Archive for the ‘East Asia and Pacific’ Category

Can Trump Come Back from a Blunder on North Korea

March 13, 2018

Richard N. Holwill (Ecuador, 1988-1989; Arms Control and Disarmament Agency, 1990-1993)


The Kim dynasty has long sought to bring legitimacy to the country formally known as Democratic People’s Republic of Korea (DPRK) and informally as North Korea. The long-standing position of the U.S. Government (USG) has been that diplomatic recognition will not be extended to the DPRK until its supreme leader signs a peace treaty with the Republic of Korea (ROK), informally known as South Korea.

A meeting with the president of the United States would grant that legitimacy to the DPRK and make a hero of Kim Jong-Un but without securing a peace treaty or any other concession. Kim will not give up his nuclear weapons based on a single meeting. The path to denuclearization will be long and hard and will require concessions from the United States and security guarantees by the People’s Republic of China.

President Trump’s acceptance of the invitation appears to have been impulsive. The New York Times and Washington Post have each confirmed that Trump did not seek the advice of his National Security Advisor or of his Secretary of Defense before his meeting with the envoys from South Korea who delivered the invitation to meet with the DPRK’s “Supreme Leader.” There are signs that this meeting will not happen, which may well reflect the fact that those in this Administration that have extensive foreign policy experience have now explained the complexity of the issue to the President.

Without regard to the capricious way that this came about, seasoned diplomats would now try a gambit to make the most of the current state of play. If Kim’s appetite for a meeting is now so strong, he might be willing to accept a peace treaty and diplomatic recognition as the price of the meeting. After all, a peace treaty and diplomatic recognition could offer the DPRK a degree of security. At this point, U.S. policy implies a desire to overthrow the Kim Dynasty. With diplomatic recognition, the USG will be expected to forego that goal. Only then can we move forward with negotiations toward denuclearization.

Diplomatic efforts, like a chess game, are best played with the king hanging back. We believe that the President would now be wise to move other pieces on the board before over committing himself.

Note: The author served as Counselor to the Arms Control and Disarmament Agency when an earlier administration considered negotiations with the DPRK.


Put people first to get fintech right in Asia

February 12, 2018

Curtis S. Chin (Asian Development Bank, 2007-2010; Managing Director, RiverPeak Group)


Jose B. Collazo (Southeast Asian Analyst, RiverPeak Group)

Cross posted from the Singapore Straits Times


As the Year of the Rooster gives way to the Year of the Dog, fintech remains very much in the news and on investors’ minds.

From blockchain to bitcoin, ethereum and other cryptocurrencies, and initial coin offerings that allocate “tokens” as a new means of crowdfunding capital, the language and disruptions buffeting the mainstream banking and financial services industry can seem overwhelming.

But beyond the multimillion-dollar, headline-grabbing investments and acquisitions, what does financial technology actually mean for the people of Asia? Across the region, fintech deals continue to make waves. And while much of the venture capital in Asia has predominantly flowed into China, particularly among a handful of large tech companies, other countries also are seeking to position themselves as fintech hubs, says Mr Jackson Mueller, associate director at the Milken Institute’s Centre for Financial Markets.

Multimillion-dollar investments were reported last year in Hong Kong in “digital wallet operator” TNG FinTech Group, in India in online lending platform Capital Float and in South Korea’s second-largest cryptocurrency exchange, Korbit.

In Indonesia, motorbike delivery and ride-sharing app Go-Jek is now officially a “unicorn” — a tech start-up valued at more than US$1 billion (S$1.3 billion). With Go-Jek’s acquisition of payment portals Kartuku and Midtrans, and savings and lending network Mapan, the company is not only poised to be a digital payments leader, but also is in a position to influence the shape and scope of the fintech landscape in Asean’s largest economy.

According to Bloomberg, Go-Jek and the three firms collectively now process almost US$5 billion of debit-card, credit-card and digital-wallet transactions for their customers, service providers and merchants. The growing interest in fintech’s potential across Asia beyond China was made clear at Singapore’s Fintech Festival last year. The conference in November was attended by over 30,000 people focused on sharing or learning more about fintech developments from companies large and small.

An awards program supported by the Monetary Authority of Singapore and the Association of Banks in Singapore recognized “digital disruptors” Blocko, Spark Systems, AGDelta, Flywire and six other companies for implementing innovative financial technology solutions.

For Asia’s brick-and-mortar financial institutions, the ongoing rise of fintech poses challenges to existing business models as well as opportunities to reach new customers. For policymakers and entrepreneurs, the benefits of addressing the digital divide and of harnessing the power of fintech can seem clear-cut in their combined ability to increase the level of access to capital and financial inclusion.

Across much of Southeast Asia, the unmet need for basic banking services is significant. Only 27 percent of the region’s 600 million inhabitants had a bank account in 2016, according to consulting firm KPMG. In emerging economies such as Cambodia, only 5 percent of the population have access to formal banking services. This level of the “unbanked” has negative repercussions for the region.

With little to no access to formal banking services, too many people in Asia go without the basic protections of a savings account, and may well face relatively higher costs for sending or receiving money. This, in a region where remittances were valued at US$236 billion in 2016, according to the World Bank. “Having access to basic financial services can reduce hunger, increase education and generally improve the quality of life,” said Queen Máxima of the Netherlands, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development, in her speech at the fintech event in Singapore.

Our view too is that fintech is a disruption to be embraced. And we are not alone. Venture capitalist and fintech influencer Spiros Margaris said: “I am convinced that fintech’s greatest achievement will be not just helping the unbanked, but also the underbanked — individuals who have insufficient access to financial services — to live a better life.”

A 2017 study conducted by the Asian Development Bank and consulting firms Oliver Wyman and MicroSave found that opening the door to financial services to the unbanked could increase the gross domestic product of the Philippines and Indonesia by as much as 3 per cent and Cambodia’s by 6 percent.

Yet, the sustained benefits of fintech will be realized only if a proper ecosystem is created and maintained — one that addresses concerns of regulators while benefiting innovators and, most importantly, consumers.

Narrowing the digital divide also will continue to be a fundamental need, with increased mobile-phone ownership and Internet penetration being key factors in spurring consumer adoption of mobile financial services. Indeed, the true measure of success for fintech should not be deal size or quantity but in expanded horizons. True success is when fintech helps once-poor farming communities access funds to bring their crops to market, or helps small shopkeepers to grow bigger, or provides seed money for a young entrepreneur ready to turn a great idea into a concrete reality.

Beyond the fintech hype and jargon, let’s not forget the human element of financial technology in the year ahead. In South-east Asia and across the Asia-Pacific region, assessments of fintech must go beyond counting fortunes made and businesses disrupted or created, but also include a measure of people helped.

Korea Options — Bad, Worse and Unthinkable

January 5, 2018

Richard N. Holwill (Ecuador, 1988-1989; Counselor to the U.S. Arms Control and Disarmament Agency, 1990-1993)


When given a choice among bad options, you would normally look for the least worst. In the case of North Korea — formally the Democratic Republic of Korea or DPRK — the least worst would appear to be negotiations but, even then, the option must be approached with great care.

Secretary of State Rex Tillerson had said “We are ready to negotiate with the DPRK without preconditions.” Then, President Donald Trump pulled the Secretary back into the fantasy world of this White House saying the DPRK “must earn” the right to negotiate. What the President did not consider was the precondition that DPRK leader Kim Jong-un has imposed on negotiations. Kim wants the United States to acknowledge and accept his Country as a nuclear power before agreeing to talk, something we cannot do.

It would seem logical that China would help calm tensions on the Peninsula, but we cannot expect China to take any steps that are inconsistent with its long-term goal of maximizing its position in East Asia. That goal includes limiting U.S. access to the South and East China Seas.

China also fears having a U.S. ally such as the Republic of Korea (The ROK, also known as South Korea) on its border. For that reason, China will actively oppose any effort to destabilize the DPRK. Human rights reform, a priority for the West, is lower on Beijing’s agenda than keeping a stable client state on its border.

Just as China wants to push the United States out of East Asia, the DPRK hopes to push U.S. forces off the Korean Peninsula. In that their goals are aligned, we should not expect China to take steps contrary to its fundamental interests.

China certainly wants to ensure that the DPRK does not actually start a war and has proposed a “freeze for a freeze,” which is to say that the U.S. and South Korean governments would not conduct military training exercises in exchange for a “freeze” in the development of nuclear arms and missile delivery systems. The Trump Administration dismissed the offer. To most analysts, simply freezing the DPRK’s nuclear program is too modest a goal, particularly if any such agreement does not include a robust verification regime.

This begs the question: What then do we want? Is it possible to seek a denuclearization agreement? And, if so, what must the United States concede to achieve that goal? Let’s assume that a denuclearization agreement is theoretically possible. To be meaningful, it must include a robust verification program backed by United Nations guarantees. More critically, we should expect China to endorse and even guarantee DPRK compliance. Such an agreement must also provide a measure of security to the ROK, which would hinge other guarantees from China.

In an agreement of this type, Kim would very likely demand concessions from the United States that go well beyond a freeze on major training exercises. He would very likely demand the removal of U.S. troops from the ROK to be staged to match the staged dismantling of the DPRK nuclear and missile programs.

Even with these potential concessions, Kim Jong-un may well refuse to give up his nuclear toys. He knows that using the weapons would be suicide, but they do give him and his country a degree of standing that would otherwise be impossible to command. Abandoning the nuclear program would be such a loss of face that Kim probably cannot accept it unless he gains face some other way.

He might insist on diplomatic recognition of the DPRK and an agreement to respect its sovereignty combined with a termination of economic sanctions. This could come through a treaty resolving the 75-year-old armistice that brought the Korean War as far as a cease fire. Kim would call that a victory but would President Trump, who seems preoccupied with his own “face,” be willing to let Kim claim victory?

This scenario, admittedly a utopian fantasy, effectively guarantees a continuation of the Kim Dynasty in the DPRK. That implies that Kim can continue to impose a system of human rights abuses that can best be described as crimes against humanity. It means that nuclear blackmail will have trumped humanitarian concerns. At the end of the day, we must ask ourselves if we are willing to pay that price. We might even ask ourselves if the status quo is perhaps acceptable.

We must remember, however, that the status quo is not static. Kim’s next move could be to demonstrate the ability to launch a missile with a warhead capable of reentry carrying a nuclear weapon to be tested not in a tunnel but over open waters. Were that to happen, our options would go from bad to exponentially worse.



North Korea’s Kim, China’s Xi both had a big year. Here’s why we should care about Asia’s 2017

January 3, 2018

Curtis S. Chin (Asia Development Bank, 2007-2010; Asia Fellow, Milken Institute)


Jose B. Collazo

Cross posted from Fox News


Asia was much in the news in 2017, as North Korea’s brutal dictator Kim Jong Un surprised experts around the world with rapid progress in his weapons program, testing intercontinental ballistic missiles and nuclear bombs. The United Nations and U.S. imposed sanctions on the North, but didn’t deter Kim from continuing to make military advances.

Kim and President Trump traded insults and threats but, thankfully, avoided going to war. Hopefully, war between the two nuclear nations will be averted in the year ahead as well.

President Trump gave up on President Obama’s failed “pivot to Asia” and said the U.S. would not join the Trans Pacific Partnership free trade agreement, which had been a top priority of the Obama administration. The new U.S. president instead embraced an “America First” foreign policy that amounted to a “pivot to America.”

So who was up and who was down in Asia in 2017? Here’s our assessment:

Worst Year: Aung San Suu Kyi and the Rohingya people

Once touted as a successful example of U.S. diplomatic engagement, the country now known as Myanmar – but still called Burma by many – was plunged into ethnic conflict in 2017 when the military in the primarily Buddhist nation launched attacks on the predominantly Muslim Rohingya minority.

One-time democracy icon and Nobel Peace Prize laureate Aung San Suu Kyi, who is now serving as state councilor (akin to prime minister) has drawn international criticism for standing by as more than 600,000 Rohingya have fled to neighboring Bangladesh following rapes, murders and the burning of their villages.

Whether a humanitarian and human rights nightmare or a clear case of “ethnic cleansing” – as U.S. Secretary of State Rex Tillerson has described it – the world has failed to effectively respond to Myanmar’s brutal treatment of an entire people.

Unfortunately, the year ahead doesn’t yet look any better for Suu Kyi or the Rohingya – sadly, the joint “winners” of worst year in Asia in 2017.

Bad Year: The Political Opposition

Incumbent leaders and parties in much of Asia, from India to Japan, solidified their lock on power. Opposition parties fared badly.

One-party rule continued in China, Vietnam and Laos. And in Cambodia, a Supreme Court ruling has effectively dissolved the only credible major opposition party. The result? Cambodian leader Hun Sen is likely to continue as the world’s longest serving prime minister for some time.

Elsewhere, Thailand’s return to democracy remains on hold after a May 2014 coup. And in Japan, Prime Minister Shinzo Abe’s party scored impressive election results, swamping the nascent “Party of Hope” of popular Tokyo mayor Yuriko Koike. Incumbency does have its advantages.

A Mixed Year at Best: ASEAN

The year 2017 proved both good and bad for the 10-member Association of Southeast Asia Nations, or ASEAN. A visit by President Trump and a seemingly budding bromance between the U.S. and Filipino presidents helped mark 50th anniversary celebrations for ASEAN in Manila in November.

The Southeast Asian region, with a combined gross domestic product equivalent to $2.4 trillion, is now the seventh-largest economy in the world and on track to become the fourth-largest economy by 2050. That’s good news for American businesses from Texas to Washington investing in and selling to this booming region.

But 2017 also made clear that the association’s non-confrontational, consensus-building approach – deemed the “ASEAN Way” – may well be facing a mid-life crisis in the face of China’s growing investment and assertiveness.

While ASEAN celebrates 50 years of growing prosperity, some of the region’s most pressing problems, including the Rohingya crisis and territorial disputes in the South China Sea, have also continued to fester if not grow.

Good Year: Asia’s Fintech Pioneers

As in America, technology from e-commerce to mobile banking continues to transform Asia and create vast new fortunes. Not everyone though can be a Jack Ma, the storied Chinese billionaire and co-founder of Alibaba Group. Nor can every company be an Ant Financial Services Group, the Alibaba-affiliated payments company described by The Economist as “the world’s most valuable fintech firm.”

But 2017 proved to be a good year for Asia’s pioneers in fintech – a catch-all buzzword for the financial technology that is challenging and reshaping mainstream banking and finance companies.

In the third quarter of 2017 alone, according to consulting firm KPMG, Asia was the global leader in fintech investment, outpacing Europe and the Americas, with more than $1.21 billion raised.

And with companies looking to serve the region’s “unbanked” – only 27 percent of Southeast Asia’s 600 million people have a bank account – what was a good year for fintech is likely to only get better in 2018.

Best Year: Xi Jinping & Kim Jong Un

There’s a new Mao in town. “Best Year” in Asia goes to: the leader of the most populous nation, China; and the leader of arguably the region’s most frightening nation, North Korea.

In 2017, Xi Jinping solidified his rule as China’s most powerful leader in decades at the Communist Party Congress. Progress also continued on two landmark Xi initiatives. The first is the “One Belt One Road” or “new Silk Road” infrastructure and development program, which will better connect China to key markets. The second is the Asian Infrastructure Investment Bank, a Chinese-led rival to the World Bank.

The major uncertainty in 2017 for Xi Jinping was the behavior of the man dubbed “Little Rocket Man” by President Trump – North Korea’s Kim Jong Un. Kim’s continued survival may well rest on China’s support more than on his small nuclear arsenal. Yet the North Korean leader is likely to know that an erratic North Korea is the price that China accepts for fear of a united, democratic Korea on its border.

And so, in a year that saw Xi Jinping emerge as a voice for Chinese-style globalization and Kim Jong Un survive – if not thrive – as a nuclear-armed provocateur, we give “Best Year in Asia” to a less-than-dynamic duo linked on the world stage: Xi and Kim, frenemies in 2017.

As President Trump moves to make America great again, America would do well to pay attention to what the billions of people and their leaders on the other side of the world in Asia are up to. In an ever-shrinking world, what happens on one side of the Pacific inevitably will affect the other.

Strengthen governance, PH democracy? Invest in Filipino youth

January 3, 2018

Curtis S. Chin (Asia Development Bank, 2007-2010; Asia Fellow, Milken Institute)

Cross posted from


With a Filipino population of some 50 million under the age of 24, the nation’s decision-makers simply cannot afford to neglect the employment, education, and social needs of this enormous constituency


One could well lose heart in parts of Southeast Asia if all you did is read the headlines, or the social media feeds. The Philippines is a case in point. Even during this nation’s holiday season, today’s banner news and trending tweets and Facebook posts from this country tend to magnify the many, not insignificant challenges facing the country.

The ongoing war on drugs, the battle against violent extremists in Mindanao, and the seemingly endemic corruption and enduring poverty that has eroded public confidence in government across presidential administrations are not for the faint of heart.

Solving these problems requires not just the commitment and ingenuity of current politicians, but the engagement of the next generation of civic and political leaders.

Thankfully, the evidence suggests that today’s young generation is no stranger to the innovation that will be essential to rising to the challenge. I had the privilege of witnessing the incredible strides made by young Filipinos firsthand when I participated recently in the graduation ceremony for the International Republican Institute’s Young Leaders for Good Governance Fellowship – a year-long program for local government leaders under 40 years old. I was struck by the enthusiasm and clear vision these young officials had for their cities, municipalities, and country.

A councilor from Ilocos Sur, in the northwest of the country, spoke at length about the need for young people to learn farming techniques from aging farmers in her municipality. Many farmers have contributed significantly to the local economy, but may well retire or pass away before sharing their skills with apprentices. In response to this challenge, this councilor created the “Farmbassadors” program to pair older farmers with unemployed youth to create jobs and foster a more inclusive community.

Disruption can come in many forms. These young people are not content to wait for solutions for their problems to be delivered from the top down. Instead, they are seeking to extend their participation in politics at the same time as the national government prepares to devolve more powers to the local level to enhance public services and better respond to citizens’ needs.

With a Filipino population of some 50 million under the age of 24, the nation’s decision-makers simply cannot afford to neglect the employment, education and social needs of this enormous constituency. Poor economic opportunities, especially outside of “imperial Manila”, are contributing to feelings of disillusionment. This, in turn, may well feed into larger challenges to social cohesion including anti-social behavior, drug abuse, and even violent extremism.

As federalism moves to the forefront of Philippine President Rodrigo Duterte administration’s list of priorities, the need to recruit dedicated, energetic local officials presents an enormous opportunity for both the government to engage the young population and for young Filipinos to make their voices heard.

The inclusive implementation of federalism and decentralization policies could provide an important mechanism to address the challenges that disproportionately affect young people in the Philippines. Greater local control over resources and programs would allow representatives to respond directly to the nuanced needs of their constituents.

Decentralization and federalism have the potential to be part of the solution to these challenges. However, if local government officials are unprepared for their changing role, or if the regulatory framework does not effectively integrate independence with accountability, the country could squander this opportunity for positive change. Moreover, if local governments are unprepared for the additional responsibilities, communities are at risk for poorer quality or less reliable services as well as increased vulnerabilities to corruption.

Effective and engaged leaders who invest in building resilience to these risks are crucial to the further development of Filipino democracy. Support from ASEAN and the larger international community can also play a valuable role. As this generation of young Filipinos moves into increasingly important positions of responsibility, political leaders at all levels must seize the opportunities presented by political reforms to build a better country of all Filipinos.

That approach – investing in youth to strengthen governance – is one that could well benefit all of the region’s governments, fully democratic or not. Identifying young Southeast Asian leaders can be the easy part. Our shared, ongoing larger challenge is to invest in and support them. The result will be a stronger region for generations to come.


Gauging the Impact of Economic Sanctions

December 8, 2017

J. William Middendorf II (Netherlands, 1969-1973; Organization of American States, 1981-1985; European Union, 1985-1987)


Dan Negrea

Cross posted from The Washington Times


Carl von Clausewitz thought of military war as a continuation of diplomacy through other means. Economic sanctions are economic war and should be similarly regarded as tactics subordinated to a diplomatic strategy.

Economic sanctions take many forms. The 1961 quarantine of Cuba targeted the whole country, but the 2014 Russia sanctions singled out a few economic sectors, enterprises and individuals. The Iran sanctions of a decade ago used asset freezes, an oil embargo and financial isolation, while the current sanctions against North Korea emphasize trade restrictions. And they can be imposed by single countries or multilaterally.

Sanctions can be designed to discourage behavior, punish actions, cause regime change or weaken a country’s economy. Or simply to advertise displeasure with certain behavior.

In 2014 the United States, Europe and their allies imposed economic sanctions on Russia in response to its occupation of Crimea and aggression against Eastern Ukraine. There was grave concern at the time that Russia planned to occupy even more Ukrainian territory and attack Baltic NATO members Lithuania, Latvia and Estonia. The sanctions included travel restrictions against Russian officials, transaction bans affecting certain energy firms and banks, and export controls on energy equipment. Russia was also denied access to Western capital markets. The sanctions weakened the Russian economy and depressed the ruble.

Simultaneously, NATO increased its military presence in member countries bordering Russia to discourage Russian military adventurism.

The West was signaling that changing borders by force is unacceptable. Russia was going to pay an economic price for its aggression against non-NATO member Ukraine and a military price if it attacked a NATO member. Russia did not withdraw from Crimea or stop interfering in Eastern Ukraine because of the sanctions. But the combination of sanctions and a firm NATO stance discouraged Russia from further aggression in Ukraine and a move against the Baltics.

Starting in 2006, the U.N. Security Council imposed several rounds of sanctions on Iran for violating nuclear non-proliferation agreements. Iran’s military was enriching uranium for nuclear weapons and building missiles to deliver them, while Iranian officials were making hostile statements against America and its allies. The almost-universal economic sanctions against Iran were the toughest any country had ever faced and virtually every segment of its economy was affected. The energy sector was particularly hard hit by an embargo on oil exports and restrictions on insurance for oil tankers serving the Iran trade. Iran was even cut off from SWIFT, the world’s bank transaction network, and forced to use gold as currency. The Iranian economy was on its knees: Between 2011 and 2014, Iran’s oil exports fell by half and the rial plummeted.

But the Obama administration gave it all away in exchange for the very bad Iran nuclear deal. The agreement limited Iran’s uranium enrichment only until 2025 and it did not restrict research on nuclear weapons or on testing missiles to deliver them. The Iranians were able to push President Obama into this pact because they figured out that he was desperate for a deal, any deal, to avoid military conflict. They even forced him to ignore the Syria genocide and his famous red line to get this deal. One of the authors of this article served in the Reagan administration and saw a different kind of president. Ronald Reagan walked away from the 1986 Reykjavik negotiations when he could not cut a good deal with Soviet leader Mikhail Gorbachev. The economic sanctions against Iran worked, but their effect was squandered by a flawed strategy.

President Trump’s North Korea goal is crystal-clear: Rogue North Korea will not be allowed to have nuclear weapons with which to blackmail the United States and its allies. The U.S. has enlisted almost the entire world community to impose the harshest economic sanctions on North Korea. But this will not be enough. “The North Koreans will eat grass before giving up their nukes,” said Russian President Vladimir Putin. And he is right.

But America is going beyond sanctions. Through skilled diplomacy it is further isolating North Korea from the world, even from China, its vital ally. And, critically important, the U.S. has left the military option on the table. No one can predict the outcome of this conflict, but the U.S. is getting the odds in its favor.

Reluctantly, America and its allies must sometimes use coercion to safeguard world peace. Sanctions can crush an economy, but by themselves they will not force a dictator to change course — dictators don’t care if their people become grass eaters. To be effective, sanctions must be melded with the threat of hard power and skilled diplomacy into a comprehensive strategy.

One more thing: In their opposition to dictators, America and its allies must remain confident in the superiority of our Western democratic principles. The West and the dictators are separated by a line of principle, to borrow a recently coined term, and we are on the right side of the line.

Big Lessons for Japan and America from three small countries

November 14, 2017

Curtis S. Chin (Asia Development Bank, 2007-2010; Asia Fellow, Milken Institute)

Cross posted from The Japan Times


When Prince Akishino and his wife Princess Kiko visited Bankok late last month to attend the royal cremation of the late King Bhumibol Adulyadej, they joined representatives of nations large and small. Together, they all bid a final farewell to a monarch whose remarkable 70-year reign coincided with the transformation of a nation and a continent.

The destruction of World War II and that of the Korean and Vietnam Wars, as well as the tremendous economic troubles that once swept large parts of Asia starting in 1997 beginning in Thailand seemed a world away.

The story of Asia today is one driven by its largest nations and economies. A slow-growing Japan and an increasingly assertive China dominate headlines, as do the mounting tensions that continue to be a major focus of U.S. President Donald Trump’s ongoing visit to Asia.

Yet, three of the region’s smallest countries each offer up a lesson for all of “Asia rising” as well as for the United States and Japan.

First: environment matters. “Going green” is a phrase embraced for many years by both countries and companies — in words, if not action.

The small Himalayan kingdom of Bhutan — 750,000 people in a nation of only 17,500 square kilometers — offers, however, an example that large nations can learn from.

Bhutan’s leaders have put conservation at the heart of their environmental agenda, pledging to keep the country carbon neutral and writing into their constitution the requirement that 60 percent of the nation must remain forested. Other initiatives include bans on plastic bags, restrictions on private vehicles in the capital Thimphu, and a commitment to become the world’s first 100 percent organic-farming nation.

Second, democracy must be nurtured. Another of Asia’s smallest countries, with 1.2 million people and 14,875 square kilometers, offers an example of how people can move forward post-conflict and take control of their own destinies, when given the chance.

The former Portuguese colony of Timor-Leste, also known as East Timor, this year held its first parliamentary elections administered without U.N. oversight since the country regained independence in 2002 from Indonesia. The results were a peaceful and powerful example to many nations, big and small, increasingly doubtful of the wisdom of entrusting their citizens with the power to vote.

While significant economic challenges continue, the people of this newest of Asian nations deserve praise as they progress from decades of conflict and centuries of colonialism. Timor-Leste was ranked first in the Economist Intelligence Unit’s Democracy Index 2016 for Southeast Asia and fifth in Asia, behind the well-established democracies of Japan, South Korea, India and Taiwan.

Third, rule of law powers business. The densely populated city-state of Singapore, 5.6 million people in an area of only 719 square kilometers, is a leading example of a small nation that thinks big — and succeeds big. With one of the highest GDP per capita in the world, Singapore showcases the economic benefits of transparency and the embrace of free markets and free trade.

Singapore has not reached global prosperity by conforming to “small-country guidelines” or “thinking small.” This prosperous “Lion City” is ranked the second easiest place in the world to do business in the World Bank’s just released Doing Business 2018 report, behind New Zealand, and the seventh least corrupt economy in the world according to Transparency International’s Corruption Perceptions Index 2016.

As small fish in the big pond that is Asia, these three nations’ futures are by no means certain in a region that will continue to transform in the decades ahead.

According to United Nations estimates, India is on track to replace China as the world’s most populous nation. Wealth and inequality likely also will continue to grow across Asia, as will the risk of military conflict amidst competing demands for energy, water and other resources, including in the South China Sea.

As Prime Minister Shinzo Abe and Trump underscored in Tokyo, Japan and the U.S. share a vision for an Asia-Pacific that is both prosperous and at peace. Much though will depend on their actions and that of others, including China and North Korea.

Countries will continue to apply economic or military pressure to shape their smaller neighbors’ behaviors and policies — no different than today. Traditions will also endure in places such as Thailand and Japan, with their embrace of centuries-old traditions and institutions.

Asia and the Pacific, however, will be better off if all nations adopt some modern-day, “small-state ideas” offered up by Bhutan, Timor-Leste and Singapore — namely the embrace of a greener, more representative and more transparent future for all their citizens.

Albert Einstein, Donald Trump and North Korea

November 3, 2017

Thomas A. Loftus (U.S. Ambassador to Norway, 1993-1997)

Cross posted from The Cap Times


Seventy years ago Albert Einstein, in an Atlantic Magazine article entitled “Atomic War or Peace,” changed American opinion on the use of nuclear weapons.

Einstein’s intended audience in 1947 was the American people, not politicians or generals. His message: “Americans may be convinced of their determination not to launch an aggressive or preventative war. So they may believe it is superfluous to announce publicly that they will not a second time be the first to use the atomic bomb.” Einstein thought refusing to publicly outlaw first use of the bomb was a mistake.

Einstein’s immense credibility and the lucidity of his reasoning had great influence on the generation that had gone through WWII. It offered a way forward to a future without nuclear war. His ideas to contain nuclear weapons would continue to be influential after the Korean War and with baby boomers who grew up in the Cold War always thinking there might be a mushroom cloud in their future.

President Trump’s trip to Asia this month gives an opportunity to change course by stating a policy the two Koreas, Japan and China understand. #1. We will honor our treaty commitments. The United States, by treaty, is responsible for the defense of Japan and South Korea. It is called a mutual defense treaty. #2. We do not want Japan or South Korea to pursue the development of nuclear weapons. #3. We will not introduce nuclear weapons into South Korea, including so-called tactical weapons. #4. We will open talks with North Korea with no preconditions.

Today we stumble toward a war with North Korea where nuclear weapons could be unleashed, not only intentionally following a war of words by the countries’ two leaders, but through accident or miscalculation.

There are questions as to whether the North Korean early-warning system is fail safe, meaning its pre-programmed softwear could trigger a counterattack by mistake. And should North Korea develop a solid fuel rocket, the danger of war by mistake increases.

I personally experienced how frighteningly easy it would be for mixed signals to result in a nuclear conflagration. As the United States ambassador to Norway, I was at the Andoya Rocket Range in north Norway on Jan. 19, 1995, to meet scientists from Cornell University on a research project. The next day a powerful rocket, the Black Brant XII, would be launched, and would pretty much go straight up and peak at a height of 1,400 kilometers. The goal of the research was to gather data on something new: a daytime look at the northern lights. Shortly after launch, the Russian early-warning system tagged it as an attack because the system was programmed to calculate the height, arc and speed of an incoming missile and trigger a counterstrike based on that. Luckily the Russian officer of the day figured out the system got it wrong and stopped the alert. But still, Russian President Boris Yeltsin was given the Black Box and his unsteady finger was on the nuclear trigger for the next 24 hours.

If we enacted a policy that includes the four points above, the risk of both an intentional launch of a nuclear weapon and the mistaken launch of one would diminish.

In high school, I read Einstein’s article, which was reproduced as a short book. To us, war was not abstract. We practiced in school what to do when the Soviets dropped the bomb. Five miles from Sun Prairie where I grew up, Truax Field in Madison housed an Air Force Nike missile base assumed to a Soviet target. Highways were marked for evacuation routes. A big issue in the 1960 presidential race between Kennedy and Nixon was the “missile gap.” The morality of dropping bombs on Hiroshima and Nagasaki was being debated and it was becoming common knowledge that after China entered the Korean War there had been a plan by the generals to drop the atomic bomb on North Korea. And perhaps it would have happened had we not had civilian control of the military.

The stated goal of the current administration is to pressure North Korea to give up its nuclear weapons. This isn’t a realistic goal. We need to pursue the four points above, along with Einstein’s admonition that America “will not a second time be the first to use the atomic bomb.”

But how do the American people become motivated enough to inform the politicians and generals and the ersatz Dr. Strangeloves of today of their disagreement with a muddled, contradictory, war-risking policy where what passes for lucidity is the phrase, “Everything is on the table”?

Here is how Einstein said it: “The atomic scientists, I think, have become convinced that they cannot arouse the American people to the truths of the atomic era by logic alone. There must be added that deep power of emotion which is a basic ingredient of religion. It is to be hoped that not only the churches but the schools, the colleges, and the leading organs of opinion will acquit themselves well of their unique responsibility in this regard.”

As Hong Kong dims, Asia can learn much from Singapore, East Timor and Bhutan

October 3, 2017

Curtis S. Chin (Asia Development Bank, 2007-2010; Asia Fellow, Milken Institute)

Cross posted from the South China Morning Post


Twenty years ago in Asia – as Hong Kong returned to China under the “one country, two systems” formula, there was hope that the former British colony would set an example for a freer, more progressive China.

Those days, for now, seem past as China cracks down on dissent in the run-up to a landmark Communist Party congress, and as Hong Kong jails democracy campaigners over anti-China protests. Hong Kong may no longer be the role model it once was, should Beijing’s moves, unintentional or not, transform this economic showcase into “just another Chinese city”.

Yet, at a recent Milken Institute Asia Summit that looked back 20 years to 1997 and ahead 20 more to 2037, I found hope that, amid the diversity of Asia, there remain numerous examples of a way forward for all of the region.

The story of Asia today remains very much one driven by its largest nations and economies. An increasingly assertive China, a slow-growing Japan, a rising India and a still emerging Indonesia dominate the headlines, along with mounting tensions from the Korean peninsula. Yet, all of “Asia rising” can take a lesson from some of the region’s smallest countries.

From three small countries come three big lessons for a greener, more representative and more transparent Asia. My hope for Asia 2037 is that these small nations – Bhutan, East Timor and Singapore – can inspire and show the way.

“Going green” is a phrase that has been thrown around for many years by both countries and companies. But despite the rhetoric, Asia is increasingly polluted, with man-made forest fires and smog-enveloped cities an annual occurrence. At least one Asia-Pacific nation, however, both talks the talk and walks the walk.

The small Himalayan kingdom of Bhutan – 790,000 people in a nation of 38,000 sq km – offers an example that its much larger neighbors (China to the north and India to the south) can learn from.

Bhutan’s leaders have put conservation at the heart of their environmental agenda, pledging to keep the country carbon neutral and writing into their constitution the requirement that 60 percent of the nation must remain forested. Other initiatives include bans on plastic bags, restrictions on private vehicles in the capital Thimphu, and a commitment to become the world’s first 100 percent organic-farming nation.

Money can’t buy you happiness

All this is in line with the philosophy of a “gross national happiness” index, as advocated by the fourth king of Bhutan, Jigme Singye Wangchuck. This approach to development goes beyond traditional economic measures, such as the gross national product, which only captures the economic value of goods and services produced. In addition to environmental conservation, the Gross National Happiness Commission also considers sustainable and equitable socio-economic development, the preservation and promotion of culture, and good governance.

East Timor votes in presidential election, signalling age of stability in Asia’s youngest nation

Another of Asia’s smallest countries, East Timor, with 1.2 million people and 14,875 sq km, offers an example of how people can move forward post conflict and take control of their own destinies, when given the chance.

I returned recently to this former Portuguese colony located on the eastern half of an island shared with Indonesia. The trip was as part of an international election observation mission from the Washington-based International Republican Institute. The East Timor government had invited observers to monitor the first parliamentary elections administered without UN oversight since the country regained independence in 2002 from Indonesia. The results were a peaceful and powerful example to many nations, big and small, still struggling to put the power of the vote in the hands of their citizens.
East Timor votes in presidential election, signalling age of stability in Asia’s youngest nation

While significant economic challenges continue, the people of this newest of Asian nations deserve praise as they progress from decades of conflict and centuries of colonialism. East Timor was ranked first in the Economist Intelligence Unit’s Democracy Index 2016 for Southeast Asia and fifth in Asia, behind the well-established democracies of Japan, South Korea, India and Taiwan.

Why Hong Kong can never be Singapore: just blame history

The densely-populated city state of Singapore, 5.6 million people on an area of only 719 sq km, is perhaps the leading example in Asia of a small nation that thinks big – and succeeds big. With one of the highest per capita gross domestic products in the world, Singapore showcases the economic benefits of transparency and the rule of law. Its neighbors would do well to adopt this nation’s embrace of free markets and free trade in their own search for drivers of growth and foreign direct investment.

Understandably, the pushback was significant when Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, recently argued that small states “must always behave like small states”, in remarks that were perceived to be a criticism of Singapore’s recent foreign policy.

Singapore did not succeed by thinking small, nor has it reached global prosperity by conforming to “small-country guidelines”. Having developed from a fishing village to a first-world country in just a few generations, Singapore also has become the leading finance and trade hub in Southeast Asia and a role model for rule of law. This prosperous Lion City is now ranked the second-easiest place in the world to do business in the World Bank’s “Doing Business 2017” report, behind New Zealand, and the seventh least-corrupt economy in the world, according to Transparency International’s Corruption Perceptions Index 2016.

As a small state, should Singapore hide when ‘elephants’ fight?

Being ambitious is not a bad thing. Small in geography need not mean small-country mentality and policies.

Over the past 20 years, I have seen first-hand the accomplishments and continuing challenges of Bhutan, Singapore and East Timor. Still, as small fish in the big pond that is Asia, these three nations have futures that are by no means certain.

In the two decades ahead, Asia will continue to transform. According to United Nations estimates, India will trade places with China six years before 2030 to become the world’s most populous nation, en route to 1.66 billion people by 2050. Wealth and inequality are likely to grow, as will the risk of military conflict amid competing demands for energy, water and other resources. Paradoxically, a more populous Asia dominated by large nations might also prove “smaller” as trade and technology further link the ­region.

All share a vision for an Asia-Pacific that is prosperous and at peace in 2037. Much, though, will depend on the world’s biggest powers and the region’s largest nations.

Here’s a prediction. Large countries will seek, in the years ahead, to apply economic or military pressure to shape their smaller neighbors’ behavior and policies – no different than today. Asia and the Pacific, however, will be better off if all nations adopt some modern-day, “small state ideas” offered up by Bhutan, East Timor and Singapore – namely, the embrace of a greener, more representative and more transparent future for all their citizens. That ideally will ring true in both Hong Kong and Beijing one day.

Tea Leaves: Progress on the Bumpy Road to Democracy

September 1, 2017

Curtis S. Chin (U.S. Ambassador to the Asian Development Bank, 2007-2010; Asia Fellow, Milken Institute)

Cross posted from the Nikkei Asian Review


A decade ago, I traveled to East Timor, also known as Timor-Leste, to look at the condition of roads and other infrastructure in Asia’s newest country. I was working with the Asian Development Bank at the time, and returned in 2010 for a follow-up visit. It was not until July this year that I returned again — this time as an independent election observer, to witness firsthand the country’s ongoing journey to democracy.

Just like the country’s roads, that voyage remains a work in progress, undoubtedly with more bumps and twists along the way. But in a world awash with cynicism, and with democracy under pressure in so many countries, I found hope in this young nation of some 1.2 million people.

The parliamentary election that I observed and a presidential poll held in March were the first run without international assistance since a United Nations mission left in 2012. A Portuguese colony for 273 years until 1975, East Timor was forcibly occupied by neighboring Indonesia until 1999, and regained its independence only in 2002 after a transition administered by the U.N.

My election day began before dawn, to the sound of roosters, in the small mountain town of Ainaro, where I stayed in a guesthouse a short walk from a beautiful colonial church. For most of the day, with my interpreter Arianto, our driver Angelo and a smartphone app that showed polling stations, I traveled on roads good and bad, and crossed rivers on bridges new and old, throughout the region.

Ainaro district, some 4-5 hours’ drive from the capital Dili, is a special place. Here, Xanana Gusmao, who would become the first president of East Timor, spent many years directing resistance to Indonesian occupation. During World War II, Ainaro was where Imperial Japan’s efforts to conquer this region came to an end.

In contrast to the mayhem and violence back then, the scenes I saw were festive and peaceful. Voters waited quietly at polling stations that opened promptly at 7 a.m. Until the polls closed early afternoon I saw voters coming on foot, by motorcycle and by bus or truck to cast their votes. Young or old, each showed a voter identification card, had his or her name confirmed on voter rolls and entered an election booth to mark a choice from some 21 political parties. A nail was provided to punch a hole in the ballot. Afterward, each voter dipped an index finger into a well of indelible ink to help prevent double voting.

Weeks later, national pride in what happened on that sunny Saturday election day can still be sensed, even as political parties jockey for position in the formation of a new government. “Once again, we have shown the world that Timor-Leste is a democratic country,” my interpreter, and now friend, Arianto Martins de Jesus told me. “The election has brought new hope for Timor-Leste’s people, no matter who leads the government.”

As with all governments — democratically elected or not — a key challenge will be delivering on people’s hopes. Running an election can be the easy part, in contrast to forming a government and running a country. But hope there is, even if at first glance East Timor is struggling on several fronts. Poverty remains high, as does youth unemployment. Oil and gas reserves, the government’s primary source of revenue, could well be depleted by 2022.

Yet notable strides have been made in the last decade to improve living conditions and increase economic opportunities. The Dili I visited in July is a far cry from the one I first saw a decade ago. Plans for East Timor’s first internationally branded hotel, a Hilton, have just been announced, and the international franchises Burger King and Gloria Jean’s Coffees are already in Dili. The infant mortality rate has almost halved since East Timor regained independence, and malaria cases have declined dramatically. Although not all in the region yet agree, East Timor’s accession to the Association of Southeast Asian Nations is richly deserved, and would help to lock in progress.

Before making the long road trip back to the capital after election day, I stopped in the old church in Ainaro and caught the start of Sunday service. Much was in the local language, but now and then I heard the word “Alleluia.” Praise and celebration were certainly in order. There may be challenging times ahead for East Timor, but the country’s commitment to the rule of law, peace and democracy bodes well for its future. This tiny young nation is an example to much larger neighbors which are still struggling, or even stalling, on their own bumpy paths to democracy.