EU erecting a green wall against Asia’s textiles

The European Union has released new trade policies and requirements for exporting textiles to the EU market, policies that have been accused of trade protectionism. 

Among them, the June 2022 EU Strategy for Sustainable and Circular Textiles (EUSSCT) is likely to significantly impact East Asian textile makers, who supply over 70% of the European Union’s textiles.

Within the EUSSCT, a series of environmental regulations stipulate that by 2030, companies trading clothing and apparel with the European Union must adhere to standards regarding durability, the absence of hazardous substances and the predominant use of recyclable materials. 

This strategy is expected to serve as the foundational plan for the evolution towards more sustainable consumption of clothing and apparel by EU member states. In doing so, the European Union could be a pioneer in enforcing its commercial partners to adopt sustainable manufacturing.

Garment, textiles and footwear sectors remain a critical contributor to Asian economies, generating around 60 million jobs for the region and indirect employment for millions more. 

The textile industry is still growing in most East Asian countries, with the fastest growth rates recorded in China, Indonesia, Vietnam and Cambodia. 

The region is the production hub for heavyweights of the European fast fashion industry like Nike, Zara, C&A and H&M. Textiles are the fourth largest burden on the environment stemming from European consumption.

An H&M store in Shanghai. Photo: WeChat

The East Asian region is the main garment producer in the world – playing a key role in the textile and garment supply chain. In 2019, the region made up around 55% of global textiles exports. 

For example, Vietnam exported apparel, garment and textile products valued at US$37.6 billion to the global market in 2022. Out of these exports, 5.4 billion euros ($5.8 billion) went to the European Union.

The industry is seeing rapid growth, which is partly attributed to increased engagement in Southeast Asia driven by the EFTA–Singapore Free Trade Agreement and the EU–Vietnam Free Trade Agreement (EVFTA). The EVFTA has led to an increasing reliance on the EU market by Vietnamese goods.

Yet since the Covid-19 pandemic, the East Asian garment and textile industry has struggled due to lower demand in key markets, including the European Union and the United States. Textile exports from Indonesia, Malaysia, Thailand and Vietnam also fell in 2020. 

In light of this, the EUSSCT’s new regulations may impact East Asian garment and textile manufacturers more significantly than previously anticipated.

The EUSSCT is expected to pose challenges and potentially increase costs for the East Asian apparel sector. Enterprises operating within this sector should be proactive in adapting to these forthcoming regulations to ensure exports continue. 

The European Union has set 2030 as the target year for full circularity. This places pressure on textile and clothing businesses to comply with different aspects — including circularity, traceability and decarbonization.

Vietnam is angling to strike a delicate trade balance between the US and China. Photo: Reuters
A clothing boutique in downtown Hanoi. Photo: Asia Times Files / AFP / Hoang Dinh Nam

East Asian clothing and apparel producers who do not utilize recyclable materials may face heightened scrutiny. Also, this sector’s heavy water and chemical usage contributes to severe water pollution as it discharges substantial volumes of wastewater containing hazardous substances into rivers and waterways. Reducing carbon emissions will require changes to the sector’s business models and technological and process innovations.

But opportunities abound. The domestic transformation required to meet EU standards could make the region better prepared if other developed markets implement similar policies. 

Embracing green production practices can have a positive impact on the local environment and the quality of life of East Asian people. It can also open up new sustainable production and business opportunities. In turn, this could attract more foreign investment from developed countries.

Despite the challenges caused by these new regulations, companies in the region are proactively addressing them. Singapore-based Ramatex has already made strides in sustainability by researching how to create clothes that do not shed microfibers. 

In Vietnam, the Spectre garment factory relies on renewable energy to power its operations, while South Korea’s Hansae Group and the Hanoi Textile and Garment Joint Stock Corporation have collaborated to produce recycled textiles for exports to the European Union.

To some extent, opportunities for environmental progress depend on existing capabilities and other facilitating factors, including policy frameworks and infrastructure. Mitigating the environmental impact of textile manufacturing requires a systemic shift towards a circular economy. 

This transition should encompass green public procurement, eco-design, labeling and standards, and increasing producers’ responsibility. It is imperative to adopt a new development approach that is both net-zero carbon and environmentally restorative.

A substantial challenge in the sustainability transformation of the textile industry in East Asia is the limited knowledge and technical know-how regarding environmental sustainability. 

Workers supervise embroidery machines working on fabrics for wedding dresses at a small factory on the outskirts†of Islamabad on September 2, 2020. Photo: Asia Times Files / AFP / Farooq Naeem

To make the East Asian textile and apparel industry greener, key projects must be set in motion. They include investing in research and development and providing comprehensive education and training programs to increase expertise in environmental sustainability.

Governments should also enact supportive policies and incentives for sustainable manufacturing in the textile sector, including tax incentives and subsidies. These incentives should encourage the adoption of eco-friendly technologies and promote green supply chain practices.

International and domestic collaborations to share best practices and strategies for sustainability are also vital. By addressing these issues, East Asian textile and apparel manufacturers can better position themselves to meet the evolving standards of the European market and improve their sustainability.

Associate Professor Dr Hoang Hai Ha is Senior Lecturer at the Faculty of History, Hanoi National University of Education.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Hamas hardly represents Gaza’s Palestinians

After more than a month during which Israel has relentlessly bombarded then invaded Gaza with the stated aim of destroying Hamas, Gaza’s health authorities have estimated that more than 13,000 people – mainly civilians and a distressingly high proportion of those children – have been killed.

Yet it should be remembered that it was the initial attack on Israel by Hamas fighters on October 7, killing 1,200 people – again, mainly civilians, many in the most brutal manner – that led to Israel’s invasion of Gaza.

Initially, the Israel Defence Forces issued warnings to Gazan civilians to move south. But repeated airstrikes on towns in the south of Gaza have left the population fearing that there are no safe spaces left in the enclave.

Israel continues to insist, with the backing of its allies in the West, that this military operation is aimed at rooting out Hamas. They say it is the fact that Hamas embeds itself in civilian populations that is causing so many casualties.

But recently there have been signs that some Palestinian civilians are openly challenging Hamas’s authority. Associated Press reported on November 10 that angry crowds threw stones at Hamas police in one location while in another, people huddling in a UN shelter hurled insults at Hamas officials.

Political party or terror group?

Hamas was founded in Gaza in 1987 by Sheikh Ahmed Yassin, an imam, and his aide Abdel Aziz al-Rantisi. This was shortly after the beginning of the first intifada – an uprising against Israel’s occupation of the Palestinian territories.

Initially emerging as an offshoot of the Muslim Brotherhood in Egypt, Hamas later established a military wing known as the Izz al-Din al-Qassam Brigades. Its primary goal was to engage in armed resistance against Israel with the aim of liberating historic Palestine.

While there is international support for Palestinian self-determination, Hamas’s aim – spelled out in its founding charter – to destroy the state of Israel has cost it legitimacy with many who would otherwise support Palestine’s cause.

The group has effectively controlled Gaza since shortly after then-Israeli prime minister Ariel Sharon withdrew troops and settlers from Gaza in 2005. In elections in 2006, Hamas secured a majority of seats in the Palestinian Authority’s legislature and established a government.

This gave Hamas some legitimacy as far as the Palestinians in Gaza were concerned – at least temporarily.

Hamas’s early success has been ascribed to its provision of social services such as healthcare and welfare. Initially, it also seemed to be a valuable counterpoint to what was perceived as corruption within the incumbent Fatah party.

But Fatah and its Western backers found the election outcome to be unacceptable, leading to the removal of Hamas from power in the West Bank. This effectively denied Hamas the role in the PA that it believed it deserved.

Mahmoud Abbas, president ot the Palestinian Authority. Photo: Asia Times Files / AFP / Alex Brandon / Pool

A 2008 presidential election confirmed Fatah’s Mahmoud Abbas as the head of the PA. But by this stage the split between the two parties meant that while the Fatah-dominated PA governed the West Bank, Hamas was largely unchallenged in Gaza.

Vote of no confidence

But a survey undertaken by Arab Barometer, a nonpartisan research network, between September 28 and October 8, 2023 revealed dwindling confidence in Hamas (the surveys in Gaza were completed on October 6).

Asked to identify the amount of trust they had in the Hamas authorities, 44% said they had no trust at all, while 23% said they had little trust. Significantly this lack of trust was roughly uniform across age groups with those between the ages of 18-29 and those over 30 giving similar answers.

An earlier poll taken by the Washington Institute in July 2023, moreover, found that 62% of people in Gaza supported Hamas maintaining a ceasefire with Israel and 50% agreed that: “Hamas should stop calling for Israel’s destruction, and instead accept a permanent two-state solution based on the 1967 borders.”

So, given the gulf between Hamas’s aims and style of governance, how has it kept control of the enclave of 2.2 million people for so long? It’s important to remember that there have been no elections since 2006 and the average age of people in Gaza is about 18, meaning most people have not had the chance to vote for any other leadership.

Hamas has also reportedly ruled with an iron fist. Hamas has used strict and authoritarian methods of control, applying its own interpretations of strict sharia law, enforcing gender segregation in public, controlling the media, repressing any political opposition and eliminating all mechanisms of transparency and accountability.

Numerous reports have detailed human rights abuses conducted by Hamas against Palestinian civilians, including arbitrary detention, torture, punishment beatings and the death penalty.

Smoke billowed over residential Israeli areas as sirens sounded overhead amid Hamas rocket attacks launched from the Gaza Strip on October 7, 2023. Image: NDTV Screengrab

To be fair, a report in 2018 from Human Rights Watch found that similar human rights abuse was just as common in the West Bank under the Fatah-led PA. Hamas also stands accused of harassing journalists who criticize its government.

The catastrophic Hamas attack on October 7 which has led to the deaths of so many Palestinian civilians in Gaza has eliminated any pretence of legitimacy that Hamas may ever have had in the eyes of most of the world. Indeed, the days of Hamas may be over.

But this will only increase the urgency of finding a long-term solution for Palestine, something that seems further away than ever.

Christoph Bluth, Professor of International Relations and Security, University of Bradford

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Preparing for a Russia-Ukraine stalemate

US President Joe Biden took to the pages of the Washington Post last week to assure the American people that continuing economic and military support to Ukraine is an investment in US security.

On October 20, US Defence Secretary Lloyd Austin visited Kiev to give the Ukrainian leadership a similar assurance together with the promise of an additional US$100 million in military aid.

A day later, his German counterpart, Boris Pistorius, announced a new 1.3 billion euro ($1.4 billion) support package, focused on defensive equipment including four more IRIS-T SLM air defense systems and anti-tank mines.

This is an indication of a growing realization that Western emphasis is shifting to sustaining Ukraine’s defense against Russian aggression – contrary to the insistence by Ukrainian President Volodymyr Zelensky and his closest political allies that victory on the battlefield is not just possible but probable. This view is now even contested in Kiev.

In an interview with The Economist, Ukraine’s commander-in-chief, Valerii Zaluzhnyi, said: “There will most likely be no deep and beautiful breakthrough.” The US defense secretary echoed this view in Kiev, emphasizing that Ukraine needs to “make the right adjustments” to its strategy.

Similar doubts have been voiced in Western capitals for months. In July 2023, the then-chairman of the joint chiefs of staff, General Mark Milley, warned that Ukraine’s counteroffensive, then in its fourth week, would be “very long” and “very, very bloody.”

Less than two weeks later, a NATO communique after its summit in Vilnius failed to provide more than the vague promise of future membership. The next day, the G7 leaders’ joint declaration of support for Ukraine noted that G7 members were launching negotiations on “bilateral, long-term security commitments and arrangements” to support Ukraine.

Ukrainian President Volodymyr Zelensky isn’t getting everything he wants from the West. Photo: NDTV / Screengrab

There are further sobering signs of a significant reset of Western strategy on Ukraine. An article in Time magazine painted a bleak picture of deliberations in Zelensky’s inner circle over how difficult the war will be to win.

Meanwhile, an NBC story revealed mounting Western pressure on Ukraine to consider a peace deal with Russia that would involve at least some territorial concessions.

No appetite for endless conflict

The underlying premise of this reset in Western attitudes is that the outcome of this war will ultimately not be decided for a long time.

Bilateral security guarantees – especially from the US, UK, Germany and France – would go some way in assuring Ukraine that the West would continue to have its back while kicking the thorny issue of NATO membership into the long grass.

The West could also remain rhetorically committed to Zelensky’s peace formula. And support for EU membership – likely to be a long and slow process – could also continue and assist Ukraine with both reforms and recovery.

Such an approach would anchor Ukraine more clearly in the West in ways that might be less unacceptable to Russia than NATO membership.

All of this, however, is predicated on the assumption of a stalemate on the ground, which Moscow and Kiev would need to accept. It also assumes that neither side can see a clear opportunity to either escalate militarily to victory or do enough to have the advantage should the two sides end up at the negotiation table.

Both sides would also need to have grounds to believe that they have the political will and material resources to at least sustain the status quo. They must also be able to credibly signal this to the other side.

For Ukraine, the recent G7 statement, Biden’s article in the Washington Post and Austin’s comments in Kiev all contribute to this message without contradicting Zelensky’s stance of no surrender, which still has clear majority support in Ukraine.

Russia launched its full-scale invasion of Ukraine 20 months ago. It has been a year since any significant movements on the battlefield. No major third-party peace initiatives are on the horizon that could change the calculations of the belligerents. Taken together, a status quo is emerging on the ground.

For this to become a preference for both Moscow and Kiev over futile and costly attempts of escalation, several conditions need to be met.

For Ukraine, the kind of credible bilateral security guarantees embodied in the G7 Leaders’ joint declaration of support are required. For Russia, it would mean no Ukrainian NATO membership and no significant escalation of Western support that could give Kiev the technological edge it might need to defeat Moscow on the battlefield.

Making the current stalemate sustainable would imply thinking about the situation on the ground – not so much in terms of temporary stalemate to be overcome through military escalation, but more in terms of an acceptable, if imperfect, status quo that is worth preserving.

In practical terms, this would imply no significant fighting and no further mobilizations. As such, it would also likely have an immediate and tangible effect on the lives of people on both sides of the lines of contact.

Russia’s relentless bombardment of the city of Kharkiv continues. Photo: EPA-EFE via The Conversation / Sergey Kozlov

Progress in this direction will not be linear, especially given upcoming presidential elections in Russia, the US, and – possibly – Ukraine. As the election campaigns get underway, there will be periods of escalation not only along the frontline but also in rhetoric. Neither side is likely to commit in public to a ceasefire. And neither side will disown their articulated maximum demands.

Yet, beyond this, there appears to be a realization now on all sides that a stable status quo is in everybody’s interest. Moscow, Kiev and the West are likely to work towards such stabilization, pursue humanitarian issues and possibly begin negotiations on a ceasefire.

None of this is equivalent to the just and lasting peace that Ukraine and Ukrainians deserve. But it does embody the hope of ultimately achieving such a peace at the negotiation table and not on the battlefield.

Stefan Wolff, Professor of International Security, University of Birmingham and Tetyana Malyarenko, Professor of International Relations, Jean Monnet Professor of European Security, National University Odesa Law Academy

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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The damaging conflation of anti-Zionism and anti-Semitism

There is a famous story about the founder of modern Zionism, Theodor Herzl. As a young journalist in late-19th-century Vienna, Herzl came to believe that the solution to the problem of Jewish emancipation in Europe was the creation of a Jewish state. His ideas remained fringe across European Jewish communities until after the Holocaust, but they did raise some eyebrows with Jewish leaders. 

Upon hearing Herzl’s plans to redeem the Jewish people, the chief Rabbi of Vienna decided to visit him. When he arrived on a cold December day at Herzl’s apartment, he found a Christmas tree in the living room. Legend has it that the Rabbi simply left and never even spoke with Herzl, believing him far too assimilated to Christian customs to be a savior for the Jews. 

This story highlights the myriad counter-narratives and differing opinions within the Jewish community over political Zionism. Since the earliest days of Herzl’s plans to create a Jewish state, Jewish communities have been divided on whether Jews even needed a state in the first place.

Even today, there are almost equal numbers of Jews who live outside of Israel as there are living in the Jewish state. While many Jewish diaspora communities call themselves Zionist, the fact is that they refuse to realize the basic tenet of modern Zionist ideology and emigrate to Israel. 

Despite the deep difference inside the Jewish community over Zionism, the Israeli government and its allies have long pushed the idea that anti-Zionism and anti-Semitism are two sides of the same coin. The conflation of these terms over the past month of fighting in the Gaza Strip has reached fever pitch and is contributing to a flare-up of anti-Semitism worldwide. 

Professor Avi Shlaim, one of the revisionist Israeli scholars known as the “new historians,” spoke about the differences between anti-Zionism and anti-Semitism in a recent clip that went viral across the Internet. Anti-Semitism, Shlaim notes, is the hatred of Jewish people because they are Jews. Anti-Zionism is opposition either to the Zionist ideology or, more commonly, criticism of specific policies of the Israeli government.

While anti-Semitism is a grotesque form of hatred that should never be justified, anti-Zionist rhetoric tends to be evidence-based. 

The Israeli government and its supporters argue that anti-Zionism deprives the Jews of a state of their own because they are Jews. Thus anti-Zionism is anti-Semitism because it singles out the group.

This argument doesn’t hold much water, as anti-Zionists don’t say that Jews can’t have their self-determination. Instead, the issue is how Zionism has sought to exercise that self-determination in a specific place at the expense of another people’s self-determination. 

Israel’s Palestinian policy

The deep issue is how Israel deliberately conflates anti-Zionism and anti-Semitism to silence any criticism of the Israeli government or its policies of occupation vis-à-vis the Palestinians.

When the UN secretary general called for a ceasefire to protect civilians in the Gaza Strip early in the war, the Israeli representative immediately branded his position anti-Semitic. This is a clear example of how the conflation strategy is deployed to divert attention over legitimate criticism of Israeli policy. 

Israel’s aggressive PR tactics have allowed the far right to push anti-Semitic ideas without getting into trouble. For decades, far-right leaders worldwide have claimed to be pro-Israel while directly or indirectly supporting anti-Semitism at home. Viktor Orban, the prime minister of Hungary, is one of the most vocal supporters of Israel in the European Union and also flames anti-Semitism at home. 

Elon Musk recently found himself in hot water after agreeing with anti-Semitic comments on his social-media platform X. Media watchdogs have since claimed that anti-Semitism is flourishing on the platform.

Musk says X is a place for free speech, and that’s why such rhetoric is shared. Yet, in response to high-profile advertisers fleeing his platform, Musk announced that using terms like “decolonization” and “from the river to the sea” in support of Palestinians will get you banned from X. So much for free speech. 

Musk is rushing to embrace pro-Israel positions in the hope people will overlook his alleged anti-Semitic tendencies. The very fact he can do that is a by-product of the Israeli government’s conflation of anti-Zionism and anti-Semitism.

The Jewish people never elected the Israeli government to represent it worldwide. Given the varied nature of Judaism today, such an election would be impossible. Yet Israel speaks in the name of all Jews to provide cover for its policies with the Palestinians.

With rising anti-Semitism worldwide, there will need to be some sort of reckoning between Jewish communities and Israel, but such an event feels far off. 

This article was provided by Syndication Bureau, which holds copyright.

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Shared prosperity for Commonwealth LDCs

The Commonwealth, encompassing a diverse group of nations, faces numerous challenges in achieving financial prosperity and addressing the needs of its member states, especially the least developed countries (LDCs) such as Rwanda, Kiribati, Solomon Islands and Tuvalu, among others.

These issues, ranging from trade difficulties and structural vulnerabilities to limited access to finance, technology, and education hinder economic growth and development.

To build a resilient tomorrow for the Commonwealth, it is essential to prioritize a robust private sector, foster innovation, bridge the digital divide, promote structural reforms, support climate justice, enhance trade competitiveness, and invest in quality education.

Some domains in the Commonwealth that need attention to move toward a more equitable and prosperous future for the LDCs are the following.

1. Private-sector development and access to finance.

A robust private sector is vital in fostering fiscal growth, investment, employment, and technical capabilities. However, many LDC economies have historically struggled with weak private sectors.

To address this, private-sector development plans should focus on improving market accessibility, competitiveness, and business-friendly regulations. Additionally, increasing domestic credit levels provided to the private sector can stimulate economic activity, as seen in the case of Bangladesh.

By facilitating access to internal financial means, such as lines of credit, trade credits, and non-equity securities, LDCs can support investments in productive capacity and strengthen their economies.

2. Fostering innovation for productivity and structural transformation.

Innovation, when combined with the adoption of new technologies, can drive productivity growth, diversification, and structural transformation. Unfortunately, few Commonwealth LDCs have made significant advancements in this area.

Increasing inventive activity, as measured by trademark and patent applications, remains a challenge. Most Commonwealth LDCs have recorded minimal trademark and patent applications. Promoting innovation through research and development, technology transfer, and intellectual-property protection is crucial for the Commonwealth to harness its potential for economic growth.

3. Bridging the digital divide and enhancing communications.

While there have been notable increases in Internet usage across Commonwealth LDCs, the digital divide persists within and beyond the Commonwealth of Nations. Access to the Internet remains limited in many LDCs, hindering progress toward universal connectivity.

Addressing this gap requires focused efforts on improving infrastructure quality, energy supply accessibility, digital skills, and entrepreneurship. The Commonwealth can play a significant role in facilitating digital inclusion by supporting the adoption of cutting-edge communication technologies, investing in remote learning, and providing technical skills and vocational training opportunities.

4. Structural reforms for economic diversification and productivity.

LDCs face many challenges, such as limited economic diversification, low productivity, and capacity constraints in manufacturing and other productive sectors. Structural reforms are crucial to shift labor and resources from lower to higher productivity activities.

LDCs can boost productivity growth and create sustainable economic progress by promoting the transition from low-value-added to higher-value-added sectors. Overcoming obstacles to structural reforms, including limited economic diversification and low investment rates, requires comprehensive policy measures, improved governance, and enhanced capacity-building.

5. Climate justice and resilience building.

Small island developing states (SIDS), low-income countries (LICs), and Commonwealth LDCs face heightened vulnerability to external shocks and climate-related disasters. Access to substantial and predictable climate funding, separate from existing assistance, is critical for these nations to address climate change impacts and prepare for a changing climate.

The Commonwealth should support climate justice by advocating for increased climate financing and facilitating cooperation among member states to address loss and damage. By forging partnerships and innovative financing mechanisms, the Commonwealth can help its most vulnerable members build resilience and ensure a just transition toward a greener future.

6. Enhancing trade competitiveness and financial stability.

Many Commonwealth nations still need help increasing export competitiveness, diversifying their exports, and engaging in global trade. To overcome these hurdles, the Commonwealth should provide technical assistance, facilitate trade negotiations, and promote financial stability through capacity-building and knowledge-sharing.

By supporting trade agreements with developed and developing nations, Commonwealth LDCs can expand their market access, diversify their exports and enhance participation in the global economy.

7. Investing in quality education for empowering youth.

Quality education is essential for achieving sustainable development and empowering youth. The Commonwealth must prioritize investment in education, particularly in LDCs, to ensure access to inclusive and quality learning opportunities.

By leveraging technology and distance learning methods, the Commonwealth can overcome barriers to education, such as limited infrastructure and teacher shortages. Additionally, valuing the contributions of young people, involving them in decision-making processes, and addressing their unique challenges will foster their active participation in national progress and drive future prosperity.

The Commonwealth stands at a crucial juncture in fostering a prosperous and resilient future for all its member states. Collaboration among governments, non-governmental organizations, the corporate sector, and civil society is pivotal in ensuring the success of these efforts in fostering effective developmental governance, especially for the LDCs.

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Argentina’s Milei wants no more ‘secret’ deals with China

Argentina is poised to downgrade China ties and upgrade US relations in a geopolitical switch driven by the ballot box. But new Argentinian President Javier Milei’s stated plan to dollarize his China-dependent economy is likely a non-starter.

Milei, 53, a right-wing politician often referred to as Argentina’s version of former US president Donald Trump, beat Economy Minister Sergio Massa 55.7% to 44.3% in the nation’s presidential election on Sunday. Milei will take office on December 10.

Milei has long advocated abolishing the Argentine peso and using the US dollar instead, claiming the currency switch will arrest his nation’s sky-high inflation.

He has also openly criticized China, saying publicly he won’t deal with “communists”, and that he favors stronger US ties. Dropping the diplomatic gauntlet, Milei and his colleagues have said Argentina will stop state-to-state trade deals and secret negotiations with China, currently its key trade partner, creditor and investor.

“We will stop interacting with the governments of Brazil and China,” Diana Mondino, Milei’s likely foreign minister, told Russia’s RIA Novosti news agency in an interview when asked whether Argentina would encourage exports and imports with Brazil and China.

Mondino told the media earlier this month that the Argentina government had in the past two decades conducted many “secret” negotiations with foreign countries, not least a US$18.4 billion currency swap arrangement with China. She said these secret contracts are abnormal and that the Milei-led government would cease the practice.

“Today we have a government that makes decisions on behalf of companies, that decides who can buy, at what price they can buy or sell,” she said regarding the administration chaired by Alberto Fernandez. 

She said the practice has to stop as “the private sector has to be free to make its decisions.”

Milei’s antagonistic pronouncements have raised antennae in Beijing.

“Some in the world misread President-elect Milei’s foreign policy,” Mao Ning, a spokesperson of China’s Foreign Ministry, said in a regular media briefing on Tuesday. “No countries could step out of diplomatic relations and still be able to engage in economic and trade cooperation.”

Mao said it would be a huge policy mistake for Argentina to cut ties with major countries like China or Brazil. 

Debt crisis

Argentina is already teetering on the economic and financial brink with annualized inflation of 142.7% last month, according to the country’s statistics office. Argentina’s peso currency has depreciated by 53.9% to 356 pesos per dollar over the past year.

Meanwhile, the government’s budget deficit was equivalent to 2.4% of the country’s gross domestic product last year. At the end of June 2023, Argentina’s external debt reached US$276.2 billion, accounting for 44.9% of nominal GDP in 2022.

The South American nation also still owes the International Monetary Fund (IMF) about $46 billion from previous bailouts. 

This explains why Milei often posed for pictures with a chainsaw on the campaign trail, a theatrical posture of his intent, if elected, to make heavy cuts in government spending.

Argentina also had a current account deficit of $6 billion, or 5% of GDP, in 2022, meaning that it spent more than it earned in external trade. 

Last year, Argentina had a trade deficit of $1.74 billion, $9.57 billion and $9.93 billion with Brazil, China and the US, respectively. With the peso’s steep depreciation, Argentinians increasingly prefer to hold foreign currencies, mainly the dollar.

Insufficient dollars

Chinese commentators said it will be difficult for Milei to resolve his country’s debt problems through dollarization and cutting government spending, both of which they claim will lead to a deeper economic downturn. 

“Can Argentina use the dollar as its currency? It’s possible. But the question is: does it have enough dollars?” a Zhejiang-based columnist says in an article published on Wednesday. “In the end, Argentina will still have to accumulate dollars through external trade.”

He opined that Milei’s dollarization idea was likely just a campaign slogan and won’t be realized. 

He said some are worried that China could have accumulated a large amount of Argentinian pesos that may become useless in the future. However, he said many people misunderstood the currency swap arrangement between China and Argentina as a currency exchange deal. 

In mid-2020, Argentina and China signed a 130 billion yuan ($18.2 billion) swap line, which allows firms to borrow currency from the other side. This year, an additional 70 billion yuan-peso swap line was granted to Argentina by China. 

Under the arrangement, Argentinian importers borrow yuan-denominated loans to pay for imported Chinese goods and pay back the loans plus interest in yuan.

In layman’s terms, China effectively issued a credit card to Argentina to buy more Chinese goods while the Argentina government prints money to buy foreign currency and pay off the debt.

Last year, bilateral trade grew 29% to $25.4 billion from $19.7 billion the previous year.

Argentina imported $17.5 billion of mechanical and electronic products, textiles and natural resources from China while exporting $7.93 billion worth of goods including soybeans, fruits, meat and cereals to China.

On October 23, Chinese President Xi Jinping told Argentine President Alberto Fernandez in Beijing that China would like to import more high-quality Argentine products and encourage more Chinese enterprises to invest in Argentina.

Read: PBoC eases RMB, triggering a debate in the process

Follow Jeff Pao on Twitter at @jeffpao3

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Ceasefire, hostage deal likely signal end of Netanyahu

After a long overnight deliberation, the Israeli government approved a hostage release deal and ceasefire today with Hamas.

The main details of the agreement, brokered by Qatar, will include the gradual release of 50 to 80 Israeli women and children held in the Gaza Strip. That’s only a fraction of the 240 hostages who were abducted on October 7 during Hamas’ violent terror spree across 23 southern Israeli towns, which killed 1,200 Israelis.

In exchange, Israel has agreed to at least a four-day ceasefire, pausing its offensive maneuvers in Gaza aimed at crushing Hamas’ military and political capabilities. At least 150 Palestinian women and minors will be released from Israeli prisons in exchange, while Gazans will receive increased amounts of humanitarian aid and fuel.

The deal presented several dilemmas for the government in Jerusalem, embodying the strong tensions between the two main goals of the war: dismantling Hamas as a functioning terror organization and securing the release of as many hostages as possible.

The Israeli Defense Forces wanted to keep the pressure on Hamas on the ground. On the other hand, it was clear that fighting would have to be put on hold for the hostage deal to go ahead.

Moreover, Israelis will not like the fact the deal applies only to women and children, leaving out men and soldiers. And it also left Hamas with strong cards to play in the coming days, able to use the remaining hostages to force more ceasefires and concessions from Israel.

This is not the first time veteran Israeli Prime Minister Benjamin Netanyahu has signed off on a sensitive prisoner swap deal. He was prime minister in 2011 when Israel released more than 1,000 prisoners in exchange for a single Israeli soldier, Gilad Shalit. The released prisoners included 280 who were serving life sentences – among them the current Hamas leader in Gaza, Yahya Sinwar.

Protests on the Israeli streets since Hamas’ attacks on October 7 have called for prioritizing the release of hostages. These have been substantial and emotional. Families of those kidnapped have also met with Netanyahu and his partners in the current emergency government, centrists Benny Gantz and Gadi Eisenkot, who are both former Defence Force chiefs of staff and were previously part of the opposition.

The Israeli public has displayed strong and heartfelt national solidarity in response to the October 7 attacks. At the same time, no one can forget the division and vitriol that threatened to tear Israel apart just a short while ago.

An Israeli army self-propelled howitzer fires rounds near the border with Gaza in southern Israel in October 2023. Image: Youtube Screengrab

Millions protested for months against the controversial judicial overhaul plan promoted by Netanyahu’s right-wing government. Coalition members fiercely attacked and ridiculed army reservists who threatened not to serve unless the reform plan was scrapped.

As long as the war continues, Netanyahu’s position appears safe. Initially, his followers claimed it is no time to deal with petty politics when the war is being fought.

Yet, soon afterward, it became clear the prime minister was refusing to take personal responsibility for what occurred on October 7, even though he was in power on and off for 16 years and failed to effectively deal with Hamas.

Many blame him for allowing Qatar to provide hundreds of millions of dollars to Hamas-ruled Gaza over the years, with the money arguably helping transform it into an army on Israel’s back doorstep.

A committee of inquiry, expected to be created as soon as the fighting is over, will most likely also grill Netanyahu and his political partners for their role in exacerbating the internal strife.

These tensions within Israel, a top intelligence official warned months ago, were perceived as a weakness among Israel’s enemies and “an expression of a linear process ending with Israel’s collapse.”

No one wants elections while the fighting continues, and toppling the government now would be legally complicated. Attempts behind closed doors to find enough hands among Netanyahu’s Likud party to replace him have so far come to nothing.

Extremist Itamar Ben Gvir, head of the Jewish Power Party which is part of Netanyahu’s original right-wing coalition, voted against accepting the hostage deal. Publicly, he warned against the deal, depicting it as a grave mistake and a show of weakness. After the war, he may seek to distance himself from the Likud leader by voting down the government.

The feeling in Israel is that Netanyahu’s days in power are numbered. Yet, the veteran PM has proven time and again that it is not wise to bet against him.

Ran Porat is Affiliate Researcher, The Australian Centre for Jewish Civilisation, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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China in land rights battle for Rempang Island

Indonesians living on Rempang Island are protesting against the construction of a multibillion-dollar Chinese glass factory. To make way for the Rempang Eco-City project, 7,500 local inhabitants must move.

This Indonesian National Strategic Project (PSN), backed by a Chinese company’s US$11.5 billion investment, seeks to transform the island into a major industrial, commercial and tourism hub.

Despite living on the island for generations, the local inhabitants lack legal land ownership. The project holds potential for economic development and job creation, driven by the abundance of quartz sand resources – a vital component in glass and solar-panel manufacturing. But the situation underscores the need for transparent and inclusive decision-making processes that consider the rights and interests of local communities.

The local community has occupied the area for decades. The investigation carried out by the Indonesian Ombudsman has revealed that the old villages on Rempang Island existed long before the memorandum of understanding between the government and Chinese investors was established in 2004. The Agrarian Reform Consortium has reported that there is a problem with overlapping tenure in Rempang due to inadequate land governance.

To solve the problem of overlapping tenure, the government of Indonesia launched the One Map Policy (OMP) in 2011 after spatial data differences became known nationally in 2010 during the Reducing Emission from Deforestation and Forest Degradation (REDD+) conference. But the OMP is not functioning well because of both political and technical issues.

The OMP’s effectiveness is hindered by poor land administration and a lack of coordination among ministries. This has resulted in unclear information, making it difficult to achieve the desired outcomes. Overlapping responsibilities among multiple agencies and institutions have also caused a domestic power struggle, creating a significant obstacle to the effective implementation of the policy.

The government could establish a dedicated institution directly under the president’s supervision. This institution should be responsible for coordinating and implementing the OMP and given the necessary authority to ensure that all stakeholders work together toward the same goals.

Slow progress

But the difficulty in identifying customary forest boundaries has slowed the policy’s progress. Although the current government is making efforts to uphold the policy by recognizing the rights of local people and implementing agrarian reform, there is still a need to put in more serious efforts to pursue these initiatives, as the progress made so far is limited.

To reduce land-ownership inequalities and empower communities through redistribution, ownership, legalization, and control over land, Indonesia launched a new reform called Lands Subject to Agrarian Reform (Tanah Objek Reforma Agraria). Understood as “agrarian reform” in Presidential Regulation No 86 of 2018, this program involves land distribution and legalization to solve the insecurities and complexities of tenure structures.

The government also issued Government Regulation No 43 in 2021, which aims to address the issue of spatial inconsistencies, forest zones, permits and land rights. Before this regulation, there was no standard procedure that ministries or agencies could follow to resolve the problem of overlapping land rights.

This regulation can serve as a catalyst for the OMP, which will help to resolve overlapping spatial data. For example, when resolving a land-ownership case in a forest area, it is important to compare the year of the letter of land-ownership issuance with the designation year of the forest area.

An added complication is that the current two-dimensional maps created do not accurately represent the complex social relationships and tenurial dynamics involved. The policy could incorporate ground-truthing as a crucial step to ensure that maps accurately reflect the actual conditions on the ground.

Ground-truthing involves a process of verification and direct on-site checking. This is particularly important in Indonesia, given its diverse geography and the need to consider local communities and environmental factors.

Public consultation is also a critical component of spatial planning, and it is legally mandated by various laws, including the 2007 Law No 26 on Spatial Planning. These laws establish a framework to involve the public in the planning process and emphasize the importance of transparency and inclusivity.

The Indonesian Environmental Forum has pointed out that the development of Rempang Eco-City does not conform to national and regional spatial planning documents. Despite this, the project’s special status as a PSN allows it to be implemented without requiring it to be written into a spatial planning document.

Investment in domestic industries requires the involvement of local communities. Communities are not necessarily against investment, but they should not be forced to relocate unwillingly. It is crucial that relevant agencies conduct appropriate consultation and mediation with legitimate community representatives in compliance with Indonesian regulations.

Public participation, as required by Indonesian regulations, is often a mere formality with little substance or purpose. The effectiveness of public consultation relies on the commitment of implementing authorities and the active engagement of various stakeholders, including local communities and civil society organisations.

The main question left to be answered is whether the government can shift its focus toward greater community participation while implementing the PSN.

This article was first published by East Asia Forum, which is based out of the Crawford School of Public Policy within the College of Asia and the Pacific at the Australian National University. It is republished under a Creative Commons license.

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Rethinking Indonesia’s nickel market dominance

Calling Indonesia “the Saudi Arabia of nickel,” one of the metals underpinning global steel production and ambitions to decarbonize energy and transport systems, would be an insult to Indonesia’s market dominance.

Indonesia’s mines accounted for nearly half of global nickel production in 2022. It has banned raw nickel exports since 2020 as the country pushes to move up global value chains for renewable energy. 

Indonesia is a G20 member, a developing democracy and has an enormous potential home market for both steel and electric vehicles (EV).

But despite the seeming centrality of nickel to net-zero ambitions, Indonesia may find itself in a situation eerily similar to that of Saudi Arabia and its oil reserves — sitting atop plentiful resources whose value is set to wane as the EV sector booms. The challenge lies in navigating two landscapes, one geopolitical and one chemical.

In a shifting geopolitical environment, Indonesia is attempting to secure a more prominent place in the EV battery supply chain. This involves moving beyond mining ore and benefaction to battery assembly at a time when major EV battery importers like the United States and the European Union (EU) are onshoring battery assembly.

In the United States, these attempts include enticing tax credits in the Inflation Reduction Act (IRA). In Europe, they include government loans via the InvestEU program, independent member-state initiatives and an anti-subsidy investigation into Chinese automakers. 

The investigation aimed to prevent Chinese EV makers who source nickel from Indonesia from flooding the European market with cheap imports. In both instances, Indonesia’s reliance on Chinese manufacturers and finance in the nickel sector creates vulnerabilities for its EV ambitions.

The second challenge is more fundamental. Indonesia’s nickel reserves and industrial ambitions are at risk of being rendered less valuable by changes in battery chemistry, or the combination of materials and technologies used in the batteries themselves. 

Nickel is a key component in nickel-manganese-cobalt (NMC) batteries, which currently dominate the market due to advantages in range and power-to-weight. But this dominance may be fleeting.

As with most things EV-related, Tesla is the bellwether. In 2021, Tesla adopted lithium iron phosphate (LFP) batteries, with nearly half of its production models using them by the first quarter of 2022

In August of this year, Tesla CEO Elon Musk announced that the company would be transitioning most of its entry-level vehicles – Model 3 and Model Y – and its shorter-range semi-trucks to using LFP batteries. For a regional hub, Tesla chose to set up shop in neighboring Malaysia rather than in the nickel giant.

Indonesian President Joko Widodo talks with Founder and CEO of Tesla Motors Elon Musk during their meeting at the SpaceX launch site in Boca Chica, Texas, U.S., May 14, 2022. Photo: Indonesia’s Presidential Palace / Handout

Tesla did not invent or even bring to market the first EVs, but it popularised and democratized them. Its move toward LFP batteries is one major reason that S&P Global forecasts that after 2030 the dominance of NMC batteries will wane in favor of LFP batteries. LFP batteries offer less range and high-end performance. 

But they are also less prone to catching fire and are made of much more globally abundant and cheaper raw materials. For most EV users, LFP batteries provide more than enough range and power.

This forecast does not include the effects of potentially market-disrupting frontier technologies like sodium-ion and solid-state batteries, upon which Toyota has placed a heavy bet

These technologies would further depress the relative demand for nickel. There will still be a market for NMC batteries in performance-oriented EVs offering pavement-wrinkling torque and acceleration. 

But the global market in the future may be smaller than the current one – and with technology, disruption is rarely linear. The market may change even more quickly than S&P anticipates.

For Indonesia to sustain nickel as an engine for growth and development within these landscapes, its priority should be to cultivate closer relationships with the United States and the EU. These markets and their comparatively affluent consumer bases will drive an appetite for higher-performance, NMC-based EVs. 

Indonesia’s relationship with the EU is seemingly on track to expand, with shared ambitions to conclude negotiations on a comprehensive Indonesia-EU free trade agreement (FTA) before Indonesia’s 2024 election.

The outlook regarding the United States is less straightforward. In September, Indonesian President Joko Widodo proposed a critical minerals trade agreement with the United States during talks with Vice President Kamala Harris. 

A limited, critical minerals-specific FTA would allow Indonesian materials to qualify for the IRA’s domestic and FTA partner tax incentives. The FTA would seemingly be consistent with the US Biden administration’s desire to avoid creating more comprehensive, multi-sector and multi-issue FTAs.

Cultivating tighter US and EU relationships should not come at the expense of partnerships with Asian firms, including those in China and Korea. And EU and US partnerships will not be cost-free. 

Both the EU and the United States are concerned about Indonesia’s use of export bans as a tool of economic policy. The EU has already challenged Indonesia’s ban and won at the World Trade Organization.

Indonesia’s raw nickel export ban could backfire. Image: Facebook

The text of the IRA also specifically requires any minerals-specific FTA to commit parties to “reduce or eliminate restrictions on exports” while allowing less extreme policies, like export taxes. 

And agreements with the EU and US will bring heightened scrutiny on the environmental impacts of open-pit mining and new business rules that some in Indonesia’s opposition view as too capital-friendly, allowing provincial governors to set minimum wages without input from trade unions and experts from civil society.

For Indonesia, the price of stronger EU-US partnerships may be substantial. But it would be preferable to seeing its nickel and related industrial ambitions become a casualty of changing chemistry and a shifting geopolitical landscape.

Cullen Hendrix is Senior Fellow at the Peterson Institute for International Economics in Washington, DC.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Chinese media missing the mark on Myanmar

While many have expressed disappointment with the limited attention from the West regarding Myanmar’s political crisis, it is especially surprising that Myanmar’s neighboring countries have not exhibited more interest. 

A perusal of Chinese newspapers – Myanmar’s most substantial neighbor – reveals scant coverage of the Myanmar population’s distress and the resistance forces opposing the military junta, the State Administration Council (SAC).

This media oversight is not a coincidence. Politically speaking, the Chinese government may be apprehensive of its citizens drawing parallels or being influenced by Myanmar’s democratic struggles, especially in an era where information spreads rapidly across digital platforms.

In a heavily censored information environment, Beijing is not interested in providing news coverage about the violence inflicted by the SAC on its citizens or footage of armed rebellions by ethnic armed organizations (EAOs) and the anti-military People’s Defense Forces. 

Despite the ongoing civil warwidespread resistance and associated violence, few in China are aware of what is going on in Myanmar. And even though Beijing has significant economic and strategic interests in Myanmar and has a strong preference for stability in the country, Chinese domestic media has been silent since the 2021 coup.

Much of China’s domestic population is not interested in learning about their neighboring countries. Despite China’s rapid ascent as a global powerhouse, there seems to be limited interest in the affairs of less affluent countries like Myanmar, perhaps except from those residing in Yunnan or areas directly bordering Myanmar. Attention is either focused domestically or oriented toward more developed nations in the West and East Asia.

Some of China’s neighboring countries, despite geographical proximity and historical ties, often find themselves overshadowed in public discourse, with their challenges and successes receiving less scrutiny from the average Chinese citizen. 

This has inadvertently marginalized the significance of Myanmar’s challenges, relegating them to the periphery of public discourse in China. It is an ironic situation, given the profound implications Myanmar’s stability and political changes hold for China. The woes of Myanmar – from its political upheaval to the struggles of its people – have limited resonance among the Chinese public.

But Myanmar has not disappeared from China’s domestic media coverage. The Chinese public’s primary interest in Myanmar revolves around its role as a hub for criminal networks involved in online scams.

These operations are often based in the border regions Myanmar shares with Thailand and China. These areas are marked by fragmented control among ethnic armed groups, militias and border guards and are exploited by criminal networks. 

They primarily target Chinese citizens but also those from other nearby countries, leading to significant financial losses and a surge in related crime. In response, the Chinese government has intensified its law enforcement efforts, either by collaborating with regional governments or directly intervening to combat these cross-border operations.

Myanmar has garnered a negative reputation in China, with some domestic media outlets portraying the country as a “living hell.” Reports often highlight how these criminal networks engage in scam operations, drug production and rampant human trafficking, describing accounts of the mistreatment and suffering of Chinese people. 

Some reports even sensationalize accounts of tourists being kidnapped from Thailand and smuggled across the border into Myanmar’s Kayin state.

Public outrage has compelled the Chinese government to adopt a more assertive stance concerning Myanmar’s internal matters. Beijing has pressured the SAC to cooperate in actions related to countering online scams. But Beijing recognizes that many territories where these scam operations are based are not under the SAC’s control.

China has also notably pressured some EAOs in Myanmar for cooperation. In September 2023, hundreds of criminals were repatriated from the Wa state across the Chinese border. At the same time, two Chinese courts have officially charged two leaders from the Wa state for involvement in scam operations. Reports suggest that more will be repatriated to China.

Amid the ongoing developments in Myanmar, China has primarily focused on matters that directly impact its own interests. The broader Chinese public seems either unaware or unengaged with Myanmar’s population and their concerns. 

This asymmetrical attention from China towards Myanmar warrants careful consideration in studies of the bilateral relationship between the two countries and in assessing the future of Chinese influence in Southeast Asia.

Enze Han is Associate Professor at the Department of Politics and Public Administration, University of Hong Kong.

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