Korean historic Kim-Trump summit begins with handshake in Sinapore, is 'very, very good'

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China Air carried Kim to Singapore talks with Trump

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The historic meeting on Tuesday between North Korean leader Kim Jong-un and US President Donald Trump began with a handshake at the Capella hotel, Singapore.

The handshake lasted about 20 seconds before the two leaders walked to the meeting room accompanied by their interpreters.

Trump and Kim sat next to each other and answered a few questions from the media. Trump said he hopes the historic summit would be "tremendously successful,” adding, "We will have a terrific relationship ahead" as he faced Kim.

Kim said there were a number of “obstacles” and “prejudices” which made today’s meeting more difficult. “We overcame all of them and we are here today,” he told reporters through a translator.

Of particular note is the display of the two countries’ flags at the hotel, which is unusual between two countries with no formal diplomatic ties. Observers believe that this is a positive sign.

Trump arrived at the hotel about 8:30am, with Kim arriving five minutes after.

Displaying the national flag of North Korea shows that the US wants to express its sincerity and kindness to North Korea, Cheng Xiaohe, an associate professor at the Renmin University of China's School of International Studies, told the Global Times on Tuesday.

“The move toward establishing formal diplomatic ties could be an achievement of the summit,” Cheng said.

Hundreds of journalists are gathered at the Press Filing Center of the JW Marriott Hotel Singapore, where they can watch the livestream of the historic moment. Dozens of photographers attempted to get closer to Sentosa Island in the morning to film and take photos for the two leaders’ motorcades.

Trump and Kim met alone at 9:15 am and held an expanded bilateral meeting 45 minutes after. At 11:00, the two leaders are scheduled to have a working luncheon. Trump will leave Singapore at 7pm on Tuesday, the White House said.

Trump says summit with North Korea's Kim is 'very, very good'

SINGAPORE: U.S. President Donald Trump said he had forged a "good relationship" with North Korean leader Kim Jong Un at the start of a historic summit in Singapore on Tuesday, as the two men sought ways to end a nuclear standoff on the Korean peninsula.

Should they succeed in making a diplomatic breakthrough, it could bring lasting change to the security landscape of Northeast Asia, like the visit of former U.S. President Richard Nixon to China in 1972 led to the transformation of China.

"There will be challenges ahead," Kim said, but he vowed to work with Trump. Both men sat against in the hotel's library against a backdrop of North Korean and U.S. flags, with Kim beaming broadly as the U.S. president gave him a thumbs up.

With cameras of the world's press trained on them, Trump and Kim displayed an initial atmosphere of bonhomie.

Both men had looked serious as they got out of their limousines for the summit at the Capella hotel on Singapore's Sentosa, a resort island with luxury hotels, a casino, manmade beaches and a Universal Studios theme park.

But they were soon smiling and holding each other by the arm, before Trump guided Kim to the library where they held a meeting with only their interpreters. Trump had said on Saturday he would know within a minute of meeting Kim whether he would reach a deal.

After some initial exchanges lasting around 40 minutes, Trump and Kim emerged, walking side-by-side through the colonnaded hotel before re-entering the meeting room, where they were joined by their most senior officials.

Kim was heard telling Trump through a translator: "I think the entire world is watching this moment. Many people in the world will think of this as a scene from a fantasy...science fiction movie."

Asked by a reporter how the meeting was going, Trump said: "Very good. Very, very good. Good relationship."

Kim also sounded positive about the prospects.

"We overcame all kinds of scepticism and speculations about this summit and I believe that this is good for the peace," he said.

Trump was joined by Secretary of State Mike Pompeo, National Security Adviser John Bolton, and John Kelly, White House Chief of Staff, for the expanded talks, while Kim's team included former military intelligence chief Kim Yong Chol, foreign minister Ri Yong Ho and Ri Su Yong, vice chairman of the ruling Workers' Party.

MARKETS CALM

As the two leaders met, Singapore navy vessels, and air force Apache helicopters patrolled, while fighter jets and an Gulfstream 550 early warning aircraft circled.

Financial markets were largely steady in Asia and did not show any noticeable reaction to the start of the summit. The dollar was at a three-week high and the MSCI index of Asia-Pacific shares was largely unchanged from Monday.

While Trump and Kim search each other’s eyes and words for signs of trust or deceit, the rest of the world will be watching, hoping that somehow these two unpredictable leaders can find a way to defuse one of the planet's most dangerous flashpoints.

A body language expert said both men tried to project command as they met, but also displayed signs of nerves.

In the hours before the summit began, Trump expressed optimism about prospects for the first-ever meeting of sitting U.S. and North Korean leaders, while Pompeo injected a note of caution whether Kim would prove to be sincere about his willingness to denuclearise.

Officials of the two sides held last-minute talks to lay the groundwork for the summit of the old foes, an event almost unthinkable just months ago, when they were exchanging insults and threats that raised fears of war.

Staff-level meetings between the United States and North Korea were going "well and quickly," Trump said in a message on Twitter on Tuesday. But he added: "In the end, that doesn't matter. We will all know soon whether or not a real deal, unlike those of the past, can happen!"

The combatants of the 1950-53 Korean War are technically still at war, as the conflict, in which millions of people died, was concluded only with a truce.

On Tuesday morning, Pompeo fed the mounting anticipation of diplomatic breakthrough, saying: "We're ready for today."

He earlier said the event should set the framework for "the hard work that will follow", insisting that North Korea had to move toward complete, verifiable and irreversible denuclearisation.

North Korea, however, has shown little appetite for surrendering nuclear weapons it considers vital to the survival of Kim's dynastic rule.

Sanctions on North Korea would remain in place until that happened, Pompeo said on Monday. "If diplomacy does not move in the right direction ... those measures will increase."

He added: "North Korea has previously confirmed to us its willingness to denuclearise and we are eager to see if those words prove sincere."

The White House said later that discussions with North Korea had moved "more quickly than expected" and Trump would leave Singapore on Tuesday night after the summit, rather than Wednesday, as scheduled earlier.

Kim is due to leave on Tuesday afternoon, a source involved in the planning of his visit has said.

One of the world's most reclusive leaders, Kim visited Singapore's waterfront on Monday, smiling and waving to onlookers, adding to a more affable image that has emerged since his April summit with South Korean leader Moon Jae-in. 'CHANGED ERA'

Just a few months ago, Kim was an international pariah accused of ordering the killing of his uncle, a half-brother and scores of officials suspected of disloyalty.

The summit was part of a "changed era", North Korea's state-run KCNA news agency said in its first comments on the event.

Talks would focus on "the issue of building a permanent and durable peace-keeping mechanism on the Korean peninsula, the issue of realising the denuclearisation of the Korean peninsula and other issues of mutual concern", it added.

Ahead of the summit, North Korea rejected unilateral nuclear disarmament, and KCNA's reference to denuclearisation of the peninsula has historically meant it wants the United States to remove a "nuclear umbrella" protecting South Korea and Japan.

Trump spoke to both South Korea's Moon and Japan's Prime Minister Shinzo Abe on Monday to discuss developments ahead of the summit.

"I too, got little sleep last night," Moon told his cabinet in Seoul as the summit began in Singapore.

"I truly hope it will be a successful summit that will open a new age for the two Koreas and the United States and bring us complete denuclearisation and peace." - REUTERS

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Crisis of the West or crisis of faith, year of living dangerously?

 

Global standard: A man walks past a poster showing a US dollar outside an exchange office in Cairo. The dollar has maintained its position as a global standard because it is convenient, cheap to use and a store of value that has so far been subject to minimal political interference. — AP

OVER the Chinese New Year holidays, we were all treated to the Trump Reality Show, changing the world we thought we understood with various tweets or executive orders.

This behaviour reminded me of the Chinese philosopher Zhuangzi waking up and was not sure he was a man dreaming that he was a butterfly, or a butterfly dreaming that it was a man. Mr Trump is either a butterfly disguised as President or a truly smart politician disguised as a butterfly. The tragedy is that the rest of us have to live with the consequences.

This week, after humiliating Mexico and reversing his position on Nato, Trump and his advisers have switched to stoking a currency fire, accusing China and Japan of manipulating their currency and even suggesting that Berlin is exploiting a “gross undervalued” euro.

Whatever you think of Trump, he was smart enough to appoint someone like Steve Bannon as his chief strategist. You always can judge a leader by the people he or she surrounds himself with. Steve Bannon is pure American success story – Harvard trained, ex-Goldman Sachs, ex-navy, and founding entrepreneur of Breitbart news, a platform that claims to represent the alt-right and third most influential news channel after Bloomberg and Reuters.

In a remarkable 2014 speech (https://www.buzzfeed.com/lesterfeder/this-is-how-steve-bannon-sees-the-entire-world), Bannon claimed that (this) ... “is a crisis both of our church, a crisis of our faith, a crisis of the West, a crisis of capitalism.”

Taken on its own, there is nothing wrong with someone having a view of the world in crisis. But Bannon is now in a pivotal position to do something about it.

The dollar has maintained its position as a global standard because it is convenient, cheap to use and a store of value that has so far been subject to minimal political interference.

The rest of the world is now stuck with a “damned if we do, and damned if we don’t” dilemma. If we continue to rely on the dollar, how do we avoid being accused as manipulators, when in reality, so far the market forces are stronger than any central bank on its own? If we don’t rely on the dollar, we will anyway be accused as manipulators, particularly if the currency depreciates against the dollar.

In other words, what is at stake is not a crisis of the West or its faith (which the Rest cannot change), but a crisis of faith within the Rest on the leadership in the West. The dollar remains the anchor of global stability, but when the solo anchor itself is adrift, we need to find alternative anchors. Single anchors are efficient but dangerous if they wobble. We need two or three anchors to triangulate global stability.

Here is another inconvenient truth – it’s Trump’s dollar, but the Rest’s savings. Based on the US Bureau of Economic Analysis, the US has net global liabilities of US$7.8 trillion or 41.7% of GDP at the end of the third quarter 2016. This has deteriorated from US$2.5 trillion or 16.8% of GDP at the end of 2010. The cumulative current account deficit (from trade) between end 2010-2016 Q3 was only US$2 trillion, which meant that the rest (US$3.3 trillion) was due to valuation changes (change in US dollar exchange rate) or financial account flows.

In other words, it is capital flows rather than trade that is the major driver of the exchange rate, with interest rate differentials influencing also the exchange rate.

If that is the case, going forward, the US net debt position will depend largely on the future global savers, mostly Europe and Asia. And if the savers are subject to constant lecturing by the Trump Administration, an alt-dollar solution will have to be found.

During the Asian financial crisis, Europe sided with the US to reject an Asian Monetary Fund in a move against regionalisation. But if today, the America First strategy is designed at isolating the Rest, then the Rest must unite to protect global trade and investments. If the non-dollar zone can maintain currency stability against the dollar, then there will be less accusations of currency manipulation, forcing the debate into how the US can restore its own fiscal and trade balance to maintain its own savings equilibrium.

In short, the Rest needs to remind the US that she is important, but cannot blame the Rest for all her own problems.

The reserve currency central banks have a major role to ensure currency stability, which can be only preserved by ensuring liquidity and discipline. So far, the Fed has shown responsible leadership, with strong support from the European Central Bank, Bank of England, Bank of Japan and the People’s Bank. But if the dollar is being politicised, then alternatives can and should be found.

All options are now on the table. If the US is no longer dependent on oil and energy, then oil and energy suppliers can price oil trade in currencies other than the dollar. We have seen this before in the competition between different technology standards. The leading standard becomes dominant because it is willing to provide public goods (lots of freebies). But when the dominant standard becomes predatory or extractive in using its monopoly position, then it is time to use alternative standards.

No one should take their position or customers from granted. The Rest will not stand still whilst Trump and his cohorts decide to change allies and foes by the tweet. None of us are against the dollar but for global stability, common sense and mutual respect. The euro, sterling, yen, yuan and SDR’s time has come.

Andrew Sheng writes on global issues from an Asian perspective.

By Andrew Sheng

Year of living dangerously

 

Rash move: The effectiveness of Trump’s executive order banning citizens of seven countries from entering the US is highly questionable. — AFP

What Trump is doing – and he may not even realise it with his defiant-style leadership – is making the US a much more dangerous place to live in now, not a safer place as he had hoped.

WHEN the world’s most powerful man conducts diplomacy over Twitter, keeping his words to 140 characters, we’d better prepare ourselves for trouble.

And indeed, since Donald Trump took over as President of the United States, there has been a series of totally unpredictable and unconventional decisions made, some mind boggling, even bordering on insanity.

And it has just been a little over two weeks since he moved into the White House.

There is no question that many Americans are troubled by a possible mass influx of refugees from the Middle East and Africa.

This does not involve just the US but also affects several parts of Europe, including Britain, France and Germany, which explains why politicians who play the right-wing card – with the anti-immigrant agenda – are winning.

Trump clearly understands the pulse of the average American, especially those in the rural mid-west, the US heartland.

These are folks who watch conservative Fox TV and whose interaction with people of other races, religions and cultures is limited.

They are not like the liberal city folks of New York or Los Angeles, who turn up at airports and train stations, waving placards and hugging Syrian refugees, as shown on international TV news.

It is probably a different story in Montana, Nebraska, Arkansas or South Carolina but we do not hear the voices of these rural folks on CNN.

Trump won simply because he understood the fears of the average American well. He has continued to play the Islamophobia card because he knows his fearmongering works.

It doesn’t help that most of these refugees want to go to the US or Britain and not the Muslim-majority nations of the Middle East. The question remains if these Arab countries are even offering places to the refugees or do the refugees themselves prefer Western secular and democratic values.

Nationalist politicians have already whipped up anger, pointing out that if these Middle East refugees hate Western culture so much and refuse to assimilate, then why should they be let in.

But Trump’s executive order banning the citizens of seven countries from entering the US, supposedly to protect the nation from “radical Islamic terrorists”, is highly questionable, especially its effectiveness.

The president has signed the order temporarily suspending the entry of people from Iraq, Syria, Sudan, Iran, Somalia, Libya and Yemen into the US for at least 90 days.

This is odd because if we wish to identify terrorism acts, then surely there’s a high number of terrorists from Egypt, Turkey, Saudi Arabia, Pakistan, the United Arab Emirates, Indonesia and Afghanistan. Why were these countries not on the list?

Obviously, Trump did not want to offend US allies, especially Saudi Arabia and Pakistan. Despite the US’ constant lecture on democracy, we all know these two countries are often “spared”, despite their horrifically poor human rights record because they are strategically important to the US. We also should not forget that at one time, the vital oil supply was from Saudi Arabia.

The fact is that in the past four decades, 3,024 people have been killed by foreign terrorists on US soil.

The reality is that the Sept 11 attacks, perpetrated by citizens of Saudi Arabia, the UAE, Egypt and Lebanon, account for 98.6% of those deaths – 15 of the 19 Sept 11 hijackers once called Saudi Arabia home.

In fact, over that period, no American has been killed on US soil by anyone from the nations named in the present president’s executive order.

The San Bernardino massacre, in which 14 people were killed and 22 injured in 2015 was carried out by Syed Rizwan Farook, who is of Pakistani descent, and his wife Tashfeen Malik, who grew up in Saudi Arabia.

The Pulse nightclub attack in Orlando, where 49 died and 53 were injured last year, was carried out by Omar Mateen, a US citizen of Afghan descent.

The Boston Marathon bombing in 2013 was orchestrated by the Tsarnaev brothers, both of whom were Russian, killing three and injuring several hundred people.

But as the world jumped on Trump, news reports have emerged that Kuwait does the same.

Syrians, Iraqis, Iranians, Pakistanis and Afghans have reportedly not been able to obtain tourism or trade visas to Kuwait since 2011.

Passport holders from the countries are not allowed to enter the Gulf state while the blanket ban is in place, and have been told not to apply for visas, it has been reported.

Likewise, the ban on citizens from fellow Muslim-majority nations has failed to prevent Kuwait from being targeted in a number of terrorist attacks over the past two years – including the bombing of a mosque in 2015 which left 27 Kuwaitis dead.

Kuwait is the only country in the world to officially bar entry to Syrians, until the US named Syria among the seven countries whose citizens were banned from entering its borders.

What Trump is doing – and he may not even realise it with his defiant-style of leadership – is making the US a much more dangerous place to live in now, not a safer place as he had hoped.

There will be homegrown terrorists, including Americans – and even radicals entering the US holding other passports – who plan to carry out their crazy acts.

He has also made the work and lives of career diplomats more difficult with his brazen diplomacy. It came as no surprise that 900 State Department diplomats signed a memo to oppose his ban.

According to CNN, the “memo of dissent” warned that not only will the new immigration policy not keep America safe but it will harm efforts to prevent terrorist attacks.

The ban “will not achieve its stated aim of protecting the American people from terrorist attacks by foreign nationals admitted to the United States,” the memo reportedly noted.

Trump has actually provided oxygen to the radicals, who will now thump the noses of moderates in Muslim countries.

There should be no surprises if the recalcitrant Trump expands his list of countries whose citizens would be banned from entering the US.

It won’t be wrong to suggest that 2017 will be a Year of Living Dangerously under Trump. Let’s be prepared for the unexpected from him.

Source: On the beat Wong Chun Wai The Star



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 The world at a T-junction

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The world at a T-junction

Jan 20, 2017, marked the inauguration of the 45th President of the United States, Donald J Trump. Next week, the Lunar Year of the Monkey ends, ushering in the Year of the Rooster. This is where monkey business ends and the chickens come home to roost.

Trump’s election marks a watershed between the old liberal order and a new populist phase that is clearly a rejection of the old order. Former German Foreign Minister Joschka Fischer defined this change as “Goodbye to the West” – a concept that the US was committed to the defence of its allies, mostly Western Europe, Australia and Japan.

Trump has turned the old establishment on its head. Policy is not made by consensus, but by tweets. World thought leader Mohamed El-Erian, whom I had the great fortune to moderate at his keynote address to the Asian Financial Forum in Hong Kong earlier this week, argued that the world is at a T-junction.

The old order has come to a dead-end. It is not even at the cross-roads, where you have the option of moving forward. At a T-junction, you either move right or move left. Volatility and the range of possibilities have increased, because no one knows which policy and which rule will change with the next tweet.

There is, of course, no difficulty in picking where Trump will move. Indeed, anyone who said Trump is unpredictable is wrong – he is very predictable.

He will do whatever is in his best interest, saying that it is in America’s interest. He will move right, because the populist sentiment has rejected the old leftist liberal order. Our only concern is – how far right will he go? Based upon the inclinations of his appointees so far, it looks pretty far right.

Trump’s election marks a very important juncture in Pax Americana. Two Democratic presidents marked the rise of the present American Exceptionalism – Franklin D Roosevelt (1933-1945) and John F Kennedy (1961-1963). The first brought in the New Deal to get America out of the Great Recession and then won the Second World War, confirming the new American order. The second inaugurated a more inclusive America, ushering global idealism of the American dream, providing aid, trade and culturally, an Age of Camelot.

New deal

Trump’s ascension signals the end of the rule-based era for the public good, with a new era of clear and present self-interest, changing allies and allegiances by the tweet. Allies and foes alike do not know how to react to this new Art of the Deal.

Crossing the river by feeling the stones is possible, when there are still some stones. But crossing the swamp where waters are murky with crocodiles and leeches will be much more complicated.

I was forced to dust off my copy of German historian Oscar Spengler’s Decline of the West, written between 1911 and 1922, to get a sense of how we should think about this era from a long-term historical perspective. Vastly simplifying his magnum opus, Spengler’s thesis is that when parlimentarian politics fail, history tends to replace disorder with great men like Julius Caesar or Napoleon.

Of course, one has to recognise that troubled times do not always get great statesmen, but may get little despots and decadent failures like Caligula or Nero, who eventually bankrupted Rome.

A significant minority of Americans voted for Trump because he argued that he could make America great again. But the irony is not that America is weak, but that America is strong and on the verge of achieving the strongest recovery among the advanced economies.

The perceived weakness comes from the insecurity of a significant majority of the working class that has become disadvantaged, not by globalisation, but by the benign neglect of the Washington/Wall Street elite who favoured themselves at the expense of the working class.

Globalisation has not failed. It is the high priests of globalisation trying to deflect the populist anger against anyone but themselves that created Trump. The same high priests are joining the Trump camp, cheering the markets for the greater suckers.

What are Asians going to do in this Trumpian Reality Show?

First, we need to distinguish the signal from the noise.

All the breast-beating at the Davos World Economic Forum this week was about how the caviar-champagne-forecasters got it all wrong. They were simply too self-congratulatory, self-referential and self-satisfied. They did not do the reality checks of simply looking at what was truly happening – the anger of the masses.

Second, despite the fact that the dollar is strong and will remain strong if Trump gets his economic policies right, the US is still funded by global savings – mostly from Asia. Asia remains the world’s largest and fastest growing region with the highest savings. What we need to do is to channel that savings to Asian markets, even as the US and European banks retreat home.

Third, the Trans-Pacific Partnership (TPP) was always an empty promise because going forward, technology and moving manufacturing jobs back to the US will not create greater exports for US trading partners.

The Asian global supply chain is changing very fast from all points-to-one market (US) to point-to-point; South-to-South, because with more than half of world population and a growing middle class, the potential for global trade, investment and financial expansion is still in trade between India, China, Indonesia and all the emerging markets of the world.

If the US turns inward under Trump, then Asians need to heed Franklin Roosevelt’s wake-up call at his inauguration, “the only thing we have to fear is fear itself”.

Under Trump, we have much to fear, but remember, it’s “his dollar, but our savings”. The US Bureau of Economic Analysis data showed that the US had net foreign liabilities of US$7.8 trillion or 41.8% of GDP at the end of the third quarter 2016. In the Year of the Rooster, this is not chicken-feed.

As America moves to a new T-(for Trump) junction, the choice is not between left or right, but between a Great America or a small-minded America.

Time for Asians to think and act for themselves.

By Andrew Sheng

Tan Sri Andrew Sheng writes on global issues from an Asian perspective.


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2017 - expect a bumpy year ahead worldwide

This will be a year like no other, as there will be a thunderous clash of policies, economies and politics worldwide. We should prepare for the challenges ahead and not be only spectators.

THE new year has dawned. Everyone agrees 2017 will be very interesting.

It will also be most problematic. From politics to economics and finance, we’ll be on a roller-coaster ride.

With his extreme views and bulldozing style, President-elect Donald Trump is set to create an upheaval, if not revolution, in the United States and the world.

He is installing an oil company chief as the Secretary of State, investment bankers in key finance positions, climate sceptics and anti-environmentalists in environmental and energy agencies and an extreme rightwing internet media mogul as his chief strategist.

US-China relations, the most im­­por­­tant for global stability, could change from big-power co-existen­ce, with a careful combination of competition and cooperation, to outright crisis.

Trump, through his phone call with the Taiwanese president and after, signalled he could withdraw the longstanding US adherence to the One China policy and instead use Taiwan as a negotiating card in overall relations with China. The Chinese perceive this as an extreme provocation.

He has appointed as head of the new National Trade Council an economist known for his many books demonising China, including Death by China: Confronting the Dragon.

Trump seems intent on doing an about-turn on US trade policies. Measures being considered include a 45% duty on Chinese products, extra duties and taxes on American companies located abroad, and even a 10% tariff on all imports. Thus 2017 will see protectionism rise in the United States, the extent still unknown. That is bad news for many developing countries whose economies have grown on the back of exports and international investments.

Europe in 2017 will also be pre­occupied with its own regional problems. The Brexit shock of 2016 will continue to reverberate and other countries facing elections will be less open to the world and become more inward-looking.

As protectionism, xenophobia and narrow nationalism grow in Western societies, Asian countries should devise development strategies based more on domestic and regional demand and investments.

2017 may be the year when resource-rich China, with its deve­lopment banks and its Belt and Road Initiative, fills in the economic void created by Western trade and investment protectionism.

But this may not be sufficient to prevent a finance shock in many developing countries now beginning to suffer a reversal of capital flowing back to the United States, attracted by the prospect of higher interest rates and economic growth.

In 2017 Malaysia will be among the countries most vulnerable to this, due to the large foreign ownership of local bonds and shares. As capital flows out and the currency depreciates further, the affected countries’ companies will have to pay more for servicing loans contracted in foreign currencies and imported machinery and parts, while consumers grumble about the rising cost of living.

On the positive side, exporters will earn more in local currency terms and tourism will increase, but this may not be enough to offset the negative effects.

Thus 2017 will not be kind to the economy, business and the pockets of the common man and woman. It might even spark a new financial crisis.

The old year ended with mixed blessings for Palestinians. On one hand, they won a significant victory when the outgoing President Barack Obama allowed the adoption of a United Nations Security Council re­solution condemning Israeli settlements in occupied Palestinian territories by not exercising a veto.

The resolution will spur international actions against the expansion of settlements which have become a big obstacle to peace talks.

On the other hand, the Israeli lea­dership, which responded defiantly with plans for more settlements, will find in Trump a much more sympathetic president. He is appointing a pro-Israel hawk as the US ambassador to Israel.

With Trump also indicating he will tear up the nuclear power deal with Iran, the Middle East will have an even more tumultuous time in 2017.

The commencement of floods in some parts of Malaysia during the holiday season, ironically following days of the taps going dry for millions in the Klang Valley, is a pre­lude to the environment continuing to be a critical issue in 2017.

Unfortunately, low priority is given to the environment. Hundreds of billions of dollars are allocated for highways, railways and urban buildings but only a trickle for conservation and rehabilitation of hills, watersheds, forests, mangroves, coastal areas, biodiversity or for serious climate change actions.

2017 should be the year when priorities change, that when people talk about infrastructure or deve­lopment, they put actions to protect and promote the environment as the first items for allocation of funds.

This new year will also be make-or-break for climate change. The momentum for action painfully built up in recent years will find a roadblock in the United States as the new president dismantles Oba­ma-initiated policies and measures.

But Trump and his team will face resistance domestically, including from state governments and muni­cipalities that have their own climate plans, and from other countries determined to carry on without the United States on board.

Indeed, if 2017 will bring big changes initiated by the new US administration, it will also generate many counter-actions to fill in the void left in the world by a withdrawing United States or to counter its new unsettling actions.

There are opportunities to think through and alternatives and re­forms that are needed on global and national economies, on the environment and on geo-­politics.

Most of the main levers of power and decision-making are still in the hands of a few countries and a few people, but there has also been the emergence of many new centres of economic, environmental and intellectual capabilities and community-based organising.

2017 will be a year in which ideas, policies, economies and politics will clash, thunderously, and we should be prepared for the challenges ahead, not just be spectators.


Global Trends By Martin Khor

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.


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Trump and China’s bumpy ride begins

 

Trump's diplomacy

Hot button: Trump’s unpredictability is making him a big topic in China.— AFP

THE rest of the world will have to fasten its seat belts while the current worrying clash of superpowers China and the United States plays itself out. Although the saga of the underwater drone ended peaceably earlier this week, the drama signalled that the competition between the two has entered a new era. With help from the ubiquitous social media, their diplomatic engagement is taking place in real time swiftly, unpredictably and amid considerable tension.

The inauguration of President Donald Trump on Jan 20 is expected to see US-China ties transformed into a guarded quasi-friendship requiring day-to-day reassessment. The stability that prevailed during the eight years of the Obama administration is unlikely to survive. Trump is given to knee-jerk reactions and ill-considered grandstanding for the sake of quick gain and publicity, as well as for his brash pursuit of the art of the deal, none of which bodes well for US’ relations with Beijing.

Still a month from taking office, Trump has already endangered his country’s long-standing recognition of the One China Policy by accepting a phone call from Taiwanese leader Tsai Ing-wan, a breach of protocol adopted after Washington formally recognised communist China in the early 1970s.

President Barack Obama immediately warned that any shift from this policy would have a serious impact on American dealings with Beijing, an important trading partner and backer of the US economy. Aiming to renegotiate extant overseas deals, Trump does not appear to care, and seems ready to test Chinese mettle on every issue.

China’s regional neighbours are aware that the nature of its relationship with the US increasingly depends on Beijing’s dealings with other countries, including the 10 nations of South-East Asia.

The attitude in the Philippines has radically changed. Whereas Manila traditionally regarded the US as the region’s military guardian, current President Rodrigo Duterte- taking umbrage at perceived American slights-has welcomed Chinese overtures. Thanks to Washington’s tendency to overreach in its authority, perceptions elsewhere are not so different.

Thus, its chief justification for wielding influence here to serve as a stopgap against China assertiveness is on the wane.

The Philippines’ abrupt refusal to be a pawn in either of the major powers games is admirable, even if it comes with risks. With sovereign territory in the South China Sea at stake, Duterte is taking a gamble in realigning with Beijing, but if those two countries can settle their differences amicably and equitably, it will have been worthwhile. The other South-East Asian claimants to maritime territories in dispute are sure to follow suit.

During the Trump presidency, more than at any time before, China has a golden opportunity to show the region and the world that it is rational and responsible in its overseas dealings. With goodwill and a commitment to peace and stability, it can take advantage of America’s loss of credibility over the election of a man who is ignorant of foreign affairs and absent in the spirit of international diplomacy. Patriotism and profit alone guide Trump, and nearly half the American electorate stands by him.

Also to be expected is a cautious realignment among the more developed Asian powers particularly Japan, India and South Korea which might pursue greater mutual cooperation as a safeguard against potential American error and affront under Trump.

No one will be surprised, meanwhile, if President Trump cosies up to Russia. While he and Vladimir Putin deny there is any special bond between them, evidence to the contrary has mounted. But using Russia as a foil against China would be detrimental to American financial and geopolitical interests. And, for Asia, while Russian investment is welcome and valued, Moscow has only a modicum of Beijing’s economic clout.

Sources: The Nation/Asia News Network

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US presidential hopefuls show a country lacking in leadership, debate falls into trite format

Monday's first presidential debate between Democratic and Republican nominees Hillary Clinton and Donald Trump was the most-watched in the US since the 1980 match-up between Jimmy Carter and Ronald Reagan. It attracted some 84 million viewers on 13 television networks, not including online watchers, National Public Radio reported.

It is widely held that in the showdown, politician Clinton, who did her homework, crushed seemingly unprepared and ill-informed Trump who often ranted, though the polls afterward showed a different picture. The CNN/ORC poll immediately after the debate found 62 percent of respondents thought Clinton won the debate, while just 27 percent felt Trump triumphed. Yet online polls with wider coverage of respondents overwhelmingly showed Trump was the winner.

However, no matter who won, it won't make the debate as significant as it is supposed to be. The two debaters deviated from substantive statements on the real problems that matter to the country, becoming embroiled in personal attacks against the bad records of each other. They did not appear statesmanlike, but rather like TV stars competing to amuse the audience for approval. Neither seriously mapped out a trustworthy blueprint for the country. In this sense, whoever eventually wins won't quell the public doubts about their capacity to steer the US out of its plight of worsening domestic and external situations.

It is widely recognized that the US, baffled by the quagmire in the Middle East and rampant terrorism, has seen its leadership decline and is unable to lead the world to squarely face up to a slew of challenges. The latest debate gives ammunition to the judgment.

The US president is in many cases the best proof of US leadership. But neither of the candidates looks capable of helping the superpower regain its global leadership in a multipolar world. Clinton, a smart politician that looks so presidential in comparison with Trump, doesn't seem able to inject anything new to the US given her poor performance as secretary of state, let alone her credibility issues. Meanwhile, caustic Trump has risen by giving voice to the anger of conservative Americans, but that's all he can offer in front of the severe tests facing the country. His ridiculous policies that woo US voters will be disastrous for US clout and raise so many uncertainties about the direction of the US.

In the final analysis, the presidential election has become a game to choose who is the least unfit to rule the superpower. As the influence of its leadership slides, the world needs to be ready for it. - Global Times

Clinton-Trump debate falls into trite format

First round debate By Wang Xiaoying

The first US presidential debate between the Democratic and Republican candidates concluded Monday night, drawing unprecedented attention from around the world. No previous two contenders have displayed more differences in personality, vision and background than Hillary Clinton and Donald Trump, making this year's race to the White House all the more enthralling.

Many commentators thought Clinton's versed performance well-demonstrated her background as a veteran politician. Trump, a bit inexperienced, didn't display many faults and restrained his flamboyant style. In general, it was a trite debate.

As Clinton has been exposed to various scandals during the campaign, she tried to highlight her honesty and prudence. Many people have doubts about her integrity, however they are also accustomed to candidates' empty promises.

Trump wasn't faking. But the problem is that Trump does not make many Americans feel secure, and they worry he might be capricious if he is elected. This debate did not reassure people.

Clinton and Trump are perhaps the most controversial candidates in the history of US presidential elections. American society has different concerns about the two candidates, as neither is a role model for the country. With only less than two months before the election, voters have no better alternative than choosing the least worst candidate.

Be it in Europe or Asia, Western countries or emerging economies, few people look forward to the result of the US election or believe the leadership transition will promote global harmony. The two candidates are publicly making their calculations and revealing their selfishness to the world. For them, it seems the whole world owes the US.

Both candidates mentioned China several times in their first debate. Trump was particularly arrogant, and has spread the mentality that the US has suffered losses from its relations with China, and is also taken advantage of by its allies. This mentality, together with Washington's powerful strategic tools, poses potential threats to global stability.

The US will not stop pursuing its privilege as a superpower, and this will for sure challenge the status of China and Russia. While Clinton tends to make the current system more favorable to the US, Trump is more straightforward in maximizing benefits. The China-US relationship will witness more difficulties in the future. The US will also weigh benefits from its ties with China with those from a tougher China policy, and evaluate whether it could afford the price of jeopardizing its relationship with Beijing.

Chinese do not want to see China pressured by Clinton, and meanwhile are uncertain of Trump's presidency. Let Americans worry about who will end up in the White House. Chinese should be ready for the change in the US presidency. We have many tools to respond, enough for the future US president to feel the dread if it makes trouble with China. Such tools matter more than the goodwill of American presidents. - Global Times

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Beware when elephants Trump-et! Trump victory a major global risk

Collective and mutual understanding needed to get out of oncoming global deflation

 

Rajan: ‘We can no longer ignore the elephant in the room, either theoretically or practically. – Bloomberg

SPRING is the time for conferences. I was lucky to join two excellent conferences last week. One was in Singapore organised by the Nanyang Technological University Para Limes Institute on “Silent Transformations”, followed by another on “Advancing Asia – Investing for the Future”, organised by the IMF and the Ministry of Finance, India in New Delhi.

Para Limes (www.paralimes.ntu.edu.sg/Pages/Home.aspx) is an institute dedicated to complexity studies – the idea that we cannot see the world from partial analysis, but must take into consideration the interconnected complex whole.

Professor Geoffrey West, former President of the Sante Fe Institute (the first of the complexity institutes founded out of the scientists that participated in the Los Alamos nuclear programme) and a leading thinker on growth, innovation and urban life, delivered a brilliant view on the sustainability of present growth models.

Modern life and culture is increasingly urban, because the larger the city, the more efficient the usage of energy and resources, but there are costs in terms of pollution, crowding and spillovers.

In other words, growth accelerates exponentially until the economy reaches maturity and slows down, and if there is no longer innovation and change, growth can even become negative.

Life follows an S-curve (sigmoid for the technically-minded), and therefore growth can only be sustained with continued innovation and reform – exactly what the Chinese are attempting.

West’s ideas resonated with me during the “Advancing Asia” conference, where the future of India became a major theme within the Asian growth story.

India is today one of the youngest (demographic labour force) growth stories, today the fastest growing and by 2050 the largest population in the world.

Without doubt, the Indians intend to use 21st technology to leapfrog traditional forms of growth, including development through knowledge and services, and less through manufacturing, currently dominated by East Asia. In contrast, the Chinese economy, currently the world’s number 2, is slowing and also aging.

In Beijing, the world sighed with relief as the Chinese Premier Li Keqiang committed to steady growth, stability in the RMB and continuous reform.

As oil prices seemed to stabilise at around US$40 per barrel and the Fed committed to slower interest rate adjustments, financial markets actually turned back upwards.

The Delhi conference was marked by extremely high quality debate on the future of growth models.

The key question before us is whether Asia, as one of the fastest growth regions, can overcome the global debt deflation. There is an existential question that the West (advanced countries including Japan) is unwilling to address.

Reserve Bank of India Governor Raghuram Rajan, arguably one of the most thoughtful of central bank governors, posed the question as the “elephant in the room” – a big issue that is right in front of us, but none of us want to address.

The basic question is why current growth is slowing and what policies can we adopt to get out of this debt deflation trap.

The advanced countries refuse to adopt fiscal expansion, because of internal politics and the growing debt overhang. Increasingly, they use quantitative easing (QE) or unconventional monetary policy to try and expand aggregate demand.

The trouble is that QE is outliving its usefulness, but has very negative spillovers on emerging markets, such as volatile capital flows, declining trade and lack of long-term investments.

The unspoken policy conundrum is that advanced countries refuse to admit that these spillovers matter.

Firstly, these spillovers are notoriously difficult to measure accurately. Secondly, central banks owe their allegiance to domestic authorities and would ignore pleas by neighbours or foreigners.

Thirdly, no one wants to admit that QE basically amounts to currency depreciation, which then forces emerging markets to also devalue in order to maintain their competitiveness.

Governor Rajan’s view is that we can no longer ignore the elephant in the room, either theoretically or practically.

If we continue to do so, the whole system could degenerate into a global deflation or worse.

Hence, he argued cogently for the beginnings of a conversation on how to grow stably and sustainably together, namely a consistent and legitimate set of international monetary rules.

The Delhi conference laid out the fundamental dilemmas in today’s growth trap. Monetary and fiscal policies are conducted through national agendas, which have spillovers onto others, but these policies do not add up in a global system.

Both the theoretical and geopolitical framework are partial, interactive and contradictory, because what is right for a single country can be wrong for the system as a whole.

Partial views are like blind men trying to describe an elephant. None of them get it right.

But partial or silo views end up with individual action or non-action that may be collectively wrong. For example, former Fed Chairman Dr Bernanke famously argued in 2005 that the US lost monetary control because of excess savings by the emerging markets.

From a system point of view, this is like an elephant complaining that it has become fat because the grass is growing too much. The grass grows because the elephant’s piss and poo fertilises the plain, whereas the gas emitted increases carbon as a spillover. Indeed, if there is too much liquidity provided, some of the smaller animals get drowned.

The yuan faces a similar dilemma. If it devalues, temporarily Chinese trade will recover, but if everyone devalues at the same rate, there will be no advantage.

However, China will have to undergo even more painful deflation with a stable exchange rate against the US dollar.

Because of China’s size, many of its trading partners could be hurt if China slows further.

Collectively, the current global monetary rules do not acknowledge a collective action to help make such adjustments more smoothly.

There is an old African and Asian saying that when elephants fight, the grass gets trampled.

The grass gets trampled even when elephants are dancing. We need collective and mutual understanding to get out of the oncoming global deflation.

But leadership and statesmanship are scarce when the dark clouds loom. For the next year or so, electioneering and partisan views will trump moderation and mutual understanding.

When bull elephants like Trump trumpet their charge, beware of global consequences.

By Andrew Sheng

Tan Sri Andrew Sheng writes on global issues from Asian perspective.


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Short-sighted: Trump's unpredictable foreign policy policy is making many observers nervous - AFP

LONDON: The prospect of Donald Trump winning the US presidency represents a global threat on a par with militancy destabilising the world economy, according to British research group EIU.

In the latest version of its Global Risk assessment, the Economist Intelligence Unit ranked victory for the Republican front-runner at 12 on an index where the current top threat is a Chinese economic “hard landing” rated 20.

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Justifying the threat level, the EIU highlighted the tycoon’s alienation towards China as well as his comments on extremism, saying a proposal to stop Muslims from entering the United States would be a “potent recruitment tool for militant groups”.

It also raised the spectre of a trade war under a Trump presidency and pointed out that his policies “tend to be prone to constant revision”.

“He has been exceptionally hostile towards free trade, including notably NAFTA (the North American Free Trade Agreement), and has repeatedly labelled China as a ‘currency manipulator’.” it said.

“He has also taken an exceptionally right-wing stance on the Middle East and terrorism, including, among other things, advocating the killing of families of terrorists and launching a land incursion into Syria to wipe out IS (and acquire its oil).”

By comparison it gave a possible armed clash in the South China Sea an eight — the same as the threat posed by Britain leaving the European Union — and ranked an emerging market debt crisis at 16.

Defiant Trump stares down protesters after rally violence A Trump victory, it said, would at least scupper the Trans-Pacific Partnership between the US and 11 other American and Asian states signed in February, while “his hostile attitude to free trade, and alienation of Mexico and China in particular, could escalate rapidly into a trade war.”

“There are risks to this forecast, especially in the event of a terrorist attack on US soil or a sudden economic downturn,” it added.

However, the organisation said it did not expect Trump to defeat his most likely Democratic opponent, Hillary Clinton, in an election and pointed out that Congress would likely block some of his more radical proposals if he won November’s election.

Rated at 12 alongside the prospect of a Trump presidency was the threat of Islamic State, which the EIU said risked ending a five-year bull run on US and European stock markets if terrorist attacks escalated.

The break-up of the eurozone following a Greek exit from the bloc was rated 15, while the prospect of a new “cold war” fuelled by Russian interventions in Ukraine and Syria was put at 16.- AFP