ASEAN losing its composure

Southeast Asia is at a dangerous crossroads. Once regarded as a haven of relative stability and economic progress, today the region is buffeted by escalating geopolitical struggle between the United States and China, state fragmentation in Myanmar and internal political conflicts that are exposing the limits of democratic reform and the dangers of populism.

These issues will be on full display at the annual leaders' summit of the Association of Southeast Asian Nations next week in Jakarta and may well intensify as the group's rotating chairmanship passes afterward from Indonesia to Laos, the bloc's smallest and poorest member.

Civil society and the international community have long looked to ASEAN, which has reliably preserved regional peace for decades, to deal with major challenges.

But the bloc is now deeply divided. On Myanmar, for example, mainland states have put a premium on state integrity and security over political change and reform while more democratic maritime states, led by Indonesia, regard military rule as intolerable.

In an alarming public display of regional dissonance, Thailand recently directly engaged with Myanmar's military junta without informing Indonesia. By playing on such divisions, the junta has avoided complete ostracization.

The region is also divided over the extent to which China poses a threat and whether it should be contained by the United States and its allies.

Laos, Thailand and Cambodia have close ties with Beijing, reflecting proximity or long-standing political alignment. Vietnam views China with deep historical enmity but maintains a dual-track relationship sustained by ties between the two nations' ruling communist parties. Even so, Hanoi has drawn closer to the US.

The Philippines has effectively checked out of ASEAN because officials in Manila believe the group has done nothing to defend the country's maritime claims against Chinese intrusions, noting its failure to support the 2016 arbitral ruling by a court in The Hague affirming Philippine sovereignty over contested areas.

"We might as well be allied with Taiwan, Japan and South Korea," said a former official after the recent confrontation between a Chinese coast guard ship and Philippine vessels attempting to resupply troops on Second Thomas Shoal in the disputed Spratly Islands. Manila has indeed moved closer to the US since Ferdinand Marcos Jr. became president last year.

Compounding such rifts over external issues is a distinct political divide. The rise of democratic reform movements in Indonesia, Malaysia and even Thailand over the last 30 years has led to more frequent changes in national leadership.

As a result, the personal relationships that held ASEAN nations together under more authoritarian regimes have frayed. Some democratic leaders have begun to wonder why they need to spend so much time with tedious ASEAN meetings when their domestic constituents are more interested in social equality and food security than strengthening regional identity.

All this has made Southeast Asia more fragile and isolated than it appears. Great power leaders who once routinely attended regional summits now often skip them. The US and China prefer bilateral engagements during which they can press for alignment. While he will skip this month's ASEAN summit, US President Joe Biden will visit Vietnam right afterward, reportedly to sign a bilateral strategic partnership agreement.

ASEAN has lost its much-touted centrality and is frankly on life support as an autonomous multilateral platform, reflecting to some degree the decline of multilateralism globally.

What can be done to revive effective multilateral cooperation and rescue the region from fracture by competing great powers and division by political dispute?

Civil society has traditionally helped in quiet ways to build and sustain the sinews of connectivity in the region. Networks of academics and think tanks helped promote connections and address sensitivities among governments and offered regional policy ideas.

Many of those veteran scholars are now retired or deceased. The younger generation has not filled the void, in part because the rivalry of the great powers has polarized much of their ranks.

A possible new approach would be to launch a recovery process to help reconnect the 10 ASEAN states. This would involve identifying common challenges rather than relying on outdated institutionalized processes or weak mechanisms to manage conflicts and protect human rights.

There is clearly a need for cross-bloc dialogue about what can be done. A bottom-up approach could offer innovative ideas and help ease the acrimony that has built up over the past few years. Post-pandemic, there is an urgent need for more contact and understanding in a region vastly more challenged than it was even five years ago.

The US and China are locked in an epic, dangerous rivalry that treats Southeast Asia as a battleground, so they will not be of help. But midsized powers and traditional partners such as Australia, the EU and UK could support regional cohesion if they spent less time pushing Western values and seeding animosity toward China, which even if justified, generates further division.

Southeast Asian governments and their leaders could help by speaking with one voice on critical issues and maintaining traditional balancing approaches to great power competition. As things stand today, there is a real chance that the Philippines and China will come to blows over the Second Thomas Shoal.

That would bring the United States and China dangerously close to war. Will ASEAN leaders be able to combine and collaborate to prevent any crisis from escalating? Right now, that looks doubtful.

 

Iran hosts Asian Clearing Union summit

The 51st Asian Clearing Union (ACU) summit, mainly focusing on de-dollarization, kicked off on Tuesday at the Central Bank of Iran (CBI).

On the first day of the two-day event, expert committees from the delegations attending the summit held meetings to discuss preliminary issues.

The summit is attended by the governors of the central banks of the ACU member countries in addition to Russia.

The Governor of the Central Bank of Russia Elvira Nabiullina arrived in Tehran on Monday to attend the event.

In the 51st ACU summit, the members are set to discuss various issues including the amendment of the Union's statutes in order to facilitate the acceptance of new members, and determining the new currency basket of the member countries in order to settle exchanges without the need for euro or the dollar.

Exploring the feasibility of using digital currencies of central banks for cross-border payments and the unveiling of the interbank messaging network of the member states of the Union are also among the major topics on the summit’s agendas.

Asian Clearing Union is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.

The main objectives of the clearing union are to facilitate payments among member countries for eligible transactions, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade and banking relations among the participating countries. 

Currently, the members of ACU are the central banks of Iran, India, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka, and Myanmar.

The central banking authorities of member countries have issued detailed instructions and modalities for channeling monetary transactions through the ACU. Membership in the ACU is open to central banks located in the geographical area of ESCAP and non-ESCAP.

 

Bangladesh inaugurates submarine base

Prime Minister Sheikh Hasina on Monday inaugurated Bangladesh’s first submarine base near Kutubdia Island, Cox’s Bazar, via a video conference from the capital.

The US$1.21 billion (127 billion taka) base serves as home port for two refurbished Chinese submarines purchased in 2016 to enhance Bangladesh’s naval capacity, after the demarcation of its maritime boundary with.

“We do not want war with anyone. But we must be prepared to give a befitting response if anyone attacks us,” Hasina said in an online message to naval officials gathered at the new base, BNS Sheikh Hasina, in Pekua, about 322 km (200 miles) southeast of Dhaka.

“I believe, by building the base, BNS Sheikh Hasina, Bangladesh Navy’s capacity to protect its maritime boundary is further enhanced,” she said, according to a transcript of her remarks.

The prime minister said that since she assumed power again in 2009, her government had added 31 warships including four frigates, six corvettes, four large patrol craft and five diesel-powered craft.

In November 2016, Bangladesh paid the Chinese government US$205 million (21.5 billion taka) for the submarines, named Nabojatra (New Journey) and Joyjatra (Victory March). Hasina commissioned them on March 12, 2017.

That same day, she laid the foundation stone for the base in Pekua near the Kutubdia channel in the Bay of Bengal. During its construction, the submarines were housed at a naval base in Chittagong.

At the time they were commissioned, Bangladesh’s military communications unit described the submarines as conventional diesel-electric powered craft, 76 meters long and 7.6 meters wide. It said the submarines could reach a maximum speed of 17 nautical miles per hour.

The statement said they were fitted with torpedoes and mines and would be capable of attacking enemy ships and submarines.

“The Chinese will help us build the base and impart training to our personnel to operate the submarines and base. The Chinese submarines will not come here. The base is for our submarines,” Faruk Khan, chairman of the parliamentary committee on foreign affairs, told BenarNews in 2019.

Retired Maj. Gen. Abdur Rashid, a defense analyst, said the base would enhance the capacity of the Bangladesh Navy to protect the vast sea region.

“Given the growing importance of the Bay of Bengal, Bangladesh must enhance the capacity of its navy to protect its sovereignty and thwart all security challenges and non-traditional security threats,” Rashid told BenarNews.

“Bangladesh procures weapons and military hardware from China as the United States and other countries usually do not sell those to us,” he said.

“The launching of the submarine base will definitely enhance our maritime power,” he added.

 

Governor State Bank of Pakistan, new Chairman of Asian Clearing Union (ACU)

Dr. Murtaza Syed, Acting Governor State Bank of Pakistan (SBP) assumed the charge of Chairman of the Board of Directors of the Asian Clearing Union (ACU) in the 50th meeting of the ACU Board held in Islamabad on May 13, 2022 in both physical and virtual modes.

Established in 1974 with permanent headquarters in Iran, the Asian Clearing Union (ACU) is a payment arrangement system whereby member countries settle payments for intra-regional transactions among their central banks on a net multilateral basis. Currently, the Central Banks of Bangladesh, Bhutan, Iran, India, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the ACU. The main objectives of the clearing union are to facilitate payments among member countries for eligible transactions, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade and banking relations among the participating countries. 

The Secretary General of ACU, Mrs. Lida Borhan Azad, presented the annual report on the operations of the union for the year 2020, which the Board approved and adopted.

The Board reviewed progress on the ongoing projects being undertaken by the union. It reviewed a new web based messaging system and constituted a sub-committee to finalize the recommendations for its implementation within six months. The Board also considered the report on issues faced by traders under the ACU mechanism and decided to implement the recommendations in the next three months. 

While appreciating the report on the use of domestic currencies for settlement of trade transactions prepared by the Reserve Bank of India (RBI), the Board requested RBI to convene a virtual seminar to enable member countries to gain a fuller understanding of the proposed mechanism. The Governors and head of the delegations of the countries also gave a broad overview of the economic development in their respective economies and shared their experiences in addressing the challenges emerging in the post COVID-19 global landscape.

Governor Central Bank of Myanmar, Than Nyein, Vice Governor Central Bank of Iran, Dr.Mohsen Karimi, Chief Economist Central Bank of Bangladesh Md. Habib ur Rehman, and Executive Director Nepal Rastra Bank Ramu Paudel participated in the meeting physically. Governor Dr. P. Nandalal Weerasinghe, and Deputy Governor of Central Bank of Sri Lanka, T.M.J.Y.P Fernando, Governor Maldives Monetary Authority Ali Hashim, Ms. Yangchen Tshogel Central Bank of Bhutan and Executive Director RBI Radha Shyam Ratho, attended the meeting virtually.

At the conclusion of the Board meeting, Mrs. Lida Borhan Azad relinquished the charge of Secretary General of the ACU after distinguished service of the Union for 15 years. While appreciating the services of Mrs. Lida Borhan, the Board appointed Farhad Morsali as the new Secretary General of the ACU, as recommended by the Central Bank of Iran.

The meeting ended with all member countries emphasizing their commitment to further enhancing their trade and banking relationships. It was decided that central bank digital currencies (CBDCs) would be the special topic on which research would be conducted during Pakistan’s chairmanship of the ACU over the next twelve months.

India trying to win over hearts of its neighbors

According to The Bangladesh Chronicle, India has announced substantial assistance for all the SAARC member countries, except Pakistan. The announcement was made by Indian Finance Minister Nirmala Sitharaman while presenting the 2022-23 budget in the parliament.

South Asian Association for Regional Cooperation

The South Asian Association for Regional Cooperation (SAARC) is an economic and political organization of eight countries in South Asia. It was established in 1985 when the Heads of State of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka formally adopted the charter. Afghanistan joined as the 8th member of SAARC in 2007. To date, 18th Summits have been held and Nepal’s former Foreign Secretary is the current Secretary General of SAARC. The 19th Summit was to be hosted by Pakistan in 2016, which never happened.

India announced Rs 300 crore annual budgetary financial assistance for Bangladesh, up from Rs 200 crore in the outgoing fiscal 2021-22. The allocation of the financial assistance has been provided for the Ministry of External Affairs.

Myanmar will get Rs 600 crore, Rs 200 crore more than last financial year, and Nepal will get Rs 750 crore from India in the coming fiscal.

India has allocated Rs 200 crore as aid to Taliban-ruled Afghanistan in for 2022-23 even though New Delhi does not have diplomatic presence in Kabul where its embassy has remained closed since the Taliban took over Afghanistan in August last.

The government of Ashraf Ghani in Afghanistan had in the last fiscal received around Rs 348 crore from India.

The Maldives at Rs 360 crore (as against Rs 250 crore in 2021-22) also saw an increase in India’s annual aid provision in today’s budget document.

At Rs 2,266.24 crore in 2022-23, Bhutan is once again be the highest recipient of India’s annual financial aid. But this is lower than Rs 3,004.95 crore in 2021-22 fiscal.

The second highest recipient in the coming financial year of the allocation will be the Indian Ocean island of Mauritius — Rs 900 crore.

 

Focus should be on oil and gas, not maritime dispute, Beijing urges Philippines

China and the Philippines should not be distracted by their disputes in the South China Sea and should instead focus on advancing cooperation on oil and gas exploration in the region, Chinese Foreign Minister Wang Yi said when wrapping up his week-long tour of Southeast Asia.

Wang said the two countries would continue to “properly manage their disputes” and push for oil and gas exploration in the South China Sea.

Wang’s trip that included stopovers in Myanmar, Indonesia and Brunei was part of Beijing seeking to consolidate its ties with the region.

In an interview with state media posted on the Ministry’s website, Wang highlighted China’s desire to move the focus away from maritime disputes to joint exploration of resources in the waters. “Both sides believe that the South China Sea issue is only partial to the entirety of Sino-Philippines relations,” Wang said, discussing the outcomes of his Manila visit. “We should not let such one percent difference derail the 99 percent of our relations.”

Separately during Wang’s tour, China and Brunei set up a working group on energy cooperation, the ministry said on Friday, without providing details.

The Philippine government in October lifted a ban on offshore oil and gas exploration, reopening the door to joint energy development with China.

Two years ago, the two governments signed a memorandum of understanding to jointly explore undersea oil and gas, a way of defusing their corner of a broader regional dispute.

In 2016, an international tribunal in The Hague upheld the Philippines’ challenge to Beijing’s territorial claims to almost all of the South China Sea, but Beijing has never accepted the ruling. President Rodrigo Duterte’s administration has promised to shelve the dispute in exchange for Beijing’s economic aid.

As the Duterte administration nears its end, Beijing has sought to reaffirm support for its neighbour, promising half a million doses of Covid-19 vaccines, US$1.34 billion in loan pledges for infrastructure projects and US$77 million in grants.

Wang said the supply of vaccines to the Philippines showed Beijing’s willingness to help the Philippines overcome its Covid-19 pandemic challenges.

China and the Philippines also announced an arrangement for fast-track border crossing during the pandemic for certain personnel, and opened the Bank of China’s yuan clearing business in the Philippines.

China would continue to take part in the Philippine side’s infrastructure plans and actively promote cooperation on major projects to lay a better foundation for the Philippines’ long-term development, Wang said.

He said China and the Association of Southeast Asian Nations were working together to advance post-pandemic recovery. “Facts once again show that adherence to regional and a multilateral mechanism is more important than ever,” he said.

Makkah Summit

King Abdullah of Saudi Arabia has called an emergency Islamic Summit in Makkah to discussed key issues facing Muslim Ummah.

This offers an opportunity to Muslim leaders to discuss the prevailing situation, showing deep divided and to come up with solution that can exhibit their unity and solidarity. 

However, there is no mention of Iran, enduring economic sanction imposed by the Western countries for more than three decades. One can still recall that some of the Arab countries had provided huge funds to Iraq when it attacked Iran, which helped in extending the war for nearly a decade.

World renowned, Abdullah Omar Naseef emphasizing the significance of the Summit has said, "There is nothing strange in this call by King Abdullah for an emergency summit. It shows his deep concern toward Islamic issues as a prominent Muslim leader in the world," He also said, "This summit is being held at the right time, when the Islamic nation is facing a lot of challenges and crises, such as the worsening situation in Syria, the ethnic cleansing of Rohingya Muslims in Myanmar, and the continuing Israeli atrocities against the Palestinians.”

A member of the World Council for Mosques, an affiliate of the Makkah-based Muslim World League, Dr. Baheej Mulla Owais said, "We are pinning great hope on this extraordinary summit and pray that it will be a great success in realizing its objectives." He also mentioned another summit held in Makkah, called by King Abdullah about five years ago to reconcile Iraqi factions. "That summit was successful in reducing the bloodbath between Iraqi groups and narrowing their differences. Sitting in front of the Holy Kaaba, they had pledged to stop fighting each other," he added.

Iranian Deputy Foreign Minister Hossein Amir-Abdollahian called on Muslim leaders to address the Syrian and Bahraini crises simultaneously in their gathering in Makkah. Iran has also proposed that the Palestinian issue and solidarity in the Muslim world should be discussed at the meeting and that divisive issues would not be raised. 

 Iranian President Mahmoud Ahmadinejad leaving Tehran to attend the emergency Islamic summit said is likely to express the views of the Iranian nation on the issues facing the Muslim world. “This meeting is an opportunity for our nation’s standpoint to be explained clearly and for efforts to be made toward the convergence and protection of the interests and integrity of Muslim nations.”   

One just can’t resist from mentioning meeting of leaders of 42 countries who have given their node to participate in the XVI Summit of the Non-Aligned Movement (NAM), which is scheduled to be held in Tehran from Aug 26 to 31. 

While efforts by Saudi Arabia and Iran deserve appreciation, the bottomline remains can Arabs really come out of the pressure of United States? There is growing consensus among the analysts that toppling of Asad regime in Syria is part of the grand agenda to isolate Iran, which is considered a threat for Arab monarchies.