|Asia News Digest
India and Venezuela Work Out an Oil Deal
India has signed a deal to take a 49% stake in Venezuela's San Cristobal oil field. The deal was signed during Venezuelan President Hugo Chavez's ongoing four-day (March 4-7) visit to India.
"For us to receive 49%, plus the operatorship, is a huge advance, and with that, I am now truly well positioned to commercialize exploration work," said India's Petroleum Minister Mani Shankar Aiyar. No financial details of the deal have been made public. But, as part of the agreement, one of six signed in New Delhi, Petroleos de Venezuela SA is taking a stake in India's refining subsidiary, Bangalore Refinery and Petrochemicals Ltd. This will pave the way for the Bangalore refinery to process heavy Venezuelan crude.
Of late, India has been aggressively pursuing energy supplies through bilateral agreements, and has taken stakes in fuel projects in Russia, Libya, Sudan, and Qatar, among other countries, and recently struck an agreement to import natural gas from Iran.
U.S. To Set Up Nine Military Bases in Afghanistan
According to Indian intelligence sources, the United States is in the process of setting up nine military bases inside Afghanistan. These bases will be spread throughout the country. There will be one each in Helmand, Nimrouz, and Herat (all close to the Iranian borders in south and southwest); one each in Mazar-e-Sharif and Balkh (in the north, near the Tajik and Uzbek borders); and two each in the Jalalabad/Khost area and Paktika (in the east, close to the Pakistan border).
The decision was made during the last visit of U.S. Defense Secretary Donald Rumsfeld to Afghanistan. The Pentagon has come to the conclusion that its ally, Afghan President Hamid Karzai, has gotten weaker, and could be overthrown by the Taliban in combination with Gulbuddin Hekmatyar, in seven to eight months, if the United States does not succeed in creating an Afghan army of significant size during that time frame.
U.S. Ambassador Mulford Cautions India on Iran
Prior to his departure for Islamabad, to participate in tripartiteIndia-Pakistan-Irantalks on the Iran-India pipeline through Pakistan, Indian Petroleum Minister Mani Shankar Aiyar got an "official" communication from U.S. Ambassador David Mulford, pointing out that the United States has serious concerns about Iran, and cannot foresee how events there will shape up, according to the India Daily March 11. Aiyer is scheduled to visit Tehran by the end of March, to pursue discussions on the subject.
Mulford is reported to have told Aiyar that Washington is facing serious difficulties with Tehran on its nuclear-enrichment program, and there was no solution in sight. Apparently, Mulford indicated that the problem was heating up and that the issue was being seriously focussed on by the State Department. Mulford also told Aiyer that the U.S. had previously informed Islamabad of its concerns, through its Foreign Minister, Khurshid Mehmood Kasuri.
Mulford left his message open-ended by not suggesting what India should do under the circumstances. The Indian External Affairs Ministry believes that when U.S. Secretary of State Condoleezza Rice comes to India on March 16, the U.S. side will bring up the issue, and "may provide a suggestion what India should do."
Islamabad Admits Iranian Centrifuge Came from Pakistan
Months after International Atomic Energy Agency (IAEA) Chief Mohammad ElBaradei told the world that the Iranian centrifuge is a replica of the one in Pakistan, Islamabad finally admitted that the centrifuge did in fact come from Pakistan. But it was Dr. A.Q. Khan who had "given the centrifuges to Iran," and "the government was in no way involved in this," said Sheikh Rashid Ahmed, Pakistan's Information Minister. Earlier, Pakistan had categorically denied that it had supplied the centrifuge to Iran.
Pakistan has admitted in the past that A.Q. Khan, who has been dubbed the "Father of Pakistan's Atomic Bomb," had smuggled nuclear secrets to North Korea, Iran, and Libya, but denied any supply of hardware to Iran.
Khan remains under close guard at his home in Islamabad, and the government has refused to allow experts from the IAEA to question him. "We will not hand over Dr. Qadeer [Khan] to any other country," Sheikh Rashid Ahmed said on March 8.
China Will Not Sell Dollar-Denominated AssetsFor Now
China will not sell dollar-denominated assets in its forex reserves, just because of the dollar decline, Guo Shuqing, director of the State Administration of Foreign Exchange and vice-governor of the People's Bank of China, said March 5, at the annual meeting of the Chinese People's Political Consultative Conference (CPPCC). Guo also said that China will try to narrow its surplus in international payments to avoid the negative effects of a big surplus.
"We will not adjust the structure of our foreign exchange reserves according to short-term fluctuations [such as the one seen in the U.S. dollar in the past year]," Guo said. "If we sell U.S. dollars now when it is tumbling, it means we lose money. If we do sell them, we have to buy other currencies such as the euro. But what if the euro drops?"
Guo said China might contemplate changing the currency mix of its reserves, but only after taking into consideration a number of factors, such as the major currencies the country uses in foreign trade payment, foreign investment, and repaying foreign debt.
China is also striving to balance its international payments. China has a big surplus because of its stress on export growth and the building of forex reserves in case of another crisis such as the Asian financial crisis of the late 1990s.
But, Guo said, China is now coming to a better understanding of the cost of having a large surplus. He had warned in an article earlier this year, that the preference of exports over imports will impede the technological upgrading of domestic enterprises. He also warned that rising forex reserves have led to unwanted growth in the money supply.
China Wants Peaceful Reunification with Taiwan; Secession, Never
Chinese President Hu Jintao called for peaceful reunification with Taiwan, but stressed that China will never allow secession. He was speaking March 4 at the annual meeting of the Chinese People's Political Consultative Conference (CPPCC) in Beijing. This is the "political season" in Beijing; after the CPPCC meeting, the annual session of the National People's Congress (NPC) opened two days before.
"Tremendous and complicated changes have taken place on the Taiwan island in recent years, and the intensified activities of the 'Taiwan independence' secessionist forces have posed a grave impact on the peaceful and stable development of across-Straits relations," Hu said. These changes include efforts by the Taiwan authorities to pursue a "creeping independence." He warned that "Taiwan independence" could "pose a severe threat to China's national sovereignty and territorial integrity."
However, there are "new and positive factors." These include the direct charter flights set up during the New Year Spring Festival holiday, giving "certain signs of relaxation" to cross-Straits relations, Hu said.
Hu announced his four-point guideline for relations "under the new circumstances." These include "adherence to the one-China principle [which] serves as the cornerstone" of relations; never giving up "efforts to seek peaceful reunification"; depending upon the Taiwan people to support peaceful reunification; and that the Chinese people will "never compromise in opposing the 'Taiwan independence' secessionist activities."
China To Maintain Macro-Control of Economy
China will maintain its policy of macro-control of the economy in the coming year, State Development and Reform Minister Ma Kai said at a Beijing press conference March 7. "We have avoided a roller-coaster in the economy," Ma said, but more needs to be done.
Ma said that China's efforts to stabilize the economy should "not be loosened up at all," because there have been only "preliminary" achievements in bringing "overheated" growth under control. "New problems are popping up as we are addressing the old ones," he said. Beijing is looking to achieve 8% economic growth in 2005, down from 9.5% in 2004. China faces big energy, transport, and other infrastructure bottlenecks. Energy efficiency is a huge problem, Ma said: China's GDP is just one-eighth of the U.S., but its electricity consumption is 50% of the U.S. Newly installed electricity capacity was 50.55 million kilowatts last year, a world record. But, Ma said, "The increase of electricity production capacity, however, still cannot catch up with the pace of demand growth." "There were 150,000 new projects last year. In December alone, there were 20,000," Ma said.
BIS: Asian Nations Not Shifting Out of Dollars
The Bank for International Settlements figures on Asian nations shifting their holdings from dollars are misleading, if they do not also include the enormous increase in dollar holdings overall. While the BIS reports that China's portion of forex holdings in dollars has gone down by 15% since 2001, the reality is that overall, China's foreign exchange reservesmostly in dollarshave increased by a full 300%! Chinese forex reserves were $212.2 billion at the end of 2001; they reached a record $610 billion at the end of 2004. There have been similar huge increases in dollar holdings by many Asian nations, including India.