From Volume 5, Issue Number 2 of EIR Online, Published Jan. 10, 2006
Asia News Digest

Balochistan Situation Worsens

Heavy fighting between Balochi tribes and Pakistani security forces has been reported from Quetta, capital of Balochistan. Meanwhile, almost the entire Pakistani province is under general strike. Most of the offices are deserted and transportation throughout the province has come to a halt.

The strike was called by the alliance of Baloch nationalist parties: Pak Oppressed Nations Alliance (PONA), Alliance for Restoration of Democracy (ARD), and the Awami National Party (ANP). The Baloch militants are trying to keep the flow of oil and gas from Balochistan shut down permanently. Balochistan is the only province in Pakistan with oil and gas reserves.

Meanwhile, Pakistani President Pervez Musharraf has accused India of being involved in the Baloch uprising. Earlier, the Pakistani military accused Iran of involvement. New Delhi has expressed concern over the worsening situation in Balochistan and the indiscriminate use of heavy weapons and bombs by Islamabad against the Baloch militants.

Indian PM: More Meaningful India-China Ties Required

Indian Prime Minister Manmohan Singh, in his New Year's message to Chinese leader Wen Jiabao, said the fast-developing ties between India and China are a strong determinant for the peace and security, as well as development and prosperity, of Asia and the world.

"We are confident that in the New Year, we will be able to continue, with greater determination, to impart further depth and substance to our rapidly growing ties, and add an important new chapter to India-China friendship."

Indian President A.P.J. Abdul Kalam, in his message to Chinese President Hu Jintao, said, "today, the footprints of India and China are increasingly visible and have made an impact on the global landscape in diverse areas." Pointing out that India and China are major developing countries with great influence in the world, Chinese President Hu Jintao said "China is ready to work with India ... to continuously deepen the contents of our bilateral relations and push further the China-India Strategic and Cooperative Partnership in an all-round and in-depth way."

South Korea Is the World Leader in Derivatives Trade

The Swiss-based Bank for International Settlements (BIS) reported that Korea stock index futures and options boomed to $12 trillion in the third quarter of 2005, making South Korea "the world's busiest market for equity derivatives," overtaking the United States. Any concern for a bubble? Lee Seon-kyu of Woori Securities in Seoul told the Financial Times Jan. 4: "Everyone is winning, so unless someone starts to lose, I think this bullishness will continue."

U.S.-Philippines War Games in Mindanao Raise Constitutional Questions

More than 5,000 U.S. troops are to hold military exercises in Mindanao in the Philippines, the Inquirer reported Jan. 4. The joint counterterrorism exercises in two southern Philippine regions which are active combat zones, raise again the question of U.S. actions counter to the Philippine Constitutional restriction on U.S. military action in the country. Also of concern are possible U.S. intentions to change those restrictions as part of the ongoing campaign in the Philippines to change the Constitution.

This is the largest yet of the annual war maneuvers, called "Balikatan," scheduled to start on Feb. 20 and last two weeks. They will take place both on the main island of Mindanao, but also on the smaller island of Jolo—a place where anger over U.S. atrocities in the early 20th Century suppression of resistance to U.S. control is still palpable, according to a Philippine military source from the region. It will also be nearly impossible to avoid military action in Jolo, despite U.S. claims that they will not be involved in combat, because of the presence of Abu Sayaaf and weak government control. A U.S. commander, Col. James Linder, admitted that the Americans will be armed and that "there is a threat there and it's dangerous."

North Korea Will Not Attend Six-Power Talks

North Korea says it can't attend six-power talks because Washington is planning a preemptive strike, Yonhap reported from Seoul Dec. 31. "If we did not equip ourselves with nuclear weapons, the United States would have launched a preemptive nuclear strike against us and made our country like Iraq," Pyongyang's Rodong Sinmun said Dec. 31 in a commentary on the official Korean Central News Agency (KCNA).

Thus, it said, the North is now unable to implement the six-party accord of September 2005, or to attend the talks; so the dispute will not be settled, as long as "the U.S. continues pursuing its hostile policy to stifle the DPRK as it did this year. The U.S. has driven the situation to the brink of war, while intensifying military moves," it said, referring to the imposition of financial sanctions on Pyongyang in October. The commentary reaffirmed the North's position that it will not abandon its nuclear program until it is provided with economic incentives that include nuclear power plants.

Kim Jong-il Waiting for Bush To Leave Office

North Korean leader Kim Jong-il will not cooperate with the U.S. until President Bush leaves office, U.S. State Department senior Korean interpreter Tong Kim writes in his Korea Times column Jan. 1. Kim interpreted for four U.S. Presidents including George W. Bush over three decades, until retirement in 2005. Bush has had five years to solve the problem, but "we are further away from resolution than five years ago, given a nuclear North Korea with two to six bombs and the level of mutual distrust as deep as ever between the United States and North Korea," he writes. "Pyongyang seems to believe time is on their side. They are inclined to wait out the remainder of the second term of the Bush Administration."

The neo-cons want to overthrow the regime, but "North Korea will not collapse any time soon," he says. "It is likely to transform itself for survival. We have to deal with it as it is now, whether we like it or not."

Kim also attacks neo-con U.S. Ambassador Alexander Vershbow, who helped collapse the talks with his barroom language. "Did Vershbow speak Bush's mind, when he called the DPRK 'a criminal regime,' as he represents the President of the United States? If he did, his primary audience should have been W. Bush and his hardliner advisers rather than Kim Jong-il," Kim concludes. "The ambassador must have known darn well the negative impact of such characterization on the prospects of reconvening the six-party talks."

China To Reorganize Structure of Huge Forex Reserves

China is planning to "optimize the structure of its huge forex reserves, to get higher returns, the State Administration of Foreign Exchange (SAFE) announced Jan. 6. China has $769 billion foreign-exchange reserves, a record, and second only to those held by Japan. The SAFE plans "to improve the operation and management of foreign exchange reserves and to actively explore ways of investing foreign exchange more efficiently," SAFE Director Hu Xiaolian said after the agency's annual conference Jan. 5, in a statement on the agency's website. The issue is "to improve the currency structure and asset structure of our forex reserves and to continue to expand the investment area of reserves. We want to ensure that the use of foreign exchange reserves supports a national strategy, an open economy and the macro-economic adjustment."

Hu also told the SAFE conference that achieving a balance of international payments is of great significance to the healthy development of the Chinese economy, but it has problems of a growing foreign trade surplus and imbalance of international payments. In September, Central Policy Research Office economist Zheng Xinli said that China should invest its foreign exchange reserves in overseas energy resources rather than Treasuries, and other economists have expressed similar views.

The central bank, the Peoples Bank of China, and other Chinese investors own $247.6 billion worth of U.S. Treasuries, as of end-October. This makes China the second-largest foreign holder after Japan. However, on Oct. 13, Finance Minister Jin Renqing said that China will not change its "set policy" of buying treasuries.

SAFE also announced it will end forex quota limits for Chinese companies investing outside China, although they will still need permission to invest abroad.

U.S. 'Absolutely Opposed' to South Asia Pipeline

The U.S. remains "absolutely opposed" to the 2,600 km-long natural gas pipeline project linking Iran with Pakistan and India, according to a speaker at the Johns Hopkins Institute in Washington on Jan. 5. Steven Mann, the special negotiator for Eurasian Conflicts in the U.S. State Department's Bureau of European Affairs, was speaking to a seminar at the School of Advanced International Studies (SAIS). Iran, Pakistan and India have said they hope to conclude a deal by June 2006.

"The U.S. government supports multiple pipelines from the Caspian region but remains absolutely opposed to pipelines involving Iran," Mann said after the Asian Development Bank's senior energy specialist Dan Millson told the forum that the Iran-Pakistan-India pipeline and another pipeline linking Turkmenistan, Afghanistan, and Pakistan were both feasible and ADB endorses both entirely on economic grounds. He said "piped gas was economically favorable versus LNG [liquified natural gas]."

The U.S. opposition to the pipeline will ensure serious repercussions across India's political spectrum. It may even have a negative effect on U.S.-India long-term relations.

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