In this issue:

Indonesia Plays 'Debtor Hardball'; Will End IMF Program

Mahathir Recommends State Oil Company Trade in Euros, Not Dollars

U.S. Signs Free-Trade Pact with Singapore as 'Payoff' for Iraq Support

First State Visit of German Chancellor to Malaysia

Thai PM Leads 70-Person Trade Delegation to France

French Utility Plans To Gain Stake in Mekong Power Project

First Anti-American Demonstrations Break Out in Kabul

Security Situation Remains Grave in Afghanistan

India Initiates Talks with Pakistan

Indonesian Army and Free Aceh Movement Gear Up for War

Is the U.S. Declaring War on the MILF Separatists?

From Volume 2, Issue Number 19 of Electronic Intelligence Weekly, Published May 13, 2003
Asia News Digest

Indonesia Plays 'Debtor Hardball'; Will End IMF Program

Indonesia has officially announced that it will dump the IMF program at the end of this year, the Jakarta Post reported May 6. The People's Consultative Assembly (MPR) passed a resolution earlier recommending the move, and a raging debate has ensued over the past months. On May 6, following a meeting of Vice President Hamzah Haz, Economics Minister Dorodjatun Kuntjoro-Jakti, and a special government team to study the issue, Dorodjatun announced that the government was ready to end the existing IMF economic bailout program.

IMF supporters have warned that Indonesia would no longer be able to obtain debt-rescheduling facilities from either the Paris Club of creditor nations or the London Club of private creditors. Next year alone, the country must repay some $3 billion in debts to the foreign creditors. Dorodjatun, while saying that the economy can handle it, is also the Minister who told the Paris Club last year that Indonesia could not and would not pay either the interest or the principle (i.e., it played the "debt card"), and was granted a one-year debt moratorium. Such "debtor hardball" will be even more essential in the future.

Mahathir Recommends State Oil Company Trade in Euros, Not Dollars

Malaysian Prime Minister Mahathir bin Mohamad recommended that the state oil company conduct begin conducting trade in euros, rather than dollars, New Straits Times said May 9. Citing the 25% fall in the value of the dollar this year, and expecting the fall to continue, Mahathir said that Petronas should consider a similar plan announced by the Indonesian state company Pertamina. Asked if the United States would not be unhappy with such a move, Mahathir responded: "It is not a question of the U.S. being unhappy, but whether we get value for our goods."

U.S. Signs Free-Trade Pact with Singapore as 'Payoff' for Iraq Support

The U.S. signed a free-trade agreement with Singapore, admitting that it was a payoff for support on the Iraq war. Even worse, the Administration also admitted that the fact that the U.S./Chile trade agreement has been stalled, was because Chile did not support the Iraq war. Said Chickenhawk U.S. Trade Negotiator Robert Zoellick in regard to Chile: "You know, people are very disappointed. I'm disappointed. We worked very closely with our Chilean partners. We hoped for their support in a time that we felt was very important." President Bush, in announcing the Singapore FTA, called Singapore "a strong partner in the war on terrorism and a member of the coalition on Iraq."

As New York Times reporter Elizabeth Becker wrote May 6: "There is nothing subtle about this policy."

The Singapore free-trade deal itself is the first in Asia, and is intended as a foot in the door to force other Asian nations to accept the same terms, which will be unacceptable to real economies, unlike the mini-state-banking and service economy in Singapore. A coalition of U.S. firms led by Boeing, ExxonMobil, and UPS will lead a campaign to get the free-trade agreement passed in the Congress.

First State Visit of German Chancellor to Malaysia

German Chancellor Gerhard Schroeder arrives in Kuala Lumpur, Malaysia May 11, on the first state visit of a German Chancellor to that country. Germany's Ambassador to Malaysia Juergen A.R. Staks emphasized ahead of Schroeder's arrival, the importance Germany assigned to this stop, on what will be a six-day visit, including stops in Singapore, Jakarta, and Hanoi.

A high point of Schroeder's visit to Malaysia is to be a public lecture by the two leaders on the subject of "Malaysia and Germany: Partners in the Dialogue Among Civilizations," organized by the Institute of Diplomacy and Foreign Relations at a Kuala Lumpur hotel.

Thai PM Leads 70-Person Trade Delegation to France

Thai Prime Minister Thaksin Shinawatra departed May 9 for France, on the first state visit of a Thai Prime Minister in 15 years. The official state visit, May 11-12, includes 70 people, among them, representatives of 60 Thai firms. Thaksin has said he wants to sign a trade agreement with France within a year. France is currently Thailand's fourth largest trading partner in Europe. Thaksin said, "France is a key member of the EU, and the EU is a big market that we should apply more concentration to."

French business expressed its confidence that the visit would spotlight Thailand's importance in ASEAN. French firms, which are the second-largest investors in Thailand, expressed keen interest in the six-nation Greater Mekong Subregion (GMS) with Thailand as a base, said Frederic Favre, president of the French Foreign Trade Advisory Committee in Thailand.

French Utility Plans To Gain Stake in Mekong Power Project

The French utility EDF plans to use its Thai subsidiary, EDF Southeast Asia, to gain a 10% stake in the Greater Mekong Subregion power generation, within the decade. EDF President Jean-Pierre Serusclat told the Bangkok Post May 2, "We believe the Greater Mekong Subregion will move ahead quickly to become the biggest integrated market in the region with energy, gas, and electricity interconnection. Political willingness will foster integration in the long run to optimize the use of energy resources. And we have a long-term strategy to be a part of integration."

First Anti-American Demonstrations Break Out in Kabul

For the first time since the American troops and International Security Assistance Forces (ISAF) moved into Kabul following the ouster of the Taliban regime, an anti-American demonstration was held on May 6 in Kabul. The protesters, who included government employees and university students, complained of growing insecurity, slow postwar reconstruction, and delay in payment of state salaries by the U.S.-backed Hamid Karzai government.

Among the chants heard were: "We don't want Brits and the Americans!"; "We want Islam to rule. We want Security"; "Death to Bush. Death to America."

The protest was organized by the "Scientific Center," headed by Sadiq Afghan, a prominent Afghan known for his outspoken criticism of the communist regime of the 1980s, the Mujahideen government that replaced it, and the Taliban.

Addressing the crowd, Sadiq Afghan said: "They are talking about reconstruction, but instead making themselves rich.... The time has come to beat the nail in the White House's coffin. If we had dogs instead of these Jews and Christians, we would have security." Afghan also said that about the only changes he had noticed since the Taliban left the scene, were that some women are not wearing veils and the Internet had been introduced.

Security Situation Remains Grave in Afghanistan

The UN Special Envoy to Afghanistan, Lakhdar Brahimi, told the UN Security Council May 6 that the reconstruction work in Afghanistan was "challenged by the deterioration of the security environment, which stems from daily harassment and intimidation, inter-ethnic and inter-factional strife, and increase in the activity of elements linked to the Taliban."

Much of the country remains "unstable and insufficient," Brahimi said. Among those factors which are behind the instability, Brahimi listed "rivalries between factions and local commanders, impunity for human rights violations, and the daily harassment of ordinary Afghan citizens by both commanders and local security forces."

Brahimi, who worked hand-in-glove with the U.S. Special Envoy to Afghanistan Zalmay Khalilzad, an associate of the Chickenhawk war party in Washington, to give Hamid Karzai another 15 months of rule, is now blaming everybody else for the instability. He never mentioned even once that the Afghans feel "occupied" and that the foreign forces are considered as an "occupying force"—a year and a half since the U.S.-led war to overthrow the Taliban.

India Initiates Talks with Pakistan

On April 18, Indian Prime Minister Atal Behari Vajpayee extended his "hand of friendship" to Pakistan. Within days, Pakistani Prime Minister Zafarullah Khan Jamali was on the phone with his Indian counterpart. Since then, India has decided to reverse the process of downgrading diplomatic relations and appoint a high commissioner to Islamabad. Islamabad has responded positively, and preparations are on for beginning of formal talks—probably at a bureaucratic level—to ease tensions between India and Pakistan.

The change in attitude of both New Delhi and Islamabad is sudden. The situation in the India-held part of the state of Jammu and Kashmir has remained as unstable as ever. The process of instability in Kashmir, triggered and sustained by Islamabad, through infiltration of militants and hard-core terrorists from the Pakistani side, does not benefit either India or Pakistan. Over the years, more than 65,000 people have lost their lives to the militants and the Indian security forces.

It is too early to tell when, in fact, peace might reign along the Line of Control. A lot, however, is at stake. Both India and Pakistan are gas- and oil-short nations, while to the west of the subcontinent, lie some of the most abundant gas and oil fields. For years, Iran tried to work out a solution whereby India could receive Iranian oil through a pipeline which would pass through Pakistan to reach India. However, the tense India-Pakistan relations have prevented the laying of this pipeline. Last January, Iranian President Mohammad Khatami was in India and Pakistan, trying to convince both the nations the necessity of laying the pipelines.

Another gas pipeline from Turkmenistan to India, via Afghanistan and Pakistan, is now openly discussed.

In addition, following the collapse of the Taliban regime in Afghanistan, and the ushering in of the Karzai government in Kabul, India was welcomed with open arms by the Afghans. India has signed a tariff-free trade agreement with Afghanistan, but the lack of a direct route to Afghanistan has so far stymied this proposal. Pakistan had earlier officially declined to allow the passage of Indian goods to Afghanistan overland. Pakistan and India have each also denied the use of air space to the other.

The most important reason for a rapproachment is to develop a strong economic relationship between New Delhi and Islamabad. Culturally compatible to each other, a strong economic relationship between India and Pakistan will pave the way for economic well-being in the South Asian region, home to more than 1.4 billion people.

India and Pakistan will have to take a number of steps in order to assure success in the upcoming talks, the first and foremost of which is to keep Washington out of these talks—both physically and in spirit. Both New Delhi and Islamabad need to make clear to each other that they are not tied to a distant puppeteer. If the American interests become the subject matter of these talks, they would result in an abject failure.

The second important objective will be to under-react to the militants' actions. Militants, many of whom would like to establish an independent Kashmir, have already stepped up violence in the India-held part of Jammu and Kashmir. A harsh reaction by New Delhi to the militants would help no one, but would give a boost to the militants, whose basic objective is to break the talks, and make New Delhi look like reactionaries and butchers.

Indonesian Army and Free Aceh Movement Gear Up for War

The Indonesian Army (TNI) and the Free Aceh Movement (GAM) are gearing up for full-scale war in Aceh, the Jakarta Post reported May 8. A deadline was set for May 12 for the GAM to return to negotiations, but no one expects that to happen. TNI Chief Gen. Endriartono Sutarto told 2,164 military personnel on May 8 to head for the country's westernmost province.

Earlier, the TNI leadership also readied two battalions of about 1,200 Air Force soldiers. They will join some 26,000 troops and 14,000 police personnel already stationed in the province. The huge number of reinforcement troops would reportedly face between 8,000 and 10,000 GAM members who are believed to have some 8,000 weapons, including SS-1, AK-47 and AK-54 rifles.

At least 10,000 people have been killed, mostly civilians, since 1976, in Aceh fighting.

Is the U.S. Declaring War on the MILF Separatists?

The conflict in Mindanao in the Philippines is now rushing toward disaster. In early May, President Gloria Macapagal Arroyo cancelled the peace talks with the MILF, scheduled for Kuala Lumpur May 9, and put a price on the head of the MILF leaders. Now U.S. Defense Secretary Donald Rumsfeld's cohort Gen. Angelo Reyes, the Philippines Defense Minister, has announced that the MILF will likely be declared a terrorist organization, and that the United States will carry out "exercises" with the Philippines Army in two or more areas considered to be MILF territory. As with the Balikatan "exercises" against the Abu Sayyaf last year, these are actually to be live combat operations against the MILF, with U.S. troop support of some sort (yet to be specifically determined).

While the Abu Sayyaf is a small band of terrorist thugs, the MILF is a long-standing Moro separatist movement with deep support in the population. Taking a page from Israeli Prime Minister Sharon's playbook, President Arroyo said on May 7: "No more double-talk. The MILF must unequivocally and unambiguously renounce terrorism in the pursuit of its objectives."

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