Wednesday, December 27, 2006

The Year in Asia, 2006

As atomic bombs go, it wasn't much. But it was a bomb, so North Korea unequivocably joined the small community of announced nuclear weapons states. The yeild at less than a kiloton was so low for a debut test as to raise speculation that it was basically a dud. Nevermind. It and the earlier testing of long-range missiles was powerful enough to roil the waters, attract attention in the West (certainly more than most of the other items on this list) and bring somewhat mild UN sanctions against Pyongyang. At year's end the Six-Party talks had been revived, only to adjourn with no major progress reported. Other significant developments in Asia in 2006 were:

2. The India-US nuclear deal inaugurates a new relationship

3. China's foreign currency reserves top $1 trillion

4. Army seizes power in Thailand, ousts prime minister

5. Vietnam joins world and World Trade Organization

6. Russia muscles in on Sakhalin oil-gas deal

7. Japan Sinks - population officially in decline

8. Sri Lanka's "forgotten war" heats up

9. Playboy debut in Indonesia sparks riots

10. East Timor becoming a failed state?

In a rare diplomatic success the George W Bush administration anounced and Congress passed the necessary legislation to implement a nuclear power deal negotiated with India. Under the terms, New Delhi agreed to place its civilian nuclear power stations under international inspections, while the US agreed to lift embargoes on the sale of nuclear fuel and plant equipment that had been in place for the three decades since India first exploded a nuclear device. The agreement was seen as ushering in a new era of cooperation with the world's second most populous nation.

In November Beijing announced that its foreign currency reserves now surpass the equivalent of one trillion dollars. About 70-80% of those reserves are in US dollars, either as Treasury bonds or other assets. This is the largest stash of US dollars held by a foreign country anywhere in the world. That same month the Chinese currency, known as the renminbi or yuan, achieved parity with the Hong Kong dollar, having appreciated about 5% since July, 2005, when Beijing relinked the yuan to a basket of currencies instead of the greenback. But the rise was not enough for many critics in the West.

A year of political turmoil in Thailand reached a climax on Sept. 19, when the army seized power in a coup d'etat and ousted Prime Minister Thaksin Shinawatra while he was in New York to address the UN General Assembly. The premier's sale of his telecoms business empire to the Singapore investment arm Temasek for nearly $2 billion without paying capital gains taxes prompted huge demnonstrations in Bangkok. An April snap election for parliament, boycotted by the opposition, was later anulled. The coup was bloodless, and largely welcome, at least by the political classes in the capital.

Communist Vietnam has had its own version of a market economy, called doi moi, for 20 years, but it seemed as if Vietnam's economy began to catch fire only this year. Or, perhaps this was the year that everybody began to take notice. First Vietnam joined the World Trade Organization, and Congress approved normal trading relations. Then Vietnam hosted the annual meeting of the Asia-Pacific Economic Cooperation forum. Probably the seal of approval came when Intel announced it planned to triple its investment in a semiconductor chip and testing plant in Ho Chi Minh City to $1 billion. Few realize that Vietnam has the world's second-fastest growing economy, after China.

Gazprom, the Russian energy monopoly, bought a controlling interest in Sakhalin 2, the world's largest combined oil and natural gas project north of Japan. This project was originally 100% foreign owned by a consortium that included Royal Dutch Shell, Mitsui and Mitsubishi. Moscow brought pressure on the owners by using environmental regulations to halt development of the offshore facilities, leading to what some called the first effective nationalization of a large foreign-owned project since the end of the Soviet era.

All Japan rejoiced in the birth of a baby boy to Princess Kiko and her husband, Prince Akishino, thus assuring the continuity of the Imperial family line. But the larger story was the official recognition that the number of projected births in Japan will be exceeded next year by the number of deaths, thus the beginning of the decline in Japan's population. Such a decline has long been predicted based on extremely low fertility rates and minimal immigration. By the end of the century Japan's population could fall to 60 million from the current 120,000 million.

When the Israeli Air Force bombed Qana killing 28, it made headlines all over the world. When, a short time later, the Sri Lankan Air Force bombed an orphanage, killing 61 and wounding hundreds, you had to look far and wide for any coverage. Sri Lanka's vicious "forgotten" war, flared in 2006. Hours after the air strike, a suicide bomber killed seven in Colombo in an attacked apparently aimed at the Pakistani High Commissioner. Islamabad helps supply the Sri Lankan Army. In December an artillery attack on a Tamil refugee camp killed 34 and wounded hundreds.

It was a pale reflection of the American original, but just the idea of a local edition of Playboy was enough to spark riots in Indonesia. The publisher fled Jakarta for the slightly freer climate of Bali. Publication coincided with contentious, year-long debate over an anti-pornography law, which went far beyond prohibiting depictions of explicit sexual intercourse to a virtual Sharia-like regulation of women's dress in public and prohibiting public displays of affection. The law was seen in the context of a resurgence of Islamic fundamentalism in the world's most populous Muslim country.

For years the independence of East Timor from Indonesia had been a cause celebre of the political classes in the West. But the anarchy and rioting that engulfed the capital Dili in 2006 raised the question whether East Timor was becoming a failed state. Australia and several other countries dispatched peacekeepers to restore law and order, the Prime Minister Mari Alkatiri was replaced by foreign minister Jose Ramos Horta. The irony was that Indonesia, from which it was detached, had become a successful democracy.

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December 27, 2006 at 11:01 PM  

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