A bi-weekly update on new political, economic, and security risks around the Asia-Pacific region from The Diplomat's Ankit Panda.

A ‘Happy New Year’ From Kim Jong Un

Bangladesh elections; Apple and China; new Indonesian base

The Big One.

A simple message.

Image result for kim jong un new year

To kick off the new year, North Korean leader Kim Jong Un delivered his customary New Year’s Day address to the country—his seventh since resuming the practice that his grandfather introduced and his father eschewed.

I broke down the speech’s four major takeaways for The Diplomat and dove a little deeper into the diplomatic context in a separate article for Politico Magazine. Kim’s main point on the diplomatic impasse with the United States was simple and reiterated a message we’d seen repeatedly appear in North Korean propaganda in the days and months since the June 12, 2018 summit meeting with U.S. President Donald J. Trump in Singapore—in fact, literally the day after the summit, we heard this very message.

In short, Kim’s message to the United States was something to the effect of: “We went; now you go.” He outlined the measures North Korea had taken to show its good faith intention to work toward the “complete denuclearization” of the Korean Peninsula. (A phrase that does not mean North Korea’s unilateral disarmament.) In light of those actions, Kim outlined his expectations for reciprocal “corresponding measures” from the United States—reusing a term that had appeared in the September 19 inter-Korean declaration signed between him and South Korean President Moon Jae-in in Pyongyang during the fifth inter-Korean summit.

Speaking of Moon, Kim greatly praised the inter-Korean progress of 2018 and encouraged the South Korean government to push forward with inter-Korean economic integration and cooperation in the spirit of national self-determination. The push is logical for North Korea, which has sought to decouple Seoul from Washington and reap the benefits of integration with its prosperous southern neighbor. Indeed, Kim likely had a free assist in the form of the recent doldrums between Seoul and Washington over the negotiation of their Special Measures Agreement (SMA)—a bilateral agreement designed to govern burden-sharing for the alliance. Without an agreed extension, the SMA expired at the end of 2018.

Kim ended his address with a warning to the United States. If the “corresponding measures,” including sanctions relief, do not arrive, he won’t hesitate to take his country down a new path. He did not elaborate on what that meant but left enough ambiguity on the table to make the threat clear.

Welcome to 2019, everyone.

Bottom Line: Kim Jong Un wants the United States to swim toward further rapprochement before the diplomatic process between them that began last year begins to sink entirely.

East Asia.

On the second day of 2019, Tim Cook, the CEO of Apple Inc. released a letter to shareholders that would send markets tumbling the next day, ensuring that the volatility that marked the end of 2018 in global markets would continue. Cook downgraded Apple’s revenue guidance for the first quarter of the 2019 fiscal year, with an expected profit shortfall in the range of $5 billion to $9 billion. The company is a global tech behemoth and the news not only sent its shares downward, but affected the entire global tech sector and broader equities in the ensuing day of trading.

Cook’s explanation merits some focus:

While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.

The anticipated Greater China issues that Apple is encountering could be due to many structural factors, including the maturation of indigenous Chinese competitors in the smartphone and other portable device space (Apple’s primary profit drivers). Cook said as much: “Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline.” Commentators immediately pointed out Apple’s higher-than-previous-generation pricing for its current iPhones, which have alienated many consumers in Asia.

But how much of this is due to the ongoing trade war between the United States and China, which has presented Apple’s existing supply chains with immense risk and increased costs? The answer isn’t clear. Apple’s slowdown comes at a time of what appears to be a cyclical slowdown in global growth—and certainly in China. But all else being the same, the uncertainty caused by Trump’s trade war with China, despite the ongoing light “truce”, is being blamed. Time will tell if Apple—and other brands—will weather the storm, but early indicators are not promising.

Bottom Line: Apple’s first earnings warning since 2002 is being seen as a harbinger of a tumultuous 2019 for global markets, spurred primarily by concerns coming out of China.

South Asia.

On December 30, as many as 100 million eligible Bangladeshi voters went to more than 40,000 polling stations around the country to cast their votes in the country’s hotly anticipated 2018 general elections. The result was unsurprising: an overwhelming victory for the incumbent Awami League, giving Prime Minister Sheikh Hasina a renewed mandate with the League taking a whopping 96 percent of all available seats in parliament.

The united opposition coalition, the Jatiya Oikya Front, claimed that votes had been rigged and there were outbursts of political violence around the country. Kamal Hossain, Hasina’s challenger as leader of the opposition, called the conduct of the elections “farcical.” Chief Election Commissioner K.M. Nurul Huda has ruled out a re-do on the election.

The election marks yet another step back in the country’s slow—but easily perceptible—democratic backsliding. M Niaz Asadullah and Antonio Savoia contextualized the circumstances of the election in The Diplomat:

Since the start of the election campaign on December 10, opposition leaders in Bangladesh have come under attack almost on a daily basis. According to local and international media, some campaigning opposition candidates have been publicly beaten by ruling party cadres or sent to jail on false accusation. As many as 21,000 opposition leaders and activists were arrested since the announcement of the election schedule. Ruling party miscreants torched opposition campaign offices, attacked female opposition contestants and accosted a motorcade including Hossain. There are allegations of rampant violation of electoral codes.

Instead of ensuring a transparent election, human rights groups have accused the election commission of doing the opposite: Putting up restrictions on election day coverage, such as live cast from voting centers or cellphone recording of irregularities. These, critics argue, are part of a coordinated strategy from the incumbent government to weaken the conditions for a free and fair election.

The United States and the European Union expressed concern about violence around the general election and called for irregularities to be investigated, but otherwise, Hasina’s government has been mostly praised for its economic performance if nothing else. The story in Bangladesh right now is an old one: democracy declining as economic performance remains upward-sloping. For now, accusations of the country having effectively become a “one-party democracy” are becoming truer than ever.

Bottom Line: Bangladesh’s recent general elections underlines its continued democratic backsliding under the Awami League.

Elsewhere: For a great overview of the state of receding democracy across South Asia, I’d recommend Paul Staniland’s new essay for Foreign Affairs.

Southeast Asia.

The China-US-Canada Huawei Crisis

India’s elections; Uzbek reforms; Malaysia takes on Goldman Sachs

The Big One.

Rule of law meets hostage diplomacy.

Image result for meng wanzhou

The United States—with an important assist from Canada—has seemingly opened up a new front in the tech war with China. Or so you might think from the manner in which Huawei CFO Meng Wanzhou’s arrest has been covered in China’s state media.

Make no mistake: Meng’s arrest in Canada over bank fraud charges is a watershed event and it has significance for the nature of China’s relationship with both Canada and the United States, but it was a result of an independent legal process in the United States. The specifics have gotten lost amid state media sensationalism in China and unfortunate statements in the United States. For instance, U.S. President Donald J. Trump’s implication that he might interfere in Meng’s prosecution, instead of reaffirming the rule of law, undermined it considerably, confirming Beijing’s worst suspicions.

The Diplomat’s Bonnie Girard explains what’s behind the public backlash to Meng’s arrest, which has inflamed nationalist sentiment over what is seen as one of China’s most cherished national brands. A perceived attack on Huawei becomes an attack on the “Huawei story” itself, which may as well be the story of China over the last 30 years itself.

The Huawei story is told and sold in China as a romanticized rags-to-riches saga: A middle-aged rank-and-file retired People’s Liberation Army officer takes his meager savings to form a private company, nearly unheard of in 1987. He braves political, financial, and societal disdain and discrimination to eventually create one of the world’s largest and most successful telecommunications equipment companies, going head to head with Western competitors, and winning.

Meng’s case comes not long after U.S. action against ZTE, too. At The Diplomat, Jin Kai contextualizes Meng’s arrest in the aftermath of the ZTE saga.

The Canada angle in Meng’s arrest adds an interesting layer to all this, of course. Ottawa complied with a U.S. extradition request by arresting her and incurring China’s wrath in the process. Chinese retaliatory action, meanwhile, has been appalling. Two Canadian citizens—Michael Kovrig and Michael Spavor, both of whom I’ve met in recent months—have been detained and hit with unspecified charges of undertaking activities that harm China’s national security. A third Canadian—as yet unnamed—has also been detained.

This is, of course, a trumped-up pretext for Chinese authorities to effectively undertake a form of hostage diplomacy, deepening a rift with Canada. Kovrig and Spavor’s arrests, alongside Meng’s prosecution and possible extradition, may mark the start of a prolonged lull in Ottawa-Beijing ties, similar to the freeze that came over China’s ties with Norway after the 2011 Nobel Peace Prize went to dissident Liu Xiaobo.

The non-authoritative, but Communist Party-linked Global Times made clear that the move with Kovrig and Spavor is effectively a ransom: “It is quite simple to end the crisis between China and Canada by giving back Meng’s complete freedom.” Donald Clarke put it rather aptly in the Washington Post:

The critical element of a hostage-taking is that the hostage-taker must tell you that it’s a hostage-taking and what his demands are, otherwise the whole point of taking hostages is defeated. In this case, official and quasi-official Chinese sources have been clear. The Chinese ambassador to Canada has not just admitted it; he has also proclaimed it in an op-ed in the Globe and Mail, saying that those who object to the Kovrig detention should reflect on Canada’s actions.

As I wrote recently, the United States and Canada should stand shoulder-to-shoulder in allowing Meng’s case to play out by the book. Unlike Spavor and Kovrig, who received limited Canadian consular assistance days after their initial detention, Meng has access to top legal counsel and was granted supervisory bail after a hearing. China’s overzealous reaction might backfire, too.

Spavor’s case, in particular, should send a chill through the spines of expat businesspeople based in China. Spavor, an entrepreneur involved in cultural exchanges with North Korea, was simply plucked up by Chinese authorities as a geopolitical pawn and now risks losing everything as a result. Other crises could similarly implicate China-based entrepreneurs from other countries.

This episode is likely far from over, however. Meng may be extradited to the United States, which would expand the scope of China’s retaliation. Stay tuned.

Bottom Line: The arrest of Huawei’s CFO over bank fraud charges has opened a serious rift between China and Canada and is far from over.

East Asia.

U.S. President Donald J. Trump and the North Korean regime have fundamentally different perceptions of just how well things are going when it comes to denuclearization diplomacy. Trump had the following to say last week on Twitter:

Donald J. Trump@realDonaldTrumpMany people have asked how we are doing in our negotiations with North Korea - I always reply by saying we are in no hurry, there is wonderful potential for great economic success for that country....
Donald J. Trump@realDonaldTrump....Kim Jong Un sees it better than anyone and will fully take advantage of it for his people. We are doing just fine!

You might recall that the Obama administration’s North Korea policy after the failed 2012 “Leap Day Deal” was pejoratively dubbed “strategic patience.” What we have here might be another version—perhaps “astrategic patience,” given the administration’s confused approach to Pyongyang.

North Korea, meanwhile, responded to Trump indirectly through an important—but non-authoritative—statement attributed to a think tank within its Ministry of Foreign Affairs. The core point was that “anti-DPRK sanctions and pressure” will “block the path to denuclearization on the Korean Peninsula forever.”

Moreover, the North Koreans clearly don’t share the same sense of time as Trump does. “The U.S. should realize before it is too late that ‘maximum pressure’ would not work against us and take a sincere approach to implementing the Singapore DPRK-U.S. Joint Statement,” the statement noted. Pyongyang will be unlikely to revert to its old ways of testing ballistic missiles, lest that make it look like the unreasonable party, but there are serious signs that North Korea isn’t willing to wait around for the Trump administration to break away from its demands of North Korea’s complete denuclearization before any inducements or benefits can come to Kim.

Bottom Line: We may be seeing the beginnings of a more turbulent U.S.-North Korea diplomatic process in spring 2019. Let’s wait to hear from Kim Jong Un now during his New Year’s Day address for a better sense of where things might go.

In Case You Missed It: Make sure you catch our editor-in-chief Shannon Tiezzi’s analysis of Chinese President Xi Jinping’s hotly anticipated speech on the 40th anniversary of China’s “reform and opening” policy. Her bottom line on Xi’s bottom line: “more, not less, CCP control over the economy.”

South Asia.

There’s a big takeaway from India’s recent assembly elections, which is that, for the first time in 2014, the Indian National Congress showed up with a generalizable sort of political success. After its embarrassing defeat in 2014, largely on a wave of anti-incumbency sentiment, India’s grand old party has had a few victories here and there, and partnered up with regional parties, but the latest assembly elections are something else and set up a potentially interesting race to the next general elections, which are just about 6 months away now.

A Trade War Truce?

Japan's plans for the Izumo; Uyghurs and Central Asia; Japan-Russia talks

The Big One.

Who told who what in Buenos Aires?

So, there’s a truce in the U.S.-China trade war. Maybe?

U.S. President Donald J. Trump and Chinese President Xi Jinping met over dinner in Buenos Aires, on the sidelines of the Group of 20 leaders’ summit, and both sides walked away claiming that they had reached a deal. Reporters on the site of the dinner reported hearing applause at the conclusion of the meal, suggesting at least a mutual satisfaction. The problem in the days since that dinner is that it’s not clear if both sides share the same perception of what was agreed.

I reflected quickly on Saturday evening, right after the dinner, about what the arrangement—largely as announced by the White House—might mean. It certainly looked like a truce and neither side, in my estimation, had really given away the farm. Xi didn’t cave; no one quite expected him to. At the same time, the Trump administration managed to hold fast and use the credible threat of raising the existing 10 percent tariffs on $200 billion in Chinese goods to 25 percent to extract what appeared to be some commitments.

But from there, it appeared that China had entirely another understanding of what had transpired.

Peter Martin@PeterMartin_PCMConfused about what exactly Xi and Trump promised each other yesterday? Here's a side-by-side comparison of the readouts from both sides. The U.S. on the left, China on the right https://t.co/5N7aISEdew @LucilleLiu @JDMayger @Jeffrey_Black

Readouts do normally vary between sides after a diplomatic encounter, of course, but Beijing made no acknowledgement of the very concessions that the Trump administration touted as being evidence of a decent deal—one that respected core American concerns. Critically, the 90-day period that the White House cited as an opportunity for the two sides to work toward a more comprehensive agreement, saw no mention in Chinese readouts. Meanwhile, the South China Morning Post reported that China had started censoring the U.S. embassy’s WeChat posts touting the trade agreement at Buenos Aires using the White House readout language.

All of this leaves the G20 agreement in an uncertain place. Markets, perhaps acknowledging this uncertainty, reacted initially with a fairly lukewarm positive turn before a precipitous fall on Tuesday U.S. time, as this newsletter was being written. (Something about Trump declaring himself a “tariff man” on Twitter perhaps didn’t sit right with investors?) The broader point stands with the trade war: the fundamental differences between the two sides are no closer to being ironed out.

Bottom Line: There’s considerable uncertainty around the commitments the United States and China gave each other in Buenos Aires. If the trade war is in a truce, we’ll find out when January 2019 comes around.

East Asia.

I hinted at this in the previous issue, but the issue of renewed Russo-Japanese talks over their mutual territorial dispute over the Kuril Islands merits a deeper look. In September, Russian President Vladimir Putin drew headlines for apparently shocking Japanese Prime Minister Shinzo Abe—an overstatement, perhaps—by proposing that the two sides finally resolve that decades-long dispute by entering talks toward a peace treaty “without any preconditions.” In short, the two sides have long been quagmired over this issue, relating primarily to the issue of sovereignty and the 1956 Joint Declaration between the Soviet Union and Japan. Japan wants to see the sovereignty of the disputed islands, which are currently administered by Russia, addressed, and Russia has refused to do that. At the East Asia Summit in November this year, Putin met Abe and the two hashed it out again, but there wasn’t any real progress apart from both leaders agreeing to “accelerate talks.” (Nick Trickett took a look at Putin’s EAS for The Diplomat.)

Since the EAS encounter, there has been some progress. This week, Abe anointed his foreign minister, Taro Kono, with the lead on the negotiations with Russia going into 2019. The goal remains a peace treaty. (A side note on Kono: it was his grandfather, Ichiro Kono, who signed the 1956 agreement with Nikita Khrushchev.) On the Russian side, Foreign Minister Sergei Lavrov will lead the charge.

The appointments and partitioning of portfolios, however, shouldn’t suggest that this time things will be different. What is different this time compared to previous attempts is that Russia’s attempts to economically galvanize its Far East with Japanese investment have come a long way and Japan has reciprocated. Cementing a peace treaty would probably unlock greater opportunities for both sides, but there’s a long list of issues to work through before getting there. Incidentally, I just returned from a trip to Vladivostok in the Russian Far East in late-November and a couple Russians who work on international affairs out of the country’s Far East saw similar benefits to resolving this issue with Japan.

For Tokyo, however, the primary issue will be a satisfactory resolution of the dispute, namely with the transfer of sovereignty of the four disputed islets to Japan. Getting there will mean swallowing tall Russian asks, which may include the exclusion of the islands from the U.S.-Japan Mutual Defense Treaty and the removal of sanctions that Tokyo agreed to impose on Russia in 2014 for its annexation of Crimea.

Bottom Line: Russia and Japan are back to talking about the Kuril Islands in a more serious way than they have in recent years, but there’s little reason to believe that this time will really be different.

South Asia.

December will be a big month for two of India’s neighborhood relationships. The newly elected president of the Maldives, Ibrahim “Ibu” Mohammed Solih, and the newly elected prime minister of Bhutan, Lotay Tshering, are both expected in New Delhi. With the Maldives, the Indian government will seek to capitalize on what turned out to be an unexpected opportunity. Where many had expected the country’s former, autocratic-leaning president, Abdulla Yameen, to manipulate state institutions and eke out victory in the September elections, Solih rose to the top on the back of unprecedented democratic turnout and enthusiasm. In his inaugural address in November, Solih pledged to improve and restore relations with India. (Indian Prime Minister Narendra Modi made his first trip to the Maldives to attend Solih’s inauguration.) The rapprochement between New Delhi and Male will be in full swing with Solih’s visit to India.

With Bhutan, matters are a little more nuanced. Last year, India and China found themselves mired in a standoff on a piece of territory on the Doklam plateau claimed by Bhutan and China; India, Bhutan’s close partner and security guarantor, stepped in to prevent Chinese construction activity in the disputed territory. While that standoff was resolved more than a year ago, the situation on the Doklam plateau remains tense, with the Chinese People’s Liberation Army having considerably upped its presence. For India and Bhutan, part of managing the relationship over the recent decade or so has been the issue of Thimphu’s outstanding territorial dispute with China. (India and Bhutan are the only countries among China’s land neighbors that have yet to finalize their borders with Beijing.) With Lotay Tshering, New Delhi will want to ensure that the relationship is properly calibrated under a new government and that Bhutan won’t be prone to make any territorial concessions to China that might harm India’s interests. (If you missed it, The Diplomat’s Sudha Ramachandran had a deeper dive on this very issue.)

Bottom Line: India’s neighborhood policy will be in the spotlight in December as the leaders of Bhutan and the Maldives head to New Delhi.

China's Insecurities on Show at APEC 2018

Pence in Asia; North Korea's weapons test; Kazakh gas exports

The Big One.

Pence’s big Asia tour wraps up with an unexpected moment.

U.S. President Donald J. Trump doesn’t travel long distances well and that’s left the vice president, Mike Pence, as the new point-man on Asia. Pence has returned from a regional tour across Asia, with the headline events of his trip including the usual round of Association of Southeast Asian Nations (ASEAN) summitry, including the East Asia Summit, held this year in Singapore. Pence ended his trip in Papua New Guinea, host of this year’s Asia Pacific Economic Cooperation (APEC) summit.

At both the EAS and APEC, Pence brought a classic Trumpian tone and defended the administration’s approach to the region.

Some of the choice lines from Pence’s EAS speech:

  • Let me be clear: China’s militarization and territorial expansion in the South China Sea is illegal and dangerous. It threatens the sovereignty of many nations and endangers the prosperity of the world.

  • The United States seeks a relationship with China that is based on fairness, reciprocity, and respect for sovereignty. We have documented the difficulties that the United States and other nations face with China, and China knows where we stand.

  • This year, we’ve devoted more than half a billion dollars to security assistance in the Indo-Pacific, including nearly $400 million in foreign military financing – more than the previous 3 years combined.

  • Now is the time to maintain the pressure campaign [on North Korea] and enforce all U.N. sanctions. We must work together to stop North Korea’s evasion of sanctions, including the illegal ship-to-ship transfer of oil and coal. All countries must also expel North Korean labor.

And Pence at APEC:

  • [S]ome are offering infrastructure loans to governments across the Indo-Pacific and the wider world. Yet the terms of those loans are often opaque at best.  Projects they support are often unsustainable and of poor quality. And too often, they come with strings attached and lead to staggering debt.

  • Know that the United States offers a better option.  We don’t drown our partners in a sea of debt. We don’t coerce or compromise your independence.  The United States deals openly, fairly. We do not offer a constricting belt or a one-way road. When you partner with us, we partner with you, and we all prosper.

The trip was Pence’s big moment to take the new and overt U.S. competitive tone toward China—the same one Pence introduced in an October speech at the Hudson Institute—to Asia. And, it actually appears to have turned out fairly well, but not necessarily due to Pence’s doing.

The APEC summit ended without a joint communiqué and it wasn’t the United States that was the troublemaker like at last year’s G7 meeting. It was China that was unable to accept the language prepared for the statement, embarrassing and frustrating host Papua New Guinea. According to the Wall Street Journal, the troublesome line was the following: “We agreed to fight protectionism including all unfair trade practices.”

That China couldn’t accept that language is telling. President Xi Jinping has been on the defensive lately. As early as the Boao Forum for Asia earlier this year on Chinese soil, Xi began emphasizing that China has no geopolitical grand designs behind the Belt and Road Initiative. He made a similar plea at APEC, remarking that his signature Belt and Road Initiative was “not designed to serve any hidden political agendas.”

Xi’s attempt to pitch himself as the defender of globalization—a project that began with his trip to Davos earlier this year—is running into roadblocks. For the United States, this presents an opportunity to corner China and capitalize on growing regional skepticism of Beijing’s intentions.

Bottom Line: The unfortunate impasse at the end of this year’s APEC summit shows that Chinese insecurities may provide the United States with an important geoeconomic opening.

East Asia.

Are the North Koreans back at it again? Last week, North Korean state media announced in a vague article that Kim Jong Un had supervised the test of a new type of "ultramodern" and "tactical" weapon. The article was accompanied by a single image that didn't show the weapon off, but did show Kim giving guidance to uniformed members of the Korean People's Army gathered at what appeared to be a coastal test site. There was a message being sent with this supposed test, which appeared to be carefully calibrated to not be too provocative. Kim was letting U.S. President Donald J. Trump know that if he wanted to continue enjoying the benefits of the ongoing pause in ballistic missile testing, he'd better move toward the "corresponding measures" the North Koreans have been looking for. Importantly, announcement of Kim's inspection came after the United States and South Korea resumed a modest, small-scale marine exercise, suggesting that North Korea wouldn't tolerate any allied military exercises as long as diplomatic talks were on. For now, this move appears to be a shot across the bows of the United States and South Korea. Momentum toward a second Trump-Kim summit, in the meantime, continues.

Bottom Line: North Korea is getting impatient and is particularly irked with resumed U.S.-South Korea military drills.

Bonus: Keep your eyes on Russia and Japan. Two months after Russian President Vladimir Putin proposed suddenly to resolve their outstanding territorial dispute over the Kuril Islands “without any preconditions,” Tokyo appears to have thought things over and has made an important opening. Abe wants to put an end to the dispute and open a new era in Russia-Japan ties, which have been expanding quickly in recent years despite the outstanding dispute and tensions between Moscow and the West.

South Asia.

In the Indian Ocean, there are two stories playing out. One's a happy one, that reached its climax with the inauguration of Ibrahim 'Ibu' Mohamed Solih as the new president of the Maldives, putting an end—for now—to former President Abdulla Yameen's authoritarian designs. Solih vowed to balance the country's foreign relations in an inaugural speech, which was attended by Indian Prime Minister Narendra Modi. For New Delhi, Solih's rise in the Maldives presents an opportunity to restore equilibrium to a once close neighborhood relationship that had gone off the rails as Yameen pursued closer ties with China. “Large-scale embezzlement and corruption have dwindled the coffers of the state by billions of rufiyaa. This money belongs to the Maldivian people, money that should have been spent for the common good of the people,” Solih noted in his inaugural speech, hinting at the corruption of the previous government. In a veiled reference to China-backed projects in the country that were initiated under Yameen, Solih noted that “reckless mega development projects [were] undertaken purely for political gains.”

The second story in the Indian Ocean concerns Sri Lanka, which led the previous edition for this newsletter. The bad news continues in Colombo, with the ongoing constitutional crisis appearing to only deepen without any sign of reversal. Sri Lankan lawmakers were able to arrive at a no-confidence motion in a parliamentary voice vote that Rajapaksa's supporters rejected as legitimate. All this eventually led to a November 18 meeting between the three men at the center of the ongoing crisis: President Maithripala Sirisena, former President and newly appointed Prime Minister Mahinda Rajapaksa, and, finally, the ousted Prime Minister Ranil Wickremsinghe. Direct talks between the three men failed to deliver any way out of the crisis, with Wickremsinghe claiming that the no-confidence motion proved that he still enjoyed legislative support.

Bottom Line: In the Indian Ocean, the Maldives drifts away from democratic decline toward what will hopefully be a period of recalibration and reconstruction. Meanwhile, Sri Lanka's crisis deepens.

Southeast Asia.

A Constitutional Crisis in Sri Lanka

Inter-Korean military progress; India's nuclear sub milestone; Lion Air crash

The Big One.

A game of thrones in the Indian Ocean.

In the final week of October, Sri Lanka found itself thrust suddenly into a political crisis—or a soft coup, depending on who you ask. The crisis has swirled largely around the ambitions of three men: Maithripala Sirisena, the president; Ranil Wickremsinghe, the prime minister of the country since 2015; and Mahinda Rajapaksa, the former decade-long ruling president and newly appointed prime minister. Sirisena, who had unexpectedly risen to defeat Rajapaksa in the January 2015 presidential elections, appointed his one-time former rival to the prime ministership. Meanwhile, Wickremsinghe, who was once Sirisena’s unity government partner, refused to vacate the prime minister’s residence, arguing that he could prove that he continued to enjoy the support of parliament. In the days since, a power struggle has played out as two prime ministers seek to wrangle support from the legislature. Meanwhile, Sirisena prorogued parliament and dissolved and reconstituted his cabinet. At least one person has been killed in political violence resulting from the crisis and there are serious concerns that further violence might emerge.

The geopolitical contours of the crisis are apparent. China has acknowledged Rajapaksa’s ascent to the prime ministership while India and the United States have been more circumspect. Under Rajapaksa’s ten-year rule, Sri Lanka took on massive amounts of Chinese debt. Beijing also sees the former Sri Lankan president as a reliable partner.

Things are still in flux, but it’s expected now that Sirisena will reconstitute parliament sooner than expected, allowing a potential confidence vote to take place, reviewing Rajapaksa’s appointment. “Really, Rajapaksa or Wickremesinghe should have to prove that they have majority support in the legislative body right now. Chaos and delay favor coup supporters,” writes Taylor Dibbert in The Diplomat.

Bottom Line: A constitutional crisis in Sri Lanka with geopolitical stakes threatens to thrust the island nation toward prolonged instability and even political violence.

Bonus: Catch the latest Asia Geopolitics podcast where Prashanth Parameswaran and I discussed Sri Lanka’s constitutional crisis and its regional implications.

Northeast Asia. 

North and South Korea have been remarkably successful so far at seeing through the implementation of the Comprehensive Military Agreement (CMA) they announced during the third inter-Korean summit this year in Pyongyang. The two sides have, among other things, jointly de-mined and demilitarized the Joint Security Area (JSA) along the Military Demarcation Line (MDL) that separates them, instituted land-, sea-, and air-based exclusion zones for military exercises and live-fire drills, instituted a no-fly zone, removed guard posts, and started talks on turning the Han River Estuary into a “joint utilization zone.” The details are interesting, but the broader picture is that South Korean President Moon Jae-in and North Korean leader Kim Jong Un have produced a stark change in the security environment on the Peninsula at breakneck speed. So far, while there continue to be roadbumps on the side of economic cooperation due to the unswerving international sanctions regime against North Korea, there have been no significant obstacles in the implementation of the CMA. The reason this is particularly important and valuable is because it raises the threshold for a crisis to break out. A replay of the 2010 shelling of Yeonpyeong Island or the sinking of the ROKS Cheonan becomes far less likely in this context.

Bottom Line: Inter-Korean military tension reduction is an incredible bright spot right now on the Korean Peninsula.

In Case You Missed It: Japan-China ties are on the mend. Japanese Prime Minister Shinzo Abe’s summit with Chinese President Xi Jinping in Beijing was an important moment in the bilateral relationship and a product of both sides seeing hedging value in the other amid an increasingly unpredictable U.S. foreign policy under President Donald J. Trump.

Bonus: Read Diplomat editor-in-chief Shannon Tiezzi’s take on Chinese President Xi Jinping’s speech to the China International Import Expo (CIIE) in Shanghai:

There were clear echoes here of Xi’s speech at the 2017 Davos meeting, where he tried to position China as the new defender of free trade and globalization. That branding exercise has become both a harder sell and a more crucial one for China to make as the United States and European countries step up their criticisms of Beijing for placing restrictions on foreign firms.

South Asia.

Pakistan’s blasphemy laws continue to stoke the flames of popular extremism in the country. On October 31, 2018, the Pakistani Supreme Court—the apex institution in the country charged with ensuring that the rule of law, well, rules—acquitted Asia Bibi, a Christian woman charged with blasphemy, citing poor witness statements against her and a shaky case by the prosecution. The Diplomat’s Umair Jamal had written in anticipation of the verdict that the case would be a “test case” for Pakistan, to see how well it could cope with an institutionally sanctioned acquittal of a defendant in a blasphemy case.

Blasphemy is no joke in Pakistan. A few years ago, Pakistani authorities hanged Mumtaz Qadri, who was bodyguard—and eventually assassin—to Salman Taseer, the former governor of Punjab province. Qadri killed Taseer after the latter criticized Pakistan’s blasphemy laws and called openly for Bibi, who had been held in custody since 2009, to be released. Qadri’s hanging spurred mass protests across the country.

That episode foreshadowed the ongoing fallout in Pakistan from Bibi’s Supreme Court verdict. Political parties like Tehreek-e-Labbaik Pakistan have seized on the moment to spur mass protests, in an attempt to force the Pakistani government to override the writ of the Supreme Court and thus rule of law itself. These protesters seek to prove that God’s law is greater than that of the state itself, as Jamal notes. Critically, the still-new government led by Prime Minister Imran Khan is unwilling to stake out too radical a position. “The government is not willing to target protesting individuals, let alone target the narrative of religious intolerance that has brought out thousands of people in streets,” Jamal observes.

It’s still unclear how the latest episode will resolve itself. Asia Bibi is being held in the custody of the Pakistani military while her life is under threat. Her lawyer has left Pakistan in the meantime, fearing for his life.

Bottom Line: Extremist outcry over Pakistan’s blasphemy laws continues to be a serious political force in the country.

Southeast Asia.

Indonesia remains gripped by the tragedy of Lion Air Flight JT610. The Boeing 737 MAX 8 passenger jet crashed off the coast off Jakarta in the Java Sea, claiming the lives of all 189 passengers and crew on board. The accident was the first to involve this kind of Boeing aircraft and is the deadliest to date involving an aircraft of the 737 class. The question of just how preventable the accident was has gripped Indonesians in the past week. The 737 MAX 8 that crashed as flight JT610 had previously encountered mechanical errors during a previous flight.

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As Asmiati Malik explained in The Diplomat, one passenger on that flight noted that the plane was “flying at a lower altitude than usual” and another noted that “the airplane’s engine made unusual noises.” But the bigger problem may have to do with a failure to adequately regulate low-cost carriers, which are fast-growing all over Asia. Lion Air, especially, has grown famous for its low fares, which have come at a cost to customer service, labor standards, and, apparently, safety too. Malik cautions:

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