Bangladesh elections; Apple and China; new Indonesian base
|Jan 4||Public post|
The Big One.
A simple message.
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.
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.
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.
Blink and you might have missed it—especially given how busy December 2018 was—but something I neglected to discuss in the last edition of this newsletter was Indonesia’s announcement of a new base in the Natuna Islands, which sit off the coast of Borneo and extend Indonesia’s exclusive economic zone (EEZ) just enough that it overlaps partly with China’s infamous “nine dash line,” thrusting Jakarta into a dispute of sorts with Beijing. (Indonesia, notably, is not a territorial claimant in the South China Sea.)
Helpfully, my colleague Prashanth Parameswaran separates hype from reality regarding the new Natuna facility:
The idea of an Indonesian military presence in the Natuna Islands in general and with respect to the South China Sea in particular is far from new. Indeed, as I have noted before in analyzing Indonesia’s approach in these pages and elsewhere, the resource-rich Natuna Islands, located in the southern end of the South China Sea northwest of Borneo, has long been factored into Indonesia’s security thinking. Though this is due to an array of concerns relating to the country’s borders, including with respect to its neighbors, one key consideration stems from the fact that even though Jakarta is not officially a South China Sea claimant, China’s nine-dash line overlaps with the exclusive economic zone (EEZ) around the Natunas.
As a massive archipelagic nation, Indonesia has to devote considerable attention to monitoring and enforcing laws across its large EEZ. The Natunas have come under focus in recent years—particularly after a handful of incidents with Chinese maritime law enforcement in disputed waters. Consider also that President Joko “Jokowi” Widodo has positioned the Natunas at the center of his otherwise sparse national security focus—and there’s an election coming up in just a few months.
Bottom Line: Indonesia’s new Natuna base is the crystallization of longstanding trends in the archipelagic nation’s security policy under President Jokowi.
Uzbekistan has seen a lot of attention in previous editions of this newsletter and that doesn’t change this time. With the onset of 2019, the country has officially abolished its Soviet-era practice of requiring exit visas for its own citizens, making good on an August 2017 directive from its reformist president, Shavkat Mirziyoyev. As my colleague Catherine Putz writes, “This system, human rights activists have long argued, has been used disproportionately to restrict politically bothersome citizens and journalists.” It’s among the more significant moves to remove restrictions on the basic freedoms of ordinary Uzbeks.
Bottom Line: Uzbekistan’s implementation of reforms announced earlier in Mirziyoyev’s term continues.
Bonus: We’ve discussed the spillover effects of China’s incarceration of hundreds of thousands of Uyghurs in its Muslim-majority western province of Xinjiang into Central Asia. The effects are intensifying. In late December, a crowd of around 150 people amassed near the Chinese Embassy in Bishkek to protest, among other things, why ethnic Kyrgyz were being held in the Xinjiang-based internment camps, which Beijing has euphemistically tried to write off as mere vocational training centers. Read more courtesy of Colleen Wood at The Diplomat.
The cat’s out of the bag on the possible CAATSA sanctions-triggering delivery of Russian-made S-400 air defense squadrons to India. As my colleague Franz-Stefan Gady reported earlier in the week, “India will begin receiving its first regimental set of Russian-made Almaz-Antei S-400 Triumf air defense systems (NATO reporting name: SA-21 Growler) in October 2020.” That could start a frantic diplomatic countdown, increasing pressure on New Delhi to secure a waiver from U.S. sanctions.
CAATSA—the Countering America’s Adversaries Through Sanctions Act—provides sanctions for states that purchase Russian arms. India, with its longstanding defense commercial associations with Moscow, concluded a deal to purchase five squadrons of S-400s from Moscow. New Delhi is also, as of 2016, a “major defense partner” for the United States and a strategic partner in the ongoing effort by Washington to pursue a concerted strategic approach toward the Indo-Pacific region.
That’s left many observers of the U.S.-India relations—yours truly included—with the sense that India is likely to receive a waiver for the S-400s, allowing it to avoid the fate that befell China. In Beijing’s case, sanctions were implemented on the People’s Liberation Army’s Equipment Development Department only at the time when it took delivery of the S-400 units it had purchased. Assuming that standard holds for India—and absent a waiver—sanctions under CAATSA might befall New Delhi by October 2020.
Former Obama administration South Asia national security hand Joshua White points out some probable wiggle room, however:
Jeff M. Smith@Cold_Peace_India-Russia. S-400 "deliveries will commence from October 2020 and will be completed by April 2023,” Indian Minister of State for Defense Subhash Bhamre. So is decision on CAATSA waiver deferred to delivery date/2020? Unclear from my read of legislation. https://t.co/0zOnc4i9fp
Either way, expect to see India expend tremendous diplomatic energy to have its S-400s without suffering U.S. sanctions—or possibly delay taking delivery of the S-400s.
Bonus: At The Diplomat, Joy Mitra breaks down the Indian Army’s newly released Land Warfare Doctrine—a successor to the last document in 2004.
Bottom Line: India’s bid to seek a waiver under CAATSA for its purchase of Russian S-400s will intensify in 2019.
Make sure you don’t miss the 50th issue of The Diplomat’s magazine. We’ve got you covered on what to expect in 2019 and also explore the state of the U.S.-China relationship 40 years after normalization, evaluate where North Korean denuclearization diplomacy stands a year on, and take a deep dive into the messy, unpredictable world of the Maldives’ politics. And, of course, we offer a range of reporting, analysis, and opinion from across the region. You can subscribe and read it here.
Please do feel free to reach out with comments, tips, and feedback at email@example.com and follow me on Twitter at @nktpnd and The Diplomat at @Diplomat_APAC.