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East Asia: Continuing to Look Inward
Stratfor’s annual forecast noted that 2007 would be a year for East Asia to look inward, focusing on domestic and regional issues — with the regional rivalry between China and Japan growing prominent as the year played out. In the first quarter, this trend manifested itself in several ways.
The region’s central governments continued to grow more powerful, especially in China, where Beijing tightened control over regional and local governments. The latest Communist Party secretary appointments undoubtedly strengthened Chinese President Hu Jintao’s hold over the provincial and city leadership while consolidating Beijing’s economic rule. Thailand’s military regime also started planning to permanently reinsert itself into the country’s political landscape. Regional geopolitical insecurity drove Beijing to undertake its January anti-satellite missile test, which was intended to warn the United States that although China said it would not “undertake military adventures in 2007,” it also would not sit idly by should Taiwan attempt to push for formal independence on the eve of the 2008 Olympics.
Mirroring China, Taiwanese President Chen Shui-bian continued to push for independence in an effort to prevent Taiwan from becoming irrelevant within the region. Unexpected financial turbulence shook global markets when the Shanghai stock market dipped in March, sending ripples around the world. Fundamentals changed little afterward, however, as the ripples did not stem from any real change in China’s economic structure; psychologically, though, China’s capacity for global financial effects is in a new spotlight.
Domestic political consolidation and constitutional change are still the key domestic policy drivers in Japan and South Korea. Japanese Prime Minister Shinzo Abe is continuing to push for change for Japan’s Constitution and defense structure, such as elevating the Defense Agency to a ministry and expanding defense cooperation with Australia. South Korea’s ruling minority Uri Party split from President Roh Moo Hyun to clean house and select its presidential candidate, freeing up Roh to push through changes to the country’s fundamentally diseased constitutional structure.
As we head into the second quarter, two dominant themes will drive events in East Asia: countries’ introspection as they are consumed by internal elections and politicking, and intraregional nuclear discussions and economic interactions. Other possible factors are the emergence of a new trilateral Japanese-Australian-U.S. security arrangement and success for Taiwan’s Chen in his efforts to provoke China. Probabilities for the former are nearly certain, and those for the latter are unknown.
Thailand is due for a new draft constitution April 19, which likely will enshrine the military’s role in government, though not by including a clause for an “unelected prime minister” as previously suggested by the military chief. This will more likely happen via more subtle clauses designed to insert military representation throughout the central and provincial government departments. If the opposition uses this draft to generate a massive groundswell of anti-military sentiment, the regime’s ability to retain control with minimal violence will be tested. The regime will continue to enhance its skills in balancing the country’s different factions. The usual cycle of violence in the south will continue.
This quarter will see more Chinese political reshuffling to smooth the path for the country’s fifth generation of leaders — a process to be completed by 2012. Hu will move more of his chosen successors into place for final training before promotion to the Politburo, which likely will occur at the Party Congress this fall. Shanghai will be used as a new training ground for Hu protege Xi Jinping — who recently was promoted to become the city’s party secretary — and also as a regional showcase of what local governments must do to avoid a crackdown. More responsibility for economic reforms will be shifted to private and foreign investors, with industries previously considered “too strategic” (such as oil and health care) being released from the state’s iron grip. The new foreign exchange investment company could be established this quarter in order to kickstart an outward flow of renminbi-denominated investment funds. China needs to continue pushing investors to send their appreciating local currencies overseas in order to rein in an excess supply of money inside the country — a root cause of the economy’s imbalanced growth.
The first stage of the six-party nuclear deal is set for completion April 14, when North Korea closes its Yongbyon reactor. Each party will use minor reasons to delay progress in order to pursue its own agenda, but progress should still continue, with or without directly addressing North Korea’s existing nuclear weapons.
This quarter kicked off with a successful conclusion to the South Korean-U.S. free trade agreement (FTA) talks. A flurry of intraregional interactions now will descend upon East Asia, with South Korea likely to speed up efforts to make similar agreements with the European Union, Gulf Cooperation Council states and China. Another deal worth watching is the Australian-Japanese FTA talks starting April 23, which could shed more light on the new regional trilateral security arrangement. For the rest of East Asia, FTAs and economics will be the main channel through which bargaining chips are dealt and exchanged in return for progression on other economic and political issues. Talk of a regional FTA might even resurface.
The structure of East Asia’s new trilateral security arrangement will emerge, as the lines of military cooperation and interdependencies between Japan, Australia and the United States gradually take shape. China and Japan will continue a flow of positive diplomatic rhetoric and superficial actions, but remain fundamentally distrustful of each other. China will try to use its economic leverage with Australia to influence or gain additional insights into the new arrangement being established in its backyard. While still preoccupied in the Middle East, the United States will not explicitly target China, but the new security arrangement is intended to indicate where Washington’s attention will next settle.
Taiwan’s Chen already has swapped out his country’s representative to the United States and convinced the Democratic Progressive Party to propose the formal abandonment of the “Five Nos” policy. Although he is constrained in his push for constitutional change, Chen’s ultimate goal is to reshape both the domestic and international perceptions of Taiwan. With Beijing preparing to host the 2008 Olympics, Chen sees this as his opportunity to rile China with his “provocative” comments and acts. Either he will prod China into lashing out — thus proving his point that China is the real threat to regional security — or China will simply ignore Chen’s actions, giving him proof for the Taiwanese people that Beijing’s threats are hollow and that Taiwan should formally pursue its own national identity and independence. Either way, Taiwan will become a key driver of regional security attention and arrangements.
Sub-Saharan Africa: Power Transfers and Ongoing Violence
Stratfor’s 2007 annual forecast for sub-Saharan Africa is on track thus far. Outside powers, led by Russia and China, have sought deals for Africa’s resources, including oil, natural gas and mineral concessions. The United States remains engaged with Africa largely in terms of terrorism and security issues, particularly in the Horn of Africa. U.S. concerns contributed to the move to create an Africa Command, a theater military command that will unite U.S. Defense Department responsibilities in Africa. Powers within Africa continued defending their core interests, despite international attention aimed at settling conflicts — another call we correctly made. The conflict in Sudan’s Darfur region remains unresolved, and the Sudanese government remains steadfast in its opposition to U.N. peacekeeping force intervention. Ethiopia continues its intervention to defeat militant Islamist holdouts in Somalia, where conflict rages among the Ethiopians, Islamists and warlords.
Violence in Nigeria’s Niger Delta region intensified during the first quarter — which we had forecast — as militant groups, their political patrons and government forces maneuvered ahead of upcoming national elections. January and February were the most violent months in terms of numbers of kidnappings of expatriate oil workers since the militant group Movement for the Emancipation of the Niger Delta (MEND) launched its campaign in December 2005.
Competing factions within South Africa’s ruling African National Congress (ANC) party ramped up their struggle over the party’s — and by extension, the country’s — future. President Thabo Mbeki sought to strengthen his alliances with ANC party structures, while rival and former Deputy President Jacob Zuma began garnering political support among the country’s trade unions, the Communist Party and the impoverished majority. The first quarter saw the South African government expropriate its first privately owned farm — the kind of populist move Mbeki must employ more in order to defeat Zuma in the ANC primary in December.
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