After almost two decades of discussion, the ASEAN Economic Community (AEC) will be proclaimed on 31st December. The AEC is a potentially significant and competitive economic region, should it be allowed to develop according to the aspiration of being a “single market and production base, with free flow of services, investments, and labour, by the year 2020”.
The ASEAN region as a composite trading block has the third highest population at 634 million, after China and India. GDP per capita is rapidly rising. The AEC would be the 4th largest exporter after China, the EU, and the United States, with still very much scope for growth from Cambodia, Myanmar, the Philippines, and Vietnam from a diverse range of activities ranging from agriculture, food, minerals and commodities, electronics, and services. The coming AEC is already the 4th largest importer of goods after the United States, EU, and China, making it one of the biggest markets in the world.
Unlike the other trade regions, the AEC still has so much potential for growth with rising population, rising incomes, growing consumer sophistication, and improving infrastructure.
Perhaps the biggest benefit of the upcoming AEC is the expected boost this will give to intra-ASEAN trade. Most ASEAN nations have previously put their efforts into developing external relationships with the major trading nations like the EU, Japan and the US through bilateral and free trade agreements. To some extent, the potential of intra-ASEAN trade was neglected, perhaps with the exception of the entrepot of Singapore.
The AEC is an opportunity to refocus trade efforts within the region, especially when Vietnam, Cambodia, Indonesia are rapidly developing, and Myanmar is opening up for business with the rest of the region.
The social, cultural, political and business interchange within the region has traditionally been low, until the rapid increase of intra-ASEAN travel, due to the low-cost airline explosion within the region.
Today intra-ASEAN trade is approximately 25% of total trade, growing around 10.5% per annum, and expected to reach 30% of total ASEAN trade by the year 2020.
However the necessary infrastructure to support intra-ASEAN trade growth is lagging behind with a delay in the completion of the Trans-Asia Highway in Cambodia, and vastly inadequate border checkpoints between Malaysia and Thailand in Sadao and Kelantan.
Some infrastructure development projects have been severely hit by finance shortfalls within member states.
There are a number of outstanding issues concerning the growth and development of the AEC.
The ASEAN Secretariat based in Jakarta has a small staff, where the best talent is lacking due to the small salaries paid. The Secretariat unlike the EU bureaucratic apparatus in Brussels relies on cooperation between the member state governments for policy direction, funding and implementation of the AEC.
Thus the frontline of AEC implementation are the individual country ministries, which presents many problems, as some issues require multi-ministry cooperation and coordination, which is not always easy to achieve as particular ministries have their own visions and agendas. Getting cooperation of these ministries isn’t easy.
There are numerous structural and procedural issues yet to be contended with. At the inter-governmental level, laws and regulations are yet to be coordinated and harmonized. So in-effect there is one community with 10 sets of regulations in effect this coming January 1st. Consumer laws, intellectual property rights, company and corporate codes (no provision for ASEAN owned companies), land codes, and investment rules are all different among the individual member states.
There are no integrated banking structures, no agreement on common and acceptable currencies (some ASEAN currencies are not interchangeable), no double taxation agreements, and no formal agreements on immigration.
There is not even any such thing as a common ASEAN business visa. These issues are going to hinder market access for regional SMEs. Any local market operations will have to fulfil local laws and regulations which may not be easy for non-citizens to meet and adhere to.
Even though there are some preferential tariffs for a number of classes of ASEAN originating goods, non-tariff barriers are still in existence, which are insurmountable in some cases like the need for import licenses (APs) in Malaysia, and the need to have a registered company which can only be formed by Thai nationals within Thailand.
Some of these problems are occurring because of the very nature of ASEAN itself. ASEAN was founded on the basis of consultation, consensus, and non-interference in the internal affairs of other members. This means that no formal problem solving mechanism exists, and the ASEAN Secretariat is a facilitator rather than implementer of policy. Illegal workers, human trafficking, money laundering, and haze issues between member states have no formal mechanisms through which these issues can be solved from an ASEAN perspective.
This weakens the force for regional integration.
One of the major issues weakening the potential development of the AEC is the apparent lack of political commitment for a common market by the leadership of the respective ASEAN members. Thailand is currently in a struggle to determine how the country should be governed. Malaysia is in the grip of corruption scandals where the prime minister is holding onto power. Myanmar is going through a massive change in the way it will be governed. Indonesia is still struggling with how its archipelago should be governed. There is a view from Vietnam that business within the country is not ready for the AEC.
Intense nationalistic sentiments among for example Thais, exasperated by the recent Preach Vihear Temple conflict along the Thai-Cambodian border need to be softened to get full advantage out of the AEC. The dispute in the International Court of Justice over Pedra Branca, and the Philippine rift with China over the South China Sea show the delicacy of relationships among ASEAN members. The recent Thai court decision on the guilt of Zaw Lin and Win Zaw Tun in the murder of two young British tourists may also show how fragile intra-ASEAN relationships can be.
The AEC is going to fall far short of achieving its full potential of becoming a major influence in global trade.
The AEC is not intended to be the same model as the EEC. The AEC is far from being any fully integrated economic community. The lack of social, cultural, and political integration within the ASEAN region indicates the massive job ahead that Europe had been through decades ago. There is still a lot of public ignorance about what the AEC is, and lack of excitement or expectation for what should be a major event within the region. Respective national media are scant on information about the forthcoming launch of the AEC.
Economic nationalism is very strong within ASEAN. Malaysia has its Government Linked Companies (GLCs), State Economic Development Corporations (SEDCs), Thailand its Crown Property Bureau, and family business empires within each country which have vested interests in keeping market access at the current status quo. The AEC is seen as a threat to many existing business empires, which fear open market access. Many of these business empires have enormous political influence upon their respective governments.
The AEC could be deemed to conflict with the special advantages bumiputera businesses in Malaysia enjoy in areas of government tendering and contracting.
It is yet to be seen how some of these businesses will behave within an AEC environment. However what can be said for sure is that the AEC will not create any level playing field for ASEAN businesses in the foreseeable future.
With the problems the EU is currently facing, maybe it is wisdom in hindsight that the leaders of ASEAN have been extremely cautious in their approach to the formation of the AEC. Any opening up of the labour market could also be a potential disaster. A free flow of labour across ASEAN would potentially put many under-qualified people out of work according to Gyorgy Sziraczki, the director of the ILO in Vietnam.
This could lead to economic downturns in some of the more susceptible parts of the AEC like Lao PDR and Cambodia. The AEC rather than promoting intra-ASEAN trade, lead to a more domestic orientation, where unemployed may see the informal economy looking much more attractive means of making a living.
However, if the leadership of ASEAN see the opportunities of dramatically increasing intra-ASEAN trade, then the AEC has great potential to assist the region withstand any steep economic downturn around the rest of the world.
Projects that are able to boost regional synergies like coordination of education, river system water management, energy, transport, banking and finance, may very quickly improve regional integration. Regional clustering can be developed in education, auto-parts, food production, electronic parts, and the value adding of basic commodities to benefit the economies of the region.
Infrastructure development will be vital to the success of the AEC. For this purpose the ASEAN Infrastructure Fund, financed by member countries and the Asian Development Bank will be extremely important. The recent ASEAN summit in Kuala Lumpur also reactivated the ASEAN Joint Consultative Committee to resolve trade and investment issues.
The slowness of the AEC should not be seen as a failure of ASEAN. We can see the slow pace that ASEAN makes decisions, with the long period it is taking to admit Timur Leste as ASEAN’s 11th member.
The vital questions here are whether the AEC will be able attract direct foreign investment to the region? Take advantage of rising opportunities like international education? Stop the talent drain from the region with China becoming more aggressive in attracting the best from the region? and Create an ASEAN awareness within the region?
Sadly, one may expect the fate of the AEC to be similar to that of the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), and the Brunei Darussalam-Indonesia-Malaysia-The Philippines East ASEAN Growth Area (BIMP-EAGA). They are in existence by name, but with little real substance on the ground.
Visit of Chinese Foreign Minister to Southeast Asia
Following the visit of Kamala Harris, the vice president of the USA to Vietnam and Singapore, the Chinese foreign minister Wang Yi visited the two countries as well as Cambodia to engage the regional players. Vietnam has become the cynosure of major powers such as the US, Japan, and China. The visit of Japanese Defence minister and the US defence secretary happening within a period of three months. US defence secretary visited Vietnam in July 2021 while the Japanese defence minister visited Vietnam in September 2021.
Given the hyper activism which was shown by the two members of the Quad, the Chinese foreign minister sensing these strategic dynamics choose to visit Vietnam to comfort the ideological partner that China would be acting constructively. The Chinese foreign minister during the visit to the country clearly stated that Vietnam should stop entertaining extra regional powers in South China Sea and resist from complicating the situation while magnifying the maritime territorial disputes. This clearly shows that China was rattled by the very fact that US has been undertaking extra efforts in engaging Vietnam through vaccine and health diplomacy as well as creating favourable conditions for Vietnam to enhance trade relations with the US. As part of a reassurance strategy, China has committed to donating 3 million doses of COVID-19 vaccine and is willing to support Vietnam in their fight against COVID-19 pandemic.
In the last two years the Vietnam foreign ministry has been criticising Chinese manoeuvres in South China Sea and threatening legitimate activities of Vietnam in its Exclusive Economic Zone. The illegal activities undertaken by Chinese survey ships and fishermen militia in Vanguard bank, Reed Bank and Whitsun Reef were a manifestation of Chinese hyper activism. This has been criticised by the US state department as well as members of international community.
In the second leg of the visit, the Chinese foreign minister visited Singapore and had fruitful interactions with his counterpart Vivian Balakrishnan. Given the fact that Singapore is slowly emerging as a critical lynchpin in the larger Quad objectives in the region. Therefore, for China, engaging the city state is critical for securing its strategic periphery and engaging Singapore for its trade and economic interests. The proposal of development cooperation proposal by the Chinese foreign minister is to get assurance from the Southeast Asian neighbours regarding good neighbourliness and commitment to the Belt and Road Initiative (BRI) undertaken by the China in the maritime domain.
The Chinese foreign minister had visited almost nine countries in the last one year when Vietnam was the Chair of ASEAN. This was primarily to counter the efforts which have been made by the high-level delegations of the United States government which included the visit by the United States vice president Kamala Harris, US defence secretary, the US deputy Secretary of State and the visit of armed forces officials to the Southeast Asian countries. China’s neighbourhood diplomacy clearly shows the anxieties from the point of view of China after US has intensified surveillance and intelligence activities as the latest Malabar defence exercises(25th edition) which concluded recently near Guam. Chinese assertive activities have been operationalised by the Chinese naval ships, Chinese Coast Guard, Chinese hydrographic survey ships, and the Chinese maritime boat militia which has been threatening navies and fishermen of littoral countries in South China Sea. The military exercises undertaken by China closer to the contested waters in South China Sea, particularly in the Paracel islands, which belongs to Vietnam, and strengthening the illegal structures built on those islands is primarily aimed to counter the group sails undertaken by the US and its alliance partners as well as any concerted activity undertaken by the Quad countries.
The visit to Cambodia was expected given the fact that the politics in Cambodia is heating up because of the Hun Sen political ambitions of placing his son at the helm of power and helping Chinese to set up a full-fledged Chinese naval base at Ream naval base. The US projects in that region has been stopped and relocated to other areas which was not liked by the US agencies.
The vaccine diplomacy which has been adopted by the Chinese foreign minister to address the deficit of vaccines in countries such as Cambodia and Vietnam is symbolic.
In this context it is also important to investigate the Japanese overtures in this regard. The Japanese have signed a defence partnership agreement with the Vietnamese which assures the exports of Japanese defence equipment to the socialist country. Under the partnership it is expected that not only arms and equipment, but also technological support and training of the technicians will be undertaken by the Japanese forces. This is the first of its kind defence partnership agreement between Japan and Vietnam showcasing the growing trust between the two countries. There have been certain writings which allude to the fact that a trilateral between India, Vietnam and Japan might be in the offing. Scholars such as Gitanjali Sinha Roy feel that Japan with its technological supremacy, and India with its large armed forces along with Vietnam’s strategic location will act as a common platform to address regional security concerns in the Indo -Pacific region. India being a regional player in the Indian Ocean region and Japan being a formidable power in the Pacific would add heft to the larger maritime security objectives.
The involvement of the European powers in the security of indo Pacific region with reference to the UK, France and Germany showcases that many players would be involved in ensuring maritime security in the region for trade and commercial aspects.
This visit of Chinese foreign minister should be seen from the point of view of reassuring Chinese commitment to the regional peace while at the same time giving a veiled warning to the neighbours that China is still a very potent power in South China Sea, and it would not allow any intervention by the extra territorial powers which tries to intervene in the South China Sea dispute. This visit clearly highlights that China has been startled by the active diplomacy undertaken by countries such as Japan and US and why keeping countries such as Singapore and Vietnam in good humour is critical for Chinese interests.
Vietnam’s ingenuity in handling diplomatic relations with the US, China and Japan and maximizing national strategic interests is appreciated. Through skilful handling of relations with these three countries, Vietnam has become a partner contributing to the peace and security of the region and affirming its central role in Southeast Asia.
The new AUKUS partnership comes at the cost of sidelining France, a key Indo-Pacific player
Here is my quick take on the new AUKUS security partnership announced on Wednesday (September 15), by the leaders of three key English-speaking countries – Australia, the United Kingdom, and the United States. But, the move has invited displeasure from France, a key player and partner in the Indo-Pacific with permanent presence in the region.
US President Joe Biden, UK Prime Minister Boris Johnson and Australian Prime Minister Scott Morrison – leaders of three key English-speaking countries – have announced a new trilateral security partnership in the Indo-Pacific on Wednesday, abbreviated as AUKUS. This came a week before the in-person Quad summit, aimed at deepening cooperation in a range of defence arenas such as artificial intelligence, cyber and quantum technologies and undersea capabilities. It is the latest in a series of moves taken by the Biden administration to engage proactively in the Indo-Pacific, keeping China in mind.
A key initiative of the new AUKUS partnership is to support Australia in acquiring nuclear-powered submarines within the next 18 months. But, this comes at the cost of Canberra putting a halt on the ocean-class submarine development programme agreed with France known as the “Future Submarine Programme”. As Australia strengthens its age-old alliance with the United States and welcomes a deeper British presence in the region, the stakes are at an all-time high for Canberra.
The French Response
When China denounced the new trilateral partnership by referring to “Cold-War mentality and ideological prejudice”, it was expected. However, what stood out was the French response. A joint statement by the French Defence and Foreign Ministers following the announcement of AUKUS stated that it was ‘contrary to the letter and the spirit of the cooperation which prevailed between France and Australia’, and that the American choice reflects ‘an absence of coherence that France can only observe and regret’.
Australia is also a member of the Quad and the ‘Five Eyes’ intelligence-sharing alliance that includes Canada and Australia as well. With AUKUS, Australian military will be closely linked with that of the United States. However, the UK has not had a permanent presence in the Indo-Pacific for decades now. On the other hand, France is the only European power currently present in the region with nearly two million of its citizens and more than 7,000 military personnel, spread across a vast maritime stretch from the Réunion Island in the Western Indian Ocean to French Polynesia and New Caledonia in the South Pacific.
In a catchy tweet, the Ambassador of France to the United States, Philippe Etienne noted,“Interestingly, exactly 240 years ago the French Navy defeated the British Navy in Chesapeake Bay, paving the way for the victory at Yorktown and the independence of the United States”.He was just reminding the Americans of their historical ties with the French that goes beyond the Statue of Liberty.
‘Global Britain’ to align with the Indo-Pacific vision
The AUKUS is specifically hurting French sentiments at multiple levels. Being a reliable partner in the region that proactively engages in a broad network of trilaterals and minilaterals involving Quad partners Japan, India, Australia and other regional players, France was much better suited than the UK to form a defence partnership, in my view, when the region needs timely action. The concept of ‘global Britain’ has made its entry into public discourse only recently. The way ahead for the re-emergence of the UK from its post-war decline seems a long one, vis-à-vis dealing with a rising China.
In contrast, the French and their military installations are already in the region. It could’ve been considered better for amplifying collective defence capability and interoperability in the region and to empower the Australian military, rather than partnering with a dormant and erstwhile regional power in Asia and the Pacific like the UK, at a time when the region faces ‘unprecedented challenges’, as noted in the French statement of response.
Washington has shared the technology of nuclear submarines only once before with the UK, almost seven decades ago. Australia’s geographic advantage and deteriorating ties with China makes it a rightful next choice. It seems the new Anglophone trilateral partnership is a systematic US-led attempt to involve the UK, particularly in a post-Brexit scenario, to play a bigger role in the Indo-Pacific.
A new addition to the regional architecture
In the context of the disruptive rise of an increasingly assertive China, it is understandable to have a variety of partnerships and minilaterals among maritime democracies that could complement the Quad and the ASEAN-led regional institutions in the Indo-Pacific. Instead of inviting the UK to the Quad itself, the Biden administration chose to form a new sister grouping in the region, perhaps with the intention of being more flexible. In the present geopolitical scenario, empowering Australia’s defence capabilities is understandably a timely move, but the choice of partners is the real issue here.
It is reasonable that not every ally or partner needs to be in every alliance or coalition, however, time-tested regional players should not be ignored in a way how the US and Australia did to France with the underlying intention of bringing the UK back into the region’s newly evolving geopolitical equation.
What Australia should be careful about?
No matter how the US chooses to hedge the situation with France, Australia should deepen its bilateral partnership with France, being a key Indo-Pacific player with permanent regional presence. The ‘2+2’ ministerial consultations between the two countries, which was inaugurated last month, needs to be built upon.
Nuclear-powered submarines could definitely boost Australia’s maritime deterrence capabilities. However, handling and operating them is a highly-complex and risky manoeuvre. So, it is important that the move should not be given the impression of being escalatory. Moreover, Australia, being a non-nuclear weapon state, should reinforce its commitment to the global non-proliferation regime and the rules-based order.
Making sense of a rugged political terrain in the Land of Golden Pagodas
Eight months have passed since Myanmar’s coup d’état. What are the domestic factors that contribute to the country’s grim political scenario? What are the odds that work against Burmese democracy? Here, I look back at the chequered political past of Myanmar to find answers.
After a decade of relative calm, the Tatmadaw, as the Burmese armed forces are referred to, smuggled power from the civilian leadership by staging a repugnant coup in February this year, led by its 65-year old-leader, General Min Aung Hlaing. This was executed just a few days before the convening of Myanmar’s newly-elected Parliament and three months after the National League for Democracy’s (NLD) landslide victory in the election held in November 2020 in the country’s second freely-contested polls since 2015.
As the junta came back to haunt the newest democratic experiment in Myanmar again, history repeats itself. Even before the coup, the Tatmadaw’s dominant posture in the administration was strongly evident, as twenty-five per cent of seats in the Parliament and key portfolios in the Cabinet were reserved for the military, according to the Constitution promulgated by the military itself in 2008.
Déjà vu 1988
Apparently, the Tatmadaw and its aging leader were outraged by the continuing and overwhelming popularity that democratic icon Aung San Suu Kyi still enjoyed in the weeks following the 2020 elections, despite all the allegations of her playing second-fiddle to the Tatmadaw. The coup d’état and the subsequent crackdown on democracy set the clock back to 1988.
It was in that year, a large wave of protests erupted against the military that began as a student-led movement in the city of Rangoon (now, Yangon), which soon spread across the country. It came to be known as the ‘8-8-88 Uprising’ or the ‘People Power Movement’ because the protests peaked on 8 August 1988. Suu Kyi’s NLD party emerged from this movement.
Burma was separated from British India as a separately-administered colony eleven years before the country gained independence. The Buddhist-majority state was free of British rule in 1948 under the leadership of people like U Nu and Aung San with the hopes of ushering in a parliamentary democracy. Unfortunately, in the next fourteen years, the country would witness the very first military coup in its history since independence, in 1962, led by General U Ne Win, who would go on to rule the country with an iron fist for the next twenty-six years.
Absence of a political consensus
Right from its independence in 1948, the Land of Golden Pagodas has been a deeply divided nation along the lines of ethnicity, religion, and political loyalty, with the majority Burmans dominating the upper echelons of power. Myanmar comprises of 135 ethnic groups in total. It includes the majority Burmans, who constitute two-thirds of the population, minority groups such as the Shan, the Karen, the Rohingya, the Kachin, the Mon and other smaller groups. A grave absence of political consensus among diverse ethno-religious groups and their respective parties had always been a bane for Myanmar’s overall stability.
Myanmar’s decades-long inter-ethnic tensions and sectarian violence have been a historical factor behind the rise of popularity of the Tatmadaw among the people, who consider themselves as the only force that could bring-in stability to the country, an idea that resonates with a substantial proportion of the majority Burmans even today. But, a pro-democracy resistance movement is underway on the other side, with the military’s recent excesses leading to many of its supporters switching sides.
When the Tatmadaw was seen a beacon of stability
The Anti-Fascist People’s Freedom League (AFPFL) coalition dominated Myanmar’s political scene from 1948 to 1958. Contrary to popular beliefs today, the military was seen as a beacon of stability in the country’s immediate post-independence period as numerous sectarian groups battled each other. In the 1950s, the country had to deal with scattered left-wing insurgencies too, along with the widely prevalent ethnic conflicts.
Even as early as 1958, when the affairs of the state were slipping away, the Tatmadaw was asked by the civilian government to step in as a temporary caretaker government. The military remained loyal to the elected government for fourteen years since independence and had even facilitated the general elections of 1960.
At a moment when the military’s public support rose considerably among the people, catalysed by a corrupt civilian government led by the AFPFL, the Tatmadaw decided to take matters into their own hands by staging a coup in 1962. The junta adopted a new Constitution in 1974, suspending the one previously promulgated in 1947.
Soon, the military emerged as a repressive force and their socialist state policy known as the Burmese Way to Socialism isolated Myanmar from the rest of the world from 1962 to 1988 and devastated the economy. Around the same time, Buddhist ultra-nationalism perpetrated by fear-mongering monks also thrived under the regime at the cost of intimidation of the minority groups.
The dawn of a new epoch and the return to history
With the people realising their folly in trusting the Tatmadaw, the uprising of 1988 happened. Around the same time, young Suu Kyi returned to her home country after completing her studies abroad. Witnessing the scathing power abuse of the ruling junta hands-on, she rallied her fellow Burmese citizens for the cause of Myanmar’s democratic transition. The uprising can also be viewed as a direct consequence of the emergence of the NLD, which contested and won the elections of 1990. But, the military refused to accept the results and prevented a civilian government from exercising power.
Suu Kyi was placed under house arrest by the junta in the following year. She continued her struggle and was awarded the Nobel Peace Prize in 1991. She was detained for fifteen years in total between 1990 and 2010. Elections were held in 2010 and the junta was ‘supposedly’ dissolved the following year, only to re-emerge in 2021.
As per estimates by the United Nations, around 230,000 people were displaced as of June this year, because of the military action and retaliatory attacks either by civilian rebels or by one armed resistance group or the other. As of July this year, more than a thousand people were allegedly killed by the junta, with thousands of protesters arrested, detained, or charged, and many even just disappeared beyond trace. Recently, the shadow resistance movement that calls itself the ‘National Unity Government’ of Myanmar had gone underground since the February coup and has called for a nation-wide ‘people’s defensive war’ against the Tatmadaw.
Regional voices and the road to peace
Myanmar is a member of the ASEAN (the Association of Southeast Asian Nations) since 1997. But, the organisation, despite its diplomatic efforts, was unable to prevent the coup and the subsequent civilian unrest in the country. In fact, the ASEAN’s negotiations in its capital Jakarta, in April, and the Five-Point Consensus that emerged from it have been seemingly side-lined by the junta. ASEAN envoys met with the army leaders in June and the organisation’s latest proposal for a ceasefire until the end of 2021, put forward in August-end, has been reportedly denied by the military.
Due to geo-economic and border security considerations, neighbouring China and India happen to have good ties with the Tatmadaw. However, a broad-based civilian support is the only way to ensure the army’s sustained legitimacy. And, the best solution to bring back real stability in Myanmar is to agree on a mutually-accepted power-sharing agreement between the shadow civilian leadership and the military that would secure unequivocal internal peace within the country.
Social cohesion continues to be a distant dream for Myanmar and the Burmese people, the absence of which continues to be the root cause of all political wrongs in the country. The ongoing Covid-19 pandemic is making the crisis worse. In the end, the military cannot afford to antagonize the United Nations and the democracies of the world for long, especially of the West, with their economic sanctions in place, and the dire curbs placed on the Burmese people’s genuine democratic aspirations will go out of the reckoning again in just a matter of time.
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