An economic alarm
Lan Xinzhen

DEVALUATION of currency, runaway inflation, huge outflow of speculative capital, decreasing resident purchasing power, a series of strikes against price hikes … Viet Nam is confronted with an economic crisis. Although the Vietnamese economic crisis has not yet caused any severe adverse reactions for other Asian economies, the international community, particularly emerging economies, is not relaxing its vigilance.
Effect on Chinese investors
To the south of China, Viet Nam began to receive Chinese investment from 1991. Since the beginning of 2008, various factors in China (readjustment of corporate income tax rate, the implementation of the Labor Contract Law and readjustment of the tax rebate policy) increased operating costs and caused some Chinese companies in the labor-intensive industries such as electronics, garment and shoe-making to transfer their factories to Viet Nam. At present, there are over 20 Chinese companies with factories or large trade volumes in Viet Nam. Chinese investors in Viet Nam are involved in the industries of farm machinery, textiles, power and automobiles, including such companies as TCL, Midea, Supor, Gree and New Hope
Group (NHG). Of them, NHG has the largest investment volume. It has set up three branches in Hanoi, Ho Chi Minh City and Haiphong, with total assets of $200 million. Its revenues and profits generated in Viet Nam both surpassed 10 percent of the group’s total revenues and profits. An announcement released by NHG says that its factories in Viet Nam are not yet affected by the economic crisis and that sales in Viet Nam remain as healthy as in China. Although inflation in Viet Nam increased prices of raw materials, and subsequently raised the prices of finished products, sales are still stable because of the large market demand.
Supor, a Chinese investor in the home appliances industry, also recently announced that the economic crisis has not had a severe impact on its business and the company is optimistic about its factory in Viet Nam. It believes that the factory will help promote the company’s business performance and brand recognition in the future. According to Midea, which mainly produces home appliances like electric and electromagnetic cookers in Viet Nam, since its investment volume is small, its sales performance is not influenced by the devaluation of Vietnamese dong.
TCL made an emergent assessment on its investment projects in Viet Nam and the result shows that losses are not substantial. Established in 1999, the Viet Nam branch of TCL sells consumer electronics and computers. The group says it will continue its development strategy in Viet Nam. The most severely affected Chinese companies are Hubei Yihua and Chongqing Lifan. In an announcement released on June 12, Hubei Yihua said that the company decided in 2005 to set up a chemical engineering company in Viet Nam to produce and sell fertilizers such as urea. Because of the economic fluctuations in Viet Nam, the company has recalled its staff in the country and only hires a translator for liaison of the project. Chongqing Lifan, meanwhile, suspended production of its motorcycle factory in Viet Nam. At present, the products of Lifan in Viet Nam include automobiles and motorcycles. Since exports of automobiles are settled with U.S. dollar, there won’t be a large influence-except in decline of export volume. In contrast, sales of motorcycles in Viet Nam are settled in Vietnamese dong and there will be huge losses if dong is not changed to dollar or renminbi. An alarm to China In fact, the problems bothering Viet Nam also exist in China in varying degrees, so the economic crisis in Viet Nam arouses disquiet among economists over the economic development of China.
“If the Vietnamese economic crisis further expands, it is likely to spread to other countries, and China may be infected,” said Cao Honghui, head of Financial Market Research Office of the Institute of Finance and Banking of the Chinese Academy of Social Sciences (CASS). In his opinion, as with Viet Nam, South Korea and Thailand are experiencing record inflation highs in the last seven and 10 years respectively, and inflation in Indonesia has also surpassed 10 percent. If these emerging economies are confronted with the same problems as Viet Nam, it will be impossible for China to escape alone. According to Cao, the most likely problem is that the hot money withdrawn from countries like Viet Nam may flow to China, making it more difficult to strictly control excessive liquidity.
The People’s Bank of China, the country’s central bank, has launched a circular, requiring banks and other financial institutions to pay close attention to capital flows of foreign capital accounts and prevent an inflow of hot money. A report released by China International Capital Corp. Ltd. says that among emerging Asian economies, China has the most stable economic situation and its foreign exchange reserve is the largest in the world. With improving fiscal conditions, it has ample fiscal revenue and the banking system is being perfected. However, once neighboring emerging markets are in turmoil because of inflation, the crisis may influence China in three aspects. First, China’s financial market will inevitably be affected and companies listed overseas will be directly influenced. Second, in terms of foreign trade, the demand for Chinese goods will decrease since increasing uncertainties in the financial market will strike the confidence of investors and consumers, and reduced economic growth and devaluation of local currencies will make imported goods more expensive. Furthermore, the devaluation of currencies of other emerging markets will also affect China’s exports. Third, as for investment returns, the devaluation of currencies in Viet Nam and other emerging Asian economies will decrease returns of renminbi-valued Chinese investment in these countries, and an increase of local interest rates, prices and wages will also increase operation costs.
In spite of worries and vigilance, some research institutions still deem that the economic crisis in Viet Nam is unlikely to inflict a substantial impact on China. In a research report released on June 10, Goldman Sachs says that since China has sufficient financial strength and a strong position of international payments, the infection risk of economic turmoil from Viet Nam to China will be limited. A Bank of China report released on June 17 indicates that the possibility is still low that Viet Nam would trigger a wider Asian financial crisis and that the influence of Vietnamese economic crisis on China is limited. According to the report, China can draw the following lesson from the crisis: controlling inflation should be the top priority. The report also points out that China cannot solve the problem of domestic inflation through renminbi appreciation and only governmental cooperation can fundamentally solve the problem of imported inflation.
Aid proposed
“China should offer loans aid to Viet Nam and promote cooperation among East Asian nations to guard against financial crisis via a regional currency cooperation framework,” said He Fan, researcher at the Institute of World Economics and Politics (IWEP) of CASS. IWEP has conducted specific research on the economic crisis in Viet Nam. According to its report, it is necessary for the international community to offer aid to Viet Nam. It suggests that China, Japan and South Korea and the Association of Southeast Asian Nations should consult to offer short-term loans to Viet Nam.
According to the IWEP report, Viet Nam needs loans of $30 billion-50 billion in market estimation. “To East Asian nations, to offer such sums of money to aid Viet Nam is like putting out a potential fire with a ladle of water, conducive to both maintaining prosperity and promoting unity of Asia,” he continued. In his opinion, there may be various means to offer aid, such as direct U.S. dollar loans, by employing foreign exchange reserves, or issuing bonds. The IWEP report holds that China should play a more active role in offering aid to Viet Nam. The report proposes that China should provide more governmental aid to Viet Nam in fields like rural development, poverty reduction and urban development. Technological and financial aid may also be offered toward infrastructure construction.
Moreover, the report deems that China should encourage more companies to invest in Viet Nam, establishing joint ventures and employing more local people. China should also further open its market to Viet Nam, encouraging more Vietnamese companies to export to China while encouraging Viet Nam to absorb more Chinese capital. Guo Tianyong, professor at the Central University of Finance and Economics, says that in both creating a good external environment for China and maintaining stability in the regional economic system, it is necessary to take measures to avoid an expansion of financial market panic in the region and a series of adverse impacts. Since Viet Nam owns abundant mineral and coal resources, Guo suggests China sign long-term purchasing contracts with Viet Nam and increase imports from it. This is normal bilateral trade which can offer capital aid to Viet Nam at a critical moment in its financial market, and is conducive to the long-term and stable cooperation between the two countries.

—The Daily Mail-Beijing Review Articles Exchange Item

Is Obama going to be another war President?
Eric Margolis

DEMOCRATIC presidential candidate Barack Obama was beating the war drums this week. He is calling for the US troops withdrawn from Iraq to be sent forthwith to Afghanistan, which he calls the real front on the ‘war on terror.’ He also has repeated threats to attack Pakistan ‘if necessary.’ One understands Obama’s need to sound tough and martial. His Republican rival, Sen. John McCain, has been beating his chest, proclaiming, “I know how to win wars.” Polls show Americans trust McCain three to one over Obama as a war leader. Unfortunately, waging small wars against weak opponents seems to have become a necessary proof of political virility for recent American presidents. Many Americans still seek revenge for the humiliating 9/11 attacks, and Taleban remains the prime target.
Obama has long called the US-led occupation of Afghanistan a ‘good war,’ a view most Americans share. They see Afghanistan — and now Pakistan — as hotbeds of Al Qaeda and Taleban terrorists that must be eradicated. It is distressing to see Barack Obama succumb to America’s mistaken views over Afghanistan, and hear him adopt George Bush’s terminology of terrorism. Before Obama urges widening America’s war in South Asia, he should consider: Al Qaeda never numbered more than 300 men. There are hardly any left in Afghanistan. Finding them is police and intelligence work, not a job for thousands more Western troops.
US policy towards Afghanistan has been driven by energy geopolitics since the 1990’s. The 9/11 attacks provided a handy reason for occupying Afghanistan. For the US, pacification of rebellious Pashtun tribesmen is necessary in order to build energy pipelines south from the Caspian Basin. American writer and strategist Howard Phillips calls US and NATO forces in Afghanistan, ‘pipeline protection troops.’Taleban fighters are not ‘terrorists,’ contrary to Western claims. We should remember that Taleban was founded as a religious movement of Pashtun tribesmen to fight banditry, rape, the drug trade, and the brutal Afghan Communists. Taleban received millions in US aid until four months before 9/11. It had no part in the 9/11 attacks on the US and knew nothing about them. The US overthrow of Taleban resulted in the Communists resuming control over half of Afghanistan. Under US occupation, Afghanistan has become a narco-state supplying 93 per cent of the world’s heroin.
Before urging expansion of the Afghan war, Obama should total up the bill for America’s military misadventures. As of last January, 2008, according to the Pentagon and data recently revealed under the Freedom of Information Act, the Iraq and Afghanistan wars have cost America 72,043 battlefield casualties. Veteran’s Administration hospitals have treated 263,909 veterans from these wars and registered over 245,000 disability claims. No one knows how many Iraqis and Afghans have been killed. The number could be over one million. Just last week over 50 Afghans in a wedding party were killed by a US air strike. But without the constant use of massive air power, including B-1 bombers, the US could not maintain its occupation of Iraq or Afghanistan. According to a Democratic Congressional committee report, the two wars will cost $1.6 trillion by the end of 2008, or $16,500 per US family of four — not counting the cost of borrowing money to pay for the wars. If the wars drag on to 2017, the estimated cost may rise to $3.5 trillion.
Obama and McCain believe Afghan resistance can be crushed by more brute force. They are wrong. Neither appears to have any understanding of the underlying geopolitical or tribal facts about Afghanistan or Pakistan. More Western troops and more bombed villages will mean fiercer Afghan resistance and an increasingly brutal war against Afghan civilians. The war is now relentlessly spreading into Pakistan. Obama’s threats to attack Pakistan and go after its nuclear arsenal are reckless, ill-advised, and dangerous for all concerned. He appears headed over the same cliff as would-be war presidents, Bush and McCain. The chief of NATO recently admitted that a political settlement, not warfare, is the only way to end the unnecessary Afghan war. But his wise words have fallen on deaf wars in Washington, London, and Paris. There is concern Obama may be falling under the influence of the same military-petroleum complex that guided Bush’s imperial-minded presidency. Worse, could Bush’s disaster in Iraq be repeated by Obama, if elected, in Afghanistan and Pakistan?

—Khaleej Times

Why ICC is wrong on Sudan
Antonio Cassese

THOSE who follow events in Darfur closely know very well that Sudan’s President Omar Bashir leads a group of political and military leaders responsible for the serious and large-scale crimes against Sudanese citizens that the country’s military forces, with the assistance of paramilitary groups and militias, commit every day in the region. These citizens are guilty only of belonging to the three tribes (Fur, Masalit, and Zaghawa) that spawned the rebels who took up arms against the government a few years ago. Any step designed to hold Sudan’s leaders accountable for their crimes is therefore most welcome. Nevertheless, the decision of Luis Moreno-Ocampo, the prosecutor of the International Criminal Court, to request an arrest warrant against Bashir is puzzling, for three reasons.
First, if Moreno-Ocampo intended to pursue the goal of having Bashir arrested, he might have issued a sealed request and asked the ICC’s judges to issue a sealed arrest warrant, to be made public only once Bashir traveled abroad. The court’s jurisdiction over the crimes in Darfur has been established pursuant to a binding decision of the United Nations Security Council, which means that even states that are not parties to the ICC statute must execute the court’s orders and warrants. Having instead made the request for a warrant public, Bashir — assuming the judges uphold the request — can simply refrain from traveling abroad and thus avoid arrest. Second, Moreno-Ocampo has inexplicably decided to indict only Sudan’s president and not also the other members of the political and military leadership that together with him have planned, ordered, and organized the massive crimes in Darfur. If Hitler had been alive in October 1945, the 21 indictees who were in fact tried at Nuremberg would not have been let off the hook.
Finally, one fails to understand why Moreno-Ocampo has aimed so high and accused Bashir of the “crime of crimes,” genocide, instead of filing charges that are more appropriate and easier to prosecute, such as war crimes (bombing of civilians) and crimes against humanity (extermination, forcible transfer of people, massive murders, rape, etc.). True, genocide has become a magic word, and people think that its mere evocation triggers the strong outrage of the world community and perforce sets in motion UN intervention. But this is not so.
Moreover, strict conditions must be met to prove genocide. In particular, the victims must form an ethnic, religious, racial, or national group, and the perpetrator must entertain “genocidal intent,” namely the will to destroy the group as such, in whole or in part. For example, one kills ten Kurds not because they are obnoxious or because the perpetrator has strong feelings against each of them taken individually, but only because they are Kurds; by killing those ten persons he intends to contribute to the destruction of the group as such. In the case of Darfur, according to Moreno-Ocampo, each of the three tribes does constitute an ethnic group; although they speak the same language as the majority (Arabic) and embrace the same religion (Islam) and their skin is the same color, they constitute distinct ethnic groups because each tribe also speaks a dialect and lives in a particular area. Under this standard, the inhabitants of many European regions — for example, Sicilians, who, in addition to the official language, also speak a dialect and live in a particular area — should be regarded as distinct “ethnic groups.” Furthermore, Moreno-Ocampo has inferred Bashir’s genocidal intent from a set of facts and conduct that in his view amount to a clear indication of such intent. However, according to the international case law, one can prove by inference a defendant’s state of mind only if the inference is the only reasonable one that can be drawn based on the evidence.

—Arab News