Dong Wang, The United States and China: A History from the Eighteenth Century to the Present, Lanham: Rowman & Littlefield, 2013, 377 pp. (ISBN 978-0742557826)

The relationship between the United States and China is likely the most studied and analyzed topic of the post-bipolar world. The growing interest towards the Sino-American issue arose since the rapprochement of the two governments and the historical visit of Richard Nixon in 1972. During the last fifty years, both Western and Chinese scholars have written extensively on Chinese history and foreign relations, American history and the narrow overlapping slice of US-China Relations. Dong Wang’s book is very ambitious, because it almost covers the entire time span of the bilateral relationship but also very clearly combines history and international relations to give a powerful account of how the two countries first encountered each other and why their interaction matters so much in the present day. It could be said that the present years are a very peculiar time to revisit the history of relations between the United States and China. That could be said because Washington has arguably reached the apex of its power and is likely to decline, whereas China’s wealth and strategic power are on the rise, and the two states and systems seem destined to compete for regional and global leadership in the years ahead.

The author’s approach stems from a long historical perspective, in which the relationship between the United States and China is seen as passing through three phases, whose watersheds are roughly the mid-nineteenth and mid-twentieth centuries. Relations shifted significantly, from the interaction between an old empire (under the Qing Dynasty) and a young nation-state to the interplay between two-nation states, and then to wide-ranging encounters between a nation-state (the People’s Republic of China) and a modern empire (the post-war United States).

Consequently the book is divided into three main sections, which are set in chronological order and cover a large spectrum of topics: from the diplomatic and political realm to the social, religious and cultural fields. The first part focuses on the early stages of the relation, from 1784 to 1911, and describes the inception of the economic and political mechanisms between the two countries. The early economic relations between the United States and China reflected the pre-industrial nature of the American economy, which was yet to produce major manufactures to export. The American debut on the Chinese stage constituted the triumphant entry of a new nation into an expanding international system of politics and trade, controlled by the then hegemonic British Empire and other major European powers. The outbreak of the Opium Wars (1839-42 and 1856-60) and the consequent unequal treaties forced on China by the Western powers almost blocked the development of the bilateral trade between the US and China. Washington maintained a neutral stance and didn’t advance any requests until 1899, when the United States proposed the so-called Open Door policy, espousing equal commercial opportunity and respect for China’s administrative and territorial integrity. This policy could be seen as a major countermove against the European territorial scramble and a sign of independent diplomacy. America’s rising presence in East Asia fell within the ambit of its consistent pursuit of national greatness. This presence was reinforced by the constant work of the Christian missions, which suffered the widespread anti-Christian xenophobic violence but were also able to conquer the appreciation and achieve accommodation and collaboration with a consistent part of the population.

The second part examines the different paths followed by the United States and China in the era of the World Wars and revolutions, from 1912 to 1970. The Celestial Empire and the Qing dynasty were overthrown in 1911, marking a major shift in the East Asian environment. In this intricate scenario, the two countries were brought closer, both as a result of their divergent stages of national development and as a consequence of the adoption of particular geopolitical strategies. The author outlines the evolution of this pattern and explains how World War I stimulated the relations between China and the United States. Respect for Beijing’s neutrality and the preservation of the status quo in China were «most important in American interests» (pp. 128). The disappointment and the rejection of China’s «seven aspirations» at the Paris Peace Conference (1919) fuelled political resentment in China. The ascendency of Japanese imperialism and the rise of the Chinese Communist Party (CCP) shaped the Sino-American relation in 1930 to 1940. The Pacific War and the inability to provide a strong support to Chiang Kai-shek and his Kuomintang against the Japanese forces caused what is known in American historiography as «the loss of China». In 1949, the CCP defeated Chiang and declared the birth of the People’s Republic of China. President Truman described it as an «avoidable catastrophe» and Dong is particularly adept at describing and connecting the causes and the events that led to the final denouement. The United States and China share responsibility for the unsettled post-World War II order in the Asia-Pacific. Washington wanted to handle Southeast Asia by «liquidating colonial regimes and replacing them by new and stable independent governments» (pp. 207). The Korean War and the Vietnam War were the major sources of acrimony in the early Cold War period. However, by the end of the 1960s, both countries realized that they needed to work together and were ready to enter a new phase of their relationship.

The third and last section covers the period from 1970 until the present day, describing the rapprochement and the renewing of the bilateral relationship. The normalization of Sino-American relation was a gradual process, taking three American administrations and two generations of Chinese leaders to bring it to completion. The core of President Nixon’s strategy was to pull China back into the world community, but as a great and progressing nation and not as the epicenter of world revolution. The US offered China some tangible stakes in a future relationship, as Beijing’s entrance into the United Nations Security Council in place of Taiwan. The secret meetings between Henry Kissinger and Zhou Enlai prepared the ground for Nixon’s visit in February 1972. Despite this political breakthrough, official diplomatic relations did not become reality until 1979. The late 1970s and 1980s witnessed China’s historic domestic reforms under the leadership of Deng Xiaoping, but the impressive economic growth was almost put in jeopardy by the Tiananmen Crisis in 1989. As a result, Sino-American relations were severely strained over the issue of human rights, and the Tiananmen incident has had major repercussions, particularly in the fields of policy making and mutual perceptions, right up to the present. A spirit of wariness and anxiety on both sides characterized the geopolitical relationship between the two governments in the first decade of the 21^st century. This paradigm changed after 9/11, when the US perception of China shifted from a potential military competitor to an important strategic partner in the war against terror (pp. 290). Despite the increasingly comprehensive links, in recent years, both countries have grown wary on each other, and the American-inspired rhetoric of the «China Threat» keeps emerging, adversely affecting the political environment. China’s desire to reassert itself in the Asia-Pacific region, after its «century of shame» at the hands of Western powers, has broader implications, particularly for the United States, which appears to have the most to lose if China’s emergence comes at their expense. Dong, however, states that although the two countries have quarreled, often bitterly, most of the time they have managed their uneasy relationship in a rational manner (pp. 297). Accordingly, she is confident that the ties between the two countries will strengthen rather than deteriorate, among other reasons, because strategic rivalry and military confrontation, in today’s entangled world, are not only too expansive but also bring no benefits to the countries involved.

The author closes her book by assuming that the US-China bilateral relationship is a major security concern for each side, but both countries need to work together on friendly terms to secure a better future, both for themselves and for the entire international community.

The monograph under review is an outstanding book that offers the first comprehensive synthesis of the history of US-Chinese relations from the initial contact to the present. Dong’s aim is not to generate new findings on specific aspects of the Sino-American relationship but to produce a very detailed epitome of the most important international relationship of our time. She has also reached her objective by grounding her analysis on a congruous number of Chinese sources in order to give a better understanding of Chinese views and behaviour.

Not only is the book addressed to students who need an introduction to the topic and academics, but it is also an extremely useful read for any educated person who might decide to approach the issue, such as journalists and media commentators.

Daniele Brombal, Curarsi è difficile. Curarsi è costoso. Storia, politica e istituzioni della sanità cinese, 1978-2013, Roma, Aracne, 2015, 167 pp. (ISBN 9788854883390).

Daniele Brombal’s book focuses on an extremely relevant issue – health care in the People’s Republic of China (PRC). In some respects, health care can be seen as a litmus test of the ability of the Chinese ruling class to manage the numerous imbalances, determined by the economic miracle that resulted from the reformist policy initiated by Deng Xiaoping in the late 1970s. Beyond the astonishing growth rates and a widely recognized absolute poverty reduction, the economic miracle has in fact given rise to serious imbalances and social inequalities, as shown by the fact that the Gini coefficient has risen from 0,16 (urban) and 0,21 (rural) at the beginning of the reform era (1978), to 0,46 (national average) at the beginning of the new millennium, well above the recognized warning level of 0,4. Not surprisingly, these increasing imbalances and inequalities have fuelled widespread social unrest over the years. For the Chinese rulers, health care reform remains one of the many challenges ahead, which needs to be urgently addressed, being compounded by the challenges represented by both a rapidly aging population and increasing levels of pollution. Three decades ago, only 5% of the population was over 65; today, 123 million people, or 9% of the population, are over this age; and a report released by a government think tank at the end of 2013 forecasts that China will become the world’s most aged society in 2030. With regards to pollution, it is one of the major causes of the increase in the number of diseases within the Chinese population.

In Curarsi è difficile. Curarsi è costoso. Storia, politica e istituzioni della sanità cinese, 1978-2013 [«To Take care of one’s health is difficult. To take care of one’s health is expensive»], Brombal provides a deep and meticulous analysis of the political, economic and social changes that occurred in China since the launching of the policy of reform and opening (gaige kaifang), in December 1978, during the Third Plenum of the 11th Central Committee Congress of the Communist Party of China. The gaige kaifang included the growing political and administrative decentralization, the de facto privatization of social services. This, in turn, brought about the establishment of strong economic interests, triggered pervasive social and economic imbalances within the population and, more recently, caused the regime’s attempt to promote social equity in order to ensure its legitimacy and stability to the regime.

This complex process is analysed in Brombal’s monograph by using the evolution of the health sector as a case study. In particular, the volume describes the serious social imbalances existing in China today; the dysfunction of the health care system, the preponderance of the private interests to the detriment of the health system consumers, the central government disengagement in relation to the health sector during the 1980s and the 1990s (strictly related to the belief of the substantial unproductiveness of all social sectors), the longstanding problem represented by the lack of enforcement of central government’s regulations by local authorities when these go against their interests and the general disinterest by the local authorities towards the citizens’ well-being.

In 2000, all the above factors brought the World Health Organization (WHO) to rank PRC’s health care system at the 144th place for its general performance (behind Burundi) and at the 188th place in terms of equity (in a general classification of 191 countries). This is in sharp contrast to the fact that, only 18 years before (at the end of the Maoist era and on the eve of the abolition of the Commune system), China had been considered an outstanding example of primary health care (p. 81).

During the 2000s, the lack of coordination and the laxity of a part of the administrative machinery in the field of health care became apparent, even outside the PRC’s boundaries, with the burst of both the Severe Acute Respiratory Syndrome (SARS) and Avian flu (or «bird flu») epidemics.

The author’s choice to concentrate the analysis on the rural areas is not accidental; on the contrary, it has provided awareness that the rural areas represent the «mouthpiece» of the contradictions that affect the Chinese system today. Going beyond «the limits of the coastal cities and the big industrial centres» allows the author to observe the «raw matter/first matter by which the so-called ‘Chinese miracle’ was fed» (p. 16).

In writing the book, Brombal has availed himself of a rich bibliography – including scientific articles, laws and government regulations, policy directives, propaganda and advertising campaigns – both in the Chinese and Western languages. But the strong point of the book is represented by the material collected by the author in the field, thanks to his sinological background and his language skills. Brombal has in fact carried out quite-difficult fieldwork research, especially considering that this kind of research is still viewed in China as a «sensitive activity» (p. 130). He has conducted interviews and accepted spontaneous witnesses among medical and administrative personnel, governmental officials, researchers, students of the Faculty of Medicine and employees of the pharmaceutical industry, in three Chinese provinces (Hubei, Shaanxi and Sichuan), in the autonomous region of Inner Mongolia and in the municipalities of Beijing and Shanghai. This impressive fieldwork has been part of a research project (headed by the author himself) funded by the Italian Ministry of Foreign Affairs (in particular the general direction of development cooperation) and realized in cooperation with the PRC Ministry of Health, between 2008 and 2011.

By making extensive use of the material collected in the field, Brombal’s monograph shows that, starting from the mid-1980s, different economic interest groups have acquired a remarkable capacity to influence the definition and the implementation of health policies in order to maximize their profits. This happened often with the connivance of the local authorities in charge of the health care management. In the last decade, these trends have had a profound effect on the ability of the central government to remedy the crisis in the health industry. This crisis was made more evident by the lack of access to health care by the most disadvantaged sections of the population, the widespread impoverishment due to illness and, finally, the outburst of the SARS crisis.

Brombal’s book is articulated in three chapters and a conclusion. The first chapter describes the evolution of the Chinese health care system from 1949 until today, focusing on the role played by the Party/State in supplying health care service in three different phases (1949-1983, 1983-2002 and 2002-2012), each one characterized by peculiarities that pertain to the different financial and distribution methods of health care services. The second and the third chapters are structured as case studies of rural health in China, aimed at demonstrating the working hypothesis, i.e., the fact that, beginning with the mid-1980s, different economic interest groups – formed largely by doctors, hospital managers and pharmaceutical companies – have acquired a considerable capacity to hack into depth on the definition and the implementation of health policies, in order to maximize their own profits. In particular, the second chapter analyses the modes that have allowed the proliferation of private interests in the health sector through the exploitation of the loopholes, the weaknesses in the existing regulations and the ability to promote the maximization of profits. The third chapter focuses on the impact of private interests on the health policies adopted by the administration, led by Hu Jintao and Wen Jiabao. In the conclusion, the author reflects on the failure of the health policy measures adopted by the Hu Jintao-Wen Jiabao’s administration in order to put an end to the distortions introduced by the neoliberal policies adopted during the 1980s and 1990s, both in terms of better access to health services and in terms of protection of the rural population from the risk of illness-related impoverishment. As a result, violent attacks against medical personnel by desperate people are the order of the day (pp. 156-157).

Brombal’s monograph closes with an interesting photographic appendix that witnesses the places and the people involved in the field research. A second appendix contains the results of the targeted and spontaneous interviews (112 in total) conducted by the author between 2008 and 2011 among medical and administrative personnel, governmental officials, researchers, Faculty of Medicine students and employees of the pharmaceutical industry. Finally, the volume includes numerous diagrams, graphics and tables that contribute to make it easier to read.

Curarsi è difficile. Curarsi è costoso. Storia, politica e istituzioni della sanità cinese, 1978-2013 represents a fundamental reading on contemporary China for both students and academics and for the general public, as well, offering the keys for a better understanding of the problems bedevilling the Chinese political leadership.

Iran has gone through great changes in the past two and a half years. After Hassan Rouhani’s election in June 2013, the country has reached a deal with the P5+1 (the permanent five members of the United Nations Security Council plus Germany) that promises to bring an end to the twelve-year old dispute over its nuclear program. Consequently, Iran has managed to improve its international ties, engaging in direct talks with the United States, resuming diplomatic relations with the United Kingdom, and attracting an increasing number of political and trade delegations to Tehran from all over the world. In the aftermath of the nuclear agreement, Iran has then focused on regional issues and, by securing a seat at the Syria peace talks in Vienna, has been recognised as «part of the solution» to solving current crises in the Middle East. This successful record on foreign policy issues, however, has not been matched by developments on the domestic front. Despite rising expectations by the Iranian populations after Rouhani’s advent to power, particularly with regard to political and social freedom and to the improvement of the economic situation of the country, the current government has not managed to achieve its stated goals. Starting from these premises, the present chapter explores the major changes introduced by Rouhani and his Cabinet in the past two years in the social, economic, political, and diplomatic sphere. In so doing it addresses the complexities of Iran’s political system and power hierarchy, most notably the relation between President Rouhani and the Supreme Leader Khamenei, the impact of the nuclear deal on the domestic front, the frustrations voiced by the reformists, and the recent hardliners’ attempted comeback to the Iranian political scene.

1. Introduction

Iran has gone through great changes in the past two and a half years. After Hassan Rouhani’s election in June 2013, the country reached a deal with the P5+1 (the permanent five members of the United Nations Security Council plus Germany) that promised to bring an end to the twelve-year-old dispute over its nuclear programme. Consequently, Iran managed to improve ties at the international level, engaging in direct talks with the United States, resuming diplomatic relations with the United Kingdom, and attracting an increasing number of political and trade delegations to Tehran from all over the world. In the aftermath of the nuclear agreement, Iran focused on regional issues. By securing a seat at the Syria peace talks in Vienna, it has been recognised for the first time as «part of the solution» of the current crises in the Middle East. This successful record on foreign policy issues, however, was not matched by developments on the domestic front. Despite rising expectations by the Iranian populations after the Rouhani’s advent to power, in particular with regard to political and social freedom and to the improvement of the economic situation of the country, the government did not manage to achieve its stated goals.

Starting from these premises, the article explores the major changes introduced by Rouhani and his Cabinet in the past two years in the social, economic, political, and diplomatic sphere. In so doing, it addresses the complexities of Iran’s political system and power hierarchy, most notably the relation between President Hassan Rouhani and the Supreme Leader Ayatollah Ali Khamenei, the impact of the nuclear deal on the domestic front and the recent hardliners’ attempts for a comeback to the Iranian political scene. It starts with an analysis of the negotiations on the Iranian nuclear programme, assessing the steps that first led to the interim agreement and then to the Joint Comprehensive Plan of Action (JCPOA). The authors opted for starting their analysis with the nuclear dossier because this constituted the priority of the Rouhani administration since it was elected in June 2013. Furthermore, the nuclear negotiation development and outcome strongly affected the government’s room for manoeuvre on the domestic, economic, and international front. The rest of the analysis is devoted to the evolution of Iran’s foreign policy beyond the nuclear issue and to an assessment of the changes occurred in the economic, social, political, and cultural spheres in the past two years.

2. The Iranian nuclear issue: Steps and outcome of two years of talks

Iran started January 2014 on the right foot with regard to the nuclear issue. Only a few months after the election of President Hassan Rouhani, Iran sealed an interim deal with the P5+1, known as the Joint Plan of Action (JPOA).[2] This constituted the first agreement reached by the negotiating parties since 2004, when the E3 (the United Kingdom, France and Germany) and Iran signed the Paris Agreement.[3] The deal was the result of a number of factors. The opening of the US administration to enabling uranium enrichment on Iranian soil constitutes one of the main elements that triggered the agreement between the two sides, but being beyond the purpose of this article it will not be discussed.[4] The other main factor facilitating the sealing of the interim deal was the election of Rouhani.

On 14 June 2013, defying most expectations, Rouhani won Iran’s 11th presidential elections, succeeding to Mahmood Ahmadinejad. Rouhani is a moderate cleric who held senior positions within the establishment, who had represented the Supreme Leader Ali Khamenei on security-related issues for more than 16 years in the Supreme National Security Council (SNSC). Despite having built a strong working relationship with the Iranian leadership, Rouhani run on a campaign of «moderation and prudence», which attracted a large amount of votes from reformist sections.[5]  In his electoral programme, Rouhani highlighted the necessity to improve relations with regional and international powers, prioritising, in particular, the resolution of the nuclear issue as a crucial element facilitating rapprochement with the West.[6] The newly elected president was familiar with the nuclear dossier, which he had handled, as chief nuclear negotiator, between 2003 and 2005, when the issue first became an international concern. Rouhani’s nickname – «diplomatic sheikh» – was an indicator of the conciliatory approach the president was known for, particularly with regard to the nuclear issue. In the presidential debates before being elected, Rouhani sharply criticised the confrontational approach adopted toward the negotiating parties, the P5+1, by the previous administration and, in particular, by previous Iran’s nuclear chief negotiator, Saeed Jalili.[7] Rouhani stressed the need to return to a confidence-building approach, reversing the aggressive rhetoric adopted under president Ahmadinejad. Questions were thus immediately raised about what his victory meant for Iran’s foreign policy posture, particularly with regard to the nuclear issue.

According to Article 110 of the Iranian Constitution, the Supreme Leader constitutes the central institution with regard to all key national security and foreign policy issues, matters on which his word is final.[8] Presidential powers are, on the other hand, constitutionally limited.[9] Nevertheless, by chairing the SNSC – a key institution in shaping national security and foreign policy matters – the president can still have a strong impact on the country’s international posture and overall approach toward the West; also he can channel new diplomatic initiatives and set Iran’s tone as far as international affairs are concerned.[10]

As a cleric who covered high-ranking positions in the Iranian regime, Rouhani was expected to have the power to influence Iran’s foreign policy. To demonstrate his commitment to change Iran’s approach to the nuclear negotiations, Rouhani took two practical steps in the first few weeks after being elected. Firstly, he removed the management of the nuclear dossier from the SNSC, which had been in charge of the file since 2003, handing the responsibility to the Ministry of Foreign Affairs. The decision was due to the tighter control the president has over the Ministry’s appointees and to the need of simplifying the decision-making process over the matter.[11] Secondly, Rouhani nominated a new and more moderate negotiating team, led by the newly appointed Foreign Minister, Mohammad Javad Zarif. A US-educated diplomat who had handled the dossier between 2003 and 2005, Zarif was viewed by the international community as a «pragmatic» diplomat because of his previous post as Iran’s representative at the United Nations.[12] Shortly after the new President undertook these changes, Khamenei stated in a speech to the Iranian Revolutionary Guards Corps (IRGC) that he was not against diplomacy and supported the idea of «heroic flexibility» in diplomacy.[13] The election of Rouhani thus raised hopes about the prospects of finding a diplomatic solution to the nuclear dossier.  A few months later, once the signing of the interim agreement with the P5+1 was announced, it seemed that domestic and international expectations were going to be met.

Under the JPOA, the two sides committed to reaching a comprehensive agreement on the Iranian nuclear issue within six months, closing the dossier that had been on the radar of the international community for more than a decade by 20 July 2014. Few days into 2014, on 20 January, the provisions of the JPOA entered into force. Iran started to scale back parts of its nuclear programme, while, in return, the United States and the European Union agreed to relax some of their unilateral sanctions against Tehran.[14] This represented a major breakthrough, not only for the resolution of the nuclear dossier but also for the improvement of Iran’s relations with the West.

Few months after the implementation of the interim agreement, the nuclear watchdog of the United Nations, the International Atomic Energy Association (IAEA), issued a report, which highlighted how Iran was meeting its end of obligations under the JPOA, in what constituted the first group effort with the Agency since 2008.[15] Once the report confirmed that Iran was curbing its most sensitive nuclear activities, in line with what agreed with the six powers in November 2013, international confidence over the ability of the Rouhani administration to deliver on its promises on the nuclear issue further increased.

Despite the positive momentum, the P5+1 and Iran missed twice their set deadline to reach a comprehensive nuclear agreement in 2014. In July, after the negotiators spent three intense weeks in Vienna’s Palais Coburg, attempting to meet the original expiry date, it was eventually decided to extend the JPOA and talks for four additional months.[16] On 24 November, the negotiators announced a second extension, which, however, required the parties to reach a political agreement within four months and to complete the necessary technical annexes by the end June 2015.[17] The failure to find a compromise was perceived as a setback by most observers, a signal that, despite the initial hopes, a peaceful solution to the nuclear issue remained far away.[18] The Iranian administration grew increasingly impatient with the subsequent extensions of the JPOA. Since the resolution of the nuclear issue was depicted by Rouhani and his team as the first priority of the administration and a precondition to gain a bigger margin of manoeuvre on other matters, both domestic and international, the presidency and the foreign ministry increasingly found it difficult to maintain their legitimacy and support from within Iran. Beginning with spring 2014, as the Rouhani administration was getting close to celebrate one year in power, the government was consistently subject to forceful criticism by the hardliners. In May, a newly established group of right-wing Members of Parliament, which called itself «We’re Worried», complained about the posture of Iran’s negotiating team and their disregard for national interests in the nuclear talks.[19] The level of pressure exerted on the negotiating team further increased in the following months. When the second extension of the JPOA was announced in November, the Iranian ultra-conservative newspapers Kayhan ran the headline «Village headman [United States] wasn’t trustworthy, sanctions extended», indicating not only that Iran did not gain any concessions from talks with the P5+1, but also that the international sanction regime against Tehran did not halt.[20] Another hard-line newspaper, Vatan-e-Emrooz, titled his cover page «Nothing», and argued that the talks with the six powers did not translate into the results Rouhani wanted to achieve.[21]

Criticism toward the negotiating strategy of the new administration started to increase also because, despite the limited and reversible sanction relief granted under the JPOA by the EU and the United States, Iran did not gain the economic benefits it was expecting.[22] A large number of trade delegations, especially from European countries, visited Tehran once the interim agreement came into force to explore opportunities in the Iranian market and to assess whether new deals could be arranged.[23] However, because of the nature of the US legislation against Iran still in place, no new contracts were signed.[24]

Despite the increasing rants about the outcome of negotiations, the Rouhani administration managed to avoid any interference of hardliners on talks with the P5+1, an achievement, which in itself was remarkable. To rebuff the criticism, Foreign Minister Zarif stated that his team had the full mandate to pursue negotiations according to the guidelines set by Khamenei.[25] In a televised address to the nation, Rouhani stated that as a result of engagement with the international community «no one in the world ha[d] any doubt that Iran must have nuclear technology, including enrichment on its soil, and no one ha[d] any doubt that sanctions must be lifted».[26]

2015, therefore, started with less optimism with regard to the chances of the Iranian government to close the nuclear dossier once for all. However, on 2 April 2015, 18 months after the JPOA was signed, the P5+1 and Iran announced that a «framework» agreement was reached, and made public the key points of a comprehensive deal.[27] The agreement, which was the result of complex negotiations and of an unprecedented number of consecutive days spent by the parties in Lausanne discussing the remaining sticking points, was defined by Zarif and EU High Representative Federica Mogherini as a «decisive step», and constituted the basis of discussions on a comprehensive nuclear deal for the following three months. The announcement was welcomed with celebrations in Tehran, ranging from cars driving through the streets and honking horns, to citizens welcoming the negotiating team at the airport or chanting «Thank you, Rouhani».[28] In spite of few exceptions, the agreement was also supported by hardliners previously critical of engagement with the West, because it enabled Iran to meet Iran’s two red lines – the preservation of existing centrifuges and the acceptance of the country’s «right» to enrich uranium on its soil.[29]

Only three months after the Lausanne agreement, Iran and the P5+1 reached the Joint Comprehensive Plan of Action (JCPOA).[30] The agreement was a complex document which sets out 5 different phases after which, in about 10 years time, the agreement will be terminated. The «finalisation day», namely day when the deal was announced, was followed by the approval by the UN Security Council, the US Congress, and the Iranian Parliament (the Majlis) of the agreement.[31] On 18 October 2015, once all three steps were made, the parties announced the second phase of the deal, «adoption day».[32] In the last months of 2015, Iran moved toward meeting its obligations under the JCPOA, curbing its most sensitive nuclear activities and cooperating closely with the IAEA to address concerns about the military nature of the country’s nuclear programme.

Completion of the Iranian obligations constituted a real priority for the Rouhani administration, which, after having sealed a historic nuclear agreement in July 2015, thus fulfilling one of its key electoral promises, now wanted to deliver on its second priority, the improvement of the Iranian economy. This was intertwined with ending the international isolation from the global financial market under which the country found itself since 2010, when EU and US unilateral sanctions were imposed.[33] Under the JCPOA, these sanctions were going to be lifted only once Iran met its end of obligations, triggering phase three of the JCPOA, known as «implementation day». Since Rouhani aimed at countering any remaining opposition toward his nuclear diplomacy and the negotiations’ outcome, Iran moved quickly toward curbing its nuclear activities, aiming at having sanctions lifted at the beginning of 2016.

Because of its successful nuclear diplomacy, Iran found itself in a very different place compared to two years before. The administration gained the trust and respect of the international community, and this in turn affected Tehran’s relations with the West on regional issues, as discussed below. Rouhani and the nuclear team also gained the support of the Iranian population that, attracted by the prospects of better standards of life and normalisation of ties with the West, endorsed the outcome of the negotiations, strengthening the administration’s support basis. Much of this outcome was the result of the unprecedented political capital invested by both the US and the Iranian administrations in reaching the deal. The commitment of US president Barack Obama to prioritise diplomacy in solving the nuclear dossier has played a crucial role in containing the efforts of some influential regional actors, Israel in particular, to derail the negotiation process. By pushing back on issues such as the «breakout time» – the time required to produce enough weapons-grade uranium for one single bomb – and by emphasising how the deal increased the security of all countries in the Middle East, the Obama administration has made it possible for Rouhani to sell the deal at home, side-lining domestic criticisms.[34] As explained in the following sections, the administration’s success on the nuclear front was not matched in other issues.

3. Iran’s foreign policy beyond the nuclear issue

The signing of the nuclear agreement with the P5+1 affected Iran’s foreign policy in various ways. First and foremost, the deal had a profound impact on the country’s relations with the West, notably the United States and some key Western European countries. Rouhani entered office stressing the importance of re-opening the dialogue with his Western counterparts, a step he considered vital for the resolution of the nuclear crisis and the normalisation of Iran’s relations with the international community.[35] The president’s so called «charm offensive», including his phone call with President Obama and his conciliatory remarks before the UN General Assembly in September 2013, can be placed in this context.[36] In his efforts to win the trust and respect of those who continued to look with suspicion at Iran’s new international posture, Rouhani was assisted and supported by his Foreign Minister, Mohammad Javad Zarif, whose diplomatic experience and soft manners soon earned him a widespread popularity. As the Iran and the P5+1 worked towards a comprehensive agreement that could finally solve the dispute over Tehran’s nuclear programme, a few bricks of the decades-old wall of distrust began to fall. However, it was not until the signature the JCPOA in July 2015 that this new climate of hope started to translate into a new political phase: the failure to meet two deadlines for the final agreement in July and in November 2014 suggests that many obstacles remained on the road to a deal and that success was not to be taken for granted.

Yet, the goal was eventually accomplished. The agreement achieved in Vienna undoubtedly represented a game changer in Iran’s relations with the West. The JCPOA and the determination shown by the parties in overcoming the difficulties that arose during the negotiations, though not meaning the complete dismissal of reciprocal suspicions and concerns, have undoubtedly inaugurated a new phase in Iran’s relations with its Western counterparts. By the end of 2015, the new atmosphere of collaboration resulted in mounting interest by European companies in re-entering Iran’s market, in the improvement of ties with EU countries, and in a timid rapprochement with the United States.

Already in the months following the signature of the interim agreement, Western companies, particularly from European countries, organised a large number of visits to Tehran to test the ground on re-entering Iran’s attractive market. In February 2014, for instance, more than 100 French companies visited Iran, including major names such as Total, Renault, and Peugeot, car manufacturers that were active in Iran before sanctions were imposed. Other countries, such as Belgium, Germany, Italy, and Austria, soon sent their trade delegations to Tehran. As a consequence, also political ties between Iran and European countries have intensified since the beginning of 2014. Trade delegations were often accompanied by political ones, in many cases of senior officials visiting Iran for the first time in many years. Furthermore, the UK decided to re-open its Embassy in Tehran that had been closed since November 2011, after it was stormed by an unidentified crowd of Iranian protesters. The French embassy in Tehran subsequently reversed the decision to cut its personnel. The improvement of ties between Iran and the West extended even to the United States. Besides the cooperative attitude showed throughout the nuclear talks, facilitated by direct talks between Kerry and Zarif’s negotiating teams, the Obama administration for the first time recognised Iran as «part of the solution» of current crises in the Middle East, offering, after years of hesitation, a seat at the Syria peace talks in Vienna to Tehran. The choice represented the first time in which the United States chose to formally engage the Iranians diplomatically on this issue, a decision that denotes a gradual but undeniable shift in Washington’s strategy in the region and in US-Iranian relations.[37]

This brings us to the second set of consequences produced by the nuclear deal on Iran’s foreign policy: those related to the regional scene. During Mahmood Ahmadinejad’s eight years in power, many commentators showed increasing confidence that Iran was on the verge of becoming the new regional hegemon: Tehran’s dynamism in Central Asia, its decades-long alliance with Hezbollah in Lebanon and with Assad’s regime in Syria, its expanding support to Hamas, and, even more, its growing influence in neighbouring Iraq and Afghanistan seemed enough to prove its gradual but incontestable transformation into a regional power. In the past few years, however, some new developments altered this scenario, first and foremost the rise and rapid expansion of the Islamic State (also known as ISIS or DAESH). Tehran did not reduce the nature and the extent of its commitments abroad. Nevertheless, the situation changed; in the words of a well known American academic: «its forces have lost more and more territory in Syria […] in Iraq, the government that they backed went from controlling the country, nominally all of the country to actually losing control of large parts of it. And then even if you looked at Lebanon, the combination of refugee crisis which has changed the demographics of Lebanon, it actually has put Hezbollah in a very complicated situation of being engaged in a very unpopular war in Syria where there has been quite a lot of bleeding in Hezbollah.»[38] Despite the territorial losses and military toll Iran had to pay, the rise of ISIS did not mean only a deterioration of Tehran’s position in the region. The strengthening of the Islamic State and the escalation of tensions in the Levant provided the Iranian authorities with a further justification to keep their forces both in Syria and in Iraq. The defence of Baghdad by the Shia militias trained and financed by Tehran received Washington’s de facto endorsement, something that would have never been possible until a couple of years ago. The fate of General Soleimani offers a revealing case in point in this regard: leader of the special forces unit of Iran’s Revolutionary Guards responsible for their extraterritorial operations, the Quds forces, the so-called «Shadow Commander» shifted from being seen as one of the main threats to the regional and international security to receiving US protection and support in its war against the Islamic State. In this sense the emergence of the ISIS threat represented both a setback and a strategic advantage for Iran.

In this situation, the achievement of the JCPOA produced two sets of effects: on the one hand, it further exacerbated the tensions with the countries that opposed the deal, particularly with Israel and Saudi Arabia. Both felt that they were not given enough say in the negotiations that led to the Vienna agreement and were clearly unhappy at the loss of their leverage vis-à-vis the United States concerning the management of regional crises, most notably their vetoing power regarding Iran’s participation to the negotiations over the future of Syria. On the other hand, Tehran’s boosted legitimacy, epitomised by its aforementioned inclusion in the Vienna talks, reinforced Tehran’s standing and diplomatic role in the region, encouraging the Iranian leadership to present itself as an indispensable partner in the fight against ISIS and to improve its relations with the other regional players.

The rapprochement with Washington and Western Europe and the end of Iran’s diplomatic isolation provide encouraging signs for the future of Tehran’s relations vis-à-vis the international community. However, it is also important to notice that these efforts still fall short of indicating a complete reintegration of Iran in the international community and a full acknowledgment of its role by other states in the region. Despite reports on Tehran’s coordination on the ground with US forces to deal with ISIS in Iraq,[39] obstacles remain for instance when it comes to the country’s collaboration with the West on issues such as Yemen or the future of the Assad regime in Syria. The conflict in Yemen, in particular, is one of the most contested terrains of Iran’s involvement in the Middle East. The country, where the Zaidi Shia community represent more than 40% of the population, witnessed in the past two years a revival of the conflict between the government in Sana’a and the Houthis, a Shia insurgent group originally from the north of the country.

In September 2014 the Houthis took control of the capital and of a significant part of Yemen’s territory, leading to the fall of the Saudi backed government. Their military successes triggered Saudi reaction: Riyadh intervened to contrast the advance of the Houthis, and launched a campaign, together with the Yemeni government, to denounce Iran’s alleged support to the group. Such allegations contributed to growing speculations about the fighting in Yemen as a proxy war between Iran and Saudi Arabia. These speculations appear, however, exaggerated: while it’s true that reports have increasingly proved Tehran’s military and financial help to the Houthis, Iran’s leverage on the local actors continued to be limited, especially in comparison to what claimed by the Saudis. «Its [Iran’s] support for the Houthis – has argued Rouzbeh Parsi – has not been a game changer nor has it influenced the group in any particular direction since, irrespective of Tehran’s ambitions, the conflict in Yemen is home grown and structural, having played out over several decades. What this support has achieved is of course to cement Saudi fears and draw Riyadh further into a quagmire it has been skirting around for many years.»[40] As for Syria, the country remains an integral part of Iran’s «forward defense policy.»[41] Tehran did not withdraw his presence on the ground. However, Syria has been costly to Iran – both financially and in terms of reputation – and Iranians, particularly within the Rouhani administration, have seemed more inclined to consider a transitional process which would not require them to compromise the country’s national interests.[42] This confirms the idea whereby Iran’s actual behaviour is «much more pragmatic and reactive than the accompanying rhetoric would let on.»[43]

In other words, the deal with the P5+1 did not assure a more cooperative attitude by Iran towards a series of problems, from the fate of Bahar al-Assad to human rights, nor did it prevent a further escalation of tensions with its regional enemies, as testified by the recent storming of the Saudi Embassy in Tehran in reaction to the execution of Sheikh Nimr al-Nimr, a leading Shiite cleric who had criticised the kingdom’s treatment of its Shiite minority.[44] However, the settlement of the nuclear crisis has made it possible to shift from seeing a rise in Iran’s stature as an entirely hostile development to acknowledging the possibility of using Tehran’s influence to lay the bases for a new policy in the Middle East. This, in turn, encouraged the most pragmatic elements of the Iranian leadership to act as viable and credible partners in the search for new paths for the pacification of the region.

The events that, at the very beginning of 2016, led to the occupation of the Saudi Embassy in Iran on 3 January and to the rupture of the diplomatic ties between Riyadh and Tehran are relevant in this regard. Not only they demonstrated the extent of Saudi hostility towards the inclusion of Iran in the inner circle of regional diplomacy, and the risks that this hostility poses for the pacification of Yemen and Syria. They also indicated the numerous ramifications of Iran’s domestic power struggles and their potential consequences on Tehran’s foreign policy. Especially in the months after the nuclear agreement was signed, the Supreme Leader felt it had to balance the legitimacy gained by the Rouhani administration, allowing radical forces to bring Iran’s policy back on a path of confrontation with actors outside the country, both within and outside the region. Because of that, for instance, despite the participation of Iran’s Foreign Minister Javad Zarif in the talks on Syria, the dossier has remained largely in the hands of the Iranian Revolutionary Guards, who have made of the survival of the Assad regime their main priority. In spite of Rouhani’s determination in reinforcing the country’s cooperative stance with the international community, which resulted in Iran’s inclusion in the Syrian talks, together with the improvement of Tehran’s ties with the West, the Rouhani administration did no manage to gain the room for manoeuvre hoped for. The rupture of relations between Riyadh and Tehran, followed by similar initiatives by the United Arab Emirates, Bahrain, and Sudan among others, indicated that a complete shift of Iran’s stance in the region remains hard to achieve. Similarly disappointing has been the outcome of the administration on the domestic level.[45]

4. The social sphere and the fog of change

Whereas when looking at the nuclear issue and, more broadly, at Iran’s foreign policy, the benefits of Rouhani’s pragmatic attitude in 2014 and 2015 have been evident, when it comes to the social, political, and economic spheres, the progress made by his administration has been slower and seems to be caught in what Robin Wright calls the fog of change. «It’s tempting simply to credit a visionary leader, the human spirit, or a historical trajectory», Wright pointed out. «Change, however, is often foggier. It takes a convergence of causes also selfish, crudely commercial, strategically pragmatic, and more reactive than altruistic.»[46] The reasons are manifold, and include the complexities of the decision making process in Iran, the position of power enjoyed by conservatives and hardliners within some of the key institutions such as the Assembly of Experts and the Judiciary, and the very notion of change from within. It is not by chance that most of the comparisons that have been made in the past two years with regard to Rouhani’s plan of reform are with one of the most celebrated example of reformers from within: Mohammad Khatami.[47] However, the comparison hides substantial differences: as many observers pointed out, Rouhani is not a reformism à la Khatami, as he was hastily defined in many Western media[48]; nor he wants to reinvent the foundations of the Islamic Republic. According to the authors of a 2013 interview to Iran’s president: «Rouhani is more technocrat than cleric. He belongs to the conservatives’ pragmatic wing that considers diplomatic engagement rather than confrontation essential to the survival of the Islamic Republic. He makes little reference to religion and is said to be particularly fond of studying statistics tables.»[49]

At the beginning of his mandate, Rouhani emphasised the importance of de-securitising the atmosphere in the country, i.e. reversing the process that has enabled the state to use extraordinary means in the name of security. De-securitisation meant, first and foremost, the freeing of some prominent political prisoners and the lifting of house arrest for Mir Hossein Mousavi and Mehdi Karroubi, key figures in anti-regime street protests after the disputed 2009 presidential election. Yet little was achieved: the situation of political prisoners remained unvaried, also as a result of Khamenei’s public condemnation of the government’s initial call for the release of Mousavi and Karroubi;[50] moreover, the annual report on the death penalty in 2014 showed that the Iranian authorities had executed more than 1.193 people since the election of President Rouhani in June 2013, marking an increase rather than a drop compared to the last phase of Ahmadinejad’s mandate.[51] The campaign of repression did not target only the reformists or the opponents of the regime, but came to involve one of the founders of the Islamic Republic: Ali Akbar Rafsanjani. In August 2015, after years of attacks from the hardliners, his son Mehdi Hashemi presented himself at Tehran’s Evin prison to serve a ten-year sentence on charges linked to embezzlement, bribery and what state television called «anti-security issues». The media coverage and the social media commentary of the episode were a testament not only to the polarising position the Rafsanjani family holds in Iranian politics today, but also to the intensity of the political struggle and the pervasive role of Judiciary in it.[52]

Ayatollah Ali Khamenei showed limited but crucial support for Rouhani’s initiatives on the nuclear issue, which included curbing hardliners from sabotaging nuclear talks. However, he did not give the same backing to Rouhani’s government on other issues, particularly on the domestic level. Furthermore, constitutionally, prisons are controlled by the Judiciary, one of the power bases of hardliners who, though small in number, used their stronghold to block any meaningful political and cultural reforms.[53]

Similar observations can be made with regard to women’s rights and to the problem of female unemployment. Rouhani’s initiatives have so far included the appointment of some women as provincial governors, the nomination of the first female ambassador since the 1979 revolution (Marzieh Afkham, Iran’s new representative in Malaysia), the increase of activities in women-related NGOs, and the removal of restrictions on certain subjects in higher education. Nevertheless, also on this matter, criticism from within remains, and the widely publicised achievements hide a situation of persistent disparities and violation of basic rights. Women in Iran still hold only 3% of seats in Parliament;[54] female unemployment in the age group between 18 and 24 is at 42.7%. According to Mohsen Ranani, professor at the University of Esfahan, some 75% of female university graduates remain without an appropriate job, and that is a heavy price for a country that is aiming to economic grow and where an average of 60% of university students are women.[55]

The same goes for cultural freedom: reformists’ initial hopes for a cultural flowering and an easing of internet censorship were not met in the first two years of Rouhani’s mandate. Flourished during the two mandates of Khatami, NGOs made a comeback between 2014 and 2015. During Rouhani’s first year in office the number of registered NGOs in Iran rose by 30% to 7,000. Most of the newly established NGOs focus on health, the environment, and entrepreneurship, avoiding to address more controversial topics such as human rights.[56] In the atmosphere of rising expectations, fuelled by the progress achieved by the administration in the negotiations with the P5+1, hope spread that civil society and interest groups could have helped the new president to achieve the reforms the country needed. «While the democratic opposition within Iran still suffers from organisational weakness and the lack of a unifying long-term strategy, – two analysts of Iranian politics wrote in the Washington Post in April 2015 – the nuclear breakthrough seems to have recharged the emotional battery of reformist activists and supporters and contributed to an optimistic perception about short-term electoral progress.»[57]

Yet, the picture remains gloomy when it comes to political rights. In 2014-2015, the Judiciary persisted in stopping reformist journalists from publishing new newspapers. Social networks, such as Facebook and Twitter and VChat, continued to be blocked. Furthermore, while some moderate politicians were appointed to regional governorships, there are few prominent reformists in Rouhani’s administration.

The struggle for cultural freedom, which represents one facet of the wider battle between the president and its opponents, was particularly fierce in the capital Tehran, where the president and conservative Mayor Mohammad Bagher Qalibaf (who lost the presidential election both to Ahmadinejad in 2005 and to Rouhani in 2013) clashed over the limits of the new climate of relaxation of the city’s cultural life. In December 2015, the reopening of the Tehran Museum of Contemporary Art and the debates over possible collaborations with some foreign partners spread hopes for the beginning of a new phase in Iran’s social and artistic scene, similar to what happened in 1997, following the election of Khatami.[58] Earlier in the year, during his visit to Tehran’s prestigious book fair, president Rouhani raised the thorny issue of censorship.[59] Though not directly challenging the tight control imposed on authors, Rouhani called for simplifying the guidelines that regulate the publishing process in Iran, guidelines that became much stricter after the approval of a some related rules in April 2010.[60] Yet, the road remains long and full of obstacles, not only because of the complex maze of Iranian politics, but also as a result of all the steps forward that were made in the past few years. «For every liberalising move like this, – an Iranian journalist commented in December 2015 – the conservatives will get mad and want to take something back. So, this being Iran, you can only count on the fact that nothing will go as planned.»[61]

The chances of meaningful progress in the social sphere have been further reduced by the priority attached from the very beginning by Rouhani and by his entourage to the achievement and implementation of the nuclear deal with the P5+1. The political capital they invested in the diplomatic marathon that culminated with the Vienna agreement  paradoxically translated into less negotiating leverage vis-à-vis other internal key powers and actors in the social field. As mentioned in the previous section, Khamenei had indeed to re-balance the gains obtained by the administration on the nuclear front, providing more power to the opposite factions on other issues, such as de-securitisation within Iran. «Other than foreign policy and nuclear negotiations and to some extent the economy, it is difficult to find out what the government’s policies in cultural and political fields are» noticed a reform-minded analyst in January 2014.[62] The pressure on the reformist and moderate forces did not only result in growing frustration among those who supported Rouhani in the hope he would introduce meaningful change in the political and social life of the country. It also risks weakening their position in the coming elections. At the end of February 2016, Iranian citizens will be called to elect both the members of the next Majles (Parliament), currently dominated by the conservatives, and the Assembly of Experts, which might have to choose the successor of Supreme Leader Ayatollah Ali Khamenei. The vote will be a test of confidence for the government and for its conduct, after two years and a half in power. At the same time the elections will be decisive in setting the tone of the political struggle in Iran, delimiting the playground where a series of key battles will be fought. These include the hardliners’ possible comeback, the reformists’ attempts to push the government towards a more assertive stance on social and political issues, Khamenei’s efforts to keep change under control, and Rouhani’s attempt to carry on with his delicate diplomacy, at home and abroad.

5. The economic sphere: Rouhani’s battle for growth

Whereas some critics could accuse the president of not having paid enough attention or spent enough energy on social matters, few would question the importance he attached from the beginning of his mandate to the economic sphere. Economic rehabilitation ranked at the top of Rouhani’s agenda, along with the nuclear issue. He installed an experienced group of technocrats and economic planners to manage Iran’s recovery, most of whom had been forced out of government by Ahmadinejad. The president also openly condemned the choices and conduct in the economic management of the country throughout the two Ahmadinejad’s mandates.

Rouhani’s commitment to the improvement of the economic outlook resulted in some accomplishments. According to the World Bank’s annual report, following two years of recession, the Iranian economy recovered during the 2014 Iranian calendar year (i.e., March 2014-March 2015). The economy expanded by 3% in 2014, after annual contractions of 6.6% and 1.9% in 2012 and 2013, respectively. The inflation rate declined from a peak of 45.1% in 2012 to 15.6% in June 2015 as a consequence of the tightening of the monetary policy by the Central Bank of Iran (CBI).[63]

Yet, in the words of the deputy director of the Foreign Policy program at the Brookings Institution, the president «[had] promised the Iranian people more than just a halt to the crisis; Rouhani [had] pledged to generate growth, development, and jobs»,[64] and in this regard the picture was far from rosy. The unemployment rate remained high and rose slightly in 2014. It reached 11.4% in 2014, up from 10.4% in 2013. The unemployment rate remains much more elevated among women (20.3% for women against 8.7% for men), among the population between the ages of 15 and 29 (17.9% for men and 39% for women in this age cohort) and in urban areas (11.7% in urban areas and 7.4% in rural areas). This weak labour market performance took place within a context of a subdued and declining labour force participation rate with only 37.2% of the country’s population being economically active in 2014, down from 37.6% in 2013 (62.9% for men and 11.8% for women). The government estimated that 8.5 million jobs should be created to reduce the unemployment rate to 7% by 2016.[65]

According to estimates upon the EU and US sanction relief which, based on the phases of the JCPOA implementation described earlier, should take place in the first quarter of 2016, real GDP should rise to 5.8 % and 6.7 % in 2016 and 2017, respectively, as oil production reaches 3.6 and 4.2 million barrels per day.[66] The progressive removal of sanctions is expected to be accompanied by reforms of the business environment and the financial and banking sectors. According to many observers, the positive fulfilment of all these conditions could pave the way for a significant improvement of Iran’s economic outlook, mostly as a consequence of the surge in oil exports, the release of about US$100 billion in frozen assets, and the prospect of re-engagement with the international markets. Iran has the word’s second-largest gas reserves, third-largest oil reserves, and significant rare earth deposits; it has a diversified economy, a trade surplus, and a well-educated urban population The country’s 77 million consumers have been locked out of global markets since 2010, when EU and US unilateral sanctions were clamped on Iran, but the situation is expected to change because of the agreement signed in July 2015.[67]

However, while the implementations of the deal is taking place, it becomes increasingly clear that Iran’s recovery from years of mismanagement and isolation will not be as easy as initially envisioned. In 2015 the cost of crude fell to levels not seen for 11 years and the decline may have further to go, a phenomenon which Tehran blames on the Saudis and that strongly links the future of oil prices – and of the Organisation of the Petroleum Exporting Countries (OPEC) – with the rising tensions between Tehran and Riyadh.[68] Iranian authorities have been waiting for months to increase the country’s oil exports after the drastic drop in sales produced by the embargo imposed in 2012 by the European Union. Iran’s oil exports had fallen to 700,000 barrels per day (bpd) by May 2013, compared with an average 2.2 million bpd in 2011. Throughout 2015, Tehran exported 1.1m barrels of oil per day, but in December 2015 the Iranian oil minister, Bijan Zanganeh, announced that the country was aiming to double that amount within six months after sanctions being lifted.[69] In an effort to attract foreign investment in the post-sanctions era, Iran also offered new oil and gas contracts designed to benefit both international contractors and the National Iranian Oil Company, particularly affected by the falling prices of oil.

Despite these efforts, the Iranian government was not able to attract foreign investors. Already after the implementation of the interim agreement, despite the interest shown by European companies, Iran was experiencing severe difficulties in benefitting from the limited sanction relief granted under the JPOA. The difficulties were mostly linked to the practical challenges of delivering money to a country largely isolated from the global banking system and to the hesitation of financial institution in authorising even legitimate trade and humanitarian transactions with Tehran because of the nature of US sanctions.[70] Iran also had difficulties in improving its economy, exploiting the limited sanction relief, because of the resistance raised by some sectors of its establishment, particularly the IRGC, which remain hostile to a change in the image and structure of power of the country,. They were determined to make sure that Rouhani could not take the credit of the lifting of sanctions and the resulting economic recovery. Additionally, these groups have been among those benefitting the most from bribes and lucrative sanction-dodging schemes and were understandably keen to maintain their privileges intact. To avoid the increased presence of Western companies in Iran as a consequence of the JCPOA reached in July 2015, hardliners thus conducted a witch-hunt against «spies» to counter what IRGC commander, General Mohammad Ali Jafari, defined a «prolonged sedition of infiltration».[71] In this scenario, based on the World Bank’s 2015 Ease of Doing Business Index, Iran ranked 130th out of 189 countries – not prohibitively low, but far from optimal. Moreover Iran was 111th out of 131 countries in a 2013 worldwide ranking of property rights regimes, 136th out of 174 countries on Transparency International’s 2014 Corruption Perceptions Index, and 83rd out of 144 countries in the World Economic Forum’s 2014-15 Global Competitiveness Index.[72] Therefore, although lifting the international sanctions against Iran might remove a substantial impediment to the improvement of the country’s economic recovery, it will not automatically create the legal and regulatory framework necessary for sustained investment. The inability of the new leadership to attract investors, to effectively tackle issues such as corruption, and to resist the attempts by the more conservative elements within the élite to sabotage the new course, was crucial in hampering Rouhani’s image domestically. The outcome of this struggle, fought on the terrain of economy but with clear political implications, is bound to have a crucial impact not only on the success of Rouhani’s project of economic rehabilitation, but also on his own political standing. «People are not economic experts. – dissident journalist and writer Akbar Ganji commented in March 2015 – They expected the Rouhani administration to improve the economy rapidly. But, since that has not happened, Rouhani’s popularity has plummeted.»[73] The situation partially improved after the signing of the JCPOA in July: a poll conducted by iPOS [Iranian Elections Tracking Polls] in August 2015 suggested that a majority of Iranians favoured the nuclear deal with the West. 77% approved the plan while 3% percent disapproved. The positive stance on the nuclear deal boosted Rouhani’s overall popularity: in occasion of the same interviews 39% of Iranians said they approved the way he was handling his job as president, while 15% said they somewhat approved.

Yet such rise in popularity is unlike to last throughout the second half of the president’s mandate unless the promise of a widespread relief from economic hardship is fulfilled. As noted by Suzanne Maloney in September 2015 «to date, the nuclear diplomacy has provided no meaningful ‘trickledown’ effect for Iran’s economy or its population at large […] expectations for Implementation Day are sky-high at home among Iranians, and Rouhani will be risking his mandate and his presidency if he does not deliver on real results.»[74] Finally, the question of how to allocate the funds that will be made available by the lifting of sanctions continues to loom at the horizon. Whereas the official priorities remain job creation, a stimulus to the private sector and sustainable growth, domestic dynamics and power struggles will continue to affect the actual implementation of the initiatives designed by the president and by his economic advisors.

Since the 1979 revolution, Iran has made several attempts to transit to a market-based economy, most notably during the Rafsanjani administrations between 1989 and 1997, and following the revision of Article 44 of the Iranian Constitution in 2004.[75] Iran’s efforts have largely failed due to the political rationales of most of the economic measures adopted, and difficulties encountered when introducing measures aimed at increasing transparency and productivity and tackling corruption and inflation. As it has been argued by Najmeh Bozorgmehr in the Financial Times, the initial call for the establishment of an economy based on an amalgamation of Islamist and socialist ideologies was soon abandoned to leave room for the creation of «a class of oligarchs, nominally operating in the private sector, linked to and dependent on the survival of the regime» in a society where «wealth that is associated, as great fortunes usually are, with political patronage rather than individual entrepreneurship.»[76] There is no doubt that this time the international as much as the domestic situation suggests a more favourable outcome; yet the road towards an effective policy of economic reforms remains long and rocky.

The first months of 2016 will prove crucial for the future of Iranian political and economic outlook. Should Iran meet its end of obligations under the JCPOA, the beginning of the year might bring the lifting of nuclear-related sanctions. The implementation of the agreement might dissipate some of the doubts on the actual impact of the long-awaited removal of the measures that have crippled Iran’s economy for decades. Sanctions relief will be followed by the elections for the Majles and the Assembly of Experts scheduled for February. The candidates include Ali Akbar Rafsanjani, who has been recently defeated in the elections for chairman of the Assembly of Experts by ultraconservative Ayatollah Mohammad Yazdi, Ayatollah Mohammad Taqi Mesbah-Yazdi, and Khomeini’s nephew, moderate senior cleric Hassan. The climate of accusations and tensions that has so far dominated the electoral campaign is a clear indicator of the importance of the elections in shaping the domestic and foreign policy of the country for the year to come.[77]

6. Conclusions

There are few doubts that the election of Hassan Rouhani as president in June 2013 heralded a new phase in the history of the Islamic Republic of Iran. Rouhani was elected on a platform of moderation, pragmatism, and reintegration of Iran into the international community. He openly criticised the conduct of the previous administration in a number of key fields, most notably the nuclear policy and the economic management of the country, and promised to improve Iran’s international standing and to bring relief to the population after years of economic hardship.

Two-and-a-half years later his record shows mixed results. On the one hand, Rouhani and his negotiating team headed by Foreign Minister Mohammad Javad Zarif managed to achieve a deal with the P5+1, the JCPOA, that pledges to bring an end to the twelve-year old dispute over the country’s nuclear programme. The agreement, when and if fully implemented, will lift the economic sanctions imposed on Iran since 2006 by the UN, the US, and the EU in exchange for the Tehran’s commitment to limit its sensitive nuclear activities. The deal represents a crucial step in the normalisation of Iran’s relations with the West and its reintegration into the international community, as testified by Tehran’s inclusion in the Syrian peace talks in October 2015. However, Iran’s rapprochement with the West and regional cooperation over key issues, such as Yemen and Syria in particular, continue to be limited, given the domestic infight between Tehran’s centres of powers for the control of the different dossiers.

Furthermore, the success achieved on the diplomatic front of the nuclear issue was not matched by meaningful developments on the domestic front. The beneficial impact of the agreement was not felt by the population, which continued to struggle against unemployment and low growth rates. The long-awaited and badly needed increase in foreign investments, which was supposed to take place already after the interim agreement entered into force in January 2014, was undermined, among other things, by the persistence of corruption and the lack of transparency in the Iranian economy. The limited economic growth compared to what anticipated by the Rouhani administration was also the result of the collapse of oil prices, but, once again, the conflicting interests of Iran’s factions played a major role in hampering the country’s economic recovery in the past two years.

Limited progress also characterised the administration’s record on the political and social sphere. At the end of the period under review, Mir Hossein Mousavi and Mehdi Karroubi were still under house arrest, the situation of political prisoners remained unvaried, while executions have been increasing since the advent to power of Rouhani. Despite a few symbolic achievements, also the situation with regard to women’s rights and cultural freedom remained critical. Whereas the number of registered NGOs in Iran significantly increased, along with hopes of more freedom and influence for civil society and interest groups, these hopes were mostly unfulfilled. Censorship continued to be in place, the judiciary persisted in stopping reformist journalists from publishing new newspapers, and the pace of change remained slow. «Having got the nuclear deal he desperately wanted, Hassan Rouhani is now suffering the backlash» – wrote The Economist in November 2015. While the president was busy fending off the risks of a comeback from the hardliners and trying to restart the economy, Khamenei, which backed the president throughout the nuclear talks, seemed content to divide and rule.[78] «Mr Rouhani is stronger than before the deal,» – the article continues – but «a stalled economy may hurt him as much as his conservative foes».[79]

The past two years were thus characterised by a mix of successes, hopes and failed expectations for the Rouhani administration. All in all, the presidency largely constituted the decision-making power within Iran compared to the previous administration, particularly on a major international and security issue, such as the nuclear dossier. Because of the structure and the principles at the basis of the Islamic Republic, however, the Supreme Leadership has been careful in rebalancing the power of the Rouhani administration, enabling different figures, close to the hardliners and to the IRGC, to retain control over domestic issues and over other foreign policy dossiers. 2016 will likely constitute the year in which factional politics will reach its peak. With the looming parliamentary elections and the starting campaign for the presidential elections which will take place in June 2017, foreign policy, domestic reforms and economic prospects will likely all be a mere representation of who will ultimately win the domestic infight. Whether regional tensions, notably with Saudi Arabia, or more importantly the implementation of the nuclear agreement will play a crucial role in this, remains to be seen.

As the country with the fourth largest natural gas reserves in the world, Turkmenistan is aiming to diversify its energy export routes in order to enhance its strategic role as an energy supplier. In 2015, this central Asian republic paved the way for the implementation of the eastward and westward export corridors, starting the completion of the TAPI pipeline and completing the national East-West gas pipeline.

Even while Turkmenistan confirmed its twenty-year adherence to permanent neutrality in its foreign policy, in the year under review President Gurbanguly Berdimuhamedow faced growing and dangerous threats along the Turkmen-Afghan border, represented by potential incursions of the Afghan Taliban or other armed groups, which could affect both Turkmenistan’s national stability and its domestic security. In this situation, and considering that Turkmenistan’s armed forces may not be ready to face this challenge along the eastern border, President Berdimuhamedow, in the year under review, reiterated Turkmenistan’s refusal to cooperate with Russia in the Collective Security Treaty Organization (CSTO) framework. However, unconfirmed reports have suggested that Uzbek and Russian military units have already been engaged along the Turkmen-Afghan border, reinforcing Turkmenistan’s border defence capacity. Likewise, according to some sources, military cooperation between Turkmenistan and the US appear to be in the offing.

1. Introduction

During 2015 Turkmenistan has been profoundly worried about the growing activism of armed militants along its eastern border, which it shares with Afghanistan. The potential convergence between Central Asian terrorists – mainly the Afghan Taliban and the Islamic Movement of Uzbekistan – and foreign fighters linked to the so-called Islamic State represent a dangerous threat to national stability and domestic security, not only with respect to the preservation of the current political leadership but also with respect to the future implementation of the eastward corridor for energy exports. As a matter of fact, the completion of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline (from Turkmenistan to India and Pakistan, crossing Afghanistan) has progressively become a strategic goal in the Turkmen strategy of diversifying energy exports in order to lessen the dependence on gas exports delivered to China.

On 12 December 2015, Turkmenistan celebrated the 20th anniversary of permanent neutrality, based on a peaceful and non-alignment position in foreign policy. However, if the Taliban threat along the border becomes more relevant, Turkmen President Gurbanguly Berdimuhamedow will be pushed to revise the traditional neutrality concept in foreign policy in order to receive the military support needed to contain the destabilizing armed incursions of terrorists.

With respect to the diversification of its energy exports, Turkmenistan took concrete steps, starting the completion of the TAPI pipeline and mainly reaffirming its commitment to supplying the Southern Gas Corridor. As a matter of fact, in addition to the Ashgabat Declaration signed in May 2015, Turkmenistan completed the East-West gas pipeline, which is meant to fuel the future westward export route to the EU markets.

2. The domestic political scenario

Since 2012 Turkmenistan has progressively undertaken a gradual process of democratization and reforms, in order to change the national political system from a one-party system – based on the presidential Democratic Party – to a multi-party political system: currently the Party of Industrialists and Entrepreneurs and the Agrarian Party of Turkmenistan – which were founded in 2012 and 2014 respectively – are the other official political parties in the country.

Nevertheless, Turkmenistan remains an authoritarian state: President Berdimuhamedow is also the head of government and the commander in chief of the armed forces. According to the Turkmen leadership, an immediate adherence to the democratic experiences of other states would be inappropriate for Turkmenistan, while a gradual approach to the democratisation could better ensure that political and socio-economic reforms are consistent with “the centuries-old democratic traditions”.[1]

The role of the Council of Elders – a consultative assembly of elders from all provinces of Turkmenistan assisting the president in addressing issues of state importance – and of the Gengesh – the local self-government bodies – reflect the Turkmen’s willingness to respect the national traditions and to undertake an endogenous approach towards democracy.

During the last session of the Council of Elders, one of the debated issues was the worsening of the economic outlook, due to falling global energy prices, which has severely affected the Turkmen economy, which is heavily reliant on natural gas exports. The Council of Elders proposed abolishing the free supply of electricity, cooking gas, and water to the country’s households, so as to reduce welfare benefits – introduced by the former President Niyazov in 1993 –, which contribute to ensuring domestic stability.[2]

Moreover, in January 2015 Turkmenistan devalued its national currency, the Manat, in order to bolster its effort to diversify its trade’s.[3]

Following the negative shortcomings in the energy, economic and security spheres, Turkmenistan’s President made reshuffled his government, changing the staff in the government’s senior posts.

In August 2015, the Deputy Prime Minister Durdylyyev was dismissed, as was the Minister of Energy, Geldi Saryev, because of shortcomings in their work, while Dovranmammed Rejepow was appointed as the new Minister of Energy.[4] As we observe in the next sections, Turkmenistan’s success in the energy sector arrived only in December 2015, following the completion of the East-West gas pipeline and the beginning of the realization of the TAPI gas pipeline (Turkmenistan-Afghanistan-Pakistan-India).

Furthermore, the growing threats to national security, due to Taliban activities along the Turkmen-Afghan border pushed the Turkmen President to dismiss Begench Gundogdiyev from the post of Defence minister: Yaylim Berdiev – the former minister of national security – became the new Defence minister, while Guychgeldi Hojaberdiev was appointed Turkmenistan’s minister of national security.[5]

3. Threats to national security at the eastern border

During 2015, the Turkmen authorities have dealt with a worsening security outlook along the eastern border, which is shared with Afghanistan, following the consolidation of tbe Taliban’s position in the Afghan districts close to the Turkmen border. After the Taliban took control of Khamyab province in December 2014, they extended their control over Faryab province in Afghanistan. Frequent clashes and military incursions have been reported, even if they diminished compared to 2014.

Considering that, according to two of the main experts on Central Asian security, the Afghan government does not have the military force to restore security in its western provinces, the rise of Taliban activism represents a serious challenge for Ashgabat.[6]

In terms of trans-border stability, the situation is further complicated by the presence of an estimated 1.5 million ethnic Turkmens in the northern Afghan provinces of Faryab and Jowzjan, just beside the border with Turkmenistan. In these Afghan border provinces, where the Taliban are firmly entrenched, the local Turkmen community have organized a kind of popular militia – led by Gurbandurdy and Emir Karyad, two former ethnic Turkmen warlords – which, in 2014 and 2015, fought against the Taliban to protect the local Turkmen.[7]

This being the situation, Turkmen border guards – worried about the Taliban threat – in order to prevent incursions by the Taliban have closed the border, installing obstructive barb wire along the border. This move has adversely affected the ethnic Turkmens on the Afghan side, depriving them of vital grazing pastures that are located on the Turkmen side of the border and which Afghan Turkmens traditionally had access to in the past.[8]

In addition to the Taliban threat, the rising presence of Central Asian foreign fighters linked to the Islamic State (IS) is another looming challenge facing Turkmenistan. According to the International Crisis Group the number of Central Asian jihadists – which are active in Iraq and Syria under the banner of the IS – is between 2,000 and 4,000. However, estimates vary, mainly because Central Asian governments often overestimate the number of terrorists for internal political reasons, in order to tighten domestic social control.[9]

Russia also appears to overestimate the presence of IS fighters in Central Asia, putting the number of IS fighters along the Turkmen-Afghan border at 2,500, in an ill-disguised attempt to pressure Ashgabat to establish military cooperation with Russia within the CSTO framework (the Collective Security Treaty Organization, the main regional security organization leaded by Russia, which also includes Kazakhstan, Tajikistan, Kyrgyzstan, Armenia and Belarus).[10]

The future possible return to their homelands of the Central Asian fighters now active in Syria and Iraq represents a big potential challenge for the Turkmen and other Central Asian authorities. This threat appears to be a serious one, particularly after the IS’s announcement that it intended to create a Khorasan vilayat (province) of the Caliphate, including Turkmenistan, Central Asia and Iran. It is a fact that the number of Turkmen IS fighters seems not to be so high – less than 400, much less than their Uzbek or Tajik counterparts. However, a potential merger between the IS and regional Islamic extremist movements is clearly perceived as a destabilizing and dangerous threat. Indeed, in August 2015 the leader of the Islamic Movement of Uzbekistan – IMU, which represents the most powerful and rooted Islamic movement in Central Asia – pledged its allegiance to the IS.[11]

This being the situation, President Berdimuhamedow has discussed with the President of Uzbekistan, Islam Karimov, in Tashkent, the worsening regional security outlook and how to address the threats coming from Afghanistan.[12]

Turkmenistan has always adopted a pragmatic approach toward Afghanistan, offering economic solutions to Afghanistan’s problems and attempting to integrate the country within a regional economy through the development of trade and energy infrastructures (natural gas and electricity networks).[13]

Part of the Ashgabat-sponsored economic solution to the Afghan woes is the completion of the TAPI gas pipeline (on which, more below). Indeed, the completion of TAPI will make available to Afghanistan both the supply of Turkmen natural gas, lucrative transit fees and revenues (estimated at 500.000-$1 billion per year) and, last but not least, the building of infrastructure and the creation of new jobs.[14]

Turkmenistan concretely supports Afghanistan’s development, by supplying electric power and liquefied petroleum gas at preferential prices, building industrial facilities and sending humanitarian aid. In 2015 the Turkmen President announced the objective of increasing fivefold the electricity supply to Afghanistan, following the expected completion of the new gas turbine power plants in the regions of Lebap and Mary.[15]

In November 2015, Turkmenistan concluded the national section of the Turkmenistan-Afghanistan-Tajikistan railway, from Atamyrat to Akina along the border with Afghanistan. In the future this trans-regional railroad corridor will play a significant role in integrating Afghanistan in the regional markets, increasing trade turnover and becoming an important link in the transport network, integrating the countries of Central Asia and easing access to the seaports on the coast of the Indian Ocean.[16]

4. 4. Revising the Turkmen neutrality policy?

Turkmenistan’s ambitious aim is to promote peace and stability in Afghanistan through preventive diplomacy, and the Ashgabat government has proposed hosting an inter-Afghan peaceful dialogue under UN auspices, as a new political and diplomatic mechanism for resolving this issue.[17] Nevertheless, in security terms, Turkmenistan has boosted its border defences, in order to monitor and patrol the 257 km largely deserted border with Afghanistan. In October 2015, nearly 70% of Turkmenistan’s land military forces were deployed in the southern parts of the provinces of Mary and Lebap, both of which border Afghanistan, which highlights the extent to which the national government is worried about the security on its eastern border.[18]

However, Turkmenistan’s armed forces may not be ready to face the challenge of frequent terrorist incursions from the eastern border, which could destabilize the country and represents a serious threat to its national security.

According to the Stockholm International Peace Research Institute (SIPRI) Turkmenistan’s armed forces are considered among the weakest in the region, due to several factors such as the lack of personnel training and as a result of the neutrality policy. As a matter of fact, the Turkmen army did not undertake any military operations and were not involved in any multilateral training exercises as a consequence of Turkmenistan’s refusal to participate in some regional military-political blocs. Normally, 12,000 border guards are deployed along the Afghan-Turkmen border but these guards are considered ineffective due to the lack of qualified personnel.[19]

During a meeting of the State Security Council, President Berdimuhamedow – who is also Supreme Commander-in-Chief of the Armed Forces General of the Army – reaffirmed his engagement in the implementation of a large-scale military reform, based on upgrading the hardware used by the armed forces and training qualified personnel.[20]

If the Taliban threat along the border becomes more urgent, President Berdimuhamedow could be pushed to revise the neutrality concept in foreign policy in order to receive the military support needed to contain armed incursions by the Taliban.[21]

On 12 December 2015 Turkmenistan celebrated the 20th anniversary of permanent neutrality, which is internationally recognized given the fact that in 1995 the United Nations General Assembly unanimously adopted the Resolution on the Permanent Neutrality of Turkmenistan.

During his speech at the International Conference on the Policy of Neutrality held in Ashgabat, President Berdimuhamedow stressed the strategic relevance of positive neutrality, as a model based on peacefulness, non-interference in the affairs of other states, respect for their sovereignty and territorial integrity, and non-participation in international military organisations and treaties.[22]

Moreover, considering that Berdimuhamedow stated that «this status is a pillar to peace, security and development», and that «the promotion of fraternal and friendly relations with our neighbours will remain a crucial aspect of the foreign policy of neutral Turkmenistan», Turkmenistan appears officially determined to preserve its neutrality policy.[23]

As a matter of fact, in spite of several talks between Turkmenistan’s and Russia’s presidents about the security concerns and the threats coming from Afghanistan, Turkmenistan has to this day refused to cooperate with Russia in the CSTO framework, disappointing CSTO Secretary General Nikolay Bordyuzha.[24]

Nevertheless, unconfirmed reports have suggested that Uzbek and Russian military units are already engaged along the Turkmen-Afghan border in order to reinforce the border defence capacity of Turkmenistan. Likewise, according to some sources, potential future cooperation between Ashgabat and Washington to achieve the same security aim seems to be in the offing, even if the Turkmen government has not officially confirmed this.[25]

5. 5. The strategic energy partnership with China and the diversification of export routes

Turkmenistan ranks fourth in the world in terms of the volume of its natural gas reserves, after Iran, Russia and Qatar. According to the BP Statistical Review 2015, Turkmenistan holds 17.2 trillion cubic meters (tcm) of natural gas reserves, even if the estimates of the Turkmen authorities are higher.[26] As a matter of fact, according to an independent audit, the reserves of the Galkynysh field – the world’s second largest in terms of reserves – together with the Yashlar deposits, are estimated at 26.2 tcm. In November 2015, during the international exhibition and conference «Oil and Gas of Turkmenistan», the country’s minister for oil and mineral resources, Muhametnur Halylov, stated that the reserves of this giant gas deposit will rise to 27.4 tcm when we add the reserves of the newly discovered Garakel field, which is included in the Galkynysh area.[27]

The national production of natural gas increased by 11% in 2014 (from 62.3 bcm[28] to 69.3 bcm); Turkmenistan exported 41.6 bcm of gas to the countries of China (25.5 bcm), Iran (6.5 bcm) and Russia (9 bcm).[29] Under the program for the development of the country’s oil and gas industry, the plan is to increase the gas production volume to 230 bcm by 2030.

In spite of these positive prospects in the gas sector, the need to diversify the export energy routes has suddenly become urgent, and not only to balance the rising Chinese influence in the national energy sector. As a matter of fact, in 2015, the Turkmen authorities clearly realized that Russia cannot be considered a reliable energy partner. In February 2015, Alexander Medvedev – the Gazprom Vice Chairman – revealed that Gazprom would be cutting more than 50% of its natural gas imports from Turkmenistan, from 10 bcm (2014) to 4 bcm in 2015.[30] This planned reduction of exports to Russia will affect the national energy budget. This is despite the fact that Russia signed an agreement with respect to gas supplies with Turkmenistan for 25 years in 2003 and that in 2008 Russia purchased 42 bcm of Turkmen gas. Moreover, the Turkmen authorities claim that Gazprom has not yet paid gas volumes bought in 2015.

At present Ashgabat has lost an energy partner that should be promptly replaced in order to implement the strategy of diversifying the export routes as well as selling the increased production that is expected over the next few years.

When the Turkmen government launched its strategy of export diversification, the main aim was to lessen the dependence on exports to Russia, finding new partners and opening new export routes: now Turkmenistan is in a similar situation with China, which has taken over Russia’s role.

China currently is the main energy partner for Turkmenistan in terms of exports (25.5 bcm in 2014, 60% of total gas exports) and the main investor in the development of the Turkmenistan gas fields. In addition to the development of the first and second phases of the giant Galkynish gas field, China National Petroleum Corporation (CNPC) is also developing Turkmenistan’s Bagtyyarlyk gas field on the bank of the Amu Darya, and investing billions of dollars in the Turkmen energy sector. After the completion of Line C at the end of 2015, the China-Central Asia Gas Pipeline will have a capacity of 55 bcm, while the construction of a new gas pipeline from Turkmenistan to China (Line D) with the capacity to carry 30 bcm/a of gas will start in 2016. Under the agreement signed between the CNPC and Turkmengaz, Turkmenistan will supply China annually with 65 bcm of gas by 2020-2021.[31]

In the next decade this unbalanced dependence on Chinese markets could severely affect Turkmenistan’s energy security. As a matter of fact, following the implementation of the Sino-Russian energy deal – based on the completion of the Power of Siberia gas pipeline (and potentially Altai gas pipeline) – China could decide to buy more Russian gas, reducing Turkmenistan’s gas supply and consequently exposing the Central Asian country to a condition of vulnerability, even if at present China buys Turkmen gas at a lower price than Russian gas.

This scenario is pushing President Berdimuhamedow to immediately find new and alternative energy partners, accelerating the implementation of the western and eastern vectors of export.[32]

5.1.   Turkmenistan and the Trans Caspian Pipeline: a concrete engagement

In 2015, Ashgabat took significant steps towards the completion of the Trans Caspian Pipeline (TCP), the energy corridor along the Caspian Sea between Turkmenistan and Azerbaijan, with the concrete involvement of Turkmenistan as gas the supplier, in order to enhance the capacity of this energy route.

Trilateral negotiations among the EU, Turkmenistan and Azerbaijan have paved the way for improved reciprocal relations, which have tried to address unsolved issues between Baku and Ashgabat (i.e. the ownership of disputed offshore oil and gas fields in the Caspian basin), and the recent trilateral dialogue involving Turkmenistan and Azerbaijan and Turkey have revitalized the Trans Caspian project, producing interesting results. As a matter of fact, in November 2014 Turkmenistan signed a framework agreement with Turkey to supply the Trans Anatolian Natural Gas Pipeline project (TANAP), a section of the Southern Gas Corridor (SGC) project, which aims to deliver 16 bcm of gas a year from Azerbaijan’s Shah Deniz II field in the Caspian Sea to Europe via Turkey.[33]

In January 2015, during a trilateral meeting held in Ashgabat these three countries decided to further enhance their energy cooperation and the ministers of Turkey and Azerbaijan invited Turkmenistan to join the TANAP project.[34] Turkmenistan’s participation will enhance the capacity of this energy route – which is expected to reach 31 bcm in 2026 and 60 bcm in 2030 – allowing Turkmenistan to successfully exploit an alternative energy corridor with a large capacity, bound to conspicuously enhance the growth of Turkmenistan gas production and exports.[35] On 4 March 2015, the Turkmen Presidents visited Ankara, where Turkish President Recep Tayyip Erdogan announced the project to develop a trilateral mechanism on energy issues involving the two Caspian countries and Turkey.[36]

Furthermore, the trilateral meeting involving Turkmenistan and the EU and Azerbaijan (the so-called Troika) has produced a relevant agreement in the energy issues, in light of the shared convergence of strategic interests and concerns of the actors involved.

For the European Union, the worsening relations with Russia have further highlighted the vulnerability of its energy security and the need to coherently undertake a diversification strategy with respect to import routes, aiming to lessen the «unbalanced» reliance on Russian gas imports crossing Ukraine. For Azerbaijan, the Turkish Stream pipeline project – a new gas pipeline backed by Moscow crossing Turkey and carrying Russian gas – could undermine Baku’s exclusive role as EU’s alternative supplier along a southern route bypassing Ukraine.[37] Furthermore, the SGC expected capacity will reach approximately 30 bcm of gas per year – without the contribution of Turkmen gas – representing less than half of the Turkish Stream’s potential capacity (63 bcm per year). Consequently, Azerbaijan could strategically support Turkmenistan’s participation in the SGC. For Turkmenistan, a western corridor of gas exports would allow Turkmenistan to diversify its energy routes, lessening the strong dependence on a single customer – China, which currently purchases over 60% of Turkmen gas exports – and offsetting the Russian decision to cut its gas imports from Turkmenistan by nearly two-thirds.

The EU’s diplomatic engagement has produced significant concrete steps. In February 2015, Maros Sefcovic, the European Commission’s Vice President in charge of Energy Union, declared that the EU intends to find a technical and legal basis for the Turkmen gas supply via Azerbaijan, mainly because the EU Commission considers the TCP as a project of common interest.[38]

On 1th May, during a meeting of the energy ministers of Azerbaijan, Turkey, Turkmenistan, and EU representatives in Ashgabat, the parties signed the «Ashgabat Declaration», focused on the development of cooperation in the energy field.[39] The document said that the sides support the creation of the favourable conditions necessary for ensuring reliable, stable and long-term international energy cooperation, taking into account the interests of producers, transit countries, and consumers of energy resources. The sides also recognized the importance of equal and mutually beneficial cooperation in ensuring the supply of natural gas from Turkmenistan to Europe.[40]

In July, the first high level meeting of the Working Group on the TCP project was held in Brussels, involving the deputy ministers in charge of the energy section in the four countries involved in order to consider all aspects (organizational, legal, commercial, technical) related to implementing a natural gas corridor from Turkmenistan to Europe.[41]

Furthermore, in December 2015 Turkmenistan concluded the East-West pipeline, a 773-kilometer gas pipeline with a capacity of 30 bcm of natural gas per year that connects Galkynysh’s largest gas field with the Shatlyk gas compressor station in the province of Mary and the Belek gas compressor station in the Balkan province. In order to enhance its capacity to 40 bcm the Turkmen authorities plan to add 10 bcm provided by Malaysian Petronas, operating at Turkmenistan’s offshore block. The fact that the whole pipeline has been built by national energy companies – Turkmengaz and Turkmennebitgazgurlushyk – and that the $2 billion estimated cost has been covered by the Turkmen governments shows the strategic relevance of this corridor to the national strategy of energy export diversification.[42]

5.2.   Geopolitical hindrances and alternative projects

Turkmenistan has clearly reaffirmed its commitment to developing the SGC, concretely opening a new and alternative westward route of energy export and potentially playing the role of a gas supplier to the EU. However, this ambition could be hampered by some domestic and international hindrances, such as the dilemma concerning the Iranian corridor and the persistent Russian opposition to the realization of TCP.

According to Sefcovic there are two potential routes for exporting Turkmen gas to the EU market: transiting through Iran, and building an underwater Trans Caspian pipeline.[43] Following the improvement of EU-Iranian relations, the possibility of an an overland pipeline delivering Turkmen gas through Iranian territory to Turkey could be an interesting alternative option to pursue, in order to reach the EU market.

However, it will be necessary to build infrastructure in order to realize this Turkmen-Iranian energy corridor: the current capacity of the Turkmen-Iranian gas pipeline is 18 bcm, so it would need to be expanded to carry additional volumes of Turkmen gas to boost TANAP’s capacity. Moreover, Iran should improve its domestic energy infrastructure in order to connect it to the Turkish border.[44]

Russian opposition to the realization of a Trans-Caspian pipeline is officially motivated by ecological and environmental issues, even if we can also observe geopolitical reasons in Moscow’s approach, aimed at preventing the implementation of an alternative export energy route to the EU markets, which could lessen the EU’s dependence on Russian gas imports. Moreover, the unsolved legal status of the Caspian Sea contributes to delay a potential solution with respect to the TCP.

The official position of Ashgabat regarding the project is that the consent of the countries whose territories are involved in the project is enough to build a pipeline. In spite of the recent enhanced rapprochement with Azerbaijan on energy issues – which also shared with Turkmenistan the same approach about the TCP – the next Caspian summit scheduled in 2016 could be decisive in reaching a definition of the Caspian sea’s legal status and both countries will postpone any decision concerning the Russian position during the summit.

At the same time, the agreement between Turkmenistan and Kazakhstan for the delimitation of the shared Caspian Sea bed signed in 2015 showed Ashgabat’s willingness to develop a cooperative approach with respect to regional energy issues, enhancing bilateral relations with post soviet energy producers with the aim of improving the legal framework before the Caspian summit.[45]

Considering that the bulk of national reserves are located onshore in the eastern region, Turkmenistan needs to exploit the potential Caspian reserves – which are largely unexplored – in order to enhance the western vector of its energy exports. Ashgabat invited foreign companies to sign production sharing agreements (PSA) to develop hydrocarbon resources in the Turkmen part of the Caspian Sea, which are estimated at 12 billion metric tons of oil and 6.5 trillion cubic meters of gas. Currently several foreign companies – such as Malaysia’s Petronas, Dragon Oil, Italy’s Eni, Russia’s Itera and Zarubezhneft Cyprus-based Buried Hill – are seeking to develop the Turkmen offshore energy potential.[46]

In spite of positive diplomatic steps, given the current outlook, Sefcovic’s statement that Turkmen natural gas could start being exported to Europe through a pipeline under the Caspian Sea by 2019 appears optimistic. In spite of several hindrances, which have been delaying the TCP’s realization, the potential participation of Turkmenistan in the AGRI project could allow the implementation of the Southern Gas Corridor – as well as of a westward export route – without building an underwater pipeline, also overcoming Russian claims.

AGRI will be designed to transport Azerbaijani gas by pipeline – with a planned capacity of 7 bcm that should thereafter be upgraded to 20 bcm – to a Black Sea port in Georgia for liquefaction and then this LNG will be delivered via tanker to the Romanian Black Sea port of Constanta before reaching Eastern European markets.[47]

If the AGRI system’s capacity is increased, it could potentially accommodate LNG exports from Turkmenistan, through the ad hoc facilities in Turkmenbashi International Seaport. The AGRI project clearly represents an interesting diversification option for Ashgabat, even if the fate of this interconnector is strictly interlinked to several economic and geopolitical hindrances which could delay its completion.[48]

Turkmenistan’s contribution to the development of an East-West corridor is growingly significantly with respect to the oil sector, considering that Turkmen oil transportation through the Baku-Tbilisi-Ceyhan pipeline increased by nearly 40% in 2015. The BTC pipeline mainly delivers Azerbaijani oil to the Western markets but also Kazakhstan and Turkmenistan oil exports by tankers to the Baku port. In 2014, BTC transported 5.6 million metric tons of Turkmen oil, compared to 3.3 million metric tons in 2013.[49] At present, the country produces around 10 million metric tons of oil per year, but in 2015 Turkmenistan increased oil production (+6.5%) partly thanks to the activities of foreign energy companies – mainly Dragon oil and Malaysian Petronas – involved in the development of the Turkmen sector of the Caspian Sea under the production sharing agreements.[50]

5.3.   The launch of the Turkmenistan-Afghanistan-Pakistan-India pipeline

Concerning the eastern energy export corridor, in 2015 Turkmenistan started to build the TAPI natural gas pipeline, overcoming the traditional hindrances. On 7 November 2015, Turkmenistan’s President signed a decree ordering the state companies Turkmengaz and Turkmengazneftstroi to design and to construct the national segment of the TAPI, to be completed in two years.[51]

On 13 December 2015, the President of Turkmenistan Gurbanguly Berdimuhamedow, the President of the Islamic Republic of Afghanistan Mohammad Ashraf Ghani, the Prime Minister of the Islamic Republic of Pakistan Muhammad Nawaz Sharif, and the Vice President of India Mohammad Hamid Ansari gathered in the city of Mary to attend the ground-breaking ceremony of the TAPI gas pipeline.[52]

Through TAPI, Ashgabat will be able to sell 33 bcm of natural gas per year, through a pipeline with a length of 1,800 kilometres, which will cross Afghanistan and Pakistan before reaching India, with an expected cost of $10 billion.

This relevant success has been made possible by the previous realization of some necessary preconditions. Firstly, the TAPI Ltd. International consortium – established in November 2014 and composed pf Turkmengaz State Concern, Afghan Gas Corporation, Pakistan’s «Inter State Gas Systems (Private) Limited» and Indian «GAIL (India)» – selected the Turkmen national energy company Turkmengaz as the leader of this consortium and also the main investor. As a leader, the Turkmengaz State Concern will supervise the interaction concerning the construction, financing, ownership and operation of the pipeline.[53]

Secondly, in September 2015, the feasibility study for a project to construct the TAPI gas pipeline was completed. The British company Penspen was involved in the feasibility study for the TAPI. According to the Asian Development Bank (ADB), which is a transaction advisor on the TAPI project, this pipeline will be realized by 2018. Moreover ADB is one of the main investors and it will try to attract other international actors interested investing and financing the project.[54]

Thirdly, Turkmenistan has signed a framework agreement with a consortium of several Japanese companies for the development of the third phase of the Galkynysh gas field, which will be the main source fueling the TAPI project.[55]

So Japan has entered the geopolitical energy game in Central Asia, because the agreement on Galkynish is a real challenge to the current position of China, which holds contracts to develop the first and the second phase of the project. Japanese Prime Minister Shinzo Abe visited Turkmenistan in October 2015, where he concluded bilateral agreements on the construction of a gas and chemical plant, power plant and other projects for worth a total of $18 billion.[56] Tokyo’s government has offered investments to construct industrial plants based on advanced technologies for gas processing meant for the production of gasoline, polypropylene, polyethylene, caustic soda and other gas-chemical products. Construction also continues to progress on a gas chemical complex in Turkmenbashi that will to produce ethylene, high-density polyethylene, and polypropylene.[57]

In spite of Turkmen claims that it will complete the infrastructure by December 2018, the rising threats to regional security and stability appear likely to delay the implementation of this export corridor which is currently vital for the national strategy of diversification. Firstly, the TAPI route will cross areas affected by a great instability such as South-Western Afghanistan (Herat, Helmand, Kandahar) and Pakistani Baluchistan. Secondly, the growing confrontation along the Turkmen-Afghan border between Islamic extremists (Taliban, foreign fighters linked to the IS or IMU) and Turkmen border guards could contribute spreading instability (even if this area is currently a long way from the northern areas involved in the unrest), representing a threat to regularly supply energy delivered through TAPI.[58]

In addition to increasing exports of oil and gas, Turkmenistan also aims to diversify its national energy strategy and exports, developing projects to expand natural gas processing and petrochemical production. Turkmenistan plans to complete a plant for polyethylene and polypropylene production in Balkan province, as well as a plant for producing synthetic gasoline from natural gas in Ahal province in the next few years.

The recent energy cooperation with Japan could help Turkmenistan to develop its national industrial sector. Another interesting opportunity to diversify the national energy strategy is based on the industrial development and commercial exploitation of more than 200 deposits of various solid minerals and hydro-mineral raw materials. According to the Turkmen government, recent geological explorations have showed the presence in the national subsoil of relevant reserves of various mineral salts – such as sodium, potassium, sulfate and magnesium salts – as well as potential reserves of metals[59] such as manganese, copper, iron, lead, zinc, gold.[60]

In August 2015 Kyrgyzstan completed the accession process to the Eurasian Economic Union (EEU). Bishkek now firmly gravitates in Russia’s orbit. In October parliamentary elections returned a six-party national assembly, where the president, Almazbek Atambayev, could count on a strong pro-presidential power base, consisting of the «president’s party», the Social-Democratic Party of Kyrgyzstan (SDPK), and the new «Kyrgyzstan» party. Suggesting that Kyrgyzstan is a country adrift might appear counter-intuitive. However, the impression resulting by an in-depth analysis is that the Central Asian country’s political system and society are presently floating, without trajectory or leadership. In fact, the government has been unable to resolve the never-ending controversy over the Kumtor gold mine. The authorities are also showing signs of preoccupation due to the threat posed by the Islamic State (IS). This being the situation, the chapter reviews two economic issues that largely shaped political and social developments in 2015: the first is the accession to the Eurasian Union and the effects that the economic crisis in Russia had on the Kyrgyz economy. The second is the turbulence surrounding Kumtor. Next, the chapter analyzes the results and effects of the October parliamentary elections. The remainder of the chapter focuses on some controversial legislative initiatives and concludes by discussing the threat posed by the IS to Kyrgyzstan.

1. Introduction

Suggesting that Kyrgyzstan is a country adrift might appear counter-intuitive. After all, in August 2015 the small Central Asian republic completed the accession process to the Eurasian Economic Union (EEU). Consequently, Bishkek now firmly gravitates in Russia’s orbit. In October parliamentary elections returned a six-party national assembly, where the president, Almazbek Atambayev, could count on a strong pro-presidential power base, consisting of the «president’s party», the Social-Democratic Party of Kyrgyzstan (SDPK), and the new Kyrgyzstan party. Yet, the impression is that of a political system and society that float, without trajectory or leadership. The government has been unable to resolve the never-ending controversy over the Kumtor gold mine. The authorities are also showing signs of preoccupation with the threat posed by the Islamic State (IS). Although precise numbers are hard to come by, a few hundreds Kyrgyzstani citizens are among the ranks of either the IS or Al Qai‘da’s affiliate Jabhat al-Nusra. Without a proper attempt at addressing the root causes of discontent or the individual pathways to radicalization and recruitment, the government is resorting to the strategy it knows best: a crackdown on civil and political liberties. The chapter begins with reviewing two economic issues that largely shaped political and social developments in the country in 2015: the first is the accession to the Eurasian Union and the effects that the economic crisis in Russia had on the Kyrgyz economy. The second is the turbulence surrounding Kumtor. Next, the chapter analysis the results and effects of the October parliamentary elections. The remainder of the chapter focuses on some controversial legislative initiatives and concludes by discussing the threat posed by the IS to Kyrgyzstan.

2. International and domestic causes of a critical economic situation

The Kyrgyz economy and, more broadly, society suffer from two main sources of vulnerability. The first stems from the fact that Kyrgyzstan is a resource-poor country, whose main strategic asset is the gold mine at Kumtor (and other mining sites, which are confronted with similar challenges). A drop in production (of gold) is bound to cause a decline in export revenues which constitute the main source of hard currency. This has implications on GDP growth, tax revenues and social welfare. The second is the growing dependence on the Russian economy. Over a million Kyrgyzstani citizens work in Russia and migrants’ remittances constitute an important source of livelihood for local households. Last but not least, Kyrgyzstan’s membership in the Eurasian Economic Union (EEU) meant that the country’s position as main entry in the Central Asian economic space and re-export point for Chinese goods was lost because of the higher tariffs imposed on non-EEU imported goods. In August 2015, after years of delays and wrangling during the accession negotiations, Kyrgyzstan finally formally joined the EEU, a regional economic organization which also includes Russia, Belarus, Kazakhstan and Armenia. The strongest argument in favor of Kyrgyzstan’s membership in the EEU has long been the promise of long-term economic stability and development. EEU membership will bring a welcome easing of regulations for Kyrgyz labour migrants in member countries, a critical issue for Kyrgyzstan’s economy and society, as these critically depend on remittances. Remittances from Kyrgyz migrants are crucial to the local economy staying afloat. Official statistics put the number of migrants at some 700,000 (mostly working in Russia and Kazakhstan), whereas international organizations put the estimate at well over one million, or about 20% of the overall Kyrgyzstani population. In recent years the Customs Union (the EEU’s predecessor) and the Single Economic Space have set in place a wide range of rules and institutions. This includes two of the agreements on the legal status of migrant workers and their family members, and the agreement on cooperation among member states on counteracting illegal labour migration from third countries. The most important benefit of EEU accession in this regard stems from the fact that national status is granted to labour migrants as far as job placement and access to social services are concerned. This includes the abolishment of licences and permissions to work; the granting of social and other rights to migrants and their families (medical care, education); the payment of the income tax in the country of residence; and recognition of work experience and of pensions rights. These benefits notwithstanding, some challenges remain. Kyrgyzstan will have to make arrangements to secure its external borders to restrict the move of the citizens of third countries and ensure the security of EEU countries. This will heighten pressure on the Osh and Batken regions in the south, through which illegal migration via Tajikistan and trade from China mostly enter the country. What is worse, the Russian financial crisis, caused by the plummeting of oil prices and Western sanctions because of Russia’s annexation of Crimea, has had a direct fallout on the Kyrgyz economy, bringing about a shortfall in migrant remittances, pushing inflation up and foreign investment down, all of which is bound to adversely impact on the GDP. The most direct fallout of the Russian crisis (recession, plummeting oil prices, and sanctions) is precisely on the remittances that Kyrgyz migrants send home: 20% migrants have been forced home because of shrinking labour market in Russia; as a result, remittances in 2015 are expected to decrease by some US$425m, or about 23% compared those of the previous year. Apart form the migrants issue, Kyrgyzstan’s economy remains vulnerable to external shocks such as the global trend of commodity prices. Macro-economic data reveal a worrisome picture of the Kyrgyz economy. GDP growth slowed in 2014 and 2015 (3.5% and 3.2% respectively, compared to 10.5% in 2013) . During the same period foreign direct investment declined as well. Russian investment and subsidies were announced in the closing months of the period under review as a way to promote and speed up the accession process to the EEU. They included US$600m to upgrade gas infrastructure, US$300m to enhance border security, and US$1.2bn for the establishment of a Development Fund aimed at offsetting the costs of EEU integration . Much of this has now been put on hold. In turn, the uncertainty surrounding the implications of EEU integration has led to a sharp decline of both Western and Chinese investment.

3. The Kumtor gold mine

The gold mine at Kumtor, located some 350 kilometres south-east of the capital Bishkek, is the country’s main source of hard currency, a vital contributor to the country’s GDP, and the single largest private employer. Since 1997, when production started, Kumtor has emerged as one of the most contentious issues in the small Central Asian republic’s socio-economic and political life. In 2014 the mining sector accounted for 15% of the budget revenues, 15% of the country’s GDP and over half of its industrial output and export revenues, constituting Kyrgyzstan’s main source of wealth.

3.1. The deal that never was In February 2014, after months of protests, rallies, and violence, the parliament voted in favour of a new agreement framework, replacing the one signed in 2009. At the time, the Canadian company Centerra Gold Inc. was the owner of the mine; Kumtor Gold Company, fully owned by Centerra, operated the mine. In turn, the Kyrgyzstani government owned 33% of the shares in Centerra (not Kumtor) via the state-owned mining company Kyrgyzaltyn JSC . Centerra also owned other mining sites in Mongolia, Russia, Turkey, and China, and the Kyrgyz government, being a shareholder in Centerra, received dividends from Centerra’s profits, including those accruing from activities outside Kyrgyzstan. This being the situation, a new agreement, whose signature was expected first in late 2014 and then any time in the first half of 2015, seemed in the offing, bound to radically revise the contentious 2009 framework agreement. The terms of the new agreement would have been the following: The government would release its shares in Centerra; in turn Kumtor would be co-owned as a joint venture (50-50) by Centerra and the Kyrgyzstani government, via Kyrgyzaltyn. The new agreement would have lead to Bishkek giving up its share in Centerra’s profit outside Kyrgyzstan, receiving in exchange greater responsibilities and profits exclusively in Kumtor. This was a development which would have tyed the performance of the Kyrgyzstani economy to the volatility of gold prices, making the local economy even more dependent on a single sector (gold) at the expense of other (non-gold) sectors. This, in turn, would have raised key questions about the long term development of the country. However, on 9 April 2015 the national parliament adopted a non-binding resolution which called the government’s handling of the Kumtor negotiations «unsatisfactory». On 13 April, then Prime Minister Otorbayev, in a surprising turn of events, announced that the government would no longer pursue a new agreement, as this «was no longer in the interests of the country». Ten days later, on 23 April the prime minister resigned. The new government led by Temir Sariyev promptly confirmed that neither nationalization nor the renegotiation of the deal were on the agenda. «Nationalization will only create certain risks and threats for us. We must seek other ways», Sariyev stated in April. Spats between the parties resurfaced in late July when the State Agency for Geology and Mineral Resources noted that Centerra’s report detailing data on stocks of gold at Kumtor (including the projected lower production in 2015) was overdue. Calm around the Kumtor issue was, as predicted, merely a lull. A bitter row re-ignited as the new parliament convened after the elections (see the next section) and the government, led by Temir Sariyev, was confronted with this seemingly irresolvable question. The most immediate cause of the new development lies in the failure of the parliament to adopt an amendment of the «Water Code». This would essentially prevent mining sites from operating at high altitudes, where their functioning would jeopardise glaciers, already in retreat. Failure to amend this would lead to making Centerra’s license to operate the mine inapplicable. An even more disconcerting development occurred right before the closing of the year under review as the government notified Centerra Gold of its intention of withdrawing from the renegotiations of the agreement, something which the Kyrgyz government itself had proposed to Centerra. In the words of an official statement, the Kyrgyz government «considers that the existing agreement on Kumtor in the current environment does not meet the interests of the Kyrgyz Republic». This last «act of brinkmanship» , which Bishkek blamed on Kumtor’s lower than expected output in 2015, shows the intention to pursue yet another restructuring of the ownership configuration of Kumtor, its governance, and the distribution of dividends. A new wave of «resource nationalism» has seemingly engulfed the country and the international companies operating there, in what has become a volatile political and business environment.

4. The 2015 parliamentary election in Kyrgyzstan

On 4 October 2015 Kyrgyzstan held its sixth parliamentary election since achieving independence form the Soviet Union in 1991. Of the fourteen parties allowed to register and contest the elections, six managed to pass the required threshold and gain seats in the Jogorku Kenesh (National Assembly). On the eve of the 2015 national elections, The Social-Democratic Party of Kyrgyzstan (SDPK) was the country’s dominant political party. After spending two decades at margins of Kyrgyzstan’s political life, the SDPK had been catapulted to the centre of the political system by the democratic breakthrough which followed the ouster of former president Bakiyev and the election of Almazbek Atambayev to the presidency in October 2011. Another important political party, established by former Respublika MP Kanatbek Isaev in 2015, was the Kyrgyzstan party. With an unclear ideological platform but well-endowed financially (backed by the owner of the largest vodka company in the country), in 2015 the Kyrgyzstan party staged a lavish electoral campaign. The 7% nation-wide threshold for political parties made the formation of electoral coalitions compelling. By 2015, however, SDPK’s strong competitors in 2010 had gradually withered away: nationalist Ata Jurt, with a stronghold in the south had suffered several defections, as had been the case with Respublika. Even more so, the Ar-Namys party, led by long-time politician Feliks Kulov, had literally been deserted by its members. Apart from Respublika and Ata Jurt, the main challenge to the strong organizational presidential machine was expected to come from the Butun Kyrgyzstan-Emgek coalition. Butun Kyrgyzstan was led by Adakhan Madumarov, a nationalist politician based in the south, whose party narrowly failed to pass the threshold to gain seats in 2010. Emgek was led by Askar Salimbekov, a wealthy businessman from the northern regions and owner of the country’s largest market, Dordoi, in the capital Bishkek.

4.1. Results Elections returned a six-party parliament (table 1). At 27% SDPK won comfortably. The opposition split into two competing coalitions (Respublika-Ata Jurt and Butun Kyrgyzstan-Emgek) and fared poorly, with the former coming second (20% of the popular vote) and the latter failing to secure the required threshold, receiving just over 6% of the popular vote. The other parties that managed to pass the threshold were Kyrgyzstan (12.8%), Onuguu-Progress (9.3%), Bir Bol (8.5%), and Ata-Meken (7.75%). The SDPK won predictably and comfortably, albeit not by the expected landslide. The SDPK came first in seven out of nine electoral districts. Respublika-Ata Jurt won in the other two districts (Talas in the north-west and Jalalabat in the south), with an especially strong performance in Talas where it gained 37% of the popular vote. Kyrgyzstan did exceptionally well in the Chuy district (over 17%), as well as in Osh city and Jalalabat in the south. Onuguu-Progress gained more than 14% in Jalalabat, with Bir Bol obtaining its best results in Jalalabat and Batken (around 11%). A comparison with 2010 highlights interesting trends (table 2). First, the SDPK significantly increased its presence in the new parliament (38 seats, up from 26 in 2010). Kyrgyzstan, Onuguu-Progress and Bir Bol were not represented in the fifth legislature, whereas in the sixth the three parties received 18, 13, and 12 seats respectively. Respublika-Ata Jurt incurred significant losses (28 seats in 2015). In 2010 the two parties, having run separately, conquered 23 and 28 seats, whereas they only won 28 seats in 2015. Ata Meken also performed poorly, losing 7 seats (11 in 2015, down from 18 in 2010).

Table 1. The 2015 Parliamentary Election Results (voters and percentages)

Votes (overall) % (overall) Bishkek Chuy Talas Issyk-kul Naryn Osh city Osh Jalalabat Batken SDPK 431,771 27.5 30.4 29.1 12.3 25.7 30.4 40.1 35.5 14.4 29.8 Respublika-Ata Jurt 316,372 20.2 20.6 19.6 37.3 21.7 12.8 16.9 16.3 22.6 18.4 Kyrgyzstan 203,383 13.0 8.6 17.1 13.0 11.3 16.1 14.5 12.4 14.4 7.1 Onuguu-Progress 143,475 9.3 6.5 8.6 9.3 7.7 6.4 7.5 9.5 14.1 7.6 Bir Bol 133,800 8.5 6.5 7.2 3.8 6.5 2.4 8.1 10.2 11.4 11.9 Ata Meken 122,152 7.0 7.8 6.5 13.8 7.2 10.5 5.9 6.6 8.5 6.8 Butun Kyrgyzstan-Emgek 96,751 6.1 7.9 4.4 2.6 4.9 8.2 2.6 4.4 7.3 12.4 Ar-Namys 12,496 0.7 1.1 0.5 1.6 0.3 0.3 0.6 0.3 1.5 0.6 Others 199,256 7.7 10.6 7 6.3 14.7 12.9 3.8 4.8 5.8 5.4 TOTAL 1,659,456 100 100 100 100 100 100 100 100 100 100

Source: Kyrgyz Respublikasynyn Zhogorku Keneshinin Deputattaryn Shayloo – Central Election Commission – (http://ess.shailoo.gov.kg/ServiceJSP.do)

Table 2. Jogorku Kenesh seats

2015 2010 Diff. SDPK 38 26 +12 Respublika-Ata Jurt 28 51* -23 Kyrgyzstan 18 0 n.a. Onuguu-Progress 13 0 n.a. Bir Bol 12 0 n.a. Ata-Meken 11 18 -7 Ar Namys 0 25 -25 TOTAL 120 120

* Respublika and Ata Jurt ran separately in 2010, receiving 23 and 28 seats respectively. Source: Central Election Commission, Kyrgyz Republic.

Consequently, SDPK’s grip on power has consolidated; the party increased its number of seats by 50%. Together with Kyrgyzstan, pro-presidential parties enjoy a strong base in the parliament. Similarly to 2010, Butun Kyrgyzstan again failed to pass the necessary threshold to gain seats in the parliament. Ar-Namys, one of the country’s oldest parties, was virtually eliminated from political life as it received 0.79% of the votes.

4.2. Coalition-building and government formation

In light of the changes introduced by the 2010 Constitution, the results of the parliamentary election are consequential for government formation since the cabinet must rely on a parliamentary majority. Although the parliament is home to six parties, the assembly is less fragmented than the previous one and, at least on paper, should be conducive to more stable majorities. Relatively swift post-election negotiations ended in the formation of a coalition comprising, as expected, the SDPK and Kyrgyzstan, alongside Ata Meken and Onuguu-Progress. On 5 November the parliament approved the formation of the new coalition government by Temir Sariyev (who was also Prime Minister in the previous government), with the support of 80 MPs.

5. Towards institutional isomorphism: Russia’s influence casts a shadow on Kyrgyzstan’s civil society

It is not only Bishkek’s foreign and domestic policies which orbit around Russia. Social developments are largely shaped by occurrences and even legislative initiative that take place in Moscow, such as the curbing of civil liberties. Kyrgyzstan’s once vibrant civil society has increasingly become the target of harassment, intimidation, attacks and more recently legislative activity aimed at curbing its activities and stifling its impact. Such trends bear strong resemblance to analogous dynamics in Russia. Rising nationalist tones, anti-western themes, far-right and homophobic groups already regularly feature in the republic’s daily life. The first reading of the «foreign agents» and «gay propaganda» bills in the year under review was a clear pointer to the tendency to effectively condone such attitudes and expose already vulnerable groups to increased state and public pressure and interference.

5.1. The «foreign agents» bill

On 4 June the Jogorku Kenesh voted in favor – 83 to 23 – of the «foreign agents» bill. It was the first reading of a bill which had been in the works since 2013 and which, before being enacted, is to pass two more readings and get the president’s signature. The bill requires domestic non-governmental organizations that receive funding from abroad and engage in vaguely defined «political activities» to register as «foreign agents». In its current wording, the bill is problematic in a number of respects. First, the notion of political activities is defined in very broad terms, encompassing «activities aimed at influencing public opinion and government policies». Second, as most local NGOs depend on external funding for their work, the bill would expose a large number of them to the rigours of the law. Third, the bill expands the scope of action of the authorities, which are granted increased powers to inspect the activities of NGOs. NGOs falling in this category would have to register as «foreign agents». Failing to do so would expose them to the risk of being closed down by the authorities. In its scope and language the bill mirrors Russia’s legislation on the same subject, with a focus on the origins of funding and that of political activities. The final approval of controversial legislation was halted after the first reading of the bill, as the electoral campaign went on the way, out of concerns that international support (also financial) for the elections would be curbed. What remains to be seen is whether in 2016 the legislative process will be carried to its conclusion, with the final enactment of the controversial bill.

5.2. The «gay propaganda» bill

A second pending piece of legislation was that on ‘non-traditional sexual relations’, which also passed the first reading, but did not yet complete the legislastive iter. According to the proposed draft law, propaganda – defined as depicting in positive light or promoting interest in same-sex relations – is to be prohibited at public assemblies, in the media, via the internet. Penalties include administrative and criminal sanctions, such as fines and jail sentences up to one year. If approved, the law would infringe on the advocacy of groups for rights of the LGBTI community (lesbian, gay, bisexual, trans, and/or intersex.), and would also hinder discussion of LGBTI issues, de facto condoning discrimination and intolerance. Again, the law bears close resemblance to the one adopted in Russia.

5.3. Harassment of political and civil rights groups

During the year under review, episodes of attacks against political and civil rights groups were on the rise: on 3 April 2015 Bishkek-based NGO Labrys, which defends LGBTI rights in the country, came under attack when a small group threw several explosive bottles into the NGO’s office yard. The attempt to set it on fire ultimately failed, but Labrys’s subsequent attempts to launch a police investigation were thwarted, a clear indication of the law enforcement authorities’ stance against the LGBTI groups. On 27 March the Osh offices of the Bir-Duino-Kyrgyzstan Human Rights Movement and the homes of its lawyers were searched by officers of the State Committee for National Security. Various materials, including computers, flash drives and files, were confiscated. Although the action was sanctioned by a court, the State Committee’s actions exceeded the scope allowed by the law (which applies to cases where lawyers are involved in criminal offenses). The lawyers first won the appeal, only to see the decision annulled by the Osh Regional Court. Any attempt to initiate a new investigation into the case of Askarov, an ethnic Uzbek allegedly involved in the 2010 violence in the south of the country and detained ever since, has also failed. In September 2014 the Supreme Court confirmed the decision – by another court – to discontinue such investigation. Requests to reconsider by the European Parliament and attempts to secure the involvement of the UN Human Rights Committee have similarly failed. Washington’s decision to bestow the Human Rights Defender Award to Askarov plunged Kyrgyz-US relations to a new low, with Bishkek repealing the 1993 bilateral treaty, which ensures tax-free status to Kyrgyz employees of US government or aid agencies.

6. Radicalization, the rise of the Islamic State and government crackdown

As already noted in the previous Asia Maior volume, the major global issue that found echoes in Kyrgyzstan is the rise of the Islamic State (IS). The existence of IS looms large over Kyrgyzstan in at least two respects. The first concerns radicalization and recruitment of foreign fighters. This trend has constantly been reported by international and local news agency as well as organizations such as the International Crisis Group, although evidence of radical groups actually taking root remains scant. Estimates of Central Asians living in IS-controlled territory in Syria and Iraq are set at about 3,000 for 2015 (out of about 20,000 foreign fighters), of whom about 200-300 allegedly originate from Kyrgyzstan. Once in Syria, fighters are affiliated to one of two groups, «mirroring the larger fault lines of the Syrian conflict». First the so-called «Aleppo Uzbeks», allied with al-Qa‘ida-affiliated Jabhat al-Nusra. The second and larger group is found on IS-controlled territory, especially the cities of Raqqa and Mosul, and includes both fighters and those that have relocated there, to the live under the Islamic State. Regardless of the reliability of the estimates, what is true is the far greater appeal of the events in Syria compared to the old «theatre» for Central Asian militants, namely Afghanistan and Pakistan, now seemingly remote and irrelevant. Syria is seen as an issue of global relevance, whereas the remote valleys of northern Pakistan seem to be caught up in ferocious but distant, localized and largely irrelevant fight. The second issue pertains to the possible returning fighters and the measures taken by local governments to counter the threat, real or perceived, posed by the Islamic State to domestic stability. Again, evidence in support of this claim is elusive, and yet fears along these lines are used by the authorities in support of the introduction of legislation which restricts civil liberties such as the freedom of non-traditional religious practices and religious organisations not officially sanctioned by the state. Whereas government rhetoric suggests that the authorities take the threat seriously, policies have so far focused on repression (e.g. apprehending real or imagined radicals allegedly preparing attacks on local territory) rather than tackling the root causes of those societal grievances which find expression in the IS popularity.

Conclusion

On a superficial level, most political developments that have taken place in 2015 point to stability, something which the country has been in short supply of since acquiring independence from the Soviet Union in 1991. However, at a closer look, this veneer of stability masks a situation characterized by the fact that the country is without a steering direction, adrift in the face of forces that are beyond its control. In a way, Kyrgyzstan is muddling through amidst multiple challenges and stress points. If this is a lull, how long will it be before another major crisis occurs?

he end of the Karzai era and the establishment of a coalition government were the most important events of 2015 in Afghanistan. After the disputed 2014 presidential election, Ashraf Ghani and Abdullah Abdullah signed an agreement for the formation of a government of national unity. On this basis, Ghani took office as President, while Abdullah was appointed Chief Executive Officer, a position that corresponds roughly to that of a prime minister. Despite high expectations, the government faced enormous difficulties because of the disagreement between the two leaders. This division also characterized the reform agenda, which was an integral part of the 2014 deal. Ghani and Abdullah pledged to change the electoral system and to reform the Constitution. However, the two leaders have found themselves in disagreement on the contents of the reforms, particularly in relation to the electoral system. The dispute has therefore caused a climate of political uncertainty. Meanwhile, the military situation has deteriorated because of the intensification of the offensive of the Taliban. The military mission «Resolute Support» has seen the international forces reducing their activity to a consulting and training role. This has highlighted the weakness of the Afghan National Army. However, in mid-2015 the Taliban faced an unexpected internal crisis, with the death of their leader, Mullah Muhammad Omar. With regard to foreign relations, Ghani successfully sought to re-establish positive relations with the United States, and vigorously pursued the peace process. The two main changes in this regard were the search for a direct approach with Pakistan and the formal inclusion of China—along with the United States—in what has become the «Quadrilateral Approach» to the peace process. Finally, this essay summarizes the evolution of the Afghan economy, which appears once again to be conditioned by the uncertain political framework and by the negative effects of reduced foreign military presence, despite an improvement in tax revenue.

 1. Introduction

The end of the Karzai era and the establishment of a coalition government in Afghanistan dominated 2015. After the highly disputed 2014 presidential election, Ashraf Ghani and Abdullah Abdullah signed a deal which provided for the formation of a National Unity Government (NUG). According to the agreement, Ghani was appointed President, while Abdullah was sworn in as the Chief Executive Officer (CEO), a newly-created position corresponding to that of a prime minister. However, the deal did not bring to an end the political confrontation. Despite the solemn pledges of political unity made by the two leaders, the government has faced great difficulties in agreeing on basically all political choices. The formation of the cabinet had to wait until the end of 2014, but the key position of Minister of Defence has been left in the hands of an acting minister due to the lack of consensus on the appointment. Such disagreement also characterized the agenda of reforms, which was included in the 2014 deal. The two leaders made a commitment to change the electoral system in time for the new parliamentary elections, which were due to take place in the summer of 2015. Moreover, they committed themselves to reforming the Constitution, in order to replace the presidential system with a parliamentary one. However, since the beginning of the government, the two leaders have shown very different approaches towards the agenda: while President Ghani appeared reluctant to take concrete steps, Abdullah was much more active, showing signs of impatience at Ghani’s apathy. The confrontation between the two leaders caused a serious political impasse, which led many observers to express doubts about the capacity of the NUG to deliver political stability. In the meantime, the military situation deteriorated due to the intensification of the Taliban’s offensive. The start of the «Resolute Support Mission» in January 2015 resulted in the international forces downgrading their activity to an advisory and training role. As widely expected, these circumstances highlighted the weakness of the Afghan National Army (ANA) and its inadequacy in taking on the task of leading the war against the Taliban. However, in mid-2015 the insurgents faced an unexpected internal crisis, with the announcement of the death of their leader Mullah Muhammad Omar. The loss of the charismatic mujahidin commander led to a struggle for succession within the Taliban which has affected their unity and strength.

On the foreign policy front, President Ghani successfully tried to re-establish positive relations with the US, and eagerly pushed forward the peace process, as promised during the electoral campaign. The two main developments in this regard were the President’s initiative to directly approach Pakistan in bilateral talks, and the formal inclusion of China, together with the US, in what has become the «Quadrilateral approach» to the peace process.

Finally, in the year under review, the political uncertainties and the withdrawal of the international military forces adversely affected the economy, which nevertheless recorded, overall, a slight improvement.

2. The NUG and the reform agenda

The results of the presidential elections largely determined the political developments in 2015.[1] The September 2014 deal signed by the two main contenders, Ashraf Ghani and Abdullah Abdullah, was not merely a power-sharing plan. Besides the distribution of the governmental posts, the deal included a plan for the reform of both the Constitution and the electoral system. The statement issued by the two leaders at the time declared a change in the Afghan political system with the introduction of the post of «executive prime minister»—therefore modifying the current presidential system—as one of the main purposes of the agreement.[2] The deal also established a two-year deadline for the convocation of a constitutional Loya Jirga (traditional grand assembly). Such a decision had delicate political consequences, because it implied that the CEO—the role held by the opposition leader Abdullah—was an interim figure, and he would have to give up his position within two years. The fact that the two leaders had agreed on a form of government was in itself an important achievement, given the country’s political history. In fact, the non-Pashtun communities—, which were for the most part Abdullah’s supporters—never quite accepted the presidential form of government, which was decided on at the 2001 Bonn conference at the insistence of both the Pashtun majority and of the US.[3]

However, the more complex point of the government’s agenda turned out to be the electoral reform. Although described in the post-election joint statement as a necessary step «to ensure that future elections are fully credible», it became soon the real point of contention between Ghani and Abdullah.[4] The dispute concerned the result of the last elections. According to Abdullah, the elections were largely marred by fraud, and the responsibility for this lay with the electoral bodies: the Independent Electoral Commission (IEC) and the Independent Electoral Complaints Commission (IECC). Therefore, the changes Abdullah and his supporters had in mind involved a radical reform of the two institutions. In February 2015, Asef Ashna, the deputy spokesman of the CEO, stated that «the (electoral) reforms include the dismissal of the commissioners of the election commissions, who have upset the elections and who are responsible for damaging the people’s trust in a democratic process».[5] As expected, this statement caused a strong reaction on the part of the electoral commissioners. Not only did they refuse to be held responsible for the problems of the last elections, but also insisted that the reform of the system was their own business, claiming that the government had no authority to interfere.[6] Unsurprisingly, the election commissioners found an ally in the President and his supporters. In fact, Ghani rejected Abdullah’s demand of a reshuffle of the IEC and the IECC, and insisted that the reform had to be limited to the electoral rules. Significantly, while Abdullah ignored the IEC and IECC in preparing his own proposals, Ghani had a meeting with the IEC commissioners and listened to their proposals.

3. Why were the reforms so important?

There was more than one reason that caused the President and his circle of supporters to be so cautious about revising the electoral commissions and the electoral matter at large. First, a replacement of the IEC and of the IECC might be interpreted by the public as an admission that the vote had been marred by fraud. This would have undoubtedly damaged the President’s image and strengthened his opponent’s. Secondly, the choices made about the electoral system would have relevant consequences for the future Constitution. As we noted above, the reform of the Constitution required the convening of a Loya Jirga. However, the formation of the Loya Jirga was to be preceded by the election of the new parliament and district councils; according to article 110 of the Constitution, more than 85% of the Jirga’s members should be elected from a pool of delegates chosen by those assemblies.[7] In short, prevailing in the future Parliament would be a necessary step in order to acquire a majority in the future Loya Jirga, and therefore to influence the reform of the Constitution. The consequence of this was that all political actors were determined to play a role in the electoral reform. With these premises, it is easy to understand why the reform agenda became an arena of contention between the two main factions, and between the two main factions and all of the other minor groups that wanted to play a role in Afghan politics.[8]

To make things even more complex, the Afghan electoral schedule required that the parliamentary and district council elections be held not later than 23 June 2015; that is, before the end of the Wolesi Jirga’s (the lower chamber’s) term. Although the February 2015 joint declaration by the President and the CEO stated that no further elections would be made without the reform, it soon became evident that only a miracle would allow the process to be completed in time. According to the September 2014 agreement, «immediately after the establishment of the NUG», the President would appoint a special commission for the reform of the electoral system. In reality, it took as long as five months for Ashraf Ghani to sign the necessary decree. Unsurprisingly, the President’s inaction aroused anxiety in Abdullah and his supporters, who began casting doubts on the President’s real intentions. In January, the CEO began moving on his own path. His representative announced the drafting of two proposals; one to amend the electoral laws and to establish an anti-fraud mechanism, and a second one to modify the electoral system with the introduction of a quota of proportional representation.[9] The Parliament also decided to take the initiative: although article 109 of the Constitution forbids the Wolesi Jirga from amending the electoral laws during its last year of office, the assembly started discussing amendments to various articles of the law on electoral bodies. The prevalence of CEO’s supporters in the parliamentary commissions—not surprisingly—led to amendments that were very close to Abdullah’s views, which added new fuel to the confrontation.[10] These developments emphasised once more the extreme fragmentation of the Afghan institutions and the lack of consensus among the political forces.[11]

In February, the President reacted by trying to take control of the process. First, he launched a consultation with the IEC and the civil society on the electoral laws; two months later, he appointed—without consulting the CEO—a chairperson to the special commission for the reform of the electoral system.[12] The news caused a new conflict, given that the person nominated by the President—Shukria Barakzai—had been a member of Ghani’s electoral team, which obviously led the CEO’s circle to cast doubt on her impartiality. The deputy spokesperson of the CEO went so far as to accuse Barakzai of being involved in «large-scale fraud» during the past election.[13] As was largely expected, the confrontation made it impossible to complete the reform according to the constitutional schedule. Unsurprisingly, the international actors followed these events with growing concern. In May, they decided to put some pressure on Kabul, and announced the «end (of) their financial cooperation» with the Afghan electoral institutions due to the lack of reforms.[14] Given that the international donors financially supported about 80% of the IEC budget, including the salaries of the electoral commissioners, their decision to withdraw from the process meant bringing to a halt the electoral machine. The donors’ initiative was decisive in ending the stalemate; after more than three months of negotiations, in July 2015, Ghani announced the appointment of Sultan Shah Akefi as the new chairperson of the commission. An academic belonging to the Hazara community, and with extensive experience in parliamentary work, Akefi was acceptable to the opposition. In addition, the President appointed the other 14 members of the body—seven names from each party—including the UN Deputy-Special Representative for Afghanistan as the 15th component without voting rights.[15] The international partners reacted with relief to the news, and invited the government to announce an electoral calendar as soon as possible.[16]

However, great obstacles remained along the way. Apart from the technical complexity of the reform itself, the organization of the district council elections was not an easy task. The main reason was that these elections had never been held in the past; therefore, a complex work of boundary definition and the gathering of population statistics were required. Not surprisingly, the previous governments had decided to cancel the plans to hold district council elections together with other polls.[17] In any case, the special commission seemed to act efficiently. Starting work in late July, after one month it submitted a list of proposals to the President and to the CEO.[18] The draft proposals included a correction of the electoral system with the introduction of a quota of parliamentary seats (85 out of 250) allocated through proportional representation; the creation of a voter’s identification system; and the division of the provinces into smaller electoral constituencies. Having been discussed for years, the proposals were not new; however, their publication caused a new dispute between Ghani and Abdullah, because some of the former’s supporters viewed the draft as too close to the CEO’s views. For example, the head of the IECC, Abdul Sattar Saadat, already at the centre of the 2014 electoral dispute and considered close to the President, described some of the proposals as «illegal», and stated that their acceptance would amount to admitting the illegitimacy of the previous presidential election.[19] On the other side, Abdullah was quick in lauding the work of the Commission, while Ghani himself remained silent.

Apart from the parties’ strategies, the introduction of a proportional quota would undoubtedly be a revolution for the Afghan political system. Not only would it reinforce the political parties’ influence at the expense of the independent parliamentarians, but it would also force the Kabul politicians to look for candidates able to mobilize the vote banks in the provinces, therefore changing the balance of power between the capital and the provinces. In any case, the complexity of the task, and the failure of the attempt to build a political consensus, made delaying the parliamentary election an unavoidable choice. By June, the President had already issued a decree extending the term of the parliament until the holding of fresh elections.[20] In late December, Ghani announced that the elections would be postponed until 15 October 2016.[21]

4. The deteriorating military situation

Since the formation of the NUG, the insurgency has intensified its offensive against the government. The pressure by the Taliban began in February and reached its apex in September/October. Significantly, in 2015 the Taliban did not interrupt—except in Kabul—the military operations at the beginning of the winter season, as they had done in the past. The higher intensity of the fighting was also due to the reduction of the international allies’ activity to a training and advisory role, which allowed the insurgents to engage the Afghan armed forces in open battles. As a result, the geography of the war changed during 2015, with the Taliban extending their offensive to provinces that had been relatively peaceful in the past, principally in the Northern areas. Of particular importance has been the capture by the Taliban of the city of Kunduz, which was recovered by the ANA two weeks later, only thanks to the deployment of US Special Forces and air support.[22] The fall of Kunduz to the insurgents was a shock for the Afghan public, since it was the first time since 2001 that the Taliban occupied an urban area. Moreover, Kunduz was far from the territory under Taliban influence, being disconnected from their support networks in Pakistan. The strategic position of the city, near to the Tajikistan border, contributed to spreading insecurity through the Northern provinces.[23] Moreover, with their attack on Kunduz, the insurgents showed the capacity to penetrate regions that had been considered centres of anti-Taliban activity. The insurgents also conducted large-scale military operations in the South, particularly in the Helmand and Uruzgan Provinces, and launched attacks against civil targets, like the airports of Kabul and Kandahar and even the national Parliament.[24]

Although the Taliban rarely established stable control of these territories, these events augmented their confidence, while increasing the feeling of insecurity among the population. During the year under review, the Afghan National Security Forces (ANSF) continued to register a very high number of casualties, which increased by 70% in the first 15 weeks of the year, compared to the same period in 2014; a rate that former US commander, Gen. Joseph Anderson, described as «not sustainable».[25] Despite the unavailability of exact data, many observers have considered the year as the bloodiest since 2001.[26] Moreover, the confidence shown by the Taliban increased the perception that they can still prevail in military terms, which has made political reconciliation more arduous.[27]

These developments obviously emphasised the difficulties for the ANA in leading the military operations against the insurgents, following the reduction of the ISAF (International Security Assistance Force) role under the «Resolute Support Mission». There was certainly an expectation that the change in military responsibilities would lead to a weakening of ANA control in the rural areas, and therefore a growing threat to the cities. However, the speed of the process and the inability of the ANA to maintain a hold on the territory surprised many analysts.[28] According to well-informed sources, for the first time since 2001 the ANA has begun having problems with recruitment. The army is also suffering both from the withdrawal of foreign advisers at unit level, and from a weakness of equipment and logistics.[29] The high casualties suffered and the lack of major victories have also created a low morale in the troops, which was reflected in desertion and «ghost soldiering» (troops that are included on the soldiers’ list, but who are not serving).[30] The decision by the President to augment the salaries of the army was also a demonstration that the NUG was aware of the problem.[31] Another serious issue was the inability of the government to improve the mechanism of appointments based on merit. Contrary to the announcements of the NUG, politicization and patronage still condition the careers of the military, causing a serious adverse impact on ANA morale.[32]

In this context, it is not surprising that Ashraf Ghani, during his first official visit to Washington in March, formally asked the US administration to freeze the plan of withdrawal of troops from Afghanistan, a request that the US President accepted.[33] The decision of the Obama administration was also based on other elements, besides Kabul’s request. The most important was the resilience of al Qa‘ida in the border region between Afghanistan and Pakistan. Although considered moribund, according to reliable sources the Islamist network was still active in 2015 in the mountainous tribal areas, despite repeated operations by the US Special Forces.[34] The second reason was the emerging evidence on the infiltration of the so-called Islamic State’s Wilayat Khorasan (namely the «Khorasan province», Khorasan being a region in Eastern Iran) into the eastern region of Afghanistan.[35] Finally, the decision by the Obama administration to maintain «flexibility» on troops’ deployment was linked to the needs of the CIA and of the Special Forces to operate in two large military bases at Kandahar and Jalalabad. Washington has therefore redefined its initial plan of withdrawal in order to maintain about 10,000 troops in Afghanistan, which the US officials consider the minimum useful force.[36] Still, disagreement exists between the Afghan and American actors—as well as between US officials—about the future prospects of American military presence in the field. While President Obama has promised to withdraw all US troops by the end of 2016, Ashraf Ghani—aware of the ANA’s weakness—has insisted on a protracted US military presence. Apparently some of the US staff also shared that fear; according to them, the Afghan scenario after a complete US pull-out would resemble too closely the post-1989 period, when the Islamist insurgency was quick to occupy the political vacuum.[37]

5. The power struggle within the Taliban

The apparent position of strength of the insurgents came under scrutiny in mid-2015 when, after many unconfirmed reports, Kabul’s National Directorate of Security (NDS)—the Afghan intelligence agency—revealed that Mullah Muhammad Omar, the charismatic leader of the Taliban, had died, apparently, in 2013. After two days of silence, the Taliban official sources confirmed the news, and, at the same time announced the appointment of Mullah Omar’s deputy, Mullah Akhtar Muhammad Mansour, as the new Taliban leader.[38] The loss of the acknowledged leader inflicted a tremendous blow to the movement, given that Mullah Omar was perhaps the only unifying force in a traditionally fragmented movement. In fact, not all the factions accepted the appointment of Mullah Mansour; some founded a parallel organization under the leadership of another veteran mujahidin commander, Mullah Muhammad Rasul. The actual balance of forces between the two leaders was difficult to ascertain, given that the estimates were often politically motivated. According to US diplomatic sources, about 80-90% of the movement supported Mansour, while the rest of the insurgents were loyal to Rasul. However, Taliban sources suggested that Mansour had a much more limited strength of about 55-60% of the Taliban.[39] While the struggle of power inside the movement did not generally affected their ability to fight, it nonetheless emphasised their internal rivalries and divergent opinions on a variety of topics, which may be the sign of a possible fracture in the movement. Moreover, the attempt by the Islamic State to penetrate the Af-Pak region created a further alternative to Mansour, with some of the disappointed field commanders and rank-and-file declaring their allegiance to the «Islamic State», in open disagreement with the current Taliban leadership.[40]

More importantly, the two sides showed different attitudes towards the issue of reconciliation with the NUG. Akhtar Mansour has been known for years as one of the most pragmatic and pro-dialogue Taliban commanders.[41] This was confirmed by his role in the opening of the Taliban «political office» in Qatar in 2013, as well as by his support—though with scarce enthusiasm—of the peace initiative launched under Pakistani guidance in Murree (in the Pakistan province of Punjab) in July 2015.[42] On the other side, Mullah Rasul rejected the attempts to negotiate with the NUG made by Mansour, accusing him of pursuing «personal interests».[43] However, differences within the Taliban are much more fluid than they may appear on the surface, and well-informed sources emphasise that differences of opinions regarding whether to negotiate—and under which conditions—exist on both sides, as well as in the other Taliban splinter groups. Mullah Rasul himself, while condemning the Murree Process, has emphasised that he is not against «reconciliation in principle»; rather that he is opposed to Mansour’s control over the negotiation. Mullah Rasul has publicly insisted that reconciliation must not sacrifice basic Taliban «principles», such as the insertion of more shari‘a norms into the Afghan Constitution, and the preliminary withdrawal of all Western soldiers from Afghanistan. Interestingly, Rasul has also criticized the current state of the reconciliation process, based on the «Quadrilateral approach»; that is, on the participation of the US, China and Pakistan, with the exclusion of Iran.[44] While the appointment of Mullah Mansour has undoubtedly kept the door open for negotiation, it has also had a divisive effect on the Taliban groups, which, in turn, has paradoxically made negotiating more difficult. Moreover, Mansour’s need to reassure the movement of his unwillingness to negotiate at all costs explains the dramatic increase in violence during the autumn.

6. Ghani’s foreign policy

The most obvious change with the passage of the presidency from Karzai to Ghani was probably recorded in foreign policy. First, Ghani worked hard at reversing the Afghan-US relations, which had reached their lowest point during the last months of the Karzai era, with the latter’s refusal to sign both the Bilateral Security Agreement (BSA) with the US, and the Status of Forces Agreement (SOFA) with NATO. Significantly, one of President Ghani’s first acts was to sign both treaties.[45] Moreover, whereas Karzai based its political action in recent years on a stronger nationalist sentiment, exploiting the existing discontent among the population caused by the US bombings’ civilian victims, the nationalistic anti-US rhetoric all but disappeared with Ghani’s election. When the President visited Washington in March, he thanked the US soldiers who fought in Afghanistan, and the US government for its military and financial support.[46] This «different relationship» was acknowledged by the US officials, who described Ghani as «more cooperative» than his predecessor.[47] On the other hand, Ghani’s cordial tone towards the US is easily understood in the light of his extreme need for continued military support, as noted above. The second new aspect was Ghani’s initiative—supported also by Abdullah—to directly address Pakistan about reviving the peace process with the Taliban. This in fact was not a true innovation, in that it reflected a widespread belief among Afghan politicians—often repeated by Karzai in the past—that the Taliban are controlled by Islamabad, or at least that Pakistan may persuade the Taliban to sit at the negotiating table.[48] This vision—which probably overestimates the strength of Pakistan vis-à-vis the Taliban—stems, among other factors, from a vision of the war as a conflict between states (that is, Afghanistan and Pakistan), rather than between different components of Afghan society.[49] That there has been a tendency on the part of Kabul and the US to overestimate the role of Pakistan in controlling the Taliban—or most of them—has been shown by the complex events of the Murree Process, that is, the negotiation conducted in summer 2015 under the auspices of Pakistan.[50] Well-informed sources suggest that the negotiation has actually been imposed on the Taliban by Islamabad, with the consequence of creating a rift between some of the Taliban commanders and the Pakistani civilian and military authorities. The result has been that, so far, the process has had limited results.[51] That said, it has to be recognized that the NUG have energetically carried on the attempt to build a new confidence in relations with Islamabad, also taking advantage of Nawaz Sharif’s new government in Pakistan, an attempt which has been acknowledged by Islamabad.[52] Regardless of whether Pakistan does or does not have the power to control the Taliban, there is no doubt that peace in the region must come from a change in relations between the two neighbouring states.[53]

7. The economic situation

The political uncertainties and the withdrawal of international military forces affected the economic results of 2015. The political impasse caused by the reform difficulties and the military situation have counterbalanced the positive effect of the formation of the NUG. Accordingly, the economic improvement during the year under review has been modest when compared to the 2014 estimates.[54] However, the overall macroeconomic situation has remained stable and there are hopes of a gradual recovery in the next few years. The GDP growth rate marginally increased from 1.3% in 2014 to 1.5% in 2015. There was a slight growth in services, from 2.2% (2014) to 2.8% (2015), while the industry expansion rate was 1.4% lower than the previous year’s 2.4%. The data on new firm registrations showed a small rise in investment activities; however, these remained low in comparison with the 2012 level. The agricultural output was negative at -2.0% in 2015, mainly due to unfavourable weather conditions.[55] The inflation rate decreased to 1.5% from 4.5% in 2014, which may be explained by the fall of private consumption. The exchange rate saw the afghani depreciated by 7% against the US dollar, due to the decrease in foreign aid and the tendency of Afghan consumers to save their wealth in foreign currencies because of the political and military uncertainty.[56] The area where the Afghan economy improved most was in the fiscal sphere. Domestic revenues improved from 8.7% of the GDP in 2014 to 10.4% in 2015, which was, in part, the result of the Kabul government’s reforms in tax policy and arrears collection, and, in part, an effect of cautious expenditure management. Total expenditure slightly increased from 26.2% in 2014 to 27% in 2015.[57]

The issue of opium poppy cultivation also slightly improved during 2015, with the total area under cultivation estimated to be 19% less than 2014. This was even more significant in the context that this was the first decrease since 2009. A similar improvement was recorded with regard to the areas where poppy eradication was carried out, with an increase of 40% from 2014; this was due to enhanced coordination between the government’s agencies and increased protection on the part of the military. However, the data for 2015 confirmed the connection between opium production and insecurity, with 97% of the total production of opium taking place in the Southern, Eastern and Western provinces, where the political and military situation is most unstable.[58]

In Pakistan, the period under review (January–December 2015) was characterised by the overall stable rule of the Nawaz Sharif-headed government of the PML-N (Pakistan Muslim League-Nawaz) of the Prime Minister. The main challenge to the Nawaz Sharif government was the internal militancy. The cruelty of the 2013 attack on an army-run school in Peshawar that killed 149 people, including 132 children, had started what appeared to be a watershed moment in the savagery of domestic terrorism. In the period under review, a clear message was sent by the Pakistani institutions to the perpetrators of the deadly assault and to the militancy in the country at large: zero tolerance and no more safe havens allowed in Pakistan or Afghanistan. The special measures taken to fight the militants represented a change of direction after the initial tendency of the Nawaz Sharif government to engage in dialogue with the fighters operating in the North West areas of the country.

A similar iron-fist approach was taken by the military-led paramilitary forces in its effort to fight the violent crime affecting Karachi, the country’s most populous city. This policy, however, triggered political instability, as the strongest political party in town was the main target of the crackdown.

Developments in Pakistan-China bilateral relations led to the formalisation of an important economic agreement for the creation of a trade corridor linking China to the port of Gwadar in Balochistan. The strategic implications of the accord can be better understood in the context of the announced disengagement of the United States from Afghanistan. Moreover, the agreement contributes to explaining Islamabad’s decision not to support militarily its traditional ally Saudi Arabia in its campaign against Houthi rebel fighters in Yemen.

Overall stable bilateral relations between Pakistan and India at the highest diplomatic level did not prevent tensions from escalating on the international border in Jammu and Kashmir, where exchanges of fire and civilian casualties were reported, beginning in the summer of 2015.

1. The domestic challenge: the militancy

The long years of military rule in the country (34, more than half of its history), which can be divided into four periods, were characterised by the national governments’ opposition to ethno-national provincial administrations and by the attempt to ensure political stability and economic modernisation in Pakistan. Ethnic and provincial identities were considered as threats to the achievement of these aims, while Islam was promoted as a means of national integration, which was done in parallel with a centralization of powers in Islamabad. As a consequence, both the empowerment of Islamic parties and militant groups (which were allowed unprecedented power) and the weaponisation of the country became the overall legacy of the long years of military rule and the distinguishing features of contemporary Pakistan. The war on terrorism which followed 9/11 strengthened these features further. Since then, Pakistani forces have encountered difficulties in maintaining control over the restive tribal regions, from where Islamic anti-government militants are mostly operating.

On 15 June 2014, the Pakistani army launched a comprehensive operation called Zarb-e-Azb against local and foreign militants in North Waziristan. According to the army, the military operation succeeded in ridding that geographical area from anti-government militant forces. A few months later, the military also launched Khyber-1, a follow up intervention aimed at clearing out militant strongholds in the tribal region of Khyber.[1]

The Islamic fighters’ retaliation was particularly cruel. On 16 December 2014, the Pakistani Taliban attacked an army-run school in Peshawar, the capital of Khyber Pakhtunkhwa province, killing nearly 150 people, among whom many were children. The attack triggered widespread outrage both in the country and abroad and the political leadership was put under pressure to take effective measures against terrorism.[2] Military action against militant groups was strongly demanded by the civil society. The widespread indignation caused by the event gave rise to a unity of purpose on the part of the political class, the army, and civil society at large. This resulted in a more resolute and united national effort to address the country’s security problems and, ultimately, in a more determined approach to counter-terrorism.

In March 2015, Pakistan launched a fresh operation (Khyber-2) against terrorists in the Khyber tribal region near the Afghanistan border.[3] In the period under review, the army continued fighting militants belonging to TTP (Tehrik-i-Taliban Pakistan, an alliance of a dozen groups of insurgents). A 20-point action plan was launched by the government to counter the escalating terrorism in Pakistan. A specific measure waiving the existing moratorium on the death penalty was taken to allow the execution of convicted terrorists. Also, special military courts were established for two years in order to be able to rapidly prosecute and try suspected terrorists. This was criticised for its implications regarding civil-military relations and, later in the year, the Supreme Court suspended some of the executions of terrorists convicted by the military courts.

Other measures were taken to freeze the financial and communication networks of the terrorist groups. A regulation of the madrasas was also put on the anvil, as the government pledged to exercise strong control over the religious seminaries suspected of fostering extremism. References to the financial support provided by Saudi Arabia to the religious seminaries, seen as breeding grounds for religious extremism, had frequently appeared in the media after the 2013 mass murder in Peshawar. Saudi authorities answered these implicit and explicit accusations by clarifying that all their donations had been cleared by the government of Pakistan. Iron-fisted counter-measures aimed at implementing a zero tolerance policy for militancy were also announced in Punjab, where violence had rapidly escalated.

Attacks by the TTP, their splinter groups, and other militant organisations continued in the period under review and were expanded in January and February 2015 to target minority groups, in particular Shia Muslims and Christians, in other areas of Pakistan.[4] A first attack on a Shia mosque involved Rawalpindi’s imambargah (a Shia congregation hall for commemoration ceremonies) Aun Mohammad Rizvi in the city’s Chatian Hatian area. Later, about 40 people were killed and over 50 injured as a blast hit a Shia mosque during the Friday prayers in Pakistan’s southern province of Sindh at the end of January 2015. According to the local English newspaper Express Tribune, a militant group named Jundallah – a Balochistan-based TTP splinter group which has pledged support to the Islamic State, claimed responsibility for the attack.

Christian churches were targeted too by the militants. On 15 March 2015, at least 15 people were killed and 70 wounded by bombs which were detonated near the gates of St. John’s Catholic Church and Christ Church in Lahore.[5] Similarly, on 13 May 2015, about 50 people were killed in Karachi when an armed commando opened fire inside a bus carrying members of the Shia minority Ismaili community. Again, Jundallah was reported to have claimed responsibility for the attack.

Another high-profile attack occurred in Attock in August 2015, when a suicide bomber killed the Home Minister of the Punjab province, Shuja Khanzada.

2. The paramilitary operations in Karachi

Karachi, the country’s most populous city, which is afflicted by a violent criminal racket, has been repeatedly targeted by the paramilitary forces’ interventions since the 1990s.[6]

The current Rangers operation which started in 2013[7] has led to a significant fall in criminal activity, yet it has increased the political instability. In the period under review, the paramilitary forces predominantly targeted the members of the MQM (Muttahida Qaumi Movement), the strongest political party in town. Bearing responsibility for violent and intimidating acts, the MQM saw the Karachi party’s premises raided and many of the party members arrested. Disappearances and killings of MQM-affiliated individuals were reported throughout 2015. Altaf Hussain, who rules the MQM from his self-imposed exile in London, was investigated by the British police over allegations of money-laundering. Hussain, claiming that his party had been unfairly targeted in the crackdown organised by the Rangers, launched a campaign against the Chief of Army Staff Raheel Sharif and Prime Minister Nawaz Sharif. In August 2015, the MQM announced the resignations of all the party’s members from the National Assembly, the Senate, and the Provincial Assembly.

The security forces paid similar attention to the PPP (Pakistan People’s Party), triggering the reaction of Asif Ali Zardari, PPP president and former President of the Islamic Republic of Pakistan. As a reaction, Zardari threatened to abrogate the PPP’s informal non-aggression pact with the PML-N, which had been in place since the two parties decided to jointly oppose the former military ruler General Pervez Musharraf a decade ago.

3. Pakistan and Saudi Arabia

Saudi Arabia’s campaign against Houthi rebel fighters in Yemen, which began in late March 2015, was coordinated with other Sunni countries. At the end of March 2015, the Saudi-led coalition fighting Yemen’s Shia Houthi rebels asked Pakistan to contribute soldiers.

Islamabad and Riyadh’s ties are rooted in a partnership which has been forged over the years and has led to a strong bilateral relationship. This partnership started to become important when the two countries jointly supported the Afghan mujahedeen fighting against the Red Army’s occupation in the 1980s. Later, both countries – and the United Arab Emirates – recognised the legitimacy of the Taliban regime in Kabul (1996–2001). Also, the Saudis gave oil to Pakistan in 1998, when the government of Islamabad was hit by international sanctions for conducting a nuclear test.[8] The following year, in 1999, the Saudis offered shelter to Nawaz Sharif after the then Prime Minister was overthrown by the military coup led by Pervez Musharraf.[9]

For its part, Pakistan has provided military aid to Saudi Arabia since the 1960s – including deploying Pakistani combat forces in Saudi Arabia in the 1970s and 1980s, and providing continual military technical aid.[10]

After his official visit to Saudi Arabia in March 2015, followed by Nawaz Sharif’s visit a few weeks later, Pakistani Defence Minister Khawaja Asif confirmed Islamabad’s commitment to defending Saudi Arabia’s national territorial integrity.[11]

In April 2015, Pakistan, which had backed the Saudi mission against the Houthis without offering military assistance, debated formally in parliament whether or not to contribute militarily to the campaign against the rebels. Opposition politicians expressed their concerns and called for the country to be neutral. They stressed that internal terrorism and other pressing domestic and regional issues would make Islamabad’s involvement in a proxy war between Iran and Saudi Arabia and in a Shia-Sunni conflict in the Middle East extremely risky.[12]

The joint session of parliament called by Prime Minister Nawaz Sharif at the beginning of April 2015, to discuss Saudi Arabia’s request for Pakistani military aid, went on for five days and ended with a unanimous decision to make use of diplomatic instruments – and diplomatic instruments only – to bring about an end to the crisis in Yemen. An ensuing parliamentary resolution on the Yemen crisis urged Pakistan to stay neutral and play a mediatory role to resolve the issue. The reference to «neutrality» in the parliamentary resolution generated tensions in the Pakistan-Saudi relationship, as Riyadh reacted badly to it.[13] Yet, as admitted by the Minister for Climate Change and PML-N’s Information Secretary Senator Mushahid Ullah Khan, Pakistani troops were already deployed in Saudi Arabia to protect the holy places.[14]

4. Pakistan-China

In the past few years, the Islamabad-Beijing axis has been progressively growing in strategic importance in view of the announced disengagement of the USA from Afghanistan.[15] According to some sources, the strategic links developed by Pakistan with China were also one of the reasons why the former could afford to decline Saudi Arabia’s requests for support, as described in the previous section.[16]

On April 21, the President of the Republic of China, Xi Jinping, visited Pakistan and pledged 46 billion dollars of support for energy and infrastructure projects. While the current trade value between Pakistan and China is relatively low – US$ 9 billion per year – the future economic relations between the two countries are bound to grow by leaps and bounds. The plans agreed upon during Xi Jinping’s visit to Islamabad represented a remarkable boost in bilateral relations, particularly in light of the rights won by a state-run Chinese company to operate the expansion of Gwadar Port as an economic hub, which was obtained for a period of 40 years.

Gwadar is strategically located in Balochistan, on the shores of the Arabian Sea, opposite the Gulf of Oman, and in close proximity to the oil and gas resources of the Gulf countries. For China, Gwadar Port is of both economic and military strategic interest. It will grant China access to the Gulf countries, by providing it with the possibility of having a naval base on the Arabian Sea. According to a plan, formalised during Xi Jinping’s visit to Pakistan, the port – originally financed and constructed by the Chinese – will become the head of a km 3,000 long economic corridor – the China-Pakistan Economic Corridor – connecting Gwadar to Kashgar, in the Muslim majority Xinjiang region of China, via land routes and pipelines.[17] The idea of the economic corridor began being shaped in 2013, when Pakistan passed the task to expand Gwadar Port from Singapore Port Authority to China Overseas Port Holding. It has actually embraced other existing projects and, due to the economic potential of the port’s development, Chinese banks were interested in funding it and pledged more than US$ 46 billion.[18]

The port will play a critical economic role for Pakistan too, allowing the outflow of goods from Western China and Central Asia, and enriching the Pakistani exchequer thanks to the port, cargo handling, and freight charges related to the economic traffic between China and Pakistan.

The development of Gwadar Port has been controversial over the years. Balochistan is the poorest province of Pakistan, where basic necessities are not taken care of; yet it is rich in natural resources and Balochi nationalists have been accusing the federal government of the exploitation and violation of the province’s rights.[19] The port’s development has occurred in parallel with an upsurge in religious extremism in Gwadar and in the province at large, while Baloch political parties were opposing the deal with China and Baloch militant organisations were trying to sabotage the construction work.[20] This has worried China, which has alerted the government of Pakistan; in turn, the government of Pakistan has tried to implement extra security military measures to protect the increasing number of Chinese personnel involved in the project.[21] According to current plans, the corridor would also cross the Khyber Pakhtunkhwa province and, in case it is decided that the route should be changed to avoid turbulent areas, the Baloch and Pashtun areas would be avoided by making the corridor run through Sindh and Punjab.

5. Pakistan-India

In December 2014 and January 2015, tensions between Pakistan and India rose over the disputed region of Kashmir. Clashes between security forces occurred on the border, followed by a meeting of the two countries’ foreign secretaries in March.[22] Harsh statements from senior officials on both sides referring to the alleged involvement of the other country in sponsoring terrorism escalated the tensions, yet without permanently undermining the high level bilateral relations.

In July 2015, the two premiers, Nawaz Sharif and Narendra Modi, met at the Shanghai Cooperation Organisation summit held in Ufa, Russia.[23] The discussions focused on agreeing to expedite the Mumbai terror attack trial, and statements aimed at promoting peace and development in the region and condemning terrorism were issued. An agreement to organise a meeting of top security advisers to discuss terrorism was achieved, while no specific reference to the disputed Kashmir region was made, over which India and Pakistan have conflicting territorial claims. Sharif invited Modi to attend the annual[24] SAARC (South Asian Association for Regional Cooperation) summit in Pakistan in 2016 and the Indian Prime Minister accepted the invitation.[25]

As a follow up to the Ufa agreement, a meeting of the National Security Advisers (NSA) of India and Pakistan, Sartaj Aziz and Ajit Doval, respectively, was scheduled for 23 and 24 August 2015.

However, a few days after the Ufa meeting tensions escalated again when Pakistan accused India of unprovoked ceasefire violations in Kashmir. According to the Pakistani Foreign Ministry, on July 18, Indian troops opened fire in the Poonch area. This was not an isolated event, as skirmishes had occurred in the previous days and the exchanged gunfire had killed Pakistani civilians. The civilian casualties on both sides led the United Nations Secretary General Ban Ki-Moon to urge India and Pakistan to resolve their issues through diplomatic dialogue.

A rise in tensions between the two countries as a result of frequent violations of the Line of Control (LoC), which continued for the following months, increased further when the NSA peace talks were cancelled one day before they were set to begin in August 2015.[26] While Pakistan had reiterated its intention to discuss the disputed Kashmir territory, India had insisted that the talks focus on terrorism issues only. Eventually, on the eve of the scheduled NSA meeting, India advised Pakistan against his high commissioner in New Delhi meeting with Kashmiri separatist leaders belonging to the Hurriyat Conference.[27] Indian authorities pointed out that India had never sought dialogue with groups and regions demanding separation from Pakistan. For their part, the Pakistani authorities answered by highlighting that the habit of the Pakistan high commissioner in New Delhi to consult with Hurriyat leaders on the eve of official visits by Pakistani political leaders to India was by then a well-established practice, which had never caused problems with previous Indian governments. Islamabad also reiterated that India’s intention to restrict the discussion agenda was evidence of a lack of any serious intent on the part of New Delhi to engage in meaningful talks with Islamabad.[28]

As had happened in 2014[29] – this time due to the lack of agreement with respect to the agenda – the meeting of the top security advisers was cancelled with the two countries blaming each other. This event seemed to illustrate the gulf between the civil government and the Pakistani military establishment. Specifically, Sharif seemed to have overestimated his capacity to influence Pakistan’s India policy in line with the desiderata of the Pakistani business community. The latter would welcome increased engagement with India, which would be beneficial to the Pakistani economy. Pakistan’s India policy, however, remains strictly controlled by the army, which appears suspicious of any thaw in the relations with India.

In September 2015, following talks between the Director Generals of the Pakistani Punjab Rangers and India’s Border Security Force held in New Delhi, the two parties agreed to observe the ceasefire along the LoC and to de-escalate tensions through a set of confidence building measures.[30] Yet, just a few days later, skirmishes erupted again across the de facto border and casualties were again reported.[31]

6. Economy

Pakistani average growth rate for the last five years has been 2.9%. During the same period, inflation has remained steady at 7.9%.[32] Pakistan’s economic growth for the financial year 2015, which ended on 30 June 2015, was mainly driven by services. Manufacturing and industrial growth slowed down due to reduced external demand. Power shortages also contributed to the setback, debilitating the industrial sector.[33]

The federal budget for the fiscal year 2015–16 was presented on 31 June 2015. Its total outlay was 4,451.3 billion rupees (about US$ 42 million), 3.5% higher than the 2014-15 budget.[34] The main internal source of income was the provinces’ revenues and taxes. The budget introduced measures focused mostly on fighting tax evasion, increasing tax revenues and, nominally, trying to save the poorest segments of society from new taxes. The long awaited increase in the government employees’ salaries was not significant, being 7.5%.[35] External sources of income, mainly loans, increased by 12.1% compared to the 2014–15 budget.

The government announced incentives for the agricultural sector to boost agricultural production in the country. A health insurance scheme (9 billion rupees, about US$ 85 million) was launched to provide insurance for patients suffering from serious diseases. The targeted growth rate was fixed at 5.5%, more than a 1 percentage point increase over the previous financial year.[36]

Last but not least, 781 billion rupees (about US$ 7.5 billion) were allocated for expenditures on defence, representing an increase of 11.16% over the previous fiscal year.[37]

At the beginning of the year under review, the Opposition common candidate, Maithripala Sirisena, emerged as the winner of the January presidential election. The new Presidency brought with it the promise of a new political phase, characterised by the restoration of both democratic institutions and the rule of law, seriously eroded during the previous ten year long Rajapaksa’s presidencies. However, the shift of power at the presidential level was not immediately accompanied by an analogous shift in the Parliament, which at first precluded the possibility of a wide-ranging change of policies. Nevertheless, the Sirisena administration was able to tackle at least some of the most compelling issues affecting the country, in particular by limiting the extensive powers attributed to the Presidency by Rajapaksa in 2010. Despite this and other unquestionably positive political developments, other critical matters – among which the heavy militarization of the Northern region, the maintenance of the draconian Prevention of Terrorism Act and some restrictions on media freedom – were left unsolved.

In foreign policy, the shift was substantial, resulting in the cooling down of relations with Beijing and in a new closeness between Colombo and both New Delhi and, particularly, Washington. This realignment involved on the one hand the interruption of numerous Chinese funded infrastructural projects in Sri Lanka, and, on the other hand, a dramatic shift in the United Nations Human Right Council (UNHRC) attitude towards Sri Lanka. The UNHRC had previously issued three resolutions, sponsored by Washington, harshly criticizing the war crimes occurred in Sri Lanka during the long and gory 1986-2009 civil war. However, in October 2015, a new UNHRC issued resolution on the same topic saw the involvement of Sri Lanka in its drafting, which, not surprisingly, took into account the Sirisena administration demands and needs.

From an economic standpoint, the year under review opened on a rather bleak situation, to which the government reacted by promoting an expansive policy. Although not devoid of positive results, this policy brought about a surge in the debt and a worsening of the balance of payments. After the parliamentary election held in August, which saw the victory of the pro-Sirisena political forces, the resulting new government launched a novel economic policy, presented by Prime Minister Ranil Wickremesinghe in his 5 November  speech. Wickremesinghe outlined a «Third Generation Reforms Plan» made up by a complex set of socio-economic reforms which, while being  mainly congruent with neo-liberal orthodoxy, nevertheless included numerous provisions aimed at promoting the economic welfare of the lower social strata. The budget, presented on 20 November, reflected this dual aspect. At the end of the year, in spite of the many continuing difficulties, the Sri Lankan economy still managed «a respectable growth», exemplified by a full year GDP increase equal to 4.8%.

1. Introduction

During 2015, Sri Lanka witnessed one of the major political developments of the last decade. The authoritarian rule of the President Percy Mahendra Rajapaksa – alias Mahinda Rajapaksa – indeed came to a conclusion in the wake of the unexpected result of the presidential election, held on 8 January 2015, two years ahead of schedule. Though the new President of Sri Lanka, Maithripala Sirisena, used to be the Health Minister of the Rajapaksa administration, his election promised a deep change in the political path followed by his predecessor.

Rajapaksa, head of state from 2005 to 2015, was indeed a controversial figure that came under the scrutiny of international community, mainly as a result of his unwillingness to pursue those responsible for the war crimes committed during the long civil war.[1] With the election of Sirisena as President, a new political phase began, characterized by the progressive restoration of those democratic rules which had been greatly limited during Rajapaksa’s increasingly authoritarian and corrupt rule. This process, however was slowed down and limited by the lack of a parliamentary majority supporting the new President.

If the political shift in domestic policies was limited, although real, that in foreign policy was decidedly more pronounced. The close bond between Sri Lanka and China, which marked the Rajapaksa decade, in fact loosened, while the relationship with Western countries, especially the United States, and India became closer. During the year under review, as a result of the improved relationship with Washington, international pressure on Sri Lanka, above all within the UNHRC (United Nations Human Rights Council), dramatically relaxed. This is not surprising, considering the U.S.’s strong support for Sirisena’s Presidential candidacy. The pro-U.S. attitude of the new President was indeed welcomed by Washington, which was eager to remove the South Asian island from the Chinese orbit.

Once in power, Sirisena proved to be able to politically distance himself from his predecessor. This does not meant that Sirisena’s mandate started a democratic revolution: since the 1950s, Sri Lanka has indeed been a dysfunctional democracy and the road to turn it into full-bodied and mature democracies is bound to be full of obstacles.[2] The first of them is the realization of the reconciliation between the Tamil and Sinhala communities, as well as between the North and the South of the island. Six years after the end of a 26-year gory civil war (1983-2009), the wounds caused by it have not yet completely healed, leaving open geographical and ethnic deep rifts, which are preventing Sri Lanka from consolidating its democratic institutions.

2. The Presidential Election: The unexpected defeat of Rajapaksa

The erosion of Rajapaksa’s popular support had already become evident during the provincial elections held in March and September 2014, when the ruling Sri Lanka Freedom Party (SLPF) recorded an unprecedented decline in its share of votes. It was owing to this electoral decline that Rajapaksa called for an earlier presidential election, aiming to be re-elected for a third mandate before losing further popular support. The decision to move up the presidential election was followed by the emergence of rifts within the United People’s Freedom Alliance (UPFA), namely the SLFP-headed ruling coalition, which, in turn, led to the resignation of three ministers among whom the Health Minister, Maithripala Sirisena. Sirisena’s resignation represented a crucial turn, since he was soon chosen as the joint opposition candidate. His candidature – supported by Sri Lanka’s former President Chandrika Bandaranaike Kumaratunga – united a weak and scattered opposition in the newly created New Democratic Front (NDF). The NDF included several parties, the strongest one being the United National Party (UNP), and was backed by the Tamil National Alliance (TNA), the leftist Janatha Vimukthi Peramuna (JVP), and about 40 civic action movements. Supported by these forces, Sirisena went on to win the presidential election (8 January 2015), obtaining 51.2% of the vote against 47.5% received by Rajapaksa.[3]

The NDF electoral campaign pledged a democratic and corruption-free governance, the end of family rule and cronyism, and the re-establishment of the autonomy of key institutions of governance, in particular the legislature and the judiciary.[4] Above all, the electoral manifesto of the former Health Minister consisted of a 100 days agenda, focused on reforming the presidency, abolishing the Eighteenth Amendment, which made the office of the President extremely powerful, and changing the electoral system.[5]

Sirisena’s unexpected victory took place in a relatively peaceful way and was function of the fact that, together with a part of the Sinhala electorate, the minority communities and their parties massively backed the former Health Minister’s candidacy.[6] Indeed, the main vote support received by Sirisena came from those electoral divisions where the Tamil and Muslim components were overwhelming, in particular the Northern and Eastern Provinces. The peak of votes for Sirisena was reached in the districts of Batticaloa and Trincomalee, in the Eastern Province, where he received 81% and 71% of the popular vote, respectively. Also the Northern Province constituency, especially the Jaffna and Vanni districts, massively endorsed Sirisena’s candidacy, which was supported by more than 70% of the popular vote.[7]

Actually, this voting pattern was due less to Sirisena’s popularity among the ethnic minorities than to their hostility towards Rajapaksa. Ten years after the end of the civil war, Rajapaksa’s appeal as the national hero who ended the three decades old ethnic conflict was no longer sufficient to compensate for the lack of answers to concrete political, economic, and social issued faced by the country – not least inflation and the high costs of living affecting the lower classes of society. This being the situation, as hinted above, even a part – although not the majority – of the conservative sinhala electorate, which had been the core of Rajapaksa’s support, switched behind Sirisena. At the same time – as above stated – the Tamil and Muslim minorities (12% and 10% of total population, respectively), which had been increasingly marginalized during Rajapaksa’s presidency, voted for the candidate in the strongest position to defeat Rajapaksa. They cast their vote for Sirisena, in spite of the fact that he had not made any concrete commitment favouring their political rights. In the close competition between the two presidential candidates, the minority groups’ decision to strategically vote against Rajapaksa proved decisive in determining his defeat. [8]

After the poll, the new President swore in the UNP leader Ranil Wickremesinghe as the Prime Minister, at the head of a minority «national government» which incorporated the Sri Lanka Freedom Party (SLFP), namely Rajapaksa’s party, into the UNP-led coalition.[9] This rather paradoxical development was due to the fact that, although Maithripala Sirisena had won the election as the common candidate of the opposition, he had maintained his role as General Secretary of the SLFP. Soon after the election, on 16 January, the SLFP Central Committee decided to hand over the leadership of the party to Sirisena, justifying its decision with reference to the fact that: «Article 12-2(a) of the SLFP Constitution stipulates in clear terms that when a person contests as a SLFP candidate at the Presidential Election and if he were to win, he automatically becomes the President/Leader of the Party».[10] As a consequence, in a highly ironic development, Sirisena not only took over the SLFP formal leadership from Rajapaksa, but was also made chairman of UPFA,[11] namely – as above remembered – the political coalition which had opposed his candidature to the presidency in the just contested presidential polls. Of course, as was only to be expected, Sirisena was not able to gain effective control over the UPFA parties, while the same SLPF split into a pro-Sirisena and a pro-Rajapaksa’s faction.[12]

3. The first signals of the restoring of rule of law

Despite the weakness of the UNP «national government» and the lack of a parliamentary majority, the new administration proved to be able to deal with some of the most urgent issues of the country, curtailing the presidency’s executive powers, reviving the parliamentary system, strengthening the rule of law, re-establishing an independent judiciary, removing some media restrictions, vigorously pursuing corruption cases, and showing attention to at least some of the needs of the minorities.

In a highly symbolic action, one of the first moves of Sirisena as President was to declare illegal (29 January) the controversial impeachment of the Chief Justice Shirani Bandaranayake, decided by the previous government.[13] The destitution of Bandaranayake in 2013 had indeed caused harsh criticism from the UNHRC and feelings of deep indignation among segments of Sri Lanka’s civil society. The latter perceived the sacking of the Chief Justice as an assault on judicial independence in order to annihilate it.[14] Sirisena formally restored Shirani Bandaranayake to the office of Chief Justice, thereby implementing one of his electoral commitments. Shirani Bandaranayake formally resigned after two days, but Sirisena following choice of a new Chief Justice was also very significant, since the President appointed Kanagasabapathy Sripavan, namely the first Tamil to occupy this top judicial position in 24 years.[15] It was a highly revealing decision, as it underlined the new President’s willingness to pursue a policy of national reconciliation after 26 years of ethnic conflict and a further ten years of majoritarian rule based on a vision of ethnic exclusiveness. After all, Sirisena had received a strong electoral support from the Tamil community; accordingly his pursuit of national reconciliation – apart from being an ethically high profile policy – from a realpolitik viewpoint represented a way to keep the support of the Tamil electoral block.

Once the above has been pointed out, it is worth stressing that Sirisena’ s decision to appoint a Tamil as Chief Justice was not an isolated decision but part of a general strategy. A Presidential Task Force on Reconciliation, headed by the former President Kumaratunga, was established in March 2015, with the aim of identifying the most urgent needs of the minority Tamil community.[16] Also Ranil Wickremesinghe, following his appointment as Prime Minister, expressed the intent to «implement the Thirteenth Amendment within a unitary state».[17] The implementation of Thirteenth Amendment, born out of the Indo-Lanka Accord of 1987,[18] represented the main legal instrument with the potentiality to ensure a national reconciliation process. In fact, it provided for the devolution of conspicuous legislative and executive powers to the Provincial Councils, which would automatically guarantee the autonomy of the minorities, which are numerically dominant in the north of the island.

Up to Sirisena’s election, the Thirteenth Amendment had never been fully implemented, and the central government had withhold the powers entitled to the Provinces, especially the powers related to police and land authority.[19] A week after assuming the Presidency, as an additional gesture aimed at opening up the dialogue with the Tamil community, Sirisena appointed a new civilian governor for the Northern Province. That area – despite the conclusion ten years before of the civil war – had been under the protracted military rule of General G. A. Chandrasiri. Chandrasiri’s replacement with a civilian governor – the long time diplomat H. M. G. S. Palihakkara – met «one of the major requests» expressed by the Tamil electorate.[20]

The Sirisena administration’s conciliatory policies towards the minorities were also directed towards the Muslim community. In the past few years, the Sri Lankan Muslim community had become the main target of a hate campaign carried out by Sinhala Buddhist extremist groups. Significantly, Sinhala Buddhist extremism developed during the Rajapaksa regime, taking root both in society and politics and benefitting from state patronage. As a result, in the past decade Sri Lanka witnessed a series of increasingly frequent communitarian attacks against its Muslim minority which culminated in the eruption of the 2014 Aluthgama wave of violence.[21] Sirisena, since assuming power, has been engaged in contrasting this chauvinistic trend. On the occasion of the SLFP convention on 17 March, he stated that the SLFP was «not a Sinhala Buddhist party».[22] Moreover, on 26 May, the leader of the extremist group Bodu Bala Sena (Buddhist Power Force, BBS), the Buddhist monk Galagoda Aththe Gnanasara Thera, was arrested by the police for the first time. Though the monk was released on bail, the episode marked the end of the immunity that the group had hitherto enjoyed. Through the restoration of the rule of law, the authorities were also able either to prevent communal violence or to minimise it, as happened during the Buddhist Sinhala demonstration at the Kuragala holy site.[23] Communal incidents, which have continued in 2015, with 37 cases recorded in the first four months of the year, have nevertheless experienced a slight decline in comparison with the last four months of 2014, which saw 48 cases.[24]

When Sirisena, in November 2014, resigned as Health Minister to run as a Presidential candidate, he explained: «Parliament is under this [Rajapaksa’s] family, the ministries are under this family, the judiciary is under this family, the military and the entire state sector and business and investment come under the direct control of this family. This country is as unstable as it could be because of family bandyism and nepotism».[25]

Indeed, during the Rajapaksa rule, the concentration of power and wealth in the hands of the presidential family made it similar to a sort of close-knit oligarchy, beyond the reach of the law. That was a situation which, during his electoral campaign, Sirisena pledged to end once for all.[26] Once Sirisena became President, the fight against corruption and the abuse of power was carried out through the establishment of a series of institutional mechanisms. These included the formation of a cabinet subcommittee on corruption, a Police Financial Crimes Investigation Division (FCID), and a Presidential Commission of Inquiry to Probe Corruption and Abuse of Power. The last was designated to investigate matters such as the illegal acquisition of lands, irregularities in the Colombo Stock Exchange, and the handling of money in the Employees’ Provident Fund.[27]

Basil Rajapaksa, the brother of Mahinda Rajapaksa and the former Economic Development Minister, was detained in April 2015 on charges of misappropriating public funds earmarked for the construction of public housing.[28] Another brother of Mahinda Rajapaksa, the former Defence Secretary, Gotabaya Rajapaksa, was summoned in front of the commission appointed to investigate allegations of bribery and corruption on 23 April.

The anti-corruption campaign, focused on frauds in the different government departments and in state owned companies, investigated 220 cases by August, bringing to light grafts and irregularities concerning major development projects and leading institutes in the country. Among the latter there were the arms and security firm Rakna Lanka Company and the Sri Lankan Airlines.[29] The investigations revealed not only the magnitude and intensity of corrupt practices among officials during the Rajapaksa regime, but also the need for an efficient and independent system to either prevent or contain such a phenomenon. However, the mechanisms established to investigate large-scale corruption allegations did not adequately meet these standards, given the politicization of the anti-corruption institutions and the magnitude of caseload. On the other hand, the expectations raised by the government’s rhetoric made it necessary «to act fast to satisfy voter expectations and capitalize on the old regime’s political weakness».[30]

It is worth to consider that the chase against corruption crimes took place in the course of a power struggle during which the former President Rajapaksa, who was able to keep his influence over a section of the SLPF. The antagonism between Rajapaksa and Sirisena reached a peak when the former President’s activities threatened to derail the UNP reform program. In this respect, the anti-corruption enquiries involving Rajapaksa and his inner circle certainly contributed to politically weaken the former President. Since January 2015, the improvement of press freedom within the country has indeed made Sri Lankan citizens more aware of the alarming features that marked the Rajapaksa administration.

4. The arduous path of political reforms

The major and more ambitious goal achieved by the UNP-led government was the passage of the Nineteenth Amendment, on 28 April. Such a constitutional change represented a significant step forward in restoring democracy and the rule of law. Since the end of the civil war, Mahinda Rajapaksa had actually embarked on a process of accretion and centralization of presidential powers, epitomised by the promulgation, on 8 September 2010, of the Eighteenth Amendment. The latter abrogated the presidential limit of two mandates and gave the President direct power to appoint judges and a variety of enquiry commissions.[31] On its part, the Nineteenth Amendment, approved on 28 April 2015, limited the length of the presidential mandate from six to five years, renewable for a second term only. It also limited the presidential power to dissolve the Parliament: under Rajapaksa this power could be made use of after one year, now it could be applied only after four and a half years. Furthermore, the Nineteenth Amendment reduced the legal immunity of the President and envisaged a marginal shift of power and authority to the Prime Minister, though the Supreme Court rejected the provisions that made the Prime Minister the head of the Cabinet.[32] Even if the abolition of the executive presidency was the major electoral promise of Sirisena, the road that led to the passing of the amendment was scattered with obstacles which conditioned the final form of the law. Indeed, the law turned out to be weaker than most of its proponents had wanted. The difficulties that Sirisena encountered in implementing the reforming agenda resulted both from the need to deal with an heterogeneous ruling coalition and the lack of a two-thirds majority in Parliament, which is required in order to pass any constitutional amendment.

The lack of a clear majority proved to be a challenge for the UNP-lead government. Not surprisingly, one of the main controversial issues faced by the new government was that of the electoral reform, which had been promised as part of Sirisena’s 100 day’s agenda and which implied the revision the Twentieth Amendment. The electoral reform aimed at replacing the proportional system with a hybrid system, containing proportional and first-past-the-post elements. Such a system was supposed to ensure both a stable government and a strong opposition. Nevertheless, since the proportional system could enable, to a certain extent, the ethnic, social, political, and ideological diversities of Sri Lanka’s society to find representation in all legislative assemblies, the proposed electoral reform threatened to marginalize both minorities and small parties, consolidating the trend towards ethnic and social majoritarian in politics.[33] Also, there were different viewpoints among the parties about the abolition of the executive presidency: whereas the UNP called for a return to the Westminster-style parliamentary model, the JHU wanted the President to keep key powers to avoid «jeopardising national security and territorial integrity».[34]

The debate on electoral reform witnessed the attempt by some sections of the SLPF to use the issue for short-term political gains. First of all, the majority faction of the SLPF sought to delay the adoption of the Nineteenth Amendment and the reform of the electoral system. Secondly, the SLFP attempted to postpone the parliamentary poll to the end of 2015, using a delaying tactic to exploit the growing anti-incumbency factor. On the other side, Prime Minister Wickremesinghe fought for an early dissolution of parliament, in order to ride the wave of popular discontent against Rajapaksa and the UPFA to secure a majority of seats in next parliamentary election.[35] Despite the Parliament being dissolved on 26 June, without any agreement on the electoral reform, Sirisena was able to negotiate with the SLPF, gaining its support for the Nineteenth Amendment. In order to obtain the SLPF’s support, the President persuaded Ranil Wickremesinghe to accept the substantial changes to the bill required by the SLFP. The most important of such changes was the reduction of the number of civil society members on the Constitutional Council from seven to three.[36] Popular demand and support from civil society played also an important propulsive role in the process that led to the passage of the Amendment. In fact, several organizations joined the Satyagraha campaign arranged by the monk Maduluwawe Sobitha Thera, whose most important moment was the popular march towards the parliament building on 27 April.[37] Overall, the approval of the Nineteenth Amendment to the Constitution was a crucial personal success for Sirisena, who succeeded in passing the bill with a majority of 214 votes in favour.

5. The UNP minority government: a silent revolution?

Maithripala Sirisena’s advent to power and the UNP government’s policies were surely remarkable, in spite of their limitations. Indeed these policies were portrayed by the media as a «silent revolution». However, as highlighted by some observers, what happened in Sri Lanka was mainly a factional struggle within the Sri Lankan ruling classes, particularly inside the SLPF.[38] The progressive centralization of powers in his own and his family’s hands, undertaken by Rajapaksa, had progressively excluded from power an increasing number of political players, including high level members of the very same SLPF. The latter, while not unduly worried for the erosion of the democratic checks and balances, became increasingly uncomfortable as the diminution of their own power.

It is worth noting that Sirisena had held the office of SLFP’s general secretary for 13 years, and had served the Rajapaksa government both as the Minister of Agriculture and as the Minister of Health from 2005 onward. Sirisena had also been the Minister in charge of Defence during the last, and most bloody, two weeks of the war.[39] Consequently, he was in every respect an active and important member of Rajapaksa’s regime. In this respect, Sirisena’s political turn-around could be attributed not so much to a sudden democratic fervour as to political opportunism. The Rajapaksa family increasingly tight and monopolistic hold on Sri Lankan political power had translated into a crony capitalism benefitting the Rajapaksa’s clan and their mignons. This situation had caused the growing anxiety of both the international investors and the local business, which, in turn, undoubtedly was a relevant factor in favouring Sirisena’s decision to challenge Rajapaksa. Once Rajapaksa was defeated, Maithripala Sirisena and the UNP government, which received the backing of the Sri Lankan capital, appeared not to be unresponsive to the call by international financial actors to further push Sri Lanka towards free market and global investments.[40] Actually, both the SLPF and the UNP have favoured a similar economic development pattern, namely that of a «Singaporean hyper-urbanised and consumption-driven» country.[41] The new Sri Lankan regime seemed eager to achieve this goal by rethinking its position on the international stage and, particularly, by reducing Sri Lanka’s dependency on China in favour of a greater integration in the global economy.

Arguably, the steps made by Sirisena’s administration towards democratic restoration were accompanied by a certain degree of continuity with the former regime and the persistence of political anomalies. For instance, the new government appeared reluctant to abrogate the draconian Prevention of Terrorism Act and to proceed with the demilitarization of the Northern area of the island, despite both having so negatively affected the democratic recovery after the end of the civil war.[42] Such caution was presumably caused by the influence of the Sri Lankan army, an influence which had greatly increased following its victory in the civil war. Furthermore, during the Rajapaksa’s regime, the army played a key role in allowing the President to increase and centralize his powers. In turn, Rajapaksa supported and promoted the army’s increasing role in civil affairs.[43] Thus, the Sri Lankan army gained a deep ascendency over both society and politics, which will be hard to remove. Nonetheless, the government adopted some modest measures to marginally reduce the army presence in Northern Jaffna District, by returning about 1,000 acres of military occupied land to the long-time displaced owners. Such an action represented an isolated gesture, extraneous to any coherent programs for resettlement; therefore its concrete effect was pretty insignificant. In fact, the above-mentioned land was undeveloped, with neither original houses nor new military camps or other government buildings.

In addition, as far as media freedom is concerned, the Sirisena administration proved to be ambiguous. The restoration of press freedom was a major electoral promise of Sirisena’s electoral campaign. In fact, after the January election, the blocking of independent news websites, implemented by the old regime, was immediately lifted. Along with this provision, the President also announced, in May, that the government was determined to reopen investigations into all past murders and disappearances of journalists.[44] Yet, two months later, Sirisena decided to restore the Press Council, which had virtually ceased to exist after the January Presidential election. The Press Council was a controversial body, through which the Rajapaksa’s regime had coerced the media.

After Rajapaksa’s electoral defeat, Sri Lanka certainly «took a number of positive steps to address human rights and democracy concerns».[45] In fact, according to a United Kingdom governmental report on human rights in Sri Lanka, the overall situation improved during the first half of 2015.[46] Nonetheless, as shown above, political inconsistencies have marked Sri Lankan democracy even after Sirisena’s election. The positive democratic shift by Maithripala Sirisena and the UNP-led government, although real, has been limited and fragile. On the other hand, the restoration of democratic institutions after a 26 year long ethnic war and a decade of authoritarian and majoritarian government could be neither an easy nor a speedy process.

6. The Parliamentary Elections and the Formation of National Government

In the electoral Manifesto, Sirisena had promised to held new general elections hundred days after the presidential election.[47] This pledge was redeemed in a substantial way, although with some delay, with the dissolution of the Parliament on the midnight of Friday 26 June, namely ten months before the completion of the legislature,[48] and the convening of the general election. In doing this, Sirisena, beside keeping a key promise contained in his 100 days agenda, was trying to consolidate his political basis of support. The electoral competition saw the UNP-led coalition – the United National Front for Good Governance (UNFGG), which included, among others, the All Ceylon Muslim Party, the Sri Lanka Muslim Congress, and the JHU – challenging the UPFA. Yet, the political struggle was not limited to the counterpoising of the two main party coalitions, but was, above all, an intestine fight inside the SLFP, eventually tearing the party asunder. After the poll was announced, the power struggle between Sirisena and Rajapaksa to take control over the party intensified, reflecting deep divisions within the Sri Lankan ruling class. The rivalry became dramatic when the former President sought to orchestrate his return to the scene as the SLFP prime ministerial candidate. On the occasion of the party leaders’ meeting, held on 2 July, Rajapaksa indeed managed to be nominated to compete in the forthcoming polls.[49] His appointment represented a political debacle for Sirisena, because, had Rajapaksa won at the poll and become Prime Minister, he would have wielded those increased political powers, just conferred by the recently promulgated Eighteenth Amendment. In addition, Sirisena faced heavy criticism for having been unable to nip in the bud Rajapaksa’s possible political comeback. However, under the party rules, Sirisena, as SLPF’s President, had not the power to block the nomination.

All this drove the Sri Lankan President to change radically his attitude towards the party. In fact, months of negotiations with SLFP cadres had only resulted in the President’s failure to impose his leadership on the party. Accordingly, on 14 July, Sirisena declared that he would not appoint his predecessor as Prime Minister, even if the SLFP won the majority of parliamentary seats. Sirisena was legally entitled to do that, as, according to the Constitution, the Sri Lankan President had the authority to appoint as Prime Minister «the Member of Parliament who in his opinion is most likely to command the confidence of Parliament».[50] Nevertheless, it is clear that Sirisena intended to exercise this presidential right only as a last resort; in the short ran, his announcement aimed at undermining Rajapaksa’s ascendancy and his electoral prospects, in favour of the UNP candidate, Ranil Wickremesinghe. On the same day of the election (17 August), the Sri Lankan President, in his capacity as the SLFP Chairman, further displayed his strength by removing thirteen General Secretaries from the party Central Committee. The Central Committee is the head decision-making body of the SLFP and most of its members were appointed by Rajapaksa. Sirisena’s move was indeed aimed at consolidating his power over the party.[51]

Sharp antagonism clearly marked the two Prime Ministerial candidates electoral campaigns as well. The rivalry between Mahinda Rajapaksa and Ranil Wickremesinghe was such as to make the parliamentary election a competition fashioned along the lines of the presidential election, namely as a political duel between the Sirisena-sponsored candidate, Ranil Wickremesinghe, and Sirisena’s main political adversary, Mahinda Rajapaksa. Accordingly, the SLPF’s defeat appeared, above all, as Rajapaksa personal defeat. Indeed, the poll – which saw a huge popular participation (70% of the electorate)[52] – confirmed the electoral trend initiated by the January poll. The UNFGG, namely the UNP-led coalition, emerged as the winner, gaining 45.6% of the votes and 106 seats in the 225 members legislature, whereas the rival UPFA obtained 95 seats only. Nonetheless, the UNFGG’s victory was less than total, as the winning coalition was not able to secure the 113 seats required for a having the absolute majority in the new legislature.[53]

The outcome of the parliamentary election essentially reflected the decline of Rajapaksa’s political appeal, rather than the success of the UNFGG coalition. The former President’s defeat as the prime ministerial candidate was due to two main factors. First of all, Rajapaksa appeared to have not learned any lessons from his previous electoral debacle, persisting in underestimating the need to gain the confidence of the minority communities. In fact, he based his electoral strategy almost exclusively on the nationalist appeal to Sinhala Buddhist voters, making extensive use of the language of national security and patriotism. His aggressive electoral campaign centred around three issues: national sovereignty, development, and the security of the country. The first topic was related to Rajapaksa’s struggle against the threat of the supposed foreign «conspiracy». The conspiracy was allegedly organised by Americans, Norwegians, Europeans, and Indians, along with the UNHRC, and aimed at interfering in Sri Lanka’s national affairs. The second issue was based on championing development policies followed during Rajapaksa’s presidency, which emphasized major infrastructural projects. The third, which was also the dominant theme of Rajapaksa’s campaign, was essentially marked by an incendiary communal attitude focused on highlighting the threat of a possible resurgence of the Liberation Tiger Tamil Eelam (LTTE). The former President indeed accused the government of concerting with the LTTE and jeopardising national security by removing the Army from the North and «nurturing terrorists».[54] This divisive approach ended up being rejected by most of the electorate, in particular in the electoral districts with a considerable presence of ethnic and religious minority populations. In those areas, the UPFA performed even worse than it had in January. It is no coincidence that the Tamil National People’s Front (TNPF), which embraced a sharply nationalistic position with a separatist manifesto, also did not gain any seats, in contrast to the moderate TNA. The latter obtained 16 parliamentary seats, thanks to the remarkable support it gained among Tamil voters, who appreciated the role played by the party in calling for the building of democracy by opposing the constantly authoritarian style of the Rajapaksa regime.[55]

Unlike the SLPF, the UNP based its campaign on topics related to development, as indicated by its five-points manifesto – focused on the growth of the economy, the fight against corruption, the enshrining of freedoms for all, investments in infrastructures, and improvement of the education system. This agenda sounded attractive to a wide range of voters, irrespective of their religion or ethnicity. In addition, while Wickremesinghe campaigned all over the island, Rajapaksa carried an electoral campaign that focused on the UPFA strongholds, virtually ignoring the Northern and Eastern Provinces.

Furthermore, since his defeat in the January election, Rajapaksa’s political opportunities undoubtedly shrank because of the loss of the political power he had enjoyed while being in control of the government, with its machinery and patronage network.[56] At the same time, Rajapaksa’s image suffered a gradual deterioration that affected even his formerly immense popularity among the Sinhala electorate, especially in urban areas. The inquiries launched under the Sirisena administration into allegations of corruption, abuse of power, and even murder contributed to dispelling the myth of the national hero that had arisen around the former President.[57] Besides, the news circulated that, when defeated at the Presidential poll, Rajapaksa had sought to orchestrate a coup, eventually conceding defeat only because unable to gain the support of the Army Chief and the Police Inspector General.[58] Despite the fact that this accusation had not been proven, it undoubtedly played a part in further discrediting Rajapaksa. As a result, the UPFA and its Prime ministerial candidate were not able to achieve the same kind of electoral mobilisation that Rajapaksa’s charisma alone had achieved during past elections.[59]

Despite the UPFA electoral defeat, the lack of an absolute majority compelled the UNP to engage in intensive negotiations with other parties, mainly the SLPF, in order to achieve the formation of a National Government able to last two years. This task was accomplished on 4 September, at the cost of conspicuously expanding the cabinet beyond the originally pledged number of 30, following in this way the pattern previously implemented by Rajapaksa’s administration.[60] In fact, the cabinet composition required a great effort by Wickremesinghe and Sirisena to balance different needs and demands. In order to do that, the UNP renounced several important Ministries, such as those of Power and Energy, Petroleum and Gas, and Labour and Trade Unions, in order to accommodate its allies. This was a sacrifice well worth doing, because, according to Sirisena, the unity government represented a prime strategy for achieving «reconciliation among all communities» and «socio-economic development to face the new world».[61]

After the swearing in of the new government, the reconciliation goal was certainly supported by the new Prime Minister’s decision to recognise the TNA leader R. Sampanthan as the Leader of the Opposition in Parliament.[62] That was the first time, after over three decades, in which a Tamil Member of Parliament was appointed to this office.[63] This happened in spite of the opposition of Rajapaksa and his SLFP loyalists, which had joined the opposition. In fact, the former President and his supporters requested the appointment of one of them, Kumara Welgama, as Leader of Opposition. Against this backdrop, Sampanthan’s appointment acquired a double meaning: on the one hand, it was designed as a reassurance to the Tamil community with regards to their place in national politics;[64] on the other hand, it was a measure to further marginalise the former President.[65]

Even with the difficulties faced by Sirisena in the first months of his office, the President displayed his ability by widening his support and establishing his leadership over the SLPF, while the party faction still devoted to Rajapaksa was gradually isolated and weakened. The aim of the National Government was to «work harmoniously at least for another two years to come to a consensus on the basic issues affecting the country».[66]

7. The role of Sri Lanka in the Indian Ocean dispute

The field that has been most affected by the establishment of Sirisena’s administration is that of foreign policy. The ensuing political shift has been highly welcomed by India and Western countries, in particular the United States. In fact, Sri Lanka is a key nodal point for sea-routes, whose worldwide importance has increased as a result of the pivotal role the Indian Ocean plays in the global economy and the geopolitical strategy of a number of countries. In fact, the most significant Sea Lines of Communication (SLOC) and a number of major choke points in the world are hosted by the Indian Ocean. More than 80% of the global seaborne trade in oil transits through Indian Ocean choke points, with 40% passing through the Strait of Hormuz, 35% through the Strait of Malacca, and 8% through the Bab-el-Mandeb strait.[67]

Since the end of the 1960s, in the background of the Cold War, foreign superpowers and local countries have increasingly paid attention to this region, engaging in a competition aimed at enlarging their own areas of influence, securing their vital interests, and imposing their hegemony on the Indian Ocean. Therefore, the United States, China, and India have formed a «strategic triangle», within which their rival ambitions over the Indian Ocean has emerged more and more acutely.[68] After the end of the Cold War, Washington tried to secure a major role for itself in the Indian Ocean, with the purpose of containing Beijing’s influence over the area. In fact, the interests of the United States appeared to be threatened when China started to increasingly assert its presence on the Indian Ocean chessboard, especially from the 1990s onwards, when Beijing launched the so called «String of Pearls» strategy. This strategy has consisted in the establishment of strategic relations with Indian Ocean littoral countries through the installation of maritime infrastructure and Chinese detachments in coastal ports, like Coco Islands, Sittwe (formerly Akyab) and Bassein in Myanmar, Chittagong in Bangladesh, Hambantota in Sri Lanka and Gwadar in Pakistan. The strategic partnership that China has strengthened with those littoral Asian countries has been enhanced by infrastructural and commercial cooperation. This has allowed Beijing to secure a vital maritime line, connecting the South China Sea to the Gulf of Bengal, and then on to the Persian Gulf and the Red Sea. However, the Chinese effort in engineering a «new maritime silk road» predictably collided with both the US and Indian interests in the area. As a consequence, Sri Lanka, because of its commercially and a strategically geographical location, could not avoid being involved in this dispute.[69]

During Rajapaksa’s rule, Colombo approached Beijing and joined enthusiastically its «String of Pearl» plan, which resulted in the launching of a series of Chinese funded projects – such as the Hambantota port, in the South of the island. Throughout his presidency, Rajapaksa massively promoted economic and military ties with China, with India and the United States showing growing concern. As a consequence, during Rajapaksa’s years relations between China and Sri Lanka have grown closer at a rapid pace, along with the increase in Chinese investments in the economy of the island. Foreign direct investment from China, which was US$ 101,2 million in 2008, grew to 149,3 million in 2011.[70] Beginning in 2007, Beijing has turned into the biggest provider of loans to Colombo, albeit at a high rate of interest, overtaking countries such as India and Japan, which had previously been the largest source of financing for Sri Lanka’s infrastructure projects. In addition, the total trade between Sri Lanka and China has been steadily increasing over the years, more than doubling from 2009 to 2012.[71] The friendship between Beijing and Colombo was further strengthened in 2013 thanks to the signing of a Strategic Cooperative Partnership and, in 2014, by the first visit of a Chinese President to Sri Lanka in 28 years, along with the signing of 27 agreements.[72]

The Obama administration was undoubtedly irritated by Rajapaksa’s strong ties with Beijing and eager to bring Sri Lanka closer to its «pivot to Asia» policy. As a consequence, the role played by Delhi and Washington in favouring the change of regime that occurred in January 2015 in Sri Lanka was neither unexpected nor negligible. At first, India and the United States exerted significant pressure on Colombo through the UNHRC and the potential threat of economic sanctions.[73] Given Rajapaksa’s unwillingness to fulfil the UNHRC recommendations, the international body voted in 2014 for a stricter resolution calling on the U.N.’s human rights office to investigate allegations of war crimes, through the establishment of an independent commission of inquiry.

Sirisena’s election to the presidency was strongly backed by two leading Lankan politicians with friendly relations with the U.S.: UNP’s leader, Ranil Wickremesinghe, and Sri Lanka’s former President Chandrika Kumaratunga, the latter being the main architect in bringing Sirisena forward as the common opposition candidate. Also New Delhi seemed to be involved in manoeuvring behind the scenes, with the aim of bringing about Rajapaksa’s departure. Indeed, the Sri Lankan station chief for India’s foreign intelligence service allegedly cooperated with the local opposition parties to get them to agree on a joint contender for the election, facilitating meetings and encouraging defections from the UPFA.[74]

8. Rebalancing Foreign Policy

The confidence of United States and India in Sirisena’s presidential candidacy was actually well placed. In fact, the foreign policy vision outlined in the NDF electoral manifesto was grounded on the consolidation of Sri Lanka’s relationship with its Asian neighbours and a willingness to establish equal relations with China, Pakistan, Japan, and India. In particular, in relation to India, the manifesto, by alluding to the different positions vis-à-vis Sri Lanka taken by India’s central government and by the government of the nearby Indian state of Tamil Nadu (which, being inhabited by Tamils, had a special interest for the Lankan Tamil minority), asserted: «Our Indian policy will take into due consideration the diversity of India». The Manifesto went on stating: «I [Sirisena][75] would act to have closer relations with an attitude that would be neither anti-Indian nor dependent».[76] Such an agenda aimed at allaying New Delhi’s anxiety about its relations with Sri Lanka, which had witnessed a dramatic deterioration, when, in November 2014, a Chinese submarine and a warship had docked in Sri Lankan ports, on the very day the Japanese Prime Minister was visiting the island.[77]

After assuming office, Sirisena’s first foreign visit, significantly, was to India. On 15 February 2015, the Sri Lankan President indeed met Narendra Modi in order to strengthen bilateral relations between the two countries. During the visit, India and Sri Lanka signed four agreements; among them, the most strategically important was the pact pertaining to civilian nuclear cooperation. Such an agreement could not but be perceived as a «major setback for China».[78]

The rapprochement between New Delhi and Colombo was fostered by Indian domestic factors as well. In fact, the landslide victory of the Narendra Modi-headed Bharatiya Janata Party (BJP), in May 2014, allowed the new Indian government to carry out a foreign policy less affected by the requests of the Indian Tamil parties.[79] In addition, the BJP-led administration displayed a renewed eagerness to engage with India’s neighbours and reclaim New Delhi’s status as a major power in the Indian Ocean, as shown by Narendra Modi’s five days visit to the Seychelles, Mauritius, and Sri Lanka (10-14 March 2015). The visit was designed to strengthen India’s key role among the Indian Ocean island states, improve security cooperation in the area, and counter China’s growing presence in the region. Modi’s trip to Sri Lanka was politically very significant, since it was the first Indian Prime ministerial visit in 28 years to the island. [80] The visit mainly aimed to ensure that India gained a stronger presence in the eastern port of Trincomalee, thanks to the joint development of an Oil tank Farm.[81] Nonetheless, Modi also took the opportunity to raise the Tamil issue, urging Colombo to implement the provisions enclosed in the 1987 Indo-Sri Lankan agreement.[82]

New Delhi’s effort at strengthening its position in the Indian Ocean was a product of the need to reverse what had been a protracted phase of policy neglect, which had favoured China’s strategy to become a major player in the area. In fact, as regards to Sri Lanka, India had failed to provide significant investments in the country’s maritime infrastructure, which the island-state perceives as essential to achieving its national development goals.[83] That was a situation that the new Indian Prime Minister appeared keen to reverse.

Not surprisingly, China’s relations with Sri Lanka seemed to be heading for trouble, when, soon after the January Presidential election in Sri Lanka, anti-corruption probes were started, putting under scrutiny the allegedly tainted ties between the Rajapaksa administration and the Chinese investments in Sri Lanka. Following this probe, the construction of the Colombo Port City, a US$ 1,4 billion Chinese project, funded by a company considered a security risk by New Delhi, was suspended until the completion of an inquiry into allegedly unlawful awarding of the contract. To this followed a meeting between the Sri Lankan Foreign Minister Mangala Samaraweera and the Chinese Premier Li Keqiang in Beijing (27 February 2015), during which the Sri Lankan Minister sought to renegotiate some huge loans given by Beijing at rates as high as 8%. Samaraweera also announced the decision not to allow further Chinese submarines docking in Colombo.[84]

Once all this has been pointed out, it is worth stressing that Sirisena’s foreign policy did not aim at breaking ties with China, but at rebalancing them. In fact only one month after his visit to India, the Sri Lankan President went to Beijing to meet Xi Jinping (25-27 March 2015). On that occasion, the two countries reaffirmed their longstanding ties and the Chinese President expressed China’s eagerness to «again promote and elevate the Sino-Sri Lankan relationship to fulfil an important purpose».[85]

Beijing did not appear to be resigned to a weakened friendship with Colombo. China considered its friendship with Colombo as being fundamental to its strategy in the Indian Ocean, in order to keep its favourable position in the region and secure its growing energy needs. Accordingly, the Chinese answer to Sirisena’s rebalancing in foreign policy was to pledge over US$ 1 billion new grant to Sri Lanka after a Chinese luxury real estate project in the capital Colombo was suspended. Furthermore, Chinese companies agreed to cut the cost of the US$ 520 million project to build a road in a Colombo suburb by $ 225,73 million.[86]

The apparent slowdown experienced by Sino-Sri Lankan relations is likely to result in a «normal» relationship with Beijing, which could enable Colombo to avoid irritating India and the United States. According to government spokesman Rajitha Senaratne, the Sirisena’s administration has not been «against China, but we have been analysing and re-evaluating all the projects so that Sri Lanka gets the best deal».[87] Chinese investments in Sri Lanka have been significantly greater than Indian ones and, despite the political change that has occurred in the island, Beijing’s presence in the area will likely «continue to rise in the coming years».[88]

9. The reconciliation between Sri Lanka and United States: implications on the UNHRC attitude

The remarkable shift that occurred in Sri Lankan international relations following Sirisena’s rise to the presidency was reflected notably in the attitude of Washington towards the island-state. The United States, indeed, praised the result of the January 2015 Presidential poll and welcomed the regime change that took place on the island.[89] Apart from the rhetoric about the Sri Lankan democratic twist, Washington was pleased by the pro-Western bias in Sirisena’s foreign policy agenda, which could not but favour the U.S. strategic interests. The ensuing change in the Sri Lanka-U.S. relations was signalled by the visit of U.S. Secretary of State John F. Kerry to Sri Lanka, in May 2015. The visit had a highly symbolic value, since Kerry was the first top-level U.S. diplomat to visit Sri Lanka in ten years. The reconciliation between the two countries brought with it other important consequences, especially as far as the UNHRC was concerned, as the Obama administration adopted a more compliant approach on the issue of war crimes accountability. In fact, the prospect of setting up a United Nations investigation into the war crimes committed during the Sri Lankan civil war, previously strongly supported by the United States, appeared to have become less compelling with Sirisena’s election. The point of view of Washington on the issue was well formulated by New York Times’ journalist Ryan Goodman: «Pushing for full, sweeping accountability in this fragile moment of transition could destabilize the new government and jeopardize the warming of relations between the United States and Sri Lanka».[90] Since the beginning, Sirisena’s administration struggled both to avoid an independent international investigation and to gain a postponement in the release of a UNHRC «landmark enquiry»  into possible war crimes, originally scheduled for March 2015.[91] Essentially, Sirisena sought successfully to convey the impression that his government was, on one side, definitely more open to pursuing the responsible of war crimes than that of his predecessor, but, on the other side, maintained Rajapaksa’s same stand with respect to averting direct international involvement in war crimes prosecutions.

After fruitful negotiations within UNHRC and with Washington, Colombo was able to obtain a six-month delay of the presentation of the U.N.’s report on war atrocities.[92] This concession to the Sirisena administration was granted in anticipation of the conclusion of the scheduled general elections.[93]

In addition to postponing the resolution, the Sri Lankan government reached a further and greater success. This was the achievement, within UNHRC, of a mutually agreeable mechanism for addressing the issue of war crimes and human rights violations in the country. Such a mechanism was envisaged in the resolution passed without any opposition, on the occasion of the 30th session in Geneva on 1 October 2015.[94] The motion had the strong endorsement of India and, importantly, the crucial support of the United Stated.[95] Indeed, the latter took an active part in searching for a joint solution through consensus, and the final UNHCR document represented the outcome of this effort. The final content of the resolution probably exceed even the more ambitious hopes of the Sirisena administration, meeting fully Sri Lankan demands. Firstly, the UNHRC document acknowledged «the steps taken by the Government of Sri Lanka since January 2015 to advance respect for human rights and to strengthen good governance and democratic institutions».[96] Secondly, the resolution largely backed the Sri Lankan aspiration to implement a domestic accountability mechanism, rather than establish an international court. As a result, the accountability mechanism by the UNHRC was pretty far from the hybrid special courts suggested by both the U.N.’s report and the High Commissioner, Prince Zeid Ra’ad Zeid Al-Hussein.[97]

The UNHRC resolution represented a dramatic shift in the United States’ position on the issue of Sri Lankan war crimes. No doubt, this softening of Washington’s stand can be explained by the more collaborative attitude showed by the Sirisena administration and its asserted willingness to make those responsible for war crimes accountable. On the other hand, it clearly aimed at further encouraging Colombo to more closely enter into the US network of strategic alliances in the Asia-Pacific region, leaving the Chinese orbit for good.

Although a clear-cut success, as pointed above, the UNHRC resolution was doomed to disappoint sections of Sri Lankan society, namely both the Sinhala nationalist groups and the Tamil community. The former, indeed, blamed the government for allowing the international community to violate Sri Lankan sovereignty, while the latter perceived the provisions included in the resolution as too mild. A joint statement on the draft UNHRC resolution, issued on 29 September by a wide range of Tamil civil society groups and political parties, reflected their frustration. They regretted the lack of adequate provisions for the setting up of a credible investigation. According to the joint statement, the UNHRC resolution merely sought «to provide the appearance of credibility to a domestic process through the appointment of ‘commonwealth and other foreign judges, defence lawyers, and authorized prosecutors and investigators’».[98] Consequently, the judicial mechanism, managed to a great extent by the Sri Lankan state, was, in fact, branded by the Tamil groups as not credible for the (mainly Tamil) victims. As a matter of fact, the UNHRC resolution called merely for an oral report in June 2016 and a written report in March 2017. This arrangement appeared like a noteworthy attenuation of international pressure on Sri Lankan state, if not even a sort of disengagement.

10. Political Economy

10.1. The Interim Budget and after

At the beginning of the year under review, the economic situation appeared bleak. During the first quarter of 2015, Sri Lanka witnessed a significant slowdown in its GDP growth, which, in comparison with the previous year, went down from 7.4% to 4.4%.[99] Its causes were several. One was that, the country’s total debt had reached US$ 58.7 billion, which implied heavy annual costs in debt servicing.[100] This was a situation which had come into being in the previous decade, mainly as a consequence of expenditures on large infrastructure development projects, the financing of imports, and loan repayments.[101] As half of the total debt was foreign debt, this, by itself powerfully contributed to the worsening the country’s balance of payments. A conspicuous role in it was played by the infrastructure projects funded by Beijing, which caused Sri Lanka to triple its foreign debt over the past five years, due to the high interest rates of Chinese loans.[102]

This situation was further aggravated by the adverse effects of the world-wide international economic crisis.

To the above long term factors, two others added themselves at the beginning of the year under review. The first was the new government’s decision to suspend a series of construction projects funded by Chinese investments.[103] Of course, as has been pointed out above, repaying the debts related to the infrastructure projects funded by the Chinese was a major factor in the Sri Lankan balance-of-payments crisis. However, to suddenly suspend them could not but adversely impact on the economy as a whole, because, since the end of the civil war in 2009, the Sri Lankan economy had mostly been driven by them, allowing the Rajapaksa’s regime to sustain an impressive average annual growth of 7.4%.[104]

The second contingent cause of the economic slowdown was the uncertainty brought into being by the change of regime that occurred in January, along with the prospect of a new parliamentary election during the course of the year.[105]

This being the situation, the interim budget, approved on 29 January 2015, was nevertheless aimed less at remedying the causes of the economic slowdown than at pursuing the goal of social justice (or, should one prefer the language normally employed by the mainstream media and neo-liberal economists, at implementing populist policies). Of course, in whichever way one views the measures characterising the 2015 Interim budget, they had the advantage of likely gaining electoral support for the parties in government during the incoming general election.

Among the most notable provisions, aiming at pursuing social justice by raising the living conditions of workers and the poor, there were the enhancement of the salaries of state sector public servants, the raise of pensions, the cutting of farmers’ loans by 50%, the cutting of taxes on 13 essential food items, the continuation of the agricultural fertilizer subsidy, and the raise of the education allocation to 6% of GDP. Also congruent with social justice goals can be considered those interim budget provisions introducing additional taxes on the most profitable private companies and the wealthy – such as an annual mansion tax, a 25% «Super Gain Tax» on companies whose profits exceed 2,000 million rupees, a tax on casino business-owners, and a onetime tax on telecommunication providers and mobile phone operators.[106]

In spite of its expansive character, the Interim Budged aimed at bringing down the fiscal deficit from the 4.6%, estimated in the previous budget, to 4.4%. This target was aimed at by the dubious method of cutting public investment from 6.2% to 4.5%.[107]

Not surprisingly, criticism to this policy came from the International Monetary Fund (IMF), which disapproved of the financial measures adopted by the Sri Lankan government for lacking credible steps to boost revenues; the IMF warned that such measures could threaten the island nation’s fiscal consolidation.[108] The IMF had indeed demanded that Sri Lanka enhanced its revenues and implemented a policy of economic austerity as a precondition for any new loan.[109] However, as shown above, the interim budget went in the opposite direction, and, in spite of its rosy forecast, the fiscal deficit target was exceeded in the first semester of 2015. According to Government’s data it reached 4.7%, whereas, according to IMF estimated, the full year budget deficit was likely to be close to 6.0% of the GDP.[110]

In spite of the IMF criticism, the expansion of expenditures promoted by the interim budget seemed, at first, to be able to revive the economic growth, which, in the second quarter of the year, increased to 6.7%. The growth appeared to be broad based – with tourism earnings that grew notably by 14% – despite agriculture continuing to underperform because of drought early in the year, which were followed by heavy rains and flooding.[111] Also the inflation trend improved, as it experienced a remarkable drop, especially related to fuel and food prices. Indeed, food inflation went down from 12% in December 2014 to 2.5% in August 2015.[112]

These positive developments were however more than overshadowed by the rising debt and the accelerated worsening of the balance of payments.[113] According to an analysis published in the influential Wall Street Journal in mid-September, «Sri Lanka’s rising debt [was] unsustainable and the country [was] heading for another balance-of-payments crisis». The same analysis went on pointing out that debt financing was «dangerously reliant on commercial borrowing at a time of increasingly volatile capital flows to emerging markets».[114]

10.2. Wickremesinghe’s «third generation» reform plan

On 5 November, Prime Minister Ranil Wickremesinghe, delivered a statement in front of the Parliament, outlining the plan for a complex set of socio-economic reforms. Some of these reforms appeared well thought out, others were barely outlined; all of them, however, aimed at making the economy of the island flourish, while keeping in mind both social justice and the need to heal the wounds of the civil war.[115]

Wickremesinghe’s action plan appeared to be influenced on one side by the history of the island, which, in pre-colonial times had been a major hub in the flourishing Indian Ocean trade routes, and, on the other, by Singapore’s contemporary example. As remembered by Wickremesinghe, Singapore, which in the 1950s looked up to the Sri Lankan example, envisioning to follow it, had conquered a much more advanced position, becoming a major regional power, in spite of its complete lack of natural resources, «not even water».

In order to reach his goal, Wickremesinghe intended to introduce a «third generation» economic reforms. As remembered by the Prime Minister, after the post-WW2 period, when Sri Lanka had «lived with the false notion that the Government must somehow intervene in the economic process» and when «heavy taxes were imposed on the private sector that negatively affected imports and exports», a first set of reforms, were introduced by President J.R. Jayawardena in 1977, starting to change the existing system. These were followed by a «second generation economic reforms», which «took place under the aegis of President Premadasa» (in office from 1989 to 1993). At the time, according to Wickremesinghe: «The investment climate and the stock market were dynamic and free to grow in leaps and bounds.  State enterprises that were considered not relevant to be managed by the Government were given to the public. The initial growth and expansion of the garment sector, which forms a key economic area today, took place at the time.»

According to Wickremesinghe, all that had changed for the worse during the Rajapaksa’s administration, whose procedures, based on «erratic economic process and irregular practices» had pushed the country into an «economic abyss». Now, in Wickremesinghe’s own words, it was the time «to steer the country in the right direction with the third generation economic reforms that would herald in a new era».

What said so far can lead one to think that Wickremesinghe’s «third generation» reforms merely amounted to a more or less extensive implementation of the usual neo-liberal economic policies, giving a free hand to international and domestic capital, without much attention for the needs of the subordinate classes. This is an impression which could not but be strengthened by Wickremesinghe’s reputation as a friend of free-market policies and a critic of state intervention in the economy. But already Wickremesinghe’s reference to former President Ranasinghe Premadasa was a give-away that the Prime Minister’s strategy was something more complex than the simple implementation of the neo-liberal orthodoxy. Indeed Premadasa had started his public life as an activist working for the uplifting of the poor and ended it as a President who had played a key role not only as the author of the «second generation» reforms, but in the field of poverty alleviation. In fact, Wickremesinghe’s action plan, while pushing for a series of policies congruent with neo-liberal orthodoxy, included numerous provisions aimed at promoting the economic welfare of the lower social strata. As claimed by Wickremesinghe himself, towards the closing of his speech: «The economy we plan to build must yield results for all. An economy that will promote the benefits of development among all. An economy that will be friendly to all, beneficial to all.»

In order to achieve this objective, Wickremesinghe outlined a complex set of strategies. The most impressive was the plan to establish a State Holding Corporation Limited, «built along the lines of the famous Temasek Company of Singapore», with the task to manage «on sound economic principles and market economies» all state enterprises. At the same time, the shares of state enterprises would be sold to the public through a newly created Public Wealth Trust, whose managing board would be selected from the ranks of civil society, unions and chambers of commerce, and whose activities would be supervised by the Secretary of the Treasury and the Governor of the Central Bank.

Another key strategy aimed at confronting «the catastrophe facing the rural economy». This strategy implied the establishment of 2500 state rural development centres, the building or strengthening of rural infrastructures, the creation of «large scale enterprises in which farmers can be members». Moreover, «a fully fledged agro marketing authority that will purchase all agricultural produce» was to be established. Its task was handling «all matters relating to marketing, storage, sourcing markets, improving transport, purchasing of produce at a village and provincial level, preserving of produce and freezer facilities». Finally, the Prime Minister planned both «to put into place a mechanism that will encourage and empower landowners investing in new technology and farming methods», and to gear Sri Lanka’s agricultural production to meet the food requirements of the middle class in the SAARC (South Asian Association for Regional Cooperation) region.

An additional key strategy aimed at empowering «3 millions citizens to become land and house owners», through a set of policies, including a low interest loan scheme.

Wickremesinghe also envisioned the carrying out of a series of institutional reforms aimed at making the state machinery more efficient and more responsive to the needs of the Sri Lankan population. Among them there was the creation of a new pension fund; the establishment of a new Employment Council in charge to ensure minimum wages for the working population; structural changes in the Central Bank, making it more independent; the creation of a Tea Industry Committee to enhance the efficiency in tea production; the creation of an International Trade Agency «that will handle all aspects of international trade»; the restructuring of the Board of Investment, of the Export Development Board and of the Tourism Authority. Finally, an Agency for Development, bearing responsibility for «managing all economic activity» and «manned by professionals from the state and the private sector» was to be created within three years. The same deadline was set for restructuring the Board of Investment, the Export Development Board and the Tourism Authority. No clear cut deadline was set for the creation of restructuring of the others above quoted institutions.

Expenditures on education were to be augmented, taxes on knowledge and talent removed, and women were to be supported. In fact, another main government effort was to be geared at «reviewing the possibility of providing economic empowerment for women». «We will implement a policy of ensuring that 25% of all political representation at provincial government level will be allocated to women», said Wickremesinghe. He went on promising that: «In future, from 2017 onwards, when making budget allocations, it will be based on identifying financial needs on a gender basis, enabling women to have better access to opportunities at all levels».

The Prime Minister also pointed out the intention to rebuild the war affected areas in the North and East of the island. To this effect, Wickremesinghe stated that «we have discussed with Japan the possibility of conveying an aid summit in this regard in 2016».

On a more strictly economic plan, the Prime Minister, while taking pride in the economic policies introduced with the interim budget, and pointing out that, as a result, «people have more money in their hands», announced a series of changes, on the whole favouring the business community, but not only it. Among these changes there was the reduction of the budget deficit to 3.5%[116] and the abolition of the «Super Gain Tax». The latter had «served the purpose of propping up demand and providing relevant revenue», but was not needed any more. Also the Prime Minister stressed the fact that, in order to achieve the results broached out in his speech, it was vital «to encourage foreign investment and investment by individuals». Consequently he promised protection for local and global investors and announced the government intention not to make use of Under Utilized Asset Act, which had been misused in the past, in order to harass business, in some cases taking it over. «We will not engage in such activities.» announced Wickremesinghe, who went on saying: «The Government will not take over private enterprises. We will also review the business taken over in this manner».

Business activities were to be further promoted by the establishment of 11 business and development areas throughout the island – some of them in the geographical parts more affected by the civil war – and by the creation of financial and business areas, fitted out both for economic activities and social development («…they will have schools, hospitals and highways»).

At the same time, the Prime Minister pointed out the necessity «to review the tax concessions given to the investors» and announced a policy aimed at the minimization of regressive taxes. The latter policy was to pursue the medium term aim to bring down to 60%:40% the existing 80%:20% indirect/direct tax ratio. Both were steps going against the interest of the business community, although congruent with the general interest.

Concluding the present examination of Wickremesinghe’s speech, it is necessary to dwell on the fact that, as already noted, in it two different – some would say contradictory – themes were present: a neoliberal strategy of economic reforms and the pursuit of social justice. Only the future will tell if one of the two strands will prevail on the other, or if they will coexist side by side. Also, only the future will tell if Wickremesinghe’s promises were just only that – heady promises without any concrete follow-up – or a turning point in Sri Lanka’s history, the beginning of a new phase, not only in the economic field, but in the political and social ones as well. The fact that, at the time of writing the present essay, the latter possibility did exist explains why the present author has dwelt at some length on Wickremesinghe’s «third generation reform» speech.

10.3. Towards the «Third Generation» reforms? The 2015 budget

In closing his 5 November speech, Wickremesinghe claimed that: «The first budget of our Government presented on the 20th [of November] will reflect the third generation economic reforms we have planned».[117] To a certain extent this promise was fulfilled, even if the decisions part of the budget do not – actually could not – be taken as proof that Wickremesinghe’s promises were in the process of being actually translated into concrete policies. After all, as pointed out time and again by Wickremesinghe in his speech, most of the promises there made were part of a medium-term program, needing some years in order to be implemented.

Budget 2016[118] was presented on 20 November by Finance Minister Ravi Karunanayake in a marathon speech lasting more than four hours.[119]

The speech was differently assessed as «a road map for economic reforms»,[120] as providing «relief to people by reducing the prices of essential commodities»,[121] and as an austerity budget, «in line with the pro-business demands of the International Monetary Fund».[122] At the end of the day, however, Budget 2016 can be evaluated as characterized by the same ambiguities already present in Wickremesinghe’s 5 November speech: strategies in line with the neo-liberal orthodoxy coexisted with an array of measures which neo-liberal ideologues would decry as «populist».

On the social front, prices of 11 essential commodities were reduced; a programme to build 100,000 houses in five years for slum dwellers and low income groups were announced; new laws to grant ownership of lands and houses to those who had occupied them for over 10 years were announced; a series of training and financial measures favouring teachers were made known. They were to be accompanied by increased investments in education and health. Moreover, the Finance Minister urged «the private sector employers to increase the monthly salary by at least Rs.2,500 per month of which Rs.1,500 per month could be given in 2015 and the balance Rs.1,000 per month in 2016» [§ 303]. In making his request, Karunanayake pointed out that the «necessary legislations will be brought in to implement this»[§ 303].

Confirming what had already been said by Wickremesinghe on 5 November, Karunanayake also officially announced that: «While the government has committed to a significant amount of funds for the development of the war affected areas, we also plan to convene a Donor Conference in 2016, to generate support from bilateral and multilateral agencies to enhance the rehabilitation of the North and the East» [§ 507]. In fact, many of the budget provisions aimed at improving the situation in the war affected areas, in the North and East of the island, were 70% of the Tamil population lived. Also, Karunanayake announced the Government’s decision «to ensuring that the issues of the internally displaced people are addressed immediately.» «In this regard, – stated the Finance Minister –  we will initiate a rapid large scale resettlement programme for the internally displaced people and provide basic needs and livelihood opportunities to the already resettled families. In this respect, we will be building 20,000 houses especially in the Districts of Mannar and Mulativu,[123] with proper sanitation facilities, access to clean water and electricity» [§ 508].

In consonance with fiscal prudency, Karunanayake announced that the time had come «to critically analyze and evaluate the expenditure needs of the line ministries and departments to rationalize unnecessary expenditure and eliminate excessive administrative overheads» [§ 65]. He also noted that the «social protection and safety network mechanism» aimed «to protect the most vulnerable in the society» was «riddled with issues of inefficiency and sub optimal effectiveness in reaching those who actually require assistance» [§ 410]. Hence the Finance Minister decision to review this scheme.[124]

A main aim of the budget was that of attracting foreign investment. Accordingly Karunanayake announced «an investor friendly Foreign Exchange Management Bill (FEMB), which would help attract foreign flows from the SAARC and the world at large» [§ 199], the removal of tax on leasing of land to foreigners and the lifting of restrictions on land ownership by foreigners in the case of selected investments. The Minister of Finance also assured that any application for foreign investment would be cleared in 50 days and investors allowed to bring money to Sri Lanka «through any bank account existing in the formal banking system» [§ 208].

At the end of the day, and differently from what claimed by some analyst, it is difficult to allege that Budget 2016 imposed «a series of austerity measures on working people while granting significant concessions for local and foreign capital».[125] Rather, the budget, reflecting the guidelines set out in the Prime Minister 5 November programmatic speech, was a complex effort aimed at bringing together measures which could encourage both domestic and international capital to invest in the Sri Lankan economy, while introducing a conspicuous set of measures in support of the poorer and intermediate strata of the population. In this perspective it does not come as a surprise that the budget deficit, which in 2015 was equal to 6%, was brought down of a modest 0.1% to 5.9% in 2016.[126]

10.4. Taking stock of the economy

During the year under review, weak global demand and domestic political change adversely affected the economic situation in the island-state. Investment faltered as investors decided to assume a «wait and see» attitude. Moreover, the Sirisena-Wickremesinghe administration cut capital spending and, as noted above, temporarily suspended some large investment projects approved by the Rajapaksa’s administration. In that situation, growth was sustained by an increase in private and government consumption spending and was led by a 5.3% expansion in the service sector, the largest one in the Lankan economy.[127]

In spite of the above listed difficulties, at the closing of the period under review, the Sri Lankan economy still managed «a respectable growth». In fact the economy expanded 2.5% on a yearly basis in Q4, namely the fourth quarter of the year, bringing full year growth to 4.8%.[128]

Of course, all economic difficulties were still there, in particular an adverse balance of payment and a ballooning debt. Accordingly, only the future will tell if the new Sri Lanka administration will be able to progress on a path of social justice and economic growth, pointed out in Prime Minister Ranil Wickremesinghe’s 5 November speech.

Narendra Modi’s 2014 election generated enormous expectations in the economic sphere. However, in 2015, on the one hand, Modi was unwilling or unable to push through any «big bang» reforms; on the other hand, jobs generation – one of Modi’s key electoral promises – proceeded at an excruciatingly slow pace. At the macroeconomic level, the Indian GDP grew by 7.3% during 2014/15, making India the fastest growing among the major economies. However, these data were the result of a new methodology, and most economists, including some politically close to the Modi government, were uncertain about its reliability. Moreover, when applied to the previous years, the new methodology unequivocally showed that the positive turn-around in the economy had happened before Modi’s government came to power. The Indian economy was also severely affected by a deepening rural crisis. Some of its causes were beyond the reach of Modi’s government, but it is a fact that its response was disappointingly inadequate.

Domestic politics was a constant source of difficulty for Modi. First, state elections in Delhi and Bihar dispelled the myth of the invincibility of the Modi – and Amit Shah – led BJP, which was soundly defeated by local outfits. Second, the government struggled to pass key legislation in Parliament, also thanks to the unexpectedly successful opposition of the Congress party. Finally, the most worrying development on the domestic front was the rise of intolerance against non Hindus, who were victims of Fascist-like, sometimes deadly, aggressions by Hindu outfits. This happened while the Prime Minister appeared basically unconcerned about the climate of growing violence and some members of his government went so far to openly justify this state of affairs.

The aim of Modi’s foreign policy was projecting India as a major power on the world stage and getting all the possible foreign help in promoting India’s economic development. To this end, India’s foreign policy was articulated along two main axis: the India-US connection and the India-China connection. In turn, the latter had two faces: engaging China and containing China. At the end of the day, the India-US connection was high on hype but low on content, among other reasons because the US business community, after its initial enthusiasm for Modi, had come to perceive him as well intentioned but unable to further liberalise the Indian economy. India’s economic engagement with China brought about the signing of several MoUs and China’s promise to invest in India. However the concrete fall-out of all this was limited. More concrete appeared the containment aspect of Modi’s China policy, which, at a more general level was expression of India’s strategic surge, aimed at reclaiming the position of great power.

1. Introduction

In 2015, India’s political, economic and even social landscape was dominated by the presence of her prime minister, Narendra Modi. In the making of political and economic strategies, Modi’s role was a proactive one, the prime minister playing the role of the undisputed star on stage. In contrast, in the case of social problems, Modi appeared conspicuous for his virtually total absence from stage. Nevertheless his absence was – for all intents and purposes – as politically significant as his urge to play the dominant role when dealing with politics and the economy. At first sight, the contrast between Modi’s unbound activism in the political and economic fields and his sloth and timidity when dealing with social problems may appear paradoxical. In reality, this apparent strangeness is the natural manifestation of Narendra Modi’s Janus-faced political personality: on the one hand, there is Narendra Modi the statesman, the Indian super-CEO, the man who purportedly intends to modernize India and make her a world power; on the other hand there is Narendra Modi the former Rashtriya Swayamsevak Sangh (RSS) pracharak, the political leader who turned a blind eye to the 2002 pogrom against the Gujarat Muslims, the Gujarat Chief Minister who presided over the marginalization and ghettoization of the local Muslim community.

During the extraordinarily successful 2014 general election campaign, the latter aspect of Modi’s personality was successfully disguised under the elegantly tailored suit of India’s super-CEO to be. Nevertheless, if the super-CEO aspect of Modi’s personality is undoubtedly a real one, the same is true, in the opinion of the authors of this chapter, with respect to the other aspect of Modi’s personality – that of the Hindu communal leader. Accordingly, in 2015, Modi’s activism, or lack of it, can be explained by his dual political and ideological personality, as a pro-business and a Hindu leader.

During 2015, both the Indian and the international press, while advancing some infrequent and timid criticism of Modi’s role as a Hindu leader, by and large continued to give a very positive assessment of his role as India’s super-CEO. However, as will be shown in the remainder of this article, even as India’s super-CEO, Modi’s performance has been much less successful than may appear at first sight.

The remainder of this article will proceed as follows: first, the economic policy implemented by the Modi’s government and its (mixed) results will be analysed; then the analysis will dwell on the domestic political developments; finally Modi’s over-dynamic and over-personalized foreign policy will be assessed.

2. Modi’s economic policy

Modi’s election generated enormous expectations in the economic sphere.[2] On the one hand, the Prime Minister was expected to put India’s economy back on a path of high growth; on the other hand, he promised to create million of new jobs for what is one of the fastest growing labour force in the world.[3] Modi’s main strategy for achieving these objectives was based on a series of economic reforms that would stimulate investments (both domestic and foreign), and on initiatives aimed at bettering the quality of India’s labour force. In this section, we will first look at Modi’s government’s key economic reforms and the first budget it presented in February 2015; we will then analyse how and to what extent some of the key economic electoral promises – the implementation of the Goods and Services Tax, the creation of jobs, and the support of farmers’ incomes – were fulfilled; finally we shall examine the data related to the growth of the economy in the year under review.

2.1. A government signalling its intention to push ahead with its reformist economic agenda…

The year 2015 started with the appointment of Arvind Panagariya, a renowned free-market economist and a professor of economics at Columbia University (New York), as the first vice-chairman, namely de facto head, of the newly established Niti Aayog, the body which replaced the Planning Commission in 2014.[4] Panagariya’s appointment was seen by many as a concrete sign that Modi intended to push for a programme of rapid economic reforms.

Indeed, between the end of December 2014 and the first week of January 2015, the government promulgated several ordinances on economic matters. This was a message to both investors and the opposition that the government was ready to bypass the Parliament in order to push ahead with its reform programme. In fact, during the second part of 2014, the government’s attempt to pass its economic reform legislation in the Rajya Sabha had been stalled by its lack of a majority in the Upper House.

The most significant ordinances were – listed in chronological order – the Coal Mines (Special provisions) second ordinance; the Insurance Laws (Amendment) ordinance; the Land Acquisition ordinance; [5] and the Mines and Minerals ordinance.

The Coal Mines (Special provisions) second ordinance,[6] promulgated on 26 December 2014, aimed at clearing the logjam created by an order of the Supreme Court, in September 2014, which had cancelled hundreds of coal-mining licences that had been allocated illegally.[7] The ordinance introduced a more transparent procedure for the allocation of coal blocks, which aimed at more strictly regulating what had become a major source of corruption.[8] The ordinance was also a first step towards liberalising the coal sector.[9] By allocating mines to the state governments for commercial mining, the ordinance put an end to the monopoly of the centre in the sector.

The Insurance Laws (Amendment) ordinance, promulgated on 26 December 2014, hiked the Foreign Direct Investment (FDI) limit in the insurance sector from 26 to 49%.[10]

The Land Ordinance emended the Land Acquisition Act of 2013 – the last important piece of legislation enacted by the UPA2 government – by listing five new categories of projects for which land expropriation would be facilitated. In fact, for these projects – related to infrastructure, defence, and industrial corridors – prior consent from affected families and social impact assessment (SIA) would not be required.[11]

The Mines and Minerals ordinance, promulgated on 12 January 2015, emended the 1957 Mines and Minerals Act. It aimed at removing discretion when granting mineral concessions, by making it compulsory to allot them through public auctions.[12]

All the above ordinances were turned into legislation by the Parliament during the Budget session, with one conspicuous exception. In fact, the Land Acquisition ordinance became the object of a major political clash between the majority and the opposition. Finally – as detailed in the section on domestic policies – the government gave up the attempt to turn it into an act in August 2015, when it decided to let the ordinance lapse and accepted the requests of numerous state governments that were seeking to pass their own land laws.[13]

2.2. … but failing to convincingly do so in the budget

In spite of the promise of a rapid implementation of key economic reforms, the 2015-16 budget – as usual presented on the last day of February – did not contain any «big bang» reforms. [14] Rather, the government chose to follow in the footsteps of its predecessor, continuing with a «gradualist» approach.[15]

One of Modi’s top priorities in the economic sphere was to increase capital expenditure for infrastructures. In order to do this, however, he had to find the resources without giving the impression to foreign and domestic investors that he was reversing the traditionally rather conservative fiscal policy of the Indian government.

Arun Jaitley, the Finance Minister, found the resources mainly from three sources. First, the government chose to relax its short-term fiscal deficit reduction targets, without changing the medium-term ones. This provided some (short-term) fiscal space. Second, expenditure on subsidies was cut significantly, but this reduction was entirely due to the huge fall in global crude and commodity prices. Third, the government planned to raise Rs. 69,500 crore [Rs. 695 billion] through disinvestment (i.e. the privatisation of state-owned enterprises). The latter source of resources, however, remained largely on paper, since, as of October 2015, the government had been able to raise just Rs. 12,600 crore [Rs. 126 billion].[16] Moreover, out of this sum, Rs. 9,000 crore [Rs. 90 billion] came from the selling of 90% of India Oil Corporation to another state-owned enterprise, Life Insurance Corporation of India.[17] In addition, in mid November 2015, the government gave its nod to the sale of 10% of Coal India Ltd, which was supposed to fetch the government about Rs. 21,000 crore [Rs. 210 billion].[18] In any case, the inability of Modi’s government, despite its huge majority in Parliament, to significantly disinvest its shares of public enterprises shows how politically sensitive this issue remains.

Overall, Jaitley was not able to mobilise relevant resources for infrastructure investments. The budget for capital expenditure was raised to 1.7% of the GDP (up from 1.5% in 2014/15), which was about the same as in 2012-13 and 2013-14 when «nobody made a song and a dance about it».[19]

Jaitley’s fiscal space was also constrained by the fact that the government, in order to fulfil its promise of fostering a more business-friendly environment, decided to cut the corporate tax rate by as much as 5 percentage points and not to implement the much hated General Anti-Avoidance Rule (GAAR)[20] for another two years.

Another indication of how constrained Jaitley’s fiscal space was can be seen in the very limited increase in military expenses. These were brought to Rs. 2,46,727 crore, a rise of 6.9% compared to the sum allocated in Jaitley’s first budget.[21]

Furthermore, the government, wishing to please the urban middle classes, which had so much supported Modi in the 2014 general elections,[22] introduced a number of incentives for retirement investments, health care insurance, and financial savings and abolished the wealth tax. On the other hand, the government increased by 2% the surcharge on the super rich and marginally raised indirect taxation. Finally, what is usually called ‘revenue foregone’ (made up of tax concessions and the relaxation of custom duties and excise) grew slightly to Rs. 5.89 lakh crore, the largest share being constituted by exemptions for the diamond and gold industries. Overall, the tax-to-GDP ratio (one of the lowest in the world)[23] remained unchanged at 10.3%.

The big story of the 2015/16 Budget, however, was the rather radical restructuring of fiscal centre-state relations. Shortly before the presentation of the budget, the government accepted the recommendations of the 14th Finance Commission, which had proposed raising the states’ share of central government revenues from 32 to 42%, which increased the receipts of the states by Rs. 1.41 lakh crore [Rs. 1410 billion]. However, this was matched by a reduction of Rs. 1.34 lakh crore [Rs. 1340 billion] of central government funding to state plans.[24]

This restructuring of fiscal centre-state relations has several implications. Firstly, what is significant is not so much the (limited) increase in the resources transferred to the state governments, but the fact that the states were left free to spend these additional resources as they preferred. However, it should be noted that in some states (Telangana, Uttarakhand, Karnataka and Maharashtra) the availability of resources actually decreased between 3 and 20% when compared with the previous year’s revised estimates.[25]

The bulk of the reduction of the centre’s assistance to the states’ plans came from the reduction in the funding of Centrally Sponsored Schemes (CSS).[26] This decision was bound to have huge implications, in particular for the social sector, since most CSSs are welfare programmes.

The 2015-16 Budget divided the existing CSSs in three categories. First, some schemes were discontinued, among which were the Backward Regions Grant Funds, a scheme for strengthening the panchayats, a scheme for the modernisation of police forces, and the National e-Governance Plan. Second, 31 schemes, including the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the Sarva Shiksha Abhiyaan, and the Mid Day Meal Scheme continued to be fully funded by the central government. Third, for 24 schemes – among which the Swachh Bharat Abhiyaan, the National Health Mission, the Rashtriya Madhyamik Shiksha Abhiyaan, the Integrated Child Development Scheme (ICDS), the National AIDS and STD Control Programme, and the Rural Housing scheme – the government severely reduced its budgetary commitments, leaving to the states the decisions regarding whether to keep the original budgetary allocations by using the newly allocated additional resources.[27]

The cut in funding for these social sector programmes was particularly alarming for the schemes belonging to the third category. For example, the budget for the ICDS – India’s only programme to tackle child malnutrition[28] – was cut by as much as 44%. The Minister for Women and Child Development, Maneka Gandhi, in a rare expression of dissent from her own government’s policy, said that with the reduced budgetary allocation there was barely enough money to pay for the wages of the millions of health workers in charge of running the programme.[29] Another example was the health sector, which saw its budget reduced not only as a proportion of GDP and in real terms, but even in monetary terms.[30] This is likely to have disastrous consequences in the future, as recently argued by a group of scholars in the prestigious medical journal The Lancet.[31] In fact, India already had one of the lowest health budgets (as a proportion of GDP) in the entire world.[32]

Obviously, the question is to what extent the states will match the central government’s cuts with their own resources. This will depend not only on state-specific political considerations, but also on the technical capacity of the states to manage an unexpected «29 billion dollar bonanza».[33] It is rather ironic that the central government, in an attempt to devolve more powers to the states, caught them completely unprepared to deal with the changed fiscal situation. Not only does it appear that the states were caught unprepared to cope with the impending changes in the funding for the social sector programmes, but the timing of the announcement of these changes (in the budget presentation speech of the Finance Minister on 28 February 2014) was particularly ill-timed. In fact, many state governments had already passed their 2015-16 budgets, whereas the central ministries were expected to approve the CSSs annual plan and budget for states within a few weeks. It was a situation bound to increase the states’ difficulties in managing and correctly spending the central funds allocated for the CSSs. It is also worth stressing that, even in normal times, the states had tackled with difficulty the task of managing CSSs central funding, often leaving a conspicuous part of it unspent.[34]

One final implication of the changed fiscal relations between the centre and the states could be a growing gap between the richest (and administratively more capable) and the poorest state. However, it is certainly a good idea, on principle, to leave the state governments with more leeway in spending centre-allocated resources, as each state has a better understanding of its own local conditions and needs. In fact, a state with notoriously low administrative capacity, Bihar, has been able, in recent years, to dramatically improve its implementation capacity of state-designed schemes.[35]

2.3. The unsuccessful attempt to push through the Goods and Service Tax bill

Another important piece of legislation that encountered substantial difficulties was the Goods and Service Tax (GST) bill. The reform of indirect taxation is a long-time demand of India’s business groups. In fact, each state has its own regulations, which makes it difficult to move goods and services across state borders, inflates costs and causes severe delays. The 2015 GST bill aimed at replacing this chaotic structure with a national goods and services tax, getting rid, in the process, of at least 14 federal and state levies, which often resulted in double taxation, pushed up the average burden for all goods at about 30% of the cost, going, in a few cases, as high as 50%. Moreover, the necessity to collect these taxes caused considerable delays in the movement of goods, as the trucks transporting them had to spend nearly a quarter of their road time going through border checks and being subjected to other inspections.[36]

In spite of the evident drawbacks of the prevailing situation, the bill faced strong opposition both by the states and the Congress party. Indeed, the latter went out of its way to oppose the bill, in spite of the fact that it had supported the imposition of GST legislation in the past. But the most significant source of opposition came from the state governments, which feared loosing part of their revenues. This was a main stumbling block, as the support of the states was crucial not only for passing the bill in the Upper House, but also because, in order to become operational, the GST law had to be ratified by at least half of them.

It was precisely to assuage the opposition from the states that the government agreed to a 1% additional new toll by states for goods crossing the internal borders, even in cases when the same company was shipping its own products from one of its plants to another. Moreover, the GTS bill did not extend to real estate, leaving companies still subjected to state taxes on plants and properties, possibly including machinery. Again this was not an oversight, but the result of the fact that these kinds of taxes were one of the major financial sources for the states.[37] This being the situation, it does not come as a surprise that, once the GST bill was introduced in Parliament, India’s business community reacted with considerable disappointment. In fact, it pointed out that the bill could result in an increase in taxation rather than in its diminution, creating a situation in which, according to an anonymous senior executive at a major steelmaker, «it would be easier for businessmen to import rather than manufacture goods in the country».[38]

The business community opposition, however, was not a compact one. In fact, a report by the Confederation of Indian Industry (CII) argued that, if implemented well, the proposed legislation would significantly lower logistic costs.[39] In any case, the government failed to implement the bill on 1 April 2016, as promised.[40]

Overall, at the end of the period under review it appeared that the impression (and hope) that Modi would push through a set of epochal economic reforms was inaccurate. Both institutional constraints (in particular the BJP’s lack of control of the Upper House) and political considerations (in particular the BJP’s fear of being depicted as anti-farmer and anti-poor) resulted in the continuation of India’s long-established gradualist approach to economic reform. Modi himself has indeed acknowledged the path of reforms is a «marathon» rather than a «sprint».[41]

2.4. Attracting additional foreign direct investments (FDI)

A main preoccupation moulding the economic policies of the Modi government has been attracting FDI, particularly through its «Make in India» campaign. Although what the Make in India campaign entails in terms of concrete policy has never been totally clear,[42] it appears that, on the one hand, the government instructed its officials to expedite business activity-related processes and procedures, while, on the other hand, a few small but important administrative changes made it easier to start and conduct business. This strategy was not totally devoid of results; in fact in the latest World Bank’s Doing Business Report, India moved up twelve positions in the «ease of doing business» ranking.[43] This was mainly due to easier and faster procedures for obtaining an electricity connection and starting a new business.[44] Although there was still a long way to go – India was ranked 130th out of 189 countries – the direction of change was certainly positive and showed that Modi’s battle against red tape was starting to pay off. It is also significant that the conclusions of the World Bank’s report, based on data collected in Delhi and Mumbai, were strengthened by the government’s own data. These suggested that states such as Gujarat, Rajasthan, Chhattisgarh, Madhya Pradesh, and Odisha had recently made important steps forward in reducing unnecessary business regulations.[45] It is thus possible that the all-India picture might be better than the World Bank report suggested. It is also worth stressing that the 2015 Doing Business report is based on data collected up to June 2015; accordingly, it does not take into account a number of changes introduced after that date. The post-June 2015 data, which will be shown in the 2016 report, are likely to positively impact on India’s ranking.

Once all this is said, it is necessary to stress that data on investment flows do not offer a clear picture of the impact of these measurers. On the one hand, FDI have indeed been increasing. In September, The Financial Times reported that India was then ahead of both China and the United States as the most favoured destination for FDI.[46] On the other hand, Gross Fixed Capital Formation (GFCF) data do not indicate any dramatic surge of investment levels. Similarly, data from the Department of Industrial Policy and Promotion do not show any significant revival in investment trends.[47] On a more positive note, data show that the lion’s share of new investments are in the manufacturing sector, whose growth was one of the key objectives of the «Make in India» campaign.[48] When all the above is taken into account, it is necessary to point out that, after a few quarters of significant progress in the unclogging of stalled projects, there has been an inversion of the trend. At the end of the quarter ending in September 2015, the stock of stalled projects amounted to Rs. 9.9 trillion, up from Rs. 8.8 trillion of the previous quarter.[49]

2.5. Creating jobs at an excruciatingly slow pace

Apart from the pledge to reboot the economy through a sustained programme of economic reforms, the other key promise of Modi’s 2014 electoral campaign was that of creating jobs. During his prime ministership, Modi has attempted to fulfil this electoral pledge by pursuing two strategies: the already quoted «Make in India» Campaign and an ambitious programme for skills development.

As noted above, Modi’s second strategy to boost job creation was the introduction of an ambitious new skill-development programme, aiming to render no less than 402 million people skilled between 2015 and 2022.[54] This is potentially an extremely important policy initiative, as, paradoxically enough in a context of prolonged jobless growth,[55] India’s entrepreneurs struggle to find qualified workers.[56] This comes as no surprise if one bears in mind that only 4% of India’s workforce has received any formal training.[57]

The previous UPA government had launched its own National Skill Policy in 2009, but very little was achieved. At the time of writing it is not possible to say in what respects the new policy differs from the old one. What seems clear is that officials in the newly established Ministry of Skill Development and Entrepreneurship hardly appear confident about the success of the new initiative.[58]

2.6. The continuing rural crisis

2.6.1. The long term and contingent causes of the rural crisis

The poverty of India’s primary sector has been a major economic problem since the colonial period. After independence the situation has improved, but only up to a point. Anyway, the economic reforms launched in 1991 ended a period of relatively high public investments in the rural sector, which had started with the launch of the Green Revolution in the mid-1960s. Not very surprisingly, but against the expectations of India’s policy makers, private investments, also because of a series of legal norms that make agriculture a very risky business,[59] did not compensate for the decreasing intervention of the state in the primary sector. During the UPA 1 and 2 governments, a number of anti-poverty policies were introduced, the most significant among them being the MGNREGA. This, together with robust economic growth throughout the period, had a significantly positive effect on the rural areas in general, and on poverty reduction in particular.[60] However, the most recent data indicate that the rate of growth of farm income declined in 2015 and that non-farm income in rural areas «remained flat at best».[61]

As a result of the above listed long-term problems, Indian agriculture in the period under review presented a dismal enough picture. Data released by the National Sample Survey Organisation (NSSO) at the end of 2015 indicated that nearly 70% of farmers subsisted on farm holdings which were economically unviable, being less than a hectare in size. Not surprisingly, over one-fifth of farm households did not report farming as the primary source of their income, but rather salaried employment. An additional 44% had to supplement their limited income by seeking work under the MGNREGA.[62] Finally, according to government data for the year 2014, 52% of India’s agricultural households were indebted.[63]

In the period under review, the long-term problems afflicting Indian agriculture were compounded by a series of contingent but momentous events. These events were of two main kinds: natural and related to the global economic situation.

In 2014, El Niño – the climatic phenomenon caused by the exceptional warming of the Pacific Ocean, which causes droughts in large swathes of the globe and excessive rains and floods in others – started to manifest itself once again.[66] As a consequence, in India, rains were 12% below normal, which caused a 4.7% diminution in grain production in the twelve months ending in June 2015. This was followed by a worsening of the climatic situation, characterised by «unseasonal rains that damaged India’s winter harvest in March and April»,[67] followed by monsoon rains 14% below par in June-September 2015.[68] As a consequence, according to the Indian Meteorological Department, already in October 2015 nearly half of the Indian districts – a total of 320 – had been afflicted by a deficiency in rainfall of at least 20%.[69] Considering that roughly half of India’s cultivated land lack irrigation, this could have disastrous consequences.[70] In fact, an in-depth drought impact assessment conducted during the Summer months of 2015 by the Swaraj Abhiyan in seven districts in southern Uttar Pradesh – one of the drought worst hit states – suggested that «the drought may well be a famine».[71]

An additional natural event that adversely affected the rural production of perhaps the best irrigated state in India, namely Punjab, was the whitefly infestation of cotton. This happened in spite of the fact that the local cotton, the Bt type, is supposedly pest-resistant. In November 2015, according to a Press Trust of India report, Punjab’s cotton output was likely to shrink by 40%.[72]

The climatic difficulties were coupled with difficulties related to the global economy, which resulted in an 11% fall in India’s farm exports in the October 2014–March 2015 crop season.[73] Moreover, international factors adversely affected the production of a number of Indian crops. In particular, cotton and non-basmati rice exports were affected by China’s decision to put an end to cotton stockpiling and by Thailand’s decision to diminish its rice stocks, respectively.

Indian sugar was made uncompetitive in the international market by the decline in world sugar prices, caused by the devaluation of the real, the currency of Brazil, the world’s main sugar producer; Indian sugar, soy, barley and basmati, formerly bought at a premium by an Iran hemmed in by world sanctions, after the easing of such sanctions started to be substituted by less expensive goods produced by other countries; the fall in global crude oil prices, on the one side, had an adverse effect on the competitiveness of Indian grains and oilseeds used for biofuels and, on the other side, by cutting down freight costs, made South America-produced soy and corn competitive in the Indian market. Last but not least, the strength of the rupee during the year under review put Indian exports at a disadvantage and favoured imports.[74]

2.6.2. The Modi government’s slow response to the rural crisis

In May 2014, the BJP manifesto had promised that farmers would earn a 50% profit over their total input costs.[75] Although often repeated by Modi during the electoral campaign, once the new government was in place, this particular electoral promise seems to have rapidly been forgotten. This, it seems, happened as a consequence of the advice of two influential neoliberal economists: Dr. Arvind Subramanian (Chief Economic Advisor (CEA) to the Government of India since October 2014) and Dr. Arvind Panagariya (as already mentioned, the vice-chairman of the Niti Aayog).[76] In November 2014, both Subramanian and Panagariya warned the Indian Government that higher agricultural procurement prices could trigger a surge in inflation.[77] As a consequence, the minimum government support price for staples – in particular wheat and rice – was cut, badly affecting the level of rural incomes.[78]

In the analysis of The Economist, although the above decision «was the right move, and has since helped bring down inflation», it, nevertheless, «should have come with more transitional support for farmers hurt by the adjustment».[79] On top of that, after the decision was taken, soft commodities prices[80] crashed, making the situation desperate for Indian farmers.[81] The most glaring indication of the increasing desperation of the Indian farmers was the sudden raise in farmers committing suicide, which has been reported with increasing frequency by the domestic press.[82]

In this situation, even some economists close to the government started to express their concern. In the words of agricultural economist and advisor to the Niti Aayog on agriculture, Dr. Ashok Gulati, the situation was «so grim» that, without «a sustained incentive structure for the farmers, India could slip back to the era of food shortages experienced in the 1960s».[83] For his part, D.H. Pai Panandiker, president of the Mumbai-based RPG Foundation, which houses a macroeconomic policy think-tank, expressed the fear that, considering the challenging agricultural situation, farm output in the 2015-16 fiscal year could shrink «by as much as 4 per cent, which would be the first [agricultural output] contraction since 2002/03».[84]

Strangely enough, the response of the Modi government to this situation was slow and not commensurate with the increasing gravity of the situation. The consequences of this lack of attention was that, during the year under review, no well thought-out and comprehensive strategy aimed at remedying the many ills affecting Indian agriculture was ever conceived, and much less implemented. What was to be implemented were a set of piecemeal ad hoc decisions, which could not but be judged, particularly by those affected by the deepening agrarian crisis, except as examples of «too little, too late» stopgap remedies.

The most important of these ad hoc remedies was the decision to moderately increase the minimum support prices (MSP) for grains and pulses. In addition, the central government raised the compensation for crop damage and set more generous rules for claiming it.[85] Moreover it asked state governments to draw from the more than US$ 1 billion allotted to the State Disaster Response Fund, for which the centre provides 75% of the funds, and raised compensation by 50% for farmers suffering crop losses. At the same time, quality requirements for wheat purchases by state agencies were lowered, import taxes on rubber and sugar were lowered, and raw sugar exports promoted through an incentive.[86]

However, in practical terms, these apparently generous provisos were gravely insufficient. Even when compensation reached the farmers – which depended on a set of circumstances, including the decision of the particular states to declare a situation of drought and the farmers being the owners of the damaged land and being indebted with a bank – they covered less – sometime considerably less – than a fifth of the damage.[87]

As far as the suicides of farmers were concerned, compensations were provided to the families. But the rules for allowing these compensations varied from state to state, were more or less restrictive[88] and, once again, insufficient to provide for the bereft families.[89]

More generally, what was striking in the government’s response was not only – as noted above – the complete lack of a general well-thought out plan to cope with the mounting rural distress, but the lack of willingness to fully make use of the instruments already available. In the words of Harsh Mander, a former district collector and present human rights activist, who reported his impression after visiting the rural district of Banda (U.P.): «The response of state administration to looming drought is disgracefully dismal and listless, lacking entirely in both urgency and compassion. People showed us empty job cards; public works under the MGNREGA, the most effective instrument to prevent distress migration, were nowhere to be found. Wages from earlier work had not been paid for over a year. Even more gravely, neither the Central nor the state government is serious about rolling out the National Food Security Act that should lawfully have commenced a year and a quarter ago. It would have ensured the availability of half of each household’s monthly cereal requirements almost for free for more than 80 per cent of households».[90]

When all this has been noted, it is worth stressing that, as noted by Harsh Mander himself, the callousness of the central and most state governments as far as the plight of the rural population was concerned was accompanied by – and possibly was a function of – the indifference of the educated public with respect to this problem. In fact, the abundance of quotations concerning the rural population’s plight present in this chapter should not conceal the fact that, as a rule, the attention given by the Indian media to this issue has been minimal and erratic.[91] As noted once again by Harsh Mander: «Farmers and landless workers in 11 states are crashed by drought, often for three years in a row, but if you scan newspapers and television screens, debate in Parliament and meetings in state secretariats, it would appear that this is a figment of some imagination». «This, indeed, – concluded Mander – is what some senior journalists and officials said to me, or implied – that we are inventing a story of drought hunger».[92]

2.7. Macroeconomic Performance

2.7.1. A positive U-turn in the GDP rate of growth?

In spite of the mixed success of the economic policies listed above, during the year under review the macroeconomic indexes appeared to experience an impressive improvement. Consumer price inflation, which had been a major problem in the UPA-2 years, was put under control, as shown in chart 1 and table 1. This was mainly due to the already mentioned steep decline of the oil price at the global level.[93] As a consequence, the Reserve Bank of India (RBI) significantly cut interest rates, a move that was welcomed by the business community.[94]

Chart 1 – Monthly Inflation in India 2015, CPI (Consumer Price Index) The average inflation of India in 2015 = 5.88%[95]

Table 1 – 2015 inflation India (CPI)

Inflation rates in the table are presented both on a monthly basis (compared to the month before) as well as on a yearly basis (compared to the same month the year before).[96]

As far as the real GDP (Gross Domestic Product) is concerned, official government data unveiled on 9 February 2015 showed that India had become the fastest growing country among the major economies, overcoming China, [97] a success that was much celebrated by the Indian media. However, the Indian media rarely pointed out that, a the end of the day, China’s economy was still four times the size of India’s and that, as noted by Ashish Kumar, director general of the Indian Central Statistics Office, if India continued to grow at the same speed as in 2014-15 and China continued to perform at the lower level of the last few years, «then still it will take 20 to 30 years [for India] to catch up [with China]».[98]

Once this has been pointed out, it remains the fact that, according to the official data, the rate of growth of India’s real GDP (Gross Domestic Product) was equal to 7.3% in the fiscal year 2014-15 and to 7.25% for the calendar year 2015.[99] The quarterly growth from October 2014 to December 2015 is given in Table 2.

Table 2 – Growth of the real gross domestic product (GDP) from 3rd quarter 2014 to 3rd quarter 2015 (compared to the same quarter of the previous year)[100]

At first sight the growth in the six quarters ending with October-December 2015 represents a radical U-turn when compared to the sluggish rate of growth of the UPA-2 period (given in Table 3).

Table 3  – The GDP rate of growth during the UPA-2 government according to the old methodology

However, the rosy picture given by the above data needs some qualifications. The first is that the new figures were the result of a new methodology plus a change in the base year from 2004-05 to 2011-12.[101]

Here, the first problem is that most economists – including RBI governor Raghuram Rajan and the Narendra Modi government’s new CEA Arvind Subramanian – were clearly uncertain about the reliability of the «incredible (in both senses of the word) new numbers».[102] Accordingly, Raghuram Rajan appeared unwilling «to take a strong view» based on the updated data. [103] For his part, Arvind Subramanian pointed out that the new figures were «mystifying because these numbers, especially the acceleration in 2013-14 [when, according to the new methodology, the GDP rate of growth was 6.9%, instead of 5%, as shown by the old methodology], are at odds with other features of the macroeconomy».[104] As explained by Subramanian: «The year 2013-14 was a crisis year – capital flowed out, interest rates were tightened and there was consolidation – and it is difficult to understand how an economy’s growth could be so high and accelerate so much under such circumstances».[105]

A second (political) problem with the new methodology, implicitly highlighted in the above quoted CEA’s remarks, was that, when applied to the rate of growth during the UPA-2 government years, it unequivocally showed that the positive turn-around in the economy had happened before the Modi’s government came to power, as shown in Table 4.

Table 4 – Growth of the real gross domestic product (GDP) in India from 2010 to 2015[106]

At the end of the day, the credit for the positive U-turn of the Indian economy must either go to the Central Statistical Organization, which revised the national statistics in January 2015,[107] or to the policies implemented during the last phase of the UPA 2 government. Most probably – as noted, among others, by the authors of this chapter – the economic recovery had indeed started during 2014, [108] but the extent of this recovery has been amplified by the new GDP methodology.

2.7.2. The economy beyond the GDP

Should the official GDP data be taken at face value, the conclusion would be that the economic situation could not but be considered a quite positive one. This being the situation, one would expect a quite optimistic outlook on the part of the general public and, particularly, the business community. This, however, was not the case. As noted by Harvard educated Indian economist c: «Whenever and wherever business people meet, the conversation invariably veers to flattening sales and falling profits despite the government crowing that the real GDP is growing at 7.4%».[109] This negative perception was shared by credit rating agency Standard & Poor’s, which refused to change India’s credit rating from just above «junk».[110]

According to Guruswamy, the discrepancy between, on the one side, the image of the economy conveyed by the official data and, on the other, the perception on the part of business people and credit rating agencies such as Standard & Poor’s can be explained by the nature of the macroeconomic data employed by the Indian government. According to Guruswamy, even if the official data were recognized as correct, a major problem in accepting them as an accurate image of India’s economic reality was related to the discrepancy between the real GDP rate of growth (taken into account in the official data) and the nominal GDP rate of growth.[111] It is on the basis of the latter that most economic decisions are taken both by businessmen and individuals and families.[112]

Here the problem was that, in the 2015 calendar year, the Wholesale Price Index (WPI) declined below zero for the whole period (see charts 2 & 3), a trend which had begun in November of 2014. More precisely, the WPI declined by 0.90% year-on-year in January of 2016, as compared to a 0.73% drop in December.[113] In other words, beginning in November 2014, the Indian economy entered a period of deflation.[114]

Chart 2 –India’s Wholesale Price Index 2011-15[115]

Chart 3 – India’s Wholesale Price Index January 2015- January 2016[116]

All the above means that beginning in November 2014 the nominal rate of growth was well below the real rate of growth. Indeed, according to the government’s mid-year review, made public in December 2015, the nominal GDP growth had sharply declined from 13.5% in 2014-15 to only 7.4% in the first two quarters 2015-16. As noted by well-known senior journalist and economy expert M. K. Venu: «This is almost like suggesting that the income growth rate across the board is nearly halved!»[117] The government itself acknowledged that: «The sharp and continuing decline in nominal GDP growth, as well as the fact that the economy is powered only by private consumption and public investment – is a cause for concern».[118]

This «dramatic slowdown in nominal GDP growth» witnessed, as a consequence, «the extremely low growth in corporate earnings».[119] Hence the business community’s despondency, noted above. The nominal GDP slowdown could not but adversely affect future investment decisions on the part of Indian companies. This, in turn, did affect employment and salary growth in the organized sector, which, in the year under review, «experienced the worst retrenchment, the scale of which has not been seen in the past two decades».[120] All this catastrophically dovetailed with the deepening agricultural crisis. The all too real crises in both the secondary and primary sectors could not but impinge on the unorganised sector, further depressing the internal demand. On top of all this, exports experienced «an unprecedented decline» in 2015.[121]

Summing up, once one goes beyond the over-optimistic official macroeconomic data, the situation of the Indian economy in 2015 looked far from satisfactory and, certainly, very distant from the rosy hopes engendered by Narendra Modi’s electoral promises.

3. Domestic Politics

Even as far as domestic politics are concerned, during 2015 not all went well for Narendra Modi. The Prime Minister’s problems originated from three interrelated factors. First, the BJP’s defeat in two important polls (Delhi and Bihar) put into question the Prime Minister’s ability to win elections. Second, the Congress Party, which practically all analysts considered to be in ​its ​death ​throes, quite unexpectedly put up a spirited and sometimes successful fight against the Modi government; finally the Prime Minister struggled uneasily to reconcile his institutional role as Prime Minister with the demands and actions of a number of Hindu extremist groups.

3.1. The Delhi and Bihar Elections

The state elections held in 2015 (and the local bodies election in Gujarat and Uttar Pradesh) reveal a common pattern. This is that, compared to 2014, the Modi’s wave had lost at least some of its steam and the Prime Minister was not able to win elections on his own any longer.

On 10th February 2015, the results of the elections in Delhi were announced. It was a political earthquake.[122] The Aam Aadmi Party (AAP – «Party of the common man») led by Arvind Kejriwal obtained the largest majority a party has ever captured since 1993, when the Delhi legislative Assembly was reintroduced.[123] Table 5 shows the number of seats and the share of the vote obtained by the AAP, the BJP, and the Congress.

Table 5

Delhi Election results and comparison with the 2013 election[124]

Apart from the smashing victory conquered by the AAP, the other most noteworthy development to be noted is the disastrous performance of the Congress. The party (which had ruled Delhi for three consecutive terms from 1998 to 2013) failed to conquer a single seat and saw its vote share plummet from 40.31% in 2008 to 9.7% in 2015.[125]

Another point worth stressing is that the poor performance of the BJP was not so much due to any significant decline in the popular vote; rather, it was the consequence of India’s first-past-the-post electoral system. It had worked well for the BJP in the 2014 Lok Sabha elections, when the party obtained 51.93% of the seats with 31.3% of the votes.[126] However, the extraordinary electoral performance of the AAP in 2015 translated into an even more extraordinary vote-to-seat conversion rate.[127]

The failure of the BJP to replicate its impressive performance in Delhi during the 2014 Lok Sabha election was mainly due to the poor choice of its chief ministerial candidate.[128] In January 2015 – less than a month before the polls – the BJP started presenting Kiran Bedi (a well-known former Indian Police Service officer, who had been an active militant in the Anna Hazare anti-corruption movement) [129] as its chief minister candidate.[130] The choice surprised many, especially the local BJP leaders. Many of them resented the fact that an outsider had been «parachuted» in by the national leadership onto the Delhi political battlefield, and were upset because Bedi, when associated with Anna Hazare’s anti-corruption movement in 2011, had been a sharp critic of the BJP. [131] The very disappointing results obviously upset greatly the local BJP leaders, who saw the defeat as the direct consequence of the «politics of arrogance»[132] of Modi and his principal lieutenant, Amit Shah, who had managed the elections from the top, without involving the local party branch.

Bedi’s choice as the BJP’s chief ministerial candidate was also a demonstration of weakness. The party chose a candidate that had a lot in common with her main rival, Arvind Kejriwal: both were known for their honesty and integrity, both had been associated with the Anna Hazare anti-corruption movement, and both had entered politics comparatively late in life. In this way, the BJP had endorsed the AAP’s argument that what Delhi needed was a new type of politician, and, in so doing, had strengthened Kejriwal’s position, as the latter appeared much more credible than Bedi in the role of a «new politician».

The extraordinary performance of the AAP was in many ways unexpected. The AAP had formed an Arvind Kejriwal-headed minority government in Delhi, with the support of the Congress party, in 2013. However, after only 49 days, Kejriwal had stepped down. Many thought this was a fatal error for the newly born party. The very disappointing performance of the AAP at the Lok Sabha elections in 2014 (when it failed to conquer a single seat in the capital)[133] seemed to confirm this view.[134]

Kejriwal, however, did something completely unexpected at that point: he apologised to the citizens of Delhi and to its own party for his mistakes[135] and started a vigorous and carefully planned electoral campaign based on a number of innovative initiatives such as the «Delhi Dialogues», flash mobs, and clever and intensive usage of social media.[136]

Data collected by the Centre for the Study of Developing Society (CSDS) show that, on the one hand, the AAP’s message resonated with a very broad section of the electorate, cutting to a large extent across caste, class and religious lines.[137] However, CSDS data also show that the AAP was the preferred party of the more marginalised communities and religious minorities:[138] 77% of the Muslims, who had overwhelmingly voted for the Congress in the past, 57% of the Sikhs, and 66% of the poor voted for Kejriwal.[139] It is significant though that as many as 47% of the upper classes chose the AAP (as against 43% who preferred the BJP).[140] Overall, the CDSD post-poll survey shows that corruption was the second most important issue for Delhi’s voters (just after «price rise») and that Kejriwal was considered by far the most credible chief minister candidate up to tackle the problem.[141]

On the other hand, one should be cautious to interpret the results in Delhi as a sign of the declining popularity of the Prime Minister. The CDSD survey shows that 65.5% of the electorate was «fully satisfied» or «somewhat satisfied» with Modi’s government.[142] But it is nevertheless clear that the BJP cannot win state elections just hoping that the «Modi wave» will last forever. The message of the Delhi electorate was precisely this: the BJP cannot «parachute» candidates from above, especially if other parties have strong and locally popular candidates. The result of the Delhi elections was also a shot in the arm for Modi’s internal opposition,[143] which had been resentful at the high degree of centralisation in the management of party affairs.

A similar lesson can be drawn from the results in Bihar. The state went to the polls in October-November 2015. Table 6 offers a synthetic view of the results.

 Table 6

Bihar elections results and comparison with the 2010 elections[144]

It is difficult to compare the 2015 results in Bihar with the previous state election in 2010 because of the complete change in the political landscape in the intervening years. Two major developments were significant. First, when Narendra Modi was chosen in 2013 as the NDA’s Prime Ministerial candidate, the chief minister of Bihar and leader of the Janata Dal (United) or JD(U), Nitish Kumar, decided to break the 17-year old alliance with the BJP.[145] Second, at the 2014 Lok Sabha elections in Bihar the spectacular performance of the BJP – which gained 22 out of 40 seats – and the catastrophic results for the JD(U) – which crashed down from 12 to 2 seats – produced two main consequences among the political forces which were on the losing side. The first was Nitish Kumar’s resignation as Chief Minister in May 2014.[146] The second was that the electoral results alarmed not only the JD(U), but also the other main regional party of Bihar, the Rashtriya Janata Dal (RJD), led by Lalu Prasad Yadav. Although the two parties have been at daggers drawn since the JD(U)’s creation on 30 October 2003, the 2014 electoral results were worrying enough for both parties to convince them to bury the hatchet and form (together with the locally almost irrelevant Congress party) a «Grand Alliance».[147]

These two important political developments make it very difficult to assess the changes in the parties’ electoral performance. For example, the declining vote share of the JD(U) was almost entirely due to the fact that the party contested a significantly lower number of seats because of the seat-sharing agreement with the RJD.[148] Similarly, the BJP’s vote share increased, but, again, this was mostly due to the increased number of seats it contested.

The BJP’s original plan was to confront the Bihar’s voters with a choice between development (Modi) and caste politics (Nitish and Lalu). Accordingly, the Prime Minister was to be the focal point of the BJP’s campaign, so much so that the party did not even name a potential chief minister candidate.

However, after the first phase of polling, BJP’s leaders started feeling that the party’s prospects were not as good as hoped. This had a significant impact on the BJP’s campaign in two ways. First, the duo Narendra Modi-Amit Shah – who in the first phase of the campaign had dominated the party’s billboards and advertisements throughout the state – disappeared, to be replaced by local party leaders.[149] This was an attempt to shelter the Prime Minister in case of defeat. Second, the BJP decided to shift the emphasis of its campaign from development to caste and religious polarisation.[150]

A few examples are sufficient to highlight this shift. At a public rally on 25th October, Modi alleged the existence of a secret plan of the Grand Alliance to take away 5% of the existing reservation quota – allotted to Dalits, Extremely Backward Castes (EBCs) and Other Backward Classes (OBCs) – giving it to Muslims.[151] A few days later, Amit Shah said that a victory for the Grand Alliance would be celebrated with firecrackers in Pakistan.[152] At the beginning of November – just a few weeks after a Hindu mob assassinated in Dadri, in neighbouring Uttar Pradesh, a Muslim suspected of keeping cow meat in his house[153] – the BJP displayed billboards portraying a woman hugging a cow with a headline saying «Nitish Kumar Ji, your allies kept insulting the holy cow of every Indian and you kept quiet!»[154] Television ads, on the other hand, reminded the voters of Narendra Modi’s OBC background and the fact that the Grand Alliance leaders could not stomach his ascendancy to the country’s highest office, because of his caste background.[155] The list could be much longer.

The strategy did not work.[156] On the one hand, those for whom cows are a crucial political issue would most probably vote for the BJP anyway. On the other hand, religious polarisation mainly had the effect of consolidating the Muslims vote behind the Grand Alliance. There is also some evidence that shows that the BJP performed only marginally better in districts more affected by religious riots.[157] The attempt to woo OBCs, EBCs and Dalits did not work either, as the BJP offered a disproportionate number of seats to the upper castes.[158] On the other hand, the Grand Alliance was able to expand its social base among Muslims, OBCs, and EBCs, especially in rural areas.[159] Throughout the campaign, the BJP-led alliance managed to mobilise the upper castes only, the only exception being the Paswan Dalits, whose leader Jitan Ram Manjhi (briefly Chief Minister of Bihar when Nitish resigned in 2014) had chosen to ally with the BJP.[160]

The Grand Alliance, more importantly, won the rhetorical battle on development.[161] In fact, Modi’s repeated attacks on Lalu and the «jungle raj» that characterised Lalu’s chief ministerships in the 1990s did not undermine Nitish Kumar’s image as an able administrator.[162] Moreover, CSDS data show that Modi’s rhetoric of Bihar being a hopelessly underdeveloped state collided with the voters’ perception that Nitish Kumar had indeed been able to bring about development during his two terms (2005-10).[163]

This, in fact, was more than just a perception. Under Nitish Kumar the state’s GDP grew at an unprecedented pace (albeit from a very low base) both in absolute terms and as a share of all states’ GDP.[164] There is evidence, importantly, that this growth had been inclusive: not only did Kumar fund and implement a number of social welfare schemes reasonably well,[165] but growth in agriculture, poverty reduction, and literacy rates improvements have been among the highest in India.[166] The results would thus confirm the trend, identified by Milan Vaishnav and Reedy Swanson, according to which Indian voters are more and more inclined to reward good economic performance, at least at the state level. [167]

Finally, it is worth noting that, like in the case of Delhi, leadership was an extremely important issue for Bihar’s voters. Even though satisfaction with Modi’s government at the centre was quite high – 71.6% of the voters were fully or somewhat satisfied with the BJP-led government, according to CSDS data[168] – Nitish Kumar was by far the preferred choice for the chief ministership.[169] In Bihar too, the Modi-centric campaign – as a BJP leader put it, Modi and Shah «hijacked the entire campaign without feeling the pulse of the state»[170] – and the choice not to name a chief minister candidate did not pay off. The lesson that the BJP learnt – and that Modi’s internal enemies were quick to highlight[171] – was that an extremely centralised management of the party does not work, even if at the top of it stands a politician as popular as Narendra Modi.

Some more troubles for Modi came from the results of the elections for local bodies (panchayats and municipal corporations) in two states, Gujarat and Uttar Pradesh. In both cases the BJP suffered heavy losses.[172]

3.2. The Congress’ unexpected comeback

Another source of problems for the Prime Minister came from the opposition parties and in particular from the Congress. After its resounding defeat in 2014, the Congress was in serious trouble. Many thought that the «Grand Old Party» was about to implode,[173] as a number of senior leaders left and many more seriously questioned the leadership of the Gandhi family.[174]

However, contrary to expectations, the party put up an increasingly effective parliamentary fight against the Modi government and effectively disrupted the legislative activity in Parliament, thus replicating the BJP’s strategy during the UPA governments. Whereas this was certainly not a democratically healthy way of opposing the government, it suggested that the Congress was not yet ready to be consigned to the dustbin of India’s political history.

A turning point in Congress’s parliamentary strategy occurred following the results of the elections in Delhi, where the Congress failed to conquer a single seat. This appeared – and undoubtedly was – as clear-cut as any confirmation of the sad state of the party.[175] However, rather paradoxically, the results of the Delhi elections, by showing that Modi was not invincible, encouraged the Congress to get its act together, mounting a more determined and eventually not totally ineffective resistance effort against the Modi government. The main battleground of the Congress counterattack was the fight against the Land Acquisition Ordinance.

3.2.1. The fight against the Land Acquisition Ordinance

As recalled above, the Land Acquisition Ordinance was one of several ordinances on economic matters promulgated by the government between the end of December 2014 and the first week of January 2015.[176] Clearly, it was considered a key initiative in favour of the business community. It emended the «UPA’s growth-killing Land Acquisition Act»,[177] namely the last important piece of legislation enacted by the UPA-2 government in 2013.[178] In turn, the 2013 Land Acquisition Act had supplanted the Land Acquisition Act of 1894, a law enacted in the colonial period, which, nevertheless, had continued to be the rule of the land up until 2013.

The longevity of the 1894 Land Acquisition Act can be explained by the fact that it gave a free hand to the state to take hold of any extension of land, when it was «likely to be needed for any public purpose [or for a company]»,[179] without providing any adequate compensation to the former owners. Accordingly, land was seized and the former owners were paid a meagre amount (if any at all).

According to the Land Acquisition Act 2013, land could be expropriated only if assent was given by at least 70% (if the expropriated land was meant for public and public-private-partnership enterprises) or 80% (if the land was meant for private enterprises) of the people living off the land (namely not only landowners, but also «livelihood losers», that is people whose livelihood depended on the land which was being acquired). Moreover the Act fixed generous compensations for those who lost their land: four or two times the market value for urban and rural land respectively. [180]

The 2013 Land Act had been conceived by Rahul Gandhi and piloted through the parliamentary process by the then Minister of Rural Development, Jairam Ramesh. Interestingly enough, it had had the near general support of the Opposition, starting from the BJP. As later remarked by Rahul Gandhi, «In 2013, BJP had supported the new law. There were two all-party meetings, three amendments the BJP had proposed and which were incorporated, 15 hours of debate in Parliament, 65 MPs taking part».[181] Not only that, as again remembered by Rahul Gandhi, during the parliamentary debate two eminent BJP politicians such as Rajnath Singh and Vinay Katiyar had acted as the «opening batsmen» in favour of the law in the Lok Sabha and Rajya Sabha respectively.[182]

The above does not detract from the fact that, as soon as the new law was approved, strong objections were raised by many states, including several then ruled by Congress.[183] Also, the then Power Minister, Jyotiraditya Scindia, had called for an amendment exempting from the new law the biggest power projects.[184] Even more relevant was the fact that the business community was vehemently against the new Act; so much so that, according to a well known pro-Congress intellectual, it was this particular Act which had been a main reason behind the business community’s massive shift against the Congress party.[185]

This being the situation, the Modi government’s decision to emend the 2013 Land Acquisition Act made sense and was in line with the pro-business approach which characterised its policies – hence the decision to introduce an ordinance emending the law, which was promulgated by the President of India on 31 December 2014.

As briefly noted above, the ordinance exempted five categories of land use from the provisions of the 2013 Land Act: defence; rural infrastructure; affordable housing; industrial corridors; and infrastructure projects, including Public Private Partnership (PPP) projects where the central government owned land. For these extremely vaguely defined areas, expropriation would not require the consent of the people living off the land and the state was dispensed from performing the social impact assessment.

The government tried to convert the ordinance into law[186] by introducing in Parliament the Land Acquisition bill in February 2015. However, the bill, which was passed in the Lok Sabha in March, got stuck in the Rajya Sabha, where the government did not have a majority.[187] To this the government responded by having the land ordinance issued – with some minor variations as compared to the first version – a second and a third time, in April and May.[188]

By mid-February, however, following the BJP Delhi debacle, the Congress MPs, which had been «directionless for the first six months after the Lok Sabha election […] came into their own», as «they realised that the Modi government was not invincible».[189] Not only the Congress, under the leadership of a «newly energised» Rahul Gandhi put up a fierce parliamentary battle against the land acquisition legislation, but, led by Sonia Gandhi, took to the streets, accusing the Modi government of being «anti-farmer and pro-corporate».[190] More importantly, all the main opposition parties, which had hitherto acted each by itself, making life easy for the government, started to act together, leaving the issues which divided them at the level of the states.[191]

The opposition in the streets was organised not only by Congress, but also by other parties (particularly the AAP) and, perhaps more importantly, by several grassroots organisations. Even Anna Hazare, the leader of the 2013 anti-corruption movement, launched a march from Faridabad to Delhi, where it concluded with a two-day demonstration.[192]

Eventually, the Land Acquisition bill was referred to a joint parliamentary committee, where the Opposition parties, following the suggestion of the Congress general secretary, Digvijay Singh, insisted that a number of RSS-affiliated peasant organizations be heard.[193] This was done knowing that, since the promulgation of the first land ordinance, the opposition to the Modi government’s land legislation from «its own Sangh mischief-mongers» had been evident.[194] In fact, in spite of the behind curtains attempt by Modi and Amit Shah to convince the Sangh Parivar peasant organizations to close ranks and support the government’s land legislation, the Bharatiya Mazdoor Sangh, the Bharatiya Kisan Sangh, the Swadeshi Jagran Manch, and the Akhil Bharatiya Vanvasi Ashram made clear their continued opposition to the government’s Land Acquisition legislation.[195]

That was really the turning point in the struggle: the government – which had been mulling over the idea of convening a joint session of Parliament, in case the land bill was not passed in the Upper House[196] – decided to cut its losses and call it a day. The change in strategy was made public when, on 30 August, Narendra Modi announced during his radio programme Mann ki Baat his decision to let the third Land Acquisition ordinance lapse.[197]

All this does not mean that the government’s attempt at modifying the 2013 Land Act was over. The Land Acquisition Bill was still standing. Moreover, both Arun Jaitley and Arvind Panagariya advised states to frame their own acquisition laws, following the example of what had already done by Tamil Nadu.[198]

Once all this has been said, the undisputable fact remains that the shelving of the land ordinance was a major political defeat for the government and a clear cut victory for the opposition at large, but more specifically for Congress, which had led the attack on the government’s land legislation. It was not without justification that Sonia Gandhi, at a rally in Patna, celebrated «the victory of farmers over a government that has worked against the interests of the farmers».[199]

3.2.2. The Lalit Modi and Shivraj Singh Chouhan affairs

In leading its parliamentary battle against the BJP, the Congress became increasingly effective in highlighting and exploiting the BJP’s weaknesses. For example, in June 2015, an anonymous source leaked to the British Sunday Times[200] the content of some emails casting a shadow on External Affairs Minister, Sushma Swaraj, and Rajasthan’s Chief Minister, Vasundhara Raje. According to these emails, Swaraj and Raje had made use of their influence with the British government to favour Lalit Modi, the former Commissioner of India’s Premier (Cricket) League (IPL), who had fled to Great Britain to avoid prosecution in India over charges of «financial impropriety». Despite the fact that the Indian government had cancelled his passport due to allegations of «monumental graft» in the allocation of broadcasting rights, first Vasundhara Raje had helped Lalit Modi to find a safe haven in Great Britain by sponsoring his British immigration application in 2011 and then Sushma Swaraj had helped the former IPL chief to get British travel papers on «humanitarian» grounds.[201] The Congress disrupted the functioning of the Parliament repeatedly asking for Swaraj and Raje’s resignation (to no avail).

A similar strategy was adopted by the Congress in relation to the Vyapam scam involving Madhya Pradesh’s Chief Minister Shivraj Singh Chouhan. The scam, which involved a widespread corruption network in the state’s civil service appointment system, was made particularly disturbing by the fact that, over the last few years, as many as 50 witnesses and defendants involved in the affair have died, 23 of them for «unnatural» reasons.[202]

The effects of the Congress’s opposition against Modi’s government were mixed. On the one hand, even if the Congress did not obtain any resignations, it certainly reinvigorated itself, at least in Parliament. Moreover, it is undeniable that the continuous media exposure (also due to the Congress strategy) seriously damaged the image of the BJP as the «clean» party that in the 2014 election campaign had ridden the anti-corruption wave.[203] Furthermore, the continuous disruption of legislative activity – leading to a virtual policy paralysis[204] – affected the image of the Modi government as a «doer».

On the other hand, however, probably just by chance, all the accused in these scams – which reached the press thanks to internal leakages – were Modi’s internal rivals.[205] Therefore, although the BJP’s prestige was damaged, thus indirectly weakening the Prime Minister himself, it is a fact that the whole affair strengthened rather than undermined Modi’s position inside his own party.

3.3. Intolerance

The second source of problems for the Modi government came from the heart of Narendra Modi’s social base, namely the galaxy of Hindu groups that form the core of the BJP’s electoral support. The election of Modi in May 2014 galvanised Hindu groups throughout the country.[206] Since then, the Prime Minister has proven to be unable (or unwilling) to control the most extremist elements among them. To put it in different terms, Modi has been unable to reconcile his institutional role as Prime Minister with that of leader of a party that represents the interests and demands (also) of Hindu zealots.

Two policy decisions taken at the state level by BJP governments (in Maharashtra and Haryana) were particularly important in their consequences. Both states made it illegal to own or sell beef.[207] We shall leave aside the implications for personal freedom that these decisions entail. We will also not discuss the fact that beef is widely consumed in India – 1 in 13 Indians consume it, including 12.5 million Hindus[208] – especially by the most nutritionally deprived sections of society (Dalits and Tribals, for whom beef is an important and cheap source of proteins)[209] and by religious minorities (Muslims and Christians).

Rather, we will focus on the fact that the bans contributed to creating an «anti-beef hysteria»[210] that had major political consequences. On 28th September in Dadri (Uttar Pradesh) someone at the local temple announced that the family of Mohammad Akhlaq, a farm worker, had some cow meat in their house. Shortly afterward a mob reached Akhlaq’s house, killed him, and severely injured his son, Danish.[211] The episode – perhaps because Dadri is just 50 kilometres from New Delhi, from where journalists could travel easily – immediately caught the attention of the national media.

Akhlaq’s murder became of national relevance for several other reasons. First, some of the people involved in the lynching were associated with the BJP.[212] Second, BJP local leaders, MPs and ministers made a number of outrageous declarations on the incident. MP Tarun Vijay suggested that the victims should «maintain silence in the face of assaults».[213] Culture Minister Mahesh Sharma – who had raised a controversy a few days earlier when he said that the former President of India A. P. J. Abdul Kalam was a nationalist «despite being a Muslim»[214] – called the lynching just an «incident» that should not be given a «communal tone».[215] An MP from Uttar Pradesh, Yogi Adityanath – one of the main architects of the «Love Jihad» campaign during 2014[216]– offered guns to the Hindus of Dadri to defend themselves from retaliation.[217] The list is by no means exhaustive.

Third, the Dadri lynching occurred in a climate of increasing religious intolerance – at least at the level of perception.[218] A number of disturbing episodes happened during 2015 that reached the national media. In December 2014, Perumal Murugan, an acclaimed Tamil writer, was threatened by Hindu groups that found a novel of his (written in 2010) insulting. The police suggested him to go into exile, as they could not ensure his safety. Eventually, he withdrew his entire literary production and promised to give up writing.[219] In February 2015, Govind Pansare, a Communist Party of India member, author of a biography of Shivaji and a sharp critic of right-wing Hindu extremism, was killed.[220] Former vice-chancellor of Kannada University in Hampi, Malleshappa Madivalappa Kalburgi, a rationalist who had spoken out against idolatry in Hinduism, suffered a similar fate in August.[221] In October, two concerts of the famous Pakistani singer Ghulam Ali, scheduled in Mumbai and Pune, were cancelled because the Shiv Sena (an ally of the BJP in Maharashtra) objected to Ghulam Ali’s nationality.[222] Later in the same month, the Jammu and Kashmir MLA Engineer Rashid was attacked with black ink in New Delhi because he had organised a «beef party».[223] Sudheendra Kulkarni, a former BJP member, suffered the same fate a few days earlier, when he was attacked with ink by Shiv Sena activists who did not want him to present the new book by the former Pakistan Foreign Minister Khurshid Kasuri in Mumbai.[224]

All these (and other) episodes contributed to creating a fear that freedom of speech and religion were in danger. As many as 40 writers returned their Sahitya Akademi awards in protest. Numerous filmmakers, scientists and academics returned their awards too.[225] This obviously kept the attention of the media focused on the issue, as did the fact that the RBI governor Rajan and the rating agency Moody warned the government that rising religious tensions could hurt its economic reform agenda.[226]

Fourth, the government badly mismanaged the situation from a public relations perspective. The Prime Minister did not comment on the Dadri lynching until 14 of October (more than two weeks after the episode) when he called the incident «sad» and «not desirable», pointing out, however, that the central government could not be blamed for it.[227] Also, those BJP members responsible for outrageous declarations were not punished in any way. The Prime Minister did not comment on any of the other episodes listed above.[228]

Modi’s silence is significant if only because it sheds light on the nature of his relationship with the RSS. In short, the impression is that the Prime Minister cannot afford to take a firm stance in defence of religious pluralism, even if he wanted to.

Of course, it is far from certain that Modi’s silence is not an endorsement of the actions of Hindu extremists. His long career in the RSS, his track record in Gujarat where he oversaw the killing of hundreds of Muslims, and his more recent explicit attempts to polarise the electorate (both during the last phase of the 2014 Lok Sabha elections and the 2015 Bihar polls),[229] are clear signs that Modi’s silence is at least a partial endorsement of the Hindutva agenda.

The problem represented by Modi’s silences can be more accurately assessed by reflecting on the fact that, although the Prime Minister could have politically profited by taking a firm stand against religious extremism, he chose not to do so because of even weightier political reasons. Indeed, speaking firmly and without reservation against communal hatred would have reinforced Modi’s image as a statesman, both domestically and internationally. This would have vindicated a great number of political commentators in the international and Indian English media who, since May 2014, have repeatedly argued that Modi, the Prime Minister, is a radically different person from Modi the politician who, in Gujarat, turned a blind eye to the anti-Muslim pogrom of 2002. Modi the Prime Minister, according to this view, is a pragmatist who only cares about economic growth. Hence, according to these interpretations, Modi would actually be disturbed and irritated by the behaviour of his (extremist) followers, because they distract the party from pursuing his economic agenda. Furthermore, Modi, by taking a firm stance against religious intolerance, would have avoided offering the opposition an excuse to block yet another parliamentary session on a golden plate[230] and left him more space to push through his reform agenda.[231]

These benefits, however, appear to be too limited when compared to the potential damages caused by a firm stand against religious extremism. First of all, it is not clear to what extent the indignation over Modi’s behaviour exists beyond the English media. By looking at the CSDS data on the most important electoral issues in the eyes of Bihar’s voters, one would be inclined to conclude that the debate was largely confined to the English speaking élite.[232] Moreover, even the English speaking élite, although dissatisfied with Modi, still considered him the lesser of two evils. As pithily stated by a quintessential member of this élite: «I am certainly disappointed by Modi’s priorities, performance and style so far […] but if the elections were held today I would still vote for Modi. I myself and many others I know well, and perhaps millions of Indians, are so fed up with the greed, avarice, dishonesty and feudalism of the Congress/Gandhis that any alternative is better than them.»[233]

Summing up, there are reasons to think that the damage to Modi’s image may be much more limited than what it would seem reading the English media, even among the members of the English speaking middle class. Which explains why Modi did not appear overly concerned about the criticism. More importantly, the complexity of the relationship between the Prime Minister and the RSS made it extremely difficult for him to take an institutional stance in defence of religious pluralism.

The BJP and the RSS are in a symbiotic relationship. To oversimplify: the former needs the latter’s workers to win support, particularly during electoral campaigns; the latter needs the BJP’s presence in the state institutions to put the country on the path leading from a secular state to a Hindu Rashtra. However, as shown by what happened during Atal Bihari Vajpayee’s prime ministership, when the BJP is in power this symbiotic relationship runs the risk of being disrupted. However, since Modi’s 2014 victory, the government and the RSS had found a division of roles that ensured a certain equilibrium. On the one hand, the RSS were left a free hand to either direct or oversee government and party affairs in the cultural and educational spheres.[234] On the other hand, the RSS did not interfere in other domains, especially in the management of the economy. This being the situation, had Modi taken a firm stance against religious intolerance, he would have explicitly violated this tacit pact.[235]

During 2015, however, a number of latent tensions between the Modi and Shah duo, on the one hand, and the RSS, on the other, emerged. The duo’s overly centralised management of the BJP had been a constant source of concern for the leadership of the RSS. What had probably upset the RSS leadership the most was Shah’s attempt to recruit 1.5 million new BJP members independently from the RSS. According to Dhirendra K. Jha (an acute observer of the RSS and the BJP) this would be the reason behind the RSS cadres’ rather lukewarm support to the BJP during the 2015 electoral campaign in Bihar.[236] It may also be possible that the politically inappropriate call for a review of the reservation system – an extremely obvious taboo in a state like Bihar – made by Mohan Bhagwat, the RSS Sarsanghchalak (supreme leader), during the electoral campaign in that state, was not an accident. Rather it may have been a not-so-covert attempt to undermine the Prime Minister, or at least to send him a not-so-subtle message.[237]

To complicate things further, the RSS cannot afford to loose ground vis-à-vis the growing number of increasingly assertive Hindu extremist groups (within and outside the Sangh Parivar). The risk for the RSS is to be «outflanked from the right by Hindutva outfits they can no longer control».[238] These groups can potentially attract the most radical elements within the RSS family. Suhas Pashikar has written an informative essay on one such outfit (the Sanatan Sanstha) that explicitly endorses violence as a means of ensuring religious «justice» and which has been involved in Govind Pansare’s assassination. [239] This and other militant groups of the Hindutva galaxy are increasingly independent of the RSS, which is worried about loosing even more ground if it shows any sign of «weakness». If only for this reason, the leadership of the RSS cannot and will not tolerate any criticism of the Hindutva agenda from «their» Prime Minister.

The challenge on the right involves political parties too. The Shiv Sena in Maharashtra is a case in point. Probably with its mind on the Mumbai municipal elections (to be held in 2017),[240] the leadership of the party has posed a direct challenge (from the right) to the BJP. When Modi «dared» to call «unfortunate» the cancellation of Ghulam Ali’s concerts and the Dadri lynching, Shiv Sena MLA Sanjay Raut replied that the Shiv Sena respected Modi because of Godhra, and that what was «unfortunate» was Modi saying that the Dadri lynching was «sad».[241]

What is at stake is one of the key elements of the BJP’s (and the RSS’s) social base of support, which may be relatively small in numerical terms – the overwhelming majority of Indian voters do not endorse the Hindutva agenda – but it is extremely important in terms of political mobilisation.

4. Foreign Policy

As in the second half of 2014, in the year under review India’s foreign policy had two main objectives: projecting India as a major power on the world stage and getting all the possible foreign help it could in promoting its own economic development. The pursuit of both objectives was often intertwined with, on the one hand, the shopping for state-of-the-art weapons and weapon systems on the part of India and, on the other hand, with the selling or gifting of (maybe not so state-of-the art) weapons and weapon-systems by India to countries which she wanted to bring inside her sphere of influence. As in the second half of the 2014, in the year under review an absolutely dominant role in the making of India’s foreign policy was played by Narendra Modi, with Foreign Affairs’ Minister, Sushma Swaraj, playing a distinctively subordinate role. Indeed, in 2015 Modi confirmed to be the most peripatetic among India’s Prime Ministers by making 27 trips abroad and officially visiting 26 nations, which means an average of more than two foreign countries visited each month.[242] These official visits brought Modi not only to the US, China, Japan and Russia – all countries which have traditionally been central to India’s foreign policy strategies – but also to a host of other important and less important nations, some of which had rarely or never been visited by an Indian premier. Westward, Modi visited France, Germany, Ireland, and Canada; southward, he visited most Indian Ocean island nations plus Singapore and Malaysia; northward, he went to Mongolia, most Central Asian republics, and Turkey; finally, among India’s closest neighbours, Modi visited Sri Lanka, Bangladesh, Afghanistan, and Pakistan. Moreover Modi was present at the Paris climate conference (30 November-11 December 2015), where India played an important role in its successful conclusion[243] and was able to have some of its main objectives included in the final accord.[244]

In pursuing his two main objectives Modi’s main effort appears to have been twofold. On one side it aimed at strengthening the political, military, and economic connection with the US (attempting at the same time, with some success, not to loosen India’s traditional ties with Russia)[245] and, on the other side, it was focussed on the strategy of engaging/containing China. Therefore, it is on the relationship with the US and that with China that this year’s treatment of India’s foreign policy is mainly focussed. However additional space will be dedicated to the analysis of India’s relations with two of its closest neighbours: Nepal and Pakistan. Finally, some attention will be given to analysing India’s role at the WTO (World Trade Organization) ministerial meeting of 15-19 December, held in Nairobi. This was practically the only really important foreign event for India where Modi was not present, the key role being played by Commerce and Industry Minister of State (independent charge) Nirmala Sitharaman.

4.1. The India-US connection: high on hype, low on content

During the year under review the India-US relationship was high on hype, but low on content. The hype was provided in particular by Modi’s invitation to US President Barack Obama to be the «Chief Guest» to the Republic Day parade on 26 January 2015. That was the first time ever that a foreign head of state was invited to the Republic Day parade. Moreover, this brought about an unprecedented second visit by a US President to India during his term in office.[246] Also, high on the first pages of the press – at least the Indian press; in the American press it went almost unnoticed – was Modi’s second visit to the US from 26-30 September 2015. [247] These two high visibility visits were accompanied by a host of other visits either by prominent members of the Obama administration to India or by eminent members of the Indian government to the US.[248]

All these visits, but particularly the ones by Barack Obama to India and Narendra Modi to the US, although «extraordinarily rich in political symbolism», at the end of the day «failed to produce a substantive outcome».[249] According to former Ambassador M. K. Bhadrakumar, this happened because «the sort of market access that the US is demanding and the high Indian expectations regarding American investments are unrealistic in a near term.»[250] However, US access to the Indian market and US investments in India were not the only issues on the table. Two additional, interrelated and crucial ones were Washington’s attempt to integrate India’s military with the US forces deployed in the Asia-Pacific region and its contemporary effort – really the other face of the same coin – to more firmly bring India inside the American arc of containment around China.

As far as the opening of the Indian market to US capital is concerned, there were two main problems to be solved. One was the definition of the terms for operationalizing the 2008 civil nuclear cooperation agreement; the second was the signing of a bilateral investment agreement between the two countries.

The 2008 civil nuclear agreement had possibly been George W. Bush’s major political success in the area of foreign relations. However, the agreement had nevertheless failed with respect to the economic goal of opening the Indian market to US nuclear firms, mainly because of the passing of the Nuclear Liability Act by the Indian Parliament in 2010, which allowed both the victims and the operators of a nuclear plant involved in a disaster to sue the suppliers «for tortuous and criminal liability»,[251] effectively deterring the US nuclear companies from entering the Indian market.[252] Already during his 2014 trip to the US, Modi had signalled his intention to modify the US-India nuclear agreement in such a way as to accommodate the needs of the American nuclear firms.[253] Although news circulated[254] that the two parties were willing to compromise, it remains the fact that, as noted by the former Ambassador M. K. Bhadrakumar, «there [was] no clarity whether the understanding [concerning India’s nuclear liability law] reached at the governmental level (details of which haven’t been divulged) would stand scrutiny in a court of law or even prompt the American companies to shed their inhibitions over the Indian law (which, they say, does not conform to the international covenants on liability in nuclear commerce)».[255]

Indeed, the lack of clarity highlighted by Bhadrakumar still persisted at the end of the period under review. During the same period, no indication has emerged of a newly found willingness on the part of US nuclear firms to enter the Indian market.

As far as the bilateral investment treaty between the US and India is concerned, this had been under negotiation for years. This negotiation, stalled in February 2014, was restarted on January 2015, when visiting US secretary of state John Kerry, taking part in the «Vibrant Gujarat» conclave, made a strong case for it.[256] The American position on the bilateral investment treaty was that it, by facilitating protection of intellectual property rights, would encourage US companies to invest in India.[257] However, any speedy progress in the negotiation was impeded by uncertainties on the Indian part. Indeed, at the beginning of 2015 India was reviewing its existing bilateral investment model agreement, on which 83 Bilateral Investment Promotion and Protection Agreements (BIPPAs) with several foreign countries had been based since 1994. The problem was that, in the previous two years only, the pre-existing bilateral investment model agreement had paved the way to no less than 17 arbitration proceedings initiated by international companies against the Indian government.[258] This being the situation, the Ministry of Commerce proposed scrapping the BIPPAs altogether; the ministries of Finance and of Foreign Affairs, however, proposed modifying the existing model by modifying the investor-State dispute settlement in such a way as to prevent foreign companies from taking the Indian government to international arbitration unless all legal and administrative remedies in India had been exhausted.

Both the above solutions were bound to be opposed by the US government and investors, which, not without reason, considered the Indian judicial system slow and inefficient. US investors in particular appeared concerned regarding the question of intellectual property rights, which they saw as being routinely infringed upon by India, in spite of India’s claim that its regime was in line with the WTO’s Trade-Related Aspects of Intellectual Property Rights.[259]

In due course the Indian government finalized a new bilateral treaty model framework, deciding in favour of the Ministry of Finance-sponsored solution. This brought forward several US objections to the Indian position.[260] As a consequence, at the end of the year under review, «the long pending bilateral investment treaty between India and the US [appeared] nowhere on the horizon».[261]

As far as the high Indian expectations regarding American investments are concerned, Modi’s main attempt at increasing them was made during his second visit to the US in late September. Modi, after a stopover at the UN headquarters in New York, spent most of his time on American soil meeting 47 among the US’s main Chief Executive Officers (CEOs), some of whom – as in the cases of Google, Microsoft, and Adobe – were of Indian origin.[262] As during his previous visit to the States one year earlier, Modi declared that «India was open for business». Also «he listened to the Americans carefully, and seemed to take [their] complaints on board without defensiveness». For their parts, the American CEOs «praised the [Indian] prime minister’s efforts but highlighted a host of obstacles».[263] However, at that point in time it had already become clear that the mood was not that of the previous year and the enthusiasm for Modi had somewhat cooled down. In the period between Modi’s two American trips, the US CEOs and politicians had expected the Indian Prime Minister to translate his first announcement about India being «open for business» into «doing the business».[264] This was something that had not happened, at least not at the speed with which foreign investors had expected Modi to proceed. Indeed, the changed attitude of the American business community and politicians had already become apparent on the eve of Modi’s second arrival in the States. During the US-India CEO Forum held in Washington on 21 September 2015, US Secretary of Commerce Penny Pritzker had remarked that the World Bank ranked India 186 out of 189 countries on the ease of enforcing contracts. «In fact – Pritzker had stated – it can take years to resolve a contractual dispute with a vendor in India, and terms are too frequently reinterpreted after a deal has closed. These challenges make it incredibly costly and unpredictable to do business in India, and only serve to impede the operations and investments of Indian and foreign firms alike.»[265] For his part, during the same event, Honeywell CEO David Cote, while declaring that he was «pretty bullish» on India’s efforts to cut red tape, decried the Indian bureaucracy as «stultifying».[266]

Summing up, the impression is inescapable that the US business community had concluded that Narendra Modi, although willing to accommodate their needs, was not up at doing that, at least in the near future. Accordingly, in spite of the rise in US direct investment in India – noted in a previous section – this remained well below India’s expectations and the US business community’s potentialities.[267]

During the year under review, Washington’s doubts about India’s ability to fully integrate into the US-dominated neoliberal economic space became evident in relation to India’s «unambiguous interest in joining APEC»[268], namely the Asia-Pacific Economic Cooperation forum, which includes 21 Pacific rim nations and was founded in 1989 to promote free trade in the region. Indeed, joining the APEC forum was seen by both New Delhi and Washington as a necessary stepping-stone to India joining the Trans-Pacific Partnership treaty. The January 2015 US-India Joint Strategic Vision for the Asia Pacific and Indian Ocean Region had welcomed India’s interest in joining the Asia Pacific Economic Cooperation forum, noting that «the Indian economy is a dynamic part of the Asian economy.»[269] But in the following months the matter rested there, without any new developments.[270] Significantly, in the joint press conference following the Modi-Obama New York meeting of 28 September 2015, India’s Prime Minister’s statement that he looked «forward to work with the US for India’s membership of the Asia Pacific Economic Community» was not reciprocated by the US President.[271]

As far as the US attempt to closely integrate the Indian military with its own military forces in the Asia-Pacific sector is concerned, this depended upon the finalization of some contentious pacts, in particular the Logistic Support Agreement (LSA), the Communication Interoperability and Security Memorandum Agreement (CISMOA), and the Basic Exchange and Cooperation Agreement for Geo-Spatial Cooperation (BECA).

The LSA envisaged reciprocal logistical support on barter or an equal value exchange basis, whereas the CISMOA and BECA would enable the US to transfer high-tech avionics and electronics to India. However, in spite of their seeming advantages for India, these pacts, when they had first been discussed during the UPA’s time in office, had eventually been steadfastly opposed by the then Defence Minister, A. K. Antony, who had come to the conclusion that they limited India’s full control of its own military forces, and gave the US unfettered access to India’s military installations and to sensitive data, including India’s encrypted systems.[272] With the coming to power of the BJP government, the negotiations had been restarted and the US had pressured India to accept the pacts, which were described as «foundational» in the development of the military ties between the two countries.[273]

Although at the beginning of June 2015 a new 10-year US-India defence framework was signed in New Delhi, renewing the previous one, signed during the first UPA government in 2005,[274] the more specific military pacts still remained up in the air. A new and more intense phase in the negotiations concerning the LSA started at the end of year under review, during Defence Minister Manohar Parrikar’s visit to the USA (7-10 December 2015), whose «open mind» on signing the pact was appreciated by the US negotiators.[275] However, at the end of the period under review, the finalization of the LSA had not yet been reached.[276]

While unable to finalize the LSA, CISMOA and BECA, the US had considerably more success in more firmly inserting India into their own arc of containment around China. In fact, during Obama’s January trip to India, the two countries signed a joint document officially setting out their common vision for the Asia-Pacific and Indian Ocean region. This document, which re-stated their common position on the topic, which had already been arrived at during the September 2014 Modi’s visit to the United States, was most notable for reasserting Washington’s anti-Chinese position on «safeguarding maritime security and ensuring freedom of navigation and over flight throughout the [Asia-Pacific and Indian Ocean] region, especially in the South China Sea».[277]

The joint document was seen by some commentators as prefiguring the «eventual amalgamation of India’s Act East Policy and US’s Asia pivot»,[278] as adumbrating a closer integration of India’s foreign policy in the Asia-Pacific region within the US’s anti-China arc of containment policy. However, at first, New Delhi seemed both bent on distancing itself from what it unofficially termed a «strategic misinterpretation» of its foreign policy goals,[279] and concerned about the consequences of openly espousing the US anti-Chinese arc of containment policy.

On the other hand, the US appeared determined to push India exactly in that direction. This was mainly done by pressuring New Delhi to integrate Japan in the Malabar naval exercises.[280]

The annual «Exercise Malabar», from a very modest beginning in 1992, off the coast of Goa, had gradually progressed «to become a high point of Indo-US defence cooperation at the operational level […] with high strategic significance».[281] In 2007 «Exercise Malabar» was held twice, the first time off the coast of Japan, the second time in the Bay of Bengal, and expanded from a bilateral to a multilateral exercise, with Japan taking part in the first session and Australia and Singapore joining India, the US, and Japan in the second session. The 2007 expansion of «Exercise Malabar» was part of a strategic quadrilateral dialogue involving Washington, New Delhi, Tokyo, and Canberra and clearly aimed at containing China. Indeed Beijing responded to it by issuing formal diplomatic protests, which induced both India and Australia to pull out of the quadrilateral dialogue, «citing political and economic reasons respectively».[282] For its part, the Malabar Exercise continued as a merely bilateral India-US military drill.

However, US Defence Secretary Ashton Carter, during his visit to New Delhi on 2-4 June 2015, had both «singled out “India’s Act East policy” as a strategy that the US supported» and stressed that «the US “pivot” or “rebalance” to Asia complemented India’s Act East Policy».[283] Also, high on Carter’s agenda was the goal of convincing India to once again include Japan in the Malabar exercise. This was an attempt that, after the official disbanding of the quadrilateral dialogue, had been made during the UPA government’s tenure to no avail.

Indeed, according to an anonymous «top defence ministry official», even this time India was unlikely a change its position.[284] However, in the end, India’s Foreign Minister Sushma Swaraj met in New York with her US and Japanese counterparts in September, inaugurating a «trilateral ministerial dialogue».[285] Soon after the news became official that the annual Malabar exercise would henceforth include Japan.[286] As a consequence, in October, a Japanese destroyer joined US and Indian ships in the Malabar exercise in the Bay of Bengal.[287] Although Japanese participation could appear limited, from a strictly military standpoint it was «operationally and strategically significant», as claimed by a former Commander-in-Chief of the Indian navy’s Southern Naval Command.[288] But, of course, the real importance of Japan’s participation was political: the fact that the Malabar exercise had once again been upgraded to include both the US and Japan clearly signalled that India had jettisoning its original shyness about being seen as openly taking part in the US sponsored anti-China arc of containment.

4.2. The India-China relationship: economic engagement and political containment

4.2.1. Engaging China

All the above brings us to India’s China policy. As during the first six months of Modi’s government, during 2015 it continued to have two apparently contradictory aspects: economic engagement and political containment.

The first aspect was apparent during Modi’s visit to China (14-16 May 2015); the second was visible during the whole year in India’s proactive policy in the Indian Ocean, in East and Central Asia and in the Pacific. Indeed, the bulk of India’s initiatives in the above areas appeared to have New Delhi’s need to build its own arc of containment around China as a common subtext.

Modi’s May 2015 visit to China aimed at procuring both Chinese investment in support of India’s economy and Chinese help in realising his «make in India» pet project. The visit was not without results, as «24 agreements for cooperation in education, science, and economic development, including railways, aerospace, mining and tourism, said to be worth over $ 10 billion» were signed.[289] Moreover, 21 business-to-business deals worth US$ 22 billion were also signed. Many of the deals entailed Chinese banks’ financial support to Indian firms and, in some cases, to joint India-China ventures (for example in the field of steel production).[290] This, in a way, nicely dovetailed with the fact that India and China were already acting in partnership in a number of important international initiatives, such as the BRICS Development Bank and the Asia Infrastructure Investment Bank (AIIB).[291] However, as noted by M. K. Bhadrakumar, at a closer look many of the above agreements were «in the nature of MOUs», namely memoranda of understanding, which, although «good for the optics», might not get implemented.[292] Also, a host of problems that are making the relationship between the two Asia giants difficult were left either unaddressed or unresolved.

From a political standpoint, the main problem remained the question of the disputed borders and the uncertainty itself of the LAC (Line of Actual Control), namely the provisional India-Pakistan border, in much of its course. This was such a complicated problem that it could be highlighted – as Modi did during a speech given at the prestigious Tsinghua University, in Beijing[293] – but not solved during a tree-day visit, even though it was well prepared in advance.

More significant for judging the status of the relationship between the two countries was a series of economic questions. First of all, work on the industrial parks that China should have set up in India, as agreed during China’s President Xi Jinping September 2014 visit to India, had not yet taken off. Also, during Modi’s visit China’s distinct lack of interest in the «make in India» project was evident. On the other hand, no offer on China’s part to involve India in the «New Silk Road» project was made.[294] However, the main and more urgent problem that remained unresolved was the question of the growing imbalance vis-à-vis India of the growing China-India trade.

India-China trade, which has been growing steadily from as little as US$ 2.92 billion in 2000 to US$ 70.25 billion in 2014, making China India’s largest trading partner in goods, is highly imbalanced in favour of China. India’s trade deficit increased from US$ 18.65 billion in 2009 to US$ 36.88 billion in 2013 and then skyrocketed to US$ 46.29 billion in 2014.[295] This was not such a surprising development, given the nature of India-China trade: while China exports high value goods, such as telecommunications equipment, computer hardware, industrial machinery and other manufactured goods, India sends back mostly raw materials such as cotton yarn, copper, petroleum products, and iron ore.[296]

In his Tsinghua University speech Modi hinted at his dissatisfaction with the existing Sino-Indian trade partnership by pointing out that: «to maintain this partnership over the long run, we must also improve the access of Indian industry to the Chinese market». To this, Modi hastened to add: «I am encouraged by President Xi’s and Premier Li’s commitment to resolve this problem».[297]

Unfortunately, in spite of Modi’s exhibited optimism, no sustained policy on China’s part, aimed at solving this problem, appears to have taken shape, at least during the period under review.

4.2.2. Containing China

The second aspect of Modi’s China policy – containing China – can be seen not only as the other face of the policy of engaging China, but, more generally, as an expression of India’s strategic surge aimed at reclaiming the position of great power and a main player in an area extending from the western side of the Indian Ocean to the Pacific and including the whole of South Asia. This strategic surge was given expression in a series of official visits by the Indian Prime Minister to the states of the area, with the accompanying signing of bilateral agreements, and a series of bilateral naval exercises, involving the Indian navy and the navies of other countries. Also, this strategic surge was also expressed, on both the political and theoretical level, at an international conference, where India announced the launching of a «Cotton Route» policy, in clear competition with China’s «Silk Road» policy.

In March, that is, before his visit to China, Modi embarked on a five-day tour to three Indian Ocean island states: Seychelles, Mauritius, and Sri Lanka (10-14 March 2015). In all three cases, India offered military aid and opened lines of credit with the explicit aim to counter China’s growing influence in the Indian Ocean.[298]

This was followed by a three-day international conference (18-20 March 2015) held at Bhubaneswar (Odisha). The conference, entitled «India and the Indian Ocean: Renewing the Maritime Trade and Civilisational Linkages», was conceived as the official launching of a «Cotton Route» policy, aimed at reviving the pre-colonial connections between India and a series of Asian and African countries. The conference included a close-door session and saw the participation of no less than four Indian ministers, among whom the Foreign Affairs Minister, Sushma Swaraj, plus India’s National Security Adviser, Ajit Doval, and several foreign ambassadors («at least a dozen»). [299] According to Indian government sources, the idea on which the conference was based was «to balance China’s growing maritime ambitions, especially its security interests and projects that have adverse implications for India’s defence.»[300]

Part of the «Cotton Route» policy can be considered Modi’s visit to Dhaka (6-7 June 2015). Although the contentious issue of the sharing of the waters of the Teesta River could not be solved, a series of important agreements were concluded. These included, among others, the long-due rationalization of the common borders, Bangladesh’s engagement to create an India-reserved special economic zone in the hinterland of the port city of Mongla, and the opening to Indian cargo vessels of the Chittagong and Mongla ports. Particularly the opening of the Chittagong port to Indian traffic was bound to irk China, as the port had been developed thanks to China’s help, as part of Beijing’s «string of pearls» policy.[301] Also, while in Dhaka, Modi announced a US$ 2 billion line of credit to Bangladesh, to be used to finance infrastructure, power, health, and education projects.[302]

In July 2015, news circulated that the Indian navy was aiming at having 200 warships operational by 2027, up from 137.[303] This was followed by the first-ever joint maritime exercise held off the East coast of India on 11-19 September 2015 by the Indian Navy and the Royal Australian Navy.[304] Finally a «strategic partnership» declaration between India and Singapore was signed on 24 November 2015, during Modi’s visit and was accompanied by the inking of 10 bilateral pacts in the fields of defence, cyber security and civil aviation.[305]

Also part of the «Cotton Route» strategy (although India’s eastward pre-colonial sea routes only went as far as China but did not reached the Pacific Ocean) can be considered the second Forum for India-Pacific Islands Cooperation (FIPIC), held in Jaipur (Rajasthan) on 21 August 2015. The first FIPIC had been held in November 2014, in Suva, Fiji, when Modi had visited that small island nation. In Jaipur, Modi, speaking to the representatives of 14 Pacific nations, offered the establishment of an FIPIC trade office in Delhi and promised to fund solar power infrastructures and to help in setting up early warning and response systems for extreme weather events.[306]

Summing up, India’s policy aimed at containing China can be seen as an expression of India’s strategic surge in South Asia and in the Indian and Pacific Oceans. Among the nations which were drawn in the net weaved by Narendra Modi’s hectic foreign tours in the above mentioned geographical areas, some – Bangladesh, Sri Lanka and Fiji (where half of the population is of Indian origin) – had traditionally been a privileged object of India’s foreign policy. However, in the case of the others, the visit of an Indian Prime Minister had been a novelty, as it had been a novelty that India was supplying military and economic aid to these nations.

4.3. India’s difficulties in its own neighbourhood

In spite of Modi’s foreign policy activism and his attempt to project India as a major world power and define the Indian Ocean-South Asia-Pacific Ocean as an Indian sphere of influence, the fact remains that India either failed to develop more harmonious relations with some of its closest neighbours or contributed to making them more difficult. The former is the case of Pakistan, the latter that of Nepal. Significantly, in both cases, the shadow of China appears in the background. We shall dwell first on Nepal and then on Pakistan.[307]

4.3.1. The India-Nepal crisis

Nepal had been one of the first countries to be visited by Narendra Modi, soon after his election, in August 2014. At the time, the relations between New Delhi and Kathmandu seemed to have reached an all-time high, as Modi’s commitment to massively invest in the Himalayan country arrived after the crucial role played by India in mediating the end of the long civil war which had bloodied Nepal from 1996 to 2006. Furthermore, when Nepal was hit by two devastating earthquakes in April and May 2015, India was ready to succour its small neighbour.

However, the relations between the two countries suddenly nosedived following the promulgation of the Nepal’s new constitution on 20 September 2015, which established the country as a secular federal republic organized in seven states.[308] India publicly not only expressed its dissatisfaction with the contents of Nepal’s constitution[309] but, while officially denying doing that, immediately imposed a de facto blockade on the movement of first necessity goods to the Himalayan country.[310]

According to India, the new constitution restricted the political rights of the inhabitants of the Madhes or Terai region, namely the plains bordering with India, where some 40% of the Nepali population lived[311]. India claimed that this was bound to produce a backlash, which could become violent and even spill beyond the border, because the inhabitants of the southern Nepali plains were closely related to the inhabitants of the Indian state of Bihar. Also, and rather funnily – considering the totally different position consistently taken by the BJP in the case of Sonia Gandhi, whose Italian origin had been an unending source of polemics and personal and political attacks – India objected to the fact that, according to the new constitution, only citizens by descent, and not citizens by birth or by naturalization, were entitled to occupy the top political, judicial and security positions, such as president of the Republic, Prime Minister, head of the judiciary and head of the police. Equally funny was the request that foreign women married to a Nepali citizen should automatically acquire the Nepali citizenship.[312] More concretely, India’s real political objective seems to have been the creation of two Madhes provincial states, which would run 800 kilometres along the southern border, being only 20-30 kilometres wide. By many, this move was seen as potentially endangering Nepal’s territorial integrity.[313]

Although this is not the place to discuss the democratic features of Nepal’s constitution, in order to put the Indian government’s claims and behaviour in perspective, some points need to be highlighted.[314] The first is that some of the Nepal’s constitution key aspects favourably compare with the Indian Constitution. The Nepali constitution abolishes the death penalty;[315] explicitly abolishes any discrimination based not only on «origin, religion, race, caste, tribe», but also on « sex, physical condition, condition of health, marital status, pregnancy, economic condition, language or region, ideology or on similar other grounds»;[316] establishes «that women members constitute at least one third of the total number of members elected to the Federal Parliament» by any given party; [317] or, in case a party is unable to do that, enjoins the party to «so elect that women members constitute at least one third of the total number of members elected to the State Assembly from that party».[318] Also, the constitution establishes a National Women Commission, with extensive powers, among which is that of monitoring «as to whether laws concerning the rights and interests of the women and obligations under the international treaties to which Nepal is a party have been implemented».[319] The Nepali Constitution also grants extensive rights to the Dalits, among which «free education with scholarship, from primary to higher education».[320] Last but not least, the Nepali Constitution introduces a mixed electoral system, according to which a part of the representatives in the two houses of Parliament are elected according to the first-past-the-post method and the remaining part according to the proportional method.[321] In other words, in contrast to the Indian electoral system, the Nepali one, while assuring governability through the first-past-the-post system, allows a closer correspondence between the popular vote and the number of representatives elected in Parliament, thanks to the proportional method.[322] This, by itself, goes a long way towards preventing the danger – so evident in the first-past-the-post system – that the minorities go unrepresented.

It should also be stressed that the Nepali constitution was approved by the 601-members Constituent Assembly on 17 September 2015 by an overwhelming majority. In fact, 507 members voted for it; 25 members, representing the pro-Hindu and pro-monarchist Rastriya Prajatantra Party Nepal, voted against it; finally, most of the absent members, belonging to small parties representing the ethnic minorities residing in the southern plain, boycotted the vote.[323] This does not mean that all or even the majority of the representatives of the Terai/Madhes region boycotted the vote, as the majority of them had been elected in the national parties and, therefore, voted for the constitution.[324]

Contemporaneously to the opposition put up in the Constituent Assembly, the small Madhesi parties launched a series of violent demonstrations, which, already by 18 September, resulted in some 40 deaths, half of which were members of Nepal’s police and Armed Police Force.[325] This agitation continued to be carried out in the following months, resulting in further deaths.[326]

Two aspects of the anti-constitution agitation must be stressed. The first is that, in spite of what was claimed by much of the Indian press, it was carried out only by a part of the Terai population, which did not include the Dalits and landless people.[327] The second is that the suspicion is legitimate that Indian agents acting as provocateurs helped to organize the agitation itself, as the death of an Indian national and the arrest of several others seem to confirm.[328]

The blockade – for which, contrary to all evidence, the Indian government continued to deny any responsibility – resulted in «severe and chronic shortage of fuel, essential commodities and medicines».[329] The situation became so bad that, in a statement issued on 30 November 2015, UNICEF denounced the risk of death or disease for more of 3 million children under the age of 5 due to a severe shortage of fuel, food, medicines and vaccines. This situation was due to the fact that, as diplomatically stated in the UNICEF’s press release, «In the past 10 weeks, vital imports of essential commodities have been severely restricted at Nepal’s southern border due to unrest over the country’s new constitution.»[330]

All this translated in a rapid increase in anti-Indian sentiments in the Himalayan country.[331] For its part, the Nepal government, while trying to appease India, opened negotiations with China, from which it received some essential fuel supplies.[332] But geography stood against any possibility that, at least for the time being, this counterstrategy could be effective. While Nepal appears sandwiched between the two Asian giants, the truth is that the lines of communication with India are easier and shorter than those with China,[333] which really makes Nepal an «India-locked» country.[334] This means that supplies from China were slowed down and made overly expensive by geography.

However, by the end of the year, the fact started to become apparent that New Delhi had overplayed its hand. The Modi government had been right in assessing that the major powers, including the US, while not necessarily being enthusiastic about India’s behaviour vis-à-vis Nepal, would leave a free hand to New Delhi.[335] The problem was that, on the domestic front, the open opposition to the Nepal policy of some intellectual circles was joined by the silent, but much more redoubtable opposition of two other groups. One was the business community trading with Nepal; the other was the RSS. The latter had always been in sympathy with what had hitherto been the only Hindu state in the world and, accordingly, hostile to the new secular constitution. However, the fact that India’s intervention was justified with the need to defend both Nepal’s democracy and the rights of the Madhes people and Nepali women disturbed the RSS, as a distraction from the real objective, namely supporting the political forces opposing secularism in Nepal.[336]

By the end of the year, there were timid signs that Modi’s government was searching for some face-saving formula to break the impasse which it had so powerfully contributed to creating.[337]

At the time of writing, the India-Nepal crisis is still on-going, which makes it impossible to arrive at a final assessment of it. However, two tentative points can be made, the first related to the causes of the crisis, the second to its consequences.

When one goes beyond the rather funny and scarcely convincing claims that the Modi government’s intervention was motivated by its love for democracy and preoccupation with the political rights of the Madhesi minorities and the gender rights of the Nepali women, the suspicion is legitimate that such an intervention was triggered by the conviction that the Nepali government and constituent assembly, by not heeding New Delhi’s wishes, were taking too independent a stand. Clearly Modi and his government considered Nepal as a sort of protectorate, a conviction which was widely – even if (most of the times) unconsciously – shared by the bulk of the Indian commentators and public opinion. This motivated the Indian government’s arrogant and brutal behaviour, rightly compared to that of Lord Curzon of colonial lore vis-à-vis the Indian princely states and Tibet.

Concerning the consequences of the crisis, it is clear that not only anti-Indian sentiments in Nepal had reached an all-time high, but that the local political class was bound to try to countervail India by building closer ties with China. Of course, in the year under review, recourse to this strategy was drastically limited by the scarcity, length, and difficulty of the land routes connecting Nepal to China. However, the situation was bound to dramatically change in the near future because of the expansion of the railway and all-weather highway connections between the two countries, triggered by the India-Nepal crisis itself.[338]

4.3.2. The India-Pakistan relationship

Since the beginning of his mandate Modi had put Pakistan in front of the choice between either accepting New Delhi’s own guidelines concerning the modalities of the relationship between the two countries or being isolated and put under pressure.[339] In other words, New Delhi’s Pakistan policy was not so different from its Nepal policy; the problem was that Pakistan was not only a more powerful country than tiny Nepal, but also a country which, in contrast to Nepal, had an extremely favourable geopolitical position. Not surprisingly, by the early months of 2015 indications started to abound that Modi’s Pakistan policy was badly failing.

The attempt to isolate Pakistan from the US could proceed only up to a point. Although the relationship between Islamabad and Washington was not particularly warm, Washington’s decision to maintain an important military presence in Afghanistan until 2018 made the safeguarding of tolerably good relations with Islamabad imperative.[340]

On a different front, after having been traditionally difficult, Russo-Pakistan relations started to suddenly flourish. The turning point was the end of Russia’s embargo on arm sales to Pakistan and the inking, in November 2014, of a «milestone» military cooperation agreement between the two countries.[341] In mid-April 2015, this was followed by Moscow’s decision to invest US$ 2 billion in the building of a 1,100-kilometres pipeline for the transport of liquefied natural gas from the port city of Karachi to Lahore.[342]

The Russia-Pakistan deal, however, was soon dwarfed by the almost contemporaneous launching (20 April 2015) of a $46 billion Chinese project, the China-Pakistan Economic Corridor (CPEC). The CPEC – a set of railways, all-weather highways, and pipelines, aiming at connecting Pakistan’s southern Gwadar port on the Arabian Sea to China’s western Xinjiang region – was an integral and radically important part of the Chinese new «Silk Road».[343] The Corridor aimed at providing China with a safer new route to the Middle Eastern gas and oil fields and the European markets than the sea route going through the Malacca Straits. The CPEC also had the potential to easily be extended to Iran, making possible a China-Pakistan-Iran variation of the Iran-Pakistan-India (IPI) pipeline. After having been on the anvil for more than 20 years, the IPI had not been able to take off, because of American opposition and Indian second thoughts.[344]

This being the situation, on 10 July 2015, rather unexpectedly, Narendra Modi and his Pakistani counterpart, Nawaz Sharif, met «for nearly an hour» on the sidelines of the Shanghai Cooperation Organization summit in Ufa (Russia) and decided to restart the negotiation process between the two countries, putting together «a clear road map of events» to take the dialogue process forward.[345] However, the envisaged dialogue process got derailed even before it started. In fact, its initial step – the meeting in August of the Indian and Pakistani National Security Advisors in New Delhi – was abruptly cancelled on 21 August 2015 by the Indian Foreign Affairs Ministry, on the very eve of the meeting itself.

Although the political preparations for the meeting had been badly managed by both countries,[346] the key reason for the negotiations being derailed was India’s continuing attempt to unilaterally impose its own modalities and (newly drawn) red lines on the negotiations between the two countries.[347]

On 30 September 2015, Pakistan Prime Minister Nawaz Sharif tried to re-launch the negotiations by proposing, in front of the UN General Assembly, that Pakistan and India normalized relations by formalizing the 2003 ceasefire line and agreeing to an expansion of the UN Military Observer Group to monitor a new ceasefire. Sharif’s proposal was responded to by India’s Foreign Affair Ministry spokesperson Vikas Swarup, tweeting that: «To demilitarize Kashmir is not the answer. To de-terrorize Pakistan is».[348] This was followed by India’s decision, in October, «to take an aggressive position on Balochistan», highlighting the «atrocities» by Pakistani forces both there and in «Pakistan occupied Kashmir».[349]

In this inauspicious contest there was a new coup de theatre, namely the meeting of the Pakistani and Indian National Security Advisors in Bangkok on 6 December 2015.[350] The meeting itself – which had been prepared in the most absolute and unbroken secrecy – was the result of a «path-breaking 167-second long talks in Paris», between Modi and Sharif, held on 30 November 2015, on the sideline of the climate summit.[351]

From Bangkok onward, the stalled dialogue process appeared to proceed at full speed. On 8 December India’s External Affairs Minister Sushma Swaraj travelled to Islamabad where she held talks with her Pakistan counterpart Sartaj Aziz. At the and of them, at a joint press conference, Swaraj made public the two country’s decision to launch a «Comprehensive Bilateral Dialogue».[352] A fortnight later, this was capped by the «surprise move» by Modi, who, on his way back to New Delhi from Kabul – where he had visited the new Parliament building, gifted by India – made an «unscheduled stopover» in Lahore (25 December), to meet Nawaz Sharif on his birthday.[353] It was a typical vintage Modi move, a highly symbolic personal meeting aimed at highlighting that a new phase in the India-Pakistan relationship had begun.

Summing up, during 2015 Modi’s policy vis-à-vis Pakistan, in spite of a false start, had turned on its head: as late as June 2015, while in Bangladesh, Modi had publicly attacked Pakistan for «constantly» troubling India by promoting terrorism;[354] some six months later he had celebrated Pakistan Prime Minister’s birthday in the latter’s family home near Lahore.[355] More importantly, by accepting the re-launch of a «comprehensive dialogue», Modi had de facto abandoned his attempt, pursued from the start of his prime ministership up until August 2015 and beyond, to impose his own preconditions on the dialogue with Pakistan.

The fact remains that the history of the difficult Pakistan-India relationship, particularly in the last few decades, is such as to make anybody sceptical about the fact that any sudden positive turn can really last over time. Both in Pakistan and India there are powerful interests which militate against any real and long-lasting detente between the two countries. Accordingly, it comes as no surprise that, in the past decades, any positive diplomatic steps aimed at pushing forward meaningful negotiations between Islamabad and New Delhi have inevitably been marred by the increase in incidents along the border and, sometimes, by terrorist attacks.

4.4. India at the Nairobi World Trade Organisation meeting

On 27 November 2014, the WTO’s General Council had set 31 December 2015 as the final deadline for arriving at a permanent solution to the controversial problem of stockholding of food crops, maintained by developing countries for security reasons. Public stockholding of food crops was opposed by the developed countries, which claimed that it distorted market prices. For their part, less developed countries, led by India, had strongly defended their right to stockholding, pointing out that it was crucial to protect the poorer strata of their own population against the danger of scarcity or famine. Thanks to the spirited fight led by India, first at the WTO ministerial conference held in Bali in December 2013, and then in a series of secretive dealings with the US during the second half of 2014, the WTO had provisionally accepted the right of developing and least developed countries to hold public stockholding of food crops beyond the limits officially established by the WTO itself. This right had been sanctioned by a «peace clause», namely an agreement that, while standing, would suspend any legal challenge to the food subsidy policy of any WTO country. At Bali the expiry date of the «peace clause» had been set at 2017; later on (13 November 2014), the US and India had announced that they had agreed on the fact that the «peace clause» would have an indefinite timeframe. A few days later, on 27 November 2014, the WTO’s General Council «unequivocally» agreed to the indefinite «peace clause», fixing however – as noted above – 31 December 2015 as the deadline to solve the food stockholding problem.[356]

This being the situation, the tenth ministerial WTO meeting, scheduled to be held in Nairobi on 15-18 December 2015, was bound to be the place where the whole question of food stockholding and the «peace clause» would be solved. Moreover, some further questions were on the anvil. One was the Special Safeguarding Mechanism (SSM), which developing and least developed countries wanted in order to temporarily raise tariffs in case of surging imports and related price falls. Another problem was the cutting of «trade distorting» subsidies on agricultural and allied activities, requested by developed countries. A crucial part of this problem was the question of subsidies for cotton. Last but not least, there was the question of the continuation/discontinuation of the Doha Development Agenda (DDA). The DDA, launched in 2001 at the fourth WTO ministerial conference, aimed at making trade rules more favourable to developing countries. After 14 years without any substantial results, the developed countries (plus Brazil) wanted the DDA to be abandoned, a proposal which was strongly resisted by developing and least developed countries. The Indian delegation, led by Commerce and Industry Minister Nirmala Sitharaman , played an important role in building and leading a united front that included both most developing countries (the exception being Brazil) and the least developed countries.[357]

Reaching a consensus on all these problems proved difficult enough to force a one-day-extension of the conference to 19 December.[358] The final ministerial declaration, while not an unqualified success for India, was nevertheless far from being a failure. Concerning the food stockholding question, the decision was taken to continue the discussion of the problem in the Committee on Agriculture, to be convened in special session. This actually meant that the 31 December 2015 deadline had been cancelled, de facto leaving India free to continue with its existing food stockholding policy. Regarding the SSM, the developing countries’ right to it was recognised; at the same time the final ministerial declaration stated that this issue was to be defined and reviewed later on. The question of farm subsidies was left open, but the decision to end farm export subsidies was taken. However, while developed countries were asked to start cutting subsidies immediately, the other countries, including India, were allowed to start doing so as late as the end of 2018. A major reverse for India was related to cotton exports: the ministerial declaration established duty-free and quota-free access to the developed countries market for cotton produce, but only for the least developed countries, excluding from this benefit developing countries, such as India. Finally, on the DDA, the final declaration reaffirmed a full commitment to its fulfilment, although noting that some member-nations disagreed about this. However, as WTO’s procedures require the unanimous support of all member-countries for any new resolution, the declaration amounted to a reaffirmation of the validity of the DDA.[359]

In India – possibly favoured by a tweet by Nirmala Sitharaman, saying: «Utterly disappointed! A unanimous reaffirmation of DDA hasn’t happened» – the opposition and most civil society groups portrayed the results of the Nairobi conference as an utter disaster, a «dismal failure» and «nothing, but surrender».[360] But it is difficult to see how – given the compact opposition of all the developed countries, led by the US and supported by Brazil – India could have got more.

The main issues that shaped Bangladeshi politics in 2015 were the emergence of radical Islamic terrorism, the continuation of the trial related to the war crimes committed by pro-Pakistan organizations during the 1971 war of independence, the continuation of the Rana Plaza case, and the positive evolution of the bilateral relations with India.

It is difficult to define the dividing line between the domestic and IS-related roots of the wave of political violence which engulfed the country in the year under review. But it is a fact that in 2015 Bangladesh was wracked by continuous attacks against exponents of civil society, Christians, and foreigners.

In 2015 the targets of and strategy behind political violence changed. Unlike in 2013, when political violence reached heights unprecedented since 1971 and was aimed mostly at political activists and agents of law enforcement, in 2015 violence was directed mainly against common people, including children.

The dimensions of political unrest were such as to make many analysts fearful of there being serious adverse consequences for the promising Bangladeshi economy. The massive infrastructure investments in 2015 had a setback and foreign investors withdrew from Bangladesh’s industrial sector. However, in 2015 Bangladesh maintained its approximately 6% GDP growth rate.

Ties with India were strengthened, in spite of the misgivings caused by Indian Prime Minister Narendra Modi’s anti-Bangladeshi statements during his 2014 electoral campaign.   

1. Introduction

The main factors which characterised Bangladesh’s political evolution in 2015 were the emergence of radical Islamic terrorism, the continuation of the trials related to the war crimes committed by pro-Pakistani organisations during the 1971 civil war, the continuation of the Rana Plaza case[1] and the positive evolution of relations with India.

In a country which, since its foundation, has been dominated by a combination of autocracy, political violence, Islamic extremism and terrorism, the spread of the radical Islam threat was more than predictable. In such a climate, it is difficult to define the dividing line between the domestic and IS (Islamic State) related roots of the wave of terrorism which engulfed the country in the year under review. But it is a fact that, in 2015, Bangladesh was wracked by continual attacks against exponents of the civil society, against Christians and foreigners, and by a massive return of political violence.[2]

It is worth stressing that, in 2015, political violence changed its targets and strategy. In 2013, when it had reached unprecedented heights since 1971, violence was characterised by riots and hartals,[3] which targeted mostly political activists and law enforcing subjects.[4] In 2015, violence was directed mainly against the common people,[5] including children. Its dimensions were such as to make many analysts fearful of serious adverse consequences even for the promising Bangladeshi economy.

The description of the violence that upset Bangladesh in 2015, which will be given below, may seem exceedingly detailed. However, it is necessary to realise that, although the international media have concentrated almost entirely on the attacks taking place in the West, the same situation has held true in other parts of the world, including Bangladesh. Indeed, Africans and Asians were exposed to the same threats faced by Westerners.

2. The first anniversary of Hasina’s second term (and its aftermath)

The year began with the government’s restrictions over the celebrations, on 5 January, of the first anniversary of the 2014 election and the opposition’s protests, which signalled the return to «uncertainty in the political landscape of Bangladesh».[6]

A few days earlier, police and sand-laden lorries had blocked Khaleda Zia—leader of the main opposition party, the Bangladesh Nationalist Party (BNP)—in her office in Dhaka, allegedly to protect her. Long-distance bus services were suspended and gatherings were banned. Fakhrul Islam Alamgir, the BNP secretary general, was arrested, while many other party leaders went into hiding. Tariq Rahman, Khaleda Zia’s son living in London to escape the consequences of corruption charges, publicly incited the Bangladeshi people to overthrow the government. The owner of the television station that broadcast his speech was arrested, although allegedly not for political reasons, but because charged with pornography. Mahfuz Anam, editor of the Daily Star, condemned the «mindless suppression of the opposition».[7] Mohammad Ershad, former dictator and leader of the JatiyaParty, Bangladesh’s third largest party and a League ally, warned that his party’s ministers could quit the government.

The Awami League celebrated the anniversary as «Constitution and Democracy Protection Day», while the opposition renamed it «Democracy killing day».[8] After the assassination of two BNP members, allegedly killed by Awami League activists in the northern district of Natore, the BNP called an indefinite national transport strike. The month-long blockade turned immediately into turmoil. Bombs were thrown into two buses and about 60 people died in clashes.[9]

In spite of this new spell of violence, a year after her electoral success, Sheikh Hasina seemed firmly in control and appeared to be strengthened by international support. The US government, which in 2014 had expressed much criticism of Hasina’s policy, «stopped putting public pressure on the Bangladeshi government».[10]

In 2015, the trial against those responsible for war crimes during the 1971 liberation war continued, with two more executions.

3. 3. The trial goes on

The trial against the 1971 war criminals, started by the Awami League in 2010, went on among the usual controversies and violent retaliations.[11] Since the beginning of the trial, the court had prosecuted 17 people.[12] In spite of internal and international criticism, the sentences were severe. In February 2015, the tribunal ordered the execution of Abdus Subhan, age 79, former vice-president of the Jamaat-e-Islami (JI), declared guilty of six out of nine charges, including murder, genocide and torture. According to the prosecutors, during the 1971 war, Subhan was the head of the JI and of a pro-Pakistani militia in the district of Pabna, in the north-west of Bangladesh. Subhan was accused of having murdered hundreds of villagers in his area, most of them Hindus.

After the sentence was passed, some disorder occurred outside the court, where three Molotov bombs were thrown by suspected opponents of the government.[13] On 16 June 2015, the Supreme Court upheld the death penalty for 67 year old Ali Ahsan Mohammad Mojaheed, Jamaat-e-Islami’s Secretary General, charged with abduction, torture, genocide and the killing of intellectuals. Mojaheed had been a minister in the Khaleda Zia government between 2001 and 2006. The Jamaat-e-Islami immediately called a 24-hour nationwide strike.[14] At the end of July, the death sentence for the opposition leader and former BNP Member of Parliament Salauddin Quader Chowdhury, aged 68, was also upheld. Chowdhury was proved guilty of nine charges out of 23, including genocide, murder, torment, and forced and unfair extradition of people. Chowdhury committed the crimes while supporting Pakistan’s occupation forces during the 1971 liberation war and made use of his house in Chittagong as a torture detention centre. Among Chowdhury’s victims were Sheikh Mozaffar Ahmed, the founder of the Awami League in Chittagong, and his son Sheikh Alamgir.

BNP and JI activists loudly protested against what they claimed to be an unfair sentence. However these protests remained at the verbal level, as the BNP and JI did not call for agitation. By then, after the three month long nationwide blockade, the opposition was politically weakened.[15]

3.1. The executions

On 18 November, the Supreme Court rejected the petitions filed by Ali Ahsan Mohammad Mojaheed and Salauddin Quader Chowdhury and once again upheld the death sentences. The Jamaat called for protests the following day,[16] but to no avail, as the two men were hanged on 22 November. The opposition immediately called for a general strike but, in order to prevent major disorders, thousands of police and border guards were deployed in Dhaka, Faridpur and Raojan, respectively Mojaheed’s and Chowdhury’s hometowns, where the funerals were held on the morning of 22 November. The Awami League’s supporters greeted the executions and held parties in the streets, distributing sweets[17] while, thanks to the massive police deployment, protests were muted. The general strike went on without demonstrations and the day was peaceful.

The Prime Minister has, however, been sharply criticised. Since the beginning of the trial, the main charge was that Sheikh Hasina was exploiting the trial for political gain. Some analysts warned that the executions might provoke further bloodshed in Bangladesh. However, it is a fact that an overwhelming majority of people were in favour of the trial and the execution of the war criminals.[18]

The issue provoked tensions with Pakistan. On 22 November, Pakistan’s Foreign Minister Hina Rabbani Khar expressed «deep concern and anguish» over the executions.[19] This statement provoked an immediate reaction from the Bangladeshi Foreign Minister, A.H. Mahmud Ali, who publicly criticized his counterpart and recalled the Bangladeshi envoy in Dhaka. As a response, Pakistan’s Foreign Ministry recalled its deputy High Commissioner in Bangladesh.[20]

Some observers pointed to the trial as the main source of political polarisation,[21] but this view appears simplistic and biased to this author. Even if the death penalty is objectionable, justice had to be done for the 1971 war crimes.

While the sentences were issued and the political confrontation turned increasingly bitter, violence proliferated and manifested itself in a number of attacks against multiple targets, especially exponents of the secular civil society and minorities.

4. Political violence and its multiple shapes

By the end of February 2015, strikes, blockades, protests and arson had caused 30 deaths (many, including children, burned to death) and hundreds of injuries, while more than 7,000 people had been arrested.[22] Many analysts compared the 2015 violence with the 2013 riots, but the 2015 wave of violence differed from that of two years previously. In 2013, the violence took the shape of clashes between at least two different factions: the supporters of the Awami League government and its opponents, especially the BNP and Jamaat-e-Islami followers. In contrast, as already pointed out, the violence in 2015 was indiscriminate, directed against the common man, characterised by attacks on the crowd carried out by politically oriented gangs trained in urban guerrilla actions. Buses were the preferred targets: bombs were thrown inside them or they were set on fire, causing severe casualties and panic. Moreover, private properties and vehicles were looted and damaged or destroyed. By the end of January 2015, more than 600 motorcycles had been burned. The perpetrators were clearly connected with the opposition, especially with the BNP. The violence was indeed the uncontrolled result of the BNP’s call for strikes. The outburst of violence in February 2015 has been correctly defined «as the most anti-people, unimaginative, cruel and destructive programme that the BNP is embarking on».[23] This agenda alienated the already low public support for the BNP and other opposition parties.

In the following months, the features of the violence changed and differentiated. They took three main shapes: attacks against secular writers and media people, especially bloggers; attacks on foreigners and minorities, especially Christians; and terrorism.

4.1. Secular and independent media under attack

In 2015, four bloggers were hacked to death. All the killings were executed with identical modality. All the victims were attacked by masked assailants who acted in groups of between two and four men. All the victims were butchered with cold weapons, such as machetes, knives or meat cleavers. On 26 February 2015, Avijit Roy, a US national born to a Bangladeshi Hindu family in 1972, was killed in the street in Dhaka. His wife, Rafida Ahmed Bonia, was also seriously injured in the attack. On his Facebook profile, Roy defined himself «as an engineer by profession and a writer by passion».[24] Avijit Roy had founded his own blog, Mukto Mona, and also contributed to other blogs and newspapers. He had authored about ten books on secularism and against religious fanaticism. Roy’s most famous book was Biswasher Virus («Virus of Faith»). In his writing, he frequently compared religion to a disease and denied any scientific reliability in the Koran. His views about Islam were very radical, as he did not acknowledge the existence of any tolerant stream in the Muslim religion. Roy publicly condemned the attack on the school in Peshawar and on Charlie Hebdo in Paris, and debated provocative issues like homosexuality, upsetting many conservative Bangladeshis.[25] In spite of death threats, Roy had just arrived from the US a week before being killed. On 29 March 2015, another secular blogger, Washiqur Rahman Babu, age 27, was assassinated in Dhaka. He was so maimed that the police identified him from his voter card. Washiqur Rahman had attacked the fundamentalists in his blog.[26] On 12 May 2015, Ananta Bijoy Das, 32 years old, was murdered in Sylhet. Das was a banker, a progressive writer and editor of the science fiction magazine Jukti. He was also an activist in the Gonojagoron Mancha («People’s Resurgence Platform»), an organisation connected to the Shahbag Square movement, supporting the International Crimes Tribunal and the death penalty for the criminals.[27] Das was connected with Avijit Roy, as he had written blogs for Roy’s Mukto Mona. Das had also criticised Islamic fundamentalism in his blog. Within a few hours of Das’ murder, a message was posted on Twitter by somebody concealing himself behind the nickname «Ansar Bangla 8», claiming responsibility for assassinating the blogger. Apparently, the nickname referred to the Ansar Bangla or Ansarullah Bangla Team (ABT), namely an extremist organisation implicated in various criminal activities, including murder and bank robbery. The same username later tweeted the message: «Al-Qaeda in Indian Sub-Continent (AQIS) claimed responsibility of [sic] killing  Ananta Bijoy in Sylhet.».[28] AQIS posted another message in Justpaste.it, threatening those who insulted Allah and the Prophet Mohammed.[29]

The police headquarters asked the Home Ministry to ban ABT for its involvement in several attacks on secular bloggers and writers.[30] One more attack took place on 6 August, when 28 year old Niloy Chatterjee— pen name Niloy Neel—was killed in his flat in Dhaka. Chatterjee too was a Hindu and belonged to the Gonojagoron Mancha. Responsibility for the murder was claimed by an organisation named Ansar al-Islam, apparently a local affiliation of Al-Qaeda. Niloy’s wife reported that her husband had tried to file a complaint about having been threatened, but the police had refused to receive it.[31]

On 31 October, two attacks took place in Dhaka against two publishers. Both had printed Avijit Roy’s books. During the first attack, the office of the Shudhdhoswar publishing house was assaulted by three men carrying cold weapons. The publisher, Ahmed Rahim Tutul, was in a conversation with two writers when the killers broke into his room. Both Tutul and the two writers were seriously wounded and had to be hospitalised.[32] During the second attack, which occurred a few hours later, Faisal Arefin Dipan, head of the publishing house Jagriti Prakashani, was assaulted in his office in the Shahbag area and stabbed to death.[33] Both publishers had filed a complaint with the police claiming they were being threatened.[34] However, in these cases again the police did not take any precautions.[35]

The attacks on the two publishers have been claimed by AQIS’s affiliate Ansar-al-Islam. In a message sent to the media, Ansar-al-Islam asserted: «These two publishers were worse than the writers of such books, as they helped to propagate those books and paid the blasphemers [a] handsome amount of money for writing them».[36]

After the attacks on the publishers, writers and citizens alike turned out in large numbers for a rally on the streets of Dhaka on 3 November, asserting the right to free speech.[37]

The attacks on bloggers and publishers have been strongly criticised by several eminent voices including the Committee to Protect Journalists, the Blogger and Online Activist Network, and Human Rights Watch, who urged Sheikh Hasina to take steps to ensure the safety of secular writers in Bangladesh.[38] About 150 writers, including Salman Rushdie, Margaret Atwood, Yann Martel and Colm Tóibín, signed a letter condemning the attacks and asking the government to take measures to prevent similar events.[39]

The role of the police is not clear. At least three victims had sought help from the police, who did not take any steps to protect them, even when the blogger issue had clearly become an emergency. The Inspector General of Police, after defending the free thinkers, declared that respecting religious feelings is a duty, so much so that: «Any offender of religious beliefs may get the highest punishment of 14 years».[40] Many labelled the Bangladeshi bloggers «atheists», but none of them published any blasphemous message.[41]

The attacks had several aspects in common: the targets, the methods and the weapons. As far as the methods are concerned, they were clearly inspired by the Charlie Hebdo assault. This aspect can be explained in two ways. The attackers may have been affiliated to IS and therefore shared its targets and methods; or they could just be politically motivated local gangs, who flaunted their affiliation to radical Islam and emulated its methods, but pursued different goals, most probably connected to local politics. The victims have some common features. Two were Hindus and two belonged to Gonojagoron Mancha. They were not common people, but they had the capacity to voice some of the values that the government was trying to promote, like the trial of the war criminals, secularism, freedom of speech and belief. These assassinations, therefore, could not just be directed against the offenders of Islam, as officially claimed, but targeted government policies, particularly the war crimes trials. Gonojagoron Mancha started in 2013 in connection with the above quoted Shahbag Square movement and can be considered the Shahbag online voice. Gonojagoron Mancha rapidly became a nationwide movement, demanding capital punishment for war criminals and safeguarding of the «nation’s secular ideals that were attained through the liberation war in 1971».[42]

In September 2015, the ABT published a hit list of 18 secular bloggers, writers and activists to be killed if they did not stop criticising radical Islam or writing about «blasphemous» topics. The targets were not only Bangladeshis living in the country, but also Bangladeshi nationals based abroad, individuals with dual nationality, and citizens of Western countries. The list includes nine persons living in the UK, seven in Germany, two in the US and one in Canada.[43] A prominent name in the list was Taslima Nasreen, who has lived under police protection in India for the past 21 years, after receiving death threats from Muslim fundamentalists.[44] Some individuals in the list declared their decision to continue writing and blogging. Some of them approached the police after the publication of the list. The authorities seem to have taken the matter seriously and advised the writers to take precautions to reduce the risk of attack.[45]

It is unclear if the ABT has the capacity to act abroad, but the publication of the list may be a call for action potentially capable of triggering a witch hunt outside Bangladesh. The publication of the black list, indeed, may call for «lone wolf» action around the world.[46]

4.2. Attacks on foreigners and religious minorities

On 28 September, the Italian aid worker Cesare Tavella was killed on a street in Gulshan, Dhaka’s diplomatic area, while he was jogging. A 50 year old veterinary surgeon, Tavella was working as project manager for the Dutch NGO ICCO, within the programme Cooperation’s Profitable Opportunities for Food Security (PROOFS). Witnesses reported that the assailants fled on a motorcycle and that one of them was carrying a gun. The forensic expert Qazi Md Abu Sharma, after inspecting Tavella’s body, told the media that the Italian aid worker had been «shot three times from behind at close range» with a revolver.[47] The American SITE Intelligence Group, which monitors online activities of radical Islam, reported a statement released shortly after the murder, where IS claimed that a «security detachment» had tracked Tavella through the streets of Dhaka and killed him with «silenced weapons». The statement warned that foreigners should not feel confident in Muslim lands. It announced more attacks in Bangladesh on citizens belonging to «the crusader coalition».[48]  The “crusader” Tavella had chosen to work in Bangladesh (as he did in several other developing countries) to train farmers to breed cattle.[49]

According to the Bangladeshi authorities, Tavella’s murder was planned, but he was not the objective. The attack was rather directed against the Western presence, activities and interests in Bangladesh. The Bangladeshi authorities and the Prime Minister denied the presence of IS cells in Bangladesh.[50]

According to the Italian diplomatic and intelligence authorities cooperating with the Bangladeshi investigators, the attack was deliberately directed against Tavella, yet the reasons for the murder had to be clarified.[51] However, the thesis supported by the Bangladeshi authorities, according to which the terrorists’ targets were not specific individuals but foreigners as such, seems to be more plausible, as shown by the assassination of a 65 year old Japanese farmer, Kunio Hoshi, on 3 October. Kunio was killed by three masked gunmen, who shot him while he was on the way to his farm in Rangpur.[52] The murder was claimed on the same day by the IS, but the Prime Minister, who met the journalists at her residence on 4 October, once again denied any IS involvement. She asserted that the killings of the two foreigners were «part of a conspiracy to tarnish the image of the government».[53] The paradoxical nature of these rather indiscriminate attacks is highlighted by the fact that Kunio Hoshi had recently converted to Islam.[54] The murderers kill people who are either concerned about Bangladesh’s development or who share their assailants’ faith.

The murders of two foreigners in less than a week increased the alarm of Western authorities. Before the killings, the Australian and British embassies had informed their citizens that «there is reliable information to suggest that militants may be planning to target Western interests in Bangladesh».[55] After Tavella’s murder, the Canadian Embassy issued a web site alert to its nationals, informing them that «attacks cannot be ruled out and could be indiscriminate. Terrorist attacks could occur at any time and could target areas frequented by expatriates and foreign travellers. Limit your attendance at events where Westerners may gather, for example in hotels or conference centers».[56] The message issued by the American authorities warned that «in case of increased threat, US citizens should maintain a high level of vigilance and situational awareness and should exercise caution in public places including restaurants, hotels and other places frequented by foreigners».[57] Before Tavella’s killing, Cricket Australia (CA) delayed the arrival of its cricket team in Bangladesh because of security concerns. The Australian authorities had received «reliable information» on the possibility of attacks by Islamic militants. A few hours before Tavella’s murder, the Bangladesh authorities had already provided the Australian team with the highest security.[58]

Attacks on foreigners represent a serious threat to Bangladeshi business, which depends upon foreign investments, export of Bangladeshi goods and delocalisation in Bangladesh. One of the main disruptive effects of the climate of terror spreading in the country is its negative consequences for the economy. Investors – especially in the ready-made garment sector, which is the backbone of Bangladesh economic development – have cancelled their trips to the country.[59]

Sheikh Hasina promised prompt action to capture the culprits of the attacks on foreign citizens.[60] Once more, the government blamed the opposition for the violence against foreigners.[61]

On 5 October, a 52 year old Bangladeshi pastor from Pabna survived a vicious assault by three men who came to his house, pretending to be interested in learning about Christianity. The assailants, between 25 and 30 years old, attacked the pastor with knives. The man suffered minor injuries.[62] Less than two weeks later, on 18 November, an Italian missionary and doctor, Piero Parolari, was gunned down by three men while riding his bicycle to church in Dinajpur. The assailants fled on a motorbike. The priest survived the wounds. Parolari had been living in Bangladesh since 1984.[63] IS claimed responsibility for the attempt.[64]

Alok Sen, leader of the Hindu–Bouddho–Christian Unity Parishad in Faridpur, survived an assassination attempt. The assailants were armed with kitchen knives. The attempt on the religious leader took place on 24 November, the day after Ali Ahsan Mohammad Mojaheed’s burial in Faridpur.[65]

Besides the attempts on individuals, the terrorists carried out attacks on religious crowds and holy places. The Shia community was repeatedly targeted between October and December. The first strike took place on 24 October, the day of Ashura, when a series of bomb blasts killed a boy and wounded over a hundred people gathered for a procession in the old part of Dhaka. When claiming responsibility for the attack, IS defined the religious gathering as «polytheist rituals».[66]

An almost identical attack killed 16 people during a Shia procession in Pakistan hours earlier, but the Bangladeshi Home Minister, Asaduzzaman Khan, denied any involvement of extremists or any connection between the two attempts. The minister, as usual, blamed the opposition for «aiming only to destabilize the situation of the country».[67] The attack provoked consternation in the country, as the day of Ashura in Bangladesh has been peacefully celebrated for some four hundred years and the Shia community had rarely been under attack in the past.

National and international experts, including the Italian Ambassador and the Italian media,[68] shared the Home Minister’s doubts about IS involvement in the violence that upset the country throughout the year. An international relations expert who did not want to be identified noted that militant organisations have the tendency to attack targets where «casualties are likely be higher», ensuring that their names make headlines across the world. «By all means, this seems to be a conspiracy at maligning [sic] the global image of Bangladesh», he said.[69]

On 26 November, three young men stormed into a small mosque in the Bogra district and opened fire indiscriminately on the worshippers during the function after locking the main gate. The muezzin was killed and three people were wounded. The attack has been claimed by IS, but the authorities continued to question IS’s involvement and suspected that the banned Jamaat-ul-Mujahideen Bangladesh (JMB) might have been behind the attack.[70]

On 5 December, three crude bombs exploded outside Kantaj Temple in Dinajpur during a religious gathering. At least ten people were injured, three of them seriously.[71] The attempt took place in Faridpur, Ali Ahsan Mohammad Mojaheed’s birthplace, the same area were Parolari was assaulted a month earlier.

IS involvement in the attacks in Bangladesh is not beyond doubt. The hypothesis that the mainstream opposition parties may exploit radical Islam as an instrument to destabilise the country and topple the government cannot be discarded. Indeed, this hypothesis is shared by most analysts and by the Bangladeshi government alike. As shown above, the latter has consistently denied the affiliation of the killers to Islamic State and «blamed domestic Islamist militants and parties for orchestrating the violence in a bid to destabilise the nation».[72]

5. 5. A wave of arrests

At the time of writing this text, the attitude of the police regarding the assassinations was unclear. As already seen, in some cases the police did not take proper action to protect the victims who reported harassment and did not take any measures to protect them. The Bangladeshi authorities have been under international pressure, including in consideration of the high exposure of foreign citizens living in Bangladesh and the size of foreign investments in the country. The police’s reaction only came in August 2015, perhaps after government pressure. Since then, the police have become very efficient and have carried out a series of notable arrests. When the violence against foreigners became an embarrassing issue, the police, about a week after Niloy’s August assassination, arrested two suspects, Saad al-Nahin and Masud Rana, both members of the banned ABT. Nahin was on bail on the charge of attempted murder of another blogger in 2013. A further three men were arrested shortly afterwards, on 17 August 2015. They too belonged to the ABT. According to a spokesman for the Rapid Action Battalion, a paramilitary police unit, Touhidur Rahman, a 58 year old British national of Bangladeshi origin, was the «mastermind and financier of the attacks» on Avijit Roy and Ananta Bijoy Das.[73] Another of the three arrested, Sadek Ali Mithu, 28, acted as the «bridge» with the alleged head of the ABT, Mufti Jasim Rahmani, in jail for the assassination of a blogger in 2013. The third man arrested, Aminul Malik, 35, apparently was not directly involved in the murders, but helped the ABT militants to escape abroad by furnishing them with forged passports. By the beginning of September, the police had arrested seven militants.[74]

Cesare Tavella’s alleged killers were arrested a month after his assassination, on 26 October 2015. Dhaka police held four people, three of whom have been identified as Tavella’s killers.[75] The suspected assailants of the Italian priest Piero Parolari were held immediately after the attack. The Secretary General of the Jamaat-e-Islami, Mahbubur Rahman Bhutto, has been arrested, while ten more people have been held in custody.[76]

At the end of November, the police detained two members of the Jamaat-e-Islami. One of them spread pro-Caliphate propaganda on Facebook under the pseudonym Jihadi John.[77]

On the evening of 4 November 2015, commandos, armed with machetes, rode on motorbikes up to a checkpoint in Baroipara, in the Dhaka suburbs, and assaulted the stationing policemen. Three were seriously injured and one was killed. Most probably the attempt was a retaliation against the police for the crackdown of the previous months.[78] Between October and November, another three attacks on policemen were carried out and another officer was killed.[79]

At the end of the year, on 24 December, the police raided a building in the capital and seized a massive quantity of weapons and explosives, including bombs, grenades, suicide belts and substances to produce at least 200 bombs. In the operation, the police detained seven men associated with the banned Jamaatul Mujahideen Bangladesh. When the raid started, the militants exploded bombs, fortunately without consequence.[80]

Apart from the arrests, the Bangladeshi government also took several measures to combat radicalism at the international level. According to security and intelligence sources in Dhaka, Bangladeshi diaspora communities in the UK finance and encourage young Bangladeshi radicals to join the international jihad. The Jamaat-e-Islami is very active in East London. Two of three British citizens recruited by IS and killed by drone strike in Syria in August 2015 were of Bangladeshi origin. Sheikh Hasina urged David Cameron «to do more to combat radicalism, as British jihadists play a prominent role in fomenting the Muslim radicalism in Bangladesh». «The British government should take more steps on the ground», the Bangladeshi Prime Minister told the press.[81]

In November, the Bangladeshi government, considering that the criminals made use of apps and social media, decided to block Viber, WhatsApp and the social media for some days. On 11 November, the Prime Minister announced to parliament the decision to suspend the internet connection in the country for some days.[82] Most probably, the internet blackout allowed the Bangladesh Telecommunication Regulatory Commission (BTRC) to put into operation Internet Safety Solutions, a system to monitor the social media and cyber activities. Several agencies have been involved in efforts to prevent cybercrimes.[83]

On 23 December, the second secretary in Pakistan’s high commission in Dhaka, Farina Arshad, was recalled to Islamabad following a request by the Bangladeshi authorities. She was suspected of having financed a member of the Jamaatul Mujahideen Bangladesh on trial for espionage.[84]

6. 6. Bangladesh’s Muslim radicalism: identity and financial sources

In a year, the Bangladeshi authorities arrested 15 IS suspects.[85] Nevertheless, official sources continued to deny any IS involvement in the series of bloody attacks that shocked the country in 2015. Most attacks and murders have been claimed by IS and most of the arrested seem to have actually been connected with the group. However, as maintained by the government, the opposition may be involved in most, if not all, the attacks, through its militant wing, the Jamaat-e-Islami.

In a context like the intricate Bangladeshi political scene, it is difficult to identify the dividing line between domestic political radicalism and international militancy. Political identities and demands are changing in Bangladesh, where there are no less than 125 Islamist militant organisations. Seven of them are prominent: the already mentioned Ansarullah Bangla Team (ABT), AQIS and Jamaatul Mujahideen Bangladesh (JMB); plus the Harkat-ul-Jihad-al-Islami Bangladesh (HuJI-B), the Hizb-ut-Tahrir (HuT), the Jagrata Muslim Janata Bangladesh (JMJB), and Sahadat-e Al-Hikma (SAH).[86] Among them, the most active groups are the ABT and JMB. They may be connected with IS, as claimed by IS itself after the attacks and confirmed by information obtained from the arrested. As far as AQIS is concerned, in September 2014, Ayman Al-Zawahiri, in a video released by Al-Qaeda, announced the formation of a new body: «Al-Qaeda in the Indian Subcontinent».[87]

The emergence of violent radical Islam in Bangladesh may be explained by the competition between Al-Qaeda/AQIS on one side and IS on the other. Both organisations aspire to obtain the international leadership of Islamic extremism and both seek maximum visibility for their actions. AQIS may try to strengthen its presence in South Asia in order to claim a role in a post-American Afghanistan and in a post-Zawahiri Al-Qaeda, remaining active in a region – South Asia – where Al-Qaeda has its historical roots. On its part, IS may be engaged in challenging Al-Qaeda’s influence in South Asia. In fact, at the end of January 2015, IS announced its formal establishment in the Af-Pak region.[88]

According to Abul Barkat, Professor of Economics at Dhaka University and an expert in the economics of fundamentalism, the Bangladeshi Islamist extremist organisations are «the militant front of the mainstream Islamist Party», the Jamaat-e-Islami. JI has created «a state within a state» and an «economy within an economy» in Bangladesh.[89] The Jamaat has established its presence in most sectors of Bangladesh civil society and economy: NGOs and microcredit, madrasas, mass media, banks and finance, the pharmaceutical industry and healthcare, real estate, trade and transport. Professor Barkat has calculated that the Jamaat’s annual net profit amounts to about US$ 278 million. The largest part of JI’s income, 27.5%, derives from bank, insurance and finance. The second main source of income, 18.7%, is from the NGOs. About 10% of the total amount goes to the party’s political activities. The strongest business lobbies in Bangladesh are connected with the BNP and JI, and many persons accused of war crimes control this business. Mir Quasem Ali, a Jamaat-e-Islami executive committee member sentenced to death for crimes against humanity in the 1971 war, was a business tycoon and the director of the Islamic Bank of Bangladesh Ltd. (IBBL), Jamaat’s principal source of funding. The IBBL has been involved in illegal activities, some of which were carried out on Jamaat’s behalf. In 2006, Mir Quasem Ali was prosecuted under the Money Laundering Act for crimes committed through the IBBL. The Islamic Bank of Bangladesh was founded in 1975 at the initiative of the Saudi Ambassador in Dhaka, Fuad Abdullah Al Khatib, and has become one of the largest banks in South Asia, with 60% of its shares held by Saudi Arabian subjects. Recently, the IBBL extended its connections with the Islamic world, forging links with the Razee Bank of Saudi Arabia. Besides IBBL, Jamaat controls fourteen other banks, including the Islamic Bank Foundation (IBF), an affiliate of IBBL. Mir Quasem is the chief of the IBF and of the Saudi Arabian NGO Rabeta-al-alam-al-Islam. With other NGOs like the Kuwait Relief Fund and the Al-Nahiyan Trust from Saudi Arabia, Rabeta runs several projects in Bangladesh.[90] Therefore, the government’s explanation for the insurgence of Islamic radicalism in Bangladesh seems to be correct. IS is probably a label to cover a network of local political movements and organisations coordinated by JI, with the common dual objective of overthrowing the secular tradition and values represented by the Awami League since the foundation of Bangladesh and attacking the local religious minorities, namely Shia Muslims, Hindus and Christians.

7. Will IS proliferate in Bangladesh?

The attention of international experts, analysts and governments is focused on Syria, Libya, Afghanistan and other areas in the Middle East and Africa, considered the core of IS and international jihadism. Bangladesh is somehow neglected as a potential laboratory and a manpower reserve for international terrorism. However, Bangladesh, the world’s third most populous Muslim country, should not be underestimated as a potential recruiting ground for radical Islamic organisations. The same applies to the huge Bangladeshi diaspora. Even if it is not possible, at present, to quantify the phenomenon, Bangladeshis living in Great Britain and other European countries are a fertile recruiting ground for radical Islamic organisations. For instance, in April 2015, an entire family of eleven people based in Britain disappeared. It reportedly joined the Islamic State in Syria. At the beginning of July, IS posted a message asserting that the family was «safer than ever with the Islamic State».[91]

Adherence to radical Islam is a phenomenon which involves middle class families living in metropolitan cities in Bangladesh or abroad. They are isolated, tend to lose their family networks and, therefore, recognise themselves in the religious community that symbolically replaces the extended family.[92]

The Bangladeshi diaspora, along with Islamic charities, is the main source of IS financing. The reasons – which explain the growth of Islamic radicalism among Bangladeshi youths, both in their homeland and abroad—are similar to those which apply to other Muslim youths living in Muslim countries, in Europe and in the United States: unemployment, lack of prospects, social and political exclusion, lack of government measures and discrimination have created space for radical Islam. Within the mosques, these youths feel acknowledged and involved. Those who join the armed units are well paid. Jihad becomes a job.[93] In 2014, the unemployment rate among Bangladeshis in the UK over 16 years of age was 13.4%, which, as far as unemployment is concerned, made them the third most affected community in the UK after Pakistanis (16.9%) and Africans and Caribbeans as a whole (15.3%).[94] IS is able to capitalise on the lack of social and economic integration not only in Western societies, but also in Bangladesh.

Besides political violence, the country is still affected by social insecurity and a lack of fundamental rights. Among the many other challenges Bangladesh has been facing since its foundation, from poverty to climate change and environmental problems or women rights, two are particularly alarming: the violence against minors and the labour conditions.

8. Minors at risk

Between July and August 2015, three teenagers and a small girl were brutally killed. Muhammad Samiul Alam Rajon, 13 years old, was killed in Sylhet on 8 July. He was tied to a pole and tortured for about an hour. On 3 August, in Khulna, Rakib Hawladar, a 12 year old, was tortured to death with unthinkable cruelty. On 4 August, Sumaiya Akter, a 3 year old girl, died after being heavily beaten by her parents. The next day, Robiul Awal, 15 years old, was beaten to death for allegedly having tried to steal food. Rakib Hawladar was murdered by the owners of the garage where he had worked because he moved to another nearby garage. Witnesses reported that the boy had previously been harassed and tortured on many other occasions. Sumaiya Akter’s father, Emran Hossain, was a carpenter who had fallen into debt. In order to earn some money, he and his wife duped people into thinking they had supernatural powers and could exorcise them from evil spirits. The couple used the girl to simulate a ritual, where she was beaten to expel the evils from her body. These facts attracted people’s attention.

A friend of Rakib Hawladar witnessed part of the scene and reported the facts to the local media. The boy was rescued, although too late, by bystanders who, after his death, broke into the garage and brought the owners to the attention of the police. Rajon’s murder was filmed and the video went on Facebook. It outraged the public and stirred a public outcry across the country. One of Rajon’s murderers, Kamrul Islam, managed to flee to Saudi Arabia, but was caught by some Bangladeshi expatriates and handed over to the police. The post «#JusticeforRajon» circulated on Twitter, Facebook and the main social media. In November, four men involved in Rajon’s murder and two in Rakib’s murder were sentenced to death, to the cheering of the crowd gathered outside the court.[95]

Thanks to the public uproar, the police were compelled to act promptly. On 12 August, people were arrested for Rajon’s murder, while Rakib and Robiul’s killers and Sumaiya’s parents were arrested on the spot.[96] According to the Bangladeshi Shishu Adhikar Forum (BSAF) – a Dhaka based organisation promoting children’s rights – at least 154 children were killed in Bangladesh between January and June 2015, 292 in 2014 and 180 in 2013.[97] Children in Bangladesh are victims of rape, sexual and other kind of abuse, and are often killed for insignificant reasons.[98] These facts prove not only that children’s rights in Bangladesh are still not respected and that childhood is exposed to tremendous risks, but also that the combination of poverty and ignorance can be deadly. All the murders described above had economic motives: Rakib was a working child; Robiul was compelled to steal food; Sumaiya died because of her parents’ economic problems; Rajon came from a poor family.[99] The poor in Bangladesh are powerless and are often blackmailed by criminals. Children fall prey to sexual exploitation, child labour and kidnapping for illegal trafficking.

On 14 March, the dead body of ten year old Abu Sayeed was discovered in the house of a police officer in Sylhet. When arrested, the man confessed that the boy had been abducted. The General Secretary of the Sylhet Ulama League and an officer of the Rapid Action Battalion were involved in the murder. The kidnappers had demanded a ransom of 500,000 Taka—less than 5,000 euros—from Sayeed’s family.[100]

Child suicide is on the increase in Bangladesh. In 2014, about 95 children took their own lives. According to the experts, children are depressed because they are affected by poverty, child marriage and child labour, and are forced to take responsibilities they cannot bear at an age when they should only study and play. In metropolitan areas, there are not even playgrounds, as land is being used to erect buildings and shopping centres. Children play on the streets and are frequently victims of accidents.[101]

Children have always been exploited and abused in Bangladesh. The people’s fierce reaction and the role of social media in denouncing the crimes prove that awareness of children rights is increasing, but also that much has still to be done.

9. The Rana Plaza issue

Other powerless subjects in Bangladesh are factory workers, especially those employed by Western garment firms. According to a Human Rights Watch (HRW) report published on the occasion of the second anniversary of the Rana Plaza disaster of 24 April 2013,[102] the workers continue to suffer from poor working conditions, «physical assault, verbal abuse, forced overtime, unsanitary conditions, denial of paid maternity leave, and failure to pay wages».[103]

After the Rana Plaza collapse, the Western retailers set up two consortia, the Accord on Fire and Building Safety – a group of 180 companies based mainly in Europe – and the Alliance for Bangladesh, representing 26 North American firms. The two institutions have helped Bangladeshi businessmen to improve the structures of their firms and to set up an inspection regime. The two organisations oversee more than 2,000 factories. On its part, the Bangladeshi government has facilitated the registration of new unions. These now number about 400, three times more than in 2012. According to the HRW report, workers who try to form unions are often intimidated, dismissed or physically assaulted.[104]

The Clean Clothes Campaign – an alliance of unions, NGOs and other organisations in sixteen European countries – has been campaigning since the April 2013 tragedy, demanding that companies and retailers compensate the families of the victims and the injured. The Clean Clothes Campaign has exposed many world famous companies whose clothes were produced by the factories housed in the Rana Plaza building and has mobilised more than a million consumers.[105]

In September 2013, representatives from the Bangladeshi government, local and international garment companies, trade unions and NGOs came together to form the Rana Plaza Coordination Committee. With the International Labour Office (ILO) acting as a neutral chair, the Committee aimed «to develop a comprehensive and independent process» to support the victims, their families and the workers, according to international standards.[106] In January 2014, the ILO set up the Rana Plaza Donors Trust Fund to collect the financial resources to refund loss of income and the medical expenses faced by the victims and their families. The ILO was the sole trustee. The fund was financed by a combination of donors, including buyers, companies and individuals who wished to make a voluntary donation.[107] In November 2014, the Rana Plaza Coordination Committee announced that about US$ 30 million was required to cover the refund costs.[108] In April 2015, a week before the anniversary of the Rana Plaza disaster, 21 million dollars had been collected and nine million were still missing. Benetton, which sourced clothes from a Rana Plaza factory, eventually promised to donate 1.1 million after denying any connection with the factories in the collapsed building. Benetton’s donation came after protests and a petition signed by one million people asking the Italian corporation to donate alongside other Western companies.[109] The companies were supposed to contribute on the basis of their share of production at Rana Plaza factories, according to ILO compensation conventions. Benetton’s share was 1.8%. The Italian company donated an extra 500,000 dollars to BRAC, the main Bangladeshi NGO.[110] Other Western companies that manufactured in Bangladesh but not in the collapsed building, donated to the fund: the US$ 30 million target was eventually reached in June 2015.[111]

On 1 June 2015, the Bangladeshi authorities filed murder charges against 41 people for the Rana Plaza collapse. Among the accused were the owner of the building, Sohel Rana, his parents, the owners of seven factories housed in the complex, and some government officials. Initially, the defendants were charged with culpable homicide, but later the court, due to the gravity of the accident and at the investigators’ request, decided on a charge of murder. In the latter case, the defendants risked the death penalty, whereas the maximum punishment for culpable homicide in Bangladesh was only seven years in jail. The investigators changed their attitude after discovering that the management of the factories, on the day of the accident, forced the workers to enter the building despite the fact that it had developed major cracks the previous day. The police defined the Rana Plaza collapse a «mass killing». Other charges were related to the violation of safety rules, as additional floors had been built up over the existing five and had illegally housed additional factories. In December, the court issued arrest warrants and ordered the seizure of the properties of 24 suspects who had absconded. The defendants were asked to report to the police, in order to be arrested, by 27 January 2016.[112]

10. A promising economy constrained by political turmoil

Despite a slight decline in economic growth in the fiscal year (FY) 2015[113] and all the challenges it was facing (on which more below), Bangladesh, according to the World Bank and the IMF, advanced 14 steps from 58th position in the world economy in 2013 to 44th position in 2015.[114] Indeed, Bangladesh’s economic growth did well in the first half of FY15.[115] The growth rate was 6.4% – a good result, but far below the 7% rate expected by the government.[116] According to the World Bank, the GDP growth rate should rise to 7.5-8% to accelerate the poverty reduction and improve shared prosperity.[117] In the second part of 2015, the World Bank and the Asian Development bank had to revise their growth forecasts respectively to 6.8% and 6.7%, while inflation was expected to remain at about 6.2%.[118]

There is no survey-based evidence on poverty reduction in Bangladesh since 2010; however, it is assumed that the sustained GDP growth of approximately 6% has been the result of agricultural growth of 3.3% and remittance growth of 6.7%, which, taken together, made possible an annual poverty decline of 1.74% between 2000 and 2010.[119]

During the year under review, the global growth recovery – in particular in the US and Europe – had positive repercussions on Bangladesh, while the low international commodity prices favoured the investments and helped to contain inflation. The 12 month average inflation decelerated from 7.6% in February 2014 to 6.8% in February 2015.[120]

The fiscal deficit was stable. The total budget deficit in the first half of FY15 amounted to 108.96 billion against 118.70 billion in the same period of FY14.[121]

The Eighth Pay and Service Commission suggested a 100% salary increase for civil servants. It was recommended that the lowest basic salaries be raised from 4,100 Taka (US$ 52) to 8,200 Taka, and the highest basic salaries from 40,000 (US$ 510) Taka to 80,000 Taka. The government planned to implement the Commission’s recommendations gradually, beginning in FY16.[122]

Despite its promising results, Bangladesh’s economy was exposed to several challenges. In 2015, the political turmoil took a heavy toll on the economy and tested the resilience of Bangladesh’s growth. Disruptions to domestic transportation due to the blockades in the first months of 2015 broke the supply chains. The apparel sector, which improved after the Rana Plaza reforms, recorded losses due to order cancellations, shipment delays and vandalism. Retailers cancelled trips and orders, shifting them to India, China, Pakistan, Myanmar, Vietnam and Indonesia. The Bangladesh Shop Owners’ Association, which represents 2.5 million retailers, reported that sales dropped from 30 billion to 9 billion Taka a day.[123]

Disruptions also had a negative effect on revenue collection, which in the first four months of FY15 was 3.2 lower than the corresponding period of FY14.[124] The pessimistic investment climate was confirmed at the end of 2015, due to the persistent risk of political instability. [125]

Besides political unrest, other risks threatened Bangladesh’s development. The financial sector was weak due to rigid lending rates, nonperforming loans, financial scams and lack of accountability in bank management.[126] The land market was very inefficient because of long delays and high costs in property registration, lack of ownership data, weak computerisation of land records, poor zoning laws and high transaction costs. The availability of land for manufacturing enterprises was insufficient.[127]

On 18 February 2015, the government approved a proposal to establish 17 special economic zones (SEZs) to attract local and foreign investors. However, the implementation of infrastructural projects was poor as a consequence of resource constraints, unrealistic targets and procedural lapses between the initiation and the completion of the projects. Corruption was often behind the delays. Sometimes projects were approved far beyond the planned inception date. Procedural delays and post-approvals held back the projects’ start-up. Key projects started in 2014, mostly with foreign investments – such as the Dhaka-Chittagong four lane highway, the double tracking Dhaka-Chittagong railway, the Dhaka metro rail, the Moghbazar Flyover, the two Bibiyana gas power plants and others – were proceeding disappointingly slowly.[128]

Apart from domestic factors, Bangladesh is expected to face global challenges in the short and medium term. The slowdown of the European economy may compromise Bangladesh’s export competitiveness in the main European markets. Moreover, exports to the European Union risk being cancelled or reduced if Bangladesh does not succeed in improving labour and safety standards in the garment sector.[129]

Female employment is the key factor in Bangladesh’s short and medium term development. The country is facing a potential decline in GDP growth from the present 6% to 5.7% in FY17, because of both the labour force’s decline and reduced growth in productivity. The labour force has begun to decline because of ageing, wider access to education and migration. There is a chance to increase the labour force growth by improving female employment, however: women make up a little over half the national population, but their contribution to the country’s economy is far below its potential. In spite of significant progress in recent times, the labour market remains divided along gender lines and the promotion of gender equality in employment has stalled. It has been estimated that if female labour participation rates were to rise by 2.1 million a year for ten years, pushing up the total female participation to 75% of its full potential and reaching the level of Thailand in 1990, the growth rate would rise to 7.3%. The leverage to stimulate women’s participation is developing early childhood and tertiary education, technical training, and reducing legal and social impediments to pursuing a profession.[130]

11. India-Bangladesh ties grow up

«Hum paas paas hain, hum saat saat bhi hain» (literally, «we are close close, we are also together together»). [131] The sentence sounds like a line of a ghazal, but it is part of Indian Prime Minister Narendra Modi’s talk on the occasion of his two-day visit to Bangladesh on 6 and 7 June 2015. «We are close and united» was the ultimate meaning of Narendra Modi’s words.

India is adopting a leading role in the region, with the objective also of containing China’s expansion into the Bay of Bengal. In this context, Narendra Modi’s visit to Bangladesh was the first tangible act of rapprochement between the two countries after the tensions caused by the territorial dispute dividing them and Modi’s electoral and post-electoral declarations about Bangladeshi illegal immigrants in India. In fact, during his electoral campaign in 2014, Modi declared that if the BJP came to power, the «Bangladeshis would have to pack their bags and leave India».[132] In June 2015, however, the Indian Prime Minister carefully avoided the subject. On Modi’s initiative, the land boundary agreement –which had been inked in 1974, namely 41 years before, but never ratified – became effective on 6 June 2015. The agreement swapped 160 enclaves on both sides of the border, whose residents, up to that moment, had been stateless people. The enclaves were created in the eighteenth century by princely rulers and were like islands where stateless people of either country used to live. The Land Boundary Agreement (LBA) allowed about 51,000 people to choose between Indian and Bangladeshi nationalities, also giving them the right to decide to stay where they were, or to move to the other country.[133]

In June 2015, Bangladesh and India signed 22 more agreements and Memoranda of Understanding, including «blue economy» and maritime cooperation agreements. India obtained the use of the Chittagong and Mongla ports. Chittagong was developed through Chinese investment, like several other major ports in Pakistan, Sri Lanka and Myanmar. Apparently in a rather paradoxical development, India will be able to make use of an infrastructure built by her main rival for influence in the Indian Ocean region. In fact, this development is not as paradoxical as it appears, but is the result of a tripartite agreement between Bangladesh, China and India.[134] Part of this agreement is the fact that India will build the infrastructure that will facilitate the traffic of goods not only between the Indian state of West Bengal and Bangladesh, but also between China and the Indian Ocean.[135] Also, China continues to be the main supplier of military equipment to Bangladesh and Dhaka’s «most dependable partner», according to official sources.[136] On the other hand, India is emerging as Bangladesh’s potential key partner in the energy sector. In fact, India has agreed to raise the power supply to Bangladesh from 500 to 1000 MW and has supported a sale to the Bangladesh Power Development Board of 3000 MW at a cost of US$ 3 billion. In addition, two coal-fired plants with a capacity of 1600 MW are expected to be set up by the Indian corporation Adani Power, at a cost of US$ 1.5 billion. Last but not least, Narendra Modi announced a line of credit of US$ 2 billion to Bangladesh, while Sheikh Hasina pledged zero tolerance of terrorism.[137]

The year 2015 will be remembered as a watershed in the political evolution of Myanmar. After 5 years of semi-civilian government, the country was allowed to hold free elections for a new national parliament and regional assemblies. In November, the National League for Democracy (NLD) led by Aung San Suu Kyi won by a landslide obtaining almost 80% of votes throughout the country, including in ethnic states in which it scored much better than expected. The incumbent Union Solidarity and Development Party (USDP) – the party created by the army – suffered a crushing defeat: it got only 8% of the votes, while many party leaders had hoped it would get up to one third of the national popular vote. The scale of the NLD victory will allow it to choose the new president and to form the new government. However, the constitution approved by the outgoing military regime has created a number of important obstacles to real regime change. First, the Tatmadaw (the army) will continue to nominate 25% of parliamentary members and will have the power to veto constitutional changes. Second, the Tatmadaw will continue to appoint the ministers of Defence, Border Affairs and Home Affairs. This implies that the army will maintain control of the police as well as of the General Administration Department, which forms the backbone of the administration at the local level. Third, a clause in the constitution prevents the election of Aung San Suu Kyi to the presidency, thus confronting the NLD with two equally risky choices, either selecting a non-entity as president, potentially damaging the reputation of the NLD, or endangering the leadership of Aung San Suu Kyi by choosing a capable politician for the state’s highest political office. The limits imposed to far-reaching political change help to explain why the army accepted the transition and immediately recognized the electoral results.

         The complexity of the political and institutional transition is bound to cause continuing difficulties in addressing the main national challenges. A ceasefire with eight ethnic armies reached in October 2015 was an important result, but the ethnic conflict remains rampant. Political and ethnic tensions in Rakhine state between the Buddhist majority and Muslim minorities have become particularly severe, and the dramatic conditions of the Rohingya produced an international crisis in spring 2015. To a very large extent, these ethnic conflicts are the result of both the conditions of poverty in which the large majority of the population live and the political, cultural and economic suppression of ethnic minorities since national independence.

1. The elections and the political transition

After five decades of military rule, a political transition began in 2011. International sanctions had made the country excessively dependent on China, weakening the prestige of the army as the guardian of national sovereignty.[1] The looming economic crisis and ethnic insurgency in several states made evident the need for change. This became particularly urgent after the 2007 mass protests triggered by an increase in oil prices, during which the influential Buddhist clergy took an open stance against the junta. Eventually, the pressure for political change came also from inside the regime. The business elite – traditionally made up of the army leadership and its cronies, but increasingly becoming an autonomous oligarchy – saw the prospects of large profits deriving from a closer integration into the world economy.[2] The strategy adopted by the army was a process leading towards a «discipline-flourishing democracy», in which the return to a civilian government – most likely dominated by the NLD – would continue to guarantee the long-term interests of the army itself and its allies.[3] Political elections were held in 2010 leading to the creation of a semi-civilian government. Army strongman Than Shwe stepped down as country leader, and former general Thein Sein took over as president. Although the NLD had boycotted the elections, Aung San Suu Kyi was released from house arrest and a timid political dialogue began. The same Suu Kyi agreed to participate in the by-elections in 2012 and was elected to parliament. Eventually, the NLD and other regional parties were allowed to reorganize and prepare for the elections anticipated in 2015.

In early July 2015, the Electoral Commission announced that political and administrative elections would be held on 8 November. Only a few days before, the outgoing parliament had refused to abolish one of the most controversial articles of the constitution drafted by the military rulers in 2008. This article impedes any citizen with family connections with foreigners to be elected as president of the republic – a norm obviously designed against Aung San Suu Kyi, whose two sons hold British passports from their late father. Other articles further contributed to maintaining a strong military influence on future administrations. First, 25% of parliamentary seats are to be occupied by officers nominated by the army, while changes to the constitution require the support of 75% of the parliament. Second, the army will continue to appoint key ministers in future governments. These ministers include Defence and Border Affairs, thus giving the army unlimited authority upon the management of the conflict with insurgent ethnic groups. The other ministry controlled directly by the army is Home Affairs, from which depend the Police and the General Administration Department, managing the local administration throughout the entire country.

In calling for free elections, the army had probably expected to be able to continue to control parliament or at least to force the NLD to form a coalition government. Since 25% of the MPs are appointed officers, had the army-backed Union Solidarity and Development Party (USDP) obtained one third of the popular votes, it would have controlled the absolute majority in parliament.[4] The army had possibly also expected that the NLD would do rather poorly in ethnic states, where local parties were supposed to have more appeal. The lack of reliable opinion polls created a climate of incertitude ahead of the 8 November elections. The results, however, completely dispelled any illusion that the army may have had of its popularity in the country. The military-backed USDP, led by the outgoing president Thein Sein, obtained only 8% of votes. The NLD scored ten times more, coming close to 80%, i.e., the same result it had obtained in 1990. At that time, the army had reacted by annulling the vote, putting Aung San Suu Kyi under house arrest and jailing many of the NLD leaders and supporters. The USDP and the NLD were the only national parties to gain seats in the parliament. The ethnic parties obtained only 11% of the popular vote with only two achieving some success: the Arakan National Party obtained 12 seats in the House of Representatives (Pyithu Hluttaw) and 10 in the House of Nationalities (Amyotha Hluttaw), while the Shan Nationalities League for Democracy obtained 12 and 3 seats respectively. The other ethnic parties won just a few seats or none at all.[5]

The clear victory obtained by the NLD was also reflected in the administrative elections. In the seven Burman-majority regions, it obtained 95% of the votes, whereas in the seven ethnic states it achieved, on average, 45% of the popular vote, conquering the majority of the popular votes in four states, while in the other three states no party was in a position to rule alone.[6]

The outgoing government immediately recognized the NLD’s victory. President Thein Sein’s spokesman and minister of Information Ye Htut, on his Facebook page, congratulated Aung San Suu Kyi, declaring that the outgoing government would respect and obey the decision of the electorate and would work peacefully in the transfer of power.[7] Encouraging declarations came also from the powerful commander-in-chief of the Myanmar Armed Forces, Senior General Min Aung Hlaing who congratulated Aung San Suu Kyi for winning a majority. Under the constitution, General Min Aung Hlaing retained a considerable influence, which made it imperative for the new government to cooperate with him.[8]

In the following weeks, it became clear that the army was committed to respecting the electoral results but would not surrender its power unconditionally. On the one hand, the outgoing military leaders demanded guarantees preventing any possible prosecution for the crimes committed under their decades-long harsh rule. Whereas Aung San Suu Kyi and the NLD have repeatedly declared the need to look ahead, it was unclear if a complete impunity could and would be guaranteed. On the other hand, the army and its cronies were eager to defend their economic interests and, from this perspective, their offer of a smooth power transition was their way to buy the new leadership’s goodwill.

In the intense and confidential contacts between the outgoing and incoming leaderships, particularly important was a secret meeting between Aung San Suu Kyi and Than Shwe, the head of the military junta that had ruled the country until 2011. News about the meeting was revealed by the grandson of the 82-year-old former army leader with a post on Facebook. Than Shwe, who is reported to maintain considerable power and influence, not only acknowledged that Aung San Suu Kyi would become the new country leader but also expressed his will to support her with all his efforts.[9] Although no further information about the exact content of the meeting is available, it is likely that Aung San Suu Kyi sought support for the suppression of the norms preventing her from being elected as new president of Myanmar.

The future presidency remained a key issue in the two final months of 2015. The NLD continued to seek army consensus to amend the constitution and explored ways to circumvent the norms barring Aung San Suu Kyi from assuming the job. The solution prospected by Aung San Suu Kyi before the elections – nominating a figurehead who would let her continue to take all the important decisions – was considered to be an uncomfortable second best. A president with inadequate experience may compromise the reputation of the NLD and may be resented by the senior party leaders. At the same time, the election of an experienced politician may undermine Aung San Suu Kyi’s authority over a party that remains largely dependent on her charismatic leadership. The parallel with Sonia Gandhi – who renounced becoming Prime Minister after winning the elections in 2004 and remained president of the Indian Congress Party – seems to be inappropriate.[10] Not only was the role of Aung San Suu Kyi – commonly referred to as «mother» – a key element in the NLD success, but also her authority to keep together a party that has few experienced leaders and lacks administrative experience. The absence of a strong collective leadership is an acute problem as many of the old generation, tempered by decades of struggles against the military rule, have died or are in too poor health to continue leading the party. The creation of a reliable, honest and inspiring younger leadership is a daunting task for a party that has obtained so large a majority of votes and will be asked to govern a country with many challenges ahead.

In this sense, a more relevant parallel seems to be with South Africa at the end of the apartheid regime. The charismatic leadership of Nelson Mandela was paramount in securing a fairly smooth power transition and creating a united and democratic country. However, the aspirations to social and economic change that had fashioned such a strong consensus around the African National Congress were eventually frustrated by a transition that left economic power in the hands of the old white elite. This seems to be the challenge ahead for Aung San Suu Kyi and the NLD. At the end of 2015, there was some optimism for a power transition that would create the space for a functioning democracy. However, the economic and social agenda of the NLD remained too undetermined to make predictions about its ability to address the expectations of a population still facing poverty and vulnerability.

2. The international relations of the «new» Myanmar

The years immediately following the advent of the semi-civilian government led by Thein Sein (2007) saw a realignment of Myanmar’s international relations. The country had become increasingly dependent on China, which had a strong strategic interest in Myanmar especially because it could provide a friendly corridor to the Indian Ocean. Decades of military rule and international recognition for the cause represented by Nobel Peace laureate Aung San Suu Kyi had isolated the country, making China its only viable partner. China provided funds for (often controversial) infrastructural projects, became the major source for the import of consumption goods and represented the main export market for local natural resources. Animosity connected with ethnic conflicts along the borders has historically dominated the bilateral relations and the Burmese army is known to harbour anti-Chinese sentiments. However, warmer relations with China had been a necessity for the military juntas facing international isolation. Cooperation with the ASEAN – the Association of Southeast Asian Nations – was only a limited surrogate for the lack of integration into the wider international economy and could not reduce the dependency on China. It was only in 2011 when Thein Sein took the first steps in the direction of a political transition that the international relations of Myanmar started to shift. The United States and the European Union were quick to adopt a policy of positive engagement, removing most sanctions against Myanmar. A number of high profile visits revealed the recognition given to Thein Sein’s government for its commitment to political transition.[11] With the reestablishment of political dialogue with Western countries and an improvement in cooperation with India, relations between Myanmar and China became more complex and tense.[12] Whereas Myanmar was keen to reduce dependence on its giant neighbour, China tried to exert pressure on Myanmar to prevent a waning of bilateral cooperation. Relations turned sour from September 2011, when the government suspended an important hydroelectric project financed by China (the Myitsone dam).[13]

Two major events shaped the relationship between China and Myanmar in 2015: the first confirming the deterioration of relations between Beijing and the Thein Sein administration; the second, possibly anticipating a new phase of bilateral cooperation.

The first event was a military and diplomatic crisis produced by clashes along the borders. The incidents developed as a consequence of the ongoing conflict between the Burmese army and Kokang insurgents. After six years of ceasefire, in February 2015 fighting resumed as the Kokang army reportedly attempted to regain lost territory.[14] This local conflict – per se not different from others setting the Burmese army in opposition to ethnic militias – immediately had repercussions in relations with Beijing, as the Kokang are a Chinese-speaking minority living in the northern part of Shan States, on the border with the Yunnan province of China. The Kokang’s Myanmar National Democratic Alliance Army (MNDAA) had once been part of the pro-China Burmese Communist Party and is considered to maintain close connections with Beijing. As the military clashes escalated, President Thein Sein warned China not to encroach on Myanmar’s sovereignty, while both the MNDAA and Beijing denied that China had provided support to the Kokang insurgents.[15] Neither the negotiations between the Myanmar government and the MNDAA nor the dialogue between Naypyidaw and Beijing helped to find a settlement. In March, the Burmese air force bombed the Chinese territory in three distinct episodes and killed or wounded several farmers, besides causing material damage. In the evening of 13 March, the Burmese ambassador was summoned to the Chinese Ministry of Foreign Affairs: Beijing formally and strongly protested and demanded a complete investigation of the incidents. The following day, the vice chairman of the Chinese Central Military Commission made an urgent call to Min Aung Hlaing, the commander-in-chief of the Burmese armed forces, and made an ultimatum-type statement that the PLA would intervene immediately if such incidents happened again.[16] The tension was so high that the Burmese government immediately chose to send its Foreign Minister to Beijing to offer an official apology.[17] The episode, which eventually led to a new ceasefire, was highly indicative of the critical status of relations between the two countries.

The second event was Aung San Suu Kyi’s mission to Beijing. The strained relations with Thein Sein’s government had resulted in a decline of FDI flows from the giant neighbour – from a peak of US$8.2 billion in 2010/11 to only US$56 million in 2013/14, followed by a timid recovery to US$516 million in 2014/15.[18] Nevertheless, China remains by far Myanmar’s largest trading partner, accounting for over half of the country’s external trade.[19] Economic relations with Beijing are expected to remain of paramount importance for the NLD-led government after the 2015 elections. After Aung San Suu Kyi’s victory in 1990, China was one of the first countries to congratulate the NLD and this led to a suspension of diplomatic relations once the army refused to acknowledge the electoral results. Relations between the two countries were soon re-established and, as discussed above, China became a major partner of the military junta. As a result, for many years there were practically no contacts between the NLD and the Chinese government. When Thein Sein inaugurated the transition process, relations with the NLD resumed, although the two parties remained diffident for different reasons. Beijing feared that Aung San Suu Kyi would support pro-democracy groups in China and may even sustain the Tibetan cause of her fellow Nobel Peace laureate, the Dalai Lama. Even more importantly, Beijing was concerned that she would establish cooperation with Western countries and Japan with an anti-Chinese aim. On the other hand, Aung San Suu Kyi and the NLD could not easily forget the support given by the Chinese government to the military junta during two decades of brutal rule. Given the importance of bilateral relations, however, from the beginning of the transition process both sides did their best to build confidence through a rather intense dialogue via the Chinese Embassy in Yangon, cultural and academic exchanges, and high-level meetings.[20] The visit that Aung San Suu Kyi paid to China in June 2015 to meet President Xi Jinping and the Prime Minister Li Keqiang represented a major step forward in bilateral dialogue. Officially, the visit was held at party level, as the Burmese guest was a simple parliamentarian, but it was clear that the aim was to lay the ground for state relations after the elections in Myanmar. The new NLD-led administration would need economic support from China and, in recent years, Aung San Suu Kyi did her best to dilute Beijing’s fears. This constructive attitude was interpreted as another sign of Aung San Suu Kyi’s pragmatism.[21] On the Chinese side, creating a positive relationship with the NLD is considered a way out from the impasse that had characterized bilateral relations in the previous five years. While Beijing had no illusions about resuming a warm and preferential cooperation with Naypyidaw, its aim was to reach a «new normal» that could help to achieve long-term political and economic priorities.[22] At the core of Beijing interests continued to be infrastructural works – an oil and gas pipeline, railways, highways and harbours – which would connect the landlocked south-western provinces of China with the Indian Ocean.

In political terms, 2015 did not see any major development affecting relations with Western countries, Japan and India. For all, the months ahead of the Burmese elections were a period of suspense, possibly because high-level international meetings would have risked consolidating the power of the semi-civilian government in a critical election year. At the same time, the year confirmed the tendency toward a major reorganization of the Burmese economy on the basis of a World Bank-inspired neoliberal model and a closer integration in the regional and international economy. The lack of access to Western markets represented a major loss both for the export of extractive products and for the ambition to develop a manufacturing industry. A «pro-market» economic reform became the point of consensus between the army, the NLD, major international players such as the US and Japan, and the Washington-based International Financial Institution.[23] The economic template is the same as had already been experimented with by other Southeast Asian countries, and currently being enforced by the newcomers in the regional division of labour (Vietnam, Cambodia and Laos): FDI-led and export oriented industrialization relying on very low labour costs, trade liberalization, privatization of key state assets through an alliance between international capital and local elites.[24] Interestingly, these «pro-market» reforms are promoted by neoliberal pundits (such as Francis Fukuyama) on the basis of the argument that reducing state control over key assets and liberalizing international economic relations is a major contribution to state formation and the rule of law.[25] For these free-marketers, the reforms will create a level play field for national and foreign firms, forcing all economic actors to submit to the neutral discipline of the markets. However, these reforms tend to overlook the reality that in the context of Myanmar, even more dramatically than in other neighbouring countries, the inflow of foreign capital only occurs in alliance with local elites, and de facto implies creating new opportunities for the cronies of the former regime, including those more directly involved in criminal activities and drug trafficking.[26] Keeping in mind the enormous economic interests at stake in the Burmese political reform process is important to better appreciate the complex mosaics of power struggles and new alliances, which have characterized the transition process before and after the elections of November 2015. One of the most remarkable political events of the year was the removal in August of Shwe Mann as head of the USDP, the army sponsored party. When the country was still ruled by military junta, Shwe Mann had been the number three of the Tatmadaw and a protégé of Than Shwe. He then left the army to become the Speaker of the Lower House and in 2013 took over the leadership of the USDP from Thein Sein. Eventually he became a close confidante of Aung San Suu Kyi to the point that he was considered as a possible candidate for president of the republic with NLD support. His removal from the USDP leadership with a palace coup-style intervention of security forces loyal to Thein Sein suggested that his relationship with Aung San Suu Kyi had become too warm for the incumbent president.[27] The political turnabout of a former general suspected to have had responsibility for severe human rights abuses might be explained by the need to protect the economic interests of his family. As highlighted by Asia Maior 2014, Shwe Mann and his sons continued to control important monopolies in the Burmese economy.[28] While the November elections have probably compromised the chances of Shwe Mann becoming the next president, it is likely that the NLD will not challenge his economic empire nor the economic interests of the elite connected with the previous regime.

3. The Rohingya crisis, ethnic conflicts and social issues

As noted at the beginning of this chapter, the elections of November 2015 are likely to represent a watershed in Myanmar’s politics. However, the legacy of decades of military rule remains difficult to address. A major obstacle is represented by ethnic insurgency along the Thai and the Chinese borders. About 40% of present day Myanmar’s population belong to ethnic minorities, which have historically felt underrepresented and suppressed in the process that led to the creation of post-colonial Burma. The advent of military rule made the conflict intractable as the army committed severe human rights abuses not only against the insurgents but also against the civilian populations belonging to ethnic minorities. To make the situation even more complex, many rebel groups have become dependent on illegal activities – drug trafficking, illegal trade of jade and precious stones – to support their armies. The conflict over control of these illegal activities has often been the real cause of confrontation between the Tatmadaw and local militias. Furthermore, the hostilities between the ethnic groups and the central government have often also become part of wider games involving neighbouring countries Thailand and China.

The NLD has been accused in the past of scarce attention to the cause of ethnic minorities, but in recent years has been able to improve its standing in ethnic states, as witnessed by the results in the national and administrative elections. On his side, Thein Sein made a settlement with ethnic insurgents a priority of his government. One month before the election, the government announced an important breakthrough: 8 of the 15 ethnic armies had agreed to a cease-fire. A ceremony was held in Naypyidaw on 15 October with Thein Sein, representatives of the insurgent groups and international observers. Aung San Suu Kyi refused to attend, suggesting that the ceasefire did not represent the breakthrough that the government suggested it to be. A rather sceptical view was expressed also by the international media. First, the ceasefire only involved some, but not the largest, of the ethnic armies and only those on the border with Thailand. Second, the terms of the agreement remained quite elusive, while the negotiation of more critical issues – including the monitoring of the ceasefire itself – was deferred to further negotiations.[29] Among the groups signing the agreement, the most notable was the Karen National Union, which had been fighting the Burmese army for 60 years. Other major groups refused to sign and government officers even voiced the suspicion that China had discouraged ethnic Chinese groups from participating in the negotiations.[30]

In May 2015, a refugee crisis related to the Rohingya – a Muslim minority from the Rakhine state – obtained international attention. At the beginning of the month, graves were discovered by Thai authorities in a «waiting» area at the border with Malaysia normally used by human traffickers. This tragic discovery drew attention to the traffic of Rohingya and Bangladeshi people across the Andaman Sea and eventually led traffickers to abandon thousands of people on-board makeshift boats. For days, Thailand and Malaysia refused to rescue these people until the crisis assumed worldwide visibility and international outcry forced them to act.[31] The crisis shed light on the tragic conditions in which this Muslim population live. Animosity between the Buddhist majority of the Rakhine state and the Muslim minorities have roots in the British colonial era, when ethnic tensions were deliberately used as a medium to control local populations. Tensions between the Buddhist majority and the Rohingya escalated into violent confrontation in 2012, largely as a result of the political transition process for which the central government and local politicians tried to exploit nationalism to attract consensus. Since then, about 140,000 Rohingyas were forced into squalid and crowded refugee camps, and kept under apartheid-like conditions, with little access to education or adequate medical care.[32] These conditions were so terrible that the Simon-Skjodt Centre of America’s Holocaust Memorial Museum, which campaigns to prevent genocide, indicated that the Rohingyas are «at grave risk [of] additional mass atrocities and even genocide».[33]

To please the most radical elements of the Buddhist clergy, in 2014 the Government Office drafted four bills as part of a «National Race and Religion Protection» strategy giving legal coverage to discriminatory policies against the Muslim minorities. These bills were eventually signed by Thein Sein in May 2015, right in the middle of the Rohingya refugee crisis, making more dramatic an already appalling situation.[34] Although these discriminatory policies were directed against all the Muslim communities, the Rohingya were particularly affected. Not only have they been progressively marginalized from social and political life, but also many have long been denied full citizenship.[35] For the Rakhine majority the Rohingya do not even exist as a distinct ethnic group as they are simply considered to be illegal immigrants from Bangladesh who, therefore, should not be entitled to Burmese citizenship. Historical evidence, on the contrary, suggests that the Rohingya are the descendants of seafarers and traders from the Middle East that settled in the kingdom of Arakan (present day Rakhine) in the 8th Century and then intermarried with Bengali Muslim slaves.[36]

The events of May 2015 gave international visibility to the discrimination faced by the Rohingya. From an internal question it transformed into a regional and international crisis when thousands of Rohingyas and Bangladeshi migrants were abandoned at sea by human traffickers. However, the international visibility did not help to improve the situation of discrimination faced by the Rohingya and the entire Muslim community. The inability to address this interethnic conflict was also reflected in the November elections. If the Thein Sein administration and the USDP were directly responsible for the anti-Muslim policies harshly implemented since 2012, the same NLD could not or did not want to distance itself from those policies. Not a single Muslim candidate was included in the NLD lists at national and regional level. The NLD claimed to have been forced to exclude Muslim candidates because of the pressure of increasingly powerful ultranationalist Buddhist monks. However, these claims do not reduce the disillusion of Muslims who had previously supported the NLD.[37] Even Aung San Suu Kyi was often criticized abroad for her silence and ambiguity on the Rohingya cause. In an interview given to the BBC immediately after the election, she indicated that as the new country leader she intended to protect all citizens, independently from their ethnic or religious background. [38] She also promised to punish hate speeches, thus condemning the role of ultranationalist monks.[39] Given the very poor results obtained in the election by radical Buddhist candidates and the large majority of seats that the NLD will control in parliament, the NLD will be called to live up to these promises.

The November elections boosted the expectation that the country’s economy was bound to rapidly expand and that living conditions were to improve. However, a major natural disaster is expected to have a significant negative impact on the national economy and on the livelihoods of hundreds of thousands of citizens. In July 2015, the worst flooding in decades hit a large part of the country. By August, the situation had become so critical that the government declared a state of emergency in four regions.[40] Hundred and three people died and up to one million more were affected by the floods. Unlike in 2008, during Cyclone Nargis, when the junta refused outside help, this time the government required and obtained international aid.[41] The floods compromised the main rice crop of the year, although a precise estimate of the damage was still not available at the time of writing this article. While climate change has probably been the cause of higher-than-usual rainfalls, mismanagement of irrigation projects and deforestation caused by logging certainly contributed to make the impact of this natural disaster more severe.[42] These problems are also likely to become part of the agenda of the new NLD-led administration, although the many vested interests connected with the non-sustainable exploitation of natural resources will not allow easy fixes.

The strengthening of Vietnam-US relations in recent years has been one of the most interesting traits of the so-called US Pivot to Asia. Such a strengthening needs to be understood at the intersection between geopolitical and geo-economic factors and in triangulation with the rise of China. While in many regards the emerging of Vietnam as a privileged interlocutor of US attempts at «disciplining» China is a fascinating historical development, it also entails important elements of historical continuity. Interestingly, the evolution of Vietnam-US relations in the two years 2014-2015 – which have been characterized by important developments in both military, economic and political terms – show both faces of this coin. Going through these recent evolutions is a particularly fascinating exercise in light of the series of historically significant anniversaries that marked 2015. 

1. Introduction

2015 was the fiftieth anniversary of the official beginning of the American war in Vietnam, the fortieth anniversary of the liberation of Saigon by Northern Communist troops, and the twentieth anniversary of the normalization of relations between the US and this Southeast Asian state. Amidst this coincidence of highly symbolic anniversaries, it seems fitting to make an assessment of the more recent state of Vietnam-US relations. Indeed, the two years 2014-2015 saw an unprecedented strengthening of bilateral ties, well reflected in the intensification of high-level visits and exchanges of political leaders. In what follows, we first propose a brief historical overview of Vietnam-US relations, paying attention to how they fit into the US’s so-called Pivot to Asia. Launched by Obama’s administration in 2009, the Pivot is a project substantially in continuity with a long history of US aspiration to world hegemony. As has been aptly noted, this project certainly can be read in the light of Beijing’s geopolitical and geo-economic rise. However, more than being merely aimed at containing Chinese power, its true stakes seem to concern the writing of the global rules, and who should be in charge of doing so.[1] We will then look at some key developments of the two years 2014-2015, namely: (a) The crisis that occurred between Vietnam and China over the Haiyang Shiyou-981 oil rig in spring 2014, which strengthened Hanoi’s reasons for intensifying its relations with the US; (b) The partial lifting of the US embargo on lethal weaponry that had been imposed on Vietnam in 1975, and the prospects this opened up in terms of military cooperation; (c) The conclusion of negotiations for the Trans-Pacific Partnership (TPP), of which Vietnam became part not least thanks to US support. In the final section we propose an assessment of the role that the highly contested issue of human rights – which has historically permeated US-Vietnam relations – concretely played in mediating the most recent developments between the two countries.

2. An overview

Obama’s Pivot to Asia has hinged on three main objectives.[2] The first is that of guaranteeing American interests in the «economic driver of the world».[3] The TPP – the Pivot’s economic pillar – covers a region producing 40% of global GDP. Far beyond trade relations alone,[4] the «US friendly» free trade agreement concerns the regulatory frameworks of the 12 member states in areas as diverse as intellectual property rights, the environment, labour standards, and the role of State-Owned Enterprises (SOEs) in the economy.[5] Secondly, the Pivot aims at increasing the US military presence in the Asia-Pacific; strengthening its already-existing alliances and strategic partnerships; and creating new ones.[6] One of the main US focuses, here – also driven by the need to check China’s growing assertiveness in the East and South China Sea – is that of guaranteeing the security and «freedom of the seas», and the respect for international law, in a major crossroad of world trade.[7] The Pivot’s third objective is the promotion of US values in the region, including prosperity and democratic freedoms.[8]

It is within this schema that Vietnam has definitively re-emerged from the «periphery of the world»,[9] this time as a privileged interlocutor of the United States. At the turn of the 20th century, China was already identified as a fundamental pillar of the US’s «long-term project of a capitalistic world order».[10] It was especially with China’s loss to Communism that Vietnam – as part of a Southeast Asian region now even more strategic in terms of markets and raw materials[11]– started to move towards becoming, in American eyes, the world’s «belly-button».[12] It was an arena in which America’s capacity to guarantee the victory of freedom and democracy, as well as its own credibility, would ultimately be tested. Accordingly, the Communists’ seizure of Saigon in April 1975 marked one of the US’s sharpest military and political defeats. This was soon followed by the Ford administration’s extension to the whole country of the «total embargo on transactions» already applied to North Vietnam.[13]

Interestingly, the Vietnam conflict largely explains the emergence of the «human rights» language in US foreign policy in the 1970s.[14] Vietnam was nonetheless still the victim: intertwining with accusations related to what has been defined the «POW/MIA myth»,[15] human rights considerations contributed to the strengthening and «multilateralization»[16] of the already harsh 1975 embargo. Washington’s normalization of relations with Beijing; the blind eye it turned to the Khmer Rouge’s genocide; the definitive isolation of Vietnam by the US (and its allies) following the intervention in Cambodia (1978), all well reflected the ambiguous role human rights played in American foreign policy – even at their apex, during the Carter administration. The embargo was definitively lifted by Bill Clinton in 1994 and the normalization of relations was announced in 1995 – some years after the launch (April 1991) of George H. W. Bush’s «roadmap for normalization» and the Paris Peace Agreements, in 1991. By that time a compromise had been found between the pressure exerted by a US business community wanting to enter the Vietnamese market and the forces opposing the lifting of the embargo, in the name of the continuously re-emerging POW/MIA issue.[17] One landmark of the strengthened economic relations was the sealing of a Bilateral Trade Agreement (BTA), coming into effect in 2001. Agreed in exchange for Vietnam’s improved market reforms, the BTA was followed by a series of US anti-dumping actions against the South-east Asian country.[18] Rapidly growing since then, bilateral trade has indeed been characterised by a persistent US trade deficit.[19] The intensification of economic and trade relations has proceeded notwithstanding the question of human rights in Vietnam – even though Washington has identified this as one of the most problematic aspects of restored links. In the first years of post-normalization, human rights-related criticisms still significantly overlapped with protracted accusations related to the American POWs/MIAs. Until recent times, indeed, the human rights issue seems to have served to perpetuate the US’s long-term discourse on Vietnam’s «moral unaccountability»[20] – sometimes compounded by the theme of its economic unreliability[21] – while morally legitimizing American global leadership aspirations.

Within the Pivot, Hanoi’s need to strengthen its own security in the South China Sea – a constant source of tension between Vietnam and China (who normalized relations with its South-east Asian neighbour in 1991) – has played in Washington’s favour. The historic dispute over the Spratly and Paracel Islands has re-emerged with particular vigour in the second half of the 2000s, when, from the Vietnamese perspective, China has began to show an ever more aggressive attitude.[22] Moreover, Vietnam’s rise as an Asian «manufacturing hub»[23] has paradoxically made it increasingly economically dependent on China – from where it imports a large share of intermediate goods, and with which it has a growing trade balance deficit.[24] In Vietnam’s view, the TPP could help reduce such dependency, encouraging foreign investors to produce intermediate goods directly in the South-east Asian country, to be exported to big international markets such as the US. More generally, Vietnam’s foreign-driven/export-oriented economic model has made it increasingly dependent on widening export markets and on the inflow of foreign direct investments. Conversely, beyond holding a strategic geographic position, Vietnam has itself become one of the most dynamic Asian economies – and a crucial destination for international manufacturers especially on account of its low labour costs and strong incentives for foreign direct investment (FDI) attraction. In 2015 the country saw a 6.68% GDP growth, allowing it to hope that it could overtake China’s growth rate (6.9%) in 2016.[25] As of 2014, foreign investments made up almost 20% of the country’s GDP, 22% of total investments and two-thirds of merchandise exports.[26]

A recent turning point in Vietnam-US relations was 2013, marked by the signing of a comprehensive partnership.[27] In correspondence with negotiations over the TPP and the signing of this partnership, the question of the state of civil, political and religious freedoms in Vietnam has overlapped with a specific focus on labour rights.[28]Also permeated by this theme, the two years 2014-15 simultaneously marked a transition to a qualitatively new phase of post-normalisation. Before turning our attention to the key moments underlying this acceleration – and to the concrete role played by human rights in mediating it – we will first offer a reflection on the triangular Vietnam-China-USA connection.

An analysis of Vietnam’s own relations with China in the two years under analysis is beyond the scope of the present study. However, it’s worth highlighting that as of 2015 Beijing still was a strategically important partner of Hanoi. As has been suggested, the Southeast Asian economy has systematically pursued a «policy of cooperation and struggle» with both US and China.[29] This orientation is part of wider foreign policy goals framed in terms of the «multilateralization» and «diversification» of external relations, and function of the preservation of «independence» and «self-reliance».[30] It will be interesting to assess, from this point of view, the outcomes of the Vietnamese Communist Party’s (VCP) Twelfth Congress,[31] whose preparatory work has been marked by intense infighting, not least regarding the country’s foreign policy orientations. For several years the VCP’s internal struggles have anticipated important changes, both domestically and on the international political terrain.[32]

3. The Haiyang Shiyou-981 crisis.

An important catalyst for the recent intensification of bilateral relations between Vietnam and the US was the unprecedented deterioration of Hanoi’s relations with Beijing in the spring of 2014, when China deployed the massive oil rig Haiyang Shiyou-981 in disputed waters surrounding the Paracel Islands. The crisis happened in the context of the noticeable intensification of Chinese interest and activities in the South China Sea under Xi Jinping’s presidency.[33] Among other things, since 2013 Beijing has started to rapidly intensify land reclamation activities in the South China Sea and turn the Spratly land formations into artificial islands equipped with both civilian and military infrastructure. Far wider in scope than the building activities mounted by any other contending country, Chinese manoeuvres have appeared to aim at increasing its capacity to control the Sea – indeed, potentially overwhelmingly so.[34]

The Haiyang Shiyou-981 events apparently ended with the restoration of Vietnamese-Chinese relations practically in the same state as they had been before the crisis broke out.[35] Nonetheless, they decisively dented Hanoi’s confidence in Beijing, strengthening its reasons to intensify its relations with the United States. Not only did the dispute over the oil rig put Vietnam face-to-face with the levels of aggression that China can reach, and indeed «the enormous disparity in the two countries’ power and capabilities».[36] It also shed further light on the possible economic and domestic political implications of the problem of maritime security.[37] Overall, the Haiyang Shiyou-981 affair substantially reinforced the perception that China represents a threat to Vietnam’s autonomy, security and political-economic stability. We will go on to briefly recount the most important moments of the crisis.

On 2 May 2014 the China National Offshore Oil Corporation (CNOOC) positioned the Haiyang Shiyou-981 oil rig within Vietnam’s exclusive economic zone, about 120 miles from its coast and close to the Paracel Islands. On 3 May, the China Maritime Safety Administration’s website noted that the Haiyang Shiyou-981 oil rig was to conduct drilling operations from 4 May to 15 August 2014, and forbade the presence of ships within a one-mile radius of the rig (soon after extended to three). On 5 May Hanoi demanded the removal of the rig and declared Beijing’s manoeuvres «illegal».[38] From the outset, China’s move was marked by an unprecedentedly muscular approach. Beijing unilaterally entered another state’s Exclusive Economic Zone (EEZ) for the first time[39]  – and it did not hesitate to actively defend the Haiyang Shiyou-981 oil rig area. In fact, according to Hanoi, already within the first week after the oil drill was placed in the disputed waters, China took recourse to ramming and the use of water cannons to push away Vietnamese vessels, damaging them and causing injuries to several of their crew members.[40] Vietnamese authorities denounced the provocative aspects of Beijing’s move, and its disregard for all previous agreements on maritime issues. In the words of the Vice Chair of the Vietnamese National Boundary Commission, Tran Duy Hai,

This is clearly an intentional act, seriously violating the sovereign rights and jurisdiction of Viet Nam over its Exclusive Economic Zone and continental shelf. It also infringes upon the relevant provisions of the international law, including the 1982 UNCLOS and runs counter to the spirit and language of the DOC. China’s actions run counter to the agreements and common understanding between the two countries’ leaders, particularly the agreement on the basic principles guiding the settlement of maritime issues between Viet Nam and China. [41]

Beijing, for its part, justified its recourse – with the «utmost restraint»[42] – to water cannons as a response to some 171 Vietnamese attacks in its own territorial waters between 2 and 7 May 2014.[43]  In late May, a Vietnamese fishing vessel sank around 17 miles from the oil rig, following a collision with a Chinese one. The clash led to mutual accusations of responsibility for the incident, and a further escalation of tensions.[44] Beijing seemingly deployed some 80 vessels in defence of the rig, including fishing vessels, coast guard ships and seven warships – as well as some military jets. Hanoi reacted with a few dozen coast guard and fisheries surveillance vessels.[45]

During the second week of May 2014, as the Haiyang Shiyou 981 crisis was heating up and the VCP appeared divided on the approach to take toward China,[46] a wave of unrest broke out in the country. A first wave of peaceful anti-Chinese demonstrations was followed by violent riots in the industrial parks of the southern areas of Binh Duong, Ho Chi Minh City and Dong Nai. Over 300 businesses – whether owned by Chinese or other foreign (mostly Asian) capital – were attacked, looted and destroyed.[47] Workers were apparently involved in initially peaceful demonstrations by organized groups of unemployed migrant workers (who had earlier been laid-off), who went on to engage in violence.[48] In Binh Duong province – from where the riots spread, involving some 20,000 protesters – authorities reported the burning of 15 factories and enormous economic damage.[49] Riots also spread to central Vietnam, leading to the burning of the giant Taiwanese-owned «Formosa Plastics» and to the death of one Chinese worker and several dozens of injuries. [50]

This «dark chapter in Sino-Vietnamese relations»[51] brought about the temporary closure of a series of foreign businesses, job losses, a drop in tourism, serious economic damage and damage to the country’s image, as well as difficulties in maintaining order.  During these days, investor countries called on Vietnam to restore order and protect their citizens, condemned the incidents, and also highlighted the possible negative consequences they might have for future investment decisions. The Vietnamese authorities, on their part, worked to reassure investors, restore order and offer economic support for the damage suffered. China did not hesitate in blaming the Vietnamese authorities for sparking and then mishandling the disorder, and evacuated thousands of its own citizens. [52]

During this first month of clashes Beijing apparently rebuffed all Vietnamese attempts to resolve the tensions via negotiation. The clashes also continued into June 2014, which saw the failure of the first diplomatic meeting between the two countries since the crisis first exploded. On 10 June 2014 the Chinese State Councillor Yang Jiechi met the Vietnamese Foreign Minister Pham Binh Minh and Prime Minister Nguyen Tan Dung in Hanoi. The visit resulted in an exchange of accusations, with neither side moving from their respective positions.[53]

Already in the days immediately following the explosion of the crisis, the United States made its first official interventions in support of Vietnam. On 7 May 2014, a press statement by Jen Psaki, a spokesperson for the State Department, declared the Chinese manoeuvre «provocative» and expressed US concerns «about dangerous conduct and intimidation in this area».[54] On 10 July, a Senate resolution (S.RES.412) reasserted US support for freedom of navigation and the peaceful resolution of territorial and maritime disputes in the region; it condemned the recourse to intimidation and coercion; it highlighted China’s violation of international law; and it called on Beijing to return to the situation that had existed prior to the oil rig crisis breaking out.[55] The following day, deputy assistant secretary of state for Strategy and Multilateral Affairs Michael Fuchs reaffirmed US concerns over Beijing’s «provocative and unilateral» behaviour. [56]

On 15 July 2014 the oil rig was unilaterally withdrawn, earlier than it was previously announced.[57] This was officially justified as marking the conclusion of the exploratory operations and the identification of «signs of oil and gas».[58] The Chinese Foreign Ministry again declared that the Paracel Islands belonged to Chinese territory, while also defending the legitimacy of Beijing’s «safety of operations» around the oil rig.[59] It also remarked that the platform had been moved in correspondence with the implementation of commercial strategies, and not because of «outside factors».[60] After the oil drill was removed China continued its land reclamation and building activities in the Spratly Islands, reaching 2,900 acres in June 2015 according to US Defense Department data.[61]

4. From the Haiyang Shiyou-981crisis to the lifting of the weapons embargo

Among other things, the Haiyang Shiyou-981 crisis accelerated the already repeatedly-heralded US decision to relax its embargo on the sale of lethal weapons to Vietnam. The related announcement was made on 2 October 2014, upon the occasion of a bilateral summit between Secretary of State John Kerry and his Vietnamese counterpart Pham Binh Minh in Washington. The Vietnamese minister had apparently declined an invitation from Kerry in May, considering the meeting «too sensitive» in light of the affair over the oil rig. The summit’s objective was to assess the evolution of bilateral relations within the US-Vietnam comprehensive partnership – which had also foreseen the creation of a ministerial-level mechanism to this end. [62]

Already in the first days of August, the Republican senator and war veteran John McCain, visiting the Vietnamese capital together with senator Sheldon Whitehouse, reiterated his support for lifting the embargo and for accelerating military and economic cooperation.[63] That same month, General Martin Dempsey made a visit to Hanoi to discuss the strengthening of military cooperation. He was the first chairman of the Joint Chiefs of Staff to visit Vietnam since 1971.[64]

The ban on the sale of weapons to Vietnam dated back to the 1975 embargo. In 1984, Vietnam was further included among the countries subject to the restrictions set out by the ITAR (International Trafficking in Arms Regulation). The weapons embargo remained in place even after 1994, with its lifting conditional on Vietnam progress concerning the country’s human rights situation. In 2007, a first amendment to the ITAR allowed, on a case-by-case basis, the export or import of non-lethal defence articles and defence services.[65]

The partial lifting of the ban, announced in October, remained limited in scope. The United States emphasised that this measure reflected certain noticeable improvements in Vietnam’s human rights situation – including the release of some political prisoners – and that the future pace of military relations would remain conditional on «continued progress» in this field.[66] Adopted in November 2014, the new amendment to ITAR allowed the sale to Vietnam – on a case-by-case basis – of lethal defence articles and defence services aimed at enhancing maritime capabilities and domain awareness.[67] Not without a certain symbolic value of its own, this decision opened the way to further important developments.

One significant shift was the meeting between US Defense Secretary Ashton Carter and his counterpart General Phung Quang Thanh in Hanoi on 1 June 2015. A month from the fortieth anniversary of the loss of Saigon, the United States promised to transfer Vietnam some US$18m for the purchase of American Metal Shark patrol vessels, in support of the country’s maritime defence capabilities.[68] Carter’s visit to Vietnam was part of a wider 11-day tour across Asia, during which he also took part in the annual Shangri-la Dialogue in Singapore. He here confirmed Washington’s interest in strengthening Southeast Asian countries’ maritime capacity.[69] He also reaffirmed the three cornerstones of the US’s latest position on the South China Sea, which he had already announced in Hawaii some days previously.[70]

To put it in Carter’s own words,

1. First, we want a peaceful resolution of all disputes and an immediate and lasting halt to land reclamation by any claimant. […] We also oppose any further militarization of disputed features; 2. Second and there should be no mistake: The United States will fly, sail and operate wherever international law allows, as we do all around the world; 3. With these actions in the South China Sea, China is out of step with both international norms that underscore the Asia-Pacific’s security architecture, and the regional consensus in favour of non coercive approaches to this and other long-standing disputes.[71]

The announcement in turn evoked Washington’s apparent intention – disclosed by a Wall Street Journal report – to make recourse to «a more robust approach in the South Chinese Sea», including «using aircraft and Navy ships to directly contest Chinese territorial claims to a chain of rapidly expanding artificial islands».[72] Such intention provoked a sharp reaction from Beijing,[73] which it also reiterated at the Singapore security summit.[74]

In Hanoi, Carter also made an – only partially accepted – request to his Vietnamese counterpart, asking for a halt to land reclamation and island building in the South China Sea.[75] In any case, the meeting between the two ministers concluded with their co-signing of a Joint Vision Statement (JVS), seeking to orient their bilateral defence relationships on the basis of the Memorandum of Understanding on Advancing Bilateral Defense Cooperation already sealed in 2011.[76] The JVS explicitly invoked the possibility of «expan[ding] defence trade between our two countries, potentially including cooperation in the production of new technologies and equipment, where possible under current law and policy restrictions».[77]

In filigree, the overall language of the JVS represented an indication that the restrictions set out in the ITAR were about to be eliminated. This probable development seemed to be confirmed in subsequent months by Assistant Secretary for Arms Control Verification and Compliance Frank A. Rose.[78] It is worth noting, here, that the US defence industry has shown increasing interest in the growing Vietnamese market, and more generally in «capitaliz[ing] on regional anti-Chinese sentiment to boost sales».[79] The priority that Vietnam has itself attributed to modernising its own military capacities has translated into a surge in military spending. According to the Stockholm International Peace Research Institute, between 2005 and 2014 it rose by some 128%.[80] In April 2015 the media widely reported the staging of a meeting at the US embassy in Hanoi, seeking to promote the sale of US defence firms’ articles to the Vietnamese military. The invitees for this symposium – held a few days before the forty-year anniversary of the liberation of Saigon – included contractors like Boeing Co., BAE Systems Plc., Lockheed Martin Corp. and Honeywell International Inc.[81]

In the short term the US defence industry nonetheless seemed probably destined to play a limited concrete role in Vietnam. This owed not least to factors of a legal, technical and strategic nature. First of all, the restrictions set out by the ITAR still hung over the country. Secondly, the still-inexpert Vietnamese may have faced difficulties accessing the American Foreign Military Sales procurement procedures – and integrating US equipment and technology into Vietnam’s existing defence systems.[82] Finally, although «the Haiyang Shiyou-981 drift» strengthened the arguments for a closer alliance with the United States, it seemed probable that Hanoi would continue to privilege its own strategic allies, including Russia, also on the military terrain.[83]

Historically one of the main arms suppliers to Vietnam since the end of the war, as of 2015 Russia still provided the South-East Asian country with 90% of its military equipment.[84] In 2009 Vietnam signed an agreement for the supply of six Kilo-class submarines, with the penultimate vessel reaching Cam Ranh Bay in February 2016.[85] Moreover, Russia was already selling Vietnam aircraft, and was helping the country to construct a nuclear power station.[86]

The developments that we have briefly related above have, in any case, reconfirmed the substantial alignment of US and Vietnamese strategic interests with regard to the South China Sea. This convergence was brought into relief in Washington on 7 July, at the historic meeting between President Barack Obama and Vietnamese Communist Party’s General Secretary Nguyen Phu Trong. Organised to mark twenty years since the normalisation of bilateral relations, during the summit the two leaders also reaffirmed their mutual interest in taking forward their cooperation in areas already identified by the comprehensive partnership, strengthening their bilateral relations, and accelerating negotiations over the TPP.[87] We will now turn our attention to these negotiations, before returning, later in the chapter, to some particularly telling aspects of the meeting between Obama and Trong.

5. The conclusion of the TPP negotiations

5.1.   The US-Vietnam side-agreement on labour

The growing perception of a «Chinese threat» has pushed the American Congress to overcome its own reticence about a (partial) lifting of the embargo on the sale of lethal weaponry to Vietnam. This decision has, nonetheless, raised strong criticism in the world of campaigning and human rights organisations as it has been deemed to decrease Washington’s capacity to influence Hanoi’s conduct with regard to civil and political liberties.[88]

Backed by the Obama administration, Vietnam’s presence in the TPP negotiations has also fed into a wider opposition to the agreement in the US Congress. US legislators’ – and particularly Democrats’ – objections on the specific Vietnamese case have overlapped with the criticisms levelled by both human rights organisations and the world of trade unionism. Beyond the question of human rights in general, these critiques have concerned the theme of labour rights and the barriers to the constitution of independent trade unions in Vietnam.[89] The concerns in this regard have brought into question – among other things – the possible repercussions that a deal with a country hostile to labour rights like Vietnam might have for the levels and quality of employment in the US. Hanoi’s presence in the negotiations for the free trade area also intersected with discussions in Congress about granting President Barack Obama the Trade Promotion Authority (TPA), namely the (impermanent) power to negotiate a trade agreement, which the Congress can then endorse or turn down, but cannot modify.[90] The US President ultimately obtained the TPA – not without difficulty, and with Republican support proving decisive – in June 2015.[91]

Negotiations were also characterised by several reasons for apprehension and mutual pressure between Washington and Hanoi. Some main fields where problems arose included the question – of particular interest for the United States – of Vietnam’s adaptation to the agreement’s standards regarding SOEs, intellectual property rights and the «yarn forward» rule.[92] On their side, Vietnamese demanded special treatment for developing countries, while also noting the US tendency to privilege its own interests, without wanting to concede much to the other negotiating countries.[93] Issues related to access to the respective markets also featured prominently in bilateral talks. In any case, already in 2014 successive meetings between Vietnamese Deputy Prime Minister Vu Van Ninh and US trade representative Michael Froman had expressed a common will to accelerate negotiations and find agreement on the thorniest questions.[94]

The 12 member-countries concluded the negotiations for the TPP on 5 October 2015, following a complex process that had raised many difficulties and taken more than five years.[95] The text of the agreement, which up till that moment had remained a secret,[96] was made public on 5 November 2015[97] and formally signed in New Zealand on 4 February 2016.[98] Vietnam brought its own bilateral talks to a conclusion in August 2015.[99] Nonetheless, the TPP still had to face the far from simple challenge of being ratified by each member country. The United States – where the debate over the TPP overlapped with the US presidential election campaign – was the country where it seemed likely to face the greatest difficulties.[100] It remained uncertain whether Obama, confronted by a bipartisan opposition, would be able to get Congress to ratify the TPP by the end of his term as president.[101]

The conclusion of the negotiations was ultimately accompanied by a bilateral labour agreement between the United States and Vietnam.[102] The US’s overall goal in this side-agreement was to commit the Southeast Asian country to adopt the necessary internal reforms to satisfy the standards set out in the TPP. The TPP chapter on labour (no. 19) anchors all member countries to the «core labour standards» identified in the 1998 ILO declaration on Fundamental Principles and Rights at Work: «freedom of association and effective recognition of the rights to collective bargaining; the elimination of forced and compulsory labour, the abolition of child labour and the elimination of discrimination in respect of employment and occupation.» Moreover, chapter 19 sets out the adoption of several measures: a first set guaranteeing «acceptable conditions of work related to minimum wages, hours of work and occupational safety and health», a second one «prevent[ing] the degradation of labour protections in export processing zones», and a third one aimed at to «combat[ing] trade in goods made by forced labour».[103] Focused on the core labour standards mentioned above, with particular attention to the question of unions’ independence, the agreement provided for the possibility of technical assistance to Vietnam, also allowing a certain flexibility in the timeframe within which the country was to comply with its requirements.[104] On a more general level, Vietnam appears to have obtained margins of flexibility and promises of technical assistance from both the United States and the other member countries – including with respect to thorny issues like SOE reform, open procurement and intellectual property rights.[105]

5.2.   Vietnam’s and the US’s converging interests in the TPP

Vietnam’s interest in the TPP is easily understood in terms of the predictions that accompanied the conclusion of the negotiations.[106] The most cited of these include Eurasia Group’s estimate of a 11% increase in the Vietnamese GDP within ten years of the agreement’s implementation – a «percentage increase» that «dwarfs the gains made by any other country» – and a likewise considerable increase in exports, of 28%. More particularly, a 50% increase was predicted – again, the highest in the whole free-trade area – for the garment and footwear sectors, mostly to the disadvantage of China.[107] Other export sectors expected to gain included agriculture, aquaculture, seafood and forestry. Analyses have especially highlighted the possibility for Vietnam to gain enhanced access to enormous markets like the USA and Japan. Vietnam is one of the five countries in the area covered by the TPP that does not already have a Free Trade Agreement (FTA) with the United States.[108]

According to estimates, garment and textile – key sectors of the Vietnamese economy – were likely to benefit most from the country’s entrance into the TPP and the preferential access to the US market allowed by the agreement.[109] Between 2005 and 2015 Vietnam was continuously classified as one of the world’s top ten garment and textile exporters, taking fifth place in 2015.[110] That year the United States was the Southeast Asian economy’s number one export market in these sectors, whereas Vietnam was itself the second biggest net exporter to the US after China.[111]

American official reports have identified Vietnam as one of the most interesting countries of the TPP’s area still lacking a US FTA.[112] This owes not least to Vietnam’s economic dynamism, the noticeable intensification of bilateral trade relations, and their potential for growth. It has been noted how the TPP could affect both Vietnamese tariff barriers relevant to US interests and, as noted above, non-tariff barriers such as those associated with the considerable role SOEs play in Vietnam’s economy.[113] Once in effect, the TPP will, for example, allow US agricultural and food producers to penetrate the highly promising Vietnam market. This will help strengthen America’s competitiveness in these sectors, faced with the challenges deriving from other free trade agreements existing or currently being negotiated in the region.[114] Similarly, the removal of the duties on US auto parts will improve US competitiveness as compared to countries that already have an FTA with Vietnam, such as China, Thailand and Indonesia.[115] Within the limits of the flexibility measures set out for the country, the TPP will also result in US access to the Vietnamese procurement market, and, as noted above, in strong provisions on the protection of intellectual property rights being extended to the country.[116]

We have mentioned in previous sections the TPP’s potential to decrease Vietnam’s economic dependence on China. Nonetheless, in key sectors like garments and textiles, both the possibility of increasing exports to the US market and that of reducing Chinese imports depended on Hanoi’s ability to adjust to the «yarn forward rule». As of 2015, the Vietnamese garment and textile industry was still heavily reliant on non-TPP member countries, particularly China. The insertion of «yarn forward rule» into the agreement was aimed at restructuring the regional supply-chains, to the advantage of the member countries – not least the United States – and to the direct disadvantage of non members countries, above all China. No doubt, the inclusion of the «yarn forward rule» creates important opportunities for US textile producers to penetrate the Vietnamese market, both in terms of exports and investments.[117]

Vietnam’s entrance into the TPP has also been deemed likely to bring it a greater influx of foreign direct investment than any other member country.[118] Already before the negotiations were concluded, international garment and textile producers – both of Asian, including Chinese, and American provenance – began to redirect investment flows toward Vietnam or to increase existing ones, in expectation of the benefits associated with Vietnam’s participation in the agreement. [119] Also predicted was a further increase in the already extraordinary influx of foreign direct investment in the Vietnamese electronics and IT sectors, coming from the biggest international conglomerates. In recent years – not least in anticipation of its entrance into the TPP – Vietnam has turned into a major production base for giants like Samsung, Intel, and Microsoft. Since 2013, electronics have become Vietnam’s leading export sector. Along with trade advantages that Vietnam is foreseen to gain from participating in TPP, the low costs and good quality of its labour have greatly contributed to making it one of the most attractive Asian production bases and, at least in part, an alternative to the increasingly more expensive China.[120] In 2015, the US was only the seventh investor in Vietnam (out of 103 countries and territories), though this figure does not take account of investment by American enterprises registered elsewhere.[121] According to the Vietnam Association of Foreign Investments predictions, the United States was nonetheless one of the TPP area countries most interested in expanding its presence in Vietnam, with important potentials «to rise to the top».[122]

6. Some reflections on the state of US-Vietnam bilateral relations through the lens of human rights.

As we mentioned above, the question of human (and labour) rights in Vietnam featured prominently in US-Vietnam relations also in the two-year period under examination. In the following sections, some reflection on the role that this theme concretely played in mediating recent relations between the two «old enemies» will be offered. The analytical lens of «rights» offers a particularly interesting perspective on at least two levels. On the one hand, it allows us to evaluate the real state of the relations between the two countries, on the fundamentally important political-ideological plane. On the other hand, the theme of rights opens out onto reflection on some of the concrete contents of the American «return» to Vietnam, and, more generally, the US project of «global leadership». In this latter regard, we will devote particular attention to the question of labour rights and standards, which marked the TPP negotiations and closely concerned the Hanoi regime. On this terrain we can take forward some of the observations already made in a previous issue of Asia Maior.[123]

6.1.   Convergences

Although as of 2015 the US’s persistent questioning of the state of human and labour rights in Vietnam was not without concrete implications, it seems to have continued to play a mostly rhetorical role, legitimising its privileged dialogue with Hanoi. Indeed, this marked an element of continuity with the controversial relation between rhetoric and practice that has traditionally underpinned Washington’s foreign policy on this theme. After all, the US fought its Vietnam war not least in the name of democratic freedoms; and, on the other hand, the US return to the country in the 1990s went ahead despite the lack of such freedoms. A useful entry point for evaluating the most recent state of relations between the two countries on the ideological-political plane are two of the main official meetings that marked 2015.

The first was the already-mentioned visit to Washington of Vietnamese Communist Party’s General Secretary Nguyen Phu Trong in July of that year. The visit had initially raised uncertainties as to the correct protocol to follow, given that the US system does not itself have any equivalent figure.[124] The most insightful analyses have aptly shown that although the Vietnamese leader’s trip did not result in tangible forward steps in the relations between the two countries, it was of very great value. Among other things, Nguyen Phu Trong was ultimately received by Barack Obama in the Oval Office of the White House, on a par with a prime minister or head of state. This decision seemed to note the US’s definitive recognition of Hanoi’s domestic political structures, including the centrality of the VCP and the primary role the General Secretary plays within the Party. This seemed to contribute to easing the suspicions raised by Vietnamese political factions more concerned over US intentions toward their country. Moreover, the meeting was characterised by the theme of  «respect for each other’s political systems, independence, sovereignty and territorial integrity».[125] This seemed to de facto seal the US’s «substantive engagement» with the Vietnamese Communist Party, first started by Hillary Clinton’s visit to Hanoi in 2012, and then strengthened with the launching of a comprehensive partnership the following year.[126]

It is worth noting that the July summit had been preceded by Tran Dai Quang’s visit to Washington, in March of that same year. It has been noted that although this meeting did not catalyse media attention, it in itself represented a crucial advance in the relations between the two countries. A Politburo member and the first Vietnamese Public Security Minister to visit the United States, Tran Dai Quang was also commander of the national security forces and, as such, a potential «primary target of human rights critics in the United States». His visit to Washington was interpreted as demonstrating Hanoi’s increased assuredness in dealing with its historic «ideological challenger». Again in this case, the welcome reserved for the minister seemed to contribute to salving the qualms of Vietnamese «conservatives» averse to rapprochement with Washington. An apparently clear mark of the eased relations between the two countries on the ideological plane was the acceptance of the US Peace Corps’ presence in the country – these latter having only a few years earlier been defined a subversive and «hostile force».[127]

It is true, within this picture, that the specific theme of human rights has remained of central importance, and has been constantly addressed throughout the more recent exchanges between the two countries. Even so, the objective qualitative leap in bilateral relations seemed bound – at least in part – to encourage a further «levelling down» of the two countries’ different positions in this regard; as has already been seen in the past.

Without doubt, Vietnam’s «struggles» against US political pressure on human rights has been the subtext of its rapprochement with Washington.[128] In fact, US pressure has not brought about «reform or any meaningful action to improve human rights» inside Vietnam.[129] Significantly, in the past years, Hanoi has continued to oppose the US’s full lifting of its embargo on lethal weapons being conditional on the question of human rights.[130] On the other hand, even in August 2015 – as he visited Vietnam to mark twenty years of the normalisation of relations – John Kerry remarked that

[…] there are basic principles that we will always defend: No one should be punished for speaking their mind so long as they are peaceful; and if trading goods flow freely between us, so should information and ideas. And we believe that progress in upholding these basic human rights will absolutely serve Vietnam’s interests in several ways. […]. Progress on human rights and the rule of law will provide the foundation for a deeper and more sustainable strategic partnership.[131]

More generally, the two countries have systematically underlined their readiness to pursue dialogue and, at the same time, their objective differences in this regard. Within this evident dialectical tension, nonetheless, Hanoi has often strategically made openings on the question of human rights, and in particular in correspondence with crucial moments of its rapprochement with the United States or integration into the international community. As negotiations advanced on the TPP, Vietnam repeatedly proceeded to release political prisoners.[132] As mentioned above, the partial lifting of the lethal weapons embargo was itself preceded by a manoeuvre of this type. After the comprehensive partnership agreement was signed, there was a drop in arrests and the number of political activists, journalists and bloggers who were detained.[133] Already in the second half of the 2000s, as relations with the United States intensified, Hanoi released political prisoners and negotiated over religious freedoms. At stake in that period there were several crucial political-diplomatic developments: premier Phan Van Khai’s historic 2005 visit to Washington; the preparations for Vietnam joining the WTO; and President Nguyen Minh Triet’s 2007 visit to the United States.[134] In the lead-up to Vietnam’s entry into the WTO (2007) and its election to the UN Human Rights Council (2013), there were also openings on the question of the independence of the trade unions.[135]

For its part, the US administration has not been averse to endorsing the Vietnamese government’s proclamations of intent, or the limited material advances that this latter actually made.[136] This has allowed Washington to legitimise its proceeding with bilateral relations in spite of the many critical voices that have been raised, including in Congress, reaffirming these relations’ beneficial effect on freedoms within Vietnam.[137] However, Vietnam’s openings have been mostly limited and superficial, and often the promises made have not been kept. As noted by an analyst, the Vietnamese Communist Party has thus far proven able to combine its economic opening with the preservation of its political control.[138] Beyond the numerical tally of political prisoners, often the focus of Washington’s attentions, in 2015, «amid high level diplomacy», the human rights situation in Vietnam was reported as being persistently critical. [139] To put it in the words of Brian Adams, the Asia Director of Human Rights Watch: «Vietnam tried to minimize political trials and convictions in 2015 to gain favour during the Trans-Pacific Partnership negotiations, but repression against activists remained firm, with beatings increasing».[140]

6.2.   The TPP and labour standards

The dynamic we briefly reconstructed above brings into question the role that labour standards in general – and more specifically the side-agreement on labour between the United States and Vietnam – were meant to play in the TPP. They above all seemed to respond to the Obama administration’s attempt to influence the fiery domestic political debate around the free trade agreement.[141] On the Vietnamese side, adherence to labour standards – officially reasserted in November 2015[142] – certainly did serve the demands of the Party’s own internal legitimation.[143] However, the overall treatment of labour rights and conditions in the TPP provoked not a few criticisms.

Before going on to give a few examples of these objections, it seems useful to make a general observation. As in most FTAs, the main labour standards included in the TPP directly invoke the «core labour standards» of the ILO’s 1998 Declaration on Fundamental Principles and Rights at Work (DFPRW) – and not that Organization’s set of labour conventions. This has itself been considered an element of ambiguity.[144] Indeed, the appearance of the DFPRW at the end of the 1990s responded to the attempt to reassert the question of labour – marginalised in previous decades – in the context of growing economic globalisation and trade liberalization, characteristic of those years. The labour standards at the heart of the DFPRW are based on 8 key pre-existing ILO labour conventions.[145] These core standards are meant to be binding on all ILO member states, regardless of whether or not they have ratified the 8 conventions.[146] However, ever since its first appearance – strongly backed by the United States – the DFPRW has proven an instrument with less enforcement capacity than the existing international labour rights regime. As one authoritative commentator explained, it embodied a shift of emphasis «from a focus on rights, the content of which is relatively well defined in international treaties» to a «focus on more generally formulated ‘principles’». As a consequence, «There is now an emphasis on soft promotional techniques […].» [147]

Analyses have also brought into relief the weakness of the specific enforcement mechanisms set out in the TPP;[148] such a weakness has been already amply demonstrated by assessments of other US FTAs, including the new-generation ones (2009 and after), which set out strengthened measures concerning labour rights and standards.[149] As we mentioned in the previous section, the TPP also proposed that member countries adopt laws that guarantee «acceptable conditions of work related to minimum wages, hours of work and occupational safety and health».[150] Nonetheless, the parameters of «acceptability» have not been referred to any specific standard; they have instead been left to the decision of individual governments. Moreover, the labour chapter appears to allow countries – in order to be more attractive for trade and investment – to weaken their provisions concerning the «acceptable conditions of work» and also those related to the fundamental rights themselves (in this case, provided that the minimum standards, as internationally defined, are met).[151] The effective lack of enforcement mechanisms in the side-agreement between the United States and Vietnam has also been noted.[152]As some analysts have shown, the Vietnamese authorities have themselves claimed that the country has already put in place measures aimed at satisfying the criteria of the DFPRW – to which it already adhered as an ILO member country – and already has adequate laws on wages, hours of work and health and safety. At the same time, their proclaimed acceptance of the requirement regarding union independence seemed liable again to translate into purely superficial measures, or unkept promises.[153]

It should be said, in the above regard, that the enormous limits to the functioning of the Vietnamese union – especially at the factory level – have so far certainly contributed to exposing the country’s emerging working class to very poor working and living conditions. It is also true, however, that over the years a singular mechanism has been developing in Vietnam, through which the union and government apparatus «respond» to the high level of worker conflictuality, mostly expressed in the form of «wildcat strikes».[154] Particularly frequent from the early 2000s onward, some 80% of these strikes have been concentrated in companies financed by foreign capital.[155] Although illegal from a formal point of view, such strikes have been de facto «institutionalized».[156] They normally lead to the intervention of government and union officials at the negotiating table on behalf of the workers, once the conflict has broken out.[157] Many of these industrial disputes have resulted in a raise of minimum wages, following what some have labelled «collective bargaining by riot».[158]

In 2015 the question of the Vietnamese unions’ transition to a more democratic set-up still remained very much unresolved and problematic, all the more so in a country that continues to declare itself a «socialist market economy». Even the reform programmes that the government and the union have adopted in response to rising labour conflict have overall proven to fall far short of providing workers democratic representation.[159] Nonetheless, not only the TPP’s provisions seem unwilling to effectively challenge the status quo. Such agreements also highlight the ultimate incompatibility between, on the one hand, the «neoliberal» models of development and industrialization and, on the other hand, the very same labour (and other) rights they claim to promote – thus bringing to light the constraints under which trade unions in Vietnam (as elsewhere) operate.

As noted above, a central factor in catalysing investors’ attentions towards Vietnam has been the possibility of accessing a deep reserve of low-cost and relatively well-educated young workforce. Effectively, the agreement could definitively trap Vietnam in productive specializations inherently incompatible with advancing even basic labour rights and conditions.[160] Studies in Vietnam as elsewhere have widely shown what international investors’ expectations and demands are with regard to the characteristics of the workforce – indeed, low-skill and labour intensive productions can be easily moved to other countries offering lower labour costs. A recent survey on the Vietnamese garment and electronics sectors – typically relying on the recourse to poor internal migrant workers, in particular young women – has for example confirmed the spread of low pay and unstable employment relations in foreign invested firms, the workforce’s enormous vulnerability, the existence of very high turnover rates, and the prevalence of harsh and highly disciplinary factory regimes.[161] Some case studies on female migrant labour in the electronics sector have shown in detail how the labour regimes driven by foreign investment are structurally tailored to producing (migrant) workers that are exploitable, poorly paid, vulnerable, temporary and circulatory (and thus exposed to a ceaseless return to poverty).[162]

In the above respect, it’s worth recalling the idea of labour rights and standards that the United States and its businesses themselves concretely uphold and promote. Telling, for example, is the hostility that the American Chamber of Commerce and the US-China Business Council (along with the European Union Chamber of Commerce) have shown in the past towards attempts at concretely improving the basic standards of work of millions of Chinese (internal migrant) industrial workers – as in the case of the 2008 Chinese Labor Contract Law. Not only did the above organizations criticize some pillar aspects of the draft law’s provisions; they also intensively lobbied for having them revised and mitigated in its final version. Moreover, conspicuous by their absence in the two organizations’ comments to the draft law was any reference to the rights to strike and organize – which the Chinese labour law itself does not recognize. [163]

Indeed, US firms are among those well-known for spreading heavily labour-unfriendly practices around the world. Noteworthy in this regard was the highly criticized visit that Obama paid to Nike headquarters in Oregon in May 2015, as part of its «campaign» to gain Democratic and trade-union support for the free trade agreement.[164] With much at stake in the TPP, as of 2015 Nike represented 60% and 30% of the US and world footwear markets respectively.[165] The corporation’s labour practices in Vietnam – its largest production base[166] – have apparently improved since the 1990s, when workers’ harsh treatment in the country came to light, heavily damaging the image of the giant conglomerate.[167] However, as a report noted in 2015, Nike has continued strongly to rely (and apparently still intended to do so) on the below-subsistence wage levels that can be imposed on Vietnamese workers, and on the lack of basic workers’ freedoms and rights in the Southeast Asian country.[168] It is also, more generally, worth remembering that the US has not signed up to the ILO convention on workers’ freedom of association and collective bargaining. In fact US «law allows employers to permanently replace workers that exercise the right to strike»,[169] whereas at the enterprise level, heavy anti-union practices are notoriously widespread, and made possible by easily-escaped legislation.[170]

With regards to the issue of the compatibility between the TPP and human and labour rights, another important question relates to the much-criticized Investor to State Dispute Settlement (ISDS) mechanism. The extent to which the ISDS will be extended to areas such as labour regulations – if it is at all – is still difficult to assess. However, the very fact that this mechanism did ultimately enter the TPP’s text is telling of the «rights-unfriendly» rationale of the agreement – already visible in measures such as those related to intellectual property.[171] Aimed at guaranteeing the enforceability of international investors’ and corporations’ rights and interests, this is a mechanism that can significantly challenge governments’ regulatory capacity in areas of public interest.[172] With regard to the specific issue of labour rights and standards, it seems legitimate to echo one commentator’s observation: «[…] if the Vietnamese government did decide to enact policies to strengthen labour – such as a big increase in the minimum wage […] – companies may sue, forcing the country to pay compensation and reverse policies. Even if independent unions were allowed, how much power would they really have to struggle for policy changes in the face of this corporate power?».[173] Potentially, mechanisms like the ISDS do indeed seem capable of imposing «from above» precise and stringent limits on the effectiveness of any pressure «from below» seeking substantial political and institutional change.

We said above that in 2015 the question of human and labour rights in Vietnam represented an element of continuity with the controversial relation between rhetoric and practice that has traditionally underpinned US foreign policy on these subjects. Seen through the lens of the TPP and labour standards, the human rights issue also raises questions regarding the continued US tendency to collapse the very meaning of democratic freedoms, principles and rights into its own vision of the world order. Inextricably bound up with «U.S. practices of ‘neoliberalism’»[174] and hegemony, the extension of the theme of Vietnamese «moral unaccountability»[175] into the post-normalization years also appeared to disguise the fashioning of the mechanisms that would finally be able to empty these notions of their genuine socially-transformative potential. In particular, while reference to labour rights and standards appears to serve the interests of key international stakeholders, agreements such as the TPP do indeed seem capable of weakening any genuine attempt at improving labour conditions and rights and reforming its organizational structures.

In 2015 Cambodia celebrated the anniversary of 30 years of Hun Sen’s government. This article argues that this anniversary coincided with a crisis of hegemony of both the leadership and the Hun Sen’s government. During 2015 Hun Sen tempted to face the crisis without a precise strategy. The most important was the so called «culture of dialogue» with the opposition coalition and its leader Sam Rainsy. In a first stage this dialogue was unexpectedly fruitful, but after a few months was interrupted and the two parties plunged in the traditional clash.

In terms of international relations, the Cambodian government has further strengthened its relations with China. The solid relationships with Beijing have allowed Phnom Penh an approach more assertive in respect of Vietnam and of others ASEAN members.

1. Introduction

It is universally acknowledged that every anniversary is an opportunity to take stock and reflect on the past. For Cambodia, 2015 marked 30 years of Prime Minister Hun Sen’s government, 40 years since the beginning of the Pol Pot regime and 60 years since the Conference of Bandung.

The local and international press were most interested in the 30-year anniversary of Hun Sen’s government. In fact, Hun Sen is one of the most enduring prime ministers in the world and, given his young age, he seems to be set to rule for a long time. Such an anniversary presents a unique opportunity for us to take stock of past experiences. Due to the limited space of this article, we will confine our analysis to only some fragments of Hun Sen’s political biography.[1] The choice is limited to the elements that appear to be instrumental in analysing the recent political processes that are still in progress in Cambodia. Among these, we want to explore what appears to be the most important, namely the double crisis of hegemony of Hun Sen’s leadership and his party (Kanakpak Pracheachon Kampuchea, or Cambodia Peoples’ Party, CPP) – being «hegemony» defined in Gramscian terms.[2] The hegemonic crisis appears to have at least three specific elements. The first is the progressive damage to consensus, which was detected during the last elections of 2013 and brought the CPP to a loss of 22 seats in the National Assembly (the worst election result since 1998). The second is represented by the social conflict that, after years of alarm signals, exploded with great violence and virulence throughout the country after the elections of 2013. The government has responded with violence and repression. The third is the strengthening of parties and opposition movements, which has given voice to instances of democracy, employment protection, environmental protection and human rights, all of which have highlighted the criticality of the CPP.

On the basis of these elements, this article argues that Hun Sen tempted to face the crisis of hegemony of his leadership and his party without a precise strategy. In general, this is highlighted by his focus on strengthening and centralizing the control of the government and, above all, his party. In this way, Hun Sen became a single man in command, pursuing, although with varying results, a single objective: de-structuring that unity of purpose of labour, which, in latest years, has gradually taken place, although slowly and haltingly. The result was an alternation of openings, closures and repression against antagonists – parties, movements, politicians, activists, trade unionist or journalists. Reference is particularly made to the movements that, until a few years ago, were fragmented, spontaneous and amorphous, and that, in different forms, have reached moments of dialogue, cohesion and unity.

Hun Sen has attempted to face the crisis of hegemony by using the international lever. He has tried in every way to exploit China to show the positive economic impact that his government has achieved. The excellent relations with China, which are a source of unstoppable capital flow in Cambodia, have become a reason for triggering the daily rhetoric of the premier, which is always in third person, based on the «inalienability and indispensability of Hun Sen. Without Hun Sen, the country returns to civil war».[3]

In addressing the theme of the crisis of the hegemony of the leadership of Hun Sen and the CPP, in the first part of this article, we will analyse the internal dynamics of the party, the attempts of openness and Hun Sen’s dialogue with the different movements and opposition parties. In the second part, we will analyse the international relations, with particular reference to China’s great support. Finally, the last chapter will analyse the economic policy in the short and medium term.

2. The renewal of the politburo of CPP after the death of the president Chea Sim

In June 2015, Hun Sen finally achieved one of his great political objectives – presidency of the CPP. On 6 June 2015, the president of the party, Chea Sim, died after a long illness. This certainly facilitated the turnover of Hun Sen and the renewal of the Central Committee of the CPP.

For a long time, analysts have discussed the opportunity to separate the roles of the government’s presidency and party leadership.[4] Hun Sen’s ascent to party leadership appeared to be obvious for two reasons. Firstly, he has never had full control of the CPP and has always experienced internal opposition factions, in particular those lead by the duo, Chea Sim and Sar Kheng. Secondly, at such a stage of the hegemonic crisis of CPP, the position of leadership, which was created by the death of Chea Sim, needed to be filled by a strong guide with control of the party. This was needed in order to manage the repositioning of the affiliates to Chea’s clan. Based on this premise, in the first part of this article, we will analyse the attitudes of Hun Sen within his own party, while, in the second, we will analyse the relations between the CPP and opposition parties.

2.1. Chea Sim, the main antagonist of Hun Sen

Historically, the CPP was composed of more cores, which were representatives of each broad clan, based on different territories. The two strongest clans were the one led by Hun Sen and the other led by Chea Sim. The third, which was led by Heng Samrin, the honorary president of the CPP and of the National Assembly, did not rival Hun Sen in the same way that Chea Sim group had.[5]

Chea Sim was born on 15 November 1932 to a peasant family in eastern Cambodia’s Svay Rieng province. In the early 1950s, he joined the Khmer Issarak[6], the revolutionary movement against colonial France. He was a cadre of the communist, Khmer Rouge, by the time it ousted a pro-American government in 1975.[7] In 1978, he abandoned the Khmers Rouges and fled Vietnam. In early 1979, he came back to Cambodia, following the Vietnamese troops, who had defeated the Khmers Rouges. Chea Sim was appointed Minister of the Interior of the Pro-Vietnamese Government, which was created in Phnom Penh. In this team, Hun Sen was Minister for Foreign Affairs.

Since 1979, Chea Sim built his power base in the northern region of Cambodia, in the province of Battambang. Here, his nephew, Ung Samy, acted as Secretary of the Party and, since 1987, as Governor of the Province.[8] Chea Sim also had other strong allies in the provinces of Siem Reap and Bantey Meanchey. However, one of his strengths was his control of the army – first, at the end of the 80s, through his close ally, Sin Song, Minister of the Interior, and, subsequently, through Sar Kheng, the current Minister of the Interior and Chea’s daughter’s husband.[9] The recruitment of the army of relatives, close allies and former paintings of Khmers Rouges guaranteed Chea Sim unparalleled strength in the party and government.

Hun Sen has always had a subaltern position against Chea. During the years of the first government, followed by the peace agreements of 1991 and the elections of 1993, the two leaders greatly clashed. Some U.S. diplomats’ documents, dating back to that period, reveal the resentment and tensions inside the CPP. These were so strong that Hun Sen was terrified by the news of a possible attack against him, which was published by a local newspaper. The Near-obsession, wrote that the U.S. diplomats had induced Hun Sen to establish a government commission of inquiry in order to discover a plot.[10] However, the prime minister had not entrusted the leadership of the commission to his Minister of the Interior, Sar Kheng, as it would have been natural to. Instead, he entrusted Co-Minister of the Interior, You Hockri, a member of the FUNCINPEC party (Front Uni National pour a Cambodia Indépendant, Neutral, Pacifique, et Coopératif).[11] This clearly shows that Hun Sen did not trust Sar Kheng.[12]

In 2004, after the 2003 legislative elections, there was great political conflict between Hun Sen and Chea Sim. In this period, the three parties that were most voted for – CPP, FUNCINPEC and Sam Rainsy Party  (SRP) – tried to reach an agreement in order to form a government coalition. Since Hun Sen did not commit himself to the FUNCINPEC, he proposed an amendment to the constitution, which would have allowed the vote of confidence to the government by show of hands, instead of in secret. In this way, he would have avoided any votes against the maverick party members of parliament. Chea Sim, as president of the Senate and acting behind the mandate of the King (who, in that period, was abroad) as head of state, had refused to promulgate the act, which greatly annoyed Hun Sen.[13] Chea Sim was forced to leave the country in order to take refuge in Thailand, although officially for a period of medical care.[14]

In the subsequent years, conflicts between the two clans continued. In 2011, the group of Chea Sim-Sar Kheng suffered a further setback, following a scandal involving a group of Chea Sim’s consultants. In the space of a few months, six members of staff were arrested, tried and sentenced for fraud and the illegal possession of arms and drugs.[15]

2.2. The Control of the armed forces by Hun Sen

Against the background of these events, we must not forget Hun Sen’s actions since the 90s to counter the hegemony that the Chea Sim clan has always had on the army. Legitimized by the overwhelming victory of the 2008 elections, Hun Sen made an important and significant move – the alternation of the commander in chief of the army, General Ke Kim Yan, whose daughter married the son of Sar Kheng.[16] In his place, Hun Sen appointed Pol Saroeun,[17] who had been his close crony since the 1980s. He also appointed six new generals, who were known to be close to the prime minister. His aim to control the army continued in 2012, when Hun Manith, his second son, was promoted to Brigadier General and Deputy Chief of Military Intelligence Unit (MIU).[18] In 2015, at the age of 34, Hun Manith, who was the country’s youngest four-star general, assumed the direction of the MIU.[19] Furthermore, Hun Sen’s eldest son, Manet, has also had a successful career in the armed forces. In 1999, he obtained his diploma in the prestigious U.S. military West Point Academy. Manet, who is currently Lieutenant Brigadier, commander of the 911 Airborne Brigade’s counter-terrorism unit, is regarded as one of the best candidates to succeed his father.[20]

Hun Sen has no chosen one of his sons to direct the intelligence in a period of political instability, marked by workers’ protests, tensions within the party and Islamic terrorism dangers.

Many of Hun Sen’s unprecedented announcements during 2015 have been in this context. The army was vigilant against such «coloured movements», which, displaying the principles of democratic alternation, want to overthrow the government.[21] In July, faced with an unprecedented audience formed by 5,000 members of the army and police, Hun Sen called on the armed forces to take immediate measures against any political group that was attempting to overthrow the «legitimate» regime.[22]

To complete the picture of the dynamics between the government and the armed forces, it is useful to cite a further element that was made public in 2015. Every year, the Royal Cambodian Armed forces receive financial backing from both local and foreign large companies. In a public discourse, the Minister of Defence, Tea Banh, stated that the number of companies that financed the armed forces had gone from 42 to 100.[23] Considering this admission, it is easier for us to understand why, during 2015, on many occasions, different chiefs of the armed forces openly guaranteed their loyalty to the CPP as opposed to the government. [24]

However, it is significant that at least nine deputy National Police commissioners, in addition to several powerful generals and military commanders – some of whom directly ordered crackdowns on political protests after the July 2013 election, were elected to the CPP central committee. These include Phnom Penh, Police Chief; Chhuon Sovann, RCAF Deputy Commander; Chief of the Prime Minister’s Bodyguard Unit, Hing Bun Heang; and Phnom Penh Military Police Commander, Rath Sreang. [25]

2.3. The question of the Vice Presidency of the CPP

Immediately after the death of Chea Sim, Hun Sen was elected president of the CPP and Sar Kheng was elected vice president. It is important to note that Hun Sen did not wish for Sar Kheng to act in complete autonomy as vice president. He wanted Say Chhum, a faithful crony, to act with Sar Kheng.[26] Once again, this highlights how the prime minister did not trust Sar Kheng during the phase of transition and hegemonic crisis.

Say Chhum has been a crony of Hun Sen’s clan since the 1980s. After the death of Chea Sim, some political analysts maintained that he could be the next president of the CPP. Say Chhum was elected in the Kampong Speu constituency. In the 11th session of the first People’s Republic of Kampuchea, National Assembly on 25th July 1986, he was appointed Agriculture Ministry. In 1987, Hun Sen appointed him Deputy Prime Minister, together with Chhay Than, Minister of Finance; and Ho Non, Minister of Trade. In 1997, he was appointed Co-Minister of Interior and Secretary General of CPP. As a member of the Standing Commission of the Central Committee and chairman of the Organization Committee of the party, he has always played a role of mediation between the factions of the party, as well as between the CPP and opposition parties. Say Chhum was in the first row in the periods of political crisis, for example, in the period that followed the 1997 bomb attacks or after the elections of 2003, when he facilitated the dialogue with the opposition parties to find a coalition government agreement.

For these reasons, even before the elections of 2002, some of the press had declared that Say Chhum was one of the best candidates to challenge the premiership of Hun Sen, together with Sar Kheng, and Chea Sophara, Mayor of Phnom Penh. [27]

During the apparent renewal phase of the CPP, Say Chhum was confirmed to have taken the position of Secretary General, in addition to assuming the co-vice presidency.

2.4. The opening of the party to the young people

The Congress of CPP was opened in January 2015, a few months before the death of the party’s president, Chea Sim. The Congress was the ideal occasion to analyse the crisis of hegemony and identify the best strategies for addressing it. However, at least from what was officially reported, it addressed the need to rejuvenate the party and pay attention to the young people of the country. On this ground, the CPP is considered to have lost competition with the opposition’s parties and movements. Therefore, taking into account the fact that 68% of the population (14.8 million) is under 30 years of age, the party took into consideration the needs of young people. From this point of view, the party’s first act was to rejuvenate the Central Committee by adding 306 new members. This more than doubled the committee’s size to 545. Apparently, their goal has been achieved since 70 of these new members are under 50 years of age.[28] The second act was to entrust Hun Sen son, Many, with the task of creating a school of political formation for the young people. Besides arranging a delegation trip in China for the party’s young activists, it does not seem that Hun Many has organized any successful initiatives.[29] Furthermore, it is still not still known what modalities the CPP’s school of formation should operate and what themes will be addressed.

However, on closer inspection, the party’s opening to the young people appears to have been a populist announcement that has been devoid of effectiveness, especially in view of two important elements. The first element is related to the fact that the party’s crisis stemmed from their inability to represent the needs of an urbanized and poorly skilled young working class, as opposed to a generic category of an indeterminate class of young people. For a long time, the CPP have underestimated the strikes and demonstrations for better working conditions and in general to affirm a new subjectivity of the work and a social justice. Moreover, the recent period of violent repression of the world of labour and prohibitions of public protests and demonstrations have progressively pushed the party further away from the electorate.

The second element is at odds with the CPP’s new strategies – nepotism. This can be seen among the party’s elite and the government. In fact, at least a dozen of the party’s elders, in addition to the Hun Sen’s three sons, occupy positions of importance in all of the institutions.

3. The «culture of dialogue»

Another difficulty of the CCP is Hun Sen’s attempt to converse with a multiplicity of political actors. These include large parties, like CNRP; his former friend-rival, Norodom Ranariddh; and small opposition movements such as Kem Ley’s Khmer for Khmer, Mam Sonando’s Beehive and Sourn Serey Ratha’s Khmer People’s Movement. [30]

At the beginning of January, Norodom Ranariddh announced his return to the guidance of FUNCINPEC. FUNCINPEC was founded by Ranariddh’s father, Norodom Sihanouk in 1981. In 2006, the party was expelled for the misappropriation of its funds. The royalist party almost entirely disappeared from the Cambodian political landscape. However, some members of the royal family have maintained a strong presence on the electorate. As such, Ranariddh seems certain to obtain strong support in the next municipal elections, which are scheduled in 2017. According to some analysts, the return of Ranariddh could be a move that was advocated by Hun Sen in order to create an alliance between the CPP and FUNCINPEC, in view of the parliamentary elections of 2018.[31]

In his tireless quest for consensus, Hun Sen has not only conversed with political actors but also, religious groups like the community of Muslims. It is estimated that the Islamic community in Cambodia accounts for about 600,000 Muslims. Consequently, it represents an interesting group of potential votes. On 31 May, in Phnom Penh, Hun Sen inaugurated the newest and greatest mosque in Cambodia during a ceremony that was participated by 1,000 people.[32] The following month, repeating an event that was started in 2014, the prime minister organized the iftar for 4,000 Muslims – the evening meal that breaks the fast of Ramadan.[33] Dialogue with the Cambodian Muslim community has allowed Hun Sen to establish closer relations with the South East Asian Muslim Countries such as Malaysia. It is worth noting that Hun Sen appointed Othman Hassan, President of the Cambodian Muslim Development Foundation, as State of Ministry of Labor and Vocational Training, as well as Advisor to the prime minister.

However, the unprecedented dialogue that Hun Sen established with Sam Rainsy, the leader of the opposition coalition, had an even greater impact. This will be discussed in the next paragraph.

3.1. The Culture of Dialogue Between the CPP and CNRP

In April, during the celebrations for the new lunar year, after months of fighting, the CPP and the opposition coalition of CNRP started the so-called «culture of dialogue».[34] This political dialogue primarily focused on trying to find an agreement on a series of reforms. Among these were the electoral reform, the regulation of the trade unions and the regulation of the activities of the Non-Governmental Organizations (NGOs). All of these reforms concerned very delicate subjects such as involvement in the world of labour and various categories of social actors, as well as international investors and the community of the donor countries. In the past, the government had attempted to deal with the rules of the trade unions and NGOs. However, on every occasion, there were local protests and international pressures to stop discussions in Parliament. In order to prevent any further criticism and avoid worsening the social conflict, Hun Sen wanted to enlarge the discussion boards by inviting the opposition parties and trade unions to negotiations.[35]

The regulation of NGOs (Law on Associations and Non-Governmental Organizations – LANGO) that was strongly desired by the premier was the reform that immediately tested the culture of dialogue. In Cambodia, from 1991, after the intervention of the UNTAC, there was a growing organization. In 2015, there were about 5,000 local and international organizations and, on the whole, there were about 4,000 development projects operating with a total budget of approximately $600-700 million per year.[36] It is understandable that, with the substantial amount of money that the community of donors offer to Cambodia, there is a great interest in any intervention of the legislator on this matter.

The most controversial points of the draft law were related to the obligation that was imposed on the local NGOs to register at the Ministry of Interior and international at the Ministry of Foreign Affairs. In addition, organizations are required to regularly submit their work progress and financial reports.

Article 25 and 30 of the law states that any organization will be erased from the registration list if it fails to report to the ministries. Furthermore, it says that those that are not registered are «not allowed to conduct any activities» in Cambodia. Even if approved, «NGOs must be neutral towards all political parties» and the government can request full details of activities and finances if it deems it «necessary» to do so.[37]

The law proposal aroused numerous protests that stigmatized the desire of the government to impose a series of controls and restrictions on the activities of the NGOs, contemplating the closure in evidence of non-compliances and of serious violations.[38] Most of the NGOs – affirmed the opponents – are small associations that work in the countryside. Those in the countryside are more sensitive to the problem of land grabbing and, often, they do not have the expertise to meet all of the government’s requests.

Substantial amendments to the draft law were suggested by the UN, U.S. and EU. The parliament of the EU even threatened to freeze a sum of €700 million of aid to Cambodia in a case in which the law had been approved.[39]

In this context, the coalition of opposition and, in particular, Sam Rainsy, strangely remained silent. Sam Rainsy, who was trapped in the culture of dialogue, affirmed that: «The prime minister confirmed to me that civil society groups should not worry too much. Civil organizations that are in operation are not required to re-register. They will automatically be recognized.»[40]

On 13 July, the law was approved with some amendments, with respect to the initial draft, while the CNRP had not participated in the Parliament vote to protest. However, that same evening, when, on other occasions, opposition parties would have called a strong protest, Hun Sen and Sam Rainsy, together with their families, unexpectedly took dinner together. Pictures of the families of the two bitter enemies on the same table appeared on social media and aroused great international acclaim, in addition to discontent within the CNRP.[41]

3.1.1. Further cracks and the collapse of the culture of dialogue

Discontent inside the CNRP was repeated and made worst on 21 July, when 11 activists of the CNRP, who had participated in one of the numerous protests from the summer of 2014, were sentenced to seven years for fomenting an «insurrection», and 20 years for «leading an insurrection».[42] In the face of protests of the opposition parties and NGOs, Hun Sen stated that, to the contested offences, «The judges were far too lenient».[43] The premier also added: «It would have been appropriate also to arrest the other activists who had instigated the protest».[44] In fact, at the beginning of August, three more activists were arrested.

The day when the judgement was announced, Sam Rainsy was not in place to drive the protest, as expected by the militants, but left for France. Interviewed by a French newspaper on the condemnations, Sam still maintained low tones and stated that it was a gesticulation, namely the exaggerations of the judiciary. Sam also added that, in any case, the condemnations would not have undermined the culture of dialogue with CPP.[45]

After that particular interview, it was clear that the intolerance of the members of the CNRP in respect of their leader and the culture of dialogue began to emerge. A number of previous accusations from 2014 were repeated, for example, the base of the CNRP had shown discontent towards Sam Rainsy for having conducted negotiations with Hun Sen without having been involved. [46]

With the growing tensions between the CPP and CNRP, the situation progressed on 15 August, when a CNRP senator was arrested and charged with serious unrest. This accusation was based on a fake document that was posted on Facebook. This document claimed that an article of the 1979 Cambodia-Vietnam Friendship Treaty was meant to dismantle, rather than simply define, the border between the two countries. Charged with forging a public document, the senator could carry a combined maximum prison sentence of 17 years.

At that point, the two political forces went back to their traditional conflict with reciprocal accusations of unreliability, dishonesty and betrayal, as had already been heard in recent years. At the end of October, there was a further escalation, characterized by a series of events. First, two members of the CNRP were attacked just outside the gates of Parliament. Dragged from their vehicles, they were assaulted by protesters and a group of CPP activists. The sit-in was organized against Kem Sokha, the first Vice President of the National Assembly, as well as the Vice President of the CNRP, for having criticized Hun Sen during a public discourse on the day before. Within a few weeks, it was ascertained that the leaders of the beatings were three policemen.[47]

As a result of this beating, the lower chamber voted a «citizen proposal» for the removal of the Vice President of the National Assembly, Kem Sokha. This was proposed by CPP’s supporters and signed by 300,000 citizens, in virtue of the inadequacy of the vice president.[48] Subsequently, on 11 November, the leader, Sam Rainsy, faced an arrest warrant in relation to a prosecution for defamation against the Foreign Minister, Hor Namhong, dating back to 2008.[49] Following the arrest warrant, the President of the National Assembly decreed the revocation of the parliamentary immunity of Sam, which decided not to return to Cambodia, while the CNRP decided, once again, to abandon Parliament.

Within a few months, Cambodia relapsed into a stalemate, as had happened after the elections of 2013, when the CNRP had refused to participate in the parliamentary work to protest against alleged electoral fraud.

4. International relations

In the 30 years of Hun Sen’s government, the international relations of Cambodia were characterized by a policy of equal distance with the major powers, China and the US, in particular, and good neighbourly relations. This attitude has assured the country’s internal stability in addition to a continuous flow of investments and aid from both the western and Asian side. In the last decade, relations between Beijing and Phnom Penh have intensified and strengthened. This is due to a flow of capital that China provided for Cambodia in the form of investments, subsidized loans and donations. In addition to the economic benefits, according to Sebastian Strangio, the solid bond between the two countries ensured that the Cambodian government could exercise power on the level of internal policies. At the same time, it is important to note that foreign policies are affected by foreign «conditionalities».[50]

In fact, Hun Sen, has always suffered with «conditionalities» (respect for democratic principles and human rights), which were duly imposed by the western donors to the Cambodian government. In 2009, the U.S. Embassy noted: «Hun Sen frequently praises China for its ‘blank check’ policy on assistance, and criticizes other donors who to seek to condition aid on political and economic reforms in the country. […] Hun Sen lauded the Chinese for providing assistance with no strings attached, saying ‘they are quiet, but at the same time they build bridges and roads, there are no complicated conditions». [51]

However, on an international level, China also presented its conditionalities to Cambodia, so much so that the government of Phnom Penh, in the toughest issues relating to territorial disputes in the South China Sea (SCS) and the demarcation of the Exclusive Economic Zones, is deployed securely to the side of Beijing.

The main stages that led to the Cambodian engagement with China and the regional consequences will be analysed in detail in the following paragraphs.

4.1. The enveloping embrace of China

Since the early 1950s, China had had a policy of aid to countries of the communist block.[52] After the conference of Bandung in 1956, it also granted financial and military aid to non-aligned or neutral countries. After the Korean War, the aim of both the Chinese government and Chinese Communist Party was to rebuild its image and show that is a reliable and responsible player in the international arena.

Cambodia received much more aid from China than other countries (in that period, $6 million). This was because, in 1958, Norodom Sihanouk recognized the Beijing government and, at the same time, worked with great commitment in order to expel the Republic of China (Taiwan) from the UN.[53]

Despite not having any sympathies to the communist party, Sihanouk accepted their aid for both internal and foreign political reasons. From an internal point of view, Sihanouk restrained the opposition, in particular that of the leftist intelligentsia. On an international level, he avoided taking sides with one of the blocks and held a neutral attitude. In this way, Sihanouk was able to obtain two results. The first was to ensure that his country obtained financial aid by more countries such as the US, Japan and France. The second was related to the acquisition of a hedge, in the case where Vietnam became communist and China would have done the same via the region’s arbitrator and moderator. From 1964 onwards, the engagement with Beijing also provided the first military supplies.[54]

In 2008, the 50th anniversary of diplomatic relations between Cambodia and China was celebrated with the signature of a financial aid programme to Cambodia ($256 million). This was intended for the construction of roads and bridges. This agreement was just a prelude to a renewed understanding that, in the subsequent years, it would converge a stratospheric amount of Yuan to Cambodia. In Washington, the U.S. Ambassador, Carol Rodley, reported such agreement between Beijing and Phnom Penh, stating: «Cambodia’s ‘Year of China’ looks to become its ‘Century of China’».[55] From that moment, China’s aid policy in Cambodia has never stopped, and has been a continuous source of projects and funding.

During the official visit in Phnom Penh on 23 December 2009, Xi Jinping, the then Vice President of PRC, formalized the granting of $1.2 billion (part non-repayable and part a subsidized rate) for the construction of infrastructures and technological assistance. In 2010, relations between the two countries were sealed by the signature of the comprehensive Strategic Partnership in December 2010. This was a five-year programme that guaranteed Cambodia a flow of Chinese investments for a total of $2.5 billion.[56]

Among the various projects that were financed by China in Cambodia, between 2011 and 2013, it is important to mention the construction of the new container port in Sihanoukville and the construction of an oil refinery, the first in Cambodia, with an investment of $1.67 million.[57] However, it is also worth pointing out that the infrastructure funded by the Chinese government, in most cases, ended up facilitating the activities of the Chinese companies.

It is estimated that, over the last 20 years (1994-2014), Chinese investment in Cambodia has reached more than US$10 billion. Furthermore, in November 2014, during bilateral meetings on the Asia-Pacific Economic Cooperation (APEC) side-lines, Hun Sen was able to secure promises of at least another US$500 million in soft loans annually, on top of the US$2.85 billion that was secured between 1994 and 2014. [58]

In 2015, Hun Sen inaugurated six bridges, thanks to the financial support of China, and was repeatedly asked to be able to be part of the new belts and new «silk roads». [59]

4.2. The vision of Hun Sen over China

On one hand, the enveloping embrace of China has allowed Hun Sen’s government to ensure substantial financial aids and investments. On the other hand, the Cambodian alignment on the Chinese positions has caused problems for the traditional policy of equal distance with the major powers. Some frictions are highlighted within the regional for a, such as ASEAN, which are related to the CSC’s questions.

With reference to the ASEAN, the Sino-Cambodian alignment contributed to creating a fracture in July 2012, during the 45th Foreign Ministers Meeting. Here, Cambodia was deployed to openly support Beijing’s positions. China, in fact, had pressed in order to address the SCS’s disputes on a bilateral basis. Instead, Vietnam, Philippines, Malaysia and Brunei asked that the issues of the SCS were discussed inside the forum. For the first time in 45 years, a forum of ASEAN ended without a joint statement and Cambodia, which, in 2012, had the presidency of the forum, was pointed out as being mainly responsible for the failure of the dialogue.

Three years later, the fracture has not yet recomposed, despite the fact that the presidency of ASEAN has alternated the Brunei, Myanmar and in 2015 Malaysia.

In reality, the problems of ASEAN are not solely due to the different positions on the issues of the SCS. Frictions in the regional forum also stemmed from the debate on the new medium and long term plans, which once closed the action of the Millennium Development Goals. The creation of an economic community, one of the advocated projects in early 2000s, still remains wrapped in uncertainties and requires a profound rethinking on the basis of the new regional equilibrium. Reference is made, for example, to the new Trans Pacific Partnership (TTP) agreement, which involves only two of the countries of ASEAN (Singapore and Malaysia), to the new security forums or the new international financial institutions promoted by China, or even the threat of the Islamic State. [60]

In this respect, it should be recalled that, in 2015, Cambodia was accepted «as partner in dialogue» of the Shanghai Cooperation Organization. This is the only country of ASEAN that accesses the forum.[61]

With regard to the tensions between Cambodia and its neighbours, reference is made to karstic matters on contended borders between Cambodia and Vietnam, which, once again, resurfaced during 2015. It is true that, in the past, the question of the borders of Vietnam was considered to be an internal problem concerning the criticism of opposition parties in respect of the common wire-Vietnamese CPP. Hun Sen, in fact, has always been accused by his detractors to have sold pieces of Cambodian territories to Vietnam. In July 2015, along the border of the province of frontier of Svay Rieng, there were continuous protests on the part of the Cambodians, following the creation of artificial pounds by the Vietnamese, whose waters invaded the Cambodian territories.

In order to avoid repercussions on an inner level, by feeding the nationalist instances and anti-Vietnamese movements, Hun Sen acted immediately on an international level, involving different actors including the UN, France, the United Kingdom and the US. The UN and all of the governments requested copies of the geographical maps that were processed during the peace conference in Geneva in 1954, in order to locate the exact boundaries.[62] Once the government verified that the maps were sent by France and established that Cambodia had not surrendered the territories to Vietnam, the opposition parties were disarmed.[63]

However, as far as relations between Cambodia and Vietnam are always solid, it should not be underestimated the fact that, for the first time in 2015, the Cambodian Minister of Foreign Affairs, Hor Namhong, officially asked Hanoi to put an end to the activities of the occupation of Cambodians territories.[64] In the past, when other violent protests of Cambodian villages near the border with Vietnam had inflamed nationalist Cambodian souls, Phnom Penh had never made such requests to Hanoi. Cambodia’s attitude is more assertive towards Vietnam, which brings to mind another curious fact that dates back to December 2013. During a visit to Hanoi, Hun Sen spoke to his audience in Vietnamese. Given the damage that this could do to his standing domestically, it could only be seen as a gesture of conciliation. It seems likely, as argued by some analysts, that the enveloping embrace of China to Cambodia has brought Hun Sen to a redefinition of the attitude towards Vietnam, which is no longer based on a position subordinate but rather, equal footing.[65]

5. The Growing Economy and Worries for the Future

In the context of the hegemonic weakness of Hun Sen’s leadership and his party, in 2015, the public speeches by the premier were preoccupied with announcements related to the economic results that were achieved by his government. During his long experience of being part of a government that has faced difficulties in internal policies, Hun Sen has always supported the principle of the indispensability of his role due to the positive macro-economic data. Moreover, macro-economic data have been constantly positive and, in 2015, the growth of GDP was expected to remain at 7.3%, compared to the previous year.[66]

However, in 2015, for the first time, the government presented a new industrial development plan that provides for the diversification of industrial production. Next to rice and garments, which are the driving sectors of the economy, it aims to develop other activities that employ a higher cognitive level. In this way, the government intends to raise the share of GDP created by industry from 24.1% in 2013 to at least 30%.[67] This diversification can be done through the creation of a favourable environment to FDI and settlement of industries with higher specialization. Hun Sen argued that this would reduce taxation and improve the infrastructure and bureaucracy. Some analysts have pointed out that this programme’s complexity clashes with others issues (e.g., a lack of skilled human resources and very high production costs) and it can only be addressed by stages in the medium-long term. [68]

Considering this, it can also be assumed that the new industrial plan aims to counteract the negative effects that the agreements of the TPP and the EU-Vietnam Free Trade Agreement (both signed in 2015) could have in the field of Cambodian exports. [69]

Next to the new industrial plans, from an economic point of view, the activity of the government in 2015 was characterized by actions that were aimed at neutralizing the fuses of the social conflict. Among these, we can mention: the announced intention to reduce the price of electricity to the garment’s workers living in the industrial area of Phnom Penh;[70] the announced increase of the threshold of minimum income not taxable;[71] and the announced intention to remove taxes on motorcycles.[72] Furthermore, with the aim of alleviating the criticism of NGOs concerning the question of land grabbing and avoiding protests by farmers, the government has given great emphasis to the moratorium on new economic land concessions (ELC). Hun Sen already announced in 2012 and 2015 that, for the first time, the authorities withdrawn certain ELC to large companies for the lack of requirements.[73]

Finally, Hun Sen’s government has sought to defuse the aspects that are more incandescent, which could ignite social conflict inside the working class. The attempt to institutionalize the dialogue between the State, companies and trade unions, creating a model of tripartism, has not given rise to great enthusiasm, especially on the part of workers. Workers , in fact, repeatedly denounced that some trade unions taking part in the negotiations would be strongly influenced by the government and would not be representative of the workers. The main consequence of this is the slowdown of the question of minimum wage. [74]

The military staged a coup on 22 May 2014, overthrowing the elected government of Prime Minister Yingluck Shinawatra. Outwardly, the military justified its political intervention with the classic claim that corruption was the rot of Thai politics and the coup was needed to purify the political domain. At a deeper level however, the military intervened at a time when a critical transition in Thai politics is on the horizon: the imminent royal succession. For decades, the traditional elites, of which the military is a part, have long dominated Thai politics. This changed with the arrival of the Shinawatras who set huge socio-economic changes in motion. They then took advantage to empower themselves politically, and in doing so, shook the old political structure. In today’s Thailand, the power struggle between elective and non-elective institutions is now reaching its peak because the era of King Bhumibol Adulyadej is closing. Haunted by anxiety over a future without the charismatic King, the traditional elites are vying to manage the royal succession and maintain their power position. The paper argues that the military government led by General Prayuth Chan-ocha is seeking to accomplish three missions: to reconstruct the electoral system that will benefit the traditional elites; to eliminate political enemies though the legal system, particularly the lèse-majesté law and other non-legal means; and to reinforce the position of the palace to ensure that the monarchy will continue to be at the centre of power in the post-Bhumibol days. It is unlikely that these undertakings will stabilise Thai politics, and as voters become alienated in the political process à la Prayuth, large-scale violent protests may be seen as unavoidable in order to restore democracy.

1. Introduction

The Thai military staged the latest coup on 22 May 2014, overthrowing the elected government of Prime Minister Yingluck Shinawatra, who won a landslide election earlier in 2011. Months of relentless protests led by former members of parliament from the Democrat Party, Suthep Thaugsuban, which formed an anti-Yingluck movement under the name, PDRC (People’s Democratic Reform Council), successfully created a violent context for the military to intervene. The discontentment against the government derived from the fact that the ruling Pheu Thai Party attempted to push through the parliament a blanket amnesty bill, which, if successfully approved, could emancipate former Prime Minister Thaksin Shinawatra from corruption charges.[1] Although the blanket amnesty would also allow the military to walk free from its involvement in the mass killings of the red-shirt protesters in 2010, the military top leaders seemed to be more interested in interfering in politics as a way to eliminate the Shinawatras’ political influence. Prime Minister Yingluck called for dissolution of the parliament and an election was held on 2 February 2014. But the Constitutional Court intervened and ordered her to step down over her role in the controversial transfer of a senior security officer in 2011.[2] In May 2014, the military finally staged a coup, while leading many Thais to believe that it was just another «normal coup», primarily to get rid of so-called corrupt politicians.

In reality, the objective of this latest coup went beyond the mere overthrowing of the Yingluck government. The electoral successes of Thaksin’s political parties, from the Thai Rak Thai [Thais Love Thais] in 2001, the Palang Prachachon [People’s Power Party] in 2007 to the Pheu Thai [For Thais] in 2011, serve as a justification for the royalist elites to find ways to constrain majoritarian democracy. Andrew Walker asserted that they wished to condemn Thailand’s new «electocracy» championed by Thaksin and his proxies.[3] This is particularly crucial during which time the royal succession is imminent. This article argues that the coup was staged primarily for the military and the traditional elites to take control of the royal transition. In so doing, they aimed at eliminating the Shinawatras before the succession takes place. In this process, it seems apparent that the military has attempted to stay in power for as long as possible, determined, once again, to be in charge of the royal succession. Should the military be forced to step down, perhaps due to domestic or international pressure, it wants to ensure that it would continue to dominate the political domain. During 2014 and 2015, Thailand witnessed military scheming to put in place an infrastructure, to allow itself and the royalist elites to manipulate the electoral game, which in the past decade had been comfortably controlled by the Thaksin faction. Alongside, the military has constructed and popularised the discourse of anti-majoritarian democracy, first crafted by the anti-Thaksin «yellow-shirt» movement, known as the People’s Alliance for Democracy (PAD), and now the PDRC; it is adopted by the current military-appointed Constitution Drafting Committee in order to belittle the «electocracy» as a way to prevent the Thaksin faction from returning to politics too easily.

The military government of a self-proclaimed Prime Minister, General Prayuh Chan-ocha is now concentrating on drafting the constitution, which is seen as part of the traditional elites putting such an infrastructure in place. Instead of working to win the electorate by introducing popular and positive policies, the royalist elites have chosen to control the electoral system through rewriting the constitution. Almost two years now after the coup, key figures in this military government have revealed their ideas for the new constitution, which will be similar to the semi-democracy model that was seen in Thailand a few decades ago – a model that seemed to embrace democracy on the exterior but essentially the government was under control of extra-constitutional institutions. However, an earlier version of the drafted constitution was disapproved by the military-dominated parliament, possibly as a result of a split in the ideas among the parliamentarians. Some seemed to be keen for the elections to be organised soon, so that Thailand would eventually get out of the political mess. Meanwhile, some wanted to prolong the life of the Thai military junta and therefore rejecting the constitution would be a way for the military government to stay on in power. Currently, a new set of the Constitutional Drafting Committee, led by Meechai Ruchupan, a legal expert and former politician with intimate ties with the military, is working on redrafting the charter. The structure of the new constitution that is being discussed, when implemented, will certainly prevent an emergence of a strong and popular elected government, as will be shown/demonstrated in the next paragraphs. It is also likely that the appointed Senate will be the agent of the conservative elites and will play a vital role in that capacity. Moreover, the new constitution will provide the military with some legitimacy to intervene in politics whenever it sees fit. Even if the junta goes ahead with the elections, now set for 2017, the top brass will continue to exert major influence over Thai politics – a strategy necessary in coping with the uncertainties in the post-King Bhumibol Adulyadej period.

2. New political structure

Political Scientist Puangthong Pawakapan of Chulalongkorn University wrote succinctly:

Thailand’s pro-coup entrenched royalists distrust electoral democracy, politicians and rural-voters. The anti-rural voter discourse was in fact central to the Yellow-Shirt campaigns led by the People’s Democratic Reform Council (PDRC) and its predecessor the People’s Alliance for Democracy. The coup is an opportunity for them to put construct [sic] a new political game where the electoral power of majority voters is reduced.[4]

And indeed, the Prayuth government has striven to promote a new political structure whereby future civilian governments would be deprived of their actual power. In the first draft of the constitution, it was evident that the members of the Constitutional Drafting Committee moved toward that end to limit the power of the future executive branch by allowing a non-elected member of parliament to become prime minister. In other words, the new constitution would not require a prime minister to be a member of parliament or a member of any political party. Purportedly, this would allow an «outsider», like those from the military, to take the premiership – a move perceived to be a step backward for Thai political development. According to the 1997 constitution, still known to be the most «liberal» constitution Thailand ever had, it was stipulated clearly that a prime minister must be an elected member of parliament. This requirement reflected one of the major demands of the democratic movement in the aftermath of the Black May incident of 1992 as part of the public’s push for a greater democratisation and as a way to prevent the military from its interference in politics.[5]

Puangthong also emphasised that the new constitution will likely grant the Senate more power. Senators are to be assigned greater responsibilities, such as in proposing reform bills and even scrutinising the profiles of nominated cabinet ministers before the prime minister submits the list for royal approval. Moreover, senators could be given some authority to vet the profiles of heads of all governmental organisations. In effect, the Senate will be a dutiful agent of the conservative powers in their attempt to control the new political structure. The set-up of the Senate proposed by the Constitutional Drafting Committee reiterated the conservative elite’s determination to consolidate their power over parliamentary politics.[6] The move to constrain the parliamentary politics has been noticed since the coup of 2006, which was primarily staged to topple the Thaksin regime and its enduring power. At the peak of Thai democratisation in the 1990s, as reflected in the 1997 constitution, all senators must be directly elected by the people. Seen as an important instrument of the traditional elites, the Senate underwent a serious transformation to serve the political purposes of those elites. In 2007, as the new constitution was drawn, the Senate was divided into two parts – some members were elected, some appointed. This model of a partial election of the Senate will lend itself to the latest constitution drafted by the Prayuth regime. But the empowerment of the Senate will not be the only tactic adopted by the Thai junta. It is also possible that the Constitutional Drafting Committee would permit independent candidates to run for seats in the parliament. The emergence of a large number of independent candidates would function to break up the parliamentary domination of powerful political parties, like that of Thaksin. The end result could see the forming of small or medium sized parties together with some independent members of parliament – a recipe for a coalition government seen vividly during the 1980s and 1990s. Coalition governments are usually weak, as they consist of several individuals with diverse interests; they would thus be easily manipulated from the perspective of the traditional elites. Apart from the encouragement for independent members of parliament, it is highly likely that the constitution would give more power to independent organisations – most of which are not really independent but operate at the behest of the traditional elites. These organisations include the National Anti-Corruption Commission, the Human Rights Commission and the Constitutional Court. They successfully proved in the past to have worked to weaken the government of Yingluck. For example, the Constitutional Court was responsible for undermining three prime ministers in the Thaksin camp, from Samak Sundaravej (2008), Somchai Wongsawat (2008), to Yingluck (2014).[7] This is testament of how independent institutions, like the Constitutional Court, have become largely politicised.

From this view, the new constitution and the election that will follow will not solve the Thai crisis, which was brought about by the elites’ attempt to maintain their power position in the first place. The election, in particular, will not guarantee that Thailand’s democracy will return and be strengthened. At the critical period of the royal transition, the control of the military over the parliamentary process will further complicate Thai politics.

3. The military–monarchy nexus

Realising that the military will continue to exert its influence in politics through the carefully designed constitution, it is imperative to explore the role of the army, now and in the post-election period. It should not be unexpected for Thailand to have a senior/retired military leader as a prime minister after the next election, since the new constitution would likely allow a non-member of parliament to take up the top political position. It is not unexpected either for the National Council for Peace and Order (NCPO) – the governing body of the coup makers – to continue to exist and Article 44, known as the «dictator law», which gives the prime minister unchecked authority over all branches of government, to remain in place after the election.[8] Re-establishing military power in politics is essential for the future of the monarchy, as much as for the military itself. This is simply because the intervention in politics of the army has long been carried out under the pretext of the military’s need to defend the monarchy from all kinds of threats. From communism in the old days to modern-day anti-monarchism supposedly driven by Thaksin’s supporters, the military has exploited the position of the monarchy to give itself legitimacy in playing politics. As this paper argues, the 2014 coup was staged in order for the traditional elites to oversee the royal succession, the military has, in this process, assigned itself a task of eliminating threats and enemies. But why is the royal succession so crucial for the traditional elites?

King Bhumibol Adulyadej is today the world’s longest reigning monarch. Crowned in 1946, Bhumibol was able to transform the monarchy from an unpopular establishment into the country’s most powerful institution. But his era is coming to a close. He is frail and has been intermittently hospitalised since 2009. He did not appear on national television on his birthday, 5 December 2015, to give his much-awaited speech, thus heightening the public anxiety over the future of Thailand without the charismatic king. Andrew MacGregor Marshall even predicted that while it is highly possible that violence will erupt in the days and weeks after Bhumibol dies, it is likely to lead to a period of greater stability.[9] Ironically, the anxiety is derived mainly from Bhumibol’s successful reign. In the past several decades, royal elites and the military embarked on recreating the authoritative persona of Bhumibol to strengthen the monarchy. They elevated the king to a semi-god status, while simultaneously celebrating his reputation as the people-centric monarch. Pictures of the king travelling through remote regions, with maps, notebooks, and binoculars in his hands, were popularised. He initiated a series of royal projects to inmprove the living standards of the underprivileged. The trickle of sweat from the royal brow captivatingly symbolised a hardworking monarch. Bhumibol was also extolled as a democratic king. His periodic interventions in politics – most recently in 1992 and 2006 – were interpreted as a necessary step to prevent or end political violence. This kind of interpretation provided a legitimate pretext for his political involvement against the constitutional rule of the king being «above politics». Thai historian Thongchai Winichakul asserted:

The more it [monarchy] is believed to be outside politics, the higher moral authority thus more influence it earns because, in the logic of Dhammaracha, non-partisan and disengagement means cleaner and more virtuous, hence more power, which does not corrupt. Over time, people look «up» to the royal authority when they are dissatisfied with the normal political system.[10]

But the royal transition is happening and far from being a trouble-free process. The construction of a perfect Bhumibol will prove to be a dangerous entrapment for the only heir apparent, Crown Prince Maha Vajiralongkorn. Vajiralongkorn is an opposite image of his father. The inability of Vajiralongkorn to fit into that perfect mould crafted by the palace triggers public anxiety regarding Thailand under his future reign. Unfortunately, palace propaganda based around excessive glorification of Bhumibol through national education and the mainstream media has been in recent years more aggravated. This led to a rigid perception of an immaculate monarch – anything less than this will not be accepted. Certainly, this poses a serious challenge for Vajiralongkorn to follow in the footsteps of his father. Matching Bhumibol’s divinity, popularity and shrewd political manoeuvrings represents a formidable obstacle for Vajiralongkorn. These are non-transferable traits and personal properties. The circumstances surrounding the royal transition offer few choices for Vajiralongkorn – one of which is to promote the reform of the monarchy should he wish to prolong his reign. With his lack of sacredness and popularity, Vajiralongkorn – who also lacks the necessary qualities to reign – may find expedient to detach himself from politics. Depoliticising the monarchy is a crucial approach for the survival of throne.

But Vajiralongkorn’s recent political interventions suggest otherwise. As a part of his search for a new role in the period leading up to the royal succession, Vajiralongkorn expressed concern about the potential political violence during the anti-Yingluck Shinawatra government protests last year. He summoned the Prime Minister, Yingluck, and the leader of the PDRC, Suthep, for a televised royal audience. Andrew Walker wrote:

Given the gravity of the situation he adopts a stern and disapproving tone. With the two protagonists kneeling before him, he emphasizes the dangers of national division and the importance of resolving differences through dialogue and democratic process rather than confrontation on the street. He urges Suthep to end his protests and firmly demands that the king’s role not be invoked in campaigns against a democratically elected government. To display his even-handedness he also reprimands Yingluck, encouraging her to deal respectfully with the constitution and avoid unnecessary provocation of opposition forces. Possibly a defining moment?[11]

However, talks about a political alliance between Vajiralongkorn and the Thaksin camp, as a result of the former being isolated from the inner circle of the palace, deepened a suspicion of the Crown Prince becoming more sympathetic toward the Yingluck government. That suspicion served as a factor behind a decision of the PDRC to ignore Vajiralongkorn’s plea for the conflict to end. The test of his leadership was thrown into jeopardy.

The role of the military is traditionally crucial in the support of the monarchy. Vajiralongkorn had long been isolated by the military although he holds many top ranks in the army. To empower his position, Vajiralongkorn set up his own praetorian army – the Royal Guard 904 Corps, or Ratchawallop, an infantry regiment under his command since 1978. In April 2014, a month before the coup, Vajiralongkorn announced a new recruitment to his army, hoping to attract those in Thailand’s rural north and northeast regions – the heartland of the Shinawatra clan. However, the Ratchawallop unit, now consisting of 5,600 members, has been unpopular, partly because it was seen as hostile to the national army.[12] Without support from the military and the palace, Vajiralongkorn, as mentioned earlier, viewed his alliance with Thaksin as strategic. Since Thaksin commanded a popular mandate through successive electoral triumphs, leaning toward Thaksin could mean gaining that same popular support. The evidence was reflected in the gradually growing admiration of Vajiralongkorn among the red-shirt supporters of Thaksin. But the 2014 coup has compelled Vajiralongkorn to shift his political alliance. He seemed to have reached out to the military government of Prime Minister Prayuth to ensure its endorsement of his succession. For example, Vajiralongkorn agreed to preside over the inauguration ceremony of the National Legislative Assembly (NLA) in August 2014, an act deemed to legitimise the coup and the military regime. On that occasion, Vajiralongkorn urged members of the NLA to bring Thailand back on a stable track.[13] So far, Vajiralongkorn has never publicly condemned the coup. Vajiralongkorn also divorced his wife, Princess Srirasmi, reasoning that her relatives had done some damage to the dignity of the monarchy. They were accused of exploiting his name for their own financial benefits, and were charged of lèse-majesté.[14] They were eventually jailed for two and a half years after pleading guilty to defaming the monarchy. His move was seen as a cleaning-the-house exercise before the succession. But were Vajiralongkorn’s efforts enough to earn the support of the royal and military elites?

Talks are ripe about an alternative to Vajiralongkorn should his lack of required qualities threaten the stability of the royal institution. His popular sister, Princess Maha Chakri Sirindhorn, has long been recognised as a more suitable candidate to the throne following her own successful makeover as a humble and down-to-earth princess à la Bhumibol. But a hurdle is how to overcome the constitutional constraint of prioritising male heirs over female candidates. A greater problem will rest on possible fallout within the royal family. As an heir apparent, it is unlikely that Vajiralongkorn will walk away quietly from his legitimate kingship. The selection of Sirindhorn over Vajiralongkorn will instigate a power struggle in the palace, thus deepening the vulnerable position of the monarchy at the twilight of the Bhumibol period. The implications of the royal succession, shown through the military’s seizure of political power, the politicisation of the monarchy and the power rearrangements within the palace, reaffirm the importance of the royal institution as an integral part of Thai politics. The real stake lies at the vision of the next monarch – whoever it will be – to ensure that the monarchy is compatible with democracy.

5. A fragmented army?

As the royal transition has remained uncertain, the seemingly fragmented military may further complicate the succession. A rift is growing within Thailand’s military-royalist establishment, threatening the country’s stability and undermining prospects that the upcoming royal succession will unfold smoothly. On one side is an old guard of senior officers who gradually consolidated power during the long reign of Bhumibol. On the other is a new guard from a semi-autonomous elite military unit at the service of Queen Sirikit, which includes the leaders of the 2014 coup against the elected Yingluck government. The current Prime Minister, Prayuth, is a former commander of the 21st Infantry regiment, better known as the Queen’s Guard. Founded in 1950 to fight in the Korean War, it was later assigned to protect Sirikit. After rising to eminence within the regiment, in recent years Prayuth has sought to increase his political power, and now seems to challenge other military-royalist factions. It is known that the army has been an indispensable actor in Thai politics for decades, thanks largely to its close connection with the monarchy. Together the military and the royal family have worked to keep civilian governments weak in order to maintain more power themselves. During the Cold War, they joined forces to ward off Communist influence. Their alliance was reinforced in the 1980s, after Bhumibol appointed Prem Tinsulanonda, a general, to be prime minister. With that nomination, Prem became the head of what the political scientist Duncan McCargo has called the «network monarchy»: a political consortium of pro-monarchy groups that includes the military, conservative royalists, senior bureaucrats and big business.[15]

Prem stepped down in 1988, largely because of infighting within his government, but he remained influential behind the scenes. Notably, he advised Bhumibol during the turbulent period of 1991–92. After General Suchinda Kraprayoon, a member of the junta then in power, reneged on a promise not to become prime minister, there were pro-democracy protests, and then the military killed some demonstrators. Bhumibol stepped in, calling for a truce while keeping his distance from the army, and earning a reputation as a stabilising force and for being neutral. In 1998, Bhumibol appointed Prem to preside over the Privy Council, an advisory body that protects the monarchy’s interests and promotes its views. By that time, non-elected institutions like the Privy Council and the courts were exerting more and more influence in Thai politics. The power of Prem and his supporters in the network monarchy continued to grow until 2001. That year, Thaksin won the election by a landslide, thanks to a populist platform vowing to reduce rural poverty. Tensions between elected and non-elected institutions became an open conflict, as Thaksin threatened to recast the political landscape and challenge the domination of the monarchy and the military. He was ousted in 2006 in a coup widely believed to have been masterminded by Prem. Apparently, Prem has denied this.[16]

Thaksin was not the only loser, however. Soon the Prem faction found itself weakened by the emergence of an anti-coup movement, the so-called red-shirts, as well as anti-monarchist sentiment, which was growing as Bhumibol’s health deteriorated. Queen Sirikit, meanwhile, was becoming more politically active, partly to compensate for Bhumibol’s fading authority. Sirikit’s position has been reinforced in recent years with the promotion of men from the Queen’s Guard to key positions in the army. Prayuth was deputy army chief in May 2010 when the army cracked down on red-shirt protesters in Bangkok’s business district; a few months later, he became army chief. Most leaders of the 2014 coup are members of the Queen’s Guard.

Although Sirikit suffered a severe stroke in 2012, her loyalists remain powerful, and now seem ready to influence the royal succession. The Prayuth government apparently supports Crown Prince Maha Vajiralongkorn, whom Bhumibol designated as his heir apparent in 1972. Vajiralongkorn, for his part, seems to have endorsed Prayuth’s coup, as seen through his speech delivered at the inaugural session of the NLA in August 2014. The main reason was the fact that the Prince came to the realisation that to become the next king without support from the army would be difficult, if not impossible.

But the old guard within the network monarchy finds Vajiralongkorn lacking in gravitas. According to a 2010 U.S. diplomatic cable released by Wikileaks, Prem, the Privy Councillor Siddhi Savetsila and former Prime Minister Anand Panyarachun expressed misgivings to the U.S. ambassador to Thailand about the prince becoming king. A note by the ambassador says Siddhi and Anand «implied the country would be better off if other arrangements could be made».[17] Siddhi suggested that Vajiralongkorn’s sister Princess Sirindhorn, who is well liked by the public, be made heir apparent instead.

Conservative royalists have also become increasingly critical of the military government. Prem told the media in January, «This country does not belong to Prayuth».[18] Anand recently declared in public that General Prayuth should «not to extend his rule too long».[19] Rumours of a countercoup are growing louder in Bangkok. Prayuth has responded by placing more members of the Queen’s Guard in major positions and has reportedly been orchestrating military promotions without consulting the Privy Council, even though it traditionally has had a say in important military appointments. However, Prem is not yet out of the picture. When Bhumibol passes, it will be up to the Privy Council to formally recommend the heir apparent to parliament for approval and then appointment to the throne. At that point it could nominate Sirindhorn instead of Vajiralongkorn. Even if it did endorse the prince, simply delaying that decision by a day would do great damage to his legitimacy as king. Fragmentation within the military-royalist complex is complicating the upcoming royal succession in Thailand. With the factions of Prayuth and Prem apparently favouring different candidates to the throne, the two men’s struggle could translate into power plays within the government, the army and the palace itself. And should the camp of the Queen’s Guard prevail and Vajiralongkorn accede to the throne, both the military and the monarchy would become even more politicised. This means that Thailand could become even less democratic. The coup of 2014 was staged to ensure that the power holders will get to manage the royal succession and to ensure that their political interests will be preserved at all cost.

6. Thailand in the region

The coup of 2014 caused a considerable impact on the Thai economy with exports and domestic consumption still lacking strength. Although the military government initiated a 360-billion-baht stimulus package in October 2015, it failed to boost local economy mainly because of the lack of confidence in the military and the general fear that the junta would stay longer in politics. The fact that the first draft of the constitution was not approved, thus allowing the military to extend the election deadline, was a testimony to the junta wishing to remain in power. This led to a state of economic inertia in Thailand. Meanwhile, the hope that foreign investors, like those in China, would offer something more substantial, such as through a joint long-distance rail project, continued to remain unrealistic. As a result, the government was unable to raise the level of domestic demand.[20]

In the area of foreign relations, Thailand under military rule implemented a foreign policy that sought to find the country’s new legitimacy providers in the region in order to legitimise its regime. Thailand reached out to China, Myanmar and Cambodia to seek their support for the existence of the military government. The visits of Prime Minister Prayuth to Nay Pyi Taw and Phnom Penh in 2014 were politically meaningful because they renewed Thailand’s friendship with old enemies in the region. More importantly, it was strategic for Thailand to strengthen its ties with two neighbours which are also members of the Association of Southeast Asian Nations (ASEAN). In other words, while ASEAN might have mixed responses to the coup in Thailand, and often been criticised by the international community for tolerating the Thai coup, the Thai government strove to informally set up a mini-club of dictatorship endorsed by both Myanmar and Cambodia. Here, China also played an important part in giving the Thai military regime a source of confidence. The Prayuth government attempted to diversify its foreign policy choices, and thus moved closer into the orbit of China at a time when Thailand has been under sanctions from the West, particularly from the United States.[21] This new balance of power, with China acting as a new regional hegemon working to challenge the old power like the United States, allowed the military government in Thailand to hold on to its anti-democratic agenda. It is a negative sign for the future of Thailand.

The United States, arguably Thailand’s most important ally, implemented an «interventionist policy» shortly after the coup by suspending US$4.7 million in financial assistance to the Thai army. Washington also excluded Thailand from an international maritime exercise held in June 2014, and downgraded Thailand’s Cobra Gold event, the largest annual military exercise in the Asia Pacific region. Other democratic nations and organisations took tougher action against the junta. The European Union, for example, froze bilateral cooperation, suspended all official visits to and from Thailand, halted the implementation of a broad partnership and cooperation agreement, and shelved talks on a trade deal. As mentioned earlier, amid these punitive measures, the junta found some comfort in Chinese friendship. Shortly after the coup, Prime Minister Prayuth was photographed shaking hands with Chinese businessmen, illustrating the government’s apparent belief that China could be used to offset the impact of Western sanctions. So far, China has responded favourably to the Thai approaches. Presenting itself as impartial in Thailand’s internal conflicts, China makes no pretence of promoting human rights or democracy. This firm posture is helpful to the junta, which knows that China will not promote internal dissent by seeking political reforms.

Thailand and China established diplomatic relations in 1975. Throughout the latter half of the Cold War, the two countries formed a loose military alignment against the communists in Indochina. Since then, bilateral relations have remained healthy thanks to the absence of territorial disputes, firm ties between the Thai royal family and the Chinese leadership, and the influence of Thailand’s well-integrated ethnic Chinese community. A Sino-Thai trade agreement, the first between China and a member of the ten-country ASEAN, took effect on 1 October 2003. Thailand has since then developed a military relationship with China that is beginning to resemble its security ties with the United States. Since the early 1980s, Bangkok has purchased American armaments and military-related equipment under this partnership at «friendship prices». Sino-Thai military links, meanwhile, are among the most developed in the region – second only to those of Myanmar, China’s quasi-ally. Many cabinet ministers and powerful businesses in Thailand have significant investments in China. Thailand’s Charoen Pokphand Group, one of Southeast Asia’s largest companies, has been doing business in China since 1949. Thai and Chinese conglomerates regularly exchange high-level visits and share business information. Increasing numbers of Thai students are learning Mandarin, prompting Beijing to dispatch a large number of language teachers to Thailand.

Overall, US interventionism seems to have pushed Thailand further into the Chinese sphere of influence. China’s non-interference policy and its concentration on making money rather than enemies has helped it steal a march on Western countries in the wake of the coup, allowing it to pull ahead in the subtle but intensifying competition for increased influence in Thailand. As a result, China was invited to invest in Thailand’s high-speed train and other infrastructure projects, although amid intense lobbying from Japanese and other companies, the projects have since become something of a political football ground. China’s pragmatism has also proven effective in cementing its relations with Cambodia, Laos and Myanmar.

The United States, meanwhile, continues to goad the Thai leadership with interventionist comments. In January 2015, US Assistant Secretary of State Daniel Russel visited Thailand and urged the military government to lift martial law and to return power to the Thai people. Russel’s remarks infuriated the generals, who see the US focus on democracy and human rights as a departure from Washington’s Cold War support for the military, the bureaucracy and the royal family as allies against communism. However, the United States clearly understands that this alliance has weakened following changes in the Thai political landscape in recent years. Washington has recognised that there are new players in Thai politics who are not aligned with the traditional elite, and has diversified its policy accordingly, reaching out to the so-called «red-shirt» supporters of Yingluck and her brother Thaksin, also a former prime minister. In effect, the United States is betting that its interventionist stance in favour of democracy will be a better long-term bet in Thailand than Beijing’s pragmatic support of the militarised status quo.

This is a high-stakes game for both Washington, which risks «losing Thailand» to China, and Bangkok, which may in the end find that life as a client of Beijing is both less comfortable and less effective than its alliance with the United States. For example, there are question marks over whether China can provide the international legitimacy that the US has given Thailand; whether it can guarantee Thailand’s security; and whether it can sustain the appearance of neutrality in the Thai conflict while doing business with the military government. In a broader context, a closer Sino-Thai relationship may also affect regional stability, especially if it encourages the formation of an alliance of non-democratic regimes, which would represent a dark hole at the heart of Southeast Asia. Worse, Chinese support for the Thai junta may strengthen its position and instil a degree of confidence that could prolong its rule despite international condemnation. That would be both a perverse outcome of Western interventionism and a tragedy for Thailand.[22] The upcoming royal succession with a shift in the political dynamism in Thailand may further intensify the rivalry between China and the United States in their attempt to retain their political footholds in the country.

7. Conclusion

The traditional elites, of which the military is a part, often resort to their old trick in undermining the threats against their interests – through a military coup. The 2014 coup achieved that purpose, on the surface at least – in eliminating the threat of Thaksin and his political proxies. However, at this critical juncture of Thai politics, with the royal transition coming up, the military has become even more anxious in re-organising political power, to ensure that those interests of the monarchy and the military itself would be defended. So far, the Prayuth government has seemed to reach out to the heir apparent, Crown Prince Vajiralongkorn. Meanwhile, the Crown Prince himself has become increasingly politically active, based on his numerous public activities as well as his apparent endorsement of the use of lèse-majesté to protect his name. But the involvement in politics of the Crown Prince does not seem to guarantee that the monarchy is willing to depart from political affairs even when in reality he lacks the necessary qualities enjoyed by his more charismatic leaders. The fact that the new monarch is interested in collaborating with the military will not help improve the Thai situation. The power re-arrangement in the hands of the military and royal elites, without a broader involvement of the Thai public, could stir up a sense of resentment among Thais. This could lead to inevitable political clashes in the post-Bhumibol era. The likely pessimistic scenario emerging from the royal succession will cause an impact on the region, particularly in the context of the competition between the United States and China to maintain their influence in Thailand and generally in Southeast Asia.

In 2015 Malaysian Prime Minister Najib Razak’s leadership was badly shaken by the eruption of a huge corruption scandal in July. This same scandal contributed to making the Malaysian economic outlook negative, while the national currency fell to an all-time low against the US dollar. This was accompanied by a massive protest movement (Bersih 4.0), aimed at forcing Najib’s resignation, a goal that, however, at least up to the time of writing, has not been reached. At the same time, clear signals of discontent towards Najib’s leadership started to become visible even within UMNO, the Prime Minister’s own party.

In November the announcement was made that the Trans-Pacific Partnership (TPP) agreement had been signed by the Trade Ministers of 12 countries, including Malaysia. As the TPP is considered an important aspect of the US strategy to counter China’s influence in the Asia-Pacific region, Malaysia’s presence among the TPP signatories highlighted its role as a US strategic partner in the region. That same role was highlighted once again by Barack Obama’s November visit to Kuala Lumpur, on the occasion of the US-ASEAN meeting. However, Malaysia’s behaviour vis-à-vis China, in the months before the TPP announcement, showed that Kuala Lumpur’s closeness with the US was qualified by the need not to enter on a collision course with Beijing. Although Malaysia too has been involved in the disputes pitting China against several ASEAN countries in the South China Sea, Kuala Lumpur’s protests against Beijing’s assertiveness have been particularly weak. Indeed, Malaysia appears to be trying to perform a kind of balancing act, trying to appease both the US and China. At the same time, Malaysia, as Chairman of ASEAN for 2015, maneuvered to moderate the more aggressive anti-China positions of some of the other ASEAN members.

1. Introduction

2015 was a year of domestic controversies in Malaysia, mainly related to the leadership of Prime Minister Najib Razak. The jailing of the opposition leader Anwar Ibrahim on an old and controversial allegation of «sodomy» came just before the eruption of a huge scandal related to a state-owned investment company called 1Malaysia Development Berhad (1MDB). The 1MDB scandal personally involved the Prime Minister and cost him credibility and part of his political capital.

Even before and independently of the 1MDB scandal, Malaysia had been confronted by many challenges in 2015. This was the year of the final negotiation of the Trans-Pacific Partnership (TPP) of which Malaysia was one of the most enthusiastic and assertive supporters. At the same time, 2015 was important for the future of the Association of South-East Asian Nations (ASEAN), of which Malaysia is one of the founding members and was the chairman for the year under review. On 1 January 2016, ASEAN was expected to become a real integrated market, due to the fall of barriers and the establishment of a commercial union.[1] Accordingly, ASEAN in 2015 gave Malaysia the responsibility for leading this union of ten countries to the conclusion of a process that started back in 1967. However, while the process of economic integration was undoubtedly progressing, ASEAN appeared divided on many political issues, above all the attitude to take towards China. Whereas China is the main economic partner of most of the ASEAN members, it has territorial disputes with many of them, including Malaysia. The positions within ASEAN, related to China’s assertiveness in the South China Sea, showed important divisions among its members. Malaysia tried to moderate these divisions, while at the same time attempting to appease both China and the Unites States, the latter being a traditional Malaysian ally.

In the remainder of this chapter all these issues will be analysed. The first to be put under examination will be the eruption of the 1MDB scandal and its political and economic implications.

The second problem to be analysed will be the state of the Malaysian economy, a special emphasis being placed on the plummeting of the ringgit, the national currency, which was under pressure for the whole year for many reasons, not least the eruption of the 1MDB scandal.

The third issue to be discussed will be the domestic political situation, characterised by the collapse of the united opposition and the launching of a new street protest by civil society organisations, giving rise to the so called Bersih 4.0 movement. However, it will be shown that the main challenge to Najib Razak’s leadership came from within his own party, the United Malay National Organisation (UMNO). Signals of discontent became frequent after the involvement of the Prime Minister in the 1MDB scandal was exposed in July. Najib had to deal both with the vitriolic attacks from the former Prime Minister Mahathir Mohammed and with the rebellion of important party cadres. Despite all these problems, eventually Najib managed to maintain his control over his party and hold on to his Prime Ministership. In December, the UMNO general assembly was unusually tense and difficult. Challenged by a section of his own party, dealing with a huge scandal and confronted by an economic slowdown and a currency crisis, Najib faced his hardest year since the beginning of his prime ministership in 2009. Nevertheless, Najib showed his ability to bounce back and to continue to lead his country.

The fourth issue to be dealt with will be Malaysia’s foreign policy, particularly with respect to the relations with China and the US.

2. The 1MDB scandal

«1Malaysia Development Berhad»[2] originated from a  sovereign wealth fund, named Terengganu Investment Authority (TIA). TIA, founded in 2008, aimed at promoting the economic development of Terengganu, a state situated in north-eastern Peninsular Malaysia. In January 2009, TIA was renamed 1Malaysia Development Berhad  (1MDB) and its activities were expanded to the whole of Malaysia. This development was part of the big and pompous «1Malaysia Plan», announced by Najib Razak on 16 September 2008, when he was not yet the Prime Minister, but the Deputy Prime Minister and the heir apparent to the then Prime Minister Abdullah Ahmad Badawi.[3] The company was run by a Board of Advisors, a Board of Directors, and a Senior Management Team. The Board of Advisors was chaired by the Prime Minister himself.[4]

Initially 1MDB’s focus was mainly on real estate, energy, tourism and agribusiness. In 2009, the decision of the company to get involved in funding the huge Tun Razak Development Project drew criticism from the parliamentary opposition. The lack of transparency in the company’s governance was another important source of criticism. The then opposition leader, Anwar Ibrahim, openly questioned the lack of transparency in the governance of 1MDB and went as far as to insinuate that the Prime Minister himself might have some personal interest in the funding of the project.[5] In 2010, another member of parliament from the opposition, Tony Pua, questioned Najib’s role as chairman of the 1MDB Advisory Board, complaining about the lack of transparency in the accounts of the company.[6] In September 2013 the 1MDB attracted attention once again, as it asked for a six-month extension in presenting its annual report. All this occurred in spite of the fact that the 1MDB accounts had regularly been audited by international firms such as KPMG and Ernst and Young.[7]

At the beginning of year 2015, it became public knowledge that 1MDB was in deep crisis and that it had accumulated losses worth 42 billion of ringgits (more than 11 billion US dollars).[8] This huge debt caused both the value of the ringgit to plummet and the country’s economic outlook to worsen.

In March, an investigative journalism portal – Sarawak Report – began alleging that a controversial Penang based businessman, Jho Low, had initiated a joint venture with 1MDB and Petro Saudi International, which had allowed him to pocket US$ 700 million.[9] While both Petro Saudi and 1MDB denied any connections with Jho Low, the same portal alleged in July that US$ 1.16 billion from 1MDB had been transferred to the account of a company controlled by Jho Low, Good Star Limited, and that, through this company, over US$ 700 million had been deposited in a personal account made out to Najib Razak.[10] The report alleged that even the prime minister’s wife, Rosmah Mansor, had benefited from a transfer of cash to her personal account made by Jho Low, and had received valuable gifts such as jewellery and gold.[11] After this report as many as five international police teams, including the FBI, started to investigate 1MDB’s accounts around the world.[12]

Najib, while dismissing any allegation of corruption, launched a campaign targeting whoever might criticize him. He sacked his deputy prime minister, Muhyiddin Yassin, along with four ministers for their tepid defence of his person after the scandal came to light.[13] Then Najib, at the beginning of August, started a more vigorous counterattack campaign. On 1 August, clearly referencing the editor and founder of Sarawak Report – Clare Rewcastle Brown, a British citizen born in Malaysia – Najib said that «white people should stay out of Malaysia’s affairs».[14] After three days a Kuala Lumpur Court issued an arrest warrant for Rewcastle-Brow «for activities detrimental to parliamentary democracy under Section 124B and 124I of the Penal Code».[15] However, Interpol, after receiving the international arrest warrant, rejected it and finally dismissed it on 27 August.[16]

3. The Economy: the fall of the ringgit

Following the eruption of the big scandal involving the leadership of the country at the highest level, the outlook of the Malaysian economy became negative and the ringgit fell to an all-time low against the US dollar. However, the state of the Malaysian economy had already been faltering even before the scandal broke out over the summer. The low international prices for crude oil and other commodities – such as palm oil, of which Malaysia is the second largest producer worldwide – had hit the country hard. The deceleration of the Chinese economy had affected Malaysian exports too, particularly because China was the major destination for Malaysian commodities and manufactured goods. Malaysia recorded its 13th consecutive month of falling exports in October.[17] Despite these difficulties, the Malaysian GDP growth projection for 2015 was at 4.7%, a healthy level given the global environment and the domestic financial and political turmoil.[18] Domestic demand remained high and grew by 5.9%, despite the introduction of the new Goods and Services Tax (GST),[19] on which more later. Furthermore, the export forecasts seemed to improve, due to the depreciation of the ringgit, whereas the possibility took shape that the robust growth in the US might partially compensate for the Chinese economic slowdown.

The value of the Malaysian currency started to drop at the end of 2014, reaching 3.44 against the US dollar on 3 December 2014, its lowest point since February 2010. Then, in the first quarter of 2015, the value of the ringgit dropped again. In March the exchange rate went down to 3.71 against the US dollar, and, in June, further declined to 3.77, the lowest level since January 2006.[20] However, in August, after news started making the rounds of a huge debt accumulated by 1MDB, the ringgit broke another negative record, plummeting to 4.00 against the US dollar. This was an even lower value than that witnessed in the aftermath of the big Asian financial crisis of 1997, when the ringgit-US dollar exchange rate reached 3.80 to 1.[21]

This fall had much to do with the decline in the price of commodities at the international level. Other reasons were the devaluation of the Chinese yuan, which strengthened the US dollar against other Asian currencies. But, after July 2015, a powerful additional cause was the 1MDB debt. Prime minister Najib Razak’s involvement in the scandal, evidence of huge mismanagement of public money, and uncertainty about the real dimension of the company’s debt pushed international rating companies, such as Fitch, to change the long-term outlook for Malaysia from stable to negative.[22] Even though the Governor of the Malaysian Central  Bank, Ms. Zeti Akhtar Aziz, tried to reassure investors, claiming in June that the continuing weakening of the ringgit was a short-term problem,[23] in July a Financial Times report predicted that the ringgit was expected to sink even more, reaching 3.88 by the end of the year.[24] In fact, as already noted, this forecast, which created panic among international investors, was even too optimistic, given that the ringgit plunged to 4.00 against the US dollar at the end of December.

Furthermore, Malaysia’s deficit problem remained unresolved. The new Goods and Service Tax (GST), discussed by the Malaysian political élite since 1992, was finally implemented on 1 April 2015. This new tax, which aimed at replacing a complicated system of sales taxes and service taxes, was considered a priority by international observers. In 2013, in its Structural Policy Country Notes, the Organization for Economic Co-operation and Development (OECD) had stated that «Malaysia should introduce a GST as soon as possible».[25] According to international agencies, the GST should bring broad and steady fiscal revenue for a state such as Malaysia, which has registered high deficit levels and high public debt in the past few years. But the GST rate was put at a mere 6%, while 13 economic sectors – the most important, including all agricultural products and all exported goods and services – were exempted from it.[26] Thus, it is unlikely that the introduction of the GST will have any significant impact on the deficit. Given the fact that direct taxation is also very low, and given that public expenses continued to grow even in many unproductive sectors, it is not surprising that the goal, announced by the Malaysian government, of bringing the deficit below the 3% of GDP was not reached in 2015.[27]

4. The collapse of the united opposition

The explosion of the 1MDB scandal should have been a godsend opportunity for the opposition, formally unified in the Pakatan Rakyat (People’s Alliance). But the Pakatan Rakyat (PR), which includes three parties representing different classes and communities that have differing visions for the future of the country, had found it difficult to survive since the loss of its leader, Anwar Ibrahim, who was jailed on 10 February 2015 on an old and controversial conviction for «sodomy». Just a few weeks after Anwar’s imprisonment, the alliance entered a period of crisis. In fact the relations between two of the parties of the three-party-alliance – the Islamist Pan-Malaysian Islamic Party (PAS) and the secular, and ethnically largely Chinese, Democratic Action Party (DAP) – were already badly damaged after the «Kajang move». As noted elsewhere,[28] there was a long struggle among the opposition parties in the second half of 2014 aimed at controlling Selangor, the richest and most populous state in Malaysia and a stronghold of the opposition. This struggle directly involved Anwar, who tried to secure the post of Menteri Besar (Chief Minister), first for himself and then for his wife Wan Azizah. The result was an open battle between PAS and DAP, with Anwar’s multi-ethnic People’s Justice Party (PKR) being caught in the middle.

After the long internal fight related to the «Kajang move», the opposition was briefly able to reunite following the 7 March 2014 Kuala Lumpur Court of Appeal’s overturn of Anwar’s acquittal. The opposition parties jointly protested against the decision, which they all claimed to be politically motivated.[29] But divisions soon rose to the surface again as Anwar’s new conviction left the opposition without the only leader charismatic enough to heal its divisions. In March, a few weeks after Anwar’s jailing, controversies emerged within the PR regarding the Prevention of Terrorism Act (POTA), a law aimed at preventing the spreading of terrorist ideologies in Malaysia. Many civil society organizations denounced the act as illiberal and potentially antidemocratic.[30] The most controversial piece of the law was the reintroduction of detention without trial for a period up to 59 days and the fact that the continued detention of a suspected terrorist after this period would not be confirmed by a normal court but by a special Prevention of Terrorism Board.[31]

The controversial law was approved by the Federal Parliament on 7 April 2015, after 12 hours of debate, at 2.25 am, with 79 votes in favour and 60 against.[32] Decisive for the approval of the law was the absence of 26 PR lawmakers. This absence was strongly condemned by PR activists on social media, and led to a major fracture within the opposition ranks. The absent lawmakers were mainly from PKR, Anwar’s Party, and from PAS, while those critical of the absence mainly belonged to DAP.[33]

In March another issue came to the fore. The enforcement of laws based on Islamic Law, or Shari‘a, has for years been a source of friction between PAS and the secular parties, particularly in Kelantan, the Northern state where PAS has ruled since 1971. At the end of March the Kelantan Legislative Assembly passed some amendments to its Syariah Criminal Code (II) Enactment, 1993 – namely the local Islamic penal code, also named «hudud»[34] – which quickly became a source of legitimate public concern. In 1993, the Syariah Criminal Code had established a dual penal system of punishment, with the Malaysian Penal Code applicable to non-Muslim citizens, whereas Muslims citizens were subject to the much tougher Islamic Law. Following the 2015 amendments, Islamic norms became, in some cases, applicable to non-Muslim citizens too.[35] Specifically, clauses 56, 57, and 58 of the act left it to the judge to decide which law to apply in cases of crimes jointly committed by a Muslim and a non-Muslim. In these cases the non-Muslim citizen might be subject to the same punishment as the Muslim, including amputation in the case of theft (clause 58).[36] «Many noted that the provisions did not explain if hudud would remain exclusively applied to Muslims in the event that a criminal act was perpetrated by both a Muslim and a non-Muslim».[37] This move from the PAS alarmed secular parties all over the country. In June the frictions became open and PAS voted to sever ties with DAP.[38] PKR, caught in the middle,[39] could not do much to avoid the collapse of the alliance. The three parties continued to work together in some local administrations, but the prospect that, in a foreseeable future, the Malaysian parliamentary opposition would once again be able to act as a united political force appeared improbable.[40]

5. On the streets again: Bersih 4.0

If the political opposition proved itself unable to capitalize on the 1MDB scandal because of internal divisions and lack of a common leadership, the protests against corruption were once again taken up by Malaysian civil society. The scandal brought people onto the streets again and led to the birth of a protest movement named Bersih 4.0. The original Bersih («clean») movement was launched in 2006 to protest against the unfair electoral system. In those days the official name of the movement was «Coalition for Clean and Fair Elections» (Gabungan Pilihanraya Bersih dan Adil) and it was organized by NGOs which sought to reform the existing electoral system to ensure fairer elections.[41] The movement was started again in 2010 (Bersih 2.0) in response to the reluctance of the government to meet the protestors’ demands. Later on, in 2012, Bersih 3.0 came to the fore with a broader set of objectives: they not only sought the reform of the electoral system, but also set out to fight against corruption in government, and to promote environmentally linked campaigns, notably the opposition to the Australian based company Lynas rare earth project.[42]

The Bersih 4.0 movement, mainly prompted by the 1MDB scandal, demanded Najib’s resignation. The movement was initiated by a series of planned rallies carried out on 29 and 30 August 2015, just before the country’s National Day (August 31). The rallies, held in Kuala Lumpur, Kota Kinabalu and Kuching, called for clean and transparent governance. The demonstrations were successful, particularly in the capital city. Despite many attempts to intimidate protestors and provocations by the police and UMNO supporters,[43] the rallies saw the participation of thousands of people. According to Bersih’s estimations, in Kuala Lumpur alone 250.000 people gathered for the rally, whereas estimates made by the police were, as usual, much lower (around 25,000).[44] There were no major incidents and, unlike the previous Bersih rallies, police did not intervene with tear gas or with charges. The movement succeeded in highlighting the political demands of a large sector of Malaysian civil society. But, as in the previous editions, the effectiveness of the movement seemed to be low. Interestingly, former PM Mahathir Mohammed participated in a Bersih rally, a fact which will be discussed later.

It is interesting to note that the public perception of Bersih 4.0 as a largely Malaysian Chinese movement was widespread in the country, particularly among Malays.[45] The political divide among Malays and Malaysian Chinese has grown steadily in the past few years. The recent split between the opposition parties and the increasing pro-Malay attitude of the UMNO-dominated government deepened this divide.[46]

6. The struggle within UMNO: the final stage of arm wrestling between Najib and Mahathir?

The weakness of the opposition and the limited effectiveness of the protests coming from civil society organizations explain why Najib was left relatively unscathed by the 1MDB scandal. However, the main challenge for Najib did not come from the opposition or the civil society street demonstrations, but from within his own government and party. As has become usual in the past years, when a political struggle develops within the National Front (Barisan Nasional, BN), and particularly within the major party of the coalition, the UMNO, a central role is usually played by Mahathir Mohamed. This authentic éminence grise of Malaysian politics, who was prime minister for 22 years (from 1981 to 2003), even though he turned 90 in 2015, still enjoys great prestige and considerable political influence among both the political establishment and Malaysian citizens at large. In Malaysia everybody still remembers what had happened to Anwar Ibrahim and Abdullah Badawi, two former Mahathir protégés who had dared to challenge him, and, as a consequence, had seen their political fortunes rapidly decline. The story of Anwar Ibrahim, who was Deputy Prime Minister and Finance Minister under Mahathir, is widely known and has been told elsewhere by the present author.[47] For his part, Abdullah Badawi, who was Prime Minister from 2003 to 2009, was officially made to step down for bad economic performance after attracting criticism from Mahathir.[48] Indeed it was Najib Razak who replaced Badawi, with Mahathir’s blessing. However, by 2013 Mahathir turned his criticism against the new PM, branding his 1Malaysia Plan an «unproductive scheme».[49] After the eruption of the 1MDB scandal, Mahathir started attacking the prime minister personally. He openly criticized the «lavish» lifestyle of Najib’s wife in his blog and advocated the PM’s resignation.[50] On 30 August he went as far as to participate in the Bersih 4.0 rally, whose participants were labelled by Najib as «shallow and poor in patriotism».[51]

On 12 October Mahathir strongly criticized Najib again, asserting that Malaysia under the Najib government had become a «pariah» state. He wrote on his blog: «In the eyes of the world Malaysia has become a pariah state, a state where anyone can be hauled up and questioned by the police, detained and charged through abusing laws of the country».[52] After a few days, during an extensive interview with the British newspaper The Guardian, Mahathir made public a private conversation he had had some months before with Najib. The contents of this interview proved to be very embarrassing for the incumbent Malaysian PM. Mahathir said: «What he is telling me is that bribery is OK. If you bribe with a few dollars, I suppose it doesn’t work, but if you give [money] to a person who has never seen a million ringgit he will turn around».[53] Mahathir, in the interview, went on to say: «The only thing that we can do is to have the Prime Minister resign or step down or to be removed. Because he is the principal person who has brought about this bad image for the country».[54]

Mahathir has indeed remained influential in Malaysian politics but, at the moment of writing, it is still not clear how much harm he had caused the incumbent PM with his vitriolic attacks. He advocated a confidence motion be launched against Najib in parliament but the opposition held back with respect to this matter.[55] As already noted, the three main opposition parties were deeply divided and probably did not want to push for a resignation that might lead to an unknown scenario, possibly dangerous for the opposition too.

Given the reluctance of the opposition to push strongly against Najib, Mahathir’s appeal received a warmer response from some UMNO MPs. This was the case of the Kedah MP Anina Saadudin who, on 28 August, filed a lawsuit against Najib.[56] The allegations made by Ms. Saadudin concerned the misuse of party funds. She went to court to recover, on behalf of UMNO, 2,6 billion Malaysian ringgit (around US$ 650 million), which were reportedly in the PM’s private accounts.[57] However, shortly after this, she was expelled from the party.[58]

Up to the time of writing, Najib has been able to resist any attempt to remove him from his post as Prime Minister. Notwithstanding the growing pressure on him, Najib still enjoyed the backing of most of UMNO’s powerful division chiefs.[59] However, in November, at least some among the UMNO division chiefs urged Najib’s resignation. For his part, UMNO’s Deputy President and former Deputy Prime Minister Muhyiddin Yassin demanded a full explanation on the 1MDB issue.[60] The general assembly of UMNO on 10 December was one of the most agitated in the history of the party. Usually these meetings are quite routine and generally smooth; but in November 2015 the assembly had to deal with protests outside the venue of the meeting and internal criticism. For the first time in UMNO’s history, the assembly saw only the president, namely Najib himself, speak at the winding up-session, a clear signal that Najib and his followers did not want to face surprises from within the organization. Declaring himself a «magnanimous» person, Najib Razak ended his speech at the general assembly by extending a handshake to his most vociferous critic within the UMNO leadership, Muhyiddin Yassin. Muhyiddin accepted Najib’s hand, «as delegates shouted and applauded the apparent show of unity».[61]

Apparently Najib won this round, restoring unity in the UMNO’s ranks. But denying Muhyiddin Yassin the possibility of speaking can also be seen as a signal of fear and of weakness. The next general elections were scheduled for 2018, allowing Najib time both to retake full control over his own party and to rebuild his public image. But that is an uphill task, which could be made more difficult if new problems come up in the near future, related to the investigations on Najib’s private accounts. More importantly, it remains to be seen how Malaysian public opinion will react to a weakened leadership. According to Ooi Kee Beng, Deputy Director of the Singapore-based Iseas-Yusof Ishak Institute: «The only way UMNO can turn things around for itself is with a new leader, a new agenda and a new direction in leadership».[62]

7. A balancing act policy: Malaysia between the US and China

On 5 October 2015 the trade ministers of 12 countries announced the final agreement for the Trans-Pacific Partnership (TPP) in Atlanta. Although in order to be enforced the treaty still needed to be ratified by all the parliaments, the 5 October agreement meant that the main step had been taken.

The TPP has generally been considered a crucially important element in the US strategy to counter China’s influence in the Asia-Pacific region.[63] Malaysia is pivotal in the enforcement of this strategy. A visit of Barack Obama to Kuala Lumpur in November for the US-ASEAN meeting highlighted once again Malaysia’s role as a US strategic partner in the region. Signing the TPP was just one among many pro-US steps Malaysia, traditionally an American ally, has taken in the recent past. After 2013, with a series of agreements, Malaysian Prime Minister Najib Razak has steadily conceded to the US whatever Washington has requested. Indeed Malaysia has showed itself eager to meet US requirements by allowing the US Navy to fly spy planes from Malaysian airstrips, by cooperating in joint military exercises and by collaborating in countering the funding of international terrorist organizations.[64]

On its side, the US was careful not to harm the Malaysian leadership by drawing attention to some already present frictions. These were several, and included: the jailing of the opposition leader Anwar Ibrahim (which attracted criticism of the Malaysian judicial system at the international level); an alleged human rights crackdown just before Obama’s visit; the arbitrary employment, in the wake of the 1MDB scandal, of criminal defamation and internal security laws to prosecute dissent among journalists and opposition activists. Obama, who was visiting Malaysia for the second time in just two years and who was the first US president to visit the country in over half a century, carefully avoided mentioning the troubles Najib was facing at home and the issues of human rights and democracy more broadly.[65]

In the months before the TPP announcement, Malaysia was partially involved in the dispute concerning the Spratly Islands in the South China Sea, namely the same dispute which had already caused a worsening in the relations between China and other ASEAN countries. Nevertheless, Malaysia’s protests against China regarding the increasing Chinese military presence in the disputed area were relatively cautious. Even though Malaysia itself was involved in the dispute, in the past few years it has appeared to act mostly to moderate other ASEAN members, such as Vietnam and the Philippines, whose opposition to China’s assertiveness in the area was much stronger. Something changed between March 2013 and February 2014 when Chinese warships held exercises twice in the waters near James Shoal, an atoll 80 kilometres from the Borneo seashore, the control over which is a point of dispute among Malaysia, China, and Taiwan. Kuala Lumpur reacted with official protests to Beijing.[66] In October 2013 Malaysia announced plans to build a navy base in Bintulu (Sarawak state), the closest major town to the contested atoll, stating that the aim of this base was to protect oil and gas reserves in the region.[67] However, according to Reuters’s analyst Stuart Grundgings, «despite its shifting stance, Malaysia will likely stop short of risking any chill in ties with China».[68] He added: «Malaysia has given the impression of seeing the South China Sea dispute as a hitch in an otherwise thriving and historic relationship».[69]

After the diplomatic tensions between the two countries over the handling of the flight MH 370 disaster cooled down,[70] the Malaysian government did its best to try to appease China, its main economic partner. In October 2015 the two countries conducted the first-ever joint troop exercises in the Strait of Malacca and, in November of the same year, the Malaysian Government gave permission to Chinese warships patrolling the South China Sea to stop at Malaysian ports.

After the bilateral talks held in Kuala Lumpur on 20 November, both Najib and Obama admitted that the South China Sea problem had been one of the main points of discussion. Obama underlined the involvement of all the ASEAN countries in the dispute saying that «there are a number of claimants there»[71] and that «the United States is not one of them, but the United States does strongly believe in the need to apply the rule of law and international norms in the resolution of maritime disputes».[72] However, Najib’s position was decidedly much more cautious. The Malaysian Prime Minister carefully avoided any mention not only of China, but of the other ASEAN countries as well, in an attempt to de-emphasise the importance of the issue. In the press conference after the meeting, Najib stated: «We know the position of the United States, (inaudible) position consistent with the role. And we hope that periodic tensions are not escalated, and that we be able to find a negotiated settlement that’s consonant with the principle of international law and that respects the rights of big and small nations, as well».[73]

This declaration did not mention other claimants to the waters and islets of the South China Sea, in an attempt not to attract criticism from either China or other ASEAN members. This was something that Kuala Lumpur wanted to avoid at any cost, in order not to create additional problems related to its chairmanship in a crucial year for regional economic integration. As noted in March by the Foreign Minister of Malaysia: «As chairman of ASEAN for 2015, Malaysia bears the responsibility to ensure that the agenda to establish the ASEAN Community by the end of this year will be materialized».[74]

Indeed, Malaysia was performing a kind of balancing act between China and the US with an eye on the politics of regional integration, which has been a cornerstone of Malaysian foreign policy for the last 30 years. Yet, ASEAN members are not in agreement about how to cope with China. The four ASEAN member states that have maritime disputes with China (Malaysia, the Philippines, Vietnam and Brunei) have overlapping claims and each of them do not recognize the claims of their fellow ASEAN countries with respect to the disputed islands. Furthermore, there are evident contrasts within the organization about how to relate with China. Often, states which have no direct role in the South China Sea disputes, such as Myanmar, Cambodia and Indonesia, have tried to moderate the position of the other ASEAN countries vis-à-vis China.[75]

On 4 November 2015 the ASEAN Defence Ministers Plus (ADMM-Plus)[76] had a meeting in Kuala Lumpur. For the first time the ADMM-Plus did not issue a joint statement at the end of the meeting. It seems that the final statement had been blocked by China over the issue of the South China Sea.[77] Officially, ASEAN deals with these disputes following the Six-Point Principles, aiming at fully implementing the 2002 Declaration on the Conduct of Parties in the South China Sea[78] and the 2011 Guidelines for the Implementation of the same Declaration.[79] Nonetheless, it is clear that many of the countries within the organization thought that these disputes should be dealt with by each state separately and should be left out from the debate within ASEAN.[80]

The Malaysian position on the issue seems to be a paradox. On the one hand, Malaysia is a party in the South China Sea disputes and a strong and long-time ally of the US, which is to say the nation that has been more resolute in the last few years in reacting to China’s assertiveness in the area. Hence, apparently, Malaysia has a visible interest in uniting as many ASEAN countries as possible on a common anti-China platform. But, on the other hand, China represents the most important market for Malaysian exports and Malaysia is the largest Chinese economic partner among the ASEAN countries. This creates an imperative for Najib’s Government not to harm Malaysia’s relations with China. So, the Malaysian Prime Minister made every possible effort not to involve ASEAN in the South China Sea dispute at all.

The electoral authoritarian regime of Singapore has experienced two very different general elections in 2011 and 2015. The first was a watershed election that allowed the opposition to capture the largest number of seats ever, including a group representative constituency, which was once believed to be impossible. It had also fielded the most candidates ever, running in all but one constituencies. The latter, however, was a major setback for the opposition which had to suffer a significant reduction in the share of popular vote. As the ruling party won in a landslide, the opposition Workers’ Party even lost one seat that it had gained in a by-election in 2013. Opposition supporters, who had hoped to make additional gains, were devastated. Observers even saw in the election result a clear victory for the soft-authoritarian regime. This paper, however, argues that Singapore, in spite of the 2015 election, continues to be on the path to a fundamental political transformation. The majority of Singaporeans still wants a responsive government with sufficient checks on arbitrary power. The ruling party now has to be much more responsive to popular desires and quirks than in the past and can no longer act according to what it claims to be the long-term interests of the country. In addition, it is important to recognize that the 2015 election was conducted under extremely favorable conditions for the ruling party including Singapore’s 50 year celebrations and the death of the «founding father» Lee Kuan Yew. Overall, this demonstrates that the ruling party’s hegemonic position is in decline while it remains to be seen how the ruling party will fare in the upcoming leadership transition amid growing challenges and the lack of a clear successor.

1. Introduction

In 2011 and 2015, Singapore experienced two general elections which can be seen as polar opposites of each other. The 2011 election signified political change as the opposition could make its largest gains in post-independence history. For the first time, the election had truly been competitive even though the chances of an opposition victory had remained slim. The fact that the opposition Workers’ Party was able to capture six seats, including a group representative constituency, was seen as a watershed event in the political development of Singapore.[1] This has raised hope that Singapore could be on the verge of democratization because competitive authoritarian regimes have shown to be more likely to democratize than other more closed authoritarian regimes.[2] In contrast, the 2015 election saw a massive swing in favour of the ruling People’s Action Party (PAP), which was described as a landslide victory.[3] Although the Workers’ Party managed to retain all but one of its seats (it lost one it had gained during a by-election), the election was regarded as a major setback for the opposition and came as a great shock to many supporters. The strong support for the PAP seemed to indicate resurgent support for the authoritarian government among the Singaporean public.[4]

This paper, however, argues that despite the electoral setback, Singapore’s political system continues to be on the path of fundamental political transformation. Although the process of political change is slow, the ruling party has significantly altered its principal modus operandi. In order to gain support, the PAP has shifted toward less technocratic and more populist politics to counter its declining support and rising demands for pluralism. Moreover, Singaporeans still want more pluralism and an effective opposition in parliament. Finally, the large vote swing in the 2015 election can also be seen as a result of the strategic timing of the election by the ruling party. In fact 2015 was both the 50th anniversary of the country’s independence and the year of the passing away of Lee Kuan Yew, Singapore’s first prime minister, often referred to as the «founding father» and credited with the country’s rapid economic development.

The remainder of this article is focused on the study of Singapore’s political evolution as highlighted by the 2011 and 2015 elections. But, as a further preface to it, it is important to stress that the Singapore’s political evolution between 2011 and 2015  occurred against an economic background which was characterized both by sustained growth and increasing social disparities. Indeed, by 2015 Singapore had become one of the most advanced economies in the world with a GDP per capita that, according to the World Bank, is higher than the United States of America.[5] Even in recent years, the city-state has still been able to record modest growth with 6.2% in 2011 and 2.9% in 2014.[6] While the unemployment rate has remained low at around 2%, Singapore continues to have a very high degree of inequality with a Gini coefficient of 0.412 after taxes and transfers, which is much worse than most developed countries although, according to government data, it has declined slightly in recent years.[7] Moreover, the city-state has also become one of the most expensive places in the world lo live in.[8] As shown below, this has led to changes in politics. However, the democratic development has been lacking as the country continued to be ruled by an elitist party in the form of an electoral authoritarian regime and the political opposition has remained deeply divided. While there has been a slow liberalization process since the 1990s, the government has maintained strict limits on the development of civil society, the ability to protest, and the use of free speech.

2. Singapore’s electoral authoritarian regime

Even though the Southeast Asian city-state holds regular elections with universal suffrage, it is difficult to characterize it as a democracy. Elections are not unique to democracies as they nowadays exist in most countries around the world, even in those which would be classified as closed authoritarian such as North Korea. However, there are undemocratic regimes in which elections are more than a façade. Unlike in Communist regimes, different independent political parties are allowed to contest although they face severe obstacles to gain power, such as strict limits on the ability to operate and campaign effectively. They face restrictions on the freedom of speech and assembly, while even vote buying is widely employed against them. This hybrid regime form between closed authoritarianism and liberal democracy has been called «electoral authoritarian regime».[9]

This is the case in Singapore, where the electoral system is excessively biased in favour of the incumbent ruling party, which can significantly influence the outcome. Not only, is there plurality voting[10] and gerry-mandering, altering the constituency lines in such a way to favour of the party in power, but since 1988, there has been the introduction of group representation constituencies (GRCs). This means that, particularly in the larger constituencies, the competition is not among single candidates, but among groups of candidates, four to six, with at least one member belonging to a minority ethnic group. This change was introduced in a period, the 1980s, when the opposition was gaining seats, and represents a significant barrier for the development of a stronger opposition, which needs to find more highly qualified candidates.[11] Even more problematic is the lack of a division between local and central government, which not only deprives opposition members from gaining experience on the ground but also means that electoral outcomes can be directly linked to local services including whether residential areas will be renovated. The ruling party even admitted that linking the upgrading of public housing to votes helped it gain support in the 1997 general election.[12] Even today, the management of estates is of great concern during election periods as the ruling party seeks to tie its vote to local issues rather than national concerns. While the vote is held secretly, there are serial numbers on ballots, purportedly to avoid voter fraud, which have raised some concerns among opposition parties and potentially creates fear among voters that their votes could be traced.[13] Political activities are also marked by a climate of fear that runs deep even among opposition party members who still worry about the existence of «moles».[14] The prevalence of surveillance cameras in Singapore and the ability to quickly apprehend politically motivated vandals has strengthened this perception further.[15] Finally, restrictions on the campaign itself also make it difficult for opposition parties to effectively compete. The official campaign period has a minimum of only nine days (which is currently the standard) including the so-called «cooling-off» day on the last day, a feature which was introduced for the 2011 election.[16] Party propaganda and election commercials are not allowed to be made and distributed online.[17] As the mainstream media are biased in favour of the ruling party, opposition parties struggle to get their voice heard.

The ruling party has also constantly adapted the parliamentary system to weaken any potential challenge from the opposition. Currently, there are 92 members of parliament, 89 of them are elected while the remaining three are Non-Constituency Members of Parliament (NCMP). In 1984, following opposition successes, the government decided to create a provision that allows it to appoint up to nine losing opposition party members. This move responded to the growing demands for alternative voices in parliament while, at the same time, by ensuring that the opposition would be represented anyway, sought to discourage people from voting for it. In other words, the ruling party tried to reserve for itself the selection of a fair share of the opposition representatives.

Currently, there are two NCMPs in office. Aside from the undemocratic aspect of nomination, NCMPs also do not have the same rights as other members of parliament. For instance, they cannot vote on motions of no confidence or constitutional changes. In addition, since 1990 the government has also regularly appointed Nominated Members of Parliament (NMP) from various social groups for two and a half year terms, which have similar rights as NCMPs. They are supposed to introduce independent voices into parliamentary debates. Finally, in 1991 the President became directly elected. This was not done to enhance the democratic nature of the regime. In fact, running for office came with very stringent requirements including membership in the top élite.[18] Although the President’s role has remained largely ceremonial, according to Lee Kuan Yew the President’s power to block withdrawals from the national reserves is supposed to avoid the possibility that a future opposition government could potentially misuse the funds.[19]

The Singapore government has been able to effectively dominate the national discourse in all public arenas except the Internet. This begins as early as in kindergarten, many of which are operated by the ruling party. The school curriculum stresses and at times even exaggerates the achievements of Lee Kuan Yew, one of the founders of the PAP and the first prime minister of independent Singapore. Although Singapore was one of the most developed Asian cities in 1959, Lee Kuan Yew has sought to create the impression that he and his party have achieved a miracle as Singapore supposedly transformed from third world to first.[20] High economic growth rates, investments in public housing and other achievements have significantly transformed the tiny island nation.

The Singapore government also holds sway of all traditional media, which are owned by government-linked corporations and are thus pro-government. Critics and overseas media have been silenced with lawsuits alleging slander or sedition. Most recently, a defamation lawsuit on behalf of the prime minister was brought against Roy Ngerng for online criticism of the Central Providence Fund, which he had compared with an illegal misappropriation scheme of a local church.[21] It is thus not surprising that Singapore ranks 153rd in the Press Freedom Index published by Reporters Without Borders in 2015. This is worse than Myanmar, Russia, and Zimbabwe and only slightly better than Libya, Iraq and Egypt.[22] In recent years online media have challenged the government’s control over the public discourse. This has been met with a strong reaction by the government. In order to also contain the challenge from online media, new registration rules have been introduced, making it more difficult for these sites to operate.[23]

Finally, it is important to recognize the relevance of Singapore’s strategically important geographical position as a crucial factor for the long-term survival of its electoral authoritarian regime. Indeed the support from Western powers, despite frequent criticism about Singapore’s human rights record, has never been lacking.[24] This support has its roots in the Cold War in which the PAP was staunchly anti-Communist and thus provided the US with its most important ally in Southeast Asia.[25] This has not changed with the rise of China as Singapore has become the most important strategic base for the American «Pivot to Asia».  In early 2015, it was announced that the city-state would increase the number of US combat ships based in Singapore to four by 2018.[26] However, while Singapore needs the US to maintain the balance of power in the region and to guarantee freedom of navigation, it also seeks to build good economic relations with China and thus maintains its official neutrality. For this reason, the government frequently engages in high level diplomacy and «punches above its weight.»[27] For example, in 2015 Singaporean officials arranged a high level meeting between the Chinese and Taiwanese presidents in the hope of improving relations between the two rivals.[28]

While the ruling party remained firmly in control, it needed to find new mechanisms to incorporate rising demands from the public. On the one hand, the government has sought to strengthen its links to the population. Through the People’s Association and its associated grassroots organizations, the ruling party sought to penetrate all aspects of life. However, the lack of freedom for activists often led to a lack of enthusiasm in these organizations, which was reflected in the repeated calls for a more active citizenry. In the 1990s, the government sought to give Singaporeans more space through the promotion of a «civic society», a depoliticized third sphere that would allow activists to promote issues such as women’s rights, human rights, or the protection of the environment without challenging the power of the regime. This sphere was clearly marked as separate from political society, which would be the sole domain of political parties. External influences within this sector would not be allowed. While this constituted only a very careful initial step, it has to be seen as the basis for the increasingly assertive civil society today.[29]

The idea of allowing a controlled liberalization in which the ruling party would stay in firm control but people would be allowed to voice their concerns was also behind the creation of a Speakers’ Corner in Hong Lim Park in 2000. The cosy little park, away from the main business and government areas, would give people the right to speak out on many issues, even if some restrictions remained, such as a ban on discussing race, languages and religion and the participation of foreigners.[30] Over the years, a number of restrictions were relaxed; accordingly in 2004 performances were allowed and in 2008 demonstrations were permitted without the need for a police permit. While Singaporeans showed little interest in the park in its first years, this changed significantly following the relaxation of the rules and the increasing ability on the part of the public to use the internet to mobilize supporters and post videos about protests online. Nowadays, protests are being organized much more frequently than in the past with a few thousand people having joined the most popular ones. The most popular event has been the annual gay rights event Pink Dot, which in 2015 attracted 28,000 people.[31] Protests dealing with other issues such as the massive population increase and the lack of transparency in the case of the Central Provident Fund have attracted thousands of people.[32] The government responded to this issue-oriented protest by making some concessions such as promising to reduce the number of immigrants. The largest political gatherings are opposition election rallies which also attract thousands of people.

The need for control has been much greater in regard to the working class, which remains highly depoliticized. The labour movement, unified under the National Trades Union Congress (NTUC), is firmly in the hands of the government as its secretary-general, currently Chan Chun Sing, is a member of ruling party. In addition, the government owns a significant part of the economy in the form of numerous large-scale government-linked corporations (GLCs). As a consequence of the economic development model, the level of income inequality has become one of the worst among developed economies. There is no doubt that many people live in poverty, although it is difficult to quantify their number, as the government has refused to set an official poverty line.[33]

3. The 2011 general election: The rise of competitive politics

Despite Singapore’s extremely biased electoral process and strong limitations on freedom of speech, there has recently been a shift toward a more competitive political system, which, for the first time since independence, has given the opposition, at least in theory, the possibility of winning an election. This has occurred after years of limited progress by the opposition. In 1981, J.B. Jeyeratnam had broken the electoral monopoly of the PAP in a by-election. Since then, at least two opposition members were elected to parliament in every general election. However, the opposition never fully challenged the ruling party as it contested less than half of the seats. This naturally meant that the ruling party had already won the election on nomination day. This changed in 2006, when for the first time the opposition contested more than half of the seats. Then the ruling party’s vote share declined by more than 8% to 66.6%; at the same time the Workers’ Party managed to gain over 13% of the popular vote, even though it did not increase the number of its seats in parliament. Opposition parties at the time only had two elected members.

A more significant shift occurred with the 2011 general election, when all but one of the constituencies were contested by the opposition, thus making an opposition victory possible, at least in theory. The opposition parties strengthened their position by avoiding, in many cases, multi-cornered fights, bound to result in the fragmentation of the opposition vote. Moreover, the quality of their candidates had increased significantly, many of them being were established professionals, entrepreneurs, and even former civil servants. Moreover, most of the candidates were highly educated, with a few of them holding PhD degrees. For instance, the Singapore Democratic Party fielded Dr. Vincent Wijeysingha, Dr. James Gomez, and Dr. Ang Yong Guan, while the Workers’ Party nominated John Yam, who holds a PhD in Philosophy. This showed that a growing number of intellectuals were interested in taking an active part in politics, defending pluralist concerns. Last but not least, younger voters, the voting age in Singapore is 21, played a much more active role than in the past. This not only enhanced the competitiveness of the elections but, as I argued previously, marked the change toward a competitive authoritarian regime.[34]

The election result was impressive. The opposition increased its share of elected seats to six, its highest number of directly elected seats since independence. In particular, the opposition Workers’ Party was able to capture the Aljunied Group Representative Constituency (GRC) with five members, which can be regarded as a «psychological breakthrough for challengers».[35] Moreover, the ruling party suffered a decline in the popular vote from 66.6% to 60.1%. Even though this was still a very high vote share, it was the lowest since 1968, when the Barisan Sosialis, which had called on people to boycott the «undemocratic elections for the Lee Kuan Yew puppets»[36] dropped out of electoral politics.

This development was the result of several factors. One was the emergence of online media, which allowed Singaporeans to learn more about the opposition, its manifestos and campaign activities. The Internet provided a low cost option for cash-strapped opposition parties to reach more voters. Accordingly, Singaporeans were able for the first time ever to see the massive turnout at opposition election rallies from the comfort of their home.

In addition to the relevance of the new media, the electoral results were determined by the growing number of bread-and-butter issues facing Singaporeans, particularly the rapidly rising living costs and changes to the central provident scheme meant as a safeguard for retirement. By 2011, the golden years of rapid economic development were over, as economic growth remained modest. The Swiss living standard that had been promised seemed a distant dream for many middle income Singaporeans.[37] The rise of online media also contributed to the fact that, unlike in previous elections, when attacks on the character of the opposition and local concerns dominated, national issues became the central focus of the election. For example, in 2006 the mainstream media were dominated by a story about opposition candidate James Gomez, who had been accused of being a liar after he had made a mistake during the registration process.[38]

Despite the advances of the opposition, it is important to remember that the PAP was still able to garner massive support thanks not only to the many systemic advantages but also its willingness to adapt to the new realities. Most notably, the party engaged with the internet in new ways. The prime minister answered questions on Facebook to allow for some interaction with the leadership.[39] Moreover, despite initial trepidations, the PAP showed itself willing to engage in a televised debate. Finally, the prime minister responded to public discontent by apologizing for all mistakes during the electoral campaign. This was meant to demonstrate a willingness of the ruling party to listen to the public and make adjustments to its policies. By itself, the new populism revealed a major shift from the elitist approach of the past, when the PAP government publicly touted its ability to decide in the long-term interest of the country even if it meant unpopular measures in the short-term.[40]

Subsequent elections demonstrated that Singapore’s politics had become more competitive than in the past. The 2011 presidential election saw four candidates competing for the office with three candidates having a strong following. The candidate supported by the ruling party, Tony Tan, only narrowly won the election with 35.2% of the popular vote and a very small margin over Tan Cheng Bock, who was supported by moderate voters. Liberals and civil activists, who wanted more fundamental political change, supported Tan Jee Say, who promoted the idea of a conferring real political power to the president – who, presently, is a mere figurehead. Tan Jee Say was able to gain another 25% of the popular vote. The election overall demonstrated the problem of plurality voting, especially since there was no second round between the leading contenders. However, it also showed that there was a high demand to have alternative voices in government.

The most pressing issue in this period was the possible impacts resulting from the massive immigration.[41] The largest immigrant group was made up by low-income foreign workers who filled jobs Singaporeans either did not like or would not do for the wages employers were willing to pay. The lack of labour protection for these exploitable workers was another benefit. However, this brought about a reaction, giving rise to new forms of social activism, and a counter reaction, exemplified by the rejection of this new forms of social activism on the part of many Singaporeans. When 171 Chinese bus drivers went on a strike in late November 2012 over unequal pay and poor living conditions, the government declared the strike illegal, arrested four drivers, who were eventually condemned to serve six to seven week jail and deported 34 drivers.[42] Many Singaporeans supported the government decision.[43] The poor conditions of foreign workers also contributed to another major event. On 8 December 2013, triggered by the accidental death of a foreign worker who had been run over by a bus, 400 demonstrators, mainly Indian nationals, became involved in a violent riot in the famous Little India district, which caused massive damage to emergency vehicles. 18 people including 10 police officials were injured.[44] Official accounts have blamed the riot on «misperceptions about the accident and response, certain cultural and psychological elements present in the crowd, and the consumption of alcohol by some members of the crowd».[45] Not included, were social problems caused by the exploitation of foreign labour such as long working hours, little entertainment, and crammed living conditions. This blatant omission clearly revealed the limitations of authoritarianism in Singapore. Not only are the Singapore’s media unwilling to challenge the government’s version of the event, but also the commission was hamstrung in finding the actual cause of the riot not only because government officials such as Lui Tuck Yew had already blamed the violence on alcohol abuse,[46] but also as a consequence of the fact that the workers, because of the precarious nature of their employment contracts, subjecting them to immediate repatriation, self-censored their opinions.

Concerns about immigration, rising prices and the frequent problems of the public transport network played an important role in the victory of the Workers’ Party in the Punggol East by-election on 26 January 2013, one of two by-elections in which the opposition party was able to win.[47] Strong demand for alternative voices in parliament convinced a significant number of people to switch their vote from PAP to Workers’ Party.[48] The electoral volatility in these by-elections amply revealed that voters were willing to vote for credible opposition candidates. This stood in great contrast to by-elections in the 1970s, which the ruling party used for political renewal. Clearly, in 2011 the hegemonic position of the PAP was in decline, but, the general election of 2015 was to show, the party still maintained a significant popular support.

4. The 2015 general election: A major setback or an aberration?

While there was hope for the opposition to make limited progress in the 2015 general election held on 11 September, the loss of almost 10 percentage points led to a massive disillusionment among many supporters. Speaking to television reporters immediately after the results were announced, the head of the Reform Party, Philip Jeyaretnam, said: «I guess Singaporeans get the government they deserve, so I don’t want to hear any more complaints.»[49] This frustration resonated with many supporters of the opposition, who used the response as a meme on social media. So what had happened? Why did Singaporeans seemingly withdraw their support from the opposition? Above all, did this election mean that Singaporeans had «overwhelmingly endorsed a form of technocratic authoritarianism and turned their back on any prospect on the development of a two-party democracy» as Michael D. Barr suggested?[50]

Clearly, the election demonstrated that the ruling party was still capable to generate massive support for itself. The ruling party won the election with 69.9%, which constituted the largest vote share in a long period of time. The opposition parties, on the other hand, were reduced to their 30% electoral base. The PAP even recaptured a seat it had lost during the Punggol East by-election in 2012. Moreover, while the Workers’ Party was able to hold on to the six seats it had won in the 2011 election, its overall vote margin in both Hougang and Aljunied was significantly reduced. Overall, the election was undoubtedly an electoral landslide for the ruling party.

The outcome of the election cannot, however, be explained by reference to a single factor but is function of a number of different factors. It is, moreover, impossible to determine which of the factors actually dominated as it is hard to disaggregate them. First of all, the ruling party continues to rely heavily on the popularity of its traditional policies in the fields of law and order, defence and national security, prevention of corruption, crisis management, and relations between the different «races».[51] Secondly, it needs to be recognized that the PAP has made significant policy changes since the 2011 election, which, while not fundamentally changing the conservative neo-liberal nature of the government, did introduce new social measures that gained the support of many Singaporeans. The ruling party has become more responsive to the public. For instance, it has reacted to demands to limit the influx of foreigners. Also, it has provided more financial assistance to low income citizens. As the pro PAP shift among voters came mostly from wealthier Singaporeans in middle and upper income groups,[52] the hypothesis can be made that the these social groups are expressing their concern at the prospect of greater wealth redistribution, should the opposition gain more influence.

Another important reason for the election outcome is the effective use of timing. Although the election could have waited until January 2017, it was called in a year in which the party could only hope to profit from events that allowed the ruling party to draw attention to its past achievements.[53] The first was Lee Kuan Yew’s death on March 23, which was followed by a week-long period of mourning in which any criticism of his heritage was considered out-of-bounds.[54] Singaporeans stood in line for many hours to pay their last respects to the iconic leader. Television channels constantly broadcast documentaries about his legacy. Any criticism of his actions, for instance the arrest without warrant of political opponents, was considered as disrespectful. These events demonstrated the strength of Lee’s personality, which had provided significant charismatic leadership for the ruling party. When one youngster declared that Lee Kuan Yew was a «horrible person» in a video uploaded to Youtube, at least 20 police reports were lodged against him.[55] He was later arrested and, although charged and convicted for other charges, he served a four week sentence.[56] Similarly, the country’s 50-year anniversary also provided an opportunity to stress past achievements. Despite Lee Kuan Yew’s death, festivities proceeded as planned. These included a massive military parade, which again paid tribute to the late «founding father» of the country. Lee’s speech following Singapore’s separation from Malaysia in 1965, was broadcast on radio. In addition, the celebrations were a boon for marketing as many shops made use of the opportunity to sell SG50 themed products.[57] To one observer, these events «felt like a reminder to the country’s younger, sometimes disgruntled, generation that it should not take Singapore’s remarkable successes for granted.»[58]

Of course, it is important to remember that despite all changes, the ruling party still maintains tight control over most aspects of society. The media, which frame the issues mentioned above, still remain biased in favour of the ruling party. Although many people are concerned with the lack of fairness in the media, traditional media, especially television, remain the primary source of information, the influence of online information being still limited.[59] This happens even because the government is actively engaged in trying to reduce the impact of social media by making use of various means, including tighter registration requirements and lawsuits against individual content providers. In contrast to the situation prevailing on the eve of the 2011 election, the ruling party has become the political organization with the highest number of followers on Facebook, overcoming even the most popular opposition party, the Workers’ Party.[60] This showed that the ruling party was effectively using its access to resources to play an important role online.

The factors mentioned so far suggest that the election outcome was the result of genuine popular support for the PAP’s past achievements and an indicator that people at large believed that the PAP was moving in the right direction. But was it also a sign that the people were content with the technocratic and undemocratic form of governance? There are indicators that, in fact, this was not the case. According to a survey by the Singaporean Institute of Public Policy, a majority of Singaporeans believe that there should be more diversity in parliament.[61] Not only is political pluralism highly valued but Singaporeans attach great importance to the concept of checks-and-balances. Moreover, many voters dismissed the attempts of the ruling party to discredit the opposition with scandals such as the widely publicized administrative problems of the opposition Town Council. Despite this issue, the Workers’ Party was actually able to improve its own credibility.[62] Even Dr. Chee Soon Juan, the leader of the Singapore Democratic Party, who had been persecuted as well as demonized in the past, made a comeback as many people queued up to get his autograph.[63] Only three years earlier, he had been able to annul his bankruptcy, which allowed him to compete again as a candidate. There was clearly a desire to have an opposition to ensure that the PAP listened to the demands of the public.

5. Conclusion

In 2011 and 2015, Singapore experienced two very different general elections: the former was a watershed in the way it demonstrated that the Southeast Asian city-state was moving toward a competitive authoritarian regime; the latter, on the contrary, revealed the continuing strength of the ruling party. Whereas elections have remained highly contested, the PAP remains firmly in control. As things presently stand, it is unlikely that the opposition will be able to field a successful challenge, resulting in the transformation of competitive authoritarianism into liberal democracy. This remains the case, even as the Singaporean population increasingly demands more checks on government power.

However, Singapore’s increasingly competitive politics has led to a transformation of the PAP from a technocratic to a more populist party. Whether it can adapt to this change will be the ultimate test for the ruling party. As the current Prime Minister Lee Hsien Loong, Lee Kuan Yew’s son, is set to retire, a leadership transfer is expected in the near future. As no consensus as hitherto emerged on the name of his successor,[64] an internal leadership struggle could be in the offing. This could further put under pressure the ruling party ability to maintain its hegemonic position.

Joko Widodo’s election in 2014, after a long and harshly contested presidential race, raised great expectations: not beholden to the military and political elites of the Suharto era, Indonesian people considered him a representative of new democratic forces vis-a-vis the deep-seated «New Order» legacy. Accordingly, 2015 was important to see the extent to which these great expectations would be fulfilled. Unfortunately, the new President’s record was a mixed one, as the hoped-for change, although not completely absent, was greatly constrained by Joko Widodo’s inability to overcome the resistance of the conservative forces, still well entrenched both in the opposition and inside the ruling coalition who exerted their sway against Widodo’s advanced pro-poor and reformist programme. In fact, the new President had to come to terms with these conservative forces, allying himself with at least some of the most influential politicians of the «New Order» Suharto era. Of course, this could not but adversely reflect on Joko Widodo’s credibility.

To make things more difficult, Indonesia in 2015 continued to be characterised by strong internal tensions. These were caused by the persistent discrimination against religious and ethnic minorities, by the militarisation of the outermost region of West Papua, and by a comparatively new political development in Indonesia, namely the rise of radical forms of Islam, represented by domestic organisations which claimed to be linked to the murderous Middle Eastern Islamic State (IS). Given this background, in 2015 Joko Widodo was unable to clearly take a firm stance on these issues, in spite of their potential danger of destabilisation.  

Finally, the global economic crisis represented a further considerable challenge for the new President who, in 2015, was unable to fulfil his electoral promise to free the largest economy in South East Asia from the slowdown which had begun during his predecessor’s (President Yudhoyono) last term.

1. Introduction

2015 was an important year for Indonesia, because it coincided with Joko «Jokowi» Widodo’s first full year in office as President. Jokowi’s election was saluted as a remarkable event, a radical turning-point in the history of the country, since the new President was the first to not come from the Suharto-related military or political elite.[1] For this reason, Joko Widodo embodied a «new hope» for Indonesia, the only man who thanks to his humble origins could bring effective change to improve the situation of the wong cilik, the «ordinary man».

Nonetheless, as will be seen, the longed-for change was more taxing than it was optimistically expected, made difficult not only by the country’s systemic problems, but also by Jokowi’s questionable alliances with suspicious politicians and by his lack of a well-structured ideological vision. In spite of some positive developments, after more than one year from his election the so-called «man of the people» was still struggling to assert his independence vis-à-vis the conservative forces which have traditionally dominated Indonesian politics.

This chapter will first focus on Indonesia’s domestic policy. In order to consolidate his power basis, Jokowi wooed the military and made a series of political moves at odds with his original programme. The issues analysed include: the political discourse about the 1965 anti-communist massacres, Jokowi’s stance on the Papuan question, the alarming revival of radical Islamist groups, some of which are linked to the Islamic State (IS), and, finally, the regional elections. Then, Indonesia’s new foreign policy will be discussed, which aimed at transforming the archipelagic country into a major maritime power, willing and capable of taking a more independent stance vis-à-vis the ASEAN group and in relation to the tense situation in the South China Sea. Finally, the last section will analyse Jokowi’s response to the economic slowdown affecting Indonesia in the year under review, including the pro-poor measures taken to fulfil electoral promises.

2. Domestic policy: «Jokowi is us»?[2]

2.1. Jokowi’s «original sin»

Jokowi’s victory was generally welcomed with relief. Many feared that if his opponent Prabowo Subianto, a general of the Suharto-era and an oil-magnate,[3] had become president of Indonesia, the country might have backtracked on the difficult path to democratisation. Therefore the fact that Jokowi,[4] a man of no privilege or wealth, could win the election was considered a step forward in the consolidation of Indonesian democracy.

Undoubtedly, Jokowi, often compared with Obama, owes his popularity to his image of a clean new face in the Indonesian political scene. For this reason, the people, unhappy with the extant nepotistic and corrupted political system, saw the new President as a valid alternative, if not the antithesis, to his immediate predecessor: Susilo Bambang Yudhoyono (2004-14). Nevertheless, since his presidential candidacy, Jokowi had to rely, paradoxically, on the financial and political backing of those same oligarchs who have traditionally dominated the Indonesian political system and economy. Joko Widodo’s victory, therefore, was the result of both grassroots consensus and negotiations with at least some of the old oligarchs. In fact, popular support coming from grassroots organisations and new forms of campaigning, involving the use of social networks such as YouTube and Twitter came together with support from vested interests. Hence, it is very likely that Jokowi’s success in the presidential race would not have been possible if the chairman of the Indonesian Democratic Party of Struggle (PDI-P) Megawati Sukarnoputri had not decided to support him, a fact that gave Jokowi national prominence.[5] Also media tycoon Surya Paloh, chairman of NasDem Party and close associate of Megawati, gave his support as well.[6] Finally Jokowi’s choice of Muhammad Jusuf Kalla – Golkar’s unsuccessful presidential candidate in 2009[7] – as his running mate, proved equally decisive.

Indeed, Jokowi’s necessity to fall back on the support of a section of the old oligarchic forces which he was supposed to fight can be considered the «original sin» of his presidency. Hence the wavering conduct which, during the year under review, came to characterise the new presidency betrayed Jokowi’s conviction that his outsider status was a source of vulnerability, rather than strength.[8] Therefore, soon after Jokowi’s victory, it became clear that the new President would struggle to keep his credibility amidst an intricate political scenario characterised by the continuing hegemony of a few powerful and wealthy elites.

When Joko Widodo took the oath of office in October 2014, his weakness was very apparent. As a matter of fact, the majority of seats in the newly inaugurated Parliament were controlled by the conservative Red-and-White coalition. Taking its name from the colours of the Indonesian flag and led by Prabowo, this coalition comprised Prabowo’s own party Gerindra, Golkar, Yudhoyono’s Democratic Party (PD), the Islamic PAN (Partai Amanat Nasional), PKS (Partai Keadilan Sejahtera), and PPP (Partai Persatuan Pembangunan). Together they held 63% of the seats. This fact enabled the opposition to pass measures aimed at strengthening its position, while obstructing Jokowi from realising his programme.[9]

To make matters worse, Widodo had to combat the pro-status-quo forces within his own coalition. In fact, on the one hand, the ex-President Megawati Sukarnoputri and her daughter Puan Maharani were wary about Jokowi’s agenda. In particular, Puan perceived the new President as a threat to her power within the PDI-P, which she considered a family property, although the party was also Jokowi’s strongest political support. On the other hand, the other forces in the alliance had strong links with the political elites of the New Order and did not look favourably upon the reforms promised by Widodo. It should not be forgotten, indeed, that there were two parties in Jokowi’s coalition that were created after a split in the conservative Golkar, that is Hanura, led by the former commander of the armed forces Wiranto, and NasDem founded by the above-mentioned media tsar Paloh, both linked to the Suharto’s regime. Moreover, Widodo strategically allied with the Partai Kebangkitan Bangsa (PKB) or National Awakening Party, namely a traditionalist Muslim party, in order to win the vote of the rural Muslim constituency in Java.[10]

All this considered, since the beginning of his mandate, Jokowi appeared to vacillate between presenting himself as the man of the people and surrendering to pressures from those among his political allies who belonged to the traditional power elites. Indeed, during Jokowi’s first year in power, on several occasions the public expressed disappointment, because of the impression that the new President was acting as the establishment’s front man or, at least, that he could not gain autonomy from the key establishment figures in his coalition. Many started wondering whether Jokowi had leadership capability and if his integrity was such to withstand the pressure of the old hefty politicians and military-businessmen.[11] The point is that, if the new President needs the support of the traditional political forces, he also needs the backing of those civil society groups which are a growing reality in Indonesia. These groups – which cannot be ignored, especially given their pivotal role in Jokowi’s rise – continue to be perceived as a threat by the establishment. In this situation, as noted by Philip Vermonte, the President must prove his credibility and accordingly will be judged in terms of legal enforcement and corruption eradication, both important elements in his campaign.[12]

In light of this, as maintained by Klaas Stutje, historian at the University of Amsterdam, there are three main roadblocks in Jokowi’s path towards change for Indonesia. First, the President is alarmingly dependent on dark, authoritarian forces which influence his choices in the conservative sense. Secondly, Jokowi’s coalition is not stable, because, as often happens in Indonesian politics, parties have no ideological basis and jump easily from one side to the other of the political spectrum. Third, Jokowi himself has never developed a clearly defined ideology: this makes it unclear which social classes he is focused on and which social structures he relies on to realise the bottom-up approach to politics he proclaims to support.[13]

2.2. Jokowi’s new government

Once elected head of the Indonesian Republic, the new President had to pay his political debt to those members of the traditional oligarchic order who had supported his political ascent. This explains why Paloh and Muhammad Yusuf Kalla were soon appointed to top positions in State-owned enterprises (SOE) and given seats in the Working Cabinet.[14] Likewise, Megawati’s PDI-P obtained eight ministerial seats,[15] while Paloh’s NasDem got three seats and the post of Attorney General, despite his party only winning 6.2% of seats in the House.[16] Furthermore, controversial figures closely linked to Suharto’s New Order were chosen to be part of the government: for example Ryamizard Ryacudu, retired army general involved in the genocidal military operations in Timor-Leste, was appointed Minister of Defence.

Nevertheless, the newly elected President tried to balance these questionable choices by appointing 19 non-partisan professionals to his 34 member cabinet.[17] Moreover, some members were chosen for their pro-democratic and inclusive credentials: for example, the rector of Paramadina University in Jakarta, Anies Baswedan, a reputed intellectual who, among other things, campaigned against corruption,[18] was appointed Minister of Education, while a moderate Muslim figure, Lukman Hakim Saifuddin was appointed Minister of Religious Affairs. The latter engaged in talks with religious minorities, mainly Ahmadiyya, Shias and Christians, and stated that cases of violence and discrimination affecting them would not be tolerated. This and similar announcements notwithstanding, many cases remain unresolved and in October in Aceh, a province were sharia has been established, three Churches were burnt.[19]

2.3. The Gunawan and Hendropriyono controversies

Unfortunately for the new President, 2015 started with a huge controversy around the appointment of Budi Gunawan as National Police Chief in January.[20] Gunawan, a personal friend and former aide of Jokowi’s political patron, Megawati, was suspected of money laundering and bribery by the Corruption Eradication Commission (KPK), the formidable anti-corruption organisation established in 2003. This not only created a conflict between the police and the KPK – with Gunawan starting investigations against some key members of the anti-graft agency – but it also ignited a feud between Jokowi and Megawati. In fact, the general uproar against the criminalisation of the KPK pushed Jokowi to defy his own party, since he realised that his overall reputation was in danger. Finally, in mid-February Jokowi made up his mind and dropped Gunawan from his post, a move that was gladly welcomed by the Indonesian public opinion, although considered belated by several activists.[21]

Again, in February, another fact reminded the public of dynamics typical of the Suharto era and cast a shadow on Jokowi’s reputation of anti-graft advocate. During the President’s official visit to Malaysia, a Memorandum of Understanding (MoU) was signed between Proton, the Malaysian national carmaker, and ACL, a rather unknown Indonesian car company. However the CEO of ACL and, as such the one who signed the MoU, was the controversial A. M. Hendropriyono. Hendropriyono, a retired four-star General and former head of the National Intelligence Agency, [22] who had close ties with Megawati and had been one of the greatest backers of Jokowi during his ascent to the presidency, was suspected of human rights violations.[23] Apart from that, the Indonesian public was stunned to find out that the beneficiary of the Malaysian-Indonesian joint-venture was the lesser company of a political affiliate of Jokowi, instead of Esemka, Indonesia’s national car brand. Resentment was raised against Widodo’s inability to detach himself from cronyism,[24] which the President had promised to uproot.

2.4. The August reshuffle of the presidential cabinet

In August, the President reshuffled the cabinet, a decision aimed at strengthening his position, which, as seen above, was precarious because of the opposition within and outside his own party. The reshuffle occurred in the background of an economic slowdown and the fall of Indonesian rupiah at a 17-year low. Six ministers were replaced in order to make the public feel confident that the economic situation would improve.[25] In the first place, Jokowi replaced three out of four Coordinating Ministers[26] to attain better coordination and communication: this move was appreciated by analysts as more convenient stability-wise than the replacement of the main technical ministers themselves.[27] What appeared evident was Joko Widodo’s willingness to choose figures known to international markets[28] and to «counter rising negative perceptions of Indonesia’s protectionist trade policies»,[29] before his official visit to Washington. So, the previous Trade Minister, Rahman Gobel, was replaced by Thomas Lembong, a Harvard-educated economist, specialised in investment banking,[30] whereas Darmin Nasution, former Central Bank of Indonesia director and official in the Finance Ministry, was appointed Coordinating Minister of Economics. Compared to the former Minister, Sofyan Djalil, it seems that Nasution is less dependent on the Vice-President Jusuf Kalla, with whom Jokowi had disagreements in terms of economic policies.[31] Moreover, the former military, now rich businessman, Luhut Binsar Pandjaitan, head of the special forces under Suharto and already Chief of Staff in the President’s office (the latter position he left one month after the reshuffle), was appointed Coordinating Minister for Security and Political Affairs with six ministers, including those of Foreign Affairs, Home Affairs and Defence, reporting to him.[32] Luhut, a forceful supporter of Jokowi and part of the latter campaign team since the beginning,[33] was still very influential in the military; therefore his choice can be perceived as a way to gain favour from the army while countering Megawati’s heft. Nevertheless, Mrs. Sukarnoputri’s daughter, Puan Maharani, was the only Coordinating Minister (of Human Development and Culture) to remain in her place, despite the general discontent with her performance. Moreover, Sukarnoputri’s closest aide and PDI-P former general secretary, Pramono Anung, obtained the position of cabinet secretary. Also Dr. Rizal Ramli, appointed the new Coordinating Minister for Maritime Affairs, was considered to be close to Megawati. All these appointments signalled the sway of Sukarno’s daughter and granddaughter over the President, which makes it difficult for him to find a compromise between his avowed objective to appoint his ministers on the basis of meritocracy and his need to appease his political sponsors. In terms of power consolidation, a further step on Jokowi’s part was the political deal completed at the beginning of September, which brought the moderate Islamist National Mandate Party (PAN) into the ruling coalition, giving the government a majority.[34]

2.5. The limitations of Jokowi’s pro-workers stance

With this background, the President’s ambivalence towards social movements, such as human rights activists and trade unions, came to the fore.[35] Accordingly, despite Jokowi’s supposed pro-workers stance, a new regulation was introduced in October, which tied annual wage increases to the current fiscal year inflation and to GDP growth rates. The new regulation replaced a formula which was more favourable to the workers based on the basic cost of living (KHL),[36] and did away with the past practice of talks between unions, companies and local officials. Moreover, the labour strikes against the government’s decision were violently repressed by the police, especially in Jakarta, where thousands of workers had gathered.[37] The government even vowed to protect businesses by providing security measures in order to guarantee the safety of foreign companies against potential future strikes.[38]

Another of Jokowi’s stances which seems at odds with his proclaimed pro-labour inclination is his resolve to join the controversial international treaty Trans Pacific Partnership (TPP), announced during the official visit to the US in late October.[39] Without dwelling on the TTP characteristics – which, given the secrecy enveloping the pact, are mainly known thanks to documents leaked by WikiLeaks – here it suffices to remember – in Michela Cerimele’s words – that «the TPP seem[s] to be the bearer of a possible suspension of national, economic and political sovereignty, and as well as limitative of human rights and of important elements of democracy, all goals which are to be reached through the adoption of extraterritorial regulatory and judicial norms.»[40] All in all, there are reasons to believe that the TPP is completely at odds with a «people-centred economy».[41]

2.6. Jokowi’s «muscular» policy

During 2015, Joko Widodo, in order to address his sagging popularity – something certainly exacerbated by the unfavourable economic situation – reacted by taking actions that caused dismay both within and outside the country. In the first place, after brushing aside last-minute appeals by foreign leaders, in January a total of six people convicted of drug trafficking, including five foreign nationals,[42] were executed. Besides rejecting clemency requests, President Widodo forcefully defended the executions, stating that Indonesia was facing an «emergency» regarding drug use.[43] In order to rally support for his adamant stance against drug smugglers, Joko Widodo wooed Islamic organisations visiting the headquarters of Indonesia’s two largest Muslim organisations: Nahdlatul Ulama (NU) and Muhammadiyah.[44]

Also the decision to sink foreign illegal fishing boats has been a source of bewilderment and diplomatic tension, especially with Malaysia. The President has justified this as a necessary move to safeguard the self-sufficiency of small islands in terms of fish, namely the main food resource in the largest archipelagic state in the world. But, at the same time, curbing illegal fishing is being considered a test, although a minor one, for the new maritime security agency, called Bakamla. Bakamla is viewed as a critical institution for the realisation of the country’s maritime ambitions; in turn, maritime security, as a matter of fact, is one of the pillars of Jokowi’s ideology.[45] The highly public sinking of boats has served a double function: on the one hand, the government was flexing its muscles to intimidate the neighbouring countries;[46] on the other hand, it was tapping into nationalistic sentiments in a period of plummeting public approval, as also suggested by the fact that the sinking of 41 illegal fishing vessels took place on National Awakening Day.[47]

2.7. Jokowi’s inability to come to terms with Indonesia’s past

Jokowi’s tough actions and stance, however, were not enough to cover up his continuous political wavering, as shown by his inability to come to terms with his country’s genocidal past. Widodo had promised a national reconciliation process and an official apology for the 1965-66 anti-communist killings.[48] The year 2015, marking the 50th anniversary of the massacres, would have been the perfect occasion to show that Indonesia was ready to admit its past wrongs. Actually, with bitter disappointment for the families of the victims, for human rights activists and for intellectuals, it was Jokowi himself who silenced any rumours that he would offer a public apology on the 30th of September, the date in which the killings started in 1965. The President stated in front of the leaders of the most important national Muslim organisation, Muhammadiya, that he had no intention of doing so, a statement reaffirmed afterwards in high-sounding military tones by Luhut Pandjaitan.[49] In fact, it was the pressure exerted by the Islamic organisations – Muhammadiya, Nathdlatul Ulama, and also the radical Islamic Defender Front (FDI) – and by the military, both more or less involved in the massacres that prompted the President to abandon any thought of apologising officially.[50] In particular, the FDI stated that it absolutely forbade Joko Widodo to apologise, because an apology would have meant a justificatory posture towards the Communist Party of Indonesia and would have implied that the communists had done nothing wrong.[51] It is important to note that the relationship between Jokowi and Islam is particularly delicate. During his presidential campaign, Jokowi reiterated his tie with the majoritarian Sunni Islam, so much so that, as already noted, he allied with the PKB, a traditionalist Islamic party which had previously joined conservative coalitions. The PKB shift gave Jokowi an «Islamic edge», which in fact the would-be President needed in order to refute Prabowo’s allegations that he was Christian and from a Singaporean family. Joko Widodo, then, played the religious card and has been keeping an eye on Muslim forces in an attempt to not displease them. This constant wooing of Sunni Islam, whose support Jokowi needs, can prove dangerous, especially when it comes from traditionalist groups, since they are mainly responsible for discriminating against religious minorities, in particular Shias, Ahmadiyya and Christians. Jokowi might feel that his hands are tied and might turn a blind eye to anti-minority religious violence and intolerance.[52] Yet, by failing to address these persistent social issues, Joko Widodo risks paying a high political price, as people expect his government to perform better than the previous one towards the creation of a peaceful society and the consolidation of the country’s democracy.

Therefore, while deciding to please certain forces, Jokowi disappointed the elements of civil society that had hoped that the new President could provide a resolution for the past violations. Unfortunately, as further confirmation that this was not going to happen, the Ubud Writers and Readers Festival in Bali, the largest of this type in Indonesia, was forced to cancel the events dealing with the anti-communist massacres, something unprecedented in the twelve-year history of the popular festival.[53] In addition to this, other incidents revealed that the government was not willing to start a serious debate on the heinous crimes of the New Order: on the contrary, in the name of silencing the 1965 purges, censorship is being used to enforce general limitations on freedom of expression.[54]

By and large, it is difficult to say whether, by promising to offer an apology, Jokowi simply wanted to gain favour from human rights activists or if he was sincerely committed to alleviating the suffering of the 1965 victims. Yet, since in the meanwhile he has benefited from the political and financial backing of personalities of the Jakarta establishment, who were more or less directly linked to the Suharto’s junta (and who do not easily accept seeing their power challenged by a potential revisitation of history), Jokowi was aware of the fact that he was running with the hare and hunting with the hounds and that he would have to displease one side or the other.

2.8. Jokowi’s ambivalent attitude on the rise of radical Islam and the IS threat

A major social development of the past years that cannot be ignored is the alarming influence of radical Islamist organisations in several areas on the archipelago. In a sprawling and diverse country such as Indonesia, still characterised in many places by tensions between the local population and the central government, an already tense situation has been overlapping with IS-promoted terrorism, generating a synergy between these two phenomena which can be destructive.

The rise of radical Islam is not a new phenomenon in the Southeast Asian nation, the world’s most populous Muslim-majority country. Indonesia’s Islam has historically been moderate, accommodating and diverse,[55] and, significantly, did not spread in the archipelago following outside conquest but thanks to the preaching of the Sufis. However, starting with the 1980s, namely from the last decade of Suharto’s regime onwards, Indonesia was subjected to the influence of Saudi Arabia. This brought about the creation of Saudi-funded schools and the invasion of the Indonesian cheap book market with pamphlets and booklets that condemned pluralism, while promoting Wahhabism.[56] Thus, after the Suharto era, powerfully sponsored by Saudi money and influence, new radical versions of Islam started competing for dominance with the quiet and traditionally tolerant Indonesian Islam. The Majelis Ulama Indonesia (MUI, Council of Indonesian Ulama), established in 1975, shifted from a modernist stance to a conservative and «purer» one. Moreover, Indonesia’s national ideology was increasingly influenced by arguments according to which the nation should take the form of an Islamic state. This new ideology has become so influential that some provinces have introduced the Islamic law.[57]

What is important to underline here is that MUI has great influence both at the social and political levels as it defines the parameters of religious orthodoxy. These parameters, although not legally binding, are kept in consideration by the government, which does not want to alienate Muslim support. Over the last decade, MUI has become a detractor of pluralism, even issuing fatwas justifying violence against those who do not comply with the interpretation of Islam that the organisation promotes.[58] Indeed, during the Congress of the Indonesian Muslims held in February 2015 in Jakarta, MUI, while forgetting to mention the discrimination of non-Islamic minorities in Indonesia, denounced the oppression of Muslims all over the world and advocated distrusting cultures not in line with the sharia.[59] Furthermore, MUI had previously issued a fatwa against pluralism, secularism, and liberalism, while refusing to do the same against IS.[60]

This is not to suggest that the version of Islam promoted by MUI is representative of the majority of Muslims in Indonesia: Indonesian Islam remains mainly tolerant and moderate and several Muslim organisations are trying to spread a counter narrative to denounce the IS’s interpretation of Islam.[61] Yet, it cannot be denied that, not surprisingly, MUI advocacy of a stricter Islam has had negative repercussions over the social fabric, since it favoured the emergence of hardliner Muslim groups like Laskar Jihad and the FDI, responsible for the victimisations of religious minorities, or even organisations like Jemaah Islamyah (JI), linked with al-Qa‘ida and responsible for the bombing attacks of 2000s. Moreover, in the past years, at least three IS-linked groups have become active in Indonesia: Katibah Nusantara, Ansharut Daulah Islamiyah, and Mujahidin Indonesia Timur. Katibah Nusantara, guided by Bahrun Naim, is, according to the New York Times, «a ‘dedicated Southeast Asian military unit’ under the Islamic State that represents a direct security threat to the region».[62] But it is active even outside Indonesia, having been credited with the capture of part of the territory formerly held by Kurds in Syria.[63] Ansharut Daulah Islamiyah claims to be the main IS structure in Indonesia. Mujahidin Indonesia Timur (MIT), also known as East Indonesia Mujahideen, has been linked to lethal attacks on policemen and organises training camps in Sulawesi Island.[64] The MIT is led by Santoso, one of the most feared Indonesian terrorists, involved in the Bali bombings of 2002 and 2005, whom the Indonesian security forces, in spite of a sustained campaign, have hitherto been unsuccessful in hunting down.[65]

Therefore, radicalised Islam and the formation of terrorist groups are tightly linked and should be equally confronted promptly and effectively. As a matter of fact, just after becoming President, Jokowi declared that terrorism and extremism must be dealt with by combining military resolve with a «soft approach», which includes the reduction of economic inequality, education, law-enforcement, and cooperation with moderate Muslim organisations.[66] Nevertheless, while taking forceful action against global terrorism-linked groups, the new President has preferred to maintain a cautious and ambivalent attitude towards the ideological threat of radical Islam. No doubt, on the one hand, President Widodo has not shied away from using the army to curb Islamist armed groups. In fact, the military operations launched in March and at the end of the year under review, although unsuccessful in apprehending the masterminds of the IS-inspired terror strategy, nevertheless led to the arrest of several militants.[67] On the other hand, however, during the same period Widodo did not take a strong stand at the ideological and cultural level against FDI and MUI. This could be explained by the fact that, accused of being a Christian by his rival Prabowo during the presidential campaign, Jokowi feared that taking a clear stance against Islamic radical ideology could cast doubts on his religious affiliation and be detrimental to his quest for consensus. Thus, during his first year in power, the President’s condemnation of intolerance was not matched with concrete steps to stop the discrimination against religious minorities or to limit the circulation of extremist messages.[68] By and large, then, notwithstanding the alarming situation, Jokowi’s reaction to the threat of radical Islam has been strategically weak. In line with the conduct of the previous Indonesian governments over the past fifteen years,[69] Joko Widodo has insisted on showing Indonesia’s military might, but has so far been wavering in condemning and fighting those elements of ideological extremism which could facilitate the penetration of Indonesian society by IS-linked terrorist organisations. Although effective only in the short-term, from the point of view of power consolidation and consensus gathering, the new President has deemed fighting an enemy which claims to have links with global terrorism to be more rewarding and legitimising while presenting it as a threat to national security rather than trying to uproot radical Islam by ideologically defying it.

2.9. Jokowi’s ambivalent attitude on the Papuan question

Jokowi’s ambivalent attitude can also be seen in the case of the thorny Papuan question.[70] During his electoral campaign the would-be President paid considerable attention to the outermost region of West Papua. He presented Papuan grievances as worth lending an ear to and seemed genuinely willing to find a solution to end the longstanding conflict. That Jokowi has addressed the problem is undoubtedly a positive aspect per se, since, for the Indonesian state, West Papua represents a national security issue and any change in the status quo is considered political taboo. Therefore, the President introduced an element «that could be a determining factor: dialogue».[71] In fact, previous governments simply addressed economic issues, but they did not take into consideration Papuans’ claims or their complex cultural identity and historical specificity, something that understandably did not ease the process of pacification. Thus, apart from promoting regional development through infrastructure building, the rehabilitation of traditional markets, a more equitable sharing of resources between centre and periphery, the continuation and implementation of former President Yudhoyono’s welfare policy,[72] and the enforcement of a revision of the 2001 special autonomy law, Jokowi is trying to find a comprehensive and durable solution.[73] For example, Jokowi proposed building a presidential palace in Papua,[74] a measure also supported by Komnas HAM (the human rights national commission) in order to give local people more visibility; he announced the suspension of the discussed transmigration scheme that relocated mainly Javanese farmers to Papua and contributed to reducing locals to a minority in certain areas,[75] perpetuating the imposition of the Javanese ethnocentrism.[76] Moreover, Jokowi declared the end of the restrictions for foreign journalists[77] in Papua and West Papua and, in May, decided to release five political prisoners,[78] while promising to free many more activists.[79] In fact, in November he also released Filep Karma, symbol of the independence movement.[80] These steps are undeniably important signals for a region that has for too long been victimised by a painful internal colonisation and a fierce military repression. Yet, there are some major problems. Papua is in fact a theatre of multiple conflicting interests and agendas and it is difficult to take a stance that pleases all parties. A very strong hand is needed if things are to change. In the first place, the presence of the army in the region has not been reduced; on the contrary, despite Jokowi’s efforts to involve the military and the local police in the dialogue with the local inhabitants, the expansion of territorial military structures in the region does not contribute to helping the local population regain trust in the good will of the central government. In fact, security policies remain in place and counterbalance the beneficial effect of welfare policies. Such security policies are part of a programme, unfortunately named Serbuan teritorial («territorial invasion»), promoted by Defence Minister Ryamizard Ryacudu, who is in favour of greater involvement of the military in civilian life.[81] The purpose of the programme is to increase the social functions of the military in the outermost, conflict-prone areas – and thus also in Papua – and improve the soldiers’ image among the locals. But, according to many analysts, it is exactly the opposite of what is needed to stop abuses of power.[82] Therefore, Jokowi’s agenda is at odds with the agenda of the generals, some of whom, like Ryamizard, are also members of his Cabinet. Moreover, both the Minister of Defence and the Commander of the Indonesian Armed Forces (TNI) publicly denied that the veto on foreign journalists in Papua had been lifted. On the contrary, they declared that permission would still be needed and «good reports» (that is to say nothing which questions the official narrative) must be produced.[83] Also Jokowi’s plan to grant amnesty to around ninety Papuan political prisoners was rejected by the House of Representatives.[84] Another contradictory fact was that the President, albeit professing to be determined to combat the discrimination against Papuans, denied the latter’s claims to Melanesian cultural identity and refused to acknowledge any special relationship to Melanesia. In fact, Jokowi successfully exerted his pressure over the Melanesian Spearhead Group (MSG)[85] in order to prevent the United Liberation Movement of West Papua (ULMWP), namely an umbrella group formed in 2014 that gathers different organisations fighting for Papuan independence from Indonesia,[86] from becoming full members. At the same time, Indonesia obtained the status of associate member in the MSG.[87] This was a political victory for Joko Widodo: indeed, by granting ULMWP only the status of observer, the MSG made clear that it recognised Indonesia’s sovereignty over Papua. In other words, Jakarta was acknowledged as the legitimate representative of the five Melanesian provinces in the archipelago, while the ULMWP was denied its prerogative to speak on behalf of all the West Papuan Melanesians.[88] In addition to this, the Indonesian President was trying to tighten the economic ties with Papua New Guinea to undermine this nation’s support of Indonesian Papuans.[89] This ambiguity and the lack of a shared vision within the government was not encouraging for those who had set high expectations on Jokowi.

Also the presence of powerful international companies is a factor with serious complications in the area. West Papua has always kindled much interest for its enormous mineral wealth[90] and since the 1960s, under Suharto, the region experienced an influx of American, European, and Japanese companies,[91] but hardly ever did the locals benefit from their own resources. For example, in the case of Freeport Indonesia, a unit of the gigantic American mining company Freeport McRohan, Papuans complained that, in terms of employment, they are discriminated against in favour of immigrant workers; they also reported that local government is rarely involved in negotiations related to companies working in the region.[92] Moreover, the implementation of expansion schemes for palm oil production have brought the swift penetration of multination industrial producers. This, not surprisingly, has been damaging to local smallholders, constrained by the insufficient expertise, fertilisers and other fundamental inputs. If the needs of local communities are not taken into consideration, these economic policies are likely to alienate Papuans’ trust in the central government’s development policies. In addition to this, lack of transparency in land acquisitions by companies to the detriment of land rights of smallholders have spurred conflicts that can destabilise the areas.[93]

2.10. Jokowi’s ambivalent attitude on the «haze crisis»

Both the questions of land ownership and production of palm oil are crucially linked to the disastrous «haze crisis» which was caused by forest fires which burned from June to December 2015. [94] These fires blanketed a great part of Southeast Asia, stirring diplomatic tensions with the neighbouring countries[95] and placing the Indonesian President under global spotlights. On the one hand, fires are set in cases of disputed ownership to claim one’s right over a certain land; on the other hand, the fires clear the land for the plantation of trees for pulp and paper, but above all, for oil-producing palms.[96] Both smallholders and plantation companies – the former having less resources at their disposal, for survival,[97] the latter driven by the logic of profit – turn to burning instead of cutting, because it is extremely cheaper and faster.[98] Investigations have shown that plantation companies, by paying families to set fires to land, have fed a mafia of farmer group organisers, village heads, land claimants, businessmen, and government officers who benefit enormously from the fires.[99] Despite the dreadful extent of the ecological disaster – whose gravity, it is worth mentioning, pushed the President to shorten his official visit to Washington at the end of October – Jokowi did not declare a state of emergency, lest companies could default from contracts;[100] this caused dismay, especially in West Papua, which was badly damaged by the fires.

In this situation, the President took action to try to solve the crisis and defeat the haze problems within three years. In the first place, he acknowledged that unclear land tenure and concessions were at the root of the problem, announcing the mapping of land ownership, which should be carried out by 2020;[101] secondly, the government froze permits to four of the companies suspected to be errant and criminal cases were filed against their executives;[102] moreover, the Forestry Minister issued new technical guidelines that should contribute to reducing fire risks in the forthcoming years.[103] Yet, analysts have expressed concern about Jokowi’s ability to implement central government policies at the local level, something made difficult by the decentralisation, which Indonesia underwent after the Suharto era.[104] Moreover, the decision jointly made by Malaysia and Indonesia to create a Council of palm oil producer countries[105] was received with generally disappointment: in fact, this seemed to go against important agreements aimed at reducing deforestation[106] and to contradict Jokowi’s declarations at Cop21 in Paris that local communities must be involved in order to pursue a more sustainable economy.[107] Once again, it was not clear where Jokowi was heading. The risk is that welfare policies would be of no use if not backed by a durable and inclusive development scheme that, especially in critical West Papua, values and protects the environment as the fundamental resource of local communities.

3. The regional elections

Late in 2015, millions of Indonesians voted in regional elections, which were held in about half the local administrations of the country. This was just the first of three rounds: the two remaining ones are scheduled to take place in February 2017 and June 2018.[108] What is important to note is that, contrary to the attempt by the Prabowo Subianto’s coalition to eliminate local elections during the transition period, these were maintained. In fact, owing to an enormous public outcry, Yudhoyono soon had to overturn the unpopular move and restore the pilkada system (local elections system).[109] Since 2005, this allows electors to choose local administrators directly and is a fundamental safeguard of bottom-up democracy. The fact that local elections were retained was a personal victory for Jokowi, who had loudly decried the anti-democratic measure.[110] These elections cannot be considered a referendum over Jokowi’s first year for two main reasons.[111] The first one is that single candidates are more important than parties.[112] The second one is that just half the country will be involved during this round. Yet, results matter because the winners could implement or stall Jokowi’s proposals at the local level, therefore being either a consolidation or a destabilising factor for the President.[113]

4. Foreign policy: «In the Ocean we triumph»[114]

If we look at Indonesian foreign policy, we can see that Joko Widodo seeks to present himself as a promoter of considerable change. Nevertheless, there are many elements of continuity with Yudhoyono’s foreign policy. This is evident both in the new President’s maritime vision and in the emphasis on the need for varying and expanding bilateral relationships with partner countries. Three main points will be analysed in the following section. First, it will be seen how Jokowi has been trying to sensitise the general public on issues concerning maritime vision and security and to depict Indonesia as a country that can serve as a bridge between the Pacific and Indian Oceans. Second, Indonesia’s bilateral relations will be taken into account. Greater prominence will be given to the relations with China and US. It will be shown that, in a period of growing geopolitical tensions at the international level, Indonesia is not willing to choose between the US and China. As a matter of fact, Jakarta prefers not to take a clear-cut stance and nor be drawn into a rivalry that might cost a great deal in terms of sovereignty and independence. Not unlike the other ASEAN countries’ leaders, Widodo does not ignore the complexities of the interwoven conflicts of interests in the regional scenario and is trying to take advantage of the proposal advanced by both US and China, avoiding upsetting either. Ultimately, Jokowi’s attitude towards the ASEAN group will be considered. Certain declarations by the new President and his entourage suggest that Indonesia might abandon its traditional role of mediator in the region and focus on its national interests, while strengthening its position in the regional area.

4.1. Jokowi’s maritime vision

At this point, it is important to briefly focus our attention on Joko Widodo’s maritime vision. Jokowi wants to transform Indonesia into a «global maritime axis», namely a powerful and dynamic maritime hub, equipped with a developed modern infrastructure.[115] His political manifesto gave momentum to ideas which were not new but had been discussed only at the high-politics level. As a matter of fact, during his presidential campaign, the issues of maritime strategy and maritime security were encompassed in the broader political discourse for the first time.

The President’s vision is predicated on three main principles: 1) improvement of infrastructure to enhance inter-island connectivity in order to integrate the outermost areas of Indonesia, improving trade and commerce, thanks to a better use of choke points and maritime corridors;[116] 2) expansion of regional diplomacy in the area of the Indian and Pacific Oceans, making Indonesia a fulcrum between India and China and between China and the US;[117] 3) projecting Indonesia as a maritime power whose naval capability will be increased in the forthcoming years.

As analysts maintain, the new emphasis placed on maritime vision is a by-product of the growing awareness of the maritime vulnerability of Indonesia given the alarming tension in the South China Sea and the rise of China and India: a stronger awareness of the archipelago being exposed to external threats is constitutive of the country’s deep-seated sense of vulnerability towards its maritime domain.[118] Moreover, while underlining the need to overcome what has been an anomaly for the world’s biggest archipelagic state, namely a strategy predicated on a continental army,[119] Jokowi reinvigorates Mohammad Hatta’s «between the two continents and two Oceans worldview», according to which Indonesia’s geographical cross-road location shapes its «independent and active foreign policy». [120]

The implementation of this maritime vision would hardly be possible without the modernisation of the Indonesian navy, which – it is worth remembering – is weaker than those of Singapore, Vietnam or Thailand. Former President Yodhoyono had already started a twenty-year programme (2005-2024) focused mainly on the improvement of the naval and air forces. Thank to this plan, called «Minimum Essential Force» (MEF), some progress has been made and a few warships and submarines have been acquired.[121] This notwithstanding, because of the limited resources allocated and the lack of coordination, the programme has left much to be desired. Therefore, Jokowi’s intention was to push it forward.[122] The President’s elaboration of an ideological framework in which maritime security is depicted as a national interest priority is functional to gain political support and to sensitise people through a mainstream public debate. The above-mentioned sinking of illegal fishing vessels, for instance, could be interpreted as part of this strategy.

In order to improve maritime coordination, soon after being elected, Jokowi created a new maritime security agency, called Bakamla, to replace the previous agencies, whose tasks were not clear and often overlapped. Bakamla’s priorities were securing Indonesian resources against illegal fishing, building up maritime defence and preserving territorial integrity, conducting patrols and exercises and cooperating with Customs and with the Ministers of Transportation and Maritime Affairs.[123] Secondly, Jokowi announced his will to double the defence budget from 0.9% to 1.5% of the GDP in five years.[124] In 2014, Indonesia met 38% of its MEF objective, with the aim of reaching 100% by 2019.[125] All this considered, Joko Widodo’s five years in office will be pivotal for the realisation of his vision. Yet, it will be a tough test for the President, since, as noticed by many, there are several roadblocks ahead.

In the first place, doubts have been raised about the possibility of doubling the financial resources allocated to the armed forces. Moreover, it is not to be forgotten that Ryamizard will try to redirect most of these additional resources to the TNI rather than to the Navy. Also, the idea is widespread that the country might not be able to develop the necessary technological know-how to reach the goal of entirely relying on the indigenous shipbuilding industry. Finally, the common sense is that Joko Widodo’s lack of the necessary experience in foreign affairs will prevent him from acquiring national and international credibility.[126]

4.2. The Indonesia-China relations

The clash with the Defence Minister should not be underestimated, since it has influenced many domestic policy-related issues.[127] Also as far as the South China Sea dispute is concerned, the positions of Ryamizard and Jokowi have been at odds. It is well-known that according to the so-called «Nine-Dash Line», the vague boundary used on official Chinese maps, about 90% of the South China Sea belongs to the People’s Republic of China.[128] Within the area on which China lays claim, lie the Indonesian Natuna Islands, where Jakarta has established an Exclusive Economic Zone. Therefore, while the Minister of Defence announced that the deployment of a fleet of jet fighters and three corvettes to the islands is planned, as well as the upgrading of the small military force based there,[129] the President was more careful. During his official visit to Beijing in March, Jokowi apparently did not discuss with Xi Jinping the issue of the disputed sea area and a number of MoUs were signed on questions of finance, industry, infrastructure, natural disaster management and aerospace. Later on, in an interview with a Japanese newspaper, the Indonesian President was reported as saying that China’s claim over the South China Sea does not have any legal foundation in international law. However, Jokowi soon clarified that his statement, rather than being against the Chinese posture, was meant to emphasise the fact that a Code of Conduct was needed for tackling the South China Sea dispute.[130] Joko Widodo, thus, is aware of the complexities of the relationship with China, whose foreign investments he wants to attract, and that is maybe the reason why he is reluctant to play a leadership role within the ASEAN group and to act as spokesperson of the other member countries who have grievances against the Asian superpower.[131]

All in all, however, the relationship with Beijing is strengthening, as shown by the fact that Jokowi visited China twice during 2015 and that, in October, the latter offered up to US$ 100 billion in total investments in several projects, including joint-venture infrastructure development projects, such as the bullet train connecting Jakarta and Bandung.[132] Moreover, in November, during the G20 meeting in Antalya, Jokowi and Xi discussed the possibility of liquidity support with an additional contribution of US$ 20 million as part of an attempt to reduce Indonesia’s dependence on the US dollar.[133] Considering that Jokowi has rightly declared that infrastructure is at the top of his priorities, Indonesia seeks to take advantage of the will to invest in the Asian colossus, which is one of Indonesia’s biggest investors.[134]

4.3. The Indonesia-US relations

It is too early, though, to tell whether Jokowi will abandon the traditional role of regional mediator played by Indonesia or if he will move towards either the US or China, becoming part of the spheres of influence of either power.[135] For the time being, despite great expectations, Washington has been disappointed by the hesitating attitude of the archipelagic country. During Joko Widodo’s visit to the US in October 2015, Washington and Jakarta signed a MoU on maritime cooperation which covered broad priority areas such as maritime security, law enforcement institutions, and technical skills. Nevertheless, a new work plan which was supposed to provide the recently-created Bakamla with institutionalised assistance from the US did not come up for discussion because, for reasons which are not very clear, it had been cancelled by Indonesia.[136] While it has been said that this is explainable by a struggle for authority within the Bakamla, it is likely that Jakarta does not want to depend upon Washington too much to avoid being too closely integrated inside the US sphere of influence. Likewise, Jokowi’s announcement on being keen on joining the TPP has not been followed by concrete steps, at least so far. Apparently, then, like other countries in South-East Asia, Indonesia is also struggling to find a balance between strengthening defence cooperation with Washington, while establishing economic ties with China.[137]

4.4. The Indonesia-ASEAN relations

Furthermore, it has been observed that the Indo-Pacific vision implies a broader landscape for strategic action and allows Indonesia to project itself as a maritime power outside ASEAN, which, according to some sections of the strategic circles, is too constraining.[138] As declared by Rizal Sukma, one of Indonesia’s leading strategic experts, ASEAN is an important focal point, but only one.[139] What has been seen so far is that certain statements released by Jokowi as soon as he took office gave the impression that Indonesia might change its attitude towards the ASEAN and cease to have a unifying function. During the ASEAN summit in Myanmar in November 2014, Jokowi said that Indonesia is not willing to become merely a market and that the country must ensure that no harm comes to its national interests.[140] Is this sheer rhetoric to impress Indonesian public opinion and neighbouring countries or is it a concrete sign that Jakarta is embracing a broader vision and that its focus on the so-called PACINDO (the Pacific and Indian Ocean region) will entail turning away from the South East Asian regional cooperation?[141] In any case, such declarations are not very promising in view of the full implementation of the ASEAN Economic Community (AEC). Other declarations released by the Minister of Culture demanding that, since Indonesia will be the centre for economic development among the group, Bahasa Indonesia should become AEC’s main language were not fostering unity and trust, and suggested that Indonesia was acquiring a self-centred posture and abandoning regionalism.[142] This big-brother behaviour might exacerbate fissures that are already present within the ASEAN group. In fact, although such statements might remain confined to the rhetorical level, in the current tense climate it might stall regional cooperation and harden postures related to the several territorial disputes already dividing the member states. All in all, this can make the regional countries more vulnerable to the powerful sway exerted by the US and China.

4.5. Indonesia’s other bilateral ties

By and large, Joko Widodo has not neglected other bilateral ties, apart from those with the US and China. Those with Iran, Australia, Russia, and India are examined in the present section. The visit of the Iranian President and the Foreign Minister to Indonesia in April indicated the mutual will to strengthen relationships in terms of regional security, infrastructural and technical projects and in anti-terrorism cooperation.[143] The political shift with Jokowi was also perceived as timely by Australian new Prime Minister Malcolm Turnbull in order to reset relationships which had been marred during Abbott’s government.[144] Another very important step occurred in June, when Jakarta signed a MoU with Moscow in the field of nuclear energy.[145] Russia is also considering helping Indonesia with military equipment and contributing to the development of her infrastructures.[146]

Moreover, India has also been an object of greater attention, especially as far as defence partnership is concerned. In August 2015, Indonesian Defence Minister Ryamizard and India’s ambassador to Indonesia, Gurjit Singh, held a meeting during which they signed a MoU focusing on maritime security and on the will to promote future cooperation in defence procurement.[147] This could bring mutual advantages, since Narendra Modi, the Indian Prime Minister, wants to increase naval cooperation with Southeast Asia as per his «Act East» policy, whereas Jakarta, as mentioned above, is willing to enhance its naval capabilities.[148]

Note must be taken of the fact that during Jokowi’s first year in office, an improvement has been noticed in the diplomatic relationships between Indonesia and Malaysia. Although the situation remains tense due to territorial disputes that involve tiny, but rich in oil, islands in the Sulawesi sea and because of mistreatments of migrant Indonesian workers,[149] increasing bilateral trade, investment growth and deepening cooperation in defence and security are contributing to a detente.[150] Thus, in February, during a bilateral meeting, the Defence Ministers of the two neighbour countries signed a letter of intent expressing their will to cooperate in the fight against both IS and piracy: this has been interpreted as a mutual effort to temporarily overcome territorial disputes in order to fight common enemies.[151]

All in all, Indonesia is trying to diversify its bilateral relationships in an effort to balance the influence of the US and China in the Indo-Pacific region and to strengthen its position. This notwithstanding, it cannot be denied that Indonesia has not completely neglected its traditional role of mediator within the south eastern region. It is worth mentioning that during the Shangri-La Dialogue held in April 2015, Indonesia had proposed a peaceful settlement of several border disputes by supporting regional dialogue, the introduction of a Code of Conduct (CoC), and the introduction of joint patrolling operations in the area.[152] Moreover, despite the tougher approach taken by the Indonesian military towards China, also seen above, and the deployment of at least 14 naval ships to conduct routine surveillance in the southernmost South China Sea area, Jokowi and Coordinating Minister for Security and Political Affairs Luhut Binsar Pandjaitan made blunt statements after the provocative action of the American destroyer USS Lassen[153] asking all sides to «exercise restraint» and tone down the inflammation of the dispute.*[154]

5. The economy

5.1. The general economic trend

In 2015, the Indonesian economy was under pressure from both internal and external factors. Although the new President’s election brought a gust of optimism to a country which had been bitterly disappointed by the slowdown of the economy in 2014,[155] the problems inherited from the previous government – that is endemic corruption, rising inequality, sluggish economic growth and poor infrastructure – were deep-seated and not easy to solve. These unfavourable conditions were exacerbated by a new global economic slump and by the huge cost of the haze crisis which amounted to 1.9% of the GDP in only five months.[156]

Initially, Joko Widodo had set expectations too high: he had projected a growth rate of 7%, then revised to 5.7%, for 2015.[157] The World Bank considered it ambitious and unrealistic, and, already in the second quarter of the year, forecast the growth of Indonesia’s GDP at around 4.7%, a figure that was confirmed by further forecasts at the end of the year.[158] In fact, Southeast Asia’s largest economy was affected by the financial crisis in China and in other parts of the world: the rupiah fell precipitously against the US dollar in the first nine months of 2015, trading at the lowest level since 1998, while performing slightly better in the remaining part of the year.[159] This had burdensome repercussions for the country: internal consumption, which comprises half of the economy, decreased since domestic purchase power was curtailed by the high inflation and the high benchmark interest rate at 7.50%.[160] Moreover, the rupiah’s depreciation did not even benefit Indonesia’s main exports, namely natural gas, coal, and palm oil, due to a downward trend in their prices.[161] Also manufacturing exports were not favoured by the weak currency, as several industries need to import basic or intermediate materials in order to produce exportable commodities. Another reason for the loss of competitiveness was the surge of labour wages, spurred by inflation.[162]

Consumers’ confidence fell also as a consequence of President Widodo’s decision to stop gasoline subsidies and cap assistance for diesel from January.[163] The removal of fuel subsidies, which had been in place since the first petrol crisis in 1973, was favoured by falling global oil prices. According to forecasts, the budget cost of fuel subsidies was reduced from US$ 8 billion in 2015 to US$ 4 billion in 2016.[164] This move was part of Jokowi’s broad aims to make funds available in order to boost spending on education, health, infrastructure and abate the budget deficit from under 3% to under 2% of the GDP. However, the beneficial effects of the state budget savings, if any, were to be seen in the following years. For the time being, the measure was not popular, because of fear that the cost of transportation and food could increase, even though the government took steps to moderate the negative impact of higher prices on vulnerable households. These steps included a monthly allowance for 15.5 million economically unprivileged families, plus health assistance and funds for education. The relative expenses would be financed by making use of the financial resources made available in the medium-term by the removal of fuel subsidies.[165]

5.2. Public spending in support of the disadvantaged social strata

It should not be forgotten, in fact, that according to the World Bank more than 11% of Indonesians live below the national poverty line (for 2015 this was fixed at 331.000 rupiahs per month, about US$ 23),[166] while many more are just slightly above it. On the whole, people below and slightly above the poverty line form a conspicuous disadvantaged stratum.[167]

The President launched a health care programme and a public education programme, which were modelled on programmes which he successfully implemented during his mayoral career in Solo. It will be seen whether the conditions to implement such schemes at the national level will be created. A major problem, in fact, is the lack of coordination between centre and periphery. Until October 2015, the level of fiscal deficit was still 2.5% of GDP, instead of the proposed target of 1.9%; the government’s commitment to accelerate public spending and a revenue collection lower than expected contributed to that result.[168] As planned, the expenditure for infrastructure, health and social assistance has increased and should further increase as per the 2015-2016 budget. As far as infrastructure is concerned, the allocation of more funds will go to local governments and through capital injections to SOE.[169] A higher public spending in infrastructure is positive because it can help reduce the negative effect of higher unemployment caused by moderate growth.[170] In 2015, in fact, both construction and trade benefitted from the expansion and/or betterment of infrastructure, which created the largest number of jobs.[171] On the other hand, universal access to subsidised healthcare was supposed to be achieved by 2019 and will require increasing spending to cover more and more of the population.[172]

Jokowi’s social programmes, in line with social security schemes introduced in 2013 by Yudhoyono, address both the formal and informal sectors, even though it is much more difficult to implement such schemes in the informal sector. A positive development was that, from August 2010 to February 2015, the number of workers employed in the informal economy went down from 59% to less than 52%. Moreover, most of the new jobs created from 2001 are in the formal economy.[173] Poverty reduction, however, has been less successful, recording no decline in 2014, while the divide between poor and rich has been widening: according to a World Bank report published in November 2015 the income of the top 10% of the population rose three times faster than that of the lowest 40%.[174]

Certainly, it takes time to fix inequality, but providing targeted social assistance and a good tax administration can contribute to realise Joko Widodo’s aim to cut the country’s Gini coefficient,[175] stable at 0.41 since 2011, to 0.39% by 2019.[176]

5.3. The 2015-2016 budget

The 2015-2016 state budget was approved in October 2015. The macroeconomic targets remained those of enhancing investment in infrastructure development (raised by 8% compared to the 2014-2015 state budget), increasing, exports and boosting people’s purchasing power through subsidies to diesel, electricity, and gas, along with programmes of food security.[177] Economic growth was projected at 5.3%, lower than the government’s initial assumption, with an inflation rate of 4.7% and an exchange rate of 13,900 rupiahs per US$. In relation to welfare, targets include the reduction of the poverty level between 9 and 10% as well as the decrease of unemployment rate to 5.2% from 5.5%.[178]

The only party which disagreed with the budget draft was Gerindra. In particular, Gerindra, the major opposition party in the «Red-and-White» coalition,[179] carried out such a determined opposition against the injection of state capital in SOE that the government had to postpone that measure sine die.[180] The plan was to inject around US$ 3 billion in state firms, in particular construction and electricity companies, to boost infrastructure development. This would have been a significant economic step in relation to the size of Indonesia’s economy. State enterprises, with an asset superior to US$ 300 billion, are pivotal for building infrastructure and connect the archipelago through communication and a more even development; moreover, they employ more than 850,000 people.[181] It is understandable, then, that Jokowi and the Minister of SoE, Rini Soemarno, considered this step to be very important for growth. Even though Rini Soermano was not excluding privatisation as a future option, her priority was, for the time being, the expansion of state enterprises.[182]

Apart from finding a way to implement such expansionary policy, it remains to be seen how Jokowi’s administration is going to face the problems that hinder infrastructure development: one is corruption, which has involved several state enterprises in recent times; the other is difficulty in spending, as shown by the fact that, in the first six months of the year under review, only 11% of the US$ 22 billion allocated for infrastructure programmes were spent.[183]

Another much-discussed measure was tax amnesty, which was supposed to be implemented in 2015 but had to be included in the 2015-2016 budget.[184] Through this, the President aimed to decrease the budget deficit. Nevertheless, the proposal caused concern among anti-corruption activists and the Organisation for Economic Cooperation and Development (OECD): as a matter of fact, according to them, Indonesia does not have enough monitoring mechanisms to make sure that people who do not comply with amnesty or just partially submit their assets get punished.[185] Moreover, analysts fear that it is too risky to rely on such uncertain resources and that future tax compliance might be negatively affected by amnesties, favouring the promotion of tax evasion and a culture of impunity.[186]

5.4. Moving towards neoliberalism?

The economic policy adopted by Joko Widodo appeared predicated on a good dose of state intervention, evidently seen by the new President as conducive to steady growth and inclusive development. Nevertheless, the appointment of Thomas Lembong as Trade Minister following the August Cabinet reshuffle and a package of deregulation policies, according to which the minimum wage is also determined,[187] have raised concerns about the new President possibly sliding towards a neoliberal agenda. Also the decision to let fuel prices be fixed by market mechanisms has been interpreted as evidence of a growing neoliberal influence.[188] As a more telling signal that the biggest economy of ASEAN might move in the direction of the hegemonic paradigm of neoliberalism, Jokowi and Trade Minister Thomas Lembong declared their intention to join the TPP.[189] Several economists have warned about the dangers that joining the TPP could cause to the country. In fact, while Jokowi apparently wants to be involved in the free trade agreement in order to attract foreign direct investment more easily,[190] the benefits for the common person are questionable. Former President Yudhoyono himself advised Joko Widodo against signing the TPP and cautioned him about the geopolitical repercussions that such a decision could cause, especially as far as China is concerned.[191] Lana Soelistianingsih, an economist at the University of Indonesia held that signatory neighbouring countries like Singapore, Malaysia and Vietnam, being manufacturing export-based economies, will be able to perform better in the US-promoted partnership than Indonesia, whose exports are mainly raw materials like oil and gas. According to Soelistianingsih, boosting the competitiveness of the Indonesian manufacturing sector would require, among other things, significant upgrades to the existing poor electricity infrastructure.[192] Likewise Firmanzah, a former dean of the faculty of Economics of the University of Indonesia, has argued that Indonesia should focus on existing regional agreements such as the Regional Cooperation Economic Partnership (RCEP) and the Comprehensive Economic Partnership Agreement (CEPA). Different from these regional agreements, the TPP is at odds with Jokowi’s development agenda «Nawa Cita», whose purpose is to achieve economic independence by developing strategic sectors in the domestic economy.[193]

Generally, many observers have been afraid that the positive results attainable through social schemes and economic policies could be neutralised by joining the TPP. Among other problems, they pointed out the risk of the massive damages that the penetration of food multinational companies into the food sector could cause to small farmers. Likewise, they highlighted the danger that some TPP regulations could cause the removal of the extant provisions of flexibility related to the implementation of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). This is a scheme which allows many developing countries to produce generics of drugs patented by US pharmaceutical companies at lower prices in the public’s interest. Such removal could result in a significant increase in prices due to cartels and monopolies on drugs organised by powerful foreign corporations.[194] It is a remarkable fact that even a financial institution like the World Bank, which has consistently shown its commitment to the promotion of neoliberal policies, has expressed its reservation over the potential effects of «the [TPP] agreement [since it] affords countries little flexibility to make laws and regulations more restrictive towards other member countries […]». Accordingly, as acknowledged by the World Bank, «the cost of this TPP-imposed limitation would be the loss of some economic policy space».[195]

This article analyses some of the key issues in Philippine domestic politics and foreign policy during the years 2014 to 2015. The analysis is divided into two main parts. First, the article examines domestic politics from the lens of political corruption, President Aquino’s good governance programme, and electoral politics. Second, the article examines the principal patterns of power relations and key issues in regard to the Philippine government’s foreign policy and international diplomacy strategy — with a particular focus on bilateral relations with the United States, the rise of China and the territorial disputes, and regional economic integration in the context of the ASEAN. The main argument here is that the key patterns of domestic and foreign policies and strategies of the Philippine government under the Aquino administration reveal historically constituted shortcomings of the Philippine state in autonomously steering its own long-term development outcomes, primarily because of two factors: the internal struggles amongst various elite factions within the state-society nexus and the peripheral and US-centric roles that the country plays in the international system.

My hope is that when I leave office, everyone can say that we have traveled far on the right path, and that we are able to bequeath a better future to the next generation. Join me in continuing this fight for change. Philippine President Benigno Aquino III[1]

1. Introduction

Elected based on his «good governance» platform, President Benigno Aquino III’s legally mandated presidential term started last June 30, 2010, and his presidency is expected to last until mid-2016. The quotation above is cited from the last paragraph of Aquino’s speech, which he gave when he was inaugurated as the 15th President of the Republic of the Philippines. Amidst the last few months of the Aquino presidency, did his leadership live up to the promise of «good governance» he so willingly invoked during his campaign and in the inaugural address? How did the Aquino administration address key issues of domestic politics and foreign policy?

This article analyses the key developments in Philippine domestic politics and foreign policy during the years 2014 to 2015. The analysis is divided into two main parts. First, the article examines domestic politics from the lens of political corruption, economic development, peace and conflict, and electoral politics. Second, the article examines the principal patterns of power relations and key issues in regard to the Philippine government’s foreign policy and international diplomacy strategy – with a particular focus on bilateral relations with the United States as well as the territorial disputes in the region in the context of the rise of China as a regional power. The main argument here is that the key patterns of domestic and foreign policies and strategies of the Philippine government under the Aquino administration reveal historically constituted shortcomings to autonomously steer towards its own long-term development goals, primarily because of two factors: the internal struggles amongst various élite factions within the state-society nexus and the peripheral and US-centric roles that the country plays in the international system. The analysis of this article begins in the next section with a discussion on key issues in domestic politics in the Philippines during the years 2014 and 2015.

2. Domestic politics

Similar to the previous administration of President Gloria Macapagal Arroyo (2001-2010), current President Benigno Aquino III commenced his mandate with a massive campaign against «bad» politics through his daang matuwid (straight path) governance brand. Aquino’s candidacy in the 2010 national elections could not have been timelier: the death of his mother, former President Corazon Aquino, who had become the symbol of Philippine democracy, occurred when Arroyo was facing serious corruption and electoral fraud allegations. In his inaugural speech in 2010, he vowed to transform politics by getting rid of patronage politics, junketeering, «senseless spending», and bribery.[2] The focal point of his reputed social contract with the people was «transformational change», which highlighted what he aspired to accomplish: a dramatic transition from a failed leadership that incited cynicism to an ethical one bound to stimulate renewed hope for the country.[3] This is manifest in the usual narrative of his annual State of the Nation Address that extols his administration’s accomplishments against the backdrop of pressing corruption and culture of impunity, both treated as an inheritance from Arroyo and her henchmen.

The unfortunate reality of Asia’s «oldest democracy»[4] being trapped in the cycle of changelessness cannot be understood through piecemeal narration of each presidency. Likewise, adjectives attached to democracy, like «cacique», «clientelist», «élite», «oligarchic», and «bourgeois» could only offer new perspectives if dovetailed with the three formidable historical chapters that form the present political reality in the Philippines.[5] The first is the Spanish colonization (1565-1898). Spain ruled and influenced the Filipinos mostly through Catholicism. With 86% of the population being Roman Catholics, the church has a decisive influence on domestic politics, particularly concerning the choice of leaders and their fate and social policies, such as the approval of the Reproductive Health Law.[6] Politicians are known to solicit political support from the Roman Catholic Church and other Christian denominations, most notably Iglesia ni Cristo (Church of Christ), given their huge religious following and remarkable reach to ordinary citizens. Moreover, the predominance of Catholicism has had a huge impact on the people’s perception and treatment of Muslim minorities in the country.

The second historical chapter influencing the political present of the Philippines is represented by the American colonization (1898-1946). Operating as a tutelary colonial state to introduce democracy in the Philippines, the US allowed Filipinos to conduct free elections and hold government offices under the supervision of the American administration. Since the Americans lacked a sufficient number of civilians to administer a colony, they ruled indirectly through landed élites and clans that – then and now – govern important regions. This meant that the few existing local economic élites and the «ilustrados» («learned» or «enlightened ones»), namely the members of the educated class, which had taken shape during the Spanish colonial era, were absorbed into the «administrative» machinery to get their political support. In return, these classes were protected from seditious and popular opposition. Many of these élites developed a «directing class» mentality. Such belief in their status as an educated and usually well-to-do class granted them the privilege to act as the «natural leaders» of the popular mass.[7] Although Filipinos are generally grateful for the American heritage of electoral democracy, it is difficult to deny that it gave birth to the modern Philippines’ political ills. In Benedict Anderson’s words, «it was above all the political innovations of the Americans that created a solid, visible ‘national oligarchy’».[8]

The third and last historical chapter to mould the Filipino political present is the 1986 EDSA People Power Revolution,[9] which became both the country’s boon and bane. The peaceful movement led by the alliance between the Catholic Church, the opposition élites, and the middle class restored Philippine democracy after over two decades of dictatorship under Ferdinand Marcos. The 1983 assassination of Benigno Aquino Jr., perhaps Marcos’s fiercest political rival, significantly influenced the Filipino public’s choice for his wife, Corazon Aquino, for president. Nevertheless, despite a new type of government, familiar faces facilitated the continuity of traditional patronage politics amidst a change of leadership. The peaceful EDSA revolution has since morphed into a tool for both destroying and seizing power, with two more EDSAs following as if to mock the original. Specifically, the EDSA 2 Revolution in 2001 resulted in President Joseph Estrada’s resignation on the count of plunder and corruption allegations. Only three months after Gloria Macapagal Arroyo was sworn into office, another «EDSA» occurred, only to reinstate Estrada. The irony is that the 1986 EDSA People Power Revolution also produced the «EDSA system» that «encouraged maximum factional competition among the élite while allowing them to maintain a united front against any change in the system of social and economic inequality».[10] That is, in spite of their name, the second and third EDSAs are by no means revolutionary. Therefore, we find the two presidents, Estrada and Arroyo, who were brought down by EDSAs, now occupying official positions. Estrada is currently the Mayor of the Philippines’ capital city, Manila, while Arroyo is serving as a Congresswoman representing her native province, Pampanga.

Political reforms, no matter how well intended, are deeply conditioned by these historical factors. Years 2014 and 2015 are as good as any other year to illustrate the recurring or even deepening problems of Philippine domestic politics throughout the past decades. In 1991, prominent political scientist David Wurfel described Filipino politics from Ferdinand Marcos (1965-1986) to Corazon Aquino (1986-1992) in terms of «development» and «decay».[11] Despite being cognizant of the minor developments that took place during the transition, he was wary of the real possibility that the new Corazon Aquino-led regime would restore the old crony system in the guise of democracy. This is a prophecy that seems to be confirmed by Corazon Aquino’s son’s fast track to the presidency.

The focus of this section is to discuss three enduring issues in Philippine domestic politics, particularly as they manifested themselves in the years 2014 to 2015: (1) political corruption, (2) conflict and development, and (3) democracy and elections. As we shall see, Benigno Aquino III had a promising start but, eventually, was unable to prevent further political decay for the Philippines.

2.1.   Political corruption

One of the most sensational corruption scandals, the Priority Development Assistance Fund (PDAF) scam, broke out during the Aquino administration. PDAF, or what is popularly known as «pork barrel», are lump-sum funds given to legislators to be used at their discretion to finance public infrastructure and development projects. Politicians have always been notorious for «pork-barrel» funding small-scale, often dubious projects, such as basketball courts and road reconstruction, to boost their popularity among voters.[12] However the PDAF scandal revealed the gravity of corruption behind closed doors.

The scandal came to light in July 2013, when one of the country’s leading newspapers, The Philippine Daily Inquirer, published a series of exposé articles about what the National Bureau of Investigation called the «mother of all scams». An estimated amount of 10 billion pesos (2.13 billion US dollars) «pork barrel» funds were stolen from the government.[13] The chief operator Janet Lim Napoles solicited «pork barrel» from legislators to fund what later transpired to be ghost projects and fictitious non-governmental organizations (NGOs). Her vast networks in government agencies and the Congress had allowed the projects to go unchallenged for the past ten years. Some of Napoles’s most influential accomplices included top legislators Juan Ponce Enrile, a nonagenarian who had been intermittently serving the government since the 1970s, Jinggoy Estrada, Joseph Estrada’s son, and Bong Revilla, a son of a former senator. After a series of deliberations on whether the Senate should probe into the case, the Senate Blue Ribbon Committee[14] finally began its investigation on 1 April 2014. The Supreme Court declared PDAF unconstitutional seven months later.

While the investigations took place, the Aquino administration continued to fight corruption. Early in 2014, it recovered a part of Ferdinand Marcos’ ill-gotten wealth and returned it to the national treasury. Aquino abolished six non-performing government-owned and controlled corporations to streamline and improve public services. A number of appointed officials were also charged with graft and corruption, including another Estrada, E.R. Ejercito, who was unseated after being found guilty of misuse of election funds.

In spite of the Aquino administration’s trumpeted accomplishments, it has also fallen victim to its own anti-corruption strategy. Following the PDAF scam, the public began to scrutinize Aquino’s own undisclosed and unaudited 220-billion-peso (4.7 billion US dollars) «pork barrel».[15] His administration was even accused of illegally spending public funds through his Disbursement Acceleration Program (DAP), a stimulus economic programme designed to efficiently allocate the budget through fund reassignment and «unprogrammed funds» spending. After a series of investigations and impeachment motions filed by the opposition and civil society groups, in July 2014, the Supreme Court ruled the DAP unconstitutional. However, the Aquino administration’s motion for reconsideration was partially granted in early 2015, leaving the DAP issue unresolved. This caused a deep rift between the executive and judiciary branches,[16] as well as Aquino and Department of Budget Management Secretary Florencio Abad, who was the co-executor of the DAP project.

Insofar as the PDAF scam was concerned, Napoles was indicted in April 2015 and sentenced to reclusión perpetua, or 40 years of imprisonment without parole, while her chief collaborators – senators Enrile, Estrada, and Revilla – were found guilty of plunder. These results were highlighted by Aquino as one of the achievements of his administration’s tuwid na daan (straight path) campaign. However, these four major players were down but not out, as shown by the fact that Revilla’s and Napoles’ bail petitions were denied in the first division of Sandiganbayan, the Philippines collegial appellate court. At the closing of the period under review, Napoles’ lawyers were contemplating an appeal to the Supreme Court.[17] She also attempted to seek refuge in the Catholic Church through the Catholic Bishops Conference of the CBCP. Her request was turned down on the basis of existing church law that does not allow the episcopal conference to become a guarantor of the accused.[18]

To the public’s surprise, Enrile was released from jail in August 2015, due to «humanitarian reasons». Not only that, but he has also returned as a senator and has recently been active in Senator Ferdinand Marcos Jr.’s vice-presidential bid campaign for 2016. The irony is clear: From being Ferdinand Marcos’ loyal defence minister, then a key figure in ousting the dictator, he is now looking into bringing back a Marcos into the executive branch. As for Aquino, when asked if it would be acceptable to grant the same pardon to Gloria Macapagal Arroyo, who is under hospital arrest, due to serious spine complications, his reply was negative.[19]

With such a mixed record, it is difficult to pass a positive judgment on Aquino’s anti-corruption campaign. His insistent allusion to Arroyo’s malefactions is gradually losing its magic in convincing the public that his administration is emphatically different. It is also unlikely for Aquino to escape DAP and PDAF allegations with ease. He is currently facing a fifth impeachment complaint for questionable spending.[20] Yet, Aquino appears undeterred by detractors and deaf to the fact that only three in ten Filipinos in 2014 still believed in his «straight path». [21] Aquino continues to vow that his government will weed out all sources of corruption.

2.2.   Economic development

According to recent research, the most compelling concern for the ordinary Filipino is the absence of significant upward social mobility, which requires the following policy priorities: (1) improving/increasing the pay of workers, (2) controlling inflation, and (3) fighting graft and corruption in the government.[22] Yet, beneath all the chaos within élite factions mentioned above, the Filipino public is finding it increasingly difficult to have faith in the government’s current efforts to improve social and economic conditions.

The Aquino administration formulated the Philippine Development Plan 2011-2016 to address these problems through «inclusive growth», which means extending economic benefits to the poorest and marginalized sectors. In late November 2015, the Philippine National Statistics Authority announced that the Philippines has the third fastest GDP growth of 6.4% in Asia, following China and Malaysia with GDP growths of 6.9% and 6.8%, respectively.[23] The government attributes the growth to its prudent fiscal management and political stability. The World Bank even described the Philippine’s economic transformation from being a «sick man in Asia» to being «Asia’s rising tiger».[24] In his two previous State of the Nation addresses, President Aquino stressed the administration’s economic accomplishments with commendable statistical data on increased foreign direct and domestic investments, employment opportunities, and manufacturing capabilities.[25]

Despite these accomplishments, poverty indicators have not dramatically changed since 2003.[26] In July 2015, prominent Filipino economist Cielito Habito observed that the Philippine economy witnessed a positive breakout in 2014 in three counts: prices, jobs, and income. However, he saw the recent economic slippages, particularly in the field of providing jobs and attracting foreign direct investment, as signs of the government losing the momentum for growth.[27] In fact, the IBON Foundation, a leading non-stock and non-profit organization, characterized the economy under Aquino as «worsening exclusivity».[28] The IBON Foundation report indicates that the Philippine unemployment rate of 7.0% is the worst in Asia. Job shortage and underemployment are major reasons why Filipinos, especially the most educated, decide to work abroad.[29] High commodity prices and low average income have diminished the ordinary individual’s purchasing power. At the same time, the lack of investment in the agricultural and other local industries also undermines the government’s efforts in attracting foreign direct investments for economic growth. While the latter only provides short-term and limited impact, investing in local industries, on the other hand, would yield long-term benefits, including providing sustainable livelihood to agricultural workforce.

The IBON Foundation also questions the quality of jobs the government boasts to have generated. Their report indicates that one-third of the total number of employed individuals are either self-employed or unpaid family workers, and therefore, increased employment rates do not necessarily mean improved quality of work conditions.[30] In addition, the wealth of the Philippines’ richest has grown by 250% since 2010.[31] Chinese Filipinos and mestizos mainly make up this socio-economic group who monopolizes the country’s major industries and applauds the government economic achievements. In short, the celebrated growth has been generally inclusive of the rich, yet highly exclusive of the poor.

To improve the Filipinos’ education and marketability, the Aquino government led an education reform programme in line with the United Nation’s Millennium Development Goals. Called the K to 12 Program, it seeks to improve the Filipino students’ skills and competency necessary for the job market. It also aims to elevate the Philippine education system to international standards.[32] The basic education curriculum will be brought up from the current 10-year to a 12-year pre-university education. Filipino students who have reached their senior year are given the choice to choose a track: academic, technical-vocational-livelihood, or sports and arts. After completing the requirements for a K to 12 degree, students will have the option to either work right after finishing secondary school or pursue a university degree. In any case, adding two more years in basic education is expected to give them a better chance for their pre-university education to be officially recognized abroad, both in university enrollment and professional employment. The two-pronged projected outcome of (1) holistic and competent students and (2) more job opportunities within and outside the country are expected to have a huge positive economic impact. The programme incremental implementation began in 2012 and expects completion in 2018.

However, the initial eagerness of the Filipino public in the K to 12 Program is transforming into cynicism.[33] Indeed, critics are wary of the paucity of resources allocated to implement such dramatic change in the education system. The planned additional two years in the pre-university curriculum pose a logistical nightmare for the government, which has been dealing with classroom and teacher shortages for a very long time. The situation is much worse in areas with problematic supplies of textbooks and learning materials.[34] The Catholic Bishops Conference of the Philippines (CBCP) is concerned about the possible increase in dropout rates and the negative impact on academic and non-academic personnel, who are likely to face unemployment in the process.[35] According to a report jointly issued by the Commission on Higher Education, the Department of Education, the Technical Education and Skills Development Authority, and the Department of Labor and Employment, the reduction in college enrolment may affect approximately 25,090 employees.[36] Classroom shortages in public high schools may also lead to a higher dropout rate. An estimated one million students entering senior high school are expected to leave school because they cannot afford to transfer to private institutions. The government created the Tertiary Transition Education Fund to be disbursed in 2016 in order to address these logistical problems.

On a more principled level, critics consider the K to 12 Program as «exploitation» and «abuse of power». Various mass protests called for the suspension of the programme’s implementation, if not altogether scrapping it. The government’s harshest critics come from the civil society’s left-wing organizations, which are worried that the programme may lead to further labour exploitation, especially among children and the youth. A number of public schools nationwide have played host to anti-K to 12 demonstrations, usually led by teachers, students, and parents. The Manila Science High School, one of the top public high schools in the country, filed a petition against the Aquino government to annul K to 12 to the Supreme Court on the grounds of «abuse of discretion».[37] Another group composed of university professors and academics, Alyansa ng mga Tagapagtanggol ng Wika («Defenders of the national language») or Tanggol Wika, also filed a case against the programme for deliberately undermining the Filipino language and native literature in favour of more «economically productive» courses.[38]

The programme’s unpopularity is largely due to the adverse short-term consequences caused by its implementation. In fact, a point has been reached where no spin on the part of the government can assuage the doubts and fears of a conspicuous part of the public. So far, there have been a total of six petitions to stop the K to 12 programme. The government, nevertheless, remains convinced that the long-term social and economic benefits would later overshadow the current and foreseeable setbacks.

Lastly, another key issue for Philippine economic policy under the Aquino administration is regional economic integration within the framework of the Association of Southeast Asian Nations (ASEAN). In principle, regional economic integration includes the following key goals: «(a) a single market and production base, (b) a highly competitive region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy»[39]. To a substantial extent, the relatively impressive economic performance of the country under the Aquino administration was driven by a variety of domestic and international factors, including the country’s commitment to be part of the ASEAN regional economic integration agenda.

Indeed, this ambitious region-wide economic integration plan is also matched by the Aquino administration’s relatively unprecedented economic governance measures that seek to bolster the country’s economic competitiveness and political preparedness for ASEAN integration. As one of the country’s most influential economists, Harvard-educated Bernardo Villegas assessed the Philippine’s current economic state in the following words: «Only an earthquake like in Nepal and several typhoons like Yolanda can disrupt the growth of the Philippine economy. This is because of the political reforms made by former President Cory Aquino up to the incumbent.»[40] In addition, Philippine Finance Secretary Cesar Purisima attributed the country’s remarkable economic performance to three factors: «First, transparency. People are being allowed to evaluate if changes are really happening. Two, rule of law and the responsiveness of the government. And others are inclusiveness, accountability and participation.»[41] In particular, the country’s top trade official Gregory L. Domingo highlighted landmark policy interventions in promoting micro, small, and medium enterprises (MSMEs) in bolstering the local economy. Considering the severe problem of heavy traffic in Metro Manila’s main roads, Domingo clarified that the Philippine government «do[es] invest in the right infrastructure», whereby the administration «tripled our [the] infrastructure budget from around 165 billion Philippine pesos in 2010 to 535 billion» in 2015.[42] Another key economic issue for the government was addressing the constitutional restrictions imposed on foreigners in terms of ownership of land. In particular, several local economists, including Gerardo Sicat, who was a former top economic adviser to the Philippine government. He was called for eliminating restrictions to foreign nationals in terms of land ownership, access to natural resources, and opportunity to invest in public infrastructure (current restriction in the 1987 Philippine Constitution limits foreigners ownership in these fields to 40% of the total value of the property in question).[43]

2.3.   Peace and conflict

Integrating the Muslims into a predominantly Christian state continues to be a multifaceted challenge for the Philippines. Muslims comprise approximately 5% of the country’s population, 58% of which are in the Autonomous Region of Muslim Mindanao (ARMM). Those who live in this region are collectively called «moros» (the Spanish word for «moors»), an identity that morphed from its derogatory Spanish colonial roots to its present self-identification function.[44] While the protracted armed conflict in ARMM is often depicted in religious and ethnic terms, it is also a form of resistance against the national government based in «imperial» Manila. Like their counterparts in other Southeast Asian states, the inhabitants of this region represent a group of people whose settlement in the archipelago predates colonization, which they have more or less continuously resisted for centuries. In fact, the «moros» have resisted Spanish, American, and Japanese occupations and have more or less uninterruptedly been fighting for a separate territory and identity from the centre since the Spaniards colonized the archipelago.

While the relationship between the Philippine state and the Muslims in Mindanao was relatively amicable in the 1920s, the rise of new intellectuals and counter-élites revived the demand for greater autonomy 50 years later. The Corregidor Jabidah massacre in 1968, when 28 Muslims were brutally murdered, and the Martial Law imposed in 1976 compounded the conflict between the government and the Muslims in the south. Internal ideological conflict in the Moro National Liberation Front (MNLF), whose struggle was originally based on the search for self-determination of peoples in the region, regardless of their religion, gave birth to a number of religious-based breakaway groups. The most notable among them are the Moro Islamic Liberation Front (MILF) and Abu Sayyaf, born in 1978 and 1991, respectively.[45] Because of such groups’ insurgent and violent methods, the Philippine government and the international community consider them threats to peace. The United Nations and the US classify Abu Sayyaf as a terrorist group with support from international terrorist network, al-Qa‘ida.[46]

Aside from this, the region is a magnet for criminal activities, such as kidnapping, murder, and ethnic violence. The New People’s Army, an armed communist rebel group, is known to be very active in the area. The long-standing armed conflicts result in the death and displacement of hundreds of thousands of local citizens. Economically, the ARMM is among the poorest regions in the country, with a poverty incidence rate of 48% in 2012.[47] The region contributes only 1.3% to the Philippine national economy, the lowest among 18 administrative regions.[48]

In other words, both history and socio-economic conditions exacerbated the already deep resentment that Muslims feel against the national government. The ceaseless armed clashes between separatist groups and the military are clearly manifestations of such problems.

Peace negotiations with the Muslims in ARMM have been taking place since the 1989 Tripoli Agreement, which granted partial autonomy to the region. Ultimately, these negotiations have not led to a solution of the ongoing conflict, both because of disagreements among faction groups within the Bangsamoro itself and the lack of consistency on the part of the national government.[49] For instance, when President Joseph Estrada declared an all-out-war against the MILF, his infamous roasted pork feast nearby a mosque caused further agitation, even among the moderate Muslims. The Arroyo administration has tried to revive the peace talks with the help of Malaysian representatives, yet the subsequent military attacks on the MILF camp caused the tragic unraveling of its efforts to settle with the Bangsamoro.

The years 2014-2015, however, saw what could be a turning point in the relationship between the central government and the secessionist groups in the southern Philippine island of Mindanao. The Aquino administration, together with Malaysian and Japanese leaders, has been working towards reaching a peace agreement with the MILF since 2012. The Framework Agreement of the Bangsamoro in 2012 and the Comprehensive Agreement on the Bangsamoro in 2014 were two milestones reached by the Aquino administration in dealing with the «moros». Moreover, at the closing of the period under review, the Congress was deliberating the passage of the Bangsamoro Basic Law (BBL), which promises to give further autonomy to the Bangsamoro. The law should guarantee the rights of self-governance and self-determination for the Bangsamoro, under the general supervision of the central government. To ensure greater and distinct autonomy, the law stipulates that the relationship between the Bangsamoro and the central government shall be considered «asymmetrical».[50]

While everything went relatively well,[51] skepticism girdles the BBL’s passage. In January 2015, the Mamasapano incident in the ARMM province Maguindanao shook what seemed to be a somewhat smooth transition for both parties. With an estimate of 250 casualties, including 44 Special Action Force (SAF) policemen and 18 MILF members, the incident became a litmus test for Aquino’s sincerity about the peace process. As the blame game between the President and SAF Commander Napeñas on who was responsible for the tragedy transpired,[52] the public’s opinion regarding the BBL’s efficacy as a solution to the conflict grew largely negative.[53] The Mamasapano clash raised serious doubts about the ability of a more autonomous Bangsamoro to address the precarious condition of Maguindanao. Significantly, the investigations that ensued became a reason to postpone the BBL deliberations in the Senate. Meanwhile, Aquino’s trust rating dropped from 59% in November 2014 to 38% four months after the incident.[54]

Besides the clash, it seems that the BBL has its own structural and internal problems. The bill has been pending for almost a year because of disagreements among lawmakers and between lawmakers and the Bangsamoro representatives. Whereas Philippine lawmakers assert the «unconstitutionality» of MILF’s demands for autonomy, MILF Chief Negotiator Mogaher Iqbal accused them of justifying their reluctance to devolve more power to the region because of their «very conservative interpretation of the Constitution».[55] The gridlock in the senate gave civil society groups, academics, the church, and the business sector the impetus to appeal for the passage of a fair Bangsamoro law. However, to echo Mindanao peace and conflict specialist Rizal Buendia, «The threat of national disintegration will continue until an appropriate institutional framework for political governance which can accommodate Mindanao’s social and ethnic diversity is ensconced.»[56]So long as the government commits itself to strategies similar to the past, a peace agreement is unlikely to take effect.

2.4. Democracy and elections

With the next general election scheduled for 9 May 2016, in the period under review, democracy and electoral issues have attracted a lot of attention. Accordingly, during the closing months of 2015, the media agencies were preoccupied with either generating or twisting information for public consumption. On the one hand, allegations to discredit candidacies, ranging from citizenship issues to corruption scandals, provided an incredible spectacle, bemusing the public opinion.[57] On the other hand, political realities seemed to dampen the usual Filipino hope for political salvation.

Like other leaders whose term is about to end, Aquino appears to have invested the last months of his mandate in creating legacies. These include the attempt at reducing the influence of dynasties or political clans in the government. Filipino kinship politics continues to survive through violence and rent-seeking behaviour.[58] The stronghold of the members of a limited number of important families on both national- and local-level politics breeds corruption and poverty in many areas.[59] Presently, 70% of the Philippine Congress members belong to dynasties, some of which have close ties with the economic élites.[60] Surnames like Aquino, Roxas, Osmeña, Marcos, and Cojuangco have occupied government seats since 1902. Even without focusing too much on surnames, patronage politics still plays a dominant role in the social, political, and economic spheres, affecting the integrity of elections and making difficult inclusive growth in the country.

As a legal safeguard against this abuse of power, the 1987 Constitution stipulates that «the State shall guarantee equal access to opportunities for public service, and prohibit political dynasties as may be defined by law».[61] Interestingly, several versions of the Anti-Dynasty law have been passed for over two decades to make the constitutional clause more specific, each without a hint of success.

During the period under review, the political scandal involving Vice President Jejomar Binay became a major reason for suddenly rekindling the urgency to approve a new and more stringent anti-dynasty bill. The Binays have been a dominant political clan in Makati, the country’s business and financial hub situated in central Metro Manila. Vice President Binay and his family members are facing corruption charges. His son, Jejomar Binay Jr. was recently dismissed from public office due to corrupt spending and dishonesty. Vice President Binay is also Aquino’s formidable political opponent, and he is one of the Presidential candidates for the upcoming 2016 national elections.

Whether Aquino is taking advantage of Binay’s unpleasant political standing or is seriously concerned because of the ill effects of dynastic politics, his decision to push the anti-dynasty bill earned him general approval. The bill, once passed, would limit the number of similar surnames in the government. Interestingly, Aquino himself is part of a long-standing Cojuangco-Aquino dynasty. His relatives are among the richest people in the Philippines. His uncle Eduardo «Danding» Cojuangco was both a former crony of Marcos and Corazon Aquino’s cousin. Should Aquino be successful in making the Anti-Dynasty Bill his political legacy, over 150 congressmen will be affected. Some of Aquino’s detractors have criticized the Anti-Dynasty bill as a toothless law aimed at glorifying Aquino’s presidency.

Indeed, the domestic political developments in the Philippines during the years 2014 and 2015 appear to be mixed but are still welcomed by the Filipino public – an attitude that is starkly different from the one towards the previous administration.

3. Foreign policy

As a former Spanish colony for more than 300 years and the first colony of the United States (US) in the first half of the 1900s, the Philippines has one of the most Western-oriented foreign policies in the Asia-Pacific region. The Philippines is a US long-standing military ally, whose relationship is based on the Mutual Defence Treaty (MDT), signed on 30 August 1951. In the East Asian region, the Philippines, Japan, and Thailand are the US’ only MDT allies. The MDT solidified US-Philippine bilateral relations right after Washington formally ended its colonial domination over the archipelago. During the postcolonial period, the Philippines remained one of the US’ most reliable allies in the region during the Cold War, as the archipelagic country functioned as a buffer state against what was then seen as the threat posed by the potential spread of communism from China to Southeast Asia. Even during the 1990s, after the end of the Cold War, the US-Philippine bilateral relations remained relatively cordial, despite the fact that the Filipino government, with the support of the Filipino public opinion, eventually decided to remove American military bases in Subic and Clark, then the largest of its kind in the world.[62]

In the post-9/11 period, the Philippines once again became a focal point of US foreign policy, when the Bush administration labelled the country as one of the key allies in the «war on terror» and branded the Southeast Asian region as the «second front» in such global military campaign. In practice, post-World War II foreign policy of the Philippine government is largely shaped by the national and local élites who are mostly sympathetic to the United States. In fact, these élites are strongly influenced by the rich American cultural heritage and prominent political institutions that remained after the colonization period,[63] making possible a process of enduring pro-American socialization of these élites, including the leaders of the country.[64]

It is important, however, to note several cardinal principles that govern Philippine foreign policy, as stated in the 1987 Philippine Constitution and other relevant laws. According to the 1987 Constitution, also known as the «Freedom Constitution», the state disregards war as a matter of national policy, enshrines international law as part and parcel of the national laws, and adheres to principles such as «peace, equality, and justice».[65] The Freedom Constitution also advocates for an «independent foreign policy», whereby principles such as «sovereignty, territorial integrity, national interest, and the right to self-determination» constitute some of the supposed key values of the government’s external relations.[66] In addition, the foreign service apparatus of the Philippine state is governed by the Department of Foreign Affairs, in accordance to the Republic Act No. 7157 or the «Philippine Foreign Service Act of 1991», which highlights three main goals for the execution of the country’s foreign policy: (1) national security, (2) economic security, and (3) the welfare of the Filipinos based abroad.

Considering the above overview of the governing laws pertaining to the Philippines’ foreign relations, this section on Philippine foreign policy and international relations during the years 2014 to 2015 is divided into two main thematic parts: (1) foreign relations with the United States and (2) the territorial disputes in the South China/West Philippine Sea amidst the rise of China as a regional power.

3.1. Foreign relations with the United States

During the term of US President Barack Obama, the US foreign policy apparently shifted towards a more Asia-oriented perspective, whereby the long-term goal was to shift a greater percentage of military resources from the Atlantic to the Pacific.[67] Many analysts believe that such a shift, at least from a rhetorical standpoint, represents Washington’s clear recognition that the epicenter of global economic and political transformation in the decades to come will be in the Asia-Pacific region. To the extent that the Philippines is one of the only three Mutual Defence Treaty allies of the US in the region, this shift in the US foreign policy has transformed the Philippine international role in ways that are qualitatively different from before. Whereas the post-9/11 US foreign policy of the Bush administration became evident in the Philippine government’s increased domestic counter-terror operations, thereby emphasizing domestic security, the Obama administration, particularly during Hillary Clinton’s tenure as Secretary of State, spearheaded an external security-oriented bilateral relation with the Philippines. This means, in policy terms, that the increased US militaristic assistance to the Aquino-led Philippine government was a response to the emerging territorial conflict in the South China Sea vis-à-vis the growing military power and political influence of China.

In view of such shifts in US foreign policy and the apparent transformations in the balance of power in the Asia-Pacific region, the Philippine and US governments have implemented several new landmark bilateral agreements and policies. Notably, on occasion of the two-day state visit of US President Barack Obama in Manila in April 2014, Philippine Defense Secretary Voltaire Gazmin and US Ambassador to the Philippines Philip Goldberg signed the Enhanced Defense Cooperation Agreement (EDCA), a 10-year defence arrangement that seeks to bolster American military presence in and assistance to the Philippines.[68] Indeed, this must be viewed against the background represented by the fact that some 25 years earlier, in the early 1990s, the Philippine government evicted American troops stationed in military bases in Luzon, northern Philippines. That was a change triggered by the global American military retrenchment strategy and followed by the US in the early post-Cold War period and by the shifts in the policy priorities of the newly democratizing Philippine government of the time. Considering such critical juncture in the 1990s, the EDCA was indeed a landmark agreement to the extent that it represented an opportunity for the US military forces to have relatively comprehensive access to Philippine military bases and facilities, in ways that were not evident in the 1990s. Specifically, the EDCA enables the US military to have access to at least eight military bases of the Philippine Armed Forces, two of which are located in a strategic position vis-à-vis the highly disputed South China Sea.[69] Apart from that, the goals of the EDCA are not only strictly military but aim to give «the United States greater flexibility to respond to threats and natural disasters in the region.» [70]

3.2.   The rise of China and territorial disputes

China’s rise as an influential global leader has posed immense geostrategic and political challenges to many countries in the Asia-Pacific region, especially the Philippines, which has maintained enduring and close bilateral ties with the United States.[71] One of these challenges that became prominent, especially in the period under review, is the South China Sea/West Philippine Sea (SCS) territorial dispute. China and the Philippines are two of several main claimants to several parts and territories within the SCS region. Although the SCS dispute has existed for several decades, China’s unprecedented political, military, and economic rise, coupled with its increasing assertiveness in putting forth its territorial claims, has greatly sharpened and made more dangerous the pre-existing situation. In contrast to Beijing’s militaristic and unilateral orientation, Manila has highlighted the need for public diplomacy and called for procedural international law to arbitrate amongst claimant countries. Consequently, President Aquino’s government initiated formal legal proceedings to the Permanent Court of Arbitration in The Hague in mid-2015. This initiative seeks to undermine China’s perceived unilateralism, disregard for international law, and increasing militaristic strategy in resolving the dispute.

To be sure, the Philippine public opinion has been increasingly concerned about the ongoing land reclamation activities and the ensuing diplomatic disputes over the SCS islands and reefs. In fact, according to the 2015 Pew Research Center survey, around 91% of the total number of respondents asked from the Philippines claimed that they were «very/somewhat concerned» about the territorial disputes between China and claimant countries in East Asia.[72] Indeed, this apparently overwhelming anxiety of the Filipino public over the current territorial disputes can be seen within the broader context of the US-China rivalry, in which the US, the status quo power, has been increasingly seen as being seriously challenged by China in terms of leadership over the Asia-Pacific region. In the same Pew Research Survey conducted in 2015, around 65% of the total number of respondents expressed serious scepticism over the probability that China «will/never replace» the US, while only 25% believed that China «will/has replaced» the US. Moreover, the 2014 Global Attitudes Survey of the Pew Research Center confirmed that the majority of the respondents from the Philippines viewed the US as the country’s «greatest ally», with China as «the greatest threat» – both findings correlated well with how the Aquino government conducted its foreign policy with regard to the major challenges posed by ongoing US-China rivalry.[73]

Essentially, the Aquino-led Philippine government implemented a predominantly US-centric foreign policy, which practically made its bilateral relations with Washington the centrepiece of the Philippine government’s foreign policy. While many smaller states in many parts of the world may continue to strategically hedge – or strategically engage with the status quo (US) and challenger powers (China) – the Philippine government chose to bolster its military ties and public diplomacy in support of continuing US leadership in the region. It is worth stressing that this decision has been taken in spite of the fact that «trade between the Philippines and China is not only stable, but also growing», whereby Philippine government statistics account for total trade amounting to US$ 14.6 billion in 2013 alone.[74] Hence, it appears that the Philippine government considers it strategically more relevant to place its bet on the continuation of US political and military leadership in the Asia-Pacific region rather than on the growing economic clout and military assertiveness of China. To be sure, during the Asia-Pacific Economic Cooperation (APEC) meeting held in Manila last November 2015, US President Obama urged the Chinese government to take «bold steps to lower tensions, including pledging to halt further reclamation, new construction and militarization of disputed areas in the South China Sea».[75] Although the US government does not hold any formal position on the territorial demands of various claimant countries, the Obama administration invoked freedom of navigation in the South China Sea region.[76] The Obama administration’s decision not to formally take a clear position in the territorial dispute suggests its attempt to balance two seemingly conflicting interests: American interests in bilateral cooperation with China on a wide range of global governance issues vis-à-vis America’s security commitments to the Philippines as a military ally.

4. Conclusion

This essay analytically examines some of the most prominent issues in Philippine domestic politics and foreign relations during the years 2014 to 2015. The goal herein is not to exhaustively examine the causes and consequences of the prominent socio-political problems that emerged during those years; instead, the aim is to highlight some of those issues in order to tease out how they could plausibly fit in the broader and long-term patterns of power relations within the Philippine state-society nexus.

Based on the illustrative empirical analysis in this essay, we tentatively argue that the issues we examined herein demonstrate two notable long-term patterns of power relations within the Philippine state-society nexus. First, in terms of domestic politics, the Philippine state persistently confronts enduring internal struggles amongst various political-economic élites, all of whom seek to maximize the promotion of their own interests, regardless of the agenda of the ruling presidential regime. Second, in terms of foreign relations, the Philippine state, to a large extent, conducts a US-centric foreign policy, despite the constitutional provision that guarantees a supposedly «independent» foreign policy strategy. Such patterns of power relations apparently are not unique to the Philippines; indeed, many states in the Global South are facing severe problems, both as far as internal conflict amongst élites (in many cases, leading to violent conflict) is concerned and in implementing a supposedly independent foreign policy, which, in reality, is still beholden to the interests of more powerful states. Questions about regime consolidation or democratic stability are quite crucial to many of these states, but perhaps a crucial starting point of our analysis is how such severe problems of consolidation are actually outcomes of historically constituted interactions between domestic and transnational factors.[77] Finally, the succession of presidential regimes has to be seen within the long-term and enduring patterns of continuity of elite contestation within the Philippine state-society nexus as well as the enduring and prominent role that the United States has in the construction of Philippine foreign policy.

This essay focuses on the mounting geopolitical tensions around the South China Sea so as to gauge Japan’s growing assertiveness in foreign and security policy there. It defines regional strategic interaction in 2015 along the lines of a «game of go» (known as go or igo in Japan, and as weiqi in China): China calmed the situation in the East China Sea in the face of Japan’s economic and military-diplomatic pushback, but it has refocused its energies to building massive constructions on disputed coral reefs and rocks in the South China Sea’s Spratly Islands. Key events of 2015 hinted at the insufficiently noted drivers behind Tokyo’s response to Chinese actions in the South China Sea. This study argues that the new US-Japan security guidelines and the Abe government’s security laws have sown the seeds for a progressive institutionalization of Japan’s higher military profile, because these norms granted the United States leverage vis-à-vis Japan.

Finally, the essay analyzes the state of Sino-Japanese relations throughout 2015 to find little-appreciated conciliatory overtures that nonetheless clashed with progressively heightened military and constabulary activities. In that spirit, it analyzes the 14 August Abe Statement and accompanying exegesis in order to stress the Janus-face quality to the Sino-Japanese cold peace.  In conclusion, the essay pits the logic of power politics against liberal theories of international relations to find that international economic initiatives in 2015 clearly favored strategic and geopolitical imperatives over economic considerations. The essay concludes with an assessment of regional stability, finding mounting turbulence in the short-to-medium term.

1. Introduction

The year under review witnessed the indisputable centrality of geopolitics in the East Asian landscape. As recounted in last year’s essay, China somewhat calmed down the situation in the East China Sea in the face of Japan’s economic and military-diplomatic pushback. Confronted with Japanese and US resolve over the Senkaku/Diaoyu Islands standoff, Beijing refocused its energies to building on coral reefs and rocks in the hotly disputed Spratly Islands, in the South China Sea.  But it did so while keeping Japan busy with aircraft and vessel incursions around the Senkaku Islands and through a newfound politico-economic synergy with Russia. Moreover, China started to eye the consolidation of its naval facilities in the Indian Ocean and beyond to secure its sea lanes.

In other words, strategic interactions started to resemble a «game of go» (known as go or igo in Japan, and as weiqi in China), where Xi Jinping’s China jostled for position on the regional chessboard to prevent encirclement and, if possible, to secure its primacy.[2] The South China Sea (SCS) became the core playground, and the many man-made islands there resembled go’s playing pieces, the «stones». While China was catching up with other claimants’ land-filling operations, the sheer quantity of its efforts risked turning those waters into a Chinese inland sea, as hinted by a Chinese navy commander’s controversial statement: «The South China Sea, as the name indicates, is a sea area that belongs to China».[3] In fact, with time China could eventually claim the entirety of the seas within the so-called Nine Dash Line – including those areas that overlap with the Exclusive Economic Zones (EEZs) of other littoral states.[4] Geographic misconceptions aside, the logic was straightforward: as China’s power grew, so did its desire to secure its immediate neighborhood and critical Sea Lanes of Communications (SLOCs). At the same time, its appetite to expand its maritime spheres of interest also grew. By July 2015, China reclaimed at least 8 square kilometers of new land at seven different locations. Within 18 months, Chinese man-made islands in the SCS dwarfed those built by other claimants by both size and scale.

In other words, China’s quest for territory, honor and status over disputed islands coincided with the 21st Century power transition and the broader strategic game in the East and South China Seas. And in 2015 Japan confronted a multipolar post-Cold War regional order premised not only on China’s staggering, if bumpy, ascendance to regional hegemony, but also on the relative decline of the US, whose commitment to its ally’s security cannot be taken for granted indefinitely. Indeed, China’s smaller neighbors, including Japan, advanced more assertively their maritime interests, but in a way reflective of their own insecurity; they advanced their claims also in light of the limited «window of opportunity» of the early 2000s, a period of flux where US military aegis and power projection remained unmatched by China’s military might, though increasingly deterred by its naval and military presence. In fact, China’s neighbors were sometimes the first to adopt a more proactive stance, but China behaved with a «reactive assertiveness».[5] For these reasons, the Senkaku/Diaoyu and Spratly Islands disputes functioned as cognitive transference of the broader undercurrents of regional power transition. Thus, China’s massive land-filling operations in the South China Sea will render its smaller neighbors helpless vis-à-vis a hegemonic China; if Beijing enforces its claims following a decade or so of growing economic and military leverage.

With an eye on the South China Sea grid, Beijing safeguarded its continental backyard through deepened partnerships and new economic initiatives. A region-wide dependence on oil imports from the Middle East and Africa gradually extended the go chessboard beyond the Western Pacific to include the Indian Ocean, where competition between India and China was intensifying. Yet, in 2015 Chinese military and coastguard forces were concentrated in the East and South China Seas, because Beijing’s assertiveness was informed by both diffuse irredentism and cool strategic thinking. Strategy-wise, Chinese analysts feared that the island barrier running north from Borneo to the Philippines, Taiwan and Japan restricted the People’s Liberation Army Navy (PLAN) and obstructed its access to the Pacific.[6] Thus, China needed to step up its naval presence within the so-called «first island chain» to better confront those key naval powers able to rein in China’s maritime advancement: the United States and Japan.[7] In this context, China continued its naval and aerial engagement in and above the East China Sea ‒ thus providing the opportunity to raise its tempo again in the future both to bolster the legal foundations of its claim over the Senkaku/Diaoyu Islands and to distract Tokyo from intervention elsewhere. As per the strategic logic of the game of go, China’s engagement in the East China Sea and its constabulary build-up reminded Japan of the risks of stretching out its naval presence to distant Southeast Asian waters.

After all, the SCS is of paramount importance to the global economy and to maritime powers such as Japan and China. Trade that flows through the SCS can be diverted to other waterways, like the Lombok or Australian Straits, without much loss; at the same time, China and Japan’s SLOCS are effectively indivisible, at least in the South China Sea and beyond. What threatens Japan’s SLOCS also threatens China’s. Moreover, in the aftermath of the nuclear disaster of 11 March 2011, Japan’s post-Fukushima energy security increasingly relied on imported natural combustibles such as oil; and 88% of Japan’s oil imports passed through the Strait of Malacca.[8] Yet, post-war Japan traditionally played a low key politico-military role in securing these SLOCs on the basis of two fundamental factors: the relative lack of concern among regional players about the nature of China’s ascent ‒ compounded by US military primacy and reliable security commitments, and Southeast Asian states’ deep-held suspicion of Japan’s military involvement. In 1994, late Singaporean strongman Lee Kuan Yew still held the belief that «allowing Japan to send its forces abroad is like giving liquor to an alcoholic».[9]

The regional interplay changed in the first decade of the 21st Century. Washington’s military resolve gradually waned due to the United States’ involvement in the quagmires of the Iraq and Afghanistan wars, while China ruffled the feathers of several Southeast Asian states through a newfound assertiveness. Beijing now aimed at securing its «core interests», which possibly included the whole South China Sea. China traditionally made use of this wording with reference to Taiwan, Tibet and Xinjiang, but Chinese officials started to apply it also to disputed territories in the East and South China Seas. By 2010, China began to widen the definition of the term: an ambiguous stance reiterated in private conversations with US officials was, possibly, becoming official government policy.[10] Thus, on November 3 2015, Minister of Defense Chang Wanquan became the highest ranking Chinese official to unequivocally refer to the SCS as China’s «core interest»; it was significant that he did so while meeting his US counterpart, possibly an indication that Chinese policymakers increasingly understood Washington’s resolve as a paper tiger.[11] Thus, with greater power came greater confidence, and the Chinese elite gradually gravitated in favor of abandoning Deng Xiaoping’s low-profile foreign policy strategy (tao guang yang hui).

Along with Chinese assertiveness and US fatigue, Premier Abe Shinzō’s quest for a strong Japan and Washington’s increased reliance on its regional ally for the preservation of the wobbling regional status quo drove Japan’s security renaissance. Thus, in early 2015 the Abe government agreed to a set of new security guidelines governing the bilateral alliance and rammed through the Diet the contentious security laws that fleshed out ways for Japan to exercise collective self-defense. Concretely, these laws lifted Japan’s restrictions over military support to friendly forces when the situation endangered Japanese security, as defined in the broad sense. As a consequence, by mid-2015 Japanese lawmakers started to sell the SCS as a vital sea lane mired by Chinese expansionist claims, as part of the rationale for the right for collective self-defense. Thus, Japan was ready to share the alliance burden and, if push came to shove, add its military might to the US-led deterrence mix in the SCS. While operations would be limited to non-combat roles, Japanese officials signaled to China that if it did not soften its growing assertiveness in the Spratlys, Japan’s military would go beyond its usual geographic scope of action. The Abe government demonstrated it was a keen player of the East Asian game of go.

Scholars have emphasized the Abe-centered ideological factors behind Japan’s proactive security posture.[12] Other authors, instead, have stressed continuity and altogether downplayed the implications of Abe’s security reforms.[13] Through an analysis of the momentous history of 2015, this essay argues that Abe’s success in endowing Japan with the right of collective self-defense planted the insufficiently noted institutional seeds that were already forcing Tokyo to a more decisive military profile. For that purpose, in addition to China’s assertiveness and Abe’s taste for power politics, the essay details the deepened leverage enjoyed by the United States over Japan’s low key military involvement in the SCS. In turn, Japan’s direct engagement in South China Sea issues called China’s tactical accommodation bluff against Japan, although the bilateral cold peace continued throughout the year under review.

In order to present a historical overview of 2015 through these lenses, the first section highlights the nature of the new US-Japan security guidelines and of Japan’s security laws. The section concludes by pointing at the resilience of Abe’s domestic political mandate, widespread demonstrations notwithstanding. The second section gauges the timid Sino-Japanese political overtures witnessed in 2015 against the backdrop of a region increasingly defined by the logic of power politics. A thorough analysis of the government-backed 14 August Abe Statement to commemorate the end of World War II highlights the Janus-like quality of the Sino-Japanese cold peace, which is also reflected on the Chinese side; the Statement testified to a working-level political agreement to move bilateral relations forward, but its language signaled resolve against what Tokyo understood to be a revisionist China bent on asserting its regional dominance. Indeed, the major international economic initiatives finalized by Beijing, Tokyo and Washington in 2015 testified to an ongoing geopolitical rivalry between China and the two major regional players. In light of these events, the essay concludes with an assessment of the prospects for regional stability in the medium term.

2. Deepening the US-Japan alliance: Mr. Abe goes to Washington

On April 26 Abe Shinzō made a historical week-long trip to the United States. His state visit to Washington D.C. was marked by initiatives of relevance for the future of Asia-Pacific security. Fifty-five years after Prime Minister Kishi Nobusuke’s tortuous ratification of the US-Japan Treaty of Mutual Cooperation and Security, Kishi’s grandson undersigned new wedding vows with his American counterpart. This was a necessary step to allow Japan to play a bigger military role – an explicit component of Abe’s security agenda. In addition, the Japanese and United States governments agreed to tame an assertive China by taking a more dynamic military stance. In that spirit, deeper security ties and interoperability with Washington and like-minded maritime states in the Asia-Pacific would have increased the coercive tools at Tokyo’s disposal vis-à-vis Beijing. Thus, on the occasion of the Security Treaty’s Emerald anniversary, the US and Japan agreed to new security guidelines, an addendum to the new Security Treaty that altogether avoided a divisive ratification process.

The new guidelines fleshed out the two allies’ new responsibilities: a more coordinated joint command, interoperability and modernization of their respective armed forces, with the possible inclusion of other US allies, such as Australia. Strengthened by Abe’s security reforms and the July 2014 constitutional reinterpretation that endowed Japan with the right of collective self-defense, Tokyo would be on the frontline of its territorial defense and assume responsibility for logistical and military support to US and friendly forces on a global level. At the same time, these activities were limited to non-combat operations and, in all likelihood, to the East Asian region. Japan’s greater contribution to regional security would have nonetheless upgraded the US-Japan alliance to a more equitable one. China was the target of these new nuptial vows.

Indeed, diplomatic propriety mandated the two governments to reiterate that the guidelines did not aim at a specific target country. But China was the elephant in the room that was responsible for the camaraderie between the Obama-Abe odd couple. In fact, Obama and Abe asserted that «State actions which tended to undermine respect for sovereignty and territorial integrity by attempting to unilaterally change the status quo by force or coercion, would pose challenges to the international order».[14] In a similar way, Abe’s historic speech to a joint session of the US Congress ‒ «Toward an alliance of hope» ‒ never actually used  the «C word», but implicitly identified China through the clear enumeration of the alliance’s aims: peaceful resolution of international disputes, respect of international law, democracy, human rights and the like.[15] Subsequently, Abe’s 2015 visit to the United States signaled to Beijing an unwavering, newfound synergy between Tokyo and Washington.

As recounted in last year’s essay, the right of collective self-defense would  be limited to aiding friendly countries under attack,  when said-attack threatens «Japan’s survival and poses a clear danger to fundamentally overturn people’s right to life, liberty and pursuit of happiness (sic)».[16] Many Japan security watchers ignored this cumbersome definition under the deep-held belief that the fundamentals of Japanese security will be constant: Tokyo would engage in military operations only when its survival is in peril. But this is not exactly the case. While Japan would likely be involved in non-military operations, the deployment of its armed forces could well go beyond the survival of physical persons to include the safeguard of energy supplies and national assets when these pose a «clear danger» to Japan. This interpretation is key to understanding the significance of Abe’s security bills and was the necessary prelude to Japan’s more active involvement in the SCS. At any rate, even a restrictive interpretation of the new legislation could allow action in the South China Sea: after all, the Sea’s Hainan Island hosts a major Chinese submarine base, which includes vessels operating around Japan. That and the Japanese government’s growing insistence on the menace of a Chinese domination of the SCS implies that Chinese actions there can easily be interpreted as imperiling Japanese physical security.

2.1.   Japan’s mounting interest in the South China Sea and its logic

It is telling that in 2015 Tokyo signaled with greater intensity its active interest in balancing China’s growing clout in the South China Sea through non-combat military operations. By that summer, the Japanese media slowly gravitated towards alarmed denunciations of China’s construction of artificial islands. In the author’s view the news media echoed the government’s insistence and played a secondary role in shaping the domestic discourse. See, for instance, Newsweek Japan’s cover story: «China’s well-thought plan to seize the South China Sea» with its cover drawn by a famous Chinese cartoonist dissident, who fled to Japan.[17] Moreover, a search in the archives of the Japanese Diet’s deliberations points at lawmakers’ increased sense of urgency on the matter, in particular from spring 2015 onwards, possibly in connection with the deliberations over the security bills.

Finally, the annual Defense White Paper testified to Japan’s heightened alarm: «China continues to act in an assertive manner, including coercive attempts at changing the status quo, and is poised to fulfill its unilateral demands without compromise».[18] The 2015 White Paper included reference to «[China’s] rapid and large-scale land reclamation work in seven features in parts of  the Spratly Islands» and, at the insistence of conservative LDP lawmakers, it included aerial photographs of China’s sand-filling activities over the Johnson South Reef and the Subi Reef.[19] Japanese news somewhat echoed the alarmism insisted upon by the political elite,[20] but so did bureaucratic agencies: the Japanese Defense Ministry had already provided a graphic picture of a South China Sea dominated by China, with red-colored infographics that pointed at a «China menace».[21] It was not a coincidence that these publicity activities coincided with the Diet passage of the embattled Security Bills and the new US-Japan security guidelines, but China’s non-stop land-filling operations there contributed to the sense of danger. At any rate, the Abe government killed three birds with one stone: it reassured Washington of Japan’s newfound proactivity; it signaled resolve to Beijing; and it heightened alarm among the general public to facilitate passage of bold security reforms.[22]

In all likelihood China’s hawkish foreign policy actors ‒ and they likely included the ever-more powerful Xi Jinping (on Xi’s accommodating comments towards Japan vis-à-vis the propaganda department’s line see sections below) ‒ aimed at realizing the long-term vision of turning the South China Sea into an inland basin. The sheer number and progressive militarization of the artificial islands would have convinced China’s smaller neighbors through fait accompli of its regional primacy; together with its growing asymmetric warfare capabilities, these would have deterred the US from meddling in China’s immediate neighborhood. That is, Beijing was taking concrete steps to secure its own coastline and beyond, to enact a 21st Century, Chinese version of the Monroe Doctrine. Yet, there was a key difference between contemporary East Asia and 19th Century America: China’s neighbors were no «banana republics», or powerless client states of the regional hegemonic power. Moreover, the United States remained an engaged resident power: it committed its military might to the region and also bolstered the military capacity of smaller states to preserve a favorable regional multi-polarity, as demonstrated by Japan’s case. In that sense, the SCS stormy waters became ever more stormy, thanks to mounting waves of Sino-US strategic rivalry in 2015. In late October, the Obama administration’s decision to institutionalize «Freedom of Navigation» operations within the waters of China’s man-made islands in the Spratlys testified to testy relations between Beijing and Washington.

Indeed, Tokyo borrowed Washington’s language register to call for «Freedom of Navigation» (FON) operations. Accordingly, the United States would start sending naval forces within the 12 nautical miles of disputed ‒but progressively militarized ‒ rocks and reefs, to prove these were not islands. Washington used its military might to balance Chinese assertiveness and to make a point: the man-made «islands» were not entitled to broad territorial waters and an Exclusive Economic Zone. Instead, Japanese options probably entailed surveillance operations over the open seas around the disputed Spratly Islands to aid Washington and signal military resolve to China.[23] Thus, Tokyo’s bolder and broader security profile echoed a belated, but somewhat less conciliatory US posture and reflected the newfound clout of the Department of Defense headed by Ashton Carter. Back in May 2015 Washington allowed, for the very first time, CNN cameras on board a Navy surveillance aircraft to graphically display China’s island-building in the SCS. That is, the US government placed a bright spotlight on the likely militarization of China’s artificial islands; the video, which included enraged calls by PLA officials to drive away the US spy plane, signaled US commitment there.[24] Through its ambassador in Washington, China retorted with its own set of velvet accusations on several media outlets and a popular CNN talk-show. Here, Ambassador Cui Tiankai stated: «I wish the US would really do something to lower the temperature, to reduce the tensions there. So I hope people in the US will refrain from making all the coercive statements, will refrain from making all the coercive actions there».[25] In late October, Washington started, if cautiously, its «Freedom of Navigation» operations over reefs under Chinese control.[26]

As mentioned earlier, the timing of Washington’s emboldened resolve against Beijing suggests that the new US-Japan security guidelines and Abe’s security laws ‒ unorthodoxly promised ahead of time to a joint US Congress, and rammed through the Japanese Diet in the summer of 2015 ‒ were key pieces in the regional game of go. The subtle threat of Japan’s involvement in the SCS was an additional stick to deter China from mounting the escalation ladder vis-à-vis Washington, for instance through further militarization of the islands. Experts warned US policymakers about expectation gaps on Japanese commitment to alliance burden-sharing and discounted a major shift in Japan’s involvement in the SCS beyond capacity-building. However, the Japanese government was building momentum for direct action, possibly entailing surveillance operations. Japan’s higher military profile was not just an index of Chinese assertiveness but resulted from a mix of other factors: first, Abe’s idiosyncratic perception of Japan as a Great Power; second, Abe’s willingness to use military tools in order to strategically counter-balance China’s assertiveness more forcefully; third, Tokyo’s willingness to deepen military cooperation with strategic players in a scenario of common concern, China’s undisputed regional hegemony. Thus, as recounted in previous essays, Abe Shinzō’s long-term aim for Japan was the building of a coalition of China-balancing naval powers. Finally, and most importantly, Washington saluted and prompted Tokyo’s increasingly assertive signals and actions in the SCS. This was evident, for example, by the timing of the alliance’s new security guidelines: Tokyo and Washington controversially decided to sign the guidelines before the passage of the Japanese security bills. They did so to send a strong signal to Beijing.

Interestingly, analysts failed to notice Washington’s newfound leverage over Tokyo’s military posture which was embedded in the new security guidelines. Notably absent from the guidelines was any specific action over the islands disputed between Japan and China. Senior US officials and President Obama himself made it clear that the Senkaku/Diaoyu Islands fell within the scope of the US-Japan treaty of mutual cooperation and security, by virtue of Japanese «administration» of the islands, but the US did not take sides on the territorial dispute and intended not to provoke other claimants, first and foremost China. As noted elsewhere, Washington «is likely to oppose the inclusion of specific guidelines over the islands in order to avoid entrapment concerns and to gain leverage over Japanese actions in dealing with the territorial issue».[27] I would push this reasoning a step further and argue that the US sought to gain leverage not only on Japan’s actions in the East China Sea, but on Japan’s contribution to alliance burden-sharing in the 2015 «upgrade» to the US-Japan Mutual Security Treaty: the guidelines lacked specifications over the Senkaku/Diaoyu Islands and ‒ importantly and unappreciated ‒ on what qualifies and what does not as a «grey zone» scenario (i.e. Chinese coercive behavior that doesn’t constitute outright aggression).  In short, by feeding Japan’s insecurity Washington denied Japan leverage whilst gaining leverage itself in theaters beyond the Senkaku/Diaoyu. A clear example of the working of this logic is provided by the strategic ambiguity embedded in the Australia, New Zealand, United States Security Treaty (ANZUS), where Article IV avoids spelling out US military commitment to rescue its allies in case of a contingency. Such a lack of specificity has nurtured Canberra’s fears of abandonment and, in light of such, an incredibly consistent commitment to all major US military operations since the inception of ANZUS in 1951. It is worth noting that Australia has wholeheartedly committed blood and treasure to its partnership with the US, even when said military operations were incredibly costly, if not altogether hazardous, to its own  national security.[28]  The same logic has also applied to Italy in instances such as its military involvement in Iraq following the US-led invasion in 2003.[29] Thus, Japan signaled its resolution to put a halt to Chinese unilateral actions in the South China Sea ‒ through joint military exercises near those waters, low key surveillance operations, and a more assertive language register ‒ to pay the increasingly expensive insurance premiums for securing US extended deterrence.

Certainly the Japanese government’s determination to showcase military preparedness by engaging in non-combat activities away from the ECS was also calculated to increase Japan’s appeal as a security partner to regional players other than the United States. After all, Tokyo was adjusting its military posture to the harsh realities of a markedly more multipolar regional environment. It helped that an increasing number of China’s maritime neighbors in the South China Sea welcomed Japanese proactive behavior, but Tokyo’s effective counter-balance would have functioned especially with major Indo-Pacific players: the US, Australia, India and, possibly, Indonesia.  At the same time, the only external partner capable of credible deterrence against Chinese assertiveness in the East China Seas remained the United States. Its unmatched military capabilities over the safeguard of Japan’s security provided leverage to cajole Tokyo into accepting an increased share of the burden of the alliance in the South China Sea. For these reasons, the relative vagueness of US security commitments inspired its dependent allies, such as Japan, to go «above and beyond» of their own accord – that is, they proactively tried to prove their usefulness to Washington, and Washington facilitated such proactivity through vague security commitments.

For instance, evidence shows that the Americans asked for support in the SCS in unmistakable terms during a December 2014 meeting taking place in the Pentagon between then US Chief of Naval Operations, Admiral Scott Swift, and the Japanese Chief of Staff, Admiral Kawano Katsutoshi. Ministry of Defense (MOD) sources leaked the minutes of this meeting to the feisty Japanese Communist Party in the summer of 2015, but the news was interestingly given very small publicity; yet, the MOD confirmed the leakage and Swift’s requests testify to the afore-mentioned dynamics: «India is making a variety of port calls starting with Vietnam, on occasion of military exercises in the South China Sea. Ought Japan not make similar strategic port calls? Ought Japan not send a message through port calls also in Singapore and Kuala Lumpur?»[30] Would Japan easily concede to pressure from the US? An anonymous Japanese Ministry of Defense official confirmed Japan’s receptiveness when he asked, rhetorically: «Ought Japan not support the United States even by stretching its forces down in the South China Sea, in exchange for American support in the East China Sea?»[31] By October 2015, Japanese military planners confirmed a Vietnam port call scheduled for the next year.[32]

Interviews with US and Japanese policymakers implicitly unveiled the Realist quality and US expectations behind the deepened bilateral entente. Ambassador Richard Armitage praised the historic importance of Abe’s security reforms and highlighted the possibility that the right to collective self-defense would entail Japan’s future involvement in US wars, «but as it is quite clear, the Japanese will have to go through the Diet to get Diet permission».[33] At the same time, one of Abe’s advisors accepted arguments that stressed Japanese dependence on the United States. Asked about Japanese policymakers’ increased reliance on Washington for military deterrence and intelligence as well as Japan’s outright psychological dependence on the US, he agreed on the assessment, but discounted the risks of entrapment in US conflicts because of Washington’s post-Iraqi syndrome fatigue over military interventions abroad.[34] The Obama White House’s caution over Chinese activities in the South China Sea and elsewhere validates this argument, but an emboldened new US president could drag Japan into a military confrontation.

Thus, Japan’s words and eventual military deeds around the South China Sea were not necessarily in Tokyo’s own national interest. They came at the cost of further alienating China and ran the risk of embroiling Japan in a US-China confrontation. Yet, that China responded to Japan’s indication that it might become involved with an accusatory rebuttal showed that Beijing had taken a tactical decision to calm the situation in the East China Sea, while at the same time appeasing a more external-oriented Japan. Following a series of declarations by Japanese Navy officials, China responded by calling for Japan to «put an immediate end to the hyping up of the South China Sea issue [to] genuinely maintain the momentum of improving bilateral relations».[35] Japan’s signaling of military resolve in the area called Beijing’s tactical-accommodation bluff vis-à-vis Tokyo.

In light of these developments China continued to exert a degree of pressure over the Senkaku/Diaoyu Islands, to which it began to send vessels on a more regular basis. A cursory look at the date of the incursions within the Japan-administered islands revealed that Chinese constabulary forces routinely entered the Senkaku waters every ten days.[36] But Beijing was always ready to up the tempo further, if needed. By the end of 2015, the East China Sea witnessed a new round of bilateral tensions, partly in connection with Japan’s growing involvement in the South China Sea.[37] The game of chicken over the Senkaku/Diaoyu Islands clearly developed into a game of go in the broader East Asian chessboard.

2.2. Japan’s domestic politics and the limits to Tokyo’s proactive posture[38]

Yet, Japan’s insular public opinion remained Abe’s Achilles’ Heel, because it prevented him from signaling credible Japanese deterrence against Chinese actions in the South China Sea. While the Abe administration progressively cemented Japan’s security stance, Japanese citizens still prioritized economic performance above any other policy issue. Moreover, Japanese voters were decidedly allergic to Abe’s security-oriented legislation. A variety of public opinion polls and well-thought arguments demonstrated that Japan still abided by deeply held norms of anti-militarism, in stark comparison with mounting Chinese nationalism.[39] If push came to shove in 2015, 71% of Chinese were reportedly willing to fight for their country, as compared with only 11% of Japanese: 5% fewer than 2010 and the world’s lowest percentage.[40] Moreover, a 10% decrease in the number of applicants to the Japanese Self-Defense Forces and the marked increase of Defense University graduates refusing to enter into service, most likely resulted from increased sensibility to risk.[41] But was this risk only of China’s making? Evidence shows that Japanese voters disapproved of Abe’s 2013 visit to the Yasukuni Shrine, both in itself and also for the effect it had on stoking tensions with its neighbors. Accordingly, these statistics imply that even if Japan’s impressions of China had reached rock bottom,[42] they   neither translated into bellicose popular enmity which would have allowed swift passage of the security laws, nor did they prop up domestic support for the Abe government. Quite the opposite.

Thus, it would be misleading to say that the Abe administration was solely concerned with using the China danger during the fiercely debated Diet deliberations. Abe needed to dispel citizens’ concerns about his hawkish reputation and, to that end, the government reiterated through words and deeds that he was committed to «peace diplomacy» (heiwa gaikō) as the primary means of solving international disputes. Moreover, Abe capitalized on foreign endorsements to his security agenda in order to appeal to an insular public opinion. It referenced these very many endorsements ahead of the Diet deliberations over the security bills, including a major TV appearance in July.[43]

Abe’s push met vocal domestic resistance, which included street demonstrations around the Diet building. Public opinion polls dipped to a three-year low, but Abe was still able to renovate his mandate as LDP President in September 2015. Japanese citizens were also distrustful of the opposition parties, which were still unable to arrange a united front against the LDP-New Komeito majority. Abe wisely toned down his revisionist colors to cater to the sensibilities of a moderate Japanese public opinion: he did not hollow out the 1993 Kono and 1995 Murayama Statements, as many commentators feared. In fact, wording in the August 14 Abe Statement hinted at a bilateral Sino-Japanese effort to resume working-level relations. In addition, Abe sought a degree of stability in Sino-Japanese relations in order to convince domestic public opinion of his pragmatism.

In evidence of the success of Abe’s strategies and of the lack of political alternatives to his rule, two months following the contentious passage of the poorly explained security laws, the Abe government recovered public support above the 50% threshold. Domestic politics in 2015 testified to the relative stability of the Abe administration, but Japanese aversion to a more assertive security posture would have likely permitted only limited engagement in the South China Sea.

3. The Sino-Japanese truce: toning down bilateral acrimony

But how did Japan and China achieve a very timid thaw in political relations in 2015? As recounted in last year’s essay, the vicious cycle of recrimination which the two governments initiated in September 2012 gained new heights in 2014. The Chinese propaganda apparatus had insisted on the so-called «history issue» as a mirror of Japan’s «revisionist» and «militaristic» behavior that acted in defiance of «the world order created after the victorious war against fascism». Illustrating the logic of the «propaganda dilemma», according to which both the Abe and Xi Jinping administrations refurbished the two states’ propaganda machines to secure their respective self-righteous narratives, Tokyo responded in full force to Chinese attacks. [44] On the occasion of Abe’s historic visit to the US, Tokyo staged a highly symbolic gesture of bilateral reconciliation between two war veterans during his speech to a Joint Congress.[45] The message resonated with Abe’s insistence on a «forward-oriented» outlook that stressed post-war Japan’s constructive role in international society and its «proactive contribution to peace», but the unspoken aim was to neutralize Beijing’s (and Seoul’s) politicized criticisms of Japan’s historical revisionism and showcase to international and domestic audiences that the «international community» was with Abe.

Following Abe’s successful state visit to Washington D.C., MOFA released an illuminating video titled «Communication and Reconciliation in the Post War Era», available in Japanese and several foreign languages: it stressed how the US, Australia, the Philippines and ASEAN nations have moved past the war legacy to the degree that «enemies that have fought each-other so fiercely have become friends bonded in spirit», an explicit reference to Abe’s speech to the US Congress.[46] Within the above-mentioned context, the documentary’s concomitant focus on Tokyo’s contribution to China and South Korea’s economic development highlighted Japan’s higher moral ground and, not by chance, the documentary showed footage of the Japan-China Friendship Hospital. This was a facility built thanks to Japanese Official Development Assistance (ODA) that Chinese managers had recently rechristened as the China-Japan Hospital.[47]

Heated international crossfire throughout 2015 confirmed the resilience of the Sino-Japanese «propaganda dilemma». The continued exchange of accusations, for instance the inclusion of the Nanjing Massacre documents to the UNESCO Memory of the World Register, implied that the shallow détente resembled more of a political truce.[48] Yet, the underlying structural factor behind the international and domestic «propaganda wars» was the bilateral strategic mistrust at a time of power transition. In fact, China’s state-led media outlets insisted on presenting a Japan that had turned into a source of instability following the passage of its security laws. For that purpose, Chinese media availed themselves of distorted and fabricated testimonies of foreign experts. Two examples help illuminate this aspect. The first is a series of alleged statements by Professor Thomas U. Berger of Boston University carried by state-led news agency Xinhua: «Japan has mostly apologized to South Korea and South-East Asian countries, but no proper official apology was issued to China. I only found mentions of China in speeches, and none of them have for main purpose to give (sic) a genuine apology, mentioning the massacres, rapes, plunder, sexual slavery and biological experiment on live humans. The emperor has never apologized to China».[49] Yet, a request for the academic’s reaction revealed the scholar’s astonishment: «I was never interviewed for Xinhua and I said none of these things! This is absolutely extraordinary»![50]A similar episode involved Dr. Alessio Patalano of King’s College London, whose recorded comments on the significance of the 1945 Potsdam Declaration were later edited to imply that Japanese leaders were «turning back on their earlier promises (to forego force as a tool to solve international disputes)», contrary to  the interviewee’s intended message.[51] In a similar fashion, on the anniversary of the Marco Polo Bridge incident, which marked the beginning of the Second Sino-Japanese War, Xinhua inaugurated a series of special websites devoted to the history issue; the website commemorating the 70th Anniversary of Victory of the Chinese People’s Resistance against Japanese Aggression and World Anti-Fascist War had sleek sections in foreign languages. Interestingly, however, its Chinese-language equivalent was somewhat sanitized.

Nonetheless, Japanese news media reports failed adequately to recognize that official Chinese-language news media had slightly toned down the propaganda offensive to pave the way for the 2015 shallow détente. While indulging in an examination of Japanese wartime atrocities, China’s propaganda apparatus shifted its focus away from the whole of Japan to focus, instead, on Abe and right-wing politicians as the loci of Japan’s supposed denial over its brutal historical legacy.[52] Strengthened by his new-found domestic clout, in December 2014 Xi Jinping set the language register for the year ahead. His speech on the occasion of the newly-inaugurated Nanking Massacre Memorial highlighted the leitmotifs of the Sino-Japanese «propaganda wars», but with a more nuanced language register that was aimed at «setting aside hatred and not allowing the minority who led Japan to war affect current relations». The speech’s strongest passage endorsed the idea of the event’s remembrance but remained vague, and limited the scope of Japan’s responsibility: «Forgetting history is a betrayal, and denying a crime is to repeat a crime. Just because a handful of militarists in a particular nation set off an invasion; war is not a reason for us to hate this nation…but people shouldn’t at any time forget the brutalities and crimes committed by the invaders».[53] In fact, Xi’s tone during the Nanjing massacre memorial had markedly softened from his earlier remarks on the same subject.[54] In December 2014, China’s paramount leader emphasized his political will to partially mend political ties with Tokyo. The event confirmed the dynamics leading to the frosty Abe-Xi summit choreographed during the November 2014 APEC Summit. Indicative of the somewhat positive trend, Xi decided not to attend the 2015 Nanjing massacre celebrations.

Thus, on 22 April 2015, the more confident Abe-Xi handshake and bilateral summit on the occasion of the sixtieth anniversary of the Asian-African Conference in Bandung presaged the primacy of Chinese political and economic imperatives over historical sensitivities. In fact, senior Japanese officials revealed that China insisted on holding the meeting.[55] The rationale had been unveiled in the previous years’ analyses. First, the Abe government went for the Chinese Communist Party’s economic jugular from the very moment it initiated its expansionist monetary and fiscal policies under the rubric of Abenomics. These policies not only shielded Japan from Chinese economic retaliation, but presented a subtle «beggar-thy-neighbor» edge that boosted, if temporarily, Japanese domestic consumption and exports. [56] Moreover, the higher political risks and economic costs of doing business in China contributed to push investment away from the mainland; the Abe government’s frenetic Asian diplomacy certainly helped to diversify Japan’s Foreign Direct Investments (FDI) and to spearhead the redirection of Japanese businessmen’s investment away from mainland China. To be sure a Chinese economic slowdown greatly impacted on Japan too, as testified by a new technical recession in late 2015, but China’s intensifying woes deeply worried Chinese officials, who started to publicly acknowledge the risks to social, hence political, stability.[57] Noted US China scholars also started to ring alarm bells in light of the recent economic and political undercurrents there.[58] These dynamics constituted the undercurrents which prompted Premier Li Keqiang’s love calls to the Japanese business community following the successful summit with Abe on the fringes of the South Korea-Japan-China trilateral of 1 November 2015.[59] Second, China needed to buoy an increasingly anxious and militarily assertive neighbor.[60] Finally, as per the logic of the East Asian game of go, China pursued its tactical accommodation with Japan to refocus its energies on the South China Sea in the belief that Japan would remain  quiet.

And so, in May 2015 at a «China-Japan Friendship Exchange Meeting» held at Tiananmen Square’s Great Hall of the People, Xi Jinping made a surprise appearance to greet with considerable warmth, a 3,000-men strong delegation of private Japanese visitors with even more explicit conciliatory messages. Three years after his ascendance to power, Xi made his first, elaborate, official pronouncement on Sino-Japanese relations and China’s Japan policy. He aimed at reassuring Japan and preparing the domestic groundwork for a more timid détente when he recalled «the Chinese people’s profound generosity and infinite kindheartedness; in the immediate aftermath of the Anti-Japanese War of Resistance we have ‘repaid hatred with kindness’ (yi de bao yuan) and allowed the repatriation of over one million Japanese resident in China, [because] they were also victims of that war».[61] In other words, seventy years after the war Xi was insisting on the so-called «military-civilian dualism» (ni bunron) which was first expounded by Nationalist Party leader Chiang Kai-Shek, who held «the Japanese military clique as the enemy and not the Japanese people».[62] The speech signalled the willingness at the very top to raise public awareness of the importance of China-Japan relations, stress the positive aspects of Japan and encourage cultural exchanges and people-to-people contact. But the transcribed speech also hinted at Xi’s desire to turn the page, an intent made evident by repeated wording in favour of a forward-oriented outlook for Sino-Japanese relations. One passage embeds this positive message amidst calls for a proper understanding of history and it is worth citing in full: «China and Japan should, in the spirit of taking history as a mirror and looking into the future, jointly promote peaceful development, jointly boost friendship from generation to generation, and jointly create a good future for the development of both countries, so as to make contributions to peace in Asia and the world at large».[63] Xi’s personalized love calls to Japan also cleverly minimized the legacy of Imperial Japan in the wider context of hundreds of years of peaceful and fruitful interaction, rather than the 19th and early 20th Century’s unfortunate past. He emphasized Sino-Japanese exchanges throughout the ages: during the Tang era (618–907 C.E.), the 17th Century, the post-war period and the future. The Chinese government’s instrumentalist and selective use of Sino-Japanese history – trumpeted in this particular instance as a history of peace and prosperity – was evidence of Beijing’s need for a more conciliatory policy vis-à-vis Tokyo. The reprint of most of Xi’s «important speech» as the top news item of the Chinese Communist Party’s official mouthpiece, the Renmin Ribao, was indicative of Xi’s firmer political base back home.

At the same time, the Chinese media and propaganda apparatus was in full swing, making a great fanfare commemorating the 70th anniversary from the end of the war. Japanese reaction to the same was chilly and reflected the broader international and domestic structural problems rocking recent Sino-Japanese relations. As pointed out in last year’s essay, Japan’s domestic media came to stress the negative side of China’s words and actions, reflecting both governmental and popular distrust towards Japan’s giant neighbor. In 2015 the slow media reaction to Beijing’s more confident fence-mending overtures betrayed the lopsided nature of news reporting on all things Chinese. A clear instance was the widespread failure fully to appreciate Xi’s marked change of his language register in favor of Sino-Japanese friendship. In fact, most Japanese media tended to emphasize Xi’s limited criticism of the damage brought by historical revisionism: «the Chinese people cannot forgive words and actions that distort and beautify the history of Japanese militarist aggression». That most Japanese media ‒ including the government-friendly NHK ‒ highlighted the above passage at the expense of all the aforementioned overtures, and that virtually all of them had rendered the Chinese for «cannot allow» (burong) into the sterner worded «cannot forgive», was symptomatic of the media’s structural problems and of the underlying suspicion of China’s Janus-faced tactical accommodation.[64] At any rate, this event and its resonance in China’s official state-run media displayed clear willingness from the top to mend ties with Japan, even if only out of political and economic necessity.

At the same time, it is worth stressing that Xi was neither all-powerful nor willing to steer the domestic propaganda machine towards a meaningful détente. The above limited love calls were, in fact, a drop in an endless ocean of nationalist fanfare in this historical year, the very same fanfare that central and local governments had insisted upon since the flaring up of the Senkaku/Diaoyu islands dispute in the summer of 2012. In other words, there were minor adjustments in the media discourse, but China’s change in tone needs to be taken in the context of continuing anti-Japanese sentiment.  Chinese traditional media dutifully emphasized criticism of Abe, rather than the whole Japanese polity, to pour cold water on an already incensed and nationalistic domestic audience. That is, it aimed at preparing the groundwork for a working level Sino-Japanese truce with the prospect of a deeper détente with Abe’s successor. Moreover, the Xinhua and CCTV websites devoted to the 70th Anniversary of the end of World War II stressed China’s «victorious» narrative compared to its markedly more «victimized» tone in previous years.[65] However, they continued to make the simplistic comparison between an unrepentant Japanese polity, with specific reference to right-wing politicians, and Germany’s penitence; a recurring reference to this was reflected in the websites’ layout and condensed in a documentary called «Truth and Denial».[66]

According to direct testimony from a European Union diplomat, in the run up to the 70th Anniversary celebrations the Propaganda Department Education Bureau flooded the city of Beijing with billboards advertising the Chinese Communist Party’s fight in the global war against fascism. These posters succinctly hinted at the dominant historical narrative of a CCP-led liberation. Here the Nationalist Party (Guomindang, GMD) was hardly mentioned, apart from «CCP and GMD cooperation» (guo gong hezuo), and the Allied forces barely figured, apart from intelligence cooperation and Japan’s signature of the instruments of surrender on the USS Missouri on  2 September 1945.  At the same time, careful reading of the dazibao and of the long red banners plastered over various sites in Beijing confirmed that China was now insisting on a «victorious» storyline, rather than a «victimized» one.[67] Moreover, the end of the seven-paged dazibao hinted at Beijing’s willingness to tone down present-day Sino-Japanese acrimony; it detailed Xi’s earlier speech to the China-Japan Friendship Exchange Meeting along with the Politburo Standing Committee’s visit on 7 July 2015 to the Anti-Japanese War of Resistance Museum. Yet, it was no mistake that the so-called «China Seven», the members of the Standing Committee of the CCP Politburo, were shown visiting a room devoted to Japanese atrocities committed on Chinese soil.[68] China was ready to move on but the state-sanctioned narrative made sure to pander to popular sensitivities.

In fact, on multiple occasions high-ranking Chinese government officials prioritized the history issue to reset Sino-Japanese relations. Xi’s statements during his April bilateral meeting with Abe made absolutely clear the need to cater to China’s historical sensitivities: «The history issue is a fundamental matter of principle, a matter that lies at the political foundation of China-Japan relations».[69] To these calls Abe Shinzō half-heartedly responded through his 14 August government-backed statement.

3.1.   The Sino-Japanese truce II: Abe’s «History Statecraft» and the Abe statement

As the Chinese and Japanese war of words over the history issue toned down but simmered throughout mid-2015, it looked as if the frosty Sino-Japanese rapprochement would come under considerable stress by late summer, when Japan and its Asian neighbors commemorated the 70 years since the capitulation of the Japanese Empire. As recounted, a new powerful stream of Chinese propaganda aimed at memorializing the second Sino-Japanese war presaged a testy season.

Yet, Abe and Yachi’s «history statecraft» followed the 2006 model, the year when Tokyo and Beijing inaugurated the Strategic Mutually Beneficial Relationship following a highly choreographed exchange of signals between the two governments. The key premise now, as then, was reciprocity: a conciliatory «Abe Statement» sought somewhat to assuage China’s historical sensitivities, but emphasized postwar Japan’s positive role and its further contribution to peace in line with the Premier’s ideology; in turn, Beijing ignored the lack of specific apologies (owabi) and echoed Japan’s forward-looking attitude towards resuming the moribund Japan-China Strategic Mutually Beneficial Relationship. MOFA’s short movie on post-war Japan-China relations had already hinted in mid-2015 at the way forward for bilateral relations, according to Tokyo.[70]

In turn, the Chinese authorities quietly watered down the overtly jingoistic aims of the newly established 3 September military parade. As of January 2015, according to a popular blogger writing for the Renmin Ribao social network, the purposes of the parade were to: «showcase China’s military strength; frighten Japan for the sake of maintaining the post-war order; unite the people’s confidence and pride; and showcase the PLA’s discipline».[71] By June 2015, however, these goals had turned into: «Showcase China’s determination to take the road of peaceful development; showcase its position of defending its national sovereignty; show its great sacrifices during the war; push forward the modernization of the PLA».[72] In all likelihood Chinese policymakers also understood the negative international spillover effects of its bombastic anti-Japanese campaigns, but it was too late: many Western governments decided not to send heads of governments to such bombastic celebrations.

Preliminary evidence suggests that Washington was pressing to bring about a degree of stability between Japan and its North-East Asian neighbors over the «history issue». Brad Glosserman, executive director of the US-based Pacific Forum Center for Strategic and International Studies think tank, testified to such pressure regarding the Abe Statement in an e-mail exchange: «I have been in meetings when I and others pressed government of Japan representatives to take that extra step and I have been told by US government representatives that they did the same».[73] As recounted in previous essays, similar US pressure contributed to a moratorium to the history-related acrimony between Japan and China starting with the first Abe administration, including a seven-year moratorium to the disputes over Yasukuni Shrine visits by sitting prime ministers. Washington’s aims were consistent throughout: policymakers wanted a stronger Japan, but not at the cost of entrapment into Sino-Japanese military or history issues-related brinkmanship.

At the same time, there was a key difference between 2006 and 2015: Japan was not negotiating from a position of undeniable politico-economic strength vis-à-vis China. China did not pursue a fuller accommodation towards Japan for this reason. By 2015, Chinese policymakers probably thought that time was on their side in the medium to long term, and they did not need to make considerable concessions to Tokyo, only buy time. Confident of Japan’s military potential, emboldened by the new US-Japan security guidelines and probably betting on China’s deepening economic woes, Abe was not interested in making meaningful concessions to China either.

At any rate, the history issue was a major hurdle in resetting a working level relationship and the Japanese and Chinese governments needed to find a working-level agreement to defuse it. In fact, since the history issue had become a matter of international and domestic politics, the Japanese government had set up a public advisory panel on the occasion of the August statement commemorating the end of World War II. This was the Advisory Panel on the History of the 20th Century and on Japan’s Role and the World Order in the 21st Century (abbreviated in Japan as «21st Century Advisory Panel»). Since previous statements suffered from substantial domestic rebuttals and lukewarm acceptance from Japan’s neighbors, the variegated advisory panel crafted a report that explicitly aimed at building domestic consensus and international support.[74] In other words, the report and accompanying statement constituted an implicitly political communication effort designed to reassure international and domestic audiences that «Japan’s post-war trajectory is based on a thorough reflection on its actions in the 1930s and the first half of the 1940s».[75] The international and domestic buzz surrounding the declaration of Japan’s conservative Prime Minister testified to the political need to dispel diffuse anxieties and win support for Japan and its leadership. These anxieties were all the more felt by Abe because of China’s earlier successes in putting the spotlight on the Premier’s ill-concealed revisionist colors, and in light of Abe’s main priority: passing the embattled security bills. As recounted earlier, the Obama administration interceded to avoid a new row between Japan and its neighbors and likely exacted promises from Abe on that front.

Thus, the end product was an overarching document that did not shy away from highlighting Japan’s «reckless war», «colonial rule» and «aggression», key words from previous Statements that aimed at assuaging the historical sensitivities of victimized neighbors, the United States and of progressive forces within Japan; in a jab against Abe’s and Japanese historical revisionists’ personal credo, the report spelt out that «it is inaccurate to claim that Japan fought to liberate Asia as a matter of national policy».[76] But it was evident that the commission fumbled over some definitions and details due to internal disagreement, possibly as a means of leaving room for politically-expedient ambiguity. For instance, in another passage the report contradicts the above-statement and panders to the revisionist readership:  «Whether or not Japan intended to liberate Asia, it did wind up promoting the independence of the colonies in Asia». Positive reception of the report’s language by newspapers spanning Japan’s political spectrum testified to such ambiguities: notoriously conservative Sankei Shinbun highlighted the latter passage, while progressive media outlets praised the inclusion of other key words, such as «aggression» (the translation used for shinryaku, more commonly translated as «invasion»).[77]

In fact, Japanese historical revisionists traditionally sought to minimize Japan’s responsibility. They euphemistically referred to aggression as «advancement» (shinshutsu) and denied that the colonization of Korea could be described as an invasion. For these reasons, the inclusion of «aggression» (shinryaku) appeared with reference to Japan’s encroachment into China and was accompanied by a cumbersome footnote that described the internal disagreement over its usage. Wording further on in the report highlighted the very same dynamic: «[There is a 1974] UN General Assembly Resolution on the Definition of Aggression, but (emphasis added) there are some who point out that the international community has yet to reach a complete consensus». This was another indication that the report was directed at the widest possible domestic audience at the cost of watering down its most conciliatory wording.

The report had a whole section that compared Japan’s historical reconciliation with those who had been victims of its aggression, and hinted at the way forward for Japan-China relations. Not by chance, this section echoed the Chinese government’s marked change of language register: «China has maintained ‘military-civilian dualism’ after the end of the war. As Premier Wen Jiabao stated in his speech before the Japanese Diet in 2007, China made clear its stance of appreciating Japan’s remorse and apology over the war, which was expressed in the Murayama Statement and the Koizumi Statement». Yet, two panel members usually close to Abe were against the use of «aggression» to define Japanese encroachment into China.[78] In exchange for Abe’s recognition of Imperial Japan’s culpability, China would drop requests for words of «apology» (owabi). Acting chair of the advisory panel Kitaoka Shin’ichi stressed that «what is important here is reflection, not apology. [because] Japan has apologized many times and the countries concerned have accepted in most cases».[79] It was time to reflect on Japan’s positive and negative legacy and turn the page.

Thus, the aim of Abe’s «history statecraft» was not full-fledged reconciliation, but tit-for-tat reciprocity that avoided the politicization of the history issue and altogether curtailed major provocations in the sensitive year of 2015. As recounted in last year’s essay, this likely meant avoiding a Yasukuni Shrine visit until the end of Abe’s mandate and the Abe Statement was a chess piece used by Beijing and Tokyo to sell a very timid cold peace. Yaming Tang, Head of the Society of Chinese Professors in Japan, testified to the logic of the Abe Statement: «Behind the scenes China has already agreed to specific wording in the Abe Statement, but the core message has been watered down to Abe’s personal message. In fact, the final wording will water down the Murayama and Koizumi Statements, but it won’t provoke China».[80]

For these reasons, on 14 August 2015, Abe was sending clear messages to China, when he stated that «we must squarely face the history of the past» and praised the tolerance of post-WWII China. The passage is worth quoting in full:  «How much emotional struggle must have existed and what great efforts must have been necessary for the Chinese people who underwent all the sufferings of the war and for the former Prisoners of War who experienced unbearable sufferings caused by the Japanese military, in order for them to be so tolerant nevertheless?» Abe was echoing Xi Jinping’s earlier reminder of Chinese generosity, one that «repaid hatred with virtue». These soothing words were diplomatic signaling at work; the aim being the resumption of a working-level relationship.

Moreover, it is worth noting that Abe did soften his historical revisionist credo. The use of so-called «key words» hinted at a political compromise at home. Members of his Cabinet were often affiliated with intra-LDP nationalist groups, some of which wholly misrepresented Imperial Japan’s acts of aggression as noble missions to liberate Asia.[81] Faced by mounting international and domestic pressure, Abe aborted earlier attempts to rescind or hollow out the Murayama and Kōno Statements. Concerning Imperial Japan’s legacy in Asia, the Murayama statement had become the gold standard of that contrition. This was certainly the case in China, and South Korea, but also among the vast majority of Japanese citizens. One public opinion poll confirmed the overwhelming popular desire to uphold the socialist Prime Minister’s statement.[82] For these reasons, and in the face of sinking approval rates due to the passage of the embattled Security Bills, Abe hinted approval of progressive forces and catered to the sensitivities of his coalition partner.

But Abe certainly watered down the spirit of previous statements because he was appealing to too many audiences: the US, China, and all of Japan, and that included the nationalists. During the highly-choreographed press conference that followed the Statement Abe provided journalists with the Statement’s exegesis. There he recognized the primacy of domestic considerations: «I wanted to write a statement that was shared by many Japanese, a statement that should be read as a whole and from a broad perspective».[83] For these reasons the statement toed the 21st Century Advisory Panel’s line, the «voice of history» in Abe’s own words, for even more politically-expedient ambiguity. For instance, whereas the then-controversial Murayama statement explicitly blamed Japan’s «colonial rule and aggression [in the not too distant past]», Abe pledged to renounce aggression and colonial rule in the future.[84] A few minutes later he explicitly linked «aggression» to the 21st Century Advisory Panel’s report, where the word referred to Japan’s encroachment of China into Manchuria. At the same time Abe was ambivalent on specifics: «it is historians’ responsibility to define what constitutes and what doesn’t constitute aggression».[85] That is, by Abe’s own unintended acknowledgement, the statement included ill-defined key words. Thus, the government-backed policy statement presented shaky historical foundations and its alleged author walked the tightrope of ambiguity in order to cater to the sensitivities of too broad a target on that front.

At any rate, and differently from the speeches given in Washington and in Jakarta at the 60th Asia-Africa Summit, Abe spelt out some of the keywords from previous declarations of contrition: «aggression», «colonial rule», and «apology». The domestic media agenda had set the words up as a litmus test to grade Abe’s statement against the previous ones. Thus, the cabinet-approved policy document emphasized «feelings of profound grief» and recognized the «unshakeable position» of past Japanese apologies, but Abe provided another piece of the puzzle when he said he abided by the «unwavering spirit of apology» (yuruginai owabi no kimochi) of previous declarations. Progressive media outlets positively reported the news, although the editorial bureau of the same outlets, such as Asahi Shinbun, sternly rebutted its line.[86] Abe had come a long way from his earlier, public disavowal of the 1995 Murayama Statement. On that occasion he had left the Diet Building with other MPs so as to impede its passage as a Diet Resolution through unanimous vote.[87] National and political interests contributed to preserving an ambiguous consensus on previous government declarations.

At the same time, the statement reflected Abe’s personal outlook. First, it betrayed his aspiration for Japan to outgrow what he understood as masochistic acts of contrition. An early draft of Abe’s initial posturing on the Murayama and Kōno statements opens a window to the Prime Minister’s «future-oriented» thinking. Given the documentary value of the roughly-sketched draft, one that allows a comparison between Abe’s personal ambitions in late 2012 and the realities of political compromise once in office, it is worth quoting in full:

«Do you follow through (tōshū), or not? Yes or no? Prime Ministers of Japan have been presented with simple binary options with regard to the Murayama and Kōno Statements. But History contains instances of glory and disgrace, instances to treasure with pride and instances to treasure as admonition. I can say only one thing: Japan intends to build relations with neighboring countries such as South Korea and China in order to share the fruits of prosperity. I am earnestly devoted to the future, because the Japan of 30 years from now will bring peace and prosperity and I intend to move forward and pursue these objectives with my heart and soul».[88]

Three years later, Abe’s pledge of looking to the future and his variegated, if ambiguous, overview of the past was intact in his Statement’s most-relevant passage: «We must not let our children, grandchildren, and even further generations to come, who had nothing to do with that war, be predestined to apologize. Still, even so, we Japanese, across generations, must squarely face the history of the past. We have the responsibility to inherit the past, in all humbleness, and pass it on to the future». In the summer of 2015, the main speechwriter would remain the same as for the afore-mentioned draft, and so too would the gist of the message. Abe-colors were on full display.

Secondly, the statement superficially echoed, almost verbatim, the Chinese government’s politically-charged calls for Japan to «squarely face the history of the past». But it did so with an implicit, if recurrent, desire to highlight the identity chasm between a virtuous post-war Japanese «Self» against an aberrant pre-war «Other» that often resembled present-day China. The present-day «Self» upheld the surrounding international order, while the pre-war «Other» challenged it. Abe’s introspection on the «mistaken road to war» taken in the 1930s sounded very much like a warning to Beijing, not least because of its added emphasis: «Japan gradually transformed into a challenger to the new international order that the international community sought to establish». The statement’s concluding passage confirmed the Premier’s insistence on the identity chasm rooted in the power politics of Sino-Japanese rivalry. Since the narratives highlighted in last year’s essay were clearly emphasized, the statement is worth citing in full: «We will engrave in our hearts the past, when Japan ended up becoming a challenger to the international order. Upon this reflection, Japan will firmly uphold basic values such as freedom, democracy, and human rights as unyielding values and, by working hand in hand with countries that share such values, hoist the flag of Proactive Contribution to Peace, and contribute to the peace and prosperity of the world more than ever before». China was certainly not a member of the club and, given its persistent refusal to go before international arbitration with its territorial disputes in the East and South China Seas, it started to look like a challenger of said «international order». The statement’s intriguing mix of soothing words and veiled antagonistic discourses confirmed, one more time, that Abe’s resolute stance was unwavering.

To sum up, the statement hinted that the Sino-Japanese détente was very timid indeed. It thoroughly underlined contemporary Japan’s identity as a peace-loving, rule-abiding state that upheld the status quo and that did not intend to resort to coercion. This was an implicit message to domestic and international audiences that there was a big difference between today’s Japan and China. Antagonism was alive and well. Together with the White House’s public endorsement of Abe’s words,[89] it became evident that the Sino-Japanese cold peace was staged on the solid, but rapidly shifting, tectonic plates of power politics.

4. The Structural Picture: Enduring Rivalry in the Regional Game of Go

Although China and Japan staged a modest rapprochement, this did not alter the structural picture, characterized by deepening rifts in the military, economic and communication arenas. In fact, the mid-summer crescendo in the regional game of go triggered a new wave of negative Chinese propaganda that may have gone beyond the central government line. China’s state-run media was deviating from Xi’s line to lament a lack of specific wording of contrition in the upcoming Abe Statement: «because hansei (i.e. «self-reflection», but translated in English as «remorse») is not synonymous with owabi (i.e. «apology»). If Abe opts for that wording, his statement will constitute a serious dilution of the 1995 Murayama Statement offered on the occasion of the 50th Anniversary of the end of the war». The above editorial was all the more alarming because it was carried by the Renmin Ribao, and it did so when the Party leadership as usual retreated to the ritual secretive summer meeting at Beidaihe.[90] It is worth noting that the chasm between the quiet bilateral agreement and state-led propaganda preoccupied one of the members of Abe’s Commission on a Framework for the 21st Century. According to him, it looked as if Beijing was moving the goalpost for timid détente only one week before the landmark statement.[91] Yet, it was also true that Japan was unwavering in its commitment to deter and publicize Chinese assertiveness in the South China Sea. The August anti-Japan crescendo was also a reaction to Japan’s «meddling» in what China understood as its neighborhood. The logic of the regional game of go trumpeted shallow engagement in 2015.

Indeed, according to an influential Chinese academic based in Japan, who would later attend the September 3 parade, China was indeed accommodating but Japan was hardening its position. He qualified the Japanese government’s position over the SCS as provocation and lamented Japan’s increasingly rock-solid stance on the Senkaku Islands, including Abe’s decision to make repeated reference of these in school textbooks.[92] Yet, China’s continued presence in the East China Sea and its inauguration of a mammoth coast guard ship, the Zhongguo Haijing 2901, destined for that theater, indicated that Beijing was also unwilling to shelve the issue.[93] In addition, a bombastic new recruitment video for the People Liberation Army’s Navy was a powerful reminder of China’s maximalist stance over its multiple territorial disputes and of its hyper-nationalistic narratives.[94] According to a Council on Foreign Relations blog, the PLA was behind the release of a new computer-generated video on September 3, China’s Victory Day. The video had a telling title, «Battle to Capture an Island: a Full View of Chinese Military Strength»,[95] and it showed China’s crushing defeat of what looked like US military forces based in China’s proximity, seemingly on Japan’s Okinawa islands. China had no claims on the islands, but the Renmin Ribao did come up with an editorial in 2013 that disputed Japan’s sovereignty there.[96] That particular detail and the closing line to the short movie presaged a bumpy road ahead for the regional strategic game of go, where no party was willing to make substantial concessions: «We wholeheartedly love peace, but must be prepared for the likelihood of war. We respectfully and solemnly commemorate the 70th anniversary of the war against Japan». That they decided to commemorate it with a bombastic animated video in addition to a raw display of military artillery and marching soldiers was symptomatic of China’s underlying jingoistic attitude.

In other words, Beijing defused confrontations with an increasingly assertive Japan only halfheartedly. It was, however, quite possible that powerful opposition within the CCP was endeavoring to shake Xi’s qualified conciliatory stance vis-à-vis Japan in order to score political points and delegitimize his rule. Jiang Zemin’s notoriously anti-Japan «Shanghai faction» had proved a major foe against the accommodating Hu Jintao administration back in 2005 and it needed to consolidate power at home prior to introducing the 2006 détente.[97] In August Xi sent coded threats to Jiang through the Renmin Ribao to impede his meddling in Chinese politics.[98] At any rate, only time will tell what role Japan played in the intra-party factional turf wars following the 2012 nationalization. No matter how firm Xi’s grip on power looked from a distance, the Japan-bashing discourses proved incredibly resilient in this historical year, and the very same Xi Jinping administration’s earlier ignition of the «Japan-bashing» propaganda machine unleashed a nationalistic tiger it proved unable to dismount. Xi was unable to dismount this anti-Japan beast even if he wanted to; in the author’s view, he was unwilling to wholeheartedly defuse bilateral acrimony and pursued, instead, a tactical accommodation to buy China time and much-needed economic resources and military capabilities. Xi was a nationalist himself.

Indeed, evidence of a deepened geopolitical realignment among longstanding partners ‒between China and Russia on one side, and the US and Japan and others, such as Australia and India, on the other‒ provided another indication of the gathering storm clouds in the region. 2015 saw a full-blown rise of joint naval drills in the Indo-Pacific; these were directed towards enhancing interoperability, deterring adversaries and reassuring domestic constituencies, but their sheer quantity, increased  tempo and number of actors involved betrayed the action-reaction dynamics of a region-wide security dilemma. Prior to the September 3 military parade, Russian and Chinese navies held their largest joint naval exercises in history, Joint Sea 2015 II. Twenty-two vessels, 20 aircraft, 40 armored vehicles and 500 marines engaged in anti-submarine, anti-aircraft and anti-ship exercises. It was a first for China, which had never engaged in a joint naval drill in that theater before. A further indication of deepening bilateral military ties was the first-ever joint amphibious operations on Russian territory off Vladivostok.[99] These military exercises are likely to become more common and echo regional noises. For example, the Japanese Navy joined the India-US Malabar naval exercises in the Gulf of Bengal as a regular participant[100] Notably, Japan’s more forceful pronouncements in favor of engagement in the South China Sea were accompanied by other joint exercises clearly aimed at deterring China from meddling with its neighbors. It sent a small contingent to large-scale joint US-Australia exercises, it engaged in bilateral drills with the Philippines Navy and later, the US Navy, in waters adjacent to the hotly contested Spratly Islands. It also participated in a multi-nation exercise with the intention of reclaiming remote islands.[101] The burgeoning expansion of scope and deepening intensity of military drills from both camps hinted that it was still too early to talk of any Sino-Japanese rapprochement worthy of notice.

Military trends provided another indication of rising tensions, again evidenced by action-reaction dynamics in naval and constabulary military procurements. Specific to Sino-Japanese relations, the budding East China Sea «security dilemma» had not yet evolved into a naval arms race, but a «naval constabulary forces race» in which Japan responded to China’s aforementioned mammoth Coast Guard ship, the first of two, by considering the redeployment of coast guard vessels to docks closer to the Senkaku/Diaoyu Islands and ECS choke points.[102] Previously, the central government had also moved forward with its plan to establish a Ground Self-Defense Force surveillance station and garrison on the remote Yonaguni Island.[103] Moreover, the Japanese Coast Guard made a budget request for a near-record 204 billion yen in the 2016 fiscal year, 10% up from the year before.[104] In fact, the CGS procurement did not fall into Japan’s much-vaunted 1% to GDP ceiling for its annual military budget.[105] Finally, the Japanese military planners aimed at «stringing a line of anti-ship, anti-aircraft missile batteries along 200 islands in the East China Sea stretching 1,400 km from the country’s mainland toward Taiwan».[106] Thus, while defensive in character, operations on that front increasingly reflected the common characteristics of an arms race: they were driven by international imperatives; they were bilateral in scope; intense in rapidity and expression; they were associated with ongoing high political tension; they were operationally specific and they were indicative of high strategic stakes in the eyes of policymakers in both states.[107] China and Japan’s decision to continue their naval procurement in aircraft/«helicopter» carriers was indicative of the broader undercurrents on the military front.[108] But Japan still heavily depends on US extended deterrence. Either a full-blown arms race or else, in the words of a blue-ribbon advisory group to MOFA, the «law of the jungle» would be the result of a progressive United States military retrenchment from the region.[109] To avoid this nightmare scenario, Japanese policymakers reasoned that they needed to further bolster their defense and, as recounted earlier, to sustain the United States’ military engagement in the South China Sea.

4.1. A stabilizing factor? Economic interdependence and antagonistic economic blocs

What about economic interaction in 2015? Proponents of commercial pacifism argue that greater economic interdependence between states translates into increased cooperation, as rational policymakers acknowledge the benefits of «peace dividends», such as trade, bilateral investment and reduced military budgets. This paradigm ascribes to non-state actors, such as multinational enterprises (MNE), a prominent role both in fostering economic interdependence and lobbying for international stability conducive to business interests. Making a cost-benefit analysis, state leaders value peace and cooperation over destabilizing military balancing policies with valuable economic partners. This view is represented by Richard Rosecrance’s view that global capital and interstate trade favors integration, and gradually makes military power redundant in the management of interstate relations. According to him, Japan is a perfect example of a trading state and, thanks to financial liberalization in the 1980s, of a capital-exporting virtual state.[110] In addition, a richer and more recent analysis of the «ties that bind» Japan and China towards greater integration and cooperation is presented by Kent Calder and Min Ye. Their argument posits that functional cooperation through a set of regional frameworks emerged from the ashes of the 1997 Asian Financial Crisis and that this had fostered regional economic integration:

«Strong underlying macroeconomic complementarities among capital-intensive Japan, labor-intensive China, and entrepreneurial Korea, reinforced by deepening transnational production and distribution networks at the micro-level, and with Taiwan as an intriguing new catalyst, clearly facilitate interdependence. […] the concept of a more autonomous Northeast Asian core, with its components coordinated through soft-institutionalist networks among the spokes of the Pacific wheel, approaches more closely the emerging regional reality, given recent trade, financial, and even geopolitical trends as China rises, cross-Straits relations improve, and American hegemony wanes».[111]

Thus, according to the two authors: a) the rise of regional production networks, in which  China is Japan’s main target market for Foreign Direct Investment and production offshoring, b) deepening epistemic communities among intellectuals and policymakers, and c) trade and financial integration, as shown respectively by the negotiation of a trilateral FTA and bilateral swap agreements of currency reserves, have progressively made cooperation among the parties more likely and US presence less relevant.

Critics counter-argue by citing the historical record: notwithstanding Great Britain and Germany were each other’s major trading partner, the rising continental Power and status-quo maritime Power fought a bitter war between 1914 and 1918. In other words, security trumps economic prosperity in whenever the two collide. This example is, however, partial, since Japan’s economic stakes embedded in continental China, which are exemplified by Japanese Foreign Direct Investments and direct ownership of offshore production facilities, are clearly higher compared to British-German trade in the early 20th Century. By examining transnational economic actors, Calder, Ye and Rosecrance share the assumption that their interests are ultimately synonymous with state interests and translate into a rational foreign policy aimed at the maximization of economic gains. Nonetheless, both contemporary Sino-Japanese relations and fin de siècle European interstate relations share a major weakness, the destabilizing and parallel influences of irrational threat perceptions, usually fed by nationalistic sentiments. In fact, both set of relations have been fraught with the destabilizing, irrational effects of mutually-reinforcing nationalisms, both at the elite level and, to a lesser extent in Japan’s case, at the societal level.[112] Evidence of such sentiments, especially on China’s side, have been provided throughout this essay. This weakness is not usually given adequate attention in theories of liberal interdependence, which often focus on rationally-calculated gains.

To sum up:  key economic initiatives in the year under review testify to the strategic use of free trade agreements and new financial institutions for clear geopolitical aims. China inaugurated its much-vaunted Asian Investment Infrastructure Bank (AIIB) to rival the existing G7-centered development-focused international financial institutions: the World Bank and the Asian Development Bank (ADB). The surprise decision by the United Kingdom to become an AIIB shareholder triggered a chain reaction among other major US allies: Germany, France, Italy, Australia and South Korea, among others, all agreed to become early supporters of Beijing’s initiative. The United States government’s unsuccessful lobbying against their participation testified to the growing economic and political clout enjoyed by China.[113] In 2016, China will also inaugurate the BRICS-led New Development Bank. In connection with these new financial institutions, China took its «One Belt, One Road» initiatives to augment its presence in areas that have historically been open for American, European or Russian involvement. Thus, it promoted free trade agreements, investment and infrastructure building in Central Asia and Africa, all way to the west of China.[114] Moreover, China’s new initiatives were directed at securing its continental backyard to refocus its military energies more confidently on the East and South China Seas. The logic of the game of go also applied to geo-economic interaction.

Were China’s mammoth initiatives spurred solely by economic considerations? To a certain extent, the grandiose plans for a new maritime and a continental Silk Road connecting China with the land and sea fringes of the Eurasian landmass played well with the CCP’s internal propaganda,   which increasingly insisted on the «China Dream» and the achievement of a «national rejuvenation» that would bring China back to its ancient greatness. At the same time, there were undeniable geopolitical undercurrents embedded in Beijing’s economic activities. For instance, an October 2015 special issue of the popular Chinese National Geography (Zhongguo Guojia Dili) was entirely dedicated to China’s geo-economic challenges, and to its solutions. The language register was unmistakably rooted in the Realpolitik proper of modern geopolitical thought: it borrowed Halford Mackinder’s term  to call for China’s advancement into the Eurasian continental «heartland» and, to a lesser extent, into the seas through the twin «One Belt, One Road» Initiative. According to the contributors, China needed to act because Washington was advancing major initiatives to contain China through a concert of sea powers, a concept borrowed by famous naval strategist Alfred Mahan.[115]

Indeed, in October 2015 Japan and the United States, as well as ten other countries, concluded the long-awaited Trans-Pacific Partnership (TPP) Free Trade Agreement negotiations that bound the economies of 12 Asia-Pacific maritime states. The economy-security nexus was evident with the inclusion of key US allies and strategic partners within the scope of the TPP: Vietnam, Japan, Australia, New Zealand, and the like. In accordance with China’s continental initiatives, geopolitics trumped economic considerations of losses and gains. In fact, the TPP certainly favored multinational enterprises, but it would have fostered economic blocs, whose frontiers coincide with the existing military ones. At any rate, the treaty still needed to go through the hurdles of the ratification process. The fate of the TPP deal was still in limbo as the United States entered the presidential campaign season: an early proponent of the deal, then Secretary of State Hillary Clinton, turned lukewarm during the Democratic Party primaries to woo labor unions and lobbying groups against the TPP deal.[116] As demonstrated by the AIIB, «One Belt, One Road» and the TPP initiatives, geopolitics were clearly deemed more important than economics. The strategic logic of the game of go informed the behavior of the region’s major Great Powers – China, the United States and Japan – throughout the year under review.

5. Conclusions

The year under review testified to the primacy of geopolitical interaction, resembling a game of go. Indeed, 2015 witnessed important changes in Japan’s security strictures. The new US-Japan security guidelines and Japan’s new security laws ushered in a new set of formal and informal institutions that would have allowed Japan, if not constrained, to a more active security position; these factors were leading Tokyo to a more muscular stance in defense of areas well distant from the archipelago down to the South China Sea. China’s continued assertiveness there, and Abe’s fondness for power politics as a tool of statecraft, certainly favored Japan’s enhanced military profile. Yet, this essay has argued that US leverage has also played a substantial role in encouraging Abe’s interest in the China-centered game of go. The only possible obstacle to Tokyo’s muscle flexing was Japan’s insular, yet realist, public opinion.[117] At the same time, Japanese Self-Defense Forces’ aircraft and vessels, returning from antipiracy missions in the Gulf of Aden, were already conducting surveillance operations around the South China Sea, away from public scrutiny.[118] More importantly, Japanese public opinion was much in favor of routine «cautionary surveillance» there, according to a Yomiuri Shinbun survey of late 2015.[119]

In the meantime Beijing pursued its tactical accommodation with Tokyo, but the prospects for stability in the medium term were not promising given the simmering geopolitical tensions and bilateral war of words. The crescendo of hostile words and actions also informed the rival economic initiatives that were finalized in 2015. Moreover, at the very end of the year, the East China Sea witnessed a new round of bilateral tensions, possibly in connection with Japan’s growing involvement in the South China Sea.[120]

With regard to the Senkaku/Diaoyu Islands, only substantial mutual concessions could have brought the «quiet understanding» dispute back into life.[121] In fact, the Sino-Japanese rivalry and standoff over the disputed islands is as much a dispute over geo-politics as over honor and status, with neither side able to fundamentally back down.[122] For these reasons, a tenable and meaningful détente over the disputed islands must rest on more than wishful calls for international arbitration through the International Court of Justice (ICJ). China’s reaction to a possible ICJ verdict that assigned sovereignty to Japan will likely veer toward the hostile. For these reasons, the two parties need to devise more creative compromises.

A popular saying maintains that good fences make good neighbors. In fact, China and Japan have been trapped precisely by such a continental approach as this to maritime boundaries. That is, bilateral relations have suffered from Tokyo and Beijing’s reification of the Westphalian trope over a set of small disputed islands.[123] Unless the two governments put a lid on the Senkaku/Diaoyu battle for honor and status, the quiet «constabulary arms race» taking place in the East China Seas is destined to rock the whole Asia-Pacific. Both countries need to give more than they take in order to usher in a new «quiet understanding» that shelves the dispute; creative solutions may even turn a temporary fix for the Senkaku/Diaoyu Islands crisis into a long-term solution for bilateral cooperation in the maritime boundaries of the East China Sea. For instance, the two countries may adopt a functionalist approach designed after the 1950 Schuman Declaration that preluded the European Coal and Steel Community. Hypothetically, Japan could offer joint development of natural resource fields within its claimed Exclusive Economic Zone, including the EEZ that extends from the Senkaku/Diaoyu: in this way China abandons the implicit recognition of Japan’s claimed EEZ median line and obtains an indirect recognition by Japan of the existence of a dispute. Conversely, China stops any dispatch of official vessels and aircraft to the disputed islands. This would allow Japan to cement its effective control and (already strong) legal claims there. After all, possession is nine-tenths of the law. While the dispute is understandable given the background of Sino-Japanese relations, the two states sought to appreciate the possible benefits of joint exploitation of natural resources in the ECS seabed of the Senkaku/Diaoyu Islands, and henceforth make the East China Sea «a sea of peace, cooperation, and friendship».

Nonetheless, events in 2015 relegated the possibility of such creative solutions to the distant future, because the Senkaku/Diaoyu and Spratly Islands’ standoffs were the products of the broader undercurrents of regional power transition. The leading strategic game of go was rooted in the logic of power politics, and the shifting tectonic plates of the Asia-Pacific were more rapidly grinding past each-other with some significant realignments in place. A major earthquake in one of the many fault lines came to be a possibility. The logic of the game of go continues to govern the East Asian seas, but, as the adage goes, «it’s all fun and games until somebody loses an eye». The prospect for incidents looked remote in 2015, but it remains a real possibility in the medium term in the face of Chinese assertiveness, mounting US-China rivalry and, realistically, greater Japanese military engagement in the South China Sea.

In 2015, in South Korea, President Park Geun-hye’s decline in popularity, which had begun in the previous year, further accelerated. In particular, the outbreak of the MERS (Middle East Respiratory Syndrome) crisis between May and June contributed, once again, to show the government’s inability to act quickly and effectively. The already difficult situation worsened in Autumn, following the vehement protests organized by different sectors of the South Korean civil society against the school history textbooks reform and the new labour legislation.

North of the 38th parallel, President Kim Jong Un moved quickly to definitively strengthen his power. A new series of purges hit the members of the political and military leadership. At the same time, there was the consolidation of the new Kim-inspired political line. Part of it can be considered the announcement that the Seventh Plenary Congress of the Party was to be held for the first time after 36 years in 2016. In May and June, a severe drought affected North Korea. However, the limited 2013 agricultural reforms, avoided the outbreak of a real famine.

A major crisis in inter-Korean relations was triggered by the explosion, in August, of two landmines in the southern side of the de-militarized zone. However, the two parts reached an agreement that, besides solving the landmines issue, paved the way for a new round of family reunions and a new series of high-level inter-governmental talks.

2015 saw the consolidation of the excellent relationship between Seoul and Beijing, highlighted both by the participation of South Korean President Park Geun-hye – the only US ally – in the military parade that took place in early September in Tiananmen square, and by the signature, in December, of a bilateral Free Trade Agreement. Also the relations between South Korea and Japan improved significantly after almost three years of diplomatic freeze. The rapprochement materialized with a bilateral summit between the leaders of the two governments, in November, and with a historic agreement on the vexed issue of the «comfort women», signed on 28 December. This was welcomed by the US, which had made significant efforts to favour this result. There were also positive repercussions on the relations among the three Northeast Asia powers.

2015 was the year of North Korea President Kim Jong Un «missed debut» on the international scene. Although Kim was expected to take part in several important international events, this did not happen. Nonetheless Pyongyang further deepened the already positive relations with Russia. On the contrary, the difficult Sino-North Korean relations, after a moment in which they seemed headed for an improvement, remained strained. Regarding the relations with Japan, the deadlock on the issue of Japanese citizens abducted by North Korean secret agents in the 1970s and 1980s put an end to a timid improvement in the Tokyo-Pyongyang relations.

1. Introduction

For South Korea, 2015 was the year that confirmed the already on-going decline of President Park Geun-hye. In particular, after the Sewol incident in 2014, the crisis erupted with the outbreak of the Middle East Respiratory Syndrome (MERS) disease in the country, between May and June, demonstrating once again the lack of leadership of a government that intervened slowly and late, just like in the ferry sinking case. Not surprisingly, the first moment of social and political tension, which occurred in 2015, coincided with the anniversary of the Sewol tragedy, in April, during which both the President and the Prime Minister were strongly criticized. Soon afterwards, the resignation of the Prime Minister for a corruption scandal and the outbreak of MERS worsened the popularity of the government even more. A further controversial point in the relation between the executive and the public opinion emerged in the last months of 2015, when the government decided to put forward two highly contested reforms: the history textbooks and the labour reforms.

As for North Korea, domestic policy continued to be dominated by Kim Jong Un’s process of consolidation of power, with further purges within the party and the military, especially during Spring. The main event was represented by the celebrations for the seventieth anniversary of the founding of the Workers’ Party of Korea (WPK)  and the announcement of the convocation of a Plenary Congress of the WPK in 2016, the first in over 35 years, in which Kim’s consolidation of power will most likely take its definitive shape with the launch of a new policy line.

Regarding inter-Korean relations, the trend of highs and lows, which emerged during 2014, remained the norm until August when a new crisis erupted due to the explosion of land mines in the demilitarized zone, south of the border, in which two South Korean soldiers were wounded. The allegations from Seoul to Pyongyang led to an escalation of tension that ended only in late August with an agreement between the parties. As has happened before, the resolution of a crisis also represented a new opportunity for cooperation resulting in the family reunions, which took place at the end of October, and working-level meetings in view of a high-level inter-Korean summit.

As far as international relations are concerned, the most important event in the South was certainly represented by the meeting between Park Geun-hye and Abe Shinzō, which put an end to a three-year period of cold relations, detrimental not only to their bilateral rapport but also to their relationship with the USA. The meeting took place in Seoul at the beginning of November, on the sidelines of the trilateral summit among South Korea, China, and Japan.[2] Although it did not achieve anything substantial, the summit signalled a highly significant symbolic thaw in the Japan-South Korea relationship. In the meantime, the relationship with China continued to grow stronger and deeper, as was clearly demonstrated by the participation of South Korea in the Chinese V-Day. In that occasion South Korea was one of the few highly developed nations and the sole US ally attending the event.

For North Korea, 2015 can be considered the year of the «missed debut» of Kim Jong Un on the international stage. He was first expected to attend the Asian-African Conference (the Bandung Conference) in Indonesia in April, and then, in May, the commemoration in Moscow of the seventieth anniversary of the Soviet Union’s victory in World War II.  Kim, however, cancelled both visits. The second was a widely anticipated event, but Kim’s cancellation was hardly a surprising announcement, since most observers were rather sceptical about whether the North Korean leader would go to Moscow in his first-ever foreign trip.  Likewise, Kim did not even accept the invitation from China to attend the huge military parade in September, marking China’s victory over Japan in 1945. Instead, Kim dispatched his personal representative, Choe Ryong Hae, who, at the event, was refused even a brief meeting with the Chinese President, while, at the same time, the South Korean President was received with all the honours. The deteriorating trend in the North Korean-Chinese relationship – which has become a constant with the Kim Jong Un-Xi Jinping era – was somewhat reversed following Liu Yunshan’s arrival in Pyongyang to join the celebrations of the seventieth anniversary of the KWP foundation. Liu, who is one of the seven members of the Politburo Standing Committee, was in fact the first high-ranking Chinese politician to visit North Korea in 4 years. With Japan, relations were at a standstill as Tokyo waited, in vain, for a report on the thorny issue of the abductions of Japanese citizens by North Korea.

2. Domestic politics

2.1. South Korean domestic politics: the dark sides of Park Geun-hye’s presidency

The negative trend in the management of domestic policy by South Korean President Park Geun-hye, already visible during 2014, reached its nadir in 2015. The President, in fact, failed to recover the consensus lost since April 2014, after the Sewol tragedy.[3] Moreover, Park had to face several new crises that further undermined her popularity and exposed her weak leadership skills.

The first half of Park’s five year presidency can be exemplified through the convex shape of a parabola. The first year and a half, up to the sinking of Sewol, were characterized by a growing consensus among the public opinion and the strengthening of her power within the Conservative Party. This was due especially to the strong economic results and her active management of foreign policy. From April 2014, following her difficulty in managing the ferry tragedy, things changed decisively. The inability to take a leading role in the country in a time of tough crisis weakened her leadership role, while her popularity entered an apparently irrecoverable downward trend for the entire second half of 2014 and throughout the following year. If 2014, in fact, opened with popularity rate for the President that reached and exceeded 60%, the following year opened with a free fall in consensus, which in January barely reached 35%.[4]

As a political figure, Park Geun-hye has been strongly characterized by her leadership skills and her decision-making capacity. Political experience was a hallmark of her campaign, and helped her to overcome gender bias deeply rooted in the conservative electorate. The daughter of authoritarian President Park Chung-hee (1961-1979), Park Geun-hye became First Lady at 22, after her mother’s death in 1974, following an attack by a North Korean commando aimed to kill her father. In 1998, she was elected for the first time to the National Assembly; a position to which she was re-elected four times, and which held until the presidential election. From 2004 to 2006, she became chairperson of the party, a position in which she obtained an impressive number of important electoral victories earning her the nickname «Queen of Elections». When she took the leadership of the party, in fact, the Conservatives were in one of the lowest moments of their political path. Park’s leadership resulted in her party’s strong and unexpected result in the 2004 parliamentary elections. During her two years at the helm of the party, the Conservatives won in all re-elections and by-elections, regaining the majority in 2006. In the following year she suffered what can be considered the only setback in an otherwise brilliant political career. She was beaten in her party’s primary election for the 2007 presidential bid, albeit by a small margin, by the popular mayor of Seoul, Lee Myung-bak, who became President shortly thereafter. Within a few years, however, Park had the opportunity to have her revenge; in 2011, in fact, as a result of a dramatic slump in the popularity of the party, linked to the collapse of President Lee’s consensus, the party was renamed Saenuri dang («New Frontier Party») and Park Geun-hye was appointed to head an Emergency Committee for the revival of its popularity, a role that made her the de facto leader of the party. This new situation paved the way toward the presidential nomination of 2012 and the subsequent election.[5]

Her long electoral and political experience gave President Park a resolute and combative political image, which appeared to be characterised by strong leadership skills and the ability to take decisions in difficult times. The first year and a half as the head of the country highlighted these features. In particular, her firm stance towards North Korea, in the months following the third underground nuclear test in February, 2013, and the hard line against Abe Shinzō’s Japan, characterized by a strong nationalist approach, related in particular to the historical memory of the period of Japanese occupation, had a largely positive effect on her popularity. However, as already noted, all this started to change and Park’s popularity nosedived following the April 2014 Sewol tragedy.

2.1.1. The Government reshuffle

In 2015, the first difficulties that the President had to face materialized in February. In fact, between 16 and 17 February, Park decided to implement a cabinet reshuffle both to regain public trust after the disappointing results of the previous year, and to strengthen the government ability to enact reforms. The issue of greater importance was linked to the figure of Prime Minister Hong Chung-woon, who had submitted his resignation in April 2014 after the protests following the Sewol incident, but who was still acting as Prime Minister. Chung was still holding the position only because the government had failed to find a viable and acceptable candidate to replace him. After ten months of deadlock, the choice fell on Lee Wan-koo, the leader of the Conservative Party, in the National Assembly. The parliamentary hearing for his confirmation showed a strongly divided Assembly when it came to choosing his name, as he was accused by the main opposition party (NPAD) of several ethically questionable issues in his past: from having avoided conscription to real estate speculation and collusion with the military junta during the 1980s.[6] Thus, the parliamentary confirmation for the new Prime Minister, the only member of the government that, after the appointment by the President, must pass a parliamentary hearing and a vote in the National Assembly, became a political battleground between the two main parties.

The cabinet reshuffle did not seem to bring about the results expected by the President. The government push for reforms, focusing on the economy, – especially the reform of the labour market, considered of paramount relevance to go back to high rates of growth – was slow to materialize, while the popularity of the executive did not seem to benefit much from the choice of new members. The first real test that the government had to face was the first anniversary of the sinking of Sewol, a tragedy which continued to be problematic for Park Geun-hye, also one year later. On 16 April, in fact, exactly one year after the sinking, the victims’ families refused to meet the President at a commemoration and prevented the Prime Minister from accessing another event in memory of the victims.[7] The two facts clearly showed that the public opinion, and especially the families of the victims, considered the government’s responsibilities in what happened to be very serious. In particular, the main target of their rage was the inaction of the government in carrying out its role in protecting and assisting the citizens.[8]

However, the month of April proved to be very problematic for the government not only for the anniversary of the sinking of Sewol. The new Prime Minister, Lee Wan-koo, who took office a few months earlier, was, in fact, involved in a scandal for accepting, in the past, an improper gift from a businessman. On 9 April, Sung Woan-jong, a South Korean businessman under investigation for the failure of a number of energy projects, was found dead from an apparent suicide. In one of his pockets, the police found a handwritten piece of paper containing the names of politicians with the sums that Sung allegedly paid to each of them. Among these names there were also a number of leading members of the ruling party and some of the President Park’s closest associates, one of which was the newly-appointed Prime Minister, Lee Wan-koo.[9] Although Lee denied any wrongdoing, the decision to include him in an investigation by a special team of the Attorney General aimed at shedding light on the issue, led him to resign on 21 April. The resignation was accepted and formalized the following week. As a result, South Korea was again without a Prime Minister; the Minister of Finance and Deputy Prime Minister, Choi Kyoung-hwan, was appointed acting Prime Minister.[10] The thrust for renewal and reform, launched by President Park Geun-hye to boost the action of her government, recover consensus among the public and, above all, regain her identity as a strong political leader, crashed, after a few months, against the typical rocks of South Korean politics: bribery and collusion between political authorities and economic and financial entities. In spite of new scandals and new protests, in the 29 April by-elections, Saenuri dang, the President’s party, managed to win 3 out of the 4 available seats, while the NPAD, the main opposition party, suffered a stinging defeat including the loss of the historically Democratic stronghold city of Kwangju, to an independent candidate, previously a member of the NPAD.[11] Albeit very limited in scope, these elections seemingly showed that the electorate, despite its disillusionment and discontent with the government, was even less inclined toward the opposition party, foreshadowing a very complicated scenario for the general elections, scheduled for April 2016.

2.1.2. The MERS crisis

The crisis that seriously tested the executive, however, took place in June 2015 with the outbreak of the MERS crisis and lasted until the end of July. In late May, in fact, the first case of this disease was confirmed in the country, isolated in a 68-year-old patient, returning from a trip to Bahrain, via Qatar. The insufficient controls by the South Korean health authorities brought the number of infected to 7 before the end of May. On 2 June, the first two deaths due to MERS were confirmed, while the number of detected cases rose to 25, mainly among hospital staff, patients, and visitors, and the number of people quarantined went up to 680.[12] Although MERS did not constitute a real threat – as reaffirmed by the World Health Organization – from this point on, the country was swept by a wave of mass panic, lest the disease would spread uncontrolledly. This mass panic was amplified by the inefficiency shown by the health authorities, but also by the entire government’s lack of communication skills and leadership, confirming what had emerged as the main problems of the Park Geun-hye administration in the recent past.

The virus, in fact, was not identified in the first patient for nine days, a period during which he travelled to different hospitals to receive treatment, in both the capital and the suburbs. As a consequence, patients and medical staff were infected in the health facilities where the first patient was treated. Once the medical problem was detected, government authorities decided not to disclose the name of the hospitals at which the MERS infected people received assistance, with the intent not to create panic in fellow patients and the population living nearby. This policy, however, resulted in scaring the population away from health facilities, while the lack of information further increased the panic. Only about twenty days after the registration of the first case, the government decided to make public all the information in its possession.[13] The first weeks of June were thus dominated by a crisis created more by the mistakes of the government than by the real health risks. After recalibrating the intervention, in fact, the situation quickly returned to normal and, by the end of the month, the MERS crisis was finally contained. It took, however, one more month, until 25 July, before the authorities officially declared the MERS outbreak over. The final tally was 189 people infected, 36 victims, most of them belonging to debilitated categories, and several thousand people held in quarantine. The social and economic consequences were even worse: schools and kindergartens closed for several weeks, many social events and public activities were suspended or cancelled, trade and tourism were negatively affected. In June, more than 100,000 visitors from China and Hong Kong cancelled their reservations, and even South Koreans tried to avoid crowded places, such as markets, malls, and shopping areas, with the inevitable economic consequences. The Bank of Korea decided to intervene through a US$ 590 million fund for small and medium businesses affected by the MERS crisis.[14] The adverse economic effects of the epidemic were limited by its rapid resolution; however, these adverse effects, although limited in time, hit the South Korean economy hard, at a time when it had already slowed down.

The slow and inadequate response to the crisis and the «monopoly of information», put in place in order not to cause panic but producing the opposite effect, became the main criticism made to the government. They were the same criticisms raised in the aftermath of the Sewol tragedy. Once again, the figure of the President was seen as detached from the rest of the population, its sufferings, and concerns, characterized by an authoritarian attitude towards the other members of the government, dangerously reminiscent of the authoritarian regime of her father, but with less and less authority in the public eye.

2.1.3. The Autumn protests against the government

The MERS outbreak was not the only obstacle that the presidency had to face during the course of 2015. After the summer storm, or rather, with the autumn months, a number of initiatives launched by the government met fierce opposition from broad sectors of civil society. This opposition took the form of a series of massive demonstrations, especially during the month of November, to which the government responded with a heavily authoritarian and repressive attitude. One of the central issues around which the dissent of the population focused, had to do with a very sensitive topic for South Korean public opinion: historical memory. On 12 October, in fact, the South Korean government announced a reform according to which, by 2017, the history textbooks for middle and high schools would be published by the government itself, rather than by private publishing houses.[15] A measure of this kind immediately unleashed a wave of protests by many groups in civil society, organizations related to the world of education and ordinary citizens, who considered this approach to be a dangerous limitation to pluralism in education and information and an example of governmental interference that dated back to the period of authoritarianism in the country. During Park Chung-hee’s years in office, in fact, there was only one single government-sponsored history textbook in schools, in which the dictator’s coup was presented as a revolution and the authoritarian regime was justified.

The opponents of the reform feared the possibility that the new government manuals would provide a milder interpretation of the authoritarian period, in particular the Park years, which is still a controversial issue within the country. While the harsh repression of civil society and political opposition continues to be one of the hallmarks of the period from 1961 to 1979, on the other hand, the spectacular economic growth of the same years brought a large segment of the conservative electorate to see Park Chung-hee regime in a favourable light. The risk was therefore to convey a South Korean version of the recent past with a perspective mainly linked to the latter interpretation, fears heightened by the presence of Park’s daughter at the helm of the country. In addition, progressive opponents were concerned about the interpretation of obscure and controversial points of the country’s contemporary history, such as: the period of Japanese colonization, in particular the collaborationism of many Koreans; the massacres of civilians during the Korean civil war; and the abuses against political dissidents. The government and the supporters of the reform, from the conservative camp, instead, placed emphasis on the need to teach the country’s history without the ideological bias of leftist movements, and not to inculcate in the young generation a «masochistic view of history». In this case, the main focus of the criticism was the emphasis given by many extant history textbooks to the obscurities of South Korean history, the soft attitude towards North Korea, with which they emphasized the common ethnic origins and cultural affinities, an excessively tolerant view of the North Korean regime, and the latent feeling of anti-Americanism that led many textbooks to negatively assess the US role in peninsula’s history.[16]

Ironically, many of the reasons given by Park’s government to support the textbook reform, especially the «masochistic view of history» formula, were the same used in Japan to support the adoption of textbooks with a decidedly revisionist perspective about the imperial period, a decision that had sparked strong protests in South Korea.[17]

The textbook reform, strongly supported by the government for the entire month of October, was finally approved on 3 November, unleashing protests and fears in broad sectors of the public opinion.

These protests converged with those against the government new labour legislation, aimed at increasing the competitiveness of South Korean industries. The unions, in particular, lashed out against a policy that would make dismissal easier and quicker, claiming that it was a gift to the country’s cash-filled conglomerates – chaebol – while an increasing share of workers had to survive with precarious and low-paid jobs. On Saturday, 14 November, the anger of these broad sectors of public opinion led to a huge demonstration in the streets of Seoul, the largest since the candlelight vigils in 2008.[18] Tens of thousands of people – 130,000 according to the organizers, 68,000 according to the police – gathered in City Hall Square, protesting against Park Geun-hye, her textbooks policy, and the new labour reform. The event also had a violent aspect, with clashes between police and protesters leaving dozens wounded on both sides.[19] The political consequences came quickly. In fact, in the aftermath of the event, the Saenuri dang decided to defend the actions of the executive, condemned the protests and considered the demonstration illegal; at the same time, the work of the police was praised, a tough response against the organisers,  especially trade unions leaders, was demanded, and an iron fist policy against any similar future event was advocated. On the contrary, for the opposition the police response was disproportionate while the government was guilty of not listening to these important requests from civil society.[20] A few weeks after the event, the Minister of Justice, Kim Hyun-woong, reiterated the determination of the government to suppress future unauthorized demonstrations, targeting in particular a new rally organized for Saturday, 5 December.[21] In the end, this new demonstration had a much lower impact than the previous one, and did not trigger any violence.

These developments of the last months of 2015 had a very negative impact on the figure and on the popularity of the President. A survey conducted in the aftermath of the protests showed, in fact, a big drop in the approval of the government action, located mainly in the South-eastern areas, which constitute the main bastion of support for Park Geun-hye.[22] The year ended with a new cabinet reshuffle, in which key members of the executive were replaced, including the Ministers of Finance, Education, Interior, Trade and Equal Opportunities, precisely in order to revive the action of the government, especially in the economic field, and to recover consensus, before the general elections scheduled for April 2016.[23]

Like the previous year, 2015 also ended in South Korea with a strong decline in the popularity of the President and a number of shadows cast on the quality of democracy in the country. Park Geun-hye’s authoritarian tone did not translate, in fact, into political leadership at the helm of the country, especially during times of crisis, and created considerable concern in large parts of civil society. This situation was amplified by the family legacy from which Park could not escape and currently represents a double-edged sword in the South Korean political landscape.

2.2 North Korean domestic politics: towards the launch of a new political line

2015 represented a new evolution in the political path of North Korean leader Kim Jong Un. After the «purges» and the induction of new political figures of proven loyalty in 2013 and 2014,[24] the new young leader started to implement and formalize a new policy, directly associated with his image as the new leader of the party and the country. In 2013, the party’s standing committee had already approved the new political guideline called byungjin (parallel development), aimed at simultaneously pursuing the nuclear programme and economic development. The rationale was that the development of a credible nuclear deterrent could be used to free resources from the military apparatus and devolve them to the pursuit of a higher degree of economic development. Just like the son’gun (military first policy) launched by Kim Jong Il in the 1990s, consisted in putting more emphasis on a particular aspect within the ideological framework of Juche (self-reliance), likewise byungjin was launched as a further evolution based on son’gun and within the broader ideology of Juche.

During the spring of 2015, the North Korean regime carried out several missile tests, which appeared to be as messages to South Korea and the United States, engaged at the time in joint military exercises. At the same time, according to South Korean intelligence sources, a new series of «purges», targeting important members of the regime, took place. On 29 April, in fact, an audition of the South Korean National Intelligence Service (NIS) to the National Assembly reported the news of the execution of 15 senior regime officials during 2015, including a number of deputy ministers.[25] Soon after, on 13 May, the NIS published a new report, according to which North Korean minister of defence general Hyon Yong Chol had been charged with treason and executed.[26] In this case, however, some doubts about the reconstruction of the South Korean intelligence service arose. Several South Korean analysts, in fact, argued that Hyon’s close proximity to Kim Jong Un in propaganda films transmitted during the same week of the alleged execution demonstrated the unreliability of the information; in fact, it is standard practice for North Korea to remove the name and the figure of leaders in disgrace as the first step of their ouster. In addition, according to the NIS, the sentence would have been carried out on 30 April, but until that day Hyon’s name appeared in the main newspaper of the regime, the Rodong Sinmun, thus making the general’s execution highly unlikely.[27] The doubts about Hyon’s demise remained; however, during the summer, the regime officially replaced him at the helm of the defence ministry with Pak Yong Sik, who was promoted to the rank of General in April 2015. These alleged new «purges», and in particular Hyon’s case, gave life to a number of conflicting interpretations. In all probability, however, these changes can be explained as without any high political relevance and such not to undermine the stability of the regime. They appear to be part of the strategy of power consolidation of the new leader. Kim, in fact, keeps a firm grip on power, with periodic removals of his high-level staff to further cement its control. This constant shuffling is intended to stoke fear among high officials, both civilian and military, who have to manoeuvre in an unpredictable and dangerous political environment.[28] Moreover, those who are promoted usually are faithful to the one who guaranteed them a new position of power.

As summer approached, however, the regime had to face other priorities. The spring and early summer were characterized, in fact, by an almost total lack of rainfall, which caused a severe drought. By the end of May, the first alarm about possible of food shortages in the country was sounded, and, in mid-June, the situation became serious enough to push the national news agency to announce that the country was facing the worst drought in the last 100 years and that 30% of the rice crop was lost.[29] The announcement by one of the official organs of the state was probably a move aimed at obtaining international assistance.

When problems occur in food production in North Korea, the first thought is always to the tragic famine of the 1990s. However, despite the severity of the problem, the 2015 drought was not comparable to the situation prevailing in the 1990s, thanks to the fact that agricultural production had grown in a decisive manner from 2011 onwards, with record harvests both in 2013 and in 2014. The main reason for this improvement was the reforms introduced by the regime, which had allowed families to register as «production unit» and keep for themselves 30% of the crop. This new mechanism linked the well-being of farmer families to their productivity.[30] Fortunately, in the last weeks of June and early July, the amount of rainfall normalized, thereby limiting the impact of the drought.

During the month of August, the North Korean regime took a further decision aimed at symbolic self-assertion; on 7 August, in fact, it announced the creation of a Pyongyang time zone, set 30 minutes earlier than the current one – and eight hours and 30 minutes ahead of GMT. The reason for this change was that the time zone of the peninsula had been decided by the Japanese during the colonial period. To commemorate the seventieth anniversary of the liberation of the peninsula from the colonial rule, the regime established that, from 15 August, the exact anniversary of the Japanese decision, the time zone of Pyongyang would no longer be the same as Japan – or as South Korea.[31] The practical implications of the decision were actually very few, given the poor integration of the country into the global economic and trade mechanisms; the only minor problems in communications took place in Kaesong, where South Koreans and North Koreans are working together. The significance of the decision was therefore exclusively symbolic; but, unfortunately, more than marking a break with Japan, the decision was likely to disrupt the efforts of integration between the South and the North of the peninsula, as exemplified by the case of the industrial park in Kaesong.

On 10 October, the seventieth anniversary of the founding of the WPK took place. The anniversary was celebrated with a grand parade in the capital, one of the largest in the history of the country, in which the regime showed all its military force. Kim Jong Un, in his first public speech since 2012, which lasted 25 minutes, affirmed his love and his dedication to the people, thanked North Koreans for their support despite the sanctions and blockades of the international community, and promised improvements in the economy and in the citizens’ living standards. Regarding the military aspects, Kim repeated that the country and its military were ready to support «any kind of war» against the United States to defend the independence of the motherland, with a clear reference to the nuclear program.[32]

On 30 October, the regime called for the seventh Congress of the Party in 2016, the first since 1980.[33] After 36 years, this unexpected convocation immediately gave rise to a series of speculations. According to several observers, the choice of convening a Party Congress was related to Kim Jong Un’s effort at consolidating his own power. A Congress would definitively solidify the changes that had taken place in recent years, primarily the policy guideline of byungjin, and perhaps would pave the way for future and more profound changes. Undoubtedly, in recent years the emphasis on the nuclear program has been accompanied by deep changes in the economic system, which led the country’s socialist economy to be increasingly influenced by elements of market economy. The Congress could thus be an opportunity to definitively ratify these changes of the internal system of the country.[34]

3. Inter-Korean relations

3.1. The spring highs and lows on the peninsula

The year 2015 opened under positive auspices for inter-Korean relations. During 2014, a number of constructive events took place between the two Koreas. In particular, the new round of family reunions in February 2014, and the inter-Korean high-level meeting, in October,[35] paved the way for a positive beginning of the upcoming year.

On the first day of 2015, Kim Jong Un’s New Year’s speech to the nation contained conciliatory messages towards Seoul, including the recognition of the importance of improving inter-Korean relations and the possibility for a meeting with President Park. The speech, however, was not followed by any concrete actions from either side. As such, the first months of the year passed by without any remarkable event in inter-Korean relations. In spring, as usual, North Korea decided to test missiles and held military drills in the East Sea on several occasions. In the early days of March, some short-range missiles were launched as a protest against the annual joint exercises in the area between the United States and South Korea; on the first days of April, a new round of missile launches was carried out just in time for the visit of US Secretary of Defence, Ashton Carter. This move was considered by many not as accidental, but rather as a signal sent from Pyongyang to the international community, in particular to Washington.[36] In May 2015, after some questionable claims by both governments, tension rose again, culminating in North-Korean rounds of artillery fire, this time in the West Sea. The move by Pyongyang, which nonetheless decided to give the southern counterpart advanced warning, seemed to have the goal of raising the tension in the area, and revive the dispute between the two countries related to their maritime border.[37] In fact, despite more than sixty years of fait accompli, the so-called Northern Limit Line (NLL) – namely the extension of the border into the sea that was established with the 1953 armistice – has never been recognized by Pyongyang, resulting in periodical naval skirmishes between the two countries. [38]

3.2. The August crisis

The most crucial month for inter-Korean relations was definitely August. At the beginning of the year, a series of expectations emerged, due to the recurrence, on 15 August, of the seventieth anniversary of the liberation of the peninsula from Japanese colonial rule. Unfortunately, these expectations were betrayed.

The month of August opened with a possible sign of a thaw, namely the visit to North Korea by the former First Lady of South Korea, Lee Hee-ho. President Kim Dae-jung’s widow enjoyed, in fact, great respect in Pyongyang, thanks mainly to the efforts towards reconciliation pursued by her husband in his years as President (1998-2003). However, the South Korean government decided not to give any political significance to Lee’s journey, and did not make use of Ms. Lee to send any message to the North Korean regime during the visit. Surprisingly, North Korea decided to give little attention to the initiative as well, avoiding the scheduling of high-level meetings for Ms. Lee.[39] The month continued in an anything but positive way for the inter-Korean relations. On 10 August, in fact, the South Korean authorities officially accused North Korea of ​​having placed some landmines in the southern part of the de-militarized zone; mines that had caused serious injuries to two South Korean soldiers. According to the South’s military command, the act was a deliberate provocation by North Korea, carried out through an operation of infiltration across the border. Immediately, as retaliation for the incident, the South Korean government decided to restore the broadcast of propaganda messages through loudspeakers along the border. The broadcasts represented one of the most critical points for inter-Korean relations and were interrupted 11 years before, as a sign of good will on the path of reconciliation.[40]

A few days later, Pyongyang denied any involvement in the events, accusing Seoul of raising tensions on the peninsula, and threatening retaliation for the resumption of propaganda broadcasts at the border, including the possibility to hit the loudspeakers installations with artillery. To make matters worse, some South Korean activists decided to restart the launch of balloons from the border, carrying banners containing denigrating messages directed against Kim Jong Un and the North Korean regime. On 15 August, the anniversary of the liberation of the peninsula from colonial rule, rather than being an occasion for reconciliation, turned into a new day of tension. As a result, in her speech to the nation, Park Geun-hye could not refrain from highlighting the latest negative developments in inter-Korean relations and stigmatized North Korea’s behaviour, regarded as provocative and unjustified. In particular, the South Korean President affirmed that Pyongyang’s attitude, made of threats and provocations, could only lead to more isolation for the country and, ultimately, to its destruction. Park went even further, saying that North Korea would have to undertake a process of rapprochement and opening to the international community, just like Cuba had recently done.  She also stated that the liberation from the colonial rule could not be considered complete until the achievement of the reunification of the Korean people.[41] The reaction of the North Korean regime to Park’s speech was one of condemnation and derision, with the usual disparaging tone against South Korea and its President, pointing out the inconsistency of a message where conciliatory proposals had been mixed up with very harsh accusations.[42]

As a result, tensions rose rapidly on the peninsula. At the same time, however, in what proved to be a certain degree of schizophrenia in inter-Korean relations, the two countries agreed to a wage increase in Kaesong joint industrial park. The issue had been on the table for several months, since February, and was at the centre of negotiations between the Ministry of reunification and its North Korean counterpart. On 18 August, the two sides finally announced the agreement, introducing a 5% increase in the minimum monthly wages for North Korean workers in Kaesong.[43] This decision, apparently limited in scope, had a significant symbolic aspect. The existing discrepancy between the high-sounding public rhetoric, especially linked to the military and security aspects, and the more concrete plans for economic cooperation demonstrated yet again the need for projects of this kind in inter-Korean relations in order to reach tangible results in easing tension. The problematic and often-reviled concept of «flexible dualism»,[44] introduced in 1997 by former President Kim Dae-jung during the «Sunshine Policy», proved once again to be a very effective tool for improving the relations on the peninsula, and, despite having been officially abandoned since Lee Myung-bak’s election (2008), it seemed to still be alive and working in practice.

A few days after Park Geun-hye’s speech, tension, already high, rose even more. In response to the loudspeaker propaganda campaign, and also to the joint military drills Ulchi-Freedom Guardian between South Korea and the United States, an exchange of artillery between the two countries broke out on 20 August, started by rockets apparently fired from North Korea, to which the South Koreans immediately responded with their own artillery; the unusual amplitude of this exchange of fire – the first time in five years – was worrying. The following day, the North Korean regime declared a state of «semi-war», one of the highest military alerts in the country, declared only twice in its history, in 1968 and 1993.[45] To try to find a way out and avoid a useless and dangerous escalation, the two Koreas decided to meet two days later, on 23 August. This first meeting was aimed at intervening quickly to stop the escalation while, at the same time, laying the groundwork for an agreement between the two governments. Both delegations were made up of members of the highest level from both governments: Chief of The National Security Office Kim Kwan-jin and Minister of Reunification Hong Yong-pyo represented South Korea, while Hwang Pyong So, considered number two in the North Korean power structure, and Kim Yang Gon, the secretary in charge of inter-Korean relations, represented Pyongyang’s regime. Another positive signal came through the official channel of information of North Korea, the Korean Central News Agency (KCNA), which, in announcing the meeting, referred to South Korea using its official name, the Republic of Korea, avoiding any offensive references.[46]

The meeting of the two high-level officials, which lasted nearly three days, led to a real agreement, on 25 August, in which the two sides decided to take concrete steps to ease tensions: South Korea would stop the broadcasts of propaganda messages, while North Korea would withdraw the «semi-war» alert and express regret for the two South Korean soldiers injured by landmines. Through this formula, Pyongyang could meet the main South Korean request and, at the same time, did not explicitly recognize any responsibility in the issue. In addition, the two sides decided to go further, agreeing to new rounds of family reunions and a series of inter-governmental high-level meetings, aimed at improving inter-Korean relations.[47] A few days later, the two parties held a meeting to define the dates and modality of family reunions. On 7 and 8 September, in Panmunjom, the delegates of the two Koreas agreed to hold two rounds of meetings, between 20 and 26 October, at the tourist facilities located on Mount Kumgang.

With the definition of the details for the family reunions, the «August crisis» could be considered definitively closed. The events that took place can be certainly considered significant, as it was the moment of highest tension since the nuclear test in February 2013 and its aftermath. As had happened at that time, also in this case the crisis created the possibility of new spaces for dialogue and cooperation. In an extremely rational way, in fact, the two sides agreed to negotiate before the situation could lead to a pointless military escalation, and came up with an agreement that not only solved the immediate issues, but also created the basis for further positive developments, especially for what concerns the high-level meetings. The future developments in autumn and the presence of an overall strategy in the management of inter-Korean relations would decide if it were a real watershed, as predicted by many analysts in South Korea, or the umpteenth agreement destined to expire in silence.

3.3. The new rounds of family reunions and the inter-governmental talks

The second round of family reunions during Park Geun-hye’s administration started on Tuesday, 20 October, at Mount Kumgang, in the northern part of the peninsula. Over 750 Koreans, from both sides of the 38th parallel, met for two rounds of meetings – the first from 20 to 22 and the second from 22 to 25 – between members of families separated by the Korean War. Most of the participants were very old, some of them had to be transported by ambulance to Mount Kumgang, and represented a small fraction of those still waiting to be reunited with their relatives who live in the north; in South Korea alone, in fact, their number reaches over 66,000 people.[48]

The reunions, a highly symbolic and emotional event for the Korean population, also represent a kind of barometer for the relations between the two countries at the political level. It is, in fact, a humanitarian issue of great importance but with little military or political implications, and for this reason, it is often used as a first step towards future dialogue and cooperation, to show the goodwill of the parties. Even in the previous rounds, in February 2014, the aim was the same. This time the aim was to highlight the agreement reached in August and the possible developments of the inter-governmental talks that, along with the reunions, constituted the most important part of the agreement.

In this context, on 19 November the South Korean government accepted a proposal from Pyongyang to hold a preparatory meeting on 26 November. The session was supposed to be a working-level meeting between negotiators, with the goal of preparing the ground for a subsequent wide-ranging and high-level dialogue. The 26 November meeting in Panmunjom gave a semi-positive result. In fact, although the two sides agreed for the coming intergovernmental meeting, which was scheduled for 11 December, they decided to limit it to the level of deputy ministers, whereas it was previously thought of as a meeting between ministers, and to hold it in Kaesong, a less significant location compared to one of the two capitals.[49] These early warning signs became concrete during the meetings. After marathon talks that lasted two full days, on 12 December, the parties announced that they had failed to reach any agreement and decided to suspend the inter-governmental meetings.[50] The main point of friction was the reopening of the joint tourism program in Mount Kumgang. The project had been one of the Kim Dae-jung’s administration major achievements in terms of cooperation, and consisted of a series of tourist facilities built by the South Korean Hyundai Asan Fundation on one of the most spectacular and symbolically highly important mountain, situated in the north. The program had been interrupted in 2008, however, following the death of a South Korean tourist, killed by North Korean soldiers when she ventured into an off-limits military area. The representatives of Pyongyang privileged the reopening of the Mount Kumgang program, while Seoul’s priority remained the issue of family reunions. The impossibility to find a common ground on these issues led to the interruption of the dialogue, without so much as an agreement on the date of further meetings.

This failure showed how the Trustpolitik, launched by President Park Geun-hye three years earlier, was struggling to be translated into practice. South Korea’s lack of a proactive approach to the relations with North Korea, which translated into facing a crisis at a time without an overall strategy of trust-building, proved to be the main cause of the impossibility to build mutual trust between the parties, and create a new course of inter-Korean relations.

4. International relations

4.1. Seoul and Beijing: friends as never before…under the gaze of Washington

In 2015, the already very good bilateral relationship between Seoul and Beijing became even more intense, reaching its apex in the second part of the year. The launching on 20 December of a Free Trade Area agreement between South Korea and China marked a new stage in bilateral diplomacy under the presidencies of Park Geun-hye and Xi Jinping. They met in Beijing in September, for the sixth time since their taking office, on the occasion of China’s V-day celebrations, which included the seventieth anniversary of both the victory of the Chinese People’s War of Resistance Against Japanese Aggression and the victory in the World Anti-Fascist War.

Predictably, Park’s presence in Beijing was seen by many commentators as a major geopolitical shift in the region and stimulated speculations about an increasing South Korean alignment with China and a consequent loosening of its ties with the US In fact, the South Korean President was the sole US ally present at the celebration, while all other leaders of the most-developed nations’ declined the invitation to attend, sending only low-level delegations. On the top of it, this happened at a time when China was perceived as becoming increasingly more assertive and the US increasingly more determined in containing its rise. However, even if Park’s presence could be seen as a real test of the strategic cooperative partnership between the China and South Korea, such speculations were misplaced for several reasons. The most important was the fact that Seoul continued to consider both the US and the People Republic of China (PRC) vital for its interests – the former security-wise, the second economy-wise – and was thus quite «natural for Seoul to try to derive the maximum benefit from relations with both countries».[51]

Actually, since the beginning of the year, some of the critical aspects characterising  the South Korean-Chinese relationship came to the surface, with special reference to Seoul’s effort to strike a balance between its competing relationships with Beijing and Washington. In particular, the South Korean government was confronted by the necessity to take tough decisions, which could have important consequences on its relations with both the United States and PRC.[52] The first (which remained undefined in the year under review) had to do with the deployment in South Korea of the US-backed Terminal High Altitude Area Defense missile system (THAAD), aimed at facing possible military threats from North Korea. A decision favouring the deployment would understandably raise China’s concern. In fact, Beijing was afraid that THAAD, by subverting the existing military balance in the peninsula, might threaten regional security. The second decision concerned the ROK’s (Republic of Korea) decision to join the China-led Asian Infrastructure Investment Bank (AIIB). Here the problem was that the US had encouraged its allies not to join it, due to concerns over China’s rising power on the world stage. However, first London and then Berlin, Paris and Rome had not heeded Washington’s desires, and had joined the AIIB.[53] Only one year before, when Xi Jinping had first asked South Korea to join the AIIB, Washington had urged Seoul not to accept, and Seoul had complied with the US wish.[54] However, one year later – as a consequence of the decisions taken by the US European allies – things had changed. Resigning itself to the inevitable, on 17 March Washington gave South Korea the green light, announcing that it was up to Seoul to decide what to do. On 26 March Seoul communicated its intention to join the AIIB.[55]

On 3 September, when the PRC commemorated the end of the WWII with an extravagant military parade in Tiananmen Square, all eyes were understandably pointed at the foreign dignitaries who had accepted Beijing’s invitation. Among them, as noted above, there was Park Geun-hye sitting in a front row seat, closed to Vladimir Putin and Xi Jinping. According to Yoon Sukjoon, of the Korea Institute for Maritime Strategy, [56]  by her choice to attend the event, Park Geun-hye was demonstrating that a collaborative strategy through skilful diplomacy was the best for peace and security in East Asia; at the same time, she was also showing her strategic leverage, taking advantage of South Korea’s strategic partnership with China without undermining the security alliance with the US.[57]

Analysing the reasons and the implications of Park’s presence in Beijing, Lee Ki-hyun, of the Korea Institute for National Unification, argues that its real significance was to be found in the «change of stature in the ROK-China relations revealed in the process».[58] Indeed, the South Korean President was received by Beijing as the most important guest throughout the entirety of the visit – from the protocol accorded at the V-Day celebrations, to the exclusive luncheon after the bilateral summit, and the consecutive talks with Premier Li Kejiang.[59] This suggested that South Korea’s strategic value for China had increased significantly. In this sense, the Beijing summit played a key role in upgrading the two countries political ties, paving the way for the launch of the ROK-China Free Trade Area in December, which marked a new stage in bilateral diplomacy under Park and Xi.

The deal had clear advantages for South Korea, as its government projections showed the benefits for the country’s economy in term of real GDP growth, job growth, and the growth of bilateral trade.[60] Significantly the South Korea National Assembly ratified the China-ROK deal on 30 November, only 5 months after its signing.[61] This can be compared with the fact that the free trade agreement between South Korea and the US (KORUS FTA) was ratified exactly 4 years after its initial signing, in the midst of heated parliamentary debates and violent mass protests.[62]

Finally, it must be noted that the Beijing summit served as a catalyst to the normalization of relations in Northeast Asia, as it was in this occasion that Park proposed to China to hold a ROK-China-Japan trilateral summit «between late October and early November» in Seoul.[63]

Generally speaking, Park Geun-hye’s «China policy» was judged positively both in China and South Korea. On the one hand, South Korean public media agreed to consider the public support for Park’s visit to China the key factor for the spike in her domestic approval rate in early September.[64] On the other hand, Chinese media organizations selected Park Geun-hye among the top ten people of the year, citing in particular her balancing role between major powers and her attendance at Beijing V-Day (on the list there were also Vladimir Putin, Angela Merkel and Myanmar’s democratic symbol Aung San Suu Kyi).[65]

4.2. The «long-awaited» rapprochement between Seoul and Tokyo

2015 was a relevant year in South Korean-Japanese relations since it marked not only the seventieth anniversary of the end of WWII (and thus the end of Japanese colonial rule in the Korean Peninsula), but also the fiftieth anniversary of the establishment of diplomatic ties between Seoul and Tokyo (formalized on 22 June 1965).

As already seen in the previous volumes of «Asia Maior», the ties between the two countries had been frosty in recent years, beginning with Park Geun-hye and Abe Shinzo’s taking office. Since ten, historical divisions and territorial disputes came (once again) to the fore, creating an increasingly strong barrier between the two neighbours and the US’s two most important Asian allies. Actually, the frosty bilateral ties had started to thaw since the end of 2014, when the two countries signed an important trilateral agreement with Washington for the sharing of military and other sensitive information concerning the North Korean nuclear and ballistic program.[66] That is why at the end of 2014 there was cautious optimism about a further improvement in the bilateral ties in 2015, also in view of the aforementioned anniversaries.

Confirming such optimism, the first months of 2015 saw some important positive, starting with the resumption of talks among the foreign ministers of South Korea, Japan (and PRC), for the first time in nearly three years. They met in March, at the Seventh Trilateral Foreign Ministers’ Meeting in Seoul, in a bid to restore cooperation between the three Asian economic powers.[67]

Much more relevant, however, was the anniversary of normalization of relations on 22 June, which brought South Korean Foreign Minister Yun Byung-se, for the first time since he took office in 2013, to Tokyo for a commemoration banquet.[68] On its part, Seoul hosted an international academic conference from 17 to 19 June dedicated to the topic «beyond the past and into the future of the South Korea-Japan relations».[69] Park and Abe, while attending separate celebrations – Park at a reception at the Japanese embassy in Seoul, and Abe at the South Korean embassy in Tokyo – spoke optimistically about the future of Japanese-South Korean bilateral relations, although showing their awareness that this improvement would not happen overnight. A South Korean official’s words to South Korean’s Yonhap News Agency – «Spring has come to South Korea-Japan relations, though the ice of the river has not melted yet» – reflected well the difficulties still facing the two countries.[70] Nonetheless, according to some experts, the diplomatic functions to commemorate the fiftieth anniversary of the establishment of diplomatic ties between Seoul and Tokyo could be seen as a turning point for the improvement of bilateral ties, while the trend to mend fences appeared to have become irreversible.[71]

On the contrary, the general mood during the celebrations of the seventieth anniversary of the end of World War II (which marked Korea’s independence from Japanese colonial rule) was decidedly disappointing for Seoul. In his statement, when referring to Japanese war crimes, the Japanese Premier mentioned «deep remorse» and generically expressed «heartfelt apology» without actually issuing a direct apology himself.[72] Predictably, Abe’s speech did not meet Seoul’s expectations,[73] and South Korea’s media reaction was largely negative. In particular, the Chosun Ilbo daily criticized the Japanese Prime Minister for not apologizing directly for Japanese aggression and colonial rule, while the Yonhap News Agency defined the statement as a major step backward from those made by two of his predecessors (referring to Murayama Tomiichi and Koizumi Junichiro).[74] Nonetheless, while inviting Tokyo to let «sincere actions» follow Abe’s words, Park Geun-hye declared that, despite all the difficulties, the two countries had to «move forward to a new future».[75]

It was in this spirit that the two sides met for a bilateral summit in Seoul, at the beginning of November, on the side-lines of the trilateral summit among the PRC, Japan and South Korea. The meeting took place amid heightened tensions in the Asia-Pacific region, following the provocative decision by the US navy to send a destroyer within the 12 nautical mile territorial limit surrounding Chinese-claimed territory in the South China Sea (where China had built artificial islands).[76] It is no coincidence that analysts and commentators agreed to consider the trilateral summit largely symbolic, «an achievement in itself», considering that none of the issues that had initially disrupted the annual summits had been resolved.[77] Not to mention, the fact that the historical issues that had contributed to disrupt the trilateral summits after 2012 were barely mentioned in the declaration.

The joint statement released at the end of the trilateral summit («Joint Declaration for Peace in East Asia») focused on closer collaboration, both in terms of the economy and regional security, while the only reference to history saw all three sides agreeing to carry out further cooperation «in the spirit of facing history squarely and advancing towards the future».[78]

As far as the bilateral summit was concerned, the overwhelming majority of observers agreed to reduce its importance – as had been the case with the trilateral summit – to a symbolic level, while considering it quite disappointing in terms of substance,[79] because it had failed to yield anything tangible beyond the appearance of improving relations between the two sides. Nonetheless, as for the abovementioned trilateral summit, the fact that the meeting had taken place after a long hiatus was seen as more important than its content, raising hopes for the beginning of a «new cycle of good relations between the countries».[80] Nonetheless, according to Scott Snyder, the «cold summit» result, with no joint press conference, no joint statement, and no Park-hosted lunch for the Japanese Prime Minister (as she had done for the Chinese Premier Li Kejiang), clearly reflected the on-going political gap between the two countries, despite the re-establishment of normalized communication channels in every area of the relationship.[81]

As expected, the «comfort women» issue dominated Park and Abe’s 100-minute long conversation.[82] The two sides expressed the commitment to «accelerate talks to reach an agreement as soon as possible» in order to resolve it once for all, but they did not offer details of how such a result might be achieved. Actually, Park Geun-hye had already indicated her preferred timeline for the on-going negotiations, when, in a written response to questions presented by two Japanese media organizations, had stated: «I truly hope that this issue can be resolved within this year/hopefully to be settled by the end of the year».[83] The new positive approach by both leaders (particularly by the South Korean President) was also evident in their personal attitude. In a commemorative photo session prior to the talks, Park Geun-hye smiled as she shook hands with Abe.[84]

The more relaxed atmosphere that emerged from the summit was quickly disturbed by some frictions,[85] but, thanks to the will of both leaders, neither Seoul nor Tokyo let any single issue damage the bilateral relation’s new spirit.[86]

In fact, 2015 ended with a bang. On 28 December, the two countries signed a historic deal which was supposed to put an «end» to the long-standing issue concerning the «comfort women/sex slaves».[87] Under the accord, Japan agreed to supply US$ 8.3 million in government funds to support the surviving Korean women (who totalled 46) who were sent to front-line brothels for Japanese troops before and during World War II. Japanese Prime Minister Abe Shinzo apologized for the women’s treatment, something he had been previously reluctant to do, through a statement by his Foreign Minister and a telephone call to South Korean President Park Geun-hye.[88] In return, South Korea promised to «finally and irreversibly» end the dispute and try to secure the removal of a comfort women statue in front of Japan’s Embassy in Seoul.  Both nations also agreed to mutually refrain from further public criticism related to this issue.[89]

However, despite immediate praise from the US, the public opinions on both sides, but especially in South Korea, were not happy about this denouement.[90] The «Korean Council for Women Forced Into Sexual Slavery», which represents a group of former sex slaves, considered the agreement inadequate, as it did not make clear enough that the recruitment of the women «was a crime done by the Japanese government and military systematically».[91] Also, it criticized the Japanese government’s decision to create a fund instead of directly compensating the surviving victims.[92] Accordingly, while marking a significant step, only the future will show the real impact of the agreement on Japan-South Korean relations.

4.3. The «missed debut» of Kim Jong Un on the international scene

2015 can be considered the year of the «missed debut» of Kim Jong Un on the international stage.

At the end of January, Yonhap News, the South Korean News Agency, reported that the North Korean leader might be attending the sixtieth anniversary ceremony of the Asian-African Conference (known as the Bandung Conference) in Indonesia on 24 April, marking his first official international visit since succeeding his father, Kim Jong Il, in 2011.[93] For Kim Jong Un, it would have been a «noteworthy diplomatic schedule», following his grandfather’s legacy, who had joined the Conference during its tenth anniversary in April 1965.[94] However, a brief announcement made by North Korean news agency KCNA, a few days before the beginning of the Conference, put an end to the speculations triggered by Yonhap News: «A DPRK [Democratic People’s Republic of Korea] delegation led by Kim Yong Nam, President of the Presidium of the Supreme People’s Assembly – stated KCNA – left here Saturday to take part in the Afro-Asia Summit and events marking of the sixtieth anniversary of the Afro-Asia Conference».[95]

After the missed opportunity in Indonesia, Kim’s first foreign visit seemed set to be at the Victory Day celebrations in Moscow on 9 May, following the declaration in January by Russian Foreign Minister Sergey Lavrov to reporters that the North Korean leader had accepted the invitation to attend the ceremony.[96] Moreover, repeated statements from Russian officials  gave the impression that Kim’s attendance was to be considered a fait accompli, also implying that a bilateral summit between Kim and Russian President Vladimir Putin was in the cards.[97]

Moscow had already invited Kim Jong Un at the end of 2014, in a move to crown a particularly good year in the relations between the two countries, both ostracized by the international community.[98] For Kim Jong Un, such an occasion would have contributed to further strengthen its relationship with Moscow, allowing his country to rebalance away from economic over-reliance on Beijing. Indeed, as already seen in the previous volumes of «Asia Maior», in the last few years, Pyongyang, while relations with the PRC soured and talks with Tokyo went through highs and lows, had increasingly relied on Russia as its last diplomatic ally. Furthermore, there was the possibility of using Moscow as the site for an inter-Korean summit, in consideration of the fact that the South Korean President had received the same invitation.

At the beginning of May, however, only a few days before the «big event», KCNA announced that the North Korean head of Parliament and nominal head of state, Kim Yong Nam, would attend the Russian Victory Day celebrations, without mentioning the reasons why Kim Jong Un had cancelled his trip to Moscow.[99] Kremlin spokesman Dmitry Peskov’s stated that Kim’s last-minute change had to do with unspecified «internal matters». While this was, in all likelihood, just a face-saving excuse, the hint to «internal matters» provoked widespread speculation, «with theories ranging from domestic instability to Russia’s refusal to come up with an arms deal incentive».[100] Other theories focused on the difficulty (and failure) to reach an agreement on security protocol for Kim while in Moscow. Actually, Russia reportedly refused to comply with North Korea’s request to give its leader a special treatment, given that there would be several other foreign dignitaries participating in the event.

In Moscow’s view, protocol arrangements would have been further complicated because, nominally, Kim was not a head of state.[101] Another supposed reason was that the North Korean leader was worried that relations with China could worsen, since, according to professor Kim Yong-hyun of Dongguk University: «It would have been very awkward for Kim to meet Chinese President Xi Jinping face-to-face in Moscow for the first time».[102] Much-discussed was also the possibility that Kim Jong Un’s was determined by the news, released two weeks before, that his South Korean counterpart would not go either.[103] All said, according to Andrei Lankov, the cancellation of Kim Jong Un’s trip to Moscow was «hardly a surprising announcement», since most observers had been rather sceptical about the chance that the North Korean leader would go to Moscow in his first-ever foreign trip. Lankov reflected instead on the reasons «why did North Koreans create the impression that Kim Jong-un’s visit was all but decided». For Lankov, it was quite possible that the North Korean leader had for a while been undecided about going or not. On the one hand, he needed Russia as a balancer against China; however, on the other had, «he may have quickly realized that he would have been facing not just any summit but a super-summit, and obviously succumbed to his worries and phobias».[104] In any case, the Moscow event would not have been the best place, not to mention the best time, for Kim Jong Un’s diplomatic debut, because it was going to be a large and noisy gathering, with «hordes of journalists swarming ready to spot and report a single slip or mistake». If Kim wanted to talk with the Russian President, reflected Lankov, a separate visit would be a much better idea.[105]

Beyond these two lost occasions, there was another chance for Kim Jong Un’s international debut, probably the most important one. In fact, in the meantime, the North Korean leader had also received China’s invitation to take part in its Victory Day Parade in September.[106] In a press briefing released on 14 April, China’s Foreign Ministry spokesperson Hong Lei announced that Beijing had «sent invitations to leaders of all relevant countries» to the ceremony commemorating the seventieth anniversary (3 September) of the Victory in the War of Resistance against Japan. Yonhap News Agency, quoting unnamed diplomatic sources, said that North Korea’s leader would be among those.[107]

It was the first time Kim Jong Un had been invited to China, probably in a move to improve the recent troubled state of Sino-North Korean relations, but also because, according to Kim Heung-kyu, director of the China Policy Institute at Ajou University: «It would be quite embarrassing for China and its (President) Xi Jinping to meet Kim Jong Un in Moscow when North Korea hasn’t solved its issues with China yet».[108] Quite unsurprisingly, Kim Jong Un declined the invitation from Beijing, confirming the strained political ties between the allies over Pyongyang’s defiant pursuit of nuclear weapons and wayward behaviour.[109] Again speculations on Pyongyang’s decision went from domestic considerations to reasons more strictly related to the bilateral relationship. For John Delury, of the Yonsei University in Seoul, Kim Jong Un possibly renounced to go to China either because he did not feel secure leaving his country or simply because he was not interested in a close relationship with Beijing.[110] However, according to the 1 September edition of KGS NightWatch the reason was a completely different one. In fact, the North Korean government insisted on its «Supreme leader» receiving the highest honours as a guest, and being placed on Xi’s right hand side. So, when informed by Beijing that he would be placed at the end of the reviewing stand, the North Korean leader decided to cancel the visit.[111]

Nonetheless, in a significant move, Kim decided to send Choe Ryong Hae, part of his inner circle, instead of the ceremonial head of state, Kim Yong Nam. Much has been said on Choe’s treatment by the Chinese, starting from the fact that he was seated far away from the centre, together with other undistinguished foreign dignitaries, while the South Korean President sat near Xi Jinping himself. However, as noted by a Chinese commentator, Choe did not hold an official government position, since his official title was «secretary of the Korean Worker’s Party»; thus, according to the protocol, with so many head of states and prime ministers attending the parade, the fact that he was seated behind the higher-ranking officials from other countries was natural enough.[112] However, Choe Ryong Hae was refused even a brief meeting with the Chinese President, while, as already noted, Park Geun-hye was received with all the honours. All this appeared to confirm the deteriorating trend in North Korean-Chinese relationship – which had become a constant during the Kim Jong Un-Xi Jinping era.[113]

After turning a cold shoulder to his two closest historical allies, speculation that the North Korean leader did not want to share the stage with other world leaders seemed to be clearly confirmed. In any case, Kim had missed out on important opportunities for his country, since he did not seem to care about its foreign relations, and at the end of the year – with the exception of the the relationship with Russia (on which more below) –  North Korea was as isolated as ever, in sharp contrast to the diplomatic activism which had characterized 2014.[114]

4.4. The «friendship year» between Pyongyang and Moscow

Following the excellent trend which defined North Korea-Russia ties in 2014, in the year under review the bilateral relation continued to be good, even after the cancellation of Kim’s trip to Moscow. Actually, since the beginning of the year there were clear indications confirming that North Korea considered its relation with Russia as ranking above all others,  the one with China included. On 2 January, when announcing, in order of their importance, the list of foreign leaders who had sent New Year’s greeting cards to Kim Jong Un, the North Korean state TV mentioned Vladimir Putin before Xi Jinping. This was in contrast with what had been done in previous years, when the Chinese President had always been mentioned first.[115] In the same spirit, in the middle of February, the Russian news agency ITAR-TASS reported a declaration by the Russian Ambassador in Pyongyang, Alexander Matsegora, according to which the Russian President and the North Korean leader exchanged regular messages in order to keep in touch and coordinate their policies.[116]

On 11 March, then, the two countries declared 2015 a «year of friendship» that was to be marked by a series of political, economic and cultural exchanges.[117] In reality, the declaration had been preceded in late February 2015 – during a visit by a North Korean economic delegation to Moscow – by an agreement that committed the two countries to discuss the creation of advanced development zones in the Russian Federation’s Far East.[118] In the same days, news also circulated that the Russian electricity giant TEK Monsenergo – a subsidiary of Russia’s state-owned Gazprom, the world’s largest extractor of natural gas – would carry out a feasibility study to bring electricity to North Korea.[119] Again in February, the two countries announced the intention to conduct a series of joint army, navy, and air force exercises during the year.[120] It’s worth to note that, since the beginning, the announcement appeared a move «aimed at proving that Moscow isn’t isolated on the world stage», whereas the fact that the two countries could actually conduct joint drills appeared doubtful to most analysts.[121]

Under those circumstances, the launching of a friendship year was more than understandable. The declaration was in fact the latest indication of the ever-growing relationship between two countries that were both target of international ostracism. Generally speaking, the increasing closeness between the two countries appeared to be an attempt to balance the pressure placed on them by the West. In particular, their decision to strengthen their ties seemed to be a direct message to the US and other Western governments, signalling their ability to expand their influence in geographically distant areas, should the West seek to isolate them through sanctions.[122]

Nonetheless, the two countries’ friendship was not going to be unconditional. Speaking at a forum marking the twenty-fifth anniversary of the establishment of diplomatic relations between Seoul and Moscow, top Russian envoy in South Korea, Alexander Timonin, said that his country would «never justify North Korea’s nuclear missiles nor its nuclear program», and that, for Moscow, there were «no other alternatives than diplomatic measures to solve the nuclear issue».[123] Actually, the Kremlin had been paying attention and monitoring the nuclear situation in North Korea ever since Pyongyang announced plans to resume nuclear operations and launch missiles in the middle of September.[124] In the end, the event that might have marked a real breakthrough in the bilateral relation did not occur, as we have seen in the previous paragraph.

4.5. Pyongyang-Beijing. Opening a new chapter in North Korean – Chinese relationship?

As already mentioned, Kim Jong-un’s rejection of the Chinese invitation to attend the military parade marking China’s Victory Day could be seen as emblematic of the strained political ties between the two allies, even if the choice to send Choe Ryong Hae instead of Kim Yong Nam (as happened for Moscow) had been interpreted by some observers as «a sign that, when it comes to China-North Korea relations, leader Kim Jong-un values substance over style».[125] The deteriorating trend in North Korean-Chinese relationship appeared to be merely put on hold by Liu Yunshan’s arrival in Pyongyang to join the celebrations of the seventieth anniversary of the foundation of the Korean Workers’ Party. Being one of the seven members of the Politburo Standing Committee, Liu – as already noted – was in fact the first high-ranking Chinese official to visit North Korea in four years. His presence in Pyongyang, according to John Delury, was a clear message by Xi Jinping, marking an apparent shift away from a hard line toward North Korea.[126]

Such a shift was also visible in the «warm» message sent by Xi to Kim to congratulate him on the seventieth anniversary of the founding of the KWP.  Xi’s message contrasted notably with the «coldness» that had marked the previous contacts between the two leaders, particularly in the case of the reciprocal messages in 2014. «China is willing to make joint efforts with the DPRK comrades to well maintain, consolidate and develop the friendship between China and the DPRK in the interest of the two countries and two peoples, so as to play a positive and constructive role in maintaining regional as well as world peace and stability» said Xi in his message, and concluded by stating that he «sincerely wished the WPK constant development, the DPRK prosperity, and the China-DPRK friendship passing down from generation to generation».[127] A similar tone marked the letter sent by Xi Jinping through Liu Yunshan to Kim Jong Un. In reporting this, Chinese news agency Xinhua stated: «Beijing attaches great importance to its traditional friendly ties with Pyongyang, proposing that both sides go hand in hand to cherish their ‘common treasure’».[128] In John Delury’s opinion, Xi’s letter marked the «Chinese leader’s first real effort to make friends with Kim Jong Un». Delury also noted that Xi’s letter did not mention denuclearization, in contrast with an earlier message carried by Vice President Li Yuanchao, who, in 2013, tried to press North Korea to slow down its nuclear program.[129]

North Korea watchers paid particular attention to the four-day visit by Liu, underlining the significance on his presence on the podium together with the North Korean leader during the military parade, highlighted by the fact that Liu was the only foreign dignitary of any significance at the event. North Korea’s state media reported Liu speaking frequently with Kim Jong Un while the state television showed the images of the two watching the military parade and waving to the crowd holding hands.[130] All this appeared to point out that the two countries were going to open a new chapter in their strained relationship. Indeed, in a possible sign of Pyongyang’s concession to Beijing, Kim Jong Un refrained from making threats about the use of nuclear weapons in his rare public speech (the first in three years).[131] Nor did the event include any firing of missiles, with a probably sigh of relief of Beijing, in spite of the fact that Liu’s visit to Pyongyang had been accompanied by speculations that North Korea would launch a long-range rocket to celebrate the anniversary, as Pyongyang had done in previous similar occasions.[132]

Following signs that bilateral relations had thawed after a deep chill, in the aftermath of Liu Yunshan’s successful mission to North Korea there was a growing sentiment that Kim Jong Un might go to Beijing «in November or in Spring next year at the latest, given that Xi hinted at inviting the North Korean leader in his message last week».[133] According to Kim Yong-hyun, a professor of North Korean studies at Dongguk University, and An Chan-il, head of the World Institute for North Korea Studies, «it is expected that the North Korean leader will visit Beijing within a month in response to Xi’s offer […] If that’s not the case, he may go there before next April when things will start to get busy in North Korea» in order to celebrate the 104th birthday of North Korea’s late founder Kim Il Sung.[134] In the end, November passed and nothing happened; it remains a possibility that such an event could happen in April 2017. However, this possibility appeared to vanish after Kim Jong Un’s announcement to the state media, at the beginning of December, that North Korea was «ready to detonate [a] self-reliant A-bomb and H-bomb to reliably defend its sovereignty and the dignity of the nation». Interestingly, the announcement was made in exactly the same moment when a top United Nations human rights official was telling a Security Council meeting that it was «essential» that Pyongyang be referred to the International Criminal Court for its human rights abuses. [135] The abrupt cancellation of performances by the North Korea’s visiting Moranbong band in Beijing on 10 December[136] was just the last indication of the unresolved tensions between China and North Korea relative to the latter nuclear ambitions.

4.6. The Pyongyang- Tokyo deadlock on the abduction issue

After the largely cooperative attitude shown in 2014 by North Korea towards Japan on the abduction issue,[137] which had led to the resumption of the dialogue and the achievement of an important agreement in Stockholm at the end of May, the Japan-North Korea relations deteriorated again for two different reasons. The first was the missed delivery of the first report on the issue, by a special commission set up by Pyongyang. The second was the fact that Japan co-sponsored the condemnation of North Korea by the UN General Assembly on the issue of the violation of human rights.

In the year under review, North Korea-Japan relations were at a standstill, as Tokyo waited, in vain, for an initial report on the abduction issue, and North Korea advanced the request that Japan apologized and paid reparations for its colonial crimes before negotiations could move forward. In March, after Tokyo police raided the properties of members of the General Association of Korean Residents in Japan (Chongryon), as part of an investigation into the smuggling of North Korean pine mushrooms, Pyongyang made use of the case to render its position more inflexible. Indeed it conditioned the continuation of the negotiation on the abduction affair to Toyo making public the proofs of the involvement of the Chongryon representatives in the smuggling.[138]

During the informal talks held in March, Tokyo indicated that it would re-impose the sanctions that had been suspended following the signing of the Stockholm agreement, if progress on the abduction issue was not made.[139] The promise was immediately honoured. On 30 March, top Japanese government spokesman Yoshihide Suga announced that Japan had decided to once again impose sanctions on North Korea in response to Pyongyang’s delay in presenting the promised report on the abduction affair. He also specified that Japan would impose a trade embargo on North Korea and ban for two years North Korean ships from entering Japanese ports, except for humanitarian reasons. In a press conference, Suga added that Japan would continue to urge Pyongyang to present its report on the abduction issue without delay, and to make the utmost effort to return all of the abductees.[140] The Chief Cabinet Secretary subsequently announced a 4 July deadline (exactly one year from the day the investigation officially began) for North Korea to turn its report in. Nonetheless the position of the Japanese government was not univocal, with some agreeing to continue dialogue with Pyongyang after that deadline, and others willing to expand sanctions in case of non-respect of the deadline.[141]

In the meantime, Japan tried to involve third parties in the issue. The symposium hosted by Japan in New York at the beginning of May was actually part of an intensive campaign to rally international support for its efforts to seek answers from Pyongyang on the fate of the abductees. The requested support was found, in particular, on the part of the US.[142] On its part, at the end of March, the UN Human Rights Council had already adopted a resolution against North Korea condemning its abduction of foreign nationals.[143]

As the deadline passed without North Korea releasing any report, the Japanese Premier renewed his pledge to resolve the issue. Also, at a brief meeting of the two countries’ Foreign Ministers in Kuala Lumpur, Pyongyang was urged to be more cooperative and make some real progress.  [144] On the other hand, on 20 August, The Japan Times reported that a North Korean Foreign Ministry official, in charge of negotiations with Japan, had informed a Japanese private-sector mission that Pyongyang had communicated to the Japanese government that the probe was complete and the report ready, but Tokyo had refused to accept it. On his part, a delegate of the same mission, quoted the North Korean official as saying that the Japanese government worried about the emotional feelings that could be aroused in the Japanese public opinion by the publication of the report.[145]

In the midst of reciprocal accusations, and despite perceptions that maintaining continuity was vital in moving the bilateral talks forward, the Japanese government decided in October to renew its team on the abduction issue. In fact, Abe was seeking a breakthrough in his dealings with North Korea.[146] The new team met secretly with its North Korean counterpart on two occasions, in November 2015, in China. At the second meeting, in mid-November, Tokyo demanded that North Korea «promptly and honestly» report the findings of its latest round of investigations. North Korea, on its part, announced that a new burial, site containing the remains of the Japanese who died at the end of the World War II, had been found on the outskirts of Pyongyang.[147]

The clandestine nature of the meetings (another secret meeting had been held in mid-May 2015 in Mongolia) was, to some extent, probably due to persistent pressures from both the domestic and foreign audiences.[148] Among others, there was a mass public gathering held in Niigata in November called the «Never forget the Abductees Assembly», led by parents of the well-known Yokota Megumi, who had come to symbolize the intractable nature of the issue.[149] But there was also news of an internal North Korean document (a kind of manual of more than 350 pages), most likely dating back to the 1990s, with contents related to abduction strategies. This manual had apparently been used as part of the intelligence curriculum at the Kim Jong Il Political-Military University (one of the most secretive North Korean intelligence institutes). Despite questions about the authenticity of the document, the Tokyo Shimbun reported that the document confirmed the claim that the abductions had been carried out in accordance with the will of the upper echelon of the North Korean leadership. If the manual does exist and is authentic, and if what claimed by the Tokyo newspaper is truthful, this news represents the proof that the abduction a program had been supported by Pyongyang.[150]

At the same time, North Korea was again under pressure at the UN (within both the General Assembly and the Security Council) for its human rights violations. That happened when the media started to focus on the story of the «ghost ships» containing headless skeletons or rotting corpses. According to the Japanese media, the «ghost ships» most certainly originated from North Korea – given the overwhelming evidence pointing in that direction, in particular the Korean Hangul lettering on the boats and their «primitive nature».[151] Such a phenomenon was not new – on the contrary it had been happening for years – but new was the number of «ghost boats» intercepted by the Japanese Coastal Guard: 12 within just 5 weeks (against a total of 283 in the five years from 2011).[152] There was much speculation about the origins of the victims, but the most accepted theory was that they were most likely fishermen, since fishing nets were found aboard some boats, in particular considering the fact that in the previous months Kim Jong Un had been pushing the employees in the fishing industry to increase their catch.[153]

The present article sees as the most important political-economic development in China in the year 2015 the fulfilment of the first phase of a gargantuan political-economic project: the Silk Road Economic Belt and 21st-Century Maritime Silk Road, known also as the «One Belt, One Road» (OBOR) initiative. This project, launched by the Chinese government in 2013, was institutionalized in a programmatic document in 2015. Therefore, the present article analyses the OBOR initiative from several different perspectives. First, the Silk Road project is presented as the current phase of a long-term political-economic strategy aimed at internationalizing the Chinese state-owned and private enterprises. Then, the article examines the OBOR’s programmatic official document, published during the year under review, and goes on to explore the OBOR’s geographic extension and its implementation. Finally, the article deals with the OBOR’s main financial mechanism, known as the Asian Infrastructure Investment Bank, and with the Western countries’ divided reactions when confronted with the opportunity to become founding members of this new China-led multilateral financial institution.

1. Towards a re-construction of a new «New International Economic Order»?

The main theme of this article is detailing the rationale and genealogy behind China’s attempt at realizing a gigantic political-economic plan known as the Silk Road Economic Belt and the 21stCentury Maritime Silk Road. This attempt, which reached an apex in 2015, namely the year under review, had gradually been taking shape in the past years. In order to situate the Silk Road strategy, this opening section is focussed on sketching out the role of China in the changing international landscape, as it evolved during and after the Cold War era up to formulation of a twin Silk Road strategy.

The People’s Republic of China (PRC), before establishing diplomatic relations with the United States and launching those policies of reforms in 1979 that converted her to capitalism, had played an important part in the international movement known as Third-Worldism or Non-Aligned Movement. The PRC had indeed been present at the Bandung Conference in 1955 and at the Tri-continental Conference in 1966 in Cuba, namely the two most institutionalizing moments of the movement. Third-Worldism reached its apex in 1974, when the sixth special session of the United Nations General Assembly adopted the Programme of Action on the Establishment of a New International Economic Order. According to the programme, the New International Economic Order (NIEO) was founded in order to assist developing countries «In view of the continuing severe economic imbalance in the relations between developed and developing countries…».[1]As recently argued by Associate Chancellor and Chief of Staff at UC Berkeley, Nils Gilman, NIEO was an effort «to transform the governance of the global economy to redirect more of the benefits of transnational integration toward the developing nations».[2] The programme, divided into ten chapters, seemed effectively aimed at restructuring the pattern of international trade and the flow of capital in such a way that the benefits could have been impartially distributed. Developing countries were asking, just to quote some of their claims, for preferential trade access to developed countries’ markets, greater aid to the least developed, favourable debt rescheduling, and regulation of transnational corporations making them compliant with national laws.[3]

Looked at from this perspective, which is the one propounded by an important part of the extant International Political Economy literature,[4] the main issue at stake during the Cold War era was the capacity to regulate the global economy and to lure other countries to adopt a particular economic model. The NIEO was based on a state-centred economic-development model towards which most developed countries had major reservations, because they felt that it could severely damage the market-based international economic system prevailing outside the USSR sphere of influence. Since the second half of the 1970s, NIEO’s state-centred economic development model was gradually outstripped by the free-market mantra of fiscal austerity (for public expenditure), deregulation and privatization, establishing the hegemony of a US-centred neoliberal approach over the global economy even before the official termination of the Cold War. Looking at the Chinese case, the NIEO model had probably become obsolete, even before its launch, following Mao Zedong and Richard Nixon’s meeting in Beijing in 1972.[5]

From that point on and until the emergence of the on-going global economic crisis, China has always demonstrated her willingness to accept the US-led global economic governance, while at the same time, cautiously proceeding on the path in structural reforms for fears of an internal legitimacy crisis. An example of this is the US’s role in promoting the formidable reform of state-owned enterprises realized by China in the 1990s. According to Charles Freeman III, «…not surprisingly, the most active and forceful source of external pressure was the US which, through the negotiating team led by the US Trade Representative, sought to make China’s commercial regulatory landscape as friendly to US sectoral interests, and thus similar to US economic structures, as possible».[6] It is also worth stressing that the reform of state-owned enterprises was the price that China had to pay to access the World Trade Organization in 2001.

Since 2008-9, however, China’s role in the international system has gradually changed. Several intertwined factors affected this dramatic change, among which the most significant ones were China’s role in the 1997 Asian Financial Crisis, the Chinese government’s push for outwards direct investments, the growing weights of emerging economies other than China (India, Russia, Brazil, South Africa), the 2008-9 crisis of the neoliberal economic order, and the military tensions in the East and South China Seas. Eventually, China’s response to this complex set of crises was the launching of an extremely ambitious new strategy in 2013. This strategy – which, mutatis mutandis, brings to mind the NIEO project – is articulated in the «Silk Road Economic Belt» and the «21st Century Maritime Silk Road», in practice, the two sides of the same project, also known as the «One Belt, One Road» initiative (OBOR) (yi dai, yi lu).

2. The taking shape and the meaning of the new Silk Road strategy

The new Silk Road or OBOR strategy’s main aim is to build an integrated set of transportation infrastructures along the land and maritime trade routes that two thousand years ago linked China to Europe throughout the Middle East, Central Asia, and East Africa. In 2015, the project was formalized through the presentation of an official document during the Boao Forum for Asia (an annual economic dialogue held in China’s Hainan Province): the Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st-Century Maritime Silk Road.[7] Furthermore, in the same year, the PRC succeeded in completing the creation of the project’s principal financial mechanism, the Asian Infrastructure Investment Bank (AIIB), which collected the commitment of 57 founding members, among which, the presence of several Unites States’ Western and Asian allies stuck out.

As will be discussed in the present article, the OBOR initiative can be considered as the current stage of a political-economic development strategy that the Chinese government introduced at the end of the 1990s for the sake of China’s own domestic economic development: the so-called «Go Global» strategy. The essence of the strategy has been to support, through a liberalization of regulations, outbound foreign-direct investment (OFDI) from Chinese companies, especially state-owned enterprises (SOEs) with the purpose of improving their international competitiveness and protecting the Chinese labour market from harsh industrial conflicts. The result has been an incremental internationalization of Chinese SOEs and of big, private corporations heavily financed and entrenched within the Chinese state.[8] Throughout the launch of the OBOR project and the establishment of the AIIB, these enterprises were once more incentivized to invest in the global economy, even if they were encountering strenuous resistance and widespread critiques abroad. Chinese corporations were indeed accused of being «unfair» competitors, because they were being supported by a systematic and structured state intervention, both in China and abroad.[9]

From the above standpoint, the year 2015 opened for China with President Obama’s blunt and well-defined challenge, represented by the view enunciated in his 20 January 2015 State of the Union Address. «Twenty-first century businesses, including small businesses, need to sell more American products overseas», said the US President. He went on to state: «Today, our businesses export more than ever, and exporters tend to pay their workers higher wages. But as we speak, China wants to write the rules for the world’s fastest-growing region. That would put our workers and our businesses at a disadvantage. Why would we let that happen? We should write those rules. We should level the playing field. That’s why I’m asking both [US] parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but are also fair. It’s the right thing to do».[10] In this passage, Obama was trying to persuade Congress to grant him full Trade Promotion Authority in order to speed up the establishment of the Trans-Pacific Partnership Agreement (TPP). This agreement could be interpreted, as has been previously mentioned,[11] as a strategy to formerly exclude China in order to be able to engage and discipline it latterly. Congress granted the Trade Promotion Authority in June 2015; TPP negotiations then closed on 5 October 2015, and a final text was released at the end of the year, contributing to renew an ideological divergence on the capacity and method of regulating the global economy. The TPP was indeed designed to isolate the state-centred economic-development model espoused by the PRC.[12] However, the establishment of the AIIB, its early approval by many governments (including western ones), and the US opposition and lobbying stance against it, drew a fair amount of doubt about the efficacy of TPP plan.

The OBOR and the AIIB, though, did not just represent an evolution and a strengthening of the Chinese «Go Global» strategy; indeed, they were also becoming a powerful foreign-policy tool through which the PRC proposed itself as the promoter of, as Xi affirmed during the Boao Forum, a «more democratic form of global governance» and a so-called «community of common destiny», where the principle of «wide consultation» and «joint contribution» reigned and where the other countries’ choices in terms of their social systems and development paths were said to be respected.[13] The PRC declared no intention to export its state-centred development approach to capitalism throughout the OBOR and the AIIB, as the West did with neoliberalism through the Bretton Woods institutions, especially from the 1990s. Furthermore, PRC refused the accusations of having launched a new Marshall Plan with the OBOR in order to strategically control the countries along the routes.[14]

In that sense, China in 2015 was recalling the NIEO experience in a way that could be said to validate Nils Gilman’s paradoxical thesis that, although NIEO failed to realize the developing nations’ institutional demands, «one can make a credible case that the undead spirit of the NIEO continues to haunt international relations».[15]

In theory, the OBOR and the AIIB might pose a significant challenge to the hegemony of the US-led multilateral institutions. However, one could doubt that they might also incentivize a radical change in the domestic-development path of each involved country, determining its departure from the neoliberal development model. At the end of the day, the OBOR and AIIB goals are the promotion of transport infrastructure building, as well as of energy, telecommunications, and rural infrastructures, without posing any kind of political-economy conditions. These goals are likely to be reached reproducing the same socio-economic polarization conditions, common to both the followers of the neoliberal paradigm and to those of the Chinese development path.

Building the conditions for lucrative development in developing countries, as well as in China, has often entailed the dispossession of millions of people whose land has been expropriated by the state and, in most cases, sold to multinationals in order to build transport infrastructures, dams, export processing zones, real estate areas, and plantations. This kind of development path has given rise to a huge reserve army of migrant workers contributing to the race to the bottom of the cost of global labour.[16] It is indeed very likely that the proposed widespread infrastructure building in all the involved countries would be capable of attracting more foreign-direct investments than most countries might welcome, contributing to reproduce that kind of path. A study from the Asian Labour Review further argues that the AIIB regulations do not satisfactorily address labour and environmental issues and do not request the adherence to the related international conventions and regulations.[17]

Lastly, the OBOR initiative has also been accused to have military implications with specific reference to the maritime disputes in the South China Sea. In 2015, military tensions in the Asian region among China, the United States, and those Asian countries involved in the disputes were indeed quite intense. The PRC speeded up its island-building in the South China Sea in order to assure itself major portions of the disputed maritime area and started to build ports, airstrips, radar facilities, and other military installations along the construction works related to the OBOR initiative in Southeast Asia. The United States, on its part, continued to militarize the area and sent navy destroyers to patrol the man-made «islands» (including those claimed by the Philippines and Vietnam) to prove they were not proper islands, hence, not entitled to a 12-nautical-mile territorial sea, nor Exclusive Economic Zones.[18]

At this point it is worth highlighting that the Chinese Communist Party was, in the domestic context, in a serious deficit of consent. The party was dealing with hundreds of demonstrations a day concerning labour issues in the urban areas, land grabbing in the countryside, and environmental issues throughout the country. This being the situation, socio-economic disparities and the recent economic slowdown were forcing the party to search for new sources of political legitimacy. Accordingly, the OBOR, with its potential to improve national economic development and above all to fuel nationalistic sentiments, was a handy instrument aimed at strengthening a weak political legitimacy. The other main instrument, as it has been underlined somewhere else,[19] was the anti-corruption campaign, as shown by the political implications of the Tianjin blasts in a chemical warehouse in August 2015. Local and central officials, together with the company executives (the Tianjin Ruihai International Logistics Co. Ltd), were indeed found guilty for the blast that killed 173 people and contaminated nearby water sources. Moreover, they were investigated and convicted of corruption. The main issue at stake was that the warehouse was found to be too close to residential complexes, in violation of the Chinese work-safety rules.[20]On August 19, Xinhua (the state-run news agency) published an investigative report that mentioned the names of the company executives detained by the police.[21] The report specified that these executives had strong and good connections with government officials. This is certainly indicative that the CCP was trying to rebuild its legitimacy by making an example of some of its own members and state officials. These people were made a scapegoat for the historically consolidated wrongdoings that made up the Chinese economic miracle and for the presently evident environmental, social, and health disasters throughout China.[22]

3. The Silk Road Economic Belt and the 21st-Century Maritime Silk Road: the Project in its Official Document

Xi Jinping exposed the Silk Road Economic Belt at Nazarbayev University on 7 September 2013 as part of his state visit to Kazakhstan. The New Maritime Silk Road was announced before the Indonesian Parliament on 3 October 2013 during Xi Jinping’s state visit to Indonesia. Furthermore, the two correlated initiatives were officially presented as one single project in November 2013 during the Third Plenum of the Central Committee of the Chinese Communist Party (CCP).[23] As there stated: «To adapt to the new trend of economic globalization, we must promote domestic openness together with openness to the outside world, better integrate the ‘Bring In’ and ‘Go Global’ strategies […]. We will set up development-oriented financial institutions, accelerate the construction of infrastructure connecting China with neighbouring countries and regions, and work hard to build a Silk Road Economic Belt and Maritime Silk Road, so as to form a new pattern of all-round opening».[24]

In general terms, the project foresees the construction of highly integrated and mutually beneficial maritime and land-based economic corridors linking Europe, Africa, and Asia, as Xi Jinping’s speeches in Kazakhstan and Indonesia have made clear.[25] In March 2015, the Chinese government went further ahead and transformed it into an institutional foreign-policy measure through the enactment of an official document during the Boao Forum for Asia: the previously mentioned Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road.[26]

In the first of this eight-chapter document («Background»), the Chinese government – in the face of an on-going international financial crisis, the uneven global development, and the major adjustments occurring in the field of multilateral trade and investment – declared its intention to promote an initiative aimed at catching the current «trend towards a multipolar world, economic globalization» and «to seek new models of international cooperation and global governance». More specifically, the document stated that the OBOR aimed to «promote the connectivity of Asian, European and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road […]».[27]

In its second chapter («Principles»), the document set out the philosophy at the basis of the OBOR project. Apart from the commitment to abide by the Five Principles of Peaceful Coexistence, the project was founded upon the principle of inclusiveness, market rules, and mutual benefits. The initiative was, indeed, said to be open to all countries, no matter which paths and modes of development they had chosen to follow. However, this principle was immediately followed by one of compliance with market principles without specifying the risk of clash between the two and the possible ways to face this ambiguity.

In the third chapter («Framework»), the Chinese government outlined the structure of the project, specifying networks, bridges, and economic corridors that eventually needed to be reinforced or built from scratch on land and at sea.

The fourth chapter («Cooperation Priorities») represented the core of the document, as it established, in line with Xi Jinping’s 2013 speeches, the five major cooperation goals of the project: (1) policy coordination, (2) facilities connectivity, (3) unimpeded trade, (4) financial integration, and (5) people-to-people bonds. Apart from conventional goals, such as inter-governmental cooperation, free trade and investment cooperation, and cultural exchanges, among its major and innovative goals, the initiative envisaged the construction of a huge infrastructure network able to connect Asian, European, and African markets and the safeguarding of oil and gas pipelines along the routes. In this way, the document underlined the importance of financial integration as a fundamental instrument for the implementation of the OBOR initiative. It proposed to jointly work to establish an Asian Infrastructure Investment Bank (AIIB), a BRICS New Development Bank (NDB), a SCO financial institution, and finally, a Silk Road Fund.

In its fifth chapter («Cooperation Mechanisms»), the OBOR document, to better realize the envisaged goals, pledged to take advantage of existing multilateral-cooperation mechanisms, such as the Shanghai cooperation Organization (ScO), ASEAN plus China (Association of Southeast Asian Nations), Asia-Pacific Economic Forum (APEC), and Asia-Europe Meeting (ASEM), to mention but a few. In its sixth chapter («China’s Regions in Pursuing Opening-Up»), the document focussed on the possible outcomes of the project for China’s own economy. According to the text, Chinese rulers believed that the project would have enhanced the openness of China’s economy by speeding up the development of the western and less-wealthy regions and bringing the structural reforms in the coastal and most-advanced areas in line with the 12th Five Year Plan promulgated in 2011 and the 13th Five Year Plan proposed in 2015.

Finally, in the last two chapters («China in Action» and «Embracing a Brighter Future Together»), the text briefly outlined some of China’s initial actions, such as high-level official visits, the signing of cooperation agreements, the promotion of financial integration, and the importance of «equal-footed consultation with all countries along the routes».[28]

Following the ancient-land and maritime routes, the idea behind the Silk Belt Economic project was to draw a commercial line between Xi’an in Central China and Venice via Rotterdam in Central Europe, passing through Central Asia, Iran, Iraq, Syria, Turkey, and Eastern Europe. As far as the Maritime Silk Road was concerned, it was supposed to start in Quanzhou in Fujian Province and end on the Southern European coast, passing through the Southern Chinese ports, the Malacca Straits, the Indian Ocean, the Eastern African coasts, and the Mediterranean sea.[29]

The One Belt, One Road project was aimed at involving a range of more than 60 emerging-market and developing countries with a total population of over 4 billion and with 75% of the known energy reserves that accounted for about 65% and 30%, respectively, of the global totals in land-based and maritime-based economic production values.[30]

According to the financial and business news and information online in the periodical Caixin, in the first four months of 2015, bilateral trade between China and the countries along the above–land and maritime routes equalled US$ 316 billion (30% of China’s total international trade during the same period). Furthermore, direct investments by Chinese companies in the area’s non-financial sector amounted to US$ 3.7 billion (10% of China’s total overseas investment during the same period).[31]

Also, according to Xinhua, during the first seven months of 2015, Chinese companies had already signed 1,786 project contracts in countries along the two routes valuing US$ 49.44 billion, an increment of 39.6% from the year before.[32]

It goes without saying that the effective realization of the project implied China’s deep involvement in the creation of infrastructural networks, such as railways, ports, highways, and pipelines. Furthermore, at the same time, in the Chinese vision, currency integration and expansion of the international use of Chinese currency in the region was an additional fundamental element.[33] Ba Shusong, chief economist at the China Banking Association, argued that «the initiatives will promote the use of the yuan beyond China by expanding the country’s international investment and trade activity, which in turn will circulate more yuan, more widely».[34] To this end, according to Caixin, between 2014 and 2015, China made major investments in the area, as «Chinese companies and banks are eager to invest in vast areas of Asia, Europe and Africa targeted for development through China’s “one belt, one road” initiatives».[35] All Chinese projects connected with the OBOR initiative involved the participation of state-owned Chinese companies or private Chinese companies with close relations with the central government, all committed to financial, construction, or supply activities.[36]

4. The «Go Global» strategy, the «New Normal» theory, and the OBOR initiative

At the end of 2015, China’s GDP growth stabilized itself at around 6.9%, according to China’s official statistics, attesting to an economic slowdown for which origins can be traced back to the beginning of the on-going global economic crisis.[37] Since the end of the first decade of the 21stcentury, China’s economy has indeed been growing far slower than the double-digit rates to which the world had become accustomed during the past decades.[38] This condition, new to the Chinese, appears to have become China’s «New Normal». The term, which has been used to describe the state of the economy after the onset of the global-economic crisis, was later adopted by Xi Jinping and adapted to the Chinese situation in order to portray China’s current economic slowdown as a typical normalizing process of a once fast-growing economy. Xi Jinping’s «New Normal» theory was fully presented on 9 November 2014 on the occasion of the Chinese President’s speech at the APEC CEO (Asia-Pacific Economic Cooperation – Chief Executive Officers) Summit in Beijing in front of 1,500 business people from 21 APEC member economies and 17 other countries and regions.[39]

As stated by Xi, the Chinese «New Normal» indicated an on-going transitory condition from a labour-intensive and export-driven economy to a capital-intensive, high-tech, and domestic demand-driven one, based more on the tertiary than the secondary sector, as in the previous developing phase. China was entering into a new stage of development, passing from a high-speed to a medium-high-speed growth where innovation was taking the place of investment as a major driver. In order to follow this path, Xi admitted the Chinese government was undertaking major economic structural adjustments. «[…] we have lifted restrictions on the “invisible hand” of the market», stated Xi, «and ensured the proper role of the “visible hand” of the government».[40] The Chinese leader saw China’s economic slowdown as an opportunity, physiological for most economies, to make China’s development more sustainable in terms of services, innovation, reduced inequality, and environmental protection.[41]

The same concepts are included in the 13th Five Year Plan’s Proposal (2016-2020), released by the CCP fifth plenum in October 2015. The proposal indeed referred to five main principles in relation to Chinese future-development policies, which evoke the «New Normal» theory’s contents: innovation, openness, green development, coordination, and inclusiveness. Innovation was presented as the primary driver of Chinese economic development and industrial pattern’s upgrading. Openness was mainly intended to focus both on domestic and global market but, above all, on being more active in global governance. Furthermore, the proposal was a way to reiterate China’s commitment to environment protection and to socio-economic disparities’ reduction.[42]

In line with the party’s approach, Hu Angang, professor of economics at Tsinghua University, argued that China’s transition was already yielding the first results in terms of a «better quality growth». China’s new trend in the political economy was creating millions of urban jobs; it was expanding the service sector and was upgrading the industrial production through significant public investments for research and development while, at the same time, mechanizing agriculture. Furthermore, social welfare was improving with an important expansion of the healthcare system, which now covered a little less than 95% of China’s total population. [43]

With respect to this formidable, planned re-orientation of the domestic economic model, the Silk Economic Belt and the 21st-Century Maritime Silk Road can be understood as key strategies for confronting and overcoming the economic slowdown. For the Chinese economy, the OBOR project would indeed entail the opening of potentially huge markets for Chinese goods and capital.

Once the above has been said, it is necessary to stress that, notwithstanding Beijing’s on-going efforts towards a transformation of its economic model, the domestic heavy and light industrial sectors are said to be characterized by a serious, progressive-industrial overcapacity. Such a situation was primarily due to the global-economic recession, followed by diversified state financial-stimulus initiatives. This appeared to be particularly true for the Chinese state-owned enterprises active in the manufacturing and constructions’ sectors. On top of it, these industries were in the middle of serious industrial conflicts and heated debates over their structural reform and, above all, over the path and strategies to be followed to reach the desired transformation of the extant economic model.[44] Although the SOEs’ market-oriented reform had been officially launched by the CCP third plenum in 2013, the new strategy clashed with major vested interests, which made it difficult to implement it in absence of a (hard-to-reach) agreement among the major, internal, political and economic forces. As stated by Premier Li Keqiang at the annual Central Economic Work Conference in December 2015, the Chinese «supply side» needed serious structural reforms, based on tax reductions, advanced technologies, innovation, and services. Unreformed SOEs were supposed to be the major challenge to this structural change, because they were said to be suffering from excessive capacity and low efficiency, which were becoming an increasingly serious problem given the on-going economic decline.[45]

The infrastructure projects proposed as part of the OBOR initiative would strategically fuel China’s domestic-construction industry, including iron, steel, and cement, and, at the same time, would create a more rapid and viable way for Chinese goods towards regional markets in Europe, Central Asia, Africa, and Southeast Asia, giving more chances to the strongest but also to the more problematic SOEs.[46] Furthermore, the OBOR project could also be considered as a means to secure access to raw materials, energy in particular. In this case, Central Asia – from which China has been increasing its energy imports in order to lessen its dependency on the Middle East, Sub-Saharan Africa, and Russia – was the key factor, as demonstrated by the Chinese focus on the Eurasian infrastructure corridor (§ 4.1).[47] Soon after the 1989 Tiananmen repression and the 1991 USSR collapse, China indeed started to devote all its efforts to reassure its neighbours on the west and southeast that its development was peaceful and its growth had a positive international fallout. China needed good neighbourhood relations to be able to concentrate on its domestic development and nurture its voracious natural resources’ sector with profitable economic agreements.

As specified in the 6th chapter of Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, («China’s Regions in Pursuing Opening-Up»), the OBOR initiative was also finalized to develop a domestic consumer market by improving domestic connectivity between the developed coasts and the underdeveloped inner areas and also among the countries along the borders, reducing, in this way, the socio-economic gap between coastal and rural areas.[48] Moreover, this would have helped Beijing to control social discontent in critical areas, such as the Xinjiang Uyghur autonomous region, where separatist stances were being held responsible for the recent so-defined «terrorist attacks».[49] In fact, Xinjiang was one of the regions towards which Beijing had started to move its manufacturing sector through major investments, in an effort that was part of the above-mentioned domestic dual-development goal. For these reasons, the central government has established 20 special industrial zones in Xinjiang. Since 78% of Xinjiang’s exports were already directed to central Asian neighbours, the OBOR task would be to further promote and facilitate the export of goods produced in this region in order to strengthen its economic development.[50]

Looked at under this light, the OBOR project could be seen as an alternative to a simple market-oriented transition that was encountering such a strenuous resistance inside the Chinese economic and political system. The project, though, would contribute to reinforce rather than change China’s current and peculiar political-economic path, as efficaciously described by Tobias ten Brink, a scholar from Frankfurt University: «a heterogeneous, competition-driven variant of state-permeated capitalism» which «takes the form of extensive state intervention with a specific competition-driven, corporate spirit».[51]

Since its launch, which preceded the OBOR opening in 2013 of over two decades, China’s «Go Global» strategy aimed primarily at upgrading both private and state-owned Chinese enterprises’ industrial and development structure in order to make them sufficiently competitive to be internationalized. This strategy was later included in Xi Jinping’s current «New Normal» theory.

The first stage of the «Go Global» strategy served the state-owned enterprises need of acquiring natural-resource assets, mainly in the energy sector, to feed a low-tech manufacturing-exporter sector. The second stage, launched by Xi Jinping, aimed at industrial upgrading by investing in high-tech infrastructure projects abroad. China needed to diversify the use of its huge foreign reserves, both to foster the industrial upgrading of its own domestic industry and to deal with its overcapacity. Finally, she also needed to deal with capital-labour conflicts and the demand for better working conditions and higher salaries. During the year under analysis, workers’ strikes and protests strongly intensified, according to the China Labour Bulletin’s data. Workers were indeed struggling against the failure of local governments to enforce the 2008 Labour Contract Law, which provided more protection for basic labour rights, such as on-time payment, benefits, and due-wage arrears.[52]

The essence of this strategy was to support, through a liberalizing regulation, outbound foreign direct investment (OFDI) from Chinese companies (especially SOEs) by improving their international competitiveness. The procedure for examination and approval of outward investment projects have been progressively simplified, decentralized, and accelerated. Moreover, the Chinese government – both directly and through banking institutions, including the China Development Bank and the China Export and Import Bank – has been offering financial and non-financial incentives to sustain the overseas expansion of Chinese enterprises. Among these incentives are government special funds, direct capital contribution, and loans below market rates and subsidies. In 2009, the China Development Bank, for example, supported the Chinese telecommunication company Huawei with US$ 30 billion to expand in overseas markets. As far as the non-financial incentives were concerned, the government typically offered a wide range of information about the recipient countries.[53] In order to have the right perception of how much the Chinese leadership relied on such national-global corporations, suffice to say that, in the occasion of overseas official visits, Chinese officials usually envisaged a visit to the local Huawei subsidiary.[54]

As a result of this policy, there has been a spectacular increase in Chinese OFDI. According to United Nations Conference on Trade and Development (UNCTAD) data, Chinese OFDI amounted to US$ 830 million in 1990, US$ 6,885 billion in 2001, and US$ 116,000 billion in 2014.[55] Again, as a result of this policy, several international brands, such as Motorola, Volvo, and IBM, have come under the control of Chinese companies. The major players in this dramatic increase in Chinese FDI outflows have been the SOEs, which have funded at least 80% of the OFDI.[56]

In 2015, the OBOR initiative could be considered the extension and the institutionalization of a plan mainly focussed on the internationalization of Chinese companies and further reinforced by means of the newly born multilateral financial institutions.

5. The OBOR initiative «in action»: Beijing’s infrastructure diplomacy

t the end of the day, the «One Belt, One Road» initiative was nothing more than a huge rhetorical and diplomatic operation that gave a banner of historical legitimacy to China’s «Go Global» strategy. The reasons behind the OBOR initiative were several, among which, as above noted, domestic economic development and security issues enjoyed an uncontested priority.

Through the OBOR initiative, Xi Jinping and Li Keqiang gave a new imprinting to this on-going strategy, highlighting the role of transportation-infrastructure projects in shaping Beijing’s «new diplomacy». In Li Keqiang’s own words: «We will speed up the implementation of the “Go Global” strategy. We will encourage Chinese companies to participate in overseas infrastructure development projects […] We will work to increase the international market share of Chinese railway, electric power, communications, engineering machinery, automobiles, aircraft, electronics […] and encourage the metallurgical, building materials, and other industries to invest overseas».[57]

The majority of the more-recent infrastructure projects promoted by the PRC along the land and New Maritime Silk Roads have been the by-product of bilateral agreements. Nevertheless, the Chinese government promoted the initiative at regional forums also, including the Asia–Europe Meeting, the Shanghai Cooperation Organization, ASEAN plus China, the China–Arab States Cooperation Forum, the Forum on China-African Cooperation, and the sixteen central and eastern European Countries, plus China.[58] In November 2014, at a China-ASEAN summit held in Myanmar, Chinese Premier Li Keqiang announced that China would offer US$20 billion of loans to the ASEAN for infrastructure building.[59] In January 2015, the African Union and China signed a memorandum of understanding to collaborate on building high-speed railways, roads, and new airports in order to improve connections among the major African-economic poles.[60]

Furthermore, in December 2014, the Development Research Centre of the State Council of China created a multilevel, multilateral platform – the Silk Road Forum – in order to provide an intellectual venue that brought together statesmen, senior figures in governments, think tanks, enterprises, academic institutions, and independent scholars from all countries along the routes. The declared scope was to provide an inclusive platform in order to exchange ideas, combine strategies, policies, and interests while also promoting convergences. The first annual conference of the Silk Road Forum was held in Istanbul in December 2014, and the second one was held in Madrid in October 2015 with the participation of around 300 guests from approximately 30 nations and international institutions.[61] On this last occasion, the so-called SiLKS (Silk Road Think Tank Network) was also established in an effort to foster cooperation and discussion among think tanks along the routes, in the fields of research, and the elaboration of policy ideas concerning the overall OBOR project (objectives, outcomes, potentialities, and criticalities). SiLKS, at the moment of its establishment, already had 43 members and partners, including think tanks and international organizations from 27 countries.[62] A look at the list of the Silk Road Forum’s experts on the Development Research Centre’s website confirms that SiLKS has effectively brought together a combination of high-level experts from all over Eurasia and Africa.[63]

5.1. Building the Eurasian corridor

The Silk Road Economic Belt project combined and strengthened a series of «going out – going west» policies, aimed in particular at Central Asia, whose beginnings could be traced back to the late 1990s, when the Shanghai Five Mechanism took form.[64] Nevertheless, as far as infrastructural investments were concerned, the initiative also implied a series of specific projects that had been announced or implemented in a more-structured way between 2014 and 2015. The main goal was to create a Eurasian economic corridor – through «transportation infrastructure diplomacy», trade liberalization, and monetary cooperation – able to further develop Central Asian economies and integrate them into both European and Asian markets.

To this end, as well as for strictly internal security and political reasons, Xinjiang Province jumped to the forefront of China’s toward-west policies, becoming the target of an incessant promotion of urbanization and influx of investment, as will be further argued in the next paragraphs. In particular, many of Xinjiang’s cities, at the border with Central Asia, have been transformed into free-trade economic zones. The most significant example is that of the city of Horgos (also known with the names of Huoerguosi, Khorgos, Chorgos, and Gorgos), near the border with Kazakhstan, which, in September 2004, had already become the headquarters of the Horgos International Border Cooperation Centre, founded following an agreement between China and Kazakhstan. This development was certainly due to Horgos’ glorious past, during which it played a junction role along the ancient Silk Road. However, soon after the 1917 Russian revolution, the borders (at the time dividing Russia and China) were closed, only to be permanently reopened in 1983. In 2012, China developed a free-trade zone in the area, and in 2013, bilateral trade through Horgos accounted for US$ 11 billion, 55.5% more than in 2012. On 29 June 2014, Horgos formally became a Chinese municipality and, together with Kashgar and Alataw, has been granted the role of the largest land port along the Silk Economic Belt.[65]

In order to make Horgos and the other Xinjiang cities an effective trade gateway to the west and as far as Europe, through Central Asia, Beijing has been investing in railways and planning further major investments. China has built a series of rail links: the first rail services began in 2012, with passage from western China to Western Europe taking up to three weeks, depending on destination, instead of five weeks using trucks and ships.[66] Furthermore, China planned to finish upgrading the last section of a transcontinental highway from Lianyungang (a Chinese port in Jiangsu Province, in the east coast) to St. Petersburg in Russia, which would pass through Almaty, Kazakhstan’s most populous urban centre. Initial indications for this project suggest it was going to be finalized and opened in 2016. The logistics terminal in the port of Lianyungang was jointly built by China and Kazakhstan in order to make it a platform for transporting Central Asian goods to overseas markets. The first phase of the terminal’s construction, concluded in 2014, required an investment of US$ 98 million. More construction phases and more investments were expected to follow.[67]

In 2015, Kazakhstan continued to maintain its leadership as a principal destination of China’s foreign investments. During Chinese Premier Li Keqiang’s visit in 2014, the two countries signed US$ 14 billion worth of economic deals, and the March 2015 Kazakhstani Prime Minister Karim Qajymqanuly Massimov’s visit to China added another US$ 23.6 billion of economic deals.[68] In Kyrgyzstan, the PRC, with a US$ 850 million allowance from the state-owned China Export-Import Bank (or Exim Bank), has been financing the construction and reconstruction of major highways. In Tajikistan, with a US$ 900 million loan, Chinese companies have been building roads linking the capital, Dushanbe, with other important towns. In 2013, China signed a contract with Uzbekistan worth US$ 455 million for the construction of a railway tunnel. Furthermore, in its 2015 hearing before the US and China Economic and Security Review Commission, professor Sebastien Peyrouse of George Washington University highlighted Chinese extensive investments in Central Asia, using China Exim Bank or China Development Bank funds, in sectors such as hydroelectricity, telecommunications, uranium, and cement.[69]

China’s «going out – going west» investment policies, as part of the Silk Road Economic Belt project, have headed farther west, beyond Central Asia, and targeted Eastern and Western Europe, enhancing the opportunities for the growth of financial cooperation among China, Europe, and European-member states. In June 2015, Hungary was the first European country to sign a cooperation pact, inserting her in China’s New Silk Road, when Chinese Foreign Minister Wang Yi and his Hungarian counterpart, Peter Szijarto, signed an MoU, the first of its kind between China and a European country.[70] Also, at the end of 2014, a new direct railroad line between Europe and Asia was launched: the first direct freight train to connect China and Spain reached Madrid after a journey of around 13,000 kilometres. The journey lasted 21 days, starting from Yiwu, a Chinese city on the east coast. It was meant to be the longest rail route in the world – surpassing even the combined 12,250 kilometres covered by the Trans-Siberian Railway and the Orient Express routes – and of course, a major international link between Europe and Asia. The route crossed Kazakhstan, Russia, Belarus, Poland, Germany, and France before reaching Spain.[71]

Aside from direct freight railroads, China was also planning to build a high-speed passenger railway between China and the United Kingdom and between Beijing and Moscow. The first would entail an investment of US$ 150 billion and would take approximately ten years to be completed.[72]

Furthermore, this long Eurasian corridor was supposed to be complemented by several smaller corridors, such as: the Bangladesh-China-India-Myanmar Economic Corridor aiming to connect Yunnan, the south-western Chinese province with the Bay of Bengal,[73] the rail services aiming to connect Nepal to Thailand as part of a MoU on railway cooperation signed by China and Thailand in December 2014, and, more important, the China-Pakistan Economic Corridor connecting Kashgar in Xinjiang with the port of Gwadar in Pakistan through roads, rails, and pipelines. This last project was discussed at a forum on the China-Pakistan Economic Corridor held in Xinjiang in August 2015, which was attended by hundreds of officials and delegates from companies and think tanks. At the forum, the two countries signed 20 cooperation agreements accounting for US$ 1.6 billion projects.[74]

5.2. From the East China Sea to the Mediterranean Sea and Africa coasts: re-building the ancient maritime routes. 

Maritime routes are as important as land routes to China’s economy, as most goods in the global-trade economy are transported by ship. Being the world’s largest trading nation, China is the major destination and a key starting point of international shipping routes. According to a Clingendael report, seven out of the ten busiest container ports in the world are positioned in China, with the port of Shanghai being the world’s largest; three Chinese shipping companies are among the twelve largest container transporters in the world; China is the largest shipbuilding nation in the world; Chinese firms are particularly dynamic in the construction and management of ports around the world.[75]

China’s effort to build a new maritime route officially started in 2013 in Southeast Asia. At the time, major Chinese foreign investments were committed to the region, through bilateral or multilateral agreements on infrastructure building. This happened notwithstanding the heated maritime territorial disputes, which were pitting China against several Southeast Asian countries (Philippines, Vietnam, Malaysia, Brunei, and Taiwan), and the United States.[76] As suggested by Cai Penghong, a Senior Fellow at the Shanghai Institute for International Studies, maritime cooperation between China and ASEAN started in the early 1990s. However, since the launch of the Maritime Silk Road in Indonesia in 2013, every major agreement and commitment, although previously signed or taken, has gone under the banner of the New Maritime Silk Road project.[77]In particular, the year 2015 was declared, in relation to the project, as the «ASEAN-China year of maritime cooperation». Indeed, 2015 was particularly marked by a great number of visits by high-level Chinese officials to Southeast Asian countries.[78]

Among the ASEAN countries, Vietnam, one of the main players in the South China Sea’s territorial disputes and the site of several anti-China riots,[79] was a major focus of China’s Maritime Silk Road initiative in 2015. In April, the General Secretary of the Communist Party of Vietnam, Nguyen Phu Trong, visited China. On that occasion, the two countries signed two MoUs aimed at founding two working groups: one for infrastructure cooperation and another for finance and currency cooperation. In July, Chinese Vice Premier Zhang Gaoli visited Vietnam, to be followed in November by Xi Jinping, the first Chinese President to visit Vietnam in over a decade. The major proposal that emerged from all of these high-level meetings was the need to combine China’s Belt and Road initiative with Vietnam’s «Two Corridors and One Economic Circle» plan. This plan, proposed in 2004 by Vietnam and endorsed by China, refers to: the «Kunming – Lao Cai – Hanoi – Haiphong transport corridor», the «Nanning – Lang Son – Hanoi – Haiphong transport corridor», and the «Beibu Gulf Rim Economic Circle». The two transport corridors and the economic circle, the latter also known as Gulf of Tonkin Economic Belt, defined the economic region comprising south-western China, and northern and central Vietnam. During Xi’s visit, the two countries signed agreements concerning party-to-party cooperation, infrastructure, trade, investment, culture, and education. In particular, Xi committed to loan US$ 158 million over the following five years for the conclusion of a high-speed railway project.[80]

Also, Laos, Thailand, Malaysia, and Singapore were part of a large 3,000-km-long regional railway project involving China, which would connect Kunming, the capital and largest city in Yunnan Province, Southwest China, to the Southeast Asian markets. On 1 December 2015, Zhang Dejiang, the chairman of the Standing Committee of China’s National People’s Congress, went to Laos to attend the celebration of the 40th anniversary of the founding of the Lao People’s Democratic Republic. The visit followed the formal start of the construction of the China-Laos high-speed railway, which was part of the bigger construction plan. The project entailed a total investment of US$ 6 billion, 70% of which came from China and 30% from Laos. The intention was to build a 418-kilometre railway departing from Kunming and arriving in Vientiane, the capital of Laos.[81]

Beijing’s plans to develop a network of ports and coastal infrastructures involved all countries along the maritime route until the door of Western Europe, where the China Ocean Shipping Company (COSCO), a Chinese state-owned enterprise, was developing the port of Piraeus in Greece into a major hub at the European end of the Maritime Silk Road. At the end of 2015, the COSCO Group was in pole position to obtain the majority stake of Piraeus Port, thanks to the privatization process launched by the Greek government. In 2008, COSCO had already obtained one of the two Piraeus terminals as a 35-year concession. Since then, a Chinese-built railway has been constructed to connect the Greek port with Central Europe’s three major ports of Hamburg, Rotterdam, and Antwerp.[82] It was also remarkable that each of these three European ports maintained very special relations with China. China was indeed considered the port of Hamburg’s most important trade partner. In October 2015, the Bank of China and the port of Rotterdam authority signed a MoU in an effort to strengthen their reciprocal investments, and the port of Rotterdam affirmed its will to cut for itself the role of a key logistic hub in the Chinese network of the Belt and Road. Furthermore, at the end of 2015, the port authority chairman of Belgium’s port of Antwerp, Marc Van Peel, declared he would warmly welcome Chinese investments in the port in order to make it part of the Chinese Belt and Road project in line with a long tradition of friendship between the Belgian port and China.[83]

As in the ancient maritime silk route, Africa was meant to be an integral part of the new development as well. Chinese infrastructure building in Africa certainly preceded the launch of the OBOR project. Nevertheless, since its launch, Chinese infrastructure activities in Africa started to be presented as an integral part of the Maritime Silk Road initiative. This was the case of the Kribi Port project in Cameroon, the first phase of which started in 2011. This first phase’s cost amounted to US$ 568 million, of which 85% came from China and 15% from the Cameroon government, but the final expense was projected to reach US$1 billion. Furthermore, the Chinese were also committed to build roads and railways connecting the new port to major urban areas in Cameroon, which would give birth to an integrated industrial area.[84]

According to Brian Eyler, Deputy Director of the Southeast Asia programme at the Stimson Center in Washington DC, Africa’s role in the Maritime Silk Road was not secondary to that of Europe. It was, on the contrary, a primary focus, not only of the current Chinese international political economy but also of Southeast Asian countries’ trade interests.[85] According to Eyler, behind the Maritime Silk Road project and, in particular, behind the complex rail links connecting Yunnan to Southeast Asia, there was a very well-organized cooperation between China and the most advanced Southeast Asian economies in order to jointly exploit the growing markets in Africa, the Middle East, and South Asia. Southeast Asia – by providing strategic port facilities and exporting goods, such as Thai rice, alongside with Chinese products – was indeed a key actor in the construction of the Maritime Silk Road. This connection between some Southeast Asia countries and China was also visible in the joint China-Thailand project, aimed at building a canal connecting the South China Sea to the Andaman Sea, through the Isthmus of Kra. This project bypassed the Malacca Strait, seen by China as a dangerous choke point, where, in case of military confrontation, the US could easily cut off the Chinese routes to West Asia and East Africa. Eyler describes the Maritime Silk Road as «a network of exporters formed of commercial interests from China and advanced economies in Southeast Asia sending manufacturing and food exports to Africa’s growing markets while importing valuable minerals and metals from African trading partners».[86]According to the author, Thailand was the most-interested Southeast Asian country in the commerce with Africa: thai rice exporters are likely to be one of the main beneficiaries of the Asia-Africa link under the MSR (Maritime Silk Road) plan. Already 60 per cent of Thai rice exports in 2013 are headed for Africa.[87] With the purpose of controlling the Asia-Africa trade, Beijing has been developing 12 deep-water ports, seven of which along the African coasts (Djibouti, Dares Salaam, Maputo, Libreville, Tema, Dakar, and Bizerte), while, at the same time, constructing airports, railroads, and highways.[88]

6. Financing the OBOR: China-led multilateral financial institutions and funds and the IMF democratization process

China’s infrastructure diplomacy of the Belt and Road project has been complemented by the foundation of a number of China-led multilateral financial-institutions and development funds: the Silk Road Fund, the Energy Development Fund, the Maritime Silk Road Bank, and the so-called Asian Infrastructure Investment Bank.

China announced the creation of the US$ 40 billion national Silk Road Fund in November 2014. The fund was meant to be financed from China’s foreign currency reserves (accounting for about 65% of the fund), from the government’s sovereign wealth fund, and from the Exim Bank and the China Development Bank. In the case of the Silk Road Fund, China was the sole founder and founding source.[89] The Energy Development Fund was, on the contrary, meant to be a multilateral fund aimed at investing in energy infrastructure along the Silk Road land and maritime routes. The idea of this fund was conceived by the China Energy Fund Committee, a Hong Kong-based think tank concerned with global energy cooperation that sought both Chinese funds and foreign investments, aiming at putting together US$ 20 billion.[90] Among the strategies to raise enough money to finance the ambitious OBOR initiative, there was also the project to create a Maritime Silk Road Bank, a project for which several ASEAN countries have shown the intention to contribute, in an effort to raise US$ 16 billion.[91]

The launch of the AIIB initiative – already mentioned above –coincided with the OBOR launch in October 2013. However, its constitution was only completed in 2015. The final text of the AIIB founding document (Articles of Agreement) was adopted at the 5th Chief Negotiator Meeting on 22 May 2015 in Singapore and was signed by 57 Prospective Founding Members between 29 June and 31 December of the year under analysis. By 31 December 2015, 18 members among the 57 had ratified the agreement. More members were expected to ratify the document by the final deadline of 31 December 2016.[92] The AIIB’s main declared goal was to support the «development of infrastructure and other productive sectors in Asia, including energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, urban development and logistics […]».[93] The bank had a founding base of US$ 100 billion, with China contributing approximately 30% of the initial capital and holding the largest number of shares (30.34%), followed by India (8.52%), Russia (6.66%), and Germany (4.57%). China’s capital shares gave her 26.06% of voting rights, followed by India (7.51%), Russia (5.93%), and Germany (4.15%). Since AIIB constitution required 75% of voting rights for deciding key issues, such as changes in the bank’s capital base or in the board of directors, China de facto enjoyed veto power.[94]

The AIIB foundation acquires a more-profound meaning if connected with the long-run battle over the IMF (International Monetary Fund) reforms aimed at democratizing its governance. The IMF reform process was officially launched in 2009 at the G20 in Pittsburgh, and the year after produced two agreements on IMF reform that needed to be ratified by the single countries involved. The reform was aimed at increasing the fund’s financial resources from roughly US$ 330 billion to US$ 660 billion and shifting more than the 6% of quota shares to emerging markets and developing countries in a major effort to reflect the dramatic changes in world economy and the greater economic weight of developing countries. At that time, notwithstanding the extraordinary changes in the world-economy balance of powers, the IMF voting rights’ distribution continued to be quite similar to the one established in 1944, when the IMF and the World Bank were created at the Bretton Woods Conference. Still, in 2015, the US controlled 16.7% of voting rights, while China, the second largest economy, controlled only the 3.8%, highlighting a clear asymmetry between its weight in the global economy and its role in the governance of IMF. Through the proposed reforms, Brazil, Russia, China, India, and South Africa, the five major emerging economies forming the so-called BRICS, enjoyed a total increase of 4.5% of voting share corresponding to 14.3% of total voting power. In this way, China would become the third-largest member country in the fund and the US’s quota share would be reduced from 16.7 to 16.5%, which, however, leaves her veto power to key IMF issues untouched. However, this reform process was stalled for five years, as the US Congress finally authorized it only in mid-December 2015.[95]

The most remarkable aspect, related to the AIIB foundation, has been the unexpected enthusiastic response to China’s initiative from the United States’ allies within Asia as well as within Europe, including South Korea, India, Philippines, Australia, the United Kingdom, Germany, Italy, and France. Together, they have given a significant legitimacy in supporting this new China-led multilateral financial institution in spite of American and Japanese refusal to join and, above all, US lobbying efforts against it. According to Chinese press and academics, this has been a major diplomatic victory for China, particularly if the UK’s critical position on IMF reform impasse and its positive stance on AIIB set up are taken into account.[96] As noticed by Lu Feng, professor of Economics at Beijing University, «[…] In a rare case of disagreement with the US, the United Kingdom, France, Germany, Luxembourg and Switzerland all applied to join the AIIB. This symbolic development marks the rise of emerging economies, with China as their representatives, and is a prelude to the restructuring of the global financial system».[97]

The AIIB has not been the sole multilateral financial institution created as a result of the emerging markets and developing nations’ dissatisfaction with the Bretton Woods architecture. In July 2014, China contributed to establish, together with the other BRICS countries, the New Development Bank (NDB).

The NDB – funded following the Fortaleza Declaration, made at the 6th BRICS Summit – was officially launched in July 2015. However, the project had been under discussion among BRICS countries since around 2012. Among the major goals of the bank, the Fortaleza document highlighted the objective of financing infrastructure and sustainable development projects in developing countries by increasing the amount of money at their disposal. The bank was established with an initial capital of US$ 50 billion and an emergency reserve fund of US$ 100 billion.[98] The document openly asserts the BRICS countries’ disappointment with the impasse in IMF reforms. In fact, the Fortaleza document states «We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness».[99] On the NDB official web site, it is furthermore specified that: «The New Development Bank BRICS […] is a multilateral development bank operated by the BRICS states […] as an alternative to the existing US-dominated World Bank and International Monetary Fund. The Bank is set up to foster greater financial and development cooperation among the five emerging markets. […] Unlike the World Bank, which assigns votes based on capital share, in the New Development Bank each participant country will be assigned one vote, and none of the countries will have veto power».[100]

6.1． The West divided over the AIIB/China question 

From the end of 2014 till the end of 2015, the AIIB question was the cause of significant turbulence in US-Europe relations as well as in US-Australia relations. The West has thus been divided over an issue concerning China and how to deal with its rise in a way that, in spite of the deep differences in context and meaning, brings to mind the 1950s and 1960s, when a more-open European stance on how to deal with China was counter-posed to a total American closure.[101]

As reported by the Australian Financial Review, between the end of 2014 and the beginning of 2015, the US repeatedly tried to dissuade Australia from joining the AIIB, stating its official concerns about the nature of the AIIB objectives, its standards, and the fact that the bank would give the possibility to enhance China’s military capacities in the region. In particular, the US was worried about China’s having veto power over the AIIB’s decision-making body, as this would further empower its foreign policy.[102] Among Western countries, the ice was broken in March when the United Kingdom announced its decision to become an AIIB founding member; after the UK, other Western countries, Australia included, followed its lead.[103] The US had an unusual and almost immediate public reaction: the 12th March issue of the Financial Times anonymously quoted an Obama administration official accusing the UK of «a trend of constant accommodation with China, which is not the best way to engage a rising power».[104] The anonymous official further argued that the British decision had been taken when the G7 was still in the midst of a debate in order to develop a comprehensive common approach towards the bank.[105]

The issue at stake between the US and the rest of the West seemed to be what stance to take vis-à-vis China’s ambiguous attitude towards the international system and its rules: engagement or containment. In this specific case, the US – whose own policy towards China has constantly wavered between the two stances since Nixon’s times – was adopting a containment stance. Washington argued that the best way to be sure that China’s AIIB would have been willing to abide by high-level international standards on workers’ rights, environment, and corruption would be by putting pressure on Beijing from outside the AIIB. On their part, European countries claimed that, from inside the bank, they would be by far more effective in pushing China to follow those international rules. Of course, behind the divided American and European stance, so remarkable and, above all, so openly shown for the first time in history, there were diverging national priorities.

At that point, the US seemed far more worried about defending its declining global hegemony rather than securing her already-solid economic relations with China. As explained by Tobias ten Brink, America’s greater ability, in comparison to the other countries, to deal with her own trade deficits, her massive military expenses and the recurring economic crises was not only due to China being the principal owner of the US national debt but also to the absolute global dominance of the US dollar. The US dollar global dominance, however, has been under attack for several years, as shown by at least two crucially important developments. The first is the use of currency-swap agreements finalized to substitute the US dollar with the Chinese yuan in commercial exchanges, especially among Asian countries. The second development is China’s diversification policies of international financial investments, aiming at substituting US bonds with those from other international sources. In a context of increasing threat for the US dollar dominance, it’s no wonder that the coming to the fore of the BRICS New Development Bank but, above all, of the AIIB provoked a sharp reaction from the Obama administration.[106] Moreover, as previously mentioned, the competitive pressure in the global market coming from the Chinese global firms was affecting the US as well as European firms, already seriously damaged by the global economic recession. The Chinese way of internationalizing firms was often under attack and accused of being unfair for not abiding by the neoliberal rules of the international market, especially because of the significant role played by the State in the «Go Global» process.[107]

While the US seemed to have chosen a radical method to try to force the PRC to abide by neoliberal rules – by refusing to adhere to the AIIB, lobbying their allies not to do it, and creating the TPP, which excludes China – European countries seemed to have chosen to exploit the benefits of the Chinese way. Between September and October 2015, just to mention the most striking example, China and the UK exchanged visits at the highest level: George Osborne, UK Chancellor of the Exchequer, visited China in October, and Xi Jinping visited the UK in November. During Xi’s four-day trip, the two countries issued a document, the UK-China Joint Statement on Building a Global Comprehensive Strategic Partnership for the 21st Century, which stated: «This visit opens a golden era in UK-China relations featuring enduring, inclusive and win-win cooperation». Among the several agreements on investment, commercial, and financial cooperation, it is worth mentioning the fact that China was offered the opportunity to invest in different sectors of the British economy and, in particular, in the nuclear sector. Furthermore, London was chosen as the first-ever financial centre outside China in which to open a sovereign debt market in Chinese renminbi.[108]

On the whole, the great absence in the current triangular relations among the PRC, the US, and the UK was the usual Western pressure over China for human rights’ protection. David Cameron had indeed been refusing to host the Dalai Lama since they last met in the UK in 2012, provoking, at that time, harsh reactions from China. During Xi Jinping’s visit in October 2015, Prince Charles, a well-known supporter of Tibetan human rights, refused to participate in the state banquet. However, he hosted Xi and his wife at his Clarence House London Mansion and avoided meeting the Dalai Lama when the Tibetan leader visited the UK in September, just one month before the Chinese President’s visit. Moreover, in 2014, London absolutely failed in supporting the Hong Kong pro-democracy movement against Beijing, a behaviour that has been defined «deferential» and «shameful» by Hong Kong pro-democracy activists. Lastly, in 2015, during his official visit in September, Mr. Osborne visited Xinjiang in spite of the controversial and harsh Chinese repressive policy against Uyghur separatism. His goal was to try to assure UK lucrative construction contracts in the province in line with the overall aims of the Chinese OBOR project.[109] Notwithstanding this poor record by the UK government in defending Chinese human rights, the main argument used by the US to confront the UK decision to join the AIIB completely eschewed any reference to this problem. As noted above, the Obama administration’s critique was indeed related to a supposedly wrong way to «engage a rising power».[110]

7. «Seeking new models of international cooperation and global governance» in a changing international landscape

In 2015, the «One Belt, One Road» initiative was proposed by the Chinese leadership as a new and innovative Chinese foreign-policy strategy, potentially able to reform global governance and democratize international relations. As stated by an official Chinese press agency: «The [OBOR] plan is expected to change the world political and economic landscape through development of countries along the routes, most of which are eager for fresh growth».[111]

The point of departure and the legitimacy basis for this strategy – which, as already noted, were not new in Chinese foreign policy but which were reaffirmed with significant emphasis by the fifth generation of Chinese leaders – was Xi Jinping’s Address at the Fourth Central Conference on Work Relating to Foreign Affairs (Zhongyang waishi gongzuo huikuai), held in Beijing on 28-29 November 2014.[112] The Conference, chaired by Premier Li Keqiang, was the first on foreign affairs since 2006 and was attended by the entire Politburo Standing Committee, by central and local civilian and military bureaucrats, by almost all Chinese ambassadors, and by commissioners of the Ministry of Foreign Affairs to both the Hong Kong and Macao Special Administrative Regions. Its main aim was to launch and strengthen the guidelines, principles, and major goals of China’s diplomacy in a deeply transformed and interdependent international scenario. The core argument of Xi Jinping’s address was the necessity to develop a new diplomatic approach in accordance with both China’s long-standing dependence on the world and the world’s new and growing dependence on China.[113] According to Xi, the world and China were so intertwined that, for the sake of China’s own domestic and international development, the Chinese leadership had, more seriously than in the past, to rethink its diplomacy in terms of «win-win cooperation» in order to build «a new type of international relations» (xinxing guoji guanxi).[114]

In the words of Chinese Foreign Minister Wang Yi: «This important exposition of President Xi Jinping is a synthesis of the new diplomatic theories and practices we have developed in our relations with major countries, neighbouring countries and developing countries».[115] According to Wang Yi, this diplomatic stance had already brought about the establishment of a China-centred «global network of partnerships». Since the end of the Cold War, China had indeed launched a diplomatic strategy aimed at getting «partners instead of allies».[116]

Xi Jinping’s theses have been reiterated and given theoretical depth by some well-known Chinese intellectuals. In one of his articles, Su Ge, the President of the China Institute of International Studies in Beijing, identified the 9/11 attacks (2001) and the 2008 international financial crisis as the major turning points that contributed to modify the international structure. In Ge’s words: «[…] the economies of the United States and developed western countries tended towards relative decline while those of some newly emerging economies experienced new vitality and an increase in strength and standing […] The G20 summit has become the principal platform for the international community to cope with the financial crisis, the emerging countries have enhanced their influence in international affairs, and the trend of world multi-polarity is becoming increasingly salient».[117] In addition, Su Ge argued that the US, in order to cope with her decline, had promoted her rebalancing strategy towards the Asia-Pacific region and taken a hard line on what she judged the unfair competition practices of the emerging economies. This hard line had found expression in both the Transpacific Partnership Agreement and the Transatlantic Trade and Investment Partnership (TTIP), which had been conceived with the goal «to bypass or replace relevant WTO rules and formulate a capital operation system that overrides state sovereignty».[118] Likewise Ding Yuanhong, previous Ambassador in the European Union and former Director of the Policy Research Center of the Ministry of Foreign Affairs, identified the shifting balance of power between developed and developing countries as one of the major factors of change in the international architecture.[119]

This vision, which highlighted the need for a rebalance in global governance, was further enhanced, with special reference to Asian countries, by the rhetorical concept of the so-called «community of common destiny», propounded by Xi Jinping in his speech at the Boao Forum for Asian Annual Conference of March 2015.[120] In Xi Jinping’s speech – integrated by the remarks of Chairman of the National Committee of the Chinese People’s Political Consultative Conference Yu Zhengsheng, and of Chinese vice-president Li Yuanchao[121] – the «community of common destiny» substantially appears as another expression to indicate Chinese aims and efforts to promote a different type of international relations and global governance. As stated by Li Yuanchao, China proposed itself as the «proponent, supporter and facilitator» of the process aiming at reaching this goal.[122]

Although most of the rhetorical discourse around the «community of common destiny» was especially addressed to Asian countries, China’s declared aims were effectively and ambitiously directed to the whole world. In Li Yuanchao’s own words: «The destiny of the Chinese people is inseparable from that of people of all countries, so are our dreams and aspirations closely connected with those of other people. China actively advocates a community of common destiny for all».[123]

The Asian «community of common destiny» was essentially intended in two forms: Asian economic integration and Asian security. In an undeniable effort to deal with the extraordinary escalation of military and economic tensions in the East and South China Seas, Xi Jinping asked Asian countries to «shelve differences and seek common grounds».[124] In particular, apart from the OBOR project, he mentioned the efforts that the «Asian community» had been putting into the ongoing project to build an East Asian economic community and the ongoing negotiations for the Regional Comprehensive Economic Partnership (RCEP). The former was expected to be completed in 2020, while the deadline for the latter was projected for the end of 2015. However, at the time of this article’s writing, the latter agreement was yet to be closed. It is worth noting that the RCEP was a comprehensive free-trade agreement and involved ten member ASEAN economies plus six of the current free-trade agreement partners (Australia, China, India, Japan, South Korea, and New Zealand). Seven of these countries (Australia, Japan, Malaysia, New Zealand, Singapore, Vietnam, and Brunei) were also part of the US-led and already-concluded TPP. In that regard, it is relevant to mention Xi Jinping’s encouragement, directed towards Asian countries, to «oppose interference in other countries’ internal affairs and reject attempts to destabilize the region out of selfish motives».[125] Although implicit, this was a clear criticism of the US military and economic rebalancing to Asia.

As has been pointed out in the foreword of the previous Asia Maior volume, Asia – even the portion of it that the Asia Maior think-tank defines as «Asia Maior», namely Asia south of the Caucasus and Siberia and east of Turkey and the Arab countries – is a profoundly diverse area, basically devoid of any unity geographically, politically, culturally, economically or socially.[1]Given this situation, identifying one or more developments which can be considered as characterizing the evolution of even the majority of Asia Maior is always a difficult task.

However, in 2015 – the year under analysis in the present volume – at least three core developments appear to have been important enough to immediately catch the attention of attentive observers. Moreover, apart from these more conspicuous developments, some others, perhaps less immediately noticeable but equally important, are worth singling out. Accordingly, we shall organize this concise foreword in two parts: in the first, the most conspicuous and immediately evident developments which have characterized Asia Maior in 2015 will be briefly discussed; then, in the second part, we shall go on to briefly present some additional developments which, although less immediately visible, are important to understand in order to have an accurate overview of the evolution of Asia Maior.

***

As said above, there were three main and immediately visible developments which characterized Asia Maior in the year 2015. The first was the Chinese fulfilment of the first phase of a gargantuan political-economic project: the Silk Road Economic Belt and 21st Century Maritime Silk Road, known also as the «One Belt, One Road» (OBOR) initiative.

The second element was the successful conclusion the TPP (Trans-Pacific Partnership) negotiation by its main sponsor, the United States, as well as 11 Pacific Rim countries, including five Asian countries: Japan, Singapore, Brunei, Malaysia and Malaysia.

The third element was the July 2015 nuclear agreement between Iran and the P5+1 (the UN Security Council’s five permanent members, namely China, France, Russia, the United Kingdom and the United States, plus Germany). This agreement established the possibility of a more dynamic role for Tehran on the international stage and (more specifically) in West Asia.

The TPP treaty and the OBOR initiative are the two competing strategies adopted by the two major powers active in Asia Maior – namely the US and China – while pursuing their respective hegemonic strategies in that geopolitical area. These two competing strategies are intertwined with and to a large extent condition the strategies adopted by countries such as India and Japan, aimed at strengthening their own position on the international stage by projecting themselves as leaders at the regional level. Seen from this perspective, the political change determined by the progressive reintegration of Iran into the international system widened the area in which the hegemonic dynamics of the two major powers (US and China), plus the expansive economic strategies of some intermediate ones, in particular India and the EU countries, played themselves out.

It is in this context that China’s foreign policy must be seen. Since 1978, the Chinese Communist Party (CCP) has legitimized its own power with reference to the economic growth made possible by its policies. As a consequence, the legitimization of the party has gradually moved from an ideological motivation, namely the reference to the revolutionary model, to an economic and financial motivation, namely the long-term and truly impressive economic growth experienced by China since 1978. This shift, however, implies a risk: the PCC political legitimization cannot help but be in danger whenever the growth of the economy slows down – as has happened in recent years – and, by slowing down, highlights and deepens the growing socio-economic inequalities which are the necessary by-product of the Chinese growth model.[2] Therefore, supporting economic growth has become the priority of the Chinese state. In the past few years, an integral part of this strategy has been the ‘Go Global’ policy, aimed at making possible massive Chinese investments abroad. As shown by Francesca Congiu in the present volume, China has pursued this objective by launching, in 2013, what has more recently been termed the OBOR.

The OBOR project does not simply aim to encourage Chinese public investments abroad in order to support the national economy, it also pursues two additional targets, both crucially important. One is to guarantee the uninterrupted and easy flow of raw materials – particularly energy resources – into China’s economy, accompanied by the reverse flow of China’s products directed to the international market; the other target is the attempt to mitigate fears related to what is often seen as Beijing’s over-aggressive assertiveness on the international stage.

This dynamic Chinese foreign policy has been countered by an equally dynamic US foreign policy. US hegemony in Asia was built, after the Second World War, on three pillars: military supremacy, economic supremacy and cultural hegemony, i.e., the acceptance by a large part of the international community of this supremacy as something beneficial for all.[3] However, the grip of US power on Asia has started to slowly loosen since the 1970s. With the beginning of the world economic crisis in 2008, the decline of US power in Asia became suddenly more pronounced and increasingly visible.[4]

Once the long term decline of US hegemony has been pointed out, it must be put into perspective; the three pillars on which US hegemony in Asia and across the world has been based may be weakening, but the US economy remains the biggest on the planet, its military the most powerful and its cultural hegemony still basically unchallenged. In fact, the US remains the pole of attraction and the preferred residence and workplace of the most brilliant brains worldwide. As a consequence, US superiority in advanced technologies, both military and non-military, rather than declining appears to be surging. Last but not least, US hegemony, although weakened, appears to be propped up by a complex network of overlapping military and economic alliances.[5] Given this situation, it was only to be expected that Washington would find the will and the resources to launch a set of ad hoc strategies aimed at containing and hopefully reversing the process of decline. Perhaps the most important of these strategies, at least in the foreign policy field, has been the Obama administration’s launching, in 2009, of the so called «Pivot to Asia».

If observed from the standpoint of long-term US policies in Asia – at least in East and South-east Asia – the Pivot to Asia can be considered the fourth stage of a process which began at the end of the 19th century. The first, soon after the 1898 Spanish-American war and the consequent sudden surge of US power in Eastern Asia, was the «Open Door» policy, aimed at maintaining a formally independent China open to economic exploitation by the Western powers. The second stage, which started after the 1949 communist conquest of mainland China, was the anti-communist containment. The third stage was heralded by Richard Nixon’s speech in Guam, in 1969, setting out the doctrine which was to be known by his name.

The Nixon Doctrine de-emphasized the direct usage of force by the US and privileged diplomatic engagement with both the Soviet Union and Communist China. Although the application of the Nixon Doctrine in the following decades was not linear, with its dramatic interruption due to George W. Bush’s post-9/11 proactive military policy in Central and East Asia, it still remained the reference paradigm of US foreign policy in East, South-east and South Asia, even after 2001. It introduced what Douglas Stuart and William T. Tow allude to as «hegemony light» on the part of the US.[6] In Colin S. Gray’s words, this boiled down to «a primacy expressed more in leadership than in actual application of the mailed fist», as the latter was bound to be unsuccessful if employed, with little discrimination, «as the principal weapon in the U.S. strategy arsenal». Indeed, American military power was still considered as absolutely essential, but only as «the option of last resort», namely «a strategy more potent as threat than it is in action».[7] Finally, the fourth stage was the «Pivot to Asia», which, as stated by Douglas Stuart and William T. Tow: «is best understood as an effort to preserve ‘hegemony light’ in the face of an unprecedented shift in global power from West to East».[8]

The «Pivot to Asia» is clearly articulated in two contextual action plans: the first is the US policy to guarantee its continued financial assistance and military protection to its historical allies in Asia: Japan, Singapore, The Philippines, Malaysia and (ironically enough) its former archenemy of the 1970s, Vietnam. The second action plan is represented by the attempt – through the TPP treaty – at creating a gigantic US-dominated free trade area, encompassing both the Americas and East and South-east Asia.

On 4 February 2015, with the signing of the TPP treaty by 12 nations and the finalisation of the text of the treaty by the respective Trade Ministers on 5 October 2015,[9] the US reached a first crucial turning point in its strategy, aimed at maintaining and strengthening its hegemony in Asia (and as a consequence, worldwide). In fact, the building of a free trade area including 12 Pacific Rim countries, which has usually been described as an attempt to exclude and encircle China, has a different, more ambitious and politically more sophisticated objective. As argued by Francesca Congiu in this volume, the US aims less at implementing a policy of containment vis-à-vis China than at inserting China into an economic space where the rules are written by the US. In so doing, the US aims to reach an objective which it has pursued since the time of the «Open Policy», namely getting rid of those tariff and non-tariff barriers which, since the 19th century, have prevented the US from freely entering and dominating the Chinese market.

As we have seen, both China and the US aim to strengthen their international position by making use of their economic leverage. But, from this point of view, there is a radical difference in the way in which the two powers have been moulding their respective strategies since the beginning of the present century. The US, after the military difficulties it experienced in Iraq and Afghanistan, has shifted from a dominance model which privileged military might and its ruthless usage to a new hegemonic model based almost exclusively on economic supremacy. China, on the other hand, after having built its hegemony on its extraordinary economic growth, presently seems bent on reinforcing it by building up its military might. As Giulio Pugliese shows in the present volume, in 2015 China has become more accommodating in the East China Sea in the face of Japan’s economic and military-diplomatic containment strategies; however, this has simply made Beijing refocus its energies on strengthening its position in the South China Sea, by implementing a massive building programme on the disputed coral reefs and rocks of the Spratly Islands.

China’s activism in the China Seas only serves to increase the feeling of threat experienced by some Asian countries, including Japan. For its part, the Abe government has reacted by bargaining over the US’ new security guidelines, in exchange for Japan’s signature on the TPP treaty.

The TPP treaty, as shown by Michela Cerimele in the present volume, has an explicit exclusionary function towards those economies which are not part of the TPP. As, at this stage, the TPP treaty does not include China and the Japanese and Chinese economies are characterized by a high level of interdependence, China is forced to compete with the US and the other TPP signatories at a disadvantage in the crucially important Japanese market. Significantly, this is the same kind of strategy that, in the 1980s and 1990s, was employed by the US and its allies to draw China inside the World Trade Organization (WTO).[10]

Most Asian countries – with the notable exception of North Korea, which is completely isolated – have expressed their interest in participating in either the Chinese OBOR or the US-sponsored TPP treaty. The launching in 2015 of the «Cotton Route» project by New Delhi does not change this general picture, as India does not seem to have the resources to convincingly and effectively implement this project. Indeed, the «Cotton Route», if it ever takes shape – which is, by itself, a doubtful proposition – does not seem up to entering into direct competition with the OBOR or TPP projects. In this context, the goal of the lesser Asian countries – or, rather, the goal of their ruling elites – appears to be to take advantage of the trickle-down effects of one or both of the OBOR or TPP-related development policies. This is done without much concern for the possible adverse socio-economic fallouts of such projects.

In this context, it is worth stressing that the TPP treaty, although presented as a trade agreement, is not mainly about trade, as shown by the fact that, out of its 30 chapters, only six deal with traditional trade issues. The remaining 24 chapters aim to attenuate the local regulations in key sectors such as environment, health and labour, through an unspecified process of normative «harmonization». Also, the negotiation of the TPP treaty has been surrounded by secrecy, its contents going without debate in the parliaments of the countries involved. All this should have raised doubts about the real advantages of the treaty, particularly for the working classes and the weakest among the countries involved. However, curiously enough, the TPP-related negotiations have not aroused either a particular interest or triggered any sustained protests in the signatory countries.

***

Whereas the three developments discussed above are the ones which immediately appear to characterize the evolution of Asia Maior in the year under review, two more need to be singled out and briefly appraised: the vicissitudes of democracy and the evolution of the economy.

In the foreword to the previous Asia Maior volume, «the lack of unity as far as the political systems of the several Asian countries are concerned» was stressed and the point was made that: «Indeed, one could claim that practically all kinds of political regimes are nowadays present in Asia Maior, ranging from the biggest democracy in the world, India, to the most bizarre dictatorship on the planet, North Korea.»[11] Once this has been pointed out, the fact remains that, out of 20 Asia Maior countries examined in the present volume, 17 have political systems which are fully democratic, partially democratic, or somewhat democratic. Accordingly, the situation ranges from the largest democracy in the world, India, which remains a full-fledged democracy, although crisscrossed by authoritarian tendencies, to regimes which, borrowing from Stephan Ortmann’s article in the present volume, can be accurately defined as «electoral authoritarian regimes», to the peculiar Iranian case, where a democratic system is enclosed in the «womb» of an authoritarian one.

Looking at things from this perspective, it is worth noting that out of the 17 Asia Maior countries analysed in the present volume and characterized by either democratic, partially democratic, or somewhat democratic systems, four (Singapore, Myanmar, Sri Lanka, Kyrgyzstan) went through either national parliamentary or presidential elections or both in the year under review, four more (Indonesia, Bangladesh, India, Afghanistan) did the same in 2014 and an additional three (Cambodia, Pakistan, Iran) went to the polls in 2013. In other words, more than half of the 20 Asia Maior countries analysed in this volume went to the polls in the last three years, which, at least at first sight, appears to be an encouraging indicator towards the widening reach of democracy. Only one Asia Maior country, namely Thailand, went in reverse, because of the military coup in 2014.

Proceeding westward in our analysis of the elections (and without any pretension of establishing a hierarchy to their importance), some of their distinguishing features are worth highlighting. In the small but strategically and economically important city-state of Singapore, the 2015 parliamentary elections saw the apparent reverse of the political trend set in motion by the 2011 elections. The 2011 elections had witnessed an impressive surge of the opposition, while the 2015 elections saw a major defeat for opposition and the strengthening of the ruling party, namely the People’s Action Party (PAP). However, the PAP, in spite of its victory – favoured, as shown by Stephan Ortmann in this volume, by exceptional circumstances – saw the scope of its power severely reduced by the necessity to be much more receptive than before to the popular will.

In Myanmar, a parliamentary election – and at long last, a free one – witnessed the landslide victory of the Aung San Suu Kyi-led party, the National League for Democracy, meaning that the Union and Solidarity Development Party, the parliamentary front of the army, was unseated. While this victory – rightly assessed by Pietro Masina in the present volume as a historical one – was an undoubted triumph of democracy, its results were bound to be restricted by both the limitations of the elected government’s powers and the conspicuous residual political powers allowed to the army by the existing constitution.

In Sri Lanka, in January 2015, the victory at the presidential elections of Maithripala Sirisena, the candidate of the united opposition, marked another historical triumph for democracy, putting an end to Mahinda Rajapaksa’s increasingly authoritarian regime. In August, the presidential election was followed by the parliamentary election, which saw a huge popular participation (70% of the electorate) and confirmed the electoral trend initiated by the January poll. Indeed, the forces hostile to the former Rajapaksa regime and favourable to the new presidency, although missing the absolute majority of the parliamentary seats, gained the upper hand, confirming the decline in power of the former president and his political supporters. Already before the parliamentary election, the new president brought about a limitation of the extensive powers given to the presidency by Rajapaksa in 2010. After the parliamentary elections, the new premier, Ranil Wickremesinghe, in his 5th November speech, outlined a «Third Generation Reforms Plan», sketching out an impressive socially progressive reform programme. However, the wounds opened by the long civil war – such as the heavy militarization of the Northern region and the draconian Prevention of Terrorism Act – were left untouched.

Finally, in Kyrgyzstan, the October parliamentary elections confirmed the hegemony of the pro-president parties, yet did not alter a general situation characterized by uncertainty and the lack of a clear-cut political project.

Whereas, at the time of writing, it is too early to clearly assess the consequences of the elections in Singapore, Myanmar, Sri Lanka and Kyrgyzstan, it is possible to attempt to do so in the case of the Asia Maior countries which went to the polls in 2014 and 2013.

Maybe the most interesting among these cases is that of Indonesia, the third largest democracy in the world (after India and the USA). Here, the 2014 presidential election was won by Joko Widodo, a politician who was unconnected to the corrupt, authoritarian and largely criminal «New Order» of President Suharto. As such, President Widodo was seen as an expression of a surging democratic wave. Unfortunately, as shown by Elena Valdameri in this volume, at the end of 2015 the record of the new president was a mixed one; the hoped-for change, although not totally absent, was limited, as Joko Widodo appeared either unwilling to or incapable of challenging the well-entrenched, New-Order-related conservative forces present both inside and outside the government coalition.

An equally interesting case (and a revealing one) is that of India, the world’s largest democracy. Here, the 2014 general election saw the landslide victory of the Bharatiya Janata Party, the Narendra Modi-headed parliamentary front of the Hindu right. After the elections and during the whole year under review, an atmosphere of growing intolerance against non-Hindu minorities and free thinkers became increasingly apparent. Acts of intimidation and open violence, sometimes with deadly results, were organized and/or carried out by Hindu activists, while the government turned a blind eye to – or, sometimes, was taking an apologetic stand vis-à-vis – these fascistic aggressions. The organizations which promoted such violence showed that they had learned from the anti-Muslim Gujarat pogrom of 2002. Massive violence – as was the case in 2002 – is bound to bring the undesired attention of the international community; on the contrary, «chirurgical» violence, applied to single individuals or small groups, easily remains under the radar, particularly if the perpetrators are not Muslims. But the effects of this widespread «low-intensity» violence are equally terrorizing for the social groups which are its victims, generating a situation where the democratic space is increasingly and severely constrained.

In the year under review, Bangladesh, which went to the polls in January 2014, still appeared as a democracy, albeit one living under a kind of siege. On the one hand, it was still dealing with those politicians who, although active and vicious accomplices of the Pakistani army in the 1971 genocidical war waged against the Bangladeshi people, had later resurfaced as partners of some post-independence governments. On the other hand, the Bangladeshi democracy confronted, not without uncertainties and weaknesses, a wave of murderous and wanton violence by radical Islamic groups.

In Afghanistan, after the end of the Karzai era, brought about by the 2014 presidential election, political power was shared between Ashraf Ghani (who took over the presidency) and Abdullah Abdullah (appointed chief executive officer, i.e., prime minister). However, the relations between Ghani and Abdullah were characterized by profound disagreement, making it difficult for them to implement any kind of coherent policy and impossible for the political system, particularly the electoral process, to be reformed.

Cambodia, which went to the polls in July 2013, celebrated the 30th anniversary of Hun Sen’s prime-ministership in 2015, which, by itself, does not seem an indicator of good health for a democracy. In fact, after the 2013 elections, social conflict has exploded virulently throughout the country and has been confronted by the government with repression and violence.

In Pakistan, the 2013 elections were the first in the whole history of the country to see a democratic transition from one elected parliament to another elected parliament. However, two years later, Pakistan’s democratic institutions remain weak and appear largely subordinated to the army’s political will.

In Iran, the 2013 presidential election, which saw Hassan Rouhani’s victory, gave him the possibility to negotiate and finally, in the year under review, conclude a crucially important deal with the P5+1 countries, including the US, which promised the early reintegration of the Middle Eastern country into the international community. However, developments in Iran on the domestic front remained disappointing. Political and social freedoms continued to be severely limited, while the economy’s situation remained unsatisfactory.

Summing up, while democracy is undoubtedly at work in Asia Maior, sadly its results and the benefits for the people at large are, most of the time, disappointing.

***

The above notes on democracy in Asia Maior are far from exhaustive, as for the sake of brevity they are limited to those countries which went through the electoral process in the period 2013-15. However, they are sufficient to highlight once again that political systems in Asia Maior vary along a spectrum, from full-fledged democracy, as in India, to a kind of dual system where democracy gestates inside an openly authoritarian system, as in Iran, to what appears, to a large extent, to be the ideal type of an authoritarian regime, namely North Korea.

Although heterogeneous, this situation is less so than it may appear at first sight. As argued by Emanuela Dalmasso, today democracy and authoritarianism, rather than two opposing poles, can be viewed as part of the same continuum.[12] This continuum is what French scholars Oliver Dabène, Vincent Geisser and Gilles Massardier have characterized as: «[an] authoritarianism with a human face, that spares no country, no political regime, no system, no transnational organization, but whose substantiating ‘traces’ and salient ‘expressions’ can be found in almost all ‘situations’ and political ‘logics’ which unfold before our eyes at the dawn of the twenty-first century».[13]

dc

Last but not least, some words must be expended on the economic trends in Asia Maior. Without giving the data for the individual countries, which are available in the related articles in the present volume, the point can be made that in 2015 the Asia Maior countries’ GNP, although growing less rapidly than before, neared a respectable 6% increase.[14] As pointed out by ADB Chief Economist Shang-Jin Wei: «The region’s growth [was] supported by vibrant private consumption in the PRC [People’s Republic of China] and expanded industrial production in India and other countries. At the same time, countries reliant on commodities [were] hurting from the global slump in prices, and the slower-than-expected recovery in the US and economic contraction in Japan will continue to [adversely] weigh on export prospects».[15]

On the whole, in 2015, economic growth appeared to be sustained in East and South Asia – where it reached 6% and 6.9% respectively; less so in South-east Asia, where it was 4.4%, while it was remarkably slower in Central Asia, where the local economies, hit by «continued low commodity prices, particularly oil and gas» and unaided by «the slow recovery in the Russian Federation», recorded a 3.2% GNP growth.[16]

On the whole, economic growth in Asia Maior appeared to be towed along by China and India, which recorded a GNP growth of just under 7% and just over 7% respectively.[17] This in turn means that, in 2015, India’s rate of growth overtook China’s, making India the fastest growing economy among the major world economies. However, India’s success should not obscure two significant points. The first is that, as pointed out by Diego Maiorano and Michelguglielmo Torri in the India-related article in this volume, India’s quicker economic pace might be, at least in part, the result of a new statistical methodology, whose soundness is not beyond criticism. Moreover – and much more relevant because it is a fact rather than a speculation – in 2015 China’s economy was still four times the size of India’s. As pointed out once again by Diego Maiorano and Michelguglielmo Torri, who quote well-known Indian statistician Ashish Kumar, should India continue to grow at the same speed as in 2014-15 and should China continue to perform at the lower level of the last few years – both of which are highly doubtful propositions – then India would still need 20 to 30 years to catch up with China.

At the end of the day, the truth is that, in the foreseeable future, China remains the economic «locomotive» of Asia. Therefore, for the time being, India’s evident ambition to be considered on a par with China and possibly supplant her as the leading Asian country remains nothing more than very wishful thinking.

N.M. & M.T.