Brexit’s EU shake-up and the global fall-out

Brexit has certainly shaken the European Union. But apart from the mess over the timing, pace and substance of Britain’s EU divorce, no one should expect any other major changes in way the now-27 member bloc conducts itself. And, oh yes, don’t expect any rapid EU unravelling either.

True, there has been a spate of statements on the need for “political reflection to give an impulse to further reform”. The foreign ministers of France and Germany have talked in a heady fashion of their vision for further steps in the direction of a political union. And there’s even a brand new EU “global strategy” articulating the bloc’s vision for dealing with the world outside.

The far right, meanwhile, is predictably gloating over the “Leave EU” message delivered by British voters and demanding similar national referenda on EU membership in their countries. Europe’s populists will certainly continue to make gains in elections in the coming years. But the likelihood of other EU referenda is slim.

Similarly, those vowing to show that the Union is strong and unchanged by Britain’s withdrawal and that the EU will push on without the presence of Britain as the perennial naysayer, the sceptic and the doubter are on the wrong track. The truth is different.

Britain’s objections focused on the EU’s overly ambitious plans a further pooling of sovereignty and the bloc’s failure to hammer out a rational and fair immigration policy. These are also opposed by many other EU states, not just Britain.

On questions related to the further development of the EU single market, Britain was usually in the vanguard of states wanting the removal of internal barriers. On trade, it took a strong anti-protectionist line. And for all the anti-immigration talk, Britain’s multi-cultural landscape stands out in an EU where minorities are not as visible as they should and could be.

Europe’s internal divisions are not about to disappear. The squabbling and wrangling over the EU’s future will continue — perhaps even become shriller. There is no guarantee that the advice to act responsibly given to the EU by US Secretary of State John Kerry will be heard.

What Brexit has done, however, is create uncertainty on global financial markets triggered by the fall in the value of the pound. Some of Asia’s biggest economies have warned that Brexit could cast a shadow over the world economy for years to come.

Global business leaders are already rethinking their export and investment strategies to take account of Britain’s imminent departure from the EU.

More is at stake, however. The EU has long inspired nations across the globe with its message of reconciliation among former adversaries and as a project for peace and stability. In varying ways and to varying degrees, many have also looked to Europe in their own quest for regional integration and cooperation.

That reputation has now taken a body blow. Both Britain and the EU appear diminished to a closely watching world. Those opposed to regional cooperation are likely to take heart from the EU’s difficulties. But it would be unfortunate if the EU crisis puts the brakes on other regions’ plans for integration.

Significantly, none of the EU’s foreign partners — except Donald Trump, the presumptive Republican nominee for US president and possibly Russian President Vladimir Putin — is applauding.

Much will depend on how British and EU leaders conduct themselves over the coming weeks and months. Britain’s pro-Leave campaigners have already sullied the country’s reputation by misinforming and misleading their citizens and by fanning the fires of hatred and racism. It will be tough to correct their mistakes — if that is indeed what the next British Brexit government intends to do.

EU leaders, meanwhile, face a stark choice: they can either listen to and respond to the real concerns of their citizens, including on immigration, and seek a dignified response to the latest crisis. Or — as many fear — they can engage in yet more squabbling over Europe’s future direction.

The route they take will determine whether or not other eurosceptic movements will become even stronger in the days ahead and present their own blueprints for an EU exit.

Europe’s response will be watched carefully not just by the US where fears are growing of a Trump victory in the November presidential elections but also by China, India, Japan and Europe’s other important partners which have invested heavily in Britain as a “gateway” to Europe.

No responsible global power wanted Britain to leave the EU and today no major country wants the EU to unravel. True, some countries may want to negotiate new trade pacts with Britain — but as the US and India have warned, such discussions will not be their top priority. The EU is a much larger trading bloc than Britain — and will continue to count for more on world stage.

For Europe’s trading partners Britain’s absence will be especially felt in EU discussions on trade agreements, whether bilateral free trade accords such as the Transatlantic Trade and Investment Partnership (TTIP) or the wider multilateral trading system. London has taken a strong stance in favour of granting market economy status to China. It has also been among the lead players in the EU’s trade relations with many South Asian countries, including India, Pakistan and Afghanistan.

The departure of Britain as the EU’s prime military power, is going to hit hard at a time when Europe is trying to push its security credentials, especially in Asia. A new EU “global strategy”, which cannot rely on and use Britain’s wide network of global partners, will appear less impressive.

In the end, however, once the market turmoil is over and the reality of Brexit sinks in, it is the blow to the EU’s reputation as an agent for change and transformation which will resonate most strongly across the world.

No schedule yet to restart negotiations on India-EU free trade pact: EU official

The 28-member European Union (EU) is “encouraged” by the political momentum the long-discussed India-EU free trade agreement (FTA) gained at the summit held between the two in Brussels at the end of March, but both sides have not been able to fix a schedule to restart negotiations as yet, an EU official said.Both sides have “outstanding issues” to sort out and “the European Commission offered India on several occasions and in different formats to create an adequate forum to discuss outstanding issues...to enable the process to move forward,” Daniel Rosario, a spokesman for the EU trade department, told a group of visiting Indian journalists on Monday.The last round of talks on India-EU FTA was held in 2013 and the discussions have remained deadlocked on issues such as tariffs on automobiles and wines and spirits, Rosario said.In the auto sector, EU is unhappy given that its exporters have to face Indian import duties of up to 100% on cars and car parts. And in the case of wines and spirits, European exporters face tariffs as high as up to 150%, Rosario said.He said the EU had put forward several proposals in 2013 to break the deadlock.“We suggested long transitional periods for their elimination or going as far as accepting asymmetric elimination of these duties in favour of India” in the case of automobiles, he said. In the case of wines and spirits, “the proposal made in 2013 was for a gradual if not complete elimination of these duties and taking into account the Indian sensitivities”, he said.“We clearly identified the areas where we expect India to make some movement and we offered some fora to go into some specific discussions to allow for the general discussion to move ahead and for the time being, this has not happened,” he added.When asked if the EU would agree to re-open negotiations from the start, Rosario said the EU could not “ignore all the work that has been done so far”.Despite the many contentious issues, “we are encouraged to see that in the last (India-EU) summit at the end of March, both sides agreed to re-engage in this process to give it the necessary momentum”, Rosario said, referring to the 30 March India-EU summit in Brussels. India was represented by Prime Minister Narendra Modi and the EU side was represented by Donald Tusk, president of the European Council and Jean-Claude Juncker, president of the European Commission.But Rosario did not seem to have an answer when asked when the talks will get going again.According to analysts, the trade pact could serve as an “anchor” for bilateral relations, besides proving to European businesses that “India is open for businesses”.The March India-EU summit was the first in four years and followed the EU’s refusal last year to confirm the dates of a proposed visit by Modi amid a diplomatic row over the slow progress in India of the trial of two Italian marines accused of killing two Indian fishermen in 2012.Talks on the Bilateral Trade and Investment Agreement—the official title of the free trade pact—started in 2007 but progress has been tardy and marked by flip-flops. India cancelled a meeting with the EU chief trade negotiator in August last year in protest against an import ban on 700 of its generic drugs clinically tested by GVK Biosciences for alleged manipulation of clinical trials.“The GVK issue, it’s a decision for us that has nothing to do with the negotiations of a trade agreement, it never had a link,” Rosario said.Later, during a meeting between Modi and Tusk in the Turkish city of Antalya in November on the margins of a G-20 meet, both sides agreed to hold a stock taking meeting between the chief negotiators before resuming formal talks. The stock-taking talks, including a meeting between Indian commerce secretary Rita Teaotia and EU Trade Commissioner Cecilia Malmström in Brussels on 22 February, however, did not produce any results.The impression in New Delhi seems to be that with the EU involved in talks with the US on the Transatlantic Trade and Investment Partnership, it is not focused on trade talks with Asia’s third largest economy. Also occupying European mind space is the British referendum, to be held on 23 June, on whether the country should remain in the EU.“There was a long discussion on the trade agreement during the India-EU summit and we have conveyed to them (EU) that we are committed to the agreement,” said a person on the Indian side who is familiar with the developments.On India’s part, disputed issues in the trade talks include the so-called Mode 4, a provision of the 1995 General Agreement on Trade in Services, which seeks to facilitate the movement of professionals from one country to another.According to Shada Islam, director at the Policy Friends of Europe think tank based in Brussels, India-EU ties seemed to be a work in progress with India focused on consolidating ties with countries like the US.“The India-EU relationship is not as vibrant as the EU-China partnership,” she said, adding that the 30 March summit “seemed to be the beginning of a new understanding with misconceptions on their way out”.“At the moment, we (India and the EU) don’t have a strong anchor for our relations and the trade agreement could serve as that anchor,” she said.Total bilateral trade between India and the EU, which is India’s largest trading partner, was €78 billion in 2015, according to EU figures.The EU is one of the largest foreign direct investors in India with investments of €38.5 billion since 2000. 

India Free Trade Agreement: European Union Expects Both Sides To Move With Caution

Talks on the free trade agreement between the EU and India started in 2007 but there has been little progress since then.

Even as the European Union (EU) is preparing its reply to a letter written by India’s commerce and industry minister, Nirmala Sitharaman asking for a meeting of chief negotiators to resume dialogue on the free trade agreement, the EU feels that this time around the two sides will move with caution.

“You don’t negotiate trade agreements without caution. Caution goes hand in hand with ambition. So you have to be able to deliver in the end a deal that is both ambitious and in the interest of both the sides,” said Daniel Rosaro, spokesperson Trade, Directorate-General Communication-EU.

Last year in August, India cancelled a meeting with the EU chief trade negotiator in protest against an import ban on 700 of its generic drugs clinically tested by GVK Biosciences for alleged manipulation of clinical trials. According to Rosaro, India should not have cancelled the meeting with the EU chief negotiator as the import ban was not linked to the free trade agreement. “For us this (cancellation of meeting) was a step that was not really justified at that time and we have explained it why. The GVK issue had nothing to do with the negotiation of a trade agreement,” said Rosaro.

When asked if the EU is focussing more on Transatlantic Trade and Investment Partnership (TTIP) than negotiating free trade agreement with India, Rosaro said, “TTIP is a very demanding process and has brought new public interest in trade policy, but it is one of the many processes where the EU is involved in terms of trade policy we have a broad ambitious global trade agenda in which India comes as one priority.” Shada Islam, director of policy at Friends of Europe, a think-tank  that aims to stimulate new thinking on global and European issues said while India needs to engage with the EU at a higher level and focus on its relationship with Europe, the EU too has to keep up the momentum in its relationship with India.

In November 2015,  Prime Minister Narendra Modi and Donald Tusk, president of the European Council, met in Turkey on the sidelines of a G-20 meet and agreed to hold a stocktaking meeting before resuming formal talks. In March, during the EU- India summit the two sides have now developed a strategic partnership for joint cooperation in many areas under the title EU-India Agenda for Action 2020. “The fact that EU and India have identified quite a few areas of synergies whether it’s smart cities or clean India is quite interesting. I hope this will open up ways for businesses to get involved. We think that there is a lot of potential in  Narendra Modi’s drive for modernisation of India. But we need to see how this can work out in reality, “ said Islam. “What we are also watching very closely is also how India works within the G-20 because that’s for us is one of the new global governance tools,” Islam said.

View from Abroad: Life in Vietnam, Asia’s reborn tiger economy (Originally published 28/03/2015 at dawn.com)

The death last week of Singapore’s much acclaimed statesman Lee Kuan Yew has spotlighted world attention on tiny Singapore’s transformation from a tropical backwater to an affluent global city in just one generation. Certainly, Singapore stands tall in Asia as a formidable city state which proves that sometimes in geopolitics size does not matter.

But in South-East Asia, it’s not just Singapore that impresses.Travelling in Vietnam this week, it’s striking just how quickly this once war-devastated country has dusted off a bloody past, in favour of a new life and persona as one of this region’s most exciting economies.Ho Chi Minh City, formerly Saigon, buzzes with excitement as cars, motorcycles, buses weave their noisy way around surprisingly green urban centres — and some very narrow streets. Cafes, restaurants and bars are heaving with people. New businesses keep popping up, old ones are still thriving.A Belgian-Vietnamese friend tells me the country’s growing middle class has an appetite for foreign goods, the more luxurious, the better. Certainly, more and more European and Japanese cars on the roads are big and shiny, competing for space — and winning — against the ubiquitous scooters and motorbikes. Everyone has his/her palm pressed firmly on the car horn.This is China as it was twenty years ago, friends tell me. Noisy, crowded, the old and ramshackle giving way to the new and glittering. The skyscrapers going up, the five-star hotels, the glamorous department stores boasting French luxury brands are a foretaste of the big metropolis, a mini Shanghai, that Ho Chi Minh City is poised to become. For the moment, it is still possible to find serene hideaways where time appears to have stood still. But not for long.And certainly not at the university I visit on the outskirts of Ho Chi Minh City where students rush from class to class, stopping occasionally to sit down and play the pianos which are strewn around the campus.At the lecture I give on Europe, Asia and Vietnam, the students are serious and attentive — but impassive. I wonder in despair if I am getting through. But then the questions come fast and furious. I am grilled mercilessly on the impact of globalisation, my view of Vietnam, why Vietnam and the EU are signing a free trade agreement, how do you distinguish between good and bad journalists — and so on.Globalisation means losing our identity, they tell me, oblivious to the fact that in their skinny jeans and sneakers, carrying backpacks and peering into their smartphones, they have bought into globalisation with a vengeance. I point it out, they stare at me incredulously. This is not globalisation, this is life, they argue back. Exactly.Later as we take pictures and exchange addresses, I tell them they are lucky to be living in rising Asia, with jobs, hope — and pollution, one says interrupting me. Yes, pollution, urbanisation and overcrowding. But also jobs and growth — the two things we need in Europe. Puzzlement shows in their eyes.Their self-confidence is justified. Perched along one of the world’s most crucial shipping routes, and with a young and growing population, Vietnam is — once again — being tipped for economic lift-off, after years of disappointment.The news reports I read underline that money pouring into the South-East Asian economy from the likes of manufacturers Samsung Electronics Company and Intel Corporation is giving Vietnam a second run at becoming Asia’s next tiger economy.According to PricewaterhouseCoopers LLP, the country has the potential to become one of the world’s fastest-growing economies over the period to 2050. Not only is the South-East Asian nation gaining ground as a cheaper manufacturing alternative to neighbouring China, Vietnam is also a politically palatable destination for Japanese firms boosting investment in the region amid recurring Sino-Japan spats.“Vietnam is really the big winner from China losing its competitiveness because of rising wages” and a strong currency, say specialists. As labour costs rise in China, foreign investors are knocking on Vietnam’s doors.The list of those wishing to cash in is long, led by China and Japan but also including Singapore, Taiwan, the United States and the European Union.Vietnam and the US are working hard to strengthen ties, including in the security and defence sector, with Hanoi now demanding the full lifting of the arms embargo that was eased last year. Vietnam will be taking part in the Trans-Pacific Partnership trade pact, led by the US.Relations with Beijing are fraught over rival territorial claims in the South China Sea although tensions have eased in recent months and the Chinese and Vietnamese communist parties retain close ties.The EU, meanwhile is hoping to clinch negotiations on a bilateral, free trade agreement with Vietnam before too long.European diplomats tell me the country is an exciting destination for European exporters and investors.At more meetings — this time in Hanoi — the discussion turns to journalism, open societies and freedom of expression. Vietnam’s Communist Party keeps a tight lid on the media, including bloggers. The EU and the US are pressing for change and have an ongoing human rights dialogue with Hanoi. But it’s a question of one step forward, two steps back.As in China, the government appears to have struck a defining big bargain with its citizens: we’ll provide growth and progress in exchange for your loyalty. The trade-off appears to be working. So far.I see the bright lights, the fancy restaurants and the big cars. There is also still poverty and underdevelopment. I am enchanted by the friendliness of the people, young and old. Traditional and modern mix easily in the streets. There is no doubt: Vietnam is on the move. And it’s going to keep going up

View from Abroad: Europe waits for trade talks but Modi ‘looks East’ (Originally published 22/11/2014 at dawn.com)

These are busy times for Asian leaders — and Indian Prime Minister Narendra Modi is among the busiest.Last week as he criss-crossed Asia, clinching business deals, attracting much-needed investments and building strategic alliances, Modi found time for a quick meeting with the European Union’s outgoing European Council President Herman Van Rompuy to underline that the “EU should take advantage of the new economic environment in India”.The two men apparently agreed that the United Nations should hold an annual international “Yoga Day”.But not much was apparently said on the EU-India free trade agreement that the two sides have been trying to negotiate for the last seven years and which now seems to have run into the ground.EU officials are still hoping that the negotiations will be back on track soon. But the Indian leader is too busy looking elsewhere.As of this autumn, Modi has his nation and the rest of Asia abuzz with his determination to inject new life into India’s “Look East” policy which, following his incessant Asian travels, including recent talks with Asean (Association of South-East Asian Nations) and other Asian leaders in Myanmar, has morphed into what Modi proudly describes as a “Look East — and Act East” policy.India’s decision to step up its game in Asia is no surprise. As an emerging power with “great power” ambitions, India has no option but to seek a stronger role in a volatile neighbourhood and a region marked by often-changing geopolitical rivalries and alliances. Also, tapping into the region’s dynamic economies is critical for India’s own growth and reform agenda.Certainly, China has the funds needed to help finance India’s infrastructure requirements while Japan and South Korea have the technical experience and expertise. South-east Asian markets are important for Indian investors and exporters. Sustainable peace with Pakistan may still be a long way off but is essential for India’s development and peace and stability in the region.While in Myanmar, Modi made the headlines by pushing his “Make in India” campaign, which aims to turn the country into a global manufacturing hub, by cutting red tape, upgrading infrastructure and making it easier for companies to do business. Modi promised to implement long-delayed plans to boost trade and deepen ties with Asean so that current trade flows could rise from $75 billion today to $100 billion by 2015.In fact, the policy is not new. India has long spoken of developing a “Look East” policy, but has lagged behind China in forging ties with emerging economies in South-East Asia. Tackling China’s influence on Asean and South Asia is still a challenge but India benefits from the fact that Japan, Asean and others in the region are certainly looking to reduce their economic dependence on Beijing by reaching out to Delhi.Indian commentators also underline that Modi used the Asean meeting to articulate for the first time India’s intent to enhance “balance” in the Asia Pacific region, arguing that the word was carefully chosen to reflect India’s shared concerns with other Asian countries about China’s growing assertiveness in the region.Interestingly, Indian defence cooperation is being stepped up with several Indian Ocean states including Sri Lanka and Maldives. India will supply four naval patrol vessels to Hanoi as part of $100 million Line of Credit signed last month. The two countries have also decided to ramp up cooperation in the field of hydrocarbon, civil nuclear energy and space.Given Modi’s focus on the Asia-Pacific, the EU’s new leaders may have to wait a long time before he signals a real interest in upgrading bilateral ties.It is no secret that the EU-India strategic partnership needs a shot in the arm and that trade and investment flows are much too modest. But negotiations for an India-EU Bilateral Trade and Investment Agreement (BTIA) — the most important issue on the bilateral agenda — have lasted for seven years, with no end in sight. And hopes that New Delhi would put energy and effort into the successful conclusion of the elusive deal have not materialised, with differences over tariffs and market access as well as questions related to the protection of intellectual property rights continuing to impede progress.The pact could be signed in 2015 — but only if both sides can summon up the political will to look beyond the array of technical issues to the deeper strategic importance of their relations.Modi and the EU’s new leaders face the uphill task of taking the relationship to a higher and more genuinely strategic level, a move that would benefit both sides.In addition to the geopolitical value of such a decision, European investors are willing and eager to enter the Indian market. European know-how could be valuable to India’s reform and modernisation agenda. Europe, meanwhile, needs new markets to keep its modest economy on track.To inject momentum into the relationship, both sides will need to make an effort. EU and Indian leaders have not met for summit talks since February 2012. An early meeting between Modi and the EU’s new presidents of the European Commission and the EU Council this autumn will therefore be crucial in signalling a fresh start in relations.

View from Abroad: EU must engage urgently with China (Originally published 15/11/2014 at dawn.com)

China's President, Xi Jinping, is a busy man. And if the European Union’s new leaders waste time in engaging with him, the EU could find itself gently, but firmly, shut out as Beijing steps up its game, both in the region and on global stage.The Chinese president has had quite a week. Having hosted the Asia Pacific Economic Cooperation (Apec) summit, signed an unexpected agreement with President Barack Obama on cutting greenhouse gas emissions and eased tensions with Japanese Premier Shinzo Abe, Xi attended the East Asia Summit in Myanmar and will then be at the G20 gathering in Brisbane, Australia.Chinese Premier Li Keqiang did attend the Asia Europe Meeting in Milan last month — but the EU was represented at the meeting by the outgoing EU leaders, European Council President Herman Van Rompuy and his colleague at the European Commission Jose Manuel Barroso. Beijing is waiting for the new Commission chief Jean Claude Juncker, Donald Tusk who will head the European Council as of Dec 1, and the new EU foreign policy chief Federica Mogherini to get in touch and answer whether the new men and women in Brussels will want a continuation or a change in in EU-China relationsCertainly, urgent matters at home and in Europe’s troubled neighbourhood command immediate attention. Juncker has also had to field embarrassing questions about allegations that Luxembourg was helping companies to dodge taxes while he was prime minister.But still, reinforcing ties with the world’s second largest — and still fastest growing — economy must be also be an EU priority.The good news is that after a few troubled years, Europe-China ties are encouragingly sound. Although trade frictions are unlikely to completely disappear, major trade quarrels have been settled. Differences over human rights notwithstanding, the EU and China have developed a good working relationship. As such, the new EU team inherits a relatively solid EU-China agenda. It must use this to further shape relations to fit a complex environment, both at home and in China.But as the array of recent events, overtures and agreements illustrate it is busy with consolidating relations with the US and is focused on its immediate neighbourhood. Unless Europe acts quickly, it could lose China’s attention at a time when the two sides need each other.It is worth repeating: Europe and China need each other, not least for economic reasons. Its growth rates may be slowing down, but China’s appetite for European goods and investments continues to be crucial in determining the pace and success of Europe’s economic recovery. China’s economic transformation demands that it has access to European know-how, experience and technology. China’s reform agenda also gives European companies myriad opportunities for enhanced trade and investments.Second, a deeper EU-China relationship is important in order to polish Europe’s foreign policy credentials — in Washington, Moscow and in many Asian capitals. Asian countries, which are locked in territorial quarrels with Beijing in the East and South China Seas, believe Europeans can temper Beijing’s assertiveness on the issue and use its experience in managing cross-border challenges to ensure stability in the region.Third, while Europe’s one-time dream of ensuring that China would one day become a “responsible” international stakeholder now appears hopelessly out-of-date and patronising in view of Beijing’s increasing global outreach and self-confidence in world affairs, there is no doubt that the EU needs to engage with China on a range of urgent foreign and security policy issues, including relations with Russia, Iran’s nuclear plans, policy towards the IS, fighting Ebola and combating climate change.Significant headway has been made in recent years, especially in EU-China economic ties. Trade relations remain buoyant, with bilateral trade in goods valued at about 420 billion euros in 2013. Trade in services, currently estimated at about 50 billion euros annually, is expected to grow as China opens up its services sector and as new reform efforts begin to bear fruit. More is being done to increase bilateral investment flows.There is still much more to discuss and discover. China is in the midst of massive change as the focus shifts to boosting consumer demand and away from an excessive reliance on investments and exports. The emphasis is also on fighting pollution, ensuring sustainable urbanisation and implementing other aspects of last year’s massive national reform agenda agreed at the Third Plenum. More recently, China’s Fourth Plenum shifted the focus to the rule of law, governance and legal reform. President Xi, widely regarded as China’s most powerful leader in recent decades, is stepping up his anti-corruption campaign.Beijing has been true to its word in making 2014 “the year for Europe”, with both President Xi and Premier Li travelling to key European capitals. The EU’s new leaders must reciprocate through visits, convening of an EU-China summit early next year and rapid organisation of the high-level political, economic and people-to-people dialogues.As China and the EU prepare to celebrate the 40th anniversary of their partnership next year, the relationship must be made more resilient, robust — and mutually respectful.

View from Abroad: A 21st century Silk Road (Originally published 25/10/2014 at dawn.com)

I have been in China for five days and my brain is on fire. Perceptions, discussions, confrontations crowd my mind, jostling for space, demanding attention. My Chinese colleagues have so much to tell me about their country’s new priorities and they want to know so much about the future of Europe. We discuss. We argue.

The debates go on and on at the round-table meeting in Changsha in Hunan province that we are attending. As day turns into night, the debates not only dominate my waking hours, they enter my dreams.Europe and China have much to talk about. We are so different and yet we have much in common. There is the shared challenge of encouraging sustainable growth, tackling problems in our respective neighbourhoods, dealing with an ageing population, making sure we eliminate inequalities.But much also separates us. Europe believes in democracy, elections and human rights. China wants western countries to stop pontificating and giving Beijing lessons on democracy. The focus should be on governance, not on elections and other the rituals of democracy, one Chinese academic tells us.“We have to treat each other equally ... the West should stop looking down on us,” another Chinese colleague insists at the round-table discussion between European and Chinese think tanks.Indeed, much has changed — and is changing — in Beijing. President Xi Jinping has embarked on an unprecedented national reform drive, demanding an end to corruption, stronger implementation of the rule of law, a rebalancing of the economy from investments and exports to domestic consumption.And for the last year, President Xi and Prime Minister Li Keqiang have been promoting the ambitious idea of a Silk Road which would connect China to Europe, weaving its way across Central Asia and Central and Eastern Europe on the one hand while also building connections through a maritime route which would include the Maldives and Sri Lanka and many South-East Asian states.Full disclosure: I confess that I am completely fascinated, intrigued by the initiative. As a young girl growing up in Pakistan, I spent hours reading of the adventures of the intrepid men and women who plyed the Silk Road, connecting towns, industries and people.Exotic looking Chinese traders, with their bundles of silk, satins and brocades, made their way to Islamabad, persuading my mother and aunts to buy their goods. I watched from the sidelines, amused by the good-natured bargaining, the chuckles resulting in mutually satisfactory transactions.Years later, I went up the Silk Road — or rather the silk track — to Hunza and Gilgit and felt my heart almost break at the exquisite beauty of the landscape. Many hundreds of Chinese and Pakistani workers died while building the road in such a hostile land. Their sacrifice was enormous, their memories preserved in plaques along the route.That was then. The Road was about romance and adventure. Today it’s about commerce. China’s new concept of the Silk Road has little to do with romance — and a lot to do with business.Still it is a visionary idea which is getting much attention in Asia and Europe. And so it should. As they did when they came out with their ‘China Dream’ concept a year or so ago, the ‘Silk Road’ initiative is a work in progress.Beijing has yet to articulate its ambitions in detail. “We are not yet talking about a strategy,” says a Chinese colleague.Clearly, China wants to use the Road to increase its trade relations with countries along the route. Beijing is interested in Central Asia’s energy resources. It wants to counterbalance Russia’s political influence in the region.Also, the Silk Road provides a strong counter move to America’s much-touted ‘pivot’ to Asia and to the Trans Pacific Partnership (TPP) trade agreement that the US wants to negotiate with countries in the region but without China.As I listen to the discussion, I am convinced that this is an idea whose time has come — again. China has the political clout to make it happen. And it has the money to finance many of the projects.Still, it won’t be easy. The 21st century Silk Road will not only allow goods to be trade freely across borders, it could also facilitate the cross-frontier movement of drugs, arms and terrorists.As such, the proposal needs to be developed with care and caution.As I prepare to leave Changsha, my head is still spinning with new information and ideas. I dream of ancient bazaars and long, winding roads through mountains and plains. The Silk Road as envisioned by Beijing may be based on national self interest and, given the challenges, may never see the light of day.But the vision of an interconnected world it articulates is worth preserving — and developing.

View from Abroad: Western nightmares are just bad dreams (Originally published 19/10/2014 at dawn.com)

It's the stuff of Western nightmares: imagine if, one day, a strong China and a weak but assertive Russia “gang up” against the United States and Europe, winning more friends and allies and imposing their writ on the rest of the world?The recent high profile meetings between Chinese Premier Li Keqiang and Russian President Vladimir Putin have been watched carefully — and fretfully — in all Western capitals with uneasy policymakers seeking to understand if this is just a passing show of affection or if the two countries are planning to build a more solid partnership.Beijing has made clear that it has no intention of being part of any geopolitical power play being hatched by Moscow. China’s interests are global. Indeed before he met Putin, Li was in Germany striking two billion euro worth of business deals. He then headed to Italy for more headline-grabbing commercial overtures.Beijing’s standard line is that it has no allies, only friends. That’s not how Russia views the world. Russia in contrast is under Western sanctions. The EU is struggling to reduce its dependence on Russian oil and gas while the Nato military alliance talks menacingly about Russian actions in Ukraine and its annexation of Crimea.Some warn it is the beginning of a second Cold War. Clearly, it isn’t. The multipolar world today is a very different place from what it was in the Cold War years.Still, some thing is afoot. The Russians are working overtime to woo the Chinese. Beijing is clearly interested in accessing more Russian oil and gas, providing Moscow with new markets as Europe diversifies away from Russian energy. Some 50 agreements and memorandums of understanding are reported to be signed during Li’s visit to Moscow, including in areas related to high-speed transit and finance. China is also eager to supply Russia with fruit and vegetables, products that Moscow is no longer importing from Europe.Western attention is focused on Russian-Chinese cooperation within the Shanghai Cooperation Organisation which some in the West view as a potential competitor for Nato. And the recent decision to launch the BRICS bank is seen as a joint challenge by Russia and China to the post-war liberal order and the supremacy of the Bretton Woods institutions.Both China and Russia are often on the same side on tackling global flashpoints, eschewing military intervention unless sanctioned by the United Nations Security Council.There’s no doubt, however, that while it may want to stay friends and do business with Moscow, China has no interest in being seen as Russia’s best friend. As friendships go, in fact, the focus in many envious Western capitals is on the ‘special relationship’ between China and Germany.While in Berlin, Li and German Chancellor Angela Merkel signed deals worth approximately US$18.1 billion, covering cooperation in areas including agriculture, automotive, telecom, healthcare and education.Li requested that Germany help to relax the EU’s high-tech export restrictions to China and continue expanding bilateral trade and investment. He further stated that the two countries should continue working together on feasibility studies concerning the proposed China-EU Free Trade Agreement. The two sides also signed guidelines covering 110 cooperative agreements over the next five to 10 years.At the Hamburg Summit organised by Germany’s top industrialists that was attended by Premier Li the message was clear: China is not only the the biggest market for German companies, it is also a growing one. China’s huge national reform programme agenda, opens up exciting new export and investment opportunities for German — and other European — companies. Discussions focused on China’s massive urbanisation needs which can be met by European companies.Chinese investments into Germany and the EU are soaring. Significantly, unlike many other countries, China has shown a strong interest in the future course of Asem, the Asia Europe Meeting forum which is often criticised for being a mere talk shop.At the Asem summit in Milan last week, Li waxed lyrical about Asem’s role in improving connectivity between Asia and Europe, underlining his vision of building a Silk Road between Asia.Li knows he is on a winning streak. As the Financial Times newspaper reported recently, Chinese investors are surging into the EU.In 2010, the total stock of Chinese direct investment in the EU was just over 6.1bn euro — less than what was held by India, Iceland or Nigeria. By the end of 2012, Chinese investment stock had quadrupled, to nearly 27bn euro, according to figures compiled by Deutsche Bank.Not surprisingly, the EU and China are in the process of negotiating a bilateral investment treaty aimed at protecting each others’ investments but also ensuring better marker access.China is clearly not about to ditch Russia. But Beijing’s focus is on the growing markets of Europe. Western policymakers can sleep easy. For many nights.

APPOINTMENT OF FIRST EU ENVOY TO ASEAN WILL BOOST TIES (Originally published 25/09/14)

The European Union’s decision to appoint a special ambassador accredited to the Association of Southeast Asian Nations (ASEAN) is a welcome and long-awaited step forward in the EU’s relations with one of the world’s most dynamic and rapidly-growing regions.As a statement by the European External Action Service, the EU’s “foreign ministry”, underlined, the “important decision” reflects Europe’s growing engagement with ASEAN and an ambition to upgrade the existing partnership with the Southeast Asian grouping to a strategic one.The move also underscores the hard work put in by ASEAN members in drawing EU attention to the region over the last four years. Friends of Europe has been a strong advocate of closer and stronger EU-ASEAN relations.The new EU envoy could make an important contribution to injecting some much-needed momentum into what – until four years ago – was still a lacklustre and uninspiring relationship.Good progress has been made in recent years. However, building a solid, sustainable and strategic EU-ASEAN relationship will remain a challenge, demanding a strong effort by both regions. Certainly both sides see an interest in forging closer ties. Bilateral EU-ASEAN trade and investment flows are booming. Europe and ASEAN need each other’s’ markets to grow and thrive.But in addition to the global challenges they need to tackle, Asian and European countries face difficult tasks both at home and in their respective regions. Still grappling with slowing economic growth and unacceptably-high youth unemployment rates, Europe’s urgent foreign policy priority is to thrash out a new “beyond sanctions” strategy for dealing with an increasingly volatile and assertive Russia.European countries are also under pressure to join America’s campaign to “destroy and degrade” the so-called “Islamic State” in Iraq and Syria.ASEAN states, meanwhile, are struggling to meet their goal of forging a border-free single ASEAN market by end-2015. On the foreign policy front, they are engaged in a delicate balancing act to maintain good relations with the three Asian behemoths: China, Japan and India.Still the omens are good. Coming only a few weeks before the mega Asia Europe Meeting (ASEM) in Milan on October 16, the EU announcement on the special envoy to ASEAN sends a strong and reassuring message of continuing EU engagement with Asia in the years ahead.ASEM will bring together 53 Asian (including ASEAN) and European partners for a two day summit focusing on the key security, economic and political challenges facing both regions.Significantly, Chinese Prime Minister Li Keqiang, Japan’s Shinzo Abe and key ASEAN leaders will be attending the meeting as will Italian Premier Matteo Renzi and the EU’s top officials, Herman Van Rompuy and Jose Manuel Barroso. For both men it will be the last ASEM gathering before the change of EU leadership in November.Asian and European business leaders, parliamentarians, academics and journalists as well as civil society actors will also be gathering in Milan around the same time in separate but inter-connected fora.In another sign that Europe intends to stay engaged with Asian states despite the fires burning in its neighbourhood, the incoming EU foreign policy chief, Italian Foreign Minister Federica Mogherini, has gone out of her way in recent weeks to highlight Europe’s sustained interest in Asia, including ASEAN.Mogherini’s focus on Asia is important and reassuring. Her predecessor Catherine Ashton was roundly criticised by ASEAN governments for paying only sporadic and cursory attention to their region. She managed to get relations back on track – but it was touch and go at moments.Mogherini is expected to be more attentive. And under the new structures being designed by incoming European Commission President Jean-Claude Juncker, the EU foreign policy chief will be working in close cooperation with her colleagues who deal with trade, development aid, humanitarian affairs and climate change to forge a coherent conversation with Asia. Closer coordination with EU capitals is also expected.This is good news. Both the EU and ASEAN have worked hard over the last four years - in Brussels and in the different European and Southeast Asian capitals - to make their relationship more credible and relevant.It’s often been long and laborious. Human rights issues as well as relations with the former military junta in Myanmar cast a dark, unpleasant shadow over relations even as trade and investment flows continued to expand.Political reforms in Myanmar as well as ASEAN’s economic dynamism and newfound interest in developing an impressive - albeit still modest - human rights agenda, have helped to turn the relationship around.Looking ahead, for the EU, membership of the East Asia Summit (EAS) remains an important strategic goal. The 18-member forum which discusses security and development includes ASEAN as well as the United States, Russia, India and others. ASEAN’s reaction so far to EU membership of the East Asia Summit has varied from lukewarm to hostile, however.The appointment of the new EU envoy to ASEAN could help unlock the EU membership of EAS in the coming years. ASEAN is also looking for an EU upgrade to status of “strategic partner” and the regular convening of EU-ASEAN summits.At the same time, with the end-2015 deadline approaching for establishing a border-free ASEAN Economic Community (AEC), demands for the revival of the once-abandoned effort to negotiate an EU-ASEAN free trade deal have resurfaced. The outgoing EU Trade Commissioner Karel De Gucht has said such a pact could be negotiated once the AEC is in place. It’s still not clear if his successor Cecilia Malmstrom will be equally interested in such a deal.Certainly an EU-ASEAN FTA could increase Europe’s visibility in a landscape crowded by multiple Asian free trade initiatives including the US-led Trans Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) linking ASEAN to all leading economies in the region.Significantly, the EU has emerged as an important partner in implementing the Master Plan on Connectivity adopted by ASEAN leaders in October. The plan, which includes the forging of physical, institutional and people-to-people links, is discussed in the EU-ASEAN Dialogue on Connectivity. The first such dialogue was held in Brussels earlier this year.A conversation on maritime security has also been initiated.These and other EU-ASEAN ventures should expand and deepen once the new – and yet to be named - EU envoy to the grouping begins working in Jakarta. Europe and ASEAN have come a long way in making their partnership more relevant in a rapidly-changing world. Both sides must maintain the momentum despite domestic and regional distractions.

Time for a new EU-ASEAN strategy (Originally published 12/04/11)

As the Association of Southeast Asian Nations (ASEAN) rises along with the rest of Asia – in some cases notching up even stronger growth rates than Asia’s other booming economies – EU policymakers must step up engage with Asia’s oldest, but newly-re-energised, region-wide power.The EU has provided technical help and expertise to ASEAN’s regional integration efforts for many decades. Trade, aid and investment relations between the two sides are booming. With a combined GDP of around US$700 billion and a market of more than 550 million people, ASEAN offers great economic opportunities for European business.However, stronger business ties need to be buttressed by a supportive political environment. As such, Europeans must ensure their political and security relations keep pace with rapid changes in ASEAN and Southeast Asia’s growing global clout.If the EU is serious about restoring its credibility and influence in Asia, it must look beyond relations with China and India and develop a new strategy for engaging with a re-vitalised and vibrant ASEAN. Failure to do so could mean being excluded from an array of exciting new multilateral initiatives on issues like climate change, immigration and food security. A lack of political engagement could also act as a brake on the further development of EU-ASEAN economic ties.The 10-member ASEAN certainly has a new spring in its step. Growth rates are high, plans for ASEAN economic integration are picking up momentum, Timor Leste is set to become the newest member of the organisation and ASEAN is in the driver’s seat of an array of free trade and regional integration initiatives spanning the continent. G20 member Indonesia, as current chair of the organisation, is expected to give ASEAN an even stronger international profile.Significant challenges remain, however. The Jakarta-based ASEAN Secretariat remains weak, cash-strapped and under-staffed. The organisation’s member states include a disparate mix of emerging economic giants and some of the world’s poorest nations as well as democracies, monarchies and authoritarian governments. ASEAN experts warn of a “democratic recession” in the region, pointing out that even Indonesia, the world’s third biggest democracy after India and the United States, is “flawed”. Border disputes such as the recent flare-up between Cambodia and Thailand pose a serious challenge to ASEAN’s credentials as peace-maker.After a slow start, the pace of ASEAN regional integration is picking up. The six major ASEAN countries (comprising Indonesia, Malaysia, the Philippines, Singapore, Brunei and Thailand) have rebounded from the global economic crisis. The region stands determinedly at the centre of a host of ambitious pan-Asian trade and political networks, emerging as a strong third pillar in a region dominated by new economic powerhouses China and India.Expectations are high as regards Indonesia’s current chairmanship of the organisation. Indonesian Foreign Minister Marty Natalegawa has said he intends to focus on making progress toward the fulfilment of the ASEAN Community, establishing a “dynamic equilibrium” between ASEAN and the world’s major powers and increasing ASEAN’s role in the global community of nations.As ASEAN’s oldest Dialogue Partner, the EU has provided help and expertise to ASEAN’s regional integration efforts. The EU-ASEAN relationship has, however, turned lacklustre with time; today it is in dire need of a new lease of life.The first ever ASEAN-EU Business Summit to be held in Jakarta in early May could provide some of the much-needed impetus. Bilateral economic and trade agreements that the EU is seeking to negotiate with Singapore and Malaysia as well as the Philippines, Vietnam and possibly Brunei, will also help boost relations. But such initiatives are not enough. The EU needs to take a leaf from the US foreign policy book by taking its engagement with ASEAN to a higher level.Giving more impetus to EU-ASEAN relations will require a fresh look at the region, a focus on security and political issues of interest to ASEAN as well as initiatives such as visa-free travel for business leaders. Once the current EU review of strategic partnerships is complete, policymakers should consider making ASEAN a strategic partner, on a par with China and India.Interestingly, not unlike the EU, ASEAN is entangled in a debate on whether to widen or deepen its membership. ASEAN also faces a tough balancing act in its relationship with China. Traditionally ASEAN’s closest ally, the US under the Obama Administration has become an even stronger guarantor of the region’s security. Australia and Japan are drawing ever closer to ASEAN.As Europe struggles to rebuild its economy, it needs to trade and investment more in one of the world’s most dynamic regions. It cannot afford to remain on the periphery of ASEAN’s expanding ring of friends.