Trade and investment

Some experts believe that while caution prevails in East Asia on monetary integration, the euro crisis should not deter regional efforts to free up trade and investment.

"The situation in Europe is extremely serious and frankly scary," said Matthew Goodman, a former senior White House official who oversaw U.S. policy development in Asia-Pacific groupings such as the Asia-Pacific Economic Cooperation (APEC) and the East Asia Summit (EAS) forums.

[It] may be a lesson for East Asia about the hazards of currency union, particularly without full fiscal union, and the sovereignty implications of that, which I think we are a long way from in Asia. But it should not send a chilling message to the rationale for trade and investment integration in the region," said Goodman, now an expert at CSIS.

China, Japan, South Korea, and the 10 Association of Southeast Asian Nations (ASEAN) member states Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam set up a common fund to fight a potential liquidity crisis after the region plunged into its worst recession following a severe currency meltdown in 1997.

Chiang Mai

Concerned over the devastating contagion effects of any escalation in the euro crisis, the ASEAN Plus Three countries decided this month to double the size of the their regional currency swap pool, known as the Chiang Mai Initiative Multilateralization (CMIM), to U.S. $240 billion.

They also decided to increase the amount countries can access without conditionalities imposed by the International Monetary Fund.

The Chiang Mai initiative began as a bilateral currency swap facility, but after the 2008-09 global economic crisis stemming from a U.S. housing mortgage meltdown, it grew into a multilateral facility.

Some had viewed the evolution of the Chiang Mai plan, intended to provide emergency U.S. dollar liquidity to countries facing a foreign exchange crisis, as laying the groundwork for an Asian Monetary Fund, along the lines of the International Monetary Fund, with China at its core.

But "that is a step which is far beyond the horizon of what is happening in East Asia," noted Shujiro Urata, a professor of economics in the Graduate School of Asia-Pacific Studies of Waseda University.

"That is as far as East Asia can go," he said, citing the Chiang Mai initiative.

"They are not really thinking about a common currency because they  just observed what is happening in Europe," Urata said.

"One important reason behind what is happening in Europe is that there is a common currency [and] one central bank, but there is no coordination or cooperation in the fiscal area and that is one of the reasons why they are having a problem," Urata said.

AMRO

The 13 countries under the ASEAN Plus Three framework have also set up a Macroeconomic Research Office known as AMRO in Singapore, seen as the beginning of efforts to institutionalize regional financial cooperation in East Asia.

The regional currency surveillance body is designed to coordinate the decision-making process for providing emergency liquidity to member states under the CMIM scheme.

The office began operating from October last year and member nations have sought "to accelerate the preparation to institutionalize AMRO as an international organization."

"Some would interpret it as the prelude to the emergence of  [the] Asian Monetary Fund," said Hank Lim, an expert at the Singapore Institute of International Affairs (SIIA), a think tank. "It could but it is a long way from the original intention of Chiang Mai Initiative Multilateralization program," he said at the Washington conference.

For the Chiang Mai initiative to be effective, it is essential that AMRO becomes stronger and more capable, said Chalongphob Sussangkarn, an expert at the Thailand Development Research Institute.

"Building up AMRO’s capability and credibility is now the biggest challenge for increasing the CMIM’s effectiveness," he said.

AMRO, he said, needs to develop close links with other regional organizations, such as the Asian Development Bank and the ASEAN Secretariat based in Indonesian capital Jakarta, as well as the IMF, the World Bank, the Bank for International Settlements, and other monetary organizations around the world.

"In the longer term, AMRO should not simply act as a research office; it should evolve into a regional monetary organization for East Asia, supporting the CMIM as well as carrying out technical activities to support financial cooperation in the region."

This may include macroeconomic policy cooperation and coordination, a focus on regional financial regulatory frameworks, and capital market development, as well as working to support the region’s longer-term financial and monetary integration, Sussangkarn said.

The two countries also said they will exchange ambassadors to reflect a new chapter in bilateral relations during the first visit to Washington in decades by a Burmese foreign minister.

“As an iron fist has unclenched in Burma, we have extended our hand, and are entering a new phase in our engagement,” President Barack Obama declared in a statement, warning however that the U.S. “remains concerned” about the Southeast Asian country’s political system.

American companies, which have been banned from Burma for the past 15 years, will now be issued licenses to invest in the country, U.S. Secretary of State Hillary Clinton said as she announced a suspension of sanctions across all sectors of the economy and the export of financial services.

She described it as the most significant action the United States has taken so far to reward reforms being implemented by Burmese President Thein Sein’s nominally civilian government that came to power in March last year, replacing decades of brutal military rule.

“So today, we say to American business:  Invest in Burma and do it responsibly; be an agent of positive change and be a good corporate citizen; let’s all work together to create jobs, opportunity, and support reform,” Clinton said.

American companies will be free to look for opportunities in oil, mining, gas, and other industries, she said, but the U.S. will prevent companies from working with Burmese groups that have abused human rights.

“We will keep our eyes wide open to try to ensure that anyone who abuses human rights or obstructs reforms or engages in corruption does not benefit financially from increased trade and investment with the United States, including companies owned or operated by the military,” Clinton said.

Washington will also maintain an arms embargo on Burma in line with the actions of  the EU, which announced a one-year suspension of sanctions last month, as well as Canada and Australia.

“This is a moment for us to recognize that the progress which has occurred in the last year toward democratization and national reconciliation is irreversible,” Clinton said, speaking at a press conference with Burmese Foreign Minister Wunna Maung Lwin.

While Wunna Maung Lwin was on the first visit to the U.S. by a Burmese foreign minister in decades, the two countries named ambassadors to each other’s capitals, formalizing diplomatic relations for the first time since Washington withdrew its ambassador in 1990.

Obama named Derek Mitchell as ambassador, pending confirmation by the Senate.  Mitchell is currently serving as the State Department’s first Special Representative and Policy Coordinator for Burma.

Wunna Maung Lwin said Burma’s ambassador to the U.S. will be Than Shwe, who is the country’s current representative to the U.N. in New York and has the same name as the former military general and junta leader.

Remaining concerns

Even though sanctions are suspended, the laws relating to them will be “kept on the books” so that they can be quickly reinstated if Burma backslides on reforms, Clinton said.

Obama renewed the state of national emergency for Burma, the precondition for the legal framework to maintain the sanctions which was set to expire next week.

"Burma has made important strides, but the political opening is nascent, and we continue to have concerns, including remaining political prisoners, ongoing conflict, and serious human rights abuses in ethnic areas," Obama said.

Burma’s release of hundreds of political prisoners in January prompted warmer ties, but the opposition groups, including pro-democracy leader Aung San Suu Kyi’s National League for Democracy party, say around 300 people remain locked up for their political activities.

Asked whether Burma would release more political prisoners, as the Burmese opposition has called for, Wunna Maung Lwin said it “will grant further amnesty when appropriate.”

Ethnic fighting in northern Burma’s Kachin state has also marred the country’s democratic reforms.

Clinton expressed concern about the ongoing violence in Kachin state, saying the U.S. is “very committed to supporting the end of the ethnic conflicts in the country."

Earlier this week, Aung San Suu Kyi had cautioned against being “too optimistic” about Burma’s political future, saying that its democratic transition should not be “taken for granted.”

Reported by Rachel Vandenbrink.

The Kachin Independence Organization (KIO), the ethnic group’s political wing,  made the appeal in a letter Tuesday to U.N. Secretary-General Ban Ki Moon, who urged an end to the conflict on a visit to Burma earlier this month.

The KIO’s Central Committee said in the letter that they “earnestly implore” the UN observer teams or intermediary teams to the conflict zones, including IDP (internally displaced person) camps and the towns and villages emptied by the fighting.

“The KIO would like to request that the Secretary General continue to facilitate visits by UN personnel to conflict zones and IDP camps in Kachin State, so that appropriate assistance can be arranged and provided to the IDPs,” it said, in a translation posted on the Kachin News Group's website.

The fighting, which has raged since a 17-year peace agreement was shattered in June last year, has forced at least 50,000 people from their homes. Thousands more have fled across the border into China.

Colonel James Lum Dau, the KIO's deputy head of foreign affairs, said that the political situation in Kachin state was grave.

“In a situation like this, we need U.N. intervention," Lum Dau told RFA in an interview Thursday.

He applauded Ban’s visit to Burma earlier this month, when the secretary-general urged the Burmese government to work toward a ceasefire agreement with the KIO, but said more could be done.

“Very recently, Ban Ki Moon visited Burma and asked the Burmese government to stop the fighting. But I think [the U.N.’s involvement] should be more practical. That is why we want U.N. observers to go and see the reality of what's happening there,” Lum Dau said.

In the letter, the KIO said the Burmese military–which has waged war against armed ethnic groups since the country’s independence in 1948–had begun a “massive troop buildup” in the Kachin region despite initiatives for ceasefire talks.

It also charged that the military was bent on wiping out the Kachin ethnic group.

“The Burmese Army is now engaged in ethnic cleansing, and the conflict has now turned from one of political to racial in nature,” the letter said.

Talks

The Kachin conflict has persisted even as the Burmese government has negotiated preliminary peace agreements with 12 ethnic groups since President Thein Sein called for ending ethnic conflict across the country in August last year.

Last week, the government revamped arrangements for peace talks, naming Thein Sein as chairman of the negotiating team, the first time a Burmese president has been in charge of peace talks.

The six rounds of talks held so far between the Burmese government and Kachin political leaders have produced few tangible results.

At initial talks in January, the two sides agreed to “reduce and control” military activities and to hold further talks, but since the last round in March, no date or location has been agreed upon for the next meeting.

Reported by Kyaw Kyaw Aung for RFA’s Burmese service. Translated by Htar Htar Myint. Written in English by Rachel Vandenbrink.

The Xayaburi dam on the Mekong River may have to be redesigned to avoid any adverse impact on the environment, a senior Lao official says, citing a French study amid opposition to the project by green groups and neighboring nations.

Vice Minister of Energy and Mines Viraponh Viravong said that Laos received the findings from a French company hired to conduct an environmental assessment of the dam. Previous studies have said the dam could have a major impact on the regional environment and threaten food security.

“This study … confirms that if the Lao government wants to let the dam be redesigned, there will be no impact on the environment,” Viravong said recently.

The redesign, he said, would allow more river sediment to flow through the dam, a key concern for downstream countries whose agriculture depends on the river.

The Mekong River originates in China and flows through Burma, Laos, Thailand, Cambodia, and Vietnam.  The silt deposits provide rich soil nutrients for rice and other crops.

Environmental groups have opposed the dam, saying it would block fish migration and sediment flow on the Lower Mekong, affecting the millions of people in Southeast Asia who rely on the river’s ecosystem for their food and livelihoods.

Viravong said Laos had hired the French consultants Compagnie Nationale du Rhone after the Mekong River Commission, an intergovernmental body that manages development on the waterway, called for further assessments.

“First we hired the Swiss company Poyry to do the impact study, but people were not satisfied with that, and now we have hired a French company,” he said.

In December, Laos and the three other MRC member countries—Cambodia, Thailand, and Vietnam—agreed the dam should be postponed pending the results of a new environmental impact assessment, which was to be conducted by Japan.

The decision followed a report by Poyry Energy AG, which was hired by the Lao government in May 2011 to review the dam’s compliance with MRC requirements.

In its final report submitted in August, the Swiss company found the project to be "principally in compliance" with the MRC's requirements, but international environmental groups said the study was flawed.

International Rivers, an NGO that works on water systems worldwide, said it found “numerous inconsistencies and scientific shortcomings” in the report and that the Lao government was using it as “false justification” that it had responded to MRC concerns about the project.

In its report, Poyry also recommended that over 40 further studies be conducted before the dam was built.

An earlier study by an expert group had recommended a 10-year moratorium on all mainstream Mekong dams due to a need for further research on their potentially catastrophic environmental and socioeconomic impact.

‘Wanting to know’

Environmentalists are seeking more information about the new French study.

"The Lao government will have to release this company’s report and [information about] how the studies were carried out,” Montree Chantawong, an expert on hydropower from the Bangkok NGO Towards Ecological Recovery and Regional Alliance, told RFA.

“We want to know if it is true as the Lao minister has said,” he said.

He said a comprehensive assessment of the dam was required in order for all relevant parties to assess whether or not the dam is economically worthwhile.

Preliminary work on the dam site has already begun by Thai construction company Ch. Karnchang.

The company announced in April it had signed a contract for the construction of the dam beginning March, despite calls from the MRC to wait for a further study.

Over 3,000 residents near the dam site have been relocated to make way for the project, according to the Bangkok Post newspaper.

Opponents of the project are concerned that if the dam moves forward without regional consensus, it will pave the way for more hydropower projects on the river and render the MRC consultation process irrelevant.

At least 11 other dams have been proposed on the mainstream Lower Mekong, in addition to five already built on the upper part of the river in China.

Six of the 11 Lower Mekong projects are in Laos, which has said it hopes to become the “battery” of Southeast Asia.

Most of Laos’s 70 planned dams are on Mekong tributaries, over which MRC agreements have no sway.

Vietnamese opposition

The Xayaburi dam has also drawn protests from riparian communities in Thailand, where 95 percent of the electricity from Xayaburi is to be sent.

Last week, a group of Vietnamese scientists added their voices to the project’s opposition, urging Prime Minister Nguyen Tan Dung and Vietnam's National Mekong Committee to formally lodge a protest with the Lao government.

“It is unacceptable to resume construction on the Xayaburi dam,” the scientists at the Vietnam Rivers Network wrote in a joint letter addressed to Dung, Vietnam’s Thanh Hien News reported.

The team of experts insisted that the dam will directly threaten the livelihoods of around 20 million residents in the Mekong Delta, as well as Vietnam's national and regional food security, the newspaper said.

In late April, another Vietnamese scientists’ group, the Vietnam Union of Science and Technology Association, voiced its concern over the dam at a conference in April, saying the project will threaten regional food security and affect the lives of millions downstream, particularly in the Mekong delta, the heart of the country’s rice production.

Cambodia has already lodged its official protest with Laos over the project, warning Lao MRC representatives in a letter in April not to allow the dam to move ahead.

The letter followed earlier threats from Cambodia to take Laos to international court over the dam.

Reported by Nontarat Phaicharoen for RFA’s Lao service. Translated by Somnet Inthapannha. Written in English by Rachel Vandenbrink.

She made the observation after talks with visiting South Korean President Lee Myung Bak and in a video conference at the launch of  a freedom project in Washington by former U.S. president George W Bush.

“We are at a point in history when there is a possibility for transition, but I do not think we can take it for granted that this transition will come about,” the 66-year-old Nobel Laureate told reporters after her meeting with Lee in Rangoon on Tuesday.

“The intention is there and there is goodwill from all over the world, but we have to make sure that we do not dissipate this goodwill,” she said.

The opinions of the opposition leader, elected to parliament in April after having spent most of the last two decades under house arrest, are considered an important marker for the removal of long-running international sanctions.

Lee, on the first trip to the country by a South Korean leader in three decades, said his informal meeting with the Nobel laureate was “as important, if not more so” than the official purpose of his state visit, which included talks with Burmese President Thein Sein in the capital Naypyidaw Monday.

“I have sincere hope that the people here in Burma … will live a much freer and better life and I hope that Ms. Suu Kyi’s dream and aspirations to bring about a democratic Burma will be realized as soon as possible,” he said.

Sanctions

Aung San Suu Kyi said she had no objection to a U.S. proposal to suspend sanctions on Burma, but cautioned against removing them altogether and against placing too much confidence in reforms without further commitment from Thein Sein’s government.

"I sometimes feel that people are too optimistic about the scene in Burma,” she told the conference in Washington, speaking via Skype at the launch of Bush’s new "Freedom Collection" project.

“You have to remember that the democratization process is not irreversible,” she added, noting that reforms by the government would only be set once the powerful military firmly committed to democratization.

She said sanctions, which were imposed as a penalty for human rights abuses committed during decades of rule under the previous military junta, could be a useful tool for further encouraging needed reforms.

"I am not against the suspension of sanctions as long as the people of the United States feel that this is the right thing to do at the moment. I do advocate caution, though," she said.

"I believe sanctions have been effective in persuading the government to go for change," she added.

The EU suspended for a year all economic and trade sanctions on Burma in April, save for an arms embargo. Canada later followed suit.

U.S. President Barack Obama’s administration has engaged in dialogue with Burma since reforms began last year, but the U.S. is retaining trade restrictions and has yet to make clear what kind of investment it will allow.

Suspending sanctions rather than removing them entirely is “a way of sending a strong message that we will try to help the process of democratization but if this is not maintained then we will have to think of other ways of making sure that the aspiration of the people of Burma for democracy is respected," Aung San Suu Kyi said.

She added that the government was continuing to hold some 300 political prisoners, despite amnesties granted to prisoners over the past year as part of a series of reforms by the government.

‘Cautious optimism’

Lee said he was optimistic that Burma could follow a path similar to South Korea’s in achieving both industrialization and democratization.

“I believe that this country is now entering into an era of change,” Lee said. “I have high confidence that this wonderful country … is going to be a true democracy,” he said.

In talks Monday with Thein Sein, the two sides had discussed Burma’s previous military links to North Korea.

“I hope his government will refrain from engaging in any activities with the DPRK [North Korea] that may be deemed to be considered as violating various UN Security Council measures. Based upon that agreement, Korea is prepared to cooperate more fully [with Burma],” Lee said.

Former U.S First Lady Laura Bush, who introduced Aung San Suu Kyi at the Washington event and who has been a staunch supporter of the opposition leader, said she was “cautiously optimistic” about Burma’s future.

“I think it looks like the first steps are being made,” Laura Bush said in an interview after the event.

“But I want the people of Burma to know that the institution you have to build for democracy take a long time,” she said, encouraging the people of Burma to identify and communicate to other countries what kind of international aid they would like to be given.

Reported by Khin Khin Ei, Win Naing, and Soe Min for RFA’s Burmese service. Written in English by Rachel Vandenbrink.