Posts Tagged ‘Australia’

Hypocrisy in the South China Sea — According to China’s rationalized perspective, the former Western colonies have been stealing its fish, oil and gas for a long time

July 23, 2017

Nationalism-fueled rationalizations are running rampant in the disputed region


There is a big difference between reasoning and rationalization. Reasoning is the use of facts and logic to derive a conclusion regarding a given issue. Rationalization is the use of reasoning to justify a preconceived conclusion. Many countries have rationalized their positions regarding their claims and actions in the South China Sea. Indeed there are no “innocents” — only degrees of rationalization.

For its policies and actions in the South China Sea, China has been accused of being aggressive; bullying other claimants; violating the 2002 ASEAN-China Declaration on Conduct of the Parties in the South China Sea (DOC) as well as international law and norms; militarizing the features it occupies; threatening freedom of navigation; damaging the environment and causing ASEAN disunity.

But China argues that what it calls the Nansha (the Spratlys) and their “adjacent waters” have been under its sovereignty since “time immemorial.” According to China’s rationalized perspective, the former Western colonies have been stealing its fish and oil and gas in collaboration with outside Western companies and powers.

Moreover, to China, other claimants like the Philippines, Malaysia and Vietnam have committed similar transgressions. Indeed, in the 1970s and ’80s while the United States, Japan and Australia remained silent, they occupied features there that China considered its sovereign territory. They then altered the features by adding to them, built structures, ports and airstrips, and allowed access for their militaries. In China’s view they appropriated the largest and most useful features under spurious claims leaving only the dregs and submerged features.

In China’s rationalization of its more recent actions, it suffered by previously being relatively non-aggressive. When China tried to “catch up” by building on some of the only remaining unoccupied and low-tide features, the other claimants accused it of not exercising “self-restraint” and thus violating the 2002 DOC. But to China, other claimants have also violated the DOC’s self-restraint provision by continuing their reclamation and construction activities after the signing of the agreement. More significant to China, the Philippines — by filing a complaint with the Permanent Court of Arbitration in The Hague — violated what China considers the most important DOC provision of all — the commitment “to resolve territorial and jurisdictional disputes through friendly consultations and negotiations by sovereign states directly concerned.”

It is a violation of precedent-setting international arbitration rulings to undertake unilateral activities in disputed areas that change the nature of the area. When China does so or tries to prevent others from doing so it is called a “bully” by the smaller countries. But the reality is that this pejorative term is often used by less powerful countries to engender sympathy in their interactions with the more powerful ones — including with the U.S. For example, the U.S. freedom of navigation operations (FONOPs) that use some of the world’s most lethal surface warships to publicly violate the national laws of less powerful countries are perceived by some as “bullying.”

China has rejected an international arbitration panel’s ruling adverse to its interests. The U.S. and Australia have criticized it for doing so. But the U.S. rejected the decision of the International Court of Justice (ICJ) when it ruled for Nicaragua against it. Also, Australia withdrew from ICJ jurisdiction rather than arbitrate boundary issues with East Timor. So what “international rules and norms” apply and who is and who is not in compliance with them are rationalized by many countries.

The U.S. accuses China of “militarizing” the South China Sea but fails to define the term. Critics of China’s actions like Vietnam and the Philippines reclaimed features and “militarized” them years ago — albeit on a lesser scale. Moreover, the Philippines used a naval vessel in a standoff with China at Scarborough Shoal — a clear threat of use of force and thus a violation of the U.N. Charter, UNCLOS and the DOC. More recently, the U.S. has maintained a studied silence regarding Taiwan’s decision to send more troops and possibly anti-aircraft missiles to Itu Aba.

But it is the U.S. itself that has perpetrated one of the most egregious examples of hypocrisy by increasingly militarizing the region with its forward deployed troops, assets and patrols as part of the “rebalance” of its defense forces — all the while condemning China’s militarization of the features it occupies.

The rival claimants have also echoed U.S. accusations that China is threatening commercial freedom of navigation. But the U.S. has over time deftly conflated freedom of commercial navigation with freedom of navigation for its warships and intelligence, surveillance and reconnaissance (ISR) vessels and aircraft. In so doing it makes frequent reference to the 1982 U.N. Convention on the Law of the Sea (UNCLOS), which it has not ratified but claims to be implementing. Yet the U.S. is trying to pick and choose which provisions it will abide by and interpret them to its benefit. The U.S. rationalizes that it is abiding by its interpretation of this convention and others are not.

Vietnam supported the January 2016 USS Curtis Wilbur FONOP near Triton Island in the Paracels by proclaiming that it “respects the right of innocent passage through its territorial seas conducted in accordance with the relevant rules of the international community.” But Vietnam has both a territorial sea baseline and a prior notification regime for entry of warships into its territorial sea that have been the targets of U.S. FONOPs.

India also supports the U.S. position. Prime Minister Narendra Modi said “countries must “respect and ensure freedom of navigation. …” But India has also been the target of U.S. FONOPs challenging its ban on military activities and maneuvers in its exclusive economic zone (EEZ) without its permission. Malaysia and U.S. ally Thailand have similarly restrictive regimes for their EEZs. Indeed, Malaysia’s regime has been challenged by U.S. FONOPs. But it supports U.S. military probes in other countries’ waters by allowing U.S. intelligence, surveillance and reconnaissance planes to refuel on its territory. All have presumably rationalized their seemingly contradictory behavior.

The Philippines accused China of wanton environmental damage in the Spratlys and the arbitration panel found it guilty as charged. But China is certainly not the first or only claimant to damage the environment of these atolls or to allow their military to use them. All claimants, including the Philippines, have undertaken “reclamation” and construction on features they now occupy that must have damaged coral reefs and the ecosystem they support.

Moreover, the Philippine government was relatively silent for years in the face of destructive “muro-ami” fishing in the Spratlys by Filipino boats and crews. Again these contradictions are rationalized by arguing that China’s transgressions were much more expansive.

In April 2016, Singapore criticized China for “meddling” in ASEAN’s internal affairs. Indeed, China has attempted with some success to garner support from Brunei, Cambodia and Laos for its position that the South China Sea disputes should be negotiated by the countries directly concerned. However, the U.S., by strongly supporting the Philippines and Vietnam’s positions against China, has contributed to ASEAN disunity on this critical issue as well. Singapore’s rationalization of this dichotomy is presumably in its “national interest.”

And so it goes.

The point is that we should realize that much of what we hear and read about countries’ claims and actions in the South China Sea is nationalism-fueled rationalization — not objective reasoning based on logical analysis of all the relevant facts.

Mark J. Valencia is an adjunct senior scholar at the National Institute for South China Sea Studies, Haikou, China. A longer version of this piece first appeared in the IPP Review.


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 (Contains links to several more related articles)

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Dominance of the South China Sea, the Malacca Strait and the Indian Ocean would solidify China’s One Belt One Road project
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The international arbitration court in the Hague said on July 12, 2016, that China’s “nine dash line” (what Bill Hayton calls the U-shaped line) was not recognized under international law — making the Vietnamese and Philippine claims on South China Sea islands valid and lawful.
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China’s aircraft carrier Liaoning at Hong Kong

 (Contains links to information about Vietnam’s renewed efforts to extract oil and gas from the sea bed)


Australia Says Chinese Spy Ship Near War Games

July 22, 2017

(Reuters) – A Chinese spy ship has been detected off the Australian coast near joint war games underway between the United States, New Zealand and Australian militaries, the Australian Defense Force (ADF) said on Saturday.

The Chinese People’s Liberation Army-Navy Type 815 Dongdiao-class auxiliary general intelligence vessel was operating off the northeast coast during the Talisman Sabre war games, the ADF said in a statement.

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Chinese Type 815 Dongdiao-class auxiliary general intelligence

The Chinese ship remained outside Australian territorial waters but was inside the Australian Exclusive Economic Zone in the Coral Sea, it said.

“The vessel’s presence has not detracted from the exercise objectives. Australia respects the rights of all states to exercise freedom of navigation in international waters in accordance with international law,” the statement said.

More than 30,000 troops from the United States, New Zealand and Australia are taking part in biennial war games, which end in late July.

China’s growing military presence, particularly in the disputed South China Sea, has raised tensions with regional neighbours and drawn criticism from both the United States and Australia.

Brunei, Malaysia, the Philippines, Vietnam and Taiwan also have claims in the South China Sea, through which about $5 trillion in ship-borne trade passes each year.

(Reporting by Joseph Hinchliffe; Editing by Michael Perry)

EU Seeks U.N. Alliance Against Torture Trade, Lethal Drugs

July 20, 2017

BRUSSELS — The European Union is rallying dozens of countries to stop the trade of torture equipment and lethal-injection drugs, which could make it harder for the United States to perform executions, a top EU official said on Thursday.

The bloc will call for an alliance against trade in goods such as spiked batons and drug cocktails at the United Nations in September following an EU move last year to strengthen its own export ban, the EU’s trade chief Cecilia Malmstrom told Reuters in an interview.

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Tiger Chair

“We want to ally with countries to try to stop the trade in products used for executing and torturing,” Malmstrom said.

Abolition of the death penalty is a central tenet of the EU’s foreign policy and is also a requirement for countries seeking to join the 28-nation bloc.

“We are talking about poison, chemicals used in executions, thumb screws, (electric-shock) belts,” said Malmstrom, a Swedish liberal who as a former EU home affairs commissioner and EU lawmaker met torture victims and campaigned on rights issues.

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Tiger Bench

“We’ve already seen that the end to some European countries exporting chemicals has made it more difficult to execute people in the U.S.,” she said. “This is of course our aim.”

Tougher EU laws, including a 2011 export ban on lethal-injection drugs, are making U.S. executions harder to perform by cutting off supplies by large-scale manufacturers of sodium thiopental, an anaesthetic in such injections.

Mongolia, which outlawed the death penalty in 2015, and Argentina, which has similar legislation to the EU, will jointly launch the initiative with the EU on Sept. 18 in New York.

Australia, New Zealand, Canada and Norway are among the first countries expected to back the plan, Malmstrom said.

  Chinese made weighted leg cuffs


The alliance would first see governments sign up to a political commitment during the United Nations General Assembly, and then start helping local customs authorities track the transit of torture equipment and lethal-injection drugs.

If successful, the United Nations itself could eventually draw up a convention against the trade in goods used for torture and execution, which would be a legally-binding treaty.

The project marks an effort by the European Union to promote human rights after an economic crisis saw its “soft power” wane, business interests trumping rights issues and allies such as Turkey turn increasingly authoritarian.

Malmstrom said she did not expect the world’s worst human rights offenders to support the cause. Iran, Saudi Arabia and China carried out the most executions last year, according to Amnesty International.

But an alliance at the United Nations could make it harder for countries to obtain, for example, Chinese-made riot shields with electrified spikes, and bring more publicity to the issue.

“China is one of the countries that tortures its own citizens and who executes people, so they are not on the list of invitees (to the alliance) but they are open to attend (the U.N. launch),” Malmstrom said.

(Editing by Crispian Balmer)

Amnesty International Slams China’s Production Of Torture Tools, Urges Ban On Industry

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Paramilitary policemen take part in anti-riot training at a military base in Suining, Sichuan province, on Mar. 9, 2010. Photo: Reuters

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BHP to ramp up US shale rigs despite divestment calls

July 19, 2017


© BHP BILLITON/AFP | Major shareholder Elliott Advisors is pushing for BHP to restructure, including spinning off its US oil and gas operations and dissolving its costly dual stock market listing

SYDNEY (AFP) – BHP said Wednesday it would double the number of onshore US shale rigs, despite a major shareholder pushing for the commodities giant to divest its American oil and gas assets.The Anglo-Australian firm said in an annual operational review ending June 30 that it increased the rig count to five during the April-June quarter, with plans to boost that to 10 in the 2018 financial year.

The ramp up came even as BHP said it would sell-off non-core shale assets in Hawkville, Texas, in the September quarter.

New York-based Elliott Advisors, a significant shareholder in the company, is pushing for BHP to restructure the business, including spinning off its US oil and gas operations and dissolving its costly dual stock market listing.

The world’s biggest miner rejected Elliott’s proposal in April, while Canberra has warned that removing BHP from the Australian Stock Exchange was not in the national interest.

Apart from iron ore and energy coal, annual production for BHP’s other assets — petroleum, copper and metallurgical coal — all fell, pushing shares down 1.67 percent to Aus$24.68 in Sydney Wednesday.

Total iron ore production for the 2017 financial year rose four percent to 231 million metric tons after record output from its Western Australia operations.

The lift also came during a period where prices for the metal surged following a slump from a supply glut and softening Chinese demand.

Copper output eased 16 percent for the year to 1,326 kilotonnes, hurt by a strike in Chile at the world’s largest copper mine Escondida, with the industrial action also costing BHP US$546 million in costs.

But copper production was “expected to rebound strongly in the 2018 financial year”, BHP chief executive Andrew Mackenzie said, on the back of a new water project and an extension programme at Escondida.

Rio Tinto, the world’s second-largest miner, said Tuesday in its second-quarter production report that shipments and production for iron ore, its main commodity, slipped slightly for the period owing to “adverse weather conditions”.

Ukraine wants Russia held to account over MH17 downing — “Russia has been getting away with murder.”

July 17, 2017


© AFP/File | International investigators have said the Boeing airliner flying from Amsterdam to Kuala Lumpur was blown out of the sky over conflict-wracked east Ukraine on July 17, 2014 by a Buk missile system brought in from Russia

KIEV (AFP) – Ukrainian President Petro Poroshenko on Monday insisted Russia must be held to account over the downing of Malaysia Airlines flight MH17, three years on from the tragedy that killed 298 people.

International investigators have said the Boeing airliner flying from Amsterdam to Kuala Lumpur was blown out of the sky over conflict-wracked east Ukraine on July 17, 2014 by a Buk missile system brought in from Russia and fired from territory held by Moscow-backed rebels.

The probe being led by The Netherlands — which suffered the majority of losses — is focusing on some 100 people suspected of having played an “active role” in the incident, but the investigators have not publicly named any suspects.

The West and Kiev are adamant that all the evidence points to the insurgents and Moscow.

Russia and the separatist authorities it supports, however, continue to deny any involvement and have sought repeatedly to deflect the blame onto Ukraine.

“It was a barefaced crime that could have been avoided if not for the Russian aggression, Russian system and Russian missile that came from Russian territory,” Poroshenko wrote on Facebook.

“Our responsibility before the dead and before future generations is to show to the aggressor terrorists that responsibility is unavoidable for all the crimes committed.”

Officials announced this month that the trials of any suspects arrested over the shooting down of MH17 will be held in the Netherlands.

The countries leading the joint investigation — Australia, Belgium, Malaysia, The Netherlands and Ukraine — agreed that any trials will be carried out within the Dutch legal system.

Poroshenko said that he was “convinced that the objectivity and impartiality of Dutch justice will complete this path.”

“It is our shared duty in the face of the memory of those whose beating hearts were stopped exactly three years ago by a Russian missile,” he wrote.

No official events are planned in Kiev to mark the third anniversary but local residents are expected to gather for a small religious ceremony at the crash site in rebel-held territory.

Russia and Ukraine have been locked in a bitter feud since Moscow seized the Black Sea peninsula of Crimea in 2014 after the ouster of a Kremlin-backed leader by pro-Western protesters in Kiev.

Moscow was then accused of masterminding and fueling a separatist conflict in two other eastern regions that has cost the lives of some 10,000 people in over three years.

Russia insists it has not sent troops and weapons to fight in Ukraine despite overwhelming evidence that Moscow has essentially been involved in an undeclared war.

Former prime minister John Howard urges Australians to trust Donald Trump – but admits the U.S. leader’s presidency was ‘provocative’ and ‘unusual’

July 16, 2017

Australia’s second longest-standing prime minister thinks Donald Trump will remain president for his entire four-year term and has urged people to accept his unusual style of leadership.

Mr. Howard said most criticisms of Mr. Trump came down to his “locker-room” manner, not his policy.



  • Former prime minister John Howard calls for Australians to trust Donald Trump
  • ‘The style of President Trump is unusual… but it’s what he does that matters’ 
  • Speaking in Sydney on Thursday Mr Howard addressed Liberal party tensions
  • He insisted the party was made up of both moderate and conservative voices
  • It comes after Malcolm Turnbull said the Liberal party was not conservative

Former prime minister John Howard has urged Australians to trust Donald Trump, despite admitting his style of presidency was ‘provocative’ and ‘unusual’.

Mr Howard, who served as Australia’s prime minister from 1996 to 2007, said Australia should give the US president a chance.

‘The style of President Trump is unusual… I accept that some of his style is provocative, but in the end it’s what he does that matters,’ Mr Howard said at a University of Sydney event on Thursday.

'The style of President Trump is unusual...I accept that some of his style is provocative, but in the end it's what he does that matters,' Mr Howard said at a University of Sydney event on Thursday

‘The style of President Trump is unusual…I accept that some of his style is provocative, but in the end it’s what he does that matters,’ Mr Howard said at a University of Sydney event on Thursday

Mr Howard also addressed Prime Minister Malcolm Turnbull’s claim the Liberal party was not a conservative one.

Earlier this week Mr Turnbull said the Liberal Party was not conservative but ‘the sensible centre’ at an event in London.

Mr Howard insisted the party was made up of both classical liberal and conservative traditions.

‘Let me say to people in this country who regard themselves as conservative, you are always welcome in the Liberal party,’ he said.

‘The Liberal Party and the National Party are the natural and most productive homes for conservatives in this country.’

'Let me say to people in this country who regard themselves as conservative, you are always welcome in the Liberal party,' Mr Howard said

‘Let me say to people in this country who regard themselves as conservative, you are always welcome in the Liberal party,’ Mr Howard said


Mr Howard, who served as Australia's prime minister from 1996 to 2007, said Australia should give US President Donald Trump a chance

Mr Howard, who served as Australia’s prime minister from 1996 to 2007, said Australia should give US President Donald Trump a chance

Mr Howard’s comments come amid a war of words between Mr Turnbull and his predecessor Tony Abbott about the definition of the Liberal Party.

Mr Turnbull said Liberal founder Sir Robert Menzies ‘went to great pains not to call his new political party consolidating the centre right of Australian politics ‘conservative’ but rather the Liberal Party, which he firmly anchored in the centre of Australian politics’.

‘The sensible centre was the place to be. It remains the place to be,’ he told a London think-tank.

Mr Howard's comments come amid a war of words between current Prime Minister Malcolm Turnbull and his predecessor Tony Abbott about the definition of the Liberal Party

Mr Howard’s comments come amid a war of words between current Prime Minister Malcolm Turnbull and his predecessor Tony Abbott about the definition of the Liberal Party

Mr Turnbull said Liberal founder Sir Robert Menzies 'went to great pains not to call his new political party consolidating the centre right of Australian politics 'conservative' but rather the Liberal Party, which he firmly anchored in the centre of Australian politics'

Mr Turnbull said Liberal founder Sir Robert Menzies ‘went to great pains not to call his new political party consolidating the centre right of Australian politics ‘conservative’ but rather the Liberal Party, which he firmly anchored in the centre of Australian politics’

After a public backlash, Mr Turnbull said he had deliberately used the phrase ‘sensible centre’ coined by Tony Abbott, and believed most Liberal Party members – including himself – embraced both the terms liberal and conservative.

‘They are brought together and indeed they are shared by most of us, we share both traditions, they are not exclusive,’ Mr Turnbull said.

Mr Abbott vowed to be a strong voice for conservative voters.

Former Liberal senator Cory Bernadi split from the Liberal party earlier this year to set up his own Australian Conservatives party.

Mr Howard urged supporters to steer clear of ‘alternative conservative configurations’ because joining such groups would ‘end in tears’.

'The Liberal party and the National party are the natural and most productive homes for conservatives in this country,' Mr Howard said (pictured at the Museum of Contemporary Art in Sydney on Thursday 

‘The Liberal party and the National party are the natural and most productive homes for conservatives in this country,’ Mr Howard said (pictured at the Museum of Contemporary Art in Sydney on Thursday

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India-US-Japan Malabar exercise is an assertion of New Delhi’s independence, foreign policy and self-confidence

July 14, 2017

By Nalini R Mohanty

It is a great coincidence that the 10-day annual India-US-Japan Malabar naval exercise began at a time (on 10 July) when India and China are locked in a serious standoff in the Sikkim region. India could not have timed it so well to send a maritime threat to China as a rebuff to the latter’s threatening posture in the Himalayan region.

After all, the Malabar exercise is an annual event and its timings are decided and preparations are made, at least, six months in advance. The Sikkim border bedlam which is barely a month-old could not have been anticipated while scheduling the Malabar drill.

But there is no gainsaying that the India-US naval exercise has come to represent, in the last several years, a joint resolve to counter increasing Chinese hegemony in the territorial waters of the region. Both India and the US are coy in admitting it in so many words; naturally so, as both the countries do not want to openly antagonise a rising super-power like China. But everybody concerned knows it very well that the annual exercise is a constant reminder to China to rein in its expansionist designs.

After all, China has been flexing its muscles in its backyard, the South China Sea, for the last several years pushing countries like Taiwan, Vietnam, Brunei, Malaysia and the Philippines, which are mostly aligned with the USA, to come under its umbrella.

The Philippines under President Rodrigo Duterte has somewhat drifted away from the US and has made common cause with China in the hope of larger economic aid. The US is certainly concerned that its hegemony in the territorial waters worldwide is being challenged by China. So it is looking for reliable partners to checkmate China everywhere.

This suits India as well because China is the only other country, apart from Pakistan, which has been engaged in an adversarial relationship for years. The bigger threat is that Pakistan has become a satellite country of China. China-Pakistan axis, both military and economic, is writ large.

China has helped Pakistan to develop its nuclear capability; it has provided military jets and submarines to Pakistan. It has helped develop the Gwadar port in Pakistan which would help China gain access to the Arabian Sea in the Indian Ocean. China has invested 46 billion dollars to build China-Pakistan Economic Corridor. Naturally, India has to be wary of China which is rapidly emerging as a regional hegemony.

The United States and India have, therefore, a shared objective to contain China. The Malabar exercise is meant to precisely do that, though the diplomatic sophistry describes it as a routine maritime drill.

The joint exercise began in 1992 in a modest way; it went on to acquire greater muscle in the succeeding years. Reuters

The joint exercise began in 1992 in a modest way; it went on to acquire greater muscle in the succeeding years. Reuters

It was the foresight of P V Narasimha Rao, the prime minister in the early 1990s — when the Cold War came to an end with the disintegration of the Soviet Union and the international relations underwent a massive churning — that India persuaded the USA to come together to protect their respective interests in the territorial waters.

The joint exercise began in 1992 in a modest way; it went on to acquire greater muscle in the succeeding years. The Manmohan Singh government took the exercise several notches higher; in 2007, India invited Japan, Australia and Singapore to be part of the drill. The five-nation joint exercise infuriated China to such an extent that it issued demarches against the manoeuvre. Australia then backed out from the subsequent strategic dialogue (Quadrilateral Security Initiative) fearing the Chinese backlash. The Australian action displeased India to no end.

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Now, that Australia is facing the Chinese heat again and it wants to break free from the Chinese domination, it has been earnestly requesting India to re-admit it in the annual exercise. But India has stubbornly refused to accede to Australia’s plea. Australia even pleaded to be given an observer status in the Malabar exercise; but, after dithering over it for a long time, India finally rejected the plea last month. There is a lingering view that India still looks upon Australia as an unreliable strategic ally.

Many in India view Australia’s burgeoning economic and political ties with China with suspicion. As an analyst said: “A section of New Delhi’s policy elite believes that China’s associations in Australia are so vast and intricate that Beijing may even have infiltrated Canberra’s political establishment.”

While India has cast aside Australia’s entreaties, it has had no hesitation in embracing Japan for two reasons: first, Japan has been also in an adversarial relationship with China and would be a strategic Asian ally of India in the eventuality of any maritime conflict in the region. Secondly, the USA has been pushing the case of Japan to build an India-Japan strategic relationship to counter the Chinese designs. Japan first joined the exercise in 2014. It has become a permanent fixture in the three-nation naval exercise since 2015.

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Japan’s biggest warship, the helicopter carrier Izumo

By admitting Japan to be an institutional part of the trilateral naval exercise, India has upped the ante against China. There is, of course, no doubt that China is far ahead of India, both economically and militarily. But India today is in a position to demonstrate it is no more a pushover.

India’s supreme confidence was manifest when the Narendra Modi government decided to boycott the One Belt, One Road (OBOR) initiative of China; it also gave a miss to the Belt and Road Forum (BRF) showcased by Beijing in May this year in which almost 100 countries (including the USA, Japan and South Korea) and 29 heads of state (including the likes of Vladimir Putin, the Russian president) participated. India did not even send its ambassador in Beijing as a token representation as it wanted to bring home its objection to the creation of the China-Pakistan Economic Corridor in the disputed territory occupied by Pakistan.

India’s self-assuredness is again evident from its firm position in the Doklam border dispute; it has gone ahead and stopped Chinese construction of a road in the disputed territory and refused to back off despite serious threats from the Chinese authorities.

The Malabar exercise is another assertion of India’s self-confidence to conduct its foreign policy on its own terms, undeterred by the dispositions by other powers. The independent foreign policy is a legacy that India has succeeded in carrying on despite the changes in governments as well as policy prescriptions.

Published Date: Jul 13, 2017 01:08 pm | Updated Date: Jul 13, 2017 01:08 pm


Australia buys back farmland sold to China for coal exploitation

July 12, 2017

CANBERRA, Australia — A state government says it will buy back most of a Chinese mining company’s coal exploration license for 262 million Australian dollars ($201 million) to help protect some of Australia’s most fertile farmland.

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Harvesters process corn on the Liverpool Plains

The New South Wales state government said on Wednesday it will buy back 51.4 percent of state-owned China Shenhua Energy’s license covering the Liverpool Plains, northwest of Sydney.

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Liverpool Plains

Australian subsidiary Shenhua Watermark Coal paid the government AU$300 million in 2008 for exploration rights over the prime farmland, angering local farmers and agriculture advocates.

Resources Minister Don Harwin says Shenhua will be left to explore the mountain ridges that border the flatland.

Shenhua said in a statement it has “expressed its disappointment,” but will continue with plans to mine the smaller area.


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he Long Paddock, Liverpool Plains Australia

Japan to Host TPP Pacific Rim Trade Pact Talks, Minus the US — In Asia U.S. withdrawal seen as a loss for U.S. influence and an opening for Chinese geopolitical and business interests

July 11, 2017

TOKYO — Members of a Pacific Rim trade initiative rejected by U.S. President Donald Trump are to hold working-level talks Wednesday in the Japanese mountain resort town of Hakone, west of Tokyo.

The three-day meeting among envoys from the 11 remaining members of the Trans-Pacific Partnership follows a breakthrough last week on a Japan-European Union trade deal seen as a repudiation of the U.S. moves to pull back from such arrangements.

Last week, Japan named a new chief negotiator for TPP talks, Kazuyoshi Umemoto, a former ambassador to Italy.

Trump pulled the U.S. out of the pact soon after taking office, saying his “America First” policy favors one-on-one agreements with other nations rather than multinational pacts like the TPP.

Other TPP members hope to make progress on an alternative that does not include the U.S. before an Asia-Pacific summit in Vietnam in November.

The administration of President Barack Obama helped lead the five-year effort that yielded a TPP agreement in 2015. The deal has to be restructured since as originally agreed it can only take effect after it is ratified by six countries that account for 85 percent of its original members’ combined gross domestic product. The U.S. made up 60 percent of the TPP’s combined GDP, so it could not be implemented as it stands now.

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Japanese officials say they are hoping the TPP talks will get a boost from the Economic Partnership Agreement reached with the EU, which dismantles trade barriers and eases tariffs on a wide range of products for the two markets accounting for almost a third of world economic activity.

The other TPP member countries are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Supporters of the TPP say it would set high standards for modern trade rules, labor, environmental and intellectual property protections. Critics say it puts corporate interests ahead of the public good and national sovereignty.

In Asia, the U.S. withdrawal is seen as a step back for U.S. influence that leaves wider leeway for Chinese geopolitical and business interests.

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China’s One Belt One Road

How Energy-Rich Australia Exported Its Way Into an Energy Crisis

July 10, 2017

The world’s No. 2 seller abroad of liquefied natural gas holds so little in reserve that it can’t keep the lights on in Adelaide—a cautionary tale for the U.S.

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The LNG carrier Methane Spirit loads the the first LNG cargo from Australia Pacific LNG, January 9, 2016. Photo: Australia Pacific LNG

July 10, 2017 11:34 a.m. ET

On a sweltering night this February, the world’s No. 2 exporter of liquefied natural gas didn’t have enough energy left to keep its own citizens cool.

A nationwide heat wave in Australia drove temperatures above 105 degrees Fahrenheit around the city of Adelaide on the southern coast. As air-conditioning demand soared, regulators called on Pelican Point, a local gas-fueled power station running at half capacity, to crank up.

It couldn’t. The plant’s operator said it wasn’t able to get enough natural gas quickly to run its turbines fully. At 6:03 p.m., regulators cut power to 90,000 Adelaide homes to prevent a wider blackout.

Resource-rich Australia has an energy crisis, one that offers lessons for America as it prepares to vastly increase natural-gas shipments abroad.

Australia now exports so much liquefied natural gas, or LNG, it may overtake No. 1 exporter Qatar within several years. It exported 62% of its gas production last year, according to the BP Statistical Review of World Energy.

Yet its policy makers didn’t ensure enough gas would remain at home. As exports increased from new LNG facilities in eastern Australia, some state governments let aging coal plants close and accelerated a push toward renewable energy for environmental concerns. That left the regions more reliant on gas for power, especially when intermittent sources such as wind and solar weren’t sufficient.

Shortages drove domestic gas prices earlier this year in some markets in eastern Australia to as high as $17 per million British thermal units for smaller gas users such as manufacturers. On the spot market, gas prices have gone from below $1 in 2014 to roughly $7 today—well above the roughly $3 that prevails in the U.S.—causing havoc around the country.

In March, Australia’s largest aluminum smelter cut production and laid off workers because it said it couldn’t secure enough cheap energy. During one blackout last year, some families lost embryos in an in-vitro-fertilization clinic with no backup generation, according to a government-commissioned report. In February, some tuna fishermen watched catches rot because freezers shut off.

The blackouts have been severe enough to catch the attention of Tesla Inc. Chief Executive Elon Musk, who said last week he agreed to build a giant battery system in the state of South Australia, where Adelaide is the capital city, to store power from a wind farm. Such a system could provide electricity during shortages.

Prime Minister Malcolm Turnbull, in an emailed response to Wall Street Journal questions, blamed previous Labor governments. Mr. Turnbull, of the center-right Liberal Party, said “gas export licenses were issued without regard to the consequences for the domestic market,” and, “as a result, at a time of record gas production we have had the prospect of a shortage of domestic gas on the east coast.”

An LNG export facility in the distance near Gladstone.Photo: Rachel Pannett/The Wall Street Journal

The Labor Party says that when the LNG-export plants were approved, the industry said sales abroad wouldn’t impact domestic gas supply because it was developing new sources of gas. “It is clear that those assurances haven’t come to pass,” said Mark Butler, the Labor lawmaker who is currently its spokesman on energy. “If we had our time again, we would have put in place a national-interest test,” he said. Such a test insures domestic needs are protected.

Australia’s plight is less likely in America, which is experiencing a gas glut and is boosting exports. The first LNG-export terminal in the lower 48 states opened in Louisiana last year, allowing exports by ship in addition to existing pipelines to Mexico and Canada. Energy Secretary Rick Perry said at his Senate confirmation hearing he wanted to boost natural-gas exports.

The U.S. is on track to become the world’s No. 3 LNG exporter behind Qatar and Australia by 2020, according to the U.S. Energy Department.

Unlike Australia—which has plentiful gas supplies in its west but no pipelines to get them to its gas-starved east—the U.S. has a large pipeline grid, making it easier to move supplies during shortages. It also has largely avoided the kind of long-term export contracts that trapped Australian companies into giving foreign buyers priority.

Still, Australia’s gas pains offer a case study in what can go wrong in committing to expanding exports at the same time as other steady power sources are shutting down, said Michael Webber, deputy director of the Energy Institute at the University of Texas at Austin. “We have more options” in America than Australia, he said, but “there’s always a risk that markets will behave in a different way than we anticipated.”

“There’s no one country that has mastered this,” Mr. Webber said. “We’re all learning from each other.”

Until the 2000s, Australia was a minnow in international energy markets. It had major gas deposits off its northwestern coast, but coal remained its dominant fuel source.

New gas source

Geologists had suspected there was methane gas buried in Australia’s vast coal seams. When energy prices climbed with Chinese demand, companies including BG Group PLC, now owned by Royal Dutch Shell PLC, rushed to extract this “coal-seam gas”—a process that involves pushing gas out of seams, sometimes through hydraulic fracturing, or “fracking”—in Australia’s east.

ConocoPhillips bought a 50% stake in an Australian coal-seam-gas venture for $8 billion in 2008. In 2010, Shell and PetroChina Co. in a $3 billion deal acquired coal-seam-gas producer Arrow Energy, which had a market value of $10 million a few years earlier.

Producers say they concluded the only way to justify the cost of extracting coal-seam gas was to sell it abroad, where demand was higher and customers would agree to long-term contracts. They also needed money to build terminals on the east coast to convert gas into liquid for shipping.

In 2009, BG Group and Adelaide-based Santos Ltd. signed 20-year export deals, the first of a string of long-term export contracts that coal-seam-gas concerns in Australia would sign.

In a 2009 report, the northeastern Queensland state’s government warned of “a real problem that the availability of gas in the ground may not translate into gas supplied to the domestic market.” It suggested requiring energy companies keep up to 20% of production for domestic users.

Australia’s energy companies argued such “gas reservation” policies would deter investment needed to boost supply. Many politicians emphasized how LNG projects would create jobs in the aftermath of the global financial crisis.

Lynda Pearce, 68, has seen her power bill go up.Photo: Rachel Pannett/The Wall Street Journal

Queensland didn’t institute a gas-reservation plan. Its government now says it couldn’t have predicted all the forces creating current shortages.

Western Australia state did implement a similar plan years before for its offshore gas, avoiding local gas shortages. The plan also applied to exports from LNG terminals added on the west coast after 2009.

In Australia’s east, three terminals were built off Gladstone in Queensland.

As gas production increased, Australia cut back on coal, whose use had put it among the world’s biggest greenhouse-gas emitters per capita. Coal-fueled plants were shut down without comprehensive plans for replacing them with other power sources.

South Australia and Queensland, in 2014 and 2015, set targets to get 50% of their electricity from renewable sources such as wind and solar. Gas, the argument went, would help fill the gap when renewable power wasn’t sufficient.

Some prospective new gas sources in the east were being shut down, with New South Wales placing a moratorium on fracking in 2011 and later freezing new exploration licenses for coal-seam gas. Victoria in March this year banned fracking and new coal-seam-gas development.

Santos and its partners weren’t able to pump as much gas as expected and began signing third-party supply contracts, including from other gas producers and electricity companies to meet export obligations, adding to factors driving up domestic prices.

As prices rose, some manufacturers using gas, such as fertilizer makers, publicly threatened to move operations abroad. Power plants relying on gas—currently about 25% of Australia’s power grid—raised rates.

“Santos has been singled out as almost the sole cause” of Australia’s gas problems, Santos Chairman Peter Coates told shareholders in May. Coal-seam gas could underpin Australia’s long-term needs with more investment and never would have been developed without foreign buyers, he said. “The gas would still be sitting in the ground.”

Gladstone, the city with the three new LNG-export facilities, has been among areas most affected. It is home to manufacturers that use gas, including Australia’s largest aluminum smelter, a Rio Tinto PLC plant that once distributed beer-can holders reading: “Proudly Australian, operating beyond 2030.”

In March, Rio Tinto cut 14% of the smelter’s production and laid off 100 workers, saying it couldn’t secure enough inexpensive energy. Rio Tinto CEO Jean-Sébastien Jacques in May said: “The price was so high that it didn’t make any sense anymore for us to produce.”

Kirsty Callander said her Fit Life smoothie-and-snack bar in Gladstone has seen business shrivel since the smelter layoffs. “I think Australia should keep what’s ours,” she said, “and get the jobs and money coming here.” Down the road at Tannum Meats, store manager Nathan Lynn said he once sold a dozen rib-eye steaks a day and now is lucky to sell that in four days.

Kirsty Callander has seen business shrivel since the smelter layoffs.Photo: Rachel Pannett/The Wall Street Journal

In February, regulators ordered another aluminum smelter, in New South Wales, to cut production to prevent power outages in the state, which includes Sydney.

Repeated outages

Outages have become a familiar gas-crisis byproduct, including one last September in which 1.7 million households and businesses in South Australia state lost power after tornadoes damaged lines supplying power from Victoria. South Australia was relying on other states for electricity because volatile gas prices and other issues had forced its generators to cut capacity. Power wasn’t fully restored for 12 days.

In the week that Adelaide’s February blackout cut power to 90,000 homes, five ships left Gladstone carrying out 314,000 tons of LNG altogether, according to the port operator. That’s enough to generate electricity for roughly 750,000 Australian homes for a year, according to calculations for the Journal by the Australian Bureau of Statistics.

The Adelaide blackout traced to 2015, when the Pelican Point gas-fired power plant’s owner, Engie SA  of France, mothballed one of its two turbines, saying it was too expensive to run at prevailing gas prices.

When Australia’s electricity overseer, the Australian Energy Market Operator, ordered Pelican Point to fire up its second turbine that hot February day, Engie initially said it wasn’t available. When the regulator insisted, Engie said it couldn’t move quickly without gas-supply contracts.

Pelican Point power station.jpg

Engie declined to comment about the blackout. In a media statement afterward, it said: “There is no commercial rationale to operate the second Pelican Point unit in the current market environment in [South Australia] for a small number of days across the year.”

Engie in March agreed to restart the second turbine after Origin Energy Ltd. , which operates one of the Queensland LNG plants, committed to provide gas to Pelican Point and buy some of its electricity.

Prime Minister Turnbull that month urged producers to reserve more gas for the domestic market. He declared in April he would invoke little-used trade powers to block some exports until local needs were met; the measures went into effect July 1.

The energy regulator in June said the market and government response should help secure the power grid, though it “remains susceptible” to extreme summer conditions.

South Australia and Queensland are promising to open more land to gas development. Shell has reduced exports from one Australian LNG facility to supply more gas locally and recently signed supply contracts with utilities, including a short-term deal with Engie.

Companies’ flexibility to make such concessions is constrained by overseas contracts, industry analysts say. Without more gas production or faster development of other power sources, many say, Australia faces more shortfalls.

“It takes long lead times to bring on new gas developments,” said Saul Kavonic, a Perth-based analyst at energy consultancy Wood Mackenzie. “You can’t just press a magic button and fix it overnight.”

Meanwhile, budgets of Australians such as retiree Lynda Pearce, 68, are feeling the shortage’s impact. “I’m really worried about what’s going to happen. It’s sort of like waiting for a bomb to explode,” said Ms. Pearce, who in a Gladstone suburb has seen her power bill go up around 6% in three months.

Nearby, Gladstone’s LNG plants continue exporting. “It seems stupid,” she said, “to send the gas offshore when people want it here.”



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South Australia power lines down after storm