The Malagasy Election and its Potential Impact on Land Deals in Subsaharan Africa

Madagascar goes to the polls today for the first time since the coup of 2009. Though there were multiple reasons for Andry Rajoelina’s overthrow of the government of Marc Ravalomanana it must be noted that Ravalomanana’s plan to lease approximately half of Madagascar’s arable land to Daewoo Logistics for 99 years served as a major rallying point for Rajoelina’s supporters. In the aftermath of the coup foreign aid, which provided approximately 40% of Madagascar’s 2008 budget, plummeted while malnutrition, sex tourism and deforestation increased. Legitimate tourism, an important component of the Malagasy economy, also fell as did school enrollments. Clearly, the coup did a great deal of damage to Madagascar.

Given the state of the Malagasy economy it is not surprising that economic recovery is central to the platforms of the two main contenders Hery Martial Rakotoarimanana Rajaonarimampianina and Richard Jean-Louis Robinson. If economic recovery is to occur foreign investment is going to have to increase. As a result of the Daewoo deal, potential investors will presumably be paying close attention to land tenure in Madagascar. For this reason potential agricultural and mining deals should be monitored closely as their completion could indicate that some of the concerns about "Land Grabs" in Africa have been addressed. Companies are unlikely to make significant investments in Madagascar if they feel that a repeat of 2009 will occur. To ensure stability it is not impossible that greater transparency could play a role in future land negotiations. Commitments to ensuring the food security and access to potable water of the local populations could also be components of future agreements. I am not saying that a perfect model for land deals will result. I am merely stating that future investment in Madagascar will likely indicate that conditions have improved to the point that businesses do not fear losing profitability due to delays, sabotage or forced withdrawal. The terms of the sale or lease of land and the feedback of the local population will be key indicators as to how stable agricultural and mining investments will be in the future.

The United Nations defines Land Tenure as "…the relationship, whether legally or customarily defined, among people, as individuals or groups, with respect to land." It is important to note that "customarily defined" indicates that land rights that are not legally codified are still recognized as valid. This needs to be taken into account when looking at property rights in many emerging markets, as a lack of a written deed does not necessarily mean that a group of people does not have a right to the land in question. For this reason it is not impossible that a company could buy or lease land, invest heavily in it, and at some point down the line find that they have no legal right to be there. This is essential like receiving stolen property without knowing that it is stolen. On one hand the recipient might not have done anything wrong. On the other they will likely have to return the property. Another important factor to note is that many developing countries do not have adequate dispute resolution mechanisms thus people who feel that their land is under threat are more likely to take the law into their own hands. This breeds distrust and ultimately means that deals, which in theory could be mutually beneficial, will not become a reality.

Madagascar and the Daweoo Deal is an important example of what can go wrong for countries and businesses when deals are not arranged appropriately. The reality is that Antananarivo needs investors and that Madagascar does have resources that could attract them. Finding a way to balance the needs of the Malagasy people with the expectation of investors is not impossible. Given the events of 2009 such a balance could be an essential component of future land deals within the country. After all, every party has incentives to come to a mutually beneficial agreement. If they are successful such a model could be exported. The reality is that buying and leasing land in Subsaharan Africa is increasingly becoming a means for developed countries to ensure food security. This trend is likely to continue. In theory it could be an important source of revenue for developing countries which, provided their own agricultural needs are met, could promote social stability. In practice this trend has often had the opposite effect. Any precedents that could improve this process should be watched closely. Madagascar is one place where a positive precedent could occur.

The Impact of China’s Territorial Claims to the South China Sea on Sino-Filipino Relations and Long-Term Stability within the Asia Pacific Region

In January of this year the Philippines requested arbitration against China under the United Nations Convention on the Law of the Sea (UNCLOS). The request was due to China’s increasingly aggressive territorial ambitions in the South China Sea. In the long term this suit has the potential to increase conflict in the Asia Pacific region. Though the case is likely to take years to be settled and could be difficult to enforce its progress should be monitored as its influence could impact regional stability and the global economy.

China  claims 80% of the South China Sea as Chinese territory through a demarcation line called the Nine-Dash Line.  The intent of the case is to prove that the Nine-Dash Line claim is invalid under UNCLOS. The Filipinos seek to clarify their territorial claims and to confirm that shoals, such as Scarborough, legally fall within the Philippines 200-nautical-mile exclusive economic zone. Suffice it to say this legal challenge has angered Beijing and the Chinese are arguing that the case is not valid. Though China ratified UNCLOS in 1996 it filed a statement in 2006 which essentiality stated that China will follow the parts of UNCLOS which suit its interests while ignoring the parts that do not. (Interestingly enough the parts of UNCLOS that work against China in its dispute with the Philippines work to Beijing’s advantage in its conflict with Tokyo over Japan’s occupation of the Senkaku/Diaoyu Islands in the East China Sea).

China has been increasingly aggressive in staking its claim to the South China Sea. Earlier this year Sinomaps Press (China’s mapping authority) published a map officially claiming the area within the Nine-Dash Line as Chinese territory rather than territory that Beijing felt it had a historic claim to. Not surprisingly the map has been met with alarm by China’s neighbors. Controlling the South China Sea is an imperative in terms of access to energy as there are potentially significant reserves of oil and natural gas in the region. These resources are essential to meeting the rapidly rising energy needs of the regional countries. Even if the energy sources are overstated control of the territory conveys a strategic advantage as about half of the world’s shipping tonnage is shipped through the South China Sea. Suffice it to say no country in the region wants to relinquish its claim to the territory.

Beijing has taken action that has gone beyond redrawing maps. Currently, China is occupying Scarborough Shoal. The concern is that this action could lead to its permanent annexation. There is a precedent here. In 1994 China occupied Mischief Reef which is about 130 miles from the Filipino Province of Palawan. Over the next nineteen years the reef has evolved into a military base. In September it was reported that 75 concrete blocks were spotted near the entrance to Scarborough Shoal. There is speculation that this could be the start of military fortification. Not surprisingly, Manila does not want the Chinese to be so close to Filipino territory. The lawsuit is a peaceful way for the Philippines to challenge China’s actions. 

The Philippines have made a stand. If they are successful in their suit other powers will monitor China’s response. If China disregards the case's findings some form of action will need to be taken. The nature of the action can of course vary, however, we must note that it would set a negative precedent if the countries of the Asia Pacific region remained passive while Beijing continues annexing and fortifying various reefs and shoals when international law says the territory in question does not belong to China. If China continues with this policy after UNCLOS has ruled against it this action could force regional countries to band together. This would increase regional tensions as well as the potential for an event that could trigger a conflict. Such a situation would have severe security and economic consequences. Certainly, the impact on shipping lands would have a significant impact on the trade thus impacting commodity prices and access to energy sources. We can hope that a peaceful resolution can be found, however, if Beijing continues with its current policy of symbolically and literally annexing territory while delaying discussions to resolve this issue the hope of a peaceful resolution is lessened.

　

　

The Implications of Korean Reunification Part 3: Military Alliances and Competition for Resources in the Event of a North Korean Collapse

Summary:
A recent RAND Corporation report provides evidence that the regime of Kim Jong Un could collapse within the coming years. Such an occurrence could set the stage for the reunification of the Korean Peninsula. Though we must note that regime change does not necessarily mean reunification (in fact it could set the stage for a conflict between China and the US/South Korea), it is still important to forecast how the reunification of the Korean Peninsula might impact the Asia Pacific region and the global economy.

When we look at international relations amongst the countries of the Asia Pacific region we must recognize that these states seek to use the United States and China to counterbalance one another. By playing Beijing and Washington off each other the countries of the Asia Pacific region seek to ensure access to shipping lanes and natural resources while managing their security needs. For these reasons the terms and conditions of the security and trade agreements that these countries reach with the United States, China and amongst themselves serve as a barometer as to how the various actors view the present and future stability of the region. If the Koreas reunited it would likely result in a major change in regional military alliances which would have a significant impact on regional security agreements and the global economy. Such an occurrence could also force regional countries to choose between the United States and China in terms of which country best serves their interests. This could cause further instability.


The US Military in the Asia Pacific Region:
The United States has maintained a military presence in South Korea since the signing of the 1953 The Korean War Armistice Agreement. Currently, there are approximately 28,500 American military personnel based in South Korea. The potential of resumed hostilities between the Koreas has been the justification for an American military presence. If the potential for conflict was removed, via reunification or some other means, it would be more challenging to justify the deployment of so many US soldiers on the Korean Peninsula. 

Currently, we are seeing the redeployment and proposed redeployment of US military personnel within the Asia Pacific region. Reasons for this shift include budget cuts and domestic pressure on the governments of military allies from citizens who resent a large concentration of US military personnel within certain areas of their territory. We are also witnessing the greater use of military rotation. Allowing the US military to be temporarily based in a country is a good way for countries to bolster their security and their relationship with the United States. Though China is not keen on a continued US military presence in the region Beijing likely sees temporary access to bases as superior to permanent bases thus relations between these countries and China function as well as can be expected. For the time being this balancing act appears to be working. However, is this course of action sustainable? A reduction of permanent bases could reduce the ability of the United States to protect its regional interests if some of Washington’s current allies decided at some point in the future to prevent the US military from rotating through their territory. Clearly, this is not in the interest of the United States.

If the US were to reduce the number of troops in the Korean Peninsula it is likely that we would see American forces spread amongst the Philippines, Japan, Australia and Singapore. It is important to note that a desire by the US to station troops in any of these countries is not guaranteed to become a reality. Allowing the US military to pass through one’s territory is one thing. Allowing the United States to set up bases there is a different matter entirely. As we shall see there is a great deal of opposition to a US military presence in the Philippines (the US had to withdraw in 1992 due to public pressure), and the presence of US forces in Okinawa has generated a great deal of resentment in Japan. In the coming posts we will look at how several key regional powers view their economic, security and energy needs and how this perception could influence their relations with the US and China.

　

　

　

　

The Potential Impact on Sino-Korean Relations of a Delay of the Transfer of OPCOM

The Implications of Korean Reunification Part 2:

This is the second part of an analysis of the changes that we could expect to see in the event of the reunification of the Korean Peninsula. Please note that I am not arguing that reunification will occur. I am merely outling the likely outcomes of reunification and their implication on regional security and the global economy. 

The Potential Impact on Sino-Korean Relations of a Delay of the Transfer of OPCOM:

A recent RAND report has argued that there are signs that North Korea could be close to collapse. The report cites numerous concerns such as evidence that there is a greater recognition amongst the North Korea population that the citizens of the Republic of Korea (ROK) do not have a lower standard of living. This recognition has the potential to lead to social instability at a time when North Korea’s Chinese benefactor is showing signs that it is losing patience with Pyongyang’s rhetoric. All of this is occurring while the South Koreans are adjusting their military strategy to contend with any nuclear weapons that the North can develop, and seeking to delay the transfer of military power from Washington to Seoul. Though we cannot say for certain whether or not North Korea will implode, we must be prepared for such an event.

Kim Jong Un’s rhetoric has raised concerns amongst certain segments of the Chinese population that Pyongyang might cross a line that forces South Korea and the United States to become involved in North Korea. Such an action would likely force a confrontation between the US and China that neither party wants. Within the past week South Korean President Park Geun-hye has stressed that South Korea will build strong defenses to destroy any nuclear weapons that North Korea develops. On October 1^st President Park stated, "Only when we are backed by strong national defense that does not allow provocations can we bring North Korea onto a genuine path of change." This statement was issued the same week that the US and the ROK endorsed a deterrence strategy that includes the use of the United State’s conventional strike and missile defense capabilities. A Kill Chain System (a system to detect signs of incoming missile or nuclear attacks and launch pre-emptive strikes in the event of such attacks) is also part of the plan. These actions indicate that Seoul is concerned that Pyongyang might be changing the tactic of escalating regional tensions in order to draw China, the US, Japan, the ROK and Russia to the bargaining table where Pyongyang has historically extracted concessions in exchange for backing down. Such a tactical shift would have a profound impact on the stability of the region.

The ROK also wishes to delay the transfer of OPCON (Operational Control). In other words the Koreans have said that they want to delay taking control over military operations in their country. Currently, the U.S. Forces Korea commander is in charge of both American and Korean troops. A Korean four-star general would serve as deputy commander in the event of hostilities. As things stand now the transfer of OPCON is set for December 2015, however, it has been delayed in the past due to North Korean belligerence. Another delay is not impossible. Due to low birth rates in South Korea it is also probable that the number of Korean Military personnel will be smaller in the future which means that Seoul might need additional military support in the future. A delay in transferring OPCON combined with a smaller South Korean military and the continuation of US interests in East Asia means that the United States could be in charge indefinitely if South Korea were attacked.

Encouraging the reunification of the Korean Peninsula could potentially afford China and the United States (along with the Koreans and other regional powers) the opportunity to preemptively address regional security concerns thus reducing the risk of hostilities that no one wants. The Chinese could also position themselves to benefit economically from such a deal as well as convincing the United States to withdraw much of its military operations from the Korean Peninsula (please note that a total US withdrawal from the Asia Pacific Region is HIGHLY unlikely). Though reunification would result in China losing a buffer state that has historically been of strategic importance such an action could see Beijing gaining some economic advantage and international prestige while having some of China’s more pressing security concern addressed. In the next posts of this series I will explain how, and under what circumstances, such events could unfold.