Friday, August 19, 2005

Common East Asian Currency?

Korea Times writes about the proposal of an East Asian Currency

This would include Japan, South Korea and China. Now, why in the world would they want to do that? Aren't there enough grieviences between these countries to fill an oil tanker? The relationship between these countries is enough in itself to make the efford effortless. But then again, there are some positive aspects about it as well. What if, in the wake of the 6-party talks, this could kick-off an even closer cooperation between the countries to lubricate the rusty tensions in Northeast Asia. Here are some of the pros and cons. I am far from a currency expert, so your comments are highly appreciated (I will correct anything that is flatout wrong):

1. Quoting Korea Times "...under the current U.S. dollar-dominated currency system, Asian countries will not be able to maintain regional financial stability and sustain high economic growth". A common currency would enable East Asia to better shied itself from various shocks.
2. Peace, peace, peace. Common currencies have often been a major part of arguments speaking for increased inter-dependence with peaceful purposes.
3. Prevent another East Asian Economic Crisis, which could hurt China in the future.

1. The East Asian economies depend too much on exports to the US and lack a suitable financial system to deal with the current account surplus, Choi Gong-pil a Korean economist was quoted in the Korea Times.
2. China and Japan would never be able to build a working relationship conducive to such developments.
3. The US hubs-and-spokes system in East Asia would not allow for an enhancement in a regional structure such as a common currency. It would also not fit into the security parameters of East Asia, particularly with the Taiwan issue.

Tuesday, August 09, 2005

DDDDOOONNNNGGG [sound of bell]: End of Round 4!

In retrospect, the 4th round of the six-party talks have produced absolutely nothing. Diplomatic kow-towing and tug-of-wars throughout the 13 days of negotiations has not managed to get the 747 Jumbo of an issue out of the mud and towards any tangible accomplishments or goals. Asia East Blog will take a look at a few of the main issues:

-A Nuclear-Free Korean Peninsula
North Korea has generally agreed to such an utopia, but has pushed for the establishment of a civilian nuclear energy facility, which has dominated the headlines. Please see below.

-Light Water Reactors (LWR)
North Korea was hell-bent on their right to maintain such reactors, which terminally became the stumbling block (or deal breaker) for this round of talks. Utilizing LWR for "peaceful" energy purposes in North Korea is not acceptable by Hill and his American delegation, who fear the North Koreans may use such facilities to generate weapons-grade plutonium (despite the much greater difficulty than at other types of nuclear plants). None of the 5 other parties are willing to issue a guarantee for the North Koreans to establish a LWR, as originally promised in the Agreed Framework and was to be constructed by the Korean Peninsula Energy Development Organization (KEDO). In a strong statement Hill said, "We decided it was time to end it and go to recess, with the idea that they can go back and think about what they've been told, which is, they're not going to get a light-water reactor."

-Peace Treaty
In what seems to make a whole lotta sense, the North Koreans have iterated their desire for a peace pact with the US. The two countries have officially been at war since the end of the Korean War in 1953, which ended with a cease-fire agreement. North Korean authorities stated, "Replacing the armistice agreement with a peace treaty is an urgent issue, which North Korea and the United States should immediately address to resolve the nuclear problem in a fair manner." This would seem to be a great first step--but we're still faraway.

-Future Talks (and actions, if any)
That's right. After a 3-week recess the 'big boys' including nice-guy Mr. Hill will experience another deja-vu in Beijing where expectations are as low as President Bush's approval rating. The Chinese delegate, Wu Dawai, is optimistic, however, which is understandable as China is poised to be the biggest gainer of the talks. Where why: if the issue is resolved: China is will appear as a good-will figure with gained diplomatic respect; if the talks fail: China will still have established an image as a worthy negotiating organizer through the 6-party talks being hosted in Beijing. The Washington Post argues that China has invested the most in the 4 meetings and has much to lose--that may be so, but in the long-run it will still be the US and North Korea that will be staring actors (or actresses) fated to disappoint, in this seemingly never-ending story.

-In summary
Christopher Hills is widely characterized as a flexible and skilled negotiator, as seen in his efforts in the 1998-99 Kosovo crisis. In the 6-party talks he was not given the amount of elbow space needed to successfully solve the nuclear issue. In a word, the US has not put enough serious bargaining power into this game. While keeping pretty much the same line drawn in the sand, the US is just as reluctant to give into any concessions. It may very well be that North Korea needs another Gorba before we can see any light at the end of the tunnel, but while that is not very likely, I do not think we can keep pressuring North Korea is this boxing fight between Mark Tyson and the mosquito equivalent DRPK (note, mosquitoes can carry all sorts of deadly diseases). At the end of the day, the United States IS the big boy in the playground, which has to make the choices that have an impact. You can say as much as you want about the atrocities of the North Korean politburo, but the only effort that will have a lasting effect (unless you're naïve enough to believe in the collapse of North Korea) is a 'Grand Bargain' between the US and North Korea. Please consult with Mr. Michael O'Hanlon over at Brookings for his ideas in this regard and how they seem the most credible, as opposed to the piece-meal path of the George W. Bush.

Friday, August 05, 2005

Asia Top 3

After a long absence on Holiday, Cookiesap is back with an update on some of the big issues in East Asia. I call it my top 3 list. Feel free to comment as you please:

3) Typhoon Matsa is about to hit Zhejiang and Shanghai. What can we do? RUN!

2) Russia: Another submarine is stuck to the ocean floor. Bottomline: Russia's military is rapidly deteriorating, and it is a horrible foreboding for the dangers of its much more dangerous nuclear stockpile.

1) North Korea: Impasse in the 6-party talks. On their 11th day of talks, the US negotiator Chris Hill is getting no-where. Why? Because the US is investing too little in this extremely urgent matter. Bush is simply over-stretched.