From the Editor’s Desk · 2019-07-28 · 6 November 2013 | Vol. 4, № 41. From the Editor’s...
Transcript of From the Editor’s Desk · 2019-07-28 · 6 November 2013 | Vol. 4, № 41. From the Editor’s...
6 November 2013 | Vol. 4, № 41.
From the Editor’s Desk
Dear FDI supporters,
Welcome to the Strategic Weekly
Analysis. At the meeting of the Indian
Ocean Rim Association (IORA) Council of
Ministers in Perth late last week, Australia
took up the role of Chair. We begin this
week’s edition by considering some of the
future prospects for the organisation,
formerly known as the Indian Ocean Rim
Association for Regional Co-operation, or
IOR-ARC.
Next, we analyse the latest developments
in the US-Pakistan relationship; examining
the complicated circumstances brought
about by US drone strikes in that country.
Heading south, we report on the outcome
of the first round of the long-delayed
Madagascar presidential election. We also
consider the implications for the future,
as the country heads towards a run-off
election between the first- and second-
place getters, both of whom are proxies
for the two bitter rivals, Andry Rajoelina
and Marc Ravalomanana.
We then explore the financial implications
of piracy in the waters off Somalia. While
the number of attacks has dropped
markedly, piracy remains a big business
and produces many negative economic
effects.
Moving to Indonesia, we assess the
impact of the large-scale strikes and
protests to demand an increase in the
minimum wage, and conclude that an
increase is unlikely.
We conclude this week’s edition in
Burma/Myanmar, where we investigate
the latest crisis gripping violence-prone
Rakhine State: chronic food insecurity.
I trust you will enjoy this edition of the
Strategic Weekly Analysis.
Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International
*****
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From IOR-ARC to IORA: A New Name for Indian Ocean
Regional Body
The change of name to Indian Ocean Rim Association is important, but it must be just the
first step towards raising awareness of the organisation and the work it is doing, along
with cultivating a sense of the Indian Ocean rim as a true region, rather than just a series
of sub-regions.
Background
The Indian Ocean Rim Association for Regional Co-operation (IOR-ARC) has shed part of its
clumsy nomenclature to become the Indian Ocean Rim Association, or IORA. The
announcement was made at the 13th meeting of the Council of Ministers, held in Perth on 1
November, at which Australia assumed the role of Chair and Indonesia became Vice-Chair.
The name change (or reduction), although symbolic, will be useful. Shedding the previous
acronym, which was lengthy and difficult to both pronounce and remember, is an important
step towards facilitating increased awareness of the organisation and a greater sense of
regionalism around the Indian Ocean rim.
Comment
For the next two years, Australia will hold the position of IORA Chair, with Indonesia as Vice-
Chair. In 2015, Indonesia will become Chair, with South Africa as Vice-Chair. Australia’s stint
as Chair comes at an important time to support and follow up the efforts of outgoing Chair,
India, to revitalise what has been widely perceived as a lacklustre and underperforming
organisation. Such accusations are somewhat unfair, particularly given the work that India
has put into the organisation. There are inherent difficulties in bringing together such a
diverse range of countries. These difficulties are emphasised by the tendency of the
organisation’s explicit emphasis on consensus and voluntarism to result in issues being
referred to committees, rather than being dealt with speedily.
The biggest problem is perhaps at an awareness level. Simply put, very few have actually
heard of IOR-ARC/IORA. While the relevant ministers, diplomats and policymakers are all
very aware of the grouping and keen to see it do more, awareness beyond those circles is
almost non-existent. In that sense, giving the organisation a more manageable – and,
hopefully, more memorable, name is a worthwhile move.
Also, much of the work done by IORA is quite technical in nature and does not fit the needs
of the twenty-four hour news cycle. Investigations into improving the sustainability of
fisheries and aquaculture in Eastern Africa, feasibility studies into an IORA Business Travel
Card (presumably modelled on the APEC equivalent), or training courses for diplomats from
Indian Ocean rim countries, just do not provide suitable news fodder; yet such initiatives
have the potential to improve business and living conditions around the region.
Similarly, the six priority areas adopted at the 2011 Council of Ministers meeting in
Bangalore were scaled back from the original 12 priority areas, with the aim of giving the
organisation a sharpened focus. They are all areas in which Australia especially can make a
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meaningful contribution: maritime safety and security; trade and investment facilitation;
fisheries management; disaster preparedness; academic, science and technology
cooperation; tourism and cultural exchange.
All are worthy fields, but, as ever, the challenge will be to turn the lofty goals of those six
priority areas into concrete achievements, which could then be actively publicised to raise
awareness of IORA and contribute to a greater sense of regionalism among the residents of
the Indian Ocean rim. Whatever other achievements may come out of Australia’s tenure as
IORA Chair, and hopefully they will be many, that alone would be a worthwhile
accomplishment.
Leighton G. Luke Manager Indian Ocean Research Programme [email protected]
*****
Running with the Hare and Hunting with the Hounds: Drone
Strikes and Pakistan’s Double-Game
Despite its many protestations over the US drone strikes on its territory, it appears that the
Pakistani Government has not only been aware of the strikes, but tacitly approved and
even requested them at times.
Background
The Pakistani Taliban leader, Hakimullah Mehsud, was killed in a US drone strike on
1 November, leading the Government of Pakistan to declare that it ‘condemned drone
strikes whenever they have taken place, including the two recent drone attacks that took
place on Thursday and Friday.’ The US Ambassador was called to the Pakistani Foreign
Secretary’s office to note Pakistan’s protest. On Thursday, Imran Khan, the leader of
Pakistan’s main opposition, the Tehreek-e-Insaf (Movement for Justice) party, threatened to
cut off the NATO supplies to Afghanistan being transported through Pakistan if the US
launched drone strikes during the on-going talks between the government and the Taliban,
presumably targeting the latter.
The government denounced Mehsud’s killing as a US bid to derail the talks. ‘The murder of
Hakimullah is the murder of all efforts at peace,’ said Interior Minister, Chaudhry Nisar Ali
Khan, adding: ‘Why has Hakimullah Mehsud become so important? If they were wanted
there were many opportunities, we know it and I am sure they know it ... Why target him
just a day before a three-member team of ulemas (religious leaders) was going to visit and
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start formal contacts.’ Pakistan said it would ‘review the entire gamut of bilateral ties and
co-operation’.
Comment
In the midst of debates over the legality of the drone strikes, the Interior Minister reported
to the Senate that between 2008 and 30 October 2013, there had been 317 drone strikes in
Pakistan. Those strikes resulted in the deaths of 2,160 terrorists and sixty-seven “shaheeds”
(martyrs, in this case innocent civilians). While these figures do not exactly coincide with
those of other organisations, which base their findings on media reports, it is, nevertheless,
instructive to compare the two sources to arrive at a preliminary understanding of the
Pakistani Government’s motivations.
One independent source claims that since the drone programme began in 2004, there have
been 350 strikes, with 340 of those occurring since 2008. Since 2006, the strikes have killed
an estimated 2,563 leaders and operatives (the latter as a consequence of the CIA tactic of
“signature strikes”) from the Taliban, al-Qaida and allied extremist groups. During the same
period, an estimated 153 civilians have lost their lives.
While the number of civilian deaths will always be a matter of debate, it is interesting to
note that the government, assuming the figures from independent-sources have the support
of media confirmation, downplays the number of strikes. Given their lethality and political
importance, there is a large difference between the government’s figure of 317 strikes and
the independent bodies, which claim the higher figure of 340 since 2008. There is also a big
difference in the government’s figure of 2,160 terrorists killed since 2008 and the total of
2,368 accepted by independent sources. The Government of Pakistan appears to want to
downplay the number of strikes and terrorists killed, so as to avoid a potentially politically-
dangerous situation; one in which it could lose the confidence of the Pakistani people
altogether. If that reasoning is correct, the government probably also downplays the number
of civilian deaths, to avoid greater public reprobation.
Notwithstanding the Pakistani Government’s protestations that it has not colluded with the
US in permitting drone strikes on its territory, there is evidence that it has done exactly that.
A Washington Post report shows that, despite repeated denunciations of the drone strikes
on its territory, the Government of Pakistan secretly endorsed the programme; even
receiving regular briefings and casualty reports. In fact, in the early years of the programme,
the CIA launched its Predator drones from bases in Pakistan.
But the report goes further, alleging that, according to leaked top-secret CIA and Pakistani
Government documents, between late 2007 and 2011 successive Governments of Pakistan
collaborated with the CIA’s drone programme and even chose the targets in some cases. In
April 2013, ex-President Pervez Musharraf admitted to CNN that while he was in power he
had sanctioned drone strikes. Ex-Prime Minister Yousuf Raza Gilani (2008-June 2012) denied
any such collusion, but the evidence states otherwise: a diplomatic cable from then-US
ambassador Anne Patterson in August 2008, released by WikiLeaks, indicated Gilani had
agreed to the strikes in private. One document describes hitting a location ‘at the request of
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your government’, while another refers to a joint targeting effort between the CIA and
Pakistan’s Inter-Services Intelligence agency.
Pakistan’s current rhetoric will likely ebb in the coming days and weeks as diplomatic and
financial reality takes hold. Pakistan, it appears, has had no qualms about running with the
hare, while hunting with the hounds.
Lindsay Hughes Research Analyst Indian Ocean Research Programme [email protected]
*****
Madagascar Presidential Elections: A Move Towards Stability?
The current presidential elections have the potential to restore investor confidence and
provide stability. While neither the current nor former leaders – bitter rivals – are
standing, both are seeking to maintain their influence, potentially prolonging the
uncertainty.
Background
Since the coup in 2009, Madagascar has struggled to maintain any real social or economic
stability. Many people in Madagascar see the current government as illegitimate, and feel
that the only way out of their continuing poverty is a fairly-conducted election to choose a
leader. Both the former president, Marc Ravalomanana, and the current transitional
president, Andry Rajoelina, promised not to stand as president in future elections. But now,
in the midst of an election campaign, both are continuing to throw their support behind the
current candidates in an effort retain their influence over Madagascar’s political future.
Comment
Unhappy with the effect of certain policies initiated by the Ravalomanana Government,
Andry Rajoelina helped to lead a number of rallies in the capital, Antananarivo, in January
2009. After many demonstrations and much political unrest throughout Madagascar,
President Marc Ravalomanana signed over power to the military on 17 March 2009, before
fleeing into exile. Growing tensions subsequently led the military to hand the presidency to
the opposition leader, Rajoelina. He announced that he was President of the High
Transitional Authority of Madagascar (French: Haute Autorité de Transition de Madagascar)
and promised an election by late-2010. The United States condemned the change of power
as undemocratic and unconstitutional, labelling it a military coup d’état.
The election was postponed several times and, in the end, Rajoelina’s promised 2010
election never eventuated. There has not been an election since Ravalomanana was re-
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elected in 2006, but now, with the first round of voting completed on 25 October,
Madagascar is one step closer to a resolution. Originally, the expectation was that Rajoelina
and Ravalomanana would participate in the election but, according to the African Union,
both had broken electoral regulations and this forced them to withdraw from the race. Even
though there are 33 candidates competing for the leadership post, many will struggle
against the Rajoelina- and Ravalomanana-backed candidates. Rajoelina must remain
impartial, due to his position as interim leader, but backs his former finance minister Hery
Rajaonarimampianina, while Ravalomanana has called on his supporters to vote for Jean-
Louis Robinson, his former health minister.
Madagascar’s political unrest has caused a great deal of economic instability, which, in turn,
has seen an increase in poverty across the country. Despite having significant natural
resources, Madagascar’s recent political problems have caused the percentage of people
living under the poverty line to increase by ten points between 2008 and 2013. As a result,
around 92 per cent of Madagascans find themselves living on less than US$2 per day. In
addition, infrastructure has deteriorated due to environmental conditions and budget cuts.
The number of children not attending school has increased, prompting concern over their
future employment prospects, and many health care centres have closed down in recent
years.
With the second round of the election (between the top two candidates) to take place on 20
December, it is imperative that whoever is elected must immediately work on improving the
economic situation. A successful election period will, in itself, achieve a degree of stability,
by restoring investor confidence. Unless the winning candidate quickly takes control of the
political and economic situation, however, Madagascar’s economy will continue to
deteriorate. Even though many in Madagascar see the election as a solution to the current
instability, there are concerns over the organisation of the event. With a relatively small
population of 22 million people, spread out over an area the size of France, rural areas with
limited road access may miss much of the campaigning.
Jean-Louis Robinson is currently leading in the early stages of vote counting and, should he
win the second round, we could see the return of Marc Ravalomanana from exile. Andry
Rajoelina, on the other hand, brought legal action against Ravalomanana during his absence;
the latter was found guilty of abuse of office and his role in protests that led to the deaths of
around 30 protestors. Even though Rajoelina has now agreed to Ravalomanana’s
unconditional return home, the latter’s criminal record precludes him from the presidential
race. If Robinson were to take power, these charges may be overlooked, however, providing
a path for Ravalomanana to return to Madagascar and become politically active once more.
David Martin Research Assistant Indian Ocean Research Programme
*****
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Attacks Drop, but Cost of Somali Piracy Continues to Climb
Despite the progress made so far in resolving Somalia’s piracy problem, it may be too early
to declare a victory – the economic cost of piracy, and its unlawful economic influence,
remains an obstacle.
Background
Last January, the public retirement of notorious Somali pirate king-pin, Mohamed Abdi
Hassan, known as Afweyne, or “Big Mouth”, seemed to signal the dismantling of pirate
networks operating off the Horn of Africa. The announcement came amid a record drop in
pirate attacks in the Gulf of Aden and the western Indian Ocean. The decrease has been a
continuing trend throughout 2013, resulted from naval flotilla patrols and the deployment of
privately-hired armed guards on ships. Figures released by the International Maritime
Bureau (IMB) show a continued drop in piracy in the Horn of Africa, with Somali-related
incidents accounting for just 11 of the 206 total incidents reported worldwide as of 30
October. In spite of the drop in the number of incidents, the economic cost of piracy still
looms as a threat to economic stability.
Comment
Despite the progress made so far in
resolving the piracy problem in Somalia,
it is too early to declare a victory. It is
important to note that the available
statistics on piracy are murky. The IMB
and similar organisations rely on self-
reporting by affected mariners, but an
estimated 50 per cent of attacks go
unreported. There is reluctance among
shipowners to report incidents if it is not
economically wise to do so. Moreover,
officials often minimise pirate incidents
to provide an optimistic regional picture.
In addition, many attacks on small
vessels go unreported, adding to the
gaps in reporting.
Analysts also point to other reasons for the drop in piracy. Some credit the decline to
Kenya’s fight against al-Shabaab, a terrorist organisation with links to al-Qaida, which has
disrupted the business conditions necessary for piracy to thrive. Others acknowledge that
weather patterns in the monsoon season limit pirate activity in the area, suggesting that the
lull in piracy will not last.
Regardless of the cause of the decline, the economic cost of piracy remains problematic.
‘Pirate Trails,’ a report authored by the World Bank, the UN and Interpol, has shed light on
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the financial world of piracy.1 The report estimates that between 2005 and 2012, pirates off
the Horn of Africa obtained up to US$413 million in ransom payments from hijacked vessels.
Moreover, piracy costs the global economy an estimated US$18 billion per year in increased
trade expenses. Insurance premiums have increased, as well as the cost of rerouting
shipments. Ship owners have also incurred the cost of hiring expensive armed guards to
prevent and counter attacks. The IBRD/World Bank Report assessed that the cost of piracy
has the same effect as imposing a 1.1 per cent tax on all shipments transiting Somali waters.
The criminal influence on the economy has also become a global issue, as well as a sustained
threat to regional security. Somali piracy has evolved from small-scale, clan-based
operations into an organised transnational network, with funds and operatives coming from
abroad. Proceeds have been widely distributed through various industries. Some of the
profit has been laundered through investments in legitimate businesses, such as hotels,
restaurants, real estate and financial services. Earnings are also reinvested into future pirate
operations, with a growing number of financiers investing in other unlawful business
ventures, including human trafficking, prostitution and smuggling over Somalia’s porous
borders. Khat – a regional plant popular for its narcotic properties – has been a favoured
investment, particularly in neighbouring Kenya, where the drug is traded with little
government control.
This illegal activity has led to increases in prices and revenue losses throughout the region.
Its effects have also spilled into surrounding areas, reducing maritime activity and tourism,
and forcing the closure of money transfer services. Barclays Bank, for instance, has
threatened to withdraw its services, including closing its accounts with Dahabshiil, one of
the biggest remittance companies in Somalia.
The future of anti-piracy measures continues to depend upon diverting illegal maritime
activity into legal, profitable land- and sea-based actions. This does not necessarily translate
into state-building endeavours, but rather taking action to limit corruption, as well as
restricting incentives for pirates and their patrons. As the IBRD/World Bank report shows,
piracy continues to impose a cost on both the regional and international economies.
Unopposed, it will remain a danger to stability and, perhaps even more significantly, extend
into other forms of criminal activity.
Kaelin Lutz Research Assistant Indian Ocean Research Programme
*****
1 ‘Pirate Trails: Tracking the Illicit Financial Flows from Pirate Activities Off the Horn of Africa’,
International Bank for Reconstruction and Development/World Bank: Washington DC, 2013.
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Indonesian Wage Protests Continue Ahead of Government
Income Announcements
Wage protests have continued in Indonesia, with tens of thousands of workers striking
across the country. But, with the economy looking more uncertain, local governments are
unlikely to heed protesters’ demands when they announce income levels in the coming
weeks.
Background
Indonesia’s wage wars have continued, with tens of thousands of workers going on strike to
demand an increase in the minimum wage. The two-day national strike, which included
public demonstrations and protests, started on 31 October and reportedly covered some 22
provinces around the country. It comes barely a week after some 7,000 workers took to the
streets of Jakarta, demanding increased wages and improved social welfare. But the strike
failed to garner much popular support and, with Indonesia’s economy in a more uncertain
position, local governments are unlikely to grant major wage increases when they announce
minimum levels later this month.
Comment
The protesters, backed by several large labour groups, were demanding a 50 per cent
increase in the minimum wage. Currently, Indonesia’s poorest workers earn US$210 per
month, or around US$2,500 per year. But, increased inflation and a rise in the cost of living
have left many workers struggling to get by. They claim that the government has failed to
accurately determine the index of living, leaving many Indonesians behind, despite
impressive economic growth in the past few years.
The strike failed to attract popular support, however, hampering the protesters’ efforts to
put pressure on government officials. Unions had predicted that up to three million people
would join the walkout, yet police said only around 100,000 people took part in the strikes.
Such numbers pale in comparison to the protests that took place November last year, and it
is unlikely that similar wage increases will be seen this time around.
Having agreed to large increases in the past, Indonesia’s government fears that further
increases could drive away foreign investment and squeeze the country out of global
markets. In particular, officials are worried that the cost of rising wages and work stoppages
could dent employers’ profits, prompting many firms to move their operations to nearby
countries, such as Vietnam and the Philippines, where minimum salaries are lower.
As Yose Rizal Damuri, Head of the Economics Department at the Centre for Strategic and
International Studies, said: ‘if they increase wages by 50 per cent, it would increase the cost
by around ten to 12 per cent, which is quite high, compared to the inflation we have at the
moment’. He went on to say that ‘the government [has] already learned from … last year’s
experience, where the high increase in the minimum wage [resulted in] a lot of problems
with the business sector’. So, although negotiations between labour groups and local
governments are still ongoing, a significant increase to the minimum wage is unlikely.
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Given that Indonesia’s economy continues to waver, that might be a good thing. Last week,
the Wall Street Journal announced that Indonesia’s finance minister, Chatib Basri, had
reduced his growth projection for the country. Mr Basri said that Indonesia’s economic
outlook had worsened, with the economy now expected to grow 5.8 per cent in 2013, down
from an earlier October forecast of six per cent. That is still impressive, of course, but the
South-East Asian giant will need to continue to attract foreign investment if such levels are
to be maintained.
Few Indonesian workers are likely to be happy when local governments announce income
levels later this month. But, given the previous increases and the country’s shaky economy,
they can ill afford to raise minimum wages once again. This time, it seems, people power
cannot win the day in Indonesia.
Andrew Manners Research Analyst Indian Ocean Research Programme [email protected]
*****
Burma/Myanmar: Food Security Latest Concern in Rakhine
State
While Burma/Myanmar is regarded as a food secure state, experts are becoming
concerned by rising levels of chronic food insecurity in its central regions, including conflict-
ridden Rakhine State.
Background
Burma/Myanmar is widely considered as food-secure; capable of producing sufficient food
to meet the basic needs of its population. A report conducted by the UN and the Myanmar
Government in 2007, found that only ten per cent of households were below the national
poverty level; however, recent studies have revealed that the number of people suffering
from poverty is increasing. The cumulative impact of changing weather patterns, poor
government planning and rising food costs, has raised concerns among experts about long-
term food security in Myanmar.
Comment
The ability of Myanmar to maintain general food security has been supported by its
agricultural sector. Rice is the country’s largest and most profitable export, contributing
more than 40 per cent of annual GDP. Experts estimate that more than 70 per cent of the
population is either directly or indirectly involved in rice production, which covers more than
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60 per cent of Myanmar’s cultivated land area. Myanmar’s favourable climatic conditions
and fertile soils have historically enabled farmers to overcome poor technology and low
government investment to produce surplus crops.
In spite of its overall national food self-sufficiency, recent studies have revealed that food
insecurity in Myanmar has increased since 2007. A report released by USAID, estimated that
more than 20 per cent of Myanmar’s population has fallen below the poverty line. Food
insecurity is most acute in central areas, including conflict-ridden Rakhine state, which is
experiencing ongoing violence and instability as a result of ethnic and religious conflicts. The
disruptions have produced a large number of internally displaced persons, whose access to
water and food is insecure. In addition to the vulnerability caused by the political situation,
Rakhine is also a poor and remote state with poor infrastructure, which has lower rainfall
and less arable soil than the southern and northern parts of Myanmar. Since 2009, the
percentage of households classified as being “very food insecure” in Rakhine increased from
38 to 45 per cent.
In addition to the disruption caused by the conflict situation, many farms in Rakhine are too
small to allow farmers to produce enough food to meet their subsistence needs. The
government’s unequal land distribution schemes have left many farmers without enough
land to produce surplus crops. The schemes have had a detrimental impact on farmers in
central Myanmar, who require larger areas of land to counter the effects of lower levels of
rainfall and soil fertility. A series of prolonged droughts has forced many farmers to abandon
their land. The USAID report revealed that many farmers are forced to pursue marginal
economic activities, like wood cutting and casual labour, to support their families. Rising
food prices have made it increasingly difficult for these low income families to obtain
adequate food supplies.
Despite possessing enormous potential, Myanmar’s agricultural sector is being constrained
by a range of governmental and environmental factors, which are jeopardising the long-term
food security of millions of people. The government must improve its support of farmers, to
ensure that they can overcome these barriers. The fact that the Myanmar Government only
invests 20 per cent as much in agricultural research as neighbouring countries like Vietnam
shows the significant improvement that could be made. Increased government investment
and support will be crucial in ensuring that Myanmar’s long-term food security is protected.
Lincoln Meeking Research Assistant Global Food and Water Crises Research Programme
*****
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Any opinions or views expressed in this paper are those of the individual authors, unless stated to be those of Future Directions International. Published by Future Directions International Pty Ltd. 80 Birdwood Parade, Dalkeith, WA 6009 Tel: +61 8 9389 9831 Fax: +61 8 9389 8803 E-mail: [email protected] Web: www.futuredirections.org.au
What’s Next?
Operation Southern Katipo, the biggest international military drill held in New Zealand, runs until 29 November around the South Island city of Timaru. The three-week long exercise began on 4 November and brings together maritime, land and air assets from the defence forces of the United States, United Kingdom, Australia, Canada, France, Malaysia, Papua New Guinea, Singapore, Tonga and New Zealand.
The African Union is hosting a high-level conference titled “A Business Plan for Africa: From Vision to Execution” at its headquarters in Addis Ababa from 6-8 November.
The annual Bali Democracy Forum will be hosted by Indonesian President Susilo Bambang Yudhoyono from 7-8 November. Australian Foreign Minister Julie Bishop will speak on the topic “Building and Strengthening Democratic Institutions”.
The next round of P5+1 negotiations on Iran’s nuclear programme will take place in Geneva on 7-8 November.
A second round of voting to elect a new government is scheduled to take place in the Maldives on 9 November.
The third plenary session of the 18th Communist Party of China Central Committee will be held in Beijing from 9-12 November. On the agenda will be financial reform and the formulation of a longer-term growth strategy.
The foreign ministers of India, Russia and China will meet in New Delhi on the sidelines of the Asia-Europe Meeting on 10 November.
The Commonwealth Heads of Government Meeting will be held in the Sri Lankan capital, Colombo, from 10-17 November.