From the Editor’s Desk...6 February 2013 | Vol. 4, 2. From the Editor’s Desk Dear FDI...

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6 February 2013 | Vol. 4, 2. From the Editor’s Desk Dear FDI supporters, Welcome to the Strategic Weekly Analysis. This week we begin by looking to India and examining some key cross- border issues for New Delhi; first, with China over the potential damming or diversion of the Yarlung Tsangpo (or Brahmaputra) River and then with Pakistan over the longstanding issue of Kashmir. Moving a little further east, we explore the continuing Sino-Japanese tensions over the disputed Diaoyu/Senkaku Islands. We then consider efforts by the United Kingdom to focus the attention of the G-8 group on the issue of world hunger. In Africa, we investigate the prospects for a resolution of the political crisis in Madagascar and the impact of the conflict in northern Mali on the region’s precarious food and water security situation. This week’s issue concludes with an analysis of the warming relationship between Argentina and Iran. Upcoming Strategic Analysis Papers include two more papers from our “National Involvement in the Indian Ocean Region” series, looking at Indonesia and South Africa. I trust that you will enjoy this edition of the Strategic Weekly Analysis. Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International ***** China’s Plans for Yarlung Tsangpo River Cause India Concern Chinese infrastructure plans to dam or divert the Yarlung Tsangpo (Brahmaputra) River, are raising water security concerns in New Delhi. Background Reports that China plans to build more dams across the Brahmaputra River in Tibet, have caused concern in India. This arises from the fact that the Brahmaputra constitutes a major

Transcript of From the Editor’s Desk...6 February 2013 | Vol. 4, 2. From the Editor’s Desk Dear FDI...

Page 1: From the Editor’s Desk...6 February 2013 | Vol. 4, 2. From the Editor’s Desk Dear FDI supporters, Welcome to the Strategic Weekly Analysis.This week we begin by looking to India

6 February 2013 | Vol. 4, № 2.

From the Editor’s Desk

Dear FDI supporters,

Welcome to the Strategic Weekly

Analysis. This week we begin by looking to

India and examining some key cross-

border issues for New Delhi; first, with

China over the potential damming or

diversion of the Yarlung Tsangpo (or

Brahmaputra) River and then with

Pakistan over the longstanding issue of

Kashmir. Moving a little further east, we

explore the continuing Sino-Japanese

tensions over the disputed

Diaoyu/Senkaku Islands.

We then consider efforts by the United

Kingdom to focus the attention of the G-8

group on the issue of world hunger. In

Africa, we investigate the prospects for a

resolution of the political crisis in

Madagascar and the impact of the conflict

in northern Mali on the region’s

precarious food and water security

situation. This week’s issue concludes

with an analysis of the warming

relationship between Argentina and Iran.

Upcoming Strategic Analysis Papers

include two more papers from our

“National Involvement in the Indian

Ocean Region” series, looking at Indonesia

and South Africa.

I trust that you will enjoy this edition of the Strategic Weekly Analysis. Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International

*****

China’s Plans for Yarlung Tsangpo River Cause India Concern

Chinese infrastructure plans to dam or divert the Yarlung Tsangpo (Brahmaputra) River,

are raising water security concerns in New Delhi.

Background

Reports that China plans to build more dams across the Brahmaputra River in Tibet, have

caused concern in India. This arises from the fact that the Brahmaputra constitutes a major

Page 2: From the Editor’s Desk...6 February 2013 | Vol. 4, 2. From the Editor’s Desk Dear FDI supporters, Welcome to the Strategic Weekly Analysis.This week we begin by looking to India

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Indian river system and any reduction in the flow will have a major ecological and

agricultural impact on India.

Comment

Several major Indian river systems, including the Indus and Brahmaputra, originate in Tibet.

The Brahmaputra is the world’s fourth-largest river measured by discharge, averaging

twenty thousand cubic metres per second at its mouth. India is very dependent upon the

Brahmaputra. Its mean annual run-off volume is approximately 165,400 cubic kilometres per

annum, out of a total of 347,000 cubic kilometres of all Tibetan flows into India. Any

interference with this flow of water, therefore, will have a major impact on India and, even

more, on Bangladesh, which relies on India for approximately 91 per cent of its water.

Reduced flow, though, is one thing: an even greater impact would be felt if the Brahmaputra

was diverted altogether.

The idea of diverting the Brahmaputra was first mentioned outside China at the first

international conference of the Global Infrastructure Fund in Anchorage, Alaska, in 1986. At

the time, though, engineering challenges and the controversial nature of the project

prevented the plan from progressing beyond a proposal being discussed by China. In 2005,

however, the publication of a book, Tibet’s Waters will Save China by Li Ling, brought this

issue to the fore again. Prior to this, the People’s Daily in 2003 reported the launch of a

feasibility study on diverting the Brahmaputra, adding that, in Tibet alone, the river ‘boasts

hydropower reserves of about 100,000 megawatts, or one sixth of China’s total, ranking

second only to the Yangtze River.’1 Detailed planning in 2006 brought the announcement

that the project would involve the use of nuclear explosives to blast a tunnel fifteen

kilometres long through the Himalayas to “partially” re-route the river northwards.

Interestingly, this planning coincided with China’s renewal of its claim to India’s eastern

state of Arunachal Pradesh. China has long claimed this territory, which it calls South Tibet.

Its demarcation of Tibet as a “core interest” on a par with Taiwan, demands that it claim

Arunachal Pradesh as its territory. Arunachal Pradesh’s water resources, however, with

hydro-power reserves estimated at 57,000 megawatts,2 could be playing a part in its claims.

The Government of India previously announced that China planned to build three dams

across the Yarlung Tsangpo. These were to be built at Dagu, Jiacha and Jiexu. Jana Jagriti, an

NGO, has published photographs, however, that allege to show China is building twenty six

dams across the Yarlung Tsangpo. Jana Jagriti claims these dams will provide hydro-electric

power and also act as storage dams to divert water into China from the river’s natural

course. According to that organisation, China does not dispute these claims.3 India’s External

Affairs Minister, Salman Kurshid, has reportedly stated that his Ministry is awaiting a report

to determine whether the dams are “run-of-the-river” dams, or water storage facilities.

1 ‘China to conduct feasibility study on Hydropower Project in Tibet’, People’s Daily, 17 July 2003.

2 Government of Arunachal Pradesh, Arunachal State Industrial Policy 2008, Department of Industries:

Itanagar, India, 2008, p.1. 3 http://www.hydroworld.com/news/2013/02/01/china-building-26-dams-on-brahmaputra-ngo.html

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The Minister need only look to recent history to make a determination. China has dammed

several rivers on the Tibetan plateau to cater to its hydro-power demands, as well as for

irrigation. Increasingly, it is building new dams, which are also increasing in size. The

damming of trans-national rivers upstream leads invariably to unpredictable flows further

down. This may be seen in the current situation with the Mekong River; huge water-based

projects in Chinese territory have led to increased tensions with Thailand and Vietnam.

Future and on-going projects, however, do not constitute all of India’s concerns. In 2000, a

breach in an upstream dam led to wide-spread flooding in parts of Arunachal Pradesh. The

Brahmaputra rose by up to thirty metres, causing severe damage and leaving a reported

forty people dead or missing and a further thirty-five thousand displaced. Compounding the

issue, China provided no warning to New Delhi and even suppressed the news in its

domestic media. Repeated flash floods in 2000, 2001 and 2005, fuelled further concerns in

India about China’s ability to manage its water projects.

In summary, China’s burgeoning economy places high demands on water resources, forcing

it to obtain these from Tibet, long viewed as China’s “water tower”. The damming of rivers

in Tibet, however, has caused much concern in downstream countries, such as India and

Bangladesh; much as China’s previous projects on the Mekong River in China caused a good

deal of angst in Vietnam, Thailand and other countries downstream. This aside, China’s

ability to manage its river projects appears wanting. As the Three Gorges project shows, lack

of planning and/or poor execution can cause unforeseen environmental consequences. It

appears that India and Bangladesh have good cause to worry.

Lindsay Hughes Research Analyst Indian Ocean Research Programme [email protected]

*****

India and Pakistan Resume Trade in Kashmir, Regional

Tensions Remain

India and Pakistan have agreed to resume trade in Kashmir, following violence early last

month; but, with the Kashmir issue still unresolved and concerns mounting with China over

water resources, tensions in the region remain high.

Background

India and Pakistan have resumed cross-border trade in Kashmir, after ties were suspended

for almost three weeks following military tensions. While the agreement was welcomed by

both sides, the incident highlights the challenges still facing the traditional rivals as they seek

to normalise relations. Moreover, as these two states remain at loggerheads over Kashmir,

there are growing concerns that tensions between India and China may be rising, with

Beijing unveiling an ambitious hydropower plan involving the region’s rivers.

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Comment

Cross-border trade and people-to-people contact has been restored after being suspended

for 20 days following violence, which began on 6 January and left five soldiers dead. The US

reportedly played a major role in resolving the conflict, through its ambassadors in New

Delhi and Islamabad. In any case, the skirmish marked the worst crisis in relations since the

2008 Mumbai attacks, which India still blames on Pakistani-backed militants. Furthermore,

while a feared escalation of violence was averted, the divergence on the issue of Kashmir is

as wide as ever and continues to halt efforts to normalise relations.

Kashmir has been a constant flashpoint between India and Pakistan. Three of the four wars

between them have been over the disputed territory. Since late 2003, however, the region

has seen almost no violence as a result of a ceasefire which, until now, both sides had

adhered to.

The recent episode therefore demonstrates just how wide the division is between the two

states over Kashmir. In fact, both sides have refused to budge since agreeing to the Line of

Control in the Simla Agreement of 1972, although the rise of extremist militants, many of

whom are backed by Pakistan, has complicated the conflict. Although leaders on both sides

have at times shown a willingness to end the intractable conflict, any solution currently

appears well out of reach. Indian officials have said that they cannot move forward on

anything beyond trade until Pakistan takes steps to address the rise of extremism and agrees

to hold those behind the Mumbai attack responsible. Pakistan, meanwhile, has offered few

hints at what it wants to do about groups such as Lashkar-e-Taiba, which have orchestrated

terrorist attacks, including in the one in Mumbai, but offer a hedge against Indian power in

Kashmir and Afghanistan. Until this issue is resolved, little is likely to change in Kashmir.

There are also major political roadblocks to address before any progress can be made.

Officially, India would like to formalise the status quo and make it the accepted international

boundary. Pakistani and Kashmiri activists reject this notion, as they both want greater

control over the region. In addition, they claim that formalising the status quo fails to take

into account the aspirations of those Kashmiris who have been fighting for independence

since 1989.

The Kashmir issue will not be resolved anytime soon and, along with the problem of

terrorism, will remain a major hurdle to normalising relations. Yet the greater danger lies in

its potential to spark further conflict. The next time this kind of violence erupts, tensions

may not be resolved so easily; the threat of another full-scale war is certainly not

implausible. With both sides now possessing nuclear weapons, the stakes are greater than

ever. Pakistan-India relations are therefore as tenuous as ever, despite recent trade and visa

deals creating closer economic ties.

Meanwhile, as noted in the article above, New Delhi is also looking east towards China,

apprehensive of Beijing’s most recent hydropower plan involving the region’s rivers. India is

particularly concerned that China may try to divert the upstream waters of the Yarlung

Tsangpo (Brahmaputra) River to farmers in its central and eastern regions, leaving less water

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for the plains of Assam in India. Much of India’s agricultural production occurs on the Assam

plains and the region is vital to India’s economic interests.

Clashes over the region’s rivers in South Asia are not limited to India and China, but also

involve disputed territories in Kashmir and Bangladesh. Increasingly, it looks as though

growing water shortages and dire relations among many South Asian states will precipitate

further clashes. As Bangladeshi security expert, Major-General Muniruzzaman ominously

warns, ‘if there were a localised conflict in South Asia, it will be over water.’

Andrew Manners Research Analyst Indian Ocean Research Programme

*****

Tensions Continue between Japan and China over Disputed

Islands

The possibility of conflict remains, although the catastrophic damage it would do to both

economies makes it unlikely.

Background

A tiny uninhabited island chain in the East China Sea, known as Diaoyu in China and Senkaku

in Japan, is claimed by both countries. Tensions were heightened in September 2012 over

the sale of three of the islands by a Japanese citizen to the Japanese Government. Japan

currently administers the islands and claims sovereignty due to previous US administration

of them. China contends that the island chain has been a part of its territory since ancient

times.

Comment

There have been numerous visits to the islands in the past year by maritime vessels and

aircraft from both countries. Japan has scrambled fighter jets to the islands a number of

times, with the latest reported incident on 10 January. On 16 January, Japanese Defence

Minister Itsunori Onodera implied that Japan would consider the use of tracer bullets as a

warning to Chinese aircraft in the area. Chinese Foreign Ministry spokesman Hong Lei said in

response that China was on high alert.

While officially maintaining neutrality on the subject of who owns the islands, on 18 January

US Secretary of State Hillary Clinton did make made a statement supporting Japanese

administration of the island chain, which prompted a strong rebuke from Beijing.

China received an envoy from Japan on 22 January for four days of talks, in a sign that both

parties wish to ease tensions.

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It is certain that neither party wants to go to war, considering the damage that would be

sustained by both sides, but the danger is that a mistake or further escalation could trigger a

conflict. Why are both countries then behaving in such a way? The new Chinese leadership

does not want to be seen as weak, especially in its early days. Likewise, Prime Minister

Shinzo Abe does not want to appear weak to the Japanese voting public.

There are four possible outcomes to this standoff. The first is that the two countries resolve

their differences and come to an agreement to jointly exploit the area’s resources. This is a

possibility if the language about who controls the islands is sufficiently ambiguous, so that

no one loses face domestically. The second possibility is that the two countries go to

international arbitration. Given what this issue means to the legitimacy of the respective

leaders, it is unlikely that either country would agree to this because of the possibility of

losing its claim. The third possibility is resolution through armed conflict, which, if big

enough, would drag in the United States and potentially be economically devastating. This

fact keeps the possibility of armed conflict low, although in a period of high tension a

mistake could cause an escalation. The final possibility is maintenance of the status quo;

continued rounds of talking past one another, continued talks that lead nowhere and

continued tense standoffs. For the short term, the latter is the most likely.

John Boulter Research Analyst

*****

British G8 Presidency Boosts New Global Hunger Coalition

Following the success of the 2005 “Make Poverty History” campaign, Britain’s

presidency of the G8 has prompted a follow-up campaign aimed at targeting global food

security.

Background

The “Enough Food for Everyone IF” campaign has highlighted global food security on the

public agenda. With the countdown to the G8 summit in Enniskillen this June already

underway, the UK chapter of the campaign, made up of over 100 development charities,

backed by the likes of the Bill and Melinda Gates Foundation, Desmond Tutu and

organisations such as Oxfam, is hoping to drum up a similar level of support to the massively

successful 2005 “Make Poverty History” campaign.

Comment

In light of the recent food price crisis in 2008, organisers this time around are pushing for a

more land-based agenda, focussed on the underlying causes of global hunger, such as “land

grabs”, providing support for small scale farms and increasing funding for nutrition

programmes. Tax and development practices are also to be reviewed, as the OECD estimates

that developing countries lose three times more through tax avoidance than they receive in

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aid each year. British Prime Minister David Cameron has already promised to put various

food security and agricultural investment practices at the forefront of the agenda in June.

The objectives of the new campaign are, to a large extent, supported by the recently

released New Vision for Agriculture report from the World Economic Forum. The report

recognises that 500 million smallholders account for 97 per cent of global agricultural

production, support two billion people and feed over 70 per cent of the global population. It

then highlights the importance of including these smallholders in Public Private Partnerships

and the need to embrace the “Step Up to Scale Up” catchphrase, to bring these practices to

regional and national levels.

The emerging campaign has its critics. In contrast to the 2005 campaign, which was almost

universally well-received, the focus on small-scale farming practices has drawn criticism

from many who advocate the need for in the establishment of more of the larger-scale

commercial farms to tackle the continuing global food crisis. They highlight the responsibility

of the current smallholder intensive practices for a raft of problems, ranging from rapidly

degrading arable land in developing nations producing insufficient agricultural yields and

failing to meet local demand for staple crops, through to the use of inefficient farming

methods that lead to the continued increases in food prices in nations where affordability,

rather than availability, is the prevailing issue.

Tom Davy Manager Global Food and Water Security Research Programme [email protected]

*****

Potential Madagascar Settlement on the Horizon

Confirmation from Madagascar’s two political rivals that neither will contest this year’s

presidential election, offers a window of opportunity to end the uncertainty that has

gripped the country since 2009.

Background

The recent news that Madagascan leader Andry Rajoelina will not stand in the presidential

election scheduled for 8 May 2013, could herald the best chance of a breakthrough in the

ongoing political crisis that has unsettled investors and kept the country’s living standards

among the world’s lowest.

Comment

The 16 January announcement from 38-year old President Rajoelina (officially, President of

the High Transitional Authority; the Haute Autorité de Transition, or HAT) that he would not

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contest the presidential election planned for May, has led to renewed optimism that the

island’s long-running political crisis – now entering its fourth year – may be moving closer to

a solution.

President Rajoelina’s announcement followed the earlier declaration by former president

Marc Ravalomanana, currently exiled in South Africa, that he would not be standing. The

undertaking of both Rajoelina and Ravalomanana not to stand, meets the so-called “neither

… nor” solution aspired to by the Southern African Development Community (SADC). The

SADC has been grappling with the Madagascar situation since Mr Rajoelina, a former disc

jockey and mayor of the capital, Antananarivo, wrested power from Mr Ravalomanana in

March 2009, with the support of the military, after leading anti-government demonstrations

from January of that year.

Madagascar has effectively been in a state of paralysis since then, although Mr Rajoelina did

put a stop to some of his predecessor’s more unpopular initiatives, such as the high-profile

contract to lease almost half of the country’s total arable land to South Korean

conglomerate Daewoo for 99 years, for the production of palm oil and other such

commodities. The elections that Mr Rajoelina had indicated would be held in 2010, however,

did not eventuate.

Looking ahead, the real challenge will be to complete the presidential and legislative

elections over the intended May-July timeframe, with as little unrest as possible and an

orderly transition of power. In the meantime, Mr Rajoelina will be actively campaigning for

his Young Malagasies Determined party and is likely to remain an active figure in the party,

regardless of the election outcomes. But, by announcing that he will step aside, Mr Rajoelina

has created a window of opportunity to end the uncertainty.

While the electoral period may well see some civil unrest, if the final result is increased

stability, it will be the best outcome for Madagascans and foreign investors alike. The island

has large reserves of ilmenite, used in the production of titanium oxide, for such products as

paints, food colourings and sunscreens. Rio Tinto is present in Madagascar, where the

company operates a mineral sands mine near Fort Dauphin, in the south-east of the island.

In January 2013, the operation, run by subsidiary QIT Madagascar Minerals, was the scene of

a violent confrontation, when angry locals blockaded the site, trapping almost 200 staff

inside. The protesters were dissatisfied with the amounts paid by the company for their

land, despite the matter being dismissed by the courts.

The protesters’ other demand, that the company employ more locals, may be difficult to

meet, given the poor educational levels in Madagascar. Free and fair elections, however,

could provide the increased stability and rule of law that would attract foreign investment

and could contribute to more employment opportunities and better educational budgets.

Leighton G. Luke Manager Indian Ocean Research Programme [email protected]

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*****

Conflict Worsens Food and Water Security in Northern Mali

Despite recent military successes in the northern Mali conflict, humanitarian issues still

affect the newly government-controlled regions.

Background

Humanitarian efforts in region of Gao have been suspended due to the ongoing conflict

between French-supported Malian forces and Islamic insurgents in the north of the Saharan

country. This has resulted in a deterioration of the already precarious food security

situation. Although the tide seems to be turning in favour of the government, it still has to

address the worsening humanitarian crisis in the region.

Comment

Thirteen million people in the Sahel region are facing a major food crisis after lower than

average cereal harvests last season, some as low as 50 per cent. In Mali, as a result of the

conflict against the Tuareg National Movement for the Liberation of Azawad (MNLA) last

year and the recent locust swarms that affected the entire West African region, the

agricultural sector was already under huge pressure to meet demand: in Gao, over 15 per

cent of children are acutely malnourished.

With access to local and cross-border supply routes effectively disabled, food prices have

risen by over 20 per cent since January 2013 and by more than 70 per cent over the last five

years. With the price of rice and other staple crops rising and availability decreasing, locals

are becoming increasingly concerned that their dwindling cash supplies will be unable to

cope with the inflation of food prices.

The Australian Government has recently pledged to contribute $10 million to the

peacekeeping operation. Half of this is earmarked for humanitarian assistance, such as

medical, food and water supplies for Internally Displaced Persons, especially for children

affected by the conflict. Most other major western nations have also pledged similar

donations, with France providing the bulk of military assistance until the 8,000 troop strong

African Union force is fully deployed.

Tom Davy Manager Global Food and Water Security Research Programme [email protected]

*****

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A Latin Reprieve for Tehran? Argentina Deepens Relationship

with Iran

The Argentine Government appears to be moving towards a closer relationship with Iran,

at the expense of its relations with Israel and the West, after the announcement of a joint

commission with Iran to investigate the 1994 AMIA bombing in Buenos Aires.

Background

On 18 July 1994, the Asociación Mutual Israelita Argentina (AMIA) building in Buenos Aires

was attacked with a car bomb, killing 85 and injuring more than 300. The attack has long

been considered by authorities, including Interpol, the US Federal Bureau of Investigation

and former Argentine President the late Nestor Kirchner, to have been conducted by

Hezbollah (which reportedly has a presence in the Argentina-Brazil-Paraguay tri-border area)

and Iran. Despite that, current President Cristina Fernández de Kirchner – the widow of Mr

Kirchner – has reopened the case, inviting Iranian authorities to collaboratively investigate

the incident. Mrs Kirchner’s actions appear to indicate a growing relationship between

Argentina and Iran.

Comment

Argentina’s economic ties with Israel have been on the decline since 2007 and political ties

since 2010. This has been reinforced by President Cristina Fernández de Kirchner, who has

symbolically separated Argentina from Israel, citing limited economic opportunities and

political differences.

On 27 January 2013, Argentina’s foreign ministry announced the establishment of a joint

“truth commission” with Iran, to investigate the 1994 AMIA bombing, stemming from a

statement by Mrs Kirchner in October 2012. Israel condemned the announcement, with

Argentina’s ambassador being summoned by Israel’s Ministry of Foreign Affairs to clarify the

situation. The timing is significant for Argentina, as its economy faces high inflation, resulting

from Mrs Kirchner’s economic policies.

Argentinean ties with Iran have improved in recent years, in line with a growing isolation

from the international economy, as the country alienated itself from international capital

markets, thus restricting its access to foreign exchange. Additionally, Argentina has

experienced a period of monetary inflation, raising the prices of food and goods, increasing

unemployment and raising investment barriers. Iran is experiencing a similar situation,

facilitating dialogue between the two states. Bilateral trade stands at US$1.47 billion, having

increased significantly since 2009. Principal goods exported by Argentina to Iran include

agricultural fodder, vegetable oils and cereals. Argentina imports mainly chemicals, but also

plastics, tea and spices from Iran.

The decision to establish a joint commission with Iran is likely to create further animosity

between Argentina and Israel; building on the legacy of Nestor Kirchner, who led Argentina

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to promote Palestinian sovereignty, despite Israeli criticisms. Mrs Kirchner’s move to

co-operate with Iran may be the final nail in the coffin of Argentina’s relationship with Israel.

Argentina’s interest in Iran is unlikely to help Tehran to bypass international sanctions

against its energy sector, as it is largely self-sufficient in crude oil extraction. That may

change in the future, however, as the rate of Argentinean oil production has been in decline

since 1998, even as domestic energy demand has grown. The possibility of keenly-priced

Iranian crude may become increasingly attractive to a government presiding over an

underperforming economy.

Given that, the key Iranian objective in gaining a closer relationship with Argentina is that it

will facilitate a welcome source of income, by allowing Iranian goods to reach a wider

market. Many countries have become much more cautious in their trade relations with Iran,

but Mrs Kirchner has less to worry about due to Argentina’s relatively independent – if not

necessarily healthy – economy. Stephen Johnson from the Centre for Strategic and

International Studies in the United States, highlighted Iran’s objectives as being, ‘to spread

its global influence, overcome isolation from the international community, and keep the

United States off balance in a location ... that it cannot ignore.’4

Argentina’s evolving relationship with Iran and the decision to investigate the AMIA attack is

unlikely to mature into a military partnership, however. Argentina’s foremost partners are

regionally-based and, though fractious at times, share general cultural and geopolitical

similarities. Argentina’s main partner, and apparent regional rival, is Brazil. Other important

partners include Chile, Spain, Uruguay and Venezuela. Argentina enjoys a trade surplus with

nearly all its major trading partners, including a US$1.4 billion surplus with Iran.

By prioritising Iran over Israel, Argentina is making a strategic choice to put economic

incentives ahead of political ones. Politically, because of Argentina’s relative international

isolation, only limited diplomatic repercussions are expected. Mrs Kirchner’s foreign policy

resembles realpolitik doctrine, choosing relationships that create domestic advantages,

rather than choosing moralistic or value- based policies.5

Despite everything, Mrs Kirchner could be on a slippery slope at the moment. By engaging

more closely with Iran, she is entrenching Argentina’s relative isolation, partly to reduce

vulnerability to international markets, despite the probability of also reducing economic

growth and increasing inflation, as the economy continues to be stifled by political

mismanagement.

With elections not scheduled until 2015, and Mrs Kirchner talking about removing

presidential term limits, it will be interesting to see how far Argentina and Iran will court

each other.

4 Johnson, S., 2012, ‘Iran’s Influence in the Americas’, Centre for Strategic & International Studies.

<http://csis.org/files/publication/120312__Johnson_Iran'sInfluence_web.pdf>. 5 Haslam, J., 2002, ‘No Virtue Like Necessity: Realist Thought in International Relations since

Machiavelli’, Yale University Press: London.

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Gustavo Mendiolaza Research Analyst Indian Ocean Research Programme

*****

Any opinions or views expressed in this paper are those of the individual author, 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?

• The Organisation of Islamic Co-operation is meeting in Cairo until 7 February. Iranian President Mahmoud Ahmadinejad is among the leaders attending. He is the first Iranian president to visit Egypt since the 1979 Islamic revolution.

• US President Barack Obama will deliver his fourth State of the Union Address to a

joint session of the Congress in Washington DC, on 12 February. • The Second International Conference on Water Resources and Environmental

Management (ICWRE 2013) will be held in Marrakesh, Morocco from 12-14 February.

• The International Atomic Energy Agency and Iran are scheduled to hold talks over Tehran’s nuclear programme in Vienna on 13 February.

• Japan will co-host the “Conference on Co-operation among East Asian Countries for Palestinian Development” with the Palestinian Authority in Tokyo on 13-14 February, as a part of efforts towards achieving peace in the Middle East by sharing East Asian countries’ experience in economic development.

• South African President Jacob Zuma will deliver his annual State of the Nation

Address to a Joint Sitting of Parliament in Cape Town on 14 February.