Elusive
ASEAN consensus model shapes regional policies, global cocoa price spike due to dwindling output in west Africa, two-state solution and establishing an independent State of Palestine.
UPDATE: By adhering to ASEAN’s consensus-based model, its member states - big and small - can have equal participation and influence in shaping regional policies. Recent years have witnessed intensifying U.S.-China competition and tensions in both the political and economic spheres, particularly in areas related to technology, global supply chains, infrastructure connectivity, trade and finance. Southeast Asia has become the center of this strategic rivalry.
The global price of cocoa is spiking, a direct response to dwindling cocoa output in west Africa. In September, cocoa futures reached a 44-year price peak due to mounting concerns over reduced supplies from the region. The price surge could prove to be a critical moment for cocoa farming and policy in west Africa.
China on Sunday reiterated that the fundamental way out of the Palestine-Israel conflicts lies in implementing the two-state solution and establishing an independent State of Palestine, after the latest conflict triggered by Hamas militants killed hundreds. China has called on relevant parties to remain calm, exercise restraint and avoid further escalation.
Laos-ASEAN members can leverage U.S.-China competition
By Ambassador Mai Sayavongs
By adhering to ASEAN’s consensus-based model, its member states - big and small - can have equal participation and influence in shaping regional policies. Recent years have witnessed intensifying U.S.-China competition and tensions in both the political and economic spheres, particularly in areas related to technology, global supply chains, infrastructure connectivity, trade and finance. Southeast Asia has become the center of this strategic rivalry.
In the region, the Association of Southeast Asia Nations (ASEAN) has positioned itself as the “central” actor in shaping the regional order and positively engaging with external powers. However, ASEAN’s centrality is increasingly challenged by these two major powers, who have deep and complex ties with Southeast Asia. While this competition poses challenges for ASEAN, there are also opportunities for countries like Laos and others in Southeast Asia to leverage in this tense geopolitical moment.
On the other hand, China has long played an integral role in Southeast Asia’s economic development through the Belt and Road Initiative (BRI), its initiative to promote economic development and inter-regional connectivity. Moreover, China has been engaging in diplomatic efforts to strengthen its ties with regional countries, including through the establishment of the Mekong-Lancang Cooperation, the Asian Infrastructure Investment Bank, the Shanghai Cooperation Organization, the Regional Comprehensive Economic Partnership and BRICS.
Countries like Laos have a tricky balancing act to play in navigating this major competition. But U.S.-China competition and decoupling — what U.S. officials are now calling “derisking” — also provides opportunities for Laos and ASEAN as a whole.
Laos Amid Major Power Competition
Laos is a small, land-locked nation, situated among some of the world’s fastest-growing economies. For that reason, Laos has sought to maintain good relations with neighbors and beyond to ensure stability and development cooperation. Its foreign policy emphasizes cooperation over conflict. At the same time, Laos has political and economic aspirations that hinge on ensuring cooperation with regional and global powers.
The U.S.-China rivalry has inevitably created geopolitical tension in the region, which has implications for Laos and ASEAN, which Laos will assume the chair of in 2024. Therefore, Laos needs to carefully navigate this complex geopolitical landscape to safeguard its interests and maintain economic and political stability.
Opportunities and Challenges for ASEAN
ASEAN’s economic ties to the United States and China have been important for the bloc. The two countries are ASEAN’s largest trading partners, and their economic growth has been instrumental in driving the economic development of ASEAN members. U.S.-China economic decoupling in recent years, however, disrupted the two powers’ significant trade relations, which has been one factor leading to a comparative slowdown in the Chinese economy. This also has had a ripple effect on ASEAN countries.
Particularly in recent years, ASEAN nations have increased their reliance on China for trade. In 2022, China represented nearly 20% of exports to ASEAN and received 27.2% of the blocs' imports. This indicates the close trading ties between ASEAN and China, the heart of the global industrial chain. A large portion of ASEAN's exports to China eventually make their way into U.S.-China trade after being further processed or assembled. Therefore, a decrease in U.S.-China bilateral trade eventually cascaded back to Southeast Asia through regional supply chains.
While there may be losers in the major powers’ economic standoff, a growing number of ASEAN member states could benefit from the bilateral turmoil. Perhaps the most notable example is how Southeast Asia countries have benefited by hosting new businesses looking to move their manufacturing operations out of China. Multinational corporations are gradually shifting their manufacturing to some Southeast Asia nations, particularly in countries where there are competitive advantages such as low labor costs, investment-friendly regulations, human resource and infrastructure capacity.
However, both the United States and China are increasingly employing re-shoring initiatives, like the U.S. “Buy American” and China’s “Made in China 2050” policies. The "Buy American" initiative stipulates minimum domestic content standards for government purchases, while China's new industrial policies encourage the use of domestic rather than imported inputs in the manufacturing supply chain. This will significantly harm ASEAN exporters of parts and components. In addition, the two countries are trying to reduce their technological interdependence and develop their own independent technology ecosystems.
Still, these trends will bring some benefits to ASEAN, likely increasing investment and growth opportunities as U.S. companies seek to diversify their supply chains away from China. This could also lead to a potential for increased technology transfer from the United States or China as technology companies seek to expand their operations in ASEAN countries.
But, some ASEAN countries such as Cambodia, Laos and Myanmar may struggle to keep up with the pace of technological development in the United States and China, which could lead to a wider technological gap between ASEAN and the two superpowers. This means that countries such as Vietnam with more potential will be able to reap extra benefits from the technology decoupling, while countries lacking tech capacity are more likely to lose out on this.
The Way Forward
As noted above, there are distinct prospects and challenges for ASEAN in the context of U.S.-China competition. Here are some ways ASEAN can respond to these ongoing challenges:
It is essential for ASEAN to adhere to its fundamental principles, especially ASEAN centrality and independence. This is because ASEAN's commitment to non-interference and consensus-based decision-making ensures that ASEAN member states have equal participation and influence in shaping regional policies.
More importantly, ASEAN needs to adopt a balanced and pragmatic approach to navigate the complex and dynamic situation, while leveraging our own strengths and opportunities. This can be done through dialogues and forums where member states engage in discussions and collaborate on security, economic and socio-cultural matters. This collective approach strengthens Southeast Asian nations' agency by giving them a unified voice in regional and international affairs.
Furthermore, ASEAN can engage in constructive dialogue with the United States and China, as well as regional powers like Japan, South Korea, India, Australia and the European Union, to balance competing strategic interests and assert its members’ agency, avoiding overreliance on any single external power.
ASEAN should promote economic integration through initiatives like the ASEAN Economic Community, which will create a single market and production base, enhance competitiveness, attract foreign direct investment and foster economic growth. Member states will negotiate trade agreements collectively to shape regional economic policies. At the same time, ASEAN should also enhance cooperation on innovation capacity, digital connectivity and resilience especially for developing economies within ASEAN such as Cambodia, Laos and Myanmar to be able to fully participate in the global supply chains. By doing so, ASEAN will be able to maintain its relevance in the Indo-Pacific region and beyond.
Last but not least, ASEAN countries should ensure they are not forced to pick sides, balancing relationships and deepening partnerships with the aim of achieving win-win cooperation.
Read more here.
High Cocoa prices: Can West Africa enrich farmers?
By Michael E Odijie (amended)
The global price of cocoa is spiking, a direct response to dwindling cocoa output in west Africa. In September, cocoa futures reached a 44-year price peak due to mounting concerns over reduced supplies from the region. The price surge could prove to be a critical moment for cocoa farming and policy in west Africa.
The cocoa-producing belt of west Africa is responsible for generating over 80%of the total global output. Between them, Ghana and Côte d'Ivoire contribute more than 60% to the global output. Ghana is the second-biggest producer in the world and cocoa is a vital component of the country’s economy.
The global price spike has led west African governments to increase the guaranteed producer prices to farmers. Ghana recently raised the state-guaranteed cocoa price paid to farmers by two thirds. The announcement means that Ghana’s cocoa farmers will be paid 20,943 cedis (US$1,837) per tonne for the upcoming 2023-2024 season, up from 12,800 cedis.
Cameroon, the world’s fourth-largest cocoa producer, raised the price cocoa farmers get to 1,500 CFA francs (US$2.50) per kilogram, a 25% jump from the previous rate of 1,200 CFA francs. This increase is even more significant than Ghana’s when factoring in Cameroon’s single-digit inflation. Additionally, the Cote d'Ivoire government has announced a rise in the producer price.
The recent shortages can be harnessed to strengthen the position of cocoa producers. This will enable them to address the structural challenges ingrained in the cocoa production value chain. Rising production costs have not been recognised in the value of cocoa beans. Farmers therefore haven’t been able to earn enough income and this has led to unsustainable farming practices.
In my view, west African countries should use the cocoa shortage as negotiating leverage against multinational corporations to address these structural issues. Both Ghana and Côte d'Ivoire must recognise this pivotal moment. They must take the lead, and frame the current production challenges as deep-seated structural problems requiring solutions, rather than as short-term issues.
What’s driving the change?
Ghana’s cocoa regulator recently indicated that its farmers might not be able to meet some cocoa contract obligations for another season. Ghana’s projected cocoa yield for the 2022/23 planting season was the lowest in 13 years, falling 24% short of the initial estimates of 850,000 metric tonnes.
This trend has been repeated across the region, with production falling in Côte d'Ivoire and Cameroon.
Reduced output means demand can’t be met and global prices rise.
The reduction in cocoa output is attributed to short-term and long-term factors.
Commentators typically emphasise the short-term factors:
poor weather conditions
black pod disease, which causes cocoa pods to rot
the decline in the number of cocoa farmers, some of them selling their land to illegal miners
a shortage of fertilisers and pesticides, especially since the conflict in Ukraine has curtailed Russia’s export of potash and other fertilisers.
A number of long-term structural issues have beset cocoa farming in west Africa for decades. They shouldn’t be overshadowed by concerns with short-term problems.
The first is the declining availability of forest land and its connection to increasing production costs.
Over the last two decades, depletion of forest land has led farmers to turn to grasslands for replanting cocoa plants. This requires extensive land preparation, regular weeding around the cocoa trees, pruning, and the application of fertilisers and pesticides. What’s more, the plants are highly susceptible to disease. All these things result in increased labour costs.
None of these additional burdens have been incorporated into the pricing for sustainable cocoa production. In light of the new cost structure, cocoa beans have been undervalued for decades. Farmers have become poorer and are exploring alternative sources of livelihood.
The cost of sustainably cultivating cocoa in grasslands must be reflected in the price that farmers receive. Relying solely on market forces will not achieve this. For instance, every year, typically in September, the Ghana Cocoa Board announces the official producer price for cocoa beans for the upcoming cocoa season on behalf of the government. This official price is based on the anticipated export market price, with an understanding in Ghana that farmers should receive approximately 70% of it. However, the resulting market price, and consequently the producer price derived from it, often falls short of covering the costs of sustainable cocoa cultivation.
A path forward
What would it cost for cocoa farmers to cultivate cocoa beans sustainably, and ensure a living income, without contributing to deforestation or resorting to child labour?
If the market price falls below this cost (which isn’t static), then the farmers face exploitation, giving rise to many of the problems that plague the industry.
A few years ago, Ghana and Côte d'Ivoire pioneered the introduction of the “living income differential” – a premium that cocoa buyers would pay on top of the market price to ensure that farmers earned a sustainable income from their produce. Despite its noble intent, the initiative faltered. It was not well thought through. And it came at a time when these countries had diminished bargaining clout in a saturated market. Now is a favourable moment.
The crisis in the sector puts cocoa producers in a stronger negotiating position.
Ghana and Côte d'Ivoire could collaborate with other regional countries, such as Nigeria and Cameroon, to negotiate a better position for their cocoa farmers, ensuring sustainable cultivation. There are many strategies these countries can explore, including supply management (such as buffer stocks, export controls, or quotas), price premiums and value addition.
Read more here.
Reconciliation elusive while Palestine-Israel conflict unsolved
By Zhao Yusha (amended)
China on Sunday reiterated that the fundamental way out of the Palestine-Israel conflicts lies in implementing the two-state solution and establishing an independent State of Palestine, after the latest conflict triggered by Hamas militants killed hundreds. China has called on relevant parties to remain calm, exercise restraint and avoid further escalation.
So far, 908 wounded people have been taken to Israeli hospitals, the Israeli health ministry said. Separately, at least 40 people have died in Israel, officials said earlier, according to media. In Gaza, nearly 200 are dead and more than 1,600 are injured, Palestinian health ministry said.
Chinese observers said the surprise attack, triggered largely by Hamas' intention to disrupt US-backed Saudi Arabia-Israel normalization, will shadow the recent "wave of reconciliation" in the Middle East, and serve as a harsh reminder that the reconciliation will be short-lived with the Palestine-Israel conflict remaining unsolved. They also believe the conflict will exert a heavy blow to Washington's Middle East policies, including disrupting the new US-backed India-Middle East trade route, a plan aimed at challenging China.
Hamas militants fired thousands of rockets and sent dozens of fighters into Israeli towns near the Gaza Strip in an unprecedented surprise early morning attack during a major Jewish holiday on Saturday. The death toll in Israel following a surprise attack by the militant group Hamas stands at 600, according to several Israeli media outlets. Palestinian officials say more than 300 people have been killed in Gaza, without differentiating between fighters and civilians, AP reported.
Israel's security cabinet has officially declared a state of war, according to the government press office Sunday. Israeli Prime Minister Benjamin Netanyahu vowed on Saturday "mighty vengeance" against Hamas militants' surprise attack. Netanyahu said, "We are embarking on a long and difficult war that was forced on us by a murderous Hamas attack.''
China is deeply concerned over the current escalation of tensions and violence between Palestine and Israel. We call on relevant parties to remain calm, exercise restraint and immediately end the hostilities to protect civilians and avoid further deterioration of the situation, a spokesperson of China's Ministry of Foreign Affairs said in a statement on Sunday.
The recurrence of the conflict shows once again that the protracted standstill of the peace process cannot go on. The fundamental way out of the conflict lies in implementing the two-state solution and establishing an independent State of Palestine. The international community needs to act with greater urgency, step up input into the Palestine question, facilitate the early resumption of peace talks between Palestine and Israel, and find a way to bring about enduring peace, the spokesperson remarked.
China will continue to work relentlessly with the international community towards that end, the spokesperson said.
Both the Chinese embassy in Israel and Chinese office to Palestine issued a warning to Chinese nationals in those places to pay close attention to the evolving situation and strengthen safety measures.
"The civil defense siren keeps going on all the time; the streets are filled with gun-holding soldiers; warplanes hovering above … You can hear people crying in the airport," a Chinese national who was stranded in Ben Gurion International Airport, near Israeli city of Tel Aviv, who requested anonymity, told the Global Times on Sunday.
Major airlines such as American Airlines, Air France, Lufthansa, Emirates, Ryanair and Aegean Airlines cancelled dozens of flights to Tel Aviv this weekend after the attack.
A Chinese student who is studying in Rehovot [an Israeli city roughly 66 kilometers from Gaza Strip], who preferred to be called Zack, told the Global Times that he could not only hear bombings, but also saw bright spots in the night sky as the Israeli antimissile system Iron Dome was intercepting flying rockets. However, his daily life remains undisrupted.
As of Sunday, Israeli soldiers were still battling to retake control of territory in the country's south from Hamas. Israeli strikes also leveled buildings in the densely populated Gaza Strip, foreign media reported.
Wen Shaobiao, an expert from the Shanghai International Studies University, said the conflict will further escalate in the following days, as Israel has already conducted war mobilization. Netanyahu's administration has always been tough on Palestinian-Israeli conflict, he said, noting Netanyahu will face severe political crisis if he makes no strong response to this attack.
Yet Wen believes the conflict will die down within a few weeks under mediation from major regional and international powers, such as Egypt and the US.
Fighting between Israeli forces and the Palestinian militant group Hamas raged on October 8, with hundreds killed on both sides after a surprise attack on Israel prompted Prime Minister Benjamin Netanyahu to warn they were "embarking on a long and difficult war."
This attack is deemed as the most serious attack against Israel in a generation. Hamas has named the attack "Al-Aqsa Flood," which it said is a response to the desecration of the Al-Aqsa Mosque and increased settler violence.
One deeper reason for this attack is to disrupt the negotiation of Israel-Saudi normalization, which is primarily facilitated by Washington, Li Shaoxian, director of the China-Arab Research Institute at Ningxia University, told the Global Times.
Hamas fears that if Saudi Arabia normalizes ties with Israel, other Arabic countries may follow suits, which will be destructive for Palestine, said experts, noting that all forces in Palestine have been opposing Arabic countries normalizing relations with Israel, and asking solving Palestine-Israel conflicts as precondition for Arabic countries to smooth ties with Israel.
Several Chinese experts believe the surprise attack may not only disrupt the negotiation of Israel-Saudi normalization process, but also likely reduce the freshly established mutual trust between Saudi Arabia and Iran, who resumed diplomatic ties under China's mediation.
After the conflict, the governments of Saudi Arabia, Qatar and Iran appeared to blame Israel for escalating conflict with Hamas on Saturday. "The Kingdom of Saudi Arabia is closely following the developments of the unprecedented situation between a number of Palestinian factions and the Israeli occupation forces, which has resulted in a high level of violence on several fronts there," Saudi Arabia's foreign ministry said in a statement.
US President Joe Biden offered Israel on Saturday "all appropriate means of support" after the attack, and warned "any party hostile to Israel" not to seek advantage.
A senior official of Hamas on Saturday criticized the biased position of the US toward Israel. Saleh al-Arouri, deputy chief of Hamas, said in a press statement that "the hypocritical position of the US is known to the world, and we do not count on it."
Experts said this conflict will severely set back the US policies on the Middle East. The latest example being Biden's plan of building a large-scale transportation network with India, Saudi Arabia and the United Arab Emirates.
If Saudi Arabia and Israel were to normalize relations, the rail system could include Israel, extending the project's reach into Europe via Israeli sea ports, according to Axios.
China has grasped the essence of solving Palestinian-Israeli conflict, as mirrored by foreign ministry spokesperson's remarks on Sunday, said Liu Zhongmin, a professor at the Middle East Studies Institute of Shanghai International Studies University, noting that implementing the two-State solution and establishing an independent State of Palestine is to put Palestine-Israel conflict on the table, and then move to promote reconciliation between Israel and the Arabic world. "A wave of reconciliation in the Middle East won't last long with the Palestine-Israel conflict remaining unsolved," said Liu.
"The US has been making plans for solving Palestine-Israel conflict without involving Palestine; and then it forces such plan on Palestine,'' Liu said, adding that the current US plan of pushing more Arabic countries to reconcile with Israel has pushed Palestine to the corner, and Hamas' attack is its last ditch efforts.
Experts also said China's impartial stance in mediating contradictions between Middle Eastern countries has been widely recognized by the international society, and has achieved substantial results, with resumption of Saudi Arabia-Iran diplomatic ties a case in point. China's success in brokering Saudi Arabia-Iran talks may serve as exemplary role in solving Palestine-Israel conflicts, although the latter is a result of more complicated conflicts, said experts.
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