Japan’s new model of capitalism in an uncertain world

15 February 2022

Author: Shujiro Urata, Waseda University

The year 2021 began with hope that the successful development of a new vaccine would relieve the world from the COVID-19 pandemic. But while vaccines were rapidly deployed in Europe and the United States, the Japanese government’s slow approval process delayed its rollout.

Under former prime minister Yoshihide Suga, the vaccine rollout was eventually accelerated after administrative and logistical hiccups were resolved, contributing to a decline in the number of infections. A state of emergency continued until 30 September as Suga needed to keep cases low to host the Olympics and to increase his chances of being re-elected as leader of the Liberal Democratic Party (LDP) in the late-September election.

Suga hosted the Olympics in the face of general public opposition. The number of infections skyrocketed during the event, resulting in a rapid decline in Suga’s approval rating and forcing him to cede his leadership of the LDP. Fumio Kishida replaced Suga as prime minister and won the general election in October owing to the support of key conservative party members, weak opposition parties and a sharp decline in COVID-19 cases.

Japan’s economic performance was stagnant throughout 2021. According to IMF projections, Japan registered a 2.4 per cent GDP growth rate for the year — an improvement from -4.6 per cent in 2020 — mainly due to inactive consumption from continued uncertainty surrounding COVID-19. A shortage of semiconductors resulting from the pandemic disrupted production of automobiles and electronics among other products, causing a slowdown in economic activity.

The economic consequences of COVID-19 are characterised by a K-shaped pattern reflecting two divergent trends — upward and downward. An increase in demand was found in the technology sector, especially for products such as office machines, while a decrease in demand was found mainly in service sectors such as tourism. Another K-shape consequence was observed for the rich and the poor. The wealthy saw the value of their financial assets rise, while the poor suffered from declining wages and unemployment, resulting in widening inequality.

Looking forward to 2022, Kishida must achieve economic recovery and sustainable growth in an increasingly uncertain environment caused by the new Omicron variant of the virus, climate change and US–China rivalry, among other factors. In response to COVID-19, Kishida is ready to take necessary measures — including accelerating the rollout of vaccine booster shots, speeding up the approval of oral treatments and providing government support for people and companies negatively impacted by the pandemic.

Kishida has advocated a ‘new model of capitalism’ to promote economic growth and equitable distribution simultaneously. The model’s two components are to be achieved by generating a virtuous cycle of economic growth and increasing wages through the collaboration of public and private sectors.

The model’s first component for economic growth has four sub-components, innovation, digital economy, climate change and economic security. The government is to play an active role in each of these. For innovation, the government will support start-up companies and develop human resources in science and technologies. For digital economy, it will build digital infrastructure to provide various services throughout the country. For climate change, it will undertake investment and regulatory reform in the clean energy sector to achieve carbon neutrality by 2050.

Kishida is particularly keen on economic security. He realises the increasing risks of supply issues for strategically important materials and technologies due to heightened geopolitical tensions and possible natural and health disasters, including new infectious diseases. Following similar actions taken by the United States and other major countries, Kishida created the position of minister in charge of economic security in his new cabinet. He is also expected to pass the ‘Act for Promoting Economic Security’, which contains provisions to strengthen supply chains and build critical infrastructure. 

A major element of the model’s second component, which focusses on achieving equitable distribution, is increasing wages. For this reason, fiscal measures including tax breaks to companies, increasing wages and direct subsidies to selected groups of workers such as nurses are being considered. The impacts of these measures are likely to be small. A variety of government support for child-rearing — such as expanding capacity for nurseries and childcare centres and the provision of a housing allowance to families with children — are also included. Yet more drastic reform in the labour market must be undertaken to increase overall wages.

The possible economic consequences of Kishida’s new form of capitalism demand closer scrutinisation. This is particularly the case for economic security, as national security is often considered without factoring in economic consequences or costs. Kishida’s new model of capitalism will require large government expenditure, increasing Japan’s already substantial fiscal debt. Kishida needs to provide a blueprint for achieving fiscal sustainability, otherwise citizens will fail to increase spending, against his expectations.

Full implementation of Kishida’s policy hinges on many variables, including an LDP victory in the upper house election in July 2022. To win, Kishida must handle the pandemic successfully. While the IMF projects 3.2 per cent growth for the Japanese economy in 2022, this growth rate may be significantly lower if COVID-19 is not controlled. Only time will tell the success of Japan’s new capitalism.

Shujiro Urata is Professor Emeritus at Waseda University.

This article is part of an EAF special feature series on 2021 in review and the year ahead.

Kishida’s new capitalism raises more questions than it answers

7 February 2022

Author: Aurelia George Mulgan, UNSW Canberra

Japanese Prime Minister Fumio Kishida’s new economic program is gradually taking shape via a series of major policy announcements and record-breaking government spending initiatives. These include ‘an economic stimulus package that dwarfs anything announced by his predecessors’, the biggest supplementary budget in history amounting to 36 trillion yen (US$314 billion) for fiscal year 2021, a national budget plan allocating 107 trillion yen (US$933 billion) for fiscal year 2022 and a fiscal year 2022 tax reform plan.

The stated mission of the government is to deliver economic measures that will ‘overcome COVID-19 and pioneer a new era’ including ‘the realization of a new form of capitalism, the linchpin for reviving the Japanese economy’. For Kishida, ‘new capitalism’ represents a necessary economic model upgrade where ‘rather than leaving everything to markets and competition … public and private sector entities together play their roles’.

Promoted through public–private partnership, this ‘new form of capitalism’ is intended to lead to faster economic growth and higher wages. Kishida’s ‘new capitalism’ rejects neoliberalism predicated on market dominance, which he holds responsible for promoting greater inequality and poverty, as well as for exacerbating climate change.

Kishida wants to distribute the fruits of economic growth more directly to lower and middle-income groups through redistributive policies rather than rely on the ‘trickle-down’ economics that characterised the Abe administration. ‘New capitalism’ embodies an implicit rejection of Abenomics in terms of both national economic strategy and policy sloganeering. Politically, this is a deliberate challenge to Abe’s legacy and appears to be a popular move with majority support among the Japanese public. Whether this rejection extends beyond rhetoric is questionable, however, particularly in areas such as massive fiscal stimulus, quantitative easing and policies that deliver wage increases.

Questions arise about how the range of spending and incentive programs will create a ‘new form of capitalism’. The connection between new capitalism, the targets for government assistance, and other proactive measures, needs careful clarification. Promoting new industries is not necessarily synonymous with establishing a new form of capitalism. Although Kishida has made clear his dedication to implementing his policy agenda, ‘new capitalism’ is fast turning into a label of convenience for a range of disparate government measures and spending initiatives.

In Kishida’s New Year’s speech, he nominated specific elements — digitalisation, climate change, economic security, innovation, and science and technology — as ‘engines of growth’, reiterating the importance of tackling disparities, bringing about redistribution through wage increases initiated by companies, and greater investment in people. But the respective roles of these factors in establishing a ‘new form of capitalism’ still needs elaboration. Whether private corporations will fall into line with Kishida’s wishes also remains an open question.

Kishida’s economic program has been heavy on rhetoric but light on reform. The overarching goals set for his administration incorporate variants of the phrase ‘growth and distribution’, including ‘creating a virtuous cycle of economic growth and wealth distribution’.

In practice, Kishida quickly reversed the order of his ‘virtuous cycle of growth and distribution’ to ‘distribution to spur growth.’ Distribution has clearly become the top priority — sourced primarily from government coffers in the form of a ‘cash splash’ and baramaki (government handouts) — rather than the fruits of economic growth or reform.

Implementing Kishida’s ‘new capitalism’ has thus entailed all gain and no pain at the public’s expense. It has become a convenient label for a traditional LDP-style big spending policy — albeit, for spending targets that focus on large social and economic groupings, and on strategically and socially important industries, rather than on traditional LDP special interests.

During his campaign for the LDP presidency, Kishida very quickly backed off the main policy instrument that would have provided a source of cash to be redistributed to employees and to lower and middle-income groups — taxing investment income by raising the capital gains tax, thus making corporate profits a source of economic growth.

Nor is Kishida seeking funds from sources such as corporate tax hikes which, if combined with increased financial income taxes, would have amounted to substantial tax reform. He has also failed to implement the introduction of a carbon tax levied in proportion to companies’ greenhouse gas emissions in line with new capitalism’s major goal of transitioning Japan to a carbon-free society.

These policy backdowns have disappointed expectations given that economic reform was touted as the most urgent item on Prime Minister Kishida’s policy schedule. Yet being in pre-election mode means that Kishida is under pressure to come up with policies that deliver economic and financial benefits quickly and directly to Japanese voters. Economic reform has, so far, taken a back seat to Kishida’s spending, a commitment he can justify in terms of invigorating the Japanese economy suffering from COVID-19 fallout.

In pushing Japan’s fiscal debt beyond an unprecedented one quadrillion yen (US$10.5 trillion) in outstanding government bonds, Kishida has prioritised the political rationale for ‘big spending’ — promoting economic measures that maximise the benefits to as many voters as possible, ensuring the consolidation of his leadership and the LDP’s success in the July general election.

The ‘big spend’ is coming first because of the electoral timetable and the convenient rationale that the COVID-19 economy needs boosting. But if Kishida were serious about the necessary economic reforms to create his ‘virtuous cycle of growth and redistribution’, he would implement policies with far greater potential to boost economic growth such as adopting measures to raise real wages and productivity, and completing the structural reforms promised but not delivered by Abenomics.

Clearly Kishida’s ‘new capitalism’ remains a work in progress. Perhaps realising the ideals and objectives of his newly announced ‘grand design’ of ‘new capitalism’, and implementing his summer action plan for ‘new capitalism’, will provide the answers.

Aurelia George Mulgan is Professor at the School of Humanities and Social Sciences, the University of New South Wales, Canberra.

Indonesia’s gig economy falling short on

decent work standards

Author: Trevi Putri, Gadjah Mada University and Richard Heeks, University of Manchester

3 February 2022

Indonesia’s gig economy is dominated by two mega-platforms, Grab and Gojek. The gig economy contributes at least US$7 billion to Indonesia’s economy and employs at least four million workers. The sector has been plagued with controversy, beset with worker strikes and complaints about pay and conditions. These controversies are well-founded as labour standards have consistently fallen short of decent work standards.

In December 2021, the Fairwork project released a report evaluating nine of the most prominent platforms in the country. This included car-based taxi services, motorcycle-based taxi and delivery services, and courier services. The report scored each platform against the five global principles of Fairwork — fair pay, fair conditions, fair contracts, fair management and fair representation. Indonesia’s gig economy fell short across all metrics.

The Indonesian government has previously introduced guidelines for per-kilometre fare payments to meet minimum wage standards. Yet no platform studied was able to show evidence that fair pay for its workers was being provided. Once a worker’s logged hours and work-related costs were taken into consideration, many did not take home a minimum wage. Those who did earn more than the minimum wage often worked long hours — nearly 20 per cent of workers interviewed regularly worked more than 100 hours a week.

Indonesia’s gig workers constantly face risks from accidents, scams and COVID-19-related loss of income. Only a third of the platforms studied had sought to provide fair conditions by taking measures to protect their workers through accident insurance, emergency helplines, access to health insurance and COVID-19 sick pay.

Most of the platforms have clear and accessible terms and conditions for workers that contribute toward fair contracts. But the terms and conditions typically feature an unfair distribution of risks and liabilities, given that workers are less able than platforms to bear such burdens.

Only Grab and Gojek were awarded scores for fair management. These two platforms documented channels for communication with workers and initiatives seeking to address discrimination and inequities, including those relating to gender. This is particularly important given the challenges facing female gig workers in Indonesia — those interviewed were sometimes faced with male customers refusing to travel with them or sexually harassing them.

These problems are exacerbated by a lack of fair representation of workers across all platforms. Worker associations exist in Indonesia, but they are often locality-based and informal. They are not formally recognised in law or by the platforms, giving workers no legitimised way to express their collective concerns and to negotiate with platforms. Workers also reported being wary of joining protests or strikes due to fears of penalties. Without fair representation, the grievances expressed by workers cannot be fully addressed.

The ratings for 2021 reflect an urgent need to ensure fairness in Indonesia’s gig economy. Two main actions are needed to address the substandard working conditions.

The claim that gig workers are ‘independent contractors’ needs to end. Gig workers are dependent on platforms for their livelihoods, and their work is directed and monitored by the platform’s app. The government needs to change the law to recognise that gig workers are akin to employees, and to give them associated rights and protections. As part of this, gig worker associations must be given recognition in law as labour unions, allowing them to enter into formal negotiations with the platforms on behalf of workers to reduce the current power imbalance between platforms and their workers.

Consumers in Indonesia should be provided scores on how each platform is performing in terms of decent work standards. When selecting which platforms to use, consumers can then choose a higher-scoring platform where possible. This will help to incentivise proactive steps among the platforms to meet key metrics and exceed minimum labour standards in the gig economy. Large organisations are also encouraged to sign up to the Fairwork Pledge as a way to pressure platforms to improve.

Providing platforms with incentives to show leadership in raising work standards can affect meaningful change. Worker protests, dissatisfaction and unfair treatment are detrimental for brand image and reputation at a time when platforms are seeking to engage more with corporate social responsibility in order to attract consumers and investors.

Regulatory change and consumer pressure for improvements in gig work conditions are found in a growing number of countries around the world. With some initial signs of movement in Indonesia for legislation on gig work and the willingness of consumers to boycott brands that treat workers poorly, platforms would do well to get ahead of this wave so that they can shape, rather than be driven by, the coming changes.

Trevi Putri is a lecturer in the Department of International Relations and a researcher in the Center for Digital Society at Gadjah Mada University, Indonesia.

Richard Heeks is Professor of Digital Development in the Global Development Institute at the School of Environment, Education and Development, University of Manchester.

Thailand doubles down on authoritarianism

Author: Greg Raymond, ANU

4 February 2022

Thailand became less free and more authoritarian in 2021, as the democracy movement felt the heavy hand of Thailand’s illiberal constraints on basic civil liberties. COVID-19 also devastated the Thai economy and health system, presenting additional challenges in the new year.

In 2021, the Delta strain broke Thailand’s model of containment. This model — based on a sophisticated series of community level organisations managing close-contact cases, monitoring individuals in quarantine and manning check-points — earned praise from the WHO. But with nationwide vaccination rates at a paltry 5 per cent as a consequence of overconfidence and poor worst-case planning, the Delta variant surged, especially through poorer communities. The hospital system was overwhelmed and public distress and disorder began to emerge. Photos were posted on social media showing COVID-19 patients lying in a hospital parking lot next to biohazard dumpsters.

The loss of tourism, which accounts for 11–12 per cent of Thailand’s GDP, combined with public health measures combating COVID-19, meant Thailand’s economy shrank by 6.1 per cent in 2020. The World Bank’s growth outlook for Thailand was 1 per cent in 2021, and the economy is not expected to return to pre-pandemic levels until 2023.

Comparing tourism volumes before and after the pandemic illuminates the extent of Thailand’s economic crisis. In 2022, Thailand is predicted to welcome a total of 1.7 million tourists. Before the pandemic, Thailand received more tourists every two months from China alone.

Thailand has been able to offer more fiscal stimulus to the public than many of its neighbours, but still less than the average levels in the West (Thailand’s was less than 15% of GDP but France and Japan’s were each above 20%). Thailand lifted its debt ceiling from 60 per cent to 70 per cent of GDP to protect jobs as growth slowed. Across the country, some 100,000 restaurants vanished between January 2020 and June 2021. Even wet markets, a lifeblood for locals, closed periodically due to virus outbreaks.

In 2022, economic recovery will be slow, especially now that Omicron has delayed the restoration of tourism. In the long term, one of the worst impacts may be on the country’s youth. Bangkok closed its schools for four months in 2021, and as many as 15 per cent of students will not return, having dropped out of school entirely.

In 2020, Thai democracy activists took advantage of Thailand’s exemplary handling of the initial phases of the pandemic to express discontent with the Prayuth government, the monarchy and aspects of Thailand’s hierarchical culture. The strength, breadth and intensity of the protests shook the government and conservative establishment. In particular, unprecedented calls for monarchical reform were discussed widely in media and in parliament. A new generation of liberal-minded Thai youth, many astonishingly articulate and courageous, made their views heard.

In 2021, the conservative empire struck back. Thai authorities pursued 486 cases against 1,171 protestors. The reintroduction of lese majeste charges led to activist leaders being jailed or caught up in endless legal battles. The law allows for the prosecution of minors and up to 15 years jail time. Protests dwindled, barring the Bangkok suburb of Din Daeng, where alienated youth engaged in violent battles with police, and in the provinces, through car mob protests. But nothing as powerful as the protests of August to October re-emerged, and the space for discussion of monarchical reform dwindled.

With the Constitutional Court’s November ruling that even discussing the topic of monarchical reform was unconstitutional, the chill on public protest deepened. Meanwhile, the government moved ahead with plans to pass a bill that would force non-government and civil society organisations to register in order to continue. This law will foreclose on Thailand’s political space even further, especially if progressive think tanks like Ilaw and Prachathai are muzzled. Thai disillusionment with the political system has been expressed in a movement to emigrate. But while the Thai police and military remain loyal to the government, its hold on power is assured.

Other political developments included moves to reintroduce a two-ballot paper electoral system and some infighting in the government’s party, Phalang Pracharat. The former would advantage larger parties, such as Phalang Pracaharta and Pheu Thai, but disadvantage the Move Forward Party — the party most threatening to the conservative establishment. The latter could indicate tension between Prayuth Chan-ocha and erstwhile military colleagues, especially former Deputy Prime Minister Pravit Wongsuwan. This could mean that Prayuth’s continuance in power beyond the next election, expected in 2022, may not be assured, even if his party can overcome community anger at his government’s vaccination failure.

Gregory V Raymond is a Lecturer in the Strategic and Defence Studies Centre, The Australian National University.

https://www.eastasiaforum.org/

Mining fractures land and community in Mongolia

11 February 2022

Author: Ariell Ahearn, University of Oxford

With over 1000 licenses issued across the country, a diverse range of mineral extraction operations are transforming Mongolia’s rural cultural landscape. The Gobi region is crowded with both mega mines and smaller-scale operations. The Gobi also has excellent conditions for renewable energy and is poised to be a site for significant investment in this industry. Solar and wind farms are already starting to pop up in Omnogobi and Dornogovi provinces reflecting Mongolia’s commitment to reduce its reliance on coal power under the State Policy on Energy 2015-2030.

Yet in the face of these major investments and developments, discussions of traditional mobile pastoralist land tenure rights have been muted. While the Mongolian government has some legal provisions to protect the environment, such as the 2012 Law on Environmental Impact Assessment, it lacks robust policy on resettlement and social safeguarding and adequate protections against forced eviction.

To address this regulatory gap, the ESRC-GCRF funded (2018-2021) Gobi Framework project drafted national guidelines for the Social Impact Assessment as part of a Government of Mongolia Working Group initiative. The Working Group was established in 2020 to study and develop proposals on the impact of mining, including existing practices of resettlement and compensation.

Since the mid-1990s, the crisis of land tenure rights for mobile pastoralists has been quietly unfolding across the country. Rural pastureland is state property and industrial licensing processes — for both mineral extraction and renewable energy projects like wind and solar — override herders’ traditional rights to mobile land use. The territory of Dalanjargalan county in Dornogovi province is a case in point, with two-thirds of the territory taken for mining.

Climate change impacts the Mongolian drylands in complex ways. But herder vulnerabilities also stem from political and economic policies, which include a lack of government capacity, informalisation of the economy, legal complexity and a focus on urban-based service provision and free market policies, catering to settled and urbanised livelihoods.

The rapid scaling up of open-pit mining has fractured and physically destroyed pasturelands. Mining overburden, heavy truck traffic, dust, waste and herder concerns on the availability of safe potable water make rural areas increasingly risky for the well-being of livestock.

The transformative effects of open pit mining intersect with climate change impacts, putting pressure on the delicate and variable steppe and Gobi ecosystems. The industry is only loosely regulated, and enforcement is challenging. The vast majority of mines are limited only by national laws and regulations. They are not required to abide by international standards such as the International Finance Corporation Performance Standards, as their financing is from private sources.

While mining laws in Mongolia require an Environmental Impact Assessment process, they lack attention to social impacts and international standards for resettlement of traditional mobile pastoralist herders. As herders are not considered to be Indigenous by the Mongolian government, processes of free, prior and informed consent are not a legal requirement. A regular review of human rights in Mongolia by a UN Special Rapporteur in 2019 and by the UN Human Rights Council in 2020 identified concerns regarding the negative impacts from mining projects on the rights of herders.

International resettlement and livelihood restoration standards do not feature in the Mongolian Minerals Law. Article 41 of the law makes licence holders liable to compensate for damage they cause. But companies tend to define project-affected peoples as those who have a formally registered winter camp within a fixed distance from a piece of infrastructure or license area. In some cases, registered spring camps are also included. This excludes many herders who do not have formally registered winter camps but are still legitimate occupiers based on customary land use practices and commonly held beliefs.

This overly simplified mapping practice misrepresents the dynamic mobile livelihoods of herders as fixed points occupying a small plot of land. It also leaves out many herders who may use a designated license area seasonally. By not formally accounting for loss of pastureland or other natural resources, herder livelihoods are put at risk.

Our research in the Gobi Framework project revealed that the failure to acknowledge herders outside of the narrow lens of registered winter camp households is sowing the seeds of community conflict. Conflict is frequent between displaced and non-displaced herders, with displaced herders being shunned as ‘sell-outs’ and chased away by new host communities. In many cases, the households formally designated by companies as ‘project-affected people’ were rejected and ostracised by herders from the same district. Their ability to negotiate for pasture access in other areas is limited due to this social rejection.

For project-affected people, some mining companies provide monetary compensation while others provide in-kind goods for herders who lose their winter campsites located in license areas. Amounts of compensation vary widely and arrangements are often protected by nondisclosure agreements. In other cases, herders report being threatened with forced eviction by companies.

The land dispossession facing Mongolia’s traditional mobile pastoralists and the contribution of mining-induced displacement on processes of urbanisation should be given urgent attention in this era of climate change and its consequential risks to rural livelihoods.

Ariell Ahearn is a lecturer in human geography at the School of Geography and the Environment at the University of Oxford.

https://www.eastasiaforum.org/

India’s free pass on civil rights

14 February 2022

Author: Arun R Swamy, University of Guam

For India, 2021 was a year of trauma and portent. Alongside the continuing COVID-19 crisis — despite an ostensibly successful vaccination drive — the ruling Bharatiya Janata Party’s (BJP) anti-democratic tendencies intensified. A year-long protest by farmers eventually resulted in the government withdrawing a landmark bill to liberalise agricultural trade. State elections heralded the strength of regional parties. Yet despite domestic setbacks, India raised its profile regionally and globally.

India’s COVID-19 surge between March and June 2021 was exceptionally high and sharp. By the end of the year, the country had recorded nearly 40 million positive tests, totalling 3 per cent of the population and 500,000 deaths. Both numbers are likely gross underestimates given the lack of reporting and testing in rural areas. By mid-year, the economy was reeling and the crisis took a toll on Prime Minister Narendra Modi’s popularity. This led the government to lash out at critics — including ordering Twitter to shut down criticism of the government’s handling of COVID-19.

The attempt to censor criticism on Twitter illustrated the government’s most notable anti-democratic practice of pressuring social media companies to police criticism of the government. It asked Twitter to shut down hundreds of accounts critical of the government — including news organisations and supporters of the farmers’ protests — and investigated Twitter for labelling a BJP spokesman’s tweet misleading. Facebook dithered over-policing hate speech in India for fear of alienating the government and initially blocked a hashtag calling for Modi to resign, while WhatsApp took legal action to prevent the Indian government from tracing accounts.

The attacks on social media are an extension of years of effort by the Modi government to control information on the internet, resulting in a low and declining Freedom on the Net ranking. The attempts to intimidate and muzzle journalists also produced a low rank of 142 in the World Press Freedom Index. While elections remain free and fair, the decline of civil liberties and increasingly open attacks on religious minorities are eroding India’s democracy, with watchdog group Freedom House dropping India’s democracy status to ‘partially free’ for the first time.

These crackdowns are notable for their brazen disregard for international opinion, even at a time when India is becoming more assertive internationally. In Asia, the term Indo-Pacific is replacing the old ‘Asia Pacific’ as the Quadrilateral Security Dialogue — composed of the United States, Japan, Australia and India — more actively seeks common ground. And nothing in India’s recent democratic setbacks got in the way of Modi being given a prime speaking slot at US President Joe Biden’s Summit for Democracy.

Globally, Modi won plaudits at the COP26 climate summit in Glasgow for committing to a distant deadline for capping greenhouse emissions. At the same time, India’s decades-old security cooperation with Russia, most notably on weapons systems, received a major boost during Russian President Vladimir Putin’s high-profile visit despite US disapproval. This partnership has resulted in the first major sale, to the Philippines, of a jointly developed Indian–Russian missile system.

It seems that Modi, in his eighth year in office, has learned that democracy activists and editorialists count for little in the halls of diplomacy, and is making the most of India’s strategic location and flexibility.

In domestic politics, the jury is still out on the BJP. Elections in various states in May 2021 showed it is yet to penetrate much beyond its core regions in the north and west, but also demonstrated the continued weakness of the main opposition Indian National Congress. Many BJP-ruled states are scheduled to hold elections in early 2022, including the largest state in the country, Uttar Pradesh.

While opinion polls show the BJP ahead in Uttar Pradesh, other states show a tight contest — often between two or three opposition parties. There are also signs that the BJP’s position is eroding in Uttar Pradesh and a defeat there would provide a catalyst for opposition parties to come together for the national elections in 2024.

The BJP’s prospects of becoming the first party in over 50 years to win a third consecutive term will depend on the performance of the economy, which is still suffering from the effects of the pandemic. To this end, the government has undertaken a massive stimulus that has taken the fiscal deficit to 9.5 per cent of GDP but eschewed any direct relief for the poor. Various liberalisation measures should also be seen in this light, from the privatisation of Air India to the attempted agricultural liberalisation bills.

India’s stock market boomed over the last year with tech start-ups taking off led by mobile payment apps, but US automaker Ford exited the market, India’s 5G rollout was ‘bumpy’ and agricultural reforms were withdrawn. The poor are suffering the most in the COVID-19 recession.

Above all, 2021 was a year in which Modi and the BJP implemented their authoritarian vision of a resurgent Hindu India. Despite a setback at the hands of the farmers’ movements, domestic opposition is divided and international attention is focussed on India’s usefulness in emerging geopolitical alignments. There is little reason to think that the trajectory of Indian politics or foreign policy will change in 2022.

Arun R Swamy is Professor of Political Science at the University of Guam.

This article is part of an EAF special feature series on 2021 in review and the year ahead.

https://www.eastasiaforum.org/

Peeling back the onion on India’s farm

protests

24 February 2022

Author: Arun R Swamy, University of Guam

Late last year, Indian Prime Minister Narendra Modi announced the repeal of three laws intended to liberalise agricultural trade within the country. The announcement attracted worldwide attention, giving some indication of how enormous a political headache the laws had become.

For over a year, mass protests by farmers camped in and around New Delhi had been an international talking point. Concerns were often borne out by the government’s heavy-handed responses and accusations that the protestors were unpatriotic. That the protestors’ victory was framed as a win for democracy against an autocratic regime is not surprising.

But at its core, the protests were not about democracy. It was about the economic interests of some farmers in maintaining a set of policies dating back to the food shortages of the 1960s when the government promoted hybrid high-yield varieties of rice and wheat with a wide range of subsidies. Over time, the subsidies came to cover agricultural inputs — seeds, fertilisers, power and water — as well as the prices paid to farmers and by consumers. The policy led to a dramatic increase in food production, the so-called Green Revolution, but also brought problems in its wake.

Subsidies to farmers and consumers were closely linked. The purchase of grain by the Food Corporation of India for the Public Distribution System was redistributed to consumers at subsidised prices. While private traders were allowed to purchase grain, trade across state boundaries in grains and other ’essential commodities’ was restricted to prevent profiteering at the expense of food deficit states.

Prices paid to farmers by the government increased until they were well above market prices in many states and constituted a Minimum Support Price (MSP). Farmers preferred to sell their grain to the government and huge grain surpluses rapidly outstripped warehouse capacity.

By the 1980s, the combined cost of food and agricultural subsidies was a significant fiscal burden. Some questioned whether farmers were actually subsidised once trade policies were taken into account. Import restrictions on fertiliser and export restrictions on grain may have represented hidden taxes on farmers that ate up much of the value of the subsidies. But, economists on both left and right decried the size of the subsidies.

The regional, class and caste biases of the subsidies also attracted criticism. The coverage of the Public Distribution System was uneven. Some states expanded it to the countryside, while in others it remained a predominantly urban intervention benefiting the middle class. Farmers who benefited from agricultural subsidies tended to be concentrated in a few regions deemed suitable for high-yield variety seeds. They often came from owner-cultivator castes who formed the middle stratum in the countryside in many parts of the country.

Farming communities were both agents and beneficiaries of agricultural modernisation. Caste solidarity facilitated their political mobilisation. Subsistence farmers, farmers in drier areas growing other crops like onions and agricultural workers from lower castes benefited little from the policies, apart from the increase in food output.

The class bias critique can be exaggerated. While critics often refer to ’rich farmers’, even prosperous Indian farmers are small farmers by global standards and poor by Western ones. The economic challenges faced by farmers, especially in the states characterised by more commercial crops, are significant and farm indebtedness has been blamed for persistent suicides by farmers.

The caste and regional biases are central to understanding the politics of Indian farm prices. Farmers’ organisations have been active politically in many states since the 1970s. But, the proximity of wheat-growing Green Revolution areas to New Delhi and the supporting infrastructure provided by caste organisations gave them special clout in these regions. The Bharatiya Kisan Union, for example, mounts force in the capital whenever policies that threaten the subsidy regime are proposed.

In the 1990s, as India pursued economic liberalisation, dealing with agricultural subsidies became one of the residual issues that successive Indian governments failed to deal with. While food subsidies were reduced, the MSP for key agricultural commodities was expanded.

It was against this backdrop that Modi’s government passed three reform laws in September 2020. The laws allowed farmers to sell their grain anywhere, allowed long-term contracts between farmers and trading companies and removed many agricultural products from the essential commodities list. Farmers’ concerns have focused on the potential impact of these measures on farm prices. Farmers fear that the increased role of private contracts would lead to a gradual erosion of the MSP paid by the government.

While it is tempting to view the farmers’ protest as a blow for democracy against an authoritarian government, the economic pressures to reform the agrarian sector and the political obstacles to do so have been around for decades. The context of farm politics is essential to understand why the protest ensued, why it lasted so long and why farmers won.

Modi’s decision to withdraw the laws was undoubtedly motivated by political concerns, as was the decision of all opposition parties to oppose it. The need for change will not go away, but the Modi government’s characteristic preference for a frontal assault may yield to more incremental steps less likely to provoke another mass demonstration.

Arun R Swamy is a Professor of Political Science at the University of Guam.

https://www.eastasiaforum.org/

 

Australia’s Anglo-focussed COVID-19 news coverage

26 February 2022

Author: Ross Tapsell, ANU

Australian news coverage of the COVID-19 pandemic has been largely focussed on the United States and United Kingdom, not Asia and the Pacific.

Between 1 December 2020 and 28 February 2021, 53 per cent of COVID-19 foreign news coverage across selected Australian media outlets studied were of the United States and the United Kingdom. Australian mainstream media coverage of its neighbours in South Asia, Southeast Asia and the Pacific is low in comparison. Only 5 per cent mentioned Southeast Asia and 1.5 per cent mentioned South Asia.

The declining and reduced coverage of the Asia Pacific region is not recent, nor is it a direct consequence of the COVID-19 pandemic. The Australian mainstream media has for the past decade reduced the number of its reporters in the Asia Pacific and has steadily dismantled programs and positions that allowed for reasonable coverage of the region.

The decline in coverage of Australia’s region by the Australian Broadcasting Corporation (ABC) is of growing concern.

In 2014, the Australian government cut the Australian Network’s AU$223 million (US$160 million) funding over ten years. Sky News was given funds to broadcast the Australia Channel internationally, a 24 hour business channel which would showcase Australian industry and Australia as an investment destination. Graeme Dobell estimates that in 2010, the ABC spent AU$36 million (US$26 million) on international broadcast services. By 2018, the figure dropped to around AU$11 million (US$8 million). The subsequent restructuring of its international division made many journalists with years of experience covering the region redundant. In late 2019, ABC Chair Ita Buttrose called for more funding to ‘increase [the] ABC’s role in the Asia Pacific’.

The ABC’s Asia Pacific Focus program, which was broadcast nationally in Australia and the region, was axed in 2014. Amid ongoing cuts to its budget from the federal government, the ABC’s long-running program Foreign Correspondent has seen original episodes reduced, even though its stories would very often make the nightly news.

The ABC scaled back its foreign bureaus in 2014, including selling off its Southeast Asia office in Bangkok. As COVID-19 cases in India surged to record levels in 2021, the Australian mainstream media’s on-the-ground coverage of the devastation relied heavily on Delhi-based ABC correspondent James Oaten, who was ‘working around the clock’.

In the print media, the Sydney Morning Herald and The Age previously employed a specialist Southeast Asia correspondent as well as an Indonesia correspondent, before the roles were merged in 2018. Both now employ a ‘Southeast Asia’ and a ‘Northeast Asia’ correspondent, both based in Singapore. The Australian’s Jakarta correspondent is expected to cover all of Southeast Asia and South Asia. The Australian Financial Review relies on grant funding to maintain a Southeast Asia correspondent, having previously closed down the bureau in Jakarta.

The decline in the number of Australian journalists in Asia could be filled by a growing number of highly competent and English proficient Asian journalists, commentators and columnists. But research shows that Australian newspapers are rarely even using Reuters or Agence France-Presse stories from these countries, let alone allowing for more Asian writers in their news coverage. Conversely, it is more common to see interviews with US politicians and analysts on the ABC, as well as stories by US and UK writers in Australian newspapers. This suggests that the narrow coverage is more than just a resourcing issue.

For the Australian mainstream media and the COVID-19 pandemic, the United Kingdom and the United States are most likely considered ‘newsworthy’ because it captures an Anglo-Saxon audience or readership. The United Kingdom and the United States are part of the developed world and these countries being unable to handle a pandemic is seen as shocking and makes headlines.

The ABC 7.30 Report introduced a COVID-19 story in the United Kingdom in January 2021 as ‘ripping through the country on a scale difficult to comprehend’. Yet COVID-19 was ‘ripping through’ many other countries, notably Indonesia, South Africa, the Philippines and India. It was only ‘difficult to comprehend’ perhaps because the Western, developed world was expected to be able to handle a global pandemic better than countries in the developing world, including Southeast Asia. This skewed worldview may lead to editorial justification for more reports on the United Kingdom and the United States.

Seen through the prism of how media reports emphasise Australia’s place in the world, the findings show a largely Anglo Saxon-centric coverage. Consequently, lives in the developing world — even those on Australia’s ‘doorstep’ — are underrepresented.

The Australian mainstream media’s COVID-19 coverage reflects a broader issue in Australian society that continues to emphasise the stories of nations with Australia’s ‘colonial ties’ and the plight of white, English-speaking Australians in them.

The declining trend in media expertise on Asia and funding for Asian bureaus is indicative of a wider trend in Australian society in the 21st century previously noted by scholars of Asia–Australia relations. Australia does not systematically prioritise engagement with, or knowledge of, Asia and continues to see itself as overwhelmingly tied to the events, policies and fortunes of those in the United States and the United Kingdom.

Ross Tapsell is a Senior Lecturer at the College of Asia and the Pacific, The Australian National University.

https://www.eastasiaforum.org/