20 March 2013 | Vol. 4, № 8.

From the Editor’s Desk

Dear FDI supporters,

Welcome to the Strategic Weekly

Analysis. This week, we open with an

examination of the Indian military’s

moves into space, as New Delhi seeks to

match China’s space programme.

Still in South Asia, we report on the recent

AMAN-13 international naval exercise

hosted by Pakistan. Our conclusion is that,

while the exercise was a success, it has

done little to soothe tensions in regional

waters.

Next, we look at Iran and some of the –

often inventive – loopholes used to

sidestep the sanctions imposed in

response to the Islamic Republic’s nuclear

programme. We then analyse the latest

developments in Yemen, where a national

reconciliation dialogue begins as the

country faces continuing pressures.

Returning home, we report on a National

Drought Reform programme that has

been piloted in Western Australia.

Indications are that it could make a

leading contribution to drought

management across the region.

We conclude this week’s SWA by

examining the implications of Burmese

President Thein Sein’s recent landmark

visits to New Zealand and Australia.

Our next Strategic Analysis Paper, to be

released in the coming weeks, will be an

analysis of India’s Special Forces, by FDI

Visiting Fellow Balaji Chandramohan. His

paper will pay particular attention to the

structure of these units and their possible

future deployments.

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

*****

Page 2 of 13

India’s Slow Race to Military Space

Regardless of India’s denial that there is a space race with China, that country’s

militarisation of space is forcing India to review its space technology options. Political

indecisiveness, though, is holding it back.

Background

Recent reports have highlighted India’s enhanced budget spending on space technology;

emphasising its achievements and drawing comparisons with China’s space programme. This

has drawn the usual denials of a space race from Indian scientists and bureaucrats. Despite

these denials, the evidence suggests China’s militarisation of (inner) space is spurring India

on.

Comment

The recent 2013-14 Indian budget has increased spending for the country’s space

programme. The Indian Space Research Organisation’s budget has increased from US$590

million in 2004 to US$1.3 billion in this budget; reflecting its increased programme. The

ISRO, now widely perceived as one of the top six such organisations world-wide, took

twenty-seven years to accomplish its first fifty missions. The second fifty, however, took only

ten years, and the plan is to carry out the next fifty-eight in the next five years.

India’s Polar Satellite Launch Vehicle (PSLV) recently placed seven satellites in orbit. The

PSLV-XL is scheduled to send a “Mars Orbiter” to reconnoitre that planet in the not too

distant future. These missions come in the wake of India’s recent lunar mission and its plans

to conduct human space flights by 2020. This has attracted the inevitable comparisons with

China’s space programme. Equally inevitably, Indian scientists have denied that a space race

is in progress. These protestations notwithstanding, it is likely that China’s efforts to achieve

space-technology parity with the United States, and India’s urge to garner national and

regional prestige and consequent influence, are the factors driving India’s space efforts. This

aside, China’s growing relationship with Pakistan could see it transfer space technology to

India’s rival, just as it did with nuclear technology to counter India in that field.

At the end of the Cold War, China’s leaders recognised that the US’s military superiority was

the result of its technological prowess. Determined to bridge the gap, China made

“informationalisation” the cornerstone of its military endeavours. This encompassed the

C4ISR philosophy: command and control, communications, computers, intelligence,

surveillance and reconnaissance. Space, being integral to this philosophy, then took China’s

attention. It has developed (and controls) its own version of the Global Positioning Satellite

(GPS) system – called Beidou – as a more reliable alternative to the US system.

More importantly, however, China demonstrated that it possessed anti-satellite (ASAT)

capabilities when it shot down an old weather satellite in 2007. While in the immediate term

its objective was to check the reliability of its ASAT system, it was also demonstrating its

ability to take out American satellites in any future China-US conflict. Knocking out US

satellites would dramatically degrade the US Navy’s capabilities; for instance, if called on to

counter a Chinese invasion of Taiwan. China could then deny the East and South China Seas

Page 3 of 13

to the US Navy. Moreover, its own satellite system would allow the Chinese navy, the PLAN,

to project power far beyond its territory.

It was arguably that test, which spurred on India’s space efforts. It now has fairly well-

developed communications, navigation and remote sensing systems. India, however, as it so

often does, stumbles at the political hurdle when it comes to militarisation. Its political

leaders appear indecisive about emulating China’s militarisation of space. The situation

bears a direct resemblance to India’s political stand over military nuclearisation. Where

China has made space an integral part of its defence mechanism, India has created an

“Integrated Space Cell”. This is a relatively diminutive body, which is expected to co-ordinate

the space activities of various Indian organisations and, simultaneously, formulate near-term

space policy. This political indecisiveness – and refusal to heed calls from the Indian Air Force

to establish an Aerospace Command – negates the demonstrated capabilities of India’s

military leaders and scientists, who have demonstrated their abilities time and again.

Disregarding these capacities will cost India time and will necessitate the application of

greater effort and more resources at a later date to achieve parity with China – which is, in

all likelihood, its intention. Perhaps reports that China is ready to test its Dong Ning (DN-2)

ASAT missile – and any future international ban on such tests – will spur the Indian

government into giving this issue the attention it deserves.

Lindsay Hughes Research Analyst Indian Ocean Research Programme

lhughes@futuredirections.org.au

*****

Pakistan Hosts International Naval Exercise but Suspicions

Remain in Indian Ocean

Pakistan has hosted a joint naval exercise with over 30 countries, including the United

States, China, Australia and Britain. While the exercise was intended to promote peace

and stability in the region, recent developments have caused suspicions to linger in the

Indian Ocean region.

Background

Pakistan conducted a joint international naval exercise in the north Arabian Sea between 4

and 8 March. The AMAN-13 exercise was aimed at combating piracy and terrorism; the

protection of shipping lanes; and trade flows. It was attended by 33 countries, including the

US, Australia, Britain and China. While the exercise may be viewed as a sign of Pakistan’s

commitment to peace and stability, recent developments have done little to calm suspicions

over the increasingly assertive roles of Pakistan and China in the Indian Ocean.

Page 4 of 13

Comment

This exercise, the fourth in a biannual series that began in 2007, included a range of

exercises and information swapping sessions and was largely hailed as a success by most

observers. The four-day exercises brought together ships from 13 countries, including the US

China, Britain and Australia, as well as observers from 20 other countries. Speaking at the

opening ceremony, Pakistan fleet Commander, Rear Admiral Hasham bin Siddique, stated,

‘AMAN-13 will be instrumental in enhancing tactical and operational readiness amongst its

participating navies’.

With so many navies agreeing to take part, the exercise may well help boost the confidence

of those states involved and improve relations between them. It was also, as Pakistani

commentators pointed out, a rare occasion where the US and Chinese maritime forces

worked together, especially amid their growing rivalry in the Pacific Ocean. Unfortunately,

while the slogan for the AMAN-13 exercise was “Together for Peace”, recent events have

underlined the suspicions that remain in the Indian Ocean, especially as Pakistan is aiming to

establish itself as a more influential naval stakeholder in the region.

While Pakistan may have sought to portray the maritime exercises as promoting peace and

stability in the region, it is likely that its real objective was to boost its regional standing and

maritime profile. In recent times, Islamabad has gone to great lengths to improve its navy

and has built strong ties with China and Iran, alarming both India and the US.

Indeed, in early February, it was announced that China would finally take control of the

Gwadar port, effectively giving it direct access from the Pakistani coast to the Strait of

Hormuz, the Arabian Sea and the Gulf of Aden. Though China has denied any intention of

building a naval base there, the announcement and the growing co-operation between

Beijing and Islamabad has concerned India and the US. ‘It is a matter of concern for us,’ said

the Indian Defence Minister, A.K. Antony, when asked about Chinese control of the port.

Washington has also expressed fears that the port may be used as a listening post, to

monitor US military activities in the Persian Gulf.

Moreover, Tehran recently announced plans to set up a large oil refinery facility at Gwadar,

in Pakistan’s south-western Baluchistan province. The move coincides with Pakistan and Iran

finalising a gas pipeline deal, despite US concerns that the agreement would undermine

recent sanctions placed on Iran due to its nuclear programme.

Although Iran was notably absent from the AMAN-13 exercise, Pakistan’s navy has been

expanding its engagement with Iran in recent times. In October 2012, following the attack

on an arms depot in Port Khartoum, allegedly carried out by Israel, Iranian and Pakistani

ships showed up in Sudan. Then, in December 2012, alarm was raised when Israeli media

reported the presence of a Pakistani nuclear-armed naval ship in Port Sudan. According to

other reports, the vessel was to rendezvous with Iranian ships to conduct exercises in the

Red Sea, but was diverted under pressure from the US, Saudi Arabia and Israel.

Although Islamabad also conducted exercises with Saudi Arabia and Turkish maritime forces

in January this year, suspicions continue to linger over its future aims in the Indian Ocean.

Page 5 of 13

India, meanwhile, was predictably absent from the AMAN-13 exercises. Just days before

AMAN-13, New Delhi concluded its own naval exercise, TROPEX 13.

These developments highlight the mistrust and suspicions that remain in the Indian Ocean

region. As Abhijit Singh at the National Maritime Foundation in New Delhi wrote in

dismissing the recent AMAN exercise, ‘security can only be *built+ on firm foundations. As

long as political instability and mistrust exists in South Asia, there is only so much that tacit

diplomatic manoeuvres and military exercises in the Indian Ocean can help in achieving’.

Andrew Manners Research Analyst Indian Ocean Research Programme amanners@futuredirections.org.au

*****

Trade in your Washing Machine: Tehran’s Method for Evading

International Sanctions

An International Energy Agency report recently indicated that Iran’s oil and gas exports

have increased 13 per cent between January and February this year. As international

sanctions become more intense, countries are finding creative ways to evade the US-led

sanctions campaign.

Background

A fresh wave of US-led energy and financial sanctions has been applied against Iran,

effective from 6 February 2013. This third wave of sanctions closes loopholes previously

exploited by Iran’s key energy partners. Further, it presents a unique challenge to all

countries still importing oil and gas from Iran.

Comment

The report by the IEA serves to undermine US efforts to compel Iran to come to the

negotiating table. While the economic damage done to Iran has been severe over the past

two years, there are still many countries that have had to continue importing Iranian fuel, in

a world of limited resources. India, the second-largest importer of Iranian fuel, has arranged

meetings with OPEC advisors to find alternative sources of fuel. As reported in the Gulf

Times and elsewhere, the Indian Ministry of Petroleum and Natural Gas is currently in

closed-door discussions to secure other fuel suppliers, as India prepares to sever its oil trade

with Iran.

Until recently, India imported Iranian crude by trading wheat, rupees and Turkish lira with

Iranian banks. Pakistan has also profited from Iran’s circumstances by transporting rice

Page 6 of 13

across the Iranian border in exchange for energy. A gas pipeline project between Iran and

Pakistan, due for completion in 2015, is likely to further increase this trade. Both Pakistan

and India have benefited from heavily discounted prices for Iranian crude, as Tehran seeks

increased this trade despite diminishing profits. With the fresh wave of US sanctions though,

the current practices used by India and Pakistan may be challenged. Furthermore, US

pressure could be the catalyst that encourages New Delhi to seek viable alternatives to Iran.

China, as the largest importer of Iranian crude, has also felt the sting of sanctions and has

resorted to somewhat unorthodox measures to secure its vital energy imports. Authorities in

China have been trading Iranian crude for a mixture of yuan and Chinese white goods,

including washing machines. The trade has seen China increase its imports of Iranian crude,

importing 1.805 million tonnes of oil in January 2013. Iranian exports to China, though, are

significantly lower than the 2.98 and 3.36 million tonnes that China purchased from Saudi

Arabia and Angola, respectively. The practice of trading white goods for energy has led

Kenneth Katzman at the US Congressional Research Service to refer to Iran’s practice as,

‘essentially a junk-for-oil programme.’1

Turkey, the largest importer of Iranian natural gas, has also bypassed the sanctions. These

transactions, however, are very complicated and time-consuming. To acquire the

commodity, Turkey buys the gas in lira; these funds are, in turn, used by Iran to buy Turkish

gold. The bullion is then is shipped to the United Arab Emirates, where an Iranian liaison

agent either converts the gold into a hard currency, or ships it Iran. The process, which could

take weeks to months, effectively came to an end on 6 February, with new sanctions closing

loopholes that had previously facilitated such trade. These loopholes also previously allowed

Greece and Bulgaria to import Iranian gas via Turkey, where it was blended with Azeri gas to

bypass the sanctions.

The latest wave of sanctions presents new challenges to the regime in Tehran. Since the

sanctions were applied, the value of the Iranian rial has dropped by 60 per cent and the

country has been unable to purchase many basic goods, including medical supplies.

Additionally, Iran is running out of space to store the surplus oil that it has been unable to

sell. According to Oil and Gas Journal, Iran currently has 14 million barrels of crude oil stored

at facilities on land and over 50 million barrels at sea.2 If Iran is not able to sell enough oil to

reduce these stock levels, it will need to curtail production, risking the infrastructure used to

extract the oil. Should that occur, it may diminish Iran’s longer-term potential as a future

energy provider.

Gustavo Mendiolaza Indian Ocean Research Programme Research Analyst gmendiolaza@futuredirections.org.au

1 Lakshamanan, I. and Narayanan, P., ‘India and China Skirt Sanctions with “Junk for Oil”, Bloomberg,

30 March 2012. <http://www.bloomberg.com/news/2012-03-29/india-and-china-skirt-iran-sanctions-with-junk-for-oil-.html>. 2 Kashfi, M., ‘Iranian Oil Industry under Siege as International Sanctions Grow’, Oil and Gas Journal,

4 March 2013. < http://www.ogj.com/articles/print/volume-111/issue-3/general-interest/iranian-oil-industry-under-siege-as.html>.

Page 7 of 13

*****

Yemen Begins National Reconciliation Talks amid Protests

Yemen has launched a national dialogue aimed at drawing the fractured state’s many

players into a negotiated settlement. But, while the talks are a step in the right direction,

several key groups have rejected them.

Background

Yemen has launched a United Nations-backed national dialogue, aimed at paving the way for

a new constitution and general elections in February 2014. The initiative is scheduled to run

for six months and includes over 500 delegates, representing various political groups.

Several factions, however, have rejected the talks, threatening to undermine the process

and spark further violence.

Comment

The talks, which began on 18 March in Sana’a, the national capital, are aimed at drawing

Yemen’s divided (and divisive) players into a negotiated settlement. The talks bring together

565 delegates from Yemen’s various political groups, ranging from secessionists in the south,

to Zaidi Shiite rebels in the north. They also include a range of civil society representatives.

The delegates are seeking to draft a new constitution and prepare for general elections in

February 2014, following a two-year transition led by President Hadi.

The talks are a positive step for Yemen. Most factions, including many of the members of the

Southern Movement, have finally agreed to take part, after months of negotiations and UN

pressure. Indeed, the UN envoy to Yemen, Jamal Bonomar, declared the talks a ‘historic

moment’. ‘Months ago this country was on the verge of civil war. There is now a peaceful

transfer of power … the political process is moving forward’, he said. He went on to say that

the dialogue offers ‘an opportunity to settle *the ongoing+ problems’ in the south and in the

north, where a Shia insurgency has been raging in Saada.

But while the talks offer hope of a negotiated settlement, several key stakeholders have dug

in their heels and are refusing to take part in the dialogue. Such groups threaten to

undermine the ongoing peace process and may spark further unrest in the Gulf of Aden

state.

Chief among these is the hardline southern faction, led by the former president of South

Yemen, Ali Salim al-Beidh. He and his supporters have said they prefer negotiations between

two independent states from the north and the south. On 17 March, thousands marched in

protest against the national dialogue in Aden, the Southern Movement’s stronghold and the

capital of the former South Yemen. They are demanding that the south secede, while also

claiming that the southern groups participating in the talks are not fully representative.

North and South Yemen united in 1990.

Page 8 of 13

In response, President Abdrabuh Mansur Hadi warned against the use of force to express

political views. He said, ‘those who seek to impose their own approach by the force of arms

are doomed to fail’, referring to the southern factions that have rejected the talks. He later

noted, however, that ‘the question of the south is the key to resolving all problems’, raising

concerns over the value of a national dialogue that fails to take into account all the relevant

voices from the south. These stubborn southern factions are unlikely to back down from

their calls for independence; future violence could well arise as a result.

There are other groups within Yemen that also threaten to derail the peace process. Yemeni

forces are still battling Al-Qaida in the Arabian Peninsula (AQAP), in Yemen’s southern Abyan

province. Though AQAP has been weakened in recent times, mainly due to US drone strikes,

it is still a destabilising force that spreads violence in the hope of creating an Islamic

caliphate. Moreover, with the population of almost 25 million people split between the

Sunni and Shiite branches of Islam, the possibility of further sectarian violence should not be

discounted.

Meanwhile, many of the country’s young people are growing restless. They argue that the

movement that resulted in the overthrow of long-time former President Ali Abdullah Saleh

has been hijacked by a political élite, who have done little to address their concerns. Feeling

that they have been denied the revolutionary change they fought so hard to achieve, and

angered by bleak education and employment prospects, many youths are taking to the

streets to protest. For them, any outcome secured at the national dialogue is unlikely to

address their grievances. Consequently, we are likely to see more protests from Yemen’s

young people in the future.

As Yemen’s humanitarian crisis worsens, amid growing food shortages and widespread

poverty, the fractured state needs a negotiated settlement more than ever. The new

national dialogue may therefore offer a faint glimmer of hope. In reality, however, it is

unlikely to resolve Yemen’s woes.

Andrew Manners Research Analyst Indian Ocean Research Programme amanners@futuredirections.org.au

*****

Australian Model Leads in Global Move to Reduce Drought

Crises

In the lead up to World Water Day, global talks have concluded on measures to implement

national drought management policies that will improve food security for the half of the

world’s population that will be living in areas of high water scarcity by 2020.

Page 9 of 13

Background

Last week, representatives from countries around the world, including Australia, met at the

High Level Meeting on National Drought Policy (HMNDP) in Geneva. The meeting, which was

arranged by the World Meteorological Organization (WMO), the Food and Agriculture

Organization of the United Nations (FAO), the UN Convention to Combat Desertification

(UNCCD) and other partners, represented a globally coordinated attempt to address the

existing lack of national-level policy framework and action to combat drought. The

participating countries adopted a declaration which encourages governments to develop

and implement national drought management policies consistent with their development

objectives. At the conference, Australia was recognised as the ‘the only country in the world

that has a fully-fledged drought policy.’

Comment

Drought is the world’s most destructive natural hazard, causing more deaths and

displacements per year than cyclones, floods and earthquakes combined. Its average annual

cost to the global economy is US$6-8 billion, and this only accounts for immediate impacts

on production. Droughts are expected to increase in frequency, area and intensity in coming

decades, due to changes in the global climate. As the single most common cause of food

shortages, increases in the occurrence and severity of droughts could have devastating

impacts on food security.

At present, most countries in the world lack effective drought management policies.

Compared to other natural disasters, drought has less public visibility; it tends to be a slow

creeping phenomenon that does not garner significant media attention. Governments are

therefore often slow to act and have traditionally focussed their efforts on crisis

management, rather than prevention. Drought is predictable though and the scientific

knowledge and experience to reduce its impacts already exists. Mitigation of drought effects

can be achieved through early observation, supportive crop rotations and risk reduction,

transfer and sharing tools. The message of the HMNDP was that the cost of crisis

management far exceeds that of risk management and early action; ‘building resilience to

drought is not only a mitigation measure, but a smart investment with a guaranteed high

return.’

The Indian Ocean Region contains many areas that are highly vulnerable to drought. In 2011,

13 million people in the Horn of Africa were affected by drought and recurrent droughts in

the region have caused famine and considerable social and economic disruption. The dry

regions of the Middle East are similarly vulnerable. In India, losses recorded from droughts

between 1970 and 2002 have reduced the yearly incomes of affected households by 60 to

80 per cent. As one of the world’s main agricultural producers, drought management is

becoming a national priority for the Indian government, amidst increasing recognition that

‘drought is not a disaster, but a management issue.’

Droughts in major food producing regions can have global ramifications. As the world’s

second largest wheat exporter, drought in Australia affects not only national interests, but

can also affect global food prices. Last year, dry weather delayed the sowing of wheat in

Page 10 of 13

Western Australia, which contributed to expectations of cuts in global grain stockpiles this

year.

A significant outcome of the HMNDP was a commitment to stronger regional and global

cooperation to improve observation systems and emergency relief measures. As the only

country in the world operating a comprehensive drought policy, Australia has much to

contribute to collaborative regional efforts. Australia has had a drought policy in place since

the 1990s, but it has undergone major reform in recent years. The new framework,

implemented in 2012, shifts the focus from dealing with ‘exceptional circumstances’, to

planning and preparing for farming communities to become risk resilient. Piloted in Western

Australia, the National Drought Reform measures integrate land and water management, to

build a system that comprehensively addresses sectoral strategies.

At the HMNDP, Australian representatives gave presentations on developing and

implementing national drought policy and on designing strategies to cope with drought

impacts on key sectors. Further opportunities for Australia to share its knowledge will arise

at an Asia-Pacific workshop, due to be held later in the year, and at the UNCCD Conference

of Parties to be held in September.

Lauren Power Research Analyst Global Food and Water Security Research Programme lpower@futuredirections.org.au

*****

Burmese President’s Visit Cements Closer Ties with Australia

and New Zealand

Burmese President Thein Sein’s landmark visit to New Zealand and Australia has secured

increased aid and trade ties, together with the easing of defence sanctions.

Background

As the first Burmese head of state to visit the two countries since the 1970s, President U

Thein Sein’s Antipodean trip has secured greater amounts of foreign aid and closer trade

ties. Australia has also announced an increase in defence co-operation for peacekeeping and

disaster relief purposes. While both Canberra and Wellington can see trade opportunities in

Burma, the responses of both are effectively rewards for the remarkable reforms launched

by President Thein Sein soon after taking office in March 2011.

Page 11 of 13

Comment

Postponed after originally being planned for late-2012, President U Thein Sein’s itinerary

saw him spend four days in Auckland, followed by three in Australia. On both sides of the

Tasman, President Sein’s delegation of ministers and senior government officials met with

political leaders and representatives from the education and business sectors. Following his

arrival in New Zealand on 14 March, Governor-General Lieutenant-General Sir Jerry

Mateparae welcomed President Sein for a State Dinner with a 21-gun salute and haka.

Subsequent stops on the President’s itinerary included a meeting with Prime Minister John

Key, representatives from the University of Auckland and dairying multinational, Fonterra,

and a visit to a dairy farm.

In addition to cementing further Western acceptance of Burma, President Sein’s interest in

New Zealand also includes expanded trade relations and tapping into Kiwi expertise in such

fields as health, human resources, advanced technologies and science. According to the

President, partnerships to improve higher education standards in his country would

contribute to the success of further political social reforms.3

The Auckland visit also reinforced the commitments given by Prime Minister Key in his

November 2012 trip to Burma, when New Zealand pledged a NZ$6 million ($4.8 million) aid

package to help build the Burmese dairy industry, along with scholarships and an English

Language Training for Officials programme and NZ$1 million ($794,000) in humanitarian

assistance for strife-torn Rakhine province. New Zealand – which, other than the presence of

Kiwi troops there during the Second World War, has traditionally had only slight with links

with Burma – is to establish a diplomatic presence in the country for the first time.

More than that, however, the visit was a form of positive reinforcement for the reform

process launched by President Sein and which has transformed many aspects of life in

Burma in a very short space of time.

Such sentiments were echoed when the Burmese delegation crossed the Tasman to meet

with Prime Minister Julia Gillard and Governor-General Quentin Bryce, both of whom

praised the President for his boldness and commitment to improving the lot of his fellow

citizens.

In response to the reform path unleashed by President Sein, Australia will double its aid

commitment to Burma to $100 million per year by 2015, including $20 million over two

years for the first phase of the “Myanmar-Australia Partnership for Reform”. Emphasis will

be placed on building capacity in the country’s emerging democratic institutions, improving

governance and the promotion of human rights. Australian expertise in the resource

extraction sector will assist the development of the resource-rich country’s mining industry.

A trade commissioner, Mark Wood, will be posted to Rangoon, with a defence attaché to

follow.

3 ‘Myanmar Leader Builds Closer Ties With NZ’, Radio New Zealand, 15 March 2013.

<http://www.radionz.co.nz/news/political/130482/myanmar-leader-builds-closer-ties-with-nz>.

Page 12 of 13

Defence restrictions are to be relaxed to facilitate peacekeeping and disaster relief

operations. Joint training exercises could even be on the cards in the future, but the

embargo on arms sales to Burma will remain.

Such developments are all very positive, but a note of caution may still be warranted. Burma

is still grappling with ethnic violence and human rights issues in Rakhine province – a matter

on which both Thein Sein and Aung San Suu Kyi have both been largely silent. Corruption is a

significant problem in Burma, which is yet to be addressed. Critics of President Sein allege

that he has had contact with drug bosses and militia leaders. A general in the former ruling

junta, President Sein is reportedly in favour of the military continuing to play a leading role

in the government.4 Although his government did reduce the military’s budget for 2013-14

by US$100 million from last year, it still amounts to US$2.4 billion, or 12 per cent of total

government spending, and far outstrips other expenditure, such as that on health, at just

under two per cent.

In any event, the scale of the transformation required in Burma is enormous and

undertakings such as those given to President Sein by Australia and New Zealand can help to

reduce the chances of backsliding. That is particularly so if the upper echelons of the still-

powerful Burmese military perceive the benefits of change to be outweighed by a future

reduction in their power, especially as the country moves closer towards its next general

election in 2015.

Leighton G. Luke Manager Indian Ocean Research Programme lluke@futuredirections.org.au

*****

4 Armitage, R., ‘Thein Sein: From Junta Elite to Nobel Nominee’ ABC News, 19 March 2013.

<http://www.abc.net.au/news/2013-03-18/thein-sein3a-from-junta-elite-to-nobel-nominee/4579894>.

Page 13 of 13

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: lluke@futuredirections.org.au Web: www.futuredirections.org.au

What’s Next?

• US President Barack Obama begins a three-day visit to the Middle East today. He will meet with Israeli Prime Minister Benjamin Netanyahu, Palestinian Authority President Mahmoud Abbas and Prime Minister Salam Fayyad and with Jordanian King Abdullah in Amman.

• Thai Prime Minister Yingluck Shinawatra is conducting official visits to New Zealand

and Papua New Guinea on 21-25 March. • The Institute for Defence Studies and Analyses will host a Fellows’ Seminar titled “A

Study on the Foreign Policy Behaviour of Nepal and Bhutan towards India” at their premises in New Delhi on 22 March.

• The New Zealand Government and the European Union are hosting the Pacific

Energy Summit in Auckland from 24-26 March, preceded by two days in Tonga to see the Tonga Energy Roadmap in action (21-22 March). The focus of the Summit is on investment in renewable energy and energy efficiency.

• His Excellency Mr Biren Nanda, Indian High Commissioner to Australia, will give the Alfred Deakin Memorial Lecture under the theme “Indian Foreign Policy in a Globalised World” on 25 March from 6.00-7.00 pm at the University of Melbourne, Parkville VIC. For more information, visit aii.unimelb.edu.au.