Indonesia, sometimes known as the “fifth BRIC” (after Brazil Russia India China) because of its population size and growth potential, now has debt rated at investment grade for the first time since the Asian financial crisis:

While a credit-rating cut hangs over some nations, the Southeast Asian giant’s sovereign debt has been bumped back up to investment grade by Fitch Ratings, in December, and Moody’s Investors Service this week. Standard & Poor’s will surely follow suit.

Investors have already rewarded the country for solid fundamentals—foreign direct investment grew 20.2% last year to a record $19.3 billion, the government said Thursday, and, earlier this month, Indonesia sold 30-year bonds at a record-low yield of 5.375%. Meanwhile, gross domestic product growth is trotting along at a healthy 6%-plus, public debt is under control, and inflation is relatively benign at under 6%. Still, there are reasons to be cautious.

Corruption and weak infrastructure are perennial problems. Crumbling roads and inadequate ports especially stifle trade, costing as much as 1% of GDP, according to analysts. A recently enacted land acquisition bill should help. But there is much work to be done.

While India and China gain many more headlines, Indonesia may be both a more attractive bet for investors and a better case study for development professionals trying to find lessons applicable to less developed countries.

Source: Tracking Development

Southeast Asia’s growth has also been much more inclusive than Africa’s. Whereas the latter’s two growth spurts since independence—in the 1960s and 2000s—have yielded little poverty reduction, Southeast Asia has produced spectacular reductions. Indonesia, for instance, reduced poverty from 60 percent in 1970 to 22 percent in 1984. Vietnam reduced it from 58 percent in 1993 to 14 percent in 2008.

Yet, the region does not meet the standard model for economic success, at least as defined by the World Bank and the rest of the Western development community. Governments have historically not been held in check by elections. Corruption is widespread. Governance has rated low on most indicators.

What then explains this success?

According to a recently completed research project Tracking Development (funded by the Dutch Ministry of Foreign Affairs), the difference lies in the policy choices made by governments in these two regions. The authors argue that there are three essential policy preconditions for sustained growth and poverty reduction. All must be present simultaneously to work.

1) Sound macroeconomic management. Inflation may not exceed 20 percent for any length of time.

2) Economic freedom for peasants and small entrepreneurs. The state did not attempt to dominate the economy, especially at the expense of small actors.

3) Pro-poor, pro-rural public spending. At least 20 percent of the state development budget was allocated to agriculture in ways that benefited peasants rather than large landowners. Leaders made it a priority to raise the productivity and profitability of smallholder food crop farming.

Indonesia, Vietnam, Malaysia, and Cambodia all adopted this policy package, aiming for shared growth. Motives ranged from:

Ideology (social justice, nationalism) through political pragmatism (fear of radical or socialist opposition) to a correct interpretation of the historical relationship between agricultural and industrial development.

In contrast, no government in Africa has adopted all three. The third has proven especially elusive.

The final conference of this project took place in The Hague right before the holidays.

While participants accepted the main arguments, there was much debate on whether the results could be replicated in Africa or elsewhere. Some (including myself) argued that the political dynamics that produced these policies do not exist elsewhere and were unlikely to be recreated. Elites that do not see a reason to act inclusively will not. Weak states with very limited administrative capacity will not be able to implement these policies effectively. Ideology (and the preferences of donors) may favor other choices. In such places, more systemic issues must be addressed first.

Click here to view the embedded video.

Exceptionally wrong, in fact.

Rather than acquiesce to a resolution condemning the Syrian government for repressing its people, China and Russia used their vetoes.  And rather than support the EU-drafted resolution (as had seemed increasingly likely) Brazil, India and South Africa abstained.

This is a big set-back for the EU and the Americans, who were firmly behind the European initiative.  It’s a big win for Russia, which would have been embarrassed if China had even abstained.  And it’s a grim moment for Brasilia, Delhi and Pretoria, who have missed the chance to carve out a distinctive position in the Council on Syria, and opted to avoid a confrontation.  This was a moment the “IBSA” countries  could have seized to show why they deserved more respect at the UN.  They missed it.

More analysis tomorrow.  For now, congratulations to Gabon and Nigeria for voting for the resolution, refuting the claim that all developing countries are anti-interventionist.

In a joint statement issued the same day European nations were to seek a vote on a UN Security Council resolution condemning Syria’s crackdown on protests, EU leaders and visiting Brazilian President Dilma Roussef said the two sides “expressed grave concern” at the current situation in Syria.

“They agreed on the need to continue urging the Syrian authorities to put an end to the violence and to initiate a peaceful transition to democracy.”

The well-informed David Bosco predicts that India and South Africa will also vote for the resolution, although the Indians were fighting a rearguard action against it last week.  He thinks that China and, in the end, Russia will abstain.  Meanwhile, Turkey is giving the resolution full support from outside the Council:

Turkish Prime Minister Recep Tayyip Erdogan voiced support for the proposed UN resolution and said he would soon announce sanctions on the neighbouring country.

“The draft resolution before the council today is in the nature of sending a warning. We hope there will a positive outcome of this vote and that there will then be further discussions about whatever further steps need to be taken,” Erdogan told a news conference during a visit to South Africa.

The political picture could change again before the vote, and it can’t be repeated too often that the EU’s resolution has been watered down a lot , with a threat of sanctions reduced to near-invisibility.  But I think that this episode underlines the point Franziska Brantner and I made in our recent update on human rights and the UN for ECFR: many non-Western powers, especially rising powers like Brazil, want to distance themselves from Russia’s obstructionism in UN debates.  Even China is ready to step away from the Russians, as it did over Côte d’Ivoire.   As we noted in our paper, and I repeated here last week, this opens up the EU’s options for coalition-building in New York.  It looks like the EU is finally finding ways to use those options…

It’s obvious that the Asia-Pacific will dominate American strategic thought for the foreseeable future.  Today an Obama administration official confirmed just that:

The Obama administration is “rebalancing” U.S. foreign policy by enacting a “turn to Asia,” a senior State Department official said Tuesday.  “As the long shadow of 9/11 recedes, we are witnessing the re-emergence of the Asia-Pacific as a key theater of global politics and economics,” Kurt Campbell, assistant secretary of State, told a House panel.

What does this mean for America’s NATO allies?  This is a topic I addressed briefly in an op-ed for the EU Institute for Security Studies (EUISS), which has launched an enjoyable online debate about transatlantic cooperation:

Since the Iraq war peaked, US strategic debate has increasingly shifted away from counter-insurgency and stabilisation operations to securing the Asia-Pacific. This has involved diplomatic outreach to India and South-East Asia and a military focus on China’s growing capabilities and its threat to US vessels in the western Pacific.

The European security debate is also evolving, but it is driven by financial concerns. While China’s rise will frame American security policy for years ahead – even in the event of a major terrorist attack – no comparable challenge shapes European worldviews. Russia’s uneven resurgence worries many EU and NATO members, but Moscow’s ambitions centre on energy deals and it does not present a true strategic game-changer. Instead, the need for austerity dominates European thinking.

Do European military forces  have any role to play in Asian-Pacific affairs?  In another contribution to the EUISS debate, Daniel Keohane argues that Europe won’t look far beyond its periphery, and he doesn’t find this surprising:

Put simply, the US is an Asian power, but the Europeans are not. This is not new. During the Cold war, France and Britain carried out a military operation in the Suez Canal, but they did not join the Americans in Vietnam.

Indeed, future historians may conclude that Afghanistan was the exception that proved this post-World War II rule. Most Europeans went to Afghanistan for the sake of their close relationship with the United States, not because it was an existential threat to their security. That unhappy experience makes it very unlikely that Europeans would follow Americans on future military operations beyond Europe’s neighbourhood.

Richard Gowan, therefore, is right about the emerging strategic divergence between Europeans and Americans. But for Europeans the issue is not so much that the Pentagon cares more about Asia; it is that Washington cares much less about Europe.

There are lots of other contributions to the EUISS debate, and they’re all worth a look.  But most of them don’t really address the problem of Europe’s (ir)relevance in the Pacific theater.  Quite a few contributors are still focused on the need for better Euro-American cooperation in the European theater instead, and  all (including Daniel and me) recognize that financial concerns will affect both European and American security policy very deeply.  Nonetheless, I wonder whether the European Security community – and U.S. commentators focused on Europe – have really grappled with the implications of a shift from an Atlantic-centered to a post-Atlantic security order…

China is not Egypt, Libya or Tunisia. As the Pew Global Attitudes project noted in March this year, only 28% of Egyptians were then ‘satisfied’ with their country’s direction, down from 47% a few years earlier; whereas in China the figure was 87% in March, up from 83%.

So why, asks James Fallows in last month’s The Atlantic, is the Chinese government so clearly freaking out about protests this year and the risk of a “Jasmine Revolution” – when the protests clearly don’t add up to a national movement? As he puts it,

Why … has the government reacted as if the country were on the brink of revolt? Do the Chinese authorities know something about their country’s realities that groups like Pew have missed, and therefore understand that they are hanging by a thread? Or, out of reflex and paranoia, are they responding far more harshly than circumstances really require, in ways that could backfire in the long run?

Fallows sets out the pros and cons for each view. Here are some snippets to set out the first camp’s rationale:

Those who think the government has good reason to be worried say that the accumulated tensions—political, economic, environmental, and social—of China’s all-out growth have reached an unbearable extreme. By this interpretation, the seeming satisfaction of the Chinese public is a veneer that could easily crack. “If one were to read only the Party-controlled media, one might get the impression that China is prosperous, stable, and headed for an age of ‘great peace and prosperity,’” Liu Xiaobo himself wrote, in an essay shortly before he was arrested. (The English version, translated by Perry Link of Princeton, will appear this fall in a collection of Liu’s essays and poems, No Enemies, No Hatred.) He continued:

Not only from the Internet, but from foreign news sources as well as the internal documents of the regime itself—its ‘crisis reports’—we know that more and more major conflicts, often involving violence and bloodshed, have been breaking out between citizens and officials all across China. The country rests at the brink of a volcano.

By June of this year, a wave of bombings, riots, and violent protests at widely dispersed sites across the country illustrated what Liu was warning about. The trigger of the uprisings varied city by city—ethnic tensions in some areas, beatings by police or chengguan in others—but they added to a mood of nationwide tension. “With rampant official corruption, inflation, economic disparity, and all sorts of social injustice and political tensions, the threat to the CCP rule is very much real,” Cheng Li, who grew up in Shanghai and is now a specialist in Chinese politics at the Brookings Institution, told me this summer.

The second camp’s rationale, on the other hand, which Fallows tends towards himself:

…that the situation in China is indeed tense—but that it has always been tense, and that so many people have so much to lose from any radical change, that the country’s own buffering forces would contain a disruption even if the government weren’t cracking down so hard. The main reason is that for all the complaints and dissatisfactions with today’s Communist rule, there is no visible alternative—in part, of course, because the government has worked so hard to keep such alternatives from emerging. This is a less satisfying side of the argument to advance. You look worse if you turn out to be wrong, and it seems unimaginative to say that an uneasy status quo might go on indefinitely. Still, it is what I would guess if forced to choose.

I asked Chas Freeman what he made of China’s current turmoil. He is a former diplomat who served as Richard Nixon’s interpreter during his visit to China in 1972 … Freeman said that he takes seriously the complaints about economic inequality, ethnic tension, and other potential sources of instability. But, he said, they remind him of conversations he had when living in Taiwan in the 1970s, before Chiang Kai-Shek’s Kuomintang party had moved from quasi-military rule to open elections. “People would say they are corrupt, they have no vision, they have a ridiculous ideology we have to kowtow to, but that no one believes in practice,” he told me. “And I would say, ‘If they’re so bad, why don’t you get rid of them?’ That would be greeted with absolute incredulity.” Taiwanese of that era would tell him that, corrupt or not, the party was steadily bringing prosperity. Or that there was no point in complaining, since the party would eliminate anyone who challenged its rule. The parallel with mainland China was obvious. A generation later, Taiwan had become democratized.

Of course, Freeman’s analogy only holds up if you think that China will indeed manage to follow Taiwan’s record of “steadily bringing prosperity”. And that’s why, unlike Fallows, I tend towards the first camp. I noted last month that there are already weak signals of the arrival of “jobless growth” in China. And more broadly, I think China looks in bad shape to manage a whole range of global threats that will shape its outlook – just like the United States.

I’m not an expert on Chinese internal politics, so I won’t attempt to guess how all this will play out domestically. But I do see good reasons to question the wisdom of relying on steadily increasing prosperity. As for the lack of a “visible alternative” - surely we’re not going to assume that as a guarantee of stability after the year so far in the Middle East?

UN Watch is an NGO that specializes in getting cross about the numerous misdeeds (whether major or minor) of the UN system.  This week it has had something pretty straightforward to be peeved about: North Korea is chairing a plenary session of the Conference on Disarmament (CD) this month.  Yes, that North Korea. 

“Allowing an international outlaw to oversee international arms control efforts is just plain wrong,” advocacy group U.N. Watch’s director Hillel Neuer said today. “North Korea is a ruthless regime that menaces its neighbors and starves its own people, and should not be granted the propaganda coup of heading a world body dedicated to peace.”

Fireworks did not, however, ensue.  The CD’s members held what appears to have been an exceptionally turgid debate on why everyone thinks that the CD doesn’t matter any more.  It clearly gripped some of the participants, as the photo from the session reproduced above shows.  But something very important did happen at this meeting, if the UN’s own summary is to be believed.  The representaive of Iran managed to come with a statement on the CD’s woes that, to my mind, may be the finest piece of hollow UN rhetoric delivered in any forum on any subject:

Changing the Rules of Procedure was not the answer to breaking the impasse and many treaties had been negotiated under these same rules. Thus, they should deal with the root causes of the problem rather than advocating cosmetic changes in the procedures without tackling the substance and crux of the problem which was a lack of political will for creating an environment in which the security concerns of all countries could be addressed.   [Emphasis added.]

Go on, read it out loud.  Feel the words trip off your tongue.  Luxuriate in them.