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Policy Alert: Panama Papers Leak Proves Taxing for Rising Powers

panamapapers

On April 3, an international coalition of journalists released information on thousands of tax shelters created by the Panama-based firm Mossack Fonseca. Global reactions to the leak of over 11 million documents, also known as the Panama Papers, have been swift with condemnations directed at individuals named as shareholders and directors of the shell companies, including politicians, business leaders, athletes, and celebrities in more than 200 countries. Among them are 12 national leaders, such as the prime ministers of Iceland, the United Kingdom, and Pakistan, the presidents of Argentina and Ukraine, and the king of Saudi Arabia. The list also links to individuals with connections to Russian President Vladimir Putin and Chinese President Xi Jinping.

While the use of these offshore companies to avoid taxes at home is not illegal, they remain controversial to many who consider the practice as cheating taxpayers and creating opportunities for fraud, money laundering, and drug trafficking. Several countries in Eurasia were identified as hubs for this type of financial activity or saw their political leadership included in the allegations. This Policy Alert highlights reactions in China, India, Russia, Japan, and South Korea to the emerging global shell game.

CHINA

After the Panama Papers cited at least eight current and former Chinese top-ranking officials of having links to Mossack Fonseca, the Communist party ordered the country’s media outlets to censor all references to the story. Foreign Affairs Ministry spokesperson Hong Lei refused to comment on “groundless accusations” when pressed by journalists. Chinese law does not prohibit its citizens from creating overseas entities, but according to Chun Han Wong in the Wall Street Journal, party leaders are sensitive to allegations, including some directed at relatives of President Xi Jingping, that may “add fuel to perceptions of double standards in Beijing’s efforts to fight graft.”

Hong Kong was said to be home to the most active and highest number – over 2,000 – of the shell corporations set up through Mossack Fonseca. Zhang Xiaodong, named as the firm’s primary contact on the island, pushed his clients to set up offshore accounts to purchase stocks abroad due to “overseas countries’ hostility to the rising Chinese economic power.” When a media outlet did cover the leaks, its criticism was directed at foreign powers. The Global Times questioned the real motives behind the leak, which the paper said has “basic political targets,” and how the information is being spun by “the Western media” to minimize information negative to the United States and give “extra spin” to the “exposure of non-Western leaders, such as Putin.” (more…)

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Policy Alert: An American President in Cuba: Reactions from Rising Powers

obama_cubaOn March 20, President Barack Obama became the first sitting president to visit Cuba since 1928. The trip marked a pivotal moment in the efforts to normalize bilateral relations that have been long characterized by mutual enmity. Obama called on Cuba to open its economy and political system while Cuban President Raúl Castro urged the U.S. Congress to lift the trade embargo. In this Policy Alert, we highlight the reactions of rising powers to the trip and steps made toward normalized relations, including commentary in China, Brazil, Russia, India, Japan, and South Korea.

CHINA

As two of the few remaining Communist countries in the world, China’s foreign ministry said its “continued mutually beneficial cooperation with Cuba” is not dependent on the action of third-parties such as the United States. The ministry welcomed the normalization of relations between Cuba and the United States and pressed the U.S. Congress to completely lift the trade embargo. Chinese President Xi Jingping traveled to Cuba in 2014 and visited the barracks where Fidel Castro launched his revolution.

(more…)

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RPI Director Deepa Ollapally: Congressional Testimony on China and South Asia

china-indiaDr. Deepa M. Ollapally, Research Professor of International Affairs and Associate Director, Sigur Center for Asian Studies, Elliott School of International Affairs, George Washington University, testified before the U.S.-China Economic and Security Review Commission during a hearing on China and South Asia.

On the question of whether India sees China as a threat, Dr. Ollapally considered:

India’s top priority is to achieve the status of an economically developed country. Thus even a Nationalist-leaning governing party like the Bharatiya Janata Party (BJP) sees the value of economic integration as a way of stimulating economic growth. Economic growth in turn will lay the foundation for India’s military and political power in the region and beyond. For this to happen, India needs a peaceful extended neighborhood and good relations with China. After all, China is India’s largest trading partner too. Indian Globalists and Realists seem to be confident that economic development is China’s top objective as well. In interviews with Indian business and political leaders, the sentiment I hear most often is that Chinese leaders are first and foremost business-minded. There seems to be a level of confidence that the leaders of both countries will not let relations get out hand. For example, in fall 2014 as Xi Jinping and Modi were meeting in India for a bilateral summit, the spectre of a border encroachment by China at the very same moment, threatened to derail relations. Instead, the two leaders skillfully managed the crisis and averted a blow up on the ground or in the diplomatic arena. This type of crisis management augers well for a Realist/Globalist perspective to continue to hold in India.

You can read the full testimony here.

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Policy Alert: Zika Epidemic Raises Public Health Concerns among Rising Powers

zika1Last month, the World Health Organization (WHO) declared a global public health emergency in response to the outbreak of the Zika virus in Brazil and other Latin American countries. The WHO estimates the virus has spread to 52 countries to date and can infect up to 4 million people by year’s end. While the symptoms of the virus are moderate, it is “strongly suspected” the disease causes brain damage in newborns. In this Policy Alert, we examine commentary from Brazil, China, India, Russia, Japan, and South Korea on the Zika outbreak.

BRAZIL

Brazil has been the country most affected by the Zika outbreak so far. The outbreak coincides with a concurrent political and economic crisis in the country and has catapulted Brazil’s public health capacity into the global spotlight just months before Rio de Janeiro is set to host the Olympic Games. (more…)

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Policy Alert: China’s New Missiles in South China Sea Stir Debate at U.S.-ASEAN Summit  

missiles

With South China Sea debates already on the agenda at last week’s U.S.-ASEAN summit, new satellite images showing China deployed missiles to a disputed island tested ASEAN’s ability to manage the maritime domain. A joint statement at the close of the gathering did not mention China by name, but it outlined support for “mutual respect for the sovereignty, territorial integrity, equality, and political independence of all nations” as well as for “ensuring maritime security and safety, including the rights of freedom of navigation and overflight.” As host for the summit, the role of the United States in these maritime disputes was also center stage with President Barack Obama calling for “tangible steps” from all sides to resolve the region’s evolving maritime disputes “peacefully and through legal means,” including a “halt to further reclamation, new construction, and militarization of disputed areas.”

On February 17, Taiwan’s Ministry of Defense broke the news China deployed two batteries of eight advanced surface-to-air missile launchers and a radar system in recent weeks. Taiwan provided satellite images showing the HQ-9 missile systems with a range of 125 miles now located on Woody Island – called Yongxingdao by China – in the Paracel Islands chain, which has administrated by Beijing since 1974 but is also claimed by Vietnam and Taiwan. The Pentagon confirmed the presence of the missile systems and considered the moves to be “increasing tensions in the region and are counterproductive.” Secretary of State John Kerry pledged to have a “very serious conversation” with China about U.S. concerns Beijing is militarizing the South China Sea.

This Policy Alert covers the reactions in China, India, Japan, the Philippines, and Vietnam to these developments and is part of our series on Energy and Maritime Security for the Rising Powers Initiative’s project exploring the linkages between energy security debates and maritime strategies in the Indo-Pacific. (more…)

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Policy Alert: North Korean Missile Test Launches Debate Among Rising Powers

southkoreamissileOne month after conducting a nuclear test, North Korea successfully launched a long-range rocket on February 7th from its Sohae Satellite Launching Station. Pyongyang claimed the launch was a peaceful earth observation satellite, but the United States, South Korea, and other powers quickly condemned it as a provocative and destabilizing ballistic missile test in violation of UN resolutions. U.S. National Security Advisor Susan Rice called on the “international community to stand together and demonstrate to North Korea that its reckless actions must have serious consequences.” China, however, remains unwilling to back stronger sanctions against the Democratic People’s Republic of Korea (DPRK) and prefers a return to the negotiation table. In this Policy Alert, we explore the reactions of South Korea, China, Japan, Russia, India, and Brazil to the launch and their proposals to resolve nuclear weapons and missile challenges on the Korean Peninsula.

SOUTH KOREA

President Park Geun-hye strongly criticized the missile launch as an “intolerable provocation,” positing the North’s missile program is “all about maintaining the regime” in Pyongyang. Park’s deputy chief of national security, Cho Tae-yong, pledged “the government will continue to put necessary pressure on North Korea so that North Korea has no other choice but to change.” South Korean intelligence agencies reportedly have evidence North Korea plans another nuclear test in the near future. (more…)

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Policy Alert: Taiwan’s Presidential Election Provokes Reactions in Asia

taiwanelectionOn January 16, Democratic Progressive Party (DPP) candidate Tsai Ing-wen defeated the incumbent Kuomintang Party (KMT) to become the first female president of Taiwan. The DPP also won a majority in the Legislative Yuan and vowed to start a “new era” in Taiwan with an improved economy and a relationship with China based on “dignity and reciprocity.” The United States congratulated Tsai on her victory and expressed its desire for continued peace and stability in the cross-straits. China – who pined for a KMT victory – and other powers responded to the news with a mix of cautious optimism and diplomatic tightrope walking. In this Policy Alert, we look at reactions in Taiwan, China, Japan, South Korea, and India on what the election holds for the region.

TAIWAN

While not entirely a surprise, the landslide victory for Democratic Progressive Party (DPP) transformed the balance of political power on the island. It has also forced the Kuomintang Party to do some soul searching when it votes in March for a new leader after its 2016 candidate and former chairman, Eric Chu, resigned. Furthermore, the new DPP majority promised new legislation to strip the KMT of its multi-million assets through party finance and property reforms, which may make it more difficult for the KMT to mount an electoral comeback.

Taiwanese policymakers remained cautious in the handling of post-election cross-strait relations. (more…)

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Policy Alert: Rising Powers Respond to North Korean Hydrogen Bomb Test

northkoreaOn January 6, North Korea announced it conducted its forth nuclear test, claiming the successful explosion of a hydrogen bomb. As experts work to verify the claim, the international community unanimously condemned Pyongyang with the UN Security Council planning to impose further sanctions on the Kim Jung-un regime for taking an action South Korea called an “unpardonable provocation.” In a display of strength and support for allies in the region, the United States flew a nuclear-capable B-52 bomber over Seoul, which prompted North Korea to vow further tests. In this Policy Alert, we examine commentary from South Korea, China, Japan, India, Russia, and Brazil on the latest North Korean nuclear test.

SOUTH KOREA

As expected, South Korean President Park Geun-hye denounced the test as a “serious threat” to national security and warned “our military is at a state of full readiness, and if North Korea wages provocation, there will be firm punishment.” Along with resuming broadcasts of propaganda messages across the north-south border, South Korea urged the international community to work together on sanctions to inflict “bone-numbing pain” on its northern neighbor, specifically calling on China to prove Beijing is serious about improving ties with Seoul.

Newspapers in South Korea focused on how the country and the international community should response to this latest development by the Democratic People’s Republic of Korea (DPRK). (more…)

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Policy Alert: We Have a Climate Deal: India and China React to the Paris Agreement

parisOn December 12, leaders from more than 190 countries reached a consensus on how to combat climate change after two weeks of intense negotiations and years of diplomatic wrangling. The Paris Agreement will succeed the expiring Kyoto protocol and seeks to keep the average global temperature from rising above two degrees Celsius over pre-industrial levels through reductions in greenhouse emissions, changes in energy policies, shifts in agriculture and livestock production, and other far reaching measures. Countries outlined their plans to reach these targets and pledged to share funding and technology to poorer states needing to adapt to and mitigate the impacts of climate change. This Policy Alert is a companion to Policy Alert #114 and illustrates the reactions on the final deal within India and China, two rising powers central to the negotiations and future success or failure of the accord.

INDIA

Indian Prime Minister Narendra Modi praised the outcome in Paris where “every nation rose to the challenge, working towards a solution” that “has no winners or losers” save for the preservation of “climate justice” and “a greener future.” While many analysts worried India could play a “spoiler” in the negotiations due to its developing economy’s reliance on coal, New Delhi ultimately agreed to the final deal. (more…)

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RPI Scholar Deepa Ollapally: India’s National Identity and Its Impact on Security Policy under Modi

modi-fopoEarlier this month, Dr. Deepa Ollapally, director of the Rising Powers Initiative and research professor of international affairs at the Elliott School of International Relations, published an article at The Asan Forum that explored how the election of Indian Prime Minister Narendra Modi in May 2014 shaped expectations of the future direction of India’s foreign policy and the eventual path the Modi government has taken since rising to power:

The consensus on India’s national identity has been slowly fragmenting over the last twenty-five years, especially since the emergence of the Bharatiya Janata Party (BJP) government in 1998 displacing the Congress Party, India’s dominant political party since independence. After being out of power for a decade, the BJP came back to power with a decisive showing in May 2014 under Narendra Modi. There were varying expectations regarding how the new government would project its worldview onto the international stage, but a prior question for many was what exactly was the new prime minister’s own worldview, left unclear given that he had spent his career in state-level politics.

The best indication came from the self-avowed nationalist image of the BJP. Based on this, it was assumed that under Modi, New Delhi could be expected to focus on building up the country’s hard power, i.e., military capabilities, and fashioning a more assertive defense and security policy. In other words, India’s “great power” ambition would be underwritten by bigger military prowess and stronger security policies. (more…)

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