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March
Pacific's Micronesia in talks to switch ties from Beijing to Taiwan- letter
Written by Nur Yasmin
The Federated States of Micronesia (FSM) held talks with Taiwan in February about switching diplomatic ties for $50 million in assistance after frustrations with China, the outgoing president of the Pacific island nation has said in a letter.
Tensions between the United States and China for security influence in the Pacific islands are rising, and FSM President David Panuelo was a prominent critic of China's attempt to strike a 10-nation security and trade pact.
Panuelo lost his seat in Tuesday's national poll, election officials confirmed.
In a letter sent to state governors that was reviewed by Reuters, Panuelo said he met with Taiwan's foreign minister Joseph Wu in February to discuss switching diplomatic recognition.
"I was transparent with Foreign Minister Wu; we project we need an injection of approximately $50,000,000 to meet our future needs. We can and will receive this, over a three year period, if and when we establish diplomatic relations with Taiwan," he wrote.
"Taiwan assures me that they will simply 'pick up' any and all projects that China is currently undertaking.".
The aid would come on top of "greatly added layers of security and protection that come with our country distancing itself from the PRC, which has demonstrated a keen capability to undermine our sovereignty, reject our values, and uses our elected and senior officials for their own purposes," he added.
An interim $15 million annual assistance package was also offered, he wrote.
A spokesperson from the FSM president's office declined to comment.
Taiwan's foreign ministry said it could not comment on its contacts with other countries, but that compared to China's "lip service promises", Taiwan had always adhered to the spirit of "practical diplomacy, mutual benefit and 'Taiwan can help'".
"In the future, our country is willing to use the Taiwan model to assist Micronesia's development, benefit their people's well-being, and respect and welcome the expansion of bilateral relations," it said in a statement.
POLITICAL WARFARE
Panuelo's letter was dated March 9 and first reported by The Diplomat.
In the letter, he accused China of waging "political warfare" in his country, and bribing his government's officials.
Panuelo wrote he had blocked the appointment of China's choice of new ambassador because the person had a background in security and overseas police operations.
Panuelo said China's previous ambassador had urged an official to sign a memorandum of understanding between China and FSM despite Panuelo rejecting it, telling the official the president did not need to know.
In Beijing, Chinese Foreign Ministry spokesperson Mao Ning said she had noted the reports on Panuelo's letter and that "slander and accusations against China are completely inconsistent with the facts".
No matter who is in power, China will uphold the principles of mutual respect, equality and mutual benefit "on the basis of the one-China principle", she added, referring to China's view that both it and Taiwan belong to "one China".
Beijing and Taiwan have a history of competing in the Pacific islands, where four of Taiwan's 14 diplomatic allies are located. Two Pacific island nations, Kiribati and Solomon Islands, cut diplomatic ties with democratically ruled Taiwan in 2019 after offers of aid from China, which views Taiwan as its own territory.
FSM's official election results will be announced later on Friday. A new government will take power in May, with the next president to be chosen by Congress from four elected senators.
The country - made up of more than 600 islands spread across the Western Pacific - is close to finalising a renewed compact of free association with the United States, under which the U.S. provides defence and economic support. (Reuters)
March
South Korea's Yoon vows to bolster joint military drills with US
Written by Nur Yasmin
South Korean President Yoon Suk Yeol on Friday vowed to strengthen deterrence against North Korea's threats by establishing a nuclear planning and implementation system with the United States.
Speaking at a commissioning ceremony for Naval academy graduates, the president also said South Korea will step up joint military drills with the United States. (Reuters)
March
Global house prices set to extend declines, risk of more with higher rates: Reuters poll
Written by Nur Yasmin
Home prices in several major markets will extend their decline this year, according to a global Reuters poll of property analysts who either predicted slightly steeper drops or kept their view steady from a survey three months ago.
Even greater drops may be in the offing, since the forecasts were collected before the Federal Reserve this week indicated that U.S. interest rates would likely climb higher and stay elevated for longer than previously thought.
Rising mortgage rates as central banks lift benchmark borrowing costs to curb inflation, and a historic house price boom during the COVID pandemic have pushed home ownership closer to impossible for many prospective first-time buyers.
That in turn has pushed up rents sharply in most markets, leaving the overall cost of housing much more expensive in just the past few years.
Predicted drops in house prices in the U.S., Canada, Britain, Germany, Australia and New Zealand will come off price surges of as much as 50% since the start of the pandemic in 2020.
Indeed, 50 of the 96 analysts in the polls, taken from Feb. 15 to March 8, said affordability would worsen in the coming year. They included nine who said it would do so significantly.
"Those markets that saw the strongest growth during the pandemic, so places like New Zealand, Canada, the Nordic markets, are probably likely to be most heavily affected," said Kate Everett-Allen, head of international global residential research at Knight Frank.
House prices in Canada and New Zealand, which began to fall last year, were forecast to register a peak-to-trough drop of at least 20%, the poll showed.
Both countries have a considerably high household debt-to-income ratios.
Double-digit falls from recent peaks were also predicted for Australia (16.0%), Germany (11.5%) and the U.S. (10.0%). British home prices were expected to fall 8.0%.
Among the most commonly cited reasons for house prices to remain elevated were crimped supply, made worse during the pandemic, when construction activity came to a near-halt, and ever-rising demand.
"A slowdown in new housing construction and (a) drop in building permits are expected to deepen housing shortages in many countries across the world, with population growth continuing to outpace growth in new housing supply," said analysts at JLL.
"A divergence in construction output is anticipated in 2023 with most markets seeing a fall in supply."
However, activity in the crisis-hit China property market, which has seen mounting debt defaults over the past year, was forecast to recover this year as stimulus policies and the scrapping of COVID-19 curbs improve sentiment.
While India's housing market will remain resilient despite rising interest rates, home prices in Dubai were also predicted to rise steadily. (Reuters)
March
Alternative to WTO trade arbitration gains steam as Japan joins
Written by Nur Yasmin
Japan has become the latest country to join an alternative mechanism for resolving disputes to the World Trade Organization, it said in a statement on Friday, in a move that observers say could urge others to follow suit.
The top appeals bench of the global trade watchdog which rules on trade disputes has been idle for more than two years because of holds on appointments during the administration of former President Donald Trump. The United States, which continues to resist regular calls to approve appointments, is instead leading private discussions on how to reboot the dispute system.
"As an interim measure until the dispute settlement function is restored, the Japanese government decided to join the MPIA," Japan's economy ministry said in a statement, referring to the Multi-Party Interim Appeal Arbitration Arrangement.
Japan, a regular user of the WTO dispute system including in a recent case with South Korea, is the 26th member to join the alternative arrangement, according to the MPIA website. Parties include the European Union, Canada and Brazil.
"Japan's membership may increase pressure on wavering potential members, like the United Kingdom and South Korea," Dmitry Grozoubinksi, Executive Director of the Geneva Trade Platform told Reuters. He added that its adhesion would offer a legal path forward for any future disputes between Japan and China, since they are both members.
The paralysis of the WTO's top dispute bench means that the losing side can appeal the outcome from the lower court into a legal void, as has happened to Japan twice. This has led to fewer cases being brought to the WTO. (Reuters)
March
IAEA board backs chief Grossi for second term in 'sign of trust'
Written by Nur Yasmin
The U.N. nuclear watchdog's 35-nation board of governors on Friday backed the reappointment of Argentina's Rafael Grossi to a second four-year term as director general, diplomats at the closed-door meeting said.
The decision was a formality since there was no challenger.
The International Atomic Energy Agency's board approved his reappointment by acclamation, meaning that no vote was held and no country expressed opposition, diplomats said. The decision is subject to approval by the IAEA's General Conference, an annual meeting of all member states held in the autumn.
The General Conference is expected to approve it. Grossi's current term ends in December.
"I think it's a sign of trust. We have lots to do, with Iran, with Ukraine, with nuclear energy," he told Reuters outside the meeting room after the decision.
"One thing that was very heart-warming, I would say, is that there were great expressions of support from the entire ... arc of representation and political vision and that is of course for the head of an international organisation the best sign of trust. I need trust to be effective."
Grossi has overseen a turbulent period in relations with Iran, since the Islamic Republic started breaching restrictions imposed on its nuclear activities by the 2015 Iran nuclear deal with major powers the year he took office.
Iran's steps, which have now gone well beyond those curbs, followed the United States' withdrawal from the deal in 2018 under then-President Donald Trump, which re-imposed U.S. sanctions against Iran.
The IAEA is policing that deal although it is not a party to it, and it is also locked in a years-long standoff with Iran over the separate issue of uranium particles found at three undeclared sites, which Iran has yet to explain credibly.
After Grossi visited Iran this weekend, both sides issued a joint statement saying Iran was prepared to hand over more information on the traces and allow more monitoring related to the 2015 nuclear deal, but the statement went into few details and is subject to further talks.
Grossi, a more vocal IAEA chief than his Japanese predecessor Yukiya Amano, who died in office, has also been trying to broker a protection zone around the Russian-held Zaporizhzhia nuclear power plant in Ukraine,
Shelling near Zaporizhzhia, which Russia and Ukraine have blamed on each other, has repeatedly cut external power lines needed to cool reactor fuel and avoid a potentially catastrophic meltdown at Europe's biggest nuclear power plant. (Reuters)
March
Former Malaysian PM Muhyiddin charged with corruption
Written by Nur Yasmin
Former Malaysian Prime Minister Muhyiddin Yassin was charged on Friday with abuse of power and money laundering over projects launched under his premiership, accusations that he said were politically motivated.
The charges come just three months after Muhyiddin lost a closely fought and divisive general election to Anwar Ibrahim, and are likely to increase political tension in Malaysia ahead of regional polls this year.
Muhyiddin, who led the country for 17 months between 2020 and 2021, becomes the second Malaysian leader to be charged with crimes after losing power.
At a Kuala Lumpur sessions court, the prosecution alleged that Muhyiddin abused his position as prime minister to receive bribes of 232.5 million ringgit ($51.44 million) in a bank account belonging to his party, Bersatu.
The former premier and opposition leader was charged with four counts of abuse of power and two counts of money laundering.
Muhyiddin, 75, pleaded not guilty to all six charges and said the accusations were "organised political persecution".
"Not a single cent of the people's money went into my own pocket during my tenure as prime minister," Muhyiddin told reporters after being granted bail.
The former premier faces up to 20 years in jail if found guilty. He would also be subject to a heavy financial penalty.
The case will be heard next on May 26. Muhyiddin said he will face an additional charge of abuse of power on Monday.
The Malaysian Anti-Corruption Commission denied the accusations of political motivation and interference in its probe involving Muhyiddin.
Muhyiddin and his party have faced graft investigations since losing the national election in November, with the party's bank accounts frozen by the anti-graft body and two leaders charged with bribery.
The former premier has also been banned from leaving the country.
Prime Minister Anwar, who has long vowed to undertake reforms to improve governance and fight corruption that has long plagued Malaysia, has also dismissed accusations that the charges against Muhyiddin are politically motivated. Anwar said he has not interfered in investigations.
UPCOMING POLLS
The allegations against Muhyiddin come ahead of crucial regional elections to be held in six states by mid-year, with his coalition expected to pose a strong challenge to Anwar's alliance.
The state polls are seen as the first big test for Anwar, who failed to win a simple majority on his own in the national election last year.
Muhyiddin leads a conservative, ethnic-Malay, Muslim alliance that has portrayed itself to be clean of corruption, and won support from the country's majority Malays in last year's election.
Anwar runs a progressive, multi-ethnic bloc but has faced criticism for joining hands with the corruption-tainted United Malays National Organisation (UMNO) party to form a government.
The UMNO was defeated in 2018 elections due to widespread graft allegations, bringing to an end an uninterrupted rule by a party that had governed Malaysia for more than 60 years since independence.
UMNO's former leader and ex-prime minister, Najib Razak, is serving a jail term for graft related to the multi-billion dollar corruption scandal at state fund 1MDB. Anwar's deputy and current UMNO leader, Ahmad Zahid Hamidi, also faces graft charges.
Anwar himself served jail time for corruption and sodomy before he became prime minister, charges he insists were politically motivated and designed to keep him from power. (Reuters)
March
Australia, India agree on strengthening economic, defence ties
Written by Nur Yasmin
Australia and India have agreed to accelerate a broader economic partnership and to boost their defence ties, Australian Prime Minister Anthony Albanese said in New Delhi on Friday.
Last year the two countries signed a free trade deal called the Economic Cooperation and Trade Agreement (ECTA), the first signed by India with a developed country in a decade.
However, a much larger Comprehensive Economic Cooperation Agreement (CECA) has been stuck in negotiations for over a decade. Discussions between the countries restarted in 2011 but were suspended in 2016 as the talks were gridlocked.
Negotiations resumed in 2021 but a deal has yet proved to be elusive.
"We also agreed on an early conclusion of our ambitious Comprehensive Economic Cooperation Agreement as soon as possible and I am hopeful that we will be able to finalise that this year," Albanese, who is on a three-day visit to India, told reporters.
"This transformational deal will realise the full potential of the bilateral economic relationship, creating new employment opportunities and raising living standards for the people of both Australia and India."
Bilateral trade between the countries was $27.5 billion in 2021 and India says trade has the potential to nearly double to $50 billion in five years under the ECTA.
India and Australia are security partners through the Quad group, which also includes the United States and Japan.
Australia and India made "significant and ambitious" progress in strengthening defence and security ties and also discussed climate change issues, Albanese said. (Reuters)
March
Biden to host Australia and Britain to reveal details of submarine pact to counter China
Written by Nur Yasmin
U.S. President Joe Biden will meet leaders of Australia and Britain in San Diego on Monday to announce a way forward for Australia to receive nuclear-powered submarines in Canberra's biggest-ever defense project.
The three countries announced the so-called AUKUS plan in 2021 as part of efforts to counter China in the Indo-Pacific region.
However, questions remain over strict U.S. curbs on the extensive technology sharing needed for the project and about the length of time it will take to deliver the submarines.
Australia is expected to buy up to five U.S. Virginia class nuclear-powered submarines in the 2030s as part of the landmark agreement to be revealed in detail by Biden, Australian Prime Minister Anthony Albanese and British Prime Minister Rushi Sunak, four U.S. officials told Reuters this week.
The agreement would have multiple stages with at least one U.S. submarine visiting Australian ports in the coming years and end in the late 2030s with a new class of submarines built with British designs and American technology, one of the officials said.
Two of the officials said that after the annual port visits, the United States would forward deploy some submarines in Western Australia by around 2027.
In the early 2030s, Australia would buy three Virginia class submarines and have the option to buy two more.
China has condemned the effort by the Western allies, who are seeking to counter its military buildup, pressure on Taiwan and increasingly muscular deployments in the contested South China Sea.
SHARING SENSITIVE TECHNOLOGY
The officials did not elaborate on the planned new class of submarines, including where they would be built, but Australia's ambassador to Washington said last week there would be a "genuine trilateral solution" and the plan offers the prospect of jobs in all three countries.
Under the initial AUKUS deal announced in 2021, the United States and Britain agreed to provide Australia with the technology and capability to deploy nuclear-powered submarines.
It will be the first time the United States has shared nuclear-propulsion technology since it did so with Britain in the 1950s. Currently no party to the nuclear Non-Proliferation Treaty other than the five countries the NPT recognizes as weapons states - the United States, Russia, China, Britain and France - has nuclear submarines.
In a second stage of the AUKUS project, the three countries will share advanced technology such as artificial intelligence and hypersonic weapons. British and Australian officials said last week there was still work needed to break down bureaucratic barriers to such technology sharing.
Bill Greenwalt, a former senior Pentagon official for industrial policy, said that since it will be years before the Australia has new submarines, the partners urgently need to move forward with this second stage, which covers capabilities that could be deployed within the next few years and are needed quickly given the growing threat posed by China.
"Undersea drones, swarming drones, ubiquitous surveillance, advanced AI and data analytics are all in this potential wheelhouse but ITAR (International Traffic in Arms Regulations) prevents the types of cooperation that is needed," said Greenwalt, referring to U.S. export rules.
A State Department spokesperson said the United States was working to streamline the defense trade process, adding: "We do not anticipate any challenges in implementing AUKUS due to U.S. export-control regulations."
AUSTRALIAN WORKERS TO THE U.S
The U.S. Congress has been briefed in recent weeks on the AUKUS deal to garner support for the legal changes needed to smooth out technology transfer issues for the highly secret nuclear propulsion and sonar systems that will be aboard Australia’s new submarines, a congressional source said on condition of anonymity.
Over the next five years, Australian workers will come to U.S. submarine shipyards to observe and train, the source said, adding that this could help ease a shortfall of U.S. shipyard workers.
It is unclear how AUKUS might affect the U.S. Navy's own submarine acquisitions. General Dynamics Corp (GD.N), which makes Virginia class submarines, has 17 of them in its current backlog delivering through 2032.
Australia's Defence Minister Richard Marles said on Thursday the submarines would ensure peace and stability across the Indo-Pacific, Southeast Asia and the Indian Ocean.
"It is difficult to overstate the step that as a nation we are about to take," said Marles. "We have never operated a military capability at this level before."
Justin Burke, a visiting fellow at Australia's Lowy Institute think tank, said the aim was for a straightforward and cost-effective plan to supply submarines and starting with an existing design like the Virginia Class was "a very plausible way forward."
"There are always considerable challenges in designing submarines from scratch, especially if you are combining technology from different nations and potentially manufacturing across multiple locations. Acquiring several submarines up front would mitigate those risks considerably," he said. (Reuters)
March
Over the South China Sea, dispute simmers via radios and rhetoric
Written by Nur Yasmin
As a Philippine coast guard aircraft flew over the disputed Spratly islands in the South China Sea on Thursday, a message came in over the radio telling it to immediately leave "Chinese territory".
Such warnings, from a Chinese coast guard ship, have become an almost daily ritual around one of the world's most contested archipelagos, where China is one of five countries claiming the strategic islands - or at least some of them - as their own.
"Calling China coast guard vessel. You are transiting inside Philippine territorial sea," the Philippine pilot radios back.
"Request identify yourself and state your intention to prevent misunderstanding," he said.
China claims sovereignty over almost the entire South China Sea and has for years permanently deployed hundreds of coast guard and fishing vessels in disputed areas like the Spratlys, where it has dredged sand to build islands on reefs, and equipped them with missiles and runways.
Malaysia, Vietnam, Brunei and Taiwan also have claims in the Spratlys. The Philippines occupies nine features there, and has accused China of aggression and "swarming" by fishing vessels that it says are militia, including near the tiny Thitu island occupied by Manila since the 1970s.
A Reuters journalist joined the Philippine flight on Thursday and observed some of those Chinese boats dotted in the waters around Thitu, an island of 400 people. The Philippines last week accused the vessels, including a navy ship, of "slowly loitering".
China said on Friday it has sovereignty over the Spratly Islands, known in China as the Nansha Islands, and its adjacent waters.
"Therefore, it is reasonable and legal for Chinese ships to carry out normal activities in waters under China's jurisdiction," Chinese foreign ministry spokesperson Mao Ning told a regular briefing.
The fly-by came amid repeated complaints by the government of President Ferdinand Marcos Jr against China's actions, including its use of a laser that Manila said temporarily blinded crew members of a coast guard vessel last month.
The Philippines under Marcos has stepped up its rhetoric to challenge China and is seeking closer ties with former colonial power and defence ally the United States, including plans to hold joint sea patrols.
The plane flew over another hot spot for China-Philippines tensions - the Second Thomas Shoal - where the military grade laser was last month used to target a coast guard crew supporting a military resupply mission.
The Philippines has long maintained a small contingent of military aboard a rusty former U.S. navy ship that it ran aground on a reef there to preserve Manila's territorial claim.
China's coast guard challenged the plane again as it flew over the shoal, located inside the Philippines 200-mile exclusive economic zone.
"This is the Philippine Coast Guard," the pilot responded.
"We are conducting a routine maritime patrol within our national airspace, and monitoring the safety of our fishermen," it said. (Reuters)
March
North Korean leader Kim calls for intensified drills in case of 'real war'
Written by Nur Yasmin
Jakarta (voinews): North Korea's Kim Jong Un ordered the military to intensify drills to deter and respond to a "real war" if necessary, state media said on Friday, after the leader oversaw a fire assault drill that it said proved the country's capabilities.
North Korea fired a short-range ballistic missile off its west coast on Thursday, South Korea's military said, adding it was analysing possibilities the North may have launched multiple missiles simultaneously from the same area.
Photos released by the North's KCNA news agency showed at least six missiles being fired at the same time.
KCNA said a unit trained for "strike missions" fired a "powerful volley at the targeted waters" and demonstrated its capability to "counter an actual war."
"(Kim) stressed that the fire assault sub-units should be strictly prepared for the greatest perfection in carrying out the two strategic missions, that is, first to deter war and second to take the initiative in war, by steadily intensifying various simulated drills for real war ...," KCNA said.
Kim was accompanied by his young daughter who has appeared recently in a series of major events.
South Korean President Yoon Suk Yeol said South Korea would step up combined military drills with the United States and enhance joint planning and execution of U.S. extended deterrence against the North's nuclear and missile threats.
"We will build an overwhelming response capability and retaliation posture," Yoon said at a commissioning ceremony for naval academy graduates in the southeastern city of Changwon, adding that the security situation surrounding the Korean peninsula was "more serious than ever."
Seoul has been seeking to strengthen extended deterrence, the ability of the U.S. military to deter attacks with its nuclear umbrella, amid growing calls within South Korea for the country to develop its own nuclear capability to counter North Korean threats.
The latest missile launches came as the United States and South Korea were set to kick off large-scale military exercises known as the Freedom Shield drills next week. North Korea has long bristled at the allies' drills as a rehearsal for invasion.
North Korean leader Kim's sister, Kim Yo Jong, said earlier this week any move to shoot down one of its test missiles would be considered a declaration of war and blamed the joint military exercises for growing tensions.
Yang Uk, a research fellow and defence expert at Seoul's Asan Institute for Policy Studies, said North Korea has been increasingly claiming that its smaller missiles are nuclear-capable, in apparent threats to South Korea.
"North Korea doesn't appear to have developed miniaturised nuclear warheads to be loaded on cruise or tactical ballistic missiles yet, but it's clear that's where they are headed to," Yang said.
The United States will hold an informal meeting of United Nations Security Council members next week on human rights abuses in North Korea, a move likely to anger Pyongyang and spur opposition from China and Russia. (Reuters)