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Policy Forum Online: Bush Administration's Asia Policy Ethical Governance Of Investment Biweekly Update
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I. United States1. ROK-US Military Alliance Agence France-Presse ("US TO BOLSTER MILITARY ALLIANCE WITH SOUTH KOREA," 09/25/03) reported that the US plans to boost its military potential on the Korean Peninsula over the next four years -- and make a concerted effort to strengthen its security alliance with the ROK, said US Defense Secretary Donald Rumsfeld. He did not offer any specifics. But addressing the US-Korean Business Council, Rumsfeld on Tuesday expressed confidence that the regime holding power in the DPRK will eventually collapse, and the country will join the ranks of democratic societies. "While the situation in North Korea sometimes looks bleak, I'm convinced that one day freedom will come to the people of the North and light up that oppressed land with hope and with promise," the defense secretary said. However, he stressed that in the interim, the US and the ROK must continue to build on their strong relationship and make efforts to strengthen regional security. "Over the next four years, the US has plans to make a substantial investment in the alliance, strengthening more than 150 of our various military capabilities," Rumsfeld said without elaborating. He added that the administration of President George W. Bush had been assured that the ROK "will compliment those investments with improved capabilities of their own." The US military is reorganizing its posture in the ROK, pulling key units away from the demilitarized zone where they could be vulnerable to a surprise artillery strike from the North, and consolidating its 37,000-strong force around several key hubs farther south. The redeployment is seen as a prudent move since the DPRK keeps more than 60 percent of its 1.2-million-strong army within 100 kilometers (65 miles) of the DMZ, according to defense officials. In his address, Rumsfeld assured that while the size and shape of the US footprint in the region might evolve, US determination to defend the region will not wane. "There certainly would be no change at all in our commitment to the defense of South Korea and just let there be no doubt about that," he stated. "Our goal is to reinforce deterrence and to position the alliance for the period ahead," he added. 2. PRC Solid-Fuel Satellite Agence France-Presse ("CHINA DEVELOPS ITS FIRST SOLID-FUEL SATELLITE ROCKET," 09/25/03) reported that the PRC has successfully test-fired its first four-stage solid-fuel rocket capable of putting small satellites into space on short notice, the official Xinhua news agency reported. The launch of the Pioneer I rocket on September 16 at north PRC's Taiyuan Satellite Launch Center makes the PRC only the third country capable of developing such rockets, after the US and Russia, a spokesman for China Aerospace Science and Industry Corp (CASIC) told Xinhua. The rocket is capable of putting payloads of up to 100 kilograms (220 pounds) into orbit around the earth to help with resource exploration, environmental monitoring and surveys, the spokesman said. The announcement comes just weeks ahead of the PRC's planned manned space mission, which is widely expected to take place next month, based on media reports. The Xinhua report did not say whether the rocket had any connection to the launching of space flights or whether it could launch satellites for military use. The People's Daily website said the rocket would be convenient for short-term, short notice use, such as to launch satellites to monitor sudden natural disasters or to broadcast sports events. "Compared with powerful launch vehicles that use liquid fuel, the solid-fuel launch vehicle, popularly known as Pioneer I, requires much less preparation time to launch, and is much easier to operate," the spokesman said. It takes 12 hours or less to prepare for the launch of a satellite using the Pioneer I rocket, whereas about three months are needed to prepare the traditional liquid-fuel launch vehicle, including the time for shipping, installation and testing, and filling it with liquid fuel. The Pioneer I also can be launched from a mobile pad, the spokesman said. 3. US Missile Defense Development The Guardian ("Pentagon 'pushing missile defence system too fast," London, 09/24/03) reported that the cost of the US's national missile defence system is likely to spiral higher, and the system's effectiveness could be impaired, because the Pentagon is pushing to get the program operational by the end of next year, congressional investigators say. The General Accounting Office said this week that introducing untested technologies before they were fully developed could drive the program well beyond Pentagon estimates. The GAO report said the Missile Defence Agency had developed and tested only two of 10 vital technologies needed for the ground-based shield, to be built in Alaska and California. The MDA maintains it will have five more ready by the middle of next year, but the GAO found they would be integrated into the final system before they had been fully demonstrated. "Making a decision to begin system integration of a capability before the maturity of all critical technologies have been demonstrated increases the program's cost, schedule and performance risks," the GAO said. In December, President George W. Bush ordered the Pentagon to field a ground-based missile shield in Alaska, where six interceptors will be built, and central California, with four. The system has been described as limited, but Bush's decision significantly accelerated a controversial program developed piecemeal since Ronald Reagan first proposed a space-based anti-missile system in the 1980s. The GAO report said the stepped-up schedule proposed by Bush was largely responsible for the premature integration, a point the administration has quietly conceded in budget documents. "As a result, there is greater likelihood that critical technologies will not work as intended in planned flight tests," the GAO said, which could force the Pentagon to spend more funds than expected or "accept a less capable system". The Defense Department has budgeted approximately $10 billion a year over the next five years to fund the missile defence program, and congressional appropriators last week approved $9.1 billion to be spent next year on the system. The portions in Alaska and central California will cost an estimated $21.8 billion through to 2009, $6.2 billion of which has already been spent. The GAO report singled out a radar being developed to track incoming missiles as a particular problem. The "Cobra Dane" radar is currently used to collect data on some Russian test launches of intercontinental ballistic missiles, but does no "real-time" data processing or communications. In order to fit into the missile defence system by the end of next year, it must be upgraded to perform both functions, a task that will require significant software changes, which will be completed only shortly before the entire system is to go online. "Unless the current test program is modified, the only opportunities for demonstrating Cobra Dane in an operational environment would come from flight tests of foreign missiles," the GAO said. 4. Japan Domestic Politics Agence France-Presse ("SUPPORT SURGES ABOVE 60 PERCENT FOR KOIZUMI AFTER RESHUFFLE," 09/24/03) reported that support for the cabinet of Japanese Prime Minister Junichiro Koizumi leapt above 60 percent according to three opinion poll results. The polls were conducted immediately after a cabinet reshuffle on Monday. The Nihon Keizai Shimbun economic daily showed support surging 20 percentage points from a month earlier to 65 percent, the sharpest gain yet for the premier. Koizumi's approval was buoyed by the recent rise in the stock market and his appointment of "young and capable" lawmakers to key party and cabinet positions, the paper said. The Yomiuri Shimbun put support for the cabinet at 63 percent, up six points from a similar poll last month. But the leading paper noted 55 percent of respondents said Koizumi should shift the focus of his economic policies to boost growth, with only 30 percent supporting structural reforms as the top priority. The Mainichi Shimbun put support for Koizumi's cabinet at 65 percent, up 11 points from a month earlier. All three surveys polled more than 1,000 respondents on Monday and Tuesday, immediately after Koizumi announced a new cabinet in which he kept key reformer Heizo Takenaka, 52, in both his economic and financial posts. A day earlier, Koizumi named former deputy chief cabinet secretary Shinzo Abe, 49, who has taken a tough line on North Korea, as the ruling Liberal Democratic Party's secretary general. Abe, who has handled the issue of the abduction of Japanese citizens by DPRK spies, received a 76 percent approval rate, according to the Mainichi poll. In the LDP's number two post, Abe will play a key role in leading the party into a general election expected later this year. 5. Japan on DPRK at UN General Assembly Agence France-Presse ("JAPAN UPBRAIDS NORTH KOREA AT UN GENERAL ASSEMBLY," 09/23/03) reported that Japanese Foreign Minister Yoriko Kawaguchi took the DPRK to task at the UN General Assembly on Tuesday, calling on Pyongyang to abandon its nuclear weapons program. "The development and possession of nuclear weapons by North Korea must never be tolerated," Kawaguchi said in a speech to the annual gathering of world leaders in New York. "Japan once again urges North Korea to immediately and completely dismantle all of its nuclear development programs in a verifiable and irreversible manner," she said. The foreign minister said Tokyo also required a solution to the issue of Japanese nationals abducted by the DPRK in the late 1970s and early 1980s, before it could consider normalising relations with Pyongyang. In a wide-ranging address, Kawaguchi highlighted several regional issues by calling for the release of Myanmar's detained democracy leader Aung San Suu Kyi and pushing for the trial of Khmer Rouge leaders in Cambodia. She also issued a strong call for reform of the UN Security Council and reiterated Japan's desire for a permanent seat on the body. "The perpetuation of the same basic structure of the Security Council of 60 years ago leads many to question the legitimacy under which the United Nations operates," she said. 6. PRC-Russia Oil Pipeline Deal Postponement Agence France-Presse ("RUSSIAN PM TELLS CHINA OIL PIPELINE DEAL POSTPONED," 09/24/03) reported that Russian Prime Minister Mikhail Kasyanov said a long-awaited 2.5-billion-dollar oil pipeline deal with Beijing had been postponed, but Moscow was still committed to helping the PRC meet its energy needs. Russia was still conducting technical and environmental studies for the construction of a 2,400-kilometer (1,500-mile) pipeline from its Angarsk oil fields in Siberia to refineries in northeastern China's Daqing city, Kasyanov said. "I personally believe in order to better improve the basic technical plan and meet the environmental needs we still need three or four months of time," he said in a press conference after meeting his PRC counterpart Wen Jiabao. "Can you say this is a postponement? Yes, you can." The project has been discussed for some 10 years, with many expecting a Russian decision during Kasyanov's visit. Talks between the premiers appeared mostly focused on economic ties between the two Asian giants. Afterwards they oversaw the signing of six agreements, including a joint communique, a protocol on improving trade of "sensitive products" -- which the two sides refused to identify, and a banking agreement. Wen told journalists that the PRC viewed cooperation in the oil industry as central to the "strategic partnership of cooperation" established between former presidents Boris Yeltsin and Jiang Zemin in the mid-1990s. "We both believe that to strengthen cooperation in the oil industry is a major part of our cooperation," Wen said. "Both sides believe that the most logical way to transport oil is through the oil pipeline and ... both sides expressed the government joint communiques, agreements and commitments (on the project) should be honored." The project has increasingly come under threat from a rival Japanese project, which observers have said may be more attractive to the Russians because it could help bring in much-needed funding from Japan. The Japanese project would extend the pipeline some 800 kilometers (500 miles) more to the Pacific ocean, where the Russian crude could be immediately placed on global markets. 7. US-PRC Currency Battle Agence France-Presse ("US INDUSTRY STEPS UP PRESSURE ON BUSH OVER CHINA CURRENCY BATTLE," 09/25/03) reported that the US industry urged the administration of President George W. Bush to intensify pressure on China over its currency peg, which it says is costing vital jobs and profits. "Pegging the yuan to the dollar appears to be part of a deliberate strategy to support PRC industry and boost exports," William Primosch, director of international business policy at the National Association of Manufacturers, told a congressional panel. Manufacturers and high-technology representatives implored Congress and the Bush administration to push Beijing to adopt a market-based exchange rate regime rather than pegging the yuan to the dollar. US manufacturers argue the yuan, which has been pegged at about 8.3 to the dollar over the past nine years, is undervalued by 15 percent and is unfairly eating away at US exports. Treasury Secretary John Snow pressed the currency issue with PRC leaders on a recent visit to Asia and the US has used its position in the Group of Seven industrial powers to take up the PRC's currency. 8. ROK New Administrative Capital Asia Pulse ("S KOREA'S NEW ADMIN CAPITAL TO HAVE POPULATION OF 500,000," Seoul, 09/24/03) reported that the ROK's new administrative capital, scheduled to be built in the Chungcheong region by 2013, will likely be designed to accommodate a population of about 500,000 and occupy a space of over 66 million square meters, experts said at a seminar Wednesday. At a public seminar organized by a presidential commission on the new administrative capital project and the Korea Planners Association, urban-planning experts urged the government to construct the new administrative capital at an "independent" site, rather than on the outskirts of an existing large city. Prof. Kim Hyun-soo of Daejin University said that a population of around 500,000 will be most ideal for the new capital city from an urban planning perspective with regards to self-sufficiency, infrastructure and financing. Kang Jeong-seok, a senior researcher at the Korea Institute of Public Administration, insisted that both the administrative and legislative bodies be relocated to the new capital city in line with international practices. With regard to the judiciary, he proposed relocation to the new capital or another provincial city in order to help promote balanced regional development. He insisted on the relocation of almost all central-government ministries and agencies, excluding the Financial Supervisory Commission, calling for further reviews regarding the Ministry of Defense, the Fair Trade Commission and the National Intelligence Service. The final site for the new administrative capital will be announced in the second half of next year, after a study of several candidate locations in the Chungcheong Provinces, with construction set to begin in 2007. 9. US Firms on DPRK Nuclear Standoff Asia Pulse ("US FIRMS URGE EARLY END TO N.KOREAN NUCLEAR STANDOFF," Washington, 09/24/03) reported that the resolution of the DPRK nuclear standoff is a vital factor in ensuring a stable investment climate and overall confidence in the ROK market, American and Korean business leaders said in a joint statement released here Tuesday. The statement, released at the end of the 16th annual plenary session of the Korea-US/US-Korea Business Councils, said that elimination of the DPRK nuclear threat is needed in order for South Korea to successfully position itself as a key regional business center. "During the two-day session ended Sept. 23, the Korean and US sides reviewed the outlook for the bilateral economic and political relationship, with a special focus on priority commercial issues, including prospects for a bilateral investment treaty and free trade agreement," the statement said. It also noted the two parties held intensive discussions surrounding the need for greater labor flexibility to improve the business climate for all firms and the unintended consequences of the tightened US visa policy on legitimate business and other travel to the US. The Korean and US business leaders also exchanged views on Korea's goal of establishing itself as a commercial hub for Northeast Asia and the steps that would be needed to move toward that objective. The two councils issued a separate joint statement on the importance of a US-Korea bilateral investment treaty, or BIT, calling for a renewed effort to find creative approaches to the outstanding differences that hold up conclusion of a BIT. "The conclusion of a US-Korea BIT would bring tangible benefits to both countries," the statement, which will be delivered to appropriate senior members of both governments, said.
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