Posted on Monday, July 2, 2012 by Michael Chen
A weekly compilation of under reported events in Asia.
- China National Offshore Oil Corporation (CNOOC) announced it will open nine offshore blocks in the South China Sea to foreign bids for energy development. Vietnam protested the CNOOC decision, calling it a violation of its sovereignty. Territorial disputes in the South China Sea also came to a head last week when Vietnam passed its Maritime Law reaffirming national claims over the Paracel and Spratly islands. Meanwhile China released plans to establish Sansha City, a prefecture-level body that will administer islands in the South China Sea, including the Paracels and Spratlys.
- After failed WTO negotiations, the U.S., EU, and Japan requested a dispute settlement panel against China’s restrictions on rare earths exports. The three powers accuse China, which produces 97 percent of the world’s total rare earth output, of artificially holding down prices for domestic manufacturers as a means to encourage international companies to move production to China. Later last week, however, Japan announced its own discovery of rare earths in its Pacific seabed, which scientists say could sustain the country’s industries for over 200 years.
- India and South Korea have reacted differently to recent EU sanctions that will place a ban on insuring tankers carrying Iranian oil. Following Japan’s pledge last week to provide sovereign guarantees for Iranian shipments, India announced that it will use Iranian ships and insurers to continue crude imports from Iran. However, South Korea announced that it would halt Iranian imports starting July 1. The decision drew criticism from Iran, which threatened to reconsider ties between the two nations. Seoul may overturn its decision as the two countries are in talks to circumvent the sanctions by importing crude oil on Iranian-flagged tankers.
- Seoul released a surprise announcement that it would sign the General Security of Military Information Agreement (GSOMIA) with Japan, but backtracked the next day, citing a need to discuss the issue with the National Assembly. The military pact would allow direct sharing of information on North Korean and Chinese military developments. Public backlash prompted ruling party officials to pressure the government to reverse the unpopular decision. As South Korea approaches election season the GSOMIA may constrain the current ruling party, whose candidate Park Geun-hye, already faces a serious challenge from independent businessman Ahn Cheol-soo.
- South Korea may backtrack on plans to purchase 60 F-35s, a contender for Seoul’s fighter jet acquisition bid, if Lockheed Martin denies Korea the chance to monitor the stealth fighter’s performance. Meanwhile, Japan has agreed to purchase four F-35s as an initial purchase, an announcement experts say will boost Lockheed's prospects in Korea.
- Japan’s lower house overwhelmingly passed a tax hike that would double the country’s sales tax by October 2015. 50 ruling party lawmakers who opposed the bill, led by faction leader Ichiro Ozawa, quit the party in protest to what they called a betrayal of the party’s campaign promise, leaving the ruling Democratic Party of Japan (DPJ) with a slim majority in the parliament’s lower house.
- The newly confirmed ambassador to Burma (Myanmar), Derek Mitchell, said that lack of transparency in Burmese ties to North Korea remains a major obstacle to normalized U.S.-Burma relations. Apart from urging Burma to sever ties with Pyongyang, Mitchell also called for more transparency in its extractive industries, including oil and gas. Meanwhile, during Aung San Suu Kyi’s landmark visit to Europe, leaders including French president Francois Hollande vowed to support all actors in Burma’s democratic transition.
- In legislative elections on June 28, Mongolia’s opposition Democratic Party narrowly defeated the ruling Mongolian People's Party. Both parties campaigned on platforms to reduce unemployment and narrow the income gap with revenues generated from mining. Mongolia’s mining boom has made the landlocked country the fastest growing economy last year, but a third of its population remains below the poverty line.