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Republic of China, Indonesia Simmers, Kyrgyzstan Chaos, Wang Watch and the Week in Review

Blog / Weekly Review

Republic of China, Indonesia Simmers, Kyrgyzstan Chaos, Wang Watch and the Week in Review

Happy Friday folks. Our latest podcast is out and is about a controversial question, namely, is there any comparison to be made between what India has done in Kashmir in the past year and what China has done in Hong Kong? Amal Sinha joins us to dive into that question. Also, Jacob is going to be virtually joining Kathleen Lucente, President and Founder of Red Fan Communications, on October 29th to discuss “Communications and Geopolitics: What leaders need to know now.” If you want to sign up to join, you can do so here. Kathleen is a B0$$ and it should be an interesting conversation. Lastly, thank you so much to the folks who have written in to tell us how much they are enjoying the newsletter. We’re glad and all we ask is that you continue to spread the gospel of Perch, especially to folks who need help managing the risks, challenges, and opportunities geography and politics are creating in their lines of business. We’re working on some exciting client projects right now but have plenty of bandwidth to take on more, so don’t be shy.

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The Republic of China. Chinese Nationalist Party (KMT) Chairman Johnny Chiang said the Republic of China aka Taiwan is a “sovereign nation.” The KMT proposed two resolutions in the Legislative Yuan urging Taiwan’s government to “request the U.S. help resist the CCP [Chinese Community Party]” and to pursue “resumption of diplomatic relations between Taiwan and the U.S. The resolutions were unanimously approved.

What it means: That’s a huge policy about-face from the KMT. There is speculation that this is a political maneuver to embarrass the ruling Democratic Progress Party (DPP), the assumption being that the KMT wants to embarrass the DPP by proposing impractically aggressive moves. (Even the independence-minded DPP has sought to maintain the political status quo and improve relations with the U.S. “step-by-step” rather than going for it all in a way that would piss China off too much.) We think that is a misread. Taiwan is changing. A 2019 Pew survey indicated 66 percent of Taiwanese people identify as Taiwanese – and the number bumps up to 83 percent for the aged 18-29 demographic. The KMT has lost two elections in a row to the DPP, the last one by a 57 to 39 percent margin at the beginning of the year in the pre-COVID world. (Remember that?) The KMT, in other words, is sitting on a losing political position and needs to shake things up. This sure does accomplish that goal, and while the first response from China was predictably angry, it was the Thursday morning trade data that showed that Taiwan-China trade was up over 13 percent year-on-year and notched a new record for the first 9 months of any year on record that is most significant. China has no choice but to play a long game though we should probably expect the saber-rattling to be lit in the weeks and months ahead.

Indonesia simmers. Indonesia rushed to pass a controversial omnibus bill aimed at creating jobs and attracting foreign investment. Global investors voiced concerns that the bill was not environmentally conscious enough. Indonesia police cracked down to prevent large-scale protests against this bill from developing. They failed and protests continued and grew throughout numerous Indonesian towns and cities while workers took part in a national strike for three consecutive days and counting. Meanwhile, the Indonesian government announced it is planning to set up a sovereign wealth fund with an initial investment of $5 billion and would seek to attract $15 billion in investment funds and the U.S. invited Indonesian Defense Minister Prabowo Subianto to the U.S. for talks on military and defense cooperation next week.

What it means: Indonesia is the fourth most populous country in the world, the 10th largest economy in terms of purchasing power parity, and it has succeeded in cutting its poverty rate by more than half since 1999 to roughly 10 percent (before COVID-19 of course). Indonesia has the largest Muslim population in the world, with over 205 million people, or 13 percent of the world’s total Muslims and sits astride some of the world’s most important maritime trade routes. Despite its strategic location and the economic potential its size offers, Indonesia’s vast diversity makes it extremely difficult for the central government to control the country, and there is arguably no country in the world more in danger of the negative consequences of climate change then Indonesia. The country is moving its capital away from Jakarta in part because the city is sinking. And yet, its potential and its strategic location make Indonesia one of the least talked about and most important variables for considering the future of the balance of power in the Indo-Pacific region, hence the U.S. interest in hosting Subianto just a week after chumming it up with its fellow “Quad” leaders in Tokyo earlier this week.  Like India, Indonesia is trying to take advantage of COVID-19’s disruption by pushing through controversial and needed reforms. Whether and how well it can do so will be an important indicator to help assess Indonesia’s overall trajectory. First results aren’t looking great.

Chaos in Kyrgyzstan. Protesters flooded the streets of multiple cities in Kyrgyzstan over allegations that government authorities manipulated the results of this weekend’s parliamentary elections. Opposition parties signed a petition requesting the Central Election Commission to annul the results, which they subsequently did. As of writing it is not clear who is in charge of Kyrgyzstan. The Kyrgyz Security Council has closed the country’s borders and the whereabouts of top politicians are unknown. At one point, a rump parliament seemed to attempt to appoint a new prime minister, but according to Eurasianet’s Peter Leonard, that has only made the situation more confused.

What it means: It is hard to know at this point, and with the borders being closed, it just got more difficult to get reliable information out of the country. Russia has appeared to rule out intervention which means unlike in Belarus, the Kyrgyz people will have a chance to solve their issues with government corruption, poor economic performance, and COVID-19 disruptions for themselves. All we can say

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Wang-watch. China’s National Supervisory Commission announced that Dong Hong, who worked closely alongside top Xi henchman Wang Qishan, is under investigation for “serious disciplinary violations.”

What it means: Xi Jinping is one of the most powerful leaders in China’s history. He achieved his position in part because he empowered Wang to execute a series of political purges designed as much to rid the Chinese Communist Party of corruption as to make sure the CPC cadres would loyal to Xi’s rule. Unlike Chairman Mao, however, Xi’s approach to purges was orderly and legalistic. Xi has first-hand knowledge of the sort of chaos Mao’s approach could create: his family was personally impacted by it as a result of his father being subject to a previous purge. The thing about purges however is that they rarely if ever stop, and eventually in an authoritarian regime, the leader has to purge the purgers. That is why it is so important for China-watchers to watch Wang Qishan’s political fortunes and why even the insinuation that Wang might be connected to someone who has run afoul of party discipline warrants mention here. If Xi is turning against Wang, that tells us something about the nature of the CPC regime and the brittleness of Xi’s power. If this turns out to be yet another sensationalist rumor, then the opposite could be true: far from being an indicator of weakness, it would suggest solidarity at the top. Hence our watchful interest.

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Fighting continues in the South Caucasus. Azerbaijan and Armenia continue to fight over Nagorno-Karabakh with no end in sight. Some of the fighting this week spilled over onto Iranian territory, which caused Iran’s Interior Minister Rahman Fazli to warn that if the situation continued, Iran would “take reciprocal action if necessary.”

What it means: This adds yet another variable to an unstable situation and puts Iran in a very difficult position, as it has pragmatic and meaningful ties with both Russia and Turkey and yet has a natural propensity to see this conflict from Azerbaijan’s point of view.

 

Honorable mention

Ethiopian lawmakers decided to cut an undisclosed amount of federal funding to the Tigray region after it went ahead with elections that the central government has deemed illegitimate and illegal.

In case you missed it, U.S. President Donald Trump has COVID-19.

If you’re in the path of Hurricane Delta, we’re thinking of you. 2020 has sucked for all of us but Southwest Louisiana especially can’t seem to buy a break this year.

Warner Brothers delayed the release of the new Dune movie to October 1st, 2021. STOP IT 2020. WE’VE HAD ENOUGH.

The University of Santiago de Chile published a report that said temperatures in the extreme north of the Antarctic peninsula were the highest in three decades and more than 2 degrees Celsius above their average.

New Caledonia, which has the third-largest producer of nickel in the world in 2019, voted to reject independence from France by a 53-47 percent margin, a slightly weaker display than a similar vote in 2018 that saw a 57-43 percent margin.

French President Emmanuel Macron said his government would submit a bill to parliament early next year in order to combat “Islamist separatism,” which Macron described as “an ideology which claims its own laws should be superior to those of the Republic.”

The Turkish lira hit yet another record low on the dollar earlier this week.

The foreign ministers of Japan, the United States, India, and Australia – the so-called “Quad” – met in Tokyo on Tuesday.

The National Zoo accomplished a gender reveal for a panda cub born last month without setting off a wildfire. Good job National Zoo and welcome to the world unnamed boy panda baby!

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