THE NAVIGATOR
MARCH 2024
INTRODUCING OUR INAUGURAL NEWSLETTER
Dr Manali Kumar, Editor-in-Chief at 9DASHLINE
Welcome to the new monthly newsletter from 9DASHLINE.
This month we navigate the various unfolding democratic exercises, geopolitical manoeuvring, and ongoing domestic challenges across the Indo-Pacific. From Pakistan's recycled leadership to India's upcoming election with questions of transparency, democratic processes are under strain. Similar anxieties grip Southeast Asia, where Thailand and Indonesia grapple with potential crackdowns on democratic voices. This rise in authoritarian tendencies and lack of stability creates an volatile environment, potentially hindering economic growth and long-term investment opportunities.
Our main stories in this edition focus on India and AUKUS (the trilateral security partnership between Australia, the United Kingdom, and the United States). As India heads to general elections, disclosures around electoral bonds and allegations of extortion in relation to political funding indicate the increasingly sophisticated nature of corruption in the country. The AUKUS pact, designed to bolster security cooperation, faces scrutiny amidst questions about US capabilities and Australia's strategic prudence. We also see potential signs of de-escalation with talks planned between China and Australia.
The Indo-Pacific is a crucial economic engine, and its political turmoil has global consequences. How countries manage their economies and respond to the geopolitical competition between China and the US is going to affect risks and opportunities across the Indo-Pacific. In case you missed them, we also link to some of the most insightful expert analyses published on 9DASHLINE towards the end.
We’re going to keep tracking these developments and many more to keep you up-to-date on the latest news and events in the region, and provide you with expert insights that will help you understand the complex geopolitical landscape of the Indo-Pacific.
THE SAGA OF ELECTORAL BONDS IN INDIA
By Chetan Rana
In a landmark decision on 15 February, India's Supreme Court struck down the electoral bonds scheme marking a pivotal moment in the ongoing debate over political funding and transparency. Introduced in 2017 (and notified in 2018) through the Finance Bill as part of the Union Budget and issued exclusively by the State Bank of India (SBI), the electoral bonds were supposed to increase accountability and eradicate black money from political donations. However, the scheme's promise of donor anonymity immediately sparked concerns, as it obscured the details of the purchasers and the receiving political parties from the public eye.
The Association for Democratic Reforms (ADR), Common Cause, and the Communist Party of India (Marxist) (CPI(M)) questioned the legality of electoral bonds as a mechanism for political funding. The CPI(M) is also the only major political party to have boycotted the electoral bonds from their inception. This culminated in a Supreme Court ruling highlighting the scheme's infringement on the public's right to information, ordering an immediate cessation of the scheme, and directing SBI to disclose the details of the transactions involved.
The resulting disclosures paint a grim picture. The ruling Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi, is the primary beneficiary of these funds, securing over half of the total donations. It has also emerged that many of these corporate donors were awarded major government contracts, indicating potentially quid pro quo arrangements. Reports also suggest that companies under investigation by central agencies made significant contributions, including those operating at a loss, leading to allegations that these donations are a form of extortion. While several political parties benefited from the scheme, as the ruling party the BJP has been uniquely positioned to leverage this financial instrument to its advantage over the past five years. The gradual unveiling of the electoral bonds scheme's ramifications has intensified concerns over a deepening corporate-political nexus in India.
AUKUS HITS ROUGH WATERS
By Connor Fiddler and Daniel McIntyre
Announced in September 2021, the trilateral partnership between Australia, the United Kingdom, and the United States (AUKUS) has become a pivotal relationship for security cooperation in the Indo-Pacific. Despite the praise, the pact faces many barriers.
Among the various AUKUS initiatives, one of the most consequential is the US selling 3 to 5 Virginia-class nuclear-powered submarines to Australia. Many in Washington are concerned about what this means for the US submarine fleet and shipbuilding industry. Over the past five years, the US has produced 1.2 submarines a year, well below the required production rate of 2 a year. Additionally, unless the US is willing to sacrifice its own capability, AUKUS would require the US to produce 2.33 submarines a year. With President Biden’s recent procurement cut to the Virginia-class submarines, there are now serious questions about the US’ budgetary, personnel, and industrial capacity to support this program.
Questions over the US’ reliability and AUKUS’ feasibility hit a neuralgic point in Australian strategic thinking, where “fear of abandonment” is at the core of its foreign policy. The Fall of Singapore in 1942 is still fresh in the memory and critics are asking whether Australia is repeating past mistakes by becoming dependent on an unreliable external ally for its security.
Polling this month showed significant support among Australians for their country to be “An independent middle power with influence in Asia-Pacific region”, with barely half as many supporting the country’s status as “primarily an ally of the US”. With earlier public enthusiasm souring, some have said that AUKUS needs “a public diplomacy arm”, similar to the creation of the NATO Information Service in 1950, to explain the purposes of the agreement. Although the Labor government has said it remains “fully behind” the deal, questions remain about its strategic prudence. In light of the US announcement, former Prime Minister Malcolm Turnbull said Australia had been “mugged by reality”.
ACROSS THE INDO-PACIFIC
More of the same in South Asia
Following elections in early February, Pakistan’s lower house has re-elected Shehbaz Sharif (brother of former Prime Minister Nawaz Sharif) as its new prime minister. Having already held this office from April 2022 to August 2023, the Sharif-led coalition of PML-N and PPP is expected to continue past policies, including giving over more power to the military. The government also faces mounting economic and security challenges. Although it has managed to secure the release of the final USD 1.1bn tranche of a USD 3bn IMF bailout package, Pakistan is burdened by over USD 130bn of external debt while foreign reserves are a meagre USD 8bn and inflation is still at 23 per cent. Meanwhile, the security situation continues to deteriorate with a recent suicide bomb attack in Khyber Pakhtunkhwa killing five Chinese nationals hours after an attack by Baloch militants on a naval air base in Balochistan. Check out this recent article in 9DASHLINE for an insightful analysis of the government’s struggle to contain the Baloch insurgency.
Earlier this month in Nepal, Prime Minister Pushpa Kamal Dahal of the Maoist Party joined forces with the Communist Party of Nepal to form a new coalition government following policy differences with the former centrist coalition partner, the Nepali Congress. The country, which finds itself in the crosshairs of geopolitical competition between China and India, could do with some much-needed political stability to focus on boosting its economy. The Communist-led government might be more willing to engage with China than its predecessor as it seeks to revitalise stalled infrastructure projects.
Meanwhile, India is preparing to hold the world’s largest ever election with polling set to begin on 19 April. The government is deploying all possible measures to stifle the opposition with Delhi Chief Minister Arvind Kejriwal arrested on allegations of corruption, and the Indian National Congress Party’s bank accounts frozen over allegedly unpaid income tax dues. Meanwhile, although India is one of the world’s fastest-growing economies, unemployment particularly among educated youth continues to increase and private and foreign investments remain tepid. Despite scandals around the electoral bonds, the failure of the grand alliance of 27 political parties to agree on an effective seat-sharing agreement and Prime Minister Modi’s grand opening of the USD 217bn Ram Temple in Ayodhya this January will deliver the BJP a third term in office.
The struggle for democratic consolidation in Southeast Asia
Although Southeast Asian countries are caught in the crosshairs of great-power competition, issues surrounding domestic governance are capturing most people living in the region.
On 12 March, Thailand’s pro-monarchy Election Commission announced it would seek the dissolution of the pro-democracy Move Forward party, setting up a legal battle in the courts. Despite winning a clear plurality in the May 2023 general election, it was denied its right to take power by forces loyal to the monarchy and military. Move Forward’s top policy priority is amending the royal anti-defamation law, which it argues is used to suppress free speech and political dissenters. The dissolution of the Future Party in 2020 sparked student protests against the government. For a deeper understanding of Thailand’s political dynamics, check out William J. Jones’ analysis for 9DASHLINE.
Similarly, Indonesia faces legal questions about its February general election. Defense Minister Prabowo Subianto was declared the winner with almost 60 per cent of the vote, but his rivals claim voting irregularities and unconstitutional practices. Courts are set to decide the veracity of their claims.
In Cambodia, local elites voted in Senate elections, paving the way for former Prime Minister Hun Sen’s return to a senior government position. After 38 years as prime minister, Hun will serve the largely ceremonial role as Senate President. Exiled opposition leader Sam Rainsy expressed hope that the small gains made in the election by opposition forces could encourage more democracy.
A new normal in East Asia
In the Taiwan Strait, China seems to be attempting to establish a new normal around Kinmen Island after the fatal capsizing of a Chinese fishing vessel last month — similar to its response to former US Speaker Nancy Pelosi’s visit in August 2022. However, the incident also looks like a case of escalation management as the two sides have been regularly talking. That being said, China has little interest in escalating. Kinmen is the most pro-China region in Taiwan and per its recently launched Fujian Proposal to encourage “integrated development” with Taiwan, it will not want to sour ties with Kinmen, 10km off its coast, where official cooperation is at its strongest. On China’s strategy towards Taiwan, check out PRC scholar Dr Lin Gang’s article this month for 9DASHLINE.
The Hong Kong Legislative Council passed the Safeguarding National Security law, also known as Article 23 on 19 March. Analysing Article 23’s implications, Eric Y.H. Lai says it will “integrate the PRC’s national security framework into Hong Kong’s legal system”. Proposed offences under the new law might cause issues for foreign businesses. Critics say its passing will impact the rule of law and freedoms in Hong Kong, and further isolate it from the liberal democratic world.
Security concerns take centre stage in the Pacific
As the US and China remain locked in a geopolitical struggle for influence, developments in the Pacific underscore the complex manoeuvering required to navigate ever-heightening security concerns, economic conditions, and emerging partnerships.
Pacific island nations like Tuvalu, which recently reaffirmed its relationship with Taiwan, are grappling with existential threats from rising sea levels, further exacerbated by security concerns. Tuvalu's recent plea to Australia for sovereignty guarantees highlights this worry, with the 2023 Australia-Tuvalu Falepili Union treaty raising fears about potential constraints on Funafuti’s ability to make independent security decisions, especially regarding China.
Meanwhile, Australia is to partner with UK-based BAE Systems in the latest step toward acquiring nuclear-powered submarines. Separately, the UK and Australia announced a defence cooperation agreement potentially signalling a hardening stance against China's growing footprint in the region.
Potential maritime talks between China and Australia offer some hope for de-escalation in the South China Sea, which remains fraught with territorial disputes. Australia’s recent AUD 1 billion deal to sell 100 infantry fighting vehicles to Germany showcases its increasing role as a security provider.
New Zealand Prime Minister Christopher Luxon's upcoming China visit underscores the delicate balancing act undertaken by regional players. As Wellington explores potentially joining AUKUS, a move opposed by China, it is also seeking to maintain economic ties with Beijing. Security concerns, however, may push New Zealand even closer to the US and its allies.
In February, Japan held a cybersecurity exercise with five Pacific island nations designed to bolster secure digital connections in the face of increasing global cyber threats. Pacific countries continue to balance security partnerships with the US and allies while deepening economic ties with China. New alliances like AUKUS and regional defence buildups are fast reshaping security dynamics, creating opportunities and challenges in this rapidly evolving region.
THE BEST OF 9DASHLINE
This month we spotlight several expert analyses exploring different aspects of China’s domestic politics and governance under Xi Jinping’s rule.
The re-election of the pro-independence Democratic Progressive Party in Taiwan’s January elections is a troubling outcome for Beijing, which has long followed a policy of seeking reunification.
Beijing’s Taiwan policy after the island’s elections
In this article, Dr Lin Gang (Distinguished Professor, Fujian Normal University) explains how this is likely to affect China’s policy towards the island nation in the coming years
Like many advanced industrialised countries, China is also now facing the challenge of an ageing population.
Ageing China increases its military spending
In this article, Jiachen Shi (PhD candidate, Tulane University) analyses why, unlike in other countries, this is having a ‘crowding-in’ effect on military spending in China deeply influenced by capitalism.
Xi’s purge and corruption in the PLA
Here, Lyle J Morris (Senior Fellow, Asia Society Policy Institute’s Center for China Analysis) explores systemic corruption in the Chinese military following the recent unprecedented removal of several senior officials and a rash of recent removals of senior People’s Liberation Army officials.
In February, the Central Committee of the Communist Party of China released regulations governing the study of the Party's history.
China’s 'history learning' regulations
In this article, Manoj Kewalramani (Fellow, Takshashila Institution) and Rakshith Shetty (Research Analyst, Takshashila Institution) explain how the party is strategically using historical narratives to bolster its legitimacy, consolidate power, and shape the trajectory of its governance.
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