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From the Editor's Desk ***** 8 August 2012 | Vol. 3, № 30. From the Editor’s Desk Dear FDI supporters, Welcome to this week’s edition of the security. Staying on the theme of food Strategic Weekly Analysis. security, Anna Mitrofanova, provides an assessment of the growing agricultural We begin this week, by exploring the crisis in the Democratic Republic of the announcement of industrial military co- Congo. operation between China and Indonesia. To conclude, we focus on India. Firstly, we FDI Associates, Margareth S. Aritonang examine the causes and consequences of and Novan Iman Santosa, consider this the recent large-scale power outage. within the broader context of growing Linked to this, we focus on the prospects relations between Beijing and Jakarta, of recovery for India’s slow economy. considering the implications for security in the region. I trust that you will enjoy this edition of the Strategic Weekly Analysis. Staying in South-East Asia, we analyse the implications of the on-going water crisis in Major General John Hartley AO (Retd) Selangor, and its implications for up- Institute Director and CEO coming elections. The Indian Ocean Future Directions International Research Programme analyses Singaporean Prime Minister, Lee Hsien Loong’s recent visit to India. Next, following July’s announcement that Australia will supply the United Arab Emirates with uranium, we assess Abu Dhabi’s motivations for nuclear power and broader regional trends. Gary Kleyn reports on a new study from the Economist Intelligence Unit that provides national assessments on food ***** China, Indonesia Begin Missile Talks Background China and Indonesia have started talks on the ambitious local production of C-705 anti-ship missiles as part of Indonesia’s efforts to achieve independence in weapons production. The defence co-operation reflects strengthening ties between both countries amid heightening tension in the South China Sea involving China and a number of Indonesia’s ASEAN neighbours. Comment Indonesian Defence Ministry chief spokesman Brigadier-General Hartind Asrin said that the initial talks were conducted during the first China-Indonesia defence industry co-operation meeting held in Jakarta on 25 July. The Ministry’s Director-General of Defence Potential, Pos M. Hutabarat, hosted the Chinese delegation which was led by Liu Yunfeng, a deputy Director-General at the Chinese State Administration for Science, Technology and Industry for National Defence (SASTIND). ‘The meeting discussed various efforts to improve co- operation between the defense industries of both countries,’ Hartind said. ‘We’ve already prepared an area for the *missile+ production site that faces the open sea for trials.’ Hartind said the C-705 had a range of 120 kilometres and that the Indonesian Navy had successfully test-fired C-705s in the Sunda Strait. ‘China has also offered to donate weapons systems that Indonesia might need,’ he added. A source said that Indonesia was expected to reply to Phase One of the missile proposal at the end of August and Phase Two, one month later. A contract is expected to be signed in 2013. Phase One covers semi-knocked down production, while Phase Two is on completely- knocked down production. A proposal for a Phase Three on research and development is already on the table although the focus is currently on the first two phases. Aside from missile production, a number of Indonesian Army Special Forces Command (Kopassus) members recently conducted the second “Sharp Knife” joint exercise with Chinese Special Forces operatives earlier this month in Jinan, Shandong, China. China has also offered to train ten pilots from the Indonesian Air Force in using a Sukhoi simulator in China. Commenting on the defense co-operation, Indonesian defence expert Andi Widjajanto said the industrial co-operation was solely to gain access to more advanced technology. ‘However, it will take a long time for us to be independent in the defence industry, perhaps after 2024. This is the reason Indonesia builds partnerships with many countries that possess modern military technologies,’ he said. ‘This is also why we require partner countries to transfer their technologies to us in any agreement we sign with them.’ Andi added that there were two goals in terms of the partnership: to access advanced rocket technology, and to collaborate in upholding maritime security, which began when President Susilo Bambang Yudhoyono signed an agreement in March during a state visit to Beijing. ‘I don’t believe it has anything to do with conflicts in the South China Sea,’ he stressed. Page 2 of 13 Meanwhile, Chairman of the House of Representatives’ Commission I on defence issues, Mahfudz Shiddiq, said such global partnerships in the defence industry were designed to develop Indonesia’s own industry. ‘We have allocated 150 trillion rupiah ($15.1 billion) to modernise our weapons-defence system from 2010 to 2014. It would be wasteful paying such a huge amount to foreign defence industries without any attempt to improve our own,’ he said. ‘Therefore, we require partner countries to transfer their military technologies in the hope that they will gradually improve our own technologies.’ He added that the partnership with China was due to its advanced military technologies in fields such as rocketry. ‘This is not political, even though others might link the partnership to political issues, for example, the South China Sea disputes,’ Mahfudz said. Indonesia already co-operates on weapons production with several other countries, including South Korea to build jet fighters and submarines, the Netherlands to build frigates and Spain to build medium transport aircraft. Margareth S. Aritonang and Novan Iman Santosa FDI Associates About the Authors: The authors write for the Jakarta Post, Indonesia’s leading English- language daily. Ms Aritonang is a graduate of the Universitas Sanata Dharma in Yogyakarta, and Mr Santosa is an alumnus of the Institute of Defence and Strategic Studies, Indonesian Defence University. This article originally appeared in the Jakarta Post of 27 July 2012. ***** Politics Blamed for Malaysian Water Crisis Background As Malaysia gears up for a federal election next year, people in the state of Selangor in the country’s west are questioning whether the current water shortage crisis in their area has been manufactured for the sake of political leverage. Malaysia’s long ruling party United Malays National Organization (UMNO) lost control of Selangor in the last election and many believe that this current water crisis is an attempt by UMNO to undermine the public’s perception of the state’s current ruling party before next year’s election. The current crisis, while serious, is not life-threatening to the people of Selangor, but will potentially mean reduced access to water due to rationing. Comment Malaysia’s western state of Selangor is the richest and most populous in the country. It includes Kuala Lumpur, the nation’s capital and is the traditional engine room for Malaysia’s economic growth with a population of over seven million. Recent heavy rains have left the seven dams that supply Selangor’s drinking water overflowing, but UMNO representatives Page 3 of 13 have suggested that the state government’s decision to block the RM3.8 billion ($1.2 billion) Langat 2 water treatment plant is behind the current water crisis. The state’s water supply company Syabas announced on 14 July it would implement water rationing in Kuala Lumpur, Hulu Langat and Klang in response to the critical levels of treated water available, but this has led to outrage from both the state government and locals. Rozali Ismail, the executive chairman of Syabas, is also the treasurer for UMNO’s Selangor branch showing that the country’s ruling party has close ties with the company in control of the area’s water supply. This has resulted in cries of corruption from both the state government and locals, as many believe that UMNO and Syabas are working together to manufacture a water crisis so as to ensure the state government appears incompetent. Rozali also owns a 40 per cent stake in Puncak Niaga, a company that owns 29 out of 34 water treatment plants in Selangor as well as a 70 per cent stake in Syabas. In response, Selangor has declared an attempt to take over Syabas and is going ahead with plans to sack Rozali by using their 30 per cent stake in Syabas to trigger a vote of no-confidence. The federal government has signalled it will not allow Syabas to be taken over by Selangor, but in response, the Selangor government has revealed it will bring the takeover bid for Syabas to a referendum. The water treatment plant proposed by UMNO has been slammed by the Selangor government as unnecessary and a potential catalyst for a steep rise in water tariffs. They also claim that projections for water consumption and population growth used to justify construction of the plant are too high. Instead, they are asking for RM225 million ($68 million) from the federal government to upgrade two existing plants and have committed RM200-300 million ($60-90 Million) of their own funds which they say will generate an additional 100-150 million litres a day. Many, including Charles Santiago, an opposition member of parliament and coordinator for the Coalition Against Water Privatisation, believe Rozali’s large stake in Puncak Niaga and therefore also Syabas, is the main reason behind the current push for the Langat 2 treatment plant. “Are the companies manufacturing a crisis for projects? Did the federal government promise operations and management of Langat 2 to Syabas?” asked Santiago while speaking to Free Malaysia Today; an independent news agency. The Deputy Prime Minister, Muhyiddin Yassin has stated that the federal government will go ahead with building Langat 2 without Selangor state’s approval if necessary. The Selangor government appears set to take drastic action against what it perceives as manipulative politicking by the federal government ahead of next year’s elections.
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