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Georgetown Journal of

ASIAN AFFAIRS POLICY FORUM The Contest for Vietnam’s Offshore Energy Gregory Poling

East Asia’s Nuclear Policies Timothy Fraser & Daniel P. Aldrich

The Global Implications of China’s Energy Transition Jane Nakano

Moon Jae-in’s Nuclear Phase-out Policy Viet Phuong Nguyen

Indonesia: From Oil to Coal Elena Reshetova Asia’s Auto Boom and Energy Security Clara Gillispie & Laura Schwartz

Ongoing Court Battles After Fukushima Paul Jobin An Ethical Future for the Mekong River David Groenfeldt

Should Clean Energy Be Politics As Usual? Rohan D’Souza

Energy Access, Greener Energy, and Energy Security in India Meeta Mehra & Guarav Bhattacharya

Energy Transitions in Myanmar and Thailand Adam Simpson & Mattijs Smits

Technology Leapfrogging in China and India Daisuke Hayashi

Energy Politics in Asia A Time of Transition with an introduction by Senator Dan Sullivan

Published by the Asian Studies Program in the Edmund A. Walsh School of Foreign Service


Georgetown Journal of

ASIAN AFFAIRS Vol. 4 | No. 2 | Winter 2019

The Georgetown Journal of Asian Affairs is the flagship scholarly publication of the Asian Studies Program housed within the Edmund A. Walsh School of Foreign Service at Georgetown University. Established in 2014, the Journal aims to provide a forum for scholars and practitioners in the field of Asian affairs to exchange ideas and publish research that further the understanding of the world’s largest and most populous continent. The views expressed in this issue do not necessarily reflect those of the Journal ’s editors and advisors, the Asian Studies Program, the Edmund A. Walsh School of Foreign Service, or Georgetown University.

Winter 2019 [i]


editorial board Editor-in-Chief Sam Gerstle

Senior Editor

Managing Editor

Publishers

Kim Mai Tran

Brian Bumpas

Daye Shim Lee Caroline Yarber

Associate Editors

Assistant Editors

Nick Kodama

Abigail Dawson

Rachelle Moon

Jake Galant

Kim Roy

Jessica Lee

Sonia Su

Karissa Prayogo

advisory board Saadia Pekkanen University of Washington

Amitav Acharya American University

Philip Kafalas Georgetown University

Charles Armstrong Columbia University

Jordan Sand David Kang University of Southern California Georgetown University

Harley Balzer Georgetown University

Christine Kim Georgetown University

David Shambaugh George Washington University

Carol Benedict Georgetown University

Diana Kim Georgetown University

Gi-Wook Shin Stanford University

Kurt Campbell The Asia Group

Joanna Lewis Georgetown University

Sheila Smith Council on Foreign Relations

Victor Cha Georgetown University

Kristen Looney Georgetown University

James Steinberg Syracuse University

Mike Mochizuki Bruce Dickson George Washington University George Washington University

Elizabeth Stephen Georgetown University

Andrew Nathan Evelyn Goh Australian National University Columbia University

Robert Sutter George Washington University

Michael Green Georgetown University

Irfan Nooruddin Georgetown University

Yuhki Tajima Georgetown University

Touqir Hussain Georgetown University

Michael O’Hanlon Brookings Institution

Andrew Yeo Catholic University of America

Christopher Johnson CSIS Freeman Chair

Lynn Parisi University of Colorado

[ii] Georgetown Journal of Asian Affairs


contents Volume 4 | Number 2 | Winter 2019

1

Editor’s Note

policy forum Energy Politics in Asia: A Time of Transition 6

Introduction Indo-Pacific Strategy Should Include Energy Sen. Dan Sullivan

9

High Stakes in the Contest for Vietnam's Offshore Energy Gregory Poling

13

The Global Implications of China's Energy Transition Jane Nakano

18

Indonesia's Energy Transition From Oil to Coal Elena Reshetova

25

How Asia's Auto Boom Shapes its Energy Security Strategies Clara Gillispie and Laura Schwartz

38

Should Clean Energy Be Politics As Usual? Reflections on India's Energy Transition Rohan D'Souza

45

Illiberalism and Energy Transitions in Myanmar and Thailand Adam Simpson and Mattijs Smits

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58

East Asia's Nuclear Policies Fukushima Effect or a Nuclear Renaissance? Timothy Fraser and Daniel P. Aldrich

66

An Analysis of Moon Jae-in's Nuclear Phase-out Policy The Past, Present, and Future of Nuclear Energy in South Korea Viet Phuong Nguyen

73

"Some 40 Years to Clean Up Fukushima" A View from Ongoing Court Battles Paul Jobin

82

Imagining an Ethical Future for the Mekong River David Groenfeldt

88

Energy Transitions in India Implications for Energy Access, Greener Energy, and Energy Security Meeta Mehra and Guarav Bhattacharya

98

Energy Transitions in China and India Leapfrogging in Wind and Solar Power Technology Daisuke Hayashi

research 108 The Consequences of Confucius Institutes Understanding the Opposition Andrew Switzer

interviews 132 China's AI Ambitions Elsa B. Kania

142 Shifting Dynamics on the Peninsula What is next for the United States? Sue Mi Terry

[iv] Georgetown Journal of Asian Affairs


147 Navigating the China-Russia Defense Relationship What role for the United States? Richard Weitz

152 Political Activism in Thailand Lessons for Democracy Thai Political Dissident

Send inquiries to: SFS Asian Studies Program, Georgetown University Box 571040, 37th and O Streets, NW Washington, DC 20057 Email: gjaa@geogetown.edu

Winter 2019 [v]


Editor’s Note

In 2013, political scientists Llewelyn Hughes and Phillip Lipscy identified a recent surge of interest in the politics of energy. As they wrote in that year’s Annual Review of Political Science, the topic had reemerged “as a major area of inquiry.”1 The two offered a straightforward explanation for this development: the politics of energy had changed fundamentally since the oil shocks of the 1970s and past accounts of the connection between energy and politics could no longer be accepted uncritically. In short, the politics of energy had become interesting once again. Three factors were at play in this development, including the economic rise of non-Western economies, the gradual liberalization and globalization of the energy market, and emerging threat of climate change. Since 2013, the continued relevance of these trends has only deepened interest in the politics of energy, the topic for the Winter 2019 issue of the Georgetown Journal of Asian Affairs. In a breakdown of these trends, Hughes and Lipscy point out that the growth of non-Western, and specifically Asian economies, had led to a renewal of interest in the threat of great power conflict. Western anxiety focused in particular on China’s rise, which had, in addition to seeing China develop into a military rival of the United States, been facilitated by massive oil imports. With China’s demand surging, many analysts and policymakers, citing a widely-held concern that the world would soon enter a period of oil scarcity, believed that tension over natural resources might trigger a war between the United States and China. This attentiveness to the intersection of great power rivalry and energy that persists today.2 The second trend cited by Hughes and Lipscy is climate change. The growing recognition among governments that climate change demands action on a global scale introduced an entirely new factor into the traditional political discussions around energy. Where energy policy has long focused on energy security, which deals primarily with the economic and security questions related to ensuring that a state’s energy demand is met, climate change required a re-examination of the basic question of how energy is produced. Climate change has also changed the aims and actors involved in the politics of energy, leading to a diffusion of influence away from the state. The original dilemma of energy politics—providing equitable access to energy while also ensuring its steady and affordable supply, addressed primarily at the state level—has become what Adam Simpson and Mattijs Smits refer to in this issue as the “energy policy trilemma.” Increased state concern with the ecological impact of energy use has been accompanied by the emergence of a set of new actors seeking to influence policy. Energy policy is not simply a domestic concern, however, and, as Hughes and Lipscy 1

Llewelyn Hughes and Phillip Y. Lipscy, “The Politics of Energy,” Annual Review of Political Science 16 (March 2013): 449-69. 2 The term “energy abundance” was popularized by Meghan O’Sullivan, a political scientist and former member of the U.S. National Security Council. See, O’Sullivan, Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power (New York: Simon and Schuster, 2017).

[1] Georgetown Journal of Asian Affairs


Editor’s Note

point out, the study of energy policy at the international level has also undergone a substantial shift that in many ways mirrors changes at the domestic level. The politics of energy was originally viewed through a realist lens, with states as the primary actors whose concerns were limited to the determination of who exercised control over which natural resources. Due to the globalization of the world economy and emergence of international cooperation and non-governmental interest groups seeking to address increasingly global energy concerns, energy policy has expanded beyond security policy to encompass the overall foreign and economic policies of individual states. This shift took place even as the emergence of international energy cooperation and non-governmental interest groups lessened the role of the state in the international politics of energy. As demonstrated by the work in this issue of the Georgetown Journal of Asian Affairs, Asia’s example maps these dynamics. The energy policy trilemma frames the Winter 2019 issue of the Georgetown Journal of Asian Affairs, titled “Energy Politics in Asia: A Time of Transition.” This trilemma has persisted even as the international scene has changed dramatically since 2013. The United States emerged during the presidency of Barack Obama as an energy producing superpower on par with Russia and Saudi Arabia. Moreover, a growing acceptance of the costs of climate change and the falling cost of renewable energy have created hope of a transition away from fossil fuels like coal and oil and toward cleaner-burning and renewable sources of energy. On the other hand, nuclear power remains economically and politically out of favor due to an abundance of cheap natural gas and a fear of catastrophe that has persisted since the 2011 Fukushima nuclear disaster in Japan. The Editorial Board hopes this Policy Forum offers fresh perspectives the politics of energy in this time of transition. The Policy Forum is introduced by an essay by Senator Dan Sullivan of Alaska. Senator Sullivan has long played an influential role in guiding U.S. policy toward the Indo-Pacific region and, as a representative of the energy producing state of Alaska, in promoting U.S. energy overseas. His introduction provides not only the perspective of an influential politician, but also suggests how the United States can leverage the bounty of the unconventional oil and gas revolution. His remarks offer a perspective on another crucial transition in energy—the globalization of natural gas markets as United States turns into an energy-exporting superpower—and how this development is affecting the international balance of power. The next article, by Simpson and Smits, introduces the aforementioned “energy policy trilemma.” The authors focus on energy politics under illiberal regimes with a comparison of Myanmar and Thailand. In both countries, public pressure has led to greater access to energy, facilitated by small scale renewable energy projects. Both regimes understand that their legitimacy depends on poverty reduction, for which energy access is crucial, much like democracies across the world. Next, Greg Poling addresses the relevance of energy to China’s claims to sovereignty over the South China Sea. He finds that energy plays only a marginal, even incidental role, in driving conflict in this crucial region. In a case study of Vietnam’s efforts to ex-

Winter 2019 [2]


Editor’s Note

ploit the oil and gas reserves within its maritime borders, Poling finds that while China has exerted pressure to complicate and halt those efforts, this pressure is intended not to seize Vietnam’s natural resources, but to signal sovereignty over what China sees as its historic waters. Ready access to oil, gas, and coal powered China’s rapid economic growth, with dire consequences for China’s environment. Jane Nakano analyzes this environmental degradation has shifted China’s approach to energy consumption. She finds that in responding to public pressure at home for cleaner air and water, in addition to a desire to improve its image abroad, China is undergoing a state-led transition away from coal and toward cleaner-burning natural gas and renewables. In looking at Indonesia’s response to the energy trilemma, Elena Reshetova finds that the Jokowi government has prioritized energy security and electricity access over environmental concerns. Declining domestic production, a massive population—the world’s fourth largest—and the geographic challenge of managing 17,000 islands weigh in favor of greater coal use: coal is simply cheaper and more readily accessible than oil or gas. Transport consumes half of global energy produced, with personal vehicles accounting for roughly half of that amount. Clara Gillispie and Laura Schwartz use the framework of Asia’s car boom—there are 350 million cars on the road in Asia today, compared to just 50 million 40 years ago—to examine the energy policies of Asian countries. This car boom, they argue, will strain energy security and infrastructure, and, most critically, will have huge implications for the environment throughout Asia. Without forward-looking leadership, Gillispie and Schwartz argue that many countries will struggle to meet the challenges posed by their own economic growth. Daniel Aldrich and Timothy Fraser kick-off a series of articles on nuclear energy with an examination civil society groups concerned by the potential for nuclear disaster. The authors find that while many civil groups found nuclear power unacceptable in the wake of Japan’s triple disaster, governments have been hard-pressed to find replace nuclear power, given that powerful institutions and economic interests continue to favor its use. Viet Phuong Nguyen follows with an analysis of South Korean President Moon Jaein’s plan to shutter his country’s nuclear industry. Nguyen argues that economic and environmental imperatives demand a continued reliance on nuclear power, reflecting a tension between the dangers and promise of nuclear energy that policymakers must wrestle with throughout the world, with troubling implications for South Korea’s sustainability and energy security goals. Paul Jobin rounds out this section with an exploration of the efforts of one laborer engaged in the clean-up of the Fukushima Daiichi Nuclear Plant to secure compensation for work in dangerous levels of radiation. Through this narrow focus on one individual, Jobin highlights the incredible environmental and health impact of Japan’s nuclear

[3] Georgetown Journal of Asian Affairs


Editor’s Note

disaster. While traditionally a secondary concern for politicians, the ethical dimensions of energy use can help us balance political and economic concerns with an authentic consideration of the values of others. To this end, Groenfeldt identifies the interests of the various stakeholders in the development of hydroelectric dams on the Mekong River. He applies a framework to help the reader work through the necessity of tradeoffs between different value systems and asks us to consider more thoroughly the costs of development. Rohan D’souza examines the political, social, and economic costs of past energy transitions in India. He points to previous transitions in post-colonial India to argue that changes to our use of energy necessarily engenders follow-on effects throughout an economy and society. He finds that a transition away from fossil fuels demands a revolution in the political-economy of the energy sector. He warns that energy cannot be treated as merely a technocratic problem. The last two articles of the Policy Forum provide contrasting views on large scale adoption of renewable energy. The first, co-authored by Meeta Keswani Mehra and Gaurav Bhattacharya, examines New Delhi’s dual goal of developing a domestic renewable energy industry while simultaneously meeting the economic and political imperative of “energy for all” in a country where 300 million people lack access to electricity. As India’s energy use doubles over the next decade, Mehra and Bhattacharya find that with the present pace of change, India will struggle to meet its goals related to electricity access while limiting the use of fossil fuels in a country that is already the world’s fourth largest emitter of CO2. Daisuke Hayashi provides a different perspective on government-led efforts in India and China to introduce greater use of renewable sources of energy. He finds that these initiatives—facilitated by the falling price of renewable technologies—in China and India have made remarkable progress in advancing those countries through energy transitions. Hayashi’s research gives additional evidence that top-down initiatives can, in conjunction with economic incentives, move a country toward more new sources of energy. In addition to the Policy Forum, this issue features an original, peer-reviewed social science research paper by Andy Switzer. Switzer addresses the prevalence of Chinese-backed Confucius Institutes at American universities and the growing resistance among faculty and, increasingly, within the U.S. government, to hosting these institutions. Switzer contributes to our understanding of this issue by finding that this resistance is due to concerns regarding restrictions to academic freedom that often accompany these institutes. This issue closes with four timely interviews. Elsa B. Kania discusses recent developments in AI, U.S.-China competition in this emerging industry, and Chinese efforts to adapt AI technology for military use. Sue Mi Terry offered her thoughts on the Winter 2019 [4]


Editor’s Note

shifting geopolitical situation on the Korean peninsula and provided an assessment of the major drivers of change in that persistent conflict. Richard Weitz speaks about the history and future of Sino-Russian cooperation since the end of the Cold War and its impact on the regional balance of power. This issue ends with an interview with a member of Thailand’s New Democracy Movement. As democracy in Thailand continues to dissolve and democratic promises are challenged across Southeast Asia, our interviewee provides a powerful argument for democracy and justice. This issue would not have been possible without our entire Editorial Board, our authors, reviewers, and advisors. I am incredibly grateful for their patience, hard work, and commitment. The Journal relies on strong institutional support from the Asian Studies Program, which recently underwent its own transition as Dr. Victor Cha handed leadership over to Dr. Michael Green. I am grateful to both for their support, advice, and genuine dedication to their students. Kim Mai Tran and Brian Bumpas, our Senior Editor and Managing Editor, respectively deserve special thanks. Both went far beyond what was required to put this issue together. No one knows the Journal better than our Publisher, Daye Shim Lee, and I am thankful for her guidance throughout this process. Finally, Caroline Yarber deserves thanks for stepping into Daye’s shoes near the end of the process and bringing this edition to a successful conclusion. It was a privilege to serve as Editor-in-Chief for the Winter 2019 issue of the Georgetown Journal of Asian Affairs and I am grateful for the opportunity. I hope you enjoy what we put together. Sam Gerstle Editor-in-Chief

[5] Georgetown Journal of Asian Affairs


Sullivan | Introduction

policy forum Energy Politics in Asia: A Time of Transition

Introduction Indo-Pacific Strategy Should Include Energy Senator Dan Sullivan

Over the course of my career, I have had the opportunity to view our country’s relationship with Asia from a variety of different lenses, which began when I studied law and Foreign Service at Georgetown University. Soon thereafter, nearly two decades ago, I was a Marine Corps infantry officer aboard an amphibious assault ship with the 31st Marine Expeditionary Unit deployed in the South China Sea during the Third Taiwan Strait Crisis. I saw first-hand the powerful demonstration of American commitment and resolve in the recently renamed “Indo-Pacific.” As the U.S. Assistant Secretary of State for Economic, Energy, and Business Affairs, and then as the State of Alaska’s Commissioner of the Department of Natural Resources, I was involved in many trade and diplomatic missions in the area. Now, as a U.S. Senator, I have returned to the region numerous times as a member of the Senate Armed Services Committee to assess the United States’ strategy in the region.   In 2011, President Obama announced the “strategic rebalance to the Asia-Pacific,” or the “pivot,” which involved shifting our country’s focus — in terms of military and trade strategy — toward the region. While there are certainly challenges, the Indo-Pacific is a region full of immense opportunities. It holds half of the world’s population, it is the fastest growing economic region in the world, and it has tremendous export opportunities for our country.   To be clear, I have not agreed with many of the former president’s foreign policies. However, I was very supportive of President Obama’s Asia-Pacific focus, and this focus has continued – and been operationalized – in this current administration. To highlight the region’s importance to our country and to a peaceful global order, Secretary of Defense Jim Mattis’ first overseas trip as Secretary was to Japan and Korea, where he spoke of the enduring alliances between our nations and the need to continue to work to find deeper collaboration and to strengthen those strategic alliances.   I agree wholeheartedly with Secretary Mattis and also believe that one way to continue to work to strengthen our alliances is to cement and then expand our Indo-Pacific

Winter 2019 [6]


Policy Forum

strategy to include energy as component to our existing military and trade strategies. Using a three-pronged rebalancing strategy — military, trade and energy — has the potential to benefit our country’s economy and our national security, and to ensure peace and prosperity as this dynamic region of the world continues to grow and as countries like China continue their rise.   American energy as an important strategic asset has been overlooked for too long. American natural resources, particularly our vast reserves of natural gas, as well as oil and minerals, are much needed by Asian economies. Exporting these resources to Asian-Pacific markets is a win-win. First, it will create tens of thousands of good-paying jobs for American workers, deepen our country’s security ties with Japan and Korea, increase our economic ties with China, and dramatically and positively impact our trade imbalances in this part of the world. Most importantly, it will allow us to unlock our country’s economic might by enabling us to cement our role as the world’s energy superpower—with my state of Alaska playing a key role. Our country is an Arctic country because of Alaska, and the U.S. geological survey has estimated that the Arctic region has approximately 90 billion barrels of oil. Additionally, there are almost 1,700 trillion cubic feet of natural gas and 44 billion barrels of natural gas liquids. Just off the coast of Alaska alone, there is an estimate of over 24 billion barrels of conventional oil and 108 trillion cubic feet of gas. For decades, much of the energy resources in Alaska’s have been off the table because of environmentalists and a federal government that seemed to want to keep Alaska locked in a romanticized snow globe. Now, however, the current administration is working with my state as a partner in progress, and it understands that all roads towards energy dominance pass through Alaska. Recently, we were able to pass a bill to open a small slice of the 1002 area of the Arctic National Wildlife Refuge (ANWR) for exploration and potential energy development. It was a decades-long goal for my state, and I am proud to be a part of a congressional delegation that at long last got it done. Oil from ANWR, as well as other recent discoveries in my state, as well as development of renewable resources, will help our energy security, and therefore help our national security. When we do not have to import energy from countries that do not like us, or better yet, when we can export American energy to our allies like Japan and Korea, or even a country like China, this helps our national security and foreign policy.

[7] Georgetown Journal of Asian Affairs


Sullivan | Introduction

The White House and Congress has come together in support of our rebalance to the region. But to be truly successful, it must be a three-pronged strategy — military, trade and energy — in order to more comprehensively advance America’s long-standing interests and commitments in the region.

Senator Dan Sullivan (R-Alaska) is a member of the Senate Armed Services Committee and a former assistant secretary of State for economic, energy and business affairs.

Winter 2019 [8]


Policy Forum

High Stakes in the Contest for Vietnam's Offshore Energy

Gregory Poling The South China Sea disputes center on a noxious combination of nationalism, historical revisionism, and a contest over whether fundamental principles of international law, including the equality of states, will apply in Asia. The disputes are not driven by competition over energy resources, no matter how tempting it might be to place them within that well-worn narrative, and they would endure even if there were no oil and gas reserves under the disputed waters. According to U.S. Energy Information Administration estimates, the South China Sea holds a modest 16 to 33 billion barrels of oil and 14 trillion cubic meters of natural gas (Chinese estimates are much higher, but are generally rejected by outside experts).1 Nearly all of these hydrocarbons lie in shallow coastal waters around the edges of the South China Sea, with little to no commercially viable reserves beneath the disputed Paracel and Spratly Islands. But oil and gas exploration is vital to key stakeholders in each of the claimant countries, and serves as one field among many on which the contest over the deeper constellation of issues, especially competing visions of history and the role of international law, plays out. This is particularly true for Vietnam, whose entire offshore energy sector is now threatened by successful Chinese coercion. The South China Sea is home to two overlapping but interconnected disputes, one territorial and one maritime. The territorial disputes focus on contested sovereignty over the Paracel and Spratly Islands, and Scarborough Shoal. The maritime disputes focus on rights to water, airspace, and seabed. The two are related because customary international law, codified in the United Nations Convention on the Law of the Sea, dictates that a country’s maritime entitlements, including its territorial sea, exclusive economic zone, and continental shelf, derive from its coastline and outlying islands. 1

Richard Javad Heydarian, “Are China and the Philippines Agreeing to Share the South China Sea?” National Interest, April 5, 2018, http://nationalinterest.org/blog/the-buzz/are-china-the-philippinesagreeing-share-the-south-china-sea-25229. Compared to projected Chinese demand of over 12.5 million barrels per day in 2018. “CNPC Forecasts Chinese 2018 Oil Demand to Grow 5% to 12 Million b/d,” Platts, January 16, 2018, https://www.platts.com/latest-news/oil/singapore/cnpc-forecastschinese-2018-oil-demand-to-grow-27906041.

[9] Georgetown Journal of Asian Affairs


Poling | High Stakes in the Contest for Vietnam's Offshore Energy

The Southeast Asian littoral states base their claims in the South China Sea, including the oil and gas beneath it, on this framework, drawing lines out to legally-prescribed distances from their coastlines and the islands that they claim. Beijing, on the other hand, refuses to limit its maritime claims within the South China Sea to those emanating from territory. Instead, China falls back on a “nine-dash line” drawn around the entire perimeter of the sea within which Chinese leaders claim ill-defined “historic rights,” including to the oil and gas fields that sit on its neighbors’ continental shelves. On March 22, BBC News broke the news that Hanoi had, for the second time in less than a year, ordered Spanish energy company Repsol to halt work on a major offshore oil and gas project under pressure from Beijing.2 Repsol had commissioned a rig that was scheduled to depart Singapore for the project site, Block 07/03, on March 22 when Vietnamese authorities issued a last-minute order to stand down. The block is part of Vietnam’s internationally-recognized continental shelf, but also sits along the southern edge of China’s nine-dash line. A Repsol subsidiary estimates that the block could hold 45 million barrels of oil and 172 billion cubic feet of natural gas as part of the Red Emperor (Ca Rong Do) field. Vietnam has been trying unsuccessfully to exploit that field for a decade. This episode is a worrying echo of the last time Repsol tried to tap an oil and gas block on Vietnam’s continental shelf. In June 2017, despite complaints from Chinese authorities, Hanoi and Repsol decided to move forward with drilling in Block 136/03, which sits close to Block 07/03.3 That project covers part of Vanguard Bank, a piece of the Vietnamese seabed over which China has demanded exploration rights since at least 1992 when it leased blocks in the area to U.S.-based Crestone Energy. After Hanoi’s refusal to back down, Chinese authorities reportedly threatened to attack Vietnamese outposts in the area if Repsol did not halt its work. In late July, Hanoi folded and ordered Repsol to plug the well it was drilling and leave the area.4 It is unclear whether Repsol will ever be allowed to restart work at the two sites. If not, the company and its partners could be out as much as $300 million they already spent on exploration and drilling at Block 136/03 and another $200 million at Block 07/03.5 Whether canceled or indefinitely delayed, the case of Repsol will serve as a strong deterrent to any other foreign companies who might be considering investments in hydrocarbon exploration within the nine-dash line. The pool of potential investors is already depressingly small for Hanoi.

2

Bill Hayton, “South China Sea: Vietnam ‘Scraps New Oil Project’,” BBC News, March 23, 2018, http:// www.bbc.com/news/world-asia-43507448. 3 Murray Hiebert and Gregory Poling, “Tensions Bubble to the Surface in China-Vietnam Spat,” Asia Maritime Transparency Initiative, June 28, 2017, https://amti.csis.org/tensions-bubble-china-vietnam/. 4 Bill Hayton, “South China Sea: Vietnam Halts Drilling After ‘China Threats’,” BBC News, July 24, 2017, http://www.bbc.com/news/world-asia-40701121. 5 Ibid; Hayton, “South China Sea: Vietnam ‘Scraps New Oil Project.”

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Policy Forum

U.S. State Department cables reveal that in 2006 China began to pressure major foreign investors to abandon offshore contracts signed with Vietnam.6 Beijing reportedly threatened both BP’s $4.2 billion in assets in China and any staff it might send to work on offshore projects in the South China Sea.7 As a result of such pressure, both BP and Chevron sold off their stakes in projects in disputed Vietnamese waters.8 In 2011, stateowned PetroVietnam purchased ConocoPhillips’ $1.5 billion in offshore assets to try and push stalled projects forward.9 That left only a few foreign players still invested in Vietnam’s South China Sea oil and gas ventures. Russian companies, led by local subsidiaries of Gazprom, are heavily involved in Vietnamese offshore assets and have to date weathered any pressure to divest.10 Others still in the game include India’s state-owned Oil and Natural Gas Corporation (ONGC), Repsol (courtesy of its acquisition of Canada’s Talisman, which owns the rights to blocks 136/03 and 07/03), and ExxonMobil. With Repsol badly burned and ONGC sitting on assets that are likely not commercially viable just to send a message to China, Vietnam should be watching ExxonMobil closely.11 The U.S. energy giant has been more resistant to Chinese pressure than its competitors, at least to date, and it might be Hanoi’s last best hope to salvage international interest in its South China Sea energy resources. In January 2017, ExxonMobil announced plans to exploit natural gas in the Blue Whale (Ca Voi Xanh), field off the coast of central Vietnam. The area in question, Block 118, is bisected by the ninedash line and also overlaps with blocks that state-owned China National Offshore Oil Corporation put up for tender in 2012.12 The site at which ExxonMobil plans to drill falls about 10 nautical miles outside the nine-dash line and it would come as no surprise if Beijing objected on the basis that it would be siphoning out gas that lies across the line.13 ExxonMobil was expected to announce the official launch of the project in November 2017, but instead delayed a final decision until 2019. 14 That should have authorities in Hanoi, as well as the rest of the region, very worried. 6

“2008 Recap of the Sino-Vietnam South China Sea Territorial Dispute,” U.S. Embassy Hanoi Cable, January 20, 2009, in Stirring Up the South China Sea (IV): Oil in Troubled Waters, International Crisis Group (ICG), Asia Report No. 275 (Brussels: International Crisis Group, 2016), 12, https://www. crisisgroup.org/asia/north-east-asia/china/stirring-south-china-sea-iv-oil-troubled-waters. 7 Bill Hayton, The South China Sea: Struggle for Power in Asia (New Haven: Yale University Press, 2014), 137. 8 Ibid; ICG, Stirring Up the South China Sea, 12. 9 Ho Binh Minh, “Petrovietnam Eyes Oil Assets in Disputed South China Sea,” Reuters, July 8, 2011, https://www.reuters.com/article/us-vietnam-energy-conocophilips/petrovietnam-eyes-oil-assets-indisputed-south-china-sea-idUSTRE7671KS20110708. 10 “Gazprom Falls Victim to China-Vietnam Territorial Dispute,” RT, June 29, 2012, https://www. rt.com/business/gasprom-oil-gas-057/. 11 Mai Nguyen, Nidhi Verma, and Sanjeev Miglani, “Vietnam Renews India Oil Deal in Tense South China Sea,” Reuters, July 6, 2017, https://www.reuters.com/article/us-southchinasea-vietnam/vietnam-renews-india-oil-deal-in-tense-south-china-sea-idUSKBN19R25P. 12 Gregory Poling, “CNOOC Pulls Back the Curtain,” CogitAsia, August 15, 2012, https://www.cogitasia.com/cnooc-pulls-back-the-curtain/. 13 Hiebert and Poling, “Tensions Bubble to the Surface.” 14 Gary Sands, “Will China Scuttle ExxonMobil’s South China Sea Gas Project with Vietnam?,” The Diplomat, November 16, 2017, https://thediplomat.com/2017/11/will-china-scuttle-exxonmobilssouth-china-sea-gas-project-with-vietnam/.

[11] Georgetown Journal of Asian Affairs


Poling | High Stakes in the Contest for Vietnam's Offshore Energy

Were Vietnam forced to make the suspension of its offshore operations in Vanguard Bank and the Red Emperor field permanent, it would be abandoning exclusive rights to resources on its continental shelf—a fundamental principle of customary international law, including the United Nations Convention on the Law of the Sea. That would mark a significant win for China and its demand for historic rights. But it would also be a disaster for other South China Sea claimants, the United States, and the international community. The most important interests of Washington and likeminded partners in the South China Sea are the maintenance of regional stability and defense of the rules-based order, meaning freedom of the seas. The United States cannot defend the rules-based order or maintain the support of allies and partners just by ensuring that U.S. Navy assets can sail through contested waters. It must demand the observance of all lawful uses of the sea, including the rights of coastal states to an exclusive economic zone and continental shelf. Failing that, the U.S. Navy will sooner or later find itself sailing alone through a Chinese lake.

Gregory B. Poling is director of the Asia Maritime Transparency Initiative and a fellow with the Southeast Asia Program at CSIS. He oversees research on U.S. foreign policy in the Asia Pacific, with a particular focus on the maritime domain and the countries of Southeast Asia. Mr. Poling received an M.A. in international affairs from American University.

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Policy Forum

The Global Implications of China's Energy Transition Jane Nakano No country has made a bigger splash on global energy markets than China. In the last few decades, China’s dramatic growth in energy consumption has made it a price setter on a host of energy and natural resource commodities. Today, China’s energy system is undergoing a major transition as the country’s economy has entered a “new normal,” defined by slower rates of economic growth and a greater focus on a qualitative yardstick for economic development. What are the key features of China’s ongoing energy transition and their major global implications? During the past four decades of unprecedented economic growth, China became one of the world’s major energy consumers and importers, turning from a net exporter of oil up until 1993, to the largest net importer in 2014 and thereafter.1 This dramatic rise in China’s energy needs and its effort to secure energy and natural resources around the world raised even Washington’s eyebrows in the early 2000s, when it prompted a U.S. government investigation into the intent and implications of Chinese energy activities abroad for U.S. national security interests.2 Robust economic growth and attendant rise in energy consumption came with a steep price domestically for China’s leadership and public alike. China, which consumed less than half of the primary energy consumed by the United States in 2000, became the world’s largest carbon dioxide emitter in 2007 and the largest energy user in 2009.3 The nearly singular focus on maintaining a high level of growth began to wane earlier this decade. China’s leadership came to appreciate that slower growth rates were to be expected, given the stage of economic development the country had reached. The country’s GDP growth rates, which marked an average of 9.8 percent for the last few 1

Oil is a broad category that includes both crude oil and petroleum products, such as LPG, gasoline, jet fuel, lubricants, and asphalt. 2 “U.S. Energy Information Administration–EIA–Independent Statistics and Analysis.” China Is Now the World’s Largest Net Importer of Petroleum and Other Liquid Fuels–Today in Energy–U.S. Energy Information Administration (EIA). https://www.eia.gov/todayinenergy/detail.php?id=15531 3 Petroleum, natural gas, coal, renewable energy, and nuclear electric power are primary energy sources. Electricity is a secondary energy source that is generated from primary energy sources.

[13] Georgetown Journal of Asian Affairs


Nakano | The Global Implications of China's Energy Transition

decades, declined to 7.3 percent in 2014, and to 6.7 percent in 2017. Accordingly, China’s primary energy consumption growth has slowed down, as well. In 2016, China’s energy consumption grew by 1.3 percent, against the ten-year average growth rate of 5.3 percent.4 China’s energy transition is also being shaped by the need to alleviate energy-related air, land, and water pollution. Between 2000 and 2006 alone, sulfur dioxide emission in China rose by 53 percent. Outdoor and household air pollution are believed to have accounted for over two million premature deaths in China today.5 Moreover, environmental degradation has risen as a social and political issue, capable of destabilizing the Chinese regime under the Communist Party rule. For example, in the recent years, lawsuits have been brought against local governments, including Beijing’s, by a few Chinese lawyers for failure to effectively manage pollution. Additionally, the 2016 environmental protests in the city of Chengdu reportedly drew security forces in riot gear and resulted in detention of some protesters.6 Efforts to Combat Pollution To address environmental degradation, one of the measures introduced by the leadership is to shift China’s economic structure away from energy-intensive industrial sectors toward other less energy-intensive sectors, such as the service sector. Under the 13th Five-Year Plan (FYP) covering the 2016–2020 period, the government is calling for the share of the service sector in total GDP to rise from 50.5 percent in 2015 to 56 percent by 2020. Whether this goal is met will be a significant determinant for the success of China’s effort to reduce energy intensity by 15 percent by 2020. Meanwhile, insofar as China’s influential state-owned enterprises have a traditional preference for infrastructure investment and are dominant in many energy-intensive industries, the success of the structural transition is not a foregone conclusion. Another key measure is to increase the share of non-fossil fuels in China’s primary energy consumption mix, from 12 percent in 2015 to 15 percent by 2020. In particular, the effort to reduce dependence on coal has become a hallmark of the ongoing energy transition. As the world’s largest coal consumer today, China relies on coal for about 60 percent of its primary energy needs and about 70 percent of its electricity needs. Notwithstanding the dominance of state-owned enterprises in China’s coal sector, as well as local government interests in tax revenue and employment from coal sector activities, a host of government targets to reduce coal dependence is likely to continue 4

“BP Statistical Review 2017: China’s Energy Market in 2016,” BP. 2017. https://www.bp.com/ content/dam/bp/en/corporate/pdf/energy-economics/statistical-review-2017/bp-statistical-review-of-world-energy-2017-china-insights.pdf 5 “Energy and Air Pollution.” International Energy Agency (IEA), World Energy Outlook: Special Report 2016. 170. https://www.iea.org/publications/freepublications/publication/WorldEnergyOutlookSpecialReport2016EnergyandAirPollution.pdf 6 “China’s citizens are complaining more loudly about polluted air,” The Economist, March 2, 2017. https://www.economist.com/news/china/21717975-government-wants-silence-them-chinas-citizens-are-complaining-more-loudly-about-polluted-air

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to reduce coal’s share relative to other energy resources. China’s 13th FYP notably calls for capping the share of coal at about 55 percent of the total power mix. It also calls for limiting the addition of new coal-fired power generation capacity to 200 gigawatts (GW)—which is equivalent to the entire installed power-generation capacity of Germany—to a total installed coal capacity at 1100 GW. Moreover, the robust deployment of renewable energy sources is underway in China. Last year, the country was the top investor in clean energy technology, spending US$132.6 billion, a 24 percent increase from 2016.7 In 2017, about half of the total global investment in solar was spent in China, adding 53 GW of newly installed photovoltaic (PV) capacity.8 Additionally, nuclear power development has seen a remarkable growth since the early 2000s, due to the rapid growth of electricity demand and government measures to promote it as a non-carbon emitting source of electricity. As of March 2018, there were thirty-eight nuclear power reactors in operation, meeting roughly 4 percent of the country’s electricity needs. With close to twenty reactors under construction, China’s plan is to expand its nuclear power generation capacity from about 35 GW today to 58 GW by 2020. Meanwhile, China’s push for clean energy technologies, or “green shift,” is also helping to drive down the global costs of clean energy equipment and components, facilitating the decarbonization of energy systems in many parts of the world. Global Implications China’s energy transition has some significant implications for the global energy system. On the positive side, the urgency of addressing environmental issues has propelled China to become a leader on global climate change issues. Party leadership has recognized that carbon reduction strategies and policies can have complementary benefits of reducing local air pollutants. No longer apprehensive about the benefit of addressing climate change, nor suspicious of western powers’ intent behind anti-climate change efforts, China played an instrumental role in the successful conclusion of the Paris Agreement in November 2015. China today aims to cap carbon-dioxide emissions by 2030, as well as reduce carbon intensity by 40 to 45 percent by 2020, and by 60 to 65 percent by 2030 against the 2005 level. More concerning, however, are the uncertainties regarding the energy and environmental implications of China’s economic slowdown. No longer generating double-digit GDP growth rates, China’s economy has become laden with significant excess manufacturing capacity in some sectors. This, in turn, has been fueling China’s infrastructure export drive—whether under the auspices of the Belt and Road Initiative (BRI) or otherwise. China’s energy infrastructure export portfolio is significantly more coal intensive than the global average, and it is robustly aided by public financing. For example, since 2010, Chinese firms have been involved in 47 percent of global coal 7

“Runaway 53GW Solar Boom in China Pushed Global Clean Energy Investment Ahead in 2017.” Bloomberg New Energy Finance. January 18, 2018. https://about.bnef.com/blog/runaway-53gw-solarboom-in-china-pushed-global-clean-energy-investment-ahead-in-2017/. 8 Ibid.

[15] Georgetown Journal of Asian Affairs


Nakano | The Global Implications of China's Energy Transition

capacity addition in non-industrialized economies besides China.9 In terms of spending, China’s public financing for coal plant projects abroad since 2000 amounted to be $43.5 billion.10 While China strives to address domestic environmental problems from coal-fired power generation, its coal capacity export drive may also be exporting the emissions issue. The Guidance on Promoting Green Belt and Road, issued by the Chinese government in May 2017, suggests the government’s preference for infrastructure projects that promote energy conservation and emission reduction, and encourages companies to consider international environmental standards.11 As China is confronted by competing desires to address overcapacity and to comply with global expectations for low-emission exports, how the guidance will be implemented holds a key to successful “greening” of BRI energy projects. What’s Next? This drive to export energy infrastructure projects raises several geopolitical questions. How will China balance its infrastructure export drive and its nascent leadership on global climate issues? How will Chinese activities in the South China Sea and the future of territorial disputes affect the country’s ties with the very neighboring countries that are important markets for Chinese energy goods and services? Most fundamentally, what does China want to do with its newly acquired position as a key stakeholder in the global energy system? Rising energy consumption by nonOECD economies like China and India has prompted the re-examination of current international energy institutions that are largely a product of the oil embargoes of the 1970s. Feeling that the needs and concerns of emerging economies are under-served, China appears to be interested in gaining a greater voice on global energy governance matters. Yet, what exactly it aspires to say and do remain unclear. Is China ready to join western governments in upholding the rule of law that underpins open, transparent, and competitive markets for energy production, supply, and transit services? Or does China prefer more transactional relations with other major energy suppliers and importers? The answer to these questions will have a profound effect not only on the future of China’s energy sector, but also on the future of the global energy system, warranting close attention for some years to come.

9

Phillip Hannam et al., “Developing Country Finance in a Post-2020 Global Climate Agreement,” Nature Climate Change 5, 11 (2015): 983. 10 Kevin P. Gallagher. “China’s Global Energy Finance.” Boston University. http://www.bu.edu/cgef/#/ all/EnergySource/Coal. 11 “Guidance on Promoting Green Belt and Road,” State Information Center, May 8, 2017. https://eng. yidaiyilu.gov.cn/zchj/qwfb/12479.htm

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Jane Nakano is a senior fellow in the Energy and National Security Program at the Center for Strategic and International Studies (CSIS). Her areas of expertise include U.S. energy policy, global market and policy developments concerning natural gas, nuclear energy and coal, and energy security issues in the Asia-Pacific region. Nakano graduated from Georgetown University’s School of Foreign Service and holds a master’s degree from Columbia University’s School of International and Public Affairs.

[17] Georgetown Journal of Asian Affairs


Reshetova | Indonesia's Energy Transition

Indonesia's Energy Transition From Oil to Coal Elena Reshetova Widely recognized as ASEAN’s economic powerhouse, Indonesia recently joined the trillion-dollar economy club with its GDP crossing the $1 trillion threshold at the end of 2017.1 The country has numerous advantages that translate into steady economic growth: abundance of natural resources, large domestic market, low labor costs, evolving regulatory mechanisms for investment protection and unobstructed access to many sectors of its economy. However, as an archipelagic nation of 17,000 islands and home to a growing population of over 260 million people, Indonesia is an energy-poor country still struggling to address many issues of energy access.2 Despite significant progress in electrification, which increased nation-wide from 66 percent in 2009 to 91 percent in 2016, many challenges persist.3 For example, in some, and not necessarily remote, areas electrification rates remain well below the national average, and the quality of electricity access is questionable. Also, despite a relatively low current per capita electricity consumption and in view of rapidly expanding electrification along with delays in streamlining additional electricity generation capacity4 in a system with already low reserve margins, it is unclear whether the country’s energy infrastructure will be able to keep up with mounting demand.5 1

Tassia Sipahutar, “No Fanfare for Indonesia as Economy Hits Trillion-Dollar Mark,” Bloomberg, January 3, 2018, https://www.bloomberg.com/news/articles/2018-01-03/no-fanfare-for-indonesiaas-economy-hits-trillion-dollar-mark; International Monetary Fund, “World Economic Outlook Database,” October 2017, IMF, https://www.imf.org/external/pubs/ft/weo/2017/02/weodata/index.aspx 2 The World Bank, “Data: Indonesia,” The World Bank, 2016, https://data.worldbank.org/country/indonesia; Ben Bland, “Indonesia Starts Count to Solve the Riddle of the Islands,” Financial Times, June 3, 2017, https://www.ft.com/content/3acc43f0-45f5-11e7-8519-9f94ee97d996 3 Directorate General of Electricity, “The Book of Electricity Statistics Number 30 – 2017,” Ministry of Energy and Mineral Resources, November 2017: 25, https://www.esdm.go.id/assets/media/content/ content-statistik-ketenagalistrikan-tahun-2016-1.pdf 4 Examples of programs include: Phase I and Phase II, both delayed. The government also set an ambitious target of 35 GW power capacity expansion by 2019, also delayed. 5 In 2014, it amounted to 812 kWh versus 2,540kWh in Thailand and 4,596 kWh in Malaysia. (Source: The World Bank, “Data,” 2014, https://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC) In 2016, Indonesia’s per capita electricity consumption was equal to 950 kWh (Source: Directorate General of Electricity, “The Book of Electricity Statistics Number 30 – 2017,” Ministry of Energy and Mineral

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Quantitative problems of accurately projecting supply-demand dynamics and import-export components of the energy system are further complicated by qualitative dilemmas: the controversial role of fossil fuels dominating Indonesia’s national energy mix, additional pressures of such factors as urbanization and environmental concerns, and, more generally, the dual role of government in the energy sector as an active player (represented by state-owned companies) and a regulator. As a result, the country has a difficult task of balancing existing and emerging short- and long-term energy security, environmental sustainability and broader social and economic objectives. While each of these topics warrants a lengthy discussion, this piece explores them in the context of recent developments in the conventional energy sub-fields of oil, gas, and coal, which constitute the backbone of Indonesia’s national energy system. The country’s ongoing transition from an energy system dominated by oil to one heavily reliant on coal and reasons behind this change are analyzed. Indonesia’s National Energy Policy (Government Regulation No. 79/2014) calls for reductions in oil (petroleum) consumption, optimization of natural gas use, and increases in the supply and utilization of coal in the domestic market.6 As of 2015, the biggest share in the energy mix belonged to oil (47 percent), followed by coal (27 percent) and gas (21 percent). According to the 2025 targets put forward in the policy document, the shares of resources are expected to change as follows: coal (30 percent), oil (25 percent), and gas (22 percent). In percentage terms, only the change in oil consumption targets appears significant. But taking into account that Indonesia’s total primary energy supply is expected to almost double from 225 million tonnes of oil equivalent (Mtoe) to 400 Mtoe in the same period, in real numbers changes in all three components of the mix are substantial.7 Finally, although together fossil fuels are forecasted to relinquish almost 25 percent of their combined share to renewables by 2025, the feasibility of the latter target is dubious.8Although the government put forward a number of programs to promote renewable energy utilization and several pioneering projects have been successfully implemented in recent years,9 the renewable energy Resources, November 2017: 25); “As of June 2017, only 13 of PLN’s 22 large power systems across Indonesia were considered normal, with reserve margins above 30 percent.” (Source: PWC, “Power in Indonesia: Investment and Taxation Guide – 5th edition,” PWC, November 2017, https://www.pwc. com/id/en/energy-utilities-mining/assets/power/power-guide-2017.pdf). 6 The President of the Republic of Indonesia, “Government Regulation of the Republic of Indonesia Number 79 of 2014 on National Energy Policy,” 2014, http://ditjenpp.kemenkumham.go.id/arsip/terjemahan/2.pdf 7 International Energy Agency, “Indonesia: Indicators for 2015,” http://www.iea.org/statistics/statisticssearch/report/?country=INDONESIA&product=indicators&year=2015; International Energy Agency, “Energy Supply Security: Emergency Response of Partner Countries. Indonesia,” 2014: 6, https://www.iea.org/publications/freepublications/publication/ESS_Indonesia_2014.pdf 8 In 2015, share of renewables was 5 percent. In 2025, it is supposed to be at least 23 percent (Source: The President of the Republic of Indonesia, “Government Regulation of the Republic of Indonesia Number 79 of 2014 on National Energy Policy,” 2014, http://ditjenpp.kemenkumham.go.id/arsip/terjemahan/2.pdf). 9 Indonesia’s largest solar power plant (5MW) was completed in December 2015 in Kupang (Felix Utama Kosasih, “Kupang Houses Indonesia’s Largest Solar Power Plant,” Global Indonesian Voices, January 7, 2016, http://www.globalindonesianvoices.com/24393/kupang-houses-indonesias-largest-solar-power-plant/). Operational since March 2018, Indonesia’s first wind farm with the capac-

[19] Georgetown Journal of Asian Affairs


Reshetova | Indonesia's Energy Transition

target is unlikely to be met due to the current macroeconomic conditions,10 existing electricity market design, contradictory regulations and electricity pricing system, all of which put electricity production from renewable energy sources at a disadvantage. The government’s goal of reducing dependence on oil is understandable given Indonesia’s transforming profile in the oil industry. The oil and gas sector used to contribute up to a quarter of state revenue in the early 2000s; that share dropped to 3 percent in 2016.11 A former OPEC member12 and a net importer of oil since 2006,13 at current production levels, Indonesia is set to stop producing oil by 2030, subject to new discoveries and technological improvements.14 The problem lies in the divergence between decreasing availability and affordability of oil and its increasing consumption. If electricity generation is not as dependent on oil (in the form of diesel: 9 percent) as on coal (56 percent) and gas (24 percent), the country’s transportation sector runs almost exclusively on fuel oil (96 percent).15 When other factors, such as growing urbanization, increasing access to personal vehicles and fuel subsidies, are taken into consideration, it becomes evident that Indonesia will continue to heavily rely on oil in the decades to come.16

ity of 75WM is located at Sidrap, Sulawesi. Fergus Jensen and Wilda Asmarini, “Less Headwinds for Renewables Now Say Indonesia Pioneer,” Reuters, February 12, 2018, https://www.reuters.com/ article/us-indonesia-renewables-windfarm/less-headwinds-for-renewables-now-says-indonesia-pioneer-idUSKBN1FW0W4 10 Indonesia’s economy has been growing by around 5 percent instead of expected 7 percent and as a result, electricity demand has been increasing at a much slower pace than planned: 4.4 percent instead of 8 percent a year. Basten Gokkon, “Indonesia May Achieve Renewables Target, but Still Favors Coal for Power,” Mongabay March 29, 2018 https://news.mongabay.com/2018/03/indonesia-may-achieverenewables-target-but-still-favors-coal-for-power/ 11 Karlis Salna and Yoga Rusmana, “Whatever Happened to Indonesia’s Mighty Oil and Gas Industry?” Bloomberg, August 15, 2017, https://www.bloomberg.com/news/articles/2017-08-14/whateverhappened-to-indonesia-s-mighty-oil-and-gas-industry 12 Fergus Jensen, “Indonesia to Keep OPEC Membership Frozen: Deputy Energy Minister,” Reuters, December 5, 2017, https://www.reuters.com/article/us-indonesia-opec/indonesia-to-keep-opec-membership-frozen-deputy-energy-minister-idUSKBN1DZ20O 13 International Energy Agency, “Indonesia: Oil for 2006,” http://www.iea.org/statistics/statisticssearch/report/?country=INDONESIA&product=Oil&year=2006 14 “Indonesia’s Proven Oil Reserves Recorded at 3.3 Billion Barrels,” Tempo, March 27, 2018, https://en. tempo.co/read/news/2018/03/27/056917019/Indonesias-Proven-Oil-Reserves-Recorded-at-33-Billion-Barrels 15 2015 data (Source: Secretariat General, “Indonesia Energy Outlook 2016,” National Energy Council, 2016: 48, https://www.esdm.go.id/assets/media/content/content-indonesia-energy-outlook-2016-versi-inggris-my33nxb.pdf); MEMR statistics. 16 Krithika Varagur, “Indonesia to Effectively Continue Fuel Subsidy,” Voa News, March 19, 2018, https://www.voanews.com/a/indonesia-fuel-subsidy/4304709.html; Erwida Maulia, “Indonesia Creates Oil and Gas Holding Company to Expand Production,” Nikkei Asian Review, April 12, 2018, https://asia.nikkei.com/Business/Companies/Indonesia-creates-oil-and-gas-holding-company-to-expand-production; Fergus Jensen and Gayatri Suroyo, “Shell Asks Indonesia to Reconsider New Fuel Pricing Policy,” Reuters, April 13, 2018, https://www.reuters.com/article/us-indonesia-gasoline-shell/shell-asks-indonesia-to-reconsider-new-fuel-pricing-policy-idUSKBN1HK1GM).

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While the loss of profits from oil exports is likely irreversible, Indonesia would like to take advantage of domestic production for as long as possible in order to minimize the amount of costly oil imports. Nevertheless, the country’s policy and regulatory measures designed to sustain current levels of production have been focused too much on collecting more revenue and not enough on retaining and attracting investors. As an indicator of a struggling oil sector and ineffective policy changes, investment into exploration activities plummeted from $1.3 billion in 2012 to $100 million in 2016.17 Consequently, despite ongoing attempts to provide new tax incentives and further revise production-sharing contracts (PSCs), it is unclear whether enough interest can be generated from investors for projects and auctions planned for 2018 and beyond.18 Although Indonesia is the eleventh largest gas producer in the world19 and exports almost half of its domestic production,20 for the past decade it has been gradually rerouting its exports to the domestic market and is expected to become a net importer of gas by 2020.21 This trend is consistent with declining gas reserves as well as the current national energy policy. Indonesia’s gas sector faces strong competition from the coal industry while also being plagued by problems similar to those in the oil industry. Foreign investors find Indonesia’s oil and gas regulatory and tax conditions unfavorable, and gas exploration and production are suffering as a result. For example, in July 2017, Exxon Mobil exited the East Natuna gas project, leaving Pertamina, the state-owned company, without partners.22 Competition from coal, which is comparatively cheaper, further slows down the investment in gas upstream projects and downstream infrastructure which could negatively affect domestic production (resource supply, pipelines, storage, etc.), exports (LNG terminals) and imports (regasification plants) in the near future. Thus, Indonesia’s gas sector is hostage to competing objectives of its government’s policies, which lead to unintended consequences. First, gas exports are held back in anticipation of stronger domestic demand. Second, the role of the latter in the energy mix is growing at a slower pace than desired due to strong competition from coal. Third, gas imports are soaring as shrinking domestic production is negatively affected by the unfavorable investment climate with Pertamina losing valuable expertise and coping with more financial constraints. 17 Karlis Salna and Yoga Rusmana, “Whatever Happened to Indonesia’s Mighty Oil and Gas Industry?” Bloomberg, August 15, 2017, https://www.bloomberg.com/news/articles/2017-08-14/whateverhappened-to-indonesia-s-mighty-oil-and-gas-industry 18 “Indonesia Sets Sights on $17.04b Oil and Gas Investment in 2018,” The Jakarta Post, January 10, 2018, http://www.thejakartapost.com/news/2018/01/10/indonesia-sets-sights-on-17-04b-oil-andgas-investment-in-2018.html 19 International Energy Agency, “IEA Atlas of Energy: Natural Gas,” 2015, http://energyatlas.iea. org/#!/tellmap/-1165808390 20 International Energy Agency, “Indonesia (Association Country),” 2015, https://www.iea.org/countries/non-membercountries/indonesia/ 21 John McBeth, “Indonesia’s Oil and Gas Prospects Running Dry,” Asia Times, October 30, 2017, http://www.atimes.com/article/indonesias-oil-gas-prospects-running-dry/ 22 “ExxonMobil Withdraws from Natuna Gas Consortium,” The Jakarta Post, July 19, 2017, http:// www.thejakartapost.com/news/2017/07/19/exxonmobil-withdraws-from-natuna-gas-consortium. html

[21] Georgetown Journal of Asian Affairs


Reshetova | Indonesia's Energy Transition

Indonesia’s coal industry has been on the rise since the 1990s. A relatively new player in the market, the country is now the fifth largest producer and the second largest exporter in the world.23 Until the government’s 2014 decision to significantly increase domestic consumption of coal was articulated in the National Energy Policy, the vast majority of production was destined for export; close to 80 percent as of 2015.24 Although the share of coal exports is likely to decrease in the future, ramped up domestic consumption is not the only reason. As a large exporter, Indonesia is extremely dependent on major buyers such as China and India. Between 2013 and 2015, the reduction in the two countries’ import demand associated with their new energy and economic policies lowered Indonesian exports by 13 percent.25 Also, low and lower-medium quality of most of Indonesia’s coal reserves26 puts its exports at an additional disadvantage as climate change and environmental sustainability agendas becomes increasingly prioritized in countries that consume Indonesian coal. Exports to ASEAN neighbors, who are promoting the use of coal in the power sector, are least affected by coal-unfriendly regulations at the moment. However, these exports will not be able to absorb India and China’s demand and will remain uncertain as ASEAN member-states’ energy policies continue to evolve. With large coal reserves in hand,27 a well-established national industry, and growing ambiguity around exports, Indonesia is pushing for coal as a preferred electricity generation source at home. This is evident from the planned and implemented additional generation capacity heavily focused on coal since 200628 and domestic consumption of coal doubling in a short period between 2010 and 2016.29 Additionally, compared with oil and gas, coal has many more advantages beyond its relatively low price. These 23 International Energy Agency, “IEA Atlas of Energy: Coal,” 2015, http://energyatlas.iea.org/#!/tellmap/2020991907/1 24 Secretariat General, “Indonesia Energy Outlook 2016,” National Energy Council, 2016: 26, https:// www.esdm.go.id/assets/media/content/content-indonesia-energy-outlook-2016-versi-inggris-my33nxb.pdf 25 Sylvie Cornot-Gandolphe, “Indonesia’s Electricity Demand and the Coal Sector: Export or Meet Domestic Demand?” The Oxford Institute for Energy Studies, March 2017: 12, https://www.oxfordenergy.org/wpcms/wp-content/uploads/2017/03/Indonesias-Electricity-Demand-and-the-Coal-Sector-Export-or-meet-domestic-demand-CL-5.pdf 26 Secretariat General, “Indonesia Energy Outlook 2016,” National Energy Council, 2016: 23, https:// www.esdm.go.id/assets/media/content/content-indonesia-energy-outlook-2016-versi-inggris-my33nxb.pdf 27 “The reserves-to-production ratio is estimated at around 70 years at current production levels.” (Sylvie Cornot-Gandolphe, “Indonesia’s Electricity Demand and the Coal Sector: Export or Meet Domestic Demand?” The Oxford Institute for Energy Studies, March 2017: 9, https://www.oxfordenergy. org/wpcms/wp-content/uploads/2017/03/Indonesias-Electricity-Demand-and-the-Coal-Sector-Export-or-meet-domestic-demand-CL-5.pdf). 28 Keith Burnard, Shelly Hsieh, Noor Miza Muhamad Razali et al., “Reducing Emissions from Fossil-Fired Geenration: Indonesia, Malaysia and Viet Nam,” International Energy Agency, 2016: 14-15, https://www.iea.org/publications/insights/insightpublications/ReducingEmissionsfromFossilFiredGeneration.pdf 29 Sylvie Cornot-Gandolphe, “Indonesia’s Electricity Demand and the Coal Sector: Export or Meet Domestic Demand?” The Oxford Institute for Energy Studies, March 2017: 18, https://www.oxfordenergy.org/wpcms/wp-content/uploads/2017/03/Indonesias-Electricity-Demand-and-the-Coal-Sector-Export-or-meet-domestic-demand-CL-5.pdf

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include the dominant role of local as opposed to foreign companies in the sector, the employment opportunities the industry creates, and the regional economic development it brings to remote areas of the country. As for the commonly cited perils of coal as the dirtiest fossil fuel, such concerns as Indonesia not meeting its greenhouse gas emissions reduction targets and not yet employing carbon capture and storage (CCS) technologies at the coal-fired plants are reasonable. But the coal industry is using clean coal technologies and increasing efficiency. For example, new and planned power plants are ultra-supercritical and supercritical plants.30 At the same time, a lot of small and least efficient illegal coal producers have been forced out of business since 2009 with the adoption of the Law on Mineral and Coal Mining. Hence, Indonesia’s reliance on coal is not ideal, but sensible given the alternatives. A brief exploration of trends in the oil, gas, and coal sectors explains Indonesia’s reorientation from oil to coal as the key energy source: it is an abundant and inexpensive resource capable of ensuring uninterrupted energy access for a large population. This is in line with the core objective of the Electricity Law No. 30/2009.31 The broader implication of coal prioritization in the national energy policy is Indonesia’s commitment to energy security goals, with the issues of environment and sustainability moved aside to the periphery of decision-making agenda. However, it remains to be seen if the dominance of coal will persist in the longer term (beyond 2030) or if it is a transition stage for incorporating more natural gas and renewables into the energy mix. According to the current government plans, it is the latter. By 2050, the National Energy Policy envisions the share of renewable energy at 31 percent (23 percent in 2025), gas at 24 percent (22 percent in 2025), and coal at 25 percent (30 percent in 2025).32 In other words, 2050 targets signal an expansion of the energy security agenda to integrate other issues.

30 Supercritical and ultra-supercritical coal-fired power plants emit less GHG, pollutants and particulate matter because they are more efficient than their older counterparts, around 45-50 percent vs 33 percent. Their main advantage is the ability to convert water into a supercritical fluid (neither a liquid nor a gas). This requires less energy to convert water into steam resulting in a smaller amount of heat transfer to water. Therefore, less coal is needed to heat up the same amount of water (University of Calgary, “Supercritical Coal Plant,” Energy Education, http://energyeducation.ca/encyclopedia/ Supercritical_coal_plant). 31 The Government of the Republic of Indonesia, “ELECTRICITY (Law No. 30/2009), Government Regulations, September 23, 2009: Chapter 2, Article 2.2, https://policy.asiapacificenergy.org/sites/ default/files/ELECTRICITY%20%28Law%20No.%2030%3A2009%20dated%20September%20 23%2C%202009%29.pdf 32 The President of the Republic of Indonesia, “Government Regulation of the Republic of Indonesia Number 79 of 2014 on National Energy Policy,” 2014, http://ditjenpp.kemenkumham.go.id/arsip/terjemahan/2.pdf

[23] Georgetown Journal of Asian Affairs


Reshetova | Indonesia's Energy Transition

Independently of a prevailing scenario – coal dominated vs more diversified energy supply, Indonesia will have to tackle the same challenges it is trying to address today. They range from land acquisition disputes and limited public financing to grid infrastructure constraints and promotion of a conducive investment environment. As the country’s experience illustrates, finding robust solutions to these problems is not feasible without a coordinated national – local and public – private action.

Elena Reshetova joined the Energy Studies Institute as a Research Fellow in July 2017. Elena has several years of experience researching natural gas market development in Asia and Europe, policy-making in the oil and gas industry in East Asia, ASEAN and North America, and the evolution of national energy security policies. She holds a Ph.D. in Public Policy from the Lee Kuan Yew School of Public Policy (NUS) and an M.A. in International Affairs from Boston University.

Winter 2019 [24]


Policy Forum

How Asia's Auto Boom Shapes its Energy Security Strategies

Clara Gillispie and Laura Schwartz Between now and 2050, nearly two-thirds of all growth in global demand for oil is anticipated to come from developing Asia, and Asia’s need for oil will be overwhelmingly driven by just one sector—transportation.1 Central to this story is growing desire for travel via automobiles, including private cars, taxis, buses, and trucks. Already, Japan, China, and India are three of the world’s four largest automobile markets2—and according to the Institute of Energy Economics, Japan (IEEJ), Asia’s auto fleet will likely triple by 2050.3 To put Asia’s pace of growth in perspective, in China alone, new vehicle registrations topped 24 million in 2017.4 This is equivalent to building a fleet roughly half the size of Germany’s in just one year.5 Meanwhile, car ownership in India continues to grow at a rate of 10 percent a year.6 And given Southeast Asia’s demographic 1 Ken Koyama, “Key Points of IEEJ Outlook 2018,” The Institute of Energy Economics, Japan (IEEJ) (October 2017), https://eneken.ieej.or.jp/data/7588.pdf (accessed 25 April 2018): 1; IEEJ, “IEEJ Outlook 2018,” IEEJ, (October 2017), http://eneken.ieej.or.jp/data/7748.pdf (accessed 25 April 2018): 9. 2 Moneycontrol News, “India is Now World’s 4th Largest Automobile Market, Outpaces Germany with 9.5% Growth in Sales,” Moneycontrol News (26 March 2018), https://www.moneycontrol.com/ news/business/india-is-now-worlds-4th-largest-automobile-market-outpaces-germany-with-9-5growth-in-sales-2536215.html (accessed 19 April 2018); Henk Bekker, “2017 (January to December) International: Car Sales Worldwide,” 17 January 2018, https://www.best-selling-cars.com/international/2017-january-december-international-car-sales-worldwide/ (accessed 19 April, 2018). Although the Republic of Korea possesses a vibrant manufacturing industry, with a population on par with Japan’s and relatively more modest domestic demand and sales, it fails to qualify for this list. Jamal Amir, “New Vehicle Sales in South Korea Grow 8.7% y/y in January,” IHS Markit, 6 February 2018, https://ihsmarkit.com/research-analysis/New-vehicle-sales-in-South-Korea-grow.html 3 IEEJ, “Asia/World Energy Outlook 2016: Consideration of 3E’s+S Under New Energy Circumstances in the World,” (October 2016), http://eneken.ieej.or.jp/data/7199.pdf (accessed 26 April 2018): 211. ⁴ Henk Bekker, “2016 (Full Year) International: Worldwide Car Sales,” Car Sales Statistics, 19 January 2017, http://www.best-selling-cars.com/international/2016-full-year-international-worldwide-car-sales (accessed 19 April 2018). ⁵ IHS Markit, “Five Critical Challenges Facing the Automotive Industry: A Guide for Strategic Planners,” https://ihsmarkit.com/industry/automotive/china/ap4.html, (accessed 20 April 2018): 3; Eurostat, “Passenger Cars in the EU,” http://ec.europa.eu/eurostat/statistics-explained/index.php/Passenger_cars_in_the_EU (accessed April 19, 2018). 6 Isha Sharma, “Indian Passenger Vehicle Sales Up Over 6 Percent in March, CV Sales Surge over 24 Percent,” IHS Markit, 11 April 2018, https://ihsmarkit.com/research-analysis/indian-passenger-vehicle-sales.html (accessed 19 April 2018).

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Gillispie and Schwartz | How Asia's Auto Boom Shapes its Energy Security Strategies

outlook and growing economic clout, its rising demand may remake the global outlook for automotive supply and demand.7 In this essay, we explore how Asia’s auto boom will shape its energy and environmental security outlook and identify options for how policymakers and industry can respond. We begin with a brief overview of key dynamics at play in Asia’s growing demand for automobiles. Next, we explore how the regional countries hope to mitigate the extent to which road-based transit will spur greater demand for oil, first, by engaging more robust urban planning, and second, by changing patterns in consumption through raising efficiency standards and promoting new and more advanced technologies. Last, we look at how countries across the region are evaluating their options for reducing prospects that oil security strategies could contribute to regional conflict, ultimately argue that countries need to accelerate progress on regional cooperation. The Oil-Transportation Nexus and Asia’s Auto Boom Asia’s search for energy security is an issue of national security for policymakers across the region, and oil supply questions play an important role in this assessment.8 Japan and South Korea are already 100 percent reliant on oil imports to meet their needs, while China and India have also seen their self-sufficiency decline dramatically in recent years. While some countries such as Brunei, Malaysia, and Indonesia are important regional exporters, their production levels have also struggled to keep pace with evolving domestic demand, contributing to periodic debates about how much of their oil supply should be reserved for domestic use. For policymakers across Asia, the overriding concern is not just that declining self-sufficiency could push them into an international marketplace where supplies are expensive or limited. As Herberg and others have noted, it is also that numerous countries have used their ability to redirect or disrupt access to oil as leverage in an attempt to reshape power relations—to the detriment of trust in the reliability of markets. With this context in mind, Doshi and Bin Zahur note that countries across the region have historically taken aim at reducing or eliminating reliance on oil in power generation and also looked to reduce inefficiency in oil demand and consumption in transportation.9 However, a high degree of reliance on oil in the transportation sector has persisted given more limited viable, affordable, and desirable alternative fuel options that could enable switching.10 Meanwhile, Herberg notes that Asia’s major powers have 7 PWC, “Riding Southeast Asia’s Automotive Highway,” November 2015, https://www.pwc.com/kr/ ko/industries/automotive/201511_riding-southeast-asia-automotive-highway_en.pdf (accessed April 25, 2018): 2. 8 For more on this topic, Mikkal Herberg’s work on the strategic and economic dimensions of Asian energy security strategies, much of which can be found at NBR.org, is considered to be among the leading in the field. The authors of this essay are indebted to his insights and analysis on these points. 9 Tilak K. Doshi and Nahim Bin Zahur, “Energy-Efficiency Policies in the Asia-Pacific: Can We Do Better?” The National Bureau of Asian Research (NBR) 2013 Pacific Energy Summit, http://www.nbr. org/downloads/pdfs/eta/PES_2013_summitpaper_Doshi_Zahur.pdf, (accessed 19 April 2018): 2. 10 That is to say, while several switching options have long been readily available for power generation—switching from oil to coal, gas, nuclear, or renewables, for example—a similar range of options

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traditionally viewed oil supply security initiatives in zero-sum terms, instead pursuing “a national competitive approach that intensifies distrust, worsens maritime tensions, and aggravates key strategic rivalries.”11 It is against this backdrop that Asia’s auto boom is occurring. In real terms, most of Asia’s demand is relatively recent. IEEJ estimates that in 1980, there were fewer than 50 million cars on the road in all of Asia, with the highest concentration by far in Japan.12 Contrast this with 2014, when the number of cars in Asia surpassed 350 million, and analysts expect that by 2040 this will jump to 900 million.13 By and large, this transformation can be seen as tracking with broader regional demographic and macroeconomic trends, including improving standards of living and personal incomes; rapid rates of urbanization; and the rise of first China and now India (and increasingly Southeast Asia) as major engines of global economic activity.14 Yet as noted by the International Energy Agency (IEA) and the World Bank, Asia’s auto boom cannot be entirely attributed to higher incomes and a growing desire for mobility; inefficient city planning and inadequate infrastructure investment have also played a role in amplifying demand as well as its consequences.15 Here, the example of Jakarta is particularly instructive. Between 1970 and 2016, more than five million people moved into Indonesia’s capital, doubling its size and contributing to rapid urbanization and extensive sprawl.16 Meanwhile, the city’s transit infrastructure struggled to advance comparable levels of development. Until recently, Jakarta was perhaps the largest city in the world without a metro,17 and as detailed in the New York Times, “[less than 320] of the capitol’s 4,500 miles of road have sidewalks,” leading some to opt for “cars, buses, taxis, and motorcycles to travel distances as short as 200 meters.”18 have not been technically or economically possible or desirable for transportation. This is not to indicate that many countries have not tried; rather that the results up until the last few years have been very modest. 11 Philip Andrews-Speed, Mikkal E. Herberg, Tomoko Hosoe, John V. Mitchell and Zha Daojiong, “Oil and Gas for Asia: Geopolitical Implications of Asia’s Rising Demand,” NBR, September 2012, 3. 12 IEEJ, “Asia/World Energy Outlook 2016,” 211. 13 Ibid. 14 International Energy Agency (IEA), “World Energy Outlook 2017 Executive Summary,” (2017), https://www.iea.org/publications/freepublications/publication/WEO_2017_Executive_Summary_ English_version.pdf, (accessed 27 April 2018): 1-2. 15 IEA and the Economic Research Institute for ASEAN and East Asia (ERIA), “World Energy Outlook Special Report: Southeast Asia Energy Outlook,” (September 2013), http://www.iea.org/publications/ freepublications/publication/SoutheastAsiaEnergyOutlook_WEO2013SpecialReport.pdf, (accessed 20 April 2018): 112. 16 World Population Review, “Jakarta Population 2018,” http://worldpopulationreview.com/world-cities/jakarta-population/ (accessed 19 April 2018). Indeed, if you include the Greater Jakarta Metropolitan Area in this estimate, its population now stands at 30 million. 17 Nick Van Mead, “The World’s Worst Traffic: Can Jakarta Find an Alternative to the Car?” The Guardian, 23 November 2016, https://www.theguardian.com/cities/2016/nov/23/world-worst-traffic-jakarta-alternative (accessed 10 April 2018). 18 Joe Cochrane, “Jakarta, the City Where Nobody Wants to Walk,” New York Times, 20 August 2017, https://www.nytimes.com/2017/08/20/world/asia/jakarta-walking-study-sidewalks.html (accessed 19 April 2018).

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Gillispie and Schwartz | How Asia's Auto Boom Shapes its Energy Security Strategies

Jakarta now has the world’s worst traffic by some accounts, with the average commuter spending up to four hours in traffic each day.19 Jakarta’s story is particularly stark, but similar stories about the relationship between urbanization and limited infrastructure in amplifying demand can also be seen in Delhi, Manila, and Bangkok, cities that are quickly climbing the ranks of those with the worst traffic in the world.20 Worse still, such congestion is not only a visible indication of burgeoning overall demand, but can also exponentially increase environmental damage. “Congestion can increase the amount of pollutants emitted to three to five times the level in non-congestion scenarios,” according to the World Health Organization.21 Congestion can also negatively impact the economic growth that increased flows of goods and people is supposed to enable, with the Asian Development Bank (ADB) estimating that Asian countries face annual GDP losses of 2–5 percent as a result of congestion.22 Consequentially, while expanded road-based transit has advanced the economic and social opportunities available to millions of people across Asia, it has also undeniably created new challenges for governments, industry, and the public. The Energy Security Consequences of Asia’s Auto Boom If in its most basic form, energy security is about the search for supplies that can address four primary concerns—accessibility, affordability, geopolitical security, and environmental security—then a few observations about the energy security implications of Asia’s auto boom are warranted, and should shape how we think about the road ahead. First, our understanding of what is likely and what is possible must factor in how tightly the oil-transportation nexus binds the outlooks of these two sectors to one another. It is not just that the primary use for oil is in the transportation sector, but also that the transportation sector is overwhelmingly reliant on oil. Thus increased motorization across the region has a strong correlation with Asia’s rate of oil consumption growth.23 This dynamic further intensifies debates about how to sustain economic progress and secure necessary supplies without resorting to zero-sum competition and conflict. Second, in our economic assessment, we cannot necessarily assume that global oil prices closely track with how individual motorists across Asia think about the costs and benefits of taking to the road. Several countries across the region continue to subsidize or otherwise cap the domestic price of gasoline. Consequently, higher global oil prices may not be immediately felt by consumers at the pump. However, it should be said that 19

Nick Van Mead, The Guardian. Simon Roughneen, “Booming Southeast Asian Vehicle Sales Drive Urban Congestion,” Financial Times, 29 May 2017, https://www.ft.com/content/96608536-4204-11e7-9d56-25f963e998b2 (accessed 18 April 2018). 21 World Health Organization, “A Global Health Guardian: Climate Change, Air Pollution, and Antimicrobial Resistance,” http://www.who.int/publications/10-year-review/health-guardian/en/index1. html (accessed 19 April 2018). 22 Asian Development Bank (ADB), “Key Priorities: Urban Transport,” (2017), https://www.adb.org/ sectors/transport/key-priorities/urban-transport, (accessed 11 April 2018). 23 Ashley Johnson, “Fuel Pricing and Subsidy Reforms in Asia: An Interview with Vandana Hari,” NBR (5 December 2016), http://nbr.org/research/activity.aspx?id=725 (accessed 27 April 2018). 20

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this cost is still felt indirectly. As the level of subsidy required to keep domestic prices low rises, that money has to come from somewhere—meaning that governments can be torn between options to reduce spending in other areas (such as education, public health, and even critical transit system improvements), levying new or higher taxes, or racking up debt that can undercut further energy sector development.24 As might be expected, such conditions can (and do) harm efforts to achieve national economic objectives, cause strife between governments and their people, and have even been the proximate cause for protests in India, Pakistan, and Indonesia.25 Finally, if not well managed, the mass proliferation of automobiles will greatly exacerbate Asia’s environmental challenges in ways that will need to be addressed. Chief among these concerns is air pollution, which in cities such as Beijing, Delhi, and Jakarta has already reached unbearable levels. Every year, outdoor air pollution is responsible for two million premature deaths across Asia.26 While air pollution can be attributed to a number of factors, tailpipe emissions play an important role in driving overall levels, and in some Asian cities up to 80 percent of air pollution can be linked to urban transport.27 Meanwhile, the IEA has noted that globally, the transportation sector is not on track to meet reduction targets and support efforts to limit average global temperature increases to no more than two degrees Celsius over the next century. Studies suggest that increases beyond two degrees will significantly increase the likelihood of more dire climate change scenarios.28 Thus, without more robust industry and policy efforts to reshape transportation, global climate efforts will almost certainly fail.

24 Ashley Johnson, “Fuel Pricing and Subsidy Reforms in Asia: An Interview with Vandana Hari,” NBR (5 December 2016), http://nbr.org/research/activity.aspx?id=725 (accessed 27 April 2018). The historical impact of Indonesia’s subsidies is one case in point. For more, see Natalie Bravo, Clara Gillispie, Mikkal E. Herberg, Hanan Nugroho, Alexandra Stuart, and Nikos Tsafos, “Indonesia: A Regional Energy Leader in Transition,” NBR (December 2015), http://nbr.org/publications/specialreport/pdf/ sr53_indonesia_dec2015.pdf (accessed 27 April 2018). 25 Heather Timmons and Hari Kumar, “Protests Over Fuel Costs Idle Much of India,” New York Times, 5 July 2010, https://www.nytimes.com/2010/07/06/world/asia/06india.html (accessed 27 April 2018); Michael Kugelman, “Pakistan’s Energy Crisis: From Conundrum to Catastrophe?” NBR (13 March 2013), http://www.nbr.org/research/activity.aspx?id=323 (accessed 27 April 2018); Wendy Culp, “Pakistan’s Energy Insecurity: Anatomy of a Crisis and How to Move Forward: An Interview with Michael Kugelman,” NBR (22 July 2015), http://www.nbr.org/research/activity.aspx?id=588 (accessed 27 April 2018), Joe Cochrane, “Crowds Protest as Indonesian Lawmakers Raise Fuel Prices,” New York Times, 17 June 2013, https://www.nytimes.com/2013/06/18/business/global/indonesia-budget-fuel-prices.html (accessed 27 April 2018). 26 IEA, “Energy and Air Pollution,” 2016, https://www.iea.org/publications/freepublications/publication/WorldEnergyOutlookSpecialReport2016EnergyandAirPollution.pdf (accessed 27 April 2018): 35. 27 Ibid.; ADB, “Key Priorities: Urban Transport,” (2017). 28 Srikanth Shastry and Madhav Pai, “The Role of Transportation in the Future of Urban Developing Asia: A Case Study of India,” NBR 2016 Pacific Energy Summit (2016) http://nbr.org/downloads/pdfs/ eta/pes_2016_working_paper_Shastry_Pai.pdf (accessed 11 April 2018)” 2.

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Gillispie and Schwartz | How Asia's Auto Boom Shapes its Energy Security Strategies

Asia’s Transportation Imperative: Managing Competing National Aims The scale and intensity of the challenges presented by rapid motorization in Asia have led governments to look at how to more fully incorporate robust responses into their thinking about energy security. Generally speaking, the IEA notes that countries can deploy various tactics to “avoid, shift, and improve” the way that transportation systems are used.29 Directly addressing how to reduce fears about oil supply insecurity contributing to regional conflict also remains key. With these major goals in mind, several countries have developed comprehensive national energy plans and industrial policies that treat transportation as both a strategic challenge for policymakers, requiring coordination across sectors and ministries, and an opportunity to take on new leadership. Notable examples include China’s series of five year plans on energy and the environment as well as “Made in China 2025;” Japan’s Basic Energy Plan and its Quality Infrastructure Initiative; “Make in India;” and Thailand’s Integrated Energy Blueprint; as well as various national initiatives designed to harness the potential of the fourth industrial revolution.30 Meanwhile, regional fora such as the Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC), and the East Asia Summit (EAS) have dedicated working groups to identifying regional best practices on strengthening transportation and energy security. The next four sections look at the execution of these visions in terms of particular strategies and approaches, while highlighting areas of untapped potential. Designing and Shaping Demand As noted earlier, an important factor sharpening the intensity of Asia’s auto boom is that the region’s existing infrastructure is insufficient; depending on the locale, infrastructure may need to be expanded or even redesigned. Yet the now infamous images of sprawling bicycle graveyards in China are just one example of how new development can fail when there is disconnect between policy incentives and local need.31 With this in mind, Shastry and Pai have argued that if decision-makers want to have the greatest impact in advancing more sustainable systems, they should first analyze the local conditions that can make certain forms of transportation more or less likely to be used. For example, analyzing population density in a particular area as well as how many miles 29

IEA, “A Tale of Renewed Cities,” (2013), http://www.iea.org/publications/freepublications/publication/Renewed_Cities_WEB.pdf (accessed 20 April 2018): 43-45). ADB’s “Avoid, Curb, Transit” provides a similar approach: Sharad Saxena, “ACT now to avoid being stuck in traffic,” Asian Development Blog, ADB (24 June 2016), https://blogs.adb.org/blog/act-now-avoid-being-stuck-traffic (accessed April 19, 2018). 30 The fourth industrial revolution is characterized as a building upon of the emergence of the digital age, “blurring the lines between the physical, digital, and biological spheres” as described by Klaus Schwab and the World Economic Forum. Klaus Schwab, “The Fourth Industrial Revolution: What It Means, How to Respond,” World Economic Forum (14 January 2016), https://www.weforum.org/ agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/ (accessed 13 May 2018). 31 Alan Taylor, “The Bike-Share Oversupply in China: Huge Piles of Abandoned and Broken Bicycles,” The Atlantic, 22 March 2018, https://www.theatlantic.com/photo/2018/03/bike-share-oversupply-inchina-huge-piles-of-abandoned-and-broken-bicycles/556268/ (accessed 26 April 2018).

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are covered in a community’s average daily commute can help planners avoid pitfalls in overbuilding of highways, subways, or even bicycle sharing systems.32 Once decision-makers are better positioned to make investments that avoid ‘one-size fits all’ approaches, integrating transit and land developing planning processes can further enable a more comprehensive understanding of real costs and trade-offs of various plans, ultimately promoting better demand management. This integrated planning approach is a key part of the idea of transit-oriented development,33 and has been increasingly elevated as an important strategy across Asia. One positive outcome of transit-oriented development is that many countries in Asia are now experimenting with Bus Rapid Transit (BRT) systems, which can move more people than private automobiles yet have a smaller physical and financial footprint than light or underground rail projects;34 China in particular has introduced more BRT systems into more cities than any other country in Asia.35 Meanwhile, Singapore has also had strong success in using the principles of transit-oriented development to make decisions about its long-term investments, given the strong premium on its limited land. The city-state is now home to one of the world’s most efficient public transit systems.36 Finally, to further accelerate popular shifts to new transit options, governments are also experimenting with ways to nudge individuals toward limiting their reliance on personal automobiles. For example, major cities such as Delhi and Beijing have implemented restrictions on when and how private cars can take to the road, with fines and other punishments for those who use theirs on prohibited days.37 Singapore has alternatively placed a cap on the net number of new vehicle registrations that can be approved in a given year—set to decline to 0 percent by the end of 2018.38 And while 32

Shastry and Pai, “The Role of Transportation in the Future of Urban Developing Asia: A Case Study of India,” 5. 33 That is, the idea that development can and should prioritize planning that focuses on making urban areas more well-connected, walkable, and bikeable to more sustainably address individual transit needs. 34 Christina Olsen, “Interview with Dan Chatman: Integrating Pre-Existing Public Transportation with Bus Rapid Transit in Developing Cities,” Meeting of the Minds, (29 November 2016), http://meetingoftheminds.org/interview-dan-chatman-integrating-pre-existing-public-transportation-bus-rapid-transit-developing-cities-17634#prettyPhoto (accessed 11 April 2018). 35 Robert Cervero, “Bus Rapid Transit (BRT): An Efficient and Competitive Mode of Public Transport,” ACEA (December 2013), http://www.acea.be/uploads/publications/20th_SAG_HR.pdf (accessed 27 April 2018): 6. 36 Louise Lucas, “Singapore Seeks to Export Own Model,” Financial Times, 29 July 2015, https://www. ft.com/content/2adc8d68-20a6-11e5-aa5a-398b2169cf79 (accessed 2 April 2017). Via unpublished paper by Matt Mingey: “Island Lessons: The Singapore Model and Chengdu’s Transit Development.” 37 Sylvester Monroe, “7 Cities that Fight Air Pollution with Driving Restrictions,” Washington Post, 8 December 2015, https://www.washingtonpost.com/news/worldviews/wp/2015/12/08/7-cities-thatfight-air-pollution-with-driving-restrictions/?utm_term=.f5a02a60326d (accessed 11 April 2018). 38 Patrick Caughill, “Singapore Will Stop Adding New Cars to Its Roads in 2018,” Futurism, 23 October 2017, https://futurism.com/singapore-will-stop-adding-new-cars-to-its-roads-in-2018/ (accessed 11 April 2018).

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Gillispie and Schwartz | How Asia's Auto Boom Shapes its Energy Security Strategies

planners and observers are right to question whether some of the tax and regulatory incentives for developing bike sharing systems have been overly attractive, the increased availability of these systems has nonetheless had a positive impact in checking excessive driving. As reported by Reuters, studies of Shenzhen found that the city’s bike sharing systems had reduced “nearly 10 percent of travel by private car or 13 percent of gasoline consumption,” while informal surveys conducted in Beijing, Seoul, Taipei, and Singapore suggest that available systems have genuinely encouraged individuals to minimize their frequency of travel by motorized transit.39 Pairing Technology and Policy to Manage Fuel Efficiency and Vehicle Emissions Next, to account for when oil demand and emissions cannot be dampened through reducing distances traveled, countries across Asia are also looking to increase vehicle efficiency standards.40 Much like the efforts immediately following the oil shocks of the 1970s, many recent pushes could be seen as going hand-in-hand with the desire to alleviate concerns over exposure to high oil prices or volatile markets; the Japanese government’s significant funding assistance in 2014 for the development of next-generation engines in a period of painfully high oil prices provides one example.41 However, even after oil prices began to crash in mid-2014, policy and industry momentum on advancing energy efficiency initiatives has remained resilient.42 This is partly because such initiatives often also well-align with popular calls to reduce air pollution and address environmental security concerns more broadly; over the past decade, a rising percentage of the public in countries across Asia have described climate change as a “major threat,” according to surveys by Pew,43 while leaders in major economies like China, Japan, and India have all touted such progress as strategic national priorities, providing political cover for additional policy and industry efforts. And it is also important to credit that as Southeast Asia continues to increase in significance as an 39

Jessica Jaganathan and Florence Tan, “Two Wheels Good: Bike Boom Nibbles on Asia Gasoline Demand Growth,” Reuters, 26 September 2017, https://www.reuters.com/article/us-asia-bicycles/ two-wheels-good-bike-boom-nibbles-on-asia-gasoline-demand-growth-idUSKCN1C10ZJ (accessed 26 April 2018). Jessica Jaganathan and Florence Tan, “Bike-Sharing Takes Off Among Youths in Major Asian Cities: Survey,” Reuters, 26 September 2017, https://www.reuters.com/article/us-asia-bicycles-survey/bike-sharing-takes-off-among-youths-in-major-asian-cities-survey-idUSKCN1C110F (accessed 26 April 2018). 40 Clara Gillispie, Ashley Johnson, and Laura Schwartz, “2016 Pacific Energy Summit Report: Sustainable Futures: Energy and Environmental Security in Times of Transition,” The National Bureau of Asian Research (2017), http://nbr.org/downloads/pdfs/eta/PES_2016_report.pdf (accessed 19 April 2018): 37. 41 Hans Greimel, “Japanese Collaborate on R&D for New Fuel Efficient Engines,” Automotive News, 19 May 2014, http://www.autonews.com/article/20140519/OEM04/140519876/japanese-collaborate-on-r%26d-for-new-fuel-efficient-engines (accessed 21 April 2018). 42 This is partly because such initiatives often also well-align with popular calls to accelerate progress on environmental security and air pollution concerns. 43 Jacob Poushter and Dorothy Manevich, “Globally, People Point to ISIS and Climate Change as Leading Security Threats,” Pew Research Center (1 August 2017), http://www.pewglobal.org/2017/08/01/ globally-people-point-to-isis-and-climate-change-as-leading-security-threats/ (accessed 23 May 2018).

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engine of energy demand growth, stakeholders are championing discussions of energy efficiency in high-level regional dialogues, and in turn, governments across Southeast Asia are translating recommendations into practice. For example, in a 2017 review of initiatives taking place across Southeast Asia, the IEA and ERIA detailed that a number of countries in the region are working to advance fuel efficiency and mitigate pollution, and using a variety of mechanisms based on varying domestic goals.44 Such efforts include offering tax reductions for those who purchase vehicles that hit targets for overall fuel consumption (Thailand); offering rebates for purchasing high-efficiency cars (Singapore); and pushing for requirements that domestic industries adopt higher, international standards for fuel efficiency and pollution management (multiple).45 Yet even so, such programs represent ambition below their full potential. In reviewing the aggregate impacts of policies being pursued, the same IEA/ERIA report argued that Southeast Asia’s transport sector would tap just 25 percent of possible, economically viable energy efficiency gains.46 Additionally, even after policies are mandated, proper enforcement and complete adoption can remain a challenge, as Vandana Hari has well documented. This is the case even in major markets such as China and India, where policymakers have executed ambitious enforcement campaigns and have also articulated clear desires to transform their domestic automotive manufacturers into internationally competitive brands (where meeting higher benchmarks for fuel efficiency and emissions is often a prerequisite to breaking into European and American markets).47 This suggests that even if improving efficiency can be the ‘low-hanging fruit’ in a country’s effort to boost its energy security outlook, it may nonetheless require dedicated leadership and long-term focus to achieve real gains. Breaking the Oil-Transportation Link Meanwhile, in terms of reshaping overall transportation sector outlooks, several observers have noted that automobiles occupy a space that is especially ripe for disruption given a growing range of viable switching options. Consequently, governments and industry have identified greater leadership in driving innovation as a key opportunity to support local economic growth and job creation. For example, regional gatherings such as the EAS48 as well as national initiatives in select countries have examined opportunities for biofuels to play a more prominent role as a fuel source, strategies that could reduce transportation-linked demand for oil and support domestic agriculture jobs.49 India has also experimented with increasing the role of natural gas in its mass transit 44

IEA and ERIA, “Southeast Asia Energy Outlook,” 97. Ibid. 46 Ibid, 112. 47 See also Vandana Hari’s work. 48 Association of Southeast Asian Nations (ASEAN), “Joint Ministerial Statement of the Sixth East Asian Summit Energy Ministers Meeting (6th EAS EMM),” ASEAN (12 September 2012), http://asean.org/joint-ministerial-statement-of-the-sixth-east-asian-summit-energy-ministers-meeting-6theas-emm/ (accessed 27 April 2018). 49 Kaoru Yamaguchi (ed.), “Study on Asian Potential of Biofuel Market,” ERIA (November 2014), http://www.eria.org/RPR-FY2013-20.pdf (accessed 27 April 2018) 9. 45

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Gillispie and Schwartz | How Asia's Auto Boom Shapes its Energy Security Strategies

systems as a strategy for reducing transportation-linked air pollution.50

Additionally, the potential of new energy vehicles (NEVs)—a category that includes plug-in hybrid, battery, and fuel-cell electric vehicles—has captured the imagination of both governments and industries. While zero-emission vehicles still represent only a small fraction of total global automotive sales, their disruptive potential is immense. As one capture of the transformative potential of these vehicles, recent modeling from IEEJ has indicated that, “if global new vehicle sales are limited to zero-emission vehicles…Global oil demand will peak out around 2030.”51 Consequently, China in particular has championed the development and diffusion of NEVs in its strategic national plans (such as Made in China 2025), and Japan and South Korea have also advanced robust national targets for domestic sales and adoption.52 Much like national efforts focused on improving efficiency and strengthening city planning, such efforts regularly combine an array of tools, including rebates, tax credits, and incentives for public-private partnerships, at times blurring the line between energy security and industrial policies. Meanwhile, to further incentivize NEV adoption and other switching efforts, countries including China and India are going as far as setting target dates for banning standard combustion vehicle sales, or at least when companies are required to have a certain share of their overall sales classified as NEVs if they want to be eligible to sell domestically, though it remains unclear to what extent national policymakers will press for follow through.53 50

Tim Gould and Christophe McGlade, “Commentary: The Environmental Case for Natural Gas,” IEA, (23 October 2017), https://www.iea.org/newsroom/news/2017/october/commentary-the-environmental-case-for-natural-gas.html (accessed 27 April 2018); IEEJ, “Asia/World Energy Outlook 2016: Consideration of 3E’s+S Under New Energy Circumstances in the World.” 51 Koyama, 2. 52 Marika Heller, “Chinese Government Support for New Energy Vehicles as a Trade Battleground,” NBR (27 September 2017), http://www.nbr.org/research/activity.aspx?id=805 (accessed 19 April 2018). “Guowuyuan: Zhengfu bumen ji gonggong jigou xingou xinnengyuan qiche bili yao chao 50%” [State Council: For Government and Public Organizations NEVs as Proportion of New Purchases Will Surpass 50%], Caijing, 24 February 2016, http://industry.caijing.com.cn/20160224/4074093.shtml (accessed 27 April 2018). Additionally, while this section has primarily focused on government action, industry and market commitments to transformation undeniably play a critical role in driving innovation. For example, recognizing this market opportunity (and the peril of losing out on market share), Honda announced that it intends for two-thirds of its automobile sales to be electrified in 2030, while the Renault-Nissan-Mitsubishi alliance plans to introduce twelve models of EVs by 2020 and set a target that 30 percent of its total sales in that year will be EVs. Honda, “Summary of Honda CEO Speech at Honda Meeting 2017,” Honda News Releases 2017, 8 June 2017, http://world.honda.com/news/2017/c170608eng.html (accessed 27 April 2018); Julia Pyper, “Nissan-Renault Insists It’s ‘Not Going to Relinquish’ Leadership on Electric Mobility,” Greentech Media, 12 January 2018, https://www.greentechmedia.com/articles/read/nissan-renault-leadership-electric-mobility-ces#gs. GZktrOQ (accessed 27 April 2018). 53 Alanna Petroff, “These Countries Want to Ban Gas and Diesel Cars,” CNN Money, 11 September 2017, http://money.cnn.com/2017/09/11/autos/countries-banning-diesel-gas-cars/index.html (accessed 21 April 2018); Melissa Lynes, “Projecting light-duty electric vehicle sales in the National Energy Modeling System (NEMS) and World Energy Projection System plus (WEPS+),” (Presentation for 2017 EIA Energy Conference, Washington, D.C., 27 June 2017), https://www.eia.gov/conference/2017/pdf/presentations/melisssa_lynes.pdf (accessed 25 May 2017). Authors’ own interviews.

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These examples are not to say that breaking the oil-transportation link should be viewed as the be-all, end-all solution to the energy and environmental security challenges stemming from Asia’s auto boom. As explored by IEEJ, greater adoption of zero-emission vehicles could generate significant additional demand for electricity— raising total final global consumption by 12 percent under some scenarios. To the extent that electricity generation in Asia remains coal-dominant, zero-emission vehicles could still contribute (albeit indirectly) to rising air pollution and CO2 emissions.54 This is not to mention that the processes and technologies involved in the creation of next-generation vehicles can also introduce new venues for competition; concerns over China’s dominance of the market for critical rare earth elements are just one case in point. Thus transformation may not eliminate energy and resource insecurities, but rather repackage how they manifest. In Case of Emergency: If not Peak Oil Demand, Then What? This raises an important final point: how can Asia better address its anxieties about energy insecurity once efforts to ‘avoid, shift, or improve’ the overall level of demand are already exhausted? Indeed, while all of these strategies play important roles, the IEA, IEEJ, and ADB all anticipate that oil will remain the dominant fuel behind Asia’s auto boom through at least 2050. In one sense, scenarios for advancing regional progress on collaborative oil security efforts have improved dramatically over the past several years. The emergence of major new suppliers – including a growing potential role for the United States -- has contributed to both new production sources and an overall more diversified supplier map, reducing some of the potential political drivers of tensions. In a major, two-year study, the National Bureau of Asian Research found that these conditions have created a window of opportunity for policymakers and industry to take action along a number of lines. Such actions could include building regional stockpiles to minimize the impact of future market disruptions, conducting joint security operations to reduce risks at particular transit choke points (such as the Straits of Hormuz or Malacca) and clarifying regional best practices in domestic reforms that better enable market signals that can rebalance supply and demand.55 While undertaking such efforts will not be easy, regional breakthroughs on collaborations in other domains show that it can be possible to balance strategic, economic, and environmental sensitivities. These include formalized progress between India and Bangladesh on trans-boundary water sharing and management 56 and regional cooperation on anti-piracy campaigns and other maritime security challenges, models which could be reviewed as potential templates for how to develop regional trust and collective action.

54

IEEJ, “IEEJ Outlook 2018,” 9. Mikkal E. Herberg, “U.S., Japanese, and Asian Energy Security in a New Energy Era,” NBR, April 2015, http://www.nbr.org/publications/specialreport/pdf/sr51_asianenergysecurity_april2015.pdf (accessed 27 April 2018). 56 NBR, “2016 Pacific Energy Summit Report,” 12. 55

[35] Georgetown Journal of Asian Affairs


Gillispie and Schwartz | How Asia's Auto Boom Shapes its Energy Security Strategies

To move forward effectively, Asia also needs robust, comprehensive frameworks that can sustain regional dialogue and action on energy security. The IEA has taken difficult and commendable steps to bring in a greater range of Asian countries as members and associates—but it remains a forum where not everyone has a seat at the table during decision-making, which can hinder efforts to ensure that ideas can be translated into specific, well-coordinated region-wide initiatives that take into account varying political and economic conditions.57 As explored by Cutler, there are a number of ways that the region could look to address this deficiency, including through pushing for further membership reforms in existing energy security groupings like the IEA; further expanding the technical capacity of existing regional groupings such as the East Asia Summit or APEC; or creating an entirely new organization. These need not be viewed as mutually exclusive options, but it is important to note where significant progress is already underway. This includes commendable steps by the East Asia Summit process to develop a comprehensive, multi-year strategy for strengthening Asian energy security that builds on many of the recommendations above while engaging both Asian and broader international stakeholders. Greater levels of regional cooperation can help countries to achieve outcomes that might otherwise be economically or technically prohibitive to pursue on an individual basis. Yet to the extent that we may be returning to an era of higher prices with a nearterm supply crunch potentially on the horizon, moving toward regional cooperation now could have significant long-term benefits. There is a clear risk that the current era of relative abundance could result in complacency, allowing energy security competition to potentially rise to the surface again in the future. Therefore, countries must move forward now and embrace the potential of cooperation, despite the significant amount of hard work that this will entail. Conclusion Can countries across the Asia-Pacific make significant, sustained progress on each of these fronts? And if so, will it be enough to reduce energy insecurity and prevent environmental disaster? As this essay has shown, there are a number of ways that countries can move the needle toward ‘yes.’ Yet greater certainty of success will likely require significant leadership, long-term commitment, and regional coordination. Certainly, governments can play a positive role in shaping and responding to the challenge of ensuring that Asia’s auto boom does not sacrifice the region’s energy and environmental security. However, stronger action must be taken now to turn this potential into a new reality.

57

For more on this point, see: Tom Cutler, “The Architecture of Asian Energy Security,” in Mikkal E. Herberg, Roy Kamphausen, Tsutomu Toichi and Tom Cutler, “Adapting to a New Energy Era: Maximizing Potential Benefits for the Asia Pacific,” NBR, September 2014 (accessed 27 April 2018); and Mikkal E. Herberg, “U.S., Japanese, and Asian Energy Security in a New Energy Era,” in Mikkal E. Herberg, Roy Kamphausen, Tsutomu Toichi and Tom Cutler, “Adapting to a New Energy Era: Maximizing Potential Benefits for the Asia Pacific,” NBR, September 2014 (accessed 27 April 2018).

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Clara Gillispie is Senior Director of Trade, Economic, and Energy Affairs at the National Bureau of Asian Research (NBR). Her subject-matter expertise focuses on shaping program and research agendas on energy security, trade and innovation policies, public health and the environment, and geopolitical trends in the Asia-Pacific. Prior to joining NBR in 2011, Ms. Gillispie served as a consultant for Detica Federal Inc. (now a part of BAE Systems), where she conducted program assessments and policy reviews for U.S. government clients. She has also worked both at the U.S. House Committee on Science, Technology, and Space and the American Chamber of Commerce in the People’s Republic of China. Ms. Gillispie graduated from the London School of Economics and Peking University with a dual M.Sc. in International Affairs. Prior to her graduate studies, Ms. Gillispie received a B.S. from Georgetown University and attended Sophia University in Tokyo, Japan, for language training. Laura Schwartz is an Analyst for Nuclear Energy and Nonproliferation at International Technology and Trade Associates, Inc., a boutique consulting firm based in Washington, D.C. Prior to joining ITTA, Ms. Schwartz worked with Chevron Government Affairs in Washington, D.C., with a focus on US cybersecurity policy development and impacts on the energy industry. She has previously worked at Albright Stonebridge Group, Crumpton Group, and the National Bureau of Asian Research. Ms. Schwartz holds a Master of Science in Foreign Service (MSFS) from Georgetown University, with a concentration in Global Business and Finance. She also holds a B.A. in Government and East Asian Studies from Cornell University and speaks Chinese. Ms. Schwartz’s areas of expertise include the future of energy and environmental security in the Asia-Pacific, global energy markets, and international climate policies.

[37] Georgetown Journal of Asian Affairs


D'Souza | Should Clean Energy Be Politics As Usual?

Should Clean Energy Be Politics As Usual? Reflections on India's Energy Transition

Rohan D'Souza As planet Earth continues to warm up, there have been pressing calls for a decisive “energy transition.” An urgent demand, in other words, for a comprehensive shift from the current dependence on fossil-based or “dirty” energy such as oil, gas, and coal, to adopting low-carbon renewables — solar, wind, geothermal, hydro, and even nuclear. While most countries — through their pledges to the Intended Nationally Determined Contributions (INDCs) and to the United Nations Climate Change Conference in Paris in December 2015 - have outlined pathways for achieving clean energy targets, their political and social implications have yet to be adequately debated.1 Is the radical energy transition merely a technical challenge or is it about effecting profound political and social transformations? Vaclav Smil — prolific writer, scientist, and policy analyst — in Energy in World History convincingly critiqued the belief that energy choices were principally, or exclusively, technical decisions that needed to sidestep political calculations and social interests. In part, understanding energy use through apolitical technical perspectives, he felt, was made possible by the “appealing division” of history into “just two distinct energy eras”: the animate (muscle and biomass) that characterized traditional society as opposed to the inanimate (fossil fuel) that shaped modern civilization.2 Animate and inanimate energies in the many twists and turns of history, however, were substantially entangled by a range of what he called “prime movers,” including economic circumstance, social context, and the play of power. Explaining the emergence of a “dominant fuel” in a society consequently required explorations into the messy complexities of political economy, historical process, and sociological arrangement, rather than simply concluding that high energy use by burning fossil fuels led to “higher civilization.” Smil also saw a similar conceptual build up through a “second simplification” — between renewables and non-renewables. Achieving a low-carbon society was widely perceived as a technical recalibration rather than a need to examine how intricately energy use has been 1

Andrew Stirling, “Transforming Power: Social Science and the Politics of Energy Choices,” Energy Research & Social Science 1, (2014): 83-95. 2 Vaclav Smil, Energy in World History (Boulder: West View Press, 1994), 224-35.

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wired into social, economic, and political interests. Timothy Mitchell’s celebrated Carbon Democracy mirrored some of Smil’s insights when discussing the emergence of coal as a dominant energy resource in Europe. Coal, according to Mitchell, was a crucial ingredient in undermining Europe’s feudal order by helping to forge an industrial society and fueling modern European colonialism. On the other hand, mining coal and harnessing it as an energy source also created material contexts for imaginations that shaped a “collective life” in the Western world, whereby people could now “acquire a power of [political] action from within the new energy system.”3 Coal, as a flow of energy, proved critical in advancing notions of the general strike, the creation of the modern working class (coal miners), and the idea of political unions.4 Ironically, it was coal-driven industrial Britain that pursued the de-industrialization and decimation of the once vibrant village-based Indian handicraft and manufacturing sector. 5 Coal, however, by the end of World War II, was eclipsed by the emergence of the oil industry. For Mitchell, the big shift in fuel to “black gold” as the dominant global form of energy also led to the assembly of a “peculiar set of relations [that were] engineered between oil, violence, finance, expertise and democracy.”6 The workings of the oil industry and its organization as an energy source thus ended up capping, if not limiting, much of the political potential for democratic action that coal extraction and its use had made possible. Oil workers, Mitchell notes, seemed uninterested and hostile to political mobilization, and reluctant to sustain political unions. From the above, it follows that Smil and Mitchell offer a compelling case for treating energy use as being critical to the making of social and political worlds. And given such an understanding, it becomes particularly instructive to review India’s current clean energy quest as outlined in its INDC submission to the United Nations Climate Change Conference that was held in Paris in December 2015.7 As I will point out in this brief essay, if India wants a meaningful energy transition towards renewables, it cannot be limited to policy choices that are aimed only at managing trade-offs between economic growth, demographic pressures, and carbon emissions.8 Rather, the Indian energy transition ought to be particularly attentive to questions of history, political power, and imaginations about energy use that aim to nurture decentralized democracy.9 3

Timothy Mitchell, Carbon Democracy: Political Power in the Age of Oil (London: Verso, 2011), 12. Ibid,12-42. 5 Prasannan Parthasarathi, Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600–1850 (New York: Cambridge University Press, 2011). 6 Timothy Mitchell, Carbon Democracy, 253. 7 “India’s Intended Nationally Determined Contribution: Working Towards Climate Justice,” (United Nation Climate Change Conference, Paris, 2015), 1-38. 8 Girish Sant and Ashwin Gambhir, “Energy, Development and Climate Change,” in Handbook of Climate Change and India: Development, Politics and Governance, Navroz K. Dubash, ed. (New Delhi: Oxford University Press, 2012), 289-302. 9 For an interesting discussion that aims to achieve radical ecological democracy in India through localism, regionalism, and the idea of place, see Aseem Shrivastava and Ashish Kothari, Churning the Earth: The Making of Global India (New Delhi: Penguin Viking, 2012).

4

[39] Georgetown Journal of Asian Affairs


D'Souza | Should Clean Energy Be Politics As Usual?

Fossil Fuel and Colonial Legacies Ramachandra Guha and Madhav Gadgil, in their authoritative This Fissured Land, note that energy in the vast sprawling Indian sub-continent prior to the 19th century was largely drawn from biomass (wood and grass), human muscle, and animal power.10 While the Persian waterwheel (saqiya) supplied a negligible amount of inanimate power for irrigation, the dominant source of energy remained animal power (traction for ploughing, transport, and war making).11 Pre-modern empires in the South Asian subcontinent rose and fell without acquiring any significant capacity to harness inanimate sources. The decisive energy shift had to await the consolidation of British colonial rule in the region. The first coal discoveries in Eastern India (Bengal) by colonial officials were quickly followed by the granting of mining licenses in 1774. While the initial demand for coal came from steamships moving commodities across the Eastern rivers, railways and modern factories soon followed with demands for fuel.12 Nonetheless, what typified the coal industry in British India was its peculiar colonial context. Though mining under brutal conditions was carried out by native or local Indian landlords (zamindars), the overall trade and coal market was placed under the firm control of the British colonial authorities. Coal in term of its pricing and output, moreover, was kept “demand driven,” and throughout the colonial period, was characterized by …the exploitation of labor, displacement of agriculture, lease disputes over land, problems of transportation methods, the overall technological and administrative inefficiency of most of the mines, incompatible mechanisation, and, above all, the haphazard extraction of coal and incidental mining hazards.13 Several colonial legacies of the Indian coal sector still haunt and persevere despite central government efforts to transform the industry during phases of nationalization in the 1970s and liberalization in the 1990s. Even today, the main challenges confronting the Indian coal industry continue to be about containing the debilitating ecological impacts of mining and meaningfully compensating the affected local communities by giving them a share of the profits.14 Like coal, the origins of the oil industry in India can be traced back to the British colonial period. Between 1825 and 1882, British explorers, speculators, and officials frequently reported the sighting of an inflammable sticky substance that was 10

Madhav Gadgil and Ramachandra Guha, This Fissured Land: An Ecological History of India (New Delhi: Oxford University Press, 1992), 60. 11 Jos J.L. Gommans, “The Silent Frontier of South Asia, c. A.D. 1100-1800,” Journal of World History 9, no. 1, (1998), 1-23. 12 Kuntala Lahiri-Dutt, The Coal Nation: Histories, Ecologies and Politics of Coal in India (Farnham: Ashgate Publishing, 2014), 10-15. 13 Ibid, 15. 14 “Rich Lands, Poor People: Is Sustainable Mining Possible?” (New Delhi: State of India’s Environment, A Citizen’s Report, CSE, 2008), 315-320.

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found to be oozing to the surface during their treks across the territories of Assam (Eastern India). The commercial exploitation of oil in India finally began in 1889 as several “wildcatters, heroic individuals, and frontier entrepreneurs” were the responsibility for extracting, transporting, and selling petroleum.15 In these initial decades, the colonial state preferred to merely sell exploration leases and collect taxes from oil sales. Within a couple of decades, however, relying on those with adventurous, speculative, and risk taking attitudes proved to be counterproductive. Oil, as the colonial government learned on several occasions, was extremely volatile, and, if mishandled during transportation and distribution, could be fatally dangerous. In effect, if oil production and use was to be consolidated as an industry and kept profitable, it needed a gamut of reliable and enforced management protocols and regulations. From the early decades of the twentieth century, consequently, the British colonial government in India steadily set about treating the management of oil as a technical domain that required expert regulation and scientific judgement, rather than retaining it as an enterprise for quick and reckless profit making. Developing oil production as an industry within India therefore required the colonial authorities to step in as both the authoritative regulator and as the main technical body. In time, the government’s in-house expertise on oil proved particularly crucial for negotiating prices and setting import quotas from several powerful private oil corporations and conglomerates such as Standard Oil, Burmah Oil Company, and the Asiatic Petroleum Company. By the early decades of the twentieth century, moreover, a range of petroleum-based products for transport, industry, urban life, food, and defense made oil too strategic a resource to be left outside of government concern and management. Unsurprisingly, as India was breaking free of its colonial shackles in 1947, several leading Indian industrialists, politicians, and technocrats, were also vigorously arguing for the oil industry to be nationalized and kept within government control. While much of the emphasis in their demand was on the need for nation building and pursuing economic self-reliance, there was also considerable anxiety that powerful corporations like Standard Oil needed to be prevented from acquiring too much of a hold over the fledging Indian economy and thereby undermining the nascent Indian industry.16 As oil began to shape and dominate the everyday social and economic world of a modernizing India from the 1950s onwards, it also invariably became a vital ingredient in the making of electoral politics. That is, the price of oil, as Sarandha Jain suggests, became one of the most critical flashpoints between governments and the Indian voters. The near social and economic collapse from the 1973 oil shock in India starkly brought home the fact that elected governments could become vulnerable if petroleum was not kept affordable and accessible.17 15 Sarandha Jain, “The Elephants Feet: A Study of Oil as Infrastructure in India,” (New Delhi: Jawaharlal Nehru University, Centre for the Study of Science Policy, School of Social Sciences, 2014), MPhil Dissertation, 62. 16 Ibid, 99-101. 17 Ibid, 116-125.

[41] Georgetown Journal of Asian Affairs


D'Souza | Should Clean Energy Be Politics As Usual?

As evident in the above discussion, colonial efforts to develop and manage oil and coal resources in India were not only woven into projects for political domination and economic exploitation, but the succeeding Indian national governments in the post-independence phase largely continued harnessing these fossil fuels through expert-driven centralized organizations and as technical institutions of the state. That is, government management of fossil fuels was neither subject to participative control nor decentralized decision making. In stark contrast to how fossils fuels were controlled, early advocates for renewable energy in India began challenging the fundamental premise that energy should be under exclusive state ownership and specialized control. Renewable energy was a vital part of the quest for deepening democracy through the participative management and popular ownership of both the technology and the sources of the energy. Renewables for Deepening Democracy The democratic implications of solar energy in independent India were first explored by D. D. Kosambi (1907-1966) — a polymath whose contributions ranged from mathematics, history, political theory, Indology, and linguistics.18 In a less publicized talk in 1960 titled “Atomic Energy for India,” Kosambi argued against the dominant reasoning of the time that nuclear energy could solve India’s huge demand for electricity. In contrast, not only did he believe that solar electricity was viable as a technology, but that its greatest promise lay in its “decentralization.” In other words, solar energy would be technologically agile enough to supply off-grid power to industries and local communities that were geographically dispersed, in addition to empowering people by allowing them to manage solar equipment virtually unaided.19 And, critically as well, he chose to round off his final argument with an even grander political appeal: “If you really mean to have socialism in any form, without the stifling effects of bureaucracy and heavy initial investment, there is no other source [than solar energy] so efficient.”20 Though the notion of democratizing energy through decentralization was further elaborated by several enthusiasts in India, one of its leading advocates and certainly the most prolific writer on the subject was the “citizen scientist” Amulya Reddy (19302006). While he held a PhD from Imperial College London in chemistry, Reddy specialized in electrochemistry. In 1974, following a set opportune of twists and chance encounters, Reddy was tasked with founding the Application of Science and Technology to Rural Areas (ASTRA) in the Indian Institute of Sciences. ASTRA was designed as a multi-disciplinary effort and tasked with crafting and promoting technol18

Ramakrishna Ramaswamy, “A Scholar in his Time: Contemporary Views of Kosambi the Mathematician,” Occasional Paper of the Nehru Memorial Museum and Library, Perspectives in Indian Development New Series 45 (2014). 19 D.D. Kosambi, “Atomic Energy in India,” in D.D. Kosambi: Adventures into the Unknown (New Delhi: Three Essays Collective, 2016), 59-70. 20 Ibid, 67.

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ogies considered relevant for rural India. The ASTRA initiatives and research thrusts were soon increasingly committed to arguing for “appropriate technology” challenging the uncritical acceptance of technologies from advanced countries, and also arguing for “alternative technologies” that meaningfully address the real demands and needs of rural India.21 And amidst the call for a turn towards embracing low-capital, inexpensive, and employment-generating appropriate technologies for rural areas, Reddy was also arguing that the demand for rural energy be entirely reconfigured. Instead of the government’s continued emphasis on centralized grid-based electricity generation, emphasis was placed on the urgency of developing off-grid decentralized systems which increased the villagers’ ability for self-reliance and control over their energy needs.22 Clearly, the writings and efforts of Kosambi and Reddy suggest that arguments for deepening democracy through decentralized energy systems have been critical to defining the renewable energy debate in India. It is unsurprising, then, if energy activists and experts have recently advocated for accelerating the adoption of renewable energy, unambiguously describing it as the de facto pursuit of participative democracy. The future they envision would be one where all citizens - rural, migrant, and urban - are energy self-sufficient, and each citizen or community owns, produces, and uses energy responsibly under democratic, community-based control and management, sourcing locally available resources, and with full knowledge of the impacts of their consumption on society and environment. They also envision energy being used productively with efficient, decentralized means to generate and sustain employment. This future would rely on the sun, wind, water, and waste to power homes, work, and communities.23 In striking contrast to the above inclination for decentralized renewable energy, the Indian government’s INDC submission for the Paris Agreement on Climate Change consistently remains committed to adopting clean energy principally as a solution to a logistics challenge. The official drive for reaching clean energy targets has been kept within formulaic narratives for attaining sustainable economic growth, extending urbanization, intensifying industrialization, and overcoming infrastructural deficits. These efforts for the Indian government are furthermore woven into larger efforts to raise per capita Gross Domestic Product (GDP), improve India’s ranking in Human Development Index (HDI), and lastly, end poverty by increasing per capita energy consumption. Whilst these indexes centering on economic growth appear to provide meaningful goals for achieving dignified and sustainable lifestyles, in the same breath, the INDC advances the belief that renewables are to be encouraged and extended by growing the clean energy paradigm through markets, pricing mechanisms, centralized grids, large capital investments, 21

Ravi Rajan, Amulya Reddy: Citizen Scientist (Hyderabad: Orient BlackSwan, 2009), 1-58. Ibid,1-58. 23 Harish Hande, Vivek Shastry and Rachita Mishra, “Energy Futures in India,” in Alternative Futures: India Unshackled, Ashish Kothari and K.J. Joy, eds. (2017), 85. 22

[43] Georgetown Journal of Asian Affairs


D'Souza | Should Clean Energy Be Politics As Usual?

and turning renewable energy into profit seeking private goods.24 In sum, India’s INDC, in its current version, appears to be pushing for an energy transition that is based on a strong desire to sidestep the possibility for any profound political transformation. In contrast, Indian renewable energy enthusiasts and activists argue the opposite: that India’s energy transition is a quest for decentralized energy management and the deepening of democracy through the participative control and management of energy use.

Rohan D'Souza is an Associate Professor at the Graduate School of Asian and African Area Studies, Kyoto University. He received his Ph.D. from Centre for Historical Studies, Jawaharlal Nehru University. Dr. D’Souza was awarded multiple fellowship position and now works on a project titled ‘The Great Hydraulic Transition: colonial engineers and modern rivers in South Asia.’'

24

“India’s Intended Nationally Determined Contribution,” 9-28.

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Illiberalism and Energy Transitions in Myanmar and Thailand

Adam Simpson and Mattijs Smits Over the next century most states are likely to face momentous and potentially catastrophic environmental impacts due to climate change. This has made managing energy policy – traditionally focused on delivering energy security and equitable access – much more strenuous. Governments now face an energy policy trilemma: delivering both traditional energy goals while also minimizing greenhouse gas emissions.1 Most governments have found it difficult to achieve high levels of all three goals at any one time, particularly within the developing countries of Southeast Asia. The traditional reliance on fossil fuels for energy in most industrialized countries has created physical, political, economic, and cultural impediments to the transition towards more climate-friendly energy sources. Although there are exceptions, efforts at a paradigm shift away from fossil fuels have been stymied within many liberal democracies.2 Environmental nongovernmental organizations (NGOs) can play a crucial role in the promotion of climate-friendly energy technologies but they inevitably experience these structural obstacles to change, even within liberal environments.3 If the transition to more climate-friendly renewable energy has proved difficult to achieve under relatively liberal conditions where environmental NGOs have relatively free reign, how has this transition progressed in countries where environmental NGOs have faced more illiberal regimes?4 1 Geoffrey P. Hammond and Peter J.G. Pearson, “Challenges of the Transition to a Low Carbon, More Electric Future: From Here to 2050,” Energy Policy, no. 52 (2013): 1-9; Robert E Looney, “Introduction,” in Handbook of Transitions to Energy and Climate Security, ed. Robert E Looney (London and New York: Routledge, 2017). 2 Robyn Eckersley, “National Identities, International Roles, and the Legitimation of Climate Leadership: Germany and Norway Compared,” Environmental Politics 25, no. 1 (2016): 180-201; Michael Mehling and Antto Vihma, ‘Mourning for America’: Donald Trump’s Climate Change Policy, The Finnish Institute of International Affairs, 11 October 2017. 3 Rebecca Pearse, “Moving Targets: Carbon Pricing, Energy Markets, and Social Movements in Australia,”Environmental Politics 25, no. 6 (2016): 1079-101. ⁴ We analyze the specific influence of case study environmental NGOs on energy transitions in Myan-

[45] Georgetown Journal of Asian Affairs


Simpson and Smits | Illiberalism and Energy Transitions in Myanmar and Thailand

In this article, we examine the progress in, and impediments to, climate-friendly energy transitions in two neighboring countries of mainland Southeast Asia, Myanmar and Thailand, both of which have recently experienced liberal and illiberal governing regimes. Transitioning towards renewable energy is crucial to achieve a sustainable future in Myanmar and Thailand, since both are highly susceptible to flooding and droughts resulting from climate change, with both appearing in the top ten countries of the Global Climate Risk Index 1993-2012.5

Figure 1: Map of Myanmar and Thailand. (Source: ANU, 2017) Energy transitions in Myanmar Throughout its history, illiberal governance in Myanmar has been accompanied by frequent conflicts between the central government in the Bamar (Burman)-dominated lowlands and the ethnic minorities that populate Myanmar’s mountainous border regions.6 Following a period of relative liberalism after independence from Britain in 1948, a military coup in 1962 resulted in almost five decades of direct and indirect military rule under Ne Win and his successors, until the launch of a reform program mar and Thailand in an article published in a special issue of Society & Natural Resources on “Society and Natural Resources in an Illiberal World”. Adam Simpson and Mattijs Smits, “Transitions to Energy and Climate Security in Southeast Asia? Civil Society Encounters with Illiberalism in Thailand and Myanmar,” Society and Natural Resources 31, no. 5 (2018) 580-98. ⁵ Sönke Kreft and David Eckstein, Global Climate Risk Index 2014, (Bonn: Germanwatch, 2013). 6 Ashley South, Ethnic Politics in Burma: States of Conflict (London and New York: Routledge, 2009).

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in 2011. From 1962 to 1988, the government was relatively isolated and pursued centralized and socialized energy policies focused on large hydropower.7 The new military regime adopted a new approach after the protests and political convulsions of 1988.8 Direct Military Rule After decades of socialist policies, the early 1990s saw private and foreign direct investment permitted within Myanmar’s energy sector and broader economy. A nascent market system expanded, with Myanmar’s political economy dominated by the military and its associated business interests.9 Throughout this period, governance by a military junta left little space for civil liberties or political debate; independent media were banned and many ethnic minorities repressed.10 Contestation between ethnic minorities and Myanmar’s central government over the rich natural resources in the ethnic minority borderlands often caused, or at least compounded, civil conflict. Ceasefires, however, were periods of military-state building in these regions through land confiscation and primitive accumulation.11 This natural resource extraction provided the means for the military to maintain its illiberal and repressive rule, and to enrich leading members of the military junta. While some ethnic groups also earned considerable wealth from the exploitation of these resources, their precarious existence and constant war footing, meant that social and economic development in these regions was limited. For Pogge, the “resource privilege” – effective ownership of natural resources – that accrues to any governing body provides “powerful incentives towards coup attempts and civil wars in the resource-rich countries”.12 It is clear that Myanmar provides a prototypical case study of this effect. In their comparative study on natural resources and conflict, Rustad et al. were unable to find a demonstrable link between conflicts and exploitable forest resources across all the cases they examined; Myanmar was the clearest case where the phenomenon persisted.13 7 Adam Simpson, Energy, Governance and Security in Thailand and Myanmar (Burma): A Critical Approach to Environmental Politics in the South, Updated ed. (Copenhagen: NIAS Press, 2017). 8 Human Rights Watch, Burma: Justice for 1988 Massacres (New York: Human Rights Watch, 2013). 9 Michele Ford, Michael Gillan, and Htwe Htwe Thein, “From Cronyism to Oligarchy? Privatisation and Business Elites in Myanmar,” Journal of Contemporary Asia 46, no. 1 (2016): 18-41; Lee Jones, “The Political Economy of Myanmar’s Transition,” Journal of Contemporary Asia 44, no. 1 (2014): 144-70. 10 Renaud Egreteau. Caretaking Democratization: The Military and Political Change in Myanmar (Oxford: Oxford University Press, 2016); Timothy Doyle and Adam Simpson, “Traversing More Than Speed Bumps: Green Politics under Authoritarian Regimes in Burma and Iran,” Environmental Politics 15, no. 5 (2006): 750-67. 11 Kevin Woods, “Ceasefire Capitalism: Military–Private Partnerships, Resource Concessions and Military–State Building in the Burma–China Borderlands,” The Journal of Peasant Studies 38, no. 4 (2011): 747-70. 12 Thomas Pogge, World Poverty and Human Rights. Second ed. (Cambridge and Malden: Polity, 2008) 219. 13 Siri Camilla Aas Rustad et al., “Foliage and Fighting: Forest Resources and the Onset, Duration, and Location of Civil War.” Political Geography 27 (2008) 761-82.

[47] Georgetown Journal of Asian Affairs


Simpson and Smits | Illiberalism and Energy Transitions in Myanmar and Thailand

Many environmental NGOs in Myanmar were ethnically-based and focused on campaigning against large energy projects slated for the ethnic minority regions, resulting in critiques of military rule. The military regime tended to conflate activism against energy projects with the ethnic military insurgencies, and NGOs were consequently attacked and banned by the government.14 Myanmar’s military junta during this era had little interest in climate concerns, but in an effort to normalize its international relations and attract foreign investment, it signed the UN Framework Convention on Climate Change (UNFCCC) in 1992. The subsequent two decades were, nevertheless, characterized by a lack of effective climate and energy policy making. Environmental NGOs, such as the Renewable Energy Association of Myanmar (REAM), provided technical assistance on decentralized, smallscale, and low emission energy technologies to rural communities such as mini-hydro schemes in mountainous Shan State. These projects were highly sought after in villages since electricity access and usage throughout the country were extremely low. By the end of direct military rule in 2011, the electrification rate was estimated by the Asian Development Bank at 26 percent.15 In addition to low levels of rural electrification, energy shortages occurred regularly in Myanmar throughout the 1990s and 2000s, even when energy was exported in return for foreign exchange, initially to Thailand, and later to China.16 Natural gas was the most successful of Myanmar’s forays into this area with several projects being completed or initiated during military rule. The Yadana Gas Pipeline from Myanmar into Thailand was the first transnational gas pipeline in Southeast Asia and was opposed by a range of environmental NGOs that were mostly ethnically-based and, due to military rule in Myanmar, operated from Thailand or from the contested Thai-Myanmar border area. These NGOs, such as the Karen Environmental and Social Action Network (KESAN), had little impact on military decision-making, and the pipeline was completed in 1999, providing much needed foreign exchange for a military regime on the brink of bankruptcy.17

14 Simpson, Energy, Governance and Security in Thailand and Myanmar (Burma): A Critical Approach to Environmental Politics in the South; Adam Simpson, “Challenging Hydropower Development in Myanmar (Burma): Cross-Border Activism under a Regime in Transition,” The Pacific Review 26, no. 2 (2013) 129-52; Vanessa Lamb, “Making Governance “Good”: The Production of Scale in the Environmental Impact Assessment and Governance of the Salween River,” Conservation and Society 12, no. 4 (2014) 386-97. 15 Asian Development Bank, Myanmar: Energy Sector Initial Assessment (Manila: Asian Development Bank (ADB), 2012).23. 16 Adam Simpson, “The Environment-Energy Security Nexus: Critical Analysis of an Energy ‘Love Triangle’ in Southeast Asia,” Third World Quarterly 28, no. 3 (2007) 539-54; Jürgen Haacke, “China’s Role in the Pursuit of Security by Myanmar’s State Peace and Development Council: Boon and Bane?” The Pacific Review 23, no. 1 (2010) 113-37. 17 Simpson, Energy, Governance and Security in Thailand and Myanmar (Burma): A Critical Approach to Environmental Politics in the South. (Copenhagen: NIAS Press, 2017).

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Large dam hydropower was, and is, the main electricity source in Myanmar (75 percent) but the country’s ambitious hydropower export program was less successful than the exporting of gas. This was mainly due to civil conflicts in the mountainous ethnic regions rather than opposition from ethnic environmental NGOs, such as KESAN, which the government largely ignored.18 Nevertheless, the transnational campaigns against the Thanlwin (Salween) and Ayeyarwady (Irrawaddy) Dams and transnational gas pipelines provided a training ground for a generation of environmental activists. President Thein Sein and the USDP Government Despite significantly more political contestation and improved civil liberties, illiberalism was built into the military-authored 2008 Constitution, under which there is no effective civilian oversight of military activities.19 In 2010, national elections delivered a government led by the military-backed Union Solidarity and Development Party (USDP), which took office in April 2011.20 The political and economic reform process launched in 2011 restored many civil liberties absent for decades, and activists were able to openly campaign against large dams inside Myanmar for the first time. On September 30, 2011, President Thein Sein astounded observers and local activists by suspending the Chinese-backed US$3.6 billion Myitsone Dam on the Ayeyarwady River in Kachin State, which had become the focus on an increasingly vociferous campaign by activists.21 The decision precipitated a slowdown in Chinese foreign investment and a shift towards EU and US investors as Western sanctions against the regime fell away.22 During this period, REAM experienced unprecedented freedoms and access to government decision-makers. Its founder, Aung Myint, helped draft both the Environmental Law of 2012 and the associated Environmental Impact Assessment Procedures, which were launched in January 2016 in the last days of the Thein Sein government. He also sat on the National Electricity Management Committee (NEMC), which oversaw all policy decisions regarding electricity. Energy-focused workshops funded by international donors proliferated during this period, with REAM a key contributor. Nevertheless, the government refused to support regulations that would allow mini-grids to feed into the national electricity network, which were an essential reform for climate-friendly mini-hydropower grids to compete with the subsidized national electricity grid.23 18 Adam Simpson, “Challenging Hydropower Development in Myanmar (Burma): Cross-Border Activism under a Regime in Transition,” The Pacific Review 26, no. 2 (2013) 19 Lee Jones, “Explaining Myanmar’s Transition: The Periphery Is Central,” Democratization 21 no. 5 (2014) 780-802. 20 Adam P. Macdonald, “From Military Rule to Electoral Authoritarianism: The Reconfiguration of Power in Myanmar and Its Future,” Asian Affairs: An American Review 40, no. 1 (2013) 20-36. 21 Julian Kirchherr, “Strategies of Successful Anti-Dam Movements: Evidence from Myanmar and Thailand,” Society and Natural Resources (2017). 22 Adam Simpson and Susan Park, “The Asian Development Bank as a Global Risk Regulator in Myanmar,” Third World Quarterly 34, no. 10 (2013) 1858–71. 23 Adam Simpson and Mattijs Smits, “Transitions to Energy and Climate Security in Southeast Asia? Civil Society Encounters with Illiberalism in Thailand and Myanmar,” Society and Natural Resources

[49] Georgetown Journal of Asian Affairs


Simpson and Smits | Illiberalism and Energy Transitions in Myanmar and Thailand

In international climate change negotiations, the Thein Sein government submitted its Intended Nationally Determined Contribution (INDC) to the UNFCCC in September 2015.24 Aung Myint sat on the committee that prepared the government’s submission, which committed to reduce the country’s per capita emissions of two tons of carbon dioxide equivalent (tCO2e) in 2010, by six percent by 2030.25 Given the existing low level of per capita emissions – compared with, for example, Australia at 25.3 tCO2e – the commitment appears significant, but is unlikely to be achieved without a shift in policy towards climate-friendly sustainable energy. Aung San Suu Kyi and the NLD Government The unexpectedly-comprehensive landslide by the National League for Democracy (NLD) in the November 2015 national elections – winning almost 80 percent of the available seats – ensured that the NLD dominated parliament and the government. Yet the constraints in the military-written Constitution remained.26 A return to the extreme illiberalism of previous military regimes looks unlikely in the near term but progress is far from assured, with unwelcome reminders from the NLD government of illiberal attitudes towards ethnic groups usually associated with previous regimes.27 Although there has been less progress than many NLD supporters hoped or expected since the NLD-led government came to power in April 2016, there have been several liberal reforms, including the removal of some illiberal colonial and military-era legislation.28 The first year of government was characterized primarily by policy inactivity in many areas, including energy and resource governance.29 There may well be opportunities for expanding small-scale renewable energy technologies in the future: Aung San Suu Kyi has argued that the electricity subsidy should be abolished for everyone except for those only using electric light, rendering renewable energy micro-grids more competitive. 31, no. 5 (2018) 24 Ministry of Environmental Conservation and Forestry, Myanmar’s Intended Nationally Determined Contribution - Indc (Yangon: Ministry of Environmental Conservation and Forestry (MOECAF), The Republic of the Union of Myanmar, 2015). 25 Government of Myanmar, Myanmar Energy Master Plan (Naypyitaw: National Energy Management Committee: Government of Myanmar, Asian Development Bank, Intelligent Energy Systems, Myanmar International Consultants, 2015). 26 Ardeth Thawnghmung, “The Myanmar Elections 2015: Why the National League for Democracy Won a Landslide Victory,” Critical Asian Studies 48, no. 1 (2016) 132-42. 27 David Steinberg, “Myanmar’s Minority Strife.” East Asia Forum (2017); Adam Simpson, Ian Holliday, and Nicholas Farrelly, “Myanmar Futures,” in Routledge Handbook of Contemporary Myanmar, ed. Adam Simpson, Nicholas Farrelly, and Ian Holliday (London and New York: 2018); Nicholas Farrelly and Adam Simpson, “Aung San Suu Kyi Will Come to the Asean Summit with Her Reputation Tarnished,” ABC News. 15 March 2018. 28 Adam Simpson, Energy, Governance and Security in Thailand and Myanmar (Burma): A Critical Approach to Environmental Politics in the South, 201-05. (Copenhagen: NIAS Press, 2017) 29 Adam Simpson, “The Extractive Industries Transparency Initiative: New Openings for Civil Society in Myanmar,” in The Business of Transition: Law Reform and Commerce in Myanmar, ed. Melissa Crouch (Melbourne: Cambridge University Press, 2017).

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The experience of Myanmar demonstrates that it is possible to make some progress on energy and climate security under a range of illiberal conditions. Under the extreme illiberalism and traditional authoritarianism of direct military rule, progress was halting and sporadic, and subject to the whims of opaque, ad hoc and inconsistent government policies. Under the relative liberalism of the Thein Sein government progress was more substantial, if still circumscribed by the strong political links between the government, the military, and its associated businesses. Under the NLD, environmental NGOs face difficulties in influencing government policies towards an energy and climate security transition, but the government knows that its longevity is linked to poverty reduction in rural areas and that this cannot be achieved at the expense of broad scale environmental destruction. Support for small scale hydro, solar, and wind energy projects, and their linking to the national network is therefore likely to occur. Energy transitions in Thailand Although punctuated by more liberal democratic periods than Myanmar, Thailand’s modern history has largely been the story of illiberal or authoritarian governance. The ability of environmental activists and movements to protest openly in Thailand has been primarily determined by the nature of the governing political regime. Their ability to influence policy and political outcomes has been tenuous and, even under its most democratic governments, has tended to reflect the extent of accommodation by existing political power structures. Those power structures, often allied to the monarchy and linked to structural inequality, run deeply through Thai society and are rooted in the country’s earliest history.30 Thailand’s nominally modern and democratic political era began in 1932, when a constitutional monarchy replaced absolute rule. The first half century of this era was marked by periodic military rule and the development of a centralized energy regime, based on state-owned companies and large hydropower dams. With occasional democratic rule from the 1980s, Thailand started to exhibit more progressive energy and climate policies than most other countries in the Southeast Asian region.31 Democratization Thai environmental NGOs started to emerge in the mid-1980s.32 In the early 1990s, the government started diversifying its energy markets and, later, considered the impacts of climate change. The context of this period is generally characterized by democratization with the first elected Prime Minister in 1988, followed by, after a military interregnum, a relatively long period of democratic progress, resulting in the rather liberal 1997 Constitution. Kevin Hewison, “Considerations on Inequality and Politics in Thailand,” Democratization 21, no. 4 (2014) 846-66.no. 4 (2014 31 Mattijs Smits, Southeast Asian Energy Transitions: Between Modernity and Sustainability (London and New York: Routledge, 2015). 32 Philip Hirsch, “The Politics of the Environment: Opposition and Legitimacy,” in Political Change in Thailand: Democracy and Participation, ed. Kevin Hewison (London and New York: Routledge, 1997).

30

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Simpson and Smits | Illiberalism and Energy Transitions in Myanmar and Thailand

The debt crisis in the 1980s resulted in a period of neoliberal reform instigated by the World Bank and the IMF. The dominance of the state-owned Electricity Generating Authority of Thailand (EGAT) in Thailand’s electricity market was reduced during reforms starting in 1992. These reforms established markets with feed-in tariffs for Independent Power Producers (IPPs), Small Power Producers (SPPs) and, eventually, Very Small Power Producers (VSPPs) (initially one megawatt).33 Although it was the Thai governments’ neoliberal tendencies that opened up space for this sector, environmental NGOs were also influential in its development, particularly by supporting the VSPP legislation.34 Relative liberalism in Thailand in the late 1980s and 1990s also allowed its environmental NGOs to achieve significant early successes, including the blocking of World Bank–backed Nam Choan Hydroelectric Dam in Kanchanaburi Province in 1988,35 although unsuccessful campaigns, such as that against the Pak Mun Dam, demonstrated the limits of environmental activism.36 Activist successes resulted in EGAT pursuing transnational energy projects, such as gas pipelines and hydropower dams, in its more authoritarian neighbors in Myanmar, Laos, and Cambodia.37 By 2015, 70 percent of Thailand’s electricity was generated using natural gas, with approximately one third imported from Myanmar.38 While only approximately five percent of electricity generation capacity is currently derived from large-scale hydropower, plans to import electricity from large dams in Myanmar and Laos would significantly increase this number.

Adam Simpson and Mattijs Smits, “Transitions to Energy and Climate Security in Thailand,” in Handbook of Transitions to Energy and Climate Security, ed. Robert E Looney (London and New York: Routledge, 2017). 34 Chuenchom Sangarasri Greacen and Chris Greacen, “Thailand’s Electricity Reforms: Privatization of Benefits and Socialization of Costs and Risks,” Pacific Affairs 77, no. 3 (2004) 517-41. 35 Timothy Forsyth, “Environmental Social Movements in Thailand: How Important Is Class?” Asian Journal of Social Sciences 29, no. 1 (2001) 35-51 5; Jonathan Rigg. “Thailand’s Nam Choan Dam Project: A Case Study in the ‘Greening’ of South-East Asia.” Global Ecology and Biogeography Letters 1, no. 2 (1991) 42-54 46. 36 Chris Sneddon and Coleen Fox, “Struggles over Dams as Struggles for Justice: The World Commission on Dams (Wcd) and Anti-Dam Campaigns in Thailand and Mozambique,” Society and Natural Resources 21, no. 7 (2008) 625-40. 37 Philip Hirsch, “Globalisation, Regionalisation and Local Voices: The Asian Development Bank and Re-Scaled Politics of Environment in the Mekong Region,” Singapore Journal of Tropical Geography 22, no. 3 (2001) 237-51 241; Piya Pangsapa and Mark J Smith, “Political Economy of Southeast Asian Borderlands: Migration, Environment, and Developing Country Firms,” Journal of Contemporary Asia 38, no. 4 (2008) 485-514; Adam Simpson. “The Environment-Energy Security Nexus,”; Adam Simpson, “Challenging Hydropower Development in Myanmar (Burma): Cross-Border Activism under a Regime in Transition,”; Ian G Baird, “The Don Sahong Dam: Potential Impacts on Regional Fish Migrations, Livelihoods, and Human Health,” Critical Asian Studies 43, no. 2 (2011) 211-35. 38 International Energy Agency, Thailand: Statistics for This Country International Energy Agency, 2015. Adam Simpson. Energy, Governance and Security in Thailand and Myanmar (Burma): A Critical Approach to Environmental Politics in the South. (Copenhagen: NIAS Press, 2017) 33

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The Shinawatra Party Machine and a Democrat Party Government Increased environmental activism supported the creation of a new kind of responsive formal politics in Thailand, which was epitomized by the ascension to power of Prime Minister Thaksin Shinawatra and his Thai Rak Thai (TRT) party in 2001. Thaksin initially courted environmental activists, but once in power, his rhetoric against environmental NGOs and activists provided cover for repressive crackdowns by security services and threat of violence perpetrated by non-uniformed assassins.39 His government undermined many of the checks and balances of the 1997 Constitution. Thaksin remained popular, however, with proxy or family parties comprehensively winning every election since 2001.40 Thaksin fled into exile following a royal-backed military coup in September 2006, initiating a brief period of military government until an election in December 2007, which was won by the Thaksin-friendly People’s Power Party (PPP). The PPP was dissolved by the Constitutional Court in December 2008, which allowed the opposition Democrat Party to form a coalition. At the next election in July 2011, Yingluck Shinawatra, Thaksin’s sister, led the Pheu Thai Party into government. Despite clear illiberal undercurrents in Thailand, the governments between December 2007 and 2014 can be defined as democracies, given their relative liberalism.41 Despite illiberal tendencies in this era environmental NGOs continued to form, such as the Thailand Climate Justice Working Group (TCJ). It was established in 2008 and provided a coordination role for a network of ten specialized environmental groups focused on the energy, trade, agriculture, and forestry sectors. TCJ was funded primarily by Swedish NGOs to organize events, campaigns, and other activities, on diverse topics related to energy and climate change mitigation. The relative liberalism of the political regime influenced its ability to promote progress on an energy and climate transition.42 The emergence of an environmental NGO focused on climate demonstrated the increasing significance of climate change in Thailand, initially related to the economic opportunities relating to mitigation. Under the Kyoto Protocol, over 150 Clean Development Mechanism (CDM) projects were registered. More recently, the Thai Greenhouse Gas Management Organization (TGO), an independent public organization set up by the Thai government, started to develop new and voluntary market-based instruments.43 Amnesty International, Thailand: Memorandum on Human Rights Concerns (Amnesty International, 2004). 40 Thitinan Pongsudhirak, “Thailand’s Uneasy Passage,” Journal of Democracy 23, no. 2 (2012) 47-61. 41 Veerayooth Kanchoochat and Kevin Hewison, “Understanding Thailand’s Politics,” Journal of Contemporary Asia 46, no. 3 (2016) 371-87. 42 Adam Simpson and Mattijs Smits, “Transitions to Energy and Climate Security in Southeast Asia? Civil Society Encounters with Illiberalism in Thailand and Myanmar,” Society and Natural Resources 31, no. 5 (2018) 580-98. 43 Mattijs Smits, “The New (Fragmented) Geography of Carbon Market Mechanisms: Governance Challenges from Thailand and Vietnam,” Global Environmental Politics 17, no. 3 (2017). 39

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Simpson and Smits | Illiberalism and Energy Transitions in Myanmar and Thailand

Climate change adaptation and mitigation policy has also been taken up by the central government. Thailand’s first Climate Change Master Plan, which was developed by the Office of Natural Resources and Environmental Policy and Planning (ONEP) during relatively liberal democratic governments, was released in 2010 and updated in 2012. Although market-based climate policy instruments emphasize liberal economic values and liberal political principles, such as freedom of consent and public participation, in practice such principles are not always adhered to.44 In Thailand during this period, environmental NGOs often were invited to attend or comment, but late in the process when most important decisions already had been made.45 Some NGOs with significant technical knowledge, such as Palang Thai, were influential in changing policies. while others more focused on social movement campaigns, such as TCJ, were less successful. While renewable energy schemes, such as Adder, transformed parts of the electricity market, it also provoked a backlash from fossil fuel interests that were supported by the illiberal military regime that soon came to power. Military Rule In May 2014, the Thai military seized power through a coup and has since denied citizens basic rights, including the right to assemble and freedom of expression, accompanied by widespread political repression.46 Soon after the coup, its leader, General Prayut Chan-o-cha, established a military dominated national assembly, which elected him as prime minister.47 The military and its royal supporters have also diminished and constrained democratic rule in the new 2017 Constitution. The resultant constriction of political space for environmental NGOs has undermined the shift towards energy and climate–friendly policies. Starting under Yingluck’s government but continuing under the Prayut military regime, there have been significant backward steps in energy and climate governance. Many of the effective energy and electricity structures established over the last two decades have been undermined, as the success of the renewable energy sector created fertile ground for well-connected corporations to extract rents, causing potentially long-lasting damage to community support for the sector. This outcome seems consistent with Prayut’s lauding of fossil fuels as an energy source in mid-2015, when he instructed the Energy Ministry to boost ‘public understanding’ about the increased cost of producing electricity from renewable or alternative energy sources (Bangkok Post, 14 August 2015). Srikanth Subbarao and Bob Lloyd. “Can the Clean Development Mechanism (Cdm) Deliver?” Energy Policy 39, no. 3 (2011) 1600-11. 45 Mattijs Smits and Carl Middleton, “New Arenas of Engagement at the Water Governance-Climate Finance Nexus? An Analysis of Boom and Bust of Hydropower Cdm in Vietnam,” Water Alternatives 7, no. 3 (2014) 561-83. 46 Pavin Chachavalpongpun, “The Politics of International Sanctions: The 2014 Coup in Thailand, “ Journal of International Affairs 68, no. 1 (2014) 169-85; Chris Baker. ‘The 2014 Thai Coup and Some Roots of Authoritarianism.’ Journal of Contemporary Asia 46, no. 3 (2016) 388-404. 47 Veerayooth Kanchoochat and Hewison, “Understanding Thailand’s Politics,” Journal of Contemporary Asia, 46:3, 371-387. 44

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Using absolute authority under Section 44 of the Interim Constitution, Prayut exempted all power plants from regulations under the Town and City Planning Act (Prachatai, 22 January 2016). During the first public hearings for the formulation of the Power Development Plan (PDP) 2015-2036 (PDP 2015) in August 2014, protests were banned and journalists and activists arrested for expressing opposition to the military government’s policies.48 In a further attempt to bolster the fossil fuel industry, the Minister for Energy announced in March 2018 that the government would cease purchasing renewable energy for a period of five years.49 Notwithstanding the support for fossil fuels, Thailand has made some progress on climate change policy since the 2014 coup, at least on paper, with the country finally submitting its INDC to the UNFCCC in October 2015. In that submission, the Thai government stated the country’s intention to reduce greenhouse gas emissions by 20 percent from the projected business-as-usual (BAU) level by 2030.50 The military coup was a major setback for TCJ and other Thai environmental NGOs. The restrictions on any political gathering or activities meant that it was difficult to organize any events and a schism emerged between liberals and monarchists, even within individual NGOs, which meant environmental issues received little attention. In addition to a lack of funding this resulted in TCJ suspending its activities in mid2016 until a more favorable political environment emerges.51 While in the past Thailand’s political system has helped develop diverse and, for the region, progressive renewable energy policies, the country’s current illiberal trajectory seems to be undermining earlier gains. There is little indication that politics in Thailand will become more liberal in the short or medium term. Elections will possibly be held in February 2019 but the military Constitution will constrain any new government’s actions. Early indications from recently installed King Vajiralongkorn suggest that he is more interested in consolidating monarchical power than promoting liberal political reform.52 His conservative support for the existing centralized political power structures in Thailand indicate that he is unlikely to use his influence and political capital to promote a decentralized renewable energy transition. Decentralized energy systems offer communities a measure of independence from reliance on the state and related oppressive governance structures and the corruption and rents associated with large centralized projects. Decentralized electrical power can stimulate the decentralization 48 Kevin Hewison, “Thailand: The Lessons of Protest,” Asian Studies: Journal of Critical Perspectives on Asia 50, no. 1 (2014) 1-15; Chavalit Pichalai, Thailand’s Power Development Plan 2015 (Bangkok: Director General, Thai Energy Policy and Planning Office, Ministry of Energy, 2015). 49 Sopitsuda Tongsopit, “Give Renewable Energy a Chance,” Bangkok Post. 30 March 2018. 50 Raweewan Bhuridej, Submission by Thailand to Unfccc: Intended Nationally Determined Contribution and Relevant Information (Bangkok: Secretary General, Office of Natural Resources and Environmental Policy and Planning, 2015). 51 Adam Simpson and Mattijs Smits, “Transitions to Energy and Climate Security in Southeast Asia? Civil Society Encounters with Illiberalism in Thailand and Myanmar,” Society and Natural Resources 31, no. 5 (2018) 580-98. 52 Adam Simpson, Energy, Governance and Security in Thailand and Myanmar (Burma): A Critical Approach to Environmental Politics in the South, (Copenhagen: NIAS Press, 2017). 200.

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Simpson and Smits | Illiberalism and Energy Transitions in Myanmar and Thailand

of political power, which often accounts for its unpopularity with illiberal central governments and leaders.53 Looking to the Future Progress towards a genuine climate-friendly renewable energy transition has been limited in both Myanmar and Thailand. Thailand has been a leader within Southeast Asia on many environmental issues, including innovation within its electricity sector which allowed small scale renewable energy producers to enter the market. Some environmental NGOs with strong technical knowledge were influential in developing these regulatory frameworks. In recent years, however, this transition has faltered due to illiberal governance and the assertion of vested interests from the fossil fuel sectors. The activities of NGOs have been severely curtailed, as has access to the government. In Myanmar, environmental policy and domestic environmental activism was almost non-existent until the political reforms of 2011. Since this time, climate concerns have been included in government approaches to energy security although the government continues a paternalistic attitude to civil society. Historically, much of Myanmar’s energy has been drawn from large dams. Although these dams harness renewable energy, the national network suffers blackouts during the dry season and social and environmental issues were caused by their implementation during authoritarian rule. Increasingly irregular monsoons, instigated by climate change, are likely to put further strain on this dependency. There is still a lack of regulations allowing small power producers, using mini-hydro or solar mini-grids, to feed into the national network. Some progress may be made in this area in future, since the government is keen to promote rural development, but until environmental NGOs are valued for their expertise and community connections progress in this area will continue to be limited. Overall, Myanmar and Thailand have demonstrated that progress can be made on climate-friendly energy transitions in developing or middle-income countries, but as in many other parts of the world this progress often only comes about through pressure from civil society groups using international agreements to hold their governments to account. We therefore make the following recommendations: 1. That international aid agencies, official development assistance and transnational corporations in both countries are focused on: a.

Technology transfer to facilitate the transition to climate-friendly energy technologies in agriculture, manufacturing and transport; and

b. Linking aid and investment to the establishment of formal multi-stakeholder decision-making bodies in energy and climate-related projects that involve civil society, government and business, with equal voting rights. The Extractive Industries Transparency Initiative 53

Ibid. 195. Adam Simpson, “The Environment-Energy Security Nexus.�

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(EITI), operating in Myanmar, provides a useful international template.54 2. That the Myanmar and Thailand governments: a.

Actively establish multi-stakeholder groups in all areas of development decision-making, particularly in relation to energy and climate-related projects and activities; and

b. Encourage civil society participation in the political process by repealing constraints on political gatherings and activities in both countries.

Adam Simpson was the inaugural Director of the Centre for Peace and Security within the Hawke Research Institute and is the inaugural Program Director: Postgraduate Programs within the School of Creative Industries, University of South Australia. He is the author of Energy, Governance and Security in Thailand and Myanmar (Burma): A Critical Approach to Environmental Politics in the South (Routledge 2014; Updated Paperback Edition, NIAS Press 2017) and is lead editor of the Routledge Handbook of Contemporary Myanmar (2018). Mattijs Smits is Assistant Professor at the Environmental Policy group at Wageningen University and Research (The Netherlands). He is a Human Geographer interested in social practices, energy transitions, renewable energy policy and politics, development and carbon markets, with a focus on the Global South. He is author of the book Southeast Asian Energy Transitions: Between Modernity and Sustainability (Routledge/Ashgate, 2015).

54 Adam Simpson, “The Extractive Industries Transparency Initiative: New Openings for Civil Society in Myanmar.� (Melbourne: Cambridge University Press, 2017)

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Fraser and Aldrich | East Asia's Nuclear Policies

East Asia's Nuclear Policies Fukushima Effect or a Nuclear Renaissance? Timothy Fraser and Daniel P. Aldrich Until 2011, nuclear power seemed to be on a roll around the world. A number of countries, including China and Japan, placed atomic energy as a core pillar in their energy policies or had plans for a massive expansion of reactors. China aimed to host 70 gigawatts (GW) of nuclear energy by 2020, South Korea aimed to boost nuclear power from 30 to 60 percent of its energy mix by 2035, and Japan planned to add fourteen reactors to its fleet of fifty-four. Specifically, Japan hoped to boost nuclear power’s place in its energy mix from 30 percent in 2011 to over 50 percent by 2030.1 The March 11, 2011 triple disasters in Japan altered that calculus. Where Japan had relied on nuclear energy for close to one-third of its electricity production until the Fukushima meltdowns, that production dropped to zero for much of 2011 and 2012 and has remained low since then. China suspended its nuclear fleet expansion plans for half a year, and countries quite far from the disasters—including Germany, Italy, and Belgium—suspended or ended their use of nuclear power. Despite short-term perturbations, however, nuclear power’s massive sunk-cost structure and embeddedness in national energy plans have made massive changes in the field unlikely in East Asian nations. Since the Fukushima disaster, civil society held large-scale protests, referenda, and petitions against nuclear power, but their results have been mixed.2 Contentious politics have successfully put new nuclear safety laws on the books in Japan, South Korea, and China, but have failed to overpower the nuclear lobby and shift the trajectory of nuclear power in their countries.3 Only Taiwan has managed to secure an exit from nuclear power.4 M.V. Ramana and Amy King, “A New Normal? The Changing Future of Nuclear Energy in China,” in Learning from Fukushima: Nuclear Power in East Asia, Peter Van Ness and Mel Gurtov eds., (Canberra: Australian National University Press, 2017), 103-132; Vlado Vivoda, “After Fukushima: The Future of Nuclear Power in Asia,” East Asia Forum, March 16, 2013, http://www.eastasiaforum. org/2013/03/16/after-fukushima-the-future-of-nuclear-power-in-asia/. 2 See Daniel P. Aldrich, “Post-Crisis Japanese Nuclear Policy: From Top Down Directives to Bottom Up Activism,” Asia Pacific Issues, no. 103 (2012): 1-12; Daniel P. Aldrich, “Future Fission: Why Japan Won’t Abandon Nuclear Power,” Global Asia 6, no. 2 (2011): 62-66. 3 Lauren Richardson, “Protesting Policy and Practice in South Korea’s Nuclear Energy Industry,” in Learning from Fukushima, Van Ness and Gurtov eds., 133-154. 4 Xiaochen Su, et al., “The Rationale for Supporting Nuclear Power: Analysis of Taiwanese Public Opinion Survey,” International Relations of the Asia-Pacific 15 (2015): 147–176; Ming-sho Ho, “The 1

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Civil society has helped push governments to change regulatory institutions, but civil society organizations have had limited impact on nuclear restart decisions. Below, we outline why we should not expect major change in East Asian nuclear policy to come from civil society, and we discuss alternative avenues for civil society to achieve lasting change in energy policy in East Asia. What Drives Japan’s Nuclear Restarts Many scholars have wondered what drove Japan’s nuclear restarts after such a major accident and why civil society has had such limited impact. Some thought these unpopular restarts were due to the need to ensure energy security by boosting domestic energy supply, as efforts to boost renewables had been admirable but insufficient. However, others suspected politics was involved. Observers suggested that pro-nuclear advocates—national, prefectural, local, and company officials who support the continuation of Japan’s nuclear program—called the “nuclear village” (genshiryoku mura), were primarily responsible.5 These officials shared a common interest in securing the continuation of nuclear power, lest their rural constituents, companies, national energy security, and reelection campaigns would be left vulnerable without it. This included the troubling practice of industry executives receiving top posts at the nuclear regulator after retirement, as well as bureaucrats from the regulator receiving favorable positions on company boards. It also included trillions of yen spent on pipe-dream industries to reuse spent nuclear fuel and secure a near complete transition to nuclear power, despite extended delays, bankruptcies, and poor management of these facilities.6 Together, this powerful interest group used its clout in national government to secure the continuity of the nuclear industry after Fukushima, albeit with substantial upgrades in regulations.7 However, while Japan’s nuclear industry is unique in that it is significantly more privatized than others, the idea that a single industry could have such significant political importance is hardly exclusive to Japan. 8 Nuclear power appears quite prone to insular and technocratic governance. France’s nuclear power program has had considerable

Fukushima Effect: Explaining the Resurgence of the Anti-Nuclear Movement in Taiwan,” Environmental Politics 23, no. 6 (2014): 965–983. 5 Vlado Vivoda and Geordan Graetz, “Nuclear Policy and Regulation in Japan after Fukushima: Navigating the Crisis,” Journal of Contemporary Asia 45, no. 3 (2015): 505; Jeff Kingston, “Japan’s Nuclear Village,” The Asia Pacific Journal: Japan Focus 10, issue 37 (2012): 1-23, https://apjjf.org/-JeffKingston/3822/article.pdf. 6 “Monju and the Nuclear Fuel Cycle,” Japan Times, September 4, 2016, https://www.japantimes.co.jp/ opinion/2016/09/04/editorials/monju-nuclear-fuel-cycle/#.WtP-GIjwZPY. 7 Jacques E.C. Hymans, “After Fukushima: Veto Players and Japanese Nuclear Policy,” in Japan: The Precarious Future, Frank Baldwin and Anne Allison eds., (New York: New York University Press, 2015), 110-138; David Arase, “The Impact of 3/11 on Japan,” East Asia: An International Quarterly 29, no. 4 (2012): 331. 8 Hitoshi Yoshioka, Genshiryoku no Shakaishi: Sono Nihonteki Tenkan [A Social History of Nuclear Power: Its Development in Japan] (Tokyo: Asahi Shimbun Press, 2013).

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Fraser and Aldrich | East Asia's Nuclear Policies

political influence, and scandal has surrounded nuclear industries in other countries. 9 In 2008, China’s nuclear industry narrowly averted its own Fukushima after the magnitude 7.9 Sichuan earthquake (and then kept a lid on it until 2017).10 Meanwhile, in 2013, South Korea’s industry was plagued by revelations that companies had faked safety test results and bribed officials in charge of regulating the industry.11 As a result, Japan’s nuclear village was hardly unique in its regulatory problems. After Fukushima, though, the government made significant improvements in nuclear regulations. The most significant was making regulators independent from the Ministry of Economy, Trade, and Industry (METI), and instead establishing the Nuclear Regulatory Authority (NRA) within the Ministry of the Environment. Critics have highlighted that METI prioritized economic growth over enforcing regulations in the nuclear industry in the years leading up to Fukushima. As a result, the Tokyo Electric Power Company did not construct sea walls of the appropriate height that protected neighboring reactors at the Onagawa Nuclear Power Plants just north of Fukushima.12 After this major regulatory reform, Japan’s reactors restarted based on regulatory approval and community consent, two processes where neither the nuclear village nor METI could directly engineer an outcome. Although the nuclear village’s influence could not directly explain restarts, other explanations were also possible. Many rural communities hosting nuclear facilities remained financially dependent on the nuclear industry. Additionally, some communities might have lacked the community solidarity necessary to resist, or perhaps their citizens were sharply divided on the issue. But upon closer examination, none of these reasons explains fully why such strong civil society opposition could affect so little change at the local level. Japan’s seemingly illogical restarts come from its institutions. To convince communities to host their plants, Japanese power companies wrote loose safety agreements with community and prefectural officials while the government ensured large subsidy packages for communities throughout the lifetime of reactor operations.13 In doing so, they set up civil society with a Catch-22. If a reactor ever went offline and had to be restarted, but surrounding communities were opposed, the mayor, governor, prefectural assembly, or municipal assembly could theoretically veto the restart. However, to do so, these often underpopulated rural towns would have to give up subsidy packages 9 Gabrielle Hecht, The Radiance of France: Nuclear Power and National Identity after World War II (Cambridge: MIT Press, 2009). 10 Enyo Mitsusada, “China Had Crisis Similar to One at Fukushima, But Averted Disaster,” Asahi Shimbun, March 21, 2017, http://www.asahi.com/ajw/articles/AJ201703210050.html. 11 Choe Sang-Hun, “Scandal in South Korea Over Nuclear Revelations,” New York Times, August 3, 2013, https://www.nytimes.com/2013/08/04/world/asia/scandal-in-south-korea-over-nuclear-revelations.html. 12 Airi Ryu and Najmedin Meshkati, “Onagawa: The Japanese Nuclear Power Plant That Didn’t Melt Down on 3/11,” The Bulletin of Atomic Scientists, March 10, 2014, https://thebulletin.org/onagawajapanese-nuclear-power-plant-didn’t-melt-down-311. 13 See Daniel P. Aldrich, Site Fights: Divisive Facilities and Civil Society in Japan and the West (Ithaca: Cornell University Press, 2008).

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on which they relied heavily. After Fukushima, when this theoretical scenario actually happened, the outcome revealed the relative powerlessness of local communities and elected officials to influence restart outcomes. For example, after 3/11, Satsumasendai Mayor Iwakiri Hideo and the city council gave their consent for the Kyūshū region’s utility to restart the nearby Sendai Nuclear Power Plant in Kagoshima Prefecture. However, in 2016, a series of magnitude 6 and 7 earthquakes struck the Kyūshū region, and Mitazono Satoshi won that summer’s gubernatorial race on a wave of anti-nuclear sentiment, winning a majority of votes in the town hosting the reactors. When the governor called on the utility to shut the plant down until it was determined safe, the utility publicly rebuked the governor, saying the gentlemen’s agreement in place was not legally binding, and thus he had no legal authority to order them to do anything. The utility did shut the plants down for routine maintenance and toured the governor through the plant, but the utility won the war. No governor has since successfully kept a reactor offline. The electoral institutions that civil society relied upon were shown to be impotent. Similarly, some communities turned to the courts to intervene in the restart of the Takahama reactor that was located in a seismically-active region. But these judicial institutions were weakened by decades of government pressure. Judges, especially liberal ones, who rule against the government frequently have found less career success than pro-government judges.14 Higuchi Hideaki, the judge in the Takahama case, found himself reassigned to Family Court in another region after he ruled against the restart, and the Fukui District Court overruled his verdict later that year in 2015. Similarly, in 2017, the Osaka High Court overruled a separate ruling against the restart by Shiga Prefecture’s Ōtsu District Court. As a result, the only organization wielding real power over the restarts in Japan is the Nuclear Regulation Authority (NRA), a bureaucratic organization which came under fire after it failed to appoint a seismologist to its advisory board. Electoral and judicial institutions have blocked Japanese civil society from truly influencing the field of nuclear power.15 Instead, NGOs, anti-nuclear groups, and unions have seen their greatest successes in delaying restarts which pile up costs on utilities and pressure elites even within the famously pro-nuclear Liberal Democratic Party to consider moving away from nuclear power. Future nuclear nations would be wise not to placate civil society with false hopes for public participation in nuclear policy. As the case of Japan has demonstrated, civil society could not derail nuclear policy, but it has used those weak institutions to delay restarts and cause considerable annoyance and financial difficulty to government and utilities.

Mark Ramseyer and Eric Rasmusen, “Why Are Japanese Judges So Conservative in Politically Charged Cases?” American Political Science Review 95, no. 2 (2001): 341. 15 See Daniel P. Aldrich and Timothy Fraser, “All Politics is Local: Judicial and Electoral Institutions’ Role in Japan’s Nuclear Restarts,” Pacific Affairs 90, no. 3 (2017): 433-457. 14

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Fraser and Aldrich | East Asia's Nuclear Policies

Civil Society’s Role to Play in Asian Nuclear States This suggests that civil society has a role to play in transitioning Asian nuclear states towards renewable energy and away from nuclear power, but it is not a dominant role. Civil society can exploit weak institutions to delay nuclear policy, and it also can channel its members towards related causes where public participation could make a significant difference. Environmental organizations should choose their avenues for engagement based on their country’s regulatory regime. For example, institutions have blocked civil society in South Korea as well, so it has resorted to similar delaying tactics as in Japan. In South Korea, civil society has capitalized on public discontent with embedded interests in politics. Plaintiffs have turned to courts to win compensation from utilities for exposing locals to radioactive materials. And towns like Samcheok have used referendums to highlight public opposition to plans to site reactors in their towns. Even as the South Korean government disregarded the referendums as non-binding, these tactics have generated bad press for the industry, which is increasingly facing calls from top government officials for a gradual nuclear phase out.16 Although civil society’s adept use of technology symbolically overcame ingrained political networks and corruption in South Korea’s Candlelight Revolution of 2017, institutions barring public participation in other spheres did not disappear overnight. In contrast, in China, civil society holds even less formal power. Despite that, citizens have had a surprising degree of influence over nuclear policy, although their gains remain meager. Fukushima raised awareness of vulnerability to regulatory failure, and this allowed experts to critique China’s state-owned nuclear industry for lack of transparency.17 Local governments have experienced sudden protests over uranium-processing facilities and pressure from wealthy citizens against nuclear power. As a result, Chinese government officials increasingly are adopting consensus-building tactics over more authoritarian options when siting controversial facilities.18 Given the extreme costs of outright opposition, this may be the best realistic outcome that civil society can hope for in China’s nuclear policy. These strategies of creative annoyance will not dismantle nuclear power any day soon. However, although Japan’s weak judicial and electoral institutions impeded public participation in nuclear power, civil society has found more success in promoting renewable power. During Japan’s nuclear shutdown from 2011 to 2015, Japan’s strong feed-in Se Young Jang, “The Repercussions of South Korea’s Pro-Nuclear Energy Policy,” The Diplomat, October 8, 2015, https://thediplomat.com/2015/10/the-repercussions-of-south-koreas-pro-nuclear-energy-policy/. 17 Guizhen He, Arthur P.J. Mol, Lei Zhang, and Yonglong Lu, “Public participation and trust in nuclear power development in China,” Renewable and Sustainable Energy Reviews 23 (2013): 1–11. 18 Chuanwang Sun, Xiting Zhu, Xiaochun Meng, “Post-Fukushima Public Acceptance on Resuming the Nuclear Power Program in China,” Renewable and Sustainable Energy Reviews 62 (2016): 685–694; Hui Zhang, “China: Evolving Attitudes on Nuclear Affairs,” in Nuclear Debates in Asia: The Role of Geopolitics and Domestic Processes, Mike Mochizuki and Deepa Ollapally eds., (London: Rowman & Littlefield, 2016), 31. 16

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tariff churned out thousands of renewable power plants across the country. This has provided officials a clear, tangible, alternative energy policy to support—one that many officials view as a path to community development in Japan’s rural regions.19 This is an area where civil society leadership could make a difference. The Institute for Sustainable Energy Policy and Tetsunari Īda’s Japan Renewable Energy Institute, backed by Softbank’s billionaire Son Masayoshi, have initiated national-level advocacy for renewable power, while the Citizens’ Commission on Nuclear Energy has developed concrete policy ideas for the path to a post-nuclear Japan. In Japan (and East Asia), national-level civil society organizations are rare, and these groups represent an important shift towards a professionalized civil society that contributes to national policymaking. Similarly, at the local level, it may be easier to promote renewable power than to resist nuclear power. In Japan, some nuclear restart opposition movements have redirected their energies towards pushing local government to adopt renewable power such as solar, geothermal, and wind. Instead of grinding against the weight of ingrained institutions, they are finding more success in building consensus among local officials to promote technologies that add to their city tax base while eating away at utilities’ bottom lines. South Korean environmentalists might benefit from building stronger inroads with local and national government over areas of agreement, such as renewables, to ensure a more compelling alternative to nuclear power. Also, during the Moon administration’s honeymoon period of public participation, civil society could help with the country’s lackluster policies for renewables: South Korea lags behind its neighbors as the twenty-ninth most attractive for investment in renewable power, compared to China at number one and Japan at number seven.20 Facing similar institutional barriers as Japan, South Korean environmentalists should consider contributing to renewable power promotion efforts, lest they lack a compelling alternative to bargain with over nuclear. Likewise, Chinese civil society might find it more productive (and safer) to work to build networks and norms in city government that prioritize public participation in China’s renewable energy transition. Community participation could ameliorate the potential land and community impacts of solar and wind farms that provinces and companies are deploying across the country. Success would mean ensuring a just transition to renewable power in Chinese provinces. Failure could mean decades of poor urban planning and landscape degradation for communities affected by mass deployment of these facilities. Building norms for local consent and relationships between civil society and local government could help ensure a more equitable transition. Although Japan, South Korea, and China have already sunk decades of investment and political capital in nuclear power and its ingrained institutions, aspiring nuclear states 19 See Timothy Fraser and Andrew J. Chapman, “Social Equity Impacts in Japan’s Mega-Solar Siting Process,” Energy for Sustainable Development 42 (2018): 136-151. 20 Ernst and Young, “Renewable Energy Country Attractiveness Index,” October 2017, http:// www.ey.com/gl/en/industries/power---utilities/ey-renewable-energy-country-attractiveness-index-our-index.

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Fraser and Aldrich | East Asia's Nuclear Policies

like Vietnam have not. Civil society likely cannot dissuade Vietnam from pursuing nuclear power, because it has banked its economic development strategy on nuclear power’s low-cost domestic energy supply. However, Vietnam still has the chance to avoid the environmental pollution, corruption, and conflicts of interest that beset Japan’s nuclear industry. In order to stave off the creation of new nuclear villages, future Asian nuclear states should build strong institutions protecting public participation in energy policy. Governments and utilities could site nuclear facilities based on local consent measured not through the opinions of political elites and town council members but the citizens more broadly. Community referenda, votes, and deliberate polling can give host community citizens and officials real veto power over operations. The state could ensure the authority and autonomy of courts, so that judges need not fear retaliation for ruling against the state. While this would increase the risk on the state’s investment in nuclear power, it would also help the public keep the industry accountable to safety standards. Giving the public real veto power could also push the nuclear industry to make more realistic spending projections, ensure transparency, and avoid corruption, because they cannot rely on the unending support of the state without appeasing the public. Vietnam should also consider the Catch-22 that Japanese towns faced after Fukushima. Numerous towns chose to allow reactor restarts amidst seismic activity because they could not risk losing their town’s biggest employer and source of government subsidies. In these “castletowns” local officials answered to the requests of industry officials, rather than the other way around. Rather than promising subsidies, the state could convince multiple companies to settle in communities along with nuclear power plants. Industry diversification would give communities greater incentive to hold utilities accountable for safe operations, and it would help to build stronger, sustainable rural economies than can outlast the life of their reactors. On top of that, states could give real veto power over reactor operations to regional officials and assemblies, not just the towns that host reactors. This would make it harder for a utility to rebuff the challenges of governors or local civil society in the event of a safety crisis. States should also apply these principles to other parts of the energy grid, especially renewable power. Giving citizens the right to veto other energy projects helps communities avoid poor planning and any community or environmental costs from it, and it builds linkages between communities, local government, and industry from the start. Vietnam has the chance to build democratic institutions in its renewables industry and ensure a just transition from day one, unlike its Chinese neighbors. Finally, they could work to add more diverse power sources to their grid by adding decentralized sources like wind, solar, and biomass in regions around their reactors. This ensures that if their reactors are ever compromised unexpectedly, these regions will still retain the capacity to generate power for their local industries. Additionally, these renewable sources can add to local tax bases and help communities avoid becoming single-industry towns.

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Policy Recommendations Summary -

Give citizens real veto power over nuclear reactors through the ballot box and the courts Diversify industry in host communities and avoid single-industry “castletowns” Give regional and local officials legally-binding and equal veto power over reactors Build public participation into renewable power planning and design Diversify energy grid sources by adding renewable resources.

Conclusion Civil society has slightly pushed the regulation and adjudication of nuclear energy in East Asia, but it has not radically altered the landscape for the technology. Instead, civil society’s contribution to nuclear policy depends on the domestic institutions of each country. However, there is great potential for civil society to build connections with local and national officials in renewable power, creating norms for public participation and building a credible alternative policy regime to nuclear. South Korea and China lag behind Japan in how involved civil society is in nuclear or renewable power. However, civil society can still exploit areas of collaboration with government in Asian nuclear states. Future nuclear states like Vietnam should be wary of the corruption, expense, and environmental hazards of nuclear power. Involving civil society in the policymaking process from the start can help build stronger institutions, reduce the likelihood of future safety threats, and build more resilient economies and energy systems. Although the toolkit for civil society is limited when it comes to improving or abolishing nuclear power in East Asia, policymakers should continue to seek out opportunities to increase public participation in energy policy.

Daniel P. Aldrich is Director of the Security and Resilience Studies Program and full professor in the Political Science Department and the School of Public Policy and Urban Affairs School at Northeastern University. He has published more than forty-five peer reviewed articles, four books, and dozens of book chapters along with Op-eds for the New York Times, CNN, and the Asahi Shimbun, among others. His new book Black Wave: How Connections and Governance affected Japan’s 3/11 Disasters is forthcoming from the University of Chicago Press. Timothy Fraser is a Ph.D. student in the political science department at Northeastern University. He is the author of several articles on renewable energy and nuclear power in Japan and was a Fulbright Fellowship recipient in Japan from 2016-2017.

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Nguyen | An Analysis of Moon Jae-in's Nuclear Phase-out Policy

An Analysis of Moon Jae-in's Nuclear Phase-out Policy The Past, Present, and Future of Nuclear Energy in South Korea Viet Phuong Nguyen Although South Korea adopted nuclear energy later than countries like the United States, Russia, or France, the country, until recently, has been considered to have one of the most successful civil nuclear power programs in the world, with a fully-developed supply chain, a remarkable record in constructing and operating nuclear power plants (NPPs), and the ability to compete and win contracts to supply NPPs abroad. The fortune of South Korea’s nuclear program has seemingly come to an end, however, with the election of Moon Jae-in. The new South Korean President promised to reduce the country’s dependence on nuclear energy, and has, since taking office, implemented measures to phase out this type of electricity generation. In this paper, following a brief history of the development of nuclear energy in South Korea, the root causes that instilled public distrust of nuclear energy and Moon Jae-in’s phase-out policy are discussed. Subsequently, by analyzing the validity of Moon’s plan, I argue that this phase-out policy is not beneficial for the long-term sustainability of South Korea’s economy in general, and of the Korean nuclear industry in particular. The paper concludes with policy recommendations for a more balanced nuclear policy that can accommodate public opinion and, at the same time, ensure energy security and provide other economic and diplomatic benefits. Nuclear Energy’s Successful Past South Korea, bound by an isolated electricity grid and a lack of natural resources, has imported most of its primary energy sources since the 1960s.1 For this reason, South Korea was among the first participants in the “Atoms for Peace” initiative, which in 1962 provided the East Asian state with its first research reactor built by the United States (U.S.). In the same year, then-President Park Chung-hee initiated the Korean civil nuclear program and involved numerous organizations, from research institutes (the Korea Atomic Energy Research Institute—KAERI, which was established in 1959), to universities (starting with Hanyang and Seoul National Universities), to The World Bank, World Development Indicators, (Washington, D.C.: The World Bank, 2015), Primary energy imports as a percentage of the Republic of Korea’s total energy consumption has increased from around 60 percent in the early 1970s to almost 90 percent since the early 2000s. 1

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utility providers (the Korea Electric Company – KECO, later renamed to Korea Electric Power Corporation—KEPCO). The first major fruit of South Korea’s nuclear program was the Kori-1 power reactor, which was put into operation in 1978 and was followed by eight other units during the 1980s. Although the first two nuclear power units in South Korea were built using U.S. technology supplied by Westinghouse, the South Korean government actively tried to diversify its technology and material supplies by approaching vendors from Canada and France. By localizing U.S. designs and generating sufficient manpower for a self-dependent civil nuclear program, Seoul also intensified the effort to develop its own technologies.2 South Korea reaffirmed its commitment to nuclear technology in the 1990s, during which the country added seven other reactors in a period that is often considered the low point of nuclear power development worldwide. Since the 2000s, the share of nuclear energy in South Korea’s electricity mix has dropped from almost 45 percent in 2000 to 26 percent in 2013, with four new reactors being put into operation in the 2000s, five in the 2010s, and three currently under construction. Such decrease in the country’s reliance on nuclear energy comes from several factors, including the more high-tech, high-value, and less energy-intensive orientation of the Korean economy, the rise of natural gas consumption, and the decline in public support for nuclear energy.3 Nevertheless, the indigenous nuclear industry of South Korea has achieved several important milestones, including the successful development of the advanced reactor technology APR1400 (Advanced Power Reactor with 1400 MW electricity capacity), export contracts to supply the first research reactor in Jordan, and most importantly, four APR1400 units for the United Arab Emirates. While the Jordan reactor was already commissioned in December 2016 after three years of construction, the Barakah project in the United Arab Emirates has been generally implemented on time and within budget. Given the recent struggles of more experienced suppliers including France and For a brief history of nuclear energy development in South Korea, see: Scott Snyder, “South Korean Nuclear Decision Making,” in ed. William C. Potter, and Gaukhar Mukhatzhanova, Forecasting Nuclear Proliferation in the 21st Century, Volume 2: A Comparative Perspective, (Stanford, CA: Stanford University Press, 2010); For the localization history of nuclear technology, see: Byung-koo Kim, Nuclear Silk Road: Koreanization of Nuclear Power Technology, CreateSpace Independent Publishing Platform (2011); World Nuclear Association, Nuclear Power in South Korea, (World Nuclear Association, 2017). 3 The increasing reliance of South Korea on natural gas for electricity production can be found in the World Development Indicators database of the World Bank. Regarding the instability of Korean public support for nuclear energy, surveys on public acceptance of nuclear energy in the late 1980s and early 1990s showed that 63 percent to 72 percent of respondents expressed support for this type of technology, whereas the percentage of interviewees opposing nuclear energy always remained below 30 percent. However, more recent surveys conducted by the Korea Nuclear Energy Agency (KNEA) from 2013 to 2015 indicate that such support has since dropped to around 30 percent. Ministry of Trade, Industry, and Energy and Korea Nuclear Energy Agency, 2012 Modularization of Korea’s Development Experience: Energy Policies. (Republic of Korea: Ministry of Strategy and Finance, 2013); Young Sung Choi et al, “Development of the Public Attitude Model Toward Nuclear Power in Korea,” Annal of Nuclear Energy 25, no. 12 (1998): 923-936; Korea Nuclear Energy Agency, 원자력 국민인식 조사 결과 [Nuclear National Survey Result] (2016). 2

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Nguyen | An Analysis of Moon Jae-in's Nuclear Phase-out Policy

the U.S., such achievements are indeed commendable and would help South Korea strengthen its position in the nuclear export market. Moon Jae-in and the Reversal of Fortune for Nuclear Energy in South Korea As previously mentioned, public support for nuclear energy in South Korea has generally declined in recent years. There are several possible explanations for the downturn, including the rapid improvement in living standards and the democratization of the Korean society. More frequent occurrences of significant seismic activity could also have induced safety concerns regarding NPPs.4 Additionally, the issue of radioactive waste management is still unresolved: the nation is running out of space to store spent fuels, while the government has been unable to gain public support for a final disposal site. Furthermore, the image of nuclear energy, once considered a major factor that led to the rapid economic growth of South Korea—the so-called “Miracle on the Han River”—has been seriously tarnished by the recent exposés of safety-related scandals of the South Korean nuclear industry and, in particular, the Fukushima nuclear accident in March 2011.5 Nuclear energy was actively promoted domestically and overseas by the conservative administrations of Presidents Lee Myung-bak (2008–2013) and Park Geun-hye (2013–2017). Recent scandals involving Lee and Park have further undermined the credibility of the nuclear industry in South Korea: Lee was investigated and arrested on corruption charges, while Park, the daughter of former South Korean president and nuclear industry godfather Park Chung-hee, was impeached in 2016.6 Therefore, it 4 This observation was made based on the correlation between public acceptance of nuclear energy and other socio-economic factors, as well as the psychological impact of nuclear accidents. Viet Phuong Nguyen and Man-Sung Yim, “Examination of different socio-economic factors that contribute to the public acceptance of nuclear energy”, Nuclear Engineering and Technology (2018); Shirley S. Ho et al., “Science Literacy or Value Predisposition? A Meta-Analysis of Factors Predicting Public Perceptions of Benefits, Risks, and Acceptance of Nuclear Energy”, Environmental Communication, (2018); Edwin Latré et al., “Public opinion change after the Fukushima nuclear accident: The role of national context revisited”, Energy Policy 104 (2017). 5 Recently uncovered issues of the Korean nuclear industry included, among others, a station blackout incident at the Kori NPP, which was finally reported to the regulatory body one month after its occurrence, and the falsification of testing results for NPP parts by a Korean company. The safety-related incidents of South Korea’s nuclear industry are discussed in details in the sixth (2013) and seventh (2016) national reports of the Republic of Korea to the Convention on Nuclear Safety. The Republic of Korea Working Group for 7th National Report for the CNS, Seventh National Report for the Convention on Nuclear Safety (International Atomic Energy Agency, 2016); The Republic of Korea Working Group for 6th National Report for the CNS, Sixth National Report for the Convention on Nuclear Safety (International Atomic Energy Agency, 2013); Sang-hun Choe, “Scandal in South Korea Over Nuclear Revelations,” The New York Times, August 3, 2013. https://www.nytimes.com/2013/08/04/ world/asia/scandal-in-south-korea-over-nuclear-revelations.html. 6 There have been allegations that Lee Myung-bak made a controversial military agreement with the United Arab Emirates that required South Korea to deploy South Korea forces to support the country in case of conflicts. If they turn out to be true, the successful story of South Korea’s nuclear export to UAE will be severely tarnished. June Park and Ali Ahmad, “Risky Business: South Korea’s Secret Military Deal with UAE,” The Diplomat, March 1, 2018. https://thediplomat.com/2018/03/risky-business-south-koreas-secret-military-deal-with-uae/.

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came as no surprise that anti-nuclear energy policy featured prominently in the agendas of several liberal candidates during the 2017 presidential elections. Among those candidates was Moon Jae-in, who had publicly expressed his affection for Pandora—a popular 2016 disaster film about a fictional nuclear accident in South Korea—as well as his intention to reverse the pro-nuclear policy of his two predecessors. He cited concerns over the possibility that a Fukushima-like accident could happen with Korean NPPs and cause unforeseeable damage to populations living near those plants.7 In the end, South Korean voters elected Moon to succeed Park Geunhye. In late June 2017, only one month after taking office, Moon Jae-in announced his nuclear phase-out policy outlining a range of measures such as 1) permanently shutting down the aging Kori-1 reactor; 2) temporarily stopping the construction of the Shin Kori-5 and Shin Kori-6 nuclear units; 3) organizing a “citizen jury” to decide the fate of these two projects; and 4) revising the national nuclear energy plan to cancel all future domestic nuclear projects. The construction of the two power reactors at the Shin Kori NPP was later resumed thanks to the voting result of the aforementioned “citizen jury,” who favored the restart of constructions already in progress but recommended lowering the future share of nuclear energy in the national power consumption mix. Nonetheless, Moon’s administration has maintained the decision to cancel all six constructions of new nuclear power units, reject applications to extend the lifespans of old reactors, and ultimately reduce the current fleet of operating power reactors from 24 to 14 or fewer by 2038. Coupled with the nuclear phase-out policy, Moon Jae-in also decided to close down all old coal-fired power plants aged 30 years or more in order to address the air pollution issue that has plagued South Korea in recent years. To replace the bulk of electricity generated by nuclear energy and fossil fuels, Moon proposed an ambitious plan to accelerate the deployment of solar power stations and wind farms, as well as step up natural gas imports from suppliers like Qatar or Russia.8 An Uncertain Future for the Korean Nuclear Industry Given the high approval rating of Moon Jae-in in public polls, it is likely that Moon’s administration will continue to implement measures to curb the development of nuclear energy in South Korea. In addition, although Moon has faced opposition from the nuclear industry and other pro-nuclear groups, including communities that are worried about the economic impact of closing down their local NPPs, his transparent For Moon Jae-in’s anti-nuclear agenda and the impact of “Pandora,” see: Kanga Kong and Heesu Lee, “Stalled Korea Reactors Show Risks to Betting on Moon,” Bloomberg, October 20, 2017. 8 For The discussion over the construction of Shin Kori-5 and -6, as well as Moon Jae-in’s policy measures to phase out nuclear energy, see: Ji-bum Chung and Eun-sung Kim, “Public perception of energy transition in Korea: Nuclear power, climate change, and party preference”, Energy Policy 116 (2018); In-wan Jung and Sung-hwan Kim, “Construction to be suspended on fifth and sixth Shin-Kori nuclear reactors,” The Hankyoreh, June 28, 2017; Sang-hun Choe, “South Korea Will Resume Reactor Work, Defying Nuclear Opponents,” The New York Times, October 20, 2017; Viet Phuong Nguyen, “Lights Out for South Korea’s Nuclear Export Ambitions,” The Diplomat, August 12, 2017; Rod Adams, “Moon Jae-in Making Friends By Importing More Gas,” Forbes, July 12, 2017. 7

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Nguyen | An Analysis of Moon Jae-in's Nuclear Phase-out Policy

and largely democratic approach to the nuclear policy decision-making process will help him maintain support from environmental groups and gain new support from undecided voters. Despite its being viewed positively by a growing part of the Korean public, Moon’s phase-out policy has several disadvantages that make it unsustainable in the long run. Firstly, as nuclear energy remains the cheapest type of electricity generation in South Korea, any drastic nuclear phase-out will induce a sharp increase in energy prices. This may negatively affect energy-intensive industries like steel production, which still play a major role in the South Korean economy. For example, one energy policy adviser to Moon Jae-in claimed that energy prices would rise by 25 percent by 2030 if the phaseout policy is fully implemented, noting that a mere 10 percent hike in prices would lead to a 30 percent decrease in profits.9 Aside from rising energy costs, South Korea should take into account the negative impacts of the nuclear phase-out policy in Taiwan, which shares similarly high levels of dependence on foreign supply of primary energy and difficulties in expanding renewable sources due to high population density and geographic limitations. Since the Taiwanese leader Chen Shui-bian declared his plan to drastically phase out nuclear energy during his presidency from 2000 to 2008, the island has experienced numerous problems like massive blackouts, vulnerability of foreign energy supply, and air pollution due to the increase in coal consumption as an alternative source of energy.10 In France—another major nuclear energy user—the newly-elected President Emmanuel Macron recently reneged on his campaign promise to close numerous NPPs after he realized the difficulty of maintaining both environmental conservation practices and a nuclear phase-out policy, especially without a viable, environmentally-friendly alternative to nuclear energy. Macron explained, “I don’t idolize nuclear energy at all. But I think you have to pick your battle. My priority in France, Europe, and internationally is carbon dioxide emissions and [global] warming.”11 Secondly, numerous studies have shown that if South Korea wants to sustain its energy security while reducing greenhouse gas emissions, it is not feasible to fully depend on natural gas and renewable sources—absent nuclear energy sources—for electricity

Sotaro Suzuki, “Moon’s bold reforms weigh heavily on Korea Inc.,” Nikkei Asian Review, August 19, 2017. 10 Here it should be noted that coal-fired power plants are also targets of Moon’s phase-out policy. However, so far his administration has only announced concrete plans to close down eight old coalfired plants with low impacts on the electricity market, as the new coal capacity under construction in 2017 alone (around 5 GW) has already doubled the generation capacity of these plants. Michael Cooper, “Fate of South Korea’s new coal plants rests with its new president,” S&P Global Platts, May 31, 2017. 11 Nicolas Freschi, “Taiwan’s Nuclear Dilemma,” The Diplomat, March 14, 2018; Lawrence Chung, “Taiwan blackouts cast long shadow over leader’s plans for nuclear-free future,” South China Morning Post, August 20, 2017; Michel Rose, “Nuclear, renewables to help French CO2 reduction goals, Macron says,” Reuters, December 18, 2017. 9

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generation due to the country’s geographical, demographic, and economic limitations.12 In addition, expanding the portfolio of natural gas suppliers has proven to be a complicated task for South Korea, as the country faces strong competition from other major importers like China and Japan. Increasing natural gas imports from Russia does not appear to be a desirable strategy at the moment, given the heightened political tension between this major gas exporter and the U.S.—South Korea’s closest ally—and the fact that Russia has a record of using energy export disruption as a tool for political leverage in bilateral disputes.13 Finally, Moon’s phase-out policy would likely make the competitive edge of South Korea’s nuclear industry disappear—a lesson that the U.S. nuclear industry has already learned the hard way. Lack of domestic demand disrupted the nuclear supply chain, and undermined the financial capabilities of U.S. companies, which are much needed for their competition with vendors from Russia, China, and South Korea over contracts in newcomer countries like Saudi Arabia.14 Furthermore, despite the successful Barakah project in the United Arab Emirates, winning the bidding war to build the first NPP in Saudi Arabia and securing the Moorside nuclear power project in the United Kingdom remain big challenges for Moon Jae-in. This is due to the fact that the credibility of the South Korean nuclear industry, in terms of safety, was questioned by Moon himself when he announced the phase-out policy in 2017. Given the role of South Korea in helping the United Arab Emirates commit to nuclear nonproliferation—which includes the renouncement of the right to develop sensitive nuclear technologies like enrichment and reprocessing—losing the Saudi contract to other suppliers will be a missed opportunity for South Korea to help protect the security of the Middle East and promote nonproliferation.15

Sang Hyung Hong, Corey J.A. Bradshaw, and Barry W. Brook, “South Korean energy scenarios show how nuclear power can reduce future energy and environmental costs,” Energy Policy 74 (2014); Sang Hyung Hong, and Barry W. Brook, “A nuclear-to-gas transition in South Korea: Is it environmentally friendly or economically viable?,” Energy Policy 112 (2018). 13 For the challenges that South Korea faces in increasing its natural gas imports, see: Sylvie Cornot-Gandolphe, “South Korea’s New Electricity Plan: Cosmetic Changes or a Breakthrough for the Climate?,” Édito Énergie, Ifri, February 28, 2018; Emma Lecavalier, “Russian nuclear power: Convenience at what cost?,” The Bulletin of the Atomic Scientists, October 16, 2015; “European energy security: Conscious uncoupling,” The Economist, April 5, 2014. 14 Viet Phuong Nguyen and Man-Sung Yim, “Post-Cold War civilian nuclear cooperation and implications for nuclear nonproliferation,” Progress in Nuclear Energy 93 (2016). 15 It was ironic that while questioning the safety of the domestic NPPs, Moon’s administration also suggested that South Korea should consider developing nuclear-powered submarines, linked to many more recorded accidents. Jun-suk Yeo, “Talk of tactical nuclear weapons resurfaces,” The Korea Herald, August 31, 2017; Lami Kim, “South Korea’s Nuclear Hedging?,” The Washington Quarterly 41, no.1 (2018): 115-133. For the United Arab Emirate’s nuclear transparency, see: Viet Phuong Nguyen and Man-Sung Yim, “Building trust in nonproliferation: transparency in nuclear-power development”, The Nonproliferation Review 24, no. 5-6 (2017); For information on the South Korea’s efforts to secure the Moorside project, see: Jilian Ambrose, “Koreans save Cumbria’s Moorside nuclear plant,” The Telegraph, December 2, 2017; Eun-jung Kim, “S.Korea stepping up efforts to build nuclear reactors in Britain,” Yonhap News, November 28, 2017. 12

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Nguyen | An Analysis of Moon Jae-in's Nuclear Phase-out Policy

Conclusions and Policy Recommendations It was a stroke of unexpected luck for the Korean nuclear industry that the 5.4-magnitude Pohang earthquake—the second-strongest earthquake in South Korea’s modern history—struck North Gyeongsang Province (the site of the Wolsong NPP), a few weeks after the “citizen jury’s” decision to restart the construction of the Shin Kori-5 and 6 reactors had been made. Had the 2017 earthquake occurred before the vote, its visible destruction of the city of Pohang and nearby areas would have affected the decisions of the jury members and the fate of the Shin Kori constructions. This is just another example of the uncertain future of nuclear energy in South Korea, when taking into account its declining public support and Moon Jae-in’s determination to minimize the use of nuclear power in this country. At the same time, however, Moon should also be mindful of the potential backlash from the public against him and his Democratic Party that could erupt once the disadvantages of the phase-out policy—including increasing electricity costs and weakening energy security—become clear. Therefore, it would be beneficial for Moon’s administration, and for South Korea’s economy, if the current phase-out policy is revised into a long-term strategy that focuses on a greener and more sustainable electricity mix, while maintaining the competitive edge of the Korean nuclear industry through domestic and foreign contracts. Since South Korea has been searching for a roadmap to grow into a regional and global middle power, Moon Jae-in and his successors should consider retaining advanced, proliferation-resistant nuclear technologies as a way to assist nuclear newcomers in complying with the nonproliferation regime. A country with robust energy security supported by a balanced mix of renewables, fossil fuels, and nuclear energy, competitiveness in the nuclear export market, and ability to effectively support the nonproliferation regime would definitely be a legacy that Moon Jae-in would want to leave behind in 2022, after finishing his single five-year term as the President of South Korea.16

Viet Phuong Nguyen is a post-doctoral fellow of the International Security Program and Project on Managing the Atom, Belfer Center for Science and International Affairs, Harvard Kennedy School, where he was pre-doctoral fellow from 2016 to 2017. Previously he was post-doctoral researcher in the Nuclear Energy Environment and Nuclear Security Laboratory, Department of Nuclear and Quantum Engineering, KAIST. He has also worked for the Vietnam Atomic Energy Agency. Dr. Nguyen received B.Sc. in nuclear physics from the Vietnam National University, and M.Sc. and Ph.D. in nuclear engineering from KAIST. His research on nuclear energy development policy, nuclear security and nonproliferation, and multilateral approach to nuclear fuel cycle has been published by The Nonproliferation Review, Progress in Nuclear Energy, and Nuclear Engineering and Technology. Moon should also consider the risk that his nuclear phase-out policy will be reversed by his successors, especially those from conservative parties that have always maintained their support for nuclear energy, given the long-term unsustainability of this policy. 16

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"Some 40 Years to Clean Up Fukushima" A View from Ongoing Court Battles Paul Jobin While China and India continue to build new nuclear power plants, partly for the sake of reducing coal-related air pollution, Taiwan and South Korea have stopped their development plans and have announced a clear agenda for the decommissioning of existing plants.1 The situation in Japan is somewhere in between: Despite popular opposition and defiance of nuclear experts, five reactors have resumed operations and nineteen are waiting for approval to restart. In contrast with former Prime Ministers Kan Naoto and Koizumi Junichiro, who have become resolute opponents of nuclear power after the disaster on March 11, 2011, Prime Minister Abe Shinzo has been determined to restart as many nuclear facilities as possible. The Fukushima nuclear disaster, however, has also boosted initiatives to reduce Japan’s dependence on both nuclear and fossil fuels.2 But whatever energy mix results in the future, Japan will have to deal with the legacy of the explosions that occurred at Fukushima Daiichi. Experts believe that it could take between forty and two hundred years to clean up the whole site.3 Robots have been used to inspect the melted reactors, but given the extremely high levels of radiation, it remains uncertain how useful they will be for cleanup operations.4

1 In addition to 38 existing nuclear power reactors in operation, China currently has about twenty under construction. In 2012-2013, local opposition compelled the government to abandon the construction project of a reactor fuel facility in Guangdong province. Since then, popular opposition has been almost next to none with this plan. In India, eight nuclear power plants (NPP) are running twenty two reactors, and six more nuclear power plants are under construction. One of these in Jaitapur, funded by the French company Areva (alias Orano), has been facing a strong local opposition movement. On the case of Taiwan, see Ming-Sho Ho, “Taiwan’s Anti-Nuclear Movement: The Making of a Militant Citizen Movement,” Journal of Contemporary Asia (2018). 2 See Kuei-Tien Chou, ed., Energy Transition in East Asia: A Social Science Perspective (London: Routledge, 2017). 3 Richard Lloyd Parry, “Japan Faces 200 Year Wait for Fukushima Clean Up,” The Times, March 28, 2015, https://www.thetimes.co.uk/article/japan-faces-200-year-wait-for-fukushima-clean-up-mcb2q3kkdfw; Asaoka Ken, “Tōdo kabe ga kakaekonda 1F osensui mondai no kon’nan,” Sekai (March 2016). 4 Justin McCurry, “Dying Robots and Failing Hope: Fukushima Clean-up Falters Six Years After Tsunami,” The Guardian, March 9, 2017; Martin Fackler, “Six Years After Fukushima, Robots Finally Find Reactors’ Melted Uranium Fuel,” The New York Times, November 19, 2017.

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Jobin | "Some 40 Years to Clean Up Fukushima"

The Fukushima region will have to pay the biggest share of the damage. The 2020 Olympics have been presented to the region as an opportunity to restore self-confidence and economic growth. But critics point out that the Olympics, which look like the pom-pom girl of Abenomics, draw the blinds on the Sisyphean tasks that remain at Fukushima Daiichi.5 This positive thinking tends to minimize the perceptions of radiation risk in the region and its impact on the food chain across Japan.6 Even worse, it tends to shift the burden of the disaster onto the victims themselves and onto the most vulnerable.7 At the end of March 2017, the government cut public aid to twenty-seven thousand people displaced by the catastrophe. One year later, despite insisting that everything was back to normal, only 10 percent of the evacuees have returned to their abandoned houses and a majority of them are over sixty years old.8 Meanwhile, Fukushima Daiichi and its surroundings have become a huge storage area for radioactive waste.9 Another population at risk expected to sacrifice themselves for the benefit of the country are the large number of workers employed on the site of Fukushima Daiichi and at other decontamination sites in the region. The following pages introduce the court struggle by a former cleanup worker at Fukushima Daiichi intended to combat this logic of sacrifice, or what philosopher Takahashi Tetsuya calls “a sacrificial system.”10 Given the battles that remain ahead for the cleanup of Fukushima Daiichi and its surroundings, this lawsuit holds special meaning among the thirty or so litigations related to the nuclear disaster. Let us first have an overview of these court battles. The Fukushima Litigations In addition to nearly 400 individual cases, some thirty civil collective actions have been filed nationwide by the victims of the Fukushima nuclear disaster.11 It used to be said that compared to the United States, recourse to the courts was not a frequent habit in Japan, particularly for collective issues. However, starting with the famous “big four” pollution trials of the 1970s, there has been copious evidence to the contrary. Discrepancies between the juridical cultures and the motivations to sue do not ⁵ Seth Berckman, “Would you play baseball at Fukushima?” New York Times, December 29, 2017. ⁶ On issues related to the food chain, see: Aya Hirata Kimura, Radiation Brain Moms and Citizen Scientists: The Gender Politics of Food Contamination after Fukushima (Durham: Duke University Press, 2016). ⁷ Rina Kojima, “Geo–social Movements by the Inhabitants of Fukushima: ‘Solidarity in Fear’ Vis–à– Vis the Risks after the Nuclear Accident,” in Sociotechnical Environments: Proceedings of the 6th STS Italia Conference, Stefano Crabu, Paolo Giardullo, Francesco Miele and Mauro Turrini, eds. (November 2017), http://www.stsitalia.org/?p=1870. ⁸ Philippe Pataud-Célerier, “À Fukushima, une catastrophe banalisée,” Le Monde diplomatique, April 2018, 14-15. ⁹ Peter Wynn Kirby, “Is Fukushima Doomed to Become a Dumping Ground for Toxic Waste?” The Guardian, March 16, 2018. 10 Takahashi Tetsuya, Gisei no shisetumu Fukushima, Okinawa (Tokyo: Shūeisha, 2012). See also Murakami Katsuzō et al, Posuto Fukushima no tetsugaku (Tokyo: Akashi, 2015). 11 Soeda Takashi, Tōden genpatsu saiban–Fukushima genpatsu jiko no sekinin o tou (Tokyo: Iwanami, 2017), 100.

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mean a lesser recourse to courts, but a different approach.12 For instance, since the “big four,” more than thirty collective lawsuits have been launched related to Minamata disease, in particular for issues dealing with the certification system to receive medical assistance.13 Similarly, survivors from atomic bombings who were denied the status of hibakusha also sued the state.14 In Fukushima, despite an increase in thyroid disease, there is not yet a lawsuit seeking medical compensation. However, the ongoing class action lawsuits related to the legacy of 3/11 echo the abundant history of court battles in contemporary Japan, from Hiroshima to Minamata and other tragedies. The first type of Fukushima lawsuits seek compensation from either the Tokyo Electric Power Company (TEPCO) alone, or from both the utility and the state for loss of access and use of property, and related consequences like psychological distress. Many plaintiffs are those who have, to use the government’s wording, “voluntarily fled” (jishu hinan) and therefore cannot apply for the compensation schemes set by the government and TEPCO. One of the first decisions came from the Kyoto district court in February 2016 for a family that escaped from Koriyama, a city in Fukushima prefecture. Although Koriyama was located outside of the official evacuation zone, its habitants were nevertheless exposed to a level of background radiation above safety standards. In the case of this family, the mother was pregnant and they also had a young child, so they decided to move to Kyoto. The father, in his forties, who until then was running restaurants in Koriyama, tried to start a new business in Kyoto. When the restaurant failed, he fell into depression, so they sued TEPCO for post-traumatic stress disorder. The court ordered a compensation sum of 30 million Yen.15 Two years later, in a collective litigation, the same court acknowledged the responsibilities of both TEPCO and the government, requesting the payment of approximately 110 million Yen in compensation to 57 families of 110 “voluntary evacuees” from Fukushima (out of a total of 174 plaintiffs) for mental distress caused by the loss of their initial life conditions.16 In these litigations, the plaintiffs must demonstrate the respective share of responsibility of TEPCO and the state in the occurrence of the nuclear disaster. In March 2017, the district court of Maebashi was the first to recognize the responsibility of both TEPCO and the state. After hearing of expert testimonies and site inspections, the judges ruled that as early as 2002, TEPCO and state authorities had been aware that a big tsunami could destroy the reactor’s cooling system. This was a groundbreaking decision, but the plaintiffs found that the compensation sum was not proportionate: 12 See Frank Upham, Law and Social Change in Postwar Japan (Cambridge : Harvard University Press, 1987). 13 Paul Jobin, “Beyond Uncertainty: Industrial Hazards and Class Actions in Japan and Taiwan,” in Environmental History in East Asia: Interdisciplinary Perspectives, Ts’ui-Jung Liu, ed. (London: Routledge, 2013), 339-382. 14 See for instance: Genbaku-shō nintei shūdan soshō kankō iinkai, ed., Genbaku-shō nintei shūdan soshō tatakai no kiroku (Tokyo: Nihonhyōronsha, 2011); Tōkyō genbaku-shō nintei shūdan soshō o kiroku suru kai, ed., Genbaku-shō nintei soshō ga akiraka ni shita koto ― hibaku-sha to tomoni nani o kachitotta ka (Tokyo: Akebi Shobō, 2012). 15 “Jishu hinan: Tōden ni hajimete no baishō meirei,” Mainichi Shimbun, February 18, 2016. 16 “Kyōto chisai hanketsu: Kuni to Tōden sōhō no kashitsu sekinin o shitatameru,” Mainichi shimbun, March 15, 2018.

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Jobin | "Some 40 Years to Clean Up Fukushima"

405 million Yen for 137 plaintiffs (on average, around three million Yen, or $27,000 per plaintiff ). In September 2017, the district court of Chiba ordered TEPCO to pay a higher amount of compensation (376 million Yen to 42 plaintiffs, averaging around nine million per plaintiff ), but it dismissed the state’s responsibility. The latest decision to date comes from the Iwaki branch of the Fukushima District Court. The judges ordered TEPCO to pay 610 million Yen in damages to a group of 216 plaintiffs. Most of them are evacuees from areas within 30 kilometers of the Fukushima Daiichi plant.17 The issue of radiation risk is a major point of debate in most of these lawsuits. One class action therefore directly aims at challenging the state’s safety standards. In May and June 2015, two hundred families (808 plaintiffs), residents of Minamisoma, sued the government to protest the state’s decision to use 20 millisieverts (mSv) as a safety benchmark for determining relocation areas. This level is the maximum annual dose for nuclear plant workers wearing protective suits, but is not necessarily an appropriate standard for young children playing outside with just a mask to prevent catching a cold. The court hearings might be paved with daunting difficulties for the plaintiffs’ lawyers and their experts, but the fact that the plaintiffs dare trying is a sign that they will not bow to the wishes of the state. The goal of these mobilizations is not limited to a cold calculation of lost property but encompasses various ideas of justice, ethics, and political ideals of responsibility and symbolic recognition.18 As argued by Yokemoto Masafumi, a subpoenaed expert, the “loss of a homeland” (furusato sōshitsu) is something unseen so far in Japanese history.19 Therefore, in their decision on the levels of responsibility and compensation, the judges should envision a broad understanding of the consequences of a nuclear disaster. However, in civil actions, moral accountability must be converted into a monetary equivalent, therefore restricting the ethical dimensions of the charge.20Another large number of plaintiffs (1364) have therefore sued three TEPCO executives on criminal charges of gross negligence. This attempt is, legally speaking, much more demanding than a civil action, so it took five years for the first court hearing to start in July 2017 in Tokyo.21

The Mainichi Daily, March 22, 2018; and Soeda, Tōden genpatsu saiban, Ch. 4. For a seminal article on this problem, see Frank Upham, “Litigation and Moral Consciousness in Japan: An Interpretive Analysis of Four Japanese Pollution Suits,” Law & Society Review 10, no. 4 (Summer, 1976), 579-619. 19 Soeda, Tōden genpatsu saiban, 119-122. See also Yokemoto Masafumi , Kōgai kara Fukushima o kangaeru: Chiiki no saisei o mezashite (Tokyo: Iwanami, 2016). 20 See Paul Jobin, “Industrial Disease as Crime? Epidemiology in a Japanese Asbestos Lawsuit,” in Disease and Crime: A History of Social Pathologies and the New Politics of Health, Robert Peckham, ed. (London: Routledge, 2013) 129-150. 21 On the motivations of the plaintiffs, see Tomomi Yamaguchi and Muto Ruiko, “Muto Ruiko and the Movement of Fukushima Residents to Pursue Criminal Charges against TEPCO Executives and Government Officials,” The Asia-Pacific Journal, 10, issue 27, no. 2, (July 2012). For a complete picture on all the trials dealing with the responsibility of TEPCO and the state in the disaster, see Soeda, Tōden genpatsu saiban. 17

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All these litigations have a different focus. Some emphasize compensation, while others address the levels of responsibility or aim to challenge the current safety standards. Whatever the emphasis, many of these lawsuits deal with the movements of people inherent to these sorts of catastrophes, like the forced or “voluntary” evacuees. In other words, the plaintiffs are those people whom an antinuclear protest song of the 2000s nicknamed the “nuclear plants’ refugees” (genpatsu nanmin).22 After 3/11, the movements of people were mainly flows out of Fukushima, but in the opposite direction, thousands of workers, soldiers and fire-workers went to the Daiichi and Daini nuclear reactors, to clean up the mess that was threatening the very possibility of living in Japan, especially around Fukushima and Tokyo. Beyond the mediatized “Fukushima Fifty,” they were also the heroes who saved Japan from a nuclear apocalypse, like the “liquidators” in Chernobyl, without whom Russia and Europe would be unlivable today. Before the Fukushima disaster, Japan already had important flows of workers from one nuclear power plant to another, depending on the schedule of the nuclear reactors’ regular inspections (teiki kensa). Since the 1980s, this labor population has been nicknamed “nuclear plants’ gypsies” (genpatsu jipushii), a strange appellation that belongs to the specificity of the nuclear industry.23 A similar floating labor population can be found in nuclear power plants of other countries like the “gitans du nucléaire” in France.24 In Japan, this organization of labor appeared very early in the history of the nuclear industry. After March 2011, Fukushima urgently needed these workers, but their needs were such that other workers were recruited from all over Japan, even among newcomers to the nuclear industry, with no specific training and even less awareness about radiation risks.25 Arakabu v. Tepco Mister Arakabu was one of these workers. He is now at the center of another Fukushima-related litigation.26 A father of three young children and a resident of Kitakyūshū city during the tsunami that ravaged northeast Japan, he was horrified by pictures of 22 This expression was used for two book titles after March 2011: Satō Shigeko, Genpatsu nanmin no uta (Tokyo: Asahi Shimbun Shuppan, 2012); and Ugaya Hiromichi, Genpatsu nanmin: Hōshanōun no shita de nani ga okita no ka (PHP Shinsho, 2012). However, this use was sometimes criticized for stigmatizing the victims. 23 See Paul Jobin, “‘Nuclear Gypsies’ in Fukushima Before and After 3.11.” 24 For instance, in the case of France, see Marie Ghis Malfilatre, “La CGT face au problème de la sous-traitance nucléaire à EDF. Le cas de la mobilisation de Chinon (1987-1997),” Sociologie du travail 59 , no. 1, (January-March 2017). 25 Paul Jobin,“Dying for TEPCO? Fukushima’s Nuclear Contract Workers,” The Asia-Pacific Journal 9, issue 18, no. 3 (May 2, 2011); and Paul Jobin, “The Roadmap for Fukushima Daiichi and the Sacrifice of Japan’s Clean-up Workers,” The Asia-Pacific Journal 11, issue 28, no. 2 (July 15, 2013). 26 To protect his family, he has chosen the nickname Arakabu, which in the dialect of Kyūshū means a little fish named kasago elsewhere in Japan, or sebasticus marmoratus for its scientific name. The facts and narratives below are based on a discussion in Tokyo on February 20, 2018, with Iida Katsuyasu, who is an organizer of the support group to Arakabu for this lawsuit, and two documents: “Meeting notes from Fukushima genpatsu hibaku rōsai Arakabu-san o sasaeru kai” (April 26, 2017); and Kataoka Ryōhei, “Fukushima genpatsu hibaku rōsai Arakabu-san saiban,” Genshiryoku jōhōshitsu tsūshin (CNIC) 517 (July 1, 2017), 14-15.

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Jobin | "Some 40 Years to Clean Up Fukushima"

dead children and hoped he could do something to help people there. An opportunity came in October 2011 when his company’s boss offered him a job at Fukushima Daini. His wife did not like the idea. She worried something wrong could happen. However, as an iron worker his knowledge of welding tasks would be helpful. He stayed there until January 2012. At the Fukushima Daini plant, though the reactors did not melt down like at the Daiichi, the tsunami had ravaged the installations, so they needed to be reinforced. For instance, as Arakabu notes: At the large entrance of the reactor building, there was just a thin shutter left. If another earthquake and tsunami were to occur, it could provoke a loss of power like at the Daiichi plant. It should not happen again. So we affixed to it a sixteen millimeter thick steel plate.27 Then he was invited to shift to the Sendai nuclear power plant in Kyūshū to work on the regular examination of reactor number four, until March 2012. From October 2012 to March 2013, and again from May to December 2013, he returned to Fukushima, this time at the very heart of the nuclear disaster, on the totally crippled site of the Daiichi power plant, with daunting tasks to perform. In October and November 2012, it was for the construction work necessary to reinstall the crane that would remove the fuel rods near reactor number four. I thought that would also be helpful for Fukushima.28 This was a high-risk work site. The hydrogen explosion had ravaged the reactor building and the roof was wiped away. The cooling pool near the reactor was full of used fuel rods that urgently needed to be covered. Another frightening job was at reactor three. The workers had to dismantle and clean up the debris of a six hundred ton crippled crane. In normal times, this crane is above the reactor and is used for changing the fuel rods and putting them in the cooling pool. During these operations, the level of radiation was extremely high, so the workers needed to wear lead protection jackets that weigh fifteen kilograms. The operations were supervised by Takenaka Construction, one of the big four general constructors: We were asked: ‘go, go, go!’ It was crazy! There were only twenty lead jackets for thirty workers. Needless to say what could happen to the ten of us who don’t get a jacket, we still had to do the job. Anyhow, these jackets were passing from one another without any decontamination. Those employees who had well received the risk premium could buy a jacket for themselves. I think it costs around a hundred thousand Yen. There were such things. […] So it is really irritating to hear TEPCO simply denying that such things could not happen.29 At the end of December 2013, he caught a bad cold with a high fever. As a result, he decided to give up the job and go back to Kyūshū. Then, at a health check control in “Arakabu-san o sasaeru kai,” 17. Ibid. 29 Ibid., 20-21. 27 28

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January, he was diagnosed with acute myeloma: We are requested to go through a health check within one month after we quit the job. So once in Kyūshū, I had a medical examination specific to radiation workers.30 I was found with cancerous cells, so I was sent to a big hospital and immediately started chemotherapy. This was serious. The doctor told me that if I had arrived two weeks or twenty days later, my nose and teeth would have started bleeding and it would have been impossible to stop that bleeding. I was so afraid to hear this and I thought that my whole body was perhaps already infected with cancer, and it might be too late anyhow.31 For a while, the hematologic dysfunction was threatening his life and the chemotherapy was painful: hair loss, violent vomiting, diarrhea, high fever, and depression. Yet, thanks to the therapy, in August 2014, he was able to leave the hospital. By the time he quit the job at Fukushima Daiichi, his official radiation record had accumulated 19.78 mSv, almost the maximum annual dose of 20 mSv. But for the first period, from October 2011 to January 2012, when he worked at Fukushima Daini, there was simply no record at all due to the lack of dosimeters, since most of them had been washed away by the tsunami. This official dose of 19.78 mSv was nevertheless enough to apply for the occupational disease certification. Leukemia is one of the rare radiation-induced nuclear illnesses that qualifies for this certification, provided a minimum cumulative dose of 5 mSv during one year. In October 2015, he was thus the first to be certified for a case of occupational cancer in relation to cleanup work at the Fukushima nuclear power plant. The news made the headlines, but TEPCO’s reaction was laconic. For Arakabu, this attitude was a blatant lack of responsibility and a sign of disrespect for the thousands of workers who have been risking their life to clean up the mess caused by TEPCO. In November 2016, he sued TEPCO as well as Kyūshū Electricity (Kyūden) on a civil charge seeking compensation for damages. Arakabu explained his motivation: It is not fair to treat the workers who are cleaning the reactors like this. They are working in a dangerous environment exposed to radiation risk. So I hope [my action] can give them some strength and raise awareness of the horror of nuclear plants. I wish people can understand we don’t really need those nuclear plants.32 This state of mind goes hand in hand with the initial emotion that pushed him to Fukushima in 2011, despite the daunting tasks, hell-like conditions, and cheap wages: The media have reported a lot about our supposedly high wages. […] But I think the salary was just around ten thousand Yen and a trip allowance of two thousand Yen. […] Anyhow, I didn’t go to Fukushima for the money. I thought this was an opportunity for me to do something for the people there, this kind of thought.33 In Japanese: denri kenshin (電離検) or denri hōshasen kenkō shindan (電離放射線健康診断). Ibid., 18. 32 Quoted by Kataoka Ryōhei, “Fukushima genpatsu hibaku rōsai Arakabu-san saiban,”14. 33 “Arakabu-san o sasaeru kai,” 17.

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Jobin | "Some 40 Years to Clean Up Fukushima"

As he further explains, at Fukushima Daiichi, the cleanup workers were supposed to receive risk premiums with three possible amounts (33,000 Yen, 22,000 Yen and 11,000 Yen), depending on the level of radiation and the difficulty of the task. But to avoid causing trouble for their bosses, most of the workers did not even ask for it.34 During the last court hearings on February 22 and April 19, TEPCO and Kyūden have tried to show that Arakabu’s officially recorded cumulative dose was correct, despite the blatant evidence that, given his tasks at Fukushima Daiichi in 2012-2013, it should be higher. Another line of defense that has been emphasized by the companies’ lawyers consists of arguing that even under a cumulative dose of 100 mSv, there is no causal evidence for radiation-induced cancer.35 This kind of argument and biased interpretation of the existing medical literature has been repeated over and over by radical deniers of radiation risk.36 As of March 2018, only twenty cases of former nuclear plant workers have been certified: eight cases of acute radiation syndrome caused by sudden exposure to high doses from two dramatic accidents at the Tokaimura nuclear fuel plant in 1999; eight cases of cancer caused by regular exposure to low doses at the Mihama power plant in 2004; and four other cases after 3/11 including Arakabu.37 This small number of cases should be compared to the huge cohort of people who have been employed in Japanese nuclear power plants since the beginning of the industry in the 1970s: Some forty thousand were employed every year in the early 1980s, and twice that by the year preceding the Fukushima disaster. Among the numerous litigations related to the Fukushima nuclear disaster, Arakabu’s lawsuit holds a special meaning based on irrefutable experience and a strong moral stance. As in previous similar litigations for other nuclear plant workers, though there is only one plaintiff, many people are supporting the case because they see in it a symbol of the blatant discrimination against blue-collar workers, even those who have According to other testimony, even if TEPCO does indeed pay these premiums to the contractors, few workers receive it because wage skimming (pin haneピンはね) has been a common practice of the nuclear and construction industries long before 3/11. See Paul Jobin, “‘Nuclear Gypsies’ in Fukushima Before and After 3.11.” 35 For a follow-up on Arakabu trial, see “Arakabu-san o sasaeru kai,” https://sites.google.com/site/ arakabushien/home 36 Paul Jobin, “Radiation Protection after the Fukushima Nuclear Disaster,” Journal of Ohara Institute for Social Research 8, no. 658 (2013): 14-30 (In Japanese). 37 Three other workers have been certified in August and December 2016, the first one for leukemia, and the second one for thyroid cancer, with respective doses of 54.4 mSv and 149.6 mSv. A former TEPCO employee who had accumulated a dose of 99 mSv and suffered from leukemia was also certified in December 2017. “Genpatsu sagyō de rōsai nintei hakketsubyō, 3 ninme Fukushima dai ichi jiko-go,” Asahi Shimbun, December 14, 2018. But regardless of the dose, the hazards resulting from exposure to nuclear radiation and, in particular, to supposedly low doses below 100 mSv, have been consistently downplayed. For instance, the most recent UNSCEAR report on Fukushima in 2017 has confirmed its self-fulfilling prophecy that no one would die from exposure to radiation from the accident. It further asserts that, despite the ongoing survey of the twenty thousand workers, a maximum of two or three cases of cancer might result from the one hundred and seventy-three workers who have been exposed to doses over 100 mSv, but any other increased incidence of cancer will probably remain “indiscernible.” The report further stresses that the certification of two cases of occupational cancers since 3/11 has no scientific implications. 34

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been struggling hard to clean up the terrible mess caused by the nuclear industry and its political allies. Since 3/11, around sixty thousand workers have come to Fukushima Daiichi. If at least another forty years will be necessary to fix the whole site of Fukushima Daiichi, given all the remaining uncertainties (the resistance of the robots and the ice wall, among others), it is difficult to predict how many more workers will be necessary until the site becomes safe enough. However, the mobilization for Arakabu’s litigation emphasizes that these cleanup workers should be treated with more respect. A concrete sign for this would be, at least, to provide them with sufficient protection and regular health checks, whatever their accumulated dose might be. This lawsuit could also provide another opportunity to challenge the supposed radiation safety standard of 20 mSv. As a matter of coincidence, Arakabu’s official recorded dose stopped at 19.78 mSv, right below the annual safety standard of 20 mSv (or 100 mSv on a five year average). Before 1990, the annual safety standard recommended by the International Commission on Radiation Protection (ICRP) was 50 mSv. Then, in 1990, it was changed to 20 mSv, but nothing was done for all the workers who had been exposed to 50 mSv previously. Furthermore, these standards can be modified in case of disaster, for example, when in March 2011, the Japanese government set it at 250 mSv. That exposure limit was lowered back down to 100 mSv in December 2011, but then once again, in April 2016, it was increased to 250 mSv to cope with the lack of an appropriate labor force. Radiation safety standards are not fixed norms of measurements; they can be modified depending on the circumstances. Furthermore, radiation standards establish basic discriminatory categories among the population: In ordinary times, it is 1 mSv for citizens and 20 mSv for the workers; however, it is currently 20 mSv for citizens in the Fukushima region and 250 mSv for the workers. This is why the residents of Minamisoma have sued the government to directly challenge the use of that radiation level as a safety threshold. The battle of former “gypsy” nuclear worker Arakabu may thus converge with the mobilizations of ordinary citizens displaced by the nuclear catastrophe to challenge the logic of discrimination and sacrifice that is behind the so-called safety standards.

Paul Jobin is an Associate Research Fellow, Institute of Sociology, Academia Sinica. Prior to that, Jobin was an Associate Professor at the University of Paris, Diderot. He received his Ph.D. from the Ecole of Hautes Etudes en Sciences Sociales (EHESS) in Paris.

[81] Georgetown Journal of Asian Affairs


Groenfeldt | Imagining an Ethical Future for the Mekong River

Imagining an Ethical Future for the Mekong River

David Groenfeldt The future of the Mekong River is unfolding like a movie we have seen many times. The opening scene is this idyllic river with traditional fishing and farming villages clustered along the shore. Hydroelectric dams first start appearing on the tributaries, and then on the main stem of the river. We can expect the movie to end with the river transformed into a series of reservoirs backing up to the dams that provide electricity for the region’s economy. The traditional villages, farms, and forests, are replaced by shopping malls, factories, and monoculture plantations. Is this the inevitable development scenario for the Mekong? Major elements, including two of eleven planned mega-dams on the Mekong’s main stem, have already become “facts on the ground” constraining future options. Decisions that will affect the whole Basin are being taken unilaterally, sidelining both international diplomacy and the Mekong River Commission. Environmental and social impact studies have become cynical exercises with no actual role in decision-making.1 Politics, power, and money, rather than reasoned planning, are driving the agenda.2,3 We are not so naïve as to be surprised, but neither should we be complacent. What kind of future do the 60 million inhabitants of the Basin want? What kind of Mekong River would they like to see? Whose voices should be heard? Whose values should prevail? The Mekong ecosystem is dramatically rich in fish and biodiversity, and provides both food and income for millions of people. The environmental, social, and economic costs of the currently planned hydropower scenario for the Mekong Basin are huge. Depending on the assumptions, the costs could be exceeding the benefits when the lost

1 Andrew Wells-Dang, Kyaw Nyi Soe, Lamphay Inthakoun, Prom Tola, Penh Socheat, Thi Thanh Van, Areerat Chabada, and Worachanok Youttananukorn, “A Political Economy of Environmental Impact Assessment in the Mekong Region,” Water Alternatives 9, no. 1 (2016). 2 John Dore, Louis Lebel, and Francois Molle, “A Framework for Analysing Transboundary Water Governance Complexes, Illustrated in the Mekong Region,” Journal of Hydrology 466 (2012): 23-36. 3 Tira Foran, “Node and Regime: Interdisciplinary Analysis of Water-Energy-Food Nexus in the Mekong Region,” Water Alternatives 8, no. 1 (2015).

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ecosystem services are considered.4 But the question facing the Mekong Basin surpasses the fish versus electricity or tradition versus modernity quandaries. The big question, in my view, remains what type of modernity will unfold? Will the future be marked by a centralized or a decentralized authority? Will nature continue to play a central role in everyday experience, or will uniform technologies (e.g., monocrops and aquaculture) displace diverse ecologies as the source for food and fish? The field of applied ethics developed around the need to make life-altering decisions in the face of long-term uncertainties and short-term temptations. Ethics offers a way of identifying the norms and values that are bound up in development policies and judging the desirability of particular courses of action. While best known from the fields of medicine and public health, theories and methods of ethics are equally relevant to a range of environmental concerns,5 including agriculture6 and water.7 Through the application of ethical reflection and analysis, Mekong River stakeholders could, and should, clarify the values they want to express in their management of the river and its resources. The inevitable diversity of values (healthy fish versus hydropower) can be sorted out through mutual respect for divergent perspectives that motivates a creative search for innovative solutions to accommodate diverse values.8 Indeed, it is the tension between these seemingly conflicting aims that motivates the search for new solutions and drives innovation. But the prerequisites for unlocking a constructive innovation dynamic include both understanding and respect. Without authentic respect for the others’ values, differences of view will be settled by political, economic, or military dominance rather than through innovation. A Framework for Mekong River Values If there is a willingness among the parties, whether they be states, sectors, political factions, ethnic groups, or other stakeholder interest groups, to engage in dialogue about the shared use of the Mekong’s resources, then an ethics approach could facilitate a search for solutions. The framework presented here is taken from my book Water Ethics: A Values Approach to Solving the Water Crisis (see Figure 1).9 It distinguishes two basic contexts of water: (1) Water that is in nature, in a river or aquifer, or in the soil; and (2) Water that we take out of nature to use for a purpose. We divert water for urban water supply and for irrigation, or we pump water from aquifers to use in manufacturing, to 4 Apisom Intralawan, David Wood, Richard Frankel, Robert Costanza, and Ida Kubiszewski, “Tradeoff Analysis Between Electricity Generation and Ecosystem Services in the Lower Mekong Basin,” Ecosystem Services 30 (2018): 27-35. 5 Marion Hourdequin, Environmental Ethics: From Theory to Practice (London: Bloomsbury, 2015). 6 Paul Thompson, “Agricultural Ethics, Then and Now,” Agriculture and Human Values 32 (2015): 77-85. 7 David Groenfeldt, Water Ethics: A Values Approach to Solving the Water Crisis (New York: Routledge, 2013). 8 Anna Simpson, The Innovation-Friendly Organization: How to Cultivate New Ideas and Embrace the Change They Bring (London: Palgrave, 2017). 9 David Groenfeldt, Water Ethics: A Values Approach to Solving the Water Crisis (New York: Routledge, 2013).

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Groenfeldt | Imagining an Ethical Future for the Mekong River

wash coal, or to mix with fracking fluid. Water impounded in a reservoir and released for hydropower can also be considered water that is effectively diverted for human use. These two kinds of water—nature’s water and people’s water—cycle back and forth, as water is diverted, used, and returned (often polluted), to nature. Although water easily crosses the boundaries between natural ecosystems and man-made infrastructure, the laws and policies pertaining to the natural environment (in contrast to the economic sectors) are separated into distinct legal and institutional frameworks, often referred to as “silos” of water use. Much of the controversy confronting Mekong stakeholders deals with the management of the Mekong River and its tributaries, rather than the use of water after it is taken out of the river system. Separating out the ethics of river management (the top row in Figure 1) from the ethics of water use (the bottom row) helps us focus our analysis and clarify the particular values that might provoke conflict or facilitate cooperation. Figure 1. Two Categories of Water Context (left) and Five Categories of Values (top)

The Mekong River ecosystem is appreciated and valued differently by the various categories of stakeholders involved. Traditional communities along the Mekong River have evolved in harmony with the river and they may value particular benefits they receive from the river (e.g., certain kinds of fish) as well as their over-arching relationship to the river, celebrated in festivals and daily rituals.10 But modern urban professionals also hold values about the river, which might overlap, or conflict with, traditional values. Hydropower company executives, for example, are expected to appreciate the economic potential of the river, as they project their own value systems onto the river. The five value categories (the columns in Figure 1) are seen as universal aspects relevant both to the river (top row) and the particular uses of water (bottom row). These categories are also seen as universally applicable to any and all stakeholders, whether they be an Indigenous fisherwoman or a university-educated energy company CEO. Yot Santasombat, The River of Life: Changing Ecosystems of the Mekong Region (Chiang Mai: Mekong Press, 2011). 10

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Values About the River The Mekong River, as large and obvious as it is, can be difficult to see as a river on its own terms. Instead, we tend to see the river in our terms, according to what we notice and consider important. It is because of our diverse perspectives of the river that a unifying framework can be helpful for understanding what different individuals and groups see in the Mekong. I distinguish five categories of values that are useful to disaggregate to understand the value of the Mekong River, or water in general: 1. Environmental values about the health and welfare of fish, wildlife, and rivers as complex ecosystems, are of obvious importance within the Mekong Basin. The ecological integrity of the Mekong River and its tributaries serve as the foundation for both people including cultural identity and livelihoods, and for nature including biodiversity and ecosystem health. 2. Economic values of water are realized not only by taking water out of nature to provide beneficial services of hydropower and irrigation (which we consider below), but also by deriving economic value from the river through its services as a river: habitat for fisheries, river transport, and the economically valuable indirect ecosystem services of pollution abatement and flood water retention. These are functions that depend on the viability of the whole river. 3. Social values supported by the Mekong River and its riparian ecosystem include the provision of good quality water for domestic uses and recreation, swimming for example, or social interaction such as visiting friends and relatives along the river, and the river as a common aesthetic amenity for all to use and enjoy. 4. Cultural values include not only traditional spiritual and religious understandings of the river, but also the emotional relationships with the river and with culturally-infused livelihood activities, ranging from the traditional (fishing) to the modern (eco-tourism industry). The river serves as a cultural resource of heritage and identity which has broad psychological value.11 5. Governance values include the norms defining stakeholder roles in decision-making about water use and river management, and the value principles expressed in their institutional arrangements: river basin organizations versus private companies versus government agencies. Values About Water Use The Mekong and its tributaries provide water that is diverted from the natural riverbed to be used for a broad range of activities and purposes. Allocating water among competing use demands, such as hydropower or irrigation or biodiversity protection, is a central function of water governance. Just as water takes the shape of whatever is 11 Karl Matthias Wantzen, Aziz Ballouche, Isabelle Longuet, Ibrahima Bao, Hamady Bocoum, Lassana Cisse, Malavika Chauhan, Pierre Girard, Brij Gopali, Alioune Kanej et al., “River Culture: An Eco-social Approach to Mitigate the Biological and Cultural Diversity Crisis in Riverscapes,” Ecohydrology & Hydrobiology 16, no. 1 (2016): 7-18.

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Groenfeldt | Imagining an Ethical Future for the Mekong River

containing it, a water bottle, a canal, or a river, the ethics of water depend on how it is used. The ethics of water used in irrigation depend upon the ethics of the agricultural practices the irrigation is supporting. We can apply the same five value categories (the columns in Figure 1) to reflect on the ethics of water use (bottom row in Figure 1): 1. Environmental values are expressed in selecting crops and practices that minimize agro-chemical inputs and support healthy soils both for production and carbon sequestration. Environmental values are also expressed in urban water systems through water conservation policies, recycling and reuse, and by integrating natural water ecosystems into urban landscapes and applying “green infrastructure” in urban water management. Similarly, water used in manufacturing processes can reflect environmental values of “water stewardship”12 or other environmental norms. 2. Economic values are the dominant motivation for diverting water from nature. Ethical choices come into play in terms of efficiency, frugality, and responsible use. These ethics are linked to the value placed on natural water ecosystems: When rivers are viewed as having intrinsic rights to their own water, any water that is diverted for human use incurs an ethical responsibility to make good use of it and avoid waste. 3. Social values of water are of special importance in domestic settings where access to safe water and sanitation is a universally acknowledged human right and one of the important aims of the UN’s 2030 global agenda.13 But over and above meeting basic water needs, there is also an open-ended opportunity to use water to advance human well-being, through, for example, creative water-sensitive urban design.14 4. Cultural values of water provide meaning and support identity through sensory and emotional experience. Water museums, urban fountains, and river trails, as well as water ceremonies, rituals, and festivals, provide expressive contexts for these cultural values. More broadly, livelihoods and water can be viewed as interconnected dimensions of well-being and the “good” life.15 5. Governance values relate to decisions about water allocation and use. Because water is so critical to human life and economic activities, these decisions can reflect values about social justice. In particular, community irrigation networks and rural as well as urban water supply systems offer opportunities for building local capacity in participatory governance.16

See the “Water Stewardship Standard” of the Alliance for Water Stewardship, http://www.a4ws.org. The UN General Assembly declared access to safe water and sanitation to be a fundamental human right in July 2010. 14 Briony C. Ferguson, Niki Frantzeskaki, and Rebekah R. Brown, “A Strategic Program for Transitioning to a Water Sensitive City,” Landscape and Urban Planning 117 (2013): 32-45. 15 David JH Blake and Buapun Promphakping, “Water Resources Development, Wetlands-Based Livelihoods and Notions of Wellbeing: Perspectives from Northeast Thailand,” The Journal of Lao Studies 5, no. 1 (2014): 1-28. 16 Groenfeldt, Water Ethics, 50-85. 12

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Discussion Analysis of the multiple and interacting values, and the philosophical activity of “reflecting” on the implications of prioritizing diverse values, provides a framework for operationalizing the elusive norm of “integrated water resources management.”17 When a broad range of values are considered, including non-market intangible goods such as cultural identity and relationship to Nature, the rush to build more dams to produce more electricity to power conventional forms of economic development is called into question. Why replicate the development strategies of the past which have already painted the world into an unsustainable corner? At least look, and ethically reflect, before leaping into a relentless treadmill of river engineering and re-engineering. Rather than calculating the short-term tradeoffs between the costs of losing ecosystem services versus the benefits of producing electricity from dams and repeating the fallacies of 20th-century benefit-cost analyses, why not apply ethically-inspired imagination to find more innovative solutions that can safeguard the most deeply held values of Mekong stakeholders? Finally, there is an overriding “meta ethic” about water decision-making. Just as ethics analysis in medical decision-making has become the expected and often legally mandated norm, the meta-ethic for water, and for the Mekong River would resemble this: Since water is fundamental to life itself, decisions about how water is managed and governed should be guided by ethics. We have a moral responsibility to treat decisions about our rivers with the serious attention they deserve, and ethics need to be part of that serious attention.

David Groenfeldt is received his Ph.D. in 1984 from the University of Arizona, based on field research on irrigation development in India. He established the Water-Culture Institute in 2010 to promote the integration of Indigenous and traditional cultural values into water policies and practices. David is an Adjunct Associate Professor of Anthropology at the University of New Mexico, Albuquerque.

Maite Martínez Aldaya, Pedro Martínez-Santos, and Ramon Llamas, “The Relevance of Ethical Factors in the Pursuit of Integrated Water Resources Management,” in Global Water Ethics: Towards a Global Ethics Charter, eds. Rafael Ziegler and David Groenfeldt (New York: Routledge, 2017), 147-64.

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Mehra and Bhattacharya | Energy Transitions in India

Energy Transitions in India Implications for Energy Access, Greener Energy, and Energy Security Meeta Mehra and Guarav Bhattacharya

Today, India is one of the fastest growing economies in the world, with an expected annual GDP growth rate of 7.6 percent. With a target of eight percent annual growth in the twelfth five-year plan (2012–2017) and significant policy initiatives toward sustaining growth for the next forty years, India’s energy needs cannot be overlooked.1 Energy is a vital input to production and consumption processes and it is pertinent that its uninterrupted supply to various sectors of the economy be ensured to meet their growing energy demand. At present, India accounts for nearly eighteen percent of the world population estimated to be approximately 7.6 billion in the year 2018, yet comprises a mere six percent of global energy demand.2 While India’s energy consumption nearly doubled between 2000 and 2015, its per capita energy demand remains around one-third of the world average, and much below the levels reached by the United States and the European Union. Herein lies the potential for India’s energy economy to grow substantially in the future. India’s Energy Outlook (IEO) 2015—produced by the International Energy Agency— predicts trends in the growth of energy supply and consumption to be staggering.3 By 2040, India’s energy demand will explode due to an economy that is expected grow by more than five times its current level in terms of aggregate GDP, and a population growth rate that would make India the most populous country in the world. Accordingly, IEO 2015 projects India’s aggregate energy consumption to more than double by 2040, with a rise in the offtake of coal, oil, and natural gas, making it among the highest energy consumption growth countries across the globe. 1 Ministry of Statistics and Programme Implementation (MoSPI), Second Advance Estimates of National Income, 2016-17 and Quarterly Estimates of Gross Domestic Product for the Third Quarter (Oct-Dec), 2016-17. (India: Ministry of Statistics and Programme Implementation, 2017). http:// mospi.nic.in/sites/default/files/press_release/nad_pr_28feb17r.pdf. Accessed November 30, 2016 2 United Nations Population Division, 2017 Revision of World Population Prospects, Department of Economic and Social Affairs (UNDESA, 2017). 3 International Energy Agency (IEA), “India Energy Outlook (IEO),” World Energy Outlook Special Report. (Paris, France: 2015).

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Specifically, the power sector will continue to be pivotal to India’s future energy economy. With expected power capacity likely to rise from below 300 GW to over 1,000 GW by 2040, rapid growth in renewable energy and increases in nuclear capacity imply that solar and wind will account for over 50 percent of the new capacity addition between now and 2040.4 Additionally, coal-fired generation will continue to play a key role, mostly at higher thermal efficiency. Notably, however, India’s neighbor, China is far ahead in energy capacity and greening of the energy basket. China’s power capacity stood at 1,604 GW in 2016 and is estimated to be around 3,275 GW in 2040. The renewables, which mostly include hydropower but also wind and solar photovoltaics (PV), would make up 60 percent of the total capacity in 2040.5 The growing demand for energy has raised some questions pertaining to energy transitions in the recent years: larger access to energy, switch from traditional bioenergy to modern and cleaner energy, and security of energy supplies. These issues have important areas of intersection amongst them. Notably, however, policies toward achieving these goals often pose trade-offs, making it difficult to achieve them simultaneously. For instance, “energy for all” and the shift to cleaner energy might be fiscally burdensome and raise energy import-dependence, both having obvious implications for energy security. An analysis of recent policies aimed at accomplishing the three goals (“energy for all,” renewable energy, and energy security) and discussing the possible policy trade-off occupies center-stage in this paper. Key Components of Energy Sector Trends Energy Access A large section of the population in India remains without access to modern and reliable energy sources, with an estimated 240 million without access to electricity.6 “Energy for All” has been enshrined in several recent energy policy pronouncements in India, such as the Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) launched in July 2015, which focuses on rural electrification, and the Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya, announced in September 2017, which emphasizes energy access to rural and urban households. The DDUGJY targets 100 percent rural village electrification by 2019, with an estimated budget allocation of INR 76,000 crores (USD 12 billion).7 Until 2017, it had attained electrification of 78 percent of 18,000 villages, albeit leaving the problem of electricity “access” unresolved.8 The Saubhagya scheme aims to provide funding of INR 16,300 crores (USD 2.5 billion) to around 40 million willing households for last-mile connectivity costs to help achieve the objective of Ibid. International Energy Agency (IEA), World Energy Outlook: China (IEO). (2017). https://www.iea. org/weo/china/, Accessed on April 25, 2018. 6 “India Energy Outlook (IEO).” Op. cit. 7 “PM Modi launches ‘Deen Dayal Upadhyaya Gram Jyoti Yojana’ for power reforms in rural areas,” Financial Express, July 25, 2015. http://www.financialexpress.com/economy/pm-modi-launchesdeen-dayal-upadhyaya-gram-jyoti-yojana-for-power-reforms-in-rural-areas/107601/ 8 Utpal Bhaskar, “Saubhagya scheme: All you need to know,” Live Mint, September 26, 2017. https:// www.livemint.com/Industry/6agWD5oCYBi6jokfKc3QjP/Saubhagya-scheme-All-you-need-toknow.html; M. K. Mehra, S. Mukherjee, G. Bhattacharya, Sk. Md. Azharuddin & G. Shrimali et al. “Renewable energy in India: What it means for the economy, jobs and energy security?” Climate Policy Initiative Working Paper (New Delhi, India: 2018).

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Mehra and Bhattacharya | Energy Transitions in India

lighting all households by December 31, 2018.9 As it stands, this scheme is expected to transition India’s energy basket, help reduce import dependence, tap into underutilized power capacity, and meet its climate change commitments. The Pradhan Mantri Ujjwala Yojana is another energy welfare scheme launched by India’s Ministry of Petroleum and Natural Gas in May 2016, to provide free liquefied petroleum gas (LPG or cooking gas) connections to women from below poverty line (BPL) families. In India, the rural poor in particular have had restricted access to clean cooking fuels such as LPG, forcing them to rely on traditional and inefficient energy forms, such as crop residue or fuelwood, or polluting fossil energy, namely coal and coke. Typically, the penetration of LPG cylinders has been restricted to urban and semi-urban areas, with the coverage of mostly middle income and affluent households, due to upfront investments and running costs of LPG. Provision of LPG connections to BPL households under Ujjwala aims to ensure universal coverage of clean cooking gas in the country, aid the empowerment of women, and protect their health. Absent such interventions, the burden of collecting firewood, animal dung, and water for cooking falls disproportionately on the women in a household. Furthermore, women are highly exposed to indoor air pollution by using traditional and inefficient energy forms.10 Within the rubrics of development microeconomics, there may be indirect consequences of indoor air pollution, like reduced food intake, lethargy, and intratemporal substitution of girl’s education and employment, which is further linked to their empowerment.11 Greening the Energy Shifts Another important development is the greening of India’s energy basket through the diffusion of renewable energy (RE), mainly solar and wind power.12,13 Because of its abundant potential for improving financial viability, renewable energy could contribute to the growth and development of India’s electricity sector. The Government of India 9 “PM Modi launches Saubhagya scheme, targets electrification of all households by Dec 2018,” DNA India, 2017. http://www.dnaindia.com/business/report-pm-narendra-modi-to-launch-saubhagyayojana-at-630-pm-arun-jaitley-2548301 10 Research by Khan et al. (2017) and Devakumar et al. (2018) suggests that indoor pollution from cooking has become one of the predominant causes of death and disability of women and children in developing countries. Indoor pollution adversely affects vision, respiratory system and maternal outcomes. Delan Devakumar, Qureshi, Z., Mannell, J., Baruwal, et al, “Women’s Ideas about the Health Effects of Household Air Pollution, Developed through Focus Group Discussions and Artwork in Southern Nepal,” International Journal of Environmental Research and Public Health 15, no. 2 (2018): 248; Md Nuruzzaman Khan, Islam M,, et al, “Household air pollution from cooking and risk of adverse health and birth outcomes in Bangladesh: a nationwide population-based study.” Environmental Health, 16, no. 1 (2017): 57. 11 Ministry of Finance (MoF) Department of Economic Affairs (DEA), Economic Survey 2017-18 (India, Ministry of Finance: 2018). 12 The massive push toward renewables began in the year 2014, when the present government came to power. The ruling party’s election manifesto had categorically mentioned the following: launch of a comprehensive “National Energy Policy”, expediting energy efficiency and energy conservation, strengthening the “National Solar Mission”, ensuring energy security through oil and gas exploration activities within the country and thrust on renewables in the energy basket. 13 India’s focus on solar and wind is driven by factors like climate and geography. Moreover, a substantial proportion of energy generation takes place through large hydropower relative to small hydropower. Small hydropower refers to an energy system which has a generation capacity of at most

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has put out an ambitious plan of achieving 175 GW of renewable penetration by 2022, of which 100 GW is anticipated to be solar, sixty GW wind, 10 GW biomass, and five GW small hydro. According to NITI (National Institution for Transforming India) Aayog, the growth of RE will be enormous in the next few years, with proposed incremental installations of 20.2 GW in 2017–2018, 21.8 GW in 2018–2019, 23.5 GW in 2019–2020, 24.7 GW in 2020–2021 and 27.5 GW in 2021–2022.14 If realized, this would contribute around nineteen percent of power consumption in India in 2022, rising from around thirteen percent in 2017. Myriad policy measures have been instituted by the government for greening the energy basket. The policy push towards alternative sources of energy is driven by the interplay of economic, social, and political incentives. At the macro level, the economic incentives include economic growth, employment opportunities, and energy security. A 2017 study by Jairaj et al. suggests that clean energy jobs could be an alternative to subsistence farming in rural India with steady income flows, improved health facilities, and increased productivity.15 Besides, concerted efforts in harnessing and deploying clean energy promulgate India’s commitment and probity towards mitigation of greenhouse gas (GHG) emissions in international fora like the United Nations Framework Convention on Climate Change (UNFCCC). These have significant implications for the international political economy. Energy Security On account of significant dependence on imported energy and high expected growth in per capita consumption and energy access, India faces the challenge of placating its energy security concerns. The net energy import dependence for India has risen from thirty-one percent in 2000 to forty-seven percent in 2015, with only a slight change in the diversity of supply sources.16 The projections under the New Policy Scenario of India’s 2015 Energy Outlook show that India is likely to be at the center-stage of the global energy scene, accounting for a quarter of the increment in global energy use up to 2040. India’s increasing reliance on imported energy—especially oil—has profound implications for its security of supplies, with overall energy import dependence rising to ninety percent in 2040 and amounting to around 9.3 million barrels/day in 2040.17 This raises concerns about India’s energy security and socio-economic health of the economy. Consequently, adoption of policies tailored to enhance indigenous production and encourage the use of alternative sustainable sources of energy is imminent. However, transition towards renewables should be complementary to fossil energy: In the shortto-medium term, India is likely to continue to import both crude oil and coal to meet its economic growth and “energy for all” targets. While dependence on energy imports is imperative to ensure larger access, the consequent burden on the government budget is indisputable. Furthermore, any protectionist policies to regulate energy imports may have severe repercussions on total primary energy supply and domestic prices of fossil 25 MW. Consequently, India strives to tap into energy through solar and wind. 14 Government of India (GoI), NITI Aayog. Draft National Energy Policy (New Delhi, India: 2017). http://niti.gov.in/writereaddata/files/new_initiatives/NEP-ID_27.06.2017.pdf. 15 Bharath Jairaj, Deka, Pamli, and Boehm, Sophie, “India’s Renewable Energy Push: A Win-Win for Job Creation and Electricity Access,” World Resources Institute (2017). 16 International Energy Agency (IEA), India: Balances for 2015 (International Energy Agency: 2015) http://www.iea.org/statistics/statisticssearch/report/?country=INDIA&product=balances&year. 17 “India Energy Outlook (IEO).” Op. cit.

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energy. Fuel price hikes are therefore politically unpopular moves. Challenges and Prospects of Implementation The prospects offered by these policy pronouncements must be measured against the challenges surrounding their implementation. How feasible are these initiatives in terms of technology, finance, and administration? What kind of supporting policies will be needed to realize these targets? What could be the associated policy trade-offs? In what follows, we attempt to find answers to some of these questions. “Energy for All” Targets: How Achievable are These? In India, universal access to electricity has been preserved in almost all energy policy pronouncements. The draft National Energy Policy (NEP) of June 2017 targets complete electrification of all the Census villages by 2018 and universal electrification with uninterrupted electricity by 2022.18 However, mere fund allocation will not suffice: Structural problems in the power sector must be addressed. Stemming from inadequate demand for power from state distribution companies (DISCOMs) because of unremunerative tariffs, poor financial and technical health due to high transmission costs, and poor grid connectivity and mismatch in capacities, power generation utilities have remained underutilized.19 This is reflected in the plant load factor (PLF) of coal and lignite-based plants having dropped steadily from 77.5 percent in 2009–2010 to 59.68 percent in 2017–2018.20. The Saubhagya scheme does little to attend to electricity price rationalization. Secondly, the affordability of electricity from utilities is a matter of concern. While a free electricity connection could reduce the financial burden of upfront costs, it would do little to ease the recurring burden of electricity bills.21 Again, Saubhagya fails to address this concern. The answer clearly lies in designing competitive or more remunerative energy prices to drive affordability while targeting cross-subsidization of merit consumption for the vulnerable and poorer sections in rural and urban India.22 The rapid progress of Ujjwala has resulted in significant policy conflicts. Recent statistics point toward India’s imports of LPG in 2017–2018 exceeding eleven million tons, close on the heels of the Ujjwala scheme. Consequently, India is now the world’s second-largest importer of LPG, next only to China.23 Any “Energy for All” initiative will have to settle these critical trade-offs between a switch to cleaner and efficient fuel supplies and rising energy import dependence.

NITI Aayog (2017), Op. cit. “Power problem — On Saubhagya scheme,” The Hindu, September 27, 2017. http://www.thehindu. com/opinion/editorial/power-problem/article19758243.ece 20 Ministry of Power (MoP), “Power Sector at a Glance ALL INDIA” (Ministry of Power: 2018). https:// powermin.nic.in/en/content/power-sector-glance-all-india 21 “Power problem,” Op. cit. 22 NITI Aayog (2017), Op. cit. 23 Sanjay Duttal TNN, “Ujjwala success makes India world’s 2nd largest LPG importer,” The Times of India, April 10, 2018. https://timesofindia.indiatimes.com/business/india-business/ujjwala-successmakes-india-worlds-2nd-largest-lpg-importer/articleshow/63702946.cms 18 19

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Renewable Energy: A Remedy for Access and Clean Energy or Not? According to trends in the energy sector, the greening of India’s energy mix is being spearheaded by large-scale penetration of renewable energy technologies in both utilityscale grid-connected and decentralized stand-alone modes. The abundance of natural resources and steadily falling costs of renewable energy make it a suitable alternative source of energy supply. According to the draft National Energy Policy (NEP), the rapid fall in the prices of wind and solar power, amounting to as much as sixty percent and fifty-two percent respectively between 2010 and 2015, has led to a significant shift in favor of renewable energy generation.24 Despite the ambitious official targets of renewable energy capacity of 175 GW by 2022 projected by the government, results of our macro-econometric time-series forecasting for India’s macro-economy show that these are only likely to be achieved much later.25 Our estimations derive three alternative scenarios of future renewable energy penetration for the Indian economy: Optimistic (OPT), Business-as-Usual (BAU), and Pessimistic (PES) cases. These three scenarios have their origin in the alternative official trends or policy-targets that have implications for key macro variables projected, as drivers of renewable energy diffusion, for the Indian macro economy. Under the OPT, by assuming a plant capacity utilization of twenty-five percent, the renewable energy capacity is projected to be eighty-siz GW in 2022, 239 GW in 2032, and a whopping 615 GW in 2042. The estimate for the year 2040 is 510 GW, which is closer to the estimates put out by the NITI Aayog. In case of BAU, the growth is closer to that in OPT in the initial years, but the gap widens over time. Renewable energy capacity is estimated at eighty-three GW in 2022, 224 GW in 2032, and 548 GW in 2042. In comparison, under PES, the growth of renewables is much slower in terms of capacity, as compared to BAU and OPT. The capacity installed levels, assuming the same levels of plant capacity utilization, are predicted to be seventy-eight GW, 170 GW, and 305 GW in 2022, 2032, and 2042 respectively.26 Hence, the official targets of renewable energy penetration are likely to be achieved during 2029–2030 under the BAU, a bit earlier, in 2027-2028 under the OPT case, and much later, in 2032–2033 in the PES scenario. This bolsters recent apprehensions, given the available policy framework moving away from feed-in-tariffs to auctionsbased purchases, lack of grid infrastructure, and evacuation constraints.27 The official forecasts are a bit too ambitious, and plausibly, will likely be achieved with a delay of between five to ten years, depending on how the macro-economic trends, efficacy of policy design and execution, and technical (grid-related) constraints unfold over time.28 Based on the data set for 27 years (1990–2016), the same time-series estimations also indicate a pro-cyclical relationship between renewable energy penetration and gross domestic product (GDP) at constant prices, and a counter-cyclical link between renewable energy diffusion and net energy imports. Interestingly, however, with aggregate population and population percentage with access to electricity, renewable energy generation series depicts a negative correlation; that is, it moves counterNITI Aayog (2017), Op. cit. Mehra (2018), Op. cit. 26 Ibid. 27 “Saubhagya scheme,” Live Mint, Op. cit. 28 Mehra (2018), Op. cit. 24 25

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cyclically. A higher population level places a heavy mandate on the economy in terms of demand for energy. Given the time series dataset and India’s excessive dependence on fossil energy so far, the estimations show that higher population tends to dampen renewable energy penetration. The direction of this link may undergo a change as more RE diffusion happens. In the meantime, a case can be made for the fact that with higher population levels or with higher share of population with electricity access, greater reliance will have to be placed on fossil energy than renewable energy in the short to medium time frames. The constraints associated with widespread diffusion of renewable energy are financial sustainability and technical feasibility. The government policy of dismantling feedin-tariffs for renewable energy and switching to an auction-based system has been instrumental in lowering prices, culminating in prospects of emergence of “solar bubbles” on the one hand, and questions on financial viability of projects on the other. There have been aggressive bids by renewable energy developers due to stiff competition, with solar power tariff at a record low of 2.44 INR/kWh in May 2017, at Bhadla solar park in Madhya Pradesh.29 It is important to maintain the right balance between lower prices and financial viability. Financially unviable projects may be a recipe for disaster in terms of inferior quality, distressed loans, and contracts not honored.30 Consequently, a penalty on the defaulting bidders may be imposed so that only financially viable bids are made. In fact, the recent bid of 2.98 INR/MW on March 28, 2018 in Gujarat, which is much higher than that at Bhadla solar park, was largely on account of threat of imposition of safeguard and anti-dumping duties on solar developers. A related and highly contested topic of discussion has been the use of local content regulations in the manufacturing process in the renewable energy sector. As the Make in India 2.0 identifies the renewable energy sector as one of the champion sectors, India has been keen to provide a level playing field for nascent domestic manufacturers of solar panels and modules.31 Presently, almost ninety percent of demand for solar panels is met through imports, mainly from China.32 Consequently, the Government These include domestic investors, namely, ReNew Power, Avaada Power, Tata Power, Azure Power, Adani Group, etc. and international companies like LONGi and TrinaSolar from China, ORIX from Japan, Enercon and Nordex from Germany, Applied Materials and Octillion Power Systems from the US, Vestas from Denmark and Statkraft from Norway (National Investment Promotion and Facilitation Agency, Make in India, GoI). Investment by foreign companies have been instrumental in promoting transfer and diffusion of updated technology. 30 “India to grow 7.3 percent this fiscal, fastest across Asia: ADB,” Economic Times, April 11, 2018. https://economictimes.indiatimes.com/news/economy/indicators/adb-sees-asias-economic-growthat-6-per-cent-indias-at-7-3-per-cent-in-2018/articleshow/63707972.cms 31 Renewable energy sector is one of the priority lending sectors, with now solar rooftop systems to be treated as a part of home loan. The Union Budget of 2018-19 has laid emphasis on externally aided projects like the United Nations Development Programme (UNDP)/Global Environment Facility (GEF) project for strengthening access to clean energy in the remote villages of the United Nations Development Action Framework (UNDAF) states. Besides, the off-grid biogas project of the MoNRE aims to provide alternate cooking fuel solutions to one lakh families/ communities. Under the DDUGJY, feeder separation has been commissioned to facilitate uninterrupted power supply to agricultural workers in order to improve productivity and employment opportunities. Furthermore, the Union Budget’s focus has also been on strengthening the power system of the north-eastern states (Union Budget, 2018-19); Economic Survey 2017-18 (India, Ministry of Finance: 2018), Op. cit. 32 Manu Aggarwal and Viswamohanan, Anjali, “A solar gear shift,” The Hindu, March 29, 2018. http:// 29

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of India has been promoting domestic manufacturing, driven by lobbying by domestic solar manufacturers. For instance, the India Solar Manufacturers’ Association (ISMA) filed a petition on December 5, 2017 on behalf of domestic solar manufacturers to the Directorate General of Safeguards Customs and Central Excise for immediate application of safeguard duties on imported solar cells for four years.33 Subsequently, investors are wary of the repercussions of falloff in demand owing to a rise in solar energy prices. High solar prices due to local content regulations might discourage DISCOMs from buying renewable power. On the technical front, firstly, renewable energy deployment is highly contingent upon the state of grid connectivity. It is unlikely that sub-stations and power utilities would be located near renewable energy plants that render transmission costly. Furthermore, the “Energy for All” target must control for the fact that transmission of electricity to the most remote regions would be an onerous task, given the geographical variance and accessibility in a country like India. Therefore, it is important to integrate distant large renewable energy plants, namely solar parks, with inter-state transmission networks. Secondly, in the case of renewables, there exists a typical mismatch between generation and transmission capacity. For example, a wind power plant may only generate at rated output for a few hours a year. Intermittency of supply is an inherent characteristic of renewable energy.34 If the calibration of transmission capacity is not in line with the rated output, a significant level of capacity goes underutilized, with marginal cost of excess capacity outweighing the marginal gain from power generation. Another related concern is that of storage. Electricity generated from any source has to be consumed instantly. Battery technologies in electronic goods and vehicles, and electricity backup solutions like inverters and UPS, are costly and entail maintenance and replacement costs.35 Newer technologies such as smart grids have already been pilot tested in India.36 These also constitute an important component of the draft National Energy Policy.37 These, in conjunction with demand side management and improved storage solutions, will have to be rolled out on a country-wide basis to effectually attain an energy future for India with a larger share of renewable electricity in the overall energy mix. Energy Security Concerns and Prospects www.thehindu.com/opinion/op-ed/a-solar-gear-shift/article23375847.ece 33 Saumy Prateek, “Directorate general recommends 70 percent provisional safeguard duty on imported solar cells,” Mercom India, January 9, 2018. https://mercomindia.com/dgad-70-percentsafeguard-imported-solar-cells/ 34 NITI Aayog, Report of the Expert Group on 175 GW by 2022 (Government of India: 2015). 35 Neeraj Kuldeep, Ganesan, Karthik, et al., “Energy Storage in India: Applications in the Renewable Energy Segment,” Council on Energy, Environment and Water (CEEW) Report (New Delhi, India: 2016). 36 With features such as digital communication, automation and information technology (IT) systems, smart grids enable to monitor and control power flows and information flows from producers to enduse consumers and vice versa. In case of decentralized electricity generation, smart grid technology helps consumers with real time control and choice to generate, store and consume electricity. However, smart grid technology entails huge costs and is associated with cyber security concerns. Navneet Gupta and Jain, Apurav, “Smart Grids in India,” Akshay Urja, 5, no. 1 (2011): 38-41. 37 NITI Aayog (2017), Op. cit.

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Notwithstanding the challenges faced by the renewable energy sector, it would not be overly ambitious to recognize its potential implication for energy security. The recent policy push towards energy access and sustainability, coupled with growth targets, is associated with a concomitant rise in demand for commercial energy. While it is not pragmatic to assume that dependence on imports will entirely cease, a rather optimistic way would be to diversify the energy trade portfolio in the international market, in terms of where imports are sourced from. The Hirfindahl-Hirschman index of market concentration for India has been quite stable, i.e., 0.077 in 2012, 0.075 in 2014, and 0.076 in 2016.38 These figures are impressive compared to the index value of nearly 0.8 in 2003 and 2004.39 In case of import dependence in commercial energy, India’s performance has been promising in petroleum products and electricity (negative net imports in petroleum products, i.e., 42.63 MT in 2015 and 29.23 MT in 2017, even as it continues to be a large importer of crude oil). India became a net exporter in electricity in 2017 with 1,093 GWh.40 However, India is highly dependent on imports for energy sources like crude oil, coal, and natural gas. It is thus necessary to diversify the energy basket by injecting renewables on a commercial scale. Conclusion Although India’s growth trajectory has been perturbed by recent policy shocks of demonetization and implementation of the Goods and Services Tax (GST), it is expected to retrieve its vigor from 6.6 percent in financial year 2017 to 7.6 percent in financial year 2020.41 Consequently, its energy needs are expected to grow unabated. The IEA/IEO 2015 forecasts for the year 2040 also corroborate this proposition. The behemoth task of providing energy access to the rapidly growing population coupled with transition towards clean energy is encumbered by policy trade-offs. While the “energy for all” target cannot be achieved without dependence on energy imports in general, and fossil energy in particular, a transition toward clean energy should not be confined to electrification and lighting end-uses alone. Rather, this calls for addressing issues at the household level, namely indoor pollution, especially in rural households that rely heavily on traditional fuels for cooking and water heating. The proportion of population without access to clean cooking options was put at around 64 percent in 2015 as compared to the world average of 38 percent.42 As Ganesan and Vishnu argue, the use of traditional fuelwood falls with a rise in household income and in pro-poor policies, like the Pradhan Mantri Ujjwala Yojana, are expected to ensure energy justice.43 However, its favorable outcomes have been accompanied with a baggage of bloated import bills and tighter budgetary constraints. As a result, energy security concerns are inevitable. In fact, the need of the hour is to strike a balance amongst rationalizing energy pricing, swifter penetration of renewables in the overall energy basket (both at the micro and macro levels), and keep tabs on the level of import dependence for fossil energy sources like crude oil, natural gas, and coal. Authors’ calculations based on UN COMTRADE database. An index value closer to 1 denotes trade concentration, in terms of imports, from only few market sources, while a value closer to 0 indicates diversification of market sources. 40 Ministry of Statistics and Programme Implementation (MoSPI), Energy Statistics (Ministry of Statistics and Programme Implementation: 2018). 41 The Economic Times, Op. cit. 42 Economic Survey 2017-18, Op. cit. 43 Karthik Ganesan and Vishnu, Rajeev, “Energy Access in India - Today, and Tomorrow,” Council on Energy, Environment and Water (CEEW) Working Paper 2014/10 (2014). 38 39

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Meeta Keswani Mehra is Professor of Economics at the Centre for International Trade and Development, at School of International Studies, Jawaharlal Nehru University. She obtained her Ph.D. in Economics from the Indian Statistical Institute. Gaurav Bhattacharya is a Ph.D. candidate at the Centre for International Trade & Development, School of International Studies, Jawaharlal Nehru University.

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Hayashi | Energy Transitions in China and India

Energy Transitions in China and India Leapfrogging in Wind and Solar Power Technology Daisuke Hayashi China and India are undergoing rapid transitions towards renewable energy. While their power mix is still dominated by coal, renewables—especially wind and solar— have in recent years outpaced the capacity addition of coal.1 Both countries have managed to become global leaders in the wind and solar markets in a relatively short period of time. In 2016, China and India ranked first and fourth, respectively, in the world in terms of capacity addition of wind and solar photovoltaic (PV) technologies.2 They were also home to several domestic, globally competitive wind and solar PV manufacturers. The rapid growth of clean-energy industries points to the potential of environmental leapfrogging, which suggests that developing countries might be able to follow more sustainable development pathways than those experienced by industrialized countries.3 The leapfrogging in wind and solar power technologies in China and India is largely because of strong government targets and policy support. Therefore, these cases serve as useful examples of how government policy can guide energy transitions in the power sector. By comparing the wind and solar industry development in China and India, this paper discusses how government policy influences development and deployment of wind and solar technologies, explore what challenges remain for the further scaling up of the clean-energy industries, and draw lessons for a transition into a low-carbon power sector. China’s Quest for Indigenous Wind and Solar Industries The growth of China’s renewable energy capacity is driven by strong government targets, policy support, and active investments by state-owned enterprises, especially the “big-five” power utilities. These utilities—China Power Investment, Datang, Huadian, Huaneng, and National Energy Investment Group—contributed to 39 percent of the total non-hydro renewable capacity installed in 2016.4 In the 12th Five-Year Plan International Energy Agency (IEA), “World Energy Outlook 2017” (Paris, 2017); World Institute of Sustainable Energy (WISE), “Renewables India 2017: Towards Grid Parity” (Pune, 2017). 2 REN21, Renewables 2017: Global Status Report (Paris: REN21, 2017). 3 Jim Watson and Raphael Sauter, “Sustainable Innovation through Leapfrogging: A Review of the Evidence,” International Journal of Technology and Globalisation 5, no. 3/4 (2011): 170, doi:10.1504/ IJTG.2011.039763. 4 Kate Chrisman, Jon Creyts, Lena Hansen, Becky Li, and Zihe Meng, State of the Market 2017: Cor1

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(FYP)—the party’s centrally produced economic guidance that includes growth targets and industry-specific objectives—covering the 2010–15 period, wind and solar were identified as high-value strategic industries, essential to the future of the Chinese economy.5 In January 2017, China announced targets for renewable energy deployment over 2016–20, the 13th FYP period. Wind and solar comprised a major part of the renewable energy targets: 210 gigawatts (GW) of wind and 110 GW of solar energy by 2020, up from 129 GW of wind and 43 GW of solar energy in 2015.6 If these targets were met, wind and solar would account for 16 percent of China’s total power generation capacity in 2020. Table 1. China's Renewable Energy Targets and Achievements under the 12th FYP and the 13th FYP

China’s Wind Industry China’s wind industry has expanded rapidly since the mid-2000s, serving almost exclusively its domestic market. The Chinese government’s Wind Resource Concession Program was a key driver of wind development in China between 2003 and 2007, during which wind farms meeting a certain localization rate were selected through a competitive bidding process for government-selected sites and various preferential treatments. Another major driver was the Renewable Energy Law in 2006, which set a legal framework for mandatory grid connection and full purchase of renewable energy projects, and authorized the establishment of feed-in tariffs (fixed, subsidized power porate Renewable Procurement in China (Boulder, CO: 2017). 5 Government of China, Zhonghua Renmin Gongheguo Guominjingji Huo Shehui Fazhan Di Shier Ge Wu Nian Guihua Gangyao [The 12th Five-Year Plan for Economic and Social Development of the People’s Republic of China] (Beijing: Government of China, 2011). 6 Measured in both PV and concentrated solar power. Government of China, “The 13th Five-Year Plan for Economic and Social Development of the People’s Republic of China” (Beijing: Government of China, 2016).

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tariffs).7 The wind market reached a record level of capacity addition (31 GW) in 2015, when wind developers rushed to complete their projects before the planned reduction in feed-in tariffs in the same year.8 The market growth has slowed down since then, but China remains the world’s largest wind market, with 188 GW of installed capacity in December 2017.9 China’s Solar Industry China’s solar industry had primarily served the foreign market, particularly in Europe, until 2009, when the Eurozone crisis led to a cutback of feed-in tariffs in key European markets and dampened the financial incentives for Chinese solar investors. The Chinese government made a major effort to rescue the Chinese solar industry, introducing nationwide solar feed-in tariffs in 2011 and increasing the initial target of solar energy deployment for 2015 from 5 GW to 35 GW.10 Subsequently, China’s domestic solar market has grown rapidly, with annual growth rates consistently exceeding 50 percent since 2011. In 2017, the new solar-capacity addition hit a record level of 53 GW to reach cumulative capacity of 130 GW, a higher figure than the 110 GW solar target set for 2020.11 Critically, the per unit price of energy of both solar PV and onshore wind energy has fallen to the point where it can compete without significant government assistance, a major milestone in an industry where price is king.12 Integration Challenges The unprecedented growth of wind and solar capacity in China has brought significant challenges for the integration of the intermittent renewable energy sources into China’s coal-heavy electricity system. This has resulted in a widespread problem of wind and solar curtailment. Curtailment is when grid operators command wind and solar generators to reduce power output, which is typically done to minimize transmission congestion and to reduce excess generation during low load periods.13 China experienced record levels of wind curtailment in 2016, accounting for 17 percent of the annual wind generation.14 Smaller yet increasing amounts of solar generation have also 7 National People’s Congress, The Renewable Energy Law of the People’s Republic of China (Beijing: National People’s Congress, 2005). 8 Global Wind Energy Council (GWEC), Global Wind Report: Annual Market Update 2015 (Brussels: GWEC, 2016). 9 GWEC, Global Wind Statistics 2017 (Brussels: GWEC, 2018). 10 Matthew Hopkins and Yin Li, “The Rise of the Chinese Solar Photovoltaic Industry: Firms, Governments, and Global Competition,” in China as an Innovation Nation, ed. Yu Zhou, William Lazonick, and Yifei Sun (Oxford: Oxford University Press, 2016), 306–32. 11 Mark Osborne, “China Officially Installed 52.83 GW of Solar Modules in 2017,” PV-Tech, January 22, 2018, www.pv-tech.org/news/china-officially-installed-52.83gw-of-solar-modules-in-2017. 12 International Renewable Energy Agency (IRENA), Renewable Power Generation Costs in 2017 (Abu Dhabi: IRENA, 2018). 13 Lori Bird, Debra Lew, Michael Milligan, E. Maria Carlini, Ana Estanqueiro, Damian Flynn, Emilio Gomez-Lazaro, Hannele Holttinen, Nickie Menemenlis, Antje Orthus, et al., “Wind and Solar Energy Curtailment: A Review of International Experience,” Renewable and Sustainable Energy Reviews, 2016, doi:10.1016/j.rser.2016.06.082. 14 IEA, World Energy Outlook 2017 (Paris: IEA, 2017).

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been curtailed in the last couple of years. The factors underlying curtailment are both technical and institutional. China’s power sector suffers from an overcapacity problem, as new nuclear, coal, natural gas, and renewable power plants come online at the same time as electricity demand growth slows.15 In China, thermal power plants are assigned a set number of full load hours every year. Both wholesale and retail power prices are determined by the government and not updated frequently.16 Therefore, generators have little incentive to lower the thermal operation hours and allow for more renewable generation. Together with the overcapacity situation and the limited flexibility of the existing coal fleet, the tight regulation of power plant operations in China leads to greater challenges for the integration of wind and solar power.17 China has begun to address the integration challenge. As part of its anti-air pollution efforts, China is pushing for the early retirement of inefficient coal capacity and banning new coal plants in provinces with high pollution levels.18 Furthermore, efforts are being made to shift renewable deployment to demand centers by restricting new wind and solar projects in provinces with high curtailment levels.19 China is also commissioning additional transmission capacity, improving the flexibility of coal-fired power plants, and implementing power sector reforms to provide stronger price signals to generators.20 Increasing Cost of Renewable Subsidies Feed-in tariffs have been a major driver of China’s wind and solar market expansion, supporting most of the 200 GW of solar and wind capacity installed over 2009–16.21 After the amount offered as renewable subsidies almost quadrupled, China is now searching for a more cost-effective renewable incentive scheme. Since 2015, China has cut its feed-in tariffs for wind by 8 to 16 percent and for solar by 15 to 28 percent, depending on the resource potential of different provinces.22 In a demonstration of the growing maturity of the renewables sector, feed-in tariffs are likely to be replaced by a Ibid. Fei Teng, Xin Wang, and LV Zhiqiang, “Introducing the Emissions Trading System to China’s Electricity Sector: Challenges and Opportunities,” Energy Policy 75 (2014): 39–45, doi:10.1016/j.enpol.2014.08.010.in which the interaction between ETS and electricity market reform plays a major role. China’s electricity sector is currently in a slow progress towards a more competitive and market-based system. Both equal share dispatching policy and regulated wholesale and retail pricing policies pose significant challenges for implementation of ETS in China’s electricity sector. One of the important points of ETS is to give a price for carbon emissions and establish a cost pass-through mechanism (reminded that the essential of carbon pricing is to put a price on carbon emissions that is equal to discounted value of the external damages 17 IEA, World Energy Outlook 2017. 18 Ibid. 19 Kathy Chen and Stian Reklev, “China Caps 2018 Energy Consumption Growth, Paves Way for CO2 Drop,” Carbon Pulse, March 8, 2018. 20 IEA, Renewables 2017: Analysis and Forecasts to 2022. 21 Ibid. 22 Ibid. 15 16

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market-based approach: tradable, renewable energy certificates. China launched a pilot program to test this idea in July 2017 and aims to make it mandatory in 2018/19.23 Leading in Manufacturing, Lagging in Innovation The Chinese government has strategically pursued the development of indigenous wind and solar power industries, implementing various research and development (R&D) programs (e.g., the 863 Program) and preferential measures for domestic manufacturers (e.g., local content requirements for wind).24 Collaborative R&D between industry and universities has also played an important role in technological capability development in China’s wind and solar industries. Today, Chinese wind turbine manufacturers can produce the vast majority of the onshore wind supply chain domestically, and have started the commercialization of offshore wind projects.25 In the solar sector, Chinese firms have rapidly expanded into the upstream, more high-tech segments.26 Despite their success in manufacturing, Chinese firms are still lagging in innovation capabilities, a clear area of concern for the party: The 13th FYP refers to innovation as the “primary driving force for development,” while recognizing China’s “capacity for innovation is not strong enough.”27 While global wind and solar PV patent filings, a proxy measure of innovation activities, have increased sharply since the 2000s, most of the wind and solar PV patents are held by firms from the United States, Europe, and Japan; Chinese firms have only recently started patenting in their home market.28 One reason for China’s lagging innovation capabilities is that earlier phases of China’s wind and solar industries focused on capacity expansion and cost reduction at the expense of technology improvement and quality assurance.29 This points to the trade-off between the pace of market expansion and innovation capability accumulation.

Ibid. Hopkins and Li, “The Rise of the Chinese Solar Photovoltaic Industry: Firms, Governments, and Global Competition”; Joanna I. Lewis, “The Development of China’s Wind Power Technology Sector: Characterizing National Policy Support, Technology Acquisition and Technological Learning.” 25 Xiaojing Sun, Diangui Huang, and Guoqing Wu, “The Current State of Offshore Wind Energy Technology Development,” Energy, 2012, doi:10.1016/j.energy.2012.02.054; Jiahai Yuan, Shenghui Sun, Jiakun Shen, Yan Xu, and Changhong Zhao, “Wind Power Supply Chain in China,” Renewable and Sustainable Energy Reviews, 2014, doi:doi.org/10.1016/j.rser.2014.07.014. 26 Smita Kuriakose, Joanna I. Lewis, Jeremy Tamanini, and Shahid Yusuf, Accelerating Innovation in China’s Solar, Wind and Energy Storage Sectors (Washington, D.C., 2018). 27 Government of China, The 13th Five-Year Plan for Economic and Social Development of the People’s Republic of China, 12, 20. 28 Kuriakose et al., Accelerating Innovation in China’s Solar, Wind and Energy Storage Sectors. 29 Junfeng Li, Fengbo Cai, Liming Qiao, Hongwen Xie, Hu Gao, Xiaosheng Yang, Wenqian Tang, Weiquan Wang, Xiuqin Li, And Li, et al., 2012 China Wind Energy Outlook (Beijing: Chinese Wind Energy Association, 2012); Fang Zhang and Kelly Sims Gallagher, “Innovation and Technology Transfer through Global Value Chains: Evidence from China’s PV Industry,” Energy Policy 94 (2016): 191–203, doi:10.1016/j.enpol.2016.04.014. 23 24

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India’s Growing Aspirations for Green Innovations In 2015, the Government of India set the target of achieving 175 GW of renewables by 2021–22.30,31 The target anticipates 60 GW of wind and 100 GW solar by March 2022, up from 32 GW wind and 12 GW solar in March 2017. 2016–17 was the first time that the capacity addition of renewables (11.3 GW) surpassed that of conventional sources (10.3 GW) in India.32 According to the capacity addition scenarios of India’s Central Electricity Authority, this trend is set to continue over the 13th FYP—the Government of India’s centralized and integrated national economic programs—covering the period from 2017–18 to 2021–22. This is because of the ambitious renewables target for 2022 and the over-achievement of the targeted capacity addition of conventional sources during the 12th FYP period (2012–13 to 2016–17).33 Table 2. India's Renewable Energy Targets and Achievements under the 12th FYP and the 13th FYP

The growth of India’s wind and solar capacity has been driven by private-sector investments supported by government policy at both the central and state levels. The most significant boost was the enactment of the Electricity Act 2003, which provided the first legal framework dedicated to promoting renewable energy in India. The act required each state to promote renewables, including through preferential tariffs and purchase obligations.34 The wind market has grown rapidly since then, supported by All dates here refer to the fiscal calendar. An Indian fiscal year runs from April 1 to March 31. For example, the fiscal year 2022–23 starts on April 1, 2022 and ends on March 31, 2023. 31 Ministry of New and Renewable Energy (MNRE), Annual Report 2016–17 (New Delhi: MNRE, 2017). 32 WISE, Renewables India 2017: Towards Grid Parity. 33 Central Electricity Authority (CEA), Draft National Electricity Plan: Volume 1–Generation (New Delhi: CEA, 2016). 34 IRENA and GWEC, 30 Years of Policies for Wind Energy: Lessons from 12 Wind Energy Markets (Abu Dhabi: IRENA, 2013). 30

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the central government’s decision to implement tax breaks on investments in wind power equipment and by state-level feed-in tariffs. In 2009, the central government introduced a generation-based incentive (GBI), which provides a tariff-based incentive in addition to the state feed-in tariffs. GBI has attracted independent power producers and foreign investors, who have contributed toward the greater performance-orientation and technology upgradation in the wind market.35 India’s solar market started expanding with the launch of the Jawaharlal Nehru National Solar Mission ( JNNSM) in 2010. The JNNSM had initially targeted a 20 GW grid-connected solar capacity by 2022, which was later revised to 100 GW. Solar projects under the JNNSM are allotted after competitive bidding and this led to price discovery and minimization of the financial burden of the renewable subsidies.36 Given this success, competitive bidding has recently been applied to wind power projects. It remains to be seen whether wind and solar projects can sustain themselves at increasingly lower tariff levels. Nevertheless, onshore wind energy and solar PV are becoming increasingly cost-competitive in India. Inadequate Manufacturing and Innovation Capabilities In 2014, the Government of India announced the “Make in India” initiative to “transform India into a global design and manufacturing hub,” with renewable energy being one of the priority sectors.37 While this is an area of critical development, India still faces important challenges in the wind and solar manufacturing industries. As of June 2016, the manufacturing capacity of solar cells and PV modules in India was 1.5 GW and 4.3 GW, respectively.38 Given that solar capacity needs to increase by 17.5 GW per year to achieve the 100 GW target by 2022, the current solar manufacturing capacity is far from adequate. Moreover, India’s solar manufacturing capacity is absent in the upstream, high-tech segments of the value chain. As a result, India remains heavily dependent on imported solar PV technology, with almost 84 percent of the solar panels being imported during FY 2016–17.39 The JNNSM aspires to develop an indigenous solar manufacturing industry. To this end, the central government stipulated a domestic content requirement for solar PV projects funded through the JNNSM. However, solar developers have so far demonstrated a preference for foreign-produced technologies.40 Solar projects funded through Daisuke Hayashi, “The Governance of International Technology Transfer: Lessons from the Indian Wind Industry,” in Challenges of European External Energy Governance with Emerging Powers, edited by Michèle Knodt, Nadine Piefer, and Franziska Mueller (Surrey: Ashgate Publishing, 2015), 251–68. 36 Ankur Chaudhary, Chetan Krishna, and Ambuj Sagar, “Policy Making for Renewable Energy in India: Lessons from Wind and Solar Power Sectors,” Climate Policy 15, no. 1 (2015): 58–87, doi:10.10 80/14693062.2014.941318. 37 Government of India, “Make in India,” www.makeinindia.com. 38 WISE, Renewables India 2017: Towards Grid Parity. 39 Ibid. 40 Rainer Quitzow, “Assessing Policy Strategies for the Promotion of Environmental Technologies: A Review of India’s National Solar Mission,” Research Policy 44, no. 1 (2015): 233–43, doi:10.1016/j. 35

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state programs—with no domestic content requirement—imported cheaper silicon-based modules from China.41 In 2013, the United States filed a complaint against JNNSM’s domestic content requirement with the World Trade Organization (WTO). The WTO ruled in favor of the United States, and India has recently deleted all of the domestic content requirement clauses from the 5 GW Batch-IV solar scheme in the second phase of JNNSM.42 Given the WTO’s ruling against the domestic content requirement, India will not be able to use the protectionist measure—at least not at a large scale—to nurture its solar industry. Besides open competitive bidding, JNNSM should provide stronger R&D support to the upstream segments of the PV value chain. For instance, the Indian government has since 2012 provided R&D subsidies for polysilicon, wafer, and cell manufacturing through the Modified Special Incentive Package Scheme.43 The R&D scheme can be scaled up to improve the competitiveness of India’s solar industry. India’s wind turbine industry has a manufacturing capacity of about 12 GW, which is more than double the wind capacity addition in FY 2016–17 (5.5 GW).44 Despite the abundant manufacturing capacity, most Indian wind turbine manufacturers still lack innovation capabilities. The major R&D activities of wind turbine manufacturers in India are taking place either outside India or at local R&D facilities of multinational companies. Most others depend on foreign help in terms of technology licenses and R&D.45 The Indian government provides financial support for wind technology research.46 However, the R&D scheme is underutilized by wind turbine manufacturers, because their profits are not yet sufficient to start investing in R&D and/or they do not wish to disclose R&D results in the public domain.47 Unlike China, industry-university linkages for wind technology research are not well developed. Conclusions There are similarities and differences in the way China and India developed and deployed wind and solar power technologies. In both countries, guaranteed tariff-based incentives (feed-in tariffs and GBI) were instrumental in achieving a large-scale derespol.2014.09.003. 41 Chaudhary, Krishna, and Sagar, “Policy Making for Renewable Energy in India: Lessons from Wind and Solar Power Sectors.” 42 Ministry of New and Renewable Energy (MNRE), Corrigendum: Amendment in the Guidelines for Implementation of a Scheme for Setting-up of over 5,000 MW Grid-Connected Solar PV Power Projects with Viability Gap Funding (VGF) under Batch-IV of Phase II of the JNNSM (New Delhi: MNRE, 2018). 43 Ministry of Communication and Information Technology (MCIT), Modified Special Incentive Package Scheme (M-SIPS): Enhancement of Scope and Extension of Time and Other Amendments—Revised Notification (New Delhi: MCIT, 2015). 44 WISE, Renewables India 2017: Towards Grid Parity. 45 Hayashi, “The Governance of International Technology Transfer: Lessons from the Indian Wind Industry.” 46 MNRE, “Research, Development and Demonstration: Industry Involvement,” mnre.gov.in/industry-involvement. 47 Indian wind turbine manufacturer, interview by Hayashi, March 9, 2013.

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ployment of wind and solar power. As the amount of renewable subsidies soared, both countries shifted to a more market-based incentive scheme: tradable renewable energy certificates in China and competitive bidding in India. These deployment policies have been successful in terms of capacity expansion and cost reductions. However, the unprecedented capacity growth in China resulted in a widespread problem of wind and solar curtailment. Wind and solar curtailment is also emerging in India, especially in southern states with high penetration of wind and solar power.48 India should learn from China’s experience in tackling the integration challenge. A notable difference between the Chinese and Indian approaches is that China has been much more strategic and effective in fostering indigenous manufacturing and innovation capabilities. The Chinese government has supported the development of indigenous industries through various R&D programs and preferential measures. The Indian government has historically played a limited role in wind and solar technology development. Innovation has only recently (re)gained political prominence in India, as exemplified by the “Make in India” initiative and JNNSM. China’s state-led approaches to innovation may not be readily applicable to India, because private firms are dominant in its wind and solar industries. Nevertheless, India can benefit from stronger public-private partnership for clean-energy technology research. A suitable arrangement can be made for intellectual property sharing based, for example, on the technology management plan of the United States-China Clean Energy Research Center.49 The challenge for both China and India is to establish an institutional framework for managing the trade-off between the pace of the build-up of domestic manufacturing industry and the accumulation of innovation capabilities in the clean-energy industries. Carefully designed innovation policies need to complement the deployment policies. Acknowledgement This research was funded by JSPS KAKENHI Grant Number 15K16163.

Daisuke Hayashi is an associate professor of environment and development at the Department of International Relations, Ritsumeikan University in Kyoto, Japan. His research focuses on the design of policies and institutions for low-carbon development in emerging economies, particularly China and India. He serves as a board member of the Society for Environmental Economics and Policy Studies, Japan.

48 Bridge to India, “Southern Region to Lead India in Grid Integration of Renewable Energy,” PV-Tech, May 26, 2017, www.pv-tech.org/guest-blog/southern-region-to-lead-india-in-grid-integration-of-renewable-energy-bridg. 49 Joanna I. Lewis, A Better Approach to Intellectual Property?: Lessons from the US-China Clean Energy Research Center (Chicago, IL: The Paulson Institute, 2015).

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CALL FOR PAPERS The Journal welcomes original social science research papers written on issues relevant to politics, security, economy, culture, and society of contemporary Asia, including Pakistan and Afghanistan. “Contemporary� is understood broadly as recent, but not necessarily as current. We are pleased to consider articles with historical background sections so long as such analyses are crucial for advancing core arguments.

SUBMISSION GUIDELINES Submissions should be emailed to gjaa@georgetown.edu as MS Word documents. Please do not submit in PDF format. Authors should include a short bio in the email text, but must avoid any self-identification in the manuscript as we send our articles out for anonymous review. Document: Manuscripts must be typewritten and double-spaced in Microsoft Word, with 1-inch/2.5-centimeter margins on all sides. Length: Manuscripts should be 5,000-7,000 words in length. Style: Authors must follow The Chicago Manual of Style, 16th ed. Citations: All citations must be formatted as footnotes. Please also include a full bibliography at the end. Abstract: Authors must include an abstract (100-200 words) that effectively and concisely summarizes his/her study. *Submissions must not be plagiarized, copyrighted, or under review elsewhere.


Switzer | The Consequences of Confucius Institutes

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The Consequences of Confucius Institutes Understanding the Opposition Andrew Switzer

Confucius Institutes (CIs) are Chinese public educational organizations that promote Chinese language and culture around the world. The Chinese government has invested over $1 billion USD in establishing 500 of these CIs in existing academic institutions. The rapid growth and behavior of these CIs, however, have resulted in significant opposition from academic institutions. By analyzing statements made by faculty members and administrators, this paper concludes that widespread CI opposition stems from concerns over academic freedom. This research further elucidates the underlying causes of widespread CI opposition and examines the potential impact on China’s and the United States’ global image.

As China becomes a global economic power, more students in the United States are studying Chinese. The number of students in the United States that attended an Advanced Placement Chinese exam quadrupled over the last decade.1 This increase in Chinese language studies is largely driven by the fact that many people believe that studying Chinese will provide better job opportunities in the future.2 In response to the growing global presence of the Chinese language and the need for more Chinese speakers, the U.S. government has supported—and even stimulated—Chinese language education. President George W. Bush launched the National Security Language Initiative in 2006, funding new and existing Chinese language programs.3 President Barack Obama continued to prioritize Chinese language programs by launching the 100,000 Strong initiative in 2009, providing scholarships to students studying abroad in China.4 May Zhou, “In US, Demand Surges for Mandarin Lessons,” China Daily, 10 April 2017. Edmund Lee, “Learning Chinese: Will You Make More Money?,” CBS Money Watch, 23 August 2010. 3 Dina Powell and Barry Lowenkron, “National Security Language Initiative: Fact Sheet,” Office of the Spokesman, U.S. Department of State, 5 January 2006. 4 U.S. China Strong Foundation, “About Us,” (date accessed: 21 October 2018).

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The United States government’s investment is not the only source of funding for Chinese language education in the country. The Chinese government has spent tens of millions of dollars in the United States on Confucius Institutes (CIs), non-profit public educational organizations that promote Chinese language and culture. By creating language and culture programs within partner universities and colleges, China hopes to quicken the international “popularization” of the Chinese language and strengthen “cultural exchanges” between people, ultimately allowing students to have a better understanding of and respect for China.5 CIs complement President Obama’s investment in the 100,000 Strong initiative, which also aims to strengthen the U.S.-China relationship through cross-cultural communication.6 A unique aspect of CIs is that they partner with and reside in an existing academic institution. Universities and colleges that agree to house a CI receive funding, instructors, and teaching materials from Hanban, a managing organization affiliated with the Chinese Ministry of Education.7 These resources are very attractive to cash-strapped schools that struggle to provide high-quality Chinese language instruction for their students. As a result, Hanban has been able to establish 110 CIs in the United States and a total of 500 worldwide.8 Steadily increasing annual budgets suggest that the number of CIs in the United States will continue to grow.9 Despite the growth of CIs and the benefits they provide, there has been a significant amount of pushback in the United States. For instance, a CI closed at the University of Chicago due to opposition from professors.10 This opposition has also extended beyond the United States into Canada, Sweden, and even Japan, where CIs closed as a result of substantial opposition.11 The concern has become so widespread that The House of Representatives Subcommittee on Oversight and Investigations of the Committee on Foreign Affairs even held a hearing regarding CIs in 2012.12 The emergence of such opposition makes one wonder why scholars and government officials resist CIs despite the fact these institutes provide colleges and universities with funding, teachers, and educational materials that promote Chinese language education.

Adam Minter, “China’s Soft-Power Fail,” Bloomberg View, 7 October 2014. U.S. China Strong Foundation, “About Us.” 7 Hanban, “About Confucius Institutes,” Internet, http://english.hanban.org/node_7716.htm, (date accessed: 21 October 2018). 8 Ibid. 9 Confucius Institute Headquarters, “Annual Report,” Hanban, 2006-2016. 10 Elizabeth Redden, “Chicago to Close Confucius Institute,” Inside Higher Ed, 26 September 2014. 11 Marshall Sahlins, “China U.” The Nation, 30 October 2013. Marshall Sahlins, Confucius Institutes: Academic Malware (Chicago: Prickly Paradigm Press, 2015). Ying Zhou and Sabrina Luk, “Establishing Confucius Institutes: A Tool for Promoting China’s Soft Power?” Journal of Contemporary China 25, no. 100 (2016): 640. 12 U.S. Congress, House of Representatives, Subcommittee on Oversight and Investigations of the Committee on Foreign Affairs, The Price of Public Diplomacy with China: Hearing before the Subcommittee on Oversight and Investigations of the Committee on Foreign Affairs, 112th Cong. 2nd sess., 2012.

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As CIs continue to multiply and situate themselves in academic institutions in the United States and around the globe, it is necessary to learn from previous hosts about the potential drawbacks of these institutes. For instance, while the economic benefits of CIs can help universities fulfill their own programming initiatives, CIs, similar to other public diplomacy initiatives, may compromise other academic or societal norms. The fact that some academic institutions are cancelling and not renewing CI partnerships signals that CIs are more problematic than initially anticipated. Do CIs have a more elusive mission—one that extends beyond merely promoting Chinese language and culture? Are CIs Trojan horses as some experts suggest?13 Or are some academic institutions xenophobic? Without a thorough investigation of the causes of CI opposition, the answers to these questions remain unknown. By analyzing public statements from faculty members and administrators who are associated with CIs, this research finds that academic freedom concerns are the leading cause of widespread opposition to CIs. While CIs have received a fair amount of attention—especially when Chicago decided to close its CI in 2014—there has been relatively little work consolidating existing research and public statements to examine the main drivers behind CI opposition. In this paper, I first provide a deeper investigation of CIs and then discuss why these institutes may be perceived as limiting intellectual freedom. After identifying alternative explanations to the widespread CI opposition, implications of my argument are discussed followed up with a conclusive summary of the findings. Confucius Institutes Beyond teaching Chinese language and culture, CIs are meant to reinforce “friendship and cooperation between China and the rest of the world.”14 The first CI was established in South Korea in 2004, which was soon followed by the creation of a CI at the University of Maryland.15 Since the conception of CIs, these institutes have been erected on every inhabited continent.16 Such progress has culminated in an ambitious goal by Hanban to create 1,000 CIs around the world by 2020.17 It is assumed that China is establishing these CIs as a public diplomacy initiative to increase its soft power around the world, with Donald Clarke, a professor of China Studies at George Washington University, describing CIs as “China’s official soft power project.”18 A concept first developed by Harvard professor Joseph Nye, soft power is Ibid. Hanban, “About Confucius Institutes.” 15 D.D. Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses,” The New York Times, 4 March 2012. 16 Ibid. 17 Pan Letian, “Confucius Institute: Promoting Language, Culture and Friendliness,” Xinhua, 2 October 2006. 18 Jeremy Goldkorn, Donald Clarke, Susan Jakes, David Shambaugh, Bill Bishop, and Jonathan Landreth. “Why is Chinese Soft Power Such a Hard Sell?,” ChinaFile, Internet, http://www.chinafile. com/conversation/why-chinese-soft-power-such-hard-sell, (date accessed: 21 October 2018). 13 14

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the “ability to obtain preferred outcomes by attraction and persuasion.”19 Unlike hard or economic power, which uses coercion or payment to push another country towards a desired objective, soft power pulls a country in a prescribed direction.20 This type of power is of increasing interest to Chinese leaders. For instance, following President Hu Jintao’s 2007 speech to the 17th Party Congress, where he stated that China must “enhance culture as part of the soft power of our country,” the CI program expanded rapidly.21 President Xi Jinping continued investing in CIs, saying that the Chinese government “should increase China’s soft power, give a good Chinese narrative, and better communicate China’s message to the world.”22 Structurally, CIs are managed by Hanban, which is officially described as being “affiliated with the Ministry of Education.”23 Through investigating the affiliation between Hanban and the Ministry of Education, however, University of Chicago Professor Marshall Sahlins found that Hanban is “governed by a council of high state and party officials from various political departments and chaired by a member of the Politburo, Vice Premier Liu Yandong.”24 Sahlins calls Hanban an “instrument of the party state operating as an international pedagogical organization.”25 Hanban also manages Confucius Classrooms (CC), which are similar to CIs but intended for K-12 students, and CI Online, which is an online platform to teach Chinese language and culture.26 According to their website, CI Online has over 604,000 registered students around the world.27 Furthermore, CIs and CCs have been growing steadily over the past 10 years, as illustrated in Figure 1. CI contracts between Hanban and the host university or college gives Hanban the right to supply teachers, textbooks and curricula of the courses it manages. In 2014, Hanban dispatched over 15,000 teachers worldwide, as shown in Figure 2. Moreover, research on China that utilizes CI funds requires approval by Hanban.28 Although there have been exceptions to some of these requirements, such as if Hanban wants to enlist a prestigious university (i.e., Stanford University or the University of Chicago), a typical contract between Hanban and the host academic institution will have a number of stipulations.

Joseph S. Nye, “The Information Revolution and Soft Power,” Current History, 113 (2014): 19-22. Joseph S. Nye, “China’s Soft Power Deficit: To catch Up, Its Politics Must Unleash the Many Talents of its Civil Society,” The Wall Street Journal, 8 May 2012. 21 People’s Daily, “Full Text of Hu Jintao’s Report at 17th Party Congress: Promoting Vigorous Development and Prosperity of Socialist Culture,” 15 October 2007. Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses.” 22 Xinhua, “Xi Eyes More Enabling International Environment for China’s Peaceful Development,” 30 November 2014. 23 Sahlins, “China U.” 24 Ibid. 25 Ibid. 26 Hanban, “About Confucius Institutes.” 27 Confucius Institute Online, Homepage, Internet, http://www.chinesecio.com/ (date accessed: 21 October 2018). 28 Ibid. 19

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Figure 1. Total number of Confucius Institutes and Confucius Classrooms worldwide

Figure 2. Total number of dispatched teachers to Confucius Institutes and Confucius Classrooms worldwide, in thousands

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While often compared to the British Council, France’s Alliance Française, or Germany’s Goethe Institute, Chinese CIs differ in two main respects.29 Firstly, CIs are housed within existing institutions; most of these European organizations are stand-alone organizations operating out of their own premises.30 Secondly, British, French, and German language institutes represent governments, not a political party.31 This difference is subtle, but the fact that China is a one-party state suggests that CIs represent the Chinese Communist Party (CCP). It is because of these two reasons that scholars hesitate to associate CIs with other countries’ language and cultural institutions. CIs are not an inexpensive investment. According to CI annual reports, Hanban spent just over $50 million (USD) on CIs in 2006.32 Annual investments in CIs have continued to increase, with the exception of 2010. In 2015, China’s annual investment in CIs rose to over $300 million.33 China’s growing investment in CIs is illustrated in Figure 3. Figure 3. Confucius Institute total expenditures, in millions (USD).

Many CIs not only teach language and culture, but also other subjects based on the needs of the locality. For example, the CI at the University of Arkansas provides business training sessions for professionals to help them expand their trade in China, while the CI at the University of California, Los Angeles focuses on health and medical issues.34 Moreover, CIs have different responsibilities at different schools. In larger colleges and universities, CIs tend to be responsible for only a portion of the overall Kissinger Institute on China and the United States, “Xi’s Statements on Education,” Wilson Center, Internet, https://www.wilsoncenter.org/xis-statements-education, (date accessed: 21 October 2018). Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses.” 30 Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses.” Christopher R. Hughes, “Confucius Institutes and the University: Distinguishing the Political Mission from the Cultural,” Issues and Studies 50, no. 4 (2014): 58. 31 Hughes, “Confucius Institutes and the University,” 57. 32 Confucius Institute Headquarters, “2006 Annual Report,” Hanban, 2006. 33 Confucius Institute Headquarters, “2015 Annual Report,” Hanban, 2015. 34 Jamie Walden, “Confucius Institute Helps Arkansas Companies Go Global,” Arkansas Business, 13 29

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Chinese curriculum, but in smaller academic institutions, CIs have more control of the language and culture instruction.35 Therefore, although CIs are identical in name, their activities are not uniform across the United States or around the world. Selecting Confucius as a symbol of CIs is an interesting choice given China’s recent history. Chairman Mao Zedong led an anti-Confucius campaign during the 1970s, vilifying Confucius as a symbol of backward feudalism.36 Mao despised Confucius so much that he even ordered Red Guards from Beijing to destroy a Confucian temple in Qufu, the venerated philosopher’s hometown.37 Now after using ‘Confucius’ in the title of 500 established CIs around the world, the Chinese government has clearly changed its narrative. By embracing Confucius, who possesses a positive reputation in the West, the Chinese government is using his image to promote the CIs’ mission of “reinforcing friendship and cooperation between China and the rest of the world.”38 However, even the use of Confucius has failed to bring about cooperation between CIs and host institutions in certain instances. Academic Freedom Concerns This paper utilizes the definition of academic freedom given by Cary Nelson, President of the American Association of University Professors (AAUP): engaging in “intellectual debate without fear of censorship or retaliation.”39 By this definition, many scholars fear that CIs censor academic dialogue at colleges and universities. The AAUP recommended that all academic institutions either terminate their CIs or renegotiate their contracts to ensure academic institutions’ full control over academic matters, noting that “allowing any third-party control of academic matters is inconsistent with principles of academic freedom.”40 There is evidence that CIs directly and indirectly censor academic discourse. The director of the Modern Tibetan Studies Program at Columbia University described a “strange silence about Tibet” around the same time the CI was established at the school, falling in line with China’s policy of avoiding discussions about Tibet.41 While this occurrence could have been a mere coincidence, it is also plausible that the new CI encouraged self-censorship. At North Carolina State University, the CI director October 2008. James F. Paradise, “China and International Harmony: The Role of Confucius Institutes in Bolstering Beijing’s Soft Power,” Asian Survey 49, no. 4 (July/August 2009): 652. 35 Randolph Kluver, “Introduction: The Confucius Institute as a Communicative Phenomenon,” China Media Research 10, no. 1 (2014): 2. 36 The Economist, “A Message from Confucius,” 22 October 2009. Richard McGregor, “Why Fast-Changing China is Turning Back to Confucius,” Financial Times, 11 April 2007. 37 Ibid. 38 Hanban, “About Confucius Institutes.” 39 Cary Nelson, “Defining Academic Freedom” Inside Higher Ed, 21 December 2010. 40 Committee on Academic Freedom and Tenure, “On Partnerships with Foreign Governments: The Case of Confucius Institutes,” American Association of University Professors, June 2014. 41 Emile Kok-Kheng Yeoh, “The Quarter-Century Legacy of June Fourth: Prospects and Challenges in the Struggle of Post-1989 Dissent and Nonviolent Action in the People’s Republic of China,” International Journal of China Studies 5, no. 2 (June/August 2014): 510.

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told the University’s provost that a planned visit by the Dalai Lama, a proponent of freeing Tibet from Chinese rule, would disrupt “some of the strong relationships we were developing with China.”42 The visit was ultimately canceled, partly due to concern over a Chinese government backlash.43 In this instance, the CI directly influenced the University in a way that may not have been possible had the CI not been there. One junior faculty member at a United States campus with a CI explained that criticizing the CI would end his career.44 The professor stated, “I am an untenured professor in a department which receives a lot of money from a CI, which is run by senior faculty that will vote on my tenure case.”45 In this instance, self-censorship stemming from the apparent financial needs of the academic institution hindered the professor’s ability to criticize the CI. Academic freedom concerns were so severe at the University of Chicago that 108 faculty members petitioned the University to discontinue the CI.46 The deputy director of the Center for East Asian Studies at the University admitted that there was a “certain amount of self-censorship” on campus due to the presence of a CI.47 The deputy director implied that self-censorship was tied to Hanban funding when claiming, “thank goodness we have money for the Center for East Asian Studies; we can go there for these kinds of projects.”48 Although the deputy director recognized the self-censorship imposed by CIs, he or she downplayed the issue since the University had other sources of funding independent of CI influence. It is worth noting, however, that not all academic institutions enjoy this same privilege. Due to substantial opposition from faculty members, the University ultimately suspended renewal negotiations and closed the CI.49 Some schools are able to negotiate a better deal with Hanban—one that guarantees academic freedom. Stanford University was offered $4 million by Hanban to host a CI and endow a professorship.50 The University rejected the initial offer since it came with a suggestion that the professor refrain from discussing Tibet, but after renegotiations, Hanban and Stanford University were able to come to an agreement.51 The University would still receive $4 million, and the endowed professor would teach classical Chinese poetry, which by one professor’s account is “convenient for everyone concerned.”52 Because of Stanford University’s highly-esteemed reputation, it was able to negotiate a better deal that minimized academic freedom concerns. Minter, “China’s Soft-Power Fail.” David Volodzko, “China’s Biggest Taboos: The Three Ts,” The Diplomat, 23 June 2015. 43 Ibid. 44 Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses.” 45 Ibid. 46 Harini Jaganathan, “Confucius Institute Protested by Faculty,” The Chicago Maroon, 2 May 2014. 47 Sahlins, “China U.” 48 Ibid. 49 Redden, “Chicago to Close Confucius Institute.” 50 Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses.” 51 Ibid. 52 Ibid. Sahlins, “China U.”

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Academic institutions that do not host CIs are well aware of concerns over academic freedom that come along with CI agreements. June Teugel Freyer, a professor of Chinese government and foreign policy at the University of Miami, told the New York Times how she understood CIs: “you’re told not to discuss the Dalai Lama—or to invite the Dalai Lama to campus. Tibet, Taiwan, China’s military buildup, factional fights inside the Chinese leadership—these are all off limits.”53 Although her university does not host a CI, she said that the rapid growth and potential influence of CIs are regularly discussed among China specialists.54 Freyer’s account speaks to the widespread awareness among academic institutions, even those who do not host CIs, of the risks of taking on such a partnership. Scholars affiliated with, or even loosely connected to, CIs may self-censor their publications and activities out of a fear of retaliation by the Chinese government. There are politically sensitive topics that the Chinese government does not want to be discussed at all known as the “Three Ts”: Taiwan, Tibet, and Tiananmen.55 Some scholars who ignored the Chinese government’s wishes and published on these topics have been blacklisted by Beijing and banned from entering China.56 Perry Link of the University of California and Andrew Nathan of Columbia University have been denied entry into China since the 1990s due to the fact that they were two of the main editors and translators of The Tiananmen Papers, a book describing the 1989 crackdown on the democracy movement in China.57 China has even detained scholars for publishing politically sensitive materials. In April 2017, Chongyi Feng, a scholar who had been vocal about Beijing’s influence in Australian politics, was banned from returning back home to Sydney after a visit to China.58 He was eventually allowed to return home, but the details of his detention are still publicly unknown.59 Although these events have not dissuaded all academics from debating sensitive issues, many have refrained from being outwardly critical of the Chinese government because they worry about the future of their careers.60 Even the United States federal government investigates concerns about academic freedom. In March 2012, the House of Representatives Subcommittee on Oversight and Investigations of the Committee on Foreign Affairs held a hearing pertaining to CIs undermining academic freedom.61 In the hearing, Mr. Rohrabacher, the chairman of the Subcommittee on Oversight and Investigations, described CIs as “penetrating . . . Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses.” Ibid. 55 Volodzko, “China’s Biggest Taboos.” 56 The Editorial Board, “Blacklisting Scholars,” The New York Times, 17 July 2014. 57 Ibid. 58 Kevin Lui, “An Australian Professor Has Been Reportedly Barred From Leaving China,” Time, 26 March 2017. 59 Jacob Saulwick, “Sydney Academic Chongyi Feng Returns to Australia, Commits to Continuing His Work in China,” The Sydney Morning Herald, 3 April 2017. 60 Ibid. 61 U.S. Congress, House of Representatives, Subcommittee on Oversight and Investigations of the Committee on Foreign Affairs, The Price of Public Diplomacy with China. 53 54

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public education to spread its own state propaganda.”62 In a February 2018 Senate Intelligence Committee hearing, FBI director Christopher Wray shared Senator Marco Rubio’s concerns over CIs’ “efforts to covertly influence public opinion and to teach half-truths designed to present Chinese history, government or official policy in the most favorable light.”63 The fact that these concerns have been discussed in the halls of Congress signals how widespread the opposition has become. The closing of CIs due to academic concerns is not only a phenomenon in the United States. Stockholm University was the first university in Europe to shut down its CI after faculty accused the CI of damaging the University’s academic integrity.64 To mitigate fears that this closure would create a domino effect, official Chinese media outlet Xinhua published an article stating that Stockholm University’s decision to close their CI would not “cause a chain reaction.”65 In France, the CI at Lyon University closed its doors; the Chair of the CI Board of Directors stated, “it seemed that our institutional and intellectual independence became unacceptable to Beijing.”66 Clearly, universities and colleges abroad are similarly concerned that CIs limit academic freedom. Furthermore, these concerns over academic freedom are afflicting colleges and universities in many parts of the world. In a case study of German CIs, Falk Hartig, a professor at Queensland University of Technology, believed that it was “obvious” that scholars would not risk losing money coming from Hanban by covering “anti-China topics.”67 Even at liberal arts universities like Erlangen-Nürnberg in Germany, the deputy director of the CI said that CIs may not be the correct venue to debate sensitive issues like Tibet, and such topics were better left to Sinology departments.68 At Sydney University in Australia, a scheduled trip of the Dalai Lama was canceled to avoid jeopardizing CI funding sources.69 These concerns have brought about significant opposition; concerns were so severe in Canada that the Canadian Association of University Teachers called for all academic institutions to sever ties with their CIs due the “fundamental violation of academic freedom.”70 In Israel, a judge concluded that Tel Aviv University violated freedom of expression by shutting down a student-organized Falun Gong oppression art exhibition.71 It was revealed that the University acted in this way out of fear that the Ibid. Elizabeth Redden, “The Chinese Student Threat?,” Inside Higher Ed, 12 February 2018. 64 Sahlins, “China U.” Sahlins, Confucius Institutes: Academic Malware, 52. 65 Roger Greatrex, “Letter of Protest at Interference in EACS Conference in Portugal, July 2014,” European Association for Chinese Studies, 30 July 2014. 66 Sahlins, “China U.” Sahlins, Confucius Institutes: Academic Malware, 49. 67 Falk Hartig, “Confusion about Confucius Institutes, Soft Power Push or Conspiracy? A Case Study of Confucius Institutes in Germany,” Paper presented at the 18th Biennial Conference of the Asian Studies Association of Australia, Adelaide, Australia, July 2010. 68 Sahlins, “China U.” 69 Agencies in Canberra, “Sydney University Criticized for Blocking Dalai Lama Visit,” The Guardian, 18 April 2013. 70 Canadian Association of University Teachers, “Universities and Colleges Urged to End Ties with Confucius Institute,” 17 December 2013. 71 Peter Schmidt, “At U.S. Colleges, Chinese-Financed Centers Prompt Worries About Academic Freedom,” The Chronicle of Higher Education, 17 October 2010. Omid Ghoreishi and Jason Loftus, “Former McMaster Confucius Institute Teacher Seeks Asylum in Canada,” The Epoch Times, 26 August 62 63

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exhibit would jeopardize CI support.72 Therefore, academic institutions that host CIs still struggle to find a balance between the benefits of acquiring much-needed resources and the very real concerns about limits to academic discourse. CI censorship was evident in a European Association for Chinese Studies (EACS) Conference in Braga, Portugal. Upon orders from Xu Lin, the Director-General of Hanban, portions of the EACS Conference program were deleted after the conference had commenced.73 The president of EACS was outraged, stating in a letter that the “seizure of conference materials and deletion of pages in an unauthorized manner . . . was extremely injudicious.”74 He continued on to say that “providing support to a conference does not give any sponsor the right to dictate parameters to academic topics or to limit open academic presentation and discussion, on the basis of political requirements.”75 This event, now referred to as the “Braga Incident,” confirmed what many people already suspected: CIs subvert academic freedom.76 Scholars are not the only ones who feel pressured to self-censor. Chinese students were upset to find that the London School of Economics hosted a CI because these students felt that they were under Chinese surveillance, even abroad.77 Arthur Waldron, a professor of international relations at the University of Pennsylvania, notes that “Chinese embassies and consulates are in the business of observing Chinese students,” and since CIs answer to the CCP, academic institutions should think twice before inviting CIs onto their campuses.78 By hosting a CI, Chinese students may feel the need to censor their own academic discourse due to the fear that the CI is monitoring them. The secrecy of the arrangements between each local academic institution and CI only exacerbates academic freedom concerns. The agreements themselves have nondisclosure clauses, barring anyone familiar with the agreement from publicizing its content.79 Even early negotiations with CIs do not involve senior faculty who conduct research on Asian affairs. A member of the faculty at the University of Oregon found out that the University was hosting a CI only after it came out in the press; the professor stated that the whole process of hosting a CI was conducted under an “orchestrated silence.”80 Even Bruce Cumings, a tenured professor on the board of the University of Chicago’s East Asian study center, was never informed about the University’s agreement to host a CI “until the day it was opened.”81 At the University of Hawaii-Manoa, the Faculty Senate submitted a formal complaint to the administration about being inadequately 2011. 72 Ibid. 73 Greatrex, “Letter of Protest at Interference in EACS Conference in Portugal, July 2014.” 74 Ibid. 75 Ibid. 76 The Wall Street Journal, “Madam Xu’s Party Line,” 25 December 2014. 77 Hughes, “Confucius Institutes and the University,” 45-83. 78 Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses.” 79 Sahlins, “China U.” Sahlins, Confucius Institutes: Academic Malware, 59. 80 Ibid, 55. 81 Guttenplan, “Critics Worry About Influence of Chinese Institutes on U.S. Campuses.”

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consulted about the CI before it was established at the school.82 Faculty members have expressed discomfort with secret negotiations and contracts containing nondisclosure agreements. By directly and indirectly censoring academic discourse at academic institutions, CIs have led faculty members around the world, United States government officials, and Chinese students to fear infringement on their academic freedom. Although this is the main factor causing widespread opposition to CIs, there are other, less significant variables. These alternative explanations are discussed in the next section. Alternative Arguments There are three other alternative explanations that may help explain the reasons for opposition to CIs around the world: academic rigor concerns, hiring practice concerns, and xenophobia. I analyze these three arguments within the context of the previously discussed academic freedom concerns to better understand how they fit into a larger framework for understanding the opposition to CIs. It is possible that concerns regarding the academic rigor of CIs fuels opposition to these institutes. There is a broad understanding among Chinese language teachers in the Washington D.C. area that teachers from China who volunteer to teach at CIs are more interested in traveling abroad than actually teaching.83 This sentiment is not limited to Washington D.C.; China scholars at the University of Pennsylvania rejected the idea of hosting a CI on campus because they did not want a program of inferior pedagogy competing with their own.84 Therefore, academic institutions that already have respectable Chinese language programs may neither have the need nor the desire to host a Chinese language program that has a reputation for lower quality. The Chinese government acknowledges many of these concerns. China’s Minister of Education, Yuan Guiren, said in a 2013 speech that academic institutions hosting CIs are demanding higher quality services from Hanban.85 Even last year, the Deputy Director General at Hanban, Wang Yongli, admitted that CIs have a long way to go and that the level and quality of the Chinese-language education services provided by CIs needs to be improved.86 Christopher Hughes, a professor of international relations at the London School of Economics and Political Science, noted that Chinese citizens often complain that the instructors selected to teach Chinese abroad in CIs are typically poorly trained.87 Thus, concerns about the academic rigor of CIs have been recognized within Hanban. Schmidt, “At U.S. Colleges, Chinese-Financed Centers Prompt Worries About Academic Freedom.” Conversation with a Chinese language teacher in the Washington, D.C. area. 84 Sahlins, “China U.” Sahlins, Confucius Institutes: Academic Malware, 55. 85 Xinhua, “China Inaugurates Confucius Institute U.S. Center in Washington” 21 November 2013. 86 Yongwen Qian, “Exclusive: Looking Forward to Greater Improvements in the Level and Quality of Chinese-Language Education at Latin America’s Confucius Institutes,” Hanban News, Xinhua, 29 May 2016. 87 Hughes, “Confucius Institutes and the University,” 45-83. 82 83

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Despite the concern over the pedagogical quality of CI Chinese teachers, this is a minor concern compared to restrictions on academic freedom. There seems to be more concern coming from the Chinese government than from the academic institutions themselves. This lack of widespread criticism from academic institutions suggests that academic rigor concerns are neither compelling nor unique to CIs. Therefore, while concerns over the academic rigor of CIs are valid, greater controversy stems from concerns over the freedom of academic discourse. A second alternative explanation for the widespread opposition to CIs is Hanban’s hiring practices. In Canada, McMaster University failed to renew its agreement with its CI following a discriminatory hiring complaint filed by Sonia Zhao, a CI instructor.88 Zhao claimed that the university was “giving legitimation to discrimination” because she was forced to conceal her belief in Falun Gong under her CI work contract.89 Beyond religious beliefs, there is evidence that Hanban discriminates based on age, disability, and political beliefs when awarding contracts.90 This incident led to the closure of the CI at McMaster University. Andrea Farquhar, McMaster’s assistant vice-president of public and government relations, confirmed that the decision was due to Hanban’s hiring practices, saying “it’s really about the hiring decisions, and those decisions were being made in China.”91 Opposition to CIs based on hiring practices actually aligns with concerns regarding CIs’ academic freedom. While it is permissible in China to refuse to hire someone due to their belief in Falun Gong, such discrimination is not tolerated in Canada. By selecting teachers based on their religious and political beliefs, China is essentially discriminating against teachers with beliefs that run contrary to the Chinese government line during the hiring process. This results in a lack of ideological diversity among CI teachers, which further censors certain beliefs from CI classrooms. If a teacher cannot practice or teach about Falun Gong, then the values of academic freedom are breached. A third alternative cause of the widespread opposition to CIs is xenophobia. It is hard to ignore the fact that most of the highly publicized opposition to CIs comes from Western countries. This has led to some questions about the role of race in the widespread opposition to CIs.92 There was tension at a 2014 school board meeting regarding a Confucius Classroom in Hacienda Heights, California, during which protestors held up signs with slogans such as “America, not Confucius.”93 This reaction came from the same community that opposed the construction of a Buddhist temple on the hillside in the 1980s over fears that animals would be sacrificed and the chime of gongs would Sahlins, “China U.” Ibid. 90 Hughes, “Confucius Institutes and the University,” 45-83. 91 James Bradshaw and Colin Freeze, “McMaster Closing Confucius Institute Over Hiring Issues,” The Globe and Mail, 7 February 2013. 92 Eric Olander, Cobus van Staden, and Falk Hartig, “Chinese Cultural Diplomacy in Africa: A China in Africa Podcast,” 18 April 2015. 93 Jacob Adelman, “Chinese Government Classroom Grant Divides S. Calif. Community Suspicious of Motivation,” The Gaea Times, 24 April 2010. 88 89

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disturb the peace.94 Jane Shults, a middle school history teacher from the area, said the protests are not rational and are actually xenophobic.95 This event suggests that racist and nativist beliefs may in fact play a role in perpetuating CI opposition. The xenophobic fervor seen in the Hacienda Heights community cannot be ignored, but it should also not be overstated. It would be dishonest to suggest that xenophobia plays no role in some of the CI opposition, especially given the variety of ideologies held by CI critics, but widespread CI opposition seems to be mostly directed at the Chinese government, not necessarily at Chinese people. Copenhagen University in Denmark rejected a CI in 2006, with the Dean for Academic Research at the time explaining that they “prefer to collaborate directly with Chinese academics at Chinese universities, rather than collaborate directly with the Chinese government.”96 In fact, even the University of Chicago, which experienced a high-profile case against its own CI, continues to maintain a University of Chicago Research Center in Beijing.97 The fact that institutions like the University of Chicago or Copenhagen University seek and maintain ties with China through alternative avenues provides evidence that they are not discriminating against Chinese people but rather are opposing the structure and academic restrictions of CIs. These three alternative explanations, while helpful in understanding widespread opposition to CIs, play a relatively minor role compared to opposition fueled by academic freedom concerns. Hanban is more worried about lack of academic rigor than academic institutions are. Hiring practices amplify concerns regarding academic freedom. Although xenophobia may in fact affect CI opposition, academic institutions’ willingness to engage with China in other ways suggests that such xenophobia also plays a minimal role in widespread CI opposition. In summary, these three alternative explanations are relatively inconsequential in comparison to the widespread concerns surrounding CIs’ restriction of academic freedom. Discussion Despite widespread opposition to CIs in the United States and around the world, CIs continue to multiply. This is partly due to the fact that hosting CIs can bring an academic institution additional revenue. In recent years, there has been a 47 percent decline in U.S. government funding for language training and area studies programs.98 The additional resources from CIs have made U.S. higher learning institutions more heavily dependent on Chinese money.99 Colleges and universities that are financially independent may not need extra funding from Hanban, but academic institutions that are struggling financially are more inclined to agree to host a CI in order to add more Ibid. Ibid. 96 Sahlins, “China U.” Sahlins, Confucius Institutes: Academic Malware, 51. 97 Center in Beijing, The University of Chicago, Internet, https://www.uchicago.edu/research/center/ center_in_beijing/ (date accessed: 21 October 2018). 98 Sahlins, “China U.” 99 Ibid. 94 95

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revenue to the their insufficient budgets. For instance, it was the University of Montana’s “institutional poverty rather than . . . greed” that motivated them to establish a CI.100 Terry Russell, the director of Asian Studies at the University of Manitoba, argues that funding is, in fact, the primary reason that academic institutions decide to open a CI, stating that “It’s not a huge amount of money, but for some [universities] it could be the difference between having a Chinese studies programme and not having [one].”101 Russell believes that there will always be institutions willing to capitalize on Hanban’s resources.102 Besides the direct financial leverage, CIs may have additional leverage on publicly-financed state universities. When North Carolina State University canceled a scheduled visit of the Dalai Lama, the provost, Warwick Arden, cited China as being “a major trading partner for North Carolina.”103 For a university affiliated with a state with substantial economic ties to China, it may not be in that university’s best interest to criticize, let alone shut down, a CI because of a difference of opinion regarding the Dalai Lama. As long as China remains a large trading partner with individual states, it may become harder to resist CIs’ demands at state universities. As CIs actively censor academic topics, one might wonder if CIs are strictly a soft power initiative. North Carolina State University’s decision to change its academic plans— due to the fear stemming from the potential economic consequences on the university or state—signals that economic power plays a vital role in CIs’ activity. Moreover, the Braga Incident, where pages of conference materials were physically deleted, is not in line with the soft power principles of attractiveness and persuasion but is rather more similar to coercive hard power. While some pundits believe that CIs are meant to expand Chinese soft power, the high-profile opposition cases have proven that some CIs are actually detrimental to China’s image.104 The fact that CIs employ these economic and coercive tactics signifies that China moves beyond the principles of soft power to achieve their goals, thereby challenging the narrative that CIs are strictly a soft power initiative. Additionally, as more highly selective schools, such as Stanford University, host CIs, other schools may be more willing to sign an agreement with Hanban. A dean at George Washington University stated that the University of Chicago’s adoption of a CI before the CI’s eventual closure increased George Washington University’s comfort level with hosting a CI.105 The acceptance of CIs by top-tier institutions could prompt 100 Robert Kapp, Jeffrey Wasserstrom, Perry Link, Winston Lord, Jerome A. Cohen, Isabel Hilton, Jonathan Mirsky, Steven I. Levine, David Wertime, Matteo Mecacci, David Schlesinger, Shai Oster, Edward Friedman, Carsten Boyer Thøgersen, and Sebastian Heilmann, “The Debate Over Confucius Institutes,” ChinaFile, Internet, http://www.chinafile.com/conversation/debate-over-confucius-institutes (date accessed: 21 October 2018). 101 Jon Marcus, “West’s Universities Reconsider China-Funded Confucius Institutes,” Times Higher Education, 4 April 2013. 102 Ibid. 103 Sahlins, “China U.” 104 Zhou and Luk, “Establishing Confucius Institutes." 105 Sahlins, “China U.” Sahlins, Confucius Institutes: Academic Malware, 59.

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other schools to open CIs as well, thus creating a domino effect. When looking at the data, however, the domino effect hypothesis seems to be disproved. Figure 4 shows the number of CIs in the United States increasing, but they are doing so at a decreasing rate, thus proving that the growth of CIs in the United States is slowing. Some academic institutions may have indeed been more willing to sign an agreement with Hanban due to the influence of Hanban’s past agreements with prestigious schools, but there seems to be little evidence in support of this domino phenomenon. Since the CIs’ restriction of academic freedom has prompted a number of host colleges and universities to terminate their CI agreements, Hanban will face an uphill battle in extending its influence worldwide.106 Figure 4. Total number of Confucius Institutes in the United States

CIs may also affect the reputation of the United States. One of the United States’ competitive advantages in the world lies in its deeply respected higher education—even Xi Jinping sent his daughter to Harvard.107 Due to the increasingly negative reputation of CIs, by hosting a growing number of CIs in the United States, the global image of U.S. higher education could diminish if people believe the narrative that U.S. academic institutions are compromising academic freedom for economic resources. Students already question if paying such high tuition in the United States is worth the degree, and if CIs continue to multiply in the United States, fewer people may be willing to pay the steep tuition fees at colleges or universities that host CIs due to their limits on intellectual freedom and sub-par programs.108 Pan, “Confucius Institute: Promoting Language, Culture and Friendliness.” Evan Osnos, “What Did China’s First Daughter Find in America?,” The New Yorker, 6 April 2015. 108 John W. Schoen, “Why Does a College Degree Cost So Much?,” CNBC, 16 June 2015.

106 107

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CIs could prove to be a useful stepping stone in pushing other Chinese foreign policy objectives. In the online CI magazine that commemorated the 11th CI Conference, one of the articles was titled “Confucius Institute: A key player in the implementation of the ‘Belt and Road’ Initiative.”109 In the article, the Vice Minister of Education and Executive Council Member of Hanban, Hao Ping, said that CIs will meet the overall requirements for the development of the “Belt and Road” initiative.110 It is important to note that China has more CIs in the United States than in any other country. While China’s “Belt and Road” initiative is limited to Eurasia, it will be interesting to observe which foreign policies, if any, will permeate CIs in the United States. Although perhaps unanswerable at this point, it will be necessary to monitor how China implements broader foreign policy goals through CIs. It is hard to know under which circumstances an academic institution should refuse external funding. Academic institutions require resources from multiple funding streams, but a problem emerges when colleges and universities accept outside funds that come with too many strings attached. In an imperfect analogy, would it be appropriate to accept money from Vladimir Putin if he were willing to sponsor a Russian Studies Center on the condition that Crimea and Ukraine could not be discussed?111 Moving forward, it will be important to discuss when it is reasonable to accept external funding sources. In order for CIs or host institutions to mitigate academic freedom concerns, Shai Oster, an award-winning Bloomberg reporter, suggests taking CIs out of the academic institutions or taking the government out of CIs.112 Taking CIs out of the academic institutions would make them more comparable to British, French, or German language and culture centers, which are housed outside of established colleges or universities. Alternatively, taking the government out of CIs would ease many critics’ concerns about CIs toeing the party line; however, since CIs are a Chinese government initiative, taking the government out of the CIs is extremely unlikely. Moreover, Avery Goldstein, the director of the Center for the Study of Contemporary China at the University of Pennsylvania, suggests crafting a “best practices” agreement among colleges and universities that focus on CI issues.113 Through collaboration, academic institutions could be better able to successfully negotiate with Hanban. Oster’s and Goldstein’s suggestions could potentially mitigate concerns regarding a lack of academic freedom at CIs, but Hanban would likely have a difficult time accepting these terms since Hanban benefits from negotiating independent agreements with each institution.

109 Confucius Institute, “Confucius Institute: a key player in the implementation of the ‘Belt and Road’ Initiative,” 11th Confucius Institute Conference 4B, no.1 (2017). 110 Ibid. 111 Jon Mahoney, “Guest Editorial: Some Questions About the Confucius Institute,” University Wire, 27 March 2015. 112 Kapp, et al., “The Debate Over Confucius Institutes.” 113 Ibid.

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While this paper analyzes the key variables that cause widespread CI opposition, it would be interesting to further examine the extent to which CIs are accomplishing their intended goals. The negative reactions to CIs are well understood, but the extent to which the Chinese government benefits from CIs remains unclear. Since China must expect to receive returns on its investments in CIs around the globe, quantifying and qualifying these returns may be a fruitful avenue for additional research. The CI website clearly shows where CIs exist, but it does not disclose which schools have refused to host CIs. This paper provides a rare glimpse into where CIs have failed to take root. According to Hanban, outside institutions apply to host CIs, but Hanban actively courts certain institutions as well.114 For example, conversations with faculty at Georgetown University revealed that Hanban wanted to establish a CI within the University, but this proposal was rejected.115 This refusal occurred without the fanfare that took place at other academic institutions, and most of the general public were unaware of these conversations. It would therefore be interesting to calculate the rate at which Hanban’s offers were accepted by targeted institutions. Marshall Sahlins has collected data through the public domain or personal communications to create a short list of institutions that have rejected CIs, but a more comprehensive study surveying all of the universities and colleges in the United States would provide the necessary information to identify patterns in Hanban’s selection criteria and comprehensively analyze which colleges and universities decide to accept versus reject hosting CIs.116 Further research would elucidate the intentions and activities of CIs in the United States. Conclusion Although there are many reasons why an academic institution may refuse to host a CI, this paper has shown that widespread CI opposition mainly stems from concerns regarding CIs’ restrictions of academic freedom. These concerns are consistent among faculty members in both the United States and abroad and have even permeated the U.S. government. Chinese students have also felt that their privacy has been compromised while attending schools with CIs. By directly and indirectly censoring academic discourse at academic institutions, CIs have received considerable backlash in the United States and around the world. There are three other minor factors that have contributed to CI opposition. Concerns over academic rigor have caused Hanban officials to admit that teaching pedagogy must improve. Hanban’s hiring practices have also caused a Canadian CI to close, which echoes similar concerns about limiting academic freedom. Thirdly, xenophobia may play a role in opposition to CIs. However, there remains considerable interest among academic institutions to acquire partnerships with Chinese institutions to increase external funding, which suggests that xenophobia plays a minor role in explaining CI opposition. Paradise, “China and International Harmony," 647-669. Conversations with Georgetown University Faculty. 116 Sahlins, “China U.” Sahlins, Confucius Institutes: Academic Malware, 60. 114 115

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Regardless of CIs’ intentions, CIs are widely perceived as violating academic freedom. This not only negatively impacts China’s image but may also compromise the reputation of the U.S. education system. One of the United States’ competitive advantages lies with its greatly revered higher education system. Yet the increase in CIs across the country, and their reputation for violating academic freedom, may have repercussions on the perceived quality of Chinese language programs—and perhaps institutions of higher learning—within the United States. In addition, CIs have been known to push foreign policy objectives in Asia, particularly relating to the “Belt and Road” initiative. In the future, it will be important to monitor which foreign policy objectives, if any, China plans to promote within CIs situated in the United States. This prompts a larger question regarding the value of China’s financial investments in CIs: Is China getting the desired returns on its investment in CIs? This question, along with examining where and under which conditions colleges and universities have refused to open CIs, may be interesting avenues for future research. In summary, widespread CI opposition among faculty members and government officials may prevent Hanban from achieving its goal of establishing 1,000 CIs around the world by 2020. The rapid expansion of CIs since the establishment of the first CI in 2004 is an impressive feat for Hanban and the Chinese government; however, if China wants to continue to expand its global influence, it will need to rise to higher standards and represent itself as a language and culture institution that values the academic freedoms articulated by many of its host institutions. Until these host institutions are assured that CIs will contractually commit to protecting academic freedom, CIs will continue to encounter opposition to their initiatives.

Andrew Switzer received his Master of Arts in Asian Studies from Georgetown University’s Edmund A. Walsh School of Foreign Service in Washington, D.C. His research focuses on Chinese politics and security, cross-cultural negotiation, and quantifying soft power.

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Nye, Joseph S. “The Information Revolution and Soft Power.” Current History, 113 (2014): 19-22. Olander, Eric and Cobus van Staden, Falk Hartig. “Chinese Cultural Diplomacy in Africa: A China in Africa Podcast.” 18 April 2015. Osnos, Evan. “What Did China’s First Daughter Find in America?” The New Yorker. 6 April 2015. Pan, Letian. “Confucius Institute: Promoting Language, Culture and Friendliness.” Xinhua. 2 October 2006. Paradise, J. F. “China and International Harmony: The Role of Confucius Institutes in Bolstering Beijing’s Soft Power.” Asian Survey 49, no. 4 (July/August 2009). Powell, Dina and Barry Lowenkron. “National Security Language Initiative: Fact Sheet.” Office of the Spokesman. U.S. Department of State. 5 January 2006. Qian, Yongwen. “Exclusive: Looking Forward to Greater Improvements in the Level and Quality of Chinese-Language Education at Latin America’s Confucius Institutes.” Hanban News. Xinhua. 29 May 2016. Redden, Elizabeth. “Another Confucius Institute to Close.” Inside Higher Ed. 1 October 2014. _____. “Chicago to Close Confucius Institute.” Inside Higher Ed. 26 September 2014. _____. “The Chinese Student Threat?” Inside Higher Ed. 12 February 2018. Sahlins, Marshall. “China U.” The Nation. 30 October 2013. _____. Confucius Institutes Academic Malware. (Chicago: Prickly Paradigm Press, 2015). Saulwick, Jacob. “Sydney Academic Chongyi Feng Returns to Australia, Commits to Continuing His Work in China.” The Sydney Morning Herald. 3 April 2017. Schmidt, Peter. “At U.S. Colleges, Chinese-Financed Centers Prompt Worries About Academic Freedom.” The Chronicle of Higher Education. 17 October 2010. Schoen, John W. “Why Does a College Degree Cost So Much?” CNBC. 16 June 2015. “South Korea ‘Suspends Visas’ for Chinese Teachers at Confucius Institutes.” South China Morning Post. 1 February 2017. The Editorial Board. “Blacklisting Scholars.” The New York Times. 17 July 2014. U.S. Congress. House of Representatives. Subcommittee on Oversight and Investigations of the Committee on Foreign Affairs. The Price of Public Diplomacy with China: Hearing before the Subcommittee on Oversight and Investigations of the Committee on Foreign Affairs. 112th Cong. 2nd sess. 2012. Volodzko, David. “China’s Biggest Taboos: The Three Ts.” The Diplomat. 23 June 2015.

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Walden, Jamie. “Confucius Institute Helps Arkansas Companies Go Global.” Arkansas Business. 13 October 2008. Kissinger Institute on China and the United States. “Xi’s Statements on Education.” Wilson Center. https://www.wilsoncenter.org/xis-statements-education. Xinhua. “Xi Eyes More Enabling International Environment for China’s Peaceful Development.” 30 November 2014. Yeoh, Emile Kok-Kheng. “The Quarter-Century Legacy of June Fourth: Prospects and Challenges in the Struggle of Post-1989 Dissent and Nonviolent Action in the People’s Republic of China.” International Journal of China Studies 5, no. 2 (June/August 2014). Zhou, May. “In U.S., Demand Surges for Mandarin Lessons.” China Daily. 10 April 2017. Zhou, Ying and Sabrina Luk. “Establishing Confucius Institutes: A Tool for Promoting China’s Soft Power?” Journal of Contemporary China 25, no. 100 (2016): 59.

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CALL FOR PAPERS The Journal welcomes original social science research papers written on issues relevant to politics, security, economy, culture, and society of contemporary Asia, including Pakistan and Afghanistan. “Contemporary� is understood broadly as recent, but not necessarily as current. We are pleased to consider articles with historical background sections so long as such analyses are crucial for advancing core arguments.

SUBMISSION GUIDELINES Submissions should be emailed to gjaa@georgetown.edu as MS Word documents. Please do not submit in PDF format. Authors should include a short bio in the email text, but must avoid any self-identification in the manuscript as we send our articles out for anonymous review. Document: Manuscripts must be typewritten and double-spaced in Microsoft Word, with 1-inch/2.5-centimeter margins on all sides. Length: Manuscripts should be 5,000-7,000 words in length. Style: Authors must follow The Chicago Manual of Style, 16th ed. Citations: All citations must be formatted as footnotes. Please also include a full bibliography at the end. Abstract: Authors must include an abstract (100-200 words) that effectively and concisely summarizes his/her study. *Submissions must not be plagiarized, copyrighted, or under review elsewhere.


Kania | China's AI Ambitions

interviews China's AI Ambitions

An Interview with Elsa B. Kania

In July 2017, China announced an ambitious plan for the country to become a global leader in artificial intelligence (AI) technology with the aim of creating an industry worth $150 billion by 2030. The plan includes detailed actions to apply AI to various fields, including public security, transportation, manufacturing, and military. The Journal sat down with Elsa B. Kania, an adjunct fellow researching Chinese defense innovation and emerging technologies at the Center for a New American Security (CNAS), to discuss the reality of China’s AI advances, comparisons in AI developments between the United States and China, and key challenges that remain in China’s rise as a major player in AI. Ms. Kania also discussed her latest report, Battlefield Singularity, which explores how China plans to leverage AI technology for military applications.

Journal: China’s approach to AI is, as you have written in The Diplomat, “often hyped and sensationalized, variously provoking alarm and enthusiasm that can sometimes overshadow the reality of real progress.” One of the most widely reported fears is that of an “AI-overseen human population,” in which a “bad social credit” would be grounds for banning people from using public services such as transportation. What is the reality of this policy on credit-related offenses? Kania: Certainly it is very clear in Chinese plans and policies that the Chinese Communist Party (CCP) and state are very much focused on the utility of big data and artificial intelligence to ensure social control and preserve social stability. Whether in policing, censorship, or surveilance, there are some clear applications, though the degree of efficacy of these measures – or ways in which these tactics may backfire – remains to be seen. The obvious comparison people make for the social credit system is a Black Mirror episode, which is not entirely inaccurate but perhaps not the best metaphor.1 See Rogier Creemers’ recent paper on the topic for a nuanced analysis: “China’s Social Credit System: An Evolving Practice of Control,” May 22, 2018, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3175792 1

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The basic idea behind it is the ability to both respond to certain market failures and to reshape behavior and incentives in more far-reaching ways. In certain respects, the average Chinese citizen or consumer may find the system helpful or convenient—if it makes it easier for money to be lent and borrowed, through giving a better sense of who is credit-worthy. It is not a phenomenon entirely unique to China—another imperfect analogy would be credit scores and how all of us in the United States and other democracies are also scored and ranked by algorithms in various aspects of our lives. But while the system is varied and not fully transparent at this point—and may continue to evolve as it is implemented—what is inherently different is the underlying objective of changing people’s behaviors through creating different incentives.2 Journal: Ethnic tensions with the indigenous Muslim Uighurs in the Xinjiang Autonomous Region of western China have persisted for decades. However, in the past couple years, the CCP has been increasing the persecution of this Turkic-speaking group, a process in which digitized surveillance has played a major role. From your perspective, are concerns regarding China’s increasing authoritarian measures via AI, or, in other words, China becoming a surveillance state, credible? Kania: These concerns are very credible and quite troubling. Xinjiang is perhaps becoming a testing ground for a lot of techniques and technologies, given the intensity of those security concerns. By all accounts, surveillance has become quite pervasive, with local authorities undertaking the collection of different types of biometric data, as Human Rights Watch’s work has indicated, collecting much more detailed, granular information on every individual and seeking to scale up that sort of invasive surveillance.3 There is also certainly a major focus on big data, utilizing techniques to essentially enhance and modernize the coercive capability of the state. It is also important to note that there is a definite human dimension to this surveillance and the coarseness of state authority, including the detention of, by some estimates, hundreds of thousands, if not close to a million, of people in these centers.4 I expect Xinjiang will continue to be a pilot for a lot of these techniques and technologies, which could eventually be deployed more widely within China going forward. The maturity of these approaches and their actual efficacy on the ground will be harder to evaluate from the outside. I think it is another question entirely whether an over-reliance upon them could also create challenges for the state in the future. In many respects, the Chinese government’s approach in Xinjiang may backfire. Already, there is evidence that these policies of repression are starting to engender radicalization. For another authoritiative discussion, see: “Shazeda Ahmed on China’s Social Credit System,” Mercator Institute for China Studies, September 28, 2017, https://www.merics.org/en/podcast/shazeda-ahmed-chinas-social-credit-system. 2 Please see Samantha Hoffman’s research on these issues, including a report on the topic that is forthcoming. 3 “China: Big Data Fuels Crackdown in Minority Region,” Human Rights Watch, Feburary 26, 2018, https://www.hrw.org/news/2018/02/26/china-big-data-fuels-crackdown-minority-region. 4 Simon Denyer, “Former inmates of China’s Muslim ‘reeducation’ camps tell of brainwashing, torture,” Washington Post, May 17, 2018, https://www.washingtonpost.com/world/asia_pacific/formerinmates-of-chinas-muslim-re-education-camps-tell-of-brainwashing-torture/2018/05/16/32b330e85850-11e8-8b92-45fdd7aaef3c_story.html?noredirect=on&utm_term=.e9987b1e3c90

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Evidently, a lot of these trends are not necessarily unique to China, given that the capabilities these technologies promise will be used by regimes and governments of all types around the world. There is a growing community that is deeply concerned about the use of big data and algorithms in policing in the United States and elsewhere around the world, such as recently in the case of Palantir. While the use of surveillance technologies is not unique to China, the differentiation I would make is that systems in democracies are being implemented under the rule of law, with a legal regime that has protections in place, relative to the use of these technologies in a targeted or opaque way, such that those who are caught up may not be guilty in a sense that is universally recognized as legitimate in terms of such targeting. Looking forward, the question of what this means for democracy is deeply troubling. Increasingly, regimes and governments of different types will have access to the capability to track and surveil people with much greater precision and granularity. The U.S. government and many others may use this for security and counterterrorism. The Chinese government would also claim to be pursuing “counterterrorism” in the case of Xinjiang, but the difference is whether these capabilities are being exercised in a way that is appropriate and legitimate. Journal: With funded plans and strategies, as well as dedicated research parks, current Chinese efforts appear to be aimed at helping the country make progress in AI innovation and deployment. Could you highlight some key areas in which China is making progress, perhaps areas that the United States may not be as focused on? What are some similarities and differences in AI ambitions between the United States and China, especially regarding data and privacy? Kania: To start, there has been a major divergence between the U.S. and Chinese approaches on the policy side of things. And it is actually very ironic, because there was significant momentum to craft and implement a comprehensive AI policy after the U.S. Office of Science and Technology Policy released the National Artificial Intelligence Research and Development Strategic Plan in fall 20165 – but so far as I can tell, there hasn’t been a lot of follow-through or implementation. In contrast, the Chinese government seems to have taken those efforts fairly seriously. Some of what we have seen since from China in terms of AI policy may have been informed or inspired by those initial U.S. efforts, such as a focus on workforce issues, and targeted funding to selected areas of research and development is also common across those plans, such that one might even say Chinese policymakers may have copied some of those elements. China has very rapidly elevated AI as a high-level priority. In mid-2016, when Beijing released the National Science and Technology Innovation Plan, it announced 15 different technological megaprojects prioritized for advancement by 2030.6 This included items like big data, robotics, and quantum computing and communications, but it didn’t explicitly list AI at the time. Later that year, AI was added to the list—partly in National Science and Technology Council, “The National Artificial Intelligence Research and Development Strategic Plan,” October 2016. 6 The State Council, “China to Boost Scientific and Technological Innovation,” August 8, 2016.

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response to concerns that the United States was about to embark upon a major initiative, and also partly in response to AlphaGo, which defeated Lee Sedol in the spring of 2016. AlphaGo’s victory was a major milestone in AI that occurred perhaps a decade sooner than anyone would have expected, highlighting how rapidly this technology is advancing. Go is a game that has some salience and meaning in Chinese culture, and given the fact that Western AI defeated the world’s top players and that Deep Mind was later acquired by Google—even though it played under the U.K. rather than U.S. flag—this was seen as a major indicator of the rapid advances in and potential significance of AI. The event also highlighted the fact that China, despite the tremendous dynamism of a number of Chinese technology companies, was behind some of the most cutting-edge advances. I think it is funny because the perception has shifted from “China can’t innovate; China is just copying and stealing technologies,” to alarm that, ‘China already beating the U.S. in everything,’ which is not true by most accounts. China has emerged as a powerhouse in AI. If you look at metrics on the number of patents and publications, quantitatively China surpassed the U.S. as early as perhaps 2014. Certainly, quantitative indicators aren’t necessarily the most significant. It is hard to measure or evaluate with granularity the quality of that research. However, there also are several other more descriptive indicators. For instance, there is an increasingly high proportion of researchers from mainland China participating in international conferences. When a major machine learning conference conflicted with Chinese New Year, it had to be rescheduled, because there was a critical mass of participants who otherwise wouldn’t be able to make it. In a number of international competitions, Chinese teams have placed at the top. When IARPA (the Intelligence Advanced Research Projects Agency) held a competition for image and facial recognition, a Chinese startup, Yitu Technology, placed first.7 There has been a lot of talk about AI as a technology race between the U.S. and China, or even an arms race. But I don’t think that is the most accurate description. It seems unlikely that any singular actor—be that a corporation or a nation state—will truly “lead” in all things AI, because it is such a disparate technology. There will likely be niches of strength and excellence in the U.S. and in China and in companies around the world. For instance, Chinese startup companies are strong in facial recognition, and there are more Chinese startups focused on AI-enabled education than there are in the U.S. Given the fact that AI is often open-sourced, it can diffuse fairly regularly, and this dynamic can also lower the barriers of entry. Even smaller countries like Israel can be leaders in the field. So I don’t think it makes sense to talk about AI as an arms race. AI is not a weapon. It is an enabling technology with impact well beyond military applications, which are one among many ways in which AI could be transformative. It is hard even to know the best way to measure progress in AI. But I think it is clear that China has a fairly strong foundation in terms of the current level of advancement. Beijing is increasingly leveraging the efforts of top companies such as Baidu, Alibaba, Tencent, iFlyek, and Horizon Robotics. The state has thrown a lot of support and 7 Boehnen, Chris, et al. “The 2017 IARPA Face Recognition Prize Challenge (FRPC).” U.S. Department of Commerce, National Institute of Standards and Technology. November 2017.

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resources behind them in a way that could accelerate advances. For instance, there are high levels of funding both from the central governments and local governments through different investment mechanisms for research and development. It is a meaningful indicator that funding for Chinese AI startups surpassed that for U.S. AI startups as of 2017, so there is a lot of money going into the field, and that is significant. The flip side is that there are concerns that there may even be an “AI bubble”—that there may be even too much money, and we could eventually reach the end of a hype cycle and an AI winter that would result in a drawback of the amount of funding and enthusiasm. On the policy side of things, the United States would benefit from a fairly comprehensive approach, including, most importantly I would say, a focus on education and recognition of the importance of human capital. Today, human capital is one of the greatest and most enduring advantages for the U.S. The critical mass of the world’s top AI talent is here and a lot of the top universities are here, but China is seeking to shift that balance. A recent plan released by the Chinese Ministry of Education focused on higher education in AI, as well as the establishment of AI as an academic discipline, and having a range of universities set up majors or even dedicated research institutes in AI. That will be one of the most important things to watch going forward. Certainly throwing money at something is one thing, but another is actually building worldclass research institutions that can train students who can go on to become leaders in the field, while also attracting enough professors and educators to build up that pipeline. There are new programs like Kai-Fu Lee’s initiative, an AI-training program in partnership with China’s Ministry of Education, which aims to educate hundreds of teachers and thousands students within the next few years—that reflects notable initiatives often involving public-private partnerships of sorts. For the time being, the United States still has the advantage in talent, but the Chinese government either is able to recruit people through targeted talent plans or, in some cases, benefit from the fact that increasingly researchers see greater opportunities associated with returning. It remains to be seen if China’s approach will pay off, and it is another conversation entirely whether or not innovation and authoritarianism can be reconciled. A number of measures that the Chinese government is taking—for example, greater control and assertion over tech companies—reflect the party-state’s priorities and paranoias in ways that may be less than conducive to some of their long-term objectives. Beijing can perhaps compensate for that through the mobilization of resources, but there are certain underlying impediments to creativity and to risk-taking, especially when the Party can be rather capricious in how it responds to various incidents and dynamics. With regard to AI policy in China, it is also worth noting that these plans call for a focus on norms, standards, and regulations for AI, whereas the United States so far has been averse to implementing any regulations and hasn’t yet been all that proactive on norms and technical standards. For China, having that kind of foundation could be a positive thing, insofar as if we see a backlash, for example, against self-driving cars in the U.S., the fact that there aren’t regulations or parameters around liability or safety measures could hinder future developments. So, to a certain extent, China is being Winter 2019 [136]


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proactive and forward-looking on safety and standards in ways that could enable futher progress going forward. Journal: China’s digital platform giants—Baidu, Alibaba, and Tencent (BAT)—are all expanding beyond the country’s borders and increasing investments in AI. Especially in light of the Committee on Foreign Investment in the United States (CFIUS) blocking recent Chinese investments in American businesses, what are arguments for and against China expanding its AI ambitions globally? Kania: This is a very tricky set of issues, because, in the broader context of U.S.-China relations, tensions over tech and trade are intensifying and escalating. The term “trade war” is being thrown around quite a bit these days, and hopefully, there will be ways to walk off that particular precipice before things really go in directions that could be very damaging to both the U.S. and China. Among of the underlying concerns is China’s record of tech transfer, both through licit means, such as acquisitions, and through illicit means, such as human or cyber-enabled industrial espionage. All of that was very well-documented in the Section 301 investigation that came out this March.8 The U.S. is finally pushing back more forecefully on those issues, and arguably, the reforms to CFIUS (the Committee on Foreign Investment in the United States) are overdue and necessary, given that there were a number of loopholes that could be exploited. So the U.S. concerns overall are legitimate, but I worry that some of the solutions proposed could be damaging, if too sweeping and not adequately discriminatory. There is a lot of talk about competition, but it is also important to recognize there’s also a high level of entanglement and cooperation between U.S. and Chinese innovation ecosystems, and often that can be very mutually beneficial. At least for now, we live in a very open, globalized world, which is, on the whole, a very positive dynamic, though there are reasons for concern and to criticize that sometimes Beijing has exploited that openness. For example, there have been cases where even joint laboratories or university research collaborations have started to become concerning or controversial, particularly when one of the Chinese partners involved may have linkages to the state or military that are not fully disclosed or when there is a lack of transparency about the terms of those collaborations. However, as the debates on CFIUS and related issues continue, there may be greater obfuscation of the sources of investments and the linkages of those involved in it. For these issues overall, it is still difficult to evaluate what is a targeted and appropriate response and to find a reasonable approach to evaluate risk. Not every single Chinese investment in the U.S. should raise red flags; a lot of this is primarily commercial, in a world in which such flows of capital and investments are frequent and extensive. Overall, foreign investment into the United States is a very positive thing that U.S. Office of the United States Trade Representative: Executive Office of the President. “Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act of 1974.” March 22, 2018. 8

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enterprises benefit from. I have argued for a more targeted approach that recognizes that this is not all a singular phenomenon. There are cases in which, for instance, investment mechanisms that receive funding from the state or local governments in China engage in investments that seem to be very targeted and in accordance with the priorities articulated in national science and technology initiatives. Some of these investments should raise red flags, perhaps even more so when the investor question may take on a seat on a U.S. company’s board or have more direct involvement in its future direction. I deeply believe that preserving openness and cooperation between the U.S. and China remains important and mutually beneficial. We must examine issues on a case-bycase basis to determine the risks, yet it is difficult to define what constitute sensitive investments in a technology that is very complex and is, at this point, fairly open in its development. Often, algorithms and platforms are even entirely open-sourced—much of this research is quite academic and there is a fair amount of collaboration. So there can be an argument for seeing all of “AI” as sensitive and strategic such that foreign investment, Chinese or otherwise, should be restricted or at least subject to much greater scrutiny. But this approach could also be inadvisable insofar as there could be collateral damage, including to the vitality of the U.S. innovation ecosystem. This is very much the frontline of U.S.-China tensions right now. We will see where things go from here. Journal: Do you think China is well-positioned to pivot to indigenize its AI development efforts if a trade war does break out? Kania: I will leave aside the question of what a trade war may mean in actuality, but if there are, for instance, restrictions on China’s ability to invest in the U.S., to collaborate with U.S. research institutions, or to establish laboratories in the U.S. led by Chinese companies, that could certainly be a hindrance. For instance, Baidu’s motivation for creating its Silicon Valley AI lab reflects the reality that a lot of the top talent is here. Similarly, there are a range of talent bases and recruitment efforts trying to bring back top talent and encourage researchers to return to China and establish startups or work for Chinese companies. To a certain degree, China is still reliant upon what policies have referred to as “international innovation resources,” through drawing upon innovation happening elsewhere in the world, pursuing “going out” types of activities and the “bringing in” of some of those talent and resources to China. It is important to recognize there clearly is truly “Made in China” innovation happening. Beijing, by some accounts, is an environment more conducive to cutting-edge innovation than Silicon Valley. Increasingly, Beijing, Shanghai, Shenzhen, and other major tech hubs in China are very much at the forefront of this. There are thousands of AI enterprises in China today. Still, there is a shortage of talent, and there are shortcomings in Chinese indigenous innovation capabilities. For instance, China is still struggling to develop advanced semiWinter 2019 [138]


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conductors, and there has been recent redoubling of those efforts, as well as attempts to develop new GPUs (graphics processing units), or specialized chips and hardware for AI. That remains an obstacle—that is why you may have heard a lot about the attempts to acquire certain semiconductor firms that are then blocked, because it is a remarkable challenge for China or any latecomer to build the ecosystem required to manufacture advanced semiconductors, despite poaching top talent and acquiring technology. There are still a number of obstacles and bottlenecks in which China is behind the U.S. and reliant upon some of these international engagements, collaborations, and acquisitions. If the U.S. were to introduce a more restrictive series of policies, that approach would do some damage, but I don’t think it would be fatal or permanent by any means. If anything, a lot of these tensions and some of the policies under consideration are motivating Chinese policymakers to redouble their efforts to indigenize core technologies, given growing concerns over the risks and possible dependence upon them. In the long term, this may cause some interesting externalities for the U.S. and China, given that a lot of U.S. tech companies have pursued markets in China and anticipated a lot of opportunities there. NVIDIA, for instance, is selling a lot of its GPUs in China, which are fairly specialized for AI and fairly prevalent at the moment. Certain U.S. companies that are currently engaging in China may lose market share or access entirely if there is a greater push for indigenization. Journal: You’ve written that the People’s Liberation Army (PLA) is “seeking to engage in ‘leapfrog development’ to achieve a decisive edge in ‘strategic frontline’ technologies,” as well as the fact that future “intelligentized” warfare could potentially change the paradigms of military power. Based on your findings, especially in your report, Battlefield Singularity: Artificial Intelligence, Military Revolution, and China’s Future Military Power, how is the PLA seeking such an advantage over the United States? Can you tell us about the advances made in AI by the PLA in pursuit of military advantage over military rivals, and the United States in particular? Kania: The advent of artificial intelligence will enable new capabilities across a range of applications, including national defense, so it is not surprising that the United States, China, Russia, and just about every major military in the world are trying to leverage this potential going forward. There is a range of likely applications, some of which are feasible in the near term and some of which could become more relevant in the longer term. Chinese military strategists anticipate that future warfare will be “unmanned, intangible, and silent,” as well as increasingly “intelligentized” – that is that the character of conflict is transforming information-age warfare to a new era, in which AI may be more critical to military capabilities and future combat power. At present, however, AI is primarily leveraged in supporting functions, such as the use of algorithms in support of intelligence, surveillance, and reconnaissance, such as to process massive amounts of data, imagery, or video footage, as in the Department of Defense’s Project Maven. On the future battlefield, we may see uninhabited systems that are increasingly autonomous or “intelligent” across all domains of warfare. Going forward, remotely-piloted (or “unmanned”) systems may become increasingly autonomous and thus much more [139] Georgetown Journal of Asian Affairs


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capable of operating in denied or contested environments, in which operator control over these systems will likely not be feasible. In particular, a notable application will be swarm intelligence, involving autonomous cooperation and coordination among “swarms” of hundreds or even thousands of drones. Apparently, China is now setting the world record in terms of swarm size, with a reports of a test involving a swarm of 200 drones, though this is not a context in which size matters necessarily. It is hard to evaluate the complexity and sophistication of the algorithms in question, but, in concept, the use of swarming capabilities could, for instance, take out an aircraft carrier through dive-bombing and by saturating its defenses. This notion of a saturation-style attack is one scenario, in which artificial intelligence and autonomy could become quite disruptive on the battlefield. Speaking of autonomous systems, intense concerns have arisen regarding Lethal Autonomous Weapons Systems (LAWS), characterized, by the campaign seeking to ban them, as “killer robots.” This has motivated a lot of pushback and global efforts that are starting to gain more momentum, it seems, after the latest UN Group of Governmental Experts on LAWS. Notionally, China, has espoused its support for a ban on the use of fully autonomous weapons systems. Of course, experts and delegates to this process are still trying to decide how to define what is a lethal autonomous weapons system, despite several years of conversation. Given how rapidly the technology is evolving, even coming up with a consensus definition of what is to be banned could remain a rather complicated endeavor. Ironically, on the same day that China announced its support for a ban in this diplomatic venue, the PLA Air Force announced further details on an upcoming challenge and competition involving fully autonomous swarms of drones. Beyond a lot of these concerns about killer robots or a Terminator scenario, certain impactful applications of AI under development by the Chinese, among other, militaries will be less ‘exciting’ or sensational. For instance, if you are short on linguists and trying to process massive amounts of information, commercial AI technologies, such as natural language processing and machine translation, could prove quite useful. AI can also be leveraged in information operations, in cognitive electronic warfare or through through greater automation of cyber capabilities, whether in defense or offensive operations. The use of big data and AI also have the potential to enable more targeted psychological operations; we have already seen some of this happening at a basic level with bots and micro-targeting. In supporting functions, AI will be useful for logistics, predictive maintenance, and management. Going forward, AI could also have great impact in support of command decision-making or battle management. The title of my report (“Battlefield Singularity”) was firstly an attempt to come up with something more catchy than “AI Dragon” or “AI Revolution with Chinese Characteristics,” but it is also a reference to the notion that, though the trajectory of these technologies are uncertain, future dynamics in warfare could be beyond what the human mind can fully process in real time, given the speed and complexity, as well as the saturation, of information. This raises the question of how Winter 2019 [140]


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AI technologies could best be leveraged to support decision-making that is faster and better, enabling a commander to achieve decision superiority. The title of my report came from the writings of a Chinese defense academic who wondered whether we may see a future “singularity” in warfare given these global trends. I am not saying that “the singularity” is near or coming soon, though it very well may be, and I guess we will find out! There are limitations inherent in these technologies at this point in time, and it will be interesting to see how militaries will calibrate the appropriate balance between human and machine decision-making responsibilities. The U.S. military has talked a lot about human-machine teaming, and the Chinese military is looking at some of the same concepts, while even raising the question of whether AI may one day augment, or even displace, commanders. Of course, at this point, the only certainty is the tremendous uncertainty that remains regarding these capabilities and the vulnerabilities that will likely arise along the way.

Elsa B. Kania is an Adjunct Fellow with the Center for a New American Security’s Technology and National Security Program. She focuses on Chinese defense innovation in emerging technologies in support of the Artificial Intelligence and Global Security Initiative at CNAS, and she also acts as a member of the research team for the new Task Force on Artificial Intelligence and National Security.

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Terry | Shifting Dynamics on the Peninsula

Shifting Dynamics on the Peninsula What is Next for the United States? An Interview with Sue Mi Terry

In July 2017, North Korea tested its first intercontinental ballistic missile (ICBM), demonstrating the possibility of a North Korean nuclear warhead capable of reaching the U.S. mainland. During the eight-month period following the first ICBM test, the international community and particularly, the United States, repeatedly condemned North Korea, implementing sanctions on all exports, affiliated actors and entities, and trading ships. Since January 2018, however, North Korea’s foreign policy has changed. There have been numerous inter-Korean cultural exchanges, overseas visits by high-level North Korean officials, and summits between Kim Jong-un and the Chinese and South Korean heads of state. To understand the shifting situation on the Korean Peninsula, the Journal has invited Dr. Sue Mi Terry, Senior Fellow at the Office of the Korea Chair at the Center for Strategic and International Studies and former analyst on Korean issues at the CIA, to offer her assessment of these developments and provide a big picture. Journal: Considering the complexity of the North Korea issue today, it would be helpful to start off by laying out the relevant stakeholders and their objectives. What are the policies and priorities of the governments of South Korea, the United States, China, Japan, and Russia with regard to the North Korea issue? Terry: I think all of the countries that you listed obviously want North Korea to give up its nuclear weapons program—that is the bottom line that everyone can agree on. That said, there are different priorities for different countries. For the United States, the denuclearization of North Korea is the primary goal. China does not want a nuclear North Korea, but it has other interests that are perhaps more important than just nuclear weapons dismantlement. These include maintaining stability, keeping North Korea as a buffer state, and avoiding a South Korean-led unification that results in a pro-U.S. unified Korea where the U.S. military is still present. So while China does not want a nuclear North Korea, there are other concerns that match or even exceed the

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nuclear issue in importance. Russia feels similarly, though its main interest is to play a “spoiler” role vis-a-vis the United States. Japan, of course, is much more aligned with the United States in wanting denuclearization of North Korea, but there are also other issues that the Japanese equally care about, such as the abduction issue. While South Korea obviously wants a denuclearized North Korea, the country has already lived with the North Korea threat for so long that its main emphasis is on avoiding conflict and the outbreak of war. In sum, all of these countries have an interest in getting North Korea to denuclearize, but each country has different priorities, so that complicates things. Journal: Why does Pyongyang want nuclear and ballistic missiles, despite the costs of economic sanctions and diplomatic isolation? Are there alternative options whereby North Korea could guarantee its security even after a complete, verifiable, and irreversible denuclearization? Terry: North Korea needs nuclear weapons to preserve and secure its own regime. They truly feel that a nuclear weapons program is the only real deterrent against the United States. But going beyond regime survival and preservation, I do think there is a more offensive component to having nuclear weapons. In other words, once North Korea possesses nuclear weapons, coercive diplomacy becomes a more possible option, trying to get the situation proceed in a more favorable way to North Korea, which is, ultimately, to end the U.S.-South Korea alliance and remove U.S. troops from the Korean Peninsula. You often hear about North Korea’s objective to reunify the Korean Peninsula under its own terms, but this is not possible for North Korea without nuclear weapons. Only after North Korea acquires the capability of attacking the U.S. mainland can it threaten the United States with coercive diplomacy, prompting the United States to deliberate on not risking San Francisco for Seoul. Regime preservation is the utmost important goal, but there is something beyond just that. In terms of how the United States can offer alternative options or ease North Korea’s security concerns, I think it will be realistically very difficult. The only possible way is if the United States concludes a peace treaty with North Korea, normalize relations with North Korea, and pull out U.S. forces from South Korea. Perhaps North Korea could feel secure enough to give up nuclear weapons after all of these things occur, but, realistically, I do not believe these options are possible. Journal: North Korea is a hard intelligence target and getting information on Kim Jong-un is extremely difficult. Given your expertise and experience at the CIA, what do we know about Kim Jong-un and how do we know it? Terry: We call North Korea the hardest of hard targets. It is true that the United States cannot run human intelligence operations—like running spies—in North Korea. The most difficult thing to understand is the regime’s intentions and resolve, what Kim Jong-un will and will not do. It is like working on a puzzle with many pieces missing or even pieces from another puzzle box thrown into your puzzle box just to make it extra complicated. But we do what we have to do, which is to make use of all information that is out there. Initially it started out with some feedback from people who actually [143] Georgetown Journal of Asian Affairs


Terry | Shifting Dynamics on the Peninsula

met with Kim Jong-un, such as the sushi chef Kenji Fujimoto and Dennis Rodman. This is not ideal, but there are not a lot of options. We have no choice. One good thing about all this summitry—Kim Jong-un meeting with President Xi Jinping, President Moon Jae-in, and potentially Prime Minister Shinzo Abe, President Vladimir Putin, President Trump—is that Kim Jong-un is now going to be in the public more often. That will allow us to have a better idea of Kim Jong-un. Otherwise, much of the analysis was based on monitoring Kim Jong-un’s behavior in North Korea. Not everything in North Korea has been hidden; he has been out and about even in North Korea. From that, we were able to draw some conclusions. For example, his father Kim Jong-il never spoke in public; he was very introverted. On the other hand, Kim Jong-un does not seem to have that problem. He goes around North Korea more often, and tries to emulate the style of his grandfather Kim Il-sung, holding babies and smiling in a much more jovial manner. So we look at information from North Korea, monitor open information, debrief anyone who had any kind of contact with Kim Jong-un. There is some clandestine information, such as signal intelligence. There are some things that come from the intelligence channel. So we try to make what we can out of all the available resources, but it is very difficult. North Korea is the most difficult place to get information on. Journal: As far as we know, Kim Jong-un took his first trip abroad to Beijing to meet with President Xi Jinping. Before this trip, many experts including yourself believed that North Korea’s relationship with its principle ally had deteriorated since 2011. What conclusions can the US draw from this visit regarding the current state of China-DPRK relations, and why did the two choose this moment for a visit in particular? Terry: Well, it is true that China-North Korean relations have deteriorated. Xi Jinping until very recently has never met with Kim Jong-un, when he met with former South Korean President Park Geun-hye, and even current president Moon Jae-in multiple times. It is also known that Xi Jinping does not like Kim Jong-un; it is not like we are making this up—he does not like him. North Korean Kim Jong-un did not like China because China got signed on to all the UN sanctions, so that relationship has truly deteriorated over the years. Just because there has been this meeting recently does not make everything okay. It is just that now, both sides have found it to be in both of their interests to have this meeting. Particularly, I think from the North Korean perspective, Kim Jong-un is going to meet with Moon Jae-in, he is going to meet with President Trump, China is still—whether you like it or not—North Korea’s main ally, patron, security partner. You do want some policy coordination before having these meetings. That is what his father did—Kim Jong-il in 2004 before the summit with President Kim Dae-jung, he made a secret visit to China, had coordination with China and then eventually with Putin and so on. So I think Kim Jong-un is really taking a page out of his father’s playbook. He now understands that he is going to meet with Trump, so he wants more allies in his corner. He is going to be looking for sanctions relief down the road, and China is obviously a huge player. China has to help in that regard, so it makes sense from Kim Jong-un’s perspective. From Xi Jinping’s perspective, he was not happy with Kim Jong-un after Kim Jong-nam’s assassination, who was under the protection

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of China. But now that [Kim Jong-un] is about to meet with Moon Jae-in and Trump, China does not want to be sidelined. China wants to make sure that its interests are protected, that they do not make some sort of deal without China being part of it. So I think the circumstances of the Trump-Kim meeting led to these two allies needing to meet with each other, and whether they like each other or not is sort of beside the point. It is more like realist politics; it was time to meet. Journal: How is the current “thaw” in North Korea’s foreign policy different from what happened in the 1990s, when North Korea agreed to IAEA inspections under the Non-Proliferation Treaty and signed an Agreed Framework with the United States, and in the 2000s, which saw two inter-Korean summits and six rounds of Six-Party Talks? Terry: What is different is that North Korea is very close to completing its nuclear program. Back then it was the beginning stage, and right now North Korea is about 90—95% done with their nuclear program, so they are at the end stage of completing the program. They might believe that they have the upper hand, that they are coming to this meeting from a position of strength, because they have already proven their ICBM capabilities. That is different. Now what I do not think is that different is the intention. I still do not believe that North Korea is intending to truly give up nuclear weapons; they are just ready to go through the negotiation process. But the difference is in the beginning and the end, and right now they are at the end of their program. Journal: You published an article in Foreign Affairs in 2014 titled “A Korea Whole and Free,” wherein you described three possible scenarios that could lead to reunification of the Korean peninsula. First is a “soft landing” whereby Pyongyang adopts the Chinese economic model; the second scenario is a “hard landing,” whereby the Kim regime implodes; and the third is military conflict, whereby North Korea attacks South Korea. Your assessment back then was that a “hard landing” is the most likely scenario. Do you believe that is still the case today? If not, how has your assessment changed? Terry: I still believe ultimately that hard landing scenario is the most likely scenario. But what is different from my assessment in 2014 and now is that back then I would have put reunification scenario through conflict and war as zero and right now it is not zero. It is certainly more than that. Even in the middle of all this summitry and thawing of tensions, whatnot, I would still say it is more today than 2014 just because success cannot just continue unless something truly changes. And in that regard, we do have an unpredictable president here with a national security team that is very hawkish, very hardline on North Korea. In fact, I could not possible imagine more hawkish national security team on North Korea. So, if things do not work out, I do not think it will be like before where we say, "okay, there is still a chance that we could return to potential conflict as an option." Again, that is the difference. Were I to put my money on it, I would still say [the chances of a] hard landing scenario, that is, a reunification scenario through conflict, is still higher today than 2014.

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Terry | Shifting Dynamics on the Peninsula

Journal: Finally, let’s turn our attention to the 25 million North Korean people who suffer under a repressive regime. Can the United States promote human rights in North Korea while pursuing denuclearization of the Korean peninsula, and if so, how? Terry: The US definitely should, it is just difficult because getting North Korea just to talk about denuclearization is hard. So now you are putting two very difficult issues on the table at the same time. I still think we need to talk about it and if so how. As for the "how," the US must really continually try to bring attention to the issue. I think this focus on human rights really came about after the United Nations Commission of Inquiry came out with their 400-page report on human rights and that really did bring a lot of attention, and a lot of people started focusing on human rights issues. So even if we have to refer Kim Jong-un to the ICC tribunal and China vetoes the motion, we should do so. Let China veto [the motion], because [this would make] China the power that iss aiding and abetting a country that is committing crimes against humanity. That puts extra pressure on China because China wants to be a normal country; they care about perception and what the international community thinks of them. So, this is just another price that China has to pay for supporting North Korea. If you compare it to the South Africa apartheid situation, that is exactly what happened. Not really at the policy level, but on every level people started talking about it more, focusing on it, and that does bring not only attention but pressure on the Kim regime to make some cosmetic changes. I do not think they will [make those changes], but I think there is some obligation from the international community to not forget the 25 million people in North Korea.

Sue Mi Terry is a senior fellow for Korea after a long and distinguished career in intelligence, policymaking, and academia following Korean issues. Prior to CSIS, she served as a senior analyst on Korean issues at the CIA from 2001 to 2008, and the director for Korea, Japan, and Oceanic affairs at the National Security Council under both Presidents George W. Bush and Barack Obama.

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Navigating the China-Russia Defense Relationship What role for the United States? An Interview with Richard Weitz

Amid rising tensions between the United States and China, and rising complications in the U.S.-Russia relationship, the Journal sat down with Richard Weitz, Senior Fellow and Director of the Center for Political-Military Analysis at Hudson Institute. His current research includes regional security developments relating to Europe, Eurasia, and East Asia as well as U.S. foreign and defense policies. In this interview, he illuminates the recent defense-related developments in China and Russia, highlighting increasingly closer ties between the two countries and the impact on their respective relationship with the United States.

Journal: As an expert on both China and Russia, can you talk briefly about the recent history of Russia-China relations, talking about the 2001 Treaty and maybe the Shanghai Cooperation Organization? Weitz: I think the broad sweep beyond particular treaties and organizations has been that the animosity during the Cold War grew really strong in the 80s as Gorbachev became head of the Soviet Union in 1985. And then relations thawed a little, but there is still a lot of suspicion. Gorbachev reached out to China in 1989, but this effort was interrupted by Tiananmen, followed by change and turnover of power in Russia. The new Russian government and post-Tiananmen Chinese government were focused on domestic issues. Russia made an important effort to reach out to the West, but that effort failed for various reasons, and we are still looking for an equilibrium. China, meanwhile, began to look to improve its relations with Russia particularly because after Central Asian states broke off from the Soviet Union fell apart, China’s diplomatic relations in the region became far more complicated and it began to think about a means of managing—of bringing stability and predictability to its relations in that region. [147] Georgetown Journal of Asian Affairs


Weitz | Sino-Russian Cooperation

The newly dubbed Russian Federation was also looking for mechanisms to simply stabilize its relations. One of these was the annual heads of meetings by the government leaders. These countries founded the “Shanghai Five,” and that eventually evolved into what we now know as the Shanghai Cooperation Organization a few years later. There was also a disarmament treaty, and these countries pulled back their mutual forces which had been concentrated along the border. Since then, the relationship has developed thematically, rather than as a whole. The strongest relationship has been the arms sales. Russia had Soviet arms it no longer needed and was looking to find buyers. China no longer had access to Western arms after Tiananmen and found Russia was a convenient source of Soviet weaponry, which was similar to the kinds of weapons the PLA had always used, and so progress in this field was possible and mutually beneficial. In the security field, the relationship has become a series of joint exercises. These have grown in frequency and size and expanded to new locations. The economic relationship has developed haltingly. It is very volatile and depends to a great deal on commodity prices. Russia and China have not realized their natural partnership, in the sense that Russia is an exporter of oil and natural gas, and China increasingly importing those commodities. You would think that they would be natural economic partners, but that hasn’t evolved quite as we would expect. Still this relationship got a new spurt following Russia’s annexation of Ukraine and Crimea. The war with Ukraine led to a series of sanctions [on Russia] and China has become Russia’s most important economic partner. Though the asymmetry still persists, in that China is Russia’s most important economic partner, but Russia is by no means China’s most important economic partner. That is where we are. Collective security relations and a good series of diplomatic exchanges—their leaders meet often, and the economic relationship is developing, but still lagging. Journal: You mentioned joint military drills that were conducted in the past year. What importance do you place on these drills, and do they have anything to do with the current administration or are they merely a continual evolvement of the military relationship between Russia and China? Weitz: These drills have been going on for a long time. In the Shanghai Cooperation Organization, they have been going on for about a dozen years. And then there is a series of joint Russian-Chinese exercises. What is different is they are becoming more frequent. They now include a regular naval phase as well as land-based exercises, whereas that was not originally the case. And the location is going all over the place, so one was held in the Eastern Mediterranean most recently. In Europe, they were held in the Baltics. They have occurred in several places in Asia. They seem to benefit from joint exercises: Russia gets to show it has a close security partner, and the Chinese learn some things from the Russians, since the Russians have more experience in military operations than the Chinese. They are still by no means at the level of the exercises you see between, for example, the United States and South Korea, or the United States and Japan. They are not yet too engaged in an integrated military operation. But they are getting more developed.

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Journal: How does China’s military modernization, which is, of course, accompanied by the development—if slowly—of a domestic arms industry, affect the defense relationship between Russia and China? Do you see a future for arms sales between the two? Weitz: Russia is desperately trying to keep the Chinese market. But the Chinese are developing their own defense industry. They have steadily decreased arms purchases from Russia over the past few years. China does not need former Soviet weaponry, as they can make the equivalent at this point. Meanwhile, Russia remains concerned about selling more advanced systems because of they fear the potential loss of intellectual property. But since its invasion of Ukraine, Russian firebreaks—the limits set on exports—have been relaxed. China is again buying whole systems, not just parts like they were doing a few years ago. China is buying S-400 advanced air defense systems, Su-35 air superiority fighters. These are good weapons. It is not yet clear if the PLA can make weapons of this quality. But if not now, they will. Russia is trying to overcome the strained relationship and transform it. Instead of having Russia sell whole weapon systems to China, there is a hope that the two would jointly work to develop new weapons that they could both use or sell to a third market like Pakistan and so on. The long-term challenge that Russia is going to have is that China is basically rising to Russia’s level and is probably already ahead of Russia in some cases. Russia does not buy a lot of military equipment from China. Since Western-led sanctions, they have been stressing more domestically-made products, trying to encourage more internal production. But it is possible that they may take advantage of Chinese ship building, which is advancing in capacity and capability rapidly and buy warships from China. China now has aircraft carriers, Russia’s are aging rapidly. However, we are now beginning to speculate—It is still a bit early to see how that is going to go. Journal: A recent topic of discussion regarding the United States and its relations with both Russia and China is the development of nuclear weapons. The Trump Administration has put forth strategies that call for the development of tactical nuclear weapons, has re-emphasized ballistic missile defense, and has deprioritized arms reduction treaties, to say the least. With regard to nuclear weapons, what indicators should we look at? How should we expect relations between these three countries to evolve over the next two decades? Weitz: That’s a good question. What has been happening is the U.S.-Russia relations is that, basically, they are in a position of deadlock now and it is not clear if the two will agree on additional arms control treaties. The Russians want to bring in additional countries, including China, and want to include other weapon systems, particularly missile defenses. Conventional, space, and cyber are also areas of disagreement. With regard to China, the U.S. and China have never had an arms control and defense reduction agreement to verify reductions, and I do not see that happening anytime soon. The Chinese do not seem interested in that. So, the thinking is, the US relationship with Russia and China will evolve to become a strategic stability dialogue of some useful[149] Georgetown Journal of Asian Affairs


Weitz | Sino-Russian Cooperation

ness. China has not realized its potential yet, and we are still struggling with that. We have a lot of treaties, but they are not enforceable, and Russia and China are not really military threats to each other at the moment, so it has not come into play. The second dimension would be non-proliferation strategies of weapons to other countries. Cooperation between the three countries varies over time depending on what issue is dominant. In the past, they cooperated well enough on Iran and Korea, but Russia and China now both oppose the U.S. withdrawing from the Iran nuclear deal and the Korean situation is still very much in flux. There is a lot of mutual suspicion, and the Russians and Chinese are trying to blame the U.S. for setbacks in that dialogue. There is still a mixture of cooperation and conflict. And in the third dimension, nuclear security, keeping nuclear materials away from terrorists, they are all on the same page. They all oppose nuclear terrorism. But it is not a priority for any of the governments like it was for the U.S. under Obama, so I am not sure how much momentum or funding will go to that. Journal: Continuing on this thread, ballistic missile defense—especially Terminal High Altitude Aerial Defense (THAAD) in South Korea—has been a large point of contention between the U.S. and China. Where do you think that is going in the near term? Will China continue to oppose THAAD? And what does a relationship with China look like if THAAD remains in South Korea? Weitz: China still opposes THAAD, but not as vocally as they did before. It is not that their opposition to THAAD has lessened, it’s just that other things have become more of an irritation in the China-US relationship. So before, maybe two years ago, missile defense was the dominant issue for both countries. Now, for Russia it is NATO expansion, Ukraine, and other US capabilities. For China, they are much more concerned about Taiwan or the trade conflict than THAAD, which they see primarily as a China-South Korea issue. They put a lot of pressure on South Korea to remove THAAD, or rather, its deployment. They failed on that, so I am guessing that they understand this pressure can be counterproductive in a sense, as it pushes South Korea—even the Moon Administration—closer to the US because it does not want to look like it has bent to Chinese pressure. Beijing may quiet its opposition. I think that the systems will remain in South Korea for a while until the North Korea threat goes away, and that does not look very likely at the moment. Journal: You wrote recently that the new US NSS “depicts China in a more negative light than any major US foreign policy document since Washington’s recognition of the PRC on January 1, 1979.” How much of this document is reason to be concerned about strains in the relationship and how much is the Trump Administration posturing based on his campaign rhetoric? In comparison to Obama’s Asia Pivot, how is Trump’s strategy different when it comes to engagement with Asia and containment of China? Weitz: There are a lot of gaps between what the Trump administration said, particularly what President Trump says, and what are in the documents, so the National Security

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strategy reads like a think tank product. This was something that if you went back two years, you would have heard this kind of description at various think tanks—the revival of great power competition, the focus on the need to revive the US economy, the challenge of values—the Trump Administration, and President Trump in particular, does not really align their rhetoric with that. But their policies are pretty much similar to what is in the document. And the gap between with the President says and what is written in the document is not large for China. Both President Trump personally and the document put out by the administration paint China in a much less positive light than, say, earlier documents, which were sort of a mixed picture. You know, for example: we appreciate that China is working with us on North Korea and managing climate change, but we have concerns about Chinese domestic practices with respect to Taiwan and so on. This one is much more negative. There is very little positive that is said about China, and I think that reflects President Trump’s views.

Richard Weitz is Senior Fellow and Director of the Center for Political-Military Analysis at Hudson Institute. His current research includes regional security developments relating to Europe, Eurasia, and East Asia as well as U.S. foreign and defense policies.

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Political Activism in Thailand Lessons for Democracy An Interview with a Thai political dissident

After the 2014 coup in Thailand, Sam (alias) became a key member of the New Democracy Movement that protested the junta and its abuse of power. He was one of the fourteen student members of the New Democracy Movement (NDM) arrested on June 26, 2015 for protesting the junta and jailed for twelve days by the military court in Bangkok. NDM advocates for the restoration of democracy, for the end of trials against civilians before military courts, and for the respect of human rights and freedoms. All were charged with violating the Head of the National Council for Peace and Order (NCPO) Order No. 3/2015, which bans gatherings of five or more people, and Article 116 of the Thai Criminal Code for sedition.

Journal: Could you tell us about your background and what got you into activism? Sam: I came from one of the poorest provinces in Thailand’s Northeastern region (Isaan), called Beung Kan. There are about twenty million people living in Isaan, and the poverty rate is higher than in the rest of Thailand; my family was very poor. My father was a carpenter, and my mother was a housewife. Most of my peers in my hometown did not really have a future as we understand it because most parents want their children to stay at home and help with farming, carpentry, and other chores. My parents thought that going to high school meant that you had no future. In 2005, there was a mass protest against Thaksin (Thailand’s Prime Minister between 2001 and 2006), and then in 2006, there was a coup d’état that started the Red Shirt movement.1 From 2007 to 2009, Thailand’s political situation was chaotic. My home1

Originally synonymous with the United Front for Democracy Against Dictatorship (UDD), a group formed to protest the coup and military government, the movement has since expanded to include various groups with diverse political priorities. Its members range from Left-wing and/or liberal activists and academics to the large number of Thaksin’s rural and working-class supporters.

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town mostly supports Thaksin, but I wanted to understand what was really going on and decided to go to university, but I was penniless. Fortunately, I received a scholarship from Chulalongkorn University, one of Thailand’s top universities, to study political science. I had 1,000 Thai baht ($40) when I arrived in Bangkok because my father decided not to support me financially. I did not know anyone in Bangkok but I was interested in politics so I started going to political seminars and meeting political activists with whom I started drinking. These activists were students from Ramkhamhaeng University, the cheapest university in Thailand and had similar backgrounds to mine. I did not really fit in at Chulalongkorn, and had a deeper connection with students from Ramkhamhaeng University. Journal: And what were these groups talking about when you were sitting with them? Sam: Ramkhamhaeng students study slum-related issues, ethnic minorities, and they are “masters” in communist theories. And one of the biggest groups is a Muslim group called PNYS (“Patani Narathiwat Yala Satun”) but in 2007, the junta believed that PNYS were insurgents and decided to shut down all student political groups. There are two types of student political activists in Thailand: One group includes students from elite schools Chulalongkorn or Thammasat or Mahidol – these groups do not go to the street. Instead they host study groups and interviews. But Ramkaehang students are more action-oriented—they go to the streets, they organize protests actions I felt very strongly about. But I still had connections with so-called elite schools like Chulalongkorn University and Thammasat University and managed to be a bridge between both worlds. Journal: Do you think there is one form of activism that is more efficient than others? Sam: Both groups had to work together because if there is a televised interview, they want the name to be from Chulalongkorn or Thammasat, but if you want to have a body of protest with hundreds of people in the streets, then you need Ramkhamhaeng students. The Student Federation of Thailand (SFT) plays a critical role in Thai politics; it overthrew the junta in 1973 and 1992. In the fifties, Thailand was a dictatorship that first fell in 1973, and the organization that led the mass protests against the junta and led to the overthrowing of the military government was the SFT. The late King Bhumibol sided with the students, and the junta had to flee the country. The country became democratic for two years. Three years later, in 1976, there was another coup and the SFT was banned for being communist. In 1984, SFT’s focus shifted to environmental issues. There was another coup in 1991 and in 1992 the SFT protested the junta again. The SFT was founded to combat dictatorship with leftist ideals. Our structure parallels that of a communist party, but we are

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not affiliated with any communist movement. I was elected leader of the SFT; I think being this bridge between the rich and the poor definitely helped. Journal: Thailand and mainland Southeast Asia in general has ambiguous, if not discriminatory, policies towards their local Muslim communities. For decades now, there has been a Muslim separatist insurgency in Thailand’s southernmost region of Patani. Can you tell us a little bit about the Muslims you worked with? Sam: There are two big movements in Thailand’s political sphere: one is the movement for democracy in Bangkok, and the other is the movement for civil rights in Patani. Almost half of the students in SFT were the students from the South who wanted to fight for civil rights in Patani. Patani is only a small part of Thailand but the organization of the students there is powerful and has impact. The SFT leader therefore had to appease the Muslim voice too. Journal: How do you appeal to both voices? Sam: The main message SFT has been trying to convey to both Yellow2 and Red Shirts is that democracy and the civil rights issue in the South are actually the same issue. If we can bring democracy to Bangkok, it will be a lot easier to campaign for civil rights in the South and vice versa. Muslim students care about democracy in Bangkok, and students in Bangkok have to care about the civil rights in the South. But this message, despite it making sense, is not that effective; very few people believed in it. I was the only Chulalongkorn student in Bangkok the Muslim movement could really talk to. I was therefore able to engage with them and understand their grievances, their lifestyle, and spend time understanding their way of life and culture. My role was essentially to unite the organization around one cause to combat the military power in Thailand and fight for democracy. But the obstacle was that the student groups were fractioned: Some were aligned with the Red Shirt movement, and some were aligned with the Yellow Shirt movement. The Yellow Shirt student movement is ideologically close with the military and the Bangkok establishment. Why? Because the military and the royal palace has the funding for NGOs. If you have an NGO in Thailand, you better be on the military or the palace’s good side in order to get funding, specifically those working on environmental issues. Students who focus on democracy and fighting the military will align more with the Red Shirts. As the leader, I had to work with both of these ideologies. Journal: But were you still aligned with Red Shirt ideology? Or did you just give that up? 2

People’s Alliance for Democracy, or Yellow Shirt movement, was originally a coalition of protesters against Thaksin Shinawatra, the former Prime Minister of Thailand. Its membership now consists mainly of ultra-royalist middle-class and working-class Bangkok residents and anti-Southerners, supported by some factions of the Thai Army, some leaders of Democrat Party, and the members of the state-enterprise labor unions.

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Sam: Most student political groups are affiliated with NGOs and these NGOS in the past used to gain funding from international organizations, but now that Thailand has become richer, international organizations directed their money toward countries that were poorer than Thailand. Now that these NGOs do not have the support from international organizations, they have to get support from local organizations, the palace, or the military. NGOs are now fighting for funding and the military, of course, is more likely to support environmental NGOs than NGOs fighting for democracy. We are now at a crossroad after the 2006 coup. Journal: Sam, you were involved in the 2014 coup that led Prime Minister Prayut to power until elections that were postponed to 2019. Could you tell us a more about how the coup unraveled and your role in the 2014 events? Sam: Since 1973, there have always been measures to tame the political voice of students, especially after the students successfully overthrew the military government in 1973. Powerful people wanted to preserve their power and came out with ways to constantly reduce the political power of students. I graduated in 2012, so I was no longer a student in 2014, but I still played a role within the SFT thanks to contacts I had made when I led it. About a month before the coup happened, a lot of people knew that a coup was about to take place because Prime Minister Yingluck had dissolved the parliament and announced new elections. In Thailand there are two political parties, the Pheu Thai party, following Thaksin, and the Democratic Party. The Democratic Party knew that they would never win this election so they organized their own protest to boycott it. They shut down voting booths and voter registration so the election could not take place. The protest was becoming larger and demanding a coup. My main concern at the time was that my wife was really close to giving birth. We were also concerned about the King’s health, and I think his poor health is one of the reasons the coup took place. I organized a meeting at my apartment and we decided that we would go for it and organize a protest. On the first day after the coup, I organized a protest in front of Thammasat University in Bangkok and we then marched to the Democracy Monument, and during the march they had to march past the Ministry of Defense. We settled at the Victory Monument for two days. So when he organized the protest, right after the coup, no one knew how harsh or lenient the new junta was going to be and the situation seems to be getting worse and worse; a lot more people were getting arrested. The situation was worsening every day and more and more of my friends were getting arrested. But the protest lasted only four days and it was not effective, because at the moment of the coup the military arrested all the key political figures, so we lacked a leader and direction. [155] Georgetown Journal of Asian Affairs


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I think the coup was really well-planned; Prayut really studied the failure of the 2006 coup and now knows how to conserve his power. Journal: The coup leaders are still in power today, and it seems that they will be for a while. Can you explain how they conserve their power? Sam: The difference between the 2006 coup and the recent coup is that the junta in 2006 was very liberal and progressive. After the coup they almost governed like an elected government, which led to massive Red Shirt protests after that. In the recent coup, the new junta learned from its failures and tried to get a tighter control over the democratic opposition. They now monitor most political activists, and they ban most political events, even LGBTQ events. Anything remotely related to politics has been banned. The military set up a cyber apparatus that distributes fake news about their military, about how to combat corruption, about where they are going with their governance, and that reinforces their positivity among their supporters in Bangkok. What about the middle class? Why does the middle class in Thailand really like the junta? The junta, over the years, has gained a lot of support from Democratic Party’s base, the middle class in Bangkok and people in the south who tend to be wealthier than people in the North and the Northeast, who were historically Red Shirt supporters. What makes the recent political struggle in Thailand different today is that in the past the middle class in Bangkok really supported democracy and they were against the military and the junta. In 1973, when the student movement worked through the military government, the middle class in Bangkok sided with the students and fought against the military. In 1991, the middle class came out to fight against the military. But in contemporary Thai politics, the middle class in Bangkok tends to really support the military because they see the rural poor having a political voice in the Thai political system. The middle class in Bangkok does not want to give up their political power to the rural poor, which would give them means to have parliamentary power. So when the middle class will not give up its parliamentary power, they side with the military and try to crack down on democracy. The middle class who used to fight for democracy and against the military now sides with the military and against the rural poor who would benefit from democracy. Journal: Could you tell us more about your role in the democracy movement, your arrest, and finally, your role now? Sam: It was the one year anniversary of the coup; it was a really small event. About 30 people were lighting candles at the MBK Shopping Center in Bangkok. There were 30 protestors from the National Democratic Monument but three hundred policemen. So the police were surrounding us and they just carried the leaders of the protest out of the area one by one. They arrested all the protestors but only put nine people in jail, who they thought were leaders. I was not actually the leader of any movement at the time, but the police just remembered me from all the monitoring they did when I was. So I got arrested and was jailed.

Winter 2019 [156]


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Journal: So how long did you stay in jail for, and could you let us a little more about it? Sam: 12 days. My arrest was actually a strong case for abuse of power, because first they went to the military court, but we were not at war so the military court was closed the evening I got arrested. But I guess they opened it for us and we went to the military court at 1:00 am, with the special order from the junta, calling for Section 44,3 allowing them to do just about anything. We were sent to jail shortly after at 4:00 am. There were protests brewing outside, and after twelve days we were released. Journal: But what does activism look like for you now? Sam: Activism in Thailand is very quiet right now because of the passing of King Bhumibol. I think in Thailand we are getting very tired right now, because we have been fighting for freedom and democracy for decades. And things seem to be getting a lot worse every day in terms of civil rights and democracy. Things are worrying and no one really cares. A lot of people, like me, gave their life to activism, and we cannot financially support ourselves anymore. Many of my activist friends did not do well in school and because of that, they are having a hard time finding a job; some of them do not even have money to have lunch and they have to eat food donated to sacred statues. Personally, it is tough for them. And for the movement itself, there is no funding anymore. It is hard to fight without money. Civil society is very constrained nowadays and its future is not good. Journal: What worries you the most about what is going to happen in Thailand in the next few years? Sam: I am worried about civil war. It will eventually happen but the question is only when. There are so many lines of conflict that are still hiding, because of the [interruption]. If you look at how intense the political conflict was and how angry the people were, it is unthinkable that the anger just went away, or that quietness is going on. There will be a conflict between the rural people and the urban idiots who supported the coup. There are so many lines of conflict in Thailand and which one will emerge and which one will escalate in a civil war is still unclear to me, but it will eventually happen. The people’s anger was shown clearly six years ago. It is impossible that it just went away after the coup—it is still there. The anger of the local people who were oppressed and coerced as second class citizens since forever—it is still there.

3

Section 44 of the interim Constitution of the Kingdom of Thailand empowers the National Council for Peace and Order to issue any order for the sake of reform in any field, the promotion of harmony, or the prevention and suppression of any act detrimental to national order or security.

[157] Georgetown Journal of Asian Affairs


Political Activism in Thailand

The last time the rural people came to protest in Bangkok and clearly showed their anger was in 2011, and they were shut down. So the anger and grievances are there. It is impossible that the anger will just go away. Being political is not just about saying what you think out loud or trying to express moral superiority, or trying to impose your beliefs, as in "this is what is right and everything has to be done our way." I think that is what a lot of students both in Thailand and the U.S. think [that being political means]. Being political is about understanding the issues, and at the same time, being political about how you say things, about how you negotiate things. It is about making things you believe in happen. We have to be political about what we say too. We have to say different things to different people to get results. Sometimes we have to reassess our position to make progress and be realistic. The problem with students involved in politics in Thailand today is that they are just expressing what they think is right, with goals that are never realistic. But I do not think that saying different things to different people is immoral. We can do this and still be honest and stay true to what we believe in. Someone who wants to lead a political movement here in Thailand really has to keep this in mind and be political in a practical way. For example, I was willing to create an alliance with any political party or issue that had the same views on specific issues or policy goals, but I would not become inferior to any political party or belong to any political party one hundred percent. And why? Simply because more negotiation and compromise means less violence. If we do not negotiate, the people who die under repression are my people, not the rich and powerful. Compromising is, today, the only way of doing things to minimize violence. It sometimes hurts, not physically, but my soul. That is why I always keep my goal in mind, and need to be reminded of it. Because fighting for what is right is a long task. It is a task that does not belong to anyone’s lifetime; it is longer and bigger than any of us. Fighting for five years or a lifetime to expect to get justice—it is not going to happen. Fighting for what is right is long and not about any of us. Fighting for a better life for my people is never-ending. Only justice and democracy can allow that. Journal: There are not many democracies around Thailand. Could you tell us about the democratic system you envision for Thailand? Would it be a Thai democratic system or is there another democracy that exists that could be a model? Sam: We need a Thai democracy. There is only one essence to democracy, and to say that there is a uniqueness you find in Thai democracy suggests that we would have to include the junta’s vision of democracy. I want a democracy that my people in Isaan will feel and take part in, one that will empower them.

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Journal: What does your tattoo say and mean? Sam: “True peace is not merely the absence of tension: it is the presence of justice.” It is [a quotation from] Martin Luther King. You know, democracy is actually a process. Some people think of democracy as the end goal, but if they do not live their life democratically or if the process is not democratic it will not lead to democracy, not in Thailand at least. The way we reform our system and change our constitution needs to be done in a democratic way, or else we will never have democracy in Thailand. Young people who have not experienced an authoritarian regime do not know why democracy is important, in the U.S. and Thailand. Today, it is completely understandable why young people would be disappointed by democracy—politicians are not always ideal and people are bored of democracy. But people who have lived through worse regimes would understand why democracy matters. In Thailand, it is the government that poses problems to democracy. When countries are not democratic, it is the people, us, who are the biggest losers.

[159] Georgetown Journal of Asian Affairs


Front cover photo: The largest solar photovoltaic project in the world, 73-megawatt Lopburi Solar Farm is located in Lopburi Province, Thailand (Asian Development Bank).


ALSO IN THIS ISSUE The Consequences of Confucius Institutes: Understanding the Opposition Andrew Switzer

INTERVIEWS WITH

Elsa B. Kania on China’s AI Ambitions Sue Mi Terry on Shifting Dynamics on the Peninsula Richard Weitz on Navigating the China-Russia Defense Relationship A Thai Political Dissident on Political Activism in Thailand

Edmund A. Walsh School of Foreign Service Asian Studies Program http://asianstudies.georgetown.edu

ISSN 2376-8002

Profile for School of Foreign Service - Georgetown University

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