Analysis: Even as election spells Japan PM win, big reform may lose out By Linda Sieg | Reuters – 1 hour 31 minutes ago By Linda Sieg TOKYO (Reuters) – Prime Minister Shinzo Abe is likely to win a mandate on Sunday for his three-part recipe to end stagnation in the world’s third-biggest economy, but anyone expecting him to use it to push a „Big Bang” reform agenda may need a reality check.Abe’s Liberal Democratic Party-led bloc is expected to win a hefty majority in a July 21 upper house election, ending a „twisted parliament” in which the opposition controls the upper chamber. Media surveys published on Monday showed the LDP maintained a substantial lead over rival parties.That stalemate has hampered policies for most of the past six years since Abe, then in his first term as premier, led the LDP to a humiliating 2007 upper house defeat. He resigned two months later and was followed by a string of short-term leaders.Abe, who returned to office in December for a rare second chance, will have few excuses for shying away from reforms including deregulation that many see as vital to generating growth – but his commitment to doing so remains in doubt.”What’s required is the kind of thorough-going reform that Mr. Abe doesn’t seem to have the vision or stomach for,” said Jun Okumura, a senior advisor for Eurasia Group and former bureaucrat at Japan’s trade and industry ministry.”Just because he wins an election doesn’t mean vested interests will be any more amenable to changes that would affect them negatively,” he said. „A leader can do a lot with the ability to appoint and dismiss cabinet members and ultimately, the right to call a general election.”But I don’t see Mr. Abe as that kind of leader.”Hopes for his „Abenomics” prescription of hyper-easy monetary policy, big spending and steps to promote growth pushed up Tokyo share prices and weakened the yen even before his LDP-led bloc won a December poll for the powerful lower house.„ENRICH THE COUNTRY, STRENGTHEN THE ARMY”–Business executives and economists welcomed his decision in March to join talks on the U.S.-led Trans-Pacific Partnership (TPP) free trade pact despite fierce opposition from the farm lobby, a traditional backer of the LDP.Advocates say joining the pact would open Japan’s economy to competition and boost momentum for deregulation to spur growth.”TPP is not about agriculture reform, it’s about whether Japan sits at the table when global rules are made and doing whatever it takes to be a first-rate power,” said Jesper Koll, head of equities research at JP Morgan in Tokyo.”That’s what fires them up.”Abe has also backed reform of the energy sector that would break up regional utility monopolies, also powerful LDP supporters – although a political scuffle just before parliament ended in June prevented the reform bill from passing.Optimists argue the desire of Abe and like-minded nationalists for a strong economy to ensure Japan’s place on the global stage will keep up pressure for reform – a sort of 21st century version of the „Enrich the Country, Strengthen the Army” slogan of the late 19th century reformers who modernized Japan.”I think he sees a genuine challenge to the sovereignty and power of the country,” said Robert Feldman, chief economist at Morgan Stanley MUFG in Tokyo.But reaction to Abe’s „Third Arrow” of structural reforms unveiled in June has been tepid, prompting the premier and his aides to promise that more is in store after the upper house election.Among the areas where critics want bolder steps are agrarian land reform, labor market measures to make it easier for firms to exit loss-making business and shift to growth sectors, cuts in the corporate tax rate and an easing of barriers to immigration to cope with Japan’s ageing, shrinking population.ACHILLES’ HEEL ON HISTORY? –Reform advocates also worry about potential backsliding on promised steps such as energy market reform. „The LDP might change some part of the (utilities reform bill) so it doesn’t have so much impact on incumbent utilities,” said Hiroshi Takahashi at Fujitsu Research Institute, who sat on an advisory panel that recommended the reforms incorporated in the bill.A split among Abe’s growth strategists between those who see a big role for government in picking and backing new growth sectors, and those who want government to get out of the way to allow innovation, also clouds the outlook for reform.Ironically perhaps, too big a victory on Sunday could make it harder for Abe to push through the sort of reforms that would harm traditional LDP supporters. Such a win would increase party complacency along with the number of MPs with ties to vested interests.Some media forecasts give the LDP a shot at winning an upper house majority on its own for the first time since 1989. With no national poll required until 2016, LDP members keeping quiet now ahead of the election are likely to become more vocal afterwards.”Are we dealing with Japanese politics” the answer is ‘yes’. Will there be compromise? You bet. The risk of compromise moving to the forefront gets bigger the bigger they win,” said Koll, who nonetheless argues Abe is intent on meaningful reforms.Abe will also face a tough decision in autumn on whether to give the go-ahead for a plan to raise the 5 percent sales tax to 8 percent next year, the first stage in a scheduled doubling by October 2015 to help curb Japan’s huge public debt.Some LDP members fear a tax hike would derail a recovery, but postponing it could cause havoc in financial markets, where the move would be taken as a signal of reneging on fiscal reform.The International Monetary Fund (IMF), while giving a cautious OK to „Abenomics”, has warned of downside risks if Japan doesn’t both cut its debt – already twice the size of its $5 trillion economy – and enact structural reforms.Concerns have eased a bit that the deeply conservative Abe might shift attention after the election from the economy to pet projects such as revising the pacifist constitution, drafted by U.S. Occupation officials after Japan’s defeat in World War Two.The LDP’s junior partner, the New Komeito, is wary of such changes and media forecasts suggest the LDP and small parties that also favor constitutional revision will fall short of the two-thirds majority needed to submit changes to a plebiscite.But Abe may find his Achilles’ heel in questions relating to Japan’s wartime history, which he wants to recast with a less apologetic tone.Abe visited Tokyo’s Yasukuni Shrine, where wartime leaders convicted as war criminals by an Allied tribunal are honored with war dead, after becoming LDP leader in September.He has declined to say if he will do so as premier, but could face pressure from supporters to go on the August 15 anniversary of Japan’s defeat or at an annual autumn festival.A pilgrimage to Yasukuni would outrage China and South Korea, which suffered from Tokyo’s wartime aggression. Tokyo’s relations with Beijing are already strained by rows over rival claims to tiny, uninhabited isles. Abe may also have trouble refraining from comments on history that spark ire in Beijing and Seoul, in turn upsetting security ally Washington and potentially undermining his support at home.”It is going to be very tempting for Abe to speak his mind that seems like an endorsement of what he stands for as a politician,” said Sophia University professor Koichi Nakano.(Editing by Neil Fullick)
Myanmar leader visits Britain, may be challenged on human rights By Andrew Osborn LONDON (Reuters) – President Thein Sein, the first leader of Myanmar to visit Britain in more than a quarter of a century, will hold talks on Monday with Prime Minister David Cameron, who is under pressure to confront him on human rights.Sein is due to talk trade, aid and democracy with Cameron and his ministers during a two-day visit at a time when Myanmar is opening up its oil, gas and telecoms sectors to foreign investors, with further liberalization likely.Sein, a former military commander, is trying to get the West to help Myanmar’s economy recover from decades of military dictatorship, Soviet-style planning and international sanctions.Western leaders have praised him for ending the house arrest of opposition leader Aung San Suu Kyi, releasing some political prisoners, and allowing the opposition to contest an election.But they want him to loosen further the military’s grip on the mineral-rich state formerly known as Burma before a 2015 presidential election which the British-educated Suu Kyi hopes to contest.Suu Kyi, a Nobel laureate, visited Britain last year.Sein is also under pressure to act to protect Myanmar’s small Muslim minority from inter-ethnic violence.”Prime Minister Cameron should not miss an important opportunity to press Burma’s president on justice for crimes against humanity committed against the country’s Muslims, the release of remaining political prisoners, or an end to repressive laws,” said New York-based Human Rights Watch.At least 237 people have been killed in Myanmar in religious violence over the past year and about 150,000 people have been displaced. Most of the victims were Muslim and the deadliest incidents happened in Rakhine State, where about 800,000 Rohingya Muslims live, according to the United Nations.Avaaz, a global campaign group, plans a demonstration outside the British parliament on Monday, saying almost a million people have signed a petition calling for an end to inter-ethnic violence in Myanmar.It said the bloodshed risked escalating to become the next Rwanda – a reference to the bloody inter-ethnic violence there in 1994 in which hundreds of thousands were killed.A spokesman for the British Foreign Office said: „We want to recognize the remarkable reforms of the last 18 months but also to raise at the highest levels our ongoing concerns, particularly about inter-communal and anti-Muslim violence.”Britain will press Sein to improve humanitarian access, to address accountability for crimes, and to end discrimination against the Muslim Rohingya community, he said.Cameron visited Myanmar last year, and Sein, who remains close to the military, this year became the first leader of his country since 1966 to visit the White House.His British trip is thought to be the first since the late General Ne Win, who ruled Burma for 26 years, visited in 1986.Sein is expected to visit France afterwards.(Editing by Alistair Lyon)
Demographic change amplifying racial inequities WASHINGTON (AP) — One-year-old Ka’Lani is so fascinated by a round plastic toy that she doesn’t see her mother, Ke’sha Scrivner, walk into the Martha’s Table day care, chanting her name while softly clapping out a beat that Ka’Lani keeps with a few bounces on her bottom.Once on welfare, Scrivner worked her way off by studying early childhood education and landing a full-time job for the District of Columbia’s education superintendent. She sees education as the path to a better life for her and her five children, pushing them to finish high school and continue with college or a trade school.Whether her children can beat the statistics that show lagging graduation rates for black children is important not just to her family. The success of Ka’Lani and other minority children who will form a new majority is crucial to future U.S. economic competitiveness.A wave of immigration, the aging of non-Hispanic white women beyond child-bearing years and a new baby boom are diminishing the proportion of children who are white. Already, half of U.S. children younger than 1 are Hispanic, black, Asian, Native American or of mixed races.”A lot of people think demographics alone will bring about change and it won’t,” said Gail Christopher, who heads the W.K. Kellogg Foundation’s America Healing project on racial equity. „If attitudes and behaviors don’t change, demographics will just mean we’ll have a majority population that is low-income, improperly educated, disproportionately incarcerated with greater health disparities.”In 2010, 39.4 percent of black children, 34 percent of Hispanic children and 38 percent of American Indian and Alaska Native children lived in poverty, defined as an annual income of $22,113 that year for a family of four. That compares with about 18 percent of white, non-Hispanic children, according to Census Bureau’s 2011 American Community Survey.
Sudan’s Bashir arrives in Nigeria to anger of rights groups ABUJA (Reuters) – Sudanese President Omar al-Bashir arrived in Nigeria on Sunday for an African Union summit on HIV/AIDS as his hosts chose to ignore an International Criminal Court (ICC) arrest warrant against him.Bashir, accused of masterminding genocide and other atrocities during Sudan’s Darfur conflict, which has left some 200,000 people dead, in theory risks arrest if he travels to one of the more than 120 states including Nigeria that have signed up to the ICC.He has been refused trips to Uganda, South Africa, Malawi and Zambia in the past because of his indictment. This is his first trip to West Africa since the warrant was issued.The African Union (AU) voted in 2009 not to cooperate with the ICC indictments, saying they would hamper efforts to end Sudan’s multiple conflicts. Bashir rejects the ICC charges.”The Sudanese president came for an AU event and the AU has taken a position on the ICC arrest order, so Nigeria has not taken action different from the AU stand,” presidential spokesman Reuben Abati said.Human Rights Watch International Justice Program director Elise Keppler said Nigeria had „the shameful distinction of being the first West African country to welcome ICC fugitive Sudanese President Sudan al-Bashir”.”Al-Bashir is sought on the gravest crimes … and Nigeria’s hosting is an affront to victims – he belongs in custody,” she said.The main African Union summit this month had to be moved to Ethiopia, which has not signed the ICC statute, after Malawi, heavily dependent on Western aid, refused to host Bashir.Though initially welcomed by African leaders, the ICC has been accused of exclusively targeting African war criminals and failing to indict anyone from other continents, a charge the ICC and its backers says is unfair.(Reporting by Tim Cocks, Camillus Eboh and Felix Obuah; Editing by Kevin Liffey)
Insight: Smuggling rice to Thailand – like coals to Newcastle By Apornrath Phoonphongphiphat and Naveen Thukral SA KAEO, Thailand/SINGAPORE (Reuters) – Hidden in 18-wheeler trucks, carts and pick-up vans, hundreds of thousands of tonnes of rice are being smuggled from Cambodia and Myanmar into Thailand, although the country holds enough stocks to meet half the world’s annual trade in the commodity.A populist program to support prices has led to the Thai government paying its farmers almost double prevailing prices in Cambodia and Myanmar. Farmers and traders in the neighboring countries are trying to take advantage, sending their grain across the border to be sold into the Thai intervention scheme.The equivalent of 750,000 tonnes of milled rice is being smuggled into Thailand a year, mainly from Cambodia and Myanmar, according to estimates of analysts and traders who have studied the illicit shipments.”No one can differentiate which one is Thai rice and which one is Cambodian rice. That makes it easy to smuggle rice in and make a profit by selling it to the government,” said Kiattisak Kalayasirivat, managing director at Thai trader Novel Agritrade.The extent of the smuggling adds to a headache for Thai Prime Minister Yingluck Shinawatra, who increased the support price for unmilled rice to 15,000 baht ($480) per tonne after she took power in 2011, to please her farmer vote-bank.Yingluck’s support base is mostly in rural districts, and her government mistakenly bet that Thailand could corner the world rice market by building up stocks.Instead, the government, already running a budget deficit of 300 billion baht ($9.59 billion) this fiscal year, is struggling to fund the multibillion-dollar program and find buyers for the grain. Ratings agency Moody’s warned in June that „populist measures” were a risk to financial discipline.The government said last month that losses from the scheme amounted to $4.4 billion in the crop year that ended in September 2012.Thailand now sits on rice stockpiles of 18 million tonnes, almost double a normal year’s exports and nearly half of annual global trade of 38 million.It is mostly holding on to the stocks since it will make a huge loss if the rice is sold. The intervention price of $480 per tonne of unmilled rice translates to $750 a tonne for milled rice. Milled rice is quoted around $475 a tonne in Thailand’s open market and around $400 a tonne in Vietnam, traders said.From No. 1, Thailand has dropped to the world’s No. 3 rice exporter behind India and Vietnam.The quality of the rice in its warehouses has also dropped because most of the smuggled grain is broken rice, which is then blended with full-grain Thai rice.Because of that, the spread between 5 percent and 100 percent broken rice available in Thailand has narrowed to just $30 a tonne currently from $60 a tonne in June last year and $85 in 2011. „The spread has tightened up very dramatically,” said Ben Savage, managing director of London-based Jackson Son and Co, a rice broker since 1860.CAT RUNNING AFTER A MOUSE-Thailand’s porous border with Cambodia, to the east, has no natural barriers like rivers and villagers easily cross between the two countries. Smuggling of rice appears to be rampant.”As long as our prices are high and they can make a profit, we won’t stop them,” Pakkarathorn Teainchai, the governor of Sa Kaeo province on the border with Cambodia, told Reuters. „It’s like a cat running after a mouse,””Recently we confiscated 60 tonnes of rice. There’s bound to be more that we can’t prevent.”Noppadol Thetprasit, head of a customs post in the Aranyaprathet district of Sa Kaeo, said he recently intercepted 30 tonnes of rice being smuggled from Cambodia, but he knows more must be getting through at smaller crossing points that lack his facilities.”The rice is being carried into Thailand on villagers’ small carts, and is then reloaded onto bigger trucks and moved on to other provinces in Thailand to be resold,” Noppadol said.The smuggling is happening on a far bigger scale than the talk of villagers and carts would suggest. Thai officials say some smugglers use 18-wheel trucks to bring rice into the country.Small-scale smuggling had occurred previously but volumes have jumped with the advent of the high intervention price.The International Grains Council in London estimated the equivalent of 750,000 tonnes of milled rice a year was coming into Thailand, senior economist Darren Cooper said. That would be about 900,000 tonnes of unmilled rice, or paddy.”Clearly shipments (to Thailand) started going up since the intervention scheme started,” Cooper said. „It is highly attractive for the neighboring countries to try and get as much rice across to Thailand as possible and supply into the scheme.”The United States Department of Agriculture put Thai rice imports at 600,000 tonnes a year in the first two years of the scheme, jumping from 200,000 tonnes in 2010/11.BLIND EYE–In Cambodia, the authorities turn a blind eye to the smuggling. Khung Vun, president of the Rice Millers Association in Banteay Meanchey province on the border, says customs and police officials will wave grain through as long as a general export permit can be produced.In 2012, legal rice exports to all countries by Cambodia amounted to 205,717 tonnes, according to its official data.Thon Virak, director of Cambodian state-owned rice exporter Green Trade, estimated up to 300,000 tonnes of paddy rice was smuggled into Thailand in 2012 and a similar amount in 2011.”This year, the number will decline because crossing points have been closed,” he said in Phnom Penh, referring to stepped-up border policing on the Thai side.In Myanmar, a shortage of good-quality mills restricts demand for legal exports and encourages smuggling out.Aung Kyaw Htoo, agribusiness manager at cargo surveyor SGS in Yangon, estimated around 120,000 tonnes of rice was smuggled into Thailand in 2012, most of it lower-quality broken grain.He said he understood the rice was sold into the intervention scheme, although other analysts said some of it could have been bought by noodle makers and feedstuff producers who, because of state buying, find Thai grain scarce or costly.COMMERCE MINISTER SACKED–Thailand announced it would cut the intervention price to 12,000 baht per tonne last month, but reversed the decision on the day it took effect, giving in to farmers who had threatened protests.Before rowing back on the cut, Yingluck sacked Commerce Minister Boonsong Teriyapirom, after public criticism that he had failed to be credible or transparent about the costs of the scheme.New commerce minister Niwatthamrong Bunsongphaisan says the government will sell up to 1.5 million tonnes of rice a month for the rest of year through tenders and will also try to sell to other governments.It is unclear how he will do that without offering grain at cut-rate prices to exporters or governments, and that may lead to charges of dumping. The United States and others have already sounded warning noises at the World Trade Organisation because of Thailand’s lack of transparency on sales and stocks. ($1 = 31.0150 Thai baht)(Additional reporting by Prak Chan Thul in Phnom Penh, Aung Hla Tun in Yangon and Andrew R.C. Marshall in Bangkok; Writing by Alan Raybould, Editing by Jason Szep, Amran Abocar and Raju Gopalakrishnan)