Investor treaties in trouble

Several countries are reviewing these agreements, prompted by the number of cases brought by foreign companies who claim that changes in government policies affect their future profits.

THE tide is turning against investment treaties that allow foreign investors to take up cases against host governments and claim compensation of up to billions of dollars.

Indonesia has given notice it will terminate its bilateral investment treaty (BIT) with the Netherlands, according to a statement issued by the Dutch embassy in Jakarta last week.

“The Indonesian Government has also mentioned it intends to terminate all of its 67 bilateral investment treaties,” according to the statement.

It has not been confirmed by Indonesia. But if this is correct, Indonesia joins South Africa, which last year announced it is ending all its BITS.

Several other countries are also reviewing their investment treaties.

This is prompted by increasing numbers of cases being brought against governments by foreign companies who claim that changes in government policies or contracts affect their future profits.

Many countries have been asked to pay large compensations to companies under the treaties.

The biggest claim was against Ecuador, which has to compensate an American oil company US$2.3bil (RM7.6bil) for cancelling a contract.

The system empowering investors to sue governments in an international tribunal, thus bypassing national laws and courts, is a subject of controversy in Malaysia because it is part of the Trans-Pacific Partnership Agreement (TPPA) which the country is negotiating with 11 other countries.

The investor-state dispute settlement (ISDS) system is contained in free trade agreements (especially those involving the United States) and also in BITS which countries sign among themselves to protect foreign investors’ rights.

When these treaties containing ISDS were signed, many countries did not know they were opening themselves to legal cases that foreign investors can take up under loosely worded provisions that allow them to win cases where they claim they have not been treated fairly or that their expected revenues have been expropriated.

Indonesia and South Africa are among many countries that faced such cases.

The Indonesian government has been taken to the International Centre for Settlement of Investment Disputes (ICSID) tribunal based in Washington by a British company, Churchill Mining, which claimed the government violated the United Kingdom-Indonesia BIT when its contract with a local government in East Kalimantan was cancelled.

Reports indicate the company is claiming compensation of US$1bil to US$2bil (RM3.3bil to RM6.6bil) in losses.

This and other cases taken against Indonesia prompted the government to review whether it should retain its many BITS.

South Africa had also been sued by a British mining company which claimed losses after the government introduced policies to boost the economic capacity of the blacks to redress apartheid policies.

India is also reviewing its BITS, after many companies filed cases after the Supreme Court cancelled their 2G mobile communications licences in the wake of a high-profile corruption scandal linked to the granting of the licences.

But it is not only developing countries that are getting disillusioned by the ISDS. Europe is getting cold feet over the investor-state dispute mechanism in the Trans-Atlantic trade agreement (TTIP) it is negotiating with the United States, similar to the mechanism in the TPPA.

Two weeks ago, Germany told the European Commission that the TTIP must not have the investor-state dispute mechanism.

Brigitte Zypries, a junior economy minister, told the German parliament that Berlin was determined to exclude arbitration rights from the Transatlantic Trade and Investment Partnership (TTIP) deal, according to the Financial Times.

“From the perspective of the [German] federal government, US investors in the European Union have sufficient legal protection in the national courts,” she said.

The French trade minister had earlier voiced opposition to ISDS, while a report commissioned by the UK government also pointed out problems with the mechanism.

The European disillusionment has two causes.

ISDS cases are also affecting the countries. Germany has been taken to ICSID by a Swedish company Vattenfall which claimed it suffered over a billion euros in losses resulting from the government’s decision to phase out nuclear power after the Fukushima disaster.

And the European public is getting upset over the investment system. Two European organisations last year published a report showing how the international investment arbitration system is monopolised by a few big law firms, how the tribunals are riddled with conflicts of interest and the arbitrary nature of tribunal decisions.

That report caused shock waves not only in the civil society but also among European policy makers.

In January, the European Commission suspended negotiations with the United States on the ISDS provisions in the TTIP, and announced it would hold 90 days of consultations with the public over the issue.

In Australia, the previous government decided it would not have an ISDS clause in its future FTAs and BITS, following a case taken against it by Philip Morris International which claimed loss of profits because of laws requiring only plain packaging on cigarette boxes.

In Malaysia, the ISDS is one of the major controversial issues relating to the TPPA. Many business, professional and public-interest groups want the government to exclude the ISDS as a “red line” in the TPPA negotiations.

Prime Minister Datuk Seri Najib Tun Razak had also mentioned investment policy and ISDS as one of the issues (the others being government procurement and state-owned enterprises) in the TTPA that may impinge on national sovereignty, when he was at the Asia-Pacific Economic Cooperation Summit and TPPA Summit in Indonesia last year.

So far, the United States has stuck to its position that ISDS has to be part of the TPPA and TTIP. However, if the emerging European opposition affects the TTIP negotiations, it could affect the TPPA as this would strengthen the position of those opposed to ISDS.

Meanwhile, we can also expect more countries to review their BITS. Developing countries seeking to end their bilateral agreements with European countries can point to the fact that more and more European countries are themselves having second thoughts about the ISDS.

Contributed by  Martin Khor Global Trends The Star/ANN

• The views expressed are entirely the writer’s own.

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Japan, reverting to its history’s infamy !

The ghosts of Japan’s imperial past have returned to haunt the nation, its government, and the other countries in this region.

IF anyone still doubts the controversies about Japan’s current nationalistic urges, news reports and media commentaries in the region clearly confirm they persist.

Nations sometimes have leaders who shoot themselves in both feet and then promptly stuff them in their mouths. Japan’s current leaders have lately outdone all these others before.

Opinion leaders in the region have recently noted the excesses of right-wing Prime Minister Shinzo Abe’s government, its various indiscretions, and the reactions to them.

Much in the simmering controversies, notably in South Korea and China, comes courtesy of Abe’s team in Tokyo’s establishment. He, his deputy Taro Aso and some of their appointees have actively stoked the embers of regional contention.

Abe, the nationalist grandson of imprisoned Nobosuke Kishi, a suspected “Class A” war criminal, had briefly served as prime minister before without much controversy.

But by courting contempt this time in trying to rewrite history and defiantly visiting Yasukuni War Shrine honouring war criminals to proclaim that Japan did nothing wrong in World War II, Abe got the trouble he risked getting.

Aso himself is a “veteran” in provoking controversy. As foreign minister before, he was even more defiant and unapologetic than Abe, and has lately called on Japan to learn from Nazi Germany.

Their appointees such as chairman Katsuto Momii and governor Naoki Hyakuta of public broadcaster NHK have likewise made outrageous comments about Imperial Japan’s atrocities.

Momii said the sex slaves that Japanese troops made of Korean women was a common occurrence of any country at war, earning a rebuke from the United States.

Hyakuta championed Imperial Japan, denying that the Nanjing Massacre ever happened.

Abe’s choice of other controversies at the same time included efforts to rewrite the post-war Constitution to make it less conciliatory, revising past apologies for the war, and hardening Japan’s claims to disputed maritime territories.

The result: aggravating relations with South Korea and China. Although China-Japan relations are often said to be fraught because of Japan’s horrific wartime incursions, Tokyo’s relations with Seoul are even worse.

Even at the height of activism against US imperialism decades ago, Japan remained the biggest sore point for Koreans.

Now Abe is even less popular among South Koreans than North Korean leader Kim Jong-un, with two successive Presidents – and conservative ones at that – underscoring this position.

In a Korean press commentary on Thursday, Abe was described as having “become by far the most hated Japanese head of government for Koreans in recent decades”.

With 82% of Koreans convinced that Japan has not atoned for its sordid past, others have called Abe by worse names.

But have Abe and his inner circle learned anything from all this? They have offered retractions and apologies when pressed, but remained firmly set in their views.

Yet it need not be so. It was not like that for many years before.

In the 1990s, NHK invited me to give a seminar to regional news correspondents at its headquarters in Tokyo.

I was then holding a fellowship at a Japanese policy research institute to examine the prospects for regional cooperation, which happened to be a time of some regional ferment.

I introduced South-East Asia’s history and cultures without mentioning the atrocities committed by Imperial Japan, because there was no need to. Yet a young newsman later approached me to say he knew of Japanese war crimes despite all the denials.

A senior NHK staff who shared the taxi with me later explained that the common image of a constantly apologetic Japanese people was a misleading stereotype. Wherever these NHK people have gone today, they do not seem to be represented in its board.

Around that time, “maverick” Japanese historian Saburo Ienaga was entangled with the Japanese government in several court cases over an accurate depiction of Japan’s role during the war.

In Tokyo’s clumsy attempts to whitewash its wartime atrocities, the Education Ministry rejected Ienaga’s school textbooks. As he arrived at the courthouse to take on the authorities, he was cheered by a supportive Japanese public.

The Japanese public has repeatedly been more enlightened and liberal than any nationalistic government or self-proclaimed “liberal” party.

Commentators put this difference down to a flawed and dysfunctional political system, despite a mantle of democracy.

A recent commentary excused Japan in otherwise unfavourable comparisons with a contrite Germany because of “cultural” differences. However, while Germany assists in the international pursuit and prosecution of Nazi war criminals, Japan has the Yasukuni Shrine glorifying such criminals instead.

The commentary added that Germany was different in being offered full membership of a European community.

Actually, Japan was offered both membership and leadership of an East Asian Economic Grouping, when its economy was stronger and China’s ascendancy was still in its infancy, but Tokyo rejected it outright.

It was further said that like Germany, full atonement is best done in groups. But very much unlike Germany, there are groups in Japan that continue to deny wartime atrocities and – like Hyakuta and his ilk – insist that Imperial Japan had done Asia a favour with invasion and occupation.

Hardly anyone who has suffered Japanese wartime occupation would believe that tale. Japanese forces had never invaded North-East or South-East Asia only to grant independence to the countries there.

Among these reactionary and revisionist groups was a far-right party that had organised an international conference in Tokyo to argue these points some two decades ago.

As I entered the hall as an observer, I was swiftly introduced to a war veteran who had proudly published a book to “prove” that the Nanjing Massacre was a myth.

When former Malaysian foreign minister Tun Ghazali Shafie spotted me in the hall, he came over to assure me that everything was under control and that the Malaysian embassy had a staff present to take notes.

I looked around and saw a young Malaysian diplomat trying to make sense of the proceedings.

The organisers had invited foreign speakers like Ghazali to endorse their views, to which he hastened to reply that all he meant was that the region should look to the future together rather than dwell on the problems of the past. They did not seem to take note of the nuances.

Such extremist groups remain active in Japan, and have become even more vocal and visible than before. Observers note that they have lately moved from the margins to the mainstream of Japan’s body politic.

What is the sum total of their impact on Japanese officialdom? How far has their influence strayed beyond Tokyo?

Earlier this month, a Japanese diplomat based in Kuala Lumpur reviewed some of these issues with me in a private discussion.

He was a youngish, liberal-minded officer about the same age as the NHK news correspondent who confided in me in the 1990s.

In the course of our discussion I mentioned that although South Korea and China are often cited as griping about Japan’s militarist past, people in South-East Asia who had also suffered Japanese imperialism feel the same without necessarily announcing it to the world.

He expressed surprise, not knowing before that anyone in this region had suffered anything under Japan during the war.

Tokyo’s history deniers and revisionists seem to have scored some success after all.

Contributed by Behind The Headlines Bunn Nagara, The Star/ANN

• Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.
• The views expressed are entirely the writer's own 

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Chinese satellite spots large new object could be related to missing MH370

The Chinese embassy here confirmed Saturday that Chinese satellite spotted a 22-meter-long and 13-meter-wide floating object along the southern corridor missing Malaysia Airlines Flight MH370 might have taken. Malaysian acting Transport Minister Hishammuddin Hussein, who placed the size of the object at 22 meters by 30 meters at a press conference, later corrected his statement. Photo: Xinhua / State Administration of Science, Technology and Industry for National Defense

The Chinese embassy in Malaysia confirmed Saturday a Chinese satellite had spotted a floating object along the southern corridor missing Malaysia Airlines Flight MH370 might have taken.



The satellite images, which China's State Administration of Science, Technology and Industry for National Defense said were taken Tuesday, show that the 22-meter-long, 13-meter-wide object was about 120 km southwest of suspicious debris, one of which was of similar size, captured by an Australian satellite (belonged to DigitalGlobe Inc, an American Colorado-based company that collects imagery for the US government and other countries, as well as private companies ) two days earlier and announced by Australian authorities Thursday.

Malaysian acting Transport Minister Hishammuddin Hussein put the size of the object at 22 meters by 30 meters at a press conference, but later corrected his statement.

Australia's acting prime minister Warren Truss said Saturday the suspicious objects remained "the best lead" in the massive search for the missing flight.

The objects might have either drifted or sunk, but "if there's something to be found, I'm confident this search will find it," Truss told a press conference.

The hunt would continue "indefinitely" until "we are absolutely satisfied that further searching would be futile," he said. "That day is not in sight."

In response to Xinhua queries, he said there were many explanations for the satellite images provided by the Australian Maritime Safety Authority (AMSA) but they remained "a very credible lead."

What Australia needed to do now was exert all possible efforts to search for the missing plane, he told Xinhua.

On Thursday, Australian Prime Minister Tony Abbott said the Australian satellite had spotted two objects, one 24 meters long, in the southern Indian Ocean possibly related to the Boeing 777 aircraft which disappeared early March 8 while carrying 239 people from Kuala Lumpur to Beijing.

The discovery led the multinational search forces to focus on a 36,000-square-km sea area about 2,500 km southwest of Perth, but so far there have been no findings of note.

Meanwhile, two Ilyushin Il-76 aircraft from the Chinese Air Force left Malaysia on Saturday for Australia to join the search in the southern Indian Ocean.

With Australian and New Zealand airforce P3 Orions limited by the vast distances and their dependence on infrared imaging, the Chinese IL-76 will be a welcome relief to the authorities here as the challenges of the task at hand begin to overwhelm available resources.

Commander Liu Dianjun told Xinhua he hoped the integration of Chinese military assets could precipitate a swift conclusion to the agonizing international search.

A Malaysian military official said the arrival of the Chinese aircraft beefed up the assets deployed for the search and rescue operation and boosted confidence of all the staff from different countries involved in the operation.

Truss also said the same day the arrival of Chinese military aircraft had provided a glimmer of hope.

A Chinese joint working group also paid two visits to family members of Chinese passengers on Saturday and Wednesday.

Guo Shaochun, head of the Chinese task force, said two weeks had passed since flight MH370 went missing and they were as anxious as the family members about what happened to the passengers.

Guo said the Chinese government attached great importance to coordinating support with Malaysia for the family members, and the Malaysian authorities said they would always be responsible.

"Please be at ease and take good care of yourselves, whether staying in Malaysia or leaving the country, your choice will be respected," he said.

Family members said their major concern was to find their loved ones, and they hoped Malaysia would keep them posted about any findings and intensify search and investigation efforts.

Meanwhile, the Indian government told Malaysian investigators it had found no evidence the missing jet flew through its airspace after checking its radar records, local media reported Saturday.

India's response is crucial, as any of their radar data could help identify whether the jet turned north or south after disappearing off radar, but the issue is also sensitive because of the presence of military radar. - Xinhua

Chinese vessels divert to southern Indian Ocean

More Chinese vessels are now en route to the search area and China’s Maritime Search and Rescue Cent...

Chinese satellite spots large floating object in Indian Ocean

The search for missing flight MH370 continues, and a Chinese satellite has reportedly spotted a new ...

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