Indonesia's Strategic Diplomacy: Navigating ASEAN's Challenges and the Indo-Pacific
Introduction
- Indonesia successfully chaired the ASEAN meeting, a significant event in President Joko Widodo’s term, considering he won’t seek re-election in 2024.
- Myanmar was not invited at the political level, and Thailand was in the process of forming a new government.
- Indonesia introduced the ASEAN Indo-Pacific Forum (AIPF) to embrace the Indo-Pacific region and promote peace and prosperity.
- President Widodo recognized the Indo-Pacific’s growing economic importance in his address to the AIPF.
Embracing the Indo-Pacific
- Indonesia adopted a functional approach to the Indo-Pacific, similar to the Quad’s cooperative perspective, without excessive concern about China’s reaction.
- China did not participate in the AIPF, raising questions about Indonesia’s stance on China.
Handling the Myanmar Crisis
- Indonesia acknowledged the limitations of the Five-Point Consensus (5PC) and accommodated Thai initiatives without derailing ASEAN’s position.
- Unlike some ASEAN nations, Indonesia did not appoint a special envoy for Myanmar but established an office to quietly engage with Myanmar, neighboring countries, and India.
- Indonesia engaged with Myanmar opposition parties but avoided contact with armed groups.
- The 5PC is now seen as a facilitating initiative rather than a binding decision, with no quick resolution in sight.
- ASEAN decided Myanmar would not host the 2026 summit, but it remains uncertain if this leverage will work.
China’s Challenge
- China’s role remains a significant challenge for ASEAN, particularly in managing big-power rivalry.
- China’s call for peace and prosperity implies a desire to prevent U.S.-China rivalry from affecting the region.
- Progress on the code of conduct in the South China Sea (SCS) has been slow, with differences over the United Nations Convention on the Law of the Sea and China’s new map complicating matters.
- Indonesia did not openly confront China over its map due to its role as ASEAN host.
- ASEAN’s efforts to assert centrality include embracing the ASEAN Outlook on Indo-Pacific (AOIP), enhancing coast guard coordination, and conducting joint defense exercises.
Unity and Decision-Making
- Despite asserting centrality, ASEAN faces questions about its unity due to Myanmar’s absence and Thailand’s slow transition.
- Indonesia is working on coordinated rules for ASEAN’s actions in the absence of consensus, moving decision-making away from full consensus toward a “coalition of the willing.”
- Indonesia, Laos, and Malaysia form a troika to guide ASEAN’s future course.
Conclusion
- Indonesia’s presidency successfully managed ASEAN amidst challenges, emphasizing the importance of ASEAN stability in a dynamic world.
The troika formed with Laos and Malaysia will continue steering ASEAN’s direction in the future.
The Chaos in the Platform Economy
Introduction
- The platform economy continues to be marred by turmoil, as a recent incident involving protests from platform “partners” highlights the precarious position of workers who invest in training and onboarding only to find themselves excluded.
- Here we will delve into the challenges faced by gig workers in India, the power dynamics in the platform economy, and the urgent need for government intervention.
Growing Gig Economy
- NITI Aayog’s policy brief predicts a three-fold increase in gig economy workers by 2030, reaching approximately 2.35 crore workers or 4% of the total workforce.
This rapid growth is seen across both low-skilled and high-skilled jobs, signifying a significant shift from the 1% participation in 2019-20.
Motivations for Gig Work
- A report by BCG suggests that gig workers are attracted to the possibility of higher wages and flexible work schedules.
- However, despite the income potential, 78% of gig workers earn less than ₹20,000 a month, compared to 50% of non-gig workers in similar roles.
- Many gig workers struggle to secure even a day’s work, and 61% work less than eight hours daily, while ride-sharing workers may work up to 16 hours a day for decent income.
Consequences of Expansion
- The expansion of the gig workforce, as projected by NITI Aayog, may lead to increased job insecurity due to reduced hours and pay.
- This insecurity is compounded by the fact that 29% of gig workers have not completed matriculation, limiting their options further.
Precarious Behavior and Safety
- Gig workers often engage in precarious behavior due to time pressures, with 47% of delivery workers admitting to exceeding speed limits.
- This has resulted in a significant number (42%) experiencing collisions that damage their vehicles.
- Such behavior not only affects their income but also poses risks to other road users.
Debt Trap and “Forced Entrepreneurship”
- In India, gig workers are compelled to make significant capital investments, trapping them in debt and dispelling the myth of flexibility in gig work.
- Some refer to this situation as “forced entrepreneurship” or “bogus self-employment.”
Government Intervention
- The government needs to acknowledge the hardships faced by gig workers and recognize them under all labor codes.
- Currently, only the Code on Social Security provides benefits like provident funds and accident benefits, but this makes workers subservient to the platforms.
- To empower gig workers, they must be allowed to form unions, engage in collective bargaining, and command a minimum wage. Necessary changes in other labor codes are imperative to facilitate this.
Legacy of Indian Entrepreneurs
- Entrepreneurs like JN Tata, Jamnalal Bajaj, GD Birla, and Brijmohan Lall Munjal left behind a rich legacy of dealing with workers.
This historical approach could guide modern startups in fostering better industrial relations in India’s platform economy.
Delhi Declaration and the Role of Multilateral Development Banks (MDBs) in Climate Finance
Introduction
- India has achieved a perfect 10 in G20 diplomacy and reached a consensus in the Delhi Declaration.
- This accomplishment raises the question of what comes next. Notably, the pandemic and the Ukraine crisis have pushed the world to unite against climate change, with eight out of the 12 commitments in the Declaration focused on sustainable growth, climate change, and inclusivity.
MDBs and Climate Finance
- Multilateral Development Banks (MDBs) are assigned a crucial role in providing climate finance.
- They are expected to use their resources and mobilize finance from other institutions, particularly for climate finance.
- The Asian Development Bank (ADB) aims to achieve a co-financing ratio of 1:2.5 by collaborating with other lenders in Asia and the Pacific.
Reform Pathway for MDBs
- The reform pathway for MDBs, as outlined in the Declaration, has been under discussion for some time.
- The G7 countries, led by the US, have been pushing MDBs to leverage their balance sheets better, aiming to mobilize almost $200 billion for lending, especially for climate finance.
- This is in response to criticism by developing countries that Annex 1 countries (as per the Kyoto Protocol) have failed to provide $100 billion in additional finance for climate action.
- MDBs have taken center stage by pledging to align their new sovereign and non-sovereign lending with the Paris Agreement by 2023 and 2025, respectively.
Sustainable Development Goals (SDGs)
- Implementing the Sustainable Development Goals is an unfinished agenda. At the midpoint to 2030, only 12 percent of the SDG targets are on track.
- The Declaration emphasizes the need for reforms in MDBs to address global challenges and maximize developmental impact.
Paths for MDBs Post-Declaration
- Leverage Balance Sheets: MDBs must implement the recommendations of the G20 Independent Review of MDBs’ Capital Adequacy Frameworks (CAFs) to create more financing headroom while maintaining long-term financial sustainability and credit ratings. An Evolution Roadmap is expected to provide further momentum.
- Mobilize Private Sector Finance: MDBs are called upon to attract private capital through innovative financing models and partnerships. Private enterprise is essential for accelerating growth and sustainable economic transformations.
- Innovative Financing Mechanisms: MDBs should employ various financial instruments, such as blended finance, risk-sharing facilities, and green bonds, to support climate goals like Nationally Determined Contributions (NDCs) and carbon neutrality. Initiatives like ADB’s Energy Transition Mechanism and the World Bank’s Just Transition Initiative are examples.
- Assist in NDC Implementation: MDBs should play a prominent role in supporting developing countries in setting up a New Collective Quantified Goal (NCQG) of climate finance in 2024, especially in meeting their NDC needs and clean energy technology requirements.
Conclusion
As global leaders focus on enhancing climate ambitions, the role of MDBs in mobilizing resources for these high-sounding resolutions becomes crucial.
The Delhi Declaration sets a path for MDBs to not only address climate change but also contribute to sustainable development goals and bridge the financing gap required to combat climate change effectively.
MDBs must adapt and innovate to fulfill their evolving responsibilities on the global stage.
