March 1999

Stability and Conflict in 1999

Part I, January:

– The Americas

– Europe

Part II, February:

– Africa

– Middle East

Part III, March:

– Russia / Former Soviet Union

– Indian Subcontinent

– Pacific / Asia

Part III, Russia / Former Soviet Union – Indian Subcontinent –

Pacific / Asia

Russia / Former Soviet Union

The dissolution of the former Soviet Union has created many new countries. The majority of the larger peoples who were living in the Soviet Union received, or better, took the opportunity to regain independence from their former masters in Moscow.

The largest inheritor of the Soviet Union are ofcourse the descendants of the builders of the former Soviet empire, the Russians. Russia remains the largest state in the region. The capabilities and more important the potential of Russia, human, technological, industrial and resources like, makes them to a very powerful country. Even considering the political and economical problems they have experienced in recent years. Russia will be a superpower with certain limitations.

The successor of the Soviet Union is the C.I.S., Community of Independent States. The C.I.S. is less powerful and hierarchical as the Soviet Union but they have taken over some functions of the Soviet Union in areas like cooperation in political and industrial affairs and especially on common defence and security. The relationship in the C.I.S. is based on common agreements and discussions. All members remain independent as the C.I.S. is more like an association of common interests than a confederation-like successor of the Soviet Union. Not all former members of the Soviet Union are members in the C.I.S.

The C.I.S. is dominated by Russia, as Russia was the strongest political, economical and military power of the participating countries. The dominating role of Russia was at first accepted as the internal situation in and external relations of the other countries were unclear. The economic crisis in Russia and decaying political and military power will lead to an assesment of the structure of the C.I.S. Russia’s influence will decrease and some countries will leave to C.I.S to pursue and independent policy.

The new countries, excluding Russia, can be divided into three groups. The more Russian like countries like Ukraine and Belorussia. The poor and small countries in the Caucasus with the exception of oilrich Azerbaidjan. And finally the islamic, and some of them resource rich, countries in the south-east of the former Soviet Union like Kasachstan and Uzbekistan. The new leaderships in each of those countries are mostly former communist party leaders. They have continued to govern in the same way a they used to do with sometimes a market economist flavour but mostly as the sole leader without the acceptation of any serious opposition.

The general situation in the majority of those countries is negative. Several actual and latent problems are depressing the stability of each of those countries. All problems, except one or two, are internal problems or problems with Russia. Russia remains the dominating power for some time, and as such will try to influence internal politics in their sphere of influence.

Russia

The largest country of the former Soviet Union has not reached the same level of wealth and influence as its predecessor could accumulate. The consequences of the fall of the Soviet Union have been very heavy on most of the countries, entities and people in the former empire. The only advantage seems to be the lessened religious discrepancies between the Russians who are orthodox and the Asiatic peoples of which the majority are moslems. The continuing growth of the moslem population had become a real problem in the Soviet Union. The religions became factually separated as the majority of the Asian peoples of the Soviet Union have received their own state and where they have the opportunity to develop and live as they want to. Religious, social and economical.

The political changes in Russia have not brought the progress and wealth that was expected by many. The current political system in Russia has created uncertainty about who is in control and what is the future policy in Russia. The current president, Boris Yeltsin, is ill and politically hurt by the economic crisis and the inability to implement a positive change. The parliament, the Duma, is controlled, dominated, by radical parties like the former communists and extreme right organisations who want to damage the government of the president to force Russia back to the old days. And finally the military is weakened by chronically underfunded budgets which have hurted the capabilities of the armed forces in manpower, equipment and modernisation.

The changes had an incredible impact on the economy. The unproductive industry with inferior products had at once to compete against western and eastern products which were very often of better quality, cheaper and fashionable to procure. The resulted industrial downturn created unemployment of over 10 %, inefficient and very low tax collection, increasing debts and an unstable currency. After the fall of commodity prices, the absence of foreign investment, the end of the financial support of the IMF and consequently the devaluation of the national currency, the ruble, an economic crisis.

The only group of people who profited from the political changes were a group of businessmen, who became very wealthy, even billionaires, by international commodity trade, financing and a number of them through criminal activities. The Russian maffia secured a large share of the wealth in Russia and are very succesfull with their illegal activities abroad, especially in western Europe.

The economy of Russia has been virtually destroyed by the introduction of a market economy. A medieval kind of barter economy has replaced the newly introduced endaveour towards a market economy. Some industries can keep on operating in this peculiar way of doing business. The majority is however closed because of the political and economical changes in the country.

The population suffers the most from the crisis. Poverty under large parts of the society have come into existence. Social instability has had a damaging effect on the relations in and between family, company, society and country.

The economical problems had consequently a damaging effect on the political leadership and the ability to govern the country. Policy could not be executed, wages and pensions not be paid and the military is heavily underfunded.

A cyclical process had started because of the problems on nearly every field and sector in the country. Political instability led to economical instability, this led to social instability and the circle starts over again, a downward spiral.

The dissolution of the Soviet Union led to the rebirth of Russia but not a strong and stable Russia. The situation in Russia is far from stable. Beside of the economic problems which are felt by nearly everyone, there are still a number of unsatisfied groups in the country. Especially the Caucasus remains a volatile area.

The problems are deteriorating by the weak situation in Russia. As the government is or seems ineffective, the problems will worsen and the demands out of countryside will get louder and more dangerous.

There was first the demand in Chechnya for independency from Russia. After a prolonged insurgency, civil war, the Russian internal security forces, OMON, and the Russian armed forces were forced to leave Chechnya. The diplomatic solution have given birth to a five year grace period where after the Chechnyians can receive independence if wanted. Chechnya had became a de facto independent country.

The state structures and level of government remains however very low in Chechnya. The government under the leadership of Aslan Maschadov has not been able to control the country. The former warlords, or army leaders, have kept their power and militias which have each an own agenda. They all control a small territory and fight with neighbouring groups about power and wealth. Anarchy, chaos, kidnappings and racketeer operations are a normal fact of life in Chechnya.

The political, economical and social stability are non-existent in Chechnya as long as the central government can not control the many small militias in the country. Chechnya remains the snake pit of the region, very deadly if you get involved without precautions. A civil war is about the start again in Chechnya, not against the Russians but against the central government and between the several militias.

The second problem are the other Russian republics in the Caucasus which are also dissatisfied. Republics, regions, like Dagestan and Ingusjetia are dependent on financial support from Moscow. The economical problems of Russia limits the support to those regions. This can and possibly will lead to violence and calls for independence from Moscow. With support from some groups out of Chechnya violence and resistance against the regional governments is stimulated. A similar development as in Chechnya is one of the possibilities in large parts of the Russian controlled Caucasus.

The third problem in Russia are the 89 regions and republics like the Krasnoyarsk, Kalingrad, Jakoetia, Far East and several in the Ural. 80 of the 89 regions are dependent on support out of Moscow, like the above mentioned Dagestan, and a large number of them start to implement their own policy. Some of the governors of the above mentioned regions are already running their region / republic as an independent state. They collect taxes, pay wages and pensions, accumulate gold and other commodities and are pursueing an internal and external policy independent of Moscow. If the situation deteriorates any further the possiblility of a breakup of Russia into 8 or 9 parts is one of the possibilities, especially if Moscow does not adress the problems and demands of the regions and the sometimes very ambitious governors with appropriate care and attention.

The political stability will not improve in 1999. The parliament will continue to block any proposals which could create some progress as this would undermine their own agenda. They want to return to the situation of the former Sovjet Union with more or less the same government structure.

The president Boris Yeltsin with the support of the more left oriented prime minister Jevgeni Primakov will not be able to implement the much needed policy to increase the tax collection, boost the economy and stabilise the regions. Yeltsin, even with the support of Primakov, has to many opponents, in parliament, in the administration and on the street, who want him out of government.

And prime minister Primakov also has an agenda of his own, he wants to improve the political and economical situation in Russia but he is also using his position to inforce his own position by trying to eliminate the influence of the president, the business tycoons and the Yeltsin clan.

Beside the problems, instability, in the center the other part of Russia is also divided. The regions demand a greater say in and want more support from Moscow. The majority of the regional / republican governors want to maintain Russia but not if the current political elite remain on the same course. The regions will therefore go on to execute their own regional policy which is to the benefit of their own people.

The Caucasus will remain volatile and be leaning towards agression. Groups in the Caucasus will want to establish independent nations in the area to satisfy their own power wishes and out of the conviction that they could bring some improvement. The reactions of Russia and internal differences in each of the wannabe countries in the Caucasus will be responsible for more bloodshedding in the near term future of Russia.

The economy will only show some slow improvement as the industry will slowly become more productive and competitive. The absence of foreign products, because they are to expensive, will bring some more solace. The depressed commodity prices will not bring any relieve to the economy in the coming year. It will take at least another year before revenues from the commodities trade will be an important contributor to the Russian economy.

The bad political and economical forecasts will have an negative effect on the social stability. Poverty will remain around in large parts of the Russian society and will destroy many relations in the society.

The biggest chance for improvement is some kind of economical stabilisation, some small growth and regional activities to improve the economy. The next presidential elections could than bring forward a strong president with a more supportive parliament which could implement an effective policy which would boost the economy and in course the social stability of Russia. This scenario would in the end deliver more power to the regions but also a united Russia.

Moldova

This small country between the Ukraine and Romania has experienced a violent secessionist movement just after the independence of Moldova from the Soviet Union. The Russian/Ukrainian part of the population, around 25-30%, who are mostly living in the Dnjestr region did not want to live in Moldova and wanted their own independent republic. After Russian interference and mediation the situation calmed down and with some kind of autonomy the Dnjestr region remained part of Moldova.

Moldova was a poor and underdeveloped region in the former Soviet Union. This has not changed since the independency. The recent economic performance has been negative. The economic dependence on the former Soviet Union and afterwards Russia could not yet be replaced by new relations. The Russian crisis had immediately a negative effect on the Moldovan economy. Moldova is economically unstable through the dependence on Russia, the high debts and the lack of promising industries.

The social situation is some what better, the social stability could be maintained. The people are poor but they can make a living.

The political stability is more uncertain. The communists still have a lot of influence in Moldova. They are vehemently against the liberal economic policy, like the privatisation plans, of the government. They want to turn back the clock and create ones again a communist state. The recent economic crisis in Russia and the negative consequences of that crisis in Moldova give the communists more power. They could destabilise the government.

Beside the internal political tensions, there is another problem. The Dnjestr problem is still not solved satisfactorily according some people in the Djnestr region. New organisations are being formed who resist the Moldovan authorities in Djnestr. The Russian instigated treaty which calmed down the insurrection last time is loosing its value and Russia is not in the same position to solve the problem again. They have enough problems of their own.

The political, economical and social stability could because of the economic crisis, the political division in parliament and the increased tensions in the Djnestr region decrease. The latent conflict in the Djnestr region could prove to be the most dangerous factor in Moldova. Even limited actions will be to much for the politically destabilised, weak and poor Moldova. A conflict is to expensive and will not only destabilise the economy but also the social and political stability beyond any possibility of repair.

Belarus

The independence of Belarus from the Soviet Union has been disastrous and not wanted by the political elite of the new country. The elections brought forward Alexander G. Lukashenko as president. This former kolchoze manager and true communist eliminated all oppostion to its rule within a year and gathered sweeping powers in the second elections held in the country. The goal of Lukashenko is to reestablish the Soviet Union to its old might. The first step toward the realistion of that goal is the reunion, first economically later possibly politically, with Russia, a treaty to reach that goal has been signed by both countries but not yet executed. Other even more integrating plans have been shelved but could be reinstated if wanted.

The country is politically stable as all opposition have been jailed or suppressed by one of the most suppressive security apperatus in Europe. It might be unbelieveable but socially it is also stable. The majority of the population is still rural and under control of the communist party organs.

Enonomically, Belarus is close to bankrupt. The economic policy of Lukashenko have been disastrous for the economy. The Russian crisis have been the nail to the coffin of the Belarus economy. Industrial production is at an all time low and unemployment and poverty are rising throughout the country. Even the countryside starts to feel the economic problems.

The economic instability could fuel social instability. If this development can not be stopped in the countryside this could undermine the position of Lukashenko. The recent approaches to the west can be considered as an opportunity of last resort to improve the economy.

The economic instability could create some social and political instability in 1999. The security apperatus, the party organisation and the absence of serious competitors to the presidency will forestall any great changes and keep Lukashenko and his policy in power. A reunion with Russia is very unlikely as Russia will not be interested to get the Belarus economic problems added to their own problems. Russia is only interested to maintain the current relations. This will give them some influence in Belarus politics and position without having the responsibility to solve the problems in Belarus.

Ukraine

The independency of the Ukraine has been welcomed in the majority of the country. The Soviet economic system has been responsible for the bad shape of the Ukrainian economy. The industry and agricultural structure of the country is unproductive and needs improvement.

There is widespread social instability because of the economic problems. This social instability has been aggravated by the division of the Ukraine into two parts. The western part is inhabited by Ukrainians but the eastern part is inhabited by Russians. The Russians pose a sizeable minority on the Ukraine and there concerns should be properly adressed. As they are leaning towards more cooperation, even reunion, with Russia, instead of the western orientation of the Ukrainians.

The election of pesident Leonid D. Kuchma has been a stabilising factor in the Ukraine as he is aware of the concerns of the Russians living in the country.

The same level of instability will remain in 1999. Economically the situation is depressed and in need of improvement. This will be at least a five year plan with western support and an improvement of the world economy before some improvement will be visible. The political and social instability will also remain the same as there is no alternative to the current government and policy.

Georgia

The rebirth of Georgia as an independent state had to be protected against three internal threats who wanted their part or a change of policy in Georgia. This continued struggle to unite the country has been damaging on the economic and social stability.

The economic growth and development is hindered by first the civil war in Abchasia and thereafter by the tensions and low intensity fighting in Abchasia, South Ossetia and by violent actions of the internal opposition. The high costs of these conflicts have made investments in the country impossible or useless. This has led to social instability in the country. The country is divided by poverty and by the continued internal and semi-external conflicts.

The political stability in Georgia is undermined by the secessionist movements in Abchasia and South Ossetia and by violent opposition parties in Georgia. The opposition parties do not agree with the government policy on Abchasia and South Ossetia. According to the opposition these movements should be eradicated as those two parts belong to Georgia. The opposition is very clear in their wishes and are prepared to use violence to attain their goals.

In the first years of the independency those groups were used by the government in Georgia to fight in Abchasia. After a cease fire was reached, by mediation or better pressure from Russia, the government under the leadership of president Eduard A. Shevardnadze had to accept more or less the division in Georgia. The opposition could not accept the cease fire and started to fight the government.

The Russian involvement in Georgian internal affairs had to be tolerated because of the weakness of Georgia and the relative power position of Russia. This is and was however not appreciated by Georgia. As a result Georgia will try to minimize Russian involvement in internal affairs and will use any weakness of Russia to loosen the ties with Russia. The membership of the C.I.S. could be terminated by Georgia as one of the first steps in this proces.

The situation is Abchasia and South Ossetia has been stabilised somewhat by the cease fire. Large scale fighting between the opponents are over. The political situation is as these two regions are already independent states. Officially they belong to Georgia but de facto they are run by themselves.

The political situation remains far from stable as is clear by the sporadic fighting between Georgia, Abchasia and South Ossetia. The instability is further fuelled by the actions of the Georgian opposition movements who continue to operate all over Georgia. This has effect on the economical and social stability in the Georgian area. Economic activities are depressed and the fighting destabilises the economy in general. The social instability is increased as the division and poverty in the population gets more widespread.

Armenia

The situation in Armenia stabilised somewhat after the cease fire with Azerbaijan came into force. The conflict with Azerbaijan about Nagorno-Karabach, an Armenian enclave within Azerbaijan, have ended for now in the military advantage of Armenia. The Armenian forces could conquer and hold the enclave and the areas around the enclave to create a connection between Armenia proper and Nagorno-Karabach. The Armenian military was, is and will be on the short term stronger then the Azerbaijan military capabilities. Azerbaijan will not be in the position to reconquer the lost territory on the short term.

Armenia has been relativily stable after the fighting had ended. Politically, the policy is dominated by the conflict with Azerbaijan. This continues to be an important case in Armenia. No politician can afford it to give up the enclave. As long as they support the enclave the politicians will receive the support of the population. But the government is more moderate than during the war. Externally it has been a negative factor in the improvement of relations with Azerbaijan and some western countries.

The economy recovered and started to grow after the cease fire. The high cost of the conflict decreased and more funds became available for the improvement of the Amenian economy. The cease fire and the more moderate policy of the government attracted more foreign investments, especially out of the Armenian diaspora. As Armenia has no valuable resources like oil the economy has to be based on production of goods which demand more investments.

The social stability soared as the conflict ended in the avantage of Armenia. The economic growth which followed the cease fire supported the attained stability.

The political, economical and social stability can most likely be maintained in 1999. The Russian crisis will limit the economic growth somewhat but not that dramtically as for example in Moldova. Armenia is less dependent on Russia and has stronger supporters in the form of the Armenian diaspora.

Azerbaijan

The potentially rich Azerbaijan has experienced a lot of difficulties after the dissolution of the Soviet Union. They have been humiliated in the conflict in Nagorno-Karabach. Internally there have been some difficulties with the dominating position of president Heidar A. Aliyev, the popular authoritarian leader. This former communist could gain power in Azerbaijan by elections, his policy after the elections was to suppress any opposition towards his regime which supposedly is corrupt. And finally the low oil prices destroyed any hope on a quick recontruction of the economy despite the large foreign investments into the oil industry which is outdated and inefficient. It will take an increase in the oilprice and a couple of years before the investments are translated inyo revenues for the economy.

Azerbaijan is not very stable. There are to many threats to the stability of the country. On the positive side, politically, Aliyev holds a tight grip on to his position and could reestablish law and order after the war with Armenia. But on the negative side, the defeat in Nagorno-Karabach, the occupation of a part of the country by Armenia and the weak economy could become a serious threat to his regime if a turn around takes to long.

Economically, the position of Azerbaijan is very bad. There was first the conflict with Armenia and the many fugitives out of the war area which drained the budget. And after the cease fire the drop in the oil prices and the Azeri dependence on the oilrevenues has virtually destroyed any plan for the reconstruction of the country. The badly needed investments in the economy, especially into the all important oil industry, have been delayed and there were no government funds available nor foreign investors willing to invest more or in other sectors in Azerbaijan to boost the economy. And more importantly the investments in the oil industry do not bring any revenues on the short term so no relieve of the hard hit budget. Finally the question of how to transport the oil out of Azerbaijan is, beside the low oilprice, another obstacle to new investments in the region. The transport problem is important because of the costs and the volatility of the area where Azerbaijan is situated.

Socially, the population is dissatisfied because of the worse economic situation, the lost war and the many fugitives. President Aliyev remains however very popular. He benefits from the successes he gained like the attraction of a lot of foreign investments, the arrangement the cease fire and the creation of some internal stability, especially law and order after the war with Armenia.

Political, economical and social instability will be present in Azerbaijan in 1999. The situation does not predict any positive development on the short term. The low oilprices limit any new investments. Economic growth will not be attained in 1999. The social consequences of the economic crisis will have a damaging effect on the population and will create more dissatisfaction. The present government will be able to survive these problems through its popularity and the old trick of suppression and disinformation.

The remaining looming threat is the occupation of a part of Azerbaijan by Armenia. The cease fire is the best solution for the moment but the Azari government would like to solve the problem as soon as possible on their terms. A diplomatic solution with the fulfilment of the Azeri, or for that matter Armenian, demands is not possible. A compromise is not acceptable for each of both parties. What is left is the military solution of the Nagorno-Karabach problem, which would boost the Azeri political and social situation, will prove to be impossible on the short term. An Azeri military operation against Armenia demands an increased capability of the defence foces which is not fundable by the current Azeri government. And if the Azeri side would attack to early, if they are not fully prepared and / or Armenia is still to strong, the results will be devastating for Azerbaijan.

The Asian republics of the former Soviet Union

The Asian republics of the former Soviet Union, Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan, are having their own share of instability. The governments who came into power after the dissolution of the Soviet Union are led by former communist leaders who continue to govern in the same way with the same structures as in the Soviet days. The only change have been more attention towards a peculiar kind of democracy and to traditional islamic values.

A number of defence and border confidence building measures agreements have been closed between the Asian republics and respectivily Russia and China. For example an air defence early warning treaty between Russia, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. Azerbaijan and Moldova will probably follow. Or the five nation agreement to improve military confidence in border areas between Russia, China, Kazakhstan, Kyrgyzstan and Uzbekistan. Or the cooperation agreement to contain the Taliban in Afghanistan between Russia, Turkmenistan, Uzbekistan and Tajikistan. These are the most important ones beside other economy related multi- and bi-national agreements. The relations between the Asian republics are generally, beside a few disturbances, good. The problems are largely internal about power and the division of it.

Kazakhstan

The largest and wealthiest of the new Asian republics, Kazakhstan posesses very large oil and gas reserves. The Kazakh economy is the best perfoming economy of all post Soviet economies.

The president of Kazakhstan, Nursultan Nazarbayev is an autocratic leader. He is the sole power in Kazakhstan. The recent elections were a staged performance with the goal of electing Nazarbayev. According to Nazarbayev; democracy in Kazakhstan comes from above, the president has arranged his own kind of democracy. Which is supposedly the best for all. The people are not ready for a western kind of democracy.

In Nazarbayev’s elections opposition is controlled and granted a little piece of the cake. Therefore the only serious opponent, Akezjan Kazjegeldin, was sidelined on the accusation of being present at a meeting of an illegal not registered organisation, the Movement for Fair Elections. All other unwanted opponents were sidelined by the very harsh rules for being a candidate. The elections were consequently easily won as Nazarbayev controlled the parliament, the regional governments and the press.

The president holds a tight grip on the government of Kazakhstan. The opposition is dissatisfied but not in a position to act against the government. The opposition is and will not be able to use violence it is limited to some small parliamentary like opposition and do not have the support out of the population to become dangerous.

The large minority of Russians in the north and north-west of Kazakhstan could become a larger problem. They are less likely to be supporters of Nazarbayev regime and have strong backers in Russia. All agreements with Russia will not limit Russian support and protection of their group in Kazakhstan.

The replacement of the capital from Almaty to the remote and barren Astana, or Akmola if you wish, is to demonstrate the Kazakh claim on the whole of the country including the Russian inhabited parts.

A possible distant problem could become, despite several multi-national and bi-national agreements, China. The relations with China are at the moment friendly. There are two threats to these good relations, firstly, the wish of China to dominate its neigbours and the need to secure energy resources for the Chinese economy. China might be tempted to get involved in Kazakh politics. And secondly, the Kazakh support of the minority of Uigur peoples in the Chinese province of Xinjiang. The Uigur people are Sunnite muslems who are speaking a Turkish language just like the Kazakh people. The Chinese can not afford to loose the province of Xinjiang and would consequently not tolerate any kind of foreign involvement in Chinese affairs.

The political stability can be maintained in 1999 as the regime of Nazabayev will hold on to the position they have. There is no contender to replace him on the short term, either peacefully or forcefully. The Russian minority can be controlled if the Kazakh government does not unnecessary estrange and suppress the Russian community in the north of the country.

The economic stability can also be maintained in 1999. The potential wealth, the revenues out of the energy export and the lease on the Russian space port in Kazakhstan guarantee a steady flow of money into Kazakhstan. The economy will show some growth in the coming years. The growth could be larger if the freedom of the people would be larger but this would be at a cost.

The political and economical stability has created social stability. There is some opposition to the government but not the kind which would be damaging to the government. The majority of the people accept and feel comfortable with the Nazarbayev government.

Uzbekistan

Uzbekistan does not posses the same wealth as Kazakhstan or Turkmenistan. They have some gas reserves but small compared to the other two. Uzbekistan has been throughout history the governmental, cultural and religious center of the region. The central geographic location, the large population, strong military and the reliance on trade and agriculture have been the cause of their historical strong position in the region. This has been the case from the days of Dhengis Khan until the Soviet era.

Uzbekistan wants to regain this central position and are busy to gather support from their neighbours to increase the cooperation. They try to maximise their influence and minimise Russian influence in the region. The membership of the CIS could be sacrified in this battle of influence and power. A lot of funds are invested in upgrading the infra-structure and the industrial capabilities of Uzbekistan. The economy is not a star performer but is doing allright in the group of countries in the former Soviet Union.

The political situation in Uzbekistan in stable. The government under the leadership of Islam A. Karimov has proven itself as capable and has been extended by plebiscite. There are no immediate contenders to the position of Karimov as he does not accept any opposition. All opposition is forced into the illegality and therefore easy to control and if necessary to suppress.

The political problem is its foreign policy. As they want to be the center point of the region they have gotten involved in the politics of its neighbours. Uzbekistan opposes the stationing of a Russian division in Tajikistan. The Tajiki government is accusing the Uzbek government in supporting Tajiki rebels with bases and the provision of equipment. The desire to have another president, government, in Tajikstan could lead to increased tensions between Uzbekistan and Tajikistan.

The threat out of Afghanistan has diminished recently. The countries with a common border with Afghanistan, with the support of Russia, have all agreed to support the northern opposition against the Taliban. This will limit the chances of the Taliban to conquer the whole of Afghanistan, at least the attrition will make them less dangerous and will make it more difficult to undermine the populations of Turkmenistan, Uzbekistan and Tajikistan with Taliban style muslem fundamentalism.

The population is satisfied in the new post Soviet situation. The economy is promising and have been lesser hit by the drop in oil prices and Russian crisis than Kazakhstan.

The political, economical and social stability can be maintained in 1999. The government of Karimov is stable, the economy will grow slower than anticipated but will not endanger the country’s prospects. The social stability will remain intact, there are no big differences in the populations and no external threats, like fundamentalism, to socially destabilise the country. The only threat to Uzbekistan is about the interference in the policy of other countries, like Tajikistan.

Turkmenistan

This Asian republic have been gifted with large reserves of oil and gas. The potential wealth of Turkmenistan could bring prosperity to the country if the natural resources can be exploited properly. Turkmenistan has the same problem like the majority of the other oil rich countries. They possess large reserves of energy but the problem is how to transport it to the markets. The volatility in the region could make any transport system, pipeline, vulnerable to attacks, sabotage, taxes and illegal draw off of oil. This would make the production expensive and insecure.

Several transport possibilities have been processed beside the existing ones. But all are not secure and not cheap. The existing line through Chechnya is being plagued with sabotage, draw offs and is expensive because of the taxes from the government. A pipeline is planned around Chechnya but this will increase the Russian influence and is still vulnerable to Chechnyan terrorist actions. Another option would be a new pipeline through Azerbaijan and Georgia to the Black Sea. This line would have two problems, first the Armenian threat in an event of crises and the objections of Turkey of to many large ships sailing through the Bosporus. An option would be to build a pipeline through Turkey. This would eliminate the Bosporus problem and would stimulate the Turkish economy but it would ad the Kurdish threat to the pipeline. And finally the Turkmenistan government will also have to build a pipeline through the Caspian Sea which is expensive.

The second option, the cheapest and savest option would be a pipeline through Iran. This would make economically the most sense but would be politically more difficult to realise as the U.S.A. opposes any larger business relations with Iran. And U.S. oil companies have a large stake in the Caucasus and Asian oil business.

The third option would be a pipeline through Afghanistan and Pakistan. This would be an attractive alternative if Afghanistan would not be divided and destroyed by a war which will continue at least for another decade and Pakistan which is ever more becoming unstable.

The first option through Turkey could become the most likely option. As it is the least dangerous, most controllable and lessens the dependence on Russia. The majority of the new republics want to lessen the influence of Russia in their countries.

If the oil prices increase and the exploitation gets underway the economy of Turkmenistan, and the other resource rich countries, would start to grow. The dependence on Russia would automatically lessen and an independent economy with more than only an oil industry could be constructed. If a prudent government policy is executed.

The situation in Turkmenistan is relativily stable. The government under the leadership of president Saparmurad A. Niyazov has recently been extended by a plebiscite. Like other leaders in the region the authoritarian style of leadership is popular in these countries as it creates some kind of stability, law and order, and the peoples are used to such kind of government.

The only threat to Turkmenistan has been the Taliban in Afghanistan if they would want to spread their version of islamic fundamentalism to the islamic former Soviet republics. The agreement with Russia, Uzbekistan and Tajikistan to support the opposition in Afghanistan has limited the possibilities of a Taliban victory. And the presence of Russian forces in Turkmenistan will, in a worst case scenario, limit the chances of a spill over into Turkmenistan by Afghan Taliban forces.

The economic situation is highly dependent on the rise of the oil price. The oil industry, with western support, could bring progress and prosperity to Turkmenistan on the short term. Otherwise the economy will be lagging behind and with only great efforts some economic growth would be attainable.

The social situation is stable as the majority of the people support the president. As long as there are no large changes in the political and economical situation the people will not oppose the geovernment.

The political, economical and social stability can be maintained in 1999. There is no threat or competitor to the government of or to Turkmenistan. The economy has some problems but they are bearable and an increase in the oilprice will make up all problems. The social stability can also be maintained as long as there is some political and economical stability. The population is pretty homogeneous in ethniticity and religion which promotes the stability.

Tajikistan

The situaton in Tajikistan is much different from the other countries in the region. Tajikistan is less wealthy, less homogeneous and more volatile as former government officials and groups out of Afghanistan operate against the government of president Emomali Rakhmonov.

Former prime minister Abdulmalik Abdulladzhanov and former colonel Makhmud Khudoiberdyev have staged at least four attempts, 1995, 1996, 1997 and finally 1998, to unseat the government. Each time military rebel forces entered Tajikstan and tried to take over the country. Several times some towns came under their control before they were droven off by Tajiki armed forces. The rebels allegedly received support out of Afghanistan and Uzbekistan. There were training camps in northern Afghanistan and in Uzbekistan who also supported these rebel forces with asylum and equipment. The Tajiki government accused the Uzbek government for supporting terrorists for a number of years. This has been a dangerous threat to the government of Tajikistan under the presidency of Rakhmonov.

Beside the opposition of Abdulladzhanov and Khudoiberyev there are some groups operating out of Afghanistan who want to destabilise the government to replace it with a fundamentalistic regime. They stage regular expeditions into Tajikistan with the sole aim to make the current government less acceptable.

The presence of a Russian infantry division and the agreement with Russia, Turkmenistan and Uzbekistan to support the opposition in Afghanistan to limit the influence of the Taliban have minimized the operations out of Afghanistan. This support have been advantageous to Tajikistan as it relieved the Tajiki forces from fighting the opposition forces on their own. They consequently improved their position and recently have beaten the opposition every time.

The political stability of Tajikistan have been under severe threat of inside and outside opposition groups. The government under the leadership of Rakhmonov could only manage with utmost efforts and the support of Russia survive the attacks of the opposition.

The economical stability have equally been suppressed by the political problems in the country. The economic growth have been reduced by the fighting and collapsed during the Russian crisis. This had its effect on the social stability. The conflict divided the population, the ethnic differences stimulated it and the poverty created even more hardships on the people.

The political, economical and social stability will increase somewhat in 1999. The internal and exernal opponents can be controlled better with the support of Turkmenistan, Uzbekistan and Russia. The economy will improve because the lesser fighting and the improving Russian economy. Consequently will the social stability improve as the general conditions improve in Tajikistan.

Kyrgyzstan

This small country at the border of China have experienced some stability. They are at the side of the volatile Afghanistan area and do not possess any valuable minerals which would make them interesting. The only problems could be in the future relations with China and with the large Russian minority.

Politically the country have been stable under the government of president Askar A. Akayev who rules the country in the same tradition as all his neighbouring collegues. The situation is at the moment stable but this could change in the future if the Russian minority would be treated unfairly. This is however unlikely as Kyrgyzstan is dependent on Russia, economically and for security. Russia is for example still responsible for the protection of the borders of Kyrgyzstan. And economically Kyrgyzstan is tied to Russia as a market and as a deliverer of equipment.

The more dangerous and more likely problem is with China. The Uigur people of the Chinese province of Xinjiang receive support from their religious friends in Kyrgyzstan. At the moment this support is low level and mostly private. The government is discouraging any support but cannot control all of their people. If the situation in Xinjiang get more destabilised the Chinese will be more agressive in their responses towards its neighbours of whom they suspect support to the Uigur people. Despite all treaties which should build mutual trust and confidence the relations between the two countries could deteriorate very quickly into unfriendly.

The economical situation deteriorated after the Rusian crisis. This has created social instability. A large number of the younger generation left or are leaving Kyrgyrstan as the opportunities to find work are limited. The unemployment has created a lot of poverty. It has been controllable and bearable considering the family structure of the society. But the limits of support have been reached.

The political, economical and social stability can be maintained in 1999. The political situation will remain the same as the government is without serious opposition. The economy will only show some improvement if the Russian economy will see some growth. And the social stability will increase as the living standards will improve.

The Indian Subcontinent

The Indian subcontinent is a very volatile area with many internal tensions and with some external differences between some countries. All kinds of internal problems can be found on the Indian Subcontinent. Economic, Ethnic and Religious problems are existent in nearly every country of the subcontinent. Authoritarian and democratic states live side by side, and in both the opponents are absolute in their beliefs which makes the differences explosive, aggressive and very dangerous in their effects.

The relations between the countries are at best supportive and friendly but for two countries an armed cease fire like situation is a better description.

The countries are all unstable on many levels and continue to be so in the future. The differences are still to wide apart and absolute that a conciliation is very unlikely. The range of conflicts are from tension to civil war and are equally cruel in their application.

Afghanistan

This country has lost much of its character during the war of liberation against the Soviet Union and the even more destructive war, civil war, after the Soviets had withdrawn. Afghanistan lost every factor necessary to be a state.

The were several liberation groups which successfully fought with the Soviet occupation forces in Afghanistan. After the war there was no clear leader. The Soviets had withdrawn but the communist regime was still in power. It took a couple of years before the communist regime fell apart. Not only individual soldiers defected but also generals with the units under their command. The former military units became a kind of militias based on ethnicity and led by their former commander, like the Uzbek general Abdul Rashid Dostum. Which build virtually an independent state in Afghanistan with all necessary institutions.

The collapse of the communist regime did not bring the strong man wanted or needed to govern and reconstruct the country. There were a number of temporary coalitions which governed the country for some time. Or better they governed only the parts under their control. All former leaders were essentially their own boss in their region and consequently only followed the governments orders if they were part of the coalition. Afghanistan was divided into many small empires.

None of the groups was strong enough to control another group. The groups where regionally and ethnically organised according to a clan system. The cooperation during the war functioned because of the common enemy but as soon as the binding factor disappeared it was everyone against everyone. Afghanistan fell into chaos as the clans controlled Afghanistan and they ruled with the gun and without any policy to reconstruct the country.

On inspiration of refugees out of Pakistan and possibly on instigation of the Pakistani military security service, ISI, Inter Services Intelligence, a new group emerged of young islamic scholars; the Taliban. The Taliban is an organisation with a fundamentalistic islamic ideology with a very stringent if not medieval interpretation of the Koran. The mass of its support is from the rural southern part of Afghanistan, the Parthans.

The Taliban, under the leadership of mullah Mohammed Omar Hassan started a campaign to conquer Afghanistan to end the violence and disorder and to create a fundamentalistic islamic state in Afghanistan. At first they have been very succesfull, they could persuade many of the Parthan local leaders to join the Taliban. The war tired people were happy with the order created by the Taliban and the local leaders could keep their position of power. The Taliban lifestyle posed no objection as the rural people already lived more or less according the Taliban rules. The Taliban could conquer nearly two thirds of the country by negotiations. The few refusing clan leaders were easily swept away by superior forces, at least in numbers.

When the Taliban approached the northern part of the country the resistance stiffened. The northern peoples are of Tajik or Uzbek origin and could not accept the Parthan dominance. The first oprations against the battle proven northern groups ended in a disaster for the Taliban. The second attempt, this time with the support of mercenaries of the ISI, the Taliban could defeat the groups one by one and take the capital Kabul. By persuasion and treason in the Uzbek camp of general Dostum the Taliban could conquer a part of Dostum’s empire. The Uzbek people retaliated by forcing the Taliban back out of their capital and region. The Taliban under the command and with support of the Pakistani ISI, included some covered army staff, started another offensive to conquer the remaining part of the northern Afghanistan. This operation was successful as the forces of general Dostum were defeated and with the exception of the the north-east, the area north of the Hindu Kish mountains, were brought under control of the Taliban. The only dangerous opposition left was the Jamiat-e-islami under the leadership of former defence minister Ahmadshah Massoud. There are a number of small groups which also oppose the Taliban but they cannot become a major threat on the short term but will weaken the Taliban by attrition.

Massoud had, shortly after Kabul was taken by the Taliban, created with the other opposition forces an alliance against the Taliban. The alliance have recently been successful in the battle against the Taliban by offensive operations and guerilla warfare. The Taliban has lost several towns and territory. The Uzbek and Hazara regions had to be given up by the Taliban. And the Taliban are still pressed around the capital, Kabul. The forces of Massoud are dug in around the northern side of the city. Massoud is however to weak to retake the city.

The strategic position of the Taliban was further undermined by the Iranian movements on the border. Iran is supporting the alliance and when a number of Iranians were captured and some of them killed by the Taliban in their successful operation against the northern alliance the Iranians reacted by military maneouvers on the border and by threats toward the Taliban government to demand the release of the Iranians arrested or if you will hold hostage.

The Taliban is no adversary to the superior Iranian forces and they would have been defeated by the Iranians if the conflict would become active. The situation relaxed as the Iranians were released and thereafter even more as the Taliban started to loose territory.

The political situation in Afghanistan is internally and externally unstable. Internal instable because the northern alliance remains a threat towards the Taliban. The Taliban firmly controls the southern Parthan inhabited areas but will remain to have difficulties in the north. They will not be able to defeat the alliance. The alliance could force out the Soviet occupation forces by guerilla warfare and certainly are able to do the same with the Taliban, at least in the north.

The Taliban government is externally unstable because the bad relations with Iran and the international refusal of the Taliban. The Iranian government oppose the Taliban and will continue to support, together with Russia, Uzbekistan, Turkmenistan and Tajikistan, the northern alliance. The Taliban has little support in the world as they also support and hide the much wanted terrorist Osama Bin Laden. The fundamentalistic Saudi millionaire who with his organisation Al Qa’ida, the military base, fights western influence in the Arab / islamic world by terrorist assaults on western, U.S.,targets.

The economy has been destroyed by the decade long war in Afghanistan. Every attempt of reconstruction was first destroyed by the civil war and later by the rules of the Taliban which despise any western influence and values. The continuing conflict will suppress any economic recovery in Afghanistan.

Social stability is only present in the Taliban controlled Parthan south. As they accept and support the Taliban. The northern people do not like the Taliban style society and resist it. The people of Kabul are forced to live by the rules but despise them. Afghanistan is essentially an impoverished and divided country of which large parts of the population are dissatisfied.

Pakistan

Pakistan has been changing dramatically in recent years. The democratic state is changing and seems to become more fundamentalistic and authoritarian in character. The man responsible for the changes is prime minister Nawaz Sharif.

The country has seen, during the government of Sharif, many changes but most of them led to more power for Sharif. The judicial limits on the power of the prime minister have been eliminated as the high courts of Pakistan could not stop Sharif in using military courts, including the death penalty, to eliminate his enemies. Or the removing of the president’s power to dismiss the prime minister. Or to take over power in southern province of Sindh which he was constitutionally not allowed to do. Sharif strengthened his position as he placed to him favourable officers on powerful places in the army, including the replacement of the Joint Chief of Staff general Jehangir Karamat. Sharif further limited the free press by intimidation, harassment, regulations and fines which could force any media company out of business in a very short time if they would report negativily about Sharif.

To gain more support and not to alieneate the rural and fundamentalistic part of the Pakistani society he proposed to introduce the islamic law, Sharia. This was not very popular in parliament because the parliament expected a hidden agenda which would boost the power and position of Sharif even more and limits the power of other institutions like the parliament. The introduction of the Sharia above any other legislation could be prevented but the idea is still on the table.

Prime minister Sharif have become the most powerful person in Pakistan. He has created an absolute power like position around his person. To secure his position even more Sharif has been busy in eliminating the major opposition party to his party the Pakistan Muslem League, PML. The oppositional MQM, Muttehida Quami Movement, the Karachi based party of which the majority of its members are former fugitives out of India have been prosecuted by the military courts which should eliminate the violence in southern Pakistan.

In reaction to the nuclear test explosions in India Pakistan accelerated its own nuclear programme and allegedly tested five nuclear devices to prove their nuclear capabilities. The question remains about the quantity and quality of the explosions and even if the tests were high grade the next problem would be weaponisation. Which is as difficult and time consuming as building and testing a nuclear device.

The new member to the exclusive club of nuclear countries has a number of problems which have a destabilising effect on the country. Nuclear weapons might be nice for the ego and a strong leader could implement a decisive policy but going nuclear will drain the budget and a strong leader might implement a bad policy and can be very unpopular. Both do not solve problems.

Pakistan has internal and external problems. The internal problems are political, economical and social. And the scale, level or intensity of each of those problems are large or high enough to bring Pakistan on the brink of collapse.

The political problems are largely internal. As described in the introduction into Pakistan, the prime minister Sharif and his party the PML have eliminated contenders and collected power. The opposition has been forced out of every important position and even the power of parliament is curbed. But Sharif has become the leader of chaos as Pakistan is hardly a prosperous country. It is divided by political, economical and religious problems and differences.

The official national opposition has been weakened by the policy of Sharif but the regional and back room opposition have become stronger. Several small political, religious and even criminal organisations are resisting the national government and have made any regional and local government impossible. The situation in the north of Pakistan is relativily calm, the problems are between clans and religious convictions and to a lesser extent against the government. But in the southern part it is aimed as well against the national government.

Civil disobedience, riots and insurgency have become common in Pakistan. The organistions fight eachother but they all fight against the national government. The deployment of military forces and the installation of special military courts in the province of Sindh to curb the ethnic and political violence has also been used to minimize the influence of the MQM.

The external problems are about Kashmire with India and about the involvement in the Afghanistan. The external problems are to some extent controllable by the government. Diplomacy and international intervention can cool off or slow down any intensification in the conflicts. And more importantly there have been several efforts from India and Pakistan to come to some kind of agreement to solve the problem. The conditions and demands are still to different but there is at least the will to talk and to create a working relationship.

The several decades long battle with India about Kashmire has been a low intensity conflict with regular artillery duels between Pakistani and Indian forces. The majority of the casualties are however not from the fighting but from the harsh circumstances in the mountainous region. A solution to the Kashmire conflict is difficult to attain as both sides do not want to surrender territory to the other side.

The involvement in Afghanistan is a nuisance to the supporters of the northern alliance in Afghanistan conflict. The support is important for the Taliban as all military sucesses are connected with the Pakistani support but it is not enough to win the conflict. The resort to guerilla warfare will make military support and advice less important.

Economically Pakistan is in much greater problems. The economy has been hurt by the internal differences and the poverty in the country. The political problems, social structures and the lagging world economy has created an economic crisis in Pakistan. The financial resources are exhausted and the debts are making all government policy to improve the economy impossible.

One of the reasons for the political problems are the social problems. The differences between the economic haves and have nots are increasing and unemployment and poverty are growing. The problems between the several clans get larger and more violent. The very often connected religious differences between clans who belong to a religion, of better interpretation, exacerbate the problems in Pakistan.

Political instability is very large and will increase in 1999 as there is no strong and accepted government which could bring any order and improvement to Pakistan. The economic instability will also increase as the economy will probably shrink in 1999 and thus decrease the economic prospects and financial resources to create any improvement. Social instability will consequently increase as the unemployment and poverty will increase, the differences between the clans / religions get more violent and the satisfaction in the population decreases.

India

The biggest democracy on this planet is experienicing some problems which could have a negative effect on its stability and even on the existence of India. The economical problems are not that bad as in Pakistan. The government is stronger and more united but the differences between the several different groups and religions are becoming more violent and some secessionist movements are becoming more aggressive.

The acquisition, or better the test explosion, of nuclear devices to state their nuclear capabilities will not significantly improve the strategic position of India. They are just at the beginning of being an accepted and capable nuclear country. They have to weaponise the device and build launching systems for delivery. This will take a number of years before they have a capable nuclear deterrent in quality and quantity. And than they have to obey the rules of Mutual Assured Destruction which makes the application of nuclear weapons useless, except as a weapon of last resort under special conditions. Like you are fighting a nuclear power which is on the brink of defeating your last conventional forces and will destroy and loot your country.

India has a number of problems with Pakistan and China about the exact demarcation of the border. There have been a couple of wars with both countries to solve the differences. In all wars the differences were not solved, it ended in a stalemate. The differences still exist today and will continue to do so in the future. The differences will most probably not end in a armed conflict on the short term. International pressure and negotiations to solve the problem by diplomacy or at first to create a no-first use or non-agression pact between India and Pakistan will prevent an armed conflict. The knowledge that they are now nuclear powers also gives the conflict an extra dimension and reponsibility. The use of violence is in this situation not acceptable.

The problem with Pakistan is about the demarcation of the border, or better the position of Kashmire. The province of Kashmire is now for two-thirds under Indian control. The muslem population of Kashmire does not feel comfortable under Indian rule. They want to be independent or as some, including Pakistan, claims to be reunited with Pakistan. There is a strong secessionist movement in Kashmire. Several organisations fight for unification or independence. Like the pro-Pakistan and/or fundamentalistic Hizbul Muhadjedeen, Allah Tigers, Al-Omar Muhadjedeen, Islami -Jammiat-Tulba and the Jammu and Kashmire People’s League. And the independence movements like the Jammu and Kashmire Liberation Front, Mahaz-i-Azadi and Kashmir Muhadjedeen Liberation Front. Those organisations receive support from the majority of the people. And especially the pro-Pakistan parties receive support from Pakistan. This is perceived by India as an illegal involvement in Indian internal affairs.

Since decades both countries are having relatively large forces stationed in this inhospitable region of the Siaachen glacier. This highest battlefield in the world is contested by regular artillery and mortar duels between both sides. There have been only a few casualties of these duells as both forces are dugged in the mountains. The majority of the casualties are from the geography, climate and diseases in this harsh and barren area.

Both sides are not capable and willing to change this status quo by military means. A diplomatic solution will also be difficult to reach as the pre-conditions to negotiations and the actual demands of both sides are inacceptable to the other side. A solution to the Kashmire problem is difficult but a general improvement in the relations between India and Pakistan is certainly possible. As it becomes ever more clear in the increasing diplomatic negotiations and meetings. A non-agression pact and increased commercial and cultural relations are attainable.

India also has demarcation differences with China about the Kashmire area, India claims the Aksin Chin plateau which is close to the Siaachen glacier. The other problem is about the border in the north east of India in Assam state. The exact borderline is still not accepted, China has accepted the Simla treaty but India is not satisfied with this agreement and contests the demarcation line since the last war in 1962. The differences are known but there are on both sides, especially India, no activities to enforce the claims by force.

The last external problem of India, or better potential tension area, is with Myanmar about the improving military capabilities in the Andaman sea of Myanmar. Myanmar is, with the support of China, improving its forces and intelligence capabilities in the Andaman sea region, especially on the Great Coco Island. This could pose a threat to Indians position in the region as India wants to keep China out of the region and remain the sole regional superpower.

Where as the external problems are more or less under control the internal problems between religions and ethnic groups are much more dangerous. The internal problems can be divided in three groups. The secessionists, the economic dependent and the religious inspired. All three are a threat to the unity of India and the religious fanatism fuels the secessionists ideology.

In the secessionist group there are several regions which want to break away from India. The Kashmire people, the Sikhs in Punjab, several groups in Assam and the Tamils in Tamil Nadu under some circumstances.

The Kashmire problem is the largest independence movement. There a many organisations in Kashmire who demand unification with Pakistan or independence. Like the pro-Pakistan and/or fundamentalistic Hizbul Muhadjedeen, Allah Tigers, Al-Omar Muhadjedeen, Islami-Jammiat-Tulba and the Jammu and Kashmire People’s League. And the independence movements like the Jammu and Kashmire Liberation Front, Mahaz-i-Azadi, Kashmir Muhadjedeen Liberation Front and Al-faran. Those organisations receive support from the majority of the people living in Kashmire. The deployment of a lot of military and para-military forces can control the situation but Kasmire has changed in to a occupied like territory under strict military control. The situation demands a solution as this can not go on forever. The intensity of the feelings from the Indians, Pakistanis and the people living in Kashmire make a diplomatic solution necessary but complicated and difficult to attain.

The situation in Assam is less dangerous and violent than in Kashmire. There are several organisations operating in Assam which demand independence from India or more autonomy in Assam. The level of organisation and support of the population is lower then in Kashmire. The population in Assam is more diversified as large number of moslems have settled in the province. The unfair treatment of the original population or groups in Assam led to the demand for secession or more autonomy.

Beside some smaller dissatisfied groups in Manipur, Tripura, Nagaland and Moziram, there are two larger organisations in Assam.

The United Liberation Front of Assam is fighting for independence and have been succesfull, they even governed some parts of Assam until Indian forces ended this experiment. The ULFA was then forced to start a guerilla war against the Indian forces. Internal divisions in the ULFA have led to a cease fire but the radical elements continue the violence against India.

The Bodo Liberation Tiger Force, BLTF, and the Bodo Security Force, BSF, demand a seperate state in Assam. After some religious disturbances between moslems and the Bodo people, the Bodo had become dissatisfied with their position in India and especially Assam. The BLTF and BSF fight for independence to create a own secure nation. A low level guerilla war started with no clear results until now.

The problems in the Punjab have settled somewhat but the dissatisfaction of the Sikhs remained. The unfair economic and religious treatment of the Sikhs led to the demand of autonomy or independency. After the violent uprising of the Sikhs, the hard military reaction of the Indian government and the manipulated elections an artificial peace like situation could be established. But like Kashmire and Assam this is no long term solution. The Sikhs continue to reject to Indian dominance and preferential treatment of the Hindus. Several groups continue their resistance to the Indian occupation. The two largest groups are the Khalistan Liberation Force, KLF, and the Khalistan Commando Force, KCF. They countinue the battle against India for secession or at least more autonomy. The fight between the Sikhs, Hindus and the Indian forces have led to a large number of massacres but the Sikhs will not be able to beat the Indian armed forces. A stalemate is the result about nobody will be satisfied. The situation in Punjab gets even more complicated as the Sikhs have become divided about which policy to implement. The more liberal Sikhs versus the orthodox Sikhs which are the hardliners. The liberal Sikhs oppose the policy of the Orthodix Sikhs, the hardliners, which want to continue the armed fight against and the rejection of India with the goal of independence. The libaral Sikhs favor more diplomacy and would accept more autonomy. The hardliners are sometimes very rude in the endeavours to persuade the liberals.

The least dangerous situation is in Tamil Nadu. The Tamils in Tamil Nadu support their people on Sri Lanka, the Liberation Tigers of Tamil Eelam, LTTE, who are fighting for an independent Tamil state on Sri Lanka. A large support infra-structure have been build in Tamil Nadu to support the LTTE. If the LTTE would be successful in their fight and get their own nation the Tamils in India might be tempted to do the same. This will not happen on the short term but it is a probability on the long term if the LTTE would be successful.

The economic dependent problems are connected to the poverty and incompetent government in some of the provinces. The central government had to take over power from the regional / provincial governments, like in Bihar, after the problems became uncontrollable for the provincial government. The provincial government could not keep law and order in the region as there were increasing violent confrontations between the rich and poor of Bihar. The confrontations became a religious flavour as the rich belong to a higher caste than the poor. The rich, land owners, have used private militias which kill and intimidate the poor people from a lower caste, like the untouchables, which receive support from extreme left organisations. This chaos and violence between two economical, religious / caste, groups of the society could easiliy flare up all overal India. This could become a threat to the unity of the country if the government in Delhi does not act.

The above mentioned independence movements and the rich-poor conflicts are stimulated by a development of Hindu fundamentalism in India. The largest religious majority in India, Hinduism, is becoming ever more radical in the interpretation and execution of the religion in the society. They are becoming less tolerant to other religions like Christianity and the islam but also to caste migration. The fundamentalistic Hinduism is translating itself into politics. The governing Hindu nationalistic party Bharatiya Janata Party, BJP, more moderate in their actions, mainly due to the fact that there is a coalition government, than in their retoric during the elections, is supporting radical Hindu movements and executes a pro-Hindu policy in India. This alienates other religions and ethnic groups living in India and creates a division in the society which could have dramatic effects on the unity of India on the medium or long term.

The economy of India is not that much negative influenced by the Asian crisis due to the relative isolated Indian economy. The very often inefficient and out of date Indian economy is on a lot fields self sufficient. The economy is doing relatively well, macro-economically. There is still a lot of poverty in India but there is some improvement which slowly is having some effect on the worser off in the society. Live is hard on the poor people in India but they can make a living and the tight family structure is supporting the unemployed. With the exception of some areas like Bihar which seems to get poorer and poorer and more uncontrollable and chaotic.

The advantage in India is the growth of new industries like software engineering and people intensive activities like bookkeeping. These industries generate foreign currencies and are creating a larger small and medium business sector. This is the base for any positive economic development in a country.

The cooperation in the country is becoming less as Hindu fundamentalism is excluding, discriminating, other religions and ethnic groups in India. The recent election successes of the congress party in provincial elections is a promising sign of more cooperation in India, the trend in society is still to often aimed at excluding other groups.

The political stability in India is under threat in 1999. The Hindu fundamentalism and the independence movements created a division in India which will prove difficult to close. The internal problems undermine the unity of India and creates instability. The external threats can be controlled and managed by a careful policy and will not support instability.

The economical position is not that much depressed considering the internal political problems and the Asian crisis. The growth is lesser because of the Asian crisis but not of that scale that it would undermine the economy of India. The economical stability will therefore not change in 1999. The situation will remain the same. The internal problems will make any economic improvement difficult if not impossible to realise in 1999.

The social stability is under threat by the political problems in India. India will be more instable in 1999. The people, groups, do not cooperate on the scale they should. They exclude eachother and sometimes even fight eachother to improve their own situation.

Sri Lanka

The situation in Sri Lanka remains depressed as the insurgency, civil war, on the island continues. The conflict is infecting all parts of the society and worsens the general situation.

The Tamils living on the Sri Lanka are fighting for their own state on the island. The party behind this long and heated fight is the Liberation Tigers of Tamil Eelam. LTTE. The LTTE could take over large parts in the north and north-east of Sri Lanka. They govern, including all necessary institutions, the territory under their control just like a normal government of a country.

By a policy of guerilla warfare and later normal conventional operations they could take and hold a large part of Sri Lanka. If the LTTE experienced a defeat, they returned to guerilla warfare and by attrition they exhausted the Sri Lankan army and could automatically and relatively cheap regain lost territory.

The Sri Lankan armed forces could conquer a part of the territory under control of the LTTE. The northern part of Jaffna could be taken. It has, however, to be supplied by air and sea as the Sri Lankan armed forces could not defeat the LTTE in central Sri Lanka to create an overland connection. And again the Sri Lankan armed forces are exhausted by long operations with small to no gains and at high costs.

The civil war between the Sri Lankan government and the LTTE has entered a stalemate. The LTTE can not force the Sri Lankan government to recognise an independent Tamil state on their territory. Nor is the government able to destroy the LTTE, the government can make some gains but they can not, partly because of the guerilla nature of the battle, eliminate the fighting power and the ideas living in the Sri Lankan Tamil population.

The economy of Sri Lanka has been badly damaged by the civil war and the Asian crisis. The civil war has been and will be a burden on the budget. The Sri Lankan government will not be able to alleviate the negative consequences of the Asian crisis on the economy and society. This will hamper economic growth on the island.

The society is divided into two parts. The Singhalese people and the Tamils. The majority of the peoples of the two are living separated on Sri Lanka. The internal cohesion and cooperation within each of those groups is very strong. The relations between the two groups is disturbed by the ideology and the violence.

Sri Lanka will continue to be a politcal unstable country as long as the civil war dominates the political scene. The conflict will also have a damaging impact on the economic stability. As the costs of the war are very expensive, it will limit economic development and growth and human and economical resources are wasted. The social stability will decrease. The war will increase the contradictions between the Singhalese and the Tamils. The conflict stimulates poverty in the population and this will lead to dissatisfaction with the people and at the government, the Sri Lankan and Tamil government.

Bangladesh

This country which has been hit by severe natural disasters is one of the poorest nations in the world. The weak economy is, beside the natural threats, damaged by the religious differences and secession demands. The poverty and religious fundamentalism are a threat to the cohesion in Bangladesh, only the own group is important.

The political situation is depressed by the weak economy, the weak government, the rising fundamentalism in the moslem population and the resistance of the tribal peoples in Bangladesh.

The low developed economy in Bangladesh is regularly destroyed or at least disturbed by the floods and other natural disasters. The agricultural business is particularly hard hit by the disasters. The productive fields are becoming smaller by every flood. The industrial and service sector are disrupted by civil unrest and actions of fundamentalistc movements. And the fast growing population is another heavy pressure on the economic development.

The government is to weak to implement any reforms to change the situation. They have to take care about to many sensitivities in the population and with the armed forces. They simply do not have the money to support the economy. And the moslem fundamentalists, one of the before mentioned sensitivities, are against every change which undermines the moslem character of the country. They demand that the islamic law, sharia, remains the national law. Any change and progress is considered as a possible threat to the islam. The most radical of the moslem fundamentalists, Harkat-ul-Jihad, receive support of the Saudi millionaire Osama Bin Laden. And they want to have an islamic state like Afghanistan.

The moslem fundamentalists are further responsible for the stimulation of the conflict with the tribal people. They not only want to limit the traditions and religion of the tribal people, which are Buddhist and Hindu, but they also move in the living areas of the tribal people and exploit the oil and other resources over there.

The tribal people, which are Buddhist and Hindu, in the Chittagong hill tracts were against the policy of the Bangladesh national government. The resistance has, however, become lesser because of the peace treaty. Radical elements in the government and with the Chittagong hill people, especially the members of the Shanti Bahini, are against the peace treaty and continue to fight eachother and try to stimulate dissatisfaction to destroy the treaty.

The political instability will remain in 1999. The government will not be in the position to create any change and to bring the radical elements in the population on their side. The economical situation will not change, the high population growth, lagging industry and service sectors, shrinking agricultural sector and the, although lesser, violence of the fundamentalists and Shanti Bahini limits all growth and development. The resulting poverty in Bangladesh and the conceived unfair treatment of the tribal people in the Chittagong hill tracts will lead to more social instability.

Bhutan

The situation in this kingdom in the Himilaya mountain range is becoming unstable. The policy of the government to create a more homogenous population by expelling large numbers of Indians or Assam immigrants without an offical status from before 1950 is creating political and social unrest.

The Royal Bhutan army has been ambushed several times in Bhutan and in the border area with India. This development is likely to continue as the eviction process will be executed as planned. The violence will not become critical to the government but it will be bad for the internal security and economical situation of Bhutan.

The forced migration will result in more insecurity and anger in large parts of the population and this will undermine the political and social stability of the country. The economic stability has been good in Bhutan but as the immigrants have a substantial part in the economy this could change on the short term.

Nepal

The situation in Nepal has been quiet since the Chinese threat has disappeared. The Chinese claim on Nepal has not been executed by China. They now more or less accept the Macmahon line which describes the borders between China, India and Myanmar or Burma. Nepal is not specified in this agreement but it does not give Nepal to China.

Nepal is in the sphere of influence of China as there are some cultural and trade relations with China. Beside of the proximity to China. But Nepal also has some strong relations with India. The treaty of peace and friendship of 1950 with India states that Nepal is obliged to consult India before establishing cooperation with a third country as regards to arms purchases and personell training.

Nepal is forced to pacify both of its big neighbours but non of them could do something against Nepal because the other side would probably not allow it.

There have been some internal problems in Nepal. Some groups are dissatisfied with the current political situation. The United People’s Liberation Front of Nepal, Bhattarai, have launched several assaults on the police forces of Nepal. They want to change the political constellation in Nepal. These assaults could eventually undermine the political stability in Nepal if they could generate enough support from politicians and out of the population.

The economic situation is not exiting as Nepal is a poor country with none to little resources. The economic growth is average and dependent on foreign trade and tourism.

The poverty has not created social instability as the majority of the population can make a living.

The political, economical and social stability will remain the same in 1999 as there are no clear improvements or downturns expected. The UPLFN is not in a position to make an impact in 1999.

Pacific – Asia

The Asian and Pacific region promised to be the most prosperous region in the world until autumn 1997. The majority of the promising, Tiger, economies collapsed in the following six months. Thailand, Malaysia, Indonesia, South Korea, and the Philippines all experienced the merciless rules of the economy and in particular international financing. Even the largest economy of the region Japan could not save the little tigers. Japan’s lagging economy also turned south and for the first time in a decade shrunk.

The national currencies devaluated, stock markets lost over three-quart of its value, property lost over half of its value and companies had to limit or close down the production in the countries in question. The crisis has been the result of a combination of factors. Firstly, economic growth based on the input of cheap money and cheap labor, low technology/quality products and overproduction. And secondly the existence of an uncontrolled, without the necessary legislation, financial system, the inflow of foreign capital, the reliance on short term debts, the investment in consumer products, property speculation, the creation of bad debts and the absence of a reliable accounting system.

Only a few countries could avoid or minimize the consequences of the economic problems of their neighbours. There are two groups , the ones which had and have something to loose and the ones with little to nothing to loose. To the first group belonged China, Taiwan, Brunei, Singapore, Australia and New Zealand. The countries of the second group are North Korea, Laos, Cambodia, Vietnam and Myanmar. The exception is ofcourse Japan, they had and have an economic crisis of their own and felt the consequences of the crisis but the impact was negligible. An improvement of the Japanese economy is a precondition for the recovery of the Asian economies. The region is an important market for Japanese products and there have been many direct and indirect investments which have decreased in value. But Japan’s wealth and international position makes the impact of the crisis relatively small.

The economic crisis undermined the progress of the political and social position of the Pacific Asian region in the world. The Asian century with Asian values and traditions have been postponed. It will take time, work and regulations to return to their former might. A stronger Asia will come but not an Asia centred world as expected before a couple of years.

The countries in the Asian Pacific area have a number of internal and external problems. The internal problems of a number of countries will become more dangerous but the external problems will be less dangerous. The economic crisis will make visible and exacerbate problems in several countries and they can momentarily not be solved by economic growth or money. This will make them that dangerous. The external problems will be limited as the majority of the countries are to occupied by the internal problems and they do not have the time and the capabilities to become violent and dangerous.

Myanmar

Myanmar or the former Burma has been hit by the Asian crisis as investments in the country out of Asia came to a vitually stop. The western nations had already stopped the majority of the investments because of the human right violations of the government, the State Peace and Development Council, SPDC, the successor of the State Law and Order Restoration Council, SLORC. The only investors and the majortiy of the trade relations were out of the Asian region.

The SLORC has been responsible for the installation of the military regime, the majority of the violations and the corruption, nepotism and unfair distribution of the wealth in the country. The SPDC is the successor of the SLORC with the same people, policy and state structure only with a more positive sounding name.

The SPDC is not very popular with the people, they have alienated the population because of their ruthless regime of suppression and forced labour. The ruling party, military junta, have become wealthy but the poverty in the population remained the same.

There are numerous insurgent groups in the country scattered around the country’s perimeter. There are around twenty organisations operating against the military junta. They consists out of ethnic groups who demanded indepency or autonomy, national opposition parties and warlords who have their own opium empire. The capabilities and influence, power, of all those organisations have been diminished as the SLORC has routed all opposition by negotiations, especially the Karen and Shan people. The SLORC/SPDC promised autonomy and support which was accepted by a number of them. The remaining opposition was finished off by military offensives and a cruel suppression, including intimidation, kidnappings, torturing, deportations and murder. The opposition still exists but it does not pose a direct threat to the SPDC, or SLORC if you will, government.

The largest opposition, insurgent, groups, or parts which survived the last military offensives, are the Karen National Union, KNU, the Karen National Liberation Army, KNLA, the Kachin Independence Army, KIA, the Shan State Army, SSA, and the Islamic front Rohingya. They fight for more autonomy or independence in or from Myanmar.

The national opposition group consists out of parties which have gained seats in the parliament in the last elections which are however not recognized by the military junta. These semi-official parties are the National League for Democracy, NLD, the largest party under the leadership of the well known Aung San Suu Kyi, the Shan NLD, the Rakhine Democratic League, National United Party and the Mon Democratic Front. These parties want to change Myanmar by diplomatic means and sometimes they cooperate with the opposition groups.

A number of the oppostion groups and national oppositon parties cooperate in the Democratic Allliance of Burma, DAB. This group wanted to coordinate the military battle and the political opposition against the SLORC / SPDC. The DAB is nothing more than a discussion panel with no authority what so ever to make an impression on the government or even its members.

The last insurgent group are the warlords, many of them former Chinese Kuomintang officers/units, which took over control of the opium production and trade. There forces are called the Shan United Army, SUA, and the Thai Revolutionay Council, TRC. They have fought for their own cause, opium trade. They have been destroyed or are working under protection of the government if they pay their taxes.

Myanmar is a political stable country as the SPDC could eliminate or better suppress all opposition to its regime. This artificial stability can be maintained in 1999 as the opposition does not have the ability and capabilities to force the SPDC to abdicate power. The economy of Myanmar will not see any positive development in 1999. Myanmar will remain unstable as the wealth of the country is centred at the ruling elite and the economy will not be stimulated to generate a wide based growth. The social stability will decrease as the population will remain dissatisfied as poverty will continue to spread and the supression will remain the most important tool of government.

Thailand

Thailand was the first country were the currency had to be devaluated. It was the beginning of a regional economic crisis. The previously more or less booming and wealthy economy and population had to adjust to the new situation. Governmental spending had to be reduced, projects cancelled or deferred and the population had to change from a western-like life style to that of a developing country.

The political situation became more difficult, changes had to be implemented but were partially delayed out of political sensitiveties in the parliament / political parties and a rising dissatisfaction in the government and population.

There have been several violent reactions on the economical crisis as the government is not able to solve problems as they used to do. The majority of the violence was committed by disgruntled persons who are against the changes the government did implement. There are rumours that some officers from the armed forces placed some bombs because they opposed the reforms in the armed forces and the appointment of a civilian minister of defence.

Beside the internal problems Thailand has some differences with Vietnam about the demarcation of the economic zone in the Gulf of Thailand. And there are some border disputes with Myanmar and Laos. The economic crisis will limit any resort to use violence to settle these differences as no country has the financial capabilities to start a conflict.

The political stability in 1999 will be undermined by the economic crisis. The necessary changes will stimulate the dissatisfaction in the population in general and with some groups in particular. Those groups will resort to illegal activities, voilence, to force the government to change their mind. The government could and can resist this pressure as the scale of the groups is to small to represent a real threat. The economical stability will probably improve somewhat in 1999 as the economy will show the first signs of growth in 1999. The worst time and developments occured last year and it can only get better. The social stability will also improve as the economy will most probably recover. The dissatisfaction in the population will remain but the prospects are hopeful as the government could remain in power and was not swept away by pressures from small dissatisfied groups in the society.

Malaysia

The Malaysian federation have been equally hard hit by the Asian crisis. The value of the currency and the stock market have lost over half of their value. The impact of the crisis was lesser then in Thailand. The Malaysian economy was stronger, had more and more diversified production capabilites, was to a lesser degree reliant on foreign investment, was willing to save by cancelling several projects and it introduced regulations to curb the financial institutions and a tight money / capital control system to keep foreign currency in the country. Malaysia did not need nor wanted support of the IMF. They consider the IMF, Worldbank and international investors/speculants as the cause of the crisis and did not want to cooperate with them.

The economy of Malaysia seem to recover some what from the tornado-like crisis which destroyed a large part of the country and its short term prospects.

Politically the government could survive although a division has been arisen between the prime minister Mahathir Mohamad and his vice-prime minister and minister of the exchequers Anwar Ibrahim. Mahathir blamed the decadent western world and the speculants for the crisis and wanted to close the country for financial speculations. Anwar opposed the statements and policy of the prime-minister and started to make his own policy, contrary to Mahathir. Consequently Anwar was sidelined and soon after even prosecuted and jailed. The political scene is divided into two camps the Mahathir and Anwar group. The Mahathir camp is a little stronger as he is in power and receives the benefit of doubt. If the economy can keep up the same recovery as in the last two – three quarters than Mahathir’s position will be strong enough to simply dump Anwar, the outcome of the trial will be superfluous.

The external political situation is more complicated. Malaysia has several differences with nearly all of its neighbours about the ownership and demarcation of islands and seaborders. Malaysia claims part of the Spratly islands but so does China, Philippines, Indonesia, Vietnam and Brunei. Further Malaysia has a claim on Limbang islands this is contested by Brunei and Malaysia has a dispute with Indonesia about the Sipadan / Ligitan islands. The problems with Brunei and Indonesia are under negotiation and the first meetings were positive. This is an indication that the claims will not be enfoced by the use of arms on the short term. The involved countries will try to find a diplomatic solution. With the exception of the Spratly problem were a diplomatic solution is more difficult if not impossible to reach. The Chinese claim and the Chinese attitude and actions does not look like compromising. Any actions will however be very unlikely in 1999 as all countries lack the capabilities to enforce their claim and more importantly the economic crisis forestalls any large scale military operations.

The political stability can be maintained in 1999. The government will probably be able to weather out the economic crisis. The policy seems to be successful. Mahathir will be able to run the country as he wants as the economic recovery continues. Anwar will not be able to unseat the government in the current situation, he will not receive enough popular support to do so. The external differences will be solved diplomatically or will be shelved to be dealt with in the future. The economic stability will improve as the financial system is restructured and the economy can start to grow again. The social stability will remain the same as the political and economical situation get more stable. An improvement is possible as the people will directly see the economic improvement in their budgets.

Singapore

The situation in Singapore is ambigeous. The economy of Singapore has strong fundamentals, a strong and competitive industrial base, large currency reserves and strong political leadership. But all these good conditions could not stop the effects of the economic crisis on Singapore. The currency has become weaker and the stock market dropped by approximately 40 %. The large investments in the region and the regional connections have been the cause of the negative development.

The recent stabilisation and trend towards recovery in the region will have a positive effect on the economy of Singapore. Singapore and the Singapore business model, a strong government with a rigid legislature, civilian, administrative and financial, and free of corruption, which very rare in Asia, will continue to support the economic development and is an example in the region. Political stability is an absolute necessisity to create economic progress and stability.

The political and social situation in Singapore is very good, the population has not experienced the same negative effects as the trouble countries did. The only political and social problem of Singapore is the demand for some more freedom in the country. The opposition in Singapore is controlled as the best people are attracted by the government and its policy. And free speech is controlled by permissions to organise events and law suits if something negative is told.

The political, economical and social stability can be maintained in 1999. The government is stable and popular with the people. The economy is doing not that bad in this crisis ridden region. And the people are satisfied with the current situation, they do not demand a change in policy. The stability will improve if the recovery in Asia continues and/or starts in the countries which have not implemented the necessary changes like in Indonesia.

Indonesia

The situation in Indonesia is very bad, it is one of the worsest off countries in the region. Not only the economy has collapsed but also the political system and the social cohesion in the population.

The economy of Indonesia has been close to bankruptcy. The currency lost of two-thirds of its value, the stock markets lost a similar number and the inflation soared. Industrial production has been halted or limited as it was uncompetitive and supported by cheap government supported short term debts. The large IMF support saved the country from the absolute disaster but it will not be enough the reconstruct the country. A thorough reassesment and overhaul of the political system, the economy and the business community is necessary to stimulate growth and trust in the country.

The new government under the leadership of president Habibie has implemented a number of reforms which should make Indonesia more democratic but fall short to the demands out of the society. The military should have been cleaned up but the opposite has been happened. The memory of dirty war against secessionists movements and opposition groups in Indonesia and the attitude and actions of the armed forces in the recent problems has destroyed all goodwill of the military with the population. The economic reforms and plans to bring any change are viewed as to opportunistic with little chances to bring substantial improvement to the economic situation.

The economic crisis sparked a much more dangerous phenomen. The political differences in Indonesia between, rich and poor, religions and on different islands became visible and very active. The have nots assaulted the haves and looted, intimidated and raped whole living and business areas. The businesses of the Suharto-clan and the Chinese were particularly targeted as they were held responsible for the economic troubles. Muslems attacked Chinese and christians living in the archipel. And finally independency movements on Sumatra, Irian Jaya and East Timor took the opportunity the gain back terrain which they had lost in the days of military suppression.

The political and social instability which grew out of the economical instability will prove to be difficult to diminish. The existence of Indonesia as we know it has become doubtful. The opposition parties demand more influence and power in a new Indonesia. The position of the leading Golkar party has to be limited to give the oppostion parties like the Partai Demokrasi Indonesia, PDI, under the leadership of Megawati Soekarnoputri, the muslem organisations who start to play a political role like the Nahdlatul Ulama, NU, and the Muhammdiya a bigger role to satisfy demands out of the population. An elected government on a coalition of these parties could execute a policy to rebuild the country and unify the population.

The chaos created by the uproar, the looting and raping and so on, the activities of the socalled black ninjas, a number of islamic scholars have been killed by them, on Java and the religious conflicts between muslems and christians should be combatted. The religious conflict could get an extra dimension as a lot of them happen on the island group of the Moluks. This conflict could refuel the secessionist demands of the christians living on those islands. Law and order has to be established as a first condition for economic recovery.

The drive for independence on Sumatra, Irian Jaya and East Timor should be solved, or pacified, by giving more autonomy or by independence. The situation on Sumatra in the northern province Aceh has escalated. The parties fighting for independence, the GPK and the GAM, have increased their actions against the Indonesian government as they withdrew some of their military forces, which have committed human rights violations, to pacify the province. The GPK and GAM will be difficult to convince to stop their campaign and to remain a part of Indonesia. The wealth of Sumatra, including Aceh, will make an independent country economically viable, but this is also the biggest objection from Indonesian side to accept independency. The armed forces are still in the position to change the situation by the use of force if necessary. A diplomatic solution would be preferable.

The people of Irian Jaya have also been fighting for independence. Their major resistance organisation, OPM, has not been very successfully as they lack numbers and organisation to make an impact. A diplomatic solution should be attainable.

The situation on East Timor is different from the other two as the fight has been longer and more intensive. The East Timor organisation for independence, Frente Revolutionara de Libertacao e Independencia, Fretilin, has successfully been resisting the Indonesian occupation. The Indonesian forces needed to use a large number of forces and violence to pacify the island. And even than it was not secure. The relaxation of the pressure of the Indonesian armed forces on the Fretilin has been immediately took as an opportunity to improve the position of the Fretilin. Autonomy will not be acceptable to the Fretilin and independency if not gradually given will mean civil war in East Timor.

The complicated internal situation, unclear political relations in Indonesia, the economic problems and the related outburst of violence and the secessionist movements, have made external problems insignificant. Indonesia does not have the ability, capabilities and time to pay attention to them. There are a couple of differences with neighbours about the possession and demarcation of islands and sea borders. Indonesia claims a part of the Spratly islands as do China, Vietnam, Philippines, Brunei and Malaysia. Indonesia has a problem with Vietnam about the Natuna islands and Indonesia has some differences about the Sipadan / Ligitan islands with Malaysia. There have been negotiations with Vietnam and Malaysia about the claims and both negotiations are promising. The Spratly problem has been shelved as it is to complicated and they can not support any decision because of the many internal problems.

Indonesia will be very unstable in 1999. The political problems will not be solved that easily as there are problems on all levels. The current government is not in a position to establish law and order and execute a policy to reconstruct the country. The regions are destabilised by the secessionist movements and the differences between different religions. The economy will not see an improvement in 1999 as the whole situation is still uncertain and the financial problems are still present. The combination of political and economical instability have created social instability. The poverty is getting larger, the cohesion in the population is diminishing as all side with their own group, religious or ethnic, and independence movements get ever more successful. Indonesia could disintegrate into four or five new countries if the government does not implement the necessary steps to eliminate the problems and unify the people behind Indonesia.

Papua New Guinea

The situation in Papua New Guinea has stabilised as the Bougainville conflict has been settled by ngotiations. The remaining problems of Papua New Guinea are about natural disasters, development of the country and to combat poverty.

Papua New Guinea will be politically, economically and socially stable. There are no threats which could undermine the government. The economic situation is dependent on the absence of natural disasters, the reconstruction of the economy and the support it receives from the international community. The social stability will remain the same as the people are satisfied, or better accept their position, and do not have the ambition to initiate a radical change.

Australia

Australia is one of the stablest countries in the region. The Asian economic crisis has not affected the Australian economy as was expected. The Australian companies replaced their export efforts to Europe and North America. The preparations of the Olympic games, Sydney 2000, have been another stimulant to the economy.

The political, economical and social stability can maintained in 1999. It will improve as the economy continues to grow, the liberalisation programmes can be executed and the population can benefit directly from the improvements.

New Zealand

New Zealand has experienced some economic problems in the preceding two years. The economic liberalisation programme which has been executed encountered some problems and the Asian crisis had another negative effect on the economy. This has changed to some small growth in the last year.

New Zealand is also a stable country in this economic volatile region. Political stability will increase as the economy will recover further in 1999. The social stability will also increase as unemployment will go down again and people can benefit from the improving economy.

The Pacific Islands

There are a large number of small countries in the vast territory of the Pacific. These island groups are large in territory if the water is included but small in square kilometers of land and small in population. The economies are small and reliant on tourism as the major source of income. In general they are less developed countries which are dependent on subsistence farming.

The only island group with some problems is Fuji. The majority of the population of Fuji is made up out of Fijans, 46 %, and Indians, 49 %. The Fijans feel discriminated in their own country as the indians take up a large number of positions especially in the business community. There have been some problems about that but this all can be controlled and handled by a careful policy.

The countries in the Pacific could meet more problems in the future. The major threats to the countries in the Pacific are natural disasters, environmental damage and unlawful challenges to the national integrity and independence. These are all problems of international dimension. Only by cooperation and support from the big countries like Australia, the U.S.A., the U.K. and France these problems can be more or less keep under control.

A new threat may emerge in the future which demands more attention of each of the countries. It is a problem with many international aspects but in need of national support. The emergence of trans national crime. As the Caribbean becomes less attractive as a base for international operating criminal organisations the Pacific nations which are less sophisticated societies are becoming attractive targets.

The Pacific island nations will remain stable in 1999, with little to non threats which could lead to instability.

Philippines

The Philippines have been economically hit by the Asian economic crisis. The stock market and currency collapsed and the inflation soared to new unknown levels. The financial industry has not collapsed as in the other countries. The Philippino financial system has survived because of lesser government debts, no bad loans and no short term debt. The economic growth in the Philippines have been less spectacular as in the Tiger economies but as a result the Philippino industry has been not so badly hit by the crisis. The drop of the Peso, national currency, has had the largest impact on the Philippine economy.

The election of Joseph Estrada, the former movie star, as president has created some uncertainty as the people, the business and investment community in particular, did not know what to expect. As the first dust after the elections settled it seemed as things will continue as usual. The privatisation will continue as long as it is beneficial to the country and population.

The political situation on the Philippines is stable with the exception of the island Mindanao, islamic secessionists and communists, and the claim on the Spratly islands. The Mindanao island with an islamic majority has demanded autonomy or independence. After a decade long struggle between the government and the Moro National Liberation Front, MNLF, and the Moro Islamic Liberation Front, MILF, an agreement for more autonomy could be reached between the government and the MNLF. The MILF decided not to join the agreement and continues to fight the government with the final goal to expel the Philippino government from Mindanao. This battle will be fruitless as the MILF is not strong enough the defeat the government forces. But there is a big but.

The MILF has been moderate to good at guerilla warfare but if the autonomy plan works out OK the support for the MILF could dwindle. But the economic problems, the increasing worse armement position of the Philippine forces, the renewed activities of the NPA, New People’s Army, and the increasing influence of moslem fundamentalism in the world could eventually undermine the Philippine government and the reached agreements. The MILF seems to recognize their difficult position and two options are possible. A renewed querilla war with the risk of loosing. The U.S.A. would probably not tolerate a moslem or NPA victory on the Philippines. Or more likely an armistice and negotiations could be started on the short term.

A second threat from Mindanao could be a renewed querilla war of the New People’s Army, NPA, the communist party on the Philippines. The main base of the communists is the island Mindanao. The communists are politically represented by the National Democratic Front, NDF, who has signed some agreements with the government after the NPA had been weakened by force and by internal divisions.

The NPA, after a reunification and regrouping of its forces, have started some actions against the Philippine government. The now relatively weak government has come into a worser position. Which is exploited by the NPA. The NPA became active again and are demanding an implementation of the agreements on their communists terms. This is supported by the NDF. The government wants to solve this problem with negotiations and pressure on the NPA. The morally strong NPA will be difficult to convince or to beat.

The claim on the Spratly islands is shared with nearly all countries in the region. The Philippines armed forces have already collided a couple of times with Chinese fishing boats and socalled scientific research stations on a number of the islands. Which barely rise above the waterline and are essentially uninhabitable. The presumed minerals and the fishing rights are the reason for the claims by all countries. The Spratly problem will not become a cause of conflict in 1999. The problem will be limited to some tensions about fishing boats and the like and some teasing between the Chinese forces and Philippino forces together with the usual diplomatic noise but nothing really dangerous. All parties involved in the claim/conflict do not have the ability and capability to enforce the claim on the Spratlies in 1999. On the medium term this could however change.

The people in the Philippines are dissatisfied with the depressed economic situation but the election of Estrada, a man of the people, the agreements on Mindanao and the reapprochment with the U.S.A. have been positive factors to the social stability in the country.

The political stability will most likely improve in 1999. The Estrada government is doing allright in these difficult economic times and agreements are reached on Mindanao and with the U.S.A. The only negative is the MILF and NPA on Mindanao who do not support the agreements. This could lead to some new violence on the Philippines. The scale and strength of the NPA and MILF are still to weak to beat the armed forces, especially if the U.S.A. will support the Philippines in their struggle. The economy starts to recover which will be positive for the economic and social stability in 1999.

Brunei

The situation in Brunei has remained the same. It continues to be very stable. The government of H.M. Sultan Haji Hassanal Bolkiah Mu’izzadin Waddaulah, even if autocratic, is not challenged by any person or organisation in the country. The population enjoys a high level of prosperity as a lot of services are covered by the government.

The economy has been depressed somewhat by the low oil prices but the large investments holdings aroud the world will cover any short to medium term drop in revenues. The oil and gas wealth of the country will remain a virtual bank, cash cow, in the future.

The political, economical and social stability can be maintained in 1999 as circumstances remain the same and will show some improvement if the oil prices will return to the old levels of 16-18 dollar a barrel. This will however at least take another year.

Cambodia

The situation in Cambodia has stabilised again as some normalcy has returned after the conflict between the Cambodian People’s Party, CCP, of Hun Sen and the Funcinpec of Norodam Ranariddh have been solved in the advantage of the CCP. Hun Sen has become the leader of the country as the forces loyal to the Funcinpec have been virtually defeated. Only some small tracts of land remained under control of the Funcinpec at the moment a political solution ended the conflict.

The Funcinpec and its leadership were allowed to return to the country, were proscecuted and pardoned by the king to take part in the elections. The elections delivered no clear victory and a coalition returned to Cambodia in the same composition as before the conflict. The only difference is the known and accepted leader position of Hun Sen.

The last remaining threat has been the Khmer Rouge, the party of Pol Pot who has turned Cambodia in an open grave yard in the stone age communist version experiment. The last remnants of the Khmer Rouge were fighting or better surviving in the jungle of Cambodia. In time ever more forces and leaders turned themselve in, in one of the several amnesty campaigns of the government. The most prominent Khmer Rouge leaders like Ieng Sary, Khieu Samphan and Nuon Chea asked for amnesty and joined the government. Only Ta Mok, the butcher, remains in the jungle with a couple of dozen men.

As a fighting power the Khmer Rouge is finished and will not be able to endanger to stability of Cambodia. They can only influence Cambodian politics from within as they are now having some kind of position in the government.

The economical situation of Cambodia remains very bad. Everything had to be reconstructed as little survived the Pol Pot regime and the long civil war which started after the Vietnamese backed CPP ejected Pol Pot out of power. Some growth could be realised but it will take time and support before any real improvements will be visible.

The population of Cambodia have become tired of the civil wars and the poverty which they had to endure. As long as some kind of peace, law and order is established they will be satisfied.

The political, economical and social stability will increase in 1999 as the current government under the leadership of Hun Sen can keep peace. This will bring further economic growth and stability. This will be positive for the social stability in Cambodia as the future will become more secure and safe.

Laos

The situation in Laos has improved after the relations with its neighbours have gotten better. This isolated and one of the last communist countries is finally experiencing some progress. The economy of Laos is stimulated by improved relations and the large scale free market reforms that were and are introduced.

Politically the situaton has been stable as the communist government is in control and would not tolerate any opposition. but there is no group of necessary scale and support which could become a danger to the government.

There were / are a number of groups which oppose the government and some of them have organised themselves in to querilla units. The ethnic differences between highland and lowland Laotians and the acceptance of the communist regime are the main points of difference. When they united themselve in the Lao Liberation Army, LLA, they were defeated by the government with support of Vietnamese forces. Since then small insignificant groups remain but they do not pose any danger to the government of Laos.

The border dispute with Thailand have been settled for now by diplomacy. The demands however still exist and could be reborn if one of the sides would consider it worthwhile.

Th political, economical and social stabilty will improve somewhat in 1999. The government is stable, the economy is showing signs of improvement and the population has been satisfied by these positive developments.

Vietnam

Vietnam, one of the last remaining communist countries has developed itself into a stable country. The introduction of market reforms stimulated the economy and delivered a moderate growth in the last years. There are at the moment no present enemies but there are some potential problems around the corner.

The Vietnamese communist government keeps a tight grip on the power and they do not tolerate any opposition and changes in the government. The communist structures limit sometimes the development in the country but on the otherhand they provide stability. The population is satisfied with the developments so far as they increased the prosperity in the country.

There are a number of potential problems which could end into conflict. A number of disputes about the ownership and demarcation of the borders are the cause of those problems. Vietnam has differences with Thailand about the demarcation of the sea borders and with Indonesia about the Natuna island. Vietnam further has a claim on the Spratly islands as do China, Philipines, Malaysia, Indonesia and Brunei. And finally the disputes with China. These are the most dangerous conflicts, excluding the Spratly problem. Vietnam and China claim the Paracel islands and there are differences about the demarcation of the sea border in the Bay of Tonkin. The disputes about the demarcation of the land border have been more or less solved by negotiations but the sea borders are still undecided. The Paracel and Bay of Tonkin problem could very easily end up in some fighting between the two countries. The stakes in both problems are high, the attitudes of both countries get easily agressive in discussions about territory and the closeness to the land will make war possible or likely if the problem get out of control.

The political stability will be maintained in 1999, there are no internal adversaries which could replace the communist government. The external threats exist but are diplomatically solved or shelved as they do not have a high priority. The economical stability may get underpressure as the Asian economic crisis limits the attraction for new investments and business opportunities. This will limit the economic growth of Vietnam. The social stability will remain the same as political opportunities/involvement will not expand and the economy will not show any significant growth.

Taiwan

Taiwan one of the first tigers, or economic miracles, out of the Asian region. The negative consequences of the Asian crisis which has hit so many new tigers could have little effect on Taiwan. The currency and the stock market lost something of their value but the crisis offers some opportunities for Taiwan. Like new chances to invest at reasonable prices in South-East Asia, which will be very profitable if the economic turn around can be made. It will also limit the dependency on investments in China. The Taiwanese economy could show during the crisis growth figures of over 6 %.

The political situation have improved. Taiwan is as a democracy a stable country. All political dissatisfaction and problems can be brought forward in the parliamentary system so sidelining any aggressive movements. The democracy and the strong economy has created a happy people which are satisfied in the current situation.

The only problem remains China. China continues to view Taiwan as a renegade province which should be brought back into the fold of China. Threats and the two systems one country solution could not persuade Taiwan to rejoin China. Taiwan has a very strong argument against any historical or legal argument from China to state their claim. Taiwan as a democracy has to follow the wishes and demands of the population and as long as China is not democratic we can not become part of China.

The threat of China remains to be felt on the island. If Taiwan would claim independence China could react with violence. China is increasing its capabilities, amphibious forces, advanced fighter aircraft and modern warships, and the number of forces, more divisions and weapons, including between 150 and 200 M-9 and M-11 medium range ballistic missiles, in the southern part of China. This should impress Taiwan and make a possible invasion of Taiwan an option.

The political stability can be maintained in 1999 as the government is strong and backed by the population and a strong economy. The Chinese threat is existent but the Taiwanese capabilities are capable to defeat any aggresion towards Taiwan from mainland China. China will not be able to invade Taiwan on the short to medium term. It can terrorise Taiwan with M-9 and M-11 missile strikes and even disrupt the Taiwanese economy but only for a limited period of time. The international reaction and even a possible involvement will prevent China to start a terror assault.

The economic stability will probably increase in 1999. The negative consequences have been absorbed by the currency and stock markets. The growing Taiwanese economy and an improvement of the Asian economies will quickly be translated in to more growth in Taiwan.

The social stability will also increase. Taiwan as a democracy with a strong economy will improve the feel good factor of the Taiwanese. There is no dissatisfaction in Taiwan with the government or the economy. Taiwan is one of the most social stable countries in the region.

Japan

The situation in Japan is rather complicated. The economy is experiencing a recession but unemployment and inflation remain very low and the export surplus and the personal wealth of the Japanese are at an all time high. The Japanese have the highest saving ratio and savings in the world.

The political situation is not very stable. The government is weak and can not or better does not want to implement a policy which could possibly bring some relief. The Japanese government administration resist any changes as this would diminish its position/power. The bad loans and nearly bankrupt financial institutions will with some government support disappear by itself.

Japan is a very homogeneous society with low unemployment and therefore relatively very satisfied population. The country is very socially stable as has become visible in their government, business and family strucutres. They all support eachother even if another option would be more profitable or wiser.

The only internal problem of Japan are some leftist organisations like the red army and the involvement of criminal organisation in the society. The impact of those leftist groups is limited as they do not have a lot of support in the population. They are dependent on some high profile terrorist assaults to state their presence and make their case public. This does not increase their support. The other problem is about criminal activities in the society. Criminal organisations control relatively large, or better important, parts of the business community. They extort financial institutions and other companies, in the construction and service sectors, money for support with difficult share owners and with the acquisition of orders and ofcourse protection.

The external problem of Japan are small as Japan’s foreign, military, activities are limited by the constitution. There are however some conservative and right wing elements in the society and government which claim some islands in the seas around Japan. Japan claims for example the Sakaku islands, which are also claimed by China. There have been some problems about them and Japanese right wing party members even occupied them but they are uninhabitable and unattractive to stay on. The problems usually disappear with the first bad weather. But both countries will not fight about the islands on the short to medium term.

The political stability will remain just as feeble as in 1998. There will be no strong government to implement a strong policy. The economy will improve somewhat but it will remain disappointing. The social stability will remain the same as social cohesion is something of a Japanese tradition.

North Korea

The last true communist country, true in the sense of state ownership of the means of production and the absence of private initiative in political, business and cultural affairs. Everything is controlled and arranged by the state, e.g. the politburo and the communist party according the communist or better Stalinist doctrine. With the exception of the personal cult around the former leader Kim Il Sung and to a lesser extent his successor and son Kim Jong Il.

The government is now firmly under control of Kim Jong Il. All opponents to his regime have been removed. The government keeps strict control over all precedings in the country, everything has to be approved by the leadership. The indoctrination, the firm control and suppression of the security services has eliminated all oppositon in the country against the government.

The economic situation in North Korea is at an absolute low. The production capabilities are outdated, inefficient and partly shut down because of lack of spare parts and raw materials. The workforce is of bad quality because of the hunger and the low level of education in North Korea. The only efficient and functioning operations in North Korea are the security services and the development and production facilities of missiles and weapons of mass destruction.

The population is nearly starving from the hunger, over 2 million people have died from starvation in the last four years. The hunger has been the result of droughts which destroyed the harvest and later rainstorms which caused severe floodings and destroyed not only the harvest but also the infra structure and killed a large number of people.

The social cohesion has been remarkable good. There are no large uprisings against or discontent with the government. Especially state indoctrination of the population from kindergarten into old age and to a lesser extent suppression and the existence of any outside enemy secured the loyalty towards the government.

North Korea is still at war with South Korea, the hostilities are only suspended by a cease fire. The only hostile activities are infiltration, reconnaissance and propaganda operations. North Korea has still the ambition to rule over the whole of Korea

The large conventional North Korean army is still war ready and capable. The threat has diminished somewhat because of the economic problems and the critical food situation but the armed forces and the security forces are still the best provided in the country. Especially the continued development of missiles and WMD continue to pose a real and dangerous threat. The closure of two High Enriched Uranium nuclear reactors in exchange for two Low Enriched Uranium reactors, oil and food supplies in an agreement with the U.S.A., Japan and South Korea does not mean that North Korea stopped the developement of nuclear weapons. It is just an advantageous deal for North Korea and leaves all options open, including existing or even new reactors. Note: HEU reactors are necessary to manufacture weapon grade uranium for the use in nuclear weapons.

North Korea might get into a position to start a conflict with South Korea as an action of last resort. The poverty in North Korea could be more dangerous than anticipated.

North Korea will be politically stable in 1999 as the government is strong and not contended by some opposition. The economic stability will be non-existent. The economy will not show any improvement in 1999. The social stability will remain the same as the people are brain washed to believe that North Korea is the ultimate country and the suppression of the security forces will eliminate all opposition against the government. Firm control, the loyalty, of the armed and security forces will guarantee the survival of the communist regime. Without the support of the armed forces any resistance against the government will lack the necessary support and will be useless.

South Korea

South Korea has been affected by the Asian economic crisis. The currency has lost more than halve of its value. The stock market lost a third and the inflation soared. The short term debts are to high and can and could not be serviced without the support of credits from the IMF. This meant a strict regulation in South Korea and the fulfillment of many conditions to receive the badly needed support.

The causes for the crisis have been firstly the unlimited growth of the large companies, chaebols, which have activities in nearly all fields from electronics, textiles to car production. The export oriented chaebols have grown very fast through the furnishing of cheap loans and they did not pay, or to little, attention on profitability and the market situation. This created overproduction and operating losses in the majority of the companies. Secondly, the financial sector has to many bad loans. And thirdly, a shortage of foreign currency to repay the foreign short term debts. The problems are home grown and will need a harsh policy to cure the economic difficulties.

The economic crisis has created high unemployment, over 9 %, high inflation and poverty. This has led to dissatisfaction with the government, especially when Korea needed international financial support to avoid a financial collapse. The proud and independent South Koreans were humiliated by the economic crisis and even more when foreign countries and international institutions told them what to do.

The only external threat is North Korea. As the war is still not formally ended, the ambitions of North Korea are still aimed at taking over control in South Korea and the even worser economic situation in North Korea could make war an option. North Korea possesses large conventional armed forces, however of inferior quality, but with operational short and medium range missiles and long range missiles under development and with the appropriate warheads with a chemical or biological warload to do the job. The nuclear warhead is just matter of time. The North Korean armed forces have the ability and the capabilities to launch a successful assault on South Korea. Especially if they would use chemical and biological weapons.

The political stability can be maintained in South Korea in 1999. The government is stable as it received support from the population in the last elections. The IMF conditions might be impopular but they are accepted as an necessity to get the economy back on track. The people are dissatisfied and angry with the economic crisis but this is not directly aimed at the government and did not create a division in the country. South Korea is socially stable. There are only a few small radical organisations which are against the government but they lack the popular support and the means to make an impact.

The economic stability will not return that easily. It will take a number of changes to cure the commercial sector from the wrong business structures and the negative consequences of the crisis. 1999 will show a stabilisation of the crisis but not a large improvement or the same kind of stability of a number of yeas ago.

China

The situation in China is ambigeous. It isor has been one of the most promising countries in the world. It constituted, until 1998, a barrier against the spread of the Asian crisis. But there are some apects which may destroy the Chinese miracle. It could have been just a bubble. If all facts prove to be true and if a worst case scenario would be the case China might get infected by the Asian crisis.

China could attain very good growth figures over the last decade, figures in the double digit range were normal. The Asian crisis, the emergence of internal economic problems, a decline in international attention and natural disasters have depressed the growth figures dramatically. The holy 8 % growth necessary to absorb the unemployed from the restructuring of the still very large state industry and the peasants who migrate to the cities has not been reached in 1998 and will most probably not be reached in 1999.

China have been the most promising country in the world. The economic potential and the opportunities are very large and attracted the interest from all countries and companies in the world. All wanted to have a stake in the China as a market and to produce.

There are a number of good private companies in China which live up to the expectations but the majority show a rather poor performance in product efficiency and quality. The best companies are the foreign and joint venture companies. The large state industries are the worst kind of companies in China. Everything you can imagine about what can be wrong in a company is present in the Chinese state companies. Inefficient and outdated production, bad quality, incorrect business administration, high debts, poor management and so on. The elimination of these loss making companies is more difficult than anticipated. There is a lot of resistance form the workers, the local government and even some groups in the national government to the elimination of these companies. The elimination is a threat to their positions and does not guarantee a secure future for all involved. The closures will have a negative impact on the economy as the unemployment rises and poverty increases. This will lead to dissatisfaction in the population.

The financial situation of China is equally bad as in the other Asian countries which were hit by the crisis. China could fend off the crisis because of its large currency reserves, long term debt structure and the controlled currency. But the Chinese ecnomy has been infected with the same virus as the other crisis countries. The negative sides of the Chinese economy are the high level of bad debts as the financial companies were forced to lend to state owned companies which are and were essentially bankrupt. The many loss making companies, industrial and financial. And the widespread corruption and ineffective tax collection.

The economy in general is not showing a good peformance. There are to many problems which will decrease economic growth on the short term. The export position of China has been undermined by the devaluation of the currencies of the countries hit by the economic crisis and by the Chinese trading policy, China exports a lot of products but they are not prepared to open their own borders. The economy is further hit by the decreasing international investments into China, the increasing losses of government owned companies, the mass unemployment, the corrupt government officials, local and national, and large scale tax fraud.

The economic problems will probably lead to social destabilisation as the majority of the poor people, the farmers and state owned factory workers who until now did not receive any benefits from the economic progress, see their chances on some economic improvement dwindle. The consequences will be a the disgruntled population who resent the communist government with their economic changes and corrupt government officials on local and national level. This will lead to resistance against the government. This became evident at several demonstrations, mass protests, against the government all over the country. And even worser by the bombings of government institutions in the cities of Shenzen, Yizhang and Changsha and in the provinces of Liaoning and Zhuhai. These bomb assaults are most probably planned and excuted by the discontended farmers and workers. The popular discontent has reached levels at which law and order are becoming under threat, including the continuation of the current communist government, especially if the farmers and workers would receive support of the majority of the population. If this widespread support would materialise than the security forces would become outclassed.

There are some more internal problems beside the economic motivated resistance of the farmers and workers. There are at least two groups in China who do not feel comfortable to be part of China. The biggest problem and most dangerous is the demand for independence of the Xinjiang province by the Uigur people. The majority of the people in Xinjiang, the Uigurs, are Turkish speaking sunnite moslems which are related to the moslems living in Kazakhstan, Kyrgyzstan, Tajikistan and so on. The Uigur resist the unfair treatment they receive from, the occupation of the Chinese government in Xinjiang and the migration of Han Chinese into Xinjiang. The Uigur want to live according their own traditions and religion and do not want to be controlled and exploited by China or the representatives of China.

The Uigur people are fighting the Chinese government with civil disobedience and bombings of Chinese officials and institutions. The Chinese security forces reacted with brutal suppression to the Uigur resistance. The Chinese could control the Uigur resistance by the use of the security forces, migration of Han Chinese to alter the demographics and treaties with Kazakhstan, Tajikstan and Kyrgyrstan to limit support from abroad. The Chinese government is very keen on Xinjiang because of the minerals and the testing grounds which are situated in this remote part of the world.

The problems in Xinjiang will most likely deteriorate. The resistance will increase as the support for the Uigur from abroad will increase. Treaties do not count for much in this volatile region and are easily circumvented. The Asian economic crisis, the lagging economy and the internal problems with disgruntled farmers and workers will limit the Chinese abilities to combat the Uigur.

Another internal problem is with Tibet. The Tibetians still do not accept the Chinese occupation from their country. There have been little violence in the province as the Chinese security forces keep a tight grip on the situation. The Tibetians still remember the brutal suppression of their last violent uprise against the Chinese. The large number of military forces in Tibet, also because of the proximity to India, make any uprise very dangerous and without any chance of success.

The Tibet resistance is limited to a rejcetion of the Chinese occupation and the international campaign, especially by the Dalai Lama, the spiritual leader of Tibet, against China. The migration policy of Han Chinese into Tibet and the economic programmes has made resistance even more difficult and even created some accomodation of Tibetians of the Chinese occupation. The Tibetians have gotten involved in the Chinese economy and this has created some strong alliances.

The external problems of China, which are viewed by China as internal, are about the renegade province of Taiwan, the claim on the South Chinese sea and some other demarcation differences with its neighbours.

The Chinese government wants to unite Taiwan with China. The Chinese claim is rejected by Taiwan. Taiwan still has some equal kind of one China idea but the support for that idea is loosing its value as the old guard of former Kuomintang leaders, the Kuomintang is the nationalist party which have fought the communists in China, have left office and/or are death.

The reunification with Taiwan is only possible if the Taiwanese population would agree, Taiwan has turned into a democracy. And Taiwan suggests unification is possible if China would become a democracy, which is very unlikely. The Chinese-Taiwanese negotiations are in a status quo on a political level and are mainly aimed at an improved commercial and cultural relations. The Chinese idea of one country-two systems, as in Hong Kong, is not very attractive and not acceptable to Taiwan.

A Taiwanese declaration of independence would be intolerable for China and would most probably be a casus belli for China. China is prepared to use force to bring Taiwan back to China. The use of force is an measurement of last resort but it is considered as a viable option. The capabilities of the Chinese armed forces, even with the modernisation plans for the next five years implemented, are not strong enough to succeed with an assault on Taiwan. The number of advanced fighterplanes will be to low to defeat the Taiwanese air force. The armement and structure of the Chinese army inadequate to beat Taiwan on their territory. The amphibious forces to small in scale to make an impact. And the navy with to little advanced naval ships to support an amphibious landing and/or to implement a long term blockade around Taiwan and its Sea Lines of Communication.

China is willing to use force to regain control over Taiwan but its capabilities are to little to win such a conflict. An alternative option with a chance of success would be the use of missiles, the M-9 and M-11, stationed on the opposite of Taiwan. The missile launches could destabilise the Taiwanese economy and weaken its political, economical and military position which would make negotiations a better alternative. The missile campaign could be accompanied by the harassment of the shipping from and to Taiwan. The political pressure could, in the most positive scenario, force Taiwan to accept the Chinese reunification conditions. This is however a relatively large gamble with a high risk factor.

The other potential problem area is the owneship of the Spratly islands in the South-Chinese sea. The Chinese claim the whole South Chinese sea as a part of China including the Spratlies. This is contested by Vietnam, Philippines, Malaysia, Indonesia and Brunei. The Chinese operate some fishing boats and allegedly some scientific research groups on semi-detachable constructions on some islands of the Spratly group. These operations are military controlled and sometimes executed. This has caused some rows with the Philippines but nothing really dangerous. The Chinese navy is one of the strongest in the region, especially South-East Asia, and the Philippine navy or armed forces in that respect are no adversary for the Chinese. But even considering the relative superiority of the Chinese armed forces they are not able to conquer and hold the territory. The Chinese navy and air force lack the capabilities to sustain a long term operation on this distance from mainland China. The acquisition of Russian 50 -100 Su 27 type aircraft, 2 Sovremenny destroyers and some modernisations of Chinese equipment is not sufficient to dominate the territory in the next 5 years. But if China could maintain the economic growth of the last five years things could look different in the next milennium.

The Spratly problem will not cause any intensification of the tensions on the short term. The priority is to low as internal problems of all interested parties are demanding their prime attention. And as importantly they all do not possess the capabilities to enforce their claim on the Spratly islands, or part of it, on the short to medium term.

China has some differences with Vietnam about the Paracel Islands, the Bay of Tonkin and had, which are now solved by an agreement, about the demarcation of the land border. The Chinese occupy a number of islands of the Paracel group and has enforced their claim by naval activities in the Paracel region. The problem is however far from solved. The Vietnamese maintain their claim and enforced their claim by a licence to a joint venture company to search for oil in the region. The activities of both countries are low level and will not lead to a conflict on the short term. They have both to many economic problems to activate a conflict which is time and capital consuming.

The exact demarcation of the bay of Tonkin is also not solved but this can only be solved by diplomacy as both naval forces are not large enough to control the bay and limit violations of the other side. The conflict is again controllable because of the economic crisis in the region.

The difference between China and Japan is about the Sakaku islands. This is essentially, like the other potential problems, about the economic zone, or better minerals and fishing rights. It is not about territory as all of those islands are uninhabitable. The islands consist of a couple of rocks rising out of the sea or are just rising a few feet above the sea. A little rough weather make them dissappear. The activities are limited to some actions of Japanese right wing / conservative organisations which are very quickly removed by the Japanese government or some bad weather. The claim on the Sakaku islands will not be enforced by violence as Japan is limited in its actions by its constitution and their history. And China would not stand a chance of beating the Japanese armed forces.

The problems with India stem from the demand of India, that the Chinese occupy some parts of India, and the concern of India about the increasing activities of China in the Indian ocean.

The current demarcation of the border between India and China is not fully agreed by India. Where as China respects the McMahon line, more or less the current frontier, India accepts the situation and will not start a conflict about it. The military chances of succeeding are to limited. The main Indian concern is the increasing influence of China in the Indian ocean. The blue water capabilities of China are increasing and some agreements with Myanmar, basing and intelligence opportunities, are worrying India. This will not directly lead to another conflict but it is a negative factor.

The stability of China will decrease in 1999. The political situation is depressed by the many internal problems of which some of them will increase in 1999. The popular discontent and activities against the government are likely to increase as the poverty will increase, the division between have and have nots wil get larger, the incompetent and corrupt government will destroy trust and stimulate anger and the increased violence in the territories which demand secession. The differences with other countries, about the Spratly islands and the like, will not become active or violent. The priority is low and the capabilities are insufficient momentarily to be successful on the long term.

The economical stability is very much decreased. The economy of China is not that promising as it promissed to be. The same dangerous features are present as in South-East Asia. Namely a lot of bad debts, a unhealthy financial system and no proper accounting rules or in general the absence of financial and commercial legislation. The economy is further depressed by decreasing international investments into China, inefficient and outdated state owned companies, the increasing losses of the state owned companies, the mass unemployment, the corrupt government officials, local and national, large scale tax fraud and natural disasters which can be partly blamed on incompetent government. These factors will lead to economical instability if not chaos if the government does not implement a careful decisive policy to minimize the effects of the before mentioned problems. The Chinese government will have to exploit the positive sides of China the fullest, like the large currency reserves, the stable, or controlled curency, and the possibility of quick and decisive actions, to reach some stability.

The social stability will with the instable political and economical situation decrease. The political problems and the economic crisis will increase the poverty and the discontent with the government. This will lead to mass protests and even violence. Political initiaves of dissidents and illegal political parties/organisations will take the opportunity to gain some influence and to force the government to some changes. The rigid structured communist government will probably respond with suppression to the popular upheaval and the political activities of other entities. Which in turn will lead to more violence.

China is politically, economically and socially very unstable. If the government can not improve the political and economical situation the social horror scenario will come true and this should be prevented. The Chinese government could come under threat from the economical and social misery. The government is however strong enough to withstand a revolution like movement which would want to eject the government. The structure of the communist party, the security services and the loyal armed forces are to large and well organised to be swept away by the masses. The negative consequence of violence would be the end of China’s goal to become one of the leading countries in the world.