Hatoyama resigns as Japan’s PM
Japanese Prime Minister Yukio Hatoyama, who ended five decades of single-party
rule when he swept to power in August 2009, but stumbled when he confronted a
long-time ally, the United States, resigned on June 2, 2010. Hatoyama quit at a
meeting of leaders of the Democratic Party of Japan in Tokyo, becoming the
fourth straight Japanese leader to leave after a year or less in office.
“Since last year’s elections, I tried to change politics in which the people of
Japan would be the main characters,” he said later at a nationally broadcast
news conference. But he conceded that his efforts weren’t understood.
Hatoyama ran for the premiership on a campaign platform of maintaining a more
equal relationship with the United States, which still enjoys enormous support
among most Japanese. His decision to challenge Washington over the details of a
massive military base relocation plan on the island of Okinawa befuddled
Japanese and American analysts and government officials alike.
Hatoyama also called for Japan to become more of an “Asian nation,” which
sparked concern in Washington that he wanted to move away from the country’s
pro-US stance and closer to China.
Finance Minister Naoto Kan succeeded Hatoyama as the new Prime Minister.
Maoists force Nepal PM to resign
Nepal’s Prime Minister announced his resignation on June 31, 2010, bowing to
pressure from opposition Maoists who had been demanding his ouster in Parliament
and on the streets. Prime Minister Madhav Kumar Nepal said in a televised speech
that he decided to resign to end political deadlock and shore up the peace
Mr Madhav Kumar had taken over the post in May 2009 after the previous
government led by the Maoists resigned following differences with the President
over the firing of the army chief. He had the support of 22 political parties in
Parliament and more than half of the 601 members in the Assembly. However, the
Maoists, who have the largest number of seats in the Assembly, refused to
support his government and instead staged protests to demand disbanding the
In May 2010, the Maoists had shut down the nation for more than a week, imposing
a general strike. The protests also delayed the writing of a new constitution,
which was supposed to be complete by May 2010. The deadline has now been
extended by one year.
Landmark US Financial Reform Bill
On July 1, 2010, the US House of Representatives approved a landmark overhaul of
financial regulations. The Bill would impose tighter regulations on financial
firms and reduce their profits. It would boost consumer protections, force banks
to reduce risky trading and investing activities and set up a new government
process for liquidating troubled financial firms.
However, the Republicans say the Bill would hurt the economy by burdening
businesses with a thicket of new regulations. They also point out that it ducks
the question of how to handle troubled mortgage finance giants Fannie Mae and
Freddie Mac, which Democrats plan to tackle in 2011.
Ethic Riots in Kyrgyzstan
Russia sent hundreds of paratroopers to Kyrgyzstan on June 13, 2010 to protect
its military facilities as ethnic clashes spread in the Central Asian State,
bringing the death toll from days of fighting to 97. Ethnic Uzbeks in a besieged
neighbourhood of Kyrgyzstan’s second city Osh said gangs, aided by the military,
were carrying out genocide, burning residents out of their homes and shooting
them as they fled. Witnesses saw bodies lying on the streets.
The interim government in Kyrgyzstan, which took power in April 2010, after a
popular revolt toppled President Kurmanbek Bakiyev, appealed for Russian help to
quell the riots in the south.
Led by Roza Otunbayeva, the interim government sent a volunteer force to the
south and granted shoot-to-kill powers to its security forces in response to the
deadly riots, which began in Osh, before spreading to Jalalabad.
Renewed turmoil in Kyrgyzstan has fuelled concern in Russia, the United States
and neighbour China. Washington uses an air base at Manas in the north of the
country, about 300 km from Osh, to supply its forces in Afghanistan.
G-20 Summit meeting
A Summit meeting of Leaders from the Group of 20 economic powers was held in
Toronto, Canada on June 28, 2010. The leaders have agreed to halve deficits by
2013 and stabilise or reduce the government debt-to-GDP ratio by 2016. At the
same time, the bloc left it to individual countries to decide on levying taxes
on banks or adopting other means to fund future bailouts.
Along the way, the G-20 leaders who completed their fourth meeting since the
global financial crisis of 2008, also diluted their position on a number of
problems they had decided to fix earlier. For instance, while reinforcing their
desire to move to a more stringent capital structure, the communiqué issued
after two days of discussions said countries would “aim” to put in place a new
framework by the end of 2012, which was earlier the target date. Members will
also get flexibility in phasing the new rules.
The good news is that once these rules are implemented banks will have more
capital to deal with crises as the ratio of core Tier-I capital of a bank to its
risk-weighted assets is expected to double from the present level of 2 per cent.
On trade, too, there was dilly dallying. The G-20 leaders, who had earlier said
that the Doha Round of trade liberalisation talks should be concluded in 2010,
have not mentioned any deadline now. All that has been said is that they will
now deliberate on the ways to take forward the talks when they meet in Seoul in
G-20 members have also decided against erecting any new trade and investment
The decision to increase the quotas for developing countries in the
International Monetary Fund by the Seoul summit was touted as another gain.
While many elements in the 19-page statement were a reiteration of the earlier
pledges, these were at least two new elements. One of them was a proposal to set
up a working group on development. The other was the desire to focus on issues
related to corruption with members urging to ratify and implement the United
Nations Convention against Corruption.
However, the move by some developed countries to insert another new element — a
levy on bank transactions — did not find a mention in the final text as the
focus of the deliberations remained on reducing fiscal deficit levels. A key
demand of European countries, was resisted by the US and developing countries
such as India and Brazil.
Along with deficit reduction, G-20 leaders also agreed on ushering in structural
reforms by emerging surplus economies, such as China. These countries, which can
tailor their reform moves to strengthen social safety nets, should increase
infrastructure spending and enhance exchange rate flexibility to reflect
underlying economic fundamentals.
G-20 meeting of Finance Ministers
Finance Ministers and Central Bank Governors of G-20 countries met in Busan,
South Korea on June 4, 2010.
At the top of the agenda was Europe’s debt crisis. The Ministers also discussed
medium-term growth framework and how to solve economic imbalances which caused
the global financial crisis. Canada, the current G-20 President, hopes to secure
an agreement in Toronto on the broad suite of policies needed to reduce these
imbalances. Individual countries would then commit themselves to specific
policies at the next G-20 summit in Seoul.
Building on progress to date, the leaders affirmed their commitment to intensify
efforts and to accelerate financial repair and reform. They also agreed that
further progress on financial repair is critical to global economic recovery and
requires greater transparency and further strengthening of banks’ balance sheets
and better corporate governance of financial firms.
The leaders also committed to reach agreement expeditiously on stronger capital
and liquidity standards as the core of our reform agenda and in that regard
fully supported the work of the Basel Committee on Banking Supervision.
The leaders also emphasized the need to reduce moral hazard associated with
systemically important financial institutions and reinforced their commitment to
develop effective resolution tools and frameworks for all financial institutions
on the basis of internationally agreed principles.
The G-20 was established in 1999, in the wake of the 1997 Asian Financial
Crisis, to bring together major advanced and emerging economies to stabilize the
global financial market. Since its inception, the G-20 has held annual Finance
Ministers and Central Bank Governors’ Meetings and discussed measures to promote
the financial stability of the world and to achieve a sustainable economic
growth and development.
China announces plans to make its currency more flexible
Equity markets across the world made handsome gains on June 21, 2010, after
China announced plans to make its currency, the yuan, more flexible against the
dollar. India’s benchmark equity index, the Sensex, and the broad-based Nifty
today touched their highest levels in more than two months.
Market analysts said China’s move would go a long way in lifting the global
economic sentiment that was under the weather due to the Euro crisis. China’s
decision would result in a higher growth rate, especially for countries that
have a significant trade relation with the Asian behemoth, as currency
appreciation would make imports comparatively cheaper in China.
According to Barclays Commodities, there is a thinking that a stronger yuan will
“increase Chinese purchasing power” leading to an increase in its “purchases of
base metals”. “This coincides with a strong set of Chinese trade data for May
2010, which showed that the country turned a net importer of aluminium and lead,
while copper and zinc imports remained strong”.
UNSC slaps sanctions on Iran
On June 9, 2010, the UN Security Council slapped sanctions on Iran over its
controversial nuclear programme, targeting the powerful Revolutionary Guard,
ballistic missiles, and nuclear-related investments, despite opposition from
Brazil and Turkey.
In the 15-member Council, 12 countries, including the US and Britain, voted in
favour of the resolution, with Lebanon abstaining and Brazil and Turkey voting
The new resolution, which is fourth against Iran to be adopted by the UNSC,
creates new categories of sanctions like banning Iran's investment in nuclear
activity abroad, banning all ballistic missiles activities, blocking Iran's use
of banks aboard and asset freezes for members of the Islamic Revolutionary Guard
The resolution blacklists entities that includes 15 enterprises of the Islamic
Revolutionary Guards Corps, three entities owned by the Islamic Republic of Iran
Shipping Lines and 23 industrial companies. The international community accuses
Iran of seeking to develop an atomic weapon. But, Tehran has been maintaining
that its uranium enrichment program is for peaceful civilian purposes.
India has been maintaining that it is opposed to such kinds of sanctions as it
will affect the common people more than the establishment. Russia and China,
which have previously raised objections against such sanctions, supported the
resolution and said they were happy with the text of the resolution as long as
it did not have any negative impact on the people.
Iran voiced defiance, saying it would not halt uranium enrichment and suggesting
it may reduce cooperation with the UN nuclear agency.
SAARC nations pledge coordinated action to tackle terror
Members of SAARC have pledged to step up coordinated action against the common
menace of terrorism, including steps to apprehend or extradite persons connected
with acts of terrorism and facilitate real-time intelligence sharing.
The meeting of the Interior Ministers of the South Asian Association for
Regional Cooperation, held on June 27, 2010 in Islamabad, Pakistan, also
resolved to step up cooperation in real time intelligence-sharing and to
consider Pakistan’s proposal for creation of SAARCPOL, an institution on the
lines of Interpol.
The ministerial statement on cooperation against terrorism adopted at the
meeting said the SAARC member States had underscored their “commitment to
apprehend and prosecute or extradite persons connected, directly or indirectly,
with the commissions of acts of terrorism”. They also reiterated their
commitment to strengthen SAARC’s regime against terrorism.
The ministers resolved to ensure that “nationals and entities” of SAARC States
who commit, facilitate or participate in commission of terror acts are
The SAARC members—Afghanistan, Bhutan, Bangladesh, India, Pakistan, Maldives,
Nepal and Sri Lanka—also acknowledged that linkages between terrorism, illegal
trafficking of drugs, human trafficking, smuggling of firearms and threats to
maritime security remained a “serious concern” and said these problems would be
addressed in a comprehensive manner.
US-Russia ties improve
On June 25, 2010, US President Barack Obama declared he had succeeded in
“resetting” the US-Russia relationship, which he said had reached its lowest
point since the Cold War at the end of George W. Bush’s term in office. Obama
was speaking to reporters in the East Room of the White House following meetings
with Russian President Dmitry Medvedev.
Medvedev, meanwhile, agreed to allow a resumption of US poultry exports to his
country which Russia had banned earlier in 201, claiming that a chemical used in
the US violated its food safety rules.
But despite the bonhomie between the two leaders, who have met seven times since
Obama took office, both Obama and Medvedev acknowledged that they had
differences over certain issues, including Georgia. Relations between the two
countries deteriorated after the Russian invasion of Georgia in 2008.
The US and Russian Presidents said they had resolved a majority of the obstacles
in the path to Russia’s entry into the WTO. They have instructed their
negotiators to work as quickly as possible to wrap up what Obama said were
“difficult issues” that will require “some significant work”, but Medvedev
described as “minor problems”.
The two sides released 11 joint statements at the end of their meeting. These
covered promotion and implementation of open government; Kyrgyzstan; energy
efficiency; strategic stability; counter-terrorism cooperation; inter-country
adoption; Afghanistan; people-to-people connections; strategic partnership in
innovation; Russia’s accession to the WTO; US-Russia Presidential Commission.
Canada government blamed for Kanishka crash
A long-awaited inquiry into the 1985 Air India Kanishka bombing, which killed
329 persons, mostly of Indian origin, has blamed the Canadian government for its
failure to prevent the tragedy and recommended the appointment of a powerful
security czar to resolve disputes between conflicting interests among security
“The government needs to take responsibility to avoid further failure and to
prevent a return to a culture of complacency,” Justice John Major, the head of
the Kanishka bombing inquiry commission, recommended on June 17, 2010, nearly 25
years after Canada's worst terrorist attack.
In the much-awaited final report from the commission that investigated the
bombing of Air India Flight 182 on June 23, 1985, he observed that the national
security continues to be badly organised between the RCMP and Canada's spy
agency. He also recommended radical transformation in prosecution.
Meanwhile, Candian Prime Minister Stephen Harper assured the family members of
the victims of the 1984 Air India Kanishka bombing that the government would
respond “positively” to the recommendations made by an inquiry committee and
said compensation would be offered to all.
Years of criminal investigation have yielded just one conviction, for
manslaughter, against a British Columbia mechanic Inderjit Singh Reyat, who
assembled bomb components.
G-8 leaders drop commitment to complete Doha round in 2010
On June 27, 2010, G-8 leaders met in Totonto, Canada for their annual Summit
meeting. The leaders decided to drop a commitment to complete the troubled Doha
trade round in 2010 and vowed to push forward on bilateral and regional trade
talks until a global deal could be done.
In 2009, a G-8 summit in Italy and a Pittsburgh meeting of the Group of 20 both
had committed to a 2010 end date that now looks impossible to meet.
Canadian Prime Minister Stephen Harper, who chaired the G-8 summit, said Doha
was not dead. “I don't think we can afford to say that. We’ve got to find a path
over time to get to a successful conclusion,” he told a closing news conference.
Doha round has been dogged by differences among trade powers who want more
access to one another’s markets but have struggled to lower their own trade