Top 5 Stories to Follow in the South Pacific in 2016

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Auckland, New Zealand, where the Trans-Pacific Partnership will be signed. Photo Credit: Genevieve Neilson

 

  1. National Elections

This year, there will be national elections in Australia, Kiribati, Nauru and Samoa. Australia’s relatively new Prime Minister Malcolm Turnbull will be tested at the polls, and we are yet to see whether the public concentrates on the candidate’s personality or international issues, specifically, the Trans-Pacific Partnership Agreement and immigration. Pacific island voters face local issues like storm recovery, welfare and some big personalities of their own.

On January 22, Vanuatu held snap elections because 14 Members of Parliament, including the Prime Minister, were involved in a corruption scandal last year. Kiribati goes to the polls on January 30 to replace President Anote Tong (due to term limits), who has been at the forefront of international advocacy for action on climate change. Next, Samoa will hold elections on March 4, with Prime Minister Tuilaepa Sailele a “reasonable bet” given that he has held office since 1998. Last year, Nauru was plagued by concerns over its rule of law; because of this its leaders have asked for support from the Commonwealth Secretary when the country holds elections in June. Elections in Australia are not yet scheduled, but should take place before the year is over. Former Prime Minister Tony Abbott was ousted in September 2015 and replaced by Malcolm Turnbull; the new leader is seen as more open to debate than Abbott, who is contesting his Parliamentary seat again this cycle. Locally, Australia’s Northern Territories will vote in August to determine whether the government can lease the port of Darwin to Chinese company Landbridge.

Bonus: NZ Binding Flag Referendum

New Zealand Prime Minister John Key is behind the referendum to change the national flag. Critics call the move a vanity project in legacy building, in the absence of meaningful debates about New Zealand culture, Maori rights, or becoming a republic. In shocking news to many, late entry and hipster crowd favorite Red Peak did not make the final vote. There will be a binding referendum between March 3-24 requiring voters to select between the current flag or a silver fern design by Kyle Lockwood. Voters in Auckland confused about which design to select will get a demonstration on the Auckland harbor bridge.

  1. West Papua

The separatist movement in West Papua is as alive as ever, and human rights abuses committed by Indonesian forces have reportedly increased under the Jokowi government. In an address at the United Nations General Assembly in October 2015, Solomon Islands Prime Minister Manasseh Sogavare called on the United Nations Human Rights Council to step up monitoring and investigating efforts for human rights abuse and violations in Papua and West Papua. In November, Human Rights Watch published a 73-page report condemning the government of Indonesia for the lack of access for foreign journalists in the region. Meanwhile, in December, the Indonesian government warned other countries to respect its sovereignty and reportedly ordered international NGOs to close their offices in Papua. Much of the wealth from the resource-rich province goes to Jakarta, leaving West Papuans relatively poor.

There seemed to be a small amount of traction in the case for peace. Having spent the last 10 years in prison, West Papuan separatist leader Filep Karma was released from prison five years early. Yet, on the same day that Indonesian and Australian defense ministers met to declare closer ties, a young West Papuan was shot by the military while protesting a palm oil company. Pacific Islands Forum may be a platform for intervention, particularly when it releases information about its “fact finding mission” agreed to at the last Leaders Summit.

  1. Pacific Fisheries

Overfishing has been a significant problem for the Pacific Island region, leading to competition for depleted fish stocks. Ineffective international management of the Pacific tuna supply, strong consumer demand and weak monitoring of vessels have led to overfishing, illegal, unreported and unregulated (IUU) fishing, and bycatch. And, in some cases, operators of IUU fishing vessels disregard basic labor standards.  Illegal fishing cannot be solved unilaterally; Pacific Island Countries will need support from their island neighbors, larger international actors like the United States, Indonesia, Japan and Australia, as well as support from non-government groups.

Marine sanctuaries are one option for island states to protect local fisheries and recover populations lost due to overfishing.  In October 2015, Palau created one of the world’s largest marine sanctuaries that covers 80 percent of its Exclusive Economic Zone (EEZ). You can read my article focusing on Palau for the Islands Society here. Palau lacks the enforcement ships to ensure its sanctuary is protected. In addition, the United States government has reneged on a fishing agreement with Pacific island nations which will leave them in a budget shortfall. Island states like Palau hope to replace declining income with an increase in tourism by wealthy travelers and will need international support to maintain sovereignty over its fisheries.

Among other groups, the Pacific Forum Fisheries Agency is responsible for coordinating these efforts, and should be more vocal internationally this year.

  1. Trade Agreements

The signing ceremony for the Trans-Pacific Partnership Agreement (TPP) is scheduled for February 4, 2016 in Auckland, New Zealand. Meanwhile, the fate of the agreement is still uncertain. Protesters in Canada, Malaysia, New Zealand, and the United States among others continue to demonstrate their displeasure for the 12-nation pact. As Canada’s government recently made clear, “signing does not equal ratifying.” In fact, ratification could take up to 2 years. Even in the United States, passage of the agreement through Congress is anything but certain; in an address in Washington, Australian Prime Minister Malcolm Turnbull lobbied the American Congress on the agreement. But what does the TPP mean for the Pacific? Australia and New Zealand are the only South Pacific countries party to the agreement, yet the agreement allows other states to join in the future.

The Pacific is currently negotiating its own free trade agreement, Pacific Agreement on Closer Economic Relations, or PACER-Plus, which focuses on removing tariffs and duties. Last September, PIF leaders agreed that they wanted negotiations for PACER-Plus to conclude by mid-2016, yet cohesive political leadership is lacking. Fiji and Papua New Guinea have warned about the potential inability to regulate and protect specific industries; PNG believes it will hurt its manufacturing sector. Additionally, non-government groups have questioned the ability of the agreement to produce significant benefits for island countries under its current status; while it enables Australian and New Zealand access to Pacific countries, it may not similarly provide support mechanisms for local producers to get their goods to the market.

As larger island countries and regional leaders, Fiji and PNG may have too much to lose if they walk out on PACER-Plus, much the way some states feel that have already agreed to the TPP. As these processes unfold, Pacific states will be watching how the TPP impacts smaller and less diverse economies.  

  1. Climate Change Leadership

Since 1992, sea levels have risen nearly 8cm according to Nasa, and the Pacific has experienced a faster increase than other areas.  The plight of Pacific Island states has been well-documented by The Guardian and Pulitzer Center. Maintaining international commitment, funding and access to funding for climate change will be critical to adaptation and mitigation efforts. Kiribati President Anote Tong has reiterated that climate negotiations are not a game but “a matter of survival.” In part because of the persistence by Pacific island leaders, the latest UN climate agreement in Paris set a target of 1.5 degrees Celsius as opposed to the 2C limit preferred by industrialized states.

For 2016, the Pacific will need to continue to speak with a unified voice. Kiribati President Tong and Palau President Tommy Remengesau have led advocacy efforts, and increasingly Fiji under President Frank Bainimarama is making its voice more prominent. The Pacific Island Development Forum (PIDF) hosted by Fiji is now an observer in the United Nations; leaders have used the PIDF to caucus because it excludes Australia and New Zealand. The group came together for the 2015 Suva Declaration on Climate Change because, according to Bainimarama, “We in the Pacific tend to speak softly. It is in our nature. But on this issue, we needed to cry out with one voice, enough is enough. And we have. And it is all the more powerful for that.”

In June 2017, Fiji will host the United Nations Conference on Oceans and Seas. Throughout the year, but particularly in the lead up to regional and global meetings, look for Fiji to take an aggressive advocacy position.

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Contestations of Memory: Comfort Women and East Asian Politics

“To ignore violative conduct is to invite its repetition and sustain a culture of impunity.”[1]

If survivors from a tragic event do not step forward to share their experiences, how will historians and the public know the truth about what happened? A lack of personal testimonials may invite suppression of memory or rewriting of history. It took nearly fifty years for women who survived the Pacific War ‘comfort stations’ of the Japanese military to reveal their maltreatment and forced experiences as ‘comfort women.’ As opposed to redress initiated by the state, a shift in academia from the 1980s led by several female academic researchers helped open a space for survivors to bring grievances against the Japanese state for crimes against humanity (including rape and sexual slavery) and South Korean state for support. Japan and Korea’s sanitization of their official histories of the Pacific War, denial of evidence of Japan’s state coordination of enslaving comfort women and stigmatization of former comfort women amounted to a re-interpretation of history and denial of the women’s memory; with the atomic bombing of Japan and the desire for the US to have a strong non-communist ally in the region after the war, Japan was able to shed its image as an aggressor relatively quickly and in its textbooks told the story of the Pacific War through its prism as a victim. The history of comfort women, and particularly the responsibility of the Japanese state, is still disputed; this debate has led to a damaging divide between experiencers and mythologizers of history.

In discussing the history of ‘comfort women,’ there are multiple angles from which to approach their experiences as well as the constructed memory in the ‘official histories’ of Japan and South Korea. Christine Chinkin (2001) in “Women’s International Tribunal of Japanese Military Sexual Slavery” addresses the importance of tribunals–official and unofficial–and community involvement so that states cannot “ignore or forgive crimes against humanity.”[2] Chunghee Sarah Soh (1996) in “The Korean ‘Comfort Women’: Movement for Redress” focuses on the inability of former comfort women to reconcile their past due in part to cultural legacies and the institutionalization of sexual slavery based on class, gender, ethnicity, and nationality; although, changes in national and international structures since the Cold War have helped translate the problem into a universal women’s issue. Shuko Ogawa’s (2000) “The Difficulty of Apology: Japan’s Struggle with Memory and Guilt” and Bonnie B.C. Oh’s (2001) chapter “The Japanese Imperial System and the Korean Comfort Women of WWII” attempt to explain the Japanese state’s perspective. Oh accepts the uniqueness of Japan’s situation while finding underlying cultural issues that impacted the role of the government; Ogawa advocates the importance of Japan coming clean on its history of comfort women in order to save face. In “History & Memory: Comfort Women Controversy” Hyun Sook Kim (1997) compares official Japanese and South Korean textbooks with testimonials of survivors and similarly identifies cultural reasons for both states to selectively ignore, repress and sanitize experiences of comfort women. This contestation of memory entails mythmaking and a division between official narrative of ‘lack of evidence’ and narratives of testimonials from those that experienced history.

By reiterating tales of female exploitation, historical roles of Japanese and Korean governments, and the states’ claim of a ‘lack of evidence’ these texts elucidate the difficulties that former comfort women, as those that ‘experienced the history’ have faced in reconciling their past and attempting to educate future generations. Because of the official treatment of their history the women feel as if the mythologizers of the past (i.e. Japanese government) are “uninterested in knowing the past as its makers have experienced it.”[3] Women have been unable or unwilling to tell their experienced history because of the stigmatization within the families, communities and society, particularly in Korea, from the time of their return. A government study in 1993 led to the Kono statement where Japan officially recognized its role in establishing comfort stations, coercing women into sex with the military; however, controversy still ensued as the government claimed reparations should be made through private rather than public funds meaning the state would not pay for–and so would remain separate from–the harm it caused. Moreover, the states’ alternative histories are positioned from different historical data; survivor testimonials have become “reified as ‘information’ and ‘data,’ and they are treated as hard facts and the truth about the past – ‘facts’ that must be verified.”[4] According to Kim, for decades personal narratives have been withheld or ignored due to “patriarchal and national cultural arrangements.”[5] Oh meanwhile explains that comfort women were seen as “gifts from the Emperor,” pointing to the underlying issue of “contempt with which women have been held in Japanese society and exploitation of their sexuality.”[6] Decades on, financial compensation has been sought (and some achieved), but more than that is the desire for Japan to accede full responsibility for their terrible experiences; from this full apology the women seek acceptance from communities and the state to prevent this situation from occurring again.

At different points the governments of Japan and South Korea modified their positions on comfort women yet internal and external cultural and political factors led them to maintain control on history. But what did the states have to gain from their (mis)treatment of these women? Initially the Korean government ignored issues of the ‘Chongsindae’ women; there was a “lack of documentary evidence” because Japan destroyed records, and the 1965 Normalization Treaty “foreclosed the Korean government from making any further claims for reparations for damages incurred during the colonial period.”[7] Soh indicates that the state’s treatment of the plight of comfort women fits with South Korea’s tradition of sexual and physical exploitation of women for tourism and labor industries. Both cultures maintain a reverence for ancestors which enables construction of memory; in Japan specifically, “ideological wars have been fought over the wording of history textbooks, commemoration of the war dead, and personal compensation demands from foreigners” victimized by the Japanese.[8] Conservatives in Japan then do not want to teach a history which they believe will prevent students from retaining pride in their country.

While Japan eventually admitted that comfort women were coerced and recognized that “it had violated international humanitarian laws by persecuting Korean women,”[9] this contestation of memory is far from reconciled. Disputes over compensation to victims have put pressure on Japan-Korea relations, while “ethno-nationalistic sentiments have given rise to a renewed sense of historically rooted mutual hostility and contempt.”[10] Korean and Japanese heads of state have prioritized and publicized the dispute over memory of the comfort women at different levels. Current Japanese Prime Minister Shinzo Abe recently stated he would accept the 1993 Kono Statement while still enabling a review on how the apology was constructed.[11] Critics such as Ogawa claim that Japan will not be able to gain full acceptance in international institutions until it recognizes its past injustices with comfort women, who have been unable to receive closure with their past.

Contemporary politics reinforces Japan’s mythologization of its Pacific War experiences as a victim rather than the aggressor.  Recent high-level, bilateral summits between South Korea and Japan discussing security, development and now potentially the comfort women issue are a positive sign and represent a significant diplomatic concession by Japan. Events such as the fallout from Trans-Pacific Partnership discussions and the North Korea program have added to US concern over the behavior of its allies and its inability to control actors in the Asia-Pacific. Japan’s historical hesitation to confront nationalist tendencies has negatively impacted relationships with its neighbors and more importantly, has marginalized memories that can instill humility and prevent the event’s repetition.

[1] Chinkin, Christine. “Women’s International Tribunal of Japanese Military Sexual Slavery.” The American Journal of International Law. 95.2. April (2001).

[2] Ibid.

[3] Cohen, Paul A. History in Three Keys: The Boxers as Event, Experience, and Myth (New York: Columbia University Press, 1997), xiv.

[4] Kim, Hyun Sook. “History & Memory: Comfort Women Controversy.” Positions. 5:1. Spring (1997): 95.

[5] Ibid, 101.

[6] Oh, Bonnie B.C. “The Japanese Imperial System and the Korean Comfort Women of WW2” In Legacies of the Comfort Women. Edited by Margaret Stetz and Bonnie B.C. Oh. (New York: M. E. Sharpe Inc., 2001), 5, 9.

[7] Soh, Chunghee Sarah. “The Korean ‘Comfort Women’: Movement for Redress.” Asian Survey. Vol. 36, No. 12, Dec. (1996): 1230. 

[8] Ogawa, Shuko. “The Difficulty of Apology: Japan’s Struggle with Memory and Guilt.” Harvard International Review. Fall (2000).

[9] Soh, “The Korean ‘Comfort Women,’” 1236.

[10] Ibid, 1239.

[11] Akihiko Kaise. “Abe Administration Maintains Delicate Balancing Act over Kono Statement.” The Asahi Shimbun. (3/15/14) [http://ajw.asahi.com/article/behind_news/politics/AJ201403150044]

Political Risk Analysis of the 2008 Sanlu Melamine Scandal and 2013 Fonterra Botulism Scandal

This post is part of a longer research paper.  It was adapted for the Australia and New Zealand Studies Association Conference at the University of Texas in Austin on February 8, 2014.

New Zealand’s agricultural sector not only makes up the majority of its exports but also constitutes an important part of the country’s cultural identity. Risk events related to Fonterra can have significant impacts and spillover effects as the world’s largest dairy exporter. An initially localized quality problem can lead to the perception of risk on a global scale. Fonterra’s experience with two major health risk events exemplifies the imperative of risk communication and management strategies for businesses and governments to cope with risk and show accountability to stakeholders.[1] Tools of political risk analysis can help organizations to evaluate multi-layered risk situations, create risk communication strategies and mitigate spillover effects caused by social amplification. This essay compares the 2008 Sanlu melamine scandal and 2013 Fonterra botulism scandal through a risk analysis approach from the behavioral sciences. The latter provides political risk analysts a valuable tool to understand how society responds to new and unfamiliar technologies and risks, and how to manage them. In 2008, Sanlu’s information vacuum led to health problems and widespread social reactions, damaging firms and individuals. In 2013, early risk communication benefited public health but was detrimental to reputations of Fonterra and the New Zealand dairy industry; long-term effects of Fonterra’s risk communication are still unknown but are likely to be positive, displaying a desire for transparency and risk avoidance.

Risk Terms

The field lacks a unified definition of political risk, but the term implies a change in circumstances, usually a loss, for a defined actor or set of actors. Charlotte Brink’s definition of political risk analysis is aimed toward foreign investors, encompassing

the probability that factors caused or influenced by the (in)action or reactions of stakeholders within a political system to events outside or within a country, will affect investment and business climates in such a way that investors will lose money or not make as much money as they expected. [2]

Importantly, Brink shows that risks can be caused by lack of action, such as withholding information.

For public and experts, risk perceptions are built primarily using three factors: 1) degree to which the risk is understood; 2) level of dread; 3) number of people exposed.[3] People use ‘affect heuristics,’ or mental shortcuts, to process judgments about the “positive or negative quality of a stimulus.”[4] The affect heuristic is important in changing perceptions of a hazard, as access to more information can sway perception.[5] Whether risk communication seeks to inform or advocate, it is important to inform early, regularly and with accurate information to gain maintain trust, and encourage desired behaviors from the target audience.[6] The social amplification of risk framework exemplifies how risk events interact with various psychological and cultural factors in ways that affect public perceptions of risk; the portrayal of an event through different channels including, for example, media, and corporate and government releases can lead to ripple effects which can be more damaging to firms and individuals than the original impact.

Adapted from Kasperson & Kasperson (1996).
Adapted from Kasperson & Kasperson (1996).

Background on Sanlu and Fonterra

In 2008 and 2013, public health risk events rocked two of the world’s largest dairy companies. Fonterra is the world’s largest dairy exporter, a multinational cooperative owned by more than 10,000 farmers. To expand its networks in China, in 2005 Fonterra signed a joint venture with Sanlu, acquiring a 43% stake.[7] As a state-owned entity with close ties to government officials and China’s former largest seller of milk powder, Sanlu was expected to self-regulate quality control and was not subject to the same regulations as other firms. Moreover, Sanlu was critical to the economy of Hebei Province, employing 10,000 workers. As two of the world’s largest dairy producers combined forces, the reputations of their brands became intertwined while they retained separate operations.

2008 Sanlu Melamine Scandal

The 2008 Sanlu melamine scandal was China’s worst food contamination disaster; until the central government intervened, risk communication efforts were non-existent. The company, which had built up its reputation over five decades, became bankrupt as a result of the scandal. At least 6 infants were killed and 300,000 developed kidney stones due to melamine contamination of infant milk powder. As early as March 2008, Sanlu and the media received complaints about ill children, suspected contamination and performed its own testing. The media was unable to warn the public or probe complaints by parents due to government restrictions on reporting before and during the Olympics. Fonterra was not informed of the contamination by its local partner until a board meeting in August. Shortly thereafter, Fonterra notified local authorities in Shijiazhuang, Hebei Province about suspected contamination but were constrained by other Sanlu board members. When Sanlu refused to recall the products or inform the public, Fonterra contacted the New Zealand government on September 5 to pressure Beijing which then recalled all Sanlu milk powder and embarked on a campaign. [8] The scandal impacted the entire dairy industry, hundreds of thousands of individuals and two national governments.[9] Earlier risk communication efforts and a product recall by the Chinese government and dairy industry actors may have lessened the damage caused by contamination.

Risk Perception: Threat to Children Breeds Panic?

In both cases, characteristics of the hazard combined with the public’s heuristic thinking, leading to social amplification. In the Sanlu scandal, risk perception factors of understanding, level of dread and number of people affected contributed to a high public perception of risk. The Chinese public was familiar with melamine; in 2007 there was a similar contamination scandal in the pet food sector and in children’s toys.[10] Specifically, the risk to children, close proximity and that it was man-made were important dread factors.

Risk Communication and Amplification: Multiple Interests Impair Efforts

Sanlu withheld communication and responsibility as long as possible and influenced media outlets to conceal the risk. In return for suppressing negative publicity, Sanlu purchased NZ$640,000 of advertising on Chinese search website Baidu. Additionally, Sanlu used a public relations executive to act as a reporter; using propaganda techniques, they promoted positive stories of Sanlu.[11]

The increasingly decentralized political system in China and Sanlu’s unwillingness to inform the public contributed to poor risk communication. Local officials hid the problem and lacked proper standards and supervision to regulate the industry; officials were informed on August 2 but took no action until September. Beijing announced the contamination after the Olympics ended by apologizing, ensuring communication was transparent, clear and individuals were held accountable.

Beijing’s response was to “curb the risks, punish the perpetrators and help victims.”[12] Government agencies enacted a full product recall and punished many of those responsible. But, scores of children were already affected. After the government issued a warning on September 15, and Premier Wen Jiabo embarked on a media campaign in late September visiting sick infants in hospitals, journalists felt safe reporting about the scandal.[13]

Impacts and Ripple Effects of Social Amplification

Impacts of the Sanlu melamine scandal were widespread. Due to compensation claims, Sanlu went bankrupt only a few months later in December 2008; a previously little-known company unconnected to the scandal, Sanyuan, eventually purchased Sanlu. Overall, Fonterra lost NZ$139 million. More than 22 companies were implicated in the melamine scandal, which included other dairy products and eggs. Among other arrests and firings, high-profile punishments included life imprisonment for Sanlu chairman Tian Wenhua and death sentences for three men.[14]

In addition to the immediate impacts, consumers lost confidence in the domestic dairy industry, requiring government action. Consumers took weekend trips to Hong Kong to purchase large quantities of infant formula, believing it was safer than those on the mainland.[15] Beijing enacted emergency subsidies to combat further bankruptcies. To repair the industry’s damaged reputation, “local authorities were urged to reinforce technical guidelines on cow feeding and epidemic control.”[16] China’s relatively managed economy with strong state-owned enterprises enabled Beijing to exert influence and rescue smaller dairy farmers. The government also rescued a failed risk communication effort and saved its reputation by prosecuting individuals, being clear about the risk and helping victims.

Impacts of the scandal were less immediate and acute for Fonterra because the contamination did not originate from Fonterra’s farms in NZ and the company held a minority stake in Sanlu. Yet spillover effects continue to emerge. NZ Prime Minister Helen Clark publicly criticized Fonterra for mishandling the crisis. Fonterra followed a protocol which put the responsibility on their partners. Delayed notification, number of people affected and desire to expand profits in Asia led to a corporate social responsibility effort. To combat brand damage, the company donated NZ$8.4 million to a Chinese charity establishing rural clinics for mothers and infants.[17] Association with the 2008 scandal has become part of Fonterra’s record, impacting public perception and framing of the 2013 botulism scandal.

2013 Fonterra Botulism Scandal

As early as March and confirmed late July 2013, thirty-eight tons of whey protein were thought to be contaminated with clostridium botulinum, bacteria that can lead to botulism. On August 3, 2013, Fonterra issued a precautionary recall, and countries including China subsequently banned the sale of a range of Fonterra’s products; by the end of August secondary tests showed that the products contained no clostridium botulinum, but instead had clostridium sporogenes from a dirty pipe, which presents no food risk. Fonterra “blamed systematic glitches and the use of non-standard equipment for the botulism contamination scare.”[18] The immediately affected product was an ingredient sold to third parties rather than a finished product, impacting big-name infant formula and beverage. While Fonterra’s August 2013 botulism scandal turned out to be a false alarm, the risk event significantly impacted its international image as well as that of NZ dairy products, leading to a decline in sales and legal suits from customers.

Risk Perception: Affect Justifies Product Bans

The affective association of Fonterra products with harm was readily available in memories due to Fonterra’s connection with the 2008 Sanlu scandal. Botulism was a less familiar hazard for consumers than melamine but because it was new and had the potential to impact infants and children, the risk was perceived as high. Decisions to ban imports of Fonterra products added to the proximity of the risk. The comprehensiveness of Fonterra’s risk communication efforts contributed to conflicting public perceptions of its products.

Risk Communication and Amplification: Early Efforts to Prevent Worse Fallout

Fonterra amplified the risk by alerting consumers to a problem which did not exist, and the company’s early, forward efforts had mixed reviews. The public felt they were receiving incomplete information from an unorganized source, using inaccessible language; moreover, Fonterra did not apologize until days later. It was unclear how much of the public knew the event was a false alarm. A survey quoted one respondent “That this happened at all was unbelievable. Everyone was taken by surprise and they couldn’t reassure consumers.”[19] Farmers, shareholders and market analysts meanwhile were comforted by Fonterra’s communication efforts and agreed: “They did the right thing going public and the media whipped it into a frenzy.”[20] Overall, stakeholders agreed that communications improved after the first 72 hours of the recall.

Despite the launch of four independent inquiries into the botulism scare, public perception of Fonterra products has been altered. The media in both NZ and China maintained significant coverage of the product recall and announcements of potential contamination; however, after the risk was found to be a false alarm, the story only received minor coverage. In China in particular, an unknown portion of the public may still believe the products were contaminated due to lack of closure.[21]  However, there is a segment of microbloggers in China that maintain confidence in NZ products and are cynical about their own national media.

Impacts and Ripple Effects of Social Amplification

Because no consumers became ill or died of botulism, the event’s impacts centered on financial and reputational losses for Fonterra and its partners: the NZ dollar declined, the head of Fonterra’s New Zealand milk products business, Gary Romano, resigned,[22] and total damages in the case are still to be determined. In September 2013, NZ exporters claimed they were losing up to NZ$2 million in Chinese sales per week.[23] As a result of the precautionary recall, Fonterra’s supplier Danone, the world’s largest yogurt manufacturer, is suing Fonterra “after an estimated loss of 300 million euros (NZ$407 million) of free cashflow.”[24] Before the Danone suit, Fonterra estimated a loss of NZ$14 million from the event and claimed its legal liability to Danone was minimal.[25] Additionally, Fonterra reduced payouts to shareholders by about 20 NZ cents per share. Widespread publicity of the recall and import bans across Asia due to social amplification impacted companies further along the supply chain and cast doubt on standards in NZ’s largely self-regulatory dairy industry. Among other ideas, Fonterra’s review recommends strengthening crisis communications as well as processes, culture, and governance.

Concern for falling Asian consumer confidence in the New Zealand dairy industry led to government action. Unlike the Sanlu case, the NZ government did not have to step in to ensure a recall, but officials were called upon to save Fonterra and NZ’s face due to its premature communication. The initial government report claims the risk event was not due to a failure in the regulatory system but rather a failure in managing the situation. Yet a key recommendation is “establishing a food safety and assurance advisory council to provide high-level independent advice and risk analysis.”[26] Despite currently acceptable standards, the NZ government allocated $NZ8 to 12 million per annum to follow the report’s recommendations to tighten food safety and improve standards and regulations.[27]

Conclusion

Decision makers in private and public sectors employ multi-disciplinary political risk analysis to understand probabilities of losses or gains in specific scenarios. Increasingly analysts use the tools within political risk analysis that include risk perception, risk communication and social amplification of risk to build risk mitigation and communication strategies to a more advanced and connected audience. The 2008 Sanlu melamine scandal and 2013 Fonterra botulism scandal exemplify how different organizations approach a risk event, who they identify as their stakeholders and what they consider as responsibilities. A more thorough analysis of this case may examine additional factors including cultural and organizational dynamics.

In both cases, perceived risks were amplified by manufacturers and media. In 2008, amplification occurred out of the initial information vacuum created by local officials and Sanlu, a domestic history of melamine poisoning and because children were the primary targets. For Sanlu, risk communication should have occurred at the time of known contamination or confirmed cases; pressure from Beijing, producers and local government meant the public was uninformed. In 2013, Fonterra’s risk communication efforts were early, with multilevel communications reaching shareholders, customers and governments. After the fact, Fonterra sought to understand customers’ risk perception and opinion of communication efforts. The importance of Fonterra to the NZ economy meant the government was interested in a swift, transparent reaction. Undoubtedly Fonterra did not want a repeat of 2008. Fonterra in the short term must deal with economic losses and potential brand damage; however the global recall and communication efforts may be perceived as beneficial for public health concerns especially when compared to Sanlu’s experiences.


[1] Ragnar Lofstedt and Asa Boholm, “The Study of Risk in the 21st Century,” in The Earthscan Reader on Risk, ed. Rangar Lofstedt and Asa Boholm (London: Earthscan, 2009), 11.

[2] Charlotte Brink, Measuring Political Risk: Risks to Foreign Investment (UK: Ashgate Publishing, 2004), 1.

[3] Paul Slovic, “Perceptions of Risk,” in The Perception of Risk, ed.  Paul Slovic (London: Earthscan, 2000).

[4] Slovic, Paul, Melissa L. Finucane, Ellen Peters and Donald G. MacGregor. “Risk as Analysis and Risk as Feelings: Some Thoughts about Affect, Reason, Risk, and Rationality.” Risk Analysis, Vol. 24, 2 (2004). 312.

[5] Slovic, “Perceptions of Risk,” 222.

[6] Regina Lundgren and Andrea McMakin, Risk Communication: A Handbook for Communicating Environmental, Safety, and Health Risks (New Jersey: John Wiley & Sons, Inc., 2009).

[7] Duoqi Xu, “Tax Planning and Tax Policy in China: Case Study of the Tainted Milk Scandal.” Frontiers of Law in China. June, Vol. 6, 2 (2011): 192-218.

[8] Castellino and Green, “Media freedom in China.”

[9] Danielle Castellino and Lelia Green, “Media freedom in China as reflected in the development of the Sanlu milk scandal, 2008,” Australian Journal of Communication, Vol. 37, 3 (2010): 88-102.

[10] Castellino and Green, “Media freedom in China.”

[11] Castellino and Green, “Media freedom in China,” 96.

[12] E.Y.Y. Chan, S.M. Griffiths and C.W. Chan, “Public-health risks of melamine in milk products.” The Lancet; October 25, 372 (2008): 1444.

[13] Castellino and Green, “Media freedom in China,” 92.

[14] Ibid.

[15] Xu, “Tax Planning and Tax Policy in China,” 194.

[16] Xu,“Tax Planning and Tax Policy in China,” 194.

[17] Elizabeth Wishnick, “Of Milk and Spacemen: The Paradox of Chinese Power in an Era of Risk.” The Brown Journal of World Affairs, Spring, 15, 2 (2009): 213-214.

[18] Maggie Zhang, “New Zealand Minister to Rebuild Trust in Kiwi Quality.” Shanghai Daily. (11/12/13)

[19] “Report of WPC80 Independent Inquiry for Fonterra Board.” (10/23/13), 147-149.

[20] “Report of WPC80 Independent Inquiry,” 147.

[21] Christopher Marquis, “China State Broadcaster’s Attack on Foreign Brands Fuels Citizens’ Skepticism of Government.” Forbes. (12/17/13) [http://www.forbes.com/sites/christophermarquis/2013/12/17/how-much-do-the-chinese-people-believe-their-government/]

[22]  Reuters. “Fonterra’s milk products chief resigns after botulism scare.” (8/14/13)[http://www.reuters.com/article/2013/08/14/ us-fonterra-romano-idUSBRE97D04C20130814?feedType=RSS&feedName=topNews&dlvrit=992637]

[23] Christopher Adams. “China milk scare ‘needs – big PR drive’” (9/23/13) New Zealand Herald. [http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11128539]

[24]Adam Brockett and Lapeyre, Morgane. “Danone Seeks Compensation from Fonterra Over Botulism.” (1/9/14) Bloomberg News. [http://www.bloomberg.com/news/2014-01-09/danone-seeks-compensation-from-fonterra-over-recall.html]

[25] Ibid.

[26] Adam Bennett. “Botulism scare report calls for better tracking of products.” (12/12/2013) New Zealand Herald.  [http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11171048]

[27] Xinhua News Agency Economic News. “Interview: Minister assures Chinese consumers of New Zealand food safety.” (12/11/2013) Xinhua Economic News.

Australia Plans for Sustainable, Collective Security in the “Asian Century”

Sydney, Australia
Sydney, Australia. Photo credit: Genevieve Neilson

In October, the Australian Government released its much-anticipated white paper entitled Australia in the Asian Century.  A collaborative work with public input and stakeholder engagement, the white paper aims to describe the rise of Asia and offers a strategic framework to guide Australia through the ‘Asian Century’ (or least as far as 2025). While much of the paper focuses largely on prospects for improving economic gains, education and cultural ties, I will examine the lone chapter on security entitled “Building sustainable security in the region.”  Australia takes a refreshingly broad view of security which includes traditional as well as nontraditional threats to collective, national and human security.  From the outset, the white paper demonstrates the Australian government’s commitment to focus on more than just hard power, seeking collaborative solutions and understanding the interconnectedness of regional and national issues.  As a public document, the white paper is a way for Australia to clarify its position on the rise of China and India, the increasing competition for natural resources, and the strategic rebalancing of the US in Asia.  

 By taking a comprehensive approach to security, Canberra seeks to mitigate new challenges brought on by the rise of Asia including competition over resources, military modernization by China, India and other middle powers of Asia, and empowerment of non-state actors. The significant focus devoted to transnational threats such as territorial disputes, weapons proliferation as well as human trafficking, terrorism, water and food security, energy security and the effects of climate change shows the importance of regional issues to Australia over domestic security concerns.  Indeed, Australia imparts its knowledge from encounters with water scarcity and resource management, trafficking, irregular migration and terrorism, to assist its neighbors in Asia.  The South Pacific, much like other parts of the Asia-Pacific region, will be at the forefront of effects of climate change; Australia has already worked with Pacific Island states to provide funding for environmental and sustainable development projects.

 The government’s most common answer to current and future threats is international cooperation through a rules-based order.  The primary foreign policy goals established by the white paper include: supporting regional security mechanisms, including equal participation of China and the US in international institutions; and broadening and deepening bilateral relationships.  According to the white paper, “Australia’s longstanding commitment to active middle-power diplomacy, with its focus on practical problem solving, effective implementation and building coalitions with others, will continue to drive [the country’s] approach.” 

 As a newly-elected non-permanent member of the United Nations Security Council from 2013, Australia’s commitment to regional issues and a collective approach cannot be overstated.  In congruence with statements from US officials, Australia welcomes a rising China and hopes it will participate more fully in international institutions.  At the same time, Australia lobbied for the US and Russia to join the East Asia Summit, and sees the EAS as a “critical regional institution.”  The November meeting in Cambodia is likely to be a further launching pad for Australia’s goals.  Additionally, the white paper mentions Australia’s strong support of India’s desire for international engagement, particularly with Australia as a future chair of the Indian Ocean Rim Association for Regional Cooperation in 2014-15 and the country’s participation in the Indian Ocean Naval Symposium.

 Finally, Australia’s aid program is a central way that the country supports human development and human security in Asia. In 2010, 58 percent of Australia’s “aid budget was expended in Asia, the second-highest proportion among all OECD Development Assistance Committee donors, after South Korea.”  With a booming economy that relies increasingly on the purchasing power of the burgeoning middle classes and construction and energy projects throughout Asia, Australia has the financial stability to promote human security projects that also build bilateral trust.  In 2010, Australia signed a 5-year agreement with the International Labor Organization to support programs that “promote sustainable development and fair work, such as improving conditions for factory workers in the garment industry in several Southeast Asian countries.”  With a proclaimed high level of transparency, the Australian government aims to be the world leader in aid effectiveness.  East Asia and the Pacific are Australia’s primary aid focus, and over the next four years Australia plans to become the largest bilateral grant donor to East Asia by increasing assistance by around 48 percent (from $1.32b in 2012-13 to $1.95 by 2015-16).  Australia has as much to gain as China or the US in supporting such development projects; building relationships and supporting developing countries improves Australia’s soft power and the purchasing of Australian goods and services.

 Geopolitical changes and economic advancement in Asia are driving global attention to the region.  Before this white paper was launched, however, Australians had already begun their ‘engagement’ with Asia; former Labor Prime Minister Paul Keating even wrote a book on the subject.  With the US ‘rebalancing’ to the Pacific, and all eyes on China during their November leadership transition, Australia appears to be towing the line of both powers to promote a sustainable and prosperous Asia-Pacific.  With improved communication technologies bringing their populations closer than ever before, the collective approach by Australia that seeks improvements in economic and security relationships, cultural exchanges, and protection of human security in more ways than one “Australia is located in the right place at the right time.”

Prospects for Regional Security in Asia

The convergence of economic interests, shared transnational threats perpetuated by globalization and balancing powers are drivers of regional security cooperation in Asia.  As recent events in the South China Sea have illustrated, how to deal with these issues and the conceptualization of threats to state security has differed across Asia.  Therefore, rather than caving to external pressures and trying to be like the European Union or NATO, a regional security framework for Asia would need to be organic and based on the distinct experiences, interests and values of Asian states.  In order to be successful, regional security mechanisms in Asia must: take a pragmatic, bottom-up approach to regionalism; involve China and the US as strategic players; and, establish a clear division of labor among existing political and security entities to promote maximum efficiency.

Increasingly states in Asia are incorporating non-traditional security issues such as energy security, human security, threats caused by climate change and other transnational issues into their traditional state military-centered security institutions.  Attaining security, according to Alan Collins (2003) involves effectively managing threats and having sufficient access to resources to maintain relative peace and stability.  For example, part of China’s energy security strategy is to control the supply chain by gaining equity positions in the oil sector using national oil corporations.

In the wide regional landscape of Asia, states have the goal of political interdependence and territorial integrity, but in part their lack of agreement regarding what constitutes a threat has led to the stalling of deeper regional security cooperation.  Security cooperation in Asia combines power-political and institutional approaches to encompass joint actions to advance a common security goal.  Security architecture, meanwhile describes a broader security environment in which distinct mechanisms and processes interact with the aim of ensuring regional stability.

There is no indication that states in Asia will initiate a new comprehensive regional security architecture.  Europeans frequently criticize the multitude of regional institutions and loosely structured arrangements in Asia; outsiders have argued that Asia must follow a European model to succeed in promoting functional cooperation and real integration.  For Asia, a more likely path is to take a pragmatic, step-by-step, bottom-up approach to regionalism instead of an idealist, comprehensive, top-down pan-Asian ‘vision’ approach similar to Europe.  Given the delicate nature of security and historical animosities built over time, a pragmatic approach such as the institution of the Shanghai Cooperation Organization are a way forward for regional security.  Originally started to combat terrorism, separatism and extremism in Central Asia, the SCO has added observers and dialogue partners in addition to additional issues of drug trafficking and economic issues.  The SCO brings together countries which did not previously consult together.

Any approach to regional security in Asia must take into consideration the United States and China as leading regional powers.  The US alliance system is the most important feature of security in Asia and is the central stabilizing factor.  Both the US and China prefer a bilateral structure over multilateral institutions as the most efficient way to organize state security policy, and for the US because of geographic concerns.  The ‘hub and spoke’ pattern enables the central power to have more influence over its junior partners.  Further deepening bilateral security relations is part of the US Asia-Pacific Strategic Engagement Initiative.  Moreover the rise of China and India has led states to reconsider regional security dimensions; as China continues to flex its strategic muscles in the South China Sea and continues with a charm offensive in the Pacific, Asian states will need to gauge future bilateral and multilateral relations.  The incorporation of the US into the East Asia Summit and China into ASEAN + 3 are examples of regional security cooperation extension.

With overlapping membership and areas of capability, the “current alphabet soup of groupings” (Bisley, 2009) has not met the demand for institutionalized security cooperation.  As Jim Rolfe (2008) highlights, relations within and between these organizations are complicated.  Therefore there is a significant need to set out a clear division of labor among political and institutional entities.  The desire for APEC to include a security dimension demonstrates the changing attitudes to security cooperation.  A regional security architecture is needed to facilitate regional order, and the broad range of multilateral mechanisms – including platforms such as the Shangri-La Dialogue, ASEAN Defense Minister’s Meeting, the EAS, ARF and others – need to be catalogued and work together in a more constructive way.  With an active secretariat, historical longevity and due to the fact that it is not led by China, Japan or the US, ASEAN is the premiere regional grouping; it would however need to change its membership rules and the ASEAN way in order to take a central role in security maintenance in Asia.

Because of the changing regional landscape in Asia, the prospects for security cooperation rely primarily on the attitudes of regional powers.  China, India, the US and Japan approach state and regional security based upon their own interests.  These powers have already demonstrated their desire to take part in multilateral institutions alongside deepening of bilateral relationships and alliances.  There is genuine interest in Asia in the ability of cooperative elements of existing security architecture to reduce strategic uncertainties, improve policy coordination and collaborate on nontraditional security problems.  While the drivers for regional cooperation are evident, nationalism (including increased military modernization), historical animosity, and balance of power thinking remain as impediments to a concerted architecture.  Therefore, when considering regional security architecture in Asia, policymakers must take into account the achievement of relative international strategic stability in the post-Cold War period for such a diverse region.  A forced architecture from non-Asian states (such as former Australian PM Kevin Rudd’s Australian-led Asia-Pacific community) has already been rejected, and is a clear sign that like ASEAN, movements must be made from within Asia.