At last, a cause to unite all Malaysia’s ethnic groups

IT IS tempting to interpret the drama of the past week—in which the United Malays National Organisation (UMNO) and its allies, which had run Malaysia for 61 years, crashed from power—as the result of the interaction of three former colleagues in UMNO.

Without the extreme greed of UMNO’s Najib Razak, the fallen prime minister, the country would not have so readily turned against his corrupt and ruthless party. Without the return to politics of the new prime minister, Mahathir Mohamad, the 92-year-old who had dominated UMNO and the country for decades before retiring in 2003, the opposition could not have persuaded so many voters to follow his lead and desert UMNO in the general election on May 9th. And without the quicksilver brilliance of Anwar Ibrahim, who was jailed under Mr Najib on trumped-up sodomy charges but who re-emerged into the limelight on May 16th with a royal pardon, there would have been no momentum for change. Mr Anwar had been planning for this for 20 years.

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The urbane Mr Najib, President Donald Trump’s “favourite prime minister”, presided over the looting of billions of dollars from a state investment fund, 1MDB, according to America’s Department of Justice. Nearly $700m appeared in his own bank accounts, it says; some went on bling that subsequently appeared around the First Lady’s neck. As corruption grew, so did the abuses. Mr Najib suppressed investigations into lost funds, hounded opponents, and gerrymandered elections. He went to great lengths to ensure victory and appeared shell-shocked by the result, presumably because his unctuous courtiers did not make clear the jeopardy he was in. This week police once loyal to him searched the house where he sits awaiting arrest.

The hero of the moment is the comeback kid. Dr Mahathir had helped found UMNO in, oh, 1946. It was during his 22 years as prime minister that the party’s reputation for cronyism, high-handedness and pandering to the ethnic-Malay majority was honed. But for Dr Mahathir, who has reinvented himself as a democrat (or a “listening dictator” as he likes to joke), the excesses of his former protégé were too much. Last year he folded his breakaway party, Bersatu, into the motley, multiracial, left-of-centre opposition, Pakatan Harapan, or Alliance of Hope.

Of the coalition’s three main parties, Bersatu is the smallest. It won only 12 seats, compared with 48 for Mr Anwar’s People’s Justice Party (PKR) and 42 for the Democratic Action Party (DAP), which appeals to middle-class ethnic Chinese and Indians. Yet the election is Dr Mahathir’s. He represented, as Bridget Welsh of John Cabot University in Rome puts it, a “safe landing” for those in the system worried about the repercussions of betraying it.

On May 16th Dr Mahathir’s exertions to form a cabinet were overshadowed by Mr Anwar’s release. While Dr Mahathir is Pakatan’s “chairman”, Mr Anwar is its real leader. He plans to re-enter parliament and take over as prime minister—but only after a couple of years, Dr Mahathir insists.

When Mr Anwar emerged, Dr Mahathir was there to greet him. In the 1990s Mr Anwar had been his assumed successor. But when he began resisting Dr Mahathir’s unorthodox response to the Asian financial crisis and, much worse, denouncing cronyism, Dr Mahathir had him beaten and jailed. There is a touch of the martyr in Mr Anwar. But his reappearance this week underscored not only a dogged will to power but a bottomless capacity to absolve when necessary.

The two men’s relationship will now be the chief topic of speculation in politics. Mr Anwar says he will take a back seat for now. Dr Mahathir, he says, is “no great reformer. But he can be expected to mend a lot of wrongs, a lot of the excesses: the judiciary can be respected, the media can be free…My role will be essentially to be the voice of conscience. If ministers get new wives and live in opulence, then you can expect me to be more critical.” Big transformations, he implies, will have to wait until his turn.

There are other, far more numerous protagonists, of course, and a week after the vote millions are still loth to scrub off their personal memento: the purple ink on their index finger. The election result, many insist, was not a “Malay tsunami”. Rather, it was a Malaysian one. When Mr Najib plugged the money holes by handing land and contracts to firms linked to the Chinese state, many felt he was selling out the country. For the first time voters intentionally came together across religious and ethnic divides.

One campaign promise was to bring Mr Najib to justice. But the coalition’s first reform was to suspend the tax on goods and services from June 1st. Introduced in 2015, it is the first conspicuous levy many poor Malaysians have ever had to pay. Maybe the Najib-era larceny was so large that the new government really can, as it claims, make up the $5bn in forgone revenue with less graft and more competitive bidding for procurement.

The coalition’s experience of running several of Malaysia’s 12 states augurs well—the new government is not wholly green. What is more, notable agreement exists around the road map. In going after Mr Najib, more emphasis is put on due process than on settling scores. The talk is of overhauling a supine judiciary and strengthening parliamentary oversight. One adviser to Mr Anwar even worries that unless UMNO, now in disarray, refashions itself as a nimble opposition, the new coalition might fall for the “seductions of power” and reforms might slow.

Restoration drama

Such sentiments are striking for Malaysia’s new insurgents. They seem to reflect not so much a desire to turn the world upside down as to return to an earlier era of settled law, fair judges and democratic accountability that survives in the national imagination. It is why Malaysia is bucking a broader shift to authoritarianism. At heart, the sentiments reflect less a revolution than a restoration. And, despite the coalition’s inevitable bickering, that restoration has a good chance of working out.

North Korea reminds the world why past peace talks have failed

THE sun smiled down on the demilitarised zone between the two Koreas on April 27th, the day Moon Jae-in, South Korea’s president, met Kim Jong Un, the North Korean leader, for a strikingly warm summit at which they agreed on the “complete denuclearisation” of the peninsula. On May 16th the weather was very different, and so was the news. Thunderstorms battered Seoul as the North announced that it was cancelling high-level talks with the South to which it had agreed barely 24 hours earlier. It also threatened to pull out of a summit between Mr Kim and Donald Trump, America’s president, scheduled to take place in Singapore on June 12th.

The North gave two reasons for its ire: long-scheduled military exercises between America and South Korea, to which it had previously acquiesced (although it may have been surprised by the involvement of stealth fighters, which could be used in a “decapitation” strike, and B-52s, which can carry nuclear bombs), and America’s insistence that it must unilaterally forswear nuclear arms—the very condition on which America agreed to talks in the first place. Statements relayed by the official news agency made it clear that economic assistance would not be sufficient recompense for nuclear disarmament, as Mr Kim seemed to suggest only last week.

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Mr Trump’s eagerness to make history in front of the global media will not have escaped Mr Kim. Nor will southerners’ desire for peace. In South Korea, the bolt from the blue did not seem to dent popular optimism. On social media hardly anybody reproached Mr Kim. Many expressed sympathy. “Kim Jong Un is right. We shouldn’t push North Korea into a corner,” ran one popular comment.

South Korea’s unification ministry said that the North’s about-face was “regrettable”. Mr Moon’s office did not even go that far, claiming the move was “just part of the process”. The White House said it had received no indication that the Singapore summit would not go ahead.

North Korea says the summit can proceed only if America is “sincere” about improving relations. But it is the North’s sincerity that has always been in question. At the very least, the kerfuffle is a reminder that until a few months ago, Mr Kim was seen as untrustworthy and belligerent. He probably still is.

India’s victories against militants in Kashmir are largely pyrrhic

BY ONE account, what happened in Shopian district in the Indian part of Kashmir on the first Sunday in May was a stinging defeat for jihadism. Security forces had trapped five armed rebels in a house during the night. When the shooting stopped at noon they were all dead. Among them was Saddam Paddar, the local commander of a militant Islamist group. He had been on the wanted list since 2014 but, more importantly to police, also happened to be the last man still at large among 11 young guerrillas whose group photograph, taken in 2015, had gone viral, inspiring support for armed resistance to Indian rule. The “neutralisation” of Mr Paddar—in the words of a police spokesman—symbolised the futility of insurrection.

Other tellings emphasise different elements of the day’s events. As happens with growing regularity during the Indian army’s search-and-kill operations in the Kashmir Valley, hundreds of villagers had gathered at the scene to try to protect the doomed fugitives. During the incident and in subsequent protests, police gunfire killed six more people, all civilians. Dozens more were hospitalised, many with shotgun pellets lodged in their eyes. More than 1,250 people have been treated for similar eye injuries over the past two years.

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The Shopian “martyrs” all turned out to be local Kashmiris and not, as has often been the case in the past, infiltrators from Pakistan. Tens of thousands thronged their funerals. One viral video showed a woman, said to be Mr Paddar’s mother, standing on a rooftop before a chanting crowd and firing an automatic rifle in a gesture of defiance. It emerged, too, that one of the slain militants had been a popular teacher of sociology at the University of Kashmir. He had earned his doctorate only in November, and had joined the rebels just two days before his death. As inexorably as police are hunting down rebels, Kashmiris concluded, new recruits are joining them.

The contrast between these two narratives helps explain why Kashmir remains in uproar after 30 years of turmoil. Following a decline in political violence after a Pakistan-backed insurgency peaked 20 years ago, the death toll has mounted again in recent years, from a low of 117 fatalities in 2012 to 358 in 2017, and 132 so far this year.

Yet the situation as understood in Delhi, the Indian capital, as purveyed in the Indian press and as widely accepted by 1.3bn other Indians, is that brave Indian troops are waging a largely successful effort to crush a small but resilient band of Islamist terrorists who are operated by remote control from Pakistan. The situation as experienced in the Kashmir Valley, whose 7m people are nearly all Kashmiri-speaking Muslims, is rather different. In the absence of any political initiative from Delhi to respond to Kashmiris’ concerns, the heavy-handed efforts of half a million soldiers to crush a few dozen armed militants are compounding a growing sense of alienation from India.

The disjuncture in these views is reflected in the clumsy coalition that runs the state. One partner is the Hindu nationalist Bharatiya Janata Party (BJP), whose local support is concentrated in the Hindu-majority region of Jammu but which also runs the national government. The other is the Peoples Democratic Party, one of several Kashmiri groups that participate in elections and so are branded traitors by more radical factions. The relative strength of the radicals, who include pro-independence, pro-Pakistan and pan-Islamist groups, is hard to judge since they are either banned or have boycotted elections. Partly as a result, voter turnout has typically been low.

Following another bloody Sunday in early April that left 19 people dead, Syed Ali Shah Geelani, the elderly leader of one dissident group, released a video of himself banging on the inside of his own gate, demanding to be released from house arrest. “Open the doors,” he shouted to police outside, “I want to attend the funeral of your democracy.”

Indian democracy is not quite dead in the Kashmir Valley, but it is certainly ailing. Since the partition of India and Pakistan in 1947 called their fate into question, Kashmiris have been hostage to relations between the two. In its focus on the bigger picture, India has often flouted Kashmiri concerns. This trend has grown harsher since the BJP took power in 2014, vowing to end “appeasement” of Indian Muslims and to get tough on Pakistan. As Mohammed Ayoob, an Indian-American political scientist, recently lamented in the Hindu, an Indian daily, “If the political elites had the sagacity to solve or at least manage the problem ‘in’ Kashmir, the problem ‘of’ Kashmir would have lost its salience over time. Unfortunately, they did exactly the reverse.”

Flush with cash, Australia’s prime minister woos voters with tax cuts

JUST two months ago Malcolm Turnbull came within a whisker of winning parliament’s approval for his most cherished policy: cutting the corporate tax rate from 30% to 25% over ten years. At the last minute he failed to secure a couple of votes in the Senate, where his conservative government lacks a majority. Undeterred, on May 8th the prime minister made tax cuts the centrepiece of his government’s budget for the coming fiscal year. As well as lowering rates for business, it also included cuts in personal income tax. Mr Turnbull, whose government has long trailed Labor, the main opposition, in opinion polls, hopes his tax strategy will reverse his fortunes at a federal election due next year.

Among rich countries, Australia has lagged in cutting corporate taxes. It last did so 17 years ago. The Business Council of Australia, a lobby group, complains that the rate is “frozen in time” compared with the American one of 21%, which is also the average in Asia. The Treasury worries that Australia risks becoming “increasingly uncompetitive internationally”.

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Business taxes are Australia’s biggest source of revenue after personal income tax. Revenue from both is buoyant, thanks largely to rising employment and mining profits (see chart). The economy is entering its 27th year of unbroken growth. After years of deficits, a balanced budget is in sight next fiscal year and a surplus a year later. A former banker and businessman, Mr Turnbull proposed a corporate-tax cut at the previous election, in 2016. He argued it would pep up the economy by encouraging businesses to invest and hire more. There was “no question”, he said. “You’ll see a rise in wages with a reduction in company tax.”

Mr Turnbull has struck an even bolder note with his income-tax cuts. They are worth about A$140bn ($104bn) over a decade, almost twice as much as the corporate cuts. The government proposes ditching a 37% tax rate that kicks in on earnings over A$87,000, which would leave 94% of taxpayers handing over just under a third of their incomes in tax. But Labor has suggested it may not support the full plan.

The business-tax cuts, too, still face a rocky legislative road. Parliament has already approved them, but only for firms with annual turnovers of A$50m or less. When the government reintroduced the plan in March, it needed the votes of just two independent senators to extend the cuts to all businesses. One of them, Tim Storer, an economist, argued the cuts were too “narrowly cast” and called for broader tax reform. He remains unconvinced.

Another complication stems from a royal commission Mr Turnbull reluctantly set up in December to look into misconduct at banks and financial-services firms. Revelations of shabby treatment of customers have hurt the industry’s image. Derryn Hinch, a former journalist whose Senate vote the government also needs, wants banks excluded from any business-tax cut. To include them, he says, is “not only immoral, it’s politically suicidal”.

Some question the claimed economic benefits of corporate-tax cuts. Saul Eslake, an economist, compares Australia with Canada, which has cut its corporate-tax rate by more than the Turnbull government proposes. Mr Eslake calculates that investment and wages have risen by more in Australia than in Canada since Canada began to cut tax rates in 2000. A survey of some 130 corporate bosses by the Business Council of Australia, leaked in March, bears out his doubts. Less than a fifth said they would increase wages and hiring as a result of a tax cut. Most said their priority would be capital investment and increasing returns to shareholders.

A recent opinion poll showed greater public support for cutting debt than cutting taxes. At A$341bn, or 18.6% of GDP, Australia’s net debt is quite low by global standards. Mr Turnbull is convinced that voters will thank him for lowering their bills—if he can persuade the Senate to do so.

Indonesia’s president is neither a grubby politician nor a diehard reformer

IT’S Friday afternoon in Jakarta, and Indonesia’s president is getting on his hobby horse. Mounting a gaudily painted cut-out handed to him by a solemn aide, Joko Widodo, known as Jokowi, leads not just children from across the archipelago but also panting cabinet ministers on a merry dance around the grounds of the presidential palace. Some of the girls are wearing the hijab; others sport the pigtails of Japanese idol bands. Javanese boys wear the black velvet peci cap. Shy young Papuans are in grass skirts. Jokowi makes the children promise, in a pealing question-and-answer response, to go out and play more. To hammer the point home, he does so himself, taking on all comers at hoop rolling and tag. It is a struggle to imagine other leaders—Xi Jinping, say, or Theresa May—doing the same.


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Jokowi’s common touch brought him to national prominence—plus a reputation for incorruptibility and getting stuff done, first as mayor of the Javanese city of Solo and then as governor of Jakarta, the bursting capital. Where the outgoing president, Susilo Bambang Yudhoyono, or “SBY”, was tall and orotund, Jokowi was approachable and slight. His trademark was the blusukan, impromptu walkabouts in Jakarta’s alleyways during which he would listen to residents’ worries about food prices, transport, flooding and health care.

Deft on social media as well as in person, he suddenly became a hot political asset for his party, the Indonesian Democratic Party of Struggle (PDI-P), which selected him as its candidate for president in 2014. Campaigning as an outsider, Jokowi beat the macho Prabowo Subianto, like SBY a former general under Suharto, the long-serving strongman who fell in 1998. Jokowi, whose father was a furniture-maker, is the first president not from the elites. Megawati Sukarnoputri, the leader of the PDI-P, president from 2001 to 2004 and daughter of Indonesia’s founding father, Sukarno, once referred to President Jokowi as a party “functionary”.

To liberals, Jokowi was the mould-breaking reformer of their dreams. To sceptics, he was a naïf about to be devoured by a devious and corrupt establishment. He has disappointed both camps.

On the economic side, he slashed budget-busting fuel subsidies early on, to the cheers of free-marketeers. But it was a practical decision, to free money for an infrastructure binge, rather than a principled one. As the oil price has risen, fuel subsidies have begun creeping up again. Meanwhile, he has made state infrastructure and energy firms even more dominant. Though he promised the economy would grow by 7% a year, it has only managed around 5%, no faster than under SBY.

A parallel exists with his political approach. He did not view his win as reason to upend a cosy political system in which the spoils are shared and no proper opposition exists. In some respects he underscored it, by offering cabinet posts even to parties that opposed his candidacy. And even though he has talked about a reconciliation commission to examine past human-rights abuses, his minister for security, Wiranto, is emblematic of them. He was army chief at the time of Indonesia’s withdrawal from Timor-Leste in 1999, when thousands of Timorese were killed by army-linked groups.

Yet far from draining his authority, sharing power with the establishment may have reinforced it, by blunting opposition. An ally says political considerations govern his choice for half the cabinet’s 34 seats. But that leaves some of the most crucial ones, starting with the finance ministry, in the hands of true reformers, or at least competents. Somewhere behind Jokowi’s soft edges lies an iron core. Less than a year before the next presidential election, he bats away Banyan’s political questions—including whom he will choose as a running-mate—with twinkling Javanese inscrutability. Politics, he implies, is a necessary pursuit. But it is one divorced from the economy, which is his proper domain.

On that front, his administration is now doing more than it gets credit for. His finance minister, Sri Mulyani Indrawati, is overhauling a tax system that collects a mere tenth of GDP in revenue. Obstacles to doing business are being removed, and foreign investment is growing. And the infrastructure that Jokowi long promised—toll roads, new airports and power plants, all meant to knit the archipelago together—is being rolled out, with investment at near-record levels. Jokowi is in a hurry—hence an alarming reliance on state-owned firms, which can be got to start to work on a new project even before a contract is drawn up. Meanwhile Jokowi keeps ministers on their toes with blusukan to construction sites to ask why things aren’t going faster.

He is most proud of the scheme he initiated to give 92m Indonesians access to cheap health care, along with one that provides 19m needy schoolchildren with money for books, bags and shoes, and another that gives 10m of the country’s poorest families direct income support. Increasing their “purchasing power”, he says, is good for everyone.

This economic medicine may possibly inoculate him against rising religiosity. In late 2016 Islamists demonstrated in huge numbers against his former deputy in Jakarta, Basuki Tjahaja Purnama, a Christian ethnic-Chinese known as Ahok, who was unfairly accused and later convicted of blasphemy. The protests posed a threat for Jokowi, who is Muslim but secular in outlook.

Since that crisis, he has assiduously courted—indeed co-opted—the devout, which has left some of his secular fans unhappy. In the palace grounds, gardeners have wrapped the statues of naked women, of which Sukarno was fond, with bundles of tall reeds. Pointedly, however, the first lady, Iriana, larked about before the television cameras with her head uncovered. The lesson of the Ahok saga, says Jokowi, is tolerance and moderation. The months before the next election will make clear how many Indonesians take issue with the proposition.

Japan, China and South Korea get together

JAPAN has been more unsettled than any other country by the sudden shift in the diplomatic tone in North-East Asia—for good reason. President Donald Trump shocked America’s biggest Asian ally in March when he accepted an offer to meet Kim Jong Un, North Korea’s dictator—a step that seemed to deviate from his previous policy of unyielding pressure on North Korea to force it to abandon its nuclear programme. The casual way Mr Trump blindsided Shinzo Abe, Japan’s prime minister, suggested that he did not especially value America’s alliance with Japan. Japan has since looked on, as South Korea takes the lead in whirlwind diplomacy on the Korean peninsula, the North’s overtures to America grow ever warmer (on May 9th it released three Americans held in North Korea) and China tries to shape any evolving deal. Xi Jinping, China’s president, has twice hosted Mr Kim, most recently in the port city of Dalian on May 7th and 8th.

That goes a long way to explain the warmth, as well as the relief, with which Mr Abe welcomed Li Keqiang, China’s prime minister, and Moon Jae-in, South Korea’s president, to Tokyo on May 9th. It was the three countries’ first trilateral meeting in two-and-a-half years, even though the first such powwow, in 2008, was heralded as an annual event. Because Japan is unsure whether it can rely on Mr Trump, who is expected to see Mr Kim next month, it is courting its neighbours. And though relationships often run aground on historical and territorial disputes, the Asian trio are finding more reasons to be pragmatic, irrespective of North Korea. One big force pushing them together is uncertainty about America’s role in the Pacific and its growing threat to open trade.

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At a time when China’s tremendous growth is slowing and a trade war with America is brewing, China is eyeing investment and technical expertise from Japan, not least to help its Belt and Road initiative, an ambitious project to finance billions of dollars of infrastructure development along the old Silk Road. Japan has a rival plan for economic prosperity in the region, but sees opportunities in China. The three leaders say they will work on bilateral, trilateral and multilateral free-trade agreements.

Economics aside, Mr Xi appears to realise that China needs smoother relations with its neighbours to project soft power. On May 4th he and Mr Abe had the first-ever phone call between a Japanese prime minister and a Chinese president. China has stopped punishing South Korea for playing host to an American missile-defence battery and this month restarted bilateral defence talks after a two-year hiatus.

Japan and South Korea, another close American ally, are similarly united by fears of a trade war, but relations are currently driven by diplomacy over the Korean peninsula. Where Mr Trump would once call Mr Abe ahead of Mr Moon whenever North Korea fired a missile, the Japanese leader now feels he needs a hotline to Mr Moon to be kept in the loop. For his part, Mr Moon, bent on reaching a deal with North Korea, does not want Japan to ruin it. So he has urged Mr Abe to talk to the North as well. Mr Moon said he had tried to help Mr Abe at last month’s summit between the two Koreas by raising an issue that animates him: the fate of Japanese citizens abducted by North Korea in the 1970s and 1980s.

Diplomacy over the Korean peninsula is tricky for all three leaders. They all agree that the North should give up its nuclear weapons. But they differ over what “denuclearisation” means and how to get there. Mr Abe wants to keep up the pressure on North Korea until its weapons are gone, while South Korea is already exploring the idea of resuming economic ties. China above all values the stability of the North Korean regime; Chinese media suggest that Mr Xi, in his latest meeting with Mr Kim, may have endorsed the idea of phased disarmament by North Korea in exchange for a series of concessions from America.

Japan clearly deserves a say. Along with South Korea, it is most vulnerable to North Korea’s missiles. It was one of the six parties in talks with the North from 2003 to 2008. It would be expected to open its wallet, should a deal be struck with North Korea that involves economic assistance. And it fears a nightmare scenario in which Mr Trump strikes a deal with Mr Kim to get rid of long-range missiles while letting him keep shorter-range ones that could still hit Japan.

North Korea is enjoying watching Japan squirm. Rodong Sinmun, the official newspaper of North Korea’s ruling Workers’ Party, likes baiting Japan. Mr Abe, it writes, will not be granted a meeting with Mr Kim unless Japan drops its “inveterate repugnancy” that leads it to stress sanctions and pressure. Japan is right to be sceptical about North Korea’s sudden conversion to disarmament, says Daniel Sneider of Stanford University, but the danger of Japan’s hedging is also clear. “If the summit goes well between Mr Trump and Mr Kim, Japan will have to make its way on its knees to Pyongyang.” 

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