The Indonesian rupiah has lost more than a fifth of its value against the dollar so far this year and on Friday hit its weakest point since August 1998. Authorities swooped in to take over an
insolvent Bank Century, the first such takeover since the Asian financial crisis a decade ago.

   Are things in Southeast Asia’s biggest economy really that dire to prompt comparisons with the chaotic events of a decade ago? Today’s financial crisis is draining liquidity from many banks across the world, including in Indonesia.  And as was the case a decade ago, domestic capital is swarming hot on the heels of foreign capital in fleeing Indonesia.

    It is the kind of vicious circle that characterised the”Asian Contagion” crisis of 1997/98. Currencies depreciate. Foreign investors liquidate their portfolios and swarm to the exits. Creditors call in loans, plunging institutions into insolvency. More people take their money and run, further undermining institutions and weakeninging the currency … And so it goes.

    Ten years ago, I was covering South Korea’s fraught journey into near national bankruptcy. (More echoes of the Asian Contagion crisis: The South Korean won hit lows not seen in a
decade on Friday and analysts forecast the economy will shrink next year for the first time since 1997). 

    My brother and sister-in-law were in Jakarta, where the financial crisis had morphed into a populist movement aimed at overturning the autocratic regime of the late president Suharto.
I had lived in Indonesia in the 1980s and I could hardly believe what was happening in Suharto’s Indonesia.  Food riots swept across Indonesia as the rupiah halved in value in the second half of 1997 — and then halved again in January alone. Panic-buying stripped supermarkets and other
stores of their wares.  ”An army of perfectly coiffed Indonesian matrons stormed the
supermarkets this week and bought out all the rice, flour, sugar and cooking oil,” my sister-in-law Cynthia Mackie wrote in her diary in mid-January 1998. “The foreigners smelled the panic and
got very excited at the idea of their dollars being four times as strong as in July.”

    Suharto was sworn-in for a seventh five-year term after his Golkar party won an incredulous 70 percent of the vote in yet another rigged election of his New Order period.  For years, Indonesians had accepted limits on their political freedoms in exchange for prosperity and growth. Now they had
neither. They turned their rage on ethnic Chinese, who though comprising just 5 percent of the population controlled well over half of the domestic economy.

    The killings of students in pro-democracy demonstrations in May 1998 spawned an orgy of rioting that convulsed Jakarta for two days. Chinatown was gutted. Around 1,200 people died, many of them trapped in burning buildings. Anarchy descended on the capital. Foreign embassies ordered a
mandatory evacuation of their nationals. Convoys of foreigners streamed past burning cars and buildings to the airport, leaving pets and belongings behind, including my brother and his wife.
They would not return for months.

    Indonesia is an altogether different place a decade later, at least politically. The world’s fourth-largest nation arguably has the most liberal democracy in Southeast Asia, a free-wheeling
press, and a legacy of reforms that has decentralised power.  Corruption is still a problem, and an elite class with old ties to the New Order — President Susilo Bambang Yudhoyono was the
head of the armed forces political faction at the time of Suharto’s resignation — dominates politics.     

    But Indonesia has improved its ranking in the corruption tables and people can vent
their frustrations in free and fair elections, due next year.  As John Milton famously said: “Anarchy is the sure consequence of tyranny”. Indonesia is heading into turbulent economic waters,
but don’t expect to see a reign of terror again in the streets.

When world leaders meet in Washington to tackle the global financial crisis, Africa will be represented only by South Africa.

African officials meeting in Tunis this week to discuss the impact of the crisis argued that the continent needed better representation, given the effects that the turmoil is having in Africa as well as the continent’s growing financial importance. The complaint could apply equally to other developing countries.

The global crisis has come just as many African economies were turning a corner, buoyed by improvements in governance, technological change, debt relief, higher prices for their exports as well as inflows of funds from Asia and from Western investors seeking higher yields.

Many African countries have spent decades gearing economic policies to attract more private capital and dispel a reputation as unreliable investment destinations.

But turmoil on world markets has cut the supply of money as the world's biggest banks shift funds from new projects to shoring up balance sheets, leaving African governments wondering how their infrastructure will get built.

African officials were dismayed not to have a bigger voice at the summit in Washington.

"Africa ... was not associated even slightly with the preparation when it's a question of deciding the future of the world to which this continent belongs, in fact and by right," said Jean Ping, head of the African Union's executive Commission.

Returning to Nigeria for the first time in five years, nothing is more striking than the mobile phones ringing wherever you go.

The phone signal barely drops on a drive some five hours out of Abuja, through countryside where the only people visible are hoeing the red earth and balancing unwieldy stems of sugar cane on bicycles. A growing number of village households now have phones.

It marks a big change in a country where not long ago it was often easier to visit someone than to try to call.

As elsewhere in Africa, free access to mobile phones has created a new industry and made business easier for everyone – helping to propel the continent’s fastest growth in years.

But finding somewhere to charge a mobile phone’s battery can be problematic.

Nigeria, like some of its neighbours, has had far less success in bringing the reliable power supplies that business also needs to take off.

Nigerians blame that failure as much as anything else for holding back Africa’s giant. They increasingly question the ability of President Umaru Yar’Adua to make a difference, despite campaign promises ahead of last year’s election and a pledge to declare a “national emergency” to improve power supplies.

For many Nigerians, the lights rarely – if ever – come on. It is not only frustrating, it forces businesses to run their own generators, pushing up costs and eating into profits.

The growing economy and population have only made the shortfall more dramatic.

To put Nigeria’s failure to meet its power needs in context, South Africa suffered crippling outages early this year despite having 10 times Nigeria’s generating capacity for only one third of the population.

The success of mobile phones in Nigeria was not so much because of anything the previous government did as the fact that it was able to remove longstanding official obstacles to private firms eager to invest in a country of over 140 million.

The power sector is a bigger task, given the huge investments needed, but there is little sign of government action to address the problem despite an investigation into billions of dollars that the previous administration is accused of misusing in its failed efforts to improve electricity supplies.

In fact, there is concern among Nigerians and foreign investors alike at the slow pace of government under President Yar’Adua, now widely dubbed “Baba Go-Slow”.

A new cabinet has yet to be announced despite the sacking of 20 ministers and there are doubts over progress on the 2009 draft budget. Worries over Yar’Adua’s health have added to the mood of uncertainty.

Meanwhile, the economic environment is getting harsher with prices for the crude oil on which Nigeria relies now closer to $60 a barrel than the $140 they topped earlier this year. Turmoil in the Niger Delta continues to restrain oil production. Nigeria’s main stock market index has lost nearly half its value since March.

Is Yar’Adua going to be up to the task of turning on the lights? Is anyone? What do you think?

The global financial crisis has produced broad agreement that the world needs a new financial architecture, but world leaders are a long way from reaching agreement on what shape it should take.

Many countries have rescue plans to support banks and unfreeze credit markets. The United States has set in motion reforms to change the relationship between Washington and Wall Street.

But calls are being made for much deeper, coordinated reforms, and a series of global summits is planned to discuss how to reform the financial system. The first of these meetings will be held on Nov. 15 in the United States.

Capitalism as we used to know it may be on its deathbed. Some world leaders have called for a revamp of the 1944 Bretton Woods conference that resulted in the post-World War Two financial order and created the IMF and the World Bank. 

Economists and commentators have been filling newspapers with suggestions about what should be included in the new financial architecture, from more regulation to concerns about climate change and trade.

Some experts say world leaders risk making terrible mistakes of they get it wrong and must stand back and properly assess what went wrong before enacting wholesale reforms. Others say it would be wrong to force one country or region’s vision on another.

There is little doubt we are now, as British Prime Minister Gordon Brown put it, at a “defining moment” for the world economy. But there are more questions than answers.

Can world leaders overcome their differences and live up to the task? Will they have any concrete proposals to discuss on Nov. 15? Will it be more than a big talking shop?

As financial and philanthropist George Soros says, what kind of system will evolve from this is a very open question. 

European leaders have finally got their act together. After weeks of looking divided over how to tackle the global financial crisis, they agreed on joint measures at  emergency talks in Paris. 

Their meeting followed talks in Washington at the weekend involving G7 finance ministers and officials from the International Monetary Fund and the World Bank at which governments pledged to support the financial system. U.S. President George W. Bush said he was confident the world’s major economies could overcome the challenges.

But is it enough to stave off the crisis? 

Some equity investors appeared to be comforted. The pan-European FTSEurofirst rose on Monday, U.S. stock futures went up and Asian shares outside Japan, which was closed for a holiday, made gains. 

Just a few days ago, the IMF warned of the danger of financial meltdown but its chief, Dominique Strauss-Kahn said on Monday the worst of the crisis was possibly over. 

Many newspapers were cautious. The Toronto Globe and Mail saw hope in the fact that the world’s financial  leaders have started setting aside their differences but said some market participants could be disappointed by the lack of specifics. Floyd Norris wrote in The New York Times that there was no assurance that credit would flow when markets reopen this week.

The Economist said the “dithering” was over but  some problems remained.

Commentators and politicians are united in saying that staying together holds the key to success and that the consequences could be dire if unity does not hold. 

Commentator Will Hutton, writing in The Observer, said: ”I don’t know whether politicians and their advisers can move as quickly as they need in so many areas and collaborate across so many countries to restore stability.”

He added:  ”Without collaboration and leadership, we face disaster.”

With the West reeling from the financial crisis and pulling back some of its investment in Africa, could China step into the breach and expand its footprint on the continent - a presence that already worries Western powers?

On the face of it, China, which is relatively unscathed by the crisis, has a golden opportunity to exploit Western disarray and increase its financial and political penetration of the continent. Already there are signs that Africans are starting to look away from the West and towards other emerging markets, especially China, as they watch the banking chaos in the traditional capitalist markets.

This could have a lasting impact on Africa’s perceptions of East and West as they see Asian financial structures surviving better than those in Europe and America.

China’s economy is still robust, despite the turmoil elsewhere, with GDP growth this year expected to reach 8.5 to 9 percent. Its thirst for African commodities, especially oil, is unabated to fuel Beijing’s rapid industrialisation drive. Western governments and aid groups accuse Beijing of turning a blind eye to misrule, corruption and human rights abuses as it invests in Africa, including in controversial countries like Sudan, whose Darfur region is suffering a deep humanitarian crisis. But many Africans welcome China’s refusal to interfere in political issues, in contrast to Western attitudes.

Experts say it is questionable whether China has the capacity to get more deeply involved in Africa economically because of its existing huge exposure and the diversification of investment on the continent to include other emerging market countries like Brazil, India and Russia. Not to mention the huge petrodollar funds of Gulf states. They say that in any case economic contagion will reach China which has vital export links with the West. 

But will the spectacle of the Western capitalist system in disarray push African countries to look even more towards the East, finally breaking their strong ties with former colonial powers in Europe and with the United States. What do you think?

Once called the “mad dog of the Middle East” by President Ronald Reagan, Libya’s leader Muammar Gaddafi will meet U.S. Secretary of State Condoleezza Rice this week.

Senior State Department official David Welch told reporters he had met Gaddafi — “a person of personality and experience” — several times. 

“We don’t refer to Colonel Gaddafi in those terms today,” said Welch when asked about Reagan’s derogatory reference. 

He anticipated Rice, America’s most senior diplomat, was “quite capable” of meeting with Gaddafi and looking after U.S. interests. 

“She is anticipating this one with great interest,” he said of the upcoming Tripoli encounter. 

No word on whether the meeting — the first between Libya and a U.S. secretary of state since 1953 — will take place in one of Gaddafi’s tents.

First on Zimbabwe, now on Darfur, Western countries have lost out at the U.N. Security Council to African states backed by China and Russia.

A Western attempt to get sanctions imposed on Zimbabwean President Robert Mugabe’s government flopped on July 11. Three weeks later, when it came to renewing the mandate of peacekeepers in Darfur, Western countries bowed to demands to include wording that made clear the council would be ready to freeze any International Criminal Court indictment of President Omar Hassan al-Bashir for genocide. The United States abstained, but that made no difference to the vote.

The question had long come up in Western countries as to how much Africa mattered to them given what often seemed intractable wars, famine, disease and poverty. From an African perspective, Western countries - often former colonial powers - have sometimes been accused of arrogance, meddling and ignorance of the continent’s realities.

But while Africa’s economies were once dependent on aid and finance from the West, it is China and other Asian countries that are now rushing to invest, helping to drive unprecedented growth. How Africa will deal with the new investment was a key topic at this week’s meeting in Mauritania with the International Monetary Fund and World Bank. G8 countries, meanwhile, appear to be falling short on their promises of aid.

Investment from China comes without the conditions that Western countries or institutions might insist on. Meanwhile, China has been very ready to back African friends in diplomatic forums such as the United Nations. Russia is less important as an investor, but has taken a similar diplomatic line.

So how relevant does the West remain in Africa? And if its influence is waning then will that give African countries a chance to do a better job of solving problems their own way? Will it give a freer hand to leaders with little concern for democracy, human rights and government accountability?

What do you think?

What’s with farming these days? The humble, even if slightly romantic vocation, is attracting a new breed of participants as investing in farmland and agriculture becomes the latest fad in the world of investments.
 
With financial markets in tumoil and commodity prices at record highs, traditional financial players such as investment banks and hedge funds, and even sovereign wealth funds of cash-rich emerging economies are increasingly looking at farm land as the next major investment avenue.

The motivations are varied — from pure financial punting to concerns about food security. Underlying all this is the belief that the rapid economic expansion of China and India could add more than a billion people between them to the ranks of consumers of meat and wheat-based products. And then there is the growing demand for land to grow crops for biofuels.

Morgan Stanley has bought some 40,000 hectares of land in Ukraine , while the New York Times reported this month that Calyx Agro, a division of the giant Louis Dreyfus Commodities, is buying tens of thousands of acres of cropland in Brazil.

Chinese firms are said to be locking up farmland and mineral reserves in Africa, while Saudi Arabia and Bahrain plan to grow strategic grains abroad to protect their countries from crises in world food supply.

According to Asia Times, Pakistan’s Prime Minister Yousaf Gillani during a visit to Saudi Arabia in early June sought $6 billion in financial and oil aid in return for hundreds of thousands of acres of agricultural land, which could be tilled by the Saudis.
 
All this could present some poor countries with both opportunities and threats. With oil prices at near record highs, they could trade their energy security with the food security needs of their investors and bring millions of acres of non-arable land into use. But contract farming could just as easily boomerang if high prices and domestic food shortages create a backlash against such barter deals.