Asia

 They may take their tea with milk and pronounce "tomato" wrong, but here's something on which we can agree with our friends across the pond.

Yesterday, the UK's International Development Secretary Douglas Alexander announced DFID's ₤1.4 million, three-year project: Facilitating Access to Financial Services through Technology (FAST).  Working with CGAP and GTZ, FAST's aim is to "lay the foundations for financial services to be made available through new and emerging technology across Africa and Asia."

As it stands now, 2 billion people in the developing world lack access to financial services, because of distance or affordability constraints.  With that in mind, FAST aims to explore the possibilities and extend the reach of "branchless banking" using new technologies and innovative methods.

Its three-pronged strategy is to:

Falling currencies and rising prices for food and fuel are raising inflationary pressures to dangerous levels across Asia. Annualized inflation reached 4.9% in South Korea and over 11% in India. As domestic pressure mounts from consumers and labor unions, Asian central banks are reversing long standing policies designed to maintain weak currencies and benefit exports, and are instead actively intervening to push up currency values and lessen the blow from rising import costs.

The only nation not caught up in this wave is China. While consumer inflation reached its highest levels in a decade, the government has stifled domestic discontent and the trade surplus has held steady despite rising import costs.

Snapshot asks, will rising commodity and fuel prices force a greater Chinese response?

In response to growing inflationary pressure, Chinese officials increased banks' reserve ratio last weekend by 100bp to 17.5%. On Tuesday, the first day of trading following the weekend decision (Monday was a Chinese holiday), the Shanghai stock market fell 7.7%. In Asia excluding Japan, headline inflation for April rose to a nine-and-a-half-year high of 7.5%. As inflation pressures increase and tightening policies become necessary, Asian stock markets will continue to adjust downwards.

Snapshot asks, how much further do Asian equities have to fall as a response to increasing inflation?

Morgan Stanley - AXJ's Inflation Challenege
Bloomberg - Asian Economic Miracle Is at Risk All Over Again: William Pesek
Citigroup - Inflation Risk Invokes Divergence
Financial Times - Asia markets plunge as inflation looms

(Kishore Mahbubani speaks at New America Foundation reception on the "Rise of Asia and the Decline of the West. Pictured are Deputy Secretary of the Treasury Robert Kimmitt, Kishore Mahbubani, and New America Foundation/American Strategy Program Director Steve Clemons. photo credit: Samuel Sherraden)

My boss Steve Clemons is hosting a fascinating debate on the future of the international order over at his blog, The Washington Note. The debate is between some of the day's leading geopolitical thinkers, including Kishore Mahbubani, G. John Ikenberry, and Anne-Marie Slaughter. With that kind of fire power, I hesitate to step into the fray, but since I've been asked, here are my two cents:

The New Yorker (4/21) asks Parag Khanna about the end of autonomy for Western nations.
The Guardian (4/12) quotes Flynt Leverett on Gordon Brown's low U.S. profile.
Congressional Quarterly (4/11) talks with Peter Bergen on the threat from al-Qaeda.
Asharq Alawsat (4/10) listens to a New America delegation to Saudi Arabia talking about Guantanamo Bay.

The price of rice has increased dramatically in the first two months of 2008 according to the Food and Agriculture Organization of the United Nations. Gloria Macapagal Arroyo, the president of the Philippines, recently reached an agreement with Vietnam to guarantee a steady rice supply. Other Asian leaders are also trying to secure their imports. For much of Asia, industrialization has taken precedent over investment in agriculture causing shortfalls in rice production. Factories have taken precedent over rice patties and investment in machinery over research in agriculture.

Snapshot asks, will the rush to industrialize continue to push rice prices higher?