Asia rises - even as disaster tests its mettle

In 2004, the world marveled at fast-rising China and India. A quarter-century after China embarked on market reforms, the country has emerged as the world's factory. Meanwhile, its neighbor, India, is capturing a growing share of America's office work. Yet at year's end, the tsunami disaster put the spotlight on the region's poor and fragile areas - and the interaction of regional players looking to help.

Can China slake its thirst for oil?

China's economic rise has made it something like Asia's sprouting teenager - outgrowing its clothes every few months, and in constant need of new energy supplies. Chinese leaders now tour the globe regularly, cutting new deals in almost every energy market they can visit.

In December alone, the president of Venezuela came to Beijing to strike a deal with the world's No. 2 oil market. And Russia hinted that one of the mystery players in the buyout of its oil giant Yukos is China National Petroleum Corp.

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China's thirst has created disputes with Japan over a Russian oil pipeline and natural-gas reserves under the East China Sea. Another head-turner came this fall when China signed a $70 billion deal with Iran for oil and gas. Possible agreements with Australia, Africa, North and South America, and the Middle East could create further tensions among market competitors.

"If China doesn't import oil, it would need four more Three Gorges Dams, 20 Dayawan nuclear plants, 26 Yanzhou coal mines, and six Daqing oil reserves," says Zheng Jianchao of the Chinese Academy of Sciences, speaking of China's largest domestic sources of energy.

One early indicator: A Sino-Canadian oil deal could be struck as early as this month. Canada is the chief source of oil for the US; how Washington reacts could set the tone for a new age of resource rivalries.

- Robert Marquand, Beijing

N. Korea: the black box

Rumors since the death of founder Kim Il Sung in 1994 have described North Korea as on the brink. In 1997, headlines spoke of a popular revolt, a coup attempt, and an economic collapse. But not even devastating famine in the 1990s sparked a collapse. And leader Kim Jong Il may weather 2005 as well, despite talk of unhappiness and defections among the officer corps.

North Korea gets the attention of the West because of its nuclear-weapons programs, the focus of six-party talks that have stalled. In Washington, hard-line Pentagon forces are converging with the hard-liners in the State Department associated with John Bolton, the under secretary for arms control, following the departures of Colin Powell and Richard Armitage. This year could decide whether the US and China can arrange a deal the North will accept, or whether Kim Jong Il will "weaponize."

"North Korea is now in a foot race with the Iranians over who will get the best deal, or get the bomb," says James Mulvenon of the Center for Intelligence Research and Analysis in Washington.

What to watch:

• On Feb. 16, Kim Jong Il's birthday, government ministries will gather to consider economic reforms. The outcome could give some indication of the regime's willingness to engage with the outside.

• Will six-party talks resume in 2005? So far, the North has resisted.

- R. M.

Afghanistan: a fresh start

In 2004, Afghanistan moved past 25 years of war and held its first presidential election with remarkable calm. The victor, Hamid Karzai, has chosen a new cabinet that largely freezes out warlords. The move, an important symbolic step away from rule by gun, could backfire since little progress has been made in disarming the private militias of top figures, some of whom represent sizeable ethnic minorities. Curbing the burgeoning poppy cultivation will be another delicate problem for Kabul.

But it's the no-show of the Taliban at election time that has sparked the most speculation: Is the insurgency petering out?

"Certainly, the fact that the Taliban were not able to disrupt the elections has to be a positive development, but it doesn't mean that the Taliban have completely diminished," says Thomas Muller, who is with the Afghan Rehabilitation and Evaluation Unit, a think tank in Kabul.

One early indicator: This April, Afghan voters will hold parliamentary elections, a potentially volatile process of choosing among local tribal leaders, religious figures, or military commanders in their area. It presents an opportunity to bring disaffected Taliban into the political process, an offer Mr. Karzai is expected to make in the coming months. But the vote also poses another test of Taliban strength, and some observers say they are concerned about potential violence.

"Over the next year, you might see whether the Taliban do not have the capacity to carry out attacks, or whether security for parliamentary elections is so tight they decide to stay home," says Mr. Muller.

- Scott Baldauf, New Delhi

India's outward focus: China

Indian analysts have long considered China to be a far bigger threat than Pakistan to India's emergence as a power. Both countries have enormous populations, nuclear weapons, and industries that compete well in global markets. Both countries aspire to expand their trade and diplomatic relations, especially in Southeast Asia. India and China fought a brief border war in 1962. Since then, relations have been strained by Beijing's economic and political backing for Pakistan.

For now, relations between India and China are warming after compromises in 2003 over territorial disputes. Trade ties have brought India and China closer. Since signing a free-trade agreement in 2000, bilateral trade has increased sevenfold. Yet, despite the positive signs, India's security establishment remains on guard.

What to watch:

• Chinese Premier Wen Jiabao will visit India in March, a moment he describes as the most important on his 2005 calendar. China has expressed hopes of resolving remaining border issues before the visit.

• President Bush has also announced he will visit India this year, a moment that could increase India's regional stature.

- S. B.

After the waves: South Asia rebuilds

Recovery from the tsunami, say experts, could take a decade. 2005 will test the coordination and endurance of the initial rush to help. The outpouring of goodwill has drawn the diverse Southeast Asian region, Western donor nations, and even warring factions closer together. Separatists in Aceh announced a unilateral cease-fire. Tamil Tiger rebel leaders reached out to the Sri Lankan government. And US forces helping with rescue efforts were welcomed in Muslim Indonesia.

How long will the comity last? Already, there is a competitive dynamic among global powers. The US - with the long arm of its military and $350 million commitment of aid - has eclipsed China's initial $62 million outlay. But China may play a longer-range role in the redevelopment.

One early indicator: Local elections in Aceh were scheduled for June. Those could indicate whether Acehnese are more open to candidates pushing autonomy rather than independence. "I would be extremely skeptical that this disaster would lead to a resolution of the conflict. On the other hand, the relief effort ... might have more Acenhese willing to give Jakarta the benefit of the doubt," says Sidney Jones of International Crisis Group.

- Ben Arnoldy

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