Wednesday, August 26, 2015

For CCP, Stock Market Meltdown Takeaway Isn’t “Interference is Bad”; It’s “Why Didn’t Interference Work?”




I suppose much of the journo commentariat was born since 2008 and therefore has no memory of TARP, Too Big To Fail, or Jamie Dimon rolling around naked inside a gigantic vat of taxpayer money, so there has been a considerable amount of handwring about how the CCP defiled the purity of the stock market by flinging a trillion or so RMB at the markets in a faltering attempt to moderate the collapse of share prices on the Shanghai exchange.

“Purity of the stock market”.  Chew on that a while.

I expect the poohbahs of Zhongnanhai are more concerned with the interesting question of why a few phone calls and a trillion RMB were unable to stem the decline in a neat, orderly way, and it turned out the best way to handle the rout was to stand back and let the stock market crater.

And, no, I don’t think the red emperors’ conclusion is “markets are awesome and all-powerful and the CCP must accept its new role as humble handmaiden to high finance”.

Here’s a few observations/interpretations.


1.  The bubble had to pop.  Valuations were at ridiculous P:E levels of 60 to 80 and the optimistic "Silk Road Will Save Us" narrative that was supposed to prop up equities and ease the transition to the "New Normal" of lower growth wasn't holding up for international or, I imagine, knowledgeable domestic investors.

2.       I think history will judge that the bubble was fueled not only by gullible small-time investors, but an ocean of money brought in by the carry trade (borrowing cheap dollars to convert into RMB to chase high returns in the PRC stock market).  Somewhere I read that a trillion dollars of carry trade money might have made its way into the market.  That’s serious money.

3.       In my opinion, the PRC situation looks a lot like Japan in the 1990s.  Banks with underperforming/nonperforming policy/infrastructure loans looked to boost their bottom lines through carry trade, investment vehicle, and stock trading shenanigans.

4.       A lot of money, smart and otherwise, came into the market through unconventional funds, margin accounts, and whatnot.

5.       The whole stock market spectacle from April to July looks like a classic pump-and-dump, with big money investors levering up to boost the bubble and sucking in fish/sheep to be shorn/sacrificial lambs or whatever hapless animal metaphor you want to call the retail investors whose primary function, as always, was to get stuck with the funny paper at the end of the day.

6.       When the slide began, in the best time-honored fashion priority was given to make sure that the big money boys and girls dodged their margin calls and got closed out of the market at acceptable levels.  The fact that the top securities companies were entrusted with executing the bailout probably didn’t hurt their buddies one bit.

7.       The CCP wanted and expected the bubble to pop in an elegantly authoritarian and orderly fashion.  When it didn’t, the leadership bought the idea that a disorderly decline was undesirable, mainly because a spectacularly craptacular market would be unable to handle the new share offerings intended to wean the SOEs from their leech-like dependence on the banking system for ridiculously cheap capital.  So we got the panicky money-shoveling, the trading bans, and orders to security companies not to sell their own book.

8.       But instead of orderly, they got spectacularly craptacular.  That POs the CCP.

9.       What I expect concerns the CCP is the suspicion that market control efforts were balked by a lot of things: not just market forces, but also poorly monitored and regulated capital inflows, and by self-dealing shenanigans by the securities companies that were charged with executing the bailout.

10.   So now it’s time to suppress the forces that interfere with CCP-mandated market operations.  Limit margin, limit short sales, crack down on the unconventional finance companies a.k.a. hedge funds with Chinese characteristics, and hammer a few security firm execs.

11.   I expect there is a genuine split within the CCP between liberal reformers a.k.a. believers in the inevitability of oligarchical market-driven growth & Xi Jinping’s emphasis on controlling and channeling market and economic forces to buttress CCP dominance.  Xi’s aura of omnipotence has certainly taken a hit.  But I don’t think the internal takeaway is going to be that Xi blew it and Li Keqiang is unfairly taking the fall.  I think it will be that liberal reformers were naïve in thinking that the laissez faire “let a hundred hedge funds bloom” attitude could deliver a stable, manageable financial sector.

12.   Should be remembered that “liberal reformers” have the ear of the Western press while Xi Jinping probably doesn’t give the highest priority to what’s written about his economic policies overseas.  So it’s important to bear in mind the distinction between insider tittle-tattle and insider ass-covering.  In coverage look for the perennial “Li Keqiang is an economist, Xi Jinping is just a chemical engineer” tell in order to get an idea of who’s pushing what.

13.   If “liberal reformers” spend too much effort defending themselves in the Western press, I’m guessing ugly exposes of corruption, lax regulatory oversight, whatnot by China’s would-be masters of the financial universe will start popping up in Chinese media and courts.  And I expect there’s plenty to play with.

14.   The key internal fingerpointing, in other words, may turn out to revolve around “how did the bubble form so quickly and unwind so chaotically?” rather than “dang, we shouldn’t have violated the market with intervention”.

15.   I think the market will show some stability now, not necessarily because it’s reached a rational P:E, but because the insiders have cashed out and the pressure from the carry trade mechanism is gone with the collapse of returns on the China stock markets.  In fact, one way to look at the RMB devaluation that appears plausible to me is that the CCP instituted it in order to break the dollar peg and gut the carry trade.

16.   If you really want to get into the financial warfare weeds, PLA fireeater Maj. General Qiao Liang (who, according to Francesco Sisci has the ear of Xi Jinping) has put forth the theory, well, accusation, that the United States knowingly pumps up emerging markets and then crashes them.  In this scenario, the RMB deval would be a pre-emptive move to wind down the carry trade and deflate the bubble before the Fed yanked out the plug this fall with a rate hike.

17.   The carry trade equation will reverse and we’ll see capital flight out of PRC into and via Hong Kong, something to remember when the free-market wonderfulness of the Hong Kong stock exchange is extolled.

18.   The CCP can decide if it wants to cherish forever the big pile of paper it accumulated in trying to prop up the market.  I think it would be a great idea to make the shares disappear—swap them for some crappy debt that is immediately defaulted on and forgiven—but I suppose the irresistible temptation will be to hang on to the shares with the expectation that prices will recover and they will be bled into the market for triumphant “we didn’t lose a mao!” crowing.

19.   Bottom line, I think, a major embarrassment for Xi Jinping, a source of division and discord within the elites, and a big knock to the financial machinery that will set back reform plans for a couple years.  It will also strengthen the hand of the go-slow factions that, for various interested and disinterested reasons, don’t want to see the SOE/business as usual/corruption toleration applecart upset.  I expect Xi is currently weighing the options of either hammering these guys pre-emptively before another mis-step weakens him further, or cutting his losses and risks by concluding a truce with his opponents.

20.   Regardless of what happens to Xi Jinping’s mojo, I think the CCP learned an expensive lesson about financial bubbles.  And I think the lessons concerning regulation, monitoring, and control are somewhat different from those free market advocates in the West would like them to draw.





Tuesday, July 28, 2015

US “Honest Broker” Zombie Ready for Its Dirt Nap…”Anti-Submarine Warrior” Primps for Its Close-Up



Assistant Secretary of State Danny Russel spoke at the CSIS South China Sea Conference on July 20, 2015.  He made news by declaring that the United States is not neutral in some issues pertaining to the South China Sea.

The money quote came in reply to a question from Wu Shicun, the PRC representative at the conference:

On the first issue of neutrality, I appreciate the opportunity to clear up what seems to be an almost ineradicable perception of the Chinese.  We are not neutral when it comes to adherence to international law.  We will come down forcefully on the side of the rules.  

Cue the triumphant hooting from the China hawks, who were well represented at the conference and urging the United States to “draw a line in the sea”.  And squealing from the PRC that the United States had abandoned its “honest broker” stance, which dated back to the Potsdam Declaration and presented US military force in Asia as the only viable peacekeeping alternative to Japanese re-militarization.

Although the tottering “honest broker” zombie took another hit at the hands of Assistant Secretary Russel, it had been staggering to its grave ever since President Obama and Hillary Clinton opted for “PRC rollback” after the strategic drift and distraction of the George W. Bush years, and received its death blow as the US and Shinzo Abe repositioned Japan’s military away from self-defense and toward a power projection role in Asia as America’s ally.

The US FP commentariat is optimistic that the Philippine arbitration case against the Nine Dash Line will succeed, the PRC’s outsized claims in the SCS will be declared illegal, and the 200 nautical mile EEZs of the various claimants will govern who can fish and drill where.  Shedding the 9DL incubus is of particular importance to the Philippines, since exploitation of the Reed (Recto) Bank gas field inside the claimed Philippine EEZ (and inside the 9DL) is seen as a matter of near-existential economic and fiscal importance.

UNCLOS has no enforcement mechanism.  So if the PRC tries to obstruct Philippine operations at Reed Bank and the Philippines lacks the military muscle to protect its rigs and vessels, somebody’s got to step up.

That somebody, Russel indicated, is the United States.  China hawks hope this means something like interposing US naval vessels to block whatever ships the PRC sends to Reed Bank make trouble.

For fans of World War III, a few of whom I suspect reside in the Pentagon and Washington think tanks, well, it just came a step closer.  

For China-bashing realists, the day when the PRC, that salami-slicing paper tiger, is finally directly confronted by the US Navy and forced to slink away in humiliation is drawing near.

For anti-imperialists of the China-hugging persuasion, it looks like the PRC got its tit caught pretty tightly in the SCS wringer and the process of extraction will be neither easy, pleasant, nor consequence-free.

The SCS conference set the narrative that the US wishes to impose on the situation: everything was going great until the PRC upset the status quo by doing its island reclamation.  Now PRC presence and inferred intentions in the SCS have become so alarming that the US, as the guarantor of peace and prosperity in Asia, has to step in and enforce the international rules.

One panelist was relegated from my personal “expert” premier league table to the dreaded “journo-pundit” category for eagerly promoting the “shipping lane lifeline” canard, not only to explain American attention but to justify Japan’s injection into the issue.  He stated that Japan needs a tanker coming through the South China Sea “every six hours” “to keep the lights on” and this “killer fact” refuted challenges to Japan’s standing in the crisis.

Killer fact?  Just kill me.  Or better yet, read my various takedowns of this myth, including one at Asia Times and another from my blog, presciently titled, “What Should Be the Last Word on Freedom of Navigation in the South China Sea…But Won’t Be.”

However, the US SCS campaign does not draw all its energy from empty political kabuki.

Below the surface—heh, heh--I would hazard that the driving theme of the US civilian & particularly Pentagon planning (and privileged backgrounding) focuses less on the “SCS = global trade aorta” unmitigated bullsh*t and more on the US preoccupation with the threat from the PRC’s strategic submarine fleet on Hainan and the desirability of detecting, tracking, bottling up, and destroying those subs as needed.

I am not a big fan of strategic nuclear submarines.  They are unpredictable and destabilizing to adversaries, and expensive and problematic to their operators.  

But I suppose the point is that the United States is adamant about not renouncing its nuclear first strike privileges, the PRC feels it needs a sea-based second-strike capability if Taiwan blows up and the US-PRC confrontation goes nuclear, the PLAN is entranced with the deterrent and ego-enhancing potential of nuclear missiles on submarines, and away we go.

The PRC already operated a strategic nuclear submarine base near Qingdao at Jianggezhuang.  It built a bigger and better one—in that it would be able to handle newer, bigger, subs that presumably could eventually be armed with missiles capable of striking the US mainland from afar—on Hainan Island near Yulin.

So the United States, in line with its national security imperatives, feels it has to cover the SCS like, well, like white on rice.  The modern era of US-PRC conflict in the South China Sea begins in 2009 with PRC harassment of the USNS Impeccable, a survey ship that plods through the PRC EEZ off Hainan mapping the submarine topography and/or listening for PLAN submarines.  US concern with military freedom of the seas in the SCS (softened to “freedom of navigation” to soothe the tender sensibilities of surrounding states—like Vietnam and the Philippines, that still hold some reservations concerning foreign military activities inside their EEZs) appears to underpin the SCS posture of the Obama administration over the last six years.

The US has devoted considerable military and diplomatic effort to improving its capabilities to monitor current and potential submarine operations out of Yulin.   For good reason.

The South China Sea is an interesting and problematic arena for anti-submarine operations because of its complex topography.  Therefore I must, in the most deferential manner, question Howard French’s recent statement in the Guardian that PRC island building at Fiery Cross Reef is scary “because of the depths of its surrounding waters, which afford Chinese submarines far greater stealth in evading acoustic and other forms of active tracking by the US military.”

If the Federation of American Scientists’ report is correct, the situation is pretty much the opposite:

Of course, if the water is so shallow the submarine can’t submerge fully it will limit operations, but deep water is – contrary to popular perception – not necessarily an advantage. Military submarines generally are not designed to dive deeper than 400-600 meters, so great ocean depth may be of little value. The U.S. navy has several decades of experience in trailing Soviet SSBNs in the open oceans; shallow waters are much more challenging. And the South China Sea is a busy area for U.S. attack submarines, which have unconstrained access to the waters off Hainan Island.



So there you have it, folks.  A dodgy neighborhood with lots of hidey-holes and shallow waters and thermal layers that complicate the sonar ping-ping and depth-charge bang-bang and also, potentially, offering “home court advantage” to the PRC as it develops island bases to enhance and extend its own search (and, in case of war, destroy) operations—intensive mapping and monitoring, maritime sweeps, surveillance flights, buoy drops, big, permanent, passive arrays, what have you—throughout the SCS against US attack submarines attempting to track down the PRC “boomers”.

So maybe the PRC—which presumably picked up a few tips from ex-Soviet submariners—decided to put its new base in Hainan for a good reason.

The strategic nuclear submarine issue has considerably greater existential zing and persuasive power in explaining US SCS policy than the stated US obsession with sustaining the rules-based order or even using the SCS issue to d*ck with the PRC and create a favorable environment for the pivot/rebalancing.

In the corridors of American power “PLAN subs will nuke us” carries more weight—and shuts up more doubters and critics—than logically bankrupt arguments about cargo ships, anxiety over  coral polyps, or fond notions about the sanctity of international treaties that the US hasn’t signed or hydrocarbon rights that the Philippines hope to enjoy.

And the concern that PRC island-building activity will hobble US ASW measures automatically becomes a critical geostrategic issue.

And it seems obvious that’s the argument that carried the day in the last few months.

I find it interesting that reams of Western journalism are devoted to imputing division and disorganization within the opaque CCP bureaucracy on the SCS issue even as a major purge of the China policy apparatus occurred within the US Department of Defense just a few months ago under our noses.

For a fuller accounting, please see my South China Sea ultimate backgrounder.  But the short version is, China hawks saw Chuck Hagel as wobbly on the China threat and Admiral Locklear too understanding concerning the PLAN’s interpretation of its regional prerogatives.  By early 2015, the China hawks had prevailed, Hagel was gone, replaced by Ash Carter, Locklear was gone, replaced by Admiral Harris, the US committed fully to the Japanese alliance and the “China’s nuclear sub threat in the South China Sea must be contained” became an overt and irrefutable justification for an escalating US military presence in the SCS, opposing PRC efforts to turn it into a primarily PRC (and PLAN) preserve, and the context for the US elevating this economically insignificant stretch of sea to a big, big deal.

However, the “strategic anxiety” knife cuts both ways.  

If, as I think is pretty clearly the case, the PRC sees the US interest in the SCS as not only mischievous and downright hostile to the PRC, but also a key element in its full-spectrum effort to neutralize the PRC’s sea-based nuclear deterrent, the PRC will happily accept heightened local tensions as a cost of its national security business.

In a case of exquisite and almost perfect symbolism, Assistant Secretary Russel misunderstood, either inadvertently or by design, the key question for the PRC in the South China Sea, at least from the military security point of view: would the US try to stop the PRC island buildout, an activity which bolsters the PRC's ASW capability and which, it is absolutely clear--at least to people who listened to the question--the PRC has no intention of stopping?

Wu Shicun: As I know China won’t, you know, stop construction work in those island… reclaimend [sic] islands …What would be US actions if China won’t follow US requirement as you just mentioned to stop construction works…and does US State Department share the same status in this regard with the Pentagon?

Daniel Russel: You raise a very important second question.  Which is, what if China agreed that in the interests of regional stability and harmony it would enter into a reciprocal freeze, a moratorium where neither China nor Vietnam, the Philippines, Malaysia, any claimant undertook large-scale construction, upgrades, or certainly militarization.  What would our reaction be, what would we do?

I can think of few other steps that China could take that would do more to create a conducive…an atmosphere in the United States conducive to progress in the US-China relationships.  I think the concerns generated by the tensions and the disputes and the behavior in the South China Sea have raised real concerns and real questions in the minds of so many American citizens.  These are questions that would be answered in a very reassuring and persuasive way if China in this sensitive area of the South China Sea exercised the forbearance, the generosity of spirit and the good strategic judgment, show restraint and created the space for and time both for a code of conduct that I think we all would like to see completed before the end of this year and a process that would lead to the end of the underlying disputes.

Consider Professor Wu’s question unanswered.  Or maybe not.

With the United States and its allies promising a military envelopment of the South China Sea, I don’t think the PRC is going to take Russel’s unctuous suggestion of a freeze seriously as a US negotiating point.  More likely, Russel’s dodging the island-building ultimatum question indicates to the PRC that, no, the United States is not currently prepared to wipe these islands off the map, yes, the PRC can keep building, and the military cat-and-mouse in the South China Sea will continue indefinitely.

In fact, a scenario that hasn’t received a lot of airing anywhere as far as I can tell is the possibility that the PRC, on the grounds of its national security interest, will withdraw from UNCLOS if the arbitration doesn’t go its way.  In fact, I wouldn’t be surprised if the withdrawal threat has been discretely brandished before the arbitrators, to encourage them to think twice about the consequences to the universality and validity of the UNCLOS regime itself if they are too eager to claim jurisdiction and get into China’s grill.

In that case, the US would be placed in the somewhat difficult position of excoriating the PRC for exercising a cherished US prerogative: opting out of inconvenient international obligations, not just UNCLOS, which it signed but never ratified, but also the International Criminal Court, which it signed, ratified, and then withdrew from under President G.W. Bush.

Based on precedent, the PRC might be loath to formally withdraw from the treaty and flirt with the international pariah status it occupied from 1949 until the 1970s; but I think it’s quite likely that, even if the PRC stays in UNCLOS, it will be increasingly inclined to honor the treaty’s obligations “in the breach” and assert the right to interpret its spirit as it sees fit.

Just like the US does.

Which means, perhaps, that the PRC will declare that Japan’s dramatic island building and EEZ grab at Okinotorishima is more of a guiding precedent for Chinese claims for Fiery Cross than whatever the handwringers at the UNCLOS arbitration panel seek to impose.

And if the United States proves especially sedulous in supporting the Philippines’ efforts to drill at Reed Bank without PRC buy-in and participation, expect the PRC island campaign—and the headaches for US anti-submarine-warfare strategy—to increase.

Below the break: my transcript of the exchange between Russel & Wu, with a link to the relevant video.


Monday, July 20, 2015

Another Shoe Drops in the Turkish “Passports for Uyghurs” Case




Evidence keeps accummulating that a clandestine Turkish government program to enable Uyghur emigration from the PRC--for motives either noble, sinister, or both--has turned into a major security cock-up, embarrassment for Turkey, and a serious issue in PRC-Turkish relations.

I wrote this on July 11 on the occasion of the forcible repatriation of over one hundred Uyghur men from Thailand to the PRC amid PRC allegations that the Turkish government, in addition to providing diplomatic and consular support to the Uyghurs, had crossed a line by providing fake travel documents:

Please note that the PRC Foreign Ministry, as well as Global Times, were already raising the passport issue at the beginning of 2015.  First the PRC employed the polite fiction that some profit-minded freelancers were selling Turkish passports to Uyghurs; then it was “consulates and embassies of unnamed countries” were dishing out documents; now, unambiguously, the PRC is pointed the finger at the Turkish government.
The only remaining grey area is whether all the Uyghur men who end up in Syria are simply hapless “cannon fodder” recruited by jihadis, or whether the Turkish security services identify some particularly capable Uyghur militants, provide documents, and enable travel, training, and battlefield experience in Syria in order to cultivate Turkey-friendly assets in Syria or potentially in AfPak/Central Asia.  Might never get to the bottom of that one, unless the PRC decides to crank up the evidentiary apparatus another notch in order to make sure Western journos finally get the point.

The PRC is busy fleshing out this story, and added the new wrinkle that the Turkish scheme had facilitated terrorist activities within the PRC.

The PRC has embarked on a major push to justify its insistence on what the West has condemned as the refoulement of Uyghur refugees, to allege that the Uyghurs who left the country were not political refugees protected by the principle of non-refoulement; instead, they were illegal emigrants, candidate militants seeking participation in jihad.

The implications for Turkey are embarrassing, since a central allegation of the PRC’s case is that the Uyghurs it wants back from Thailand, Malaysia, Indonesia etc. were militants recruited and exfiltrated from the PRC by jihadi networks with the collusion of…

...Turkey…

...with the assistance of Turkish embassies and consulates in South Asia…

…and the PRC alleges that some of the refugees were not recruited just to fight against the Assad regime in Syria; they were trained and facilitated to return to the PRC to conduct terror attacks inside China.

That’s a nasty, toxic brew.

The only shoe that hasn’t dropped yet is an open PRC accusation that the passport mischief was organized by the Turkish government in Istanbul, either by its security apparatus as part of its jihadi-related scheming or with knowledge of the government leadership, and not a spontaneous initiative simultaneously kicked off by several Turkish consular offices in South Asia and miraculously complemented by Turkish border police at the airport in Istanbul.

On July 18, Xinhua offered case studies of three Uyghur “illegal immigants” repatriated back to China.  Here are some excerpts:

Memetaili, 25, was the only son in his family. When he was a freshman in a medical school in Urumqi, Xinjiang's regional capital, some people approached him in the name of imparting "religious knowledge." The "textbooks" they used were audio and video materials made by overseas terrorist groups, according to the CCTV report.

After watching the material, Memetaili felt the urge to "sacrifice" for his religious beliefs. The group then introduced him to a "fellow countryman" abroad, who asked Memetaili to join him.

...
He was soon transferred to southwest China and was not allowed to take anything indicating his Chinese nationality with him during the trip.

"I was required to dispose of my clothes that had Chinese on them, my ID card, and even socks," he said.

"They told us if we were arrested in Thailand, we should say we were from Turkey," he said, adding local police could not repatriate them because they had no identification on them.

In Malaysia, Memetaili and other migrants were taken to the Turkish embassy.

"We told the people in the embassy that we were illegal migrants and could not go back, or we would be arrested. They agreed to help us, sent a letter to the Malaysian government and issued identifying papers based on our real names," he said.

With the identification from the Turkish embassy and counterfeit passports they made themselves, they were able to buy air tickets to go to Turkey.

"If we were arrested at the airport, officials from the Turkish embassy would admit that we were their nationals, even though the passports were crudely made," he said.

In Turkey, Memetaili found that several different groups, including the World Uygur Congress and the U.N.-listed terrorist group of Eastern Turkistan Islamic Movement (ETIM), were competing to manipulate them.

"Some of us were sent to Syria. If you wanted to join ISIS, some other people would take you there," he said.

[It’s unclear what happened to Memetaili after he became disillusioned with IS in Syria.]

[Another case history]

Chinese police arrested several terrorists who sneaked into China and prepared to commit terror and violence in 2015.

Ekber is one of them. He received training from the ETIM in Syria and was sent back to China to conduct terrorist attacks.
Ekber first came to Turkey and then Syria, where he received military training for three months. During that period, he learned how to use guns and create explosives.

Instigated by "Aili," Ekber went back to China in early 2015 and planned to conduct a terrorist attack in Shijiazhuang, capital city of Hebei Province, which neighbors Beijing.


Ekber was arrested before carrying out the plan.

As a sidebar, I should point out that an important objective of these articles is for the PRC to assert that returned Uyghurs not regarded as guilty of crimes against the PRC are being generously reintegrated into local society, not imprisoned and mistreated, in order to blunt refoulement-related criticism.  Not an unexpected development, at least to China Matters readers, since I wrote this on July 11:

I would expect the central government would arrange for the ostentatious pampering of these refouled Uyghurs (rather than the standard brutal treatment at the hands of the local security outfits in Xinjiang) in order to reconcile neighboring nations to the PRC’s demands.

Alright, enough patting myself on the back.

Meanwhile, the most interesting Uyghur/Turkish passport case continues to provide entertainment and enlightenment in Indonesia.

This case involves four Uyghurs whose passports, unlike Memetaili’s, were so impeccable that the Indonesian police—apparently with no useful assistance from Turkey—have been unable to refute their authenticity.

Three of the Uyghurs were recently convicted in Indonesian court on terrorism charges.

They were suspected of journeying to a remote Indonesian island to attempt to hook up with a notorious Indonesian militant whose organization has reportedly declared fealty to ISIS; and the PRC claims they are implicated in the horrific attack at the Kunming railroad station that left over 30 dead and over 100 wounded.

It is safe to say that nobody is going to try to invoke the principle of refoulement for these guys.

However, possibly to protect the rather tattered secrecy of the passport scheme, the Turkish government is still loathe to withdraw its protection.

Here is the report from BenarNews which, in contrast to pretty much every major outlet, has assiduously followed and reported this most interesting case:

A lawyer for three Uyghur men found guilty of trying to join an Indonesian terrorist group is appealing the verdict, BenarNews has learned.

The appeal was filed Wednesday after consultations with Turkish officials in Jakarta, according to defense attorney Asludin Hatjani.

“The embassy of Turkey sent staff to talk with the four defendants at Brimob Headquarters a day after the verdict. They agreed to appeal and I lodged the appeal yesterday after the talks,” Asludin told BenarNews on Thursday, referring to the police’s Mobile Brigade unit (Brimob).

“Currently we are waiting for a memorandum of appeal from the High Court.”

Turkey’s involvement corroborates that his clients are Turkish, he said.

“I can confirm they are citizens of Turkey, because their documents themselves are still recognized by the embassy and the police. Even the court itself stated their nationality is Turkish,” Asludin said.

During their trial at North Jakarta District Court, the men last month could not sing the Turkish national anthem or name its title when prosecutor Nana Riana challenged them to do so.

“How is it that a citizen doesn’t know the national anthem of his own country? I’m Indonesian. My national anthem is ‘Indonesia Raya,’” Nana said in court on June10.

The men’s citizenship could determine where they are sent once the trial is over, she later told BenarNews.

“Going forward, their citizenship status may influence the extradition agreement between Indonesian officials and the government of Turkey or China,” Nana said.

“If they are not Turkish citizens, possibly the court will destroy their passports.”

Earlier, the National Counterterrorism Agency (BNPT) indicated that the four Uyghurs could be extradited to China after their trials.
The four are believed to have entered Indonesia using false Turkish passports via Malaysia. During an earlier court session they described taking a motorboat from Malaysia to Pekanbaru, Riau Province, on Sumatra island.

They flew to Jakarta, and visited Bogor and Bandung in Java before flying on to Makassar, in Sulawesi.

Shortly thereafter police arrested the four in Central Sulawesi province. Police said they were on their way to join the Eastern Indonesia Mujahideen (MIT), which is believed to be based in Poso regency in Central Sulawesi.

MIT is believed to have sworn allegiance to IS, and its leader Santoso – Indonesia’s most wanted terrorist – has welcomed foreign mujahideen to join the group, security officials say.

“We have no other intention but vacation,” Basit testified in court.

To sum up the overall “Passports for Uyghurs” affair, the preponderance of evidence indicates that Uyghurs going to Turkey with Turkish consular help is definitely a thing.  The PRC allegations that some of the Uyghurs were recruited and exfiltrated with the help of militants and some Turkish accommodation is, for me, persuasive.  

The possibility that the Turkish government is systematically playing the Uyghur militant card to increase its leverage in the Middle East and Central Asia as yet unproven.  But, motives aside,  it is difficult to entertain the idea that "passports for Uyghurs" was a local brainwave of Turkish consulates and not a decision taken somewhere high up in the Turkish government.

In any case, the Indonesian affairs indicates to me that blowback from the  reckless passport program—enabling pretty unequivocal terrorist activities--has already begun.

It is interesting to look back as recently as two years ago when Western outlets routinely downplayed evidence of Uyghur violence in order to undercut the PRC’s justification for its repressive Uyghur policies in Xinjiang.  In 2013, in covering the “SUV with Uyghur banners runs over tourists and catches fire in Tiananmen” incident, AFP ran: Uyghurs pour scorn on China Tiananmen ‘terrorist’ claim.

Think that ship has sailed.  Only question is if and how West will reconcile itself to heightened Uyghur militancy against the PRC.

Global Times, in its signature pugnacious style, pushed back against foreign criticism of a bloody security operation in Shenyang on July 13 that left three alleged Uyghur terrorists dead and sixteen detained:

The West never admits they support terrorist forces in Xinjiang. But through the mouth of the ETIM organizations, they clearly expressed their bias toward the terrorists. The terrorists in Xinjiang have been counting on Western support and believe their use of terrorism is justified.

Chinese people are clear that some Western forces are pushing the terrorist activities in Xinjiang.

"Some Western forces."  Hmmm.

Wonder if, for the purposes of PRC invective on Uyghur matters, we should take “West” as “Turkey”.  Or maybe it’s both?  This story isn’t over, so I think we’ll find out sooner or later.