There is no consensus as to what outsiders can or should do in response to the dire situation inside Burma (Myanmar). At least that was the impression left by a vigorous discussion at a standing-room-only event convened by SEAF on October 18, 2007 on "Burma's Crisis: What Should Outsiders Do?"

Reviewing the protests that broke out in Burma in August 2007, swelled into mass demonstrations for democracy, and were brutally repressed by the junta in September-October, Maureen Aung-Thwin, who heads the Open Society Institute's Burma Project, argued for targeted sanctions. In her view, for example, cutting the flow of tourists to Burma would be less effective than spotlighting China's ties to the junta in the run-up to the 2008 Beijing Olympics, when Chinese leaders would be especially sensitive to embarrassment. But if positive change could be achieved through engagement, that too would be worth trying, in her estimation.

Zarni, an author, activist, and visiting research fellow at Oxford University, differed from Aung-Thwin in recommending constructive and coordinated engagement. And whereas she thought that the political situation inside Burma, if it were to change at all, could change rapidly, Zarni argued that "gradual change is the only solution." Yet just as Aung-Thwin welcomed engagement, if that could promote democracy, protect human rights, and reduce the suffering of Burmese, so was Zarni amenable to sanctions if they could effectively serve such ends.

The willingness of both speakers to entertain a range of options reflected the difficulty of inducing change in Burma from the outside, and the corresponding inclination to be eclectic about options. One speaker from the floor went so far as to suggest that only physical intervention from the outside could end the repression. But of all the proposals suggested, that one appeared to be by far the least realistic.

Several speakers urged that China, India, and/or the Association of Southeast Asian Nations (ASEAN) be persuaded to put pressure the regime. But there was little faith in the room that Burma's immediate neighbors would sacrifice their economic interests, including access to Burma's natural gas, for the sake of promoting political reform. The sense of pessimism prevailing in the room prompted one person in the audience to suggest later that all one could hope to do was extend humanitarian aid to the Burmese people and wait for political reforms that might never arrive.

Suharto's authoritarian "New Order" regime in Indonesia unraveled quickly in 1998. Aung-Thwin recalled a conversation she had had that year with an expert on Indonesia. He had told her he expected the New Order to last a long time. Three weeks later, Suharto resigned.

Aung-Thwin offered this anecdote by way of suggesting that events in Burma, too, could someday catch observers by surprise. Also surprising, in view of this discussion, would be the effectiveness of any external action, on the full spectrum from sanctions to engagement, to induce the democratization of Burma.

The Asia Society Northern California and the Center for Southeast Asian Studies at the University of California-Berkeley co-sponsored this event with Stanford's SEAF. Of course none of the three is responsible for the opinions expressed on the panel or during the Q and A.

Please join us on Thursday, November 1 for the launch of the Stanford China Program, a new program of the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC). With China at the forefront of so many contemporary issues, from economic growth to international security, scholars at Shorenstein APARC have developed the China Program in response to the increasing need to explore and explain dynamic changes taking place in China today. The Stanford China Program is composed of scholars who do their research on the ground, in the villages, company boardrooms and government institutions of China.

Our inaugural event, co-sponsored with the Center for East Asian Studies, illustrates the catalytic role that the Stanford China Program intends to play. The panel discussion "Growing Pains: Tensions and Opportunity in China's Transformation" will go beyond the headlines trumpeting China's spectacular growth. We will discuss the difficult questions facing China, about whether and how such a rapidly transforming nation will be able to manage the tensions that accompany growth at such a pace. Issues from growing income disparity to environmental damage and widening gaps between rural and urban China are forces that are tearing at the social fabric of China. Are these the signs of a system in crisis or, as the event title suggests, the necessary pains associated with growth?

These questions occupy not only scholars, but also policy makers and business leaders alike. The panelists will discuss a range of tensions and opportunities in contemporary China such as markets, governance, environment and social inequality. The panelists include:

• Melanie Manion, Professor of Public Affairs and Political Science at the University of Wisconsin-Madison, a specialist on issues of political governance in China.
• Leonardo Ortolano, UPS Foundation Professor of Civil Engineering in Urban and Regional Planning at Stanford, who will speak on environmental issues.
• Scott Rozelle, FSI Helen F. Farnsworth Senior Fellow at Shorenstein APARC and a leading expert on rural China.
• Andrew G. Walder, Denise O'Leary and Kent Thiry Professor of Sociology at Stanford and Director Emeritus of Shorenstein APARC will moderate the panel discussion.

The event is scheduled to take place from 5:30 - 7:00 PM, Thursday November 1 in the Bechtel Conference Center, Encina Hall, 616 Serra Street. A light reception will follow the panel discussion. Full details can be found at the link below.

I look forward to welcoming you to this inaugural event and to future activities of the Stanford China Program at Shorenstein APARC.

Sincerely,

Jean C. Oi
William Haas Professor in Chinese Politics
Professor of Political Science
Senior Fellow, Freeman Spogli Institute for International Studies
Director, Stanford China Program

Pro: Not as Tempting

by Sabrina Siddiqui, intern, BusinessWeek, and a senior at the Medill School of Journalism at Northwestern University.

There is no doubt that over the last decade, India fortified its rule over the shared services and outsourcing (SSO) sector. Access to low-wage yet skilled workers allowed local global technology services giants Infosys (INFY), Tata Consultancy Services (TACSF), and Wipro (WIT) to employ tens of thousands of Indians to do work for such multinational corporate clients as Bank of America (BAC), Microsoft (MSFT), and Ericsson (ERIC).

But a recent study by Frost & Sullivan consolidates the idea that India's outsourcing has already peaked, and there are a number of factors to blame:

The Rupee Riddle. Earlier this year, the Indian rupee appreciated 8.4% against the U.S. dollar and touched 41.14 to the dollar, its highest rate in nine years. A significant reason for concern for the outsourcing sector, the upward value of the rupee continues to put a squeeze on earnings. By April, 2007, it had cut margins by about 2.5 percentage points.

Cost (In)Efficiency. Companies looking to outsource have long seen India as their most cost-efficient vehicle. But with wage inflation running 15% to 25% per year, India can no longer use the siren song of its labor being the cheapest. Competitors like China can offer their services at a lower cost, while firms like Infosys are stuck recruiting from outside the country, because the comparable Indian staff is growing too expensive.

That Age-Old Infrastructure. As much as the economy continues to boom, how long can it sustain its position when IT operations spend considerably on backup systems to fight regular blackouts? And the 300,000 engineering students who graduate each year may be short of the level needed to support modernization of infrastructure and industry growth. (Not to mention that the peculiarly accented "Doug Smith" on the computer help desk is a little too hard for U.S. callers to comprehend.)

So if you assume you're being rerouted by tech support to a call center in Bangalore, guess again. It seems India's grasp on the SSO market is at long-term risk, and it just so happens that your call might be answered by someone in Shanghai.

Con: Plenty of Spice Left

by Rafiq Dossani, Stanford University and Martin Kenney, University of California, Davis

Notwithstanding the occasional news stories about companies returning work earlier offshored to India, the logic behind offshoring and its financial impact (both on outsourcing firms operating in India and their American clients) remains intact. First, the logic: A fresh engineer costs $8,000, including benefits, on average in Bangalore. Even a "Google-quality", presumably equivalent to the best Google can hire anywhere (in fact, Google offers its India recruits the option of working in Silicon Valley if they so desire) costs $30,000. These wages are much lower than in the U.S. and will remain that way for at least a decadeespecially if the ambitious graduation targets of Indian education policymakers are realized.

Of course, there are problems in doing work long distance: Coordinating the work of global teams is costlier than coordinating such work locally. The intellectual property issues could be important. But offshoring is now tried and tested enough, and large corporations are deeply committed to it.

By 2010, many large multinational corporations like IBM (IBM) will have their largest workforces in India. This is creating a relatively rich ecosystem in a number of Indian cities, especially Bangalore.

Already, for a number of these firms, their Indian operations are being declared global centers of excellence, whose value goes well beyond just cost savings. Undoubtedly, some smaller firms have faced high initial costs, but even they, particularly the technology firms of Silicon Valley, have committed to Indian operations. Firms such as Infinera (INFNO) and HelloSoft have substantial Indian operations that are critical to their success. For them to retreat would require a major reorientation of their business strategy.

The appreciating rupee will, like rising wages, affect offshoring decisions. However, the Indian system integrators such as TCS, Infosys, and Wipro, which are also being squeezed by costs, have experienced profits rising at about 35% a year for the past decade and enjoy margins in excess of 20%. This provides ample room to absorb rising costs.

There can be little doubt that the Indian ecosystem is maturing. However, the growth of offshoring to India has not peaked.

Reprinted by permission from BusinessWeek.

SPRIE kicked off the fall quarter with two special events: first was a seminar on October 9 presented by Min Zhu, co-founder of WebEx, who spoke on "Beyond Beijing and High Tech: Chinese Entrepreneurship on the Edge." Min discussed the entrepreneurship scene in China and suggested that Silicon Valley venture capitalists investing there may be heading for trouble. John Boudreau covered the talk in the "Tech Notebook" section of the San Jose Mercury News.

Then, on October 10, Martin Eberhard, Tesla Motors' Co-Founder and President of Technology, spoke at the launch of the Stanford Entrepreneurship Network (SEN), a federation of organizations, including SPRIE, that focus on entrepreneurship acrosss the Stanford campus. Eberhard spoke of taking Tesla from the beginning stages of a start-up and formulated six lessons he learned from the experience. For more information about the SEN, visit the Stanford Entrepreneurship Network.

On October 2 FSI Acting Director Michael A. McFaul commenced FSI's annual orientation gathering for the 2007-08 academic year. After introducing new faculty and staff, McFaul turned the orientation over to scholars from CDDRL, CHP/PCOR, CISAC, Shorenstein APARC, the Program on Food Security and the Environment, and the Forum on Contemporary Europe, all of whom presented new research and outlined projects for the upcoming year.

CISAC senior research scholar Paul Stockton began with a presentation on "The Politics of Homeland Security," and was followed by Jean C. Oi, FSI senior fellow and director of the new Stanford China Program, who spoke about the Stanford Center at Peking University. Kathryn Stoner, CDDRL associate director for research, presented on "Promoting Democracy." McFaul moderated a panel discussion Q&A and, after a short break, introduced the second panel of FSI scholars.

CHP/PCOR core faculty member Grant Miller presented research that examines if "what people want" interferes with sound health policy in the developing world . New FSI senior fellow Josef Joffe discussed how America is both "a model and a monster" in the European consciousness; FSE Director Rosamond L. Naylor reviewed some of FSE's projects on biofuels and food security, and highlighted what they would be working on this upcoming year. Joffe, Miller, and Naylor each answered questions from faculty and staff before McFaul adjourned the 2007 orientation.

The Institute welcomes five new full-time faculty and two distinguished visitors in the current academic year. The latest additions represent consolidation of ongoing programs, such as those in homeland security and international relations and expansion of its research agenda into Asian comparative healthcare and issues in contemporary Europe.

Below are brief profiles of FSI's new faculty, all of whom have offices in Encina Hall.

Martha Crenshaw--FSI Senior Fellow, CISAC

Formerly a professor of government at Wesleyan University, Martha Crenshaw has a distinguished record of scholarship and policy engagement in the area of terrorism studies. Her early work on the National Liberation Front in Algeria 30 years ago made seminal contributions to the understanding of terrorist psychology and organizational structure, themes that are helping to animate the agenda for future research in the field. Her work with the U.S. Department of State and the intelligence community in the wake of 9/11 has played an important role in a major Department of Homeland Security grant she brought to Stanford this year.

Karen Eggleston--FSI Center Fellow, Shorenstein APARC and CHP/PCOR

Karen Eggleston joined Stanford from Tufts as an Asian comparative healthcare scholar whose work focuses on health systems and design incentives, especially in lower- and middle-income countries. She has co-authored Welfare, Choice and Solidarity in Transition: Reforming the Health Sector in Eastern Europe with esteemed economist János Kornai, which has been translated into Chinese, Vietnamese, Polish, and Hungarian. Her current research examines the Chinese healthcare system and how ownership factors affect hospital performance.

Siegfried S. Hecker--FSI Senior Fellow, Professor (Research), Management Science and Engineering, and Co-director, CISAC

Director emeritus of the Los Alamos National Laboratory, material scientist Sig Hecker became CISAC's co-director in early 2007. His research interests include plutonium science, nuclear weapons policy and international security, nuclear security, including nonproliferation and counter terrorism, and cooperative nuclear threat reduction. Over the past 15 years, he has fostered cooperation with the Russian nuclear laboratories to secure and safeguard the vast stockpile of ex-Soviet fissile materials.

Josef Joffe--FSI Senior Fellow, Forum on Contemporary Europe, and the Marc and Anita Abramowitz Fellow, Hoover Institution

A journalist-scholar and publisher-editor of the German weekly Die Zeit, Joe Joffe is in residence at Stanford during fall quarter. His work focuses on U.S.-Europe relations, and is noteworthy for its ability to bridge the worlds of journalism, academics, and policy analysis. He serves on several editorial boards and is a member of the International Institute for Strategic Studies. His work has been acclaimed through a number of awards, including Germany's Theodor Wolff Prize.

Phillip Lipscy--FSI Center Fellow and Assistant Professor, Political Science

Just completing his PhD in government at Harvard, Phillip Lipscy joins Stanford as a jointly held appointment in political science and FSI. His research focuses on international relations in Asia with particular attention to the domestic sources of foreign policy conduct. He is a comparativist with training in international relations, a rarity in the field of contemporary Japanese politics. He is bicultural, having grown up in Japan, and his foreign policy interests encompass the entire East Asia region.

William Howard Taft IV--The Warren Christopher Visiting Professor of International Law and Diplomacy, FSI and the Stanford Law School

Will Taft will be in residence at FSI and the Law School during the 2007-08 academic year as a visiting scholar and teaching Contemporary Issues in International Law and Diplomacy and Foreign Relations Law. Taft has held several private and public positions, including appointments at the Federal Trade Commission, Office of Management and Budget, and U.S. Department of Health, Education and Welfare. In 1981, he became general counsel to the Department of Defense followed by an appointment as the Deputy Secretary of Defense in 1984. Taft also served as U.S. ambassador to NATO and the U.S. Department of State's legal advisor, the highest legal position in the department. Taft is currently counsel in the office of Fried Frank Harris Shriver & Jacobson.

Alejandro Toledo--FSI Distinguished Payne Lecturer, CDDRL

Having overcome extreme childhood poverty, Alejandro Toledo became the first Peruvian president of indigenous descent to be democratically elected in 500 years. During his presidency, the Peruvian economy registered one of the fastest growing economies in Latin America. The central aim of his presidency was the fight against poverty through health and educational investment. Toledo will be in residence at CDDRL during the 2007-08 academic year. His work will be showcased in a series of talks, workshops, and other activities as part of his Payne lectureship.