REPORT BY MARITIME INSTITUTE OF MALAYSIA BALANCING PRIORITIES OF THE INDO-PACIFIC: CONNECTIVITY & PROSPERITY (2020) MARITIME INSTITUTE OF MALAYSIA Introduction Hosting Track Two Forums is one of MIMA’s regular activities – we gather experts, policymakers, and think-tank analysts to discuss matters concerning maritime affairs including strategic, security, economic, environmental issues as well as regional affairs such as the Indo- Pacific region. The objective is to share ideas and to promote exchange among experts as well as to share updates about their respective think-tank’s forays. ASEAN has taken a leadership role in publishing the ASEAN Outlook on the Indo-Pacific, based on the principles of inclusivity and openness. In this regard, there is a huge opportunity on the economic component of the region as current developments provide a more strategic lens rather than economic progress. The Webinar aimed to assess current developments in the region and the efforts by Indo-Pacific partners in promoting peace and stability, as well as enhancing post- pandemic maritime connectivity. Objectives (i) To develop a way forward by examining current Indo-Pacific partners’ approach on maintaining stability in the region aimed towards peace and fewer tensions in the region (ii) To explore opportunities to enhance economic growth in the wake of the pandemic, particularly in the realm of the Indo-Pacific 1
The conference report is a summary of speeches, presentation, ideas and exchanges made during the Webinar. MIMA appreciates the speakers of this Webinar; this report has included their contribution and acknowledged views from the following scholars, policy planners, and experts: Assoc. Prof. Dr Kuik Cheng-Chwee from the National University of Malaysia (UKM); Norhasliza Mat Salleh, the Deputy Under Secretary of the Maritime Division, Ministry of Transport Malaysia; Dr Vijay Shakuja from India; Prof. Kikuchi Tsutomu from the Japan Institute of International Affairs (JIIA), Dr Shafiah Muhibat from the Centre Strategic and International Studies (CSIS), Indonesia; Dr Lai Thai Binh from the Diplomatic Academy of Vietnam (DAV), Vietnam; Ashley Johnson from the National Bureau of Asian Research, United States; and Prof. Alan Chong from the Rajaratnam School of International Studies (RSIS), Singapore. Conclusion Much has been said about maritime geopolitics and strategies, compared to economic and investment opportunities presented in the Indo-Pacific region. The Indo-Pacific strategy and construct has given detailed exchanges on the US-China binary. Meanwhile, Japan and Australia are playing leadership roles that bridge the gap between the US and China. However, small states also have agency, interests and preferences – there is a need for small states to play a role in avoiding the trap of great power rivalry, to pull both extremes back into the middle. ASEAN, Japan, and Australia fully share fundamental principles such as the rule of law, openness, freedom, transparency, and inclusiveness. ASEAN’s role for regional peace and prosperity must be enhanced and “centralised” within the interlinked institutional networks with other institutions. ASEAN could enhance its institutional effectiveness by cooperating with other institutions. One of the promising institutions is the QUAD. REPORT PREPARED BY SUMATHY PERMAL & NORSYIHAN JAMAL VIRTUAL CONFERENCE PROCEEDINGS 2
Datuk Dr. Sabirin Ja’afar Director-General of Maritime Institute of Malaysia (MIMA) Nations across the globe are facing unprecedented circumstances and no one has been excluded from the dangers of COVID-19. The pandemic has made serious interferences into our daily lives, however, we are keeping proactive by providing a platform for maritime dialogue while keeping up with the new normal. The way we work has shifted faster than anyone could have predicted. In this crucial time, we have to be flexible and creative to determine a better way to work through the crisis and beyond. MIMA continues to address important issues on regional and international maritime affairs, including the Indo-Pacific. MIMA was able to put this conference together with support from the Embassy of Japan and the Australian High Commission in Kuala Lumpur. The Track-II platform is intended to explore the development of balancing priorities within the context of the Indo-Pacific’s peace, stability, and maritime connectivity. Two key aspects of the developments that we hope will be deliberated are: First, the 2019 ASEAN Outlook on the Indo-Pacific that was adopted primarily to contribute to the maintenance of peace, stability, freedom, and prosperity in the region. The Outlook commits to ASEAN's engagement in the Asia-Pacific and the Indian Ocean regions. As such, current policy direction in the region and the efforts by Indo-Pacific partners should be directed towards promoting peace and stability, and in upholding the rules-based regional security to prevent 3
escalation of great power rivalries. In this respect, I am keen to hear proposals as to how countries can de-escalate the power rivalry and soften the conception of a QUAD-like construct that may create anxiety and ambiguity, not only for China but also ASEAN as a whole. Second, the maritime space of Asia-Pacific is a closely integrated and interconnected region. It is thus essential that the Indo-Pacific and ASEAN cooperate towards accelerating the region’s economic growth, more so in the time of this pandemic. It is paramount to enhance maritime connectivity and to re-energise the region from the economic crisis. Examination on the prospects for such efforts to promote ideas on multilateral partnerships in maritime trade, shipping, and connectivity is a must. With 38 countries comprising 65% of the world population, and 62% of the world’s GDP, the region has a lot of unrealized opportunities. Hence, a discussion on how to strengthen the economic integration through a comprehensive approach, and how the Indo-Pacific will feature in regional economic and infrastructure, as well as finding ways to re-energise affected economies is much-needed. Much has been said about maritime geopolitical and strategies, compared to economic and investment opportunities presented in the Indo-Pacific region – which I think is crucial to ease the tensions in the region. MIMA wishes to thank the Ministry of Transport Malaysia, the Embassy of Japan, the Australian High Commission, and representatives of foreign missions in Kuala Lumpur who had contributed directly and indirectly towards shaping the discourse on the Indo-Pacific. MIMA pledges to contribute to this effort by moving together in a spirit of cooperation to ensure that Malaysia as a maritime nation continues to play its role as an important economic, environmental, and social hub, serving the local, regional, and international community. 4
H.E. Ambassador Hiroshi Oka Ambassador of Japan to Malaysia The COVID-19 pandemic disrupted almost every aspect of our livelihood – the movement of goods and movement of people. But the severity of the disruption has made us realise the importance of connectivity for economic growth and the prosperity in the region. It is timely and fitting to discuss the aspect of prosperity and connectivity under the vision of “Free and Open Indo-Pacific (FOIP)” so that we can fully understand its concept and its significance to the region. The new Japanese Prime Minister Yoshihide Suga is making an overseas debut by visiting Vietnam and Indonesia as soon as he assumed the premiership. For the last eight years, he was the right- hand of former prime minister Shinzo Abe, therefore the assumption is that a major policy change is unlikely under his premiership. In fact, Vietnam and Indonesia were the same countries selected by Shinzo Abe for his first overseas visit. By visiting Southeast Asian countries first, Prime Minister Yoshihide Suga demonstrated his firm commitment to the region and his unwavering commitment to the FOIP. In his first policy speech overseas in Hanoi, he stated that ASEAN and Japan fully share fundamental principles such as the rule of law, openness, freedom, transparency, and inclusiveness and that he strongly supports the ASEAN Outlook on the Indo-Pacific (AOIP), as it shares many fundamental commonalities with the FOIP. He assured that he will work hand-in-hand with ASEAN as equal partners to establish the rule of law in the seas. Japan is working with ASEAN partners so that they may cooperate on concrete projects in line with the principles of FOIP and AOIP. 5
It is gratifying to notice that the concept of FOIP has been steadily accepted by the international community, including Europe and North America. Not to forget, the importance of Africa, where former prime minister Shinzo Abe had launched his vision for the FOIP during the Tokyo International Conference on African Development VI summit in 2019. Further, the summit welcomed “G20 Principles for Quality Infrastructure Investment” from the G20 Osaka Summit, which mentioned the importance of ensuring debt sustainability when discussing principles for quality infrastructure to bring about physical connectivity. FOIP is not about bringing division in the region. On the contrary, it is intended to be a unifying vision, which will unite the region around the rule of law and enhancing connectivity to achieve safety, security, and prosperity. Japan wishes to continue expanding cooperation for FOIP and AOIP with all countries in the region, as the concept is open to any that uphold such principles. Concerning the connectivity, Japan has promoted hard connectivity by bringing about “quality infrastructure”. The Terminal One Building of the Kuala Lumpur International Airport has been constructed through G2G cooperation with Malaysia. Japan had also completed the first trans-state raw water transporting underground pipeline, the longest among ASEAN countries, to alleviate the water shortage in Klang Valley. In addition to such “physical” connectivity, Japan has also made similarly eager efforts to enhance “institutional” connectivity or “soft” connectivity. These would include putting in place regional trade and investment arrangements which Japan has been pursuing with ASEAN partners to reduce tariff and non-tariff barriers, and people-to-people exchanges for education and human resource development. Japan considers soft connectivity as important as hard connectivity for achieving prosperity in the region. Particularly in the light of the disruption that regional and global supply chains have suffered from due to COVID-19, it would be imperative to strengthen the resilience of supply chains by enhancing connectivity post-COVID-19. The Look East Policy will reach its 40th anniversary in 2022. Under the policy, more than 8,000 Malaysian students have studied in Japan, and about 18,000 received training in Japan. They are 6
now at the forefront of the Malaysian society both in the government and in business. Through G2G cooperation, Japan established the JMTI (Japan Malaysia Technology Institute) in 1998, and the MJIIT (Malaysia Japan International Institute of Technology) in 2011 to bring about Japanese- style engineering education in Malaysia. Additionally, Japan has been conducting capacity building with the Malaysian Maritime Enforcement Agency (MMEA) and the Royal Malaysian Customs Department, sharing their experience for border security and control and smoother customs clearance. There are many footprints of effort to enhance connectivity in the region, and they are integral to the concept of FOIP. Japan strives to deepen its shared understanding of the FOIP, so that it may work together to take concrete steps in bringing about the vision of the FOIP and AOIP. H.E. Andrew Goledzinowski Australian High Commissioner to Malaysia In a time of rapid changes, the maritime space is a determiner of security and prosperity. This has been true since ancient times, through the colonial period, World War II and afterwards – the maritime space has always been significant to states in the Indo- Pacific region. What has changed in more recent times is the existence of a framework of rules and laws around which we operate, to maximise the benefits of using maritime routes for communication and 7
transport, and to minimise potential difficulties. However, this does not mean problems have disappeared, only that there are new means to address these problems, and that we must often do so in more creative ways. There are two points to add some thoughts and discussion among the panellists. The first is that the notion of the biggest threat to the region is the competition of great powers. Competition, even rivalry, among states is the norm and is something diplomats are familiar with. It happens in this region and other regions, and between great powers and smaller powers. If it happens within a framework of rules that help to govern acceptable behaviour and avoid armed conflict, then competition is acceptable. The second point is about what will follow next. Malaysian Foreign Minister YB Dato’ Seri Hishammuddin Hussein has talked about the idea that once COVID-19 is over, we might look back and see that a new era of middle power diplomacy has begun; that maybe the great powers have somehow been diminished by the current circumstance and, that middle powers will be able to exert more influence. Great power is quintessentially a country able to unilaterally change its geostrategic environment. Middle power is a country not strong enough to do that unilaterally but can do so in concert with other middle powers. Small power is a country that cannot influence developments in its region and simply has to navigate them as best it can. Malaysia is a middle power. Days when Malaysia identified herself as a small country that cannot do anything and has to just await developments, has passed. ASEAN is at the core of this region and ASEAN itself is quintessentially about middle power diplomacy. Most of ASEAN countries are middle powers, as is Australia. What is important is that middle powers are prepared to exercise their will and understand they have agency. One country will dominate the region and what one can do is accept that and hope for the best – that is not the case. The reality is that will, not armed conflict, will be the big determiner of the future of this region. Do the middle powers in this region have the will to engage in activities and discussions – like middle power diplomacy and coalition building – that will enable them to navigate and come out the other side more or less intact, with a system of rules and 8
mutual respect for sovereignty? It is an important question to ask because a lot hinges on how that discussion plays out in forums like this. One last point is that this forum will examine not just what will happen in the next few weeks and months but beyond that. There is of course much at stake in what happens in the short term; if countries like Australia and Japan were to cease navigating the waters or overflying the skies of the region, there would be significant consequences for the regional countries’ economic and sovereignty aspirations. But let’s look beyond the next weeks, months, and years, to the middle of this century. What has been told is that by mid-century, the economies of the great democracies of this region (Japan, India and Indonesia) will combine to be twice the size of the US or Chinese economy, and their population combined will also be twice the size of China’s. How will the region look by the middle of this century then? It is only thirty years away. It would be interesting to hear the panellists’ views about that. EFFORTS TO PROMOTE PEACE AND STABILITY IN THE INDO-PACIFIC Moderator: Assoc. Prof. Dr Kuik Cheng-Chwee, Head, Centre for Asian Studies, IKMAS, National University of Malaysia (UKM) India’s Efforts to Promote Peace and Stability in the Indo-Pacific 9
Dr Vijay Sakhuja New Delhi, India India plays an important effort in promoting peace and stability in the Indo-Pacific. Although there are different interpretations of Indo-Pacific based on geography, and perspectives vary on the strategic forum of Quadrilateral Security Dialogue (QUAD), the conditions are based on several factors such as competing political priorities, economic interests and changing strategic perspectives of regional and extra-regional powers that have been a catalyst for the formulation of the idea of an “Indo-Pacific”. The Indo-Pacific is characterised by a general sense of insecurity – Asian powers are beginning to be more proactive in the security domain as they are confronted with competition and rivalry. Amidst this competitiveness, there is a visible sense of responsibility among ASEAN whose Vision-Outlook is that the Indo-Pacific must focus on maintenance of peace by making the region stable, secure, and prosperous. This sense is reflected in aspects of ASEAN’s Indo-Pacific formulations including their objectives, mechanism, and the pillars on which they are built. More so with the economic imperatives among Indo-Pacific countries, the Resilient Supply Chain Initiative (RSCI) post-COVID-19 in particular, the Regional Comprehensive Economic Partnership (RCEP), and the Blue Dot Network initiative that was announced at the Indo-Pacific Business Forum in Bangkok, Thailand, in 2019. Further, the Indo-Pacific has emerged as an arena of power shift leading to alignments in different aspects such as politics, economics, and strategy. As such, the Indo-Pacific is mixture matter of perception of international relations of constructivism and realism. The shifting power structure 10
will lead to a shift in alignment across countries, in the form of a Quadrilateral Security Dialogue Asia, likely shaping the geopolitical dynamics of the region, and which the Asian security architecture may evolve into. Beyond the US-China Narrative: An Alternative Conception for the Rules-based Multipolar Order in the Indo-Pacific Prof. Kikuchi Tsutomu The Japan Institute of International Affairs (JIIA), Japan There seems to be a variety of Indo-Pacific Visions that emphasise normative aspects and have noted that the rules-based regional order is in jeopardy during this critical moment. In this regard, the Indo-Pacific is beyond the framework of major power relations and should focus on Asia. As Japan’s new Prime Minister Yoshihide Suga emphasised in his speech in Hanoi, Japan will continue to seek to realise its FOIP vision as a key foreign policy agenda. There are possibilities for QUAD-ASEAN cooperation to enhance the rules-based order. ASEAN has emphasised the need to enhance the rules-based framework as adopted in the ASEAN Outlook on the Indo-Pacific (AOIP) in 2019. The Indo-Pacific is a principle beyond the US-China narrative as the framework should not entirely rest on major powers, other countries should step up to sustain the rules-based order. Countries located along strategically important sea lanes of communication in the Indo-Pacific have the potential to be economic, political, and military powers. Asia can play an important role in supporting a stable balance of power, as potential conflicts must be restricted to strengthen economic cooperation. 11
To achieve multipolar rules-based order, the Indo-Pacific must be sustained by a stable balance of power, and destructive effects on the regional order must be contained even though conflict is inevitable. This can be achieved through strengthening the collective capability of “the rest of Asia” to address the issues relating to the rules-based order. There is a huge opportunity for QUAD-ASEAN collaboration. QUAD is one of the solid platforms in the rapidly changing Indo- Pacific, it is not intended to be a collective defence arrangement (alliance) against other major powers. QUAD-ASEAN cooperation has the potential to provide a collective platform for engagements more compatible with international rules and norms along with ASEAN. ASEAN’s role in regional peace and prosperity must be enhanced and “centralised”, it could enhance its institutional effectiveness by cooperating with other institutions. One of the promising institutions is the QUAD. Ongoing Challenges of Peace and Stability in the Indo-Pacific Dr Shafiah Muhibat Centre Strategic and International Studies (CSIS), Indonesia There are ongoing challenges after the ASEAN Outlook on Indo-Pacific (AOIP) was adopted. It includes various contradictions and disagreements on how to view the Indo-Pacific among ASEAN: With 10 different countries and many different ways of conveying their foreign policy. AOIP does not provide responsive measures in the case of conflict escalation and diverges from the issue of strategic competition. Overall, AOIP is less a security-driven phenomenon and focuses more on the link between economic and connectivity constructs. Although AOIP is not a legal document, it serves as a regional consensus, best to be viewed through the lens of constructivism. 12
There is building cooperation in the era of the pandemic, ASEAN particularly has highlighted a multilateral spirit in virtual platforms despite having less resource, restricted movement, and the preoccupation with managing the outbreak in their respective countries. Some countries have shifted their attention to bilateral ties rather than investing resources on multilateral efforts. The real concern is that there is an increased tendency to seek unilateral measures in foreign policy. It takes more effort to conduct multilateral relationships in the provision of vaccine, for example, which would be less cost and effort through bilateral channels. Hence, multilateral forums are essential to keep countries’ openness, reject disorderly unilateral policies, and open more collaborations in terms of capacity to respond to health emergencies. EFFORTS TO PROMOTE PEACE AND STABILITY IN THE INDO-PACIFIC Moderator: Norhasliza Mat Salleh, Deputy Under Secretary of Maritime Division, Ministry of Transport, Malaysia Importance of the South China Sea to the Development of the Indo-Pacific Dr Lai Thai Binh Diplomatic Academy of Vietnam (DAV), Vietnam 13
The South China Sea is an important maritime space in the Indo-Pacific. The role of the region is increasing in the form of cooperation, particularly in promoting economic development and stabilising the region. There are also great economic opportunities in the South China Sea, however, the opportunities face hindrances due to three factors. First, unilateral acts that undermine the status quo in the South China Sea; second, cooperation agreements that face deadlocks; and third, the COVID-19 pandemic. Despite these challenges, there have been many efforts such as the ASEAN statement on the South China Sea, particularly reaffirming the 1982 UNCLOS as a basis for sovereign rights, in response to the claim for the South China Sea. Cooperation mechanisms such as APEC and the G20 continue to exert important effects in promoting regional cooperation. Moreover, there is growing interest to cooperate on issues such as the marine environment, education, and response to climate change. There is optimism that QUAD will increase efforts to promote cooperation across various countries. Vietnam has had a consistent policy in maintaining peace and stability and promoting development cooperation in the Indo-Pacific and Southeast Asia. In this respect, countries are urged to double their efforts in promoting peace in the South China Sea, focus on the QUAD Plus, and drive more progress in Science and Technology cooperation post-COVID-19. Fortifying the ASEAN-US Energy and Economic Partnership Ashley Johnson The National Bureau of Asian Research, US Concerning the Indo-Pacific’s business framework, there are opportunities for an ASEAN-US in energy and economic cooperation. The US aims to create open and transparent markets that improve economic outlook and access to energy in the region, under the Indo-Pacific strategy. In 14
an additional challenge throughout COVID-19, many countries struggle to keep up with rapid urbanisation, the impact of climate change, and the limited access to finance and investment for necessary repairs and upgrades. Policymakers must address both the concerns for economic growth and social welfare. In this regard, the US’s Indo-Pacific strategy is one of the key pillars for cooperation and enhancing economic prosperity that is then divided into three subcategories: infrastructure, energy, and digital activity. This initiative has four key pillars: strengthening energy security, creating open and transparent energy markets, improving fair and reciprocal trading relationships, as well as expanding energy access. The potential avenues for cooperation presented in the abovementioned policy and strategic initiatives set an important tone for the future of the ASEAN-US energy and economic partnership. However, it remains vital that policymakers in the US and ASEAN continue building and improving these channels for cooperation to strengthen regional and international energy security and connectivity. Looking ahead, several key factors will influence this partnership and thus require careful consideration. Identifying solutions will create options for engagement, rather than forcing alliances. As regularly emphasised in the abovementioned US initiatives, they aim to create a level and competitive playing field and encourage the engagement of the private sector, from multinational corporations to small and medium enterprises with local knowledge and expertise. However, the private sector also needs a clear understanding of the expectations and opportunities being created in the US and Asia. Understanding how the public sector is managing risk and ensuring transparency is critical, and in light of the ongoing pandemic, strong public-private partnerships will be even more important for recovery efforts. Finally, as cooperative efforts to increase energy access and build up economies across the Indo- Pacific continue to increase, dialogues should not be limited to national governments alone. Representatives from regional, national, and local governments like community leaders; experts from energy efficiency, oil, natural gas, coal, renewables, nuclear, and alternative fuel, and technology sectors; and scholars and researchers, are all important to include in these conversations moving forward. There will not be a way to minimise negative impacts, navigate 15
complex geopolitical and economic dynamics, and build lasting partnerships without actively listening and understanding the unique challenges each relevant stakeholder faces. Free and Open Indo-Pacific: Beautiful Vision on Paper Prof. Alan Chong Rajaratnam School of International Studies (RSIS), Singapore The Pacific and Indian Ocean rim as a potential integrated market for multidirectional trade, investment, and finance. The confluence of the two seas evokes an act of deliberate “re-centring” of the political centre of gravity in the new Asia. A visionary map reveals large circles of overlap between the Pacific rim economies and those of the Indian Ocean. To this, the Indo-Pacific is a vague vision of geoeconomics and geopolitics that has yet to be made tangible. The concept is an additional layer of Asia Pacific Trade Agreements as existing platforms, including the Regional Comprehensive Economic Partnership (RCEP). RCEP alongside the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), have potential as free trading economies serving as a hub to drive intra-Asian prosperity. Further, the economic turmoil caused by the pandemic has exposed much vulnerability in the supply chain. Nevertheless, the majority of Asian economies are the base of free trade arrangements that are likely to restore prosperity and normalcy once the COVID-19 vaccine is developed. Generally, the rate of economic growth is affected by the number of infections of COVID-19, resulting in significant loss of current and future jobs. Many multilateral arrangements have the potential to build positive momentum in the region, particularly in the distribution of vaccines and 16
keeping the supply chain going. ASEAN as the sub-region sets the tone for moderation and trade connectivity. ASEAN has signed up to the ASEAN Recovery Fund conceived out of the ASEAN Plus Three forum that shows that an economic recovery hub linking Northeast and Southeast Asia is already a reality. Conclusion The Indo-Pacific shall not be led solely by one country and it is crucial not to associate the Indo- Pacific with strategic presence alone. It must be opened and led by ASEAN centrality towards a more constructive destination. Generally, the opportunities for cooperation in the Indo-Pacific is great, however, there is a need a more specific formulation on ways to enhance the actual potential of an Indo-Pacific economic corridor. An Indo-Pacific corridor can reach Central Asia through the economic front despite challenges from the COVID-19. A Free and Open Indo-Pacific (FOIP) must be open-ended alongside the existing economic mechanisms. In this respect, APEC and Indo-Pacific initiatives are both important, and the concept of Indo-Pacific represents a region that can satisfy the new demand of certain countries. APEC and the Indo-Pacific are not mutually exclusive and are important to contribute to the development of both APEC and Indo-Pacific initiatives. Both could complement and better increase overlapping areas. There are degrees of institutionalisation, however, the Indo-Pacific might want to emulate these parts for open-ended, normative frameworks for economic integration. Although there are views that the formulation of QUAD within Indo-Pacific will be a concern, it is important to note that ruled based order is crucial and must be supported by major powers. QUAD has been described as bilateral, trilateral, and quadrilateral among four parties, and not stuck in time and its structure. This is because QUAD is an open-ended organisation and provides an opportunity for agencies to join. The power balance in the Indo-Pacific can be sustained by enhancing coordination between QUAD and ASEAN. Discussions also covered the need for vaccine cooperation with a sense of commitment among ASEAN countries. Vaccine cooperation will have a bright future ahead as COVID-19 diplomacy is shaping up. The formalisation of a cooperation structure for the Indo-Pacific has been discussed, 17
particularly on whether the cooperation would thrive better under an informal or a non-binding agreement. The maritime space of Asia-Pacific is a closely integrated and interconnected region. It is thus essential that the Indo-Pacific and ASEAN cooperate towards accelerating the region’s economic growth. Post-pandemic, it is more important than ever to enhance maritime connectivity and to re- energise the region from the economic crisis. Balancing priorities within the Indo-Pacific opens prospects for multilateral partnerships in maritime trade, shipping, and connectivity. 18
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