Asean Reaps Rewards as Clinton Counters China

Posted on July 10, 2012


Hillary Clinton, U.S. secretary of state. Photographer: Andrew Harrer/Bloomberg

Southeast Asia’s growing economic importance is fueling a strategic competition among major powers, prompting the U.S. to step up its engagement in the region of 600 million people to counter China.

U.S. Secretary of State Hillary Clinton will visit Vietnam and Laos this week before she heads to Cambodia to join envoys from 25 Asia-Pacific nations and the European Union for an annual security meeting. She’ll also announce “very substantial new resources” for nations along the Mekong River, Assistant Secretary of State Kurt Campbell said on June 27.

U.S. allies Japan and South Korea are also pursuing closer ties in Southeast Asia to counter China’s influence in a region where economic growth rates are among the world’s highest. Defense Secretary Leon Panetta announced in May that the U.S. will deploy 60 percent of its naval power to the Pacific by 2020 as China’s growing economic and military might causes friction with its neighbors.

“Southeast Asian countries actually like a bit of creative tension between the U.S. and China because they can play one off against the other and derive benefits,” said Ian Storey, a visiting research fellow at the Institute of Southeast Asian Studies in Singapore. Greater economic integration means “a major conflict is out of the question because it’s in no one’s interest and the stakes are too high,” he said.

Asean Expansion
Five economies in the Association of Southeast Asian Nations — Indonesia, Thailand, Philippines, Malaysia and Vietnam — along with China and India will outpace the rest of the world over the next two years, the International Monetary Fund said in an April report. In 2013, the Asean-5 will grow 6.2 percent, compared with 2.4 percent in the U.S., 0.9 percent in the Euro area and 1.7 percent in Japan, it said.

“The United States is making substantially increased investments — diplomatic, economic, strategic, and otherwise — in this part of the world,” Clinton said yesterday in a speech in the Mongolian capitol of Ulan Bator. “The heart of our strategy, the piece that brings everything together, is our support for democracy and human rights.”

The U.S. is negotiating a nine-country trade deal that includes four Asean nations, and eased sanctions in May against Myanmar, formerly known as Burma, which has taken steps toward democracy after about five decades of military rule.

“This is a watershed moment for Burma and the United States stands ready to facilitate economic engagement,” David Adelman, the U.S. ambassador to Singapore who will lead a trade mission to Myanmar next month, wrote in an e-mail. “Southeast Asia is one of the focal points of the world’s economy right now and Burma is a market with tremendous growth opportunity.”

China’s Rise
U.S. moves to boost economic ties with Asean come after China replaced it as the 10-member bloc’s biggest trading partner over the past decade. China accounted for 11.3 percent of Asean’s total trade in 2010, compared with 9.1 percent for the U.S., the group’s data show. In 2000, U.S. trade represented 16 percent of Asean’s total, compared with 4 percent for China.

For all their economic expansion, the Asean nations remain overshadowed by China as a U.S. partner. The U.S. traded $503 billion in goods with China in 2011, more than two-and-a-half times the combined $194 billion traded with Indonesia, Thailand, Philippines, Malaysia, Vietnam and other Asean nations, according to the U.S. Census Bureau.

“The sheer volume of trade between China and the U.S. dwarfs anything that happens in Southeast Asia,” said Jeremy Haft, the founder of BChinaB Inc., which helps U.S. companies buy and sell goods in China. “Our mega-corporations have spent 15 years lining the supply chains and the logistics.”

Not Fragile
China remains the “premier dynamic trade relationship” for the U.S., said Haft, a member of the Council on Foreign Relations.

“It’s not so fragile that we can’t do business in the region,” Haft said in an interview. “I applaud Secretary Clinton for her recent maneuvering in the region. It’s the right message to China: We are strong there and will stay there.”

Nor does the U.S.’s plan to “rebalance” its military strategy toward the Asia-Pacific region signal a willingness to tangle head-on with China, a fellow nuclear power, according to Catharin Dalpino, a visiting scholar on South East Asia at Johns Hopkins School of Advanced International Studies in Washington.

“I don’t really think U.S. policy is intended to give false confidence to countries in the region” to act aggressively toward China, Dalpino said.

Territorial Claims
China’s economic importance has prevented Asean from forming a common position on issues such as territorial disputes in the South China Sea, according to Zhu Zhiqun, a professor at Bucknell University in Lewisburg, Pennsylvania. Vietnam’s state- run oil explorer warned China last month to halt efforts to develop disputed waters that Hanoi’s leaders already awarded to companies including Exxon Mobil Corp. (XOM) (XOM) and OAO Gazprom.

Asean nations with no competing territorial claims see “their relations with China as probably more important than their relations with the Philippines, Vietnam or Brunei,” said Zhu, who is currently at the National University of Singapore’s East Asian Institute. “They may not openly support China in this dispute, but the understanding is that they don’t want to offend China.”

Philippine President Benigno Aquino said last week he may seek help from the U.S., a treaty ally, to help monitor intrusions in the South China Sea.

‘Without Threats’
“We have a national interest, as every nation does, in the freedom of navigation, in the maintenance of peace and stability, respect for international law, and unimpeded, lawful commerce in the South China Sea,” Clinton said July 8 in Tokyo. “Therefore we believe the nations of the Asia Pacific region should work collaboratively and diplomatically to resolve their disputes without coercion, without intimidation, without threats, and without conflict.”

China will work with individual countries involved in the dispute, Vice Foreign Minister Cui Tiankai said last week in Hong Kong, adding that the U.S. had no claims in the waters.

“We respect the role of Asean as being the ‘driver’ in East Asia cooperation,” Cui said. “China has never coveted dominance on regional affairs and we don’t think anyone should ever try to.”

Asean member states reached an agreement yesterday on a Code of Conduct in the South China Sea, and will seek talks with China, Kao Kim Hourn, an official with Cambodia’s foreign ministry, said in Phnom Penh.

“Right now what we have done was agreed on the key elements from Asean only,” Kao Kim Hourn said. “From now on, they have to start discussions with China.”

Mekong Nations
China, which implemented a preferential trade agreement with Asean in 2010, has established a state-backed private equity fund to invest in Southeast Asia’s infrastructure, energy and natural resources that aims to have $10 billion in assets under management. Its $6 trillion economy is about 15 times the combined size of others in the Greater Mekong Subregion, which includes Myanmar, Cambodia, Laos, Thailand and Vietnam.

The U.S. began the Lower Mekong Initiative in 2009 to boost ties with Cambodia, Laos, Thailand and Vietnam on health, education, the environment and infrastructure. After convening that meeting, Clinton will take executives to meet business leaders at a forum in Siem Reap, Cambodia.

Japan began similar meetings with Mekong nations in 2009 and in April pledged to invest 600 billion yen ($7.5 billion) in infrastructure over the next three years. South Korea last year held its first-ever meeting with representatives from countries along the river and is seeking further cooperation.

Dilute Efforts
Without proper coordination, the various development plans could dilute efforts by multilateral lenders such as the Asian Development Bank to get the highest return from aid money, according to Stephen Groff, a vice-president with the government-backed lender. At the same time, the increased interest is natural given the economic uncertainty in the U.S. and Europe, he said.

“It is the region of the world that is likely to be driving economic growth for the medium to long term,” Groff said in an interview. “As much as there are issues around China, it’s also the fact that this is where it’s going to be happening in the next 50 years, and these governments recognize that.”

Daniel Ten Kate

Japan Steps Up to the South China Sea Plate

Japan’s Self-Defense Force (above) is throwing a line to the Philippines.

The Philippines and Vietnam have been raising a storm about China’s assertiveness in the South China Sea, but they’re not the only ones voicing worry. Japan has been playing a relatively quiet, though significant role. It may not have a direct stake in the Paracel or Spratly Islands, but the world’s third-largest economy has every interest in ensuring tensions don’t swell. Increasingly Tokyo is acting on that interest.

At this week’s Association of Southeast Asian Nations (Asean) Regional Forum in Phnom Penh, Japan’s foreign minister intends to express serious concern at recent developments, press the parties to clarify their maritime claims and fast-track diplomatic solutions. While this intervention will be welcomed by Southeast Asian countries like Vietnam, it will almost certainly exacerbate friction in Sino-Japanese relations.

It’s significant that Japan is willing to antagonize China over a territorial dispute in which Tokyo has no direct stake (notwithstanding its own, separate territorial frictions with Beijing). Tokyo has always kept an eye on the South China Sea, but it was not until tensions began to ramp up after 2008 that it felt the need to take a more proactive approach to the dispute. It’s now going to the next level by directly confronting China.

Japan has two major concerns here. For one thing, low-level tension could escalate over time into a larger conflict that disrupts maritime traffic. This is bad news for Tokyo’s economic security, since the South China Sea lanes carry Japanese goods to lucrative markets in Southeast Asia and Europe, and 90% of Japan’s crude oil imports pass over those waters.

The other problem is that if Beijing intimidates its way into dominance of the South China Sea, it could replicate that tactic in the East China Sea—where Japan and China directly bicker over territory. If China coaxes or coerces its Southeast Asian neighbors into accepting the questionable justifications for its claims to sovereignty and “historic rights” in the sea, existing legal norms such as the 1982 United Nations Convention on the Law of the Sea will be undermined. This could dilute Japan’s claim to ownership of the Senkaku Islands (which China calls the Diaoyus) in the East China Sea, if Beijing decides to use similar arguments.

Moreover, Beijing might calculate that just as its belligerence worked in one region, it could work in another. Chinese brinkmanship could provoke a major military and diplomatic crisis in Sino-Japanese relations.

This explains Japan’s determination to play a leading role in managing the South China Sea crisis, and using multilateral forums is one way for it to do so. Tokyo has used summits with Asean to call for “peace and stability” in the seas. More importantly, it has pledged to strengthen cooperation between the Japan Coast Guard and its counterparts in Southeast Asia. This is important because in general disputants have used their coast guards, rather than naval warships to press their claims in the South China Sea.

Japan also suggested recently that membership of the annual Asean Maritime Forum be expanded to include some of Asean’s dialogue partners—such as Australia, India and the United States. Japan views this forum as a useful venue to strengthen existing international-law frameworks and develop dispute resolution mechanisms for settling South China Sea claims. This would also boost the presence of liberal democracies at the table. The trouble here is Asean, some of whose members have reacted cautiously in the fear of antagonizing China.

This isn’t to say Japan is entirely satisfied working only through Asean. Tokyo is increasingly frustrated at Asean’s inability to manage the crisis, although it continues to voice strong support for the organization’s efforts. Japan wants to ensure that Asean stands united and opposes individual members cutting deals with China—since it knows Beijing will have the upper hand in that scenario.

So Tokyo also will pursue a bilateral course with some partners in the region. It has reached out most to the Philippines, which it fears is the weakest link in Asean thanks to its underdeveloped military. Tokyo is now bolstering the capabilities of the Philippine Coast Guard, and has agreed in principle to transfer up to 10 patrol boats to enhance its maritime surveillance capabilties.

The two sides have also begun boosting military ties. Regular dialogue has already started, and this year Japanese naval vessels visited the Philippines to take part in training exchanges and humanitarian missions. Besides the Philippines, Japan has agreed to upgrade defense relations with Vietnam and taken part in discussions with Singapore, Malaysia and Indonesia.

China can oppose other major powers from “meddling” in the South China Sea dispute all it wants, but its own actions have forced Japan to “meddle.” Tokyo seems resolute on helping South East Asian countries find a favorable resolution, even if that means some sparks fly as a result of this week’s Phnom Penh summit.

Mr Ian. Storey is senior fellow at the Institute of Southeast Asian Studies, Singapore. He is the author of “Southeast Asia and the Rise of China: The Search for Security” (Routledge, 2011).

Black gold in South China Sea

It was at the LAX airport two years ago on our way to SFO from HNL that I noticed my seatmate in the waiting room reading a Chinese newspaper. I asked where in China he was from. He gave me a noticeably mean look and huffily declared: “I am not Chinese; I am Vietnamese!”

Vietnam, previously known as Namyue, the people of the South (Nam) also known in China as Yuenan, had its language written in Chinese characters until 1945 when its rulers, with French support, started writing in the Vietnamese written language. With China’s island province of Hainan (Hai = sea, nan = south) in the gulf of Tonkin and Yunnan, the southernmost province of China, near Yuenan, these tell a lot about the ethnicity and relationship of Vietnam to China.

Though independent from direct Chinese rule since the end of the first millennium on the Gregorian calendar, the Kinh/Lac people that constitutes more than 80 percent of Vietnam are kin to the people of South China. With the French under Vichy rule during WWII, Vietnam was handed over to Axis partner Japan but Ho Chi Minh made sure that Vietnam and the rest of French Indochina would not revert back to France after WWII hostilities.

In any case, however we read the history of the islands, except for a brief eyeing of France over the Spratleys (Nansha to the Chinese) and Parecels (Xisha to the Chinese), a 1958 communiqué from North Vietnam to China’s Zhou Enlai, affirmed that both island group are territories of China. Historically, the islands of the South China Sea were recognized by the surrounding sovereign states as belonging to China, save for European and U.S. intrusion that salivated over the prospects of carving out mainland China.

When oil deposits were discovered in the South China Sea, the Philippines, Vietnam, Malaysia, Brunei, and Taiwan suddenly took interest in claiming shoals and islands as part of their sovereign territories. (BTW, the recent confirmation of natural gas in the Cagayan Valley where we spent our youth, and on the ocean slopes on the Pacific side of the Cordilleras, has enough to keep the Philippine National Oil Company busy and prosperous awhile.)

Too preoccupied with its internal survival since the ’50s, China had not developed anything on both island groups until the new claimants started building resident presence in the territories. After a war with Vietnam in the ’90s, China finally created a city in the Paracels, which is a part of Hainan.

Western oil companies have heretofore undertaken China’s offshore drilling, particularly in Bohai facing Tianjin and Huanghai by Qingdao, and the coast close to Shanghai. Like Japan that quickly appropriated Western technology in its industrialization, China developed its own drilling capability, and is now ready to drill in what it considers its sovereign territories in its continental shelf.

With peak oil (the point where the production of oil from known reserves plateaus) occurring in 2005 by oil companies’ reckoning, the sudden value of the islands of China Sea had gotten a premium rating. Japan even offered to buy one of the uninhabited islands geographically part of the Taiwan group but close to the Ryukyus. Oil remains a strong magnetic pull to sovereign ownership of territories along the continental shelf.

Now we have a proposal (long overdue) from China. In the disputed islands between China and Vietnam, nine lots had been declared open for international drilling by interested investors. Vietnam not too long ago scurried to enter into contracts with drillers to locate oil in claimed territories. The U.S. sides with Western companies operating in claimants’ area, and the Philippine Cabinet just went into an emergency session on what to do since they have an active claim on the Spratleys as China recently showed naval muscle along the Scarborough (Haiyuan) shoals close to the Philippines that were briefly occupied by Filipino fishermen.

The U.S. wisely decided to stay neutral on the Haiyuan incident and China’s flexed naval muscle is accompanied by a concrete proposal on the table on how claimants, backed by global oil interests, can collaborate in exploring the undersea wealth of the area.

We wrote of the Jianglong submersible taking a dive at Challenger Deep in the Marianas Trench, reportedly timed immediately after the successful docking of Shenzhou 8 capsule with the Tiangong skylab. U.S. interest in the Marianas intensifies as bases in Korea and Japan are inevitably receding back to the Pacific. China is going solo in its explorations of outer space and the undersea after being shunned by the international community under the instigation of the U.S.

Meanwhile, the laurel of commercial collaboration had just been extended by China whose behavior so far to trust but verify in a basic stance of balance and harmony is out-Reagan-ing the American cowboys. This is potentially good for everyone. It alleviates China’s overheated real estate market from further investments, being an overpriced and underperforming asset. It opens investments into a commodity where demand now outstrips supply.

China is offering to dance. Any interested fleet-footed sails out there?

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Jaime R. Vergara ( previously taught at San Vicente Elementary School on Saipan and is currently a guest lecturer at Shenyang Aerospace University in China.

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