January 31, 2012 00:00 By Sarinna Areethamsirikul
In the aftermath of the Asian financial crisis in 1997, Asian countries realised that they were easily exposed to shocks and crises because of the free flow of capital and unregulated markets that were the fundamental policies of the so-called Washington
The one-size-fits-all economic policy drive towards a free market under the Washington Consensus was forcibly imposed on developing economies through aid and loans from the World Bank and the International Monetary Fund.
During the crisis, the Clinton administration decided to take its hand off the case, but China voluntarily stepped in and took its first major international leadership decision to manage the regional crisis. Since then, China’s power has been on the rise in Asia. With its rapid economic growth, China has also reached out to fulfill demands in other parts of the world as a major trader and financier, which accordingly is seen to be a challenge to the roles of the United States, the World Bank and the IMF.
Over the last decade, two wars in Iraq and Afghanistan have apparently distracted US interest and involvement in Southeast Asia. In 2007, the non-attendance of former US secretary of state Condoleezza Rice at the annual Asean Regional Forum, and of former US President George W Bush at the US-Asean Summit, unhinged the US’s relationships with Asean members. On the other hand, China has increased its presence through financial aid and investment projects on commerce and energy, and has promoted cultural and social programmes in the region.
For many policy-makers in Washington, rising China is an obvious threat to US power, especially at a time when the United States is losing its financial strength at home and its soft power and economic influence in many parts of the world. Unlike during the Cold War, the United States is not in a position to aggressively balance itself against potential new threats like China, even though its military remains the strongest in the world. In addition, the US and China are much more interdependent than they were twenty years ago.
President Obama’s new engagement policy in Asia, which promotes the use of “smart power” (a combination of diplomacy, commerce, militarism, cultural promotion and politics) to achieve its goals has so far received positive and enthusiastic reaction from Asean members. This is particularly true on the issues of the South China Sea, Burma’s apparent democratisation, and Chinese influence in Mekong region – because the Asean members do not fully trust China on these issues and have concerns about Chinese aggression and unilateralism in the region. However, what Asean does not want to see, and what should not be allowed to happen, is a power contest between the two superpowers in the region.
Two regional strategies can help to prevent a possible China-US power contest in Southeast Asia. First, use hedging strategies with caution. Currently Asean members tend to lean towards the US policy that attempts to mildly counterbalance Chinese power. Since Asean cannot provide a security umbrella and does not wish to create conflict with China, the United States thus becomes a fulcrum to rely on.
The recent visit by Senator John McCain and Senator Joseph Lieberman to the Philippines and Vietnam has significantly pinned down the US commitment to security and trade in the region. The Philippines has welcomed the US presence in strengthening the country’s defence and surveillance against Chinese military aggression in the South China Sea. Similarly, the United States has also sent a positive signal to possibly allow arms sales to Vietnam in the future, but only if Vietnam’s human rights record improves. Vietnam and the Philippines are two claimants to the Spratly Islands in the South China Sea, along with Brunei, China, Malaysia and Taiwan.
Cambodia is now banking on the US president participating in the Asean Summit in November this year, which unfortunately is during the same month as the US presidential election. Considering the massive flow of foreign direct investment from China into the country, Cambodia seeks to build on leverage over Chinese influence. Chheang Vannarith, director of the Cambodia Institute for Cooperation and Peace (CICP), stated that Cambodia was important for the US in counteracting China. He called this a win-win policy that benefits both Cambodia and the US.
Asean members need to be painstaking in their unilateral hedging strategies against China and make sure that their actions do not create tension that could cause a power contest in the region. Nobody knows whether, how, or when China might retaliate against such new approaches. In addition, the re-election of President Barack Obama for a second term remains uncertain at this point. It is thus unclear if the US engagement in Asia will continue after the next US presidential election. Therefore, Asean members should maximise the range of strategic options to cushion against any unprecedented changes or shocks.
Secondly, Asean should unify its voice on the Indonesian concept of “dynamic equilibrium”, which adheres to the principle ofs mutual respect and common interest between Asean members and other regional powers. Asean should also pursue a “soft power” policy to expand its economic and cultural influence beyond the Southeast Asian region. Last year, Indonesian President Susilo Bambang Yudhoyono evoked the significance of geo-economics, not geo-politics, in the Asia-Pacific region, at the Apec CEO Summit in Honolulu. Asean could present itself as a bellwether to promote the geo-economics approach in Asia and push for its favoured choice of establishing an Asean+6 free trade agreement.
Asean’s institutional power has been recognised internationally and is certainly on the rise. If the grouping’s members can stick to a unified strategy, it will not only beef up Asean in coping with external threats, achieving common goals and preventing a power race in the region, but would also reinforce individual members their ability to use hedging strategies more effectively.
Sarinna Areethamsirikul is an independent researcher and writer based in the United States.