Foreign Policy: Are East Asian states really hedging between the US and China?


January 31, 2016

Are East Asian states really hedging between the US and China?

by Darren J. Lim, ANU and Zack Cooper, CSIS

Are East Asian states really hedging between the US and China?

The term ‘hedging’, one of the most widely used in contemporary discussions on East Asian security, is intended to capture the fact that most states in the region face conflicting economic and security interests. States wish to maximise trade and investment ties with Beijing and welcome China into the region’s political order, but also feel the need to maintain a close security relationship with Washington.President Barack Obama pauses during a joint news conference with Chinese President Xi Jinping in the Rose Garden of the White House in Washington. (Photo: AAP)

Engaging China economically and politically while enhancing security ties with the United States is usually referred to as a hedging strategy. Hedging is cast as an alternative to the traditional security strategies of ‘balancing’ against or ‘bandwagoning’ with a rising power as it begins to challenge the status quo.In a recent article, we argue that this traditional definition of hedging offers little insight into the security dynamics of East Asia.

It should be no surprise that every state is looking to engage with China economically and politically, since doing so offers obvious benefits at minimal cost. But this says virtually nothing about today’s central security questions, such as the durability of alliance commitments, the stability of the regional order, or whom a state would support if the unthinkable occurred — war between the United States and China. Answering these questions requires recognising that states positioned between competing great powers face an inherent trade-off between the advantages of alignment and autonomy.

Alignment with Washington offers the backing of the world’s largest military, but also places a state in opposition to Beijing and exposes it to the risk of abandonment. Alignment comes at the cost of a state’s autonomy to pursue an independent and flexible security strategy, since it requires calibrating defense policies to those of the United States. Signals of alignment vary in strength from public statements in support of US positions, to arms sales and joint exercises, to supporting permanent military bases and mutual defense treaties.

Importantly,economic and political engagement policies are excluded from this spectrum of alignment behaviours. This is because in most cases they do not affect the trade-off between alignment and autonomy.

Therefore, when a state hedges, it seeks to preserve autonomy by sending mixed signals regarding its alignment choice. Under this definition, hedging is costly, since ambiguity precludes the protection offered by clear alignment with either the United States or China.

When seen in this light, it seems that most states in the region are not hedging, but aligning with the United States. US alliance partners — including Japan, South Korea, Australia and the Philippines — are not hedging. These states cannot generate alignment ambiguity without jeopardising the integrity of their alliances.

Although it is possible for treaty allies to opt to increase their autonomy, as Thailand may be considering, the significant security benefits alliances offer tend to render them target over time. This leads to path dependency — that is, structural constraints to altering security strategies. States that have committed to fight alongside one great power in a conflict are not hedging.

Another group of states that are often miscategorised as hedging are those engaged in major territorial disputes with Beijing. By indicating their resolve to defend territorial claims, states like Japan, the Philippines and Vietnam are defying China and forsaking the possibility of autonomy.

Opposing China this way naturally leads them on a path of closer alignment with the United States. As the extent and severity of China’s territorial disputes grow, it should not be surprising that even a former US adversary — Vietnam — is now looking to build closer security ties

Few Asian states are truly hedging. If a state is a treaty ally of the United States or disputing territorial claims with China (or both), its security strategy is one of balancing against Beijing. The remaining Asian nations — a small group that notably includes Singapore and Indonesia — are the only states even capable of maintaining autonomy. They can be properly characterised as hedging.

This suggests the United States is in a stronger position than is sometimes claimed. Although some East Asian states are hedging by avoiding security alignment with either the United States or China, most have made their alignment decisions and these decisions are likely to endure.

US alliances and partnerships in East Asia are likely to grow deeper even as China’s relative power grows, particularly if perceptions of China’s assertiveness grow. Opportunistic and coercive actions by China, especially those that appear to threaten the territorial status quo, such as constructing military outposts on disputed features in the South China Sea, are likely to intensify alignment toward the United States.

Scholars and policymakers need to assess accurately the alignment of East Asian states if they are to understand changes in the regional security environment. Hedging may  be ambiguous, but its definition shouldn’t be.

Darren J. Lim is a Lecturer in International Relations at the School of Politics and International Relations, Australian National University.

Zack Cooper is a doctoral candidate at Princeton University and a Fellow at the Center for Strategic and International Studies.

This article is based on a previous paper ‘Reassessing Hedging: The Logic of Alignment in East Asia’ first published in volume 24, issue 4 of Security Studies.  The paper below is intended for doctoral candidates at The Techo Sen School of Government and International Relations, The University of Cambodia, Phnom Penh, Cambodia.–Din Merican

Reassessing Hedging: The Logic of Alignment in East Asia

by Darren J. Lim and Zack Cooper

http://www.tandfonline.com/doi/full/10.1080/09636412.2015.1103130#

Abstract

It is widely claimed that secondary states across East Asia are not purely balancing or bandwagoning, but rather hedging between the United States and China by combining policies of economic and political engagement with risk management. We argue that hedging behavior should not include costless activities that do not require states to face trade-offs in their security choices. We redefine hedging as signaling that generates ambiguity over the extent of a secondary state’s shared security interests with great powers. This definition returns the focus to security relationships and better accounts for the trade-off between autonomy and alignment. Based on this definition, we argue that hedging occurs in far narrower (but arguably more interesting) circumstances than is widely believed. Many Asian states have existing treaty alliances with the United States or major territorial conflicts with China, creating path dependencies that reinforce balancing behavior rather than hedging. We therefore clarify cross-national variation in state behavior and contribute to the larger research project on regional responses to China’s rise.

The term hedging is pervasive in contemporary security literature, and has been used by scholars and policymakers to describe the strategic behavior of a variety of states in a variety of situations.

The United States is described as hedging against China; China as hedging against the United States; Brazil, Russia, and France are hedging in their own ways, too.

The term is particularly attractive to scholars grappling with China’s rise who observe that its Asian neighbors are not conforming to traditional security theories’ prediction that secondary states should either balance against or bandwagon with China as it grows more powerful.

Instead, they argue that East Asian states are hedging by engaging with China on both economic and political levels while strengthening security links with the United States.These descriptions are accurate, but for a term used almost on a daily basis in discourses on Asian security, there has been little inquiry as to whether the hedging concept as commonly understood offers meaningful analytic value.

In this paper we investigate the concept of hedging and find it wanting. We argue that hedging as currently constructed inappropriately incorporates policies of economic and political engagement as components of security strategies and indicators of states’ alignment choices. As a result, the frequent use of the term sheds little light on the security behavior of East Asian secondary states and obscures the fact that balancing has actually been the dominant response to China’s rise.

As currently defined, all states in East Asia (with the exception of North Korea) are hedging. And yet, there are real and meaningful differences in the security strategies of Asian secondary states that the hedging concept cannot distinguish. To do so, economic and political engagement must be excised as evidence of security alignment. We propose that alignment should be seen as signaling by a state that it shares common security interests with one side in a great power rivalry.

We therefore propose a redefinition of hedging as an alignment choice involving the signaling of ambiguity over the extent of shared security interests with great powers. Using this definition, we argue that many regional states are engaging in various forms of balancing, rather than hedging. We believe that this is an important and policy-relevant revision to a widely used theoretical concept in the literature on regional responses to China’s rise.

The Logic of Hedging

Most scholars appear to agree with three propositions about China’s rise. First, China’s rapid economic growth is providing lucrative economic opportunities for every state in the region in the form of bilateral trade and investment, generating complex and deep economic interdependence. Second, China’s rapid military growth is creating a growing security deficit with neighboring secondary states.

An individual state’s perception of the threat from China depends primarily on the state’s geographic location and the tone of bilateral relations. Particularly important are the state’s perceptions of whether an active territorial dispute exists and how its interests in regional order are affected by China’s rise.

Third, the United States, as the established great power, retains a preference for the status quo and has maintained (to date) the capabilities to offset the security deficit otherwise faced by secondary states.

Turning specifically to the responses of East Asian secondary states to the above dynamics, scholars tend to agree that most are not pursuing the traditional dichotomous strategies of balancing or bandwagoning.

Instead, East Asian states are adopting strategies that fall in between the balancing and bandwagoning poles. These policies tend to share three common elements. First, economic engagement capitalizes on China’s rapid economic development through mutually beneficial trade and investment links. Second, political engagement seeks to reduce China’s level of dissatisfaction with the status quo without compromising the integrity of the system.

States pursue this through building diplomatic and institutional links to socialize China to the rules and norms of the existing order and offering (low-cost) concessions to accommodate China’s expanding interests, acknowledge its prestige, and reward positive behavior.

Third, risk management mitigates the threat posed by uncertainty over China’s future capabilities and intentions. Risk management techniques may include augmenting national capabilities and force posture; building bilateral security relations with the United States or otherwise fostering a favorable balance of power by encouraging U.S. involvement in the region; or using non-military means to check the more threatening aspects of China’s expansion without being overly provocative—the establishment of the Association of Southeast Asian Nations (ASEAN) Regional Forum being an example.

Scholars researching secondary states’ responses offer many labels to describe this combination of behaviors. Hedging is the most common and is essentially an umbrella term used to capture various strategies that seek to locate an equilibrium that embodies two (somewhat) contradictory policy responses.

Japanese scholar Yasuhiro Matsuda, for example, writes that Japan’s “perception of China as a threat has led the Japanese to incorporate a ‘hedging’ strategy into its policy of engagement with China.”12

 According to Matsuda, “this ‘hedging’ strategy has included strengthening Japan’s alliance with the United States, and building a multi-layered security framework that gives China incentives to conform its external behavior to ‘international standards.’ ”13

Hedging therefore incorporates two different concepts. The first is fostering positive economic, political, diplomatic, and institutional relations with China through policies variously labeled as engagement, accommodation, enmeshment, and binding. The second policy response focuses on the need to maintain a favorable balance of power and deter destabilizing behavior amid an uncertain environment. These policies include complex balancing, soft balancing, and low-intensity balancing.14

The challenge for governments is to prevent one set of policy responses from undermining the other. Hedging is intended to capture this delicate exercise and is said to fall on a spectrum between the two ideal-type strategies of balancing and bandwagoning.15

Yet once hedging is disaggregated into its security and non security components, one observes that the risk management policies closely resemble traditional balancing behavior.16 

This prompts the following question: to what extent (if any) should policies of economic and political engagement modify this conclusion? In other words, does the incorporation of non security elements into the hedging concept offer useful analytical traction on fundamental security questions? We argue it does not. Economic engagement is not motivated exclusively, or even predominantly, by security concerns, but rather by the lucrative gains from economic links with China. Political engagement is similarly low cost and does not undermine security alignment strategies.

As a result, the umbrella concept of hedging cannot distinguish between states’ alignment choices. To say a state is hedging offers little insight into critical alignment questions. For example, if a war broke out between the United States and China, which side would each secondary state support? Equally problematic is the fact that empirically every state in East Asia (with the exception of North Korea) is said to be hedging. The absence of variation in the dependent variable further erodes the analytical value of the concept. As presently constructed, the concept of hedging says little regarding variation in great power alignment choices among those states that are said to be hedging.

The emergence of hedging as a theoretical concept is a function of the fact that mainstream theories of international security do not offer determinate predictions regarding how secondary states should respond to a rising power beyond the balancing-bandwagoning dichotomy.17

To resolve this shortcoming scholars have employed the term hedging to describe phenomena occurring at different levels of analysis. One branch of theories focuses on domestic politics and how relations with China factor into the domestic legitimacy of governments.18 Another branch focuses on the uniquely Asian features of the regional order and the strategies used to welcome China into that order.19

A third employs a traditional focus on capabilities and the coercive power and influence in both military and economic spheres that has accompanied China’s rapid rise.20

Surveying this literature, Steve Chan criticizes efforts to accommodate the new evidence—by modifying or adapting theories of balancing—as adopting “the terminology of balancing without… adhering to its essential meaning.”21

He dismisses such attempts as linguistic devices that help “salvage these theories from empirical challenge without adding any new theoretical content.”22

Chan identifies “stable and distinctive categories, shared meaning and an adherence to conventional usage” as key to advancing the research program.23

Our aim is to develop a simple model that admits variation in the security behavior of states that are routinely described as hedgers. We redefine hedging and argue that it occurs in far narrower (but arguably more interesting) circumstances than is widely believed. We re-establish meaningful distinctions between secondary states’ security behaviors and identify important cross-national variation in state behavior, thereby contributing to the larger research project on regional responses to China’s rise.

<The Importance of trade-offs in Alignment Decisions

War is costly and rational states prefer to avoid the costs of conflict whenever possible. As Stephen Walt recognizes, even the most diametrically opposed strategies—balancing and bandwagoning—need not be mutually exclusive.24

The optimal security strategy for most states facing two great powers is to forge an alliance with the least-threatening great power while maintaining reasonably good relations with the more-threatening great power. Accordingly, most states should be expected to follow this optimal security strategy whenever circumstances allow, and under such conditions one would observe little variation in state behavior.

Our major criticism of the theoretical basis of hedging—defined by the literature as a combination of engagement and risk management—is that it is precisely the type of optimal strategy Walt envisaged.

When a secondary state can engage with a threatening great power economically and politically, while simultaneously managing risk by maintaining security links with a more friendly great power, it should always do so. Scholars describe hedging as a security strategy involving the non security components of economic and political engagement. Yet, if there is no trade-off between a strategy’s security and non security components, rational states should do both. In other words, when states can hedge, they will, and there is no theoretical basis within this definition of hedging for any other response, nor any cross-national variation.25

This flaw does not render hedging an inaccurate description. We accept that empirical evidence from East Asia confirms the descriptive predictions of the hedging literature. Our complaint is that with all states doing the same thing, hedging is reduced to a label rather than a substantive analytical concept with theoretical variation, falsifiable predictions, and concrete conceptualization and measurement.26

This shortcoming begs the question: how can the concept of hedging be improved to admit theoretically interesting and analytically useful variation in state behavior?

We submit that a better definition of hedging is one that more explicitly recognizes it as a costly strategy. Balancing and bandwagoning admit clear trade-offs—aligning with one great power places the state in opposition to the other. Studying how states evaluate the cost-benefit trade-offs of balancing and bandwagoning yields important insights on bigger questions of deterrence, the security dilemma, power transitions, crisis bargaining, and war outcomes.27

As currently conceived, however, hedging’s defining characteristic is the avoidance of trade-offs, which says little about these critical questions.28

The crux of the problem is hedging’s theoretical incorporation of economic and political engagement policies as components of states’ security strategies. These policies’ low costs make them poor signals.29 Accordingly, we focus our redefinition of hedging exclusively on state behavior within the security realm.

In the following section, we propose a simple model of alignment prior to the outbreak of war. Hedging, using our definition, is a class of behaviors which signal ambiguity regarding great power alignment, therefore requiring the state to make a trade-off between the fundamental (but conflicting) interests of autonomy and alignment. In this model, the conditions under which hedging can be pursued are much narrower, but hedging is conceived as offering a concrete mix of costs and benefits which a state must evaluate against alternative strategic choices.

Alignment as signalling: A SIMPLE MODEL

Consider a region dominated by the presence of two great powers—a rising power with expanding interests that are inexorably coming into conflict with the interests of an established power that prefers the status quo.30

The region is otherwise populated by secondary states that perceive each great power to be threatening or friendly. We describe our model from the perspective of a secondary state that lacks the capabilities to prevail alone in a conflict against either great power, but can offset its weakness by aggregating capabilities with one of the great powers.31

We define alignment in this context as signaling by a secondary state that it shares common security interests with a certain great power. We cast alignment in terms of signals because the ultimate security decision does not arise until a crisis (possibly a war) breaks out. At that point, secondary states must decide whether to intervene in a dispute and on which side. Secondary states should only intervene when it is in their interests to do so, thus alignment is a signal of shared interests sent prior to a crisis materializing.32

How does the act of alignment incentivize the established power to signal its willingness to intervene should the secondary state itself be attacked? To align itself with a great power, a secondary state must to do two things. First, it must coordinate its policies with and potentially make policy concessions to the great power. Second, it must signal its own willingness to support the great power in the event of external conflict.33

Reciprocal signals indicate that the great power shares common security interests with the secondary state, raising the possibility that it will intervene if the secondary state is attacked.

What form do signals of alignment take? Table 1 lists a spectrum of alignment behaviors.34

Moving from left to right in the table increases the strength of signals of shared interests between the secondary state and the great power. Public statements of support for security policies are the weakest alignment signal; criticism of a rival state’s security policies (consistent with the interests of the aligned state) is also included in this category. Arms sales signal support by the great power for arming the secondary state and willingness by the secondary state to acquire capabilities about which the great power has detailed knowledge and control.

A stronger signal is sent by joint training, exercises, or combat operations, which require some agreement over shared threats as well as combined operational planning and inter-operability between military forces. Rotational deployments and military access agreements send a stronger signal because they require robust planning and cooperation between two countries and indicate capability for deeper cooperation during contingencies.

Permanent military basing is an even stronger signal, demonstrating a high degree of cooperation and agreement on shared long-term security interests. Finally, the strongest signal of alignment is a mutual defense treaty, which requires a public commitment to fight on the other state’s behalf, detailed planning for potential contingencies, and close cooperation between the great power and the secondary state.35

None of these behaviors is a binary proposition. Selling small arms is a weaker signal than selling large ships and aircraft. Joint combat operations can deepen inter-operability or highlight areas of disagreement. A basing agreement or alliance can look robust on paper but in reality be an ongoing source of friction.

Therefore, these categories offer an indication of the baseline strength of the alignment signal, but the form and degree of cooperation within each category matters. Accordingly, dynamic evidence of new or cancelled cooperative agreements, joint statements, and public opinion expressing support, criticism, or ambivalence toward the alignment are all important indicators of a signal’s strength.

For the secondary state, signaling alignment with a great power has both benefits and costs, creating a broad trade-off between alignment and autonomy.36

Alignment enhances the state’s security through two mechanisms. The first is strengthened defense through capability aggregation: if the secondary state is attacked and the great power intervenes, the great power’s capabilities increase prospects for victory.37

The second benefit is deterrence: by signaling shared security interests, security alignments deter would-be aggressors by indicating that a great power is likely to offer assistance if the secondary state is attacked.38

Signaling alignment comes, however, at the cost of the secondary state’s autonomy, which is its capacity to pursue independent and flexible security policies. Alignment requires the coordination of policies with the great power, and sometimes the making of policy concessions. Failure to do so reduces the strength of the alignment signal, limiting the potential for the state’s security to be enhanced. This loss of autonomy generates a risk of abandonment, which occurs when the great power patron does not provide security assistance when the secondary state is threatened.39

In this situation, the secondary state has paid the costs of losing policy autonomy and flexibility but has not received security through capability aggregation in return. Another danger is that alignment itself can cause a loss of security, if the secondary state is perceived to be acting provocatively and becomes a target of the opposing great power. Note that as the strength of the signal increases, both the benefits and costs of aligning also increase.

The great power must also be willing to signal its acceptance of the secondary state’s alignment and thus its willingness to provide security assistance in the event of conflict. It faces a complementary trade-off between autonomy and alignment.40

The great power gains influence over the secondary state’s policy choices, but assumes the risk of entrapment in conflicts to which, but for its alignment, it would be unwilling to contribute.41 The great power would accordingly face either the cost of fighting or of reneging on its alignment signals.

The costs of reneging may include the loss of future policy influence over the secondary state, damage to the great power’s reputation, and increased perceptions of its declining capabilities. The failure to uphold an alliance agreement (the strongest alignment signal), for example, may undermine the capacity of the great power to create and sustain future alliances, or affect how states perceive the regional balance of power.42

Table 2 describes these logics, outlining the benefits and costs of security alignment for secondary states and great powers.

Table 2 Security Benefits and Costs of Secondary State-Great Power

Alignment CSVPDF Display Table

As explained above, signals can also be sent with respect to existing alignments. When either the secondary state or great power perceives the cost of alignment to be too high, it can signal a scaling back of the relationship. As the strength of the alignment signal is reduced, the costs and the benefits of the alignment decrease. This in turn increases the uncertainty about the ultimate question of whether the two would fight together in the event of a conflict.43

Accordingly, if a secondary state in an alliance with a friendly great power (the strongest form of alignment) wanted to improve its relations with the rival great power, its government could announce its intention to scale back alliance cooperation. Such a signal would have three effects. First, it would decrease the costs of alignment by enhancing the secondary state’s autonomy.

Second, it would decrease the benefits of the alignment by reducing the likelihood of security assistance from the friendly great power if the secondary state is attacked.

Third, such a signal would increase uncertainty about which side, if any, the secondary state would support in a great power conflict.44

Equally important is what is excluded from our spectrum of alignment behaviors: policies of economic and political engagement. We argue these are poor signals of security alignment because they involve minimal trade-offs. Scholars have previously argued that economic relations involve security externalities and allies are therefore more likely to trade with each other.45

While this may have been true during the Cold War, amid the deep economic interdependence of the twenty-first century economic engagement in the form of trade and investment is commercially profitable and strategically costless (actually yielding strategic benefits). Only in vary narrow circumstances will international economic relations yield relative-gains concerns (such as where sanctions are imposed against a pariah state, or where strategic industries such as weapons technology are involved).46

In a similar vein, political engagement—diplomacy and socialization into institutions—also involves very few costly trade-offs. Engagement of this sort opens up new avenues of cooperation and reduces information asymmetries.47 Rarely is such engagement a costly signal of shared security interests.

Our decision to exclude economic and political engagement from our hedging model necessarily comes at the expense of excluding certain behaviors that could impinge on security competition.48 For example, China’s moves in 2014 to create and lead an Asian Infrastructure Investment Bank (AIIB) were seen as constituting a direct challenge to the U.S.-led regional order and its institutional framework (led by the World Bank and Asian Development Bank).49 The media similarly characterized the decision of secondary states to join as a trade-off between satisfying Chinese or American interests.50

Nevertheless, we feel on balance that the exclusion is justified because even in a salient case like the AIIB, the trade-off for secondary states remained low and, importantly, joining did not observably affect signals of security alignment.51

Our very motivation in excluding engagement policies was to introduce meaningful variation in the alignment choices of secondary states. As membership of the AIIB had no meaningful implications for states’ alignment choices, joining offered little insight into the security dynamics motivating our reassessment of the hedging concept.

Hedging as a costly choice: The Alignment Choices of East Asia States

We now return to the motivation behind this paper, which is to re-characterize hedging behavior in East Asia.

Based on the logic of our model, we posit the following definition of hedging: secondary states hedge by sending signals which generate ambiguity over the extent of their shared security interests with great powers, in effect eschewing clear-cut alignment with any great power, and in turn creating greater uncertainty regarding which side the secondary state would take in the event of a great power conflict.

This definition of hedging is an improvement on the existing literature because it accounts for the trade-off between autonomy and alignment, therefore permitting cross-national variation in observed state behavior. If a state sends ambiguous signals regarding its alignment choice, it is opting to forego the security benefits of strong alignment in return for increased policy autonomy, including the flexibility to align more closely in the future should it face increased security threats. Accordingly, in the context of East Asia, hedging occurs when a status quo-preferring secondary state refuses the security benefits of aligning with the United States and instead preserves policy autonomy in the great power competition between the United States and China.

Our redefinition of hedging also draws attention to the path dependency inherent in the alignment choices faced by two types of states for whom hedging involves higher costs or reduced benefits.

The first category comprises states that already maintain an alliance with a great power. Alliances are the strongest possible signal of alignment and create a default signal of shared security interests.52

Should great power interests come into conflict, the secondary state must support its great power ally to preserve the signal. Alliance partners are not incapable of making the decision to hedge by sending signals at odds with the alliance relationship, but the cost of doing so is relatively higher than for non-allies. Signals of ambiguity undermine the strength and credibility of the alliance, raising doubts about whether the secondary state or the great power would intervene to assist the other. Moreover, alliances are typically buttressed by costly investments in shared security architecture, systems integration, and policy coordination, which would be lost if the alliance ceased functioning.

A second category encompasses secondary states facing major and active security disputes with a great power. If the state seeks to lower the risk of conflict, it must accommodate the disputant great power over the security issues in dispute, at the cost of its own interests. If the secondary state chooses to signal its willingness to defend its interests against the disputant great power, the shadow of conflict threatens its security. Both the benefits of hedging and the costs of aligning with the friendly great power are reduced in this latter scenario because the secondary state has already placed itself in opposition to the disputant great power. Accordingly, while a security dispute does not preclude a hedging strategy, the cost-benefit trade-off of alignment improves once the state elects to defend its security interests.

For those states without alliance commitments or major security disputes with a great power, hedging becomes a more feasible alignment choice. Indeed, we expect such states to hedge because this allows the state to minimize trade-offs by deferring its alignment choice until uncertainties surrounding intentions, potential threats, and the balance of power become clearer.

Table 3 classifies a number of East Asian states along these two dimensions of path dependency: (1) whether they have a major security dispute with the rising great power (China); (2) whether they are treaty allies with the established great power (the United States). According to this categorization, many states in East Asia that are commonly described as hedging are actually sending signals more consistent with balancing behavior because path dependency limits their strategic options.

Table 3 Path Dependency in Alignment Choices.

 

CSV PDF Display Table
Based on this model, we predict the following alignment behaviors.

Resolute Allies. States with strong and increasing signals of U.S. alignment. These states face both forms of path dependency: security disputes with China and extant U.S. alliances. Once these states elect to defend their security interests and signal defiance towards China, their rational security strategy will be to strengthen the already strong alignment signals sent by the alliance. We predict these states will seek to deepen their alliance relationship to maximize the security commitment from the United States. Strengthening the already strong signals is pursued to offset a perceived increase in threat posed by China’s rapid military modernization and increasingly assertive behavior.

Emerging Partners. States with weak but increasing signals of U.S. alignment. These states lack an alliance relationship with the United States but face a real security threat from territorial disputes with China. The threat of conflict increases the security benefits of strengthening signals of alignment with the United States and decreases the value of maintaining policy autonomy. Accordingly, we predict that these states will respond to the heightened threat by looking to build upon weak baseline signals of U.S. alignment as a means of aggregating capabilities and increasing their projected deterrent, thereby trading off some autonomy in return for increased alignment.

Reserved Allies. States with stable signals of U.S. alignment. These states enjoy existing security treaties with the United States but do not have a serious security dispute with China. The prohibitive cost of departing the alliance creates path dependency, but unlike alliance partners with security disputes, these states have less urgency in the need to strengthen their alignment signals, not least because of the benefits of maintaining positive relations with China, which can be achieved without substantially altering the status quo. There is no need for them to demonstrate significantly strengthened U.S. alignment, leading to a prediction of maintaining rather than maximizing their U.S. commitments.

Hedging States. States with ambiguous alignment signals. These states are unburdened by path dependency because they have no major territorial dispute, nor treaty alliances, with a great power. For these states hedging is optimal—maximizing policy autonomy and minimizing provocation of either great power while reserving the flexibility to align in the future should either great power come to constitute direct threat. We accordingly predict that these states will send ambiguous alignment signals and refuse to align strongly with either the United States or China. Ambiguity does not prevent any signaling of shared security interests; rather, the state shares security interests with both great powers and avoids conduct which would clearly situate it with one power against the other.

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As Figure 1 shows, such alignment signals do not simply fall between balancing and bandwagoning, but represent another dimension in East Asian security choices based on their intentional ambiguity.

Figure 1 Conceptualizing East Asian Security Options.

This redefinition shrinks the number of states that can be said to be hedging to include Singapore, Indonesia, Burma, and Brunei. These states are not affected by either form of path dependency and have real alignment options. They can effectively cultivate positive non security relations with both great powers while simultaneously sending ambiguous signals regarding their security interests and future alignment choices. Such hedging behavior reflects a choice to maximize autonomy at the expense of strong alignment. These states retain the freedom to align with either great power should their future cost-benefit evaluation change.

The Evidence: Which states are actually hedging?

Given the preceding argument about the infrequency of hedging behavior, we now consider whether empirical evidence supports our model’s predictions. We examine this question by analyzing the behavior of one state in each of the four categories described above: Japan (a U.S. ally with a territorial dispute), Australia (a U.S. ally without a territorial dispute), Vietnam (a non-U.S. ally with a territorial dispute), and Singapore (a non-U.S. ally without a territorial dispute).56 Whereas each of these states has been described as hedging in the existing literature, our model predicts variation in their alignment signals, with only Singapore predicted to engage in hedging as we redefine it.

We consider the actions of these four states in response to the U.S. rebalance to Asia. Announced by President Barack Obama in November 2011, the rebalance was a strategic policy response to China’s rise that reflected the United States’ desire to preserve the existing order in East Asia, which it largely designed and underwrote.57 The rebalance thus represents a clash of interests between the United States and China, and provides the ideal opportunity to test our theory by evaluating the responses of regional actors to this singular region-wide dynamic.58

The rebalance presented East Asian secondary states with three broad choices: signal U.S. alignment by endorsing and enabling the rebalance, signal Chinese alignment by criticizing and opposing the rebalance, or avoid alignment by maintaining ambiguity in signaling. We test our theory’s predictions by identifying and analyzing the responses of each chosen state to the rebalance from its 2011 announcement through 2014. From this analysis we draw inferences regarding each state’s alignment choice.

Japan

Japan is a longtime ally of the United States and also party to a significant dispute with China over islands and territory in the East China Sea that re-emerged as an ongoing source of tension in 2010, before the rebalance was announced. Our model predicts that both path dependent factors will push Japan to strengthen its alignment with the United States in response to the increased perceived threat from China. The evidence is largely consistent with this expectation.

Japan warmly embraced the U.S. rebalance and sought to deepen alliance cooperation while simultaneously enhancing its own security capabilities in ways consistent with U.S. interests. In the months following President Obama’s announcement, the government of Prime Minister Yoshihiko Noda relaxed restrictions on arms exports and enhanced the law enforcement powers of its coast guard to continue a trend, which arguably began in 2010 with the release of National Defense Program Guidelines, of adopting a robust security posture against China.59

While tensions with China undoubtedly strengthened the impetus for the normalization of Japanese security policy, these efforts began to fulfill long-standing U.S. calls for Japan to increase the operability of its military, which provided new opportunities to enhance cooperation with U.S. forces.60

Following his ascension to the premiership in December 2012, Prime Minister Shinzo Abe continued this trend. The Japanese Ministry of Defense released new National Defense Program Guidelines in 2013 that stated, “it has become more important than ever for Japan’s security to strengthen the Japan-US Alliance.”61

Statements from Japanese officials suggested that Tokyo expected its initiatives to complement the U.S. rebalance, particularly efforts to permit the exercise of collective self-defense.62

Policymakers in Tokyo expressed hope this would permit Japan to contribute more to its partnership with the United States by allowing Japan to take actions to protect U.S. forward bases and forward-deployed forces.63

Former U.S. Secretary of Defense Chuck Hagel called this, “an important step for Japan as it seeks to make a greater contribution to regional and global peace and security.”64

In addition, Japan has pushed forward a long-stalled plan to realign U.S. basing on the island of Okinawa, addressing a major impediment in alliance relations. A joint statement by the U.S.-Japan Security Consultative Committee in October 2013 outlined the centrality of the alliance to both Japan and the United States, noting that “as the United States continues to implement its rebalance to the Asia Pacific region it intends to strengthen military capabilities that allow our Alliance to respond to future global and regional security challenges.”65 To that end, in 2015 Washington and Tokyo approved new bilateral defense guidelines to increase alliance cooperation, particularly in maritime crises and conflicts.66 These statements and actions clearly indicate that embracing the rebalance was part of a conscious strategy by Tokyo to strengthen its alignment with Washington.

Japan’s efforts to enhance its own capabilities, including increasing its planned defense spending by issuing a new Mid-Term Defense Plan, enabled closer cooperation with the United States.67

Japan has also been an active participant in bilateral development efforts with the United States, such as the SM-3 Block IIA missile, the Joint Strike Fighter, and recently the V-22 Osprey tilt-rotor aircraft, among other joint procurement programs. Along with Japan’s inaugural National Security Strategy, which called for a “proactive contribution to peace,” Japan created a new National Security Council to improve coordination of its security policies. Prime Minister Abe’s decision to advocate a constitutional reinterpretation allowing Japan to exercise the right of collective self-defense indicates his commitment to altering Japan’s security posture to allow for greater internal balancing behavior and cooperation with external allies.68

In addition, Japan passed a controversial state secrets law in December 2013, designed in large part to address U.S. concerns about intelligence threats.69

On passage of the secrecy law, U.S. Ambassador to Japan Caroline Kennedy noted with approval that “we support the evolution of Japan’s security policies, as they create a new national security strategy, establish a National Security Council, and take steps to protect national security secrets.”70

Finally, the relaxation of restrictions on arms exports has created a platform for Japan to cooperate more closely not only with the United States, but also with states with shared regional security interests, most prominently Vietnam and the Philippines, who in 2014 were in the process of receiving patrol vessels from Japan.

As our framework predicts, Japan has chosen a strategy of balancing both externally (through the United States) and internally (via domestic strengthening) after it perceived China as posing a substantial and growing threat. Tokyo’s response to the U.S. rebalance provided the opportunity to enhance both these strategies by strengthening its alignment signals while augmenting its own capabilities. Therefore, we argue that Japan’s signals are not those of a hedging state, but rather those of a resolute ally of the United States.

Australia

Australia’s alliance with the United States has formed the core of its security strategy since the 1950s. Simultaneously, Australia’s bilateral relationship with China has remained largely positive and productive, avoiding the serious disputes over territory that have marred several of China’s bilateral relationships with other East Asian states. Our model therefore predicts that Australia’s security signaling will be strongly shaped by its U.S. alliance, but remain stable in light of a desire to maximize cooperation with China.

The empirical record partially confirms these predictions; if anything, Australia’s support of the rebalance has been stronger than our model would have predicted. It was in Canberra, Australia’s capital, where U.S. President Barack Obama announced the rebalance. The fact that the president made the announcement from Australia proved beyond doubt the strength of Australia’s support, with Prime Minister Julia Gillard stating: “Our alliance has been a bedrock of stability in our region. So building on our alliance through this new initiative is about stability.”71

Australia offered more than the platform for the announcement, also agreeing to host a new contingent of 2,500 U.S. marines on a rotating basis, who would train with local troops. While falling short of permanent basing, this enhanced military-to-military cooperation was a stronger manifestation of efforts to increase inter-operability with the United States military, and an unambiguous signal of Australia’s support of the rebalance.

Canberra’s decision should not be surprising because of the significant benefits it draws from the alliance. Aside from the increased likelihood of American assistance if Australia were attacked, the alliance provides access to U.S. military technology, opportunities for joint training, integration with U.S. intelligence networks, and political influence in Washington.72

Casting doubt on the continued strength of the alliance would reduce these benefits at significant cost.73

There have been some critics, such as Hugh White, who argue that Australia (and the United States) should take a more conciliatory tone in relations with China.74

But polls show high public support for the U.S.-Australia alliance, with 74 percent of Australians supporting the U.S. rotational deployment in 2012 and 78 percent describing the overall alliance as either very important or fairly important in 2014.75

Nevertheless, there have been some areas of tension in the U.S.-Australia relationship, the most notable being Australia’s limited defense spending and difficulties in cost sharing arrangements for new U.S. basing access.

Canberra has also been willing to oppose Beijing’s interests over security matters in ways that support the goals of the rebalance even when Australia’s direct security was not threatened. In late 2013, the newly elected government led by Prime Minister Tony Abbott was publicly critical of Beijing’s unilateral decision to declare an expanded Air Defense Identification Zone (ADIZ) over disputed maritime areas in the East China Sea.76

This move was surprising to many since it enhanced the perception within China that Australia was siding with Japan on the sensitive East China Sea territorial disputes, an issue on which Australia had previously taken no position. Under criticism for damaging relations with China, both Prime Minister Abbott and Foreign Minister Julie Bishop refused to back down.77

In 2014, Abbott ignored Chinese protests and signalled an intention to cooperate more closely with U.S. ally Japan, including on regional security challenges.78

Canberra’s enthusiastic support for the U.S. rebalance leaves little doubt about Australia’s alignment choices, and dispels any notion that the country is pursuing a hedging strategy. Not only has Australia served as announcement platform and host to U.S. troops, it has also been willing to criticize Chinese actions that have threatened the interests of its ally. In 2015, Secretary of the Department of Defence Dennis Richardson expressed concern about “the unprecedented pace and scale of China’s land-reclamation activities in the South China Sea over the last couple of years.”79

While it is clear Australia has not hedged, one might question whether Canberra’s behavior has been noticeably different than that of a state like Japan with more directly conflicting security interests. It would not be unreasonable to interpret the U.S. Marines’ deployment as a decisive increase in Australia’s alignment signals. Yet, we view the deployment of U.S. Marines as an incremental increase in military cooperation within a stable alliance relationship—Australia has fought alongside the United States in every major war since World War I, and U.S. forces make regular appearances on Australian soil. Recall that our model predicts that Japan will strengthen its alignment signals while Australia will seek stability in its alliance signals.

In our view, Australia’s response to the rebalance has tended towards incremental improvements in cooperation rather than wholesale upgrading of its security capabilities, as is the case with the Japan. Australia has strengthened its alliance with the United States but it has not substantially increased defense spending nor has it engaged in the types of domestic strengthening that Prime Minister Abe has sought.

Despite much talk about Australia’s efforts to avoid choosing between the United States and China, the choice has already been made. Australia’s alliance with the United States predetermined its security approach toward the rebalance.

Vietnam

Neighboring China has been the central strategic challenge for Vietnam for almost all of its history, with the primary fault line in recent years being overlapping sovereignty claims in the South China Sea. Yet while the United States is the obvious partner to counter China’s superior size, both the bloody legacy of the Vietnam War and sharp differences in political values have long prevented Vietnam and the United States from forging any kind of substantive security relations. This led Evelyn Goh in 2005 to describe Vietnam’s China strategy as “weak hedging,” marked by “deep pragmatism and the dark shadow of very asymmetrical power.”80

Since that year China’s capabilities have continued to grow rapidly and, in combination with renewed frictions in the South China Sea, the Vietnamese government has come to perceive China in an increasingly threatening light.81

Our model classifies Vietnam as an Emerging Partner and predicts that Hanoi would respond to the China threat in part by seeking to strengthen (from a weak baseline) signals of shared security interests with Washington.

The evidence offers cautious support for this prediction. At the time of the announcement of the U.S. rebalance, U.S.-Vietnam security relations were already undergoing a gradual but consistent period of improvement. In 2010 several U.S. Navy vessels visited Vietnam to commemorate the 15th anniversary of the normalization of diplomatic relations and the two sides held their first ever meeting at the level of deputy defense minister. This trend continued in 2011, signified in particular by the conducting of a joint noncombat naval exercise in July and visits in August by the U.S. aircraft carrier USS George Washington and the high-speed cargo ship USNS Richard E. Byrd.

These incremental improvements coincided with heightened Sino-Vietnamese tensions in the South China Sea. In June 2011, Vietnam had accused China of a “premeditated and carefully calculated” attack after its oil exploration cables were cut in the western Spratly Islands, one of a series of incidents that year.82

Even these modest activities raised Chinese suspicions, and throughout Hanoi took great pains to emphasize that its enhanced cooperation with Washington was not directed at Beijing.83

Each action with the United States was matched with parallel efforts to build goodwill with China. For example, Deputy Minister of Defense Nguyen Chi Vinh publicly downplayed the 2010 collaborations with the United States as purely a product of the diplomatic anniversary celebrations. He described claims that Vietnam was strengthening ties with the United States in response to South China Sea developments as groundless and lacking understanding of Vietnamese defense policy.84

Despite the 2011 escalation in tensions and heightened U.S. cooperation, that same year the Chinese and Vietnamese navies conducted joint naval patrols, Vietnamese ships made port visits to China and General Secretary Nguyen Phu Trong visited Beijing in October for talks in which defense cooperation and the resolution of maritime issues featured prominently.85

The care taken by Vietnam during this period to sustain positive and stable ties with China inevitably curtailed the signals it could send of shared security interests with the United States. The announcement of the rebalance did not appear to alter this pattern. Hanoi refrained from giving public endorsement of the policy, and throughout 2012 and 2013 the gradual trajectory of increased security cooperation continued in tandem with efforts to avoid antagonizing Beijing.86

U.S. Secretary of Defense Leon Panetta visited Cam Ranh Bay in June 2012, and, in July 2013, Washington and Hanoi entered into a “comprehensive partnership” that specifically included enhanced military-to-military cooperation. Meanwhile, U.S. ships, including the USS John S. McCain, continued port visits. However, Vietnam still retained a “strategic partnership” with China, despite the ongoing maritime dispute.

Vietnam’s clear resolve to defend its territorial interests aside, this combination of behaviors has more in common with our redefined hedging concept than the model predicts. However, as tensions with China escalated further in May 2014 following the deployment of a Chinese state-owned oilrig in waters claimed by Vietnam, Hanoi responded by further increasing the strength of its alignment signals.87

One observer notes that shortly thereafter Vietnamese leaders held “an unprecedented public forum on the topic of ‘Thoat Trung’ (escaping from China’s orbit),” and the next month “sixty-one party members signed an open letter addressed to the party and its Central Committee in particular warning of the danger of Vietnam becoming a ‘new-type of China’s vassal,’ and calling for drastic reforms to reduce the country’s dependence on China.”88

Prime Minister Nguyen Tan Dung also stated publicly that Vietnam attached great importance to its relationship with the United States and requested Washington continue to support cooperation between the two countries.89

Vietnam joined the Proliferation Security Initiative, giving it the opportunity to work with the United States on maritime surveillance. Agreements with the Philippines created the scope for U.S. Navy maritime surveillance aircraft based in the Philippines to be temporarily deployed to Vietnam.90

Following a three-day visit to Hanoi, U.S. Chairman of the Joint Chiefs of Staff General Martin Dempsey commented “we should have a steady improvement in our relationship with the Vietnamese military.”91

While these moves should not be interpreted as robust alignment, they nevertheless constituted a clear strengthening of the signal that Hanoi shared security interests with the United States.

The evidence therefore suggests that as the threat from China grows, Vietnam is becoming increasingly willing to trade off policy autonomy in return for the security benefits of closer alignment with the United States. Le Hong Hiep writes, “it is clear that one of the major drivers behind Hanoi’s efforts to forge closer ties with the United States is related to its growing rivalry with Beijing in the South China Sea.”92 He goes on to note that U.S.-Vietnam ties “have developed at a pace that has surprised many observers.”93

Such actions are costly—the alignment signals attract concern in Beijing and are sharply criticized in Chinese media, which explains why, in a relative sense, this security cooperation continues to remain limited in comparison to regional parties that are in existing alliance relationships. Although Hiep and others continue to describe efforts by Vietnam to strengthen engagement with China economically and politically as part of a hedging strategy, this does not fully capture the choices and trade-offs inherent in Vietnam’s strategic circumstances.94 Hanoi has consistently sent clear signals of resolve to defend its security interests and faces a trade-off between autonomy and alignment as it, albeit incrementally, strengthens ties with the United States.

Singapore

As one of a limited number of states in East Asia without a military alliance or serious security dispute with either China or the United States, Singapore is an obvious case for our narrowly redefined group of hedging states. Our model predicts that Singapore’s leaders will seek to avoid choosing between the two great powers by maintaining ambiguity in their alignment signals in order to protect the autonomy—independence and flexibility—of Singapore’s security policies.

Independence and flexibility are indeed hallmarks of Singapore’s grand strategy as regularly outlined in public statements by the city-state’s leaders. Above all, according to former President S. R. Nathan, Singapore is motivated by its “inherent vulnerability” stemming in significant part from its small size and lack of natural resources which limit the state’s development potential. This vulnerability motivates the three pillars of Singapore’s core national interests—survival, independence, and growth.95

The logic of Singapore’s preference for autonomy is powerful. The city-state is located in a critical geo-strategic location but could never hope to defend itself alone. As a supposedly impregnable British colony it fell to Japanese forces in World War II, demonstrating that the protection of a powerful patron is no guarantee of security.

Singapore seeks to maximize its security by cultivating positive relations with all great powers while preventing itself from becoming too close to (or dependent on) any single power. Singapore thereby preserves its flexibility to adapt its security policies to changing dynamics, which explains why its leadership has avoided entering into security alliances and has instead signed lower-level security cooperation agreements with both China and the United States.96

To maintain its autonomy from both great powers, Singapore has pursued a delicate balance in its alignment signaling, sending both supportive and critical signals to both great powers and never allowing itself to be too closely associated with either. This is reflected both in the statements of Singapore’s leaders and its policy choices in response to the U.S. rebalance. During a visit to the United States in February 2012, Foreign Minister K. Shanmugam warned the United States not to try to contain China. He was also critical of antagonistic rhetoric toward China in certain sections of the American security community and media, warning that it could give rise to unintended problems in the region.97

In the next few months, however, Singapore’s Defense Minister Ng Eng Hen made his own trip to Washington, during which he welcomed the US commitment to the region and described the United States as Singapore’s “closest security partner.”98 A few months hence, an agreement was finalized for Singapore to host four U.S. littoral combat ships on a rotating basis.

While the scope and depth of Singapore’s defense cooperation with the United States far exceeds that with China, Singapore has been careful to cultivate positive security relations with Beijing as well. Less than three weeks after announcement of the littoral combat ship agreement, Defense Minister Ng travelled to Beijing to laud Singapore’s “special relationship” with China and its desire to deepen military cooperation.99 In September 2012, Prime Minister Lee Hsien Loong made a successful visit to China where he had the rare honor of meeting five members of the Politburo Standing Committee.100

Yet he also delivered a thought-provoking speech to the Central Party School arguing that the Chinese should not view the United States as a declining power.101

On balance, Singapore has been supportive of the U.S. rebalance for its contribution to regional stability, but the country’s leaders have refrained from over-emphasizing this fact in public.102 For example, the littoral combat ship agreement received little attention in Singapore’s local press, thereby demonstrating respect for its relationship with China. Efforts to improve relations with Beijing followed quickly.103 Singapore has sought to keep a balanced ledger in its cooperative programs, never allowing its praise (or criticism) to become too one-sided. Singapore is following the predictions of our revised concept of hedging: by never allowing itself to become too close to either great power, Singapore creates ambiguity about the degree of its shared interests and with whom it would side in the event of great power conflict.

So what explains Singapore’s relatively stronger security ties with the United States? See Seng Tan argues that “Singapore’s hedging approach towards China—deep engagement with Beijing certainly, but also with other powers as well—arises partly from wariness of Chinese intentions.”104

He also contends that “Singapore has long advocated the need for a stable balance of power in the region, in the belief that it and other small states can survive and possibly thrive only when the region is not threatened by great power conflict and upheaval.”105

Accordingly, even while vigorously guarding its autonomy, Singapore longs for great power cooperation. In the words of Prime Minister Lee Hsien Loong, “We want the U.S. to have constructive and stable relations with China. That makes it much easier for us. Then we don’t have to choose sides.”106

Conclusion and Policy Implications

The security literature uses the term hedging to describe the responses of East Asian secondary states to China’s rise. Typically hedging refers to engaging heavily with China on both economic and political levels while retaining or building security links with the United States to encourage its continued presence as a regional stabilizer. We argue that hedging, as presently constructed, is a purely descriptive term with marginal analytical value. The current usage of hedging as an umbrella concept cannot yield insight into fundamental security questions because it does not differentiate between different types of alignment nor recognize the trade-offs inherent in competing strategic choices.

Our aim in this paper is to put forward a simple model that incorporates meaningful variation in the behavior of states that are routinely described as hedging. To do so, we redefine hedging behavior as a costly security strategy involving a trade-off between alignment and autonomy. States hedge by sending signals that generate ambiguity over the extent of their shared security interests with great powers. This ambiguity results in the avoidance of clear-cut alignment with any great power and, in turn, creates uncertainty regarding which side the secondary state would take in the event of a great power conflict. Our redefinition of hedging highlights the path dependency of many alignment choices, the effect of which is to reduce the benefits of sending ambiguous alignment signals. For states engaged in active security disputes against, or enjoying an alliance with, a great power, a clear trade-off already exists between their autonomy and alignment. Our redefinition of hedging and recognition of the effect of path dependence together allow us to identify important cross-national variation in states’ behavior and contribute to the larger research program on how states are responding to China’s rise.

A brief review of the available evidence confirms that trade-offs between alternative alignment choices are a core element of any analysis of secondary states’ security policy responses to China’s rise. Once trade-offs are accounted for, we observe that fewer states are truly hedging (see Table 4 for an illustration of security alignment behaviors of our four cases). For many states, their great power alignment choices have been decided for them, either by ongoing territorial disputes with China or by a pre-existing alliance with the United States. Secondary states unencumbered by such path dependency face lower costs to hedge, but we expect they will do so only as long as the threat posed to their security by either great power is relatively low. Although states can attempt to defer alignment decisions, all security policies eventually involve trade-offs and the advantages of hedging are limited to a small number of states in East Asia.

Table 4 Summary of Illustrative Security Alignment Behaviors Since 2011.

CSVPDF Display Table

This research suggests that the United States is in a somewhat stronger geopolitical position than is sometimes claimed. Although some states are hedging by avoiding strong security alignments with either the United States or China, path dependency suggests that most have made their alignment decisions and that these decisions are likely to be relatively sticky. Thus, U.S. alliances and partnerships in East Asia are likely to grow deeper even as China’s relative power grows, particularly if the United States is able to use Chinese opportunism to strengthen these commitments. Increasingly assertive actions by China that appear to threaten the status quo, such as constructing military outposts on disputed features in the South China Sea, are likely to intensify this re-alignment toward the United States.

On the other hand, this research suggests that Chinese policymakers should emphasize more cooperative elements of Chinese policy in order to avoid alienating East Asian neighbors. This finding provides an additional rationale for President Xi Jinping’s call in May 2014 for a new Asian security framework via the Conference on Interaction and Confidence Building Measures in Asia (CICA), which excludes the United States.107

Chinese Foreign Minister Wang Yi has also called 2015 the year of China-ASEAN maritime cooperation, seeking to defuse the rising tensions over South China Sea claims.108 Although these cooperative, positive-sum efforts are likely to continue, our research indicates that such initiatives will be unlikely to change strategic calculations among countries that maintain an alliance relationship with the United States or a have a significant territorial dispute with China.

Finally, this research suggests that the competition for nonaligned East Asian states—such as Singapore and Indonesia—may intensify due to the limited number of states that we would describe as hedging. With fewer states truly non-aligned, the United States and China have increased incentive to compete for influence, raising the leverage that these states may have to win concessions from the major powers. Although Sino-American competition for influence over already aligned secondary states will likely continue (as evidenced most recently by Chinese outreach to Thailand and U.S. approaches to Burma), the remaining nonaligned secondary states are likely to have outsized regional influence.

As East Asian power dynamics continue to shift, the responses of regional secondary states are likely to be a critical area of study and debate. Over the last decade, hedging has been a central element of the literature on regional responses to China’s rise. For leaders in both Washington and Beijing, this more refined conceptualization of hedging is critical to a proper understanding of and response to the evolving security environment in East Asia.

Acknowldegements

The authors wish to thank those who reviewed and provided feedback on previous drafts, including the anonymous reviewers, Omar Bashir, Victor Cha, Michael Green, G. John Ikenberry, Van Jackson, and attendees at the workshop on “Managing International Conflict in East Asia” held by the University of Tokyo’s Security Studies Unit in January 2014, the 2014 International Studies Association Annual Convention, the 2014 American Political Science Association Annual Meeting, and the 6th Oceanic Conference on International Studies.

Notes

 

See Van Jackson, “Power, Trust, and Network Complexity: Three Logics of Hedging in Asian Security,” International Relations of the Asia-Pacific 14, no. 3 (2014): 331–56.

 

Recent descriptions of hedging include: the 2006 U.S. National Security Strategy, which noted, “our strategy seeks to encourage China to make the right strategic choices for its people, while we hedge against other possibilities.” “The National Security Strategy of the United States of America” (Washington, DC, The White House, 2006), 32; Evan S. Medeiros, “Strategic Hedging and the Future of Asia-Pacific Stability,” Washington Quarterly 29, no. 1 (Winter 2005–2006): 145–67; Rosemary Foot, “Chinese Strategies in a US-Hegemonic Global Order: Accommodating and Hedging,” International Affairs 82, no. 1 (January 2006): 77–94; Wojtek M. Wolfe, “China’s Strategic Hedging,” Orbis 57, no. 2 (Spring 2013): 300–13; Brock F. Tessman, “System Structure and State Strategy: Adding Hedging to the Menu,” Security Studies 21, no. 2 (April 2012): 192–231.

 

David Kang, “Getting Asia Wrong: The Need for New Analytical Frameworks,” International Security 27, no. 4 (Spring 2003): 57–85; Evelyn Goh, “Great Powers and Hierarchical Order in Southeast Asia: Analyzing Regional Security Strategies,” International Security 32, no. 3 (Winter 2007/2008): 113–57; Steve Chan, Looking for Balance: China, the United States, and Power Balancing in East Asia (Stanford, CA: Stanford University Press, 2012).

 

Yuen Foong Khong, “Coping with Strategic Uncertainty: The Role of Institutions and Soft Balancing in Southeast Asia’s Post-Cold War Strategy,” in Rethinking Security in East Asia: Identity, Power, and Efficiency, ed. Jae-Jung Suh, Peter J. Katzenstein, and Allen Carlson (Stanford, CA: Stanford University Press, 2004), 172–208; Denny Roy, “Southeast Asia and China: Balancing or Bandwagoning?” Contemporary Southeast Asia 27, no. 2 (August 2005): 305–22; Evelyn Goh, “Understanding ‘Hedging’ in Asia-Pacific Security,” PacNet 43, 31 August 2006; Cheng-Chwee Kuik, “The Essence of Hedging: Malaysia and Singapore’s Response to a Rising China,”Contemporary Southeast Asia: A Journal of International and Strategic Affairs 30, no. 2 (August 2008): 159–85.

 

Alastair Iain Johnston addresses whether Chinese assertiveness, in addition to military capabilities, has increased over time. Alastair Iain Johnston, “How New and Assertive Is China’s New Assertiveness?” International Security 37, no. 4 (Spring 2013): 7–48.

 

At times China has sought to de-emphasize conflicts of interest, employing charm offensives with certain countries. See Joshua Kurlantzick, Charm Offensive: How China’s Soft Power is Transforming the World (New Haven, CT: Yale University Press, 2007).

 

Balancing is typically described as large and sustained increases in defense spending and/or the pursuit of countervailing alliances in order to bridge the security deficit. See Kenneth N. Waltz, Theory of International Politics (Reading, MA: Addison-Wesley, 1979). Bandwagoning is typically defined as aligning with the source of the danger through offering asymmetric concessions and accepting the illegitimate actions of the dominant ally. See Stephen M. Walt, “Testing Theories of Alliance Formation: The Case of Southwest Asia,” International Organization 42, no. 2 (Spring 1988): 275–316.

 

Randall L. Schweller, “Managing the Rise of Great Powers: History and Theory,” in Engaging China: the Management of an Emerging Power, ed. Alastair Iain Johnston and Robert S. Ross (New York: Routledge, 1999), 1–32.

 

David Kang, China Rising: Peace, Power, and Order in East Asia (New York: Columbia University Press, 2007); Goh, “Great Powers and Hierarchical Order in Southeast Asia,” 113–57; Robert Zoellick, “Whither China: From Membership to Responsibility,” Remarks to the National Committee on US-China Relations, 21 September 2005.

 

Roy, “Southeast Asia and China: Balancing or Bandwagoning?” 305–22; Khong, “Coping with Strategic Uncertainty,” 172–208; Goh, “Great Powers and Hierarchical Order in Southeast Asia,” 113–57. For an alternative approach to hedging as a risk management strategy, see: Tessman, “System Structure and State Strategy,” 192–231.

 

Øystein Tunsjø makes a similar observation in the context of Chinese energy security. Tunsjø describes hedging as “a strategy aiming to reconcile conciliation and confrontation in order to remain reasonably well positioned regardless of future developments.” Øystein Tunsjø, Security and Profit in China’s Energy Policy: Hedging Against Risk (New York: Columbia University Press, 2013), 2–3.

 

Yasuhiro Matsuda, “Engagement and Hedging: Japan’s Strategy toward China,” SAIS Review of International Affairs 32, no. 2 (Summer–Fall 2012): 109.

 

Ibid.

 

For simplicity, we use the term engagement to apply to fostering positive relations, and the term risk management to cover various forms of balancing behavior. These labels appear in the studies cited above as well as studies of individual countries such as Björn Jerdén and Linus Hagström, “Rethinking Japan’s China Policy: Japan as an Accommodator in the Rise of China, 1978–2011,” Journal of East Asian Studies 12, no. 2 (May­–August 2012): 215–50; Bjorn Elias Mikalsen Grønning, “Japan’s Shifting Military Priorities: Counterbalancing China’s Rise,” Asian Security 10, no. 1 (2014): 1–21; Kuik, “The Essence of Hedging,” 159–85; Andrew Tan, “The U.S. and China in the Malay Archipelago,” Asia-Pacific Review 17, no. 2 (2010): 26–55; See Seng Tan, “Faced with the Dragon: Perils and Prospects in Singapore’s Ambivalent Relationship with China,”Chinese Journal of International Politics 5, no. 3 (Autumn 2012): 245–65; James Manicom and Andrew O’Neil, “China’s Rise and Middle Power Democracies: Canada and Australia Compared,” International Relations of the Asia-Pacific 12, no. 2 (May 2012): 199–228; James Reilly, “Counting On China?: Australia’s Strategic Response to Economic Interdependence,” Chinese Journal of International Politics 5, no. 4 (Winter 2012): 369–94; Robert S. Ross, “Balance of Power Politics and the Rise of China: Accommodation and Balancing in East Asia,” Security Studies 15, no. 3 (July 2006): 355–95; David C. Kang, “Between Balancing and Bandwagoning: South Korea’s response to China,” Journal of East Asian Studies 9, no. 1 (January–April 2009): 1–28; Renato Cruz De Castro, “The Aquino Administration’s Balancing Policy against an Emergent China: Its Domestic and External Dimensions,” Pacific Affairs 87, no. 1 (March 2014): 5–27; Ann Marie Murphy, “Beyond Balancing and Bandwagoning: Thailand’s Response to China’s Rise,” Asian Security 6, no. 1 (2010): 1–27.

 

To be clear, not every scholar describes every state as hedging, but almost all recognize the dualism in East Asian states’ policy responses embodied by the welcoming of the benefits from positive relations with China, combined with a need to address future risks.

 

Adam P. Liff, “Whither the Balancers?” Security Studies (forthcoming).

 

The balancing-bandwagoning concept was fashioned for larger states and is most useful for analyzing alignment decisions during wartime. It is accordingly less helpful when conflict is not immediately apprehended. Glenn H. Snyder writes that the “balancing-bandwagoning dichotomy is… unfortunate… [and] obscures the full range of choices within the alliance realm and inhibits more discriminating analysis.” Glenn H. Snyder, “Alliances, Balance, and Stability,” International Organization 45, no. 1 (Winter 1991): 121–42. Ann Marie Murphy argues that we need to move beyond the dichotomy in “Beyond Balancing and Bandwagoning,” 1–27.

 

Kuik, “The Essence of Hedging,” 159–85; Chan, Looking for Balance.

 

Kang, “Getting Asia Wrong,” 57–85; Kang, China Rising; Goh, “Great Powers and Hierarchical Order in Southeast Asia,” 113–57.

 

Ross, “Balance of Power Politics and the Rise of China,” 355–95.

 

Chan, Looking for Balance, 51.

 

Ibid.

 

Ibid. See also Daniel H. Nexon, “The Balance of Power in the Balance,” World Politics 61, no. 2 (April 2009): 330–59.

 

Walt, “Testing Theories of Alliance Formation,” 275–316.

 

Compare this to balancing and bandwagoning, which are legitimate alternatives. Hedging is not an alternative to balancing and bandwagoning, since it is optimal for a state to avoid balancing and bandwagoning and instead hedge wherever possible. Note that we do not argue that fostering positive political and economic relations can never further security interests. The strategies of engagement and binding described by Schweller are designed to reduce the risk that a dissatisfied power will resort to war. Our argument is that including these strategies as part of the hedging concept offers little analytical traction because they do not involve costly trade-offs, admitting no variation in state behaviour and offering little insight into a state’s alignment choice: Schweller, “Managing the Rise of Great Powers,” 1–31.

 

Gary King, Robert O. Keohane, and Sidney Verba, Designing Social Inquiry: Scientific Inference in Qualitative Research (Princeton, NJ: Princeton University Press, 1994). Kuik makes a deft attempt to distinguish variation within hedging strategies, but even his identification of different behaviors admits to only minor variation and relies on policy differences between Malaysian and Thailand on one hand, and Singapore and Indonesia on the other, which in our view are marginal at best. Kuik, “Essence of Hedging,” 166.

 

Nexon, “Balance of Power in the Balance,” 330–59.

 

Goh explicitly defines hedging as the avoidance of trade-offs: Evelyn Goh, Meeting the China Challenge: The U.S. in Southeast Asian Regional Security Strategies (Washington, DC: East-West Center, 2005), 22–23.

 

On the need for signals to be costly to be credible, see Thomas C. Schelling, Arms and Influence: With a New Preface and Afterword (New Haven, CT: Yale University Press, 2008); James D. Fearon, “Signaling Foreign Policy Interests: Tying Hands versus Sinking Costs,” Journal of Conflict Resolution 41, no. 1 (February 1997): 68–90.

 

In this construction, the potential for competition does not nullify bases for cooperation, but the potential for cooperation does not remove the risk of competition.

 

James D. Morrow, “Alliances, Credibility, and Peacetime Costs,” Journal of Conflict Resolution 38, no. 2 (June 1994): 270–97; James D. Morrow, “Alliances: Why Write Them Down?”Annual Review of Political Science 3, no. 1 (June 2000): 63–83.

 

This definition of alignment is simply a weak form of alliance, which Alastair Smith defines as a voluntary agreement between two states representing a nonbinding commitment to help each other in the event of a conflict. Alastair Smith, “Alliance Formation and War,” International Studies Quarterly 39, no. 4 (December 1995): 405–25. See also Morrow, “Alliances, Credibility, and Peacetime Costs,” 270–97. Alignments include alliances, but unlike alliances do not require an explicit commitment. However, because anything that an alliance accomplishes during wartime can also be accomplished without a prewar alliance, alliances are still just a signal and thus can be thought of as a subset of the broader alignment phenomenon. See Morrow, “Alliances: Why Write Them Down?” 63–83.

 

Our setup derives from the discussion of alliances by James D. Morrow. States have preferred ideal points over international issues, and their security is defined as their ability to maintain the status quo on issues currently in a favorable equilibrium. See James D. Morrow, “Alliances and Asymmetry: An Alternative to the Capability Aggregation Model of Alliances,” American Journal of Political Science 35, no. 4 (November 1991): 904–33.

 

The spectrum is informed by: John D. Ciorciari, The Limits of Alignment: Southeast Asia and the Great Powers since 1975 (Washington, DC: Georgetown University Press, 2010); Zachary Selden, “Balancing Against or Balancing With?: The Spectrum of Alignment and the Endurance of American Hegemony,” Security Studies 22, no. 2 (April 2013): 330–64.

Table 1 Spectrum of Security Alignment Behaviors.

CSVPDFDisplay Table

 

Formal alliances are normally accompanied by the building of alliance bureaucracies that provide a specific instrument to coordinate behavior thereby strengthening the signal of shared interests.

 

Brett Ashley Leeds and Burcu Savun discuss the cost-benefit trade-off in the context of alliances. Brett Ashley Leeds and Burcu Savun, “Terminating Alliances: Why do States Abrogate Agreements?” Journal of Politics 69, no. 4 (November 2007): 1118–32.

 

Prewar planning or coordination improves the expected outcome from fighting. Alignment may also bring positive (nonsecurity) externalities, economically if it fosters trade or investment relationships, diplomatically if alignment increases the state’s influence in international affairs, and domestically if the alignment generates prestige for government leaders. Morrow, “Alliances, Credibility, and Peacetime Costs,” 270–97.

 

Morrow, “Alliances: Why Write Them Down?” 63–83.

 

Victor D. Cha, “Abandonment, Entrapment, and Neoclassical Realism in Asia: The United States, Japan, and Korea,” International Studies Quarterly 44, no. 2 (June 2000): 261–91.

 

In the alliance literature this is referred to as an “asymmetric alliance.” Morrow, “Alliances and Asymmetry,” 904–33.

 

On the trade-off between the fear of entrapment and the fear of abandonment inherent in all alliances, see Glenn H. Snyder, “Theory: Alliance Management” in Snyder, Alliance Politics (Ithaca, NY: Cornell University Press, 1997).

 

The theoretical and empirical debate surrounding whether reputation inferences are drawn in international relations is vigorous. Do an opponent’s past actions affect policymakers’ expectations of how it will behave in the present? Some empirical studies question whether reputation matters: Ted Hopf, Peripheral Visions: Deterrence Theory and American Foreign Policy in the Third World, 1965–1990 (Ann Arbor, MI: University of Michigan Press, 1994); Jonathan Mercer, Reputation and International Politics (Ithaca, NY: Cornell University Press, 1996); Daryl G. Press, Calculating Credibility: How Leaders Assess Military Threats (Ithaca, NY: Cornell University Press, 2005). However, more recent efforts offer both theoretical reasoning and empirical evidence re-establishing reputation’s importance: Allan Dafoe, Jonathan Renshon, and Paul Huth, “Reputation and Status as Motives for War,” Annual Review of Political Science 17 (2014): 371–93; Keren Yarhi-Milo and Alex Weisiger, “Revisiting Reputation: How do Past Actions Matter in International Politics,” International Organization (forthcoming). We do not seek to decide this debate here, but observe that it matters what the great power’s reputation is for—the circumstances in which resolve is at stake. See Dafoe, Renshon, and Huth, “Reputation and Status as Motives for War,” 380; Douglas M. Gibler, “The Cost of Reneging: Reputation and Alliance Formation,” Journal of Conflict Resolution 52, no. 3 (June 2008): 425–54; Marc J. C. Crescenzi, Jacob D. Kathman, Katja B. Kleinburg, and Reed M. Wood, “Reliability, Reputation, and Alliance Formation,” International Studies Quarterly 56, no. 2 (June 2012): 259–74; Gregory D. Miller, The Shadow of the Past: Reputation and Military Alliances before the First World War (Ithaca, NY: Cornell University Press, 2012).

 

Morrow, “Alliances: Why Write Them Down?,” 63–83.

 

Secondary states can still engage in policy disputes with great power alignment partners that have no bearing on alignment posture. The question is whether signals are being sent which undermine the scale of and commitment to security cooperation.

 

Joanne Gowa, Allies, Adversaries, and International Trade (Princeton, NJ: Princeton University Press, 1994).

 

Jean-Marc F. Blanchard and Norrin M. Ripsman, “Measuring Economic Interdependence: A Geopolitical Perspective,” Geopolitics and International Boundaries 1, no. 3 (1996): 225–46.

 

Robert O. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton, NJ: Princeton University Press, 1984).

 

We thank an anonymous reviewer for cogently arguing this point.

 

Ely Ratner, “Making Bank,” Foreign Policy, 23 October 2014, http://foreignpolicy.com/2014/10/23/making-bank/.

 

Australia’s Prime Minister Tony Abbott reportedly received a personal request from U.S. Secretary of State John Kerry not to join the AIIB: “John Kerry to Tony Abbott: Steer Clear of China Bank,” Australian Financial Review, 23 October 2014, http://www.afr.com/news/policy/foreign-affairs/john-kerry-to-tony-abbottsteer-clear-of-china-bank-20141023-11aw96.

 

Two founding members included the Philippines and Vietnam who, at the time, were engaged in serious and ongoing territorial disputes with China in the South China Sea.

 

Morrow, “Alliances, Credibility, and Peacetime Costs,” 270–97.

 

South Korea does have an overlapping claim with China over Socotra Rock (known as Ieodo in South Korea and Suyan Rock in China). We classify this claim is minor, however, due to statements by both sides downplaying the dispute and because the United Nations Convention on the Law of the Sea classifies the rock as a submerged reef that cannot be claimed as territory. Thailand’s recent history of political upheaval and its increasing skepticism of the United States raise questions at the time of writing (early 2015) about whether Thailand will alter its alignment in the future. Nevertheless, this domestic political instability makes it difficult for us to examine its alignment decisions in this treatment.

 

On Malaysia’s perception of the security dispute with China, see Stuart Grudgings, “Insight— China’s Assertiveness Hardens Malaysian Stance in Sea Dispute,” Reuters, 26 February 2014, http://uk.reuters.com/article/2014/02/26/uk-malaysia-china-maritime-insight-idUKBREA1P1Z020140226.

 

Indonesia’s exclusive economic zone does overlap with China’s nine-dash line, but Indonesia has thus far maintained that it is not a claimant to disputes in the South China Sea. See Prashanth Parameswaran, “Indonesia Avoids Open Territorial Dispute, Despite Concerns,” China Brief 14, no. 13, 3 July 2014, http://www.jamestown.org/single/?tx_ttnews[tt_news]=42584&no_cache=1#.U_IChWMd3Sg. Brunei has claimed the southern Spratly Islands as part of its continental shelf, but Brunei does not occupy any land features in the region and has not attempted to enforce its claims. See Tessa Jamandre, “Brunei Snubs Phl, Others on United Stand vs. China,” Philippine Star, 3 March 2014, http://www.philstar.com/headlines/2014/03/03/1296636/brunei-snubs-phl-others-united-stand-vs.-china.

 

On its face, South Korea would seem an even better case study of a reserved ally than Australia, given that its economic interdependence with China is arguably even deeper than Australia’s and its proximity to the mainland increases its exposure to destabilizing activity in the region. However, we do not consider South Korea to be an appropriate case because its dominant security challenge arises not from managing great power relationships, but from a third party: Seoul remains focused on the danger of North Korean provocation, its nuclear and missile programs, and the potential for a political and humanitarian crisis if the regime in Pyongyang collapses. South Korea’s arguable strengthening of security ties with the United States in recent years may accordingly have less to do with how it evaluated the trade-offs of closer alignment with the United States or China, and more with the possibility of an increased threat from Pyongyang. The North Korea situation thus represents a potentially confounding variable that may bias any inference. The impact of third party security threats on hedging behavior thus lies outside the scope of our model. This is regrettable given the central policy importance of Seoul’s efforts to balance its relationships with Washington and Beijing, and we hope future research can extend our framework to incorporate this security dynamic.

 

Kurt M. Campbell and Ely Ratner, “Far Eastern Promises: Why Washington Should Focus on Asia,” Foreign Affairs 93, no. 3 (May 2014): 106–16.

 

Ely Ratner, “Rebalancing to Asia with an Insecure China,” Washington Quarterly 36, no. 2 (Spring 2013): 21–38.

 

David Fouse, “Japan’s New Defense Policy for 2010: Hardening the Hedge,” Korean Journal of Defense Analysis 23, no. 3 (2011): 489–501; Axel Berkofsky, “Japan’s December 2010 ‘National Defense Program Guidelines (NDPG)’: The ‘Big Bang’ of Japanese Security and Defense Policies?” Korean Review of International Studies 14, no. 1 (2011): 33–52.

 

For prior calls for a more robust U.S.-Japan alliance, see Michael J. Green and Patrick M. Cronin, ed., The U.S.-Japan Alliance: Past, Present, and Future (New York: Council on Foreign Relations Press, 1999).

 

“National Defense Program Guidelines for FY 2014 and Beyond,” Japanese Ministry of Defense, 17 December 2013, http://www.mod.go.jp/j/approach/agenda/guideline/2014/pdf/20131217_e2.pdf.

 

“Joint Statement of Security Consultative Committee: Toward a More Robust Alliance and Greater Shared Responsibilities,” United States Department of State, 3 October 2013, http://www.state.gov/r/pa/prs/ps/2013/10/215070.htm.

 

Echoing the importance of Japan’s ability to defend U.S. forces, U.S. chairman of the Joint Chiefs of Staff General Martin E. Dempsey noted that, “The Japanese Self Defense Forces’ ability and willingness to not only protect themselves, but their closest partners… is an important step for the region,” quoted in Jim Garamone, “Chairman Stresses Value of Military Partnerships,” DoD News, 2 July 2014, http://www.defense.gov/news/newsarticle.aspx?id=122597.

 

“Hagel Welcomes Japan’s New Collective Self-defense Policy,” DoD News, 1 July 2014, http://www.defense.gov/news/newsarticle.aspx?id=122591.

 

“Joint Statement of Security Consultative Committee,” 3 October 2013.

 

“The Guidelines for Japan-U.S. Defense Cooperation,” Japanese Ministry of Defense, 27 April 2015, http://www.mod.go.jp/e/d_act/anpo/.

 

Koji Sonoda, “A Lot of New Equipment Purchases in Latest 5-year Defense Plan,” Asahi Shimbun, 14 December 2013, http://ajw.asahi.com/article/behind_news/politics/AJ201312140033.

 

See Michael J. Green and Nicholas Szechenyi, “Japan Takes a Step Forward on Defense Policy Reform,” Center for Strategic and International Studies, 2 July 2014, http://csis.org/publication/japan-takes-step-forward-defense-policy-reform.

 

For Prime Minister Abe, the Secrets Law was important because its perceived value in advancing Japan’s commitment to information security, as outlined in the October 2013 2+2 Agreement between the United States and Japan. The Secrets Law also indicates in Article 3 that such activities as “mutual defense support between Japan and the United States” would be designated as “special secrets.” Also see “Tokutei Himitsu no Hogo ni kansuru Hōritsu (Act on Protection of Specified Secrets),” Japanese Diet, 6 December 2013, http://search.e-gov.go.jp/servlet/PcmFileDownload?seqNo=0000103648.

 

Lucy Craft, “Japan’s State Secrets Law: Hailed By U.S., Denounced By Japanese,” National Public Radio, 31 December 2013, http://www.npr.org/blogs/parallels/2013/12/31/258655342/japans-state-secrets-law-hailed-by-u-s-denounced-by-japanese.

 

Julia Gillard and Barack Obama, “Remarks by President Obama and Prime Minister Gillard in Joint Press Conference,” The White House, 16 November 2011, http://www.whitehouse.gov/the-press-office/2011/11/16/remarks-president-obama-and-prime-minister-gillard-australia-joint-press.

 

Nick Bisley, “‘An Ally for All the Years to Come’: Why Australia is not a Conflicted US Ally,” Australian Journal of International Affairs 67, no. 4 (August 2013): 403–18.

 

Ross Babbage describes a possible defense policy option which would reduce dependence on the United States through heavy investments in military capabilities, but which would be highly costly, possibly requiring a 25–50 percent increase in defense spending over ten years. Ross Babbage, “Australia’s Strategic Edge in 2030,” Kokoda Paper, no. 15, February 2011.

 

Hugh White, ”Power Shift: Australia’s Future between Washington and Beijing,” Quarterly Essay 39 (2010): 1–74; Hugh White, The China Choice: Why America Should Share Power (Sydney: Black, 2012).

 

Fergus Hanson, “The Lowy Institute Poll 2012: Public Opinion and Foreign Policy,” Lowy Institute for International Policy, 5 June 2012, http://www.lowyinstitute.org/publications/lowy-institute-poll-2012-public-opinion-and-foreign-policy; Alex Oliver, “The Lowy Institute Poll 2014,” Lowy Institute for International Policy, 2 June 2014, http://www.lowyinstitute.org/publications/lowy-institute-poll-2014.

 

The ADIZ announcement was described as “unhelpful” by Foreign Minister Julie Bishop. John Kerin, “Bishop Queries China over Air Rights Claim,” Australian Financial Review, 27 November 2013, 6.

 

Ross Fitzgerald, “No Time to be Meekly Standing By, Placating Other Lands,” Australian, 4 January 2014, 12.

 

“PM’s High Wire Act,” Australian Financial Review, 3 July 2013, 52.

 

Brendan Nicholson, “‘China Land Grab a Danger for All’: Dennis Richardson,” Australian, 28 May 2015, http://www.theaustralian.com.au/national-affairs/defence/china-land-grab-a-danger-for-all-dennis-richardson/story-e6frg8yo-1227371948850.

 

Goh, “Meeting the China Challenge,” 22–23.

 

John D. Ciorciari and Jessica Chen Weiss, “The Sino-Vietnamese Standoff in the South China Sea,” Georgetown Journal of International Affairs 13, no. 1 (Winter/Spring 2012): 61–69; Tomotaka Shoji, “Vietnam, ASEAN, and the South China Sea: Unity or Diverseness?” NIDS Journal of Defense and Security, 14, no. 1 (December 2011): 3–21.

 

Ciorciari and Weiss describe these moves as “the most significant defense opening in decades.” Ciorciari and Weiss, “The Sino-Vietnamese Standoff in the South China Sea,” 64.

 

Shoji, “Vietnam, ASEAN, and the South China Sea,” 14.

 

Ibid., 15.

 

Carlyle A. Thayer, “South China Sea Two-Step,” Wall Street Journal, 25 November 2011, 12.

 

Some examples are increases in high-level diplomatic and military visits between the two nations and expanded security collaboration on issues like the use of Cam Ranh Bay. See Carl Thayer, “Vietnam Gradually Warms up to US Military,” Diplomat, 6 November 2013, http://thediplomat.com/2013/11/vietnam-gradually-warms-up-to-us-military/; Greg Torode, “Hanoi Plays Up Beijing Ties Ahead of Panetta Visit,” South China Morning Post, 3 June 2012, 1.

 

The extent to which May 2014 was a turning point is evidenced by the fact that just a few months prior, Vietnamese media had been instructed to downplay grievances with China on the 35th anniversary of the Sino-Vietnamese border war in effort to sustain positive relations. Trung Nguyen, “Vietnam Muted Ahead of Border War Anniversary,” Voice of America, 12 February 2014, http://www.voanews.com/content/vietnam-muted-ahead-of-border-war-anniversary/1850215.html.

 

Nguyen Manh Hung, “Chinese Oil Rig and Vietnamese Politics: Business as Usual?” cogitASIA, 25 August 2014, http://cogitasia.com/chinese-oil-rig-and-vietnamese-politics-business-as-usual/.

 

Kristine Kwok and Julian Ryall, “Vietnam Edges Closer to Old US Foe as Maritime Dispute with China Heats Up,” South China Morning Post, 29 May 2014, http://www.scmp.com/news/asia/article/1521439/vietnam-edges-closer-old-us-foe-maritime-dispute-china-heats. In an interview with Bloomberg, Vietnamese Prime Minister Nguyen Tan Dung said that Vietnam “hoped that the United States will make stronger, more practical and more effective contributions to peace and stability in the region.” “PM Nguyen Tan Dung grants interview to Bloomberg,” Vietnam News, 31 May 2014, http://vietnamnews.vn/politics-laws/255609/pm-nguyen-tan-dung-grants-interview-to-bloomberg.html.

 

Carl Thayer, “Vietnam Mulling New Strategies to Deter China,” The Diplomat, 28 May 2014, http://thediplomat.com/2014/05/vietnam-mulling-new-strategies-to-deter-china/.

 

Jane Perlez, “In China’s Shadow, U.S. Courts Old Foe Vietnam,” New York Times, 16 Aug-ust 2014, http://www.nytimes.com/2014/08/17/world/asia/in-chinas-shadow-us-courts-old-foe-vietnam.html?_r=0.

 

Le Hong Hiep, “Vietnam’s Hedging Strategy against China since Normalization,” Contemporary Southeast Asia: A Journal of International and Strategic Affairs 35, no. 3 (December 2013): 360.

 

Ibid., 359.

 

See, for example, Greg Torode, “Keeping Ghosts at Bay,” South China Morning Post, 10 June 2012, http://www.scmp.com/article/1003573/keeping-ghosts-bay. Moreover, the oilrig incident sparked a populist backlash, with violent protests across Vietnam during which Chinese and other foreign-owned businesses were attacked, damaging Vietnam’s economic reputation. Chris Buckley and Edward Wong, “Unrest Poses a Risky Choice for Vietnam,” New York Times, 17 May 2014, http://www.nytimes.com/2014/05/17/world/asia/in-vietnam-indignation-toward-china-is-likely-to-linger.html.

 

S. R. Nathan, “Singapore’s Foreign Policy: Beginnings and Future” (speech at the MFA Diplomatic Academy’s Inaugural S. Rajaratnam Lecture, Shangri-La Hotel, Singapore, 10 March 2008).

 

Singapore signed a Strategic Framework Agreement with the United States in 2005, and an Agreement on Defense Exchanges and Security Cooperation with China in 2008. “S’pore, US Deepen Security Partnership,” Straits Times, 13 July 2005; “Sino-Singaporean Joint Exercise Boosts Military Ties: Defense Ministry,” Xinhua News Agency, 24 June 2009, http://www.china.org.cn/china/military/2009-06/24/content_18008128.htm. See also “Stealth Bomber Diplomacy,” Straits Times, 3 July 2011.

 

Fred Hiatt, “Singapore on China Policy: Don’t Call it ‘Containment,’ ” Washington Post, 7 February 2012; “S’pore, China Agree to Draw Closer,” Straits Times, 11 February 2012, http://www.mfa.gov.sg/content/mfa/overseasmission/shanghai/press_statements_speeches/2012/201202/press_20120211.html.

 

“US Expected to Keep Up Asian Military Presence,” Straits Times, 7 April 2012; “US Closest Defense Partner of S’pore,” Straits Times, 7 April 2012.

 

“Sino-S’pore Bond is Special, Says Ng Eng Hen,” Straits Times, 22 June 2012.

 

“Leaders Hail Close Ties, High Points,” Straits Times, 5 September 2013.

 

Lee Hsien Loong, “China and the World: Prospering and Progressing Together” (speech at Central Party School, Beijing, 6 September 2012).

 

“Reply by Minister for Defence Dr. Ng Eng Hen to Parliamentary Question on the US Pivot Towards Asia,” Singapore Ministry of Defence, 16 October 2012.

 

The decision was mentioned in passing by the Straits Times in a story about broader US force posture in the region. Jermyn Chow and Ben Nadarajan, “US Navy to Move 60% of Warships to Asia,” Straits Times, 3 June 2012. However, it had been discussed for some time. See “U.S. Plans to Deploy Littoral Combat Ships in Singapore,” Singapore Government News, 4 June 2011.

 

Seng Tan, “Faced with the Dragon,” 254.

 

Ibid., 246.

 

Lally Weymouth, “An Interview with Singapore Prime Minister Lee Hsien Loong,” Washington Post, 15 March 2013, https://www.washingtonpost.com/opinions/an-interview-with-singapore-prime-minister-lee-hsien-loong/2013/03/15/5ce40cd4-8cae-11e2-9838-d62f083ba93f_story.html.

 

“China’s Xi Calls for Asia Security Framework at Summit,” Bloomberg News, 21 May 2014, www.bloomberg.com/news/2014-05-21/china-s-xi-calls-for-asia-security-framework-at-summit.html.

 

“China-ASEAN Strategic Partnership Enter a New State of Development: Chinese FM,” Xinhuanet, 9 August 2014, http://news.xinhuanet.com/english/china/2014-08/10/c_133544829.htm.

A World of Scandal Descends on Malaysian Prime Minister


January 31, 2016

A World of Scandal Descends on Malaysian Prime Minister Najib Razak

by John Berthelsen

http://www.asiasentinel.com/politics/scandal-descends-malaysia-prime-minister/

Malaysian Prime Minister Najib  beset by investigations in Switzerland, France, Saudi Arabia

The world outside of Malaysia appears to be coming apart for Prime Minister Najib Razak, with announcements on Jan. 26 by Swiss authorities that as much as US$4 billion has been stolen from the state-backed 1MDB investment fund, and a report in France that two officials of a state-owned defense contractor were indicted in December for bribing Najib in the 1996 US$1 billion purchase of French submarines.

The events followed a disastrous press conference on Jan. 26 by Attorney General Mohamed Apandi Ali supposedly clearing Najib of wrongdoing over RMB2.82 billion (US$681 million) that had ended up in his personal bank account in 2013. Enterprising news photographers using telephoto lenses caught pictures of the papers he was waving during the press conference. The papers actually described a money trail of millions of ringgit of public money that flowed into Najib’s personal accounts.

Apandi Ali’s assertion that the money came from the Saudi royal family has been met with widespread derision.  In all, the aftermath of the Attorney-General’s press conference presents a picture of a government desperately scrambling to contain a widening scandal. The Saudi government is said to be investigating the assertion that the royal family had made the donation, which is felt to be highly unlikely, especially in the light of the Swiss investigation.

Najib stonewalls

If the world outside is coming apart for Najib, however, he has done his level best to try to contain news of the scandal inside the country, blocking critical international news organizations including Asia Sentinel and Sarawak Report. This week the government also blocked the enormously popular blog platform Medium for reprinting Sarawak Report articles, although those articles represent a tiny fraction of the blog platform’s output by thousands of bloggers, many of whom merely publish recipes or stories about their cats.

In addition to blocking Asia Sentinel and Sarawak Report, the government in July 2015 suspended the influential business publication The Edge and its sister paper for three months for printing details of the 1MDB mess. Police in May arrested journalists from the news portal Malaysian Insider and in November raided the offices of another, Malaysiakini. It has recently toughened laws against online media.  Nonetheless, both published the news of the Swiss action.

The mainstream media,  including radio, television and newspapers, all of which are owned by government-aligned political parties,  have been put on notice to be careful of what they air or print. The government has charged opposition politicians with sedition for seeking to investigate the various scandals and sought to curb public statements of critics by threatening them with jail – including the 90-year-old former Prime Minister Mahathir Mohamad, the man who engineered his ascent to the top job by driving his predecessor, Ahmad Abdullah Badawi, from office.

 Ampu Man Apandi Ali and Journalist John Berthelsen

Najib and Apandi Ali have silenced Malaysian Anti-Crime Commission investigators and pigeonholed an investigation into the movement of money by Central Bank Governor Zeti Akhtar Aziz.

Any of the scandals would have driven another person from office. But Najib, backed by his tenacious wife Rosmah Mansor, has stonewalled all challenges, charging racism or a cabal by unknown dark forces outside the country to push him out. He is said to be seeking a public relations firm to polish his image in preparation for elections in 2018.

But Stonewalling won’t Stop Outside Probes

But the tone of the two new investigations by prosecutors in international courts may be something else. Other probes are moving forward by the US government for money-laundering and in other countries as well. While Najib continues via patronage, bribes or makework jobs to receive the solid backing of the UMNO cadres who elect him, the international problems he faces could make it a new ballgame. It is too early to tell.

The Swiss in particular were upset with Apandi Ali’s announcement that the investigation had ended, issuing a terse one-page press release late on Jan. 29 saying the Swiss authorities had requested cooperation with Malaysia for mutual assistance in a criminal investigation of two former officials of 1MDB and “persons unknown,” presumably Taek Jho Low and Najib, for misconduct in public office, money laundering and criminal mismanagement.

The Swiss authorities said the Swiss Attorney General had met with Apandi Ali in September to discuss mutual cooperation into the 1MDB investigation.  In conversations with the Wall Street Journal, they said they were surprised and disappointed that the Malaysian attorney general had closed the case, saying the lack of cooperation would hamper their efforts to get to the bottom of the scandal.

“The sum suspected to have been misappropriated amounts to around USD 4 billion,” the Swiss statement said. “So far it has been ascertained that a small portion of the money was transferred to accounts held in Switzerland by various former Malaysian public officials and both former and current public officials from the United Arab Emirates.”

Cherchez Le Premier

Meanwhile, in Paris yesterday, Agence France Presse quoted judicial sources as saying Bernard Baiocco, 72, former president of Thales International Asia (Thint Asia), a unit controlled by the French munitions manufacturer DCN, was indicted on December 15 for “active bribery of foreign public officials on people including Najib Razak.”

Najib was Defense Minister at the time of the alleged bribe, amounting to €114 million which appears to have been passed on to the United Malays National Organization. Baiocco was held in custody for 48 hours, according to AFP, together with the Directorate of Naval Construction (DCN) for the sale, who was also indicted for complicity in misuse of corporate assets, the sources said.

DCN weapons sales across the world were the subject of astonishing scandals that stretched across half the earth to Pakistan, Taiwan, Malaysia, India and untold numbers of other countries whose defense ministries bought armaments from the French defense giant around the turn of the century. At least three of those sales have been dogged with stories of bribery and the murder or unexplained deaths of 19 people. According to other revelations, the sale of submarines to India is also suspected of “non-compliance” with the OECD Convention on Bribery.

“This is an important and encouraging step,” William Bourdon, the crusading French lawyer who brought the case on behalf of Suaram, the Malaysian reform NGO, told AFP. Suaram took the case to Bourdon on the basis of stories written by Asia Sentinel after the death of a Mongolian woman named Altantuya Shaariibuu in 2006 at the hands of two of Najib’s bodyguards.

“The French judges show, even if the investigation goes on, their ability to dissect complex corruption mechanisms, Bourdon said. “In some respects, the investigation is just beginning.”

Bourdon was kicked out of Malaysia when he flew there in 2013 to attempt to interview witnesses involved in the case.

In Paris, according to AFP, the prosecuting judges suspected sums from a firm called “C5 Commercial Engineering” provided for payment by DCNI, a subsidiary of DCN, of €30 million to Thales International Asia, for “selling expenses for export (FCE).”

Another company, the Hong Kong-based Terasasi Hong Kong Ltd., whose main shareholder was Razak Baginda, received almost the same amount for consultations. Investigators suspect the consultations of being a front for bribes.

 

Open Letter: Thanks, but no thanks, Obama


January 30, 2016

Open Letter: Thanks, but no thanks, Obama

by Ahmad Azrai

HE President Barack H. Obama
The White House
1600 Pennsylvania Avenue
Washington DC, USA

Dear Mr President,

Obama shakes hands with Najib

A belated Happy New Year to you! It still applies, as Chinese New Year is coming up soon. Anyway, you don’t know me, but I am a citizen of the nation for which one of your golfing buddies is the political leader (no, not Bill Clinton). I just wanted to drop you a note, and make a request.

Like many around the world, I admired you for being you: the history-making president; the first non-white male to break the old boy’s club of Pennsylvania Avenue; the lawyer who became a law unto himself, figuratively speaking; the honourably honest husband and fantastic father who managed to reverse his country’s economic fortunes, started some reform of Wall Street, made it irrelevant to ask or to tell, instituted a monumental healthcare initiative, and was the leader presiding over the team that killed the infamous Osama bin Laden.

Heck, not only are you a walking poster for multiracial success, you even speak flawless Bahasa Indonesia, adding multilingualism to your long list of credentials. And you still have most of a year to go before you step down for good. “Hope” was definitely the most well-chosen campaign theme ever. Kylo Ren’s grandfather would have been impressed.

However, all that you have gotten for your accomplishments are complaints and brickbats by your fellow countrymen, from the gun-toting, Bible-thumping, abortion-hating homophobic retrenched Ford-factory worker all the way to the resident of Trump Tower (there may be some overlapping of categories). Blaming you for everything — from burnt toast to Hurricane Joaquin — unlocked that ultimate in achievements: becoming an Internet meme. All thanks to you, if you’ll pardon the pun.

Well, all I can say is that you need not worry so much about that. The grass is always greener on the other side, and American history is on your side — so even though they would not care to accept the truth, the American people will one day see that you did do amazing stuff, and that they should not be so ungrateful to you.

President Obama’s Corrupt Malaysian Golf Buddy

Malaysians, on the other hand, are another story. You see, that golfing buddy of yours really is a headache for the rest of us here. In truth, his first official golf game with you meant that he took his own sweet time coming back to Malaysia when an unprecedented natural disaster struck — and the repercussions from that were needlessly aggravating to us citizens. He has just been cleared in a globally embarrassing corruption case — and has been given a clean bill of health by a man who was appointed to a very cushy national directorship.

And what did you do? It looks like you took full advantage of him, by twisting his arm, and essentially forcing him — meaning us — into a Trans-Pacific Partnership Agreement (TPPA) that really is to our disadvantage.

So on behalf of my fellow citizens, I implore you for a belated Christmas present: make him your permanent golf partner, and please take him away from here. You owe us that much, at least, for that TPPA. If you don’t take him, then all we can say is: Thanks, Obama. Thanks for nothing.

Sincerely,

AHMAD AZRAI

 

Scorpene Submarine Corruption Case –Former President of Thales International Asia indicted


January 30, 2016

Scorpene Submarine Corruption Case –Former President of Thales International Asia indicted

by John Berthelsen

http://www.asiasentinel.com

Former boss of a French defense company has been indicted in Paris on charges of bribing Malaysian Prime Minister Najib Razak, involving one of the most notorious scandals in Malaysian history, including sex, corruption, murder and political chicanery.

Finally! French Act in Altantuya Murder Case

Bernard Baiocco, 72, former president of Thales International Asia (Thint Asia), a unit controlled by the French munitions manufacturer DCN, was indicted on Dec 15. for “active bribery of foreign public officials on people including Najib Razak,” according to Agence France Press, quoting judicial sources.

Najib is enmeshed in yet another monumental scandal in Malaysia today over US$681 million mysteriously deposited in his personal account in AmBank Malaysia in 2013 that has nothing to do with the affair when he was defense minister, although both cases illustrate the depth of corruption that has overtaken Malaysia. At least four questionable deaths, three of which were outright murder, have been linked to various cases involving Najib.

As stories have increasingly tied him to wrongdoing, he has sought to intimidate the domestic press, most of it owned by government-aligned political parties.  He has sought vainly to buy up opposition websites and has blocked two of the toughest international critics, Asia Sentinel and Sarawak Report, as well as Medium, a popular blog platform used as a mirror site for opposition publications.

Najib was Minister of Defense at the time of the alleged bribe, amounting to €114 million which appears to have been passed on to the United Malays National Organization. In the early part of the first decade, he embarked on a whirlwind of defense purchases, almost all of which were tainted by bribery. However, it was the purchase of two French Scorpene submarines that represented the most spectacular scandal. The episode was the subject of a prize-winning series of stories by Asia Sentinel.

Baiocco was held in custody for 48 hours, according to AFP, together with the Directorate of Naval Construction (DCN) for the sale, who was also indicted for complicity in misuse of corporate assets, the sources said. According to documents made available to Asia Sentinel in 2013, the scandal involved French officials all the way up to including Alain Juppe, then the foreign minister, and was conducted with the knowledge of then-Malaysia Prime Minister Mahathir Mohamad.

DCN weapons sales across the world were the subject of astonishing scandals, including the deaths of French engineers in Pakistan, reportedly because bribes to Pakistani generals were stopped by French President Jacques Chirac. Others died in Taiwan. DCN has been accused of bribing government officials in half a dozen countries.

“This is an important and encouraging step,” William Bourdon, the crusading French lawyer who brought the case on behalf of Suaram, the Malaysian reform NGO, told AFP. “The French judges show, even if the investigation goes on, their ability to dissect complex corruption mechanisms. In some respects, the investigation is just beginning.” Bourdon was kicked out of Malaysia when he flew there in 2013 to attempt to interview witnesses involved in the case.

The story gained notoriety with the October, 2006 murder by two of Najib’s bodyguards of Altantuya Shaariibuu, a jet-setting Mongolian interpreter and party girl who was said by a Malaysian private detective named Perumal Balasubramajiam, in a sworn statement to have been the plaything of Najib before she was passed on to Razak Baginda, reportedly, the private detective said, because Najib felt a foxy girlfriend who liked anal sex would impede his progress to the prime minister job.  Balasubiamaniam later died of a heart attack although his associates in Kuala Lumpur believe he may have been murdered via an injected drug to induce heart failure during a visit to a government-run hospital.  He died shortly after the visit.

Asia Sentinel was given the Society of Publishers in Asia’s highest award for investigative reporting in 2012 for its series of stories on the murder of Altantuya Shaariibuu and the massive corruption connected to her death with the purchase of Scorpene submarines by the Malaysian government from the French government-owned munitions maker DCN and its subsidiaries. A package of the stories can be found here.

After supposedly being passed on to Razak Baginda by Najib, according to reports in Kuala Lumpur, Razak Baginda and Altantuya toured Europe in Razak Baginda’s Ferrari, pausing for pictures in Paris, before the two broke up. But the 28-year-old Altantuya, apparently pregnant, was furious that the US$500,000 promised her for her role as interpreter in the final stages of the Scorpene deal, flew to Kuala Lumpur to demand payment according to a note she left behind in her hotel room.  She was abducted in front of Razak Baginda’s house in Kuala Lumpur by Najib’s bodyguards and murdered, according to a cautioned statement delivered by one of the two that was never delivered in court. Her body was wrapped in C4 explosive and blown up, presumably to destroy the DNA of the fetus.

The trial of the two, lasting months, was by all accounts designed to steer away from any indication of who had hired the two to kill her. It is a question that has never been asked, and in fact an appellate judge ruled that asking motive in the case was irrelevant. Eventually the two were pronounced guilty and sentenced to hang. However, temporarily freed on appeal, one of the two, Sirul Azhar Umar, fled to Australia where he is being represented by two United Malays National Organization lawyers.  Why UMNO lawyers are defending a convicted murderer in Australia has not been explained.  He is said to be negotiating for a huge bribe to keep his mouth shut.

In Paris, according to AFP, the prosecuting judges said they suspected sums from a firm called “C5 commercial engineering” provided for  payment by DCNI, a subsidiary of DCN, of €30 million to Thales International Asia, for “selling expenses for export (FCE).”  The “selling expenses” are suspected of being a bribe. 

Another company, the Hong Kong-based Terasasi Ltd., whose main shareholder was Razak Baginda, received almost the same amount for consultations. Investigators suspect the consultations of being a front for bribes.

The counsel for Mr. Baiocco, Jean-Yves Le Borgne, said his client’s indictment was based on “legal acrobatics” because “there is no evidence” that the former minister had received funding and its advisor must be considered a “commercial agent,” therefore outside the scope of corruption of public officials.

Your Weekend Entertainment: Back to ’60s


January 30, 2016

Your Entertainment: Back to 1960’s

Malaysia-Land of Beauty and Harmony but Destroyed By Corruption and Inept  Najib’s UMNO Governance

99600626-dave-brubeck-speaks-during-the-2010-george-gettyimages

Generated by IJG JPEG Library

Dr. Dave Brubeck@ The George Washington University–Simply The Best

Dr. Kamsiah who is now in Sarawak on a volunteer mission and Din Merican in Phnom Penh bring back memories of the music of the Golden Sixties. It was a period when we Malaysians were living harmoniously with  one and another, despite the Cold War which was raging in Southeast Asia. That changed when some politicians in our country decided that it was time to play politics with race; and that culminated in the May 13, 1969 riots.

Today, we seem to have forgotten that tragic episode. Our besieged Prime Minister is allowing Malay extremists in UMNO, and mullahs and bigots to play with race and religion, leaving us in a state of tension. We hope he knows what he is doing by engaging in this politics of divide and rule. We should show him and UMNO that we are not going to be drawn into his game and destroy our country.

Let us take good care of our Malaysia. Enjoy the weekend with the music of the Sixties. Let us do the peppermint twist under the Blue Moon .  –Dr Kamsiah and Din Merican

Swiss Question Use of Malaysian Sovereign Fund Run by Prime Minister Najib Razak


January 30, 2016

Swiss Question Use of Malaysian Sovereign Fund Run by Prime Minister Najib Razak

by Louise Story

…the Swiss government announced Friday that it had found serious indications that funds had been misappropriated from Malaysian state-owned companies.-NY Times

 

Days after the Prime Minister of Malaysia was cleared of wrongdoing in an investigation into transfers of money into his bank accounts, the Swiss government announced Friday that it had found serious indications that funds had been misappropriated from Malaysian state-owned companies.

The sovereign wealth fund at the center of the Swiss inquiry, called 1Malaysia Development Berhad, or 1MDB, has been the focus of several investigations around the world as authorities attempt to ascertain whether money vanished in a series of international business deals.

“We believe we have compiled significant evidence of illegal transactions and wrongdoing, which we will transmit to the respective Malaysian authorities in the coming days,” said André Marty, a spokesman for the Swiss Attorney-General, in an email.

The Swiss Attorney-General formally requested help from Malaysia in its investigation, and Mr. Marty said that his office hoped that Malaysia would provide that assistance. He said that Malaysia’s Attorney-General had agreed to do so in a meeting in Switzerland in September.

Apandi Ali

Will he cooperate with  the Swiss Authorities?

Since then, however, Malaysian law enforcement has moved toward closing the investigations into Mr. Najib. The announcement this week focused on questions surrounding nearly $700 million that had been deposited in Mr. Najib’s bank accounts. Malaysia’s attorney general on Tuesday said the money was a personal donation to him from the Saudi Royal Family.

The Swiss announcement on Friday provided details on the direction of Switzerland’s investigation. It said that $4 billion was believed to have been misappropriated and that some of that money was transferred into bank accounts in Switzerland held by former Malaysian public officials and current and former public officials in the United Arab Emirates.

The United Arab Emirates carried out a series of business deals with U.A.E. state companies and 1MDB, and some of those deals are mentioned in the Swiss announcement, including a joint venture in 2013 between 1MDB and a United Arab Emirates state company called Aabar. The announcement also says the Swiss are looking into allegations involving a small oil company called PetroSaudi that carried out a joint venture with 1MDB.

Aiding in both of those deals was a young businessman named Jho Low, who is a longtime friend of the prime minister’s family. Mr. Low was also active in helping the prime minister’s stepson, Riza Aziz, acquire luxury properties in the United States, The Times found in its investigation, and was involved in Mr. Aziz’s movie business in Hollywood. Mr. Aziz has said one of his main financial backers of the movie company was Mohamed Ahmed Badawy al-Husseiny, who was at the time the chief executive of Aabar, the United Arab Emirates company that was a partner in business deals with 1MDB.

The Swiss have not singled out anyone by name in their announcements and have not made it clear whether Mr. Najib will be a target of their investigation. The Department of Justice in the United States is also investigating 1MDB deals as well as properties in the United States owned by Mr. Low and Mr. Aziz.

Representatives for PetroSaudi, Mr. Najib, Mr. al-Husseiny, Mr. Low and Mr. Aziz did not respond to requests for comment.