Free market alternatives


November 27, 2016

Here is something I wrote in The Phnom Penh Post in 1996, which may still be of interest. Of course, Cambodia has come a long way, having achieved average GDP of over 7 per cent p.a. over the last 20 years. It is enjoying peace and security, thanks to the strong leadership of Prime Minister Samdech Techo Hun Sen.–Din Merican

Logo of Phnom Penh Post newspaper

Free market alternatives

The Editor,

I read Mr Matthew Grainger’s balanced and interesting report on the recent CDRI International Roundtable on Structural Adjustment Programme in Cambodia (January 26, 1996). I also read Dr Walden Bello’s paper titled “Economic Liberalization in Southeast Asia: Lessons for Cambodia”, and Dr K.P. Kannan’s paper, “Economic Reform, Structural Adjustment and Development: Issues and Implications”.

Dr Bello of Chulalongkorn University’s Social Research Institute in Thailand and Dr Kannan, CDRIs research director, are reminding policy makers in Cambodia that there is an alternative paradigm for Cambodian economic development to the standard IMF/IBRD prescription of market economics.

Image result for cambodia kingdom of wonder

The trickle-down theory is attractive in concept, but it has limited relevance in the real world due to market imperfections. Government intervention, as a result, is necessary to ensure equity and development without degradation of the environment.

Growth and equity are two sides of the same coin. For that reason, real GDP growth, in my view, is alone not a good indicator, if we ignore the distributional or equity and environmental aspects of development. One has to look at Thailand and Malaysia to realize that this obsession with GDP growth rates among policy makers results in serious socio-economic imbalances with long-term political consequences.

Malaysia’s realization of this problem is now incorporated in its Second Outline Perspective Plan 1991-2000. Even as of yesterday (Feb 13), Malaysia’s Deputy Prime Minister Dato Seri Anwar Ibrahim was reported to have said that in the next Malaysia Plan, our seventh, the social and related aspects of development will receive greater attention. After nearly 40 years of economic management, Malaysia’s decision to evaluate its strategies and adopt new approaches to achieve more balanced development supports Dr. Bello’s call “to articulate an alternative future” and “to ponder carefully the consequences of fast track capitalism…”

We must remind ourselves what development is all about. Here I would quote Dr Kannan:

“In terms of development, the ultimate objective is that of human development and reducing inequities as between people and regions.”

I am, of course, reminded of great development economists of the sixties like Sir Arthur Lewis, Gunnar Myrdal, Jan Tinbergen and Ragnar Nurkse and my mentors in economics, Clifton Wharton Jr., and Ungku Abdul Aziz (Malaysia), who studied the processes of development and underdevelopment with a socio-cultural perspective.

Development is about bringing about systematic change, and providing meaning to the lives of people so that they have opportunities to progress as far as their abilities can take them. It is about ensuring that scarce resources are used responsibly so that succeeding generations can build on the efforts and achievements of their forebears.

It is about institutions, culture and people. It does not exist in a vacuum, certainly not in econometric models, computer simulations, scenario planning systems or in the air-conditioned offices of the World Bank, IMF and the ADB. Most of all, development is about responsibility and accountability for all stakeholders, not a power game.

Image result for cambodia kingdom of wonder

Because it is a grassroots process and culture bound, development must be driven by nationals, in the case of Cambodia by Cambodians, with a shared vision, not by experts who have no stake and who do not have to live with the consequences of their prescriptions. This is not to discount the contributions made by the international community, donor countries and multilateral agencies. But it does emphasize that the granting of technical and financial assistance does not confer on the provider the right to impose their own values, preferences and way of life, or to dictate what is best for the beneficiary.

Cambodian leaders know what they want for their country. They have a clear vision of their country’s future as reflected in their National Programme (NPRD) and this is more than what can be said about some countries in the Third World. They have a strategic purpose which is to create a fair, just and peaceful society and, through strong sustainable economic growth, to raise the living standards for all Cambodians.

Cambodia is committed to a democratic system of government with a Constitutional Monarchy, and free market economic system with the private sector as the engine of growth and government in the role of strategist and manager-mentor.

Cambodia is adopting a state-directed economic growth strategy. This approach accepts the price mechanism, and the market in general, as an efficient allocator of resources. It also taps the dynamism of the private sector, but recognizes that government activism is essential in the area of national strategy in a competitive and interdependent world and to tame the excesses of the profit motive and ensure that economic growth is sustainable, balanced and equitable in the long term.

Image result for cambodia kingdom of wonder

Their development will be on the back of agriculture which is today the step child of most economies in East Asia. It may not be the “sexy thing” to do, but Cambodia is making its first wise move. Modern agriculture backed by advances in bio-technology, efficient water resource management systems, and strong marketing and distribution networks is a profitable undertaking.

Since the private sector is going to be given a prominent role in the development of the Kingdom, the World Bank and other multilateral agencies should finance a master plan study on small and medium scale industries and businesses and recommend policies and strategies for developing this sector. In many countries in East Asia, this sector is the driver of economic activity with the greatest potential for growth.

It is more refreshing to talk about development than other issues, usually negative ones, about Cambodia. The country has done well since the formation of the Royal Government. The tasks and challenges ahead are daunting. Cambodia needs the understanding and the patient support and cooperation of friends. Credit when it is due should be given. Criticisms, on the other hand, should be constructive.

For democracy to survive in Cambodia, economic development is essential. I have not known of any situation in the world where democracy exists side by side with abject poverty, unemployment, illiteracy and social inequities.

I stand, therefore, to be educated by anyone who has had the privilege of seeing democracy in a symbiotic relationship with the aforementioned phenomena.

I hope your readers – especially those in the IMF, World Bank, ADB and UNDP here in Phnom Penh – will respond with their comments on my letter. If that happens, my purpose in writing this letter as a sort of rejoinder to the Cambodian development debate is well served.

Image result for Din Merican

Din Merican 2016

– Din Merican, Phnom Penh. (Din Merican is an economist with an MBA degree from the United States, who worked for more than 30 years in the Central Bank in Malaysia and in the private banking industry. This letter represents his personal views.)

Indonesia’s ASEAN leadership lost at sea


September 17, 2016

Indonesia’s ASEAN leadership lost at sea

by Ristian Atriandi Supriyanto

Indonesia likes to portray itself as first among equals in ASEAN. But it’s fundamentally wrong to conceive of ASEAN as a flock of sheep with Indonesia as the shepherd. Every ASEAN nation has its own set of interests and priorities with Beijing, which has become more influential in dictating their South China Sea policies.–Ristian Atriandi Supriyanto

Image result for ASEAN Leaders at Laos Summit 2016

As ASEAN meetings in Vientiane concluded in September 2016, an air of anxiety was already beginning to settle over the Southeast Asian nations. Further resistance against China’s maritime assertiveness in the South China Sea is provingincreasingly futile. Nothing displays this conviction better than ASEAN’s muted acquiescence towards Beijing’s rejection of a legally binding Permanent Court of Arbitration’s (PCA) decision in July 2016; ignoring calls from the United States andothers. And it’s wrong to assume that Indonesia’s diplomatic heft in ASEAN could change that.

Prior to the PCA decision, Indonesia had been consistently arguing about the illegality of China’s ‘nine-dash’ or ‘U-shaped’ line claim. This stems from its critical stake in the UNCLOS-based global maritime order — a point Indonesia made clear in its 2010 UN note. It thus begs the question why Indonesia’s foreign ministrystatement did not explicitly support the decision, although President Joko Widodo’s parliamentary address reiterated the statement’s call for conciliatory efforts among claimants. Indonesia could have at least amplified its diplomatic concerns on the illegality of the U-shaped line. But it didn’t, despite plenty of opportunities to do so.

Image result for ASEAN Leaders at Laos Summit 2016

Having been embroiled in fishing skirmishes with China recently, Indonesia’s ‘soft’ response towards the PCA decision is surprising indeed. China consistently supports Indonesia’s territorial sovereignty over the Natuna Islands but it remains ambiguous over the maritime boundary. In June, China broke this ambiguity by stating that its ‘traditional fishing grounds’, as part of the U-shape line, overlap with Indonesia’s claimed exclusive economic zone near the Natunas. In spite of Widodo’s ostentatious display, Indonesia is aware of its limitations in the South China Sea, including a disunity of efforts among its government ministries and agencies.

Indonesia’s response to the PCA decision appears to reflect ASEAN’s general tone. During the ASEAN meetings in July, the PCA decision wasn’t mentioned at all in their joint statements. Still, ASEAN foreign ministers were ‘seriously concerned over recent and ongoing developments’, including ‘land reclamation that could further complicate the situation and escalate tensions in the South China Sea’. They also issued a joint statement with China, with both parties pledging ‘to exercise self-restraint’, including refraining from ‘inhabiting on the presently uninhabited islands, reefs, shoals, cays and other features and to handle their differences in a constructive manner’.

Image result for ASEAN Leaders at Laos Summit 2016

To be fair, the foreign ministers’ statement is noticeably strong, implicitly aiming at China’s ongoing reclamation activities. But the joint statement is a bit disingenuous, given the PCA decision that none of the Spratly features legally constitute islands. The recent Vientiane talks also stopped short of targeting the core issues. For instance, it adopted the Code for Unplanned Encounters at Sea, or CUES, for naval forces, despite the fact that paramilitary forces such as coastguards lead much of the maritime assertiveness, especially from China.

At heart is the question of whether ASEAN is able to coalesce vis-à-vis China when its largest member, Indonesia, is fixated on its domestic front. Amid budget cuts, trickling foreign investment, and a depreciating rupiah, the economy is what every sensible Indonesian would care about first and foremost. Simply put, Indonesia just doesn’t feel it has the luxury of options, at least for now. Sweet talking is enough to persuade Jakarta about the prospect of Beijing funding Widodo’s maritime vision. Jakarta doesn’t want the South China Sea to overshadow its relationship with Beijing.

Yet Indonesia’s present approach towards China isn’t unique. Once the most confrontational of all, the Philippines under President Rodrigo Duterte is now doing something similar. And then there’s Cambodia and Laos. Why should Indonesia confront Beijing when others in ASEAN appear either unwilling or unable to do so?

Indonesia likes to portray itself as first among equals in ASEAN. But it’s fundamentally wrong to conceive of ASEAN as a flock of sheep with Indonesia as the shepherd. Every ASEAN nation has its own set of interests and priorities with Beijing, which has become more influential in dictating their South China Sea policies.

Consequently, a wait-and-see approach towards China appears to have prevailed in ASEAN. They ‘wait’ until the other makes the first move towards China, and ‘see’ how favourable China’s response is before making the next move. No ASEAN country is willing to lay all their cards on the table as a precursor to crafting a concerted strategy towards China. And it’s wishful thinking to argue that Indonesia could make that happen.

Indonesia’s ASEAN leadership isn’t about forging a unity among discords, much less building coalitions. Rather, it’s about cobbling together a consensus from the lowest common denominator or low hanging fruit. If and when discords do arise, at most Indonesia tries to mediate or facilitate rather than enforce consensus. Indonesia to ASEAN is not what the United States is to NATO or even what India is to the South Asian Association for Regional Cooperation (SAARC).

Indonesia’s diplomatic aura reveals more strategic weakness than geopolitical dominance. In short, its ‘big country’ syndrome belies a middle power capacity trying to project itself globally through the use of diplomatic apparatus rather than, say, military expeditionary forces.

Asking Indonesia to lead ASEAN on the South China Sea would be too much and too soon. It’s too much because Indonesia doesn’t think of its leadership as such, and too soon because it doesn’t have the capacity to do so — at least not yet. This is why Indonesia sticks to the Declaration of Conduct and the Code of Conduct — because that’s what it can realistically do. If China decides to disregard international law, intimidate its neighbours or continue reclaiming the ocean, there’s little Indonesia can do through ASEAN.

Ristian Atriandi Supriyanto is an Indonesian Presidential PhD Scholar with the Strategic and Defence Studies Centre at The Australian National University.

Is ASEAN about to fracture?


September 7, 2016

Is ASEAN about to fracture?

by Editors, East Asia Forum*

http://www.eastasiaforum.org/2016/09/05/is-asean-about-to-fracture/

President Obama is on his final trip to Asia as US President for the G20 summit in Hangzhou in China and the East Asia Summit (EAS) in Vientiane, Laos. Leaders of Asia Pacific nations, including some of the largest and most powerful in the world — eight of them G20 members — will meet in Vientiane because Laos is the chair of ASEAN in 2016.

US Secretary of State John Kerry and China's Foreign Minister Wang Yi talk at the 5th East Asia Summmit at the 48th Association of Southeast Asian Nations (ASEAN) foreign ministers meeting in Kuala Lumpur, Malaysia. (Photo: Reuters)

Secretary of State John Kerry  and his Chinese counterpart

The ten Southeast Asian nations making up ASEAN will also hold their summit in Vientiane, almost as a sideshow alongside the EAS. Yet they are there because ASEAN is at the centre of Asian regionalism and regional cooperation. The ASEAN grouping celebrates its 50th anniversary next year and continues to defy the odds on falling apart. Conceived for geostrategic reasons, it has been pronounced dead or useless countless times while it still plays a key role in managing major power relationships in Asia and across the Pacific.

ASEAN is very much greater than the sum of its parts. At its best, when unified and on message, it projects the interests of 625 million people from a diverse set of countries ranging from some of the richest and most technologically advanced to some of the poorest countries in Asia and globally. Collectively it is a larger destination for US direct investment than China or Japan.

Image result for Obama in Laos

When divisions appear amongst the ASEAN ten — as has been happening again of late — or progress on economic integration lags behind deadlines — which is the norm — ASEAN looks more like a passenger than the driver of Asian regionalism.

Because China and Japan (and South Korea) are plagued by political squabbles, theASEAN plus three grouping including ASEAN’s three Northeast Asian neighbours has been useful for promoting broader regional economic and political cooperation. Australia, India and New Zealand, who are all in the neighbourhood and have strong interests in East Asia, build off the plus three and are part of the broader ASEAN plus six grouping. This was initiated in part by Japan’s desire to have more like-minded countries included in the East Asian arrangement. The East Asia Summit was set up to include the United States so Russia had to be brought in too. That ASEAN provides the venue for these powers to get face time is an achievement in itself, even though it could do more to set the agenda and progress Asian and trans-Pacific cooperation.

ASEAN has been successful in helping to institutionalise major power relations in Southeast Asia and in defining the role that great powers play, while giving voice to smaller states. A weakened ASEAN would put all that at risk.

Since the end of the Cold War the economic impact of ASEAN has been more important than its geopolitical impact. A necessary condition for ASEAN to thrive is for its members to deepen economic integration primarily as a base for the broader Asian supply chains that drive trade and economic growth in the regional economy.

Image result for asean economic community

The ASEAN Economic Community (AEC) was launched at the end of 2015. It’s an ongoing project towards a single market that has a long way to go and requires member states to commit to and deliver on difficult reforms — something not many have shown the willingness to do in recent years. Doing so collectively will help expand the benefits of regional integration but it is a slow process and theheadwinds of anti-globalisation in the rest of the world are not going to make it faster. Much of the region is still very poor or at risk of becoming stuck in a middle-income trap, unable to deliver high incomes. Lifting living standards, and doing so while reducing inequality, is a top priority in ASEAN economies.

The AEC sets the right agenda to achieve that — a gift for which many regions would be grateful. The rapid growth of East Asia in the second half of the 20th century was inclusive; now Asia must return to inclusive growth in order to sustain its future development.

ASEAN once again faces existential threats to its unity and centrality as Mathew Davies explains in this week’s lead essay. It faces the external pressure of ‘rival Chinese and US ambitions’, internal tensions, and questions of legitimacy in the eyes of its people, according to Davies.

Davies says ‘[n]either the United States nor China seem willing to make ASEAN unity a strategic goal’. That’s because it’s easier to ‘harness ASEAN, unified or not, for their own ambitions’. It’s easier to deal with individual member nations and the result is that some align with Washington, others with Beijing and most hedge between both.

The South China Sea tensions have exposed these divisions. It does not help that Indonesia, ASEAN’s biggest member, has shown a tendency to ‘drift away from multilateralism towards a more bilateral and global heavyweight role’, as Davies explains. Indonesia dominates ASEAN in terms of size and is ASEAN’s only G20 member, but has been inclined under its current President, Joko Widodo, to pursue its own interests independently of the ASEAN group.

Former Australian Prime Minister Paul Keating last week called for Australia to join the ASEAN grouping in the context of managing its relationships between the United States and China. Keating’s call suggests that in the midst of these emerging divisions, ASEAN must be doing something right.

ASEAN’s inability to take sides between the United States and China as a group, whether on the South China Sea or other issues, may frustrate many. That same strategic incoherence, however, can be a useful buffer between the superpowers even if it does little to broker cooperation and avoid conflict between them. The risk is that ASEAN, betwixt and between, becomes divided and fractures.

China is a larger economic partner than the United States for all ASEAN members. Many but not all of the ASEAN countries rely on the United States for security from a rising China. That certainly complicates affairs but does not make them unmanageable.

Though ASEAN’s potential is huge, it’s true that it has never fulfilled the more optimistic expectations for its role in the region. It has nonetheless played a critical geopolitical and geo-economic role.

ASEAN remains a force for keeping markets open in Asia, lifting the living standards of its 625 million people, acting as a facilitator of cooperation between major powers, reducing the risk of conflict in the Asia Pacific and bringing coherence to Asian arrangements. ASEAN’s greatest proponents would be shy of owning these lofty goals. But the continued existence of ASEAN itself is still critical to achieving them.

*The EAF Editorial Group is comprised of Peter Drysdale, Shiro Armstrong, Ben Ascione, Ryan Manuel, Amy King and Jillian Mowbray-Tsutsumi and is located in the Crawford School of Public Policy in the ANU College of Asia and the Pacific.

 

AEC building block of ASEAN community?


August 14, 2016

AEC building block of ASEAN community?

by Dr. Munir Majid

http://www.thestar.com.my

THE AEC (ASEAN Economic Community) could turn out to be the saviour of ASEAN. Whatever its shortcomings, it is real, unlike largely mere words of the ASEAN Political and Security Community, and the tamasha (carnival) of the socio-cultural communion.

Even so, there are developments worth noting which would make the AEC, or the ASEAN community, not what is envisaged in the fine official plans.But first let us acknowledge the so many things that are happening in the ASEAN economy, facilitated by economic ministers and officials, but most of all driven by business people who see its huge potential.

Business people appreciate all too well the size of the ASEAN market (at 640 million people, the third largest in the world), the total economy (US$2.6 trillion, the world’s seventh biggest), healthy growth rate of 4%-5% (which could make the ASEAN economy number four in the world in a little over a decade), and the powerful demographics (65% of the population under 35 years of age).

Despite complaints about non-tariff barriers and measures (NTBs and NTMs) that impede virtually zero tariffs for trade in goods in most places, despite still limited openness for trade in services, for investments in some strategic sectors, and for mobility of skilled labour, there is a dynamism in business activity not much seen elsewhere in a lacklustre global economy.

In economically under-rated Laos (with GDP of US$13.5bil the smallest in ASEAN, not counting Brunei), there is potential and activity that belie its size.

The proposed Kunming-Vientiane high speed railway, with a price tag over half the size of the country’s economy, will transform the country.Already, huge projects in special economic zones are taking place whose activities cut across mainland South-East Asia.

For Laos, conversion from being land-locked to being land-linked, is not just a slogan. The connectivity from north to south, and east to west, is driving economic activity in what is commonly called the Mekong sub-region way beyond it, even into extra-ASEAN territory. There is a “T” in the traditional CLMV (Cambodia, Laos, Myanmar and Vietnam) countries – Thailand – which is very much in the mix.

The kingdom has great ambition to be ASEAN’s logistical hub, based on its central location in mainland South-East Asia, bordering Malaysia, Cambodia, Myanmar and Laos, with access to the Mekong, the Gulf of Thailand and the Andaman Sea.

But not just Thailand. Under Prime Minister Modi India, which has been “Looking East” for a mighty long time, is moving to “Act East”.

Last November it was announced that India is providing a US$1bil line of credit for a 3,200km highway linking the country with Myanmar and Thailand. Once completed it would add to pre-existing, largely historical, land and maritime linkages.

Cambodia –The Hub of Mainland ASEAN

While significant, this is some way behind what is already happening in the CLMV ASEAN sub-region, which is served by improving north-south connectivity and the East West Economic Corridor stretching 1450km from Danang in Vietnam, through Laos and Thailand, terminating at Mawlamvine Port in Myanmar. Distance to global markets from Laos has already been considerably shortened, as with the other countries.

According to one calculation, with the East West Economic Corridor, existing global sea routes have been shortened by 3,000 nautical miles, “or a 10-day sea journey from east to west and vice versa” – generating enormous savings of freight and time costs for all investors along the region.

What with tax breaks and governmental support, many businesses are seizing the opportunity.This “Greater Mekong sub-region” is getting linked up with China, particularly the provinces of Yunnan and Guangxi. Its growth rate is higher than the overall ASEAN average.

This whole area, with the two Chinese provinces, has a population of more than 400 million people. One calculation has it that it is more than half the size of the ASEAN economy. Thus there is an economic reality in mainland Asean with a gravitational pull towards China.

Of course all this is part of the AEC scheme. Construction materials and equipment, for example, moving seamlessly from Thailand to Laos for development projects. Car parts going from Laos to Thai assembly plants. Connectivity across ASEAN member countries.

Open regionalism, linking up with China and to a lesser extent with India which, after all, is part of RCEP (Regional Comprehensive Economic Partnership).

Business is agnostic. Investments are being made. Economic activities are taking place. The Greater Mekong Sub-Region is throbbing.However, from the viewpoint of the AEC and Asean generally, a few points need to be observed. The first is that antecedent to Asean economic centrality there are centrifugal forces pulling outwards.

This means policies for an ASEAN single market and production base must be enhanced so that whatever hubs that develop occur also because of the Asean economy even if there will always be extra-regional and global market attractions as well. Therefore removal of all those NTBs and NTMs remains essential for natural economic flow.

The ASEAN Business Advisory Council, as the lead and apex private sector body, is pushing hard for elimination of NTBs and NTMs in four key sectors – healthcare, retail, logistics and e-commerce, and agri-food.

The working groups, which ASEAN economic ministers again agreed last week should be formed, must get cracking. The official sector is also doing its bit with the launch in Vientiane last week of the ASSIST (Asean Solutions for Investments, Services and Trade) web portal where sustained complaints against NTBs and NTMs will be posted.

This kind of name and shame way is a good start, but much more needs to be done particularly at the front end of such barriers.

A second observation to be noted is the possible bifurcation of ASEAN. Mainland and maritime South-East Asia not quite gelling together economically, with trade, investment and movement of peoples between the two areas becoming secondary or minimal as they forge different hubs and look more to extra-regional economic relationships.This would be nothing new for Singapore which has always looked outward.

Indonesia is huge enough to go ahead with its maritime development plans at whatever pace it can achieve.

The Philippines has always been a bit apart, but it is well integrated in trade with China whatever South China Sea problems it faces with the Asian giant. In any case, with a population in excess of 100 million there is plenty of unfulfilled potential in the domestic economy.

It is Malaysia that could be squeezed. With a relatively small population of just over 30 million, ASEAN offers the country a huge hinterland which it could benefit enormously from if the economy is not caught in the middle income trap, moves into higher value products and services, invests out of sectors it no longer is competitive in, and becomes a hub in modern services using advanced technology.

The great irony will be what is now called a two-speed ASEAN will become a two-part ASEAN, with mainland South-East Asia no longer looking like the poor cousin.

The final and most significant point to note is that the centre of economic gravity is China, whether for mainland or maritime ASEAN. Through sheer economic and financial resources, and total strategic commitment, such as through OBOR (one-belt-one-road) and the AIIB, it has caused a frustration of the ASEAN community, including of the AEC, without actually willing it.

This does not mean there will be no ASEAN community, based largely on economic foundation, but it will be one subsumed within a Greater China political economy, and not in the way intended.

This will be neither a good nor a bad thing. It all depends on the basis of relationships countries in the region, not just Asean, have with China, and what hold China would exercise over them.

The realist therefore might contend the ASEAN community 2025 Blueprints, including on the AEC, would need to take into greater account the Greater China superstructure than they have done. It would be useful if top ASEAN policy makers could have this conversation, but I doubt they ever will except in national confines.

 

No political leadership in failing ASEAN


August 4, 2016

 No political leadership in failing ASEAN

by Dr. Munir Majid

http://www.thestar.com.my

The Transformation of Munir Majid: From  an ASEAN Activist to an ASEAN Skeptic

ASEAN is failing. It is not working in the way grand declarations and pronouncement of community just last year proclaim it would. Yet, in a pattern of self-deception which has become a regional characteristic, ASEAN – and its intellectual apologists – continue to deny what is plain for all to see.

If not before it is piece of fiction now to speak of ASEAN centrality. This was again proclaimed when the ASEAN Political and Security Community was pronounced last November. ASEAN Foreign Ministers even agreed in September on a “work plan” to strengthen this.

But, however ASEAN muddles through with a definition on what this centrality means, it is gone.Surely, the first and foremost thing about ASEAN centrality must be that it is central to its member states. Is it? Certainly not in respect of how to project and defend an ASEAN position on the South China Sea.

Some have described ASEAN as toothless in this regard. This is unfair. You cannot expect ASEAN to bite or even bark at mighty China. However you would expect ASEAN to stand up for its principles and sovereign rights of states, big or small. Therefore ASEAN should more appropriately be described as spineless.

This did not use to be the case. When ASEAN declared ZOPFAN (Zone of Peace, Freedom and Neutrality) in 1971, through the leadership of Malaysia’s Tun Razak among others, it was in no position to defend it in a very hot phase – the Vietnam War was raging – of the Cold War. Nevertheless it drew a line in a joint commitment to establish a cordon sanitaire.

When ASEAN so creatively promulgated the Treaty of Amity and Cooperation (TAC) in 1976 – with leaders such as Indonesia’s Suharto and Singapore’s Lee Kuan Yew at the fore – it was in actuality the origin of ASEAN centrality: when states from outside the region want to come and treat with ASEAN, they had to accede to the TAC, one of whose main tenets was the legal undertaking to resolve disputes peacefully.

Thus it was that China acceded to the TAC in 2003 and the US in 2009. It is interesting to note that in the joint communique in Vientiane last weekend, where ASEAN Foreign Ministers struggled to forge a weak consensus, there was allusion to the TAC – as if, whistling in the dark, ASEAN wanted to remind its outside partners, especially in relation to the South China Sea, of their commitment to the peaceful conduct of states.

If there was some agreement in Vientiane not to make big the arbitration award on the law of the sea which so infuriates China, to lower the temperature in a situation that was spinning out of control, to engage in bilateral negotiations with China among the claimant states, but also to return to the Declaration of Conduct of Parties (2002) framework which will be fulfilled by a legally binding Code of Conduct, it is actually a good thing.

But where is the leadership in ASEAN to pursue the matter with the commitment that is needed? Leaders and ministers meet and then they go back to domestic concerns. Who follows through?

Certainly not the weak secretariat. Who provides the leadership in ASEAN today of the type which saw its establishment of Asean 50 years ago, of the panache and imagination of Tun Razak, Lee Kuan Yew and Suharto, to name just a few of the luminaries of ASEAN days gone by?

This lack of leadership is the reason why ASEAN is failing today. Asean has been happily organising meetings, with rotating chairs, among its members, with its partners (the so-called Asean Plus countries), at the Asean Regional Forum (established in 1994, now with 27 members) and the East Asia Summit (set up in 2005, now with 18 members), where they all come and attest to Asean centrality. Which Asean believes while they do their own thing.

After the hoopla and the linking of arms, there is poor follow up and follow through, except for the organising of more meetings. All too often you hear the assertion: ASEAN will do this and that, will take on the challenge of one thing or the other. Who? Which ASEAN? Doing what exactly?

There is no doubt there are big problems in the region. The biggest is the new regional geopolitics in South-East Asia informed by strategic contest for influence in the region between China and the US.

Weighty academic conclusions have been reached such as South-East Asia has become “the decisive territory, on the future of which hangs the outcome of a great contest for influence in Asia.”

ASEAN – here we go again, ASEAN as one when there is not any – is not able to contend with this new geopolitical reality. There is now an environment in the region out of the control of ASEAN’s institutional capabilities, such as they are. Another comment by a regional expert: “ASEAN suffers from inherent institutional paralysis.”

However, the situation was not any easier at the height of the Cold War at the time ASEAN was established, when the Vietnam war was raging, later when the genocidal Pol Pot regime reigned in Cambodia, which was then invaded, the war between China and Vietnam in 1979 – one thing after another – but ASEAN held together and fashioned a regional order even if it did not exclusively determine its remit.

There was leadership in ASEAN to make it possible to talk about an ASEAN position. Nowadays even the simplest of things take forever to happen.

The leaders talk grandly about a “People-Centric”. Yet they cannot even make sure there are ASEAN lanes at all ASEAN airports and points of entry.

 

ASEAN’s South China Sea ulcer


July 27, 2016

COMMENT: Why the gloom and doom about ASEAN just because the regional organisation is unable to craft and issue a joint statement on the question of the South China Sea.

That is not unusual. Members can agree to disagree and yet ASEAN can remain a cohesive and purposeful organisation to serve the common interest of its members. The Treaty of Amity and Cooperation in Southeast Asia is a key document that forms the glue that binds members and its partners reinforced by the ASEAN Charter. The ASEAN way operates on consensus, consultation, and dialogue.

ASEAN is, therefore, not structured like the European Union centered on a huge and overpowering bureaucracy in Brussels. One of the reasons for BREXIT is the United Kingdom’s desire to preserve its sovereignty and free itself from mountains of EU rules and regulations. The Jakarta based regional grouping, on the other hand,  is a collection of sovereign and independent nations, each acting in accordance with the dictates of their respective national interest, yet agreeing to come together to pursue their collective interest to preserve regional peace, security and stability, and promote trade and investment for socio-economic development. So far, ASEAN is a success story. Since 2015, it is working towards becoming an economic community.

Cambodia's Prime Minister Hun Sen gestures as he delivers a speech during his presiding over an inauguration ceremony for the official use of a friendship bridge between Cambodia and China at Takhmau, Kandal provincial town south of Phnom Penh, Cambodia, file photo.

Cambodia’s Foreign Policy is one of equidistance and neutrality with ASEAN as one of its pillars. (pic above Samdech Techo Hun Sen, Prime Minister of Cambodia)

South China dispute is a convenient diversion. To label it as ASEAN’s ulcer–academics are prone to using colorful descriptions and cliches–is to me a bit of an exaggeration. To suggest that Cambodia is a surrogate of China is way over the top. It is a sovereign and independent nation and an active member of ASEAN and the United Nations. As such, Cambodia has the right to pursue good relations with China, Russia and United States and other countries. Its foreign policy is one of equidistance and neutrality.

Using labels has never helped to solve problems among nations. One can easily get away by saying that in the case of its dispute with China over the South China Sea, the Philippines is a proxy of the  geo-stategic interest of United States and talking tough because Filipinos think they can rely on US military power to defend their interest. This is to deny that the Philippines may have its rights over the disputed area. What purpose is served if Cambodia, a non claimant state, is seen to be taking sides?  Rightly, Cambodia has been promoting peaceful settlement of disputes and urging China to sign a Code of Conduct on the South China Sea which is an ASEAN initiative. Lest we forget the South China Sea issue simply  put is a complex one, one that will engage our diplomats over a long time. –Din Merican

ASEAN’s South China Sea ulcer?

by Dr Mathew Davies

http://www.newmandala. org

The just concluded meeting of ASEAN Foreign Ministers in Vientiane, Lao PDR, looked like it was going to be a high profile failure.  The fear was that the meeting would repeat the 2012 experience of being unable to produce a final communiqué in the face of Cambodia’s insistence that nothing was said that would criticise China over the South China Sea.

Four years later ASEAN may have avoided such a public display of disunity but the released communiqué, together with a JointStatement between ASEAN and China on the SCS, suggest that nothing has been resolved.

The Joint Statement is an insipid document that does nothing to address the cause of the flaring tensions in the region. It is full of bland endorsements of the international legal principles that many have shown a flagrant disinterest in and calls for handling differences in a ‘constructive manner’. If the word constructive in this context is intended to cover the building of military landing strips, the placing of advanced weapons systems and aggressive military posturing, then even given ASEAN’s ability to obfuscate this is a linguistic feat to marvel at.

The Communiqué certainly contains more words on the South China Sea than does the joint statement, a whole eight paragraphs, but it is just as damning. Paragraph 174 notes that only ‘some ministers’ were concerned about ongoing issues (for which read, not the Cambodians). No mention was made of the recent Permanent Court of Arbitration’s ruling on the South China Sea which had so decisively rejected China’s claims in the region in favour of the Philippines.

Image result for cambodia and south china sea

Instead all states were called upon to work together to both implement the Declaration on the Conduct of Parties in the South China Sea and work towards building a Code of Conduct to better manage affairs. These are laudable in themselves but hardly helpful given the Declaration was agreed in 2002 and has conspicuously failed to curtail regional tensions and any Code of Conduct would seriously curtail China’s freedom of action in the region, which is completely unimaginable at this stage.

ASEAN’s continued failure to address the South China Sea in anything approaching an effective manner is not only a short term failure – it now represents a significant and ongoing risk to ASEAN’s health. This challenge will not take the form of a heart-attack, a sudden and existential shock to the system. Instead it is an ulcer, a constant pain in the guts that threatens, slowly but inexorably, to flood the system with bile. This challenge takes two forms.

First ASEAN from 1967 has always been about protecting the sovereignty of its members from the encroachment of great powers – as Alice Ba has memorably put it the ‘regional resilience’ of Southeast Asia. ASEAN was founded in the belief of regional self-determination – in the wake of colonialism and amidst the Cold War it was a call to ensure that Southeast Asian states remained in the driving seat of Southeast Asian affairs.

Today, with ASEAN member Cambodia serving as a surrogate for China against the interests of other ASEAN members, it no longer seems to be that the organisation serves the interests of the region.

Failure in the South China Sea to offer even the most tepid of support for member states claims against a rising China, especially the more moderate of those claims, strikes at the heart of what ASEAN was designed to achieve. If ASEAN cannot talk of member states sovereign claims against external great powers, what is the value of ASEAN to those members?

Second ASEAN’s own quest for centrality in Asia-Pacific security is revealed to be a fruitless quest when there is so much reason to question even ASEAN’s relevance to the most pressing of regional security issues. ASEAN has always sought to spread the norms of consensus decision making that it is supposed to follow internally across the Asia-Pacific as a way to exert some sort of pacifying effect on the great powers of the region. Yet if those same norms are now preventing ASEAN’s ability to engage in a meaningful way with China in what way can they be said to be positive and worthy of others following?

The South China Sea issue, then, is not an external threat to ASEAN, but an internal health risk – a sore that if not addressed will continue to leach its poison into the regional organisation and the faith that its members have in it.

The challenge is not a superficial one. It is not about whether ASEAN will unite in the defence of an American designed international order as was the wish of Obama at the Sunnylands Summit or whether it will continue to forge its own path.

The challenge is about whether ASEAN can continue to be valued by its members for the reasons it was created – whether it has the strength of purpose to defend its members from external interference, whether it can continue as a vehicle for regional self-determination rather than a generator of regional discord, and whether it can choose centrality over irrelevance.

As with any health risk, this challenge needs to be confronted sooner rather than later and with a coherent measured response, not a random assortment of lowest common denominator actions. I fear that the prognosis has just deteriorated.

Dr Mathew Davies is head of the Department of International Relations in the ANU Coral Bell School of Asia Pacific Affairs.