ASEAN Car, National Car and What else–Let’s Get Real, not Sentimental


June 29, 2018

ASEAN Car, National Car and What else–Let’s Get Real, not Sentimental

by Bunn Nagara@www,thestar.com.my

The international marketplace can be an unforgiving arena, if the hard economic realities of global markets are replaced by sentimentality or nostalgia. 

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A “national car” in Vietnam or Malaysia tends to miss the wood for the trees. Larger regional realities determine the local prospects, not the other way round. All goods and services are subjected to tough market realities.–Bunn Nagara

THERE is a pattern and a rhythm in global markets that, when acknowledged and heeded, can yield profits – but when denied or confronted may lead to loss and pain.

Asia’s two largest economies, China and Japan, are set to face off in South-East Asia in at least one sector: automobiles.

The signs of this looming challenge are becoming observable, as the portents of the rivalry settle steadily into place. A “national car” in Vietnam or Malaysia tends to miss the wood for the trees. Larger regional realities determine the local prospects, not the other way round. All goods and services are subjected to tough market realities. A temporary reprieve may come only with costly subsidies or tariffs which then render items uncompetitive over the longer term.

Among the realities of the global auto market are, first, that the motorcar is the single most costly consumer item commonly sold across borders. Second, of all the global consumer items traded daily, the car is probably the least nationally oriented. Parts come from all over the world, plants are established abroad for cost and other reasons, and companies from abroad buy proud “national” firms producing even the most prestigious brands.

Britain’s Jaguar Land Rover was bought by America’s Ford, and then by India’s Tata. Britain’s most prestigious marques, Rolls Royce and Bentley, were bought by Germany’s Volkswagen which also bought Italy’s supercar Lamborghini and France’s pride Bugatti, besides Spain’s Seat and Czechoslovakia’s Skoda.

Lamborghini was previously taken over by the Swiss (Mimrans), then the Americans (Chrysler), and then Indonesians (V’Power) and Malaysians (MyCom).

China’s Geely bought Sweden’s Volvo, the London Taxi Company, Germany’s prestigious Daimler (Mercedes) Benz, the US “flying car” company Terrafugia – and Malaysia’s Proton and Lotus.

Proton had earlier acquired Britain’s iconic sports car company, Lotus. Ownership “promiscuity” in the auto industry across borders is spread all round.

Some of these acquisitions may not be 100% but they are still substantial. Geely, for example, owns 49.9% of Proton and 9.69% of Benz, both being the single largest stake in these companies. Among the earliest across borders was General Motors’ acquisition of Germany’s Opel in 1929, after which Opel models were still sold in the UK as “British” Vauxhall. Last year Opel was acquired by France’s Groupe PSA which incorporates Peugeot and Citroen.

The pace and number of cross-border auto acquisitions continue to grow, along with the scale. It is a game for the super cash-rich, making independent national operations unviable while squeezing the prospects of new startups. In ASEAN countries today, mega competition on Level Two between Japanese and Chinese auto firms is shaping up. Even Korean companies are only looking in to see if there is a possible opening.

Sales of individual cars to consumers on Level One continue for all marques, but sales of whole auto companies (Level Two) are the new name of the game. Apart from direct competition between Japanese and Chinese corporations, competition is growing between their locally named subsidiaries – and between rival compatriot firms. The result may see South-East Asian auto companies functioning largely as proxies of parent Chinese and Japanese firms.

SAIC Motor, China’s biggest auto firm which also assembles US and European brands, wants Thailand as the regional production hub for export to other countries. Japanese companies had set that example in this region and are still trying to keep the “flag flying.” Toyota has raised its stake in the Philippines, as has Mitsubishi, with increased investments in factories for larger output. However, higher levels of local technical input are still limited at best.

The international auto acquisitions market has also involved prestigious car design firms. Vietnam’s first car company Vinfast proudly announced engaging Italy’s Pininfarina, which designed Ferrari and Maserati models – and which was bought earlier (76%) by India’s Mahindra.

Developing countries may be smitten by the “national car” bug, while developed countries are more interested in producing sophisticated high-value systems that can be incorporated into all cars: among them, AI for self-driving cars. These high-end components are the real value-added skills in auto production today, rather than basic parts assembly so commonly found in Third World car factories.

Ultimately, the issue is the degree of local content along with the technical input rather than a hidebound obsession with a “national” car. Production and ownership promiscuity across borders means that cars no longer have distinct nationalities.

Image result for Thailand the hub of auto industry in ASEAN

 

Thailand produces some two million cars a year, more than half for export, about as many produced as all the other ASEAN countries combined. It has no national car project since it manufactures only automotive components and assembles cars from other countries. Nonetheless its automobile sector is widely regarded as economically successful, employing more than half a million people and accounting for 10-15% of GDP. Most of the world’s auto parts and automobile manufacturers operate in the country.

A lack of high-end technical inputs for greater value-added has however been limiting to growth. Lately the auto sector pledged to scale up the technical ladder, with attractive government-supported incentives for environmentally clean designs.

Indonesia has ambitious plans for boosting its auto sector, encouraged by rising local demand since 2012 but still hampered by limited exports. It therefore risks mistaking local demand for overseas demand, which has been only 20% of Thailand’s.

Within ASEAN, Indonesia is the biggest country with the biggest population and economy, but its auto sector has not been competitive internationally. Government support through protectionism is no answer. Now the Indonesian auto sector may be facing another challenge – competition from elsewhere in ASEAN such as Vietnam. Its structural inefficiencies remain a persistent problem.

A study by Prof Sadayuki Takii found that the problems include weak or minimal local content and government protection contributing to a lack of competitiveness. The same conditions may be found in other ASEAN countries.

Another reality in the global auto market is how successful companies come from countries with a sizeable domestic market providing healthy competition nationally. Through the years, market discipline made these companies competitive internationally and fit to compete against companies in other countries. Protectionism however works in the opposite direction.

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Indonesian President Joko Widodo has been toying with the idea of an “ASEAN car,” which would bring together engineering skills across this region to produce a competitive world-class item. This desire still exceeds the capacity or the prospect, unfortunately.

Countries in ASEAN still need to get over the lack of substantive technology transfer if they are to acquire the real skills that make the auto sector competitive. Increasing investments by Japanese and Chinese firms at largely parts assembly level are contributing to the problem. But who can say no to immediate investments offering more jobs?

Beyond technology transfers, local players also need to become innovative on their own. That has yet to happen. Another problem to resolve is the growing competition between ASEAN countries. The competing concepts of “regional car” and “national car” are in a zero-sum game.

The Philippines also wants to be the regional auto manufacturing hub within a decade. This national-centric approach, typical of the region, retards regional integration and prospects for the ASEAN Economic Community.

The more likely prospect is to become local outposts for larger Chinese or Japanese firms.

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

Bunn Nagara

Bunn Nagara

 

The Trump-Kim Summit: Reality TV or a New Era?


June 13, 2018

The Trump-Kim Summit: Reality TV or a New Era?

In Singapore, North Korea reaffirmed an agreement to “work toward” complete denuclearization. But two other key words long sought by the U.S.—“verifiable” and “irreversible”—were missing.Photograph by Evan Vucci / AP

 

Three days after angering his six closest Western allies, President Trump embraced Asia’s most notorious dictator at a steamy resort in Singapore and heralded a “very special bond” in new relations between the United States and North Korea. Trump and Kim signed a two-page statement—big on ideas but slim on specifics—that committed North Korea to “complete denuclearization” and said that the United States would “provide security guarantees” for a country with which it is still technically at war.

“We’re very proud of what took place today,” Trump said, after the two men, appearing relaxed after three rounds of talks, signed the four-point declaration. “I think our whole relationship with North Korea and the Korean Peninsula is going to be a very much different situation than it has been in the past. We both want to do something.” The President said that the world will be “very impressed, very happy” as the two nations take care of “a very dangerous problem for the world.”

Kim chimed in, saying, “We had a very historic meeting and agreed to leave the past behind. The world will see a major change.”

The four-point statement committed the countries to establishing new diplomatic relations. It pledged to “join efforts” to build a “lasting and stable peace regime” on the Korean Peninsula, and that would appear to include South Korea. In especially vague terms, North Korea reaffirmed an agreement—originally made between the two Koreas at their historic summit on April 27th—to “work toward” complete denuclearization. Two other key words long sought by the United States—“verifiable” and “irreversible”—were missing. Finally, the two nations vowed to recover the remains of prisoners of war from the Korean War, from 1950 to 1953, in which more than thirty-three thousand Americans were killed. Almost eight thousand American troops remain unaccounted for.

Trump also announced that he would cancel regularly scheduled military exercises—which he referred to as “war games”—with South Korea, which have been pivotal to South Korea’s security. Trump called the exercises, which will next take place in August, “provocative,” adopting North Korea’s position and language on both terms. The United States still has twenty-eight thousand troops in the South.

In Washington, there is broad support for Trump’s diplomacy, especially after a year of threatening rhetoric that seemed to move the U.S. and North Korea ominously close to war. Ten months ago, the President warned Kim of “fire and fury like the world has never seen.” Yet former U.S. negotiators with North Korea and senior military experts who worked on the issue were distinctly unimpressed—even baffled—by the lack of substance at the summit, the first meeting between the leaders of the United States and North Korea.

“As hyped as the meeting was, the result is underwhelming,” Wendy Sherman, who was a top negotiator with North Korea in the Clinton and Obama Administrations and the lead negotiator on the Iran nuclear deal, said. “The document not only doesn’t break new ground—it is less than previous documents, including the 1992 Joint Declaration, the Agreed Framework of 1994, and the September, 2005, Joint Statement of the Six-Party Talks.” All were diplomatic initiatives by the three previous Presidents that eventually collapsed because Pyongyang was found to be cheating or in violation of its pledges.

All earlier efforts by both Republican and Democratic Administrations emphasized verification, the core issue in virtually every U.S. agreement on nuclear-arms control with any nation, and incorporated international accords such as the Non-Proliferation Treaty. Trump also gave Kim a “major concession” without equivalent reciprocal steps, Sherman added, by cancelling joint exercises with South Korea.

The government in Seoul appeared surprised by the cancellation. “We need to find out the exact meaning or intention behind his comments at this point,” a South Korean military official said. The Pentagon also appeared to be caught off guard by the announcement, the Times reported. Defense Secretary James Mattis has long backed the U.S.-South Korean exercises as central to America’s role in East Asia. Pentagon officials both in Seoul and Washington said they had received no new instructions and were still planning for exercises that are now only a couple of months away.

The brief statement “landed with a thud,” Abraham Denmark, the director of the Asia Program at the Wilson Center and a former Deputy Assistant Secretary of Defense for East Asia, told me. “No new commitments from Kim on denuclearization, or even a freeze on North Korea’s nuclear or missile programs. No new assurances from the United States. The statement mostly reiterates what was said at the inter-Korean summit, and sets vague plans for future meetings. We knew there was a long way to go, but this statement makes very little progress.”

Pyongyang and Beijing are the big winners coming out of the summit, especially because of the limits on U.S. military activities in South Korea. Trump had also suggested earlier that he might draw down U.S. troops, who have been stationed on the Peninsula for seven decades. “Kim got a huge propaganda win and a metric ton of legitimacy,” Denmark said. “Expect North Korean media to replay these images for years, showing how the world respects Kim and that North Korea is now recognized as an equal to the United States and the other great powers of the world. Kim gave up nothing new.” China, North Korea’s main ally and trading partner, got everything that it wanted, too.

At the press conference, Trump said he has extended an invitation to Kim to visit the White House at some “appropriate” time in the future, implying after progress has been made with “denuclearization”—the pivotal concept that’s still not spelled out specifically in the statement. Kim accepted the invitation, the President said, adding, “There’s no limit to what North Korea can achieve if it gives up its nuclear weapons.” The White House prepared a four-minute video to illustrate the potential for Kim—and the alternatives.

“A new world can begin today—one of respect, friendship, and good will,” the narrator vows, referring to Trump and Kim as “two men, two leaders, one destiny.” The video features high-rise condo units, drones, packed grocery stores, car-assembly plants, and babies in modern incubators. “The past does not have to be the future,” the narrator says. “It comes down to a choice.” The video then shows the bleak future without diplomacy: bombs going off, troops at the demilitarized zone. “The future remains to be written.”

The brief summit—originally scheduled for two days—was rife with lofty language from the President about the North Korean leader, who has executed members of his own family to consolidate power. “Well, he is very talented,” Trump said. “Anybody that takes over a situation like he did, at twenty-six years of age, and is able to run it, and run it tough.”

The summit was historic simply because it allowed the socialization of two countries at war, and it “didn’t obviously fly off the rails,” James (Spider) Marks, a retired major general who was a senior intelligence officer on North Korea, told me. But a “Presidential pat on the back does not connote trust. It can start trust-building, and we all should hope that that is the intended outcome.”

The danger is that the new U.S.-North Korean agreement offers no guidelines on how to convert principles into disarmament practice, or even of how many arms it covers. The Administration has previously thrown in all of North Korea’s intercontinental missiles and its biological and chemical weapons. “Unfortunately, it is still unclear whether the two sides are on the same page about definitions and the pace, and the sequencing of many steps involved in the complete ‘denuclearization’ of the Korean Peninsula,” Daryl Kimball, the executive director of the Arms Control Association, said in a statement. North Korea has yet to provide a full rundown of its deadliest weapons; the agreement offers no details on timing or process. It also does not mention who will oversee the three big steps—the dismantlement of the nuclear arsenal, the verification of that dismantlement, and future inspections. Will part of it be done by the International Atomic Energy Agency, the nuclear watchdog that has been central to many such inspections? Or will the United States claim most or all of the roles? The I.A.E.A has already said it is gearing up to participate.

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Otto Warmbier sacrificed

The most conspicuous item missing from the statement was the issue of human rights, which has been central to U.S. policy for decades. Tens of thousands of political prisoners are believed to be held by Kim’s regime, according to human-rights groups. The American Otto Warmbier died within days of his release from a North Korean prison because of alleged torture that left him brain-damaged. Trump—who called his North Korean counterpart “very smart” and “talented”—was repeatedly pressed on whether he brought it up. The President actually cited Warmbier as the pivot to diplomacy. “Otto did not die in vain,” he said at a press conference before leaving Singapore. “I think, without Otto, this would not have happened.”

Sherman was outraged. “The President’s comments on human rights—that those in labor camps would be winners, that this meeting wouldn’t have happened but for Otto Warmbier’s death, and that Kim was loved by his people and was trustworthy—those comments are not worthy of a President of the United States,” she said.

Others urged separating the issues immediately at hand. “Let’s not roll the Kim regime’s egregious and undeniable human-rights violations into our evaluation of success of the summit,” Marks said. “This is about reducing the clear and present danger of global nuclear annihilation, not human rights.” The irony of the President’s approach, however, is that it exactly mirrors what the Obama Administration did in its diplomacy with Iran, out of which came the 2015 Iran nuclear deal. Obama wanted to focus on eliminating Tehran’s deadliest arms program first before taking on other issues, including human rights.

Trump, who claimed that he had not slept for twenty-five hours, basked in the attention of the choreographed summit. But he will face tough questions about how to translate a modest statement into the most robust program anywhere in the world to limit nuclear proliferation as the initiative—to be led by Secretary of State Mike Pompeo—moves forward. Meanwhile, key allies left in the dirt at the G-7 summit over the weekend may be wondering what happens next with them, too.

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Trump took time at the press conference following the summit to again scold Canada, the closest U.S. ally geographically and its second-largest trading partner. A member of NATO, its troops have fought and died alongside U.S. forces in Afghanistan. More than twenty-six thousand Canadians fought in the Korean War; more than five hundred were killed. But alliance be damned. The President was infuriated after Prime Minister Trudeau said that Canada would not be “pushed around” by the United States. “He learned that’s going to cost a lot of money for the people of Canada,” Trump told reporters in Singapore. “He learned.” After the Singapore summit, the temperamental President seems to be on better terms with a North Korean despot than a Canadian democrat.

This post has been updated.

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BOOK REVIEW: A ‘Vulcan’s’ Version of Asia-Pacific History


February 11, 2018

BOOK REVIEW: A ‘Vulcan’s’ Version of Asia-Pacific History

by John Bethelsen@www.asiasentinel.com

Prosecuting an adequate foreign policy in Asia for the United States “requires mastering a strategic concept at least as complex as three-dimensional chess,” according to Michael J Green, who served on the National Security Council staff as a special adviser to George W Bush.

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“To use that analogy, on the top of the board, the United States must seek to reinforce a rules-based regional order underpinned by US leadership and backed by strong alliances, partnerships, trade agreements and multilateral engagement. On the middle board, the US will have to work toward a stable and productive relationship with China, constantly seeking new areas of cooperation based on a recognition of how much China can potentially contribute to global progress and prosperity. On the bottom board, the United States will have to continue ensuring that it has the military capabilities and posture necessary to defeat any attempts to overturn the current regional order through force.”

Think about the implications of that paragraph in connection with the government installed by President Donald Trump on January 20, 2016, and the astonishing damage the administration has done to the US position in Asia. The United States, Green writes, emerged as the preeminent power in the Pacific “not by providence alone but through the effective (if not always efficient) application of military, diplomatic, economic and ideational tools of national power to the problems of Asia.”  That 200-year campaign is now clearly over.

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The 45th POTUS is messing up US engagement with Asia– His All Options on the Table with North Korea Policy is creating tensions in Asia

Green, now a Senior Vice President for Asia at the Center for Strategic and International Studies in Washington, DC as well as a member of the School of Foreign Service of Georgetown University, has written the most deeply-researched, cogent and important book I have ever read on the US experience in the Asia Pacific, “By More than Providence: Grand Strategy and American Power in the Asia Pacific since 1783,” published in mid-2017. It is also badly flawed and has to be read in recognition that Green was a Vulcan, a member of the foreign policy team that advised Bush prior to his election in 2000.

Containing 174 pages of notes, bibliography and index in its 723 pages, it is arguably the most exhaustive history of the US presence in Asia going back to the founding of the Republic with the landing in what was then Canton of the clipper ship Empress of China at the Whampoa dock.

Image result for Michael J. Green By More than Providence: Grand Strategy and American Power in the Asia Pacific since 1783,”
It is the most deeply-researched, cogent and important book I have ever read on the US experience in the Asia Pacific–John Berthelsen

The book is an invaluable resource, a history of President-by-President Asia policy from George Washington to through Barack Obama drawn from hundreds of official sources and Green’s own experience. After the chapter on the administration of Gerald Ford, it needs to be read extremely carefully and critically. Although Green served as an adviser in the Clinton administration and as a member of the NSC under Bush the younger, it is clear where his heart is.

Even before that there are some significant elisions. The 1965 Gulf of Tonkin resolution is dealt with in a single sentence without mention of the fact that the linchpin for the resolution was a supposed attack on the US destroyers Maddox and Turner Joy by North Vietnam patrol boats during the administration of Lyndon B. Johnson. But the fact is that no such attack ever took place. The justification for US entry to a tragic war that took perhaps a million Vietnamese lives and 57,000 American ones was built on a lie.

There are other shortcomings. President Clinton’s decision to send two aircraft carrier battle groups to intercede in Chinese rocket rattling against the Strait of Taiwan gets short shrift although many analysts regarded it as a courageous strategic move.  Barack Obama is accused of waffling – which he did – although Edward Luce, in his new book “The Retreat of Western Liberalism” gives Obama rather higher marks.

George Schultz and Henry Kissinger

Ronald Reagan’s Secretary of State George Schultz is called “the most effective Secretary of State for Asia-Pacific policy in the history of the republic, which be news to Thomas Jefferson, John Quincy Adams, James Monroe, Edward Stettinius, James F Byrnes and others.

While he gives George H W Bush his due – a far more effective President than most give him credit for – Green far overplays Bush the younger, whose administration “came into office with a clear strategic concept on Asia focused on shaping a favorable geopolitical equilibrium in the region, and that generally held through a series of short-term crises and the attacks of 9/11.” He gives only passing reference to the infamous Bush Doctrine, which included not only unilaterally withdrawing from the ABM treaty, rejecting the Kyoto protocol, and a willingness to start preemptive wars, which meant that Asia cannot be considered separately from a long series of international disasters that reduced global approbation of US foreign policy.

His declaration of a “war on terror” included “rendition” of those suspected of terrorist activities to black site where they were tortured unmercifully.  The Bush administration also split its forces between Afghanistan and Iraq, fighting neither war very well. As a result, both countries ended up in a botch. In the wake of 9/11, when the world needed effective law enforcement and intelligence-gathering instead of the blunderbuss of twin invasions, Bush ridiculed John Kerry, his opponent in his second presidential race, as “fundamentally misunderstanding the war on terror.” The fact is that Kerry understood it a lot better than Bush did, to America’s deep misfortune.

Having said all that, the value in Green’s book is its deep wealth of detail about how successive governments – even the Bush 43 one – have conducted enormously layered foreign policies, not just in the Asia Pacific but across the world.  For those interested in foreign policy, it is a must read, especially given the tragedy that is being visited on US strategic interests by the current administration.

Trump, as Luce points out, “has chosen to drive America’s regional allies into China’s arms. Even Australia, which comes closest to US values, wants to enter China’s rival trade group, the Regional Comprehensive Economic Partnership.”  He voided the Transpacific Partnership, arguably over pique at Obama. At a time when a rising China is setting out to return to the global pre-eminence it enjoyed up to the 17th Century, throwing its weight around in East Asia, enormously skilled diplomacy is called for. Instead, Trump has decimated the State Department, appointed an oil man with no government experience as Secretary of State – and won’t listen to him even when he tries to talk sense into him.

Image result for john berthelsen asia sentinelJohn Berthelsen

The current President is not a man for three-dimensional chess. He is not a man for chess at all. As Luce points out – and Green probably would if he could add a chapter – the US has entered arguably the most dangerous period in the country’s history when it comes to Asian policy, if not global diplomacy overall.

https://www.asiasentinel.com/book-review/book-review-by-more-than-providence/

 

Chomsky: How the US Is Playing with Fire in Asia


January 18, 2018

Chomsky: How the US Is Playing with Fire in Asia

A shifting balance of power in Asia has the potential for regional conflicts if it’s not managed, warns Chomsky.

Often dubbed one of the world’s most important intellectuals and its leading public dissident, Noam Chomsky was for years among the top 10 most quoted academics on the planet, edged out only by William Shakespeare, Karl Marx, Aristotle.

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An unrelenting critic of U.S. foreign policy since the 1960s, much of his intellectual life has been spent stripping away what he calls America’s “flattering self-image” and the layers of self-justification and propaganda he says it uses to mask its naked pursuit of power and profit around the world.

Now aged 85, Chomsky is still in demand across the world as a public speaker. He maintains a punishing work schedule that requires him to write, lecture and personally answer thousands of emails that flood into his account every week. He is professor emeritus of linguistics and philosophy at the Massachusetts Institute of Technology in Cambridge, where he has been based for nearly 60 years.

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Chomsky will make a rare trip to Tokyo in March, where he is scheduled to give two lectures at Sophia University. Among the themes he will discuss are conceptions of the common good, one deriving from classical liberalism, the other from neoliberal globalization that he predicts will lead to disaster very soon if not radically modified.

“That gives the answer to the question posed in the title of the talk: ‘Capitalist Democracy and the Prospects for Survival,’ ” he says. “The quick answer is ‘dim.’ ”

Tell us about your connections to Japan.

I’ve been interested in Japan since the 1930s, when I read about Japan’s vicious crimes in Manchuria and China. In the early 1940s, as a young teenager, I was utterly appalled by the racist and jingoist hysteria of the anti-Japanese propaganda. The Germans were evil, but treated with some respect: They were, after all, blond Aryan types, just like our imaginary self-image. Japanese were mere vermin, to be crushed like ants. Enough was reported about the firebombing of cities in Japan to recognize that major war crimes were underway, worse in many ways than the atom bombs.

I heard a story once that you were so appalled by the bombing of Hiroshima and the reaction of Americans that you had to go off and mourn alone . . .

Yes. On August 6, 1945, I was at a summer camp for children when the atomic bombing of Hiroshima was announced over the public address system. Everyone listened, and then at once went on to their next activity: baseball, swimming, et cetera. Not a comment. I was practically speechless with shock, both at the horrifying events and at the null reaction. So what? More Japs incinerated. And since we have the bomb and no one else does, great; we can rule the world and everyone will be happy.

I followed the postwar settlement with considerable disgust as well. I didn’t know then what I do now, of course, but enough information was available to undermine the patriotic fairy tale.

My first trip to Japan was with my wife and children 50 years ago. It was linguistics, purely, though on my own I met with people from Beheiren (Citizen’s League for Peace in Vietnam). I’ve returned a number of times since, always to study linguistics. I was quite struck by the fact that Japan is the only country I visited — and there were many — where talks and interviews focused solely on linguistics and related matters, even while the world was burning.

You arrive in Japan at a possibly defining moment: the government is preparing to launch a major challenge to the nation’s six-decade pacifist stance, arguing that it must be “more flexible” in responding to external threats; relations with China and Korea have turned toxic; and there is even talk of war. Should we be concerned?

We should most definitely be concerned. Instead of abandoning its pacifist stance, Japan should take pride in it as an inspiring model for the world, and should take the lead in upholding the goals of the United Nations “to save succeeding generations from the scourge of war.” The challenges in the region are real, but what is needed is steps toward political accommodation and establishing peaceful relations, not a return to policies that proved disastrous not so long ago.

How in concrete terms, though, can political accommodation be achieved? The historical precedents for the kind of situation we face in Asia — competing nationalisms; a rising undemocratic power with opaque military spending and something to prove in tandem with a declining power, increasingly fearful about what this means — are not good.

There is a real issue, but I think the question should be formulated a bit differently. Chinese military spending is carefully monitored by the United States. It is indeed growing, but it is a small fraction of U.S. expenditures, which are amplified by U.S. allies (China has none). China is indeed seeking to break out of the arc of containment in the Pacific that limits its control over the waters essential to its commerce and open access to the Pacific. That does set up possible conflicts, partly with regional powers that have their own interests, but mainly with the U.S., which of course would never even consider anything remotely comparable for itself and, furthermore, insists upon global control.

Although the U.S. is a “declining power,” and has been since the late 1940s, it still has no remote competitor as a hegemonic power. Its military spending virtually matches the rest of the world combined, and it is far more technologically advanced. No other country could dream of having a network of hundreds of military bases all over the world, nor of carrying out the world’s most expansive campaign of terror — and that is exactly what (President Barack) Obama’s drone assassination campaign is. And the U.S., of course, has a brutal record of aggression and subversion.

These are the essential conditions within which political accommodation should be sought. In concrete terms, China’s interests should be recognized along with those of others in the region. But there is no justification for accepting the domination of a global hegemon.

One of the perceived problems with Japan’s “pacifist” Constitution is that it is so at odds with the facts. Japan operates under the U.S. nuclear umbrella and is host to dozens of bases and thousands of American soldiers. Is that an embodiment of the pacifist ideals of Article 9?

Insofar as Japan’s behavior is inconsistent with the legitimate constitutional ideals, the behavior should be changed — not the ideals.

Are you following the political return of Prime Minister Shinzo Abe? His critics call him an ultranationalist. Supporters say he is merely trying to update Japan’s three outdated charters — education, the 1947 pacifist Constitution and the security treaty with Washington — all products of the U.S. postwar occupation. What’s your view?

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It makes sense for Japan to pursue a more independent role in the world, following Latin America and others in freeing itself from U.S. domination. But it should do so in a manner that is virtually the opposite of Abe’s ultranationalism, a term that seems to me accurate. The pacifist Constitution, in particular, is one legacy of the occupation that should be vigorously defended.

What do you make of comparisons between the rise of Nazi Germany and China? We hear such comparisons frequently from nationalists in Japan, and also recently from Benigno Aquino, the Philippine president. China’s rise is often cited as a reason for Japan to stop pulling in its horns.

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China is a rising power, casting off its “century of humiliation” in a bid to become a force in regional and world affairs. As always, there are negative and sometimes threatening aspects to such a development. But a comparison to Nazi Germany is absurd. We might note that in an international poll released at the end of 2013 on the question which country is “the greatest threat to world peace,” the U.S. was ranked far higher than any other, receiving four times the votes of China. There are quite solid reasons for this judgment, some mentioned earlier. Nevertheless, to compare the U.S. to Nazi Germany would be completely absurd, and a fortiori that holds for China’s far lesser resort to violence, subversion and other forms of intervention.

The comparison between China and Nazi Germany really is hysteria. I wonder whether Japanese readers have even the slightest idea of what the U.S. is doing throughout the world, and has been since it took over Britain’s role of global dominance — and greatly expanded it — after World War II.

Some see the possible emergence of an Asian regionalism building on the dynamic of intertwined trade centered on China, Japan and South Korea but extending throughout Asia. Under what conditions could such an approach trump both U.S. hegemony and nationalism?

It is not just possible, it already exists. China’s recent growth spurt is based very heavily on advanced parts, components, design and other high-tech contributions from the surrounding industrial powers. And the rest of Asia is becoming linked to this system, too. The U.S. is a crucial part of the system — Western Europe, too. The U.S. exports production, including high technology, to China, and imports finished goods, all on an enormous scale. The value added in China remains small, although it will increase as China moves up the technology ladder. These developments, if handled properly, can contribute to the general political accommodation that is imperative if serious conflict is to be avoided.

The recent tension over the Senkaku Islands has raised the threat of military conflict between China and Japan. Most commenters still think war is unlikely, given the enormous consequences and the deep finance and trade links that bind the two economies together. What’s your view?

The confrontations taking place are extremely hazardous. The same is true of China’s declaration of an air defense identification zone in a contested region, and Washington’s immediate violation of it. History has certainly taught us that playing with fire is not a wise course, particularly for states with an awesome capacity to destroy. Small incidents can rapidly escalate, overwhelming economic links.

What’s the U.S. role in all this? It seems clear that Washington does not want to be pulled into a conflict with Beijing. We also understand that the Obama administration is upset at Abe’s views on history, and his visits to Yasukuni Shrine, the linchpin of historical revisionism in Japan. However we can hardly call the U.S. an honest broker . . .

Hardly. The U.S. is surrounding China with military bases, not conversely. U.S. strategic analysts describe a “classic security dilemma” in the region, as the U.S. and China each perceive the other’s stance as a threat to their basic interests. The issue is control of the seas off China’s coasts, not the Caribbean or the waters off California. For the U.S., global control is a “vital interest.”

We might also recall the fate of Prime Minister Yukio Hatoyama when he followed the will of the large majority of Okinawans, defying Washington. As The New York Times reported, “Apologizing for failing to fulfill a prominent campaign promise, Hatoyama told outraged residents of Okinawa on Sunday that he has decided to relocate an American air base to the north side of the island as originally agreed upon with the United States.” His “capitulation,” as it was correctly described, resulted from strong U.S. pressure.

China is now embroiled in territorial conflicts with Japan and the Philippines and Vietnam in the South China Sea as well as the air defense identification zone on its contested borders. In all of these cases, the U.S. is directly or indirectly involved. Should these be understood as cases of Chinese expansionism?

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People pose with Chinese national flags after landing on Meiji Reef in the South China Sea

China is seeking to expand its regional influence, which conflicts with the traditional U.S. demand to be recognized as the global hegemon, and conflicts as well with local interests of regional powers. The phrase “Chinese expansionism” is accurate, but rather misleading, in the light of overwhelming U.S. global dominance.

It is useful to think back to the early post-World War II period. U.S. global planning took for granted that Asia would be under U.S. control. China’s independence was a serious blow to these intentions. In U.S. discourse, it is called “the loss of China,” and the issue of who was responsible for “the loss of China” became a major domestic issue, including the rise of McCarthyism. The terminology itself is revealing. I can lose my wallet, but I cannot lose yours. The tacit assumption of U.S. discourse is that China was ours by right. One should be cautious about using the phrase “expansionism” without due attention to this hegemonic conception and its ugly history.

On Okinawa, the scene seems set for a major confrontation between the mainland and prefectural governments, which support the construction of a new U.S. military base in Henoko, and the local population, which last month overwhelmingly re-elected an anti-base mayor. Do you have any thoughts on how this will play out?

One can only admire the courage of the people of Nago city and Mayor Inamine Susumu in rejecting the deplorable efforts of the Abe government to coerce them into accepting a military base to which the population was overwhelmingly opposed. And it was no less disgraceful that the central government instantly overrode their democratic decision. What the outcome will be, I cannot predict. It will, however, have considerable import for the fate of democracy and the prospects for peace.

The Abe government is trying to rekindle nuclear power and restart Japan’s idling reactors. Supporters say the cost of keeping those reactors offline is a massive increase in energy costs and use of fossil fuels. Opponents say it is too dangerous . . .

The general question of nuclear power is not a simple one. It is hardly necessary to stress how dangerous it is after the Fukushima nuclear disaster, which has far from ended. Continued use of fossil fuels threatens global disaster, and not in the distant future. The sensible course would be to move as quickly as possible to sustainable energy sources, as Germany is now doing. The alternatives are too disastrous to contemplate.

You’ll have followed the work of committed environmentalists such as James Lovelock and George Monbiot, who say nuclear power is the only way to save the planet from cooking. In the short term, that analysis seems to have some merit: One of the immediate consequences of Japan’s nuclear disaster has been a massive expansion in imports of coal, gas and oil. They say there is no way for us to produce enough renewables in time to stop runaway climate change.

As I said, there is some merit in these views. More accurately, there would be if limited and short-term reliance on nuclear energy, with all of its extreme hazards and unsolved problems — like waste disposal — was taken as an opportunity for rapid and extensive development of sustainable energy. That should be the highest priority, and very quickly, because severe threats of environmental catastrophe are not remote.

Noam Chomsky is Professor Emeritus in the Department of Linguistics and Philosophy at Massachusetts Institute of Technology. His most recent books are Who Rules the World? (Metropolitan Books, 2016) and Requiem for the American Dream: The 10 Principles of Concentration of Wealth & Power (Seven Stories Press, 2017). His website is http://www.chomsky.info.

The Koreas: President Moon Jae-in pursues the Path to Peace the Kim Dae Jung Way


January 9, 2017

The Koreas: President Moon Jae-in pursues the Path to Peace the Kim Dae Jung Way

By Stephen Costello, AsiaEast

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It is hard to overstate the drama that has gripped the South Korean political world during the past 12 months. But the return of pragmatic democratic leadership today offers a crucial opportunity for President Moon Jae-in to reshape the perilous security situation in Northeast Asia as well as to reinvigorate South Korea’s democracy and economy.

The political year really began in October 2016, when then President Park Geun-hye’s combination of corruption and incompetence propelled hundreds of thousands of citizens onto the streets in lively but peaceful protests. On 10 March 2017, the National Assembly voted unanimously to impeach Park. Sixty days later Moon Jae-in was elected. There may not be any other democracy today that could do this.

Image result for president moon jae-inMoon Jae-In is a pragmatic strategist, not an ideologue

 

South Koreans can be rightfully proud of this. Yet it is not clear that government leaders or the policy community at large have fully digested the country’s growth or fully recognised its middle power potential. In this sense, they lag behind much of the public.

For South Korea and Northeast Asia, the most important aspect of Moon’s election is that he is a pragmatist, not an ideologue. That makes him unique right now in Northeast Asia. His task is to advertise South Korea’s assets and insist on the country’s rightful seat at the decision making table. If the Moon government can become a channel for clear and pragmatic policies, it can then lead on critical issues such as North Korean denuclearisation and development, disaster relief, clean energy and arms reduction.

Yet to do that, impediments within South Korea’s policy space must be acknowledged and managed — some will even have to be addressed head-on. One is that conservatives fear modernism and miss the imagined certainty of the pre-democratic era. Another is that there is a persistent political and personality war among democrats that may determine how successfully Moon can shape policy debates and maintain support in the National Assembly. Moon must also cooperate with the progressive People’s Party and the Justice Party in order to push through his initiatives.

There are two other challenges that could constrain South Korean power and flexibility. One is the radically different views that persist of South Korea’s role, power and responsibilities: on one hand, a weak and dependent South Korea, and on the other, a South Korea that stands as middle power. Even the President seems torn between them; Moon recently said that the regional situation ‘is not favourable to us’ and that South Korea ‘has no power to resolve the current crisis or help relevant sides seek an agreement’. But he has also insisted for months that Seoul should be ‘in the driver’s seat’ on North Korea issues, and he has begun to cultivate his relationship with Xi Jinping.

The second challenge is the South Korea–US alliance. The relationship is long overdue for readjustment and modernisation but is encountering numerous road blocks under the Trump administration. The Trump administration is an unreliable negotiating partner, and it has become hyper-sensitive to any hint of independent ambition by Seoul. While the alliance is not at risk, it sorely needs South Korea to assume greater responsibility. But US unpredictability and Trump’s bellicosity mean statements to that effect evoke nervousness among South Korean elites, and have prevented the government from advancing solutions.

Where does that leave South Korea’s foreign policy direction? President Moon needs to focus on three key external relations opportunities.

First is South Korea’s regional relations. Moon has already begun to manage the areas in which South Korean, Chinese and Japanese interests overlap. But it would be a grave mistake for Moon to continue to urge Russia and China to punish North Korea harder. Instead, his advantage lies in his ability to offer a roadmap for infrastructure and development that integrates the North. China, Russia and Japan would directly and amply benefit from this. Moon should also encourage diplomacy and increased global interaction with North Korea, which could form the basis for the next successful regional advancement.

Second is South Korea’s bilateral relations with North Korea. South Korea’s clear interest lies in reclaiming the strategic possibilities that emerged in 2000, when the North’s proposed denuclearisation benefitted each actor and Pyongyang’s security and development were tightly linked to it. But if the government continues to pursue the false notion that maximum isolation and pressure can lead to negotiations with Kim Jong-un, then it can make no progress.

Third is South Korea’s alliance with the United States. Due to mistakes of past US and South Korean presidents, the North Korea issue now largely defines bilateral relations. This was clear before Moon was elected. If he is to be a true friend to the United States rather than a Trump enabler, he will quickly take up leadership on Peninsular issues (which Trump has abandoned).

While the United States will eventually return to positive engagement on Peninsular issues, this may take five years or more, and Moon doesn’t have time to wait. Too much of South Korea’s agenda and its immediate security depend on him moving now. Trump has shown himself to be malleable — particularly if others arrange for the US’s advantageous participation. That possibility — rather than fuelling Trump’s non-strategic, ‘tough guy’ impulses — is where Seoul and Washington’s roles can be mutually reinforcing.

With its US ally temporarily drained of diplomatic and institutional capacity, and with broad public support, South Korea’s leadership has never possessed this level of capability, stability and flexibility. How and whether it is used will greatly impact regional dynamics in coming months and years. Will the government use its unprecedented power to play a decisive and positive role in 2018?

Stephen Costello is an independent analyst and consultant and the producer of AsiaEast. He was formerly director of the Korea Program at the Atlantic Council and director of the Kim Dae Jung Peace Foundation. His column appears at The Korea Times. You can follow him on Twitter at @CostelloScost.

http://www.eastasiaforum.org/2017/12/18/south-koreas-astonishing-political-year/

This article is part of an EAF special feature series on 2017 in review and the year ahead.

 

Foreign Policy: Balancing US-China Interest in the Trump–Xi era


December 11, 2017

Foreign Policy: Balancing  US-China Interest  in the Trump–Xi era

by David M Lampton, Johns Hopkins University

http://www.eastasiaforum.org

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The Asian Statesman,HE President President Xi Jinping–Economic Diplomacy

From 1945 to 2016 the United States used its economic, military and ideological power to build institutions, alliances and regimes that contributed to global economic growth and the avoidance of great power war. In doing so, it fostered the rise of a new constellation of powers, China notable among them, with which it must now deal. If the United States wants to see its interests met, Washington must win Beijing’s cooperation rather than try to compel it.

 

On entering office, US President Donald Trump put several contentious issues with China on the backburner in the hope of achieving his primary goal — North Korea’s denuclearisation. When that failed, the front burner of US–China relations became crowded with previously repressed issues.

Several of these — US freedom of navigation operations in the South China Sea, talk of steel and aluminium tariffs, weapons sales to Taiwan, threats to tighten technology and investment flows as well as secondary sanctions on Chinese entities — threaten to become serious problems if not managed in a more careful manner than the Trump administration is currently demonstrating.

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From Pivot to Asia to Divert from Asia–America First

So what might the United States usefully do? There are three issues on which Washington should focus: fostering an economic balance of power in Asia that promotes regional stability, achieving more reciprocity in US–China relations and addressing the North Korean nuclear and missile problem.

A central part of Xi Jinping’s geo-economic vision is the expansion of regional links and the promotion of urbanisation and growth on China’s periphery to make China the central node in this growing region. For Beijing, this means north–south connectivity — namely supply chains that originate in China and extend to the Indian Ocean, South China Sea, Andaman Sea, Bay of Bengal and beyond.

Unless Washington wants Asia to become a unipolar sphere of Chinese influence, it should become more involved in the construction of regional infrastructure to foster linkages that are not just north–south but also east–west from India to Vietnam through Myanmar, Thailand and Cambodia and on to Japan and the wider Pacific.

Turning to reciprocity, when China joined the WTO in 2001 its overseas trade and financial involvements grew enormously. So too did its global trade surplus and bilateral trade surplus with the United States. Beijing soon had the technology, capital and capacity to seize the opportunities of openness abroad without providing reciprocal domestic access to the United States and others.

From 2008 onwards, the pace of domestic economic, financial and foreign trade liberalisation slowed. China’s world trade partners came to realise that as China leapt outward to seize opportunities, it did not reciprocally open itself in areas where foreigners enjoyed comparative advantages. Consequently, the issues of ‘reciprocity’ and ‘fairness’ have moved to front and centre in US–China relations. US companies are now asking themselves why Chinese entrepreneurs should be able to freely acquire US service and technology firms when these areas in China are closed to foreigners.

While US feelings of resentment mount, finding ways to enhance reciprocity with Beijing that do not injure US workers or other bystanders is hard. Limiting Chinese investment into US employment-generating firms diminishes US job opportunities. On the other hand, ignoring the problem invites extremist proposals at home as well as contempt in Beijing.

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Finally, the issue of North Korea. Trump thought his predecessors had been right in pressing Beijing to put more pressure on North Korea and in their assessment that Beijing had sufficient means to do so. Where they had gone wrong, Trump believed, was in not making it worth Beijing’s while to apply the necessary pressure.

So President Trump suggested that Washington would give Beijing concessions in other areas — trade and Taiwan among them — in exchange for pressure on North Korea. Of all the reasons that this approach has not worked out (including the viability of some of Trump’s promised consessions) the most dominant is that Pyongyang resists following any external advice that it fears would be lethal to the regime.

Consequently, the Trump administration is left with the same stark choices as its predecessors, except that Trump has staked even more on the issue and North Korea is further down its deliverable nuclear weapons path.

It is time for Washington (in close consultation with its South Korean and Japanese allies) to acknowledge that North Korea has a modest nuclear deterrent, and that as a result the United States should shift its aim from denuclearisation to deterring the use and further proliferation of these capabilities.

The US–China relationship is fraught with problems and will be for the foreseeable future. The United States is no longer positioned to compel cooperation from China. Any policy changes from Beijing must be negotiated, and within this negotiation Washington must seek a balance of power and interests.

David M Lampton is Professor and Director of China Studies in the School of Advanced International Studies, Johns Hopkins University. His most recent book is Following the Leader: Ruling China, from Deng Xiaoping to Xi Jinping.

This article appeared in the most recent edition of East Asia Forum Quarterly, ‘China’s Influence’.