Aspiration: Singapore’s Approach to ASEAN


April 25, 2018

Aspiration: Singapore’s Approach to ASEAN

Ja Ian Chong, NUS

http://www.eastasiaforum.org

Singaporean Prime Minister Lee Hsien Loong’s 50th Anniversary Lecture for the Yusof Ishak Institute of Southeast Asian Studies on 13 March 2018 was notable for its open acknowledgement of some of the difficulties facing ASEAN, which Singapore is chairing this year. Importantly, Lee recognised that ASEAN is, above all, a political grouping, and that some of its most pressing challenges are fundamentally political.

Both internal and external political forces are buffeting ASEAN members. On the one hand there is the growing influence of different major powers in Southeast Asia such as China and India and their diverse domestic influences in various ASEAN member states. On the other there is the still important but uncertain role of the United States in Asia.

 

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Such developments call into question ASEAN’s continued relevance and unity. Unfortunately, Lee offered little in the way of concrete responses to the changing circumstances he sketched out, whether for ASEAN or for Singapore.

An important area of tension that Lee pointed out is ASEAN’s longstanding focus on consensus. Lee sees this ‘laborious’ process of finding ‘common ground’ as fundamental to enabling the group’s diverse members to move forward together on issues like trade liberalisation, economic integration and the management of territorial disputes (for instance in the South China Sea).

But recent initiatives by China and India to gain influence in Southeast Asia, alongside radical departures from past precedent in US approaches to foreign policy, are pulling ASEAN members in disparate directions. Responses to these cross-cutting dynamics — often guided by domestic considerations — make intra-ASEAN consensus much more difficult to attain. Projects such as China’s Belt and Road Initiative and the United States’ ‘Free and Open Indo-Pacific‘ idea may move ASEAN members in different directions well before any consensus can emerge.

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A related concern is the competition for influence from alternative regional arrangements and external powers — a process Lee described as ‘Darwinian’. Even if not explicitly stated, this word choice implies that Lee may be conceding that ASEAN risks extinction if it cannot adapt to the changing circumstances. For the ASEAN project to persist, Lee said, ASEAN members ‘must come together to maintain relevance and cohesion’.

Yet, given that ASEAN’s ability to sustain cohesion is undergoing unprecedented internal and external pressure, the organisation faces a real risk of marginalisation, maybe even irrelevance. Major powers active in the region are beginning to offer alternative institutional arrangements that may ultimately prove more attractive to some of the group’s members.

While the frank assessment of ASEAN’s current difficulties is welcome, Lee provided few clear, practical responses to these issues. The few goals Lee laid out are largely aspirational. He called on ASEAN governments to look beyond immediate domestic considerations, trust in past experiences of cooperation and commit jointly to the ASEAN project.

Within these parameters, Singapore — as current ASEAN chair — will seek to move member states to strengthen existing frameworks for political, economic and socio-cultural cooperation with a focus on resilience and innovation. This includes advancing existing economic proposals such as the Regional Comprehensive Economic Partnership and the ASEAN–EU Comprehensive Transport Agreement. Even then, progress on these issues will be trying, owing to a ‘growing mood of nationalism and protectionism’ that is on the ascent in many countries.

Lee called on ASEAN governments to make bold decisions based on enlightened, long-term considerations to improve livelihoods. Noble as such goals may be, one wonders what such considerations mean in terms of concrete policies. After all, it is unlikely that any government will admit to making policies based on timidity, benightedness and short-term conveniences that are detrimental to livelihoods.

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There is also the matter of how the Lee administration aims to get other ASEAN governments and partners on board with its vision before a new Singaporean leadership takes over, possibly by 2022. This in turn raises the more pedestrian but perennial issue of improving long-term intra-ASEAN coordination across issue domains given member states’ preferences for an institutionally weak secretariat and secretary-general. Adequately addressing these institutional factors may well be crucial in moving Lee’s hopes for ASEAN closer to reality.

Lee reiterated that ASEAN is of critical importance to Singapore and its future. This suggests that Lee views the global political trends he discussed as having a direct effect on Singapore, its interests and external outlook.

But it is on Singapore’s relationship to the region and how Singapore’s foreign policy fits within this context that Lee is vaguest. He echoed Singapore’s former Deputy Prime Minister Goh Keng Swee in calling for a ‘delicacy of perceptions’, where academia and business weigh in on critical issues of the day to help inform the decisions of professional bureaucrats and political appointees. But Lee left how this ‘delicacy of perceptions’ should play out or what kinds of policy directions Singapore should follow unexplored.

While Prime Minister Lee presented a refreshingly honest outlook on ASEAN’s uncertain future, he did not offer much more than an uncertain policy approach to match.

Ja Ian Chong is Associate Professor in the Department of Political Science, National University of Singapore.

Mekong River’s Fate : Major Challenges and Opportunities


April 6, 2018

Mekong River’s Fate : Major Challenges and Opportunities for Cambodia, Laos, Thailand and Vietnam

https://www.asiasentinel.com/econ-business/mekong-river-fate-cambodia/

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Prime Minister Hun Sen at the Third Summit of the Mekong River Commission in Siem Reap on April 5, 2018. Facebook

The Prime Ministers of the low-lying countries through which the Mekong River runs – Thailand, Laos, Cambodia, and Vietnam – have been meeting this week to attempt to reach agreement on strategies to address major challenges and opportunities facing the river’s huge basin, now and into the future, overshadowed by China, which clearly intends to exert greater influence over the river and its riparians, according to critics.

It is questionable whether any of the four, who began the meeting on April 4, demonstrate any real commitment to health of the river, which is vital to the wellbeing of 60 million people whose ancestors have for centuries relied on it for their livelihoods as well as for transport, water for cooking, irrigation, cleaning, and sanitation.

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Over the past two decades, most of the four countries’ leaders have instead demonstrated a willingness to build more dams on the river because population pressures and the burgeoning thirst for additional hydropower across Southeast Asia. There is little doubt that the character of the river, Southeast Asia’s largest, is under intense stress.

The main aim of this week’s meeting, at Siem Reap in Cambodia, is a discussion of the Mekong River Council Study, a massive 3,600-page attempt to assess the impacts of mainstream hydro projects begun in 2011. The analysis includes hydropower, irrigation, agriculture and land use, transportation, domestic and industrial water use, flood protection and includes climate change. It is described as an “an integrated, cross-sectoral, comprehensive and state-of-the-art study supporting sustainable development in the Mekong Basin.”

Unfortunately, the study findings conclude that the series of 11 large hydropower dams on the lower mainstream of the river and the 120 tributary dams planned by 2040 pose a serious threat to the ecological health and economic vitality of the region.

 

“Major detrimental impacts resulting from current hydropower plans will in turn produce massive trade-offs between water, energy and food,”according to International Rivers, a Berkeley, Calif-based NGO dedicated to protection and preservation of the world’s rivers,  which has dealt exhaustively with the council study. “Predicted impacts include, by 2040; a 30-40 percent decrease in Mekong fisheries — a loss of about 1 million tonnes per year and a staggering 97 percent reduction in the sediment load reaching the Mekong Delta. These impacts are expected to result in a drastic reduction in food security and agricultural productivity, alongside increased poverty levels and heightened climate vulnerability in much of the Lower Mekong Basin.”

Not only are fish populations expected to fall, the study suggests that there will be drastic changes in fish species with  migratory “white fish” species predicted to disappear entirely from Thailand and Laos and being pushed to the brink in Cambodia. Invasive species are expected to take their place, putting pressure on ecosystems.

To date, decisions on hydropower projects have been made by member country governments on a project-by-project basis, without regard to basin-wide impacts. The lower Mekong governments meeting at Siem Reap “must now ensure that the findings of the Council Study meaningfully inform decisions on future projects,” according to International Rivers.

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The 3rd Mekong River Commission (MRC) Leaders Summit in Siem Reap hosted by Cambodia’s  Prime Minister Samdech Techo Hun Sen.

Certainly, the stakes on the river have increased. The unsettling tendency of the Chinese government to throw its weight around in the lower Mekong basin as well as its frenetic dam-building in the upper reaches, in addition to development on the mainstream of the lower delta are of rising concern. Climate change is becoming an issue as is private funding, particularly by Thai interests, of dams in Laos.

“Beijing has continued to support those countries that are determined to develop dams on the river at any cost,” according to  Mervyn Piesse, Research Manager, Global Food and Water Crises Research Program for Future Directions International, an Australian research institute. “China provides funds, materials and labor for dam construction in Laos and Cambodia. While both countries see hydroelectric dams as an integral component of their economic development, Laos plans to graduate from least-developed country status mainly by exporting surplus hydroelectricity to its neighbours. China has been willing to help fund those ambitions, as it believes that it will help to further its interests across greater South-East Asia.”

One major issue is the so-called “run-of-river” concept, generally applied to hydropower projects that have only a small reservoir or no reservoir for storing water in contrast to mega-dams that store vast amounts of water and cost billions of dollars to build. The idea is to create sustainable hydro energy while minimizing the impact on the surrounding environment and nearby communities.

The “ROR” dams are theoretically able to harness the energy potential efficiently and without a major environmental impact. Without large reservoirs, they eliminate methane and carbon dioxide emissions caused by the decomposition of organic matter in conventional reservoirs.

Proponents argue that because proposed Mekong dams have limited storage capacity, the hydrological impacts will be minimal, as they allow a ‘natural’ flow of water through the dam, thus aiding the movement downstream of sediment and allowing for the migration of fish .

But, according to International Rivers, “focusing on the overall amount of water passing through a dam does not take into account impacts on flow patterns, including increased water levels during dry season and decreased levels during wet season. The ways in which dams alter seasonal flow patterns has severe adverse implications for downstream ecosystems and agricultural systems that are built around the seasonal flood pulse.”

ROR dams can have equally harmful impacts as conventional facilities, International Rivers says, “particularly on ecosystems and communities downstream. Some of these impacts are inherent; others depend on how a dam is operated. Unfortunately, the impacts of ROR dams tend to be overlooked and understudied, an oversight in part due to the assumption that ROR are less destructive than traditional dams.”

The NGO has published a fact sheet entitled ‘Swindling the Mekong: Run-of-River Hydro’ seeking to address what it calls some of the misconceptions that surround ROR dams, and examines specific case studies in the Mekong Basin.

Misunderstanding ASEAN


March 29, 2018

Misunderstanding ASEAN

by Bunn Nagara@www.thestar.com.my

“SO when is China going to join ASEAN?” a foreign news editor asked me in the early 1990s by way of introduction at a luncheon meeting in Tokyo.

He had asked when, not if, seeming to assume it was just a matter of time. There was no talk or even rumour of such a prospect at the time, so he must have just dreamt it up.

It was so ludicrous as to seem like a trick question.

Shouldn’t a foreign news editor be better informed about ASEAN and China than to even think of asking such a question? And yet so much about ASEAN remains unknown even among some of its national leaders.

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Turkey in ASEAN?– You must be joking, Mr. President
Last year Philippine President Rodrigo Duterte advocated ASEAN membership for Turkey and Mongolia. The Philippines at the time held the rotating chairmanship of ASEAN, and Duterte must have thought he could do as he pleased.
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Jokowi wants Australian Prime Minister, Malcolm Turnbull, to keep him company in ASEAN. What a ridiculous idea.

This year it was the turn of Indonesian President Joko Widodo to dabble in the ridiculous. On a recent trip to Australia he told the media that Australia should join ASEAN.

Nobody else in ASEAN took either remark seriously, even if those statements made the news throughout the region. In case of lingering delusions resulting from these statements, some history may help.

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South-East Asia has had more than its share of regional organisations through the decades.

During the Cold War, the US and its allies fashioned the South-East Asia Treaty Organisation (SEATO) as a bulwark against international communism. It was basically a military grouping to turn the region into a Cold War zone. SEATO was a misnomer from the start, with six of its eight members from outside South-East Asia. Even the two members from this region, Thailand and the Philippines, were allies of the US in a Western-directed Cold War scheme.

Indonesia and Malaya (later Malaysia), which wanted no part of the Cold War, stayed out. So did most other countries in the region including Cambodia.

The Association of South-East Asia (ASA) was another attempt at regional identity politics. But with only three members Thailand, Malaya and the Philippines, it lacked credibility and purpose.

MAPHILINDO comprising Malaya, Philippines and Indonesia was yet another attempt by South-East Asian countries to create an organisation of the countries of the region themselves. MAPHILINDO came on the eve of Malaysia’s formation, with the undeclared purpose by Macapagal’s Philippines and Sukarno’s Indonesia to thwart the creation of Malaysia. Indonesia had its confrontation (konfrontasi) policy against Malaysia, while the Philippines pursued its claim to Sabah. Thus MAPHILINDO was diplomatically worded to favour Malaya over the others.

Still that did not work. With MAPHILINDO’s hidden purpose known to Malaya, it suffered from neglect and died an early death.

Soon after that Malaysia was born (September 16, 1963) with Sabah, Sarawak, Singapore and Malaya coming together to form a new federation.

Meanwhile, historic change was underway in Indonesia. Rebellion erupted against Sukarno’s rule, he was stripped of his life presidency, and konfrontasi against Malaysia ended when General Suharto assumed power in 1965.

Malaysian officials and their Indonesian counterparts had worked feverishly behind the scenes to manage an emerging situation with a fledgling new Indonesia. Within months, ASEAN was born in 1967.

Thus began a slow but steady process of regional institution building to ensure peace, stability and prosperity through fraternity. Since then, ASEAN has been at the heart of this process.

The other three co-founding members of ASEAN were Thailand, the Philippines and Singapore. With ASEAN, the dormant Philippine claim to Sabah stayed dormant between governments.

Since Indonesia, the Philippines and Malaysia had been locked in disputes over territory and Sukarno’s aggression, ASEAN had to come by way of a neutral partner country: Thailand.

So the Bangkok Declaration of August 8, 1967 saw the formation of ASEAN, following much spadework by Thai officials to ensure agreement. Malaysia acknowledged the hard work put in by Thai Foreign Minister Thanat Khoman, awarding him the title of “Tun” for his efforts.

However, right from the start, disparities existed among ASEAN member countries. There was a hulking Indonesia next to Singapore, while differences in economic development made for more variations.

For ASEAN to work, all members had to agree to certain basics: all members were equal regardless of size or wealth, decisions would be made by consensus, ASEAN chairmanship would be by rotation, none shall interfere in another’s internal affairs, and disputes had to be resolved peacefully.

Even as Thailand and the Philippines continued to host US military bases, these would only be temporary and never to be used against another member country. The ASEAN region would equate peace with freedom and neutrality, while rejecting all manner of nuclear weapons.

The spirit and essence of ASEAN is non-alignment. Today all 10 ASEAN members are in the Non-Aligned Movement, with Thailand, the Philippines and Brunei the latest to join in 1993.

When Duterte championed Turkey and Mongolia for ASEAN membership, many in the region were taken aback. Aung San Suu Kyi asked if he had considered geography and he said he had, showing instead how he had failed to grasp the subject and the question.

Neither Turkey nor Mongolia is in South-East Asia. Besides, Turkey is a member of NATO and is hoping to join the EU.

When Jokowi advocated Australia’s membership of ASEAN, he seemed to have lacked the luxury of thinking before speaking. To be fair he was probably prodded into a rash answer, or something must have been lost in translation.

His apparent enthusiasm has not been supported by his colleagues in government, among Indonesia’s elites or anyone else in ASEAN.

Australia is not in Asia, much less in South-East Asia. When Paul Keating was Prime Minister he insisted Australia was in Asia, but when he moved to a solemn academic post he admitted it wasn’t. Neither is Australia a non-aligned country, nor likely ever to be one. It is comfortably set in the US strategic alliance. Yet some senior Australian figures and establishments like the Asia Society Policy Institute recommend Australia joining ASEAN in 2024 together with New Zealand. Clearly, it is not just a deficiency in geography that is at issue.

One or even a few ASEAN leaders do not make decisions for a grouping that operates by consensus. When ASEAN was being formed in 1967, Malaysian Prime Minister Tunku Abdul Rahman reportedly favoured Sri Lanka’s membership.

Singapore opposed it, while the other three members were not particularly motivated either way. A decade later Papua New Guinea applied to join and ASEAN has kept it waiting ever since.

Some reports suggest even Pakistan and Bangladesh had been keen to join. Again, a better sense of geography and geopolitics would help to keep things in perspective. In 2011 Timor Leste applied to join ASEAN with the official support of Indonesia and Cambodia. Unlike the other hopefuls, the territory and people of Timor Leste had been in ASEAN before independence as part of Indonesia and as Indonesians.

No country joins ASEAN without a formal invitation, with that invitation resulting only from a consensus among all member countries. However, consensus is more accessible than unanimity.

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

ASEAN’s renewed centrality


March 14, 2018

ASEAN’s renewed centrality

Author: Editorial Board, East Asia Forum

http://www.eastasiaforum.org/2018/03/12/aseans-renewed-centrality/

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US President Trump fired the first shots in what could become a global trade war this week with the imposition of 25 per cent tariffs on imports of steel and 10 per cent tariffs on aluminium. The action, taken under the national security provisions of US trade law (Section 232), risks provoking tit-for-tat retaliation by trading partners who, unlike Canada, Mexico and Australia, aren’t able to negotiate exemption from its impact, and corrosion of the WTO rules-based trading system.

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Cambodian Prime Minister Samdech Tech Hun Sen

The White House announcement throws the international trade rulebook out the window. If the Trump administration’s imposition of these tariffs on a flimsy national security pretext does not outright flout the rules of the WTO, then it at least flouts its widely shared norms.

The response from the European Commission was to ‘do the same stupid things to respond to stupid things’ — promising retaliatory tariffs on a range of US exports into Europe, from Harley-Davidson motor bikes to bourbon whiskey. The tariff imposts also launched a process in which trading partners like Australia successfully begged exemption on various grounds both sound and spurious, all of which are nonetheless in clear violation of the understanding that trade will be conducted under internationally agreed rules, not ad hoc bilateral deals.

That’s the beginning of the rot; it may be a short-term tactical victory for countries like Australia, but it is certainly not effective strategic play.

What happens now?

US commentators reckon that a challenge of the Trump tariffs before a WTO dispute panel is a no-win game. If the European Union takes the United States to the WTO (as it has promised to do) and loses under Article XXI, which allows trade restrictions on national security grounds, the ruling will open countries to restrict imports however they choose on ‘national security grounds’. If the United States loses, it will surely reject the ruling, rendering the WTO dispute process effectively dead.

The strategic objective is to keep the WTO system alive in the face of this potentially mortal threat. The United States is playing itself out of the system. Learning to live without the United States as a rules- and norms-enforcer won’t be easy, but it is the only response that will protect the system and avoid the large-scale economic cost and dangerous political consequences of an escalating trade war.

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The strategic response to the Trump trade threat is more important to Asia than to any other major centre of international trade. Asia’s prosperity and political stability depends critically on its integration into the global economy through the rules-based trading system. The global trading system has underpinned the growth of Asian interdependence, Asia’s economic prosperity and its political security.

China, in particular, is in Trump’s cross hairs as ‘the cause of US trade deficits because of its violation of trade rules’. But China is also a crucial stakeholder in the rules-based system through its largely faithful observance of the protocols of its accession to the WTO in 2001 and the huge trade in Asia and around the world that has been built on that.

Locking in China’s entrenchment to the WTO system — and resisting the temptation to take retaliatory actions in the face of Mr Trump’s trade antics — is thus a major element in the system’s defence.

As China and the United States stare each other down with a potentially devastating trade war on the horizon, it may seem strange to turn to ASEAN, but it has a central role in the collective response to Asia’s present predicament.

ASEAN centrality has been an organising platform for Asian economic policy cooperation over the past half century, as explained in the issue of East Asia Forum Quarterly ‘ASEAN Matters‘ released today.

The retreat of the United States from leading the global order and the reversal of its pivot to Asia; the rise of China with its aggressive stance on the South China Sea and its infrastructure development ‘carrot’ in the Belt and Road Initiative; a putative ‘Quad’ configuration of Indo-Pacific power around the US, India, Japan and Australia; and the hot spot in North Korea all present challenges to ASEAN’s central role in the region.

ASEAN leadership in the negotiation of the Regional Comprehensive Economic Partnership (RCEP) in East Asia renews its centrality in Asia’s response to the present uncertainties.

RCEP includes not only the ten ASEAN economies but also Japan, South Korea, China, India, Australia and New Zealand. It is a coalition of countries with the economic weight to deliver a powerful message to the world. Without movement in ASEAN, RCEP is unable to go anywhere. The signing of the Trans-Pacific Partnership agreement without the United States (TPP-11) in Chile last week was a start in defence of the global trading system. But the TPP-11 is not systemically important enough to make the difference. RCEP is.

The threat to security in our region is now much more about the dangers to the multilateral trading system than anything else, despite the still unfinished business on the Korean peninsula.

The Australia–ASEAN summit next weekend is a singularly important opportunity for setting out joint interests on the economic dimensions of regional security and ASEAN’s role in achieving them. ASEAN, with Indonesia at its core, is a regional enterprise with a distinctly global outlook and objectives. A declaration from the Sydney summit that commits to elevating the momentum in RCEP will help cement a broader coalition of Asian economies, including China, Japan, South Korea and India, to holding firm on the international trading system. It will also ensure ASEAN’s continuing centrality in economic cooperation across the region.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.

The latest edition of East Asia Forum Quarterly, ‘ASEAN matters’, is available to read here.

Singapore sounds an optimistic note but eyes tough year ahead as ASEAN chair


February 24, 2018

Op-Ed

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Singapore sounds an optimistic note but eyes tough year ahead as ASEAN chair

by Lynn Kuok

https://www.brookings.edu/opinions/singapore-sounds-an-optimistic-note-but-eyes-tough-year-ahead-as-asean-chair/

Whether Singapore will be able to successfully navigate the challenging year ahead is still uncertain. Much will depend on sustained U.S. attention to the region on the security, economic, and diplomatic fronts. It will also depend on Singapore’s ability to persuade member states to work together to maintain ASEAN’s relevance and centrality. The work has already begun with ASEAN states reiterating the importance of maintaining ASEAN centrality and unity at the foreign ministers’ meeting. At stake will be the ability of ASEAN to chart its own course and the very character of the region itself. ASEAN and member states must decide whether a region governed by right, not might, is worth defending.–Lynn Kuok

The Foreign Ministers of the Association of Southeast Asian Nations (ASEAN) recently met in Singapore from February 4 to 6. It was the first meeting of regional foreign ministers since Singapore took over ASEAN’s rotating chairmanship from the Philippines earlier this year. The foreign ministers’ retreat is regarded as a “curtain raiser” to the ASEAN summit, which will take place in April.

The gathering was an opportunity for ASEAN to collectively chart a direction in line with Singapore’s themes of “resilience” to strengthen ASEAN member states’ ability to withstand crisis, and “innovation” to increase regional integration and connectivity in such areas as digital technologies. It also facilitated an exchange of views on regional and international headwinds, which might derail ASEAN’s agenda in the year ahead. Singaporean Foreign Minister Vivian Balakrishnan expressed optimism about ASEAN’s future, but was clear-eyed about the challenges that lay before the grouping.

The city-state is well-placed to make progress on promoting the region’s digital economy. However, while Singapore is known to punch above its weight economically and diplomatically, old and new challenges should temper expectations in the year ahead.

The economy matters

An important priority for ASEAN will be continued economic progress, not least because this has real implications for the well-being of its 630 million people. Many of the region’s working poor remain vulnerable to backsliding, although important strides have been made in addressing extreme poverty.

Better living conditions will likely improve local support for further ASEAN integration and projects. Brexit has shown the dangers of the lack of public support for supra-national organizations—ASEAN must take heed. Increased prosperity will also boost the grouping’s geostrategic heft.

To this end, Singapore aims to establish an ASEAN smart cities network to leverage technological solutions to improve the lives of the people within ASEAN countries. It also seeks to boost economic integration and improve regional trade facilitation, especially in e-commerce. If all ASEAN member states are to benefit from such growth, Singapore will also have to put in place initiatives to bridge the digital divide in the region.

Navigating between competing great powers

In achieving its goals, ASEAN faces external and internal challenges, including a more assertive China. Beijing is simultaneously clenching its fist in the South China Sea and offering an open hand with the prospect of a Sinocentric economic network that could provide vast benefits to ASEAN countries in areas such as infrastructure development, even if concerns are mounting about what this means for Beijing’s broader influence in the region.

As China expands its footprint in Asia, the United States, which for decades brought strategic stability to the region, appears to be distracted at home and schizophrenic abroad. U.S. President Donald Trump and his advisers appear to have belatedly come to the realization that “America First” cannot mean “America Alone,” and multilateralism and a strong international network of allies and partners actually promote an “America First” agenda. But Trump has failed to follow through on the need to seek mutually beneficial policies, including on trade and climate change.

His decision to pull out of the Trans-Pacific Partnership (TPP) trade deal and the Paris climate change agreement has sent the unfortunate message that the United States is disengaging from Asia and the world. At Davos last month, Trump suggested a willingness to rejoin the TPP if the United States was able to strike a “substantially better” agreement. But there appears little appetite among the remaining 11 TPP countries to reopen negotiations.

Image result for bilahari kausikanSingapore’s Ambassador-at-Large Bilahari Kausikan

 

Washington mainly views Southeast Asia through the lens of North Korea, which is not ideal since the issue puts the United States at odds with ASEAN. The grouping is reluctant to expel North Korea from the ASEAN Regional Forum since it does not want to be seen as parroting the U.S. line. Singapore needs to suggest ways in which the United States can meaningfully engage with the region and encourage this by highlighting what ASEAN brings to the table. This includes demonstrating, in the words of Singapore’s Ambassador-at-Large Bilahari Kausikan, “the utility of ASEAN-led multilateral diplomacy.”

ASEAN must also decide how to respond to the Trump administration’s push for an “Indo-Pacific” strategy that has raised Beijing’s suspicions about being encircled by U.S. allies. ASEAN might try to resurrect a 2013 Indonesian initiative to promote an “Indo-Pacific wide treaty of friendship and cooperation” to reduce China’s concerns.

Washington mainly views Southeast Asia through the lens of North Korea, which is not ideal since the issue puts the United States at odds with ASEAN. The grouping is reluctant to expel North Korea from the ASEAN Regional Forum since it does not want to be seen as parroting the U.S. line. Singapore needs to suggest ways in which the United States can meaningfully engage with the region and encourage this by highlighting what ASEAN brings to the table. This includes demonstrating, in the words of Singapore’s Ambassador-at-Large Bilahari Kausikan, “the utility of ASEAN-led multilateral diplomacy.”

ASEAN must also decide how to respond to the Trump administration’s push for an “Indo-Pacific” strategy that has raised Beijing’s suspicions about being encircled by U.S. allies. ASEAN might try to resurrect a 2013 Indonesian initiative to promote an “Indo-Pacific wide treaty of friendship and cooperation” to reduce China’s concerns.

A test of principles

A more assertive China and the United States’ relative neglect have undermined ASEAN unity in addressing critical issues

A more assertive China and the United States’ relative neglect have undermined ASEAN unity in addressing critical issues such as the South China Sea dispute.

ASEAN has an important role to play in protecting all states’ shared interest in adherence to international law, the peaceful settlement of disputes, and freedom of navigation. If ASEAN wants to maintain the rule of law, it cannot afford to remain silent, as it did in July 2017, when China threatened military action after Hanoi began drilling for oil and gas in Vietnam’s exclusive economic zone.

Vietnam has extended an oil concession to India. If New Delhi begins drilling and China repeats its bellicose behavior, ASEAN would face another critical test. Continued silence would bode poorly for the trajectory of the rule of law.

Electoral politics and other internal challenges

Achieving a unified position in dealing with great power competition is difficult enough, but ASEAN must also deal with internal issues that threaten to weaken the group’s cohesion.

The most significant issue in this regard is Myanmar’s harsh treatment of the Muslim Rohingya community in Rakhine State. The crisis has drawn international condemnation and frayed Myanmar’s relations with the Muslim-majority nations of Malaysia and Indonesia.

As ASEAN chair, Singapore will have the difficult task of helping to stem the ethnic violence and ensuring that humanitarian aid reaches displaced Rohingya communities in Myanmar and neighboring Bangladesh. The ASEAN Coordinating Centre for Humanitarian Assistance is doing important work in this respect, but much more needs to be done. The crisis is stretching the region’s capacity to deal with the refugee influx, threatens to undermine ASEAN unity, deepens religious divisions, and increases the risk of violent extremism.

In Cambodia, the government’s crackdown on the opposition will put additional stress on ASEAN ahead of elections in July that will extend Prime Minister Hun Sen’s 30 years in power. Although the ASEAN principle of non-interference in the internal affairs of a member state will almost certainly be observed, Singapore will still need to address likely calls from some quarters for a tougher stance. Military-ruled Thailand is also likely to see controversial elections this year.

Another challenge comes in Malaysia, where the long-ruling coalition government is likely to resort to religious appeals to the Muslim-majority population to win elections this year in the face of corruption allegations. This creates the potential for ethnic clashes in the multiracial country, which could destabilize Singapore and the rest of the region. As ASEAN chair, Singapore needs to consider how the group can build interethnic resilience.

Singapore will need to encourage Indonesia as the group’s largest member to resume its role as a driving force in ASEAN, which Jakarta has neglected in recent years. Jakarta has lately demonstrated some leadership on spearheading humanitarian assistance to the Rohingya, but this has largely been in response to domestic politics, including radical Islamist groups seeking to politicize the issue.

Singapore’s relations with China

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Singapore may find its leadership of ASEAN this year affected by its strained relations with China, which has criticized the ethnic Chinese-majority state for its close ties with the United States and firm stance on the South China Sea. Although Singapore does not take sides on parties’ specific claims, it has critical interests in adherence to international law, freedom of navigation, and ASEAN unity, which the dispute undermines.

The testy relations have provoked concerns within Singapore’s business community, thereby complicating foreign policy toward China. Soon after participating in a World Economic Forum event in Dalian where China’s hospitality and beneficence was in full display, this author overheard a Singaporean businessman complain in Hong Kong that the goodwill that the late Singaporean Prime Minister Lee Kuan Yew had built up with the Chinese was being squandered by his son, the current prime minister. He asked what interests Singapore had in the South China Sea. It was clear that the long reach of China’s “sharp power” also extends to Singapore. China has been trying to influence Singapore’s business and even academic communities as well as various clan, cultural, and literary associations.

A principled approach pursued pragmatically

Singapore’s foreign policy has been characterized by its adherence to principle and pragmatism, which it will seek to apply in representing ASEAN in relations with external partners. Some consider these competing approaches, but one can argue that a principled approach is a pragmatic one, particularly for countries seeking shelter against the wanton exercise of raw power.

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Singapore will need to stand firm against pressure to bend on issues of principle as ASEAN chair; its chairman’s statement that took note of the concerns of some ministers on “land reclamations and activities” in the South China Sea is a good start.

While Singapore is unlikely to budge on principles, it will take a pragmatic approach in how it seeks to communicate them. Singapore’s foreign minister has stressed “quiet but active diplomacy.” Its senior diplomats insist that Singapore’s message will not change, but it will exercise more care in how it communicates this to other parties.

Whether Singapore will be able to successfully navigate the challenging year ahead is still uncertain. Much will depend on sustained U.S. attention to the region on the security, economic, and diplomatic fronts. It will also depend on Singapore’s ability to persuade member states to work together to maintain ASEAN’s relevance and centrality. The work has already begun with ASEAN states reiterating the importance of maintaining ASEAN centrality and unity at the foreign ministers’ meeting. At stake will be the ability of ASEAN to chart its own course and the very character of the region itself. ASEAN and member states must decide whether a region governed by right, not might, is worth defending.

China’s Silk Road: Altering the global economic order


December 23, 2017

China’s Silk Road: Altering the global economic order

by Salman Rafi Sheikh@www.asiasentinel.com

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The world is gradually awakening to the dark side of China’s Belt and Road Initiative, often called One Belt, One Road, or OBOR and designed to bring infrastructure development to a huge slice of the world. But a growing number of projects completed or in process, including the China-Pakistan Economic Corridor (CPEC), are beginning to demonstrate the grip that China has over the target countries’ economies.

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The massive undertaking is increasing Chinese hegemony not only in Asia but elsewhere, causing concerns to grow in Europe and beyond. The AidData research lab at the College of William and Mary in Virginia in the United States found that only 21 percent of Chinese money channelled into development across 140 countries could be called traditional aid. The rest of the money is in commercial loans at stiff rates that must be repaid to Beijing with interest. The Beijing rate averages 6 percent and above. By contrast, the International Bank for Reconstruction and Development, a unit of the World Bank, charges roughly 1.5 percent above the London Interbank Offer Rate, currently standing at 2.04 percent on loans of 12 months and above for a total of about 3.5 percent.

A French Senate delegation visited Pakistan last week to study CPEC has come away with reservations.

“France enjoys close ties with China, but we feel the project may have consequences on the geopolitical situation,” Pascal Allizard, the delegation’s leader, told local media. “We would be submitting our report (to the Senate) after analysing if this initiative is Chinese regional hegemonic agenda or a step towards greater regional connectivity.”

Questions for Eurozone

China’s financial and economic incursions into Europe have already raised questions, for instance, over one of its most ambitious projects, the Budapest-Belgrade high-speed rail track, which is under investigation for violation of EU laws regarding such large projects.

Ironically enough, during the delegation’s visit, significant cracks appeared in CPEC with reports that China is rolling back a number of projects over potential disagreements with Pakistan. Among other projects excluded recently from the CPEC vision is the US$14 billion Diamer-Basha Dam in Kashmir. According to Pakistani officials, it was excluded because “Chinese conditions for financing the dam were not doable and against our interests.”

With China being now blamed for not protecting Pakistan’s vital interests, the Pakistan-China ‘all-weather’ friendship seems to be on a slippery slope, spurring conflict and divergence rather than convergence of interests.

But Pakistan isn’t the only country in the region where blowback is occurring. Sri Lanka’s Mattala Rajapaksa International Airport in Hambantota, 250 km south from Colombo, was built with Chinese loans of US$190 million at 6.3 percent annual interest, covering more than 90 percent of the total cost.

Sri Lanka in hock

Today, Sri Lanka is finding it impossible to repay that loan and is reportedly considering handing over the airport to an Indian company willing to pump US$205 million into it for a 70 percent share for 40 years.

Sri Lanka is thus finding itself in a Chinese debt trap. Colombo owes China US$8.8 billion in loans. Significantly, the Indian proposal to run the airport won a favorable review in Sri Lanka within only a fortnight of Sri Lanka’s US$1.1 billion deal with China, which had given the state-run China Merchants Port Holdings 70 percent of the revenue in a joint venture to run the Hambantota port. That is very much identical to China’s 91 percent share for the next 40 years in Pakistan’s Gwadar port.

Malaysia too

While the Sri Lankan airport has already been branded the “world’s emptiest airport,” the condition of Malaysia’s Forest City is little different. Malaysia’s former Premier, Mahathir Mohamad, has accused the incumbent government of selling the country’s most precious land to foreigners, it is coming clear that Forest City may end up nothing but a forest.

The first glimpse of the problems came in March when China imposed aggressive domestic measures to clamp down on capital outflows, resulting in cancellations by 60 major Chinese interests of their Forest City bookings and depriving Forest City’s access to its primary target market, leading some to predict that the project will become a giant white elephant.

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There is also the East Coast Rail Line (ECRL). According to reports and claims raised from within Malaysia, it is to be constructed by a Chinese state-owned firm at allegedly inflated prices, using mostly Chinese labor and building materials and funded by soft loans from Chinese state banks. While this is again quite similar to the way China is building a number of CPEC projects, as we reported previously,  it also raises the question of whether Chinese funded projects such as this one can truly be called “investments.”

This is already echoing in host countries, such as Malaysia, where political forces are questioning terms and conditions attached with loans, which the ruling elites continue to dub as “investment.”

“We do want Chinese investment,” said one Malaysian parliamentarian from the opposition Democratic Action Party, “but the type of Chinese investments that are coming to Malaysia today are either dodgy or in reality are Malaysian-paid-for investments that are not really FDI.”

Scenario unfolding in other countries

The scenario now unfolding in countries like Sri Lanka, Malaysia and Pakistan can be seen in dozens of small countries in Asia such as Thailand where disagreements and disputes over terms of business with China have appeared and greatly delayed the construction of Sino-Thai high speed train project.

The controversy has been caused by China demanding that it apply the same conditions agreed to by the Lao government for financing a high-speed rail linking that nation to southern China. According to the demands made by China, the Chinese government will be able to seize five mine assets if they fail to repay the debt. While the project has now received a go-ahead, it happened only when Bangkok decided not to rely on Chinese capital, contractors or operators, but to procure China-made rolling stock as a trade-off to mollify Beijing.

While this has also led to a project that is markedly different from the one originally planned, it also shows how some countries have already started to impose limits on what the Chinese can or can’t do with the so-called “investments.”

These developments are only proving correct the warnings made in a study of the UN Economic and Social Commission for Asia and the Pacific, which claimed that Chinese “investments” were going to increase financial risks in a host of countries in Asia where China was pumping more money than the relative size of the host country.

In this context, Chinese “investment” in Pakistan greatly outweighs the size of Pakistan’s economy. And, that explains why Pakistan has stopped agreeing to whatever China asks for in terms of giving loans.

Thus, the Silk Roads are already beginning to become Chinese inroads into other countries, aimed at altering the global economic order to its own advantage.

Salman Rafi Sheikh is a Pakistani academic and regular contributor to Asia Sentinel