Book Review: ASEAN, Sovereignty and Intervention in Southeast Asia


April 17, 2017

ASEAN, Sovereignty and Intervention in Southeast Asia

Book Review by Malcolm Cook

ASEAN, Sovereignty and Intervention in Southeast Asia. By Lee Jones. Basingstoke: Palgrave MacMillan, 2012. Hardcover: 262pp.

Lee Jones’ new book on ASEAN and the states of Southeast Asia is refreshingly iconoclastic. It tackles one of the core tenets of ASEANology that has been intellectually reinforced by the Constructivist turn in the analysis of this regional organization. The icon that Jones’ book takes aim at is the scholarly near consensus “on the absolute centrality of the non-interference principle for ASEAN states” (p. 2). A consensus that Jones’ correctly notes echoes the official rhetoric of ASEAN and its member states.

Image result for ASEAN, Sovereignty and Intervention in Southeast Asia. By Lee Jones

There are three steps to Jones’ argument that this consensus is misplaced. First, he establishes that a range of Constructivist, Realist and English School scholars of ASEAN uphold this consensus despite their intellectual differences and debates over other aspects of the organization.

Second, he establishes the case that ASEAN member states have repeatedly intervened in Southeast Asia both in the Cold War and post-Cold War periods in apparent contradiction to ASEAN’s commitment to non-interference. Where he sees other scholars of ASEAN as downplaying or ignoring these interventions, he makes them the empirical core of his argument.

Third, Jones posits a theoretical explanation for when member states uphold ASEAN’s “cherished norm” of non-interference and when they violate it. He adopts the multi-variable critical political economy approach that Jones argues, for Southeast Asia, “was pioneered by scholars based at or linked with the Asia Research Centre at Murdoch University, Perth” (p. x). Befitting this social conflict approach’s Marxist roots, Jones focuses on state-capital relations in the different member states of ASEAN and the role of the state and state institutions in supporting powerful owners and managers of capital in their domestic conflicts and transnational expansion.

This approach sees “state managers” in the ASEAN member states invoking the non-interference norm and its purported centrality to ASEAN as a “technology of power” to hinder external interventions in favour of domestic marginalized groups such as the people of East Timor (Timor Leste) when it was under Indonesian control and communist rebels and their sympathizers in the Philippines [End Page 303] and Thailand.

These managers violate the same norm when they perceive external threats to their states such as during the invasion of Cambodia by communist Vietnam during the Cold War or threats to foreign market access such as Western pressure on ASEAN over Myanmar’s membership.  In the case of Cambodia, both in the Cold War and post-Cold War periods and Myanmar in the post-Cold War period, it has not only been ASEAN member states that Jones argues have violated this “cherished norm” of ASEAN but ASEAN itself.

Jones links Myanmar’s decision to seek ASEAN membership, ASEAN’s acceptance of Myanmar and ASEAN’s subsequent pressure on the junta to reform politically all to dominant state and capital interests. The junta was interested in joining ASEAN to benefit from the protection of ASEAN’s non-interference norm while providing more economic opportunities for state-linked firms. Myanmar’s membership benefited dominant capital interests in ASEAN states as shown by the rapid increase in Thai and Malaysian foreign investment in Myanmar. However, Western disdain at ASEAN’s acceptance of Myanmar and the importance for ASEAN member states and dominant capital interests of continued good relations with Western powers, particularly after the Asian financial crisis, strongly underpinned ASEAN pressure on Myanmar to reform politically.

ASEAN, Sovereignty and Intervention in Southeast Asia is most effective at establishing the existence of this near consensus in favour of the ASEAN commitment to non-interference and this consensus’ empirical and analytical shortcomings. This definitely is a worthwhile independent contribution to the literature and our understanding of ASEAN’s development.

The author repeatedly shows how the most quoted scholars of ASEAN, particularly those of a Constructivist bent, downplay examples of interventions as isolated or, counter-intuitively, as supporting the general principle of non-intervention. In the second half of the book that looks at the post-Cold War period, Jones insightfully analyses how ASEAN’s rhetorical embrace of good governance, democratization, human rights and ASEAN community building all.


Treat IA-CEPA with Caution, says CSIS Researcher


April 12, 2017

Treat IA-CEPA with Caution, says CSIS Researcher

by Rudy Intan

http://www.eastasiaforum.org

“…the statist–nationalist approach clearly indicates where Indonesia under Jokowi lies with respect to multilateral trade negotiations in the Asia Pacific. As the dust settles on the death of the Trans-Pacific Partnership (TPP), Japan and Australia will be keen to ensure that RCEP includes higher commitments on things like services and investment. China on the other hand is keen to secure an early deal by the end of 2017 that primarily involves reducing tariffs. Jokowi’s approach suggests Jakarta will lean towards Beijing in the contest to shape a trade pact that will cover a third of the world economy and half its population.”–Rudy Intan

 

Despite the warmth between Indonesian President Joko ‘Jokowi’ Widodo and Australian Prime Minister Malcolm Turnbull following their February 2017 meeting in Canberra, hopes that the Indonesia–Australia Comprehensive Economic Partnership (IA-CEPA) will achieve a high quality ‘21st century partnership’ should be treated with caution.

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Jokowi-Turnbull –IA-CEPA

FTAs are generally evaluated differently by their respective countries. In the case of IA-CEPA, Indonesia maintains formidable barriers to sectors of Australian interest such as agriculture, mining and education. Matthew Busch highlights that announced deals to improve access for Australian sugar and cattle do not confront the daunting market access challenges in Indonesia.

The challenges of reaching a meaningful agreement have been well documented. Yet the Jokowi government’s approach to FTAs has so far avoided scrutiny. This is relevant not only for the IA-CEPA but also for the Regional Comprehensive Economic Partnership (RCEP). International economic policy is driven by domestic economic policy concerns. Consequently, Jokowi’s approach to international economic policy is but an extension of his domestic one.

Eve Warburton provides the clearest articulation to date of Jokowi’s approach to economic policy, termed new developmentalism. It is a statist–nationalist mode of thinking focused on ‘infrastructure, deregulation, and de-bureaucratisation’. The approach is statist because it views state intervention as necessary to accelerate national development, with state-owned enterprises (SOEs) acting as growth locomotives. At the same time, it is nationalist because intervention aims to reduce reliance on foreign capital, build state strength, and safeguard sovereignty.

Clear examples of statist–nationalist policy include capital injections and the awarding of strategic projects to SOEs, as well as plans to establish large holding companies in key industries. Recent moves on beef import licenses and an export ban on unprocessed minerals are further illustrations. Other agendas such as anti-corruption and human rights take a back seat to safeguard the political equilibrium created by the administration to accelerate growth.

The statist–nationalist approach is oriented towards delivering short-term victories in the form of tangible economic outcomes. There is speculation that one of the reasons the Jakarta–Bandung high-speed rail project was awarded to Chinese developers over a Japanese company was the former’s promise to deliver results before the next election, with construction to finish in 2018 and the line operational in 2019.

By extending these priorities into international economy policy, how Jokowi views FTAs can be discerned. The overarching goals are growth and development, with an emphasis on export market access. Imports should be controlled since they are perceived as undermining local industry and productivity. Liberalisation is viewed as a last resort for attracting foreign direct investment and only allowed if not overtly disruptive, especially to political stability. Foreign policy and geopolitics will not factor much into FTA calculations.What do these priorities mean for Jakarta’s trade agreement prospects with Canberra and its participation in the region’s multilateral negotiations? First, IA-CEPA will likely fall short. It is unlikely that the agreement’s scope and commitments will be comprehensive enough. Australia’s interests in agricultural exports and mining investment will run against powerful and entrenched Indonesian interests, a clash where the latter will most likely carry the day.

This calculus could be different if Australia offers meaningful concessions, such as by opening up its labour market for Indonesian migrant workers. Yet even such enticement will not amount to much without significant skills and language training on Indonesia’s part. It is likely that notions of economic sovereignty and self-sufficiency will prevail, especially if powerful actors in the agriculture and mining industry are considered necessary allies to maintain the political equilibrium.

Image result for Jokowi-Turnbull

 

Second, the statist–nationalist approach clearly indicates where Indonesia under Jokowi lies with respect to multilateral trade negotiations in the Asia Pacific. As the dust settles on the death of the Trans-Pacific Partnership (TPP), Japan and Australia will be keen to ensure that RCEP includes higher commitments on things like services and investment. China on the other hand is keen to secure an early deal by the end of 2017 that primarily involves reducing tariffs. Jokowi’s approach suggests Jakarta will lean towards Beijing in the contest to shape a trade pact that will cover a third of the world economy and half its population.

Without the lure of a large market that it currently does not have an FTA with — such as the US market which previously was offered by the TPP — Indonesia is in no rush to bind itself to a high-commitment agreement and will be wary of allowing RCEP to evolve into such. Prospects do not seem rosy for those hoping Indonesia will enact meaningful reforms initiated by an FTA, be it through IA-CEPA or RCEP. Grounding expectations for both is in order.

Rocky Intan is a researcher at the Centre for Strategic and International Studies, Jakarta

 

The Renminbi and the Rise of China in Global Trade and Finance


April 10, 2017

The Renminbi and the Rise of China in Global Trade and Finance

by Paola Subacchi, Chatham House

http://www.eastasiaforum.org

“…any suggestion that the renminbi may one day rival the dollar and seriously threaten the greenback’s dominance within the international monetary system remains wishful thinking. The renminbi is moving in the right direction, but much more needs to be done to make it into a pillar of this multi-currency system.”–Paola Subacchi

At times of big turmoil, currencies take the hit, but economic transformation can also create currency winners. Nowhere is this more apparent than when we compare the prospects of British sterling and China’s renminbi.

Image result for the renminbi as an international currency

Between February 2016 — when the referendum on the UK’s membership of the European Union (EU) was announced — and the end of January 2017, the sterling fell by 14 per cent against the US dollar. Then, at the beginning of October, when the UK government appeared to signal a preference for a clear break with the EU — a ‘hard Brexit’ — the sterling dropped again by 6 per cent.

As the British government is serving notice on the membership of the EU, it is not yet clear what the future relationship will look like. Will Britain remain a member of Europe’s single market? Or will it embrace a totally independent trade policy to maintain control at its borders?

Currencies not only reflect geopolitical dynamics, but also patterns of trade and debt. A weak currency is not much help for an economy that imports more than it exports. The UK has a significant deficit in its current account — roughly, it consumes more than it produces — at almost 6 per cent of GDP. Of course, a weak currency would lower the prices of exports, but only if these goods are produced with limited inputs from imports.

In a world of global supply chains this is questionable. Even assuming that a weak sterling would help shift the UK model of growth from domestic demand to exports, this adjustment will take time and is unlikely to cushion the adverse impact of Brexit on real GDP growth in the next few years.

The ‘hard Brexit’ option, by reducing market openness, will affect investors’ confidence, have an adverse impact on capital inflows and undermine growth. If the UK becomes less attractive as an investment destination, and stricter immigration policies cause the labour force to shrink, then Britain may find it difficult to attract the quantity of foreign capital and labour necessary to sustain a domestic demand-driven economy.

Image result for the sterling post Brexit

The sterling remains in the IMF’s Special Drawing Rights (SDR) basket of international reserve currencies. To some extent the sterling has been a proxy of British global influence: on the way down, but still ‘punching above its weight’. But the sterling’s protracted weakness coupled with the inclusion of the Chinese renminbi in the SDR basket — in effect from the beginning of October 2017 — may result in downgrading the pound when the composition of the basket is reassessed in 2020.

If currencies are an expression of national sovereignty, they also epitomise the limits of such sovereignty in an open economy. Exchange rate dynamics tend to reflect divergences between domestic politics and global markets. Thinking that domestic policy making can be insulated from the rest of the world, so that no coordination or cooperation is needed, is deeply fallacious. The sterling’s troubles are a reminder that foreign investors have an indirect say — and interest — in how a country is managed.

The inclusion of the renminbi among the currencies that compose the SDRs — the US dollar, the euro, the yen and the sterling — is a ‘milestone’ for China, as International Monetary Fund Managing Director Christine Lagarde said when she presented the IMF executive board’s decision on 30 November 2016.

The renminbi’s inclusion recognises the work that China’s monetary authorities have done in the last five years to push the renminbi’s transformation into an international currency — a currency that can be used to invoice and settle international trade and that is traded in international capital markets. The outcome of this process has been remarkable: approximately 25 per cent of China’s trade is now settled in renminbi — it was less than 1 per cent in 2009.

In addition, the inclusion somehow addresses the contradiction that China has faced for years: being the world’s second largest economy and the largest exporter without a currency that reflects that role. For years the dollar has been the currency used in China’s trade and investments, and this is still largely the case. This has suited China well throughout its transformation from a poor and isolated nation into an industrial powerhouse that is well integrated in regional and international supply chains.

But China’s dollar dependence no longer reflects Beijing’s ambitions for playing a more engaging and assertive role in international economic and financial affairs and governance. If ‘great nations have great currencies’, to paraphrase Nobel laureate Robert Mundell, then it is understandable that the Chinese leadership would push to turn the renminbi into a ‘great currency’.

Finally, and even more critically, being part of the SDR basket implicitly recognises the role that the renminbi, going forward, can play in the international monetary system. The hype that has surrounded the IMF decision — the SDR made headlines beyond the financial press, perhaps for the first time since its creation in 1969 — should not obscure the fact that the development of the renminbi is not a linear process, even if it is heavily policy-driven, and there is no guarantee that progress will continue at the same remarkable pace. The renminbi remains a currency with limited international circulation because of obstacles that are still in place to constrain capital flows into and from China’s domestic market.

Image result for the renminbi as an international currency

This is not the case for trade transactions, where the renminbi has been fully convertible since 2001 when China joined the World Trade Organisation. But what is the incentive for foreign businesses to hold renminbi if liquidity is constrained and therefore so are investment opportunities?

To make the renminbi into an international currency that foreigners want to hold as a store of value the Chinese leadership needs to continue the pace of reforms. Top of the list is the exchange rate and the abandonment of the system where the central bank intervenes every time the value of the renminbi moves outside a pre-determined range. Until foreign investors believe that the renminbi is liquid and trustworthy, any suggestion that the renminbi may one day rival the dollar and seriously threaten the greenback’s dominance within the international monetary system remains wishful thinking. The renminbi is moving in the right direction, but much more needs to be done to make it into a pillar of this multi-currency system.

Paola Subacchi is Director of Economic Research at Chatham House, London, and the author of The People’s Money: How China Is Building a Global Currency (Columbia University Press, 2017).

 

Assessing the ASEAN Economic Community


March  24, 2017

Assessing the ASEAN Economic Community

by Somkiat Tangkitvanich and Saowaruj Rattanakhamfu

http://www.eastasiaforum.org

Image result for asean economic communityMaking Progress Slowly–The ASEAN Way

East Asia continues to sustain a high level of economic integration, yet a significant proportion of intraregional trade is still uncovered by agreements to guard against current and possible future protectionism. Without multilateral movement under the World Trade Organization, further regional integration can proceed only through agreements that reduce trade barriers within the region.

ASEAN appears to be leading the Asia Pacific in FTA formation. The ASEAN Free Trade Area was implemented in 1993 and the ASEAN Economic Community (AEC) was officially launched in late 2015. The AEC aspires to go beyond typical trade agreements, aiming to create a single market and production base with equitable development across its 10 member countries.

 

ASEAN will celebrate its 50th anniversary in August, 2017. While ASEAN has made some significant political achievements during the past five decades, its economic integration project is still very much a work in progress, and could remain so for many years or even decades to come.

Image result for asean leaders 2017

The ASEAN Secretariat claims that the implementation of the AEC Blueprint 2015 — the community’s formal agenda — has been substantively achieved in many areas. In reality, the levels of integration vary greatly by sector. The only clear success ASEAN can claim is the reduction of tariffs among member countries. Since the implementation of the Common Effective Preferential Tariff agreement in 1990s, about 99 per cent of tariff lines between member countries have been reduced to zero.

Still, the free flow of goods among ASEAN member countries continues to be hindered by the use of non-tariff measures (NTMs). These may have adverse consequences on the sourcing decisions of firms and the structure of trade and related industries.

Countries such as Indonesia or Malaysia that employ active ‘industrial policy’ apply more NTMs. Car assemblers in Thailand, for example, have long complained about Malaysia’s restriction of the number of cars imported into Malaysia.

Image result for asean in the philippines 2017

While minimising non-tariff barriers is an action target in the AEC Blueprint, ASEAN has relied on a voluntary approach to reduce them — with very limited success. Under the voluntary approach, member countries can have an adverse incentive to under-report the barriers they are using. What’s more, there is no effective monitoring system to keep track of the changes of NTMs among member countries.

ASEAN has been negotiating services liberalisation since the creation of the ASEAN Framework Agreement on Services in 1996. The AEC Blueprint has established clear targets to remove all restrictions on trade in services by 2015. But some ASEAN countries, including Thailand, the Philippines and Indonesia, could not meet their targets by the deadline.

Critically, service liberalisation under ASEAN contains no commitment to address behind-the-border issues, such as interconnection for telecom services or access to ATMs for banking, which are crucial to the creation of competitive markets. The difference in laws and regulations among member countries is also problematic.

Service liberalisation under ASEAN in its current form would fail to create a single service market. Thailand, the Philippines and Indonesia, still could not meet the targets by the 2015 deadline. Indonesia and Thailand’s specific commitments under the latest offer contain many services that are inconsequential or even useless.

In terms of promoting cross-border movement of labour, ASEAN has achieved very little. From an economic development perspective, the opening up of unskilled labour markets through FTAs would be a useful policy option, given the relative abundance of unskilled labour in many ASEAN countries, but the AEC Blueprint attempts to facilitate only the mobility of skilled professionals, currently comprising just eight professions. The arrangement to facilitate the movement of these professionals is also problematic. In the case of Thailand, for example, the requirements imposed on ASEAN professionals are the same as those of the non-ASEAN countries.

To critical observers, ASEAN integration has so far produced very few tangible results. The Asia Trade Centre’s Deborah Elms concludes that ‘ASEAN officials shifted the rhetoric as the deadline loomed to argue instead that the AEC itself should be viewed as process and not a destination’. In September 2016, The Economist mockingly wrote that ‘[w]hen it comes to elevating form over substance, and confusing a proliferation of meetings and acronyms for a deepening of ties, ASEAN is the Zen master’.

The lack of momentum to deepen regional integration in ASEAN is largely a consequence of most member countries’ protectionist stances, perhaps with the sole exception of Singapore. Many ASEAN countries view one another as rivals in their pursuit of exporting to the global market or attracting foreign direct investment.

Domestic political conflicts, along with a lack of strong and stable government, have led political leaders in many ASEAN countries to look inward and lose their appetite for regional integration. Without confronting the core problems of its integration project squarely and urgently, ASEAN will not realise the AEC Blueprint vision of a single market and single production base.

ASEAN prides itself on being the ‘hub’ of bilateral FTAs in East Asia. The concept of ‘ASEAN centrality’ espoused in the group’s initiatives emphasises its role in facilitating economic integration in the region. But the economic integration among ASEAN countries has so far focused on creating a more attractive package for multinationals looking to operate in the region, rather than on creating stronger bonds between member economies.

When it comes to economic integration, ASEAN has to aim at achieving critical targets while ignoring trivial ones. In other words, ASEAN needs to be much more focused than it is now. Its current agenda is overly ambitious considering its limited resources.  The AEC Blueprint has established 17 core elements and set 176 priority actions, covering the free flow of goods and capital, movement of skilled labour, equitable development and protection of intellectual property rights, to name just a few.

A sharper focus would help ASEAN to deliver meaningful and tangible results without depriving member countries, especially less developed ones, of their limited resources. This requires ASEAN to return to the core missions of an FTA: reducing barriers to trade and facilitating cross-border trade in goods, services and the movement of labour and inputs to production.

Yet the real challenge for ASEAN is not economic but political. Full national sovereignty and economic integration are incompatible. The success of the European Union’s trade integration, for example, is based on pooled sovereignty.

The idea of ‘pooled sovereignty’ is not all-or-nothing in nature. When started, the EU was a comparatively modest project. It had few members and only one policy area for pooling sovereignty: a common market for coal and steel. Only gradually did it expand its membership and its mission.

Unless ASEAN countries are willing to increasingly pool their sovereignty and meet political challenges head on, the AEC project will go nowhere and ASEAN will be little more than a talking shop.

Somkiat Tangkitvanich is President of the Thailand Development Research Institute (TDRI). Saowaruj Rattanakhamfu is a Senior Research Fellow at TDRI.

This article summarises a paper prepared for the 2016 Pacific Trade and Development Conference in Australia.

 

APSIA Conference 2017 Keynote Address by Singapore’s DPM


March 5, 2017

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APSIA Conference 2017 Keynote Address by Singapore’s DPM Tharman Shanmugaratnam at LKY School of Public Policy

COMMENT:

Geo-Politics, Disruptive Social Developments and Technological Change: Has the Game Changed? Yes, that is easy part of the answer.  How we wish that life is simple and outcomes are predictable. But it is not. I  have been grappling a few questions. I asked myself questions like What has changed? How it has changed?  What is driving the change?What this change means to us in Asia.

China, North Korea, Islamic and Christian evangelism, terrorism and so on are making the headlines.I  also see increasing polarisation and the need for understanding and rebuilding trust. I expect our politicians to reconnect with people they are mandated to serve and  want leaders to lead with integrity, honesty and hope. Listen to DPM Tharman Shanmugaratnam for some insights.–Din Merican

 

 

Saudi King Salman’s Mission to Malaysia, China and Indonesia


March 4, 2017

What Saudi King Salman wants from his tour of China, Malaysia

Ignore the theatrics, the multibillion-dollar investment deals and even the uncertainty over US hegemony – when the leader of the House of Al Saud is in town, Iran, Islamic State and ultra-conservatism are never far from the surface.

By James M. Dorsey

http://www.scmp.com/week-asia/geopolitics/article/2075774/what-saudi-king-salman-wants-his-tour-china-malaysia

The spectacle of Saudi King Salman’s tour of Asia is matched by its significance. Attention has focused as much on his 1,500-strong entourage and their 459 tons of luggage – roughly the weight of two Boeing 787 Dreamliners – as it has on expectations of billions of dollars in investment.

To be sure, economics is high on the Saudi leader’s agenda. Salman is looking at both strategic investments in Asia as well as Asian investments in the kingdom that will help it diversify its economy and strengthen ties to China and major Muslim nations in an era of uncertainty about the United States’ place in the world.

Yet Salman’s geopolitical concerns go far beyond whether the US remains a reliable guarantor of regional security. Saudi Arabia is locked into a global battle with Iran for dominance in the Muslim world. For the Al Sauds, the kingdom’s ruling family, the struggle with the Islamic republic is existential in nature.

A policeman prepares his patrol car ahead of Saudi King Salman’s visit to Bali. Photo: AFP

Iran not only represents an alternative form of Islamic rule that recognises a degree of sovereign legitimacy and was established by a popular revolt. It also has assets the kingdom lacks that are key to sustaining regional hegemony: a large population, a huge domestic market, an industrial base, a battle-hardened military, geography, and a deep-seated identity grounded in a history of empire.

An epic battle

The epic battle between Saudi Arabia and Iran is being fought not only on the international and Middle Eastern stage but domestically in Muslim and non-Muslim nations that span the globe. Saudi Arabia’s soft power effort, possibly the single largest public diplomacy campaign in history, has aligned itself neatly with Muslim governments that opportunistically play politics with religion and Muslim communities that embrace Saudi-style Sunni ultra-conservatism in lieu of feasible alternatives.

Singapore’s bid to outshine Hong Kong with Saudi Aramco bid is a pipe dream

Saudi King Salman with Chinese President Xi Jinping in Riyadh in 2016. Photo: AFP

China may not have a seriously sizeable Muslim community, yet the lure of ultra-conservatism has made its mark among Hui Muslims and Uygurs alike. Chinese concern about the impact of ultra-conservatism coupled with Iran’s strategic advantage has shaped Chinese policy even if Saudi Arabia is a major oil supplier and commercial partner as well as a military ally.

President Xi Jinping’s (習近平) visit to the Middle East last year, the first by a Chinese leader in seven years, saw the signing of billions of dollars’ worth of agreements with Saudi Arabia and a ten-fold expansion of trade with Iran over the next 10 years. The significance may go far beyond commerce as Chinese interests align more with Iranian interests than those of Saudi Arabia.

From Riyadh, Xi went to Iran to become the first foreign leader to do so following the lifting of international sanctions against the Islamic republic. Saudi leaders could not have been pleased.

Back to the future: Chinese President Xi Jinping’s Middle East visit … and his Middle Kingdom dream

Xi’s determination to gain a first mover advantage in Iran at a time that Saudi Arabia was seeking to increase rather than reduce the Islamic republic’s international isolation suggested that more than commerce was at play.

Chinese President Xi Jinping meets Iran’s supreme leader Ayatollah Ali Khamenei in Tehran. Photo: AFP

Xi’s visit to the kingdom was accompanied by talk of brotherly relations and strategic cooperation. The rhetoric, however, did little to mask serious differences on issues ranging from Syria – with Chinese support for President Bashar al-Assad – to Saudi propagation of ultra-conservatism and a relative decline in Chinese reliance on Saudi oil.

“Our biggest worry in the Middle East isn’t oil – it’s Saudi Arabia,” a Chinese analyst told the Asia Times. Religious affinity is not something China has to worry about with Shiite-majority Iran, which has long projected itself as a revolutionary rather than a sectarian power.

Consequently, China remains reluctant to clearly articulate its strategic interests or intentions in the Middle East and North Africa beyond its drive to secure resources, investments and people, and expand its influence through economic ties and its “One Belt, One Road” initiative to link economies into a China-centred trading network. As a result, China’s strategic dialogue remains focused on free-trade agreements with the six-nation, Saudi-led Gulf Cooperation Council (GCC) rather than the forging of broader strategic partnerships that go beyond economics.

China has also long sought to tread carefully in its for now limited military contacts.

China was, for example, slow to engage in its security cooperation with Saudi Arabia that started in secret in 1985, five years prior to the establishment of diplomatic relations between the two countries. In a deal that was only disclosed three years later, Saudi Arabia in its first weapons deal with China bought in 1985 for US$3.5 billion 36 Chinese CSS-2 East Wind intermediate range ballistic missiles even though they were known to be highly inaccurate in conventional use.

Saudi Arabia’s King Salman is driven around in a golf cart by Indonesia’s President Joko Widodo in the presidential palace in Jakarta. Photo: AFP

The deal said much about the attitude of Saudi Arabia towards China. Saudi Arabia saw the deal as a way to counter Iran’s missile strength that in a twist of irony was built on Chinese technology and design, and as leverage to persuade the US to be more forthcoming with weaponry that had offensive capabilities. In a further indication that China was making only limited inroads and that Saudi Arabian arms purchases remained focused on Western suppliers, Saudi Arabia – even while engaged in a massive weapons buying spree – waited 30 years to acquire a more up-to-date Chinese missile system, the DF-21 East Wind ballistic missile.

A frontal assault

Ultra-conservatism – which complicates communal relations, changes policies towards minorities, and alters local culture as well as Saudi efforts to forge an anti-Iranian military alliance – loomed even larger in Malaysia and during the current Indonesian leg of Salman’s tour. In Malaysia, a supposedly pluralistic nation that bans Shi’a Islam, ultra-conservative Islamic scholars legitimise the United Malays National Organisation (UMNO), the country’s ruling party, raising concerns about a more intolerant society despite its multi-ethnic composition.

Saudi King Salman and Indonesian Parliament Speaker Setya Novanto in Jakarta. Photo: EPA

The state of Johor’s straight-talking Sultan, Ibrahim Ismail Ibni Sultan Iskander, didn’t mince words last year when he decried what he described as creeping Arabisation of the Malay language. He insisted that Malaysians use Malay rather than Arabic words when referring to religious practices and Muslim holidays.

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In a frontal assault on Saudi-inspired ultra-conservatism, Ibrahim advised his people who “If there are some of you who wish to be an Arab and practise Arab culture, and do not wish to follow our Malay customs and traditions, that is up to you. I also welcome you to live in Saudi Arabia. That is your right but I believe there are Malays who are proud of the Malay culture. At least I am real and not a hypocrite and the people of Johor know who their ruler is,” the Sultan said.

Saudi King Salman and Indonesian President Joko Widodo in Bogor, West Java. Photo: AFP

Both Malaysia and Indonesia have been reluctant to become too involved in a 41-nation, Saudi-led military alliance headquartered in Riyadh that officially was created to combat political violence and the Islamic State (IS). Many fear the alliance is also intended as a military bloc against Iran that would also bolster Saudi Arabia’s campaign in Yemen – where it is fighting Houthi militia and loyalists of the former president, Ali Abdullah Salleh, allegedly supported by Iran.

Ultra-conservatism

Saudi influence was nonetheless evident when Malaysian Defence Minister Datuk Seri Hishammuddin Hussein last year, to the consternation of his ministry’s civilians, agreed to let 300 Malaysian paratroopers participate in a 20-nation military exercise in the kingdom. Malaysia currently has up to 100 military personnel and C-130 Hercules transport planes in Saudi Arabia that provide the alliance with logistical support.

The Indonesian military, like its Malaysian counterpart, regularly trains with Saudi officers to counter IS. Nawaf Obaid, a Saudi policy analyst with close government ties, described last year’s exercise as a preparation for possible Saudi military intervention in Iraq and Syria.

King Salman and Malaysian Prime Minister Najib Razak in Putrajaya, outside Kuala Lumpur. Photo: AFP

Critics in the ministry were taken aback when Hishammuddin obliged them weeks later to endorse Saudi funding for the King Salman Centre for Moderation (KSCM). Under the auspices of the ministry’s think tank, the Malaysian Institute of Defence and Security (MIDAS), would seek to counter jihadist messaging in Southeast Asia. An internal ministry memo said MIDAS had a “strategic interest to be collaborating with various institutions internationally particularly from Saudi Arabia”.

A joint communique at the end of Salman’s visit described political violence as the most important issue discussed between the king and Prime Minister Najib Razak. Najib backed Saudi concerns about Iranian interference in the internal affairs of Arab countries and called on the Islamic republic to respect the sovereignty of regional states.

The two leaders also announced the establishment of the King Salman Centre for International Peace (KSCIP), a collaboration of Saudi and Malaysian defence institutions as well as the Muslim World League, a prime Saudi vehicle for the propagation of ultra-conservatism. It’ not clear if KSCM and KSCIP are separate institutions.

An Indonesian honour guard waits for the arrival of Saudi Arabia’s King Salman at the presidential palace in Bogor. Photo: AFP

In Indonesia, a country that prides itself on its tolerant interpretation of Islam, Saudi-style ultra-conservatism is similarly making itself felt. Major Islamic organisations with a history of opposition to Wahhabism, the ultra-conservative world view that governs the kingdom, see Shiites, who constitute 1.2 per cent of the population, and Iran as threats to national security. A former deputy head of Indonesian intelligence goes as far as describing Shiites as the foremost domestic threat to national security.

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Saudi media reported that King Salman hoped during his visit to lay the ground for the opening of more Arabic-language Islamic schools in Indonesia. They said the king would also be increasing the number of scholarships available to Indonesians for study in Saudi Arabia. Many of those who return after completing their studies are imbued with Saudi-style ultra-conservatism.

All in all, Salman’s Asian official visit-cum-holiday is likely to reverberate far beyond the billions of dollars in economic and commercial agreements he signs. The visit also solidified cooperation between Asian nations and Saudi Arabia in the fight against IS. This, despite the fact that IS and the kingdom have the same ideological roots, even if the jihadists accuse Saudi Arabia of having deviated from the true path of Islam. At the same time, the tour could also well embed sectarian aspects of Saudi’s Arabia’s epic struggle with Iran ever deeper in the social and political life of the continent’s Muslims.

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies