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Refuting criticisms that call into question the effectiveness, and even the purpose, of ASEAN, Shaun Narine traces the o

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Shaun Narine

b o u l d e r l o n d o n

Published in the United States of America in 2018 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301

and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU

© 2018 by Lynne Rienner Publishers, Inc. All rights reserved

Library of Congress Cataloging-in-Publication Data Names: Narine, Shaun, 1966– author. Title: The new ASEAN in Asia Pacific and beyond / by Shaun Narine. Description: Boulder, Colorado : Lynne Rienner Publishers, Inc., 2018. | Includes bibliographical references. Identifiers: LCCN 2017048309 | ISBN 9781626376892 (hc ; alk. paper) Subjects: LCSH: ASEAN. | Southeast Asia—Foreign relations. Classification: LCC DS520.A873 N38 2018 | DDC 341.24/73—dc23 LC record available at

British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992.

5  4  3  2  1


List of Tables and Figures Acknowledgments Map

1 2 3 4 5 6 7 8

ASEAN in the Twenty-First Century History: From Creation to Crisis The Postcrisis Reform

Regional Institutionalism

vii ix xi 1 7

47 85

Relations with China

Relations with the United States

ASEAN and the Regional Powers ASEAN’s Role in Asia Pacific

List of Acronyms References Index About the Book



163 207 251 277 281 301 308

Tables and Figures

Tables 3.1 3.2

4.1 4.2 5.1 5.2 6.1 6.2

Overall Intra-ASEAN Trade, 2005–2013 Distribution of Major Ethnic Groups in the ASEAN Countries CMIM Contributions and Purchasing Multiples Foreign Exchange Reserves of Select Asian States, 2012–2015 ASEAN Exports to and Imports from China, 2005–2014 China’s Trade with Individual ASEAN States, 2010–2014 ASEAN Exports to and Imports from the United States, 2005–2014 US Exports to and Imports from Individual ASEAN Countries, 2010–2014


78 90

113 122 123 179 179

Figures 5.1

China’s Claims in the South China Sea, 2009




This book began several years ago when a colleague at an International Studies Association conference suggested that I produce a second edition of my previous book, Explaining ASEAN: Regionalism in Southeast Asia. I thought this was a good idea and approached Lynne Rienner Publishers (LRP) to see if they were interested in such a project. LRP said it would prefer a new book on ASEAN. This book—many years later than anticipated—is the result. Unfortunately, I cannot remember who, among my many colleagues, made the suggestion. I would like to acknowledge her nonetheless. I would also like to acknowledge the several editors at Lynne Rienner who have worked with me throughout the course of this project. Among the people I can remember, I want to acknowledge Alice Ba and David Capie. Both are excellent colleagues, and they form, for me, the heart of a community of scholars from around the world who are engaged in the often frustrating study of ASEAN. During the early part of 2017, I had the good fortune to take part of my sabbatical as a visiting fellow at the Institute of Southeast Asian Studies–Yusof Ishak Institute (ISEAS) in Singapore. Ian Storey and Malcolm Cook went out of their way to be wonderful hosts during my time there. I appreciate the hospitality extended to me by all of the people at ISEAS and by the many other people in Singapore who were willing to meet with me and discuss questions related to ASEAN and the political, economic, and security relations of Asia Pacific. At my home university of St. Thomas, I must thank Gayle MacDonald. For most of the writing of this book, Gayle was vice president of ix



research at St. Thomas. She was encouraging and helpful and suggested many useful strategies for completing what became, at times, a considerable burden. Finally, I wish to express my love and thanks to my parents, Amina Narine (1933–2008) and Haresh Narine (1937–2014). I miss both of you very much. —Shaun Narine


TAIWAN Hong Kong



South China Sea








The Countries of ASEAN


1 ASEAN in the Twenty-First Century

In 2017, the Association of Southeast Asian Nations (ASEAN) celebrated its fiftieth anniversary. Since its founding in 1967, ASEAN has evolved and reformed many times and in many ways. It has grown from a nonaggression pact between five anticommunist states into an increasingly sophisticated community of ten (perhaps soon to be eleven, if East Timor joins) Southeast Asian nations. It has grown from a loosely institutionalized regional entity indirectly addressing the political and security relations of its member states into nascent Economic, Political and Security, and Socio-Cultural Communities, all under the umbrella of the ASEAN Community. Yet despite all of this, there remains considerable doubt within the international and academic communities on exactly what ASEAN is, what it is capable of doing, and what purposes it serves. In 2003, the Association of Southeast Asian Nations held its ninth summit in Bali, Indonesia. This was the second Bali Summit, and it was a deliberate attempt to evoke the memory and achievements of the first Bali Summit, of 1976. The first Bali Summit was a seminal moment in the evolution of ASEAN. It was the first meeting of ASEAN’s heads of state and it concluded with the signing of the Treaty of Amity and Cooperation in Southeast Asia (TAC), which laid out the basic guidelines for interstate interaction between its signatories. The TAC commits its signatories to the peaceful settlement of disputes; it has since become the symbolic heart of the region’s security aspirations. To join the East Asia Summit (EAS), a regionwide conglomeration of states (including the United States, China, India, Russia, and Japan), states must first accede to the TAC. 1

2 The New ASEAN in Asia Pacific and Beyond Bali I signaled substantive efforts at using the organization to shape the political, economic, and security parameters of Southeast Asia. The meeting was driven by the regional need to respond to the potential threat of Vietnam, newly reunified under communist rule. Bali II was an effort to rejuvenate ASEAN and set a course for the next several years. It was a response to the years 1997–2003, when ASEAN’s institutional prestige suffered humiliating blow after blow. ASEAN entered the post– Cold War era as the instrument of a group of confident and emerging economic powers. Between 1995 and 1999, ASEAN expanded its membership to include all ten states (at the time) of Southeast Asia. But in 1997, the rising powers of Southeast Asia took a nasty tumble, along with many of their East Asian neighbors. The Asian economic crisis of 1997–1999 devastated the region’s economies and demonstrated the significant limitations of ASEAN as a coherent and effective regional body. During and after the crisis, numerous other calamities befell Southeast Asia. A choking haze caused by human-made forest fires in Indonesia engulfed the region in 1997, threatening the health of tens of millions of people. In 1999, East Timor voted to establish itself as an independent state. In response, militias backed by the Indonesian military rampaged across the territory, eventually prompting United Nations (UN) intervention. In both of these cases, ASEAN proved incapable of effectively managing important threats to regional stability. At the same time, ASEAN was proving incapable of managing the conduct of some of its newest members, Cambodia and Myanmar, as they engaged in brutal actions against their own citizens. Taken in conjunction with the economic crisis, ASEAN was in dire need of proving itself to be a consequential regional organization. At Bali II, ASEAN’s leaders approved plans to make ASEAN into the foundation of a much larger and more coherent regional project. In defiance of their critics both inside and outside the region, ASEAN’s leaders decided that the best way to demonstrate the continuing relevance and efficacy of the institution was to set bold and extravagant goals. Bali II called for the creation of an ASEAN Charter, a document that, once ratified, would give ASEAN legal personality for the first time. It also called for the creation of an ASEAN Community, to consist of three separate communities: an ASEAN Security Community, an ASEAN Economic Community, and an ASEAN Socio-Cultural Community. Bali II was the first effort to rehabilitate ASEAN for the twentyfirst century, the first effort of Southeast Asia to assert its rightful and leading role in the redefinition and realignment of Asia Pacific in the new world order. This book is a critical assessment of ASEAN’s efforts to achieve these goals.

ASEAN in the Twenty-First Century 3

This book attempts to answer the question: What role will ASEAN play in Asia Pacific in the twenty-first century? This is a broad question that invites numerous possible answers, and all of the answers are subject to numerous interpretations. This book seeks to address this question for the next ten to fifteen years. Within ASEAN scholarship, there is a lively debate over whether ASEAN embodies a distinct form of Asian multilateralism. If it does, ASEAN supporters argue it must be evaluated on the basis of that uniqueness. ASEAN’s critics argue that the organization is, in fact, relatively weak and incapable of concerted action. Its unique “Asian” qualities are simply excuses for the inability of its members to make the commitment to the measures necessary to make ASEAN a truly effective institution. The argument in this book is that neither characterization of ASEAN is accurate. To get to this point, the book examines ASEAN’s efforts to create itself as an ASEAN Community and its attempts to place itself at the center of regional institutionalism. Neither effort achieves what ASEAN appears to be trying to accomplish. If ASEAN’s efforts to construct a community and to regulate regional interactions are less than fully successful, then what role does ASEAN play in the region? The answer, in large part, lies in its ability to facilitate interactions between the great powers of Asia Pacific. The book shifts to examine the relationships of China, the United States, Japan, India, and Russia with ASEAN and each other. It examines if and how ASEAN affects the conduct and interests of these powerful states. The answer to this question is a qualified yes: by providing the venues in which regional powers can interact, by creating structures that influence the rules and norms of regional conduct, ASEAN affects the actions of the great powers. However, it is critically important not to exaggerate the extent of this influence. The great powers accede to ASEAN’s regional role because tensions between them make ASEAN an acceptable compromise for providing the institutions that are absolutely essential for diplomatic interaction. Even so, great powers have interests and objectives of their own that do not necessarily accord with the norms and values propagated by ASEAN. The global and regional environments are in the preliminary stages of a shift to a multipolar world. Under these circumstances, an organization such as ASEAN—provided it can present a unified face to the world—has the potential to play a major role. Overview of the Book

This book picks up where my earlier book, Explaining ASEAN: Regionalism in Southeast Asia (2002), left off. That work focused on ASEAN’s

4 The New ASEAN in Asia Pacific and Beyond creation, evolution, and regional functions from 1967 to 2001. ASEAN’s regional role has changed considerably since 2002. ASEAN has become the linchpin of many more regional institutions and economic arrangements. This book does not try to provide an exhaustive description of ASEAN’s many institutional reforms, numerous meetings, related bodies, and various activities. That is difficult to do for a constantly moving target. Moreover, too much detail can obfuscate the larger picture. Instead, this work examines what I believe are the most significant developments around ASEAN and analyzes what these changes mean for ASEAN and the region. The book also does not try to look too far into the future. The arguments made here apply to ASEAN’s development over the next ten to fifteen years. Beyond that period, a great deal can change. For example, within that time span, the relative positions of the United States and China in the region should become clear, and that will have serious implications for ASEAN’s development. Chapter 2 reviews the history of Southeast Asia, the conditions that gave rise to ASEAN, and the organization’s development through to the end of the Cold War. The chapter discusses the crises of purpose and credibility that afflicted ASEAN during the Asian economic crisis. The chapter concludes with a discussion of how the crisis led ASEAN to try to build an ASEAN Community and facilitated the development of other, newer institutional structures. Chapter 3 evaluates ASEAN’s efforts at internal reform by examining the ASEAN Community and its component parts, including the ASEAN Charter. ASEAN’s efforts at reform encourage the greater institutionalization of the organization. However, its stated goals give precedence to established Westphalian values. The chapter illustrates this by assessing the ASEAN Charter and the ASEAN Intergovernmental Committee on Human Rights (AICHR). An examination of the ASEAN Economic Community (AEC), the ASEAN Political Security Community (APSC), and the ASEAN Socio-Cultural Community (ASCC) indicates that the AEC is the most effective of these three “pillars” of the ASEAN Community. However, the ASEAN Community is still decades away from being an appreciable influence on regional affairs. Chapter 4 looks at ASEAN “centrality”—that is, ASEAN’s attempt to place itself at the center of new regional institutions. The chapter examines the ASEAN Plus Three (APT) (China, Japan, and South Korea) and its associated structures, the Chiang Mai Initiative Multilateralization (CMIM) and the Asian Bond Markets Initiative (ABMI). It also reviews the East Asia Summit, the ASEAN Regional Forum (ARF), and the Regional Comprehensive Economic Partnership (RCEP). These institutions play important diplomatic, political, and economic roles in

ASEAN in the Twenty-First Century 5

the region, but they have still not lived up to expectations of what they should accomplish. The fact that the states of Asia Pacific weathered the global financial crisis of 2007–2009 through national, rather than collective, policies has undermined the urgency with which the region built many of the new economic institutions. The next three chapters focus on the great powers. Chapter 5 explores China’s increasingly important economic, political, and security relationships with ASEAN and Southeast Asia. The chapter analyzes how China’s actions in the South China Sea have greatly complicated its otherwise positive relationship with most ASEAN states. The chapter emphasizes the critical role of domestic pressures in explaining and understanding how China deals with Southeast Asia and the larger global community. China is an emerging global power, but it is plagued by many sources of domestic political and economic instability that can fatally undermine its drive toward prosperity. China’s need for a peaceful regional environment in which to pursue economic development is complicated by its concerns with regional security, access to resources, and use of nationalism to offset the losses to the Communist Party’s legitimacy. China is at the forefront of an emerging multipolar global order but its many inherent weaknesses challenge its ability to be a regional hegemon. Chapter 6 examines the fundamentally important role of the United States in shaping and maintaining the modern Asia Pacific. Despite its importance, the United States is a power in decline. The overwhelming preponderance of economic and military power that allowed the United States to dominate the world in the post–World War II and post–Cold War eras is long past. It is only in military power that the United States remains a hegemon, and much of that military power is of questionable utility. Rather than accepting its decline, the United States strives to remain a global hegemon, leaving it overextended and, often, a source of instability and conflict in the world. The United States is distracted from the parts of the globe that really matter to its long-term interest, foremost among these Asia Pacific. Much like in China, US foreign policy is heavily constrained and shaped by domestic political considerations. The United States faces considerable political, social, and economic dysfunction at home; this dysfunction has been building for decades and is deeply rooted in the fundamental structures and myths of the American state and society. The 2016 election of Donald Trump as US president was the culmination of many of those problems. It was also a spectacular failure of American democracy and will have serious consequences for American soft and hard power in the world, including Asia Pacific.

6 The New ASEAN in Asia Pacific and Beyond Chapter 7 looks at the other major powers of Asia Pacific: Japan and India, with a brief discussion of Russia. Japan has enormous potential to be a full major power (a “normal country”) in Asia Pacific. It has been content to shelter under the US security umbrella, but there are early signs that it may be considering expanding its regional actions and influence. Southeast Asia would welcome such a move; Northeast Asia, however, remains wary of Japanese power. Japan’s tense relationship with China continues to complicate its regional aspirations, and domestic issues, such as demographic decline, remain concerns. India is emerging as a major power but, even more than China, is a state with one foot in the developing world and another in the industrialized world. India has a tense relationship with China regarding border issues and it is developing stronger ties with Japan and the United States. India has been following a “Look East” policy of pursuing economic links with Southeast Asia. Its growing naval presence in the region speaks to its seriousness as a potential counterbalance to Chinese power. Finally, Russia remains more focused on its European relationships than Asia, despite some efforts to recalibrate its foreign policy. Russia is more of a potential regional power for now, but it provides weapons technology and natural resources to major Asian states. Chapter 8 concludes the book by exploring the key question of this study: What is ASEAN’s role in a changing regional environment? ASEAN has limited influence over the great powers of Asia Pacific. Much of its influence lies in its ability to provide the venues for states to meet and smooth over their relationships and to set the basic rules— which are very much in keeping with traditional Westphalian norms— of regional interaction. ASEAN has the potential to be more. In an emerging multipolar world, particularly one that requires greater and more complex cooperation in order to deal with burgeoning (and related) social and economic tensions, ASEAN is well-positioned to act within the leadership vacuum left by great power competition. Doing this, however, requires a level of unity between ASEAN member states and a commitment to the organization that is very difficult for them to achieve. ASEAN consists of a remarkably diverse group of states, all of which see themselves as politically fragile. ASEAN’s norms and structures encourage its members to focus on their narrow national interests. If the ASEAN states—for their own reasons—can find consensus over which great powers to ally with and how to conduct their regional relations, then the organization will grow and prosper. If they cannot, then ASEAN will languish.

2 History: From Creation to Crisis

This chapter provides an overview of the events leading to ASEAN’s creation, ASEAN’s early history, its successes and failures, and concludes with an examination of the various crises that ASEAN faced in the late 1990s. These events undermined ASEAN’s regional and international credibility and set the stage for its efforts in the 2000s to rehabilitate its reputation and expand its institutional presence. A key argument is that ASEAN has grown through the impact of external events and threats. Intra-ASEAN development has taken a backseat to extra-ASEAN activities. ASEAN’s members designed the organization to further their interests. ASEAN is not meant to challenge their sovereignty; it is meant to enhance their national and regional independence. ASEAN’s members have understood that they need external stability in order to further their internal development. ASEAN helps to provide that external stability by facilitating contacts between ASEAN’s leaders and between ASEAN states and global powers. ASEAN’s Early History European colonialism shaped modern Southeast Asia. For approximately 400 years, the Dutch controlled Indonesia and the Spanish colonized the Philippines. Later, the French dominated Indochina and the British controlled Malaya. In 1898, the United States acquired the Philippines from Spain in the aftermath of the Spanish-American War and set about crushing the new, independent Filipino state. In 1942,



The New ASEAN in Asia Pacific and Beyond

Japan “liberated” Southeast Asia from European and US colonialism, then tried to establish a Japanese-Asian “Co-Prosperity Zone.” The people of Southeast Asia found that Japanese domination was as intolerable as Western colonialism and rose in resistance. The European powers tried to reestablish themselves in the region after Japan’s defeat in 1945. The Dutch failed in their effort to retake Indonesia, defeated through a combination of Indonesian nationalist resistance and US pressure. The United States granted the Philippines its independence in 1946. However, driven by its fear of communism, the United States supported France’s efforts to retake Vietnam and ignored overtures of friendship from the Vietnamese communists. Vietnam soundly defeated France in 1954. The United States took up the conflict, fighting a war (1961– 1973) that left more than 3 million Vietnamese dead (Shenon 1995). Of all the states of Southeast Asia, only Thailand remained free of outright colonial domination, but Thailand ensured its formal independence by “bending with the wind”—that is, mastering the art of acquiescing to the demands of the most powerful actors in its political environment. The common story of Southeast Asia is that the Western powers invented the region during World War II, and designated the area the Southeast Asia Command (established 1943). In truth, the cultural, economic, and political interaction of the regional peoples before European colonization constituted a kind of state system based around the territorial concept of a mandala, where borders were fluid (Acharya 2012, pp. 51–104). Asia was a stable, hierarchical region of considerable political, economic, cultural, and religious interaction before the advent of the Europeans (Kang 2005). European colonization shattered many of these intra-regional ties. The region has been reinventing those connections since decolonization. Southeast Asia boasts incredible cultural, ethnic, religious, political, and economic diversity (Weatherbee 2005, pp. 6–16). This diversity presents significant obstacles to regional identity. Regionalism in Southeast Asia did not begin with ASEAN. The United States created the Southeast Asian Treaty Organization (SEATO) in 1954 in an attempt to construct a network of Asian anticommunist states. Of SEATO’s seven members, only the Philippines and Thailand were Southeast Asian. SEATO’s members dissolved it in 1977. South Korean president Park Chung-Hee created the Asia Pacific Council (ASPAC) in 1966. It expired seven years later. SEATO and ASPAC failed because they were external initiatives in a region shaped by the memory of colonialism. The Philippines, Malaya, and Thailand established the Association of Southeast Asia (ASA) in 1961. The ASA’s founding states were the

History: From Creation to Crisis


three most pro-Western, anticommunist states of the region. Indonesia saw the ASA as an attempt to link SEATO to the rest of Southeast Asia and refused to join. The remaining noncommunist states of mainland Southeast Asia did not want to join an institution that even hinted at an anti-China orientation. In 1967, the newly created ASEAN took over the remnants of the ASA, including its loose institutional structure and nonbinding organizational approach, qualities now strongly identified with ASEAN. Malaya, the Philippines, and Indonesia inaugurated MALPHILINDO in August 1963. MALPHILINDO was the first regional organization that Indonesia agreed to join. On September 16, 1963, Britain amalgamated Malaya, Singapore, Sabah, and Sarawak to create Malaysia. The Philippines and Indonesia objected to the new state, arguing that it was a British imperial imposition on the people of the region. These territorial disputes left MALPHILINDO stillborn and paralyzed the ASA for the next three years, until it was rolled into ASEAN. Indonesia responded to Malaysia’s creation with a policy of Konfrontasi (Confrontation). This consisted of political, economic, and military pressure on the new state, usually in the form of support for Malaysian insurgents. To add to the regional crisis, Malaysia expelled Singapore from the federation in 1965. Malaysia’s rulers feared that the predominantly ethnic Chinese Singapore would radically upset the “ethnic balance” of the new state and lead to conflict between Chinese and Malays. This situation fed Singapore’s sense of isolation and uncertainty in a predominantly Malay region (Lee 1999, pp. 628–663). Konfrontasi ended when the Indonesian military deposed its architect, President Sukarno, in 1966. The military accused the Communist Party of Indonesia, a major Sukarno ally, of plotting the violent overthrow of the Indonesian state and assassinating leading military officials. The military seized control of the state itself, then purged communist influence from the country. Over the next several years, the Indonesian military and death squads murdered hundreds of thousands of Indonesian communists and those it deemed to be “communist sympathizers” (Roosa 2006; Scott 1985).1 Konfrontasi demonstrated their mutual vulnerability to the states of Southeast Asia. Indonesia’s campaign against Malaysia was almost as damaging to Indonesia as its target. After Sukarno’s overthrow, the new Suharto regime in Indonesia attempted to alleviate the intra-regional tensions created by Konfrontasi by becoming a major proponent of regionalism. The other Southeast Asian states were determined to create a mechanism that could constrain Indonesia. Indonesia saw the ASA as aligned with the West and it did not wish to join an organization that it


The New ASEAN in Asia Pacific and Beyond

had no role in creating. ASEAN was invented as the acceptable alternative (Narine 2002b, pp. 9–38). The Association of Southeast Asian Nations was created on August 8, 1967, in Bangkok, Thailand, at a meeting of ASEAN’s foreign ministers. ASEAN’s founding members were the major noncommunist states of the region: Indonesia, Malaysia, the Philippines, Singapore, and Thailand. They designed ASEAN to serve three functions: to alleviate intra-ASEAN tensions, to reduce the regional influence of external actors, and to promote the socioeconomic development of its members. Member states shared the belief that the greatest security threat facing them was foreign-backed communist insurgency. Ostensibly, ASEAN’s goal was “to promote regional peace and stability,” through the pursuit of socioeconomic goals (ASEAN 1967). From the outset, however, ASEAN focused on using political contact to enhance the security of its members. ASEAN could not be a military alliance since that required identifying an enemy against whom to ally. The ASEAN states would not antagonize any of the major powers, even those of whom they were genuinely suspicious (i.e., the Soviet Union and China). Intra-ASEAN tension also impeded security cooperation. Nonetheless, the shared regional perception of externally inspired threat played a significant role in ASEAN’s creation and has remained a consistent motivating force behind ASEAN’s development (Narine 2008). Despite its change in government, Indonesia continued to see Southeast Asia as targeted by foreign powers. The best solution to this problem was to develop “regional resilience.” This was Indonesia’s belief that individually strong national states, working collectively, would make a strong region, like links in a chain (Ba 2009a, pp. 92–97). Building a strong region meant limiting the involvement of extraregional powers. Thailand and the Philippines were allies of the United States. Malaysia and Singapore depended upon British security guarantees. These ASEAN states regarded their Western allies as unreliable and they sympathized with Indonesia’s argument that the states of the region should manage regional security. Nonetheless, they were not prepared to abandon their existing security relationships or allow Indonesia unchecked regional dominance. The ASEAN states eventually resolved these conflicts in outlook by agreeing that foreign bases would be “temporary” but setting no timetable for achieving this goal. ASEAN’s ability to work around disagreements rather than resolving them became one of the signature qualities of the “ASEAN Way,” ASEAN’s distinctive approach to internal relations. The “Corregidor Affair” between Malaysia and the Philippines effectively paralyzed ASEAN’s operations between 1968 and 1969. 2

History: From Creation to Crisis


However, dramatic changes in the regional security dynamic soon convinced the two states that they needed to put their disputes aside and ASEAN resumed its activities. In 1968, Britain announced it was accelerating its military withdrawal from Southeast Asia. On July 25, 1969, US president Richard Nixon announced the Nixon (or Guam) Doctrine, which required the states of the region to assume the primary burden for their defense and limited US commitments to their security. The Soviet Union asserted itself by proposing an Asian collective security system. China began to reemerge as a regional presence in the aftermath of the Cultural Revolution. The surprising opening of the United States to China in 1972—an unexpected action that caught all the regional allies of the United States by surprise—demonstrated to the ASEAN states that the major forces shaping their region were beyond their individual control. This realization reinforced the idea that Southeast Asia should face the world as a common front (MacMillan 2006). The Zone of Peace, Freedom, and Neutrality

In November 1971, ASEAN committed Southeast Asia to becoming a “Zone of Peace, Freedom, and Neutrality” (ZOPFAN). ZOPFAN began as a Malaysian effort to get the great powers (China, the Soviet Union, and the United States) to exempt Southeast Asia from their rivalries by agreeing to the “neutralization” of the region. Malaysia adopted the idea of “neutralization” as an official state policy in 1970 and presented the idea at the Non-Aligned Movement (NAM) Conference in Lusaka, Zambia. The proposal called on regional states to adhere to noninterference and nonaggression in their mutual relations and to avoid involvement in great power conflicts. The United States and Soviet Union rejected the Malaysian proposal; China accepted it. However, Malaysia’s ASEAN partners refused to support neutralization. Indonesia wanted to exclude the great powers from regional affairs, not legitimize their presence by asking them to leave. The Indonesian military balked at the implication that Southeast Asia was seeking accommodation with China. Other ASEAN states wanted the United States to remain active in the region. Nonetheless, ASEAN agreed to discuss the proposal in the aftermath of the US opening toward China. ASEAN’s foreign ministers negotiated the ZOPFAN agreement at a meeting in Kuala Lumpur on November 26–27, 1971. ZOPFAN called on the ASEAN states to secure Southeast Asia as a region free of interference by outside powers and to promote intra-ASEAN cooperation. The use of the term “neutralization” appeared only in the preamble, as a synonym for “neutrality.” The agreement afforded the great powers no


The New ASEAN in Asia Pacific and Beyond

special regional role, and the preamble strongly implied that they should respect regional sovereignty and independence. ZOPFAN had no timetable for its implementation, so it posed no risk to those ASEAN states that relied on external allies for protection (Haacke 2003, pp. 73–74). It stood, at most, as a long-term goal. The development of ZOPFAN illustrates the dynamics of ASEAN’s early years. The disparate interests and perspectives of ASEAN’s members meant that most could not agree on fundamental security policies. ZOPFAN rejected the Malaysian idea of accommodating China. The subsequent ZOPFAN blueprint imposed no obligations on the ASEAN states to realize ZOPFAN. ZOFPAN stood as the “primary declaratory security policy” of ASEAN until the post–Cold War era, but in practice it meant very little (Rolls 1991, p. 325). However, ZOPFAN was important in that it was the first clear step on the way to Southeast Asia’s gradual development of a culture of consultation and consensus-building, qualities that came to define the ASEAN Way. The Bali Conference

The Vietnam War ended in 1975 with the reunification of Vietnam under the control of the communists. Communist governments also emerged in Laos and Cambodia. ASEAN states were uncertain of the US commitment to the region. ASEAN held the Bali Conference in February 1976 in response to these developments. The Bali Conference was the first meeting of the ASEAN heads of state, indicating the organization’s new level of importance in a rapidly changing and uncertain region. Out of the conference came two important documents: the Declaration of ASEAN Concord, and the Treat of Amity and Cooperation in Southeast Asia. The declaration addressed the economic side of security, defining four areas of intra-ASEAN economic cooperation. It also encouraged military cooperation between the ASEAN states, albeit on a non-ASEAN basis. The Declaration of ASEAN Concord inspired little economic activity, though subsequent efforts at economic cooperation have proven more influential. The Treaty of Amity and Cooperation obligates its signatories to settle disputes peacefully and prohibits the use of force. It is open to accession by non-ASEAN states. The TAC has since become one of the strongest symbols of ASEAN’s influence in the Asia Pacific region. By 2017, its signatories included twenty-eight countries and organizations: all of the Southeast Asian countries (including East Timor); China, India, Japan, New Zealand, Australia, Russia, Bangladesh, Papua New Guinea, Mongolia, Sri Lanka, North Korea, Russia, South Korea, France, Pak-

History: From Creation to Crisis


istan, Turkey, the United States, and the European Union (EU). Being a signatory to the TAC is one of the conditions that ASEAN set for becoming part of the East Asia Summit, one of the new regional institutions of the twenty-first century. ASEAN and the Invasion of Cambodia/Kampuchea

ASEAN’s fear that the new communist states of mainland Southeast Asia would instigate regional communist insurgency proved unfounded. Indeed, the leading communist states of Asia—Vietnam, the Khmer Rouge–controlled Kampuchea (Cambodia), and China—were soon at odds.3 Vietnam and Kampuchea clashed over territory; Vietnam resisted Chinese domination. ASEAN welcomed the balance of power that emerged between the competing communist states. Thailand valued Kampuchea as a buffer between itself and Vietnam. Indonesia was happy to see Vietnam in conflict with China, impeding the growth of China’s regional influence. By 1977, Kampuchea was provoking border conflicts with Vietnam and by 1978 both sides were preparing for war. China allied itself with Kampuchea and launched a diplomatic offensive in Southeast Asia to garner support for its Khmer Rouge ally. Vietnam initiated a diplomatic mission to the ASEAN states, offered to sign bilateral treaties of friendship and nonaggression with the individual ASEAN members, and pledged not to support regional insurgencies. ASEAN’s members coordinated a common rejection of these offers. On November 3, 1978, Vietnam signed a twenty-fiveyear Treaty of Friendship and Cooperation with the Soviet Union, China’s arch-rival. On December 25, 1978, Vietnam invaded Kampuchea, deposing the Khmer Rouge, cementing its rivalry with China, and putting itself at odds with the United States and the ASEAN states (Narine 2002b, pp. 39–65). In February–March 1979, China launched a punitive attack on Vietnam. The battle-hardened Vietnamese soundly defeated China’s military. China changed its tactics. It supported the Khmer Rouge’s guerrilla war of attrition against Vietnam. To provide the Khmer Rouge with supplies, however, China needed the support of Thailand, the “frontline” state bordering Kampuchea. Thailand deplored the loss of Kampuchea as a buffer state and was wary of the expansion of Vietnamese power on the mainland. Thailand became a conduit for Chinese weapons to the Khmer Rouge and acquired Chinese arms for itself. Thailand also secured a reassurance of US security guarantees from Washington and secured assurances of military support from some of its ASEAN allies, such as Singapore and Malaysia (Acharya 2012, pp. 187–195).


The New ASEAN in Asia Pacific and Beyond

Thailand appealed for ASEAN’s support in its confrontation with Vietnam by arguing that Vietnam’s invasion violated ASEAN’s TAC. The ASEAN states agreed on the principle at stake and the need to reverse the invasion, but their different strategic perspectives created intra-ASEAN friction. Indonesia and Malaysia saw China as the real long-term threat to the region and Vietnam as a potential ally in facing that threat. They were reluctant to engage in actions that would strengthen China’s regional position and weaken Vietnam. Singapore, concerned with the need to keep the United States engaged in the region, presented the Vietnamese invasion as an example of Soviet expansionism. The Philippines was committed to international law and did not want the invasion to go unpunished. Indonesia supported Thailand’s plan because it was still living in the shadow of Konfrontasi and it needed to show that it could be a responsible regional actor. Indonesia also feared that Thailand would abandon ASEAN if the organization did not support Thai objectives, thereby pushing Thailand into closer alliance with China. Indonesia also wanted to preserve ASEAN as a vehicle for its ambitions of regional leadership. These concerns led Indonesia to temper its own security outlook for the sake of ASEAN solidarity. Over the next decade, ASEAN tried hard to present a unified front in dealing with Vietnam. However, the façade sometimes slipped. From 1979 to 1990, ASEAN was at the forefront of international opposition to the Vietnamese invasion of Kampuchea. ASEAN—supported by the United States and China—denied the Vietnamese-installed government of Kampuchea (the People’s Republic of Kampuchea [PRK]) its seat in the UN. ASEAN organized the military/political opposition to the government in Phnom Penh, but its efforts were hobbled by the fact that the internationally reviled Khmer Rouge was the most effective opposition fighting force. ASEAN sponsored an International Conference on Kampuchea (ICK) in New York in July 1981. It discovered, however, that its genuine attempts to resolve the conflict diplomatically were stymied by the United States and China, both of which wished to keep Vietnam—and, by extension, the Soviet Union— bogged down in Kampuchea. The ICK ended with a statement of principles that were too inflexible to be politically viable. In March 1980, Indonesia and Malaysia issued the Kuantan Declaration, which called on Vietnam to reject Chinese and Soviet influence in exchange for recognition of its “legitimate” interests in Kampuchea. Thailand and Vietnam rejected this proposal. These different perspectives toward Vietnam festered within ASEAN. Indonesia became frustrated with ASEAN’s policies, the constraints those policies placed

History: From Creation to Crisis


upon its own initiatives, and its loss of influence within ASEAN to Thailand. To accommodate Indonesia’s growing impatience and diplomatic efforts, in 1985 ASEAN designated it the “interlocutor of ASEAN” with Vietnam. By 1987, the Cold War was thawing, and the major powers (the United States, the Soviet Union, and China) saw the Vietnam/Cambodia situation as an inconvenient obstacle to their efforts to improve their relations. In 1988, a change in Thailand’s leadership led to a complete reversal in Thai policy toward Vietnam, dealing ASEAN a serious blow. The new prime minister of Thailand, Chatichai Choonhaven, represented local business interests that sought to establish commercial ties with Vietnam. Thus, Thailand, the state that had been driving ASEAN’s hardline policy toward Vietnam for a decade, suddenly and dramatically shifted its policy toward accommodation with Vietnam without consulting its fellow ASEAN states or considering ASEAN’s unity. It abandoned and undermined the ASEAN united front. The parties in conflict held the Paris International Conference on Cambodia (PICC) in July 1989. The PICC ended in failure as the various external powers in the dispute were not yet ready to abandon their respective allies. ASEAN divided further and Indonesia began to contemplate a separate peace with Cambodia and Vietnam, regardless of ASEAN policy.4 The permanent five powers of the UN Security Council took charge of the Cambodian situation. The disputants signed the Paris Peace Treaty, which ended the external dimension of the Vietnam/Cambodia conflict, on October 22, 1991. By that time, the great powers wanted an end to the war and Vietnam had significantly improved its economic and political relationships with the ASEAN states, particularly Indonesia, Malaysia, and Thailand. ASEAN’s handling of the Vietnam invasion of Cambodia remains the high point of intra-regional cooperation in ASEAN’s history as an institution. No event or crisis since has managed to unify ASEAN to the same degree nor has ASEAN’s international influence been as great. ASEAN’s members, despite significant internal tensions and the occasional slip, maintained a united front for almost a decade. The member states’ need to coordinate policy greatly improved intraASEAN cooperation and communication. ASEAN’s international profile and influence increased exponentially over what it had been prior to the invasion. However, there were significant unresolved tensions between the ASEAN states. The ASEAN united front was in the process of crumbling when the conflict was finally resolved. ASEAN was only one part of a diplomatic and political alliance shaped by the United States and China and the exigencies of the Cold War. When the


The New ASEAN in Asia Pacific and Beyond

relations between the great powers improved, the larger actors pushed ASEAN aside and ended the Vietnam situation. ASEAN’s handling of the Kampuchean/Cambodian invasion was the organization’s coming of age, but it also demonstrated the limited influence of relatively weak actors in a complex, multipolar environment and highlighted the limitations of intra-ASEAN cooperation. As much as it wanted to be the master in its own house, ASEAN remained a tenant. ASEAN’S Economic Development During the Cold War From its beginning, ASEAN attempted to facilitate economic cooperation between its members. However, in practice, most of its economic initiatives were unsuccessful. The economic accomplishments of the individual ASEAN states were attributable to their national decisions. ASEAN, the organization, contributed to Southeast Asia’s economic development by encouraging regional political stability, but it had very little direct effect on improving economic relations. ASEAN’s economic initiatives became bolder and more effective in the post–Cold War period, but the organization’s contribution to regional economic development continues to be a matter of considerable debate. The Korean and Vietnam Wars spurred the development of Southeast Asia’s economy in the post–World War II era (Stubbs 2005, pp. 78– 152). The Korean War provided Singapore and Malaya with the resources to build extensive social and economic infrastructures and effective civil administrations that were later essential in helping launch the development of these states. The Vietnam War was of particular benefit to Thailand and Singapore. Thailand received US aid in the mid1950s and used the support to develop its infrastructure and civil service. This support greatly increased during the US phase of the Vietnam War (approximately 1961–1974). Thailand also provided goods for South Vietnam. Singapore greatly increased its exports to Vietnam during the conflict. Most of its exports were petroleum-based products, which established Singapore as the petroleum processing center of Southeast Asia. While Singapore’s trade with the rest of Asia increased, most of its exports went to the war-fueled US economy. Singapore used the infusion of resources to strengthen its economic and social infrastructures. In the early 1970s, Japan became a major economic actor in Southeast Asia (Stubbs 1991; Stubbs 2005, pp. 153–183). ASEAN formally promoted economic interaction between its members but, during the Cold War, it clearly failed in this objective. The ASEAN member states were more economically competitive than com-

History: From Creation to Crisis


plementary. In 1972, the UN Economic Commission for Asia and the Far East (ECAFE) issued a report proposing a kind of economic union between the ASEAN states that could compensate for the developmentally limiting effects of their small internal markets. In 1977, after years of discussion, ASEAN established a preferential trading agreement (PTA) between its members. However, the PTA was notoriously deficient; most of the items the members listed for consideration were not imported or exported by the ASEAN states, tariffs remained high enough to stymie trade, and numerous nontariff barriers had the same effect. By 1990, despite listing more than 16,000 items, the PTA covered less than 1 percent of intra-ASEAN trade (Narine 2002b, p. 28). The ECAFE report also recommended that ASEAN establish ASEAN industrial projects (AIPs), large industrial projects that the ASEAN states could jointly own. These failed for a number of reasons, including that they were government-owned in a region driven by private sector development. In 1981, ASEAN approved ASEAN industrial complementation (AIC), designed to distribute industrial development between various member states. This failed, in part, because the states could not agree on how to allocate the different industrial sectors. ASEAN industrial joint ventures (AIJVs) tried to build on the fact that ASEAN states seemed more willing to work with outsiders than with each other. The AIJVs permitted outside participation in an ASEAN industrial project so long as at least two ASEAN states were participants. The private sector showed little interest in this scheme, however, primarily because of the difficulty in getting projects approved. The ASEAN Way Before discussing ASEAN’s evolution during the post–Cold War era, it is important to consider the “ASEAN Way,” a set of norms and behaviors that govern how ASEAN’s members interact with each other and the organization. The ASEAN Way has become ASEAN’s signature methodology. ASEAN has successfully transplanted it to the operations and conduct of most other major regional organizations. The ASEAN Way evolved during the first two decades of ASEAN’s existence and was refined during the Vietnam/Kampuchea period. Today, critics accuse it of being a serious impediment to ASEAN’s development into an effective multilateral organization. By extension, it may be limiting the nature of regionalism in Asia Pacific. However, supporters praise it as a necessary and realistic restraint on what the organization can accomplish (Nishikawa 2007).


The New ASEAN in Asia Pacific and Beyond

The ASEAN Way is an expression of ASEAN’s organizational norms. Amitav Acharya distinguishes ASEAN’s legal-rational norms from its socio-cultural norms. Legal-rational norms are “formal and rationalistic principles of law”; sociocultural norms are the basis of informal social controls and social habits. ASEAN derives most of its legal norms from conventional international norms that reflect the ideals of the Westphalian state system. ASEAN’s sociocultural norms are, arguably, particular to Southeast Asia and focus around the processes of consultation and consensus needed to reach common organizational positions (Acharya 2009, pp. 54–98). ASEAN’s legal-rational norms are:

1. A prohibition against the use of force and commitment to the pacific settlement of disputes. 2. Regional autonomy. 3. The doctrine of noninterference. 4. No military pacts and a preference for bilateral defense cooperation.

ASEAN’s defining documents and declarations codify the first three norms. The last norm is an established practice, though its status as a “legal norm” is more debatable. Throughout its early history, some ASEAN states promoted the idea of ASEAN forming a military pact. The desire of ASEAN members not to antagonize any potential objects of such a pact prevented such a development. It is conceivable, though unlikely, that these political conditions could change in the future. Acharya argues that ASEAN’s sociocultural norms “helped ASEAN to overcome initial contestations and reach compromises over the meaning and scope of the legal-rational principles” (Acharya 2009, p. 55). ASEAN’s supporters credit the organization’s success to ASEAN’s sociocultural norms, embodied in the ASEAN Way of diplomacy. Supposedly, the ASEAN Way reflects the Malay cultural practices of musjawarah and mufukat. Musjawarah requires leaders to make decisions not by imposing their will on others but by gently pushing a community decision in the appropriate direction, while taking into account the views of all participants. Mufukat means “consensus” and is the objective toward which musjawarah is directed. It requires the participants to consider and accept the larger interests of the community. The ASEAN Way is about the management and containment of problems. It is a “consultative process” that is primarily motivated by the desire to create a stable intramural environment (Narine 2002b, p. 31). Even so, the focus on state sovereignty that underpins the ASEAN Way seems to

History: From Creation to Crisis


contradict the principle of musjawarah; ASEAN members rarely consider the interests of the larger community. ASEAN also utilizes quiet diplomacy. The organization often cannot resolve issues of contention between its members, but it can compartmentalize them and move these problems aside so that they do not prevent cooperation in other areas. Ideally, over time, the disputants find that areas of contention become far less contentious as other relationships and interests develop to offset the problem. In the interim, members agree to go their separate ways while concealing their differences behind ambiguous language. Ultimately, ASEAN is the convergence of the interests of its members. Michael Antolik defines these qualities as restraint, respect, and responsibility, the three key principles of ASEAN that all member states must follow to ensure the organization’s survival (Antolik 1990, pp. 8–10, 156–157). ASEAN promotes regional socialization by facilitating contacts between its members’ governmental, academic, and social elites. The organization pursues the development of regional identity, in part, by strengthening personal ties and obligations among national leaders. Historically, these personal relationships, developed over years of interactions, were a critical part of ASEAN’s ability to mollify regional tensions. These interactions were especially productive when there was long-lasting continuity in the leadership of ASEAN states. As regional states have become more democratic, political leadership has changed more often and the importance of personal ties in binding ASEAN has declined. With newer leadership in Southeast Asia, memories of Konfrontasi and colonization have faded, affecting the region’s perspective on what ASEAN has accomplished and the purposes that it serves. The regional states still desire to expand and enhance ASEAN, but they are driven by contemporary concerns. The ASEAN Way is critically important to ASEAN’s operations in the international system but it also operates against building a stronger ASEAN institutional structure. ASEAN insists that its approach to institutionalism and diplomacy be adopted by the rest of the region within organizations centered around ASEAN. However, there are numerous difficulties associated with implementing the ASEAN Way at the international level. The nature and complexity of national interests operate at a level far beyond that of the village environment where the concepts of musjawarah and mufukat originated. Consensus-building cannot replace a convergence of interests between negotiating states. In addition, the authority of a village chieftain is not duplicated at the international level. There is no official, institutionalized leader of ASEAN with the authority to lead the other, sovereign members. Indonesia has tried to play this role


The New ASEAN in Asia Pacific and Beyond

within ASEAN for much of its history, but Indonesia’s position reflects the political reality of its historical, economic, and demographic presence in Southeast Asia, not institutional structures. Indonesian leaders have claimed that their state’s unwillingness to impose itself on its neighbors has contributed to ASEAN’s success. The processes of consultation and consensus-building emphasized by ASEAN are not unique to Southeast Asia or Asia. There is nothing unique about cultural commonalities forming the basis of more cooperative relations between states. The ASEAN Way is unique in the significance placed upon it by ASEAN supporters as the preferred method of diplomatic conduct in Southeast Asia. Some commentators have argued that Asians, as a group, are culturally disposed to handling conflict in nonconfrontational ways and rejecting rigid, legalistic institutions in favor of informal mechanisms for governing their relations (Dupont 1996). However, these arguments are unconvincing. The ASEAN Way is not simply a manifestation of cultural preferences. The ASEAN states refuse to create strong institutional structures because they do not wish to—or perhaps cannot—sacrifice their sovereignty or independence of action to a supranational body. ASEAN’s sociocultural norms reinforce its legal-rational norms, which derive from the need to protect state sovereignty. “The ASEAN Way is a realistically modest approach to dealing with intra-ASEAN relations . . . [by] appealing to the lowest common denominator, it does not push the institution beyond what it can sustain” (Narine 2002b, p. 33). The ASEAN Way is one of ASEAN’s genuine strengths, but it is also symptomatic of the organization’s institutional weakness. ASEAN “lacks the higher levels of community integration that would allow it to support binding, strongly institutionalized structures” (Narine 2002b, p. 33). Contemporary critics of ASEAN charge that the ASEAN Way is preventing the institution from making the changes necessary for it to maintain its leading role in regional institutionalism. Supporters of ASEAN reply that the organization has successfully created a genuine sense of regional identity (CaballeroAnthony 2014). ASEAN is trying to build a new level of interaction and institutionalization between its members, but its institutional survival still requires adhering to the ASEAN Way. ASEAN in the Post–Cold War Era The end of the Cold War forced ASEAN to find a new unifying purpose. The ASEAN states learned the international political advantages of operating as a group from their experience with Vietnam and Cambodia.

History: From Creation to Crisis


They were determined to maintain ASEAN as a functioning institution (Narine 2002b, pp. 101–138; Weatherbee 2005, pp. 95–100). In 1992, ASEAN reformed its institutional structure, formalizing summit meetings between state leaders, increasing the duties and rank of the ASEAN secretary-general, and strengthening and improving the levels of interaction between officials at the highest levels of the ASEAN states. However, the ASEAN Secretariat, the heart of ASEAN’s bureaucracy, remained underfunded and largely incapable of independent action. ASEAN undertook initiatives designed to give itself new purposes and focus. Over the course of the 1990s, it introduced the ASEAN Free Trade Area (AFTA); it took the leading role in regional security with the ASEAN Regional Forum (ARF); and it expanded its membership to incorporate all of Southeast Asia. These measures had the desired effect, but they also revealed the limitations of ASEAN’s capabilities. The end of the Cold War brought considerable uncertainty about the future of ASEAN. ASEAN decided to redefine itself for the new era. It adopted a definition of “security” that included economic, social, ecological, and political factors. The ASEAN member states decided to confront transnational crime, pollution, and terrorism on a regional basis. The security of Northeast Asia also had an impact upon Southeast Asia. ASEAN was concerned with how to manage regional great power relations. ASEAN wanted to keep the United States engaged in the region, in part to restrain Japan, thereby making it easier to incorporate China into a regional structure that could mitigate China’s long-term behavior. ASEAN hoped its reforms would give it more influential roles in regional security and economic development and a louder, stronger voice on the international stage. The ASEAN Regional Forum The ASEAN Post-Ministerial Conference (ASEAN-PMC) first met in August 1977, after the second ASEAN Summit, comprising heads of state and government, in Kuala Lumpur. The ASEAN-PMC consisted of bilateral meetings with the heads of government of Australia, Japan, and New Zealand. Subsequent ASEAN-PMCs followed the annual ASEAN Ministerial Meetings (AMM) and expanded to include seven dialogue partners: Australia, Canada, Japan, New Zealand, South Korea, the United States, and the European Union. Until 1992, the ASEAN-PMC’s discussions focused primarily on economic matters. In 1986, Mikhail Gorbachev of the Soviet Union suggested that Asia Pacific needed a new security organization that could directly address


The New ASEAN in Asia Pacific and Beyond

regional issues. Joe Clark, foreign minister of Canada, later made a similar suggestion. The ASEAN states rejected these overtures, fearing that any new organization would detract from ASEAN’s regional preeminence. The ASEAN states were wary of Western states using formal structures to pressure them on human rights and environmental issues. They were also opposed to formally structured multilateralism, preferring flexible and informal approaches to institutionalization (Narine 1997). In 1990, Gareth Evans of Australia proposed using the ASEANPMC as the basis of a regional security dialogue. The ASEAN Institutes of Strategic Studies (ASEAN-ISIS), a network of Southeast Asian think tanks, proposed a similar idea in 1990 and expanded upon it in a memo to the ASEAN heads of state, published in June 1991. During the 1991 ASEAN-PMC, Japanese foreign minister Taro Nakayama, supported by Canada and Australia, made a similar proposition. ASEAN greeted the proposal with “deafening silence,” apparently because the Japanese had preempted ASEAN’s deliberations on the same question (Narine 2002b, p. 104). The United States opposed the idea and Japan retreated. However, ASEAN recognized the growing momentum for a regional security organization and decided it was better to get ahead of it, in order to maintain some control over whatever developed. In November 1991, the United States announced it would withdraw from its military bases in the Philippines. The Soviet Union collapsed in December 1991. In January 1992, at the fourth ASEAN Summit in Singapore, ASEAN’s leaders acknowledged the enormous political and economic transformations rocking the globe and approved using the ASEAN-PMC as the venue for regional security dialogue. Toward the latter part of its mandate, the George H. W. Bush administration signaled that it was backing away from its opposition to new Asian security institutions; the new Clinton administration made this change in policy explicit. The Americans believed that an ASEAN-based security dialogue could complement the existing US security structure. On May 20–21, 1993, ASEAN held the first ASEAN-PMC Senior Officials Meeting in Singapore. ASEAN senior officials and their dialogue partners met to discuss regional security. At the meeting, it became apparent to the participants “it was not possible to hold high-level discussions on regional security without the participation of China, Russia, and Vietnam” (Severino 2009, p. 11). Consequently, ASEAN invited the foreign ministers of China, Russia, Vietnam, Laos, and Papua New Guinea to a special session of foreign ministers in Singapore, after the ASEAN Ministerial Meeting, in July. The AMM met in Singapore July 23–24, 1993. At an informal dinner on July 25, ASEAN, its dialogue partners, and its invited guests (China, the European Union, Laos, Papua

History: From Creation to Crisis


New Guinea, Russia, and Vietnam) agreed to establish a regular meeting of foreign ministers to address regional security issues. The joint communiqué of the twenty-sixth AMM (July 23–24, 1993) endorsed a proposal “to invite representatives of China, Laos, Papua New Guinea, Russia and Vietnam to meet ASEAN and its Dialogue Partners at the ‘ASEAN Regional Forum’ in Bangkok” the following year. The ARF inaugural meeting occurred on July 25, 1994, in Bangkok. ASEAN asserted its proprietary role in the ARF. The opening session discussed Cambodia and briefly touched on the South China Sea. The participating states endorsed the ASEAN Treaty of Amity and Cooperation as the regional code of conduct and agreed to hold ARF meetings on an annual basis. Over the next year, ARF participants held a number of workshops on regional security issues with the objective of developing an ARF structure. The ARF met for the second time in Brunei on August 1, 1995. ASEAN presented a concept paper that formally declared that ASEAN had “undertaken the obligation to be the primary driving force” within the ARF (ASEAN 1995, p. 1). The concept paper defined the broad outlines for future ARF meetings. First, it asserted that “meetings will have no formal agenda and approach sensitive security issues in an oblique and non-confrontational manner,” reflecting standard ASEAN practice. Second, the paper described a three-step process for the evolution of the ARF: confidence-building measures, followed by preventative diplomacy, followed by conflict resolution. No timetable was set for the duration of these different stages. The paper rejected the creation of an ARF Secretariat. Instead, the ASEAN Standing Committee would provide support for the fledgling organization and would be the repository of all ARF documents.5 Ministerial meetings would occur annually, in conjunction with the AMM, and under ASEAN chairmanship. The paper recommended that the ARF should evolve at a pace “comfortable” to all its participants (ASEAN 1995). The ARF adopted most of the paper’s recommendations. A significant exception was that it changed the third stage of development from “development of conflict resolution mechanisms” to the far more ambiguous “elaboration of approaches to conflicts.” This change was made at the behest of some countries, most notably China, that were concerned that multilateral conflict resolution could allow external powers to become involved in issues of domestic concern. The second meeting established two types of structures to help the chairman of the ARF Senior Officials Meeting make recommendations to the ARF concerning the implementation of its proposals. These were the Intersessional Support Group (ISG) on Confidence-Building and intersessional


The New ASEAN in Asia Pacific and Beyond

meetings designed to address a number of cooperative activities, such as peacekeeping and search and rescue coordination. The intersessional meetings are chaired by one ASEAN and one non-ASEAN state. The number of intersessional meetings and their range of topics have expanded considerably since their inception. The ARF is also the focus of track-two organizations and activities. Chapter 4 includes an evaluation of the ARF in the decades since its inception. It is fair to say that the ARF has failed to address regional security issues in Asia Pacific effectively. In the immediate post–Cold War era, however, it was an essential part of ASEAN’s effort to assert its regional role and redefine itself. The ASEAN Free Trade Area During the 1990s, ASEAN attempted to reenergize its economic initiatives, partly in response to the Asia Pacific Economic Cooperation (APEC) Forum, an economic regime launched by a number of nonASEAN states and designed to advance free trade on a Pacific-wide basis. In 1991, Thailand proposed that ASEAN establish the ASEAN Free Trade Area for manufactures. ASEAN endorsed the idea at the ASEAN Summit in Singapore in 1992. The organization pursued AFTA for four reasons: to provide ASEAN with a new purpose in the aftermath of the Cold War; to offset the growth of economic regionalism in other parts of the world and give AFTA members a greater voice and more economic clout in international economic negotiations; to make it easier for multinational corporations to establish themselves at the regional level; and to function as a regional investment area that could attract foreign investment and compete against China on a more equal footing (Narine 2002b, pp. 126–127; Nesadurai 2003; Severino 2006, pp. 222–250). AFTA was to be a “training ground” for ASEAN businesses, wherein they could test themselves against each other before moving up to the international level. AFTA got off to a fast start; only seven months passed between Thailand’s proposal and the signing of the AFTA agreement in 1992. AFTA called for states to reduce tariffs on intra-ASEAN trade in manufactures, processed agricultural products, and capital goods to the 0–5 percent range within fifteen years—that is, 1993–2008. The initial AFTA agreement was only twelve pages long, little more than a general statement of ASEAN’s intention to create a free trade area. This lack of specificity created regional skepticism about AFTA, though Richard Stubbs argues that it was this application of the ASEAN Way to the process that

History: From Creation to Crisis


enabled it to survive (2000, p. 313). Within its first year, AFTA faced resistance from business interests and traditional economic nationalists within Southeast Asia who were concerned about their ability to compete with their more developed counterparts in other ASEAN states. On January 1, 1993, only Singapore began implementing the tariff cuts required by AFTA. Export-oriented sectors in the ASEAN countries pushed back against the nationalist/protectionist elements and threw their weight behind the agreement. The Japanese government also encouraged the ASEAN states to adopt policies to facilitate intra-industry regional trade. The emergence of the European Union in 1992 and the North American Free Trade Agreement (NAFTA) in 1994 reinforced concerns in ASEAN about exclusion from regional trade blocs elsewhere and gave greater impetus to the AFTA. Ultimately, ASEAN governments provided support to their AFTA-affected industries in the form of loans and stronger nontariff barriers, and inclusion on the AFTA exclusion list. By October 1993, ASEAN officials developed a plan to relaunch and strengthen AFTA. They streamlined the AFTA agreement and closed various loopholes. Negotiators attempted to keep the exclusion list as short as possible and to bring services, investment, and industrial production under the agreement. The ASEAN countries agreed to establish a dispute settlement mechanism to adjudicate disputes arising from intra-ASEAN economic cooperation. Over the next several years, ASEAN made slow progress on implementing and refining AFTA. In 1996, ASEAN adopted the protocol on the dispute settlement mechanism and began negotiations for the Framework Agreement on Services (FAS). ASEAN’s negotiations on AFTA moved from general commitments to specific details on how to improve the free flow of goods and services in the region. ASEAN gave the ASEAN Secretariat the responsibility of implementing AFTA, but the secretariat lacked the resources to do so. The ASEAN secretariats of the member states were doing most of the AFTA’s administrative work.6 The dispute settlement mechanism was never utilized; ASEAN states dealt with disputes by working around them or taking them to the World Trade Organization (WTO). AFTA was a limited success story for ASEAN. The ASEAN states were largely successful in radically reducing tariff barriers to trade and increasing intra-ASEAN trade, though much of that trade was between Singapore and a few other states. Nonetheless, total intra-ASEAN trade remained relatively small, and regional businessmen were unaware of AFTA or did not see it as being effective (Severino 2006, pp. 247–248). Beyond this, other ASEAN efforts to construct specialized regional economic zones largely faltered due to political and economic tensions between the involved ASEAN states (Weatherbee 2005, pp. 111–116).


The New ASEAN in Asia Pacific and Beyond

Throughout the 1990s, the deadline for AFTA’s implementation kept being moved forward as other international economic arrangements created pressure on ASEAN. Recommitting itself to AFTA was a major part of ASEAN’s response to the Asian economic crisis of 1997– 1999, demonstrated by ASEAN’s adoption of the “ASEAN Vision 2020” in December 1997. ASEAN’s members promised to fully implement AFTA and some of its associated arrangements by 2003. In December 1998, ASEAN agreed to the Hanoi Plan of Action, which accelerated the implementation of AFTA from 2003 to 2002 for the longest-participating six members of ASEAN. The action plan also specified various other measures for promoting existing economic cooperation in ASEAN. Today, AFTA is the putative foundation for the new ASEAN Economic Community, discussed in Chapter 3. ASEAN’s Expansion Vietnam joined ASEAN in 1995, followed by Myanmar (Burma) and Laos in 1997. Cambodia joined in 1999. ASEAN’s leaders believed that a larger ASEAN could speak with a louder voice on the global stage. Expansion was also the realization of ASEAN’s long-term ambition to incorporate all of Southeast Asia. However, the expansion of ASEAN created significant problems for the organization. Myanmar’s membership tested and complicated ASEAN relations with the Western world; the less-developed new members dragged on ASEAN’s plans to intensify its economic integration; and the new states resisted various efforts to increase the organization’s political cohesion. Vietnam went from being ASEAN’s primary antagonist to a member in July 1995. Some ASEAN states were concerned that Vietnam would destabilize the established intra-organizational balance of power, but Vietnam proved to be a net benefit to ASEAN. ASEAN membership helped Vietnam become one of the fastest-growing and most dynamic economies in the region. Vietnam’s inclusion in ASEAN was also of critical symbolic importance; its membership powerfully represented the changing, less antagonistic dynamics of the post–Cold War era. In 1997, Myanmar and Laos joined ASEAN. Laos was a noncontroversial addition to ASEAN’s roster, but Myanmar’s proposed membership created ineluctable tensions between ASEAN and its Western allies, and considerable disagreement within ASEAN itself. In May 1990, Myanmar held national elections that were won, in a landslide, by the National League for Democracy (NLD), led by Aung San Suu Kyi. In response, the ruling State Law and Order Restoration Council

History: From Creation to Crisis


(SLORC) invalidated the electoral outcome. Western powers and Japan imposed sanctions against the regime. By contrast, ASEAN expressed its disapproval of Western meddling in Southeast Asia affairs and numerous ASEAN states cooperated with or improved their relations with the SLORC regime. ASEAN argued that isolating Myanmar would push it into the arms of China, which proved to be a valid concern. As the West punished Myanmar, China greatly increased its trade with the country, helped develop Myanmar’s infrastructure, and reconstructed naval bases that would allow it to project its power into Asia. ASEAN informed Myanmar that ASEAN wanted it as a member. However, ASEAN stipulated that the country needed to make conciliatory gestures on the domestic front before its membership could become possible. ASEAN pursued “constructive engagement,” which was designed to encourage incremental change in Myanmar through improved economic relations and quiet diplomacy. However, Myanmar explicitly rejected the idea that constructive engagement meant anything other than ASEAN’s desire to see Myanmar as an equal partner state in Southeast Asia (Narine 2002b, pp. 114–116). On several occasions between the 1990s and 2000s, Asia and Europe’s diplomatic relations strained over the question of Myanmar’s participation in the Asia-Europe Meeting (ASEM) and other international forums. The government of Myanmar evoked ASEAN’s principles of nonintervention to demand that the organization stay out of its internal affairs. ASEAN members lost patience with Myanmar’s military government as it became apparent that constructive engagement was yielding few results. At the same time, Myanmar had allies in the newer members of ASEAN, including Vietnam, which fully supported its invocation of the ASEAN Way as a defense against ASEAN’s meddling in its domestic affairs (Emmerson 2008; Jones 2008). Eventually, Myanmar began to fear its growing dependence on China and implemented domestic reforms in an effort to relieve international sanctions and diversify its international partners. By 2013, Myanmar had exchanged ambassadors with most Western countries, including the United States, and greatly broadened its economic engagement with the rest of the world. Myanmar vowed to release its political prisoners. In elections held in 2015, the NLD won by another landslide. Through constitutional maneuvering, Myanmar’s military denied Aung San Suu Kyi the right to be the country’s president, but she served as foreign minister and state counselor to the president, as well as leader of the NLD. Human rights abuses in Myanmar continued, but they were no longer the sole preserve of the military regime. Ironically, Myanmar’s new democracy actually facilitated the oppression of a despised minority, the ethnic


The New ASEAN in Asia Pacific and Beyond

Rohingya Muslims (Kurlantzick 2016). Popular violence against the Rohingya, driven by the prejudices of the Buddhist majority, became a major problem within the country and may even constitute genocide. It has elicited considerable criticism from abroad and has tarnished the image of Aung San Suu Kyi, who refused to speak in defense of the Rohingya (Khan 2016). The Cambodian elections of May 1993 resulted in the National United Front for an Independent, Neutral, Peaceful, and Cooperative Cambodia (FUNCINPEC) and the Cambodian People’s Party (CPP) forming a coalition government, which included elements of the nationalist right. Prince Norodom Ranariddh, the leader of FUNCINPEC, and Hun Sen, the leader of the CPP, shared the premiership. Tensions between the Cambodian leaders developed in 1996 and violence between the opposing political groups exploded in 1997. On July 5, 1997, Hun seized control of the capital, Phnom Penh, at the cost of sixty lives. Prince Ranariddh was exiled as heavy fighting broke out in northern Cambodia. Cambodia was scheduled to join ASEAN in 1997, along with Laos and Myanmar. Over Vietnam’s objections, ASEAN decided to suspend Cambodia’s accession to membership indefinitely. Hun Sen insisted that ASEAN respect its own principle of nonintervention and stay out of Cambodia’s internal affairs. Nonetheless, ASEAN was determined to play an active role in Cambodia, given Thailand’s strategic concerns and ASEAN’s unwillingness to participate in Western sanctions. ASEAN attempted to mediate the dispute but Hun Sen used ASEAN’s internal contradictions and the different strategic outlooks of its member states to undermine its effectiveness. The 1997 Asian economic crisis eroded ASEAN’s bargaining position with Cambodia. Hun Sen derided ASEAN’s inability to deal with its own problems and refused to meet the ASEAN delegation sent to negotiate with him. In the end, Japan brokered a truce between the CPP and FUNCINPEC forces that allowed Ranariddh to return to Cambodia to contest the upcoming election, after receiving a royal pardon for smuggling arms and conspiring with the Khmer Rouge. ASEAN helped expedite the judicial proceedings against Ranriddh, but was otherwise marginal to the resolution of the Cambodian situation. The elections of July 26, 1998, were marred by violence and intimidation, but the international community, anxious to put Cambodia behind it, accepted the results. The CPP won the election by a substantial margin, though it offered to include the other parties in the coalition government. On April 30, 1999, ASEAN formally admitted Cambodia to the organization, finally incorporating all of Southeast Asia (Narine 2002b, pp. 116–119).

History: From Creation to Crisis


ASEAN in Crisis, 1997–2003 Between 1997 and 2003, a series of crises rocked ASEAN and damaged the organization’s international reputation and credibility. The Asian economic crisis, which began in 1997, was the first and most consequential of these events. This crisis taught ASEAN important lessons about its vulnerability to international forces. The crises of the late 1990s set the course for ASEAN’s development in the twenty-first century, causing ASEAN to reform itself and facilitate the creation of new, ASEAN-centered regional organizations. The Lead-Up to the Economic Crisis

In the early 1990s, international and domestic actors pressured Indonesia, Malaysia, Thailand, and the Philippines to deregulate their financial sectors. The banking sectors in these countries lacked the necessary regulative structures and expertise needed to successfully implement such reforms. Nonetheless, liberalization proceeded, leading to the creation of many new financial institutions. Financial liberalization enabled inexperienced regional banks and businesses to borrow dollar-denominated loans from foreign lenders at interest rates much lower than at home, leading to the flow of huge amounts of foreign capital into the regional economies. At approximately the same time, Japanese banks, reeling from the bursting of Japan’s bubble economy in 1991–1992, were looking for places to invest the massive savings of Japanese citizens and ways to recoup some of their losses at home. In Europe, an economic downturn, combined with expansionary economic policies meant to stimulate consumer spending, added to the excess liquidity in the world financial markets. In the United States, burgeoning economic productivity, combined with low interest rates, made a great deal of American capital available for overseas investment. The banks and investors holding excess liquidity were drawn to Southeast Asia by the region’s high interest rates and the fact that most Southeast Asian currencies were pegged to the dollar. To lower the cost of borrowing, East Asian banks and corporations took out short-term loans from foreign lenders. The implicit understanding between the Asians and their foreign creditors was that these loans would be renewed indefinitely (Narine 2002b, p. 142; Park 2006, pp. 55–87). The leading ASEAN states—with the exception of Singapore—had pegged the values of their currencies to the US dollar, or to a basket of currencies with the dollar disproportionately weighted. Borrowers and lenders in the region assumed that these pegs would hold. Thus, most


The New ASEAN in Asia Pacific and Beyond

lenders did not hedge their loans—that is, take measures to insure themselves against sudden currency devaluation. By 1995, the dollar started to rise, pulling up the values of Southeast Asian currencies and making them less competitive, even as the Japanese yen declined in value. In 1990 and 1994, China devalued its currency, the yuan, increasing China’s market share in the United States and Japan and further undercutting Southeast Asian goods. To maintain the pegged currency values, local central banks had to purchase foreign funds with local currency, creating an oversupply of local currency. These circumstances fueled an inflation rate of about 6 percent in Southeast Asia, even as inflation in the United States and Japan declined. By 1996, European banks had lent East Asia $318 billion, Japanese banks had lent $260 billion, and US banks had contributed another $46 billion (Narine 2002b, p. 143). Private East Asian corporations expanded and spent with little regulatory oversight, significantly increasing their foreign debt. Much of the investment in East Asia was real-estate speculation. Speculators built golf courses, condominium complexes, and office buildings on the assumption that they would be economically viable. The concern with East Asian inflation also made real estate the most secure investment. In 1996, a global economic downturn affected the sale of East Asian goods. Significant overcapacity appeared in East Asian industries and many plants sat idle. Additional investment in manufacturing contributed to the oversupply of East Asian products. Money continued to flow into the region, as did speculative real estate investment. Under these conditions, a large number of business failures were inevitable, causing a large number of nonperforming loans. The Asian economic crisis was the result. The Asian Economic Crisis Begins

The Asian economic crisis began in May 1997 when currency speculators launched a concerted attack on Thailand’s currency, the baht. Thailand pegged its currency at 25 baht to 1 US dollar. The attack on the baht was preceded by bank and real-estate business failures that signaled significant weaknesses in Thailand’s economy. Foreign banks became uneasy with the situation in Thailand and began to call in their loans. Investors were no longer confident in the safety of investments predicated on currency stability. Uncertain of Thailand’s ability to defend its dollar peg, investors began to sell local currencies. Thailand spent at least $23 billion of its dwindling foreign reserves to protect the baht’s peg, but this strategy was not sustainable (Laurid-

History: From Creation to Crisis


sen 1998, p. 149). On July 2, 1997, Thailand gave up its defense of the baht and allowed it to float on the international currency markets. The baht rapidly declined in value and business debts issued in foreign currency increased proportionately. Foreign investors reevaluated the Southeast Asian economies and decided that the problems they previously overlooked in Thailand—crony capitalism, poor government regulation of the financial sector, and a lack of transparency—existed to significant degrees in Indonesia and Malaysia. Japanese banks, struggling with domestic debts, began calling in their loans. Investors and rating agencies—which, to this point, had been very enthusiastic about Southeast Asian economies—shifted their focus from macroeconomic indicators (government budget deficits, debt-to-GDP [gross domestic product] ratios, etc.) to microeconomic factors (short-term dollar debt and debt-to-equity ratios in Southeast Asian corporate sectors, etc.). The targeted Southeast Asian states had substantial short-term, privately held dollar debts that would be difficult to service if the currency pegs collapsed. Investors began selling off the local currencies. Malaysia floated its currency, the ringgit. Indonesia startled investors by floating the rupiah. Investors worried that Southeast Asia was beginning a competitive currency devaluation. They began selling their regional currencies as quickly as possible, creating the very situation they had feared. In August 1997, the International Monetary Fund (IMF) announced a rescue package for Thailand. The United States made very little contribution to this package, in part because of congressional restrictions, and Japan contributed only $4 billion. The IMF required structural changes in the Thai economy that were unrelated to the immediate problems facing the country. These actions stirred fears among investors that there was little international interest in saving Thailand and that the country’s economic difficulties were worse than expected. In South Korea, disturbing information came out concerning the structure of the country’s foreign debt. Observers estimated South Korea’s private foreign debt to be $110 billion, three times the country’s official foreign reserves. Rumors spread that the government was concealing the true extent of South Korea’s debt. Driven by a full-fledged panic, investors stampeded for the exits, causing the collapse of South Korea’s currency, the won. Korean banks began to sell their foreign securities in an effort to boost their liquidity. They sold off Russian and Latin American government bonds, spreading the effects of the crisis beyond Asia. Japanese banks had lent heavily to South Korea and Japanese goods competed with Korean goods. Investors saw this connection as a sign that the yen was vulnerable to a devaluation of the won. These fears fueled further fears that Hong Kong and Taiwan would devalue their currencies


The New ASEAN in Asia Pacific and Beyond

in order to remain competitive with Japan and Korea, leading to a further withdrawal of investor funds from East Asia (Chang 1998). Singapore and the Philippines were the two ASEAN states least affected by the crisis. The Philippines’ economic underdevelopment, institutional weakness, and low levels of foreign investment insulated it from the crisis (Lim 1998). As the crisis continued, Singapore actually attracted regional capital looking for a safe haven from the political and economic upheaval. Singapore floated its currency against a weighted basket of foreign currencies (including the US dollar and the Japanese yen), allowing it to gradually readjust the value of the Singaporean dollar as the other currencies shifted in value. Singapore responded to the crisis by further liberalizing its financial sector. However, this move was not an endorsement of unfettered liberalization. Singapore’s strategy was possible because of the state’s heavy intervention in the land, labor, and capital markets, which enabled it to adjust its economy to respond to external shocks. Observers expected Indonesia to weather the storm well. Its economic indicators were strong and it was governed by a dictatorial government capable of decisive action. Initially, the Suharto government acted as observers expected: it reduced government spending, cut government projects, and opened the economy to more foreign investment. When the economic downturn continued, Indonesia appealed to the IMF, and, on October 31, 1997, signed a $23 billion (soon raised to $38 billion) bailout package. However, many of the measures supposed to save the Indonesian economy also hurt Suharto’s children and cronies. Suharto began to send mixed messages to the international community. He signed a decree permitting the resumption of large-scale industrial projects that he had already suspended, as well as several other projects subject to review. Under the best of conditions, some of these projects made little economic sense. In the crisis, pushing ahead appeared irrational. Suharto’s entourage began to resist the government actions, suggesting, in some cases, that they would use incoming international funds to rescue their insolvent businesses, a measure explicitly prohibited under the terms of the IMF agreement. As this was happening, the Indonesian government was implementing the IMF reforms, with differing degrees of success. Foreigners and Indonesians were unclear on Suharto’s intentions. As the president’s health declined, the situation became more uncertain (Montes and Abdusalamov 1998). In January 1998, the Indonesian government introduced a budget that made highly unrealistic assumptions about Indonesia’s short-term economic performance. Foreigners misunderstood the budget as being expansionary. The IMF suggested that it might abandon Indonesia.

History: From Creation to Crisis


Eventually, Suharto accepted an even more severe IMF rescue package, but his credibility with international investors was gone. When the crisis started, the rupiah was worth approximately 2,400 to 1 US dollar; during January 1998 it declined in value to more than 17,000 to 1. The Indonesian economy collapsed as businesses proved incapable of servicing their foreign debts. Solvent businesses lost access to international credit; imports and exports stopped flowing through the Indonesian economy. Unemployment grew; the construction, financial, and hotel/restaurant sectors were particularly hard-hit; rates of poverty increased from 17.5 percent of the population in 1996 to 24.2 percent in 1998 (Tambunan 2010, pp. 159–160). As the crisis grew more severe, rioting erupted across the country by protestors objecting to massive increases in the costs of staple goods. Mob violence targeted Indonesia’s ethnic Chinese minority, contributing even more to political instability and capital flight. An official investigation later accused the military of provoking some of this violence as part of an internal power struggle. In 1998, Suharto resigned the office of president. Malaysia’s response to the crisis was shaped by its volatile domestic politics (Jomo K. S. 1998). Malaysia had a relatively low level of foreign debt, allowing it to avoid the ministrations of the IMF. The Malaysian government was determined to maintain its existing economic arrangements and national independence. The governing party, the United Malays National Organization (UMNO), maintained power by representing the interests of the ethnic Malay majority. It practiced affirmative action favoring the Malays and implemented economic policies designed to create an ethnic Malay business class. The crisis threatened to force the government to alter its policies, but allowing Malayowned companies to fail risked alienating UMNO’s ethnic support. Initially, Prime Minister Mohamed Mahathir blamed the crisis on a conspiracy directed against the Muslim and Asian worlds by Western states that feared a challenge from Asia. In response, foreign investors pulled their funds from Malaysia, causing dramatic declines in the value of the Malaysian ringgit and the local stock exchange. In the second stage of its response, the Malaysian government, led by Deputy Premier Anwar Ibrahim, attempted to implement IMF-like austerity measures and contractionary policies. Mahathir’s inability to stop the ringgit’s decline temporarily silenced him. By mid-1998, the Malaysian government reversed itself again. Mahathir resumed direct control of the government’s economic policy. He abandoned austerity measures and implemented an expansionary fiscal and monetary policy. In August–September 1998, Malaysia brought in capital controls that targeted short-term capital flows. The controls effectively withdrew


The New ASEAN in Asia Pacific and Beyond

the ringgit from the international currency trading system. The new rules required exporters to sell their foreign exchange to the central bank at a specified rate. The bank then sold foreign exchange to foreigners for approved payments, primarily in imports and debt services. The ringgit remained convertible on the current account but not the capital account. This prevented the purchase of foreign exchange for speculative purposes. Residents were forbidden to transfer ringgit to foreign accounts and were allowed to leave the country with only limited foreign exchange. Nonresidents could only convert ringgit into foreign currencies with the approval of the Central Bank. Foreigners holding Malaysian securities had to hold them for twelve months before they could convert them into foreign exchange. These measures, along with several others, produced a short-term capital inflow and stabilized the Malaysian economy, shielding it from the worst effects of the crisis. Causes of the Economic Crisis and the IMF Throughout the 1980s and 1990s, Western-influenced international institutions encouraged Asian states to deregulate their financial systems, in keeping with neoliberal economic ideology. For institutionally weak Asian states, the minimally regulated, free-market approach to financial management was particularly appealing. Before the economic crisis, Western institutions claimed credit for the Asian economic miracle; when the economic crisis hit, they scrambled to disown East Asia. Many Western critics characterized the crisis as the “market” penalizing Asian states for idiosyncratic economic policies, characterized by “crony capitalism” and government intervention. Asians responded that the crisis was, in fact, a result of a fundamentally unstable international financial system that exacerbated the effects of irrational investor behavior (Park 2006, pp. 55–83). In retrospect, it is clear that the Asian analysis was closer to reality. While there were, undoubtedly, major weaknesses in East Asian economies, those weaknesses could not account for the depth and duration of the crisis. The crisis was caused by weakly regulated banking systems and exacerbated by foreign financial panic. An unstable and unaccountable international financial system encouraged these conditions (Akyuz 1998; Milner 2003). The global financial crisis of 2007– 2009, which was caused by poor US regulation of the US banking and housing sectors, subsequently proved that the dogma of deregulation is fatally flawed and leads, inevitably, to economic disruption. The Asian states affected by the crisis shared some of the same vulnerabilities: sharply slowing export growth, large current account

History: From Creation to Crisis


deficits, heavy foreign borrowing, and the declining social profitability of investment. However, the strengths of these Asian economies outweighed their weaknesses. In all of these countries, inflation was low, governments were running small deficits or surpluses, and GDP growth rates were high. All enjoyed high investment and savings rates. Their current account deficits were relatively low, certainly sustainable, and financed industrial expansion and capital goods, not unproductive consumer goods. The strongest explanation for the Asian crisis is that bankers and investors, attracted by the economic dynamism of East Asia, did not critically examine the strengths and weaknesses of the economies in which they were investing. The information that they needed was always available, but they chose to ignore it because of their irrational enthusiasm for East Asia and the influence of herd behavior. Similarly, herd behavior explains the depth and duration of the Asian economic crisis. When economic uncertainty rocked Thailand, international investors, who knew relatively little about Asian economies, stampeded for the exits, making a bad situation far worse than it should have been. The Asian economic crisis was mostly an example of market failure, as opposed to governmental failure (Narine 2003). Financial liberalization and the lack of state capacity to monitor financial transactions were at the heart of the Asian economic crisis. The states most capable of withstanding the economic storm were those least exposed to the flow of international “hot money,” possessed strong state capacity, or both. Taiwan, for example, was least affected by the crisis. Taiwan financed most of its development through domestic savings. Its banking and regulatory authorities placed strict limits on foreign investment. Along with Singapore, Taiwan was an excellent example of the benefits of strongly regulated financial markets in Asia. The International Monetary Fund led the restructuring of the economies of Indonesia, Thailand, and the Philippines. It required that these states reduce subsidies and raise interest rates in order to stabilize their currencies. The IMF strategy focused on calming foreign investors and bringing back foreign capital to the crisis-affected states. IMF stabilization programs assumed that the Asian countries needed fundamental institutional reform. The IMF closed financial institutions and enforced strict regulatory standards. This policy increased investor panic. The IMF’s abrupt closing of sixteen commercial banks in Indonesia precipitated a run on the entire banking system. The IMF required Thailand, Indonesia, and South Korea to adopt high real interest rates and fiscal restrictions. This prescription was based on the IMF’s experience in Latin America, where high interest rates controlled inflation and


The New ASEAN in Asia Pacific and Beyond

corporate debt-to-equity ratios were low. In Asia, the high real interest rates devastated private businesses that were functioning with high debt loads and low inflationary expectations. Asian businesses, even those that were economically sound, suddenly found operating capital prohibitively expensive. The IMF meant for high interest rates to attract foreign capital. It overlooked the reality that a program of recovery had to rely on more than just foreign investment. The IMF policies actually drove investors away by making economic recovery more difficult. In addition, the IMF’s demands for structural reforms in the middle of an economic crisis made the problems far worse. The IMF required changes in labor laws to make it easier to fire workers and the removal of regulations on foreign ownership to allow foreign banks and firms to buy their Asian counterparts. These measures created business closures, layoffs, and deflation, and accelerated capital flight. The IMF demanded greater liberalization of Asian economies even as it was apparent that too much liberalization was the major cause of the crisis. The IMF was driven as much by ideological commitments as economic analysis. Its prescriptions exacerbated the hardship faced by the weakest and poorest segments of the Southeast Asian population. It seemed most concerned with recovering and protecting the investments of wealthy foreign investors and banks at the expense of Asian societies. Many Asians saw the IMF as a blunt instrument of US policy, particularly as the organization insisted on reforms that furthered the US trade agenda and the financial interests of US banks. It appeared that the United States was using the crisis as an opportunity for predation on its Asian “allies” and to force through economic changes to advance the US neoliberal agenda, a process Naomi Klein has called “disaster capitalism” (2007, pp. 316–336). This perception radically affected Asians’ sense of trust in the United States, a factor addressed in Chapter 6. The IMF’s failure had profound implications for the standing of the United States in the regional context and continues to affect how Asia Pacific perceives the IMF. In the end, Asian governments turned away from the IMF and began following their own policies. They cut interest rates and introduced fiscally expansionary policies. The IMF began to reverse some of its policies, allowing its Asian clients to run budget deficits. There is some evidence that the IMF learned important lessons from its bungling in Asia. However, this was too little and too late for the institution’s reputation. It was also too late for many Asian economies to limit the damage. American and other Western businesses used the Asian disaster to buy up Asian competitors at fire sale prices (Klein 2007, pp. 331–332). The Asian economic crisis forced East Asia to adjust, reform, and alter its

History: From Creation to Crisis


approach to economic development. However, contrary to the desires of Western powers, the crisis did not result in the complete acquiescence of the region to Western economic models (Park 2006). More than any other factor, the actions of the IMF created a powerful impetus within Asia for new regional institutions to forestall future economic crises and protect the region from the volatile international financial system. ASEAN’s Response to the Asian Economic Crisis ASEAN’s failure to respond effectively to the Asian economic crisis severely damaged its international reputation. ASEAN failed to utilize the few mechanisms it had at its disposal, such as the ASEAN Swap Agreement, and what mechanisms existed were inadequate anyway. As the Asian economic crisis gathered steam, ASEAN met at the second Informal Summit in Kuala Lumpur, December 14–16, 1997, and issued the “ASEAN Vision 2020” (ASEAN 1997). This document celebrated thirty years of ASEAN and pledged to “reaffirm” the commitment of ASEAN’s leaders to the “aims and purposes” of the association as set forth in the Bangkok Declaration of 1967. It expressed a positive vision of ASEAN in 2020 as a peaceful, prosperous, economically developed, and internationally influential organization. It laid out some of the basic economic, political, and security-oriented steps that ASEAN would need to undertake in order to fulfill this vision. The ASEAN Vision 2020 was a statement of regional aspirations and confidence at a time when Southeast Asia was collapsing into political and economic disarray, but it did nothing to address the ongoing crisis. ASEAN met in Hanoi in December 1998 and adopted the Hanoi Plan of Action and an associated Statement on Broad Measures. The Hanoi action plan called for moving the implementation date for AFTA for the six established members of ASEAN from 2003 to 2002. It called for the implementation of the framework agreement on an ASEAN Investment Area (AIA), designed to attract foreign investment, and the liberalization of trade in services. Nonetheless, these measures amounted to very little (Narine 2002b, pp. 161–169). The ASEAN Secretariat underwent further reform. The size of the bureaucracy was increased. A second deputy secretary-general position was created in 1997. One deputy secretary-general was tasked with managing the secretariat while the other directly assisted the secretarygeneral on policy matters. Nonetheless, the ASEAN Secretariat remained underfunded, understaffed, and largely incapable of managing the many responsibilities ASEAN added to its agenda.


The New ASEAN in Asia Pacific and Beyond

A special meeting of ASEAN finance ministers in Manila in November 1997 produced the Manila Framework Agreement (MFA). The MFA called for the creation of an ASEAN Surveillance Process (ASP) that would complement the global surveillance of the IMF. At a subsequent ASEAN meeting of finance ministers in Jakarta on February 28, 1998, the ministers agreed to establish the ASP “within the general framework of the IMF and with the assistance of the Asian Development Bank” (ADB) (Narine 2002b, p. 162). The connection between the IMF and the ASP is not clear. The ASP began to operate after the crisis, but its effectiveness was debatable. The ASP was meant to spot potential crises in ASEAN before they happened, assess the vulnerability of ASEAN members to financial disruptions and crises, and improve the coordination of ASEAN members’ economic policies. This was to be done through a “peer monitoring” process between ASEAN states. The ADB agreed to provide training and technical support for the ASEAN countries during the formative years of the ASP. Despite these efforts, there is little evidence that the ASP worked as envisioned. The two factors impeding the effectiveness of the ASP were the institutional limitations of the ASEAN Secretariat and the reluctance of ASEAN countries to share economic information with one another. The ASP also ran into other problems associated with the inherent limitations of the ASEAN states. For example, despite the efforts of the ADB, many Southeast Asian officials lacked the technical expertise to monitor the increasingly complex economic and financial realities of the global economy. Even if the expertise were available, most ASEAN countries did not have access to the information necessary to make a regional monitoring mechanism work effectively. Any such mechanism would need to keep track of private sector activities, but the private sectors in many ASEAN countries were reluctant to provide information to their governments that could leak to their economic competitors. Other measures that ASEAN considered during the crisis included conducting intra-ASEAN trade in the Singaporean dollar, the strongest ASEAN currency. The states rejected the proposal because such trade was too small to significantly counteract the effects of currencies devalued in relation to the US dollar. Other efforts to use local currencies for local trade quickly faltered. ASEAN suggested measures to create social safety nets and construct “ASEAN as a caring society.” In October 1998, the ASEAN Secretariat announced the creation of an ASEAN Action Plan on Social Safety Nets. However, initiatives meant to address domestic social welfare within member states risked running afoul of ASEAN’s principle of nonintervention, an issue that arose later as ASEAN created an ASEAN Community.

History: From Creation to Crisis


By mid-1998, the crisis led to bilateral conflict between the ASEAN states. Tensions rose between Singapore, Malaysia, and Indonesia, in particular. Singapore withdrew a $5 billion loan it had agreed to extend to Indonesia because of its unhappiness with the new Habibie government. Malaysia and Singapore became embroiled in territorial disputes. In 1998, Malaysian forced the closure of the Central Limit Order Book (CLOB), a facility in Singapore that traded Malaysian shares, after charging that the CLOB undermined the Malaysian stock exchange. The Malaysian action provoked panic selling and caused enormous losses to the CLOB’s shareholders, most of whom were Singaporean. As Singapore became a regional safety zone for panicked Southeast Asian investors, Malaysia and Indonesia accused Singapore of benefiting at their expense. Malaysia and the Philippines came into conflict after Malaysia built structures on reefs in Spratly Islands claimed by the Philippines. Border disputes, refugees, the drug trade, and the deportation from Thailand of illegal immigrants from Myanmar undermined the relations between Thailand and Myanmar. The crisis also affected the new ASEAN states. Laos, Myanmar, and Vietnam were not full participants in the global economy, so they avoided the full effects of the economic crisis. Even so, Vietnam experienced dramatic declines in export growth and foreign investment. By late 1997, the currencies in Laos, Myanmar, and Vietnam were devastated. Laos’s kip declined by 80 percent, Myanmar’s kyat declined by 50 percent, and Vietnam’s dong fell by about 25 percent between January 1997 and November 1998 (Narine 2002b, p. 166). In response, the new ASEAN members retreated from economic liberalization. The Regional Haze and East Timor Even as the economic crisis unfolded, other, unrelated regional events further eroded ASEAN’s credibility in the eyes of the international community. The “regional haze” crisis, caused by deliberately set forest fires in Indonesia, blanketed the entire region in choking smog. East Timor’s long struggle for independence from Indonesia came to a violent conclusion. These local crises presented ASEAN with challenges that it was unable to manage, despite the international expectation that it would act. In both cases, the need to respect Indonesian sovereignty and its preeminent position in Southeast Asia, along with the ASEAN norm of nonintervention, blocked ASEAN from coordinating effective regional responses.


The New ASEAN in Asia Pacific and Beyond

The Regional Haze Throughout 1997 to 1998, human-caused forest fires covered large parts of Indonesia and Malaysia and all of Singapore and Brunei in smoke. Most of these fires were located in Indonesia, though parts of eastern Malaysia contributed to the problem. Episodes of regional haze had occurred several times in the region since the 1980s. The 1997–1998 experience, however, was of a far greater magnitude than the earlier events and occurred when political and economic upheaval in the region was already creating serious instability. The total area consumed by fire in Southeast Asia was approximately 8 million hectares, twice the size of Taiwan. The Malaysian Air Pollutant Index (MAPI) and Singapore’s Pollutants Standards Index (PSI) designated readings of over 100 to be unhealthy and those over 300 to be hazardous. During 1997–1998, readings of over 100 were common in Singapore and much of Malaysia. In East Malaysia, in October 1997, Kuching, Sarawak, recorded a reading of 849. Kuching was hundreds of kilometers from the nearest fire, implying that readings of over 1,000 must have been common in areas such as Kalimantan in Indonesia, the source of most of the haze. In February 1998, researchers estimated that the measurable economic costs of the fires were about $4.5 billion (Narine 2002b, p. 170). Large commercial interests in Indonesia laid claim to forest areas, then used fire to clear those areas for timber or palm plantations. In addition, local actors drained peat swamps for rice production. When these caught fire, the peat proved toxic and difficult to extinguish. The Indonesian government lacked the physical resources to manage the forest fires, but more important was its lack of enforcement capability. The commercial interests responsible for the forest fires were politically well-connected and protected from governmental authority by presidential influence. In East Malaysia, similar factors were at work as state actors granted politically well-connected and protected parties access to timber resources and then permitted them to ignore regulations governing their actions. In June 1995, following an earlier haze incident, ASEAN environment ministers had agreed to a Cooperation Plan on Transboundary Pollution. The proposed measures included plans to share information and coordinate regional expertise on firefighting, and seeking assistance from outside actors, if necessary, to deal with regional fires. There was little implementation of the plan. The events of 1997–1998 demonstrated the lack of follow-up. Other than Singapore’s providing Indonesia with satellite imaging to detect fires, there was no regional cooperation. The affected states tried to address the haze through bilateral and

History: From Creation to Crisis


emergency agreements. The ASEAN environment ministers met in December 1997 to agree to another Regional Haze Action Plan. There remained considerable doubt on ASEAN’s ability to implement any of its plans. The organization’s norm of nonintervention, Indonesia’s prominence in the region, and ASEAN’s institutional weakness all prevented the organization from taking any effective position. According to James Cotton: It would not be an overstatement to maintain that the haze has been among Southeast Asia’s biggest internal challenges if not since the era of “confrontation” then since Vietnam’s invasion of Cambodia in 1979. While the 1997 financial crisis has had a greater impact, its causes have been partly external, and increasingly it is viewed as a product of globalization of finance. . . . The haze has posed a challenge to every aspect of ASEAN’s character and modalities. Virtual solidarity on the part of governments and a preference for indirect diplomacy have collapsed in the face of the seriousness of the problem. Action plans and ministerial meetings did not prove efficacious, with the Indonesian government incapable of policing its own regulations. (1999, p. 348)

Regional haze incidents continued to wreak environmental havoc in Southeast Asia in the years since. They remain serious blemishes on ASEAN’s reputation and cast doubt on the organization’s effectiveness (Elliott 2003). During 1997–1998, however, the haze was another spectacular example of ASEAN ineffectiveness before a global community that viewed the organization with increasing skepticism. The East Timor Crisis

In 1975, Indonesia invaded and annexed East Timor. Almost one-third of East Timor’s population, about 200,000 people, died under Indonesian occupation (Jardine 1993). During the occupation, the ASEAN countries, unwilling to antagonize their largest member, treated East Timor as a domestic Indonesian issue. In 1997, B. J. Habibie replaced Suharto as president of Indonesia and allowed East Timor to hold a referendum on whether it was to remain part of Indonesia or become an independent state. The UN-supervised referendum was held on August 30, 1999. Despite massive intimidation from Indonesian-backed forces, East Timorese voted overwhelmingly in favor of independence. This result precipitated an orgy of violence by the militias and an outflow of refugees from East Timor. The situation eventually led to the intervention of a UN peacekeeping force, the International Force for East Timor (INTERFET).


The New ASEAN in Asia Pacific and Beyond

ASEAN states supported Indonesia’s control of East Timor for several reasons. They were afraid that East Timor’s independence could encourage other separatist movements within Indonesia, causing Indonesia’s disintegration, the flow of refugees into neighboring states, regional instability, and a weakening of ASEAN. ASEAN states feared that a successful insurgency in East Timor would encourage other regional insurgencies. They also worried that Western states were using human rights issues as a pretext for unilateral armed intervention in the developing world. Malaysian prime minister Mahathir condemned the West for its hypocritical application of its human rights principles. According to Mahathir: “Southeast Asians generally believe that humanitarian intervention could subvert the region’s dominant nonintervention norm, weakening political and social cohesion and allowing the West to call into question the legitimacy of governments and regimes not to their liking” (Dupont 2000, p. 165). The UN created INTERFET, led by Australia, and later the UN Transitional Authority in East Timor (UNTAET), and authorized them to use force to fulfill their mandates. ASEAN regarded these measures as insulting to Indonesia, which had not formally ceded its claim to sovereignty over East Timor when INTERFET was deployed in September 1999. The UN expected ASEAN states to take part in the mission. However, with the exception of Malaysia, ASEAN countries had little experience with UN peacekeeping. Singapore and Thailand were concerned about domestic political backlash if their troops were killed, and other ASEAN states were worried about the consequences for the organization if their troops engaged in combat against Indonesian-backed militias or the Indonesian military itself. The ASEAN states also worried about the expense of fielding peacekeeping forces at a time of economic crisis. Some Southeast Asian states made their participation in INTERFET conditional on financial support from Australia and Japan. Indonesia wanted ASEAN to participate in the UN force in order to reduce Australia’s influence, an endorsement that removed some of the political barriers to ASEAN’s involvement. Ultimately, of the 9,000 troops deployed by INTERFET, around 2,500 were from ASEAN, and the deputy commander was from Thailand (Narine 2004a). ASEAN’s failure to manage East Timor effectively was a further blow to its international prestige. Many Western states saw the East Timor situation as ASEAN’s chance to show that it could manage regional security problems without the need for external actors playing major security roles in the region. Yet ASEAN was divided over how to respond and paralyzed by debate over how to interpret the principle of noninterference in the context of East Timor. Just as the economic crisis

History: From Creation to Crisis


had shattered ASEAN’s credibility as an effective regional economic organization, the East Timor situation undermined ASEAN’s claims to a leading role in the ARF. The Rise and Fall of ASEAN ASEAN’s early history is more complex than a cursory reading reveals. ASEAN originated, primarily, as a nonaggression pact and soft political alliance between its member states. Historically, its efforts to foster economic cooperation were of little consequence. Its evolution was driven by external security threats, but its raison d’être was statebuilding. ASEAN came together as a way to alleviate tensions between its member states in the aftermath of Konfrontasi. It created a space within which its members could pursue their own development without worrying about destabilizing actions from their neighbors. It articulated institutional norms that privileged respect for sovereignty above all other considerations and, accordingly, did not require that member states choose between their own narrow self-interests and those of the organization. The reunification of Vietnam created a potential threat that pushed ASEAN to a higher level of political cooperation, as indicated by the first meeting between ASEAN heads of states in Bali and the creation of the TAC. Vietnam’s invasion of Kampuchea/Cambodia provided ASEAN with an international issue on which the organization could focus its efforts and organize the international community. The conflict provided ASEAN with a prominence on the world stage that its relatively weak members had not had before. Even so, ASEAN’s international influence at the time was largely due to its role in the strategies of the United States and China, which saw Vietnam’s actions against Kampuchea as an opportunity to strike at the Soviet Union. Within ASEAN, real differences in members’ strategic perspectives threatened to break ASEAN’s united front. The fact that Indonesia subordinated its security interests to ASEAN unity for as long as it did was remarkable but, ultimately, unsustainable. ASEAN’s concentration on Vietnam/Kampuchea may have distracted ASEAN from its internal development. More likely, however, is that the conflict provided ASEAN with a focus it would otherwise have lacked and an opportunity to strengthen its institutional structures without needing to confront contentious internal disputes. This focus created the ASEAN Way and drove the process-oriented institutional action that has come to define ASEAN. ASEAN did not end violence between its member states and it did not create the Southeast Asian economic miracle. However, once regional states recognized their interest in peace,


The New ASEAN in Asia Pacific and Beyond

ASEAN facilitated the regular interactions that maintained regional peace, fostered stability, and made economic development possible. The end of the Cold War ended the Vietnam situation. Again, forces external to ASEAN compelled it to evolve. The growing international demand for a regional security institution pushed ASEAN to invent the ARF; the proliferation of free trade agreements (FTAs) in other regions and the threat of APEC led to AFTA. ASEAN’s initiatives to expand were not driven by an internal dynamic. The ASEAN states understood the political and diplomatic benefits of being part of an organization that could speak for the entire region; they realized that their united front during the Vietnam period had given them, collectively, real international influence. They intended to pursue the long-term goal of shaping their regional security environment. However, they were not prepared to, or even capable of, following through on the political and economic measures necessary to enhance their regional cooperation significantly. ASEAN’s decision to expand its membership reflected an economic and political logic that assumed that more members translated into more international influence. However, its influence was contingent on the ability of the organization to operate as a unit. This became apparent with the Asian economic crisis of 1997–1999 and the other regional crises that hit Southeast Asia in the late 1990s. The global community’s expectation that ASEAN would deal effectively with the crisis was wildly unrealistic and illustrated the international misunderstanding of ASEAN’s capacity and functions (Narine 2002a). ASEAN had fed these expectations and faced the humiliating revelation of its inherent limitations. The regional haze and the East Timor situation further illustrated the limits of ASEAN’s capabilities. ASEAN finished the twentieth century weak and divided, its international reputation in tatters. For its members, restoring and rejuvenating the organization became a major institutional goal. Beyond the lessons for ASEAN, the Asian economic crisis illustrated the dangers of the international financial system. It revealed the predatory inclinations of the Western powers, particularly the United States. Without the restraining and balancing influence of the Cold War, the United States pushed a destabilizing economic agenda on its Asian allies and then preyed on them when that system failed. Asians’ perception that the IMF was, at best, incompetent and, at worst, the errand boy of the Western powers, de-legitimized the organization in the region. The crisis proved that Asia Pacific was interconnected, whatever the wishes of its states. The only way to defend the region from future catastrophes inherent in the neoliberal economic system was to build Asian institutions that could protect Asian interests. Over

History: From Creation to Crisis


the next several years, this need for self-protection drove the region’s desire for greater Asian integration and more effective and independent regional institutions. Conclusion The Asian economic crisis is the dividing line between the ASEAN of the past and that of the present. ASEAN was born during the Cold War and refined in the crucible of Cold War politics. After the Cold War, its members strived to retain and strengthen the organization out of a determination to play a role in shaping the post–Cold War regional environment. ASEAN’s members understood that their best chance at influencing the norms and rules of the emerging regional system was by speaking with a collective voice. The diversity of its membership compromised this goal, along with their different political, security, and economic interests. The rules of the institution, which were necessary to accommodate ASEAN’s diversity, weighed against collective action. The Asian economic crisis demonstrated to the states of Asia Pacific that they were relatively weak actors, subject to the predation of the powerful. Under such conditions, the argument for a stronger collective response to the international system was never more compelling or important. The next two chapters examine ASEAN’s response to these imperatives in detail. Chapter 3 explores ASEAN’s efforts at internal reform through the creation of an ASEAN Community. Chapter 4 examines ASEAN’s efforts to put itself at the heart of new regional institutions. In both cases, ASEAN made progress toward its larger goals. However, that progress was slow, incremental, and circumscribed by the domestic weaknesses and priorities of the ASEAN states. Notes 1. Historical scholarship indicates that the conflict in Indonesia was largely an internal conflict within the military and that Suharto himself may have had prior knowledge of the plan to assassinate seven army generals. The Communist Party of Indonesia (PKI) likely was involved in the plot, but in a peripheral way. MI6 and the US military/CIA were also involved in the effort to scapegoat and eliminate the PKI. Experts agree that the official version of events from the time, which placed responsibility for the attempted coup solidly on the PKI, was a fabrication (Roosa 2006). 2. The Corregidor Affair involved the killing, apparently by their officers, of twelve to sixty Muslim recruits whom the Philippines were training to infiltrate the Malaysian state of Sabah. Sabah was also claimed by the Philippines and the


The New ASEAN in Asia Pacific and Beyond

recruits were meant to destabilize the new state of Malaysia. The recruits’ secret training camp was located on the island of Corregidor in Manila Bay. Diplomatic attempts to resolve the dispute were fruitless. In September 1968, the Philippine Congress passed a resolution emphasizing the Philippines’ territorial claims to Sabah. ASEAN suspended its meetings until May 1969 and the Philippines and Malaysia ceased diplomatic contact. They resumed normal relations in December 1969, in the wake of a number of larger regional developments. The Philippines continues to maintain its claim to Sabah (Narine 2002b, pp. 19, 36) 3. At the time, Cambodia had been renamed “Kampuchea” by the Khmer Rouge government. 4. The PRK renamed the state “Cambodia” in 1989. 5. The ASEAN Standing Committee coordinates and implements ASEAN policy between ASEAN Ministerial Meetings. The Standing Committee reports directly to the AMM. The foreign minister of the country hosting the AMM chairs the Standing Committee. The Standing Committee includes the secretary-general of ASEAN and the directors-general of the ASEAN national secretariats. 6. Each ASEAN state has an ASEAN national secretariat, housed in the foreign ministry, which conducts ASEAN-related activities at the national level. These secretariats also manage their states’ interactions with ASEAN.

3 The Postcrisis Reform

In the aftermath of the 1997–1999 crisis, ASEAN’s leaders looked for a way to rejuvenate the institution and restore its international reputation. They found it in the idea of an ASEAN Community. The ASEAN Community consists of three “pillars,” or separate communities that, collectively, form the larger community. These are the ASEAN Economic Community (AEC), the ASEAN Political Security Community (APSC), and the ASEAN Socio-Cultural Community (ASCC). The AEC means to make ASEAN an integrated single market and production base, building on AFTA, the ASEAN Investment Area, and the ASEAN Framework Agreement on Services (AFAS). The APSC (originally just the ASEAN Security Community) is meant “to bring ASEAN’s political and security cooperation to a higher plane to ensure that countries in the region live at peace with one another and with the world at large in a just, democratic and harmonious environment” (ASEAN 2003). The ASCC “envisages a Southeast Asia bonded together in partnership as a community of caring societies” (ASEAN 2003). On November 22, 2015, at the twenty-seventh ASEAN Summit, ASEAN passed the 2015 Kuala Lumpur Declaration on the Establishment of the ASEAN Community, which declared the realization of the ASEAN Community, effective December 31, 2015 (ASEAN 2015b). At the same time, ASEAN declared a new program of actions and goals with the completion date of 2025, designed to further develop and strengthen the ASEAN Community. This chapter evaluates the ASEAN Community and its component parts. Can building the ASEAN Community be the objective that sustains and focuses ASEAN in the twenty-first century?



The New ASEAN in Asia Pacific and Beyond

Most observers agree that, historically, ASEAN’s founding members did not intend for it to become a supranational institution, like the European Union (Acharya 2009, p. 268; Alagappa 2003b, p. 79; Severino 2006, p. 11). The ASEAN Community is not a sudden turnaround in that position. Rather, its members designed the Community to maintain and enhance their state sovereignty by improving their levels of economic, security, political, and social cooperation. These goals may be contradictory or entail difficult choices. In the short term, even the ASEAN Community’s limited goals appear to be largely unattainable, though ASEAN has made some small progress toward its apparent objectives. However, it is not entirely clear what these objectives are. Ultimately, the pursuit of the ASEAN Community alone cannot be the purpose that keeps ASEAN whole and relevant in the twenty-first century. Development of the ASEAN Community The Asian economic crisis created the international perception that ASEAN, and its member states, were economically weak, disunited, and politically unreliable. ASEAN’s economic competitiveness declined relative to emerging markets like China and India. ASEAN’s leaders believed that the only way to reverse this trend was to improve regional economic integration. If the ASEAN countries could credibly argue that Southeast Asia formed a coherent economic region with a population half the size of China, they could regain the confidence of foreign investors. The move toward a more integrated ASEAN began with the ASEAN Vision 2020 (1997), followed by the Hanoi Plan of Action (1997) (Caballero-Anthony 2006; Hew 2006). AFTA (1992) proved highly successful in cutting tariffs between ASEAN countries, but its overall economic impact remained small, primarily because nontariff barriers were the major impediment to ASEAN economic integration. In late 2002, in preparation for the November ASEAN Summit in Phnom Penh, the ASEAN economic ministers formed a High-Level Task Force (HLTF) on ASEAN economic integration. They tasked the HLTF with recommending measures for increasing regional economic integration beyond AFTA. At ASEAN’s request, the international consultants McKinsey & Co. had earlier prepared a study that argued that ASEAN’s market fragmentation discouraged international investors. McKinsey suggested that the region pursue integration in two sectors—electronics and consumer goods—as first steps toward greater economic cooperation. A fully integrated ASEAN would lead to faster regional economic growth, better economic policies,

The Postcrisis Reform


greater efficiency, higher productivity, and lower costs among the ASEAN states; increase intra-ASEAN trust; and improve ASEAN’s international standing and bargaining power. At the 2002 ASEAN Summit, Singapore’s prime minister, Goh Chok Tong, proposed that the next stage in regional economic integration be called the “ASEAN Economic Community,” a name that evoked the European Economic Community (EEC), the precursor to the European Union. Goh believed that the AEC could be similar to the EEC of the 1950s (Hew 2008, p. 15; Severino 2006, pp. 344–347). If the idea of an AEC followed from extensive effort and study, the motivations for the ASEAN Security Community and the ASEAN Socio-Cultural Community did not. In preparation for Indonesia’s position as ASEAN chair in 2003, the Indonesian foreign ministry asked respected Indonesian scholar Rizal Sukma for ideas on how to fulfill its role. Sukma suggested building on the idea of an “economic community” by creating an ASEAN Security Community (ASC). Sukma presented his ideas in a paper to the foreign ministry in March 2003, which circulated it (in various modified forms) to different ASEAN meetings over the next several months, looking for feedback. Numerous factors contributed to Indonesia’s ASC initiative. Indonesia feared its role as chair of ASEAN would be less prominent if discussions focused on economic issues. Indonesia was hesitant about rapid regional economic integration, given its industrial weaknesses. The Indonesian government may have wanted to protect the country’s democratic gains and wished to institutionalize, within ASEAN, opposition to illegitimate transfers of power, including military coups and insurgencies. Indonesia was also concerned about the flow of arms to separatist groups from or through the neighboring countries; an ASC could help counteract the movement of weapons. Indonesian diplomats were worried about ASEAN’s incoherent response to the American invasion of Iraq. They may also have seen the ASC as an opportunity to advance human rights in the region (Severino 2006, pp. 355–356). Outside of Indonesia, most academics and government officials viewed Indonesia’s initiative with skepticism. An official in the ASEAN Secretariat even said that the ASC proposal was so “impractical that he wondered if its true purpose was to provide Indonesia with an excuse to walk away from ASEAN by demanding agreement over something that Jakarta knew the other member states would reject” (Roberts 2012, p. 120). Other observers felt the idea originated with the United States, which found an ASC useful for prosecuting its “war on terror.” Many officials disputed Indonesia’s contention that the security community concept had been widely circulated and felt Indonesia was imposing it on the


The New ASEAN in Asia Pacific and Beyond

rest of ASEAN. Indonesia’s original ASC proposal envisioned numerous new institutions to promote regional security cooperation. However, the other ASEAN states were wary of its failure to consult with them and the possible threat a more institutionalized ASC could pose to the noninterference principle. Thus, the final ASC proposal was a highly diluted version of Indonesia’s original concept (Acharya 2009, p. 256). The ASEAN Socio-Cultural Community was “brought in almost as an afterthought” at the suggestion of the Philippines (Severino 2006, p. 368). The ASCC was meant to demonstrate that ASEAN was not just an elite-driven instrument of politics and security but that it was also concerned about the health, education, and social environments of ordinary citizens. The ASCC is the least-developed pillar of the ASEAN Community, but it may be the most important. Creating a genuine ASEAN Community requires a strong sense of “ASEAN identity” among the citizens of Southeast Asian states. The ASCC directly addresses this need; how successfully remains to be seen. In October 2003, ASEAN held the second Bali Summit, where it introduced the Second Declaration of ASEAN Concord (Bali II), a sequel to the 1976 Declaration of ASEAN Concord. Bali II stated ASEAN’s intention to create an overarching ASEAN Community by 2020, based upon the three pillars (Freistein 2005, pp. 186–197; Weatherbee 2005, pp. 107–110). ASEAN leaders adopted the Vientiane Action Programme (VAP) at the tenth ASEAN Summit, in Vientiane, Laos, on November 29– 30, 2004. The VAP committed ASEAN’s members to “pursue the comprehensive integration of ASEAN towards the realization of an open, dynamic and resilient ASEAN Community by 2020” (ASEAN 2004, p. 4). The HLTF presented its recommendations in Bali in 2003. ASEAN tabled the action plans of the ASC and the ASCC in Vientiane in 2004. The VAP promised that ASEAN would address the “development gap” between ASEAN states, strengthen ASEAN’s institutional framework and external relations with its dialogue partners, and “work towards the development of an ASEAN Charter” (ASEAN 2004, p. 4) In August 2006, the ASEAN meeting of economic ministers recommended that ASEAN accelerate the completion of the AEC from 2020 to 2015. ASEAN leaders accepted this recommendation at the twelfth ASEAN Summit (January 9–15, 2007) in Cebu, the Philippines, and moved forward the establishment of the entire ASEAN Community to 2015. The detailed ASEAN Economic Community Blueprint was released at the thirteenth ASEAN Summit, in Singapore, November 18– 22, 2007. The ASEAN Political-Security Community and the ASEAN Socio-Cultural Community Blueprints followed at the fourteenth ASEAN Summit, held in Cha-Am, Thailand, February 26–March 1,

The Postcrisis Reform


2009. Before evaluating the different pillars of the ASEAN Community, let us critically examine another fundamental component of the ASEAN Community: the ASEAN Charter. The ASEAN Charter At the eleventh ASEAN Summit, in Kuala Lumpur, Malaysia, in December 2005, ASEAN leaders issued the Kuala Lumpur Declaration on the Establishment of the ASEAN Charter. The proposed charter would “confer a legal personality to ASEAN and determine the functions, develop areas of competence of key ASEAN bodies and their relationship with one another in the overall ASEAN structure” (ASEAN 2005). The charter would be a “constitutional document embodying fundamental principles, goals, objectives and structures of ASEAN cooperation capable of meeting the needs of the ASEAN Community and beyond” (ASEAN 2005). The leaders established a ten-person Eminent Persons Group (EPG), with representation from each ASEAN member, to produce “bold and visionary” recommendations for the proposed charter. They encouraged the EPG to consult with civil society organizations and business groups as part of “the new thrust of [ASEAN] to become a more inclusive organization” (CaballeroAnthony 2008, p. 72). The EPG completed its report in December 2006 and presented it at the twelfth ASEAN Summit, in Cebu, January 2007. The report attempted to integrate ASEAN’s norms, scattered in various declarations and treaties over forty years, into one coherent document. However, the final document went well beyond established ASEAN norms and practices. It called for “the active strengthening of democratic values, good governance, rejection of unconstitutional and undemocratic changes of government, through the respect and institutionalization of the rule of law, including humanitarian law” (Report of the EPG 2006, p. 2). The EPG recommended the creation of a formal dispute mechanism to resolve political and economic issues; decisionmaking by majority vote, rather than the traditional consensus, in areas other than security and foreign policy; and monitoring mechanisms to gauge members’ compliance on ASEAN’s objectives, principles, and policies. The EPG proposed sanctions against members in “serious breach” of ASEAN principles. Those sanctions could include loss of membership rights and even expulsion. ASEAN’s leadership endorsed the report, but political support for the recommendations eroded over the next few months, particularly


The New ASEAN in Asia Pacific and Beyond

over the issue of sanctions. The organization struck a High-Level Task Force to prepare a draft of the charter, to be ready for ASEAN’s fortieth anniversary celebration in Singapore in November 2007. ASEAN senior officials instructed the HLTF to exclude the discussion of sanctions and maintain the consensus decisionmaking approach. ASEAN’s leaders formally adopted the final ASEAN Charter on November 20, 2007, at the thirteenth ASEAN summit. The leaders welcomed the new charter as a milestone in ASEAN’s history—the first document to “codif[y] organic Southeast Asian diplomacy, and [list the] key principles of and purposes of ASEAN” (Caballero-Anthony 2008, p. 76). The charter’s supporters argued that it would make ASEAN a more rules-based organization. It was not supposed to replace the ASEAN Way so much as supplement it “by a new culture of adherence to rule . . . a culture of taking . . . obligations seriously” (Caballero-Anthony 2008, p. 77). However, if implemented, these changes would supposedly transform the consensus-based approach to decisionmaking. By November 2008, all of ASEAN’s members had formally ratified the charter. The ASEAN Charter states that the ASEAN Summit, the regular meeting of ASEAN’s heads of government, is the organization’s highest policymaking body. It is to meet twice a year and “deliberate, provide policy guidance, and take decisions on key ASEAN issues” (ASEAN 2008a, art. 7.2b). The ASEAN Coordinating Council, which comprises the foreign ministers, shall meet at least twice a year. It will carry out tasks assigned to it by the summit and coordinate policy with the ASEAN Community Councils, the individual bodies meant to implement the AEC, APSC, and ASCC. Member states are obligated to appoint an ambassador to constitute a Committee of Permanent Representatives to ASEAN. Article 11 of the charter updates the role of the secretary-general of ASEAN and the ASEAN Secretariat. The secretary-general reports to the ASEAN Summit, participates in all relevant ASEAN meetings, and is the chief administrative officer of the organization. The charter provides for four deputy secretaries-general, each from a different ASEAN state and different nationality than the secretary-general. One of the deputy secretaries-general coordinates foreign affairs, while the other three coordinate with the three Community Councils. Two of the deputy secretaries-general are selected by their states, based on alphabetical rotation, to serve a nonrenewable three-year term. The other two deputy secretaries-general are “recruited based on merit” and may have their terms renewed for another three years (art 11.6a). The charter does nothing, however, to increase the size and capability of the ASEAN Secretariat to make it a more effective and independent body.

The Postcrisis Reform


As of 2010, the ASEAN Secretariat had approximately 300 employees in total (ADB Institute 2015, p. 186).1 The charter accords ASEAN “legal personality” but it does not give the secretariat the power to conclude treaties on behalf of the organization (Lin 2010). In the past, the ASEAN secretary-general has concluded “non-sensitive agreements” on ASEAN’s behalf and this will likely continue. The charter permits an “ASEAN Minus X” approach to economic agreements, which allows faster members to conclude treaties without waiting for the rest of the group (Lokshin 2008; Seah 2009). The charter’s preamble specifies ASEAN’s guiding principles as the “principles of sovereignty, equality, territorial integrity, non-interference, consensus and unity in diversity.” Included is the promotion of a “just, democratic and harmonious environment” (art. 1.4) and the promise to “promote and protect human rights and fundamental freedoms,” albeit with the caveat “with due regard to the rights and responsibilities of the member states” (art. 1.7). Article 2.2a and 2.2e also focus on the importance of sovereignty (and its associated values) and noninterference, even as Article 2.2i promotes “human rights” and “social justice.” In practice, these concepts are often in conflict. They raise serious questions about the coherence and purposes of the charter. This tension is exemplified in the controversy around the ASEAN Intergovernmental Commission on Human Rights, the most contentious issue faced by ASEAN diplomats as they negotiated the charter (Clarke 2015, p. 285). Ultimately, the AICHR became a symbol of ASEAN’s commitment to the protection of the rights of states over those of individual humans and minority communities. The ASEAN Approach to Human Rights

In 1993, in preparation for the United Nations World Conference on Human Rights in Vienna, Austria, ASEAN’s heads of state met in Bangkok to adopt the Asia Pacific Declaration on Human Rights (also known as the Bangkok Governmental Human Rights Declaration). This Declaration specified a number of reservations on the idea of universal human rights norms and standards (Narine 2012). The Vienna conference issued the consensus-based Vienna Declaration and Programme of Action, which emphasized “the need to consider the possibility of establishing regional and sub regional arrangements for the promotion and protection of human rights where they do not already exist” (United Nations 1993). ASEAN’s foreign ministers supported the Vienna Declaration and indicated that ASEAN should consider establishing a “regional mechanism on human rights.” However, the ministers also


The New ASEAN in Asia Pacific and Beyond

reiterated their view that human rights were culturally specific and needed to be balanced with the rights of the community. Over the next several years, concerned Southeast Asian nongovernmental organizations (NGOs) agitated for the creation of an ASEAN human rights body. In July 1995, the Human Rights Committee of the Law Association for Asia and the Pacific (LAWASIA) created the Regional Working Group for an ASEAN Human Rights Mechanism. This working group argued that any regional human rights mechanism should support the universality of human rights and that regional laws should be consistent with international human rights law. ASEAN recognized this working group as a dialogue partner in 1998. In July 2000, this working group submitted a report to ASEAN that recommended that the organization establish an independent human rights commission that would prepare reports on human rights, conduct its own investigations, and communicate with states. ASEAN did not respond and spent the next few years apparently ignoring the working group’s initiatives. The EPG charged with shaping the ASEAN Charter suggested that the final draft of the charter incorporate a human rights body. ASEAN’s leaders endorsed the EPG’s recommendation. The High-Level Task Force, the successor to the EPG, met with and received presentations from regional civil society and human rights organizations. These groups drew on the 2004 VAP, which committed ASEAN to promote human rights, to argue for their agenda. Civil society organizations active in promoting human rights in Southeast Asia organized under the banner of “Solidarity for Asian People’s Advocacy” (SAPA). On March 3, 2007, the ASEAN meeting of foreign ministers in Cambodia approved the inclusion in the draft charter of a provision that mandated the creation of an ASEAN human rights body. However, by July, the HLTF could not decide on how to insert this provision. It referred the matter to the fortieth ASEAN Ministerial Meeting, in Manila, July 21–August 2, 2007. The foreign ministers of Malaysia, Indonesia, Singapore, Thailand, and the Philippines convinced those of Cambodia, Laos, Myanmar, and Vietnam to accept the measure. Nonetheless, the debate around what this meant and how such a mechanism would work was just beginning. The ASEAN Intergovernmental Commission on Human Rights

Article 14 of the ASEAN Charter committed ASEAN to establishing a regional human rights body but left its terms of reference to be determined by the ASEAN meeting of foreign ministers. They tasked a

The Postcrisis Reform


High-Level Panel with drafting the terms of reference for the ASEAN Intergovernmental Commission on Human Rights. The High-Level Panel presented its recommendations to the ASEAN foreign ministers in July 2009. The terms of reference emphasized the “independence, sovereignty, equality, territorial integrity and national identity” (2.1a) of the ASEAN states, and reinforced the need for noninterference and freedom from external interference before mentioning “principles of democracy and constitutional government” (2.1d), “human rights” (2.1e), or “international humanitarian law” (2.1f). The principles included the “recognition that the primary responsibility to promote and protect human rights . . . rests with each Member State” (2.3), thereby reinforcing the sovereign powers of states. The principles of the AICHR called for an “evolutionary approach” to the development of human rights in ASEAN (2.5). The AICHR consists mostly of current or former government officials, calling into question their independence. The decisionmaking process of the organization follows ASEAN’s established consultation and consensus approach. Amnesty International complained that this configuration “means that each state would be able to reject any criticism of its own human rights record by veto. This could lead either to paralysis or to the adoption of weak positions based on the lowest common denominator” (Ginbar 2010, p. 513). Most representatives of civil society and government within the ASEAN states do not expect the AICHR to be a protective, independent body capable of rendering binding decisions. In a survey, almost 90 percent of respondents attributed the AICHR’s perceived weaknesses to the ASEAN Way of consensusbuilding decisionmaking and the principle of nonintervention (Phan 2009, pp. 477–481). Nonetheless, the AICHR may be a first step toward a more robust human rights regime. As ASEAN’s member states become more stable, democratic, economically developed, and self-confident, the AICHR may push the organization toward being more respectful of human rights and its associated values. At present, the AICHR’s tilt toward traditional norms of sovereignty and nonintervention is in keeping with the direction of the ASEAN Charter. Along with the AICHR, the emerging ASEAN human rights system includes the ASEAN Commission on the Promotion and Protection of the Rights of Women and Children (ACWC) and the ASEAN Committee on the Implementation of the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers (ACMW). The government-appointed representatives in the ACWC and the ACMW tend to be more independent than those appointed to the AICHR. The ACWC benefits from the fact that all the ASEAN states have ratified


The New ASEAN in Asia Pacific and Beyond

the Convention on the Rights of the Child (CRC) and the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), which allow the ACWC to appeal to outside, non-ASEAN sources of legitimacy. The ACMW is constrained by the facts that it is a committee and is dealing with a subject of considerable political delicacy within ASEAN (Clarke 2015, p. 285). On November 18, 2012, in Phnom Penh, ASEAN heads of state adopted the ASEAN Human Rights Declaration (AHRD) (ASEAN 2012; Renshaw 2013). The drafting of the AHRD was another arduous process, with Thailand and Indonesia championing “universal human rights,” compared to Cambodia, Laos, Myanmar, and Vietnam, sometimes in alliance with Singapore, Malaysia, and Brunei, wanting a more conservative declaration. ASEAN foreign ministers and representatives of the AICHR struggled to limit the expectations of civil society organizations, which wanted a document that would dramatically expand the use of “universal human rights” standards in ASEAN. The AHRD promotes individual rights and freedoms, but is careful to balance them with duties of individuals to their communities and the state. It explicitly makes allowance for the “regional and national context” and “different political, economic, legal, social-cultural, historical and religious backgrounds” when defining human rights (art. 7). Articles 10–25 lay out civil and political rights, and refer to “persons” rather than “individuals.” Articles 26–34 lay out economic, social, and cultural rights. Articles 35–38 set out “third-generation rights,” especially the collective right to development. Notably, Article 35 claims that the lack of development cannot justify the violation of internationally recognized rights. The AHRD is a compromise document, one that reflects the sensibilities and perspectives of developing states. Gerard Clarke sees the AHRD as an evolutionary document that is part of “a structured, inclusive and evolutionary process” that will help to “ensure [the] security, well-being and distinctive cultural identities” of the people of Southeast Asia (2015, p. 288). The ASEAN Charter encompasses principles and purposes that, in practice, contradict each other. The ASEAN Charter, as it now stands, is a “maximum achievement” for the organization (Khalik 2008). However, the charter has proven ineffective in promoting the democratic and humanitarian values it has championed. This is exemplified in the AICHR. Since 2012, the start of the latest outbreak of violence against them, the Rohingya people in Myanmar have been subject to systematic violence perpetrated by nationalist Buddhists. This may constitute genocide. The Rohingya are interred in camps in Myanmar and victims of violence and slavery when they manage to escape to other ASEAN

The Postcrisis Reform


states. There is a certain amount of sympathy for the Muslim Rohingya in Indonesia and Malaysia, but they remain exploited and marginalized even in those countries (Human Rights Watch 2013; Kurlantzick 2016). In Thailand in 2014, the military launched a coup that deposed the democratically elected government. In 2016, following the election of President Rodrigo Duterte in the Philippines, police executed more than 2,000 people in the span of a few months, as part of Duterte’s bloody “war” against drugs. Vigilantes, encouraged in their violence by the authorities, killed many more. By December 2016, Filipino authorities sanctioned the murders of more than 6,000 people, with the president promising another 20,000 to 30,000 deaths (ABS-CBN News 2016a; Berehulak 2016). In all of these cases of extreme human rights abuse, the AICHR remained silent. The ASEAN Economic Community The ASEAN Economic Community encompasses earlier ASEAN economic agreements: AFTA (1992), the ASEAN Investment Area (1998), and the ASEAN Framework Agreement on Services (1995) (Hew 2008, p. 21). These agreements continue to develop, furthering the goals of the AEC. The AEC is constituted of four independent and mutually reinforcing “pillars”: a single market and production base, a competitive economic region, equitable regional economic development, and integration into the global economy. The AEC Blueprint (2007) identified specific actions by which to advance economic integration (ASEAN 2008b). The single market and production base (SMPB) promotes the free flow of goods, services, investment, capital, and skilled labor. This base identifies twelve priority integration sectors, as well as food, agriculture, and forestry. The blueprint called for the elimination of nontariff barriers and encouraged measures to facilitate trade and integrate customs through a process called the ASEAN Single Window. This was meant to move goods through customs between ASEAN states in a single stop. It called for the harmonization of standards, technical regulations, and other procedures by adopting international practices; the creation of new agreements; and the implementation of older ones. ASEAN committed to remove substantially all restrictions on trade in services for most service sectors by 2015, through a process of ASEAN Minus X. The AEC Blueprint stipulated that “the process of liberalization should take place with due respect for national policy objectives and the level of economic and financial sector development of the individual members” (ASEAN 2008b, p. 12). Promotion of investment


The New ASEAN in Asia Pacific and Beyond

encouraged the ASEAN private sector to invest in other ASEAN countries and to utilize the various existing government-sponsored economic initiatives. The AEC’s goal was to create a free and open investment regime between the ASEAN member states by 2015. The second pillar, the competitive economic region, is to create a “business-friendly and innovation-supporting regional environment” by developing common policies and mutual cooperation in areas such as competition policy, consumer protection, intellectual property rights, and agricultural and financial services. The economic plan encourages interconnectivity and technical interoperability among national computer systems, with the goal of developing a regional information infrastructure. It also promotes energy cooperation. Equitable economic development concentrates on closing the gaps between the ASEAN states. The Initiative for ASEAN Integration (IAI), launched in November 2000, is meant to assist Cambodia, Laos, Myanmar, and Vietnam to integrate with their more developed neighbors and expand their capabilities in the areas of economic competition, foreign direct investment (FDI), and the expansion of the private sector, while meeting public goals. ASEAN recognizes that free trade regimes can exacerbate existing inequalities and development gaps if these are not mitigated through specific policies (Soesastro 2003). Integration into the global economy is the final AEC pillar. It encourages a common ASEAN approach to external economic relations and aims to increase ASEAN’s participation in “global supply networks.” ASEAN has been at the forefront of efforts to promote “open regionalism,” a policy of not differentiating between insiders and outsiders when negotiating trade agreements. The ASEAN Development Fund (ADF), with contributions from ASEAN member states, is tasked with attracting resources from ASEAN and non-ASEAN sources, such as the Asian Development Bank (ADB), the World Bank’s International Finance Corporation (IFC), external partners, and the private sector, to develop regional infrastructure. The ASEAN Secretariat is supposed to strengthen its research and planning capabilities in order for it to carry out its many new functions and responsibilities in relation to the AEC. Finally, the plan calls for a comprehensive communications strategy that explains the benefits and challenges of the AEC to government officials, the private sector, and the general public. In 2010 the ASEAN Trade in Goods Agreement (ATIGA), and in 2012 the ASEAN Comprehensive Investment Agreement (ACIA), came into operation. The AEC became officially operational on December 31, 2015, along with the rest of the ASEAN Community.

The Postcrisis Reform


Evaluating the ASEAN Economic Community At first glance, the ASEAN Economic Community appears to be making significant movement toward its goals. It has specific deadlines it is supposed to meet as part of its progress, making it far more structured and organized than the other ASEAN communities. On paper, ASEAN states have removed most customs duties. ASEAN has signed numerous intrastate framework agreements and mutual recognition arrangements (MRAs) to further the goals of the AEC. However, the appearance of progress is less substantial than it appears. Not all of the ASEAN members have ratified these agreements. Moreover, because of ASEAN’s diversity and its members’ sensitivities in various economic sectors, the ASEAN states agreed that the liberalization of goods, capital, and skilled labor would proceed at rates comfortable to each member. Thus, the AEC’s “strategic schedule,” the timetable for progress, is loaded with “flexibility” provisions, words and phrases that function as loopholes, allowing states to decide whether to implement their commitments (Severino and Menon 2013, p. 12). ASEAN designed “scorecards” to keep track of the AEC’s progress. It published scorecards covering the 2008–2009 and 2010–2011 periods, but stopped making them publicly available after 2011. ASEAN continues to use data from the scorecards in its publications, but the scorecards are unreliable. They do not provide a pillar-by-pillar breakdown of progress and rely on self-assessment—that is, what member states choose to report to ASEAN. They are based on aggregate data gathered from the geographical area around the ASEAN states’ capital cities. Thus, the extent of AEC implementation in other parts of the countries is unknown. The country-based scorecards are confidential, meaning there is no way for states to exert peer pressure on each other or for working committees and experts using the information to assess and address implementation bottlenecks in particular states. Finally, the scorecards measure the implementation of the various priority actions in the AEC Blueprint but not the follow-through. Thus, there is no evaluation of whether the ends of economic integration are achieved, and they do not take account of the “flexibility” provisions (Menon and Melendez 2015, pp. 1H–4H). The scorecards seem to show that ASEAN has made significant progress toward realizing the AEC. Careful studies done by outside experts, however, indicate that the AEC remains far short of its stated goals. There is no doubt that intra-ASEAN trade is increasing in its overall value. But there is also no doubt that overall ASEAN trade remains focused on extra-regional actors. In 2015, the share of intra-ASEAN exports compared to extra-ASEAN exports was


The New ASEAN in Asia Pacific and Beyond

25.8 percent to 74.2 percent. Extra-ASEAN imports were 78.1 percent to 21.9 percent. Table 3.1 shows the overall growth in intra-ASEAN trade between 2005 and 2013. There is a clear and substantial improvement in the value of trade, especially for the major ASEAN states. However, the percentage of intra-ASEAN trade has increased by only 4–5 percent from what it was in the 1980s. In 2013, the ADB did a detailed study of business attitudes within ASEAN toward the AEC (Hu 2013). The survey found that businesspeople in Southeast Asia have a very low awareness of the AEC and its presumed benefits. Southeast Asian businesses see the main barriers to greater intra-ASEAN trade as different regulatory standards between countries, excessive regulation, and lack of information. AFTA removed the vast majority of tariffs on intra-ASEAN trade, but one-third of regional businesses still say tariffs are a major barrier. This belief may indicate that the businesses are unaware that the tariffs no longer exist or that state officials continue to charge them tariffs despite regional agreements. This finding reinforces the point that most businesses do not utilize AFTA or other regional economic arrangements. According to the WTO, only 20 percent of intra-ASEAN trade utilizes AFTA preferential tariffs; the rest takes place under the most-favored-nation provisions (Menon and Melendez 2015, p. 5). This indicates the difficulties of proving the origin of a good, given the production fragmentation and high import content of major regional exports. The costs and inconvenience of the paperwork involved often makes using AFTA inconvenient for ASEAN businesses (Ravenhill 2008, 2010). More than 70 percent of intra-ASEAN trade is tariff-free and less than 5 percent is subject to tariffs of more than 10 percent (Menon and Melendez 2015, p. 5). However, as tariffs have fallen across the ASEAN

Table 3.1 Overall Intra-ASEAN Trade, 2005–2013 ($ billions) Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam


2.3 1.2 33.2 0.5 65.8 2.5 16.0 124.1 45.4 13.9


2.6 1.2 37.9 0.8 73.3 3.3 18.4 146.1 50.5 18.7


3.2 1.5 46.1 0.8 82.6 4.8 20.9 160.9 57.9 23.2

Source: ASEAN Yearbook 2015.


3.7 1.9 68.2 2.2 85.1 5.6 21.5 183.2 69.4 29.5

2009 2.5 2.1 52.4 2.5 72.1 5.3 17.4 22.1 59.3 22.1


2.3 2.4 80.5 2.6 95.3 5.7 27.8 181.2 86.6 26.7


2.9 3.0 99.4 2.5 108.3 7.2 23.7 205.7 111.5 34.3


3.3 5.1 95.7 2.3 115.8 7.5 24.8 209.6 99.5 38.3


4.5 4.1 94.7 3.7 119.0 9.9 22.8 206.7 103.7 39.5

The Postcrisis Reform


states, nontariff barriers (NTBs) have replaced them as the protective measure of choice among ASEAN countries. There has been little progress reducing NTBs, despite state commitments to the AEC. It is difficult to evaluate NTBs, because it is hard to identify which of them are acting as effective barriers to trade and new NTBs emerge regularly, often in response to efforts to curtail them. The 2008–2009 global economic downturn gave a further impetus to protectionism between ASEAN states. Economic integration will continue, but it will likely be limited to those ASEAN economies advanced enough to address NTBs and possessing “highly integrated production networks” (Severino and Menon 2013, p. 15). Myrna Austria (2013) suggests combating NTBs by involving the private sector in identifying NTBs, subjecting all nontariff measures to compliance reviews to ensure that they are transparent and nondiscriminatory, and establishing a web-based facility to report, monitor, and eliminate NTBs. ASEAN has undertaken numerous measures to facilitate trade, including agreements on interstate transport and Internet connectivity. ASEAN has adopted a customs code of conduct and the ASEAN 6 plus Vietnam are testing the ASEAN Single Window. Malaysia, Singapore, and Thailand are piloting an ASEAN customs transit system to facilitate the movement of goods by road. Numerous other measures are in play. However, the effectiveness of these measures varies across states and the nonbinding nature of these commitments continues to stymie AEC deadlines. The liberalization of intra-ASEAN trade in services is critical to the economic integration of the region, but the existing measures to facilitate this, including the commitments in the AEC Blueprint and the AFAS, are not sufficient to fulfill this goal. The existing mutual recognition arrangements for specific professions are riddled with loopholes and fail to facilitate the movement of professionals within the region (Chia 2013). Most service liberalization has followed from unilateral policy initiatives rather than multilateral agreements. The ASEAN states have signed on to a number of agreements, including the AFAS, the General Agreement on Trade in Services (GATS), and bilateral measures designed to improve service mobility. However, local laws and regulations, such as limits on foreign equity holdings, landownership, and labor mobility, undermine these measures. The ASEAN Minus X formula, which permits states to liberalize according to their readiness and by national legal impediments such as restrictions on landownership, foreign equity, work permits, and the like, has also hampered liberalization. Under present circumstances, the AEC is unlikely to make any substantial difference to trade in services in


The New ASEAN in Asia Pacific and Beyond

ASEAN for the foreseeable future. The ASEAN states remain unwilling to open up their politically sensitive, and sometimes lucrative, service sectors to foreign competition. Other domestic factors that continue to impede the integration process in ASEAN “include vested interests seeking continued government protection from regional competition, historical animosities, territorial disputes, mutual suspicions, [and] the cultural diversity of the people inhabiting the region” (Severino and Menon 2013, p. 19). So far, the AEC has largely failed to achieve its goal of attracting more FDI to the ASEAN region; indeed, FDI has not returned to its pre1997 levels. The problem with FDI is, again, that the market has driven investment in the ASEAN states rather than intergovernmental agreements; businesses are largely unaware of the AEC; and the major impediments to attracting foreign investment lie in the domestic policies of member states, something that ASEAN can do little to address. If realized, the AEC could improve economies of scale for foreign investors, rendering ASEAN economies more attractive, but it is the business climate within each ASEAN country that is most important for attracting investment. The greatest obstacles to improving business climates may not be stated government policies but the implementation of those policies (Das 2017). The AEC deals with the movement of skilled labor. As of 2015, ASEAN had established MRAs dealing with only eight professions. In September 2014, ASEAN established the ASEAN Qualification Reference Framework (AQRF), which will allow comparisons in skills across borders. How well this is implemented remains to be seen. The great majority of laborers moving between ASEAN states are low- and semiskilled labor, categories not covered by the AEC. In January 2007, ASEAN signed its Declaration on the Protection and Promotion of the Rights of Migrant Workers, but the implementation of this measure has been poor. It is difficult to see how ASEAN can create a working economic community when the AEC excludes most labor. Competition policy and the protection of intellectual property rights are important parts of the second pillar of the AEC, the creation of a competitive economic region. These measures help to improve the business environment within ASEAN countries. Again, competition policy and intellectual property rights protection are national in scope and are outside the AEC’s authority. Common policies in these areas across the ASEAN states would be the best way to make progress. However, different levels of economic development and competing national interests between the ASEAN countries mean that any common policy in these areas is difficult to achieve.

The Postcrisis Reform


The third pillar involves creating a region of equitable economic development. The economies of Cambodia, Laos, and Myanmar have improved considerably as part of ASEAN, but they are still far behind the other ASEAN states. This holds back the institution’s overall development. ASEAN adopted the ASEAN Framework for Equitable Development (AFEED) in 2011, and the Initiative for ASEAN Integration promotes subregional economic zones (SRZs). Analysis of the four existing SRZs between ASEAN states shows that they can improve economic interaction and connectivity. However, economic progress for the poorer ASEAN states depends almost exclusively on their own initiatives (Menon and Melendez 2015, pp. 10–11). The fourth pillar, integration into the global economy, is a goal that the most successful ASEAN states have already attained. According to the MGI Connectedness Index, five ASEAN countries rank among the world’s fifty most globally integrated countries: Singapore (ranked 4), Malaysia (18), Thailand (36), the Philippines (45), and Vietnam (48) (Menon and Melendez 2015, p. 11). As noted earlier, economic integration has been driven by market forces, not government agreements (Ravenhill 2009). Since 2000, multilateral economic integration has slowed and this has led to a proliferation of bilateral FTAs across the region. Razeen Sally (2013) evaluates all of the free trade agreements that ASEAN states have entered into since 1992—the AFTA agreement, the ASEAN Plus One (China) FTAs, and the separate agreements between individual ASEAN members and non-ASEAN states—and concludes that all these agreements are deficient, largely because they cannot address NTBs. This has significant implications for the Regional Comprehensive Economic Partnership, discussed in the next chapter. Lack of progress in these areas is attributable to the different stages of development of the ASEAN states and the numerous political, economic, cultural, and other divisions that characterize the region. A return to unilateral trade liberalization would be much more effective and beneficial than efforts to create regional integration. The various existing FTAs do not promote regional, Asian, or even global integration. Indeed, the bilateral trade pursuits of some ASEAN states, notably Singapore and Thailand, tend to work against regional integration (Dent 2005, 2006). In terms of dispute settlement mechanisms, ASEAN is particularly weak. These mechanisms are essential to creating an AEC. The existing ASEAN Protocol on Enhanced Dispute Settlement Mechanism is modeled on the WTO Dispute Settlement Understanding, but with significant differences. In the AEC, the ASEAN Summit is supposed to act as a dispute settlement body but, given its limited operation, many unresolved disputes cannot be referred to it. In addition, the ASEAN economic


The New ASEAN in Asia Pacific and Beyond

dispute settlement mechanism has weak financial institutional support. ASEAN members prefer to submit their disputes to the WTO rather than to any ASEAN bodies. While there may be sound political reasons for this reluctance, this failure to use the available regional institutional mechanisms hobbles the development of the AEC (Hsu 2013). The ASEAN Political Security Community The ASEAN Political Security Community Blueprint (2009) had its proximate origins in Bali II (2003), the ASEAN Security Community Plan of Action (2004), and the Vientiane Action Programme (2004). ASEAN leaders requested the drafting of the APSC Blueprint after signing the ASEAN Charter at the thirteenth ASEAN Summit in Singapore in 2007. Some of the “Characteristics and Elements of the APSC” are as follows: It is envisaged that the APSC will bring ASEAN’s political and security cooperation to a higher plane. The APSC will ensure that the peoples and Member States of ASEAN live in peace with one another and with the world at large in a just, democratic and harmonious environment. The APSC shall promote political development in adherence to the principles of democracy, the rule of law and good governance, respect for and promotion and protection of human rights and fundamental freedoms as inscribed in the ASEAN Charter. It shall be a means by which ASEAN Member States can pursue closer interaction and cooperation to forge shared norms and create common mechanisms to achieve ASEAN’s goals and objectives in the political and security fields. . . . It promotes a people-oriented ASEAN in which all sectors of society, regardless of gender, race, religion, language, or social and cultural background, are encouraged to participate in, and benefit from, the process of ASEAN integration and community building. (APSC Blueprint 2009, pp. 1–2)

The blueprint reiterates ASEAN’s commitment to the renunciation of violence and aggression, recognizes the need to address nontraditional security issues, and upholds existing ASEAN security instruments such as the ZOPFAN Declaration, the Treaty of Amity and Cooperation in Southeast Asia, and the Southeast Asia Nuclear Weapons Free Zone (SEANWFZ). The APSC Blueprint (2009, p. 2) identifies three key characteristics it intends to develop: 1. A rules-based community of shared values and norms. 2. A cohesive, peaceful, stable, and resilient region with shared responsibility for comprehensive security.

The Postcrisis Reform


3. A dynamic, outward-looking region in an increasingly integrated and interdependent world.

Creating a “rules-based community” means the ASEAN states must cooperate in ways that “strengthen democracy, enhance good governance and the rule of law, and . . . promote and protect human rights and fundamental freedoms” (APSC Blueprint 2009, p. 2). The AICHR, discussed earlier, falls under the auspices of the APSC. The blueprint calls on the ASEAN states to establish programs to develop strategies to strengthen the rule of law, judicial systems, and legal infrastructure in member states. It seeks to prevent and combat corruption and promote the ideas of democracy and tolerance for religious and cultural diversity among ASEAN youth in schools, while still remaining aware of the educational differences and perspectives between ASEAN members. The APSC expects ASEAN to adjust its institutional framework to comply with the ASEAN Charter and lists the practical and procedural actions that would be necessary to achieve this goal. It promotes strengthening cooperation under the TAC and encourages non-ASEAN countries to accede to the TAC. The blueprint calls for the full implementation of the Declaration on Conduct of Parties in the South China Sea and work toward adopting a regional Code of Conduct in the South China Sea. It encourages the implementation of the SEANWFZ treaty and supports the establishment of an ASEAN Maritime Forum. The second major section of the APSC Blueprint focuses on building a “cohesive, peaceful and resilient region with shared responsibility for comprehensive security” (APSC Blueprint 2009, p. 8). Comprehensive security includes economic, sociocultural, and environmental aspects of development. The blueprint promotes confidence-building measures and preventive diplomacy and “respect for territorial integrity, sovereignty and unity of ASEAN Member States,” in accordance with international principles, including the UN Charter (APSC Blueprint 2009, p. 9). It specifically identifies “separatism” as a threat to ASEAN members and supports developing an appropriate dispute settlement mechanism within ASEAN. It supports the development of postconflict peacebuilding abilities and the need to strengthen ASEAN’s centrality in regional cooperation and community-building, especially within institutions such as the ASEAN Plus Three, the East Asia Summit, and the ASEAN Regional Forum. The Coordinating Conference for the ASEAN Political-Security Community Plan of Action coordinates the implementation efforts of various ASEAN-associated sectoral bodies, such as the ASEAN Law Association or the ASEAN University Network, that can be utilized to


The New ASEAN in Asia Pacific and Beyond

further the APSC’s goals. The Coordinating Council reports to the APSC Council, which is responsible for the implementation of the APSC Blueprint. The secretary-general of ASEAN provides annual progress reports to the ASEAN Summits. Finances to support the APSC will come from the ASEAN member states, and the ASEAN Development Fund, dialogue partners, donor states, international agencies, the private sector, and NGOs. The Blueprint calls for an extensive communications strategy at the national and regional levels. Many of the initiatives described by the APSC Blueprint fall solidly under the authority of the ASEAN member states. The desire to promote democracy and good governance, even the drive to become involved in humanitarian assistance in conflict-prone areas, are examples of ASEAN moving into the sovereign domain of its member states. At the same time, the APSC Blueprint calls for respect for traditional ASEAN norms of noninterference and the need for respect for territorial integrity. As in the case of the ASEAN Charter, ASEAN’s stated objectives work against each other. The most ambitious aspect of the APSC idea is the notion that it can shape the norms and values of ASEAN (Severino 2006, pp. 357–361). The APSC is a concerted effort to make ASEAN a “security community.” A security community is distinguished by a “real assurance that the members of the community will not fight each other physically, but will settle their disputes in some other way” (Acharya 2009, p. 18). At present, most analysts agree that ASEAN is not a security community. The possibility of violence between some ASEAN states is real, if unlikely. Alan Collins argues that ASEAN is a “security regime”: A security regime exists where states interact through norms of behaviour that, by regulating or constraining their behaviour, create a degree of certainty in their relationship. This certainty enables regime members to pursue more than their short-term self interest . . . the regulating effect of the norms enables states to accept short-term sacrifices, which they hope will yield long-term gains. . . . A security regime therefore dampens or mitigates the effects of the security dilemma by reducing the uncertainty statesmen have about others’ intentions. (2007, p. 206).

In 2002, Tobias Nischalke assessed the extent to which considerations of “regional community” affected the actions of ASEAN states and concluded that “ASEAN has constituted a rule-based community that is based on the norms of regional conduct enshrined in the Treaty of Amity and Cooperation. Those norms that underpin the status quo in the region have provided the foundation for community action rather than shared identity” (p. 112).

The Postcrisis Reform


Angela Floristella describes ASEAN as a “regional security partnership” (RSP): “In formal terms, a RSP is formed through a long process that consists of declarations, agreements and treaties, in which the principles regulating the peaceful relations of the region, as well as the main problems posing a threat to peace, are presented. . . . RSPs are conceived as an intermediate venture on the road towards a possible, though uncertain, creation of a security community” (2015, p. 39). These formulations allow for the possibilities of tension and conflict within ASEAN while recognizing the self-interests that have enabled ASEAN states to avoid serious conflict. Can the APSC become the basis of a full security community? I have already discussed the problems associated with the AICHR. These questions are examined further through two case studies: the conflict between Thailand and Cambodia over Preah Vihear, and ASEAN’s continuing problems with “regional haze.” In both of these cases, the narrow national interests of the ASEAN states undermined efforts to act as a “security community.” The Case of Preah Vihear

In 2008, Thailand and Cambodia became engaged in a series of conflicts over disputed territory in the vicinity of the ancient temple complex of Preah Vihear, located 400 kilometers north of Phnom Penh, Cambodia (International Crisis Group 2011). The International Court of Justice (ICJ) awarded Preah Vihear to Cambodia in 1962. Thailand accepted the ICJ ruling but continued to dispute an area comprising 4.6 square kilometers around the temple complex, which the ICJ did not address. In 2001, Cambodia approached the United Nations Educational, Scientific, and Cultural Organization (UNESCO) to propose that Preah Vihear be designated a World Heritage site. In 2007, the World Heritage Committee agreed, in principle, to Cambodia’s request. Thailand supported the process. At the time, the Thai government was a military-backed entity, established after the September 2006 coup that deposed Thai prime minister Thaksin Shinawatra. In December 2007, the People Power Party (PPP) won Thailand’s national election. The PPP was a proxy for the deposed Thaksin. The new government maintained the same position on Preah Vihear as that of its predecessors. In May 2008, the Thai and Cambodian governments agreed that Thailand would support Cambodia’s appeal to the World Heritage Committee, on the understanding that the listing of the site would not prejudice Thailand’s claim to the disputed area. In June 2008, the two governments signed a communiqué to formalize the main agreement. The People’s Alliance for Democracy (PAD), a Thai opposition


The New ASEAN in Asia Pacific and Beyond

movement that had emerged to resist Thaksin’s influence in Thai politics, seized on the communiqué to claim that Thailand was at risk of losing its territory. The PAD’s charges stirred up a nationalist fervor in Thailand. On July 8, 2008, the World Heritage listing became official. While Cambodia celebrated the news, in Thailand the issue became a political football. The PAD argued that the Thai-Cambodian communiqué on the Preah Vihear complex was a treaty and that the government had violated the constitution by approving a treaty that altered Thai territory without parliamentary approval. The government argued that the communiqué was not a treaty, but its opponents succeeded in having the Thai courts, which were part of the anti-Thaksin coalition, halt the June 17 cabinet resolution that had accepted the communiqué. This ruling set the legal precedent that anything signed related to the border could be potentially illegal, complicating any further bilateral talks on the dispute. On September 29, 2008, the National Anti-Corruption Commission (NACC) voted to file criminal charges against Thailand’s prime minister Samak Sundaravej and foreign minister Pattama Noppadon for their role in supporting the communiqué. The two men were found guilty of wrongful or dishonest exercise of authority. On November 13, the NACC announced that it “had found Samak and 28 Cabinet ministers guilty of violating Article 190 of the Constitution for endorsing the joint communiqué without parliamentary approval” (International Crisis Group 2011, p. 10). On December 2, 2008, the Constitutional Court dissolved the PPP and two smaller parties, claiming they were involved in electoral fraud. The leader of the opposition Democrat Party, Abhisit Vejjajiva, came to power on December 17, 2008. The change in government delayed any further diplomatic negotiations. Ahead of the World Heritage listing in July 2008, Thai soldiers occupied a pagoda in the disputed area, prompting Cambodia to occupy other historical sites and increasing tension between the two countries. By October 2008, the Thai and Cambodian militaries exchanged rocket-propelled grenades, mortars, and gunfire, resulting in the wounding of one Cambodian and two Thai soldiers. By late October, 600 Thai troops were facing 2,800 Cambodian soldiers. In April 2009, hostilities between the two sides resulted in the deaths of at least one Thai soldier and two Cambodians. Another flare-up of violence began on February 4, 2011, and lasted three days. This clash killed four Cambodian soldiers and one police officer and displaced 13,000 people. The temple itself was slightly damaged. On Thailand’s side, the skirmishes killed two soldiers and two civilians and displaced 20,000 villagers. Thailand used cluster munitions against Cambodia, the first

The Postcrisis Reform


known use of these weapons since a 2008 convention restricting them came into force in August 2010.2 Thailand accused Cambodia of indiscriminately firing rockets into Thai territory. Between April 22 and May 5, 2011, Cambodia claimed that Thailand fired more than 50,000 artillery shells up to twenty kilometers into its territory. Eight Cambodian and three Thai soldiers were killed; dozens of troops and civilians were injured on both sides. Thailand claimed nearly 10,000 civilians were displaced; Cambodia indicated that more than 45,000 people were forced to flee on its side of the border. The Wall Street Journal accused Thailand of “going rogue” and its domestic political turmoil as “damaging regional stability” (International Crisis Group 2011, p. 23; Weatherbee 2012, pp. 11–14). On February 22, 2011, ASEAN’s foreign ministers met informally in Jakarta to discuss the conflict. Indonesia, then the chair of ASEAN, agreed to send observers and increase its diplomatic efforts to resolve the dispute. The conflict dominated the discussion at the next ASEAN Summit in Jakarta, in May 2011. Thailand would not agree to Indonesian observers until Cambodia withdrew troops from land Cambodia regarded as its own. Indonesia continued its efforts at mediation, fearing that inaction would be more damaging to ASEAN’s long-term health than trying nothing and allowing the conflict to fester. However, Thailand obstructed the efforts to get the Indonesian observers into the area. The United States warned Thailand that its behavior was risking damage to ASEAN. On April 28, 2011, Cambodia asked the ICJ to interpret its 1962 judgment, which had given Preah Vihear to Cambodia. On July 18, the ICJ unanimously rejected Thailand’s argument that the court had no jurisdiction in the dispute. It then issued a number of provisional measures, including demanding that the Indonesian observers be allowed access to the area, that Thailand stop obstructing Cambodia’s access to the complex, and that both parties should refrain from actions that might “aggravate or extend the dispute” (International Crisis Group 2011, p. 25; Traviss 2012). By the time of the court decision, Thailand was in a transition in government. National elections in June brought to power the Pheu Thai Party, led by former prime minister Thaksin Shinawatra’s younger sister, Yingluck. This brought about an immediate change in the rhetoric and the mood between Thailand and Cambodia. Cambodian leader Hun Sen indicated that relations between the two countries would enter a “new era.” Nonetheless, the dispute left confusion within Thailand over the extent to which its diplomats and foreign ministry officials could negotiate on behalf of the country. In the end, the violence over


The New ASEAN in Asia Pacific and Beyond

Preah Vihear killed seventeen people and displaced 36,000 villagers (Mancini 2013, p. 1). ASEAN and the Management of the Conflict

There were numerous opportunities for ASEAN to intervene in the Preah Vihear dispute. However, ASEAN did not become involved for three reasons: “its members were reticent to get involved in “internal affairs”; the country chairing the organization was reluctant or unable to lead; and Thailand resisted “internationalization” of the dispute” (International Crisis Group 2011, p. 13). In July 2008, Cambodia asked the UN Security Council (UNSC) for an urgent meeting to discuss its conflict with Thailand. At the time, Vietnam was the chair of the UNSC. ASEAN intervened to stop the UNSC from dealing with the conflict and argued the dispute should be returned to the existing regional forums. Singapore’s foreign minister, George Yeo, described Cambodia’s appeal to the UNSC as a threat to ASEAN’s credibility because turning to outside actors could harm ASEAN’s international standing. Between 2008 and 2011, suggestions to include ASEAN in the resolution of the conflict, including invoking the ASEAN Charter, were fruitless. Indonesian foreign minister Marty Natalegawa conducted shuttle diplomacy between Bangkok and Phnom Penh outside the parameters of ASEAN. In August 2010, Thailand’s prime minister Abhisit Vejjajiva told a group of protestors that he was willing to use force to resolve the dispute with Cambodia. In response, Cambodia wrote to the UN Security Council president on August 8, 2010, claiming that regional bilateral mechanisms were not serving their function and asked for greater international involvement. On August 14, Cambodia called on ASEAN to invoke the ASEAN Charter and mediate the conflict. Vietnam, the ASEAN chair, solicited Thailand’s perspective. Thai foreign minister Kasit Piromya indicated that bilateral communications between Thailand and Cambodia were continuing and should be allowed to proceed, in accordance with “the general will of the ASEAN family” (International Crisis Group 2011, p. 15). ASEAN remained inactive and ineffective. The UN Security Council informally met with the involved parties to discuss the conflict on February 7, 2011, after the conflict escalated into further violence. Indonesia’s Natalegawa indicated that ASEAN, led by Indonesia as the new ASEAN chair, was willing to take an activist role in resolving the dispute. The UNSC returned the dispute to ASEAN while reserving the right to act later. During the ASEAN Summit in Jakarta in May 2011, divisions within ASEAN became apparent. Malaysia blamed Thailand for creat-

The Postcrisis Reform


ing and exacerbating the problem. Singapore indicated that it disagreed with Indonesia’s activist approach to the conflict. “Outgoing Foreign Minister George Yeo remarked to a diplomat that the organization should not be the regional referee, but rather should stay on the sidelines of the conflict and avoid the risk of failure” (International Crisis Group 2011, p. 24). Many of the ASEAN states shared the concern to maintain ASEAN’s principle of noninterference, despite the threat the conflict posed to regional peace. The Preah Vihear dispute is instructive. According to many observers, ASEAN’s foremost achievement is that it has prevented war/violent conflict between its members. If true, this is a considerable accomplishment, given the region’s violent past. Faced with a smallscale but violent conflict between two members, it was reasonable to expect ASEAN to do all it could to end the conflict and maintain this reputation. Instead, it did very little and even attempted to minimize its involvement. This avoidance happened at the same time ASEAN was, ostensibly, attempting to increase its levels of institutionalization in an ASEAN Community and pursuing the values expressed by the ASEAN Charter (Busbarat 2011). The incident left the impression of an organization that was strong on rhetoric and short on action. It proved that ASEAN’s normative influence over its members was weak. It also demonstrated the fundamental importance of domestic political factors in understanding ASEAN. Thailand’s domestic politics turned what could have been a shared celebration of a mutual cultural achievement between two ASEAN states into a violent flashpoint (Pongsudhirak 2011). The problem was not resolved through the offices of ASEAN but rather when Thailand’s government changed. If ASEAN were incapable of addressing a “small-scale” dispute between two of its members, it would likely have much greater difficulty managing more serious regional and extra-regional disputes. There are numerous other intra-ASEAN border conflicts that have the potential to provoke violence between ASEAN states. Thailand has ongoing border disputes with Myanmar and Laos; Vietnam and Cambodia are at odds; and numerous regional states have disagreements over maritime borders (Wain 2012). 3 While the ASEAN states have done a generally good job of managing these conflicts, they continue to simmer and create complications. The Philippines’ claim to Sabah, for example, continues to muddy relations with Malaysia and has prevented the Philippines from opening a consulate in Sabah to assist its own citizens. As the Preah Vihear situation demonstrated, there is no guarantee these will not become active disputes.4 Aarie Glas notes that “interstate militarized disputes remain a persistent feature” (2017, p. 833). ASEAN


The New ASEAN in Asia Pacific and Beyond

states frequently exchange harsh words and threats over their various territorial disputes. However, these rarely become violent; Glas argues that the “habits of peace” have taken hold. The Preah Vihear dispute, however, was an example of both sides effectively abandoning the ASEAN Way. This created an onus on ASEAN to act, if only to encourage its members to follow the proven formula. It did not. The Regional Haze

As noted in Chapter 2, ASEAN was unable to manage the regional haze event of 1997. In the years since, “regional haze” became a regular economic and environmental calamity. Putting aside the horrible damage to Indonesia’s rainforests and the costs in human life, lost economic potential goes into the billions. In 2002, ASEAN signed the Agreement on Transboundary Haze Pollution; in 2014, Indonesia became the last of the ASEAN states to ratify the agreement (Library of Congress 2014). The Haze Agreement has proven ineffective. As part of the agreement, Singapore provided Indonesia with satellite information on the location of fires. Indonesia grudgingly accepted the information but failed to act. ASEAN’s failure to deal with this persistent problem is a testament to the organization’s limitations and a reiteration of the role of domestic politics in shaping regional institutional action. In general, ASEAN has proven ineffective in dealing with the numerous environmental catastrophes facing the region, the result of a lack of human and material resources, a failure of governance, and the influence of patronage and the pursuit of narrow national self-interest (Elliott 2004; Varkkey 2014). Indonesia is proud of its democratic status, but it has failed to curb powerful and destructive economic interests. ASEAN’s inability to address a persistent, avoidable, and consequential problem effectively damages its claim to regional efficacy. The ASEAN Sociocultural Community At the thirteenth ASEAN Summit, in Singapore on November 20, 2007, ASEAN agreed to develop an ASCC Blueprint. This blueprint was tabled at the fourteenth ASEAN Summit, in Cha-Am, Thailand, in March 2009. According to the blueprint: “The primary goal of the ASCC is to contribute to realising an ASEAN Community that is people-centred and socially responsible with a view to achieving enduring solidarity and unity among the nations and peoples of ASEAN by forging a common identity and building a caring and sharing society which

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is inclusive and harmonious where the well-being, livelihood, and welfare of the peoples are enhanced” (ASCC Blueprint 2009, p. 1). The ASCC aspires to improve the region’s quality of life through cooperative activities and the promotion of environmentally responsible development. It supports strengthening human development, social welfare and protection, social justice and rights, ensuring environmental sustainability, building the ASEAN identity, and narrowing the developmental gap between ASEAN states. The blueprint identifies numerous priorities, objectives, and initiatives meant to create these characteristics within the ASEAN Community. Under human development, the document emphasizes the need for ASEAN states to promote and invest in education and lifelong learning for their citizens. Among its objectives are universal access to primary education, the promotion of early child care and development, and educational programs and activities that enhance an ASEAN identity. The blueprint calls for actions to, among many other things, promote interASEAN university contacts, develop and offer courses on ASEAN studies at all levels of educational development, and bring together ASEAN youth. It wants citizens of member states to be proficient in the English language to enable direct communication between citizens and encourage business contacts. The blueprint calls for investing in human resource development, particularly in Cambodia, Laos, Myanmar, and Vietnam. Its suggested actions include enhancing the capacity of governments to monitor labor markets and human resource indicators and design social impact policies. The blueprint promotes information and communication technology, and measures to improve ASEAN citizens’ access to these technologies. It advocates the creation of a network of science and technology centers of excellence across the region that will share research facilities, technology transfer and commercialization, and undertake joint research and technology development. Under social welfare and protection, the blueprint calls for poverty alleviation, the creation of social safety nets, protections from the negative impacts of integration and globalization, enhancing food security and safety, access to health care and promotion of healthy lifestyles, improving the capability to control communicable diseases, ensuring a drug-free ASEAN, and building disaster-resilient nations and safer communities. As in the case of the other two blueprints, the ASCC Blueprint plans to achieve its objectives through combinations of implementing preexisting agreements and creating agreements and linkages across borders that will facilitate contact and communication between ASEAN citizens and states. According to the ASCC Blueprint: “ASEAN is committed to promoting social justice and mainstreaming people’s rights


The New ASEAN in Asia Pacific and Beyond

into its policies and all spheres of life, including the rights and welfare of disadvantaged, vulnerable and marginalised groups such as women, children, the elderly persons with disabilities and migrant workers” (2009, p. 11). It calls for the development of social security standards in each ASEAN member state and the facilitation of research and data collection in matters related to disadvantaged groups in order to better formulate and coordinate policy. The ASCC seeks to expand efforts to implement existing agreements to protect and promote the rights of migrant workers, among many other measures. It supports corporate social responsibility, guided by public policy based on other international agreements and guidelines. ASEAN must “effectively address global environmental issues without impinging on competitiveness, or social and economic development” (ASCC Blueprint 2009, p. 14). The document allows for different social and economic conditions affecting the responsibilities that states have to environmental concerns. ASEAN must respond to climate change and its effects. The ASCC supports environmentally sound technology and promoting quality living standards in ASEAN group areas. Other measures include harmonizing environmental policies and databases between ASEAN states, promoting sustainability in the use of coastal and marine environments, natural resources and biodiversity, water resources, and forest management. Building an ASEAN identity includes measures promoting ASEAN awareness and a sense of community through broad-based educational programs and regional activities that draw in the public. The ASCC Blueprint calls for the preservation and promotion of ASEAN cultural heritage. ASEAN should convene the ASEAN Social Forum and the ASEAN Civil Society Conference on an annual basis to examine the best ways to increase interaction and dialogue between ASEAN and ASEAN civil society. ASEAN should develop a public information network and databases to increase the flow of information in the region. The final category of concern is strengthening civil society connections between the ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) and Cambodia, Laos, Myanmar, and Vietnam, largely through building on existing cooperative agreements and relationships within ASEAN. The ASCC Council is accountable for the overall implementation of the blueprint, coordinating with other ASEAN Community Councils where necessary. The actual task of implementing the plan falls to the relevant ASEAN ministerial bodies or equivalent governmental actors whose activities fall within the ambit of the ASCC. The blueprint

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expects these governmental bodies to mobilize resources and undertake national measures to meet ASCC commitments. The ASEAN secretarygeneral reports on the progress of the implementation of the ASCC Blueprint to the ASEAN Summit and other relevant governmental structures. ASEAN member states; the dialogue, sectoral, and development partners; regional and international institutions (e.g., the ADB, World Bank, and UN); regional and international foundations; and the private sector should provide the financial resources, expertise, research, and capacity-building necessary for the implementation of the ASCC. The political will to make the difficult decisions that will further economic integration and security cooperation ultimately rests upon a foundation of shared values and norms that are rooted in a common identity. Thus the ASCC may be the most important part of the interlocking communities structure of the ASEAN Community (Severino 2006, pp. 368– 370). However, the ASCC Blueprint reads like an idealistic wish list. Most of its initiatives and objectives lie firmly within the domestic political realm of the ASEAN member states. Among ASEAN members, there is no significant support for the implementation of policies that bear directly on some of the most fundamental domestic functions of government—that is, educational policies, social welfare initiatives, and domestic economic development, and the blueprint is fuzzy on how these goals are to be achieved. Moreover, the available evidence indicates that the sense of “regional identity” among the public in Southeast Asia is weak. Christopher Roberts (2007) conducted an important survey on “affinity and trust in Southeast Asia” between May 2004 and July 2007. The first part of the survey consisted of over a hundred in-depth interviews with representatives of the academic and governmental elites in most ASEAN countries. The second part was a communal survey of 819 people conducted in all the ASEAN capital cities except Yangon, the capital of Myanmar at the time. The fact that the communal surveys were done in the capital cities probably indicates that “the true extent of regional affinity and trust is likely to be somewhat lower” elsewhere in the ASEAN states than indicated in the survey (Roberts 2007, p. 85). Nonetheless, in some instances, more work needs to be done among the elites than other groups to build a regional identity. In the communal survey, at least 40 percent of the respondents recognized ASEAN countries to be part of their region. However, most respondents did not extend that identification to all ASEAN states. The survey indicated a low level of understanding of what ASEAN is among the general public. In the communal survey, 37.5 percent of respondents said they could trust all the ASEAN countries, but 36.1 percent were unsure and 26.4 percent answered no. Myanmar, Singapore,


The New ASEAN in Asia Pacific and Beyond

and Indonesia were the most distrustful of their neighbors. It is particularly disturbing that Singapore and Indonesia fall into this category. Both are original members of ASEAN and played prominent roles in the institution’s creation and evolution. However, as Roberts noted: The most disconcerting statistics arose from the respondents within the “elite survey” sample. When forced to provide only a “yes” or “no” answer to the question of “trust,” 59.8 percent of regional elites said they couldn’t trust other countries in Southeast Asia to be “good neighbours.” Furthermore, when the sample was split between the government respondents and the academic respondents, it was the academics who were the most cynical with 66.7% answering “no” to the question of trust. (2007, pp. 87–88)

When asked if they could envision circumstances causing armed conflict within ASEAN within the next twenty years, 50 percent of elites indicated no, while 22.3 percent indicated yes and 27.7 percent were unsure. Regarding whether the principle of noninterference is as important now as a decade ago, 46.7 percent replied yes, 39.1 percent no, and 14.1 percent unsure; 61.1 percent of government respondents replied yes to the question. Interestingly, 54.8 percent of the elite sample felt that diplomatic interventions between ASEAN states could be justified.5 The survey indicated that 75 percent of elites said that democracy was not personally important to them. The amount of time a country has been a member of ASEAN did not significantly affect the extent of trust between the communities and the elites of Southeast Asia. Roberts suggests that further economic development and institutional capacity is necessary before higher levels of policy coordination and interest harmonization can take place within ASEAN. The Roberts survey demonstrates the need for educational programs and other initiatives to address the issues of trust and familiarity across the region, as advocated by the ASCC (Azmawati and Quayle 2017). A 2007 survey of attitudes and awareness toward ASEAN among university students across the ASEAN states found considerable variation in enthusiasm and knowledge about ASEAN across the region. Students in poorer states tended to be more aware of and positive toward ASEAN than those in the wealthier countries. Most students were positively disposed toward ideas of economic integration, but this does not necessarily mean they shared a strong identification with the ASEAN region (Thompson and Thianthai 2007). The same researchers did an update of the 2007 survey in 2014 and found broadly similar results. The Roberts survey is old, but its findings have been confirmed and supported by more recent studies (Fabrian 2016). A study released by

The Postcrisis Reform


the ASEAN Secretariat in 2013 indicated that 76 percent of ASEAN citizens “lack a basic understanding” of what ASEAN is and what it is trying to do. However, 81 percent of ASEAN citizens are “familiar with” the organization, surpassing the expectations of the survey’s authors. The survey involved 2,200 respondents from the general public and 261 in-depth interviews with business leaders across the capital cities of the ten ASEAN states. Only 55 percent of business respondents had “a basic understanding” of ASEAN; 30 percent lacked basic knowledge of the organization. While the general feeling toward ASEAN in the ASEAN states is positive, it is evident that the depth of knowledge and engagement with the region among most ASEAN citizens is low (Domingo 2013). The fact that there are low levels of trust and affiliation between ASEAN’s publics is not surprising; the average Southeast Asian citizen has little knowledge of ASEAN and is far more concerned with navigating local identities and conflicts. As Table 3.2 indicates, Southeast Asia is an exceptionally diverse region. Within states, ethnocentrism, tribalism, religious identities, and regionalism remain powerful political forces (Palatino 2013). An ASCC and the sense of genuine regional identity that it embodies are decades away from being a reality, at best. Evaluating the ASEAN Community On November 17, 2011, ASEAN issued the Bali Declaration on ASEAN Community in a Global Community of Nations, or the Bali Concord III (ASEAN 2011). This concord reiterated ASEAN’s commitment to creating a vibrant economic, security, and sociocultural community. ASEAN declared the establishment of an ASEAN Community, on schedule, effective December 31, 2015. It then immediately issued new blueprints for the three ASEAN communities to achieve by 2025. As the preceding discussion has shown, however, ASEAN’s progress toward an economic community has been spare. ASEAN has decades of work before it can create substantial political/security and sociocultural communities (Roberts 2012, p. 184). Historically, ASEAN has projected an image of unity and efficacy to the international community that far outstrips the organization’s actual abilities. The ASEAN Community and its associated pillars are an effort to refurbish ASEAN’s tarnished image to the world. However, the disjuncture between what the ASEAN Community is and what it is presenting itself as being risks repeating the events of 1997. The ASEAN Community cannot successfully contend with any crisis that ASEAN may face in the foreseeable


The New ASEAN in Asia Pacific and Beyond

Table 3.2 Distribution of Major Ethnic Groups in the ASEAN Countries Number of Ethnic Groups/Tribes

Number of Languages and Dialects Spoken




























Vietnam Total





Five Largest Ethnic Groups/Tribes (% of population)

Malays (45.1), Chinese (15.7), Filipino (8.0), Dusun Kadazan (7.1), Iban (5.6) Khmer Central (85.3), Vietnamese (4.2), Chinese (4.1), Cham (2.2), Kampuchea Krom (1.7) Javanese (38.2), Sunda (15.6), Madura (3.4), Minangkabau (1.8), Bugis (2.5) Lao (44.3), Khmu (8.8), Hmong Daw (3.7), Hmong Njua (3.2), Phu Thai (2.9) Malay (41.6), Chinese (25.2), Indian (7.5), Iban (2.8), Minangkabau (2.1) Burmese (56.1), Shan (8.5), Karen (9.0), Rakhine (3.9), Yangbye (3.6) Filipino (26.9), Visayan (20.0), Illocano (9.1), Hiligayno (7.7), Bikol Central (4.2) Chinese (63.7), Malay (13.9), Tamil (5.6), Filipino (2.9), Thai (1.1) Thai (81.5), Chinese (10.8), Malay (2.5), Khmer (1.7), Pu Thai (0.7) Vietnamese (84.5), Chinese (2.7), Tay (1.9), Muong (1.5), Khmer Central (1.4)

Source: Adapted from Joshua Project Peoples Data, This table appears in Moorthy and Benny 2012, p. 1064. Note: Percentages may not sum to 100 due to rounding.

future. ASEAN’s efforts to reestablish its regional presence and institutional centrality risk exposing its considerable limitations. The weaknesses of the ASEAN Community are not surprising. Indeed, the idea that ASEAN would try to create an ASEAN Community is, in itself, highly problematic. What, exactly, does ASEAN mean by “community”? What does it hope to achieve? Throughout its history, ASEAN leaders and observers have consistently denied that ASEAN has had any ambition to form an organization analogous to the European Union. Indeed, the question of how ASEAN’s development has been influenced by the EU is the subject of a vibrant debate, though most observers now concede that the influence has been minimal (Jetschke and Murray 2012). If the ASEAN states never intended to

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form a true supranational entity, why did they create the impression that this was their goal? Their insistence that “ASEAN centrality” be at the core of regional institutions invites the belief that ASEAN will deal with regional crises. Yet as the preceding discussion has shown, it cannot. Why create expectations that it cannot meet? Anja Jetschke (2009) argues that ASEAN designs institutions it cannot use because it is mimicking the EU integration process. The EU is the “gold standard” for regional organizations, so following its steps reinforces international legitimacy. However, ASEAN cannot be the EU. It is an organization built around a network rather than bureaucratized institutions because the looser structure allows for its international legitimacy while enabling ASEAN’s political survival as an organization. There is considerable merit to Jetschke’s analysis, but ASEAN has created an impression of institutionalization that it cannot meet. The problem facing ASEAN is the same one that it has always confronted: the tension between ASEAN’s need to ensure the protection and advancement of the sovereign powers of its member states versus its aspiration to make itself a unified entity that can strongly represent its members’ shared interests on the world stage. Ideally, these objectives work together. This is the ASEAN idea of the regional resilience, with the entire region as strong as each individual link in the chain. In practice, these two goals often work against each other. Yet it would be unfair to judge the organization too harshly for this. Critics of ASEAN often appear to assume that making ASEAN a strong organization that can advance human rights and speak as a single bloc on regional issues is simply a matter of “political will.” It is not this simple. ASEAN’s need to acquiesce to the sovereign desires of its members is a necessity; if the organization pushed too hard, if it refused to compromise or made demands of its members that some or all refused to meet, it would fall apart. To most of the ASEAN states, the organization is valuable because of how it enhances member state sovereignty and because of the regional voice it provides on the international stage. However, if faced with a choice between pursuing their national goals or an ASEAN/regional interest, ASEAN states have chosen national interest time and again (Nischalke 2000). The organization’s norms encourage this path. Thus, advocates of the AICHR or the ASEAN Charter who argue that these bodies/instruments are as assertive as they can be, at this point in time, are correct. The ties that bind ASEAN states to each other are weak not just because its members refuse to make them stronger. The ties are weak because they cannot be stronger—not without a long, arduous process of community-building and economic development that can be encouraged, and even partially shaped, by


The New ASEAN in Asia Pacific and Beyond

ASEAN, but cannot be rushed. The compromises of the ASEAN Community and its constituent parts are necessary and fundamental to the survival of the institution. The ASEAN Charter’s many references to the need to maintain nonintervention, state sovereignty, and a respect for national differences are not simply a concession to the newest members of the organization. Thailand stands as a cautionary tale of why even the most established ASEAN states may not want to compromise the nonintervention principle. In the late 1990s, Thailand suggested that ASEAN adopt “flexible engagement,” a practice that would allow ASEAN to criticize member states that were following policies detrimental to the region or other members. Most of the other ASEAN states rejected this initiative, opting instead for “enhanced interaction,” which allows member states to criticize each other over harmful policies, while allowing the organization to remain silent. Thailand’s human rights record has deteriorated dramatically since 2000. Years of political unrest, including military coups in 2006 and 2014, have demonstrated that even the most (apparently) stable ASEAN country may destabilize under the right conditions. Thailand’s experience makes the argument for maintaining the nonintervention principle for all of ASEAN’s members. Even as the ASEAN Charter and other documents promote democracy and implicitly condemn coups, ASEAN stays silent. The elements of a very nascent security community are present in Southeast Asia, but they are overpowered by far more basic national, ethnic, and religious identities that divide the ASEAN states from each other. In Europe, the experience of two devastating world wars, the enforced peace of the Cold War, and the economic difficulties faced by individual states in rebuilding in the post–World War II era led most Western European states to support the supranational project that culminated in the European Union (Milward, Brennan, and Romero 1993). The European states acquiesced to the idea of pooling their sovereignty, albeit with considerable qualification. Even so, in the wake of the financial catastrophe of 2008, the EU identity proved very fragile. Germany pursued punitive measures against Greece that devastated that country’s society and economy and were decidedly counterproductive. It is unlikely that Germany would have done the same thing to ethnic Germans. In 2016, Britain voted to leave the EU, carried on a wave of xenophobia and a backlash against the perceived economic and social costs of globalization and Europeanization on the working class. If Europe, with its far greater unity, homogeneity, wealth, and institutional effort, has found it difficult to build a durable regional identity and institutional structures, the obstacles are exponentially

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greater for Southeast Asia, a far more diverse, politically unstable, and economically challenged region. Cambodia, Laos, Myanmar, and Vietnam joined ASEAN with the expectation that their domestic politics would not be subject to regional scrutiny. They have not changed their minds on this point (Jones 2008, p. 284). ASEAN states are still capable of engaging in violent conflict, as demonstrated by the Preah Vihear situation. ASEAN’s continuing failure to deal effectively with the regional haze problem reinforces the perception that the organization is more of a “talk shop” than an effective instrument. ASEAN’s failure to address Myanmar’s attacks on the Rohingya underline the limits of its new human rights initiatives and institutional structures. Observers have noted that ASEAN’s individual members are often willing to sacrifice aspects of sovereignty to non-ASEAN organizations and agreements. The ASEAN states are more apt to turn to outside bodies to resolve disputes than ASEAN’s own instruments. These decisions may reflect pragmatic political decisions—using the ASEAN instruments may fan regional tensions—but the effect is to forestall ASEAN’s development. The ASEAN states’ commitment to sovereignty is at the foundation of ASEAN’s structures. This norm supersedes all other norms within ASEAN. As long as it persists, ASEAN’s development into a more coherent and effective community will be slow, halting, and reversible. This does not mean that the other norms and ideals expressed within the ASEAN Community and its associated instruments are inconsequential. They plant seeds that may, eventually, guide ASEAN’s collective development along a different path. They have the potential to moderate and inform the actions of ASEAN states. However, for the foreseeable future, they cannot successfully contend with the nonintervention norm. If ASEAN’s prospects of forming a coherent community are so small, then why does the organization put such effort into its development? Several answers appear likely. First, ASEAN is a statement of aspirations. The ASEAN scholars who fasten on the organization’s function as a norm incubator overstate the effectiveness of this process but not the intent. For example, when the Philippines suggested that ASEAN establish an ASCC, it undoubtedly realized that the final product would be little more than a statement of ideals. But this is important; it gives a sense of where many of the regional states wish to go and it sets parameters for acceptable regional conduct. States may debate and violate these norms, but they stake out normative parameters. At the least, states will need to engage and address the norms if/when they violate those norms. Just as significant, ASEAN’s efforts to create an ASEAN Community send a message


The New ASEAN in Asia Pacific and Beyond

to the international community. The ASEAN Community attempts to create an impression of regional unity. The ASEAN Community is, at present, completely incapable of dealing with any kind of regional crisis. If such an event were to happen, ASEAN would face the embarrassment of, once again, failing to live up to the expectations it created. At some point, ASEAN’s ability to fail when external expectations of it are the highest will permanently damage the institution’s reputation. But if ASEAN fails to present itself as more than it is, it will undermine its influence on the international stage. It will never become more than it is. Conclusion ASEAN aspires to be the basis of an integrated economic, political, security, and sociocultural community. If it can achieve this, then it will be the cornerstone of one of the wealthiest, most dynamic regional blocs in the world. However, this vision is unsustainable. The day when ASEAN will constitute a meaningful community is far in the future. For now, ASEAN will be engaged in building its pillars. Even economically, its efforts are of limited efficacy. The economies of its member states remain outwardly oriented. Many of ASEAN’s initiatives strengthen its external ties over its internal. The considerable obstacles faced by ASEAN in creating an effective ASEAN Community are not reasons to dismiss the organization. The ASEAN Charter, the AICHR, and all the other ASEAN structures are necessary first steps in a long-term process that may, eventually, bear fruit. The limitations faced by ASEAN in its development are very reasonable and expected, given the many internal strains, forces, and actors its members need to negotiate. ASEAN’s development will be more reactive than proactive. It will result from external stimuli, not internally generated imperatives. Historically this is in keeping with the pattern of ASEAN’s past development. ASEAN states’ continuing commitment to narrow conceptions of nonintervention and state sovereignty is likely unsustainable. Many issues of concern demand regional, not national, responses. The reality of climate change and its associated economic, political, social, and environmental effects demands regional management and is probably the single most important challenge facing the modern world. The problem of economic inequality is rapidly emerging as the major, defining economic question of the twenty-first century and requires a radical redefinition of global capitalism. Technological change may alter the path of global development. These are challenges that the ASEAN states must face collectively.

The Postcrisis Reform


Notes 1. In 2010, the ASEAN Secretariat employed approximately 70 “openly recruited professionals,” 110 technical staff, and 120 local support staff (ADB Institute 2015, p. 186). 2. Neither Thailand or Cambodia are parties to the cluster munitions convention, but Indonesia has signed the document and has committed to encouraging others to join the treaty. 3. Stephen Druce and Efir Baikoeni (2016) hold out the Indonesia-Malaysia dispute over the Ambalat Block as a textbook case of ASEAN functioning exactly as its most optimistic supporters believe. When the rhetoric over the Ambalat Block became too overheated, the leaders of the two countries drew on their personal ties, developed through their contact in ASEAN, to reduce tensions and resolve the dispute. 4. To further complicate the situation, Barry Wain argues that the various territorial disputes that ASEAN states have taken for resolution to the ICJ have served to embitter the losers and cast into doubt the appeal of the ICJ as the place to peacefully settle border disagreements. This creates even more pressure on ASEAN to facilitate a process that can effectively address territorial disputes (2012, pp. 54– 57). Alexandra Traviss (2012) also questions if the ICJ overextended its authority in declaring some of the areas around PV as “demilitarized zones.” 5. Lee Jones (2007) has strongly argued that ASEAN’s norm of nonintervention was repeatedly violated in the organization’s dealings with Cambodia between 1979 and 1999. This is definitely true, but it suggests that the application of the principle must be modified: ASEAN adheres to the norm of nonintervention when dealing with other ASEAN states; Cambodia was not a member during most of this period. This selective interpretation of the norm may help to account for why ASEAN appeared to have no crisis of principle when dealing with the US invasion and occupation of Iraq in 2003.

4 Regional Institutionalism

Asia Pacific responded to the Asian economic crisis by creating multilateral institutions designed to protect the region from future economic disruption. ASEAN was at the heart of these regional initiatives, largely by default. The following discussion assesses ASEAN’s role in a number of major regional institutions: the ASEAN Plus Three and its offshoots, the Chiang Mai Initiative Multilateralization and the Asian Bond Markets Initiative; the Regional Comprehensive Economic Partnership; the East Asia Summit; and the ASEAN Regional Forum.1 Though the ARF predates the Asian economic crisis, it remains a key to ASEAN’s regional role. By successfully placing itself at the center of Asia Pacific multilateral development, ASEAN ensured it plays a major role in the political, economic, and security environments of the larger region. These multilateral projects also provide energy and purpose to ASEAN’s efforts at institutional rejuvenation and more reasons for the ASEAN states to unite within their organization. ASEAN was able to seize a central role in building regional institutionalism because of the tensions and contests for leadership between the great powers of the Pacific. Nonetheless, ASEAN is constrained in its ability to manage the regional environment. ASEAN sees itself as being in the “driver’s seat” of regionalism, but it is more like a cab driver, taking direction from others in the back seat (Tang 2006, p. 208). It may be steering the vehicle, it may be a necessary intermediary, but it is not deciding the final destination. In the aftermath of the global financial crisis of 2007–2009, a more awkward problem emerged: in Asia, the crisis was successfully managed by states acting on their own. The



The New ASEAN in Asia Pacific and Beyond

new regional institutions did nothing to address the financial catastrophe (Beeson 2011; Emmers and Ravenhill 2011; Katada 2011). This may have undermined the logic and reduced the urgency of creating regional economic institutions and called into question the ASEANcentered multilateral institutional superstructure. The ASEAN Plus Three In the early 1990s, Malaysian prime minister Mohamed Mahathir proposed that Asia Pacific states create an East Asian Economic Group (EAEG). This grouping would consist entirely of Asian states and enable them to coordinate strategies in dealing with other regional trade blocs. The United States opposed the idea, and other Asian states were wary. In the end, Mahathir’s idea led to the creation of the ineffectual East Asian Economic Caucus (EAEC) within APEC, but went no further. In 1995, ASEAN approached China, Japan, and South Korea to join it in representing Asia at the first Asia-Europe Meeting, to be held in 1996 (Hidetaka 2005, p. 216). The meeting went well and the Asian states agreed to continue to consult and coordinate with each other in preparation for future ASEMs, including the next one, scheduled for 1998. This began a process of senior officials meeting on a regular basis to coordinate policies and work on the ASEM agenda. In mid-1997, the economic crisis hit Asia. The leaders of ASEAN and the three big Asian powers—China, Japan, and South Korea—met informally in Kuala Lumpur in December 1997 to commemorate the thirtieth anniversary of ASEAN. The ongoing crisis and the West’s unhelpful response led Mahathir to suggest that the leaders meet again the following year, at the next ASEAN Summit. China was anxious to build economic ties with Southeast Asia, and Japan could not afford to be left behind in the quest for regional leadership. APT heads of government began meeting at ASEAN Summits; APT economic, finance, and other high-level officials began to meet on a regular basis. From these tentative beginnings, the APT became the vanguard of regionalism in Asia Pacific (Beeson 2003; Stubbs 2002; Terada 2012). In September 1997, as the economic crisis built momentum, Japan proposed the creation of a $100 billion Asian Monetary Fund (AMF) to provide much-needed liquidity to the faltering regional states (Narine 2003). The United States strongly opposed this idea, arguing that any alternative financial instrument to the IMF would undermine a coordinated global response to the crisis and possibly worsen the situation by lending funds without stringent policy conditions. China and South

Regional Institutionalism


Korea also opposed the Japanese idea because they were leery of Japan enhancing its regional prestige and leadership credentials (Grimes 2011b, pp. 293–294). China, seeking access to the World Trade Organization at the time, was also reluctant to antagonize the United States (Ciorciari 2011, pp. 927–928). As the crisis unfolded, China chose not to depreciate its currency, earning it the appreciation of its Asian neighbors. It offered $1 billion in aid to Thailand when the baht collapsed, and it contributed to rescue packages for some of the other affected states (Terada 2012, p. 370). In October 1998, Japan made $30 billion available to the crisis-struck regional states through the New Miyazawa Initiative. Asian states were more inclined to remember the failure of Japan’s AMF initiative than its subsequent efforts at regional rescue. On November 18–19, 1997, the Manila Framework was developed at a meeting of the Asian finance and central bank deputies in Manila (Sussangkarn 2010, p. 4). The Manila Framework was designed to enhance Asian regional cooperation while still maintaining a central role for the IMF in the regional bailout (Grimes 2009a, pp. 78–82). The Asian crisis and the US reaction undermined regional confidence in the United States and convinced a generation of Asian policymakers that the region needed to protect itself from future economic and financial upheaval. The Hanoi meeting of the APT finance ministers in March 1999 was the first time that the term “ASEAN Plus Three” came into wider usage. The finance ministers set three goals for the APT: strengthening the regional bond markets, increasing regional cooperation in monetary policy, and creating an emergency financing facility. The Chiang Mai Initiative (CMI), the Asian Bond Markets Initiative (ABMI), the Asian Bond Fund (ABF), and the Economic Review and Policy Dialogue (ERPD) were the results. To date, the APT’s most impressive accomplishment has been the Chiang Mai Initiative and its successor, the Chiang Mai Initiative Multilateralization. Since the inauguration of the CMI in 2000, the APT expanded dramatically in areas of functional cooperation. As Takashi Terada notes: “APT now covers 20 policy areas with 57 bodies, including one summit, 14 ministerials, 19 senior officials, two directors-general, 18 technical-level meetings and two other track meetings, and has established itself as a fully fledged regional institution in East Asia. . . . APT is now viewed as the “main vehicle towards achieving an East Asian Community” (2012, p. 364). The APT was the first regionwide institution to exclude the United States. Terada notes three reasons for this: the US disengagement during the Asian financial crisis, Malaysia’s decision to exclude non–East Asian countries from the first APT summit in 1997, and the “benign


The New ASEAN in Asia Pacific and Beyond

neglect” of the United States toward the APT (2012, p. 365). Usually, financial institutionalism follows economic integration, but the APT developed without prior regional economic integration. A final distinction is that ASEAN is—nominally—the leader of the APT. The large regional powers are on the sidelines and treated as guests of the smaller regional states. The competition for leadership and influence between China and Japan means that ASEAN has assumed a central role in the APT, albeit by default. Whether ASEAN can actually lead the APT is debatable. Nonetheless, the APT is the regional institution in which China is willing to invest the most time and effort and faces the least competition for influence (Hund 2003). The Chiang Mai Initiative and the Chiang Mai Initiative Multilateralization

The Chiang Mai Initiative of 2000 expanded the existing ASEAN Swap Arrangement (ASA) from $200 million to $1 billion and included bilateral swap arrangements (BSA) between the ASEAN members of the ASA and China, Japan, and South Korea (Sussangkarn 2010, p. 5). The CMI allowed the Plus Three states to offer support to the ASEAN Five countries (Indonesia, Malaysia, Philippines, Singapore, and Thailand) and each other in the event that a currency crisis occurred again. The BSAs allowed a country in crisis to swap US dollars from its CMI lender for an equivalent amount of its own currency. At the end of the swap period, the borrowing country would return the dollars with interest, set at the IMF borrowing rate. By October 2003, regional states had negotiated thirteen BSAs totaling roughly $35 billion (Sussangkarn 2010, p. 5). States could claim up to 10 percent of the total amount of a swap without linkage to an IMF program for 180 days. To obtain the rest of the swap, the country needed to be under an IMF program or about to enter one. At first, most of the BSAs were one way. In 2005, the Istanbul Agreement agreed to convert the BSAs to two-way arrangements. Some BSAs were also asymmetrical, involving lending from the wealthier to poorer states. Most BSA arrangements involved US dollars, though China insisted on using local currencies, calculated in the dollar equivalent. In 2005, the APT finance ministers agreed to reform the CMI by creating “a multilateral reserve arrangement under a single operating contract” (Ciorciari 2011, p. 934; Dent 2013). Rather than having numerous separate BSAs, “multilateralization” meant the APT states would contribute to a single fund that all members could draw on in times of need, based on a weighted formula. China and Japan fought over the right to be the largest contributor to the new institution, delaying the implemen-

Regional Institutionalism


tation of multilateralization. In 2008, in Madrid, Spain, the finance ministers agreed to increase the CMI to at least $80 billion. Eighty percent of the total would be contributed by the Plus Three countries, with the remaining 20 percent contributed by the ASEAN states. China and Japan agreed to a CMIM funding formula whereby each country contributed 32 percent to the CMIM, but China’s 32 percent included Hong Kong’s contribution (3.5 percent). South Korea contributed 16 percent of the CMIM. In May 2009, spurred on by the global financial crisis of 2007– 2009, the APT finance ministers increased the facility to $120 billion, creating a fund one-sixth the size of the IMF at the time. The APT ministers worked out individual country contributions and their borrowing multipliers. The borrowing quota of each country is equal to its contribution times the multiplier. The ministers agreed that they would decide the most fundamental issues of the CMIM—questions such as membership, changing borrowing multipliers and contributions, terms of lending, and the like—by consensus. They would decide other issues, such as lending, renewal, and default, by a two-thirds majority vote. A vote in favor of disbursement obligates member states to contribute funds proportionate to the percentage of their contribution, barring financial exigency or legal barriers preventing loans to another state. Each CMIM economy starts with 1.6 basic voting shares. Additional shares are obtainable based on the size of the country’s financial contribution. Collectively, the Plus Three economies control nearly 72 percent of the voting power (Ciorciari 2011, pp. 939–940). Individually, Japan and China are one ASEAN Five country (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) short of exercising a veto. The CMIM is designed to address balance of payments and shortterm liquidity problems for its members and to “supplement existing international financial arrangements” (Ciorciari 2011, p. 936). The institution has no physical offices, save for the ASEAN Plus Three Macroeconomic Research Office (AMRO), located in Singapore. The CMIM’s organizational structure is spare. The APT meetings of finance ministers take place on the sidelines of the regular Asian Development Bank meetings in May of every year. Below the finance ministers is the ExecutiveLevel Decision-Making Body (ELDMB), which consists of deputy-level finance and central bank officials from the APT states. This body oversees AMRO and handles the day-to-day operations of the CMIM. The ministers and central bankers signed the Chiang Mai Initiative Multilateralization agreement in December 2009. On March 24, 2010, the CMIM came into effect. The central banks of the APT agreed to contribute $120 billion (increased to $240 billion in 2012) to a multilateral swap facility when called upon to do so. The banks only transfer funds


The New ASEAN in Asia Pacific and Beyond

to CMIM once the group approves a swap request. In contrast to other regional financial arrangements, the CMIM does not pool or manage the contributions from its members. The funds are available only when needed. This arrangement avoided tension between central banks that had different investment priorities. CMIM’s borrowers can renew their loans every 90 days for up to 720 days. The central banks participating in a swap deliver the money directly to the borrower on a bilateral basis, rather than going through a central administrator. CMIM loans funds at an interest rate equal to 1.5 percent above the London Interbank Offered Rate (LIBOR). The interest rate increases 0.5 percent every 180 days to a maximum of 3 percent above the LIBOR rate (Ciorciari 2011, p. 931). The lending states have the right to opt out of participating in a swap before the vote on the swap activation, if the ELDMB approves. The central banks that remain in the swap must make up the difference, so long as this does not exceed their contribution limits. This provision allows APT states to avoid making loans that they have legitimate reasons to question. Under current conditions, each of the major ASEAN Five states has access to about $22.8 billion in total from the CMIM (Siregar and Chabchitrchaidol 2013, p. 4) (see Table 4.1).

Table 4.1 CMIM Contributions and Purchasing Multiples Financial Contribution ($ billions)

Plus Three 192.00 Japan 76.80 China 76.80 PRC 68.40 Hong Kong 8.40 South Korea 38.40 ASEAN 48.00 Indonesia 9.104 Thailand 9.104 Malaysia 9.104 Singapore 9.104 Philippines 9.104 Vietnam 2.00 Cambodia 0.24 Myanmar 0.12 Brunei Darussalam 0.06 Laos 0.06 Total


Share (%) 80.00 32.00 32.00 28.50 3.50 16.00 20.00 3.793 3.793 3.793 3.793 3.793 0.833 0.100 0.050 0.025 0.025


Purchasing Multiple 0.5 — 0.5 2.5 1.0 — 2.5 2.5 2.5 2.5 2.5 5.0 5.0 5.0 5.0 5.0

Maximum Swap Amount ($ billions) 117.30 38.40 — 34.20 6.30 38.40 126.20 22.76 22.76 22.76 22.76 22.76 10.00 1.20 0.60 0.30 0.30


Source: CMIM Agreement, .wp403.enhancing.effectiveness.cmim.amro.pdf?sequence=1. This table (adapted here) is found in Siregar and Chabchitrchaidol 2013, p. 6.

Regional Institutionalism


When the APT first created the CMI, only 10 percent of its funds could be dispersed without an IMF plan in place. In 2005, this allocation was increased to 20 percent. Shortly after the CMIM’s inauguration, the limit was increased to 30 percent, with the intention of considering increasing the exemption to 40 percent by 2014, if conditions merited. In 2014, the CMIM decided to leave the exemption at 30 percent. The members of the APT are aware of the political traps involved in lending to each other (Ciorciari 2011; Siregar and Chabchitrchaidol 2013, p. 11). The Plus Three countries wish to ensure that their resources are allocated in a fiscally and economically prudent manner but the smaller economies of the APT bristle at the idea of being subject to conditions determined by the powerful states of the region. The ASEAN countries are particularly sensitive to being under the economic (and, by extension, political) domination of the large regional states. The IMF link began as a way to ensure a certain amount of discipline on the part of the borrowers without the lenders having to take the politically dangerous position of setting conditions (Grimes 2009a, pp. 85– 102). The IMF was willing, able, and accustomed to playing the role of international enforcer. The linkage to the IMF also assuaged the fears of the United States and other Western powers that the Asians were planning to create an alternative form of financial institutionalism. Nonetheless, defending Asia from the instability of the global financial system—and, by extension, the IMF—is at the heart of the CMIM. Yet it is not clear that such a separation is politically possible. When the global economic crisis of 2007–2009 began, some Asian countries faced short-term liquidity shortfalls.2 South Korea and Singapore arranged for lines of credit from the US Treasury, rather than go to the CMI. Some observers explain this action by arguing that, after the economic crisis, the IMF was so politically toxic in Asia Pacific that no Asian state could take the risk of utilizing the CMI if it meant approaching the IMF (Katada 2012, p. 132; Sussangkarn 2010, pp. 10–11). Other observers argue that the actions of South Korea and Singapore demonstrated their lack of faith in the CMI and the continuing structural power of the United States (Grimes 2011a, pp. 90–91; Rethel 2014). South Korea’s apparent defection caused both China and Japan to offer Korea equivalent amounts of support at their trilateral summit on December 12, 2009, but the Koreans never followed up on these offers. Whatever the explanation, the fact that Korea turned to the United States before turning to its neighbors underlines the limitations of current East Asian regionalism (Grimes 2009b, p. 13). This failure helped to convince Asian states of the need to consolidate the CMIM and further refine the institution.3


The New ASEAN in Asia Pacific and Beyond

If the explanation of IMF toxicity is correct, then the CMIM must loosen its connection to the IMF if it wishes to become a credible regional financial institution, or many of its members may never use it. Reducing the IMF link has other potential benefits. If the CMIM becomes a viable challenge to the established international financial architecture, its members could use it to leverage greater representation and influence at the IMF. The Western powers running the IMF will be more likely to take Asian interests and perspectives into account if they wish to keep Asia fully engaged in the existing structure. The Asian states deny that they intend to use the CMIM in this way, but it is a logical course of action. Asian states have been pushing for the reform of the IMF to reflect the changing global distribution of economic power. Their demands have borne fruit; in 2006, China and South Korea were among four countries allocated more IMF shares because their economic clout was grossly underrepresented within the fund.4 The IMF leadership has officially disavowed the traditional policy of giving the directorship of the IMF to a European and Asians are much more prominent in the upper echelons of the Fund. As wealthy Asian states gain greater say in the IMF, they may lose interest in regional institutions. Even so, this would still complicate the regional dynamic, since these states will be implicated in IMF policies that may be applied to Asia in the future. AMRO began operating in May 2011. The AMRO Agreement of October 2014 made it an independent international organization; the treaty came into effect in February 2016. AMRO is designed to help creditors detect vulnerabilities in potential borrower economies and to help those economies avoid future crises by strengthening their policies and institutions.5 Choosing a director for AMRO required compromise between China and Japan. In April 2011, China and Japan agreed to split the position for the first three-year term. AMRO employs a senior staff of ten experts (including a director and two deputy directors) hired on the basis of merit, overseeing a staff of about fifty economists. An advisory panel of six prominent “wise men,” three from ASEAN and three from the Plus Three states, offers advice. Nonetheless, Asian states resist providing information to outside actors and resent unwanted criticism and policy advice. These difficulties have rendered past efforts at economic surveillance in the region ineffective. Some states have invoked ASEAN’s noninterference principle as a defense against intrusive monitoring by AMRO. In addition, the idea that AMRO can forestall the use of conditionality by the CMIM depends on AMRO being an independent entity, protected from political interference and considerations, that can assess, fairly and objectively, the economic policies of CMIM members. On the basis of AMRO’s analysis, members following

Regional Institutionalism


unproductive economic policies could be denied CMIM support. This amounts to a form of conditionality. There is no reason to believe that the APT states will allow any regional institution to exercise such a level of oversight over their policies. Moreover, it is unlikely that AMRO could avoid political interference. Japan has said it will only consider weakening the link between the IMF and the CMIM if AMRO proves equal to the task of providing economic surveillance and advice that is followed by the regional states (Grimes 2011b, pp. 301–302). However, pressure to reduce the connection is growing. “In a crisis, political pressure to sever the IMF linkage entirely will be intense, if Asian countries see CMIM as a less onerous lender” (Ciorciari 2011, p. 947). At the end of the day, conditionality of some kind is unavoidable. Even if the CMIM did follow a less onerous lending policy than the IMF, there would still come a point where it would need to enforce conditions for its disbursements. The CMIM symbolizes Asian economic power and independence. It provides leverage as the Asian countries deal with established international financial institutions and it deters currency speculators and other outside economic actors who might attempt to disrupt future Asian economic development. However, if faced with an actual economic crisis, it is unclear how the CMIM would operate. The amount of money that most states could claim from the CMIM is less than they could get from the IMF. To be truly effective, the institution must increase its available funds by at least a factor of three.6 The institutional weakness of the organization operates against its development into a dependable defense in a time of crisis. The CMIM must be able to apply conditionality to its loans, creating the prospect of powerful Asian states dictating policy to smaller states in their times of need—a situation sure to breed regional division and discontent. There is no effective way around these issues. Even if China and Japan were to reach a hegemonic consensus, their shared imposition of regional order would alienate the weaker states and undermine ASEAN. However, the Japan-China rivalry makes such a consensus highly unlikely. Given these problems, it is hard to see how the CMIM can move forward to further its goal of regional independence and collaboration. The Asian Bond Markets Initiative

The Asian Bond Markets Initiative is another critical part of the APT. Along with the Asian Bond Fund, which is sponsored by the Executives Meeting of East Asia Pacific Central Banks (EMEAP), the ABMI assists in the development of local currency bond markets. There are a number


The New ASEAN in Asia Pacific and Beyond

of important reasons for developing bond markets. Ideally, the financial system of a state/region effectively channels wealth from savers to investors, thereby allocating capital to where it is needed. Bond markets can assist in financing large investment projects by spreading the costs and risks of the investment over a large number of investors and a longer period of time. Bonds issued in local currencies by local states can attract investors from across the region, facilitate regional economic and financial integration, and keep Asian savings in Asia. One of the lessons of the Asian economic crisis was that most of the financial risks of the ASEAN states’ economies were centered in the banking system. There were no alternative sources of finance available if banks encountered difficulty. Another problem was that borrowing suffered from a “double mismatch”: “long-term domestically oriented investment projects were being funded through short-term and foreign currency borrowing” (Pradhan et al. 2011, p. 5). Asia was overflowing with domestic savings, but a significant part of those savings were invested in the West and then borrowed back as “short-term, dollardenominated loans and bonds” (Grimes 2009a, p. 169). When the crisis hit, banks called in short-term, foreign currency loans that had increased enormously in value as local currencies collapsed. The banks also made credit prohibitively expensive to industries desperate for financing. The argument for the ABMI and ABF was that bonds deal with these problems: “Vibrant bond markets would create another financing channel, a spare tire that firms could use in case banks once again encountered difficulties. And because domestic bonds would be long-term and in local currencies, they would eliminate the double mismatch problem. Finally, with more active domestic bond markets, firms could reduce their dependence on foreign capital markets” (Pradhan et al. 2011, p. 6). The APT designed the ABMI to study and make recommendations on how to develop regional bond markets. The EMEAP sponsored the ABF to create pan-Asian bonds to facilitate the process. The Asian Development Bank created Asian Bonds Online, a website designed to provide information about the emerging bond market to prospective investors. Individual ASEAN states began the processes of institutional, regulatory, and tax reform necessary to sustain national bond markets. The following discussion will focus on the ABMI, though all of these other components play important roles in supporting Asia Pacific bond markets. The ABMI consists of a set of working groups and a steering committee called the “focal group.” Originally, there were six working groups tasked with facilitating distinct initiatives, but in May 2005 the APT meeting of finance ministers reduced these to four, on the following subjects:

Regional Institutionalism


1. Create new securitized debt instruments (chair: Thailand). 2. Credit guarantee and investment mechanisms (cochairs: Korea and China). 3. Foreign exchange transactions and settlement issues (chair: Malaysia). 4. Rating system and information dissemination (cochairs: Singapore and Japan).

The working groups and the focal group meet bimonthly. Mid-level bureaucrats represent their respective states. Working-group members remain in contact between meetings. They present proposals on their respective issues to the focal group, and some of these become APT initiatives or guidelines for individual states to implement. The ABMI does not have any capacity to implement its proposals. Since 2005, participating countries have presented “self-assessments” to their peers at the focal-group and higher-level meetings. These self-assessments indicate a state’s progress toward meeting the ABMI’s short- and mediumterm goals, but the pace of reform is left to the state. The ABMI process is shaped by domestic political priorities (Grimes 2009a, pp. 160–203). The ABMI’s second important function is to provide liquidity support, demonstration projects, and technical assistance to its members. However, it lacks a budget or a staff, so these measures are dependent on the support of states and multilateral organizations, such as the ADB and World Bank. Ultimately, the ABMI is a very limited structure. It provides a forum in which to discuss bond-related issues, the communication of information, and the transmission of peer pressure. Bond-market development in the region has varied depending on the commitment of individual states. The effort to create a regional bond market, one of the ABMI’s key objectives, has made little progress (Dalla 2012). Evaluating the ABMI’s success is difficult. It does not set numerical targets for its members to accomplish within a specified time and it can only encourage its members to follow its recommendations. Some of these measures are intended for immediate action, while others are short- and long-term. The operations of the ABF also make it difficult to isolate the impact of the ABMI. In its early years, the ABMI focused on increasing diversity among bond issuers, leaving increasing liquidity and removing impediments to investors to the ABF. More recently, APT governments have focused on building market infrastructure, improving cross-border bond transactions, and strengthening their overall financial systems. All of these reforms have contributed to regional bond-market development (Siackhachanh 2012, p. 3).


The New ASEAN in Asia Pacific and Beyond

Since 2003, China’s bond markets have grown from about 25 percent of GDP to approximately 61 percent in 2016, growing in value from about $400 billion to approximately $6.5 trillion and showing sharp increases year to year. In Japan, from 2003 to 2016, the size of the bond market went from about 130 percent to 221 percent of GDP, or $6 trillion to almost $9.8 trillion, after peaking at almost $12 trillion in 2012. However, despite this enormous increase in the size of the bond markets, the initiative has been a mixed success. The great bulk of bonds issued in the region are government bonds; the private sector has contributed relatively little. South Korea is the only Asian state where the value of corporate bonds exceeds government bonds ( Even then, in most of the APT states, a very limited number of corporate actors are issuing and buying bonds. Governments remain the major issuers of bonds. The effort to make bonds a method of saving and investment for the general public seems to have stalled. If we consider only the original ASEAN Five, the growth of bond markets tells a complex story. Relative to GDP, ASEAN Five bond markets have not grown substantially in the years the ABMI has operated. In 2001, the ASEAN Five’s domestic debt accounted for about 20 percent of the emerging world bond market in debt securities, excluding China (Pradhan et al. 2011, p. 6). By 2011, the statistic was the same, though the value of ASEAN Five bonds had increased considerably. In 2003, Singapore’s bond markets were approximately 73.6 percent of GDP; by 2016, they were 77.9 percent, down from 90 percent in 2013. In terms of US dollar value, Singapore’s bonds jumped from roughly $67 billion in 2003 to $221 billion in 2016. In Malaysia, the comparable figures are 95.3 percent to 97.4 percent from 2003 to 2016 and $98.8 billion to approximately $293 billion. In Thailand, in 2003, bond markets hovered at around 40.7 percent of GDP; in 2016, they were around 75 percent. Their value went from about $58.4 billion to $291 billion. In the Philippines, the size of the bond market relative to GDP went from 31.6 percent in 2003 to approximately 38 percent in 2013 to 34.8 percent in 2016. The value climbed from $25 billion to $100 billion to $102 billion. In Indonesia, bond markets declined considerably, from 26.4 percent of GDP in 2003 to about 16 percent by 2016, though their value jumped from $64.4 billion to about $144 billion ( Experts estimate that “a deep and liquid” bond market needs a value of between $100 and $200 billion (Siackhachanh 2012, p. 17). The ASEAN bond markets have grown, but not as rapidly as many experts would like, and their value of GDP has been relatively stagnant in most states. Some observers have argued that the ABMI has failed,

Regional Institutionalism


but there are reasonable explanations for this relatively slow development. First, most of the local currency bonds are issued by governments and, since 2000, regional states have kept their budget deficits low and have had no need to issue additional debt. Corporate bond markets have also failed to expand, staying at between 15 and 18 percent of GDP (Pradhan et al. 2011, p. 6). Policymakers had assumed that the expansion of the bond market would come from the growth of contractual savings schemes such as pension plans. However, across Southeast Asia, contractual savings plans have grown relatively little, and their share of bonds has even declined. Banks have been the major purchaser of bonds, but domestic mutual funds have also exploded in the region since the early 2000s. In Thailand and Malaysia, banks and domestic mutual funds hold assets worth 20 percent to 25 percent of GDP, respectively. This expansion in the mutual-fund market demonstrates that the investor base in Southeast Asia has grown considerably since the 1997 crisis. Nonetheless, the growth in investors has outpaced regional businesses issuing bonds. Asian firms have become more cautious in their investment practices since the economic crisis. The decline in investment is due to “lower returns, greater uncertainty, and altered perceptions of the ease of doing business” (Pradhan et al. 2011, p. 8). Economic uncertainty in Asia through the 2000s reduced the incentive for firms to expand their capacity. Investors have proven warier of investing in regional businesses. At the same time, firms have succeeded in boosting their profitability, enabling them to fund their decreased investment needs from their internal cash generation, meaning that they do not need to seek outside sources of finance. Firms are spending less on construction, which they usually financed by borrowing, and spending more on manufacturing for export, which can be financed in other ways. Across ASEAN, particularly in Thailand, Malaysia, and Indonesia, manufacturing firms rely heavily on equity finance and much less on banks to fund their corporate domestic financing. One study found that “capital accounts represented 53% of the balance sheet for listed Malaysian corporations, while bank borrowing accounted for only 14%; the figures for Thai corporations were similar” (Pradhan et al. 2011, p. 8). Across the ASEAN Five, bank credit and bonds provide only onethird of corporate domestic financing. Within the manufacturing sector, foreign-invested companies also play a major role in providing financing. For example, half of the major 1,100 corporations in Thailand have major foreign investors. The higher the share of foreign ownership, the lower the firms’ reliance on bank loans. Many analysts see the relative weakness of the corporate bond market as a weakness in the Asian bond market. However, Mahmood Pradhan


The New ASEAN in Asia Pacific and Beyond

and colleagues (2011) argue that the fact that the ASEAN Five have managed to create and sustain relatively large and sophisticated bond markets in suboptimal conditions is a worthy achievement. The new bond markets have altered the financial architecture in the region; now, they need the opportunity to realize their potential. Some ASEAN countries have boosted their bond markets through innovative policy initiatives. Malaysia has been extremely successful in issuing Islamic bonds (sukuk, or sharia-compliant bonds), which provide investors with a share of asset returns rather than charging interest. These bonds have attracted investors from across the Islamic world and have made Malaysia, by far, the leading actor in the global market in sukuk. Singapore has encouraged foreign-based firms to issue Singapore dollar bonds in order to compensate for Singapore’s narrow domestic issuer base. Singapore has leveraged its reputation as an international financial center, as well as used tax and regulatory measures, to encourage this practice to strengthen its bond market. While the specifics vary from ASEAN Five country to country, indications are that the number of firms issuing bonds has gradually increased. By the second quarter of 2009, Asian corporations began issuing bonds at an unprecedented rate. By the end of that year, “ASEAN-5 local currency corporate bond issuance had reached $58 billion, higher than the previous peak, reached in 2007, and roughly double the normal level” (Pradhan et al. 2011, p. 16). Asian firms expanded their issuance of bonds in response to the actions of regional banks during the global financial crisis of 2007– 2009. Troubled by the uncertainty regarding the credit markets, Asian banks followed the lead of their Western counterparts and became much more cautious in lending money. Faced with the banks’ reticence, Asian corporations turned to the capital markets to raise funds. To a significant degree, Asian corporations replaced bank credit with bond financing. “In other words, the domestic bond market acted precisely as reformers had originally hoped it would: it became the ‘spare tire’ that corporations could use once the bank financing channels became impaired” (Pradhan et al. 2011, p. 17). This apparent triumph of the bond markets must be qualified. Only large firms could issue bonds; governments had to step in to help smaller firms. In addition, the bond market did not work as an alternative source of funding during the height of the crisis in 2007–2008. It began to function effectively only in 2009. Nonetheless, bond financing came back faster than bank financing. Much of the demand for Asian bonds came from overseas. Foreigners demonstrated a willingness to purchase domestic currency bonds,

Regional Institutionalism


reducing risk-taking for corporations that, in the past, had to risk a currency mismatch in order to secure external funding. Before the global financial crisis, foreign investors were reluctant to put their money in Asian bonds. However, the relative success of Asian states in weathering the economic crisis meant that foreigners looking for good investments with meaningful rates of return poured into the Asian markets. In 2004, foreigners held less than 2 percent of ASEAN Five government bonds. By 2010, this had turned around dramatically. In the third quarter of 2010, Thailand sold nearly $5 billion in bonds to foreign investors. In September 2010, the Philippines raised $1 billion from its first sale of peso-denominated bonds on the global market. These figures have held relatively constant since that time. In 2016, foreign investors held about 34 percent of Malaysian government bonds. Across Asia, however, the major buyers of bonds remain banks and, to a lesser degree, other financial institutions. There is the risk that the foreign interest in Asia could subside or reverse very quickly once economic conditions change in the Western world. However, analysts have identified a trend toward foreign investment in emerging markets that predates the global crisis. Many developing world states had economic fundamentals, such as debt-to-GDP ratios, stronger than the Western world. In general, emerging markets were also outperforming Western countries well before the crisis, delivering significantly higher rates of return on bonds while being only slightly more volatile. These changes were reflected in the increased foreign investment in emerging-market debt funds. In 2005, emergingmarket debt funds were receiving around $5 billion per year in investment; by 2010, inflows had reached $35 billion. Western economic weakness will probably continue while emerging market—specifically Asian—economic performance will remain relatively strong into the foreseeable future. This imbalance attracts Western investors. Western pension funds have a significant shortfall between their obligations and their assets. The need to make up this shortfall means these funds will be looking for places to invest their money at high rates of return. Greater foreign participation in Asian bond markets will likely reduce long-term interest rates on government bonds and improve regional liquidity. As these factors improve, more firms will issue bonds, enticing more investors to participate in the debt markets. Bonds generally mature over a longer duration than bank loans, providing firms with more secure financing. The ABMI is one factor among many encouraging bond market developments in Asia Pacific, and the most important actors remain the regional states and their national policies. This does not mean that the

100 The New ASEAN in Asia Pacific and Beyond ABMI is insignificant, but it is hard to discern and analyze its contribution to bond markets when so many forces and actors are pushing in the same direction. Nonetheless, it is hard to see the ABMI playing any major role if the region begins to experience problems related to the expansion of bond markets. Given the way that bond markets have developed, state-level regulatory actors and other national bodies, with the input of the ADB, would confront any regional bond market crisis. The role of the bond markets in drawing foreign capital to Asia Pacific and facilitating global financial integration raises some difficult questions. Convincing foreigners to purchase bonds and other assets in local currencies has been an aspiration of Asian policymakers, but this illustrates one of the paradoxes of the bond-market initiatives. Measures taken to defend the region from the volatility of the international system and to increase regionalization carry the potential to more deeply integrate the region with the world economy, thereby compromising the decisionmaking freedom of regional states. The Regional Comprehensive Economic Partnership ASEAN first advanced the idea for a Regional Comprehensive Economic Partnership at the ASEAN Summit in Bali, November 2011. The proposed RCEP consolidates the proposals for an East Asian Free Trade Agreement (EAFTA) (including ASEAN, China, Japan, and South Korea) and the Comprehensive Economic Partnership in East Asia (CEPEA) (which added Australia, India, and New Zealand to the other thirteen states). It is a compromise between EAFTA, favored by China, and the CEPEA, favored by Japan. The RCEP encourages the six countries that have bilateral trade agreements with ASEAN to enter a larger regional trade agreement.7 Importantly, the RCEP does not supersede any of the individual bilateral agreements and it only encourages states to join when they feel ready. It is open to accession by other states that do not have existing trade pacts with ASEAN (Das 2014). The RCEP covers trade in goods, services, investment, economic, and technical cooperation and dispute settlement. It should be compatible with WTO rules on goods and services. Ideally, the RCEP will reduce the considerable overlap between existing Asian trade agreements, which presently constitute a “noodle bowl” of often conflicting trade rules and rules of origin (ROOs), and deepen economic cooperation by creating a single comprehensive regional agreement. The RCEP will be sensitive to the different levels of development of its potential members by allowing for differential treatment for less-developed mem-

Regional Institutionalism


bers. This provision is incompatible with the principles of the TransPacific Partnership (TPP), discussed in Chapter 6, and underlines the contradictions of multiple regional FTA agreements (Hidetaka 2012, p. 411). Negotiations for the RCEP began in 2013 and were meant to conclude in 2015, but dragged on. The potential economic gains of the RCEP are enormous; the collective GDP of the involved states is $17 trillion (Pakpahan 2012); some models suggest the RCEP could bring income gains to the world economy between $260 and $644 billion over ten years (Wignaraja 2013). The RCEP is an ASEAN initiative. It is designed to maintain ASEAN’s regional institutional centrality (Armstrong 2013). However, the RCEP faces numerous obstacles. The larger members of the RCEP may not accept ASEAN’s self-appointed central role. The fact that the agreement can only advance if it makes exclusions to protect sensitive sectors in various states indicates that it can only achieve limited liberalization. The RCEP will need to improve its coverage of areas such as competition policy, the environment, and labor standards, all of which are part of other regional and international trade negotiations. There is the real risk that, much like AFTA, firms will underutilize the agreement. In addition, not all states can afford the investments in infrastructure needed to make goods flow freely across the region. An expert roundtable suggested that each of the ASEAN Plus One FTAs move toward standards defined by the ASEAN Economic Community objectives. These include a single market and production base, a region of equitable economic development, a competitive economic region, and full integration into the global economy. The proposal means that the RCEP would evolve into a binding agreement by 2025, with its initial start in 2015, though it has missed this start date. If adopted, this proposal would expand the AEC beyond its own borders and facilitate the integration of the larger region (RCEP Expert Roundtable 2013). The RCEP is China’s preferred instrument of regional integration. Most analysts saw it as competing with the TPP, which was supported by the United States and excluded China (Huang 2014). As discussed in Chapter 6, however, the Trump administration pulled the United States out of the TPP, damaging the TPP severely and possibly leaving the field clear for China-centered regional trade agreements. The economic realities of the situation will challenge ASEAN’s efforts to use the RCEP to retain ASEAN institutional primacy in Asia Pacific. Nonetheless, the RCEP takes into account the political, economic, and social realities of the less developed countries (LDCs) of Asia Pacific. As such, it has a higher probability of becoming a practical reality.

102 The New ASEAN in Asia Pacific and Beyond Some analysts suggest that the RCEP and TPP could, ultimately, become the basis for a larger Free Trade Area for Asia Pacific (FTAAP) (Das 2014, pp. 45–55). However, given the considerable differences in expectations and objectives between the two proposed trade agreements, as well as the considerable variation in economic development between the regional states, this was always a very distant goal, even before the uncertainty around the TPP. Within the Western world, there is growing antipathy, among the general public, to global FTAs, as demonstrated by the fate of the TPP. As the West retreats from free trade, Asia Pacific may end up being the major champion of the global liberal economic order. The East Asia Summit In 1998, at the second ASEAN Plus Three summit and at the instigation of South Korean president Kim Dae Jung, the APT established an East Asian Vision Group (EAVG), consisting of “eminent intellectuals” from each of the thirteen states. The EAVG was tasked with studying “concrete ways to nurture East Asia into a single community of cooperation, serving as the basis for the countries of the region to start the discussion on the related issues in earnest” (Severino 2006, p. 267). The EAVG delivered its report to the APT summit in 2001. Titled Towards an East Asian Community, the report offered more than seventy proposals for how East Asia could become a genuine community. One of its recommendations was that the APT gradually evolve into an East Asia Summit, which would lay the foundations for an East Asian Community (EAC). The report emphasized the need for the community-building project to proceed at a slow and incremental pace (Nair 2009, p. 119). The APT accepted the report and, again at the proposal of President Kim, established an East Asian Study Group (EASG), consisting of senior foreign ministry officials and the ASEAN secretary-general. The EASG was responsible for assessing the EAVG’s recommendations, prioritizing them, and studying the implications of the proposed EAS. At the 2002 APT summit, South Korean prime minister Kim Suk Soo presented the final report of the East Asian Study Group. The report advocated maintaining the APT as the primary instrument of East Asian community-building while gradually working toward an EAS. It recommended that ASEAN remain in its preeminent institutional position. The report envisioned the EAS as the end product of a careful, long-term process. The EASG emphasized the “need for clarity of objectives and

Regional Institutionalism


issues which the EAS should pursue” (Severino 2006, p. 269). Which states should participate in the EAS remained undetermined. The ASEAN states were in no hurry to rush the EAS process. However, as early as January 2002, Japanese prime minister Junichiro Koizumi declared Japan’s support for the creation of an East Asian Regional Community. In December 2003, Japan invited the leaders of Southeast Asia to a meeting to commemorate ASEAN. This was the first ASEAN leaders meeting held outside Southeast Asia. Japan wooed ASEAN to enhance its own regional standing. The meeting ended with the Tokyo Declaration on Building an East Asian Community, wherein Tokyo committed to signing ASEAN’s Treaty of Amity and Cooperation. The declaration enabled Japan to align itself with ASEAN and support ASEAN’s leading role in the development of the EAS and EAC while throwing down the gauntlet to China and South Korea, both of which went on to host their own ASEAN commemorative summits (Ji 2006; Terada 2006, p. 13). Japan’s efforts to get the EAS and EAC off the ground were directly related to its concern that China was driving the development of regional institutionalism, to the detriment of Japan’s leadership ambitions. The APT, in particular, had become an important China-led vehicle, and Japan wished to develop an alternative institution to counteract Chinese influence. Japan threw its weight behind the EAS. The Japanese Ministry of Economy, Trade, and Industry (METI) established and funded the Economic Research Institute for ASEAN and East Asia, providing the EAS with a highly credible research capacity (Cook 2008). Some ASEAN states were less enthusiastic about the development of the EAS. Indonesia feared that ASEAN was too divided to effectively manage the APT; moving on to the EAS would further weaken ASEAN’s regional standing. Japan was determined not to allow China to dominate the EAS process, too. Malaysia detected the recalcitrance of its regional partners and suggested that the APT and EAS develop in tandem. This provided the opportunity for Singapore to suggest that the members invite India to join the EAS; Japan and Indonesia suggested the EAS expand to include Australia and New Zealand. Hadi Soesastro argues that Indonesia and Singapore were not concerned about bringing in India, Australia, and New Zealand as counterweights to China. They intended for the larger membership to differentiate the EAS from the APT and strengthen ties with regional neighbors. Japan, by contrast, was quite concerned to add the other three states as a way to balance China’s dominance (Soesastro 2006, p. 231; Cook 2008, p. 302). 8 China objected to the expansion of the EAS beyond the APT, but its objections

104 The New ASEAN in Asia Pacific and Beyond were overruled. As a result, China focused its energies on the APT and worked to limit the EAS’s regional importance. The competition between China and Japan allowed ASEAN to seize a leading role in the EAS by acting as a mediator between the two major powers. ASEAN set three criteria for future EAS membership that guaranteed its privileged position: that potential members of the EAS must be existing dialogue partners of ASEAN; that they must sign the ASEAN Treaty of Amity and Cooperation; and that they must have extensive economic ties with Southeast Asia. China and India signed the TAC in 2003. New Zealand and Australia followed in 2005. The link to the TAC means that the EAS is the only piece of larger Asian regional architecture that has a treaty-based link to ASEAN. The EAS is further tied to ASEAN by being held after the second ASEAN Summit every year. Within the EAS, however, the ASEAN states failed to maintain unity. Malaysia, Cambodia, and Vietnam initially opposed expansion of the EAS beyond APT members, though Malaysia later changed its position. Singapore, Indonesia, and Thailand favored the inclusion of Australia, New Zealand, and India. As the EAS came into operation, ASEAN states could not establish a unified stance on major agenda issues. The South China Sea, in particular, divided Cambodia and Myanmar from the other ASEAN states (Hidetaka 2012, pp. 405–406). The EAS held its first meeting in December 2005 in Kuala Lumpur. Its participants were the leaders of the thirteen APT states and India, New Zealand, and Australia. As the EAS’s membership expanded, China made it clear that it would not abandon the APT. Thus the APT and the EAS, originally envisioned by the EAVG to be complementary, evolutionary steps on the way to an East Asian Community, became competing institutions, exemplifying the rivalry between China and Japan. The Chairman’s Statement on the First East Asia Summit indicated that the APT would continue to play a significant, but separate, role in the efforts to realize the East Asian Community. In fact, the EAS occupies an inferior status, behind ASEAN, which remains the “driving force” behind Asian regionalism, and the APT, which has the major role in creating an East Asian Community. As Malcolm Cook notes: “Japan succeeded in the expansion of the EAS and is working to develop it beyond being a simple forum of discussion. China has since helped define and maintain its subsidiary status” (2008, p. 303). In 2009, the United States signed the TAC, clearing the way for Secretary of State Hillary Clinton to participate in the EAS in 2010; President Barack Obama attended his first EAS in 2011. Russia signed the TAC in 2004, but ASEAN put its request for membership in the EAS on hold. Russia and the United States were formally accepted as

Regional Institutionalism


members and began attending EAS meetings at the same time. The US decision to join the EAS virtually ensures the marginalization of the regime in the regional institution-building process. China continues to devote its energies to building up and legitimizing the APT, rather than the EAS. In the meantime, the idea of an East Asian Community connected to the APT appears to have fallen by the wayside.9 An EAC that includes the United States, Russia, Australia, and New Zealand is likely a nonstarter. Evaluating the ASEAN Regional Forum The ASEAN Regional Forum has met many of ASEAN’s expectations. It has engaged the United States, China, and Japan in the management of regional security; it has enabled regional states to bring collective pressure to bear on countries violating regional norms. ASEAN has utilized the ARF to counteract, to some degree, China’s growing assertiveness in the South China Sea. The United States, Japan, and South Korea have used the ARF to apply pressure to North Korea. The United States and China have utilized ARF meetings a number of times to alleviate mutual tensions after crises. Since its creation in 1994, the institution has expanded to include twenty-six member states and the European Union. Under the ARF auspices, numerous intersessional meetings and workshops take place on a variety of topics of interest to the regional states, including nuclear nonproliferation and disarmament, counterterrorism, transnational crime, and disaster relief. The organization continues to hold Intersessional Support Group meetings on confidence-building measures. These expanded to include preventive diplomacy in 2005. Other nontraditional security issues, such as disease detection and surveillance and “proxy actors in cyberspace” are on the ARF agenda. Defense official dialogues, meetings of ARF experts and eminent persons and the heads of defense universities/colleges and other institutions, also meet under ARF authority. Institutionally, there is now an ARF Unit at the ASEAN Secretariat dedicated to supporting the ARF chair by providing administrative support, functioning as the repository of ARF documents/papers, and managing a database/registry. Despite these developments, the efficacy and significance of the ARF remain contentious issues (Yuzawa 2012, p. 341). To its critics, the organization is stuck at the confidence-building phase of its development. To others, it serves a valuable purpose by providing a regular venue for the regional states to meet, formally and informally, and diplomatically address areas of dispute. Given the diversity of its membership

106 The New ASEAN in Asia Pacific and Beyond and the perspectives it encompasses, the ARF has developed as far as it is reasonable to expect. Nonetheless, there are tensions between those states that feel the ARF must continue to advance at a slow and measured pace and those that feel that if the ARF cannot be more direct in its management of regional security then other options may be desirable. In general, ASEAN states fit into the former camp, though ASEAN has recognized the challenges posed to its leadership in the ARF and to ASEAN’s institutional prestige if it cannot assuage the critics. The ARF’s approach to confidence-building measures (CBMs) exemplifies the tensions within the organization. “Activist” members of the ARF (Japan, Canada, Australia, and the United States) have pushed for greater efforts to implement concrete CBMs. More reluctant states, such as China and some ASEAN members, have supported confidencebuilding measures through informal dialogue and declarations. At the second ARF ministerial meeting in 1995, the ARF agreed to publish defense white papers and participate in the United Nations Register of Conventional Arms (UNRCA). However, participation was voluntary. The meeting also established the Intersessional Group on ConfidenceBuilding Measures, and intersessional meetings on peacekeeping operations, and on search and rescue coordination and cooperation. However, since the late 1990s, the momentum toward more extensive CBMs in the ARF has dissipated. The few measures taken are “modest” and “can facilitate an exchange of views or increase the frequency of interactions between member countries, [but] are obviously far short of reducing mutual suspicions stemming from uncertainties about defense programs” (Yuzawa 2012, p. 341). The ARF’s efforts at building preventive diplomacy have faltered. Part of the problem is in defining the concept. When ASEAN introduced preventive diplomacy in the 1995 ARF concept paper, it restricted it to interstate disputes and reiterated this understanding in a position paper in 2001. Nonetheless, the observation that “the greatest threat to regional stability is internal conflict” has fueled the argument that ARF’s preventive diplomacy should be able to address domestic affairs (Severino 2009, pp. 53–55). The activist members of the ARF want it to implement early warning systems, fact-finding missions, and mediation, as well as expand preventive diplomacy to include domestic disputes. The recalcitrant states have rejected all of these measures, fearing that they may infringe on the noninterference principles on which the ARF was founded. Despite substantial efforts by Singapore and Japan to push the preventive diplomacy agenda ahead, the ARF’s activities remain highly limited (Yuzawa 2006). In 2008 and 2009, ARF track-two institutions and other official bodies

Regional Institutionalism


attempted to develop an ARF workplan on preventive diplomacy and asked the ARF panels of experts and eminent persons to draft a document on the workplan. Singapore and Thailand supported this effort, fearing that ASEAN would lose its preeminent position in the Asian region if the stagnation in the ARF continued. The final reports from the panels of experts and eminent persons recommended that the ARF actively promote preventive diplomacy, taking upon itself the ability to deal with “territorial disputes, political and legal disputes, terrorism and human rights issues” (Yuzawa 2012, p. 342). It recommended further enhancing the ARF’s institutional mechanisms. Again, however, there is little reason to believe that these more intrusive approaches will be any more acceptable to states concerned with defending their sovereignty than previous initiatives. If the ARF has stalled in terms of CBMs and preventive diplomacy, observers agree that it has made significant advances in addressing nontraditional security issues and cooperation. Almost from its inception, the ARF adopted a comprehensive security approach, equating this with nontraditional security concerns, such as drug trafficking, terrorism, water and resource management, population migration, and the environment. The economic crisis of 1997–1999 bolstered the importance of these concerns. Beginning in 2000, ARF meetings included discussions of maritime piracy; human, drugs, and arms trafficking; money laundering; computer crime; and corruption. The focus on terrorism increased significantly in the aftermath of the September 11, 2001, terrorist attacks on the United States and dominated the ARF agenda for a time. The ARF meeting in July 2002 adopted a statement regarding terrorist financing and endorsed a US proposal to form an intersessional meeting on counterterrorism and transnational crime. Terrorist attacks within Southeast Asia, especially the Bali bombing of 2002, reinforced the general tendency toward nontraditional security in the ARF. The Indian Ocean tsunami in December 2004 increased attention on disaster relief. The ARF approached these issues through a series of workshops and, in some cases, joint military exercises and practices between member states. Other events, such as Myanmar’s deficient response to Cyclone Nargis in 2008, helped to further define the process of regional civilmilitary cooperation and coordination procedures. These developments resulted in numerous statements from the ARF, general guidelines for disaster relief cooperation, and even limited cooperative exercises. Some observers recommend that the ARF focus its efforts at preventive diplomacy on nontraditional security issues. This view argues that the ARF can do little about traditional security concerns and that nontraditional issues are of considerable relevance in a changing world

108 The New ASEAN in Asia Pacific and Beyond (Severino 2009, p. 63). By contrast, others argue that this focus on nontraditional security distracts the organization from fulfilling its traditional security objectives. For those ASEAN states concerned that the ARF’s slow progress in traditional security areas will undermine ASEAN’s centrality to the regional security process, the focus on nontraditional security is one way to convince critics that the ARF is effective. Nonetheless, even in this area, the ARF’s successes have been limited and implementation of agreements has been difficult. In 1999, the United States supported the idea of a cochairmanship, held by one ASEAN and one non-ASEAN state, and the creation of a permanent secretariat for the ARF. ASEAN was not prepared to share its leadership role or to support the further institutionalization of the organization. In 2004, mounting pressure from within the ARF convinced ASEAN to establish the ARF Unit within the ASEAN Secretariat. In 2005, the ARF ministers established the ARF Fund to help finance “the implementation of projects, activities and decisions of the ARF” (Yuzawa 2012, p. 345). However, the ARF Unit and the ARF Fund continue to suffer from a lack of resources. The ARF Unit is little more than a repository for ARF documents. It has minimal staffing and functions out of the ASEAN Secretariat. The ARF Fund is based on voluntary contributions; only three ASEAN countries have ever contributed to the fund. In July 2010, the ARF Ministerial Meeting adopted the ARF Vision Statement, which proposed making the ARF Unit a division within the ASEAN Secretariat and encouraged all members to contribute funding, personnel, and expertise to the new structure. The creation of an ARF division will not alter ASEAN’s monopolization of the ARF, a bitter point of contention with the non-ASEAN states. “The success of the ARF’s structural reform requires the willingness of ASEAN to share its leadership role with non-ASEAN states, but such a feeling has not yet matured even among those ASEAN members who are keen to strengthen the ARF’s role in regional security” (Yuzawa 2012, p. 346). ASEAN hoped the ARF would help it achieve its long-term goal of shaping its regional security environment, but ASEAN never intended to create a strongly institutionalized approach to regional security. Instead, the ARF promoted ASEAN’s norms and values and employed its approach to conflict resolution within the larger Asia Pacific. ASEAN argued that its proven methods of building regional habits of cooperation could be effective in the rest of the region. This was always a contentious assertion (Narine 1997). The ASEAN Way means working around, not necessarily resolving, conflicts. ASEAN evolved in response to external threats, which forced the weak states of South-

Regional Institutionalism


east Asia to put aside their differences and work together to enhance their common security. The most important and powerful members of the ARF—unlike ASEAN—are not weak states. They are more likely to be the source of external threat than a target and they can respond to external threats in far more robust ways than the ASEAN states. The ASEAN approach assumes that states have mutual interests that can be found through a process of consultation and consensus-building. However, this is not always the case; sometimes, states simply have contending interests. Powerful states cannot be swayed by the appeal to common weakness and external threats to compromise on those interests, unlike more vulnerable states. China strongly supports ASEAN’s approach to the ARF. China sees itself as weak and vulnerable, even as it flexes its economic and military muscles and its growing power casts a shadow over the entire region. China agreed to participate in the ARF because of ASEAN’s leading role and the assurance that the ARF would utilize ASEAN’s consensus-oriented decisionmaking approach. China—along with many other Asian participants—fully agreed with ASEAN’s emphasis on state sovereignty and nonintervention. China remains committed to the ARF and ASEAN’s role within the organization. It was unprepared to be part of an organization founded by other major powers. Thus, ASEAN’s relative weakness and its commitment to informal structures and nonintrusive behavior were critical factors getting and keeping China engaged with the organization. China also hoped to use the ARF to counter US unilateralism and hegemonic power. Thus, for example, it supported India’s ascension to the ARF in 1996 as a counterbalance to US power (Emmers 2003, p. 33). ASEAN also intended for the ARF to socialize China into ASEAN’s norms. After two decades, it is apparent that this has not worked, at least not to the extent that ASEAN originally hoped. If engaging China was a critical function of the ARF, so was engaging the United States and Japan. However, the expectations of these major powers were different from those of China. Japan, despite being instrumental in launching the ARF, concluded that the organization will not serve its purposes. It remains engaged in the ARF but is far less committed to it than in the past and is readjusting its approach to regional security accordingly (Yuzawa 2005, 2006). The United States attends ARF meetings as a matter of diplomatic and political necessity, but it continues to reinforce its bilateral security ties. If the United States ever feared that the ARF would challenge its regional dominance, that fear has long passed. Other ARF members, such as South Korea, Australia, and Canada, have tried to push the organization’s development further down the road specified by the 1995 concept paper. Their

110 The New ASEAN in Asia Pacific and Beyond efforts have proven largely unsuccessful. South Korea, in the past, has expressed frustration over the dominant role of ASEAN in the ARF (Emmers 2003, p. 32). The ARF cannot play the key role of managing regional security. The consequences of this to ASEAN itself are unclear. When ASEAN created the ARF, it put a great deal of its prestige into the new organization. In the decades since, ASEAN has moved on to other institutional developments. Even so, if the chief criticism of the ARF is that it is far less effective than it needs to be, then ASEAN’s effectiveness may also be in doubt. The key difference is that ASEAN can claim it is capable of concerted behavior within its own ranks, unlike the ARF, which must cater to a wider variety of interests. However, it is also true that conflict between ASEAN states, including violent conflict, has occurred over the past two decades. In all of these cases, the ARF has not gotten involved. This inability to act on major issues of regional security, even those that involve ASEAN states themselves, casts the ASEAN model and approach in an unflattering light. ASEAN and Regional Institutionalism In the aftermath of the Asian economic crisis of 1997–1999, the Asia Pacific region created new regional institutions to protect against future economic and political disruptions. Some of these new multilateral structures were driven by ASEAN; some were not. Nonetheless, ASEAN managed to stake an important role in every new institution, allowing it to rejuvenate itself and re-legitimize its leading regional role to the rest of the world. ASEAN’s role in the new multilateralism is the result of its status as an acceptable compromise between the much more powerful regional states—particularly China and Japan—that continue to jockey for power, position, and influence. Nonetheless, there is a considerable gap between the capabilities of these regional structures and their stated or implied goals. The most substantial new multilateral organization is the APT and its most significant instruments are the CMIM and the ABMI. The global financial crisis of 2007–2009 convinced the regional powers to put aside their differences and push the CMIM further down the evolutionary path. In a short period of time, the CMIM became more robust and independent, at least on the surface. Nonetheless, none of its members utilized the institution during the global financial crisis. The political problems entailed by rich, powerful Asian states setting conditions for currency swaps to their poorer, more desperate neighbors in times of

Regional Institutionalism


crisis remain unresolved. The facility does not possess enough resources to be an effective regional insurance policy. The connection to the IMF may make the CMIM politically toxic. The CMIM is symbolically important, but it rests upon an uncertain political foundation. To start addressing this tension, the CMIM needs access to its promised resources without political interference from the members who contribute the most. However, it seems unlikely that China or Japan would contribute large amounts of money to an institution over which they have little control or oversight. Understandably, citizens in both countries would see this as politically and financially irresponsible. For now, the CMIM’s efficacy as a financial institution remains uncertain. Its importance as a symbol of Asian financial independence and selfprotection is difficult to gauge. Investors often know very little about the financial opportunities they are running to or from and the CMIM may create an impression of financial protection that may deter currency speculation in the future. However, preparing for the last crisis does not necessarily help with the next one, as illustrated by the global financial crisis (Emmers and Ravenhill 2011; Katada 2011). Asian bond markets have grown significantly since 2003, when the ABMI was introduced. However, they were growing before then and the relationship between the different state efforts to create bond markets and the ABMI is difficult to measure. The initiative may be another example of a regional government undertaking that has little practical effect on the operations of private actors. Among the ASEAN Five, bond-market expansion is mixed and varies depending on the commitment and interest of the particular state in pursuing this course of action. The ABMI is encouraging those states. It may, eventually, form the basis of a regional bond market, though this is probably far in the future. If a crisis affecting regional bonds did strike the region, the ABMI lacks the resources and authority to be of any use in protecting and assisting regional states. The East Asia Summit is an important symbolic achievement. However, its development reflects the tensions between the great powers of the region. The EAS has become an effort by the most powerful states of Asia Pacific and beyond to limit China’s influence. As such, it is unlikely that it will become the foundation for an East Asian Community, the purpose it was meant to serve originally. The APT and the EAS have the potential to undermine each other, as each is backed by a contending regional power, but the institutions are not equal. The APT is more advanced and more important in its regional role. By expanding beyond East Asia to include the United States, Russia, and India, the EAS would have a difficult time forming an East Asian Community in

112 The New ASEAN in Asia Pacific and Beyond the future. If an EAC is to come about, it will likely be through the mechanism of the APT. Despite their limited effects during the global financial crisis and its aftermath, regional multilateral institutions are, unquestionably, beneficial to the states of Asia Pacific. They facilitate regular contact between state leaders, bureaucrats, diplomats, and military officers and provide multiple opportunities to build contacts, address issues of concern (formally or informally), and keep open essential lines of communication. If we understand regional organizations as a set of overlapping symbols and commitments that form a network of communication and interaction, then the practical effectiveness of these institutions matters less than the linkages they create and the problems they avert. Given the real tensions, competition, and unresolved historical issues between the major states of the region, what these states have achieved in creating and sustaining the APT and its associated bodies is probably the best that we can reasonably expect at this point in time. From this perspective, ASEAN’s regional role is critical. If there were not an ASEAN, no single state could act as an acceptable compromise around which to build regional multilateralism. Indeed, ASEAN’s institutional weakness enables it to play a mediating role. If it were too powerful and coherent it could arise as another competitor to the great powers. The relative weakness of the APT, its associated structures, and the EAS guarantee ASEAN a key role in the regional politics of Asia Pacific. ASEAN has placed itself at the center of these developments to ensure that they do not usurp its leadership or undermine its regional standing. But this may be a pyrrhic victory. Many of the problems facing the Asia Pacific region—such as climate change, environmental degradation, and economic coordination—need concrete collective and cooperative responses. Serving as a diplomatic and political link between disparate states is valuable but may simply not be sufficient. Ironically, Asia Pacific’s response to the global financial crisis may have further undermined the drive for effective regional institutionalism. The lesson that Asian states took from the Asian economic crisis was that the region was interconnected and that regional solutions were necessary to guard against future economic crises. Yet, when the next great crisis did come, the Asia Pacific region survived without the aid of the new institutions that it had developed to face just such a crisis. This reality reduced the urgency for creating regional financial institutions and altered the quest for regionalism (Beeson 2011; Emmers and Ravenhill 2011; Katada 2011). The multilateral momentum may also have shifted to the global level and the Group of 20 (G-20), the international body that dealt most directly with managing the crisis, and away

Regional Institutionalism


from the regional level. However, as Eric Helleiner (2014) notes, the G20 did not act collectively; states confronted the crisis at a national level. The national measures Asian states had adopted since the 1997 crisis served them well. Massive foreign reserves and the willingness to stimulate their economies (combined with China’s enormous stimulus, which had a regionwide effect) pulled Asia Pacific out of the economic downturn quickly, though the region is still feeling the long-term effects10 (see Table 4.2). There is mixed evidence that Asia Pacific has begun to economically “decouple” from the Western world, though the recession in the West, caused by the global financial crisis, has dragged on the world economy, including Asia (Athukorala and Kohpaiboon 2012; Park 2012). Helleiner (2014) has described the global financial crisis as the “status quo crisis”—the worst global financial catastrophe since the 1930s, yet one that created very little substantial change in the operation of world finance (Helleiner 2014). US policymakers, faced with crisis, rapidly retreated to reinforcing and stabilizing what they already knew. As a result, the opportunity for significant and necessary change slipped away. The full measure of this analysis remains to be seen; the global financial crisis has resulted in the “death” of the ideological consensus around neoliberalism, though no new consensus has emerged and neoliberal ideas continue to dominate policy decisions, even if they are demonstrably flawed (Bosworth and Flaaen 2012; Quiggin 2010; Stiglitz 2016). The consequences of the failure of neoliberalism are playing out as political instability in many parts of the world. The result of the global financial crisis may be that, at a time when strong regional institutions really are necessary to deal with regional and global problems, the impetus for those institutions has weakened.

Table 4.2 Foreign Exchange Reserves of Select Asian States, 2012–2015 ($ billions) China Indonesia Japan Malaysia Philippines Singapore South Korea Thailand Vietnam


3,312 106 1,194 135 72 256 317 171 25


3,821 93 1,203 130 74 270 336 159 25


3,843 106 1,200 112 70 255 354 149 33


3,330 101 1,180 91 72 246 359 149 28

Source: Figures from Asian Development Bank, Key Indicators for Asia and the Pacific Series,

114 The New ASEAN in Asia Pacific and Beyond For Asia Pacific, the drive to create stronger, more effective institutions may depend on the next crisis, be it environmental, economic, or political, or quite probably some combination of all of these. Conclusion The Asian economic crisis demonstrated to Asian states that they were inextricably connected to each other and affected by each other’s economies. In the aftermath of the crisis, ASEAN needed to demonstrate its relevance to the region. Combined, these two factors led regional states to create a series of regional institutions designed to foster Asia Pacific–wide economic, financial, and political cooperation. ASEAN was successful in placing itself at the center of the most significant of these institutions—the APT (and its offshoots), the EAS, the RCEP, and the (preexisting) ARF. However, when the next great crisis hit the region, the regional institutions did not come into play. Instead, regional states relied upon their own resources and some of them even turned to the United States for emergency support. The crisis did help consolidate the CMIM, which perhaps will be more useful in the next, inevitable, economic catastrophe to hit the increasingly volatile global financial system. The new regional institutions are also contending with political divisions and rivalries between the regional powers. In the face of this, “ASEAN centrality” maintains ASEAN as a critically important node in a network of regional relationships, but the organization itself remains largely unable to have significant impact upon the regional economic, political, and security environments (Caballero-Anthony, 2014). The preceding three chapters have indicated that ASEAN is an organization with an important role to play in Asia Pacific. Its greatest value may be in the social, political, and personal relationships and contacts it builds among the decisionmakers, foreign policy establishments, and civil societies of the ASEAN states. At the same time, however, it is important not to exaggerate ASEAN’s influence on the regional environment. Larger forces and actors have shaped the regional environment. ASEAN has taken advantage of the configuration of forces and has contributed to maintaining the positive environment, but it did not create it. The ASEAN Community is a powerful aspiration, but it is a considerable distance from becoming a meaningful reality. Regional institutions are helpful, but they remain untested and politically fragile. Understanding where ASEAN, the organization, may be going means understanding the roles it plays in an emerging multipolar region; it

Regional Institutionalism


requires examining how the large powers that shape the region interact with ASEAN. That is the goal of the next part of the book. Notes 1. Another regional security body is the ASEAN Defense Ministers Meeting (ADMM). Established in 2006, it is the highest defense-oriented mechanism in ASEAN. It meets annually. The ADMM consists of the defense ministers of the ASEAN states. Its objectives are to “promote regional peace and stability through dialogue and cooperation in defence and security.” It aims to build contacts between ASEAN defense establishments. The ADMM Plus includes all the ASEAN defense ministers and representatives of the defense ministries of ASEAN’s eight dialogue partners. It first met in 2010 and is scheduled to meet every two years. It is designed to strengthen security ties between the countries (ASEAN 2015a). 2. Chalongphob Sussangkarn (2010) explains this situation. When the 2007 global financial crisis hit, the overall liquidity crisis caused many Westerners to liquidate their stock holdings in Asia and pull money back to the West to cover their liquidity problems at home. A number of Asian states found that, even with their enormous foreign currency holdings, they did not have enough to cover both their short-term debt and the drain caused by the foreigners liquidating their stocks and repatriating their money. It would have been “political suicide” for South Korea to go to the IMF and it could not draw on the full potential of the CMIM without having an IMF program in place. South Korea and Singapore were successful in arranging currency swaps with the United States. The United States would not work out such an arrangement with Indonesia; China and Japan stepped in to arrange swap agreements with Indonesia instead. 3. At the 2013 International Studies Association conference, I asked Lena Rethel to explain the discrepancy in the explanations. She argued that it was still too early to determine exactly why Singapore and South Korea made the decisions that they did in this situation. 4. For five years, the US Congress blocked these reforms, finally acquiescing to them in December 2015 (“US Congress Moves on IMF Reforms” 2015). 5. The need for an effective surveillance mechanism has been widely recognized in international financial circles. The existing regional surveillance mechanisms are the Economic Review and Policy Dialogue (ERPD), established by the APT in 2000, and the Macroeconomic and Financial Surveillance Office (MFSO), established by the ASEAN Secretariat in 2008. Both of these offices are severely understaffed and underresourced, have to rely on incomplete information, and face resistance in providing information from their members. It remains to be seen if AMRO fares any better. 6. The European Financial Stability Facility (EFSF), in 2011, had a fund of $750 billion euros, amounting to 8 percent of the EU’s total GDP. By contrast, the CMIM’s funds came to about 1.5 percent of members’ GDP (Siregar and Chabchitrchaidol 2013, p. 3). 7. Those six countries are Australia, China, India, Japan, New Zealand, and South Korea. 8. Malcolm Cook claims that Japan’s desire to expand membership in the EAS took ASEAN by surprise. ASEAN went along with Japan’s move, partly out of its own concern with Chinese domination in the APT. Hadi Soesastro’s account, as noted, is slightly different. What is clear is that ASEAN and Japan agreed on the benefits of expanding the membership of the EAS (Cook 2008, 303).

116 The New ASEAN in Asia Pacific and Beyond 9. The incoming Hatoyama government (Democratic Party of Japan) briefly resurrected the idea of an East Asian Community in 2009, apparently as an effort to strengthen intra-Asian ties while reducing Japan’s dependence on the United States. This proposal’s connection to the earlier proposals of an EAC was not clear. The idea slipped into limbo with the end of the Hatoyama government. 10. The states of the Asia Pacific region have built up the largest supply of foreign reserves in the world. Many commentators assume that this accumulation of reserves was an insurance policy on the part of Asian states caught without sufficient foreign currency during the East Asian economic crisis. However, Sussangkarn argues that “the accumulation of reserves to a greater extent was the outcome of exchange rate intervention to keep the local currency from appreciating too much and from negatively affecting the export sectors. Whenever large capital inflows lead to currency appreciation, export businesses complain strongly to the government, and as the export sector was a major engine driving the economy, or even the only engine in some cases, the political pressure for the central bank to intervene to keep the currency from appreciating too much can be huge” (2010, p. 7). There are significant economic costs involved in sitting on top of so much unused economic potential. For the short term, however, this development means it is unlikely that any of its members will call upon the CMIM.

5 Relations with China

China is reshaping the twenty-first century. Over a remarkably short time, China went from being a disruptive force in the international system to being, by purchasing power parity, the largest economy in the world.1 China’s political clout and structural power do not yet match its international economic position (Ciorciari 2014). Its development remains fragile and vulnerable to economic slowdowns, political unrest, demographic disruption, and environmental catastrophe. Yet China is now so deeply integrated into the global economy that its stability and prosperity are essential to the proper functioning of the international system. China has begun to fill the growing vacuum left by the decline of US power, particularly in economic terms. China presents enormous challenges and opportunities to ASEAN. Between 1997 and 2009, China did an exemplary job of alleviating regional concerns about its growing power. Asian states remained wary of China, but they were convinced of its ability to act with restraint in its regional relations. Around 2009–2010, China became more belligerent in dealing with regional territorial conflicts. China’s behavior undermined much of the goodwill that its diplomacy had achieved during the previous thirteen years and opened the door on a renewed American role in Asia Pacific. In the newest phase in its changing global role, China has begun to use its considerable financial resources to create new multilateral financial institutions and spread its influence westward and into Europe, South Asia, and Africa. As China grows as a regional economic and political actor, ASEAN is divided between members who feel threatened by China’s actions and


118 The New ASEAN in Asia Pacific and Beyond are wary of its growing influence versus members whose interests lie in maintaining smooth economic and political relations with their giant neighbor. China is a major trading partner of every ASEAN state. China’s apparent willingness to exploit divisions within ASEAN threatens the organization’s coherence and relevance. It may also undermine regional institutional structures and, ultimately, China’s aspirations to regional leadership. However, Southeast Asia remains a critical part of China’s global vision. This chapter examines China’s history with Southeast Asia. It discusses the domestic forces that exercise a decisive influence on how China relates to the world. It examines the South China Sea disputes and evaluates their effect on China’s regional and global standing. The chapter examines how China’s westward expansion may influence its dealings with Asia Pacific. The chapter concludes with a discussion of how China’s growing economic and military power is affecting the unity and stability of ASEAN. China and Southeast Asia: A Historical Overview China has had a profound cultural and economic influence on Southeast Asia. Between the fourteenth and early nineteenth centuries, before the European intrusion into Asia became irresistible, China created a hierarchical system across Northeast and parts of Southeast Asia that brought stability and prosperity to the region (Kang 2005). During the nineteenth and twentieth centuries, European powers and the United States humiliated and exploited China. This damaged its standing in the eyes of neighbors that regarded it as the apex of civilization. In 1949, China reunified (except for Taiwan and European colonial possessions) under Communist Party rule. During the 1950s and 1960s, China provided political, ideological, and occasionally military support to communist insurgencies across Southeast Asia. In the 1970s, China allied itself with the United States against the Soviet Union (MacMillan 2006). The United States–China rapprochement caught the ASEAN states by surprise. It forced them to recalibrate their relations with China even as they strengthened intra-regional ties. Vietnam’s invasion of Cambodia in 1978 pushed ASEAN into an alliance with China and the United States. Even then, as discussed previously, some ASEAN states regarded China as the real longer-term regional problem (Yahuda 2011, pp. 137–159). In 1978, China resumed a process of economic reform derailed by the Cultural Revolution. Deng Xiaoping, China’s vice premier, imple-

Relations with China


mented market reforms that opened the country to foreign trade and investment. Deng’s strategy for economic development was enormously successful, but economic reform soon gave rise to the demand for political reform. In 1989, the Chinese government cracked down violently on pro-democracy protests in Tiananmen Square. This led many Western states to condemn and sanction China. However, the Asian response to China’s crackdown was more muted. Only Japan explicitly condemned China’s use of force and imposed sanctions against China, though it began to opt out of them by the following year. The ASEAN states were either silent or viewed the crackdown as an “internal affair.” In 1990, ASEAN opted to “engage” with China, even as the Western world ostracized the country. ASEAN’s strategy did not sit well with human rights advocates in the West but it was remembered and appreciated by China’s leaders (Yahuda 2011, pp. 272–275). The Asian economic crisis accelerated the evolution in China’s approach to multilateralism. Historically, China preferred bilateral arrangements, where its greater size gave it a negotiating advantage over smaller states. Though China continued to favor bilateralism, after 1997 China began to see the value of multilateralism (Shambaugh 2004, pp. 68–70). China believed that ASEAN’s approach to cooperative security was compatible with China’s New Security Concept (NSC). First advanced in 1996, the NSC was a repackaging of China’s Five Principles of Peaceful Coexistence—mutual respect for territorial integrity and sovereignty, nonaggression, noninterference, equality and mutual benefit, and peaceful coexistence—first articulated by Zhou Enlai in 1955. The NSC included a commitment to conduct dialogue, consultation, and negotiation as equals with other states and to establish “a fair and reasonable new international order” that could guarantee “world peace and security” (Shambaugh 2004, p. 69). China needs a stable and peaceful region in order to achieve its primary goals of domestic economic and social development. To that end, it began a concerted campaign to alleviate regional fears about the consequences of its rise as an Asia Pacific power. Between 1997 and 2009, China pursued a subtle diplomacy and the promotion of its culture and values in a “charm offensive” designed to advance its position in the regional and global systems while countering the efforts of those seeking to contain Chinese power, especially the United States (Kurlantzick 2007). China resolved many border disputes with its neighbors, often settling on terms favorable to the other state (Fravel 2005, p. 46). China assumed a more active role in prominent global institutions, especially the United Nations. China supported international law and the traditional understandings of state sovereignty. It was reluctant to

120 The New ASEAN in Asia Pacific and Beyond endorse Western efforts to redefine “sovereignty” to accommodate greater levels of intervention (Traub 2006). It courted Europe, with a great deal of success. China’s pursuit of natural resources in Africa made it a major player on the continent (Campbell 2008; Taylor 2009). China claims not to interfere in the internal politics of its African partners. This puts it at odds with Western powers that have tried to use economic leverage to force political and social change in Africa in the recent past (Raine 2009, pp. 201–213). As an indication of China’s growing role in Africa, in September 2008 the United States created an African military command, the US Africa Command (AFRICOM). China has been active in Latin America, the US “backyard” (Lowe 2016). Its growing presence on the world stage is a side-effect of its relentless quest for access to the markets and natural resources that it needs to continue its rapid development. Southeast Asia is the region of the world in which China was most concerned about practicing its new diplomacy and implementing its “peaceful rise” (Beeson and Li 2014, p. 87). China pursued its new diplomatic approach through four distinct strategies: participating in regional organizations, establishing strategic partnerships and improving bilateral relations, expanding regional economic ties, and reducing distrust in the security sphere (Shambaugh 2004, p. 72). Most of China’s institutional initiatives centered around ASEAN. Some examples of regional institutions created or enhanced by China’s participation include the ASEAN Plus Three, the East Asia Summit, ASEAN Plus One (ASEAN and China), the ASEAN Vision Group, the ASEAN Senior Officials Meeting, and the Pacific Basin Economic Council, to name only a few. Beyond these ASEAN-oriented organizations, China is a full participant in the Asia-Europe Meeting and the Forum for East Asia and Latin America Cooperation. Nongovernmental, tracktwo groups also involve China, such as the Council for Security Cooperation in the Asia Pacific (CSCAP), the Northeast Asia Security Cooperation Dialogue, and the Shangri-La Dialogue. China launched its own regional dialogue, the Bo’ao Forum, composed of business leaders and government officials. The forum meets annually on Hainan Island and attracts heads of state and more than a thousand delegates from around the region. China is a founding member of the New Development Bank (NDB) and the chief force behind the Asian Infrastructure Investment Bank (AIIB). In 2002, China and ASEAN signed four key agreements: the Joint Declaration on Cooperation in the Field of Nontraditional Security Issues, the Framework Agreement on Comprehensive Economic Cooperation, the agreement to create an ASEAN-China Free Trade Agreement

Relations with China


(ACFTA) by 2010, and the Memorandum of Understanding on Agricultural Cooperation. The two also signed the Declaration on Conduct of Parties in the South China Sea, a document that commits its signatories to the peaceful resolution of disputes in the sea and joint economic development (Buszynski 2003). Significantly, the continuing failure to turn this “code of conduct” into a binding treaty on the South China Sea disputes has called the efficacy of the declaration into question. At the 2003 ASEAN-China Summit, China signed ASEAN’s Treaty of Amity and Cooperation, the first non-ASEAN state (with India) to do so. At the same meeting, ASEAN and China signed the Joint Declaration on Strategic Partnership for Peace and Prosperity, which deals with wideranging political, social, economic, and security issues. In 2004, China suggested that the region build upon the 2002 ACFTA framework agreement to create a larger free trade area across East Asia. The ASEAN-China Free Trade Agreement In 2000, Chinese premier Zhu Ronghi suggested that China and ASEAN pursue a free trade agreement. Initially, ASEAN states reacted with “surprise and caution” (Flick and Kemburi 2012, p. 2). At the time, China was receiving two-thirds of foreign direct investment entering the region. Southeast Asia saw China as an economic rival. The China-ASEAN Experts Group on Economic Cooperation was formed in 2001 to examine the free trade proposal and quickly recommended acceptance. In 2002, China and ASEAN signed the Framework Agreement on Comprehensive Economic Cooperation, with the objective of creating an FTA within ten years. Over the next several years, they signed various agreements on free trade in goods, services, and investment, adding meat to the bones of the framework agreement. For ASEAN, the ACFTA offer became an opportunity to “enmesh” China in regional norms and institutions and to gain greater access to China’s burgeoning economy (Goh 2007a, 2007b). It also consolidated a relationship in which ASEAN states were compensated for the FDI they lost to China by becoming an integral part of the Chinese industrial supply chain (Ravenhill 2006). The ACFTA benefited China by providing China’s relatively inexperienced trade negotiators with practical experience in negotiating a trade deal. It undermined Japan’s leadership ambitions in Asia Pacific and left Japan scrambling to recover lost diplomatic and economic ground (Beeson and Li 2014, p. 99). The ACFTA gave China access to Southeast Asia’s abundant natural resources and agricultural products, but its most important function

122 The New ASEAN in Asia Pacific and Beyond was to counteract the “China threat” discourse by emphasizing the economic benefits that China could bring to ASEAN and providing China the opportunities to present itself as a responsible great power while counteracting US regional influence (Ba 2003; Ravenhill and Jiang 2009). The final ACFTA was extremely generous to the ASEAN states. China offered an “early harvest” provision—that is, a unilateral reduction in China’s tariffs with no expectation of immediate reciprocity from ASEAN. The agreement gave the ASEAN Six (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) until 2010 to remove all tariffs, while allowing Cambodia, Laos, Myanmar, and Vietnam until 2015. Negotiations on trade in goods and investment began in earnest in 2003. China realized that it was taking on some minor economic disadvantages, but accepted that the political and diplomatic advantages of the ACFTA justified the costs. Over the next few years, the parties worked out the details of the agreement and its full implementation. The ACFTA covered trade in goods, services, and investment. It came into effect on January 1, 2010, with 93 percent of the ASEAN Six tariffs reduced to zero percent. By the end of the first year, trade between China and ASEAN had increased 37.5 percent to $292.8 billion. The ACFTA encompassed a population of 1.9 billion, and a GDP of $6 trillion (Liu 2012, pp. 11–12). There is no doubt that the ACFTA has benefited both parties to the agreement, as Tables 5.1 and 5.2 illustrate. However, ASEAN governments and businesses remain apprehensive about the full implications of the FTA on the smaller Southeast Asian countries. For the ASEAN states, the primary purpose of the ACFTA was economic. China was committed to the ACFTA as a way to build a sense of community, alleviate tensions between itself and its Southeast Asian neighbors, and reinforce the idea of China’s “peaceful development” (Ba 2003). China’s actions also challenged other great powers to begin their own economic outreach to ASEAN. Its strategy worked well, until the intensification of the South China Sea dispute.

Table 5.1 ASEAN Exports to and Imports from China, 2005–2014 ($ billions) Exports Imports

2005 49 55

2006 62 67

2007 74 80

2008 83 92

2009 76 78


113 119

2011 128 153

2012 142 178


152.5 198


150.4 216.1

Source: Compiled from statistics at and ASEAN 2015 Statistical Yearbook.

Relations with China


Table 5.2 China’s Trade with Individual ASEAN States, 2010–2014 ($ billions) Brunei

Cambodia Indonesia Laos



Philippines Singapore Thailand Vietnam


Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports


0.4 0.7 1.3 0.1 22.0 20.8 0.5 0.6 23.8 50.4 3.5 0.9 11.5 16.2 32.3 24.7 19.7 33.2 23.1 7.0


0.7 0.6 2.3 0.2 29.2 31.3 0.5 0.8 27.9 62.1 4.8 1.7 14.3 18.0 35.6 28.1 25.7 39.0 29.1 11.1


1.3 0.4 2.7 0.2 34.3 31.9 0.9 0.8 36.5 58.3 5.7 1.3 16.7 19.6 40.8 28.5 31.2 38.6 34.2 16.2


1.7 0.9 3.4 0.4 36.9 31.4 1.7 1.0 45.9 60.2 7.3 2.9 19.9 18.2 45.8 30.1 32.7 38.5 48.6 16.9


1.7 0.2 3.3 0.5 39.1 24.5 1.8 1.8 46.4 55.7 9.4 15.6 23.5 21.0 48.9 30.8 34.3 38.3 63.7 19.9

Source: Compiled from the World Bank Country Profiles 2014,

China’s Military Power China has been less willing to extend multilateralism into the security realm. China’s leaders were horrified by the ease with which technologically superior Western forces destroyed the army of Saddam Hussein’s Iraq during the Gulf War (1990–1991). In response, China began modernizing its military technology and doctrine. The People’s Liberation Army (PLA) was refined and professionalized (Feaver, Hikotani, and Narine 2005, pp. 255–267). It is difficult to pin down China’s military expenditures, but the increase in Chinese military spending has tracked the increase in China’s GDP. In 2001, the Center for Strategic and International Studies estimated China’s military budget was $52 billion; in 2015, it was $214 billion. In that time, China’s economy grew by around 950 percent, meaning its military budget remained constant at about 2 percent of GDP. China’s military expenditures are economically rational. By comparison, the estimated annual US national security budget is around $1 trillion, or 3 percent of GDP (after spiking to about 4.5 percent in 2010) (Center for Strategic and International Studies 2015). China is a regional military power but does not have global force projection capacity. It has no foreign bases and has indicated it is ideologically opposed to building bases or garrisoning troops abroad. This

124 The New ASEAN in Asia Pacific and Beyond may change as China grows ever more immersed in the global system. China has sought access rights to foreign ports, but many Chinese are leery of foreign entanglements (Shambaugh 2013, pp. 269–306). China’s military buildup has concentrated on its capacity to use force against Taiwan. It has deployed hundreds of short-range ballistic missiles and large numbers of attack fighters, surface ships, submarines, and amphibious landing crafts within range of Taiwan. China periodically conducts military exercises in the waters adjacent to its “breakaway province” and refuses to renounce the use of force to prevent Taiwan’s separation from the mainland. China’s strategy, called area denial/sea denial, is supposed to make the area around Taiwan too dangerous for the US Navy to operate. After more than a decade of intense training and military buildup, China has largely succeeded in this goal (Shambaugh 2013, p. 280). Asia Pacific states are concerned about the possibility of a China-Taiwan confrontation and the dangers such a conflict would pose to regional peace and stability. At the same time, most regional states understand the China-Taiwan conflict as an internal Chinese affair. They might not interpret China’s use of force against Taiwan as indicative of a Chinese willingness to use force on sovereign neighbors, though the regionally destabilizing effects of such an action would be unavoidable and unwelcome. China has upgraded and vastly improved all areas of its military services, though it remains far behind the United States in terms of technological capacity. It has improved its cyberattack capabilities, its domestic weapons production (drawing heavily on Russian technology and knowledge), and its shipbuilding capacity. China has only one aircraft carrier—the Liaoning, a refitted Soviet carrier that China bought from the Ukraine in 1998 (Shambaugh 2013, p. 292).2 The navy has a second carrier under construction and aspires to build two more (Mizokami 2016). China conducts bilateral governmental security dialogs with numerous neighboring states, including Australia, India, Japan, Russia, and Thailand. It sees the ARF as a potential foundation for a regional security community. China improved its military transparency by publishing defense white papers that, while lacking in some information, have provided the international community far greater insights into China’s military doctrine and defense policy, defense industries and technology, military forces, and perspectives on Taiwan and international cooperation. China has been at the forefront of maintaining the world’s diplomatic channels to North Korea, primarily through its facilitation of the Six Party Talks. However, China is often criticized in the region for not doing enough to rein in North Korea’s aggressive impulses (Pollack 2014).

Relations with China


China’s Domestic Politics China’s foreign relations are a subset of its need to create and sustain economic development in order to stave off domestic social instability. China estimates that the country’s economy needs to grow by at least 7 percent every year in order to create enough jobs for the millions of people migrating across the country in search of employment (Shirk 2007, p. 10). Since mid-2015, China’s growth rate has fallen below 7 percent and declined to as little as 6.7 percent in late 2016 (Trading Economics 2016). This reflects both economic problems at home and the larger, long-term recession in the Western world. China has adjusted its economic forecasts for lower growth rates (6.5 percent between 2016 and 2020), reflecting its plan to rebalance its economy toward higherquality growth, while also developing the domestic services and measures needed to improve social protection (World Bank 2016a). China’s economic development has caused enormous social dislocation and disruption. Hundreds of millions of workers have migrated from different parts of the country to the wealthier provinces, looking for work. While there is much work to do, working conditions are often horrendous. Political corruption and the unrestrained pursuit of wealth within the new China have caused extraordinary hardship and injustice (Pei 2006). It is common for ordinary people to have their homes and farms expropriated by corrupt government officials who wish to claim the land for the building of factories and other profitable enterprises. Workers in large cities frequently go months without being paid, and work exorbitant hours in terrible conditions. Modern China is the manifestation of the worst excesses of unrestrained capitalism. The social contract that protected China’s citizens under communism disintegrated as economic reforms took hold. Wealth inequality in China is among the most pronounced in the world. In 2008, China reached a Gini coefficient of .49; by 2015, the Gini index was .46 (Statista 2016). The UN sets the warning level for political unrest caused by income inequality at anything greater than .40. In China, the richest 1 percent control a third of the country’s wealth; the poorest 25 percent control 1 percent of the wealth (Wildau and Mitchell 2016). To the public, the ruling Chinese Communist Party (CCP) is associated with corruption, undermining its legitimacy. Many Chinese realize that membership in the Communist Party affords individuals access to resources and government contacts that are used to the benefit of the government officials who oversee them. Tens of thousands of public protests are held every year in China by groups of people who feel exploited or oppressed by those in power. What keeps these protests

126 The New ASEAN in Asia Pacific and Beyond from becoming nationwide antigovernment movements is the growing economy that provides enough jobs to enough people to deny the protests the critical mass that they need (Shirk 2007, pp. 52–64). This may change as economic growth slows, if the government has not made sufficient progress in building the social safety net necessary to maintain a working society. The 1989 Tiananmen Square protests frightened the Chinese government leadership and led to resistance to Deng’s economic reforms from the political left. Deng succeeded in convincing the leadership that the greatest threat to the CCP’s political role and China’s stability would be failure to provide the people with economic advancement. This was best achieved through continued economic reform and deeper integration with the international capitalist economy. However, after Tiananmen, the party was not willing to risk political reform (Yahuda 2011, pp. 272–275). The CCP decided to replace its loss of legitimacy with nationalism. Throughout the 1990s and into the present day, the CCP nurtured the nationalist tendencies of its people. Nationalist demonstrations in China often become aggressive because they are one of the few outlets for anger that the authorities allow (Shirk 2007, pp. 62–64). The government fears that nationalist protests have the potential to transform into general uprisings against governmental authority if they are not properly controlled. Three particular foreign policy issue areas evoke strong nationalist responses: China’s dealings with Japan, Taiwan, and the United States. The Spratly Islands/South China Sea issue is not quite as volatile as these three, but it is rapidly heading in that direction (Wang 2015). Under the leadership of Mao Tse-tung and Deng Xiaoping, China overlooked Japan’s reluctance to come to terms with its history in Asia Pacific. The leadership felt that good relations with Japan were more important than playing to the strong Chinese antipathy toward Japan, though there were occasional tensions over issues of history between the two countries. In the 1990s, nationalism became much more of an issue for China. In 1993, after Tiananmen and the disintegration of the Soviet Union, China began a campaign of “patriotic education,” which encouraged young Chinese “to boost the nation’s spirit, enhance its cohesion, foster its self-esteem and sense of pride . . . and help the motherland become unified, prosperous and strong” (Yahuda 2007, p. 343). The CCP legitimated its rule by emphasizing its role in saving China from Japanese invasion. None of the twenty or so historical museums devoted to the war with Japan were built before the 1980s. Educated young Chinese, in particular, were drawn to the anti-Japanese nationalist rhetoric.

Relations with China


For most of their shared history, China regarded Japan as its “little brother,” and a subordinate nation. In the 1800s, as Western powers humiliated and dominated China, Japan learned from China’s experience and underwent the Meiji Restoration, reinventing itself from a feudal to a semi-modern state in less than forty years. Japan defeated China in the Sino-Japanese war of 1894–1895, resulting in China’s loss of Taiwan. Japan invaded China in 1938 to create a hinterland to feed the growing Japanese Empire. Ultimately, more than 20 million Chinese died under the ensuing Japanese occupation and the conflict of World War II. Unlike Germany, Japan has not confronted its wartime history in a way that is satisfying to its victims. Its critics charge Japan with whitewashing its conduct during World War II and refusing to teach its children about Japanese atrocities during this period. Because of this combination of factors, any issue involving Japan is a flashpoint for Chinese nationalism (Shirk 2007, pp. 140–180). The Chinese government cannot afford to look weak to its public in its dealings with Japan. This has made China’s conflict with Japan over the Diayou/Senkaku Islands particularly volatile and emotional (discussed in Chapter 7). Taiwan is another major source of tension in China’s foreign policy. China will go to war to prevent Taiwan’s formal separation from the mainland. Taiwan symbolizes the time that China was too weak to defend itself and its territory. China’s aversion to the prospect of Taiwanese separation is tied to its fear that if it allows one part of the country to formally separate, it will set a precedent for other groups and geographical areas, such as Tibet and Xinjiang province, which also have powerful separatist inclinations. The United States is the third area of sensitivity in China’s foreign policy (Shirk 2007, pp. 212–254). The 1989 Tiananmen Square incident seriously damaged China’s image in the United States and increased US pressure on China to improve its human rights record. The Chinese government resisted this pressure, determined not to be bullied by the United States and fearful that loosening human rights controls too quickly could endanger the state. The US decision to allow Taiwanese president Lee Teng-hui to visit the United States in June 1995 humiliated Chinese president Jiang Zemin and sparked a crisis in US-China relations. Secretary of State Warren Christopher had implied to Jiang that the United States would not allow Lee to enter the country, but the State Department reversed itself after considerable pressure from Congress. Jiang lost face in China and faced severe criticism from the Chinese military and his political opponents. Jiang sought to appease the anger of the public and the military by directing missile fire toward Taiwan. This resulted in the 1996 Taiwan Straits crisis, which led the

128 The New ASEAN in Asia Pacific and Beyond United States to sail an aircraft carrier group through the Taiwan Straits to deter Chinese aggression. This act drove US-Chinese relations to their lowest point since normalization between the countries in 1979 (Yahuda 2011, pp. 278–280). The US intervention was welcomed by many Asian states, which appreciated the evidence of US willingness to act against China, but it provided China with another touchstone for national humiliation and a solid reason for developing a military that could, potentially, deter future US intervention. The strains in the countries’ relations continued into 1999, when the Clinton administration inadvertently humiliated Chinese premier Zhu Rongi by backing out of an agreement that would have admitted China to the WTO. The arrangement was particularly favorable to the United States, and Zhu encountered withering criticism at home when its terms became known. The United States eventually did sign the WTO agreement with China in November 1999, on somewhat worse terms for the United States, allowing China to enter the WTO in 2001 (Shirk 2007, pp. 229–231). During the North Atlantic Treaty Organization’s (NATO) attack on Yugoslavia in 1999, the United States bombed China’s embassy in Belgrade. The incident outraged the Chinese public, media, and officials. Among Chinese, the consensus was that the US attack was deliberate. This perception persists and continues to inform the attitude of the Chinese public toward the United States. Even among Chinese officials, very few believe that the attack was an accident, despite American apologies and assurances to that effect (Shirk 2007, pp. 212–218).3 The Belgrade bombing catalyzed discussion within the Communist Party over how to deal with the United States. China’s leaders understood that a hostile relationship with the United States would hobble Chinese efforts at economic development and impede its long-term goals. Deng Xiaoping had believed that the general trend in the world was toward greater peace and prosperity. Jiang Zemin convinced his colleagues that this analysis still held true. However, China’s leaders also concluded that China needed to be more proactive in shaping its environment. It could not simply hope that events would turn out as they expected. China’s active diplomacy in the region reflected this assessment. Despite the US “war on terror” and its associated instability, Chinese analysts saw the regional environment as relatively benign, with few real threats to China’s security, though some Chinese analysts were concerned about China’s virtual encirclement by US military forces and alliances. Managing the US relationship has sometimes proven difficult, given the many sources of friction between the two states and the fact that no Chinese leader can afford to look weak in the face of foreign pressure. China’s leadership has insulated Sino-US relations from the

Relations with China


pressures of domestic politics as much as possible, directing China’s nationalist anger toward Japan, an easier target. However, the Chinese public remains suspicious of the United States. After the Belgrade bombing, the United States and China handled incidents between themselves more deftly. On April 1, 2001, a US EP3 military surveillance plane collided with a Chinese fighter jet about seventeen miles southeast of Hainan Island. The Chinese fighter pilot was killed and damage to the EP-3 forced it to land on Hainan Island. China held the US flight crew for eleven days before returning them to the United States. China dismantled the plane and eventually shipped it back to the United States in parts. Despite pressure from the military, Jiang Zemin made a concerted effort to moderate China’s response to ensure that the incident did not have long-term consequences for Sino-US relations. The government ordered China’s official and print media to tone down their nationalist rhetoric. However, ordinary citizens expressed their outrage and resentment toward the United States on the Internet. The George W. Bush administration came to power targeting China as the United States’ major potential adversary (Rice 2000). The September 11 terrorist attacks switched the security focus of the United States to international terrorism and provided China with an opportunity to cooperate with the United States on this “new threat.” With the United States distracted and launching wars in other parts of the world, China pursued its own strategies of development and economic integration with far greater focus. In the early 2000s, China began using its massive foreign reserves to support the US national debt, creating and reinforcing a relationship of financial interdependence between the two states. An Uncertain Future: Problems That China Must Overcome

During the early part of the twenty-first century, China’s unprecedented economic growth, its increasing national wealth, and its growing international political influence led many countries to assume that China was emerging as a major challenge to the United States. Much of China’s power during this period was not based on China’s actual capabilities but on expectations of what it would become (Breslin 2009). China’s structural influence in the international financial system is considerably less than its economic size and importance imply (Ciorciari 2014). In general, China follows rules made by others in a system that shapes and constrains its actions. However, China is beginning to take

130 The New ASEAN in Asia Pacific and Beyond actions that may alter the rules of the system. China’s development and promotion of the Asian Infrastructure Investment Bank is discussed later. Much of the twenty-first-century analysis of Asia Pacific/global politics asks if this is “China’s century” (Gurtov 2013). It is too soon to tell. China remains an internally fragile state with a need to maintain a stable external environment so it can concentrate on its continuing internal development (Gurtov 2013). Demographic Decline and the Opportunities of Automation

China faces a major demographic challenge: the fear that China will “get old before it gets rich.” When it began its dynamic economic growth, China exploited a relatively young, plentiful labor force. This is changing. China’s total fertility rate (the number of births per woman per lifetime) may be as low as 1.4, far below the 2.1 needed to maintain a stable population. China’s population is aging rapidly; the number of working-age Chinese dropped for the first time in 2010 or 2012; China’s overall population is expected to peak in 2020. These developments are compounded by the imbalanced sex ratio at birth of 115.9 boys to every 100 girls, meaning that there may be 50 million more men than women (Chang 2015).4 This situation has led to a proliferation of criminal activities around providing women for men and raised questions about the political and social implications of so many “surplus males.” In 2016, China had a ratio of 5.1 workers for every retiree; by 2040, the ratio will be 1.6 to 1. More Chinese are leaving the work force than entering it. China is rapidly aging and it will soon fall behind India in terms of overall population. Most retirees have saved very little and China is facing the social welfare problem of providing for the elderly by creating an adequate public pension system while contending with far fewer younger workers to support that system. Medical care for an aging population is also a looming crisis. China’s life expectancy has increased significantly, though early death by pollution (discussed later) takes a toll. China needs to transfer more of its considerable wealth to the poor, but this also means a shift in the allocation of national resources and priorities and a change in China’s economic growth model. It also requires a more advanced governmental system (Wang 2010). To some observers, China’s demographic situation virtually guarantees continued US domination of the world system; the United States replenishes itself through immigration, something that China has not yet had to do. Most of East Asia faces a similar demographic crisis, brought about by economic development, meaning the larger region is a

Relations with China


limited source of immigration for China. If China cannot manage its population problem, its economic output might never catch up to that of the United States (French 2016). There may be solutions to China’s demographic decline, but if so, they will require sophisticated government action and policy. China is turning to automation at an unprecedented rate to deal with both its demographic concerns and the effects of rising wages, which have been increasing at a rate of 10 percent per year. In 2016, China had 36 robots per 10,000 manufacturing workers, far behind Germany (292 per 10,000), Japan (312), and South Korea (478) (Bland 2016). However, China is investing heavily in industrial robots; its homegrown robotics manufacturing industry is developing rapidly, with considerable government support. Guangdong province alone set aside $200 billion to make the transition to automation. Between 2013 and 2016, China went on an international shopping spree, becoming the biggest buyer of industrial robots in the world. By 2018, it is expected to purchase more than 150,000 robots annually, which is more than the other big users of industrial robots (Japan, South Korea, Germany, and North America) combined (Petricic 2016). It is also buying not just the robots but the companies that make them; in 2016, China’s Midea paid $6 billion for an 85 percent stake in Germany’s Kuka, one of the world’s biggest manufacturers of robots. China expects automation to fill the labor gap, though it also means the gradual elimination of low-skilled jobs, a problem in a country where 40 percent of the population still live in the countryside, many in poverty. Increasingly, jobs running robots require higher skill levels.5 Income Inequality

Income inequality is another major concern, as noted earlier. China lacks a decent social safety net, many of its people feel exploited and abandoned, and it is a highly unequal society. Its economic growth is slowing, a major concern for a state that recognizes the danger of popular unrest if it cannot provide sufficient numbers of jobs to its people. Corruption in China is part of this story, as many government officials have grown wealthy at the expense of the people. President Xi launched a serious campaign to curb corruption, with notable success (Fewsmith 2015; Langfitt 2014). Ironically, the anticorruption campaign has contributed to the economic downturn in China, as corrupt officials hide money abroad and government offices spend less (Perkowski 2014). China’s efforts to shift from an economy driven by exports and investment to one supported by domestic private consumption is hampered by

132 The New ASEAN in Asia Pacific and Beyond its lack of an adequate social safety net. Ordinary Chinese save as much money as they can to guard against an unexpected personal disaster, knowing they will have no social support if they fall ill or lose their jobs. Providing social security is necessary for China’s development but the system that has been developed is inadequate and unfair to workers and farmers (Ke 2015). Environmental Catastrophe

The single largest and most pressing problem with which China must contend is the environmental catastrophe created by its rapid economic development. It is impossible to underestimate the social, political, and economic consequences of China’s pollution problem. China is the number one producer of greenhouse gases in the world, responsible for 27 percent of global emissions in 2014. Beijing frequently experiences air pollution events where the hazardous particles are dozens of times what the World Health Organization (WHO) deems safe. China has 367 cities with real-time air quality monitoring; at least 80 percent of them failed to meet national small-particle pollution standards during the first three quarters of 2015. The use of coal is the main cause of the air quality degradation. China’s energy consumption continues to rise; coal provides two-thirds of China’s energy. China’s coal-fired power plant capacity increased by 55 percent in the first six months of 2015 and the state approved 155 new coal power plants (more on this later). The government continues to promote the urbanization of the Chinese population, which creates greater demands for energy and vehicles. China’s pollution has caused severe water shortages. In 2014, the state categorized groundwater supplies in more than 60 percent of China’s major cities as “bad to very bad,” due to industrial pollution. More than 25 percent of China’s rivers are “unfit for human contact.” Combined with other environmental factors, like climate change and negligent farming practices, much of China’s arable land has become desert (Albert and Xu 2016). One-fifth of China’s farmland is too polluted to grow crops; large areas of polluted land have been taken out of food production because they may produce rice contaminated with heavy metals (Levitt 2015). These environmental catastrophes are undermining China’s ability to sustain its industrial output. China’s Ministry of the Environment estimated the cost of pollution at $227 billion in 2010, or about 3.5 percent of GDP. Air pollution contributes to roughly 1.2 million premature deaths every year in China; dangerous drinking water may cause around 11 percent of digestive system cancers. North of the Huai River, life

Relations with China


expectancy is 5.5 years shorter than in the south (Albert and Xu 2016). China’s polluted air is having environmental impacts as far away as the United States. Significantly, public protests against environmental issues are the greatest source of public unrest in China today, contributing to the government’s fear of instability (Levitt 2015). In December 2013, the National Development and Reform Commission released its first blueprint to deal with climate change. The government cracked down on factory emissions and pledged more than $500 billion between 2015 and 2020 to clean air and water pollution. China has made an international commitment to hit its peak carbon emissions by 2030 and announced plans to create a carbon cap and trade system. On January 1, 2015, China’s new environmental law came into effect. The new law allows for unlimited fines for polluting companies, encourages NGOs to initiate public interest lawsuits, and holds local governments accountable for implementing environmental policies (Ma 2015). However, there remain considerable doubts about how well these new measures will be enforced by and against local governments. China is, by far, the world’s largest investor in renewable energy, spending $103 billion in 2015 (36 percent of the global total) on wind, solar, hydropower, and other renewable technologies (Rumney 2016). Even China’s greater investment in coal is, according to its environmental plan, meant to transition to premium coal burned in new, hightech coal plants at very high temperatures with very high rates of efficiency. China plans to retrofit old power plants with new technology. It remains to be seen if China can reach these goals. Greenpeace doubts that many of these coal-powered plants will be built; it believes that China’s coal demand peaked in 2013 and China’s continued investment in coal may be “a temporary, transitional phenomenon” that will gradually decline as the country continues pushing toward cleaner energy generation (Shepard 2016). In 2017, China brought in regulations designed to make electric vehicles at least 20 percent of the new cars sold in China by 2025.6 These issues of demography, inequality, and environmental collapse are fundamental problems for China’s continuing development. The Chinese government has powerful political, economic, health, and social reasons for effectively addressing them. These issues require a stable and peaceful regional environment and considerable attention from the central government. These factors encourage an optimistic outlook on China’s relationship with the ASEAN states. Even so, China’s nationalism and desire for security can come into play and undermine this positive assessment. This is the case with the controversy over the South China Sea.

134 The New ASEAN in Asia Pacific and Beyond China, ASEAN, and the South China Sea Until around 2009, China impressed most observers of Asia Pacific with the effectiveness of its “charm offensive” in Southeast Asia. In 2007, some of China’s actions in the South China Sea began to shake this view. By 2010, a series of incidents seriously undermined China’s political and diplomatic gains in the region. By 2015, China’s assertive actions in the South China Sea had undone much of the “charm offensive.” A renewed fear of a “China threat” alarmed many Asian states. Regional states continued to do business with China, but many sought allies to balance China’s regional influence. China’s intransigence on its sovereignty claims illustrated the futility of ASEAN’s hope to “socialize” China into regional norms. The tensions rejuvenated the regional role of the United States and strained ASEAN’s unity. The South China Sea conflict has the potential to shape relations between the United States and China, and China and other great powers, notably Japan. China may want peaceful and friendly relations with its neighbors, but it appears unwilling to compromise on what it regards as its key security and territorial interests. This may prevent it from realizing its regional leadership aspirations. The 1982 UN Convention on the Law of the Sea (UNCLOS) is the international legal framework governing maritime jurisdictional disputes and boundaries. All of the disputants in the South China Sea (with the exception of Taiwan) are parties to UNCLOS. Starting from the baselines along their coasts, UNCLOS allows states to claim sovereignty over 12 nautical miles of sea and exclusive economic zones (EEZs) out to 200 nautical miles, and continental shelf rights. Within their EEZs, states have the right to exploit the economic resources of the ocean and the seabed. Under Article 76 of UNCLOS, states sitting on a broad continental shelf that extends beyond the 200-nautical-mile limit may claim the additional territory, if they can make the case to the UN Commission on the Limits of the Continental Shelf (CLCS) that the additional area constitutes part of the “natural prolongation” of the coastal state’s land territory. For many coastal states, the deadline to submit such claims to the CLCS was May 13, 2009. This deadline led to a flurry of claims on the South China Sea. Malaysia and Vietnam submitted a joint application to the CLCS asserting their claims in the southern South China Sea; Vietnam later made a separate, independent claim on an area in the north central South China Sea. China and the Philippines objected to these actions but later made claims of their own, as did Brunei (Schofield and Storey 2009, pp. 13–14). Ironically, by setting deadlines for states to make territorial claims, UNCLOS may have exacerbated simmering regional tensions.

Relations with China


Which countries hold sovereignty over the Paracel and Spratly Islands is at the heart of the South China Sea disputes. The Paracel Islands consist of the Crescent and Amphitrite groups of small islands, rocks, and reefs. The Spratly Islands are a mix of small islands, rocks, shoals, and coral reef features spread over roughly 90,000 square miles of the southern South China Sea. There is uncertainty over what to count in the Spratly Islands group. Some observers have argued that the island chain consists of 500 features but the number is more commonly put at 150–180, and only 48 of these features are above water at high tide (Schofield and Storey 2009, p. 12). The 2016 decision of the International Tribunal for the Law of the Sea (ITLOS) (discussed later) clarified that none of the Paracels or Spratlys are legally “islands.” As much as one-third of world trade passes through the Strait of Malacca in the South China Sea. The South China Sea’s sea lines of communication and passages are critical to the energy security of Northeast Asia. More than 90 percent of Japan’s oil passes through the sea. The percentage of energy imports to China, Japan, South Korea, and Taiwan moving through the area is increasing over time. The South China Sea accounts for 10 percent of the global fish catch and is crucial to supplying nutritional needs of the coastal populations (Schofield and Storey 2009, p. 8) The South China Sea seabed may be a reservoir of enormous energy deposits, though estimates of the potential seabed resources vary significantly. The US Geological Survey estimates that 28 billion barrels of oil may lie under the sea floor, but some Chinese sources estimate oil reserves in the range of 105–213 billion barrels of oil (Schofield and Storey 2009, p. 8). Chinese petroleum geologists predict that China will confirm the potential of 22 billion barrels of oil in the South China Sea’s Deepwater Fields by 2020. The China National Offshore Oil Corporation (CNOOC) believes that upward of 200 trillion cubic meters of natural gas may also be in the seabed, and some Chinese geologists believe this may be understating the region’s true potential. Some Chinese estimates put the potential hydrocarbon resources of the South China Sea at fourteen times China’s current oil reserves and ten times its gas reserves (Brown 2011). China also believes that the South China Sea may be a treasure trove of methane hydrates, the “gas resource of the future,” possibly equivalent to 10 billion tons of oil (Brown 2011). China’s dependency on foreign oil means that having a reliable source of energy close to home is highly desirable, particularly as its major oil suppliers, such as Sudan, become more unreliable, but the tensions in the region have made reliable exploration impossible. Moreover, this picture of the South China Sea as a natural resource bonanza may be

136 The New ASEAN in Asia Pacific and Beyond vastly exaggerated. The geographical features in the central part of the South China Sea—the area China is claiming—indicate that the undersea oil and gas likely leaked away eons ago. If the sea does possess abundant natural resources, they are more likely closer to shore, outside the disputed territory (Hayton 2014, pp. 147–150). There are six parties disputing sovereignty over various features in the South China Sea: Brunei, China, Malaysia, the Philippines, Taiwan, and Vietnam. China and Vietnam claim sovereignty over the Paracel Islands in the northwest; Brunei, China, Malaysia, the Philippines, and Vietnam claim some or all of the Spratly Islands in the southern part of the sea. China and Taiwan claim control of Pratas Island, the Macclesfield Bank, and the Scarborough Shoal. The Philippines also claims Scarborough Shoal. Vietnam occupies twenty-one features, China occupies seven, the Philippines nine, Malaysia five, and Taiwan one. The 2002 ASEAN-China Declaration on Conduct of Parties in the South China Sea required the signatories to stop seizing unoccupied features. The disputants have respected this commitment, but all have upgraded the civilian and military infrastructure on the occupied features. None of the parties to the disagreement has a strong claim on the disputed features under international law. For this reason, they avoided taking the matter to the International Court of Justice, which has the power to resolve disputes over sovereignty. In 2013, however, the Philippines used UNCLOS to invoke an arbitral tribunal to argue that China’s claims in the region were unsupported by international law.

Competing Claims in the South China Sea China

China’s claims that the South China Sea, and its islands and resources, are part of China’s historical domain. Chinese fishermen used and occupied the disputed islands 2,000 years ago and ancient Chinese maps sometimes noted these geographical features. In 1876, China’s ambassador to Britain claimed the Paracels for China, and in 1883 China supposedly expelled a German survey team from the Spratlys (Hong 2012, p. 16). However, it seems more likely that the Germans completed their survey without attracting attention. They published their work in 1885 and it thereafter became the reference for British and French maps of the islands (Hayton 2014, pp. 48–49). The meaning and significance of an 1887 boundary treaty between China and France is disputed. However, during the 1800s, other states had already claimed some of the South China Sea features.

Relations with China


China cannot demonstrate continuous control of the disputed areas, which is necessary for its claims of sovereignty over the islands. In addition, modern China’s claim that it exercised sovereignty over the South China Sea islands going back to ancient times is historically incongruous. The concept of “sovereignty” was introduced to Asia by European imperialists in the seventeenth century (Till 2009, p. 27). Asian empires were based on the concept of a mandala, which meant that territorial claims followed expanding and contracting zones of influence rather than set borders (Acharya 2012, pp. 63–64; Hayton 2014, p. 50). The idea that any political entity could own the sea was unknown to Asians. The Chinese focus on the South China Sea is largely a twentieth-century invention.7 In 1909, China asserted its sovereignty over the Paracel Islands for the first time, as a nationalist response to the many humiliations to which foreign powers subjected China. To that point, Chinese maps showed China’s southernmost territory as Hainan Island. In 1914, a private Chinese cartographer published a map of China that included Pratas Island and the Paracels. It was not until 1933 that China first claimed the Spratlys, and this was a confused response to the French decision to annex Spratly Island. The Chinese apparently confused the Spratlys with the Paracels (Hayton 2014, pp. 47–55). In 1936, Bai Meichu, an eminent Chinese cartographer, drew a map that included a U-shaped line demarcating Chinese territory as far south as the James Shoal. The Chinese government took this map as its official position in 1947, when the scramble for South China Sea islands between China and France resumed with the defeat of Japan. In 1949, China’s Kuomintang government retreated to Taiwan, but the new communist government maintained its territorial claims. The People’s Republic of China (PRC) first formally claimed islands in the South China Sea in 1951, in response to the peace negotiations with Japan in San Francisco, from which China was excluded (Yahuda 2013, p. 450). The PRC reiterated its claims in 1958, and following the signing of UNCLOS (1982) and its ratification (1996). Bai’s 1936 map showed an eleven-dash line that encompassed almost the entire South China Sea. In 1953, China’s government removed two lines from the map, conceding the Gulf of Tonkin to Vietnam, apparently as a favor to its fellow communists.8 In 2009, China presented the nine-dash line map as part of its submission to the UN Commission on the Limits of the Continental Shelf, the first time it used the map in an official international context. China presented the map with no explanation of what it meant. The ambiguity of the nine-dash line appears to be central to China’s strategy in the South China Sea. Even on China’s official maps, the lines have no specified geographic coordinates and are represented

138 The New ASEAN in Asia Pacific and Beyond inconsistently. The 1947 map is different from the 2009 map, which is different than other, later Chinese maps. The 2009 map was the basis of a study by the US State Department (Baumert and Melchior 2014) (see Figure 5.1). On that map, the nine dashes demarcate approximately 2 million square kilometers of maritime space and thirteen square kilometers of land, excluding Taiwan and Pratas Island. The land features include the Paracels, the Spratlys, and Scarborough Reef. The dashes are not evenly spaced or numbered and many are extremely close to the mainland coasts and coastal islands of other littoral states. In Figure 5.1, dash 1, off Vietnam, is 50 nautical miles from the mainland coast; dash 5 is 35 nautical miles from the Philippines; dash 9 is 26 nautical miles from the Philippines’ northernmost island. The dashes are generally closer to the coasts of the surrounding states than to the disputed features in the South China Sea. This cartographic inconsistency, combined with China’s refusal to clarify what the nine dashes represent, adds to the confusion around its claims. China frequently claims access to the “adjacent seas” of the South China Sea islands and has not clarified if this is a claim for an EEZ. China has tried to stop the exploration for oil and gas in areas that are within the EEZs of Vietnam and the Philippines. It has demanded identification from ships well within the maritime territory of Vietnam. It has demanded that other disputants over the South China Sea seek China’s permission before conducting oil exploration activities within their own EEZs, while conducting its own exploration within its recognized EEZ (Yahuda 2013). All of this suggests that China is claiming most of the South China Sea for itself. In 1974, China forcibly evicted South Vietnam from the Paracel Islands. In 1988, China and Vietnam fought a naval battle over the Spratlys that killed seventy-two Vietnamese and sank three Vietnamese ships. In 1992, China’s National People’s Congress passed a law that laid claim to practically the entire South China Sea, and in 1998 another law formalized China’s claim to a 200-nautical-mile EEZ and rights to continental shelves in China’s maritime areas. Between 1995 and 1997, China built fortifications on Mischief Reef, which was within the Philippines’ EEZ, and disputed Vietnam’s ownership of offshore resources. China refused to discuss the South China Sea in the ARF, insisting it was a bilateral issue. ASEAN responded to China’s actions with a unified front, supporting the Philippines over the Mischief Reef incident. In the late 1990s, China began to be more cooperative and diplomatic in dealing with its neighbors as part of its “charm offensive.” This enabled the 2002 declaration of conduct, which froze the status quo and encouraged confidence-building measures among claimants. In 2007, however, China started to become more assertive in the region once

Relations with China


Figure 5.1 China’s Claims in the South China Sea, 2009

Source: Baumert and Melchior 2014, p. 2.

again. China created a city and naval base in Hainan province called Sansha from which to administer its claims in the Paracels and Spratly Islands. China resumed its pressure on foreign energy companies to prevent them from undertaking work off Vietnamese coastal waters and it unilaterally imposed fishing bans in the South China Sea. The rapid

140 The New ASEAN in Asia Pacific and Beyond modernization of the People’s Liberation Army Navy has made China the most formidable navy among the disputant states. Nonetheless, China has been careful to use coast guard and other nonmilitary assets to press its claims in the South China Sea. Beginning in 2009 and 2011, but ramping up considerably from 2012 on, China became involved in a number of confrontations with various other claimant states and their ships in the South China Sea. Some of these encounters were violent and seriously undermined the region’s impression of China as a responsible rising power. In 2013–2014, China began dredging around three different sites in the South China Sea. Over the next three years, it created seven artificial islands in the disputed area, using land reclamation technology to dump sand onto some of the reefs and islands it controlled, including Subi Reef, Mischief Reef, and Fiery Cross Reef. By 2016, China had added more than 3,200 acres of new land to the Spratlys, doing tremendous environmental damage to the reefs (Kuo 2016). The new islands were outfitted with new port facilities and landing strips capable of handling fighter jets, along with recreational and living facilities for the inhabitants. China built reinforced airplane hangars on Subi, Fiery Cross, and Mischief Reefs (Sanger and Gladstone 2016). Whether this contradicts President Xi’s promise not to militarize the islands depends on if the Chinese see “militarization” as the actual deployment of lethal weapons on the bases. The Philippines

The Philippines claims over fifty geographical features in the Spratly Islands, which it calls the Kalayaan Island Group. Manila bases its claim to the Kalayaan Island Group on its proximity to Palawan Island and the argument that the 1951 San Francisco Peace Treaty rendered the islands terra nullius, making them available to the Philippines. As early as 1946, the Philippines indicated it intended to claim the Spratlys as a security measure. It did not press the claim, however, so long as the islands stayed under Taiwan’s control. In 1955, some of the islands were “discovered” by Filipino national Tomas Cloma, who named them “Freedomland” and hoped they would become a protectorate of the Philippines. Taiwan forced Cloma to abandon the islands, but the issue came back in the 1970s when the Philippines began oil exploration off the coast of Palawan province. The government forced Cloma to “cede” the islands to the state. In 1978, Freedomland was renamed Kalayaan Islands (kalayaan meaning “freedom” in Tagalog) and made a municipality of Palawan (Hayton 2014, pp. 64–70).

Relations with China


During the 1990s, China offered to jointly develop the resources of the South China Sea with other claimant states, but its offer was ignored by states that saw no need to share resources they felt belonged to them. In 2004, the Philippines unexpectedly agreed to enter a joint maritime seismic undertaking to explore an area of 143,000 square kilometers north and west of Palawan. ASEAN diplomats were astonished and angry that the Philippines had broken the regional solidarity on China. Vietnam was angry but, in 2005, joined the joint maritime seismic undertaking rather than be left out. Nonetheless, the project soon bogged down in charges of corruption on the part of President Gloria Macapagal Arroyo and her husband and other cronies, who benefited financially from the arrangement and associated business deals with China. The Far Eastern Economic Review accused the president of making “breathtaking concessions” in the joint maritime seismic undertaking. The joint-undertaking agreement expired on July 1, 2008 (Hayton 2014, pp. 130–135). The Philippines’ maritime claims were defined by a series of treaties signed in 1898, 1900, and 1930, the so-called Philippines Treaty Limits. The Philippines’ claims were not entirely in accordance with UNCLOS, which put the country in the awkward position of invoking the Law of the Sea against China, even as it defied that law. In March 2009, the Philippines passed a baselines law that reiterated its sovereignty over the Kalayaan Island Group and Scarborough Shoal, but which also brought the country into compliance with UNCLOS. In 2013, the Philippines brought a case under UNCLOS against China’s claims and conduct in the South China Sea, despite China’s opposition and refusal to participate in the process. This development is addressed below. Vietnam

Vietnam claims the Spratlys and Paracel Islands. It bases its claims on historical usage dating back to the seventeenth century. In the eighteenth and nineteenth centuries, Vietnamese rulers asserted sovereignty over the Paracels, though there is no evidence they maintained their claim. In 1884, France occupied Vietnam and asserted claims for the Spratlys and Paracels. Between 1933 and 1939, France claimed nine of the Spratly Islands for itself. Vietnam maintained the claim after the French departure. In 1956 and 1958, Vietnam’s foreign minister and prime minister, respectively, made comments that seemed to acknowledge China’s ownership of the Spratlys, though Vietnam now argues this was done out of political necessity (Hong 2012, pp. 16– 17). Since 1974, China has occupied the Paracels, but Vietnam continues to assert its claim. Like China, Vietnam terms its sovereignty claims

142 The New ASEAN in Asia Pacific and Beyond as “indisputable” even though its historical case is no better. In general, Vietnam and China’s relations stabilized after normalization in 1991. The countries have reached agreements on their land border and in the Gulf of Tonkin. Since 2007, however, Vietnam’s relations with China in the South China Sea have declined. Vietnam plans for its marine economy to generate 50 percent of the country’s GDP by 2020. Vietnam sees China’s efforts to control the South China Sea as designed to stymie its development. Vietnam has generally relied on diplomacy to answer China’s aggressive moves. However, it has not been happy with ASEAN’s response. In 1997, Vietnam failed to gain the support of its ASEAN colleagues when facing China in the Gulf of Tonkin and it continues to push ASEAN to negotiate a stronger code of conduct with China. Vietnam has tried to consolidate its physical presence and jurisdiction in the Spratly Islands, including electing local representatives to the national assembly from the Spratlys. Vietnam increased its military modernization program, putting greatest emphasis on acquiring more potent naval and air assets. Vietnam is relying on Russia to provide it with frigates, Corvettes, submarines, and missile boats, as well as viable fighter jets. These measures may counteract China’s naval power. Vietnam is pushing for greater intra-ASEAN security cooperation and is strengthening its ties with the United States (Schofield and Storey 2009, pp. 30–34). Malaysia

Malaysia claims twelve features in the Spratly Islands and occupies five. Malaysia argues that it bases it claims on the continental shelf extension and its discovery/occupation of specific islands. In 1979, it published a map that indicated its maritime boundaries and continental shelf and claimed all islands rising from the shelf. However, the idea of “continental shelf” does not extend to islands rising above the sea, only submerged features. Malaysia recognized the weakness of its claim and now emphasizes possession and occupation, even as it has made a claim for recognition of the extension of the continental shelf of its territory (Hong 2012, pp. 19–20). Malaysia seems to be claiming straight baselines from areas of coastline that are not deeply indented, in violation of the practice of UNCLOS. Malaysia has generally good relations with China, despite their disputes over the South China Sea. However, unlike the Philippines, Malaysia’s claims lie closer to its borders and, therefore, are easier to defend. Malaysia has a formidable navy and air force and seems capable of protecting its claims. China and Malaysia have pledged to increase their dialogue and cooperation in the South

Relations with China


China Sea with the objective of reaching a peaceful settlement of the dispute (Schofield and Storey 2009, pp. 34–36). Brunei

Brunei claims Louisa Reef, which lies within the country’s 200-nauticalmile EEZ, and Rifleman Bank, which is based on a 350-nautical-mile continental shelf claim. In 1983, Malaysia landed troops on the reef and constructed a lighthouse. Brunei is the only party to the dispute that does not physically occupy any features in the South China Sea. Nonetheless, Brunei’s submission in May 2009 to the CLCS indicated that it claims areas of the continental shelf wanted by Malaysia and Vietnam. Indonesia

Indonesia does not claim any of the islands in the Spratlys. However, its uncontested claim to the Natuna Islands in the southwestern South China Sea indicates its interest in regional maritime boundary resolution. China has produced a map showing that its “historic waters” overlap with the Natuna Islands’ EEZ. Jakarta has rejected Beijing’s call to negotiate the issue and, in 1996, conducted a major military exercise in the islands. Since 1996, the issue has largely subsided. In June 2009, however, Indonesia detained eight Chinese fishing boats inside the Natuna Islands’ EEZ. China objected, claiming that the seventy-five detained fishers were operating in China’s “traditional fishing grounds.” China’s use of fishers as proxies to assert its claims in the South China Sea raised concerns among the disputant states. The United States Gets Involved

In early 2010, reports surfaced claiming that China had defined the South China Sea as a national “core interest,” implying that it saw the issue as on par with Taiwan, Tibet, and Xinjiang as areas that China considers to be inextricably part of the motherland. This suggested that China would be willing to use force to defend its claims. US secretary of state Hillary Clinton asserted that the chief Chinese foreign policy official, Dai Bingguo, indicated this shift in policy to her during a meeting. The Chinese government did not repeat the claim. Zhu Feng, a Chinese political scientist, claimed that, in the original text, China did use the term “core interest” but actually declared that “the peaceful resolution of the South China Sea is the core interest of the Chinese government” (Hong 2012, p. 32). The media may have misinterpreted this

144 The New ASEAN in Asia Pacific and Beyond statement. China refused to confirm or deny that the South China Sea is a core interest. This may reflect a concern with nationalist reaction in China, but it may indicate genuine disagreements within the Chinese leadership over how to designate the maritime conflict. At the July 2010 Hanoi meeting of the ASEAN Regional Forum, Secretary of State Clinton declared that the United States saw the South China Sea as a “leading diplomatic priority” and “pivotal to regional security” (Hong 2012, p. 31). She said that the United States had a “national interest” in the disputes in the South China Sea. Clinton may have made this declaration in response to the Chinese claim. The US decision to involve itself in the conflict was part of the US “rebalancing” toward Asia, discussed in Chapter 7. It was strongly encouraged by Vietnam, the ASEAN chair for that year. The US intervention shocked China, which warned the United States to stay out of the dispute. Most Southeast Asian states welcomed the US statement, despite the fact that China had privately asked them not to broach the subject at the ARF and not to present a common position. The United States claimed that its major concern is maintaining freedom of navigation in the region and called on the claimants to resolve their disputes in accordance with UNCLOS. Application of the UN Convention on the Law of the Sea

The UNCLOS regime is designed to resolve conflicts over maritime boundary and related issues, not sovereignty disputes. UNCLOS is based on the assumption that sovereignty over land features has been established. UNCLOS’s dispute resolution mechanisms are also limited by extensive opting out provisions. Article 287 provides states with a choice of four alternative forums in which to settle disputes: the International Tribunal for the Law of the Sea, the International Court of Justice, and two different arbitration tribunals constituted under different provisions of UNCLOS. Article 297 provides a list of possible areas of dispute that can be excluded from the dispute settlement procedures, if states decide to opt out. Article 298 requires that states that wish to exclude specified categories of dispute must make a written declaration to that effect. These categories of dispute are sea boundary presentations or historic bays and titles; military or law enforcement activities that concern the “exercise of sovereign rights or jurisdiction excluded from the jurisdiction of a court or tribunal under Article 297”; and disputes wherein the UN Security Council is exercising its functions (Hong 2012, p. 45). China is the only disputant state to invoke Article

Relations with China


298. Malaysia, the Philippines, and Vietnam, however, made declarations when ratifying UNCLOS that limited the convention’s application. Even if states are unwilling to employ UNCLOS’s dispute settlement mechanisms, the treaty can play an indirect role in the dispute by clarifying the definition of “islands.” According to Article 121 of UNCLOS: “1) An island is a naturally formed area of land, surrounded by water, which is above water at high tide. . . . 3) Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or Continental shelf” (UNCLOS 1982, p. 66). As noted, only forty-eight of the hundreds of geographical features in the Spratlys island chain remain above the water at high tide. Whether any of them “can sustain human habitation or economic life on their own” was the subject of intense debate. If properly supplied and maintained from outside, is the ability to consistently maintain human occupation of a small geographical feature enough for a claimant to argue that the rock is sustaining human habitation? (Simon 2012, pp. 996– 997) In 2016, the tribunal that heard the Phlippines’ case against China addressed these issues. Despite China’s deliberate ambiguity about its claims in the South China Sea, the US State Department’s analysis of the possible meanings of China’s nine-dash line reached the conclusion that China’s claims have no legal basis in any possible permutation. Articles 15, 74, and 83 of UNCLOS deal with the delimitation of maritime boundaries. In general (and in practice), when EEZs come into conflict, the maritime boundary is usually set equidistant between the claimant states, though Articles 10 and 15 of UNCLOS make provision for “historic bays and titles.” The established practice in international law puts the onus to establish the validity of a claim on the claimant. To establish the existence of a historic claim or title, a state must demonstrate “1) open, notorious and effective exercise of authority over the body of water in question; 2) continuous exercise of that authority; 3) acquiescence by foreign states in the exercise of that authority” (Baumert and Melchior 2014, p. 10). In addition, Articles 10 and 15 apply only to bays and near-coastal features, not to areas of EEZs, continental shelves, or the high seas. China claims all of the land features within the South China Sea but its maritime claims are unclear. The US evaluation of China’s possible maritime claims examined three possible scenarios: that the dashed line indicates (1) only the islands claimed within the South China Sea, (2) a distinct maritime boundary, or (3) historical claims. There is considerable evidence that the Chinese claim is only on the land features within the South China Sea and that the maritime claim then encompasses only what China is legally entitled to from these

146 The New ASEAN in Asia Pacific and Beyond features (i.e., a 12-nautical-mile and 200-nautical-mile EEZ from islands; 12-nautical-mile territorial sea from other features). China’s 1992 and 1998 territorial sea and continental shelf laws only claim maritime territory extending from land features. The 1930–1940s maps on which China bases its claims were drawn at a time when islands were entitled to only narrow strips of maritime territory. Statements at the time indicate that China recognized the “high seas” between its mainland coast and its island claims. If this is the case, then China’s maritime claims would seem to accord with UNCLOS. What was undetermined before the 2016 ITLOS decision is what maritime territory China would be entitled to depending on whether and which features in the South China Sea qualified as “islands,” how the disputes over these land features are resolved, and how the EEZs of these islands would be negotiated with other littoral states where EEZs overlap. China refuses to specify how it designates the features it claims: as islands, rocks, or submerged features. The second alternative is that China sees the nine-dash line as a demarcation of its maritime boundary, despite the inconsistencies between its various maps. This interpretation is supported by the fact that the same notations on domestic Chinese maps used to mark “boundaries” are used to indicate China’s South China Sea claim. If it is China’s intention to claim that all of the sea within the nine-dash line belongs to China, then the Chinese claim has no basis in international law. Assuming that the dashes indicate borders originating with features in the South China Sea, some of the dashes extend well beyond the EEZ permitted under UNCLOS and violate the EEZs of surrounding states. UNCLOS specifies that contending maritime boundaries should be determined by negotiation. The third alternative is that the nine-dash line reflects China’s historical claims: sovereignty or some lesser set of rights to the maritime space. There is considerable evidence that this is the nature of China’s claim. China has asserted its sovereignty over areas in the South China Sea—such as the Second Thomas Shoal—that are well beyond the projected 200-nautical-mile EEZ of any South China Sea feature. Some of China’s domestic laws assert special rights to the seas that go beyond established UNCLOS conditions. According to Nong Hong, the consensus position among Chinese scholars is that China enjoys a combination of “sovereignty + UNCLOS + historic rights” within the area of the nine-dash line—that is, China enjoys full sovereignty over features in the South China Sea, including EEZs that extend from them, and historical rights to fishing in the larger region indicated by the nine dashes (cited in Wang 2015, p. 514). This maximalist position has supplanted

Relations with China


an earlier scholarly consensus position that saw China’s maritime claims as emanating from the land features within the line, in accordance with UNCLOS (Wang 2015). China has made no clear historical claim to the waters within the South China Sea. To make such a claim legally, it must make a formal declaration. A number of Chinese statements indicate that China exercises “jurisdiction” in the South China Sea, but there is no indication of the “nature, basis or geographic location” of the jurisdiction (Baumert and Melchior 2014, p. 18). The various maps published by China over the decades were not sufficiently well known, nor consistent and clear enough, to constitute a maritime claim. China’s 1958 territorial sea declaration refers to the “high seas” as separating mainland China from its South China Sea claims. If China does make a historical claim, however, it would directly contradict UNCLOS. Other than the historical exceptions noted, UNCLOS makes it clear that history is not an acceptable basis for maritime jurisdiction. When China ratified UNCLOS in 1996, its reservations undermined the ratification by reaffirming its sovereignty over all the “archipelagoes and islands” listed in the 1992 law (Simon 2012, p. 1001). These kinds of reservations—though common—are of questionable legal veracity, especially if they contradict the treaty being ratified. China sometimes claims that its historical rights and titles are not regulated by UNCLOS and continue to be governed by “general international law.” UNCLOS abrogates historical claims and supersedes any “general international law” but, even by this standard, China’s historical claims in the South China Sea fail to pass legal muster. The claims lack notoriety and China’s continuing reluctance to clarify what its claims mean actually undermines them further. China failed to exercise continuous authority over the South China Sea islands and features. Other states occupy different features and also have extended histories in the region. Finally, no state has recognized China’s territorial claims. China first used the nine-dash line as part of an official representation in 2009. Numerous states immediately protested. China’s assertions of sovereignty over large maritime regions of the South China Sea rest on tenuous legal foundations (Baumert and Melchior 2014, pp. 21–22). The United States argues that “legitimate claims in the South China Sea should be derived solely from legitimate claims to land features” (Hillary Clinton, cited in Valencia 2011). The United States has not ratified the UNCLOS treaty; therefore, its credibility in invoking UNCLOS is strained (Valencia 2011). The United States says that it acts in accordance with UNCLOS, even if it has not ratified it, because the law is now part of customary international law, but the US Senate’s refusal to

148 The New ASEAN in Asia Pacific and Beyond ratify the treaty reflects the view that the United States must have the option of choosing what laws it will and will not follow. Moreover, many of the ASEAN states are selective in their obedience to UNCLOS. Vietnam and Indonesia do not allow the innocent passage of foreign warships in their territorial seas without their consent, while Malaysia does not allow foreign military exercises in its EEZ without its consent. These practices are contrary to the provisions of UNCLOS. However, the fact that other states are ignoring or violating UNCLOS does not invalidate the legal regime. The Philippines Invokes UNCLOS

In January 2013, the Philippines filed a request for arbitration of its dispute with China under the provisions of UNCLOS. The International Tribunal on the Law of the Sea organized the subsequent tribunal, hosted by the Permanent Court of Arbitration at The Hague, Netherlands. China made an Article 298 declaration that it did not accept the compulsory dispute resolution procedures under UNCLOS with respect to historical title and refused to take part in the proceedings. China also argued that the Philippines’ actions violated its commitments under the Declaration on Conduct of Parties in the South China Sea to resolve South China Sea disputes through negotiation. As previously noted, UNCLOS cannot resolve disputes over sovereignty, but the Philippines drafted its request to specifically avoid questions of sovereignty and historical title in order to keep the case within the panel’s jurisdiction. China did not make an official submission to the tribunal. However, on December 7, 2014, it issued a detailed position paper that outlined its objections to the case and the basis of its claims over the South China Sea (Chinese Ministry of Foreign Affairs 2014). The tribunal utilized this document to understand China’s position. The paper argued that the dispute with the Philippines was over sovereignty, over which the panel had no jurisdiction, and it asserted China’s historical ties and “indisputable sovereignty” over the South China Sea. It also argued that China had exercised almost continuous sovereignty over the islands for centuries—a claim that is demonstrably false and, as already noted, incongruous with the historical reality of “sovereignty” in Asia. The Philippines made five claims: that China was not entitled to what it said were its “historical rights” over the South China Sea; that the nine-dash line has no basis in law; that the features of the South China Sea that China claims are not islands and cannot generate EEZs; that China violated UNCLOS by interfering with the Philippines’ exercise of its sovereignty; and that China has caused irreversible environmental

Relations with China


damage to the reefs and marine life of the South China Sea (In the Matter of the South China Sea Arbitration 2016, pp. 2–3). The Philippines articulated these arguments in fourteen specific submissions. On October 29, 2015, the tribunal announced that it had jurisdiction over part of the case, though it reserved judgment on whether it had jurisdiction on seven of the fourteen submissions. On November 25, the tribunal began hearing arguments. On July 12, 2016, it issued its decision. On every major point, it found overwhelmingly in favor of the Philippines and against China. The tribunal ruled that China’s nine-dash line was invalid; any “historical rights” to the South China Sea China may have possessed were extinguished when it signed UNCLOS. Moreover, while China may have used South China Sea islands in the past, it never exercised exclusive authority over them. The panel found that the rocks and reefs on which China established its claim were too small to have EEZs. Thus, “without delimiting a boundary,” the panel could declare that China was committing unlawful acts in the Philippines’ waters. The tribunal found that China violated the Philippines’ rights within its own EEZ by blocking the Philippines’ fishing and petroleumseeking actions. The panel also condemned China for engaging in, or failing to stop, activities that did enormous damage to the marine environment, such as dredging to build artificial islands and failing to regulate its fishers’ activities (In the Matter of the South China Sea Arbitration 2016; Perlez 2016; Welch 2016). Chinese president Xi responded by saying that China’s “territorial sovereignty and marine rights” would not be affected by the ruling and promising to continue to work to resolve disputes with neighboring states. China’s official media responded angrily. Xinhua, the Chinese international news service, declared the ruling “ill-founded” and “naturally null and void.” The People’s Daily claimed that the tribunal had “trampled” on international norms and laws. Some states supported China’s position, or at least called for the dispute to be resolved through bilateral negotiations rather than UNCLOS’s mechanisms (Green 2016).9 How China will respond to the tribunal’s ruling over the long term is critical. China is not yet as big and structurally important as the United States; it cannot ignore international law with impunity.10 There will be costs to its reputation, its credibility as a responsible global state, and its aspirations of global leadership if it openly and aggressively defies international law. The fact that China did not take concrete action to demonstrate its rejection of the ruling is important and a sign of restraint (Welch 2016). US sources accuse China of “militarizing” the South China Sea, in defiance of President Xi’s promise not to do so. The evidence on this score is mixed. China has built facilities that could house military resources and it does have weapons on

150 The New ASEAN in Asia Pacific and Beyond some of the islands it occupies in the South China Sea, but these are most useful as defensive instruments (Buckley 2016). In October 2016, newly elected President Rodrigo Duterte of the Philippines made new offers of cooperation to China, along with disparaging remarks about US president Obama, who had criticized Duterte’s human rights record. Duterte declared that the United States had “lost” in its competition with China and that the Philippines would align with China, though what this means in practice remains unclear (Blanchard 2016). Chinese-Philippines relations seemed to improve after this, with the Chinese coast guard withdrawing from Scarborough Shoal, allowing Filipino fishers unfettered access once more (Welch 2016). Duterte later unilaterally declared the Shoal a marine sanctuary, though fishing continues on its margins. China and the Philippines agreed on joint coast guard patrols of the Shoal, which should lead to further demilitarization (ABS-CBN News 2016b). In August 2017, China and the ASEAN states endorsed a framework for the Code of Conduct in the South China Sea. This serves as the basis of further negotiations on the code of conduct and does not envision a legally binding document as an outcome. ASEAN and China have been discussing a code of conduct, off and on, since 2002. The decision of the UNCLOS tribunal, however, may have created a new urgency to set clear guidelines for state conduct in the South China Sea (Storey 2017). The Asian Infrastructure Investment Bank and the One Belt/One Road Initiative China’s new leadership took office in November 2012 and reevaluated Chinese foreign and domestic policies. Domestically, the new president, Xi Jinping, began a concerted attempt to rein in corruption in the Chinese system. In foreign policy, China decided to take a more active role in international affairs. The Asian Infrastructure Investment Bank (AIIB) and the One Belt/One Road Initiative (OBOR, more formally known as the Silk Road Economic Belt and Twenty-First-Century Maritime Silk Road) are separate, but integrally connected, Chinese measures designed to assist the country in managing its economic development while expanding its political and economic influence over much larger geographical and institutional regions (Chin 2015). China also participated in the creation of the New Development Bank, inaugurated in March 2014, in collaboration with the other BRICS countries (Brazil, Russia, India, and South Africa). The NDB focuses on infrastructure spending and, potentially, challenges the existing financial order. The

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following discussion will focus on the AIIB and the OBOR and, briefly, touch on China’s New Asian Security Concept. A number of factors drove China’s decision to create the AIIB. By the end of 2013, China had foreign reserves of almost $4 trillion. This enormous financial capacity was sitting idle. There was also an ongoing debate in China about the wisdom of continuing to purchase US Treasury bonds. At the same time, the rest of Asia desperately needed funding for infrastructure, such as dams, power plants, ports, railway networks, road, water and sanitation projects, and airports. In 2009, the ADB reported that as much as $8 trillion in national infrastructure spending and an additional $290 billion in regional spending would be needed in Asia between 2010 and 2020. Yet the existing multilateral financial institutions, the ADB and the World Bank/International Bank for Reconstruction and Development (IBRD) were capitalized at $160 billion and $223 billion, respectively (Chin 2016b, p. 18; Xiao 2016, pp. 435–436). In Africa, the African Development Bank estimated it would take at least $93 billion a year until 2020 to bring the continent to parity with other low- and middle-income areas (Chin 2015, p. 219). Private foreign investment in infrastructure had declined precipitously since the 2008 financial crisis. There was an evident need for another financial instrument to address the funding shortfall and meet the growing international and interregional demand for infrastructure spending. For many years, China demanded a role in the institutions of international finance—the IMF and the World Bank—more proportionate to its growing international economic importance. The 2010 Bretton Woods reform package, which had offered China (and a few other countries of the developing world) slightly greater voting weight in the IMF, was delayed by the US Congress until December 2015. The unwillingness or inability of the established institutions to accommodate China’s growing economic weight and China’s desire to influence the rules of international finance fed its determination to create a new institution in which it could be a major force. China and other developing world states were also dissatisfied with the slow and overly bureaucratic lending approaches of the traditional lenders. Another major consideration was the US “rebalancing” toward Asia Pacific (discussed in Chapter 6). Beijing saw this as a move to contain it that could lead to further conflict with the United States and its Asian neighbors. Chinese strategists argued that moving China’s attention to its West would help reduce regional conflict, containing the spread of US influence. It would also strengthen cooperation between China and the United States, given both countries’ interest in a stable Central Asia. A losing clash with Japan over ADB funding of a watershed development in Arunachal Pradesh, which China disputes with

152 The New ASEAN in Asia Pacific and Beyond India, gave further impetus to China to create the AIIB. More important, China’s need to revise its economic development strategy came into play. China produces a massive surplus of concrete and steel and it possesses some of the best engineering and construction firms in the world. Developing Central Asia would provide it with an outlet for its economic and industrial capacity, spread Chinese technology and influence into other regions, and foster new customer bases beyond Western consumers. China’s adjustment to the “new normal” of slower economic growth requires that it use its considerable resources in more diversified markets. The OBOR, if fully implemented, will guarantee Chinese access to markets and natural resources across Asia, in Africa, and into Europe. The land route, the Silk Road, will be a new Eurasian land bridge; China intends for the Maritime Silk Road to link China to the Indian Ocean and Africa via the South China Sea and through the South China Sea to the South Pacific. The area covered by the plan has a population of 4.4 billion people and a collective GDP of $2.1 trillion, and includes underdeveloped countries with enormous growth potential (Chin 2015, p. 219). On top of the AIIB, China announced a Silk Road Fund worth $40 billion in November 2014.11 Developing world states hope that these different lending initiatives will stimulate additional funding from international capital markets to channel to the priority projects of regional states and funding agencies. The OBOR starts with building transportation infrastructure as a first step in linking all the various subregions of Asia with the rest of Asia, Africa, and Europe. It will expand to include energy and communications infrastructure. China’s long-term goal is to create an area of extended, interlinked free trade zones and financial integration. China sees these financial and development initiatives as an expression of its Five Principles of Peaceful Coexistence. President Xi has promised that China will not seek to assert regional hegemony but that the OBOR “will be a real chorus comprising all countries along the routes, not a solo for China itself” (Tiezzi 2015). Driven by these considerations, Chinese leaders proposed the idea of an AIIB to Southeast Asian states in late 2013. Multilateral and bilateral consultations followed and, in October 2014, representatives from twenty-one countries signed a memorandum of understanding to create the AIIB. Jun Liqun, a Chinese national, was appointed secretary-general of the Multilateral Interim Secretariat. March 31, 2015, was set as the date for states to become founding members. Japan, China, and South Korea consulted on the AIIB but Japan, in the end, decided not to join, in part because of pressure from Washington. The United States had urged China to take a more substantial role in global governance for some time, while insisting that China conform to the US-created rules

Relations with China


of the international system. In practice, as demonstrated with IMF reform, the United States made little effort to accommodate China. Faced with the AIIB, the United States tried to muster opposition to the new institution, arguing it would detract from the work of the established Bretton Woods institutions. This put the United States in an embarrassing situation when many of its major allies, including Australia, France, Germany, Italy, South Korea, and the United Kingdom, ignored US objections and joined the AIIB. In August 2016, Canada announced its intention to apply for AIIB membership and was accepted as a member in March 2017. On June 29, 2015, the leaders of China and the representatives of fifty-six other states met in Beijing to sign the Articles of Agreement, the legal framework of the AIIB. The stated purpose of the bank is to “foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia.” The AIIB differentiates itself from the established international financial institutions (IFIs) in a number of ways, including its focus on funding infrastructure, leaving funding for education, health, agriculture, and the like, to the other IFIs. The AIIB’s prospective customers hope the institution will concentrate on large-scale projects and leave the smaller infrastructure developments to the ADB and IBRD. The bank is based in Beijing and has an initial capital stock of $100 billion. China contributed the largest amount to the bank ($29.8 billion), lower than the $50 billion it had offered in 2014, the result of a bargaining process designed to give other actors a stronger stake in the final institution. As of September 22, 2016, the AIIB has a total subscription base of $89.1 billion. China provides 33.4 percent of the AIIB’s current assets and possesses 28.8 percent of its voting power (AIIB 2016a). This gives China an effective veto, since 75 percent of total votes are needed to make decisions on issues related to structure, membership, capital increases, and other significant issues. Nonetheless, the authority structure of the AIIB is different from that of the IMF or World Bank. In the run-up to the creation of the bank, China offered to forego a veto and reduce its voting power to less than 25 percent if Japan or the United States joined the AIIB as founding members. Neither joined. The voting formula is based on a member’s capital contribution, the size of its economy, basic votes each member receives equally, and 600 votes for every founding member (Chin 2016b). India has the second-largest number of votes, at 8.3 percent. The AIIB limits the shares of nonregional states to less than one-third of the total, and at least 75 percent of the votes are reserved for Asian members, the object being to preserve the influence of the Asian states in the organization.

154 The New ASEAN in Asia Pacific and Beyond The AIIB has a three-level governance structure: a board of governors to review, approve, modify, and reject key decisions; a nonresident board of directors; in upper management, a president, five vice presidents, and a general counsel. The bank’s officers and staff execute its decisions. In practice, the IMF, World Bank, and ADB have reserved their top managerial position to a European, an American, and a Japanese, respectively. The AIIB will select its top management through a competitive and transparent process, but officers must be a citizen of a member country. The first president was the secretary-general of the interim secretariat, Jin Liqun. The presidency is a five-year term. Four of the top six senior staff are Europeans, indicative of the merit-based approach to staffing the AIIB. The board of governors meets once a year, unless requested otherwise by the board of governors or board of directors. The directors are not remunerated and are nonresident. This means they may have less control over the day-to-day operations of the AIIB, putting more influence in the hands of management, which will, supporters hope, make the AIIB more efficient and effective than its institutional counterparts (Chin 2016a, pp. 15–16). The AIIB has pledged to be “lean, clean and green: lean, with a small, efficient management team and highly skilled staff; clean, an ethical organization with zero tolerance for corruption; and green, an institution built on respect for the environment. The AIIB will put in place strong policies on governance, accountability, financial, procurement and environmental and social frameworks” (AIIB 2016b). Precisely how it will fulfill its mandate remains unclear. For example, Indonesia and India expect the AIIB to provide them with loans to build coal-fired generating stations, something that the ADB and World Bank have refused to do on environmental grounds. The AIIB has yet to formulate its standards in respect to these kind of issues, but critics are concerned that the AIIB will compromise international standards in disbursing loans. However, global norms and expectations around climate change are becoming stronger and it is the developing world that is most affected by environmental degradation. The AIIB claims to want to learn and borrow from the experiences and established practices of its fellow IFIs, but not simply copy the “best practices.” Instead, its “goal is to improve on the existing norms and to exceed current standards” in areas of policy, procurement, and programming (Chin 2016a, p. 20). The AIIB will allow companies from nonmember states to bid on contracts, part of its effort to maximize efficiency and competence in its operations. This contrasts to the ADB, which restricts bids to member states. The new bank understands itself to be a regional organization created by and for the interests of develop-

Relations with China


ing countries. The rules laid out by Western states may not be adequate to the circumstances of the developing world. What this means in practice remains to be seen. The AIIB’s full relationship to China is still evolving, but China is the dominant actor. Will the AIIB adopt “conditionality,” especially given how this consideration has affected the development of the APT? The AIIB and the OBOR remain works in progress. On the surface, they appear to herald a new and more confident era for Chinese foreign policy and a greater commitment to multilateralism and its advantages. Statements by leading Chinese officials on the AIIB, the NDB, and Belt and Road indicate that they are rethinking the rules, principles and norms of global development. While Beijing has developed a greater appreciation for multilateral cooperation, it is choosing to create new international organizations with “distinctive Chinese features” and reconsidering the rules. The question is whether this will result in improved international practices. (Chin 2015, p. 223)

Since 2014, Chinese leaders have promoted the New Asian Security Concept. This approach to the Asia Pacific security architecture envisions utilizing China’s growing economic influence to serve its regional security interests; the OBOR and AIIB tie neatly into this strategy. The New Asian Security Concept will weave together existing institutions and arrangements, bypassing the needs for lengthy negotiations on new structures. It eschews formal alliances but sees a security regime built around partnerships and economic incentives designed to make regional states more amenable to China’s security prerogatives. China believes the United States can accept a regional security architecture, under Chinese leadership, that frees the United States to deal with issues outside Asia Pacific. China sees the Trump administration as a signal of a US “strategic contraction” from the region, and believes it can take the dominant leadership role in Asia Pacific with the “tacit consent” of the United States, “but without it if necessary” (McCaughrin 2017). It is unlikely that the United States will give up its global hegemonic role so easily; nonetheless, the New Asian Security Concept illustrates China’s desire to lead Asia and use its economic and military power in tandem to build a China-oriented regional environment. China’s Regional Role and ASEAN Will a powerful China be a “threat” to the sovereignty and independence of the states of Asia Pacific? Will it assert itself in ways that antagonize

156 The New ASEAN in Asia Pacific and Beyond the states of Southeast Asia? Or will it settle its disputes peacefully and without relying on coercive economic, political, or military means? China’s conduct in the South China Sea seriously damaged the bond of trust that it was developing with regional states through its “charm offensive.” Even for states not directly involved in the dispute, the perception that China is willing to intimidate weaker states will factor into their future dealings with China. China has enormous, perhaps insurmountable, domestic challenges to overcome and it needs a peaceful and cooperative regional environment in which to address those challenges. However, domestic factors, especially nationalism, could push it toward outward expressions of aggression. The multilateral environment of Asia Pacific and Eurasia is becoming much more complicated, and China will be hard-pressed to live up to its anodyne rhetoric about cooperation and “win-win” development strategies. Why did China largely abandon its “charm offensive” in 2009, when the strategy seemed to be working so well? Yahuda attributes China’s assertiveness in the South China Sea to four related factors: China’s sense that the global balance of power shifted in its favor after the 2007– 2009 global financial crisis; the natural expansion of its national interests to encompass its maritime domain and associated trade routes; the associated growth of its military power, allowing it to pursue its claims more effectively; and the growth of nationalism in officialdom as well as the general population (Yahuda 2013). A fifth consideration is that China felt the “charm offensive” was not working to its benefit. In its view, weaker regional states were taking advantage of China’s goodwill to press their own claims in the South China Sea (Saunders 2014). The idea that there has been a shift in the international balance of power followed the aftermath of the US invasions of Afghanistan and Iraq and the global financial crisis of 2007–2009. The CCP addressed this development at a foreign affairs conference in July 2009, which adjusted Deng Xiaoping’s advice that China keep a low profile into a call for a more active foreign policy. In formulating this approach, Chinese observers noticed the rapid rise of the Chinese economy, the economic and political disarray of the Western world following the global crisis, the growing importance of the G-20 and other international institutions backed by China, and the growth of Chinese military power. An economy dependent upon resources from all around the world will probably create the means to protect its interests and access to these necessities. China’s connection to much of the world runs through the South China Sea. On its east coast, it is impeded by competition with Japan and its complicated relationship with the United States and Taiwan. The argument that smaller states have taken advantage of China’s “charm

Relations with China


offensive” to reinforce their own hold on the features of the South China Sea has some validity. China understood the Declaration on Conduct of Parties in the South China Sea to guarantee that none of its signatories would alter the regional status quo. Vietnam, at least, expanded its capacities on its claimed areas, though others held to the 2002 agreement and suspended their activities. China became notably more aggressive in the South China Sea after the 2009 UNCLOS deadline that required regional states to officially register their maritime claims. Perhaps unreasonably, China viewed these actions as provocations. Until China’s foreign policy missteps in 2009, the United States faced the conundrum of how to restrain the challenge of China when the other regional states were uninterested in antagonizing China. China’s aggressive behavior in the South China Sea, its blunt intimidation tactics against Japan over the Senkaku Islands (discussed in Chapter 7), and its inability to control North Korea eroded regional confidence in China’s benevolent intentions. This created new openings for the United States in the region. The fear of the “China threat” today is stronger than before 2009. On the other hand, China is engaged in sophisticated economic diplomacy. The OBOR is an important part of China’s diversification strategy that, again, is an effort to create economic opportunities abroad in order to sustain economic stability at home. China has learned to embrace multilateralism. Just as China was one of the critical driving forces behind much of the multilateralism centered around ASEAN in the 2000s, today it is driving multilateral arrangements into the rest of Asia and beyond. China’s behavior in the South China Sea risks undermining its outreach to Asia, Africa, and Europe through the OBOR, the AIIB, and the Asian Security Concept. China’s cooperative rhetoric is difficult to accept when it seems willing to bully smaller, weaker neighbors over territorial disputes. The added fact that the ITLOS largely rejected China’s position in the South China Sea is relevant. China continues to see itself as a fundamentally weak state with numerous extraordinary domestic difficulties that it needs to overcome. The possibility of a trade war with the United States under a Trump presidency makes China’s need for a successful economic and political expansion into its surrounding regions more imperative. The South China Sea dispute is a test case for China’s dealings with the rest of the world and speaks to China’s willingness to obey international law. In fact, China’s record in following international laws and global norms is actually quite good and trending upward (Foot and Walter 2011). Moreover, the shifting global trade environment can work to China’s advantage. As the United States retreats from globalization and global trade, China’s international role may grow commensurately stronger. Non–Asia Pacific states may be more willing to enter

158 The New ASEAN in Asia Pacific and Beyond cooperative relations with China as their options narrow and despite any reservations they may have over China’s conduct in the South China Sea. In the face of Chinese pressure, ASEAN has proven weak and divided. In July 2012, for the first time in ASEAN’s history, the ASEAN Ministerial Meeting ended without issuing a joint communiqué. Cambodia, the chair of the meeting, objected to any mention of the conflict between the Philippines and China over the Scarborough Reef, as well as proposals by Vietnam and the Philippines to mention other marine incidents involving their ships and China. Most observers accept that in taking this action, Cambodia was acting as a “diplomatic surrogate” for Beijing (Simon 2012, pp. 1015–1016). The incident demonstrated the drawback of ASEAN’s protocols; any one of the ASEAN states exercises a veto over organizational policy. Indonesia took the initiative and, over the next two weeks, Indonesian foreign minister Marty Natalegawa cobbled together a draft statement on the South China Sea code of conduct that was acceptable to Cambodia. This document was published on July 20, but it was mostly a reiteration of existing ASEAN agreements and principles regarding the prohibition of the use of force, self-restraint, and the peaceful resolution of disputes. China again demonstrated its willingness to subvert ASEAN in June 2016. On June 14, China and the ASEAN states held a special meeting of foreign ministers (or their representatives) in Kunming, Yunnan, China. The meeting was instigated by Malaysia to discuss topics of concern between ASEAN and China, including preparations for the August 2016 twenty-fifth anniversary of ASEAN-China dialogue relations. However, the central matter of concern was the South China Sea. The Permanent Court of Arbitration decision regarding the Philippines’ case on the South China Sea was due within a month and ASEAN felt it was important to jointly discuss how the parties were going to address the issue. The chair of ASEAN for 2016 was Laos, a country highly dependent on China, and ASEAN wanted to avoid a repeat of the embarrassment of 2012. The cochairs of the meeting were China’s foreign minister Wang Yi and Singapore’s Vivian Balakrishnan.12 During the meeting, ASEAN states felt that China made a heavyhanded attempt to pressure them into accepting Beijing’s position on the South China Sea. Beijing warned ASEAN against issuing a statement following the Permanent Court of Arbitration decision and challenged the notion of “ASEAN centrality,” creating anger and frustration among some ASEAN participants. Irritated at China’s conduct, ASEAN ministers made the unprecedented decision to issue a separate, rather than joint, statement. For months, ASEAN had been working on a media statement for release at the conference. The ministers agreed to turn this into a formal statement on the special meeting. The statement expressed strong lan-

Relations with China


guage regarding the South China Sea, noting “we cannot ignore what is happening in the South China Sea as it is an important issue in the relations and cooperation between ASEAN and China” (Parameswaran 2016b). This language was as close as ASEAN has ever come to a direct rebuke to China on the South China Sea. Hearing of the statement, China tried to convince ASEAN to accept a ten-point consensus that China had written and that was, according to diplomats, “unacceptable by any standard,” or not issue anything at all. Most of the ASEAN states insisted in staying the course, but Cambodia and Laos reconsidered their stands. When it became clear that ASEAN had no consensus and that Laos, the ASEAN chair, was backing out, the remaining states decided to issue no official collective statement. However, acting on its own and out of frustration, Malaysia released the original ASEAN statement to the press, though it retracted it three hours later. Singapore, Indonesia, and the Philippines also released their own statements on the proceedings. To varying degrees, these reflected the language and intent of the withdrawn statement (Parameswaran 2016a; Thayer 2016). The Kunming incident demonstrated China’s ability and willingness to undermine ASEAN’s unity through its use of economic and political pressure on the organization’s weak points—in particular, Laos and Cambodia. However, its actions also elicited considerable resistance from the other eight ASEAN states. China’s efforts to push forward its own agenda and perspective on the South China Sea was strongly rejected by ASEAN (Parameswaran 2016a). Nonetheless, newly elected President Duterte of the Philippines, who assumed office on June 30, 2016, shifted his country’s position on the South China Sea and proclaimed an ideological realignment toward China and away from the United States. How far the Philippines takes this shift remains to be seen, but Duterte’s position will likely undermine any growing ASEAN consensus on the need to take a strong stand against Chinese pressure. If ASEAN cannot present a united front in its dealings with China over the South China Sea, it risks its credibility on the international stage. However, ASEAN is not designed to challenge its members’ national interests and there is an overwhelming economic interest for all ASEAN states in cooperating with China. The South China Sea conflict has entered a stage where China is using economic pressure to undermine ASEAN unity. If successful, the effect will be to reduce ASEAN’s regional influence and undermine its ability to act as a mediating actor in the region. “ASEAN centrality” in the regional institutional structure will be under threat. If regional powers see China manipulating and playing ASEAN states off against each other, they will lose faith in ASEAN’s ability to represent its members’ interests.

160 The New ASEAN in Asia Pacific and Beyond David Kang (2003) argues that the smaller states of Southeast Asia will eventually accept China’s leadership as they have in the past. However, the Asia of today is not that of the past. ASEAN states value their independence and sovereign rights. China claims to respect this and holds the same values. Moreover, China is not the only power in the region. The world is becoming multipolar and most of the emerging international powers are in Asia Pacific, or have a regional presence. This creates a much more complicated political map for the weaker states to navigate, but it may also create numerous opportunities for them and, more important, blocs of weaker countries (such as ASEAN), to exercise influence as the larger powers compete for their loyalty and support. Reflecting this logic, ASEAN continues to engage China while encouraging other powerful states to remain active in the region as counterbalances to each other (Acharya 2003). China’s nationalism is rooted in a sense of grievance and victimhood that, while historically legitimate, is unbecoming and counterproductive in a great power. Feeling victimized by other states—even small, weak neighbors—is not evidence of national confidence. How readily China’s leaders can put aside or discourage nationalism depends on how confident they are in their own legitimacy. That is connected to economic performance and, increasingly, economic performance is contingent on good relations with the surrounding states. However, a confident China runs the risk of being an arrogant China. China’s foreign policy objectives indicate that it believes in a hierarchical world order of “big” and “small” states, even as it professes to believe in state equality. Its pronouncements often sound as though it expects “small” states to know their place and accept the authority and wisdom of the “big” states. Chinese belief in a hierarchical order is rooted in deeply held nationalist beliefs about the superiority of Chinese civilization. A superior attitude does not work to China’s advantage. Already, there is a backlash against the presence and wealth of Chinese in places as diverse as Myanmar and Africa. The prospect of the “ugly Chinese” striding the world works against the Chinese foreign policy ideal of mutual respect and China’s stated determination to allow other states to develop in their own ways. Conclusion China is a contradiction: it is a major economic, political, and military power that is also hobbled by formidable limitations. China’s aging demographic, toxic environment, income inequality, and lack of an adequate social safety net are all factors that it must manage and overcome if it is

Relations with China


to achieve its full potential. These long-term problems require a peaceful global environment, conducive to economic development, to solve. This creates powerful motivations for China to do its best to accommodate regional states and contribute to their political and economic stability. China’s delicate situation should create openings for ASEAN to occupy various regional roles. However, ASEAN’s internal disunity makes it difficult for the organization to exploit these possibilities. The 2016 election of Donald Trump as US president has come at just the time when China is ready to pursue global leadership and raise its international profile. Trump rejects international free trade and global efforts at controlling climate change. The Trump administration has articulated an incoherent and threatening foreign policy. Just as China’s clumsy handling of the South China Sea derailed its “charm offensive” so the shift in US leadership and the apparent willingness to abandon economic policies that the United States has promoted globally for the past forty years have created opportunities for China to champion international economic integration, free trade, and climate change mitigation. Just as China’s missteps caused the political pendulum to swing against it in 2009, US missteps may provide China with a new chance to regain some of the goodwill that it lost, if it can control its more assertive tendencies. Notes

1. According to the CIA World Factbook (accessed December 2017), China’s GDP in 2016, measured by purchasing power parity, was $21.29 trillion. By comparison, US GDP was $18.62 trillion. 2. The aircraft carrier was originally called the Riga. The Ukraine purchased it from the Soviet Union in 1991 but was unable to complete its construction. The Ukraine stripped the ship of parts and weapons and sold it to a Chinese investor, who planned to turn it into a floating casino. The Chinese government eventually purchased the vessel. The PLA navy studied it for more than a decade (Mizokami 2016; Shambaugh 2013, p. 292). 3. The British newspaper The Observer conducted an investigation that concluded that the United States had, indeed, deliberately attacked the Chinese embassy, possibly because the North Atlantic Treaty Organization (NATO) believed the embassy was being used by Arkan, an indicted Serbian war criminal, to send radio messages to his fighters in Kosovo (The Observer 1999). The New York Times conducted an investigation into the allegations. The investigation did not follow up with The Observer’s sources but concluded, nonetheless, that the bombing was the result of a series of highly incompetent and avoidable errors (Myers 2000). Fairness and Accuracy in Reporting (1999) noted that the Observer story had been widely reported in the world media outside the United States but was not reported within the United States. It is hard to see that anything the United States had to gain by bombing the embassy would have been worth the cost, but, as Susan Shirk notes,

162 The New ASEAN in Asia Pacific and Beyond the common view in China today is that the bombing was deliberate (2007, p. 218). The Observer story lends credence to that interpretation. 4. Some sources argue that the One Child Policy, implemented in 1979–1980 and officially replaced by a Two Child Policy in 2016, was a major contributor to China’s present demographic situation, especially in causing the imbalance in the sex ratio of men to women (Chang 2015). However, other sources argue that the policy had little impact and that China’s greatly decreased birthrate is due mostly to economic development and the fact that, in industrialized states, couples generally choose to have small families (Whyte, Feng, and Cai 2015). 5. The impact of automation is considerable. Dani Rodrik and other economists fear that many low-wage countries, such as Indonesia, may no longer be able to develop on the basis of their low-wage economies. As robots take over low-skilled (and increasingly high-skilled) jobs, countries that have not yet made the transition to better-educated, skilled economies may not be able to catch up (Bland 2016). The effect of automation on low-skilled jobs also played a major role in Donald Trump’s unexpected presidential victory in 2016. In this case, Trump’s promise to “return” low-skilled work to the US white working class does not account for the reality that most such jobs were lost to automation, not free trade (Lehmacher 2016). One report estimates that 47 percent of US jobs are potentially at risk due to automation (The Economist 2016) 6. China’s regulations call for 8 percent of new cars sold to be electric by 2018, 10 percent by 2019, and 12 percent by 2020. China projects selling 35 million vehicles by 2025; at least 7 million should be electric (Reuters 2017). 7. Nong Hong argues that “China viewed ‘itself as the center of a universal state’ which ‘oversaw a hierarchy of tributary states.’ From this perspective, it had no reason to make any formal claim of sovereignty” (2012, p. 16). However, this argument does not accord with the modern concept of sovereignty, which hinges on defined borders and control of the territory within those borders. 8. In June 2013, China added a tenth dash to the map, to the east of Taiwan, to indicate that Taiwan was part of China’s territory (Hayton 2014, p. 59). The US State Department says that Chinese maps since at least 1984 have included the tenth dash (Baumert and Melchior 2014, p. 3). 9. The Asia Maritime Transparency Initiative says that the international support for China is much less extensive than China claims. China indicated that more than sixty countries supported its position that the tribunal lacked jurisdiction over the South China Sea case. However, an analysis of what countries actually said showed that, of sixty-five countries on China’s list before the verdict, thirty-one publicly confirmed their support, four (including Cambodia) denied their support, and twenty-six stayed silent or issued vague statements about the case (Green 2016). 10. The US decision to ignore an ICJ finding against it for its mining of Nicaragua’s harbors in the 1980s is a prime example of US willingness to selectively acknowledge international law (Page 2016). 11. China also helped establish another $40 billion Shanghai Cooperation Organization Development Fund (Chin 2015, pp. 219–220). 12. Singapore is the ASEAN “country coordinator” for China.

6 Relations with the United States

The United States played an indispensable role in shaping the modern Asia Pacific. This chapter focuses on events from the late 1990s through the Obama administration, ending with a consideration of what the Trump era in US foreign policy may bring. US influence in the region varied widely during this period. The Clinton administration asserted US power in the post–Cold War era but alienated Southeast Asia with its handling of the Asian economic crisis. The George W. Bush administration strengthened US military ties with Asia Pacific states but, otherwise, largely ignored Southeast Asia, except as it factored into the endless US “war on terror.” Bush’s misadventures in the Middle East revealed the limits of American power and serious (albeit historically persistent) incompetence among US foreign policy makers. The Obama administration attempted to “rebalance” US foreign policy toward Asia, in particular the ASEAN region, but it remained distracted by the Middle East (and, to a lesser extent, Eastern Europe) and was largely unable to give Asia the attention it deserved, despite the best efforts of the president. The United States remains the dominant power in the international system. However, serious political, economic, and social weaknesses and upheaval at home undermine US credibility and capability abroad. The election of Donald Trump as US president in 2016 constitutes a spectacular failure of US democracy and exemplifies this problem. Asian states favor a US regional presence for a combination of selfinterested economic and political reasons. Most Southeast Asian states want the United States to remain fully engaged in the region as a hedge against China. However, they do not want to choose between the United


164 The New ASEAN in Asia Pacific and Beyond States and China. The US approach to multilateralism has difficulty accommodating this kind of nuance. The United States evaluates multilateral institutions and international norms/rules on the basis of how these serve its own interests. The United States asserted its determination to “lead” Asia and even suggested that it intends to build institutional structures similar to those it constructed to bind the Atlantic alliance. Yet the US involvement in Asia Pacific has stunted the development of “understanding and accommodation among the indigenous Asian powers” (Alagappa 2003a, pp. xi–xii). The United States is in relative decline as a world power, but it has yet to show that it can manage this decline in a way that accommodates the new regional powers of Asia Pacific. Most analysts focus on how a US decline in Asia Pacific will create regional uncertainty and disorder. However, US efforts to hold on to a disproportionately powerful regional and global role may be equally challenging to regional order. The Trump administration presents a new challenge to regional order: a United States that appears to be precipitously abandoning its traditional regional roles even as it pursues economically isolationist and militarily aggressive policies. The United States in Asia Pacific In 1853, US Navy commodore Matthew Perry sailed into Tokyo Harbor and forced Japan to open its borders, which it had sealed to most of the West for more than 200 years. Perry secured Japan as a way station to China. Impotent before a predatory Western power, Japan confronted its weakness and initiated the Meiji Restoration, Japan’s period of rapid modernization and industrialization (Wiley 1990). The United States was slightly more respectful of China than the Europeans during China’s “century of humiliation,” but it still participated in and benefited from China’s forced opening. US missionaries were active in China, making them a highly influential voice in US policies toward that country into the twentieth century (Sutter 2009, pp. 5–9). US businessmen deposed the monarchy of Hawaii in 1893, facilitating Hawaii’s eventual acquisition as an important point for power projection into the Pacific and, eventually, a US state (Kinzer 2006, pp. 9–30). The United States initiated the Spanish-American War in 1898 and ended up in control of the Philippines. The United States promised Filipinos their independence but later decided to hold on to the country rather than let it fall into the hands of another power. US forces brutally suppressed Filipino resistance and occupied and governed the Philippines—with the interruption of World War II—until 1946 (Kinzer 2006, pp. 31–56).

Relations with the United States


Throughout the early part of the twentieth century, the United States contended with Japan for control of the Pacific Ocean. This tension culminated in World War II in the Pacific and ended with the US occupation of Japan from 1945 to 1952. The Korean War (1950–1953, though technically the two sides remain at war) was the first major conflict of the Cold War era, and cemented the American belief in a global communist conspiracy directed by the Soviet Union. The United States had regarded the communist takeover of China as the product of the long-running Chinese civil war. After Korea, the Americans came to see China as part of a monolithic communist bloc. Korea also convinced the United States that it needed to quickly establish Japan as a bulwark against communism. The United States sidelined its extensive reforms of Japanese society and returned to power many of the same Japanese actors who had been responsible for the Pacific war. The Americans had already acceded to a Japanese request that they impose on Japan a constitution that revoked Japan’s right to a military. To get around this, the United States encouraged Japan to develop a Self-Defense Force (SDF) and turned Japan into a base for US forces in Asia Pacific and a reliable (and dependent) regional ally (Yahuda 2011, pp. 20–23, 92–93). The United States helped push the European colonial powers from Asia in the post–World War II era, but US anticolonialism was secondary to its fear of communism. The Americans assisted France’s efforts to reestablish its imperial presence in Vietnam and ignored friendly political overtures from Ho Chi Minh, the leader of Vietnam’s communists. After the communists defeated the French in 1954, the United States sabotaged political efforts to reunify North and South Vietnam and propped up the corrupt regime of South Vietnam against its communist opposition. Heavy US involvement in the Vietnam War ran from 1963 to 1973 and ended in an ignominious defeat for US forces (Karnow 1983; Yahuda 2011, pp. 90–105). The United States later repeated many of its Vietnam-era errors in Iraq and Afghanistan. The Vietnam War led the United States to reconsider its global security role. The Nixon (Guam) Doctrine of 1969 asserted that the United States would provide its allies with strategic and material support but would avoid direct involvement in regional conflicts. In 1972, the United States opened diplomatic channels with communist China (MacMillan 2006). This recalibration of US foreign policy and military power caught its regional allies by surprise, had a profound effect on how the noncommunist states of the region understood their own security, and was a crucial moment in the evolution of ASEAN. In combination with the “Nixon Shock”—the US unilateral decision to abandon the

166 The New ASEAN in Asia Pacific and Beyond gold standard—Asians came to realize that the United States would act on its own interest, with no consideration for its allies, when it wanted to do so (Yahuda 2011, p. 170). The “San Francisco System” is the inaccurate appellation for the system of bilateral security treaties that set the United States at the center of a “hub and spokes” model of regional security, a dominant position that it continues to defend (Buszynski 2011). Other than SEATO, the United States made little effort to develop Pacific-wide regional institutions, in contrast to its encouragement of multilateralism in Europe. The United States of the time viewed Asians as racially and intellectually inferior to the Europeans and Americans (Hemmer and Katzenstein 2002). At the same time, there was considerable opposition within Asia to the creation of Cold War institutions (Acharya 2011). Racial considerations play less of a role today in explaining US wariness of Asian multilateralism, but cultural and ethnic divergence remain relevant factors in US-Asian relations. Under Obama, the United States began to view regional multilateralism more favorably. However, the United States continued to promote its political, economic, and cultural “values” in Asia as part of its program of regional leadership. At the height of the Cold War, the United States stationed more than 100,000 troops at military bases in Japan, South Korea, and the Philippines (and Guam) and protected the noncommunist states of Asia Pacific. Today, there are fewer US troops in the Asia Pacific theater but the US presence remains prominent. The United States is politically, though not legally, committed to Taiwan’s defense, creating a source of considerable friction between the United States and China. 1 More than 48,000 US troops remain stationed in Japan and 27,000 in South Korea (Zorthian and Jones 2015). The US presence in Asia Pacific is necessary for the maintenance of US global hegemony, which requires access to all of the world’s resources and markets. Historically, China and other Asian states saw the US presence in Japan as a welcome restraint on Japanese militarism. By the late 1990s, China began to reconsider this position, particularly as the United States pressured Japan to take a more active role in regional security. Other Asian states were comfortable with the role of the US Navy in maintaining regional maritime security. Without that presence, Asian states would need to fill the role themselves. Given the unresolved territorial disputes in Asia Pacific, such a situation could lead to increased regional tension and conflict. At the same time, the United States has ensured its “indispensability” to regional security by discouraging efforts by regional states to form their own security bonds and relationships (Ba 2009b, p. 382).

Relations with the United States


During the Cold War, the United States opened its domestic market to the export goods of its major Asian allies in order to ensure their economic prosperity and political stability. Japan, South Korea, and Taiwan used this access to rebuild and thrive in the new economic environment. Some Southeast Asian states utilized the economic windfalls resulting from the US wars in Korea and Vietnam to implement long-term development policies that facilitated their economic takeoffs, most notably Singapore (Stubbs 2005, pp. 63–152). In the 1980s, the United States resented the rise of Japan as an economic competitor and pushed Japan to accept various measures that attempted to address the growing trade deficit between the two countries, including the Plaza Accord (discussed in Chapter 7). The end of the Cold War precipitated a number of changes in the approach of the United States to its economic and security relations in Asia Pacific. The United States paid Southeast Asia relatively little attention. The administration of George H. W. Bush (1989–1993) opposed efforts to create new multilateral security institutions in Asia Pacific, fearing potential challenges to the San Francisco System. The Clinton administration (1993–2001) tolerated regional multilateralism, so long as it remained relatively weak and complemented, or did not conflict with, US-backed bilateral arrangements. Freed of the countervailing power of the Soviet Union, the United States aggressively promoted its economic and political interests, pushing its neoliberal economic ideology on the global community (Yahuda 2011, pp. 235–243). Under Clinton, the United States accelerated the domestic deregulation of its financial sector (for example, repealing the Glass-Steagall Act) and began laying the groundwork for the global financial crisis of 2007–2009. The economic success of Japan, South Korea, and Taiwan was based on their versions of an “Asian economic development model” that allowed significant government involvement in the national economy. During the Cold War, the United States was willing to tolerate, and even supplement, a variety of economic models if this ensured reliable, anticommunist allies. With the end of the Cold War, the United States pressured Asians to adopt economic, social, and political reforms that aligned with American ideology and business interests. The tension between some Asian states and the United States over these issues resulted in the so-called Asian values debate. Some Southeast Asian leaders argued that Asian peoples were comfortable with “soft authoritarian” governments and credited this approach for the region’s rapid development. This Asian triumphalism came back to haunt its proponents only a few years later, with the onset of the Asian economic crisis of 1997–1999. During the Asian economic crisis, the United States

168 The New ASEAN in Asia Pacific and Beyond appeared alternately uninterested or delighted in Asia’s misfortunes and obstructed regional efforts to quell the crisis. As discussed, US actions fed the regional perception that the United States was a predatory and untrustworthy great power and led Asians to create new institutions to insure them against similar situations in the future. Subsequent events underlined problems in the US economic model. The economic downturn of the early 2000s, exemplified by the bursting of the “dotcom bubble,” cast the US economic boom of the 1990s in a different light by demonstrating that fortunes could be made on the basis of an artificially inflated economy (Stiglitz 2003). The Enron (2001) and Worldcom (2002) scandals demonstrated the extent to which economic deregulation made consumers prey to the predatory practices of the private sector. Even so, at the end of the Clinton era, the United States was at the—somewhat illusory—peak of its global power. Militarily, it was exponentially more powerful than any other state; it had the largest economy in the world by far. It exercised enormous structural power in the global financial system. US leadership remained indispensable to accomplishing global goals, as demonstrated by the decisive US role in managing the Balkan wars, set off by the collapse of the former Yugoslavia. The George W. Bush Years: Crisis of US Power George W. Bush came to power in 2001 with the explicit intention of freeing US power from the constraints of multilateralism and international law. “After a decade of Prometheus playing pygmy, the first task of the new administration is precisely to reassert American freedom of action” (Charles Krauthammer, cited in Pempel 2008, p. 555). The United States withdrew from the Anti–Ballistic Missile Treaty, the Kyoto Accord on Climate Change, and the International Criminal Court (ICC) within the first years of the new administration. The Bush administration identified China as a “peer competitor” and prepared for confrontation (Rice 2000, p. 56). However, the September 11, 2001, alQaeda terrorist attacks on the United States radically shifted the administration’s priorities (Daalder, Lindsay, and Steinberg 2002). China became a country that could be a useful ally against terrorism. For the rest of its mandate, the Bush administration focused most of its attention on its “war on terror” and viewed most US foreign policy through this narrow lens. This had mixed consequences for Asia. The Bush regime maintained good relations with most Asian powers, as it needed their support in the war on terror. However, it was also largely

Relations with the United States


disengaged from Asia and too distracted by its various wars to consider the region beyond its narrow, terrorism-driven agenda. After 9/11, the United States fully unleashed its unilateralist and imperialist tendencies. A group of neoconservatives within the White House took full advantage of the attack to convince Bush to implement a “neoimperialist vision” that unshackled the United States from the constraints of international rules and norms (Ikenberry 2002). The United States launched a UN-sanctioned war against Afghanistan and its Taliban leaders to root out al-Qaeda and punish Afghanistan for harboring the organization. The United States then used 9/11 as the justification for a new and dangerous policy of “preemptive war” referred to as the Bush Doctrine (Acharya 2005). Any state the United States deemed to be a threat to its national security—no matter how minimal the threat or how far in the future it might be—could be subject to US attack (Daalder and Lindsay 2003; Daalder, Lindsay, and Steinberg 2002; Suskind 2006). The first target of this doctrine was Iraq. Using the implausible argument that Iraq might be developing weapons of mass destruction, which it might then give to terrorist groups, the United States attacked and occupied the country, to the consternation of most of the world community and in clear violation of international law. The US actions were a severe blow to the stability of the post– World War II international order and did enormous damage to US “soft power” (Goh 2003). The war created divisions within the Western alliance and was—and remains—by far the heaviest blow dealt by any state (including Russia) to international order in the post–Cold War period (Gordon and Shapiro 2004). The United States maintained and enhanced its military relationships in Southeast and Northeast Asia during the Bush administration, leading some American commentators to argue that the Bush policy in Asia Pacific was a success (Green 2008; Twining 2007). It is true that the administration improved or stabilized its relations with many Asian states, particularly its more powerful allies in Northeast Asia. It enjoyed good relations with India and Pakistan at once; it smoothed over disagreements with China (Sutter 2014). The later Obama “rebalancing” or “pivot” toward Asia (discussed later) can be reasonably depicted as an expansion on policies that the Bush administration had already started to implement (Manyin et al. 2012; Silove 2016). Part of this shift was done to offset China’s growing influence, which, despite US efforts to stir up fears about China, continued to expand. However, the Bush administration largely neglected Southeast Asia and regional institutions, and the war on terror remained the primary driving force in US relations with Asia.2

170 The New ASEAN in Asia Pacific and Beyond ASEAN states criticized the Bush administration for failing to consult with regional actors, ignoring multilateral processes, misreading and misunderstanding the region, and focusing on the “wrong threats” in dealing with Southeast Asia. However, the United States is guilty of a “systemic neglect” of Southeast Asia that long preceded Bush (Ba 2009b). As a superpower, the United States focuses on its relations with other great powers, to the neglect of small and mid-range powers. The United States took a paternalistic approach to Southeast Asia, assuming the “responsibility to guide, direct and teach Southeast Asians in the interest of advanced development and enlightened governance” (Ba 2009b, p. 375). The Bush administration was far more undiplomatic and coercive in its approach to the region than most previous administrations, but “those differences may be ultimately more of degree and diplomacy than of substance and pattern” (Ba 2009b, p. 376). Washington saw Southeast Asia as the “second front in the war on terror” because of links between some regional Islamic fundamentalist movements and al-Qaeda. This led to closer military relationships between the United States and many ASEAN states. The reactions of the ASEAN states to the US war on terror were mixed, at least in public (Beeson 2006a; Capie 2004; Hamilton-Hart 2012, pp. 4–8; Tay 2004). For Indonesia and Malaysia, the US invasions of Afghanistan and Iraq were politically unpopular actions that both states condemned vociferously. At the same time, US ties to the Indonesian and Malaysian militaries strengthened considerably during the Bush administration. Vietnam also opposed the invasion of Iraq, but muted its criticisms, as it was intent on establishing stronger economic ties with the United States. The Philippines strongly supported the United States, despite its concerns over how the war affected international law. Thailand was initially ambivalent in its support. Thai political leaders recognized that the US war blatantly violated international law. Thais objected to the political and legal problems associated with the executive decree the government used to send Thai troops to support the United States. However, the government of Thailand went along with the invasion and hoped to benefit from additional US military aid. Singapore enthusiastically supported the US war, its leaders accepting the initial US claim that the war was about Saddam Hussein’s hypothetical weapons of mass destruction, then later argued that the United States needed to stay the course in Iraq for the sake of its military credibility (Simon 2007). For ASEAN itself, the war presented a conundrum: the US invasion of Iraq was, legally, no different than Vietnam’s invasion of Kampuchea/Cambodia. Indeed, the US case for its invasion was far weaker than that of Vietnam, which could argue it

Relations with the United States


was actually under attack by Kampuchea. ASEAN had stood firmly in defense of state sovereignty, despite the fact that Vietnam’s intervention ended the genocide in Cambodia. When faced with the US action in the Middle East, ASEAN failed to take any action in support of its supposed principles. Across the region (and the globe) the public was opposed to the US wars. This was especially true of Muslim publics, who saw the war on terror as a war against Islam. Critics accused the United States of conflating local, regional conflicts with its war on terror. These criticisms were “eerily reminiscent” of criticisms of the US approach to communism during the Cold War and indicated a simplistic approach to international affairs that seems endemic to US foreign policy (Ba 2009b, p. 377; Gurtov 2005). The revelation of US human rights abuses and torture in places like Abu Ghraib prison in Iraq and Guantanamo Bay in Cuba further damaged the standing of the United States in Southeast Asia. In 2003, only 8 percent of Indonesians polled expressed any trust that Bush would “do the right thing.” In 2006, this increased to 20 percent (following US aid to Indonesia after the 2004 tsunami), making Indonesia the most pro-Bush Muslim population in the world (Ba 2009b, p. 377). US “soft power” and the US image of managerial competence were severely damaged by the Bush administration’s remarkably incompetent occupation and rebuilding of Iraq. The occupying US authority fired all of the Iraqi civil service who were members of the governing Baath Party, rendering Iraq’s administrative apparatus devoid of the people needed to manage the post-invasion state. The authority also disbanded the Iraqi army. Overnight, hundreds of thousands of individuals with the administrative, military, and technical skills necessary to the success of the new government were out on the street, nursing grievances against the US occupation. Republican Party political operatives, most of whom had no knowledge of Iraq or experience with international affairs and no idea of how to fulfill their responsibilities, filled key administrative positions in the Iraqi occupation headquarters. The United States doled out contracts for rebuilding Iraq to Republican Party–connected businesses and as rewards to countries that had sided with the United States. This poorly managed occupation fed a determined insurgency that proved to be far too much for the US military to manage. By 2006, the United States was caught in the middle of an Iraqi civil war it had facilitated through gross mismanagement (Chandrasekaran 2006; Packer 2005; Ricks 2007). Distracted by the unfolding Middle East disaster, the Bush administration pushed Southeast Asia aside. Condoleezza Rice, the US secretary of state, missed the ARF meetings in 2005 and 2007. Bush canceled a US-ASEAN summit in 2007, meant to celebrate ASEAN’s

172 The New ASEAN in Asia Pacific and Beyond fortieth anniversary. The United States paid more attention to Southeast Asia when it became apparent that China was making significant economic and political inroads into the region while the United States was mired in the Middle East. The United States launched the Enterprise for ASEAN Initiative (EAI) in 2002 and the ASEAN-US Trade and Investment Framework Arrangement (TIFA) in 2006. The US Agency for International Development (USAID) also provided a budget of $150 million in 2006 to support “enhanced partnership” activities. The EAI was largely a reaction to the ACFTA and Japan’s Comprehensive Economic Partnership for East Asia. On the political front, the United States announced its intention of appointing an ambassador to ASEAN in 2006 and did so in 2008, prompting Japan, China, and other states to follow its lead. Again, US concern about China’s growing regional influence drove this action. The United States even viewed its aid to Indonesia after the 2004 tsunami through the lens of how to counter China’s presence. The United States had consistently opposed and undermined Asian institutions, especially those that might exclude it. The Bush administration followed this pattern, with the notable exception of its response to the East Asia Summit. This exception may be attributable to recognition by the United States that its concerted opposition would likely increase the drive for the EAS and the fact that Australia, a staunch US ally, was a member. US military exercises with regional states expanded under Clinton and Bush. APEC enjoyed US support, a commitment that likely reflected the US desire to undermine regional efforts to create an exclusive East Asian Economic Grouping and to undercut the ARF, where the United States chafed at ASEAN’s influence. The preference for bilateralism extended to Bush’s other economic initiatives. The EAI was a set of bilateral FTAs whose terms were set by Washington and were so onerous that they could not be met by weaker ASEAN economies. This initiative may have been an effort to further fracture ASEAN unity, a “divide and rule” strategy designed to increase US influence at the expense of the organization (Ba 2009b, p. 385). The Bush administration was openly disdainful of the views and concerns of Southeast Asian states. These reactions accentuated the problems ASEAN had with the United States: the reactive nature of its policy, its disregard for regional institutions, its alternating inattention and overattention, and the hierarchical way it approached Southeast Asia. These considerations fed regional perceptions that the United States could not be trusted to use its power responsibly (Beeson and Higgott 2005). However, the disconnect between the United States and Southeast Asia during the Bush administration should not be exaggerated. Southeast Asian foreign policy elites

Relations with the United States


are disposed toward seeing the United States as a benign and stabilizing force in Asia Pacific. In part, this reflects the US-oriented education and political inclinations of the elites, who understand their states’ interests to have benefited under US hegemony. These perceptions are not always accurate and they can change, given that Southeast Asian elites are unsentimental about the United States, but they provide the United States with considerable room in which to make mistakes (HamiltonHart 2012). Southeast Asia has hedged against US power through regional institutions while still supporting the role of the United States as head of a hierarchical order. The inability of the US military to control the Iraqi insurgency demonstrated the difficulties faced by an advanced military fighting an asymmetrical war. Singapore worried that the image of US military ineffectiveness in Iraq would undermine the security guarantees that the United States provided to Asia Pacific (Simon 2007). In many ways, the lessons of the Vietnam War were relearned in Iraq (and Afghanistan). The revelations of torture at the Abu Ghraib prison in Iraq shocked the world and led to the United States punishing lowlevel soldiers for their actions. However, none of the political figures who set the policy and encouraged the abuse were ever held to account. Vice President Dick Cheney took pride in his role in utilizing torture and swore that he would do so again, if he had to make the choice (Fischer 2014). The use of Guantanamo Bay as a gulag for Muslims scooped up in various US wars further eroded American moral legitimacy and the human rights justifications for the war, and made it more difficult for the United States to promote human rights values in other parts of the world (Narine 2012). The Bush administration’s economic policies weakened the overall position of the United States in the world and empowered US domestic political blocs that favored policies detrimental to US-Asian relations. The US wars in Iraq and Afghanistan cost at least $3 trillion and were funded by diverting money from domestic spending and borrowing rather than raising taxes (Stiglitz and Blimes 2008).3 The Bush administration accumulated roughly one-third of total US government debt by the time its term ended in 2009 (Pempel 2008, p. 567). During this period, China and Japan became the primary foreign holders of US debt. In 2007–2009, a made-in-America global financial crisis rocked the world economy to its foundations. It is difficult to overstate the extent to which the Bush administration was a disaster for US foreign policy.4 George W. Bush began his term in office with the United States at the pinnacle of its post–Cold War power. By the time he left office, the United States looked weaker

174 The New ASEAN in Asia Pacific and Beyond than it had at any time since the end of the Vietnam War. US military power proved incapable of defeating relatively small insurgencies in Iraq and Afghanistan. Regressive and ideologically driven domestic policies left the United States massively in debt. The underregulated US financial system caused an unprecedented global financial crisis that threatened to derail the world economy, revealed fundamental weaknesses in neoliberal ideology, and uncovered the economic and social illusions underpinning the American economy and society. The durability and appeal of the US economic and political models were under threat. Most important, the United States demonstrated conclusively that it could not be trusted with its overwhelming power. Its actions called into question its legitimacy as the leader of the international system (Beeson 2006b). Freed from the restraints imposed on it by the Soviet Union, the United States abused its global position, undermined international law, destabilized the international system, and spread chaos through the Middle East and beyond. Significantly, many of the Bush administration’s actions were the extensions of ideas—foremost among them “American exceptionalism”—that are common to US political culture and cross party lines. The Obama Administration: “Rebalancing” Toward Asia Obama came to office as “the first Pacific president” (Lieberthal 2011). From the beginning of his presidency, Obama made it clear that he regarded the future of the United States as lying in Asia and intended to reorient US foreign policy toward the region and away from the Middle East and Central Asia. President Obama and Secretary of State Hillary Clinton declared that the United States was “back in Asia” (Simon 2009). Over the course of the next few years, in a series of critical speeches, articles, and strategic statements, the new administration articulated the “Asian pivot” or US “rebalancing” of its military, economic, and diplomatic resources toward Asia. Nonetheless, the Obama administration remained distracted by events in the Middle East and other parts of the world and was largely unable to give Asia Pacific the priority it deserved and that the president had promised. Clinton visited Indonesia in February 2009 as part of the administration’s outreach to the Muslim world. She acknowledged Indonesia’s status as a member of the G-20, asserted that US interests in Asia were not just focused on China, and reassured Southeast Asia that the United States respected regional institutions and practices. Clinton became the

Relations with the United States


first US secretary of state to visit the ASEAN Secretariat. On June 4, 2009, Obama gave a speech in Cairo, Egypt, that was meant to begin repairing US relations with the Islamic world. Obama singled out Indonesia as an example of an Islamic country that promoted religious tolerance and gender equality. In June 2010, the United States became the first non-ASEAN state to create a dedicated mission to ASEAN; it appointed the first resident ambassador in 2011. On July 22, 2009, Secretary Clinton signed ASEAN’s Treaty of Amity and Cooperation. Clinton described the signing as an executive agreement that did not require US Senate ratification and argued that the TAC did not interfere with the defense obligations of the United States to its Asian allies. Sheldon Simon noted that “signatories to the TAC frequently issue signing statements to that effect” and argued that “the TAC is more aspirational than obligatory, which is true of many international agreements” (2009, p. 64). Signing the TAC made the United States eligible to join the East Asia Summit, which it did in 2011.5 On January 12, 2010, Clinton gave a major address on the “Regional Architecture in Asia: Principles and Priorities,” at the East-West Center in Honolulu, Hawaii, as part of her fourth visit to the Asian region in eleven months. Clinton started with the “simple premise: America’s future is linked to the future of the Asia-Pacific region; and the future of this region depends on America” (Clinton 2010). Clinton’s comments emphasized the shift in US foreign policy toward multilateralism and the need of the United States to build and strengthen regional alliances. She asserted that the regional states needed to decide “which will be the defining regional institutions.” Clinton cited the ARF as an organization the United States looked to strengthen as part of the need to make regional “institutions effective and focused on delivering results” (2010). She singled out ASEAN for praise as “an important success story” (2010). The US decision to join the EAS reassured ASEAN of the US commitment to Asia and the centrality of ASEAN to regional institutional development. It also provided an opportunity for US presidents to visit states they may otherwise never visit. However, the proliferation of Asian institutions proved to be a problem. During his first term, Obama was forced to cancel planned trips to Asia several times due to domestic political crises, creating some tension between the United States and its important Asian allies. As discussed in Chapter 5, the United States prominently inserted itself into the South China Sea dispute in July 2010. The US involvement, while angering China, sent the signal to the states of Southeast Asia that the United States was determined to continue playing a fundamental security role in Asia Pacific (Simon 2012). The United States continued its assertive actions in Asia Pacific in

176 The New ASEAN in Asia Pacific and Beyond 2011, even as China faltered in its “charm offensive.” President Obama announced the permanent stationing of 2,500 US Marines in Darwin, Australia, the first long-term US expansion in Asia since the end of the Vietnam War. The United States stationed four littoral combat ships in Singapore. It began to play a major role in regional multilateral organizations, even as China began to pull back. According to Carlyle Thayer, the United States “turned the multilateral tables on China” (cited in Johnson and Calmes 2011). In late 2011, the Obama administration made a number of announcements that articulated the “Asian pivot”—later “rebalancing”—in US foreign policy (Campbell 2016). The United States indicated it intended to expand its role in the region, in order to better influence the development of regional norms and rules and offset China’s growing influence (Kuik, Idris, and Nor 2012). The pivot was a continuation and expansion of Obama’s earlier policies, as well as those of the previous Bush administration. However, Obama’s initiative went beyond Bush by placing a special emphasis on Southeast Asia and regional multilateral institutions. The Obama pivot included a greater US military presence and pledge that future military budget cuts would not affect the growing US commitment in Asia. Its geographic vision of the Asia Pacific region included the Indian Ocean. Underlying the US rebalance was the realization that the “center of gravity” for US foreign policy, economic, and security interests was shifting (Dent 2013; Manyin et al. 2012). Four specific developments drove the rebalancing: the growing economic importance of Asia Pacific to the United States, China’s growing military power and assertiveness, the winding down of US military operations in Iraq and Afghanistan, and the fear that cuts in the US military budget would feed uncertainty in the region over the strength of the US commitment. Secretary of State Clinton described Asia Pacific as “as a key driver of global politics” (2011, p. 57). She recognized that regional architecture was taking shape in Asia Pacific that required US participation if the United States intended to continue practicing global leadership deep into the twenty-first century. She compared the construction of Asian regional architecture to the benefits that accrued to the United States from its role in creating a “transatlantic network of institutional relationships” (p. 57). Clinton acknowledged that many US allies were uncertain if the United States could maintain its commitment to Asia Pacific, given its other international interests. According to her, “the answer is: ‘We can and we will’”: Just as Asia is critical to America’s future, an engaged America is vital to Asia’s future. The region is eager for our leadership and our business—

Relations with the United States

perhaps both more so than at any time in modern history. We are the only power with the network of strong alliances in the region, no territorial ambitions, and a long record of providing for the common good. Along with our allies, we have underwritten regional security for decades— patrolling Asia’s sea lanes and preserving stability—and that in turn has helped us create the conditions for growth. We have helped integrate billions of people across the region into the global economy by spurring economic productivity, social empowerment, and greater people-topeople links. We are a major trade and investment partner, a source of innovation that benefits workers and businesses on both sides of the Pacific, a host to 350,000 Asian students every year, a champion of open markets, and an advocate for universal human rights. (pp. 57–58).


The US strategy was to undertake a sustained commitment to Asia through “forward-deployed” diplomacy—building and maintaining a US diplomatic presence in “every country and corner of the AsiaPacific region” (Clinton 2011, p. 58). The United States intended to proceed along “six key lines of action”: “strengthening . . . existing bilateral security alliances; deepening . . . working relationships with emerging powers, including China; engaging with regional multilateral institutions; expanding trade and investment; forging a broad-based military presence; and advancing democracy and human rights” (Clinton 2011, p. 58). Clinton specifically rejected the view that China’s rise was a threat to the United States or that the United States was trying to constrain Chinese economic growth, emphasizing the mutual economic bond between China and the United States, the need to build military transparency, and the need for the two countries to manage their economic relationship and associated disagreements. Clinton argued that “a more robust and coherent regional architecture in Asia would reinforce the system of rules and responsibilities, from protecting intellectual property to ensuring freedom of navigation, therefore the basis of an effective international order. In multilateral settings, responsible behavior is rewarded with legitimacy and respect, and we can work together to hold accountable those who undermine peace, stability, and prosperity” (2011, p. 61). Clinton addressed regional skepticism of US staying power by pointing out that the United States has continually bounced back from setbacks to overcome them through reinvention and innovation. Our capacity to come back stronger is unmatched in modern history. It flows from our model of free democracy and free enterprise, a model that remains the most powerful source of prosperity and progress to humankind . . . [T]he world still looks to the United States for leadership. Our military is by far

178 The New ASEAN in Asia Pacific and Beyond the strongest, and our economy is by far the largest in the world. Our workers are the most productive. Our universities are renowned the world over. There should be no doubt that America has the capacity to secure and sustain our global leadership in this century as we did in the last. (2011, p. 62)

There was an important military component to the rebalancing. The US plan called for the United States to reallocate forces and bases away from Northeast Asia toward Southeast Asia. It was concerned that Northeast Asian US bases were vulnerable to missile attacks from China and that the increasing strategic importance of Southeast Asia to the United States was not properly reflected in the distribution of its military resources. The rebalance called for the United States to place 60 percent of its navy in Asia Pacific, with 60 percent of its air force’s overseas-based services and the majority of its space and cyber capabilities allocated to the region. The United States was particularly concerned about China’s antiaccess capabilities and planned to counter them by investing in weaponry that could operate effectively at longer distances. This included long-range bombers, aircraft carrier–based unmanned strike aircraft, guided-missile submarines, advanced mines, and the like. The United States was also intent on having its allies set aside funds for “costly but essential investments in their own defense capabilities” that will complement US capabilities (Campbell 2016, p. 282). Finally, the rebalance involved a refocusing on US military diplomacy: exercises designed to show the US presence. The Trans-Pacific Partnership In 2007, the Bush administration announced that the United States would join the negotiations for the expanded Trans-Pacific Strategic Economic Partnership Agreement (TPSEPA), an arrangement between Singapore, Brunei, Chile, and New Zealand that had been signed in 2005. The United States joined the March 2008 negotiations on financial services and investment. In late 2008, the agreement expanded again to include Australia, Peru, and Vietnam. As the agreement grew larger, it became the Trans-Pacific Partnership Agreement. From the outset, harmonizing the rules of various overlapping FTAs was the primary goal of the TPP (Dent 2013, pp. 976–980). The Obama administration made the emerging TPP the centerpiece of its economic initiative in Asia Pacific and a way to offset China’s growing economic influence. Malaysia joined the talks in 2010, followed by Canada and Mexico in 2012. In 2013, Japan joined the TPP

Relations with the United States


negotiations, bringing the total number of participating states to twelve. Significantly, China was not asked to join the TPP and expressed little interest in doing so. Instead, China participated in the RCEP. The TPP was an effort by the United States to make its economic presence felt in Asia Pacific. The United States remains a fundamentally important economic actor in Southeast Asia, as illustrated by Tables 6.1 and 6.2. However, it has fallen far behind in some areas. In 2014, ASEAN imports from China were more than three times greater than those from the United States (contrast with Table 5.1). Obama emphasized that, through the TPP, the United States could write the rules for regional trade. However, if the TPP did not go

Table 6.1 ASEAN Exports to and Imports from the United States, 2005–2014 ($ billions) Exports Imports

2005 86 60

2006 87 63

2007 94 71

2008 89 80

2009 69 64

2010 100 86

2011 106 92

2012 108 92

2013 115 92

2014 122 90

Source: Compiled from statistics at and ASEAN 2015 Statistical Yearbook.

Table 6.2 US Exports to and Imports from Individual ASEAN Countries, 2010–2014 (in thousands) Brunei











Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports


124,168 11,875 153,825 2,300,843 6,947,847 16,478,340 12,645 59,099 14,079,148 25,900,917 9,650.96 — 7,376,713 7,981,991 29,008,535 17,427,400 8,976,296 22,693,572 3,705,549 14,867,856


184,372 23,415 186,568 2,712,425 7,421,406 19,110,888 26,085 58,853 14,263,433 25,776,849 48,950 — 7,727,871 9,144,855 31,261,590 19,115,843 10,929,767 24,831,557 4,315,220 17,487,837


157,596 86,300 226,405 2,691,552 7,997,976 18,002,186 33,494 25,043 12,814,764 25,934,755 65,766 38.00 8,087,356 9,580,439 30,499,151 20,231,817 10,887,757 26,066,839 4,622,882 20,267,677


558,209 17,185 241,226 2,771,149 9,096,785 18,873,683 24,400 30,514 13,003,614 27,289,247 145,831 29,909 8,403,508 9,268,702 30,621,736 17,842,839 11,797,150 26,168,825 5,036.143 24,654,014


549,157 31,806 327,933 2,846,744 8,284,068 19,360,891 28,485 32,921 13,067,717 30,420,356 92,856 92,746 8,453,324 10,143,880 30,204,822 16,425,445 11,809,675 27,122,649 5,734,357 30,588,509

Source: Compiled from the World Bank Country Profile for the United States for 2014.

180 The New ASEAN in Asia Pacific and Beyond through, other states would write those rules. The TPP was meant to be a “high quality” FTA that would push its participants toward higher standards of economic interaction. This meant it was likely inappropriate for most of the developing states of the region and it underlined a weakness in the US approach. Unlike during the Cold War, the United States was no longer prepared to make sacrifices of its immediate economic interests to assist weaker Asian states in their development. In the post–Cold War era, the United States was determined to ensure that its economic arrangements reinforced its already dominant economic position. The TPP ran into considerable difficulty at home in the United States. The Obama administration asked for and received “fast track” authority from the Senate to negotiate the TPP. However, many critics on the political right and left raised serious concerns about the content of the TPP and its effects on US jobs and wages. This criticism of the influence of globalization has been a constant concern on the political left in the Western world for some time. However, it took on new urgency in the aftermath of the global financial crisis of 2007–2009 and the following great recession. Globalization has worked to the economic advantage of Asia, especially China and India. The economic disruption it has created in the United States, however, was not met by the appropriate policy responses, especially in the era of ever-increasing income inequality. Hillary Clinton, when she began her campaign for president in 2016, backtracked on her support for the TPP, as she responded to pressure from the left wing of the Democratic Party. The Republican presidential candidate, Donald Trump, made rejection of the TPP a centerpiece of his campaign. One of Trump’s first acts as president was to remove the United States from the TPP. The US failure to proceed with the TPP undermined the US position in Asia, as China continued to consolidate its regional economic relations. The Faltering Rebalance US efforts to “rebalance” toward Asia faltered in a number of ways. John Kerry replaced Clinton as US secretary of state in 2013. Kerry’s immediate focus was on the Middle East and another fruitless attempt to restart Israeli-Palestinian peace talks. The appearance of the Islamic State and its takeover of areas of Iraq and Syria in 2014, as well as another Israeli-Palestinian conflict in Gaza, further distracted the United States. During this period, China’s increasing assertiveness in the South and East China Seas drew US attention, but it was only one of numerous areas of contention. The “rebalancing” in US foreign policy remained

Relations with the United States


more fiction than fact. Asian allies of the United States remained uncertain about the extent to which the United States was paying attention to their region. Obama believed that the US ability to influence the Middle East was limited and that military force, in particular, was likely to do more harm than good. Obama focused on Asia (and Africa and Latin America) as places where the economic future of the United States lay and where US power and influence had fertile ground in which to grow (Goldberg 2016). In this assessment, Obama was certainly correct. However, the US foreign policy establishment’s fixation on the Middle East means that it is unlikely the United States can extricate itself from that region. This issue is discussed in more detail later. There is no reason to believe that the Trump administration will manage Asia Pacific well and many reasons to believe that it will adopt an antagonistic and disruptive stance toward the region. The United States in Decline: Domestic Considerations and Foreign Policy Implications After 9/11, the George W. Bush administration pursued a unilateral course in world affairs. This period was marked by an explosion of books and articles by conservative writers proclaiming the emergence of an American Empire, a “New Rome,” that would use its unprecedented power to reconfigure the world as it saw fit (Boot 2001; Eakin 2002; Kagan 2003). 6 Ignominious defeat in the wars that followed demonstrated the limits of US military force. Ironically, the imperial policies advocated by neoconservatives and aggressive nationalists led to the end of US unipolarity. This led to another chorus of voices proclaiming that the United States was in precipitous decline or was unable to stave off what was, in fact, an inevitable decline that had been building for decades (Bacevich 2008; Layne 2012). 7 The rapid emergence of China as an economic challenge to US dominance and the US-made global financial crisis of 2007–2009 complemented this perception. The persistent inability of the Western world to deal effectively with the subsequent economic malaise added further to this sense of decline (Krugman 2012). At the international level, the United States is in relative economic decline. For the first time in modern history, another state rivals and, by some measures, even surpasses the United States in sheer economic size. 8 It is logical to conclude that these changes will, eventually, be reflected in global economic institutions. There are early signs this is happening. Asian states developed the CMIM to protect them

182 The New ASEAN in Asia Pacific and Beyond from the unstable global financial structure. China has spearheaded the AIIB, is promoting the yuan as an international currency, and the United States has offered it more influence in the IMF. However, the United States continues to enjoy overwhelming structural power within the international system (Ciorciari 2014). The rules of the world economy reflect US interests, values, and ideology; the institutions governing the economy remain under the control of the United States and its allies; the United States remains the main source of international investment funds and its currency remains the international reserve. By contrast, Asian institutions remain untested or unutilized and mask deep and significant divisions between members. China faces enormous domestic issues it must address. Despite its evident failures, US economic ideology continues to dominate international discourse, though there are many signs that the failures of neoliberalism have become too great to paper over any longer (Quiggin 2010; Stiglitz 2010). Efforts to implement much-needed global financial reform have faded (Helleiner and Pagliari 2011). In the area of military power, the United States remains exponentially more powerful than its nearest competitors. The United States will remain the world’s military hegemon for the foreseeable future. Economic challenges (and congressional dysfunction) have forced the United States to reduce its military budget, but no other state is prepared to expend the extraordinary resources necessary to maintain a massive military machine. Technologically, the US military is generations ahead of its rivals. However, military power does not necessarily translate into political efficacy, as the US wars in Iraq and Afghanistan (and Vietnam) demonstrated. It is probable that the United States could decisively defeat any other power in a conventional conflict, though this advantage may be exaggerated. Unfortunately for the United States, most of the wars of the future will likely be asymmetrical, unconventional conflicts. In the areas where the United States has unquestionable military superiority, it is not clear that military superiority is useful. On the basis of its economic and military advantages, the United States will likely remain the most powerful actor in the international system for the next decade or so, but a multipolar world is emerging. Most important, the United States faces serious domestic weaknesses that will have powerful international repercussions. US domestic political dysfunction, instability, and ideological rigidity seriously undermine US soft power and render the United States a more unpredictable and unreliable international actor. The 2016 election of Donald Trump as president has underlined this dysfunction and significantly accelerated US global decline.

Relations with the United States


The Soft Underbelly: The Problems of Domestic Social and Political Decay

As with China, understanding US foreign policy requires understanding the domestic social, economic, and cultural forces that drive US actions abroad. This has become particularly true since the end of the Cold War, which had insulated the president’s ability to define foreign policy from many of the political pressures of Congress and politically motivated domestic actors. Today, that protection is compromised. The problems facing the United States are considerable; the US political system is in an advanced stage of “political decay” (Fukuyama 2014). Symptoms of this decay include the radicalization and dissolution of the Republican Party, the related issue of institutionalized racism in the United States, and the associated social and political upheaval connected to demographic change. Exacerbating these concerns is the reality of rising income inequality in the United States, a problem that has become particularly apparent in the aftermath of the global financial crisis of 2007– 2009 and the great recession that followed (Stiglitz 2013). These problems are fundamental and influence/undermine US soft power abroad, as well as the domestic social and economic stability that the United States needs to be the hegemonic international power. Domestic Social and Economic Upheaval

The American middle class, the basis of US prosperity, is in crisis. Social mobility is more limited in the United States than in any other Western industrialized country. Access to affordable education is slipping, and the United States is becoming more of a “caste” society, divided along lines of economic class and social opportunity (Putnam 2016). Americans born in the 1980s have a 50 percent chance of having a higher income than their parents, a precipitous decline from earlier decades; despite a much larger economy, the fruits of economic growth have gone massively disproportionately to the affluent (Cohen 2016; Leonhardt 2016).9 US infrastructure is crumbling. Some of these problems are appearing in other Western societies. They are symptomatic of the ideology of “neoliberalism,” promoted by the United States, and the “ordoliberalism” of Germany, another form of economic ideology that has pursued fiscal austerity at the expense of economic growth (The Economist 2015). Thomas Piketty (2014) argues that the problem of income inequality is inherent in the global capitalism promoted by the United States. Others disagree, arguing that various state measures, such as sensible taxation, can effectively address inequality (Stiglitz

184 The New ASEAN in Asia Pacific and Beyond 2014). Either way, the American society and economy need reform if they are to effectively manage the political effects of financial inequality. Arguably, the election of Donald Trump was, in part, an ominous side-effect of this situation. In the United States, these phenomena are the long-term product of the failure to fully develop a modern social welfare state or implement redistributive policies. This failure reflects US racial politics and associated conservative ideology. In the late 1960s and early 1970s, the Republican Party employed President Nixon’s “southern strategy”: an effort to attract white southern American voters who were alienated from the Democratic Party because of its advocacy of African American civil rights. The Republican Party became the home of white resentment and anger. To many white Americans, any expansion of the social welfare state was an example of the government taking their tax dollars to support African Americans and other minority groups (Rabinowitz et al. 2009). Thus, the white working class consistently voted against its own economic self-interests by opposing policies that could extend the social welfare state. The Republican Party, led by business-oriented elites who favored a small government, fanned the prejudices of this base to win power, then pushed for reductions in taxes and deregulation in order to benefit its wealthy patrons. This “small state” ideology further reduced the ability of the state to respond effectively to social and economic inequality. At the same time, both major US political parties developed a consensus around the desirability of neoliberal economic policies. This manifested in the spread of international free trade agreements. This development accelerated with the end of the Cold War and the spread of economic globalization. Neoliberalism promoted market fundamentalism, the belief that markets could most efficiently allocate any economic resource, that society should be organized on the basis of market principles, and that the only real obstacle to efficient markets was a lack of transparency, a problem that could be solved by new information technologies (Best 2005). The election of Barack Obama, the first African American president, significantly exacerbated the profound racial divisions that are fundamental to US history, culture, and politics (Edsall 2013). The Tea Party, a radical right-wing political group nested within the Republican Party, emerged as a response to the election of Obama and the fear of conservative white Americans that they were losing their privileged position in the society. The Republican Party expressed its intention to ensure Obama was a one-term president. It set about obstructing Obama in every possible way, even sabotaging the US economy, blocking Obama’s efforts to help the working class, and almost pushing the country into default on its

Relations with the United States


national debt—an action that would have had serious national and international economic repercussions. These actions revealed to the world— or, more accurately, made much clearer—the bitter partisan politics dividing the United States and raised serious questions about the ability of the United States to govern itself, let alone act as a stable, reliable, and responsible hegemon (even though there are many historical examples of the United States disappointing this expectation). Historically, the weak US state was highly susceptible to clientelistic politics: the exchange of favors between a patron and client. In the late 1800s, the need for a more disciplined, professional, and effective government gradually forced institutional reforms that wrested the US state from the control of particular political interests. This period was accompanied by political and social upheaval as the middle class, business and professional classes, unions, new immigrant communities, and other groups excluded from the patronage contended for power with corrupt party bosses and their clients (Fukuyama 2014, pp. 126–164). At this time, the United States was not a hegemonic global power, so the international effects of its internal strife were limited. Over the past few decades, the US state has slipped back into clientelism and the associated corruption (Fukuyama 2014, pp. 455–548). Most members of the House of Representatives and Senate spend vast amounts of time raising money for their electoral campaigns, basically putting themselves for sale to wealthy interests (Lessig 2012). In 2010, the US Supreme Court issued a decision (Citizens United) that allowed the interests of the wealthiest Americans, including private citizens, as well as US corporations and unions, to exercise extraordinary influence on US politics. The influence of monied elites on obstructing and attacking good public policy has rarely been as obvious (Freeland 2013). The Dodd-Frank Amendment, a modest effort to re-regulate some aspects of the US financial system in the aftermath of the global financial crisis, met with some success. However, it is under constant pressure for repeal as Wall Street financiers fill the war chests of US politicians. Eric Helleiner (2014) points out that the global financial crisis, the worst economic crisis since the Great Depression, resulted in very little change to the global financial status quo. He explains this, in part, by the inclination of government leaders to turn to the experts and practices that were most familiar during the crisis, rather than using the crisis to bring about much-needed reform, but he also acknowledges the corrosive influence of Wall Street wealth on substantial reform. Across the Western world, economic distress brought on by the 2008 collapse, and the inability or unwillingness of governing elites to properly address its economic and social consequences, inspired the rise

186 The New ASEAN in Asia Pacific and Beyond of radical political parties on the left and right. In the United States, on the left, this took the form of the candidacy of Senator Bernie Sanders for the Democratic Party’s nomination for president in 2016. Sanders, a self-declared social democrat, was intent on pursuing moderate (by the standards of most of the Western world) left-wing policies of economic, educational, and social reform. On the political right, the candidacy of Donald Trump for the presidential nomination illustrated a more ominous development: the rise of popular demagogues in US politics. Trump directed his campaign against illegal immigrants and Muslims and played to the racial resentments and insecurities of white Americans who feared their displacement by racial minorities and societal change. Trump himself was grossly unqualified to be the US president. Significantly, bombast aside, Trump was not necessarily the most extreme of those individuals competing for the leadership of the Republican Party. Moreover, Trump’s direct attacks on migrants and Muslims and his appeal to racial politics were simply explicit expressions of the “dog whistle” politics that Republican Party politicians had employed for decades. The 2016 presidential cycle demonstrated decisively that the Republican Party, one of the two major US political parties, was completely unfit to govern the United States. With the end of the Cold War, the Republican Party became a party of the extreme right, defined by little more than a commitment to “small government” (except the military and security agencies) and reduced taxes. Yet the Republicans went on to win the presidency and retain control of the Congress. Republicans remained in control in many US states and continued to implement policies that worsened social welfare. This culminated in a massive tax reform bill in late 2017 that amounted to a clear statement of Republican ideology and an attack on the idea of the welfare state in the United States. This development is addressed below. If the United States is unable to deal effectively with its growing domestic problems, the long-term social and political effects will render it economically weak, socially unstable, and even more politically divided (Calmes and Shear 2013). The problem of governability in Congress will become more acute. Both major political parties began blaming free trade agreements for the loss of US jobs that are relocated to lower-wage areas, an oversimplification that fails to account for the far greater number of jobs lost to automation. Nonetheless, these FTAs benefit the US investor class by opening up the world economy. Average workers, particularly those who lack the specialized skills that allow them to benefit from globalization, have been left by the wayside. The weak US social safety net has worsened the problem. An inadequate welfare state and increasingly expensive educational system has meant

Relations with the United States


that American workers dislocated by globalization have been provided with little security or support to retrain and adapt. The problem posed by the TPP illustrates that the internal stresses on the US system can undermine US soft power, influencing its credibility abroad. US political dysfunction adds more pressure to an international system that needs competent leadership and policies in Washington to function properly. A state that is weak at home cannot sustain global dominance, though the process of decay can be long and painful. Being the “one remaining superpower” is a major part of the US national identity. Americans cannot easily give up this self-perception, perhaps especially at a time of national upheaval. The United States is a highly militarized state given to exaggerating external threats to its security in order to justify its massive national security apparatus. As military power becomes its greatest global advantage, there is a danger that the United States will militarize its foreign policy even further and resort to foreign adventurism to divert attention from its problems at home. More likely, however, is that US political leaders will find it temperamentally and politically difficult to adjust to a world wherein the United States is, at best, the “first among equals.” With Donald Trump, the danger of an erratic and incompetent US president has made these concerns even more acute. The Problem of US Hegemony in Asia Pacific The states of Southeast Asia are uncertain about the United States. Does the United States have the political will to remain a major political, economic, and military presence in a region so far from its borders? Does it have the economic resources and political stability at home to maintain its status as the global superpower? Can the United States provide Asia the attention that the region requires or will events in other parts of the world continue to distract it? Can the United States learn to accommodate itself to regional institutions or will it try to remake those institutions to fit US models and expectations? The answers to these questions are unclear. For now, the United States does not appear ready to redefine its global role in a way that will accommodate emerging powers and modify its inclination toward global hegemony. As noted, US leaders and policymakers tend to believe in US exceptionalism and the notion that the United States is “indispensable” to world order (Zenko 2014). They view the United States as a particularly benevolent great power and the “American world order” that it established as enjoying widespread international support. However, the liberal hegemonic order created by the United States was neither as

188 The New ASEAN in Asia Pacific and Beyond widespread nor as benevolent as Americans often argue (Acharya 2014). During the Cold War, the American world order really only extended to the states of Western Europe and Australasia. The communist world was outside of this; much of the developing world interacted with the American world order but was not part of it. The idea that the liberal order was built around consent is also a myth; the United States frequently used coercive techniques against states that displeased it and continues to do so. The United States demanded that other states obey international laws, norms, and institutions but ignored, and continues to ignore, those same institutions when they impede US interests. As examples, the United States has undermined the International Criminal Court; since 1972, it has used its veto in the UN Security Council, far more than any other veto-wielding state, to stymie the will of the UN; it has refused to ratify UNCLOS, even as it invokes it against China. US exceptionalism is accompanied by “exemptionalism”: “the US does not accept that outsiders should be allowed to limit its actions, particularly in domestic governance, but also in foreign policy” (Vezirgiannidou 2013, p. 637). The exemptionalist tendency is most prevalent in Congress, where parochial US politicians have strangled to death many international treaties. The United States is an expansionist power. Whether this tendency to expansionism is the result of a crusading liberalism, the pursuit of capitalism, the need to sustain a profligate American lifestyle, or all of these in some combination, the effect is the same: the US foreign policy establishment is committed to the maintenance of a US hegemonic world order (Herring 2017). The United States cannot be the global hegemon without being the Asian hegemon; hence its “Asian rebalancing.” However, this determination to hold on to dominant power means the United States is unwilling to accept the reality of its relative decline. Being the global hegemon is crucial to American identity, and it is not clear how far the United States is prepared to go to preserve this identity. The United States may not have the diplomatic skill and perspective necessary to manage the realignment of forces in the emerging Asian political environment. The United States has a tendency to exaggerate threats because of its commitment to liberalism (Desch 2007). The American liberal mind-set means that the United States sees antiliberal forces or movements in apocalyptic terms. This does not bode well for an orderly transition of power away from the United States to the decidedly illiberal China. Aaron Friedberg’s apprehension (2011) of the rise of China because it is an illiberal power illustrates this point. During the Cold War, the ideological and economic competition with the Soviet Union forced the United States to moderate its policies and

Relations with the United States


attitudes toward government action at home and abroad. The United States accommodated political and social differences in its European and Asian allies. It overcame the anti-statist inclinations of American political culture and invested in development and innovation. An example of this was the US space program, an initiative that emerged because of direct competition with the Soviet Union, but that also had enormous technological and economic side-benefits. This period (particularly from the 1950s to the 1970s) of high taxes, government investment, and the expansion of the welfare state enabled the US middle class to thrive, and the concept of the “American dream” gained new life (for white Americans). However, the Cold War also encouraged Americans to view the world in ideologically simplistic ways, with destructive results. The social and political upheaval caused by the Vietnam War, the civil rights movement, and other social changes created greater personal liberty for American citizens but also reinforced social and political divisions that continue to define the American “culture wars” and partisan conflict. Much of the scholarly and journalistic commentary on the US role in Asia proceeds from the assumption that the United States is an effective manager of the global system. In fact, the United States has an extremely mixed record as a responsible and capable manager of international affairs. The US foreign policy establishment often proved lacking in foresight and understanding of political complexity, well before the George W. Bush administration. During the Cold War (and long before), US interventions in Latin America contributed to poverty and political violence across the region, and genocide in Guatemala and El Salvador. The United States has a long and disastrous history of intervention in the Middle East. In 1953, the United States and Britain collaborated to overthrow Iranian democracy, returning power to the Shah of Iran (Kinzer 2006, pp. 111–128). This eventually resulted in the backlash of the Iranian Revolution of 1979, which installed a hostile theocratic revolutionary regime that continues to oppose US hegemony. US support of Saudi Arabia enabled the spread of fundamentalist Wahhabism across the Islamic world and nurtured the terrorism that the United States now identifies— and exaggerates—as its primary international threat. Unquestioning US support for Israel greatly exacerbated the Israeli-Palestinian conflict. The US failure to rein in Israel, a supposed client state, facilitated and made the United States complicit in the construction of illegal Jewish settlements in occupied Palestine that have all but strangled the hope of a twostate solution. This continuing situation feeds resentment toward the United States in the Islamic world. US intervention in Iraq is the most obvious example of US mismanagement of the Middle East, but it was also a powerful blow to the foundations of the international order. The

190 The New ASEAN in Asia Pacific and Beyond war was illegal under international law and the United States handled the occupation of Iraq with incompetence and corruption. The political and social disruption in Iraq that followed was directly responsible for the emergence of the Islamic State, which engaged the United States in another regional war and helped fuel the destabilizing flow of refugees out of the Middle East. The Islamic State was militarily defeated in Syria and Iraq, but it is unlikely that it will fade away; it continues to fight in Afghanistan and elsewhere and will most likely metastasize into a new kind of international terrorism. The US war in Afghanistan, the longest war in US history, is ending in another defeat as the Taliban reasserts itself across the country. Western intervention in Libya, facilitated by the United States, led to the destruction of that country, contributed to refugee outflow and instability across North and Central Africa and into Europe, and provided the Islamic State with another base of operations. US foreign policy had a positive effect in Europe and Asia, albeit with a few obvious caveats. The US influence created a stable environment that made the European Union possible. In Asia Pacific, as noted earlier, the US economic, political, and security roles were essential to the economic miracles that enabled regional prosperity. Even so, the Vietnam War was a devastating conflict with many long-term ramifications for the United States and the region. The United States frequently demonstrated its lack of concern with the interests of its Asian allies, as illustrated by the Nixon Doctrine, the opening to China, the unilateral decision to abandon the gold standard, and the US reaction to the 1997 Asian economic crisis. Asians have many reasons to distrust the wisdom and reliability of US leadership even as they encourage and benefit from the US regional presence. The US invasions of Iraq and Afghanistan failed, in part, because the United States entered the countries without understanding the perspectives, histories, and cultures of the places it was invading (Bolger 2015). Instead, ideologically driven US officials projected their own beliefs about American values, as well as a truncated understanding of US interests, onto foreign countries. This is very similar to what the United States did in Vietnam, where it misinterpreted the country’s nationalist struggle by viewing it through the lens of the Cold War (Karnow 1983). In all of these cases, the United States possessed experts who understood the political realities of the countries in question, but they were shut out of the policy process. This inability to perceive complex international political realities does not speak well of the US capacity to understand Asia Pacific, particularly in a time of growing complexity and a rising China.

Relations with the United States


The emerging post–Cold War era is far too complex for a single power to manage it comprehensively. It requires the ability to focus on many different regions and variables at once, something that is probably beyond the capacity of any state. This being the case, the United States should prioritize and decide which areas of the world on which to focus its attention. This view shares some aspects with the concept of “offshore balancing.” Offshore balancing calls for the United States to maintain its dominant world position by balancing conflicts between other powers while avoiding long-term engagement and commitment to foreign conflicts. This would mean, in practice, becoming involved in conflicts only when necessary, utilizing naval and other mobile platforms but not committing to permanent facilities and bases all over the world. Arguably, whatever strategy the United States chooses, it will need to remain more engaged in the affairs of other states than it might like. Indeed, Evan Montgomery (2014) argues that whether the United States decides on primacy or offshore balancing, in practice its military profile will look much the same: the preparations necessary for offshore balancing would still require a considerable prior commitment of resources into any potential theater of war. The desire of the United States to maintain its global hegemony means that it risks exhausting itself in endless conflicts that may be marginal to its national interests and many of which it cannot win. This also means that the United States denies Asia Pacific the sustained attention the region needs and deserves. Over the next ten to fifteen years, this study’s period of interest, the United States will remain the most militarily powerful state in the world and in Asia. Rising tensions in the South China Sea, possible conflict in the East China Sea, economic competition, and unforeseen sources of tension are likely to make US-China relations particularly complicated. The United States will need to accommodate China’s rise and take into account China’s perspectives (White 2012). US admonitions that China be a “responsible” actor in the international system mean that the United States expects China to accept the existing rules and structures of the US–created and led system. China is a far stronger adherent to international law than the United States (Foot and Walter 2011). Even so, China (and other emerging powers) will assert its own interests and interpretations of international law in the future. China will not leave the security of the sea lanes, on which it relies for energy and trade, to the protection of the US Navy, particularly since such a position leaves it vulnerable in any dispute with the United States. At the very least, the United States will need to share regional security with China and other emerging powers.

192 The New ASEAN in Asia Pacific and Beyond The Obama administration tried to learn from the many mistakes of its predecessor. Obama proved to be a clear thinker on foreign policy and justifiably skeptical of the wisdom of the foreign policy establishment. Obama was more careful in use of force. However, this restraint affected the confidence of some Asian allies in US defense agreements. After the illegal Russian annexation of Crimea and the measured response of the United States, Japan expressed uncertainty over the US commitment to defend it if China took more aggressive actions in the East China Sea (Cooper and Fackler 2014). Many US allies criticized the Obama administration for failing to bomb Syria, after faced with the possibility that the government of Syria had crossed a US “red line” by using poison gas against civilians. As a superpower, the United States is caught by how it defines its role in the international system, but also by the expectations of its allies. The United States is in a Catch-22 situation. If it uses its military power and is unable to achieve its goals, then it looks weak. It will lose allies and influence as its partners search for other options, including arming themselves or pulling away from their alliances with the United States. In the worst case, former allied states may form alliances or make accommodation with US rivals. But if the United States fails to use its power, then its allies question its commitment and it faces the same outcome. The failure of US military power in the Middle East and the reluctance of the United States to use force against Russia over Crimea did not mean that the United States would not honor its treaty commitments in Asia Pacific. Obama’s decision to avoid yet another quagmire in the Middle East was wise, particularly after his misstep of getting involved in Libya, then watching that country descend into chaos and become a source of instability across Africa. The United States will not strengthen its credibility by becoming mired in yet another unwinnable conflict. The United States ultimately accomplished the goal of greatly reducing Syria’s chemical weapons through diplomacy, something unachievable by military force, as Obama understood (Goldberg 2016). Avoiding a conflict with Russia over a state (Ukraine) to which the United States has no treaty obligations was the most responsible response. The primary potential combatants in Asia Pacific are other states, not insurgent movements, as in the Middle East. At a purely technical level, the US military capability in Asia Pacific remains effective. Even so, the question of political will is important. Can the United States reassure its Asian allies that it will put itself at risk in order to honor security commitments in places where it has no direct interests? Will it do so if the US mainland is vulnerable to attack, as it may soon be to the nuclear capabilities of North Korea? During the Cold War, the

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United States convinced itself that the threat of global communism posed an “existential threat.” This provided the rationale to justify its interventions and alliances around the world. Today, there is no comparable existential threat, despite Americans grossly exaggerating the problem of terrorism. China certainly does not challenge the primacy of global capitalism, even if it is challenging the primary US role in the international system. It is reasonable for Asian states to be concerned about the reliability of US assurances. If the United States failed to honor its treaties, it would effectively be giving up its status as the world’s superpower. This identity is crucially important to the United States; it is how it has seen itself since the end of World War II. Even the nativist supporters of Donald Trump see the United States as the most powerful state in the world, able to intimidate the rest of the planet, if necessary. The United States will not give up global economic, military, and political domination so easily. This implies that the United States will honor its military commitments, but it may also exacerbate dangerous situations in its pursuit of an anachronistic and unsustainable hegemony. Prioritizing US interests means that the United States needs to accept being the preeminent power in a number of key regions of the world rather than a global hegemon. However, it is unclear how the United States will make those choices. President Obama argued that the US interest in the Middle East is declining as the United States becomes less dependent on Middle Eastern oil. Obama believed that the Middle Eastern allies of the United States are unreliable and that the United States has very limited ability to affect the tribal and sectarian forces that shape the region (Goldberg 2016). Therefore, the United States should reduce its focus on the Middle East and shift it to regions such as Asia, where the local conditions complement US influence. However, there are other complicating factors in the case of the Middle East. Domestic US politics, particularly the politics of Israel, keep the United States tied to the region, despite the fact that Israel is a major strategic liability for the United States. More importantly, if the United States were to retreat from the Middle East, it would effectively encourage other countries that do have stronger interests in the region to take up its “policing” role. China, Japan, and India all rely on Middle Eastern oil and might feel compelled to fill the vacuum left by a US withdrawal. This would reduce their effective dependence on the United States, lessening US influence and increasing the likelihood that other states will emerge to rival US military power or that US allies might find their interests at odds with US actions and interests in the Middle East and elsewhere. It is possible that the United States can remove itself from

194 The New ASEAN in Asia Pacific and Beyond the Middle East while still providing public goods and security in Asia, but instability in the Middle East will continue to invite intervention from outside so long as the region remains home to a critical resource. Whatever the United States decides to do will not prevent Asian powers from developing their own capacity to protect their energy interests. (Note that the development of alternative and renewable energies may be changing the calculations on this issue. For the present, however, petroleum remains a vital resource.) As previously noted, the US involvement in the Middle East has been an unmitigated disaster that continues to suck away US resources and prestige. If its quest for hegemony keeps the United States mired in that region, then it is caught in a trap from which it cannot extricate itself. China is developing relatively low-tech weaponry that may be enough to deal the United States destructive blows in Asia Pacific. However, the focus on the various degrees of effectiveness of the weapons systems that the United States and China can bring to bear may miss the larger point that none of these systems can be used. A direct military conflict between two great powers has not happened since the end of the Korean War. Factoring in modern weapons, such a conflict would be utterly devastating. The risk of such a clash sliding into a nuclear exchange is real. Any military altercation would have to quickly end and be resolved through diplomacy. Massive military machines are impressive, but their practical utility in conflicts between great powers is highly questionable. The wars of the twentyfirst century require political, not military, solutions. US drones and high-tech warfare may “degrade” the enemy and keep US opponents off-balance, but they also kill many civilians, alienate large populations, and breed the next generation of “terrorists.” The United States has proven that it can win battles but not insurgent wars. Anatol Lieven (2012) argues that the US political class and the public want an American empire but are unwilling to pay for it in blood or treasure. So long as the US military relies on a volunteer military, it will lack the manpower to successfully hold territories it may conquer. It cannot bring in a conscript army without provoking major social and political backlashes. Americans resist paying the taxes needed to sustain their country’s imperial designs. Hillary Clinton’s speeches on the US rebalancing indicated the US intention to provide “leadership” to Asia Pacific and to build institutions inspired by the Atlantic model and linked to US power. The United States has pushed for ASEAN and its many regional offshoots to be more legalistic, formal, and binding in their activities. Asians have pushed back against this approach, for sound political, economic, and

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sociological reasons. Adapting itself to a radically changed environment wherein it cannot simply dominate fits uneasily with the US approach to institutions in general and Southeast Asia in particular. To prosper in a multipolar Asian environment, the United States needs to accept, understand, and appreciate the value of institutions that are more “talk shops” than binding structures. It must follow as well as lead, and be prepared to compromise on its own goals in order to pursue longer-term gains. It must adhere to the rules of the international system; only then can it have credibility when it invokes those rules. These are the kind of adjustments that a nonhegemonic power must make in a more power-diffuse system. Unlike the reasoning behind the Atlantic alliances, there are no clear-cut enemies in Asia against whom the regional states are organizing. Asian states want the United States to be present in the region, but that does not mean that they want to be dominated or that they will accept the kind of institutional structures that the United States prefers. The Trump Factor The preceding discussion of the approach of the United States to its international position was based on an assessment of US practices and strategic priorities established over the seventy years since the end of World War II. The election of Donald Trump to the presidency of the United States in 2016 presented analysts of Asia Pacific and American foreign policy with a new set of problems. Trump’s election campaign rejected standard US political positions, at both the domestic and international levels (Landler 2017).10 At the time of this writing, almost a year into the Trump administration, it is clear that the United States is facing a presidential challenge to its fundamental institutions and social and political stability that is unprecedented in modern times. At the same time, Trump’s election and the corresponding social division and instability within the United States is the product of a decades-long process of American political disintegration. During his election campaign, Trump indicated that, under his leadership, the United States would abandon its post–World War II position as the linchpin and guarantor of the liberal international system. Instead, adopting a “nationalist” and “antiglobalist” narrative that portrays the United States as the victim of its dependent, freeloading allies, he indicated that the United States would require other states to spend more on their militaries and subsidize the US military if they want US support. Trump made opposition to free trade agreements a centerpiece of his campaign. Thus, the United States, the power that most encouraged and

196 The New ASEAN in Asia Pacific and Beyond benefited from the liberal international trading regime, would become an opponent of the system it created. The Trump administration’s foreign policy remains unclear. Trump has acted on his hostility to FTAs and raised doubts about US reliability in many parts of the world. However, his inclination to asserting US military power has kept the United States militarily engaged in other parts of the world, though not necessarily in a prudent manner. Early signs of the effects of the Trump presidency on US standing in Asia Pacific are not encouraging. Obama’s efforts at an Asian “rebalancing” ultimately failed; Trump’s approach to the region has been largely antagonistic and destabilizing. The Trump administration demanded the renegotiation of the Korea-US Free Trade Agreement (KORUS-FTA), despite considerable opposition from South Korea, and threatened to scuttle the agreement. Trump promised a trade war against China. He later backed away from this as part of his effort to gain Chinese support in dealing with North Korea. Nonetheless, Trump continues to fume about US trade deficits with China and a trade war between the two states remains possible, though the economic consequences to the United States would be extremely painful. As president-elect, Trump suggested that Taiwan may be a bargaining chip that he can use in future negotiations with China over economic issues—a possibility that, ironically, undermines Taiwan’s security and plays games with an issue of extreme sensitivity to China. Any economic acts against China will damage Southeast Asian economies, most of which are integrated into Chinese production chains. These potential actions could dramatically affect the standing of the United States in Asia Pacific. There is already considerable doubt in the region over the staying power of the United States as a military presence. As noted previously, Trump withdrew the United States from the TPP, seriously undermining US economic and political credibility in the region and directly harming states like Vietnam, which was poised to be the biggest beneficiary of the TPP. It will be difficult for any future US administration to recover from this loss of US prestige and reliability (Storey and Cook 2016). Trump indicated that he will continue the counterproductive US focus on the Middle East and the “war on terror,” including increasing the number of US troops in Afghanistan and adopting an open-ended commitment to the longest US war. In this, Trump has followed establishment policy, rather than the inclinations of the isolationists in his political base. Trump has pledged to remove caps on defense spending, to rebuild the US military. This indicates that the United States will continue to waste valuable resources on its military rather than building a necessary social safety net. Ian Storey and Malcolm Cook note that

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Trump’s . . . victory has aroused fears across Asia that the United States may abdicate its regional leadership role, a role that many states have long regarded as indispensable to the maintenance of regional peace and stability. Given America’s vast political, economic and strategic interests in Asia, such fears are almost certainly exaggerated. Nevertheless, the new administration may adopt a more transactional approach to Asia. (2016, p. 5)


If Trump follows through on this “transactional approach” to Asia and the rest of the world, it could do irreparable harm to US global leadership. In contrast, China portrays itself as willing to bear considerable costs in order to further regional integration and prosperity. It is positioning itself to replace the United States in critical areas. As noted in Chapter 5, China sees the Trump administration as following a “strategic contraction” that will further China’s New Asian Security Concept. During the summer of 2017, North Korea launched a number of missiles demonstrating its development of intercontinental ballistic missile (ICBM) technology, raising the possibility it could directly threaten the United States with nuclear attack. In early September, North Korea detonated the largest nuclear explosion it had yet produced, claiming it was a hydrogen bomb. In the face of the real threat posed by nuclear escalation, the Trump administration approached the problem in a dangerous way. Trump himself engaged in a war of words with the North Koreans (often on Twitter), threatening them with devastating military attack, disparaging the use of diplomacy to resolve the conflict, and personally insulting North Korean leader Kim Jong-Un. Trump attacked the leadership of South Korea, accusing it of seeking to “appease” North Korea by pressing for diplomatic engagement. Intemperate and erratic US rhetoric has not improved the impression of the Trump administration in Asia. Trump declared himself a pragmatist, meaning he intends to place less emphasis on issues such as human rights in US foreign policy. Authoritarian members of ASEAN, such as Cambodia, have greeted this shift warmly, and this may improve US relations with Thailand and President Duterte’s Philippines. In late 2017, Trump acted on a campaign promise to move the American embassy in Israel to Jerusalem; it remains to be seen how this will affect US relations with Indonesia, Malaysia, and other Muslim states. Trump’s commitment to the various Asian multilateral summits will likely be sporadic and uncertain. Reduced US attention to ASEAN will undermine the organization’s quest for “centrality” in the region, but it will also undermine US leadership. The military component of Obama’s rebalance will likely remain intact. Trump’s advisers have suggested that the lack of US naval presence in the region enabled Chinese aggressiveness in the South China

198 The New ASEAN in Asia Pacific and Beyond Sea. Trump has promised to increase the size of the US Navy from 275 to 350 ships, but this change would take at least a decade to implement. US military cooperation with Southeast Asian states will likely remain unchanged. Trump and his advisers have sent mixed messages on the South China Sea, suggesting both a US pushback against China’s actions in the region or US disengagement (Storey and Cook 2016, p. 6). A Trump administration may face considerable opposition in Congress and the business community to its anti–free trade plans. The Republican Party has pushed free trade to the benefit of its wealthy sponsors while obstructing improvements in the welfare state to compensate Americans affected by economic globalization. The Republicans may have limited ability to resist Trump, however, given his popularity with their base. However, many US industries depend upon production ties with China to operate efficiently. Moreover, an end to free trade arrangements would cause enormous harm to the spending power of American consumers, hitting the working class particularly hard. Political diatribes aside, most US manufacturing jobs have been lost to automation, not free trade. Indeed, the advance of technology and the toll this is taking on low-skill jobs is the real problem facing states all over the globe, including in Asia (Bland 2016). In late 2017, the Republican Congress passed a bill reforming the tax system. This was the most extensive tax reform in the United States in thirty years. The process the bill followed to passage was incredibly rushed. Congress slapped the bill together over a matter of seven weeks and passed it through committees so quickly that no governmental agency was able to assess its likely consequences. The major takeaways from the bill are that it delivers a $1.5 trillion tax cut that will massively and disproportionately benefit the wealthiest Americans, while adding more than $1 trillion to the US national debt (Patel and Parlapiano 2017). Over time, the bill will raise taxes on the lower and middle classes (Edsall 2017). Republican Party leaders have already indicated that they will pay for the increase in the debt by cutting entitlement programs, thereby continuing their war on the welfare state. For Asian states, one major concern of the bill is that it cuts US corporate tax rates to 20 percent from 35 percent. Some US-based companies quickly indicated they would “reshore” their operations and relocate from Asia to the US mainland to take advantage of these new rates. It is too early to say exactly how economically disruptive the US tax reform will be to Asian economies (Poh 2017). Many Asian states are preparing strategies to combat this new threat. China, for example, plans to reduce its corporate tax rates. The consequences may be more significant from a geopolitical perspective. The United States has

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moved itself from being the major supporter and proponent of its Asian allies to a major antagonist. This may lead Asian states to pursue new development strategies and further decouple themselves, politically and economically, from the United States. The greater impact of the tax bill will be on the long-term political, social, and economic stability of the United States. Independent analyses indicate that the tax bill will greatly increase the inequality of wealth in the United States. For the relatively minimal tax relief that some Americans may receive, the costs in lost services and access will be much greater. The bill makes higher education much less affordable for Americans, an area in which the United States is already weak. It deliberately destabilizes the health-care markets, with the hope of undermining President Obama’s Affordable Care Act. It is designed to target states that tend to vote Democratic with higher tax bills, taking partisan politics to an even more destructive level. The bill is an unequivocal expression of the Republican ideological and political commitment to the idea of a minimal state and the interests of the wealthy over the interests of the rest of society. While there are early signs that the Trump administration’s dedication to lower taxes and massive deregulation may be spurring the “animal spirits” of US business and increasing investment, the long-term costs of these measures will likely be high. The secret of America’s global economic success has been in its vibrant middle class. It remains unclear how an economy that disproportionately benefits the wealthy while offloading social costs onto the rest of society can sustain the middle class, which is already in crisis. Trump’s tax reform will further polarize the United States along regional, racial, and ideological lines. There are signs that the radical shift to the political right on the part of the government is powering the creation of a counter-movement that, in response, may push the United States further to the left. The long-term consequences of the Trump presidency are several. First, Trump came to power running a campaign that disparaged liberal democratic values and played to the worst xenophobic and racist tendencies in the US public. He was revealed as a sexual predator, openly racist, and a pathological liar (Leonhardt, Philbrick, and Thompson 2017; Politifact 2018). Despite all of this, the American public elected him to its highest office. The reasons for this are complex and are not necessarily evidence of a massive shift in the attitudes of the American people; nearly 3 million more Americans voted for his opponent, though Trump won the Electoral College. Even so, the fact that Trump was the candidate for one of the major US political parties is indicative of deep problems within American society and politics, problems that have been

200 The New ASEAN in Asia Pacific and Beyond building for decades (Perlstein 2008). It is particularly representative of the profound radicalization of the Republican Party. This reality severely undermines US “soft power” and the appeal and authority of the US system of government in the rest of the world, which was based on portraying the United States as the model for the virtues of liberal democracy. It is now much more difficult for the United States to present itself as worthy of emulation. Second, the decision of the American public to elect a president who is, by all evidence, grossly unfit for the office, adds a new dimension of unreliability and unpredictability to the global community’s relationship with the United States. Twice, in the course of the twentyfirst century, the American public has elected US presidents who are manifestly incapable of providing capable leadership: George W. Bush and Donald Trump—not coincidentally, both Republican presidents. Asian states have to adjust to this reality. Countries such as Japan and South Korea will need to develop their capacity to act on their own, despite what assurances Trump may provide. Other countries that were relying on a US counterbalance to China need to adjust their regional strategies (White 2017). The uncertainty of when the next demagogue or television entertainer will be president is one that global states must take into account. The American Empire is ending, not necessarily for what Trump does or does not do, but for the instability and political and social dysfunction that his election symbolizes. The US retreat from globalization is a major blow to world order. Income inequality is a major concern in most states. This is a harmful side-effect of globalization that can only be managed by states that are willing to create more extensive social safety nets. Rigid economic and political ideologies, along with persistent, deep-rooted racism, prevent the United States from dealing effectively with the social and economic effects of globalization. Dealing with the ramifications on employment due to changing technology requires an entirely new and different approach to the world economy. If billions of people are left unemployed or underemployed, the social and political consequences will be catastrophic. The United States is unprepared to lead this transformation. Far-right political philosophies powerful in the United States, rooted in extreme capitalism and positing a Darwinian approach to society, are counterproductive and destructive. Dealing effectively with the world’s problems requires effective and competent governance. However, there is little indication that the Trump administration is capable of learning or understanding this reality. Many of the individuals that Trump has selected to serve in his cabinet have spent their careers opposing or attempting to undermine the very departments he has appointed them to

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lead. All early indications are that Trump intends to dismantle as much of the federal government and its regulatory oversight as he can. Rather than strengthening the social safety net to defend American citizens against the social and economic effects of globalization, the Trump administration seems intent on removing what few protections they have. On the foreign policy front, the Trump administration has taken an ax to the US State Department, cutting its budget by almost 30 percent and leaving dozens of major posts unfilled, with 60 percent of career ambassadors leaving the department (Shugarman 2017; Allen-Ebrahemian 2017). The United States is moving in precisely the opposite direction from where it needs to move if it is to make any useful contribution to the major problems of the global system. While future US governments may adopt a more cooperative and collaborative approach to the international community, the rest of the world cannot afford to wait nor continue to deal with US unpredictability. Finally, confronting human-caused climate change is, by far, the most pressing issue of the modern world. The Trump administration appointed Scott Pruitt, a climate change denier, to run the Environmental Protection Agency (EPA). Trump himself has described climate change as a “hoax” perpetrated on the world by China. This complete abdication of leadership on the most important issue of the day is incredibly damaging to US power. For years, the United States was the major obstacle to the world dealing effectively with the overwhelming threats created by extreme weather events. Under Obama, it was finally starting to provide international leadership. Now, it is once again in full denial of scientific reality and vigorously attacking the efforts of the rest of the world to deal with a global existential threat. If the United States continues to deliberately obstruct global action on climate change, then other states need to take its place. China is the number one producer of greenhouse gases in the world, but it is facing an environmental apocalypse and it is doing all it can to advance alternative forms of clean energy. China has already indicated it will try to fill some of the gaps left by a US withdrawal from the Paris climate accords. China may be able to turn its global leadership on climate change into global leadership on other issues. In December 2017, the Trump administration released its first National Security Strategy. The document was widely portrayed in the media as a fairly standard statement of US foreign policy. It identified China and Russia as competitors to American power; it offered the usual commitment that the United States would maintain its hegemonic status in the international system (National Security Strategy 2017). This underlines the point, made earlier, that the US foreign policy establishment

202 The New ASEAN in Asia Pacific and Beyond remains incapable of making accommodation with the realities of American decline. More important was that Trump continued to emphasize a US view of the world, in economic and security terms, as a zero-sum game. The Trump administration believes that it can only make the United States “great” at the expense of other states. This is another selfinflicted wound on the concept of American global leadership. Conclusion The United States remains the single most important actor in the Asia Pacific region. Its military forces provide a regional security blanket by serving necessary functions that local states would find politically contentious. However, the United States is also a power in relative regional and global decline. The ASEAN states expect that the United States will help to manage China, but also that it will make room for China on the world stage. The United States must learn to live with a China that is a major power—maybe the dominant power—in Asia Pacific. International institutions will need to change to accommodate China’s interests and perspectives. US “leadership” must listen to, and take into account, the interests of other states, not just attempt to dictate the terms of interaction. Under any circumstances, this would have been a difficult educational process for US leaders and the US foreign policy establishment. This will be even more difficult for a Trump administration, which began its term steeped in the rhetoric and ideology of US nativism. ASEAN and other regional institutions can be a bridge between the great powers and can help to promote peaceful regional interaction. The success of this approach will require that the big powers understand and respect the changing structure of the regional system and reach some kind of accommodation with each other. Under an aggressive Trump presidency, the potential for misunderstanding and conflict is much greater. The United States wields enormous structural power; it has the world’s most powerful military and is, per capita, a very wealthy economy. The largest threats to US international dominance do not originate outside the United States but, rather, from within. The United States is in a state of political decay. Political instability and social upheaval combine with a growing inability of the political system to broker compromises between the different interests and factions within American society. Since the end of the Cold War, the Republican Party has refused to accept the legitimacy of Democratic Party governments. The willing-

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ness of the Republicans to pursue socially and politically divisive and destructive policies and tactics bodes ill for the future of US democracy. These developments have made the United States difficult, if not impossible, to govern. These concerns affect the reliability of US hard power and the appeal of US soft power. If allies cannot depend on the United States, they will need to pursue alternative arrangements. During the George W. Bush administration, the United States became a danger to the international order. It deliberately rejected the ideas and principles of multilateralism and sought to wield US hegemony without restraint. Early indications are that the Trump administration, despite—or perhaps because of—its semi-isolationist tendencies and domestic agenda, is acting in much the same way. A “transactionalist approach” to world order looks much like a situation wherein powerful states abuse and bully the weak. There are significant differences between the Bush and Trump foreign policies, but also many similarities. One key difference is that the Bush administration upheld the traditional American commitment to global economic liberalism. Bush recognized the advantages of economic globalization to the United States and understood economic power as an effective way to maintain international influence. Trump’s antipathy to FTAs seems based in a nostalgia about past US economic “greatness” and a failure to grasp how the modern world economy operates. The neoconservative faction within the Bush White House, while highly ethnocentric, was also driven by a desire to spread “American values” to the rest of the world. Trump explicitly rejected “state-building” as a US strategy. However, in other areas of foreign policy, the Bush and Trump administrations are remarkably similar. The Bush administration abhorred globalism; it believed it could bully, threaten, and coerce other states into accepting US dictates. It believed that the United States could use its military power to force its will on the world. The Trump administration demonstrates a willingness to bluntly threaten other states that may disagree with its policies. Trump’s foreign policy is defined by antipathy to the rest of the world; even his government’s crusade against immigrants (especially nonwhite immigrants) fits into this pattern. These continuities between Republican administrations speak, again, to the fact that Trump’s election was the culmination of a long process of political dissolution in US politics. Trump’s desire to increase the size of the military even as he threatens to pull back from US economic engagement with the world raises an uncomfortable question: If the United States does not intend to engage in political and economic leadership abroad, why does it need/want such an enormous military? The obvious answer is so that it can more effectively threaten other states.

204 The New ASEAN in Asia Pacific and Beyond The United States is entering a period of demagoguery in its domestic politics. It is unlikely that the country can make the social and economic reforms necessary to alleviate its domestic crises. Locked into a “small government” ideology that makes it difficult for the state to take effective action, the United States is accelerating its decline through its own choices and actions. The weakness of Trump’s mandate indicates that the US political pendulum could easily swing in the opposite direction. However, it seems likely that domestic political, social, and economic dysfunction will continue to preoccupy the United States for the foreseeable future. From an international perspective, the instability manifest in the United States is now a long-term consideration that other states must weigh when making future calculations about the nature of the global system. As the United States wrestles with its many self-inflicted problems, the rest of the world will not stand still. The ASEAN states must begin planning for a post-US world or, at least, a multipolar regional order wherein the United States is a much more unreliable actor and, perhaps, a dangerously destabilizing force. Notes 1. The Taiwan Relations Act of 1979 obligates the United States to provide Taiwan with defensive weaponry, but it does not obligate the United States to directly militarily intervene to assist Taiwan if it is attacked. US presidents have generally stated this commitment, however, making it a political obligation and, possibly, a measure of US credibility in the region. 2. For example, the United States improved its relations with India and Pakistan at the same time, an unusual diplomatic accomplishment. However, this happened precisely because the United States needed both countries—especially Pakistan—to fight its terrorism-driven agenda. 3. Joseph Stiglitz later increased his estimate, arguing that costs for the health care of veterans would make the final costs of the wars at least $4 trillion, but more likely between $5 and $7 trillion. (“Joe Stiglitz Tells Democracy” 2015). 4. According to Jean Edward Smith, Bush’s unofficial biographer: “Whether George W. Bush was the worst president in American history will long be debated, but his decision to invade Iraq is easily the worst foreign policy decision ever made by an American President” (2016, p. 660). 5. Clinton attended the EAS in 2010 as secretary of state. President Obama attended for the first time in 2011. 6. Many observers make the case that the United States was exploiting its dominant position in the post–Cold War world to consolidate an empire long before the appearance of George W. Bush (Huntington 1999; Johnson 2000). The difference with the Bush era was that advocates of empire openly expressed their desires and couched it in terms of bringing the benefits of American civilization and order to the “uncivilized” parts of the world. 7. The criticism of those in the declinist school is complex. Andrew Bacevich (2008) and Christopher Layne (2012), for example, argue that the United States has

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been in decline since at least the 1970s. Policy decisions made over the past few decades—reflecting narrow, right-wing ideology—allowed the United States to exploit its position in the world system and led to unsustainable debts and other social choices that undermined the ability of the United States to maintain its dominant position. US preeminence in the immediate post–Cold War era was an illusion; George W. Bush’s wars and the 2007–2009 financial crisis sped up the process of decline and revealed the illusion. 8. According to the CIA World Factbook (accessed December 2017), China’s GDP, based on purchasing power parity, was $21.29 trillion in 2016, making it the biggest economy in the world. By comparison, US GDP was $18.62 trillion. China’s GDP per capita was $15,400, ranking the country 106th in the world. US GDP per capita was $57,600, ranking it 20th. 9. According to research by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman (cited in Patricia Cohen 2016), approximately half of all Americans have seen no real increase in their incomes since the 1970s. At the same time, the US economy has expanded enormously in size. The vast majority of the created wealth goes to the affluent. From 1980 to 2014, the top 1 percent of Americans accumulated more than 20 percent of the nation’s wealth, while the share of the income of the lower 50 percent of the population fell from 20 percent of the total to 12.5 percent. In 1980, someone in the top 1 percent earned, on average, the equivalent of $428,200 in 2014 dollars. This was twenty-seven times what the typical person in the bottom half earned, about $16,000. In 2014, the average income of the top 1 percent was $1,304,800, while the average income of the bottom half remained at around $16,000. The 1 percent now made eighty-one times as much as the lower 50 percent (Cohen 2016). 10. Many factors contributed to the election outcome, but white nationalist sentiment seems to be the single most decisive factor. While many of Trump’s supporters were economically alienated working-class white Americans, the majority were college-educated suburban whites; these were people who had actually done very well under the Obama administration and continued to do well as they voted for Trump (Sasson 2016). The median income of a Trump voter during the Republican primaries was $72,000, $10,000 above the national average; this distinction generally held during the actual election (Silver 2016). Approximately 90 percent of Trump’s supporters were white; 58 percent of white voters overall supported Trump. Trump’s success involved stirring up and capitalizing on nativist sentiments in a white American population that resented the appearance of nonwhite people and other minorities in their country and wanted a “return” to a United States of an earlier age. These same xenophobic sentiments were on display during the Brexit vote that is set to take the United Kingdom out of the EU and has been manifested all across the European world as a form of “white extremism” (Saunders 2016). To deal successfully with globalization, the United States needs a more extensive social safety net and better access to education and health care. Racial hostility has impeded these necessities in the United States, and the 2016 election underlined how difficult it will be to overcome that hostility for the sake of the greater good. In addition, the rise of xenophobia foreshadows future problems for the United States. Amy Chua (2009) argues that, historically, the most dominant states have been those most welcoming of immigrants and diversity. An aversion to both is a sign of decline.

7 ASEAN and the Regional Powers

China and the United States are the major powers of the Asia Pacific region. Both are also global powers. However, less powerful regional actors are major sources of influence in Asia Pacific. As power shifts between China and the United States, these other actors will become more important. Their allegiances, strategies, and interests will define the shape of Asia Pacific. ASEAN seeks to engage these states and enmesh them in the regional structures, norms, and processes. This chapter focuses on Japan and India’s roles in Asia Pacific and concludes with a short discussion of Russia. Japan is one of the cornerstones of the Asia Pacific regional order. Given the size and importance of its economy and its considerable military power, Japan should be competing directly with the United States and China for regional influence. However, Japan has adopted a largely subservient role in relation to the United States. Its relationship with China is even more complicated, driven by centuries of historical and cultural interaction but especially by the events of the late nineteenth century and the first half of the twentieth century. Today, Japan and China compete for regional influence even as they struggle with a relationship that is both mutually antagonistic and economically interdependent. This convoluted relationship impedes Asian efforts to construct effective regional institutions. India has a limited presence in Asia Pacific, but its rapid emergence as an economic and technological powerhouse makes it a rising challenge to China’s domination in the rest of Asia. The United States and regional states are courting India as a counterbalance to China in Asia


208 The New ASEAN in Asia Pacific and Beyond Pacific. India will weigh heavily in the scales of the regional balance of power in the future as its national ambitions extend to Southeast Asia and beyond. It is actively pursuing closer security ties with Japan and the states of Southeast Asia. Its ongoing border disputes with China and China’s close strategic relationship with Pakistan make India a natural ally of those states concerned with rising Chinese power in Asia Pacific. Russia is a natural resource superpower, but its continuing political fragility, its ongoing efforts to reconstruct itself from the ruins of the former Soviet Union, and its emerging junior-partner relationship with China have rendered it a minimal presence in Asia Pacific, though it remains of great importance in Central Asia. Russia’s adventurism in the Ukraine, born of its fear of Western encirclement, and its intervention in Syria, have made Russia a much more prominent rival to Western power. Russia’s actions have distracted Western powers from Asia Pacific, even as Russia has moved more firmly into China’s orbit. The United States has implicated Russia in trying to affect the 2016 US federal election. Russia may have been instrumental in the election of Donald Trump, meaning it contributed directly to the growing instability in the United States. This chapter discusses the roles of each of these states in Asia Pacific and their relationships to ASEAN and other regional powers. India and Russia are currently peripheral to the shape of Asia Pacific, though they have great potential to become major actors in the future. Japan, by contrast, is an inextricable part of the regional configuration of power. For now, it functions largely as an extension of US power, but there are signs that it aspires—and may need to aspire—to more independent action. As ASEAN navigates a multipolar world, these are the states with which it must contend. Japan: A Rising Power? For decades, Japan was the most important state in Asia. Japanese investment in East Asia made the Asian miracle economies possible. Over time, other Asian states followed Japan’s model of development, as best they could, and benefited from its economic largesse. Japan possessed the most advanced and powerful military in the region and its financial industry remains one of the most important in the world. Despite all of this, since the end of World War II, Japan’s regional influence has been much less than any objective measure of its power would suggest. This is because Japan has been dominated—sometimes willingly, often not—by the United States. During the Cold War, the

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United States acted as a check on Japanese power, reassuring Japan’s nervous neighbors that Japan would never again be a military threat to the region. In the post–Cold War era, Japan has continued to function as an extension of US power in Asia, but Japan has also tried to take on a more prominent and independent role in world affairs. Japan may be ready to be a more “normal” state. It is now in a competition with China for influence in Asia Pacific, a situation complicated by unresolved historical animosities and territorial conflicts between the two states. The struggle for influence between these Asian powers creates opportunity for ASEAN. The History of Japan in Southeast Asia Japan’s history with Southeast Asia was relatively limited before the events precipitating World War II in Asia. Japan emerged from the Meiji Restoration (1868–1912) as a powerful modern state, but it needed an empire to maintain its newfound status (Harries and Harries 1991; Murphy 2014, pp. 63–93). It pursued its imperial ambitions by invading and occupying Korea and parts of China, and saw Southeast Asia as part of its sphere of influence. Japan invaded Southeast Asia in 1941, ostensibly to free Asian peoples from the yoke of Western imperialism. Initially, many Southeast Asians welcomed the Japanese as liberators. However, they soon rose up against the Japanese occupation. The United States occupied Japan (1945–1952) and compelled it to accept a US-written constitution that, through Article 9, removed Japan’s sovereign rights to wage war or maintain a military.1 However, US strategic interests changed after North Korea’s attack on South Korea in June 1950. For the United States, Japan became an invaluable military and economic asset in its effort to contain international communism. The United States helped Japan get around the new constitution by creating a Japanese Self-Defense Force (SDF). The United States also set aside its efforts at political and social reforms in Japan because it needed Japan to regain its footing much more quickly than extensive reform would allow (Yahuda 2011, pp. 94–97). Thus, many of the political and economic actors responsible for the rise of imperial Japan and World War II returned to positions of power in the new Japan (Murphy 2014, pp. 100–101). Nonetheless, Japan was humbled by its defeat in World War II and the suffering of its people that followed. Led by Prime Minister Shigeru Yoshida (1946–1947, 1948–1954), and following the principles of his Yoshida Doctrine, Japan sheltered under the US security

210 The New ASEAN in Asia Pacific and Beyond umbrella and pursued economic and technological development as the safest and most sustainable road to prosperity. The United States encouraged economic ties between Japan and Southeast Asia, which served as a source of raw materials and a market for Japanese goods. This relationship became more crucial as the United States pressured Japan to reduce its commercial ties with China, Japan’s main market (Singh 2010, p. 393). Nonetheless, Japan was able to maintain somewhat informal trade ties with China and the Soviet Union, and grew to become China’s most important capitalist trading partner during the 1960s (Yahuda 2011, pp. 167–168). Throughout the 1950s, 1960s, and 1970s, Japan successfully pursued global economic diplomacy. Driven by the imperatives of the Cold War, the United States supported Japan’s rehabilitation in the world economy and facilitated Japan’s access to Western markets. In the late 1960s and 1970s, Japanese investment and technological innovation flowed to its neighbors, Taiwan and South Korea, and supported their economic miracles (Stubbs 2005, pp. 156–157). However, Japan failed to deal effectively with its brutal history in the larger region. Japan’s occupation of Taiwan was relatively benign, leaving many Taiwanese positively disposed toward Japan. On the other hand, Koreans and Chinese remembered long years of brutal Japanese occupation.2 The question of how Japan deals with its historical actions toward Korea and China remains a major point of contention between all three states today. After the formation of ASEAN in 1967, Japan continued to conduct its relations with Southeast Asia on a bilateral basis. The Japanese were skeptical of ASEAN’s capacity for influence in a world dominated by great powers, particularly as ASEAN’s members struggled with domestic problems. Japan also did not want to encourage ASEAN’s development into a collective bargaining bloc. In 1974, Prime Minister Tanaka Kakuei visited Southeast Asia. His visits sparked anti-Japanese riots in Indonesia and Thailand, where protestors condemned Japan as an economic imperialist that was exploiting Southeast Asia. Shocked by his reception, Tanaka attempted to reform Japan’s image in Southeast Asia by promoting regional economic and infrastructure development. At the same time, US retrenchment after the fall of Saigon resulted in the United States offloading its responsibilities onto regional allies. The United States encouraged Japan to strengthen its economic and security ties with the region (Singh 2010, p. 394). Following ASEAN’s Bali Summit in 1976, Japan improved its relationship with ASEAN. Japan viewed Southeast Asia as a bulwark against communism and now saw ASEAN as important to maintaining regional stability. This policy led to the Fukuda Doctrine of 1977. Named after

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Prime Minister Takeo Fukuda, the doctrine stated that Japan would reject a military role in the region, but sought equal partnerships with the people of Southeast Asia. Japan intended to contribute to regional stability by mediating between the states of ASEAN and Indochina. Vietnam’s invasion of Kampuchea/Cambodia in 1978 temporarily derailed the doctrine. Fukuda was followed by Prime Ministers Zenko Suzuki (1980– 1982) and Yasuhiro Nakasone (1982–1987), both of whom promised to assist ASEAN’s economic development. However, economic difficulties with the West distracted Nakasone and he largely neglected Southeast Asia. In 1987, Prime Minister Noboru Takeshita (1987–1989) issued the Takeshita Doctrine, which promised Japan’s assistance in strengthening regional “economic resilience,” political coordination between Japan and ASEAN, and cultural exchange. Takeshita provided a Japan-ASEAN development fund of $2 billion, designed to provide low-interest loans to small, private-sector enterprises and untied loans to ASEAN governments through local development institutions (Sudo 2002, pp. 37–39). In 1989, Japan’s official development assistance (ODA) surpassed that of the United States, making it the largest donor country in the world (Sudo 2002, pp. 56–77). Japan directed most of this aid at Asia, particularly the ASEAN region, though Japan also promoted development in Africa. Japan meant for its ODA policy to counteract the image of the imperial Japan of the past, maintain Asia as a market for Japanese goods and supplier of raw materials to Japan, and consolidate Japan’s leadership role in the region. In 1992, Japan struck an ODA charter that set the rules for its disbursement of aid. Among its four principles was the need to conserve the environment and support the self-help efforts of developing states. Japan’s ODA to ASEAN throughout the 1980s and 1990s was fundamentally important in helping the ASEAN states develop the social and economic infrastructure that enabled their economic takeoffs, as part of a Japanese-led economic network. Japan saw ODA as an important way for it to contribute to international security. Even so, Japan’s economic problems have taken a toll. Between the peak of ODA, 1997, and 2013, Japan’s ODA declined by 48 percent; the United States replaced Japan as top donor in 2001, and by 2007 Japan was the fifth-largest donor nation in the world (Ohno 2013, p. 68). It was still the fifth-largest donor in 2015 (Myers 2016). The ODA charter was revised in 2003 to emphasize the need for ODA to contribute to international peace and development and Japan’s own “security and prosperity” (Myers 2016). In the 1980s, Japan implemented its comprehensive national security strategy. This approach directed Japan to contribute to the national security and economic development of its neighbors through aid and economic cooperation. In 1982, the United States proposed that Japan

212 The New ASEAN in Asia Pacific and Beyond protect the sea lanes extending for 1,000 nautical miles away from the Japanese mainland, reaching to the Philippines’ territorial waters. Japan also supported ASEAN’s policies toward Cambodia and halted economic assistance to Vietnam (Singh 2010, p. 395). During this period, Japan emerged as the major global economic competitor to the United States, a position fueled by the massive trade deficits Japan ran with the United States. In an effort to address these trade imbalances, Japan agreed to the 1985 Plaza Accord, which increased the value of the Japanese yen relative to other leading currencies. Faced with a significant jump in the price of Japanese exports, Japanese businesses relocated their manufacturing to other parts of Asia. Southeast Asia, with its relative political stability, sound infrastructure, and lower-value currencies, received enormous Japanese investment.3 This investment created modern-day Southeast Asia (Stubbs 2005, pp. 153–183). Japan envisioned itself in a permanent regional leadership role, a model it referred to as “flying geese.” In this triangular formation, Japan was the apex goose, with the other Asian states rising, prospering and following its lead (Inoguchi 2011, pp. 240– 241). However, the Plaza Accord led to expansionary monetary policy within Japan (i.e., low interest rates to encourage borrowing), which contributed to the creation of Japan’s bubble economy. In the early 1990s, Japan’s bubble economy burst, and the country plunged into an extended recession. Japanese banks poured money into Southeast Asia in search of profitable investments to offset their losses and helped create the Asian economic crisis. Interestingly, this series of events can be seen as another example of how US mismanagement of its own economy resulted in catastrophic effects elsewhere. In the post–Cold War era, three related developments forced Japan to reconsider its security role: the apparent decline of US power, the criticism from the United States that Japan was a bystander during the Gulf War (1990–1991), and the rise of China. In 1991, Prime Minister Toshiki Kaifu indicated that Japan would put greater emphasis on its relations with ASEAN and the Southeast Asian region. In June 1990, Japan held the Tokyo Conference to contribute to the resolution of the Vietnam-Cambodia dispute. In 1991, Foreign Minister Taro Nakayama proposed the creation of a multilateral security organization for Asia Pacific. This was one of a number of similar calls from non-ASEAN countries that pushed ASEAN toward establishing the ARF in 1994. In 1992, the Japanese Diet passed the International Peace Cooperation Law, which allowed the deployment of 1,800 Japanese troops to Cambodia as part of a UN-sponsored peacekeeping force. This was the first official international deployment of the SDF in the post–World War II

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era. It laid the groundwork for subsequent SDF activities in East Timor (2002) and Aceh (2005) and paved the way for Japan’s support role for the US occupation of Iraq and Afghanistan. In 1995, Japan tried to mediate the dispute between China and the Philippines over the South China Sea and engaged in direct political and security dialogues with Singapore, Thailand, and Indonesia (Singh 2010, pp. 396–397). In January 1997, Prime Minister Ryutaro Hashimoto articulated the Hashimoto Doctrine, which consisted of three policies: to deepen and strengthen exchanges between Japan and ASEAN at all levels of interaction, to deepen mutual understanding and cultural cooperation, and to jointly address various global problems. By the end of 1997, however, the region was reeling from the Asian economic crisis. In December 1997, Hashimoto announced that Japan “would cooperate with ASEAN toward stabilizing Asian currencies and financial markets, and would also assist ASEAN in achieving stable and sustained development through economic structural reform” (Sudo 2009, p. 140). This initiative marked a shift in Japan’s regional policy away from bilateral ties and toward an effort to promote a new regionalism. Japan went on to participate in the first Northeast Asian summit meetings and the APT. Japan-ASEAN summits became institutionalized annual meetings, on the sidelines of the APT. At the 2002 ASEAN-Japan Summit, the two parties signed the Joint Declaration on the Comprehensive Economic Partnership in East Asia. The CEPEA aimed to strengthen Japan-ASEAN economic integration and cooperation, liberalize and facilitate trade in goods and services, and help integrate the newer ASEAN members into ASEAN. Japan signed an economic partnership agreement with Singapore in January 2002. Japan responded to China’s offer to open a free trade agreement with ASEAN by opening negotiations for a Japan-ASEAN FTA. The ASEAN-Japan Summit meeting of December 2003 was the first such meeting held outside Southeast Asia. It concluded with the adoption of the Tokyo Declaration for the Dynamic and Enduring Japan-ASEAN Partnership in the New Millennium. The Tokyo Declaration committed the two parties to forging common principles and visions, including commitments to human rights and freedoms. Japan promised to assist ASEAN’s economic development and integration as it built the ASEAN Community. Both sides agreed to consult on regional and global issues, “keeping in mind their special relationship based on equality, mutual respect and mutual benefit” (Sudo 2009, p. 145). This meeting also led to the establishment of the East Asia Summit. One of the economic initiatives originating in the Tokyo Declaration was the Japan-ASEAN Integration Fund (JAIF), signed in 2006. In

214 The New ASEAN in Asia Pacific and Beyond 2007, at that year’s ASEAN-Japan Summit, the two parties announced numerous measures to fulfill the terms of the declaration, including Japanese grants to help bridge intra-ASEAN development gaps and assist the development of the Mekong region. The November 2007 ASEAN-Japan Summit celebrated the successful conclusion of negotiations on the ASEAN-Japan Comprehensive Economic Partnership (AJCEP). This included the creation of the Economic Research Institute of ASEAN and East Asia (ERIA), tasked with providing ideas to further integration and relations between Japan and ASEAN. Since 1997, the overall value of Japan’s assistance, investment, and trade with the region generally increased but, in percentage terms, all three have declined significantly. Nonetheless, Japan remains a critical economic actor to Southeast Asia. In 2015, total trade between Japan and ASEAN was more than $239 billion, making Japan ASEAN’s second-largest trading partner, after China (ASEAN 2016a). The weight of history does not fall as heavily on Japan’s relations with the ASEAN states as it does in Northeast Asia. In the past, ASEAN leaders expressed reservations about Japan’s growing regional security role but most revised their opinions. This shift began in the 1980s, as Japan’s economic presence in Southeast Asia grew. In 1991, Lee Kuan Yew, Singapore’s prime minister, stated that permitting Japanese forces to participate in overseas military actions was like “giving liqueur chocolates to an alcoholic” (Singh 2010, p. 398). A year later, Lee recanted. He noted that Western powers had placed Japan in an economic vise in the period leading up to World War II and that this had contributed to the war. By the 1990s, ASEAN leaders made it clear to Japan that they supported Japan’s right to act like a “normal” state in the security realm. As noted by Bhubhindar Singh, “in 1994, Prime Minister Tomiichi Murayama was given a shock when he visited Malaysia. When Murayama expressed remorse for the suffering that Japan inflicted on Southeast Asia during World War II, Malaysian Prime Minister Mahathir responded that he could not understand why Japan ‘kept on apologizing for war crimes committed 50 years ago’” (2010, p. 399). Southeast Asian leaders regard Japanese nationalism as a natural development, and one that need not cause alarm, though one leader did advise Japan to follow Germany’s lead and come to terms with its history. Nonetheless, Japan’s provocative nationalist gestures have continued to complicate its relations with China and South Korea. To ASEAN, Japan is a necessary and valued economic and security counterweight to the rise of China. From a security perspective, ASEAN states seem most comfortable with Japan constrained by its alliance with the United States. However, if Japan were to strike off on its own and chart a more

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independent course, the ASEAN states would quickly accommodate such a shift. Northeast Asia, by contrast, would react far more strongly. Japan in Asia Pacific: A Power in Decline? The end of the Cold War fundamentally altered the global strategic and economic environment in ways that caught Japan unprepared. Michael Yahuda (2011, pp. 317–318) identifies a number of factors that contribute to Japan’s decline by limiting its options. The first is the inability of the country to alter Article 9 of Japan’s constitution, thereby restricting its military power and the role that it can play in the region. Yahuda argues that, despite the push from various Liberal Democratic Party governments to change the constitution, there was never any chance that the legislative majorities necessary to accomplish this goal could be found. As we shall see, subsequent events complicate this analysis. Second, Japan proved incapable of implementing the economic reforms necessary to resolve its economic malaise. Economic growth in China pulled Japan out of its recession, not Japanese initiatives. Third, Japan’s domestic political difficulties meant that it had to reduce its economic investment, and especially its ODA, particularly in Southeast Asia. This contributed to the perception of Japanese decline relative to China. Fourth, Japan faces a declining population. The government estimates Japan’s population will fall to 87 million by 2050. In 2011, 22 percent of the population was sixty-five or older and only 13.5 percent of the population were children. By 2020, the elderly will outnumber children three to one and by 2040 this will rise to four to one. These developments will undermine government revenue and Japan’s ability to maintain defense spending. Japan’s aversion to immigration—assuming it continues—means that it cannot replenish or rejuvenate its population. Fifth, Japan is under pressure by the United States to increase its military presence and responsibilities in the region. Japan is locked into its security alliance with the United States. However, it is caught between the United States and China and it recognizes that US interests may not be Japanese interests. Sixth, Yahuda argues that Japan is constrained in refashioning its identity by pressure from South Korea and China to address historical events. Finally, he points out that most average Japanese have been opposed to undertaking serious economic reform within the state. This limits what the government can do to reverse Japan’s fortunes. Other observers argue that declinists have seriously underestimated Japan’s continuing importance as an international and regional actor.

216 The New ASEAN in Asia Pacific and Beyond Japan’s economic problems in the 1990s contributed to this overall sense of decline and it has legitimate and serious demographic problems. However, Japan remains an international powerhouse and it has a decisive role to play in the shape of Asia Pacific in the twenty-first century. According to Aurelia Mulgan: Obsession with China’s looming superpower status is obscuring the quiet but no less important transformation in Japan’s regional and global position. Japan is increasing its economic power, its technological capabilities, its military reach, its soft power and its diplomatic influence. China’s rise will serve only to hasten these developments and accelerate Japan’s emergence as a much more visible player in international affairs. Not only will Japanese rivalry with China reinforce these trends, but, in many ways, the rise of China will make Japan more important. (2005, p. 105)

Japan is the third-largest economy in the world and it remains an indispensable source of investment for the ASEAN states.4 In terms of GDP per capita, Japan remains far ahead of China. 5 It is a major contributor to the Asian Development Bank, the United Nations, and the International Monetary Fund. Japan and China make equal contributions to the CMIM. Moreover, as China grows in power, Japan has become more active in promoting its own vision of regionalism and in reaching out to form security and economic relations with more of its neighbors (Inoguchi 2011). By convention, Japan spends not more than 1 percent of its GDP on its military. This still means that, in 2015, it had the eighth-highest military budget in the world. In the areas of biotechnology, artificial intelligence, superconductivity, and numerous other areas of technical achievement, Japan possesses military technology that rivals or exceeds that of the United States. It is the only country besides the United States to create an effective missile defense system. Japan possesses a large and well-integrated civil-military industrial complex, which allows for significant spin-off technologies. In all of these respects, Japan is significantly ahead of China. Japan has acquired, or is in the process of acquiring, significant force projection capabilities in the air and at sea. If Japan wished to be a military great power, it could make the transition more quickly and easily than most states. Japan possesses the technology to rapidly assemble a nuclear bomb and its associated delivery systems, should it feel the need to do so (Mulgan 2005, p. 108). Though the United States has frequently undermined Japan’s leadership aspirations, Japan’s use of ODA, its “flying goose” approach to regional development, and its numerous efforts to create various economic and political institutions in the region speak to a subtle but per-

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sistent desire to lead. In the past, Southeast Asia has expected Japan to assume a more robust regional role (Stubbs 1991). Japan was instrumental in creating APEC, the ARF, the APT, the EAS, and numerous smaller, more particular organizations. Shintaro Hamanaka (2011) argues that Japan spent much of the post–Cold War 1990s trying to create Asian-only financial institutions, losing interest in a particular endeavor after the United States succeeded in forcing itself into the organization. Japan would then move on and try to create another USfree organization. Despite Japan’s enormous potential, the weaknesses identified by Yahuda are almost—but not quite—insurmountable obstacles. Article 9 of the constitution is under pressure; its revision or elimination is a real possibility. Bringing more women into the work force may give the country a powerful economic boost; opening Japan to immigration may address demographic decline. These changes would require massive changes in Japanese culture and would be terribly difficult to implement. They run against the conservative tendencies that are working to undermine Article 9. Yet Japan has proven itself to be enormously adaptable when faced with existential questions. How far Japan realizes its potential as a major power depends largely on its relationship with the United States. Japan’s Relations with the United States The United States has functioned as Japan’s major market and international protector, but it has also acted as Japan’s watchman, and as a restraint on Japan’s regional and global ambitions. The United States and Japan share a mutually dependent economic relationship. Japan owns more than $1 trillion of US treasuries.6 Its willingness to finance US debt has locked it into the US-oriented global system but, strangely, afforded it little influence over US policies. It is in the military realm, however, that this US domination of Japan is most obvious. In 2015, the United States had more than 48,000 troops stationed in eighty-seven military facilities in Japan (Zorthian and Jones 2015). Okinawa is home to more than 23,000 US servicemen, and almost 75 percent of its land is relegated to US bases. On the main islands, the United States occupies facilities that used to belong to the Imperial Japanese Army; under the terms of the United States–Japan Peace Treaty, the government of Japan pays for the maintenance of these bases. On Okinawa, one-third of the land used by the United States is privately owned but was confiscated during the US occupation. The

218 The New ASEAN in Asia Pacific and Beyond Japanese government pays rent to the landowners for the Americans’ use of the land (Yoshida 2008). The US presence in Okinawa is a source of enormous discord with the Okinawan people, the vast majority of whom want the Americans gone. Indeed, many observers characterize the relationship as one of continuing military occupation (Johnson 2000, pp. 34–64; Murphy 2014, pp. 324–326). Nonetheless, the United States refuses to leave Japan. The United States perceives the country as a reliable and acquiescent junior partner in the maintenance of US global hegemony. Thus, even as the United States pushes Japan to adopt greater military responsibility in helping to police the regional status quo and applauds Japan’s efforts to weaken its constitutional restrictions on the use of military force, it sees Japan as a useful appendage more than as an independent state. In the 1980s, Japan adopted a policy of “comprehensive security,” an approach to security that focused on its nonmilitary aspects. Japan supported US power by using its considerable economic resources to support international agencies and the international system, thereby demonstrating Japan’s value as a partner to the United States while also placating Japanese nationalism (Yahuda 2011, pp. 173–174). The United States was unmoved, however. At the time, the United States perceived Japan as its primary challenger for global economic dominance and was concerned that Japan was pursuing that goal while sheltering under a US military umbrella. The US concern with Japan as a “free-rider” increased with the Gulf War in 1991. Japan contributed $13 billion to the war, but the United States criticized it for not doing more to secure its own oil supplies. The US sense of Japan as an economic and political rival declined after the bursting of the Japanese bubble economy in 1992. Nonetheless, US concerns about Japanese “parochialism” continued in the 1993–1994 period, during a crisis with North Korea. At that time, Japan’s reluctance to take strong measures against North Korea convinced the United States that Japan failed to fully appreciate the military risks that US soldiers were taking on its behalf. In 1995, the United States released the East Asian Security Review (or Nye Initiative) and Japan released the National Defense Program Outline (NDPO). The NDPO recognized the key role of the United States in the defense of Japan and in maintaining regional stability. The new guidelines allowed Japan to cooperate with the United States in defending not just Japan but also the “areas surrounding Japan” (Yahuda 2011, p. 320). Japan committed to greater military cooperation and coordination with the United States, beyond allowing the United States to use bases in Japan. In 1999, the United States and Japan signed a memorandum of understanding to cooperate in researching

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theater missile defense technology as a direct response to the threatening missile tests from North Korea. During the Asian economic crisis, Western observers portrayed the Asian model of economic development, which was strongly associated with Japan, as synonymous with crony capitalism and a lack of transparency. (In light of subsequent economic crises in the West, these claims now seem quaint.) In the aftermath of this event, Japan’s regional leadership aspirations seemed to be in shambles. The United States also seemed to be paying far more attention to China, feeding Japanese fears of US abandonment. The September 11, 2001, terrorist attacks on the United States provided Japan with the opportunity to reinforce its US ties. The Koizumi government passed legislation that allowed Japan’s navy to provide ships to help refuel the coalition ships attacking Afghanistan. This was the first time Japan’s military vessels supported combat missions since World War II. In 2003, the government gained the authority to send up to 200 troops into Afghanistan to participate in humanitarian and rebuilding missions (Yahuda 2011, pp. 321–322). Japan’s air force later flew refueling missions into Afghanistan. The Japanese public generally supported these measures. In September 2009, the Democratic Party of Japan came to power. New prime minister Yukio Hatoyama sought a more “equal” relationship with the United States. He promoted the idea of an institutional East Asian Community, drawing on the concept originally associated with the EAS, that would not include the United States. He also promised to renegotiate the existing agreement with the United States on the placement of the Futenma military base in Okinawa. The United States resisted these efforts and went out of its way to express its displeasure with Hatoyama and his aspirations. Subsequent conflicts with North Korea and China convinced many Japanese of the need to maintain close security ties with the United States. Hatoyama backed away from his earlier promise and endorsed the Futenma base, much to the consternation of Okinawans, and then resigned. Japan’s national identity has evolved significantly over the past few decades. Various threats from North Korea and the changing regional environment have encouraged a move toward a more “normal” Japanese state that is prepared to speak of “national security.” The growing assertiveness of China and its tacit support for North Korea has reinforced this trend. Nonetheless, Japanese-US relations remain uncertain. The United States possesses the world’s most powerful military and is the cornerstone of regional stability in Asia Pacific, but US power is in decline, at home and abroad. The binding dynamic of the Cold War is

220 The New ASEAN in Asia Pacific and Beyond long gone. Despite US reassurances, Japan remains uncertain about the extent of US commitment to Japanese security. This uncertainty has increased as North Korea gains the capability to reach the US mainland with nuclear missiles, calling into question the willingness of the United States to risk its own citizens to protect its Asian allies. How a Trump presidency will affect the Japan-US relationship remains to be seen. Trump has characterized Japan’s military relationship with the United States as one of Japan exploiting the United States to its economic gain and has suggested that Japan needs to pay the United States for its continuing security presence. Trump may well be unaware of the long Japanese financial contribution to the US military on its soil or the controversial nature of that presence. Prime Minister Shinzo Abe was the first foreign leader to meet with president-elect Trump; this meeting may have smoothed relations (The Guardian 2016). Even so, regardless of how the Trump presidency evolves, the United States has become an unreliable and potentially unstable ally. This new reality virtually requires that Japan adopt a more independent course. Japan’s Relations with China Following the end of World War II, Japan’s relations with China followed the pragmatic considerations of the Yoshida Doctrine. Both countries set aside questions of nationalism and historical grievance. Japan did not desire to dwell on its history in the region; China was preoccupied with its domestic concerns. In 1972, Japanese prime minister Tanaka Kakuei normalized Japan-China relations, creating the “1972 system,” a pragmatic, mutually beneficial approach to relations between the two countries that deliberately avoided questions of history. The 1978 Treaty of Peace and Friendship also avoided history, other than stipulating China’s agreement to waive its right to war reparations from Japan. The two countries set aside territorial disputes to improve bilateral relations. Japanese society and business were positively disposed toward China. Historical issues flared up occasionally, but they were manageable through the mutual commitment of Japanese and Chinese political elites to maintaining good relations. However, the fact that the two countries did not confront their contentious shared history meant that it was able to return under other circumstances. By the late 1990s, Chinese nationalism surged and complicated China’s relations with Japan. A parallel process took place in Japan. The end of the Cold War undermined the 1955 consensus on which Japan’s external relations were built. The United States insisted that Japan take

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on a greater regional security role and pulled Japan even more tightly into the US security orbit. Japan’s more prominent security role increased Japan-China tensions, put security issues at the top of the Japanese domestic political agenda, and boosted Japanese historical revisionists. It undermined the pragmatists in the Liberal Democratic Party, who had managed Japan-China relations for most of the post– World War II period. The Japanese economic recession of the 1990s weakened the Liberal Democratic Party’s established political support. Ultimately, these forces led to the emergence of Junichiro Koizumi as prime minister. Koizumi represented a conservatism that believed in smaller government and more vigorous security policy. Koizumi took a revisionist approach to history, arguing that Japan turned to imperialism to deal with threats to its national survival by other great powers, that Japanese imperialism liberated East Asia from Western colonialism, and that it was qualitatively better than the Western model as it emphasized economic and social development in its colonial holdings. Koizumi meant to develop a “healthy nationalism” in Japan through this recasting of Japan’s history. This meant “rejecting much of the legacy of Japan’s self-image—regardless of whether it has been externally imposed or domestically internalized—as a defeated aggressor and semi-sovereign state” (Hughes 2008, p. 45). Revisionist politicians in Japan lacked the traditional Japanese elite’s connections with the elites of China and could not accommodate China’s concerns over issues such as the Yasukuni Shrine or Japanese history since these are issues “integral to their domestic political agenda” (Hughes 2008, p. 45). The revisionists weakened the “China faction” at the Ministry of Foreign Affairs. In the past, this faction kept Japanese-Chinese relations on an even keel by beating back the influence of the pro-US North American Affairs Bureau (NAAB). In the present era, Japan is leaning much closer to the United States at just the time that a declining United States is becoming more antagonistic toward China and the Japanese Ministry of Defense is becoming a more powerful political actor. Japanese business continues to promote good Japan-China relations, but the Japanese public has become less enamored of China. The sense of antipathy between the two countries has grown as China has become more aggressive and assertive over territorial issues. One flashpoint for Japan’s relations with China (and the Koreas) has been the issue of prime ministerial visits to the Yasukuni Shrine. Yasukuni is a large Shinto shrine in central Tokyo that enshrines Japanese war dead. It remains a central symbol for the nationalist Japanese right. The Yushukan Museum in the shrine precinct presents the story of Japan’s invasion of East Asia as the liberation of Asia from Western

222 The New ASEAN in Asia Pacific and Beyond colonialism (Morris-Suzuki 2013). In 1978, a new high priest interred the remains of fourteen indicted war criminals at Yasukuni. Ever since, prime ministerial visits to the shrine have become fraught with political symbolism around the nature of Japan’s historical conduct toward China and the Koreas. These neighbors accuse a prime minister who visits Yasukuni of advocating Japanese militarism, whitewashing Japanese history, and insulting the historical victims of Japanese aggression. This has not stopped many Japanese prime ministers and other political figures from worshipping at the shrine. The shrine visits appeal to the nationalist right, but they are also symbolically important to a people who have few spiritual beliefs and who feel—with some justification— that China and Korea are intent on using history as a political club against Japan forever (Murphy 2014, pp. 306–307). The problem of Yasukuni is compounded by controversies around how Japan teaches its history to its youth. Neighboring states complain that Japan uses historical texts in the classroom that present a sanitized version of its World War II history. The bottom line remains the same: victims of Japanese aggression during the early twentieth century feel that Japan refuses to take responsibility for its actions. In an environment where nationalism and historical grievance have become especially potent forces, this perception exacerbates any conflicts between the disputant states over political, economic, or territorial issues. The Senkakus/Diaoyu Dispute Japan, China, and Taiwan have contested the Senkaku Islands (known in China as the Diaoyu) since the 1970s, after a 1969 UN report indicated the seabed around the islands could be a treasure trove of mineral and petroleum resources. At the time, the United States controlled the islands, but returned them to Japan in 1972. Over the next few decades, China and Japan maintained a tacit understanding that their disputes over the islands would be set aside. Occasional nationalist outbursts from both parties followed over the decades, but the two states handled these with as little disruption as possible. However, beginning in the mid-1990s, concerns about maritime jurisdiction and rights to undersea resources became more pronounced as the various provisions of UNCLOS came into effect. This tension over maritime space, combined with the changing strategic environment of the 2000s, affected how the states approached the islands dispute (Manicom 2014, pp. 42–61). On September 7, 2010, a Chinese fishing boat collided with a Japanese coast guard vessel near the Senkaku Islands. Video from the

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incident shows that the Chinese ship rammed the Japanese coast guard vessel. The Japanese authorities arrested the Chinese crew under Japanese domestic law and held them while considering charges. China launched vigorous diplomatic protests, suspended rare-earth exports to Japan (necessary for high-energy batteries), and arrested and charged four Japanese civilians with entering a military zone without proper authorization. Public protests broke out in China and Japan. Japan released the Chinese crew on September 13. The captain of the ship was held until September 24, then released without charge, much to the annoyance of the Japanese public. The political implications of this incident were significant. China’s willingness to use a valuable resource for economic and political intimidation damaged its regional image as a reasonable and responsible global power. The Japanese public’s perception of China as a long-term threat increased considerably, as did support for continued Japanese engagement with the United States and greater Japanese military freedom of action (Nakano 2016, p. 175). After the 2010 incident, Chinese incursions in Japanese waters increased for a time, but then settled down to mostly two to four incursions a month until 2012. In early 2012, the governor of Tokyo, Shintaro Ishihara, announced his intention of having the Tokyo metropolitan government purchase the Senkakus from the private owner. He began to solicit private donations to help pay for the purchase and began negotiations with the owner (Hongo 2012). Ishihara meant to force the Japanese government to take more muscular actions against Chinese incursions and to stir up nationalist sentiments within Japan. In an effort to forestall this move, the Democratic Party government of Yoshihiko Noda nationalized the islands, effective September 11, 2012 (Manicom 2014, p. 166). (The government of Japan already owned one of the islands.) The Noda government felt that China would understand the benign intent of its decision (Murphy 2014, p. 353). However, the Chinese government either did not understand or did not care about the motivations behind the action. China condemned the move as a decisive effort on the part of Japan to consolidate its control over the islands. After the nationalization, the incidents of Chinese vessels violating Japanese territorial waters became a regular occurrence. Starting in late 2012, the number of Chinese vessels entering Japan’s contiguous seas around the Senkakus skyrocketed from zero to, by August 2016, 147 ships. The number of vessels entering the actual territorial waters went from zero to a dozen or more every month, peaking at twenty-eight ships in August 2013 (Japanese Ministry of Foreign Affairs 2016). Chinese vessels refused to leave when challenged by Japanese ships and often demanded that the Japanese leave instead. The Chinese are

224 The New ASEAN in Asia Pacific and Beyond attempting to undermine Japan’s actual control of the Senkakus, a fundamental principle necessary for a state to establish its sovereignty over territory (Manicom 2014, pp. 182–183). The United States has made it clear that it regards the Senkakus as falling under its Mutual Security Treaty with Japan (Panda 2014). James Manicom argues that past and continuing cooperation between Japan and China around the islands dispute indicates that both sides are capable of putting the conflict aside (2014, pp. 185–190). Even so, the Senkakus have evoked powerful nationalist feelings in Japan and China. Japan has linked the Senkakus dispute to ASEAN’s concerns about China’s conduct in the South China Sea. Uncertainty about the continuing US commitment and efficacy in the region has fueled greater Japanese movement toward regional multilateralism (Nakano 2016, p. 180). Kei Koga (2016) argues that the 2010 Senkaku incident marked a turning point in Japan’s policy toward China from one of moderate and nuanced balancing behavior to explicit balancing, through efforts to relieve constraints on its military power and forge greater security linkages with states such as Australia and India. Redefining Article 9 As discussed earlier, Article 9 of the Japanese constitution renounces war as a “sovereign right” of the Japanese state. However, it did not prevent the creation of the SDF in 1954. Japan’s courts interpreted the constitution as allowing Japan to maintain a defensive force, but the Japanese military could not operate overseas. After the Gulf War of 1990–1991, international criticism prompted Japan to revise its constitutional interpretation. In 1992, Japan enacted laws allowing the SDF to operate within UN peacekeeping missions, but it could not cooperate in military missions with the United States outside of Japanese territory. Most Japanese citizens supported this moderate expansion of the SDF’s mission. Many Japanese appreciated the fact that Article 9 provided the political cover that allowed Japan to avoid getting involved in questionable US wars in different parts of the world. In July 2014, the cabinet of Shinzo Abe reinterpreted Japan’s constitution to allow for limited forms of collective self-defense (Ascione 2015). On July 16, 2015, the Japanese Diet passed a package of eleven security-related bills to implement this reinterpretation. Japan’s opposition parties loudly opposed the bills, as did tens of thousands of protestors. On September 19, the government muscled the bills through the upper house of the Diet, effectively making them law. The new interpre-

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tation of Article 9 allows Japan to exercise a truncated form of collective self-defense by allowing Japan to assist an allied state during a military emergency, even if Japan is not under direct attack. The Abe government argued that Japan’s existing inability to come to the assistance of the United States during a military emergency could undermine the deterrent effect of the United States–Japan Mutual Security Treaty. This was reason enough to reinterpret constitutional security provisions. Other rationales included the concern with Japan’s deteriorating external security environment and the decline of US deterrent power. The new interpretation continued to restrict Japan’s use of its military. The SDF can come to the aid of a “foreign country in close relationship with Japan” if three conditions are met: “the attack threatens the Japanese people’s constitutionally-protected rights to ‘life, liberty and the pursuit of happiness’; if there are no other means to repel the attack; and the use of force must be as limited as possible” (Ascione 2015). The SDF can only act when “an armed attack against a foreign country that is in close relationship with Japan occurs . . . [which] poses a clear danger to [the Japanese people] . . . and there are no appropriate means available to repel the attack and ensure Japan’s survival” (Ascione 2015). The legislation also expanded the use of the SDF’s logistic support units to its allies, but only in areas where combat operations were not actually being conducted (Gupta 2015). Precisely how this would operate in practice was unclear and it still involved Japan being militarily active in war zones. The legislation loosened the restrictions on SDF participation in UN peacekeeping missions and it allowed Japan to respond to “grey area” infringements of its maritime territory and air space.7 Observers described the new laws as “the most dramatic shift in Japanese military policy in 70 years” and noted that they “triggered the largest protests seen in Tokyo in decades” (Ripley 2015a). Constitutional reforms have to pass both houses of the Diet with at least twothirds majority support in both houses, followed by a national referendum requiring a simple majority. This is an onerous process. The Abe government bypassed the process by legally altering the interpretation of Article 9. Its critics charge this was effectively amending the constitution (Drysdale 2015). Polls showed that 54 percent of respondents opposed the legislation, 29 percent supported it, and about 75 percent felt that the parliamentary debate on the matter had been insufficient (Ripley 2015b). At the same time, some political observers noted that the Japanese public has generally supported the Abe cabinet while disapproving of specific policies. There are some indications that Japan’s historical pacifism may be fading as young people raised with growing nationalism, little knowledge of their country’s World War II history,

226 The New ASEAN in Asia Pacific and Beyond and no memory of past wars, become the dominant voices in public discourse. Critics of Japan’s new military stance are afraid the country may become engaged in hotspots like the Middle East and that the costs of military service may fall disproportionately on the poor. Past Japanese governments have reinterpreted the constitution in order to get around Article 9. However, the Abe reforms were the most substantial in the country’s modern history and Abe himself called for “the biggest reform since the end of the war” to the constitution (Fackler 2015). Many observers believe that Japan is motivated by a right-wing desire to be free of the restraints of the US-imposed Peace Constitution, a document that Japanese nationalists have long considered a national humiliation. The push for constitutional reform of the conditions around Japan’s use of military force have been long-standing and, in the past, motivated by the desire of many Japanese to play a more active role with the UN and in assisting peace initiatives and to make Japan a more “normal” country (Welch 2011). The Abe government’s reforms, however, may have the potential to go far beyond what Japan actually needs to ensure its security. Moreover, many observers in Japan and the larger region view the Abe government with considerable suspicion because of its nationalist conduct and right-wing rhetoric. Abe has expressed “deep remorse” for World War II but, before becoming prime minister, he frequently called for discarding the “postwar regime” imposed on Japan by the United States (Fackler 2015). Critics charge that the criteria that would allow the right to collective self-defense are vague and overly broad when they are not too complex. The legislation may not be what the Abe government says it is. The legislation and the conditions that would qualify as a “threat to Japan’s survival” were unclear, apparently even to the Abe government. It is possible that the parameters of the new interpretation leave too much to the discretion of future governments. The reforms called for the “integrated use of force” beyond the Far East, which seems to overstep Article 6 of the United States–Japan Mutual Security Treaty, which limits Japanese deployment to the Far East (Hughes 2004, p. 25). The legislation allowed Japan to enter other countries’ territory as part of collective self-defense–linked minesweeping operations and attacks on enemy military bases. Its use of logistics forces close to combat makes it an accessory to the use of force that may have no bearing on Japan’s self-defense. Another serious criticism is that the previous interpretation of the constitution allowed Japan to exercise collective self-defense; the redefinition was unnecessary. In early 2016, Abe called explicitly for changing Article 9. He argued that “70% of constitutional scholars suspect the SDF is in viola-

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tion of the Constitution” and cited a draft revised constitution that had been tabled by the Liberal Democratic Party (LDP) in 2012 as a model for constitutional reform (Japan Times Online 2016). The draft explicitly “specifies that Japan has the right to self-defense and stipulates that an organization will be set up for self-defense” (Japan Times Online 2016). At the time of Abe’s statement, the Liberal Democratic Party and its coalition partner, Komeito, controlled two-thirds of the lower house of the Diet and a majority of the upper house. Abe declared his intention to campaign on the issue of constitutional revision during the July 2016 elections. During the actual election campaign, however, Abe focused on economic reform and the vice president of the Liberal Democratic Party said there was “zero possibility” that Abe would try to revise the constitution if pro-revision legislators won more than two-thirds of the upper house (Yoshida 2016). Immediately after the Liberal Democratic Party and its allies won the two-thirds majority, giving them the necessary numbers to push constitutional reform in both houses of the Diet, Abe noted that his party had always been committed to constitutional revision and indicated the need for a deeper public debate on the question. Polls conducted immediately after the election showed 49 percent of voters in favor of constitutional revision and 44 percent opposed (McCurry 2016), though other polls also indicated that most Japanese do not see the urgency of doing so (Rafferty 2016).8 Abe appointed Tomomi Inada, a well-known nationalist who has regularly visited the Yasukuni Shrine and denies Japanese historical wrongdoing, to the sensitive post of defense minister. Conservative forces in Japan appear much closer to revising Article 9 than many observers ever thought possible. A national referendum on the question seems to be the next step, though a great deal could change, politically, before this ever happens. The Liberal Democratic Party coalition partner, Komeito, is a pacifist party and may not be willing to support outright constitutional reform or the public may simply be unconvinced of the need for constitutional change (Ascione 2016). What seems clear, however, is that strongly nationalist forces are in ascendance in Japan and, as China becomes more threatening and the US commitment to Asia Pacific becomes more suspect, more Japanese may come to the view that a strong, independent military capacity is a wise precaution (Auslin 2016). In October 2017, Abe capitalized on nuclear and missile tests carried out by North Korea to call snap elections. The LDP’s political opposition was in disarray and the Japanese people’s fears over North Korea caused them to turn to the LDP in greater numbers than before. Abe’s gamble paid off: the LDP returned to power with more than twothirds of the Diet’s seats, even without Komeito (Wakatsuki, Griffiths,

228 The New ASEAN in Asia Pacific and Beyond and Berlinger 2017). Abe called the election with the specific goal of achieving the two-thirds supermajority he would need to amend the constitution. In early 2017, he had set 2020 as the deadline for achieving this objective. The fear that Japan will become, once more, the imperialistic power that it was in the first part of the twentieth century is baseless, if only for practical reasons. Japan’s neighbors are much more powerful today and capable of offsetting Japanese military power. Japan is not a militaristic country and it benefits from a stable and peaceful regional economic environment. Japanese representatives have apologized numerous times for the state’s wartime conduct; however, Japan’s inclination to minimize its wartime history to its students and the conduct of nationalist politicians have remained irritants to its relations with its neighbors (Oi 2013; Pollmann 2015). But these weaknesses do not translate into a rebirth of Japanese imperialism. The real danger of Japan’s gradual loosening of its ability to use military force is that it will, eventually, become a completely “normal” country in its use of military power. For now, the assumption of most observers is that Japan will operate as an extension of US power (Auslin 2016). This is particularly true of US observers, many of whom do not fully appreciate the nature of Japan’s changing perspective. In the future, Japan will face the choices of either embedding itself more deeply in the US power structure, learning to accommodate a dominant China, or striving to become a superpower itself. Given Japan’s demographic and economic difficulties, being a superpower is unlikely. Turning more deeply into US hegemony leaves Japan as a US vassal and dependent, is anathema to the nationalists, and is unsustainable over the long term. In the new Trump era, this may not even be possible as the United States becomes an unreliable and erratic ally. However, Japan is unwilling to accept China’s dominance in the region. This makes the antagonistic politics and nationalism of the conservative political leaders in Japan more provocative. India in Southeast Asia Historically, India had a profound social, cultural, and religious impact upon the states of Southeast Asia. British imperialism reinforced ties between India and British-dominated parts of the region. However, the linkages between India and other parts of the region withered as different subject states were dominated by different colonial empires. Long periods of colonial rule distorted the great civilizations of Asia. With the end of colonialism, India’s first prime minister, Jawaharlal Nehru,

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believed that India could help a united Asia regain its place in the world (Hayton 2014, pp. 8–16; Malone 2011, pp. 198–202). As the first Asian country to achieve freedom from colonial rule, India saw itself as a logical leader of the independence movements of Southeast Asia. As early as 1947, while large parts of Asia were still under European control, Nehru opened the Asia Relations Conference in Delhi, to encourage national struggles in colonized states. Nehru believed that Asia would eventually “replace the Atlantic community as the future nerve center of the world” (Yong and Mun 2009, p. 21). In 1955, the Bandung Conference in Indonesia brought together twenty-nine Asian and African states to reject the Cold War as the defining paradigm of the international system. The decolonized states of Africa and Asia shared common values of nonalignment and the desire to be free from foreign domination. However, as the Cold War unfolded, India and most of the states of Southeast Asia moved in different directions. India saw ASEAN as an instrument of the United States—as an anticommunist organization, designed to counteract Chinese influence and emerging when the US war in Vietnam was spreading to Cambodia. India feared that moving closer to ASEAN could harm its relations with China and the Soviet Union. Over time, India leaned toward the Soviet Union and further away from the solidly pro-Western states of Southeast Asia. ASEAN states disapproved of the Indo-Soviet Treaty of Friendship and Cooperation (August 1971) and India’s war with Pakistan in December 1971, which ASEAN regarded as a violation of Pakistan’s sovereignty. India’s economic relations with ASEAN states were minimal and pursued on a bilateral basis. In the 1980s, Indian prime minister Indira Gandhi recognized the Vietnamese-backed regime of Heng Samrin in Cambodia, ensuring India’s alienation from ASEAN. During the Cold War, India’s primary security concerns revolved around Pakistan and China. It paid little attention to ASEAN. ASEAN regarded India as “politically suspect, economically unimportant and, at times, even militarily threatening” (Yong and Mun 2009, p. 24). Under Rajiv Gandhi, India-ASEAN relations improved, but economic relations between ASEAN and India remained relatively insignificant throughout the 1980s. The end of the Cold War forced India to rethink its overall position in the world. In the 1990s, India undertook economic liberalization. Prime Minister P. V. Narasimha Rao led trade missions to Thailand, Vietnam, and Singapore. In 1993, India gained sectoral dialogue status with ASEAN, enabling it to participate in talks in certain specified fields such as trade. In December 1995 it became a full dialogue partner of ASEAN and, starting in 1996, it began attending ARF and ASEAN-PMC meetings.

230 The New ASEAN in Asia Pacific and Beyond The trade routes that are so important to Southeast Asia also pass through the Indian Ocean. Thailand, Malaysia, Myanmar, and Indonesia are Indian Ocean countries. By the mid-1980s, India acquired a powerful naval capacity and the willingness to use force against recalcitrant neighbors. These tendencies created some consternation in Southeast Asia. By the late 1980s, however, the idea of an “India threat” declined as India implemented severe budgetary cutbacks to its defense spending. India employed confidence-building measures, such as opening up some military facilities to visits from regional military attachés. India developed separate military exercises with Indonesia, Singapore, Australia, Malaysia, and Thailand. India also supported ASEAN’s policy of “constructive engagement” with Myanmar. With the end of the Cold War, India’s basic security concerns remained focused on Pakistan and China, despite the changing regional environment. Pakistan is India’s primary adversary. India views China as a rising power that could be a challenge to Indian security. In 1991, Prime Minister Rao launched the “Look East” policy, which sought to develop strategic, political, and economic ties with individual Southeast Asian nations while increasing ties with ASEAN. All subsequent Indian governments supported and developed the Look East policy. India pursued economic goals with ASEAN states, but most of its trade was with Singapore and Malaysia. A critical source of skilled labor for countries such as Singapore, Malaysia, and Thailand, India also became a major business destination for Southeast Asia, offering an enormous market and communications networks skills at competitive rates. In the 1990s India-ASEAN trade failed to achieve its full potential due to factors such as governmental instability, political confusion, and the unpredictability of foreign investment regulation in India. Potential Southeast Asian investors adopted a wait-and-see approach to Indian economic development. Nonetheless, Singapore heavily invested in Indian computer technology. It saw India as having tremendous potential for the development of software and as a potential source of tourism. Singapore also strengthened its ties with India because it saw India as a useful balance against other Asian powers, such as China and Japan. Singapore’s leaders believe that an Asia where China and India are both prosperous will be more conducive to regional peace than an Asia where one major power is in ascendance. Singapore also wanted to diversify its trading and investment patterns. India attempted to use its connections with Singapore as a bridge to other economies in Southeast Asia (Yong and Mun 2009, p. 30). On September 3, 2003, then Indian external affairs minister Yashwant Sina described India’s policy:

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India’s “Look East” policy has now entered its phase 2. Phase 1 was focused primarily on the ASEAN countries and on trade and investment linkages. Phase 2 is characterized by an expanded definition of “East” extending from Australia to China and East Asia with ASEAN as its core. Phase 2 marks a shift in focus from exclusively economic issues to economic and security issues including joint efforts to protect sea lanes, coordination of counterterrorism, etc. On the economic side, phase 2 is also characterized by the arrangements for FTAs and establishing of institutional economic linkages between the countries of the region and India. (cited in Yong and Mun 2009, p. 31)

India joined the ARF in 1996. By 2000, the government of Atal Bihari Vajpayee had become more concerned about developments in Southeast Asia and saw the ARF as a useful access point to the region and as an opportunity to develop a pluralistic, cooperative security order. India strongly promoted ASEAN’s core role in the ARF and averred its willingness to become more engaged in the institution. A number of factors turned India’s attention to Southeast Asia. It was concerned about the rise of Islamic fundamentalism in the region, especially Indonesia, and Pakistan’s ability to capitalize on this, particularly after Western intervention in the Muslim world. It found evidence that weapons from parts of Southeast Asia were making their way to South Asia, potentially for use by separatist and terrorist groups in India. The attack on the Indian parliament in December 2001 reinforced these fears. India proposed setting up a joint working group with ASEAN countries to coordinate cooperation against terrorism. India saw separatist movements in Indonesia as potential threats to important shipping lanes and the Indian government expressed greater concern over piracy in the Straits of Malacca. After the September 11, 2001, attacks on the United States, the Indian navy helped escort US vessels through the straits. India worried about China’s success in drawing ASEAN into its orbit. The success of the APT, projects such as the Greater Mekong Subregion, and China’s 2002 offer to sign an FTA with ASEAN resulted in India feeling left behind. In 2002 and 2003, India pursued economic arrangements with Singapore and Thailand. In November 2002, Prime Minister Vajpayee indicated that India wanted to negotiate an FTA with ASEAN. The states held the first ASEAN-India Summit, in Phnom Penh, in November 2002, and have held this summit on an annual basis since. At the Bali Summit in October 2003, India and ASEAN signed two landmark agreements: a framework agreement on comprehensive economic cooperation for the establishment of an ASEAN-India regional trade and investment area, and a joint declaration on cooperation to combat international terrorism. The prime minister offered to

232 The New ASEAN in Asia Pacific and Beyond increase ASEAN airlines’ access to India. India joined the ASEAN Treaty of Amity and Cooperation, and Vajpayee proposed creating an Asian Economic Community. In November 2000, India launched the Mekong-Ganga Cooperation (MGC) project with its eastern neighbors—Cambodia, Laos, Myanmar, Thailand, and Vietnam. India saw the MGC as having considerable potential for cooperative action in the areas of education, culture, tourism, transport, and communications. However, to date, the organization has failed to reach its potential. India and Thailand were the major funders and drivers behind the MGC. Thailand established the Ayeyarwaddy-Chao-Phraya-Mekong Economic Cooperation (ACMECS) in 2003. The ACMECS brings together the same group of countries, minus India. The non-Indian members of the MGC are also members of the Greater Mekong Subregion, which is more established and better known. For these reasons, the MGC is unlikely to prosper in the near future. In 2009, India and ASEAN signed an FTA on goods, which came into effect in 2010. Discussions continue on an India-ASEAN FTA in services and investment. In 2002, India turned its attention to a preexisting regional initiative, BIMSTEC. The acronym at that time meant: Bangladesh, India, Myanmar, Sri Lanka, and Thailand Economic Cooperation. BIMSTEC was initiated by Thailand in 1997 but gained traction in 2000 as India shifted policy toward Southeast Asia. The BIMSTEC foreign ministers met in Sri Lanka in December 2002, where they began work on a framework agreement for a BIMSTEC free trade area. India sponsored Nepal and Bhutan for membership to the organization in January 2004, and the organization changed the meaning of the acronym to the Bay of Bengal Initiative for Multi-Sectoral, Technical, and Economic Cooperation. BIMSTEC could eventually expand to include Singapore, Malaysia, and Indonesia. To India, BIMSTEC is a potential bridge between South Asia and Southeast Asia. India intended to use the organization to promote regional integration and get around Pakistan’s obstructionism within the South Asian Association for Regional Cooperation (SAARC) while strengthening its relations with its smaller neighbors by using BIMSTEC to facilitate their access to Southeast Asia. India also hoped to construct overland routes across Bangladesh to allow access to Myanmar and Thailand. India is trying to increase its physical links to Southeast Asia, including constructing a rail link between Hanoi and New Delhi that passes through Myanmar, Thailand, Laos, and Cambodia and a major highway link to Thailand through Myanmar (Ladwig 2009, p. 94; Sikri 2009, p. 133). India’s long-term goal is to build a wider ASEAN-SAARC community, strengthening its

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relationship with Southeast Asia and counteracting China’s influence, especially in Myanmar. It also wants to counteract the tilt of smaller states, such as Bhutan, Nepal, and Myanmar, toward China. Starting in the late 1990s, Indian governments began using the term “extended neighborhood” to explain their approach to foreign policy. As David Scott explains: This vision of an extended neighborhood involves power projection by India; be it hard power military and economic projection or be it soft power cultural and ideational strands. The extended neighborhood has become the conceptual umbrella for India; eastwards, southwards, northwards and westwards; amidst what some have called an omnidirectional “360 degree vision” of the opportunities available to India outside South Asia. (2009, p. 107)

Indian policymakers explained the country’s security as lying within “a neighborhood of widening concentric circles” (Foreign Secretary Shiv Shankar Menon, cited in Scott 2009, p. 108). India’s Look East policy was incorporated into, and now complements, the extendedneighborhood concept. In 2003, Vajpayee stated: “Our security environment ranges from the Persian Gulf to the Straits of Malacca across the Indian Ocean, including Central Asia and Afghanistan in the Northwest, China in the Northeast and Southeast Asia. Our strategic thinking also has to extend to these horizons” (cited in Yong and Mun 2009, p. 36). The “extended neighborhood” is the accepted wisdom in India’s bureaucratic, diplomatic, and military circles. India is developing a presence in Africa, the Persian Gulf and Arab world, and Central Asia. It already has a substantial and growing presence in Southeast Asia. In 2007– 2008, South Asia accounted for less than 3 percent of India’s overall foreign trade. By contrast, in 2007, ASEAN received more than 12 percent of India’s overall exports, placing Southeast Asia ahead of North America as a recipient of Indian goods and services (Scott 2009, pp. 109–110). In 1990, India’s annual trade with ASEAN was $2.4 billion; by 2007 it was $30 billion (Ladwig 2009, p. 94; Sikri 2009, p. 133). By 2015, India-ASEAN trade was $58.7 billion and 2.6 percent of ASEAN’s total trade (ASEAN 2016a). By 2014, Asia as a whole was receiving 48 percent of India’s exports, though the major ASEAN states were recipients of between 8 and 9 percent (Massachusetts Institute of Technology 2016). FDI inflows from ASEAN, especially Singapore, account for almost 10 percent of total FDI into India. Economic expansion and the relentless quest for energy to fuel that expansion drives India’s growing presence in Southeast Asia. The Hydrocarbon Vision 2025 report, presented to the Indian government in

234 The New ASEAN in Asia Pacific and Beyond February 2000, underlined that India faces a major energy security predicament over the next two decades. The report predicts that India will be able to provide only 50 percent of its oil needs by 2025 (Scott 2009, p. 110). As a result, India has aggressively pursued oil and gas development around the world, particularly in West Africa, Central Asia, and the Middle East. India’s military has concentrated on developing the resources to secure and defend India’s energy needs. This quest for energy puts India in a highly competitive position with China in many parts of the world, particularly Central Asia and Southeast Asia. China and India’s governments have emphasized the mutual economic gains potentially shared between the countries if they remain cooperative and at peace. However, the nature of their relationship is inherently competitive and possibly conflictual. Since 2000, the Indian navy has been engaged in exercises with the navies of numerous extra-regional powers, including France, Russia, Britain, Brazil, and South Africa. India and the United States have participated in the MALABAR exercises since 1992 (suspended in 1998 in response to Indian nuclear bomb tests, but resumed in 2002). India first organized the MILAN exercises in the Bay of Bengal in 1995; by 2008, India invited nine ASEAN countries, along with the navies of Bangladesh, Sri Lanka, Australia, and New Zealand, to participate. China and Pakistan were not invited. India intends to pursue a leadership role in maintaining security in the Indian Ocean and beyond. It has established a radar monitoring station in northern Madagascar and a naval presence in the Mozambique Channel. As a further example of India’s expanding horizons, to the south it sees Antarctica as a “treasure house of potential natural resources, including petroleum,” that it intends to exploit” (Scott 2009, p. 116). Like China, India sees its economic development as dependent upon a politically and strategically stable Asia Pacific neighborhood. It wishes to engage regional actors in bilateral and multilateral forums. India attended the inaugural meeting of the East Asia Summit in December 2005. Its inclusion was part of a strategy to offset the influence of China (Malik 2011, pp. 300–305).9 India has pursued an “open skies” policy with ASEAN, developed an India-ASEAN science and technology fund to further collaboration between India and ASEAN states, trained ASEAN diplomats, and promoted an India-ASEAN tourism campaign. With ASEAN support, India joined the AsiaEurope Meeting in 2006. India’s participation in important regional institutions such as the ARF, ASEM, and the EAS means that it has become a significant and accepted part of the political and security landscape of Asia Pacific.

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Over the past two decades, India and ASEAN have grown closer to each other. Southeast Asia is linked, socially and environmentally, to South Asia. Various ASEAN countries have become important investment destinations for Indian business. Southeast Asia is a critical source of commodities needed for India’s economic development, such as timber, coal, oil, and natural gas. India’s trade with Southeast Asia has increased exponentially within a short period of time. Nonetheless, it is far behind China in terms of its economic presence in Southeast Asia. India’s Relations with China China is India’s largest trading partner; India is China’s ninth-largest market. The two countries normalized relations in 2003 and signed a strategic and cooperative partnership for peace and prosperity in 2005. Both countries believe that it is desirable and inevitable that the international system transition to a multipolar structure. The two countries undertake joint military exercises and high-level exchanges between their militaries. Nonetheless, China and India see each other as significant challenges. Asia, and the global environment itself, may be shaped by the tensions that develop as these two Asian giants rise to global power while sharing common borders (Sidhu and Yuan 2003, pp. 9–44). Two issues set the tone for India-China relations: China’s unresolved issues over the legitimacy of its occupation and settlement of Tibet and the role India plays in this situation, and China’s relationship with Pakistan (Malik 2011, pp. 69–198; Malone 2011, pp. 129–152). Tibet has a long and complex history with China, one that is beyond the scope of this discussion. Many experts agree that China’s claims to Tibet are debatable. Nonetheless, China is determined to hold on to Tibet. More than 40 percent of China’s mineral resources are found in Tibet and the Tibet Plateau is the source of ten of Asia’s major rivers, which provide water to eleven countries and 85 percent of Asia’s population (Malik 2011, p. 134). China is also concerned with the implications to other separatist movements within China if it allows Tibet to leave or negotiate an autonomous relationship with the larger state. India is involved in the China-Tibet dispute in a number of different ways. In October 1913, the Simla Conference settled the boundary between British India and Tibet and between Tibet and China. At this conference, the British, led by Henry McMahon, proposed dividing Tibet into Inner and Outer Tibet. Inner Tibet would be the eastern part of the country and fall under Chinese “sovereignty,” while Outer Tibet would constitute central and western Tibet and would fall under Chinese “suzerainty.” This agreement

236 The New ASEAN in Asia Pacific and Beyond was specified in the Simla Agreement of 1914. The “McMahon Line” indicated the border between India and Tibet. China did not ratify the Simla Agreement because of disagreements over the boundary line between Inner and Outer Tibet. Tibet and British India, however, accepted the arrangement. China has since argued that the Simla Agreement was another example of the “unequal treaties” it was forced to accept during periods of weakness. It has also argued that since Tibet was not an independent state, it had no authority to ratify the agreement. Independent India inherited the Simla Agreement after 1947. India wanted Tibet as a buffer zone between itself and China but, in 1950– 1951, China invaded and occupied Tibet. India recognized China’s control over the “autonomous region of Tibet” (both Inner and Outer Tibet) under the Panchscheel Agreement of 1954, and attempted to negotiate a border agreement with China based on the McMahon Line. In 1955, India designated the area it controlled on the border as the North East Frontier Agency. China did not accept the McMahon Line, but agreed to recognize the “Line of Actual Control” between the two countries while negotiations continued. The Line of Actual Control was, effectively, the McMahon Line. Harsh Chinese rule in Tibet led to the 1959 Tibetan uprising. The Dalai Lama fled to India to seek refuge and establish a government in exile (Malik 2011, pp. 128–131). Prime Minister Jawaharlal Nehru warmly welcomed the Dalai Lama to India, which China saw as extremely provocative. This situation exacerbated ongoing conflict between India and China. On October 20, 1962, Chinese troops expelled Indian troops from an outpost the Indians had established on the Chinese side of the McMahon Line. Over the following month, Chinese forces easily defeated Indian forces all along the line. In Ladakh and the North East Frontier Agency, India was overwhelmed and Beijing succeeded in occupying all of the territory it had previously claimed. However, on November 21, 1962, the government of China announced a unilateral withdrawal. China returned to the McMahon Line, but it had established its military superiority. India’s military and political establishment was humiliated and the “sense of optimism” that had characterized India’s rebirth in 1947 was lost. India’s military defeat by China in 1962 is one of the motivating reasons behind its military buildup today, and is one of the factors that drove India’s acquisition of nuclear weapons in the 1990s (Malone 2011, p. 138; Sidhu and Yuan 2003, pp. 26–33). That India allows the Dalai Lama to maintain a government in exile in India is seen by Beijing as an intolerable provocation. China appears to believe that the Tibetan refugees in India and elsewhere are the cause

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of China’s difficulties in Tibet, rather than Chinese policy in the region. Therefore, India’s protection of the Dalai Lama and the willingness of its media to give a voice to the Tibetan exiles means that India is helping keep the Tibet issue alive, even as China’s increasing global clout enables it to shut down most international recognition of the Tibet movement. According to Mohan Malik, “Tibet may not be the pivot of the Sino Indian relationship, but this single issue has the potential to rock and unravel the entire relationship. China’s rhetoric and strategic posture suggest that it has increasingly started linking the Tibetan issue with the future of bilateral relations with India” (2011, p. 144). Under dispute between India and China is a 4,057-kilometer border, which includes five Indian provinces in three sectors: the Ladakh region of Jammu and Kashmir (western sector); Uttarakhand, Himachal (middle); Sikkim and Arunachal Pradesh (eastern). The greatest conflict is over Arunachal and Ladakh. In the cases of Uttarakhand and Himachal, the two sides have exchanged maps but have not yet negotiated an agreed-upon Line of Actual Control. In the cases of Arunachal and Ladakh, the disputants have not exchanged maps. Talks over the border have continued since 1981, with mixed results. Some of the breakthroughs reached by India and China in the early 2000s have been repudiated or compromised by China, partly to display China’s anger toward India over developments regarding Tibet. Some Indian analysts argue that China intends to keep the border issue alive until its relative power enables it to force a resolution that is to its advantage. Between 2007 and 2009, the Indian military recorded hundreds of Chinese intrusions into Indian territory in all three disputed sectors. The Chinese argued, in response, that they could not be “intruding” in an area where the borders were still in dispute (Malik 2011, pp. 144–147). Between 2006 and 2009, relations regarding the border worsened considerably. China demanded major territorial concessions from India in Arunachal Pradesh, which China now refers to as “Southern Tibet.” China attempted to consolidate its hold over areas of cultural and religious significance to Tibetans. It emphasized its rejection of the McMahon Line as a legitimate boundary. India has portrayed other Chinese actions as retrograde actions that amount to a rejection of agreements that the two sides had already reached on other areas of dispute, such as the Indian state of Sikkim. Malik suggests that provocative Chinese actions against India track with political unrest within Tibet and actions of the Dalai Lama that China finds objectionable. As Tibetans and foreigners continue to question the legitimacy of China’s claim over Tibet, the Chinese government is more likely to use its leverage over the border dispute with India to pressure India on the issues of the Dalai Lama

238 The New ASEAN in Asia Pacific and Beyond and the Tibetan government in exile. China has also taken pains to aggravate India over the issue of Kashmir. According to Malik, “resurrecting old issues and manufacturing new disputes to put the other side off balance and enhance negotiating leverage is an old negotiating tactic in Chinese statecraft” (2011, p. 150).10 Tensions between India and China were somewhat reduced after the two countries’ leaders spoke on the sidelines of the October 2009 East Asia Summit. Nonetheless, powerful forces within China appear to regard Arunachal Pradesh as Chinese territory. Some Chinese strategists worry about India’s rising power and fear that a border settlement without major Indian territorial compromises will strengthen India at China’s expense. China has also invested enormous resources in developing the infrastructure of Tibet. This gives it a military advantage in any future border wars. In response, India is improving the infrastructure of its northeastern provinces and their ties to the Indian mainland. All of these maneuvers indicate that both sides are preparing for the possibility of a long, drawn-out conflict along their shared border. Into 2016, disputes over the border remain a major point of contention between the two powers (Indian Express 2016). China’s enjoys a close relationship with Pakistan, India’s arch enemy and major competitor in South Asia. China and Pakistan claim that they share a “special,” “all-weather” relationship. China first aligned itself with Pakistan after China’s 1962 war with India. China helped Pakistan develop its nuclear weapons program and has supplied Pakistan with armaments and entered a free trade agreement with the Islamic state. Pakistan regards China as a faithful ally, in contrast to the United States, which it sees as untrustworthy and expedient in its dealings with Pakistan. Various policies of the United States toward Pakistan, such as its resistance to the Pakistani nuclear program and its refusal to extend the same bargain to Pakistan on civilian nuclear energy as it did to India, have soured US-Pakistani relations. US-Pakistani tensions over the Western war in Afghanistan exacerbated the underlying tensions. China and Pakistan have a shared interest in holding India at bay. China and Pakistan believe that India is a very fragile state, rent by ethnic and religious tensions, and that these tensions may be easy to exploit for future geopolitical gain. To India, China’s cooperation with Pakistan may be part of a larger strategy to keep India engaged in lowlevel conflict that will prevent it from reaching its full potential on the global stage (Malik 2011, p. 171). Pakistan plays an import geostrategic role because of its geographical location between South Asia, Central Asia, and the Middle East. China is investing heavily in building oil-rich Xinjiang province and in

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developing an economic corridor linking China’s West to the Persian Gulf. Pakistan provides China access to bases in that area. In military terms, the China-Pakistan relationship keeps India off balance and preoccupied with threats on its borders. The relationship helps China maintain control over Xinjiang and Tibet. Islamic separatists from Xinjiang shelter in Pakistan. A good relationship with Pakistan keeps this problem from getting worse and enables China to support stability in Pakistan. Pakistan is a major buyer and supplier of conventional and unconventional weaponry and a partner in economic and infrastructural development. Pakistan is a reliable political ally that will support China in international forums and be its advocate in the Islamic world. Finally, Pakistan is a major bargaining chip in China’s relations with India and the United States. India is jealous of China’s seat on the UN Security Council and the international legitimacy of China’s nuclear program. China and India are competing directly in the search for energy resources around the world. So far, China has outmaneuvered India in the quest for oil in Kazakhstan, Ecuador, and Nigeria. China has threatened Indian efforts to develop offshore oil resources with Vietnam in the South China Sea. China’s efforts to secure its oil resources have caused it to strike agreements and develop transportation networks across the Indian Ocean and with countries that have had tensions with India. Some Indian analysts believe that China is developing this so-called string of pearls to project power into the Indian Ocean (Malik 2011, p. 180). China has financed a major port complex in Gwadar, Pakistan, which may give it access to the Arabian Sea and the Persian Gulf, and has developed port complexes in Myanmar and Sri Lanka. These may be part of a Chinese effort to encircle India and confine it to South Asia. China and India are developing blue water navies that will operate in the same areas. Ironically, the smaller states of South Asia welcome China as a counterweight to Indian power. India’s economic and military success over the past decade has made it an appealing partner to many countries in Asia and around the world. Its diplomatic activism has increased its influence beyond South Asia. It potentially challenges China’s primacy as the major Asian state. China believes that it enhances its position in respect to India if it leaves India uncertain about its intentions. Despite these antagonisms, China and India cooperate on global issues where they have common interests. India is an observer of the Shanghai Cooperation Organization (SCO) and China is an observer in the South Asian Association for Regional Cooperation. Even so, China has attempted to exclude India from numerous Asia Pacific regional institutions, such as the EAS. It has

240 The New ASEAN in Asia Pacific and Beyond resisted India’s efforts to gain a UN Security Council seat. China would prefer that India remain a second-tier power in the world and in Asia (Sikri 2009, p. 141). Indian elites disagree over how to react to China. The dominant group, the pragmatists, believe that economic engagement and limited cooperation between the two Asian giants is possible and can be successful. They favor a militarily powerful India that, nonetheless, can enjoy cooperative relations with China. By contrast, “hyper-realists” argue that economic engagement has not prevented China from increasing its engagement with Pakistan and trying to encircle India. The hyper-realists favor building alliances with other Asian states to constrain China. Finally, the “appeasers” believe that China is a peaceful state and does not threaten India (Malik 2011, pp. 51–63). Among the general public, the perception of China has become more negative, particularly in light of China’s military buildup. To many analysts, China and India are pursuing mutually incompatible aspirations to great power status that will create tensions as they vie for leadership and influence in Asia. According to Walter Ladwig: As India’s eastward focus demonstrates, Delhi’s engagement with China is coupled with efforts to lay the groundwork for a more robust strategy should this pragmatic approach fail to deliver results. Indian leaders frequently state that they are not seeking to contain China, but their policies indicate that they are hedging their bets. India’s efforts to expand its presence in the Asia-Pacific can be seen as part of a hedging strategy that develops economic linkages and security cooperation with key states in the region wary of Beijing’s power, while still maintaining mutually beneficial economic ties with China. (2009, p. 90)

There is considerable antagonism toward China within India’s diplomatic and academic foreign policy establishment. Even so, there are signs that both sides are acting with restraint in their developing relationship. After Pakistan-linked terrorist attacks in India in 2001 and 2008, China did not leap to Pakistan’s defense but asserted neutrality and encouraged dialogue. China and India recognize their shared interest in containing Islamic terrorism and the advantages of maintaining a stable regional environment. Economically, their ties are growing. These factors support the argument that conflict between India and China is highly unlikely. David Malone argues that, until recently, there were far more Chinese studying India than the reverse. Indians had a very limited and often hostile understanding of their giant neighbor. This may change as contacts and mutual understanding improves (2011, pp. 146–148).

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The Growth of India’s Presence and Power Since the beginning of the twenty-first century, Indian political and military leaders have indicated that India’s strategic interests are not restricted to the Indian Ocean but extend across the entire Asia Pacific (Mathur 2012, pp. 55–56). Since the mid-1990s, India, which possesses the world’s fifth-largest navy, has undertaken a naval buildup that has developed its power projection capabilities. India’s present navy is quite old. Many of its surface ships are scheduled for retirement from service. The capabilities of the fleet will greatly increase if the obsolete vessels are replaced with modern ships. Admiral Sureesh Mehta indicated that India plans, by 2022, “to have 160-plus ship Navy, including three aircraft carriers, 16 major combat, including submarines, and close to 400 aircraft of different types” (cited in Ladwig 2009, p. 91). The Indian navy has received a growing share of India’s expanding defense budget. It is unclear that India can reach its target on schedule. The navy’s acquisition and indigenous construction projects are unreliable. Nonetheless, India clearly has significant naval ambitions. The cornerstone of the Indian navy will be its three aircraft carriers. At present, India has one operating carrier, the INS Viraat. The first indigenously built aircraft carrier, the INS Vikrant launched in 2013, but is not expected to join the fleet until 2018. India is also upgrading its attack aircraft. These improvements will make the navy one of the most powerful and effective military instruments in the region. India is acquiring submarines from Russia and enhancing its antisubmarine warfare capabilities, and has developed its own cruise missile with Russian assistance. Despite these considerable recent improvements and its plans for the future, India is restrained in its ability to conduct sustained expeditionary operations by technical limitations. Russia has proven to be unreliable in providing naval platforms and India’s indigenous development programs face many delays. Nonetheless, the Indian navy is presently capable of conducting significant operations beyond the Indian Ocean. ASEAN sees India as a possible counterweight to Chinese economic, political, and military influence in Southeast Asia. Since 1991, India has held joint naval exercises with Singapore, Malaysia, and Indonesia in the Indian Ocean. It has also engaged in bilateral exercises with Vietnam, Singapore, Thailand, and the Philippines, including in the South China Sea. Since 1995, these engagements have become the annual MILAN naval maneuvers that India conducts with ASEAN states in the Bay of Bengal. Indian ships, including the INS Viraat, have made port calls to major cities across Southeast Asia. India is becoming

242 The New ASEAN in Asia Pacific and Beyond a factor in the South China Sea and its presence concerns China. The South China Sea dispute has become one of the issues of contention between India and China (Scott 2013). India has extensively upgraded its support network in Southeast Asia. In 2005, India established a Far Eastern Naval Command (FENC) at Port Blair in the Andaman Islands. The completed facility may be larger than the former US naval base at Subic Bay in the Philippines, the largest overseas US naval base during the Cold War. The airfields in the Andamans will have the potential to bring the Straits of Malacca and much of the South China Sea within range of India’s fighter aircraft. The naval bases will support surface ships, submarines, and patrol craft. India has also tried to enhance its reputation as a positive force in the region. It was active in providing support to Southeast Asian countries after the 2004 tsunami. It offered to help regional states patrol the Straits of Malacca against piracy. The offer was rebuffed but that has not prevented the Indian navy from conducting antipiracy exercises with the Indonesian navy and royal Thai navy. Singapore helped India to join the ARF and has supported its bid for a seat on the UN Security Council. The two countries’ navies have conducted regular naval exercises since 1993. Personnel from the Singaporean military train in India, and Singapore tests weapons at Indian facilities. India also has a long history of cooperation with Vietnam. The rise of China has underlined shared strategic concerns between Vietnam and India, both of which have fought land border wars with China. In 1994, the two countries signed an agreement on defense cooperation, followed by another agreement in 2000. Since then, Vietnam and India have attempted to diversify and strengthen their relationship in many areas, including trade, scientific cooperation and collaboration on civilian nuclear energy, as well as enhancing contacts in multiple areas of defense. India may be seeking secure access to the port facilities at Cam Ranh Bay. India also enjoys robust ties with Indonesia (Scott 2009). India has increased its economic and security links with Malaysia, Thailand, and the Philippines as part of its Look East policy. It has provided training for the Malaysian navy’s pilots, submarine personnel, and special forces and has worked on upgrading Malaysian naval vessels. India is pursuing enhanced economic ties with Thailand. Thailand has also encouraged greater Indian involvement in Southeast Asia, and the Indian navy and the royal Thai navy have procedures for coordinated maritime defense. India’s relations with the Philippines are relatively sparse, but India does have a defense agreement with the Philippines that allows bilateral military exchanges and stronger maritime cooperation. This relationship will probably grow with time.

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In October 2008, India signed an agreement to start training East Timorese naval personnel. India and Singapore have conducted joint naval exercises since 1994. The two countries signed a wider defense cooperation treaty in 2003, and strengthened it in 2007. The joint SIMBEX exercises have mostly been held in the Bay of Bengal, but in recent years the Indian navy has deployed in the Straits of Malacca and the South China Sea. India’s relations with Indonesia have also improved. India has extended its Look East policy even further by including Australia and New Zealand as part of the policy (Scott 2009, p. 124). Beginning in 2000, India conducted a number of exercises with the formidable South Korean navy. The two states have increased their economic and political ties, including bilateral defense cooperation. South Korea supports India’s naval presence in the region to offset Chinese power. China’s close relationships with Pakistan and North Korea have provided India and South Korea with further reasons to cooperate. South Korea’s business and industrial sector drives India’s relationship with South Korea. South Korean companies have established themselves in India, particularly in the automobile and telecommunications sectors. South Korean business sees India as a potential global manufacturing hub that can market to customers in Asia and elsewhere. Indian companies are also investing in South Korea. The two countries negotiated a comprehensive economic partnership agreement, implemented in January 2010. In October 2004, the South Korean president visited India to conclude a long-term agreement on a cooperative partnership for peace and prosperity (Sikri 2009, pp. 139–140). Unlike most of East Asia, India has no historical animosity toward Japan and shares a common concern with Japan about China in Asia.11 The two countries have significantly strengthened their defense ties. China’s efforts to keep India off the UN Security Council and resistance to legitimizing India’s nuclear program have drawn Japan and India closer together. The two countries see themselves as established democracies in a region full of autocratic and soft authoritarian states. India was the first country to receive official development assistance from Japan and, even today, remains the single largest recipient of Japanese ODA (Mathur 2012). In 2000, Japanese prime minister Yoshiro Mori visited India. This visit marked a transformation in Japan’s attitude toward India. India was a nuclear weapons power, its economy was growing quickly, and the United States was beginning to seriously engage with it. Prime Minister Koizumi visited India in April 2005, marking the start of the strategic partnership between the two countries. In 2007, the countries began negotiating a comprehensive economic partnership agreement, signed in

244 The New ASEAN in Asia Pacific and Beyond 2011, which promised to eliminate 90 percent of tariffs on goods traded between India and Japan over the following decade. India and Japan are also developing the Delhi-Mumbai Industrial Corridor, a massive infrastructure project meant to create a global manufacturing and trade hub stretching almost 1,500 kilometers, linking many Indian cities in hightech, high-speed industrial zones (; Mathur 2012, p. 71). India hopes to attract Japanese investment, technology, and knowledge; Japan wishes to gain access to India’s enormous market and its pool of talented workers. Japan helped promote India’s case for membership in the East Asia Summit. Nonetheless, there remains ambivalence in the Japanese public toward India. Japan remains focused on China and its attitude toward India often reflects its relations with China (Sikri 2009, p. 139). In 2005, Japan and India conducted naval exercises in the Indian Ocean and the Sea of Japan. This was followed by a period of diplomatic activity that culminated in a 2008 joint declaration on security cooperation between Japan and India. The declaration stated that the two nations will form “an essential pillar for the future architecture” of security in Asia (Ladwig 2009, p. 100). This is only the second time Japan has entered such a security agreement. Critics have suggested that its significance has been exaggerated. Nonetheless, Japanese-Indian relations have moved forward at a remarkable pace. In 2007, then (and future) Japanese prime minister Shinzo Abe suggested that the relationship with India could become Japan’s “most important bilateral relationship in the world” (Ladwig 2009, p. 100). Despite growing security ties, economic engagement between India and Japan has not kept pace. Trade between the two countries is quite low, with Sino-Japanese trade more than twenty times that of the Indo-Japanese trade. Beyond Asia, India’s presence in the larger Pacific increased considerably since the turn of the century. India has entered agreements with Australia on joint naval exercises, enhanced maritime security cooperation, increased military exchanges, and joint training of the two states militaries. The two states have agreed to conduct joint research and development of military technology and to cooperate on counterterrorism. The Australian government has extended de facto recognition of India as a nuclear state, leading some analysts to believe that Australia, which has 40 percent of the world’s uranium, will eventually sell some of it to India. India’s security ties with Australia are stronger than Australian security ties with China. Combined with its ties to Japan, India has insinuated itself into the US military structure in Asia Pacific. The United States has strongly supported India’s growth in the region. The support has helped smooth India’s relations with the many

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US allies in Southeast Asia. The United States and India share a number of strategic concerns, including the spread of Islamic radicalism and the rise of China. The Indians supported President George W. Bush’s promotion of liberal democracy as the key to stability in Asia. The USIndian nuclear deal negotiated by the Bush administration in 2005–2006 allows for unprecedented civilian nuclear cooperation between the two countries, while turning a blind eye to India’s nuclear military program. This arrangement worked well for India, even as it undermined the Nuclear Nonproliferation Treaty (NPT). The willingness of the United States to work a deal with India demonstrated the country’s importance to US strategy. In 2005, the countries signed a ten-year defense pact that included intelligence-sharing and training of military personnel, along with technology transfers, missile defense collaboration, arms sales, and the possibility of joint weapons production. The United States supported the sale of advanced defense materials to India, while denying the same to China. Improved Indian-US relations have been lucrative for US defense contractors. In 2005, the United States invited India to post a liaison officer to Pacific Command (PACOM) headquarters in Hawaii. Subsequently, the US Department of Defense identified India as a “key strategic partner,” a category reserved for traditional US Asia Pacific allies. The US and Indian navies have conducted joint maneuvers since 1993, but the first multilateral exercise including India, Japan, and the United States took place off Tokyo Bay in April 2007. In September 2007, a corresponding exercise including Australia and Singapore was held in the Bay of Bengal (Ladwig 2009, pp. 101–103). India faces major difficulties in realizing its ambitious goals. In terms of military expenditure, India is number three in Asia Pacific, behind the United States and China, and surpassing Japan and South Korea in 2015. India is also a poor country. In 2011, 21.2 percent of its population lived below the poverty line (World Bank 2016b). The average Chinese makes more than twice as much as the average Indian. The clear need for social spending may well create political pressures that will undermine military spending. India’s political elites are divided on how to approach the larger region, and this could have longer-term implications. The single greatest difficulty facing India’s Pacific aspirations, however, is the reality of its immediate neighborhood. Political instability, terrorism, and other destabilizing factors that originate in states such as Pakistan, Bangladesh, or Sri Lanka can easily occupy India’s political attention and define its military development. India also faces instability at home. The election of Narendra Modi as prime minister in 2014 boosted India’s economic prospects, but it also provided cover for increased Hindu chauvinism, growing censorship, and

246 The New ASEAN in Asia Pacific and Beyond religious/ethnic and political intolerance and violence. Most of this quasi-official intolerance is directed at India’s Muslim community. Modi has pared back Indian environmental regulations, despite the fact that, like China, India faces massive environmental degradation and sickening air quality that pose grave risks to the health of its population (Barry and Bagri 2014; Harris 2014). Russia in Asia Pacific The Soviet Union was a major force driving political, economic, and military development in Asia Pacific during the Cold War. Today however, Russia—the successor state to the Soviet Union—has lost much of its regional standing. Economically, Russia has limited engagement with Southeast Asia. In 2015, total Russian trade with ASEAN was 0.6 percent of ASEAN’s total trade (ASEAN 2016a). Politically, Russia has become the junior partner in China’s efforts to develop natural resources in the Russian Far East. Russia is important to Asian countries as a reliable provider of essential natural resources. It is also a major supplier of weaponry to states all across the region. The great majority of the weapons imported by China and India come from Russia. Nonetheless, regional states do not regard Russia as a major political player, even as it asserts itself in Eastern Europe and the Middle East. Historically, Russian political elites were strongly oriented toward Europe. Russian leaders today realize that the nexus of world economic and political power is shifting toward Asia. Asia stands as a massive real and potential market for Russia’s arms industry and natural resource sectors. Russia is paying far more attention to developing its Far East, pouring billions of dollars into the region in an attempt to develop the infrastructure necessary to capitalize on its economic potential. In September 2012, the APEC summit was held in Vladivostok, Russia, rather than in one of the more central cities of western Russia, as part of Russian president Vladimir Putin’s effort to realign Russia’s posture toward Asia Pacific (Kuchins 2012). Nonetheless, Russia’s potential as a major factor in the region is not yet a reality. Russia is beginning the process of rearming its military, to improve its ability to defend its territory and, at the same time, play an important role in the regional balance of power. Russia has strongly allied itself with China in an effort to constrain US power in the world. Whether this will change under a Trump presidency is unknown. Russia is aware of the dangers involved in the rise of a hegemonic Chinese power. It cooperates with China in the Shanghai Cooperation Organiza-

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tion but is conscious of its junior status. Russia is dependent on natural resources for its economic strength. At the same time, its other industrial and technological sectors have declined, with the notable and important exception of weapons production. Russia is governed by a group of highly corrupt individuals who have a strong vested interest in maintaining the present system. Putin seems well aware of the weaknesses of Russia’s present course of development, but his own machinations have put in place structures that are benefiting significantly from the existing model. Thus, they will be very hard to change. Throughout 2014, the civil war in the Ukraine drew Russia and the West into a new Cold War. The reasons for the conflict are complex. Western leaders have accused Russia of seeking to reestablish a Russian empire by dominating the Ukraine. The United States has placed heavy weaponry in Eastern Europe, to protect NATO allies and deter Russian aggression. However, Russia intervened in the Ukrainian conflict largely because it was afraid that Western powers were politically interfering in the Ukraine and were implementing policies that would, ultimately, leave Russia isolated and sharing a border with a politically hostile state (Mearsheimer 2014; Narine 2016). There is plenty of blame to go around in accounting for the Ukrainian conflict. Russia has also become more active in the Middle East by providing military support to its ally Bashar al-Assad of Syria. The West has interpreted Russia’s willingness to challenge Western influence in the Middle East as a new assertion of Russian power and an effort by Putin to undermine US influence. This analysis probably has some truth to it, though it is telling that Western powers regard their own interventions in the Middle East as somehow acceptable. Russia has a long history with Syria and its actions in the Ukraine and Syria are more accurately seen as the first steps into a multipolar post–Cold War order, where non-Western powers are starting to assert themselves in the aftermath of the decline of US power. Dealing with Russia has further distracted the United States (and its Western allies) from Asia Pacific, causing it to diffuse its resources and attention, largely leaving the region to China. Conclusion Japan and India have the greatest potential to form the new poles of a multipolar order in Asia Pacific. The considerable uncertainty surrounding the sustainability of US hegemony may push these countries into these roles. However, both will need to confront considerable domestic political and economic weaknesses. Japan needs to develop a

248 The New ASEAN in Asia Pacific and Beyond political culture that can move out from under the US security umbrella and manage the tensions with its neighbors that will develop as it does so. The issue of demographic decline looms large and Japan needs to decide how to deal with it. India remains a developing world state facing enormous problems brought on by overpopulation, poverty, ethnic/ religious diversity, and environmental degradation. Japan and India both enjoy good and growing relationships with ASEAN. Their uncertain positions mean that there is significant potential for ASEAN to play a crucial part in managing, encouraging, and helping to set the initial parameters for how these states interact with the region. ASEAN may not lead, but its ability to determine which states have access to the region gives it significant political leverage, if it can use it. The emergence of a multipolar order provides more opportunities for smaller states to play the great powers off against each other. While this is ASEAN’s preferred strategy, the approach carries significant risks, particularly if the great powers cannot successfully negotiate their own relationships. Notes 1. There is some controversy over whether General Douglas MacArthur, the Supreme US Commander and official in charge of Japan’s occupation, proposed and advanced Article 9, or if Japanese prime minister Kujiro Shidehara suggested it (Fisher 1999, p. 397). 2. It is important to note that many in the Korean elite collaborated with and benefited from the Japanese occupation (Murphy 2014, pp. 378–379). This is a major reason that South Koreans find the topic of the Japanese occupation so difficult to address. 3. According to Richard Stubbs, from the early 1980s to 1985, Japanese investment in Southeast Asia reached $12.5 billion. In comparison, Japan invested only $5.4 billion in the newly industrialized economies of Taiwan, South Korea, and Hong Kong, previous recipients of considerable Japanese investment, in the same period (2005, p. 157). 4. Japanese FDI into ASEAN in 2013, 2014, and 2015 was, respectively, $24.7, $15.7, and $17.5 billion, making Japan the third-largest source of FDI for the region, ahead of the United States and China and, in 2013, ahead of the EU. In these years, Japanese FDI constituted 19.8 percent, 12.1 percent, and 14.5 percent of total FDI into ASEAN (ASEAN 2016b). 5. According to the CIA World Factbook (accessed December 2017), in 2016 Japan’s GDP per capita was $41,200 (in 2016 dollars), ranking it 42nd in the world. By contrast, China’s was $15,400, ranking it 106th. 6. As of September 2016, Japan held $1.136 trillion of US Treasury securities. This was second to China, which held $1.157 trillion (US Treasury 2016). Note that Table 4.2 shows overall foreign reserve holdings of the selected countries. 7. “Grey area” refers to the use of military force in situations that are less than a full-scale attack on the Japanese homeland (Lantis 2014).

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8. As in many such situations, polling data depend on the questions asked and who the respondents are. According to Kevin Rafferty (2016), only 54 percent of eligible voters voted in the July 2016 elections. A poll by NHK, Japan’s only public broadcaster, also indicated only 26 percent of respondents supported constitutional reform and only 11 percent felt it was a priority. 9. As discussed in Chapter 4, Hadi Soesastro argues that the ASEAN states were not concerned with counterbalancing China when they included India (and other states) in the EAS. Most other analysts, including Malcolm Cook and Mohan Malik, argue that balancing Chinese influence was a major factor for the ASEAN states and Japan. 10. There is considerable debate within Indian policy circles over how to deal with Tibet. Some Indians advocate using the “Tibet card” to help keep China at bay in the territories it disputes with India. Other critics argue that sheltering Tibet’s government-in-exile and the Dalai Lama has been costly to India, contributing to the 1962 war and blocking better relations with China. India’s official position recognizes Tibet as an autonomous part of China and has not recognized the Tibetan government in exile (Malik 2011, pp. 136–139). 11. Rajiv Sikri notes that India refused to sign the 1951 San Francisco Treaty because it felt the treaty offended the dignity of Japan. India signed a separate peace treaty with Japan in 1952, where it waived all war claims against Japan. Indian justice Radha Binod Pal, at the Tokyo War Crimes tribunal, wrote a dissenting judgment wherein he found Japan’s wartime leaders not guilty. These gestures were appreciated by the Japanese but did not translate into close relations between the two countries during most of the twentieth century (2009, p. 138).

8 ASEAN’s Role in Asia Pacific

What is ASEAN’s role in Asia Pacific in the twenty-first century? What is ASEAN’s relationship with the major powers? How does that relationship define and circumscribe its actions? What role does ASEAN play in managing the emerging Asia Pacific security, political, and economic environments? How is ASEAN evolving and changing to fit the demands of the new era? The answers to these questions are complex and uncertain. To begin to answer them, we must consider more basic questions: What is ASEAN? What are its purposes and objectives? These questions are the source of considerable debate within the scholarly community that studies ASEAN. This chapter summarizes the key arguments of the preceding chapters and brings these observations together to answer the questions about where ASEAN is going over the next ten to fifteen years. ASEAN’s efforts to reform itself into an ASEAN Community and to put itself at the center of regional multilateralism are not, in themselves, sufficient to provide the organization with an animating purpose and function. The need for the ASEAN member states to maintain their sovereignty, combined with their status as developing states, limits the extent to which ASEAN can be an effective international institution. The same considerations qualify the operations of ASEAN-centered regional institutions. ASEAN’s most critical purpose is to provide a venue for the political and diplomatic interactions—between its member states, between its members and the great powers, and between the great powers themselves—necessary to maintain and enhance the economic potential and political/security stability of Asia Pacific. However, ASEAN has only a limited influence over its environment. 251

252 The New ASEAN in Asia Pacific and Beyond ASEAN amplifies its members’ collective voice and gives them a diplomatic and political influence on the world stage that, separately, they would not have. ASEAN provides the soft institutional linkages necessary to further regional interaction and cooperation. It can be a mediating force between the great powers of the region, but the organization is usually more reactive than proactive. Over the next ten to fifteen years, competing economic and political interests within ASEAN may well intensify. This does not necessarily bode ill for the individual states of Southeast Asia, but it will create tensions within ASEAN, the organization. The ASEAN Community may find a way to operate as a consequential economic entity, but the chances of its developing a meaningful APSC or ASCC are minimal. One of ASEAN’s original purposes—the desire for the states of Southeast Asia to shape their own regional security environment—will be far more difficult to achieve. ASEAN’s external focus has centered on entangling the major regional powers within multilateral institutions, with the objective of socializing them into ASEAN norms and values. Most ASEAN states prefer a regional system with the United States as the dominant power and other powers fitting below it in a regional hierarchy. That model is under serious strain and is almost certainly unsustainable. This may create new opportunities for ASEAN to emerge as a major regional actor. However, unless its member states can unify under the ASEAN banner, competition between the great powers will shape the region, with individual ASEAN states allying with the power that gives them the greatest advantages or is able to exert the greatest pressure. This division will weaken the organization and further reduce its ability to affect regional events. ASEAN will facilitate contacts between the great powers but it will not grow much beyond this circumscribed role. The chapter places ASEAN’s cooperative dynamic in its proper context. ASEAN states are self-interested actors who cooperate out of that self-interest. However, self-interest also dictates how far ASEAN and its mechanisms can go in shaping members’ actions. The chapter summarizes the regional roles of China, the United States, Japan, India, and Russia and their relationships with ASEAN and the ASEAN states. It concludes with an analysis of how ASEAN may develop over the next decade. ASEAN’s Leadership Role in Asia Pacific The question of what ASEAN’s role is in Asia Pacific leads immediately to the question of whether ASEAN is powerful and what do we

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mean by “power”? If and how ASEAN affects the conduct of its member states is the concern at the heart of most discussions about the organization. Scholars of ASEAN tend to divide into two distinct camps (Peou 2002). On one side are the realists, who see power as the ability of a state to force other actors to comply with its interests and objectives or to make those other actors take actions they otherwise would not. Realists generally dismiss the importance of institutions, except as they help states pursue their narrow interests. From this perspective, ASEAN is a “talk shop”; it is no more than the instrument of its members and is too weak to pursue institutional objectives. Indeed, it should not have institutional objectives that do not accord with the interests of its members. In fact, ASEAN’s norms and practices are designed to avoid challenging its members. As a general rule, ASEAN’s members do not put ASEAN’s interests ahead of their own and feel no obligation to do so (Nischalke 2002). ASEAN has no way to hold accountable members who violate its key rules and principles (Jones and Smith 2007; Katsumata, Jones, and Smith 2008; Leifer 1989). On the other side of the debate are the constructivist scholars, who see ASEAN’s power as lying in its ability to shape the norms of regional interaction in Southeast Asia and Asia Pacific and, most important, to create a shared identity among the regional states (Acharya 2009; Busse 1999; Eaton and Stubbs 2006). In this view, ASEAN’s value is in its ability to socialize its members (and other regional actors) toward ideas and standards of conduct that prohibit the use of violence and coercion in regional affairs and inculcate respect for state sovereignty. It does not lie in its ability to compel its members to follow ASEAN policies. Since the end of the Cold War, realists have been expecting East Asia to dissolvew into a region of rivalries and geopolitical tensions (Friedberg 1993). Almost three decades later, while there are certainly local areas of friction and conflicts/wars remain possible, Asia Pacific remains at peace and continues to pursue economic integration. Even if conflict breaks out in the future, realism has failed to account for the political forces driving regional interactions. Mainstream Western realist theory has little to say about Asia Pacific. It is a theoretical approach based upon the historical experiences of Europe and the great power politics of the Cold War (Kang 2003). This form of realism may address, to an extent, great power relations in Asia Pacific, but it says far less about the actions and motivations of weaker states (Mearsheimer 2001).1 Constructivists focus on ASEAN’s efforts to build a sense of regional identity, arguing that with a changed identity come norms and values that are capable of transforming how states perceive each other and interact.

254 The New ASEAN in Asia Pacific and Beyond ASEAN is constructing a regional identity. However, there is little evidence to support the contention that the public within ASEAN states strongly holds an “ASEAN identity.” The ASEAN identity is primarily shared by the individuals who make up the elite transnational Southeast Asian community of diplomats, academics, and other experts who populate ASEAN’s many meetings. It does not extend to most of the citizens of the region, or even to other departments of governments, such as the national militaries. In the hierarchy of identities that define Southeast Asians, ASEAN is far down the list, below (at least) national, ethnic, religious, and local affiliations. The construction of a strong, regional identity based around ASEAN remains a possibility, but it has not happened yet. If it happens at all, it will be the result of a dedicated process that will take considerable time. The European Union stands as a cautionary tale of how even a long-term identity-building project, underpinned by extensive economic and political cooperation, can falter when faced with powerful national identities. A third approach to understanding ASEAN is liberal institutionalist. Liberal institutionalists usually do not argue that states cooperate out of a sense of shared identity; rather, cooperation is based on the recognition of mutual interests and gain (Narine 1998b). Liberal institutionalists argue that cooperation between states is difficult because of uncertainty about the intentions of prospective partners. Institutions provide the information and structures necessary to reduce uncertainty and create an investment in mutually beneficial relationships. Liberal institutionalists see institutions as functional; they are created by states to serve particular purposes. There are a number of problems involved in applying this approach to ASEAN. The most evident is that ASEAN fits very uneasily into any functionalist model. ASEAN’s purposes are unclear and indirect, and have shifted with time. ASEAN has been largely unsuccessful as an economic institution, though its indirect contributions to the region’s economic success have probably been considerable. The reason that realist, constructivist, and liberal institutionalist analyses fail to capture the reality of ASEAN is that all of them subscribe to an exaggerated understanding of threat between states within the regional system. Most formulations of realism treat cooperation between states in the anarchical international system as so unlikely that, when it happens, it is a puzzle to explain. This is a misrepresentation of the real world. It is a formulation of international politics that resonates in only a few regions of the world. As many scholars have pointed out, the leaders of Southeast Asian states tend to have a realist perspective on regional relations (Hamilton-Hart 2012, p. 1). They are highly con-

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scious of their status as the leaders of relatively weak states in a region of much larger powers. However, this does not preclude or greatly complicate cooperation, as many mainstream realists assume. In fact, this outlook assists cooperation. The regional leaders recognize disparities of power between themselves and their fellow ASEAN states; they acknowledge territorial disputes with their neighbors; they remember European colonization and are protective of state sovereignty. Even with these experiences, ASEAN states do not inflate the level of threat that they pose to each other. They recognize that regional cooperation and peace serve their national interests far better than conflict. They are far more concerned with internal insurgencies, ethnic conflict, and political unrest than they are with attack from other states. The experiences of Konfrontasi and the Asian economic crisis proved and reinforced their sense of mutual vulnerability. ASEAN’s leaders realize that their best option for dealing with predatory powers is to work together to entangle those powers in a series of constraining norms, rules, and institutions. As we have seen, this does not mean that tension between ASEAN states is impossible or that the organization cannot be divided by national self-interest. It does mean that the argument for cooperative interactions within Southeast Asia is far stronger and more compelling than any argument for conflict. The constructivists and liberals have accepted the realist interpretation of the international system as a place of considerable fear, distrust, and aggression between states, though their explanations of why this is the case differ. As such, both approaches rely upon strong formulations of identity formation or institutional balancing to compensate for the presumed realist effect.2 The practitioners of these approaches concede too much to realism. Cooperation between states is the norm in the international system; most states cooperate because they recognize the mutual gains in doing so (Narine 2006). It is true that much of ASEAN’s evolution over the decades has been driven by responses to external threats, but these concerns have usually focused on the possibility that external actors will stir up internal unrest (Narine 1997, 1998a). This comes full circle: the ASEAN states are preoccupied with statebuilding. One way of protecting their sovereignty is by developing a consensus among regional actors not to interfere in each other’s internal affairs. For ASEAN’s members, cooperation with neighbors enhances their capacity to deal with the challenges of statebuilding (Ba 2009a). ASEAN gets a great deal of credit for taking a region destabilized by Konfrontasi and helping to make it a zone of peace and stability. However, there is no need to posit a strong Southeast Asian regional identity to explain the region’s relative peace. It is only necessary to understand

256 The New ASEAN in Asia Pacific and Beyond that self-interested states, especially those that have realized their mutual vulnerability, would work to prevent such conflicts in the future. The ASEAN states needed a stable environment in which to develop. Working together, creating a nonaggression pact and then cooperating against common destabilizing elements are logical steps for self-interested actors to take. These are the elements found in an anarchical international society (Bull 1977). ASEAN’s dominant norms are designed not to challenge the sovereignty of ASEAN states, but they do not need to do so in order to create a functioning regional institution (Quayle 2013). ASEAN, the organization, is not powerful in the sense that constructivist analysts of the organization assert: it is not changing its members’ identities and norms, at least not to any significant degree and not to an extent that would explain ASEAN’s durability. ASEAN is reinforcing the established norms and principles of Westphalian state sovereignty. These norms are fundamental to the operation of the international system. They are foundational and widely accepted in the international community. Today, they are also the subject of some contention within the system.3 It is not necessary to amplify ASEAN’s level of cohesion in order to understand why it has proven to be so enduring and influential while also being limited in its influence over its members. Kishore Mahbubani and Jeffery Sng (2017) credit ASEAN with creating regional peace and economic prosperity, and argue the organization merits a Nobel Peace Prize. However, this assessment exaggerates both the intensity of historical interstate conflict in Southeast Asia and ASEAN’s role in creating peace. ASEAN has been instrumental in maintaining regional peace in Southeast Asia, but it did not create it; peace followed from states’ assessing their changing regional environment and recognizing that regional cooperation serves their national interests. ASEAN has sustained peace by facilitating constant contact between state elites, which perpetually reinforces the reasons for continued cooperation and peaceful interaction in the region. Mely Caballero-Anthony offers a compelling analysis of ASEAN’s “centrality” in Asia Pacific, an idea that has not been well-defined, even as it is reiterated by many political leaders and analysts. Drawing on social network analysis, she argues that ASEAN’s power lies in its position as a central “node” in a cluster of networks of interactions and other nodes. ASEAN bridges many of these institutional networks. This allows it to “claim a central role in the region’s institutional architecture that includes major powers” (2014, p. 565). ASEAN’s “power” lies in its structural position, not material power. Even here, however, she argues that ASEAN’s success has raised regional expectations of what it should do. To maintain its centrality, ASEAN needs to make “credible

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and substantive strides in the regional mechanisms that it has established” (p. 575). It must build the effectiveness and relevance of the ASEAN Community. As we have seen, this is a difficult undertaking. ASEAN’s most important function is in how it creates contacts and interactions between the states of Asia Pacific. The network that ASEAN has constructed, and the networks of which it is part, are politically and diplomatically significant. However, it is one actor among many in the calculations of the great powers, whose interests shape the region. ASEAN gives its members a seat at the diplomatic table; it allows them greater opportunities to influence events than they would otherwise have. ASEAN would enhance its ability to take advantage of this position in this network if the organization’s members could present a united front to the great powers on issues as varied as territorial disputes between ASEAN states and other powers, or on economic negotiations. Great powers cannot lead without followers; ASEAN possesses enormous potential power over regional events by being a coherent coalition of follower states. However, the economic, political, and security interests of its members do not necessarily align in their dealings with external actors. Thus, ASEAN’s ability to influence the normative and political environment of the region is constrained. The ASEAN Charter gives juridical personality to ASEAN, but it also codifies ASEAN’s traditional norms and practices, reinforcing ideas of nonintervention in the affairs of member states. The Reform of ASEAN ASEAN emerged in 1967 as a regional attempt to exert a level of control over an uncertain regional environment shaped by the machinations of contending global powers. ASEAN was the culmination of an argument that put regionalism at the service of nation-building (Ba 2009a). The most significant reason for the ASEAN Community’s inability to move beyond a basic level of development is that its member states remain at fragile stages of development. The fundamental problem of statebuilding, which motivated the ASEAN states to create a mutual nonaggression pact in 1967, remains at the top of the agenda for the ASEAN states today. While communist insurgency may no longer be an issue, ethnic, religious, and nationalist divisions remain major concerns in every ASEAN member (Narine 2004b). Even after fifty years, ASEAN states continue to advance slowly down the path to political stability, often taking several steps back. Thailand stands as a cautionary tale. In the 1990s, Thailand was at the forefront of democratic

258 The New ASEAN in Asia Pacific and Beyond development in Southeast Asia. It was a relatively ethnically cohesive country that believed it had put its long history of military coups behind it. In the late 1990s, Thailand advocated for reforms to ASEAN that would allow the organization to comment upon the domestic policies and actions of members that were having regionally harmful effects. By the 2000s, however, Thailand was fighting a Muslim insurgency in the south. Even more, deep class, socioeconomic, and rural/urban divisions in Thai society became the source of considerable political instability and remain unresolved. In 2006 and again in 2014, Thailand experienced military coups. The fact that Thailand could slide so far back on the democratic scale in such a short time and that its problems involve fundamental questions about the distribution of power and resources in its society speaks to the fragility of its political development. The same kind of fragility can be found—or, at least, legitimately feared—in every other ASEAN state. The same situation unfolded in the Philippines. The election of President Duterte in 2016 led to extrajudicial murder by the authorities and vigilantes on a massive scale and a dramatic corresponding decline in civil rights. Indonesia has prospered as a democracy, but there is no guarantee it will stay that way, particularly as it contends with the emergence of more intolerant strains of political Islam. In September 2017, the government of Cambodia arrested opposition leader Kem Sohka as a “traitor,” accusing him of conspiring with the United States against the state. Around the same time, Myanmar launched a military campaign that drove hundreds of thousands of Rohingya from the country in what the UN described as a “textbook case of ethnic cleansing” (Safi 2017). These indications of instability within the ASEAN states underline the reasons that member states continue to oppose more institutionalization. The ASEAN Community has an external dimension: it is designed to send the message to the international community that ASEAN is addressing its weaknesses and deficiencies and trying to create something—in particular, an integrated economic region—that is worthy of international attention and investment. At present, however, the ASEAN Community is projecting an image of ASEAN cohesion that—as in the pre–Asian economic crisis period—greatly exceeds the reality. The ASEAN Community continues to operate in ASEAN’s traditional role as a nonaggression pact that smoothes relations between its members. But if another economic crisis hit Southeast Asia, ASEAN would be as ineffectual as it was in 1997. Arguably, ASEAN has offloaded that responsibility onto the APT, even though it would be reasonable to expect that ASEAN itself would respond to a future crisis, or would be instrumental in pushing the APT to respond. However, most Asian states dealt with the global

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financial crisis of 2007–2009 on their own, with the added support of China’s massive stimulus program. This fact reduced the urgency driving the creation of the new regional institutional infrastructure and weakened the argument for ASEAN “centrality.” None of this means that the ASEAN Community is irrelevant. It does mean that it is part of a process of regional institutional- and identitybuilding that will develop very slowly, over the course of decades, and in which ASEAN’s organizational arrangements will play, at best, a supporting role. If the ASEAN Economic Community becomes the basis of a strongly integrated region, it will probably not be because of measures undertaken by the AEC but by trade agreements between states acting on their own and the actions of private economic actors. While the APSC and the ASCC may make a positive contribution toward intra-ASEAN social, cultural, and educational ties, they will be only part of what would need to be larger social, economic, and political development within the ASEAN member states. Insofar as the European Union was a deliberate effort to build on and consolidate the existing economic, cultural, and historical ties between the peoples of Europe, ASEAN still has a considerable distance to go to create such a foundation. ASEAN’s development, symbolically as well as practically, has been heavily influenced by the European Union (Beeson and Stone 2013; Jetschke 2009). As the EU roils in crisis, undermined by economic and political mismanagement, nationalism, and xenophobia, the idea of a regional organization that is much more loosely knit and open to the realities of nationalism, the limits of regional identity, and the different levels of development that it encompasses seems far more sensible than the EU model. It is also more pragmatic. If Europe—a wealthy region with a long, shared history; relatively limited religious, ethnic, and cultural diversity; and more than sixty-five years of trying to foster a regional identity—is having difficulty making its region-building project work, then why should Southeast Asia—a far more diverse region in every way—be any more successful? The European experience has proven that building a true regional identity is extremely difficult. From this perspective, ASEAN’s modest achievements and its proven durability may be greater accomplishments than its critics appreciate. ASEAN and the Great Powers ASEAN’s centrality is often described as ASEAN being “in the driver’s seat” of regional institutional development. However, ASEAN is more the driver of a taxi—it may be driving the cab but it is not determining

260 The New ASEAN in Asia Pacific and Beyond the destination. The passengers—the great powers—are the ones that are actually shaping the regional environment. ASEAN and its various institutional offshoots may be playing essential roles in providing the venues in which the powers of Asia Pacific can interact, but they have a highly limited influence on the decisions being made (Ciorciari 2009). Evelyn Goh argues that the major states of Southeast Asia have approached regional security strategy by trying to “enmesh” the great powers in regional affairs. She calls this strategy “omni-enmeshment.” Goh makes a clear distinction between the actions and interests of ASEAN, the organization, and its leading members. ASEAN is one of the instruments through which Southeast Asian nations try to entangle and restrain the actions of the great powers. She explains the rationale behind omni-enmeshment for the main Southeast Asian states: Since the 1990s these states have pushed for a regional security structure that would involve as many big powers as possible, through their engagement in regional institutions and through bilateral arrangements with individual member states. The idea is to encourage these powers to develop closer economic and political relationships with Southeast Asia as a whole, and to build stronger political and defense relationships with individual countries, so as “to deepen interdependence and to strengthen their sense of having a stake in the region’s security, so that they would be more interested in helping to maintain regional stability.” (2007a, p. 122)

The concept of omni-enmeshment involves the effort to redefine the target state’s interests and, possibly, even its identity, so that it will “take into greater account the integrity and order of the system” (Goh 2007a, p. 121). Omni-enmeshment draws on liberal ideas, but its identity-changing possibilities and its overall efforts to socialize larger powers into regional norms and practices defined by ASEAN put it on the constructivist spectrum. Through its many institutional structures and meetings, ASEAN plays a key role in this socialization process. Individual ASEAN states also develop alliances and connections that help to further entangle the great powers in the region. The ASEAN objective is to enmesh as many major powers as possible—the United States, China, Japan, South Korea, and India—within the regional normative and identity structures. Most of the ASEAN states prefer a US-led hierarchical order, wherein the United States is the dominant power; China fits into the second tier, and then other states are slightly lower in rank. The ASEAN states prefer the United States as the dominant actor because it is an external power with no regional territorial claims. In a situation of enmeshment, the ASEAN states should be able to balance the major powers against each other, encouraging these powers to compete for relationships with the ASEAN

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states that would work to the Southeast Asian states’ benefit. This is a strategy of “diversifying dependence” rather than balancing against threats. Having “more players involved can mitigate dependence and expand choices and space for maneuver” (Ba 2005, p. 103). The ASEAN states resist being dominated in their own region and see a balance of regional influence as the most advantageous situation for them. John Ciorciari (2010) emphasizes the desire of Southeast Asian states to pursue policies of “limited alignment” when dealing with the great powers. ASEAN’s central role in regional institutionalism is, primarily, by default. Ironically, ASEAN’s leading role in the region is predicated on its weakness and inability to compete with the powerful states that it draws into its orbit. Powerful regional actors understand the advantages, and even necessity, of institutional structures wherein they can meet and manage their competitive relationships. No single great power can create regionwide institutions that would be acceptable to all the others; thus, ASEAN is the satisfactory institutional compromise. The APT, EAS, and ARF bring the great powers together and perform functions similar to what ASEAN does for its members. ASEAN’s position as the acceptable compromise means that it is leading institutional development in Asia Pacific, but it also means that institutional development will be limited in what it can accomplish. ASEAN’s leading role could, potentially, be much stronger if it could form a unified ASEAN Community. However, if this could be achieved, it would invite other problems. Powerful states that favor ASEAN because it is a relatively weak actor would face the prospect of dealing with an equal or, at least, much more formidable, entity. That could undermine the appeal of ASEANcentered organizations. ASEAN’s status as an organization of “follower” states is potentially advantageous but also alters the political calculations that make ASEAN a successful regional pivot point. Any great power that seeks to “lead” in Asia Pacific needs followers. A united ASEAN could, in theory, exercise considerable influence by bestowing or withholding its “followership” on any major power on a range of issues (Stubbs 2014). Again, however, this would change the political calculations of the great powers and create the possibility of more competitive and antagonistic relationships between ASEAN and some of the powers with which it now cooperates. China

China’s relationship with ASEAN is markedly different than that of the United States. During the first decade of ASEAN’s existence, China

262 The New ASEAN in Asia Pacific and Beyond was one of the major sources of regional concern. Even during the Kampuchea invasion period, despite China’s being an ally of ASEAN, a number of ASEAN states regarded China as the major long-term problem for the region. In the post–Cold War period, this began to change. China was still very leery of regional institutionalism. After the 1997 economic crisis, however, it began to see the value of regional structures. It quickly went from opposing or ignoring those structures to becoming the driving force behind a number of regional initiatives. China instigated, or strongly supported, the APT, EAS, RCEP, and ACFTA. During this period, China also made considerable economic and political inroads to the region. Its “charm offensive” of the early 2000s was highly successful. While the United States squandered its political, moral, and economic capital in wars in the Middle East, China was building strong relations with the rest of Asia Pacific. China’s basic foreign policy approach, encapsulated in the Five Principles of Peaceful Coexistence, dovetails neatly with ASEAN’s core principles. At a normative level, China and ASEAN reinforce each other. China’s stated approach to foreign policy is that it will not seek to dominate its neighbors, establish military bases on foreign soil, or intervene in the affairs of sovereign states. It remains to be seen how closely China can or will adhere to these principles. The idea that it will not bully its neighbors is, obviously, being tested in the South China Sea. However, China’s stated principles seem to make it a prime candidate for a state that could be enmeshed within ASEAN’s network of contacts and institutions. Indeed, there was a period where many observers believed that China was, indeed, susceptible to regional norms (Ba 2006; Johnston 2003). The relationship is not so straightforward, however; China has encouraged ASEAN’s centrality in regional institutions but it has also undermined ASEAN unity when its perceived interests are at stake. In doing this, China risks de-legitimizing the institutions it has helped to create. This is counterproductive; international and regional institutions fill essential roles in the maintenance of order and peace in the international system. As a leading power, it is far more productive and effective for China to wield influence through legitimate institutions than through coercive force or rudimentary structures designed to facilitate cooperation on a case-by-case basis. China harms its own interests by weakening ASEAN. China may feel that its actions are justifiable and, at the very least, are no different and considerably less aggressive and intrusive than what the United States has done in defense of its perceived interests over the course of decades. US intervention in Latin America, the Middle East, and elsewhere has been highly destructive and counterproductive, yet

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has been broadly accepted in the international community, even if deeply resented, particularly in the places affected. However, China is not the United States. It does not possess the same hegemonic influence and it is not yet as critical to the functioning of the system. The position of the United States in the system affords it considerable advantages and privileges—though this may be changing, as noted. China has none of these advantages. Other than North Korea, it has no military allies in the entire Asia Pacific. Its neighbors regard it with great suspicion, as an actor that seeks to change a status quo that has worked to their benefit. It has territorial disputes with a number of states and, historically, it has stirred intrastate insurgency. As China has grown in power, it has become more willing to take aggressive positions in defense of its interests. Regional norms encourage states to pursue their national interests, so long as they do this without the use of force. China has used implicit threats but, so far, very little force. China’s efforts to build a regional presence and use its economic power to extend its political influence is exemplified in its creation of OBOR and the AIIB. China is offering regional states the economic resources that they need to develop, on terms that are more amenable to their goals and interests. China’s economic diplomacy supports its pursuit of its New Asian Security Concept—its attempt to supplant the United States as the region’s dominant security actor. The United States is not ready to relinquish its regional role and most Asia Pacific states support its continuing presence in the region. Nonetheless, the actions and policies of the United States are accelerating its decline. As the US decline takes hold, China is positioned to fill in some of the gaps that have opened. In some of these areas, as in the case of dealing with climate change, China’s willingness to compensate for US defection will add greatly to its international political capital and global leadership role. It is also a move that reflects China’s national interests. However, China remains a fragile state, dealing with considerable weaknesses. It needs to handle the opportunities presented by the US decline very carefully. Following ASEAN’s norms and embedding itself in ASEAN networks is one significant way to achieve that potential. China appears to understand that it serves its interests by building on regional institutions and doing what it can to make them stronger. It wants regional states to accept that China will not compromise on some issues but will, otherwise, be accommodating. After that, whether other states choose to work with China depends on how they understand their interests. Finally, China’s relationship with North Korea is potentially very problematic to China’s long-term interest in a stable Asia Pacific. North

264 The New ASEAN in Asia Pacific and Beyond Korea’s pursuit of a nuclear arsenal may push Japan and South Korea to acquire nuclear weapons of their own and pull the United States more deeply into the region, thereby greatly disrupting China’s plans for regional hegemony. However, China appears to have little control over its recalcitrant neighbor, even as regional states hold it responsible for its inability to restrain North Korea (Perlez 2017). The United States

The United States has a checkered history with ASEAN. During the early part of ASEAN’s existence, the United States largely ignored it. The United States could afford to do so because it had constructed its own series of security treaties that bound different regional states to it and reinforced US hegemony. During the period of Vietnam’s invasion and occupation of Kampuchea/Cambodia, ASEAN was useful to the United States as a diplomatic proxy. ASEAN essentially did American (and Chinese) bidding by rallying the international community toward goals that served the United States in “bleeding the Soviet Union” through the Soviet alliance with Vietnam. The United States favored ASEAN because it consisted of allied and ideologically aligned states. However, it did not regard ASEAN as a particularly consequential organization on its own. In the post–Cold War era, the United States initially opposed any efforts to strengthen ASEAN’s regional role, then eventually acquiesced (during the Clinton administration) because it saw ASEAN as no threat to its continuing regional hegemony. Indeed, flush with its “victory” in the Cold War and in a period of ascendance, the United States saw ASEAN as, at best, complementary to the existing, US-dominated regional structures. During the George W. Bush administration, ASEAN was largely an afterthought. The Bush administration had very little respect for international institutions and, under the cover of the 9/11 terrorist attacks, unleashed the unilateralist, imperialist strain endemic to US politics. Bush came to power surrounded by people who believed that the United States, as the world’s sole superpower, should reshape the globe in a manner even more conducive to US interests—by force, if necessary. These actors led the United States into the greatest foreign policy disaster in US history: the invasion and occupation of Iraq. The invasion and occupation of Afghanistan was also disastrous for the United States, though not on the same scale as Iraq. These events were highly instructive and consequential. The US military, the greatest destructive machine ever created in human history, was unable to conquer two backward states and control two relatively small insurgencies. These

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failures illustrated the extremely limited political utility of even vast amounts of military force. The damage to US “hard power” was significant; the damage to US “soft power” was just as great. At the end of the Bush administration, the United States was the epicenter of a massive financial earthquake, the worst since the Great Depression. This disruption was not due entirely to the Bush administration; the seeds of the financial crisis were planted during the Clinton era and reflected ideological rigidities that had a much longer history. The result was the same: within the span of one administration, the United States went from being the inheritor of Earth to a badly wounded, rapidly declining world power. These weaknesses were always present, just well-hidden, ignored, or not understood by US analysts. The Bush administration’s actions revealed those weaknesses and exacerbated and greatly accelerated an unavoidable decline. During this period, the Bush administration was largely distracted from Asia Pacific and paid very little attention to Southeast Asia (except as the region figured into the “war on terror”). It strengthened security ties with the states of Southeast and Northeast Asia, and it was alarmed about the rise of China. Even so, managing the self-inflicted disaster in the Middle East occupied most of its time and energy. The United States demonstrated little concern for the norms, rules, and values propagated by ASEAN. If ASEAN’s strength lies in its ability to tie states into interlocking institutional structures then, during this period, those structures and the norms underpinning them had little influence on the United States. For ASEAN, the strategic importance of the United States overshadowed all other considerations; most ASEAN states were willing to ignore their professed values if it meant gaining military hardware and economic support from the US superpower. ASEAN’s strategy of “enmeshment” had little impact on a unilateralist US government. The Obama administration came to power with the declaration that the United States saw its future in Asia. The “rebalance” to Asia reflected an astute understanding that the future of world order and the cutting edge of economic development are in the Asia Pacific region. However, Obama was unable to extricate the United States from its fixation on the Middle East, and the rebalance never resulted in a decisive foreign policy shift. The Obama administration’s approach to regional multilateralism, and multilateralism in general, was in keeping with the established US position of the post–World War II era. The United States had constructed international institutions to consolidate its power among its allies and to shape what it could of the international system to favor its interests. The Obama administration explicitly understood

266 The New ASEAN in Asia Pacific and Beyond this. The Bush and Obama administrations agreed on the need for the United States to remain the dominant power in the world. Their disagreement lay in the most effective way to pursue that goal. Obama recognized the crucial role of legitimacy in the creation of authority and the exercise of power. Bush did not, or assumed—incorrectly—that the United States could coerce other states into regarding its behavior as legitimate. Even so, the norms and values of a hegemonic state are not those of weaker, smaller powers. The two sets of actors have very different interests, emanating from their different relative power positions and associated economic and political requirements. The Obama approach to maintaining US hegemony was far more sophisticated and effective than that of Bush, but the United States could not be too deeply “entangled” in regional norms and rules as it tried to determine how to sustain and reinforce its dominant global position. The Obama administration intended to reinforce and rejuvenate US hegemony in Asia Pacific by taking the first steps toward creating a Pacific equivalent of the transatlantic multilateralism that had served US interests in the post–World War II era. The United States planned to build on existing institutions, including ASEAN and the ARF, but also wanted to make these structures more institutionalized. This would have caused conflict between the United States and the ASEAN/Asian states, which advocate more informal, less legalistic regional multilateralism. Again, this approach suggested that the United States was not bound by the norms propagated by ASEAN. The election of Donald Trump put an end to this multilateral approach, at least for now. It also, quite possibly, marked the permanent decline of US power. However, if the United States ever intends to improve its standing in the region, some form of US accommodation and engagement with ASEAN must be on the agenda. The Trump administration is far closer to the Bush than to the Obama administration in its attitudes, beliefs, and behavior toward multilateral institutions. Trump’s foreign policy, as far as it is possible to tell, has isolationist overtones. Trump quickly adopted a belligerent tone toward international institutions (such as the UN, for daring to condemn Israeli settlements in Palestine), international trade, and even longstanding US allies. The transactionalist approach to international relations that Trump espoused is based on the idea that US allies have exploited the United States, and insists that other states pay the United States “protection money” for the benefits of the US military security umbrella. How far Trump can carry out his apparent plans remains to be seen. What is likely is that the Trump administration will pay very little attention to the diplomatic and political requirements of multilateralism. The isolationist and nativist tendencies present in Trump’s campaign

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and within his cabinet selections suggests that the United States will embrace—and return to—a much more predatory approach to the international community, last given rein during the Bush administration. One key distinction between Bush and Trump is that the Bush administration focused its disruptive activities on the Middle East and was a mostly nondisruptive force in Asia; the Trump administration quickly made a number of antagonistic moves in Asia, especially in respect to North Korea, as well as the Middle East. Also, Bush was adamantly in favor of economic liberalization; Trump is not, and his push to put “America first” threatens to disrupt US economic relations on a global scale. From the perspective of Southeast Asia, this is a profound threat. Again, however, it remains to be seen what Trump actually does. His predilections are to favor the interests of wealthy Americans, who are great beneficiaries of economic globalization. However, the strong nativist streak within the administration underlines a powerful hostility to the outside world. This is exemplified in the administration’s immigration policies, which seem designed to stop and reverse decades of growing ethnic, racial, and religious diversity within the United States. The administration’s national security strategy assumes a Hobbesian, zero-sum world, in which the United States is in a relentless competition with every other state. In such a world, the United States only “wins” when other states lose. This approach breeds international hostility and offers nothing in the way of global leadership. It also exacerbates international tensions and increases the chances of conflict. The election of Trump demonstrated the deep social, political, and economic problems at the core of the United States—issues of governance, political corruption, social and economic inequality, racial animus, and other factors—that continue to fester within the American body politic. It also showed how easily illiberal, undemocratic movements could take root and exercise considerable power within a liberal democratic state. Trump is not a fascist, but he is, demonstrably, a racist, bigot, and misogynist. These very qualities were part of what made him attractive to many of his supporters. He seems oblivious to issues of conflict of interest; indeed, he seems intent on enriching himself while in office. Trump appears to be personally erratic, deeply insecure, profoundly ignorant, and a pathological liar, making him a very dangerous US president. His actions and conduct are having the dangerous effect of normalizing the debasement of the office of the president. Trump has also regularly attacked the fundamental institutions and organizations of US democracy, apparently unconcerned with the long-term implications of the US president undermining the very structures that keep the state together. It is unclear if and how the

268 The New ASEAN in Asia Pacific and Beyond Congress will act as a check on his power, how investigations into Trump’s possible obstruction of justice will play out, and how all of this will affect US foreign policy. The Trump presidency is not a permanent state of affairs. The political winds can turn quickly. However, the deep divisions within American society will persist. Even if the next US election brings a more responsible and capable person to the presidency, US political dysfunction will continue. More significant, Trump is happening at a crucial time for US power in Asia Pacific. Questions about the reliability of the US commitment to the region have been an issue for some time. During the Cold War, the United States defined the conflict as an existential struggle between itself and the Soviet Union. Thus, self-interest motivated its commitment to its regional allies. In the post–Cold War era, the United States faces no comparable threat or enemy. Its competition with China is about primacy and status. Are Americans willing to make the sacrifices of lives and treasure needed to maintain their dominance simply for the sake of that dominance? Perhaps being the global superpower is crucial to American identity. However, the Trump election speaks to the appeal of isolationist tendencies in the United States. These concerns raise legitimate questions about the commitment of the United States to its Asia Pacific allies. With the 2016 election, the issue has become about not just commitment but the stability of the US state itself. The United States has gone through periods of intense internal upheaval before, notably in the 1960s and 1970s, that have affected its international standing. However, in the past, the United States owned much more of the world’s wealth and was indispensable to its allies in the larger struggle with the Soviet Union. Today, US structural power is still overwhelming and most states will move to accommodate the new administration, but the larger significance of the political decay symbolized by Trump will not be lost on US allies around the world. In the post–Cold War era, the American public has twice elected Republican administrations that are typified by their hostility to the international community, an irresponsible use of US power, and a nativism that is dangerous to the interests of the global community. These qualities cannot support and sustain US global leadership. Moreover, they underline the fragile relationship that the rest of the world has with the American superpower. The world community cannot wait for the United States to work out its internal problems; it must act to protect itself. For organizations such as ASEAN, the uncertainty and the shifts in power that open as the United States readjusts its position in the world, and the world hedges against US decline, provide opportunities for action. However, ASEAN’s lack of institutional unity compromises

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its ability to benefit from these possibilities. The uncertain role of the United States in a changing regional order may spur individual ASEAN states to seek their own accommodations with regional powers. Japan, India, and Russia

Japan has willingly sheltered under the protection of the US security umbrella and generally accepted a reduced political and security role for itself in the regional and global environments as a result. It accepts restraints on its deployment of military force, though it has been slowly chipping away at those restrictions. At the same time, Japan has chafed at some of the limitations that have come with its constrained international position. It is a major supporter of the United Nations and desires a seat on the Security Council. It has tried to extend the interpretation of Article 9 of its constitution to allow it to come to the defense of its allies under certain ambiguous circumstances. Japan is slowly moving toward becoming a “normal country” in the international system. For ASEAN, this is a desirable outcome. The greater the number of powers it can involve in Southeast Asia, the more room there is for ASEAN to balance powers against each other and create more political space for itself. Japan is a major source of FDI and banking investment in Southeast Asia. It has considerable political clout that ASEAN states have often encouraged it to use and been disappointed when it has not. The Trump presidency has greatly exacerbated an increasingly uncertain relationship between the United States and Japan. A wise Japanese leader will prepare for the day when Japan needs to protect its interests on its own. Moreover, a prudent Japanese leader will also guard against being dragged by a belligerent US into regional conflicts that cannot serve Japan’s interests. Japan has a long and important history with Southeast Asia. It is the actor primarily responsible for the region’s economic miracles. If it moves away from the United States, Japan has enormous regional goodwill on which to build. However, China and both Koreas will meet any changes in Japan’s regional status with considerable animosity. This probability increases the need for greater communication and interaction and the importance of the ARF, the ADMM Plus, and other regional security and economic institutions. A more independent Japan will need to redefine its interests. It may become more involved in providing regional states with ODA and military support. Moreso than China or the United States, Japan could become more directly engaged in pursuing direct influence with the ASEAN states. India’s involvement in Southeast Asia is more limited, though this could change over the next several years. India’s has a growing security

270 The New ASEAN in Asia Pacific and Beyond relationship with Japan, which underlines its interest in offsetting China’s power in the region. In recent years, the United States has courted India. However, India has its own regional interests and will not be the appendage of another power. India aspires to be a regional leader, even as it confronts domestic obstacles that are as formidable—maybe even more formidable—as those faced by China. India has enormous potential, though it faces the real risk that it will not realize this potential. India’s distance from most of Southeast Asia makes it a relatively benign regional actor, and the ASEAN states are encouraging India to play an active role in the region, despite China’s resentment and disapproval of this course of action. Finally, Russia is active in the sale of military hardware and technology to regional states. Its Far East is under development by China. It shares China’s desire to see the emergence of a multipolar world. Nonetheless, for now, Russia has a relatively minor role to play in Southeast Asia. Russia has the potential to be a major regional actor but its domestic economic and political instability, combined with its worsening relations with the Western world, limit its ability to realize that potential. ASEAN’s Role in Asia Pacific The norms and rules that ASEAN supports are those of a group of relatively weak states whose interests are primarily local and regional. The great powers that it is trying to manage have much more extensive interests and requirements. China, India, and Japan, for example, all rely on vast amounts of oil coming from the Middle East. All have legitimate interests in protecting the sea lanes through which that oil travels. The Southeast Asian states share these needs, but their relative weakness limits what military contributions they can make to guarantee regional security. Thus, rules and norms that regulate the actions of relatively weak states do not necessarily resonate with more powerful states, whose interests expand with their capabilities. ASEAN can enmesh the great powers in the regional norms, but they still come to the table with their own interests and objectives. ASEAN has considerable capacity for greater influence in Asia Pacific. If the organization could function as a coherent bloc, it would constitute another major power on the regional stage. This need for unity cannot be exaggerated. All of the great powers must contend with each other for followers. This gives follower states considerable leverage over their more powerful counterparts. Ideally, the great powers could enter political and economic “bidding wars” with each other for

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the support and loyalty of respective Southeast Asian states. Indeed, in many ways, that is already happening, but it divides the ASEAN states from each other. If ASEAN could operate cooperatively, it could go from being a divided grouping to one that constitutes an overwhelmingly valuable prize. However, it is not in ASEAN’s interests to have any single power in a position of dominance. The regional states have accorded this role to the United States in the past. However, as noted, that situation is changing. Asia Pacific is a region in rapid and profound transition. The multipolar world that China has been predicting, expecting, and advocating for so long is finally being born (Deng and Wang 1999). The United States has struggled in coming to terms with how to deal with the rising China. Before Trump, the United States seemed determined to maintain its primacy in Asia Pacific, even though the strategic circumstances that had allowed it to establish that primacy during the Cold War, had changed dramatically (White 2012, pp. 98–112). With Trump, the United States is likely to become more belligerent and predatory. If so, it will alienate its Asian allies. Asian states are highly pragmatic. They favor the United States as the dominant power because its ascendance has created regional stability. If that begins to change, so will Asia’s response to US power. Most Asian states want the United States present as a check on China but they are not interested in containing or antagonizing China. Under the best of circumstances, it was not clear how the United States would walk that delicate balance; under Trump, impending US trade wars will not help its regional standing. The United States is bleeding power and influence through its selfinflicted wounds. However, there are no states that can fully fill the power vacuum that is opening up as the United States declines. China has enormous economic influence and is skillfully building political and economic ties with all of Asia, Africa, and parts of Europe. Even so, it has few real allies, and many regional and extra-regional states view Chinese power with suspicion. China’s mishandling of its position in the South China Sea has irrevocably tarnished its “charm offensive” and greatly compromised its ability to exercise soft power. China also faces considerable domestic challenges that may well prevent it from attaining the international stature it aspires to achieve. India has a considerable distance to travel before it can be a first-rate power. Its domestic problems and issues may be insurmountable, and will act as a significant brake on what it can and should do in the larger region. Japan has enormous potential, but first it has to make a decision to play a more active regional role, a difficult step for it to take, and one that is sure to evoke considerable political and military pushback, particularly in Northeast Asia. Japan also faces the

272 The New ASEAN in Asia Pacific and Beyond danger of demographic decline. What is emerging, therefore, is a growing regional uncertainty and unpredictability. The reality that no great power is capable of dominating the region, and that all of them face major domestic upheaval and weaknesses, means that ASEAN’s facilitating role in the region is secure for the foreseeable future. The need for multilateral institutions in Asia Pacific is growing stronger all the time. The nature of the problems facing the region is far beyond the power of any single state to address. Climate change needs a regional and global response. The political instability and economic upheaval caused by the failures of neoliberalism and globalization (e.g., growing income inequality) are, quintessentially, domestic political and social welfare issues that need to be managed by the larger regional and global systems. The impact of technology on economic development strategies is, similarly, a domestic issue that requires international solutions. The need for a particular solution does not, of course, mean that it will be found. However, as the United States turns inward and reacts to the outside world with more aggression and “beggar thy neighbor” policies, Asian states continue to pursue regional trade agreements and look for other ways to make multilateral structures work. There is a need for new ideas about how to manage the global political and economic systems. While it is unlikely that ASEAN will be a major source of those ideas, it could play a crucial role in the regional coordination and implementation actions that follow. Increasingly, enhancing state sovereignty means managing global forces collectively. ASEAN’s members have not yet made the leap to this reality but the organization is well positioned to play a major role if and when they do. The paradox of ASEAN lies in the reality that its most important role in Asia Pacific—facilitating interaction between its members, great powers, and each other—is contingent on its relative weakness. ASEAN’s norms, values, and practices protect state sovereignty. The fact that many ASEAN states have different or competing interests consolidates the need for the organization to limit its expectations of its members. This necessary lack of institutionalization limits what ASEAN can achieve and weakens its ability to pursue the interests of Southeast Asia in the regional and global environments. At the same time, a more unified and effective ASEAN would undermine the appeal of ASEAN-connected institutions to the regional powers. ASEAN’s strength lies in its weakness. This is what allows it to serve as the focal point for regional diplomatic and (sometimes) economic interaction. This observation is not necessarily an argument for continued stagnation. It is possible to imagine scenarios in which a unified ASEAN is a powerful actor in its own right, and where it takes its place at the table

ASEAN’s Role in Asia Pacific


of regional powers based on the economic and political weight that it brings to the table. However, such scenarios would also require a complete reimagining of ASEAN’s role in the region, possibly the globe, and its relations with the great powers. Under such circumstances, regional multilateralism would take a very different form and function. Conclusion ASEAN’s future is murky. By serving as an institutional hub and by promoting norms, rules, and values that limit violent conflict and coercive behavior, it contributes to the maintenance of peace and stability in the Asia Pacific region. If ASEAN could unite, it could effectively manage the competition between the great powers. However, it has not been able to do so (for the most part) and it is highly unlikely that this will change. The ASEAN states are incredibly diverse; they operate at different levels of economic and political development; all of them are unstable or at risk of instability; and the organization encompasses enormous cultural variation. These factors mean that the member states share the most basic national interest in sustaining a peaceful regional environment. Beyond this, they share a national interest in promoting and protecting the norm of nonintervention. ASEAN’s role in Asia Pacific will remain that of building networks and facilitating all variety of contacts between regional actors. This is a valuable function, but it certainly falls short of what the most optimistic supporters of the organization want for it. The slow emergence of a multipolar world is increasingly evident in Asia Pacific. Deep domestic problems in the United States are dramatically affecting the operation of US democratic institutions and foreign policy. How far the domestic will spill into and define foreign policy is unclear, but Donald Trump’s presidential victory is an ominous symptom of profound failures in the American social, political, and economic systems. It is likely that the Trump presidency will seriously exacerbate division within American society. At the very least, it foreshadows a United States that may be distracted by domestic upheaval for the next several years. At the worst, it may portend a United States that looks for foreign dragons to slay. Trump’s evident insecurities and the associated “need” to appear “tough” on the “enemies” of the United States may raise the level of US belligerence in the world. Dysfunction within the United States will force the international community to hedge against the United States. US disruption opens up possibilities for leadership from other states and actors. China has undermined its position in the region over the past decade. Even so, its

274 The New ASEAN in Asia Pacific and Beyond reemergence as a major power and its ambitious plans to expand infrastructure across continents make it a major player with global interests. The benefits its initiatives could bring to regions looking for new and proactive leadership are profound. Moreover, despite its uncompromising and assertive attitude toward some of its territorial disputes, China is not an expansionist power. Its philosophical commitment to respect the sovereignty of other states is attractive to the developing world. While it remains to be seen how far China will adhere to these promises and how it will square the tensions between its words and actions, it is positioning itself to take up the mantle of international leadership that the United States is dropping, particularly in truly important areas such as climate change and in the creation and dissemination of new technologies, especially those related to renewable energy. China lacks the resources of the United States and its ideological appeal is highly limited; if there is a “China model,” it applies only to China. This is a notion of “Chinese exceptionalism” with which China is comfortable and it fits neatly with China’s claim to respect the sovereignty of other states and not seek domination. The United States has enjoyed a disproportionately large role in world politics for decades, largely because of a combination of unusual factors: first, the enormous economic and political advantages of the United States as the only major state not physically devastated by World War II; then, later, the reality that most other major powers were content to let the United States bear the various costs and reap the benefits associated with maintaining international order. As the United States becomes more intolerant and as it abandons its commitment to international free trade, it opens up considerable spaces for other actors. However, no other country possesses the resources or ideological stature to fully step into the US position. This opens room for ASEAN. Its established role as the primary node in a network of regional relationships becomes more important as managing those relationships becomes more critical to regional and global order. The need to accommodate China will become more imperative among the ASEAN states. Given China’s economic importance to the region, their interests may start to align behind a Chinese regional hegemony. Much as Southeast Asian elites have learned to see US hegemony as benevolent, so they may come to accept China’s role at the top of a regional hierarchy. However, Japan and India remain important actors that are unlikely to concede that position to China so easily. At the least, competition between these parties will likely intensify. No one of these states may be able to dominate the others. Individual ASEAN states may be able to use this competition to their advantage.

ASEAN’s Role in Asia Pacific


How ASEAN develops depends upon the domestic situations of its members. If ASEAN states, for their own reasons, can develop a consensus to support one of the major powers, then they—and through them, ASEAN, their organization—can have a profound effect on regional relations in Asia Pacific. If they cannot, or if the individual members choose to ally with different great powers, then ASEAN will remain a functional, facilitating body, but one that falls short of its potential and grows more deeply divided. Most unlikely, but most advantageous, is if the ASEAN states can agree on a common strategy to manage all of the great powers. Notes 1. John Mearsheimer (2001) specifically examines the likelihood of conflict between the United States and China from a neorealist perspective. I think that Mearsheimer is incorrect in his assertions that such conflict is inevitable; however, his views are quite common in the United States and, as a power in decline, there is a real danger that the United States will take actions to preserve its privileged position that will result in conflict with China, especially if it is viewing the situation through the narrow lens of “offensive realism.” 2. In neither constructivism nor liberalism is this harsh interpretation of cooperation necessary. Historically, liberals have seen cooperation between rational actors as the natural inclination of self-interested agents seeking economic gain. For constructivism, numerous kinds of international society are possible, depending on the circumstances in which they are formed and shaped. Alexander Wendt (1999) identifies three different forms of international society, including “Hobbesian” (realist) and “Kantian” (cosmopolitan). 3. The immediate challenge to the norms of Westphalian state sovereignty is posed by the debate over humanitarian intervention and the “responsibility to protect” (R2P). See Narine 2005.




Asian Bond Fund ASEAN Bond Markets Initiative ASEAN-China Free Trade Agreement ASEAN Comprehensive Investment Agreement Ayeyarwaddy-Chao-Phraya-Mekong Economic Cooperation ASEAN Committee on the Implementation of the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers ASEAN Commission on the Promotion and Protection of the Rights of Women and Children Asian Development Bank ASEAN Development Fund ASEAN Defense Ministers Meeting ASEAN Economic Community ASEAN Framework Agreement on Services ASEAN Framework for Equitable Development US Africa Command ASEAN Free Trade Area ASEAN Human Rights Declaration ASEAN Investment Area ASEAN industrial complementation ASEAN Intergovernmental Committee on Human Rights Asian Infrastructure Investment Bank ASEAN industrial joint venture ASEAN industrial project ASEAN-Japan Comprehensive Economic Partnership Asian Monetary Fund ASEAN Ministerial Meetings ASEAN Plus Three Macroeconomic Research Office Asia Pacific Economic Cooperation (Forum) ASEAN Political Security Community




ASEAN Plus Three ASEAN Qualification Reference Framework ASEAN Regional Forum ASEAN Swap Arrangement Association of Southeast Asia ASEAN Security Community ASEAN Socio-Cultural Community Association of Southeast Asian Nations ASEAN and China ASEAN Plus China, Japan, and South Korea Indonesia, Malaysia, the Philippines, Singapore, Thailand Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand ASEAN Institutes of Strategic Studies ASEAN Post-Ministerial Conference Asia-Europe Meeting ASEAN Surveillance Process Asia Pacific Council ASEAN Trade in Goods Agreement Bay of Bengal Initiative for Multi-Sectoral, Technical, and Economic Cooperation Brazil, Russia, India, China, South Africa bilateral swap arrangement confidence-building measure Chinese Communist Party Convention on the Elimination of All Forms of Discrimination Against Women Comprehensive Economic Partnership in East Asia Commission on the Limits of the Continental Shelf (UN) Central Limit Order Book (Singapore) Chiang Mai Initiative Chiang Mai Initiative Multilateralization China National Offshore Oil Corporation Cambodian People’s Party Convention on the Rights of the Child Council for Security Cooperation in the Asia Pacific East Asian Community East Asian Economic Caucus East Asian Economic Group East Asian Free Trade Agreement Enterprise for ASEAN Initiative East Asia Summit East Asian Study Group East Asian Vision Group UN Economic Commission for Asia and the Far East European Economic Community exclusive economic zone European Financial Stability Facility Executive-Level Decision-Making Body (CMIM) Executives Meeting of East Asia Pacific Central Banks Environmental Protection Agency (United States) Eminent Persons Group (ASEAN) Economic Research Institute of ASEAN and East Asia




Economic Review and Policy Dialogue European Union Framework Agreement on Services (ASEAN) foreign direct investment Far Eastern Naval Command (India) free trade agreement Free Trade Area for Asia Pacific National United Front for an Independent, Neutral, Peaceful, and Cooperative Cambodia (Front Uni pour un Cambodge Independent, Neutre et Pacifique) Group of 20 General Agreement on Trade in Services gross domestic product High-Level Task Force (ASEAN) intercontinental ballistic missile Initiative for ASEAN Integration International Bank for Reconstruction and Development (World Bank) International Criminal Court International Court of Justice International Conference on Kampuchea International Finance Corporation (World Bank) international financial institution International Monetary Fund International Force for East Timor (UN) Intersessional Support Group (ASEAN) International Tribunal for the Law of the Sea Japan-ASEAN Integration Fund Korea-US Free Trade Agreement Law Association for Asia and the Pacific less developed countries London Interbank Offered Rate Malaya-Philippines-Indonesia Malaysian Air Pollution Index Ministry of Economy, Trade, and Industry (Japan) Manila Framework Agreement Macroeconomic and Financial Surveillance Office Mekong-Ganga Cooperation mutual recognition arrangement North American Affairs Bureau (Japan) National Anti-Corruption Commission (Thailand) North American Free Trade Agreement Non-Aligned Movement North Atlantic Treaty Organization New Development Bank National Defense Program Outline (Japan) nongovernmental organization National League for Democracy (Myanmar) Nuclear Nonproliferation Treaty New Security Concept (China) nontariff barrier One Belt/One Road Initiative (Silk Road Economic Belt and Twenty-First-Century Maritime Silk Road)



official development assistance Pacific Command (United States) People’s Alliance for Democracy (Thailand) Paris International Conference on Cambodia Communist Party of Indonesia (Partai Komunis Indonesia) People’s Liberation Army (China) People Power Party (Thailand) People’s Republic of China People’s Republic of Kampuchea Pollutants Standards Index (Singapore) preferential trading agreement responsibility to protect Regional Comprehensive Economic Partnership rules of origin regional security partnership South Asian Association for Regional Cooperation Solidarity for Asian People’s Advocacy Shanghai Cooperation Organization Self-Defense Force (Japan) Southeast Asia Nuclear Weapons Free Zone Southeast Asian Treaty Organization State Law and Order Restoration Council (Myanmar) subregional economic zone Treaty of Amity and Cooperation in Southeast Asia Trade and Investment Framework Arrangement (US-ASEAN) Trans-Pacific Partnership Trans-Pacific Strategic Economic Partnership Agreement United Malays National Organization United Nations UN Convention on the Law of the Sea United Nations Educational, Scientific, and Cultural Organization United Nations Register of Conventional Arms UN Security Council UN Transitional Authority in East Timor US Agency for International Development Vientiane Action Programme World Health Organization World Trade Organization Zone of Peace, Freedom, and Neutrality


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Abe, Shinzo, 220, 224–228, 244 Abhisit Vejjajiva, 68, 70 Abu Ghraib prison, 171, 173 Afghanistan, 173–174, 190, 219, 233, 238, 264 al-Assad, Bashar, 247 AMRO (ASEAN Plus Three Macroeconomic Research Office), 89, 92–93 American empire, 181 American exceptionalism, 174, 188 American exemptionalism, 188 American world order, 187–188 anarchical international society, 256 Andaman Islands, 242 area denial/sea denial, 124, 178 Article 9, 209, 215, 217; redefining/ amendment of, 224–228, 269 Arroyo, Gloria Macapagal, 141 Arunachal Pradesh, 151, 237–238 Asian economic crisis 1997–1999, 2, 29–39, 44–45, 85; causes, 34–36; US reaction to, 36, 167–168, 190 ASEAN (Association of Southeast Asian Nations): creation (1967), 10; economic development (Cold War), 16–17; expansion, 26–28; lack of institutional unity, 268–269; legal-rational norms, 18; limitations of reform, 257–259; purposes of, 251–257, 272–273; role in regional institutionalism, 110–114, 261; Vietnam’s invasion of Cambodia/Kampuchea, 13–16, 43 ASEAN centrality, 4, 79, 114, 158–159, 175, 197, 256, 262

ASEAN Charter, 2,4, 50, 51–53, 54, 56, 71, 79–80, 82, 257; preamble, 53 ASEAN-China Free Trade Agreement (ACFTA), 120–123, 172, 262 ASEAN Commission on the Promotion and Protection of the Rights of Women and Children (ACWC), 55 ASEAN Committee on the Implementation of the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers (ACMW), 55, 62 ASEAN Community (AC), 2, 4, 47, 48, 71, 77–82, 213, 251–252, 257–259, 261 ASEAN Community Councils (ASEAN Community), 52; APSC Council, 66; ASCC Council,74 ASEAN Comprehensive Investment Agreement (ACIA), 58 ASEAN Coordinating Council (ACC), 52 ASEAN Defense Ministers’ Meeting (ADMM), 115, 269 ASEAN Development Fund (ADF), 58, 66 ASEAN Economic Community (AEC), 2, 47, 49, 58–64, 101, 259; business awareness of the AEC, 60; scorecards, 59 ASEAN Framework Agreement on Services (AFAS), 47, 57, 61 ASEAN Free Trade Area (AFTA), 24–26, 48, 57 ASEAN Human Rights Declaration (AHRD), 56 ASEAN-India Summit, 231 ASEAN industrial projects (AIPs), 17


302 Index ASEAN Institutes of Strategic Studies (ASEAN-ISIS), 22 ASEAN Intergovernmental Commission on Human Rights (AICHR), 4, 54–57, 65, 79, 82 ASEAN Investment Area (AIA), 47, 57 ASEAN-Japan Comprehensive Partnership, 214 ASEAN Plus Three (APT), 4, 85–88, 110– 112, 120, 213, 231, 261–262 ASEAN Political Security Community (APSC), 4, 47, 64–72, 252, 259 ASEAN Post-Ministerial Conference (ASEAN-PMC), 21, 229 ASEAN Regional Forum (ARF), 4, 21–24, 85, 105–110, 171, 175, 229, 231, 234, 261, 266, 269; ARF Fund, 108; ARF Unit, 108 ASEAN Secretariat: 175; reform of, 21, 37, 52–53 ASEAN Security Community (ASC), 2, 47, 49, 50 ASEAN Single Window, 57, 61 ASEAN Socio-Cultural Community (ASCC), 2,47, 49, 50, 72–77, 252, 259 ASEAN Summit, 52, 86; as dispute settlement mechanism, 63 ASEAN Surveillance Process (ASP), 38 ASEAN Trade in Goods Agreement (ATIGA), 58 ASEAN Vision 2020, 37, 48 ASEAN Way, 10, 17–20; limits of, 108–109 Asia Europe Meeting (ASEM), 27, 234 Asia Pacific Council (ASPAC), 8 Asia Pacific Declaration on Human Rights (Bangkok Governmental Human Rights Declaration), 53 Asia Pacific Economic Cooperation (APEC), 24, 172, 246 Asia Relations Conference, 229 Asian Bond Fund (ABF), 87 Asian Bond Market Initiative (ABMI), 4, 85, 87, 93–100, 110–111 Asian Bonds Online, 94 Asian Development Bank (ADB), 89, 100, 215 Asian Economic Community, 232 Asian economic development model, 167, 219 Asian Infrastructure Investment Bank (AIIB), 120, 150–155; US reaction to, 152–153, 157, 263 Asian Monetary Fund (AMF), 86 Asian response to US power, 271 Association of Southeast Asia (ASA), 8 Australia: joining EAS, 103; relations with India, 244; role in ARF, 109 Automation, 131, 162, 186

Ayeyarwaddy-Chao-Phraya-Mekong Economic Cooperation (ACMECS), 232

Bai Meichu, 137 Balakrishnan, Vivian, 158 Bali bombing (2002), 107 Bali I (First Bali Summit) (Bali Conference), 1, 2, 12–13, 210 Bali II (Second Bali Summit), 1, 2, 50 Bandung Conference, 229 Bangladesh, 245 Belgrade bombing (of China’s embassy), 128– 129, 161–162 BIMSTEC, 232 Bo’ao Forum, 120 Bond market growth, 96–99 Bush doctrine, 169 Bush, George H. W., 167 Bush, George W., 129, 168–174, 245 Bush (George W.) administration, 168–174; danger to international order, 203; effect on US foreign policy, 173–174; policy toward Asia, 169; relations with ASEAN states, 170–173; similarities to Trump administration, 203; unilateralism, 168– 169, 264–265 Cambodia (Kampuchea) invasion, 13, 229 Cambodia: elections, 28; instability, 258; Preah Vihear conflict, 67–72 Canada: role in ARF, 22, 109 Century of humiliation, 164 Chatichai Choonhaven, 15 Cheney, Dick, 173 Chiang Mai Initiative (CMI), 87–89 Chiang Mai Initiative Multilateralization (CMIM), 4, 85, 87–93, 110–111, 181; conditionality, 93 China: and Africa, 120; aircraft carrier, 124, 161; “charm offensive,” 119, 134, 138, 156–157, 161, 176, 262; Communist Party corruption, 125–126; demographic decline, 130–131, 162; environmental catastrophe, 132; income inequality, 125, 131–132; military power, 123–124; military rivalry with US, 194; nationalism, 126–127, 160; participation in the ARF, 109; “peaceful rise,” 120; pressure on ASEAN, 158; relations with Japan, 126–127; relations with Taiwan, 127; relations with US, 127– 129; responsible actor, 191; risk of delegitimizing ASEAN, 262; social unrest, 125–126; and Southeast Asia, 5, 118–121; taking advantage of US decline, 263, 273– 274

Index China National Offshore Oil Corporation (CNOOC), 135 China threat, 157 Christopher, Warren, 127 Citizens United, 185 Clark, Joe, 22 Clientelistic politics, 185 Climate change, 74, 133, 154, 201, 272; opportunity for China, 133, 161–162 Clinton administration, 167–168 Clinton, Hillary, 143–144, 174–177, 194; describes rebalance, 176–178, 180 Cloma, Tomas, 140 Code of Conduct in the South China Sea, 150 Cold War: effects on US, 189; US conduct during, 188–189 Communist Party of Indonesia (PKI), 9, 45 Comprehensive Economic Partnership in East Asia (CEPEA), 100, 172, 213 Comprehensive national security strategy, 211–212 Comprehensive security, 65; Japan, 218 Confidence building (ARF), 105–106 Confidence building measures (CBMs), 106 Constructivists, 253–256, 275 Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), 56 Convention on the Rights of the Child (CRC), 56 Cooperation between states (concept), 254– 257, 275 Core interest, 143–144 Corregidor Affair, 10, 45–46 Council for Security Cooperation in the Asia Pacific (CSCAP), 120 Crimea, 192 Cyclone Nargis, 107

Dai Bingguo, 143 Dalai Lama, 236–237, 248 Darwin, Australia (US Marines), 176 Declaration of ASEAN Concord, 12, 50 Declaration on Conduct of Parties in the South China Sea, 65, 121, 136, 148, 157 Delhi-Mumbai Industrial Corridor, 244 Democratic Party of Japan, 219, 223 Democrat Party (Thailand), 68 Deng Xiaoping, 118–119, 126 Diaoyu Islands. See Senkaku Islands Dodd-Frank Amendment, 185 Double mismatch, 94 Duterte, Rodrigo, 57, 150, 197, 258 East Asia Economic Caucus (EAEC), 86


East Asia Economic Group (EAEG), 86 East Asia Free Trade Agreement (EAFTA), 100 East Asia Summit (EAS), 4, 85, 102–105, 111, 120, 175, 213, 234, 238–239, 244, 261–262 East Asian Community, 87, 103, 111–112, 116; Tokyo Declaration on Building an East Asian Community, 103 East Asian Security Review, 218 East Asian Study Group (EASG), 102 East Asian Vision Group (EAVG), 102 East Timor, 41–43, 212 East-West Center, 175 Economic Commission for Asia and the Far East (ECAFE), 17 Economic Research Institute for ASEAN and East Asia (ERIA), 103, 214 Electric vehicles, 133 Eminent Persons Group (EPG), 51, 54 Enhanced interaction, 80 Enmesh, 121, 270 Enmeshment, 265. See Omni-enmeshment Enterprise for ASEAN Initiative (EAI), 172 Environmental Protection Agency, (EPA), 201 EP-3 incident, 129 Evans, Gareth, 22 European Financial Stability Facility (EFSF), 115 European Union (EU), 25, 49, 79, 80, 259 Expansionist power (US), 188 Extended neighborhood, 233 Far Eastern Naval Command (FENC), 242 Financial liberalization, 29, 34.35 Five Principles of Peaceful Coexistence, 119, 152, 262 Flexible engagement, 80 Followership, 261, 270–271 Foreign exchange reserves, 113; China, 151 Forward-deployed diplomacy, 177 Free trade agreements (FTAs) (ASEAN), 63; blamed for economic disruption (US), 186–187; US opposition, 196 Fukuda Doctrine, 210–211 Fukuda, Takeo, 211 Futenma military base, 219 Gandhi, Indira, 229 Gandhi, Rajiv, 229 General Agreement on Trade in Services (GATS), 61 Glass-Steagall Act, 167 Global financial crisis of 2007–2009, 5, 85; regional institutions unutilized, 85–86 Goh Chok Tong, 49 Gorbachev, Mikhail, 21

304 Index Greater Mekong Subregion (GMS), 231 Group of 20 (G-20), 112–113 Guantanamo Bay, 171, 173 Gulf of Tonkin, 137, 142 Gulf War (1990–1991), 123, 212, 218, 224 Gwadar, Pakistan, 239 Hainan Island, 129, 137 Hanoi Plan of Action, 26, 37, 48 Hashimoto Doctrine, 213 Hashimoto, Ryutaro, 213 Hatoyama, Yukio, 116, 219 Hawaii, 164 Hegemony, 187 Heng Samrin, 229 Himachal, 237 Hindu chauvinism, 245–246 Human development (ASCC), 73 Hussein, Saddam, 170

Inada, Tomomi, 227 India: border disputes with China, 235–237; economic relations with Southeast Asia, 233; elite perspectives on China, 240; energy security, 233–234; environmental problems, 246; joining EAS, 103; Look East policy, 6, 230–231, 242; nuclear program, 239, 245; political instability, 245–246; relations with China, 235–240; relations with Japan, 243–244, 249; relations with the US, 244–245; and Southeast Asia, 6, 207–208, 228–235 Indian navy, 241; aircraft carriers, 241 Indian Ocean, 230, 233, 239 Indonesia: involvement in Preah Vihear dispute, 69, 71; Konfrontasi, 9, 43, 255; massacre, 9, 45; response to Asian economic crisis, 32–33; role in ASEAN, 19, 20; tension with ASEAN during Vietnam’s invasion of Cambodia, 14–15 Indo-Soviet Treaty of Friendship and Cooperation, 229 Initiative for ASEAN Integration (IAI) (ASEAN Economic Community), 58 International Bank for Reconstruction and Development (IBRD). See World Bank International Conference on Kampuchea (ICK), 14 International Court of Justice (ICJ),67, 69; US decision to ignore, 162 INTERFET (International Force for East Timor), 41–42 International Monetary Fund (IMF), 31,151, 153– 154, 215; politically toxic, 91–92, 115; role in Asian economic crisis, 31–33, 34–36

International Peace Cooperation Law, 212 International Tribunal for the Law of the Sea (ITLOS), 135, 146, 148, 157; Philippines’ case against China, 148–150 Iraq: occupation, 171, 173; Southeast Asian response to war, 170–171; US attack on, 169, 189–190, 264 Ishihara, Shintaro, 223 Islamic fundamentalism, 231 Islamic State, 180

James Shoal, 137 Jammu, 237 Japan: and ARF, 109; Co-Prosperity Sphere, 8; competition with China (CMIM), 88–89; competition with China (EAS), 103–104; in decline, 215; leadership aspirations, 215– 216; military technology, 216; national identity and nationalism, 219–221, 225–226; New Miyazawa Initiative, 87; normal country, 226; question of history, 210, 214– 215, 221–222, 228; relationship with ASEAN, 210–211, 248; relationship with China, 210, 220–223; relationship with US, 200, 208–209, 217–220, 269; and Southeast Asia, 6, 207, 209–215 Japan-ASEAN Free Trade Agreement, 213 Japan-ASEAN Integration-Fund (JAIF), 213– 214 Japan-ASEAN summit, 213–214 Japanese Self-Defense Force (SDF), 209, 212 Jiang Zemin, 127–129 Joint maritime seismic undertaking, 141 Kaifu, Toshiki, 212 Kakuei, Tanaka, 210, 220 Kalayaan Island Group (Freedomland), 140 Kashmir, 237–238 Kem Sohka, 258 Kerry, John Khmer Rouge, 14 Kim Dae Jung, 102 Kim Jong-Un, 197 Kim Suk Soo, 102 Koizumi, Junichiro, 103, 219, 221 Komeito, 227 Konfrontasi (Confrontation) See Indonesia Korea-US Free Trade Agreement (KORUSFTA), 196 Korean War (economic advantages for Southeast Asia ), 16, 165 Kuantan Declaration, 14 Kunming incident, 158–159 Ladakh, 236

Index Laos: dependence on China, 158; joining ASEAN, 26 Latin America: US intervention, 189 Law Association for Asia and the Pacific (LAWASIA), 54 Lee Kuan Yew, 214 Lee Teng-hui, 127 Legitimacy (concept), 266 Liberal Democratic Party, 215, 221, 227 Liberal institutionalism, 254–256, 275 Line of Actual Control (LAC), 236 Louisa Reef, 143

MacArthur, Douglas, 248 Mahathir, Mohamed, 33, 86, 214 Malaysia: response to Asian economic crisis, 33–34. MALABAR exercises, 234 MALPHILINDO, 9 Mandala (concept), 8, 137 Manila Framework Agreement (MFA), 38, 87 Mao Tse-tung, 126 McMahon, Henry, 235 McMahon Line, 236–237 Mehta, Suresh, 241 Meiji Restoration, 127,164, 209 Mekong-Ganga Cooperation (MGC), 232 Menon, Shiv Shankar, 233 Middle East, 226: US intervention, 189–190, 193–194, 247 MILAN exercises, 234, 241 Ministry of Economy, Trade and Industry (METI) (Japan), 103 Mischief Reef, 138 Modi, Narendra, 245–246 Mori, Yoshiro, 243 Mufukat, 18, 19 Murayama, Tomiichi, 214 Musjawarah, 18, 19 Mutual Security Treaty, 224–226 Myanmar, 239; constructive engagement, 27, 230; joining ASEAN, 26

Nakasone, Yasuhiro, 211 Nakayama, Taro, 22, 212 Natalegawa, Marty, 70 National Defense Program Outline (NPDO), 218 National Development and Reform Commission, 133 National Security Strategy, 201–202 Natuna Islands, 143 Nehru, Jawaharlal, 228–229 Neoliberalism (concept), 34, 183, 272; “death” of ideological consensus, 113, 182; effect on US policies, 184


Network of relationships, 114, 274 New Asian Security Concept, 155, 197, 262 New Development Bank, 120, 150 New Security Concept (NSC), 119 New Zealand: joining EAS, 103 Nine-dash line map (eleven-dash line), 137– 139; US analysis of, 138, 145–147, 162 Nixon (Guam) Doctrine, 11,165, 190 Nixon, Richard, 184 Nixon shock, 165–166 Noda, Yoshiko Nonintervention (norm), 83 Non-tariff barriers (NTBs), 61 Nontraditional security (ARF), 107 North American Free Trade Area (NAFTA), 25 North Atlantic Treaty Organization (NATO), 128, 247 North East Frontier Agency, 236 North Korea, 124, 196–197, 219–220, 227, 243, 263–264; strategic effect of nuclear weapons, 264 Nuclear Nonproliferation Treaty (NPT), 245 Nye Initiative. See East Asian Security Review

Obama administration, 174, 265 Obama, Barack, 150, 174–175, 179–181; impact on racial politics, 184; thinking on foreign policy, 181, 192–193 ODA charter, 211 Official development assistance (ODA) (Japan), 211, 215, 269 Offshore balancing, 191 Okinawa, 217–218 Omni-enmeshment, 260 One Belt/One Road (OBOR) Initiative, 150, 152, 155, 157, 263 Ordoliberalism, 183

Pacific Command (PACOM), 245 Pakistan, 229–230, 243, 245; relationship with China, 238–240 Palawan Island, 140 Panscheel Agreement, 236 Paracel Islands, 135–136 Paradox of ASEAN, 272 Paris International Conference on Cambodia (PICC), 15 Pattama Noppadon, 68 People’s Alliance for Democracy (PAD), 67 People Power Party (PPP), 67 People’s Liberation Army (PLA), 123 People’s Liberation Army Navy (PLAN), 140 Permanent Court of Arbitration, 148, 158 Perry, Matthew, 164

306 Index Pheu Thai Party, 69 Philippines: instability, 258 Philippines Treaty Limits, 141 Pivot. See Rebalance Plaza Accord, 212 Political decay (US), 183, 202 Post-Cold War, 191 Power vacuum, 271 Pratas Island, 137 Preah Vihear, 67–72, 81 Preventive diplomacy (ARF), 106–107 Pruitt, Scott, 201 Putin, Vladmir, 246–247 Quiet diplomacy, 19

Rao, P. V. Narasimha, 229–230 Rare earth exports, 223 Realists, 253–255, 275 Rebalance (US), 169, 174–181, 265 Regional Comprehensive Economic Partnership (RCEP), 4, 85, 100–102, 179, 262 Regional haze (1997), 2, 39–41; regional haze 2014, 72 Regional identity,75–77. Regional resilience, 10, 79 Regional security partnership, 67 Renewable energy, 133 Republican Party, 184, 186, 199–200, 202– 203; dog-whistle politics, 184, 186; pro-free trade, 198 Rice, Condoleezza, 171 Rifleman Bank, 143 Rohingya, 28, 56–57, 81, 258 Russia, 241; relations with China, 246–247; and Southeast Asia, 6, 208, 246 Sabah, 46,71 Samak Sundaravej, 68 Sanders, Bernie, 186 San Francisco System, 166–167 Sansha (Hainan), 1139 Scarborough Reef (Shoal), 138, 150 Second Declaration of ASEAN Concord, 50 Security community, 66–67, 80 Security regime, 66 Senkaku Islands, 222–224 September 11, 2001, terrorist attacks, 169, 181, 219, 231, 264 Shanghai Cooperation Organization (SCO), 239, 246–247 Shangri-La Dialogue, 120 Shidehara, Kujiro, 248 Sikkim, 237

Silk Road Economic Belt and Twenty-First Century Maritime Silk Road. See One Belt/One Road (OBOR), 150 SIMBEX exercises, 243 Simla Agreement, 236 Simla Conference, 235 Sina, Yashwant, 230 Singapore: relations with India, 230, 242–243; relations with US, 167, 170 Single market and production base (ASEAN Economic Community), 57 Six Party Talks, 124 Social network analysis, 256–257 Soft power (US), 200 South Asian Association for Regional Cooperation (SAARC), 232, 239 South China Sea, 5, 224, 262; artificial islands, 140; ASEAN statement on, 158– 159; Brunei’s claims, 143; resources in, 135–136; China’s claims, 136–140; India and, 242–243; Malaysia’s claims, 142– 143; the Philippines’ claims, 140–141; US reaction to, 198; Vietnam’s claims, 141– 142 Southeast Asia Treaty Organization (SEATO), 8, 166 Southern strategy, 184 Southern Tibet. See Arunachal Pradesh South Korea, 102, 196, 200; and Asian economic crisis, 31–32, 35; part of APT, 86–87; reaction to global economic crisis and IMF, 91; relations with India, 43; role in ARF, 109–110 Sovereignty (importance), 79–81; challenge to, 275; concept introduced, 137 Spanish-American War, 7, 164 Spratly Islands, 135, 140 Sri Lanka, 239, 245 Statebuilding, 257–258 Straits of Malacca, 135, 233, 242–243 Strategic contraction (US), 155, 197 Subic Bay, 242 Sukarno, 9, 32–33 Sukuk (Islamic bonds), 98 Suzuki, Zenko, 211 Syria, 192, 247 Taiwan, 124, 127, 196 Taiwan Relations Act, 204 Taiwan Straits crisis, 127–128 Takeshita Doctrine, 211 Takeshita, Noboru, 211 Tax cuts bill, 198–199; effects on Asia, 198– 199 Tea Party, 184

Index Thailand: divisions within, 258; frontline state, 13–15; Preah Vihear conflict, 67–72; response to Asian economic crisis, 30–31 Thaksin Shinawatra, 67 Tiananmen Square, 119, 126; Asian reaction to, 119 Tibet, 235, 249 Tokyo Declaration for the Dynamic and Enduring Japan-ASEAN Partnership in the New Millennium, 213 Trade and Investment Framework (TIFA), 172 Transactional approach, 197, 266 Trans-Pacific Partnership (TPP) Agreement, 101, 178–180, 196 Trans-Pacific Strategic Economic Partnership Agreement (TPSEPA), 178 Treaty of Peace and Friendship, 220 Treaty of Amity and Cooperation (TAC), 1, 12–13, 23, 65, 103, 121, 175, 232 Trump administration, 161, 198; effects, 195– 202 Trump, Donald, 5, 161, 180, 186–187, 195– 202, 205, 220, 266–267 Trump presidency, 155, 157, 220; long-term effects, 199–200, 202, 246; effects on US democracy, 267–268 Ukraine, 247 United Nations Commission on the Limits of the Continental Shelf (CLCS), 134, 137 United Nations Convention on the Law of the Sea (UNCLOS), 134, 141, 142, 144–150, 157, 188, 222; definition of “islands,” 145 United Nations Educational, Scientific and Cultural Organization (UNESCO), 67 United Nations Security Council (UNSC), 15,70, 144, 188, 239, 240, 242, 269 UNTAET (UN Transitional Authority in East Timor) 42 United Nations World Conference on Human Rights, 53 United States: attitude toward multilateralism, 164, 166–169, 172, 176–178, 194–195, 264–266; damage to global leadership, 187, 197; decline, 181–182, 202, 204–205, 265, 274; distracted by the Middle East, 171, 174, 180, 196; domestic political and social


dysfunction, 182–187, 200, 204, 267–268, 273; global hegemony, 187–188, 191, 195, 218; history in Asia, 164–168; income inequality, 183–184, 205; limits of military power, 182, 264–265; military buildup, 203; political corruption, 185; pressure on Asia for economic reform, 167; racial politics and social effects, 184–186, 205; relations with Japan, 164–165; reliability as an ally, 219–220, 268; security commitments, 192–193; soft power 169, 171; and Southeast Asia, 5; superpower identity, 188, 193; US economic model, 167–168; “war on terror,” 128, 168, 170, 196, 265 United States State Department, 201 Uttarakhand, 237

Vajpayee, Atal Bihari, 231 Vienna Declaration and Programme of Action, 53 Vientiane Action Programme (VAP), 50, 64 Vietnam: invasion and occupation of Cambodia/Kampuchea, 13–16; joining ASEAN, 26; relations with India, 242 Vietnam War, 8, 165; economic benefits to Southeast Asia, 16; lessons of, 173, 189– 190 Vladivostok, 246 Wang Yi, 158 World Bank, 151–154 World Trade Organization (WTO), 64, 128 Xi Jinping, 149 Xinjiang province, 238

Yasukuni Shrine, 221–222, 227 Yeo, George, 70, 71 Yingluck Shinawatara, 69 Yoshida Doctrine, 209–210 Yoshida, Shigeru, 209

Zero-sum game, 202, 267 Zhou Enlai, 119 Zhu Rongi, 121, 128 Zone of Peace, Freedom and Neutrality (ZOPFAN), 11–12

About the Book

Refuting criticisms that call into question the effectiveness, and even the purpose, of ASEAN, Shaun Narine traces the organization’s political and economic development and explores its impact within Southeast Asia and beyond. Narine considers ASEAN’s role both regionally and with regard to the external powers—China, the United States, Japan, Russia, and, increasingly, India—whose interests so strongly influence the regional environment. His comprehensive, multilayered analysis critically addresses the question of just how ASEAN is evolving to fit the demands of a new era. Shaun Narine is associate professor of political science at St. Thomas University in New Brunswick, Canada. His previous publications include Explaining ASEAN: Regionalism in Southeast Asia.