Making Asian summits count Simon Tay and Cheryl Tan  ;  Associate professor Simon Tay and Cheryl Tan are, respectively, chairman and assistant director of the Singapore Institute of International Affairs. Both are currently in Nay Pyi Taw to observe the ASEAN Summit meetings

JAKARTA POST, 11 November 2014

                                                

                                                                                                                       

Asia enters its annual season of political summits in the coming weeks and US President Barack Obama will be a key player. Despite his Democrat party losing America’s domestic mid-term elections, the President will continue to be a key presence, first at the Asia-Pacific Economic Cooperation (APEC) Summit and then at the East Asia Summit (EAS), hosted by Myanmar. Simply turning up shows that America is, indeed, making the effort to continue its rebalance to the region. But after the pomp and ceremony dies down, will Asia be satisfied with what America has to offer the region? And will Obama judge his time here as well spent? There has always been some debate about how to define the region — whether Asia should be paired with the US and others on the far side of the Pacific, or be a region unto itself. APEC and the EAS are two key meetings in the jumbled and partly overlapping arrangements that result. APEC includes 21 members from both sides of the Pacific, and sometimes seems too sprawling. In contrast, the EAS membership remains more limited. Hosted by ASEAN, the summit has gone beyond China, Japan and South Korea to include the US, Australia, New Zealand, India and Russia. But a moratorium has been called on including more countries and the EAS currently seems to meet a kind of “Goldilocks” test — neither too small to matter nor so large that it is unwieldy. Hosting the Summit is a major part of ASEAN’s claim to ‘centrality’ in a region of rising powers. The EAS is, however, neither without critics nor potential rivals. There is rising contention between the major powers, with many points of contention between the US and China, and between China and Japan. Different major powers are taking different initiatives that are competitive. The Obama administration’s centerpiece for trade and economic ties, the Trans-Pacific Partnership (TPP), includes its ally Japan but just four out of 10 ASEAN member states — Brunei, Malaysia, Singapore and Vietnam. China, moreover, is notably excluded. On its part, China is upping engagement with the region in a number of ways. The most recent and juiciest carrot dangled by President Xi Jinping is the newly launched Asian Infrastructure Investment Bank (AIIB). ASEAN needs not only to be economically dynamic but also politically cohesive and strategically coherent. Supported by some 21 countries to date, the AIIB has a US$100 billion kitty to fund the region’s infrastructure needs. The US has pointedly pushed against this Chinese initiative and inveighed its allies — Australia, Japan, South Korea — to also stay out. Unless US-China or Sino-Japanese ties improve, there are risks for the region’s stability and progress. Expectations arise therefore for the EAS Summit to reduce tensions and increase trust. Otherwise, the old adage about buffalos fighting and grass dying applies. The EAS is helmed by ASEAN, comprising just 10 smaller and middle sized countries. But there are limits to what can be done. Watch therefore US-China ties when Obama meets with Xi at the sidelines of APEC for an informal summit. Since their first meeting in California in June 2013, the Chinese have sought a major powers dialogue with the US. Held privately and informally, the meeting is aimed at building personal rapport between the two leaders, and improving bilateral ties amidst their global interdependence. The relationship — colored by contentious issues ranging from cyber security to China’s territorial claims in the South China Sea — is far from cuddly. But the leaders are likely to seek a reassuring baseline and some positive news to report. Cooperation on energy and climate change could be one — given the US embracing shale gas as a source of lower-carbon energy, and China’s own efforts to redress its emissions. Sino-Japanese relations have been even worse, with the two leaders declining to meet since coming into office. This goes beyond the Senkaku/Diaoyu islands dispute and interacts with fervently held nationalistic views on both sides. Yet Beijing and Tokyo are beginning to recognize their economic interdependence, and the need to return to a working relationship that is somewhat isolated from the quite irresolvable political and historical differences. The Sino-Japanese and US-China relations will be determined by these major powers bilaterally, and not by any larger Summit — whether APEC, EAS or any other acronym. But ASEAN can assist with its EAS Summit, in which all three participate. This is especially if the aims for the Summit are reinforced and its process given more focus. With its 10th anniversary coming up in 2015 and major power competition in the region, ASEAN senior officials are stocktaking the Summit. This is timely as some question whether the EAS is truly effective. The Singapore Institute of International Affairs’ recent policy brief outlines key issues to keep the ASEAN-led Summit relevant. We believe the EAS has the potential to be the apex multilateral summit of the region to bring leaders of major and contesting powers together in the same room to discuss political, security and economic issues affecting the region. The EAS should continue to be led by leaders and informal, rather than having a larger, bureaucratic structure. But more focus and better preparation are needed. For this, ASEAN and other EAS stakeholders should adopt ‘Sherpa’ system, akin to what is used in the G7 meetings. There is no need to take over or control other regional meetings, but the EAS as a Summit among leaders should receive inputs from other regional forums, such as APEC and the ASEAN Regional Forum. Further, for ASEAN to serve as effective hosts for much larger powers, the group needs not only to be economically dynamic but also politically cohesive and strategically coherent. Positions taken by ASEAN among the major powers must, moreover, not be biased towards one side or another. Members can participate in initiatives that include some but not all ASEAN members — like the US-led TPP and China’s AIIB mentioned above. But they should be watchful if these strain intra-ASEAN unity, and work to speak increasingly with a common voice on key issues, with balance and based on norms of international law and regional practices. Asia is witnessing major shifts in power and much will depend on what the major powers do, both separately and in relation to each other. Without economic clout or military strength, ASEAN should not be complacent about the EAS and its claims to centrality. The group must work together and with other stakeholders to earn the right to shape the regional agenda, or otherwise will face the prospect of being dictated to. ●

The emergence of strong leaders in a fragile Asia Simon Tay  ;   Chairman of the Singapore Institute of International Affairs (SIIA), The author of Asia Alone (Wiley 2010), which warned of power imbalances in the region in the wake of the global financial crisis

JAKARTA POST, 22 Agustus 2014

                                                

                                                                                                                                   

Not long ago, Asians suffered weak governments. Japan stumbled through a series of short-lived and unpopular leaders and, in China, the last years under President Hu Jintao saw necessary reforms postponed. In India, after initially high hopes, former prime minister Manmohan Singh ended his term with more critics than fans. Much the same is being experienced by Indonesian President Susilo Bambang Yudhoyono, who will soon leave office. There were both political and economic costs as faltering leadership impacted investor confidence. Currency values and growth rates in both India and Indonesia tumbled last year. The wish was for stronger leaders who could deliver solutions. Now this wish seems answered after one plus year of President Xi Jinping and prime minister M Shinzo Abe in China and Japan, respectively, and big wins for Narendra Modi in India and president-elect Joko “Jokowi” Widodo in Indonesia. A lot of good can result. But there are also dangers. Wish for strong leaders? A witticism may return to haunt the region: Be careful what you wish for, you may just get it. First, however, the good news: The new leaders are keen on reform. China’s President Xi is undertaking difficult but necessary economic reform and moving against corruption.  For Japan, the unorthodox policies of Abenomics stimulated growth that was almost unimaginable. The exact policies of the new leaders in India and Indonesia remain to be seen. But expectations that they will initiate reform are high. All four leaders go beyond economic policy. Each offers a transformational vision for his country and its place in the world. Each enjoys strong popular ratings that allow him ample scope to act boldly. Yet such strong leadership can have costs. Take the growing tension between China and Japan. While the dispute over the islands resurfaced before Abe took over, the situation has worsened. So far, neither Abe nor Xi appears anxious to patch things up. Indeed, each leader may gain nationalistic support back home by not giving way. Abe moreover has taken the excuse to revisit the country’s pacifist constitution and question whether Japan can extend its security role in the region — an issue that is controversial even among the Japanese people. On its part, China has broadened the dispute by introducing an Air Defense Identification Zone that overlaps with zones claimed by Japan and South Korea. With Southeast Asian neighbors too, Xi’s consolidation of power in China has not lessened frictions. On the contrary, there has been more assertive behavior, such as China’s unilateral step to begin drilling for oil in an area of the South China Sea disputed with Vietnam. Strong leaders can destabilize a fragile region. The USA, for so long the inescapable and sometimes only leader in the region, has sought to adjust to the situation. President Obama has reaffirmed alliance commitments and America’s rebalancing to the region, despite challenges elsewhere. But although an American presence is needed, there are dangers if the Obama administration over-emphasizes the role of the military in the region. Some in Beijing already believe that the Americans might welcome Abe’s ambition for Japan to serve as a counterweight. Tokyo’s efforts to support the Philippines and Vietnam are seen in this light and heighten the tensions. The already existing sense of US-China competition is in danger of being taken to another level by a direct and visceral Sino-Japanese rivalry. This complicates things for the new administrations in India and Indonesia, especially on foreign and security policies. With New Delhi, the tradition is to remain non aligned. But Modi has already received a visit by US State Secretary John Kerry and will next visit Tokyo. China and India do engage bilaterally and together with Brazil, Russia and South Africa in BRICS. But there are some in New Delhi who give more emphasis to competition with China, whether at sea or over disputed territories in their shared, high mountain borders. The new Jokowi administration in Indonesia will take office only in October and will not have much time before being swept up in regional meetings. These include the Asia-Pacific Economic Cooperation (APEC) summit to be hosted by China, and the East Asian Summit (EAS), which is convened by ASEAN (the Association of Southeast Asian Nations). Current signs promise continuity with the internationalist outlook of the out-going administration. There are however questions of nuance arising from the incoming President’s lack of foreign policy experience. Some also question how much Jakarta will assert its own and separate weight or else continue to be enmeshed within the regional group of ASEAN. It would be good if Indonesia can continue to work within ASEAN, the group of small to medium sized countries, to maintain its central role in the region’s political and trade arrangements. The EAS, where all the major power participate, may especially need strengthening. It would be ideal if India under Modi can deepen ties with ASEAN as a whole and also perhaps Indonesia on a bilateral basis. The ballast of these middle countries is needed. Otherwise, as and when the giants assert themselves, ASEAN will struggle to remain united and relevant. Asia used to suffer weak leadership but stability was maintained for the most. Stronger Asian leaders are now in place and can deliver domestic reform and economic growth. But if these same leaders assert their strength in security and foreign relations against each other or vis-á-vis the US, regional stability can potentially be unbalanced and even upended. ●

Heading off the next Asian crisis

Heading off the next Asian crisis Simon Tay ;   Chairman of the Singapore Institute of International Affairs, Author of “Asia Alone: The Dangerous Post Crisis Divide from America” JAKARTA POST, 18 Agustus 2013

After the global financial crisis, Asia grew at more than 6 percent each year, outperforming a troubled world. Not just China moreover, but also India, ASEAN and others. While the USA and Europe floundered, the gravity-defying feat substantiated the idea of Asia’s rise to close the gap with developed economies.

Now gravity seems to be catching up with Asians.

Growth in China has slowed as the new leadership rejigs policies to discipline credit and spending — much needed reform to cut wasteful projects and secure the financial system. The government targets 7.5 percent growth. Still good, but a far cry from the days of double-digit rates.

Indian expectations are even lower after visible missteps combined with a current account deficit around 5 percent of GDP. Spooked investors and capital outflows have led to the rupee tanking.

Similar symptoms show in Indonesia with the current account deficit shooting past 3.5 percent of GDP in the second quarter. In past weeks, the rupiah has fallen below the psychological threshold of 10,000 to the US dollar even as officials offer reassurance.

Asian capitals promise action and deny crisis. Perhaps. Triggers for the slow down do differ from one country to another. Emerging signs however show macro conditions are changing, and bringing Asian economies under new stresses.

The key factor is American policy. The Federal Reserve is tightening its loose credit spigot. This is the right response for America with the US economy looking up. But implications elsewhere bear watching.

Some start to feel the bottom and anticipate better days ahead in the USA, so capital is returning the world’s largest economy (and to a lesser degree, Europe). Exits from emerging markets are felt. As the big waves of easy money recede, the rocks of local problems loom more prominently.

Even kings cannot command the tide, and Asians cannot artificially stem this global financial outflow. Efforts must aim instead to adjust to the coming deceleration and ensure no crisis results.

The key responses will be domestic. At the national level, current account deficits must be trimmed or else currencies may shift to find new levels. At the sectoral level, inflated assets especially in property must be reined in. 

Over the past 15 years, since the Asian financial crisis, most of the region cleaned up their banking sectors. The excesses of Western banks that triggered the 2008 crisis were largely avoided. But after the influx of capital in these post-crisis years, reviews would be prudent.

Reviewing regional cooperation too is useful. Legacies from the Asian crisis include the Chiang Mai Initiative — now a multi-billion multilateral currency swop to address balance of payment and short-term liquidity difficulties — and the Asian Macroeconomic Research Office (AMRO) to monitor the state of regional economies.

These are not automated response mechanisms however. Even if an emerging problem is signaled, governments in the region would need to take decisions. 

That is a potential gap — understanding and concerted action amongst Asian governments may not to be guaranteed.

Take China and Japan, the region’s two largest economies. Each is currently preoccupied with quite unusual fiscal policies. Beijing is tightening credit to discipline bad practices even as Tokyo pursues Abenomics, starting with a Yen quantitative easing and increased fiscal stimulus. Both must also pursue domestic reform.

The Yen and Yuan can affect other regional currencies, as well the propensities of Japanese and Chinese companies to invest and trade. There is, as such, good reason for dialogue. 

Yet Sino-Japanese political and security tensions run high over competing claims to islands in the East Asian Sea.

Japanese leader Shinzo Abe recently called for a summit to be convened between leaders but Beijing has yet to reciprocate. Tokyo’s proposal is to meet without pre-conditions, whereas sensitivities over sovereign claims may mean that the Chinese would expect some concession.

Rather than try for a summit about fraught and quite irresolvable issues of politics and security, a dialogue about financial and economic concerns would be more acceptable — indeed, more timely. This moreover could begin with finance ministers, rather than leaders. Such a Sino-Japanese bilateral could be embedded in a larger framework convened by ASEAN.

The region must brace itself for changing and turbulent global conditions. A slowdown can be managed, but if there is an abrupt stall in one country, a wider crisis could trigger. Dialogue is needed to share Asian perspectives on the coming challenges and prepare intra-Asian cooperation for rougher times ahead. ● 

China and ASEAN : Cooperation or conflict?

China and ASEAN : Cooperation or conflict? Simon Tay ;  Chairman of the Singapore Institute of International Affairs and was invited to speak at the recent High Level ASEAN-China Forum held by the Thai government JAKARTA POST, 14 Agustus 2013

Rising tensions in the South China Sea have changed recent ASEAN-China relations from cooperation to potential conflict. Yet there is now agreement to begin consultations on a Code of Conduct to manage the issue. Since his appointment, Chinese Foreign Minister Wang Yi has also visibly upgraded ASEAN engagement.

Marking the 10th anniversary of their strategic partnership, a recent High Level Forum proceeded positively with high officials and think tank experts from both sides. Is there substance beneath the ceremonies? Are relations turning more positive?

This won’t be the first time to patch over difficulties. The Chinese Communist Party’s post WWII support for communist movements in the region meant that diplomatic relations were not normalized until 1991. By 1995, the Mischief reef incident triggered differences — then as now — over the South China Sea.

China responded however not with aggression but a “charm offensive”. The bold suggestion of a free trade agreement not only created Asia’s largest market. Beijing’s offer to give an “early harvest” of preferences showed empathy to the anxieties of smaller neighbors.

China emerged as the ASEAN’s largest trade partner and closest collaborator. A longer arc across centuries shows that civilizational connections across the sea and land have been largely positive and peaceful.

Yet history can only do so much for present problems. While the ASEAN-China forum hosted by Thailand was largely positive, other voices and events intrude.

The Philippines and Vietnam are pushing for full negotiations on the Code of Conduct — and not a more cautious “consultation”. Chinese Foreign Minister Wang Yi responded to caution against “rushing”. There may be a point in managing expectations — the preceding Declaration of Conduct, after all, took the better part of a decade.

But there are more pressures today. Manila recently bolstered its navy by accepting a Hamilton-class cutter from the USA — and Washington DC has said it will push China to speed up negotiations. Japan — with differences with China over islands further north — unveiled a naval vessel that can carry and deploy helicopters, its largest since WWII.

For China itself, military modernization and spending continues apace. Nationalistic netizens will complain if their leaders seem too soft. If conflict is to be headed off, consultations on the South China Sea must move ahead and show sufficient progress. In parallel, cooperation on navigation safety and the marine environment should progress. Most importantly, actual practices by military and other agencies in everyday exchange must emphasize prudence.

Otherwise, the best days for neighborly cooperation are past and all should prepare for rising competition rises and possible conflict. This can be further complicated by Japan and the USA, two other major partners who have given ASEAN more attention of late.

There are issues beyond the South China Sea that both can work on together. There is need, for instance, for infrastructure and investment to connect between the two.

Yet even positive steps will not be easy. The China of the 1990s has grown into a giant and the asymmetry of size and power makes many in ASEAN nervous.

To ease the way China must demonstrate a degree of magnanimity to assist ASEAN — especially the developing countries on its borders — without expecting to dominate them.

For ASEAN, there must be wisdom to cooperate with China, while adroitly working with other major powers.

This will be critical to two upcoming ASEAN-led efforts — the East Asia Summit and the Regional Comprehensive Economic Partnership (RCEP). The Summit, to be hosted by Brunei, aims for a candid dialogue that helps build strategic trust in the Asia-Pacific. But it can only succeed if all powers are equally welcome and participative.

The RCEP similarly hubs around ASEAN and will bring in all of Asia — including India and Australia-New Zealand. It can only boost economic integration across the region if major economies show commitment.

In the wake of the region’s crisis of 1997, Asian cooperation grew, and the ASEAN-China were key actors. The two must again see their cooperation as essential, rather than optional. Otherwise, Asia’s regionalism will falter.

The alternative is that security will continue to depend on the American alliance system, while the US-led Trans-Pacific Partnership (TPP) for economic and trade integration will take center stage. This can negatively impact China and many ASEAN members that currently stand outside the TPP.

China may have differences with ASEAN and vice-versa. But if Asians are to come together as a region, dealing with current problems and upgrading ASEAN-China cooperation will be essential. ● 

A new governance era and Asia anxieties

A new governance era and Asia anxieties

Simon Tay, CHAIRMAN OF THE SINGAPORE INSTITUTE OF INTERNATIONAL AFFAIRS;

AUTHOR OF ASIA ALONE: THE DANGEROUS POST CRISIS DIVIDE FROM AMERICA

Sumber : JAKARTA POST, 27 Desember 2011

History may judge this was the year when the 21st century really began. Back in 2000, continuity seemed assured, with the US consolidating power and primacy. One decade on, changes potentially upend the global balance.

The financial crisis that began in the West in late 2008 is entering a second and more dangerous phase. The eurozone shows up not only sovereign financial problems but also the difficulties in exercising collective leadership. The US is not in acute crisis and its economy showed better demand in the last quarter of 2011.

Everyone agrees something needs to be done. Yet Washington, D.C. is gridlocked — witness failure to agree ways to cut the budget deficit. From very different ends of the American spectrum, the Tea Party revolution and the Occupy Wall Street movement evidence a welling restiveness.

Across the Middle East, the Arab Spring has turned into a longer season of uncertainty. Some celebrate Libyan leader Muammar Qaddafi’s end and call for resolution in Syria.

But beyond old autocracies, the emerging concern is who will next govern, and how. With the landslide win for Islamist parties, Egypt’s December poll brings that question into sharp focus.

How has Asia coped? Growth continued for most for much of the year. Some commentators have predicted that this is the time when the region will soon catch up and then surpass the West. Reality is more complex.

Asia is not unaffected. Markets are in tumult, and economic growth rates across the region have been shaved. Prospects for 2012 are mixed, even for those like China and India with large domestic markets, let alone the smaller economies.

Politically, there is no Asian Spring. But governments across the region deal with new expectations from citizens. In erstwhile pariah state Myanmar, the newly installed government has freed political prisoners and will allow long detained Aung San Suu Kyi to contest elections. Thailand, Malaysia and Singapore too have seen changes that make for greater participation and more complex politics.

For established Asian democracies — Indonesia, the Philippines and India, — the challenge goes beyond electoral issues.

Demands in this past year have grown for governance that is less corrupt and more effective. Public protests and a number of high profile prosecutions result.

Outside of some copycat demonstrations, the Occupy Wall Street movement has not shown strength across Asian cities.

But the political imperative from Singapore to Bangkok and Beijing is to close the stark gap between
the Haves and Have Nots.

Asset bubbles in housing and inflation in basics of food and energy have been testing governments to make growth more inclusive.

With its economy still running ahead, China has loomed larger this year in the expectations of others. Yet Chinese leaders grapple with many of these same issues, and on a much larger scale. External conditions are becoming more difficult, and domestic issues too.

Measures put in place to keep up growth have distorted the market with too much easy credit. With a dip in growth, social unrest is growing. With its upcoming leadership transition, China’s rulers must do all they can to prevent an economic hard landing and shore up political legitimacy.

As the Chinese military builds up and a more assertive diplomacy is heard, however, acceptability is also an issue with near neighbors.

Global changes in 2011 have come quick and complex — a political, economic and social vortex. Asian states have not been immediately caught in that swirl. But they feel the pull more than many admit.

This shows up an ongoing problem in the region’s relationship to the global system. Despite economic growth, Asians are currently more influenced by global trends than being able to influence what happens. As the US and Europe weaken, gaps in global governance show.

Witness the G-20’s current lack of coordination, and the lack of success in the Doha trade talks. Even the acclaimed success in the year-end climate change meeting only starts off negotiations toward a later agreement and we should expect continuing differences.

The world at year-end is no better than it was at the start. Indeed, conditions — especially in the last quarter — have become increasingly difficult. Asians may make a New Year wish for the US and Europe to put their houses in order.

But looking ahead, Asians must consider what they can and resolve to secure peace and prosperity for themselves and the wider global system. ●