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Friday, Oct. 23, 2009

Influential Asian groupings


SINGAPORE — Can Asia leverage its growing weight in the global economy into a more influential leadership role in the world? This will be tested soon.

Prospects are more promising than before. Many of the intra-Asian tensions that bedeviled community-building efforts in recent years are contained, if not resolved. But the road ahead is bound to be bumpy and there are still minefields to be defused. Most involve territorial disputes.

While China is a stage manager in the geopolitical drama that is about to unfold, Japan and South Korea have been cast as leading actors. Both have new leaders who are looking beyond Northeast Asia and their longtime alliances with the United States to the rest of Asia.

Together, the Northeast Asian trio accounts for about 70 percent of Asia's GDP and 16 percent of the world's total output. The economies of China, Japan and South Korea are increasingly bound together. So is their mutual prosperity. They know that any conflict could be profoundly destabilizing.

Southeast Asia learned this lesson and acted on it by forming ASEAN, the Association of Southeast Asian Nations, in 1967. It is now 10 members strong, and China, Japan and South Korea are trying to catch up.

If they do so, there are two possibilities. Northeast Asia may overshadow ASEAN and diminish its role in regional diplomacy. Or it may complement ASEAN and contribute to the growing influence of Asia in world affairs.

China is Japan's top trading partner. It was the second-biggest market for Japanese exports in 2008, after the U.S. South Korea was Japan's third-biggest export market. Growing cross-investment is cementing trilateral trade links.

Economic interdependence is pushing the three Northeast Asian countries together in other ways. They first started meeting on the sidelines of ASEAN 10 years ago. Since last year, these meetings have been elevated to stand-alone summits. A substantial work program has been laid out, ranging from closer economic integration to technical cooperation on aviation security.

On Oct. 10 in Beijing, leaders of China, Japan and South Korea agreed to hold their next summit in Korea in 2010. They aim to conclude by then a trilateral investment promotion agreement as a prelude to a free trade deal. It will not be easy, given the different rules and barriers in each country. China and Japan backed a South Korean proposal for a "cyber" secretariat to enhance coordination and facilitate the work program. This would start by linking key officials in the three capitals. The next step would be a permanent secretariat, similar to the ASEAN secretariat in the Indonesian capital of Jakarta.

In addition to the next trilateral summit, South Korea will also chair in 2010 the summit of the Group of 20 of leading developed and emerging economies, which has become the pre-eminent forum for global economic coordination, eclipsing the G7 group of established industrial powers.

South Korea's role gives Asia an opportunity to do more to shape global economic debate and reform. Whether it does so will depend on coordination among the six G20 members on the Asian side of the Pacific — Australia, China, India, Indonesia, Japan and South Korea. Other regional states will also need to be closely consulted.

An early test of East Asian cohesion will come next month when finance ministers from 13 countries are due to finalize plans for a $120 billion fund, drawn from members' currency reserves (collectively by far the world's largest). The money can be tapped in a crisis. The so-called Chiang Mai Initiative is a project of ASEAN Plus Three, or APT — ASEAN plus China, Japan and South Korea. It is designed to improve the region's financial resilience and deter speculative attacks on national currencies.

However, the sum set aside in the fund is far less than might be needed, and contentious issues must still be settled. Among them are conditions to be attached to loans, distribution of voting power, triggers for release of emergency funding, and the location of an independent surveillance unit to analyze regional economies.

Meanwhile, Thailand will stage the delayed APT summit and the East Asia Summit (EAS) this Saturday and Sunday. These two bodies may serve as foundations for rival regional organizations being promoted by Australia, China and Japan. Each proposed group has significantly different membership and aims. EAS comprises the 13 East Asian countries in APT plus Australia, India and New Zealand to help balance China. The East Asia-focused APT is championed by Beijing.

Japan views EAS, with its broader membership, as the basis for an East Asia community. Australia wants an even more inclusive Asia-Pacific community to evolve, with both a security and economic mandate, and the U.S. engaged.

This is a debate about the geopolitical shape of the region in the 21st century and the relative weight within it of a rising China and the U.S., currently the leading global power but one burdened with major economic and foreign policy challenges. It is also a debate about the future balance of power within Asia, the roles that activist countries in the area (Australia, China, India, Indonesia, Japan and South Korea) should play, and the place of other regional states. The outcome of this contest of ideas and interests is not yet clear.

The U.S. is in the 21-member Asia-Pacific Economic Cooperation (APEC) forum whose leaders will hold their annual summit in Singapore on Nov. 14 and 15. Japan will chair APEC in 2010 and the U.S. will do so in 2011.

Optimists see the array of different political, economic and security bodies as variable geometry reflecting the interests of a diverse region. Pessimists say that with so many different and sometimes overlapping regional and subregional groups, each with its own acronym, Asia is adrift in sea of alphabet soup.

Forging unity and speaking with one voice may never be a feasible way to maximize Asia's influence on the international stage. Perhaps the best approach is a pragmatic one: devising a flexible architecture of cooperation that represents and promotes Asian interests while plugging into other centers of economic and strategic power.

Michael Richardson is a visiting senior research fellow at the Institute of South East Asian Studies in Singapore.


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