Interesting – though this article speculates that China is trying to put together an Asian alliance that includes Japan and over which it could play hegemon:
All Quiet on the Eastern Front?
By FRANCIS FUKUYAMA
March 1, 2005; Page A18
The United States in recent months has been preoccupied with the Middle East and with the near-term crisis posed by North Korea’s announcement that it has nuclear weapons. But there are other long-term developments taking place that will change the political landscape of Asia in ways that will ultimately weaken U.S. influence there. Policy makers in Washington seem scarcely to have noticed, much less arrived at a long-term strategy for dealing with these developments.
Since 1945, East Asia has never had the internal cohesion or organization of Europe, with the latter’s strong multilateral institutions like the European Union and NATO. But this is beginning to change. The Association of Southeast Asian Nations (Asean) joined with the three major Northeast Asian powers, China, Japan and South Korea, to form a group called Asean Plus Three in 1998. In addition, the Chiang Mai Initiative links the central banks of 13 East Asian countries and provides swap facilities in case of speculative attacks of the sort that occurred during the financial crisis of 1997-98. At the Asean summit meeting in Vientiane, Laos, last December, the organization decided to hold an East Asian Summit some time next year in Kuala Lumpur that would bring together the leaders of the Asean Plus Three group, but not those of the U.S., Australia, New Zealand, or India.
There is a great deal of irony in this development. In 1990, former Malaysian Prime Minister Mahathir bin Mohammed proposed the creation of an East Asian Economic Caucus, a multilateral grouping of East Asian powers that would deliberately exclude countries like the U.S. and Australia – a “caucus without the caucasians.” The U.S. and Australia were vehemently opposed to this. At American behest, the Japanese quietly sought to kill the idea, while the Australians worked hard to promote a more inclusive Asia-Pacific Economic Cooperation (APEC) forum as an alternative. What Asean Plus Three and the proposed East Asian Summit represent is a resurrection of the old Mahathir proposal, but this time with mighty China rather than tiny Malaysia driving the process forward. Japan, which earlier had acted as America’s cat’s paw in stopping the Mahathir plan, is now on board.
The roots of these developments lie in the Asian economic crisis, and in a series of highly effective Chinese diplomatic initiatives over the past several years. There has always been a huge gulf in perceptions about the causes and consequences of the Asian crisis between the U.S. and countries in East Asia. Americans tended to see the problem as one of crony capitalism, poor corporate governance, and flawed exchange rate management on the part of Thailand, Indonesia, Korea and other countries. The East Asians, by contrast, interpreted the behavior of the U.S. and U.S.-influenced international financial institutions like the IMF as narrowly self-interested, seeking to open up Asian financial markets to U.S. investment banks. To this day, South Koreans refer to the crisis of late 1997 as the “IMF crisis.”
In the aftermath of the crisis, Washington continued to bat down proposals from the region for new institutions to mitigate future financial shocks, like the Japanese proposal for an Asian IMF. Since the Clinton administration had little to offer the region in terms of new ideas or institutions, countries there took matters into their own hands and established the Chiang Mai Initiative and Asean Plus Three. Things have gotten no better under the Bush administration, which has made the war on terrorism the lens through which it saw regional cooperation.
The Chinese, in the meantime, were gearing up a series of multilateral initiatives of their own, including Asean Plus One, Asean Plus Three, a China-Asean Free Trade Area, a Northeast Asian Free Trade Area, and so on in seemingly endless profusion. The purpose of these proposals, it seems fairly clear in retrospect, was to allay fears of China’s growing economic power by offering selective trade concessions to various Chinese neighbors. The Chinese greased the path to the East Asian Summit last December by offering its Asean neighbors a free trade agreement that would open access to much of the Chinese market by 2010. Asean Plus Three appears to be a weak and innocuous organization. But the Chinese know what they are doing: Over the long run, they want to organize East Asia in a way that puts them in the center of regional politics. They can succeed where Mahathir failed because they are an economic powerhouse capable of doling out favors.
What should the long-term U.S. strategy be in response to these developments? One possibility is to create an alternative democratic Asia-Pacific economic partnership, built around a Northeast Asian free trade area that includes the U.S., Japan and any other countries that wanted to join. It is important that this organization evolve over time beyond trade into an economic partnership that promotes rule-of-law institutions. Like the European Union, it could demand democratic and good governance reform as a condition for membership, and serve as a powerful magnet promoting internal political change. It would offer a much deeper level of economic integration than Asean Plus Three or APEC. The U.S., Japan and Australia responded much more rapidly and generously in providing tsunami relief than Asean Plus Three, and we could seek to institutionalize this trend.
In the long run, this economic partnership could potentially serve as the basis for a security relationship as well, an alliance of Asian democracies that multilateralizes our existing relationships with Japan, Australia, South Korea and possibly India as well. But it is premature to move in this direction now. Such an organization will not solve our near-term problem with North Korea. Japan alone among Asian powers would be willing to support a U.S. effort to formally sanction Pyongyang, but South Korea would not. Under two left-leaning presidents, Seoul has moved in the opposite direction from Japan, toward a “sunshine” policy that seeks conciliation rather than confrontation with the North.
An Asian version of NATO would inevitably be seen as directed against China. Such an approach might become necessary at some point, if for example China seemed bent on provoking a showdown with Taiwan. But at present, it would polarize the region, and may prove a self-fulfilling prophecy: If we treat a rising China as an aggressive power that needs to be contained, we will undercut those very forces in China that seek engagement with the international order.
One reason why we have not been able to devise a coherent long-term strategy for East Asia is the compartmentalization of decision-making in Washington between economic and security specialists. Economists for the most part don’t like regional free-trade areas because they are trade-diverting, and felt that an Asian IMF would undercut the existing Bretton Woods institutions. In this they are quite right if economic efficiency is one’s sole policy criterion. But leaders in East Asia tend to see things in more geo-economic terms, where economic and strategic benefits are mixed. China and Japan have been competing to offer the Asean states free trade deals because they understand there will be important political payoffs apart from the economic logic. The U.S. needs to be able to play this game as well.
The exigencies of Iraq and the war on terrorism must not blind us to the fact that China’s rise will likely be the biggest geopolitical development of this generation. Dealing with rapidly rising powers has always been a great challenge and danger for the international system. We need to think seriously whether the political structures left over from the Cold War will be adequate to this task, and be creative in devising new ones.
Mr. Fukuyama is professor of international political economy at Johns Hopkins and director of the Human Biotechnology Governance Project. His latest book is “State-Building: Governance and World Order in the 21st Century” (Cornell, 2004).