Careful Balancing Act for Southeast Asia

On Monday, South Korean president Lee Myung-bak visited Burma and promised to extend loans and grants to the poverty stricken country.

The surprise visit came as Japan and South Korea have stepped up their diplomatic engagement in Southeast Asia over the last month, which, in turn, comes on the heels of closer engagement by the United States since 2009.

This stems not only from a desire to gain access to the region’s natural resources but more importantly, to bolster their soft power in the Mekong region, an area that is becoming increasingly important as concerns persist about Chinese foreign policy amid the rapid modernization of the People’s Liberation Army. However, while the Mekong countries are interested in the economic and political benefits from closer relations with the United States, they are mindful of the risk of antagonizing China. Read more “Careful Balancing Act for Southeast Asia”

Vietnam Key to Japan’s Southeast Asia Policy

During the Mekong-Japan Summit held in Tokyo last month, Japan announced additional development aid for and investments in the countries that make up the Mekong Delta region.

The summit was further evidence of Japan’s goal of developing stronger relations with Southeast Asian states as the Japanese economy is beset with tepid growth and due to the uncertainty and mistrust with the region’s biggest and fastest growing power, China.

However, the headlines last month overlooked one of the most important outcomes of these meetings thus far, the steady improvement of Japan-Vietnam relations to the level of strategic partnership. Read more “Vietnam Key to Japan’s Southeast Asia Policy”

Remembering the Fall of Saigon: The Saddest Day

Operation Frequent Wind, the helicopter evacuation of Saigon, South Vietnam, April 1975

Today, 37 years ago, Saigon, the capital city of South Vietnam, fell to North Vietnamese forces, making the end of the Vietnam War and the beginning of a reunification period of the Southeast Asian country into a communist state.

Despite American pledges of military assistance in case the North violated the terms of the 1973 Paris Peace Accords, the United States stood by as North Vietnamese tanks rolled into the streets of Saigon.

Among the most enduring images of the termination of the war are helicopters evacuating Americans and South Vietnamese to navy ships deployed in the South China Sea. 7,000 people were airlifted to safety in the final days of April 1975. Millions more remained to live under a communist despotism that has only in recent years begun to open up.

In the popular imagination, scenes of Operation Frequent Wind came to symbolize the uselessness of the Vietnam War. Certainly, having left behind nearly 60,000 lives in Vietnam, the fall of Saigon signaled American defeat in Indochina.

Except, as Miguel Nunes Silva wrote at the Atlantic Sentinel last year, “it was not a military defeat by any standard.”

Every single major conventional military operation launched by the North was crushed by American and South Vietnamese forces. Vietnam was not better off economically with Hanoi’s victory — quite the opposite. The war cannot even be said to have brought stability to the region since communist Vietnam would go on to fight wars with China and Cambodia.

Although it borders on a modern Dolchstoßlegende, it can reasonably be argued that with American support, South Vietnam could have remained free. The pullout of American forces and financial support plunged the South Vietnamese economy and leadership in turmoil. If the North assumed that the United States would have returned to Vietnam in the event of renewed aggression, it may not have launched the Spring Offensive which culminated in its 1975 victory.

Instead, the Congress in Washington explicitly ruled out further military action in June 1973, paving the way for the communists to crush a demoralized South.

Fast forward 37 years and a senior State Department official tells the National Journal, “The war on terror is over.” Obama bin Laden is dead, “people who once might have gone into Al Qaeda see an opportunity for a legitimate Islamism” in the sort of popular uprisings that swept the Muslim Brotherhood to power in Egypt. Yet nearly every day, Americans die in Afghanistan.

As in 1973, a majority of Americans is tired of the war. There is an attempt at “Afghanization” in the training of local security forces and negotiations with the enemy which could very well result in the emergence of an autonomous, Pashtun majority province in the south and eastern border region — only to have the Taliban storming the gates of Kabul as soon as Western military forces have left.

As was the case in South Vietnam, the Afghanistan that was liberated will again succumb to the barbarism of an ideology that is antithetical to individual liberty. The Taliban will resurge, emboldened by their victory over the decadent and “infidel” West. The region will be further destabilized.

India and Pakistan are already picking sides. New Delhi will cling to its alliance with the civilian government in Kabul as long as is possible, if only to keep the Pakistanis preoccupied. The military and intelligence services in Islamabad, by contrast, are revisiting their friendship with the Islamist insurgents. Iran’s sense of insecurity will increase if Sunni extremists return to power next door. Central Asian republics could be further weakened.

It is quite appropriate to ask why American troops are still operating in Afghanistan. But the argument that is made to justify a full military retreat in 2014 notwithstanding, the “war on terror” in Afghanistan ended years ago. The vast majority of suspected Al Qaeda members was eliminated in the months after the October invasion. Americans have since been nation building, that is, fighting a native insurgency while erecting institutions to foster stability in the country and a sense of nationhood among the Afghan people.

That may not be in America’s interests; it may not even be possible but suspending the effort after ten years begs the question — why did nearly 3,000 coalition forces have to die?

A full withdrawal in 2014, leaving behind no American or international army presence and signaling an unwillingness on the part of the United States to reengage militarily if the Taliban threaten to return to power, would repeat the mistake of 1973 and foreshadow an inevitable fall of Kabul which we will one day remember just as sadly as we remember the fall of Saigon today.

Vietnam, United States Announce Military Drills

Vietnam and the United States have announced that they will hold five days of “noncombatant” military exercises in the central part of the country near the city of Da Nang at the end of April 2012.

Press reports indicate that the drills will be focused on skills like navigation and maintenance.

The cooperation between the former enemies points to the new dynamic at play in the region with the smaller nations fronting the South China Sea increasingly falling into the arms of the United States due to their fear of a rising China.

The American-Vietnamese plans to conduct drills comes against the backdrop of a fresh dispute between China and the Philippines. The latest confrontation between the two nations was triggered when Chinese fishermen were discovered in waters claimed by both China and the Philippines. The Chinese deployed navy ships and planes to the area in support of what it said were its sovereign rights, forcing the present Philippine warship to vacate.

Relations between Vietnam and the United States have steadily improved over the last ten years as they share mutual concern over China’s rise and future plans in the region. Vietnam, like the other littoral states, has claims to portions of the South China Sea which is believed to hold vast reserves of oil and gas deposits.

As the Chinese navy vastly increased its capabilities in recent years, Vietnam has also embarked on expanding its naval posture. In 2009, it bought six Russian diesel submarines worth $2 billion, in addition to eight Sukhoi fighter jets, with plans to buy more in the future.

Although they share a communist ideology, bilateral relations between China and Vietnam have been historically difficult. The two fought a war in 1979 after China became concerned that Vietnam was developing closer relations with the Soviet Union. This was a time when Sino-Soviet ties were strained and there was a fear that Chinese interests in Indochina would be affected.

The war was inconclusive militarily but sent the message that China would not tolerate with outside meddling in its backyard.

Beijing has tended to bully its neighbors when it is powerful. In 2011, it warned Vietnam that it would not hesitate to use military force to enforce its claims in the South China Sea region.

Despite China’s threats, in April 2012, Vietnam partnered with Russia’s Gazprom company to develop two offshore gasfields in the ocean.

Vietnam faces a quandary of seeking help from the United States against China without allowing the country to open up to political reform. The government has succeeded, however, in keeping tight control over power even as it reformed the economy, much like China has done. Following its economic reforms, foreign direct investment flowed into the country lifting average annual growth to 8 percent from 2003 to 2007. However, the World Bank predicts that Vietnam’s economy faces tough prospects going forward from rising inflation and increasing unemployment.

As such, the old axiom holds true in Southeast Asia as elsewhere. The enemy of one’s enemy is one’s friend. China and the United States aren’t quite enemies but the region’s smaller countries share concerns about its military expansion and what it means for their interests going forward. For this reason, China is pushing countries like Vietnam to seek out support from the Americans in order to balance China’s power.

For its part, America is eager to reestablish its position in Asia as it has announced that its economic and political interests lie here in the twenty-first century, hence President Barack Obama’s “pivot” to Asia. Therefore, we can expect to see additional plans for drills between militaries as the specter of a rising China hangs over the region and the world.

Chinese Dam Building Tests Southeast Asian Resilience

China’s hydropower development activities on the Mekong and Salween Rivers are a clear illustration of the country’s potentially destabilizing strategy, with both diplomatic and environmental impacts, in Southeast Asia.

These waterways, along with the Yangtze River (one of China’s domestic targets for intensive development), constitute the Three Parallel Rivers UNESCO World Heritage Site in southern China’s Yunnan Province. China has thirteen projects planned on the Salween (known in China as “Nu”) River above its entry into Burma, including several adjacent to or within the ecologically sensitive heritage site.

The environment is clearly not a priority in the Chinese decisionmaking process on the topic of energy development. But what about the priorities of China’s neighbors?

Beijing is, in fact, planning and building dams on several rivers that originate in southern China and flow into other South and Southeast Asian nations, including the Mekong, the Salween and Yarlung-Tsangpo or Brahmaputra River.

Downstream riparian nations include Bangladesh, Burma, Cambodia, India, Laos, Thailand and Vietnam. All of these countries will be affected by China’s dam building and hydropower operations in upstream reaches of the aforementioned rivers.

We may also consider nearby projects on the few Southeast Asian rivers that do not necessarily originate in China but in which Chinese investment and interests are focused.

As one example, in 2011 the president of Burma suspended construction of the Chinese funded $3.6 billion Myitsone Dam project on the upper Irrawaddy River over safety issues, resident relocation programs and environmental concerns. Nevertheless, China is pressing for resumed construction on the site from which it expects to reap the majority of generated power for Yunnan growth once the 6,000megawatt project is completed. Myitsone is just one component of a six dam Chinese project on the upper Irrawaddy River intended for energy export to Yunnan.

Despite the suspension, however, a recent report from an nongovernmental organization operating in northern Burma indicates that work surrounding the project continues, with Chinese workers continuing preparation on the Myitsone site and accelerated mineral extraction in the intended reservoir area.

Chinese impacts on the Mekong River community are not yet so overt or contested. Where the Lancang River exits China and becomes the Mekong, it contributes about 18 percent of the total mean annual flow of the entire Mekong River basin. The other 82 percent of Mekong River flow originates in the lower basin from its numerous tributaries there.

During the dry season (northern winter), as much as 30 percent of the total flow in the Mekong River comes from the Chinese portion of the basin. Compared with a population of roughly ten million in the upper basin, concentrated primarily in Yunnan Province, there are more than sixty million residents of five countries in the lower basin area.

With an overall basin size of 800,000 square kilometers, there seems more than enough water to sustain the people of the Mekong River basin, if water was all they needed. Of historically greatest importance to downstream nations is the productivity of the inland freshwater fishery along the Mekong River, which is estimated at more than two million tonnes annually.

Unless the river flow regimes and their influence on this fishery are better understood before further disruption, dam building activities and the ensuing strict flow regulation for hydropower production could decimate a principal food resource in downstream areas.

Working ahead of its downstream neighbors, China has five operational hydropower dams on the Lancang River in and above Yunnan, with three more projects currently under construction and as many as 23 more in planning stages.

All of these projects in China are on main reaches of the Lancang, as few workable tributaries exist in that narrow portion of the basin.

Downstream countries along the Mekong have been working consistently together on the Mekong River Commission and, until recently, have refrained from reservoir and hydropower construction on main river reaches.

Laos has proposed for MRC approval the controversial Xayaburi Dam, a $3.5 billion project that is expected to generate 1,260 megawatts of electricity for the country and could earn back its cost in a single year for the Thai developer.

A single dam along the lower Mekong River would certainly alter flow regimes in the region but will only marginally exacerbate the changes that are seen with China’s dam building activity upstream. However, spurred on by China’s concentration of projects, another ten dams on main river reaches are currently in the proposal and planning stages for MRC countries. That rush of project development is in addition to 41 hydropower dams on tributaries to the Mekong River that are expected to be complete by the end of 2015 and as many as 37 more lower basin tributary dams that could be developed in the 2016-2030 period.

Unlike dams on the main reaches of the Mekong River, which are subject to MRC approval, these tributary dam projects can proceed under the development practices of the individual lower basin countries.

China’s influence on the lower basin has, in effect, spurred the potential fragmentation of an historically strong MRC and its cooperative process. Instead of attempting to deal with the lower basin as a bloc, China could more easily overcome opposition to its own plans for the Mekong River on an bilateral basis, at which China excels when seemingly limitless investment packages are employed as leverage. For the MRC states, however, it’s not all about the money.

Lower basin riparians have, until most recently, recognized the delicate balance between hydropower projects to provide energy for economic development in individual nation and the need to maintain the ecologically vulnerable shared freshwater fishery that provides food security to millions of Southeast Asian residents.

China seems to see no such necessity for balance and is interested in the Lancang primarily as a resource for producing energy.

Widening the regional gap in priorities, China has refused to participate with fellow riparians in the MRC to date. Eventually, as China proceeds with its own dam building efforts, the lower basin countries will reach a point at which effects on river flow regimes become obvious and the sustainability of the vital Mekong basin freshwater fishery wanes.

With full dam building efforts applied in both upper and lower basin regions, complete collapse of the subsistence fishery ecosystem is well within the realm of likelihood, destroying 81 percent of the protein source for the lower basin peoples. A recent study has found that the tributary dams are actually more at fault for such a potential collapse, although flow regulating dams on the main Mekong River reaches will only hasten the demise of the Southeast Asian fisheries ecology.

As the first and most ambitious single actor, the overall upstream riparian and the basin country with the least apparent consideration for a cooperative and balanced approach to the river, China will take much of the blame for this decline.

As with the MRC, while the lower basin countries are all members of ASEAN, China is not. Without a common local or regional authority, MRC countries have little alternative but to appeal to the United Nations for intervention in their emerging dispute with China over the uses and hydrologic alteration of the Mekong River basin.

One potential outcome is a procedural stalemate, by which the long cycle of international mediation allows China to complete its dam building efforts on the Lancang River. At that point, the damage to the lower basin is done and MRC nations must simply deal with the consequences of a diminished resource.

Working sooner and more quickly, however, the lower basin countries could propose a river treaty with an independent overseer. A valuable precedent for this action can be found in the Indus River basin, where India and Pakistan have maintained the Indus Waters Treaty for more than fifty years with oversight by the World Bank. There are still disputes between the countries over (accused) abuses and violations of treaty provisions and allowances but at the very least there is an established mechanism for dispute resolution through independent evaluation and arbitration by a third party.

As a second potential outcome of the MRC complaint, and following on historical precedent, China may attempt to employ capital investment in infrastructure development as a way to get what it wants from the downstream nations.

China could make such a preemptive move in order to mitigate, by diplomatic and economic means, the physical impacts of its new dams on the lower riparians. Specifically, China may offer to help the MRC countries build their own dams, on tributaries and/or main Mekong River reaches, in exchange for freedom of construction and regulation on the Lancang River in the upper basin.

China has precious few opportunities to do that before any further alteration of the river flow regime occurs and downstream impacts become too difficult on the shared resources of the MRC nations.

Lower basin states must hold firm to an understanding of the impacts that their own dam building activities will have on shared resources and reject China’s “help” that is actually aimed at fragmentation of the lower basin system.

With such a realization of Chinese plans, the MRC states will finally recognize the potential impacts of Chinese involvement and push back at China in a concerted effort to bring the upstream nation’s own dam building activities under control and environmentally responsible oversight, though by then the fishery could be lost entirely.

Demands will be made for China to pay for lost resources in the lower basin and any dispute could lead to negotiation, conflict or both.

In any case, China stands to lose a valuable cache of trust and goodwill with its neighbors, if not also valuable investment and trade markets, not just in Southeast Asia. Other resource and trade partners watching all of this unfold will think twice about their relations with China after such alienating behavior in its own neighborhood. No country has it in their national strategy to be taken advantage of by a neighbor or trade partner.

Without preemptive engagement and China’s cooperation and a willingness to consider alternatives alongside fellow riparians in the lower basin, MRC nations will lose control of the Mekong River and the abundance of its valuable ecosystem. MRC nations can bring China to the negotiating table through diplomatic and economic sanctions, an action to which China must acquiesce for fear of losing one of its nearest and fastest growing markets.

Once China is forced to negotiate for its use of the upper basin in the Lancang and Mekong River system, the evaluation and arbitration process will slow China’s progress considerably by subjecting its dam building projects to international standards of environmental assessment on an individual and collective basis, which China has largely avoided to date. Its ambitions for a cascade of strictly regulated hydropower dams on the Lancang River, which are considered vital to economic and industrial development in its southern provinces, will be slowed or lost entirely.

This article was adapted from a strategic simulation run by Wikistrat, the world’s first massively multiplayer online consultancy.

Good Morning Vietnam Indeed

As the Americans scramble for allies in the West Pacific to contain China’s rise, its once antagonist Vietnam could prove a tremendous asset.

Joel Kotkin and Jane Le Skaife of the conservative American Enterprise Institute suggest that “Vietnam has emerged as the un-China, a large, fast growing country that provides an alternative for American companies seeking to tap the dynamism of East Asia but without enhancing the power of a potentially devastating global competitor.”

Sino-Vietnamese relations haven’t much improved since the two countries briefly went to war in 1979. Border disputes and regional rivalry continue to be cause for mutual mistrust even as Vietnam joined in a free-trade agreement with other Southeast Asian states and China in January of last year. Chinese revisionist maritime border claims in the South China Sea in particular are forcing other countries in the area to seek American protection.

Mere decades after end of the Vietnam War, relations between the country and the United States appear to be improving however. The two have staged naval exercises together and the Cam Ranh Bay naval base was opened to foreign warships last year. But perhaps the greatest thing tying America to Vietnam, write Kotkin and Le Skaife, is people.

After the communists took over South Vietnam in 1975, millions of Vietnamese fled overseas with the majority of them heading to Australia, Canada, France and the United States. Four million Vietnamese live abroad. Half of them live in America.

Vietnamese Americans have done well. Their income is on par with the national average and nearly 65 percent of them owns homes. “Vietnamese are also three times more likely to be in such fields as information technology, science, and engineering than other immigrants, and have one of the highest rates of naturalization — 72.8 percent.”

This prosperous diaspora will prove a huge asset to the home economy as it’s moved away from central planning and is now open to international trade. Vietnamese exports have increased from about $5 billion to over $70 billion during the last three decades. America is by far Vietnam’s largest market with more than $10 billion in annual trade.

Despite the cautious liberalization, there are major impediments to growth. The regulatory framework for small businesses has improved but multinationals face import bans and restrictions as well excessive licensing requirements to do business in Vietnam. Foreign investment is either prohibited by the state or requires government approval, a process that is susceptible to bribery and cronyism. Property rights aren’t properly enforced.

On the upside, Vietnamese labor is cheap and 95 percent of Vietnamese are literate which gives the nation a huge edge over China. The government still owns entire industries but total public spending as a share of gross domestic product is less than 30 percent. Taxes and tariffs are low. Improvements are being made but need to happen faster if Vietnam is to capitalize on its demographic advantages in the decades ahead.

The Distorted Legacy of Vietnam

As far as the Vietnam War is concerned, conventional wisdom is dominated more by ideological perception than historical fact.

The proponents of the “soft power” doctrine might call it “soft victory.” A victory practically in name only was what the socialist bloc could claim in Southeast Asia. For the nineteen years of its duration, the conflict in Vietnam took countless lives and left the country’s economy in shambles. This was a conflict desired only by the socialist countries which therefore owe some explaining in regards to their “victory.”

However brutal the South Vietnamese regime may have been, it did not interfere with communist operations north of the 17th parallel. It also abstained from engaging in the same Maoist inspired grand projects that Hanoi invested in, much to its later disillusionment.

In short, the onus of belligerence falls entirely upon the North Vietnamese and their Chinese and Soviet patrons. Read more “The Distorted Legacy of Vietnam”

China, Vietnam Clash in South China Sea

Vietnam’s Foreign Ministry accused China of exacerbating tension in the South China Sea earlier this week after a confrontation between a Vietnamese oil and gas survey vessel and Chinese patrol boats took place some six hundred kilometers south of Hainan island.

Vietnam claimed that the Chinese ships had deliberately cut a submerged cable towed by the Vietnamese vessel. China denied the allegation and blamed its southern neighbor for causing the incident, saying that its oil and gas operations “undermined China’s interests and jurisdictional rights.”

Although the two East Asian countries are among the few remaining communist states in the world, their bilateral relations haven’t much improved since the brief Sino-Vietnamese War of 1979. Border disputes and regional rivalry continue to be cause for mutual mistrust.

Vietnamese relations with the United States by contrast have been improving rapidly. The two held naval exercises together and when Secretary of State Hillary Clinton attended a South East Asian cooperation summit in Hanoi last summer, she professed that the United States have a “national interest” in mediating disputes between China and its neighbors.

China’s revisionist maritime border stance in Southeast Asia is mainly responsible for a series of disputes in recent years. This body of water, through which passes a third of all commercial maritime traffic worldwide and half of the hydrocarbons destined for Japan, the Korean Peninsula and northeast China, is of great strategic importance to the Chinese but similarly vital to continental Asian nations as Vietnam.

The issue involves some two hundred islands and coral outcroppings which are claimed by Brunei, China, Indonesia, Malaysia, the Philippines, Taiwan and Vietnam. China has always insisted that its exclusive economic zone extends far into the South China Sea and claims all islands as its territory. Other countries in the region have eyed the United States to defend their claims.

The Americans maintain a strong military presence in the Pacific with bases in Japan, Korea and Taiwan. China has complained about this American shadow over the South China Sea and interpreted Clinton’s remark in Hanoi last year as an “attack”. As the Chinese foreign minister put it, “China is a big country and other countries are small countries and that is just a fact.”

Vietnam Wants to be Friends with Everyone

As China rises, other countries in East Asia are hedging their bets and seeking closer relations with superpowers farther away. Both Russia and the United States have been eying Vietnam which is only too happy to reciprocate.

President Dmitri Medvedev was in Hanoi just last month to seal the deal for the construction of Vietnam’s very first nuclear power plant by Russian contractors. Vietnam intends to build as many as eight nuclear plants before 2020.

Japan also has plans to aid Vietnam in the nuclear realm and recently initiated a joint venture with the country for the exploitation of rare earth materials in the mountains of North Vietnam. Both want to be less dependent on China in this regard which currently monopolizes the production of rare earths. These elements are essential for many of Japan’s high tech industries and used in the production of superconductors, electronic polishers and hybrid car components, including batteries and magnets.

China and Vietnam share a rich history. Chinese influence in Vietnam has been strong for centuries and today, the two remain among the few communist states in the world. Yet their bilateral relations haven’t much improved since the brief Sino-Vietnamese War of 1979. Border disputes and regional rivalry continue to be cause for mutual mistrust.

Even as ASEAN and China became a free-trade block in January, tension between the Middle Kingdom and its Southeast Asian neighbors has been rising. Its revisionist maritime border claims in the South China Sea in particular are forcing other countries in the area to seek American protection.

Mere decades after end of the Vietnam War, relations between the country and the United States now appear to be improving rapidly by contrast. The two have been holding naval exercises together and when Secretary of State Hillary Clinton attended an ASEAN summit in Hanoi this summer, she professed that the United States have a “national interest” in mediating disputes between China and the rest of East Asia.

Clinton stressed that the United States intend to remain neutral in any border conflict. At the same time, free shipping in the South China Sea has to be ensured. This body of water, through which passes a third of all commercial maritime traffic worldwide and half of the hydrocarbons destined for Japan, the Korean Peninsula and northeast China, is of great strategic importance to the Chinese but similarly vital to continental Asian nations including Vietnam.

The United States maintain a strong military presence in the Pacific with bases in Japan, Korea and Taiwan. China has complained about this American shadow over the South China Sea and interpreted Clinton’s remark in Hanoi this summer as an “attack”. As the Chinese foreign minister put it, “China is a big country and other countries are small countries and that is just a fact.”

Little wonder that Vietnam is nervous and has accelerated its rapprochement with the United States. The Americans have agreed to share nuclear technology with Vietnam and sell the country military hardware, including submarines to patrol its coast. “It is always good to have a new friend,” mused the Vietnamese vice minister of defense Nguyễn Chí Vịnh in a recent interview. “It is even better when that friend used to be our enemy.”

Why Australia Worries About Indonesia

What country is most likely to upset American-Australian relations in the near future? One would be inclined to think of China but Michael Wesley, executive director of the Lowy Institute for International Policy, doesn’t think so.

At The Interpreter, Wesley points to “the Jakarta factor” instead. Indonesia was responsible for the most serious rift in relations between Canberra and Washington, he notes, back in the early 1960s, “when the Americans decided that Cold War interests were more important than backing their mates’ opposition to Jakarta’s annexation of West Irian.”

Things may seem to have moved on. Indonesia has no outstanding territorial claims, and it’s a democracy now. And even though President Barack Obama spent part of his childhood there, it’s still a major effort to get the Americans to think seriously about Indonesia.

Although consumer confidence in Indonesia was back up to pre-recession levels in March of this year already, the island nation has yet not entirely recovered from the Asian financial crisis of the previous decade. Susilo Bambang Yudhoyono, president since 2004, has made serious efforts at reforming Indonesia’s obstructive regulatory environment, including measures to fight corruption, but impediments to economic growth remain. Investment, both foreign and domestic, is curtailed by government interference while judicial enforcement can be erratic and nontransparent. Nevertheless, Indonesia is doing better than a few years ago and, according to Wesley, that’s why it’s likely to clash with Australia eventually.

Australia and Indonesia get on because of the long-running balanced disparity between the two countries. Australia is small but wealthy; Indonesia is huge but poor. Indonesia has a huge army but small naval and air forces; Australia has a small army but potent naval and air capabilities. As Hugh White says, the Australian army could get to Indonesia but do nothing once it got there; the Indonesian army could overrun Australia but can’t get here. So we just accept each other and get along.

As Indonesia rises, being admitted into the G20 and recognized by the United States as a potential partner across the Pacific in counterbalancing China’s revisionist maritime claims in the Southeast Sea, Australia risks being sidelined.

Different countries across the region share a concern about China’s rapid growth and assertiveness. That is why the Vietnamese, for instance, have shown an interest in the Quadrilateral Initiative which Australia, India, Japan and the United States launched in May 2007 in Manilla. The country has since participated in naval exercises with the United States and negotiated a nuclear cooperation treaty with the Obama Administration.

Japan, too, has been strengthening ties across East Asia, organizing military exchanges with Vietnam, building subways in New Delhi, and making a stance along with South Korea when the North sunk one of its ships in May. Indeed, “the Japanese and Koreans have their hands full helping India and Vietnam,” according to Wesley. “This leaves the United States as most likely to awake to the strategic sense of helping Indonesia emerge as a great power.”

Wesley, writing from Australia, has reason to be concerned. “Are we sure our friends in Washington, entering a deepening spiral of strategic competition with Beijing, would take account of our strategic interests before investing in Indonesia’s strength?” The answer is probably no, though one shouldn’t worry too much about China’s navy and its posturing.

Plenty in Washington do worry however, whether they should or shouldn’t, and this should worry Australia in turn, especially with the Rio Tinto affair of last year still fresh in mind. One can hardly blame the Australians for dreading China rather more than we do, halfway across the globe. But with Australia, at the same time, invested in international peacekeeping, particularly in Afghanistan; dedicated to the War on Terror; and with the ANZUS Treaty firmly in place, Canberra hasn’t too much to fret about. If worse comes to the worst, America is rather more likely to pick sides for a prosperous, trustworthy ally than a country that just emerged out of semi-dictatorship ten years ago.