Will a Blustering Trump Change Regional Cooperation in Southeast Asia?

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Written by By Akshan de Alwis

With its primary stated goal of re-working the nature of America’s relationship with the rest of the world, the administration of President Donald Trump comes at an awkward time for Southeast Asia. Regional states are at a moment where they are adjusting domestic politics, their relationships with each other and the main intergovernmental organization, the Association of Southeast Asian Nations (ASEAN). They are also responding to China, whose role in the region is evolving as Beijing moves into a new stage in its decades-long development into a major world power that is more ready to take robust positions on issues where its interests sometimes diverge with those of its neighbors. Amid these changes, Washington seems to be looking to move away from its longstanding commitment to liberalizing trade and investment in Asia, while taking a more openly muscular stance on security. Specifically, the United States under Trump is pondering possibilities for altering the longstanding basis for its economic and security exchanges with China, which includes adopting policies that differ more starkly from, or even oppose, those of Beijing.

Even though it is early days for the Trump administration, current developments suggest good reason to expect uncertainty, possibly even some turmoil, at least in the short term. The regional security and economic architectures in Southeast Asia—primarily the post-World War II US-backed order on the one hand and ASEAN and various arrangements built around it on the other—are especially unprepared for addressing major shocks or crises at this moment. Cleavages among ASEAN members and limited institutional capacity constrain the responses regional actors can take collectively, and may dampen individual reactions as well. Even though armed conflict among Southeast Asian countries remains unlikely, effective regional cooperation in the face of greater instability and uncertainty may be difficult to achieve and sustain without consistent American support. Given that Trump and his team still have ample time to learn, there is, of course, a possibility that the new administration can adapt to circumstances in Southeast Asia specifically, and the Asia Pacific more broadly.

The American Foundations of Regional Architecture

Regional cooperation in Southeast Asia continues to rest on the US-sponsored liberal international order, supplemented by ASEAN and its affiliated mechanisms. Southeast Asian states have experienced significant economic growth since the end of the Second World War and after the Cold War. Underpinning this economic success story is a cycle that ties capital from North America, Europe and Japan, as well as more recently South Korea and Taiwan, to raw materials and production networks across Asia that manufacture for North American and European consumers. Making this possible is a constant lowering of trade and investment barriers driven by a belief in the benefits of enterprise and wealth creation not only for their own sakes, but also as facilitators of social and political stability. Much of Southeast Asia’s prosperity—and indeed challenges with the environment and inequality—over the past seven or so decades come from being key economic nodes in the American-backed liberal international order.

Overseeing this economic order are the US-backed Bretton Woods institutions—the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO)—which maintain the basic governing principles of the world economic system. Given that the US dollar denominates much of the world’s commercial activity, the US Federal Reserve too plays a critical role in the world economy via its influence over US interest rates. Despite talk of having alternative arrangements and institutions manage the world economy, the Bretton Woods institutions and the US dollar remain irreplaceable for the time being. Regional initiatives such as the Asia Infrastructure Investment Bank (AIIB), Regional Comprehensive Economic Partnership (RCEP), intra- and extra-ASEAN free trade agreements, and even calls for the Chinese yuan to denominate regional trade or even become a reserve currency, operate as part of the liberal economic order and do not provide a substitute. Being integrated in the world economy means that Southeast Asia remains subject to the prevailing international economic order and its ordering principles.

A key condition that allows for economic development and prosperity is the guarantee of security and stability, which enables governments and businesses to make longer-term plans with some expectation of certainty. Security in Southeast Asia too continues to depend on the security order established by the United States after the Second World War and during the Cold War. The network of US alliances and strategic partners, as well as a longstanding commitment to freedom of navigation, helps ensure that Southeast Asia’s energy imports as well as its exports can pass safely through the world’s sea lanes. In addition, America’s security commitment helps bolster stability in Southeast Asia, making it a more attractive environment for investors. Augmenting US security ties in Southeast Asia are Washington’s alliances with Australia, South Korea and Japan, along with its strategic partnership with Singapore, which ground America’s forward military presence in Asia and give these allied governments an active stake in preserving regional peace and stability.

Shaky Ground

Critical to the ability of the US-backed international order to provide stability, security and prosperity in Southeast Asia, is an American commitment to maintaining the status quo. The potential for instability substantively rises absent such an obligation on the part of Washington. No other actor or set of actors can yet replace such functions. Even if several major powers working alone or in coordination can extend security and stability over one or more regions, they lack the global reach of the United States and are likely to be far less effective. A critical advantage of the current international system is that it embeds regional security and economic architecture in places like Southeast Asia within a much larger global framework. This is one reason why major powers like China largely accept the international and regional status quo despite chafing against it. They worry more about an America that is either overactive or disinterested than one that is engaged in maintaining the existing system.

However, the Trump administration’s current positions on Asia give Southeast Asian governments reason to doubt America’s long-standing commitment to the prevailing regional economic and security architecture. As a presidential candidate, Trump repeatedly indicated his intention to make allies pay for their ties to the United States—ostensibly beyond current host nation support—raise tariffs, scrap the Trans-Pacific Partnership (TPP), and declare China and Japan currency manipulators susceptible to sanctions. Once in office, the administration suggested more confrontational stances towards China and North Korea that could significantly raise tensions in and around Southeast Asia. Secretary of State Rex Tillerson further articulated positions about preventing China from using its man-made islands in the South China Sea and deploying US troops to Taiwan, moves the Chinese government view as highly provocative. These statements, if faithfully carried out, promise backlash against US policies that may engulf the region, fueling Southeast Asian anxieties over the credibility of America’s commitment to regional security and prosperity.

President Trump’s ambiguous position on Taiwan further risks unsettling the regional order. Taiwan is a vibrant democracy and an actor deeply involved in Southeast Asia through trade, investment and other links, its lack of official recognition notwithstanding. Such circumstances may warrant some review and update of US policy towards Taiwan. However, the Trump administration has expressed a view that sees Taiwan as a “bargaining chip” with China. Such a perspective ignores the will of the Taiwanese people, a longstanding US commitment not to bargain over Taiwan’s status, and Beijing’s assertion that its claim over Taiwan is non-negotiable. A consequence of such an American stance may be to put Washington in more direct confrontation with Beijing, or force Taiwan to preserve its interest more robustly and prompt strong Chinese reactions.

Even though Trump indicated adherence to America’s “One China” policy in a telephone conversation with Chinese leader Xi Jinping in February 2017, the possibility that Trump or his administration could change their minds remains. Moreover, America’s “One China” policy differs significantly from the People’s Republic of China’s “One China” principle in taking Taiwan’s status as undetermined and allowing for substantive non-official US–Taiwan ties including arms sales. Consequently, Beijing may find significant scope to take umbrage at the Trump administration’s interpretation and implementation of America’s “One China” policy, regardless of its merits.

Southeast Asia’s Structural Stresses

Challenges to the underpinnings of the prevailing international order have come at a difficult time for Southeast Asia. ASEAN stands at a juncture of having to address key differences among member states and decide on how to move forward. Divisions within the grouping were perhaps most glaring when ASEAN was unable to issue customary joint statements after major meetings, due largely to disagreements over the handling of the South China Sea dispute which involves China and several ASEAN members. Some observers and officials from member states blame China and, to a lesser degree, the United States for encouraging discord within ASEAN. However, these discrepancies reflect deeper cleavages introduced during ASEAN’s expansion in the late 1990s. Poorer communist and former communist states with strong developmental needs were brought in alongside largely politically conservative, capitalist, middle-income states without mechanisms to manage their divergent concerns.

Among ASEAN’s historical functions was to complement the US-backed economic and security order in Southeast Asia. The grouping’s emphasis on sovereignty, non-interference in domestic affairs, and the consensus principle enabled members to put aside mutual disputes to make war among them virtually unthinkable. ASEAN’s focus on the gains of cooperation and a willingness to accommodate the least ready member allowed it to advance internal initiatives such as the ASEAN Free Trade Area (AFTA) and the ASEAN Economic Community (AEC). Its non-contentious approach enabled it to forge partnerships with external parties through arrangements like the Asia-Pacific Economic Cooperation (APEC) forum, the East Asia Summit (EAS), ASEAN Plus frameworks, ASEAN–China Free Trade Agreement (ACFTA), and, potentially, the RCEP. ASEAN members even cooperated on economic and diplomatic sanctions in conjunction with Washington and Beijing to end Vietnam’s 1979–89 occupation of Cambodia, paving the way for Vietnam and Cambodia to eventually join ASEAN.

ASEAN seems less able to effectively perform its ordering functions today, much less respond effectively to revisions to the broader global economic and security architecture. Most of the older ASEAN members—the grouping’s de facto leadership—are facing domestic political transitions that distract them from playing fully-engaged roles in the region. Chronic under-investment in institutional capacity means that ASEAN as an organization can do little on its own. Consequently, ASEAN’s ability to fill even some of the more modest lapses left by a revised US regional commitment seems doubtful, leaving Southeast Asian governments less able to safeguard stability, especially when facing tensions in and around the region. As developments unfold, ASEAN and relations among its members may be buffeted by greater internal and external pressure than at any time since the Cold War.

Without some meeting of minds among Southeast Asian governments, there is unlikely to be much progress in restructuring ASEAN to meet the new demands of maintaining regional order or developing alternative arrangements to do the same. The degree to which Southeast Asia is absent common vision and leadership about how to best manage economic and security matters seems quite unprecedented even by the standards of a region already known for limited cohesion and a lack of initiative. Whether during colonial or Cold War eras, the region tended to have some semblance of order, even if managed by major powers and dismissive of local concerns. Practically speaking, the present situation spells fewer constraints on assertive American and Chinese behavior in Southeast Asia, as well as less amelioration of the more abrasive aspects of US–China competition in the region. The region may have to depend on the wisdom and competence of individual leaders in capitals across Southeast Asia and beyond more than ever, but whether this will be forthcoming during the Trump era remains worryingly unclear.