Increasing challenges to stability in Asia

Barack Obama takes office as U.S. President at a time when a qualitative reordering of power is under way in the Asia-Pacific, with tectonic shifts challenging strategic stability. The impact of such shifts on U.S. foreign policy will be accentuated by America’s growing challenges, including a deep economic recession, two separate wars and eroding global influence. Such challenges dictate greater cooperation with China to ensure both continued large Chinese capital inflows and political support on issues ranging from North Korea and Burma to Pakistan and Iran.

Such calculations, in turn, are certain to have a bearing on America’s role in Asia — “as a resident power, and as the ‘straddle power’ across the Asia-Pacific,” to quote Robert Gates, who is staying on as Defence Secretary under Mr. Obama. Still, the U.S. will remain a key player in Asia through its security arrangements and other strategic ties with an array of regional states.

However, not since Japan rose to world-power status during the reign of the Meiji emperor in the second half of the 19th century has another non-Western power emerged with such potential to alter the world order as China today. As the latest assessment of the U.S. National Intelligence Council affirms, China is “poised to have more impact on the world over the next 20 years than any other country.”

China’s ascent, though, is dividing Asia, not bringing Asian states closer. Economic-powerhouse Japan — whose economy still is larger than that of China, India and Russia put together — is intent on shoring up its security and ensuring that Beijing does not call the shots in East Asia. Japan is set to reassert itself in world affairs by shedding decades of pacifism anchored in a U.S.-imposed Constitution. Another key actor in Asian geopolitics, India, is unwilling to cede its leadership role in the Indian Ocean rim region, despite China’s creeping influence in southern Asia through growing transportation, trade, port-building and defence links.

Under Mr. Obama, America’s main strategic objectives in the Asia-Pacific are unlikely to change. Indeed, the central U.S. interest in the Asia-Pacific remains what it has been since 1898 when America took the Philippines as part of the spoils of the naval war with Spain — the maintenance of a balance of power.

During the first half of the Cold War, the U.S. chose to maintain a balance by forging security alliances with Japan and South Korea and also by keeping forward bases in Asia. By the time the Cold War entered the second phase, America’s “ping-pong diplomacy” led to the 1972 “opening” with Beijing. It was designed to reinforce the balance by employing a newly assertive, nuclear-armed China to countervail Soviet power in the Asia-Pacific region.

Today, according to the Pentagon’s Quadrennial Defence Review Report, America’s interests centre on “maintaining a stable balance” in “the East Asian littoral,” given the likelihood that “a military competitor with a formidable base will emerge in the region” — an allusion to China. At the same time, China’s rising heft is spurring greater American reliance on Beijing for financial and political support.

In fact, China is becoming America’s banker. Mr. Obama’s mammoth stimulus package that is meant to help revive the broken U.S. economy is set to reinforce Washington’s dependence on capital from a foreign power already holding 10 per cent of the U.S. public debt. A creditor-debtor relationship between Washington and Beijing, along with China’s growing sway over states on its periphery, holds major relevance for America’s traditional allies, principally Japan and Taiwan, and new strategic partners, like India. After all, a banker has greater leverage over a customer than vice versa.

In the years ahead, China may not hesitate to assert the leverage over an increasingly indebted America. But the extent of such leverage is likely to remain limited. Although it is now America’s largest external creditor — with two-thirds of its $2 trillion foreign-exchange reserves invested in U.S. dollar-denominated financial instruments — China is locked in a mutually dependent economic relationship with the U.S. For instance, it is as much in China’s interest as in America’s to prop up the value of the dollar because if the dollar sinks, the worth of China’s dollar-denominated assets will plummet.

Also, despite its coffers having swelled 10-fold since 2000, China does not have much room to diversify the foreign investment of its surpluses and savings. For one, the European capital markets remain shallow for a cash-heavy China, with any big induction of Chinese capital likely to prove destabilising. For another, the global oil-price crash crimps China’s diversification ambitions. Had oil prices stayed above $100 a barrel, many oil-exporting nations would have helped bolster the value of the dollar by channelling their high oil earnings into dollar-denominated assets, thus creating space for China to diversify some of its holdings of U.S. debt.

From being allies of convenience in the second half of the Cold War, the U.S. and China have emerged as partners with such close interdependence that economic historian Niall Ferguson has coined the term, “Chimerica” — a fusion like the less-convincing “Chindia.” But as the U.S.-China relationship acquires a wider and deeper base in the coming years, the strains in some of America’s existing military or strategic partnerships will become pronounced.

While South Korea’s importance in the U.S.-led hub-and-spoke alliance system will continue to decline, doubts are bound to grow in Japan and Taiwan over the reliability of Washington’s commitment to their security. In the near term, rising Chinese assertiveness has had the unintended effect of persuading Japan to jettison its doubts about U.S. security commitments and to reinvigorate its military relationship with Washington. In the long run, however, Tokyo will seek to ease its security dependence on the U.S.

Some recent U.S. actions — including the failure to consult Tokyo before removing North Korea from the U.S. list of terrorism-sponsoring states and the refusal to sell Japan the next-generation F-22 Raptor fighter-jets — are likely to sow further doubts among the Japanese. Similarly, Washington turned down new Taiwanese President Ma Ying-jeou’s request to include diesel-powered submarines and UH-60 Black Hawk attack helicopters in a recent $6.46 billion arms deal the U.S. struck with Taiwan. For the first time, building a stronger cooperative relationship with China is taking precedence in U.S. policy over the sale of advanced weaponry to allies, lest the transfer of offensive arms raise Beijing’s hackles.

In fact, with Washington seeking to revive Sino-U.S. military contacts, suspended by Beijing in reprisal to the latest package of largely defensive arms for Taipei, the Obama administration will not find it easy to sell Taiwan top-of-the-line weapon systems. The U.S. has not only welcomed China’s deployment of battle-ready warships in the pirate-infested Gulf of Aden in its first naval task-force operation beyond the Pacific, but expressed the hope that the move — which brings the Chinese navy into India’s backyard — would be “the springboard for resumption” of military ties.

The U.S. has worked hard in recent years to co-opt India in a “soft alliance” shorn of treaty obligations. Yet, conflicting Indo-U.S. expectations and interests often surface. Take the controversial nuclear deal, which was driven by American non-proliferation considerations but peddled by Indian “neocons” and government managers as a far-reaching strategic initiative to help countervail China’s growing might. As a result, New Delhi strenuously tried to whitewash the progressive attachment of tougher U.S. conditions during the three-and-a-half-year deal-making process.

But just as India has found itself alone in the fight against Pakistani-fomented transnational terror, New Delhi is unlikely to get much comfort on China from American policy. In that light, the Indian ardour in recent years for closer defence ties with the U.S. could gradually give way to more sobering reality.

By contrast, Australia’s growing cozy relationship with distant China, especially under the Sinophile Prime Minister, Kevin Rudd, meshes well with the likely trajectory of U.S.-China ties. What Canberra pursues today — to balance its relations with Tokyo and Beijing — Washington is likely to begin doing before long.

The U.S.-China relationship — despite a deepening symbiosis, reflected in the U.S. recession seriously hurting the Chinese economy — is likely to remain uneasy, but overt competition or confrontation suits neither side. For the U.S., however, China’s rising power helps validate American forward military deployments in the Asian theatre. It also helps America keep existing allies and search for new ones. The China factor is thus coming handy to Washington to enlarge its strategic footprint in Asia in the near term.

Caught between an increasingly powerful China and an America narrowly focussed on advancing its strategic interests in Asia, other Asian powers are likely to face tough security choices in the coming years. The recent landmark Japan-India security agreement signals that major changes in the Asian strategic scene are in the offing.

(The writer is Professor of Strategic Studies at the Centre for Policy Research, New Delhi.)

© Copyright 2000 – 2009 The Hindu