AMONG Asians, President Barack Obama will go down in history as the American President who did the most to have the US re-engage meaningfully with the Asia-Pacific.
Note that I use the word “re-engage” and not “rebalance” or “pivot” which may be an object of American policy interest, but is not the sum total of the US relationship with Asia-Pacific.
The Sunnylands US-Asean Special Summit in the middle of last month captured Obama’s abiding interest, in this case with South-East Asia. It was the first summit any country had had with Asean since it pronounced itself as a community at the end of last year. A good and clever recognition.
At the same time, the 17 points in the joint declaration of the summit was comprehensive, although they have to be worked at to make the relationship meaningful. Of all the points, perhaps the most important is on human capital, particularly development of young people and entrepreneurs, a long-held Obama belief. They are the future. The connectedness of people and ideas is just as important as that of trade and investment.
As I said at a conference organised by the US-Asean Business Council in San Francisco on Feb 17, America’s unique selling point – with Silicon Valley in the background – is in the development of human capital, of ideas, innovation, inventiveness. Put human capital on the table against the kind of financial capital China has aplenty.
This is yet to happen widely enough and, therefore, must be done to give greater content to the Asean-American relationship. Of course there is the issue of intellectual property (IP) protection, but the Americans invested in China in waves against the promise of huge growth even when investment protection was not there. In any case, IP laws are being developed in Asean, with those countries acceding to the TPP taking on clear and enforceable legal obligations on IP protection.
All this is not to say US real economic involvement in Asean is small. Asean is the largest destination in Asia for American foreign direct investment (FDI). Asean holds more US FDI (total stock US$226bil) than Japan, China and India combined (total stock US$202bil). So there is real US interest in Asean.
Even in trade, while the US market is frequently cited as so important for Asean exports, it is not often realised – including by the Americans themselves – that Asean is America’s fourth largest export market. Services trade is particularly important (US$39bil in 2014) – with the US recording a surplus of US$7bil.
All these real numbers are often put in the shade by the sharp rise in trade between Asean and China. China is No. 1 here and its footprint is established and getting larger. China has also announced various policy initiatives, such as one-belt-one-road and establishment of the AIIB (Asian Infrastructure Investment Bank), which have great significance to Asean.
There is no reason why Asean’s closeness to one or the other should be conflicting. It is a positive sum, not zero sum game. Businesses are agnostic – as shown by the numbers in trade and investment and by future business plans of both America and China with Asean. However, while the Chinese are more evident and vociferous – as with any rising power – the Americans are more quiet and understated on the business front despite really enormous involvement in Asean.
The loud noise is coming over the South China Sea, where both parties are dangerously more than just barking at each other, with Asean seemingly caught in the middle.
At the Sunnylands summit, there was animated discussion of the South China Sea issues, with China’s name frequently cropping up of course – although in time-honoured Asean fashion there was no mention of China by name in the declaration. While this may have disappointed the Americans, there is no doubt China’s land reclamation and militarisation of disputed islands are matters of grave concern to not only the US but also Asean.
Asean’s own declarations are now clear about this concern. There is little doubt that Asean sees China’s bellicosity as a threat to the peace and security of the region however little it can do about it.
The danger for the US is to be as belligerent as well. The Americans are trying very hard to be measured in their response to China’s extravagant claims and activities. The not so innocent exercise of right of passage by American warships in international waters which China claims as its territory as well as overflights by US aircraft however are causing tensions to rise.
China’s strategy is to make the US. appear to be in the wrong should there be a conflagration. Its propaganda is that the Americans are playing a game of chicken. Before the Chinese domestic gallery, there would be a limit to how far and how long this could go on.
This is where the Code for Unplanned Encounters at Sea (Cues), an agreement reached in 2014 among 21 countries (which include China and the US), being pursued by Asean (through Singapore) with China for application in the South China Sea, becomes critical.
China has got to be totally recalcitrant about its rights in the South China Sea but has laid a trap for the US to appear to be the guilty party should there be a conflagration and an outbreak of conflict “in China’s territory” caused by American violation of it.
Will the Americans oblige or be calm, cool and collected? If there was a President Donald Trump, one shudders to think what is likely to happen. There might just be more than a sailing by or an overflight. And then – who knows?
An American reaction and relationship with Asia generally that is not based on engagement, which President Obama is doing, will destabilise the region. Engagement does not imply giving in to China, but managing it. Engaging Asean leads countries in the region to appreciate the issues – international rights, American objectives and China’s challenge.
The criticism in the US of President Obama’s leadership as abandoning American “exceptionalism” is based on a misunderstanding that being exceptional means being superior, always right and forcing through whatever America wants. That actually is being a bully, something the US has not always been innocent of.
American “exceptionalism” is the good that comes out of the melting pot that is America. Exceptionalism in the conduct of world affairs must mean the good that comes out of positive engagement, however powerful America may be – and it is not as overwhelmingly powerful now as it used to be.
There has been this ethic in America. It does not work in the US. It will not work in the world.
America is big in the world. It is big in its economic interest in Asean. Its military presence in the region is massive. It should use these assets intelligently and creatively, and not try to steamroll over peoples and problems.
There has never been a greater demand on the responsibility of power on America, still the No.1 power in the world, that has a lot going for it, certainly with Asean.
But to have the likes of Donald Trump lead it, or to be dominated by the kind of thinking that has driven him to the cusp of nomination of the Republican Party for President, would spell the beginning of the end of America’s place in the world, as No. 1, with Asean, or anywhere else.
- Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.