Southeast Asia’s Developing Divide

The Asan Forum’s introductory Topics of the Month article on the present state of Northeast Asian strategic competition and regionalism by Sergey Radchenko shares much in common with this article. The authors summarized in Multilateralism in Northeast Asia I contend that: 1) there are developing geostrategic divides in Northeast Asia just as the Cold War divided the region; 2) the causes of the divides and which states are on which respective side differ from the Cold War; 3) China and regional states’ relations with China are at the core of the new divides; and 4) regional multilateralism is being stymied by these divides rather than serving as a cooperative bridge over them.¹

Looking at the present state of multilateralism and strategic competition in Southeast Asia, one can draw the same four general conclusions. The starker asymmetries in power between China and any particular Southeast Asian state and the larger number of states in Southeast Asia means that the nature of the divides is more complex and dynamic in the south than the north of East Asia. The much more advanced state and diverse agenda of ASEAN compared with the Six-Party Talks and the fact that China is not a member-state of ASEAN, but a major external power for which Southeast Asian states try to use ASEAN to manage its regional influence, means that the stymying effect is much less paralytic for ASEAN than it is for the moribund Six-Party Talks.

The Cold War Divide

As with Northeast Asia, the Cold War ideological battle and its intramural Sino-Soviet schism deeply divided Southeast Asia, creating a deep sense of insecurity in each regional state and aggravating the shared fear of extra-regional major power dominance. The Southeast Asian divide between the six maritime states of Southeast Asia that were on the US-led free side and the three continental ones that were communist dictatorships overlapped substantially with the longstanding maritime-continental divide in the region. Burma (now Myanmar) and Thailand were partial exceptions to this strategic-geographic overlap.

Arguably, Myanmar is the most continental of Southeast Asian states in strategic terms as, like landlocked Laos, it does not border the South China Sea. It is the only Southeast Asian state to share land borders with both India and China, historically (and in the future) the two most important extra-regional powers. Yet during the colonial period and the Cold War, it was a continental Southeast Asia outlier with a post-colonial settlement more in line with its South Asian neighbors who, like Burma, negotiated their peaceful exit from British rule. Burma did not gain independence at the point of a gun and did not become a communist dictatorship closely aligned with either the Soviet Union or China unlike Vietnam, Cambodia and Laos after the French were pushed out. Rather, Burma adopted a policy of autarkic, neutral non-alignment.²

Even though Thailand is recognized widely as a continental state with significant historical influence in Cambodia, Laos, and Myanmar, Thailand, befitting its geographical position, has long straddled the maritime-continental divide. The Sukhothai Kingdom, whose establishment in 1238 is seen by many as the start of Thai history, was based in northern continental Thailand and laid contested claim to much of the Malay Peninsula.³ During the Cold War, Thailand, in strategic terms, stopped straddling the divide. Like the Philippines, it allied itself to the United States and joined the Southeast Asian Treaty Organization, the key US regional security mechanism in the early Cold War. It and the Philippines were the only two Southeast Asian states to join this “Southeast Asian” regional security body. Within Southeast Asia, Thailand aligned itself with Singapore, Malaysia, Indonesia, the Philippines, and Brunei against the southward push of communism. Thailand became the key front-line state against the spread of communism from continental Southeast Asia, where it had become the ruling ideology, to maritime Southeast Asia, where it had failed to gain ascendancy.

The China factor

As in Cold War Northeast Asia (witness the continuing China-Taiwan civil war and China’s alliance with North Korea), China was often the main communist power in response to which Southeast Asian states organised their external and domestic security and foreign policies. On Zhou Enlai’s 1954 trip to Burma and India, both Rangoon and New Delhi agreed to adopt the “five principles of peaceful co-existence” advocated by China as the basis for their respective bilateral relationships with China. Despite significant Chinese support during the war, Vietnam and Laos established Communist regimes allied with the distant Soviet Union and not neighboring China, while Vietnam and China jousted for influence in Cambodia.⁴ Ho Chi Minh had first sought a close security partnership with the United States to help ensure Vietnam’s autonomy from its largest neighbor.⁵

In maritime Southeast Asia, it was China and not the Soviet Union that was the main external source of support for local communist movements and, hence, the key external threat to the ruling regimes. No maritime Southeast Asian state recognized China diplomatically before the United Nations did. Cambodia, Laos, Burma, and North Vietnam all recognized China well before the UN imprimatur as did the US Atlantic allies, Canada and Great Britain. Indonesia (after withdrawing recognition in 1967 following the fall of Sukarno), Singapore, and Brunei waited until the very end of the Cold War period, two decades later than the UN, to shift their “One China” policies to the People’s Republic of China. Among these six states, only the Philippines recognized China diplomatically before it recognized the Soviet Union.

Unlike Northeast Asia, the Cold War division of Southeast Asia led to the development of effective regionalism. ASEAN was established by the five main maritime Southeast Asian states (with Brunei to join later) initially as a mechanism for collective diplomacy. The Cold War-affected political rupture in Indonesia that led to Sukarno’s Konfrontasi policy against Malaysia and Singapore and then his fall and the rise of Suharto was the key intra-regional trigger for the formation of ASEAN in 1967 in Bangkok. Communist advances in continental Southeast Asia and their links to communist insurgencies in maritime Southeast Asia were key external drivers. ASEAN’s first four dialogue partners (the key mechanism for relations with external powers) were Australia, New Zealand, Japan, and the United States, with the United States being the global superpower with which the ASEAN member-states allied or aligned in the Cold War and Japan, and Australia and New Zealand the northern and southern “anchors” of the US East Asian hub-and-spokes system of security alliances. ASEAN itself and its diplomatic relations with major extra-regional powers mirrored perfectly the Cold War Southeast Asian divide and the positions of the most important major extra-regional powers in the Cold War’s bipolar order globally.

Southeast Asia Undividing

Unlike Northeast Asia, the denouement of the Cold War divide at the global level with the collapse of the Soviet Union ended the Cold War divide in Southeast Asia. While no physical wall was dismantled, thick and high conceptual ones were. Befitting its Cold War origins and primary role as a collective diplomatic platform, changes within ASEAN and its dialogue partner network have reflected and facilitated the rapid undividing of the region.

Vietnam quickly moved from being at the pointy end of ASEAN diplomatic efforts in Cambodia from 1978 to 1991 to being the first continental Southeast Asian state to join ASEAN in July 1995. Belying criticisms of the slowness and indecisiveness of the “ASEAN Way,” by the end of 1999, the other three continental Southeast Asian states were members of ASEAN. All member states have been united, both during and since the Cold War, by the core concern at the heart of ASEAN’s formation in 1967, namely the vulnerability of individual states, and hence the region as a whole, to undue, autonomy-reducing influence by the surrounding major powers. Today, ASEAN is not focused on upholding the strategic divide between maritime and continental Southeast Asia. It is focused on reducing the sharp developmental divide between these two parts of the region.

The end of the Cold War led to the extension of ASEAN’s dialogue partner system, to the benefit of ASEAN centrality, to include India in 1995 and both Russia and China in 1996. ASEAN’s “dialogue relations” with the two communist major powers during the Cold War began in 1991 when Malaysia, as ASEAN chair, invited both China and the Soviet Union to send representatives to the ASEAN Ministerial Meeting and its ASEAN-Dialogue Partner discussions. At the same time, ASEAN, with strong support from key dialogue partners, sought to further connect the “spokes” of the ASEAN+1 dialogue partner process by building ASEAN-centred wider regional bodies starting with the ministerial-level ASEAN Regional Forum (ARF) in 1994. In 2005, ASEAN established the leaders-level East Asia Summit (EAS), which by 2011 included all the major powers surrounding the region.

The emancipating effects of the end of the Cold War came at the same time as maritime Southeast Asian economies, followed by China and then Vietnam, adopted similar export-oriented, FDI-based economic models that spurred their incorporation into proliferating regional and global production networks. Externally, this deepened and diversified Indonesia, Malaysia, the Philippines, Singapore, and Thailand’s relations with Japan, the United States, South Korea, and Taiwan, the home countries of the firms that developed and controlled these networks. Vietnam became the first and remains to be the only continental Southeast Asian economy to be internationally and regionally integrated in this manner. Today, it receives significantly more new Japanese FDI than Malaysia.⁶ With China’s embrace of a similar export-oriented, FDI-based model, the Southeast Asian economies’ integration and competition with China greatly increased. Southeast Asia became much more important economically to the major powers, as did these major powers become for the six major Southeast Asian economies.

This sharp intensification of extra-regional interdependence contributed to the diversification of ASEAN from a body for collective security diplomacy to one for collective trade diplomacy as well. Within ASEAN, this new trade diplomacy orientation saw the signing of the ASEAN Free Trade Area (AFTA) in 1992 and the later incorporation of the four continental Southeast Asian states into this agreement. The maritime Southeast Asian economies (minus Brunei) and Vietnam’s embrace of the export-oriented, FDI-driven model drove the signing of AFTA and the subsequent acceleration of its tariff reduction schedule in two key ways. First, it heightened member-state’s appreciation of the benefits of economies of scale and realization that no Southeast Asian economy alone has a competitive economy on the scale of China’s or of India that would adopt a similar economic model. Only Southeast Asia together could be of sufficient economic scale. Second, the individual Southeast Asian economies’ integration into these regional and global production networks increased and diversified intra-regional manufacturing trade and the demand for supporting logistics and services. The fact that Japanese firms at the center of many of these networks were a key advocate for AFTA reflects the origins and importance of these two drivers.

Externally, similar logic prevailed. From 2003, ASEAN began to negotiate an expanding number of preferential trade agreements with key and willing dialogue partners. The ASEAN-Japan deals was the first to come into full effect in 2008, followed by those with China, South Korea, India, and Australia and New Zealand in 2010. Today, the United States and the EU are the only two major dialogue partners that have not negotiated an ASEAN trade deal. The United States has focused its trade diplomacy in Southeast Asia on bilateral trade deals and on the wider TPP that includes four ASEAN member-states. In the last decade, ASEAN’s internal and external trade diplomacy functions have been arguably the organisation’s most dynamic and successful.

The China factor

The rapid and significant changes in China’s relations with the countries of Southeast Asia and with ASEAN both reflected and facilitated the undividing of the region. As signalled by the beginning of dialogue relations with ASEAN in 1991, China, post-Cold War, has adopted a policy of close and broad engagement with ASEAN.⁷ China’s engagement has contributed significantly to the strengthening of ASEAN’s dialogue partner relationships with all other major extra-regional powers and consequently has strengthened ASEAN centrality.⁸ China and India became the first major extra-regional powers to sign the ASEAN Treaty of Amity and Cooperation on the same day in 2003. Papua New Guinea was the first extra-regional state to sign this core ASEAN treaty in 1989. In order, Japan, South Korea, Russia, New Zealand, and Australia all signed in 2004 or 2005. The United States signed this agreement, a prerequisite for an ASEAN invitation to the EAS, in 2009, a year after North Korea. Article 10 of the treaty requires that each High Contracting Party (signatory state) “shall not in any manner or form participate in any activity which shall constitute a threat to the political and economic stability, sovereignty, or territorial integrity of another High Contracting Party.”

China was the first extra-regional state of any sort to negotiate from 2001, and in 2004 it signed an FTA with ASEAN on goods. Japan competitively followed suit with negotiations on the ASEAN-Japan Comprehensive Partnership starting in 2004. An agreement was signed in 2008. Negotiations with South Korea, Australia, and New Zealand, and India followed with preparatory work on an ASEAN-EU FTA now underway. Beyond helping to trigger a cascade of ASEAN trade negotiations with most of the other key extra-regional powers (not the United States or Russia), the ASEAN-China FTA is particularly important. As noted above, a principal driver of AFTA was the shared concern among ASEAN member-states about the uncompetitive size of their national economies of scale and the problem this would cause for their FDI-based trade and development models. China was and still is perceived as the main economy of scale sufficient to pose a threat to Southeast Asia, a threat that looked like it was being realized at the time of the ASEAN-China trade negotiations. In 2003-2004, China received, in net terms, roughly three times more new Japanese FDI than the six largest Southeast Asian economies. A decade later, this ratio has been reversed.⁹ Signing the trade deal with China, now the region’s largest trading partner, both deepened regional worries about Chinese economic competition/dominance and focused regional attention on gaining greater access to the Chinese market. No other ASEAN+1 trade deal has this same combination of competitive fear and opportunity, and no other deal is as important.

For over a decade after the Cold War, China largely pursued a “win-win” policy of closer cooperation with the individual states of Southeast Asia, a “charm offensive” that delivered many positive returns for China and its “peaceful rise” claims. When President Hu Jintao visited Manila in 2005, President Macapagal-Arroyo referred to this as a “golden moment” in the relationship and the Philippines later agreed to receive military aid and equipment from China. Vietnam, long the most fearful of Southeast Asian countries toward China, normalized relations with it in 1990, and then both sides adopted a “Four Goods” (good neighbors, good friends, good comrades, and good partners) approach to relations. This seemed to be working when Hanoi and Beijing came to an agreement over their land border disputes in 1999.¹⁰

During this same period, even the vexed issue of China’s territorial and maritime boundary disputes with five Southeast Asian states in the South China Sea permitted a deepening of China’s relation with ASEAN and ASEAN’s political-security centrality and unity. China became the first state to sign a declaration of conduct concerning territorial and maritime boundary disputes with ASEAN, and ASEAN became the first regional organization to sign such an agreement with China. The 2002 Declaration on the Conduct of Parties in the South China Sea signed in Cambodia after three years of ASEAN-China negotiations came a decade after ASEAN released its Declaration on the South China Sea in the Philippines after a bitter dispute between China and Vietnam (not yet an ASEAN member-state) in the waters around the Paracel Islands and the passage of a Chinese law authorizing the use of force to uphold its claims in the South China Sea. China-Philippine tensions, pressure on ASEAN to work together to manage the South China Sea disputes, and the gap between China’s good neighborly diplomacy and assertive actions in disputed waters spiked further in 1994-1995 when China began to build permanent structures on Mischief Reef, a South China Sea atoll also claimed by the Philippines and Vietnam (and Taiwan).

China’s agreement to sign the 2002 Declaration (after refusing ASEAN’s preferred, higher-level document, a Code of Conduct) gave credence to its peaceful rise narrative and associated hope that China was responsive to regional concerns about its strategic intentions and actions, and bound it and ASEAN together into a regular, regional diplomatic negotiation process over core sovereignty disputes between China and a range of ASEAN member-states. The final article of the Declaration calls on China and ASEAN to “agree to work, on the basis of consensus, towards the eventual attainment of” a code of conduct. Eleven years on, in December 2013, China agreed to start these negotiations. China and ASEAN also set up a joint working party to support the effective implementation of the Declaration of Conduct, whose terms of reference were agreed to in 2004.

Since 2002, the ASEAN position towards its member-states’ different disputes with China in the South China Sea has been to remain neutral on the opposing claims, not to call China out by name when it is accused by member-states of breaching the Declaration of Conduct, and upholding the process of negotiating a Code of Conduct as the proper means to manage these repeated flare-ups. This diplomatic formula contributed to the concepts of ASEAN unity and centrality and China’s cooperative engagement with ASEAN. It does not require ASEAN member-states to address within ASEAN their own overlapping disputes in the South China Sea or for China to depart from its firm position that territorial and maritime boundary disputes should be resolved bilaterally.

The Developing Divide

Over the last five years, hopes that Southeast Asian states, through ASEAN, could effectively manage their major power relations in a way that maximizes their autonomy and that China-Southeast Asia relations were truly on a new and more cooperative path have been dashed. Now, what dominates is dark talk of parallels between the present regional security situation and the start of World War Two in Europe and of US-China strategic rivalry again dividing Southeast Asia as did the US-USSR rivalry. Euan Graham traces how regional reactions to the US “rebalance” to Asia reflect, with some reservations, the maritime-continental divide with Thailand reverting to a more continental stance and Vietnam a clearly maritime one.¹¹ Focusing on the economic and infrastructure integration of the Greater Mekong Subregion that brings together China (Yunnan Province and the Guangxi Zhuang Autonomous Region) and the five continental Southeast Asian states, Geoff Wade sees a more clear-cut and deeper division between maritime and continental Southeast Asia.¹² Donald Emmerson, focusing on both strategic and economic factors, argues that the nature of the US-China rivalry will determine if Southeast Asian states and, hence, ASEAN split between China-deferring states and China-defying ones.¹³

That there are divisions among Southeast Asian states in relation to China is not in doubt. President Aquino of the Philippines publicly draws parallels between Chinese actions in the South China Sea and Nazi Germany, while Hun Sen’s Cambodia refers to China as a “big, old friend.” Today, the Philippines and Vietnam (with some opacity) see China’s actions in the South China Sea as the primary external security threat facing their countries, while Cambodia and Laos see their growing economic relations with China as the most important external support for regime security. What is in question is the nature of this developing divide and what does it means for ASEAN unity and centrality.

The China factor

As noted by Evelyn Goh and Sheldon Simon, for the first time since the 1940s, “an Asian state has become the primary security focus for Southeast Asia.”¹⁴ Again, it is the predominant Asian power from Northeast Asia and again it is a rising one not fully integrated or accepting of the current global order. At the core of the developing divide is China, and not the US-China relationship. China’s actions from being the primary infrastructure and aid provider in Cambodia and Laos to declaring and enforcing unilateral fishing bans in the South China Sea and turning disputed shoals off the coast of Palawan into landing strips and permanent docking facilities are reshaping its relations with each Southeast Asian state.

This is the primary determinant of Southeast Asian states’ (and, less so, the publics’) view of the US “rebalance” and not the presence or absence of fear in these states about the US-China rivalry and its impact on Southeast Asia. This is a very different situation than the Cold War divide where the ruling elites in Southeast Asian states positioned themselves in relation to the already existing and external to Southeast Asia US-USSR rivalry. Unlike the Cold War, the US strategic interests in Southeast Asia pose no direct threat to any Southeast Asian state. China’s do to those with which it has territorial and maritime boundary disputes.

As with the situation in Northeast Asia and the East China Sea, China’s growing assertion of what it perceives as its sovereign rights are aggravating its relations with less powerful states in the region with which it has territorial disputes. In reaction, these states are seeking stronger security guarantees from and closer security relations with the United States.¹⁵ As in Northeast Asia and the maritime boundary dispute between South Korea and China, China’s maritime boundary disputes with Malaysia, Brunei, and Indonesia, despite occasional incidents, so far, have largely stayed latent. Correspondingly, these three disputants have not been as focused on their disputes in their relations with China or on the counterbalancing benefits of enhanced American strategic involvement in the region as have the Philippines and, to a lesser extent, Vietnam. As in Northeast Asia, China’s territorial disputes and assertiveness in Southeast Asia may affect the US-China relationship in the region more than the overarching US-China relationship will affect regional security relations. The tail of China’s disputes in Southeast Asia could well wag the US-China rivalry dog.

Developing, but not crystallized

The divide in Southeast Asia caused by China’s actions is still only a developing one and is far from crystallizing in the way the Cold War one did. China already has a significant economic presence in and immigration flows to the region (it is the largest source of imports and immigrants and the largest destination of exports and FDI for Southeast Asia as whole), and particularly in Myanmar, Cambodia, and Laos, China’s presence certainly will continue to grow. At the same time, China seemingly has settled on a more assertive approach to its maritime boundary disputes. These two China-based divisive forces are bound to pull harder on Southeast Asia in the future. Likewise, leadership change in Southeast Asian states can have a significant impact on the approach to China. Aquino has taken a much firmer stance against China on the Philippine claims in the South China Sea (West Philippine Sea) than his predecessor Macapagal-Arroyo.¹⁶ The 2014 Indonesian presidential elections included some debate over the proper approach to Indonesia’s maritime boundary dispute with China and a spike in Indonesian and international interest in this dispute.

Presently, any simple dualistic divide of Southeast Asia throws up as many outliers as inliers. The continental-maritime divide does not work on the continental side. Vietnam’s increasingly tense relationship with China in the South China Sea and Vietnam’s emerging security partnership with the United States are casting Vietnam more in the China-defying category than the deferring one, while Vietnam’s embrace of the export-oriented, FDI-based economic model means that Vietnam is not dependent on China and is unlikely to become so. Likewise, some have traced the partial political and economic opening up of Myanmar to a desire to seek greater autonomy from China. As of now, in maritime Southeast Asia, unlike the continental subregion, the divide is not between those with or without border issues with China. Singapore has taken a much stronger position on supporting an enhanced US strategic position in Southeast Asia than Brunei, Malaysia, or Indonesia. This could change if China’s disputes with Brunei, Malaysia, and Indonesia stop being latent.

Presently, Southeast Asia can be best categorized as having; two states that are closely aligned with and increasingly economically dependent on China—Cambodia and Laos; two where their territorial disputes with China are the primary external security threat—the Philippines and Vietnam; and six others ranged in between but distinct from either pole. With the possible exception of Cambodia and Laos, all Southeast Asian states are united in their desire to maintain their autonomy from the surrounding major powers and their interest in Southeast Asian cohesion. Vietnam and the Philippines’ strong concern over Chinese actions in Southeast Asia puts them, alone in the region, in conflictual relationships with China.

ASEAN Rebalancing

China’s actions in the South China Sea from moving an oil rig into disputed waters with Vietnam to gaining control of a growing number of land features means that the facts on the water are now moving much faster than the glacial pace of the ASEAN-China consultations on the disputed sea. The Philippines’ decision to take its dispute with China to the International Tribunal on the Law of the Sea and Vietnam’s public references that it may follow suit are clear indications that ASEAN’s role in managing its member-states’ relations with major powers is no longer functioning in this case of increasing importance. China’s repeated emphasis that any eventual code of conduct will not be a mechanism for resolving the disputes further undercuts the credibility of ASEAN playing this role as did the Cambodian chairing of ASEAN in 2012, where it ruled out any mention of the South China Sea in the ASEAN Foreign Ministers Joint Statement, a refusal that led to there being no such statement released. With good reason, the Philippines and Vietnam are looking more and more outside ASEAN and Southeast Asian states to seek diplomatic and concrete counterbalances to China’s growing assertiveness in the South China Sea. The G-7 position on the East and South China Sea disputes, as stated in the joint statement in Brussels on June 4-5, was clearer, more comprehensive and more in line with the Philippine and Vietnamese positions on the South China Sea disputes than ASEAN’s own position, as stated in the joint statement at the end of the ASEAN leaders’ summit in Myanmar on May 10-11 or the preceding joint statement by ASEAN foreign ministers on “current developments in the South China Sea.” The G-7 statement publicly endorsed the rights of claimants to “seek peaceful resolution of disputes in accordance with international law, including through legal dispute settlement mechanisms.” Neither ASEAN statement included such an endorsement of international legal actions already taken by a member-state. Rather, both statements focused on the seemingly quixotic if diplomatically expedient quest for a Code of Conduct.

ASEAN’s approach to the South China Sea is increasingly divided and divisive, and ASEAN is playing an increasingly peripheral role in the management of these disputes. Given the importance of these disputes for the second and third most populous ASEAN member-states, this lack of unity and centrality strikes at the heart of ASEAN and its geostrategic utility to its member-states. If Chinese assertive actions in the South China Sea were to intensify in waters in dispute with Malaysia, Indonesia, and Brunei or the awareness of these states of Chinese actions in these disputed waters were to grow, then this problem for ASEAN could deepen.

Fortunately for ASEAN, the organisation’s primary focus and its utility for its member-states is no longer as a collective diplomatic platform to address major power strategic and military interests in Southeast Asia. As shown by its ambition to establish an ASEAN economic community, an ASEAN sociocultural community, and an ASEAN political-security community in the post-Cold War period, ASEAN’s coordination of intra-ASEAN relations has become the main focus of activity. ASEAN is now the main trade diplomacy platform for the less open member-state economies with RCEP the latest enhancement of ASEAN’s trade diplomacy function. Southeast Asian states now increasingly use ASEAN-based engagement with the surrounding major powers to seek support for ASEAN’s institutional strengthening and internal community-building mandate. ASEAN’s larger rebalancing towards a greater focus on trade diplomacy and internal integration means that its diminishing role in the South China Sea disputes will not paralyze the institution.

The Cold War divided Southeast Asia and united ASEAN. Today, relations with China, not the US-China relationship, are dividing both. However, the parallels between the present China-based divisions in Northeast and Southeast Asia are strengthening strategic and defense ties between like-positioned states in both regions. The rise of China and its maximalist approach to maritime disputes, just as in the Cold War, mean that the strategic futures of Northeast Asia and Southeast Asia may well be similar. Though this time, rather than the great power rivalry between the United States and the USSR defining the strategic circumstances of the states in both regions, China’s relations with its Northeast and Southeast Asian neighbors may define the strategic circumstances of the US-China relationship.