‘DIVERSE CHALLENGES, GLOBAL SOLUTIONS’
- The contours of world economic geography are redrawn at critical junctures in history, and nowhere is this more apparent at present than on the eastern shores of the Pacific. From the time of the Roman Empire in the 1st Century AD to the mid-20th Century, economic gravity was pulled inexorably northward, from the Mediterranean to Northern Europe, and then westward to North America in the 19th and 20th Centuries. Since the mid-20th Century, however, the trend unmistakably shows an eastward turn, a trend towards the Asia – Pacific that is notable both for its dramatic magnitude and unprecedented speed.
- Whenever global economic power centers have been in transition, there have been both geopolitical and geoeconomic consequences. Too often in the past, these have taken the form of inter-state rivalries, tensions, conflicts, and, occasionally, full-blown wars. Status quo powers are reluctant to cede power to newly-rising states, while newly-rising states are dissatisfied with accepting positions that do not reflect their hard won capabilities. This is especially true since receding powers will have built, and will have an interest in retaining, their privileged political, economic and cultural arrangements with other countries. Ascendant powers will, naturally, be seeking to make arrangements that are to their own advantage.
Distinguished guests, ladies and gentlemen:
- I do not believe there is a greater challenge before us today than in maintaining the spirit of peace, cooperation and development, in the midst of the economic, political and military changes taking place in the region. It is a challenge that will involve every stakeholder – governments, businesses, including those of you in the legal fraternity, intellectuals and whole societies. It is a challenge in which we cannot afford too many missteps. The price could be incredibly great if we fail, both for our present and future generations.
- Fortunately for us, we are already proceeding down a very promising path, a path leading us towards greater integration and interdependence. Since the late 1970s and early 1980s, the Asia – Pacific region has shown great pragmatism and unlocked dynamism that has lain dormant for many decades, if not centuries. First, there was post-World War II Japan. This was followed by Taiwan and South Korea – the so-called ‘East Asian tigers’ and key Southeast Asian economies. Then, there has been the historic opening of the People’s Republic of China, an event that is still being felt today and will continue to do so for some decades to come. Waiting in the wings is a rapidly rising India, one that is looking east, and a newly-minted ASEAN Community that is already in the thick of the action.
- The countries of the Asia – Pacific have not sought to wall themselves off, as some countries have tried to do, but to integrate among themselves and with the rest of the world. This has paid them rich dividends. Between 1980 and 2010, for example, China managed to reduce extreme poverty from 80 per cent of the population to just 10 per cent, involving a staggering 680 million people. Other countries, including Malaysia, have also done well, largely by pursuing policies of openness and integration. The advantages of globalization, integration and growing interconnectedness are therefore not just theoretical concepts. They are a reality in the Asia – Pacific.
- Many believe that deepening integration and interdependence should lessen the probability of conflicts and the outbreak of wars. The reasoning is simple: Wars are very costly in economic and human terms. Interdependence thus acts as a deterrent preventing highly-integrated countries from acting in a predatory manner. The European Union has followed this strategy for more than 60 years and has successfully avoided a repeat of the constant wars that had plagued the region in the previous 60. The Association of Southeast Asian Nations or ASEAN has also pursued deeper integration and connectivity since its formation in 1967, not only among its ten members but also with other countries in the region. It, too, has enjoyed relative calm and peace.
- ASEAN has a dense network of institutional agreements and arrangements, mainly in the economic sector. It is currently pursuing the Regional Comprehensive Economic Partnership or RCEP, with Australia, China, South Korea, India, Japan and New Zealand. The RCEP covers the liberalization of goods, services and investment and has working groups on intellectual property, competition, economic and technical cooperation, and dispute settlement. Among themselves, ASEAN member states have, as of December last year, begun pursuing three ambitious ten-year Blueprints, for the establishment of the Economic, Political-Security and Socio-Cultural Communities. Since 2010, they have also adopted an ASEAN Master Plan on Connectivity to promote regional and national physical, institutional and people-to-people linkages.
- At the same time, individual countries and subsets of countries have embarked on broader initiatives towards forging greater integration and, ultimately, creating interdependence. The twelve-member Trans – Pacific Partnership (TPP), concluded in October last year, is certainly notable in this regard. The five Asian members of the TPP are Brunei, Japan, Malaysia, Singapore and Vietnam. The TPP has seen lively debate during the last five years. Even today, the pros and cons of the TPP are still being heatedly debated as countries prepare themselves to ratify the agreement. Among the contentious issues are its rules regarding investor-state dispute settlement, intellectual property protection provisions, state-owned enterprises, labor standards and environmental protection.
- On an even more breathtaking scale is China’s initiative of a trans-continental Silk Road Economic Belt and Maritime Silk Road, now named the ‘Belt-Road Initiative’ or just BRI. For those who may be unaware, the Belt has two main components. The land route seeks to connect China to the Persian Gulf and the Mediterranean Sea through Central and West Asia as one prong and through Southeast Asia and South Asia as the other. The maritime route conceives of a link between China’s coast and Europe as well as Eastern Africa through the South China Sea and Indian Ocean in one direction and a link with the South Pacific in the other.
- If and when fully realized, the BRI promises to be a gargantuan network of roads and highways, ports, pipelines and rail and sea routes that will straddle the Asian, African and European continents. It will secure China’s major supply lines, a major concern that the country has, and potentially create commercial spinoffs for those situated along these lanes, just as the historic Silk Road once did. Naturally, such an effort involves a host of countries, each looking at the BRI not just for the economic benefits but also its strategic, political and security implications. Given the sensitivities involved, China has had to be highly circumspect when broaching this subject and few concrete details have so far been revealed.
- However, China’s New Silk Road initiative is coming at a time when the global and Asian order is in a state of flux. The global and regional balance is shifting, and such occasions are fraught with tension and uncertainties as ascending powers seek more space, while those at the top are loathe to share their perch or cede their supremacy. The half century of American primacy is giving way to a more diffused economic order where China is set to soon resume its position as the world’s largest economy after a lapse of five centuries. China’s growing economic weight is translating into stronger political and strategic influence and greater military capacity. This has raised concerns in the United States, Japan and India especially, although the United States and its many allies in Europe, the Middle East, East Asia and Australasia continue to enjoy overwhelming military power.
- The increased friction between a resurgent China and other major powers, especially the United States, is occurring on three critical fronts. The first is at the diplomatic level, where a more empowered China that is seeking to play an active “responsible stakeholder” role is establishing new bilateral strategic partnerships and strengthening existing ones in all continents. This has created concern among the powers who consider certain areas and countries as in their sphere of influence and prompted them to launch competing initiatives. The most obvious examples are the contests for strategic influence in Africa between the United States and China and in Asia and the Pacific Islands between Japan and China.
- The second front, more significant for its long-term impact, is in the area of international institutions for financial and economic cooperation. Frustrated by the slow pace of reform in the Bretton Woods institutions to more fairly reflect the growing economic clout and stakes of the larger developing countries, China has led them to establish the Asian Infrastructure Investment Bank (AIIB), the BRICS New Development Bank and the Silk Road Fund. China in particular has been understandably unhappy with the 3.81 percent of voting rights it has in the International Monetary Fund (IMF) although it accounts for 12.4 percent of world GDP.
- The third and most important front, the one where China is facing the biggest challenges to its quest for regional leadership is the security front. The noted American international relations scholar, John Mearsheimer, ranks the probability of a future Sino-American war to be unnervingly high. Mearsheimer posits that China is engaged in a security competition with the US, and that China will seek to push the US out of the Asia – Pacific region, beginning with China’s coast and the first line of islands in the South China Sea. The US’s counter to China, according to Mearsheimer, should therefore be to form an alliance with neighboring states in a strategy of ‘containment’. He dismisses the thesis that increasing economic interdependence will be able to constrain the chances of war.
15. While we do not need to agree with this view, we do need to be aware of the dangers. There is the rising tide of nationalism globally. The tendency to blame others for one’s economic ills is widespread and could grow over time. In Europe, the vast influx of Syrian and other refugees have led some countries to close their borders. In Britain, the issue of immigration from Eastern Europe is central to the upcoming referendum as to whether the country remains within the EU. Meanwhile, acts of terrorism have strengthened electoral support for nationalist right wing parties in many countries and fuelled increasing suspicions and xenophobia.
16. ASEAN continues to maintain close relations with China fully aware of the powerful strategic reasons for doing so, but its hitherto mild tone on the disputes in the South China Sea and China’s actions in the area has hardened. All the Southeast Asian claimants as well as Indonesia have increased their defence budgets and are acquiring more naval and maritime surveillance and patrol assets. Vietnam and the Philippines have been the most vocal. Acutely conscious of its very modest maritime defence capabilities, Manila has restored defence ties with the United States in a new Enhanced Defence Cooperation Agreement. It has also taken the unprecedented step of filing a case against the Chinese position in the South China Sea with the United Nation’s Permanent Court of Arbitration.
17. Japan has reacted by making a radical change to its post-war defence policy. It has adopted a more antagonistic stance towards China, boosted defence spending, re-interpreted its Constitution to allow for military operations overseas including with the United States, and strengthened its strategic focus on Southeast Asia. Tokyo has taken an openly confrontational position against China on the territorial disputes in the region, and provided patrol vessels and other assistance for maritime defence to the Philippines, Vietnam and Indonesia.
18. China’s New Silk Road ventures in the Indian sub-continent have also spurred India to raise its strategic profile in the Indian Ocean and East Asia in response. India supports the BRICS Development Bank and has joined as founding member of the Asian Infrastructure Investment Bank (AIIB) with the second largest number of shares after China, but views with concern China’s activities around it.
- In response, India has launched Project Mausam which targets the same maritime routes as those of the Maritime Silk Road from East Africa to Southeast Asia. New Delhi has also pursued its Look East and Act East policies with greater vigour, resuming oil exploration off Vietnam’s coast, establishing dialogue forums with the Pacific Islands, upgrading strategic and defence ties with Japan and Australia, and holding naval exercises with the United States and Japan under the umbrella of Exercise Malabar.
- Then there is the prospect of protectionism. In the US, presidential candidates from both the major political parties appear to be opposing the TPP in favor of crafting rules that are deemed to be more advantageous for the US. While this is often interpreted as political posturing on the part of the candidates, the dangers of protectionism cannot be ruled out. The TPP is widely perceived to only benefit the top 1 per cent that is already rich and wealthy rather than the middle and working classes. To varying degrees, this sentiment is also present in some other Asia – Pacific countries.
- If all countries bordering the Pacific, both East and West, are to write a new chapter of world history, one that is as peaceful as it is flourishing, constituent states must start to address not merely their own security and strategic interests, but also recognize those of neighboring states. I believe the Asia – Pacific nations can craft a new reality for themselves, one that departs dramatically from the tyranny of historical antecedents and avoids many of the region’s pitfalls. We certainly have the macro incentives to do so and now need to find the necessary ways and means to achieve them.
- First, the Asia – Pacific countries must heighten and deepen the degree of interdependence to hitherto unprecedented levels. Even if greater integration and interdependence does not offer any guarantee that frictions and conflicts will not arise, they are still instrumental to peace in the region, far more than exclusion, separation and isolation ever will be. Differences in strategic interests and perceptions may mean that we need multiple agreements and arrangements to suit countries. Agreements such as the TPP, which does not include China, and the RCEP, which does not include the US, must not be allowed to become sources of competition and confrontation. Even at the expense of some overlap and duplication, we will need to ensure that all countries are included in one or more partnership agreements with other states.
- Second, much higher degrees of integration and interdependence mean that we need to act more comprehensively than before. Greater physical connectivity, for example, requires more harmonized customs, immigration and police cooperation and procedures in order to prevent smuggling, human trafficking, terrorism and money laundering. Management of water resources and environmental quality become collective concerns and responsibilities rather than those just of individual states. The trans-boundary haze problem in Southeast Asia is a case in point.
- Third, it is critical not only to have a system of rules but also the rule of law. In a highly integrated system, the law of ‘the jungle’ – that is, brute force – cannot be the final arbiter in such things as border demarcation disputes. Agreements such as the TPP, RCEP and, possibly, in the future, a Free Trade Area for the Asia Pacific or FTAAP, introduce rules governing trade and investment, and it is critical that countries willingly abide by the spirit and letter of the obligations imposed and use the processes established when there are disagreements. The legal fraternity, of which you are a part, will have a key role to play in this regard.
- Fourth, with a more highly integrated system, there is a greater need for the provision of public goods, particularly security. We already have long standing institutions on which to build upon such as the ASEAN Regional Forum, the East Asia Summit and the ASEAN Defense Ministers Plus. We must strengthen these forums and use them to more effectively deliver tangible public security goods for our peoples. In an era of unparalleled trans-national interconnectedness and complexity, the assurance of good outcomes cannot always be safely assumed and we need to ensure that there are contingency plans and procedures in place to address natural disasters, pandemic diseases and trans-national crime.
- Fifth, we need to commit ourselves to the most intensive forms of consultation, engagement, cooperation and institution building. We will need to build trust and confidence with each other in order to ensure a high degree of predictability and stability. Risks and uncertainties are rife and room for mishaps arising from strategic miscalculations is plentiful. We must ensure that we do not fall prey to the law of unintended consequences.
Distinguished guests, ladies and gentlemen:
- I would be less than honest if I said that I do not find certain developments in the Asia – Pacific to be more than a little distressing. But I am optimistic as well for the region, despite the economic, political and security challenges. It is imperative that the Asia – Pacific be multi-polar, inclusive, open and rules-based. I believe that despite the challenges, pragmatism and the desire to forge a better future will continue to be the region’s modus operandi.
- We, in Malaysia, are deeply committed to the peaceful development of ASEAN, East Asia and the wider Asia – Pacific. We are a relatively small country but committed to the region’s wellbeing and want to play a part in it.
- In closing, I would like to thank the organizers of this 26th Inter-Pacific Bar Association for the kind invitation to share my thoughts.