Time for a new ASEAN way

If the recent Association of Southeast Asian Nations (ASEAN) conference in Phnom Penh will be remembered for anything, it will be for what went wrong rather than what was accomplished. For the first time in ASEAN's 45-year history, the 10-nation grouping failed to deliver a joint statement, underscoring deep internal divisions behind the façade of unified consensus.

At the heart of the problem is the South China Sea, where certain member states have simmering territorial conflicts with China. In particular, this has pitted Vietnam and the Philippines, proponents of a multilateral resolution to the disputes, against Cambodia, a close China ally whose position has been to keep the conflict from going international.

But rather than despairing over ASEAN's future, the crisis of consensus should be looked upon as an important opportunity for change. Currently ASEAN summits and forums allow only for member states to air their concerns, which are often as varied as the reasons for why they are ultimately not jointly addressed. Because member states are not bound to honor any proposed or passed resolution, these assemblies lack the power to force action.

After the breakdown in Phnom Penh, it is clearly time to change all of that. Established in 1967 as a six-nation bulwark against the spread of communism, ASEAN continues operates on the principles of respect for each member's national sovereignty and non-interference in each other's internal affairs.

Over the years, this arrangement has helped to avoid the creation of internal power blocs, where the biggest and most powerful states could have tried to dictate the affairs of smaller members. The absence of any binding force, however, has rendered ASEAN essentially ineffective in leading the region or resolving crises.

The future of ASEAN depends on how much its members are willing to give in order to take. If ASEAN is to become an effective force for change in Southeast Asia, it must have the ability to bind its members to resolutions. To be sure, consensus rather than majority rule will still serve the grouping. At the same time, ASEAN would be more effective if member states were willing to surrender a measure of sovereignty over certain international affairs. A supranational organization whose authority is legally binding would provide the teeth necessary for ASEAN to act when parties are in general agreement.

Much like a court of justice, a new binding arrangement would allow member states to opine and rule in favor or against certain group decisions. Dissension would necessarily be encouraged and protected, allowing for opposition voices to state countervailing views and opinions. To maintain a unified front, however, all member states would be required to honor and uphold any final resolution.

Consensus rule is far from perfect, as there will undoubtedly be times when member states believe certain resolutions work against their national interests. But the recent breakdown of unanimity in Phnom Penh represents a valuable opportunity to weigh ASEAN's strengths and weaknesses, and make the necessary adjustments to improve its credibility as an effective organization.

Non-committal values
ASEAN's motto, "One Vision, One Identity, One Community", is a lofty ideal that to date has little basis in reality across the region of 600 million people. Many now hope that the ASEAN Economic Community planned for 2015 will through more regional trade, travel and transfers prompt faster economic growth and regional coherence.

Yet ASEAN states differ in almost every measurable way, ranging from levels of economic development to technological advancement to basic governing structures and principles. These differences have made it difficult to establish an agreed set of core values - nominally human rights, democracy, and the rule of law - to which all members sincerely subscribe and uphold.

ASEAN has not been completely negligent in protecting these values, seen in the recent creation of a dedicated, though non-binding, ASEAN human rights body. But with its complex mix of authoritarian, semi-democratic and democratic regimes, it would be naïve to assume that all ASEAN member states subscribe to these values in equal degrees.

Indeed, these divergent political outlooks are arguably the biggest stumbling block to transforming ASEAN from a talking shop into an effective regional and global player.

Independent research shows that countries whose values mirror or nearly mirror one another are more likely to resolve differences than with countries whose values do not align. While basic values of human rights, democracy and the rule of law are respected to varying degrees among ASEAN states, is it any wonder that related issues have so frequently failed to result in concrete, unified action?

Take, for example, Vietnam, which has recently experienced a significant deterioration of its human rights situation and continues to resist any move towards democratic rule. Vietnamese citizens enjoy certain basic civil liberties, but are strictly barred from voicing their opinions against the government lest they be charged and potentially jailed on anti-state charges.

Although Vietnam may share the Philippines' position on the need to internationalize its South China Sea disputes with China, these two countries are no more alike than Singapore and Cambodia.

The Vietnamese government has proven unwilling to compromise on even marginal matters of political and constitutional reform, while the Philippines accommodates a lively, if not unruly, democracy.

This is not a criticism strictly reserved for Vietnam. ASEAN members Cambodia, Laos and Myanmar all maintain various anti-democratic laws and measures aimed specifically at stifling dissent. Yet for ASEAN to move forward in a unified direction, all ten members must reach a common stance on these basic values.

An organization divided over basic questions of rights and freedoms cannot lay claim to having "One Vision, One Identity, One Community", let alone reach a unified stance on more complex matters such as territorial disputes in the South China Sea.

Every effective group needs a strong leader, ideally a person or state who possesses qualities others seek to emulate. In ASEAN's context, such a leader would need to embody the wealth and technological prowess of Singapore, the economic power of Indonesia, the openness of Thailand and the bold rhetoric of the Philippines. Such a person or state, of course, is strictly hypothetical in ASEAN's current context.

Through not without flaws and not a clear beacon of democracy, human rights and rule of law, Indonesia nonetheless would provide a compelling face for a new and improved ASEAN. Indonesia has stayed above the fray of South China Sea tensions and recently played a behind-the-scenes mediating role to keep internal divisions from becoming full-blown fissures over the issue.

With its strong bilateral ties with China and the United States, Indonesia is also well-positioned to navigate ASEAN the growing superpower rivalry for influence and advantage in the region. As this rivalry intensifies and the risk of divide and rule tactics rise, a unified ASEAN will be crucial to maintaining regional peace and stability.

Whether ASEAN can serve that role will remain doubtful without substantial and prompt changes in the grouping's culture, rules and leadership.

Khanh Vu Duc

Tensions mar APEC meeting

Tension over territorial disputes and rising protectionism have cast a rather gloomy shadow over the gathering of leaders of 21 Asia-Pacific Economic Cooperation (APEC) members. These nations account for 54 percent of world economic output and 44 percent of trade.

China is throwing its weight around in the South China Sea dispute, provoking invective from Vietnam and the Philippines, and continues sabre-rattling at Japan for its plans to buy disputed islands in the East China Sea, near oil and gas reserves.

Japan is embroiled in further disputes with South Korea over more rocky islets, and with APEC host Russia over the Southern Kuriles — an archipelago seized from Japan by the former Soviet Union at the end of World War II.

Despite the tension, APEC leaders will flock to the annual summit on Saturday and Sunday on Russky Island, off Vladivostok, Russia’s most eastern city near South Korea, Japan and China.

Russian Federation Foreign Minister Sergey Lavrov believes these tensions will not hinder the already strong economic cooperation between APEC members.

“APEC is built on solid foundations,” said Lavrov on Thursday.

“Considerable progress has been made by member economies in advancing their 2012 agendas.”

Lavrov’s optimism seems to have some relevance in the real world.

Chinese President Hu Jintao, Japanese Prime Minister Yoshihiko Noda and South Korean President Lee Myung-bak arrived on Thursday and Friday.

It remains unclear, however, whether there will be any opportunity for the leaders to meet.

US President Barack Obama has skipped the summit as he prepares for the upcoming presidential election. Secretary of State Hillary Clinton is representing the US.

President Susilo Bambang Yu-dhoyono, with his entourage of more than 200, arrived on Friday afternoon with scores of agendas in hands, including plans for bilateral meetings with China, Russia, Mexico, Peru and Chile. He is also due to talk at the prestigious APEC CEO Summit, and meet with a dozen noted Russian businessmen.

Indonesia’s participation this year, however, has been marred by growing allegations of protectionism from fellow APEC members, particularly over the country’s recent policies to ascend the value chain.

“There have been some discussions over protectionism issues, and the need to address them,” said Trade Ministry’s director general of international trade cooperation Iman Pambagyo.

“According to a presentation by the World Trade Organization, the trend of protectionism has increased over the years,” he said.

Indonesia has fallen victim to protectionism measures by several APEC members. The US, for example, has been putting environmental barriers against Indonesia’s crude palm oil (CPO).

“Our CPO market is worth around US$8 billion in the US, annually. We have proposed that the US lift the environmental concerns over our CPO so that other developed nations will follow suit,” said Trade Minister Gita Wirjawan.

Several developed APEC members, particularly Japan, have recently criticized Indonesia’s stance on capping raw mining exports, alleging such measure to be protectionist.

Indonesia claims its policy is actually aimed at encouraging local and foreign companies to process commodities internally by setting up processing facilities and thereby creating jobs.

A joint statement released after the APEC ministerial meeting on Thursday emphasized the need to resolve the protectionism issue.

“We note with concern the International Monetary Fund’s downward projection for global economic growth for this and next year and the rise in protectionist instances around the world. These developments increase the urgency for further action to keep markets open.”

APEC, set up in 1989 in response to growing interdependence of Asia-Pacific economies, brings together economies surrounding the Pacific Ocean — from China, Southeast Asia, Australia to Chile via the US. Its core mission is to reduce tariffs and other trade barriers among members.

Jakarta Post

China’s territorial aggression reminiscent of imperial Japan

Having dramatically increased its military and naval prowess, Beijing now asserts expansive regional and maritime claims.

Some China scholars have begun to accuse Beijing of “salami tactics” in seeking to seize gradual control of the South China Sea. The term evokes disturbing echoes of Nazi Germany’s incremental aggression until it was ready for all-out war.

Applying Second World War terminology to China’s current behaviour may seem overblown, but it is apt. In fact, China’s actions also resemble those of another bad actor of that tragic period: Imperial Japan.

The emerging Japan of the 1920s and ’30s, like today’s China, was steeped in historic resentment of the West’s forcible imposition of commercial and cultural influence. Even as Western interaction hugely benefited Japan’s economy then and China’s now, both countries set about building military capabilities commensurate with their new economic prowess.

Naked military power was seen by imperial Japan, as it is by the Communist Party in China, as necessary to defend and expand industrial achievements and economic influence against hostile western nations, most notably the US.

After attacking and annexing Manchuria on the basis of a minor pretext in 1931, Japanese forces extended their invasion into China proper. By the end of the 1930s, Tokyo was ready to look beyond its controlled land area comprising the home islands, Korea, Taiwan and much of China.

On August 1, 1940, Japanese foreign minister Yosuke Matsuoka announced his government’s intention to establish a “Greater East Asia Co-Prosperity Sphere” under Japan’s physical and/or political control and free of western influence. It would include the former European colonies of Southeast Asia –— what Tokyo called the Southern Regions — and the Pacific Islands.

The Co-Prosperity Sphere would provide a supply of regional raw materials and energy resources to ensure Japanese self-sufficiency while enabling Japan to control the world’s access to these vital areas and commercial routes.

Mirroring the strategy of Japan’s military government prior to Second World War, the newly established People’s Republic of China first consolidated its territory before venturing into wider maritime regions. In 1950, the same year it supported North Korea’s invasion of South Korea, China invaded and incorporated Tibet and East Turkestan (now Xinjiang). In 1962, it invaded India and seized territory which it still holds. In 1969, it engaged in a series of border conflicts with the Soviet Union that almost erupted into all-out war. In 1979, after Vietnam had invaded Cambodia and overthrown China’s ally, Pol Pot, China invaded northern Vietnam to “teach it a lesson” through a scorched-earth campaign.

Having dramatically increased its military and naval power, China now asserts expansive territorial and maritime claims in the East China Sea and South China Sea, maintains its long-standing claim over the Taiwan Strait, and indulges its ally North Korea’s claim to dominance in the Yellow Sea.

It has made claims in the Indian Ocean and implemented a “string of pearls” strategy of bases and diplomatic ties along the Bay of Bengal. Its submarine base and concentration of strategic naval forces near its South China Sea province of Hainan enable it to interdict shipping at the three crucial chokepoints in the Indian Ocean — Bab Al Mandeb, the Strait of Hormuz, and the Strait of Malacca.

The geographic footprint of China’s claims and expanding reach in East Asia, including its strategic aspirations for the first and second island chains extending to Guam, is almost congruent to Imperial Japan’s planned map for its Co-Prosperity Sphere.

Obviously, no historic analogy is ever entirely apposite, and there are many differences between Imperial Japan in the 1930s and ’40s and China ruled by the Communist Party today. But there are more than enough parallels in strategic ambitions to awaken realistic concerns among western policy makers and those who influence them.

As China tries its hand at a new version of a Greater East Asia Co-Prosperity Sphere, the US needs to lead a united international response that discourages further Chinese adventurism.

Washington began such an approach during the last two years of the George W. Bush administration and has accelerated this Asia “pivot” or “rebalancing” under President Barack Obama. The US Secretary of State, Hillary Clinton, was in the region last week, building collaboration among America’s friends and allies to settle territorial disputes jointly with China, which prefers bilateral talks — a strategy that gives it the upper hand.

At a press conference in China, Clinton aptly described the US-China relationship as one in which “Our two nations are trying to do something that has never been done in history, which is to write a new answer to the question of what happens when an established power and a rising power meet”.

It’s a question that concerns a great many more countries than these two. Whether the US is led by a President Obama or President Romney, America will have to find the resources and diplomacy to continue its regional collaboration in Asia — ensuring that, this time, the outcome will be something better than war.

Christian Science Monitor

Crucial for ASEAN to take stand on South China Sea disputes: PM Lee


BEIJING - Singapore's Prime Minister Lee Hsien Loong has said it is crucial for ASEAN to weigh in on territorial disputes in the South China Sea with a view of resolving them constructively.

He urged the regional grouping not to stay mum on the code of conduct for the South China Sea.

Speaking to the Singapore media at the end of his official visit to China, Mr Lee also underscored the need for Singapore to make clear its stand on the issue.

Singapore is pushing for ASEAN to start discussion and take a stand on a code of conduct for the South China Sea.

At the end of his week-long tour of China, Mr Lee said issues such as freedom of navigation and the need for stability in the South China Sea affect all ASEAN countries, not just those with competing territorial claims.

Mr Lee said: "Members will have disputes, but ASEAN has to take a stand and can take a neutral stand. It's like when the Thais have a dispute with Cambodia, ASEAN made a statement which didn't take sides with either Thailand or Cambodia. This was over the Preah Vihear temple, but ASEAN did have a view that it should be settled peacefully because otherwise it is going to do harm to ASEAN."

He called the South China Sea issue a "difficult dispute" and said Singapore has to speak constructively and encourage moderation on all sides.

Mr Lee said: "We can't speak for America, we should not speak for America, we should not speak for China. We have to speak from Singapore's perspective. The Chinese understand our position. It's not inimical to the Chinese view and it is not very different in many major elements with what China is trying to achieve, because China does not want to raise a temperature or to have a conflict either."

On Singapore's role in China's development, Mr Lee said the private sector is increasingly taking the lead, while the Singapore government plays a supporting role.

Bilateral relations have also moved from economics to cooperation in other areas such as tourism and traffic management.

Mr Lee said: "It's a big headache for all the Chinese cities, and you can see the traffic jams in Beijing. Where they have to, they don't auction but they have a kind of COE system and they hold a ballot every month and distribute the COEs. And I read just a couple of days ago that Guangzhou is also doing the same - partly balloting, partly auctioning off licence plates which mean COEs.

"So they see Singapore doing it, they adapt, they are looking at us not as the only way, but one example, and they find a solution which is workable and politically acceptable in China, and they move forward. We help them to map out one corner of the possibilities for new policies."

China is also interested in Singapore's social management and in building a harmonious society.

Mr Lee said that that is an area that Singapore is still grappling with especially in getting the young to develop a sense of community purpose and belonging beyond themselves and their families.

Channel News Asia

China’s President Calls for Restraint in South China Sea Dispute

Chinese President Hu Jintao (R) meets with his Vietnamese counterpart Truong Tan Sang in Vladivostok, east Russia, on Sept. 7, 2012. (Xinhua/Xie Huanchi)

Chinese President Hu Jintao told Vietnamese counterpart Truong Tan Sang that both countries should stay calm and act with restraint over territorial disputes in South China Sea.

“There have been some difficulties with China-Vietnam relations because of the dispute of the South Sea,” Hu told Truong at a meeting in Vladivostok, Russia, according to a statement from China’s Foreign Ministry. “This is what we don’t want to see.”

China has become increasingly assertive in claiming sovereignty over islands in the South China Sea, a region rich in oil and gas. Vietnam, the Philippines, Malaysia, Taiwan and Brunei also have territorial claims over parts of the area.

China and Vietnam “should avoid any unilateral actions that would expand, complicate and internationalize the dispute,” Hu was cited as saying in Vladivostok, where he and Truong are attending the Asia-Pacific Economic Cooperation summit. He said they should “adhere to bilateral negotiations and friendly consultations.”

China’s foreign ministry said Truong told Hu that Vietnam is willing to work with China to solve the dispute as early as possible through peaceful and friendly negotiations.

Bloomberg

Clinton Plays Up 'Frank' Talks With Beijing

U.S. Secretary of State Hillary Clinton put a positive spin on meetings with Chinese leaders earlier this week that yielded little visible progress on diplomatic disputes, saying the relationship between the two superpowers is mature enough to withstand differences.

Secretary of State Hillary Clinton with the sultan of Brunei on Thursday.

Nearing the final leg of her 11-day Asia-Pacific tour with Thursday stops in East Timor and Brunei, Mrs. Clinton also sought to dial back speculation that she was visiting the smaller nations in an effort to counter Chinese influence in the region.

"We are not here against any other country," she said. "We happen to believe that Asia and the Pacific are quite big enough for many countries to participate in the activities of the region."

Her stops, which included a tour of a coffee plantation in Connecticut-sized East Timor, followed her visit to Beijing, where she and Chinese leaders appeared far apart on key issues such as how to end Syria's civil war and resolve territorial disputes in the resource-rich South China Sea. Chinese Foreign Minister Yang Jiechi dismissed the idea that there was a serious problem in the South China Sea, saying the historical record supported its claims there, and said solutions to the Syrian crisis shouldn't be imposed by outside countries.

Mrs. Clinton was also greeted skeptically by Chinese state media, which questioned whether U.S. officials were trying to drive a wedge between Beijing and other countries across the region.

"As was evident yesterday, there is a huge amount going on where the United States and China need to consult," Mrs. Clinton said, also mentioning issues including Iran, North Korea and the global economic recovery. "Even when we disagree, believe me, we can talk very frankly now. We can explore the toughest issues without imperiling the whole relationship," she said.

"The United States, certainly I, am not going to shy away from standing up for our strategic interests, and in expressing clearly where we differ," she added.Mr. Yang called the talks "constructive and fruitful," state media said.

Analysts widely believe Mrs. Clinton's trip is partly intended to rally leaders in other Asian nations to forge a common position on issues such as how to settle disputes in the South China Sea, which is claimed in whole by China and in part by Vietnam, the Philippines, Malaysia and others. The U.S. says it doesn't take sides in territorial disputes, but says it has an interest in maintaining freedom of navigation in the sea, which is home to some of the world's most critical shipping lanes.

Mrs. Clinton's trip comes two months ahead of a major regional summit in Phnom Penh in November where U.S. leaders are expected to continue pressing for a code of conduct to govern conflicts in the sea. China has opposed efforts to settle disagreements at multilateral forums and says it prefers to handle them on a bilateral basis.

Her stop in Brunei, meanwhile, took her to a tiny petrostate of only about 400,000 people that nevertheless will carry more weight next year when it is slated to host a series of major meetings of the Association of Southeast Asian Nations, an increasingly important regional bloc which U.S. officials hope can serve as a check on growing Chinese diplomatic sway. Brunei also has claims in the South China Sea, as well as experience in hammering out joint-development agreements for oil and gas in contested waters, which could be applied to disputes in the sea.

A senior U.S. State Department official traveling with Mrs. Clinton from East Timor to Brunei acknowledged it was likely tensions would remain high for the foreseeable future. "I do think we have to be prepared for more tension on some of these matters," the official said. "I think this is the new normal."

But U.S. officials played down the strategic imperative of visiting East Timor, instead arguing Mrs. Clinton's stop there was intended mainly to recognize the country's significant progress since it gained independence from Indonesia a decade ago, capped with a democratic election this year. Even so, U.S. officials have supported the idea of admitting East Timor into the 10-member Asean bloc, which could enhance its strategic significance.

Mrs. Clinton heads next to Vladivostok, Russia, where she will attend an Asia-Pacific Economic Cooperation summit this weekend.

Patrick Barta

South China Sea: More than Just 'Free Navigation'

Is this a necessary irritant between the US and China?

The South China Sea territorial dispute increasingly looks like a point of strategic friction between the United States and China after a recent nasty exchange between the two governments. The US Department of State criticized China for its plan to base a new military garrison in the Paracel Islands, saying this would increase international tensions. Beijing shot back that the United States should mind its own business.

Watching for them Chinese

Many observers wonder why Washington and Beijing are allowing a new irritant to emerge in the incalculably important US-China relationship. Unfortunately, there is widespread misunderstanding about the US rationale for America’s diplomatic intervention in a territorial dispute to which the United States is not a party.

Although US officials have named several specific US concerns about China’s policies and activities in the South China Sea, the US concern most widely understood and repeated is the potential threat to “freedom of navigation”: the PRC might be moving toward imposing restrictions on foreign ships sailing in the South China Sea. This, however, is not the real issue. It is really about bullying.

To be sure, the United States is a strong proponent of freedom of navigation in international waters. This stance reflects not only America’s commitment to the general principle of liberty but also the interests of a trading nation with the world’s most capable navy. There should be no doubt that if freedom of navigation was in jeopardy in the South China Sea, the United States would spring to its defense. At present, however, freedom of navigation is not at issue.

The Chinese say they do not interfere with international navigation in the South China Sea and do not intend to in the future. Their position has some merit.

China has a particular beef with surveillance by US ships and aircraft near the Chinese coast. This has resulted in Chinese harassment, with several incidents reported in the press. The UN Law of the Sea Treaty allows for spying in the region between a country’s internal waters limit—12 nautical miles—and its exclusive economic zone limit which is usually 200 nautical miles.

The Chinese argue that spying is not “innocent passage” and should not be allowed within the EEZ. It is not an unreasonable argument. So this situation has resulted in some interference with the “free navigation” of the US Navy, but this is a very limited and special case.

The other circumstance in which Chinese vessels have interfered with non-Chinese ships is when the latter are engaged in activities that involve taking resources—fishing or preparing to drill for hydrocarbons—or when foreigners are attempting to arrest Chinese fishermen. These as well are special cases. Otherwise, the Chinese have not interfered with the passage of cargo ships of any flag or of US Navy vessels passing through the waterway.

Consequently, the Chinese assert that the freedom of navigation argument is bogus, an assertion that is persuasive to many neutral onlookers. From here the Chinese charge that the Americans are using freedom of the seas as a pretext to extend the alleged “containment” strategy to Southeast Asia, limiting Chinese influence and recruiting new allies to join in the military encirclement of China.

Instead of providing fodder for Chinese rhetoric, the freedom of navigation argument should remain in the background. Rather, what the US government should be talking about is making the world safe from unlawful international coercion. Ironically, the Chinese have begun practicing what Beijing’s diplomats have for decades condemned as “hegemonism” or “power politics”—strong countries forcing their self-interested preferences onto smaller countries.

Six governments claim ownership of parts of the South China Sea. None has a slam-dunk case. China is not the only claimant that has moved unilaterally to strengthen its control over South China Sea territory and resources in recent years. China, however, has distinguished itself in two important and negative ways.

First, China’s claims are both unusually expansive and intentionally vague. Beijing has stubbornly refused to clarify its claims based on the guidelines in the international Law of the Sea treaty, to which the PRC is a signatory. This is part of a strategy of ambiguity by which the PRC tries to minimize global concern and to avoid being constrained by the Law of the Sea guidelines while taking actions aimed at intimidating individual rival claimants.

Second, the actions China has taken to assert ownership over the South China Sea and its tiny “islands” are stronger than those taken by the other claimants. These acts include threatening and damaging foreign ships, declaring a fishing ban for part of the year in half of the South China Sea and arresting foreign fisherman who do not comply. There is also the recent announcement of increased Chinese militarization of the region—not only the new garrison, but the statement by military spokesman Geng Yansheng in June that China has begun “regular, combat-ready patrols” in the South China Sea.

China’s actions are threatening because China is big. No other state in Southeast Asia can match the military power China is able to project into the South China Sea. China’s massive economic weight, rapid growth rate, and commitment to strengthening its military forces ensure that the gap will only grow larger in the future. To make the contest even more lopsided, the Chinese government recently announced plans to greatly increase the number of quasi-military patrol ships—operated by the PRC Coast Guard and other agencies—it will deploy in the South China Sea.

In effect, this is a struggle between two visions of international order for Asia. The US vision includes a system of norms and international laws that ensure, among other things, that small states are protected from predation by larger states and that dispute resolution procedures should be fair. China, on the other hand, appears to favor restoring a Chinese sphere of influence in East and Southeast Asia such as the Middle Kingdom enjoyed anciently.

Under this arrangement, the rules of international interaction would reflect basic Chinese interests. Beijing would expect regional governments not to take major decisions that run contrary to Chinese preferences. Beijing’s current unwillingness to base Chinese claims in the Law of the Sea treaty may reflect the sentiment that this mostly Western-written body of law will not be needed when China resumes its historical position of regional dominance.

Some observers see the China-US contention over the South China Sea as simply a squabble between two great powers that are both seeking regional domination, with each acting in its respective hegemonic self-interest rather than in defense of some higher principle. In this case, however, US intervention is clearly aligned with the interests of the Southeast Asian countries, which seek to avoid domination by China or any other great power. China is trying to implement a might-makes-right order, while the United States is trying to ensure that smaller countries do not get steamrolled. This is the real issue, and US officials should make it clear.

Denny Roy

APEC Leaders to Discuss Rival South China Sea Claims

BEIJING — Asia-Pacific leaders meeting in Russia this week are expected to discuss how best to reconcile border disputes in the South China Sea. Vietnam, Taiwan, Malaysia, Brunei, the Philippines and China all have competing territorial claims.

Chinese patrols in contested waters, and a new Chinese garrison on a disputed island put rival claims to the South China Sea front and center at this week's forum of the Asia-Pacific Economic Cooperation.

"There is a small risk, and I think it is a growing risk, that an incident at sea could escalate into conflict involving China and one of its neighbors, and I think that is what we are all worried about," said Rory Medcalf, who directs the International Security Program at Australia's Lowy Institute.

U.S. Secretary of State Hillary Clinton says Southeast Asian nations should draft a unified code of conduct with China to resolve competing claims to the sea.

"We believe the nations of the region should work collaboratively together to resolve disputes without coercion, without intimidation, without threats and certainly without the use of force," said Clinton.

Indonesian Foreign Minister Marty Natalegawa is taking the lead.

"I had a very good, frank and candid discussion with my foreign minister of China colleague here in this very same building to call him to revert back to the diplomatic process," said Natalegawa. "I think the track is quite clear what is ahead of us, namely, we must apply ourselves to have the code of conduct done."

But the Association of Southeast Asian Nations failed to agree on a code of conduct in July. Justin Logan of Washington's Cato Institute said this week's APEC summit may do no better.

"I think bringing in different countries will create a different dynamic.  Although, in all likelihood, many of the countries that were in involved in the first go-around will be very, very reticent to get back involved again seeing the sour outcome that happened in ASEAN," said Logan.

Resolving the standoff is complicated by Chinese wariness of the Obama administration's greater military and economic involvement in Asia.

"We have noticed the United States has said many times that it will not hold a position on the South China Sea issue," said Chinese Foreign Ministry Spokesman Hong Lei. "We hope they can keep their promises and do more things that are conducive to regional peace and stability, not the opposite."

Before APEC, Secretary Clinton tried to soothe tensions with China.

"We want to see them [China] play a positive role in navigation and maritime security issues," said Clinton. "We want to see them contribute to sustainable development for the people of the Pacific to protect the precious environment, including the oceans."

U.S. officials expect this APEC summit to endorse the need for a code of conduct over the South China Sea so that mechanisms for resolving rival claims might be in place before November's East Asia Summit in Cambodia.

VOA

China questions U.S. neutrality over its territorial claims

Beijing expresses doubts as U.S. Secretary of State Hillary Clinton arrives on regional tour to persuade authorities to resolve disputes over competing claims in South China Sea.

Clinton is pressing China to agree to peacefully resolve territorial disputes with their smaller neighbors (Feng Li, Associated Press)

U.S. Secretary of State Hillary Rodham Clinton is in Beijing to press Chinese authorities to agree to peacefully resolve disputes with their smaller neighbours over competing territorial claims in the South China Sea. But as she began her meetings, China questioned the stated neutrality of the United States.

Clinton met late Tuesday with Chinese Foreign Minister Yang Jiechi after arriving in China from Indonesia, where she urged Southeast Asian nations to present a unified front in dealing with China in attempts to ease rising tensions in the South China Sea. Clinton will meet on Wednesday with other top Chinese officials, including President Hu Jintao and State Councillor Dai Bingguo.

The U.S. wants China and the other claimants to adopt a binding code of conduct for the region, along with a process to resolve maritime disputes without coercion, intimidation or the use of force. Clinton wants the Chinese to drop their insistence on settling conflicting claims with individual nations and instead embrace a multilateral mechanism that will give the smaller members of the Association of South East Asian Nations greater clout in negotiations.

She urged all parties to make "meaningful progress" by a November summit of East Asian leaders that President Barack Obama plans to attend in Cambodia.

Dispute over South China Sea
In Indonesia's capital before heading to China, Clinton offered strong U.S. support for a regionally endorsed plan to ease rising tensions by implementing the code of conduct. Jakarta is the headquarters of ASEAN, and Clinton pressed the group to insist that China agree to deal with them as a bloc.

The stance puts the U.S. squarely at odds with China, which has become more aggressive in pressing its territorial claims with its smaller neighbours and wants the disputes to be resolved with each country, giving it greater leverage.

Clinton made her case in Jakarta on Tuesday in meetings with Indonesian President Susilo Bambang Yudhoyono and ASEAN secretary general Surin Pitsuwan, a day after she delivered the same message to Indonesian Foreign Minister Marty Natalegawa. Indonesia has played a leading role in putting the six-point plan together after ASEAN was unable to reach consensus on the matter in July.

Clinton said the U.S. is "encouraged" by the plan but wants it acted on — particularly implementation and enforcement of the code of conduct, which has languished since a preliminary framework for it was first agreed upon in 2002. .

"The United States has a national interest, as every country does, in the maintenance of peace and stability, respect for international law, freedom of navigation, unimpeded lawful commerce in the South China Sea," Clinton told reporters at a news conference with Natalegawa.

Chinese boats sail in the lagoon of Meiji reef off the island of Hainan, which is also claimed by Vietnam (Associated Press

"The United States does not take a position on competing territorial claims ... but we believe the nations of the region should work collaboratively to resolve disputes without coercion, without intimidation and certainly without the use of force," she said. "That is why we encourage ASEAN and China to make meaningful progress toward finalizing a comprehensive code of conduct in order to establish rules of the road and clear procedures for peacefully addressing disagreements."

Yet China on Tuesday expressed skepticism that the U.S. is neutral in the disputes.

"The U.S. has many times said it does not take a position," Chinese foreign ministry spokesman Hong Lei said on Tuesday. "I hope they will keep their promise and do more to help stability and not the opposite. The South China Sea dispute is a complicated thing. To China, the South China Sea dispute is about the sovereignty of some of the islands there. China, like other countries in the world, has the obligation to safeguard its territories."

China and a host of Southeast Asian countries, including the Philippines, Vietnam and Brunei, have overlapping claims to several small, but potentially energy-rich areas of the South China Sea.

In July, China angered the United States, as well as Vietnam and the Philippines, by creating a city and military garrison on a remote island 220 miles from its southernmost province intended to administer hundreds of thousands of square miles of water where China wants to strengthen its control over disputed islands. China, which also has disputes with Japan in the East China Sea, rejected the criticism.

Associated Press

Isle Spats Backdrop for Clinton's Asia Trip

JAKARTA—Secretary of State Hillary Clinton is scheduled to tour parts of Asia over the coming week in what could be one of the Obama administration's last chances to address escalating territorial disputes across the region ahead of November elections.

Secretary of State Hillary Clinton is greeted on arrival at Rarotonga International Airport on the Cook Islands where she started her trip through the Asia-Pacific region.

Mrs. Clinton is scheduled to meet with leaders of Indonesia, East Timor, Brunei, China and Russia amid growing tensions over competing claims on the islands, shoals and open waters in Asia.

Her visit, say State Department officials, is to further underline the U.S. commitment to stability in the Asia-Pacific as the U.S. untangles itself from commitments in Iraq and Afghanistan.

"She is demonstrating that the U.S. is engaging in the region in a very practical way, by showing up [for multilateral meetings], contributing, listening and adopting soft initiatives," like aid programs across Asia, said Carlyle Thayer, an Asian security expert at the Australian Defence Force Academy in Canberra.

For a year, the administration has been cranking up U.S. influence in the region, often to China's chagrin. President Obama last year announced U.S. Marines would begin regularly working out of a base in Australia, and Defense Secretary Leon Panetta said earlier this year that the U.S. Navy would shift the majority of its ships to Asia. The administration also is seeking bases to build missile defenses in Asia, primarily as a bulwark against North Korea.

Mr. Panetta is expected to return to the region again in the near future, to reassert U.S. goals and priorities. However, the effort has not always delivered results sought by the administration.

Beijing accuses the U.S. of increased meddling in the region. Chinese officials and state media object to what they describe as attempts by the U.S. to inflame territorial disputes between China and its neighbors as a means to contain China's regional influence. The U.S., on the other hand, has criticized recent Chinese moves as likely to further escalate tension in the South China Sea.

Sensitivities over China's disagreements with Japan over disputed island claims are also still raw. Anti-Japanese protests erupted in some Chinese cities in recent weeks. State media in recent days have questioned Mrs. Clinton's visit to the region.

"It is true that one objective of Clinton's tour is to contain China's increasing influence, but the core of U.S. strategy is to defend its dominance and hegemony in the Asia-Pacific region," read a Wednesday commentary by the state-run Xinhua news agency.

When Secretary Clinton was in the region last in July, tempers flared and talks broke down during a major Association of Southeast Asian Nations meeting in Cambodia. The 10 members of the economic bloc failed to agree on how to respond to China's claims on parts of the South China Sea that are also claimed by several Asean members.

With the Philippines demanding a strongly worded declaration of the group's concerns, and Cambodia resisting any wording that would embarrass China, Asean members couldn't agree on language for a joint statement at the end of the meeting. It was the first time in the association's 45-year history that it was unable to issue a joint communiqué.

The failed talks in Phnom Penh were also a setback for the U.S., analysts said, because it has been trying to build up Asean as a unified front against expanding Chinese influence in the region.

Territorial disputes in other parts of Asia have also been flaring up. Last month Japan raised the prospect of taking a dispute with South Korea over possession of a group of islets to an international court after South Korean President Lee Myung-bak visited them. The islets known as Dokdo in South Korea, Takeshima in Japan and Liancourt Rocks in the U.S. and elsewhere are part of a long-simmering territorial dispute. Japan recalled its ambassador to South Korea after Mr. Lee's visit.

Japan has disputes with other neighbors as well. It controls a set of islands known as Senkaku, also claimed by China and Taiwan; they are known as Diaoyu in Chinese. Japan also claims Russian-controlled islands known in Russia as the southern Kurils; Japan calls them the Northern Territories.

"I think one of the messages that we seek to carry on this trip is that it is absolutely essential that cooler heads prevail in every capital, and that great care be taken on these issues, and that, in fact, all of the—these complex territorial matters have existed for decades," said a senior State Department official in Washington this week. "They have been managed generally effectively for decades, and during this period we've seen some of the most manifest Asian prosperity."

Mrs. Clinton arrived Thursday in the Cook Islands, where she is attending an annual gathering of officials from Australia, New Zealand and the Pacific as part of her six-nation tour.

Her first stop next week will be in Indonesia where she is scheduled to meet with President Susilo Bambang Yudhoyono as well as Foreign Minister Marty Natalegawa. Bolstered by its strong economic growth and stable democracy, Indonesia has increasingly played a leading role in Southeast Asia and Asean. This is a trend that the U.S. wants to encourage, analysts say. After the troubled talks in Cambodia, Mr. Natalegawa took it upon himself to visit all of the region's leaders to try to encourage cooperation.

On Tuesday and Wednesday, Mrs. Clinton will be in China. Visible progress on strategic issues between the two countries is unlikely during her closely watched visit there, analysts say, given both the U.S. election and China's once-a-decade leadership change. China's transition, set to begin this fall, makes officials unlikely to make major decisions given political sensitivities.

Diplomats are already saying it will be difficult to win Chinese leaders' cooperation on South China Sea issues at the next Asean summit in Phnom Penh in November.

While a major breakthrough isn't expected, the U.S. may seek Chinese cooperation to at least ensure the South China Sea dispute is a topic of discussion. Such a move would give China room to continue to press its claim of sovereignty over the region but would likely be viewed as a victory for regional claimants who have pushed to negotiate territorial disputes in multilateral forums. China has said negotiations should be between Beijing and individual countries.

U.S. officials and Chinese political analysts say both sides are focused simply on maintaining the relationship's status quo during a period of potential political volatility in both countries.

Mrs. Clinton will arrive in Beijing as strategic ties between the U.S. and China have been strained.

On Aug. 3, the State Department released a statement criticizing Beijing's decision to elevate the administrative status of a place called Sansha City, which China says will administer the disputed territories it claims in the South China Sea, as well as its plan to establish a new military garrison there.

China's Foreign Ministry responded with what analysts and diplomats described as an unusually harsh response. The statement said people must "question the true intention of the U.S. side" and said Washington's actions weren't conducive to regional stability.

Mrs. Clinton's visit to the Cook Islands is also being closely watched in China. China has backed development projects throughout the South Pacific, and in recent years has been involved in building a police headquarters and a courthouse in the Cook Islands, according to analysts and local media.

"I think the secretary intends very clearly to underscore our continuing interest in maintaining a strong, positive relationship" between the U.S. and China, said the senior State Department official. "We recognize how critically important that is, and one of the challenges before us is to demonstrate how we deal with areas in which we have differing perceptions and where we face challenging issues on the ground, or in this case in the water."

After China, Secretary Clinton is scheduled to visit East Timor and then Brunei and her final stop will be Vladivostok for a summit of the Asia-Pacific Economic Cooperation countries.

WSJ

Sea row set aside as China, ASEAN seek trade boost

Chinese Minister of Commerce Chen Deming (AFP/File, Fabrice Coffrini) 

SIEM REAP, Cambodia — China and Southeast Asian nations pledged Wednesday to strive for closer economic ties, setting aside regional tensions over a territorial row in the resource-rich South China Sea.

Trade between China and the Association of Southeast Asian Nations (ASEAN) jumped to over $200 billion in the first seven months of 2012, up nine percent year-on-year, Chinese Commerce Minister Chen Deming said during a meeting with regional economic ministers in the Cambodian tourist hub of Siem Reap.

The business relationship between ASEAN and China was "particularly important" amid global economic gloom, he said, adding that both sides have "a solid basis for cooperation" and "bright prospects".

China is ASEAN's largest trading partner, while the 10-nation bloc last year overtook Japan as Beijing's third-biggest trading partner.

"China is willing to be ASEAN's good neighbour, good friend and good partner," Chen said in his opening remarks.

This week's talks between regional economic ministers mark the first high-level gathering of ASEAN members since a foreign ministers' meeting in July ended in acrimony over how to deal with a dispute in the South China Sea, exposing deep divisions within the bloc.

The tension that hung over those meetings appeared absent from the cordial gathering in Siem Reap, suggesting that ASEAN members do not want the maritime row to hurt business.

"It's a completely different ballgame," said Southeast Asia expert Carl Thayer, emeritus professor at the University of New South Wales in Australia.

The foreign and economic ministers have "completely different agendas", he added.

Friction within ASEAN also eased significantly after Indonesia got the bloc to agree on six key points on the South China Sea following intense diplomatic efforts in the days after the failed ASEAN summit, Thayer said.

China claims sovereignty over almost all of the resource-rich sea, which is home to vital shipping lanes, but ASEAN members the Philippines, Vietnam, Malaysia and Brunei have overlapping claims.

Hanoi and Manila have recently accused Beijing of increasingly aggressive behaviour in the disputed waters.

The ASEAN group, which also includes Cambodia, Indonesia, Laos, Myanmar, Singapore and Thailand, saw its economies as a whole grow by 4.7 percent in 2011, down from 7.6 percent growth in 2010, according to ASEAN data.

"We recognise the external environment has become more hostile," Malaysian Minister for International Trade and Industry Mustapa Mohamed said, in a nod to the economic troubles of the key eurozone and US markets.

Nonetheless, "we consider ourselves to be one of the most dynamic regions in the world under the circumstances", he told AFP on the sidelines of the talks.

AFP

ASEAN struggles to cope with rival claims in the South China Sea

SIEM REAP, CAMBODIA — Thrown off balance by a cacophony of claims in the South China Sea, Southeast Asia is struggling to cope with the “big and heavy” presence of China and the United States in the region and needs to face up to growing security and political challenges, the secretary general of a regional group said in an interview.

Surin Pitsuwan was speaking Monday after the start of a meeting of economic ministers from the Association of Southeast Asian Nations in the Cambodian town of Siem Reap. It was the first major gathering of regional officials since an acrimonious conclave last month that highlighted deep divisions created by China’s increasingly assertive territorial claims in the South China Sea and rhetorical blasts about the waterway from Beijing and Washington.

At the earlier meeting, in the Cambodian capital, Phnom Penh, foreign ministers could not agree on the wording of a final communique for the first time since the regional association’s founding in 1967.
Pitsuwan, Thailand’s former foreign minister and head of ASEAN’s secretariat since 2008, said in an interview that he was surprised by the breakdown in Phnom Penh, where the group’s customary low-key pursuit of compromise gave way to testy deadlock amid complaints of microphones being abruptly disconnected and allegations of backstage meddling by China.

The failure, Pitsuwan said , was “a wake-up call that these [security] issues will occur and we should be prepared to handle them.”

Cambodia, a close friend of China and the current holder of ASEAN’s rotating chairmanship, refused during the July gathering to accept pleas that the final communique include a mention of recent flare-ups in the South China Sea between China and two ASEAN members, the Philippines and Vietnam.

Manila and Hanoi accused Cambodia of putting its allegiance to Beijing ahead of its obligations to its regional partners and of pushing the 10-nation group to its most severe crisis in years. Cambodia, although heavily dependent on Chinese aid and investment, angrily denied acting on instructions from Beijing.

Tensions in the South China Sea, where five ASEAN members have claims that brush up against those of Beijing, are “becoming more and more of a stress on the system,” Pitsuwan said. That, he added, underscores the urgent need to make progress toward a stalled code of conduct for the disputed waters. The key, he said, is to “get around” questions of sovereignty and focus instead on practical measures to curb the risk of maritime clashes. But, he said, “this will take some time, because it is emotionally charged and extremely volatile. Positions are far apart, but eventually, we will get to a practical solution.”

Role as ‘insulation’
ASEAN, which is meeting near the ancient temples of Angkor Wat under the slogan “one community, one destiny,” has traditionally worked to paper over its differences. The risk of conflict in the South China Sea, however, has exposed the shortcomings of that approach at a time when China and the United States are stepping up their military and diplomatic activities in the region.

Washington takes no position on the territorial disputes. But the Obama administration, which has made a foreign policy “pivot” to Asia, has voiced growing concern over the risks of confrontation in the waterway. Th£e United States has stepped up security cooperation with the Philippines, with which it has a 61-year-old mutual defense treaty, and with Vietnam, which looks to America as a counterweight to a rising China.

Jousting over the South China Sea and over disputed islands to the north claimed by both Japan and China has shadowed booming trade and investment ties across East Asia and added to frictions between Beijing and Washington. The State Department this month criticized China for setting up a military garrison on an island in the South China Sea, accusing it of undermining diplomatic efforts to resolve disputes peacefully. China lambasted the U.S. assertions, with the state-run Xinhua News Agency dismissing them as “groundless and irresponsible” and urging Washington to “draw back its meddling hand.”

The feuding has pushed ASEAN into the uncomfortable role of acting as “insulation between China and the U.S.,” said Carlyle A. Thayer, an Australian expert on regional security and the author of a recent study of the group’s troubles over the South China Sea.

Originally set up in response to fears of communist subversion in Southeast Asia during the Vietnam War, ASEAN was long scorned by China as an instrument of the United States but has in recent years been embraced by Beijing as a vehicle to boost economic ties.

At the same time, China has been alarmed by ASEAN’s moves to become more involved in political and security issues, with some Chinese foreign policy experts warning that the association could go the way of the Arab League, a long-somnolent organization that, reinvigorated by the Arab Spring, has been at odds with Beijing in recent months over what to do in Syria and elsewhere.

China rejects any role for ASEAN in resolving territorial disputes and insists that the ownership of islands and reefs in the South China Sea can be addressed only through bilateral talks. But it has expressed some readiness to discuss a code of conduct for the waterway. “China wants ASEAN to be reasonably strong but also compliant,” Thayer said.

Wary of getting bogged down in arcane but highly contentious maritime quarrels, ASEAN ministers meeting this week are focusing on trade and other economic issues and want to stay clear of the South China Sea. “I’m not going to touch it. This is strictly economic,” said Gita Wirjawan, Indonesia’s trade minister.

Wealth gap a threat
In his opening address, Cambodia’s prime minister, Hun Sen, made no mention of the maritime disputes but instead spoke of the debt crisis in Europe, high oil prices and slowing export growth, and he singled out the wealth gap between member states as “a great threat” to the association’s future.

Pitsuwan, the secretary general, said “political hiccups” over the South China Sea will not slow what he described as an irreversible trend toward greater economic integration.

The association, which includes some of the world’s most dynamic economies as well as some of its weaker ones, such as Burma, Laos and Cambodia, is working to establish a single market in 2015, an important step toward regional integration akin to moves in Europe that led to the creation of the European Union. But, Pitsuwan said, ASEAN has no plans to set up a large central bureaucracy similar to the one in Brussels. The association’s administrative headquarters in Jakarta has only about 200 employees, including clerical staff and drivers. The European Commission in Brussels has more than 33,000.

ASEAN, he said, “needs a strong central mechanism so that it can be a driving force, but that has implications for sovereignty” that member states are not ready to accept.

At a time when Europe’s far more advanced drive for integration has been stalled by the continent’s financial turmoil and tensions between the E.U.’s richer and poorer member states, Southeast Asia “has to be extremely careful,” Pitsuwan said. “Europe for us is an inspiration, not a model.”

Andrew Higgins

ASEAN integration: one step forward, two steps back

Going by its "roadmap", ASEAN will by 2015 become an economic community with a US$2 trillion combined market and become a magnet for integration across the whole of East Asia, the world's most dynamic region.

This concept of an ASEAN Economic Community (AEC) was mooted in 1997 - at the height of the Asian financial crisis.

In their bid to keep ASEAN relevant amid the rise of China and India, the region's leaders sought to build the AEC on four planks - a single market and production base; a competitive community; an area of equitable economic development; and a region integrated into the global economy.

Fifteen years on and less than three years away from the 2015 target, however, there is some cause for concern.

Emeritus Senior Minister Goh Chok Tong, speaking at a recent ASEAN conference organised by the Singapore Institute of International Affairs (SIIA), summed up the zeitgeist: to keep the region plugged into the global economy, ASEAN needs to pursue its economic integration "relentlessly", he said, adding that the bloc will need to work on two issues - liberalising the services sector across the region, and non-tariff barriers.

Therein lies the rub. ASEAN officials regularly tout that - according to a "scorecard" studying the progress of the AEC - 66 per cent of measures to achieve a single market and production base have been implemented. That figure, however, represents low-hanging fruit, such as the removal of tariffs.

While the original ASEAN six - Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand - boast that 99.65 per cent of tariff lines across the region have been removed, the fact is, non-tariff barriers (NTBs) continue to impede business.

In Malaysia, NTBs can be found in the automotive, oil and gas sectors. In Indonesia there are restrictions on beef imports.

In addition to restrictions on the free flow of goods, freedom of workers' movements is another issue holding up the AEC, says Ms Sanchita Basu Das, a lead economic researcher at the Institute of Southeast Asian Studies and the editor of "Achieving The ASEAN Economic Community 2015", a collection of essays studying the AEC's implementation.

In Thailand, for example, the Alien Employment Act prohibits foreigners from being employed in professions such as civil engineering and legal services.

Says Ms Basu Das: "If you say you have the free movement of labour but have restrictions, you cannot say you enjoy such free movement of labour."

In terms of enhancing physical connectivity, ASEAN has come some way. In 2010, it tabled a Connectivity Masterplan to enhance physical and people-to-people links.

But the enabling ASEAN Infrastructure Fund has initial equity of only $485 million. It has been estimated that ASEAN will need to spend $60 billion a year on infrastructure.

"ASEAN has a lot of connectivity initiatives, but a number of them are impeded by structural weaknesses, low responsiveness to users, organisational inefficiencies, insufficient funding and heavy dependence on overseas development aid," says Pushpanathan Sundram, the managing director of EAS Strategic Advice, a consultancy. He was formerly an ASEAN deputy secretary-general.

More importantly, the members of ASEAN at its current stage of development face the same dilemma that other regional bodies such as the European Union have faced - the surrender of more sovereignty to a regional organisation. Put differently, many ASEAN countries struggle with whether to put ASEAN's interests above their own national interests.

A classic example is that of gas pipelines in Thailand and Malaysia, which are held by monopolies. This would hinder the formation of trans-ASEAN gas pipelines.

"For integration to move ahead, we really need a change in mindsets. ASEAN countries have to think regional and act national to implement locally the grouping's regional economic commitments," says Pushpanathan.

This is not to say that all is lost for the AEC. ASEAN, unlike the EU, started out more as a political body than an economic one. The EU started out as an economic body focused on coal and steel, and then took on political dimensions later. As a result, expectations about the AEC should be moderated.

Moreover, the fact that ASEAN remains externally oriented bodes well. During the Cold War, the bloc sought to avoid being used as a geopolitical pawn by the superpowers, leading to perceptions of a "fortress ASEAN". Today, however, it has sought to be part of the great geopolitical game in Asia, seeking to draw in great powers like China and the US. It has made itself relevant by signing free trade agreements with countries such as Australia and China.

More importantly, ASEAN will not lose out to China in the foreign direct investment stakes if the AEC leverages on the fact that the grouping is made up of countries at different levels of development.

Gautam Banerjee, the executive chairman of PricewaterhouseCoopers Singapore, says ASEAN can entice potential investors by getting them to locate "softer" functions such as logistics, treasury and supply chain management in its more advanced countries, say, Singapore, and get "heavy lifting" manufacturing operations done in Malaysia, Thailand and Indonesia.

"If we can ignite some of this thinking … ASEAN can be a credible challenge to China," said Banerjee at the SIIA conference.

To an extent, this is already happening. The Hong Kong Economic and Trade Office says some Hong Kong firms have decided to invest in ASEAN countries rather than mainland China.

There is a combination of push and pull factors, a spokesman adds. In China, labour costs have risen due to the strengthening yuan. In addition, ASEAN's recent strong economic performance and low labour costs have made the region attractive.

Looking ahead, ASEAN's economic prospects would be much enhanced if the private sector - rather than the bureaucrats - took the lead.

However, the entire AEC enterprise is still very much a top-down endeavour and ASEAN watchers say it receives relatively little input from businessmen, the very people who should be spearheading integration.

The experiences of Thai companies are indicative. According to a survey by the University of the Thai Chamber of Commerce, only 11 per cent of firms polled said they understood what the AEC is about. The rest said they had no idea.

No wonder then that the utilisation of the ASEAN Free Trade Area by ASEAN firms stood at only 23 per cent in 2008.

Granted, a group of business leaders - including the chiefs of CIMB Bank, AirAsia and Ayala Group - has launched the ASEAN Business Club, a private-sector initiative to engage in ASEAN integration. But ASEAN still has its work cut out for it.

"ASEAN businessmen have let their bureaucrats run away with whatever they want to do. They need to speak up for themselves," says Dr Suthad Setboonsarng, senior adviser at BowerGroupAsia, a business advisory firm.

"If it wants ASEAN to be effective, the private sector has to guide governments. So don't complain about ASEAN not working, if the private sector is not working."

ASEAN has been in the news recently for failing to come up with a communique amid differences over its handling of the contentious South China Sea issue, which involves China and ASEAN member states such as Vietnam and the Philippines. The South China Sea issue is important, but it will be a political issue that will continue to test ASEAN's leadership and coherence for years to come.

In the meantime, however, effective economic integration - the bread and butter of ASEAN's existence - should deliver the goods that will make ASEAN relevant.

William Choong

China Pushes on the South China Sea, ASEAN Unity Collapses

For more than two decades Beijing has pursued a consistent policy in the South China Sea composed of two main elements: gradually strengthening the country’s territorial and jurisdictional claims while at the same time endeavoring to assure Southeast Asian countries of its peaceful intentions. Recent moves by China to bolster its maritime claims have brought the first element into sharp relief, while reassurances of benign intent have, however, been in short supply. Indeed, far from assuaging Southeast Asian concerns regarding its assertive behavior, China has fuelled them by brazenly exploiting divisions within the Association of Southeast Asian Nations (ASEAN) to further its own national interests.

China Hardens Its Stance

Commentaries in China’s state-run media analyzing the South China Sea issue have become markedly less conciliatory. Opinion pieces highlight several new themes in China’s official line. One theme is that China’s territory, sovereignty as well as its maritime rights and interests increasingly are being challenged by Southeast Asian nations and Japan in the South and East China Seas. China’s response, it is argued, should be to uphold its claims more vigorously, increase its military presence in contested waters, and, if necessary, be prepared to implement coercive measures against other countries. As one commentary notes “Cooperation must be in good faith, competition must be strong, and confrontation must be resolute” (Caixin, July 13).

Another theme is that, while China has shown restraint, countries such as the Philippines and Vietnam have been pursuing provocative and illegal actions in a bid to “plunder” maritime resources such as hydrocarbons and fisheries which China regards as its own (China Daily, July 30).

A third theme is that Manila and Hanoi continue to encourage U.S. “meddling” in the South China Sea and that the United States uses the dispute as a pretext to “pivot” its military forces toward Asia (Global Times, July 11). To reverse these negative trends, Chinese commentators have urged the government to adopt more resolute measures toward disputed territories and maritime boundaries. Nationalist sentiment, they argue, demands no less.

Recent measures undertaken by the Chinese authorities do indeed suggest a more hard-line position. Ominously, some of the initiatives have included a strong military element, presumably as a warning to the other claimants that China is ready to play hardball.

Perhaps the most noteworthy attempt by China to bolster its jurisdictional claims in the South China Sea was the raising of the administrative status of Sansha from county to prefecture level in June. Sansha originally was established in 2007 as an administrative mechanism to “govern” the Paracel Islands, Macclesfield Bank and the Spratly Islands. Sansha’s elevation was an immediate response to a law passed on June 21  by Vietnam’s national assembly, which reiterated Hanoi’s sovereignty claims to the Paracels and Spratlys. Both Vietnam and China protested the other’s move as a violation of their sovereignty (Bloomberg, June 21). Less than a month later, Sansha’s municipal authorities elected a mayor and three deputy mayors and China’s Central Military Commission authorized the establishment of a garrison for “managing the city’s national defense mobilization, military reserves and carrying out military operations (Xinhua, July 20).

Earlier, in late June, China’s Defense Ministry announced it had begun “combat ready” patrols in the Spratly Islands to “protect national sovereignty and [China’s] security development interests” (Reuters, June 28). Embarrassingly for the People’s Liberation Army (PLA) Navy, however, on July 13, one of its frigates ran aground on Half Moon Shoal, 70 miles west of the Philippine island of Palawan and within the Philippines 200 nautical mile exclusive economic zone (EEZ). The frigate was refloated within 24 hours, suggesting that other PLA Navy vessels were nearby when the incident occurred. These developments provide further evidence of the growing militarization of the dispute.

China also has moved to undercut the claims and commercial activities of the Philippines and Vietnam in the South China Sea in other ways.

In June, the state-run China National Offshore Oil Corporation (CNOOC) invited foreign energy companies to bid for exploration rights in nine blocks in the South China Sea. The blocks lie completely within Vietnam’s EEZ and overlap with those offered for development to foreign energy corporations by state-owned PetroVietnam. Accordingly, Hanoi vigorously protested CNOOC’s tender (Bloomberg, June 27). More importantly the blocks are located at the edge of China’s nine-dash line map and seem to support the argument that Beijing interprets the dashes as representing the outermost limits of its “historic rights” in the South China Sea. Under the 1982 United Nations Convention on the Law of the Sea (UNCLOS), however, coastal states are not entitled to “historic rights” on the high seas. It is therefore unlikely that any of the major energy giants will bid for CNOOC’s blocks—although smaller companies may do so if only to curry favor with Beijing with a view to landing more lucrative contracts down the road. If, however, exploration does move forward in any of the nine blocks, a clash between Vietnamese and Chinese coast guard vessels will become a very real possibility.

On the issue of ownership of Scarborough Shoal, scene of a tense standoff between Chinese and Philippines fishery protection vessels in May-June, China position remains uncompromising. At the annual ASEAN Regional Forum (ARF) in Phnom Penh, Cambodia in July, Chinese Foreign Minister Yang Jiechi restated China’s sovereignty claims to the shoal, rejected the notion that it was disputed and accused Manila of “making trouble” (Xinhua, July 13). According to the Philippine foreign ministry, Chinese trawlers―protected by Chinese paramilitary vessels—continue to fish in waters close to Scarborough Shoal in contravention of a bilateral accord whereby both sides agreed to withdraw their vessels [1].

Following the ARF, China kept up the pressure on the Philippines. In mid-July, it dispatched a flotilla of 30 fishing trawlers to the Spratlys escorted by the 3,000-ton fisheries administration vessel Yuzheng 310 (Xinhua, July 15). The trawlers collected coral and fished near Philippine-controlled Pag-asa Island and Chinese-controlled Mischief and Subi Reefs (Philippine Daily Inquirer, July 27). The Philippine authorities monitored the situation but took no action.

The Phnom Penh Debacle

In the past, after China has undertaken assertive actions in the South China Sea it has tried to calm Southeast Asia’s jangled nerves. At the series of ASEAN-led meetings in Phnom Penh in mid-July, however, Chinese officials offered virtually no reassurances to their Southeast Asian counterparts. Worse still, China seems to have utilized its influence with Cambodia to scupper attempts by ASEAN to address the problem, causing a breakdown in ASEAN unity.

In the final stages of the annual meeting of ASEAN foreign ministers (known as the ASEAN Ministerial Meeting or AMM), the Philippines and Vietnam wanted the final communiqué to reflect their serious concerns regarding the Scarborough Shoal incident and the CNOOC tender. They were supported by Singapore, Indonesia, Malaysia and Thailand who felt that ASEAN should speak with one voice. Cambodia—which holds the rotating chairmanship of ASEAN and has close political and economic ties with China— objected because, in the words of Foreign Minister Hor Namhong, “ASEAN cannot be used as a tribunal for bilateral disputes” (Straits Times, July 22). Attempts by Indonesian Foreign Minister Marty Natalegawa to reach a compromise on the wording were unsuccessful and for the first time in its 45-year history the AMM did not issue a final communiqué.

The fallout from the AMM was immediate and ugly. Natalegawa labelled ASEAN’s failure to reach agreement “irresponsible” and that the organization’s centrality in the building of the regional security architecture had been put at risk (Straits Times, July 16). Singapore’s Foreign Minister, K. Shanmugam described the fiasco as a “sever dent” in ASEAN’s credibility (Straits Times, July 14). Cambodia and the Philippines blamed the failure on each other. Cambodia was pilloried by the regional press for its lack of leadership and for putting its bilateral relationship with China before the overall interests of ASEAN. One analyst alleged  Cambodian officials had consulted with their Chinese counterparts during the final stages of talks to reach an agreement on the communiqué [2]. China’s Global Times characterized the outcome of the AMM as a victory for China, which does not think ASEAN is an appropriate venue to discuss the dispute, and a defeat for the Philippines and Vietnam (Global Times, July 16).

A few days after the AMM, Indonesian President Susilo Bambang Yudhoyono dispatched his foreign minister to five Southeast Asian capitals in an effort to restore ASEAN unity. Natalegawa’s shuttle diplomacy resulted in an ASEAN foreign minister’s statement of July 20 on “ASEAN’s Six-Point Principles on the South China Sea” [3]. The six points, however, broke no new ground and merely reaffirmed ASEAN’s bottom line consensus on the South China Sea. In response to the joint statement, China’s Foreign Ministry said it would work with ASEAN to implement the 2002 Declaration on the Conduct of Parties in the South China Sea (DoC) (Chinese Ministry of Foreign Affairs, July 21).

One of the six points calls for the early conclusion of a code of conduct (CoC) for the South China Sea, but the Phnom Penh debacle has made that target highly doubtful.

Although China agreed to discuss a CoC with ASEAN in November 2011, Beijing always has been lukewarm about such an agreement, preferring instead to focus on implementing the DoC. Undeterred, earlier this year ASEAN began drawing up guiding principles for a code and in June agreed on a set of “proposed elements.” While much of the document is standard boiler plate, there are two aspects worthy of attention.

The first is that ASEAN calls for a “comprehensive and durable” settlement of the dispute, a phrase that seems to repudiate Deng Xiaoping’s proposal that the parties should shelve their sovereignty claims and jointly develop maritime resources. Clearly, the four ASEAN claimants have rejected Deng’s formula as it would be tantamount to recognizing China’s “indisputable sovereignty” over the South China Sea atolls.

The second interesting aspect concerns mechanisms for resolving disputes arising from violations or interpretations of the proposed code. The document suggests that disputing parties turn to the 1976 Treaty of Amity and Cooperation (TAC) or dispute resolution mechanisms in UNCLOS. Neither, however, would be of much utility. While the TAC does provide for a dispute resolution mechanism in the form of an ASEAN High Council, this clause has never been invoked due to the highly politicized nature of the High Council and the fact that it cannot issue binding rulings. Moreover, although China acceded to the TAC in 2003, Beijing almost certainly would oppose discussion of the South China Sea at the High Council because it would be outnumbered 10 to 1.

UNCLOS does provide for binding dispute resolution mechanisms, including the submission of disputes to the International Court of Justice (ICJ) or the International Tribunal on the Law of the Sea (ITLOS). China always has rejected a role for the ICJ in resolving the territorial disputes in the South China Sea and, in 2006, China exercised its right to opt out of ITLOS procedures concerning maritime boundary delimitation and military activities.

On July 9, Vice Foreign Minister Fu Ying had indicated to ASEAN foreign ministers that China was willing to start talks on a CoC in September. Two days later, however, as ASEAN wrangled over their final communiqué, Foreign Minister Yang seemed to rule this out when he stated discussions could only take place “when the time was ripe” (Straits Times, July 11). At present ASEAN and China are not scheduled to hold any meetings on the CoC, though officials currently are discussing joint cooperative projects under the DoC.

If and when the two sides do sit down to discuss the CoC, it is probable that Beijing will demand all reference to dispute resolution be removed on the grounds that the proposed code is designed to manage tensions only and that the dispute can only be resolved between China and each of the other claimants on a one-on-one basis. Taken together, these developments have dimmed seriously the prospect of China and ASEAN reaching agreement on a viable code of conduct for the South China Sea any time soon. As such, the status quo will continue for the foreseeable future.

Ian Storey

Notes:

1. “Why There was no ASEAN Joint Communique,” Philippine Department of Foreign Affairs, July 19, 2012 http://www.dfa.gov.ph/main/index.php/newsroom/dfa-releases/5950-why-there-was-no-asean-joint-communique-.
2. Ernest Bower, “China reveals its hand on ASEAN in Phnom Penh,” Center for Strategic and International Studies, July 20 2012.
3. “Statement of ASEAN Foreign Ministers on ASEAN’s Six-Point Principles on the South China Sea,” Cambodian Ministry of Foreign Affairs, July 20, 2012 http://www.mfaic.gov.kh/mofa/default.aspx?id=3206.

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