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Can a QUAD+ Decoupling Fund be possible to tackle China?

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Authors: Dr Satoru Nagao and Gitanjali Sinha Roy

The Coronavirus Pandemic has shaken the world to the highest possible risks the civilisation has seen in this century and has led many countries to cooperate and collaborate with one another in these trying times. China is the only country which seems to play the card of being an ‘opportunist’ and has prevailed as an economic and maritime aggressor. Keeping the Chinese aggressiveness in mind, this article tries to pave a way for a QUAD+ Decoupling Fund in order to tackle China.

The aggressive behaviour in the maritime domain has left most countries with a bad taste especially as Chinese aggressiveness has increased in leaps and bounds in the South China Sea, East China Sea, India-China border area, Indian Ocean and the Taiwan Strait which has made countries like Japan, India, Taiwan, Vietnam, the Philippines, Malaysia and the United States of America rather uncomfortable. In addition, recently, China imposed “sanction” against Australia by stopping import beef, wines, 80 percent tariff on barley imports has greatly affected the Australian farmers and has impacted tourism and education as many Chinese students studies in universities in Australia. This sanction came in after Australia suggested an international investigation about COVID-19 on China. China has also blamed New Zealand as they supported Taiwan to participate in World Health Organisation meeting. The Chinese government passed the national security law to crack down on the democratic movement in Hong Kong. All this has resulted in Chinese aggressive behaviour which is intimidating many countries all at the same time. Thus, it is important to analyse why China choose such a course and what should be done?

One interesting point to think about the reason of China’s attitude is that China has been aggressive against Australia, New Zealand, Japan, Taiwan, Vietnam, Malaysia India, but not so aggressive against the US. China didn’t expect that its aggressive attitude toward these countries except the US will not create a serious crisis for China as these countries depend on the economic relations with China. China has been a manufacturing destination since the 1980s and ever since then, it has been growing its manufacturing footprint across the world with an abundance of cheap labour, a weak currency and speedy decision making under the authoritarian regime and infrastructural support from Japan has contributed to the rise of China as the factory of the world.

Therefore, one way of dealing with China is to reduce economic dependence toward China as it helps China become more aggressive. Countries which are facing the rut of China need to rethink their economic dependence. It is important to understand China was a preferred kernel until the tensions between the United States of America and China began resulting in a trade war and as the tensions worsened, talks of the US shifting its manufacturing base to other countries, imposing huge taxes on each other made China’s future economic prospect dark. What worsened the situation for China was that it hid vital information of the COVID-19 spread from all the countries like US, Japan, Australia, US allies in Europe and this has made all these countries rethink their relation with China through the policy ofde-coupling from China. As China’s Wuhan emerged as the epicentre of this deadly virus, it led to the disruption of supply chains world over and the over-dependence that all countries have on China was needed to be reduced and rectified.

In a meeting of the Council on Investments held on 5 March, 2020 led by Prime Minister Shinzo Abe decided to relocate the Japanese manufacturing bases to Japan from China and the Government extended help by setting up a budget of 220 billion yen to move the production units out of China and also set aside 23.5 billion yen for Japanese firms to move their production line to Southeast Asian countries as February 2020 onwards their supply chains suffered bringing home a financial slump. Recently, in Japan57 companies are set to be incentivised with a subsidy of 57.4 billion yen to move out of China and it includes companies like Iris Ohyama Inc and Sharp Corp among many others. Thereby, it was suggested to diversify the manufacturing and supply chains to Southeast Asian countries like Vietnam, Indonesia, Thailand and India which is the need of the hour. The US has been the leader of the pack by pushing to create an alliance of ‘trusted partners’ aiming for a ‘Post-COVID Economic Prosperity Network’ consisting of Australia, India, Japan, New Zealand, South Korea and Vietnam to move the global economy forward along with restructuring the supply chains and making sure that this kind of situation is prevented from happening in the future.

India has been worried that the pandemic has exposed the over-reliance on China and so, there is a major need to become self-reliant or ‘Atmanirbhar Bharat’, a 20 lakh crore stimulus package was released with an aim to ‘build locally to go global’ which would help and integrate within the global economy. European nations like the United Kingdom and Spain has faced a large number of people succumbed to death due to coronavirus and it has made these Europeans countries highly angry about China’s handling of the coronavirus. Also, the European companies businesses were less affected by the trade war, but a threat to tariffs coupled which made some of these companies to move their supply chains out of China and move to closer homes supply chains like Romania, Portugal, Turkey and Africa.

China’s bad handling of the coronavirus and misinformation about the same has led the world today at a standstill and thousands of helpless lives have paid a price. Further, the virus has torn the world apart, shaken the supplies chains and all this has given birth to an anti-China sentiment globally. The United States along with the Quad members and the US allies are paving a way a Quad+ policy of decoupling from China. The US along with its trusted friends are aiming to form the ‘Post-COVID Economic Prosperity Network’ which should also set up a decoupling fund to help all the others who are willing to diversify out of China and this could be called the ‘Quad+ Decoupling Fund’ which would prevent China’s arm-twisting and bullying. Once all the countries back off from China’s manufacturing hub, China would be forced to abide by the rules and would be forced to behave properly as then it would be at the mercy of the other countries economically and since China will become economically weak due to the moving out these factories, it would also learn to constraint its behaviour in the western Pacific which in turn would help the US and all the Quad members and the US allies to have a free and open Indo-Pacific without any threat from Chinese maritime aggression.

Talking of maritime aggression, this Quad+ Decoupling Fund can also form a ‘Post-COVID Security Prosperity Network’. We are aware that the United States, Japan and India have been in close cooperation with regard to QUAD as well as Japan-America-India (JAI). The introduction of Quad plus countries like Vietnam, South Korea and New Zealand have been included keeping in mind their direct and indirect issues with China and most face security issues primarily in the maritime domain. Also, Australia was recently invited by India to join the maritime exercises and the recent India-Australia meeting was a way to woo Australia back into the QUAD as Australia has been facing flak from China. The recent India-Japan maritime exercise in the Indian Ocean could be seen as another addition of strengthening the maritime grouping against Chinese aggressiveness. Thereby, a QUAD+ Decoupling can be formed in the realm of economic as well as security to tackle China.

Dr Satoru Nagao is Visiting Fellow at the Hudson Institute. He is an expert on US–Japan–India security cooperation.

Southeast Asia

The so-called Indonesia-South Korea Special Strategic Partnership

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President Jokowi in a meeting with South Korean President Yoon Suk-yeol, at Yongsan Presidential Office, Seoul, Thursday (07/28) afternoon. (Photo: Bureau of Press, Media, and Information of Presidential Secretariat/Laily Rachev) Read more: https://setkab.go.id/en/president-jokowi-meets-south-korean-president-to-boost-cooperation/

In several attempts, people can find out there are repetition phrases that informally appeared from 5 years ago until now related to South Korea-Indonesia relations, it is the label “special strategic partnership”. Initially it happened during South Korea’s former president, Moon Jae-in, official trip to Indonesia in 2017. Cited from Indonesia’s Foreign Ministry Press Briefing in Jakarta Globe site, the visit means to upgrade the bilateral relations level from strategic partnership into special strategic partnership, especially to accelerate industrialization in Indonesia. 

The labels seem relevant as both governments agreed to continuing the discussion related to Indonesia-South Korea Comprehensive Economic Partnership Agreement (IK-CEPA) in 2018 that had been postponed in 2014 due to the shifting government. The agreement is likely to eliminate 95,54% post tariffs on the Korea side, while Indonesia does 92,06% post tariffs. Indonesia would get bigger market access in several sectors such as fisheries, agriculture, and other national industrial products, while South Korea is more accessible in several service sectors such as online game, construction, and healthcare service. 

The agreement is barely ratified by Indonesia’s parliament at the end of August 2022 and the Parliament is also warning the executive branch to pay attention to keep the national interest & to be aware of the competitiveness in liberal market post-agreement since many countries are facing the post-pandemic recovery complex recently.  

Besides the mentioned agreement, Indonesia and South Korea have several finished and ongoing strategic projects. Start with an ongoing joint-program on Boramae jet fighters in which Indonesia shares 20% and South Korea holds the rest of production cost. The program aims to reach mass production in 2027 and could have a competitive feature to US-made F-15, but likely less than the F-35 model. Besides that, South Korea is also involved in an Indonesia-owned submarine project for the 209/1400 type which is named KRI – Nagapasa 403 and KRI – Ardadedali 404, both respectively arrived in Indonesia in 2017 and 2018.

If the means of upgrading the relationship level to be a special one by holding the IK-CEPA, Boramae project, and other projects related to strategic necessity of the countries, then it seems Indonesia really has been treated as South Korea’s “Special Strategic Partner”. The mentioned projects aren’t covering all the government-to-government or business-to-business projects that can be classified to assert the upgraded relationship level such as Hyundai-LG investment on electric vehicle ecosystem in Karawang, West Java.

Is Indonesia the only one “Special Partner”?

To answer the question’s sub-headline, we may look back at the trade balance between South Korea and its several bilateral partners in southeast Asia, including Singapore, Vietnam, and Indonesia, for around 5 years. South Korea & Singapore had established the free trade agreement then put into force in 2006. The Korea’s import trade value from Singapore in 2006 is around $5,886,680,000 then in 2007 was risen around 16,5%, but 2017-2021 reports Singapore’s deficit trade with South Korea around $3,457,218,000 with Korea’s major deficit from importing parts of nuclear machinery & mechanical appliances. 

Meanwhile, South Korea & Vietnam had signed similar agreements and were activated in 2015. Vietnam’s export values to Korea moderately rose from $9,804,831,000 in 2016 to $12,495,154,000 in 2017. However, as the same interval trade reports as Singapore, Vietnam is also facing deficit trade around $32,762,826,000. Meanwhile, South Korea itself faces big deficits in several of Vietnam’s competitive commodities such as articles of apparels & clothing, furniture, and fisheries commodities.

Now, let’s take a look at South Korea-Indonesia trade activity. As Indonesia just barely ratified the IK-CEPA in August 2022, it’s hard to set the significance of the IK-CEPA effect on both countries’ trade. However, Indonesia-South Korea trade performance benefited Indonesia for the interval 2017-2021 with Korea Custom Service noting the surplus for Indonesia is equivalent to $8,121,555,000. South Korea’s major deficits come from Indonesia’s prominent commodities such as mineral fuels & oils and other metal & mining products that are heavily demanded by Korea’s domestic industry. 

Worth noting that even though the 3 mentioned countries may have their own bilateral economic agreement with South Korea, the countries are members of ASEAN and ASEAN itself has particular economic agreement under ASEAN-South Korea Free Trade Agreement (AK-FTA) which also benefited the 3 countries. In conclusion, the countries have so much leverage during trade with South Korea under several agreements. 

Indonesia is relatively one of key partners for South Korea since both countries share a significant number of demands in particular industry commodities. However, South Korea’s trade volume with Indonesia isn’t as big as with Vietnam which shares 4.4% of Korea’s imports and 9.04% of Korea’s exports in 2020. Indonesia only shares 1.62% of Korea’s imports and 1.23% of Korea’s exports as OEC displayed. In conclusion, Indonesia moderately played a significant role for South Korea and recently both countries really upgraded their ties by holding many mutual projects, but we can’t be blind that Vietnam was way forward in captivating South Korea’s market as it reflected by the bilateral trade volume and one of the earlier Asian countries to established a bilateral trade agreement with South Korea. 

Regardless of the “Special Strategic Partnership” label, Indonesia should seize the moment once the IK-CEPA applied in both countries by pushing diverse products to be exported, not merely relying on mineral & mining commodities. The government and Indonesia’s corporation must swiftly be aware of the Korean domestic market demands and its opportunities to make sure the IK-CEPA wouldn’t become boomerang which will hurt Indonesia’s domestic market since the market becomes more liberal & South Korea has a relative competitive advantage above Indonesia and its product highly demanded by huge number of Indonesians. The government can support the micro, small, and medium enterprises (MSMEs) to grasp the moment to export their product not only by providing them credit assistance but also information & legality aspects to fulfilled the necessity of exporters which somehow people aren’t aware of and facing complexity administration.

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Southeast Asia

U.S. Incentives for Maintaining a Presence in South East Asia, and the Nature of that Presence

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Authors: Aqeel Ahmad Gichki & Adeel Ahmed*

The US is the most prominent extra-regional actor in the Southeast Asian area. Because of its strategic position and developing economy, the region is a center of attraction all over the world. As a result, the US has significant security and economic interests in maintaining its presence in the region. Furthermore, being the sole hegemonic power, the US has several hurdles to overcome in maintaining its hegemonic status. The threat that used to come from the USSR or Russia has now switched to China, and the ASEAN nations, as its neighbors, have inevitably turned into a hot tub between the two great powers’ competition. China has a tremendous motivation to preserve its dominance in the region and keep it free of any other player’s influence.

Due to the geostrategic importance of the location, China desires a strong presence in both the political and economic affairs of the region’s countries, since any instability or influence from an extra-regional actor in the region has a direct impact on China’s security and economy. For example, the Strait of Malacca, which is one of the world’s busiest maritime lanes, is a critical area of interest for both China and the US. Governing the strait or having influence over the internal affairs of Indonesia, Malaysia, and Singapore, which are adjacent to this chokepoint, will allow the specific player to exert possible control over a major portion of the world’s marine traffic.

The most compelling reason for the US to remain in the region is to contain China, as seen by its recent efforts in the region. The US considers China to be an existential danger, and American-based academics such as John Joseph Mearsheimer has already proclaimed “rising China” to be a menace to both the US and the whole region. To retain its influence in the area, the US withdrew all of its soldiers from Afghanistan and moved its emphasis to Southeast Asia. The founding of QUAD and AUKUS to confront China were bold and decisive measures.

Moreover, an assertive and hegemonic China may endanger freedom of passage in the South China Sea to pressure the US, Japan, or ASEAN states into supporting Chinese political demands. When confronted with this threat, the US may seek backing from individual ASEAN governments to carry out a sea-lane defense, or one of the ASEAN states may request U.S. assistance. While US naval troops would be the primary responders in such a scenario.

The US is attempting to preserve its presence in the region by forming regional security alliances and maintaining excellent ties with its allies, most notably Japan, which is an economic superpower with significant influence in the Asia-Pacific region due to its geostrategic location. In any emergency in the Asia-Pacific, most notably in the case of the Taiwan conflict, Japan will be beneficial to the USA by providing her with airbases.

In addition, Southeast Asian countries rely significantly on the US for defense weaponry because of China’s assertive posture in the South China Sea, which includes territorial claims and the construction of artificial islands. The US has developed significant military bases in Japan and maintains a significant military presence in Indonesia. Most significantly, securing the Malacca Strait by establishing military bases in strategic locations such as Indonesia and Singapore will force China to reconsider adopting coercive action in the region.

North Korea’s troubles provide another impetus for the US to retain its presence in the region. North Korea’s most serious concern is its ambition to acquire transportable nuclear weapons, which would endanger US interests throughout East Asia, perhaps pose an existential threat to Japan, and create a massive proliferation problem.

As Southeast Asia’s ten nations move clearly but unevenly into the global economy and in accordance with the information and technology needs of the twenty-first century, the US has a unique opportunity to assist influence the growth of this region and the lives of its people. The 10 nations there is home to about 525 million people and gross national output of more than $700 billion. They are the fifth-largest trading partner of the US. There is also the unchangeable truth of the region’s strategic geography: it stands astride some of the world’s most important sea-lanes, notably the Malacca Strait, through which roughly half of the world’s trade flows. This includes Persian Gulf oil, which powers the economies of Japan and Korea in Northeast Asia. Equally, if the US withdraws from or misreads the area, it risks causing harm to emerging democracies around the region that rely on US assistance. Consequently, the US has strong incentives to sustain its presence in Southeast Asia.

To conclude, Asia Pacific has historically been significant for the US, strategically, politically, and in terms of economic relations with the ASEAN nations. The US considered the broader Asia Pacific region as its area of influence and maintained security alliances, as a hegemon, for regional stability. Bilateral security alliances and multilateral strategic dialogues are prominent in the depiction of active US presence in the region. Moreover, US military/Naval bases in Singapore and Indonesia demonstrate the US as regional police. The US diversified its presence in the region with economic dynamism and public diplomacy as soft power instruments. Protection and promotion of democratic norms in the region and offering economic opportunities to emerging regional economies remained instrumental in US’s regional policy. To contain an emerging China, the subsequent US administrations indicated a commitment to a comprehensive grand strategy for the Asia Pacific with diversified tools to ensure an active US presence in the region. The US has expanded its alliances with other regional actors like India and Vietnam to prevent the expansion of resurgent China in the Indo-Pacific/Asia Pacific.

 * Adeel Ahmed is a student of International Relations from Quaid-I-Azam University Islamabad. 

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Southeast Asia

ASEAN’s Role in Bangladesh-Myanmar Border Tension

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Myanmar’s border forces near the Bangladesh border in northern Rakhine State. / photo: The Irrawaddy

For the past few days, Myanmar is continuously violating Bangladesh’s air space and territorial sovereignty. It has now done so at least five times. Apart from violating border laws, Myanmar is also responsible for firing mortar shells that killed two people. Moreover, the landmines at the border also injured one. It is worth mentioning that the use of landmines in the border region during peacetime is a clear violation of international law.

Against this continuous foul play by Myanmar, Bangladesh is dealing with the situation patiently and carefully considering the sensitivity of the border area. Many are seeing Myanmar’s mischievous activities as a provocation, Bangladesh hardly wants any clash in its borderlands as it may have a wide range of adverse impacts upon it such as unstable borderland, new tensions bordering districts, a new refugee crisis from Rakhine, and hindering its peaceful development.

So, the country is resorting to diplomatic options and regional and international pressure on Myanmar. The Foreign Ministry of Bangladesh has already called the Myanmar Ambassador fourth time since August and briefed the ASEAN ambassadors about the situation. Dhaka is likely to raise the issue in the upcoming United Nations Assembly also.

In return, Myanmar Foreign Ministry also called Bangladesh’s Ambassador on 20th September and blamed Arakan Army (AA) and Arakan Rohingya Salvation Army (ARSA) blamed for the attacks. The ministry also claimed previously that there are AA and ARSA terrorists inside Bangladesh. But it seems Myanmar’s claim is unbelievable and it is a part of its ‘blame game’. Prominent Journalist Subir Bhoumik analyzed that claim that neither AA nor ARSA is known for using heavy artillery and do not have air support, it was the military helicopter that violated Bangladesh’s airspace.

Moreover, the claim of AA and ARSA’s presence inside Bangladesh is also problematic. Bangladesh’s counter-insurgency measure and counter-terrorism measure is well-known in the region. And there is hardly any official claim that foreign rebels are operating from inside Bangladesh. Surely, it’s a tactics of Myanmar to create confusion about the tension and play a blame game.

However, Dhaka’s briefing the ASEAN ambassadors and seeking ASEAN’s role in mitigating the issue is a quite fair one considering ASEAN’s structure and ambition.

The Association of Southeast Asian Nations, known as ASEAN in short is a union between 10 Southeast Asian nations. The members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The areas of cooperation include political, economic, security, military, and socio-cultural with a desire for integration. Since the early 2000s, ASEAN also followed a community approach and established several communities among it. So, ASEAN is following the supra-national model of the European Union (EU). As a result, in any matter regarding its member-state, it has a stake in it.

ASEAN also has a deep engagement in the situation in Myanmar. Since the February coup in 2021, ASEAN is playing an important role. ASEAN has also banned the Junta Chiefs from the association until a peace process follows. It is pressurizing the Junta to end the turmoil. However, many ASEAN state is already engaging with the Shadow government, National Unity Government (NUG). For instance, the Malaysian Foreign Minister met with NUG leaders and since then gradually NUG is emerging as an important stakeholder in Myanmar for ASEAN.

ASEAN can also play an important role in mitigating Myanmar’s foul play at the border. Bangladesh is not the only sufferer. Thailand- an ASEAN member also suffers greatly from Myanmar’s disrespect for borders. Quite often, Myanmar violates the Thai border; it is also a source of refugees and illicit trades such as arms and drugs.

Bangladesh also suffers from similar issues. Myanmar border is the largest source of drugs and refugees for the country. As a war-like situation is already going on in Rakhine between the Tatmadaw and the Junta, it is also a worry for Bangladesh. The conflict has already displaced many ethnic Rakhines and Rohingya. About 589 Rakhine has already sought refuge in India’s Mizoram. Bangladesh also has a fear that the conflict may trigger a new wave of Rohingya refugees, which is the last thing the country wants.

As ASEAN is a successful regional organization among Myanmar and its Southeast Asian Neighbors, it can play an important role in pressurizing Myanmar to stop its foul-play to ensure stability on the ASEAN border. Moreover, Bangladesh also has a close relationship with ASEAN as it could become an observer. Bangladesh Police has already got observer status in ASEANPOL this year. Even, the conflict zone- Rakhine, and its habitants are also part of the ASEAN community. Therefore, ASEAN should take the matter seriously and engage in one of the ‘ASEAN borders’.

Myanmar’s Union is failing miserably at the hand of the Junta regime. The Armed conflicts in almost all states and the resistance of the People’s Democratic Force (PDF) against the Junta are bringing further turmoil to the country where ASEAN is seeking a peace process. The ongoing conflict in Rakhine between the Junta and Arakan Army is a part of this turmoil also. Moreover, the Rakhine state is a very sensitive region as it is the home of the Rohingya. A new wave of refugees and violations of human rights can bring further instability to the region. The tension on Bangladesh- Myanmar border is a symptom of it. So, ASEAN should be more active in ending the conflict in Rakhine and it should pressurize Myanmar to end its provocative actions on Bangladesh border for greater regional stability. After all, this is what the regional organizations are made for!

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