One of the key issues raised in a recent report you co-authored from the Council on Foreign Relations on Asia is how best Asia can develop a multilateral framework to channel its energies. Earlier this month, Australian Prime Minister Kevin Rudd hosted a meeting broaching just this subject and Japanese Prime Minister Yukio Hatoyama has talked of an East Asia Community. There’s been talk many times over the years of closer integration in Asia. Do you think the region is this time ready for closer integration?
I think we need to recognize that there’s a long history of not just trying to integrate the region, but also trying to find multilateral solutions to specific problems. Going back especially to the last financial crisis in 1997 and 1998, I think that in addition to a long effort by a number of Asian nations to try and find more of a regional identity, Asians have been groping in many ways since that crisis for their own solutions to a number of functional challenges, particularly economic and financial.
There are a couple of reasons for that. One is that experience at the time suggested that the United States was, in some ways, aloof from the problems of the region. Back in ’97 and ’98, the United States refused to bail out Thailand, just three years after it had bailed out Mexico in 1994. That had a very powerful effect, especially in Southeast Asia, on opinions of the United States. But it also produced a kind of impulse toward institution building, and many of the regional institutions we see today. And so there has been a tension in the foreign policies of a lot of countries in the region-including even Japan for example-between their identities as Asian countries and sometimes their search for Asia-only solutions to their problems, and the fact that they’re an integral part of a strategic and economic community that includes the United States and stretches across the Pacific.
Now, the problem is that, functionally speaking, many of the institutions that have been created have not been particularly effective at dealing with functional problems. I think that’s changing in the economic and financial areas, though less so in the political and security areas. So I think what’s changed over time has been the degree to which Asians are looking for their own solutions.
You mention that suspicion on the part of Asian nations toward the US has in large part been down to how the US handled the financial crisis in 1997. Have there been any other major factors?
It’s really stemmed from three things I think. For many decades there has been a debate in Asia about how to create some kind of unity out of the region’s diversity. And as we say in the report, Asia is not Europe. There’s a history of institution building in Europe, and Europeans have also been linked for a long time by a sense of the inter-relationship of the parts of the region-there’s a dominant religion in Europe, there’s a common sense of political and other experiences. That’s not been the case in Asia.
The second, as you and I both say, is the [1997-98] financial crisis, which lent new impetus to these things.
And the third is just the growing financial and economic integration of Asia itself. That’s really accelerated since 1997 and ’98-the region just trades more with each other. There’s more happening economically in the region. And China plays a very big role in the production and supply chains that link Asian economies together. So this has all come together to create this ferment for new regional institutions and ways of doing things.
Are there any of these regional frameworks or institutions that you think have been particularly successful?
I don’t think there’s any one model-and I think one of the experiences globally of multilateralism in recent years has been that sometimes ad hoc, informal multilateralism has often been the way to go.
One of the themes in the report is that if you think about big formal security and political institutions in this region-things like the ASEAN Regional Forum, which had always been billed as the premier security forum in the region-you see standing institutions weren’t really there to respond to some of the crises in the region. Over the last five or six years, when you think of some of the crises that have happened, whether it’s avian flu, the cyclone in Burma, or the tsunami, in the formal institutions people have spent so much time trying to build institutions, forming secretariats and creating processes that these things were almost impotent in the face of these crises.
So what happened was the United States and certain other countries essentially got together and created ad hoc regional responses.
Institution building has been weak in the security and political area, and I think that’s likely to remain the case, in part because some of the traditional pillars such as formal institutions are not really what provide the backbone of security in the region. It’s American alliances. It’s the role of the United States Navy, and the role some political relationships continue to play. So my view is that the most effective institution building in the region, when it hasn’t been ad hoc, has really been in the economic and financial area.
What do you make of the Obama administration’s start to its dealings with Asia?
The hallmark of American policy, in East Asia in particular, has been bipartisan continuity over seven administrations. When you think of China policy, for example, the threads that are being pulled together in Obama’s China policy can in many ways be traced back to President Nixon. And likewise, the administration has recommitted to some of the fundamentals of the American presence in Asia. They’re working hard, it seems to me, to strengthen alliances with countries like Japan and others.
The problem is that the economic pillar of American involvement in Asia is particularly important-the business of Asia is business. So Asia won’t wait for the United States, which is really a handicap for the administration: first, because the politics of trade are controversial in the United States, but, second, because they are particularly so in the president’s own party. So the administration hasn’t really sorted itself out on trade in a way that answers a lot of the questions that Asians have had about the administration’s orientation.
The good news is that the administration has indicated, for example, that it intends to move forward on the Trans-Pacific Partnership, which was an effort by some of the APEC member economies, including the United States, to try and move forward on liberalization and trade agreements among APEC members who are willing to move forward. This is important symbolically, but could also be important substantively.
But the most important thing is that I don’t think the administration has indicated what it intends to do about the global trade round, the Doha round. And from an American standpoint, concluding a global agreement would erase all of the intraregional preferences that have the potential to put the United States and US firms at a disadvantage.
How much of a role is India likely to play in any moves toward closer regional integration–how much does it want to get involved?
It very much does. They have a “Look East” policy, but one which has lacked economic content. I think that’s changing. Indian trade, with Southeast Asia in particular, is growing, but it still comprises a very small share of ASEAN trade.
We in the United States have a bad habit of thinking about India as a South Asian country rather than an Asian country because we have tended to think of the different parts of Asia as disconnected from each other. Historically and culturally, India has been very well integrated with East Asia. But what has happened is that in the modern era, in part as a result of the colonial legacy, and in part also because of the choices India made, it [became] disconnected from East Asia. So you had for instance the Cold War, which pulled the foreign policies of East Asian countries toward the United States, at a time when India was nonaligned in that picture. So part of what’s happening is that Indian diplomacy, and economic developments between India and East Asia, and especially Southeast Asia, are restoring some of the old political and economic connections that once existed.
But it’s going to be a slow process, partly because India is not integrated into those production chains. I do think it’s a priority for the Indian government, though. And I think a priority for Indian business. So you have, for example, an India-ASEAN free trade agreement, and also an India-South Korea free trade agreement that’s been ratified while the US-Korea free trade agreement is sitting.
I think over time India is going to become more integrated into this region. Part of this is strategic-because countries that are wary of China simply see another big Asian power that, even just in an existential sense, has the ability to contribute to a mutually favourable balance of power in Asia.
There’s an unusual situation now where we see an established power, Japan, with two rising powers, namely China and India. How optimistic are you these three can accommodate each other?
I think part of what’s happening is that you have powers looking for a balance of power regionally at a time when we’re [also] looking for a concert of powers globally. And by that I mean that the major powers, whether it’s China, Japan, India, the United States, Europe or others, are groping for, if not joint then at least complementary, policies on a host of questions at a global level. However at a regional level, Asian countries seem to have much more faith in much more classical conceptions of the balance of power.
But it produces, I think, interesting orientations in countries’ foreign policies. You take something like climate change, where China and India have positions that are closer to one another than either of their positions is to the United States and Japan-but [meanwhile] at a regional level, you clearly have the United States, Japan and India working together on issues and through informal mechanisms that have made China a little bit nervous.
The most interesting issue to me to watch is that, clearly, there’s a mismatch between the global architecture and the realities of capacity: We have a UN Security Council that is in many ways outdated. And the decision in Pittsburgh to supplant the G8 with the G20 reflects a recognition, I think, by the United States and Europe that it’s time to update global institutions to reflect the realities of who has weight in the world. And that means a bigger role for China and India.
But while some countries will win in this process, there’ll also be some that are going to lose, and that will more often than not be Europe. An example of this came when I served in the Bush administration: The International Energy Agency, which allows the major energy consumers to coordinate their [stockpile] policies, doesn’t include China and India. This is ridiculous-what kind of energy agency doesn’t include the two fastest growing energy consumers in the world? So, at the end of the Bush administration, the United States tried to involve China and India to a much greater degree, to update the institution. But [the administration] very quickly ran afoul of a number of, especially small, European countries, who were concerned about what the inclusion of China and India would mean for their weighted voting shares in this institution. So I think one interesting question, as China and India rise to global influence, is what implications this will have for the United States and Europe.