History and Influences on South East Asia
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"If there were only two men in the world, how would they get on? They would help one another, harm one another, flatter one another, slander one another, fight one another, make it up, they could neither live together nor do without one another"
Philosophical Dictionary, 1764
Increasing role of China in South Asia has attracted the attention of the policy framers as well as scholars. Its foreign policy towards Southeast Asia has varied from indifference to hostility, but Chinese interest in the region has persisted since 1949. While India occupies a vital position in the Chinese calculation, there are discernible variations in Chinese policy towards other states in the region. The behaviour of Southeast Asian states towards China has also varied. Notwithstanding the persistence of the Indian factor in their perceptions, we observe different response to Chinese behaviour and policy in these states.
Chinese foreign policy is undergoing a metamorphosis never seen in the history of the People's Republic (PRC). The country has enjoyed a more secure place in the world than before, yet it has remained dissatisfied with its international status. Chinas quest for international legitimacy and a positive image is tested by its pursuit of security interests and the power politics logic of its own and other states. Chinese foreign policy strategy has equally stressed the need to protect its national interest in a threatening world and the struggle to remold the international environment in line with its preferences. Clearly PRC foreign policy is complicated, dynamic, and consequential. China has managed to become a rising star in the international arena, both politically and economically. The bipolar world order lasting for nearly half a century came eventually to an abrupt end in the closing months of the 1980s as a result of dramatic changes in Eastern Europe and the so-called "post cold war era" began in the final decade of this century.
China has some motivations in the Southeast Asia one of these is China is in pursuit of hegemony in the region, another possibility is primarily defensive an attempt to neutralize the region while China focuses on internal priorities and the third possibility is to have a cooperative structure.
India is seeking an expanded role in the international Geo-political arena which includes Asia and Southeast Asia. India's growing economy ,common energy security interests, national interest, and power projection makes India & China a Peer competitor.
Beijing's current goal in southeast Asia is to maintain a stable environment around its periphery to assure others that China is not threat, and to encourage economic ties that contribute to China's economic modernization and thus regime stability. The foreign policy instruments that Beijing has employed to secure its goals are constituent throughout most of Southeast Asia, but the priorities assigned to different strategic goals vary depending on China's interest in different part of the region.
STATEMENT OF THE PROBLEM
"To examine the current politico-economic influences in South east Asia and recommend measures for India to significantly expand its politico-economic & strategic influence in the South East Asian region with a view to counterbalance the overwhelming Chinese politico – economic dominance in the South East Asian Region.."
Justification of the Study
The most significant strategic development after the Cold War, is probably the sudden growth in China's economic potential and consequent national power. A rapid rise in power of a major country in the past has usually led to tension in the region, conflict with the neighbours and eventually a war. To make an assessment of China's posture well into the future is fraught with number of uncertainties. Equally, a projection of that role in the next century would, of necessity, demand an intimate acquaintance with how the Chinese have been involved in their dealings with this part of the world in the past. Above all, how that relationship has evolved, to the present day environment. Idea shall be to restrict the paper and sketch out important events in the near past, which have shaped the present and loom larger than the hoary past on the future that is yet in the limbo. The basic intention in writing this dissertation is To examine the current politico-economic influences in South east Asia and recommend measures for India to significantly expand its politico-economic & strategic influence in the South East Asian region with a view to counterbalance the overwhelming Chinese politico – economic dominance in the South East Asian . A direct question has been addressed whether or not China restricts India from emerging as a global player.
Axiomatically any meaningful discussion of China's role in Southeast Asia would imply an understanding of its relations with the Indian subcontinent as a whole. Of the world's great powers, China is geographically the closest to the Southeast Asian countries. It has common borders with Myanmar, Thailand, Laos, Vietnam, Caombodia. There is significant cultural similarities far reaching political and strategic repercussions over the past couple of centuries, and has propelled the world's most populous regions into interaction in a wide variety of ways. From a simple geographical perspective, qualitative changes in the China's foreign policy should be expected if China grows from a medium-sized power to superpower. At its present rate of economic growth, China's productive capabilities and total wealth will soon outstrip those of the other Asian powers. As a weaker power, China's dependence on the favour of its neighbours has been comparatively high. But increased relative capabilities make it feasible for a rising great power to exert greater control over its surroundings. If the opportunity arises to establish a dominant role in the region, China can be expected to seize it. Thus the scope of this paper has been restricted to Chinese dominance in the Southeast Asian region, which will pose vexing problems for India . An attempt has been made to analyse, how India can focus and counterbalance the overwhelming Chinese politico – economic dominance in the South East Asian.
Organisation of Dissertation.
The study is proposed to be dealt in the following sequence: -
- Modern History & strat influences in South East Asia.
- Political Economy of South East Asia.
- Chinese political and economical strategy in South East Asia.
- Indian political and economical strategy in South East Asia.
- Comparative Analysis of Indian & Chinese politico-economic strategies in SE Asia.
- Recommended response of India to expand its influence in the region.
MODERN HISTORY AND STRATEGIC INFLUENCES IN SOUTHEAST ASIA
The post-Cold War world is seeing in some areas a resurgence of nationalism and in others a greater emphasis on regionalism. These two tendencies will overlap. In Southeast Asia national and ethnic differences were significantly blunted by European colonialism and in some cases have been further submerged in the post-colonial period of new nation states. But what is new in Southeast Asia is the development of voluntary (as distinct from externally mandated) cooperation on a sub-regional or regional level. Most recently there is the assertion of an Asian identity, shared by Southeast Asians, which is sharply distinguished from Western value systems, social norms and economic models. It is too early to say how far that will be taken or how much it will influence the political and social development of Southeast Asia. The very important differences between and indeed even within the Southeast Asian countries induces some skepticism in academic circles about the existence of "Asian values" etc. But there is no doubt that there is a perception in the region of some essential shared values or priorities, and a rejection of what are seen as Western individualistic and libertarian values.
An embryonic sense of shared interests transcending ethnic or national groups emerged in colonial times between independence movements, student movements and other groups, including notably the various Marxist-inspired or communist movements in the region. But until after the Pacific War there was little connection across the region. The colonial empires were very separate and governed on different principles. It is a common observation nowadays that Australia, on the fringe of the region, only recently and belatedly become aware of and involved with its Southeast Asian neighbors. That is true, though with some qualifications. There was peripheral contact in the north even before the Europeans colonized Australia. But in the colonial era there was no steady development of contact or interest. The shifting patterns of alliance politics in Europe affected such contacts as there were between the colonial administrations in Southeast Asia and Australia, and indeed between the Southeast Asian colonial administrations themselves. Australia was not unique, or even unusual, in having little contact with its neighbors and in having its external links directed principally along the lines laid down by the metropolitan power. What are now the independent nations of Southeast Asia also had little contact with each other during the European colonial period. Just as the lines of communication and trade ran from Melbourne and Sydney to London, so did those between the French, Dutch, and other British colonies and the respective metropolitan powers in Europe. Right up to the Pacific War there was little or no communication between, for example, what are now Indonesia, Vietnam, Malaysia, and the Philippines. The links ran from Manila to the United States, from Batavia to the Netherlands, from Hanoi to France, and so on.
It was the remarkable Japanese campaign which began at the end of 1941 which precipitated or accelerated the radical changes which took place between 1945 and the end of the Vietnam war. The sheer speed and success of the Japanese successes against numerically superior defending forces in Southeast Asia made a strong impression on opinion in the erstwhile colonies. The Japanese failed to capitalize on that in the sense that after early political successes in encouraging nationalist and pro-Japanese movements the appeal to shared Asian interests lost plausibility in the face of Japanese policies and actions which were exploitative or worse. Although Japan lost the war and left wounds in the region which are still not healed, the war precipitated the end of the moribund European colonial era, and accelerated the creation of independent states largely within borders established by the colonial empires. For some years trade and other economic links remained predominantly in the old colonial grooves but with the economic supremacy of the United States and then with Japan embarked on decades of the highest rates of economic growth the world had yet seen, those patterns diversified. In the region the United States and Japan became the two most important outside powers and that was reflected inter alia by their leading roles in the setting up of the Asian Development Bank in 1966.
By that time Australia too had perforce diversified its trade away from Britain which had made it clear that it would seek its future economic arrangements in Europe and the Commonwealth arrangements which had supported much of Australia's traditional export industry were phased out. Australia turned to Japan and others for new markets (a trade agreement with Japan had already been made in 1957). Australia's development assistance programme had from the beginning concentrated on Southeast Asia and become and increasingly important instrument for involving this country with the region, especially as significant numbers of students from the region came to our universities and other institutions under the Colombo Plan and successor programmes.The failure of the attempted coup in Indonesia, the Gestapu of 30 September 1965, and the subsequent establishment of the New Order government there opened the way to overcome the regional or sub-regional strains produced by President Sukarno's efforts to crush the newly-constructed Malaysia, as well as other tensions created or exacerbated by the Sukarno policies. In this climate ASEAN, the Association of South East Asian Nations, was established in 1967 and set out on its long and successful course of gradually building a sense of common interest and regional association among the six (originally five) members. ASEAN recently embarked on the development of AFTA, the ASEAN Free Trade Agreement.
ASEAN has become the key institution in Southeast Asia not only because of its success in developing a sense of community among its very disparate members, and in finding a road for them to closer economic cooperation. It has also become the forum for discussion with the main world powers on a wide range of matters. This has come about through an annual mechanism of post-Ministerial consultations held after ASEAN's own internal consultations through which ASEAN member governments, at Foreign Minister level, meet with their counterparts. These counterparts, termed "dialogue partners", currently are Australia, Canada, the European Union, Japan, the Republic of Korea, New Zealand and the United States. In 1994 discussions on regional security were further developed with the establishment of the ASEAN Regional Forum (ARF) which groups ASEAN and its dialogue partners with Russia, China, Vietnam, Laos and Papua New Guinea. Looking at the recent evolution of Southeast Asia perhaps the most significant thing has been the change that has occurred since the ending of the Cold War and the collapse of communism. Until relatively recently the centrally planned economy model had much attraction for many developing countries and there was up to the beginning of the eighties quite widespread aversion to capitalism and to the liberal market model as exemplified by the Western industrialized countries. Now virtually all of Southeast Asia is committed to market economics, albeit with more governmental political control than in the Western countries. There is a virtual unanimity about the commitment to economic development based on relatively open markets, private ownership and competition. With that has come a period of unprecedented economic growth. The major economies of Southeast Asia are all growing at rates previously thought unattainable for a sustained period. There are of course some uncertainties about the future; but there are few who doubt that Southeast Asia will early in the twenty-first century be a major centre of economic power and influence.
Southeast Asia has traditionally been a site of great power competition for regional dominance, due to its strategic location as a bridge between continental and maritime East Asia. To manage this competition and to enhance their own sub regional autonomy, the member states of the Association of Southeast Asian Nations (ASEAN) engaged in a number of regional institution building initiatives during the early 1990s. This "institutionalism" agenda led to speculation that ASEAN could become the hub of a nascent regional security community following the 1997 Asian financial crisis, however, the prospect that ASEAN could act as an autonomous entity to mitigate Sino-U.S. geopolitical pressures seemed increasingly tenuous. Weakened by political and economic instability, intra-regional disputes and a simultaneous expansion of its membership, ASEAN has come to question its own identity. This has only further undermined ASEAN-led regional security initiatives such as the ASEAN Regional Forum (ARF). More frequently, Southeast Asian states have favored bilateralism and have looked to external powers to realize their security interests. These changing sub regional dynamics have, in turn, prompted renewed efforts by China and the United States to cultivate influence within Southeast Asia. China's attempts to gain support for its "new security concept" and US efforts to secure additional access and infrastructure agreements along the "East Asian littoral" are illustrative. To some extent, Sino-U.S. geopolitical competition has been modified by strategic cooperation resulting from the "war on terror". China still remains wary of U.S. attempts to engage Southeast Asia in countering global terrorism. These trends have, in turn, compelled analysts to reconceptualize the Southeast Asian security landscape in a balance of power context. It is clear continental Southeast Asian states have aligned with China and maritime Southeast Asian states have aligned with the United States. The geographic position of China and the United States, and the evolution of their interests and military capabilities accordingly, make it unlikely that either country would seek to project power into the other's respective sphere. Southeast Asian states maintain a position of equidistance between the great powers. She attributes this to the ASEAN states' general distrust of great powers and their desire to maintain the delicate Sino-U.S. regional balance.
POLITICAL ECONOMY OF SOUTH EAST ASIA
" China sleeps, when she wakes, the World will tremble"
The South east Asian countries over the past four decades has transformed itself from a region with enormous economic and political problems to one blessed with relative peace and prosperity. In particular the five ASEAN economies, namely, Indonesia, Malaysia, the Philippines, Singapore and Thailand , grew strongly in the 1960s with an average rate of 6 percent. This buoyant economic performance continued in the 1970s with 7.3 percent as they benefited from the massive inflows of the foreign exchange earnings due to sharp increase in the world price of primary commodities, including two oil shocks which benefited some of the members the same period.
In the 1980s the region slowed down to an average growth rate of 6.1 percent. Regional economies experienced recessionary conditions due to high interest rate policy of the US Federal Reserve Bank, the consequent debt crisis in the region, the recession in the ASEAN's major trading and investment partners, and the fall in the world prices of the primary commodities. But there was also a positive trend of influx of export- oriented foreign direct investment from Japan and the NIEs following the strong appreciation of their currencies. The recovery from 1991 to 1996 was followed by an economic contraction in 1997-98 due to the crisis which began in Thailand in July 1997 and spread to other parts of the region. In 1999-2000, the ASEAN economies staged a dramatic recovery with Singapore and Malaysia leading, things again turned sour with the September 11 attacks and the lackluster performance of the export sector. There was again a decrease in the economic growth due to the SARS, Iraq crisis and terrorist related attacks, slump in the electronic market and collapse of the WTO talks in Cancun.
The global economy is most rapid in emerging Asia where GDP accelerated to 7.2 percent in 2003, accounting for about 50 per cent of world growth. Looking forward, growth is projected to remain high at 7.4 per cent in 2004 and 7.0 per cent in 2005. The IMF stated that while domestic demand growth has increased significantly in emerging Asia, the regional current account surpluses remain very large, with exports supported by the rebound in the information technology (IT) sector as well as depreciating exchange rates.
In the ASEAN-4, Thailand has shown the strongest expansion at 6.7 per cent in 2003, and is expected to remain high at 7 per cent in 2004 and 6.7 per cent in 2005. Cyclical considerations and high levels of public debt necessitate fiscal prudence for Thai authorities. The Malaysian economy is also recovering strongly and is expected to continue with inflation and unemployment remaining at low levels. However, the main policy priorities are the implementation of the announced fiscal consolidation to achieve a balanced budget by the year 2006 and greater exchange rate flexibility accompanied with suitable macroeconomic policies.
Indonesia's modest growth continues to be driven by private consumption, and has been accompanied with lower inflation. The Indonesian government should continue to implement its planned fiscal consolidation. Moreover, it needs to sustain banking, legal and judicial reforms in order to provide a better investment climate conducive to higher growth. As for the Philippines, uncertainties remain high even after the May 2, 2004 presidential elections. The main concerns of the Philippine government include increasing the tax revenues, restructuring the power sector, strengthening the banking sector, and improving the business system. Following the SARS crisis, the Singapore economy recovered in 2003 with supportive macroeconomic policies. To enhance its medium-term competitiveness and growth prospects, the IMF recommends a deepening and acceleration of reforms including further divestment of government linked companies
Issues and Challenges for Southeast Asian/ASEAN
Domestic policy issues and challenges. On the domestic front, the growth prospects for ASEAN are very much dependent on various factors including the ability of their respective governments to provide economic, political and social stability, implement economic reforms, and diversify their economies. ASEAN policy makers thus face the following challenges:
Sound macroeconomic environment. Following the 1997/98 economic crisis, government budget deficits relative to GDP have broadly increased and this is of serious concern for ASEAN governments, particularly for Malaysia and the Philippines. Price instability has become a serious concern for Indonesia and the Philippines. Exchange rates in Indonesia, Laos, the Philippines and Myanmar have weakened significantly. Moreover, the rising levels of foreign debt in the Philippines and Indonesia could create additional uncertainties. In terms of the current account surplus as a proportion of GDP, the six older ASEAN members have broadly shown higher levels relative to Cambodia, Laos, Myanmar and Vietnam (CLMV countries). Thus, in order to achieve a sound macroeconomic environment, ASEAN economies need to adopt a prudent fiscal policy, low inflation rates, stable exchange rates, and manageable levels of external debt and current account balance.
Stable political and business environment. The political environment in some countries has been affected by military uprisings, kidnappings, bombings and other terrorist-related activities, people's demonstrations, and elections. A 1997 survey of Japanese firms conducted by JETRO indicated that political stability is considered as the most significant determinant of Japanese investments in ASEAN. Thus Southeast Asian governments need to find ways and means towards achieving and maintaining a politically stable environment in order to encourage domestic and foreign investments.
Social Harmony. ASEAN countries need to address issues such as conflicts between racial groups (e.g. the Chinese and pribumis in Indonesia, and the Chinese and bumiputras in Malaysia), between religious groups (e.g. the Muslims and Christians in Southern Philippines) and between the poor and rich. Despite all the policies and resources spent on alleviating poverty and reducing income inequality, unemployment, poverty and income inequality continue to be the major policy concerns of ASEAN governments. In reality, it is very difficult to reduce poverty and narrow the income gap given the interplay of politics, economics and industry, and the conflicting goals of the various interest groups in the economy like businesses, religious groups, the elite, farmers, small and medium entrepreneurs, etc. Thailand's income gap between the rich and the poor was the widest in the world (Bangkok Post, 2S Aug 2003). In the Philippines, Gerard Clark and Marites Sison (2003) in their study titled liDo the well-off really care about the plight of the poor?" revealed that majority of the respondents suggested that some elite people cared while others did not; and those who did care did too little or acted primarily out of self-interest. In fact, there are some people in the superior group like the elite who wish the poor to remain poor because of the benefits that can be derived from their poverty. For instance, politicians often depend on the poor at elections time for support that propels them to political office.
Economic Reforms. Southeast Asian governments need to continue implementing economic reforms that include market opening, trade, investment and financial liberalization. These reforms are particularly crucial for the CLMV countries as they undergo transition from centrally planned to market oriented economies and for the crisis-hit countries especially Indonesia and Thailand. In the case of Indonesia, there was a lack of seriousness on the part of the political leadership to undertake economic reforms. For example, there were delays in the removal of tariff control and the privatization of state assets and enterprises, so that the process of reforms is reverting to protectionism. Furthermore, a delay in the IMF's financial assistance added to the ineffectiveness of Indonesia's recovery programme. Thailand completed its 34-month Stand-By Arrangement from the IMF that formed part of an international financial package worth US$17.2 billion from multilateral and bilateral lenders. Outstanding obligations at end-June 2002 amounted to US$6.4 billion and repayment was finally completed on July 31,2003, some two years ahead of schedule - a significant achievement on the part of the Thai government.
Economic Diversion. Various factors impel ASEAN economies to continue to diversify their economies: volatile and broadly declining primary commodity prices, depletion of non-renewable primary resources such as oil and gas, and the high costs of production. Following the decline in crude oil prices in the 1980s, Brunei and Indonesia have begun to diversify their economies from oil towards non-oil products and services (finance, tourism). Because of the high costs of production (e.g. high labour costs), Singapore's economy has emphasised the significant contribution of the services sector (IT, education, tourism, finance). The services sector has accounted for about 60-70 per cent of Singapore's GDP. Moreover, to improve the competitiveness of Singapore's manufactured products and services, several cost-cutting measures have been implemented, namely, cuts in contribution rates for mandatory saving, reduction in corporate taxes, and reduction in utility charges. Long-run policies include training and re-training programmes for workers and greater focus on R&D activities for innovations and improvement in technology. In Singapore, there are more than 600,000 workers with secondary education or lower. As such, it is extremely important that these workers upgrade their skills and learn new tasks to be more productive and to be more employable in the future. There are also other schemes such as the job re-design programmes implemented by the Singapore Productivity and Standards Board which involves changing both job content and arrangement to encourage workers to become more productive. Other ASEAN countries can learn from Singapore's experiences with regard to cost-cutting measures, training and re-training programmes, and R&D activities to improve productivity and competitiveness.
Multi-Ethnic States. Multi-ethnicity is a dominant feature of the region and therefore stable inter-state ties and intra-state ethnic stability are closely intertwined. The region has to work toward the stability and security of strong, secular, federal multi- ethnic states if it is to remain secure and stable in the coming years.
The Challenge of Democratisaton. The other key political challenge that confronts South East Asian nations is how to build stable, democratic state structures in condition of a rising tide of expectations for better life and greater liberty. Through much of Asia, the struggle between pressures for democratization against existing authoritarian state structures or oppressive socio-political conditions is a reality. Human rights abuses are common in many of the states. In Myanmar and Indonesia there is a rising pressure for political change and expansion of political rights. Militancy, insurgency and terrorism have
wracked many parts of ASEAN region in the past and continue to do so even now. Only through steady democratization, decentralization and provision of caring and efficient governance can the integrity of state structures and stability be preserved.
Chinese political and economical strategy in South East Asia.
China perceives itself as a central power on Earth. The rest of the World is an array of greater and lesser powers which neither have unified structure nor a single head"
China's political and economic strategy are interlinked with the security relation that China shares with the Southeast Asia as a region. China embraced the Southeast Asian regionalism and of multilateralism with Southeast Asia is part of broader decision to jettison China's old confrontational policy and style. Chinese leaders & officials turned this approach to South east Asia on its head replacing the assertiveness that characterized pre 1997 Chinese policy with accommodation. This concerted campaign assuaged South east Asian fears but also paved the way for South east Asian and Chinese to participate in and profit from this rapidly expanding economic ties. Chinese leaders and officials smoothly employed diplomacy in innumerable meeting with South east Asian counterparts to slowly and carefully win greater influence in south east Asia. The Chinese foreign policy community made a concerted effort to represent China's reemergence as a regional power. It portrayed recent trends as aligned with the economic and security interests of its southern neighbors. China convinced the neighbors that it is not a threat. China employed the same set of instruments of Chinese national security policy at both multilateral level with ASEAN and bilateral level with individual ASEAN states albeit with differing effects in the countries concerned depending on their individual circumstances. It places contentious issues temporarily to the side, places processes before product and welcomes efforts to build EAST ASIAN community. Beijing binds the South East Asean countries with a spectrum of economic, political and cultural and security proposals. As Beijing courted its southern neighbors, it supplemented diplomacy with economic ties in terms of trade and economic investment. China opened China to "overseas" ethnic Chinese and invited ethnic Chinese Southeast Asians to invest in China and subsequently invited Southeast Asians. Rapid increases in the Southeast Asian- China trade led to overcome the financial crisis. China's economic success has been as impressive as its diplomatic campaign, because china and Southeast Asian countries have been competitors both FDI and for developed markets in Japan,Europe and the United States. Beijing has worked assiduously tp provide Southeast Asian economies with a stake in China's economic expansion thus stabilizing China's periphery and contributing to China's own economic growth. China's turn to multilateralism diplomacy was to compliment its intense bilateral diplomacy was timely. ASEAN grew during the 1990 and accommodated new countries and also in the due course of time it had not been able to respond to the financial crisis and also the turmoil in East Timor. China's help to ASEAN gave a new appearance to ASEAN.
Multilateral diplomacy provided a two way street for ASEAN countries and China and provided measures to forge new bonds. ASEAN also persuaded China not to pursue confrontationally appearance. These multilateral theory provided successes to both the sides as these countries left back the territorial claims of the south china sea and paved way for the economic development . Another success was the eradication of the severe acute respiratory syndrome . China's bilateral relations are bedrock on which multilateral mechanisms compliment the bilateral relations but also provide effective means to broadcast China's message.
Themes that China has pushed through multilateral diplomacy are Free trade between China and ASEAN, non traditional security issues as diseases and drugs and a "New Security Concept". China has also been able to set the rules for the game for the emerging East Asian regional architecture. China touted that the multilateral diplomacy has provided a win- win situation for both the sides. China has been able to gain the following:
- China's multilateral diplomacy provides a unifying element in its relation with Southeast Asian countries. It is the sheet that covers its varied interest in and approaches to individual states.
- China's multilateral component gives it an additional means to influence ASEAN states, both through its particularly close relations with several individual ASEAN members states and through its relation with organization as a whole.
- Close ASEAN-Chinese cooperation also increase China's leverage in the emerging East Asian- only regional multilateral network.
- Multilateralism thus provides a network of diplomatic channels in which the United States does not participate.
- It has a particularly significant impact on public perceptions, since the language of the multilateralism fits well with the verbiage of ASEAN.
- It includes a Chinese –ASEAN Free trade Agreement (CAFTA) , which undermines ASEAN's historically slow and halting attempts to strengthen economic links among ASEAN member states.=
China has embedded itself in the ASEAN and is so influential with the ASEAN states that it is often in effect inside ASEAN deliberations. China's support to Myanmar against human right violations has led the ASEAN in a embarrassed state. Multilateral engagement has let China play as a insider within the ASEAN ,this has also reduced the resicilience of the ASEAN and the short term benefits of the states with China under the garb of multilateral diplomacy. China played the politics in ASEAN when it was ineffective. China's role in other serious transnational issues like terrorism and response to Tsunami has been limited. Traditional security issues continued to be addressed at the bilateral level, and ASEAN states have reacted warily to Chinese proposals through ARF and the China-ASEAN strategic partnership to include traditional security issues on the multilateral agenda.
China's Multilateral Diplomacy.
Distrust of multilaterals diplomacy had a long history in China despite victorious communist and expulsion of nationalist who took refuge in Taiwan was not excluded by the UN. China fought US in 1950. China remained passive and wary observer of regional organization such as ASEAN. China initially started with service, technology and trade meetings. After the formation of ASEAN Regional Forum to reduce the tensions and enhance confidence building on security issue and to provide an alternative to Beijing perceived tactics of playing off one Southeast Asian claimant to part of South China Sea.
Initially China feared that ASEAN would use ARF to internationalize the South China Sea dispute and prove awkward questions about Taiwan. China still being suspicious joined the ASEAN and ARF. Initially China remained cautious and only after gaining confidence proposed initiatives in the organization. China slowly used multilateral forum for its own goal. China slowly started CAFTA, a economic proposal of major political significance – to forestall Taiwan to revive its pre financial crisis state.
CHINA'S ECONOMIC RELATION AND STRATEGY IN SOUTH EAST ASIA
China as widely expected to become Southeast Asia's has achieved the aim. It topped the trade at whopping $103 billion or about 10% of ASEAN's trade. With the emergence of China as the new manufacturing hub, ASEAN countries became deeply concerned with competition China would crowd out their export- driven growth. These fears subsided as their trade with China grew and with rest of the world stagnated. The relative benefit of expansion of trade is still not clear both between trade partners and specific industries. There is increase intra-industry dependence as both the economies has integrated. Since 2004 China has attracted more than 55% of the FDI as compared to 20% to the ASEAN. However it is believed that developing trade relation and –CAFTA will increase the FDI in ASEAN this also includes investment from China. FDI continues from US, Europe , and Japan. The emergence of clearer "China plus Southeast Asia" investment strategy on the part of multinational firms could help shift relative FDI flows from China to Southeast Asia.
China's search for reliable energy supplies will play a less significant role on its relations with Southeast Asian countries as a whole than trade. This choke points of the Southeast Asian countries is more of importance in terms of security issues are of "high politics". Access to Southeast Asian energy resources is important to China but not critical. Southeast Asia is net oil importer, but a significant producer of natural gas. Indonesia hope that pipeline from the country and extraction of gas will help in investment in the country. In short trade and energy issues are likely to remain at the heart of many Southeast Asian countries relations with China as both the issues carry considerable political baggage. It is perceived that value is enhanced by the political aura that surrounds the world with implications for continued economic growth and thus regime stability. Energy on the other hand implies possibility of eventual tension if outsider seeks to intervene in South east Asia in the name of energy security.
China's economic strategy can be understood in terms of trade, FDI, Investment in other's economies, development assistance and energy.
Trade. Trade is not only an economic fact measured by the exchange of goods and services it includes prosperity and political stability. ASEAN international market was in slump since the financial crisis, with accomplishment of the Free trade Agreement increasing trade with China proved beneficial. China's economy is two and half times that of Southeast Asia. Southeast Asian countries are the major suppliers of raw materials and intermediate inputs to china. China and Indonesia expanded their bilateral economic cooperation to include cooperation in agriculture , energy and natural resources and basic infrastructure. In addition China has established Joint Committee on Economic trade and Technical Cooperation with almost every country in Southeast Asia . China's trade with Southeast Asia not only expanded because of trade volume but also because of China's increasing deficits in its trade with Southeast Asia. There has been a following trend in the following:-
Manufacture. 40% of ASEAN exports to China consists of machinery and electrical equipment. A large percentage of these exports are integrated into finished products and then re- exported from China.
Primary Resources. The export of mineral products continues to increase. China has made significant investments in Southeast Asain mines and petroleum resources , this will in long run help in for the energy needs.
Agricultural products. Chinese demand favors the ASEAN agricultural exports. China as a result of Trade liberalization has marketed products cheaper than that of Thailand.
Foreign Direct Investment. FDI has been increasing to China but there is a slight improvement in the FDI in Southeast Asia after 2004. Actually there are a variety of reasons for the FDI in China first is that investors follow the investors, second is the political stability and third is the cheap labor. Chinese labor are one third and one fourth of the countries of Philippines and Malaysia an less than one tenth as that as that of Singapore. Fourthly China's huge domestic market is a key reason choose China. Finally, China's currency may be undervalued though that is controversial. Rates of return of FDI is not of a reason as the rates are almost the same . Some also believe that incentives are more in China as compared to other countries.
Investment in other economies. The largest ASEAN investor in China has been Singapore which began investing as China opened the markets. Ethnic Chinese started the initial investment. China's investment in Southeast Asia is comparatively small but appears to be suddenly increasing. Malaysia and Indonesia have attracted a substantial share . Chinese investments in Thailand went into manufacturing, food processing, power generation, pharmaceuticals, and trade and real sector. Singapore got mainly into insurance , banking , finance, shipping and trade. Chinese investments in Indonesia were made mainly by the state owned companies in the field of oil exploration. China also has invested in the poorer countries of the ASEAN. The Asian Financial Crisis led to reduction in the FDI inflows to ASEAN and increase in China but the relation between the two is complex and difficult to prove.
Development Assistance and Energy. China has been able to successfully convey an impression of itself as a grander and a generous donor to the poorer states of the Southeast Asian countries. The Chinese packages include
To understand those critical nuances, therefore, it perhaps becomes imperative to survey China's relations with each of these South Asian states and to highlight China's overall influence in the evolution of South Asian security profile.
Political strategy of China cannot be analyzed as a separate entity. it is meshed with the security of south east Asia. Due to spread of Chinese ideology and also claim our territory security assumed a major dimension in this scenario. China announced a "new security concept ",which it assumed in 1996.in 2001 it fold counter terrorism into their proposal and pressed ASEAN to adopt Chinese security concept .the core concept of Chinese security was mutual trust ,mutual benefit, equality and co operation.
During Bali summit this new security concept was consolidated and joint declaration was signed which entailed the following:-
- Two sides agreed to establish "Strategic Partnership for peace and Prosperity". This was first time that China signed document establishing a "strategic partnership" with regional organization.
- China promised to respect the sovereignty and territorial integrity of each Southeast Asian country.
- Political and economic cooperation would be intensified through CAFTA.
- China pledged to provide assistance to ASEAN in reducing" Development Gap" between developed and less developed countries.
- Security cooperation would increase.
China also ceded to Treaty of Amity and cooperation (TAC). This document pledges its signatories to renounce the threat or use of force, to respect independence and sovereignty of all nations, not to interfere in their internal affairs of others, and to resolve dispute through peaceful means. This created a "Deeper Political Trust and High Level of Cooperation".
China also reaffirmed its interest in moving towards signature of protocol to ASEANS 1995 Southeast Asia Nuclear Weapon Free Zone Treaty and in encouraging all nuclear Weapon States to do so. There was a traditional security issue arising in the South China Sea. Due to overlapping territorial security issues in the South China sea whose bed contains substantial oil and natural gas resources is the most sensitive territorial security between four of ASEAN states out of ten. Additional security concerns in South China sea for the states include access to fishing grounds, potential control of sea lanes. ASEAN states through ASEAN and ARF temporarily made Beijing shelve the dispute. China agreed to non binding "Declaration on the conduct of Parties in the South China Sea". Dispute in the South China Sea displays the growing importance to China about its energy security. This "Code of Conduct" could be enforced as ASEAN did not present (pg 84) a unified front in rejecting China's claim in the South China sea nor did they condemn the action. ASEAN was internally divided over the geographic scope of the proposed scope.
China and ASEAN also got involved into Non Traditional Security issues on the Severe Acute Respiratory Syndrome (SARS) was not only a medical issue it was also a economic challenge. Chinese cooperation with Southeast Asian states to manage this threat is viewed as "Three waves of monumental transformation since 1980". Joint declaration on Non Traditional Security issues was signed between China and ASEAN members. It encompasses challenge from epidemic to terrorism which pose threat to economic growth, social stability and regime continuance than such classic security problems of the cold war era or an armed conflict. This joint declaration agreed to enhance intelligence sharing, training and other forms of cooperation in stemming "Transnational Crime" including trafficking in narcotics and people, maritime piracy, terrorism, weapon smuggling, money laundering and economic crime.
China also played a role in regional and transnational issues like terrorism, narcotics and Tsunami. China was supportive of counterterrorism activities. China's primary concern has been to secure Southeast Asia support for its response of Turkic revolutionaries in Xingjian province some of whom have terrorist connections. China also provide limited assistance of $83 million in government and $18 million in private donation. This has showed China as a responsible global player. China has addressed narcotics primarily through bilateral diplomacy.(pg88)
China's decision to supplement bilateral diplomacy and multilateralism has been welcomed. China and ASEAN neighbors have welcomed multilateral mechanism to sideline most serious dispute over conflicting claims in South China sea (pg 90)
Indian political and economical strategy in South East Asia.
India's political and economical strategy has changed since the early 1990's.The end of the cold war era, the increase of the Chinese presence in the immediate neighborhood, increasing clandestine relations of China and the Pakistan, warmth in the US- Pakistan relations and the slow down of the Indian economy in the early 90's. This all propelled India to change the view of political and economic engagement and there began the globalization of the Indian economy. Thus it is imperative to study the political and economic strategy in consonance with the defence, strategic and multilateral influences.
India's 'Look East Policy' was officially launched in 1991. The 'Look East Policy' (LEP) had its genesis in the end of the cold war and a strategic shift in India's vision of the world and India's place in the evolving global economy. The LEP sent out strong signals that East and Southeast Asia had come to acquire a significant positioning in India's foreign policy and in economic terms it would be regarded as a new source of business opportunity while also becoming an inspiration for economic development. Closer economic ties with the region, it was assumed, would provide momentum to India's economic reform programme as it would require lower trade barriers and liberalized investment regimes. As India's economy continues to grow the LEP has acquired an added dimension of regional economic integration. Simultaneously, the slow progress in the process of integration within South Asia has made it necessary for India to extend its economic vision beyond the confines of its traditional policy and the South Asian region.
Central to the LEP has been India's engagement with ASEAN. At the institutional level India became a sectoral dialogue partner of ASEAN in 1992 with a focus on enhancing cooperation in trade, investment, tourism and science and technology; and a full dialogue partner at the fifth ASEAN summit in Bangkok in 1995. The ASEAN - India relationship was upgraded to summit level in 2002 and India is now an ASEAN summit partner along with Japan, China and South Korea. An important milestone in the ASEAN-India association was the hosting of the first ASEAN - India summit in Phnom Penh in 2002. India has also deepened its economic relations with the East Asian economies through a wide range of bilateral and regional economic initiatives. A clear institutional framework for operationalizing economic cooperation between India and ASEAN was laid out when the framework agreement (FA) was signed during the second India- ASEAN summit held in Bali in October 2003. India is also improving its relations with ASEAN through other elements like offers of lines of credit, better connectivity through air (open skies policy), rail and road links. In addition, India signed a Free Trade Agreement with Thailand in 2003 and the two countries are now working on Investment Cooperation Agreement.
After the initial Sectoral Dialogue Partnership with ASEAN in 1992, India became a full Dialogue Partner in 1995. India was made a member of the ARF in 1996, and a summit partner of ASEAN called ASEAN Plus One since 2002. India has also acceded to ASEAN's Treaty of Amity and Cooperation (TAC) to underscore its commitment to ASEAN's principles for inter-state relations. The linkages with ASEAN have been further buttressed by the recent ASEAN-India partnership agreement. Simultaneously, one can see a remarkable turn around in India's bilateral relations in particular with Singapore, the Indochina countries, Thailand, Myanmar and Indonesia.
It is however on the defence and strategic front that India has made impressive progress. A sea change in the political atmosphere that Southeast Asia witnessed in the aftermath of the cold war, especially after the Cambodian issue was settled and looking at Vietnam as a potential ally of ASEAN, contributed to this in a big way. Moreover, India's military might in the emergent Asian balance of power could not be ignored any longer. The Southeast Asian nations began to look upon India as a power that could play a kind of 'balancing role' vis-à-vis China in particular. On the other hand, it was in India's interest to ensure that Southeast Asia would not be dominated by a regional great power once it became obvious that the superpowers were going to build-down their presence, which coincided with a similar thinking within Southeast Asia. The upshot of convergence of interests was the genesis of a new strategic interaction with several of the ASEAN nations. A unique advantage India enjoyed was that its military, despite being dominated by the Moscow supplied equipment, had continued to maintain links with West Europe. Critical remarks with regard to the ambitions of the Indian Navy were replaced by many instances of greater defence cooperation. A number of confidence building measures (CBMs) that India undertook and greater appreciation by the Southeast Asian countries of Indian maritime concerns ushered in a new era of cooperation which began to transcend beyond the naval contours. Aside from periodic naval exercises and the biannual get-together of regional navies, called the Milan, India has entered into bilateral defence cooperation agreements with Malaysia, Vietnam, Singapore, Laos, and Indonesia. India has also been actively involved in assisting the armed forces of Myanmar and Thailand. For instance, Singapore has not only made use of India's missile testing range to test its own guns and missiles, but also uses Indian facilities to train its naval personnel- the first time ever that India has done for a foreign country. Similarly, the Thai pilots are being trained in India to gain experience to operate their aircraft carrier, and the Myanmarese get anti-insurgency training. India and Indonesia have also frequently conduct joint patrolling in the critical straits of Southeast Asia ensuring security of sealanes of communication. It is notable that India's strategic engagement with Southeast Asia is the strongest compared to any other Asian power. One reason why India has been relatively more successful is that, apart from the absence of any border/territorial disputes and any historical baggage, India is seen to be not having any 'ambitions' in and posing no security threat to the region.
The Look East policy also gave a tremendous boost to economic ties between India and Southeast Asia. A number of institutional mechanisms have been put in place to promote economic exchanges both at the governmental as well as private sector level. The ASEAN-India Joint Cooperation Committee and an ASEAN-India Working Group on Trade and Investment were set up along with the creation of an ASEAN-India Fund to promote trade, tourism, science and technology, and other economic activity. From virtually little or no investment from Southeast Asia in the early 1990s, Malaysia and Singapore have emerged as the tenth and eleventh largest in terms of approved investments respectively by 2002. Thailand is in the 18th and Indonesia and the Philippines are in 33 rd and 35 th position respectively. Cumulatively these five countries constitute nearly 5 percent of the total approved investments in India. In the last few there has a spurt in Singaporean and Malaysian investments in India's large investments projects. The progress with regard to bilateral trade is also equally impressive. The growth in India's trade was the fastest with Southeast Asia compared to any other region. While ASEAN exports kept the momentum, there was considerable slow down in imports as a result of the financial crisis in 1997-98. The exports grew from about US $1.4 billion in 1993 to over 6.2 billion in 2000. Imports by ASEAN on the other hand increased from 1.4 bn to 4.4 bn. in 1997 but nosedived to 1.71 bn in 1998 but have since picked up to reach about 3 bn in 2000. The US $ 13 billion bilateral trade between India and Southeast Asia is expected to reach 30 billion in the next few years. Despite repeated assertions of emphasis on economic aspects, India lags far behind other powers, for its share in trade and investments in Southeast Asia is relatively less significant. Hence, India has put across concrete plans to increase the economic interaction and integration through a number of new initiatives. Apart from creating an ASEAN-India Business Council (AIBC), in the first-ever meeting of India and ASEAN economic ministers in Brunei in September 2002, the Indian trade and industry minister offered to enter into a formal agreement with ASEAN on the Regional Trade and Investment Agreement (RTIA) or a free trade area (FTA), which has since been agreed upon to be realised by 2016. New Delhi is also in an advanced stage of finalising agreements with Singapore and Thailand to create bilateral FTAs. As the Indian economy expands, it is also providing enormous investment and trade opportunities, which countries like Singapore, Malaysia and Thailand are quickly grabbing. Both the premiers of Singapore and Thailand have often expressed concern over excessive dependence on the Chinese market and the need to look at another big country like India more closely. This is the thinking that is getting reflected in the rest of Southeast Asia.
An interesting facet of India's Look East policy is the newfound interest in regional multilateralism. Although India has been a member of the Commonwealth and more recently the South Asian Association for Regional Cooperation (SAARC) and the Indian Ocean Region Association for Regional Cooperation (IOCARC), New Delhi had always been wary of political/security issues becoming part of the agenda of these fora. Quite often it appeared as though New Delhi did not have much faith in the role and significance of regional multilateralism other than global mechanisms. India not only has moved away from that position to actively supporting them but has become instrumental in creating several new ones. Surely, it was not a founding member, but India lobbied hard to get into the ARF and became its member in 1996. As part of the ARF's CBM agenda, India has for the first time presented a fairly detailed Security Outlook paper to the Forum in 2001. The earlier reticence has given way to active participation in a variety of ARF's activities both at the official as well as unofficial CSCAP levels.
India also has come up with a number of new multilateral initiatives involving Southeast Asian countries. Prominent among these are the Bay of Bengal Initiative for Multisectoral, Technical and Economic Cooperation (BIMSTEC) with India, Nepal, Bhutan, Bangladesh, Sri Lanka, Myanmar, and Thailand as members in 1997, and the Ganga-Mekong Swarnabhumi (India, Myanmar, Thailand, Laos, Cambodia and Vietnam) in 2000. Among these, the BIMSTEC, involving five South and two Southeast Asian countries, appears to be the most promising for a variety of reasons. Aside from underscoring its eastward thrust, India appears to look at BIMSTEC as an alternative to SAARC to kick start sagging South Asian economic cooperation efforts, to build yet another bridge between South and Southeast Asian regions, to address economic development issues of the volatile Northeastern region, to create a sub sub-regional energy grid, and to tackle other security issues of region, especially smuggling in light weapons, narcotics, and terrorism. Thus, one can once again notice a multi-dimensional approach in India's strategy. India has also entered into bilateral agreements with Myanmar and collective with BIMSTEC to improve the road and rail links. A road has already been made operational connecting India's northeast with Myanmar, which will be further extended all the way up to Singapore. Similarly, a rail link will also be established along those lines.
Non-Traditional Security Threats
In the last few years, a number of non-traditional threats have become so grave that conventional aspects like power balance and jostle for politico-economic influence have become secondary. Terrorism, a range of maritime-related security issues, gun running, drug pedaling, illegal migration of people, etc., have acquired such a serious dimension that they can only be tackled collectively. Southeast Asia is touted as the second front of terrorism and this region is susceptible to a variety of above threats, and given its close proximity sharing land and maritime borders with several countries, India would be all the more concerned. India has been trying to work closely with the countries of Southeast Asia to address these problems.
Cooperative Politico-Strategic Engagement
India's increasing involvement in Southeast Asian security has been manifest in three inter-related phenomena. First, at the multilateral level New Delhi has become party to a range of institutions which bring it into closer contact with Southeast Asian governments on security matters. In 1996 India joined the ASEAN Regional Forum (ARF), the greater Asian region's first multilateral security institution. In 1997, India became a full dialogue partner with ASEAN, and in 2002 the first of a series of annual ASEAN-India summits took place. While economic matters have been central to India's dialogue with ASEAN as a grouping, security concerns have also featured. For example, at the second ASEAN- India summit in 2003 the two sides signed not only an agreement on comprehensive economic cooperation (aimed at establishing a free trade arrangement within 10 years) but also the ASEAN-India Joint Declaration for Cooperation to Combat International Terrorism, which recognized the two sides' mutual counter-terrorist interests in the light of evidence of increasing connections between violent extremist movements in South and Southeast Asia. With support from ASEAN members, notably Singapore and Indonesia, in December 2005, India joined the ASEAN-led East Asian Summit (EAS). India stressed the need to 'shape a new security environment free of confrontation and tension', in which 'even non-military issues of security' would be tackled comprehensively through 'a cooperative approach, holistically and regionally'. India's accession in 2003 to ASEAN's Treaty of Amity and Cooperation, thereby agreeing not to interfere in the internal affairs of the Association's member states, provided a degree of reassurance to them.
The second dimension of India's security engagement with Southeast Asia has involved bilateral relationships with individual ASEAN members. The most important bilateral security engagement is with Singapore. The Lion King series of annual bilateral anti-submarine warfare exercises began in 1993. Over time, these exercises' duration and complexity have increased. Cooperation with India allowed Singapore navy personnel to train on board Indian Navy 'Foxtrot' submarines, providing valuable 'hands-on' experience before Singapore acquired its own submarines in the late 1990s. A new, more ambitious series, known as SIMBEX, began in 2005 with an exercise in the South China Sea. India's defence cooperation with Singapore has now expanded to include air force exercises, Singapore army training in India, and an annual defense policy dialogue.
With Malaysia, the main area of cooperation has involved the training of Malaysian officers in Indian establishments such as the National Defence College, Defence service Staff College an agreement on satellite technology cooperation. India has held bilateral naval exercises with Thailand since 1995, and in 2003 the two countries opened discussions on counter-terrorism and intelligence-sharing. India has also offered defence equipment for sale, and Bangkok has purchased small quantities of ammunition. New Delhi and Jakarta agreed to establish a 'strategic partnership', including a potentially significant defence dimension focusing on the supply of Indian defence equipment including technology transfer, joint production and joint projects, and providing for an annual 'strategic dialogue' between senior officials. India's ISRO will assist Indonesia's LAPAN to develop its remote-sensing capabilities. In mainland Southeast Asia, India entered into defence cooperation agreements with Vietnam and Laos in 2000 and 2002, respectively. But in both cases cooperation has remained limited. India has provided training for Vietnamese military personnel and has assisted with upgrades for Vietnamese MiG-21 fighter aircraft. In January 2006, Vietnam requested Indian assistance in training troops for UN operations. India has provided defence advisers to Laos, as well as donating small numbers of TATA military jeeps and trucks.
Security-related cooperation with Myanmar, the only ASEAN member with which India shares land borders, has developed significantly over the last two-three years. Speaking in Yangon in March 2005, Indian Foreign Minister claimed that New Delhi wished for a 'long-term partnership' with Myanmar, involving not just substantially increased trade, Indian access to Burmese oil and gas, and a land route through Myanmar to other parts of Southeast Asia, but also Myanmar's assistance against armed separatist movements in Northeast India. Apart from securing India's northeast and facilitating development there, the push for closer relations with Myanmar is evidently intended to counter Chinese influence there.
The third dimension of India's growing strategic involvement in Southeast Asian security has involved the expansion of naval activities to the east. The new Indian maritime doctrine released in April 2004 envisaged a shift from coastal defence to operations in the wider Indian Ocean region, seen as the Indian Navy's 'legitimate area of interest'. Apart from exercises with Southeast Asian partners (most importantly Singapore), the Indian Navy collaborated with the US Navy in patrolling the northern end of the Malacca Strait in 2001-2, and at the end of 2004 mounted 'Operation Gambhir', a major contribut
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