Southeast Asia’s “Swing Nations”: Obama makes 2nd Myanmar visit

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Southeast Asia's "Swing Nations" -- published in Newsweek (Japan), November, 11, 2014 (page 1&2 of 3). See below for English translation.

Southeast Asia’s “Swing Nations” — published in Newsweek (Japan), November, 11, 2014 (page 1&2 of 3). See below for English translation.

President Barack Obama on November 12 will make his second visit to Myanmar to join the East Asia Summit in the nation’s capital, Nay Pyi Daw. Following the APEC meetings in Beijing, the ASEAN-led summit will allow Obama and China’s President Xi Jinping the chance to flex policy muscles in Southeast Asia, the core battleground for influence in the region.

Obama’s “pivot east” foreign policy is one of the key achievements of his administration, and the meeting will provide for opportunities to gauge how successful it has been in its objectives of bettering regional economic ties, fostering stronger political allies, establishing military security and protecting human rights. The legacy of the “pivot east” strategy will also resound heavily with its creator, former Secretary of State Hillary Clinton, when it comes time to test her potential West Wing mettle. Its failure would have negative repercussions on her likely bid for presidency.

The latest feature I wrote for Newsweek Japan (translated below) outlines the political leanings of the ASEAN nations towards China and the US, and in which countries foreign policies are most likely to hold lasting influence. The results are clear — neither the US nor China have constructed a majority sphere of dominion over the 600,000-million-person bloc. But a tipping point could be achieved, and no more more readily than in Myanmar where opinions of how to place the country in the emerging world order is undecided.

Critics of the “pivot east” policy will be quick to point to the lackluster performance of Obama’s Trans-Pacific Partnership trade agreement, which has failed to court key economic players, such as Malaysia and Indonesia. Others will laser in on the ongoing humanitarian tragedy in Myanmar’s Rakhine state, where Rohinga muslims have become vilified, ostracised and beleaguered by conflict at the hands of hyper-nationalist Buddhist monks.

But there are still policy tools in Obama’s toolshed that can be used to ensure Myanmar’s democratic transition does not falter. In reaction to the Rohinga tragedy, Obama has placed sanctions on Aung Thaung, a hardliner lawmaker that is furthering instability by promoting ethnically segregating bills in parliament. Major US-based MNCs are already operating in Myanmar — Coca-Cola, PepsiCo, P&G, PwC — but there are still many waiting for sanctions to be widely removed, including those that affect banking, which remains a large challenge when conducting overseas payments.

A fact that has not been forgotten, Myanmar is responsible for 90% of the world’s ruby industry, and the US one of the key purchasers of luxury gemstones. Obama last year maintained the ban on the importation of Myanmar rubies and jade, and will likely keep this in place through his term as a final policy lever.

But sanctions on Burmese tycoons that are not implicated in humanitarian crises should be eased if Myanmar is to become a promulgator of US values. Why? As I outlined in Newsweek, the more Burmese business is embedded with counterparts from the West, the easier it will be for the former-isolationist nation to shrug off dependence on Chinese investment.

Below is the translated version of that feature.

By judging the protests in Hong Kong, it’d be safe to say that Beijing is more comfortable browbeating than compromising with pro-democracy activists. But that is just what happened in Yangon last month when China Communist Party officials made an historic first by meeting with Myanmar’s 88 Generation, a prominent civil rights group borne out of the pro-democracy 1988 protests. In chilling echo of history, thousands belonging to the student-led Yangon group would be killed just one year before violence broke out in Tianmen Square.

During the meeting, China was forced to hear grievances against its local – often controversial – investments, accused of skirting human rights by 88 Generation’s leader, Ko Ko Gyi. Previously, the CCP would only consider meeting with the Myanmar government, but since President Thien Sein’s very public challenge to a China-backed hydropower dam last year, a bold strategy seems to be emerging.

In Myanmar, this is being done in good timing: opinions are changing as fast as the country is developing. But an attempt to hear out key concerns from its neighbors should not be limited to only one corner of Southeast Asia, a region where historically strong influence is now being tested and much lies at stake.

New era of “desinicization”

In Southeast Asia, where Chinese influence has been dominant for centuries, Myanmar represents just one of the swing nations – a country where positive sentiment towards Beijing is “mixed.” Under the Obama administration, the US has made it a strategic imperative to gain diplomatic and military ground in China’s backyard. And like a swing state in US elections, wooing a swing nation could greatly tilt regional favor to their side.

Obama’s mission has come at a time of great structural change. Across the 10-nation ASEAN bloc, the US’s “pivot east” foreign policy now coincides with pockets of political reform and overall economic vitality. In this backdrop a rehashed era of “desinicization” has been born, rendering the West a new, often appealing political, economic and military ally to China.

In 2011 [check time period, please], the term “desinicization” was first coined to describe the decoupling away from China by global manufactures, which began diversifying their supply chains to build a hedge against rising labor costs and mounting environmental concerns on the eastern coast. This perspective is largely of Western origin, however, and does not account for the broader geostrategic significance of Southeast Asia, the place where many global manufactures began migrating to.

A region of over 600 million people, Southeast Asia includes some of the world’s most vibrant economies, enviable demographic bases and has become largely politically stable launching a strong developmental course. Above all, Southeast Asia’s attractive economic conditions have opened up new partnerships beyond traditional allies. Much to its dismay, today China finds itself competing for legroom in its own backyard as Western powers begin vying for greater influence.

In ASEAN, a bloc riven with disparate perspectives, this choice to begin a greater departure away from China towards Western allies represents a new kind of “desinicization.” China will have to act in fast and bold new ways to counter it.

Forming greater clarity in 2011, Obama’s “pivot” is now showing initial dividends. A recent opinion poll conducted by Pew Research Center’s Global Attitude Project reveals stark East-West polarization in Southeast Asia. According to the survey, 74% of Malaysians clearly favor China, while just 16% of Vietnamese and 38% of Filipinos hold a similar view, reflecting the wedge that Southeast China Sea disputes have driven into relations. (Worth mentioning, only 7% of Japanese have a favorable view of China, the lowest in the poll.) Conversely, 92% of Filipinos favor of the US, the highest ranking in the poll, more than within the US, followed by 72% of Vietnamese.

That the Philippines and Vietnam hold the most negative views of China is no coincidence; history has not been positive for Sino-Vietnamese relations, and both ASEAN nations are on the defensive in the South China Sea. After renewing a defense treaty in April, the Philippines is now firmly under Uncle Sam’s aegeus, utilizing the superpower like a military hedge against China’s unpredictably bellicose maritime behavior. In the first allied show of force this year, on September 29, US and Philippine military forces commenced annual war games, an event used to demonstrate combat readiness should an emergency arise.

In May, China effectively fired the first shot in the South China Sea territorial war. Unlike the Philippines, Vietnam does not have a defense agreement with a Western power. These disputed waters thus made for a logical first place to begin construction of an oilrig. Then distaste of China in Vietnam quickly took an unprecedented turn when protesters indiscriminately began burning factories. Many of the factories targeted were Taiwanese, outrage apparently taking over from caution. Hardline rhetoric shows every sign of being a norm between Vietnam and China for the foreseeable future.

Southeast Asia's "Swing Nations" -- published in Newsweek (Japan), November, 11, 2014 (page 3 of 3)

Southeast Asia’s “Swing Nations” — published in Newsweek (Japan), November, 11, 2014 (page 3 of 3)

Riding the grey middle area are Thailand and Indonesia, where opinion is neither clearly for China or the US. The economic might of Indonesia and geostrategic strengths of Thailand make them compelling swing nations: the near and middle-term future will be shaped by the complex dichotomies of their West-East relations. Thailand is the US’s “longest ally in Southeast Asia,” but is partially controlled by a business interests that benefits from dealings with Beijing. Indonesia is strongly supported by the US in their anti-terrorist actions and territorial claims, but a free trade agreement with China allows for unparalleled access to the world’s great consumer market.

In Myanmar, which wasn’t included in the Pew Research Centre poll, the position isn’t so clearly cut. China is no longer the sole investor and today competes with other global powers in a gold rush styled setting. More than Thailand or Indonesia, it is in this re-emerging nation of sizeable geostrategic value where opinions can most easily be swayed away from China and towards the West.

Yet, much has to be done to improve the “image problem” China has come to foster here. Meeting with civil rights groups like Generation 88 could mark the beginning of a “new chapter,” Ko Ko Gyi explains. But this presents a daunting challenge for China, whose reputation for unscrupulous business hasn’t gotten by ignored.

“China has a huge image problem [in Myanmar]” is how Thant Myint-U, a Burmese historian, has commented. In the most direct challenge to Chinese authority since he took power, Myanmar President Thien Sein last year put a freeze on the multi-billion dollar China-sponsored Myitsone Dam in Kachin State, a project that was denounced by human rights groups such as 88 Generation for neglecting indigenous peoples’ concerns. This year didn’t pass without another affront. In the awarding of much-coveted offshore oil and gas blocks in March, the bidding China National Petroleum Corporation was conspicuously absent on a list that featured mostly Western energy companies.

But blood may run thicker than dollars here. Southeast Asia’s swing nations — Myanmar, Thailand and Indonesia — draw deep ancestral lineages back to China. Sino influence in Southeast Asia is, after all, centuries old. When the British Empire and Dutch East India Company extended their grasps to the western rim of the region in the 18th century, ethnic Chinese traders had already long since settled. In this expansionist age, indigenous peoples and migrants from India and elsewhere across the region would be hemmed into the strictures of colonialist legalities. But the Chinese would be left outside of this equation, allowing them to quickly leverage business ties with the mainland, developing wealth by working outside the common law.

The resulting socioeconomic order is evident today. Many of the ruling and business elite of Southeast Asia can trace their ancestry back to a Chinese province: they continue to speak minority dialects that have since fallen into obscurity after Mao’s Cultural Revolution.

Yet, China, at its most alluring, speaks a language of pragmatism. In order to woo Asian allies, cultural interconnectivity will not be as persuasive as the story of China’s rise to the global stage. This is echoed in the swing nations, where being of ethnic Chinese origin isn’t always a boon. In Indonesia, fresh President-elect Joko Widodo was recently the target of a distasteful smear campaign accusing him of being Christian Chinese, an unfounded rumor that implies he lacks qualities of an upright Javanese Muslim. Being part of the ethnic Chinese Shinawatra clan in Thailand may still be popular for the red shirts, but not in Bangkok, where the ruling military junta has appointed an ardent Thai nationalist as successor, Prime Minister Prayuth Chanocha, an all-at-once army general and statesman.

These inherent public relations hurdles may continue to sour views of China, but the benefits accrued from economic influence is set only to soar. Many economists now agree China will overtake the US in early 2020s, becoming the world’s largest economy. With this phenomenal growth curve in play, so will come China’s increasingly insatiable thirst for energy. Securing access to oil and gas is thus uncompromisable for China, who became the world’s largest energy consumer this year and will shortly overtake the U.S. as the largest importer of oil on the planet, according to the U.S. Energy Information Administration

But being on the receiving end of this energy hunt is rarely seen as a fair trade. In June, a natural gas pipeline linking the Bay of Bengal with China’s Yunnan Province through Myanmar began flowing, much to the futile dismay of locals. Myanmar oil workers, who have been digging up oil off the coastline for generations, accuse the government of untransparently selling off their livelihoods through a network of cronies to the Chinese.

This is not an uncommon fortune. For nowhere else is the maw of China’s industrious needs felt more than among its southern neighbors. China is the largest investor in both Laos and Cambodia, countries that are inordinately dependent on Chinese investment, leaving them politically tamed at regional summits: they act as vassal states, trained to come quickly and obsequiously to the Sino-side during any multilateral summit. For Laos in particular, the only landlocked country in ASEAN, China’s commitment to develop one dozen hydropower dams, including the giant $3.8 billion Xayaburi Dam, seals an inescapable pact between the two.

In a region that is said to have an immediate infrastructure shortfall totaling $60 billion, according to the Asian Development Bank, Southeast Asian nations cannot easily pass up developmental funds. “Thailand supports China’s proposed ASEAN Infrastructure Investment Bank (AIIB),” another infrastructure-centered project with $50 billion in capital, an anonymous Thai government representative said. “Thailand knows of China’s economic might and importance, hence the current free visa [policy] for Chinese tourists.

Southeast Asian nations large and small are dependent on large cash flows from China, but only if the status quo remains. Efforts to increase transparency, as evidenced by Myanmar’s willingness to join a global energy transparency initiative, will bring more diverse range of investors. With so many partners to choose from, China will have to hold many more meetings with civil society groups, an ugly task for Beijing given the situation in Hong Kong. Clearly a more approachable China is needed in Southeast Asia if a firmer wave of “desiniczation” is to be avoided.

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