A Strategic Assessment of the Asia-Pacific: Are recent tensions indicative of increased long-term risk in the Asia-Pacific’s regional architecture?

by Taylor Wettach, SFS ’13

Relations within the Asia-Pacific region grew tense in 2012, marked by a number of incidents. The escalation of the Diaoyu/Senkaku Islands dispute between China, Taiwan, and Japan provoked a wave of demonstrations across China. Territorial rows in the South China Sea shook the ASEAN-China relationship, with no progress made on the “Declaration on the Conduct of Parties in the South China Sea”. Tensions arose outside of bilateral relations with China, as seen in the disunity of ASEAN’s July and November meetings. The magnitude and latitude of these and other incidents have prompted concern about the long-term significance of rising tensions to the region.

This discord has developed at a time of great economic success for the Asia-Pacific. According to the World Bank, the Asia-Pacific is the world’s most dynamic economic region, contributing almost 40% of global growth in 2012. Based off current trends, the International Monetary Fund estimates that the Asia-Pacific economy will be larger than that of the United States and European Union by 2030. Amidst this economic dynamism, however, a tense security environment has emerged. The Asia-Pacific is home to five of the eight states recognized as being in possession of nuclear weapons, three of the world’s top six defense budgets, and six of the world’s largest militaries. As stated in Joseph Nye’s East Asian Security: The Case for Deep Engagement, “Politics and economics are connected. International economic systems rest upon international order.” Per their insecure actions, states in the Asia-Pacific appear to be asking themselves whether there will be a security framework that can sustain the Asia-Pacific’s impressive economic growth. Unless the region’s shifting political order is stabilized, the Asia-Pacific risks heightened long-term tensions of strategic and economic significance.

A large body of literature would suggest that the Asia-Pacific’s recent economic successes should pave the way for long-term cooperation by linking trade to regional peace. The recognition of mutual benefits from trade theoretically fosters peace as national interests converge, deterring states from initiating conflict against a trading partner for fear of losing trade-associated welfare gains. According to WTO Director-General Pascal Lamy, the Asia-Pacific has become the world’s most integrated trading region. This growth in trade interdependence can be seen amidst now-tense relations between the aforementioned examples.  In 2011, China-Japan trade rose 14.3% to $344.9 billion, ASEAN-China trade rose 24% to $362.3 billion, and intra-ASEAN trade rose 15.1% to $598.2 billion. Why then, while contributing 40% of the world’s growth and reaching peak economic integration, should the Asia-Pacific see a rise in behavior contrary to mutually beneficial economic interests?

The reason for this rise in behavior contrary to mutually beneficial economic interests is that the geopolitical structure of the Asia-Pacific is changing in ways that could have serious consequences for long-run stability, with the rise and fall of Pacific powers promoting insecurity. History demonstrates that periods of the rise and fall of great powers are times of instability in the international system, from Athens’ rise and Sparta’s corresponding fear leading to the Peloponnesian War to the insecurity provoked by Germany’s rise serving as an underlying cause of World War I. While the peace and prosperity of the Asia-Pacific has long relied on American power, America’s preponderance and will to underwrite the international order has been called into question. India, Indonesia and Vietnam are growing rapidly while Japan and South Korea seek larger regional and global roles. Most importantly, China has begun a successful ascent to great-power status that, if uninterrupted, will alter the ranking of the world’s major powers.

While 2012’s tensions may have been augmented by more momentary variables (e.g. changes of government in China, Korea, and Japan), the shifting security environment’s long-term impact on relations is confirmed by the increasing coercive capabilities of states in the Asia-Pacific. The NIDS China Security Report 2011 states that China’s annual defense spending increased from $30 billion in 2000 to almost $120 billion in 2010. While Japan has thus far maintained the pretense of keeping defense expenditure within 1% of GDP, this percentage excludes the cost of the Japanese Coast Guard and increased procurement of military equipment on deferred payment. Japan’s recent elections have demonstrated strong support for collective self-defense and amending Japan’s war-renouncing constitution, and the LDP defense task force announced on January 8th that it would increase the nation’s defense budget by more than $1.15 billion. According to IHS Jane’s, South East Asian countries together increased defense spending by 13.5% in 2011 to $24.5 billion. This figure is projected to rise to $40 billion by 2016. The impact of this changing strategic environment can be seen beyond Asia-Pacific states through the United States’ recent “pivot” or “rebalancing”; while under budgetary pressure, the U.S. is crafting a more assertive strategy and is re-posturing naval forces from today’s roughly 50/50% split between the Pacific and the Atlantic to about a 60/40% split favoring Pacific presence.

Ultimately, the instability of the Asia-Pacific’s changing geopolitical environment puts the region at risk for long-term heightened tensions, with coercive potential increasing in spite of peak economic growth and interdependence. This strategic concern will have economic repercussions if future tensions play out like the Diaoyu/Senkaku Islands dispute, with JPMorgan Chase contributing a 0.8 percentage-point hit to Japan’s GDP in the fourth quarter to 2012’s discord. Maintaining stability is not a lost cause, and tensions must not equal war as Mearsheimer simplifies. However, the changing geopolitical environment must be addressed productively to prevent the continuation of counter-productive tensions and increased risk. Asia-Pacific states can minimize long-term risk beginning with the prioritization of grand strategy over ad-hoc responses. Recognition of the importance of the economic “end” and the effectiveness of a security enhancing “way” that combines the “means” of engagement with coercion provide a good start to limiting an Asia-Pacific regional security dilemma with lasting strategic and economic repercussions.

Originally posted on Taylor Wettach’s blog Power, Peace, and the Pacific in January 2013.