ASEAN Daze

Staff at my Siem Reap hotel in Cambodia were preparing for an influx of guests connected with the 44th ASEAN Economic Ministers meeting, and associated gatherings like the ASEAN-US Business Summit, to be opened by Samdech Akka Moha Sena Padai Techo Hun Sen, joint Premier of Cambodia from 1993 to 1998, and since then Prime Minister as head of the Cambodian Peoples’ Party. This year, Cambodia has the Chair of ASEAN (the Association of South East Asian Nations), hence the meetings but also, in wake of the most recent Foreign Ministers’ session in Phnom Penh, a level of surprise and controversy out of keeping with the so-called “ASEAN Way” whereby most issues are resolved quietly. That stopped in Phnom Penh, even if the theme for Cambodia’s year in the chair is “One Community One Destiny”, and the reverberations have continued since.

The symptom of the Phnom Penh affliction was simple enough. That meeting occurred amidst on-going tensions in the South China Sea, with China and several ASEAN nations in dispute about territorial rights to particular areas. The most recent irritations saw the Philippines clashing with the PRC over the Scarborough Shoal, and Vietnam at odds over areas around the Spratly Islands. It was anticipated that, as always, the ASEAN meeting would calm tensions and issue a joint communiqué announcing “a way forward”, as the jargon has it.

That did not happen. Instead, the parties left Phnom Penh with no communiqué let alone an agreement. The Indonesian Foreign Minister then spent several days capital-hopping in search of a joint statement. Meanwhile, a public clash emerged between the Philippines and Cambodia about why this breakdown had occurred, and, generally, much public finger pointing occurred . At issue was Cambodia’s handling of the meeting in a way that, for many observers, privileged China.

This development has been important for ASEAN in three distinct ways, which is why there has been so much discussion both in public and in private.

The first is that as ASEAN expands (there are now eight partners as opposed to the original five) the potential for disputes increases, especially in the context where development stages are becoming so disparate. Singapore is out on its own as an economic and intellectual powerhouse, while Brunei is tiny but financially flush. Thailand and Malaysia have well developed commercial profiles, Indonesia and Vietnam are heading that way if still attracting international development aid. Cambodia, Lao PDR and the new accession, Myanmar, lag all of those on development indicators. One blunt instrument demonstrates that. Cambodia currently has an average annual income of about $US 850. In Singapore that figure is more like $US25, 000 (although per capita income is estimated around $US 55,000). In both countries, of course, extremes of income exist, but these figures indicate the vast difference developing between the ASEAN partners.

That in itself becomes more of an issue as 2015 moves closer, because in that year the partners have agreed to a greater “integration” of activity that will involve a freed up flow of labour market sources, goods and services along with business investment. The intention is that the “development gap” between the partners will narrow. While predictions vary, some observers suggest that countries like Cambodia might lose some of the few skilled labour sources they have to better paying jurisdictions like Thailand, Malaysia and Singapore, while some of those countries (like others around the world) may transfer lower level work into places like Cambodia and Lao to take advantage of cheap labour rates.

Those issues are exercising observers outside the organisation and are, simultaneously, the focus of debate inside. It was for that reason the hubbub in Phnom Penh was so significant regionally because, as many observers commented, for the first time in the ASEAN story a meeting broke up unresolved. As a signifier, it was not encouraging as to what might come next.

The second significance here concerns the broader interest now being generated by ASEAN in its immediate and not so immediate zones. Over the years it has developed a series of Dialogue Partners, including a myriad of countries that have long had some interest in the region (some as earlier colonial powers) for both economic and strategic impulses. Australia, for example, has stepped up its interest in recent years and, no doubt, will do so even more when the purportedly momentous Asian Century review emerges imminently. Australia has had a love-hate relationship with “Asia” for generations, but has gradually realised it needs to deal with the reality of rising powers there and declining ones among its traditional allies. New Zealand works in a similar if less convoluted way, while South Korea has long had an economic interest in ASEAN both as a market and a source of production. The United States has its troubled modern history in Asia to deal with, but also knows that ASEAN must now be a key part in its new global strategy.

For some countries, this new interest has a security-related edge in wake of a string of bombings around the turn of this century, and the current bombings and incidents in southern Thailand on the border with Malaysia. While countries with significant Muslim populations and influences like Indonesia, Malaysia and Brunei are important here, it is also necessary to recall that most of the ASEAN states have pockets of Islamic citizens. Some of the earlier bombings, as in Bali, were orchestrated by minority Muslim elements inside Indonesia and Malaysia, hence the heightened interest in this respect from the Dialogue Partners.

The third significance, however, is the one now at the core of the new thinking about ASEAN because it involves India, China and the rise of the Indo-Pacific zone in which so many players now have an interest. It was this dimension, really, that sparked the Phnom Penh problem.

Put simply and perhaps too crudely, the rise of China and India has complicated life for ASEAN, and for a wider number of interested parties. Most of the forthright commentary on what happened in Phnom Penh swings around the idea that China used its local leverage to engineer a non-result on the territorial disputes in question. How did it do that? Simple – it played to the fact of its enormous direct investment in Cambodia, and to its hugely generous non-tied aid funding that has assisted Cambodia greatly at a time when its relations with some large international aid donors have been tense and fragile to the point of being stalled.

Some analysts will consider this the normal nature of global diplomacy, and that is a reasonable point. However, it has not been the “ASEAN Way”, and that is the problem. It would be erroneous, obviously, to suggest that no internal disputes and issues within ASEAN have ever broken cover previously. For example, several of the partners have on-going tensions about who owns what in the Gulf of Thailand. That said, ASEAN has always somehow managed to come up with a smoothing operation while all the disputation is settled behind closed doors. The public face has been of a unified organisation presenting one voice on all matters. That was why Phnom Penh was so problematic, because the “one voice” became stricken with a severe case of laryngitis.

That is where India comes in, because at the macro level one of the key contests in the South China Sea is China’s objection to India’s naval presence and oil search activities there. India, that is, has moved from its Indian Ocean zone into one where it is at odds with China. The advent of Myanmar into the ASEAN equation has sharpened this, because India is in the best position historically and geographically to have a powerful interest, and shows great ambition to do so. Indian economic interests throughout the region have grown dramatically, beyond even the traditional strong bases of an Indian presence in places like Singapore and Malaysia. For example, India’s economic powerhouse, even in its current spluttering form, is well evident throughout the region, and its current leadership has shown strong interest in making a push into Myanmar, which would have implications for ASEAN. With the current Indian union government in weakened state, any change following the 2014 national elections there would be unlikely to reduce that greater interest in the “push east” approach.

The bigger picture here, then, is that with rising interest in its region from both China and India, ASEAN faces a future where there are likely to be more untidy meetings like that in Phnom Penh. It will likely prove more difficult for the organisation to speak with “one voice”, especially as China and India exercise greater interest in individual constituents who will then develop even more complex outlooks on important economic and strategic issues. In turn, that will raise further complexities for most if not all of the ASEAN Dialogue Partners as they weigh up the new order.

In that context, the results of the Finance Ministers meeting in Siem Reap might well have meaning and resonance considerably beyond its immediate brief, because watchers during and after will be looking for signs of any changes in approach that might have developed since the Phnom Penh embarrassment.

As well as his columns for Global Policy, Professor Brian Stoddart also writes on his blog which can be found here.