The Future of the Southeast Asian Strategic Environment
S.R. Nathan; Director, Institute of Defence and Strategic Studies, Singapor
Introduction - Impact of the Economic Crisis on South East Asia
Intuitively, Singapore and its neighbours have always realised that Southeast Asia’s security cannot be premised alone on military-political instruments such as alliances. The Association of South East Asian Nations (ASEAN) often spoke of the importance of economic growth in fostering national resilience, the possession of which in turn contributes to regional resilience. The financial crisis of last eighteen months has only reinforced the centrality of the economic element in the security equation. This paper will attempt to assess the impact of the financial crisis on the Southeast Asian strategic environment. It suggests that the political repercussions of the crisis have not fully unfolded even though the economic crisis may be bottoming out in many of the affected countries.
Various views have been presented as to what caused the crisis. Easy money in the financial sector and over-capacity in production due largely to uncoordinated monetary and policies in the affected countries have been forwarded as explanations for the crisis. Euphoric foreign lending which collapsed into panic withdrawals, with the first signs of crisis, is another explanation. Whatever the real cause, the question for security studies analysts is what can we expect to happen in Southeast Asia in the near future. This is because the crisis, which was initially purely economic in nature, has adversely affected the political and social fabric of the countries of SEA, including Singapore, albeit in a less devastating manner.
In recent months, some analysts claim to have detected signs of favourable changes to warrant an optimistic outlook. These changes are:
Going by recent developments and compared with what happened in 1998, it would be fair to conclude that the region is showing signs that it is heading for recovery, although this is somewhat fragile and uneven among countries. Thailand and Korea are viewed as front runners and likely, if current trend continues, to achieve positive growth in the 2nd half of the year. Malaysia still has problems to sort out, but showing signs of improvement and economic recovery, albeit at a slower pace. Indonesia remains marred by serious political and social difficulties that she needs to overcome.
But it is also necessary to mention some domestic risks that might threaten this recovery. They are:
All these provide some indication of the winding-down process. In Thailand, aggressive liberalisation policies have speeded up the process, while in Malaysia economic analysts suggest that delays in restructuring and unwillingness to liberalise quickly can mean a slower and prolong adjustment period. In short, the jury is still out with regards to the question of how soon or fast the region can and will recover.
It is therefore somewhat premature to conclude that Asia’s crisis is over, because crisis-ridden Asian economies face much more danger from domestic economic, social and political concerns, than from external shocks. Like wise, it is feared that a moderate slowdown in the US economy while it would not spell disaster, could also hinder Southeast Asia’s recovery.
II
Political and Security Impact of the Economic Crisis
The next question is whether this crisis and its impact have fundamentally altered the political and security environment in South East Asia. A number of questions are being asked; amongst them are the following:
Answers to the above questions hinge in part on the largest state in Southeast Asia--Indonesia. The strategic importance of Indonesia both in Southeast Asia and within Asean is obvious. The emergence of over 100 political parties, the mushrooming of newspapers & magazines, the voices of NGOs and shrill calls by protesting students may all give the impression that responsible Democracy has at last come to Indonesia bringing to an end the kind of governance that marked the last 30 odd years.
Equally "reassuring" may be the developments in the political process with a time-table for the reform of the political process; with new laws on Elections; plans for 2 Houses and structures for Regional parliaments and, above all provisions for a Democratically-elected President. Past laws that limited contest to 3 political parties will also be discarded.
Among the requirements that political parties will have to meet to contest the coming elections will be that they have branches in at least half of the 27 provinces and a presence in all districts. Also that they be accessible to all regardless of race, religion and ethnicity. The suggestion that Pancasila be dropped as the sole ideological base may seem attractive, but it has already heightened Islamic fervour and some calls for the establishment of an Islamic State, which President Habibie has recently decried.
But on the flipside, widespread unrest; tensions between the Rich & Poor; “pribumi & non-pribumi”; Religious-based differences between Muslims & Christians still dominate Indonesian politics. So has Centre (Java)-provincial relations. Against the emerging political background, the dual function of the Armed Forces and excesses by some elements within it in East Timor, West Irian & Aceh are now being questioned. This debate on the role of ABRI, will also have its repercussions in the overall political debate that is now taking place.
Efforts at reform have started and aimed at democratisation of Indonesia. But the question is how strong are these reformist forces. Have they the strength — moral and political — to bring about a change from the power-based political culture that has existed in Indonesia, this past 50 years, to a law-based political culture. What is lacking is the absence of a clear road map and the instruments to carry out what the reform groups are demanding. The priority is the need for economic reform to restore the economic & business Climate, but the reformist focus is entirely on political reforms. Added to these voices of discontent are the non-governmental organisations (NGOs) and proponents of civil society, who are predominantly urban, in a country where 80% are rural and strongly bound by tradition, especially in Java. Demands for strong leadership will be needed to help Indonesia get out of this crisis.
What will happen, once the electoral laws are passed & the process for electing the legislature and the President, is anybody’s guess. Given the organisation and money that Golkar possesses, it should win a majority of seats in the June elections. This is because its organisational links extend throughout Indonesia, while the major contesting parties — Megawati’s PDI; Amien Rais’ National Awakening Party and Edi Sudarjati’s Justice Party are reported to be focusing on Java. There are suggestions that these parties are perhaps paying less attention to provinces like Borneo, Sulawesi, West Irian or East Timor; because they do not have the means and the organisation to cover these areas. Will such a Golkar victory be widely accepted – given its past affiliation with Suharto? If not, will it heighten unrest and again threaten law and order and further bring down the economy? There are no clear answers to such questions.
The 2 dangers that Indonesia could face are:
- Peaceful co-existence among different groups being endangered due to austerity policy and reactions by some groups to acts of discrimination by the government.
- Disruptions of international co-operation towards assisting Indonesia.
Neither of these 2 dangers seem likely as of now — but either or both could arise depending on how the June Election results are received by the population and if serious disturbances to law and order are avoided until the President is elected in November 1999.
At a recent seminar in Singapore on the Regional Outlook for 1999 - Dr Hadi Soesastro, a respected Indonesia economist, argued that:
With the President Habibie administration’s record thus far being a mixed one, the question is how much longer before the Economy recovers. The estimates vary from the optimistic, that is, by mid-1999 it will begin to enter a recovery period that may take 3 years. The less optimistic cannot see how recovery is possible so long as the political situation remains fragile and unpredictable. They believe recovery could begin at the next century, while the more pessimistic think it may even take about a decade before it can return to the growth path.
In short, it is difficult to tell when the Indonesian economy will recover. Much will depend on the elections in June. The current unrest in Indonesia will hopefully pass because unlike the 50s, Indonesia now has a middle class, a consumer society which will want to get back as soon as possible to enjoying the good times, and the basic infrastructure is there for renewed progress.
III
The Future of ASEAN
The countries outside the region have hitherto lauded Asean, as the success story among developing regions. They have now begun to ask a range of questions about Asean and its future. Primarily, they focus on what they see as Asean’s inability to address and act together to prevent the spread or at least mitigate the worst effects of the financial crisis. In their eyes Asean has been found wanting. While Asean’s increasing international profile could have contributed to such high expectations, the question is about Asean’s inability to look forward, anticipate the crisis in Thailand and its subsequent spread to the rest of the region. Is this pessimism of the future of Asean justified?
Those who have followed Asean’s 30 years history will recall that its strength always lay in the political diplomatic sphere and in staying together to help develop a climate of confidence. This enhanced prospects for peace and stability in South East Asia, without which, past efforts in the individual member countries to promote growth, with such admirable results, would not have been achievable. Admittedly, in this crisis, Asean has taken time to rally together and build consensus. The Asean Free Trade Area (AFTA) took 30 years to be launched. At a time of strategic uncertainty, Asean launched the ARF, which it continues to nurse to become a useful confidence building mechanism among major powers with an interest in peace and stability in the Asia Pacific.
Last but not least, Asean’s commitment, even at a time of such serious economic crisis, to AFTA by advancing its implementation date from the year 2003 to 2002; the Asean Investment Area by bringing it forward to the year 2003 from 2010, and its encouragement to members to relax their foreign investment regulations are all indications that Asean is not out. No doubt time will be needed to restore confidence in Asean and South East Asia as a region with strong economic prospects.
With the economic downturn, Asean may have become more inward-looking temporarily. This is because Asean member countries’ concerns are more with maintaining internal stability and maintaining national unity. Nevertheless, the crisis also represents a security threat with strategic ramifications arising from the globalisation. The US resort to leverage in economic and political issues in times of domestic instability, US-Japan tensions over trade are all matters of South East Asian concern. The question that is asked is “Just how important is SEA to the United States and Europe”?
From a South East Asian perspective “Asean Unity” remains intact, even though personal relations among Asean leaders which consolidated its Unity in the past, could be somewhat affected by leadership changes in member countries. Changes in a few governments of member states could have some effect in this respect. This is because they introduce generational and value changes that are liable to follow the changes of personalities. How Asean, as an institution will regulate relations between member states in the face of such changes, is a matter that only the coming months will reveal.
IV
Southeast Asian Security
On the surface, the external security situation for South East Asian States may appear to be non-threatening because of their preoccupation with the consequences of the economic crisis on their respective domestic situations. But the fact remains that there is strategic uncertainty. In that context, long standing causes of concern, include outstanding bilateral territorial disputes and that between some of the States and China over the Spratlys. These are the hot spots with potential for armed conflict.
Today, countries in the region are more concerned with issues of domestic stability. Indonesia has seen massive political turmoil, with no signs of the law and order situation returning to normal till at least the Presidential elections in November. Whether the riots and disturbances will immediately subside thereafter is doubtful. Social stability in most parts of the region is also being undermined by the rise of unemployment. Besides these the prospects of illegal immigration remains a potentially destabilising issue.
While many commentators on the Asian economic crisis have viewed its political and security implications on South East Asia in starkly negative terms, the impact has in fact varied from country to country, with Indonesia the most seriously affected, while Malaysia and Thailand have been affected to a much lesser extent.
Given the nature and magnitude of the changes taking place in South East Asia it is difficult to attempt to isolate key determinants of external security that need addressing on a priority basis. During the Cold War it was possible to assess each potential actor among the Big Powers with security interest in South East Asia and calculate their potential course of action. Now it is more difficult to tell “ally from competitor” or “threat from opportunity”.
This is not to say that external threats are non-existent. The prospect of low-intensity conflict arising from the tensions over the Spratlys or navigation and over flight over the disputed areas is indeed there. If any of the countries involved choose to take advantage of the preoccupation of others with their domestic economic and social dangers, and resort to the use of force than armed conflict will follow. But there are no signs so far of such a development occurring in the immediate 2/3 years.
Given this evolving situation, it has also to be recognised that the countries of South East Asia being small and medium size states lack the strategic autonomy of larger powers. They also lack the commensurate strength to contend militarily with any larger power, should conflict arise with any of them. A Big Power can dictate the rules. We in South East Asia as Target States, without the capability of deploying maximum power in response, can only respond proportionately, according to respective military capability.
With the economic downturn, the concerns are more with monitoring internal stability and national unity. Nevertheless, the uncertain external security environment has strategic ramifications for the region. Thus, to keep as many options on the external situation while focusing on the domestic is what is pre-occupying those who have been badly affected by the Crisis.
V
Southeast Asia and the Major Powers
As mentioned earlier, for the present the atmosphere beyond our immediate sub-region appears tranquil except for the Spratly Islands dispute. But things can and do change unexpectedly. While we will continue to face the consequences of the economic downtown in the region, the key to peace and stability still remains the triangular US, China and Japan relationship. For this to be sustained, a healthy balance between the three powers will be crucial. Compared to a few years ago, US-China relations, and with Japan have improved and we hope that relations between and amongst the three countries would continue to improve. For now, what we can say is that the situation is evolving and a new power balance will clearly emerge only after 10-15 years.
Looking at the positive side, if the Chinese economy takes off, China will see it in its interest not to destabilise the Asia-Pacific unless its vital interests are threatened. It is generally acknowledged that her economic progress is not stoppable in the long run with that it will grow in military strength, though not necessarily able to match the US anytime in the near future. With regards to US-China relations, it has been described as a phase where the 2 countries are suspended somewhere between friendship and rivalry. But a more sanguine view will be one of cautious optimism for the immediate future. The relations between China and the US and with Japan will be of critical importance to the security and stability of the Asia Pacific region, if not the entire world.
For a time, it did appear as though the US would view the rise of China as a threat to its global supremacy and pursue a policy similar to its “containment” strategy against the former Soviet Union. This would have ensured a new bipolar struggle to replace the US-Soviet rivalry of the Cold War period. But the Clinton administration has instead decided to pursue a strategy of “engagement”. After some initial misgivings about this approach, the Chinese have come to accept it as positive and have responded with some restraints on their own strategic policies, to meet US concerns.
China has also mounted a diplomatic offensive to regain the goodwill and cultivate countries of the region and expand economic ties. With Malaysia it has even raised the prospect of greater trade and even supply of China-made weapons. It has similarly sought to reassure Indonesia that it does not lay claim to the Natunas, nor all the waters of the South China Sea. Despite recent developments with regards to Mischief Reef, China and the Philippines are unlikely to collide over the Mischief Reef. In 1995, China had already expressed its commitment to observing the UNCLOS. China has also signed the Asean Declaration on the South China Sea in 1992 and the China-Asean declaration of 1997, which commit her to settling the Spratlys issue in a peaceful manner
Recent statements from Malaysia suggest that Kuala Lumpur’s view of China has also changed. This is encouraging, given her differences with China over her territorial claims in the Spratlys. Dr Mahathir has even cast China as a non-threatening power that wants to focus on economic development. He has gone a step further to state that the region should not be taken up with assertions by some quarters in the US about China being potential military threat. But, Indonesia which has always viewed China as a threat, though preoccupied with her domestic concerns, has yet to announce any change in that perception.
As to the minuses, Sheldon Simon has argued in a National Bureau of Asian Research Study, that the economic crisis has affected the balance of power in the Asia Pacific in that most of the countries in Southeast Asia have cut defence budgets and postponed arms modernisation programmes because of economic difficulties whereas China has continued to modernise its military capability. While, (and as I have mentioned earlier), there is no imminent external security problems, in the longer term one cannot be so sanguine especially when the Spratlys issue remain unresolved. Simon concluded that more than ever, American presence as a stabilising force in the region is required.
In the years since the end of the Cold War, we have seen US foreign and defence policy particularly towards East and Southeast Asia shift from one in which the containment of communism was the central pillar, to one that is more akin to what we understand as a balance of power. The United States describes its role in the region as a ‘balance wheel of Asia’, ‘buffer force’, ‘ultimate security guarantor’ and ‘honest broker’. As the sole superpower today and with so many parts of the world requiring an American presence, the critical question for us is whether the US will remain in the region and what sort of staying power it possesses.
We have established the makings of a multilateral security architecture for the Asia Pacific for the long term. I refer to the Asean Regional Forum (ARF). Unlike Europe, East and Southeast Asia neither have a history of a shared destiny nor experience in collective security as Europe had during the Cold War years. The security landscape is more ambiguous in Southeast Asia and different countries have different perceptions of threat. The ARF is the only security forum in the world to include all the major powers but initiated and launched by a group of developing countries. Seen from this perspective, the establishment of the ARF is a significant milestone and achievement. The ARF process aims at building up trust and fostering greater confidence among its members so that differences can be resolved through peaceful means and without having to resort to the use of force. Since it was inaugurated in 1993, it has elicited a significant level of interest as a forum for both regional and extra-regional countries to discuss security issues of common concern and interest. At this stage of its evolution, it will be premature to prescribe immediate solutions to regional security problems. It is the hope that through the exchanges at the ARF, it would help the participating countries improve perceptions of each other. A seminar organised by the Institute of Defence and Strategic Studies (IDSS) in 1998 which brought together all representatives, both academics and officials in their private capacity, to ‘audit’ the ARF concluded that the ARF, while it needs some fine-tuning is the only credible security forum in the region.
VI
Conclusion
In conclusion, in the near future, it is economic restoration (more than any conventional/traditional security threat) that is likely to take centre stage. All the countries in the region are focusing on their economy. Within Southeast Asia, much depends on developments in Indonesia, which is burdened with deep economic, social and political problems. If its problems get more complicated, the region will take a much longer time to recover. Economists are of the view that the economies of South Korea, Thailand, Philippines, Malaysia and Singapore have more or less bottomed out. A clearer picture will hopefully emerge after the June 1999 Indonesian elections. Much will also depend on continued strong economic growth in the United States. If the American economy slows down too dramatically, it will affect our region negatively. An early Japanese economic recovery will give the region the much-needed lift. Finally, so long as China does not devalue the renminbi too soon, it will give the region a much-appreciated breather.
About the author: Ambassador Nathan is Director of the Institute of Defence and Strategic Studies at Nanyang Technological University. In July 1990, he was appointed Singapore's Ambassador to the United States, where he served until the end of June 1996. Upon return he was made Ambassador-at-Large and concurrently appointed to his present position. He joined the Singapore Civil Service as a Medical Social Worker in 1995, and held various positions ranging from Industrial Relations to Administrative positions. His career in the Foreign Ministry began in February 1966 where he served as Assistant Secretary and then moved to the position of Deputy Secretary, before being appointing Acting Permanent Secretary of the Ministry of Home Affairs. He then transferred to the Ministry of Defence as a Director with the rank of Permanent Secretary in 1971. Ambassador Nathan returned to the Ministry of Foreign Affairs as its First Permanent Secretary in 1979 and remained in that post until 1982. From 1982 to 1988, he was the Executive Chairman of the Straits Times Press - the Newspaper Company. In April 1988, he was appointed Singapore's High Commissioner to Malaysia. Ambassador Nathan graduated from the University of Malaya (Singapore) in 1954 with a Diploma in Social Studies (Distinction). He was awarded the Public Service Star in 1964, the Public Administration Medal (Silver) in 1967, and the Meritorious Service Medal in 1974.