President Obama’s Last State of the Union Speech: An FPRI Primer

Tonight, President Obama will deliver the last State of the Union Address of his presidency. This prime time speech offers him an opportunity both to celebrate his accomplishments and to sketch his priorities as his presidency enters its final year. News leaks suggest that the speech will not include many policy specifics, since the president has no plans to present any new initiatives to Congress. Presidents often spend their last years in office focusing on foreign affairs and international travel, where they still enjoy some possibilities for independent action, and reports of President Obama’s upcoming travel schedule indicate that will be the case for him as well.  That doesn’t mean that he will offer foreign policy specifics either, but it will certainly come up in the speech.

The world remains unpredictable, though State of the Union addresses are generally much less so.

  • ​The President will certainly highlight his efforts to break out of previously frozen relationships, such as with Cuba, where the U.S. Embassy has been reopened in the past year. Look for him to mention, if not insist upon, the need for Congressional action to reduce further political and economic barriers to trade, travel, and communications with the island.

What he will likely leave out: any discussion of Cuba’s continued imprisonment of political dissidents, or the Castro regime’s tight control on trade and economic benefits for the Cuban people.

  • This also means the President will accentuate the positive of the nuclear deal with Iran. It may be difficult for him to be too specific in his positives, considering the ongoing tension in the gulf between Iran and Saudi Arabia, and Iran’s recent missile tests, but we can expect that the President will paint the agreement, which he and his staff have already called one of the landmarks of his administration, as an important first step in reducing tensions in the Middle East. That will also likely include vague but hopeful words about how Iran can be induced to play a more constructive role in resolving the conflict in Syria.

What he will likely leave out: specific references to Iran’s missile program, or its irresponsible encouragement of the mob that attacked the Saudi embassy, not to mention today’s Iranian seizure of two US Navy ships.

For a more in-depth analysis of the Iran deal and its implications, see our recent E-Note by Oded Brosh, “The Problem with the Iran Nuclear Deal: It’s Not that Iran Will Violate It but that Iran Will Comply

  • He will also emphasize his commitment to improving the terms of global trade, which will include positive evaluations of the Trans-Pacific Partnership (TPP), the major trade deal with a dozen Pacific Rim states that has been negotiated and is now before Congress for ratification. This will require an uneasy balancing act between the President’s desire to cite TPP as a diplomatic success and his recognition that all three of the Democratic presidential candidates, not to mention the majority of Democrats in Congress, have expressed deep skepticism about free trade in general and the TPP in particular.

What he will likely leave out: in addition to his party’s ambivalence, he will also likely soft pedal his own dilatory handling of the equally important Transatlantic Trade and Investment Partnership (TTIP) with Europe, which was also supposed to be ready for ratification by now.

For some more background on the Trans-Pacific Partnership, see William Krist’s E-Note, “Why We Need the Trans-Pacific Partnership and How to Get It Right;” Felix Chang’s blog post, “U.S. Foreign Policy Aspirations and the Trans-Pacific Partnership: Economic Integration and Political Alignment?” and (re)watch our Google Hangout “The Trans-Pacific Partnership Debate: Prospects, Problems, and Implications” featuring Jacques deLisle, Shihoko Goto, and Minyuan Zhao

  • On ISIS and terrorism, the President will both reaffirm his resolve to defend the homeland and warn against allowing fear of terrorism to paralyze America’s relations with the world. As he links this general topic to the specific attacks in San Bernardino and Istanbul, as well as to the disturbing reports of migrant behavior in Germany, it is very likely that this discussion will lead into an effort to explain why legal and properly regulated immigration is important for the future of the United States, allowing him to place himself and his party on the side of immigration reform and to paint critics as alarmists and nativists.

What he will likely leave out: the security lapses that led US officials to miss the radical background of Tashfeen Malik, the female San Bernardino attacker, or his administration’s halting and uneven strategy against ISIS.

For the latest FPRI commentary on ISIS, read our Robert A. Fox Fellow Clint Watts’ essay “5 Questions on the Islamic State for GOP Presidential Candidates” from War on the Rocks, and John Haines’ recent E-Note “What Would Kennan Do? George Kennan, the Containment Doctrine, and ISIS.”
One should also expect certain international issues will be touched upon more lightly, such as:

  • China: the current economic upheaval will likely come up, though the President is likely again to accentuate the positive, holding up cooperation with China as crucial for global stability and prosperity.

What he will likely leave out: discussion of China’s provocative island building in the South China Sea, or their failure to live up to their commitments to monitor and rein in the North Korean nuclear program. For that matter, he is likely to avoid discussing how the failure of the North Korea nuclear deal might reflect on the deal with Iran.

For the latest FPRI commentary on China, see June Teufel Dreyer’s recent E-Note “China and Russia: The Partnership Deepens” and Felix Chang’s recent blog post “China’s “One Belt, One Road” to Where?

  • Russia: although significant differences remain over issues ranging from Ukraine and Crimea to Syria, the President will confine comments on Russia and President Putin to hopes for more constructive cooperation.

What he will likely leave out: the relationship between Russia’s aggressive behavior and his own failed “reset” with Moscow.

For an unusual take on Putin’s motivations, see Mitchell Orenstein’s E-Note “Vladimir Putin: An Aspirant Metternich?” from 2015.
One last thing. The President is unlikely to offer a coherent statement on American policy toward the EU. In this, he will be like too many Presidents, who have not made an effort to explain why the unity of our most important allies and trading partners is good for us as well as them.

Readers are welcome to follow the speech with us on Twitter, @fprinews and @RonaldGranieri to see how well these predictions hold up.

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China’s “One Belt, One Road” to Where?

During visits to Central and Southeast Asia in 2013, Chinese President Xi Jinping unveiled Beijing’s aspiration to create what it called the Silk Road Economic Belt and the 21st-Century Maritime Silk Road.  Both would entail the construction of new infrastructure to better connect the present-day countries along what was once the ancient Silk Road between China and Europe.  The former would do so over land with roads, railways, and airports; the latter across the ocean with seaports.  China’s two-part aspiration is now commonly referred to as its “One Belt, One Road” initiative.

China One Belt, One Road Initiative

At the time of Xi’s unveiling, China was near the zenith of its economic power.  Not even the 2008 global financial crisis seemed able to derail China’s economic ascent.  Some saw the “One Belt, One Road” initiative as a way for China to extend not only its economic, but also its political reach across Eurasia.  India had begun to worry about what it considered to be China’s “string of pearls,” a series of Chinese-built seaports across the Indian Ocean.  Others viewed the initiative even more broadly as an ambitious effort to reorient global commerce towards China.

But since then the air of invincibility surrounding China’s economy has dissipated.  China’s engines of growth—export manufacturing and infrastructure construction—have sputtered, as the debt that fueled them and the overcapacity that they created have ballooned.  Over the last year and half, Chinese leaders have been forced to repeatedly “fine tune” their economy to keep it growing.  They boosted China’s government spending, devalued its currency, cut its interest rates six times, lowered its bank reserve ratio seven times, and even directly intervened in its stock market.  Still, China’s economy continues to slow.

That slowdown has spurred Chinese leaders to seriously begin to shift their export and infrastructure-led economy to one that is driven by consumers.  How successful that transition will be is uncertain.  But one thing is clear, the “social stability” so prized by the Chinese Communist Party has begun to fray.  Popular unrest is on the rise.  The number of labor protests in China has soared from about 100 in 2010 to almost 2,500 in 2015.[1]

Thus, Beijing has every incentive to keep its giant manufacturing and infrastructure-construction state-owned enterprises (SOE) humming, as its economy makes the transition.  Seen in that light, China’s “One Belt, One Road” initiative looks less like a well-planned strategy and more like a scramble to keep the order books of its SOEs full.  New infrastructure contracts abroad would help do that; and once built that new infrastructure might help Chinese manufacturers export at a lower cost.

One can see China’s push to build more infrastructure projects from Indonesia to Pakistan.  In September, a Chinese-led consortium won approval from Indonesia to build a $5.5-billion high-speed railway in Jakarta.  But the consortium won only after it agreed that the Indonesian government would not have to guarantee the Chinese loans needed to finance the railway’s construction.  While that concession may have secured the approval, it also increased the potential financial losses that the consortium would have to bear if anything goes wrong.  With such large and complex construction projects, it is hard to ensure that will not happen.

Surely, China expected a different outcome after its construction companies built a port at Gwadar for Pakistan in 2007.  Despite a total investment of over $1 billion, the port has remained virtually idle.  Now China is doubling down on the Gwadar project.  It has promised $45.7 billion in fresh financing to build the China-Pakistan Economic Corridor, a series of energy, road, railway, and pipeline projects that will more closely tie Gwadar to China.

Of course, China can still benefit from such infrastructure projects even if they turn out to be unprofitable.  The new road, rail, and pipeline routes through Pakistan will enable China to import strategic resources, like oil, natural gas, and minerals, from the Middle East without being reliant on sea routes through the Indian Ocean.  The projects could also deepen China’s “all-weather” friendship with Pakistan by creating new constituencies within Pakistan that benefit from the economic activity that the trade routes to China could foster.

Other land-based links to China could do the same. The Kunming-to-Bangkok railway is another example.  The portion of it in China is already finished; the portion in Laos broke ground in December; and the final portion in Thailand is slated to begin construction in May 2016.  Given the massive scale of Chinese trade, even if a small portion of it is redirected over the railway, it could reshape the economic interests of a small country like Laos.  Indeed, China may hope to use the railway to pry Laos away from its traditional ally, Vietnam, and gain another friend in ASEAN.  On the other hand, China would not benefit to the same degree from Chinese-built seaports and airports that are not directly connected to it.  While they may boost trade in the host country, the course of that trade could be redirected elsewhere, if trade with China does not evolve as expected.

That is now a real possibility.  If the Chinese economy continues to soften, it means that China will need to import fewer raw materials and export fewer finished goods.  In the second half of 2015 China’s monthly imports fell 10 to 20 percent from a year earlier; and its exports slipped too.  Unless global demand revives or Chinese consumers pick up the slack, Beijing might well expect its “One Belt, One Road” initiative to yield more long-lasting political than economic benefits.

[1] “Number of strikes and worker protests in China hits record high in November,” China Labour Bulletin, Dec. 3, 2015.

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Boosting Indonesia’s Naval and Air Defenses in the South China Sea

Until September, Indonesia seemed sure to increase its defense budget in the coming year.  Rising concern over Chinese actions in the South China Sea had already prompted Indonesian leaders to pledge themselves to do more to safeguard Indonesia’s maritime claims in the region.  Indonesian President Joko “Jokowi” Widodo promised to turn the Indonesian military into “a regional maritime force respected by countries in the East Asia region.”  A senior Indonesian military official was more direct—putting China on notice that Indonesia would defend its maritime space around the Natuna Islands, including those parts that fall within China’s nine-dash claim line in the South China Sea.[1]

Indonesia China Claims in the South China Sea

But to properly defend Indonesia’s maritime interests, the Indonesian military has had to reorient itself onto what it calls a “maritime axis.”  That process was formalized in its 2010 Strategic Defense Plan.  It detailed what Indonesia would need to do to modernize its long-neglected navy and air force.  Since 2011, both have begun to procure newer equipment.  The navy ordered three Type 209/1400 diesel-electric attack submarines from South Korea, two Sigma-class corvettes from the Netherlands, and a number of fast attack craft from Indonesian shipyards.  It also acquired three small British-built frigates.  Meanwhile, the air force acquired the first of 24 retired American F-16C/D fighters, which will be refurbished and outfitted with new radar systems to give them better maritime and strike capabilities.

However, the momentum of Indonesia’s military procurement seemed to have faltered in September, when Joko’s government submitted its proposed 2016 state budget to the Indonesian People’s Representative Council (DPR).  In that budget, the government cut the defense allocation by 6.3% from Rp 102.3 trillion ($7 billion) to Rp 95.8 trillion ($6.5 billion).  A few weeks later, the government awarded a $5 billion high-speed railway contract to a giant Chinese state-owned enterprise.  Some wondered whether Indonesia had chosen to take a softer line towards China.[2]

More likely, though, Indonesia’s weakening economy drove both decisions, rather than any easing of its concerns over the South China Sea.  Joko’s government has argued that it needed to shift resources away from military spending to fund a series of stimulus packages to revive the Indonesian economy, which has suffered as the country’s raw material exports have fallen, a problem deepened by the government’s ill-timed reforms of Indonesia’s mining industry.  With respect to the contract award, the Chinese bid was sweetened at the last minute with a financial package for the proposed railway’s construction that did not require any loan guarantees from the Indonesian government, freeing it from any liabilities if the expensive project failed to meet expectations.  That was something Japan’s competing offer could not match.[3]

Whatever the reason for the lower defense allocation, it will hinder the modernization of Indonesia’s naval and air forces.  During budgetary testimony in October, General Gatot Nurmantyo, the commander of Indonesian armed forces, told the DPR’s defense commission that the lower defense allocation would force him to delay or scrap a number of procurement programs.  That prompted some on the DPR defense commission to worry whether the Indonesian military would have enough resources to achieve its “Minimum Essential Force,” the minimum requirements needed to defend Indonesia’s maritime interests.  Hence, the commission adopted a new proposal to add Rp 37.1 trillion ($2.5 billion) to the defense budget.  Ultimately, the DPR’s budget commission pared back that proposal, but still boosted the defense budget to Rp 99.5 trillion ($6.7 billion).[4]

While the new budget still represents a decrease from a year earlier, the small increase over the government’s proposal will help to keep some procurement programs on track and offset the falling value of the Indonesian rupiah against the U.S. dollar, which has made purchases of foreign military equipment more expensive.  In any case, Indonesia has also pursued other financing means to support its military procurement.  In early September, the Indonesian Ministry of Finance arranged for PT Bank Negara Indonesia to provide credit worth Rp 980 billion ($666 million) to the military for a variety of acquisitions.  Soon thereafter, the DPR’s defense commission revealed that Jakarta was seeking to secure a $3 billion loan from Moscow to fund major acquisitions.[5]  If the loan is finalized, Indonesia’s Ministry of Defense will most likely use it to acquire Russian Su-35 fighters and Kilo-class submarines, both of which the DPR’s defense commission has already endorsed.  As the one commission member said of Indonesia: “[we are] a maritime country… so sea security must be prioritized.”[6]

Yet, even with such support for new kit, the Indonesian military will have to stretch its resources to set up adequate defenses in the South China Sea.  The military has already listed a number of infrastructure improvements on and around the Natuna Islands that need to be completed before it can station more forces there.  The improvements include the construction of facilities for 2,000 additional troops; expansion of a naval base at Pontianak; and upgrade of Ranai air base with new hangars, radar, and a longer runway.  In September, Minister of Defense Ryamizard Ryacudu visited Natuna Island to draw attention to Indonesia’s efforts to beef up defenses in the area.  He noted plans to deploy three ships and four fighter aircraft on the island.[7]

In the near future, Indonesia is expected to publish a new defense white paper.  It will likely detail the growing maritime threats to Indonesian security.  Along with Jakarta’s ongoing attempts to strengthen its navy and air force, it reflects the intent of Indonesian leaders to better protect their country’s interests in the South China Sea.  But how quickly those leaders can do so is an open question.  They have a long way to go before they can bring to fruition the robust force structure envisioned in the 2010 Strategic Defense Plan.  Despite the progress made over the last five years, the defenses on the Natuna Islands are only just beginning to improve.  For now, Ranai air base still has the air of a remote outpost, operating a single 1980s-era radar set.  Perhaps in the coming years more military hardware will finally reach it.

[1] “Jokowi wants RI to be respected maritime force by 2020,” Jakarta Post, Oct. 5, 2015; Moeldoko, “China’s Dismaying New Claims in the South China Sea,” Wall Street Journal, Apr. 24, 2014.

[2] Kanupriya Kapoor and Cindy Silviana, “UPDATE 2-Indonesia rewards China’s ‘courage’ with high-profile rail contract,” Reuters, Sep. 30, 2015; Nani Afrida, “The TNI to cut back on weapons procurement,” Jakarta Post, Sep. 9, 2015.

[3] Robin Harding, Avantika Chilkoti, and Tom Mitchell, “Tokyo furious after Jakarta awards rail contract to Beijing,” Financial Times, Oct. 2, 2015, p. 6; Avantika Chilkoti and Taufan Hidayat, “Indonesia rolls out next stimulus phase in effort to lift economy,” Financial Times, Sep. 29, 2015.

[4] Lili Sunardi Senin, Kementerian, “PU Dapat Anggaran Terbanyak Dari APBN 2016,” Bisnis.com, Nov. 2, 2015; Jon Grevatt, “Indonesian parliamentary commission approves defence spending increase,” Jane’s Defence Weekly, Sep. 28, 2015.

[5] Ibid.

[6] “National scene: House support plans to buy Russian submarine,” Jakarta Post, Sep. 30, 2015.

[7] “Indonesia: Islanders on Alert,” NHK World, Nov. 11, 2015; “Indonesia’s Defense Ministry to focus on improving infrastructure in Natuna,” Antaranews.com, Sep. 21, 2015; “Indonesian military adds two thousand personnel to guard Natuna waters,” Antaranews.com, Sep. 16, 2015; Ridzwan Rahmat, “Indonesia to upgrade naval base near disputed South China Sea waters,” Jane’s Defence Weekly, May 9, 2014.

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The Big Chill: Domestic Insecurities and Sino-Japanese Relations

China and Japan sparred once again, this time at the United Nations.  Last week, China’s ambassador for disarmament affairs charged Japan with amassing excessive amounts of sensitive nuclear materials, notably 1,200 kilograms of highly-enriched uranium and 48 tons of separated plutonium (of which about a quarter is stored on Japanese territory).  That is sufficient, he claimed, for Japan to make 1,350 nuclear warheads.  Japan’s disarmament envoy shot back that his country’s nuclear program has safely operated under the International Atomic Energy Agency’s safeguards for more than 50 years.  He added that over that time Japan has consistently demonstrated its peaceful intentions and would not pose a threat to other countries.[1]  Given that he directed his response at China’s ambassador, one may have also taken it as a reminder of China’s recent aggressive behavior in the East and South China Seas.

Shinzo Abe and Xi Jinping at APEC 2014

The pointed exchange marked another episode in the downward path of relations between China and Japan.  It was not so long ago both countries got along.  Throughout the 1990s and 2000s, they enjoyed ever closer economic ties.  Many blame the current deterioration in Sino-Japanese relations on the tensions that arose over Senkaku Islands (or Diaoyu Islands in China) in 2010 or Tokyo’s purchase of them from private Japanese owners in 2012.  Certainly trade between the two countries has fallen ever since then.  (See table.)  But the dispute over the islands was just the spark.  China and Japan have substantially changed over the last two decades, both in absolute and relative terms.  Both countries have developed domestic insecurities that led them to view each other with greater concern.

On the surface, China does not seem to have any cause for insecurity.  Its ruling Chinese Communist Party (CCP) is ostensibly at the pinnacle of its power.  The government at which it is the head has presided over a 35-year economic expansion that has made China the envy of the developing world.  It is even doling out largesse under the auspices of its “One Belt, One Road” initiative and through the Asian Infrastructure Investment Bank (AIIB) that will likely expand its influence across Asia and Africa.

Yet the CCP has reason to be anxious.  In its headlong push for economic growth, it often ignored public ire over government land grabs, pollution, and workers’ rights.  The party’s widespread corruption further dented its credibility.  Hence, despite the CCP’s best efforts to eliminate organized dissent, the number of public protests has recently risen.[2]  Meanwhile, China’s fast-rising economy, once the CCP’s shining achievement, is losing its luster amid sagging exports, bursting property bubbles, and rapidly mounting debts.  Seen in that light, China’s “One Belt, One Road” initiative and AIIB begin to look more like a worried search for growth abroad (and work for its infrastructure-building companies) than a coherent strategy to connect Eurasia’s economies.

Adding to the CCP’s unease is the ever-smaller number of true believers in its Marxist-Leninist ideology.  Chinese President Xi Jinping’s efforts to promote Marxism have fallen flat.  So, the CCP has returned to nationalism to bolster its popular appeal.  A big part of that has always been showcasing the CCP as China’s savior from Japanese occupation (while largely omitting the role of Taiwan’s Kuomintang).  The CCP seems to believe that its ceaseless criticism of Japan proves that it still faithfully stands watch against any revival of Japanese militarism that could threaten China.

Linked to that narrative, the CCP has tried to show how much stronger China has become under its rule.  That was made clear in September when China celebrated the 70th anniversary of the end of World War II (and China’s victory over Japan) with a massive military parade in Beijing.  The martial display conveyed the message to the Chinese people that they should be confident in the ability of the CCP to not only defend China, but also govern it.  On the other hand, that Beijing felt the need to use such demonstrations of strength to dispel doubts about its political legitimacy probably worried its neighbors.

Meanwhile, across the Yellow Sea, Japan has grown insecure too.  It can no longer rest easy as Asia’s dominant economic power, a title that it lost to China a decade ago.  It is increasingly aware of its national vulnerabilities.  Japan’s population is ageing fast and shrinking.  That demographic shift not only has implications for every aspect of Japanese society, but also will make economic growth harder to achieve.  That is doubly concerning for Japan, which is still struggling to break free from a quarter century of economic stagnation.

Japanese leaders are all too well aware that China’s rise is remaking the regional hierarchy in Asia.  They realize that Japan cannot afford to remain forever quiescent, if it is to avoid being consigned to a subordinate role in the new order.  That has compounded Japan’s sense of unease, because Japan knows that it must keep the power gap between China and Japan from growing wider, even though it now has fewer resources with which to do so.  Fortunately for Japan, other Asian countries have begun to feel the same way.  India, the Philippines, and Vietnam have all embraced Japan.

Tokyo has taken advantage of that sentiment and become far more diplomatically active across the region, if only to prevent China from consolidating its power there.  As Xi has pushed China’s “One Belt, One Road” initiative, Japanese Prime Minister Shinzō Abe has never been far away.  Abe has travelled to Southeast Asia numerous times to ink economic, political, and even a few military cooperation agreements.  Last week, Abe began a five-country tour through Central Asia, which lies at the heart of China’s “One Road.”  A week earlier, the Japanese Maritime Self-Defense Force dispatched a destroyer to participate in naval drills with India and the United States in the Indian Ocean for the first time.

Meanwhile, there has been a generational change in Japan.  Older Japanese who had been willing to accept Japan’s diminished international stature as penance for its militarist past are passing from the scene.  Younger Japanese who have no connection with that past believe that their country has proven itself to be a responsible actor in world affairs.  Today, a majority of Japanese believe that Japan has sufficiently apologized for its military actions during the 1930s and 1940s, which China relishes reminding Japan of at every turn.  Unsurprisingly, recent polls showed that only 7 percent of Japanese viewed China favorably (down from 55 percent in 2002).  Even more telling, China’s very unfavorable rating in Japan climbed to 48 percent.[3]

The domestic insecurities of China and Japan are unlikely to abate soon.  China’s insecurities, bound up with those of the CCP, will grow if the Chinese economy continues to slow.  Japan’s insecurities are tied to its long-term demographic trends.  Both sets of insecurities continue to drive a wedge between the two countries.  Even the non-governmental Beijing-Tokyo Forum, whose primary purpose is to improve Sino-Japanese relations, has found it harder to reach a consensus.  The forum, which invites high-level former government officials from both countries, has always managed to eke out a joint statement, even during particularly testy times in Sino-Japanese relations like 2012.  This week it concluded without managing even that.  For the moment, relations between China and Japan are on ice.  The region should be grateful that the latest row between the two countries occurred inside the United Nations and not out in the East China Sea.

[1] “China Slams Japan’s Plutonium Stockpile, Frets About Nuke Armament,” Japan Bullet, October 21, 2015.

[2] See China Labor Bulletin.

[3] Pew Research Center, “Global Opposition to U.S. Surveillance and Drones, but Limited Harm to America’s Image,” July 2014; Pew Research Center, “America’s Global Image Remains More Positive than China’s,” July 2013.

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U.S. Foreign Policy Aspirations and the Trans-Pacific Partnership: Economic Integration and Political Alignment?

At times, it seemed as though the negotiations over the Trans-Pacific Partnership (TPP) would go on interminably.  Begun in 2010, the TPP evolved from the four-country Trans-Pacific Strategic Economic Partnership Agreement to encompass twelve Asia-Pacific countries, including the United States.  It would eventually take five years for the trade representatives from those countries to hammer out an agreement, the final terms of which were settled on Monday morning.

Trans-Pacific Partnership Member Countries

Over the coming months, much will be said, both for and against, the possible economic and social implications of the TPP as it is debated in the legislatures of its twelve member countries before it can be enacted.  But the TPP also carries with it strategic implications—not only for its smaller members, but also for its largest, the United States.  American interest in the TPP began during the last year of President George W. Bush’s tenure.  But it was the administration of President Barack Obama that moved the TPP to the forefront of U.S. foreign policy in the Asia-Pacific.  So important has the TPP become that Obama persuaded his political opponents in the U.S. Congress to award him “fast-track” trade promotion authority, so that American trade representatives could assure their counterparts from other countries that the U.S. legislative body would not tinker with the specific terms of the trade agreement once it was reached.

Strategically, the United States has come to see the TPP as critical to its long-term security in the Asia-Pacific.  It helps to ensure that, even with China’s rise, countries around the rim of the Pacific Ocean would have economic incentives to pursue strong relationships with the United States.  As that line of thinking goes, the more closely the trade interests of the TPP’s twelve member countries are aligned, the more closely their economies will integrate and, ultimately, the more likely their political outlooks will align.  Perhaps unsurprisingly, the United States is also pursuing a trade agreement similar to the TPP with the countries of Europe called the Transatlantic Trade and Investment Partnership or TTIP.

That line of thinking is not lost on either China or Russia.  While China chose not to participate in the TPP to avoid more pressure to remove its many trade barriers, it pushed for another (less onerous) trade agreement called the Regional Comprehensive Economic Partnership or RCEP, which did not include the United States.  China has also championed its own form of economic integration, called the “One Belt, One Road” initiative (tying together China’s land-based “Silk Road Economic Belt” and sea-based “Maritime Silk Road” efforts).  That initiative has sought to knit together the various economies along the ancient Silk Road between China and Europe.  Beijing even created the Asian Infrastructure Investment Bank earlier this year, in part, to support the construction of the trade infrastructure needed to facilitate that integration.

For its part, Russia has tried to cobble together the Eurasian Economic Union (EEU) from the countries that were once parts of the Soviet Union.  Russia has pursued the economic integration of the former Soviet republics as a way to not only expand its market space, but also strengthen its sphere of influence over them.  While most of the former Soviet republics could not ignore the economic potential of the EEU, they have been cautious about their participation in it.  Even Kazakhstan, an early supporter of the EEU, has repeatedly stressed that the EEU should remain an economic, rather than a political, grouping.  As can be expected, most former Soviet republics are protective of their new-found sovereignty.  And so, they are keenly sensitive to any Russian scheme that may absorb them into a reconstituted empire, particularly in light of what has happened to Ukraine’s Crimea and Donetsk provinces.

But lest we are to believe that closer trade and economic ties will inevitably lead to closer political alignment, history provides plenty of examples where that failed to happen.  One cannot say that closer economic integration between the European Union and Russia has brought the two to a more closely aligned political outlook.  Instead, they have used their respective trade dependencies on one another as weapons against one another in their political clash over Ukraine.

In the Asia-Pacific, one needs to look no further than the experience of China and Japan.  In the 1990s, Japanese companies led the multinational charge to set up outsourced factories and develop new markets in China.  In 1999 the two countries did $66 billion in bilateral trade.  By 2011 that figure climbed to $345 billion.  The two economies became increasingly integrated, with China more reliant on Japan for industrial machinery and Japan more reliant on China for consumer goods.  But then tensions over the Senkaku Islands, which began in late 2010, boiled over in 2012 and sparked anti-Japanese riots in China.  Tensions have run high ever since, cooling their economic relationship.  Every year after 2011 trade between the two countries has fallen.  Last year their bilateral trade slipped to $309 billion; the trade figures for August 2015 suggest that this year’s total will be lower still (indeed it is on track for a steep decline).  Rising costs in China and a stagnant Japanese economy surely contributed too, but they cannot fully explain the drop, given China’s continued, albeit slower, economic growth.

China Japan Bilateral Trade in Goods

The causal logic that closer trade and economic ties will lead to closer political alignment could be turned on its head.  One could argue that it is when political outlooks are aligned that closer economic integration often seems desirable (and also that when political outlooks are in conflict that economic integration often seems dangerous).  That is not to say that the TPP is not a worthy accomplishment; it is.  But the United States should be wary of relying too heavily on the TPP to ensure its security in the Asia-Pacific.  Even if the U.S. Senate ratifies the trade agreement, the United States should continue to actively pursue other strategic initiatives in the region with equal verve.

[1] Japan External Trade Organization, Japanese Trade and Investment Statistics, 1999-2015.

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