Thailand
Southeast Asia gains new leverage as China and US battle for influence
BANGKOK — There are two “friendship bridges” spanning the Tonle Sap river in the Cambodian capital of Phnom Penh. One is labeled the Cambodia-Japanese friendship bridge; the other is the Cambodia-China friendship bridge.
Sitting almost side by side, the bridges are an unintended reflection of the rivalry between Japan and China, in Cambodia and across much of the surrounding Mekong region, where the two countries are the largest donors and investors.
Japan’s bridge — built in the early 1960s, when the country was just starting its postwar boom — recently reopened after nearly two years of renovation. China’s is far newer, much like the nearly 3,000 km of roads and numerous other bridges that it has built in Cambodia over the last decade.
Beyond the capital there are other massive monuments to the two countries’ friendships with Cambodia. At the edge of the coastal city of Sihanoukville — where Chinese casinos and other developments dominate the landscape — sits Cambodia’s only deep-sea port, a product of Japan’s two-decade, multibillion-dollar improvement plan. The area is also home to two large industrial zones; one funded by China, the other by Japan.
Perhaps the most controversial project is taking shape in nearby Koh Kong Province, where Chinese construction company Union Development Group is building another deep-water port and an unusually large international airport that some, including U.S. Vice President Mike Pence, have suggested could be part of a covert plan for a future naval base. The rumor has been angrily denied by the Hun Sen government as “fake news.”
A Japanese official downplays the idea that the country is going head-to-head with China for influence in Cambodia, insisting that its investments stem from a blend of developmental and security considerations. “We don’t want to compete, as China is so big,” the official said.
Yet the rivalry is glaringly obvious from the plethora of competing projects in Cambodia, a developing country that has seen a flood of investment amid intensifying competition for influence across the fast-growing Southeast Asia region.
Cambodia and other nations across Southeast Asia are emerging as vital staging grounds for a new form of power struggle between China and its rivals. The growth of Beijing’s vast Belt and Road Initiative since 2013 has galvanized the U.S. and its allies — including Japan, India and Australia — and prompted them to draw up infrastructure and security programs of their own.
For recipient countries of such Chinese and Western initiatives, there are both opportunities and risks. While some nations may still feel pressure to choose between benefactors, others now find themselves shifting from a position of weakness to one of strength — at least to exploit the competition as China, Japan and the U.S. all try to transform into kinder, gentler financiers.
Siswo Pramono, head of the Indonesian foreign ministry’s Center for Policy Development and Analysis, said that rapid economic growth within the Association of Southeast Asian Nations has given the group’s 10 member countries unprecedented leverage.
“We don’t have to ‘choose’ between [the U.S. and China], because we have the pie,” he said. “The pie is our strategic position and rapidly growing regional market. ASEAN has more confidence than before, because of what we offer: The fastest growing economic region in the world is East Asia. The market is here, people are here. We don’t have to care what U.S. or China says — it’s up to us.”
Since its launch in 2013, China’s BRI has broken ground on an estimated 1,800 big projects — from roads, bridges and airports to dams, industrial zones and convention centers — in 80 countries across the world, according to China’s State-owned Assets Supervision and Administration Commission, which listed 3,120 projects as of April 30, 60% of them underway.
The rapid rollout of the BRI scheme has prompted the U.S., with assistance from Japan, to recalibrate the “Free and Open Indo-Pacific” strategy, launched around 2016, toward development and investment aspects.
First raised by Japanese Prime Minister Shinzo Abe in 2006 and again in 2012 as a security-focused maritime “diamond” of regional cooperation linking the Indian and Pacific oceans, the FOIP strategy was revived by the U.S. under President Donald Trump. A loose scheme initially centered on security, trade and promotion of the rule of law, FOIP focused on the region covered by the U.S. Pacific fleet (now renamed IndoPacom), particularly countries around vital sea lanes.
But a slew of infrastructure and aid initiatives, including $60 billion in U.S. funds for a new Development Finance Corporation authorized by Congress in late 2018 and Japan’s $50 billion “quality infrastructure” program announced the same year, may help shift the landscape. The metamorphosis of FOIP — including the entry of India and Australia to join the U.S. and Japan as the “Quad” grouping under the catchall “Indo-Pacific” title — suggests tens of billions of dollars worth of assistance is coming to many of the 37 or so countries of the Indo-Pacific region.
Pramono, whose agency is tasked with developing Indonesia’s Indo-Pacific concept, sees opportunity in the competing initiatives. “Just look at the ASEAN economy, how it has grown since 1985 to $2.8 trillion now, and Indonesia is $1.2 trillion alone,” he said. “You can sell our strategic position. It’s not about hard power, it’s smart power.”
For India, there is a strong element of hard power, however. Spurred, perhaps, by Chinese encroachment on what it sees as its backyard, India has embraced the FOIP concept to boost economic and military engagement with the U.S. and Southeast Asia.
After his resounding election victory in May, Prime Minister Narendra Modi vowed to ramp up his “Act East” policy, and in a speech at the Shangri-La Security Dialogue in Singapore last year, Modi described his Indo-Pacific vision as “a free, open, inclusive region” with Southeast Asia at its center. The follow-up has seen a significant increase in Indian military and economic engagement with Southeast Asia, including naval exercises with Indonesia, Australia and Vietnam as well as bilateral exercises with Singapore. In May, India participated for the first time in quadrilateral exercises with the U.S., Japan and the Philippines in the South China Sea.
India is now exploring possible development of a deep-sea port in Sabang in Aceh, near India’s Andaman and Nicobar Islands, facing the Malacca Strait, according to Indian and Indonesian officials, who also suggested China had expressed interest in the project. Modi had agreed with Indonesian President Joko Widodo to develop a new, bilateral maritime partnership to span their regions during a meeting in Jakarta last year.
“The development of Sabang Port is part of Indonesia’s strategic vision to become a regional and global economic power,” noted Indonesia’s Pramono. “Sabang is a strategic point in national connectivity, but also a strategic point in connecting Indonesia with the Indian Ocean.”
Pankaj Jha, an associate professor of defense and strategic affairs at India’s O.P. Jindal Global University, said the recent moves show increased commitment by India to Southeast Asia.
“India needed to show that it was an important stakeholder in the larger scheme of things ASEAN,” Jha said.
Debt threat
Whether by design or not, China’s vast BRI scheme was the catalyst that shifted the contest for dominance of the Indo-Pacific region and beyond.
It is impossible to compare BRI and FOIP directly, and estimates of their value vary wildly. The most common estimate for China’s BRI indicates about $1 trillion worth of projects are underway or completed, although according to Jonathan Hillman, who tracks infrastructure spending at U.S. think tank Center for Strategic and International Studies, the best available data suggest that at current trends, that figure will not be met for several years.
“Mapping the BRI is part art, part science. It’s a moving target, loosely defined and ever expanding … not constrained by geography or even gravity,” he said, citing other U.S. academic research that puts the figure at $340 billion spent in 2014-17.
China’s BRI — scathingly described by one U.S. official as a “questionable pile of questionable projects” — began as an ambitious scheme to connect Asia with Africa and Europe via land and maritime networks along six corridors. Its aim, as described by Chinese leader Xi Jinping, was to boost regional integration, increase trade and stimulate economic growth.
David Hale, U.S. undersecretary of state for political affairs, invoked common criticisms of the BRI — including the unmanageable debt it has saddled on some recipient nations — as he described the mission of FOIP: “We want to embrace those practical ideas and projects that address the needs of the people in the region … and to do so in a way in which they’re not caught in a trap of debt and other encumbrances that come, unfortunately, with some of the offers we see from China,” he told the Nikkei Asian Review.
Spearheading this new-style U.S. engagement with Asia has been the passage of two crucial bills through Congress, including the $60 billion BUILD Act that CSIS analysts called “the most important piece of U.S. soft power legislation in more than a decade.”
No single country can match China’s formidable resources and rapid, top-down decision making. But in a rising wave of “minilateralism,” the U.S., Japan and ASEAN countries are creating new alliances that encourage countries to team up for specific projects and corral private sector investment via offers of government support through insurance, advisory services and other incentives.
Peter Haymond, charge d’affaires at the U.S. Embassy in Thailand, cited America’s five alliances and “many security partnerships” that underpin the U.S. Indo-Pacific strategy. On the economic front, “our engagement with the partners and allies is to build a region that is as open as possible in its trade and investment policies, [and] that means the U.S. facilitating resources largely in the private sector effectively, efficiently and broadly applied. … We are the biggest investor by a long way here.”
China has faced a “BRI backlash” around the world over controversial projects such as in the Maldives, Pakistan and Sri Lanka, where the country’s debt problems forced it last year to hand back the Chinese-built Hambantota Port to China on a 99-year lease. The U.S. has encouraged the narrative by portraying such countries as victims of China’s “debt diplomacy.”
Xi came as close as he ever has to acknowledging such grievances during the second BRI summit in Beijing in April. “Everything should be done in a transparent way, and we should have a zero tolerance for corruption,” Xi said, adding that his government would now offer a “debt-sustainability framework” in infrastructure contracting.
Regardless of the negative publicity, nearly 130 countries have flocked to join China’s initiative. Switzerland recently agreed to participate, as well as EU member countries Italy and Luxembourg — which have signed memorandums of agreement to cooperate with BRI despite opposition from key EU members.
‘Backdoor BRI’
Last year, Japan — a member of the so-called Indo-Pacific “Quad” group, along with the U.S., Australia and India — stunned observers by signing an agreement with Beijing to jointly finance and implement some development schemes.
The move by Abe was seen by many regional observers as an indication that Japan — a staunch U.S. ally — wants to define its own version of the FOIP strategy, separate from rigid constraints over human rights and China-linked funding bans favored by the U.S. In addition, say some Japan analysts, Tokyo is wary of the Trump administration and is increasingly hedging its bets.
This experiment is being played out in Thailand, where officials are anxiously promoting two flagship projects under the Japan-China cooperation agreement on third-country infrastructure cooperation. One is a “smart city” scheme to transform an industrial zone near Bangkok; the other, a high-speed rail project linking three international airports in and around the capital.
Both are at planning stages amid rumors of teething problems, particularly concerning the three countries’ different views on project details and costs. Critics see the projects as a textbook study on the fundamentally different approaches of Japan and China toward construction and financing of mega-infrastructure. But Thai and Japanese officials stress the powerful symbolism of such cooperation, suggesting that differences will be ironed out.
Source: https://asia.nikkei.com/Spotlight/Cover-Story/Southeast-Asia-gains-new-leverage-as-China-and-US-battle-for-influence