Europe and the Asia Pacific (Esrc Pacific Asia Programme (Series).)

Europe and the Asia Pacific

Both Europe and the Asia Pacific agree their relationship is increasingly important. For many years it has been considered the weakest leg of the trilateral international system with US/Europe relations at the forefront. In the last few years, however, real efforts have been made to broaden and enhance the ties that bind Europe and Asia. This book is organised into five sections that examine the basic aspects of Europe/Asia relations. The first covers the historical background, the second is concerned with the contemporary political setting and the third with vitally important economic issues. The last two parts deal with security considerations and policy initiatives. All have been compiled by leading experts from both regions. Europe and the Asia Pacific is the most wide ranging and accessible study currently available of this increasingly important relationship. Out of the work on this study grew the Council for Asia-Europe cooperation (CAEC), a body of think tanks that supports the Asia-Europe Summit Meeting (ASEM) process. Hanns Maull is Professor at the University of Trier and a Senior Advisor to the DGAP in Bonn. Gerald Segal is Director of Studies at the International Institute for Strategic Studies and Director of UK Economic and Social Research Council’s Pacific Asia Program. Jusuf Wanandi is Chairman, Supervisory Board, Centre for Strategic and International Studies (CSIS), Jakarta.

Europe and the Asia Pacific Edited by Hanns Maull, Gerald Segal and Jusuf Wanandi

London and New York

First published 1998 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 © 1998 Hanns Maull, Gerald Segal & Jusuf Wanandi All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book has been requested ISBN 0-203-98318-1 Master e-book ISBN

ISBN 0-415-18176-3 (hbk) ISBN 0-415-18177-1 (pbk)

Contents

List of tables

vi

Notes on contributors

vii

Preface HANNS MAULL, GERALD SEGALJUSUF WANANDI

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1

The historical setting WITH KWA CHONG GUAN

1

2

The political setting

11

Pluralism and democracy WITH SUCHIT BUNBONGKARN, MICHÈLE SCHMIEGELOW

11

Values and civilisations WITH CAROLINA HERNANDEZRÜDIGER MACHETZKI

31

The economic setting

55

Economic interactions WITH HANNS G.HILPERTHAFLAH PIEINOOR AINI KHALIFAH JEAN PIERRE LEHMANN

55

Open regionalism WITH HADI SOESASTRO, RICHARD HIGGOTT

83

3

4

5

The security setting

107

Thinking strategically about security in Pacific Asia WITH GERALD SEGAL, JUSUF WANANDI, YUKIO SATOH, JIN-HYUN PAIK

108

The role of the United States WITH HARRY HARDING, WANG JISI

134

Arms control WITH JOACHIM KRAUSE

155

European and Asian policies

171

Europe and Northeast Asia

171

v

WITH YOSHIHIDE SOEYA, SIMON NUTTALL

6

Europe and China WITH MICHAEL YAHUDA, ZHANG YUNLING

183

Europe and Southeast Asia WITH MICHAEL LEIFER, SOEDJATI DIJIWANDONO

197

European-East Asian Co-operation in International Institutions WITH MARK HONGHANNS MAULL

212

Envoi FRANÇOIS HEISBOURG

229

Index

240

Tables

3.1 Share of world trade of the three large world economic regions in 1994 3.2 Importance of Asian-European trade (1994), from the European perspective 3.3 Importance of Asian-European trade (1994), from the East Asian perspective 3.4 Foreign direct investment of Japan, the US, Germany, France, the UK and the Netherlands in East Asia (stocks)—in national currency and in per cent as of 1994 3.5 European shares in East Asia’s investment inflows (shares of cumulated stocks as percentage) 4.1 Areas of European-Asian Pacific arms control co-operation 5.1 China’s trade with Europe (in billion US dollars) 5.2 China’s trade with Asia and the US (in billion US dollars) 5.3 Capital flow to China (in billion US dollars) 5.4 Importance of Chinese market in foreign trade of EC/EU (percentage)

56 57 57 63 64 158 194 195 195 196

Contributors

Suchit Bunbongkarn is Professor in the Faculty of Political Science; and Acting Director, Institute of Security and International Studies (ISIS), Chulalongkorn University, Bangkok. J.Soedjati Dijiwandono is Member, Board of Directors, of Centre for Strategic and International Studies (CSIS), Jakarta. Harry Harding is Dean of the Elliott School at George Washington University. François Heisbourg is Senior Vice-President, MATRA Défense in Paris. Carolina G.Hernandez is Professor of Political Science, University of the Philippines, Diliman, Metro Manila; and President, Institute for Strategic and Development Studies (ISDS), Manila. Richard Higgott is Professor in the Department of Politics and Government at the University of Warwick and editor of The Pacific Review. Hanns Hilpert is a faculty member of the Institut für Wirtschaftsforschung in Munich. Mark Hong is the Singapore ambassador to Russia. Noor Aini Khalifah is a faculty member of the University of Kebangsaan in Malaysia. Joachim Krause is Deputy Director of the Research Institute of the German Society for Foreign Affairs in Bonn. Kwa Chong Guan is Associate Professor at the Institute of Defence and Strategic Studies (IDSS), Singapore; and Council Member, Singapore Institute of International Affairs (SIIA). Jean Pierre Lehmann is a Professor at the International Institute for Management Development in Lausanne. Michael Leifer is Professor of International Relations at the London School of Economics. Rüdiger Machetzki is at the Institute für Asienkunde in Hamburg. Hanns Maull is Professor at the University of Trier. Simon Nuttall is a Professor at the College of Europe in Brussels.

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Jin-Hyun Paik is Professor of International Relations at Seoul National University. Haflah Piei is a faculty member of the University of Kebangsaan in Malaysia. Yukio Satoh is the Japanese ambassador to Australia. Michele Schmiegelow is Executive Director of the Global Economic Strategy Centre in Belgium. Gerald Segal is Director of Studies at the IISS and Director of ESRC’s Pacific Asia Programme. Hadi Soesastro is Member, Board of Directors; and formerly Executive Director, Centre for Strategic and International Studies (CSIS), Jakarta. Yoshihide Soeya is Professor in the Faculty of Law, Keio University in Tokyo. Jusuf Wanandi is Chairman, Supervisory Board, Centre for Strategic and International Studies (CSIS), Jakarta. Wang Jisi is Director of the Institute of American Studies at the Chinese Academy of Social Sciences in Beijing. Michael Yahuda is Professor of International Relations at the London School of Economics. Zhang Yunling is Director of the Asia Pacific Institute at the Chinese Academy of Social Sciences.

Preface

In what sense can it be meaningful to talk about the relations between Europe and Asia? Both parts of the Eurasian land mass are so large and diverse that it is hard enough to understand each individual region, let alone the relations between their disparate parts. As a result, this topic might well have remained relatively dormant if it had not been energised by the realities of modern international affairs. As part of the myriad changes after the end of the Cold War, companies and governments have begun to think and act as if there are meaningful relationships between Europe and Asia. Those of us who have studied the subject for decades, and have vainly suggested that companies and governments in Europe and Asia need to take each other more seriously, are delighted with the new attention given to Euro-Asian relations by the public policy community. The first Asia-Europe Meeting (ASEM) in Bangkok in March 1996 was only the most dramatic evidence of the new trend. There is clearly a new and major challenge to understand the nature of, and prospects for, the relationships between Europe and Asia. This is the task of the book that you are holding. Despite being ASEM enthusiasts, we are the first to admit the complexity of the subject. Careful readers will have already noted that the previous paragraph talks of relationships in the plural. We are well aware that Europe and Asia are hard to define. In fact, Asians did not have a conception of Asia’ until it was brought to them from the outside. The names of Asia and Europe are said to have derived from the Assyrian words for ‘sunrise, east’ (Asu) and ‘sunset, west’ (Ereb). The notion of Asia was carried by Arab and then European traders to the east. For the purposes of our analysis, there are two concepts of political geography of importance—‘Pacific Asia’ and Asia Pacific’. We are mostly focusing on Pacific Asia—the part of Asia that is close to the waters of the Pacific Ocean. More or less in keeping with the ASEM process, in Pacific Asia we include all countries in Southeast Asia (including Burma) around the rim (including Taiwan) up to and including Japan. Russia, as a nonAsian Asian (and nonAPEC, and non-ASEM member) tends to be left out of our analysis. Pacific Asia is, in the German Foreign Minister Klaus Kinkel’s phrase, ‘where the music plays’, where there is dynamic growth and deep uncertainty about sustained stability and even prosperity. We omit those parts of Asia that are not near the

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Pacific. If Asia is understood to start to the east of a line drawn through and below the Ural mountains, then we should have included South and Central Asia. We did not, although India may well be asked to join ASEM in due course, just as it has joined the ASEAN Regional Forum. The second concept of political geography which we consider important is Asia Pacific’. It includes the Americas, Russia, Australia, New Zealand and the South Pacific—hence, most importantly from the point of view of regional stability, also the United States. ‘Asia Pacific’ may in fact be able to provide some of the answers to the challenges of a rising ‘Pacific Asia’. ‘Europe and Asia Pacific’, the title of this book, implies that Europe, too, may be able to make a contribution. Our definition of Pacific Asia as a focus has a great deal to do with a pragmatic acceptance of the public policy agenda. It is worth reflecting how ASEM’s Asian membership evolved. To make a long story short (but we hope not incorrect), the notion of holding an Asia-Europe summit was derived from the twin motives of Europeans wishing to take a greater part in the Asian success story, and the Asian sense that it would be useful to open a dialogue with Europeans, just as they have with the Americas through APEC. The specific formulation of ASEM came from ASEAN, and specifically Singapore. Following Singapore Prime Minister Goh’s trip to France in 1994, and the subsequent World Economic Forum’s inaugural ‘Europe-East Asia Summit’ in Singapore in 1995, a draft structure for ASEM was devised. ASEAN had recently been successful in establishing the ARF (ASEAN Regional Forum) and saw itself as more capable than any other regional actor of being able to formulate an inter-regional agenda. ASEAN, and Singapore in particular, knew that they would only be credible in a dialogue with Europe if they involved the three countries that had extensive experience in dealing with Europeans and also had major economic and political relations across Eurasia. Hence the inclusion of China, Japan and South Korea to make up the ten countries on the Asian side. Although observers were slow to recognise it at the time, these ten Pacific Asian states were also the components of what had become known as the East Asian Economic Caucus (EAEC), a grouping called for by Malaysia as a way to restrict the influence of the ‘Caucasian’ powers in APEC. The EAEC was opposed by the Americans and Australians and received a cool response from the United States’ closest allies in Pacific Asia (Japan and South Korea). But because of its similarity in membership, in some circles ASEM was thought to have ‘empowered’ the EAEC. Leaving aside the emotive comparison to the EAEC, it remained true that one of the major achievements of ASEM, even as it just began, was that for the first time the states of Pacific Asia tried to function as a coherent group. The irony was enormous, but it was nevertheless true that it was the Europeans of all people who both gave Asians their common name, and gave life to their common purpose as an East Asian caucus. Perhaps the irony is not so enormous if one considers that Europeans have more experience than most in thinking in effective regional terms. The great

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experiment of creating a European Union out of disparate and proud states has sensitised Europeans to the problems and possibilities of building unity out of diversity, and finding the best way to govern such a complex, multi-layered system. But the fact that Europeans had already been thinking about such regionalism for some time made it easier for them to find a format for meeting with Asians. The European representation at ASEM was relatively simple—it was the states of the European Union. If new states should join the Union (e.g. Poland), then they will join ASEM. If some Europeans stay out of the Union (e.g. Switzerland) or withdraw from the Union (perhaps the UK), then they cannot be members of ASEM. For that reason, the quintessential Eurasian state—Russia— is not part of ASEM, even though its population is mainly European and its territory is mainly Asian. Despite this neatness of definition, all is not so straightforward about European representation. Europeans, much more than Asians, are confused about whether they take part in ASEM as a single unit called ‘Europe’, or as fifteen individual sovereign states. The EU, as an entity, is represented at ASEM and seeks to co-ordinate European positions regarding ASEM issues. Asians are generally wary of such an EU-led arrangement, for they know only too well the problems of EU representation in the ARF where the ‘troika’ (past, current and the next Presidents of the EU—a six-monthly rotating position) represent Europe. Because the EU is still sorting out how common its foreign and security policy might be, it still has no effective way to represent itself abroad apart from on trade issues. Because ASEM is concerned with economic, political and security matters, the EU can only be part of the European role in the Asia-Europe dialogue. Just as the ASEM deals with the three issues of economic, political and security affairs, so our analysis ranges broadly over these areas. We thought it vital to begin with a sense of the historical setting of the Asia-Europe relationship. Unlike the transPacific relationship, where there is relatively little history to be considered, Europe and Asia have been dealing with each other for thousands of years. The most intense phase of interaction until recently was the period of European imperialism and colonialism in Pacific Asia. Europe’s intrusion began in the early sixteenth century and the major colonial phase can be said to begin with the first opium war against China from 1839 to 1842 and the opening of Japan in 1853. Imperialism and colonialism left deep scars in Pacific Asia’s landscape and psyche, but overall the impact was multi-faceted, as chapter 1 argues. In this sense it perhaps does make sense to talk of relations among civilisations, although the cultures and traditions of Europe and Pacific Asia are so diverse as to make such analysis of very limited value. But the very fact that there is a civilisational dimension to the relationship makes it all the more necessary to discuss values and habits of thinking. We are very aware that there is a special sense of grudge in the way Asians and Europeans talk about conflicts of values and the persistence of hubris. Much of this tension, creative and otherwise, is derived from the complex history of interaction between Europeans

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and Asians. The fact that a number of European states were, in living memory, colonial powers in Pacific Asia goes some way to explain current neuralgia. It also goes some way to explain differences in the way individual European countries react to Pacific Asia and the different starting points of Asian countries. These matters are discussed in the first section of chapter 1, and then in scattered references throughout many of the contributions. The second section of chapter 1 is concerned with how some of these values are woven into contemporary political systems and debates. We do not shy away from robust debates about human rights and forms of democratic representation. In this lively section there is a clear sense of the diversity of views both within Europe and Asia, as well as between the two areas. What is perhaps most striking is the emergence of increasingly complex identities and the ways in which civil societies are transformed as a result. At a time of rapid economic change in Pacific Asia, it would be odd if societies and political systems did not also undergo rapid and far-reaching change. Chapter 3 is concerned with economic relations between Europe and Asia. Conventional wisdom suggests that this is the main focus of the ASEM process and, as we have already noted, this is the area in which the EU finds it easiest to operate as a coherent group. For the states of Pacific Asia, economics are also seen as the main focus of attention and by and large they would prefer not to deal with political and security matters. It was the Europeans who insisted, with scattered support in Asia, on a wider agenda. A great deal of the economic agenda concerns the actions of individuals and corporations. The role of government is analysed with a view to understanding the best role it can play in enhancing economic relations. Because most economies in ASEM are essentially capitalist, it would be strange if the primary feature of economic activity was state directed. But the role of the state is vital both in terms of how to create the best economic climate for prosperity, and how to ensure that thinking about regionalism is most conducive to an open market economy that complies with international norms. One of the key concerns is in effect whether the much discussed ‘open regionalism’ is an oxymoron, or whether regionalism is in fact a useful way to enhance greater openness in the global market economy. We also return to these subjects in chapter 5 when we discuss the specific policies of states and regions. Chapter 4 takes us into the realm of security relations. In the context of Pacific Asia, most thinking about security is ‘comprehensive’, taking into account a wide variety of factors already discussed in earlier parts of the book. Several of the authors discuss political and economic factors which must underpin any sensible analysis of the prospects for stability in Pacific Asia. Perhaps because of such a broad analysis, this chapter contains the most obvious and robust debates about the prospects for stability and the reasons for possible insecurity. These debates are not just between Europeans and Asians, for there are significant differences of emphasis between Asians and between Europeans. This chapter also includes markedly diverse analysis of the key Sino-American relationship.

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As is evident elsewhere in the book, the American factor looms large in any discussion of Asia-Europe relations, but nowhere more so than in security affairs. As is also evident, the discussion is about security issues in Pacific Asia, but not in Europe. To the extent that this discussion is unbalanced as a result, it is indicative of the need for further work by Asians on European security. Chapter 5 attempts to integrate an analysis of the policies of different parts of Asia and Europe. The focus is on the major sets of relations between Europe and Northeast Asia, China and Southeast Asia. As in the previous chapter, this selection suggests a particular focus on a Eurocentric agenda. What is still needed is work on Asia’s different relations with specific parts of Europe. Such an analysis is implicit in many of the contributions, and could be usefully made more explicit. But even with such limitations, it is clear that there is great diversity in the Euro-Asian dialogue. Regions and countries have very specific priorities, and for that reason alone, it is very hard to generalise about relations between Europe and Asia as coherent units. The conclusion seems to be that ASEM in practice should be seen as twenty-six actors (including the EU), rather than two effective teams. This conclusion, in all its subtleties, is also evident in the detailed discussion in this chapter about the ASEM process itself and the basis for common approaches by Europe and Asia to other international organisations and associations. Given the vastness of the analytical canvas, there could not be a concluding chapter that identifies agreed arguments, let alone suggests policy recommendations. But it is useful to identify mostly shared perceptions about how we should think about Euro-Asian relations. The starting point is that this is a serious and viable relationship deserving of much closer analysis. But the second, and related point is that Euro-Asian relations are best seen as a cluster of relationships that will remain diverse for some time. There are natural, what might be called ASEMetries’ in the Europe-Asia relationship, both within and between regions. Therefore, and in the jargon of European Union affairs, there is a need to think in terms of ‘variable geometry’—the notion that different states will work together on specific issues. There is no need for everyone to co-operate on all issues. ASEM should not be judged on whether it can reach coherent agreement among twenty-six actors on specific policy issues, but rather whether it is conducive to the creation of a series of closer Euro-Asian relations. Another theme that emerges from the analysis is the uncertainty about the most effective level for handling Euro-Asian relations. ASEM is one answer for what might be called (again in EU speak) the ‘subsidiarity’ question—at what level are policy issues best handled. As we have suggested, not all issues between Europeans and Asians are best handled at an ASEM level. Some are best left to a cluster of specific states. Many, especially in the economic sphere, are best left to companies and individuals. Others, most notably those concerned with intellectual exchange, are best left to independent academics, thinkers, and thinktanks. At all these different levels, there will be a range of different issues that can be addressed in the ASEM process. The chapters that follow set out a wide

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range of lessons from the past and ideas for the future. When reading the analysis in the rest of this book it is worth keeping in mind one central question: What can Europeans and Asians best do together that they cannot do either by themselves or with some other partner? This too is an aspect of the subsidiarity question, and is perhaps the most important question that the ASEM participants need to answer. For some possible answers, read on. Before we conclude, it is necessary to offer an explanation of the origins of this project, its format, and how it fits with further work in progress. This project, like the ASEM process itself, is the result of a complex, Euro-Asian effort. It has its origins in the individual efforts of a number of scholars and public policy analysts in Europe and Asia who have long urged the creation of a serious Euro-Asian dialogue. Various networks had been created and although they are far too numerous to name here, many of their key players were brought together in the effort to produce this volume. Perhaps the most sensible date to note is a workshop convened by the European University Institute in Florence in March 1995 which included European and Asian scholars and public policy analysts. The conclusion of the meeting was the need to organise a much more extensive and thorough analysis of Euro-Asian relations. In the growing climate of European awareness of the importance of Pacific Asia, Hanns Maull from the German Society for Foreign Affairs and Gerald Segal from the UK’s Economic and Social Research Council’s newly created Pacific Asia Programme, came together to work with Jusuf Wanandi from the Centre for Strategic and International Studies in Jakarta. Further intellectual and financial support was sought from the Asia Pacific Agenda Project and the Japan Center for International Exchange, both of which are based in Tokyo. Other valuable financial support was provided by the Commission of the European Communities, the Koerber Foundation, the Friedrich-Naumann Foundation, the Sasakawa Peace Foundation, the Nippon Foundation and the Foreign Ministry of Japan. We believe this to be the largest research and conference initiative on Euro-Asian relations ever launched. The project supported research on more than two dozen papers and involved a series of workshops in Europe and Asia leading up to a plenary meeting in the idyllic surrounding of Bali, Indonesia on 28–31 May 1996. The timing of this process thus preceded and followed the first ASEM meeting in Bangkok in March 1996. The first ASEM, with its call for the creation of networks of specialists and think tanks, was the stimulus for those gathered in Indonesia to establish an effective intellectual network to deepen the discussion of the burgeoning EuroAsian relationship. Many of the participants had already been involved in similar networks established to support both the APEC and the ARF processes. Therefore they decided to develop a ‘track two’ network (which brings together specialists and officials acting in their private capacities) for the ASEM process, called the Council for Asia—Europe co-operation (CAEC). The CAEC links six think tanks in Europe (IISS in London (secretariat), DGAP in Bonn, IFRI in Paris, RIIA in London, IAI in Rome, IIS in Stockholm) and six in Asia (JCIE in

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Tokyo (secretariat), CSIS in Jakarta, IIRI in Seoul, IPS in Singapore, IAPS in Beijing and SPAS in Canberra). This book is published under the auspices of the CAEC which is also working on various task forces and research projects relevant to the ASEM process. The work of the CAEC is to be reported to the ASEM officials meeting in their regular forums leading up to ASEM 2 in London in April 1998. Finally, it is necessary to explain the unique structure of this book. This is not an edited book in the normal sense of the phrase. Given the fact that we had enough papers to fill more than two weighty volumes, and had several days of lively discussion among a wider group of specialists and officials, we decided to develop a special style of publication. What follows is heavily edited text connected by substantial prose from the editors. The contributors’ text should not be read as stand-alone papers, even though these excerpts are drawn from something that was a more orthodox conference paper. The editors excised large sections of many papers, in many cases because material overlapped. This style of editing allows the reader to get the best of the papers, and also have a sense of the discussions in the wider meeting. The contributors are only responsible for the material labelled as theirs. Those wishing to refer to text should cite the title of the section. The editors take responsibility for the entire product, and in the spirit of a pragmatic and complex ASEM agenda, commend the novel approach to future editors as a flexible way to handle complex and massive material. Hanns Maull Gerald Segal Jusuf Wanandi

1 The historical setting

Books such as ours should look back to our history not merely to ‘set the context’, but also because there are real ways in which the past informs the present. It is our belief that a full understanding of European relations with Pacific Asia is not possible without a sense of the diversity of the historical experience. History casts long and different shadows over relations between Europe and East Asia. Marco Polo may or may not have been in China, but Vasco da Gama certainly landed in India in 1498. His voyage opened the maritime spice trade between Asia and Europe and thus undermined the traditional trading routes of the silk road. It also marked the first instalment in a long and painful history of ruthless exploitation and wanton killing. Yet, as the following essay by Kwa Chong Guan, a distinguished Singaporean officer and historian shows, the colonial inheritance is much more complex than a simple revulsion against European colonialism. Although his analysis focuses on only part of Southeast Asia, the issues raised clearly have important implications for the rest of the region. KWA CHONG GUAN What remained of the old colonial order at the end of the struggles for independence in the 1950s? How do we in Southeast Asia view the colonial inheritance? The emotional and political response is that little remains of the old colonial order because we consciously, often violently, rejected it in the fight against the re-imposition of colonial rule after World War II and the struggle for independence. But a dispassionate response suggests a more complex answer about Southeast Asian attitudes towards their colonial inheritance. There are three fairly different categories of issues in any consideration of our colonial inheritance. The first two are historiographical issues of defining the intent and extent of the European inheritance and our perceptions of it. Just as the Romans had dilemmas over what they were inheriting from the Greeks,1 so too we have dilemmas deciding what to do with what the Europeans who came to explore and conquer our world were leaving to us as their heritage. We in

2 KWA CHONG GUAN

Southeast Asia do not have the option of ‘rediscovering’ our colonial inheritance. Our colonial past collapsed into a post-colonial present, vastly complicating our attitudes towards that colonial past. Defining that European heritage continues to be an issue. And our perceptions of what the Europeans left us changed with time. How Pangeran (Prince) Dipanagara perceived the Dutch in the early nineteenth century is quite different from how Soekarno perceived them in 1929. The third issue in considering our colonial inheritance is a moral one of deciding whether it is an inheritance we want to receive or consign to ‘the dustbin of history’. It is this third issue that has loomed large in the debate, to the exclusion of the first two historiographical issues. This essay attempts to untangle these three issues. In 1906, Sir Frank Swettenham, late Governor of the Straits Settlements and High Commissioner for the Federated Malay States set out ‘to tell truthfully a story never yet told, though the facts, as far as they concern the Federated States, are no discredit to the British nation’. That story, entitled British Malaya, with the revealing sub-title An account of the origin and progress of British influence in Malaya’2 aims ‘to set out accurately the important facts which led to the intervention of Great Britain in the domestic affairs of the countries now known as the Federated Malay States, and to record exactly the steps by which they have been led to their present position as Dependencies of the British Crown’. As Sir Frank recalled, a series of British Governors, from Sir Andrew Clarke in 1874, intervened in the Malay states to end the anarchy threatening trade. A residential system under which a British Adviser was attached to the courts of the Malay Sultans to advise on ‘the maintenance of peace and law, the initiation of a sound system of taxation, with the consequent development of the resources of the country, and the supervision of the collection of the revenue, so as to ensure the receipt of funds necessary to carry out the principal engagements of the Government, and to pay for the cost of the British officers’, was introduced. In 1895 the four Malay states to which British Advisers were attached were brought into a Federation which Sir Frank had no small hand in bringing about. Sir Frank is clear that the prosperity of the Federated Malay States was due to the efforts of the Chinese, the Europeans, and British officers in the service of the Malay Government. In a passage worth quoting at length, Sir Frank wrote that ‘Chinese enterprise and Chinese industry… supplied the funds with which the country was developed. But without the British officers to secure order and justice, the Chinese would never have entered the country in tens of thousands, without British control of the revenues, there never would have been any money to spend on the construction of road and railways and all the other works of development; and without the exercise of foresight and intelligent direction, the funds available would have been much smaller and might have been spent in vain. European planters and miners only came into the States when the result of Chinese enterprise had already proved the rich resources of the land’. It was the European planters and miners who introduced the technology which raised the productivity of the plantations and mines. But above all else, it was ‘to the

THE HISTORICAL SETTING 3

English servants of the Government that the present prosperity of the Malay states is mainly due’.3 Sir Frank and his generation would have liked to believe that this was the legacy they left behind, that they ‘went into the Malay states for the benefit [of the Malays, “the people of the country”] and we have somehow managed to give them an independence, a happiness and a prosperity which they never knew before’.4 This mission to educate and civilise the native is very much shaped by British perceptions of the ‘natives’. For India, James Mill (1773–1836), the utilitarian philosopher and economist who worked for the East India Company, established the image of the Indian, his culture and history as backward, superstitious, and barbaric; his government as tyrannical and irrational. Mill’s The History of British India, first published in 1817,5 was ‘required reading’ at Haileybury College, which trained the servants of the East India Company. Mill described Hindu religious rituals as ‘grotesque and frivolous ceremonies…an endless succession of observances’. Sir Frank Swettenham’s image of the Malay is not too different. He found the Malay an artistic person who can produce the most beautiful objects, but extremely sensitive to slights and insults (and liable to run amok when provoked), conservative and faithful to his religion, Islam. But above all for Swettenham, the Malay ‘has no stomach for really hard work, either of the brain or the hands’.6 Similar narratives of a mission civilisatrice are present in the French and Dutch texts of their colonial record.7 It is not surprising that most of us in Asia rejected these colonial images of us and their narratives of educating and civilising us. For many of us, the Europeans came not to civilise, but to dominate Asia, as the historian K.M. Panikkar argued in 1953. For Panikkar, the period 1498–1945 ‘presents a singular unity in its fundamental aspects’. These are ‘the dominance of maritime power over the land masses of Asia; the imposition of a commercial economy over communities whose economic life in the past had been based not on international trade, but mainly on agricultural production and internal trade; and thirdly, the domination of the peoples of Europe, who held the mastery of the sea, over the affairs of Asia’.8 Today we recognise that Panikkar may have overstated his case.9 The Portuguese, concerned primarily with trading and preaching, did not perceive a need to establish a territorial presence in Asia. But the seventeenth-century Dutch, British and French traders perceived the need for a territorial presence. On the Coromandel coast, the English, Dutch and French East India Companies established new European ports. The British built Fort St George on the grounds of the old coastal village of Chennapatam in 1641 and expanded that fort into the city of Madras. The Dutch transformed the old Indian port of Palecat and Nagapatnam, which they secured from the Portuguese in 1658 while the French established themselves in Pondicherry in 1672.10 In Southeast Asia, a new VOC (Dutch East India Company) GovernorGeneral, Jan Pieterszoon Coen, recaptured and fortified in 1619 the old city of

4 KWA CHONG GUAN

Jayakerta (where the Dutch had had a trading post since 1611), renamed it Batavia, and made it the capital of an expanding trading state. In 1641, the VOC allied with Johor to capture Melaka from the Portuguese, and in 1667, it tied up with the Bugis to defeat the Makassarese kingdom of Gowa and take over Ujung Pandang, which was renamed ‘Kasteel Rotterdam’.11 In the same year, they intervened in support of the Javanese realm of Mataram when it was threatened by a rebellion in 1678. This transition from trading and preaching to conquest and territorial annexation appears paradoxical.12 For warfare was expensive, disruptive and reduced profits. The English industrialist and Member of Parliament Richard Cobden was led to complain in Parliament in 1853 about the ‘constant wars and constant annexation of territory. In other parts of the world, no Minister of the Crown would take credit for offering to annex territory anywhere…. How is it that this goes on constantly in India to the loss and dilapidation of its finances?… Why do these things happen?’13 The records indicate that the conquest and annexation of territory, whether by the English, Dutch or French East India Companies went against declared policies. More important, none of the East India Companies were structured to administer the territories they occupied. It was a capability they had to extemporaneously develop14 and eventually found horrendously expensive. It was to bankrupt all of them in the nineteenth century; the Nouvelle Compagnie des Indes Orientales, the final in a series of French East India Companies, was liquidated after the Revolution, when the Assembly threw open the India trade in 1790. The VOC was the second to go under in 1800, and the English East India Company came next in 1856, after the great Mutiny. But the British and Dutch Crowns, which took over the Companies, continued to widen and deepen their presence in Asia, and were joined by the French in the late nineteenth century.15 Was conquest and annexation of territories therefore ‘unintentional’, ‘unpremeditated’ and ‘unplanned’, a consequence of circumstances forced upon the Companies?16 It may have been, but for us in Asia, statements of ‘Civilising Missions’ or ‘Manifest Destiny’ or ‘the White Man’s Burden’ were only lofty rationalisations and justifications for interventionist colonial policies to tax, introduce colonial legal systems and education and construct public works to open up the country for a variety of other more mundane reasons—especially to trade and plunder in the region. In a rather bizarre demonstration of affinity towards the French, the brilliant if erratic Tipu Sultan of Mysore declared that he be addressed as ‘Citoyen Tipu’. But the French failed to rally to Tipu Sultan’s support in his struggle against the British, leaving him to be defeated by the new Governor-General Lord Wellesley and his brother Arthur (later the Duke of Wellington) in a campaign that was a dress rehearsal for Waterloo. In deciding to ally with the French17 against the British, Tipu Sultan, who died defending his capital Seringapatam in 1799, was no different from most other Asian potentates or aspirants who perceived the Europeans as a new power to be allied with or challenged.

THE HISTORICAL SETTING 5

But other Asian rulers like Pangeran Dipanagara in central Java perceived the Dutch as ‘heathens’ (kafir) and launched a messianic religious war (prang sabil) against them and their ‘apostate’ (murtad) Javanese supporters in 1825 that the Dutch took five years to defeat. The peasant and religious movement which Pangeran Dipanagara was able to mobilise against the Dutch was created by resentment against Dutch colonial policies. Such peasant unrest, although not primarily, much less exclusively, a response to Western colonialism, increased in the nineteenth century compared to earlier centuries.18 Colonial policies and practice unbalanced the ‘subsistence ethic’ of peasant communities living close to the margins of subsistence helping each other in times of need.19 For Pangeran Dipanagara and his peasant warriors, the Dutch were more an overbearing and intrusive landlord and local power than an imperial and colonial power.20 That perception came only in the twentieth century when a new political elite captured these peasant movements in the nationalist movement it was creating.21 For men’ like Jose Rizal, Bal Gangadhar Tilak, M.K.Gandhi and Soekarno, the colonial inheritance was to be condemned and rejected because it is a heritage of repression and exploitation of the natives. As Gandhi argued, ‘this is civilisation. Formerly, men worked in the open air only as much as they liked. Now thousands of workmen meet together and for the sake of maintenance of factories or mines. Their condition is worse than that of beasts. They are obliged to work, at the risk of their lives, at most dangerous occupations, for the sake of millionaires’.22 Colonialism, Soekarno admitted in his defence at his 1930 trial, ‘has brought civilization and blissfully tranquil humanitarianism’ to Indonesia. But Soekarno went on to argue, that these are illusory images of imperialism exploiting Indonesian wealth. The nationalism movements these men led were to overthrow the yoke of colonialism and its heritage. But these men found breaking our political dependence on London, Paris and Gravenhage easier than breaking the economic dependence. The great estates, mines and oilfields continued (and in some cases, had) to be operated by colonial planters, engineers and managers. Exports of their products still had to go through the old European trading houses. Some among us would argue that the economic dependence link was never broken.23 Diplomatically, we also had to relate to our ex-colonial powers. For despite our efforts in Bandung in 1955 to break out of the diplomatic networks of our former colonial powers and pioneer a new non-aligned way between the communist bloc and Western bloc in the extending Cold War of the 1950s, we eventually had to implicitly align ourselves with the Western bloc of our former colonial powers if we rejected the communist bloc. A more dispassionate analysis must lead to a more ambivalent attitude towards our colonial inheritance. For were not the very intellectual foundations of the nationalist struggle for independence variant interpretations of European ideologies of Marxism and liberalism we learnt in colonial schools and universities? And the moral authority we sought to establish in place of the colonialism we had overthrown drew equally on our European inheritance.

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We set out to base the new institutions we were constructing on earlier, precolonial, traditions. In Burma, U Nu searched the Theravada Buddhist texts for the underpinnings of a new socialist rationalisation of government. In Vietnam, Ho Chih Minh successfully grounded the Indochina Communist Party claim to power on a pre-colonial tradition of the mandate of heaven to rule a new Vietnam. In Indonesia a series of governments struggled with the operationalisation of Soekarno’s World War II formulation of a set of five classical core values, the Pancasila, which cuts across time, space and cultures in Indonesia and unites all Indonesians in one community; while in Malaya a debate about the values expressed by two mythological figures, Hang Tuah and Hang Jebat, underlay a wider and more controversial debate about Malay political loyalties to their Sultans in a new federation. But in all these cases the search and debate for a new moral authority depended upon, and drew on, a body of European scholarship. Indonesian nationalist awareness of the greatness of Majapahit is solidly grounded on Dutch scholarship. It was a nineteenth-century Dutch colonial government philologist, J.L.A.Brandes, who discovered in the courtyard of a temple on Lombok when it was overrun by Dutch forces in 1896 the only copy of a manuscript, the Nagarakertagama, which described the greatness of this east Javanese realm of Majapahit. And it was a generation of Dutch scholars lead by Hendrik Kern and N.J.Krom who transcribed, translated and reconstructed the Nagarakerfagama views of the boundaries of Majapahit, which was the subject of heated debate among Indonesian nationalist leaders discussing their aspirations for the new state they were creating. And they decided that the burdens of Majapahit as a precedent for the new Indonesian state outweighed the disadvantages of basing the new state on the Dutch colonial state.24 In Cambodia, a post-colonial government looked to Angkor for inspiration and moral authority. But Angkor was very much a French colonial creation. Angkor as we know it today was reconstructed by the archaeologists, art historians and epigraphists of the Ecole Française d’Extreme-Orient in the decades before World War II. Their scholarship enabled Prince Sihanouk to glorify a great realm that Cambodians could rally around. And it was again the Ecole Française archaeologists led by Bernard Groslier and others who largely restored, if not reconstructed, Angkor in the 1950s.25 Just as Renaissance Europe was defined by a new cartography founded on the discoveries of Ptolemy and the other great Greek astronomers, so too India, Southeast Asia, China—Asia, as we geographically know it today— was defined by this new European cartography. We rejected the cosmological maps that had served us for the better part of a millennium for the new European maps which provided a new way of thinking about space and our location in it.26 We redefined our concepts of boundaries and built our new nation states upon these boundaries.27 The search for ‘Golden Ages’ deep in our pre-colonial past to challenge colonial images of despotic Asian monarchs ruling feudal kingdoms does not unfortunately solve the crucial question of how we perceive ourselves and our

THE HISTORICAL SETTING 7

past in the nineteenth and twentieth century, when we became colonial dominions. For a ‘Golden Age’ in the thirteenth century raises more acutely the issue of how we came under colonial dominion in the nineteenth century. Had we in the nineteenth century, or perhaps earlier, in the eighteenth century, gone into a cycle of decline and lost the moral power to shape and influence change? Had the power and right to shape our world passed to the European colonial powers?28 This issue of when Asia became a part of European history was first raised in 1934 by the Dutch economic historians Jacob Cornelius van Leur in his doctoral proefschrift. Van Leur’s writings attempted a re-evaluation of Asian history, and especially Asian-European relations. He argued that to start Indonesian history from June 1596, when the first VOC ship arrived at Bantam, was ridiculous. For within the longer time frame of Indonesian history, the Dutch were merely another group of traders competing for a portion of the spice trade of the archipelago. Van Leur charged his predecessors with viewing the history of Indonesia from ‘the deck of the ship, the ramparts of the fortress, the high gallery of the trading house’, which he argued were wrong locations. Van Leur pointed out that ‘both Speelman and the Company were rising in the Indonesian world by means of a hard struggle with the existing powers. Why then,’ van Leur asked, ‘does more light not fall on that world?’29 Two generations of historians have since taken up van Leur’s challenge and debated what it means to view ‘the world of Southeast Asia’ from within. Today we recognise that the Indian Ocean and its emporia and great empires from Quanzhou to Siraf formed one dynamic cycle from the rise of Islam to 1750.30 By the thirteenth century we can clearly distinguish a global trading system, of which Europe was a subsystem.31 Within Southeast Asia, the fourteenth century to the seventeenth century was an Age of Commerce’ which the Portuguese temporarily disrupted for about three decades at the beginning of the sixteenth century. It was only in the mid seventeenth century that a profound economic, political and social crisis set in.32 We may today be finally shaking off the effects of that crisis to enter into a new age of commerce. Our European inheritance assumes different proportions when reviewed within this longer sequence of historical cycles of our trading world and becomes less threatening to our images of ourselves. The European legacy that we inherited is undeniably distinguishable in our language, our ways of thinking, our social structure (the creation of new social groups and classes) and technology. But many other changes attributed to European influence were, in this wider historical context, actually legacies of our Islamic and Chinese inheritance between the fifteenth and seventeenth centuries.33 Much of the innovations in technology attributed to the West—new agricultural crops and techniques, shipbuilding, metallurgy, ceramics—are actually Chinese. And much of the political structures and ideologies that underlie our government and politics today are legacies of our Islamic and Theravada Buddhist inheritance.

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NOTES 1 As pointed out by Alan Wardman, Roman’s Debt to Greece (New York: St Martin’s, 1976). 2 British Malaya is quoted from the ‘new and revised edition’ of 1929, published by John Lane, The Bodley Head, publishers of Swettenham’s other books, pp. vii, 216. H.S.Barlow describes Swettenham as an historian and also the background and reception of British Malaya in his Swettenham (Kuala Lumpur Souedene Sdn. Bhd., 1995), pp. 691–715. 3 Ibid., pp. 301f. 4 Ibid., p 305. 5 See Eric Stokes, The English Utilitarians and India (Oxford: Clarendon Press, 1959), pp. 47–80, for further comments on Mill’s History of British India. The fifth edition of this history was edited by the leading Sanskrit scholar Horace Hayman Wilson (1789–1860) and published in 1858 (reprinted in 1968 with an introduction by John K.Galbraith by Chelsea House Publ., New York and again in 1975 by University of Chicago Press). 6 Quoted from British Malaya, op. cit., p. 137 and elaborated in his The Real Malay: Pen pictures (London: John Lane, 1900). In so describing not only the Malays, but other island Southeast Asian ethnic groups, Sir Frank and his fellow colonial officers established an image and initiated a post-colonial critique of its veracity, especially by Syed Hussein Alatas, The Myth of the Lazy Native: A study of the image of the Malays, Filipinos and Javanese from the 16th to the 20th century and its function in the ideology of colonial capitalism (London: F.Cass, 1977). 7 The earlier Portuguese and Spanish texts emphasised saving souls. 8 Panikkar, Asia and Western Dominance: A survey of the Vasco da Gama epoch of Asian history 1498–1945 (London: Allen & Unwin, 1959) (first publ. 1953) reaffirms and expands upon arguments made in his Malabar and the Portuguese, published in 1927. 9 See G.V.Scammell, The World Encompassed: The first European empires c.800– 1650 (London: Methuen, 1986) who relates the classic cycle of European expansion to earlier ventures and explorations. 10 S.Arasaratnam, Merchants, Companies and Commerce on the Coromandel Coast 1650–1740 (New Delhi: Oxford University Press, 1986). 11 The Dutch preference for fortified factorijen or ‘factories’—in effect a ‘fort’—in contrast to the earlier unfortified Portuguese feitonas, first pointed out by W.H. Moreland in 1923 (‘Dutch sources for Indian history’, in Journal of Indian History, Vol. II, No. 2, p. 223), may be traced to a growing insecurity about operating in unfamiliar and hostile environments. 12 The roots of most explanations, including Lenin’s Imperialism, the Highest Stage of Capitalism, can be traced to J.A.Hobson’s seminal Imperialism: A study (London: Unwin Hyman, 1988 repr.) On this paradigm, the Europeans were reluctant imperialists. 13 John Bright and J.E.T.Rogers (eds), Speeches on Questions of Public Policy by Richard Cobden, M.P. (London: Macmillan, 1878), pp. 500–1. 14 See B.B.Misra, The Central Administration of the East India Company 1773–1834 (Manchester University Press, 1959).

THE HISTORICAL SETTING 9

15 D.K.Fieldhouse, The Colonial Empires: A comparative survey from the eighteenth century (London: Weidenfeld & Nicolson, 1965) traces this second expansion of Europe from 1815 onwards, and see C.A.Bayly, Imperial Meridian: The British empire and the world 1780–1830 (London: Longman, 1989) for an exploration of the links between the first European empires established from the fifteenth century and those of the modern period. 16 As argued by, e.g., J.R.Seeled, The Expansion of England: Two courses of lectures (London: Macmillan, 1902). 17 Tipu Sultan’s reasons are laid out in his secret correspondence with the French which Kabir Kausar has edited, Secret Correspondence of Tipu Sultan (New Delhi: Light & Life Publ., 1980), pp. 161ff. 18 See e.g. M.Adas, ‘From Avoidance to Confrontation: Peasant protest in precolonial and colonial Southeast Asia,’ in Comparative Studies in Sociology & History, Vol. XXIII, No. 2 (1981), pp. 217–47 and Sartono Kartodirdjo, Protest Movements in Rural Java (Kuala Lumpur: Oxford University Press, 1973); Ngo Vinh Long, Before the Revolution; The Vietnamese peasant under the French (Cambridge: MIT Press, 1973); and D.M.Nonini, British Colonial Rule and the Resistance of the Malay Peasantry, 1900–1957, Monogr. ser. 38 (New Haven, Conn.: Yale University SE Asia Studies, 1992). 19 As James C.Scott has argued in his The Moral Economy of the Peasant: Rebellion and subsistence in Southeast Asia (New Haven: Yale University Press, 1976); but note also the counter-argument of Samuel Popkin in his The Rational Peasant: The political economy of rural society in Vietnam (Berkeley: University California Press, 1979). 20 Indeed, Pangeran Dipanagara relates in his account of the war, the Babad Dipanagara, written in exile, that he was disillusioned with the court, its failure to enforce the law and administer justice and so allowed arbitrariness to prevail; while the Dutch were perceived to be ‘like madmen, heralded (by a drum) in everything they do.’ Peter B.R.Carey, Babad Diganagara: An account of the outbreak of the Java War (1825–30); The Surakarta court version of the Babad Dipanagara with translations into English and Indonesian Malay, Monogr. 9 (Kuala Lumpur: Malaysian Branch of the Royal Asiatic Society, 1981), pp. 5, 11–13. 21 Harry Benda, ‘Peasant movements in colonial Southeast Asia,’ in Asian Studies (1965), No. 3, pp. 420–34, distinguishes between peasant and nationalist movements. 22 Gandhi wrote this in his 1909 essay ‘Hind swaraj’ (‘Free India’) quoted from Raghavan Iyer (ed.), The Moral and Political Writings of Mahatma Gandhi, Vol. I: Civilization, Politics and Religion (New Delhi: Oxford Univ Press, 1986), p.214. 23 See the essays in Wolfgang J.Mommsen and J.Osterhammel (eds), Imperialism and After: Continuities and discontinuities (London: Allen & Unwin/German Historical Institute 1986). 24 C.G.Kwa, ‘The historical roots of Indonesian irredentism,’ in Asian Studies, Vol. VIII, No. 1 (1970), pp. 38–52. 25 Louis Malleret, Le cinquantenaire de l’Ecole Française d’Extreme-Orient (Hanoi: l’Ecole Française, 1954), celebrates the Ecole Française’s achievements. More recently, Bruno Dagens has narrated the discovery in his Angkor, Heart of an Asian Empire, transl. R.Sharman (London: Thames & Hudson, 1995).

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26 J.E.Schwarkberg, ‘South Asian Cartography’, in J.B.Harley and D. Woodward (eds), The History of Cartography, vol. 2, book 1, Cartography in the Traditional Islamic and South Asian Societies (Chicago: University Press, 1992), p. 507 and vol. 2, book 2, Cartography in the Traditional East and Southeast Asian Societies (1994), pp. 844f for an assessment of the impact of European cartography on Asian cartography from the seventeenth century onwards. C.G. Kwa has attempted to summarise the significance of Ptolemy for Arab and European mapping of Asia in a keynote address ‘Imago Mundi: Cosmography and Cartography’, to the SARBICA Seminar on the Management of Architectural and Cartographic Records, Singapore, 6–8 Nov 1991 and reprinted in the SPAFA Journal, Vol. 2, No. 1 (1992), pp. 12–16. 27 As Thongchai Winichakul has brilliantly demonstrated in his Siam Mapped: A history of the geo-body of a nation (Honolulu: University Hawaii Press, 1994). 28 An issue that deeply preoccupied the court historians of eighteenth—and nineteenth-century Asia, see for Southeast Asia the essays in David K.Wyatt and A.Woodside (eds), Moral Order and the Question of Change: Essays on Southeast Asian thought, Monogr. ser. 24 (New Haven: Yale University Southeast Asia Studies, 1982) and Anthony Reid and D.Marr (eds), Perceptions of the Past in Southeast Asia, Asian Studies Association of Australia, SE Asia publ. ser. 4 (Singapore: Heinemann, 1979). 29 Van Leur’s attacks on Dutch colonial historiography of course incurred the wrath of Dutch historians and he was therefore fortunate in having W.F. Wertheim, the bête noire of the conservative Dutch academic community, to defend him after he died, and arrange for a translation of his writings under the title Indonesian Trade and Society, Essays in Asian social and economic history, selected studies on Indonesia by Dutch scholars I (Hague/Bandung: van Hoeve, 1955). 30 Defined by K.N.Chaudhuri, Trade and Civilisation in the Indian Ocean, An economic history from the rise of Islam to 1750 (Cambridge University Press, 1985) and Asia before Europe, Economy and civilisation of the Indian Ocean from the rise of Islam to 1750 (Cambridge University Press, 1990) which successfully applies an annales framework to Asia. Also D.Lombard and Jean Aubin (eds), Marchands et hommes d’affaires asiatiques dans l’Ocean Indien et la Mer de Chine, 13e-20e siècles (Paris: Edn de l’Ecole des Hautes Etudes en Sciences Sociales, 1988). 31 Janet A.Abu-Lughod, Before European Hegemony, The world system A.D. 1250 – 1350 (New York: Oxford University Press 1989). 32 Anthony Reid, Southeast Asia in the Age of Commerce 1450–1680, Vol.l, The Lands Below the Winds; Vol 2, Expansion and Crisis (New Haven: Yale University Press 1988 and 1993). 33 As Denys Lombard has argued in a brilliant, if dense, text Le carrefour javanais: Essai d’histoire globale (Paris: Edn de l’Ecole des Hautes Etudes en Sciences Sociales, 1990), in three volumes, which shows in vol. 1, Les limites de l’occidentalisation, that the West has not impacted as greatly on Indonesia as is widely perceived; and in vol. 2 Les reseaux asiatiques reassesses and compares the impact of the earlier Indian, Arab and Chinese trading communities; while in vol. 3, L’heritages royaumes concentriques is distilled the ‘soul’ of ‘Javanism’, the nebula of characteristics which defines the Javanese.

2 The political setting

With the end of the Cold War and overriding concerns for military security receding, new issues moved up the international agenda, reshaping the range and scope of co-operation and conflict between nations. Among the most fundamental, and contentious, was the question of how the political and social systems in Asian states were adapting to modernity, and in particular how they coped with increasing demands for a stable civil society. Suchit Bunbongkarn and Michele Schmiegelow assess the experience of Pacific Asia with these issues, and especially the prospects for establishing various forms of more democratic government. While they both give democracy a bright future in the region, they do so for somewhat different reasons. Among the more contentious issues which are embedded in these discussions about civil society and democracy are those centred on values, culture and civilisation. Some observers, such as Samuel Huntington, even choose to present civilisational conflicts as the most important and dangerous fault-line in future international relations. But are the differences between Asia and Europe on issues such as democracy and human rights really that deep? And what significance do the differences have for relations between Asia and Europe? Carolina Hernandez and Rüdiger Machetzki look into the debate about Western versus Asian values —and find there may be much less controversy here than meets the eye. PLURALISM AND DEMOCRACY Europe’s penetration of Asia during the age of European world-wide expansion and colonialism profoundly and irrevocably altered the evolution of political systems in Pacific Asia. As Suchit Bunbongkarn argues in the following survey of political developments in the region after World War II, Europe casts a large shadow in at least two ways. First, colonial policies helped to shape political arrangements after the achievement of political independence: European-style parliamentary

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democracies were introduced, with modifications to be sure, in several of those countries. Secondly, and perhaps more importantly, Europe also implanted notions of the nation state and the ideologies of nationalism, liberalism and socialism and thus implicitly also shaped the political agenda for the newly independent states of Pacific Asia, which came to be dominated by problems of nation-building, political legitimacy, political participation and institutionalisation, and issues of social equity and distribution. Against this background, the author surveys trends in political change in Pacific Asia from 1945 to the present. SUCHIT BUNBONGKARN After the defeat of Japan in World War II, all Western colonial powers except the United States were severely weakened by the war and their influence was drasticaily reduced although they had won the war. The Japanese occupation in Southeast Asia had given rise to nationalist movements in the region, particularly in Indonesia, Vietnam and Burma, and the Japanese military authorities gave them an opportunity for the first time to gain experience in the exercise of power, however limited by Japanese rule. Perhaps the most interesting case in that respect was that of Indonesia, where the Japanese in principle approved the formation of an independent government through Sukarno and Mohammed Hatta.1 In Burma, the nationalist movement during the war was headed by Aung San.2 The Japanese occupation also enhanced the strength of the nationalist movement in Vietnam, the Viet Minh led by Ho Chi Minh. After the war, those movements demanded immediate termination of the colonial rule, but the colonial powers tried to resume their old positions of authority after the Japanese withdrawal. In August 1945, Sukarno and Hatta declared the independence of Indonesia and a republican government was set up. The Dutch ignored the declaration of independence, and fighting between Dutch forces and the Indonesian army broke out in 1945 and continued up to 1949. Although the Indonesian army was badly organised and equipped, the Dutch could not win the war. International pressure by the United Nations finally brought the Dutch to endorse the independence of Indonesia in 1949.3 In Vietnam, fighting broke out between the communist Viet Minh forces of Ho Chi Minh and the French army when Ho Chi Minh declared independence in 1945. Unlike in the Indonesian case, the dominant national liberation force was communist. The Viet Minh was in fact the united front of the Vietnamese Communist Party created to fight against both the Japanese and the French during World War II. To this end, a force of guerrilla fighters was created under the leadership of Vo Nguyen Giap. From 1944 to the outbreak of fighting against the French in 1946, the Vietnamese People’s Army (VPA) had grown in size and complexity. It was able to resist the French for several years and finally went on the offensive, attacking and defeating the French forces at their stronghold in

THE POLITICAL SETTING 13

Dien Bien Phu in 1954. This led to France’s withdrawal from Indochina and the partition of Vietnam into South and North Vietnam.4 In Burma, the Japanese occupation gave rise to a group of nationalists known as the 30 Comrades. This group received military training from the Japanese before their invasion of Burma and became the forerunner of the Burmese Independence Army (BIA). When Japan invaded in 1942, the BIA (which was later regrouped into the Burma Defence Army (BDA)) at first co-operated with Japan, but they soon realised the Japanese promise for independence was hollow. BDA troops began to defect, and in 1945 troops under Aung San rebelled against the Japanese. Following the defeat of the Japanese, the army and the Anti-Fascist People’s Freedom League Party (AFPFL) demanded independence from the British, and London agreed to give independence to Burma in 1948 without fighting. A parliamentary form of government was created and led by Un, the leader of the AFPFL, who had become the most important national leader after the assassination of Aung San. But communist forces and minorities rebelled against the government. Although from 1952 onward, the fighting was confined to remote areas, it revealed the failure of the government to accommodate both the Communist Party and ethnic minority tribes.5 A smooth transfer of power occurred in the Philippines, Malaysia and Singapore. In the Philippines, the enactment of a constitution in 1935 by the American colonial rulers had provided for a presidential form of government, a bicameral legislature, a system of local government and a judicial system, all of which were put in place upon the defeat of Japan. In Malaysia and Singapore, the British were willing to work with democratic nationalist forces in preparation for independence. Malaya gained independence in 1957 after smooth co-operation between the British and the UMNO (United Malay National Organisation), a nationalist-created political organisation led by Tunku Abdul Rahman which has become the linchpin of all government alliances since independence.6 Singapore’s case was more complicated. The People’s Action Party (PAP) which had emerged as the dominant political force after the war, secured selfgovernment status in 1959. Singapore then joined Malaysia in 1963 but was forced to secede and become a separate sovereign state in 1965.7 Despite their different experiences in their struggle for independence, the former colonies in the Pacific Asia region were faced with the same threat during the period of their independence struggles and the post-colonial periods, the threat of communism. The communist movement had gained strength during World War II by exploiting anti-colonial sentiment. The Huk movement in the Philippines, the Vietnamese Communist Party Viet Minh, the Malayan Communist Party which operated both in Malaya and Singapore before the war, the Communist Party of Indonesia (PKI), the Burma Communist Party and the Pathet Lao Movement in Laos were all created before World War II and tried to capture nationalist sentiments during the war. But only the Viet Minh was successful in fighting for independence and gaining control over at least the northern part of the country. The other communist movements had to resort to insurgency. The

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Huks in the Philippines were suppressed in the 1950s. The communist insurgency in Malaysia was a serious threat, which, according to some, ended only in 1962. Communists were also a serious threat in the non-colonial countries, namely Thailand, China and Korea. In China, fighting between the communists and the KMT resumed at the end of World War II, and after five years of protracted warfare, the Chinese Communist Party (CCP) was able to secure control over the mainland leaving only Taiwan under the KMT’s rule. In Korea, which had been unable to resist Japanese encroachment into the Korean peninsula and was put under Japanese rule from 1910 to 1945, nationalist elements had been ruthlessly suppressed by the Japanese authorities. At the end of World War II, two occupation zones were set up: the Soviets in the North and the Americans in the South. It was agreed that elections would be held to unify the country. However, the elections never happened and rival governments were established in North and South Korea. Pyongyang invaded the South in 1950 in an effort to unify Korea. The war ended in 1953, with the pre-war status quo but much deepened mutual distrust. In Thailand, the communist movement lacked mass support at the end of World War II but it grew in strength through time. The Thai ruling elites in the 1950s were more concerned with the threat from outside and failed to realise until a decade later that the growth of communist insurgency in the country was largely due to domestic conditions. For the Asia Pacific countries, World War II was a historical watershed. It ended European colonial rule and weakened the European influence in the region. It also ushered in a new period in which new and old nations in Pacific Asia alike faced the same problems: ensuring national survival, nation-building, political institutionalisation and economic development now became the dominant issues. Western democratic models were adopted in the immediate post-war period by a number of countries in Pacific Asia, but political systems combined European patterns with innovative indigenous elements, such as the state ideology of Pancasila and the principle of Guided Democracy in Indonesia or the army’s very active role in politics and society in Burma. Those regimes failed, however, as the author argues, for a number of reasons. The political systems were unable to achieve national integration and political stability, political institutionalisation was insufficient and the leadership was often weak and corrupt. Out of the failure of the first wave of regimes after independence, three types of political systems emerged to deal with the problem of nation disintegration, political instability and economic backwardness. They were (1) controlled democratic regimes that emphasised one dominant party and limited political freedom, (2) military rule that varied from one country to another but always saw the officer corps as the decisive political force in the political system, and (3) Marxist-Leninist systems. This stage of development reflected the discarding by

THE POLITICAL SETTING 15

political elites in many states of Western-style liberal democracy in favour of indigenous initiatives and ideas to cope more effectively with the challenges of nation-building. Singapore and Malaysia are in the first category as parliamentary democracies with limited freedom. Like Burma and Indonesia, Malaysia is a multi-ethnic society, and there was little sense of nationhood before independence. The controlled democratic system has been effective in dealing with racial issues, nation-building and economic development, except for a very brief period between 1969 and 1971 when racial riots broke out. There are a number of explanations for the success of this type of democracy in Malaysia. One is the smooth transfer of power from British rule, another is the accommodative policy of Tunku Abdul Rahman, the first prime minister, which helped to prevent possible racial tension. Perhaps the most important factor, however, was the strength of the UMNO, an alliance between the Malaysian Chinese Association (MCA) and the Malaysian Indian Congress (MIC).8 After the racial riots in 1969, democratic government was restored. Tunku Abdul Rahman resigned in 1970; he was succeeded by Tun Abdul Razak who wanted to see democracy continue to work, but with modifications. The New Economic Policy (NEP) was adopted to eradicate poverty and to create additional opportunities for the Malay to benefit from economic growth. The Barisan Nasional (National Front) led by UMNO was set up to bring other political parties into the government side to ensure political stability.9 It is true that the country has been under the control of a small and select elitist group, with power concentrated in the hands of a single person, the prime minister. But the authority is based on the party system. UMNO has received solid mass support particularly in rural areas, and as struggles for UMNO leadership have been struggles for premiership, there has been real competition for this position. Prime Minister Mahathir came to power in this way, and has been able to maintain his premiership by maintaining his grip on the party leadership. When it was forced to separate from Malaysia in 1965, Singapore’s major challenge was how to survive and become a viable and strong independent island state. Its astonishing success is largely attributable to the leadership of Lee Kuan Yew and his controlled democracy. His People’s Action Party (PAP) has been the key political institution that ensured political stability and mass support. The PAP has dominated the elections and parliament since the 1968 general elections, in which the party won all seats. Economic development was another urgent task for the nation’s survival, and Lee’s economic development strategy which concentrated on export promotion was strikingly successful. Within only two decades after the separation, Singapore became the most economically advanced in the region. Concern with survival encouraged a certain de-politicisation of politics. As a result, the ‘administrative state’ allowed technocrats and civil servants to perform increasingly important functions and enjoy a high status.10

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But political control remained firmly in the hands of Lee Kuan Yew and his colleagues in the PAP South Korea, Thailand, South Vietnam (before it was defeated by the North), Cambodia, Burma and Indonesia all fell under the control of the military; in Burma and Indonesia, the military still dominates the political scene. None of these countries ever had a political leadership committed to the course of democracy, nor were they able to develop political parties and representative institutions that could resist the military. The patterns of military rule varied, but at least in three countries, namely South Korea, Indonesia and Burma, the military attempted to get their countries out of their political crises by emphasising economic development. The case of South Korea has often been cited as an example of military rule that produced economic change. Park Chung Hee came to power by a coup that toppled the democratic but feeble Chang Myon government in 1961 and introduced a semi-authoritarian rule under his leadership. From 1973 to his death in 1979, President Park Chung Hee shifted to a highly authoritarian mode of rule known as the Yushin system. President Chun Doo Hwan, who succeeded him in 1980 after having smashed another brief democratic interlude, continued to impose authoritarian rule backed by the military until 1987.11 Park’s and Chun’s repressive regimes were often in conflict with the economic transformation which occurred during this period. But critics point out that the transformation was pioneered by a limited member of industrial companies which controlled most heavy industries, including shipbuilding, electrical appliances manufacture, automobile production and construction. Wealth and the control of the economy was in the hands of very few families of industrialists who had developed close connections with political leaders and exchanged favours with them. After the coups in 1962 and 1965, the Burmese and Indonesian militaries set up authoritarian rule with policies and national ideologies which they hoped would create national integration and political stability. Like South Korea, Westernstyle democracy was rejected as inappropriate and ineffective and the military claimed that military rule would fit the conditions of their countries best. In Indonesia, Guided Democracy was replaced by the New Order, under which the army emerged as the dominant political force.12 Its dual function (‘dwi fungsi’) was seen as ensuring national defence as well as internal security, which has given the military a wide range of domestic roles, including police functions, the organisation of political participation, local administration, and the management of state enterprises. A new political party known as Golkar was created to serve as the military’s arm in the legislature. It has brought together people from the main parts of the economy to work under the New Order and to run for elections. The doctrine of ‘National Resilience’ was developed to serve as the national ideology. It emphasises ‘the ability and the tenacity of a country that guarantees the continuity of its progress toward prosperity’.13 The New Order was established to give legitimacy to the military-dominated government, to bring

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about political stability and to ensure rapid economic development. It has achieved high rates of growth which transformed the modern sector of the economy. But corruption has been widespread among officers and government officials through their involvement in political and economic activities. In Burma, after Ne Win took power, the Burmese Way to Socialism was adopted as an ideology for national integration and development. The Burmese Socialist Programme Party was established as a mechanism for military rule. Its programme emphasised the emancipation of the people, irrespective of race and religion, ‘from all social evils, and from anxieties over food, clothing and shelter’.14 Military rule under Ne Win was able to produce relative political stability, although secessionist movements and minority rebellions remained active. Economically, however, Burma became the most backward country in Southeast Asia. The case of Thailand is different. Thailand never experienced democratic rule, except for very brief periods at the end of World War II and between 1975 and 1976. The military dominated politics from 1932 to the late 1980s, when a parliamentary government emerged. The absence of strong participatory political institutions and a lack of legitimacy on the part of civilian regimes enabled the military to seize power and establish authoritarian regimes without difficulty. During the period between 1932 and 1982, Thailand has had thirteen constitutions, fourteen general elections and fourteen coups. Out of all the successful coups, the one in 1932 was aimed at overthrowing the absolute monarchy; four other coups in 1947, 1957, 1971 and 1976 were intended to overthrow civilian governments and elected national assemblies; and another four were organised to consolidate the power of the coup groups themselves.15 The political process during the period was characterised by conflicts among the military leaders on the one hand and between the military and civilian groups on the other. The Thai military failed, however, to develop political institutions and mechanisms to serve as a basis for democratisation. Political parties were set up by military leaders, namely the Seri Managasila Party by Phibun (1954–1958) and the United Thai People’s Party by Thanom and Prapas (1968–1971), but these were intended to rally support for them in the National Assemblies. The parties largely consisted of shrewd, unprincipled and corrupt politicians who would do anything just to keep power. In the Philippines, democratic procedures and practice were not replaced by a military coup but eroded from within. The accumulation of power in the hands of the ruling few led to a civilian dictatorial regime. More importantly, it was the people and civil society organisations, not the military, that toppled Ferdinand Marcos. He had come to power in democratic elections in 1965 but turned to dictatorial rule to keep himself and his clique in power. Protests and disaffection against his regime in 1972 led to him declaring Martial Law and overthrowing the 1935 constitution. He tried to justify his dictatorial rule by pointing to the need to eliminate the oligarchic characteristics of Philippine politics, rampant corruption

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and political instability, and argued that political and economic reforms were needed if the country was to attain higher levels of development.16 But President Marcos failed to deliver what he had promised to the people. Land reform never occurred, the crime rate continued to rise, the economy declined and oligarchic rule continued. When his rival, Senator Aquino, was assassinated in 1983, this triggered a series of large-scale protests, which Marcos countered first with repression. He then called a snap election in 1986 to restore his legitimacy. The election, however, turned out to be a disaster for him. Civic groups formed an organisation called NAMFREL to monitor the election. The election results as shown by NAMFREL were different from those presented by the government’s election commission which favoured Marcos. Mass protests occurred again, and this time the army under Defence Secretary Enrile and General Fidel Ramos turned against Marcos. Marcos decided to step down when the US government intervened, offering him and his wife exile in the United States.17 China, Vietnam and North Korea have selected the Marxist-Leninist path to achieve their political and economic objectives. Their principles of ideology and political organisations, such as the dictatorship of a single party, the party’s primacy over the state, its strictly hierarchical structure, and the principle of democratic centralism, were basically the product of European intellectuals. But there were also indigenous elements. Mao’s people’s democracy, Vo Nguyen Giap’s guerrilla warfare strategy, and Kim II Sung’s Juche ideology are good examples. The ‘Third Wave of Democratisation’ in Pacific Asia The ‘third wave of democratisation’ had great impact on the Pacific Asia region. Democracies were emerging or re-emerging in the Philippines, in South Korea, Thailand, Taiwan and Cambodia. Pro-democracy uprisings also occurred in China and Burma, and there also have been increasing demands for democratisation in Indonesia. The only socialist country that has remained insensitive to the outside world is North Korea. In Thailand, South Korea and Taiwan, economic development has given strength to civil society and led to demands for more openness, political liberalisation and democratisation. Democratisation in South Korea materialised when Roh Tae Woo was elected President. Around that time, the middle class had become large and strong enough to press for democratic government. The national desire to be recognised as a modern democratic state which is important in competing with North Korea for world-wide acceptance was another driving force behind democratisation. For Thailand, economic growth in the late 1980s and early 1990s had also led to the expansion of the urban middle classes, and the semi-democratic government of Prime Minister Prem Tinasulanond (1980– 1988) had responded by facilitating the growth of political parties. This caused the decline of the military’s political influence, and the military had to accept

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democratic procedures and practices. Although the military tried to make a comeback in 1991, it had to withdraw from politics within a year because of the fierce resistance of the urban middle class and civil society organisations. Democratisation in the Philippines occurred without economic growth. There, the strength of civil society and democratic traditions helped maintain democratic rule throughout President Aquino’s period in power, although tensions and political instability were still quite visible. Thus, numerous coup attempts were made against President Aquino, and the rise of the communist New People’s Army also caused trouble. However, the smooth political succession from President Aquino to Fidel Ramos showed that democratic procedures and practices were increasingly taking root. Money politics is very much alive in Thailand, the Philippines, Taiwan and South Korea. It has been part of socio-political change, and reflects the rise of consumerism and materialism. In Korea and the Philippines, the business elites have gained access to government decision-making. Vote-buying and political corruption is becoming a part of Thai democratisation. In South Korea, however, President Kim Young Sam has made a serious effort to get rid of corruption by prosecuting two former Presidents, Roh Tae Woo and Chun Doo Hwan, for soliciting and accepting bribes on a massive scale. In all four countries, democratisation has contributed to the rise of civic groups and independent mass media. The Philippines has the freest press in Southeast Asia; freedom of expression has long been part of Philippine political culture despite its temporary suppression during the Marcos period. But the problems of businesses’ involvement in politics remain unresolved, as patronclient relationships and the culture of poverty, which makes the poor subservient to the rich and the powerful, are still noticeable.18 In Thailand, conflicts among various political and civic groups have been relatively moderate. This can be explained in part by the role of the monarchy and of Thai political culture which reflects the people’s respect and belief in this institution. The role of the King in resolving serious crises by using his charisma and moral authority, and by emphasising national unity and reconciliation, works against political extremism. Singapore’s controlled democracy endures due to the brilliant leadership of Lee Kuan Yew—but also because the government has produced national integration, political stability and economic prosperity. The system has turned Singapore into the most efficient society in Pacific Asia. Elitism, depoliticisation of politics, incorruptible government and administration, and a meritocracy in which the best and the brightest will climb to the top on a fast track are the hallmarks of this model. Civil liberties and freedom of expression, however, are limited by comparison with the other countries discussed so far. Malaysia is more flexible than Singapore in dealing with dissidents and freedom of expression. The opposition actively criticises the government, and the press often presents views which differ from that of the government. Under the leadership of Mahathir, Malaysia has been trying to achieve the status of a

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technologically modern society while preserving its own moral and religious values. Maintaining ethnic harmony is considered more important than Westernstyle liberal democracy. The pace of democratisation in Indonesia is perhaps the slowest in ASEAN except for Brunei and Vietnam, but there are signs that reflect widespread disaffection with the status quo and a desire for change. Economic development has produced a fairly large urban middle class which has turned increasingly critical of the government. Violent unrest is becoming more common. From July 1995 to January 1996, there were at least nine violent incidents in Sumatra, East and West Java and West Timor.19 For now, power remains concentrated in the hands of a small ruling elite who prefer gradual change toward democracy. Whether this can satisfy the rising middle classes who want more political liberalisation remains to be seen. As Indonesian society is becoming more complex, people’s attitudes may no longer remain compatible with the New Order. Suharto and his military colleagues will face increasing difficulties maintaining their authoritarian rule. Burma is one of the least advanced countries in terms of democratisation. In Burma, the State Law and Order Council (SLORC) led by military officers came to power in 1990 after rejecting the outcome of general elections that favoured Aung San Suu Kyi’s party. So far, SLORC has kept things under control, but the pressure from outside is intense. In response, the regime has released Aung San Suu Kyi and begun work on a new constitution. It has also launched economic liberalisation and invites foreign investment. Although some openness in the economic sphere has been achieved, there is no light at the end of the tunnel regarding prospects for democratisation. Marxist-Leninist systems in China and Vietnam are facing the dilemma of how to strike a balance between the openness necessary for economic growth and the preservation of their regimes. Economic liberalisation is necessary to attract foreign capital and to be competitive in world markets, but liberalisation in the view of the leaders must not create instability and changes in the political systems. The student uprising on Tiananmen Square in May 1989 was a warning sign to the Chinese leaders that increasing interactions with the outside world in the areas of trade, social relations and security in conjunction with economic growth and liberalisation might stimulate demands for political reforms that would probably undermine the political monopoly of the CCP. For now, the party is still able to keep things under control, but political uncertainty remains high. In Vietnam, too, economic liberalisation (doi moi) has produced an increasing number of entrepreneurs who have gained a lot from those doi moi policies. They are increasingly disaffected with the CPV and demand more openness in the political sphere. A new entrepreneurial class with new interests, and a new culture that is inconsistent with Marxism-Leninism is now emerging in both China and Vietnam. Western observers believe that social and economic progress will inevitably undermine the Leninist technique of control in China and

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Vietnam, without, however, necessarily producing a new system to replace it. As a result, political chaos could occur. North Korea continues to be the least flexible among the three remaining Leninist states in Asia in adjusting itself to the changing environment. There is some evidence, however, that the regime may have begun to realise the need to live on good terms with others. For example, it agreed to freeze its nuclear programme. But the future of North Korean politics is difficult to predict. It may be either a violent coup at the top or a gradual erosion of the present political elite’s monopoly of power. A trend of political liberalisation and democratisation is evident throughout Pacific Asia. For fifty years after the end of World War II, the states in the region, both old and new, colonised and non colonised, have been struggling for their survival, their national integration, internal stability and economic prosperity. They have experimented with a variety of methods and systems, ranging from Marxism-Leninism and controlled democracy to military rule. As in Europe, many countries have gone through turbulence, internal wars, corrupt regimes and outbreaks of violence. Western scholars like Samuel Huntington, Clark Neher and Ross Marlay have studied democratisation in Pacific Asia by classifying the countries in the region into democratic, semi-democratic, semi-authoritarian and authoritarian.20 Their criteria to distinguish different levels of democratisation are Western and include two- or multiparty systems, meaningful citizens’ participation in politics, the ability to choose government leaders, the recognition of civil and political liberties and political competition.21 Western criticisms of the restriction of political freedom in some Asian countries have produced strong reactions from Asian leaders, notably from the Singaporean and Malaysian prime ministers. They claim that their democracies are in harmony with indigenous values and more effective in preventing social disintegration and disruption of the development process. Thus, one of the major critics of American democracy, Kishore Mahbubani, argues that East Asian economic prosperity, ‘contrary to American belief, results not just from free market arrangements but also from the right social and political choices. Although many East Asian societies have assumed some of the trappings of Western society, they have also kept major social and cultural elements intact, elements that may explain their growing global competitiveness’.22 One of these social arrangements is the family.23 Many Asian countries have also been accused by the West of human rights violations. China and Burma were severely condemned over the suppression of dissidents, while Singapore’s Lee Kuan Yew is criticised for restricting the circulation of the foreign press. Reactions of Asian leaders to these accusations reflect their effort to develop political systems in tune with their own social and cultural environments. So-called Asian values are often emphasised in order to demonstrate that cultural roots are becoming important ingredients of Asian democratisation, and to argue that democracy in Pacific Asia has its distinctive

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character. All this also indicates that Asian leaders are gaining self-confidence through their economic achievements. As a result, they are now turning to their indigenous cultural heritage—and this time, not for survival but for national strength and prosperity. Why should democratisation necessarily be proceeding toward Western liberal democracy? Democratisation in the region will continue —but it will not necessarily be the same as in the West. Michele Schmiegelow argues that democratisation is the single most important political change currently occurring both in Europe and in Asia. She also suggests that Samuel Huntington’s ‘wave theory’ of democratisation24 is helpful in analysing both European and Asian patterns of democratisation, even though his views on the relationship between democracy and culture are severely flawed.25 She then explores the tensions between the universality of democratic core norms and the diversity of cultural traditions in Asian countries. She concludes that it is time to revive the normative theory of democracy and combine it with realist analysis.26 MICHÈLE SCHMIEGELOW The very diversity of the political and cultural landscapes of the countries of the Asian region casts doubt on any effort to demonstrate that there is such a thing as an Asian political culture’ or an Asian’ meaning of democracy. If there is a unifying factor distinguishing most, if not all, Asian countries today, it is their conspicuous economic dynamism. Traces of traditional Confucian ethics and approaches to knowledge may have contributed to economic performance in Japan as well as in the newly industrialised economies of East Asia and Southeast Asia with significant overseas Chinese populations or, as in the case of South Korea, traditional links to Chinese culture. But with the best of wills they cannot be observed on the Indian sub-continent or in the Philippines which have shared the pattern of dynamic economic development in the 1990s. Moreover, if there were a ‘Confucian’ or quasi-Confucian explanation of this Pacific Asian dynamic growth, classical Confucianism would offer a more reliable basis than ‘Neo-Confucian’ fundamentalism. For, just like the Ancient Greek and Indian traditions, the classical Chinese tradition was a culture of learning, linking rationality and justice in its cognitive and ethical systems. Just like the Greek tradition in the European Middle Ages, these principles of classical Confucianism were obscured by dogmatic ossifications and proliferating mythologies in subsequent centuries.27 A similar distinction must be made between the ‘Falsafa’ and ‘Fiqh’ traditions of Islam.28 That Islamic enlightenment from the ninth to the fourteenth century constituted a crucial link between the Greek tradition and European modernity at a time of medieval ‘darkness’ in Europe can only strengthen this point. So can the inversion of this relation in the present challenge of Islamic fundamentalism to perceived ‘Western’ technology and democracy.29

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The relationship between critical rationalism and humanity is the same in all cultures.30 According to the ‘Declaration of the Parliament of the World’s Religions’ in September 1993 in Chicago, a similar correspondence can be found between revelation and ethics in all major religions.31 Together, these cultures constitute the stock of universal civilisation. The ‘clashes’ which preoccupy Huntington do exist. But rather than ‘clashes of civilisations’ they are clashes between dogmatists and pragmatists, between fundamentalism and enlightenment within each of the great cultures. Japan is decidedly Asia’s most ‘Western’ country and yet it is resented by some Western observers with a fundamentalist bent as ‘enigmatic’, ‘different’ and ‘dangerous’.32 It stands out as one of the world’s leading and most dynamic market economies with an open society (surprisingly open by the standards of Western media reporting),33 showing that democracy can be both of an established Western type and the subject of reform. While four decades of LDP rule in Japan have been considered by generations of political scientists as a paradigm case of one-party dominance, just like the four decades of Christian Democrat rule in Italy, the Japanese elections of 1993 demonstrated that public opinion can play a decisive role in driving the reform of a system previously paralysed by factionalism within political parties, again just as in Italy.34 In cultural terms, Japan’s serene combination of Confucian, Buddhist and Shinto traditions, with a zest of Christianity appears as a paradigm of philosophical pragmatism, from which many Western societies with histories of dogmatism and intolerance might find something to learn. The only possible common denominator for Japan’s capacity to cope with apparent incompatibilities in politics, economics and culture is, I submit, critical rationalism.35 At least, the case demonstrates the fallacy of Huntington’s contention that Confucianism and democracy are contradictions in terms.36 In Pacific Asia, all countries except Japan have been confronted since the mid 1980s with the choice between democratisation and rejection of democracy in favour of authoritarian or totalitarian forms of government. Most of them have come out in favour of democracy in the course of Huntington’s third wave of democratisation. The evident ‘third wavers’ in Pacific Asia are the Philippines, Malaysia, South Korea, Taiwan, and Thailand. Together, these cases cut across cultural cleavages, as they include Christian, Islamic, Confucian and Buddhist countries. The case of the Philippines is a most interesting one. Huntington rates the Philippines both as a second and a third waver. It is an Asian country which is neither Confucian nor Muslim (except for a minority in Mindanao), but profoundly Catholic. Its society presents a particular blend of surviving pre-colonial communal ties, patron/client relationships inherited from the Spanish hacienda structures, and a strong culture of free speech. In many ways, it looks more like a lively civil society than some Western democracies suffering from perceived excesses of solipsistic individualism, ethical breakdowns and nostalgic search for identity. On top of all this, the Philippines boast an American-type presidential

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democracy.37 The Philippines instituted universal voting rights already in 1946, in the course of the second wave. During the reverse wave caused by the martial law period (1972–1986) imposed by Ferdinand Marcos, the military effectively took over the exercise of power. With the restoration of democracy and free speech under Corazon Aquino in 1986 and, since 1992, Fidel Ramos, the Philippines are back on a par with Western democracies.38 To be sure, massive problems of social justice remain to be solved. The gap between rich and poor is widening. But these are problems having at least as much to do with the theory of development as with the theory of democracy. Thailand, in 1990 still a ‘semi-democracy’ according to Huntington, is unique among the Southeast Asian countries in having escaped colonisation and in being the first Asian nation, in 1932, to adopt a Constitution transferring sovereignty to the people.39 The constitution was revised several times and in spite of a history of repeated military coups, Thailand has developed not only a thriving economy, but also a lively political culture with numerous marks of a civil society. Since the elections of 1994, there is no doubt that it should be considered as a democracy of the ‘third wave’. Malaysia is another country for which Huntington offers only an ambiguous ‘wave’ categorisation. On the one hand, Malaysia was definitely a case of the second wave. On the other hand, writing in 1990, Huntington ‘demoted’ it, like Thailand, to the status of a ‘semi-democracy’.40 Whatever the standard he adopted at the time, the 1995 elections projected Malaysia without any doubt into the third wave of democratisation. Malaysia is a federal republic composed of nine traditional sultanates (turned into constitutional democracies), three secular republics and one officially fundamentalist Islamic republic. In the last ten years, Malaysia has shown a remarkable capacity for adaptation and transformation in its political life. The current leadership promotes dynamic economic modernisation and very promising pragmatic forms of Islamic public life. The country is divided by ethnic, cultural and religious cleavages. Political instrumentalisation of Islamic fundamentalism by Mahathir’s government has been a passing phenomenon. It has since given way to lucid awareness of the risks of fundamentalist extremism at home and hence to a policy of containment. The forces of civil strife unleashed by a fundamentalist Islamic party have been checked successfully and social peace has been restored between the different communities. At least in Malaysia’s domestic development, there is little to suggest the Islamic Confucian connection which serves as centrepiece in Huntington’s scenario of clashing civilisations. Among the countries of Pacific Asia, South Korea has the longest history of a Confucian social order beyond China’s borders.41 Since 1948, South Korea has lived in a continuing paradox: its emphasis on education has produced a highly politicised people, but the initial poverty and underdeveloped state of its economy, added to the constant security threat of communist North Korea, has pushed the population to accept almost three decades of authoritarian government. Recurring workers’ riots and clashes between police and students were there to

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remind the leadership that it did not enjoy the support of a positively defined political consensus. Civilian rule by former military leaders was tolerated as long as the public good of rapid economic development, combined with active defence of the country, was delivered. The process of economic development was in many ways similar to the one in Taiwan: land reform, initial government control of the financial sector and export-led growth. A marked difference from Taiwan was that the Korean authorities favoured a corporatist development strategy, i.e. the constitution of large conglomerates, the chaebol, over Taiwan’s more neoclassically atomistic market structure. By 1988, the new economic affluence of the majority of the population made authoritarian rule untenable and the popular demand for democracy could no longer be refused. But the democratisation process in South Korea continues to take more radical forms of political expression than in any other Asian country. In a surprising move, the current leadership under President Kim Young Sam set about implementing its electoral programme of liberalising domestic and international trade, freeing the press, fighting corruption and bringing to justice former leaders indicted for crimes against human rights. In a very short span of time, transparency of government procedures, growing influence of public opinion, women’s access to professional life, and lastly the newly found independence of the judicial system, have become accepted norms. This achievement is all the more significant as the same normative aspects of democracy took centuries to develop in Europe. The cases of Hong Kong and Taiwan present distinctive features in that the development of domestic political life has been overshadowed by the attitude and threats of mainland China. Until recently, Hong Kong did not seem predestined to become an independent case of the theory of democracy. Its social structure and political history in a nutshell are a blend of benign colonial rule, eighteenthcentury economic laissez-faire, and active government intervention in areas such as social housing and infrastructure development. The population grew from 1.7 million in 1949 to almost 6 million today mainly through immigration from the mainland, i.e. Chinese ‘who voted with their feet’. The question of political participation and elected government came to the fore after the Agreement signed in 1984 between London and Beijing for the return of the colony to the authority of the mainland. But it is only after the Tiananmen incident in 1989 that the Chinese population of Hong Kong began to envisage what was at stake. For Taiwan, recognised by Huntington as a case of the third wave,42 there had been little hope for a process of democratisation as long as Chiang Kaishek was alive. But the autocratic personality of the leader was not the only reason for this delay in democratisation. As long as the government of the Kuomintang claimed to be the sole legitimate representative of the Chinese people as a whole, it considered it of the utmost importance to preserve its unitarian claim. This meant not only forestalling any communist attempt at destabilisation from the mainland but also banning any dissent on the island. With the nominations of Chiang Ching-kuo, Chiang Kai-shek’s son, first as Prime Minister in 1972, then as

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President after his father’s death in 1975, a slow process of partial democratisation began. Communal elections were regularly held in which Taiwanese could present themselves as nonparty opposition candidates alongside mainland Chinese who had emigrated to Taiwan.43 What made the process possible was Taiwan’s economic success. This success was the result of radical land reform, initial government control and subsequent liberalisation of the financial sector, a resolutely neo-classical regime of ‘atomistic’ competition among ideal-typical small and medium-size enterprises, and a macro-economic and exchange-rate policy favouring export-led growth. Some of these features are, as already mentioned, similar to the case of South Korea, the most outstanding conceptual difference being South Korea’s reliance on the corporatist structures of the chaebol as opposed to Taiwan’s ‘ordo-liberal’ competition regime, which is often compared by Taiwanese economists to Germany’s system.44 However, constant confrontation with communist China and recurrent proclamations of martial law prompted the government to postpone the legalisation of opposition parties until 1986.45 After the establishment of political parties was permitted, the Democratic Progressive Party emerged immediately as the main opposition party with 23 per cent of the votes. It advocates a ‘one China, one Taiwan’ solution to the ‘Chinese Question’, whereas the KMT continues to adhere to the ‘Guidelines for National Reunification’ and refuses Beijing’s proposal of ‘one country, two systems’. In 1991 the first legislative elections since 1946 were held. With Lee Tenghui, the first Taiwanese was elected President by parliament. In spite of mainland China’s threatening military manoeuvres off the coast of Taiwan, the presidential elections of March 1996 have clearly stated two new characteristics of Taiwan’s politics. The first is that the population now considers free and direct elections of their president as a right and an unalterable part of their democracy. The second is a new self-confidence: while fear of the mainland’s military might still looms large on the political horizon—so that the question of an independent Taiwan is pragmatically put aside for the time being—it does not loom so large as to prevent Taiwan from ‘affirmative action’ by conducting, in turn, its own military exercises in the same Straits of Taiwan. While the spread of the third wave through Pacific Asia exposes the fallacies in Huntington’s scenario of ‘clashing civilisations’46 its prophecy could, of course, end up as self-fulfilling. If the political elites of a sufficient number of influential countries and ‘power centres’ of the post-Cold-War world remain as fascinated as they recently have been by his prediction of a Confucian-Islamic connection up in arms against the West, Huntington might become the very propellant of his own third (or fourth) reverse wave. Of course, he would not be entirely without water to propel. Indeed, the end of the Cold War in a new triumph of liberal democracy has also triggered significant counter-currents, which, if unchecked, might consolidate into a reverse wave. The ‘new tribalism’ and the spread of fundamentalism that came along with the demise of the Soviet

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system may at least turn out as a kind of ‘wavebreaker’. And, of course, there are examples of this particular problem in Asia as well. There is, for example, the intriguing case of Singapore. But even Lee Kuan Yew’s regime should not be too difficult to understand in terms of the European political history of democracy. Were we in the eighteenth century, we might define a government like Lee Kuan Yew’s in terms of the Austrian model of ‘enlightened despotism’ under emperor Joseph II. Of course, in the twentieth century, ‘ordered democracy’ is a more suitable term for the same phenomenon. Breaking it up in its components, we find the Confucian tradition of a government having to ‘provide for the livelihood of its people’, a ‘communitarian’ concern for ensuring the orderly cohesion of social life, a commitment to the rule of law in terms reminiscent of the Western tradition, and finally the very universal voting rights that are the decisive criterion in Huntington’s wave theory. There is even a ‘social-democratic’ twist in this composition in the form of a widespread social security system. Huntington, of course, has no kinder characterisation for Singapore than that of ‘an authoritarian Confucian anomaly among the wealthy countries of the world’.47 Lee Kuan Yew himself considers that adversarial politics is particularly out of place in a multiracial society such as Singapore. The fact that an overwhelming crosscultural majority prefers to stay in the city-state and continues to vote for the government in place should make us ponder.48 One way of concluding this case is to recall that Lee Kuan Yew’s ‘empire of deference’ is the secret spiritual home of Francis Fukuyama, the onetime herald of the ‘end of history’ in a global triumph of democracy.49 Perhaps we may conclude from this elective affinity that Singapore’s case does not mean the end of democracy.50 Indonesia is categorised by Huntington as a ‘second waver’ with a ‘confused parliamentary democracy between 1950 and 1957’ having suffered a reverse to ‘guided democracy’.51 It is the country with the largest Islamic population of the world, but is ruled in the spirit of Pancasila, an adamantly secular state philosophy. Indonesian Muslim thinkers have developed a most interesting form of enlightened Islam in complete intellectual independence from the Arab centre’.52 Bouts of fundamentalist fervour have been confined to a small party that gained about 3 per cent of the votes in legislative elections. The most important feature of the last ten years is the change in economic policy: a deliberate move away from concentration on the main natural resources of the country, oil and timber, in favour of differentiated export products produced by small and medium-sized enterprises. The result is promising: high rates of economic growth, increased independence from oil revenues, and the rise of an affluent middle class. It remains to be seen whether these economic and social transformations will be followed by changes in the character of Indonesia’s ‘guided democracy’ in the long term. Mainland China, Vietnam and Cambodia are the most interesting Asian cases of transformation after the end of the Cold War. Their development will in the end decide on how the ‘third wave’ of democratisation will end. The debate on

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the merits of the centralist ‘pragmatism’ developed by Deng Xiaoping in China is far from over, both in the West and in the former East. So is the intense discussion on the future of civil society in China.53 This issue is less of an idle question than it may seem at first sight. As European history and the normative theory of democracy tell us, the development of a civil society is the key to the establishment and the maintenance of a true democracy. In a military or religious society, relations between subjects and rulers are hierarchical and governed by the discretion of its leadership, whatever its claim to legitimacy, be it tradition or ideology. There is one overriding interest, that of maintaining authority and control. In the case of China, this overriding concern was passed on essentially unchanged from imperial rule to party centralism: first to that of the Kuomintang, then to that of the Communist Party. ‘Legitimate authority’ continued to come ‘from above’. The citizen (the subject) did not consider (political) authority as part of his life: what counted was the family sphere. This ‘privatisation’ of social life may have been facilitated by centuries of Confucian tradition. But it emerged as a problem of political development under the First Republic and has remained a problem under the communist regime. The first truly ‘Western’ import in Chinese political life was that of nationalism as an expression of the will of the people not only to preserve its culture but its territory and its political unity. Of course, the Chinese have always been extremely conscious of their culture, of the cohesion of their social life as ‘Chinese’, and of their ability to ‘absorb’ any conqueror. But at the end of the nineteenth century, the confrontation with Western imperialism provoked a new Chinese interest in the notion of national territory, a territory to be defended and preserved, and the recognition of the necessity to modernise, i.e. to compensate the weaknesses of the imperial heritage. The first efforts at democratic reforms were undertaken under imperial rule but they were aborted by the Empress Dowager, Tzu Hsi. The Republic of 1911 could not reconcile the visions of those, like Yüan Shi-kai, who wanted a new imperial dynasty, and intellectuals like Sun Yat-sen, who wanted to introduce a government by the people. The Communist Party considered that Leninist ‘democratic centralism’ offered a convenient way to reconcile the Chinese tradition of government from above (by the only true representatives of the people, i.e. the professional revolutionaries: the party members) and the notion of ‘democracy’. One feature particular to Chinese communism and incompatible with the classical Confucian tradition is worth mentioning here: the status of the intellectuals under party rule. In its sweeping effort to eradicate all and any remnants of the old imperial regime, the Communist Party—and Mao Zedong more particularly—tried to eliminate intellectuals as a factor of political development. The paradox lies in the fact that without intellectuals (of all origins) the Communist Revolution would not have existed. But for the party, their very existence was and continues to be a constant challenge to its rule. The official party line was that intellectuals were responsible for the horrors inflicted on the people in pre-communist China: only the literary had access through the

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mandarinate system to the high administrative posts. Therefore they had to ‘expiate their sins’ by being banished to the bottom of the social order. The question today is whether a mere continuation of the Deng line of ‘pragmatism’, including the policy of creating a ‘socialist market economy’, will enable Beijing to maintain both economic development and centralised political control, i.e. to reconcile what is recognised elsewhere in the world as irreconcilable. The wave theory of democratisation suggests that there may be a further attempt at democratisation and yet another reverse and even several more sequences of waves and reverses. But if past history of waves of democratisation can be taken as an indication of a plausible future, economic progress may cause ‘each wave to advance further and ebb less than its predecessor’,54 until a final wave in which democracy will eventually take hold. On the other hand, given the power struggle still going on inside Beijing’s leadership and the ever crucial issue of the role of the military, this final wave today seems a long way off. The immediate diplomatic and strategic task of China’s Asian neighbours, Confucian and otherwise, as well as of the rest of the world is to try and ‘tame’ the Beijing leadership. The cause of democracy in China will certainly need patience. Vietnam’s case also suggests the need for patience, but looks more promising. After having gained, according to some Western observers of left-leaning persuasion, a ‘Confucian’ victory over the United States,55 Vietnam now faces the same choices on the relations between ‘glasnost’ and ‘perestroika’ as China and Russia. On the other hand, thanks to a tradition of spreading education to its population, it may be on a faster and safer road to prosperity and democracy than both the former communist superpowers. In a way meaningful for the theory of democracy, Vietnam’s experience is significantly different from China’s in that it has a much longer tradition of nationalism. It developed not only as a reaction to French colonialism but much earlier against Chinese domination. It reaches back to the third century when the Tongkinese resisted sinisation by the Han dynasty. It rebounded in the thirteenth century, when the Tongkinese successfully repelled the Mongol onslaught during the Yüan dynasty. Both Tongking and Annam were subdued under the Ming dynasty but managed to preserve considerable degrees of autonomy. Even the French conquest of Vietnam in the nineteenth century was facilitated by an Annamite call for French help against the Chinese. The last episode of the Chinese factor in Vietnam’s nationalism occurred in 1979 with the failed Chinese invasion of Vietnam across the Yunnan border. The history of Vietnam’s nationalism is obviously as incompatible with the notion that nationalism, the nation state and democracy are purely Western products56 as it is with the recent concept of Asianisation. The second difference between the Vietnamese and the Chinese case is the complex interaction between nationalism and colonialism in Vietnam. The consequences of French colonial rule in Vietnam were mixed. Some of them seem to have worked out in ironically positive ways for the prospect of

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democracy. Firstly, nationalism, considered often as a condition of democratisation, grew and expressed itself through the founding of political parties hostile to colonial authorities. Secondly, the transcription of the Vietnamese language, by the French Jesuit missionary, Alexandre de la Roche, during the seventeenth century, in a system using Latin letters, was accepted by the Vietnamese as a convenient way of rejecting the longstanding but still resented sinisation of the country’s culture. It turned out to be a perfect tool to express the specificity of Vietnamese culture, somehow like the hiragana syllabary for the Japanese language or the new writing system, hangul, devised in 1446 by the Korean King Sejong for the same purpose. Thirdly, colonial authorities established a French-type centralised school system, although access was initially limited to French expatriates and to a narrowed Vietnamese elite, the French school system was a useful vehicle for a high level of education and a high degree of social equality. At first sight the colonial influences in Vietnam may seem to confirm the view that democracy is a Western product exported by force or persuasion to an Asian continent which could never have developed democracy on its own. However, while the French role in Vietnam’s political development cannot be denied, it would be a mistake to see Vietnam merely as a passive recipient of colonial culture. First of all, Vietnam’s own blend of Confucianism and Buddhism constituted an autonomous and powerful factor predisposing the Vietnamese population to a culture of learning. Second, it should not be forgotten that, between the end of French rule in 1954 and the final communist victory in 1975, it was the Buddhist opposition in South Vietnam that kept calling time and again for a multiparty democratic system, and that it was the Christian minority in power, i.e. Diem and his successors, that kept refusing it. Though as yet far from an explicit conversion to democracy, Vietnam’s ruling Communist Party seems to have understood that its very existence depends on its ability to realistically introduce changes after the fall of the communist bloc. In 1993, it promulgated a new Constitution, the main feature of which is an embryonic form of ‘rule of law’, i.e. a lengthy commercial code devised to organise a smooth passage to some form of market economy.57 It remains to be seen whether, in the end, the party will have the courage of opting for the Russian sequence of economic and political transformation or whether it will prefer the Chinese sequence. In Cambodia, the most fearsome patterns of ‘diversity’ are still clearly ideological, while the hope for democracy rests on the political forces linked to the cultural traditions of that country. The fate of Cambodia invites reflexion on the dangers of archaic ‘non-political’ societies in the modern world. Indeed the atrocities of the Pol Pot regime are understandable only if one considers the absence of political life in Cambodia’s past. Unlike Vietnam, it had never had contact with a modern political system. For neither was it really penetrated by the French administrative system, since it was a protectorate, nor was it exposed to French political ideas. Only a few members of the elite went abroad to study,

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while the population remained in its fields and perpetuated local traditions. The spill-over of the Vietnam war on Cambodian territory in 1970 brought about not only the fall of the old monarchical hierarchy and the coming to power of the warlord Lon Nol, but also the radicalization of the small Communist group which took the slogans of the ‘new society’ and the ‘new man’ too much to the letter. Once in power the ‘Khmers Rouges’ set about their program of creating the new society by eliminating the old structures through genocide. The intervention, first of Vietnam, then of the United Nations, attempted to reestablish ‘normal’ life for the remaining population. The hopes of the UN of establishing a democracy through free elections in 1993 were laudable but seemed to have fallen short of really connecting with reality. Cambodia is now a constitutional monarchy but has a long way to go before it will have established an effective educational system, developed its economy, and created a true political life in which democracy might securely emerge from popular consent.58 The cases analysed in this chapter make it easy to agree with Huntington that the process of democratisation in Asia will benefit greatly from the expected dynamic economic development of that region. But they also suggest that economic progress will not be a sufficient condition for democracy to finally take hold in all countries concerned. Huntington believes that as a second condition, future political elites will at a minimum have to believe (like Winston Churchill) that ‘democracy is the least worst form of government’ for their societies and for themselves.59 I propose to define three intellectual developments as conditions for a lasting success of the global process of democratisation. The first condition is cultural, the other two are cross-cultural. The first is the rediscovery of the classical approaches to knowledge and ethics in all major cultures and their mobilisation against fundamentalist myths and the politics of resentment. The second is the realisation that open societies are the form of societal organisation best qualified both ethically and functionally to adjust to conditions of scientific uncertainty.60 The third is the growth of awareness of an imperative of responsibility both among political elites and in civil society as a condition for coping with global risks affecting all cultures alike. Only if these conditions are met in all countries and regions concerned will it be safe to assume that democracy defined as freely elected government will emerge as the universal norm of political organisation. Only then will it be possible to imagine a final wave of democratisation and, perhaps, move on to applying wave theory to other issues of ever continuing history. VALUES AND CIVILISATIONS Carolina Hernandez summarises the Asian vs. Western values debate and carefully dissects the arguments of the Asian side. In the final analysis, there remains very little of real substance in this debate, with the

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differences within Pacific Asia—and even within ASEAN—turning out to be rather more important than those between Pacific Asia and the West. While globalisation may not equal Westernisation, modern societies do seem to share a number of fundamental characteristics. Moreover, all great religious and philosophical traditions—Judaism, Christianity and the Enlightenment, but also Buddhism and Confucianism—share certain fundamental propositions about the relationship between the individual and society, and between ruler and rules. CAROLINA HERNANDEZ61 Globalisation, with its attendant interdependence and integration of farflung countries into the global economy, together with the homogenising effects of information technology are drastically reducing the meaning of physical distance between societies as they also facilitate the increasing erosion of the notion of national sovereignty. These realities and developments make the maintenance of friendly and co-operative relations between Asians and key regional and international players in North America and in Europe an imperative of our times. For these reasons, it is important that the ongoing debate about values, culture, and civilisation be managed in such a manner that these relations between key players in Asia, the rest of the Asia Pacific, and Europe are not undermined. Notions such as an impending ‘clash of civilisations’62 can be extremely damaging and counterproductive. They may not even be empirically verifiable or accurate. The values debate between Asia and the West centres on the following issues: (1) the nature of human rights, or whether they are universal or cultural-specific; (2) the character of human rights, or whether they are international or purely domestic concerns; (3) the primacy of individual over community rights or vice versa; (4) the primacy of rights over duties or vice versa; (5) the timing and sequencing of human rights implementation and observance’, (6) the legitimacy (or lack thereof) of conditionalities attached to ODA (Official Development Assistance); and (7) the question of the inclusion of the social clause in GATT and other multilateral trade regulations. In general, the Western view of human rights is derived from the concept of natural law, which posits that human beings possess certain non-derogable natural rights to life, liberty and possessions. These have universal applicability regardless of where human beings might be found. Because they are natural, states or their authorities may not withhold them from their citizens. On the other hand, some Asian perspectives argue that human rights are shaped by each society’s specific set of circumstances and experiences.63 In particular, religion and culture shape social values. This perspective has come to be known as cultural relativism.64 It claims that only certain human rights can apply to particular societies. while others, such as the position of the individual

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in the social and political sphere or the entitlements of persons under the law, vary from one society to the next. Regarding the character of human rights, Western views consider human rights to be in the international domain, not only because they are universal and are rooted in mankind’s humanity,65 but also on the basis of their recognition in both treaty and customary international law. Among numerous international declarations, agreements and conventions containing human rights principles are the United Nations Charter, the Universal Declaration on Human Rights, and various conventions this declaration has spawned. Asians often argue that many of these human rights instruments were crafted when they were still colonies and should therefore not apply to them. Being young nation states, they wish to secure their national sovereignty at a time when the nation state is facing many challenges wrought by fundamental changes in international relations. These challenges tend to undermine the integral character of national sovereignty itself. An ASEAN analyst expressed this situation succinctly: The sovereign state is now being challenged from many directions. It is challenged from ‘above’ because of pressures from regional and international organisations, including ASEAN and the UN; it is also being pressured from ‘below’ by the various groups in society, such as the minorities or other groups based on ethnicity, religion, or other interest, for greater ‘self-determination.’ It is also challenged by the need of individuals, as the state must give attention to human rights and abide by the [Universal] Declaration on Human Rights and its Covenants in the sociopolitical, socioeconomic, and cultural fields. The state is also being challenged from the ‘sides’ as a result of the globalisation of the economy, the interdependence among nations and groups within them, as well as because of the advancement of information technologies, telecommunication and transportation’.66 The West allegedly also diverges from Asian views with its emphasis on individual rights at the expense of group or communitarian rights. The West is seen as overly stressing the rights of individuals as opposed to their duties to the larger group. One of Indonesia’s founding fathers, Supomo, thought that the demand for individual rights was a liberal question not compatible with the Indonesian notion of negara kekeluargaan (roughly translated as a state that is a family). In his view, unqualified demands for individual human rights would breed conflicts and would be dangerous for a diverse and complex society such as Indonesia.67 Asian elites also often attribute the decay of Western societies—in the form of rising crime, moral degeneration, neglect of the aged and the poor, increasing use of drugs and other dangerous substances, the decline in economic capacity if compared with the rising economies in East Asia, and generally, the fraying of

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the fabric of Western societies—to their overemphasis on individual rights.68 For example, Indonesian President Suharto stresses the importance of balancing individual and community rights as critical; without it, he argues, the society’s rights would be denied, leading to instability and anarchy.69 Senior Minister of Singapore, Lee Kwan Yew, also believes that ‘the exuberance of democracy leads to undisciplined and disorderly conditions which are inimical to development’.70 Human rights are seen as comprehensive and indivisible in the West. This implies that they cannot be treated separately nor implemented and enforced sequentially.71 On the other hand, while Asians accept the notion that human rights are comprehensive and indivisible, they reason that civil and political, even social and cultural rights cannot possibly be meaningfully enforced by the government and enjoyed by the people in the developing world without the requisite economic prosperity on which prior attention and effort by governments must be focused.72 Hence, Asians place priority on economic development and tend to postpone the implementation of social, cultural, civil and political rights until such time as an appropriate domestic conjuncture is reached. The West in recent years has developed Official Development Assistance (ODA) policies which posit good governance principles, including human rights and democratisation, as conditionalities for ODA access by developing countries. Moreover, the West seeks to include social clauses in multilateral trade agreements such as the GATT and the World Trade Organisation (WTO). The European Parliament on 9 February 1994 passed a resolution which demanded inclusion of a social clause in the system of multilateral trading and the Generalised System of Preferences (GSP). The social clause seeks to combat child and forced labour and to empower workers to engage in collective bargaining in accordance with International Labour Organisation (ILO) conventions.73 Asian elites object to both these conditionalities and the inclusion of a social clause in multilateral trading regulations. In their view, conditionalities would only hurt the domestic sectors whose welfare foreign assistance seeks to promote by withdrawing ODA access to countries that do not meet the standards of good governance expected by donor countries. This would be a violation of their right to development.74 Moreover, they believe that the solution to labour problems does not lie in the social clause, but in relevant international fora such as the ILO or the United Nations Children Fund (UNICEF). They also see the social clause as potentially distorting international trade. Since trade is the pillar of their economic growth, a decline in trade would have adverse consequences on the economic wellbeing of developing countries. The inclusion of human rights and democracy in the foreign policy of Western countries is also seen as an attempt to regain their economic coinpetitive edge, which they lost to the rapid developers in Asia. As Prime Minister Mahathir said, Western criticism of Asia’s labour policy will undermine Asia’s comparative

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advantage vis-à-vis the West;75 it thus represents a new kind of Western trade imperialism. Asians further object to the West’s double standard in its human rights campaign. They argue that many countries allied to the West in the period of the Cold War were ruled by repressive regimes who were gross human rights violators, yet strategic considerations led the West to adopt a soft approach in dealing with these regimes. Consequently, Asians believe that its past foreign policy behaviour reduces the credibility of the West in the values debate. With regard to democracy, many Asian elites argue that Western-style democracy is not suitable to their societies, at least at this point in their development as nation states. Their reasons vary. Democracy is seen as inappropriate either because the prerequisites for democracy do not yet exist, or their unique historical, cultural, social and economic circumstances do not warrant its adoption, or there are many types of democracy, including indigenous kinds more suitable to their societies. Asian elites also see democracy as inimical to rapid economic development. They see the Confucian ethic of a well-ordered society controlled by able rulers as being responsible for their rapid economic development. The issue that may be raised in this regard is why Asian countries dominated by this ethic did not experience rapid economic growth in earlier periods of their history. Moreover, Western thought also attributed the growth of capitalism in the West to the Protestant ethic,76 a view that is no longer considered compelling. In Southeast Asia, many elites use the fragility of their multi-ethnic societies to rationalise the use of special social and political arrangements that the West would consider undemocratic. Some examples of such arrangements are the special position of Malays in Malaysia, limits to judicial independence in Indonesia, Malaysia and Singapore, dominant executives or military rule, electoral arrangements favouring a ruling party, coalition, or ethnic group, far too many appointed legislative and/or executive officials such as in Thailand, and internal security acts in many ASEAN states. While formal institutions of democracy like parliaments, courts and elections do in fact exist in these societies, they often work in ways seen as undemocratic by the West. In many instances, the political playing field is uneven, denying equal opportunity to all players. These are the major issues in the values debate between Asia and the West. The question that now needs to be addressed is whether the divergences are fundamental or simply instrumental. There is no single Asian civilisation, as there is no single Western or even European civilisation. There are differences between the great civilisations that flourished in Asia, as there are between those that swept the West. Within Asia, and within the West, can be found common themes about individuals and their many associations, the defining framework of their relationships, the requirements for the good life, among others. Whether Asian or Western, there is a concern for the individual and the larger association, be it the family or the community. Locke’s claims for the rights of the individual coexist with duties in social relations. Similarly, John Stuart Mill’s

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argument for individual rights recognises that injury to others is the limit to one’s individual rights. And if one went further back into Western civilisation, one finds the compelling arguments of Socrates, Plato and Aristotle regarding the allembracing character of the polis, one’s membership of which defines the individual’s nature as a human being. In sum, the Western liberal argument about the respect for the fundamental rights of every individual requires support for a system of mutually sustaining rights and duties among members of society.77 Similarly, Asian civilisations, while emphasising the importance of the larger community, also speak about the importance of the welfare of the individual. In the Confucian ethic, one crucial relationship is that of husband and wife, a relationship between individuals. What distinguishes the Western liberal theory of rights is then ‘not the denial that individuals have obligations to community and state, but the belief that human life is led by individuals. Individuals suffer or are happy, succeed or fail in their purposes, perform good or bad actions, do or do not fulfil their obligations to society’. This form of individualism is compatible with the following ‘communitarian’ propositions: ‘the identity of individuals is to a large extent constituted by their communities; and the interests of communities should often be given priority over those of its individual members. Liberal individualism is, however, distinctive in denying that communities can be valuable independently of good individual lives.’78 It is also important to recall that rights and duties are two sides of the same coin that contains human rights. The rights of one individual are possible because others choose to perform their duties. The right of a person to a good reputation is preserved when others observe their duties not to malign that person. This is not just a Western concept. It is equally understood by Asian traditions. In Buddhism, the individual is a parent, a child, a teacher, a pupil, a ruler, a citizen, etc. As such, individuals have certain duties to others to which these others are entitled or over which they have rights. While there is no isolated individual, because the universe is an interconnected whole, Buddhists can hardly fail to agree that the duties that others owe to one in justice (i.e., in dharma) are indeed human rights.79 That Islam can be compatible with contemporary understanding of human rights and democracy has been argued by many human rights and pro-democracy groups in Indonesia, such as the Legal Aid Institute founded by Adnan Buyung Nasution, the Democratic Forum led by Abdurrahman Wahid, and the renewal group of Nurcholish Madjid, to name the most important. Rejecting the concept of an Islamic state, Abdurrahman Wahid argues: ‘A government based on sectoral rather than universal representation should be changed. We have to be more receptive to minority opinion, no matter how dissenting that is. The current system of government doesn’t encourage debate. That should be changed because debate is part of the essential spirit of Islam. Islam grew by challenging people of other religions to prove their faith. That means debate. We also need to create institutions within government, and if that is impossible, outside

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government, committed more strongly to the complete upholding of the Rule of Law. Otherwise we are transgressing Islamic values.’80 From the foregoing examples, it can be seen that there can be a conjunction in the views and values of Asian and Western civilisations on the question of human rights and democracy. This is further evidenced in the way various sectors of civil society in Asia, especially non-governmental and people’s organisations (NGOs/POs), view human rights and democratic values, such as the rule of law. Organisations in ASEAN such as Indonesia’s Legal Aid Institute and Malaysia’s Aliran seek the institutionalisation of the rule of law in their countries. Their demands on government are made in terms of the rule of law principle in their attempt to curb the powers of strong government.81 It is also noteworthy that repressive regimes, whether in the West or in Asia, have been met with popular resistance over time. In the West, opposition to despotic governments had its origins in England, America and France in the seventeenth and eighteenth centuries and gave rise to ideas which sought to limit despotic power and to expand and protect the rights of citizens. In Asia, the absolute authority of Tokugawa Japan and the Yi dynasty in Korea was not spared by protests either. The Tonghak movement of the 1860s emerged ‘to challenge the neo-Confucian regime with an egalitarian, anti-Western ideology. We should therefore remember not only that violations of human rights in Asia entail the domination of some Asians by others, but also that this domination is often not culturally acceptable to those who are dominated. Political oppression in Asia can be and has been criticised by Asians on Asian cultural grounds that have some family resemblance to the human rights doctrine. Western ideas of rights were imported into Asia because there was indigenous dissatisfaction with the old order and because Western ideas of human rights and democracy helped Asia protesters to articulate their goals and principles.’82 The Confucian notion of the Mandate of Heaven is also an invitation to the possibility that rulers who no longer do right by their subjects lose their right to rule and can then be overthrown. Despots fall under this category, and so do rulers who fail to perform their duties to their subjects under the Confucian concept (also subscribed to by the Chinese legalist scholar, Hang Fei Tzu) of the correspondence between titles and forms. Hence, Confucianism shares the concern of Western liberalism about the accountability of those who govern. In contemporary Asia, nowhere is the similarity between Asian and Western views on human rights and democracy more apparent than in the views held among Asia’s NGO community. During the preparatory meeting for the Vienna International Human Rights Conference held in Bangkok, two declarations were made: an official governmental declaration and a nongovernmental declaration. The tone of these declarations reflects the values debate between Asia and the West with Asian NGOs espousing ‘Western’ views and the governments expressing views reflective of Asian’ values. The official declaration reflects much of the thinking of China, Indonesia, Malaysia and Singapore, seeking the promotion of an Asian’ concept of human

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rights described earlier. The declaration played down the importance of civil and political rights as it stressed the right to economic development; it also highlighted the need to consider cultural, religious and historical factors in human rights promotion and performance. Some of the Asian democracies, including Japan, toned down some of the provisions in the declaration and sought to include important ones such as the need to encourage Asian states to ratify the international human rights instruments.83 The head of the Japanese delegation also emphasised his government’s position that ‘expressions of concern over human rights violations do not constitute interference in a nation’s internal affairs’84 during the conference’s last session. On the other hand, the NGO declaration, appropriately titled ‘Our voice: Bangkok NGO declaration on human rights’, stressed the following points: (1) since human rights were universal, ‘[t]he advocacy of human rights cannot be considered…an encroachment on national sovereignty;’ (2) ‘while cultural relativism is important in the region, [t]hose cultural practices which derogate from universally accepted human rights, including women’s rights, must not be tolerated;’ and (3) ‘as political and economic rights are indivisible, [v]iolations of civil, political and economic rights frequently result from the emphasis on economic development at the expense of human rights. Violations of social and cultural rights are often the result of political systems which treat human rights as being of secondary importance.’85 These views, while seeking a degree of accommodation of the sensitivities of Asian governments, also reflect the socalled Western liberal view. It should by now be apparent that to regard Asia as a monolith as to questions of values is misleading. There are differences in the views of Asian elites, as well as between Asian elites and their civil societies. Even within the small grouping of ASEAN, there is no full agreement on the broad issue of human rights and democracy. ASEAN members vary in (1) the way they interpret human rights and democracy; (2) their willingness to be governed by international human rights norms embodied in international human rights instruments; (3) the manner in which they have organised their domestic constitutional, legal and judicial systems as they relate to human rights concerns; and (4) the degree of political openness of their societies. These differences are often explained in terms of their varied historical, cultural, social, economic and political experiences. More likely, Asia’s uniqueness is being used as an excuse by ruling elites not to share political power with the larger society for fear that expanded political participation could lead to political instability, economic slowdown, and social disorder— in short, the unravelling of the raison d’être of authoritarian rule in these societies. These differences have prevented ASEAN from building a consensus on the desirability and the substantive contents of a region-wide human rights charter, as well as the establishment of an ASEAN human rights body. It has also undermined ASEAN’s potential for playing a more credible role in the values debate even as the most outspoken about Asian values’ are among its ruling

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elites, or perhaps more accurately, because the most outspoken advocates of ‘Asian values’ in ASEAN happen to rule authoritarian societies. It is noteworthy that China has found common ground with many ASEAN states in the promotion of ‘Asian values’. The value of ASEAN in China’s human rights diplomacy since the 1989 Tiananmen incident has apparently increased.86 Moreover, the expansion of ASEAN to include Vietnam and later on Myanmar (Burma) may not speak well about ASEAN’s credibility on the values debate, even as this has strengthened ASEAN’s ability to engage two of its more important neighbours in Southeast Asia. On the other hand, there appears to be a growing recognition that human rights bodies may be necessary among some Asian countries. Within ASEAN, three countries already have a national body to deal with human rights matters. The Philippine Commission on Human Rights is the most developed and the most autonomous, as it is an independent constitutional body. Thailand has a parliamentary committee that deals with human rights questions. Its status lies somewhat between the Philippine and Indonesian models. Indonesia’s human rights body was originally intended as a cosmetic mechanism to deflect Western criticism of the country’s poor human rights performance, especially following the Dili incident. Once established, however, it took on a life more independent of its creator, pushing human rights promotion even in opposition to police and military authorities. While an unintended development, this could serve both as an inspiration to Asian human rights advocates and as a brake to the development of such bodies in other countries whose leaderships fear the threat such a body poses to its control over society. Japan is an Asian country that belongs to the OECD. It has an ODA Charter which links assistance to the principles of good governance. It is however, unlikely to be a leader in the values debate for many reasons, among them are its dismal wartime record, its unwillingness to offend others, its sensitivity to its neighbours’ concern over intervention in their domestic affairs, and its preference to approach social change in its neighbours through development cooperation with the expectation that the demand for change would come from inside these societies themselves. It is unlike many of its Asian neighbours in that it tries to serve as a bridge between Asia and the West as it has done in the Bangkok meeting and the Vienna conference in 1994. As we have seen, human rights and democracy may not be peculiarly Western values. The rise of Asian NGOs consciously linking these values to their religious and other indigenous traditions suggests that these values are universal. Fear of the unknown, concern over the loss of political power and control over developments in society by elites could be behind Asian resistance to these values and the cultivation of a separate set of values masked as peculiarly Asian. This talk of ‘Asian values’ in the view of a thoughtful citizen of ASEAN ‘sends an unhelpful message’; because high economic growth in Asia took place both within the context of cultural homogeneity and cultural diversity, ‘Asian values’ do not explain the great diversity in economic performance between societies that

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share the same value system, and ‘Asian values’ fail to explain success in one historical period and failure in another.87 Even as cultures and values may originally differ, rapid technological advancement is likely to homogenise cultures, to make them adapt to a rapidly changing world if they are to remain relevant to the societies they purport to guide. The benefits of rapid economic development have altered the character of Asian populations. Middle classes are forming, more wealthy than their predecessors, better educated and informed, more mobile and more cosmopolitan. They are likely to share in one global culture in the foreseeable future. The negative consequences of human rights observance and democracy in the West that are cited by the advocates of ‘Asian values’ such as crime, moral decline, neglect of the aged and the poor, drugs, etc., may be more the result of advanced industrialisation, urbanisation and modernisation in general. Many small rural communities in the West share ‘Asian values’ while the infirmities of advanced societies are already beginning to appear in Asia’s large modernised metropolises. Similarly, the West also upheld the primacy of the community over the individual and of duties to the whole over individual rights in the world of the polis of its ancient Greek thinkers. The Greek polis also thrived in preindustrial, pre-urban and pre-modern times. The emerging gap between Asia’s ruling elites and NGOs, including and in many instances led by members of the middle class, is likely to create problems of governance in the future. An increasing distance between these elites and the people has already been noted. Moreover, while the economic pie continues to grow, it is likely that the political legitimacy of and popular support for Asia’s ruling elites will continue. A contraction of the economic pie is likely to undermine both regime legitimacy and popular support. Opposition to the governing elites could grow and governance under an authoritarian order may no longer be possible. In international relations, one of the most important implications of the values debate is the great danger that disagreements between Asian and Western elites on this issue could disrupt the state of their relations. Associated in political and economic international and regional organisations and processes that are critical to the maintenance of peace, security and the path to economic co-operation and prosperity, Asia and the West need to work closely together in order to achieve their common goals. Any disruption of their co-operative relations is likely to undermine their collective effectiveness. Based on an astute reflection on the origins of ‘modernisation’ and different historical experiences related to it—which is reproduced here in a heavily condensed version Rüdiger Machetzki argues against simple notions of convergence between Eastern and Western value systems. He expects East Asian types of modern civilisation to continue to create important societal features, which will remain different from those of the West. How different the civilisations will be is, in his view, impossible to

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predict. But, faced with strong new trends of globalisation in economic and intellectual terms, Western and East Asian societies alike will continue to be subjected to lasting tensions and pressures. It is this common destiny which, together with certain shared basic features of modern society and shared universal values, which may bring them together in constructive cooperation—and competition. RÜDIGER MACHETZKI In the latter half of the eighteenth century, the age of the industrial revolution began to capture the northern part of England with unexpected force. A new historical dimension of societal change had suddenly begun, which was to alter the face of the earth within less than two hundred years. The forces of ‘modernisation’ had been unleashed. It was to lead to the rise of the ‘West’—but it was a phenomenon broader than just of ‘Western’ (i.e., European) history. Since that time, no single society was in a position to evade its radical impact and none has been able to arrest this progressing trend towards all-out modernisation. Two hundred years later, the distinction between ‘Western’ and ‘modern’ has become increasingly apparent and important for any serious discussion. The major contributions to the future evolution of the modern global civilisation no longer exclusively originate in Western societies, but also to a growing extent from the rising societies of East Asia. Some East Asian thinkers, such as the conservative Japanese political thinker Ishihara Shintaro, have even ventured to suggest that Western societies have largely exhausted their modernising energies. Further progress in global modernisation would, thus, mainly depend on the strong zeal of East Asian societies to which the torch of civilisatory leadership is alleged to have been passed: Quite a few whites probably think that the modern civilisation born in Europe is still alive and well. This is a matter of individual historical judgement. But in my view this civilisation, if not already over, is clearly approaching its end. My message is that there is no point continuing to carry the psychological baggage of an age that is receding in the past.88 Whatever the merit of this case, it is obvious that there are important discrepancies between ‘Eastern’ and ‘Western’ forms of modern society. Do these discrepancies herald the evolution of essentially different and perhaps mutually antagonistic types of civilisation? Or do they rather reflect different stages of socio-economic and sociocultural development within the same overall process of globalisation? One of the first countries which perceived this question as a basic national dilemma and pondered over it in long, acrimonious debates was Germany—the first ‘late-comer country’ in the process of modernisation. Starting as a deep-

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seated socio-psychological reaction to French civilisatory zeal and Napoleonic military occupation of German territories, which proved the undeniable material and organisational superiority of France at the time, the Germans forcefully laboured to convince themselves that they would be able to enter the path to national modernisation without Westernisation and without succumbing to ‘alien’ ways of life. In the course of this endeavour, they ‘invented’ nationalism as an ideology. It found its first literary expression in the so-called idealistic philosophy of Fichte, in particular the ‘Addresses to the German Nation’, which he delivered as lectures to mass audiences of Prussian students in Berlin in 1807– 1808. It was not until after World War II that Germany finally acquiesced in becoming a politically, economically and intellectually integrated part of the West. In fact, even today a number of right-wing intellectuals has again started to denounce the country’s ‘westernisation’ as a basic historical error, which has forced Germany up the blind alley to becoming ‘little America’. German history illustrates that there obviously exist certain underlying historico-psychological patterns with which late-comer societies react to the challenges of compulsory modernisation. The never-ending controversy between Westernisers and Slavophiles in Russia provides another classic example. As to Japan, its basic historical reactions were nearly identical with those of Germany. The Japanese developed almost the same sets of arguments and the same artificial mental constructions in order to reassure themselves of the fundamental gap between the Japanese ‘seishin bunka’ (spiritual culture) and the Western ‘busshitsu bunmei’ (material civilisation). Western civilisation was to be accepted merely piecemeal for the sake of practical benefits, in particular for the creation of ‘national wealth and military power’ (fukoku, kyohei). ‘Wakon yosai’ (Japanese spirit, Western learning) was the guiding formula of the time. On the other hand, there were also voices that called for the abandonment of Japan’s own tradition including the Japanese language. Mori Arinori, for example, Japan’s first minister plenipotentiary to America believed it imperative for the country’s modernisation to adopt English as the national language because he thought Japanese too ill-suited for communication with the advanced West. China represents another empirical case illuminating the working of dichotomic historico-psychological patterns of late-comer reaction. ‘Jingshen wenhua’, i.e. Chinese ‘spiritual culture’, was strenuously placed in contrast to ‘wuzhi wenming’, i.e. foreign ‘material civilisation’. The traditional ‘Chinese essence’ (zhong ti) was to be preserved at all costs which meant, among others, through careful and deliberate selection of ‘Western methods’ (xi yong) in order to become ‘wealthy and powerful’ (fu, qiang). For more than 150 years China’s political and intellectual elites have, generation after generation, resumed the painful debate on ‘modernisation versus Westernisation’ (xiandaihua, xihua). Other East Asian societies have also run through decades of largely comparable debates to relieve their historically burdened minds and to strengthen feelings of security that they will be successful in mastering the heavily weighing

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burden of national modernisation without weakening their traditional sense of identity and cultural self-esteem. In Malaysia, for example, an intensive exchange of thoughts has been taking place for more than a decade revolving around the crucial question of how best to draw up and carry through political and social programmes for the creation of a non-Western, ‘Islamic future’. At first sight somewhat surprisingly, the main supporters of this national debate do not primarily come from the institutions of traditional religious life, but rather from modern national think tanks such as the International Institute of Islamic Thought and Civilisation (ISTAC) and from the social science departments of the country’s leading universities. These so-called ‘new intellectuals’—in Singapore often named ‘Islamo-technocrats’—are all in search of a new Weltanschauung of national emancipation which is, above all, to bring about the unification of fundamental Islamic tenets with the world of science in order to achieve the ‘de-Westernisation of knowledge’ of man, world and nature (alAttas). All these historical cases suggest that the dubious notion of a ‘uniform world culture’, which has gained some prominence among many Western economists, is plausible, if at all, only in the domain of international highclass business hotels. Future global history will, in all probability, continue to be shaped by the forces of ‘stimulus diffusion’ (Arnold Toynbee), i.e. the interplay of different modern types of civilisation, just as it has in the past been shaped by ‘culture clashes’ between different traditional types of civilisation. But all modern types of civilisation will, of necessity, exhibit a number of common basic characteristics from which they cannot deviate with impunity. Most scholars working on modernisation theory have been guided by the following five basic hypotheses as describing the essential features of modernisation. 1 Modernisation is in essence an internal achievement of the societies which undergo the process. 2 Modernisation is a multidimensional and multifaceted process. There exists a significant difference between economic development and modernisation. 3 Modernisation is a systemic process. Changes in one direction are related to and affect changes in other directions. There is a systemic interconnection between economic development, transformation of political institutions and social outlooks (in particular value concepts). It follows that the different societal spheres are not randomly related, but coherently linked. The really significant fact in this context, however, is that the different spheres of society are not on an equal footing. Economic development is the crucial factor. It is the sphere which influences the other dimensions much more substantially than it is, in turn, shaped by them. Without successful economic advancement, societies are trapped in a precarious position. They are no longer traditional in any meaningful sense of the term, but at the same time they are not modernised either. Moreover, rather lengthy periods of

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time are needed for continuous (re-) adjustment processes between the different spheres. Modernising societies rarely enjoy a state of societal equilibrium. Disequilibrium is the fate of modernisation causing heavy intellectual, psychological and organisational strains. 4 Modernisation processes are said to converge on one ultimate end mirrored by the state of those societies that are deemed to be most modern. But this is an unproven assertion. As the modernisation process is essentially open, its end can, by definition, not be known. 5 The process of modernisation is irreversible. Again, one should beware of apodictic statements. There is nothing predetermined about individual societies, and the possibility cannot be excluded that any of them might decline to substantially lower levels of modernisation than those already reached. For such civilisatory relapses the Dutch historian Huizinga once coined the term ‘puerilism’. Puerilism refers to historical situations in which the elites of a given society abdicate safeguarding the high standard of civilisatory order created by preceding elite generations because the task of sustaining this standard is felt to be too burdensome. Probably the most pertinent characteristic of all modern societies is their enlightened capacity to learn, more exactly to learn the art of learning in order to be able to cope with the continuous emergence of new and massive challenges resulting from rapid uneven change. Pacific Asia, argues Machetzki, during its push for modernisation had to overcome a number of barriers which did not exist for Europe in the nineteenth century. Many of those barriers were results of the global impact of earlier processes of modernisation in the West. In overcoming those barriers, Pacific Asia could draw on impressive cultural adjustment potentials and a number of helpful socio-cultural characteristics. Politics, in a broad sense, played an important role in Pacific Asia’s achievements, notably in the form of an achievement-oriented administrative and political elite. Pacific Asia in that sense does provide a ‘guideline experience’—but whether those guidelines will help Pacific Asia to cope with future challenges of modernisation is quite another matter. In any case, Pacific Asia’s experience suggests that differences between the civilisations are real—though perhaps not exactly in the sense advocated by the standard bearers of this hypothesis. It is obvious that various East Asian governments and some of their intellectual spokesmen have skilfully instrumentalised the issue of purportedly diverging values for their own political reasons—and they even have won over a number of authoritarian-minded discontents in the West. Recently, however, the ‘conjurors’ of Asian values have encountered some difficulties in maintaining control of the course of discussion: they have met with strong and unexpected

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intellectual resistance from numerous East Asians who are not prepared simply to comply with the officially propagated makebelieve in Asian values’, but would, instead, prefer to promote the cultivation of Values in Asia’. Jose T.Almonte, for instance, national security adviser to the central government of the Philippines criticised the self-styled Asian values fortress of Singapore as a ‘tight little island’ pursuing policies of ‘futile rearguard action’ against new means of communication and the growth of democracy in East Asia. And Malaysia’s deputy premier Anwar Ibrahim has repeatedly in public ‘extolled democracy, lauded the institutions of a free press and excoriated those who use “Asian values” to defend tyranny’.89 He distanced himself from unspecified ruling elites responsible for ‘despotic thinking’, denounced as ‘shameful’ the use of Asian values ‘as an excuse for autocratic practices and denial of basic rights and civil liberties’, and went on to advance the challenge that the discourse on values will, in future, be led ‘by a new generation of confident and assertive Asians rooted in Asian traditions and culture—intellectuals, social activists, artists and politicians—who subscribe to the universality of democratic values’.90 It is also interesting to note that the by now common use of the term ‘value’ is symptomatic of the spread of economic terminology to non-economic spheres. Until the early decades of the nineteenth century the usage of the term ‘value’ was confined to economics. Only later did it commence to blot out older ethical terms such as ‘virtue’ or ‘moral sentiment’. One can refer to the simple fact that Adam Smith, one of the founding fathers of modern economics, wrote a treatise which he himself called A Theory of Moral Sentiments, not ‘values’. The encroachment of economic terminology on other spheres of societal life is, of course, symptomatic of the rapidly increasing absolute and relative weight which people have come to accord economic factors compared to non-economic ones. Whatever abuse the terms have suffered, this should not distract us from focusing attention on the serious aspects of the debate about values and traditions. In doing so, we have to start with a clarification of concepts, for the values debate witnesses a considerable degree of intellectual confusion. Not enough attention is paid to distinguishing between two essentially different categories of values. Secondary or derivative values designate human qualities such as loyalty, industriousness, diligence, dedication, sense of duty, respect for learning etc. These qualities do not really possess intrinsic value, but gain their importance primarily as needful qualities for the realisation of primary values. By contrast, primary values such as justice, humanity, piety, righteousness etc., are of transcultural validity. What leads to historico-cultural distinctions is their context, the so-called value systems. Value systems are co-ordinates between hierarchy-creating values on the one hand and equality-creating values, on the other. From their interplay results the respective societal understanding of freedom. It is thus the weight of these values in relation to each other, not the individual values as such, that guides specific norms of social behaviour in individual societies. Thus, when people talk of

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values, they actually refer, as a rule, to norms of behaviour which differ between societies. These remarks are not simply for the sake of juggling with words. If values themselves diverged between different societies, the gulf would be unbridgeable. But if the real issue is about norms, i.e. the interpretation of what constitutes the correct expression of values common to all men, then the pertinent question is a completely different one: Is anyone entitled to claim and exercise a monopoly right of ethical interpretation binding to all? The answer to this question is dependent on two major considerations. First, changes in norms of behaviour show that values have historically been subject to shifts in relative weight to each other and have, thereby, created new value systems and consequently new norms of behaviour. As a rule, the times when such shifts occurred were experienced by contemporaries as times of great cultural crisis. It was only after the shift had come to a historical end, that men were to recognise that they lived in a new promising age. Second, one of the most basic features of modern Western societies is that they represent societies ‘severed from tradition’, moulded by a newly emerging tradition which, through conscious intellectual repulsion, forcefully eclipsed the old historical tradition which came to be seen as an oppressive yoke of the previous ages of darkness. This is, by the way, the original meaning of enlightenment. The irresistible rule of reason was to ‘enlighten’ the spiritual, social and political realm of darkness and show men the way to new civilisatory brightness. In this context the belief in the ‘Renaissance’, i.e. the fictitious rebirth of the classical age of Greece, essentially served to lend strong historical authority to the great departure. As in many other historical cases, the challenges of radical change and the socio-psychological tensions resulting from the confrontation between the old and the new, could evidently be borne with less self-destructive consequences if the new was not viewed as having absolutely no roots in the past, but believed to represent the needful return to the lost classical age. A very prominent non-Western historical example is the case of Confucius who always maintained that his life work was in the service of restoring the Golden Past. But what he really did was to usher in a ‘conservative revolution’ by restricting the genealogical principle of legitimation of rule through the introduction of the historically new, rivalling principle of legitimation based on superior ethical knowledge and behaviour. His ‘junzi’ was no longer a ruling feudal aristocrat, but the man of wisdom. In the long run this intellectual revolution eliminated the blood principle of elite formation in favour of the principle of competitive selection of those who were to administer the country. The fictitious look back to the past holds true for Europe, but less so for America. Indeed, the American revolution and the departure to a ‘New World’ which was radically to differ from the evils of the old world of Europe was deemed a great historical event in the eyes of the American founding generations, exactly because it was believed that the battle of the new forces against the dark old ones

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was only half-heartedly being fought in Europe and compromised by the lingering resistance of old institutions. In this sense, early America represented a new society based on the common civilisatory endeavour to overthrow the authority of the past by devotion to the future. American society believed in the power of ‘utopian tradition’. And the new ideals were not to be fouled by devious foreign influences. The new society, thus, became essentially inwardlooking, consciously advocating the blessings of isolationism. America’s strong sense of global mission and the ever-present urge to spread the message of the superior American way of life which people everywhere in the world often view as characteristic of American nationalism are of a much later historical date. Unlike America, East Asian and other non-Western societies are passing through painful processes of freeing themselves from pervasive elements of their respective traditions. Thus, analogously to the West, the future civilisatory landscape of East Asia will, in all probability, also be characterised by new societal traditions which have only loose roots in respective historical traditions, and these new traditions cannot wilfully be ‘created’, neither by means of social engineering nor through other efforts of ideologico-political design. Instead, as is the case in all complex social processes, the new traditions will rather come into existence as the result of essentially self-propelling societal processes of trial and error. Thus, there is unfortunately no way to predict what, apart from the basic characteristics common to all modern societies, will be the distinguishing traits of East Asian societies and what will be the core features of their national identities. The debate on values seems, above all, to reflect the prevalence of diverging historical perceptions and realities in the Atlantic and Pacific regions of the world. East Asian and Western societies live at present in different historical stages of socio-economic and socio-cultural development, and in spite of East Asia’s high dynamics of economic development and societal modernisation, the gaps will not be closed in the short or medium run. The human mind as such changes much more slowly than it can change its environment. Let me conclude with a few remarks regarding the parallel debate on the alleged or factual differences between Western-style (liberal) democracy and East Asian forms of democracy. First, (un)fortunately it cannot be ascertained that history has, once and for all, decided that modern Western mass-scale systems of democracy are really the final answer to man’s political needs and inventiveness. Current mass-scale democracies represent a historically rather recent phenomenon, in most countries not much older than a hundred years or even less. Moreover, commendable research on the origins of modern democracies clearly illustrates that the genesis of contemporary political pluralism is not primarily due to a purported historical consensus on muchdiscussed basic civil values. Instead, pluralist democratic systems originally owe their existence to the much less agreeable fact that antagonistic societal groups largely exhausted themselves over long periods of hostile political struggle and

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were finally forced to recognise that none of them would be capable of establishing socio-political ‘hegemony’ over the others. Basic socio-political stability of modern mass-democratic systems is usually assumed to rest on the foundation of a historically grown, precarious societal consensus on social justice, as realised through the instruments of the welfare state. But in view of radical changes in global economic life, it has become much less certain that individual nation states will continue to have the substantial material and financial means at their disposal to sustain the old foundations of that consensus. Indeed, more than a decade before prominent Asian voices first began to comment critically that Western societies are showing heavy symptoms of social decay, early Western critics had already expressed similar concerns that Western mass-democratic systems faced the risk of impending ‘nongovernableness’. Up to now these warnings have not been confirmed by the real course of events, but this does not imply that they were completely unfounded. The fact that mass-democratic systems are of fairly recent origin must be stressed because it is often, albeit not quite correctly, presumed that modern democracy has its roots in classical Greece. This common ideological assumption is another great comforting myth of modern Western thought. For, although it cannot be denied that democracy and demagogy were born as twins in pre-Christian Athens, for more than 1,800 years no one thought of the short-lived Athenian political order as being of relevance to the Christian world. In fact, the intellectual roots of modern mass democracies do not really reach deeper than the seventeenth century when the philosophers of enlightenment started to ponder on the evils of absolutism and the promises of the rule of reason. Second, with respect to the attractiveness of the political ideal of demo cratic order and its significance to the contemporary world, it is of some importance that the history of democratic ideas and visions feeds on two overlapping but not identical lines of thought. The one line is assumed to start from Athens and Greek ideals. It centres on the individual and his allegedly inalienable rights, and it is perceived as intrinsically bound to ancient ideas of public equality, Christian notions of the immortal individual soul and the doctrines of mainstream enlightenment. In short, this line tends to design the ideal political order from the viewpoint of the individual, not that of society. With regard to universal legitimisation and plausibility, this train of ideals is restricted by barriers of different traditions of political culture. It is, indeed, heavily laden with metaphysics. Excellent metaphysics, but metaphysics none the less! The second line of democratic thought is less imaginative, intellectually less stimulating, but also less bound by metaphysics and less constrained by cultural barriers. Beginning with Montesquieu and his empirically supported thoughts on the spirit of laws, this line broadens into the political tradition of ‘checks and balances’. Montesquieu can rightfully be recognised as the intellectual ancestor of the ‘non-liberalist camp’ in the battle between the forces of democracy. The non-liberalist democratic tradition does not primarily start from the individual and his rights, but from the idea of civilised political order, i.e. from

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the viewpoint of society. That is why intellectual attention is mainly directed towards pondering on specific key notions such as ‘polished nations’ or ‘gouvernment modéré’, i.e. how to free the national realm of politics from pervasive political arbitrariness and safeguard lawful and accountable governance. The compromise between the requirements of functional efficiency and the realisation of the political ideal of the autonomous individual is much more to the side of good working order than in liberalist political thinking. This line is, on the whole, much more transcultural, i.e. compatible with different traditions of political thought. In fact, Confucianism, for example, can rightfully pride itself on a long chain of thought on the benefits of political checks and balances which, by way of a misnomer, has also been called the ‘liberal tradition of Confucianism’. Kim Dae-jung, Korea’s ‘elder dissident’, who has strongly argued that democracy is East Asia’s destiny, not culture, is the most recent voice of this school of tradition. Moreover, it is no longer certain that those characteristics which have been declared to represent the foundation of Asian-style democracy are, in fact, of an essential long-term nature. In Japan as well as in Taiwan and Korea they already seem to have lost much of their previous intellectual prominence. The future of democracy in Asia thus seems wide open. NOTES 1 There are numerous works on the independence movement in Indonesia, among them are G.McT.Kahin, Nationalism and Revolution in Indonesia (New York: Cornell University Press, 1952), J.D.Legge, Sukarto (Sydney: Allen & Unwin, 1972) and U.Sandhaussen, The Road to Power: Indonesian Military Politics, 1945– 1967 (Kuala Lumpur: Oxford University Press, 1981). 2 For a concise summary of the development of the Burmese nationalist movement and army, see Robert H.Taylor, ‘Burma’, in Sakaria Haji Ahmad and Harold Crouch (eds), Military-Civilian Relations in South-East Asia (Singapore: Oxford University Press, 1985), p. 1,428. 3 Ulf Sandhaussen, ‘Indonesia: Past and Present Encounters with Democracy’, in Larry Diamond, Juan J.Linz and Seymour Martin Lipset (eds), Democracy in Developing Countries: Volume Three, Asia (Boulder: Lynne Rienner Publishers, 1989), p. 429. 4 Carlyle A.Thayer, ‘Vietnam’, in: Ahmad and Crouch (eds), op cit., pp. 235–6. 5 Taylor, op.cit, p. 27. 6 Clark D.Neher and Ross Marlay, Democracy and Development in Southeast Asia: The Winds of Changes (Boulder: Westview Press, 1995), pp. 98–9. 7 Ibid., p. 131. 8 Neher and Marlay, op. cit, p. 99. 9 Ibid., p. 100, and Zakaria Haji Ahmad, ‘Malaysia: Quasi-Democracy in a Divided Society’, in Diamond, Linz and Lipset (eds) op. cit., pp. 357, 365–6. 10 Chan Heng Chee, ‘Singapore’, in Ahmad and Crouch (eds), op. cit., p. 138.

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11 Han Sung Joo, ‘Korea: Politics in Transition’, in Diamond, Linz and Lipset (eds), op. cit., pp. 267ff.; Mark L.Clifford, Troubled Tiger: Businessmen, Bureaucrats and Generals in South Korea (New York: M.E. Sharpe, 1994). 12 Harold Crouch, ‘Indonesia’, in Ahmad and Crouch (eds), op. cit., p. 60. Cf. also lan MacFarling, The Dual Function of Indonesian Armed Forces: Military Politics in Indonesia (Canberra: The Australian Defence Studies Centre, 1996), pp. 6–93. 13 Quoted in MacFarling, op. cit., p. 118. 14 Quoted in Taylor, op. cit., p. 36. 15 Chai-Anan Samudavnija and Suchit Bunbongkarn, ‘Thailand’, in Ahmad and Crouch (eds), op. cit., pp. 78–9. 16 Karl D.Jackson, The Philippines: the search for a suitable democratic solution, 1946–1986', in Diamond, Linz and Lipset, op. cit., pp. 240–1. 17 Ibid., p. 257. 18 Neher and Marlay, op. cit., p. 67. 19 Far Eastern Economic Review (Feb. 15, 1996), p. 21. 20 See Samuel P.Huntington, The Third Wave: Democratization in the Late Twentieth Century (Norman: University of Oklahoma Press, 1991) and Neher and Marlay, op. cit., pp. 193–8. 21 Neher and Marlay, op. cit., pp. 5–6. 22 Kishore Mahbubani, The United States: “Go East, Young Man”’, in The Washington Quarterly (Spring 1994), pp. 1–11. 23 Ibid., p. 11. 24 Samuel Huntington, op. cit. 25 Huntington, ‘The clash of civilisations?’, in Foreign Affairs (Summer 1993), pp. 22–49. On the relations between the notions of culture, power, economics and civilisation see Michele Schmiegelow, ‘Démocratie en Asie: cultures, pouvoir, économie et civilization’, Revue internationale de politique comparée, Vol. 2, No. 2 (September 1995), pp. 237–54 and (ed.) Democracy and Asia, op cit., pp. 533–50. 26 These arguments were first developed by Michele Schmiegelow at a conference on ‘Democracy and democratisation in Asia’ at the University of Louvain in May 1994 and published in Michele Schmiegelow (ed.), Democracy in Asia (Frankfurt: Campus Verlag, 1997 and New York: St Martin’s Press, 1997). For a more comprehensive discussion of the two schools of the theory of democracy in the Asian context, see Henrik Schmiegelow, ‘Communauté, société et éthique en démocratie’, in M.Schmiegelow, op. cit., pp. 222–76. 27 Huntington claims (Third Wave, pp. 300–1) that ‘Classic Chinese Confucianism… emphasised the group over the individual, authority over liberty, and responsibilities over rights.’ Confucian societies lacked a tradition of rights against the state, etc’. He neglects the unique Chinese traditional right of the people to revolt against a corrupt and depraved emperor, an emperor who had lost the ‘Mandate of Heaven’ and was to be replaced by a new man founding a new dynasty. See, on this subject Gilbert Rozman, ‘Confucian ethics and legitimacy of authority in China and Japan’, in Schmiegelow (ed.), Democracy in Asia (Frankfurt: Campus Verlag 1997); Richard Madsen, The spiritual crisis of Chinese intellectuals’, in Deborah Davis and Ezra Vogel (eds), Chinese Society on the Eve of Tiananmen (Cambridge Mass.: Harvard University Press, 1990), p. 259 and Gregor Paul, Aspects of Confucianism: A Study on the Relationship between Rationality and Humaneness, (Frankfurt: Peter Lang, 1990).

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28 See Bassam Tibi, ‘Democracy and democratization in Islam: the quest of Islamic enlightenment’, in M. Schmiegelow (ed.), Democracy in Asia, op. cit., and Baudouin Dupret, ‘Political Verses in the Koran: From Classical Thought to Islamic Ideology’, in M.Schmiegelow (ed.), Democracy in Asia, op. cit. 29 See Bassam Tibi, The Crisis of Modern Islam: a preindustrial culture in the scientific-technological age (Salt Lake City: University of Utah Press, 1988). 30 See M.Schmiegelow, Démocratie en Asie, op. cit., p. 246 with further references. 31 See Hans Küng and Karl-Josef Kuschel (eds), A Global Ethic (London: SCM Press, 1993). 32 Karel van Wolferen, The Enigma of Japanese Power (New York: Macmillan, 1988) and ‘Japan: different, unprecedented and dangerous’, International Herald Tribune (November 9, 1989). 33 For a discussion of Japan societal structure and model of action in terms of Popper’s concept of an open society see Michele Schmiegelow, ‘Between Platonian closure and Socratian openness’, Leviathan. The Japanese Journal of Political Science Vol. 10 (Special Issue 1992), p. 106. 34 Junko Kato, ‘Withering factionalism? The future of Japanese and Italian partisan politics’, in M.Schmiegelow, Democracy in Asia, op. cit. 35 See, for a more detailed analysis, Michele Schmiegelow and Henrik Schmiegelow, Strategic Pragmatism: Japanese Lessons in the Use of Economic Theory (New York: Praeger, 1989). See also, on the impact of this model of action on the international system and on the epistemology of foreign and economic policy, Henrik Schmiegelow and Michele Schmiegelow, ‘How Japan affects the international system’, International Organization Vol. 44, No. 4 (Autumn 1990), pp. 553–88. 36 Huntington, The Third Wave, p. 307; see also Rozman, op. cit. 37 Robert Shaplen, Time out of Hand: Revolution and Reaction in South-East Asia (New York: Harper & Row, 1970), pp. 230–65. 38 Lawrence Gray, ‘The aftermath of democratization in the Philippines: the task of consolidating progress’, in Michele Schmiegelow (ed.), Democracy in Asia, op. cit. 39 The Meiji Constitution of 1889 in Japan formally conferred sovereignty on the emperor, not on the people. 40 Huntington, The Third Wave, p. 19. 41 See Kwon Tai Hwan and Cho Hein, ‘Confucianism and Korean society: the social basis of Korean democratization’, in Schmiegelow (ed.), Democracy in Asia, op. cit. 42 Huntington, The Third Wave, pp. 302–3. 43 Li Weng-lang, ‘Ethnic competition and mobilization in Taiwan’s politics’, Journal of North-East Asian Studies (Spring 1993), pp. 59–71. 44 Michele Schmiegelow, ‘Deng’s reforms and the development experience of the ROC’, in King-yuh Chang (ed.), Ideology and Politics in Twentieth Century China (Taipei: Institute of International Relations, National Chengchi University, 1988), pp. 150–73, with Henrik Schmiegelow. 45 Lo Shiu-hing, ‘Self-determination, independence and the process of democratization in Taiwan’, Asian Profile, Vol. 19, No. 3 (June 1991), see also Philippe Regnier, ‘International security, political enlargement and democratization: the case of South Korea and Taiwan’, in M.Schmiegelow (ed.), Democracy in Asia, op. cit.

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46 Huntington, ‘The Clash of Civilisations?’, op. cit. 47 Huntington, The Third Wave, op. cit., p. 302. 48 N.Ganesan, ‘Cultural pluralism and the unifying potential of democracy in South East Asia’, in M.Schmiegelow (ed.), Democracy in Asia, op. cit. 49 Francis Fukuyama, The End of History and the Last Man (New York: The Free Press, 1992). 50 Jean-Marie Guéhenno, La Fin de la Democratie (Paris: Flammarion, 1993). 51 Huntington, The Third Wave, pp. 19–20. 52 Greg Barton, The international context of the emergence of Islamic neomodernism in Indonesia’, in M.C.Ricklefs (ed.), Islam in the Indonesian Context (1991), pp. 69–82 and ‘Neo-modernism: a liberal, progressive Islamic movement and its contribution to the process of democratization in Indonesia’, in Michele Schmiegelow (ed.), Democracy in Asia, op. cit. 53 See, among others, Davis and Vogel, op. cit.; Zhang, Wei-wei, ‘Deng Xiaoping’s political reform and its impact on China’s democratization’, in Michele Schmiegelow (ed.), Democracy in Asia, op. cit. and Kay Möller, ‘Pragmatic reform in post-Tienanmen China?’ in ibid. 54 Huntington, The Third Wave, p. 316. 55 See P.Melling and J.Roper (eds), America, France and Vietnam: Cultural History and Ideas of Conflict (Aldershot: Avebury, 1991). 56 Guéhenno, La Fin de la Democratie, op. cit. 57 Borje Ljunmggron, ‘Beyond reform: on the Dynamics Between Economic and Political Change in Vietnam’, in M.Schmiegelow, Democracy in Asia, op. cit. 58 See Raoul Jennar, ‘Democratization in Cambodia: Hopes and Constraints’, in M.Schmiegelow (ed.) Democracy in Asia, op. cit. 59 Huntington, The Third Wave, op. cit. p. 316. 60 Karl Popper, The Open Society and its Enemies (Princeton, Princeton University Press, 1966, 1st published 1962). 61 Much of the materials and arguments in this section of the paper draws from the author’s monograph ASEAN Perspectives on Human Rights and Democracy in International Relations (Quezon City: Center for Integrative and Development Studies, University of the Philippines and the UP Press, December 1995), Occasional Papers on Peace, Conflict Resolution and Human Rights, Series No. 95– 6. 62 Huntington, ‘The clash of civilizations?’, Foreign Affairs (Summer 1993), pp. 22– 49. 63 See, for example, Bilahari Kausikan, ‘Asia’s different standard’, in Foreign Policy, No. 92 (Fall 1993), pp. 24–42; Kishore Mahbubani, ‘Dangers of decadence—what the rest can teach the West’, in Foreign Affairs, 72:4 (Sept./Oct. 1993), pp. 10–14, ‘The West and the rest’, in The National Interest (Summer 1992), and ‘An Asian perspective on human rights and freedom of the press’, paper presented at the Conference on Asian and American Perspectives on Capitalism and Democracy jointly organised by The Asia Society of New York, the Institute of Southeast Asian Studies, the Singapore International Foundation, and the Institute of Policy Studies, Singapore, 28–30 January 1993. 64 On this issue, see Alison Dundes Renteln, International Human Rights: Universalism Versus Relativism (Newburg Park: Sage Publications, 1990); and

THE POLITICAL SETTING 53

65

66 67

68 69

70 71 72 73 74 75 76 77

78 79

80

81

82 83 84

Christopher Tremewan, ‘Human Rights in Asia,’ in The Pacific Review, 6:1 (1993), pp. 22–4. A.J.M.Milne, Human Rights and Human Diversity (Albany: State University of New York Press, 1986), p. 1; and Jack Donnelly, The Concept of Human Rights (New York: St. Martin’s Press, 1985), pp. 8–27. Jusuf Wanandi, ‘Human rights and democracy in the ASEAN nations: the next 25 years,’ in Indonesian Quarterly, 21:1 (1993), pp. 14–15. As cited in T.Mulya Lubis, ‘Human rights discourses in contemporary Indonesian history: 1945–1993’, a paper presented at the First ASEAN Colloquium on Human Rights, Institute for Strategic and Development Studies, Manila, 16–17 January 1993, pp. 17–18. See Mahbubani, ‘Dangers of decadence,’ op. cit., passim; and Kausikan, Asia’s different standard’, op. cit., p. 36. From his opening speech on the occasion of the Jakarta Summit of the NonAligned Movement (NAM) in September 1992, as cited in Chen Jie, ‘Human rights: ASEAN’s new importance to China’, in Pacific Review, 6:3 (1993), p. 233. As quoted in David I.Hitchcock, Asian Values and The United States: How Much Conflict? (Washington, D.C.: CSIS, 1994), p. 1. Arye Neier, ‘Asia’s unacceptable standard’, in Foreign Policy, 92 (Fall 1993), pp. 42–5. Kausikan, ‘Asia’s different standard’, pp. 35–6. ‘ASEAN’s position on the social clause’, ASEAN Update, March 1994, p. 4. Wanandi, ‘Human rights and democracy in ASEAN’, op. cit., pp. 20–1. ‘Nobody elects the press: Mahathir speaks out on media, culture and trade’, in Far Eastern Economic Review (7 April 1994), p. 20. Max Weber, The Protestant Ethic and the Spirit of Capitalism (New York: Scribner’s Sons, 1958). Michael Freeman, ‘Human rights: Asia and the West’, in James T.H.Tang (ed), Human Rights and International Relations in the Asia Pacific Region (London: Pinter, 1995), p. 19. Ibid., p. 20, emphasis is mine. Mahinda Palihawadana, ‘Buddhism and human rights’, a paper presented at the Workshop on Human Rights in Asia and the Pacific, The Center for Asian-Pacific Affairs, The Asia Foundation, Chiang Mai, 3–6 December 1995, p. 8. As cited in Anders Uhlin, ‘Transnational democratic diffusion and Indonesian democracy discourses’, in Third World Quarterly, 14:3 (1993), p. 529. Cf. also Muhammad A.S.Hikam, ‘Islam and human rights: tensions and possible cooperation,’ paper presented at the Workshop on Human Rights in Asia and the Pacific, The Center for Asian Pacific Affairs, The Asia Foundation, Chiang Mai, 3– 6 December 1995, p. 3. Daniel S.Lev, ‘Human Rights NGOs in Indonesia and Malaysia’, in Claude E. Welch, Jr. and Virginia A.Leary (eds), Asian Perspectives on Human Rights (Boulder, Colorado: Westview Press, 1990), pp. 142–56. Freeman, ‘Human rights: Asia and the West,’ op. cit., p. 15. Human Rights Watch, World Report 1994, p. 139. Gordon Fairclough, ‘Standing firm: Asia sticks to its view of human rights’, in Far Eastern Economic Review (15 April 1993), p. 22.

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85 Ibid., and: ‘Our voice: Bangkok NGO declaration on human rights’ (Bangkok: Asian Cultural Forum on Development on Behalf of the Organizing Committee and the Coordinating Committee for Follow-up, Asia Pacific NGO Conference on Human Rights, 1993.) 86 See Chen, ‘Human rights: ASEAN’s new importance to China,’ op. cit., on this interesting development. 87 Timothy Ong, ‘All this talk of “Asian Values” sends an unhelpful message’, International Herald Tribune (20 May 1996), p. 8. 88 Ishihara Shintaro, ‘Learning to say no to America’, in Japan Echo, Vol. XVII, No. 1. (Spring 1990), pp. 31–2. Cf. also Ishihara Shintaro, ‘The great tradition’, in Mahathir Mohamad and Shintaro Ishihara, The Voice of Asia, Two Leaders Discuss the Coming Century (Tokyo, 1995), p. 92. 89 ‘Asian democracy gets a boost’, in The Asian Wall Street Journal (Febr. 17, 1996). 90 ‘Who’s winning the Asian values debate?’, in The Asian Wall Street Journal (Oct. 27–28, 1995).

3 The economic setting

Perhaps the single most important fact about European-Asian economic relations is that they are widely underestimated in their importance. Realities are divided from perceptions by a considerable distance. This does not, of course, suggest that everything is as it should be: there are problems of misleading images and misperceptions on both sides. There are also persistent weaknesses both with regard to public policies and corporate strategies vis-à-vis Pacific Asia in Europe. In the first part of this chapter, Hanns G.Hilpert looks at the facts of economic relations between Europe and East Asia in terms of trade and investments. Haflah Piei and Noor Aini Khalifah critically examine policies of the European Union towards ASEAN from a Southeast Asian perspective and conclude that those policies leave much to be desired. Jean-Pierre Lehmann finds much progress, but also a host of remaining problems and weaknesses in his assessment of attitudes and strategies of European corporations in Asia. ECONOMIC INTERACTIONS European-Asian economic interaction is often seen as the weak side of the triangle tying the three major global centres of economic activity together, The reality is rather more differentiated and less negative, as Hanns G.Hilpert shows in his carefully documented analysis of trade and investment links between the two regions. Over the last decade and a half, economic relations between Europe and East Asia have grown rapidly, and have now reached levels which, while not fully of the same magnitude, certainly bear comparison with those between East Asia and America or Japan. HANNS G.HILPERT Why are perceptions of European-Asian economic relations so much out of line with realities? Foreign trade analyses have focused much less on European involvement in Asia Pacific and Asian involvement in Europe than on AsianAmerican trade and investment relationships. The characteristics and special features of Asian-European economic relations, their dynamism and their

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potential are largely overlooked in the international economic policy discussion in light of the dominance of the European-American and the Asian-American dialogue. The following analysis will focus, on the Asian side, on Japan, the NIEs (the newly industrialising economies—Korea, Taiwan, Hong Kong and Singapore), the ASEAN community,1 Vietnam and the People’s Republic of China (which will all be referred to as East Asia) and, on the European side, on the European Union (of the twelve),2 EFTA (of the six)3 and the four Visegrad countries.4 The present compositions of the EU, EFTA and the ASEAN community are, of course, different, but for an examination of the period between 1980 and 1994, the status as of 1994 is more expedient. Of total world trade (exports and imports) amounting in 1994 to about 8.5 trillion dollars, Europe had a share of 41.6 per cent, East Asia 24.9 per cent and North America 19.4 per cent. Europe’s position as the world’s most important trading region changes however, if intra-Community trade is removed. East Asia then comes out on top with a share of 30.8 per cent, whereas the European share is reduced to 27.3 per cent. The North American share also rises, but at 24.0 per cent is still below that of Europe (see Table 3.1). Judged by the potential that the world’s two largest economic regions represent, the trade between the two regions is somewhat small. The share of intra-regional trade (within East Asia and within Europe) and the share of extra-regional trade of both regions with North America is much higher. However, East Asia’s share in Europe’s exports overtook its respective US-American share in 1991. In trade terms, East Asia now is more important to Europe than the US. In 1994, nearly 8 per cent of Europe’s exports went to East Asia, where 10.5 per cent of European imports originated (intra-Community trade included). Europe’s position is, relatively speaking, somewhat more important from East Asia’s perspective: 13.6 per cent of its exports and 12.8 per cent of its imports are with the European Union (see Table 3.2). This comparison shows that Europe’s importance is greater from an East Asian perspective than East Asia is from a European perspective. East Asia has a quasi-permanent trade surplus with Europe, primarily because of shortfalls in bilateral European-Japanese and European-Chinese trade (see Table 3.3). Table 3.1 Share of world trade of the three large world economic regions in 1994

1

EU-12, EFTA-6, Visegrad Japan, NIEs, ASEAN, China and Vietnam 3 USA, Canada and Mexico Source: Calculations of the Ifo Institute based on IMF statistics (Direction of Foreign Trade Statistics) 2

THE ECONOMIC SETTING 57

European-Asian trade has grown very strongly in the past fifteen years from a low starting level. The year 1991 marks a historic watershed in international trade relations. For the first time, trade between Western Europe and Pacific Asia surpassed transatlantic trade. Hence, within less than two decades, trade across the Atlantic was not only overtaken by trade across the Pacific, but became in fact the weakest link in triadic trade relations. Table 3.2 Importance of Asian-European trade (1994), from the European perspective1

1

EU, EFTA and Visegrad FOB values for exports; CIF values for imports Source: Calculations of the Ifo Institute based on IMF statistics (Direction of Foreign Trade Statistics) 2

Table 3.3 Importance of Asian-European trade (1994), from the East Asian perspective1

1

Japan, NIEs, ASEAN, China and Vietnam FOB values for exports; CIF values for imports Source: Calculations of the Ifo Institute based on IMF statistics (Direction of Foreign Trade Statistics) 2

While Europe’s world exports from 1980 to 1994 grew at an average annual pace of 6.2 per cent, European exports to Asia rose by 11.8 per cent. European imports from East Asia did not grow quite so quickly. But although European world imports grew at an annual average of 6.4 per cent, imports from East Asia grew by 9.4 per cent. From the East Asian perspective, as well, Europe in the same period was an expanding market. Although East Asian export expansion to Europe at an average annual growth of 9.2 per cent was somewhat slower than the total growth of East Asian exports (9.8 per cent), East Asian imports from Europe at an average of 11.2 per cent showed much faster growth than that of the region’s world imports (8.6 per cent). To put it in a nutshell, contrary to conventional wisdom, Europe has successfully built up its position in East Asia. In fact, Europe did better than its

58 HANNS G.HILPERT

US competitors, who effectively lost market shares. This is even more remarkable as the US Dollar depreciated against the DM and the Yen over the period as a whole; conventional trade theory would suggest that the competitiveness of American products should have risen during that period. EU trade with all of East Asia has shown dynamic growth in the fifteen years we are examining—an average annual increase of 11.9 per cent for exports and 9. 7 per cent for imports. The fastest growth has been EU trade with the NIEs: their share of total EU exports rose from 1 per cent in 1980 to 3.3 per cent in 1994 and their share of total EU imports rose from 1.3 per cent to 3.1 per cent. Bilateral trade volume in the same period increased nearly sixfold. Between the EU and the ASEAN countries, however, growth in trade was uneven: EU trade with Thailand and Brunei exceeded that between the EU and the NIEs, whereas trade with the other ASEAN countries expanded at a below-average pace in comparison with overall European-Asian trade. By far the EU’s most important East Asian trading partner is Japan, which accounted for 2.1 per cent of all EU exports and 4.2 per cent of all EU imports in 1994 (including intra-Community trade). The second most important EU trading partner was China with 1.7 per cent of EU imports and 1 per cent of its exports. Germany A comparison of German and European East Asian foreign trade reveals that East Asia’s importance for the German export economy on the whole is somewhat larger than for the EU. Relative to total foreign trade volume, Germany also imported more from Asia than the EU as a whole. From 1980 to 1994, German firms held an above-average share of European exports to the NIEs and the ASEAN countries. German imports from Japan and China were also above the EU average. France For the French economy, the importance of East Asia as an export and import region was somewhat below the European average. At the same time, however, French exports to East Asia from 1980 to 1994 grew faster than that of its European neighbours. Great Britain On average, the British economy has somewhat closer trade relations with East Asia than the EU as a whole. Great Britain maintains comparatively close trade relations with its former colonies (Brunei, Hong Kong, Malaysia and Singapore). In growth of exports, Great Britain fell somewhat behind its European neighbours in the period between 1980 and 1994. Italy Italian exports to East Asia expanded robustly between 1980 and 1994, especially to the NIEs and Southeast Asia. Growth in imports from Asia Pacific was very hesitant, which expressed itself in a clearly below average East Asian import share in Italy. EFTA The 1994 EFTA members Finland, Iceland, Norway, Austria, Sweden and Switzerland were able to use East Asia as an export market to a somewhat

THE ECONOMIC SETTING 59

stronger extent than the EU. On the other hand, the EFTA countries imported less from East Asia than did the EU. On balance, EFTA recorded a slight surplus in East Asian trade. Switzerland assumed a prominent position among the EFTA countries—it accounted for 13.6 per cent of EFTA exports to East Asia in 1994. For no other country in Europe did East Asia have such great importance as an export region. Visegrad countries East Asian trade is still of little importance for the four Visegrad states Poland, Hungary, the Czech Republic and Slovakia. Closer trade connections with East Asia cannot be expected until the second half of the nineties. Asian exports to Eastern Europe grew by yearly rates of 8–10 per cent from 1980 to 1994, slightly less than Asian world exports and also less than Asia’s imports from Europe. But even this modest rate has pushed Asia’s market share in Europe by four to five percentage points, nearly doubling its share over the past 15 years. The roughly 10 per cent Asian market share looks small, but should be weighted against the fact that overall extra-regional trade of Europe is quite small. Japan In 1994, Japan directed 16.5 per cent of its total exports to Europe and received 15.7 per cent of its imports from this region. Germany, Japan’s most important European trading partner, accounted for 4.5 per cent of Japan’s exports and 4.0 per cent of its imports in 1994. Whereas Japanese exports to Europe basically followed the average of Japanese export expansion in the years 1980 to 1994, Japanese imports from Europe were clearly more expansive than for example Japanese imports from the United States. The EU, like America, also has an immense trade deficit with Japan, but unlike America’s it has been declining since 1992. Over the whole period, economic ties between Japan and Europe have grown considerably, but they are still far away from the density of Japan’s trade relations with the US and East Asia. NIEs The NIEs, consisting of Korea, Taiwan, Singapore and Hong Kong, were particularly dynamic trading partners of the EU in the 1980s and 1990s. These four countries were able to boost their exports to Europe more strongly than Japan in the same period. Europe’s exports to the four Tiger countries also expanded. Nevertheless, the EU was only able to register market-share gains in Korea (1994:12.7 per cent) and in Taiwan (1993:13.3 per cent), whereas the European import share in the fifteen-year period remained about the same in Singapore (1994:12.0 per cent) and declined even in Hong Kong (1994:9.3 per cent). ASEAN With high absolute growth rates of bilateral trade between Europe and the ASEAN countries, consisting of Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam,5 developments between 1980 and 1994 were mixed. Europe’s export shares declined in Malaysia and Thailand, but grew strongly in Indonesia. And while the EU lost market shares in Malaysia and held its own in the Philippines, the shares of the EU in total imports of Thailand increased slightly and grew strongly in Indonesia.

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People’s Republic of China European countries have participated in the boom of exports to and imports from China at a somewhat below-average pace since the mid eighties. With some fluctuation, the combined share of Europe in Chinese exports declined slightly (1994:13.8 per cent) whereas Europe’s import share remained unchanged (17.1 per cent). In trade between Europe and East Asia industrial products dominate, in both directions—in contrast with a somewhat greater sectoral differentiation in East Asia’s trade with the United States and Japan. For US imports from the region, the weight is still on industrial products (98 per cent), but 17 per cent of all US exports are in the areas of agricultural products, food and drink, raw materials and energy. The case of Japan is nearly the opposite: Japan exports almost nothing but industrial products to East Asia (97 per cent), but imports from East Asia still contain a large portion of primary products (1988:27 per cent; 1993:24 per cent), mostly from ASEAN. In the industrial sector, road vehicles and mechanical engineering products have shown the highest growth in European-East Asian trade. European countries have been able to boost their shipments to the East Asian market somewhat more strongly than East Asian countries to Europe. The fact that European imports from East Asia from 1988 to 1993 increased more strongly than European world imports was caused by the rising share of East Asian industrial products in the industrial imports of Germany, France, the UK and the Netherlands. The growth of East Asian exports to Europe was primarily attributable to the NIEs and the ASEAN countries, and less to Japan and China. In terms of volume, electronics and aerospace are the most important hightech areas in trade between Europe and East Asia. The share of electronics— consisting of microelectronics, consumer electronics and computers and office machines—in the total foreign trade of the EU, EFTA, the US and Japan amounted to more than 60 per cent in 1993. Its share both in Japan’s exports and that of the Developing Asian Economies (DAEs)6 was more than 80 per cent. Aerospace is only important for the US and Europe, with foreign trade shares of around 30 per cent. All other high-tech segments are much less significant for trade. The world’s leading exporter and importer of high-tech products is the EU. If intra-Community trade is excluded, however, the EU falls behind the US and also Japan in terms of exports. The share of high-tech products in Europe’s industrial goods trade is clearly lower than is the case for the US and Japan. It is also noteworthy that growth in European high-tech trade was less dynamic in comparison with the US and Japan from 1989 to 1993: Japan and the US have evidently specialised to a much larger extent in hightech products. The RCA indices7 show an above-average specialisation of the US in both exports and imports and of Japan in only high-tech exports.8 The industrial goods trade of European economies, by contrast, is on the whole much more strongly diversified. In light of this structure it is not surprising that the EU and EFTA show a deficit in their high-tech trade, with the

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US and Japan displaying a surplus. The group of Developing Asian Economies (DAEs) shows a slight surplus in high-tech trade with the EU, EFTA, the US and also Japan. This does not apply equally across the board, however. The EU has bilateral deficits with the US, Japan and the DAEs, i.e. those countries which have shown the most dynamic growth in high-tech foreign trade. (With EFTA and the rest of the world, the EU between 1989 and 1993 achieved a surplus.) In sectoral terms, the EU deficits are primarily due to an imbalanced trade position in the electronics sector (computers and office machinery, electronic components, consumer electronics). To be sure, high-tech electronics comprise a dominating share of Europe’s exports to Asia (with shares of 57 per cent for the DAEs and 55 per cent for Japan), but trade flows in this direction are clearly weaker. Asian shipments to the EU outweigh what Europe sends to Asia in the areas of telecommunications and chemicals as well. In the case of Japan, this was also true for scientific apparatus and machines. The EU, however, had a clear surplus in aerospace. The most important high-tech exporter in Europe is France, due to its strong position in aerospace. France also achieved a trade surplus in its high-tech foreign trade. EFTA, like the EU, is a net importer of high-tech products, but with a trade volume that is less than a tenth of the EU’s. Japan’s share of 10 per cent and the DAEs’ 9 per cent of total EFTA hightech imports corresponds roughly with the EU average. EFTA’s sectoral structure also resembles the EU average. EFTA, however, is not as strongly represented in aerospace products. Compared with the EU, EFTA’s position in Asia is somewhat better in scientific apparatus, machines and components. In Japan’s already relatively low level of high-tech imports, Europe, with only a 14.3 per cent share for the EU and 1.5 per cent for EFTA, is clearly underrepresented. Stronger positions are held by the US at 59.4 per cent and also, with a growing trend, by the DAEs at 20.3 per cent. The European segments that are competitive in Japan are aerospace, although here the US is clearly stronger, as well as computers and office equipment, components, scientific apparatus, nuclear energy technology and weapons. The DAEs have a positive high-tech balance of trade vis-à-vis Europe and the US but not with respect to Japan. The comparative strengths of the DAEs are in the areas of computers, office machinery, components, consumer electronics and to a growing extent also in telecommunications. The EU’s most important hightech shipments are components, aerospace products, computers and office machinery, machines and scientific devices, with EFTA’s consisting of components and machines. Since the mid 1980s the internationalisation of the world economy has accelerated enormously. In addition to the trade of goods and services, cross-border investment activity has assumed a similarly important, and often more significant, position for the competitiveness of sectors and countries. Many large corporations regard the whole international economy

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as their market and are systematically internationalising their marketing, purchasing, production, and research and development (R&D). Of all the industrial countries, only Japan has a significant share in direct investment in Asian countries—16.1 per cent of Japan’s FDI (foreign direct investment) in 1994. The five other major investing countries, the US, the UK, Germany, the Netherlands and France have invested considerably less in East Asia, both in relative and in absolute terms. The foreign investment of East Asian countries (excluding Japan) have focused on East Asia itself or on the US. Europe still plays a subordinate role. From the perspective of the receiver countries, foreign direct investment, in volume terms, comprises only a small share of total domestic investment. This applies both for the classical industrial countries and for East Asia. Singapore, Malaysia and the coastal regions of China are the exceptions. At the same time, the impact of foreign investment on the development of the domestic economy, especially in the developing world, cannot be underestimated. Direct investment facilitates the increasing integration of the international division of labour and the transfer of new technologies and organisational know-how. In East Asia, foreign direct investment has proved to be a particularly important driving force for exports and industrialisation during the past decades. The most useful statistics for long-term analyses are those prepared by the statistical offices of the US, Germany, France, the Netherlands and the UK, which evaluate corporate balance sheets when preparing their statistics. In Asia, direct investment is only identified in transaction statistics. They allow current investment flows to be captured relatively well, but past investments (which have grown because of reinvested profits) are systematically underestimated. Hence, the value of direct investment in the developing and industrialising economies of East Asia made by the US, Japan and Europe is underestimated in the statistics of the receiver countries. Since, on the other hand, direct investment data in East Asia are collected and listed on a notification basis, and since the investments actually made are considerably lower than planned or approved investments, the official statistics systematically overestimate the actual investment flows. Thus, Asian receiver country statistics provide an insufficient picture of the actual status of investment links with other countries. Substantial European direct investment in East Asia comes from five European countries: the UK, the Netherlands, Germany, Switzerland and France. The volume listed in the official European FDI statistics is clearly below that of East Asian investments of Japan and the US, even for Europe as a whole. Europe not only has a weak position as an investor in East Asia in absolute terms; the relative share of Asia in total investments of European countries is also low, consisting of 7.2 per cent for the UK, 5.0 per cent for Germany, 4.3 per cent for the Netherlands and only 1.9 per cent for France (see Tables 3.4 and 3.5). These relative shares are not only lower than the corresponding shares for Japan (16.1

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per cent) and the US (13.8 per cent), they are also not in line with the importance East Asia has as a market for European exports. European investors seem to have played only a minor role in the East Asian investment boom of the late eighties and early nineties. Only in about half of the East Asian countries did the shares of European investments amount to more than a fifth of the entire investment flow of the early nineties, for example 36.2 per cent in Japan, 33.3 per cent in Korea, 26.3 per cent in the Philippines, 22.2 per cent in Hong Kong and 21.0 per cent in Singapore. Elsewhere the European shares were low: Malaysia 7.3 per cent, Thailand 5.9 per cent, and China below 5 per cent. In comparison, Japanese, US and Chinese investors achieved clearly better positions. Only in Japan, Indonesia and the Philippines were the shares of US investors below those of the Europeans, and only in Korea was the European position somewhat better than that than of the Japanese (see Table 3.5). In comparison to the eighties, the relative position of European investors in Asia has worsened in nearly all countries, the exceptions being Japan, Korea and the Philippines.9 Why did European investors take so little advantage of the superb invest Table 3.4 Foreign direct investment of Japan, the US, Germany, France, the UK and the Netherlands in East Asia (stocks)—in national currency and in per cent as of 1994

1

The share of investment going to Japan in parentheses USA and Germany: Investment stocks and shares refer to the total of Asia (East Asia and South Asia); France: Japan, NIEs, Thailand, Indonesia, China and India only Sources: Ministry of Finance, Tokyo; Department of Commerce; Deutsche Bundesbank; Banque de France, Central Statistical Office, UK; De Nederlandsche Bank 2

ment opportunities in East Asia? First, at least as far as some continental small— and medium-business based economies, such as Germany, Italy, Austria and Switzerland, are concerned, it can be argued that these economies have traditionally shown a high exports-to-foreign-investment ratio. Second, the prime investment motive for European companies in East Asia is still market access. The intention to re-import ‘Made in Asia’ manufactured goods, a pattern widely followed by American and Japanese companies, is of far less importance for European companies. For the latter, the economic distance between East Asia and their home European market is considerably higher. Moreover, there are other competitive investment locations available nearby.

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Table 3.5 European shares in East Asia’s investment inflows (shares of cumulated stocks as percentage)

1 Statistical sources are partly incomplete; calculated shares are only approximately correct. Calculations by the Ifo Institute for Economic Research

With a total volume of nearly £12 billion (year-end 1993), Great Britain, which traditionally has been strongly represented in its former colonies in Australia, New Zealand, Hong Kong, Singapore and Malaysia, is the largest European Asia Pacific investor. Its sectoral strengths are in chemicals, mechanical engineering, food and drink, energy, commerce, transport and finance. With a total of DM 16 billion in investment stocks, German direct investment has a somewhat lower level than that of the UK (as of the end of 1994). In terms of investment stock, the favourite locations in 1993 were Japan, Singapore and Hong Kong. The chemical sector is strongly represented almost everywhere, especially in Japan. Hong Kong and Singapore are interesting locations for German financial institutes. Electrical engineering firms have preferred to locate in Japan, Australia, Singapore and Malaysia. The third largest European investor is the Netherlands, which up to the end of 1993 had invested 10.6 billion Guilders in East Asia. Enterprises located in the Netherlands made considerable investments in East Asia’s manufacturing industry, especially in the area of mining, oil and chemicals, metal processing and mechanical engineering and also in food and drink. French firms had invested nearly 15 billion Francs in East Asia by the end of 1993. The favourite investment locations for French investors in East Asia were Japan, Singapore and Hong Kong. From the European viewpoint the most important East Asian investor is Japan. Direct investments of East Asian developing and industrialising countries are concentrated in East Asia itself, and extra-regional direct investment tends to go to the US, rather than to Europe. Nevertheless, direct investments of East Asian

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countries, excluding Japan, have clearly increased in Europe since the beginning of the nineties. The dynamics of Asian investments in Europe depend on the interplay of several factors. The attractive market potential of the world’s largest single market is just as important as the fear of Asian enterprises of protectionist measures in Europe (‘Fortress Europe’). An additional factor is the internationalisation efforts of Japanese firms since the mid 1980s and NIEs’ enterprises since the beginning of the 1990s. For Japanese firms, Europe is also becoming an important location for R&D activities. In the future, Korean and Chinese investments in Europe can also be expected to increase rapidly. Up to 31 March 1995, Japanese business had invested about $90 billion in Europe. On the basis of cumulative investment stocks, this makes Europe the second most important target for Japanese investors after North America and before East Asia. The largest amounts have been invested by Japan in the European financial centres of London, Luxembourg, the Netherlands and Switzerland ($32.2 billion). This was followed by the manufacturing industry at $21.2 billion, with emphases in electronics and electrical engineering ($6.0 billion), road vehicles ($3.8 billion), mechanical engineering ($3.5 billion) and chemicals ($2.9 billion). The preferred location for Japanese investors is in the financial, real estate and manufacturing sectors of the UK, which to the end of March 1995 attracted 37.6 per cent of all Japanese investment in Europe at a value of $33.8 billion. The Japanese invested considerably less in the Netherlands (21.6 per cent or $19.4 billion) and in Germany (9.0 per cent or $8.1 billion) which is a preferred location for Japanese trading companies and distributors. With a regional concentration on the UK and a sectoral emphasis in electrical engineering, the European investments of the NIEs has a similar structure to that of Japanese direct investment in Europe. At the same time, there also are some characteristic differences:10 • Hong Kong’s enterprises are investing in Europe not only to be able to participate successfully in Europe’s market potential but also globally to position their own firms with a view to the handover to China in 1997. • Taiwan’s small and medium-sized enterprises, especially in electronics, have tended to concentrate on the UK, Germany and the Netherlands. • Korean electrical engineering firms, boosted by the Chaebols’ globalisation strategies, have preferred the UK, Germany and France for their European investments. Korean automobile manufacturers have constructed dealer networks in Western Europe and construction capacities in Eastern Europe. Judged by the absolute volume and the relative shares, the trade and investment relationships between Europe and Asia are certainly not as strong as those between East Asia and Japan or between East Asia and the US. Moreover, the European position will continue to weaken in relative terms, as with the industrialisation and growth success of the NIEs, the ASEAN countries and

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China the regionalisation tendencies in East Asia will strengthen in future. Nevertheless, European-Asian trade has been surprisingly dynamic in the eighties and nineties—more dynamic, in fact, than the transpacific economic relationship. Furthermore, European-Asian trade frictions seem to be on the decline, again in contrast to transpacific frictions. It is not trade but rather the low level of European investment in Asia that gives cause for concern. Experience shows, however, that growth in foreign trade is eventually followed by expansion in direct investment. A stronger involvement of Europe in Asia and Asia in Europe thus should be expected in future. European and Asian firms share the advantage of huge and rapidly integrating economic regions, which absorb, in the case of Europe, two-thirds of its exports (with a declining trend), in the case of East Asia nearly half of all exports (with an upward trend). This, however, has not prevented the two regions from intensifying their mutual trade relations over the last fifteen years. Both sides have significantly increased their respective market shares in the other region. Contrary to conventional wisdom, for Europe and East Asia intra-regional integration and extra-regional trade expansion have been complementary. Based on a careful analysis of trade and investment patterns between the EU and ASEAN, which has been omitted here, Haflah Piei and Noor Aini Khalifah clearly identify the tremendous potential for a further expansion in economic interaction between the two regions. While European trade actually contracted in 1993, ASEAN trade in that year grew by almost 15 per cent as compared to 1992, and by about 115 per cent compared to 1988. In 1993, ASEAN absorbed just over two per cent (2.01 per cent) of the EU’s exports and supplied a bit more (2.27 per cent) of imports, while just below 8 per cent of ASEAN exports (7.81 per cent) went to Europe, and a bit more (8.39 per cent) of its imports originated within the EU. By comparison, ASEAN absorbed a smaller share of exports from the EU than Central and Eastern Europe (2.01 per cent vs. 2.77 per cent—with the gap between ASEAN and Central and Eastern Europe widening rapidly between 1988 and 1993), but supplied slightly more of its imports (2.27 per cent, vs. 2.25 per cent for Central and Eastern Europe). EU investments in ASEAN in recent years represented between 18 and 23 per cent of total approved investments in ASEAN countries. This was roughly compa rable with Japanese foreign direct investment, though the situation of course differed from country to country. During the 1960s and 1970s and into the first half of the 1980s, European multinationals had neglected direct investment in ASEAN in favour of investments within the EU itself and America—in part because ASEAN did not figure prominently in efforts of ‘outward processing’ and was not put in a wider Asia Pacific perspective. Since the late 1980s, the EU has been able to sustain its share in annual direct investment to ASEAN, while that of the US and Japan has been reduced by newcomers such as South Korea, Hong

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Kong and Taiwan. Leading EU investors in ASEAN are the UK, Germany, France and the Netherlands, with investments concentrated in petroleumrelated activities, chemicals, pharmaceuticals, food processing, electrical and electronic products, automobile assembly and finance. The EUASEAN economic relationship has thus come some way 4 but much needs to be done if its potential is to be realised. The two authors mince no words in their critical assessment of EU policies towards ASEAN, and they also make a number of suggestions about how things could be improved in the future. HAFLAH PIEI AND NOOR AINI KHALIFAH Despite the remarkable improvements achieved in the ASEAN-EU bilateral economic relationship since the 1980 Co-operation Agreement, several issues still impede closer economic links between the two regions. Generally, most of the ASEAN member countries still harbour lingering doubts about whether the EU with its Single Market Act has become more restrictive and inward looking. On the other hand, the EU worries that the formation of AFTA (ASEAN Free Trade Area) as a caucus within APEC may damage the EU through diversion of trade and investment from the EU to AFTA and the rest of the APEC economies. While economic interdependencies between ASEAN and the rest of the APEC region are rapidly being strengthened, there is indeed a danger that EU-ASEAN relations may be downgraded. Trade, and specifically market access, has been at the heart of the ASEAN-EU economic relationship. In terms of tariff barriers to imports, the EU, like other developed countries, has significantly reduced its tariff rates. But remaining tariffs tend to be relatively high in labour-intensive industries such as textiles and clothing, footwear, and wood products which are significant manufacturing export products of ASEAN. Moreover, some of the tariff lines discriminate against developing countries including ASEAN. Thus, the EU continues to maintain a differential tariff for crude palm oil (at 6 per cent) and refined palm oil (at 17 per cent) to protect the refining industries in the EU. The tariff differential restricts market access for refined palm oil into the EU. High tariffs, ranging from 12 per cent to 14 per cent, are also hindering easy access of ASEAN’s electronic products to Europe. Another controversial issue has been the future of the EU General System of Preferences (GSP) which represents the most visible form of positive differential treatment accorded by the EU to ASEAN member countries since its inception in 1971. Under this scheme, imports from ASEAN enter the EU either duty free or at preferential rates of duty. By 1993, about 44 per cent of total ASEAN exports to the EU were accorded GSP treatment. ASEAN’s GSP utilisation rate ranged from 69 per cent in the case of agricultural products to 43 per cent for manufactured products other than textiles and clothing (for which the utilisation rate was 30 per cent).

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The GSP undoubtedly has contributed a great deal to the growth in ASEAN exports to the EU. Its future, however, is uncertain, and there are also problems. For example, the GSP excludes products of export interest to ASEAN. Other problems are the early exhaustion of quotas and ceilings, the erosion of the margin of preferences and stringent provisions on cumulative rules of origin. ASEAN countries were hoping that a new GSP formulated by the EU would be more favourable to ASEAN requests. As it turned out, the new EU’s GSP adopted a totally different approach which again fell grossly short of ASEAN expectations and requests. • The new scheme involves new conditionalities, a more restrictive product coverage, and new and amended rules of origin and mechanisms for graduation. All products are grouped into four categories, depending on the sensitivity of the product to the EU domestic industry, and are subjected to different GSP rates.11 The margin of preference now varies from 15 per cent to 100 per cent. The categories of products are: • Highly sensitive products (essentially textiles, clothing and ferrous alloys) for which the preferential rate is 85 per cent of the MFN (most favoured nation) rates so that the margin of preference is 15 per cent. • Sensitive products, which covers a wide range of goods including footwear, chemicals, consumer electronics and cars. The GSP preferential rate is 70 per cent of the MFN rates—i.e. a 30 per cent margin of preference. • Semi-sensitive products, which covers a very wide range of goods including chemicals, machinery and photographic goods. The GSP rate is 35 per cent of the MFN rate, i.e. the margin of preference of 65 per cent. • Non-sensitive products ranging from toys to pharmaceutical products which benefit from duty-free treatment. The new scheme also includes a graduation mechanism which allows the EC to withdraw GSP benefits gradually for entire product sectors for the more advanced countries. The mechanism is based on the combination of two criteria: the development and the specialisation indices. The graduation mechanism will be introduced in two phases: For the first two years, i.e. 1995–1996, the products concerned will be offered 100 per cent of the GSP rates. In 1997 the rate will be 50 per cent of the GSP and in 1998 they will be fully graduated out of the EU’s GSP scheme. The new scheme also envisages the total exclusion of the most advanced developing countries as from January 1998 on the basis of the development and specialisation indices of a country. The former represents a country’s overall level of development compared to the EU while the latter refers to its share of the EC’s imports of a given sector. The new rules of origin have shifted from the generally accepted notion of substantial transformation towards a more elaborate system of value added measurement. These moves have an inherent bias against ASEAN products with low domestic value added, which are defined as ‘non-ASEAN’. As a result,

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those products would not only lose GSP treatment but they could also be subjected to EU anti-dumping investigations. Components and parts in sectors to be graduated may, however, be exported to other ASEAN countries for further processing before being exported to the EU. If cumulative rules of origin are met and the final ASEAN country of processing is not affected by graduation, the products may be given GSP treatment. This stipulation would encourage further integration among ASEAN countries, but it is more often than not ignored in practice by the EU. The same is true of provisions to allow materials or components of EU origin to be considered as originating in the beneficiary country which processes them. The EU also intends to introduce as from 1 January 1998 an additional (unspecified) preferential margin to countries that have adopted and applied certain ILO labour standards.12 Parts or the whole of the GSP could be temporarily withdrawn, on the other hand, if a country is found to engage in one of the following practices: any form of forced labour; exporting goods made by prisoners’ labour; fraud or failure to provide administrative co-operation as required for the verification of certificate of origin; manifest cases of unfair trading practices, including discrimination against the union and failure to meet market-access objectives agreed in the Uruguay Round of GATT. In short, the special incentive arrangement is intended more to protect EU’s domestic industry than to encourage the beneficiary countries to improve their labour and environmental standards. The EU has been strengthening its trade defence mechanism in the area of anti-dumping, anti-subsidy and countervailing measures.13 ASEAN countries have complained that some of the changes—like the anticircumvention provisions—were inconsistent with the multilaterally agreed Uruguay Round documents. ASEAN countries also see anti-dumping investigations as having been conducted in an arbitrary and unfair manner. For example, the use of constructed value, rather than actual third country export prices, where there are no domestic sales, have led ASEAN countries to believe that anti-dumping measures are being used against their exports as a protectionist and trade harassment tool. Lack of transparency in antidumping procedures reinforces this belief. The EU GSP provisions relating to anti-circumvention, anti-absorption and the refund calculation also appear to ASEAN to be inconsistent with WTO stipulations. The anti-circumvention provision appears to allow antidumping duties to be extended to offending parts and finished products entering the EU from third countries not originally affected by the dumping action. If the domestic industry provides information showing that antidumping measures do not have an impact on the resale prices, the anti-absorption provisions allow the EU to reopen an investigation and reassess export prices and dumping margins. The refund provision requires that anti-dumping duties would not be treated as a cost in constructing export prices unless there is conclusive evidence that the

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duty is duly reflected in the resale prices and subsequent selling prices in the EU. This limits the use of refunds and may result in doubling the anti-dumping. It is therefore hardly surprising that the new GSP has become a major bone of contention in ASEAN-EU bilateral economic relations. While it is understandable that the GSP scheme is not negotiable as it is voluntary in nature, beneficiary countries must not be subjected to unilaterally imposed, unacceptable conditions. This is contrary to the commitment given during the GATT negotiation. Most of the products that are being graduated are products of significant importance to the ASEAN countries. Their exclusion would adversely affect the industrialisation process of ASEAN countries. The anti-circumvention provision in EU anti-dumping regulations is also seen by ASEAN as a unilateral action which is inconsistent with WTO/ GATT principles. ASEAN countries had vehemently objected to this provision as five ASEAN countries, i.e. Malaysia, Indonesia, Singapore, Thailand and the Philippines, together with Canada, Hong Kong, India and Macau, are presently under EU first-ever anti-circumvention investigation. As export of micro-discs from China and Taiwan declined following the filing of anti-dumping charges, export from these nine countries increased remarkably. The EU investigations are based on claims that Chinese and Taiwanese exporters are circumventing the anti-dumping duties and exporting these micro-discs through the countries which are being investigated. This EU action ignores other factors at work in a dynamic world economy. Thus, there will always be other producers of such items to whom customers could turn in the face of difficulties encountered with their primary suppliers. Moreover, the fit between the decline in exports of microdiscs from China and Taiwan and the increased exports of the same products from other countries including ASEAN is far from persuasive. After all, ASEAN companies have been producing and exporting microdiscs even before the EU levelled antidumping charges on China and Taiwan. Trade in textile and clothing has played an important part in changing the composition of regional exports from primary commodities to manufactured products. In 1993, ASEAN accounted for some 13 per cent of total EU imports from all countries belonging to the GATT-sponsored Multifibre Agreement (MFA). But the growth rate of ASEAN textile exports to the EU had been much higher during the period 1973–1980, i.e. prior to the EU’s introduction of the MFA. A liberalisation of the MFA would thus provide further opportunities for ASEAN to expand their exports of the products concerned. Under the Uruguay Round agreement, a ten-year period of phasing out the MFA began on January 1995, when the EU and other importing countries transferred 16 per cent of their trade in textile and clothing out of the MFA and placed them under the WTO’s general rules. The second stage is to start in 1998 with another 17 per cent of trade to be brought under the usual WTO procedures. This is to be followed by a further 18 per cent in 2001. The remaining 19 per cent will be transferred in 2005.

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ASEAN textile exporters claim that the EU have done little to fulfil their quota-dismantling obligations. What the EU has been doing is to free items that were under no quota restriction to begin with. Items transferred out of the MFA include jute products, coated and waterproof fabrics, floor coverings, men’s suits, ties and ensembles as well as women’s petticoats. These items are not commercially meaningful to ASEAN exporters. The integrated products represent only 8 per cent in value terms of EU imports from developing countries, which would have no impact on the EU’s textile and clothing industry. The EU argues it would agree to speeding up the dismantling of MFA barriers in the next phase of trade liberalisation only if ASEAN and other exporters agree to open their markets to European textiles and clothing. Another major issue that has been the subject of disagreement between the ASEAN and EU concerns the passage of several resolutions by the EU parliament pertaining to the inclusion of a social clause in the multilateral trading system and GSR Major recommendations in the resolutions are: • that a social clause designed to combat child and forced labour and to encourage trade union freedom and freedom to engage in collective bargaining on the basis of the ILO convention be introduced to the multilateral and unilateral framework (GSP) of international trade, and • that the introduction of a social clause in multilateral trade regulation be included in the responsibilities of the WTO. As far as ASEAN is concerned, it shares the universal objective of improving the standard of living of its people and is always prepared for open multilateral discussion on the way to achieve that. ASEAN also shares the universal condemnation of the exploitation of child labour, prisoners or indeed any form of forced labour. In spite of this, ASEAN believes that linking international trade, including the GSP, with social causes is an inappropriate remedy to address the ills for which it is intended. How much of international trade can be considered to consist of goods produced by children, prisoners or exploited labour? Precise figures are difficult to come by but the onus of proof should rest with proponents of the social clause. In ASEAN’s view, the appropriate remedy is to address the problem of exploitation directly in the right multilateral fora like the ILO or UNICEF and not in the WTO. For ASEAN, linking social clauses to international trade would serve as an arbitrary non-tariff barrier and a protectionist tool to shield uncompetitive or stagnant sectors from a healthy dose of competition. In ASEAN’s view, lasting and continuous improvement in the living standard of its people can only be achieved with sound economic development. International trade has been and still is one of the main pillars of growth for the ASEAN economies and the restrictions resulting from the social clause would have severe repercussions on their development. The potential of the ASEAN-EU economic relationship is enormous. But in order to realise that potential, there is an urgent need for promoting greater

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understanding of each others’ economic motives and undertakings. In order to allay suspicions that a ‘Fortress Europe’ is about to be created, Europe for example could change track on agricultural trade and refrain from taking damaging unilateral action against Asian developing countries. Europe should also take a more active role in shaping the world trading system, rather than rely on America to call the shots. In this context, Europe’s standing in Asia would significantly benefit if it were more prepared to speak up against unreasonable American trade demands on Asian countries; to participate actively in the critical job of negotiating China’s entry into the WTO, and generally to stick more closely to multilateral negotiation within the WTO than America seems prepared to do. Europe must also try to change its misconceptions about the implications of East Asia’s economic dynamism. Out of a sense of being threatened by the rise of East Asia Europeans have argued that free trade is acceptable only among countries of similar levels of economic development. Free trade with developing countries such as ASEAN, the argument goes, could lead to economic dislocation and mass unemployment in Europe. This places the blame for Europe’s current woes squarely but wrongly on Asian industries. Rather than blaming others for its own shortcomings, however, Europe should realise that it is precisely its refusal to acknowledge the dynamism of the Asian economies that is at the root of the problem. The agenda to be covered in future ASEAN-EU economic relations will not be significantly different from that being negotiated by ASEAN with the other APEC member countries. It includes regional trade and investment liberalisation and facilitation and development co-operation. Several of the agreements reached on these issues within APEC could in fact be extended to Europe with some modification, following the logic of ASEAN’s concept of ‘openregionalism’. In the area of trade liberalisation, the main preoccupation must be with tariff reduction, with the elimination of non-tariff barriers, the phasing out of the MFA and agricultural policy reforms. The ‘50 per cent rule’ for accelerating existing Uruguay Round commitments adopted by APEC member countries may be a reasonable proposition for the ASEAN-EU relationship, as well, as this would mitigate the problem of free-riding by the EU on APEC trade liberalisation measures. This would involve ASEAN and European countries having to ‘reduce by half the transition period for implementing trade liberalisation and rule-making reforms that they have already committed themselves to in the Uruguay Round’.14 As for ASEAN, implementing this rule may not be too difficult. Singapore’s and Brunei’s tariffs are low, anyway, while Malaysia, Indonesia and Thailand have already offered impressive ‘down payment’ over and above their initial Uruguay Round commitments at the APEC summit in Osaka 1995. The only problems are with Vietnam and to a lesser extent with the Philippines. The EU could easily fulfil its part of the deal, except perhaps with regard to tariffs for certain sensitive imports. On the MFA, the EU should at the very least increase by 50 per cent the value of products to be phased

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into the WTO system in the next phase, while maintaining the ten-year implementation period. Another area for facilitating trade and investment flows between the two regions relates to product standards and testing. In this area, several collaboration efforts are already under way: the ASEAN-EC Industrial Standard and Quality Assurance Programme (ISQAP), the ASEAN Timber and Technology Centre (ATTC), and the Regional Institute of Environmental Technology (RIET). The ISQAP involves the strengthening, harmonising and co-ordinating of standards and norms, but also the upgrading of institutional and industrial capabilities of the ASEAN countries in the fields of testing and quality assurance. Its product coverage is, however, still quite limited, and even there, access to several EU member countries is still subject to additional product testing and certification procedures. Finally, ASEAN-EU collaboration should help to streamline the operation of several key principles governing foreign direct investment. The EU is currently in the process of strengthening its investment principles with a view to establish an OECD-wide multilateral agreement on investment by 1997. ASEAN, on the other hand, has already adopted APEC’s non-binding investment principles (NBIP). Despite differences in the quality and the approach adopted between the two agreements, there is sufficient room for collaboration between ASEAN and EU in this area. The least that could be done is for both sides to avoid possible conflicts in the interpretation and application of several of the principles. It is only natural that after the successful Europe-Asia summit meeting (ASEM) in Bangkok in March 1996, the major focus of the ASEAN-EU collaboration effort will be, at least until the next ASEM in the United Kingdom, on follow-up action to all the major decisions reached at the Bangkok summit. ASEAN has been entrusted with the lead in most of the project initiatives. This offers ASEAN an opportunity to display its leadership, its commitment, and its capacity to forge closer Asia-Europe relations. Against the backdrop of a very detailed—and very bullish—analysis of business prospects for Asia Pacific, Jean Pierre Lehmann establishes a balance-sheet of how far European corporations have responded to the momentous shifts in world economic dynamics. He finds that large companies by and large have now been thoroughly inculcated with the rising importance of Asia, but may not always have reflected that fully in their actions. Moreover, there are also a number of specific weaknesses which sometimes go beyond what management can do individually— and there is very strong competition from American firms which now are backed by their government.

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JEAN PIERRE LEHMANN In the halcyon days of the Japanese ‘bubble economy’, European admirals of industry flew frequently into Tokyo, generally stayed at the Okura hotel, attended a few meetings with their Japanese counterparts, gave a lavish reception, and then flew out again. In the speeches that were delivered the statement would invariably be made by the industry admiral that he and his firm were ‘committed to the Japanese market’ In keeping with global economic developments and with the disappointments that many European firms experienced in Japan—were they really committed?— the focus since the mid 1990s has broadened from Japan to the Asia Pacific Region (APR).15 Currently executives of European multinational corporations (MNCs) invariably insist that the APR is their ‘Number One’ priority. Everyone knows the APR is where the action is, hence the concentration of attention on that particular region. Yet there is still a considerable gap between the rhetoric of European corporations in respect to Asia and the reality of their commitment and presence. There would also seem to be a chasm between European rhetoric and Asian perception. Asians are convinced that Europeans are not taking the region seriously and that they are not present. There are consequently two gaps that need to be addressed: the gap between the rhetoric and the reality of European firms’ strategies in regard to Asia, and the gap between the reality of the European presence in Asia and the Asian perception of the European presence. Of course, the boom in East Asia may still collapse. The geopolitical tensions, vacuums, anomalies and contradictions, as well as the deficiencies in security arrangements, and other negatives, all make for a fragile house. But from a business viewpoint, one should assume that East Asian economic growth and social development will be sustained. The way in which it will be sustained remains to be seen. Paul Krugman has raised doubts on the sustainability of the growth of the region in light of its relatively poor record in total factor productivity.16 Certainly, although the technological engines of a number of the leading East Asian economies are strong, none of them—including Japan—can be remotely described as constituting a science and technology powerhouse.17 Growth may slow down, the -economies will mature, technical improvements may be more incremental. Generally, however, the economic indicators are good, the foundations are reasonably robust, the external environment is benign, hence the scenarios are all pretty good. While East Asia’s economic performance can be expected to be impressive in absolute terms, equally important from the global business perspective is its relative economic performance. East Asia will outperform the other regions of the world economy by considerable margins. Although it has begun to have the ring of a platitude, the point nevertheless has to be repeated and indeed hammered: in the world economy of the twenty-first century, Asia will be in the lead. The Asian economic and business renaissance is here and, short of war or major geopolitical disturbances, the Asian renaissance is here to stay. What this

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means specifically is quite simple: the boom driven both by consumption and investment will continue. As Asia will be in the lead, Europe will have to follow. Has the Asian renaissance dawned in Europe? The figures are encouraging. Trade between Europe and East Asia has increased very significantly in the last few years. An accolade (of sorts) was given by the former US under-secretary of commerce, Jeffrey Garten, in an interview conducted in Singapore in the autumn of 1995: ‘We are seeing ferocious competition from the Europeans just in terms of the emphasis that they are now giving to Asia. The competition is going to be very, very rough.’18 From a European viewpoint, this is of course very pleasant to hear! Between Europe and Asia there is comparatively less real or potential head-tohead confrontation than exists between some Asian economies (especially, but not exclusively, Japan) and the United States, or indeed that exists between Europe and the United States. Thus Asian and European needs and offerings tend to have symmetric complementarities. Cars are one important case in point. With the exceptions of Renault and Fiat, all the European car producers have a presence in Asia, ranging from practically dominant—e.g. Volkswagen in China —to strong. In the Japanese import market, apart from exports from Japanese transplants in the United States, the Germans and the Swedes are the leaders. Many European automotive manufacturers are making lots of money in East Asia, while the Japanese, and increasingly the Koreans, are selling lots of units in Europe. Car friction between Europe and Japan and Korea exists, but it is much less acute than between the United States and Japan. European performance in East Asia is not limited, contrary to what one often hears, to luxury products,19 even though it is true that European luxury products are doing exceedingly well in Asia. At the opposite extreme from lipsticks, for example, Europeans are active in Asia in nuclear power plants, airport terminals, high-speed trains (e.g. the TGV), etc. European companies in petroleum, chemicals, pharmaceuticals, telecommunications, construction equipment, precision machinery, among others, need to be added to the rostrum of sectors that have a reasonably prominent presence in Asia. The captains of European industry have been quite vocal in expressing very assertive views in respect to the opportunities and challenges posed by the East Asian markets. Sir Michael Perry, outgoing Chairman of Unilever, has stated the position and the contrast in respect to his firm in Europe and in Asia as follows: Asia is absorbing more and more of our available capital resources. That does not mean we are denuding Europe of new investment. But the type of investment we undertake in Europe these days is frequently to reduce costs —for example, through our ability to restructure operations and consolidate production as a result of Europe’s Single Market. This enables us to incorporate advances in technology in the widest sense of the word, and achieve larger economies of scale. But it is investment in the rationalisation of our capital stock. Its primary purpose is to lower costs

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and prices, and deepen our hold on existing markets, rather than to widen and expand them. Our investment in Asia is typically the reverse. That is partly why economic growth in Asia has become a self-fulfilling prophecy.20 Sir Michael is exceptional among European captains of industry in that he has actually spent a good part of his career in Asia. Otherwise, however, his attitude in respect to Asia is not unique at all among European corporate CEOs. Percy Barnevik, who, as chairman of the Swiss-Swedish conglomerate, Asea Brown Boveri (ABB), is one of the most influential and prominent European business leaders today, encapsulates the European view by stating: Asia is where the big battle is’. ABB revenues from Asia correspond to a little bit less than half European revenue, but have outdistanced American revenues by a considerable margin. Barnevik emphasises the Asian market because it is there that ABB can benefit in the long term from ‘non-cyclical growth’.21 ABB has developed an extensive and penetrating business network throughout Asia, and is aggressively exploring ‘new Asian frontiers’ such as Myanmar and Laos. The prize for an outstanding European success story in Asia would see Volkswagen as a key contender. In 1995, Volkswagen sales in China alone, i.e. not counting the rest of Asia, surpassed for the first time its sales in the whole of North America. This was not because of a decline in North America (deliveries there increased by a respectable 21.7 per cent), but because of the phenomenal growth of VW sales in China by 49.3 per cent.22 Volkswagen has an extremely strong presence in China, with 59 per cent of the home-produced car market, which comes to a total market share (including imports) of 40 per cent.23 Although VW may well be forced over time to reduce its share of the pie, the pie itself will experience gargantuan growth, with private ownership expected to rise from 2 million units in 1995 to 22 million by 2010. Where else in the world can one expect anything even approaching this kind of growth? In the meantime, to remain competitive, Volkswagen is increasing production and broadening its product range and consolidating its supplier network, which is the largest local supply network of any foreign manufacturer in China. Although the economic and business prospects in East Asia are excellent, there are impediments. One of the major impediments lies in people, i.e. the East Asian labour force. While there are lots of them, and while they work quite hard and literacy and numeracy levels are often high, ‘the difficulty of finding, training and hanging on to qualified local employees is what bosses most grumble about in Asia’.24 An increasing number of major European institutions and companies are seeking to make a contribution to remedy this situation. The European Union has established a business school in Shanghai. Among corporations, the example can be cited of the German conglomerate Siemens, which established in 1991 the Beijing Technology Exchange and Training Centre, in which it has trained more than 10,000 people in software development, programming and systems service. The Siemens CEO, Heinrich Von Pierer, claims to have taken a personal interest in human resource

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development in China and asserts that Siemens wishes to provide their Chinese employees with careers and not just jobs.25 The East Asian business renaissance means that unless European firms have a robust presence in East Asia by the end of this century (at the latest), they will become dinosaurs. This requires lots of adjustments, both structural and cultural. And one of the most important adjustments required will be in respect to people. If, as recently noted by the Financial Times,26 ‘business in North America is based on law, in Europe on logic, and in Asia on relationships’, establishing and cultivating relationships provides European companies with a key business challenge and imperative. Jérôme Monod, CEO of the French company La Lyonnaise des Eaux, one of France’s more successful companies in East Asia, has commented: ‘Asia is the region where European companies need to invest their best human resources’.27 The criticism often made about European companies in respect to East Asia in the past was that commitment was lacking from the top. This is increasingly no longer the case, although, as will be argued below, part of Europe’s problem in respect to Asia is having the commitment from the top permeate the middle and junior ranks of the corporation. In respect to human resources, one handicap which European companies have in comparison to their American competitors is a far smaller pool of talented Asians to draw from. This requires innovative and aggressive human resource strategies. An illustration can be drawn from the French telecommunications and electrical engineering group Alcatel Alsthom. Alcatel was one of the relatively few European companies to have made a quite major commitment to the Chinese market fairly early on, in fact since 1983. With a reasonably important past in China, the country clearly counts a great deal in respect to Alcatel’s future: in light of the investments made by Alcatel in securing its presence in China, the chairman and CEO, Serge Tchuruk, recently commented that Alcatel’s future is tied to the continuing rapid growth of China’s economy/ To ensure that this future will be realised, Alcatel has taken the bold step of bringing in an Asian executive at a very high level. Robert Mao, a Taiwanese, was appointed to the main Alcatel Board and will have overall responsibility for the development of Alcatel’s ‘greater China’ operations, including the mainland, Hong Kong and Taiwan. As French companies tend to be rather notoriously conservative and nationalistic in their human resource practices, the Alcatel move in respect to Mr Mao is radical. As a Taiwanese with degrees from two upper-crust American universities (Cornell and MIT), ‘Mr Mao represents the new breed of overseas Chinese businessman which is assuming greater responsibility in large international corporations as the China market grows and companies such as France’s Alcatel globalise.’28 Having said that, it will remain the case that European companies will be permanently handicapped vis-à-vis the American competition in respect to hiring top-notch Asians from home. Quite apart from the vastly greater number of Asian immigrants to the United States in comparison to Europe, there is also a far greater number of Asians going to study in American universities. Europeans

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do not have the kinds of Asian networks that they need. Thus, while the appointment of Mr Mao makes headlines in the Financial Times, when in 1993 I was doing some work with the American company Motorola in Beijing, with one exception the fifteen or so senior Motorola executives responsible for Chinese operations were either immigrants from Taiwan (or other parts of the Chinese diaspora) or so-called ABCs (‘American Born Chinese’). This is a pattern one finds in many American corporations and indeed more and more Asian Americans are assuming senior positions in American firms. There are two lessons to be derived from the Alcatel story. The first is that although European universities should be encouraged to attract more highcalibre Asian students, this will take time, and consequently European companies should make efforts to recruit Asian graduates from American universities. The second is that Taiwan is a very key location point in the East Asian chessboard. Whatever the political relations may be between the People’s Republic and Taiwan, short of actual war and invasion—which is unlikely—the business connection should continue to prosper. For many reasons that need not be gone into here, Taiwan has many advantages to serving European operations as a regional operation centre, both, it should be added, in light of its ‘special’ (however defined) relationship with the People’s Republic and of its major business presence in the emerging markets of ASEAN. Furthermore, Taiwan, as Alcatel obviously discovered, has some very good people. As Lehmann argues, relations between Pacific Asia and Europe will ultimately have to expand beyond the economic and even the economicrelated to span issues of security cooperation.29 A key role in the EuropeAsia relationship is played by the more narrow and developed relationship between Europe and Japan. Lehmann finds that the broader evolution of the links between Asia and Europe started with a significant change in that relationship. He then proceeds to take a hard look at future problems and sources of friction between Europe and Asia. In many respects relations between the European Union and Japan have significantly improved. In the past, there were a lot of nit-picking irritants that pervaded relations, as well of course as deep-rooted problems. Although European policies and attitudes towards Japan varied according to European capital and according to sectors,30 as a general proposition it could be said that they were negative and hostile. There was some truth in the Japanese suspicion that the plans for a single European market would in fact result in a European fortress with its siege-towers directed primarily against Japan. Things have changed and, on the European front, the main instigator of that change has been Sir Leon Brittan. Although many European dissatisfactions with Japan remain—and some vice versa—notably on the slowness, or indeed backtracking, with which Japan is embarking upon its commitment to economic deregulation, which may occasionally require some noise to be made,31 generally

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on matters of trade the Euro-Japanese relationship can now be characterised by it having adopted a constructive approach, with a shared commitment to preserving and strengthening the multilateral system. The European Commission has openly distanced itself from, indeed expressed strong disapproval of, American unilateral measures of managed trade against Japan. And there have been other developments which have tended to improve relations. While relations have improved, however, they are not strong and remain bland. Although Europe has given lip-service to Japan’s desire to become a permanent member of the Security Council and although the Japanese are much more involved in global security and security-related issues than was the case in the past, there is no real political framework for dialogue between Europe and Japan. In contrast to all the razzmatazz which accompanied Clinton’s summit meeting with Hashimoto in April 1996, Euro-Japanese summit meetings have been largely ignored. Part of the problem is that although there are a few leading champions in Europe of closer ties with Japan, there is no corresponding political figure or other opinion leader in Japan who would champion closer Japanese ties with Europe. Today, in contrast to the past, far more Europeans study Japan’s economy and business, than Japanese study the economics and business of Europe. And the business link, which, with a few exceptions, was never very strong at the best of times, seems to be weakening. For example, although a number of European companies in the course of the 1980s developed technology-driven strategies which led them to establish R&D centres in Japan, recently a number have begun pulling out. European companies see greater attractions and more lucrative profits to be made in other Asian markets, notably China and ASEAN, and thus the phenomenon referred to as ‘Japan-passing’ has tended to be conspicuous in European business circles. Europe and East Asian member countries of the WTO are in principle committed to strengthening the multilateral system in general and the World Trade Organisation in particular. With the Asia Europe Summit (ASEM) in Bangkok in March 1996 and the flourishing process of dialogue into which ASEM has since turned with amazing speed, the idea and practice of an open world trade system has received a shot in the arm. Indeed, it is only in the context of a very robust WTO that economic relations between Europe and East Asia will flourish. This is especially the case in light of the current volatilities in the American political environment and the growing tendency of unilateralism. There are, however, current and potential future problems. Europeans continue to resort to anti-dumping measures and this bad European habit is spreading. Although, as noted in some detail above, European captains of industry are pushing ahead with far more ambitious and open-minded Asian business strategies, European national politicians and bureaucrats are often defensive and negative. A much more forceful and real commitment to free trade and the roll-back of trade hindering measures on the part of the European Union is called for.

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Although ASEM has been sweetness and light so far, it could disintegrate into a forum for confrontation. A Europe versus East Asia, rather than Europe and East Asia, forum is likely to emerge if, as is threatened, labour standards and environmental issues were to appear on the WTO agenda. Attempts by Europeans to link human rights in the economic dialogue would also jeopardise the newly established relationship.32 A lot tends to be made of Europe’s colonial heritage in Asia. For example, in an op-ed piece in the International Herald Tribune, two prominent Singaporean opinion-leaders, Tommy Koh and Lee Tsao Yuan, wrote how ‘much of East Asia was colonised or dominated by Europe’ and how important it is to recognise that ‘the relationship between Europe and East Asia is no longer one between metropolitan power and colony’.33 In fact, once the Spaniards were thrown out of Asia in 1899 and with the exception of a few outposts retained by the Portuguese, there are only three European nations that can be considered as having been serious colonial powers in Asia: the United Kingdom, France and the Netherlands. Germany got hold of a few crumbs, but these were mainly taken away after World War I. Finland, Sweden, Ireland, Luxembourg, Austria, Italy, Greece have hardly had any history of relations of any form with East Asia. Denmark and Belgium had important commercial interests and investments, but no colonies in East Asia. Thus Europe’s colonial presence in East Asia was very much of a minority affair. In fact Europeans and East Asians generally do not know each other well. There is a lack of networks. With the exception of the UK, university linkages between Europe and East Asia are comparatively weak. Although a great deal more effort is now being exerted in Europe to develop studies on East Asian business, economics and society, it is still small beer in relation to the needs. European studies in East Asia tend to be primarily literature/language oriented, with knowledge of European economic and business systems ranging from superficial to non-existent. Some of the recommendations emerging from ASEM may help to tune Europeans and East Asians into a more reciprocally receptive wavelength, but the challenge that is required must not be underestimated. Since business in East Asia, as is commonly stressed, depends so much on relationships and ‘good feelings’, this particular obstacle is critical. In the Commission document that set out Europe’s ‘new’ strategy for Asia,34 it was recognised that Europe has a poor image in East Asia. European civilisation is perceived as decadent, European industry as surpassed by the Japanese and the Americans, and that at best it may play a role as Asia’s ‘boutique’. As to the European Union, from Asian eyes it was seen as a protectionist, anti-Asian economic fortress. Certainly Europe was not in any way associated with a sense of dynamism. East Asia, although benefiting now from a perception of industrial growth, also has its image problems in Europe, especially in respect to human rights, exploitation of child labour, discrimination against women, environmental destruction and piracy of intellectual property. There is,

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of course, a certain amount of truth in these images both in respect to Europe and to East Asia, though they are caricatures. So far as European business is concerned, the negative image has negative consequences. It has, for example, been an uphill battle to convince East Asians that European companies do, in certain sectors, command state-ofthe-art technologies. A major hurdle has also emerged in the most critical area of competition in East Asia, namely human resources. As Europe is not well known and generally poorly judged, and as networks are lacking, European companies tend not to be well known. Name-recognition is weak, hence the best-and-thebrightest East Asian university graduates will prefer to seek employment with American companies, and possibly Japanese companies, rather than with European companies. There is clearly a vicious circle element here in that the longer the cultural wavelength discordance is retained, the more blurred, or negative the image, the less exchange, the poorer the prospects of promoting European technologies and companies in East Asia. The perception gap mentioned at the beginning of this article, namely the East Asian belief that European companies are inwardlooking and hence absent from Asian markets, needs to be filled. Having stated frequently in the course of this article that large European companies are not only present in East Asia, but, in certain cases, may even be dominant players, something that does set the European business community in East Asia aside from Americans and Japanese is the general absence of small and medium-sized enterprises (SMEs). Although various European Commission and individual member state government programmes have been launched to encourage SMEs to enter East Asian markets, the results have been meagre. A good deal of the reason lying behind the absence of European SMEs in Asia has to do with the geographic and cultural distance, the problem of languages, the expenses involved, and so forth. Furthermore, the kind of ‘kith and kin’ SME linkages between American ethnic Asian and Asian SMEs are rarer, for obvious reasons, in Europe.35 The biggest obstacle for European SMEs to participate actively in East Asia, however, arises from the difficult climate in Europe. In light of the plethora of regulations, taxation and other constraints that European SMEs face on their home-turf, it is difficult for them to find the means and energy required to expand to distant, even if potentially lucrative, horizons. Nor is it an option for European SMEs to piggy-back onto their homebased customers into East Asian markets. This is partly because large European firms active in East Asia tend to be exporters or licensers rather than major investors. Hence there is not much for SMEs to piggy-back on to. While it is of course a well-known characteristic of the Japanese vertical keiretsu system that major assemblers when investing abroad incite their suppliers to accompany them, it is not a common practice in European industry. As European large companies move offshore, not only do they relinquish their employees, but their suppliers are also often left high and dry. Clearly so long as European and East Asian

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SMEs are failing to be present in each other’s markets and to form alliances, the business connection between Europe and East Asia will remain weak. Having stressed that European heads of corporations are committed to East Asia and that this commitment is becoming increasingly real, rather than rhetorical, there are nevertheless some flagrant problems. At board level the proportion of European companies that include executives who have spent part of their careers in East Asia or studied in Asian universities is infinitesimal. This has all sorts of negative implications. In essence, however, it means that the amount of knowledge, experience and networks in respect to Asia contained in European corporations leaves much to be desired. Nor does the current situation augur well for the future. In light of the fact that postings in East Asia are not seen by middle and junior managers as constituting a sound track for future promotion, not surprisingly such appointments are eschewed. So, although the rhetoric is that East Asia requires allocation of the company’s best human resources, the reality is rather different. European expatriates in Asia are too often people who are not making it in the main European or American operations. There is also a far too prevalent pattern whereby European executives with experience in East Asia are retired upon returning home, thus further depriving the company of experience and contacts. Most important perhaps is the lack of clout that European executives in Asia have both vis-à-vis the local markets and especially vis-à-vis their head-office. Takeo Shiina, the chairman of IBM Japan—a foreign company that has been outstandingly successful in Japan for many decades—is fond of saying that his job consists of two parts: one is to sell IBM in Japan, and the other is to sell Japan in IBM. Because Takeo Shiina is a first-class executive, who produced results, and came to be respected in IBM, IBM’s top executives listened to him and Japan remained an important priority in the company. A similar situation exists in respect to Xerox with Yotaro Kobayashi, the chairman of its jointventure in Japan, FujiXerox. With the rapid growth in East Asian markets, the constant changes that occur, the imperative of developing and maintaining networks, there is clearly a need for a synergistic approach between selling the company’s services or products in East Asian markets and the ‘selling’ of East Asian markets and cultures in the company. As Kenneth Courtis36 has commented, East Asia is not so much about level playing fields, but primarily about fielding first-class teams. Very few European companies actually have their act together on this crucial score. Thus, although it is true that the admirals and captains of European industry are devoting more time and energy to East Asia, there is great lack of knowledge, experience and networks at lower levels. There is an absence of human resource planning in respect to East Asia. There is still often an arrogant assumption that local customs and cultures can be learned on the hop, as and when may be necessary. Training programmes for doing business with East Asians in European companies are very few, far between, and often superficial.

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The biggest weakness of European business in East Asia most frequently referred to is the relative paucity of European direct investment in the region. While the share of total stock of European investment in developing Asia—i.e. Asia apart from Japan—was 16.5 per cent in 1980, it declined to less than 13 per cent in 1993. In annual investment flows in the late eighties and nineties, American investment has been twice as high as European.37 In Japan, total stock of American direct investment is more than double that of the European Union.38 Apart from the quantitative dimension of European investment in Asia, there is also the qualitative. As noted above, SMEs are absent. Also absent are European companies in cutting-edge technologies. In fact, European Union direct investment in Asia tends to be concentrated in a limited number of sectors: chemicals, petroleum and financial services together accounted for 70 per cent of total European investments in Asia in 1993.39 It is consequently not surprising that Europe does not convey a ‘high-tech’ image in Asia. In view of the relationship-oriented nature of the business culture of most East Asian countries, having a physical presence is crucial. Relying, as European companies tend to do, on export, licensing, working through agents, and other arms-length forms of business relationships, will ultimately prove selfdestructive. Becoming good corporate citizens in East Asia is what the objective should be all about, but it remains a position very few European companies have actually achieved. In that sense, the rhetoric among Europe’s captains of industry is not reflected in the reality of the European presence in East Asia. The European position cannot be defined as in any way being robust. The relative absence of European investments in Asia is to a considerable extent an inevitable result of the human resource allocation problem. Establishing a robust presence in East Asian markets requires bright, energetic, fast inside-track, influential executives with Asian nous and cultural sensitivity, championing the cause of their territories. This in turn will improve the image of European companies in Asia and thereby serve to attract more and better local human resources. Ultimately corporate strategies are about people. Until and unless European corporations commit the necessary quantity and quality of human resources to East Asian markets, European companies will fail to make an impact. That is the key challenge. There is no doubt that European corporate strategies are changing and that they are becoming more skewed toward Asia. The question is whether they are changing sufficiently in terms of substance and quickly enough. East Asia is not standing still. OPEN REGIONALISM What does ‘open regionalism’ mean in the context of Asia Pacific? In the following essay, one of its most powerful intellectual exponents and long-time participant in efforts to make ‘open regionalism’ work, Hadi Soesastro, explains the logic behind the concept and the process of putting it into practice in the

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framework of ASEAN and the larger APEC. Regionalism in Asia Pacific, whose intra-regional trade is now as large as that of the European Union and set to grow rapidly in the future, is marked by participation of countries at widely differing stages of development. All, however, share an outward orientation. It is market driven, with open boundaries, and has developed swiftly since the early 1960s towards growing political realism. As a result, the characteristics of ‘open regionalism’ in Asia Pacific differ sharply from those of economic and political integration in Europe. Nevertheless, while trade liberalisation emerges as an important dimension in his analysis, it is not at the heart of the term. Rather, the purposes ultimately are political—namely, about the best way to create the right national, regional and global frameworks for ensuring that growth and development throughout the region may continue. HADI SOESASTRO Starting in 1978, serious attempts were made to translate the ideas of regional organisation of Asia Pacific into practice. Governments paid increasing attention, although they were not ready yet to embark on the creation of an intergovernmental process. Instead, a non-governmental forum, the Pacific Economic Co-operation Conference (PECC) began to take form and eventually paved the way for the creation of APEC almost a decade later. The wisdom of adopting an approach towards community building was agreed upon as early as September 1980 at a conference in Canberra in 1980, which led to the establishment of PECC. The Seminar’s recommendations encompassed the following principles: • the need to avoid military and security issues so as to create a sense of community without creating a sense of threat; • that EEC-type discriminatory trading arrangements are inappropriate in the Pacific; • the need to ‘hasten slowly’, and to proceed towards long-term goals step by step; • the need to ensure that existing bilateral, regional and global mechanisms for co-operation are not undermined by any new wider regional arrangement and that it be complementary with them; • the need to ensure that it is an outward-looking arrangement; • the need for an ‘organic approach’, building up private arrangements already existent in the Pacific; • the need to involve academics, businessmen and governments jointly in this co-operative enterprise; • the need to avoid unnecessary bureaucratic structures; • the need for a fairly loose and as far as possible non-institutionalised structure, recognising that while dispute settlement may prove difficult in sensitive areas, discussion of problems may contribute towards ameliorating them; • the need for all members to be placed on an equal footing;

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• the need to concentrate attention on areas of mutual regional interest. The background to the concept of open regionalism was given by PECC’s socalled San Francisco Declaration on ‘Open Regionalism: A Pacific Model for Global Economic Co-operation’.40 The underlying premises of the San Francisco Declaration were threefold, namely: (1) that openness in the region is one of the main reasons for its economic dynamism; (2) that this openness complements the multilateral system; and, (3) that by making an explicit commitment to a model for open regionalism, the region can both continue its progress and make an important long-term contribution to a stronger, more open global economic system. The belief in the importance of openness existed firstly, because this was seen as the only principle that could guide the effective management (organisation) of this diverse region of Asia Pacific. Secondly, over the years the region learned that increased openness has been responsible for the favourable economic development in the region. In strengthening the region’s commitment to a dynamic vision of open regionalism, the San Francisco Declaration suggested that the following essential conditions must be met: (1) economies must increasingly remove barriers to trade, investment and technology flows; (2) GATT disciplines must be applied to trade and investment; (3) the region must provide commercial access to economies elsewhere and seek to ensure that these economies likewise provide commercial access on a non-discriminatory basis; (4) liberalising sub-regional trading arrangements within the region must be accommodated; and, (5) to maintain momentum, the region must actively promote policies that strengthen this dynamic process. The emphasis by PECC on open regionalism in the early 1990s stems from concern about the integrity of the multilateral trading system. The Asia Pacific region took note of the slow progress in multilateral trade liberalisation and the proliferation of regional trade arrangements, and it deliberately opted for nonnegotiated forms of economic integration and opposed discriminatory regionalism. The new type of spontaneous, private sector driven integration in the Asia Pacific region has led to proposals of Asia Pacific institutional arrangements that could consolidate and extend the gains from non-discriminatory expansion of regional trade. One such proposal is the open economic association (OEA), a concept developed by Ippei Yamazawa.41 Examples of such private sector driven integration are the ‘growth triangles’ in Southeast Asia and the economic integration between Hong Kong and the province of Guangdong in China. OEAs should be ‘open’ to wider participation and its structure and policies do not seek to discriminate against trade or investment flowing to or from non-participants. Furthermore, ‘economic’ interaction and cooperation are seen as tools for maintaining the high growth performance and mutually beneficial economic integration of the region. Finally, it is a ‘voluntary’ association in that its

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participants do not cede powers of regulation or enforcement to any supranational institution. ASEAN can be regarded as a voluntary association, perhaps even a kind of OEA. The ASEAN countries promote the concept of open regionalism and they are doing so through their engagement in a number of regional economic cooperation arrangements. It is generally believed that this economic association is primarily aimed at developing a kind of regional solidarity among neighbours for the purpose of regional peace and stability. Thus, the establishment of this association was largely politically inspired. However, in 1992 ASEAN leaders began to realise that their economies are rapidly involved in market-driven processes towards regional and international economic integration. Rather than each country going its own way, they thought that by joining forces they could enhance their collective position and increase the gains from integration in the world economy. In addition, they believe that governments can facilitate this market-driven integration. This realisation led to the decision to form an ASEAN Free Trade Area (AFTA). ASEAN governments also realise that improving and strengthening intra-ASEAN economic cooperation have become imperative for the viability and relevance of ASEAN. It was felt that closer economic co-operation has become more feasible due to the changing nature of the ASEAN economies. In addition, the external shocks in the 1980s have forced the ASEAN countries to undertake adjustments by adopting outward oriented strategies and unilateral liberalisation. In essence AFTA is aimed at enhancing ASEAN’s attractiveness as an investment location and market. It is also seen as a training ground for the ASEAN members in their efforts to integrate more fully into the world economy. However, AFTA’s scope is much more limited than that of other recent regional co-operation initiatives such as NAFTA (North American Free Trade Agreement). Although it is called a free trade arrangement (FTA), AFTA is not about institutional integration. Furthermore, it has been argued that the AFTA scheme is rather archaic in nature and that the fifteen-year period for its completion is far too long. As a consequence of their trade liberalisation commitments under the Uruguay Round, ASEAN governments have agreed to accelerate AFTAs implementation to ten years or even shorter. AFTA is but one of a number of initiatives that is currently being promoted by ASEAN governments. Other initiatives are seen as complementary because ASEAN is both too small and too big. On the one hand, ASEAN is considered too big in the sense that despite restructuring of each of the ASEAN economies they are still diverse and at different levels of development and thus, integration among all its members tends to be shallow. Thus, to make economic cooperation meaningful, ASEAN has adopted the so-called ‘six (now seven) minus X’ principle through which less than all members can undertake an ASEAN cooperation project. An example of this is the development of the SIJORI growth triangle involving Singapore, Johor in Malaysia and Riau in Indonesia.

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On the other hand, ASEAN is too small to be effective in its external economic diplomacy given the uncertainties in the world economy today. To increase its effectiveness, ASEAN sees the need to take part in larger groupings in the Asia Pacific region such as APEC. The different economic co-operation schemes that ASEAN is engaged in form a kind of concentric circles of cooperation. In terms of co-operation in the field of trade, each of these ‘circles’ of co-operation is to be consistent with the further enhancement of the GATT-based multilateral trading system. Although AFTA is a preferential arrangement among its members, the ASEAN countries realise that AFTA should be outward oriented. In fact, AFTA preferences can be considered of a temporary nature as individual countries are continuously multilateralising their AFTA liberalisation through unilateral actions. This is consistent with the notion of AFTA as a training ground. The different schemes of ASEAN intra- and extra-regional co-operation should ideally reinforce each other. Indeed, a balance of attention to developing intra- and extra-regional links should be maintained because excessive preoccupation with facilitating intra-regional economic links tends to divert attention away from the important objective of global trade liberalisation. In view of its trade with the rest of the world, ASEAN should seek ways to sustain and enhance its trade and other economic links with all its trading partners. Each of the different schemes of ASEAN’s extra-regional co-operation, namely APEC, ASEM or the EAEC (East Asia Economic Caucus), can be seen as an insurance policy for ASEAN; it is an insurance policy against uncertainty in the world economy. Indeed, uncertainty appears to be the driving force behind many forms of regional co-operation that are currently being proposed, including the ARF (ASEAN Regional Forum) in the politico-security field. ASEAN’s approach to regional integration, according to Soesastro, differs markedly from approaches in the Western hemisphere, and particularly from America’s conversion to a ‘new regionalism’. This has also created tensions within APEC, as America pushed for a more ambitious agenda for regionalism in Asia Pacific than ASEAN (and others)—fearful about being dominated and dragged along in directions considered undesirable—were willing to contemplate. As a result, the APEC’s Eminent Persons Group (EPG) was unable to come up with a clear definition of ‘open regionalism’. Yet, as Soesastro’s subsequent survey of APEC and its evolution shows, ASEAN and the US have been sufficiently pragmatic to compromise. The first APEC ministerial meeting, held in Canberra in November 1989, was attended by twenty-six ministers from twelve regional economies, namely the six ASEAN countries, the five Pacific developed countries and South Korea. Three organisations were accepted as official observers: ASEAN, PECC, and the South

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Pacific Forum Secretariat. This meeting agreed on the basic principles of APEC, namely that: • the objective of APEC is to sustain growth and development in the region to contribute to improving living standards and, more generally, growth of the world economy; • APEC should seek to strengthen an open multilateral trading system and not be directed towards the formation of a regional trading bloc; and • APEC should focus on economic rather than political or security issues, to advance common interests and foster constructive interdependence by encouraging the flow of goods, services, capital and technology. The second ministerial meeting was held in Singapore in July 1990. In this meeting, seven work projects for practical co-operation were established. They are aimed at ‘developing the habit of co-operation’ and demonstrating the benefits of economic co-operation through: improving regional data on the flow of goods, services and investment; enhancing technology transfer; human resources development; promoting cooperation in energy, marine resources and telecommunications. Three additional work projects were added later: transportation, tourism and fisheries. To demonstrate APEC’s support for a strong, open multilateral system, ministers issued a declaration which stressed their firm commitment to a timely and successful completion of the Uruguay Round. It was also agreed at this second meeting that a central theme of APEC, after completion of the Round, would be to promote a more open trading system, with exploration of the scope for non-discriminatory regional trade liberalisation. China, Hong Kong and Taiwan (as Chinese Taipei) were admitted as members of APEC at the third ministerial meeting in Seoul in November 1991. The meeting also adopted the Seoul Declaration which set out the scope of activity, mode of operation of, and the principles for participation in APEC. The scope of activity for APEC was defined as follows: • exchange of information and consultation on policies relevant to common efforts to sustain growth, promote adjustment and reduce economic disparities; • development of strategies to reduce impediments to trade and investment; and • promotion of regional trade, investment, human resources development, technology transfer and co-operation in specific sectors such as energy, environment, fisheries, tourism, transportation, and telecommunications. The fourth APEC ministerial meeting, held in Bangkok in September 1992, agreed to set up a permanent secretariat as a support mechanism and a fund to finance APEC activities. The Secretariat was set up in Singapore in January 1993, headed by an executive director (from the chair of APEC) and a deputy

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executive director (from the succeeding chair of APEC). The Secretariat’s function is to co-ordinate and assist APEC’s work projects, facilitate communications between APEC members and provide a point of contact for the public, other organisations and business. It also has a research and analysis unit. The APEC Central Fund to be derived from member contributions was set at US $ 2 million for the first year. In the fifth ministerial meeting in Seattle in November 1993, Mexico and Papua New Guinea were admitted to APEC and a decision was made to admit Chile to APEC at the ministerial meeting in 1994. It was also agreed to defer consideration of additional members for three years. Ministers again called for an early and successful conclusion of the Uruguay Round and demonstrated their commitment to this goal by expressing their preparedness to take additional specific trade liberalising measures. They also adopted the ‘Declaration on an APEC Trade and Investment Framework’ to advance APEC’s role in trade and investment by engaging its members in both policy and facilitation matters. A Committee on Trade and Investment (CTI) was formally established. The report of the Eminent Persons Group (EPG) to the APEC ministers, ‘A vision for APEC—towards an Asia Pacific Economic Community’, issued in October 1993 was presented by its Chairman, Dr. C.Fred Bergsten. The report emphasised that APEC must accelerate and expand co-operation in order to respond to three threats to the continued vitality of the region: erosion of the multilateral global trading system; evolution of inwardlooking regionalism; and risk of fragmentation within the Asia Pacific region. The EPG recommended APEC to undertake initiatives in four areas: regional and global trade liberalisation; trade facilitation programmes; technical cooperation; and institutionalisation of APEC. The APEC Informal Leaders Meeting, proposed and hosted by the US President, Clinton, took place on 20 November 1993 at Blake Island and was attended by leaders from all APEC member economies except Malaysia. The leaders issued an ‘Economic Vision Statement’ which contains three main components. The first is an affirmation of the importance of an open multilateral trading system and the determination of Asia Pacific leaders to lead the way in taking concrete steps to produce the strongest possible outcome of the Uruguay Round. The second is a vision of ‘a community of Asia Pacific economies’: (1) which is based on the spirit of openness and partnership; (2) whose. dynamic economic growth contributes to an expanding world economy and supports an open international trading system; (3) where trade and investment barriers continue to be reduced; (4) where the benefits of economic growth are shared by the people; (5) where education and training are improved; (6) where goods and people move quickly and efficiently because of advances in transportation and telecommunication; and, (6) where environment protection is improved to ensure sustainable growth and to provide a more secure future for the people. The third is a list of initiatives.

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As rightly predicted by Fred Bergsten, after Seattle the leaders’ meeting quickly became an annual event.42 Bergsten also pointed out that the Seattle meetings showed that ‘the leaders were far more ready than their ministers, who in turn were far more ready than their senior officials, to adopt and pursue visionary goals.’ In addition, Bergsten noted the importance of the proliferation of meetings among APEC ministers: in 1994 these included meetings of finance ministers, environmental ministers, trade ministers, and ministers in charge of small and medium enterprises. Bergsten concluded that leaders in Seattle began the process of converting APEC from a purely consultative body into a substantive international institution’.43 The APEC Economic Leaders Meeting (AELM) in Bogor in 1994 opened up the debate on the modality for APEC trade liberalisation. Indeed, APEC after Bogor is different from the APEC before Bogor in a number of respects. Formally the AELM is not part of the APEC mechanism. However, since its first informal meeting at Blake Island in 1995, APEC’s course is now being charted by the leaders. ‘Once the leaders are together, the awesome weight of their decision-making power sort of dawns on them and the chemistry takes over.’44 The Bogor Declaration should be seen as a statement of the leaders’ political commitment. What exactly the commitments were remained somewhat doubtful. Concerns that the Bogor Declaration implicitly endorsed the EPG concept of a negotiated liberalisation of trade on the basis of reciprocity with outsiders have prompted Malaysia and Thailand to issue reservations and observations on the Bogor Declaration, emphasising that they saw APEC commitments as nonbinding and voluntary, and that APEC should not be there to create a free trade area. Malaysia’s and Thailand’s submissions are useful since they address important principles on which there needs to be a common understanding among APEC members in implementing the APEC goal. It was reported that the United States also had objected to the 2010 date, not so much because of substance but because of ‘the optics of the thing [as it] looks like China doesn’t have to do a damn thing and [the US gives] them everything’.45 However, the United States finally gave in because it realised that at that stage it would be difficult for Indonesia to accommodate all the changes. President Suharto, as chair of AELM, proposed that decisions should be reached on the basis of a ‘broad consensus’, meaning that a decision would as much as possible become a general consent enabling countries that are ready to implement it to do so immediately while those that are less prepared will follow later on. The Bogor Declaration does indeed allow for the so-called opt-out option. If at Blake Island the APEC leaders agreed on a vision, and in Bogor they agreed on a goal, the leaders still had to agree on a ‘blueprint’ for trade liberalisation in the region. This task was transferred to Japan, the 1995 chair of APEC. In Osaka, Japan successfully crafted an APEC consensus on how the APEC vision will be implemented. APEC post Osaka is about implementing a set of action plans as contained in the Osaka Action Agenda. As proclaimed by

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Murayama, Japan’s Prime Minister when hosting the APEC meeting, Osaka marks the transition from concept to action.46 Indeed, after Osaka the task at hand will become much harder. APEC members must seek ways to ensure that collectively their ‘individual action plans’ (IAPs) will produce significant results and that their ‘collective action plans’ (CAPs) are both feasible and acceptable. It is this combination of individual and collective action plans that is unique to APEC and from now on will characterise the APEC process. Sceptics question how the APEC process which rests on the implementation of IAPs could make progress in making trade free. Some have described the Osaka Action Agenda as ‘no action, no agenda’.47 Osaka was a close call. There was the concern that Japan could not provide the necessary leadership to craft the road map for APEC to implement the muchheralded Bogor Declaration. But Japan was successful. The leadership may have come not so much from the top but primarily through the careful planning and efforts by the bureaucrats. Their success was in their ability to form a consensus, which involved making compromises by all members. Osaka is regarded as a success not only because it produced an Action Agenda but because it has brought the APEC process ‘back on track’. A number of APEC members, Malaysia in particular, have been concerned that since Seattle APEC went on a wrong road; a road which may end up with the creation of a Free Trade Area (FTA). But nowhere in APEC documents is it stated that the objective of cooperation is to form a FTA. In fact, the Bogor Declaration expressed the leaders opposition to the forming of an inward-looking trading bloc. However, there was the worry that APEC trade liberalisation will be pursued by following the same process that leads to the creation of a FTA, namely through negotiated schedules of tariff reductions and the application of discrimination against non-members. Not all APEC members thought that this was the way to go. Osaka made an end to the uncertainty by adopting a set of nine principles: (1) comprehensiveness, (2) WTO-consistency, (3) comparability, (4) nondiscrimination, (5) transparency, (6) standstill, (7) simultaneous start, continued process and differentiated timetables, (8) flexibility and (9) cooperation. To be sure, these principles are a result of compromises and some of the wordings allow for differing interpretations. This may be unavoidable. Of importance is that the APEC process, which is acceptable to all, is now clearly recognised as the one which is based on open regionalism, voluntary and non-binding commitments, unilateral actions, decision by consensus, and the role of peer pressure and enlightened self-interest. The APEC process has many levels. Both the ministerial meetings and the informal leaders’ meeting are consultative in nature, in the sense that participants are not engaged in negotiations. However, the consultative processes at these levels can produce initiatives as shown in Seattle. If translated into programmes and implemented effectively, they will form the basis for a rich agenda for APEC. In other words, the APEC process can produce substance. A series of senior officials meetings (SOMs) formulate and develop the ‘structure’ for

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implementing initiatives and agreements made at the higher levels. In doing so, they will make use of the recommendations and results of the various APEC work projects as well as the recently established CTI. Further consolidations of work projects could lead to the development of other committees in the future. This would practically mean a further institutionalisation of the process. The development of regional economic co-operation in the Asia Pacific region in general, and the APEC process in particular, need to be guided by the wisdom that processes are more important than structures. This does not mean that institutional structures are unimportant; however, such structures should be dictated by what is required by the process. The ‘beauty’ of the APEC process is that it is continuously ‘injected’ by a kind of freshness in each succeeding cycle by having the host of the ministerial meeting chair APEC and provide the necessary leadership. The host can, and indeed should, project its interest in the vision of APEC into the process. For instance, Indonesia as the 1994 chair of APEC has emphasised the need to promote developmental issues that would help raise the level of readiness -on the part of the developing members of APEC to participate in a meaningful regional trade liberalisation. To some members of APEC, the pace of ASEAN’s participation in APEC might be too slow. Indeed, the call to move APEC faster in the direction of its institutionalisation continues to be aired. When the United States assumed the 1993 chair of APEC, Acting Secretary of State, Lawrence Eagleburger, in a meeting with APEC senior officials in Washington D.C. in December 1992, proposed that the 1993 cycle be seen as a time of transition for APEC, namely to ‘move beyond the phase of institutionalising APEC to making it operational’. In other words, he suggested that APEC be transformed to an organisational reality, an organisation that can produce co-operative solutions to our common regional problems. Some of the issues identified above as candidates for an APEC agreement are issues in the GATT and the WTO (World Trade Organisation). The idea of a ‘ratcheting up’ strategy in which APEC should take up issues that the Uruguay Round had dealt with but on which agreement was not reached— or even to go beyond the scope of the existing multilateral agreement—does not appear to have received encouraging support from most developing members for fear that in the regional forum they are more prone to pressures by the larger countries than in the global, multilateral forum. In addition, it should also be borne in mind, especially in the agenda setting of APEC that each member has a different interest in APEC and different expectations of what APEC’s main function should be. However, it should be possible to combine a number of issues into a coherent APEC agenda. As will be proposed here, APEC should give equal attention to three main tasks. The first task is regional trade liberalisation. The second is trade and investment facilitation, and the third is development co-operation. These three main tasks should form the agenda for APEC as recommended in the EPG Report. What needs to be stressed here is that the one task cannot be pursued in isolation of the others; they

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are interdependent. Indonesian officials, for instance, have made it clear that development cooperation programmes are necessary so that the weaker countries can increase their capabilities that enable them to participate more fully in regional trade liberalisation exercises.48 An essential part of the APEC process is the encouragement of unilateral liberalisation that thus far has been the key to the region’s economic dynamism. Thus, the question is how APEC could promote an environment that could sustain unilateral liberalisation by members that are entirely GATT-consistent. In addition, this does not require negotiations. This is also entirely consistent with the meta-regime for Asia Pacific economic cooperation that has evolved over the past fifteen years or so, as manifested in the concept of open regionalism. Of course, the issue that needs to be settled for APEC’s future is what is meant by ‘free and open trade’. Does this imply the total dismantling of all tariffs and non-tariff barriers? What should be done with the so-called ‘invisible barriers’ which are more important than tariffs? Who should decide or how can it be resolved whether one country’s tradition is another country’s trade barrier? Furthermore, what should be included in the liberalisation: are services to be included and can agriculture be excluded? A second issue is the question of which countries should be included in the fast lane. Both Hong Kong and Singapore have indicated that they can implement the 2010 deadline agreed in Bogor for developed countries. But will South Korea, China and Malaysia be included in the 2010 or the 2020 deadline? The deadline issue as it relates to the US objection mentioned above manifested itself in the emphasis by President Clinton on the principle of reciprocity within the group. Fred Bergsten had described earlier that under the scheme of a differential pace of liberalisation as contained in the Second EPG Report, developing countries would receive the full benefit of the liberalisation by the industrialised countries throughout the ten years between 2010 and 2020.49 However, Clinton has argued that there would be no ‘free riders’, no ‘unilateral give ups’ and thus, the starting date also becomes important: ‘everyone would have to start at the same time because any market opening granted by one country would have to be met with equivalent concessions in other APEC countries’.50 The Bogor Declaration made the following points: (1) APEC will not turn into an inward-looking trading bloc; (2) the outcome of liberalisation will not only be the actual reduction of barriers among APEC economies but also between APEC economies and non-APEC economies; and, (3) particular attention will be given to trade with non-APEC developing countries to ensure that they will also benefit from the liberalisation in conformity with GATT/WTO provisions. This is not unambiguous. When is a trading bloc considered to be inward looking? A trading bloc is by definition a discriminatory arrangement and, therefore, it is by nature inward looking. A free trade area (FTA) is discriminatory, and is a trading bloc. Some APEC leaders have clearly stated their opposition to creating a free trade area in the Asia Pacific region. Should

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the group extend its trade liberalisation to every other trading partner (on a nondiscriminatory, unconditional MFN basis)? Or should it move all the way towards forming a free trade bloc like NAFTA which would extend preferences to nonmembers on a reciprocal basis? The latter option ‘falls squarely into the sad and unproductive tradition of treating free trade as a bargaining chip rather than as a good thing in itself’.51 In addition, in the assessment of the New York Times the US Congress is not about to approve another NAFTA, especially if it includes low-wage countries like Indonesia and China, without insisting upon rules about environmental protection and labour conditions; this prospect would scare many APEC countries.52 It is generally believed that political realities would make negotiated liberalisation within the region unlikely. However, if the region is forced to take this route it may end up creating a very ‘dirty’ free trade scheme. This is certainly not what the region and APEC is striving for.’ Thus, the available option for APEC is clear. APEC’s realistic role in trade liberalisation should be the reinforcement of the process of unilateral liberalisation that is already well underway. APEC members should adopt the 2010 and 2020 deadline as targets and they should try to accelerate the process of liberalisation that they undertake under their Uruguay Round commitments. Some countries do oppose any regional initiative to liberalise beyond the GATT agreements. However, APEC should seek ways to encourage its members to liberalise further and faster than those already agreed under the GATT. The modality of APEC trade liberalisation is now known as ‘concerted unilateralism’.53 This approach is grounded in voluntarism and collective initiative. In essence, under concerted unilateralism, APEC liberalisation will be driven by the collective peer pressure of action plans implemented by each economy at its own pace. APEC post-Osaka will have to be able to demonstrate that this process works. However, APEC cannot fail because for the foreseeable future there is no alternative to this approach. In addition to this issue of modality, there is also the concern that the APEC process has been too much focused on trade liberalisation. It has been clear from the outset that the US support for APEC is largely driven by its interest in opening up markets in the region. The US has used bilateral means to do so rather effectively and it is hoped that with the strengthening of the WTO the US will make greater use of this multilateral forum. Should the US also use APEC? As stated elsewhere, ‘US negotiators see APEC as a multilateral crowbar for prying open East Asian markets’.54 Such an attitude is likely to backfire because APEC will be seen as a trade policy instrument of a superpower, while many East Asians see that the playing field is essentially tilted against them. Trade is a contentious issue. It is not that APEC should not deal with it, but it is a matter of how to approach it. It is dangerous to make trade liberalisation almost the exclusive test of APEC’s success or failure.55 By doing so APEC becomes hostage to economic interest groups and APEC is not yet so firmly established that governments will sacrifice important interests for APEC’s sake.

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On paper APEC believes in the importance of having a balanced agenda and that APEC should rest on three legs, namely trade and investment liberalisation, trade and investment facilitation, and economic and technical (or development) co-operation. However, there is a strong tendency to view facilitation and development co-operation as subordinate to trade and investment liberalisation. APEC is not fundamentally about liberalising trade and investment. APEC is much more; it is first and foremost about community building. There has always been this discrepancy between the ‘broad view’ and the ‘narrow view’ of APEC. The broad view sees the importance of APEC as a vehicle for community building in the Pacific, including the structuring of transpacific relations. The strategic value of APEC is that it could intensify US economic engagement in the Asia Pacific region as a way of strengthening the basis for its presence in the region. But APEC also serves as a forum for engaging China constructively in the regional and international arenas. This is of strategic importance to the region in view of China’s history of isolation and revolutionary adventures. Both the US and China are two big countries and nations for whom multilateralism is not a natural instinct. There is also a message to the Europeans there. Europe can help East Asia ensure that open regionalism in Asia Pacific be upheld by responding favourably to an APEC initiative towards strengthening the multilateral system. ASEAM provides the mechanism to do so—to develop ideas and ways to put them into practice. As a result of the rise of East Asia, the international trading system is undergoing profound changes. In his exploration of what those changes might imply, Richard Higgott focuses on the way East Asia has begun to reshape the agenda of international trade negotiations. He first discusses the state of regional integration in Asia Pacific and argues that there is more politics in those processes than is often recognised. This takes him to his second question—the conditions for keeping regionalism open. RICHARD HIGGOTT Defining region, co-operation and/or integration in Asia Pacific is difficult. By many of our yardsticks—(i.e., by criteria such as ethnicity, race, language, religion, culture, history, economic or political cohesiveness), the states of East Asia lack a record of regional consciousness. And while it is true that regional economic interdependence (seen through the lenses of deepening trade interaction and growing economic complementarity) may be developing, this does not ipso facto imply development of a greater sense of region. Regions are socially and politically constructed—that is, they need positive social and political action to advance them. APEC can be seen as an Asia Pacific regionwide exercise in economic dialogue with serious aspirations to become the vehicle for setting regional economic policy direction for the twenty-first century.

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The EAEC is an East Asian response to APEC that rests largely on rhetoric and state-centred understandings of political interest to motivate it. Smaller exercises in regional economic cooperation such as AFTA and some of the emerging Natural Economic Territories (NETS) or growth triangles can be thought of as yet third levels of regional economic interaction. So how do we cut into this multilevel reality analytically? I want to suggest that the distinction between de facto structural economic regionalisation and de jure institutional economic co-operation provides the best basis for understanding the events in train in the Asia Pacific. De facto regionalisation is driven by growing intra-regional trade and foreign direct investment. It is not driven by policy or governments. For this reason it can also be seen as structural. The driving force behind it is the globalisation of production networks—uniting myriad production units for the provision of components, materials and management for particular product assembly in numerous countries, thus fostering a continued momentum towards the further integration of economies within and across regions based on webs of production, sourcing and distribution.40 The weight of de facto processes and the limited role of the ‘political’ dynamic in regionalisation can be overstated, however. Nowhere is this better exemplified than in Kenichi Ohmae’s most recent work, The End of the Nation State and The Rise of Regional Economies. As usual, while he has a point, he overdraws his McKinseyesque cartography of the world in which states have lost ‘their role as critical participants in the global economy’. Processes of regionalisation often do not represent a state-directed enterprise and indeed, the globalisation of corporate behaviour, industrial production, capital mobility and communication have undermined much of the power once held by the nation state.41 Yet Ohmae underestimates the complexity of this process in his native region, where a creative tension exists between the inter-state system and the globalised networks of production. It is the interplay of ‘politics’ and ‘economics’ that determines the structure of the regional political economy. The spur to the liberalisation process in ASEAN, for example, has been a growing recognition amongst the membership of the ASEAN policy community that if the continued flow of international investment funds is to continue, ASEAN states have to maintain their competitiveness vis-à-vis other investment-hungry areas. AFTA is premised on an assumption that ASEAN can offer collective inducements to foreign investors as a political strategy to create collective options not present at the state level.42 Members of governmental policy-making communities drawn into the discourse on economic liberalisation through bodies such as PAFTAD, PECC, PBEC and the ASEAN business groups have strongly supported both state-based and regionally based coalitions for deregulation and liberalisation.43 As a consequence, and at different levels, ASEAN, the EAEC and APEC should be seen as a compromise product of the competing views of different groups of important regional policy actors. At first this was largely a rhetorical debate over styles and speed, but as APEC’s agenda has begun to firm up it has taken a more

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concrete form. Since the 1993 Seattle summit there has been an attempt to speed up the development of APEC, especially via the proposals of the Eminent Persons Group, the Bogor Declaration’s commitment, rhetorical at least, to full liberalisation by 2020, and the Osaka Action Agenda. But if the aim of APEC has been to share information, enhance transparency and build trust via regular interaction where it has not previously existed, this is not as unproblematic as it sounds. Most Asian members of APEC resist it becoming a formal negotiating body rather than one that simply affirms broad principles and develops a modus operandi. If this is to be done in an explicitly Asian way, then it is going to take a much greater level of intellectual and practical leadership from the region, especially from the Japanese, than has been the case in the past. APEC and other regional inter-state co-operation bodies such as ASEAN and its ancillaries (such as AFTA and the ARF in the security domain) are statist. They are seen as a way to enhance regime legitimacy. In contrast to the common Asian perception of the EU, Asian regional organisations are geared to sovereignty-enhancement, not sovereignty-pooling. APEC is determined not to replicate the institutional structures of the EU.44 Moreover, open regionalism— the progressive liberalisation of trade within the Asia Pacific region via concerted unilateral liberalisation extended to non-APEC members on an MFN basis—is invariably contrasted with the institutional-cum-discriminatory EU model.45 This having been said, there is a process of ‘enmeshment’ taking place that alters the dynamics of inter-state relations in the region. It is now apparent that there is a growing desire on the part of a wide range of policy actors in the Asia Pacific and East Asia to establish a greater sense of regional cohesion in order that the given region (APEC, the EAEC, or ASEAN, depending on the level) might play a more significant role in the conduct of inter-state relations within the region and between the region and other international actors in a range of different issue areas. Moreover, the debate over regional economic co-operation in the Asia Pacific has to date been falsely dichotomised between the consensus-based Asian approach and the supposedly legal formal approach of Europe. But Asian states already exhibit greater institutional constraint in the practice of their trade policy (norms, principles and rules) than they appreciate, or are perhaps prepared to publicly acknowledge. Institutions, seen as organised rules, codes of conduct and structures that make gains from co-operation possible over time by solving collective action problems, despite uncertainties present in mixed motive games, are important to Asians as a kind of sociopolitical cement that mitigates selfinterest and opportunism. According to Higgott, three sets of requirements will have to be met if regionalism in Asia Pacific is to be reconciled successfully with the principles of an open international trading system. The first concerns the

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evolution of appropriate institutions for open regionalism. Secondly and specifically, APEC will have to be brought into a constructive equilibrium with the WTO. The third condition is an America committed to the role of advocate of the principles of an open world economy. The first two sets of issues are discussed in the following sections. Sceptics such as The Economist see APEC as a talking-shop doomed by the diversity of its membership. Advocates, however, see APEC as the next great spur to global liberalisation, as a safeguard against protectionist pressures that would inhibit the continued economic liberalisation of the Asia Pacific, as a counter to inward-looking regionalism in other parts of the world, and as a forum for regional economic conflict mitigation and resolution. Perhaps most importantly, APEC to the believers also offers a framework within which to socialise China constructively into the regional economic conversation. The analogy that Fred Bergsten46 uses is to compare the APEC Osaka summit to the Punta del Este Meeting at the commencement of the Uruguay Round. Just as the latter did, Osaka established a set of principles and agendas for implementing the trade pledges agreed to earlier (in APEC’s case, at Bogor the year before). The optimists have a point. Journalistic interpretations, inevitably shortterm, miss the potential significance of APEC as an exercise in institutionalisation, especially the degree to which the evolution of process in the initial stages may be of more long-term significance than immediate results. Achieving consensus where possible and ensuring that competitors do not lose face is as important a part of the modern Western tradition of multilateral trade negotiation that has developed since World War II as it is part of the Asian way’. All commitments to liberalisation begin as a political commitment rather than a formal agreement. But the fruits of the process emanating from Osaka, unlike the results of a formal multilateral trade negotiation round, are non-binding and will come about via ‘concerted unilateral liberalisation’. For this to succeed, the process in the long run will depend on member states of APEC undergoing substantial exercises in social learning. Peer pressure and enlightened self-interest can lead governments towards good behaviour, and there is evidence that a cognitive adjustment to the principles of free trade and open regionalism is taking place in important quarters of the Asia Pacific economic policy community. One scholar has recently argued that even in perhaps the toughest regional test case of all—in China’s attitude towards the regional economic bodies and the WTO—we have seen evidence of cognitive learning and socialisation on the part of the Chinese elite.47 This is not to suggest that the process is teleological. Domestic political pressures—for example, the continued presence of rent seeking activities or ideology—mean governmental responses will often be selective and tactical rather than cognitive and universalist. The discourse over regionalism in Asia is still in its infancy, and the development of regional institutions on the one hand and enhanced contributions to multilateral bodies such as the WTO on the other

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cannot be sequenced: in an era of globalisation, the two must go together, for they are concomitant processes in co-operative learning. Given the lack of substantive elements of a common Asia Pacific identity, however, the development of APEC in less than six years compares favourably with the early phases of institutional co-operation in other parts of the world, including Europe in the immediate post-World War II era. While Asians look with a sense of foreboding at the prospect of a Brussels-style form of inter-state institutional contact, institutionalisation is nevertheless taking place in the region. Despite the talk of APEC remaining only a consultative forum with a lean, parsimonious bureaucracy in Singapore and a ‘sherpa’-oriented process of summitry, serious successful negotiations have already taken place (i.e. on investment principles worked out at Bogor in 1994). Senior officials, indeed now ministers, meet regularly and in a systematic way to deliberate over a range of substantive issues identified quite early on in the organisation’s existence.48 The so-called Asian way’ differs from more traditional processes of trade negotiations much less than attempts to juxtapose it with Cartesian formalism would have us think. The reason for this is that the processes at the heart of these organisations especially trade and finance—are global as well as regional issues. Moreover, the aspects of these processes in need of policy resolution—ranging from basic questions such as improved data collection and the discussion of appropriate norms, principles of behaviour and better transparency, through to higher-order matters such as negotiation on concrete distributional issues and formal policy co-ordination and the eventual development of surveillance and compliance procedures and dispute resolution—are collective action problems for Asians and non-Asians alike. APEC’s initiation during the deadlocked days of the Uruguay Round represented something of a rhetorical insurance policy. Institutional development is not expected to replicate processes in Europe and North America. But institutional development will take place. Anyone who doubts that simply needs to look at how much institutionalisation has taken place within APEC since 1989. Change will continue to be incremental, but if APEC is to advance the process of open regionalism, then institutions and procedures capable of supporting a genuinely non-discriminatory, MFN approach to trade will need to develop. In this context, the future relationship of APEC to the WTO will be crucial. Without remaining open, regionalism will run into fundamental conflict with the WTO in practice. (Some would argue that it already runs into conflict with the WTO in theory.) Should APEC achieve its Free Trade Area (FTA) status by 2020, then all members of the WTO will be parties to at least one Preferential Trade Agreement (PTA). The real question is the degree to which APEC and the WTO, or even a more restricted East Asian FTA built on the Asia 10', will be complementary to or competitive with the WTO. To date, evidence does not support the view that the world is dividing into three consolidating trade blocs.

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For most trading nations of the world, intra-regional and interregional trade have both increased in importance as a factor in their national economies.49 But the real test lies in the compatibility of the aims and of the institutional competencies of regional initiatives such as APEC with the WTO. APEC and the WTO/GATT are different institutions at different stages of evolution with ostensibly different functions and rationales. The WTO is a formal negotiating body that ‘writes rules and, in so doing, makes laws to which its contracting parties agree to abide’.50 Effectiveness depends on the WTO’s ability to enforce these rules. A role of regional bodies must be to assist the WTO in its ruleenforcement capability. To the extent that APEC is in the business of securing the reduction in tariffs and other barriers to trade needed to supporting an open, rules-based trading system, it is consistent with the WTO. Indeed, it can be said to enhance the WTO. But there are tensions. At a general level, the proliferation of regional trading arrangements must inevitably raise questions about the credibility of the WTO rules and procedures in other areas. Moreover, the Uruguay Round did little to eradicate the ambiguities pertaining to Article XXIV of the GATT. The preferential trade arrangements available under this article do not have to be automatically granted to third parties, but they were only ever meant to be for the assistance of developing countries. History has not turned out as intended by the original drafters of Article XXIV. As of January 1995, 98 agreements had been notified to the GATT/WTO under Article XXIV. Were APEC, as some have tried to suggest, to become a trading block from which external concessions were granted to non-members only on a reciprocal, rather than MFN basis, then it would be in clear violation of Article 1 of the regional WTO Agreement. Under Article 1, as is well known, benefits of liberalisation offered by one contracting party to another contracting party should be offered to all. The economic rationale of MFN is that it prevents trade diversion arising out of liberalisation. Politically, of course, it limits the potential for anarchy and the dangers of antagonistic and retaliatory bilateralism. MFN is both the strength and the weakness of the international trading system. It gives moral strength to the GATT/WTO but makes agreements to which all parties can agree very difficult to bring to a conclusion. Not only have agreements got progressively more complicated through eight rounds of GATT negotiations, the resentments generated by freeriding have increased, especially in the USA as it has become less willing to bear the costs of the provision of public goods. APEC may well be able to get round technical questions attendant in Article XXIV, but it could not count as an exemption under Article XXIV An APEC practising specific reciprocity would be of sufficient power and size to weaken the legitimacy of the WTO or even, as one author has argued, to represent an alternative system of liberalisation sufficient to undermine the WTO.51 A serious commitment to open regionalism on an MFN basis is conducive to the multilateral trade regime enshrined in the disciplines of the WTO, but only with

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a move to an FTA underwritten by specific as opposed to diffuse reciprocity will the organisation gain any strength—and this may be at the expense of the multilateral system. At present, the principles of APEC established in the Osaka Action Agenda are to be extended to all members of the WTO; in this, they represent an acceleration of the Uruguay Round agreements. As yet, open regionalism in the Asia Pacific has not violated the MFN principle. The important thing, from the perspective of keeping regionalism open, is to make sure that it never does. The third condition for a successful reconciliation of regionalism with an open world economy, in Richard Higgott’s view, is an America fully committed to the principles of multilateralism. Yet this can no longer be taken for granted. Economic nationalism, and a preoccupation with domestic politics, has, in the author’s view, turned America from a protagonist of a socially benign liberalism to what he calls predatory and subversive liberalism. This has led the US to develop a new mix of unilateral, bilateral and multilateral trade policies, with strong emphasis on specific reciprocity—i.e., reciprocity measured by results, rather than by opportunity. What conclusions may we draw from this discussion of an Asia Pacific between regionalism and globalism? First, for the foreseeable future there is unlikely to be a region-wide consensus on the overall role, and thus route to institutionalisation, of APEC. This is not to write APEC off as a potentially significant global actor—rather, it advises caution against the panglossian rhetoric following APEC summits. Second, contemporary regionalisation in the Asia Pacific cannot be understood in isolation from processes of globalisation that have weakened economic policy autonomy, especially the ability of governments to control monetary and fiscal policy, govern markets and manage exchange rates. States attempt to recover policy sovereignty lost at the national level in the wider regional context. Economic agreements and the co-operative bodies that might flow from them can give ‘voice’ to a region. This may even give governments added strength in their battles to overcome entrenched rigidities at home. Third, while economistic conceptions of market-led integration and open regionalism clearly have powerful explanatory capabilities and political appeal, as the Asia Pacific region shows, they cannot always overcome other factors which suggest different boundaries, membership and goals for a region. Exercises in institution-building are not simply the outcome of states engaging in rational utility maximising. They can also be exercises in the internationalisation of ‘new understandings and roles…[and]…shared commitments to social norms’.52 Indeed, attempts at identity-building, pace EAEC, should not be dismissed lightly. EAEC represents an historically and culturally-rooted cut into the Asia Pacific region which has growing resonance for a number of East Asian

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governments. While neo-liberalism is a major force in contemporary global affairs, clearly it will not go unchallenged. Fourth, also significant in the process of identity formation is the manner in which the region(s) respond to the institutions, dynamics and other regional actors in the global economic order. Without a major contribution from the states of East Asia, it has to be doubted whether the WTO will be successful in addressing the continuing political appeal of managed trade and the recourse to strategic trade policy, especially in important sections of the American polity and economy. At the closing stages of the twentieth century we are in a battle to redefine the intellectual structure of the international trading regime. A perception of loss of control over economic policy appears to have undermined both US capacity and willingness to provide non-selfish international leadership in trade policy. GATT’s initial purpose— the development of multilateralism— remains rhetorically central. But in practice, the WTO is now seen by the US as a location for the advancement of quite specific, narrowly defined interest. By contrast, the governing elites in the world’s more competitive economic players, notably Japan and the first wave NIES such as Korea, Taiwan and Singapore, recognise, more than at anytime in the past, the importance of international liberalisation and open regionalism for their economic well-being. Thus the remainder of the 1990s will continue to be characterised by the major players learning to accommodate to the new structures of strategic interaction. There is not the same co-variance of power and purpose that existed in the Cold War era. Strategic allies are now economic rivals. But there is co-variance of a kind. The world’s major corporate decision makers —from East and West, with a finely tuned sense of their global interests and growing influence over the policy process—can be expected to resist any of the worst disciplines on their activities that regional bloc makers might wish to erect. For them, at least, we have a global system ‘governance without government’ conducive to the bargaining patterns that have evolved in the struggle for market share at the century’s end. No guarantee can be given that institutions (global or regional) will inevitably become more efficient over time. But greater regional discourse offers an opportunity to develop consensus on how best to cope with the distributional impacts of differing state responses to common policy problems in the region. Historically, other parts of the world have seen bodies move from consensus organisations tackling definitional problems (property rights and the like—cf. the OECD) to negotiating bodies such as GATT engaged in solving co-ordination and collaboration problems. APEC, and especially the states of East Asia, started out resisting this process but may not be able to do so forever.— NOTES 1 The Association of South East Asian Nations: Brunei, Indonesia, Malaysia, Philippines and Thailand. Singapore and Vietnam are also members of the ASEAN

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2

3 4 5 6 7

8 9

10 11 12 13 14

15

16 17

community The data used here refer to the period before Vietnam joined ASEAN (1995). For this reason Vietnam and China will be referred to separately Belgium, Luxembourg, Denmark, Germany, France, Greece, the United Kingdom, Ireland, Italy, the Netherlands, Portugal and Spain. On 1.1.1995 Finland, Austria and Sweden became EU members. Since the foreign trade data used here refers to the time before accession, these three countries will be included among the EFTA countries. The European Free Trade Agreement: Finland, Iceland, Norway, Austria, Sweden and Switzerland. Lichtenstein is also an EFTA member. Poland, Slovakia, Czech Republic, Hungary. Up to 1990 Czechoslovakia for Czech Republic and Slovakia. Here not including Singapore and Vietnam. The so-called Developing Asian Economies (DAEs) include Korea, Taiwan, Hong Kong, Singapore, Malaysia and Thailand. The RCA Index (Revealed Comparative Advantage Index) is a specialisation index. An above-average specialisation in the area of exports points to a high degree of competitiveness in these product groups in the world market. An above-average specialisation in the area of imports shows a corresponding dependence on imports. In imports Japan has a below-average specialisation in high-tech products. Cf. the shares in Table 4 with the higher corresponding shares calculated by Braga/ Bannister on the basis of UNCTAB data. Carlos A.Braga, Primo; Geoffrey Bannister, ‘East Asian investment and trade: prospects for growing regionalization in the 1990s’, in Transnational Corporations, Vol. 3, No. 1 (February 1994). See Anton Gälli, ‘Die vier kleinen Drachen: das Netz ihrer Beziehungen mit Europa wird dichter’, in Ifo Schnelldienst (47) No. 4/94, pp. 16–31. Official Journal of the European Communities, No. 1343/3, Annex 1 (31 Dec. 1994). Council Regulation (EC) No. 3281/94, Article 7. Official Journal of the European Communities, No. L56/4 (6 Mar. 1996). For illustrations on how this ‘rule’ could be implemented within the APEC member countries, see APEC, Seventh Ministerial Meeting, Joint Statement (http:// www.apecsec.org.sg/minismtg/mtgmin95.html). With few exceptions, the experience of most Western firms was that the Japanese market proved much harder to crack than anticipated (see, Jean-Pierre Lehmann, ‘Japan 20: the West 1—reversing the scorecard’, in Business Strategy Review, Vol 4, No 2 (Summer 1993). Furthermore, whereas conventional business wisdom in the eighties was that a presence in Japan was necessary to penetrate the region, by the early nineties this was no longer the case. Although not necessarily abandoning Japan, at least at the rhetorical level, nevertheless more attention and resources are now being directed at seemingly potentially more lucrative Asian markets, especially in China and Southeast Asia. Paul Krugman, ‘The myth of Asia’s miracle’, in Foreign Affairs, Vol. 73, No. 6 (November/December 1994), pp. 62–78. My colleague Jon Sigurdson argues however that Japanese society and Japanese companies are on the verge of achieving significant technological breakthroughs across many sectors; see Jon Sigurdson, Science and Technology in Japan (London:

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18 19

20 21 22

23 24 25 26 27 28 29

30

31 32

33 34

1995), and Future Advantage Japan? Japanese Corporate R&D Strategies (London: 1996). Michael Richardson, ‘Europe builds ties in East Asia’, in International Herald Tribune (22 September 1995). Kerstin Berglöf, however, does make the valid, indeed crucial and cautionary points that (1) the share of EU exports going to East Asia is low compared with the other major traders—27 per cent for the US, 19 per cent for the EU, (2) but also that ‘a comparison of European Union exports of goods with those of the other traders shows that the European Union is clearly the trader with the lowest share of its exports going to sectors with strong international demand’ (Kerstin Berglöf, ‘The dynamics of economic change in Asia: implications for trade and European Union presence’, Brussels: European Parliament, Working Papers, External Economic Relations Series (March 1996), pp. 15–16. Sir Michael Perry, ‘Europe and Asia: the changing balance of international business’, in The World Today (August-September 1994), p.158. Stefan Wagstyl, ‘ABB surges to $1.315 bn’, in Financial Times (29 February 1996). ‘Volkswagen sales shift toward Asia’, in International Herald Tribune (30 January 1996). Volkswagen is also the number one foreign exporter to Japan (i.e. excluding exports of Japanese automobile manufacturing transplants from the United States), with 44,900 units. Haig Simonian, ‘VW defends its supremacy in China’, in Financial Times (2 May 1995). ‘Asia’s labour pains’, in The Economist (26 August 1995). Cathy Hilborn, ‘Better with age: Siemens shies away from making a fast buck’, in Far Eastern Economic Review (4 January 1996). ‘Survey on telecommunications’, in Financial Times (9 April 1996). Jérôme Monod, ‘How Europe can succeed in Asia’, in Far Eastern Economic Review (22 February 1996). Tony Walker, ‘Alcatel hitches wagon to Chinese growth’, in Financial Times (7 February 1996). François Godement, Hanns Maull, Simon Nuttall and Gerald Segal, ‘Creating a work in progress heads the Europe-Asia agenda’, in International Herald Tribune (28 February 1996). For the period from the end of World War II until the late 1980s, I have sought to ‘segment’ different European countries’ attitudes and policies vis-à-vis Japan according to different periods of time; Jean-Pierre Lehmann, ‘Japan and Europe in global perspective’, in Jonathan Story (ed.), The New Europe: Politics, Government and Economy Since 1945 (Oxford, 1993). ‘Europe ready to talk tough to Japanese’, in Financial Times (21 February 1996). It is not that such matters need not necessarily be discussed, but they do not need to be, in fact must not be, discussed at the WTO. There are appropriate organisations for labour standards and environmental issues, among which the WTO does not feature. The agenda for the WTO is full and complex enough as it is. Tommy Koh and Lee Tsao Yuan, ‘An Asian-European encounter of the third kind’, in International Herald Tribune (1 March 1996). European Commission, Towards a New Asia Strategy (Brussels: European Union, 1995).

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35 For this reason, among others, the British government should have actively sought to encourage Hong Kong Chinese to emigrate to the UK. Ultimately what the British government did do in respect to Hong Kong British passport holders was too little, too late, in fact pathetic. 36 Kenneth Courtis, a foremost expert on East Asian economies, is senior vice president of Deutsche Bank Capital Markets Asia. The comment attributed to him here, or variations along the same general theme, has been made in a number of his papers and presentations. 37 UNCTAD, Foreign Direct Investment in Asia and the Pacific, (Geneva: UNCTAD 1995). 38 According to figures available from the Japanese Ministry of Finance. 39 Caroline Southey, ‘Europe’s business record in Asia under fire’, in Financial Times (20 March 1996) and Guy de Jonquières, ‘European investors missing out on Asian opportunities’, in Financial Times (16 March 1996). 40 Pacific Economic Cooperation Council, San Francisco Declaration, San Francisco 1992, available through http://www.pecc.nte/1992.html 41 Ippei Yamazawa, ‘On Pacific Economic Integration’, in Ross Garnaut and Peter Drysdale (eds), Asia Pacific Regionalism, Readings in International Economic Relations (Pymble, NSW 1993), pp. 201–211. 42 C.Fred Bergsten, APEC and World Trade, in Foreign Afairs, 73:3 (May/June 1994), pp. 20–6. 43 Ibid. 44 The Asian Wall Street Journal (11–12 November 1994). 45 The Far Eastern Economic Review, 24 November 1994. 46 Tomiichi Murayama, ‘Japan Wants Open Prosperity in the Diverse Asia-Pacific Region’ in International Herald Tribune (15 November 1995). 47 The Economist (25 November 1995). 48 The Jakarta Post (29 April 1994). 49 Kompas (13 August 1994). 50 Bangkok Post (16 November 1994). 51 The Economist (12 November 1994). 52 As reproduced in The International Herald Tribune (17 November 1994). 53 Murayama, op.cit. 54 Donald K.Emmerson, ‘APEC Govwernments and Unity: Dreaming the Impossible Dream’, in International Herald Tribune (22 November 1995). 55 Charles E.Morrison ‘There Are Smarter Ways to Build An Asia-Pacific Community’ in International Herald Tribune (3 November 1995). 56 M.Barnard and J.Ravenhill, ‘Beyond product cycles and flying geese: regionalisation, hierarchy and industrialisation in East Asia’, in World Politics, 47: 2 (1995), pp. 171–209. 57 S.Strange, ‘The defective state’, in What Future for the State: Daedalus 124:2 (1995), pp. 55–74 58 L.Lim, ‘ASEAN: a new mode of economic co-operation?’, Conference on the Political Economy of Southeast Asia Foreign Policy in the New World Order (Windsor, Ontario, 1992). 59 R.A.Higgott and R.Stubbs, ‘Competing conceptions of economic regionalism: APEC versus EAEC’, in Review of International Political Economy, 2:3 (1995), pp. 516–35.

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60 R.A.Higgott, ‘Economic cooperation in the Asia Pacific: a theoretical comparison with the European Union’, Journal of European Public Policy, 2:3 (1995), pp. 361– 83. 61 R.Garnaut and P.Drysdale (eds), Asia Pacific Regionalism: Readings in International Economic Relations (London, Harper Collins, 1994). 62 The Economist (6 January 1996). 63 S.Harris, ‘China’s Role in The WTO and APEC’ in David S.G.Goodman and Gerald Segal (eds) China Rising (London, Routledge, 1997). 64 There are, for example, thirteen specific areas of economic and technical cooperation: HRD, industrial science and technology, small and medium enterprises, economic infrastructure, energy, transportation, telecommunications and information, tourism, trade and investment data, trade promotion, marine resource conservation, fisheries and agricultural technology. 65 WTO Regionalism and the World Trading System, (Geneva, WTO Secretariat, 1995). 66 D.Vines, Global economic institutions: a historical overview and a modest reform agenda, Oxford, Institute for Economic Statistics, mimeo (1996). 67 H.Dieter, Regional Integration in the Pacific Rim: The Future of APEC and the Potential for Conflict with the World Trade Organisation (Berlin, Deutsche Stiftung für Internationale Entwicklung, 1996). 68 A.Wendt, Anarchy is what states make of it’, in International Organisation 46:2 (1992), pp. 391–425.

4 The security setting

It is conventional wisdom to assume that although Europeans and East Asians are developing closer economic relations, they will find it much more difficult to establish closer security relations. This ‘wisdom’ is based on the clear evidence that the United States is the major outside power with a crucial role in Asian security, and no other power (European or other) comes near to such status. The former Soviet Union used to be a major power in Asian security, but even before its formal demise in 1991, the Soviet Union had begun to fade. By the mid 1990s it was commonplace to discuss Asian security virtually without reference to Russian power. European powers were major players in Asian security, even in living memory. But as the colonial powers retreated from the region, they retained very little direct security connection with East Asia. Of course, Britain and to some extent France retained residual links and above all retained residual sentiments that as global powers with seats on the United Nations Security Council they should be involved in East Asian security. As European economic interests in East Asia revived in the 1980s, there gradually began somewhat more serious thinking about Europe’s role in the security of the region. By the 1990s, when it was clear that the stability and security of East Asia was of great importance to Europeans with strong economic interests in the region, it was easier to sustain the argument that Europeans should have a role in Asian security. This proved to be easier said than done. By the mid 1990s the Europeans could see that at best they were likely to be peripheral players in Asian security. If Europeans were to begin taking Asian security more seriously, they would have to work with the grain of already existing realities. Thus we turn to a general analysis of security in East Asia, before taking a closer look at the role of the United States, especially in its relations with China. We conclude this section with an analysis of the trends in regional arms control.

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THINKING STRATEGICALLY ABOUT SECURITY IN PACIFIC ASIA Thinking about security in East Asia can be a perverse process. Consider the fact that the past three years have been the worst for East Asian security in fifteen years, and yet this has been the most peaceful generation in East Asian security for several centuries. What is going on? In 1993–94 we had a major crisis concerning Korea, in 1995 conflict in the South China Sea was a major worry, in 1995–96 we had the worst tension in the Taiwan Straits in nearly forty years, and in April 1996 the North Koreans tore up the Korean armistice agreement. But all these crises have helped develop new ways of coping with regional security and give hope to both realists and idealists that serious action is being taken to ensure regional security. Out of crisis comes opportunity. Just what makes the best international security is seriously contested, and of course even a volume of this size cannot fully explore the debate. According to Gerald Segal there appear to be four major components of security for any region, none of which on their own is sufficient to secure peace and stability. He argues that the first, and most important, component of security is the emergence of pluralist (democratic) political systems. GERALD SEGAL If all of Pacific Asia were rich and had well-established pluralist political systems, there could be much more confidence about regional security. Rich democracies tend to become ‘Lite powers’.1 These Lite powers tend to have populations with few children and therefore parents are more averse to risking conflict. With fewer young people for the armed forces, there is a tendency to develop professional armed forces rather than conscript armies. Professional armed forces tend to put greater stress on expensive hardware and are therefore very sensitive to the high financial cost of warfare. Countries with pluralist political systems tend to be more diverse and complex. They tend to be more understanding about differences with others and more sensitive to the need for political compromise. They tend to appreciate the joys of criticism and the healthy role it plays in society. They understand that not all criticism and rhetoric is a cause for tension and conflict. When one pluralist political system confronts another obviously pluralist society, there is a greater willingness to tolerate differences and seek peaceful solutions. When the enemy is seen as a dictator unrepresentative of popular will, it is easier to justify conflict and see one’s own behaviour as sensible and rational. If we adopt a long-term view of human history, it seems clear that the ‘litening’ of states is inevitable for those who grow rich. The ability to sustain prosperity seems to require ‘less perspiration and more inspiration’ as the basis

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of productivity and prosperity.2 If rapidly developing states are to continue moving into the class of wealthy, mainly service economies, they will need to create an environment where the joys of criticism are unleashed and innovation becomes more likely. Such criticism and inspiration require a plurality of ideas and a social system that encourages such pluralism. The new rich of Pacific Asia are beginning to recognise that their continuing prosperity requires a change of social and political systems and only now are they beginning to experiment with serious pluralism. Some societies in Pacific Asia have made remarkable progress towards pluralism and Lite power. Of course, all states in Pacific Asia have the trappings of pluralist political systems. Even North Korea has a parliament and China has a formal constitution that would make Thomas Paine proud. But few countries in Pacific Asia have what might be facetiously termed ‘really existing pluralism’. Only a handful of countries in Pacific Asia have ever had free elections leading to a change of government. South Korea, Japan and Taiwan have been admirable recent cases in point.3 Only a handful of countries have a free news media or a blind judicial system, and the degree of freedom or unbiased law seems to fit very closely with the propensity to have free elections. Perhaps not surprisingly, South Korea, Taiwan and Japan are the three most economically developed countries (as opposed to city states) in the region. It seems that the inevitable trend is a political pluralism that follows from economic prosperity.4 Whether this trend makes Japan, South Korea or Taiwan into more Lite powers depends on a host of other factors. Japan, in Hanns Maull’s wellturned phrase, has long been considered a ‘civilian power’ very averse to the use of force. But this was the result of peculiar circumstances surrounding World War II. As the importance of the wartime experience fades, Japan may become a bit more of a ‘normal’ power before it becomes Lite like the powers of the Atlantic. South Korea and Taiwan are both likely to remain unusually militarised until their civil wars are resolved. But the resolution of those civil wars may well depend on the other sides in the civil wars (North Korea and China) becoming more democratic. Thus while it may be clear that the democratisation of some East Asian states is already well underway, it is far from clear that the risk of involvement in conflict for these states has declined. So long as their pluralist systems are still fragile, and their adversaries still authoritarian, the risk of conflict may not decline. The fragility of newly liberalising societies was perhaps part of the explanation for the flare-up of the territorial dispute between Japan and South Korea in early 1996. Although this squabble was well known and long standing, it had been reasonably well submerged until Japan placed the UN Law of the Sea Convention before the Japanese Diet. South Korea reacted in such an exaggerated way to what was merely a formalisation of the already well-known Japanese position on the disputed islands, in part because its political leadership was weak and seeking reelection. As in the Greek-Turkey dispute at the same

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time, fragile democracies find that weak leaders, egged on by jingoistic media, can produce more rather than less dangerous policies. Nascent democratic politics were also a cause of security problems in the Taiwan-China dispute. The 1995–96 dispute had a great deal to do with the fact that President Lee Teng-hui, who faced the first free Presidential election in Chinese history, felt he had to win support from the centre ground of the electorate. He did so by shifting to greater support for an enhanced international role for Taiwan and sought (and received) a visa to visit the United States. China’s exaggerated reaction, and the United States’ initial havering, created a full-blown crisis and the largest deployment of American naval power in the region since the end of the Vietnam war. But the crisis would not have happened if there were no democratic process in Taiwan and no growing sense among Taiwanese that they deserved greater international status and the right to determine their own future. While Taiwan was not acting in a militaristic fashion, it remains true that the democratic process was a destabilising force for regional security. Elsewhere in Pacific Asia there are no well-developed pluralist political systems. In fact, many of those who resist greater pluralism with vigour, notably Malaysia and Singapore, cite the risks of increased conflict that might ensue from democracy. They fear that ethnic divisions in their societies might be exacerbated by demagogic politicians. They suggest that the values of pluralism are not yet well enough entrenched to be trusted to popular good sense. While it is impossible to judge the extent to which this is merely the self-serving argument of current rulers, it is understandable, especially given ethnic tensions only barely below the surface. It is no doubt true that ethnically more coherent states such as South Korea, Japan and Taiwan have less to fear in this regard and therefore may be less constrained in experimenting with popular pluralism. It may be that the complex ethnic make-up of Southeast Asian states means they will move with greater care towards pluralism. The more ethnically well mixed Thais may be evidence that those with less ethnic fears might be able to tolerate more liberal systems. However, evidence from elsewhere in Asia, and most notably India, suggests that even poor and ethnically divided societies can cope with democracy. As India’s economic growth overtakes average Southeast Asian levels, perhaps the argument for Southeast Asian stability based on authoritarian rule may begin to lose some of its currency. There is, of course, no ‘safe’ time for states to experiment with pluralism and ruling elites are usually the last to see the need to give way to pluralist forces. Nor is there, almost by definition, a single path to pluralism or a formula that can be followed. The forces for change tend to burst out in a seemingly spontaneous process and they are rooted in deeper social forces. When it happens, as it inevitably will in Southeast Asian states that continue to develop economically, in the short term there is likely to be less rather than more international security. Given the range of disputes among ASEAN states that are currently barely submerged or barely under control, there might be reason for the region to be thankful that they do not have Greek or Turkish levels of democracy.

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The Greek and Turkish cases may also suggest that Southeast Asian states, when they do democratise, will have security problems ahead. Similar arguments can be made regarding the growing pluralism in China and the tendency to vitriolic nationalism. China has undoubtedly become a more liberal place in the years of reform, even if the government continues to take a firm line restricting human rights. But the liberalism is the result of economic and social reforms derived from the decision to abandon the socialist ideology. The current hybrid is often described as Market Leninism, but in fact it is more easily recognised as national socialism. The attempt to fill the void at the heart of Chinese values with nationalism is seen to be necessary because the regime requires legitimation from some source apart from economic growth. In this sense China’s new and more dangerous nationalism can be seen in part as a response to the uncertainties of naturally emerging pluralism. Democratic support is sought, as in the case of Hitler’s Germany or Japan in the 1930s, through an appeal to nationalism. China has had nothing like the elections in Japan or Germany in the 1930s, but the essential point remains the same—China would be a more peaceful participant in international society if it were not having to appeal to its public for legitimacy on the basis of nationalism. Authoritarian China under Mao could decide more easily (as in 1958) to step back from a crisis in the Taiwan Straits, than can the current leadership which cannot afford to be seen to be weak on nationalist issues.5 The general conclusion seems to be that while pluralist democracy is, in the end, a very positive factor contributing to international security, in the short term the opposite may be true. The challenge for the states of Pacific Asia is rooted in the fact that as they develop economically, they are bound to become more pluralist political systems. While they can eventually look forward to the benefits of ‘the democratic peace’, they still have some dangerous periods to go through. Dangers for democrats come not only from living next door to authoritarians, but also from making the transition through the delicate stage of fragile democracy subject to demagogic tendencies. Thus it is both a source of pessimism, but also eventual optimism for regional security, to note that the states of Pacific Asia are growing more democratic. Segal clearly sees the political and social processes in Pacific Asia as critical to the emergence of the deeper forces necessary for building real security in the region. His analysis also discusses the obvious advantages for regional security derived from economic interdependence. But here too he sees both good prospects and looming problems. The logic is alluring: that states who obtain the benefits of economic interaction are less likely to be prepared to fight each other. Sadly, historical evidence suggests this logic is flawed. Economic interdependence (at much higher levels in Europe a century ago, than in Pacific Asia today) did not stop European powers from going to war in 1914. High levels of economic interdependence between the

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United States and Japan in the 1930s actually contributed to the outbreak of war because the United States controlled vital Japanese fuel supplies. Economic interdependence is about both the benefits of trade and investment, but also the competition for markets and resources: it carries the seeds of both conflict and co-operation. Economic interdependence only makes peace more likely in the sense that it contributes to the growth of economies, thereby making societies more plural and, with any luck, eventually Lite and democratic. Mature democracies do not go to war with each other, but interdependent economies often do. While it is useful to note the extent to which economic interdependence in Pacific Asia is growing, it is even more useful to keep in mind that interdependence is only one step down a much longer road to a democratic peace. Economic interdependence in Pacific Asia has already exacerbated a range of uncertainties and conflicts. Consider the role of the ethnic Chinese in the region. They are a vital part of the business networks, but their power and prosperity is resented. Anti-Chinese rioting in Indonesia continues. Malaysia continues to cage the extent of ethnic Chinese control of the local economy. Even Japanese increasingly worry about the closed nature of Chinese networks and the fear adds to their deeper concern about Chinese power. Economic interdependence is also a source of concern in that Pacific Asian states need a vast amount of new sources of energy and food as their economies grow. There are a range of worries about the implications for world prices as scarcities are managed. An important part of the tension over the South China Sea is stimulated by worries over long-term scarcities of energy and food. Is Indonesia, for example, confident that China does not covet the Natuna gas fields? And even if China will not take the fields by force, is Jakarta confident that China will not bully them into selling at ‘friendship prices’? Will China insist that its companies win contracts? Related worries concern the implications of the United Nations Law of the Sea. The treaty was in part designed to manage the growing interest in marine resources and conflicts over ownership. The UNCLOS process has led states to formally declare their sovereign claims, thereby provoking tension with neighbours. Consider the tense dynamic of a Japan worried about Chinese territorial claims; but when Japan enacts domestic legislation under UNCLOS it also triggers relatively dormant conflict with South Korea. Law of the Sea issues are also part of the worry over continued defence of the principle of freedom of navigation, an element that clearly loomed large in the robust American naval activity in the Taiwan region in 1996. It might also be noted that even primarily economic disputes derived from economic interdependence have an important impact on the climate of regional security. For example, while many would agree that close United States-Japanese security relations are crucial to regional stability, nasty US-Japanese trade disputes put the security framework at risk. US-Chinese trade disputes, for example over intellectual property rights, make it harder to settle other political and military disputes. China’s inability to make intellectual property rights

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agreements stick has a great deal to do with the impact of decentralisation on its economic and political system. Without economic interdependence between parts of China and the outside world, the local leaders would be less able to resist Beijing’s desire to implement international accords.6 To the extent that these problems of regionalism in China are made possible by international economic interdependence, it can be argued that some of the deeper worries about China’s future are the result of economic interdependence. How much was China’s vitriolic nationalism over Taiwan in 1996 the result of acute concern about the risks of regionalism at home? In short, seemingly strictly economic aspects of economic interdependence contribute to regional security problems. Of course despite all these difficulties, it is clearly encouraging that Pacific Asia is moving towards greater economic interdependence. There is a far better chance for a long-lasting pattern of regional security if there is extensive and intensive economic interconnections. To the extent that the process of bringing the economies closer together is a source of worry, it is a worry born out of an essentially positive process. But the point is that there is a need to be concerned about how the process is managed. Economic interdependence is a necessary but far from sufficient condition for regional security. Gerald Segal’s third feature of regional security was the various attempts (most notably the ASEAN Regional Forum), to build regional security arrangements. These issues are discussed in later contributions in greater depth. Segal then goes on to argue that the trends in the fourth dimension, the construction of a regional balance of power, are encouraging to those who see the need for regional security built on a multifaceted policy. For realists, one of the most disturbing aspects of Pacific Asian security has been the relative absence of attention given to maintaining a balance of power. One important reason for the relative unconcern with the balance of power in Asia was the fact that by and large the balance has been essentially determined by power external to the region. Ever since European powers displaced China as the dominant power in Pacific Asia, the only major indigenous power was Japan, and then only briefly. For much of the Cold War the dominant powers were nonAsian, at least until the SinoSoviet split led to China’s tentative re-emergence as a local power. Pacific Asians had grown used to thinking about balance of power strategies as something that others managed.7 When the Cold War ended, and Russian power faded, there were few tears shed for the decline of a once-great empire, but there was a concern about the supposed risks from a consequent power vacuum. These risks were said to have derived from the twin concerns about whether the United States would remain as a regional power, and whether a local power would emerge. The talk of ‘peace dividends’ in the United States and the ejection of American forces from the Philippines, seemed to confirm the notion that the United States might become less committed to ‘holding the ring’ of regional power. In the initial post-Cold-War

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period the worry was that Japan might emerge as a major local power.8 In the event, the twin concerns have so far proven groundless. There are signs of a developing post-Cold-War balance of power in Asia, and in many respects realists may have reason to relax. The reasons for new confidence in the balance of power stem from the ways in which local states and the United States have reacted to the rise of the most obvious local power—China. This is not the place to rehearse the arguments about the rise of Chinese power, but a brief sketch is necessary.9 Chinese defence spending, after a decade of reductions in the 1980s, climbed steadily in the 1990s —the only great power in the world with a real increase in defence spending. In the first major post-Cold-War military crisis in Pacific Asia—the North Korean nuclear issue—China was far from helpful in ensuring compliance with the IAEA (International Atomic Energy Agency). In the next major flash-point—the South China Sea—China seized new territory claimed by the Philippines and rebuffed any effort to discuss disputes over sovereignty. In the most recent military crisis in Pacific Asia— the Taiwan Straits—China closed international air and sea lanes and demonstrated a capability to blockade Taiwan and perhaps seize offshore islands. In these last two cases, China demonstrated that economic interdependence with either the states of ASEAN or Taiwan would not stop China from using military force or creating a crisis. Neither were regional institutions robust enough to restrain Chinese behaviour except in the most cosmetic fashion (as in the ARF meeting in 1995). China had certainly not been restrained by the forces of ‘enlitenment’, for in fact it seemed caught in a web of nasty nationalism and weak leadership. In short, in the immediate crisis, the primary constraint on the rising power would have to come from the balance of power. Was there one to be found? It may be too early to be categorical about the emergence of a balance of power in Pacific Asia, but the signs are cheery. First there was the evident disgust in ASEAN about Chinese behaviour in the South China Sea in 1995.10 ASEAN states felt that while they could do little to constrain China, they did find a more amenable China at the ARF in 1995 because China was anxious not to lose all friends in the region while Beijing and Washington were having such trouble over Taiwan. In December 1995, that once paragon of non-alignment, Indonesia, signed a defence accord with Australia. The spin doctors in Canberra and Jakarta made it plain that an important part of the message to China was that local powers were worried and had other options.11 At the same time, Japan revised its defence doctrine and its spin doctors also spoke about the Chinese challenge. The outline of a tacit ‘alliance of concern’ was emerging.12 But by far the most important evidence about an emerging balance of power, and an indication of just how effective these old-style methods could be, came in the Taiwan Straits in the first quarter of 1996. When China ignored private American warnings to China after the first set of exercises in 1995, the United States clearly felt the time had come to revive a more overt balance of power. In response to Chinese action in the Taiwan Straits that, had it been carried out by

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any other state against a sovereign state would have warranted Security Council action, the United States moved two aircraft carrier battle groups into the Taiwan region. This was the largest American military deployment in Asia since the end of the Vietnam war, and it made it clear to Beijing that the United States was prepared to use its superior force to keep the balance. As a result, China backed down.13 It is hard to over-state the importance of this old-fashioned exercise of military power. At a stroke, the United States demonstrated that it would not only defend freedom of passage in Pacific Asia, but that it would defend the right to settle disputes, even one as complex as the Taiwan-China dispute, without resort to force. Few Asians openly applauded the American action, but the absence of criticism was, under the circumstances, a vote of confidence. To their credit, a few Pacific Asian states had the courage to openly applaud the American action. Japan had the toughest choice as American forces operated from their bases, but they gave support to this exercise of deterrence. Most importantly, Singaporean officials were notable for their welcome (albeit edgy) of a firm demonstration of the United States willingness to defend the balance of power. To the extent that Singapore is significant in setting the ASEAN agenda, this was a key part of the effort to build a coalition of concern about China.14 Building a balance to deal with China is obviously a crucial challenge in Pacific Asia, but some of its building blocks look increasingly like the foundations for a more multipurpose structure. Thus the Rimpac exercises that now include a number of Western and most northern Pacific states has a utility well beyond the China problem. The concern with North Korea is clearly a major worry for those in the North Pacific. Hence the important implications of the generally positive welcome in the region for the modernisation of United StatesJapanese military relations in April 1996.15 The spring of 1996 had seen not only a crisis in the Taiwan Straits, but also the North Korean attempts to tear up the armistice agreement. In the Korean case, there was good evidence that even China and Russia were willing to join in various forms of pressure on North Korea not to upset the current balance of power. Although Japan was not a part of the American 2 plus 2 proposal for the Korean peninsula in April, it was clear that the United States-Japanese alliance was by far the most important component of a putative balance of power in Pacific Asia. Action to deter North Korea or China from unwanted action in Pacific Asia would be impossible in the long term without close United States-Japanese relations. Of course, this is far from an orthodox and open balance of power. The overwhelming weight of responsibility is still carried by the United States. But there are already strong signs that in the United States and in parts of Pacific Asia, it is no longer possible to merely trust in ‘constructive engagement’ with China. ‘Constrainment’ of China or ‘conditional engagement’ now seem far more persuasive. As the Council on Foreign Relations puts it, we must ‘weave a net’, not ‘trust in prayer’ if we are to manage China.16

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Segal’s argument places much stress on both the process of political change in East Asian states and the need for a balance of power among states. This is not the conventional argument made by Asians. Indeed, there was much discussion about how Europeans (and Americans) seem so anxious to talk about Asian security, but do not see the problems that exist in Europe. It was noted that Europe may have more institutions, but it also has more active wars. There ensued a lively discussion on how Europeans can better present their views without Asians taking it as unwarranted interference in their own affairs. Part of these differing perceptions could no doubt be explained by the differing methods of handling diverse arguments in Asia and Europe. But even in the midst of this lively discussion it was plain that there was a diversity of views among Asians and also among Europeans. As some participants noted, although we all sleep in the same ASEM bed, individual Europeans and Asians dream different dreams. The analytical task was as much to identify differences among Europeans or Asians as it was to assess differences between Europeans and Asians. In order to explore these issues in greater depth, a major contribution was made by one of the most longstanding and articulate advocates of a different and distinctively Asian approach to security issues, Jusuf Wanandi. In his view, far more attention needs to be paid to the unique mix of local circumstances and the pragmatic and careful way in which the local actors are handling risks. It is not so much that Wanandi and Segal see different factors at work, as much as that they put different amounts of stress on the common factors that they see. JUSUF WANANDI One can really talk only about Asia Pacific security because the role of the US is vital to East Asia, as it has been in Europe (NATO). Economically there are more reasons to talk about an East Asian entity because of the very fast integration among the region’s economies through trade, investment and transfer of technology. But even then it is not really adequate to separate East Asia from the US. The US, Canada and the South West Pacific are very important partners of the East Asian economies, and cannot be separated from East Asia easily. That is also the reason why Prime Minister Mahathir’s idea of an EAEC (East Asian Economic Caucus) can only make sense if it is considered as part of the whole, namely as a caucus within APEC. There is no reason whatsoever to separate the two, since the US has been to a large extent the mainstay of peace, security and stability in East Asia. That role might relatively decline as others are also becoming developed, but it will not decline in principle and definitely not in the security field. It is wrong to think that East Asia would like to be separated from the US or that the US will one day abandon East Asia. East Asia is vital to US national interests because the

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latter’s economic interest, political involvement and security presence in East Asia and South West Pacific are as deep as with Europe. That is why European views that the US would only like to co-operate with the EU because they have the same values and democratic system misses the point. The US is as much a Pacific as an Atlantic power. Just as the US would like to co-operate with Europe because of its national interest, so the US works with Pacific Asia. The US has been a Pacific power in its own right throughout the twentieth century and will stay as a Pacific power for the next century and beyond. In the security field the US forward deployment strategy might be adjusted, and the numbers will be reduced in the future from the present 100,000 troops due to new strategic developments and technological breakthroughs. This will occur especially in the case of a peaceful Korean reunification. Because of the importance of the US in the region, US forward deployment strategy is supported by East Asians in general, including the Chinese. East Asians understand that the factors that will support the US presence in the region are economic and political. East Asians are making efforts to open their markets to create a level playing field for US business. In terms of burdensharing, all ASEAN members, including the traditionally nonaligned countries— Indonesia and Malaysia—are giving facilities to and are engaged in joint exercises with the US. That is why support has been given to bilateral alliances, especially the US-Japanese Treaty and its renewal through the ClintonHashimoto joint declaration. In this regard, special efforts are needed to convince the Chinese in particular that such relationships are not anti-Chinese. As specific elements of the Joint Declaration are implemented, Chinese sensitivities should be taken into consideration. In the longer term, it is understood that some time will be needed before a new international order will be established. It is also understood that even if the US is the only remaining superpower, it is not willing to remain the world policeman, especially because the US public also would like to receive a peace dividend, both financially and emotionally. In addition, the world which has become more ‘democratic’ will not accept this US role unconditionally, especially in view of the unilateralist behaviour that such a superpower can adopt. That is why the Asia Pacific is now in search of new ideas on organising security. A concert of power or some modification of it has been proposed, in which the big powers are given the right and the responsibility to organise the region’s security. In practical terms, this will involve the three big powers: US, China and Japan. Sometimes Russia and India are included. A modified concert would see ASEAN included, because it has become an effective regional organisation that has clearly contributed to Southeast Asia’s peace, stability and dynamism and has taken the initiative through the ARF (ASEAN Regional Forum) to create CBMs (Confidence Building Measures) for the wider Asia Pacific region. However, this idea is against the grain of a democratic era. It was possible and useful in the ninteenth century, but at the end of the twentieth century this idea cannot be accepted, at least in a formal sense. In practice the big powers

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constitute the centrepoint of a larger regional arrangement, but in a formal sense such a proposal is not acceptable. One should only look at the criticism levelled at the Perm-5 at the United Nations Security Council and their veto powers. Therefore, new ideas for building a community in the Asia Pacific region might be a more acceptable proposition and this effort has begun with the APEC-PECC and the ARF-CSCAP processes. Two views have emerged about the shape of security in the Asia Pacific region. One is pessimistic, coming mostly from outsiders.17 The view is that the sustainability of the region’s economic performance is not assured, because of insufficient productivity improvements, R&D as well as educational efforts. It is argued that scarcity of energy and food and the damage to the environment will impede the region’s future dynamism. It also has been argued that economic dynamism will create severe competition that could hamper co-operation. In short, economic co-operation alone is no guarantee of stability and peace as was the case in Europe at the end of the nineteenth century until the outbreak of World War I in 1914. It is argued that existing regional institutions, especially the ARF, are far from adequate to keep peace and stability. They have not been able to settle the North Korean proliferation problem, the South China Sea disputes or the tensions in the Taiwan Straits.18 It is also said that most East Asian countries are not democratic and are still less developed and therefore, are not opposed to using force in resolving conflict amongst themselves. The argument is that democracies will not go to war with each other. These pessimists also note that the balance of power in the region is uncertain and is not being nurtured until recently by East Asians. This principle is now recognised and efforts are being made to achieve a balance of power in which the US is a vital part. These efforts include the creation of KEDO (Korean Energy Development Organisation), sending of US carriers at the time of rising tensions in the Taiwan Straits, and the renewal of the Treaty between Japan and the US. Even the Indonesia-Australia defence arrangement is seen by some as an effort to counterbalance the Chinese in the future, and as such is considered part of an effort to create a balance of power in the region. The other view is more optimistic, albeit cautious, and originates mainly from within East Asia. It believes that no great wars will break out in the region in the next decade or so. Since World War II, the region has experienced the most peaceful era in a long time. Relative to other areas in the world this region is more stable and peaceful. Of course, the tensions in the Korean peninsula, the South China Sea and the Taiwan Straits are sources of concern, but they will not become open conflicts. The South China Sea problems have been stabilised between ASEAN and China, because mechanisms of preventive diplomacy are in place. They complement the ASEAN-China SOM (Senior Official Meeting) as the first track and various bilateral efforts on the claimants’ side such as Philippines-China and China-Vietnam working committees. According to the optimists, the disputes in the Taiwan Straits will not lead to a big conflict

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because China does not have the military capability and hopefully Taiwan has learnt not to provoke China. Optimists also argue that economic dynamism and growth have given East Asia a high degree of self-confidence and pride and will be maintained at least in the next decade. Economic dynamism is vital because a greater part of the regimes’ legitimacy rests on it. East Asians also know that peace and stability have dialectical relations with economic development, growth and dynamism, and that they should also pay attention to those issues. While the region has shown remarkable resilience to external shocks in recent years this does not mean that the external environment is irrelevant to the region. On the contrary, the greater global links have made external factors all the more important. Therefore, it is in East Asia’s interests to continue to press for multilateralism and open regionalism. At the same time, all East Asian economies are continuing with liberalisation of both their trade and investment regimes. East Asia today has an environment of competitive liberalisation in trade and investment. This has made the region attractive to the world. Another positive development is the high degree of networking that has developed in the region and the creation of regional institutions. Institutions in the economic field have developed earlier, led by academics and the private sector. These economic activities have increased the sense of community in the region and are vital for the region. Based on the region’s comprehensive security concept, economic regionalism, as manifested in the APEC-PECC processes, is not only of economic importance, but also has strategic objectives and implications. These include: • • • •

keeping the US involved in the region by giving it a focus for its interests; alleviating tensions between the US and Japan. keeping the Chinese substantially involved in the region; developing a new and concrete model of co-operation between industrialised and developing countries in the region.

The ARF-CSCAP processes in the political security field are relatively new and deal with a sensitive matter. The ARF process is ASEAN-driven and is based on a step-by-step and pragmatic approach in institution building. This process will focus first on confidence building measures (CBMs) and preventive diplomacy. In the medium term the ARF will be able to provide a conflict resolution mechanism for the region. This process is only a part of the greater picture of security development in the region because bilateral alliances and co-operation with the US, which are the underlying basis of security co-operation in the region, are still very relevant in the long term. ASEAN has initiated the process because others, especially the great powers, are not able to do so. After the end of the Cold War, there was a real need to move on from bilateral co-operation, which is no longer adequate for the longer term. It was also based on the idea that economic co-operation, however

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important and vital, should go in tandem with politico-security cooperation. This effort should start now while the region is relatively peaceful. ASEAN has agreed to take the lead for the Asia Pacific because it recognises that Northeast and Southeast Asia have become one, strategically and economically. In particular, this is undertaken because in Northeast Asia a co-operative spirit between Japan and South Korea is developing only slowly. This is critical but it still needs more time before a sub-regional dialogue and co-operation in Northeast Asia can be established. It is important to recognise that the step-by-step approach is the only way the process can be successful in establishing co-operative and comprehensive security in the region. China feels comfortable with the ARF only because of ASEAN’s leadership. China has become active in the process, as it feels that there is something of value for its national interest in the ARF. ASEAN is, of course, willing to listen to other ideas on how to enhance security co-operation in the region. What conclusions can be drawn from the analysis, especially in relation to the pessimistic outlook on the region from some European scholars? First is the fact that the importance of economic relations is not merely in trade, but also in greater integration due to increased investment flows and transfer of technology. Economic relations have become very important to every country in the region. They also have become vital to the region, because the legitimacy of the regimes is strengthened by economic performances and the increasing income of the people. The economic factor in East Asia has been much more important than it was in the Atlantic at the end of the last century until 1914. Second, regional institutions are a new development in the region, and nobody in the region is relying on them alone, especially in a period of transition following the end of the Cold War. The regional architecture will be a combination of bilateral alliances and regional structures, and is aimed at strengthening the collective security system of the UN. However, regional institutions, especially the ARF-CSCAP process, are useful in laying down the basis for community building in the region. The EU is involved in the ARF, but its involvement will mainly be in sharing of ideas, diplomacy and in some token involvement in peacekeeping or other efforts in CBM and preventive diplomacy, as has been the case earlier in the Cambodian conflict or KEDO. In the Asia Pacific region as in Europe, the role of the US will be crucial for the foreseeable future. This is an accepted fact even by ASEAN, including non-aligned Indonesia, and China. The US is a Pacific power, and is going to stay a Pacific power for the foreseeable future. It is a certainty that the presence of 100,000 troops in East Asia will not continue after the reunification of the Korean peninsula, but a certain presence, naval and otherwise, will be maintained. In the future numbers will not be critical due to changes in the strategic environment, local capabilities, strengthened regional and bilateral relations as well as technological breakthroughs.

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Third, countries in East Asia are developing fast, and changes affect every field of human activities. This has created many uncertainties. The issue is not only whether they are going to become democratic or not. On the economic front, success has also brought deep discrepancies among the populace. The equity problem has not been overcome by the free market system, and especially in a fast developing country it has become more acute. The rise of a new middle class has created pressures in the political field to open up the system and to allow for greater freedom and participation. How the system will develop will obviously depend on the internal dynamics of each country. Outside pressures are peripheral and are only acceptable if done in a friendly way. Here the role of international NGOs and relations to their domestic counterparts are often more helpful. The kind of democratic system that will develop in East Asia will vary from one country to another and will differ from the Westminster or Jeffersonian model. This is not a problem so long as common criteria can be accepted. There needs to be a real possibility for the people to change the government through elections as well as the establishment of the rule of law for everybody, the ruler and the ruled. It could be true that a well-established democratic system could prevent wars between them, due to the opposition by public opinion, the level of welfare, and a more limited population increase. As has been said above there is no guarantee that democracies, including established ones, will not go to war in the future, because the history of that relationship is too short to be able to make a definite conclusion. In East Asia there is a need to establish and underscore other factors that help prevent wars. These include economic integration and the sense of regionalism. The sense of community nurtured through regional institutions and networking will make it more difficult for a country to solve its problems unilaterally or through war because national interests have become interwoven with each other. An even more difficult task for East Asia is to ensure that its values and social cultural systems can withstand the onslaught of globalisation. What the ‘West’ has endured in a 100 years, is now being experienced by East Asia within a generation. Never before has the change been so quick and fundamental. These domestic developmental issues have become so complicated that existing tools of research and the efforts to grasp their consequences are not adequate. Fourth, new challenges in the form of new security issues are becoming more important, especially since they could lead to serious military tensions. These new security issues relate to the environment, migration, international crime, especially illicit drug-trafficking, and proliferation of weapons of mass destruction. Here the ARF and CSCAP are extremely well placed to help develop policies for the region that are acceptable and feasible, either to jointly strengthen global regimes or develop a regional regime. As in the case of the UN register of conventional weapons in the region, the ARF agrees that it is much better to first

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strengthen the global regime before creating a regional one, as is also proposed by a UN committee. Based on the analysis and exploration above, where does the Asian-European relationship fit in the development of the Asia Pacific region and what should Europe’s role be? After the Cold War, both Europe and Asia have been looking for ways to develop a new international and regional order. Both have agreed that it will be a long process. In those efforts they have to realise that the international order and regional order are intertwined, and that, meanwhile, the globalisation of the economy has created a dramatic increase in economic relations, especially in trade, between East Asia and Europe. In the meantime the ASEAN-EU dialogue and co-operation to a certain extent have already established a basis for Asian-European relations. ASEM I has been a success. It is understood that economic cooperation should be the focus of co-operation, but political security issues also have to be discussed. The EU also has become a member of the ARF and is starting to play a more active role. East Asia could learn from the European experience on CBMs and preventive diplomacy as a comparative experience as well as examine other ideas on security whether applicable or not for East Asia. East Asia needs a lot more of new thinking about political security cooperation, since this is still a very new process for the region. Of course East Asians have to develop their own approaches but perhaps some adjustments of the European models can be considered. For instance, pragmatism is the creed in ASEAN, and a step-by-step approach as well as more informal ways in dealing with each other are important practices in the region. However, this is largely related to form and is more procedural. On the intrinsic security co-operation there are experiences in Europe that can be examined by East Asia, such as techniques of CBMs in the OSCE context. Both have a stake in influencing the US to be less unilateralist and to become a more multilateralist player in the international agencies and in the UN as well as in the regional context. Direct participation in each other’s security will be more limited, but political and diplomatic support, and when necessary economic support are important. In more direct security-related activities, peace-keeping comes immediately to mind, as well as other CBMs and preventive diplomatic efforts. Soft security issues, namely pollution, migration, illegal drug trafficking and international crime and piracy are essentially global issues and therefore Asian-European cooperation on these issues is very relevant. The relationship is filling a lacuna that is recognised after both regions have tackled their own basic problems regionally. However, for the relationship to be relevant and effective in the future, the rationale for co-operation and a more coherent programme have to be established. This is what a second-track activity in the form of CAEC (Council for Asia Europe co-operation), consisting of think-tanks on both sides, can do to assist and support the remarkable achievements of ASEM I in Bangkok.

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The analysis by Jusuf Wanandi is clearly different from that of Segal, but it is also different from that of other Asians. One of the earliest and more profound Asian thinkers about regional security is Yukio Satoh. Although a Japanese foreign ministry official, he has been keen to help shape the public and specialist debate about regional security. Thus when he discusses the prospects for regional security, it is with a foot in the realist camp and another one in the camp of those Asians who stress the success of recent regional efforts to build local security arrangements. What is most striking about his contribution is the argument that regional security building must be seen well beyond merely the ARF context. YUKIO SATOH The Asia Pacific region, known for more than two decades for its economic dynamism, has become politically active in the 1990s. Within a short span of the last five years, many positive developments have taken place in political and.security areas. For example, the ASEAN Regional Forum (ARF) was established with the aim of promoting a region-wide security dialogue. The Asia Pacific Economic Co-operation (APEC) process has, despite its focus on trade, investment and economic development, begun to have a stabilising impact on regional diplomacy. The so-called APEC Economic Leaders Meetings are particularly important in this context. Positive developments are also seen at the sub-regional level. In Southeast Asia, peace was finally restored in Cambodia. Countries which have territorial claims in the South China Sea have begun to participate in a process to explore the ways to manage potential conflicts in this volatile sea area. And, ASEAN itself has started to expand to eventually include all the ten countries in Southeast Asia. In Northeast Asia, too, a trilateral policy co-operation among the United States, Japan and South Korea has become a normal practice with regard to the North Korean nuclear problem. It serves as a catalyst for a broader international co-operation aimed at preventing nuclear proliferation on the Korean peninsula. The Korean Peninsula Energy Development Organisation (KEDO) is the first tangible result of such co-operation. Moreover, in the areas of bilateral security co-operation, the Japan-US Security Treaty was reinvigorated by the Joint Declaration (in April 1996) by Prime Minister Ryutaro Hashimoto and President Bill Clinton. In Southeast Asia, a new security agreement between Australia and Indonesia was added to a network of bilateral and multilateral security co-operation in the region. The United States and Australia also agreed to strengthen their security cooperation. And, security co-operation among ASEAN countries as well as between ASEAN countries and Western nations has expanded in recent years. These undertakings together have begun to have stabilising and reassuring impacts on the Asia Pacific region. But these undertakings, particularly those concerned with multilateral policy co-ordination, are as yet inchoate in terms of

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organisation and function. They could do little with regard to the recent volatile situations, such as the strained relations between China and Taiwan and violations of the armistice by North Korea. Most notably, these new undertakings are not related to each other. This is the consequence of the way they have evolved to date. APEC, ARF and the trilateral co-operation on the North Korean nuclear problem (and KEDO) have evolved independently of each other. Behind them was a broadly shared recognition that multiple approaches rather than an integrated one are required in order to meet the diverse requirements of Asia Pacific security. Nevertheless, the recent developments are raising prospects for a new architecture for policy co-ordination, which could help make the Asia Pacific region more stable politically and less dangerous in terms of security. It is too early to speculate upon how such an architecture would be structured. It appears to be plausible to assume, however, that an architecture for political and security policy co-ordination in the Asia Pacific region would have to be multifaceted and multilayered. The efforts to maximise the impacts of the region-wide, subregional and bilateral undertakings for political and security co-operation will no doubt help create a better prospect of such an architecture being realised. As elaborated in the Concept Paper, presented by ASEAN to the second Ministerial Meeting (1995), the Asia Pacific region is a remarkably diverse region where big and small countries co-exist. Countries differ significantly in levels of development and there are cultural, ethnic, religious and historical differences to overcome in order to make the ARF advance. Habits of multilateral co-operation are not deep-seated in the region, with the sole exception of ASEAN. Against this backdrop, the method and approach which ARF has adopted proved to be most productive. There is no doubt that the ARF will continue to be a central venue for a region-wide security dialogue. But, how effectively the ARF would be able to cope with the prospective security situations of the region remains yet to be seen. Obviously, the ARF is not designed to provide security to its participants. Nor is it equipped to act to make peace between conflicting parties. Moreover, the ARF would find it difficult even to discuss certain sensitive issues so long as it holds to the principle of decision by consensus. The question of Taiwan is a case in point. More suitable approaches (than the ARF) acceptable to the countries involved must be contrived for certain political and security issues. Forming security or defence co-operation, making peace between conflicting parties, solving territorial conflicts, or managing certain bilateral issues, such as the history of war and occupation—all these issues require direct dealings between the countries concerned. The ARF has another possible limitation with regard to the focus of its debate. Quite paradoxically, the pivotal role which ASEAN wishes to play for the ARF could be a cause for concern to non-ASEAN members. It is suspected that ARF

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discussions might be determined by the interests and concerns of ASEAN, which are primarily focused on Southeast Asia. That the ARF is a foreign ministers’ meeting could also narrow the scope of the ARF’s function in the area of confidence-building and other policy areas of a military nature. Indeed, the ARF has begun to involve military officers in some officials’ level discussions. But, whether the ARF should involve defence ministers is another matter, which would require careful consideration. It might take some more time before a transpacific network of defence ministers’ meetings could be realised. Many more steps must be taken in order to prepare the ground. Contacts among generals and admirals must be encouraged further. Most importantly, bilateral defence ministers’ meetings among Asia Pacific countries, particularly those engaged in Northeast Asian security, must be more regularised. In the meantime, the ARF itself needs more time to consolidate its own functions. In spite of these limitations, there are many aspects of regional security, wherein the ARF would be able to play a leading role. For example, policy co-ordination on issues of a non-confrontational nature, such as the way to increase transparency of defence policies and spending, can be tackled most effectively by ARF Problems with global implications are also an appropriate agenda for the ARF debates. Indeed, a broad range of the post-Cold-War security risks and challenges (such as proliferation of weapons of mass destruction, terrorism, refugees, mines as well as peacekeeping and UN improvements) require a regionwide co-operation on top of co-operation on a global basis. It is encouraging, therefore, that the ARF is already addressing itself to these global issues. The role which the ARF would be able to play for Asia Pacific security will grow and there is no need to try to delineate the limits of the ARF’s role at this stage. The ARF must define its role in such a way that would fit into an emerging multifaceted and multilayered architecture for Asia Pacific security. The ARF’s role derives from the need to enhance a sense of ‘mutual reassurance’ among the Asia Pacific countries. Their relations are often affected by scepticism and guardedness against each other. For example, smaller nations remain concerned about the dominating influence of bigger neighbours and bitter memories of past aggression and colonisation still persist in the minds of the victimised nations. This scepticism and guardedness are not unique to the Asia Pacific region. But, given a relatively short history of diplomacy among many Asia Pacific nations (many countries have become independent since the end of World War II) and in the absence of a commonly shared perception of a future regional order, a sense of mutual reassurance is an important precondition for effective policy co-ordination. Japan and South Korea, for example, regard each other as partners in many dimensions of global and regional diplomacy. But, a long-held antipathy held by the Korean people against Japan is evident. ‘Confidence-building measures’ of a military nature are not an appropriate approach for Japanese-South Korean

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relations. Rather, unilateral and bilateral efforts in many non-military areas (including cultural exchanges) must be made in order to enhance a sense of mutual reassurance and trust between the Japanese and the Koreans. It is vitally important for Japan to recognise the sufferings it caused to the Korean people. The ARF is already helping to enhance a sense of mutual reassurance among the Asia Pacific countries. For smaller countries, it is reassuring to engage big powers in a process of security dialogue in which they can express their concerns about the performance of big powers. In this context, for Japan to place herself in multilateral venues is reassuring to the countries which are worried about the future direction of Japanese defence policy. The engagement in the ARF by the United States, China, Russia and India has similar implications in the eyes of many smaller countries in the region. Given that many of the so-called ‘global issues’ (such as environmental degradation, refugees, drug trafficking and arms transfer) have implications for both security and economy, it would not be advisable to simply try to avoid the overlapping of ARF and APEC activities. But, it is at least necessary to ensure that the two fora’s discussions on the same subject be reflected in each other. The APEC Economic Leaders Meetings have a unique standing in this context. With some exceptions, the heads of government who attend the APEC Economic Leaders Meetings are also represented at the ARF by their foreign ministers. Accordingly, APEC leaders, should they wish, would be able to promote policy debates on any issue on the basis of discussions in both APEC and the ARF. Indeed, the unfettered nature of the APEC Economic Leaders Meetings would allow leaders to discuss whatever subjects they agree to choose. Besides, the meetings provide opportunities for leaders to make bilateral contacts outside the framework of their formal meetings. There, they can discuss virtually any subject. Moreover, being the sole summit meeting, where the leaders of Asia Pacific region gather once a year, the APEC Economic Leaders Meeting is expected to have an increasingly strong political impact on future regional diplomacy. Given that trade and the economy will remain key elements for stability and progress in the Asia Pacific region, the primary focus of the APEC process will remain unchanged. But, APEC leaders will eventually come to address themselves to non-economic issues of common concern. It is important to note that the G-7 summit, which started as ‘an economic summit’, has grown to discuss political and security issues. Quite inadvertently, the ASEM, might also affect the way the APEC Economic Leaders Meetings should work. At ASEM, leaders discuss both political and economic issues. The progress of ASEM could, therefore, have a stimulating impact on the way APEC leaders organise their own discussions. It would not be surprising if Asia Pacific leaders find it increasingly awkward to confine the discussions among themselves to economic areas while at ASEM they discuss any issues with their European counterparts.

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Satoh’s sense that regional security is multilayered and multifaceted leads very clearly to the argument that regional security needs to be considered in the wider context of the policies of great powers, including those not ‘resident’ in the region. A factor which complicates the Northeast Asian security conditions is the direct involvement of global powers. The post-Cold-War relationships among the four major powers involved (US, Japan, China and Russia) are characterised by a high degree of unpredictability. The elements of unpredictability are seen both in the future directions of these countries’ foreign and security policy and in the balance of power among them. China is the largest element of unpredictability. There is no doubt that China could affect significantly the prospect of Asia Pacific policy coordination. China is already emerging as an important force to expand the Asia Pacific and global economy. But at the same time, China’s attempt to increase its power projection capability, while maintaining an assertive and sometimes aggressive posture with regard to its territorial claims, has begun to worry Asians. Chinese efforts seemingly aimed at modernising its nuclear capability add to such concern. In a longer-term perspective, there is no assurance that a more industrialised China would become a stabilising factor in the Asia Pacific region. Even with a fully developed China, the neighbouring countries will still have some anxiety. China’s size itself constitutes a worry for its neighbouring countries and the opaqueness of its policy-making process is a cause of concern. Concern also derives from the self-centred way of thinking inherent in China’s external posture. It is widely agreed that the progress of democracy would help increase the level of predictability and transparency of China. The importance of involving China in international policy co-ordination must be emphasised in this context, too. Making China share responsibility for the peace and stability of this region is the best way to ensure that China will become a stabilising element for the Asia Pacific region. To create co-operative relations among the United States, Japan and China is what is required most for regional security. Japanese-US cooperation is a prerequisite for any such effort. Of course, Japan’s approach to China could be different from that of the Americans. For example, Japan believes that the promotion of economic reform and opening in China could be conducive to the advancement of political reform. Japan also believes that a non-confrontational approach would work better on human rights. Taiwan is another issue on which Japan is more cautious than the United States. It is partly because China itself is more sensitive to the way Japan upholds the One China Policy than to the way the United States acts in this regard. Furthermore, competition between Japanese and American economic interests for markets and other business opportunities could affect their policy co-operation toward China. Russia is another source of uncertainty. Whether Russia will continue to pursue democracy and a market-oriented economy would have a defining impact

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on the sub-regional diplomacy. Russia’s nuclear power, nationalism and superpower mentality are causes of concern to its Asian neighbours. The announcement by President Boris Yeltsin and his Chinese counterpart, President Jiang Zemin, of ‘their resolve to develop a strategic partnership’ has not been taken as a new anti-West alliance. Yet, the increased Russo-Chinese military cooperation would be destabilising to the region. Relations among the United States, Japan and Russia are complex. Japan is in total agreement with the United States about the need to support Russia’s efforts to promote democracy and a market-oriented economy. But, Japanese-Russian relations and US-Russian relations have some fundamental differences. The relationship between Tokyo and Moscow is not yet fully normalised pending the termination of Russian occupation of the Japanese Northern Territories. While the United States firmly supports the Japanese territorial claim, Washington’s relationship with Moscow is determined by strategic considerations. In a longer-term perspective, American engagement in the Asia Pacific region, too, cannot be taken for granted. The American body politic has become inwardlooking so that American foreign and security policy goals might be limited by narrowly defined American self-interests. Financial and logistic support to US forces offered by Japan and other American allies and friends have kept the United States committed to the security of the Asia Pacific region. Paradoxically, the North Korean nuclear problem has riveted anew the post-Cold-War American strategic attention on Northeast Asia. But, rightly or wrongly, the level of American engagement and commitment is always affected by the level of cooperation the country receives from its allies and friends. American public opinion tends to change rapidly, and often drastically. Japan’s external posture is seen by many countries as unpredictable. On the one hand, Japan’s low profile on political and security issues is becoming more disappointing than reassuring to many Asians. But, on the other hand, concerns about the possibility that Japan might come to possess power projection capabilities or nuclear weapons continues to be voiced internationally. Japan’s political as well as economic system continue to be regarded as opaque and difficult to understand. Japan’s commitment to the Japan-US Security Treaty is reassuring to those who are concerned about the future direction of Japanese defence policy It is necessary for Japan to engage itself in the process of multilateral security and political dialogue and policy co-ordination. But, it is equally important for Japan to define more clearly the roles it wishes to play in the Asia Pacific region as well as globally. In the post-Cold-War era it is necessary to redefine the purpose of alliances in Asia Pacific. Even in Southeast Asia, de facto defence cooperation has been growing among ASEAN countries. Australian assistance to, and support for, the defence of ASEAN countries have been growing, as symbolised by the signing of a security maintenance agreement with Indonesia. The long-dormant Five Power Defence Arrangements (among Britain, Australia, New Zealand, Malaysia

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and Singapore), are also providing a framework for newly organised joint exercises and other exchanges. Although the American bases in the Philippines were closed, some ASEAN countries have facilitated access by US forces to their facilities. Most recently, US-Australian security co-operation was reinvigorated at the AUSMIN Meeting held in Sydney in July 1996. In Northeast Asia, the Japan-US Security Treaty, together with the security treaty the United States maintains with South Korea, continue to provide a basis for American deterrence in the region. American commitment to the defence of South Korea is vital for the prevention of nuclear proliferation on the Korean peninsula, and, more broadly, for the attainment of a durable peace on the peninsula. Equally important in this context is Japanese political will to fulfil its treaty commitment, if and when necessary, by providing support for US military activities aimed at preserving the security of South Korea. Critically important to this end is the recent agreement between Prime Minister Hashimoto and President Clinton to start joint efforts to improve the way in which Japan would support American operations in the event of emergencies in the areas surrounding Japan. The importance of the Japan-US Security Treaty has critical importance for stability and security in the Asia Pacific region and beyond. The logistic and financial support which Japan provides to American forces under the Treaty facilitates the American forward deployment strategy in the region. The so-called ‘home-porting’ arrangements make it possible for the families of the crew of American naval vessels to live in Japan. And, at the time of writing, seventeen vessels, including an aircraft carrier are now ‘homeported’ in Japan. Japanese financial support (so-called ‘host-nation support’) covers more than 70 per cent of the non-salary costs for US forces’ presence in Japan. These arrangements help US forces save time and money for their forward deployment strategy in broad areas from the Western Pacific to the Persian Gulf. In conclusion, what is most needed for the success of policy coordination in any field (economic, political and security) among the Asia Pacific countries is the acceptance of the multi-ethnic and multicultural nature of the Asia Pacific Community. It is also important to note that the distinction between so-called Asian and Western values is becoming increasingly blurred as both Asian and Western societies in the region are undergoing changes. The further promotion of multilateralism (from APEC to ARF), at all levels (governmental and nongovernmental), would help enhance a sense of community among the participants. Asia Pacific diplomacy is still changing. The multifaceted and multilayered approach is only a part of this entire process. It is, therefore, important for the countries concerned to take full account of the entire picture of economic, political and security policy co-ordination efforts when they try to establish a new security architecture for the Asia Pacific region. The APEC Leaders Meetings provide an ideal venue to do so.

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As Yukio Satoh sees it, the emergence of security multilateralism obviously means good news to the Asia Pacific and Northeast Asia region. But is it also good news to the Korean peninsula? The answer of Jin-Hyun Paik, Professor of International Relations at Seoul National University, is a cautious and qualified ‘yes’. Although the realities of instability, enmity and confrontation on the peninsula give multilateralism little direct relevance, it may contribute indirectly to a peaceful management of conflict in Korea. But the challenges to ensuring stability in Korea are daunting, as his assessment of South Korea’s security concerns makes clear. JIN-HYUN PAIK The Korean peninsula remains an arena of intense military confrontation. Sizeable forces are arrayed on both sides, a million troops in the North and 650, 000 in the South, with no prospect in sight for arms control. Despite prospects for improvement in the early 1990s, inter-Korean relations are at a low point. For this reason, the peninsula is aptly called ‘the last glacier of the Cold War in Asia’.19 North Korea continues to pose the greatest threat to South Korean security. Three dimensions of the North Korean threat can be discerned: North Korea’s continued military efforts, its diplomatic efforts to create misunderstandings in the relations of the Seoul government with the United States and other countries, and its uncertain political future. The last two dimensions are relatively new. North Korea has given Seoul no reason to change its belief that the North’s basic objective remains to unify the Korean peninsula under its control. It continues to give priority attention to its military despite its deteriorating economy. It is estimated that in addition to its one million man army, North Korea has maintained formidable conventional forces, most of which are forward deployed. In addition, North Korea is capable of building Scud missiles and is exporting modified Scuds to the Middle East. Many South Koreans believe the North still desires nuclear weapons. North Korea’s tactics of subversion including infiltration gives the South no cause for complacency. The establishment of the Korean Energy Development Organisation (KEDO) following the October 1994 signing in Geneva of the Agreed Framework between the United States and North Korea was greeted in South Korea with ambivalence. After two difficult years of negotiation, North Korea had finally promised to seal off its nuclear reactors, to remain in the Nuclear NonProliferation Treaty (NPT) regime, and to allow the International Atomic Energy Agency (IAEA) to inspect its nuclear facilities. In return, KEDO promised to provide North Korea with two light-water reactors. The agreement laid the groundwork for the ultimate solution to the North Korean nuclear proliferation problem, much to the relief of the South. However, the prospects for Pyongyang’s implementation of the agreement remain far from certain. Although

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the Agreed Framework has worked better than expected, South Koreans remain wary. The nuclear negotiation also highlighted the second dimension of the North Korean threat that the North would use its newly established direct contacts with the United States to drive a wedge between South Korea and its ally. Since the conclusion of the Agreed Framework, Pyongyang has pursued a multifaceted strategy aimed at creating the perception of an estranged, ineffective South Korean government. Its strategy included a refusal to negotiate with Seoul, stepped-up pressure on the United States to agree to bilateral US-North Korean military talks, and frequent demands for a bilateral peace agreement with the United States to replace the current armistice agreement. Many South Koreans believe its ultimate objective is to create tensions in the ROK-US alliance, thereby undermining the alliance and perhaps forcing US troops out of the South. Pyongyang also unilaterally undermined the armistice regime by withdrawing its delegation from the Military Armistice Commission, forcing the Chinese government to recall its delegation from the same commission, and by expelling Polish members of the Neutral Nations Supervisory Commission from North Korean soil. As a result of this series of unilateral and potentially dangerous moves by the government in Pyongyang, the future of the armistice regime, which has been the central instrument in maintaining the status quo in the Korea peninsula since the end of the Korean War, is in question. In April 1996, South Korea and the United States proposed fourparty talks among two Koreas, the United States and China to discuss a permanent peace arrangement, but although the North Korean government has signalled willingness to join, the talks have yet to begin. A third source of threat comes from the uncertainty regarding the future of the North Korean regime. There have been several scenarios about the future of the North Korean regime such as a transitional regime under Kim Jong-II, a reformist military-technocrat coalition, or a violent collapse.20 Under the first scenario, only limited engagement between North Korea and its neighbours, including the South, will be expected. If the second scenario took place, Pyongyang could fully engage and expand relations with its neighbours. There are variants of the third, collapse scenario, but all entail destabilising political, economic and social developments, such as violent clashes within the North, military incidents by rogue forces, large-scale refugee movements, and further economic implosion. In a collapse scenario, South Korea’s deterrence policy against the North could be least effective because of fragmentation of control in the North. Furthermore, a collapse would involve other countries around Korea readjusting their policies in the face of the prospects for reunification. While it is extremely difficult to make predictions, the ROK government has been carefully studying such scenarios and their possible implications. Once thought highly unlikely, reports of economic desperation in the North, in particular severe food

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shortage, and a growing number of defections have recently given increased weight to scenarios involving collapse or heightened tensions in the North. Given this rather sombre assessment of the state of relations on the Korean peninsula, how can multilateral security mechanisms play a constructive role? Paik now reviews the attitude of South Korea to multilateral security mechanisms and then argues that such mechanisms cannot provide solutions to Korean conflicts. Nevertheless, he feels they can help to create an environment conducive to peaceful management of the North-South conflict, although in a strictly supportive role. What role, if any, is there for the emerging multilateral mechanisms in the Asia Pacific region to build peace and eventually realise unification of the Korean peninsula? Obviously, the Korean questions should be addressed by Koreans themselves. However, it is no less true that the Korean question has important regional implications. For instance, as military confrontation between two Koreas is the most imminent threat to East Asian security, regional countries have legitimate interests in the Korean situation. On the other hand, given the structural security linkage between the Korean peninsula and Northeast Asia, peace and stability in Northeast Asia is a necessary condition of the unification of the two Koreas, albeit not a sufficient one. Furthermore, the peaceful management of the Korean unification process would inevitably require substantial co-operation and support of regional countries. The ROK was one of the earliest proponents in the Asia Pacific region of the idea of multilateral security dialogue. In October 1988, for instance, South Korea’s President Roh proposed an idea of a ‘Consultative Conference for Peace in Northeast Asia’ in his address to the United Nations General Assembly. According to the proposal, the conference was to be composed of the US, the Soviet Union, China and Japan, in addition to South and North Koreas, and given the task of laying a solid foundation for durable peace and prosperity in the region. While this idea was not seriously promoted at the time, South Korea has ever since consistently underscored the need for multilateral security dialogue among regional countries, and actively participated in various multilateral forums both at the governmental and non-governmental level. It was also in this spirit that ROK officially introduced a proposal for a Northeast Asia Security Dialogue (NEASED) at the ARF Senior Officials’ Meeting in Bangkok in 1994.21 Three points need to be mentioned regarding South Korea’s attitude towards multilateral security dialogue. First, the ROK, while actively participating in a region-wide security forum such as the ARF, has been more interested in a subregional forum focusing on Northeast Asia. According to the ROK, as the Asia Pacific consists of several sub-regions that have different security equations, a security forum on the sub-regional basis may be more pertinent to the needs of regional countries.22 Moreover, the security dialogue for such a large area as the

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Asia Pacific would inevitably require a long time to become a fully fledged forum. The process could be more efficient if a certain number of countries with more definite common security issues proceed with dialogue and co-operation in their relevant region. For this reason the ROK has pursued a Northeast Asian multilateral security framework in parallel with a region-wide security forum. Second, the ROK has firmly maintained that multilateralism is not a substitute for, but rather a supplement to, bilateral arrangements. It considers that a linchpin of the Korean security should continue to be the ROK-US alliance. On the other hand, the ROK finds a principal rationale for multilateral security dialogue from growing strategic uncertainties in the post-Cold-War Asia Pacific. Such uncertainties cannot properly be addressed by existing bilateral arrangements. Thus multilateralism and bilateralism are mutually supportive, and should not be seen as an ‘either-or’ proposition.23 Should such a security forum deal directly with the Korean peninsula? So far, the ROK government has been reluctant to place the Korean peninsula under the scrutiny of the multilateral dialogue. For one thing, it would undermine the ROK’s long-held position that the Korean question should, in principle, be addressed between the two Koreas. Although the ROK recently proposed fourparty talks to discuss a peace arrangement on the Korean peninsula, it nevertheless considers the North-South dialogue as a sole forum to deal effectively with the Korean question. It is generally recognised that multilateral security co-operation is able to mitigate the insecurity deriving from the anarchic nature of the international system, but that its potential to deal with the power struggle component of the security dilemma is limited. Moreover, it is often submitted that security cooperation is possible only in the absence of intense, war-threatening political conflict and a general conviction renouncing the use of force in international relations.24 Moreover, multilateralism is not deemed to be directly relevant to the management of domestic conflict.25 Viewed from this perspective, emerging multilateral security mechanisms in the Asia Pacific could be valuable if they would address the increasing uncertainty in the region and potential for misperception and miscalculation inherent in such situations. On the other hand, multilateral forums are not likely to resolve tensions deriving from the political and military rivalries between the two Koreas. Nor are they well suited to meeting the challenge coming from the internal crisis of North Korea. Given the stark reality of the Korean peninsula that North Korea’s military threat remains unabated, it is crucial for ROK to maintain a robust and credible deterrence based on bilateral arrangements with the US. At best, multilateral co-operation could therefore create an international environment that would generally be conducive for the two Koreas to resolve their differences. While Paik cautions against ‘unwarranted high expectations’ about the potential for multilateralism in helping to manage conflict on the Korean

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peninsula, he also finds no reason for ‘rigid skepticism’. In the longer term, Paik sees an important role for multilateralism in the need for a regional framework surrounding eventual Korean unification. The unification of Korea is no longer in the realm of aspiration but of reality. It is even becoming fashionable to believe that unification of Korea will occur in the near future. While it is very difficult to predict exactly how, when and with what consequence unification will occur, it is a virtual certainty that unification would have profound implications for the region. Depending on the way in which unification is brought about, it could pose a serious threat to the stability of Northeast Asia and the Asia Pacific as a whole. It would also involve potentially high economic costs, which may require concerted actions of regional countries lest it dampen economic dynamism throughout the region. Realistic scenarios for unification are difficult to envision. While it is desirable that the two Koreas achieve unification by mutual consent, recent developments on the Korean peninsula indicate that unification is likely to come not by design but by default, probably on Seoul’s terms. One common objective of the four major powers surrounding two Koreas is a desire for stability on the Korean peninsula. In fact, among the major powers, it is not so much fear of the consequences as uncertainty about the process of unification that generates the greatest concern. To manage the path of unification peacefully requires multiple processes: that is, the inter-Korean dialogue, bilateral dealings, ad hoc coalitions, and the multilateral security co-operation. Given that the interests of the four major powers intersect on the Korean peninsula, the return of a regional bipolar confrontation pitting any one against any of the others would turn the unification of Korea into a highly contentious regional issue, thus making its prospects rather murky. It is critical to the potential success of unification that US relations with China must be put on a sounder footing. A multilateral security forum focusing on Northeast Asia would be particularly relevant in that it would provide an opportunity to enhance the understanding and confidence among the four major powers in the region on the issues of common concern. The peace and security in Northeast Asia would not necessarily lead to Korean unification, but is certainly a sine qua non to it. THE ROLE OF THE UNITED STATES The analyses of Segal, Satoh and Wanandi have agreed that the US is the main external power in regional security. But the nature of the American role is subject to sharp debate. In the 1980s much of the debate about the American role focused on features of the US-Japanese relationship. But in the 1990s the central question has become the nature of US-Chinese relations. According to Harry Harding, one of the United States’ leading analysts of regional, and especially US-Chinese relations, there are reasons

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to worry about the direction of change and the increasingly sharp divergence in American and Chinese perspectives. HARRY HARDING Just below the surface, the United States is debating its future role in Asia. The debate did not figure prominently in the 1996 presidential elections, largely because the campaign did not focus on international issues, and because the differences between candidates Bill Clinton and Bob Dole on Asia policy were not that great. But the debate continues among policy analysts and in the press, and it will ultimately determine American policy toward the Asia Pacific region as we enter the twenty-first century. America’s policy in Asia since the end of World War II has contained three principal elements. In the security sphere, it involved extensive US involvement in the strategic balance in the region, through the forward deployment of ground, naval and air forces on a network of American bases on Asian soil. In the economic sphere, it entailed an American commitment to free trade, such that open American markets could serve as an engine of growth for the economic development of Asia, and American consumers could gain access to inexpensive but high-quality goods from Asian manufacturers. And, in the sphere of ideas, American policy has focused, at least in the last two decades, on promoting democracy, human rights and market capitalism wherever possible in Asia. The central issue in the emerging debate over America’s Asia policy is whether this past policy is still well suited to both American and Asian conditions, or whether it should be extensively modified. The debate is being sparked by a variety of developments, both at home and abroad, that have challenged America’s past approach to the Asia Pacific region. The end of the Cold War and the collapse of the Soviet Union have eroded what has traditionally been the single most important rationale for maintaining a large American military presence in Asia. Large American trade deficits with key Asian countries, at a time of stagnating living standards in the US, have challenged America’s commitment to free trade and have weakened America’s willingness to underwrite Asian security. The Tiananmen crisis of 1989 transformed American perceptions of China. From a country seen as being on the forefront of economic and political reform, China became perceived as a nation governed by one of the world’s last, and most repressive, Leninist regimes. China’s subsequent behaviour in the South China Seas and in the Taiwan Straits have caused some Americans to warn about expansionist tendencies in Chinese foreign policy. The political and economic difficulties of the former Soviet Union and Eastern Europe, and the rise of the ‘Asian Ethic’ in Southeast Asia, have led some Americans to question whether liberal democracy and market capitalism can indeed address Asia’s problems effectively, and therefore whether the promotion of those models can win widespread popular support in Asia.

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The budget crisis in the United States has challenged all those aspects of American foreign policy, especially military deployments and development assistance programmes, that cost significant amounts of money The debate is being further fuelled by the rifts in American domestic politics. With the Republican victory in the legislative elections of 1994 and 1996, and the Democratic victory in the presidential elections of 1992 and 1996, the White House and the Congress are now controlled by two different parties. This will encourage debate over both domestic and international questions, as each party seeks to discover the issues that will enable it to establish control over both branches of government in subsequent elections. Equally important, each of the two major parties is deeply divided. One wing of the Republican party espouses the more traditional economic conservatism and international realism associated with the country’s economic elites, while another wing embodies the cultural conservatism and international isolationism associated with the party’s grass roots. Conversely, the Democrats are also divided between a moderate wing that is willing to support a flexible foreign policy, and a more liberal wing that demands sustained attention to the promotion of human rights abroad. Moreover, the elections of 1994 and 1996 have tended to strengthen the extremes in both parties—the Republican right and the Democratic left—while weakening the centrists in both parties who are key to forging a bipartisan consensus in foreign affairs. It is in this unsettled global setting and polarised domestic environment that the debate over America’s Asia policy has begun to emerge. The options under consideration address the core interests that have always lain at the heart of American foreign policy: security, prosperity and human rights. But some of the strategies now being advocated define those interests more ambitiously, while others advance more modest objectives. Some of the options are based on an optimistic assessment of trends in Asia and of America’s relative power in the region, while others are rooted in more pessimistic views. Some would represent considerable continuity with past US policy in Asia, while others would entail a radical change in America’s posture in the region. The debate over America’s policy toward Asia revolves around five alternative strategies toward the region. The first option is to try to remake Asia in America’s own image, with an eye toward promoting human rights, building democratic institutions and encouraging domestic economic liberalisation. This option is familiar to many Americans. Ever since the founding of the United States through a war of national independence against Britain, and especially since the emergence of a strong evangelical religious movement in America in the late 1800s, the desire to transform the world along American lines has been a nearly constant theme in American foreign policy. This idealistic approach to international affairs has, however, taken quite different forms in Asia over the years, including the attempt of American missionaries to convert Asians to Christianity in the late ninteenth and early twentieth centuries, the desire to prevent the spread of communist ideology and institutions in Asia in the

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1950s and 1960s, the Carter and Reagan Administrations’ promotion of human rights in the 1970s and 1980s, and the efforts of the Reagan and Bush Administrations to promote open markets and liberal economies in the 1980s and 1990s. Still another variant of this longstanding approach to international affairs provided the cornerstone of American foreign policy during the first two years of the Clinton Administration. In the fall of 1993, National Security Adviser Anthony Lake declared that the primary aim of the United States, in Asia as elsewhere, was to ‘enlarge’ the number of democratic, market-oriented states and reduce the number of authoritarian regimes and government-controlled economies.26 With the end of the Cold War, in other words, promoting political and economic liberalisation would replace containment of communism as the principal objective of American foreign policy. What was distinctive about the Clinton Administration’s transformational approach to international relations was that it offered a justification rooted in realism, as well as in idealism. The Clinton Administration not only argued that democratic states were more likely to honour the human rights of their citizens. It also insisted that there would be other, more tangible benefits as well: democratic, market-oriented states were deemed to be better trading partners, more attractive sites for American investment, more peaceful neighbours, less likely to provide support for international terrorist or criminal activities, and less likely to generate substantial flows of economic migrants or political refugees. The Clinton Administration utilised both positive and negative means to promote this combination of economic and political liberalisation. It provided technical advice, moral support and economic assistance to those countries that are attempting to transform authoritarian systems into democracies, and centrally planned economies into market systems. Conversely, it also directed public criticism and used or threatened economic sanctions against those governments that resisted pressures for political reform or economic liberalisation. In Asia, the principal beneficiary of American assistance was Mongolia, albeit in extremely small amounts; whereas the principal targets of American criticism were China, North Korea and Burma, although thus far without much effect. Although some Asians have welcomed the American promotion of human rights, democratisation and economic reform, many others have not. An increasing number of Asian leaders, including some in Southeast Asia, China and Japan, have begun to articulate an ‘Asian Ethic’ that challenges both strands of the enlargement policy.27 They argue that the American promotion of pluralist democracy, based as it is on individualistic values, runs counter to the Asian emphasis on respect for authority and commitment to community. If the American political model were adopted throughout Asia, they argue, the result would be to promote disorder. These same leaders also argue that the American emphasis on free trade and economic liberalism denies the successful Asian experience with market-friendly but government-guided economic development. Adopting neo-classical economic policy would reduce the ability of Asian

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governments to promote economic modernisation and achieve high rates of economic growth. As they see it, the American advocacy of such flawed economic and political models can therefore have only one objective: to hobble Asia’s economic development and undermine its political stability, so that Asia’s power can never rise to the point that it can effectively challenge the United States. To some extent, the advocates of the ‘Asian Ethic’ have produced some converts in the United States.28 Some Americans look at the economic and political crises in much of Eastern Europe and the former Soviet Union, and agree with their Asian critics that democracy and free markets may not be the most effective short-term path for reforming or developing economies. Others are asking whether the social and economic consequences of free trade— unbridled competition among firms, and longer hours and greater uncertainty for individual workers—are worth the increases in efficiency and productivity. Still others wonder whether America has indeed placed exaggerated value on individual freedom, at the expense of responsibility to the community. But the main resistance in the United States to a strategy of transformation comes not from those who reject the objective of promoting democracy and market economies, but rather from those who are reluctant to pay a significant political or economic price to do so. At a time when American foreign policy is experiencing increasing financial constraints, there is growing resistance to adopting such ambitious objectives. After all, promoting democratisation and marketisation can be expensive, when America’s budgets for international operations and foreign assistance are being reduced. Economic sanctions seem to have little effect in promoting political reform, except perhaps in the smallest and weakest of states. Conversely, economic pressure on larger countries, such as China, can complicate other American foreign policy objectives, and can reduce markets for American exporters. If idealistic objectives in foreign affairs are a luxury available to the most powerful nations, the relative decline in American power makes a strategy of transformation appear increasingly unrealistic to many Americans. A second option being considered in the United States involves contributing to the construction of multilateral institutions in the Asia Pacific region, whose norms of co-operative security and free trade will be congruent with long-term American interests. Cooperative multilateralism is, for Americans, a familiar approach to dealing with global security and economic issues. The abortive attempt to construct the League of Nations after World War I, and the more successful efforts to build the United Nations, the World Bank, the International Monetary Fund, and the General Agreement on Tariffs and Trade after World War II, are all examples of this aspect of American foreign policy. Indeed, if transforming the domestic political and economic systems of other countries is one reflection of idealism in American foreign policy, then transforming the international system through the construction of effective multilateral institutions is another.

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Until recently, however, co-operative multilateralism was not a feasible option in the Asia Pacific region. The Soviet-American, Sino-American and SinoSoviet confrontations made it impossible to envision the creation of multilateral institutions that would include all the major countries of the area. Moreover, the differences in cultural and historical background, in political and economic systems, and in size and level of economic development made it difficult to reach consensus on the agenda of multilateral institutions. Equally, the uncertain boundaries of the Asia Pacific region made it hard to agree on who should be members of regional organisations. Thus, when the idea of building regional organisations in Asia began to gain momentum in the late 1980s, the Bush Administration largely opposed it, on the grounds that it would distract attention from more feasible and effective strategies for pursuing American interests in the region. Today, the end of the various cold wars in Asia, the explosive growth of intraregional trade and investment, and the political and economic liberalisation occurring in many Asian countries, are together facilitating the creation of an organised community of nations for the first time in Asia’s history.29 The concept of a ‘New Pacific Community,’ introduced in early 1993 by Assistant Secretary of State Winston Lord, reflected the conviction that multilateral institutions are now possible in the Asian setting, and embodied the Clinton Administration’s commitment to bringing them about.30 Under this second strategy, the United States would work through the Asia Pacific Economic Cooperation forum (APEC) to sustain prosperity and to reduce remaining barriers to trade and investment in the world’s most dynamic region. It would use the ASEAN Regional Forum (ARF) and various sub-regional security dialogues to promote stability. And it would also use multilateral fora, such as the UN Commission on Human Rights, to promote democratic values. The agenda for these official intergovernmental organisations would be set, in part, through prior discussions conducted at the unofficial or quasi-official level, through such ‘track-two’ organisations as the Pacific Economic Cooperation Conference (PECC) on economic matters, and the Council on Security Cooperation in the Asia Pacific (CSCAP) on strategic issues. Within this general strategy there are many variants. The most ambitious multilateralists have much in common with the advocates of a transformational strategy. They would also seek to promote democratisation, marketisation and trade liberalisation in Asia, but they would do so through multilateral negotiations, rather than (or in addition to) unilateral American pressure. The most ambitious multilateralists would also try to replicate European-style co-operative security mechanisms in Asia, through such measures as negotiated restrictions on troop placements, weapons deployments and military exercises. Conversely, other proponents of multilateralism advocate what they see as a less ambitious, but more ‘Asian’, approach to economic and security issues. They would supplement the objective of lowering barriers to trade and investment with other goals, such as promoting economic co-operation between

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richer and poorer states and harmonising customs procedures and other aspects of international commercial transactions. They would not emphasise formal multilateral negotiations as the best method for promoting economic liberalisation, but rather would employ the technique of reciprocal unilateralism, whereby each member of APEC decides which barriers to trade and investment it chooses to reduce. Similarly, in the security realm, the ‘Asian’ approach to cooperation also features ‘softer’ measures, such as greater transparency in military budgets, weapons acquisitions, troop deployments and national strategy, rather than ‘harder’ negotiated limits on various forms of defence activity. But multilateralism has its critics in the United States. Ironically, however, the principal objections to this strategy are mutually contradictory. On the one hand, one group of critics argue that it is naive to believe that international norms and institutions can effectively restrict the pursuit of the national interest by sovereign nation states. In particular, they question whether effective international institutions can be created in a region as diverse as the Asia Pacific.31 On the other hand, a second set of objections is based on just the opposite prediction: that regional institutions might become so powerful that American interests will be sacrificed. To them, the United States still has enough power to dominate most bilateral relationships, and it is therefore in the American interest to deal with other Asia Pacific countries bilaterally, rather than through multilateral institutions that could reject American initiatives. Either way, the critics insist that any attempt to promote American interests by developing multilateral institutions is a quixotic attempt that will ultimately fail. The third option being advanced in the debate over American policy toward Asia is to identify the country that poses the greatest threat to Asian security and to mobilise a strategic counterweight to it, using both the resources of the United States itself and those of its allies.32 Such an option would, of course, be reminiscent of American policy between 1949 and 1969, when the target of containment in Asia was China, and that between 1969 and 1989, when the target was principally the former Soviet Union. It would thus be similar to American policy in four of the last five decades, and would have deep resonance with most of America’s diplomatic history since the end of World War II. Who would be the target of a containment policy today? Virtually all the proponents of containment are focusing on China, but different analysts have different grounds for concern. Some are alarmed simply by the physical size and economic growth of China. With 1.2 billion people, a per capita income already believed to be around $1,500 in terms of purchasing power parity, and growing at an average rate of 9–10 per cent per year, China is poised to be the world’s largest economy early in the next century. Moreover, Chinese leaders are allocating more and more budgetary resources to the modernisation of their armed forces, and are committed to acquiring modern force projection capabilities within a few decades. From the traditional realist perspective, China

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is a rising major power, and is likely to challenge the United States for dominance in the Asia Pacific region in the foreseeable future. Others are more concerned by the non-democratic character of China’s political system. Many Americans accept the proposition that authoritarian regimes are more likely to wage war against their neighbours than are democratic systems, largely as a way of mobilising popular support around a nationalistic cause. Until China has undertaken further political reform, therefore, these analysts will be concerned about the potential for aggressive international behaviour on the part of Beijing. Still other American observers focus on what they regard as the relatively uncooperative strategic culture of China’s foreign policy elites. In their analysis, Chinese leaders view the world as the struggle for power among sovereign nation states. Beijing either suspects that international laws and regimes are designed to protect the interests of established Western nations from challenge from rising Third World states, or else assumes that international laws and regimes are impotent to regulate the foreign policy behaviour of major powers. This analysis leads to the conclusion that China will be loath to allow the international community to subject its behaviour to any form of institutionalised restriction or regulation. Whatever the roots of their analysis, the advocates of this option all support a policy of containing the rise of Chinese power. They would strengthen traditional American alliances in East Asia, such as those with Japan, South Korea and Australia, and direct them against the Chinese threat. They would form new alignments with other regional powers, such as Indonesia, India and Vietnam that have traditionally been antipathetic toward China. And they would maintain, or even increase, the level of American troops in East Asia, and would strengthen those deployments with new weaponry, particularly theatre missile defence systems, to negate China’s own military modernisation programme. On the other hand, the critics of containment stress the potential costs and risks of such an option. • A new containment policy toward China would be highly costly financially. At a time when the United States is attempting to reduce its federal budget deficit, this option would require larger deployments of American forces in the Asia Pacific region. • Attempts to contain China would also impose other economic costs on the United States. The United States presently has far more economic interests in China than it had in the Soviet Union during the Cold War, or indeed than it has in Russia today. Any policy of confrontation with China would severely damage those interests, since Beijing would retaliate against the United States by reducing the chances for American firms seeking to operate there. A policy of containing China would also put American companies at a major strategic disadvantage vis-à-vis their foreign competitors who retained access to the Chinese market.

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• The United States would also face a high diplomatic cost in the region, since presently no other country (not even Japan, Vietnam, Taiwan or Mongolia, whose suspicions of China’s intentions are traditionally high) wishes to ensure Beijing’s enmity by supporting an American attempt to contain China. • And, of course, a policy of containment of China would significantly increase the chances of a military conflict between the US and China. Above all, the critics note, there is at present no compelling case that containing China is so necessary that we must pay these military, economic and diplomatic costs, or accept the compromises on other issues. The critics of containment argue that the United States should first try to engage China in the regional economic and security community, hoping that it will behave in a co-operative and responsible manner if given a reasonable stake in the international system. Since China does not have an extensive history of traditional territorial expansion, has a daunting list of domestic economic and political problems, is extensively integrated into global and regional communities, and is surrounded by a vibrant group of neighbours who can readily form a balance of power against China, it may be possible to integrate China into the international community without engaging in the confrontational policy of containing Beijing. The fourth option that has emerged in the debate over America’s role in Asia is distinctive. It takes a much less expansive and ambitious view of American objectives in Asia than any of the other strategies. This approach is motivated by a sense of budgetary constraint, and by the perception that the cost of America’s past international activism has been high relative to the benefits gained. If there is an historical precedent for the United States, it would be the period between the first and second world wars, in which the United States drastically reduced the levels of its armed forces and substan tially raised the levels of its tariffs, in an effort to reduce the costs of sustained international interaction. More specifically, this fourth approach would deal with the three core American interests—security, prosperity and human rights—in the following ways: • It would define American security interests far more narrowly, as the defence of US territory. It would withdraw the US forces from their land bases in Asia —especially from Korea and Japan—on the grounds that there is no threat to their security against which they cannot defend themselves with reasonable effort. (In this sense, isolationists do not profess to fear the rise of China, since their principal argument is that Asians can manage their own security requirements without the assistance of the United States.)33 • It would involve a highly nationalistic economic policy. There would be less emphasis on reducing barriers to American trade and investment in Asia, and more stress on raising barriers to Asian exports to the US. Patrick Buchanan’s call during the 1996 presidential election campaign for a tariff surcharge on imports from Japan and China is a good example of this approach.

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• Human rights considerations would still be invoked, but they would largely serve as a way of justifying protectionism, rather than as an objective of their own. The focus would shift to blocking the importation of the products of prison labour, child labour and slave labour; and to raising tariffs on the importation of goods produced in conditions that violated various workers’ rights. The critics of this approach to the American role in Asia argue that a strategy of isolationism and protectionism would be both shortsighted and narrow-minded. Past experience shows that an American military withdrawal from Asia would be destabilising, unless a security community had been created in the meantime. Similarly, past experience also shows that the imposition of new protectionist measures serves only to induce retaliation and therefore reduce, rather than enhance, economic welfare. Today, the critics charge, the United States simply has too many security interests in Asia, and too large an economic stake in the region, to make disengagement a feasible alternative.34 The fifth option is for the United States to remain engaged in Asia, but to promote a less ambitious—and less idealistic—set of international objectives. Moreover, this strategy would entail the pursuit of those interests primarily through the traditional mechanisms of bilateral negotiation on economic matters and through the manipulation of the balance of power on security issues. In purest form, therefore, this option most nearly conforms to the strategy advocated by proponents of realpolitik in international affairs. As the term ‘engagement’ implies, this option would entail much more American involvement in Asia than would a strategy of isolationism and protectionism. It assumes that the United States has a continuing interest in maintaining security and stability in the region, and that isolationism would put those objectives at considerable risk. It also assumes that the economic vitality of the United States would suffer from protectionism in several ways: American consumers would experience higher prices if the US market was closed to imports from the Asia Pacific region, and American producers would lose their efficiency and competitiveness if they were insulated from competition from their Asian counterparts. However, this fifth option does not depend on either the transformation of Asia’s domestic economic systems or the creation of effective multilateral institutions to promote America’s economic interests in the region. It tends to accept the economic and political systems of Asia as givens—as partners for negotiation rather than as targets for transformation. It also assumes that APEC will not prove to be an effective vehicle for the liberalisation of barriers to trade and investment. Instead, the proponents of this last option argue that the United States should negotiate specific economic outcomes with its major trading partners, attempting to achieve lower trade deficits or greater market shares, rather than trying to champion fundamental changes in the underlying structures

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of the Asian economies or to create regional institutions committed to open markets and free trade. Nor do proponents of this fifth option believe that the rise of China requires the United States to adopt a policy of containment toward Beijing. They point to China’s enormous internal problems, its technological backwardness, its limited ambitions and its growing interdependence with the rest of the region as constraints against excessive Chinese ambition. They also argue that the Asia Pacific region is sufficiently dynamic that there are few vacuums into which China can easily expand its influence. There are other major powers in the region —especially Russia, Japan and India—that will send clear warnings to China when its behaviour is unacceptable. And important second-tier powers, such as Indonesia, Thailand and Vietnam, are forming, through ASEAN, a regional grouping that can also act collectively as a significant strategic actor. Thus, the United States need not lead an alliance aimed at containing China, but can act instead as an external balancer, joining a coalition of regional powers that will spontaneously form whenever China’s demands on the region are deemed unacceptable. Since this is perhaps the most centrist of the five strategies, its proponents are subject to criticism from all directions on the American political spectrum. Optimistic liberals believe that this option slights the possibility for multilateral institutions in the Asia Pacific region, and that it therefore assigns a role to the United States that is too unilateral and too expensive. More pessimistic liberals charge that engagement ignores the American interest in political and economic liberalisation in Asia, and that American interests cannot be completely served unless more of Asia experiences democratic political systems and open markets. Protectionists and isolationists believe that the cost of engagement far exceeds the benefits; whereas proponents of containment argue that engagement incorrectly assumes that China can be integrated into the regional and global order without sustained confrontation with Beijing. These five options address the same enduring interests in American policy toward Asia—security, prosperity and human rights—but do so in very different ways, because they are based on divergent assumptions about the situation in Asia and about the underlying forces that shape international affairs. The five options differ, firstly, with regard to the nature of their objectives. Some reflect the idealistic strain in American thinking about the world: that the world cannot be ‘made safe’ for the United States unless it is significantly restructured through American efforts. As in the past, idealism has two variants. The proponents of the policy of ‘enlargement’ focus on transforming the domestic economic and political systems in Asian societies, on the grounds that this will make them more peaceful, more co-operative and more open to American economic interests. The proponents of the Pacific Community, in contrast, advocate transforming the international order in Asia by constructing powerful regional institutions that will regulate the international behaviour, and to some degree the domestic conduct, of Asian states.

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The other three options reflect a more ‘realistic’ approach to foreign policy. Here, the objective is not to remake the world, but simply to advance American interests within it. Whatever their differences, the strategies that we here have called containment, isolation and power politics share a scepticism about the feasibility or necessity of promoting human rights, building democracy, advancing economic liberalisation, or creating regional institutions. Instead, they believe that America should focus more tightly on its own national interests, and pursue them through more unilateral or bilateral strategies. The differences among these three variants of realism suggest another dimension along which America’s strategic choices in Asia can be compared. Some of the options reflect a relatively optimistic view about trends in the region and about the extent of American power. The proponents of enlargement and of multilateral institutionalism assume that the tides of economic reform, political liberalisation and international interdependence are running so strong that American policy can reasonably focus on attempts to promote domestic change or to build international institutions. Although this optimism is grounded in traditional liberal assumptions that economic development will produce democracy and interdependence will promote international co-operation, it is also the reflection of the American triumphalism at the end of the Cold War—the belief that, with the collapse of communism, there was no longer any significant alternative to the spread of democratic and market institutions, or to the construction of effective international institutions. Given the fact that the United States is the only remaining superpower, it can also expect to play the leading, if not the dominant role, in this ‘new world order’. At the other end of the spectrum, the proponents of containment and disengagement see Asia in much darker terms. The advocates of containment believe that economic interdependence does not mean the end of the struggle for power in international affairs. Within a decade or so, China will rise to challenge America’s pre-eminent place in Asia, and the United States must organise a coalition of nations to oppose China’s claim to hegemony and (by extension) to defend its own. The proponents of disengagement also are discouraged by developments in Asia, particularly by the rise of successful economic competitors who follow neo-mercantilist policies rather than the rules of free trade. But they believe that the United States has no vital interests in Asia that warrant continued engagement, and that America can afford to withdraw from the region strategically and erect protectionist barriers against imports from Asian economies. The proponents of power politics are neither overly optimistic nor overly pessimistic about trends in the region. They believe it naive to organise American policy around the goals of building powerful multilateral institutions or transforming the economic and political systems of its Asian partners. But they also regard it as unnecessarily pessimistic to advocate a policy of containment of China, or to call for American withdrawal from Asia. They believe that America’s power is sufficiently great, and the Asian environment

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sufficiently benign, that the United States can achieve its objectives by bargaining with its counterparts in the region, and by maintaining an effective balance of power. Finally, the five options can be distinguished on the basis of the extent to which they represent change or continuity in American policy toward the region. None of the five options is totally unprecedented for the United States. A transformational policy, as noted above, traces its roots to the missionary movement of the late nineteenth century. A strategy of multilateral institutionbuilding echoes the Wilsonian liberalism of the 1910s, and its Rooseveltian counterpart in the 1940s. Containment of China today would resonate with the containment of China in the 1950s and of the Soviet Union throughout the Cold War. Isolationism and protectionism find precedent in the inter-war era. And the realpolitik philosophy embodied in strategies of balancing and bargaining were foreshadowed by the Kissingerian approach to foreign policy in the 1970s. Even so, some of these strategies, if adopted in relatively pure form today, would represent a dramatic change in American policy toward Asia. A policy of isolation and protection would constitute the biggest shift, since strategic engagement in Asia and maintenance of open American markets have been the hallmarks of US policy in the region since the early 1950s. A policy of balancing and bargaining would also be relatively unprecedented, given the weakness of the ‘realist’ impulse in American foreign policy relative to idealism, except for a brief period in the late 1960s and early 1970s under Nixon and Kissinger. An emphasis on building multilateral institutions, while a familiar element in global American policy, would be a new component in its Asian policy, if only because the region has never previously enjoyed the preconditions for effective international organisation. In contrast, policies of containment and enlargement are more familiar elements of US Asian policy —the former since the 1950s, the latter since the 1970s. During the presidential election campaign of 1996, it appeared that the proponents of both containment and isolation were on the rise. Both the press and the policy community in the United States were replete with recommendations for the containment of China. Conversely, the presidential campaigns of Patrick Buchanan and Ross Perot featured calls for the United States to draw down its military presence in Asia and, in particular, to raise protectionist barriers to imports from the region. None the less, it is unlikely that the proponents of either of these two extreme options will prevail in the emerging debate, unless either of two contingencies occurs. Blatantly provocative or irresponsible Chinese behaviour, particularly toward Taiwan or the South China Seas, could give greater impetus to a policy of containment. Alternatively, a severe economic downturn or a more intense budgetary crisis in Washington could promote the adoption of a strategy of isolation and protectionism. So far, however, neither of these two contingencies has materialised. The American economy remains dynamic, with rates of growth relatively high and

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rates of unemployment unusually low. Buchanan’s poor performance in the Republican presidential primaries, and Ross Perot’s equally poor showing in the subsequent presidential election, showed that protectionist policies have thus far gained relatively little support from the American electorate. Indeed, the signs are that the new Clinton Administration is prepared to seek increases in the nondefence side of its foreign affairs budget, thus halting several years of significant decline, and that such a proposal is gaining bipartisan support.35 At the same time, China’s military exercises in the Taiwan Straits did not, as might have been expected, strengthen the positions of those who advocated a policy of containment against Beijing. Instead, they bolstered those who called for a more co-operative policy toward China that could avoid the prospect of a costly confrontation with Beijing. Significantly, Bob Dole agreed with the President on this point. Although he criticised the Clinton Administration for its vacillation on China policy during its first years in office, he supported the renewal of China’s most-favoured-nation trading status in 1996, and endorsed the President’s policy of seeking to integrate China into the international community.36 In the absence of these contingencies, therefore, US policy toward Asia is likely to be a blend of the three other strategies: transformation, multilateralism and power politics. There will always be an element of transformation in America’s approach to international affairs. But it will most likely remain a secondary factor in American policy toward Asia. Except for extreme cases of political repression, or for smaller and weaker countries of little strategic importance to the United States, human rights will be promoted more by rational dialogue, co-operative aid programmes and quiet diplomacy, rather than by the threat or use of economic sanctions. The US may also realise that progress toward political reform and democratisation will occur slowly in Asia, taking decades to achieve rather than only a few years. Americans will also continue to support the construction of multilateral security and economic institutions in the Asia Pacific region. But those regimes are not likely to develop rapidly enough to satisfy US interests. APEC’s strategy of ‘concerted unilateralism’ may not produce greater market access for American exporters or investors; and ARF’s attempts at confidence building may not significantly reduce the chances of an arms race, military tension or strategic imbalance in the region. Thus the US will also place significant emphasis on the exercise of power politics. That is, it will continue to conduct bilateral trade negotiations with its major trading partners to remove barriers to market access, although perhaps with a growing willingness to use the dispute-settlement mechanisms of the WTO. It will also maintain its forward deployments in Asia, and strengthen its security ties with its allies, in order to maintain a balance of power in the region, rather than relying exclusively on co-operative security measures such as the ARF.

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To most Asians, this blend of transformation, multilateralism and power politics is vastly preferable to either disengagement or containment. And yet, they would prefer that the emphasis on transformation be minimal, that the unilateral pursuit of American interests be moderate, and that America cooperate in the construction of economic and security institutions in the region. In short, most Asian governments want the United States to work within an Asian community, in which Asian nations themselves increasingly take the lead. For multilateralism to become the principal thrust of American policy in the region, however, several conditions must be met. First, it must be clear that regional institutions can effectively maintain regional security, and can address American interests in gaining greater access to American markets. Second, the US must be convinced that China can be successfully integrated into the region, thus making a renewed policy of containment unnecessary. Third, Asians must show that they are transforming themselves economically and politically, and that external pressure from the United States for political and economic reforms is therefore unnecessary. And finally, Asians must regularly express their desire to see the United States remain an active member of the Asia Pacific community, so as to eliminate any suspicion that they would prefer to see American disengagement from the region. In short, if Asians wish the United States to accept multilateral cooperation as the cornerstone of its policy toward the region, they must demonstrate that the new regional institutions will indeed advance American interests, and that all of the four alternatives to multilateralism are, on balance, less effective and less desirable options for the US to adopt. Harding’s worries about how US policy is understood in China are supported by a thoughtful analysis by Wang Jisi, one of China’s younger and more subtle analysts of American policy. In the following excerpt from Wang’s analysis we focus on a sober assessment of the current state of Sino-American relations and its future prospects. WANG JISI Regardless of the ups and downs in US-China relations, and despite China’s domestic changes toward opening and reform, the inherited interpretations of history have decisively influenced generations of Chinese leaders. As China’s official ideology has shifted gradually from emphasising Marxism-Leninism to cultivating patriotism, Chinese perceptions of America are being adjusted to reflect popular Chinese nationalistic desires and sentiments. However, the fundamental assumptions in viewing the role of the United States in world affairs, probably agreed upon by the vast majority of the Chinese political elite, will remain for many years to come. These assumptions include at least the following:

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• The United States wants to maximise its national power and dominate the world; • It is easier to deal with the United States and seek its co-operation when its power is in decline; • Americans believe in ‘the law of the jungle’, seeing no other nations as equal partners and attempting to prevent them from rising up; • Compared with other advanced capitalist countries, the United States has a much stronger mentality of racial and cultural superiority, and tends to use ideological and cultural tools, in addition to economic and military strengths, to expand its influence. With these historical legacies in the background. there has been a heated debate in the past few years among China’s political analysts concerning the relative power of the United States in world politics. The majority view is that America is a declining power over the long run.37 According to this view, the world is moving towards ‘multipolarisation’. Other powers or power centres, including Europe, Japan, China, Russia, and some developing countries, are rising as independent ‘poles’ to challenge American power and ambition. The world will be safer and better when political authority and economic wealth are more evenly distributed among several power centres, especially when the developing countries are catching up with Western countries. The observation of a declining American power and influence is based on the judgement that America’s economy is less competitive than it was decades ago, and its proportion of the world economy is shrinking. Some Chinese economists use various indicators to argue that despite the recovery of the US economy in recent years, the long-term trend of America’s economic decline is irreversible.38 As to the reasons for the inevitable decline of the US economy, they point to the high spending and low saving rates, the formidable budget deficit and trade deficit, and some other structural malfunctions in the American economy.39 The end of the Cold War has given rise to an American focus on domestic economic tasks. At the same time, in the process of economic globalisation the US economy increasingly has to depend on overseas markets. Chinese analysts therefore anticipate more intense economic competition and trade frictions between the United States and other countries, which have already been translated into political disputes. In order to strengthen their position in the economic competition, the United States, Japan and Europe are each trying hard to establish their own spheres of influence and exclude or contain others. Economic regionalisation tends to intensify great power struggles.40 In particular, the Americans and the Japanese are vying for leadership within APEC. Chinese analyses of America’s international behaviour emphasise the growing gap between America’s ambition to establish world hegemony and its diminished capabilities. Washington fails to provide effective leadership in the Western alliance in the post-Cold-War era. Without a commonly perceived enemy country or threat, Washington finds it increasingly difficult to ‘control’ its allies.

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Meanwhile, the general consensus among Chinese analysts is that the Western alliance will not disintegrate in the foreseeable future, and US relations with Europe and Japan are complicated by a mixture of competition, friction and cooperation. However, the perceived general trend is that the United States will have more, rather than less, discord with all the major power centres in the world. Chinese observers refer to the intensifying trade friction between the European Union and America, the European (especially the French) calls for preserving the uniqueness of European cultures from America’s cultural infiltration, and the European willingness to strengthen ties with Asia. Moreover, it is pointed out that the Americans are essentially opposed to the creation of an independent European defence system that the major EU countries are proposing.41 Since the Clinton Administration announced its ‘special relationship’ with Germany, its intention of establishing an American-German ‘joint leadership’ has aroused serious debates and resistance in Europe.42 It is in America’s interest to ‘try its best to take advantage of or create contradictions among European powers and to maintain and exaggerate external threats so that Europe would consider the role of the United States as indispensable’.43 Western Europe’s enthusiasm about Asia and its interest in entering into the rivalry in Asia are stimulated by its competition with the United States.44 Chinese observers hold rather sophisticated views of America’s role and position in the developing world. On the one hand, stress is placed on the growing role of developing countries in world affairs since the end of the Cold War.45 The Chinese press has reported numerous events, such as American sanctions against Cuba, in which American attempts are thwarted by the joint objection of the developing countries and even of some Western allies. In many international fora, Western standards of human rights are challenged. On the other hand, there are also Chinese comments about the United States exerting immense influence on the developing world. Its role in the Middle East is not to be replaced by any other powers and its relations with Latin American countries have actually been improved in the last few years.46 While Chinese reports on world affairs are still full of discussions of ‘the fall of the United States’ and the world moving into ‘multipolarisation’, there have also been recent observations that the political role of the United States in global affairs has not declined in measurable terms.47 Some commentators hold that, in contrast with the economic performances of Europe and Japan, the US economy has enjoyed an obvious edge in the information revolution. The Americans have been assertive in intervening in regional conflicts as well as in setting rules for international trade. As the United States will most likely remain the sole superpower for at least one or two decades to come, the global political structure today should be characterised as ‘one superpower, several great powers’.48 Chinese analysts have expressed rather divergent views regarding which power or power centre will pose the greatest challenge to American hegemonic potentials. The European Union, Japan, China, Russia, and the developing countries as a whole are the most frequently mentioned candidates. The American strategic

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planners are also seen as undecided about which power would become America’s major antagonist in future.49 A few Chinese scholarly discussions argue that the greatest challenge to America’s desire to assume a leadership role in the world comes from within its own society.50 They assert that the only ‘archenemy’ of the United States is itself. The lack of focus and coherence in America’s foreign policy will precede a diminishing role for the US in world affairs. More fundamentally, chronic domestic problems such as ethnic tensions, social decay, immorality, distrust of government, and crime are eroding the edifice of American society within and damaging its image without. Rhetoric aside, is this nation able to assume the role of world leadership, even if other peoples were willing to accept it, which they are most unlikely to do?’51 In defining the strategic role of the United States in Pacific Asia, Chinese analysts tend to debate among themselves whether the ‘strategic focus’ of the United States has moved from Europe to Pacific Asia. The general consensus today seems to be that Europe remains the most vital region for America’s national security, but Pacific Asia has already assumed more importance in America’s global strategy and may replace Europe as its ‘strategic focus’ in the future. With the ‘rise of East Asia’, American strategic planners will take an increasingly stronger interest in this region.52 There is little doubt in Chinese foreign policy-making circles that the United States will continue to maintain its military presence in Pacific Asia indefinitely. Some Chinese analysts noted in 1993 that American strategic planners after the Cold War ‘will find it difficult to discover a cohesive force for sustaining US control of the region. Without the backing of military forces, it would be impossible for the United States to protect its interests in Asia Pacific, and its trade with Asia, which takes over 50 percent of its total foreign trade, could be destroyed’.53 Another analyst noted that ‘from the US point of view, it is absolutely necessary to keep its military presence, especially its advantages at sea’.54 The Chinese perceive the following reasons for continued US security concerns in the region: (1) domestic tensions in certain countries such as Cambodia, (2) the territorial disputes in the South China Sea, (3) possible Japanese build-up that might harm America’s strategic interests, (4) the rise of China as a ‘strategic problem’ in American eyes, (5) the possible rivalry between Japan and China or between some other regional powers, (6) the beginning of an arms race in Asia, (7) nuclear proliferation, (8) possible revival of Russia, (9) tensions on the Korean peninsula, and (10) the Taiwan issue.55 The role the United States wants to play has changed from coordinating efforts in containing the Soviet Union to becoming a ‘regional balancer’ to maintain stability.56 Compatible with the aforementioned Chinese consensus about the US global role, the conventional Chinese assessment of the US position in Asia Pacific is that, given the growth of power and influence of China, Japan, ASEAN and other Asian countries, US power and influence are diminishing. However, a recent report forecasting the situation in Asian-Pacific security at the beginning

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of the twenty-first century anticipates an even larger US influence on regional political, economic and military affairs than now. The report contends that apart from the strong US economic power and military presence in the region, an important reason for the enlargement of US influence is that ‘some Asian-Pacific countries are concerned about the revival of militarism’. To be more specific, ‘under the influence of the notion of the so-called “China threat”, these countries, especially ASEAN, hope to see the United States play the role of a “power balance”’.57 Chinese strategic analysts also take the American concept of a new Pacific Community very seriously. The New Pacific Community is seen as an Americaled multilateral security mechanism which is composed of four parts: (1) the six military and security treaties between the US and other regional countries as the Community’s cornerstone, (2) the ASEAN Regional Forum (ARF) as the Community’s partner, (3) the members of the Northeast Asian regional security mechanism, which is proposed by Washington and supposedly will include Japan, China, South Korea and Russia, as the Community’s dialogue partners, and (4) the countries participating in the South Asian security consultation, i.e., the US, India, Pakistan, Russia, and China, as the Community’s co-ordinating countries. Washington will imple ment its plans according to the above mechanisms that are to be realised step by step, and finally institutionalise the Community.58 As to the regional powers’ attitude toward the United States in security affairs, Chinese strategic analyses seem to be as objective as they can. For example, two military analysts argue that in the post-Cold-War era East Asian countries in general harbour ambivalent feelings about the role of the United States in the region. On the one hand, these countries are not pleased with the Americans’ patronising and domineering attitude and policies, especially those regarding human rights. On the other hand, they ‘still hope to see a continued American presence in East Asia as a political and military balancing factor, and as a useful economic partner in the East Asia area rather than as a protectionist opponent’.59 Such relatively refined discussions constitute a contrast with some journalistic, propagandistic reports that often appear in China’s media. The Chinese official line has always opposed the American military presence in Asia, even during those years when there was a strategic understanding between the two governments against Soviet expansion in the region. However, the nuances of this formal stand are contingent on the fluctuations of SinoAmerican political relations and the changes in China’s strategic environment. The past two years have witnessed increasing Chinese suspicions of the US security role in East Asia. These suspicions are reinforced by the American clamour about a ‘China threat’, the upgrading of US-Taiwan relations, and recent American efforts to strengthen US-Japan security ties. Many Chinese view the perceptions of a rising ‘China threat’ in some Asian nations as being deliberately inflamed and exaggerated by the United States in its endeavour to contain China’s influence. They also note that there has been a

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subtle but noticeable shift in the American stand—in China’s disfavour—toward the territorial disputes in the South China Sea. Hanoi has remarkably improved relations with Washington and tried to strengthen its bargaining position in the South China Sea disputes. On the Korean issue, Washington seems to rely less on China’s assistance in contacting Pyongyang. In particular, recent developments over Taiwan have aroused greater resentment and apprehensions in Beijing. A widespread Chinese feeling is that the US leadership still regards Taiwan as its ‘unsinkable aircraft carrier’, a metaphor that was used in the early 1950s when Washington maintained a large military base on Taiwan to deter the PRC. To reach reunification with Taiwan has been one central political commitment of Beijing ever since the founding of the People’s Republic. It has been asserted that Beijing would have to resort to military means to fulfil this commitment should Taiwan declare independence. In Beijing’s eyes, independence-oriented political forces in Taiwan have stepped up their activities both on the island and internationally. They are prodded by the American leadership as a political card in its strategic game to weaken and divide China. The most formidable obstacle to China’s reunification is, in Chinese views, the American support for Taipei. With Lee Tung-hui’s reelection as Taiwan’s President in March 1996, the Taiwanese leadership may turn out to be even more intransigent over the reunification issue as it is seeking American protection and military supply. Under these circumstances, it is unthinkable that Beijing would welcome a larger security role by the United States in the region. Sino-American interactions over such issues as military transparency, nuclear tests, non-proliferation and arms sales are making a strong impact on China’s attitude toward any multilateral security dialogue or mechanism involving the United States. The resumption of military-to-military contact between the two sides is a positive sign. But this development could be offset and disrupted by renewed tensions across the Taiwan Straits that would again entangle the United States. Another debatable issue concerning America’s security role is the USJapanese strategic alliance. The joint US-Japanese declaration in April 1996 on regional security has triggered unusually coarse reaction from Chinese commentators, although the formal official comments were somewhat measured. The joint declaration is referred to by a Chinese correspondent in Tokyo as ‘a dangerous signal that indicates Japan’s integration into America’s global military strategy and gradually strengthened co-ordination with military actions of the American forces in the Asia Pacific region’.60 According to some Chinese analysis, the US-Japanese security alliance was a creation of the Cold War to counter the Soviet Union. With the end of the Cold War and particularly with a peaceful environment in East Asia there is no longer any valid reason to maintain such an alliance. The real motivations of the new efforts to vitalise US-Japanese military co-operation are therefore very questionable.61

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The newly enhanced US-Japanese military co-ordination has unambiguously reinforced the Chinese anxiety about these two powers’ joint efforts to counterbalance Chinese power. Despite the fact that both the formal declaration and the follow-on official American and Japanese clarifications are equivocal about their threat perceptions, Chinese analysts have hardly concealed their suspicions that the US-Japanese security alliance is now mainly directed at China.62 In addition, they have noticed that the Americans also need Seoul’s understanding and cooperation to contain North Korea.63 While some of the Chinese criticisms of the US-Japanese alliance stress the possible revival of Japanese military expansion, the major Chinese target is still the United States, which is seen as having initiated the expansion of the scope of US-Japanese security co-operation. One commentator links the new US-Japanese initiatives with the recent tensions across the Taiwan Straits. The theme of a “China threat” has become the major excuse for the politicians in Washington to advocate the fortifying of the US-Japanese military alliance and expanding the US military presence in Asia.’64 In general, the recent events in Asian security affairs and US-Chinese relations do not bode well for the reduction of China’s apprehensions about the role of the United States. However, the continued Chinese willingness to remain involved in various security dialogues and confidence building measures provide opportunities for preventing China and the United States from coming to a headon confrontation. It is strongly believed in China that the ultimate goal of US foreign policy is the elimination of communism from the earth and the domination of the whole world. Beijing’s indignation about American attacks on the Chinese human rights record since 1989, exacerbated by other political difficulties between the two governments, ensures that the Chinese leadership views America’s political role in Asia as anything but constructive. If there are perceived common grounds and interests between Washington and Beijing in economic and security arenas, the gap between their world views and ideologies appears more unbridgeable. Chinese leaders now openly attack the United States for maintaining a policy designed to Westernise and split up China. Furthermore, there are increasing signs that the Americans are adopting a policy of containing and weakening China because they have been apparently disappointed by their failure to change China’s political course. Supporting China’s political dissidents, encouraging the Dalai Lama, enhancing Taiwan’s international stature, and leading other Western countries against China in international human rights fora are but a few examples to prove US hostility toward the Chinese nation. Faced with Americans’ vigorous attempts to impose their political will on Asia, other East Asian nations are seen as individually as well as cooperatively resisting American pressures. They dislike the American notion of human rights and will say ‘no’ to the Americans more vehemently and frequently. However, policy-makers in the Clinton administration insist wrongly that America’s political and economic model is still attractive to Asia. They have

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underestimated the significant impact made by the rise of East Asia on geopolitics and geo-economics.’65 In the eyes of the People’s Republic of China, the image of the United States as a world power and regional player is in general a negative one. Looking at Chinese publications and media coverage in the past two years, there seem to be more political imperatives and nationalist emotions than strategic and economic calculations in shaping this increasingly negative image. Yet taking a longer view, one may find that China has had a remarkably stable approach to America’s role in global and regional affairs since the early 1980s, despite the massive changes in both the world system and the regional constellations in Asia. Beijing’s attitude toward the United States has been consistent because it has its origins in China’s domestic goals and needs rather than in the international system itself. The most salient political imperative in China is political stability at home. One typical Chinese accusation against the United States is its habitual ‘interference in other countries’ domestic affairs’, a code phrase to epitomise Chinese apprehensions about Western influences on China’s political development. While concrete trade and arms control issues with the United States are negotiable, American demands for rapid political liberalisation in China are not. Thus China will not only fend off American pressures but also sympathise with those foreign regimes that are under similar American pressures for domestic change toward ‘democratisation’, such as the governments of Cuba, Vietnam, and Myanmar. China has strong reservations about international interventions or sanctions that it regards as infringement on sovereignty, especially if those actions are initiated or orchestrated by the United States. None the less, despite the negative image of the United States in China, the PRC leadership has a realistic understanding of the importance of the United States in world and regional affairs and doubtlessly desires to improve relations with it. As rapid economic modernisation provides an indispensable guarantee for domestic stability, China will continue to induce the inflow of capital and technology into the country, to promote exports abroad, and to minimise external entanglements that would endanger China’s economic development. All these goals can be achieved only when there is a reasonably stable and manageable relationship with the United States. ARMS CONTROL The security setting can also be understood through an analysis of one of its key issues—arms control. It is on such an issue, which cuts across the individual policies of states, that we can better understand both the desires for great stability, and the difficulties in reaching regional accords. Europeans are used to seeing arms control as a major aspect of their security discussions. In Pacific Asia, arms control is a relatively new

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subject, and therefore success is far harder to find. Joachim Krause’s contribution outlines both the challenges of, and the problems with, arms control in Pacific Asia. JOACHIM KRAUSE Arms control usually does not rank very high in political contacts between Europeans and Asians. In the past, only the protracted negotiations on a global ban on chemical weapons brought together Japanese (and occasionally Chinese) and European delegations in discussing common interests and problems. Europeans and Asians had similar problems to solve, but the most conspicuous fact was that East Asians had difficulties in accepting the logic of arms control. This was for two reasons: first, the very notion of arms control and disarmament seemed to be alien to Asian thinking; secondly, the fact that negotiations on arms control and disarmament proceeded from the notion of mistrust and from the assumption that others had potentially hostile intentions was similarly alien to Asian thinking. In Europe, arms control and disarmament played an important role in managing the transition from the East-West conflict to a new period. This changed the nature and thrust of arms control and, today, the understanding of the purpose and utility of arms control are quite different from the 1980s. This leads us to raise the issue of the role arms control can play in a changing world in which states in Europe and the Asia Pacific might have common interests that might be furthered by arms control diplomacy. Arms control is not a magic instrument through which many problems can be solved, yet, it has proven to be useful in many circumstances. Arms control and disarmament can play an important role in dealing with problems that bedevil both Europeans and inhabitants of the Asia Pacific region. This was underlined by the participants of the First European-Asian Summit Meeting (ASEM) in Bangkok in March 1996. Speaking in broad categories, there are at least three areas where one could assume that Europe and the states of Asia Pacific have a common strategic interest in dealing with security problems and where arms control and disarmament could play an important role: 1 in keeping alive and improving and reforming the global nonproliferation regime for nuclear weapons; 2 in containing the proliferation of chemical and biological weapons and of ballistic missiles; and 3 in stabilising the security balance in the Asia Pacific region through arms control measures either ‘borrowed’ from Europe or developed indigenously. For many Europeans it might sound strange to hear that it was in their strategic interest to care about security balances or even security problems in the Asia Pacific. It is time for Europeans to understand that given the rapid and dynamic

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developments in that region and their relevance for world affairs, they will not remain unaffected by major disruptions of the strategic balance in Asia Pacific. Hence, it might be useful to inquire into areas of common interest, to seek cooperative strategies. Although Krause’s original essay ranged across many arms control issues, we will focus here on the issues concerning weapons of mass destruction (other issues have already been covered in earlier papers). We begin with a look at the risks of nuclear proliferation. Why is it so important that Europeans and the states of the region Asia Pacific care about nuclear non-proliferation? 1 the continuing disintegration of what was once the Soviet Union still provides many opportunities to acquire nuclear weapons material, components, technology, carrier systems and maybe even complete nuclear weapons themselves.66 2 the possibility that states with nuclear weapons (such as China) or states with nuclear weapons capabilities such as India, Pakistan or North Korea become additional sources of nuclear material, technology and components under scenarios of domestic instability; 3 the continuing diffusion of nuclear technology and modern technology in general as well as the general trend towards industrialisation slowly but steadily increases the number of states able to produce nuclear weapons on their own; 4 the fact that after the end of the Cold War many regional balances have changed, thus leaving some states (especially those adjacent to nuclear weapon states or to nuclear weapons capable states) to weigh again nuclear weapons options. The ‘loose nukes’ in the former Soviet Union is an issue that will remain one of the most risky subjects on the international agenda. The danger that fissile materials resulting from nuclear weapons dismantlement, from the nuclear weapons complex or from various civilian sources in Russia or other successor states to the Soviet Union are diverted and used for the production of nuclear weapons in various parts of the world (even for terrorist purposes) will be with us for years, if not for decades. Russian authorities seem to be overburdened with the task of safeguarding all relevant materials. In some instances, they rather seem to be part of the problem than part of the solution. International assistance so far mainly comes from the US and is increasingly jeopardised by a Russian foreign policy that is more oriented towards regaining its lost great power status and other assets of geopolitical strength than towards keeping its own house clean.

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Table 4.1 Areas of European-Asian Pacific arms control co-operation

The states of the Asia Pacific and of Europe have a common interest on the political level in signalling to Russia that continued co-operation in this field is a prerequisite not only for normal political relations and full integration of Russia into the world economy, but also for Russia’s own internal and external security. The Summit on nuclear safety and security was helpful insofar as, for the first time, Russia officially acknowledged that there is a serious loose nukes problem in Russia that needs to be tackled. The Western states also should ponder on how they could co-operate more effectively in this field. As the recent crisis over North Korea’s nuclear programme has demonstrated, there is reason to be concerned about states that are not nuclear weapons states in the sense of the NPT, but which have nuclear programmes of an ambiguous character and which have internal stability problems that might affect the region as a whole. India and Pakistan may be similar cases in the future. The states of Asia Pacific have a strong interest in dealing with these problems in a preventive way. European states should share this interest and, as is already the case with KEDO, should invest in preventive diplomacy. As nuclear weapons material is being discharged by disarmament, as huge amounts of excess fissile material from both civilian and military origin need to be stored and eventually to be disposed, a new global attempt has to be made in order to build up a more comprehensive fissile material regime. This regime should consist of various parts—many of them the responsibility of nuclear weapons states. Such a regime should range from an improved safeguards system

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to a cut-off treaty. It should include provisions for the final disposition of HEU (highly enriched uranium) and for a Pu-storage regime and many other things. The states of Europe and Asia Pacific must have a common interest in developing such a regime—or in devising its components—since this is one area in which the future of the NPT will be decided. As for co-operation between European and Asia Pacific states, the following areas could be identified: improving the safeguards system of IAEA (93 + 2); application of IAEA safeguards to nuclear weapons states, more transparency in nuclear weapons dismantlement, and curbs on civilian uses of plutonium and HEU. The most important part is the ‘93 + 2’ programme of the IAEA, since it affects directly the interests of non-nuclear weapons states with a relatively large civilian nuclear sector. The current programme involves two categories of measures: • those that could be introduced without changing the mandate under the existing safeguards system • those that would need further authorisation. The latter means a full reform of the existing safeguards system away from the system of material balancing and soft inspections at strategic areas towards a system of full disclosure of all nuclear or fuel-cycle relevant activities (irrespective of whether special nuclear material is involved) including various stages where declarations and the consistency of declarations are being scrutinised. As part of these proposals, national declarations as to the respective programmes in the field of nuclear energy utilisation should be made; laboratory and research activities in a broad field need to be declared and eventually scrutinised. The Missile Technology Control Regime has been in existence since 1987 and now has twenty-seven members, among them all relevant European states, the US and Russia but only Australia, Japan and New Zealand from the Asia Pacific. The most important problem with MTCR is how to see that China and North Korea do not undercut the rules of the regime. This is of relatively great importance for Europeans too, since China has in the past delivered mediumrange missiles to the Middle East (SSC2 to Saudi Arabia) and North Korea seems to be in discussion with possible customers both in the Middle East and in the Maghreb region as to future deliveries of medium-range missiles that were produced in North Korea with financial assistance from the region. This subject area should be an important element of any dialogue between benevolent states both from Europe and Asia Pacific in the arms control field. After the Aum Shinrikyo attacks against the Tokyo subway and the disclosure of the international network that was sustaining this organisation,67 the necessity of co-operating internationally in fighting such organisations needed no further justification. As in the export control area, international exchange of information is needed. Beyond that, rendering technical assistance and preparing for joint,

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transboundary counter-terrorist operations could be an important element of cooperation between the states of Europe and Asia Pacific. These are the areas of common interest and possible co-operation between the states of Europe and Asia Pacific in the global arms control and disarmament field. However, as was mentioned above, regional strategic issues in the Asia Pacific region deserve the same attention. While discussing the specifics of the Asian situation, it should not be forgotten that global arms control and disarmament can have an impact on the regional situation in Asia Pacific. Various arms control measures under consideration could have, for instance, a constraining effect on China’s military modernisation, such as: • a comprehensive test ban, which would prevent China from modernising its nuclear weapons arsenals • a cut-off agreement banning the production of fissile material for nuclear weapons purposes would reduce China’s possibilities of increasing her nuclear weapons arsenal. Global arms control could also contribute to the constraining of new regional powers. There are instruments and regimes that might make it much more difficult for any new power to alter drastically the regional strategic balance. These might involve: • the NPT (Non-Proliferation Treaty), since it sets a clear limit to any member state wishing to acquire nuclear weapons; • the CWC (Chemical Weapons Convention), since it does the same in the field of CW; • the BWC (Biological Weapons Convention), since it helps to prevent states from acquiring BW; • the export control regimes, as they help to organise internationally coordinated and mainly preventive responses against possible acquisitions of unconventional weapons. The arms control instrument most often mentioned is the nuclear weapons free zone (NWFZ). In the Asia Pacific there is one existing nuclear weapons free zone —the one established by the Rarotonga Treaty. For many years the concept of a NWFZ in the South Pacific was only a wish of the twelve regional states that were parties to the treaty. Since France, Great Britain and the USA have signed the protocols in October 1995, the zone established by this treaty really has become free from nuclear weapons. Another attempt was the signing of the Treaty on the Southeast Asia Nuclear Weapon Free Zone on 15 December 1995 by the seven ASEAN states plus Laos, Cambodia and Myanmar (Burma). Unlike the Rarotonga Treaty, this instrument is not yet in force and needs the support of nuclear weapons states. China and the USA have already objected to the treaty.68

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What do NWFZs bring in terms of security? What are their possible negative effects?69 Usually the purpose of establishing a NWFZ is to contribute to two goals: 1 To make it difficult for nuclear weapons states to station or test nuclear weapons, to transfer or ship nuclear weapons into or through the region, or to threaten non-nuclear weapons states of the region with the use of nuclear weapons. 2 To add further confidence regarding the non-nuclear weapons status of regional states through acceptance of verification means additional to the NPT. In the case of the Rarotonga Treaty, only the first aspect was of importance. Shipments of US nuclear weapons and French nuclear weapons tests were the real object of the treaty. Thus, its main effect will be limited and most likely without relevance for the real security problems in the area. The SEANWFZ Treaty has a more multifaceted purpose. By adding new verification measures beyond the NPT safeguards regime, it contributes to further confidence in the region that states that are capable of building nuclear weapons are not engaged in such activities. However, for the time being, none of the signatories has significant nuclear capabilities. In the near future, only Indonesia might acquire such capabilities. Thus, it might have a limiting effect on one possible regional power—and it seems that this is the most significant value of this treaty. The treaty—if the relevant protocols were signed by the five nuclear weapons states—would also have some limited effect on the freedom of action of the nuclear weapons states in moving nuclear weapons (which no one except the US might do) or with the possible use of them (all of them, however, have declared on different occasions that none of them would use nuclear weapons against a non-nuclear weapons state). The net effect of the SEANWFZ, thus, would be minimal with respect to the goal of constraining China’s military might. One could even argue that the SEANWFZ further aggravates regional security problems. By trying to impede the shipment of nuclear weapons through the zone, one might affect mainly the US Navy. The 7th US Fleet, however, is one of the most important assets in keeping the security balance in the Asia Pacific. They can live with the Rarotonga Treaty, however, a SEANWFZ would impede their ability to pass the strait of Malacca—which might have negative consequences in a regional crisis. Furthermore, by delineating the zone in terms of territories, the member states not only took their national territories, they also included their respective continental shelves as well as their Exclusive Economic Zones (EEZ) into the area covered by the treaty. While this is understandable from the viewpoint of the signing states, it might further intensify the international dispute with China over the territorial claims in the region.

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By and large, NWFZ could play some role in increasing reassurance among the member states that none of them was secretly producing nuclear weapons. It could also serve as a means of starting a regional dialogue with China over security issues. However, these effects have to be measured against the possible negative impact on the room for manoeuvre for the US Navy. It is questionable whether a NWFZ would be a useful instrument in current Northeast Asia. Since Nuclear Weapons Free Zones are not as promising and unproblematic as often contended, other regional solutions to nuclear problems are under discussion. Especially in Northeast Asia, the establishment of a NWFZ would be impossible. However, the most pressing nuclear problems are in this region—the Korean nuclear programme, Japan’s big surplus of separated plutonium and the uncertainties over China’s nuclear weapons. While the latter problem could only be solved in a global context, the former might become subject to regional solutions. As to the Korean case, the elements of a regional solution are taking shape that would make the restructuring of the North Korean nuclear sector an international task. As regards the surplus plutonium and other elements of Japan’s nuclear sector (and not only that of Japan), a combination of global and regional approaches might be advisable. The North Korean nuclear crisis is one of the most difficult and controversial non-proliferation tasks of our time, since it is part of the end-game of the last Stalinist regimes. The crisis had its origin in a nuclear programme North Korea was pursuing that was eschewing the proliferationresistant light reactor line and instead was heading for the most proliferation-relevant reactor line: graphitemoderated reactors operating with natural uranium. Nobody knows what was driving the North Koreans to pursue this path: was it the quest for a nuclear bomb or was it the intention of remaining independent of foreign enrichment services. Most likely, it was both. The pursuance of the Korean nuclear programme went along with a growing conflict between North Korean authorities and the IAEA mainly because of the reluctance of the North Koreans to comply with provisions that they were either unable or unwilling to understand. The crisis grew hot in 1993 when the IAEA asked for a Special Inspection in North Korea after they gathered information that was irreconcilable with what the North Korean authorities had declared before. As a consequence, North Korea denounced membership in the NPT and brought events on the Korean peninsula to the brink of war.70 Everything was brought on track to an amicable solution by the US North Korean Agreed Framework from 21 October 1994, which was the product of protracted negotiations.71 According to this Framework, North Korea and the USA will co-operate to replace the graphite-moderated reactors and related facilities with light-water reactor power plants, and North Korea will again become a full member of the NPT. Under the agreement North Korea will receive, free of charge, the delivery of light-water reactors and the supply of oil for North Korean electrical power generation as long as the reactors were not yet ready. This accord was subject to harsh criticism from authors who claimed that

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this would actually reward non-compliance, set a negative precedent and would give recognition to one of the most rogue regimes in the world.72 Most critics argued from the standpoint of a typical Western arms control perspective. This agreement, however, was a typical Asian one (albeit mainly drafted and elaborated by skilful US diplomats) and it might show how the Asian way of arms control actually works. The agreement eschewed the question of who did what wrong in the past, thus allowing the North Koreans to accept a face-saving solution that will be good for the future. Its most important aspects are the renunciation of the graphite-moderated natural uranium reactor line, the end of reprocessing in North Korea, and the acceptance of the principle that spent fuel should be safeguarded and removed. As concerns these critical elements, so far North Korea has been in compliance with the agreement: already in 1994 North Korean authorities closed down their only operating nuclear reactor and stopped construction work at the others, they closed down their reprocessing facility and put 8,000 spent fuel rods under international supervision. In May 1996 the safeguarding of these fuel rods began.73 The other aspect of the agreement—the delivery of nuclear power plants and of oil—has been transferred to an international authority that was established in March 1995: the Korean Peninsula Energy Development Organisation (KEDO). The USA, Japan and South Korea are the founding members, while the European Union, Australia, New Zealand and Canada have pledged substantial funds for supporting its work and have now applied for membership.74 If everything goes as planned—and there are many uncertainties involved unrelated to the agreement itself—it might become an example of Asian-American-European cooperation in the arms control field that might find application in face of similar future challenges. As regards the Japanese separated plutonium, this is not necessarily a Japanese problem alone. Other states in the region—including China—may develop a similar interest in going into the full nuclear fuel cycle and acquiring reprocessing facilities. In two earlier cases (South Korea and Taiwan) the US Administration was successful in convincing them to forego this option, Japan, however, for reasons which are consistent with her declared energy policy, has insisted on reprocessing plutonium and on using it in light-water reactors and fast breeder reactors. It would be counterproductive to press Japan, as some authors have suggested, to give up her policy of recycling plutonium. Again, an Asian—or better a combined Asian-European—solution might be feasible instead of a clear-cut arms control solution. One idea was to test whether the model of the European Atomic Agency (EURATOM) could be successfully adopted to East Asian circumstances. EURATOM is a rather unique supranational organisation. Today it is part of the European Union, but in theory it could work without the broader framework of the Union. It fulfils a set of certain functions, among them the following:75

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• to promote the use of civil nuclear energy and to facilitate investment in the basic installations necessary for the development of nuclear energy; • to devise and supervise safety and security standards within the Community; • to ensure that all users in the European Community receive a regular and equitable supply of ores and nuclear fuels; • to make certain, by appropriate supervision, that nuclear materials are not diverted to weapons purposes; • to exercise the right of ownership conferred upon it with respect to special fissile materials; • to establish relations with other countries and international organisations in order to further progress in the field of peaceful uses of nuclear energy. The question is: what would be the advantages of establishing an Asian counterpart to EURATOM—something that could be dubbed ASIATOM? Who should participate? What militates against such an endeavour? The advantages would be that the supply of special fissile materials would be organised by the Agency, which also would hold formal ownership of the material. This would allow, for instance, control by the Agency of sensitive facilities such as enriching uranium or separating plutonium. It would also allow ASIATOM to set up its own system of safeguards that could either substitute or supplement the existing IAEA safeguards. It might be useful, for instance, to establish some kind of special inspection regime among the participating states similar to the system devised for the Southeast-Asian Nuclear Weapons Free Zone. In sum, it could help to alleviate mistrust among neighbouring states, increase nuclear material supply security, increase the international leverage of the member states and it could be the first element of a larger process of community building in the region. Among those who should join such an organisation would be Japan, South Korea (and hopefully the North) and the ASEAN countries. It would be desirable to have China as a member. However, this seems to be difficult. A problem would be the membership of Taiwan—even if China was not a member—and its inclusion in the daily work. ASIATOM could be founded as part of a major international effort to change the face of East Asia. It could also, however, grow incrementally from existing or planned organisations such as KEDO and the organisation for the supervision of the Southeast-Asian Nuclear Weapons Free Zone. What militates against this idea is the lack of experience in this field and the high degree of enmity between Japan and both Koreas and the mistrust in the region towards Japan. The huge distances between the northern part of this community and its southern parts (ASEAN) might also be a problem. However, a special Asian variation to this idea cannot be excluded. For the time being, ASIATOM is still an idea and certainly needs more and thorough deliberation. The Asia Pacific region contains some states which have been exporters of missiles and dual-purpose material and technology in the past. This is true

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especially with respect to China76 and North Korea, but others were involved too. The multilateral export control fora such as MTCR, NSG, ZanggerCommittee and the Australia Group were only partially able to solve these problems, since not all relevant states are members of these groups. The recent bilateral talks between the USA and North Korea have shown that the problem is serious enough to warrant further action. The US is especially anxious to prevent North Korean missile sales to rogue states in the Middle East and North Africa. The question is whether it might be useful to establish a regional dialogue forum discussing questions of dual-purpose exports, missile exports and conventional arms exports. A model could be the CSCE/OSCE dialogue on export controls which has brought about at least agreement on certain principles guiding national export policies. These, and other measures, can provide a full agenda for Europeans and Asians who are ready to tackle their mutual interest in arms control and security. Europeans can help a lot in this respect, since their experience with arms control is relatively long and rather successful. In doing so, it is clear that Europeans should avoid measuring Asia Pacific against the European yardstick. The differences are striking—not only in terms of strategic culture but also in terms of the overall strategic setting. The high time of arms control in Europe came when the superpower Soviet Union crumbled. In contrast, Asia Pacific has the problem of how to cope with one if not two or three emerging superpowers. NOTES 1 The essence and role of Lite powers is developed in Barry Buzan and Gerald Segal, ‘The rise of Lite powers’, World Policy Journal Vol. 13, No. 3 (Fall 1996) and in Anticipating the Future (London: Simon & Schuster, forthcoming 1998). 2 See Paul Krugman, ‘The myth of Asia’s miracle’, Foreign Affairs (Nov-Dec. 1995); Chris Patten, ‘Asian values and Asian success’ in Survival, Vol. 38, No. 2 (Summer 1996), and Gerald Segal, ‘The joys of criticism’ in Worldlink (MarchApril 1996). 3 For a discussion of the changes in the Japanese case see ‘An Attractive Japan’, The Keidanren’s Vision for 2020 (Keidanren, Tokyo, January 1996). 4 Donald Emmerson, ‘Singapore and the Asian values debate’, Journal of Democracy, Vol. 6, No. 4 (October 1995). 5 Geramie Barme, ‘To screw foreigners is patriotic’ in The China Journal, No. 34 (July 1995). 6 David Goodman and Gerald Segal (eds), China Deconstructs (London: Routledge, 1994). 7 Michael Yahuda, The International Politics of Asia Pacific (London: Routledge, 1996) and Gerald Segal, Rethinking the Pacific (Oxford: Oxford University Press, 1990). 8 Paul Dibb, Towards a New Balance of Power in Asia, Adelphi Paper No. 294 (Oxford: Oxford University Press, 1995). Thomas Wilborn, International Politics in Northeast Asia (Carlisle PA: Strategic Studies Institute, March 1996), Jonathan

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Pollack and Hyun-Dong Kim (eds), East Asia’s Potential for Instability and Crisis (Santa Monica: RAND, 1995). Gerald Segal ‘East Asia and the ‘constrainment’ of China’, in International Security (Spring 1996). Mark Valencia, China and the South China Sea Disputes, Adelphi Paper No. 298 (Oxford: Oxford University Press for the IISS, 1995). ‘Asia Pacific security backgrounder’, Pacific Research (Nov. 95-Feb. 1996). Michael Leifer, The ASEAN Regional Forum, Adelphi Paper No. 302 (Oxford: Oxford University Press, 1996). Some East Asians had a different perspective on the events of March 1996. See ‘East Asia after the Taiwan crisis’, in Strategic Comments (April 1996) and The Far Eastern Economic Review (21 March 1996), p. 16. ‘East Asia after the Taiwan crisis’, in Strategic Comments (April 1996) and two polls among senior business executives in The Far Eastern Economic Review (21 and 28 March 1996) showing 62 per cent thought China was a threat to regional stability and strong support for tough action against China (only 0.5 per cent thought that China’s pressure on Taiwan should be supported). For reactions to the United States—Japanese accord in April see a survey from the US Information Agency, 19 April 1996. James Shinn (ed.), Weaving the Net (N.Y.: Council on Foreign Relations, 1996). See in particular, Gerald Segal’s contribution just above. Even Leifer in The ASEAN Regional Forum who knows more about ASEAN has fallen into the same trap as other European scholars in judging the ARF by European standards and by being too impatient with the process of building confidence in the region. The main objective of ASEAN is in preventing conflict in the future. The bottom line is that the Asia Pacific countries are the ones that will be responsible for their region, and that Europeans will play a respectable but rather complementary role in the Asia Pacific. James Baker III, ‘America in Asia: emerging architecture for a Pacific community’, Foreign Affairs, Vol. 70, No. 5 (Winter 1991), p. 12. For instance, see Byung-Joon Ahn, ‘Scenarios for the Post-Kim II Sung Korea and their regional implications’, Institute of Foreign Affairs and National Security, The Future of North Korea: Implications for the Korean Peninsula and Northeast Asia (1995), pp. 41–60. For details about the proposal, see IFANS Review, Vol. 2, No. 6, pp. 33–6. Han Sung-Joo, Korea in a Changing World (1995), pp. 137–8. Ralph A.Cossa, ‘The major powers in Northeast Asian security’, McNair Paper No. 51 (1996), p. 45. Patrick Morgan, ‘Multilateralism and security: prospects for Europe’, in John Gerard Ruggie (ed.), Multilateralism Matters: The Theory and Praxis of an Institutional Form (1993), p. 340. According to Alagappa, insecurity and conflicts at the domestic level pose a dilemma for multilateral security co-operation. In many ways, they are the most serious conflicts that can spill over into neighbouring countries and give rise to interstate conflicts. However, as states enter into multilateral co-operation normally based on the principles of sovereignty, territorial integrity and noninterference in domestic affairs, a multilateral forum is precluded from any formal role in domestic conflicts. Moreover, multilateral mechanism usually will not have the necessary

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resources to address the highly complicated domestic conflicts. See Muthiah Alagappa, ‘Regionalism and security: a conceptual investigation’, in Andrew Mack and John Ravenhill, Pacific Cooperation: Building Economic and Security Regimes in the Asia Pacific Region (1994), pp. 174–7. Anthony Lake, ‘From containment to enlargement,’ Speech at the School of Advanced International Studies, Johns Hopkins University, September 21, 1993. The two loci classici of this argument are Bilihari Kausikan, ‘Asia’s different standard’, Foreign Policy, no. 92 (Fall 1993), pp. 24–41; and Kishore Mahbubani, ‘The dangers of decadence’, Foreign Affairs, 72:4 (September-October 1993), pp. 10–14. For analysis, see Yosh Ghai, ‘Human rights and governance: the Asia debate,’ Occasional Paper no. 4, Center for Asian Pacific Affairs, The Asia Foundation, San Francisco, 1994. For an overview of the growing reservations about the American strategy of transforming Asia, see Harry Harding, ‘Promoting human rights in Asia: American and Australian approaches,’ in Roger Bell, Tim McDonald, and Alan Tidwell (eds), Negotiating the Pacific Century: The ‘New’ Asia, the United States and Australia (St Leonards, Australia: Allen and Unwin, 1996), pp. 268–94. For an overview of the process of international institution-building in the Asia Pacific region, see Harry Harding, ‘International order and organisation in the Asia Pacific region’, in Robert S.Ross (ed.), East Asia In Transition: Toward a New Regional Order (Armonk, N.Y.: M.E. Sharpe, 1995), pp. 325–55. Winston Lord, ‘A new Pacific community: ten goals for American policy’, Opening Statement to the Senate Committee on Foreign Relations (March 31, 1993); and ‘Building a Pacific Community,’ Speech to the Commonwealth Club (January 12, 1995). For such a sceptical view, see Robert A.Manning and Paula Stern, The myth of the Pacific community’, Foreign Affairs, 73:6 (November-December 1994), pp. 79– 93. For two articles warning of a long-term Chinese threat to Asian security and advocating a policy of containing China, see Denny Roy, ‘Hegemon on the horizon? China’s threat to East Asian security’, International Security, 19:1 (Summer 1994), pp. 149–68; and Gideon Rachman, ‘Containing China’, The Washington Quarterly, 19:1 (Winter 1996), pp. 129–39. The fullest warning about the rise of Chinese power, but one that stops short of advocating a policy of containing China, is Richard Bernstein and Ross H.Munro, The Coming Conflict with China (New York: Alfred A.Knopf, 1997). Chalmers Johnson and E.B.Keehn, ‘The Pentagon’s ossified Strategy,’ foreign affairs, 74:4 (July-August 1995), pp. 103–14. For an official defence of continued American strategic engagement in Asia, written primarily to counter the proponents of American strategic withdrawal from the region, see Joseph S.Nye, Jr., ‘The case for deep engagement’, Foreign Affairs, 74:4 (July-August 1995), pp. 90–102. A study group organised by the Council on Foreign Relations provided an endorsement of this strategy from outside government. See Redressing the Balance: American Engagement with Asia, Asia Project Policy Report (New York: Council on Foreign Relations, 1996). Washington Post (January 14, 1997), p. A13. Speech to the Center for International and Strategic Studies (May 9, 1996).

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37 For a comprehensive discussion of the role and position of the United States in the world, see Xi Laiwang, Meiguo Guoji Diwei De Lishi Quxiang (On the trends of America’s role in the world) (Kaifeng: Henan University Press, 1992). 38 See, for example, Huang Su’an, ‘Meiyuan Bianzhi He Meiguo Jingji Shili Xiangdui Shuailuo’ (The devaluation of US dollars and the relative decline of US economy), in Guoji Wenti Yanjiu (Journal of international studies), No. 3 (1995), pp. 20–5. 39 He Fang, ‘Duoji Geju Zhengzai Xingcheng, Chaoji Daguo Jiangcheng Lishi’ (The multipolar structure is becoming reality, and the superpower will become history), Jiefang Ribao (Liberation daily) (April 22, 1996), p. 4. 40 For this view, see Liu Shan, ‘Jingji Fazhan Gaibian Zhe Guoji Guanxi’ (Economic development is changing international relations), Shijie Zhishi (World affairs), No. 3 (1994), pp. 8–10. 41 An interview with Chen Xuanitng on Europe-US relations in 1995, Guangming Ribao (Guangming Daily) (December 16, 1995), p. 3. 42 Zhou Rongyao, ‘Shui Zhudao Ouzhou’ (Who leads Europe), Ouzhou (Europe), No. 1 (1995), pp. 49–52. 43 Zhang Yuyan, ‘Meiguo: Guancha Shijie De Yige Qieru Dian’ (The US: a special perspective to perceive the world), Shijie Zhishi, No. 9 (1996), p. 25. 44 Liu Xiaojun, ‘Meiguo Tuixing Xin Taipingyang Gongtongti Yiyu Hewei’ (Why is the United States proposing New Pacific Community), Guoji Zhamvang (World outlook), No. 3 (1994), p. 23. 45 An interview with Xiao Feng on North-South relations in 1995, Guangming Ribao (December 21, 1995), p. 4. 46 An interview with Chen Zhiyun on Latin America in 1995, Guangming Ribao (December 29, 1995). 47 See Jin Canrong’s summary of discussions at a symposium held by the Institute of American Studies at the Chinese Academy of Social Sciences in March 1995. Meiguo Yanjiu (American studies), No. 3 (1995), pp. 145–7. 48 The characterisation of ‘one superpower, several great powers’ (Yichao Duoqiang) seems to have had some kind of official endorsement as the phrase appears in a few authoritative documents. But there are also direct challenges to this notion. See, for example, He Fang, op. cit, in his Jiefang Ribao article. 49 Wan Guang, ‘Meiguo Duiwai Zhanlue Tiaozheng Zhong De Wenti’ (Questions in the adjustment of US foreign strategy), Xiandai Guoji Guanxi (Contemporary international relations), No. 1 (1996), p. 10. 50 See, for example, Wang Jisi, ‘Meiguo Bing De Weixie’ (The threat of the American disease), Guoji Jingji Pinglun (International economic review), No. 2 (1996), pp. 45–6. 51 Wang Jisi, ‘China’s muscular nationalism’, New Perspective Quarterly (Winter 1995/96), p. 43. 52 Wan Guang, op. cit., p. 10; Sa Benwang, op. cit., p. 3; Wang Shu, ‘Yanjiu Bianhua Zhong De Shijie’ (Observe the world in transition), Guoji Zhanwang, No. 14 (1994), pp. 1–4; and Jin Junhui, ‘Kelindun Zhengfu Waijiao Zhengce Sixiang Chutan’ (A preliminary discussion of the Clinton administration’s foreign policy thinking), Guoji Wenti Yanjiu, No. 2 (1994), pp. 12–14.

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53 Li Zhigu, et al., Meiguo Quanqiu Zhanlue Da Tiaozheng (The great adjustment of the global strategy of the United States), Chengdu: Sichuan People’s Publishing House (1993), p. 192. 54 Pan Shiying, Xiandai Zhanlue Sikao—Lengzhan Hou De Zhanlue Lilun (Contemporary strategic thinking: a theory for the post-Cold-War strategy) (Beijing: World Affairs Press, 1993), p. 41. 55 Chen Jun, ‘Jia Qiang Jieru, Kuoda Yingxiang—Meiguo Dongya Taipingyang Diqu Zhanlue Xin Gouxiang’ (Deepening engagement and expanding influence: America’s new regional strategic conception in East Asia and Pacific), Shijie Zhishi, No. 7 (1995), pp. 6–7. Also see Pan Shiying, op. cit., pp. 40–4, and Li Zhigu, op. cit., pp. 185–201. 56 Pan Shiying, op. cit., pp. 43–4. 57 Wang Chunyin, ‘21 Shiji Chu Yatai Anquan Xingshi Zhanwang’ (A forecast of the situation in Asian-Pacific security in the beginning of the 21st century), Xiandai Guoji Guanxi (Contemporary international relations), No. 4 (1996), p.7. 58 Wen Weiji, ‘Meiguo Mouqiu Shijie Zhudao Diwei De Junshi Zhanlue’ (The US military strategy aimed at a leading role in the world), Xiandai Guoji Guanxi, No. 3 (1996), p. 5. 59 Han Gaorun and Song Zhongyue, Dongya Heping Yu Hezuo (Peace and cooperation in East Asia) (Beijing: National Defense University Press, 1994), p. 124. 60 Chen Zhijiang, ‘Rimei Angao Gongtong Xuanyan—Yige Weixian Xinhao’ (JapanUS joint security declaration: a dangerous signal), Guangming Ribao (April 16, 1996), p. 3. 61 An interview with Zhu Chenghu of the National Defense University of China on Channel 7 of China’s Central TV Station, May 17. Also see Chen Zhijiang, op. cit., p. 3. 62 Yang Jian, ‘Meiri Jiaqiang Junshi Lianmeng Buliyu Yatai Diqu Wending’ (The strengthening of US-Japanese military alliance is not beneficial to Asia Pacific regional stability), a summary of a symposium held in Shanghai, Jiefang Ribao (April 19, 1996), p. 4; Zhang Wei, ‘Zhi De Bianhua’ (A change in nature), Jiefang Ribao (April 25, 1996), p. 4; and Zhang Yifan, ‘Mei Yu La Ri Ruhuo Lianshou Chengba Yatai’ (America intends to draw Japan into its gang to seek joint hegemony, Jiefang Ribao (April 30, 1996), p. 3. 63 Zhang Yifan, op. cit., and Zhou Xiitng, ‘Kelindun Fang Han Ri E Zhuyao Tan Anquan Wenti’ (Clinton’s visits to Korea, Japan and Russia are focussed on security issues), Jiefang Ribao (April 16, 1996), p. 4. 64 Gao Fengyi, ‘Huaitngdun Xunqiu Jiaqiang Meiri Anquan Hezuo’ (Washington seeks to strengthen US-Japanese security co-operation), Guangming Ribao (April 17, 1996), p. 3. 65 Cheng Qizhen, ‘Dongya Guojia Dui Meiguo Yazhou Zhengce De Huiying’ (East Asian countries’ response to America’s Asia policy), Guoji Wenti Yanjiu, No. 3 (1995), pp. 29–32. 66 See Graham T.Allison, Owen R.Coté, jr., Richard A.Falkenrath and Steven E.Miller, Avoiding Nuclear Anarchy—Containing the Threat of Loose Russian Nuclear Weapons and Fissile Material (Cambridge, Mass.: CSIA Studies in International Security No. 12, January 1996).

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67 See ‘Global proliferation of weapons of mass destruction: a case study on the Aum Shinrikyo’, Staff Report, US Senate Permanent Subcommittee on Investigations (Minority Staff), Washington, D.C. (October 31, 1995), memo. 68 See ‘Programme for promoting nuclear non-proliferation, PPNN-Newsbrief, No. 32 (4th Quarter 1995), p. 2; see text of the Treaty in the same issue, pp. 24–8. 69 To the general aspects see Jon B. Wolfsthal, ‘Nuclear-weapon-free zones: coming of age?’, in Arms Control Today, Vol. 23, No. 2 (March 1993), pp. 3–9; see also Zachary S.Davis, ‘The spread of nuclear-weapon-free zones: building a new nuclear bargain’, in: Arms Control Today, Vol. 26, No. 1 (February 1996), pp. 15–19. 70 For accounts of the history of the crisis see Alexandre Y.Mansourov, ‘The origins, evolution, and current politics of the North Korean nuclear program’, in The Nonproliferation Review, Vol. 2, No. 3 (Spring-Summer 1995), pp. 25–38; see also Michael J.Mazarr, North Korea and the Bomb, A Case Study in Nonproliferation (London: St Martin’s Press, 1995). 71 Text in Arms Control Today, Vol. 24, No. 10 (December 1994), p. 19. 72 An overview of the arguments can be found in Michael J.Mazarr, ‘Going just a little nuclear: nonproliferation lessons from North Korea’, in International Security, Vol. 20, No. 2 (Fall 1995), pp. 92–122. 73 See Associated Press from 25 April 1996. 74 The European Union is planning to let EURATOM become a full member of KEDO; over the next five years the European Commission will contribute 15 million Ecu annually for KEDO’s budget and will provide technical assistance; in February 1996 the EU Minister Council had already contributed 5 million Ecu; Australia contributed 8 million Dollars in 1995 and 2 Million in 1996, cf. Australian Associated Press Report from 15 April 1996 and XINHUA Press Agency Report from 24 April 1996 (both retrieved from CompuServe Executive News Service). 75 Cf. Darryl A.Howlett, EURATOM and Nuclear Safeguards, (London: Southampton Studies in International Policy, 199), p. 1. 76 See R.Bates Gill, The Challenge of Chinese Arms Proliferation: US Policy for the 1990s, Carlisle Barracks, PA (US Army War College—Strategic Studies Institute, August 1993); see also Richard A.Bitzinger, ‘Arms to go: Chinese arms sales to the Third World’, in International Security, Vol. 17, No. 2 (Fall 1992), pp. 84–111.

5 European and Asian policies

In the previous section, most of the analysis focused on the main features of Asian security. That material made only passing reference to EuropeanAsian relations, in large part because Europeans and Asians are not major players in each other’s security affairs. Earlier sections dealing with economic affairs did discuss European-Asian relations more directly. Now we turn to the more integrative process of understanding European and Asian policies towards each other in a more rounded fashion. The first point to make is that there is rarely any significant unity in the way either Asians or Europeans relate to each other. Europeans may have more formal structures for co-ordinated policy, but the reality is more of diversity. In the case of Pacific Asia, such diversity is openly acknowledged. It was not until the ASEM process got underway in 1996 that East Asians began caucusing on a regular basis on matters of high policy. In fact, given this new tendency for both Europeans and Asians to caucus in their own regions as they think about relations across Eurasia, it is all the more important to understand the history of the policy process and its new trends. This chapter draws on eight papers looking at four major aspects of Asian and European policies. The first three pairs of pieces consider the major sub-regional dimensions of the relationship, and the final pair looks at policies towards international institutions. We begin with what is still the most sophisticated of EuropeanEast Asian relations, that between Europe and Northeast Asia. EUROPE AND NORTHEAST ASIA Yoshihide Soeya, one of the younger and more innovative Japanese scholars, starts us off with a critical look at European-Japanese relations. In his view, except for some economic issues, Europe and Japan have remained mostly uninterested in each other during much of the post-war

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period. As one might expect, the state of the US-Japanese alliance remains pre-eminent. YOSHIHIDE SOEYA European-Japanese co-operation in the promotion of a stable regional order in the Asia Pacific has global and regional dimensions. The former entails, firstly, dynamics of major power relations particularly between Japan, China and the United States, and, secondly, global issues such as non-proliferation of nuclear and conventional weapons and assistance to Russia. This dimension has longterm implications for the development of a regional order in the Asia Pacific. The latter pertains to participation of Europe and Japan in the evolving process of multilateral security cooperation in the region and the settlement of regional and sub-regional issues. It is clearly recognised now by both Tokyo and Washington and is widely accepted in the Asia Pacific if not by all, that the USJapanese security relationship is a stabilising factor in the Asia Pacific region. Despite lingering constraints, signs indicating that the policy elites in Japan now see the mission of the Japanese-US security relationship in a broader context are unmistakable. A New Defence Programme Outline adopted in November 1995 to replace the 1976 Taiko (Defence Programme Outline) stated that The security arrangements with the United States are indispensable to Japan’s security and will also continue to play a key role in achieving peace and stability in the surrounding region of Japan and establishing a more stable security environment…. Additionally, this close co-operative bilateral relationship based on the Japan-US Security Arrangements, facilitates Japanese efforts for peace and stability of the international community, including promotion of regional multilateral security dialogues and co-operation, as well as support for various United Nations activities.’ The contact between the Japanese and US defence establishments to promote this new logic has expanded. The key theme has been to shift the emphasis of the bilateral security treaty from the defence of Japan to Japanese support for the US military presence and mission in the Asia Pacific. The task of ‘re-defining’ the US-Japanese security relationship came to fruition with US President Bill Clinton’s visit to Japan in April 1996. The Joint Declaration listed five specific areas where efforts to advance security cooperation will be undertaken: (1) continuation of close consultation; (2) review of the 1978 Guidelines for Japan-US Defence Co-operation, including studies on ‘bilateral co-operation in dealing with situations that may emerge in the areas surrounding Japan and which will have an important influence on the peace and security of Japan’; (3) promotion of bilateral co-operation on the basis of the Acquisition and Cross Servicing Agreement (ACSA); (4) mutual exchange in the areas of technology and equipment including bilateral co-operative research and development of equipment; and (5) prevention of proliferation of weapons of

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mass destruction and their means of delivery and continuation of the study on ballistic missile defence. Naturally, there arose a concern about a possible excessive expansion of Japan’s security role in the region from both some corners in Asia and the Japanese public and mass media. Domestically, the debate concerning the right of collective defence, which is currently denied by the government’s interpretation of the Japanese Constitution, has become lively. The domi nant thinking in the government, however, is to accomplish this new security mission without changing the current governmental interpretations of constitutional constraints. Although Europe is not a direct party to these security arrangements and developments, a clear statement in support of the general direction of the redefinition of the US-Japanese security alliance would be a great contribution to sustaining the momentum. Precisely because of the paramount importance of a sustained US presence in the region, Japan and Europe share a concern about the US propensity to resort to unilateralism. Although Washington officially supports multilateral efforts in the ARF on the assumption that they are compatible with American bilateral security arrangements with Asian countries, multilateralism by definition is anathema to US unilateralism.. Thus a central mission of EuropeanJapanese co-operation is to continue to encourage the United States towards multilateral political and security co-operation in the Asia Pacific. This could be pursued through Japan’s continued support of the US military presence in Japan under the overall scheme of the reaffirmed security relationships, the enhancement of European interest in East Asian political and security affairs, and the continuation of close consultation among the trilateral countries. As in Europe and other parts of the world, nuclear non-proliferation has been high on the agenda of Japanese diplomacy in the post-Cold-War era. There is no need to emphasise the importance of joint actions between Europe and Japan in this area. The Japanese government submitted a resolution to the 49th UN General Assembly on ‘Nuclear disarmament with a view to the ultimate elimination of nuclear weapons’. It called for nonparties to the NPT to accede to it and for nuclear states to pursue nuclear disarmament. Although the resumption of nuclear testing by France caused some commotion in the European-Japanese partnership as well as in Europe, an earlier conclusion of CTBT and the consolidation of the CTBT regime soon came to be recognised as more important. In the area of conventional weapons transfers and arms control, the UN Register of Conventional Arms commenced operations in January 1992 as a result of European-Japanese joint initiatives. In the first register in 1992, ninetythree countries reported their transfers of offensive weapons, while in the 1993 register eighty-three countries did. Clearly Europeans and Asians can do much more in the Asia Pacific in order to help Asian countries to acquire weapons in a more transparent environment.

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Although the extent of influence will remain limited, it is important for Europe and Japan to remain in close contact regarding the future of Russia. Aside from economic assistance, partly as a result of European encouragement, Japan has concluded bilateral agreements with Russia, Ukraine, Kazakhstan and Belarus to set up frameworks for implementing aid for assisting the disposal of nuclear weapons. Japan has also taken part in the International Scientific and Technological Centre to prevent the proliferation of the technologies and knowhow of weapons of mass destruction. These joint efforts should be continued and developed further. The view from Europe of these, and indeed wider issues including South Korea, comes from Simon Nuttall, once a senior ‘Eurocrat’, and now an academic specialist. Simon Nuttall was a maker of some of the policies he describes, and yet his tone remains only cautiously optimistic. When comparing EU relations with Japan and South Korea, he sees a remarkable range of similarities. Nevertheless, and not surprisingly, his stress is on EU rather than national policies towards Japan and South Korea. SIMON NUTTALL Japan and Korea are very different countries, not only in their respective economic and political situations, but also in the attitudes they adopt towards the European Union. Japan is only mildly interested in the EU. Its main foreign policy concern is the conduct of relations with the United States, whom it rightly sees as its main supplier of security and principal source of difficulties in trade policy, especially market access, questions. The EU attracts Japanese attention only sporadically, when it is prepared to lend itself as a counterweight in trade negotiations with the US, or when it is a force to be reckoned with in multilateral trade negotiations. For the rest of the time, governmental relations between Japan and the EU are a recondite hobby for the elite. Korea’s attitude is significantly different. Although as much if not more dependent on the United States for its security, its attitude towards the European Union is more forthcoming than that of Japan. This may be because the US presence is more immediate to the Korean in the street. If US forces were concentrated in downtown Tokyo, as until recently they were in downtown Seoul, the Okinawa effect might be more widespread in Japan. Again, peninsular Korea may have a sharper intuition of the need for a range of diplomatic alliances than insular Japan. Whatever the reason, Korean diplomacy actively seeks a stronger relationship with the EU in a way which Japanese diplomacy does not. In the circumstances, then, it is surprising that the EU’s policies towards the two countries do not differ more than they do. Both are based on sustained pressure for improved market access combined with a readiness for co-operation in as many fields as can be mustered. In both cases, the market access branch of

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the policy is more highly developed than the cooperative branch. It has lasted longer, and it corresponds more closely to those areas in which, by reason of its internal development, the EU is a strong player. The main difference between the two policies is the degree of enthusiasm with which each is pursued. Considerable attention is paid by the EU authorities (member states and EU institutions) to relations with Japan, whereas they have to be continually reminded to have a policy towards Korea. This is scarcely surprising: Japan is big, Korea is less big. Japan has excited the curiosity of the Western world for the best part of 150 years, while Korea is still being discovered. Japan is a developed, postmodern industrialised country with which in spite of many peculiarities the West can feel considerable affinity, while Korea in many ways is still in a phase of rapid development and thus operates on a different social and economic wavelength from the West. Any similarities between the EU’s policies towards the two countries, however, is the outcome of chance rather than determination. The EU has historically not been in the habit of co-ordinating its policies towards countries in the Asia Pacific region. When towards the end of 1994 the Commission was called upon to implement the new Asia strategy for which it had sought and secured Council approval, it found it had little alternative but to continue to develop the policies already in existence with respect to the different Asian countries. The instruments were lacking, particularly on the Asian side, to implement globally the new strategy which had been globally conceived. It was claimed that these separate policies were to be seen as part of an overall concept, but this was merely presentational: the policies themselves underwent no significant changes as a result. There are signs that this is now changing. If a new approach to Asia policy materialises, it will be as part of the co-operative process flowing from the AsiaEurope meeting in Bangkok in March 1996. This meeting, held at the initiative of the Asian participants, may well lead to the development of a new permanent forum in which relations are not confined to bilateral channels. This in turn could be the catalyst for the European Union to apply itself to the remodelling of its bilateral polices towards Asian countries to form a coherent whole. The usefulness of such an approach is undeniable. The European Union’s interests in the Asia Pacific region are primarily economic, but these economic interests cannot be adequately preserved without military and political, as well as economic, stability. This is not to say that the EU’s policy approach must itself therefore necessarily contain military and political features, but it must be forged with its impact on military and political, as well as economic, conditions in mind. Such a policy approach could well bring about changes in the EU’s policies towards Japan and Korea, as well as other Asia Pacific countries, in particular China, Taiwan, the ASEAN countries and Australia. When Simon Nuttall looks deeper into the relationship with Japan, there emerges a pattern of increasingly thickening threads of contact. But clearly

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there have been difficult periods and the relationship remains fragile because of a relative lack of interest in each other shown by both sides. On the Japanese side the fragility may be ascribed to resentment in the early days of the relationship at being subjected to a never-ending barrage of demands and recriminations on trade questions; to failure to comprehend the very nature of the EC/EU, which fell outside all the categories discussed in their handbooks of international law; and above all to obsession with the United States, not surprisingly given that country’s unique position—only the second invader in the long history of Japan, and the first successful one. On the European side the relative lack of interest can be mainly ascribed to the incomplete state of institution-building within the Union. Unlike the member states, the Union lacks the capacity to formulate a comprehensive foreign policy. Unlike the Union, the member states lack the weight to endow their policies with significant diplomatic effect. And the Union itself has been preoccupied in recent years with other more pressing concerns— the developments in Eastern Europe, the collapse of the Soviet Union and the conflict in former Yugoslavia. Paradoxically, the failure on both sides to concentrate adequately on maintaining the relationship has been aggravated by the relative success in eliminating longstanding trade disputes. Market-access negotiations were never agreeable occasions, but they had this merit, that at least the two sides spoke to each other while they were going on. One result of the relative lack of interest in the relationship is that inessential, even peripheral issues can come to dominate it. The relationship has been historically biased towards trade issues because of the peculiar structure of the EC/EU side. The Community’s responsibility for the sole conduct of trade policy, set out in the Treaty of Rome, had to be vigorously asserted, and Japan was the first country with which trade negotiations were engaged. The European Community conducted towards Japan the only policies it was capable of conducting. The approach currently being followed is one of conversation, not confrontation. A more balanced policy is being pursued, which marries continued pursuit of market access with a series of dialogues seeking greater cooperation between the two sides. These cover areas like industrial cooperation, environmental questions, development aid policy, social issues and scientific and technological co-operation. However, these dialogues are slow to develop and have so far delivered few concrete results. At the same time, a more emollient tone has crept into the discussions on trade issues. The conversational approach is not necessarily more effective than confrontation—there is no evidence that either works particularly well—still less is it an end in itself. But it is the only course which gives any room for manoeuvre in the current state of US-Japanese and EU-Japanese relations. Japanese society is in the process of undergoing an important and significant change, which makes Japan the natural partner of the Europeans in the Asia

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Pacific region. In a word, to distort the argument of James Fallows’ 1989 cultural blockbuster, the Japanese are becoming ‘more like us’. The time is right to work for a strengthened partnership between Japan and the EU. But such a partnership must have a purpose. To look for partners for the sake of having partners may enable diplomats to fill in an idle hour, but does not contribute to the stability and well-being of mankind. The purpose of a partnership between Europe and Japan would be to work together to prevent the United States from following policies which risk severely damaging the operation of the multilateral trading system. Much of the political and academic discourse over the last two decades, in both America and Europe, has turned on the conviction that the Japanese are different. This assumption has underpinned trade policy especially, and has been the basis of a solid industry in books, usually polemical, about the special nature of the Japanese economy. Whatever the reality may have been in the past, it is clear that the Japanese have increasingly more in common with the Europeans and the Americans, and that they have significantly more in common with them than does any other Asian nation. They are increasingly confronted with the same sort of problems as are the Europeans and the Americans, and are increasingly making the same sort of response. Even when this is not the case, the fact that the problems are the same or similar creates an identity of interest and the basis for a deeper dialogue. Before a stronger relationship can be built up between the European Union and Japan, the obstacles have to be removed. The European Union has to get its act together by working out ways in which the whole range of potential subjects for dialogue can be addressed at Union level. What is more, to improve the frequency of encounters will require a significant investment in effort, time and money. The inadequacies of the political dialogue can be largely explained by its haphazard nature and the scant resources devoted to it. The EU should treat the Japanese, for the purposes of political dialogue, in the same way as they treat the Americans. Other areas of dialogue should be reviewed, especially on development aid. On the Japanese side, administrative changes should be made, including a stronger EU unit in the Gaimusho and measures to alter the ethos of inter-ministerial coordination. The dialogue should extend beyond the public sector: in addition to classical industrial co-operation, there should be many more conferences and seminars bringing together business and academic circles. A strengthened relationship on these lines, with a full programme of activities and the intensified involvement of the member states, will require a new structure at EU level. The EU and Japan should conclude a Framework Agreement to provide both a legal basis for a wider range of activities and an incentive for a deeper relationship. An Agreement would make it easier to remove some of the obstacles mentioned above. It would be a Mixed Agreement, which under EC law covers matters of both EU and national competence. It thus involves the member states directly and avoids exporting into the EU-Japanese relationship difficult internal questions of competence.

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Such an Agreement should also, however, have a wider purpose than merely strengthening the bilateral relationship. It should enshrine the commitment of both sides to multilateralism and especially to the multilateral trading system. The United States’ presence is indispensable for security purposes, and the European Union neither could nor should attempt to displace or rival it. There are in any case no strong European security interests in the region, beyond a universal interest in stability. The European Union and Japan do however share an interest in preserving the multilateral system, which US policy seems increasingly to threaten. Recent examples are the car-parts negotiations and the US attitude on the financial services and telecommunications negotiations in Geneva. This could be an individual European-Japanese contribution to shaping the world order. Simon Nuttall goes on to argue that the EU’s policy towards the Republic of Korea has tended to shadow its policy towards Japan at approximately ten years’ distance. Even less is known about South Korea, which has tended to be seen exclusively as an ‘Asian tiger’ and thus as an economic threat to the Community, to be warded off by the traditional means of trade policy. Market-access questions have been the dominant theme of diplomatic discourse. Penetrating the Korean market has seemed exceptionally complicated and difficult, and the Korean trade negotiators have appeared to be even more recalcitrant and conservative than their Japanese counterparts. This is of course not a cultural phenomenon, but rather reflects the extent to which sectoral interests have guided trade policy in a country which is still engaged in a very rapid transition from a developing to a developed economy. The European Union is still locked in to the concept of Korea as a presentday trading rival and potential market. The recently initialled Framework Agreement should clear the way for a wider co-operative relationship, but cannot come into force for some time. There is an urgent need for the Union to rethink its Korean policy in terms of its interests in maintaining the stability of the Northeast Asian region. For this, an effort should be made to put policies towards Korea, China, Japan and Taiwan (and indeed Russia, in its Siberian component) into an interlocking, if not integrated, whole. The intensification of relations between the EC and ROK is a recent phenomenon. It dates from 1989, when the Commission set up a Delegation in Seoul. The year before, Korea had established a separate Mission in Brussels (previously a single Embassy had been accredited to Belgium and to the EC). Until then, contacts had been limited to sporadic meetings between the Korean Minister of Foreign Affairs and the responsible Commissioner, but these were not very productive since there was no mechanism for their preparation at the level of officials, and a fortiori no follow-up. Trade problems were dealt with in ad hoc negotiations.

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The presence of an active Commission Delegation in Seoul immediately raised the quality of the relationship. A wide range of reporting on the situation in Korea and on economic and trade issues became available, and allowed a more sophisticated approach to the relationship to be built up. At the same time, the EC’s profile in Seoul was much improved. The process was greatly assisted by the enthusiastic co-operation of the EC Embassies in Seoul, in marked contrast to their colleagues in other capitals including Tokyo. The substance of the relationship nevertheless consisted very largely of trade issues, as was the case with the relationship with Japan in the early stages, and for the same reason. The EC’s external relations powers lying mainly in the field of trade policy, the Commission came under strong pressure from member states and also directly from industry to take up market-access problems with the Korean authorities. The issues became the more pressing because of the rapidly growing importance of the Korean market, which outstripped the slow transformation of what remained essentially a conservative society. Throughout this period, the most serious problems the EC had to deal with could be ascribed either to discrimination by Korea in favour of the United States, or to anti-foreign sentiment in Korea with regard to imported goods. Faced with market access problems just like Korea’s other trading partners, the US was better placed to do something about it both because of its armoury of trade policy instruments and because of its special security relationship with Korea. When it came to the crunch, the Koreans were reluctant to turn down categorically all the Americans’ trade requests, but equally reluctant to make the same concessions to all their trading partners. The EC found itself discriminated against in a number of areas, of which the most important were intellectual property rights (IPR), motor vehicle testing procedures, maritime transport and telecommunications procurement. Korea is the only country which has had GSP benefits suspended by the Community as a measure directly related to a trade issue. (Other countries have had GSP rights withdrawn as a political sanction.) Whether it was successful as a trade negotiating tool is difficult to assess. The economic impact was certainly not negligible, but by itself would probably not have brought about a change of heart on the part of the Korean authorities. Its psychological impact, however, was considerable, and certainly played an important part in concentrating Korean minds on the issue. The ploy was tried again on a later occasion when Korea raised tariffs, especially on woollen textiles, in its ‘tariff adjustment programme’, with rather less success on that occasion, but by then the benefits of GSP to Korea had diminished because of the EC’s new policy of ‘graduation’, whereby GSP benefits were concentrated increasingly on the least developed countries. The cases of discrimination nevertheless had an effect which went wider than the economic sectors in which they arose, not only because they diverted the time and attention of EC and member states’ officials from other aspects of the relationship, but also because they maintained the relationship in confrontational

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mode and thereby retarded the search for a more balanced and co-operative relationship. The EC’s classical policy, as shown in the case of Japan, is to combine pressure for market-opening measures with co-operation. It has been slow to follow this path with Korea, first because the relationship has developed more recently and effective co-operation needs time, and second because there has been a reluctance on the European side to co-operate with a country which is perceived as being particularly resistant to calls for market-opening. This reluctance can be ascribed to the fact that EC policymaking on Korea has been in the hands of national trade policy officials, and there has been insufficient interest on the foreign policy side to counterbalance this. In particular, insufficient attention has been paid to the situation in North Korea, the tensions in the Korean peninsula, and the importance of Korea for the security of East Asia. The Commission services have for some time taken the view that it would be wrong to press the ROK so hard on trade matters that it would be handicapped in its preparations for unification, and that a more cooperative relationship would be to the long-term strategic advantage of both parties, but the absence of a suitable framework to debate this point of view with the member states has delayed reflection on these issues. It was, nevertheless, considerations on these lines which led the Commission in 1993 to propose linking progress on market access with cooperation. In its Communication to the Council on relations between the European Community and the Republic of Korea of May 1993, the Commission (basing its reasoning on economic considerations) stated that ‘the Commission considers that the Community should be prepared now to explore areas of co-operation with Korea and to start developing cooperative activities for the mutual benefit…. Cooperation should, however, go hand-in-hand with the overall development of EC/ Korea trade and economic relations.’ This apparently responded to member states’ pressure to ‘do something’ about the Korean market, and indeed did help to secure solutions to some outstanding problems, but also operated in the reverse direction by involving the member states in a greater commitment to cooperation with Korea and thus in a more balanced policy. The Koreans were prepared to go along with the approach of linking market access with cooperation, although they objected that each time they agreed to an EC trade request, the Community upped the ante for co-operation. Co-operative activities have developed slowly, partly because effective cooperation takes time to develop, but also in order to assess concurrent progress on market opening. The first official agreement on co-operation was in the field of science and technology, an ‘arrangement’ in the form of an exchange of letters being concluded in 1992. The co-operative approach was taken a step further by the Korean request in November 1993 for a Framework Agreement and a political dialogue with the European Community. The Commission secured negotiating directives from the Council in March 1995, and an Agreement was initialled shortly before the

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Bangkok ASEM meeting a year later. Since the Agreement is a ‘Mixed’ Agreement (covering matters of both EC and member states’ competence), it has to be ratified by all fifteen national parliaments as well as the Community, and so it is likely that it will not come into force for some time. It will, however, stamp a new character on the relationship, which can be exploited in day-to-day contacts and activities. The Korean government requested that the Framework Agreement should include a chapter on political dialogue. Because of the EU’s constitutional arrangements this will take the form of a separate Declaration, to be signed at the same time as the Agreement. Although the Koreans requested it on a number of occasions, the member states were reluctant to agree to a political dialogue in either European Political Co-operation (EPC—1979 to 1993) or the Common Foreign and Security Policy (CFSP—1993 to date). This was not because of unwillingness to discuss political questions with the Koreans but rather due to reluctance to devote time and resources to dialogue with yet another third country. The importance of Korea for the security of the region was no doubt perceived by the member states but never collectively formulated by them. This may have been because of the Community’s traditional reluctance to engage in foreign policy issues of a predominantly security nature; or because it was thought that the Americans had the situation in hand and there was no role for the Europeans; or because there was insufficient appreciation of the importance of Northeast Asia for world security; or because (as suggested above) there was no structure in EPC for regular discussions on Korea. The EU is nevertheless now committed to dialogue in connection with the Framework Agreement. This can be a ‘banal’ or an ‘intensive’ dialogue. By a ‘banal’ dialogue is meant the exchange of views on the great international questions of the day — the situation in former Yugoslavia, the Middle East question, the political developments in Russia, and so on. These are all important questions, but their relevance to EU-Korean relations is only indirect. An ‘intensive’ political dialogue would deal with questions with a direct relevance to the relationship. This would require the EU to formulate clearly its views on security in East Asia, the situation in the Korean peninsula, and its relations with the two Koreas. This is an area which has been inadequately covered in the past. The Community has historically been extremely reluctant to envisage any form of relations with North Korea. The North Koreans have made frequent and determined efforts over the years to enter into some form of trading relationship with the Community. The Commission rebuffed any direct approaches, believing that even to have a contact was a concession which should be paid for by the North Korean side. It sought the views of the ROK on the matter, and was content enough to be guided by them. Although some member states were nervous that the Americans might steal a march, the Commission’s position was supported by EPC, the question being linked to the inspection of nuclear facilities in North Korea.

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It might therefore have seemed logical for the EU to respond immediately to the approach made initially by Japan in the summer of 1994 to take part in KEDO. The Japanese were anxious to have European participation, however minimal, in order to spread the political burden and make it easier to get a domestic decision on financing. The European response was uncertain and initially negative. Little support could be expected from the European nuclear industry, and some member states were reluctant to have the Union engage so actively in a very concrete non-proliferation question. The Commission did not make a proposal until a year later, which met with strong opposition from anti-nuclear campaigners in the European Parliament, whose views were shared by some member states (particularly the neutrals). Agreement on participation was not secured until the European Council at Madrid in December 1995, by which time it was too late to secure a position as a founder member of the organisation. A modest 5 million Ecu has been set aside for the action in the 1996 budget, and it is by no means certain that the 15 million Ecu annually for five years which is envisaged will in fact be approved in future budgets. One cannot escape the conclusion that the strategic realities of Northeast Asia have passed the EU by. So where can EU-South Korean relations go now? In November 1993, at the suggestion of the then Korean Foreign Minister Han Sung-Joo, a ‘Wisemen’s Group’ was set up to study the future of EU-Korean relations. The Group presented its report in October 1995. It identified the major obstacle to a strengthening of the relationship as being the significant information and perception gap, the solution to which was an intensive effort in image-building. A number of useful suggestions were made to this effect in the Group’s report. There is no doubt that the Group’s analysis is correct. There can be no quick fix in the development of EU-Korean relations. Only slow and steady progress can be expected, and that only at the cost of unremitting effort, and a readiness to devote the necessary financial and human resources to the task. The ‘black hole’ of European ignorance of Korea, and to a lesser extent Korean ignorance of Europe, cannot easily be filled. Academic studies are dominated by the US connection; few Korean scholars specialise in European questions, still fewer study the European Union itself. Foreign Minster Han is a striking exception. Efforts must also be made to raise the consciousness of elites, using traditional image-building techniques. This would be assisted by highlighting security aspects in the relationship, including the implications of different forms of unification. The Union will have to adopt a broader vision if its relationship with Korea is to prosper. In particular, it should give thought to the position it should adopt on Korean unification, in the two hypotheses of sudden unification by fusion or gradual absorption. While European financial support for unification is unlikely to be forthcoming in economically significant quantities, nor would it necessarily be welcome to the Koreans, a joint reflection on possible scenarios for unification might stimulate Korean policy preparation, which some observers believe to be deficient at present.

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Above all, the Union itself has to place its relations with Korea in the overall perspective of regional security. This will require the Union first of all to develop such a perspective, a task which is long overdue. The European Union’s interests in the Asia Pacific region are primarily economic, but these economic interests cannot be adequately preserved without military and political, as well as economic, stability. This is not to say that the EU’s policy approach must itself therefore necessarily contain military and political features, but it must be forged with its impact on military and political, as well as economic, conditions in mind. EUROPE AND CHINA The relationship between Europe and Japan and Korea goes less far back in history than Europe’s relationship with China, but until recently SinoEuropean relations have been far less important than the ties between Europe and Japan. In the 1980s, when China’s economic success became plain to see, Europeans began paying more attention to China. The relationships between individual European countries and China are patchy and more notable for their differences than their commonality. Nevertheless, if Europeans and Asians are going to deepen their relationship in the future, then the future of Sino-European relations will be perhaps the most important feature. In order to understand the divergences in European policy, and the common trends that nevertheless persist, we turned to Michael Yahuda— one of the most experienced of Europe’s China-watchers—for a careful analysis. The conclusion, as with the analysis by his Chinese counterpart, suggests that Europeans and Chinese have far to go in developing the potential of their relationship. MICHAEL YAHUDA In the 1990s the European Union and a number of European states have for the first time set a series of publicly declared policies towards the People’s Republic of China. China has become an important focus for European concerns since the end of the Cold War, in part because of the new international situation and the changes within China that have transformed its international economic and strategic weight and, in part, because of changes within Europe. China and Europe cannot be considered to threaten each other’s military security and in fact they impinge on each others’ security only indirectly. Zhou Enlai’s observation of more than thirty years ago still applies, ‘distant waters cannot put out the fire’. Even though Beijing may be closer to London than Los Angeles, the United States, unlike the European Union, borders the Pacific and it has been the only Western power of strategic significance in East Asia since

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World War II. The fall of Singapore to the Japanese in 1942 marked the end of the period when Europeans were able to act independently as major powers in their own right in that part of the world. The incapacity of the EU or its constituent members to determine the outcome of conflicts and crises in Asia is matched by a similar Chinese incapacity in Europe. This does not mean that they have no role at all to play in each other’s region, but it does mean that their roles are not primary. No Chinese foreign minister has yet told a European leader what Qian Qichen told the Japanese Prime Minister Ryutaro Hashimoto in advance of a visit by an American President that he hoped they would not cause ‘new problems’ for China.1 The United States and Japan impinge upon China’s security and its emergence as a rising power in ways that Europe never will. The end of the Cold War and the impact of China’s phenomenal rate of economic development nevertheless helped the European Community to appreciate that new challenges and opportunities had appeared. Even before the Tiananmen crisis of 4 June 1989 the European Commission had prepared various economic packages and initiatives so as to respond appropriately to the changes in China. But they were suspended as the Tiananmen killings resulted in an unusually rapid response by the European Community in the form of sanctions. This pointed to the salience of human rights considerations that is still a major factor in the relationship. But once the immediacy of the event receded and the impact of the structural changes to world politics and economics began to be recognised it became clear that China was too important to ostracise on human rights grounds alone. Moreover as security began to be regarded in a broader setting than that of military strategy it became evident that especially in the postCold-War period China and Europe have become more important for each other. Although the EU states may be said to fear less for the survival of their political systems there is evidence of degrees of dissatisfaction with the conduct of politics in some member states and there is a growing unease about the possible destabilising effects of disintegrative developments among former communist neighbours in particular with a consequent fear of illegal immigration, refugees, drug smuggling, international crime rings and terrorism. In this respect it is important to recognise that the Europeans have an abiding interest in the continued viability and prosperity of China. If China were to disintegrate the terrible ramifications sooner or later would be felt in Europe too. From a European perspective, the critical security question concerning China as a rising power was precisely the terms on which it sought to deepen its engagement with the international community, and here it was thought the Europeans could play a constructive role. The legacy of the disastrous history of the rise of great powers in the past is still evident in the relatively quiescent security roles assumed by Germany in Europe and Japan in Asia. Thus in the final analysis China’s entry into the World Trade Organisation (WTO), its participation in non-proliferation regimes, its co-operation on environmental issues, its embrace of international norms of good governance (including the development of a civic society, the rule of law and observance of human rights)

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are all important security issues as are the more obvious ones of persuading it to eschew the use of force in pursuit of its territorial claims over Taiwan and in the South China Sea in particular. As part of a larger international effort, Europeans have contributed in a small way to the process of settling the Cambodian problem in which China was massively involved. And the Europeans could also play a minor but useful role in helping to settle the Korean problem peaceably by contributing to the financing of the Korean Peninsula Energy Development Organisation (KEDO). Such European contributions may not be decisive in themselves, but they help to establish an international climate and practice of international engagement that may exercise some influence over China. A China that was continuing its reforms and deepening its involvement with the world in accordance with the established international norms and procedures would be of immense benefit to Europe. Correspondingly, a China that turned inwards would be immensely damaging to European interests. It is precisely because Europe and China do not impinge on each other’s military security and do not challenge their respective political systems that very real opportunities exist for them to cooperate to the advantage of their mutual security concerns. The Europeans have a direct and immediate interest in encouraging China to follow what might be called good international business practice. That has some bearing on the retrocession to Chinese sovereignty of the last remaining enclaves of colonial rule: Hong Kong in 1997 and Macau in 1999. Since the negotiations have been conducted on a strictly bilateral basis between China and Britain and Portugal respectively, the EU has not had to take a formal position. Yet the Commission’s paper on policy towards China noted the extensive commercial interests of member states in Hong Kong and emphasised the importance that was attached to the implementation of the relevant joint declarations that China had signed with Britain and Portugal. Furthermore when the Chinese side proposed in 1994 to discriminate against the British in trade matters as punishment for their alleged misdemeanours over Hong Kong, the EU Trade Commissioner, Sir Leon Brittan, was quick to point out that the EU would not condone a member state being singled out in this way. Beijing chose to back off, rather than test the resolve of the EU. In July 1996 the British Governor, Chris Patten, visited Brussels to encourage the EU to take a still more active stance in support of the agreements about the future of Hong Kong after the reversion of sovereignty. The general point was that the more the Chinese authorities would allow Hong Kong to exercise the high degree of autonomy that has been promised, the greater the confidence will be in China’s own evolution towards further economic reform and openness in accordance with the norms and practices of the international economy. It is obvious, however, that the most important element of the relations between Europe and China is economic. Moreover many of the other aspects of the relationship touch on economics directly or indirectly. This is true not only with regard to the terms of entry to the WTO and so on, but also in encouraging the Chinese to co-operate in global approaches to environmental matters or in

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helping to fund the training of expertise in management, the law, etc. But the main driving force of the relationship is economic. In the words of the European Commission’s policy statement on relations with China, ‘China is now the Union’s fourth largest market and fourth largest supplier. China’s market could become the largest in many high tech sectors, from telecommunications to aircraft and from computers to energy. An active role for EU business in China, where US and Japanese competition is already fierce, is essential.’ Yahuda, like many of the authors in this section, is also at pains to make clear that Europe is not a single actor when dealing with China. Given the importance of China, and the range of diversity in European China policies, it is worth dwelling on the diversity of European views. East Asia and China in particular were ripe for an initiative from an ambitious and able EU Commissioner such as Leon Brittan. This was the equivalent of a new world for the EU and its members and there was an eagerness in both Europe and East Asia to explore the potential for closer relations. In many ways China was seen as the key. The European Union had a long history of engagement with Japan and some of the NIEs such as South Korea and Hong Kong who in any case were integrated into the institutions and practices of the international economy. Although diplomatic relations were first established with China in 1975 and ten years later these were extended by a Trade and Cooperation Agreement in 1985 relations were nevertheless conducted in a piecemeal fashion. Henceforth according to the Commission’s communication on China policy, ‘Europe must set itself the overriding general objective of promoting the fullest possible Chinese involvement in the international arena, whether on security, political, environmental, social or economic issues.’ The objectives of the long-term EU policy towards China included ‘encouraging a dialogue on regional and global security issues, supporting a reform of China’s public management system, developing a programme of co-operation in legal and judicial matters and supporting the principles of the joint declarations governing the transfer of sovereignty of Hong Kong and Macau’.2 The fact that GATT and WTO issues came under his exclusive provenance within the EU gave Brittan a useful degree of leverage in dealing with China. The Commission’s China policy paper was significant too in that it followed roughly similar positions that were taken by at least three of the key European states that continued to be important in the conduct of relations with China and were traditionally targeted as such by the Chinese authorities. Germany, France and Britain for fundamentally similar reasons albeit under somewhat different circumstances had each declared new policy positions on relations with China shortly before the Commission itself. Italy, the fourth largest European participant in relations with China, had no formal reason to declare a new policy as there was little that was contentious in their relations and there was no question about Italian keenness to participate in the China market.

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Member states, however, have more matters to take into account than the EU Commission. Firstly, the Taiwan question is more of an issue for them. The Netherlands and France have sold arms to Taiwan in the past and were singled out for retaliation by Beijing. France recanted in 1994 with a statement recognising Beijing’s sovereignty over Taiwan and a commitment to stop the sale of further arms, but without cancelling its contracts of 1990 to deliver sixteen Lafayette frigates (worth $4.8 billion) and of 1992 to sell sixty Mirage-2000 fighter-interceptor aircraft (worth $3.8 billion) to Taipei with delivery to begin in 1996. Moreover France has interpreted its commitment as ending the sale of offensive arms whereas Beijing understands the commitment to end all arms sales. All member states conduct significant trade with Taiwan which has also invested in EU countries notably Britain. In 1992 the value of Taiwan’s trade with the members of the European Community was not far behind that of the trade with China ($26.4 billion as compared with $30.7 billion).3 Secondly, member states exercise primary responsibility for defence and security questions. With regard to East Asia these affect a raft of issues from arms sales to arms control and any relevant international obligations including residual French and British commitments in the wider region. Indeed even within Europe itself defence is primarily a NATO matter. France and Britain as declared nuclear powers and as permanent members of the UN Security Council have separate responsibilities even though on most issues EU members display solidarity in the UN. This means that the Presidency cannot speak for the EU on defence/security matters with the same assurance as the Commission can on matters relating to the regulation of trade. Thirdly, members of the EU compete with each other in trade with China and in the provision of state assistance (as in the provision of export credit guarantees) in support of ‘their’ companies’ contracts and joint ventures with China. Fourthly, Britain and Portugal have alone been responsible for the conduct of their crucial negotiations over the transfer of sovereignty back to China of Hong Kong and Macau respectively. Finally, member governments are held responsible by their electorates for the human rights elements of their conduct of relations with China in ways that do not apply to the Commission. Yet because of principles that are deeply embedded in the institutions of the EU human rights issues bear heavily in its external policies especially in the post Cold War period. Relatedly, member states often privately welcome initiatives taken by the European Parliament on human rights questions affecting China as they do not have to associate themselves formally with such positions. A case in point is the perennial issue of Tibet and the reception to be accorded the Dalai Lama. The fact that he was formally received by the European Parliament and made a key policy statement generally known as the Strasbourg Address, in which he declared that he only sought autonomy allowing the Chinese to retain sovereignty and control of defence and foreign affairs, has suited the foreign chancelleries of European states. They are able to invoke that example as a

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demonstration of European concern while simultaneously absolving themselves of any responsibility. In practice the EU is strongest where it can bring its evident economic instruments to bear, from helping to determine universal trade guidelines to providing ODA to alleviate poverty and assist in economic development as well as to care for the collective interests of its members as a trading body. Beyond that it may be considered primarily as a diplomatic actor that can be effective especially where there is genuine solidarity among member states. The EU has a variety of economic instruments at its disposal including both pressures and inducements as indeed have been brought to bear in the case of China. Sanctions were applied in response to the Tiananmen killings and the ban on the sale of weapons-related technology is still in force. Among the inducements offered are poverty alleviation programmes, training schemes to upgrade Chinese expertise in management, legal practice, environmental issues, telecommunications, etc. One uniquely successful venture is the China-Europe International Business School that opened in Shanghai in November 1994. Beyond that a whole host of specialised joint committees meet regularly to facilitate the settling of problems of balance of trade, financial services, intellectual property, agriculture and a wide range of policy and technical matters. So where do Sino-European relations go from here? A recent assessment of Sino-European relations pronounced them to be in ‘excellent health’. Freed from the constraining influences of superpower bipolarity relations have developed between them on a multiplicity of levels. In particular the Europeans were judged to be better placed to elicit favourable responses from the Chinese than the Americans. They were said to be unaffected by the American missionary impulse to transform China in their image nor were the Europeans constrained by the strategic balance of power considerations of providing security for the East Asian region. As a result they were not accused of interfering in China’s domestic affairs nor were they said to be carrying out a policy of containment. Untrammelled by this political baggage European commerce enjoyed an advantage and more generally European pragmatism was said to yield a more businesslike relationship with China.4 But as Michael Yahuda notes: That is essentially an American perspective. Indeed it was echoed recently in a response by a spokesman for the American Boeing company who complained that American political problems with China brought about the agreement announced during Li Peng’s visit to France in April 1996 in which the Chinese undertook to purchase up to $1.5 billion’s worth of European Airbuses. But in response it was pointed out that the European consortium would still only account for 8 per cent of Chinese purchases of commercial aircraft compared to the more than 60 per cent held by Boeing, whereas elsewhere in the world the consortium claimed as much as 30 per cent of the market and even in the United

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States it accounted for over 10 per cent. Thus, if anything, the consortium had an under-representative share of the Chinese market in comparison with the general commercial considerations that applied elsewhere.5 Both the Community and the separate governments have rightly put great stress on the further development of economic relations with China. The Community, which of course can only act as a regulator and facilitator, can in fact point to a series of successful initiatives in institutionalising economic cooperation with the Chinese. These build on the mechanisms established by the Trade and Co-operation Agreement that was first signed in 1985. Individual governments have supported exports to China by a variety of means including high profile ministerial visits. Germany has been particularly active in this regard. The Europeans are not well placed to translate their collective economic significance in China into effective political bargaining as say Japan is, let alone the United States. The EU lacks the resources of a sovereign state to formulate co-ordinated policies that link defence, economic, political and other concerns into a strategic whole. The EU can perform well in the political arena when there is consensus and a high degree of solidarity among its fifteen member states. Much effort has gone into developing processes of effective political consultation between members, but this can take time as was shown by the tardy response in expressing concern about the intimidatory Chinese military exercises near Taiwan in March 1996. By contrast the British Foreign Office response was almost immediate. In cases where member’s interests may differ or indeed where matters such as arms sales by member states are not formally within the EU’s jurisdiction or where uncertainties arise as say between defence and security matters the EU scope for action is necessarily circumscribed. Even though in 1989 the Community agreed to prohibit military sales to China as part of the sanctions imposed in the wake of Tiananmen, that should be seen as an exceptional occurrence rather than as an indication of a capacity to follow a calibrated policy in which military, political and economic dimensions can be integrated in a cohesive way. On the other hand, individual European countries including the ‘big four’ lack sufficient economic weight with regard to China to be able to translate their advantages as cohesive political units into effective bargaining power. Perhaps that is why the Chinese side has been able to use its bargaining power as a great emerging market to threaten European states with commercial disadvantages for pursuing policies to which the Chinese objected. Within the last two years, France and Germany retreated on actual or projected arms deals with Taiwan because of Chinese pressure. Britain too was threatened in a similar way for its alleged political iniquities over Hong Kong. But the Chinese side backed off when Leon Brittan warned that the EU would react if one of its members were singled out for discrimination in this way. Although it can be argued that because of its own reforms the Chinese central government no longer exercises sufficient

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control over Chinese enterprises and provinces to carry out such a discriminatory policy successfully, so far foreign governments appear to take their threats seriously. Moreover it can be argued that the Europeans were fortunate that Leon Brittan’s response was not put to the test because the difficulty might well have lain less in the Chinese capacity to penalise Britain than in the EU maintaining a united front. Member states are in competition with each other as indeed are European companies. Clearly there is a need for the EU to co-ordinate and to set limits to the subsidised competition between the European states and to proceed beyond that to negotiate with other OECD states better ground rules to regulate and to restrain the further development of this kind of competition which is detrimental to the conduct of free trade. Where the EU does have a clear edge is in setting the terms of trade and the rules of economic exchanges. In addition to the important goal of promoting European commercial interests in their immediate dealings with China, the EU plays a larger role in promoting those interests with regard to the entry of China and Taiwan to the WTO. Since the basic EU interest is the same as that of the US, Japan and indeed of the international economic community as a whole, namely that China should subscribe to the universal rules of trade, the difference between the EU and the US is not as great as is sometimes suggested (by the Chinese especially). There are some minor differences in approaches between them as to how many of the WTO rules the Chinese should adhere to as a condition of entry as opposed to being allowed a specified time to make the necessary adjustments to the domestic economy. But both hold that as the tenth largest trader with fast growing exports that could swamp foreign markets Chinese trading procedures must become more transparent and its domestic economy must conform more to requisite international standards. Moreover both the EU and the US see China’s entry into the WTO as desirable not only for economic reasons but to facilitate China’s deeper engagement with the international community. Observance of the rules and conventions that are standard practice of the international community will benefit both China and the world at large. Within the EU this is not seen as a matter of ideology and still less as a mechanism for undermining China’s political system, rather it is seen as a matter of common interest between the two sides. Europeans cannot be expected to endorse a long-lasting arrangement whereby Chinese enterprises are allowed to trade and conduct business in Europe on terms that are denied to Europeans in China, which results in growing trade deficits and increasing problems for European producers because of competition deemed to be unfair. These considerations give added significance to the efforts of the Commission to assist in improving Chinese expertise in law, the management of various aspects of a market economy, financial services, the provision of social welfare and the general development of a civic society. Whether the European Union is properly equipped to deal with China on the more conventional aspects of security such as the calming of local conflicts, arms control issues and the proliferation of weapons of mass destruction is

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doubtful. But there are aspects of security in which the EU can and does play useful roles. These include a broad range of issues that are not directly to do with the deployment of military force (except in a small way through the WEU—that in any event would not be relevant to East Asia) but which are none the less relevant. These include providing economic assistance to reinforce attempts at conflict resolution and the various commercial measures necessary to underpin measures taken to uphold the common good. Europeans have been active to these ends in Cambodia, and support has been extended to KEDO to assist the process of a settlement in Korea. Arguably more could be done with regard to KEDO that would not only contribute to resolving the conflict, but that would also enhance the credibility of the EU in this part of the world. It would, for example, strengthen the EU voice in the ASEAN Regional Forum where it has a potentially important role to play in upholding the universal interest in maintaining the sea lanes of East Asia open to international traffic. It would show Beijing in particular that was indeed an issue of universal concern and not just an excuse for the United States to bring pressure to bear upon China. The EU and its European members also have important roles to play in other dimensions of economic security that are becoming increasingly salient for China and East Asia generally, such as nuclear and fossil fuel energy supplies, possible food shortages and better management of environmental issues. The EU and its member states must be interested in engaging China on human rights issues. As democracies, their citizens are deeply concerned about these matters and their governments must reflect that concern especially in the postCold-War era. It is not an issue that is directed only at China or other Asian countries. For example a good deal of European ODA to third world countries generally is conditional on the recipients improving their observance of human rights. Moreover this is an area in which a wide range of NGOs are active. The EU and its member states have developed what might be called a twin-track approach that involves firstly, a degree of confrontation by senior ministers who, prompted by NGOs, their local media and local public opinion raise specific instances of human rights violations by the Chinese authorities and secondly, attempts at subgovernmental levels to improve elements of what might be called civic and legal culture in China through exchanges and training exercises to improve the law, due process, or the handling of prisoners. The first also takes the form of conducting exchanges at the UN and other international fora and, when necessary, even putting forward resolutions condemning Chinese violations of human rights. Although the Chinese leaders generally reject Western criticisms, the Europeans, unlike the Americans, are not usually accused of using the issue for ulterior motives. On the other hand European pressure has not proved as effective as that of America on specific cases and the Chinese have had less compunction in barring European journalists and scholars from their country. The most recent case involved a German journalist and, despite the ‘special relationship’ that supposedly existed between the two countries, the Chinese totally disregarded

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the public personal pleas of the German Foreign Minister—but no corresponding response ensued from Bonn.6 This and similar experiences suggest that there is a danger that ministerial representations by Europeans will be treated like ‘empty shells’ and that they will become just a pro-forma ritual. European governments and the EU will have to take care that their representations should not be devalued especially since the effectiveness of EU diplomacy in particular may depend on its reputation as the embodiment of European solidarity and common purpose. The EU and its member governments may have a particularly important role to play with regard to Hong Kong and Macau, but especially the former. The Commission specifically referred to the great commercial interests EU members have in Hong Kong where since 1993 it has had official representation and to the role Hong Kong can continue to play as a great trading and financial centre as a gateway to different parts of Qiina. It also reiterated the importance that the Council of Ministers has attached to the implementing of the principles in the Joint Declarations signed by China with Britain and Portugal. Since then Leon Brittan has stated on several public occasions the European interest in a smooth transition. It is not just the residual responsibilities of a member of the EU towards the six million residents of the territory and the various European commercial interests that is at stake, but it is also China’s capacity to adhere to an international treaty involving tolerance for an entity that follows the norms and principles on which international commerce and society are based. Were the Chinese authorities to honour their obligations to Hong Kong the beneficial effects would be immediate, immense and wide ranging. The domestic economy and China’s external economic relations would be further boosted and the country would find its path towards deepening its engagement with the international economy smoothed considerably. The external political benefits would be immense especially as Beijing would have eased the doubts about its adaptability in its relations with Southeast Asian countries, Japan and the United States. By showing all the doubters that the concept of ‘one country two systems’ could be put into practice Beijing would also improve its standing on the Taiwan question. Conversely, were the transition to go badly the benefits would be reversed as the Chinese economy would be damaged, foreign economic relations put back, relations with Chinese overseas affected and the remaining credibility of ‘one country two systems’ undermined with incalculable consequences for Taiwan. Beijing’s international standing would be hurt as China would find new difficulties within Pacific Asia and with the United States, and the prospects for deepening the country’s engagement with the international community and the international economy would be gravely set back.7 Thus the EU has the opportunity to play a significant role on a matter of enor mous significance. A failure to do so would leave the EU and its members on the sidelines seeking to grab whatever left-overs there may be from those prepared to engage China in a responsible way.

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The departure of Britain from Hong Kong removes the last significant vestige of European imperialism from Chinese soil (apart from Macau, due to be returned in 1999). Now that Europeans are able to get beyond their imperial past in China, it is worth asking how the Chinese view the future of relations. Zhang Yunling is a senior Chinese Europe-watcher with a subtle appreciation of European politics. He shares Yahuda’s cool view of the recent history of Sino-European relations, and if anything seems to see even more problems that lie ahead. ZHANG YUNLING China and Europe are distant neighbours. Following changes of the situation in the world and the region, the nature and structure of the relations between the two are also changing. In almost two decades during the Cold War period, a strategic relationship was set up between China and Western Europe, with each side as frontiers confronting the Soviet Union. Western Europe was also considered by China as a door for imports of advanced technologies since the United States and Japan were more restrictive in technology transfer. However, with the collapse of the Soviet Union and the end of the Cold War, this strategic formation no longer exists. Europe’s major focus has turned to inter-European affairs. The ‘China factor’ in inter-European relations, especially in European security, has died away. From the Chinese side, the major concern has turned to economic development, and the weight of foreign relations has been turned to countries in the Asia Pacific region. Thus, it seems that Europe and China have become more distant. Is there any binding element for Sino-European relations in a new international environment? Economic interests seem obvious. Europe has started to reconsider its Asian and China policy in the early 1990s when the vision of an Asian century’ became more distinct. Compared with the United States, Europe is far behind in taking up opportunities in the Asian market.8 With the emergence of China as an economic and a political power, the ‘China factor’ in European foreign policy, especially in its Asian policy, is getting larger. China is considered to be a key factor in European Asian policy. In fact, the importance of China seems to go much beyond economic considerations. China is now treated as an emerging power with great potential influence. From China’s perspective, Europe, especially the European Union, is still of special importance although Europe seems less important than the Asia Pacific region. China’s European policy is pragmatic with distinct priorities for different aspects because the identity of Europe is so diverse. Economic interests are the major concerns in China’s policy toward Europe. Western Europe used to be a major market for China to import equipment and technology during the Cold War. With the normalisation of relations between China and the United States and Japan in the early 1970s, Europe’s importance declined. Especially since the late 1980s, the Asia Pacific region became more

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important in China’s foreign trade and capital imports. Nevertheless, Europe’s position and role is not easily replaced. The EU is now China’s fourth largest trade partner. It is clearly important for China to expand its economic ties to Europe, thus moderating over-dependence on Japan and the United States. As a matter of fact, Europe’s share in China’s foreign trade has shown some upward movement in the 1990s.9 A high-ranking EC official referred to an ambitious plan of making the EC China’s first trade partner in late 1980s. The facts have shown that this plan was too ambitious.10 China is the second largest recipient of foreign capital after the United States in the world. Nevertheless, capital flow from Europe to China is rather slow. The European share of total capital inflow to China is smaller than Europe’s trade share with China. From Europe’s perspective, China only became an attractive market in recent years. Europe started to realise and emphasise the significance of new Asian markets in the early 1990s and EC trade with East Asia exceeded that with the United States.11 Germany took the lead in formulating the Asian policy’ in 1993, whose ‘central idea is to strengthen economic relations with the largest growth region in the world’.12 France issued an action plan with ten initiatives in early 1994. The EU adopted a ‘new Asian strategy’ in July 1994, and a ‘long term policy for China-Europe relations’ in July of 1995. In Europe’s new Asia policy, China is considered to be a cornerstone.13 It seems that Europe intends to develop the relationship with China on a longterm and comprehensive base. For example, beside direct business relations, the EU has also invested strategically more in training and education in China. Several education or training institutions and research centres have been set up, like the Europe-China Management College, China-European Table 5.1 China’s trade with Europe (in billion US dollars)

* Including Finland, Austria and Sweden ** Not including countries formerly belonging to the Soviet Union Source: Statistical Yearbook of China, 1992, 1993, 1994 and 1995

Bio-technology Centre, and the China-European Agricultural Technological Transfer Centre. Four areas are defined as ‘a new focus’ by the EU in future co-operation with China: (1) Human resource development, which is considered a key contribution

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Table 5.2 China’s trade with Asia and the US (in billion US dollars)

* Including Japan Source: Statistical Yearbook of China, 1992, 1993, 1994 and 1995

to sustained economic growth and development in China; (2) to promote economic and social reform through offering training and technical assistance to support modernisation and market-oriented policies in key economic sectors; (3) business co-operation, in order to increase the presence of European companies in China through better information on the Chinese market and the development of business-to-business links; (4) co-operation on environment matters. In political terms, during the Cold War, China and Western Europe had common strategic interests in confronting the Soviet Union, and the relations between China and the Soviet Union as well as Eastern European countries were hostile. These conditions no longer exist. China has a new interest in developing a stable and reliable relationship with Russia and Eastern Europe. In the post-Cold-War world, one of the most important trends is that Table 5.3 Capital flow to China (in billion US dollars)

* Including Japan ** Including Finland, Austria and Sweden Source: Statistical Yearbook of China, 1992, 1993 and 1995

world politics are becoming multipolar. Europe (here only referring to the EU) is a major power. The EU’s role in international affairs is vital. China considers Europe as a more reliable partner than the United States in political relations. The EU also seems easier to deal with since the EU is a union. Of course, member states of the EU have shown their differences in dealing with China.

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Table 5.4 Importance of Chinese market in foreign trade of EC/EU (percentage)

1

Including EC/EU internal trade Only external trade with non-members Source: Direction of Trade Statistics Yearbook, 1980, 1989, 1993 and 1994 2

This divergence may create some ‘internal competition’ among EU member states, from which China may benefit. Nevertheless, what China wants is to create more opportunities. China also wants to balance the United States through good relations with Europe. Recent deals between China and France (Airbus) are good examples of how this kind of balance role works. Due to competition with the US, Europe may be softer on matters like human rights, and GATT/WTO membership.14 However, it is difficult to separate political relations from economic relations. A good political relationship is necessary to serve China’s economic priorities in Europe. There are many cases which show how China takes a good political relationship as the precondition for economic deals. For example, China decisively stopped major trade contracts and other economic projects with France when France sold advanced warplanes and submarines to Taiwan. Several large deals were signed in 1994 only when the French government changed its policy and promised not to sell advanced weapons to Taiwan. Germany benefits greatly by keeping its leading and cooperative role on economic and political issues. Both China and Europe intend to strengthen their relations in a bilateral, regional, as well as international context. Nevertheless, due to their interests, there are problems ahead. For example, China suspects that Europe may not be a fully trusted partner since it belongs to the West and often takes similar stands to the United States in exerting pressure on China. Europe, on the other hand, may consider China as an ‘unconventional and unrestrained actor’ since China is an emerging power. China has become more integrated into the world market and international system. In a strategy and policy of integrating China into the international community, Europe together with other developed countries has tried to compel China to adopt existing systems and rules. The problem is that China, as a developing country, needs more time and space to learn, to accept and to follow international norms.15 China often sees the concerted pressures from the West as hostile politics. But on the other hand, Europe thinks China is uncooperative or even a disrupter of international politics.16 These differences are becoming major

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factors worsening relations between China and Europe and seem likely to continue. China has also been criticised on matters like democracy or human rights by Europe and other developed countries, especially the United States. China regards these policies as intervention in internal affairs. Cultural differences are at the centre of these disputes. It is true that Western values and culture have dominated the world since the last century. However, Western culture does not necessarily mean an exclusive world culture. ‘World culture should not be characterised by uniformity and monotony. It must comprise a variety of cultures mutually interacting and complementing one another’.17 China has a long history of civilisation. For example, there is clear contrast between Eastern culture and Western culture on individual responsibility and freedom. It is hard to imagine that China will accept a Western political system. On the other hand, one has to understand that levels of political and economic development can only be changed gradually. There are other issues that also trouble the relationship. For example, the sale of advanced arms to Taiwan and the upgrading of political relations with Taiwan by European countries are especially troublesome. China is prepared to stand its ground on the Taiwan question, even if it means sacrificing economic interests. There are also other potential elements of tension, such as the difficulties surrounding the transfer of Hong Kong to China. There are two major problems ahead in strengthening relations with China and Asia. The first is how to balance between a focus on Europe and a new frontier in Asia, including China. Europe has disadvantages in competing with Japan and the United States in the markets of China and Asia. Therefore it has to make more efforts to establish strong institutional networks and mechanisms to exchange, discuss and work together. Europe also needs to learn how to overcome, or at least reduce, political and cultural differences in developing relations with China and Asia. In this sense Europe has advantages over the United States in forging its relations with China and Asia. Europeans are less burdened by political and security policies, differences which are often a major cause of dispute and mistrust. It is important for Europe to understand and respect the different nature of Asian ideas, values and cultures. In fact, the most pernicious thing would be for Europeans to treat China as a ‘dissident actor’ in the international community and to force it to change beyond its willingness. China and Europe have lots of common interests but the point is to explore them through consultation, rather than compulsion. EUROPE AND SOUTHEAST ASIA One of the striking features of East Asia for Europeans is the extent to which relations with the great and middle powers, such as Japan, Korea and China, are very different from relations with the smaller and less

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powerful states of Southeast Asia. And yet there are aspects of the EuroASEAN relationship that are more accessible and amenable to Europeans. Not only is there ASEAN, an organisation that allows for some coherence in relations with Europe, but the range of the size and power of states fits more with the European experience. There are also elements of great diversity for Europeans. Britain, France, Portugal and the Netherlands were all colonial powers in Southeast Asia and all retain distinctive relations with the region. ASEAN states, for many of the same reasons, also have distinctive relations with Europeans. It was ASEAN, and especially Singapore, that played such a crucial part in making the ASEM possible. The first ASEM was held in Thailand and ASEAN states retain much of the initiative in setting the ASEM agenda from the Asian side. Even Malaysia, that notable critic of APEC, has seen the virtue in an ASEM that now requires the East Asians to caucus as Asians, thereby fulfilling a longstanding Malaysian desire for an East Asian Economic Caucus. In short, there is enormous subtlety and depth to the relationships between Southeast Asia and Europe. Who better to begin our investigation of such matters than Michael Leifer, Europe’s leading scholar on Southeast Asian affairs. MICHAEL LEIFER The European Union and ASEAN are two very different expressions of regionalism, despite enjoying a common element of provenance in their attempts to promote regional reconciliation through institutional cooperation. Above all, by their very different natures, identities and political aspirations, they partake of very different forms of collective decisionmaking, which reflect their differing corporate goals. In addition, the greater part of the economic policies pursued by the member states of the European Union towards ASEAN and vice versa, above all in trade and investment, are conducted on an individual and not a collective basis. Moreover, the European experiences of and degrees of interest in Southeast Asia vary considerably among member states without an evident congruence.18 This lack of congruence has been reflected in the mixed degrees of commitment to the relationship displayed by succeeding Presidents of the Council of Ministers and their ‘troika’ partners.19 Indeed, this six-monthly rotating pattern of European leadership has proved to be a critical and a disconcerting factor in the relationship, making for a less than consistent approach, despite the continuity of the bureaucratic structure of the Commission. Although a procedural feature of the European Community/ Union, it has also been a symptom of the balance between form and substance in the relationship with ASEAN. European Community/Union policies towards ASEAN have evolved and changed concurrently with changes in the regional circumstances and priorities of both entities over more than a quarter of a century and especially

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with the end of the Cold War and have combined economic and political interests. Europe has engaged with ASEAN at ministerial and officials level to mixed effect. However, an initiative by the European Commission in July 1994 expressed in the document Towards a New Asia Strategy’20 was endorsed by the Council later in the year. An imaginative response by Singapore’s Prime Minister, Goh Chok Tong, initially in September that year which was endorsed by ASEAN in the following July and then agreed with its European Union dialogue partner in August in Brunei, paved the way for an Asia-Europe Meeting (ASEM) which convened in Bangkok in March 1996. That meeting, at heads of government level, would seem to have opened up the prospect of a qualitative change in the relationship between the EU and ASEAN even though existing forms of institutionalised contact will certainly be maintained. At issue is the degree to which European policy towards ASEAN in the broad sense will come to be subsumed within a wider structure of East Asian relationships and how that might affect the longstanding relationship in its post-Cold-War form. ASEM represented an ASEAN-driven initiative to which the EU responded through strong French encouragement. The wider geographic partnership in prospect, involving China, Japan and South Korea initially, may give rise to a measure of intra-Asian tension should ASEAN seek to retain the diplomatic initiative as in the case of the ASEAN Regional Forum (ARF).21 The EU collectively will want to avoid being drawn into such a tension, while benefiting from the wider framework of co-operation. The EU-ASEAN dialogue may well be sustained as the core of the wider Europe-Asia dialogue process which has yet to be institutionalised. However, the management of overlapping processes of dialogue opened up by the first ASEM in Bangkok could pose a diplomatic test for the EU. ASEAN has registered a determination to sustain its separate identity. The degree of resistance by some East Asian and Pacific states to that determination being expressed in a prerogative role within a wider Asian context has generated differences within the ARF, of which the EU is a member. The European Union, with its treaty base, is committed, at least in principle, to transcending the Westphalian model of the states system in its European locale, while ASEAN is committed in more than principle to upholding that system of separate sovereignties in its Southeast Asian context. Those differences in political model have been reflected in the somewhat different bases of political representation, with Europe enjoying the advantage, in principle, of a single locus of institutionalised decision-making. In practice, however, ASEAN has been able to proceed in less ambitious joint enterprises through the vehicle of annual meetings of foreign ministers complemented by less frequent but regular meetings of heads of government, which have set specific mandates for officials to implement. The fundamental differences in underlying political purpose and conception of regionalism have not stood in the way of a cooperative relationship based on common and complementary interests. But to the extent that global and regional circumstances have changed significantly with the end of the Cold War, there

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have been evident changes in priorities on the part of both entities without any underlying desire to impair fruitful aspects of inter-regional cooperation. Europe and ASEAN made initial institutional contact in the early 1970s at formative stages in their respective developments. The initiative for an institutional link came from the ASEAN side in 1972 driven by an evident concern by its two Commonwealth members, Malaysia and Singapore, about market access over loss of preferences occasioned by Britain’s impending membership of the European Community as well as an underlying interest in the transfer of technology. This collective concern found initial expression in contacts between officials in Brussels. These contacts developed into formal consultations which did not bear full fruit at the political level until November 1978 which then marked the beginning of a full dialogue relationship leading to regular attendance at the ASEAN PostMinisterial Meetings (ASEAN-PMC) with other industrialised states from Asia Pacific. In March 1980, an unprecedented Co-operation Agreement of a framework kind was concluded which has stood unrevised ever since as a testament to changing political priorities on the European side but without impairing the practical relationship. It is worth noting that it was only in October 1985 that a meeting between economics ministers was convened and that the inter-institutional relationship on the ASEAN side has been conducted by foreign ministries, despite the greatest practical interchange between states being expressed in economic terms. Indeed, the great paradox of the relationship between the European Community/Union and ASEAN is that it has been managed to a great extent as an exercise in political cooperation as understood in Brussels, while the terms of the surviving Co-operation Agreement are about trade and economic co-operation. To be fair, that agreement has provided a basis for practical co-operation with limited European Union funds allocated for encouraging trade, joint venture investments through the European Investment Bank, industrial training, human resource development, scientific and technical co-operation as well as modest development aid among other forms of provision. That Co-operation Agreement is a good starting point for assessing the nature of the relationship. Although the European Union ranks third among ASEAN’s trading partners, the Agreement has not served as an instrument for negotiating trade policies, except to the extent that the application of the Generalised System of Preferences (GSP) has been of varying benefit to members of the Association. It is best seen as a framework for inter-regional co-operation within which various facilitating devices exist for promoting a number of functional activities of mutual benefit. Total trade between European Union and ASEAN members has risen dramatically since 1980 when it amounted to just over 12 billion Ecu. In 1994, trade between members of the two entities had risen to nearly 58 million Ecu (US$ 71 billion) with a continuing but fluctuating balance in favour of the ASEAN states. That trade has been primarily a function of endeavours by individual states on both sides; the same can be said for direct investment in

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ASEAN economies aided by investment promotion facilities on the European side. Investment flows of late have not matched trade ones, however. The Co-operation Agreement has remained unrevised since its conclusion, despite a commitment to revision in Luxembourg in May 1991, because of the interposing issue of East Timor after Portugal’s entry into the Community and in particular an abhorrence at the killing of young demonstrators at Santa Cruz Cemetery in Dili in November 1991. In October 1992, ministers from both sides meeting in Manila agreed to sustain the relationship without the benefit of a new framework. Indeed, by that juncture, the pressing need for a formal revised structure with which to underpin the relationship had passed. ASEAN had moved into the tiger business, which was reflected in changing bases of economic interchange. Again members of the European Union, while taking an increasing proportion of ASEAN exports, have not been decisively responsible in any collective sense for changing the terms of the economic relationship. ASEAN’s growing impact on European markets has been a product of governments’ policies within Southeast Asia to the extent that it became a matter of economic imperative to overcome the recession of the mid 1980s when the total volume of EU-ASEAN trade was only just over 20 billion Ecu. A commitment by individual governments to policies of economic liberalisation encouraging greater direct foreign investment for exports would seem to have been a critical factor in accelerating the momentum of trade relations from the turn of the decade. If ASEAN was driven initially in its approach to Europe by needs associated with developing countries, Europe would seem to have been exercised more by political purpose. That is not to say that there were not political interests at stake on the ASEAN side. The ability to deal with the then Europe Community on an inter-institutional basis registered the corporate identity and international standing of the Association. An interest in encouraging a more extensive European economic presence was motivated in part by a desire to offset the degree of economic dependence on Japan and the United States as sources of foreign investment and as trading partners; an interest which has been sustained as a factor in encouraging a wider Europe-Asia dialogue. For the Europeans, however, there has always been a limit to what could be offered collectively on the economic side. Trade and market access could be facilitated through the Generalised System of Preferences, for which the United Kingdom pressed in the particular interest of its Commonwealth partners within ASEAN. Beyond that easement of access, Europe was bound by its commitments under GATT rules.22 An evident attraction of ASEAN for Europe was the ambition to play a role through inter-regional links in upholding regional and global order in the Western interest and to a degree in competition with the United States. ASEAN was perceived as part of the Western global alignment whose governments were determined to defeat the challenge of revolutionary communism. At the formation of ASEAN, Thailand and the Philippines deployed troops in Vietnam in support of America’s political purpose. Moreover, Malaysia and Singapore were parties with Britain to the Anglo-Malaysian Defence Agreement to which

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Australia and New Zealand were joined. That membership persisted when the Agreement was revised in 1971 to become the Five Power Defence Arrangements. ASEAN was good news in the fight against international communism which matched the underlying priorities of the European Community. Moreover, the conclusion of the framework Co-operation Agreement in March 1980 had coincided with the outbreak of the so-called Second Cold War defined by the Soviet invasion of Afghanistan in the previous December. In the following year, the European Community achieved the status of dialogue partner of the Association with right of access to the annual PostMinisterial Conferences which are held at foreign minister level following on the annual meeting of ASEAN counterparts. Indeed, it was this status of dialogue partner which enabled the European Union to become a founder member of the ASEAN Regional Forum (ARF). That membership stands in sharp contrast to Europe’s absence from APEC. It may well be that in seeking ASEAN’s support for the European position on the issue of Afghanistan, opportunity was thrust upon its members. At the meeting in Kuala Lumpur in March 1980 at which the Co-operation Agreement was concluded, the Europeans were confronted by an insistence on ASEAN’s part of a corresponding endorsement of their corporate position on Cambodia, then subject to Vietnamese occupation. To that extent, it would seem to have been ASEAN which made the wider link between regional and global security which, from then on, was better assimilated on the European side. However ASEAN states may have resented being contemplated as a factor in the global balance from a European perspective, the European Community supported the Association’s lead and collective purpose by suspending economic aid to Vietnam and in contributing financially to the resettlement of Vietnamese refugees as well as giving due recognition to ASEAN’s declaratory commitment to make Southeast Asia a zone of peace, freedom and neutrality. The Cambodian issue served as a basis for co-operation with ASEAN playing a leading diplomatic role. But the way in which that conflict was brought to a conclusion as an international and regional problem pointed up the extent to which ASEAN’s leading diplomatic role had been as an agent of Sino-American alignment to which the European Union had been joined. The evident marginality of ASEAN in the ultimate process of conflict resolution, managed in the main by the permanent members of the United Nations Security Council, was reflected in a slackening in the momentum of European-ASEAN co-operation. Moreover, with the end of the Cold War and the reunification of Germany, Europe’s attention was drawn towards the problems of Central and Eastern Europe. In addition, from the European side, with the end of the Cold War and the downfall of communism as an ideology, there was a tendency to emulate the United States in articulating human rights priorities which had always been part of the European political agenda, especially within the Parliament. The impasse over differing conceptions of sovereignty and respect for domestic jurisdiction

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was pointed up over the issue of East Timor, which proved to be the obstacle to a formal revision of the Co-operation Agreement through Portugal’s obduracy. In retrospect, however, the Co-operation Agreement, forged in the heat of the Second Cold War, did not demonstrate anything like a special relationship. Indeed, the relationship comprised more of form than of substance. It has been well noted that after the high point of the Co-operation Agreement and convergence over Afghanistan and Cambodia the substantive content of the political consultation stagnated somewhat.23 The momentum of accord over Cambodia was sustained with some difficulty as some European states indicated their distaste for the inclusion of the Khmer Rouge in the so-called Coalition Government of Democratic Kampuchea set up in June 1982 as a diplomatic device to confront Vietnam. In addition, there was a corresponding European reluctance to engage in a policy of isolating Vietnam completely. Moreover, when, in an attempt to find a wider basis for political dialogue, contentious issues such as the Middle East and Southern Africa were discussed, the degree of divergence in international outlooks became even more pronounced. To that extent, given the stalemate over revising the Co-operation Agreement, the relations between the European Union and ASEAN had come to be distinguished by a strong sense of political inertia compounded by irritation at the interposition of a human rights agenda. In the years since the end of the Second Cold War, however, there has been a reassessment of the utility of the relationship with ASEAN in the light of the economic achievements of many of its member states. This reassessment was reflected in the document submitted by the Commission of the European Union to the Council of Ministers in July 1994 entitled Towards a new Asia strategy’ which urged that Asia be accorded a higher priority. It was recommended that ‘the European Union should seek to develop its political dialogue with Asia and should look for ways to associate Asia more and more in the management of international affairs, working towards a partnership of equals capable of playing a constructive and stabilising role in the world’. By that time, APEC, with which the European Union was not associated, had assumed a greater political significance. That initiative was driven in part by American economic priorities and it was clear that the European Union was conscious of the denial of economic opportunity by dint of its exclusion from such a network. The Commission’s strategy document set out policy priorities across Asia, including a list of functional interests such as arms control, human rights and drugs as well as ways of strengthening the European economic presence in Asia. In setting out these priorities, the Commission identified its existing policy instruments in its relations with Asia and it was only here that ASEAN received particular mention in terms of regular meetings at ministerial and at senior officials level within the context of the longstanding and unrevised Co-operation Agreement, participation in the annual Post-Ministerial Conferences and in the wider context of the ASEAN Regional Forum. At the time there were only four European representations in ASEAN capitals, namely; in Bangkok, Manila,

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Hanoi and in Jakarta, out of ten in Asian countries overall. It would seem of some significance that the European Union’s main representation is a delegation in Bangkok, with another in Manila and in Hanoi but with only an office in Jakarta which is the site of ASEAN’s Secretariat. With the exception of a general exhortation to strengthen the Union’s relations with regional groups such as ASEAN, the Association was not singled out for particular attention in the strategy document. Rather, it was subsumed within the overall concluding policy recommendations from the Commission to the Council of Ministers and not mentioned specifically in them. Neglect on the European side was made up for with an inaugural meeting of EU-ASEAN senior officials in Singapore in May 1995. That inaugural event was a product of a ministerial meeting in Karlsruhe in September 1994 which recognised the need to reinvigorate the relationship on the basis of a partnership of equals. In the event, the senior officials meeting served to pave the way for the ASEM in Bangkok in March 1996. Given that so much effort and energy has been invested in the wider relationship between Europe and East Asia, with the object of institutionalising the enterprise in regular bi-annual meetings, what is the future of the association between Europe and ASEAN, which works on an annual roll-over basis without the benefit of a revised co-operation agreement? The Commission’s strategy document does not offer much comfort here given its much wider horizons. The declared aim of the ASEM has been to reinforce the weak link in the triangle of relations between Asia, North America and Europe. A general East Asian interest has been expressed in having Europe pay much greater attention to, and have a greater presence in, Asia so as to balance their relations with other partners. These are high-sounding aspirations as well as somewhat mechanical ones. Europe may wish to assert a new political relationship but geography and the absence of a common military presence to ensure balance in the conventional sense stand in the way of such a grandiose objective. One of the EU’s declared interests may be political but the practical underlying one is that of economic opportunity. The response to such opportunity will be dictated by individual state’s interests and market opportunities and company competitiveness, with Europe as a collectivity tied by its commitment to the rules of the new WTO and in the way that it provides access to its internal market. For all the talk of a new partnership, at issue has been the prospect of gaining a larger share of the region’s exponential growth in terms of trade and investment as well as to counter American trade unilateralism.24 For their part, Asian officials indicated caution against expecting any immediate increase in trade and investment coming from the Bangkok summit. Any new partnership between Asia and Europe was identified as an evolutionary process driven by the ability of heads of government meeting together to focus on the so-called big picture and not be bogged down by the detail of the complex set of relationships. The ASEM process offers the prospect that a possible Asia-Europe Cooperation Framework might take the place of the EU-ASEAN Cooperation Agreement which has still to be revised from its initial 1980 form. Moreover, the

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commitment to process on the part of the heads of government at the ASEM foreshadows also a greater demand on diplomatic resources on the part of states which are heavily engaged in multilateralism in Asia and in Europe. Given such demands, which will place some foreign ministries close to breaking point in terms of the availability of skilled human resources, it is almost inevitable that critical choices will have to be made in national and collective priorities. It is in this context that the relationship between the EU and ASEAN will have to be reconsidered. That relationship has been reinvigorated up to a point, in the context of much wider horizons on the part of both entities, but very much more so as far as Europe is concerned. At issue will be how Europe copes with balancing the priorities of regenerating the relationship with ASEAN while developing a new relationship with a wider Asia of which ASEAN is only a part. A pointer in the direction of Europe’s objective has been a policy paper on relations with ASEAN, issued by the European Commission in July 1996, which announced the intention of keeping the Association as the centrepiece of Europe’s expanding relations with Asia. For the time being, that declaration of intent has removed any acute fears on both sides that the dynamics of ASEM might interpose in a longstanding relationship. Moreover, ASEM has barely begun to take on institutional form. Michael Leifer leaves us with the implicit thought that the very success of ASEM (in many respects an ASEAN initiative) could mean a lessening of the Europe-ASEAN relationship. This sense of the creation of a wider relationship, and the minimising of the narrower one, is also evident in the Southeast Asian contribution to the discussion by Soedjati Dijwandono. SOEDJATI DIJIWANDONO ASEAN’s policies towards Europe, just as Europe’s policies towards ASEAN, may be understood in a variety of ways, and particularly in terms of bilateral relationships between individual countries. Nevertheless, it is useful to focus on ASEAN’s policies towards Europe in terms of relations between the two regional groupings, that is to say, inter-regional relations, between ASEAN and the European Union. Of course, ASEAN is a far less closely knit organisation than the EU. This is reflected in the fact, for instance, that while in discussions with its dialogue partners it has been customary for individual member states each to be assigned to speak on behalf of ASEAN as a group with individual dialogue partners (Indonesia being the contact country for Japan and EU, Malaysia for Australia, Singapore for New Zealand, the Philippines for USA and Canada, and Thailand for UNDP and ESCAP). The discussions often tend to be preoccupied with bilateral issues relating to their own national concerns and interests. ASEAN has been engaged in relations with Europe, not only in bilateral relations, but in

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addition also as a dialogue partner in the form of PMC (Post-Ministerial Meeting) including the 6 + 1 formula, in the context of the ASEAN Regional Forum. The post-Cold-War world not only has provided new grounds for relations between ASEAN and Europe within ASEM, but it has also raised new concerns, new pre-occupations and new issues on both sides. This calls for mutual understanding and appreciation of each other’s perceptions and approaches so as to sustain the continuation of friendly relations and mutually beneficial cooperation in the future. But rather than mutually exclusive, though not mutually inclusive, relations between ASEAN and Europe within the half-a dozen contexts or frameworks are most likely to be mutually complementary and mutually sustaining and supportive. ASEAN’s relations with Europe began at the dawn of the 1970s after some years of its internal consolidation and in the face of new challenges posed by a changing, international environment. The Vietnam war was escalating but the Nixon doctrine of 1969 signified the coming US military withdrawal from Southeast Asia. The new decade saw Sino-US and SinoJapanese rapprochement; the OPEC oil price crisis of 1973–5; the Vietnamese victory and the final withdrawal of US military power from mainland Southeast Asia in 1975; the beginning of China’s commitment to economic modernisation and hence its opening to the outside world. The end of the decade witnessed the invasion and occupation of Cambodia by Vietnam and the unfolding of the protracted Cambodian conflict. These developments in the international scene could not but create considerable uncertainty for the fledging regional association. It is significant to note that the first ASEAN Summit was held in 1976. Indeed, it was at the beginning of the 1970s that ASEAN initiated the idea of co-operation with the European Union, at the fourth meeting of ASEAN foreign ministers. At the ministerial meeting the following year, 1972, the idea of an institutionalised dialogue with the EC was formally approved. To realise this, a Special Co-ordinating Committee (SCANN) was formed and assigned the task: ‘to establish a continuing dialogue on the basis of a joint and collective approach between the ASEAN member countries and European Economic Community in an institutionalised manner with a view to pressing for the most favourable relationship for ASEAN with EEC.’ To facilitate the Committee’ s work, the ASEAN-Brussels Committee (ABC) was also set up consisting of ASEAN ambassadors accredited to the EC to serve as its arm and outpost in Europe. At ASEAN’s insistence, a meeting, the first of its kind, was held between ABC and the Committee of Permanent Representatives of the member states of the EC in November 1977. This led to the first ASEAN-EC ministerial meeting in Brussels on 20–21 November 1979. Formal relations between the two groups was institutionalised with the establishment in 1974 of a Joint ASEAN-EC Study Group as an alternative to the commercial co-operation agreements that had been negotiated bilaterally between the EC and the other Commonwealth countries. This joint study group met annually from July 1975, albeit with limited results. It led to the financing of a number of technical studies of regional integration

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projects such as the development of ASEAN port facilities; assistance in ASEAN trade promotion in Europe; and seminars on investments in Brussels in April 1977 and in Jakarta in February 1979. Thus the EC became, in effect, ASEAN’s first dialogue partner. The rest followed suit: Australia in 1973, Japan in 1974, Canada and New Zealand in 1975, the United States in 1977 and South Korea in 1987. The first ASEAN-EC ministerial meeting was preoccupied, apart from economic issues, with the Indochinese refugee problem. For ASEAN, it was a forum in which to internationalise the issue. But the Cambodian conflict was an occasion to help foster closer relations between the two regional groupings in a much more significant way. Indeed, the Cambodian conflict so heavily preoccupied ASEAN, that the question was often asked during those years what ASEAN would do without it. At least as far as ASEAN’s relations with EU was concerned, the Cambodia conflict was definitely a blessing. The second ASEAN-EC meeting held in Kuala Lumpur in March 1980 concentrated its attention on the issue of Vietnamese withdrawal from Cambodia, and the internationalisation of the conflicts in Cambodia and Afghanistan. In that meeting, as stated in its Joint Declaration, the EC supported the ASEAN efforts to seek a ‘comprehensive’ solution to the Cambodian problem, motivated by the desire to establish a zone of peace, freedom and neutrality (ZOPFAN) in Southeast Asia. In a sense the second ASEAN-EC ministerial meeting in Kuala Lumpur was also a turning-point in the relations between the two groups. Its most dramatic aspect was the decision by the ministers to issue a strongly worded Joint Statement on Political Issues condemning the Soviet invasion of Afghanistan and the Vietnamese invasion of Cambodia. While the first ministerial meeting in Brussels already expressed concern about the Indochinese refugee problem, the Kuala Lumpur statement was the first time the two groups had taken a joint position on major political issues. As regards the Cambodian conflict, the series of subsequent developments leading to its ‘final solution’ is now a well-known story. In any event, in the process, two informal meetings between the parties involved in the conflict were held in Jakarta initiated, hosted and chaired by Indonesia as ASEAN’s ‘Interlocutor’. This led to the Paris conference co-chaired by Indonesia, again acting on behalf of ASEAN as its interlocutor, and France, which finally led to the conclusion of the Paris Agreement. While there was no pretension that the French Foreign Minister acted as a representative of the EC, the occasion certainly had some significance to the growing ASEAN-Europe inter-regional relations. As mentioned previously, one of the regional and international developments that first encouraged ASEAN to initiate relations and co-operation with EU was the prospect or anticipation of US military withdrawal from the region. The desire to engage Europe is not to replace the role of the United States, particularly in military terms, to defend any countries in the region in the sense

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that the United States was committed to doing so in the context of its security and defence arrangements with such countries as the former Republic of South Vietnam, Thailand and the Philippines in Southeast Asia, and with Japan and South Korea in Northeast Asia. It was, so to speak, to fill a possible vacuum, with a view to the maintenance of a balance of power in the region as an integral part of the global balance. That last kind of consideration may still apply today. The presence and role of the United States or lack of it is likely to continue to be an important concern. In part, though, the role of Europe or some European countries, can serve as an alternative to the United States in certain respects. At least as far as Indonesia is concerned, for instance, since the end of the 1970s France and the Netherlands played an increasing role in the sales of arms, and at the end of the following decade Great Britain was dominant in this field, replacing the United States. The maintenance of a regional and global balance is likely to remain a major foreign and security policy objective on the part of the regional powers. One way of engaging Europe with that end in view is by fostering inter-regional relations and co-operation between the two groups. This is likely to be more effective than in the larger context such as the ARF and ASEM. It is worth noting that just as Europe had been preoccupied with the Soviet threat, and therefore had little to do with Southeast Asia for some time, exactly the same preoccupation seemed to have underlay its positive response to ASEAN’s initiative for inter-regional relations and co-operation. The Soviet invasion of Afghanistan and then the Vietnamese invasion and occupation of Cambodia were both seen then as part of Soviet expansionism. In the post-Cold-War world, and in Southeast Asia in the post-Cambodia era, especially now that Vietnam has joined ASEAN, there is a completely new ball game. But there is a strong case for an increasing role of regional or even subregional co-operation, and less for inter-regional or inter-subregional relations and co-operation. In the wider context of the Asia Pacific region, for example, ASEAN is a form of sub-regional association. So is EU in the context of Europe in the wide sense of the word. In the post-ColdWar era the great powers no longer have as great an interest in local and regional conflicts that continue to beset the world. They are no longer interested in either instigating or exploiting such conflicts. Unfortunately, nor is it likely now that they have great interest in involving themselves in attempts to seek their solution. Hence the greater responsibility of regional powers. And in that sense, the regions will increasingly have their own inherent importance, quite apart from the interests of external major powers. The groundwork for political and security co-operation between ASEAN and Europe has been laid by the first and second ASEAN-EC ministerial meetings as referred to above. The problem now is to widen the areas of such co-operation. First of all, both ASEAN and Europe share a common security concern at the global and regional level. In the post-Cold-War world, the value of nuclear weapons is likely to decrease. But nuclear weapons will remain with us for a

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long while yet and this will continue to affect global as well as regional security. The fact that there are two nuclear powers in Europe, namely, Great Britain and France, while there is none in Southeast Asia accounts for the difference in security concern, outlook and policy. Indeed, the five permanent members of the UN Security Council, all of which are nuclear powers, have issued statements on security assurances for nonnuclear states, separately as well as jointly in Security Council Resolution 984/ 1995. And as far as the European nuclear powers, namely, Great Britain and France, are concerned, both have stated their commitment to provide negative as well as positive assurances. In so far as the probability of the application of such assurances is not very great, so far there do not seem to be any serious problems relating to these assurances. In theory, however, their application may be much more complex and this may become a topic for discussion if non-nuclear states want to really feel assured. As a group of non-nuclear-weapon states, ASEAN has adopted a policy on nuclear weapons in the form of its declaration on the establishment of Southeast Asia as a nuclear-weapons-free zone. For its effective realisation, however, it needs approval from the nuclear powers. So far the United States, more than the rest of the nuclear states, has stated its objection, particularly as regards the question of innocent passage and the delimitation of such a nuclear-weapons-free zone as it relates to exclusive economic zones (EEZ) recognised by the Law of the Sea Convention. In the context of its security co-operation with ASEAN, the EU may be able to help convince the United States of the need and importance of giving approval to the establishment of a nuclear-weapons-free zone for Southeast Asia. On the non-nuclear aspects of security, the post-Cold-War world is beset by local and regional conflicts. The fact that most of these conflicts have little, if anything, to do with competition between major powers as was the case with many of the conflicts during the Cold War, because the great powers no longer have as great an interest as before, may not necessarily discourage the outbreak or continuation of such conflicts. On the contrary, it may precisely encourage them. These conflicts may have irredentist, ethnic, racial, religious, and/or cultural causes. During the Cold War, Europe was almost entirely preoccupied with the Soviet threat, and thus with the danger of a global nuclear confrontation. The fact that the disappearance of the Soviet threat, and hence the sudden end of the Cold War, was followed by the outbreak of ethnic conflicts on its doorstep seems to have been an entirely new phenomenon, although in centuries past such conflicts were common in that part of the world. Nevertheless, in the present post-Cold-War era, Europe is also facing some problems of a similar nature, particularly those of a religious (Islamic fundamentalist) nature such as in France and Sweden. In some parts of ASEAN, the same problem may be faced, while in some other parts, the problem is one of political Islam rather than Islamic or some other form of religious fundamentalism.

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For the countries of Southeast Asia, and indeed many others in the Asia Pacific region, such conflicts have been part of their lives for years. Here is an area for security co-operation particularly at this stage in the form of dialogues between Europe and ASEAN with a view to sharing experiences, ideas and perceptions. ASEAN countries are rich in varied experience in that field. Indeed, even among ASEAN states, there are differences in the nature and the extent of such conflicts as well as in the kind of approach to their management and solution. Dialogue on these issues would provide an opportunity for both sides to learn from each other and enrich each other. This is true even among ASEAN member countries themselves, because they may not be as open and honest among themselves as needed to discuss such issues. They could be avoided under the pretext of the principle of noninterference in one another’s domestic affairs, or on grounds that they are ‘sensitive issues’. In fact, a dialogue on such issues, although real and important in certain member countries, is seldom, if ever, heard within ASEAN forums. Even among scholars in the region, it is still a new phenomenon. But at least it has begun at the non-official or non-governmental level. This kind of dialogue between ASEAN and Europe may encourage further such activities among ASEAN member countries themselves at different levels. The same thing may be said with respect to such related issues as democracy or democratisation, and human rights, which have been highly sensitive political issues within ASEAN, particularly in its relations with Western powers. These and the security issues that have just been discussed are closely intertwined as far as ASEAN, and indeed Asian countries are concerned, and they are at the same time both political and security issues, which are, more often than not, highly charged with emotion. In the ASEM forum, which is wider and more complex, at least potentially than ASEAN-EU, a strong commitment to the Universal Declaration of Human Rights and other related documents was reaffirmed by the partic ipating countries, despite the lack of ratification on the part of certain countries, including Indonesia. While follow-up activities on this reaffirmation at the ASEM level have yet to happen, there seems to be little reason not to go ahead with dialogues at the ASEAN-Europe level, governmental as well as nongovernmental, to discuss and exchange views on such political and security issues. It is important to note, however, that linking such issues with the aid, trade, investment and other forms of economic relations and co-operation will always be unacceptable to ASEAN states. It would give the impression of blackmail and exploitation of such issues as a diplomatic gambit and the application of a ‘carrot and stick’ approach. Worse still, it would tend to create an impression of selfrighteousness, arrogance and lack of sincerity. On the other hand, ASEAN member states should refrain from formalistic rejections of any mention of such issues as democracy and human rights by repeated references to the principle of ‘non-interference’ in the internal affairs of

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other countries, dubious concepts of so-called Asian values’, or their own peculiar ‘concepts of individual and social rights’ and ‘democracy’ in conformity with their ‘national and cultural identities’. There is no benefit in engaging in recrimination by pointing fingers at the bleak historical records of practically all countries in the world, not the least of all the present industrially advanced countries. There are reasons to suspect that such references often tend to be used, particularly by regimes in power, against external critics, mainly as an excuse or a defence mechanism to conceal certain things that are contrary to democratic ideals and principles, or are in fact denials or violations of human rights. Such responses overlook the pressure and impact of current globalisation of information. Domestically, meanwhile, there is a growing tendency on the part of certain regimes in Southeast Asia to exploit such vague concepts primarily to justify their actions and to perpetuate their own power. Domestic critics of violations of human rights are readily accused of ‘subversion’. If such issues as democracy, justice and human rights are the business of neither private citizens nor governments, nor the international community, then whose business are they? Co-operation between ASEAN and the EU in the form of open and honest dialogues on political and security issues would help promote better mutual understanding of problems. It would help neutralise excessive sensitivity and overcome mutual prejudices and promote mutual trust. ‘Constructive engagement’ should not imply turning a blind eye to what goes wrong. What was perhaps the most interesting feature to emerge from Soedjati’s paper, and the discussion that ensued, was the lively debate about Myanmar. The discussion of whether and how fast to integrate Myanmar into ASEAN was largely conducted by Southeast Asians. The European and American participants were content to sit largely on the sidelines as Asian participants discussed their differing positions. Much of the analysis revealed different national experiences with the tense mixture of economics, politics and even social issues that lay at the heart of the Myanmar debate. What we saw was an emerging, vibrant civil society willing to carry on a real debate about public policy. For Europeans and Asians alike, it was a clear lesson about the diversity of the two regions, and the changing nature of the Asian discourse about their own region. Europeans often had the feeling that when they were criticised by Asians for excessive interference in the internal affairs of Asia, it was because their words were being used as part of an intra-Asian debate. The virtue of meetings such as these is that it helps bring out the complexity of these issues and the equally diverse sources of attitudes and policies.

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EUROPEAN-EAST ASIAN CO-OPERATION IN INTERNATIONAL INSTITUTIONS Having explored the basic features of Europe’s relations with Pacific Asia, the discussion then turned to how those relations have been and can be manifest in international institutions. As we have already indicated, one of the most exciting prospects is the creation of a formal and regular AsiaEurope relationship in the form of ASEM. Michael Leifer has already explained where the ASEM came from in the Europe-ASEAN relationship. Given the central role played by Singapore in the emergence of ASEM, it is only proper that we turn to a senior Singaporean diplomat and analyst of long standing, for a sense of where the ASEM relationship might be headed. We will then broaden out the discussion to other international institutional arrangements. But we begin with Ambassador Mark Hong. MARK HONG ASEM is a bold and unique experiment which tries to promote co-operation between two regions with disparate levels of development, no common history except conflict, domination and exploitation, and very little in common in terms of values and systems—neither geography, ethnicity, politics or strategic interests. The divergences and differences of views are many so the need for dialogue is even greater. In ASEM there are two sides, the EU and Asia. What is also evolving is the Asia’ aspect, because it comprises the ASEAN seven plus three Northeast Asian states, including South Korea. The Asian side has decided on joint co-ordination between one ASEAN and one non-ASEAN country, beginning with Singapore and Japan. The EU clearly will co-ordinate their positions as they have the mechanisms and habits of internal EU consultations, before meeting the Asian ten. Thus the ASEM structure is unique: it can be viewed as an international organisation bringing together twenty-five sovereign states as well as being a two-sided inter-regional co-operative endeavour. Obviously new ground is being explored and the organisation will inevitably develop its own mechanisms, structures and programmes. The pace of progress will be slow but it is better to achieve solid progress, build a climate of confidence and establish common interests in a gradual frame, at a pace comfortable to all members. At the first ASEM it was agreed that ASEM was a useful idea, and all present agreed on the need to reinforce Asia-Europe co-operation in various fields and that there was a need for concrete results. Although differences exist between the two regions, it was agreed that these should not become obstacles. There was a need for dialogue to create better understanding. There was an agreement in principle to co-operate on UN reforms and nuclear disarmament. It was also agreed to co-operate and ensure the success of the WTO Ministerial Conference

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in Singapore in December 1996. Further agreement was reached on co-operation on the work of the WTO, the maintenance of open regionalism, the holding of ASEM Business Forums in Paris (1996) and Bangkok (1997), meetings of economic ministers, and a mini Davos meeting. Proposals for co-operation on specific projects included Mekong river basin development; an Asia-Europe Foundation proposed by Singapore which contributed US$ 1 million as seed money to establish linkages between the thinktanks and universities of both sides; student exchanges programme; environmental co-operation; pan-Asia high-speed railway with possible rail connections to Europe; Asia-Europe business forums; cooperation between Asian and European universities as in the Erasmus Project of Europe; a Cooperation Framework Agreement; meeting of economic ministers in Japan in 1997; working group on investments; investment promotion action plan; setting up an environmental technology centre in Thailand; exchange programmes between think-tanks and research institutes; people to people contacts: all these concrete proposals were listed in the Chairman’s Statement issued by Thailand and the EU. The emphasis was on a concrete follow-up to the ASEM in order to sustain the momentum. Other topics mentioned in the Chairman’s Statement included human rights, money laundering, the fight against organised crime, drug trafficking, terrorism, poverty alleviation, co-operation on trade and investments issues, security dialogue and cultural co-operation. These proposals are now in the hands of senior officials of the respective interested countries. Once implemented, they will create better understanding between Europe and Asia, and strengthen habits and channels of co-operation. ASEM is now well and truly launched. The creation of ASEM has clearly energised the co-operation between Europe and Pacific Asia, but it would be hard to be optimistic about ASEM’s prospects if there were no firm basis for the relationship. Therefore the analysis now turns to a broader assessment of European-Asian cooperation in international institutions. What has been achieved and what are the lessons? I have chosen one political and one economic international organisation as examples. There are not many past examples of such inter-regional cooperation in the framework of the UN. Two examples come to mind: Cambodia and Afghanistan. Both occurred in the context of the Cold War when it was in the strategic interests of both regions to oppose Soviet expan sionism. Cambodia was invaded in 1978 by Vietnam, a Soviet ally. Afghanistan was invaded in 1979 by the USSR itself. Both ASEAN and the West found it useful to co-operate at the UN and to support the antiVietnamese military resistance. China and western Europe strongly supported the annual ASEAN UNGA resolutions calling for Vietnamese troop withdrawal from Cambodia and a comprehensive political settlement of the Cambodian problem. With such strong support, ASEAN was

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able to mobilise ever increasing UN votes and also to isolate Vietnam. This process continued for over ten years and led eventually to the Vietnamese troop withdrawal and the Paris peace agreement on Cambodia. This peace conference was co-chaired symbolically by France and Indonesia. A related issue was the ‘boat-people’ refugee exodus from Indochina in the 1970s. The ASEAN countries provided first asylum, and many European countries took in Indochinese refugees. Europe and ASEAN, China and Japan cooperated to produce the Geneva Comprehensive Plan of Action on solving the boat-people refugee problem, working in conjunction with the UNHCR. Another major conflict was the Afghan war of resistance against the Soviet occupation troops. Here the front-line state was Pakistan. Both Europe and China supported the Mujahideen against the Soviet forces. At the UN, there were annual UNGA resolutions condemning Soviet aggression against Afghanistan and calling for Soviet troop withdrawal and a negotiated settlement. Many Asian countries, other than those in the Soviet bloc, supported these annual UNGA resolutions, including the ASEAN countries, China and Japan. European countries also supported such resolutions and also worked with Asian countries on the Afghan refugees problem. The Soviet troop withdrawal from Afghanistan and the Geneva Accords eventually resolved the problem of Soviet aggression and occupation of Afghanistan. Other examples of European-Asian co-operation to be briefly mentioned are the donor roles played by European countries in ESCAP, ADB, and European ODA programmes for Asian countries; the EU-ASEAN dialogue relationship; the contributions of European countries in various conflicts in Asia such as the Korean War, fought under UN Command, the Indochinese conflicts, the Malayan Emergency etc. Bosnia is another example of Asia-Europe co-operation in the UN context. This is different from Cambodia and Afghanistan in that it is not driven by Cold War rivalries and happened after the end of the Cold War. Asian countries such as Malaysia, India and Pakistan have participated in UNPROFOR peacekeeping together with European peacekeeping forces (UK, France, the Netherlands, Italy etc.). In fact, Asian and European peacekeeping units have co-operated in many UN peacekeeping operations, e.g. Somalia, Rwanda, Middle East etc. UN peacekeeping is one good example of co-operation between Europe and Asia. This is one area where Asian troops and manpower can complement European logistics and airlift capabilities to assist the UN in new areas such as the proposed UN Standby Force. Both Europe and Asia also share an interest in sustaining efforts towards continued liberalisation in the multilateral trading system, ensuring open markets and maintaining transparency and certainty. Both regions also believe in the full and timely implementation of their Uruguay Round commitments, and should cooperate to encourage other WTO members to do likewise. The question has been raised whether regional trading and integration arrangements such as the EU and AFTA (ASEAN Free Trade Area) contribute positively or negatively to the

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multilateral trading system. One view is that, even if free trade areas or customs unions are consistent with GATT Article XXIV, the preferential nature of such regional arrangements could still lead to net trade diversion. The discriminatory effects of regional arrangements could include not only border barriers against non-members, but also rules of origin, dispute settlement procedures and competition policy rules. Proponents of this view therefore advocate that regional arrangements should subscribe to ‘open regionalism’. Although there is as yet no consensus as to the precise meaning of this term, the definitions range from the more general one of the lowering of barriers to nonmembers at the same time as barriers towards members are lowered, to the stronger definition of MFN liberalisation, which is one extreme case of the more general definition, i.e., the lowering of barriers to non-members at the same time and the same rate as the lowering of barriers to members of the regional trading arrangement. Cooperation between Europe and Asia has a lot of potential and can contribute much to the stability and progress of the world. Whilst relations between the US and Russia will always have an undertone of superpower rivalry and suspicion, both Europe and Asia largely comprise middle powers. Some of these have nuclear arsenals, economic strength or large populations, but the rest are middle powers which should be able to cooperate in international organisations or forums like ASEM. They are not burdened by ideological baggage or great power considerations. Hence they can play a useful conciliatory role especially in periods of superpower tensions or confrontation. They can help the UN and other international organisations function more effectively. An orderly world system is in their interest. Asia-Europe co-operation is visionary, and once the habits of cooperation and dialogue are well established, these will help refute the thesis about the conflict of civilisations. Strong co-operation between Asia and Europe can serve as building blocks to help achieve a better world in the next millennium. A vision is necessary to guide our efforts in this complex and difficult task. Otherwise the co-operative efforts will lapse into a laundry list approach. Thus whilst there is much scope for co-operation between Asia and Europe in international organisations, this is not as wide nor as challenging as the direct co-operation between the two regions. Such vision in the Asia-Europe relationship may seem enormously ambitious, but much of the discussion suggested that it was worth welcoming such ambition at least at the outset of the ASEM process. There was plenty of time for realism to creep in to the subsequent meetings in London and Seoul. The risks of realism proved to be a major feature of the subsequent discussion and it featured in the next paper by Hanns Maull. He placed the ASEM process and other dimensions of Europe-Asia cooperation in the wider context of a discussion on the best ways to enhance international governance.

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HANNS MAULL Successful international governance must rely on more than just a balance of power. It needs to build on assets of voluntary association provided by international society, such as a sense of community built on shared values and aspirations and transnational networks and social institutions. International society today already seems capable of providing some transnational problemsolving capacity. It also can underpin political efforts to do so through international regimes and institutions set up by governments. The latter in effect often represent a partial and voluntary transfer of national authority to resolve political issues through international mechanisms of co-operation. Some of this capacity for collective action needs to exist at regional levels. Regional security communities represent examples of successful international governance. There may in reality be very different forms of security communities, and different paths leading towards their establishment. The history of existing security communities seems to suggest, however, that the formation of such communities may be a non-linear process involving qualitative jumps, rather than step-by-step evolution. In any case, their establishment will always imply qualitative changes in patterns of state behaviour which take it beyond the realm of power politics to make the security dilemma obsolete. Successful international governance may thus depend on the ability of regions to serve as building blocks of international order. Regions will thus have to be able to provide for a system of regional peace, stability and prosperity, while remaining open for co-operation within wider, trans-regional and global frameworks. Their ability to do so will depend on the characteristics of the region itself, and on key players. How amenable are regional settings in Europe and East Asia (which are defined here to include Western, Central and Eastern Europe—including Russia, the Ukraine and Belarus— for ‘Europe’, and North and Southeast Asia for ‘East Asia’) to effective cooperation? Are there structural reasons which make the evolution of a security community (or security communities) in East Asia less likely than in Europe? It is often argued that the two regions are fundamentally different—so different in fact that comparison is of little practical political value. I beg to differ. While the differences are obvious and important, there are sufficient commonalities to warrant a comparative analysis, including analysis of policy implications. The first commonality between our two regions is often seen as a major difference: heterogeneity. East Asia certainly is an extremely heterogeneous mix of cultures and conditions, which historically and culturally never formed a coherent region.25 But so is Europe. After all, it is precisely Europe’s heterogeneity which historians see as the prime cause for ‘the rise of the West’,26 and while culturally the heritage of the Roman Empire and Christianity has given ‘Europe’ a certain cohesion, religious and political splits have produced conflict of enormous ferocity and persistence. Yet, as European history has shown, heterogeneity is not a factor shaping international relations in itself—it depends

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what you make of it. It can be used to justify dissociation (i.e. keeping one’s distance from each other), but can also serve as the basis of economic exploitation or mutually beneficial division of labour; it can be a source of indifference, but also one of friction and war or of co-operation and mutual learning. East Asia may be much more heterogeneous than Europe, but the differences seem to be shrinking. Whether they add up to a different quality, seems dubious. Moreover, even if they do, it may not matter much. Both regions also share another characteristic: they are sub-divided to an extent which may make it difficult to conceive of them in any practical way as ‘regions’. East Asia is divided into Northeast and Southeast Asia, the latter again sub-divided into Indochina and the maritime region. Europe is divided (by wealth and political stability) between East and West, but also (by religion and culture) between Scandinavia, ‘Western’ Europe, the (Mediterranean) South, and the Balkans. Again, this will in itself not determine the degree of co-operation or conflict within the region—though like the common feature of heterogeneity it will obviously make for patterns of co-operation which are complex. Both regions also are marked by significant asymmetries in the distribution of national power; more specifically, both have one overwhelmingly large and (potentially) overwhelmingly powerful country within the region, which because of its size and importance cannot be integrated fully in the region alone, but stalks the global scene as a great power: in Europe, this is Russia, in East Asia, it is China.27 To check their power, and to integrate them successfully into a system of international governance represents a challenge of global dimensions.28 Neither of the two regions thus has much chance to remain self-contained, except under the thumb of the great power. The existence of a great power which cannot be fully integrated in the region provides a common focus for others in the region: they will attempt to help balance this great power, to seek its tutelage through submission, or to integrate it within the framework of a regional system of governance combining voluntary association, checks and balances and hegemony. To achieve this, other countries in the region may seek external support—as both regions have done by relying on the United States to balance the great power—but also engage it in rudimentary forms of international governance (such as arms control, nonproliferation regimes and informal regimes of crisis management), so as to reduce the risks of confrontation. In much recent analysis of security conditions in East Asia, countries have simply been classified according to their relative power and importance, with the assumption that systemic constraints would produce similar patterns of behaviour for countries of similar power. Yet this line of reasoning has never been entirely satisfactory in explaining international relations. In the past, for example, it failed to explain important differences in the ‘strategic cultures’ of America and the Soviet Union during the Cold War,29 and also the very distinctive foreign policy cultures of Germany and

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Japan as ‘civilian powers’.30 Evidence, as well as common sense, suggest that particular national foreign policies will reflect both external constraints and opportunities and domestic influences ranging from historical experiences and cultural predispositions to characteristics of the political system. But if foreign policy conduct is seen as shaped by societal forces, rather than by systemic conditions, then it is plausible to assume that foreign policies will differ within and across regions not only with regard to specific policies, but also more fundamentally in their foreign policy outlook, the way states look at the world and their own place in it, define their interests and objectives, and design their policy instruments and strategies. For this, Hanns Maull uses the term ‘foreign policy culture’. For him, the analysis of foreign policy culture is an important but rather underdeveloped element in any assessment of prospects for international co-operation, both at the regional and at the global level. National policy perspectives will largely determine the degree to which states will be willing and able to co-operate, as well as the preferred forms of cooperation. Hanns Maull argues that different foreign policy cultures do seem to exist both between and within East Asia and Europe. Examples of countries with particularly co-operative foreign policy cultures include Japan and Germany (who were socialised into their ‘civilian power’ foreign policy culture by America), as well as a number of smaller Western European countries and Canada and Australia. The ASEAN states have developed their own, distinctive approach, and have achieved considerable convergence in their respective foreign policy cultures. Through the ASEAN-PMC, the ARF and ASEM, ASEAN has also tried to project this foreign policy culture beyond its immediate realm. America has its own, very distinctive foreign policy culture, which combines a sense of mission with a liberal creed and the peculiarities of a democratic foreign policy. China may represent ‘a great power of a new type’—as a German China watcher has argued31—or it may be about to revert to its traditional foreign policy culture shaped by China’s hegemonic exercise of suzerainty and cultural dominance over much of East and Southeast Asia. More plausible, for Hanns Maull, however, is the assumption that today’s China displays a foreign policy culture imbued with vintage nineteenth-century European power politics.32 This would be highly ironic if quite understandable, given the way European powers brutalised Chinese civilisation from 1860 onward. China’s foreign policy culture would in fact reflect its tragic encounter with European power politics. What are the key features of those differences in foreign policy cultures? How can they be explained? And what are their implications for regional co-operation? The following analysis by Hanns Maull tries to sketch some answers to those questions.

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An important distinction between foreign policy cultures relates to the stage of development of the respective nation state. In this perspective, Europe is a region of (mostly) ‘old’ or ‘defensive’ nationalism. This seems to be true even for nationalism’s youngest (and particularly vicious) variant, ethnonationalism: ethno-nationalism, however aggressive in its consequences, is basically motivated by the desire to defend the identity and interests of an ethnic group under conditions of wrenching social change. Since ethnic groups as a rule simply do not have much of a chance to survive economically on their own, European ethno-nationalism is under strong pressure to find accommodation within existing states. East Asia, by comparison, is a region characterised by a ‘young’, assertive and potentially expansive nationalism: the tasks of nation-building (a profoundly ‘Western’ notion) are far from complete, thus stimulating nationalism as an ideology mobilising societies for social transformation. More specifically, nationalism in East Asia seems to represent a fusion of Western and Asian influences. The impact of the West on East Asia in the nineteenth century through its technological and military superiority unleashed efforts at ‘Westernisation’ or ‘modernisation’33 and produced anti-colonial movements (which in many ways reflected the European experience) where European colonialism had subjugated East Asian countries. Indigenous sources of nationalism in East Asia may be found in ethnocentrist traditions in Southeast and East Asia. Asian ethnocentrism reflects cultural influences (such as the ‘mandala’ principle of rule, religion, or Confucian concepts of the state).34 Nationalism in Japan, however, seems to have changed as a result of Japan’s experiences in the Pacific war into a rather European, ‘old’ type of nationalism.35 In a study of the subject, Bruce Stronach distinguishes different types of nationalism—socio-cultural, self-determined, state-oriented—and finds that Japanese nationalism has changed substantially during the last fifty years, from a state-oriented, expansionist and militaristic form to a nationalism which is sociocultural, rather than stateoriented, and as such rather benign.36 It is also interesting to note that processes of democratisation in South Korea and Taiwan seem to have mellowed the strength of nationalist feelings. In Korea, prosperity and democratisation seem to produce a more sober attitude towards unification with the North, while in Taiwan, it has accentuated ethnic Taiwanese nationalism, a ‘defensive’ form of nationalism. The prevailing forms of nationalism will obviously also shape attitudes towards national sovereignty and independence. In Europe, there exists a general willingness to accept the sharing of sovereignty in formal or informal institutions. This reflects the defensive character of its nationalism —it is about defending vested interests, including that of the state, but normally willing and able to compromise for the sake of advancing those same interests through international co-operation. In Eastern Europe, Western institutions (in particular, the European Union and NATO) powerfully attract most countries—they perceive association and eventual entry at the earliest possible date as the surest way to achieve

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security and prosperity. But even for those Eastern European countries for which this option looks remote (e.g., Ukraine), compromising national sovereignty in international institutions (in this case, the Commonwealth of Independent States or its more recent cousins) for economic and security reasons seems a more promising way to moderate Russian hegemony than insistence on full independence and autonomy. The only major exception in Europe, with regard to attitudes to sovereignty, is Russia. In East Asia, by comparison, sovereignty is fiercely guarded and treasured, and international co-operation is conditional on sustaining, even enhancing national sovereignty and autonomy. Again, however, Japan seems to form an important exception to this rule. One of the key principles of post-war Japanese foreign policy has been reliance on US security guarantees in lieu of an autonomous national defence posture. By implication, this has produced a very symbiotic, highly complex and integrated relationship between America and Japan which is characterised by strong interdependencies and heavy ‘interference’ in each other’s domestic affairs. A further category to differentiate foreign policy cultures focuses on images of international relations and the definition of national interests, foreign policy objectives, and strategies. Since actual decisions reflect those images and definitions, they are critical for overall foreign policy orientations. States will behave in accordance with how their leaders see the world and define their interests —yet their behaviour may well turn into selffulfilling prophecies: they may get the world which they imagine.37 In Western Europe, images of international relations and definitions of national interests are modified by the extrapolation of democratic norms and principles into the foreign policy arena and (for most countries) by a general willingness to share sovereignty. Domestic power sharing has enhanced a willingness to accept this notion in international contexts, as well (though this willingness obviously will vary with the specific international context), and the fact that European democracies (at least so far) have proved to be ‘strong states’ has also broken the link between national security and regime security. Also, the perception of international relations within Europe has moved away from a traditional, ‘realist’ view of international politics towards views associated with ‘complex interdependence’:38 thus, national interests are no longer strongly prioritised but fused; the traditional distinction between ‘high’ and ‘low’ politics no longer makes much sense in a context where practically all major political issue areas have acquired international dimensions and are addressed through European mechanisms. As Eastern Europe closes in on Western institutions (or tries to achieve a modus vivendi with Russia), similar views can be expected to prevail. In East Asia, by comparison, national interests are shaped by concern about sovereignty and a desire to sustain domestic political stability and national unity. ‘Resilience’ is a keyword in this context; it has assumed a central role in ASEAN foreign policy culture. While the distinction between ‘high’ and ‘low’ politics

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has become rather irrelevant within Europe, it still is strong in East Asia. Economic development, however, shares top priority with national security (or may even have even greater importance). While images of international relations reflect traditional ‘realist’ assumptions about the centrality of power and balanceof-power politics, they also accord a high priority to economics, and thus also integrate strong awareness of economic interdependence. In thinking about security, the national security dimension remains central, in spite of efforts to promote international security thinking through co-operative security measures and multilateral security dialogues. It also often remains closely linked to regime security. A further difference in foreign policy cultures concerns patterns of diplomacy, the style of foreign policy conduct. This line of enquiry is epitomised most fully by Michael Haas’s study on the ‘Asian way’ of international relations,39 which argues that there indeed are fundamental differences between Asian and nonAsian foreign policy conduct. The Asian way to peace, according to Haas, operates at two levels—that of general beliefs and orientations, and that of practices and procedures—and incorporates six major principles: (1) Asian solutions to Asian problems, (2) equality of cultures, (3) consensus decisionmaking, (4) informal incrementalism, (5) primacy of politics over administration, and (6) pan-Asian spirit. This list bears considerable resemblance to summaries of the ASEAN way’, the ‘APEC way’ or even the ‘Pacific way’ of decision-making. ASEAN’s formula of success is generally seen to consist in its insistence on informality and on noninterference in each other’s internal affairs, in consensus-building, voluntary and even unilateral but co-ordinated decisions, in patient dialogue among political leaders, and tacit postponement of conflictual issues. The ASEAN approach relies on creating atmosphere, rather than binding rules and institutions; it prefers mediation to arbitration. APEC has evolved a similar pattern, which had emerged fully by the time of the Osaka Summit of 1995: its essence consists of voluntary and unilateral yet co-ordinated trade liberalisation measures. This line of reasoning raises three questions. First, is there really a difference between European and Asian foreign policy cultures? Second, if there is, how meaningful is it? And third, if there are distinctive and meaningful features about Asian ways of conflict management, how successful are they? As to the first question, we have noted already that there are significant differences in foreign policy cultures between East Asia and Europe, but also within East Asia. The latter, in fact, are more pronounced than differences within Europe. The commonalities of style, which Haas identifies, may thus be more apparent than real—‘tatemae’, rather than ‘honne’, in Japanese terms. Certainly, the gulf between the foreign policy cultures of China and Japan, for example, presently seems huge by any standard. It is also clear that foreign policy cultures in East Asia today represent a fusion of Western and Asian elements, rather than exclusively Asian policies. This does not preclude, however, the evolution of novel yet effective forms of conflict

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management.40 The ASEAN way is generally credited with considerable success in pacifying intra-ASEAN relations, and ASEAN has taken the lead in projecting this approach onto the wider Asia Pacific and even global scene through the multilateral dialogue processes of ASEAN-PMC, ARF and ASEM. Progress in those efforts has been slow, however, and there is considerable scepticism as to how effective existing multilateral security structures are.41 Yet another line of reasoning classifies foreign policy cultures in accordance with their respective political systems. The most important example for this school of thought is, of course, the notion of ‘democratic peace’— democracies do not go to war with each other (though it is unclear to what extent this also holds for countries undergoing processes of democratic transition, and for countries with very young nation states). Countries in Europe are either democracies or polities in transition away from communism (the exception is Turkey, which, as a democratising authoritarian system, in that respect resembles East Asia). In East Asia, countries are either authoritarian but undergoing more or less pronounced processes of democratisation (a process which has largely been completed in South Korea and Taiwan), or communist systems in transformation (China, Vietnam, Laos and North Korea). The major exception again is Japan, a fully developed democracy which was ‘socialised’ as such by the American occupation. Conditions for ‘democratic peace’ therefore do not yet exist, though the ASEAN notion of regional resilience built on national resilience, as well as the consensus about regional stability as an essential precondition for economic development (what might be called ‘capital peace’) bear some resemblance to this. Maull has argued that prospects for enhanced co-operation and successful international governance will depend on interaction between state and society within, as well as between, countries. Regions will have a critical role to play in this—if they manage to keep their own house in order and do so in ways which will be open to co-operation with other regions and in global contexts, they could become important building blocks of successful international governance. Balance-of-power approaches alone, however, will not be sufficient to ensure successful international governance—they fail to address important societal dimensions of political reality and carry a number of inherent risks. Maull’s comparative assessment of chances for enhanced international cooperation in the two regions East Asia and Europe has focused (1) on commonalities and differences between the two regions with relevance to their capacity for collective action, and (2) on patterns of interaction between state and society, in particular on respective foreign policy cultures. He has shown that the potential for effective collective action exists in both regions. In East Asia, it is still rather rudimentary and pushed forward by transnational, societal forces, while it may be declining in Europe precisely as a result of societal constraints on governments and institutions. The

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challenges and obstacles to be overcome seem to be considerably more important in East Asia, however. The reasons are a greater potential for political instability, the nature of conflicts in East Asia, but most importantly foreign policy cultures which are relatively more divergent and intrinsically more averse to the evolution of effective capacities for collective action. Western Europe has been successful in the transformation of inter-state relations and foreign policy cultures away from traditional balance-of-power politics, and it is beginning to draw Eastern Europe into this achievement, as well. Overall, challenges to regional governance may be less pronounced than in East Asia, although European stability may be threatened from the peripheries in the East and in the South. Europe’s capacity for effective collective action in coping with future challenges still seems insufficient, however, and there are also worrying signs of institutional erosion and decay. The key problem is deficiencies in effectiveness. While Europe has highly developed and institutionalised forms of voluntary association built on shared values both at the transnational/societal and at the intergovernmental level, and while it also has transformed balance of power into effective checks and balances against hegemonic abuse of power, it suffers from a deficit in leadership, which so far America has had to provide. In East Asia, the approach to regional governance is bifurcated and highly ambivalent. While regional society is still weak, this may now be changing very rapidly under the impact of dynamic and highly flexible transnational networks of interdependence. A common identity also seems to be developing, and there already exists a considerable capacity of international society to solve problems in the economic realm. Voluntary association also finds new expression in the proliferation of official and ‘track two’ dialogue activities and ‘soft’ institutions with peculiarly Asian’ approaches in both the economic (PECC, APEC) and the security realm (ASEAN PMC, ARF, CSCAP). Stability seems to be ensured, however, predominantly through the operation of rough balances of power and power politics both at the sub-regional level (Korean peninsula) and the regional level (China vs. America and the US-Japanese security partnership); only in Southeast Asia are there signs of a transmutation of balance-of-power politics. East Asia thus has to move forward on two fronts simultaneously: towards a transformation of interstate relations and the development of capacities for effective collective regional action. Such capacities for collective action (which need not be military action, nor comprehensive in participation) will be needed to underpin the balance of power elements of a successful system of regional governance, which until now have been provided by the US presence and the USJapan Security Treaty. Both will be needed in the future, as well, but need to be enhanced through supportive arrangements. Examples might be co-operation between America, Japan and China in ensuring stability on the Korean peninsula42 or ASEAN’s common position vis-à-vis China on the Mischief Reef incident, which did seem to have some impact on Chinese attitudes.43

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Capacity for collective action will also be needed, however, for the establishment of authoritative rules and arrangements in and for East Asia. While those exist, in principle, at the international level already (primarily in the form of the WTO and the Bretton Woods institutions in the economic realm, and that of the United Nations for issues of international order), East Asia (and Asia Pacific) so far has relied mostly on America’s presence and leadership, and residually on the Asian way’ of consensus-building and unilateral yet co-ordinated action. It is hard to see this approach survive, however, once the easy gains from cooperation have been realised. It also puts the onus of effective rule-making at the global level and thus potentially contributes to overload problems at this level. Asia Pacific’s ‘open regionalism’ and its novel way of organising regional governance thus reflect a number of deficiencies, as well as specific advantages and opportunities. At present, capacity for effective collective action thus seems limited in both regions, though it is further advanced in Europe. Yet even there, it ultimately is the United States which ensures, through its presence and leadership, regional stability and peace, and the same is even more evident in East Asia. It may not matter. America may be willing and able to sustain its role of ‘benign hegemon’ for the foreseeable future, as its rhetoric suggests. Yet it would be prudent for both Europe and East Asia not to start from this assumption for at least three reasons. The first is the continuing decline in America’s relative weight and power in international relations. This will inevitably weaken America’s capacity to sustain its post-war role.44 Secondly, even if it had the capacity to do so, there are growing uncertainties about America’s willingness to continue in its role as benign hegemon. American society is changing, and tensions are mounting—and this is beginning to show in its foreign policy culture. Thus, America’s partners can no longer be sure whether America will want to continue as hegemon at all (for example, it declined to do so for years in former Yugoslavia), or whether it will not shift to policies which maximise American interests without any regard for systemic consequences (witness the Clinton Administration’s emphasis on American economic interests as a key foreign policy concern).45 Thirdly, even if America were willing and able to sustain its role as benign hegemon, Europe and East Asia would do well to enhance their respective capacities for collective action simply because this would, if done responsibly, in fact increase the probability of America doing its bit. By being able to secure regional stability, in a crunch, without America, Europe and East Asia would actually help to keep America constructively engaged. How could regional co-operation be enhanced in East Asia and Europe? Europe has transformed its balance of power and evolved a dense and highly institutionalised international society. Objectively, the only remaining balancing problem outside an institutionalised context concerns Russia. Given Russia’s still huge destructive arsenals, US guarantees will continue to be important and a residual presence will be desirable. But the challenge of Russia basically lies in its weakness and internal upheavals, not in its power. Balancing Russian power

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will thus probably be neither particularly relevant nor particularly difficult. To sustain effective international governance in Europe, Russia will have to be integrated in the system, and this can only be achieved through transnational and intergovernmental efforts at association. Europe’s main problem is to develop capacities for effective collective action. In the economic realm, this has already been achieved to a significant degree, but beyond that, Europe has shown woeful deficiencies in getting its act together. The impulse to overcome those deficiencies probably will have to come from European societies: the Maastricht Treaty unfortunately demonstrated that courageous political leadership by governments has become prohibitively difficult. Yet, as this episode showed, European societies constrain, rather than facilitate, the development of effective political capacities for collective action. In East Asia, by comparison, multilateral political processes get their dynamism from societal forces, above all from business. Yet as the transformation of balance-of-power politics still has to be achieved, those gains may be superficial. To achieve such a transformation will require a two-track effort of sustaining yet transcending the balance of power. This, in turn, will be possible only with substantial changes in the foreign policy cultures of key players. America will have to change its foreign policy culture from ‘hegemonic multilateralism’ to an acceptance of joint decision-making and mutual adjustment. China, as well as a number of other East Asian countries, will have to accept constraints on their national sovereignty. And Japan will have to increase its contributions to effective regional governance while retaining its ‘civilian power’ foreign policy culture. A good chance to sustain and enhance processes of foreign policy learning in this sense may well lie in the realm of international society—specifically, in a proliferation of economic interdependence and transnational business activities, but also in dialogue processes, exchanges and joint projects such as this. NOTES 1 As quoted by Michael Richardson ‘U.S.-China-Japan balance: signs of stress’ International Herald Tribune (April 4, 1996), p. 7. 2 European Document Research, September 20, 1995. Ref: COM(95) 279 final, 5 July EDR 144x. 3 The Taiwan figure is cited in Gary Klintworth, New Taiwan, New China: Taiwan’s Changing Role in the Asia Pacific Region (Sydney: Longman Australia Pty Ltd., 1995), p 152; and that of Europe from the statistical annex to the Commission’s 1995 policy statement. 4 David Shambaugh, China and Europe (London: Contemporary China Institute, Research Notes and Studies, No. 1 1, 1996), p. 25. 5 ‘Boeing says political tension threatens its progress in China’, International Herald Tribune (April 19, 1996), p. 19.

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6 See ‘Quarterly chronicle and documentation’ The China Quarterly, No. 145 (March 1996), pp. 259–60. 7 For detailed analysis see Michael Yahuda, Hong Kong: China’s Challenge (London: Routledge, 1996). 8 For example, EU investors put only 1 per cent of their capital in Asia. International Herald Tribune (January 17, 1996), p. 13. 9 Source same as table 6. 10 Gary Bertsch (ed.), East-West Economic Relations in the 1990s (Macmillan, 1989), p. 153. 11 It is interesting to note that in the same year, 1992, the American trade with East Asia also exceeded that with EC. 12 Helmut Kohl, in Welt am Sonntag (September 1993), see ‘German Asian policy’, Botschaft der Bundesrepublik Deutschland, Peking, 1993, p. 5. 13 Volkmar Kohler, Value Conflict and Concrete Co-operation Between EU and the People’s Republic of China, China-German Relationship in Asian Context, Social Sciences Documentation Publisher, 1995, p. 24. 14 For example, there are disagreements between the US and EU on the means and time of China’s entry into WTO. EU supports China’s early entry in 1995. 15 China has called for the establishment of a new international economic and political system for a long time, which means it does not agree to all current rules and norms. 16 ‘New world order’, The Economist (January 8, 1994), p. 8. 17 Lee Hong-koo, ‘Attitudinal reform toward globalisation’, Korea Focus, vol. 2, No. 2 (1994), p. 86. 18 See, Stuart Harris and Brian Bridges, European Interests in ASEAN (Routledge and Kegan Paul for RIIA, London, 1983). 19 It is notable that the Danish, Greek, Spanish and Swedish Prime Ministers were unable to find the time to attend the first Asia-Europe Meeting (ASEM) which convened in Bangkok in March 1996. 20 ‘Towards a new Asia strategy’, Commission of the European Communities, Brussels. 13 July 1994. 21 See, Michael Leifer, The ASEAN Regional Forum Extending ASEAN’s Model of Regional Forum, Adelphi Paper No. 302 (Oxford University Press for IISS, London, July 1996). 22 Jaques Pelkmans, ASEAN-EC relations in the 1990s’ in Lee Lai To and Arnold Wehmhoerner (eds) ASEAN and the European Community in the 1990s (Singapore: Singapore Institute of International Affairs), p. 50. 23 Elfriede Regelsberger ‘The relations with ASEAN as a “Model” of a European Foreign Policy’, in Giuseppe Schiavone (ed.) Western Europe and Southeast Asia (London: Macmillan, 1989), p. 84. 24 Note the comment in International Herald Tribune (17 January 1996). 25 See Gerald Segal, Rethinking the Pacific (London: OUP 1990). 26 See William H.McNeill, The Rise of the West (Chicago: Chicago University Press, 1963). 27 It is interesting that this pattern can actually also be applied to the past. In the late nineteenth century, the dominant European power which was too big to be handled by the region alone was Germany; in East Asia, whose integration into world politics took place only in the second half of the nineteenth century, Russia and

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then Japan arguably played this role before World War II, while the Soviet Union held this position during the Cold War. See, for China, Yoichi Funabashi, Michel Oksenberg and Heinrich Weiss, An Emerging China in a World of Interdependence (New York: The Trilateral Commission 1994) (A Report to the Trilateral Commission No. 45); James Shinn (ed), Weaving the Net, Conditional Engagement with China (New York: Council on Foreign Relations Press 1996). See Alastair Ian Johnston, ‘Thinking about strategic culture’, in International Security, Vol. 19, No. 4 (Spring 1995), pp. 32–64 (36f.). Johnston offers a very good introduction to the concept of ‘strategic culture’, which closely resembles the term ‘foreign policy culture’ used here. For a discussion of strategic culture in East Asia, see Desmond Ball, ‘Strategic culture in the Asia Pacific region, in Security Studies, Vol. 3, No. 1 (Autumn 1993), pp. 44–74. Hanns W.Maull, ‘Germany and Japan—the new civilian powers’, in Foreign Affairs, (Winter 1990/91), pp. 91–106. Christoph Müller-Hofstede, ‘Reichtum und Macht, wirtschaftliche Dynamik und politische Risiken in Ost- und Südostasien’, in Wichard Woyke and Paul Kevenhörster (eds), Internationale Politik nach dem Ost-West-Konflikt, Globale und regionale Herausforderungen (Münster: Agenda Verlag, 1995). See David Shambaugh, ‘Growing strong: China’s challenge to Asian security’, in Survival, Vol. 36, No. 2 (Summer 1994), pp. 43–59. The subtle difference between the two notions was fully recognised early on. Thus, in late-nineteenth-century Japan, there were two different schools about the best way to reform Japan—one trying to turn Japan into a Western country, the other relying on adaptation of Western techniques and methods while retaining the essence of Japan. Cf. Jürgen Rüland, ‘Ethnozentrismus, Nationalismus und regionale Kooperation in Asien’, in Brunhild Staiger (ed), Nationalismus und regionale Kooperation in Asien (Hamburg: Institut für Asienkunde, 1995), pp. 1–20. An interesting illustration of differences between ‘old’ and ‘young’ nationalism in East Asia were the very different attitudes in South Korea and Japan in the recent Takeshima/Tokdo Islands dispute. See Financial Times (Feb. 12, 1996). Bruce Stronach, Beyond the Rising Sun: Nationalism in Contemporary Japan (Westport, Conn.: Praeger, 1995). Alexander E.Wendt, ‘The agent-structure problem in international relations theory’, in International Organization, Vol. 43, No. 1 (Summer 1987), pp. 335–70. Robert O.Keohane and Josph S.Nye, Jr., Power and Interdependence (Princeton: Princeton UP, 1987, 2nd rev. edn). Michael Haas, The Asian Way to Peace, A Story of Regional Co-operation (New York: Praeger, 1985). Also Franáois Godement (ed.), ‘Conflict resolution in Asia: exception or example?’ Theme paper presented at the European Union-Asia Cultural Forum, Venice (Jan. 1996). This is the thrust of the argument of Mahbubani, The Pacific Way. See ‘The slow progress of multilateralism in Asia’, in Strategic Survey, 1995/96, London: IISS 1996, pp. 189–96; Amitav Acharya, A New Regional Order in South East Asia: ASEAN in the Post-Cold War World (London: IISS, 1993) (Adelphi Paper No.279), esp. pp. 57ff; Andrew Mack/Pauline Kerr, ‘The evolving security

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42

43 44 45

discourse in Asia Pacific’, in Washington Quarterly, Vol. 18, No. 1 (Winter 1995), pp. 123–40. The recent initiative by the United States and South Korea concerning a multilateral security dialogue involving North Korea, China and Japan, as well as South Korea and the US, from this perspective seems a useful initiative. Strategic Survey (1995/96), p. 190. Douglas Stuart and William Tow, A US Strategy for the Asia Pacific, Adelphi Paper No. 299 (Oxfod University Press for IISS, 1995). This view is sometimes contested in America but widely shared in East Asia. See, e.g., Ralph Cossa, The Japan—U.S. Alliance and Security Regimes in East Asia, A Workshop Report (The Institute for International Policy Studies/The Center for Naval Analysis, 1995), p. 10.

6 Envoi

Given the complexity of the topic of European-Asian relations, and the newness of many of its trends, we thought it fruitless to try to impose an unnatural common conclusion. Instead, we sought a ‘strategic think piece’ from one of Europe’s most subtle strategic thinkers, François Heisbourg. His analysis will annoy some, but it is intended to stimulate grand thinking worthy of the grand enterprise of evolving a new relationship between Europe and Pacific Asia. FRANÇOIS HEISBOURG However tempting it may be to simplify the world as a system to a set of geometrical points and lines, such attempts rarely capture the essence of reality: the bipolar world of the Cold War was uncharacteristic in this regard; and even it could not capture the specific nature of international relations within the Asia Pacific region, which was marked from the early sixties onward, by the existence of a third ‘pole’, China. Uneven concentrations of power in space and time, fields of influence of varying strengths and types, will tend to be more apt descriptive tools than those of the geometrical figure, triangular or otherwise. As far as power relationships are concerned, between the three summits of the ‘Great Power Triangle’, there are three orders of magnitude. The first order of magnitude is today’s relations between the United States on the one hand, and its East Asian and European partners on the other. These relations are both complete and strong. They are complete, because they cover the whole spectrum of what constitutes power relations. US ‘cultural production’ dominates television and the cinema notwithstanding national or multilateral (European Union) quotas attempts at curbing it. Cultural production, broadly defined, has become America’s second largest category of exports, behind aerospace, and its second largest trade surplus. Politically, the US is at the centre of European security affairs via NATO and its recent extension, the Partnership for Peace, of which it is the clear leader. In East Asia, the US is at the axis of a hub-and-spoke system which is less pervasive than NATO is in Europe, but of which America has unfettered control. In terms of foreign economic policy, the US has less freedom

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of action vis-à-vis the European Union—which in this field at least speaks with one, rather powerful, voice—than towards the East Asian states. Relations with Asia are dealt with on a one-by-one basis by the US, with the full brunt of American power (including blunt instruments such as ‘Super 301’) being felt by each in turn from Thailand to South Korea. A strong World Trade Organisation has not yet emerged as an alternative in this respect; nor have the East Asians found a basis to co-ordinate their foreign economic policy. Finally, the preponderance of US military power has already been noted. Flying a B2 bomber from the US successively to the Paris Air Show (in 1995) and the Singapore Air Show (in 1996) Air Shows contains a powerful dose of symbolism as to the reality of American power projection capability. The US today is not simply at the apex of the Triangle, it is truly the pivot of the world system. The power relationship between Europe and East Asia is one order of magnitude lower on the scale. Culturally, Europe—or more accurately individual European countries (foremost the UK and France)—retains a presence in various parts of East Asia. In political terms, the European Union hardly exists as such in East Asia. But in specific instances European states (sometimes pulling in wider EU funding) have played a significant role: Cambodia in 1992–93; more recently, French, British (and EU) funding in the Korean Energy Development Organisation. In security terms, the United Kingdom has maintained a fairly substantial link, through the Five Power Defence Agreements, with Malaysia, Singapore, Australia and New Zealand, and has provided (for a fee) Gurkhas for the defence of Brunei. Arms exports from Europe, which have been growing in the region, may prove to be a significant element in the growth of this side of the Triangle. European economic and commercial ties in the region are considerable, and developing more rapidly than those between America and East Asia. East Asia has become the first destination for European exports, and its main source of imports. In absolute terms, European Union trade with East Asia (minus Japan) reached an annual rate of $226 billion during the first quarter of 1995, not far behind the US’s trade with East Asia ($266 billion). EU investment in East Asia (minus Japan) is comparable to that of the US, although investment by the US in the EU and by the EU in the US retains first rank in both the American and European cases. Furthermore, there is no gross imbalance in European-East Asia trade relations, whereas the US has a massive trade deficit with East Asia. Trade frictions between the EU and East Asia should remain fairly low key. Finally, the EU-East Asian relationship is enjoying healthy growth. Trade between the EU and East Asia more than doubled between 1988 and 1994 (versus 76 per cent growth of US trade with East Asia). The power relationship between East Asia and its European and American partners is of an even lower order of magnitude, although it is poised to grow rapidly. The cultural dimension is modest even if one doesn’t set aside diasporabased influence (‘Chinatowns’ in the US, London or Paris; Nisei, Isei and other Asian-Americans). Karaoke bars and ‘ethnic’ restaurants are still the most tangible sign of the cultural presence. Politically, Japan has acquired some kudos, but

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largely through its role as a paymaster of the UN and a number of its voluntary agencies, not as a direct player in world affairs. East Asia is hardly a political factor in European affairs: the Bosnian war or the military nuclear legacy of the USSR has not witnessed notable East Asian political activity or influence. At the multilateral level, relations have been feeble, but it has been expanding recently and rapidly. The EU’s participation in the first ASEAN Regional Forum, at ASEAN’s invitation in 1994, was followed by the first ASEM in Bangkok in March 1996. This was the first true European Union-East Asian summit. Although little was actually done, the potential for development is there. Indeed, from an Asian perspective, two things appeared to have happened on that occasion which may signal the shape of things to come: • the East Asian countries were represented, much along the lines suggested in previous years by Prime Minister Mahathir of Malaysia for an East Asian caucus. • East Asia finds itself at the intersection of two groups: Asian-European, with ASEM, on one hand; Asian-American on the other, with APEC. If substance is given to these relationships, the geopolitical consequences would be far-reaching. In the meantime, East Asia’s political influence in European or American affairs is minimal. The issue of Japanese or Korean investment into Europe or America, is not politically neutral; and trade relations between the US (to a much lesser extent, the EU) and East Asia, have been a major concern with political consequences. But in terms of the power relationship, it is the Americans who have been attempting to wield the stick of trade relations against the Asians rather than the other way around. Selling Japanese cars in the US may make Japanese auto makers powerful, but this has not given Japan as such the power to shape international relations positively or to assert itself on the international scene. Finally, in military terms East Asia has been, outside of its region, a quasi-absent actor. Approximately 1550 Malaysian soldiers deployed in Bosnia and 250 Indonesian military in Croatia from 1992 onwards appear to be the only visible exceptions. As East Asia enters into a new strategic era, and as economic growth provides the wherewithal for establishing large and modern armed forces, this will change. This is apparent as a first step in its position as an arms importer. Arms purchases are not usually a politically neutral act, and they can be used by the purchaser as well as by the seller to create or modify a power relationship. In Heisbourg’s view, a straight extrapolation of current political and economic trends would lead to the conclusion that whatever may happen in Europe or America, East Asia is fated to become the new hub of the international system. But in Heisbourg’s view, these are reasons to doubt East Asia’s ability to play such a role.

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In the economic sphere, East Asia is the world’s largest trading partner. During the 1970s, it became the United States’ principal source of imports. It has also become the main destination of its exports, notwithstanding the massive structural American trade deficit with the region. In the late 1980s the region also emerged as the European Community’s senior trading partner. There is every indication that this East Asian primacy will grow further, barring catastrophic events. The East Asian rate of growth, even including Japan’s lacklustre performance during the first half of the nineties, is about double that of Europe and America, providing the fuel for the continued improvement of Asia’s relative position as the world’s number one trading partner. The sum of East Asian GDPs is already close to that of the European Union or the United States. East Asia has also initiated steps that could put it in a pivotal situation in APEC with North America, and in ASEM with the European Union. As East Asia increases its economic strength and, as it generates its own political instruments—most notably ASEAN—the centrality of the region in world affairs may grow. At the extreme stage of such a process, the ‘Great Power Triangle’ could well gain greater substance on all three sides than it does today, but it would have an Asia-centric apex, at least in terms of economic power and political influence. Conversely, even over a time span of quarter of a century, it is difficult to imagine the United States losing its situation as the centre of the international system in terms of military power projection capability and the corresponding alliance-building potential. However, the weakness inherent in the nature of ‘East Asia’ will probably lead to something rather different than this scenario of increasing devolution of power to the region. Possible East Asian aspirations to global pre-eminence will probably not be realised, even if one sets aside the lack of a decisive technological or organisational edge of the sort alluded to earlier: • East Asia has no commonality of values and interests sufficiently strong to bring together a combination of its greatest existing powers (Japan and China) or emerging powers (United Korea and Indonesia). Each of these powers may become a substantial actor in its own right on the world scene: China may indeed emerge as the only challenger to US global preponderance; Japan, even a United Korea, and in the fullness of time, Indonesia, may well acquire more clout than any single European power, Germany included. But even the most optimistic extrapolation of current economic trends does not make ‘East Asia’ a single player. The absence of the equivalent of Franco-German reconciliation and the presence of deep and serious differences of ambitions and interest between East Asian powers does not make likely the prospect of a European Union-style construct: and even the EU is not exactly a paragon of decisiveness and unity of purpose. An optimistic scenario, based on the continuation of the Asian rate of growth’ and stable internal and international relations in East Asia makes it the focal area of world growth and security concerns. It may well lead to a Sino-American contest for influence if

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•

•

•

•

China holds together as a nation state of more than one billion inhabitants. But it will not lead to an East Asian hegemony or pre-eminence as a single power centre; rather a set of world-class contenders. Furthermore, what has just been described is a ‘fair-weather’ scenario, not a particularly pessimistic one. A negative scenario, not necessarily less likely than the previous one, would be of the super-nova variety: rapid economic growth providing the nation states with the military wherewithal and the political ambition to further their specific interests, or settle their accounts in a distinctly antagonistic fashion. This is the Asian version of ‘August 1914' whereby European strength, influence and interdependence led to (and made possible, if not inevitable) catastrophic implosion. The degree of probability of such a process depends largely on a factor extraneous to regional control, i.e. the presence or absence of the United States as a political and strategic ‘dampener’ of intra-regional antagonisms. As for the factors which are inherent to the regional actors, many of these tend to weigh in favour, rather than against, the ‘super-nova’ scenario. The lack, except in Southeast Asia, of multilateral organisations which increase understanding and stimulate habits of discussion and peaceful resolution of outstanding issues. China, Japan and the Korean peninsula operate in the framework of what closely resembles nineteenth-century international relations. The existence of major sources of intra-regional tension (the South China Sea, China’s Taiwan policy’, Japanese and Korean maritime claims) on top of the general clash of ambitions and against the background of old but vivid hatreds. The willingness of China to increase its military spending at a rate more than commensurate with that of its breakneck economic growth. The effects of this are still fairly unimpressive, given the low starting point of the Chinese military build-up and the need to clear the backlog of the PLA’s antiquated equipment and force structure. However, over a fifteen-or twenty-year period, the makings of the British-German naval competition of 1900–1914 will be present, in the form of China versus others (Japan, US and/or ASEAN countries).

Three basic scenarios can be drawn up for European prospects. Unlike the East Asian case, however, the degree of likelihood of various scenarios appears to be clearly differentiated. The baseline scenario is one where the European collective institutions continue to be marked by weakness and indecisiveness. The EU’s current institutions may witness improvements in terms of decision-making and extension to new areas: a greater reliance on qualified majority voting; a single face for its common foreign and security policy; the introduction of the ‘Euro’ as the single currency sustaining the Single Market. However, even such breakthroughs (and they may not all occur) will do little more than offset the

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political effects of the EU’s enlargement from fifteen to twenty-five or thirty members over the next five to fifteen years. Deregulation, liberalisation and the overhaul of the welfare state will occur to some extent, more or less rapidly, and the rapid growth of the Central European economies will provide a welcome boost: but no quantum leap in Europe’s political effectiveness and economic competitiveness will occur under this scenario. Such a Europe would be in only a slightly better position to be an actor in the Great Power Triangle. The extreme, and least likely scenarios, are characterised in one case by sudden regression and in the other by unexpected progression. Regression could occur as a result of the failure of the EU’s Inter-Governmental Conference to adapt institutions and the collapse of the effort for a single currency. Collective political impotence and the unravelling of the Single Market would be the consequences, which in turn would foster political inward-lookingness, beggarthy-neighbour monetary policies, and neoauthoritarian populism and protectionism in many of the European nation states. In this losing scenario, Europe becomes hardly more relevant than the states of South America at the global level. The ‘progression scenario’ entails a high degree of success of the InterGovernmental Conference, possibly with an inner set of European states securing a major advance in political integration in combination with a highly successful ‘Euro’, helping to revive growth as courageous efforts at welfare reform bear their fruits. Spurred by growth in Central European countries inducted into the Union as early on as the year 2000, the European Union—or at least its ‘core’, ‘Kern Europa’—emerges as an increasingly powerful and cohesive force on the international scene, particularly if in the interval the US commitment in Europe and Asia continued to wane. As Heisbourg argues, under these conditions and in view of possible trends within, and between, each of the regions, the likelihood of a stronger and more evenly balanced Triangle appears to be weak. In view of this situation, several questions need to be answered: is a stronger, more evensided Triangle desirable, what are the prerequisites for achieving even limited success in bringing about such a Triangle, what instruments will be required? Some of the pre-requisites for a stronger Triangle are implicit in the scenarios mentioned earlier: • East Asia should not allow itself to succumb to the ‘pre-1914’ pattern that is currently gaining strength. The strengthening of intra-regional fora such as ASEAN and its ASEAN Regional forum; the establishment of regional dialogue on issues such as North Korea’s nuclear policies, and, eventually, North Korea’s collapse; the consolidation of APEC and ASEM: all of these will help. At least as importantly, there is the need for the countries of East

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Asia to cease acting in an ostrich-like manner when one of the players — particularly China—begins to act in a bellicose fashion. Clear signals visà-vis the potential political and economic consequences of given policies would probably be more constructive than the ‘hear no evil, see no evil’ attitude taken towards the brazen threat of the use of force against East Asia’s fourth largest economic entity, Taiwan. Paradoxically, ASEAN’s handling of the contentious issue in the South China Sea has been rather more convincing. Yet the stakes in the South China Sea (the fate of uninhabited half-submerged reefs), even if one accepts the notion that there may be oil there, are infinitely lower than the consequences for the regions as a whole of war between China and Taiwan—or the Anschluss of Taiwan by China. Europe, at the very least, should avoid the failure of the EU’s InterGovernmental Conference and of the Single Currency. If either of these two mishaps occurred, Europe would be incapable of becoming a more active and constructive partner in the Triangle. Conversely, even if things go reasonably well, no quantum leap in that capability is likely to occur. At another level of analysis, the European Union should avoid Chinese attempts to empower it, with Beijing brandishing the prospect of awarding major contracts to compliant Europeans at the expense of Americans who need to be ‘taught a lesson’. It is one thing for the Europeans to resist US attempts to drag them into the zigzags of domestically inspired American initiatives vis-à-vis China; it is another to accept being used as a pawn by China in its complex bilateral relationship with the US. A European temptation to use China’s opposition to the United States in order to secure commercial and political leverage in Beijing would be even less well advised. Western Europe is part of a politicomilitary alliance with the US and thus working directly and deliberately against the US in its relationship with China would hardly be consonant with those alliance links. Europe has a narrow path to tread in defending its specific interests in its relations with China. America will naturally have to avoid neo-isolationism. The reduction which has already occurred in America’s military and political profile still falls short of anything like such neo-isolationism (even if that may not be readily apparent everywhere: no American forces intervened to stop the genocide in Rwanda, nor were they present during the first three years of the war in Bosnia). But it would not take very much to cross the line; for example, troop numbers going much below current force levels in each region would change the nature of the commitment. Neo-isolationism would not lead to Europe or East Asia substituting for missing leadership. Greater anarchy would be a more likely result than a successful attempt at strengthening the non-US sides of the Triangle. Another situation to be avoided is the disengagement of the US from one region and not from the other. This is no doubt an unlikely outcome, given the similarity of US interest in each region: if the isolationist choice were made it would affect both. But an asymmetrical disengagement is at least theoretically possible. A US absent from Europe but present in Asia would

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lead to suspicions of ‘American Pacific’ hegemony and possibly impel the Europeans to build Fortress Europe and seek elsewhere what limited succour they could (i.e. with Russia) with the potentially destabilising consequences resulting therefrom. Free trade and a benign security environment would probably not be the winners. Similarly, and possibly even more ominously, a US policy of presence in Europe but of withdrawal from Asia would enhance instability in East Asia by removing the strategic buffer which has until now effectively prevented China, Japan and Korea from reverting to the pattern of relations prevalent in 1895–1905. War would be made substantially more likely. The instruments of a stronger Triangle will in most, but not all, instances be a direct strengthening and extrapolation of those that already exist. The military presence of the US remains of paramount importance, most acutely in East Asia. But Europe’s limited contribution should not be allowed to fade away. Not only should Britain (via FPDA, Five Power Defence Arrangements) and France (through its residual assets in the Pacific) be as present as their limited military means allow them to be, but East Asia should use the leverage of arms purchases to secure a greater involvement of the Europeans, both in the political and strategic spheres. In policy terms, ASEAN needs friends in settling the disputes of the South China Sea; so does the region in helping avoid a mishandling of the delicate Taipei-Beijing relationship. Diplomatic involvement by Europe—of the sort which helped bring Cambodia at least half-way to normalcy—should be sought by the East Asians. In strategic terms, there is no reason why the East Asians should be less ambitious than the Gulf states in exploiting their position as arms purchasers to secure special agreements with the European states. Since the Gulf War, Kuwait, Qatar and Abu Dhabi have concluded defence agreements with France and/or the United Kingdom, along the lines of the agreements countries in the region also have with the US. Naturally, the Europeans may hesitate to enter into such pacts in far-away East Asia although the FPDA is a standing example of one—but if the question is put to them they will carefully assess the advantages and the costs of choosing one way or another. The example of the Gulf states indicates that the major European powers are sensitive to the leverage which prospective arms purchases gives to the regional states. East Asians should also use their own growing military and political assets to become a player in extra-regional security affairs. Aside from the limited Malaysian and Indonesian force presence in former Yugoslavia this has practically not happened. Though such involvement needs to be carefully handled, such participation in European affairs can offer a dual advantage. The first is the positive impact of direct support for endeavours in which outside help tends to be appreciated (as has been the case for Asian participation in exYugoslavia). The other is the positive nature of a policy combining words with deeds: Europeans did not take kindly to the criticism of many Muslim countries concerning the handling of the Bosnia crisis, if only because very few Muslim

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countries were actually ready to help Bosnia to more than the most limited extent. If Sarajevo didn’t fall into Serbian hands and if its inhabitants didn’t starve, it was because of the ‘Christian’ soldiers of France, Britain and others, not because of substantial help from the Muslim world. The setting up of APEC, ARF and ASEM were major steps forward in the political and institutional realm and one can only wish that these tools be used to their fullest potential. There are however two missing strands in the institutional landscape: • There is, in effect, no real triangular forum, aside from the ARF. But the ARF is focused on Southeast Asia, not on East Asia as a whole. One way to circumvent, at least in part, this anomaly would be to open up APEC to the European Union. Insofar that a Triangle is desirable, there is every reason to make a broadened APEC one of its basic features. Those who would resist such a move should either state their case if they consider that an institutional Triangle is bad or they should propose an alternative triangular institution. • Within East Asia, there is no institutional dialogue between the Northeast Asian states or between the states of the region as a whole. ASEM offers on the East Asian side the embryo of such a broader caucus. This could be developed; and/or a Northeast Asian caucus could be set up (for example the proposal for a two-plus-two forum involving the two Korean States, China and the US). Today the hostility between China, Japan and Korea remains virtual and generally concealed, dampened as it is by the US presence. It is while such a situation still prevails that a dialogue should be set up. When a major crises arises (for instance in the wake of the collapse of the North Korean regime), it will be too late to create the habits born from longstanding multilateral discussion and consultation. Institutions do not in themselves resolve problems, but they can help to deal with them. Nor do institutions necessarily prejudge the actual content of dialogue. In this regard, particular care will need to be taken to avoid the twin pitfalls of exacerbating sources of opposition on one hand, and of enhancing risks by sending exceedingly weak signals on the other. In the first instance, this means that blanket approaches should be avoided: Europe teaching Asia in general about human rights, Asia lecturing Europe about Asian values on the other. The objective is not to fulfil Samuel Huntington’s prophecies of a clash of civilisations. Sticking to relevant specifics will be generally more fruitful, as will a modest attitude on the part of all concerned. In this respect the first ASEM in Bangkok in March 1996 was fairly encouraging. In the second instance, there will be virtue in stating positions clearly, so that signals are not misunderstood or lost in the background noise. The Taiwan crisis is a good example of the need for clear reminders by all concerned including not only Americans but also Europeans as to what is the nature of their interests. It is in the economic field that new consultative initiatives are probably the least

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required. Financial and trade flows are the bread-and-butter of daily relations between the three poles of the Triangle, but they are essentially handled by nonstates actors. Ideally, letting those non-states actors get on with their jobs is the most positive contribution which political institutions can make. Reality is obviously more complex, since such flows need agreed-upon rules and regulations and there is scope both within ASEM and APEC for such consultations, hopefully in order to obtain greater liberalisation. It is not entirely clear whether those consultations should include a proper triangular format: after all, the WTO, with its global mandate spans the broader level (with EU-US-East Asian trade representing more than four-fifths of world trade). However, this implies that the WTO be enlarged to include China, a topic which is best dealt with on its own merits (e.g. the need for China to fulfil the criteria specific to the WTO, not least in the field of intellectual property rights) and not polluted by extraneous considerations. If human rights were a condition for WTO membership, many of the current members would risk expulsion! Finally, the WTO can only play its full role if its most influential single member, the United States, accepts it as the legitimate vehicle for the regulation of international trade; unilateral sanctions and secondary boycotts are incompatible with such a policy. Irrespective of the future role and composition of the WTO, the inclusion of the EU in APEC, justified foremost for political reasons, would also fill a gap in terms of fully fledged triangular economic relations. This survey of the ‘Great Power Triangle’ has highlighted, as is frequently the case, the unequal and incomplete nature of this three-sided relationship. More controversially, it does not come to the conclusion that the Triangle’ will necessarily be strengthened, fleshed in and made more balanced. Indeed, the conclusion is the opposite. On the basis of current trends, there is little reason to believe in a stronger Triangle, and it is all too easy to evolve scenarios which lead to a disintegration of the Triangle, as its East Asia component splits into gradually more adversarial parts. At the same time a viable, well-balanced Triangle contributing to strategic stability and economic prosperity is highly desirable from the standpoint of each of the three regions. More has to be done in order to promote the desired outcome, as opposed to simply letting events lead to a much less desirable result. In doing so, two factors are of essence: time and willpower. Time is already running out. Even while the US is still present as the great strategic stabiliser in East Asia as well as in Europe, even while China is still, in modern military terms, a modest power, the seeds of confrontation and war are starting to sprout. The Taiwan Straits crisis is a taste of things to come. There is not much more time available to take measures and put in place institutions which will help make conflict less likely. Willpower is present when it comes to setting up some of the machinery of dialogue, ASEM being the latest example. Willpower has also been present, to a degree, within ASEAN, notably in terms of co-ordination vis-à-vis the South China Sea disputes. But determination is clearly lacking in other respects. Few

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serious attempts are being made to create habits of dialogue in Northeast Asia or in formulating policies that would increase the price the octogenarian communists in Beijing have to pay when they indulge in potentially destabilising behaviour. In the Triangle, Europe is weak, the US is confused, and East Asia is dynamic and prosperous. Yet the real problem is in heterogeneous East Asia. Others can help East Asia in dealing with it, but the answer is for the East Asians to find.

Index

Abdul Rahman, Tunku 13, 15 see Rahman, Tunku Abdul Abdul Razak, Tun 15 see Razak, Tun Abdul Abdurrahman Wahid 36 see Wahid, Abdurrahman ADB 213 AELM 89–2, 97, 122, 125, 129 Afghanistan 201, 202, 206, 207, 212–14 AFTA 66, 85–7, 95, 96, 214 Alcatel Alsthom 76–8 Almonte, Jose T. 44 Anglo-Malaysian Defence Agreement 201 anti-colonialism see colonialism Anwar Ibrahim 44 APEC: economics 66, 71, 72, 83, 86, 87–95, 96, 97–100, 101, 102, 115; European and Asian policies 201, 202; foreign policy culture 220, 222; power relations 230, 231, 233, 236, 237; security 117, 118, 122, 123, 125, 128; US and 138, 139, 143, 147, 149, 202 APEC Economic Leaders Meeting (AELM) 89–2, 93, 97, 122, 125, 129 Aquino, Corazon 18, 19, 24 ARF (ASEAN Regional Forum) ix, x, 87, 96, 113, 114, 117–26 passim, 128, 131, 138, 147, 151; European and Asian policies 173, 190, 198, 201, 203, 205, 207, 217, 221, 222; power relations 230, 233, 236 arms control 155–65, 172, 173; see also nuclear weapons arms race 147, 151

arms trade 164: Europe/East Asia 230; with Middle East and North Africa 129, 159, 164; with Taiwan 187, 189, 195, 196 Asea Brown Boveri (ABB) 75 ASEAN: economics 56, 57, 58, 59, 62, 65–72, 78, 83, 85–8, 96, 97; European and Asian policies 121, 175, 197–211, 213, 222, 223; foreign policy cultures 217, 220, 221; human rights and values 35, 38; and national sovereignty 32; power relations 223, 231, 233, 235, 235, 238; role in formulation of ASEM ix; security 110, 114, 115, 117, 117, 118, 119, 122, 123–5, 127, 128, 143, 151, 160, 164 ASEAN Free Trade Area see AFTA ASEAN Regional Forum see ARF ASEAN Timber and Technology Centre (ATTC) 72 ASEM ix–xiii passim; economics 78, 79, 95; European and Asian policies, 170, 197, 204, 205, 207, 209–11, 211–13, 215, 217, 221; 1st meeting, Bangkok (1996) viii, xiv, 39, 72, 78, 121, 156, 175, 198, 203, 225n19, 230, 236; power relations 231, 233, 236, 237, 238; and security 115, 125–7, 156 Asia Pacific: 240

INDEX 241

arms control 156–65; definition ix; economic importance 73 (see also economics); World War II 14; see also APEC Asia Pacific Economic Cooperation forum see APEC Asian approach: economics 98–99, 139, 222; international relations 220–2, 222, 223; political systems 22–31; security 115–22, 139, 222 Asian ethic, values 22, 31–49, 134, 136–8, 210, 236 ASIATOM 163–5 Association of South East Asian Nations see ASEAN Aung San 12, 13 Aung San Suu Kyi 20 AUSMIN Meeting, Sydney (1996) 128 Australia 63, 175, 201, 206, 217; security 114, 117, 122, 127–9, 140, 159, 162 Australia Group 157, 164 Austria 58, 63, 79 balance of power: European and Asian policies 207, 216– 18, 221, 222–4, 224; security 113–16, 117, 126, 134, 142, 145, 147, 151, 152, 161 Bandung Conference (1955) 4 Barnevik, Percy 75 Beijing Technology Exchange and Training Centre 76 Belarus 173 Belgium 79 Berglöf, Kerstin 103n19 Bergsten, C. Fred 88, 89, 93, 97 boat people see Indochina refugee problem Bosnia, Europe/Asia co-operation 213, 230, 235–7 Brandes, J.L.A. 5 Bretton Woods institutions 223 Brittan, Sir Leon 78, 186, 189, 190, 191 Brunei 20, 57, 58, 58, 72, 230

Buchanan, Patrick 142, 146 Buddhism 4, 6, 29, 36 Burma see Myanmar BWC 157, 160 CAEC see Council for Asia Europe Cooperation Cambodia: European and Asian policies 185, 190, 201, 202, 206, 207; international co-operation over 212–14, 230; politics 16, 18, 27, 30; post-colonialism 5; security 119, 122, 151, 160, 190 Canada 69, 115, 162, 206, 217 cartography, European, and Southeast Asia 5 CBMs (Confidence Building Measures) 117, 117, 119, 121, 124–6, 147, 157 Central Europe 65, 202, 233 Chiang Ching-kuo 25 Chiang Kai-shek 25 Chile 88 China: arms control 156, 157, 159, 160, 161, 163, 164, 184, 190–1; Chinese view of Sino-American relations 148–56; economics 20, 56, 58, 59, 61, 62, 63, 64, 65, 69, 71, 74, 75, 76, 78, 85, 87, 90, 93, 94, 97, 98, 155; European and Asian policies 172, 175, 178, 183–97, 198, 213, 216, 222–4, 224 (Chinese view 192–7); foreign policy culture 217, 221; influence on Southeast Asia 6; politics 13–14, 18, 20, 21, 27–9, 37, 38, 42; power relations 228, 231, 232, 235, 235, 236, 237; security 109–20 passim, 123, 125, 126, 127, 130–48 passim, 150, 151 China-European Agricultural Technological Transfer Centre 194

242 INDEX

China-European Bio-Technology Centre 194 China-European International Business School, Shanghai 76, 188, 193 China threat 151, 152, 153 Chinese in East and Southeast Asia 2, 22, 112 Chun Doo Hwan 16, 19 civil societies xi, 10, 18, 19, 31, 36, 38, 211; China 27, 184; Philippines 17, 18, 24 civilisations: clash of 10, 23–31, 43, 236; values and 31–49 Clarke, Sir Andrew 2 Clinton, Bill, Clinton Administration 93, 122, 128, 134, 136, 138, 146, 149, 154, 172, 223 Coen, Jan Pieterszoon 3 Cold War 4, 102, 113, 129, 145, 153, 192, 193, 194, 201, 209, 212, 217, 228; end of 10, 26, 134, 136, 144, 150, 183, 184, 198, 202 colonialism x–xi, xv–10, 218; and economics 79; and politics 10, 12, 14, 8–29; and security 106 communism 5, 12, 13–14, 19, 27–9, 29–1, 201, 221; see also Marxist-Leninist political systems concert of power 117–18 concerted unilateralism 94, 97, 98, 147 Confidence Building Measures see CBMs Confucian ethic 22–29 passim, 34, 35, 36, 37, 48–49 Confucius 46 consumerism 19 containment, US policy 139–2, 143–6, 146, 147, 151, 154 controlled democracies 14, 15–16, 19–20, 21 corruption, political 17, 18, 19, 25 Council for Asia-Europe Cooperation (CAEC) xiv, 121 Council on Foreign Relations 115, 167n34 Courtis, Kenneth 82

Croatia 230 CSCAP (Council on Security Cooperation in the Asia Pacific) 117, 118, 119, 120, 138, 222 CTBT 173 Cuba 155 cultural relativism 32 culture 10, 196; and democratisation 22–31; and power relations 148, 149, 228, 230– 1; and security 120 CWC 157, 160 Declaration of the Parliament of the World’s Religions (1993) 23 democracy xi, 10–22; critique of Huntington’s ‘wave theory’ 22–31; European and Asian policies 196, 209– 11, 218; relationship to security 108–11, 112, 117, 119, 221; US and 134, 135, 136–8, 140, 147, 154– 6; values and 33, 34–40, 44, 47–49 Deng Xiaoping 27, 28 Denmark 79 Developing Asian Economies (DAEs) 59, 60 developing countries: growing influence of 148, 149–1; see also ODA disarmament see arms control Dole, Bob 134, 146 Dutch East India Company 2, 3, 6 EAEC ix–x, 86, 95, 96, 97, 101, 115, 197 Eagleburger, Lawrence 91 East Asia: attitude to US in security matters 115– 17, 151–3, 154; co-operation with Europe in international institutions 211–25; economics 47, 231 (relations with Europe 54–65, 193); European corporations 73–8;

INDEX 243

modernisation/Westernisation 40–49; power relations 228–39; regional governance 222–5; security 106, 115–22, 140, 150, 187, 235–7; and WTO 101; see also Northeast Asia; Southeast Asia and individual countries East Asian Economic Caucus see EAEC East India Company 2, 3, 6 East Timor 200, 202 Eastern Europe 134, 137, 194, 202, 219, 222; trade 65 (see also Visegrad) economic nationalism 100 economics xi, xiii, 54–105; ASEAN foreign policy culture and 220; Chinese view of American decline 148– 50; and colonialism 2–3, 4, 6; European corporations 72–83; European Union/ASEAN relations 57, 65–72, 197, 199–5, 210; European Union relations with Korea and Japan 174–83, 230; interaction 54–65, 121, 197; open regionalism 83–102; and politics 16–17, 18–19, 20, 21, 22, 30, 33–5, 37, 39, 45, 47, 109; power relations 230, 231, 237; security and economic interdependence 111–13, 114, 115, 117–19, 119, 120; see also under individual countries Economist, The 97 EFTA 56, 58, 59, 60, 62 engagement, US policy 142–4, 144, 145, 146, 147, 235–6 enlargement, US policy 135–8, 144, 145, 146, 147 environmental issues 79, 80, 93, 120, 184, 185, 194 ESCAP 213 ethnic conflicts 209 ethno-nationalism 218 EURATOM 163, 169n74

European cartography 5 European corporations 66, 72–83 European Union: arms control 162, 163; and ASEM x; Asian perception of 80, 97; and China 183–97; Eastern Europe and 219; economic interaction 56, 57–60, 65– 72, 79, 82, 231; General System of Preferences (GSP) 33, 66–69, 70, 179, 199; and Japan 77–9, 82, 174–8, 181, 186; power relations 228–39; relations with ASEAN 57, 65–72, 121, 197–211; and security 119, 121; and social clause 33–5; and South Korea 174–83; and US 117, 149, 150; see also ASEM Federated Malay States 2–2 Fichte, Johann Gottlieb 41 Financial Times 76 Finland 58, 79 Five Power Defence Arrangements 128, 201, 230, 235 foreign policy cultures, and international co-operation 217–22, 222–5 Fortress Europe 64, 71, 78, 80, 235 France: colonialism 2, 3, 5, 12, 28–29, 79, 197; economics 58, 59, 60, 61, 62, 64, 65, 66, 76, 79; policy 186, 187, 188, 189, 193, 195, 198, 207, 208, 209, 213; power relations 230, 235; security 106, 160, 173 free trade 71, 79, 92, 137; see also protectionism free trade areas 90–2, 93, 99, 100; see also AFTA; EFTA freedom of expression 19, 20, 22, 24, 25, 109 Fukuyama, Francis 26

244 INDEX

G-7 summit 125 Gama, Vasco da xv Gandhi, M.K. 4 Garten, Jeffrey 74 GATT 32, 33, 69, 84, 86, 92, 93, 94, 99, 100, 101, 102, 138, 186, 195, 200, 214; Uruguay Round 68, 70, 71, 72, 86, 87, 88, 89, 92, 93, 97, 99, 100, 214; see also Multifibre Agreement Geneva Comprehensive Plan of Action on Indochina refugees 213 Germany: European and Asian policies 186, 189, 191, 193, 195, 217; and modernisation 41; trade 58–66 passim, 74, 79, 193; and US 149 global ethic 23 global issues: arms control 159–1, 172, 173–4; environment 185; and security 120, 124, 125 global powers 106, 117–18, 126–30, 150, 170–2, 216–18; see also power relations globalisation: economic 73, 77, 95, 96, 97, 98, 99, 101, 102, 118, 121, 149; of information 210; and policy 170–4, 185; values and civilisations 31, 39, 40, 41, 42–4, 44 Goh Chok Tong 198 Golden Ages in Southeast Asia 6, 46 Great Britain: colonialism 2–2, 3, 13, 79; economics 58, 59, 61, 62, 63, 64, 65, 66, 79; European and Asian policies 185, 186, 187, 189, 191, 197, 201, 207, 208; power relations 230, 235; and security 106, 128, 160, 201, 230 Great Power Triangle 228–39; prerequisites for stronger 233–9 Greece 79 Greece, classical, values and democracy 35, 47 Groslier, Bernard 5

growth triangles 85, 86, 95 GSP benefits see under European Union Guéhenno, J.-M. 29 Gulf States as example of power politics 235 Haas, Michael 220, 221 Han Sung-Joo 182 Hang Fei Tzu 37 Hashimoto Ryutaro 122, 128, 184 Hatta, Mohammed 12 Ho Chi Minh 5, 12 Hong Kong: economics 56, 58, 58, 62, 63, 64, 66, 69, 76, 85, 87, 92, 104n35; European and Asian policies 186, 187, 189, 191, 192, 196; politics 25 Huizinga, Johan 43 human resources 75–8, 80, 81–4; European and Asian policies 194, 204 human rights xi, 10, 21–2, 31–40; economics and 79, 80; European and Asian policies 184, 187, 190– 2, 195, 196, 202, 209–11; power relations 236, 237; US and 134, 135, 136, 142, 144, 146, 149, 152, 154 Huntington, Samuel 10, 21, 236; critique of ‘wave theory’ of democratisation 22–31 IAEA 114, 129, 158, 162, 163 IBM Japan 81 imperialism x, 192; see also colonialism India: colonialism 2; economics 22, 69; European and Asian co-operation 213; security 99, 117, 125, 140, 143, 151, 156, 158 individual/society 31, 32, 33, 35–7, 40, 48, 137, 196, 210 Indochina refugee problem 206, 213 Indonesia 4, 5, 6;

INDEX 245

economics 17, 20, 27, 58, 62, 63, 69, 72, 86, 90, 91, 92, 93, 112; European and Asian policies 207, 210, 213; politics 12, 13, 14, 16–17, 18, 20, 26– 8, 33, 35, 36, 37, 38–39; power relations 231, 235; security 112, 114, 117, 117, 119, 122, 128, 140, 143, 160, 235 Industrial Standard and Quality Assurance Programme (ISQAP) 72 information technology 31 intellectual property rights 80, 112, 179 intellectuals, status in China 28 international governance 215–18 International Institute of Islamic Thought and Civilisation (ISTAC) 42 international institutions see institutions International Labour Organisation (ILO) 34, 68, 70 international law 32 International Monetary Fund 138 international NGOs 120 international norms, Chinese attitude 184– 5, 196; see also values international relations 40; perception and conduct of in Europe and East Asia 219–1 International Scientific and Technological Centre 173 investment see economics Ippei Yamazawa 85 Ireland 79 Ishihara Shintaro 41 Islam 6, 23, 24, 26, 36, 42, 209 isolationism, US policy 141–3, 143, 144, 145, 146, 147, 235–6 Italy 58, 63, 79, 186 Japan: arms control 155, 159, 161, 162, 163, 164; economics 56–66 passim, 73, 74, 77–9, 80, 81, 82, 90, 102, 103n22;

European and Asian policies 184, 189, 191, 192, 193, 194, 196, 198, 206, 207, 211, 213, 217 (European relations with 170–8, 181, 186); foreign policy culture 218, 219, 221, 224; occupation of Pacific Asia 12–14, 183; power relations 148, 149, 150, 224, 230, 231, 232, 235, 236; security 78, 109–20 passim, 122, 124– 6, 126–9, 131, 133, 136, 140, 141, 142, 143, 149–6 passim, 172–4; Westernisation/modernisation 42, 227n33; values and democracy 22, 23, 36, 37, 39, 42, 49; Japan-passing 78 Java 3–4, 5 Jiang Zemin 127 Kampuchea 202 Kazakhstan 173 KEDO (Korean Energy Development Organisation) 117, 119, 122, 123, 129– 1, 158, 163, 164, 181–2, 185, 190, 230 Kern, Hendrik 5 Kim Dae-jung 49 Kim II Sung 18 Kim Young Sam 19, 25 Kishore Mahbubani see Mahbubani, Kishore Koh, Tommy 79 Korea: economics 56, 58, 62, 63, 64, 65, 74, 102, 230; European and Asian policies 213, 222, 223; politics 13, 14, 36, 49, 185; power relations 230, 231, 232, 235, 236; security 108, 117, 119, 122, 129–4, 142, 151, 152, 161, 182, 190, 223; see also KEDO; North Korea; South Korea

246 INDEX

Korean Energy Development Organisation see KEDO Krom, N.J. 5 Krugman, Paul 73 van Leur, Jacob Cornelius 6 Lake, Anthony 136 Laos 13, 75, 160, 221 Latin America, US and 150 law, rule of 36, 184 League of Nations 138 Lee Kuan Yew 15, 16, 19, 22, 26, 33 Lee Teng-hui 25, 109, 152 Lee Tsao Yuan 79 liberalisation: economic 20–1, 71–3, 83–102, 118, 214; political see democracy; US encouragement for 135–40, 143 liberalism 10 ‘Lite powers’ 108–11, 112 Locke, John 35 Lombard, Denys 10n33 Lord, Winston 138 Luxembourg 64, 79 Maastricht Treaty 224 Macau 69, 185, 186, 187, 191, 192 Mahathir Muhammad 15, 20, 24, 34, 115, 230 Mahbubani, Kishore 21 Malay States, Malaya 2–2, 5 Malaysia: economics 58, 58, 61, 62, 63, 69, 72, 86, 89, 90, 93; European and Asian policies 197, 199, 213; politics 13, 14–15, 20, 23, 24, 34, 35, 36, 37, 42, 44; security 110, 112, 117, 128, 201, 235 Mao, Robert 76–8 Mao Zedong 28, 111 Marcos, Ferdinand 17–18, 24 market capitalism, US promotion 134, 135, 136, 137, 138, 143 Marlay, Ross 21

Marxist-Leninist political systems 14, 18, 20–1, 111; see also communism materialism 19 Maull, Hanns 109 Mexico 88 MFN approach 67, 93, 97, 99, 100, 214 Middle East 202; arms sales to 129, 159, 164; US role 150 Military Armistice Commission 130 military rule 14, 16–18, 19, 21, 24 Mill, James 2 Mill, John Stuart 35 Missile Technology Control Regime (MTCR) 157, 159, 164 modernisation 40–5, 47, 218, 227n33 Mongolia 136, 141 Monod, Jérôme 76 Montesquieu, Charles Louis de Secondat, baron de 48 Mori Arinori 42 Motorola 77 MTCR 157, 158–60, 164 multi-ethnic societies 15, 34–6, 110, 128 multiculturalism 128 Multifibre Agreement (MFA) 69–1, 71, 72 multilateral arms export control 164 multinationals 66, 73–8 multipolarisation 148, 150, 195 Murayama, Tomiichi 90 Myanmar (Burma) 4–5; Asian policy 210–12; economics 17, 20, 75; politics 12, 13, 14, 16, 17, 18, 20, 21, 38; security 155, 160, 210–12; US criticism 136 NAFTA 85, 93 nation state 10 national socialism of China 111 national sovereignty 31, 32, 97, 101, 218– 20, 220, 224 nationalism 4–5, 10, 12–14, 218; China 27, 110–11, 113, 114, 148; German 41;

INDEX 247

Vietnamese 28–29 NATO 187, 219, 228 Natural Economic Territories (NETs) 95 NBIP 72 Ne Win, U 17 Neher, Clark 21 Netherlands: colonialism 2–4, 6, 12, 79; economics 59, 61, 62, 63–5, 66, 79; policy 187, 197, 207 Neutral Nations Supervisory Commission 130 New Pacific Community 138, 144, 151 New Zealand 128, 159, 162, 201, 206 NGOs 36, 37, 39, 40, 120, 190 NIEs 56, 57, 58, 58, 59, 62, 64, 65, 102, 186 North Africa, arms sales to 159, 164 North Korea: politics 18, 21, 221; EU relations with 181; power relations 233, 236; security 108, 109, 114, 115, 117, 122, 123, 127, 129–4, 136, 153, 156, 157, 158, 159, 161–3, 164 Northeast Asia: and ASEM 211; Europe and 170–83; power relations 236, 238; security 119, 122, 126, 128, 131–4, 161, 170–4, 177–8, 181–3; see also individual countries Northeast Asian caucus 236 Northeast Asian regional security mechanism 151 Northeast Asia Security Dialogue (NEASED) 131 NPT 160, 173 NSG 157, 164 Nu, U 4 nuclear weapons 151, 156–65, 173, 184, 208, 212; KEDO 181–2; North Korea 114, 122, 123, 127, 128, 129– 1, 156, 157, 158, 161–3 NWFZ (nuclear weapons free zone) 157, 160–2, 208

ODA 32, 33, 34, 38, 188, 190, 213 OECD 38, 102 Ohmae, Kenichi 96 open economic association (OEA) 85 open regionalism xi, 71, 83–102, 118, 212, 214, 223 ‘Open Regionalism: a Pacific Model for Global Economic Co-operation’ 84 ‘Our Voice: Bangkok NGO declaration on human rights’ 37 Pacific Asia, definition of viii–ix Pacific Economic Co-operation Conference (PECC) 83–6, 87, 96, 117, 118, 138, 222 PAFTAD 96 Pakistan 151, 156, 158, 213 Pancansila 5, 14, 26 Pangeran Dipanagara 2, 3–4 Panikkar, K.M. 2 Papua New Guinea 88 Park Chung Hee 16 Partnership for Peace 228 Patten, Chris 185 PBEC 96 PECC 83–6, 87, 96, 117, 118, 138, 222 Perot, Ross 146 Perry, Sir Michael 74–6 Philippines: economics 22, 58, 62, 63, 69, 72; policy 201, 207; politics 13, 17–18, 19, 23–4, 38; security 113, 114, 117, 128, 201 Portugal: policy 185, 187, 191, 197, 202; in Southeast Asia 2, 3, 6 von Pierer, Heinrich 76 POs 36 power politics 222; US policy 142–4, 144, 145, 146, 147, 235–6; see also balance of power; concert of power Prem Tinasulanond 19

248 INDEX

press, freedom of see freedom of expression protectionism 64, 66–72, 80, 97; US 142, 143, 145, 146; see also free trade; free trade areas puerilism (Huizinga) 43–5 Qian Qichen 184 Rahman, Abdul Tunku 13, 15 Ramos, Fidel 18, 19, 24 Raratonga Treaty 160, 161 Razak, Abdul Tun 15 RCA indices 60 Regional Institute of Environmental Technology (RIET) 72 Renaissance 45 Rimpac exercises 115 Rizal, Jose 4 Roh Tae Woo 18, 19, 131 Russia: European and Asian policies 172, 173, 178, 194, 219, 224; modernisation 42; security 115, 117, 125, 126, 127, 143, 148, 150, 151, 157, 159 San Francisco Declaration on ‘Open Regionalism’ 84 SEANWFZ 160–2, 163, 164, 208 Siemens 76 Sigurdson, Jon 103n17 Sihanouk, Prince 5 SIJORI growth triangle 86 Singapore: economics 15, 56, 58, 58, 61, 62, 63, 64, 69, 72, 86, 92, 102, 199; European and Asian policies 183, 201, 211; politics 13, 15–16, 19–20, 22, 26, 35, 37, 42, 44; role in formulation of ASEM ix, 197, 198, 211; security 110, 115, 128, 201 small and medium-sized enterprises (SMEs) 80–2, 82

Smith, Adam 44 social issues in economic negotiations 32, 33–5, 68, 70–2, 79, 80, 93 socialism 10; Southeast Asia 4–5, 17; see also communism Soekarno, Achmed 2, 4, 5, 12 South Asian security consultation 151 South China Sea disputes 108, 112, 114, 117, 122, 134, 146, 151, 152, 184, 232, 235, 235, 238 South Korea: economics 16, 18, 25, 66, 87, 93; European and Asian policies 174–5, 178–83, 186, 198, 207, 211; nationalism 218, 227n35; politics 16, 18–19, 22, 23, 25, 206, 221; security 109, 110, 112, 119, 122, 124– 6, 128, 129–4, 140, 151, 162, 163, 164 South Pacific Forum Secretariat 87 South Vietnam 16, 207 South West Pacific 115 Southeast Asia: and China 191; colonialism xv–10; economics 58, 85; EU/ASEAN relations 57, 66–72, 121, 197–211; power politics 222; security 119, 122, 124, 127–9; values and politics 34–6, 134, 136; see also ASEAN and individual countries Southeast Asia Nuclear Weapon Free Zone 160–2, 163, 164, 208 Southern Africa 202 Soviet Union: European and Asian policies 192, 194, 207, 208, 212–14, 217; security 106, 131, 134, 137, 139, 151, 153, 156, 157, 164 stimulus diffusion (Toynbee) 43 strategic cultures 217 Stronach, Bruce 218 subsidiarity question xiii Suharto, T.N.J. 20, 33, 90 Sukarno, Achmed 2, 4, 5, 12

INDEX 249

superpower(s): and security 164; US as 117, 144, 150 Supomo 33 Sweden 58, 74, 79, 209 Swettenham, Sir Frank 2–2 Switzerland, economics 58, 61, 63, 64 Taiwan: economics 18, 25, 25, 56, 58, 63, 64, 66, 69, 76, 77, 87, 102, 190; European and Asian policies 175, 178, 184, 187, 190, 191, 195, 196, 218, 221; politics 14, 18, 19, 23, 25, 25, 49; power relations 232, 235, 237; security 109–10, 113, 114, 123, 126, 141, 146, 151, 152, 154, 163, 164 Taiwan Straits disputes 108, 111, 112, 114– 15, 117, 118, 134, 153, 189, 237 Takeo Shiina 81 Takeshima/Tokdo islands dispute 227n35 Tchuruk, Serge 76 terrorism 157, 159 Thailand: economics 18, 19, 57, 58, 62, 63, 69, 72, 89; policy 201, 207; politics 13, 14, 16, 17, 18, 19, 23, 24, 35, 38; security 110, 143, 201 Tiananmen Square (1989) 20, 25, 38, 134, 184, 188, 189 Tibet 187 Tilak, Bal Gangadhar 4 Tipu Sultan of Mysore 3 Towards a New Asia Strategy’ (EC) 198, 202–4 Toynbee, Arnold 42 UK see Great Britain Ukraine 173 UMN0 13, 15 UN 12, 30, 138; European and Asian policy 173, 190, 212–15, 223; and security 119, 120–2, 173 UN Charter 32 UN Commission on Human Rights 138

UN Law of the Sea 109, 112 UN Register of Conventional Arms 173 UN Security Council 106, 117, 187, 202, 208 UNCLOS 109, 112 UN1CEF 33, 70 unilateralism: concerted 94, 97, 98, 147; trade liberalisation 92; US 78, 79, 121, 143, 173, 204, 230 Unilever 74–6 United Kingdom see Great Britain United Nations see UN United States: and arms control 157, 159, 160, 161, 162, 163, 164; and China 110, 114–15, 133–48 passim, 151, 183, 184, 188, 189, 190, 190, 191, 196, 232; Chinese view of 148–56; economics 56, 58–66 passim, 71, 73, 74, 77, 78, 79, 80, 82, 102, 177, 202; European and Asian policies 170, 172– 4, 176, 183, 192, 193, 194, 195, 196, 201, 202, 206, 207, 208, 217; foreign policy culture 223, 224; and Japan 115, 117, 117, 122, 126–9, 133, 136, 140, 141, 142, 143, 149, 150, 152, 153, 170, 172–4, 176, 219, 222, 223; and Korea 128, 130–3, 164, 174, 179; and open regionalism 87, 88, 89–1, 91, 93, 94, 97, 100–3; and Philippines 18, 113; power relations 222–4, 228–39; and regional governance 222, 223; role in Asia 134–56, 207; security 106, 110–29 passim, 133–56, 177–8, 208, 217; values 46, 134, 135–8 Universal Declaration of Human Rights 32, 209 Uruguay Round see under GATT values 10; Asian vs Western xi, 31–49, 196; and security 120, 128;

250 INDEX

US 46, 134, 135–8; see also Asian values Vienna International Human Rights Conference 37, 39 Vietnam 5; economics 21, 56, 58, 62, 72; European and Asian policies 201, 202, 206, 207; politics 12, 13, 18, 20–1, 27, 28–30, 38, 221; security 117, 140, 141, 143, 155, 201 Visegrad, economics and trade 56, 58, 62 Vo Nguyen Giap 12, 18 VOC (Dutch East India Company) 2, 3, 6 Volkswagen 75 Wahid, Abdurrahman 36 Wertheim, W.F. 10n29 Westernisation vs modernisation 40–5, 218, 227n33 World Bank 138 World War II 14 WTO (World Trade Organisation) 33, 68, 69, 70, 71, 72, 78, 79, 91, 92, 93, 94, 97, 98, 99, 100, 101, 102, 147: China and 184, 185, 186, 190, 195; European and Asian policies 203, 212, 214, 223; power relations 230, 237 Xerox 81–3 Yeltsin, Boris 127 Yotaro Kobayashi 81 Yugoslavia, former see Bosnia Zangger-Committee 164 ZOPFAN 206