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Explaining the Japan–Australia security relationship: it’s complicated…

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International Affairs Blog, with Tomohiko Satake, 13 July, 2018

During the Cold War, Japan defined its security policy by the Yoshida Doctrine — maintaining a low profile security posture while relying on the United States for protection based on the US–Japan Security Treaty. There was little appetite within Japan’s government or military for military-to-military relationships with other regional states. Yet the past three decades have seen a steady diversification of Japanese security partnerships, including with South Korea, Australia and India as well as with some ASEAN and European countries. Notably, these relationships were not meant to replace the still-dominant security reliance on the US–Japan alliance, but instead were part of a strategy — carried out in tandem with the US — which saw the two states moving away from its strict bilateralism to what Michael J. Green calls ‘federated capabilities’.

The case of Japan and Australia — a ‘quasi-alliance’?

In our recent article for International Affairs, we looked specifically at this rapid diversification of Japanese security partnerships from the perspective of Japan–Australia security cooperation in both the bilateral and multilateral contexts, including the US and China. First of all, it was apparent that while some referred to Japan–Australia relations as ‘quasi-alliances’, they were not, in fact, alliances at all, but merely examples of what Thomas Wilkins called‘alignment’. While these groupings have systematically set about developing ‘alliance-like’ characteristics — such as military interoperability, strategic consultations and institutionalized intelligence-sharing — they have carefully avoided the primary ingredient of alliances: defence guarantees.

We asked why political leaders in Tokyo and Canberra went to the trouble of developing such complex security relationships — one need only look at the general security of information agreement (GSOMIA) and the acquisition and cross-servicing agreement (ACSA), for example — while simultaneously avoiding the primary benefit of a formal alliance commitment to each other? Neo-realist theory would have us believe that as authoritarian China rose in the region and expanded its military hard power capabilities across the maritime space and trade routes of both states, Australia and Japan would either balance Beijing’s ambitions or bandwagon behind them. However, the actual record is more complex and sees political leaders adopting elements of both strategies. At times, Australia and Japan developed very close ties and seemed on the verge of committing to the relationship — as when Prime Minister John Howard offered Prime Minister Shinzo Abe a security treaty in 2007 or when, in 2015, both Prime Minister Tony Abbott and Prime Minister Abe began promoting a submarine deal in strategic terms, labelling theirs a ‘special relationship’. Subsequently, however, caution seemed to reassert itself in both cases and domestic factors inside both countries halted further progress.

Drawing from Tomohiko Satake’s 2011 article on the origins of the trilateral relationship between the US, Japan and Australia and from John Hemmings’ doctoral research, we developed a model for explaining this apparent discrepancy. Faced, for example, with a triple security dilemma, that pits them between (1) a security dilemma with China, (2) an abandonment/entrapment dilemma with each other and (3) a quite separate abandonment/entrapment dilemma with their mutual ally, the United States, Japanese and Australian foreign policy elites simply cannot tell what the optimum policy choice is. What we found, through interviews and by analysing government policy documents, was how bureaucratic coalitions within Canberra or Tokyo would push for given policies, prioritizing one or another of these three drivers. This meant that in some cases the two would align more closely — such as when a pro-alliance group prioritizing the danger of abandonment was in control of the tools of foreign policy — only to pull back after new bureaucratic coalitions, which promoted policies that engage with China and emphasized the dangers of entrapment, took power. This was apparent, for example, after the 2008 election in Australia which saw Kevin Rudd replace John Howard as prime minister, as Australia unilaterally withdrew from the US–India–Japan–Australia Quadrilateral (QUAD) and warned against closer defence engagement with Japan.

What does this mean for the future?

This model explains both the specific pattern of Japan–Australia security ties as well as the historically atypical alignment policies that are rising across the region, in which states begin implementing multipronged strategies to pair balancing with engagement. We see these states building evermore institutionalized security relations, while continuing to closely monitor their relations with Beijing. In academia, this dual-approach has become known as ‘hedging’. As we look to the future, instability and threats to the rules-based order are discussed not only in terms of Chinese assertive behaviour, but also in terms of the Trump administration’s challenge to the liberal international order. Given these circumstances, we must also ask whether our model will see even more non-committal alignments — particularly between medium-sized regional states — or whether China will be able to successfully restrain states from forming balancing alliances. Examples of these alignment patterns are to be found in the Trilateral Strategic Dialogue, created in 2002; in the creation of an Australia–India–Japan trilateral in 2015; and in the revival of the QUAD in 2017.

One interesting implication of our research is that, while abandonment concerns regarding the US engagement in Asia significantly encouraged Tokyo to seek closer ties with India, India itself has been less motivated by abandonment issues. Instead, internal debates in Delhi are more concerned with the risk of becoming entrapped between the United States and a rising China. This, combined with a fear of provoking a security dilemma and India’s longstanding ‘non-alignment’ foreign policy approach, has compelled some factions inside the Indian Ministry of External Affairs to eschew strong commitment to the QUAD. As we can see, this ‘commitment dilemma’ explains why all of these groupings see an ebb and flow of defence institutionalization, despite the fact that all share concerns about China’s intentions and growing military capabilities.

Should the US–China rivalry intensify, we might expect to see bureaucratic coalitions inside all four countries debate the prioritization of alliance commitments versus the prioritization of their relationship with China. Much of this has a mercurial dynamic, meaning that if any player decreases its security commitment to the QUAD, one will see a reaction from the others. If the Trump administration cannot sustain strong and consistent commitment to regional security, one might see a worrying shift in balancing behaviours by other QUAD members, with some reaching out to Beijing. The future of the QUAD therefore not only depends on Chinese assertiveness, but also on the appearance of US resolve to the defence of its smaller allies and partners. No doubt, this debate is occurring now at the domestic level.

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Lessons from the America-Japan Trade War of the 1980s

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The National Interest, with James Amedeo, 2 July, 2018

The current wisdom is that there are no winners in trade wars. This message is inherent in nearly all coverage on the United States President Trump administration’s tariffs campaign on China, the European Union, and Japan. However, is this really true? History tells us that sometimes, there are winners in trade wars—all it takes is for one side to blink first.

In the 1980s and 1990s, the White House was faced with a powerful Asian economic power that manipulated its currency, subsidised its companies, and erected stiff non-tariff barriers to imports. Washington’s response was to put 100% tariffs on electronics, force voluntary restrictions on the aggressor’s auto, steel, and machine industries, and adopt laws that restricted the country’s steel, lumber, and sugar industries. But this wasn’t a nascent People’s Republic of China (PRC), it was the U.S. treaty-ally, Japan.

For approximately a decade, Japan and the United States engaged in a small-scale trade war. The United States achieved a tactical victory in the war with the 1985 Plaza Accord when the U.S. argued that it and Japan should abandon the fixed exchange rates that had prevailed after the Second World War. The result was that U.S. imports dropped in price as the dollar fell and Japan entered the bubble economy, which was ultimately to lead to the Lost Decade.

While there are many differences between the PRC now and Japan in the 1980s—the PRC is an authoritarian power and a peer competitor, rather than a U.S. ally—there does seem to be similar structural features in how the two approached trade, and how they approached access to their home market.

Thus far, the PRC’s strategy has been to respond to U.S. measures in kind. This reciprocity is somewhat ironic, given widespread complaints about Beijing’s lack of market access reciprocity. President Xi’s economic adviser, Liu He, has been the central player behind this approach. Shortly after Trump gave the green light on tariffs worth $50 billion of Chinese products Beijing retaliated with tariffs of their own that totalled up to $34 billion. Liu He even went so far as to pick the same date to enact their tariffs, July 6.

The difference between the two sets of tariffs lies in the contents. The Trump tariffs focus on parts and components used in high-technology manufacturing, machinery, automobiles, and transportation, while Xi’s tariffs focus mainly on agriculture exports like soybeans. This latter strategy seems odd until one realizes the Chinese dependency on U.S. high-tech. These items are unlikely to be targeted by Lieu He as long as Made in China: 2025 is a crucial part of Xi’s platform. Under that plan, China aims to improve its domestic production of high-end technology.

The Trump team has, of course, realized this, and therefore focused primarily on this area, both to stop the loss of valuable American intellectual property and to put pressure on the PRC through the threat of urban job losses. The example of the Chinese company ZTE is telling. With 74,000 workers jobs risked by its expulsion from the U.S. economy, Beijing focused the entirety of its next move on attempting to remedy this. While the PRC’s attack on farmers—who are a part of Trump’s voter base—threatens success in the Midterms, the White House’s attack on ZTE was much quicker, and some would say, more effective at moving Beijing.

There is a lot of noise around Trump’s tactics, saying that he represents chaos or anarchy. However, if one looks at the U.S.-China relationship since he came into office, one can discern a pattern.

First, communicate with the other side that you are unhappy and want to negotiate. One could argue that this occurred during the Presidential campaign when Trump consistently repeated the trope that China was “killing the American economy.” Second, develop a personal relationship with your opponent and give him time to make an offer. This occurred when President Xi was invited to the President’s estate at Mar-a-Lago. Filled with personal bonhomie, the president also joked during the Press Conference that Xi had not given him anything yet.

Second, if you are ignored, give the other guy something to think about. Cause him pain. This is not meant to be punitive, but to prod the opponent into really engaging with you. Famously, Beijing has promised structural reforms to previous U.S. administrations, only to renege. The first round of steel tariffs was a sign that Trump’s patience had finally run out. Perhaps symbolically, the replacement of Gary Cohn by Peter Navarro at that time as Trump’s key economic advisor was a message the U.S. would now be taking a more hard-handed approach.

Whatever the drivers are for the tariffs the end goal should remain the same for the Trump administration—Washington needs to focus on structural reform in China rather than on the reduction of the trade deficit. The trade deficit of $375.57 billion has become a useful political tool in Washington and, while it may be powerful, it is also dangerous. This is because it focuses on the symptoms, rather than the cause. In the words of former U.S Under Secretary of Commerce Frank Lavin, “If they give you a check, watch out. They’re sort of buying you off and getting you just to go away for that money.”

Trump could ‘win’ this trade war by getting Beijing to blink by seriously addressing the structural and intellectual property concerns raised in the March U.S. Trade Representative report. Whether Xi can make these changes and continue his China Dream, on the other hand, is debatable.


Global Britain in the Indo-Pacific

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Henry Jackson Society,  22 May, 2018

The weight of the global economy is going to Asia, it is going by sea – and the United Kingdom must act now if we are to build a truly Global Britain, according to a new report from The Henry Jackson Society.

Global Britain in the Indo-Pacific notes how the future of both the economic order and the rules-based international system will be decided in the Indo-Pacific. China’s growing naval power, its militarisation of sea lanes and its Belt and Road Initiative indicate not only a power determined to become wealthy, but one determined to set the rules of the coming age. However, many of China’s Asian neighbours seek to defend rules over power.

With Britain looking for new opportunities abroad in the wake of Brexit and the economic and demographic realities pointing east, the report argues that the UK must reinvigorate its partnerships with historic allies in the region, not least India and Japan – while also redeveloping new “special relationships” with Commonwealth countries such as Singapore.

The report highlights that:

  • The global middle class will grow 50% by 2030, with much of that growth taking place in the Indo-Pacific – spawning hundreds of new cities, industries and opportunities.
  • Over 90% of global trade is carried by sea and that maritime trade will only increase as regional powers struggle to bring consumer goods and energy to these new cities.
  • China seeks to exert control over these sea lanes in order to protect its own sea lanes, constrain India’s rise and set the rules for the coming era.
  • The Indo-Pacific is becoming a forum for competing visions of international relations – with many of Britain’s historic allies beginning to align in loose security groupings based on respect for maritime conventions and law.
  • The UK, dependent on the rules-based order and the sea lanes in the region, will ultimately have to adopt the “engage and balance” approach that most Asian powers have adopted towards China.

While endorsing the ‘cautious engagement’ approach of Prime Minister Theresa May to China, the report recommends that Britain should:

  • Seek a number of overlapping security relationships across the Indo-Pacific with large numbers of partners – including the ‘Quad’ of the United States, Japan, India and Australia.
  • Create “special partners” in ASEAN – not least Singapore, where Britain should explore the possibility for regular ‘2+2’ meetings between the two countries’ defence and foreign ministers.
  • Renew her security relationship with Australia – a useful “node of access” for the UK, as Australia is developing closer relations with key allies including the US, Japan and France.

Standing up for the rules-based international order in the face of the challenge from China should also involve:

  • An incremental increase in Britain’s defence spending, from the current 2% of GDP to 3%. This, with a particular focus on the future of naval and air power, would equip the UK with the requisite tools to have a truly ‘global’ influence.
  • Invest in soft power diplomacy to improve ties with Asian countries. These should involve a rise in funding for language programmes at British universities, particularly in Japanese, Chinese and Hindi; and providing help financing infrastructure development across the region, to counter the Belt and Road Initiative.

Read the full report here.


The New Great Game in the Indo-Pacific

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E-International Relations, 23 April, 2018

This past March saw a mini-crisis develop in the Indian Ocean and it all revolved around the tiny island nation of Maldives. The crisis began in earnest after Maldivian President Yameen Abdul Gayoom declared a state of emergency after rejecting a Supreme Court ruling to free opposition leaders. Indian media reported on the movement of Indian military units around the country, the implication being that they might interfere. Within days, however, a squadron of Chinese naval vessels entered the East Indian Ocean, putting India on the back foot – the chain of 1,192 coral islands that make up the Maldives is a mere 400km from India’s southern coast. President Modi put India’s military on alert, but did nothing in the end, perhaps due to the Chinese flotilla. While the crisis seemed to finish almost as quickly as it started, it highlighted a growing trend of Sino-Indian tussling for influence in a region traditionally dominated by India. In recent years, Beijing and Male have increased economic ties as the Maldives joined China’s Belt and Road Initiative and signed a free-trade agreement. The Maldives is but one such country in India’s neighbourhood that China has taken under its Belt-and-Road wing. To outside observers, it is clear that a new Great Game is underway, one that sees China using a combination of infrastructure development and loans, to develop its maritime trade and naval power. In response to China’s growing influence in a region it considers its own, Delhi has begun partnering more actively with Japan and the US, particularly in development projects and strategic groupings like the Quad.

Prior to 2012 China didn’t even have an embassy in the Maldives. Due to the island country’s strategic location in the Indian Ocean, however, it’s not difficult to see why the Maldives may have become the latest pearl in China’s ‘string of pearls’. It has already developed a major commercial port in Gwadar, Pakistan and a military logistics base Djibouti, its first overseas. Strategically, Djibouti is located near the Bab al Mandab, allowing for access to the Red Sea and Suez Canal. The country is also in dire need of infrastructure improvements, which China, through Belt and Road, is offering to finance. This isn’t the first time China has invested billions of dollars in the name of development – especially to strategically located countries. Pakistan, a long-time rival of India, has received support from the Belt and Road Initiative (BRI) to build a hydropower plant in its Punjab region, which is estimated to cost $1.42bn. In total, China has pledged $62bn to fund the China-Pakistan Economic Corridor (CPEC) – again, right in India’s backyard. The same has been happening in Bangladesh, where in 2016 President Xi signed deals worth $21.5bn, showing interest in developing a deep sea port in Pyra.

India and Japan are now taking a page from China’s playbook, treating economic development as strategic leverage. The two have made regional moves into Bangladesh and North-eastern India, however their strong suit is their Asia Africa Growth Corridor, where they are working to create routes in the Indian Ocean region that circumvent China. The Iranian port Chabahar will be especially useful to India—who has pledged $20bn for its construction—in light of the fact that Pakistan currently blocks India’s over-land route into Afghanistan. Of course, even in Africa the India-Japan duo is contending with high levels of Chinese investment. However, there may be space for more sustainable investment in both Africa and the Indo-Pacific region by the two, as an increasing number of recipients of China’s largess fall into the ‘debt trap’ laid by Beijing. Laos is in a $6.7bn hole (a fourth of the tiny country’s GDP) due to a Chinese-led high-speed railway, meant to connect China to mainland Southeast Asia through Laos and Thailand. Similarly, Djibouti’s debt to GDP ratio is now at 85%. A recent report by the Centre for Global Development has warned that Djibouti and seven other countries “face a significantly increased risk of sovereign default if planned BRI projects are implemented”. Sri Lanka has become the poster-child for China’s debt diplomacy after Beijing’s $5bn investment into Hambantota port led to the country leasing the portback to China for 99 years to avoid default. For a country that had seethed about the 100 years of humiliation and predation by foreigners, China certainly seems to be making an about-face.

Watching with increasingly alarm, Tokyo and New Delhi pushed hard to resurrect the US-Japan-India-Australia Quad – as an ‘alternative’ to Belt and Road. Thus far, talks have focused more on the importance of keeping the Indo-Pacific region “free and open”, especially with regard to “maritime safety and security”, only hinting at an alternative infrastructure strategy, however this is rapidly changing. This Great Game is less about ‘containing’ China as Beijing would have us believe, and more about diversifying choices available to countries in the region. Naturally, there is a geostrategic ‘balancing’ element to this as well. Canberra, bullied by Beijing in a domestic scandal involving Chinese interference in its domestic affairs, has pushed for closer relations with both the United States and ASEAN as a way of balancing China’s interference in its domestic affairs. It is beginning to find the true cost of having China as its largest trading partner, and has begun a national debate on how to respond to this, racked by cynical accusations of racism. While the Trump administration consider possible policy options in a ‘free and open strategy’ – see Eric Sayers excellent prescriptions here –  Japan and India are already moving forward on their own infrastructure diplomacy.

As countries begin to realize the implications to Beijing’s ‘debt diplomacy’, there’s definite scope for Delhi and Tokyo to make headway as an alternative type of development pact. While Sri Lanka has been seeking increased investment from Tokyo and Delhi in recent months to unburden itself from Chinese loans, the two need to be more forward-reaching in what they can offer. They also need to design a broader strategy, rather than merely reacting to China’s development plans on an ad hoc basis. This reactive strategy has already cost them the ‘race’ in countries like Nepal and the Maldives. Due to their geographic locations, both countries have historic ties to India, however both have aligned by China over infrastructure investment. The BRI is financing a fibre optic network throughout Nepal (with a command centre in Kathmandu), ending the country’s dependence on India for internet bandwidth. The Maldives Ambassador to China, Mohamed Faisal, noted that though India was offered “a number of projects”, they “did not receive the necessary finance” to be brought into the development stage. Now, India is facing a security problem in the region, as China’s ‘string of pearls’ strategy ties up countries right on India’s doorstep.

There is something Mahanian in the way China is building up its maritime power and increasing influence over trade in the region. Mahan, a 19th century American naval strategist who viewed the domination of maritime routes for both commercial and strategic gain, has become obligatory reading among Chinese naval thinkers. Tracing the logic identified by Mahan a hundred years ago, Chinese moves look very hegemonic in design, adding the supplemental development twist as bait. This strategy seeks to safeguard and control vital sea lines of communication (SLOCS), bringing trade and energy from Europe and the Middle East. In doing so, China also seeks to contain India’s own rise and stop it from dominating its own ‘near abroad’, the height of hypocrisy considering the US’ support for its own rise and its own strategy in the South China Sea.

Sadly, the Indo-Pacific is swiftly becoming the locus for a re-emergence of geopolitics, writ large, and all the professions of “win-win” are fading into the background as Chinese merchants and bankers are increasingly being followed by Chinese navy vessels. This new Great Game sees India and Japan competing with China for SLOC security in the Indo-Pacific and may see a re-emergence of gun-boat diplomacy if we’re not careful. Robert Zoellick once called for China to become a “responsible stakeholder”, and while Beijing claims it is not a status quo challenger, the fact is that it is redrawing the rules of the game. While there is some justice in this, China’s authoritarian regime type makes the prospect of a Chinese-led hegemony an untenable one for liberal democracies. How the new Great Game plays out in the Indo-Pacific depends on the willingness of Asia’s other great powers to defend a system, rather than contain an empire.


Against all odds, is Trump about to solve the North Korea nuclear crisis?

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The Telegraph, 29 March, 2018

The arrival in Beijing of a long, armoured North Korean train was as mysterious as it was sudden. Who could it be? Kim Jong-un hadn’t publicly left his country since he became leader in 2011, fearful perhaps of a military coup. The train itself, reminiscent of those favoured by the Bolsheviks, was strikingly similar to the one used by Kim Jong-il, the current dictator’s father, who was reportedly afraid of flying.

There had been no sign that a visit was imminent. But then the photographs emerged, Kim and Chinese president Xi Jinping shaking hands in front of their national flags. The message was as expected: we stand together and will proceed with the upcoming North Korea-South Korea negotiations as a team, as “lips and teeth” as both countries like to say of each other. But the background to the meeting was not: Donald Trump may have set in motion a series of events that could lead to a positive resolution, in some form, of the North Korea nuclear crisis.

It is astonishing that we have reached this point – and that Trump appears to have been the man who achieved it. The president is not known for his foreign policy expertise, and the nuclear issue is the modern day incarnation of the Great Game, one of the most complex and longest-running crises in history. In the 1990s, an American official said it “felt like playing a multi-tiered chess game on overlapping boards.” While there are six states involved – the US, North Korea, South Korea, China, Russia, and Japan – arrayed in two “teams”, everyone comes to the table with a different agenda, different objectives.

Take Japan. Prime Minister Abe is known to have reached out to the North through interlocutors insisting that he wants to be at the table. But for Abe, the North Korea nuclear issue cannot be resolved without determining the fate of Japanese citizens abducted by North Korea in the 1970s and 1980s. For Russia, North Korea presents an opportunity. A long-term ally during the Cold War, it now plays the crisis like a poker player with few stakes in the game and uses its role to gain best advantage for its position in Asia.

Just months ago conflict seemed imminent. Now we will see the US and the North sitting down at the same table for the first time since 2012

For China, the game has long been about history. Historically, the Korean nation has been a tributary state, and US involvement on the Asian mainland has felt like a foreign intrusion. At the most extreme, Beijing has sought to use the crisis to engineer a US removal from the peninsula; by the most benign reading, it merely seeks to maintain a safe buffer zone on its borders from any US-allied nation.

Trump could have drowned in this complexity like some of his predecessors, but instead he has shown an agility of purpose that has thrown the pieces in the air. The Kim-Xi meeting suggests movement in Beijing. The Chinese are desperate to avoid being cut out of the planned summit. Xi will have wanted to remind Kim who butters North Korea’s bread. Kim, meanwhile, will have wanted to ensure a defence commitment in case the talks are unsuccessful. After all, the Trump administration’s quiet movement of military assets to the region belies a serious determination to remove what they perceive to be a direct threat to the US mainland.

But while we should all be cautious about the long-term chances of a US-North Korea accord, what has been achieved so far is remarkable. Just months ago conflict seemed imminent. Now we will see the US and the North sitting down at the same table for the first time since 2012, and for the first time with an open agenda since 2007.

President Trump would not have accomplished this without the incredible diplomacy of the South’s President Moon Jae-in. Indeed, the US and the South have led a superb three-pronged campaign. They’ve stood firm on defence issues, with Trump raising the potential prospect of war by keeping military options on the table and moving assets in-theatre. Both men have adopted highly versatile approaches toward China, giving Xi respect and reassurance, while playing hardball on sanctions and pushing Beijing to accept a “maximum pressure” approach to the North. In turn, Xi and Kim have greeted the US-South overtures with apparent respect, and seem to be attempting to relieve tensions.

One only hopes they succeed. For if the negotiations do fail, we’ll have an unimaginable disaster on our hands in East Asia, and right at the heart of the global economy.

Jeremy S. Maxie

Energy & Political Risk Consultant

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