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THE NATIONAL INTELLIGENCE COUNCIL 2020 PROJECT

# Conference Report on Northeast and Southeast Asia

Convened by Asia Society and the NIC

May 5-7, 2004

**The views expressed in this and other papers associated with the NIC
2020 project**

**are those of individual participants. They are posted for discussion
purposes**

**only and do not represent the views of the US Government.**

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THE NATIONAL INTELLIGENCE COUNCIL 2020 PROJECT

# Conference Report on Northeast and Southeast Asia

Convened by Asia Society and the NIC

May 5-7, 2004

In May 2004, the Asia Society and the National Intelligence Council
convened a conference of regional experts from Northeast and Southeast
Asia---creative thinkers from the worlds of academia, government,
business and civil society---to consider important factors that will
influence the directions in which the region may develop by the year
2020. The two-day conference was part of the National Intelligence
Council's 2020 Project to project plausible scenarios influencing global
security.

Conference participants were asked to discuss a range of factors that
could be considered "drivers" influencing developments in the region.
Seven drivers were provided to the participants in advance of the
meeting. Several additional factors were added to the list of drivers in
the course of discussion. Following the extrapolation of details behind
these drivers, the conference participants went on to explore the
interaction of each to developing scenarios for the region in 2020.

South Asia was technically excluded from the considerations of this
conference; however, its role in the region did occasionally enter into
discussions. Similarly, while the role of the U.S. in the region was not
expressly defined as part of the exercise, the discussions frequently
led to a consideration of American actions when deemed natural and
essential to a full examination of the respective issue.

## [DRIVERS]{.underline}

### Demographics

Projected population growth in Northeast and Southeast Asia by 2020 will
have a profound affect on economic conditions in many countries in the
region. The impact will come not only from increases in total
population, but also from substantial growth from particular population
cohorts in terms of age and sex. Life expectancies will rise above

70 years in countries throughout Asia, with areas like Japan and Hong
Kong rising to exceed 80 years.

#### Economic Impact of Graying Populations

Over the past decade, much of Asia has entered a more mature phase in
economic growth---a period in which they have begun to realize that
social welfare is an important part of growth. With a significant rise
in the median age of citizens, medical care and pensions are
particularly acute problems that many Asian states will need to address.

One mitigating factor might be a reassessment of retirement ages. Since
retirement is not an indigenous concept in Asia, it is possible that by
2020 a system could arise in the region that is different than the
Western model of a standard retirement age. While in some Western
countries a rising retirement age has created pressures on unemployment,
continued high levels of growth in much of Asia would be more likely to
absorb an enlarged workforce. It is also possible that Asian states
could develop a system to deal with this potential crisis that is based
more on traditional Asian concepts than on the Western welfare state.
Singapore, for instance, is creating multigenerational housing based on
the traditional Asian extended family model, where younger generations
care for the aged; Malaysia has initiated similar programs based on
traditional family support systems.

Some discussion also developed around the impact of an inability by
nations to address their social systems on other core budget lines, such
as defense spending. Some believed that the shift in spending
allocations to meet the needs of providing for an aging population would
necessarily result in lower defense spending, and therefore promote more
regional cooperation. However, others rejected the notion of a necessary
correlation between increased funding for social services and a decline
in defense spending, since military spending is seen by many in the
region as an essential sign of national prestige.

#### Migration and Border Controls

Asian countries have traditionally been less tolerant of immigration
than the West. The responses of various countries to potential migrant
populations will serve to shape the region in 2020. How countries choose
to manage immigration could affect not only their own economies, but
also the continued growth of the region as a whole.

#### Gender Demographics

Changes in gender demographics in some parts of Asia may also have a
profound impact on society by 2020. Women are gaining greater access to
education and account for up to 70 percent of all university graduates
in some areas. In Southeast Asia, women are gaining more elected
offices---with up to 30 percent reserved by law for women in Indonesia.
In many other areas throughout Asia, women are also playing active roles
shaping society through their leadership of nongovernmental
organizations (NGOs).

[Managing Resources]{.underline}

Population increases would have obvious impact on resource demands for
many states in Asia---demands for energy supplies and access to clean
water sources. As these states address these basic needs, they will also
be forced to explore their own management of economic resources. Several
conference participants noted that many Asian states were large creditor
nations that also enjoyed high savings rates, and that these financial
resources might prove vital to Asia's ability to navigate the demands of
a growing population; however, it remains unclear if any leaders will
have the vision to harness these resources effectively.

### Governance

The forms and effectiveness of governance will be important drivers of
affairs in Asia over the next 15 years. The continued rapid pace of
economic development projected for Asia will almost certainly lead to
changes in the forms and perceptions of governance in many states in the
region by 2020. At the same time, the reinforcing pressures of remaining
economically competitive, managing the needs and expectations of its
citizens, and pressures from internal and external threats will all
influence the development of governing models of states and regional
cooperative entities in Asia. While it is currently unclear which models
will dominate in 2020, the most effective will be the development of a
uniquely "Asian way" to governance---one that adapts aspects of
different models to fit the particular issues that these nations face.
Pragmatism in addressing the most urgent issues will likely prevail over
ideology.

[Democracy]{.underline}

Movement toward democracy in many Asian states is likely to continue
along with economic successes. However, the future development of
liberal, democratic states in much of Asia is by no means certain. In
many states, the development of democratic processes could be offset by
the perceived need for strong government. Popular dissention and
insurgency resulting from severe economic downturns or perceptions of
injustice---such as those witnessed in South Korea---could lead to the
rise of extremist movements that place considerable strain on stability.
Increased popular dissent could, in turn, lead to more authoritarian
forms of governance. Similarly, the growth of perceived external
ideological threats to the state, like an international Islamic
movement, could similarly lead to strong government reaction.

Moreover, while there is an acknowledged admiration for Western-style
governance, most Asians do not want it imposed on them. The negative
experiences of the late-1990s with the IMF and World Bank continue to
engender strong reactions again structures of governance imposed by the
West.

The current lack of a truly successful democratic state in Asia has not
escaped notice in the region. The two longest standing democracies in
Asia---the Philippines and India---are far from being models that other
states wish to emulate. In the execution of governance, the Philippines
remains similar in many respects to other authoritarian states in the
region. Similarly, India today is not seen as a great democracy because
the society still retains many of the vestiges of its historic feudal
system.

[A New China Model]{.underline}

Given the undesirability of following a ready-made Western model and the
lack of a successful Asian model of democracy, developments in Chinese
governance are being closely watched throughout Asia, and will play an
influential role in the region. Generational changes by mid-2010s will
likely have a significant impact on the nature of Chinese governance.
While Third and Fourth Generation political leaders were not influenced
intellectually by international education, many of those in the Fifth
Generation have been trained in Western-style universities and have a
good understanding of international standards of governance. In fact,
some of these Fifth Generation leaders are already exerting influence as
mayors and regional officials. Current Chinese party leaders are
agnostic on the issue of democracy, and are looking to develop the most
effective model of governance. While many are open to adapting aspects
of Western governance, the leadership is following Deng Xiaoping's
guidance to develop their "own way"---a model that best fits China's
needs.

While it is still unclear exactly what this new China model will look
like in 2020, it is likely to prove a strong influence on the character
of governance in other smaller countries in Asia. As the countries in
the region increasingly have their own economic and security interests
tied to China, it is only natural that many will seek to emulate or
adopt aspects of Chinese governance---seeing it as an "Asian way"
distinct from the Western liberal democratic model.

[Regional Cooperation]{.underline}

The benefits of regional economic integration are now broadly accepted
in Southeast Asia, and will continue to develop over the next few
decades. The pace of regional economic cooperation and the extent to
which it will translate into increased political integration remain
uncertain. Consequences of regional cooperation could lead to increases
in local autonomy.

##### Identity, Ideology and Political Religions

Identity will remain a powerful force in shaping Asian societies through
2020. The role of identity is very different in the more homogenous
Northeast Asia than it is in the multireligious and multiethnic nations
of Southeast Asia. However, determining when identity issues might
emerge as drivers is difficult to chart. In fact, since individuals
often define themselves by a multiplicity of identities---particularly
in Southeast Asia---it is never clear which might emerge as resonant
issues. In the course of the conference discussion, some of the most
important identity issues were explored in detail.

#### Nationalism

The next 15 years will likely see a relaxation of nationalism in
Southeast Asia, with more pluralistic models of identity rising to the
fore. Nationalism became a strong political force in the aftermath of
colonialism in the twentieth century, and new regimes sought
legitimization. With greater stability, security and economic comfort in
the first decades of the current century, nationalism becomes a less
prominent factor in shaping identity politics. While some leaders
continue to appeal to an indigenous nationalism for political gain, the
trend toward weakening nationalist identities will continue through
2020, in some case even allowing for the rise of more localist
identities.

#### Islam

While Islamic cultural identity is currently a forefront issue in some
parts of Southeast Asia, it is unlikely to become significantly more
prominent by 2020. Indonesia, in particular, has become the center of
important Islamic theology, but barriers of language and cultural
barriers will likely prohibit it from becoming an international center
that will influence other Islamic countries. The time for pan-Islamism
has passed. Indonesia does, however, provide an interesting model for
the indigenization of Islam in a multicultural society. The balance
between Islam and secularism will continue to be an important issue, and
division of mosque and state will likely continue in the region over the
next 15 years.

[Religion in China]{.underline}

Conference participants briefly discussed the role of religion in China.
With the decline of Marxism as a guiding philosophy to personal and
professional action, several wondered what new systems of belief might
emerge to greater prominence by 2020. If corruption is not held in
check, for instance, the people could look to a new common system of
belief to fill the moral vacuum and as a compass to ethical behavior.

#### "Chineseness" in Southeast Asia

With China's emergence as a dominant power, the identities of people of
Chinese heritage will increasingly become a domestic issue in countries.
For many decades there was a trend for Chinese emigrants to adapt to
their new countries; in fact, this represented a longstanding tradition
of Chinese adaptability to their local environment. This has been
particularly true in Thailand, Malaysia and throughout Southeast Asia.
In recent years, however, the region has witnessed a reemergence of
Chinese identity. Today, the rise of "Chineseness" in not seen as threat
to local national identities. Since political identities and national
boundaries are secure, there is an increasing willingness throughout
Southeast Asia to recognize Chinese holidays and other aspects of the
Chinese identities of some citizens. In fact, many aspects of Chinese
culture, like *feng shui*, have been embraced by popular culture. If
this trend continues, by 2020 it could have implications for how some
nations view their relationships with China itself.

##### Future of Force

With Asia's development of new weapons technologies and a significant
rise in military spending projected over the next two decades, the
future of force will be one important driver to watch in 2020. Lingering
disputes in Northeast Asia will be an issue of particular concern, and
the U.S.'s role in regional security will be closely watched by all in
the region.

#### Nuclear Development

In Northeast Asia, nuclear development will likely continue to serve as
a primary factor in determining regional peace through 2020. The
ultimate resolution of the dispute over North Korea's development of
nuclear weapons will have a profound affect on the future of force in
the region---including shaping future security alliances of several key
players in the region, including China, Japan, the Republic of Korea,
and the U.S. The most likely outcome is North Korea's possession of
nuclear weapons by 2020, which could, in turn, raise questions for Japan
and South Korea. (A unified Korea maintaining nuclear weapons is also a
possibility that must be considered for 2020.)

#### China's "Peaceful Rise"

With its growing prosperity and increased military spending, the nature
of China's projected peaceful rise will certainly reshape security
throughout Asia. By 2020, China's military spending will triple or
quadruple, surpassing Japan but still remaining well behind U.S.
spending. Most Asian nations voice little concern over China's
expansion; even many states that were formerly in opposition, are now
seeking to develop partnerships---some sincerely, although others may be
seeking to develop closer relationship merely to hedge their bets.

The dispute with Taiwan remains one area that could potentially
undermine China's peaceful intentions. On the whole, most conference
participants thought military intervention was highly unlikely over the
next 15 years. Since the U.S. position on maintaining the status quo is
clear, China has demonstrated no urgency to resolve the issue. In fact,
the positions of each party have remained constant over the past 30
years, and are unlikely to change significantly over the next few
decades. Taiwan's own actions remain the most critical in how this issue
will be resolved. Some conference participants expected Taiwan to have
moved significantly closer to independence by 2020. Some others,
however, felt that with China's rising economic prospects, Taiwan's
business leaders would increasingly seek mainland business and
investment opportunities; these closer ties could ease the way to a
peaceful resolution.

#### Japan

The actions of Japan could play a pivotal role in shaping regional
security by 2020. China is interested in seeing Japan develop a greater
independence from the United States. However, most conference
participants saw little chance that Japan would abandon its strong
relationship with the U.S. in the next 15 years. Japan, they noted,
understands that it needs a powerful partner to play an influential
role, and the U.S. fulfills that need better than any other potential
partner. Yet, the continued strength of the U.S.-Japan relationship
could quicken the pace of military build-up in the region, as China
seeks to become a regional counterbalance to this alliance.

#### Competition for Resources

With a quickened pace of economic growth, competition for resources
should also become an issue to watch in gauging security concerns in
Asia. The growing demands on large states in Asia to fulfill the energy,
food, water, and communication needs of its citizens will likely
continue through at least 2020. China and India are already exploring
transregional agreements to safeguard their resource needs, and have
even begun looking to Africa as a possible source to fulfilling their
needs. While there is no clear indication that competition for resources
will lead to direct military conflict over the next 15 years, it remains
an issue that should be closely watched.

##### Technology

Technology could prove a driver of events in any number of ways.
Conventional wisdom holds that one social challenge resulting from IT
might be a growing digital divide that creates an opportunity chasm
between the haves and have-nots. However, properly utilized, technology
also provides opportunities that could help governments provide for the
needs of its citizens. The IT entry barrier is much lower than the
traditional industrial model, so educational and entrepreneurial
opportunities are available at levels never before seen. Mobile and
handheld technology allows accessibility even in developing areas where
the infrastructures for electricity do not yet exist. Unfortunately,
government leaders themselves often lack the technological savvy to
capitalize on these opportunities to provide better lives to their
citizens.

##### Globalization

The globalization of Asia's economies will undoubtedly have a profound
impact on shaping the region in 2020. While most conference participants
expected globalization to lead to economic growth for most parts of
Asia, many worried that too little attention was given to the fact that
this trajectory would not necessarily be linear growth over the next 15
years. The region should anticipate highs and lows in economic
development. This holds true for China, as well, which today is riding a
wave of optimism about its inevitable growth. While some held that China
would be responsive to drastic changes, others doubted its ability to
control the economy to avoid the inevitable down cycles.

## [ADDITIONAL DRIVERS]{.underline}

### China

While not initially considered as an independent driver, through the
course of discussions it became clear that China is itself one of the
most important factors that will shape affairs Northeast and Southeast
Asia through 2020. As noted above in the analysis of other drivers,
China will exert both an active and passive influence on a broad array
of issues---ranging from economic cooperation and regional security to
issues of identity.

### United States

Similar to China, the U.S. will also continue to play a decisive role in
the development of events in Asia through 2020. Most conference
participants acknowledged that the current level of U.S. influence in
Asia would be significantly diminished over the course of the next 15
years in direct relation to the growing influence of China. However, the
extent to which the U.S. influence declines would result in large
measure from its own policies and actions; China would fill any vacuum
in regional leadership abdicated by the United States. In the end, the
role of the U.S. would continue to be a very important driver in 2020.

### Terrorism

While some conference participants suggested that terrorism was an
important factor that could shape events in 2020, others saw little
likelihood that it would be a driver of events in Asia. Most
participants deemed terrorism in the region largely a local issue
focused in some parts of Southeast Asia, where it has been ongoing for
many years. Even in those areas of Southeast Asia where it remains an
active reality, however, terrorism has not played a very significant
role.

##### [Scenarios]{.underline}

# *Scenario One:*

# Fragmentation and Intrastate Conflict

This scenario envisions an Asia in which states are unable to address
their most pressing economic and demographic issues, and therefore face
large-scale, internal conflict as the defining characteristic. Internal
conflicts arise over economic development, social welfare, and identity
politics. Internal conflict becomes particularly rife in the larger,
multireligious and multiethnic states of Southeast Asia, including
Indonesia, the Philippines, and Thailand. High unemployment leads to an
implosion of order. In some areas where there is already longstanding
conflict, such as Mindinao and Aceh, there may be actual separatism, but
for the most part conflict would reign indefinitely without a major
crash, as states are likely to remain viable.

The most immediate consequences of this kind of conflict would be the
emergence of politically divisive identity issues, such as religious and
ethnic divisions, particularly in Southeast Asia. The political, legal
and social systems would be placed under considerable strain by having
to resolve an array of issues they were unprepared to handle. While most
nation states in Asia would remain intact, many would likely enter a
period of prolonged tension.

In response to these new challenges, a number of states in the region
would likely experience the rise of repressive military force to
maintain control. The increasing pressure from popular democratic
opposition; with a rise in ethnic identities, overseas Chinese could
increasingly play a role, as Chinese identities rise to the fore.

The broader international consequences would likely include regional
balkanization. Security in the region would take on the appearance of a
19^th^ century European model of balance of powers between nation
states. With no mechanism for regional conflict resolution, uncertainty
and fragmentation could lead to changeability in global spheres of
influence, as countries look for new alliances to deal with internal and
external threats. Conflict over resources could lead to increased
pressures of migration, so richer, more stable states will be forced to
deal with increased pressures from migrant labor. The Islamic world
could be drawn into these domestic conflicts, since poorer Muslim
populations within these states would be adversely affected and looking
for outside support. The U.S. and Chinese support for a particular
regime or state in the region could have a profound affect in
influencing internal allegiance and the balance of power between states.
A Chinese drive for oil could promote greater conflict in the South
China Sea.

The key drivers of this scenario would be the global economy, poor
governance, and the mismanagement of resources. The actions of China and
the U.S. would also play vital roles in the outcomes.

Conference participants considered this scenario feasible, but among the
least likely for Asia in 2020.

# *Scenario Two:*

# Regional Cooperation / Local Autonomy

A scenario depicting greater regional cooperation posits rapid
development toward nation states in Asia joining together their economic
and security interests. As ASEAN moves quickly toward integration, an
extended East Asian Community bloc also forms under leadership of (and
fostered by competition between) China and Japan. Manifestations of this
greater cohesion include the development of an Asian monetary fund and a
multilateral Asian security force similar to NATO. While political union
on the European Union model is not possible by 2020, it is feasible that
they could make significant progress by this time, perhaps putting them
half way toward political integration.

This scenario anticipates several consequences. First, centralized
authorities of nation states might devolve to a greater extent to
localities. Second, greater regional cooperation would greatly diminish
U.S. influence over economic and security issues in Asia.

Key drivers of this scenario include the continued growth of global
economy, where regional trading blocs increasingly become a necessity to
remaining competitive. This optimistic scenario also depends heavily
upon national leaders and governments understanding that their ability
to sustain growth and management of limited resources would be most
effectively managed through multilateral cooperation. Politics would
have to take a back seat to economic interests.

China's growing leadership and a U.S. abdication of its own influence in
the region were also considered important drivers of this scenario. The
renminbi would become the dominant currency in the region by 2020, and
China would also become the lynchpin to the development of a
multilateral security force. Many participants believed that China's
regional influence in this scenario would also result directly from the
perception---if not reality---of diminished American reliability in
protecting Asian interests on economic and security interests.

While the extent to which Asian integration would be achieved by 2020
remains a matter of speculation, this scenario of greater multinational
cooperation was deemed among the most likely by conference participants.

# *Scenario Three:*

# Competitive States

This scenario stands in contrast to the Regional Cooperation scenario,
whereby nation states maintain their independent interests, resulting in
accelerated levels of economic competition in 2020. This scenario most
closely represents the current reality in Asia, and envisions little
change from the status quo. While not abandoning advantageous
cooperative alliances, the trend of bilateral trade agreements would
continue without leading to a larger regional trading or security bloc.

A principal driver of this scenario would be an economic environment in
which government leaders perceive more to be gained by unilateral action
than through regional cooperation. This vision for 2020 might also
result from chronic internal or external threats to states, since less
secure national leaderships would be less likely to enter into
cooperative agreements that lessened its sovereignty.

While some conference participants believed that some version of this
scenario might develop alongside growing regional cooperation, most
rejected it as a likely depiction of Asia in 2020. Most believed
strongly that states in Asia already understand the benefits of regional
cooperation, and some move in that directly is most likely to occur in
the next 15 years.

# *Scenario Four:*

# China -- Japan Conflict

This conflict scenario imagines a dispute between China and Japan
arising over both countries' rising energy needs. With continued robust
growth in China's economy and resultant energy requirements, the
discovery of greater oil reserves than previously thought in the Senkaku
(Diaoyu) Islands revives the century-old dispute with Japan over
sovereignty of these territories. Over China's objections, Japan's
leadership contracts private oil companies to commence new drilling on
the islands. Conservative politics in Japan and a rising nationalist
tide in China further polarize the parties and neither agrees to direct
talks to resolve the dispute. China prepares to send forces to Senkaku
to defend its interests.

Nationalism and energy needs are the main drivers of this scenario.

While most of the conference participants felt that a China-Japan
conflict was improbable, the specific scenario proposed did raise
interesting discussion, particularly around the role of old disputes and
historic animosities in driving events. A China-Japan conflict would
also disrupt the balance of alliances in Northeast Asia. Korea and
Taiwan, many believed, would side with China in the dispute, while Japan
would look to the United States, which might be called on to defend not
only its staunch ally but also the interests of Western oil companies.
In the end, however, it was widely agreed that both China and Japan
would realize that their best interests lay in avoiding military
conflict, so this would be a limiting factor to a violent resolution.

# *Scenario Five:*

# China's Benevolent Dominance

This scenario puts forward China's benevolent dominance in Asia by 2020.
The scenario builds upon China's own claims to a "peaceful rise" and
projects it over both economic and security matters throughout the
region. To many in Asia, China's benevolent dominance is merely a return
to pre-colonial realities, where the Middle Kingdom exerted its strong
economic influence without military threat, with most in the region
ultimately benefiting from Chinese-influenced trade. While some nations
would seek to preserve their sovereignty, most would eagerly seek to
align their economic interests with China on the promise of a win-win
trade relationship.

While the economics of its own domestic growth would provide China with
the impetus for regional dominance, its role in regional security would
be evolving. Unlikely to seek active involvement as Asia's policeman by
2020, the security responsibility could be thrust upon China by others
in the region.

India's role in the region would play an important position in this
scenario. India will most likely seek close ties to the Chinese sphere
of influence, but could become a competing, dominant economic force in
the region, building upon ties with ASEAN.

China's own economic growth remains the principle driver of this
scenario. The role of overseas Chinese could also facilitate the
reception of China's growing dominance throughout Asia.

Conference participants selected China's benevolent dominance as one of
the more likely scenarios for Asia in 2020.

## [CONCLUSION]{.underline}

The conference concluded with a brief description of various global
scenarios into which these Asia-specific drivers and scenarios might
fit. These global scenarios included:

> 1\) Pervasive Insecurity
>
> 2\) Regionalization
>
> 3\) U.S.-China Conflict
>
> 4\) Heterogeneous Globalization

The development of the drivers and scenarios by the conference
participants for Northeast and Southeast Asia will help to inform the
further elaboration of these four global scenarios, as well as
facilitate the development of alternative global scenarios for further
study.