East Asia and the United States: Current

Status and Five-Year Outlook

September 2000

The views expressed are those of individuals and do not represent official US intelligence of policy

positions. The NIC routinely sponsors such unclassified conferences with outside experts to gain

knowledge and insight to sharpen the level of debate on critical issues.

Contents

Introduction

Japanese Attitudes and Approaches Toward US Policies and Presence in the Region

Trends in Chinese Assessments of the United States, 2000-2005

US-ROK Relations: Trends at the Opening of the 21st Century

Southeast Asian Perspectives

Convergence/Divergence in Political Interests, Values, and Policies

Economic Interests, Values, and Policies

The Perils of Being Number 1: East Asian Trends and US Policies to 2025

Appendix A: Conference Schedule

Appendix B: Participants

Appendix C: References

Southeast Asia

Introduction

The National Intelligence Council and the Federal Research Division of the Library of Congress held

a one-day unclassified conference on this topic on 17 February 2000, at the Thomas Jefferson

Building of the Library of Congress. Seven papers by nongovernment specialists and 11

commentaries by Intelligence Community specialists examined:

 The likely development of greater divergence or convergence between key East Asian states

and the United States over US policies and interests in the region.

 Whether divergence or convergence between East Asian states and the United States was more

likely on security, economic, or political/values questions.

 In what ways East Asian states would be likely to collaborate in opposition to US policies and

interests.

Sixty US Intelligence Community, other Executive Branch, congressional, and nongovernment

experts participated actively in discussions following the formal papers and commentaries,

reinforcing the findings presented below.

Overview

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Conference participants judged that developing trends presage more divergence between the United

States and key East Asian countries and more difficulties for US policy and interests.

This situation will come despite continued strong regional dependence on the US economy and

general support for a continued US military presence in the region. Acknowledging US superpower

status well into the 21st century, regional powers do not seek to confront the United States militarily

or to cut off advantageous economic ties with the dynamic US economy. Regional states also will

continue to conform to varying degrees with US-backed international norms and international

organizations. Meanwhile, the ability of regional countries to work together against US policies and

interests will be offset to some degree by intraregional rivalries (notably between China and Japan),

and by diverging interests (for example, Southeast Asian agricultural exporters support US-backed

efforts to open world farm markets while Japan and South Korea remain strongly opposed).

Nevertheless, growing regional resistance to US policies and interests is likely. It will be strong and

uniform in resisting expected US unilateral actions, especially regarding political issues and values

such as human rights and democracy, that will be seen to serve US interests at the expense of that

national sovereignty of regional states. Greater friction will also arise as a result on an expected

downturn in the US economy, anticipated difficulties in US-China relations, and greater debate

between the United States and Japanese and South Korean allies over military bases, host nation

support, and other alliance arrangements. Among possible developments that could seriously worsen

the outlook for the United States, military crises over the Taiwan Strait or power arrangements in a

newly reunified Korean peninsula are likely to polarize regional opinion, sharply reducing support

for US security policy and regional military presence.

Determinants

East Asian policies toward the United States will be driven strongly by the uncertain regional

security environment, the nascent revival of regional economies after the Asian economic crisis, and

trends in international politics and norms that affect East Asian authoritarian and democratic

governments differently but underline strong regional nationalistic pride and assertiveness.

Uncertainty Over Regional Security Trends

After the Cold War, many in the region feared a US withdrawal. While still present in some quarters,

this concern has been superseded by regional angst over US unilateralism--the use of political,

economic, and especially military coercion in unexpected ways to achieve goals that in the past East

Asian observers would not have expected to warrant such a strong US effort. The 1999 US

intervention in Kosovo reinforced this new regional view of US power and unpredictability.

Adding to uncertainty over the regional security environment are the rise of China as an economic

and increasingly capable military power; the implications of Japan's stagnant economy for its

regional leadership aspirations and capabilities; and continuing uncertainty over regional hot spots in

Korea, the Taiwan Strait, the South China Sea, and Indonesia.

In response, all regional powers are expected to continue actively "hedging"--using diplomacy,

military preparations, and other means to ensure that their particular interests will be safeguarded in

case the security situation should change for the worse. Thus, conference participants noted that they

expect the United States to remain in the lead in this regard, pursuing a policy of engagement with

China while fostering stronger alliances in Asia in case of Sino-US confrontation. China in turn will

continue to pursue engagement with the United States but also will strive to develop ties with Russia

and others useful in countering possible US pressure against it. Roughly similar patterns will develop

in Japan's ambivalent relationship with China, emerging Japanese hedging efforts regarding the

alliance with the United States, South Korea's dealing with North Korea and other powers concerned

with the peninsula, and the dealings of Southeast Asian countries with China. While driven by

regional security uncertainty, the active hedging is expected to continue to add to it.

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Economic Recovery

The Asian economic crisis not only hit regional economies hard but also seriously undermined social

stability, challenged the standing of political regimes whose legitimacy rests heavily on providing

economic growth, and undermined national security. It prompted widespread popular and elite

resentment over economic globalization and US-backed IMF rescue efforts. Nonetheless, regional

governments have acknowledged the need to accommodate these trends. Conference participants

expected these governments will continue to recognize the importance of the US market, investment,

and technology for the economic growth of their nations. Their economic concerns are pragmatic,

focusing on the consequences of a possible downturn in the US economy in the next few years,

Japan's continued slow growth, and possible intensified competition between Chinese and Southeast

Asian manufacturers looking to export to the same markets.

Political Issues and International Norms

Growing international pressures for freer flow of ideas and information, and the concurrent

development of greater political pluralism, democracy, and respect for human rights will continue to

challenge East Asian authoritarian regimes. They also will complicate the decision-making processes

in democratic countries like Japan that previously had been dominated by political elites and now

must take account of a broader array of interest and opinion groups.

Conference participants expect several regional authoritarian governments to continue to preserve

their prerogatives of power and resist trends toward democracy. Regional states in general, however,

are likely to accommodate international trends and norms regarding the freer flow of information,

more open markets, and common efforts to improve the environment and fight international crime

and disease. Their support for international organizations and regional organizations likewise

probably will continue.

Implications for the United States

Conference participants judged that these regional security, economic, and political trends will cause

regional states to diverge increasingly from US interests and policies in the future. They

acknowledged that the importance of these differences for the United States will remain offset by the

continuing strong convergence of US and regional interests in two key areas:

 Regional states generally support a continued active US security presence in the area. (China

is likely to step up the pace of its efforts to encourage a US withdrawal over the longer term,

while problems may develop regarding continuing US bases, notably in Japan.)

 Regional states want and depend on access to US markets, investment, and technology.

Anticipated Problems for US Interests

Security Issues. China will work against US efforts to strengthen its position in the region. Notably,

Beijing will press against and challenge US support for Taiwan, US efforts to build missile defenses

in the region, and US efforts to strengthen the alliance with Japan. It probably will work against a US

military presence in Korea after reunification and will continue to support South Korea's refusal to

be part of the US theater missile defense efforts in the region. It will seek opportunities to work with

Russia against US security interests in the region.

Japan and South Korea strongly support their respective alliances with the United States and are

currently cooperating closely with Washington in trilateral efforts to deal with North Korea. Yet, like

many other US allies, both Tokyo and Seoul chafe over the asymmetry in their alliance relationship

with the US superpower. They seek adjustments in the US military presence that would

accommodate their nationalistic or local concerns. Hedging in response to perceived US

unilateralism and regional security unpredictability probably will prompt them to diverge from the

United States over China and possibly North Korea.

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Southeast Asian countries see the United States as being much less committed to Southeast Asia as

opposed to Northeast Asia, and thus their main concern is that the United States might pull back

from the region. They also become concerned when they perceive the United States and China are

moving toward confrontation, as none of the states see their interests well served by choosing sides

between these two key powers in such a standoff.

Economic Issues. Support in the region is broad to resist perceived self-serving US trade or other

economic policies in international organizations or elsewhere that infringe on the interests of East

Asian countries. Thus, President Clinton's efforts to promote labor and environmental standards

during the Seattle WTO meeting last November found few endorsements in the region, while many

gloated over the US embarrassment regarding the chaotic and inconclusive meeting. Meanwhile,

longstanding differences over trade policies will persist and most likely worsen in the event a US

economic downturn reduces US willingness to absorb large trade deficits with East Asian countries.

Though most regional governments will go along with the greater economic opening supported by

the United States, authoritarian states like China will endeavor to curb the free flow of information,

and Japan, South Korea, and others will try to preserve their protected agricultural sectors despite US

pressures.

Intra-Asian trade and investment is growing again after the economic crisis and is likely to promote

more efforts at greater Asian economic integration that exclude the United States. Japan also can be

expected to pursue more actively its interest in Asian economic mechanisms exclusive of the West.

Japan and others will promote East Asian candidates for international economic organizations that

heretofore were Western reserves--complicating US policy in these instances.

Political Issues and Values. East Asian authoritarian governments will resist US efforts to press for

greater democracy and human rights in their countries. Such US efforts will also receive scant

support from other regional powers--even other democracies. Their strong nationalistic sensitivities

and concern over fragile regional stability will prompt them to eschew support for such

"interventionism" except in extreme cases.

US efforts to promote its leadership in broader international efforts to foster US-backed political or

other norms may also meet with resistance, even from US allies. Regional leaders probably will

tacitly welcome failures of perceived overbearing US pressures in these areas in hopes that such

comeuppance will cause the United States to be more consultative and collaborative in its policy

toward the region.

How Will East Asian Countries Cooperate Against the United States?

Regional support for continued close economic ties to the United States and general support for the

US military presence will limit interest in actively working against US policies in these areas.

Moreover, regional powers probably will continue to be at cross purposes in their reaction to many

US policies and interests. On US theater missile defense efforts, for example, Japan will continue

support while China will strongly oppose and South Korea probably will remain on the sidelines in

the debate. Japan's push for an Asian monetary fund and a seat on the UN Security Council seems to

complicate US leadership in Asia--a broad Chinese objective, but they also work against China's

concurrent objective to curb Japan's regional and global power and influence. South Korean and

Japanese resistance to US-backed liberalization of agricultural trade is opposed by agricultural

exporters in Southeast Asia.

Regional countries are most likely to find common ground against perceived US intervention in

symbolic and political areas (for example, human rights and labor rights) that challenge the

sovereignty and national dignity of East Asian countries. Regional leaders and commentators also

are likely to gloat over US setbacks in other areas of perceived unilateralism, if only in the hope that

such setbacks will prompt US policy makers to be more consultative and accommodating of regional

interests in formulating future policies.

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What Could Make Things Worse?

 A serious US recession would very likely strengthen intransigence on trade issues on both

sides of the Pacific.

 An unmoving US stance on military bases and related issues would risk nationalistic backlash

in Japan and perhaps South Korea.

 Heightened tensions in US-China relations would reduce public support for the United States

by regional countries reluctant to choose between these two powers.

 A symbolic but highly visible US policy initiative that fails in the face of resistance from East

Asian governments could prompt a backlash in the United States, further reducing US interest

in working constructively with governments in the region.

Among possible developments that could seriously worsen the outlook for the United States, military

crises over the Taiwan Strait or power arrangements in a newly reunified Korean peninsula most

likely would polarize regional opinion, sharply reducing support for US security policy and regional

military presence.

Japanese Attitudes and Approaches Toward

US Policies and Presence in the Region

by Susumu Awanohara

My task here is to examine the trends in Japanese attitudes toward US policies and presence in the

region. During 1998-99, when I freelanced and helped a major Japanese business publication and a

premier Japanese television station, I was struck by some preconceived notions held by editors and

directors/producers about the situation in the United States or about American attitudes. Often the

journalists came to the United States not to find out but to have people act out the prewritten script.

These were journalists in the mainstream, not extremists of any kind. For example, editors of my

publication once wanted me to do a "VIP interview" (meaning it had to be with someone who is a

big name in Japan as well as in the United States) as a US angle for a special magazine issue on

China. The interview was to demonstrate that, despite appearance of tension and friction, the United

States and China were really good friends and were intending to establish a condominium in the

region, isolating Japan. The editors had in mind a former secretary of state as an interviewee but I

deliberately chose a former ambassador to Japan who I knew would patiently refute some of the

editors' notions while showing a degree of understanding as to why President Clinton might have

induced the Japanese to acquire them.

The TV station I was helping shot several major features on the financial crisis that gripped the

world from 1997 through 1998. Like the editors of my publication, the TV directors and producers

came with set notions. Clearly, they were more inclined to blame international liquidity movements--

part of the "casino capitalism" of the West--rather than the "crony capitalism" of Asia for the Asian

currency crisis. Many TV personnel saw Western conspiracy in the Asian crisis, although the extent

of the conspiracy differed with each individual. In the extreme, directors and producers suspected

that the US Treasury and the IMF represented Wall Street's interests:

 Wall Street--with its advance guard, the notorious hedge funds, leading the way--attacked

currencies/stocks of emerging Asian economies for its own gain; the IMF, prodded by the US

Treasury, moved in to rescue not so much the emerging governments and economies as the big

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US banks and investors who would otherwise suffer losses; and in the final cycle, vulture

funds from the US swooped down to buy up the devalued assets of the emerging economies at

bargain basement prices.

Another popular economic theme among both the editors and directors/producers was that the

Japanese financial bubble of the late 1980s had been touched off by the Plaza Accord of 1985, the

implication being that Japan's "lost decade" was caused--intentionally or otherwise--by the United

States. My editors subscribed to this view but had the sense to ask former Secretary of State James

Baker to respond to such a view in another VIP interview. (Secretary Baker did a pretty convincing

job of rebutting the allegation, while stressing that he was a friend of Japan who coined the term

"global partnership.")

What struck me further was that Japanese "policymakers"--I include bureaucrats and politicians in

this category--had notions quite similar to those of "opinionmakers" such as my journalistic

colleagues. This is perhaps not surprising since former officials (notably Messrs. Hisahiko Okazaki

and Yukio Okamoto) and even incumbent officials (Taichi Sakaiya, Ichizo Ohara, and of course,

Shintaro Ishihara) are quite active in the media as opinionmakers, and conversely, in a new trend,

some opinionmakers are becoming policymakers (Yuriko Koike and Nobuteru Ishihara). But

bureaucrats and politicians form a group distinct from opinionmakers. The policymakers I spoke to

tended to be less forthcoming with their honne (as opposed to tatemae) views. So, it was only from

policymakers, whom I got to know quite well, that I heard of suspicions and conspiracy theories

about US intentions. Operating in the real world, however, policymakers tend to be relatively

pragmatic; even when their views of the United States no longer justify existing policy, they will

take time changing that policy.

As I prepared myself mentally for the project, I had several questions to answer and hypotheses to

test. My sense was that anti-American or America-defying rhetoric among opinion leaders was

louder and more widespread than in the late-1970s when I followed Japanese opinions. Is this true?

And if so why? America-defying attitude seemed more pronounced among officials now than it was

a decade or so ago. Is this true, and does it matter? How do opinionmakers and policymakers

influence each other? If we are interested ultimately in Japanese policy (rather than attitude), inertia

among government officials is so strong that policy will not change easily in the short term. One

notable domestic trend is that politicians are trying to make--and succeeding in making--greater input

into policy, while the position of bureaucrats is diminishing. How does this affect Japanese policy

generally and policy toward the United States?

Plan of the Paper

I set out to look for information on three groups: the general public, opinionmakers and

policymakers. For the purposes of this paper, I will consider opinion makers and policymakers to

belong to the "elite" in contrast to the "general public" (though there is some overlap in the two

categories). Also, the two major subgroups among policymakers are politicians and bureaucrats as I

have stated. I have not been all that successful in gathering the information and in answering the

questions I posed for myself. But the intention was to examine the perceptions/attitudes of the three

groups concerning the United States and US policy, focusing on three or four topics: economics,

politics (diplomacy), security, and where relevant, culture.

To anticipate:

 Japanese public opinion about the United States has improved steadily since 1995.

 The opinionmakers seem less inhibited than they were in the past, generating a lot of

revisionist history and anti-American (antiglobal)--as well as all sorts of other--opinion.

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 Policymakers, while sharing opinionmakers' sentiments and being more America-defiant than

previously, are more pragmatic than the other elite group, in the end trying to make things

work with the United States.

In sum, I am reasonably optimistic in the sense that I see little chance of a major downturn in

Japanese perceptions and attitudes toward the United States, although Washington--particularly the

Democrats--could provoke this downturn. I am pessimistic if US expectations are higher and if the

United States is wondering if Japan would all of a sudden become a staunch ally.

Public Opinion

After a big dip, public opinion is on the mend. Since late 1995, when Japanese public feelings

toward the United States reached a nadir, those feelings have recovered considerably. Responses to

key survey questions show similarity between 1999 and years when public sentiment toward the

United States was most favorable.

In its 1995 survey on US-Japan relations (published in early 1996), those Japanese calling relations

with the US "bad" (32 percent) exceeded those characterizing it as "good" or "very good" (23

percent) for the first time since the Yomiuri Shimbun, with help from Gallop, started its survey of

public opinion on US-Japan relations in 1978. A graph drawn from Yomiuri surveys over the years

shows that the curve indicating "good" has gradually declined from the peak of 53 percent in 1984,

while the curve indicating "bad" has climbed gradually from the trough of 8.1 percent, also in 1984

(see graph published January 2000 with the 1999 survey results). Incidentally, the view of Japan

from the United States showed similar trends of deterioration, although they were less extreme than

on the Japanese side: Americans characterizing relations with Japan as bad were lower in proportion

to the total than Japanese feeling negative about the relationship, while generally a higher proportion

of respondents considered the relationship as good in the United States as in Japan. Clearly, the

Japanese have been more concerned about the bilateral relationship than Americans were.

Commenting on the 1995 survey, the Yomiuri identified two "gaps" in the two nations' perceptions

of the other side. One gap was caused by Japanese self-confidence, according to the Yomiuri. Many

Japanese felt in 1995 that the United States had been Japan's "parent," "teacher," or "big

brother/sister" in earlier postwar years but was now a "friend," "teammate," or most frequently, a

"rival." Speaking of rivals, while the Japanese thought that China would emerge as their biggest

economic rival, followed by the United States, the Americans said overwhelmingly that Japan would

become--or already was--the biggest rival economically. In other words, Japan had caught up with

the United States and had little to learn from it. The second gap was found in the Japanese attitude

towards defense, the Yomiuri said. While the Japanese respondents wanted a reduction of US

military presence in Japan and the region, at the same time they expressed their faith that the United

States would come to their aid in case of an attack by another power on Japan. The Yomiuri saw this

second gap as particularly naive: "Such a selfish argument does not pass muster in the cool and hard

international community," the newspaper commented.

In a similar survey conducted in late 1999 and published early this year, sentiment in the two

countries about the other continued to improve dramatically, showing remarkable resemblance to

pre-1995 conditions. Japanese thinking that bilateral relations were good were back up to 52.2

percent, and those Japanese thinking they were bad accounted for only 9.8 percent. Judging from

these numbers, 1999 was very much like 1984. A quick look at the 1999 questions and answers

shows that Japanese respect for the United States--its economic as well as military might--has been

restored. Questions and answers indicate clearly that the Japanese feel more exposed to, if not

outright threatened by, hostile or potentially hostile neighbors (notably North Korea and China) and

that they believe that the United States would come to their aid in case of trouble with these

neighbors. Whether or not the Japanese are now willing to pay the cost of US protection in the form

of a military presence in Japanese soil does not come out clearly in this survey.

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A brief review of major recent events in the bilateral relations helps to explain the contrasting survey

results in 1996 and 2000, at least superficially. As the Cold War ended at the turn of the decade and

there was no longer need to maintain the anti-Soviet stance at all cost, economic friction between the

two countries became more severe, with accusatory words at each other escalating. The Structural

Impediments Initiative talks (under President Bush) were tough, but Japanese negotiators still used

positive gaiatsu to fight their domestic nemeses. But the Framework talks (under President Clinton)

had few positive aspects for the Japanese side; the Japanese argued rather successfully that the

United States wanted "managed trade" and rebuffed US pressures. 1995 was a particularly trying

year for US-Japan relations: difficult auto talks were concluded without making either party very

happy. Led by then MITI chief Ryutaro Hashimoto, the Japanese negotiators got particularly tough,

stiffing the US side when they thought its demands were unreasonable (rifujin). The word rifujin was

much used by bureaucrats during this period and beyond; it carried the connotation that in earlier

days, the Japanese side had caved in to US demands even if they were unreasonable. The rape

incident in Okinawa involving a local schoolgirl and US servicemen stationed in the island

prefecture poured gasoline on the smoldering relationship. In some ways it was also cathartic,

however.

Improvements began in 1996. The bilateral security treaty was reaffirmed in a Clinton-Hashimoto

summit in spring. The trimming of the US presence in Okinawa, including the return of the Futenma

helicopter base, was announced just before the summit and had a noticeable positive effect on public

opinion. Partly because of this focus on security ties and partly because the major trade issues had

now been dealt with, economic issues went on the back burner.

Assessment of US-Japan Relations

The bilateral relations got considerable help from third parties, such as China and North Korea.

China's firing of missiles across the Taiwan Strait in the spring of 1996 vindicated Tokyo's move to

reaffirm and strengthen security ties to the United States. North Korea's shooting of missiles over

Japan itself naturally had an even more positive effect on Japanese views of the alliance, although

both cases left some Japanese unhappy with Washington (either because they feared having to take

sides in the US-China conflict or because they felt that the US response to P'yongyang's missile

threat was not sufficiently indignant). For the reasons already alluded to, the Asian currency crisis

did not bring together the United States and Japan. In addition, Japan's proposal to set up an Asian

Monetary Fund provoked a US reaction similar to one against Malaysian Prime Minister Mahathir

Mohamad's notion of an East Asian Economic Grouping. President Clinton's China trip in 1998 was

a big minus in the Japanese mind. The US President termed China a strategic partner and, together

with Chinese leader Jiang Zemin, chastised Japan for its economic missteps. Furthermore,

concurring with the Chinese, Clinton decided not to stop in Japan before or after his long stay in

China. In 1999, the Diet passed bills needed to implement the new guidelines of US-Japan security

relationship.

We now return to the 1999 survey to summarize what the Japanese public is thinking of the United

States and its policies in the economic, political, and security spheres.

Economy

The US economy will remain strong (51.7 percent) or will get even stronger (25.5 percent), the

Japanese public thinks. But somewhat more Japanese (55.7 percent) than Americans (52.8 percent)

are afraid that the US stock market will fall in the near future. (My sense has been that among

Japanese elites, the expectation of a US stock market crash is even stronger than among the general

public.)

Politics

The United States will retain its superpower status and will remain the world's leader. (The survey

was not detailed enough to capture the growing sense among the elites that the United States no

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longer transcends its narrow interests to lead.) The United States is the most trustworthy foreign

nation (43.9 percent). The United States had the highest score, whereas only 15 percent of

Americans trusted Japan the most, with Japan coming in the 7th place, after Canada, Britain,

Australia, and others. The United States will remain the most important country for Japan, both

politically and economically.

Security

Korean Peninsula (78.6 percent), China/Taiwan (25.1 percent) and Russia (18.6 percent) pose a

military threat to Japan. In particular, North Korea's Taepo Dong missile is dangerous for Japan

(86.7 percent). If Japan is attacked, the United States will come to its aid (77.3 percent). Against this,

66.9 percent of American respondents said that in case of an attack on Japan, the United States

should provide help.

All in all, Japanese feelings appear favorable towards the United States. But as they are at historic

highs, so they are unlikely to get much better.

Opinionmakers

"Opinionmakers are all over the map," said an academic I spoke to during a recent trip to Japan. The

opinionmakers are saying anything they like, breaking all sorts of taboos, but, more likely than not,

only to shock and provoke others. Often the proponents are not willing to stake a lot to turn their

ideas into reality. The lifting of taboos seems to have accelerated with the criticism not only of

politicians but also of bureaucrats, particularly Ministry of Finance bureaucrats--the cream of the

crop in an earlier age. There is no more inhibition about attacking anybody. Nothing is sacred

(except maybe the imperial family to some Japanese).

Does anything anybody says matter? Does it have a bearing on Japanese policy? Some experts I

interviewed said "No" and "No." They felt there was no pattern or meaning. As one of them

explained:

Opinionmakers have always said that America is arrogant, overbearing, etc. and that

Japan should have a mind and a policy of its own, although the decibel level may be

higher today. But policymakers operate in a world that is quite separate from that of

opinion makers so there is not much point in studying the views of the latter.

Policymakers--even one that were firebrands as opinionmakers--become realistic and

say we must work it out with the Americans.

Other experts are less dismissive of the views of opinionmakers. They feel that there are some

patterns in what opinionmakers say, and these are connected to both what the public is

feeling/thinking and what the policymakers feel, think, and ultimately do. But I did not come across

interesting and convincing views on how these elements are structurally connected. One observer

thought that a major change, or "discontinuity," is taking place before our eyes, and that the

multitude of revisionist books and Democrat leader Yukio Hatoyama calling for constitutional

revision are signals of this. Citing John Dower's new book Embracing Defeat, this observer recalled

that there had been a major discontinuity of Japanese attitude--a sudden leap from the wartime

repulsion towards America to the embracing of everything American--after their defeat in 1945.

Could what we are witnessing be a correction of this "embrace," and if so, should the United States

respond in some way?

The pattern that some experts see is that there is the big middle (bigger than it used to be), and the

left and the right. This is not a great surprise (and may not even be the most interesting framework to

analyze Japanese opinions today). The middle has grown and the left has shrunk after the virtual

disappearance of the Socialist Party, while the right is active and noisy albeit lacking in common

themes and unity. (The term right is probably much too general, but I am not familiar enough with

people and groups that tend to come under this heading to offer more precise typology and analysis).

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Whereas until a decade ago the center of gravity of opinionmakers was in the left and the LDP

government was to the right of (a vaguely defined) center, today the government and its supporters

among opinionmakers (say, the Yomiuri Shimbun) seem to be part of a bloated center, taking

criticism from the left and the right. On the left you have the traditional left--the communists and the

socialists--and the liberals (Asahi Shimbun). The left has a sense of crisis that there is a general

societal drift toward the right, that the political center is moving toward the right (as exemplified by

passage of laws on the national anthem, on eavesdropping, on the new US-Japan guidelines). Major

Leftist fears are that the recent rewriting of the security treaty--particularly provisions on Japan's

response to regional contingencies--will drag Japan into America's wars in the region, and that

rewriting of the constitution by the Japanese in the near future would put the country on a warlike

path once again.

While the left is fighting a rear-guard action, the right is on the offensive. The right is made up of not

only the Sankei Shimbun and its commentators, but of all sorts of other groups--the Bungei Shunju

group, particularly the opinion journal Shokun, and Sapio of Shogakukan. There are also individual

writers who would be classified under the right. In terms of substance, the right ranges from proAmerican/proalliance elements to anti-American/proindependence elements. Proindependence does

not necessarily mean anti-American, although in fact it often does. Generally, resentment at

American hubris is not limited to the right or, for that matter, to Japan. Resentment also stems from

persistent Asian reminders of past Japanese wrongdoing, and a desire to determine Japan's own

course. In doing so, there is at least a desire to be rational, not emotional--a sense that Japan should

pursue its own national interests, that may (or may not) coincide with US interests but are at any rate

defined by the Japanese themselves. "Japan is in search of a capitalism with Japanese

characteristics," as one writer put it. The younger generation generally has little sense of debt to the

United States, which translated into the acquiescence of older generations to American demands and

whims because "we owed them" even when the United States was seen as making unreasonable

demands. One commentator captured these trends when he pointed out that the Japanese today were

more interested in kokueki (national interests) than in giri (obligation).

I could not read enough pieces by opinionmakers to attempt a genuine survey of the vast collection

of opinions (a la Ken Pyle or Mike Mochizuki). What follows are my impressions of a small

sampling of current opinion. I have taken some samples from Nihon no Ronten 2000 (Japanese

Debates 2000) published by the Bungei Shunju group. The perceptions of opinion makers about and

attitudes to economic, political, security, and other issues are listed below.

Economy

On the strength of American economy, there is a whole spectrum of opinion; there is little unique in

the Japanese analysis, but the Japanese tend to focus on the US current account deficit and the

"illusion of the dollar," predicting an end to the robust GDP growth and the stockmarket boom based

on the wealth effect. Another popular theme is the tension between globalization (which to many is

really Americanization) and national institutions and practices in Japan and Asia generally. While

some champion global standards, many demand room for national variances. Some even hope and

predict that nativist reaction would defeat hegemonic dominance of global (that is, American)

standards.

Politics

"Neo-nationalists" on the right such as Kanji Nishio are busy revising history, "removing

distortions." From the little I have read/heard, the alleged distortions are found in the more negative

accounts of facts and Japanese intentions and positive accounts of the intentions of others in

mainstream history books. Denying that the Nanking massacre happened is part of removing

distortions. Another theme of neo-nationalists is Japan's continuing subservience to the United States

for which the domestic political establishment (more than the United States) is lambasted. General

constitutional revision--not just of Article 9 but of the entire basic law--is seen as a necessary step

toward independence. China is a popular theme. US-Japan and US-China relations make a zero-sum

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game, so China's gain is Japan's loss and vice versa.

Security

The taboo on criticizing China or North Korea has been lifted (basically the left's pacifist argument

has been blown away by China and North Korea's actions) so the debate has shifted to the right. The

defense debate now centers on whether the new guidelines of US-Japan security ties are useful for

Japan or only increases the danger of Japan being embroiled in America's wars; whether or not

Japanese participation in the development of TMD is a good idea; whether or not the concept of

participating in regional contingencies is constitutional; and whether or not the constitution should

be revised for national security (and other) reasons.

There is little direct anti-Americanism in the security debate. The left no longer argues that US

imperialism is trying to dominate the world on behalf of monopoly capital. I'm not sure whether

there is raw anti-Americanism on the right such as we had from Jun Eto-- who died recently.

Perhaps, Susumu Nishibe demonstrates his anti-Americanism when he mocks the United States for

thinking foolishly that "American justice is universal justice." Nishibe finds the single-minded

American pursuit of deregulation and competition undescribably vulgar.

Other

A major debate on "the private" and "the public" was touched off by a comic book On Wars by

cartoonist Yoshinori Kobayashi, which I have not had time to study. Kobayashi argued that the

private has become dominant in the postwar period; people now reject the notion of the public,

particularly the notion that the public IS the State. He affirms the public impulse--which is associated

with patriotism--that he says exists in each individual along with the private impulse. Kobayashi's

book provoked virulent reactions from the left as well as others who saw it as

rationalization/justification of the Second World War. Some new material here may affect Japanese

attitudes toward the United States and Asia.

Mikie Kiyoi of the Foreign Ministry became a celebrity through her attacks on foreign journalists

who don't bother to study the Japanese language and misreport Japan with impunity, taking

advantage of the fact that "indulgence, swallowing insults and bearing pain are virtues, while

complaining and blaming others is juvenile" in Japan. She strikes a chord with Japanese opinion

leaders as well as the public who think that Japan is misunderstood, or misrepresented deliberately.

The neo-nationalist slogan iubeki kotowaiu (saying to the world what needs to be said) from a while

back is still strongly supported in some quarters. Kiyoi is in solidarity with a group of private

Japanese citizens living in New York who compiled a volume criticizing Japan coverage by the New

York Times's Nick Kristoff and Sheryl WuDunn.

Policymakers

By policymakers I mean politicians and bureaucrats. Further, I have in mind policymakers who have

some dealings with the United States. So, our policymakers are constrained by the realities of the

US-Japan relationship while at the same time having a degree of direct input into Japanese policy

toward the United States. At one level, the policymakers may have abstract ideas about American

power, traits, or culture, but on another level, they are dealing with practical issues that involve the

United States. The latter makes policymakers more pragmatic/realistic as a group than the

opinionmakers. (I have not done enough work to distinguish politicians from bureaucrats. Clearly,

power to formulate and implement policies is shifting from bureaucrats to politicians--albeit slowly--

and questions arise: how do the two groups differ in their views of America and the world, and how

does the power shift influence the policy outcome? I'm afraid I do not have enough data to answer

these questions at this point.)

To understand the trends in Japanese policymakers' attitudes, I have tried to engage those I was

interviewing for another purpose (that is, discussing the state of the Japanese economy as well as

fiscal and monetary policies for Medley Global Advisers) on questions concerning US-Japan

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relations. My interviews were mostly with economic officials (from the Ministry of Finance,

Ministry of International Trade and Industry, the Economic Planning Agency, and the Bank of

Japan) and LDP officials who have an interest in economic issues. I saw some Foreign Ministry

officials but no one from the Japan Defense Agency.

Following these meetings, I conclude tentatively that, for now, policymakers are more or less

satisfied with the bilateral relationship, and no major changes in policy are likely in the near term. In

the microeconomic sphere, Japanese trade negotiators have become tougher, refusing to give in to

"unreasonable" US demands, while in macroeconomics, there is the nagging suspicion that US

demands on Japan or the positions the United States takes in international negotiations are a lot more

self-serving than they purport to be. Yet, the Japanese admire (often grudgingly) the US economic

performance and lament their own. The strong sense Japanese policymakers had some years ago that

they had discovered/invented an alternative model of economic development and of capitalism has

taken a beating through domestic and Asian economic difficulties. But some say it will be back,

particularly now that the Asian crisis economies are recovering quickly.

Policymakers' attitudes in political and security areas have perhaps changed less than in the

economic areas. My assumption (without having interviewed extensively) is that those dealing with

North America and security are still at the mainstream of the Foreign Ministry (though the "Asia

school" of the ministry is apparently rising) and that this mainstream remains close and favorably

disposed to Washington, despite a feeling that the Clinton administration has treated Japan shabbily.

In this connection, news that Rust Demming at State and Kurt Campbell at Defense--Japan's best

friends in the current administration and a good combo--are leaving the US Government is received

with great concern in some policy circles.

Policymakers' perceptions about and attitudes toward economic, political, security, and other issues

are presented below.

Economy

In microeconomic (or sectoral trade) negotiations, there was a clear shift between Prime Ministers

Kiichi Miyazawa and Morihiro Hosokawa. The Miyazawa-Clinton summit in July 1993 followed the

traditional pattern: the Japanese gave in at the end although they thought US demands were

unreasonable; the summit was the culmination of a cycle of talks; there were ambiguities in the

agreement language so that each side could interpret it in its own way, up to a point. The HosokawaClinton summit in February 1994 was in stark contrast with the earlier summit: the talks broke down

because the two sides agreed to disagree (for Japan it was a major departure from the past pattern in

that it did not bend and was willing accept failure of highest level talks); Japan took the moral high

ground, accusing the US side of pushing "managed trade." The auto talks that ended in June 1995,

led by then MITI chief Hashimoto (under Prime Minister Murayama), was another landmark. The

Japanese appealed successfully to world opinion (notably the WTO and Asian countries afraid that if

Japan caved, the United States would attack them next) that the United States was forcing "managed

trade" and "quantitative targets" in the talks and refused to bend. Japanese agencies that feel the

brunt of micro pressures are of course resentful. A recent complaint is that the US Government, and

in particular USTR and Commerce, has become an agent of specific US companies, extracting

concession for these companies.

In addition, many Japanese officials acknowledge their deliberate use of US gaiatsu in

mircoeconomic areas in removing domestic microeconomic barriers. In particular, MOF and EPA,

which are more concerned about macro policies, tend to use US pressure to overcome domestic

resistance (to, say, the big stores law or equalization of tax on farm and residential land) which they

cannot handle by themselves. There is a cost to using foreign pressure, however, in the form of

strained bilateral relations. The Foreign Ministry tends to worry about such costs. Some at the

ministry even feel that Japanese economic officials are resisting US pressure/advice only because it

comes from the Americans and that there will be a backlash against Japanese trade negotiators' rude

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treatment of their US counterparts.

While welcoming US pressures on macroeconomic issues, MOF and EPA tend to resent

macroeconomic pressures by the United States, perhaps because they are at the receiving end of such

pressure but also because officials honestly think that the US pressure is misplaced. Many officials

argue that macro pressures are sometimes really for US interests and not good for Japan. The Plaza

accord is often mentioned as an example of how the United States made Japan reflate (to counteract

the deflationary effects of a higher yen), while it neglected to do its own homework of reducing the

budget deficit and raising the saving rate. The bubble was thus created, many say. The recent

pressure from Treasury Secretary Summers to boost Japan's GDP growth from the current 1 percent

or less to 3 percent is seen in similar light: Summers wants Japan to do the heavy lifting while the

United States seeks to pull off a triple soft landing of the economy, the stockmarket, and the dollar,

and avert a crisis.

As the Asian crisis economies recover--some of them quickly--some Japanese officials are feeling

that the crisis governments had been wrongly blamed for "crony capitalism" (because the crisis was

precipitated more by the uncontrolled flow of global speculative capital than by "corruption" and

"relationship-based finance"), and that the Asian Monetary Fund idea--of demonstrating a

determination to protect currencies under assault with a huge reserve of funds (as the United States

had indeed done for Mexico in the mid-1990s)--was essentially correct. According to one American

scholar, Japanese are asking: "Why can't we have a capitalism which is not the same as American

capitalism? Why can't we do it our way? Japanese--and other Asians--want to pursue the legitimate

alternative way." This sentiment is amplified when the United States fails (or appears to fail) to lead

and acts in parochial and self-serving ways--a la Seattle WTO, or as in the case of the CTBT.

Politics

My sense is that the United States has its best friends in the Foreign Ministry, friends who are

convinced that the two countries share goals and even values in dealing with bilateral as well as

regional/global issues. But just as it is not enough for foreign governments to convince the US State

Department alone, ignoring other departments and the Congress, the United States will need to send

messages not just to the Foreign Ministry but increasingly to nonfriendly Kasumiga-seki mandarins

and Japanese politicians. Although the United States may welcome the powershift from bureaucrats

to politicians, in specific instances the pragmatism of bureaucrats that support US interests may

come to be missed if politicians act in a different way.

On China and "Japan passing," Japanese officials closest to the State and Defense departments (that

is, the Foreign Ministry and the JDA) have heard the US administration's repeated assurances but

that is not the same thing as convincing the Japanese opinionmakers or the public, or Japanese

politicians. Fear of a US-China condominium has existed and was unnecessarily intensified by

President Clinton's refusal to stop in Tokyo at the time of his China visit. On whether Japan would

take the lead in establishing/fortifying Asian organizations excluding the United States such as

ASEAN+3, and the Asian Monetary Fund and its variants, I think it is possible particularly after the

Seattle WTO. But internal constraints on such organizations are so great that the United States

should not overreact. The coming constitutional debate should be watched, especially because it is

not just about Article 9 but about the very origin of the basic law; the Japanese are coming to a

consensus (although the left is resisting) that Japanese did not write the constitution, and that they

need a document written by themselves. The taboo on constitutional revision has been lifted

decisively by Democrat leader Hatoyama's advocacy of this cause.

Security

In a general sense, policymakers are moving toward Japan as a normal nation, but there are nuances

even within the conservative establishment (for example, between Ichiro Ozawa and Koichi Kato).

As earlier suggested, North Korea's Taepo Dong missile launch increased the Japanese sense of

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insecurity and their support for the alliance (more specifically, for the guidelines legislation and

TMD participation). But at the same time, many Japanese felt that the United States was not

sufficiently concerned about the threat from North Korea, which raised the further question of

whether the United States was a reliable ally and would come to Japan's aid if it were attacked. But

the contradictory attitude that the Yomiuri lamented in 1996 is still prevalent: Japan wants-- expects-

-US protection but wants the US presence to decline and is threatening to cut Host-Nation Support,

which they deliberately call omoiyari yosan (compassion budget). Against this background, Okinawa

and the bases will remain an issue--real and potentially explosive--in coming years. In case

Democrats prevail in the coming election (which appears less and less likely in early 2000 as

Hatoyama stumbles along), there could be a major shift in Japanese attitude toward "alliance without

bases," a more autonomous, inward-looking Japanese defense posture.

Other

"Will America continue to lead?" many officials asked. If America is too blatantly parochial and/or

self-serving as in Seattle (the Japanese have heard the view that President Clinton was willing to

sacrifice multilateral negotiations to help Vice President Al Gore in his bid to succeed him), it will

lose credibility as a hegemon. "You can command confidence and respect only when you are seen as

transcending your own interests to act in the general interest," one economic official said.

Is attitudinal change related to a generational shift in Japan? One economic official commented:

"The cabinet-level people are in their 60s and above--they're the ones that experienced defeat and

would follow the US lead even when they think Americans are unreasonable and selfish. Our

generation, in the 50s or late 40s, are similar, but slightly more assertive, wanting to make

Americans understand in cases differences develop. Many of the elite had a good experience

studying/working in the United States and have positive feelings about the United States. We sense

that younger people are much cooler towards the United States and are more assertive of Japan's own

national interests, etc. They don't have a sense of debt."

Conclusion

Conditions surrounding the bilateral relationship are favorable, as compared to several years ago, and

Japanese perceptions of and attitude toward the United States are generally benign.

The sense is that in the next year or two, there won't be major changes in Japanese attitudes or major

surprises in Japanese policy. Major domestic events coming up in the next year or two include:

 The G-7 summit in Okinawa (with slight risk of it becoming Seattle II).

 The lower house election sometime before late October this year (low risk of Democratic

victory).

 The move of Futemma base to Nago and accompanying issues.

 The upper house election next year.

 The constitutional debate taking several years.

External events that may impact on US-Japan relations include:

 China/Taiwan conflagration.

 More North Korean provocation against Japan.

 Korean unification.

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Domestic events are not likely to have a major influence on the bilateral relationship with the

possible exception of the constitutional debate. External events may be more significant and

although some of these events may in fact work to strengthen US-Japan ties, they also could alienate

the allies from each other. And because they are external, the United States and Japan will have less

control over these events.

Although the bilateral relationship looks stable--implying that no surprising improvement or

deterioration from the US point of view is likely--the United States may wish to listen carefully to

the opinionmakers to see if there are important messages amidst the cacophony. The United States

also may want to ponder whether it is necessary to talk to Japanese politicians more as they gain

influence in policy formulation and implementation (although US diplomats have done a much better

job of touching all the bases than have Japanese diplomats). Another topic of study is how

generational shift changes Japanese perceptions and attitudes. The "postwar" period is ending in that

those of a generation which does not remember the war or the impact of the war are coming into

positions of responsibility.

Finally, the US side should ponder the fact that Japanese perceptions and attitudes are related to US

perceptions, attitudes, and actions. The Japanese policymakers have not developed a fondness for the

Clinton administration and particularly on the political-security side, demonstrate a great nostalgia

for American individuals who dealt with Japan and Asia during earlier Republican administrations.

This is an American as well as a Japanese problem.

Trends in Chinese Assessments of the United

States, 2000-2005

by Bonnie S. Glaser

No country presents such vexing contradictions for China as the United States. The maintenance of

good Sino-American relations is indispensable for China's continued economic growth. Without

sustained high levels of US direct investment and an open US market for Chinese goods, China's

aspiration to become a middle-level developed country by 2050 will be difficult, if not impossible, to

realize. The preservation of a favorable security environment for China and the achievement of

reunification with Taiwan also are, in part, contingent on the state of Chinese ties with the United

States.

Yet, at the opening of the 21st century, Beijing is uncertain about the feasibility of securing a stable

Sino-US relationship. Chinese leaders harbor strong suspicions about US intentions globally as well

as toward China. The Chinese fear that Washington is determined to prevent the rise of a strong

China that could pose a challenge to American supremacy in the new century. They also worry about

US resolve to spread American values and transform China and other remaining socialist and

authoritarian governments into Western-style democracies. Beijing is especially uneasy about the

advent of an extremely imbalanced global pattern of power in which America's might vastly outstrips

other nations and provides the United States with the unilateral means to advance its interests as it

sees fit. Chinese complaints are targeted at fundamental American foreign and defense policies such

as post-Cold War NATO strategy, the deepening of security ties to Japan and plans to develop and

deploy missile defense systems on the continental United States as well as around China's periphery

to protect American forward-deployed forces and possibly American friends and allies in Asia from

ballistic missile threats.

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Although debates in China are ongoing about US foreign policy and intentions toward China, the

parameters of those debates have narrowed substantially over the past year. There is now greater

agreement among Chinese America specialists than previously existed in their analysis of the overall

international situation as well as specific elements such as US strategy and objectives toward China.

Minority positions are still held, but they seem to carry little weight in the policymaking process.

Thus, this paper presents primarily mainstream perspectives on the United States, which currently

dominate the formulation of Chinese policy.

The task of predicting how Chinese attitudes toward the US policy and presence in the Asia-Pacific

region will change over the next five years is a challenging one. This situation is in part because

Chinese assessments of the United States and its intentions toward China are primarily reactive, and

US policies as well as other external events influencing Beijing's estimates in the next five years

cannot be predicted with certainty. We can forecast with a degree of confidence, however, that

Chinese ambivalence about American power will endure. Moreover, Chinese suspicions about US

intentions toward China probably will not be significantly assuaged and may even intensify during

this period. This paper attempts to present current circumstances and trends in Chinese evaluations of

US policy and identify key variables that may influence Chinese attitudes and approaches toward the

United States between 2000 and 2005. The conclusion draws implications for Chinese foreign policy

and US interests.

Current Trends in Chinese Attitudes Toward the United States

Chinese assessments of US policy and presence in the Asia-Pacific region flow from Beijing's

estimates of US comprehensive national power relative to other major states, US global strategy and

economic role, and American intentions toward China. Therefore, analysis of Chinese estimates of

these broad, yet fundamental issues must precede consideration of their evaluation of US regionally

based policies. Chinese perspectives on the US-Japan alliance, US policy toward Taiwan, the

regional security architecture, and the Korean Peninsula are presented in turn.

US Reign as Sole Superpower

After the events of 1999, China reached the conclusion that the United States will continue to occupy

the position of sole superpower in a global pattern of one superpower and several major powers for

at least the next two decades.(1) Beijing had hoped that this power structure, which emerged after the

collapse of the Soviet Union, would be short-lived and be supplanted by a multipolar pattern of

power in which a core group of countries that are relatively equal in comprehensive national strength

would engage in bounded competition and cooperation, effectively checking the ambitions of any

single power. The prevailing imbalance of power is objectionable to China because it provides the

US with an opportunity to advance a global security and ideological agenda that benefits American

and broader Western interests. In Chinese parlance, the US can pursue "power politics and

hegemony." At the same time, China's room to maneuver and its ability to defend its own interests

are severely constrained in a unipolar international system. A multipolar global pattern that the

Chinese hope will provide greater opportunities to promote and defend Chinese interests is expected

to take shape gradually, but little progress is expected before 2005.

During the next five years, and even for several decades, as the world transitions from a bipolar to a

multipolar power structure, the Chinese forecast that China will lag significantly behind the United

States in key indexes of power, including economic, technological, scientific and military might.

Chinese analyses of the bases of US strength stress the critical importance of America's lead in the

development and application of high technology and predict that the US technological edge will

enable a further consolidation of the US advantage over other powers. Two specialists on the

American economy at the China Institute of Contemporary International Relations, which writes

annual assessments of the international situation and the global balance of power for the Chinese

leadership, forecast "the US will take the lead to enter the information world and keep its absolute

superiority in developing the knowledge economy."(2) They and other Chinese experts emphasize the

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links between technological prowess, economic strength, and military power. Comparative

assessments of the technological and economic level of potential competitors have convinced most

Chinese analysts that no power is likely to rival the US position in the early part of the 21st century.

US Global Strategy and Intentions

The main strategic objective of the United States, from China's perspective, is to exploit the

opportunity presented by its unprecedented favorable global position to further consolidate American

supremacy and shape the world according to US interests and values. The United States is frequently

described by Chinese analysts as in pursuit of a strategy of global "hegemony" and absolute

superiority over potential rival states. US plans to deploy a national missile defense (NMD) system

are viewed as an integral part of this strategy, aimed at preventing other powers from having a

reliable retaliatory capability against a US first strike. PLA officers reject the US contention that

concern about a missile launch by North Korea is the driving force behind consideration of the C-3

system, the more ambitious of two NMD configurations under deliberation, which envisions the

emplacement of 200-250 interceptors in Alaska and North Dakota. They insist that Washington's true

goal is to degrade or nullify China's nuclear deterrent.

The NATO military operation in Kosovo in 1999 alarmed Beijing--even before the bombing of the

Chinese Embassy in Belgrade--because it demonstrated US willingness to circumvent the United

Nations and employ military force to intervene in the internal affairs of other nations to advance

American strategic aims. The military intervention also represented a test of NATO's "new strategic

concept," which the Chinese view as intended to globalize NATO's role. The purported Clinton

doctrine of "new interventionism" has been widely criticized by China for putting issues of human

rights above state sovereignty.

During the Kosovo war and in its immediate aftermath, many Chinese feared that the United States

might use similar means to interfere in states on China's periphery or even on the Chinese mainland.

The possibility of US military intervention in North Korea, the South China Sea, and in the Taiwan

Strait was judged to be greater than in the past. Active American interference in Tibet and Xinjiang

also was considered more likely, although most Chinese researchers expected that the US would rely

on political means to stir up ethnic unrest, for example, rather than use military force to meddle in

Chinese minority areas. Subsequent US decisions to limit its involvement in East Timor and refrain

from intervention in Chechnya, along with US reassurances that Kosovo was not a model for future

US intervention abroad, alleviated the urgency of Chinese concerns, but did not eliminate them

completely. The Chinese remain wary of what they see as an increased proclivity of the US to rely

on military means to advance American interests.

More fundamentally, however, the Kosovo war served as a catalyst for a reassessment in China of

US global strategy and intentions. The United States could no longer be depicted as a relatively

benign world policeman whose policies in many areas served to promote regional and international

stability--a view that was not universally accepted, but was actively promoted by an influential group

of Chinese think tank experts and officials as the rationale for building a constructive strategic

partnership with the United States. Instead, the US came to be seen by the majority as a destabilizing

and unpredictable hegemon determined to use all possible means to pursue its interests and spread

Western values with impunity.

US Economic Role and Power

Beijing recognizes that the global economy is a major factor that increasingly influences China's

security. The Chinese are acutely aware that the United States is the primary engine propelling the

world economy forward. Sustained strength in the US economy is essential for China's economic

growth as well as for the continuing recovery of Asian states from the financial crisis. Chinese

economists worry that a major correction in US financial markets or a broader US economic

downturn could have a devastating impact on China's economic modernization strategy.(3) Despite

rhetorical statements declaring a need to diversify Chinese markets and expand domestic demand,

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Beijing remains exceedingly dependent on US markets to absorb its exports. The decision to make

far reaching concessions to Washington in the bilateral negotiations on China's accession to the

World Trade Organization signifies the judgment by Chinese leaders that economic globalization is

inevitable and that although the process carries inherent risks, China will benefit from joining the

globalization trend.(4)

Chinese attitudes toward US economic power are obviously ambivalent, however. Chinese analysts

of international affairs (in contrast to Chinese economists) especially emphasize that US economic

strength has provided the foundation for stepped-up American political and military intervention.

They worry that sustained US economic growth and its dominant position in scientific and

technological development will encourage the United States to rely on unilateral means to achieve its

global ambitions.(5) Military researchers point out that the expanding US economy has provided

ample funds to support a continued increase in the US military budget. Some predict that the United

States will take advantage of the weakening of the economic strength of many Asian countries to

enhance American economic influence over the region.(6)

US Intentions Toward China

Since the Clinton administration set out its strategy of comprehensive engagement toward China in

1993, American strategy and intentions toward Beijing have been hotly debated topics among

Chinese experts and officials. The events of 1999, most notably the accidental bombing of the

Chinese Embassy in Belgrade, have resulted in a narrowing of previously wide differences on this

issue and produced a virtual consensus that the United States is striving to contain, constrain or

otherwise check China. A leading analyst of American affairs noted privately in October 1999 that

there is widespread acceptance in China that "the containment factor" is a prominent component in

US policy toward China.

In accordance with America's global strategic ambitions, the United States is viewed as being

determined to prevent China from challenging its preeminent position regionally and globally. Many

in China contend that the United States seeks to slow the growth of China's economic power as well

as its development of science and technology to ensure that Chinese military weapons and

capabilities continue to lag far behind those of the United States. Another US objective identified by

Chinese is to promote democracy and the rule of law in China, which many believe extends to a

desire to undermine Communist Party rule. Perpetuating the separation of Taiwan from the mainland

is also considered to be an important goal of US strategy. The official characterization of US

intentions by senior Chinese leaders and in official documents as aimed at "Westernizing,"

"splitting" and "weakening" China apparently now are widely accepted.

US efforts to improve relations with states on China's periphery are interpreted by many in Beijing as

intended to better position Washington for strategic competition with China in the future. The

strengthening of the US-Japan military alliance, including the new Defense Guidelines, recently

fortified US military arrangements with several Southeast Asian states as well as with Central Asian

states bordering China, and US plans to deploy theater missile defense (TMD) systems in the region

are cited by Chinese experts as evidence of a US strategic design to encircle China. Discussion of

possible inclusion of Taiwan in a "regionwide" US defense missile system on China's periphery also

has intensified Chinese suspicions that the United States views China as likely to emerge as a

strategic adversary in the next century.

A small number of liberal-minded, Western-educated Chinese experts view Washington's objectives

in pursuing relations with Beijing as relatively benign and even in China's long-term national

interests. For example, US goals of opening up the Chinese economy, promoting democracy and the

rule of law in China, and encouraging Chinese adherence to global norms on everything from

nuclear nonproliferation to military transparency to human rights are considered by these individuals

as prodding Beijing to make policy choices that are difficult but essential for China's attainment of

its aim of enhancing Chinese comprehensive national power in the new century. Even these experts

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are worried, however, that unprecedented US global power and its impatience for change in Chinese

internal and external policies could result in increased US pressure on China that could have

destabilizing consequences for Sino-American relations as well as regional and global stability.

Many also are anxious about the dangerous mix of a continued trend toward independence in

Taiwan, growing nationalistic fervor in China in support of the use of military force to prevent

permanent separation of the island from the mainland, and increasingly resolute US determination to

defend Taiwan from a Chinese military attack.

US-Japan Alliance

Chinese perspectives on the US-Japan alliance are undergoing a sea change.(7) In the past, Beijing

judged that, on balance, the presence of American forces in Japan and the US nuclear umbrella over

Japan benefited China by: effectively checking Japan's ambitions for regional hegemony; restraining

the buildup of an independent Japanese military capability and limiting Japan's ability to project

military power; and providing reassurance to other Asian states that worried about China's growing

economic, political, and military power. In the early 1990s, China even feared that economic friction

between Washington and Tokyo could spill over into the security realm and cause a rupture of the

alliance, triggering Japanese rearmament.

The signing of the Joint Declaration on the Alliance for the 21st Century by President Bill Clinton

and Prime Minister Ryutaro Hashimoto in April 1996 and the subsequent process of revising the

Defense Guidelines governing wartime US-Japan cooperation prompted a heated debate in China

about the US-Japan alliance and its impact on Chinese security interests. The Chinese suspect that

the primary motive behind efforts by Tokyo and Washington to reinvigorate the security treaty and

expand its area of coverage is a desire to counter the rise of Chinese power. In addition, the provision

in the new guidelines that allows for US and Japanese forces to jointly respond to undefined

emergencies in the Far East has heightened Chinese concern that the US and Japanese militaries will

buttress their capabilities to respond with force in the event that Beijing seeks to militarily intimidate

or take over Taiwan.

China is increasingly skeptical about the role of the alliance in restricting Japan's acquisition of

power projection forces. Chinese military and civilian analysts contend that the security treaty

provides Japan with a cover to develop a broad range of military capabilities, and many forecast that

Japan will eventually sever itself from the United States and pursue its security interests on its own.

Instead of serving as a check on Japanese regional ambitions, the alliance is now viewed as

accelerating Japan's development into a "normal" country that shoulders greater responsibility for

regional security, a trend that China finds worrisome. The Chinese also maintain that modification of

the Defense Guidelines to allow for regional wartime cooperation between American and Japanese

forces has stimulated support in Japan for revising the Peace Constitution to include the right of

"collective self-defense." Revision of Japan's constitution would mark a major watershed in Japanese

post-World War II history and probably would have extremely negative consequences for SinoJapanese relations.

US Policy Toward Taiwan

From Beijing's perspective, a positive consequence of China's 1995 and 1996 missile firings across

the Taiwan Strait following Lee Teng-hui's visit to Cornell University was the recognition at high

levels of the US Government that China's threats to use force to thwart Taiwan independence had to

be taken seriously. Some, although not all, subsequent American policies toward Taipei have been

seen as mindful of the dangerous potential that new steps toward independence could have for crossstrait stability. The Clinton administration's swift response to Lee Teng-hui's 9 July 1999 call for

cross-strait relations to be conducted on a "special state-to-state" basis was widely praised by

Chinese officials and institute analysts. The Chinese especially appreciated President Clinton's

private assurances to Jiang Zemin regarding US policy, both in his phone call to the Chinese

president and in the September meeting of the leaders in Auckland, New Zealand. Chinese officials

were pleased by Clinton's statement that Lee Teng-hui had created difficulties for both the United

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States and China, which suggested that Washington shared Beijing's assessment of Lee as a

"troublemaker." Public affirmations by American officials that US policy is based on the three SinoUS communiques, the three no's (no support for Taiwan independence, no two-China policy, or no

Taiwan membership in international organizations that require sovereignty as a condition for joining)

and the acknowledgment that there exists only one China were welcomed by Beijing as signals of

Washington's dissatisfaction with Lee's action. The subsequent unprecedented decision by the United

States to oppose Taipei's bid to enter the UN was also widely applauded as signaling Taiwan that the

US would not countenance actions by either side that had a destabilizing influence on cross-strait

security.

Although the Chinese found these US policy steps reassuring, resentment in China is nevertheless

growing over US policy toward Taiwan, especially sales of advanced weaponry and assistance to the

Taiwan military to enhance its fighting capability, which the Chinese view as boosting the

confidence of Taiwan independence advocates and inhibiting progress toward reunification. The

announcement of the approval of a $550 million arms sale package to Taipei soon after Lee Tenghui's July 9th statement was sharply criticized by Chinese officials and institute researchers who

cited the sale as evidence of Washington's duplicitous policy. US Congressional backing for the

Taiwan Security Enhancement Act, which, if it becomes law, would further strengthen ties between

the US and Taiwan militaries, is also worrisome to Beijing because of its potential to embolden

independence supporters in Taiwan.(8)

Most Chinese analysts and officials are convinced that the US near-term objective is to preserve the

cross-Strait status quo and its long-term aim is to prevent reunification of the Mainland and Taiwan.

Return of the island to Chinese control, Chinese researchers maintain, would provide economic and

strategic advantages to Beijing while weakening the American position and thus, they claim, is

strongly opposed by the United States.(9) Most Chinese contend that the sole reason that the United

States does not support de jure independence for the island is that it would trigger a PRC military

response and likely lead to a Sino-US military clash that could quickly escalate.

Chinese officials and institute analysts complain that while Beijing has curtailed its sales of missiles

and nuclear-related technology to satisfy US security concerns in the Persian Gulf, Washington has

failed to even engage in a meaningful dialogue about how to address Chinese concerns about

American arms sales to Taiwan. To pressure Washington to impose limits on its weapons transfers to

Taiwan, Chinese officials are attempting to establish linkage between their demands and China's

future cooperation with Washington on countering proliferation. Some PLA researchers privately

have hinted that Beijing may renege on its bilateral arms control commitments with the United States

if Washington sells specific weapons systems to Taiwan, especially theater missile defense systems.

(10)

Underlying Chinese concerns about US transfers of theater missile defense systems to Taiwan,

including lower-tier systems such as advanced the Patriot or PAC-3, is their conviction that such

systems will require early warning surveillance for cueing purposes from US satellites or even a US

force presence on Taiwan.(11) To China, therefore, transfer of missile defense to Taipei signals closer

C3I cooperation between the American and Taiwan militaries. Chinese officials say that such sales

will be perceived in Beijing as a restoration of the US-Taiwan Defense Treaty and thus a violation of

the terms of diplomatic normalization between the US and China.(12) American intention behind

enhancing Taipei's ability to defend against Chinese ballistic missiles is suspect because such actions

run counter to the Clinton administration position that the United States does not support Taiwan

independence. From Beijing's perspective, the deployment of short-range ballistic missiles (SRBMs)

against Taiwan is necessary to deter Taipei from taking the separatist path. US provision of missile

defense systems to Taiwan is considered likely to further embolden proindependence advocates on

the island by giving them hope that they can defend the island against an attack by Chinese missiles.

Sales of new missile defense systems to Taiwan will also increase the confidence of separatists that

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the United States will come to Taiwan's aid even if Taipei is the provocateur, the Chinese claim.

Regional Security Architecture

China is increasingly dissatisfied with the prevailing security structure in the Asia-Pacific region that

is founded on a system of bilateral US alliances and military relationships with states in the region.

With the end of the Soviet threat and rising suspicion in the United States as well as in Japan and

elsewhere about Chinese intentions, US-led security arrangements are seen by many in Beijing as

oriented toward restraining the exercise of Chinese power. China opposes military alliances as "Cold

War relics" and claims that US initiatives over the past few years to reinvigorate its bilateral

alliances have added to regional instability.

In place of the existing security architecture, China has proposed a new security concept for the

region.(13) This vision of a post-Cold War Asian security order was authoritatively outlined in

China's July 1998 Defense White Paper. The key features of China's new security concept are the

Five Principles of Peaceful Coexistence, open and nondiscriminatory trade practices, and multilateral

dialogue to promote mutual trust and understanding. On the latter point, China favors multilateral

discussions that enable all sides to air their views, but absent consensus, does not obligate the

participants to a specific course of action. In building bilateral relationships, Beijing is also

promoting a new model of "strategic partnerships" that it is forging with key regional and global

nations as well as important political-economic organizations, such as ASEAN as an alternative to

US alliance relationships, which the Chinese insist are aimed at third parties.

In addition to setting out its new security concept in selected official documents and leadership

speeches, Beijing is promoting its new model of security through bilateral discussions with scholars

and officials in the region as well as in multilateral security forums such as the ASEAN Regional

Forum (ARF) and the Council for Security Cooperation in the Asia-Pacific (CSCAP). Beyond these

low-key efforts, however, so far there appears to be no comprehensive strategy for realizing China's

vision. This situation is partly because there is no sympathetic audience in Asia for policies directed

at weakening US alliances. Even more important is that Chinese leaders have decided not to adopt a

directly confrontational stance toward the United States on this issue. They are satisfied at present to

have put the United States and other regional states on notice that China is dissatisfied with current

security arrangements, while promoting a discussion of alternatives that could better provide for

regional peace and stability in the future. Nevertheless, China's new security concept is a clear sign

that Beijing is increasingly uncomfortable with the United States as the preeminent power in its own

neighborhood.

Korean Peninsula

Chinese perspectives on US policy toward the Korean Peninsula also are in flux.(14) Beijing shares

broad US policy objectives on the Korean Peninsula of averting military conflict, maintaining a

nuclear-weapons-free peninsula and promoting a process of stable change. China does not always

support US measures to achieve these objectives, however, and, until recently, has been quite critical

of US policy toward North Korea. The adoption by the Clinton administration of the

recommendations put forward by former Defense Secretary William Perry in 1999 are viewed by

China as a welcome shift from an approach that relied heavily on sticks while offering few carrots to

a policy that emphasizes dialogue and provides P'yongyang with more positive incentives. The

partial lifting of the half-century-old economic sanctions on North Korea by President Clinton was

roundly praised by Beijing.(15)

China is nevertheless ambivalent about the prospect of normalization of relations between

Washington and P'yongyang. On the one hand, Beijing has long hoped for the completion of "cross

recognition" on the Korean Peninsula that began with China's establishment of diplomatic ties with

South Korea in 1992 as an important step in the process of easing North-South tensions. On the other

hand, however, Beijing is increasingly wary of the possible negative impact on Chinese security

interests of a robust US influence on the Korean Peninsula that may soon include P'yong yang. This

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concern, along with a desire to advance its strategic interests, probably underlies China's increasingly

active posture toward the Korean Peninsula--including a mid-January 2000 visit to Seoul by Chinese

Defense Minister Chi Haotian.

The NATO military operation in Kosovo has heightened Chinese fears of US military strikes on

North Korea to eliminate any potential nuclear weapons program and set back P'yongyang's plans to

develop and deploy long-range ballistic missiles. China's opposition to nuclear weapons on the

peninsula may not extend to the North's development of a conventional missile capability that may

effectively deter the United States from launching an attack similar to that which was carried out

against the former Yugoslavia. This may be the first clear signal that Beijing views its interests as

potentially diverging from American interests on the peninsula. As the situation evolves on the

Korean Peninsula, the Chinese expect greater Sino-American competition for influence and will

likely continue to seek to maximize their position by strengthening relations with both the North and

the South.

China has in principle opposed the deployment of any country's troops outside its own territory, but

in practice has tacitly accepted the presence of American forces on the Korea Peninsula. As a process

of change takes shape on the peninsula, however, Beijing is putting the United States and regional

states on notice that it hopes US ground forces will not remain indefinitely. The Chinese

Ambassador to Seoul, Wu Dawei, stated in an interview last December that China wants "involved

parties to settle the issue of US military presence in Northeast Asia at an appropriate time."(16)

Beijing increasingly views the presence of US forces on the peninsula as contrary to Chinese

interests and is already probably seeking to persuade the South Koreans that future security on the

peninsula can be ensured without the deployment of American ground troops in Korea. A minority

view in China holds that the presence of US troops would serve as a buffer against possible

escalating tension between a reunified Korea and Japan, but this view is not likely to hold sway

amidst deepening Chinese suspicions of US intentions to check the growth of Beijing's power and

influence on the peninsula and elsewhere in the region.

Variables Affecting China's Views of the United States, 2000-

2005

Numerous variables will shape Chinese attitudes toward the United States in the coming five years.

To narrow the field to a few key variables, some assumptions have been made. First, there are not

likely to be any major changes in the global balance of power in this period. The United States will

remain the sole superpower and will preserve its advantages in economic, technological, political,

and military measures of strength. China will continue to lag far behind the United States in all major

indexes of power.

Second, the probability that China will experience social upheaval and systemic political change in

the next five years is extremely low.(17) Thus, domestic variables and their potential impact on

China's posture toward the United States will not be considered in great detail. The trigger of

domestic change in China, however, the manner in which it unfolds, and the outcome all would

affect Beijing's perspectives on the United States. Suspicion among Chinese leaders that the United

States is behind social unrest or separatist activities in China would undoubtedly increase Chinese

paranoia about US intent to undermine the regime and supplant communism with democracy in

China. This situation consequently would lead to a hardening of Chinese attitudes toward American

policies in the region. A systemic political change that produced a more liberal regime could have

either a positive or a negative effect on Chinese views of the United States and its regional policies.

A more democratic government could be in conflict with the United States over China's continued

determination to bring Taiwan under national sovereignty, enhance Chinese military capabilities, and

eliminate US force presence in the region even as it pledged greater transparency militarily and

promised to uphold higher standards of human rights.

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Taiwan's Uncertain Future

To the Chinese leadership, US policy toward Taiwan has a more immediate and critical impact on

Chinese interests than US global strategy or other policies in the region. How the United States

handles the Taiwan issue is judged by Beijing to be a litmus test of Washington's intentions toward

China. If the United States is seen as willing to put Sino-American relations at risk by crossing

redlines set by Beijing--including sales of specific weapons and support for further steps by Taiwan

toward independence--this assessment will guide future Chinese policy toward the United States and

may lead to the judgment that a Sino-US military confrontation in the Taiwan Strait is inevitable.

Despite the growing realization in Beijing that the United States does not control decision making in

Taipei, the Chinese maintain that US policy--especially through its arms sales to Taiwan and its

commitments to defend the island from Chinese attack--encourages Taiwan to resist entering into a

serious dialogue with the mainland to work out arrangements for reunification.

There are many uncertainties regarding Taiwan and the likely evolution of Chinese attitudes toward

US handling of the Taiwan issue. In March of this year, Taiwan will elect a new president who, over

time, will chart a new course for the island that has continuities as well as discontinuities with the

policies pursued by Taiwan's current president Lee Teng-hui. If this transition of power is followed

by a commitment by the new government to preserving the status quo, easing cross-strait tensions,

including a slowing of the arms buildup across the strait and a resumption of dialogue between

Taipei and Beijing, then Chinese concerns about US backing for Taiwan independence may

diminish. An agreement on terminating hostilities in the strait and the opening of political talks

between Beijing and Taipei could remove the Taiwan issue as an obstacle to further progress in

Sino-American relations under the condition that Beijing judges that Washington is not seeking to

block a cross-strait solution.

Alternatively, Taipei's new government could prove to be resolutely determined to pursue

independence. The holding of a national referendum on Taiwan's future status or a revision of the

constitution to legalize the island's separateness from the mainland and existence as a sovereign,

independent state are examples of steps that Taipei could take that would be viewed as extremely

provocative in Beijing. Washington's response to such steps by Taipei would be critical in China's

deliberations over an appropriate policy response. In a dangerous variant of this scenario, China

could conclude that Taiwan is moving toward independence with tacit or even overt US backing.

Should this occur, Beijing may opt to use force against the island sooner rather than later, and a

Sino-US military confrontation could ensue that holds the potential to quickly escalate to a major

war beyond the Taiwan Strait.

Between these extremes is a scenario that differs little from the situation that has prevailed in the past

five years. The new Taiwan Government may well follow a path similar to that set by Lee Teng-hui.

This would include efforts to enhance Taiwan's participation in international organizations and other

steps to raise its international status. Dialogue with the PRC may be resumed, but Taipei may resist

discussing the terms of political reunification with the mainland. The new Taiwan president could

rhetorically renounce the goal of separation, while taking incremental measures that appear to the

PRC to be aimed at the eventual objective of independence. In this case, China's approach toward

Taiwan probably would harden, and Beijing would step up pressure on Washington to set limits on

its arms sales to the island. At the same time, China might reduce or even halt its cooperation with

the United States on curbing global proliferation of weapons of mass destruction and missiles.

Beijing would remain suspicious of the US role and American intentions, but probably would refrain

from using force against Taiwan. Sino-American relations would continue the current pattern of

cooperation and competition amid mutual suspicion. China could also take a more proactive stance

against the presence of US forces in the region and seek to more assertively persuade other states in

the region of the need to create new security arrangements for the Asia-Pacific.

US Global and Regional Policies

The way the US exercises its power over the next five years will have a pivotal impact on Chinese

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attitudes and policies toward the United States. Recurring intervention abroad with military force to

advance American objectives, especially without UN approval, will be viewed with alarm by

Beijing. In the aftermath of NATO's military operation in Kosovo, Chinese institute experts remain

divided over whether Kosovo will be used as a model for future US policy in Europe and especially

in Asia. A pattern of US armed intervention in geographical regions that are not critical to Chinese

interests probably would result in rhetorical condemnation and greater unwillingness to cooperate

with the United States on issues of low priority for Beijing. US military intervention on China's

periphery could provoke a stronger Chinese response, including alignment with Russia and other

willing powers to constrain US behavior.

The outcome of the 2000 presidential elections in the United States may result in tactical shifts in US

foreign policy and particularly in Washington's approach to dealing with Beijing that will influence

Chinese attitudes and policy toward the United States. For example, foreign policy advisers to

Republican presidential candidate George W. Bush advocate placing greater emphasis on building

and sustaining coalitions and alliances with those who share core American values.(18) In Asia,

Robert Zoellick calls for Japan, the United States, Korea, and Australia to forge closer defense ties

and for Japan's forces to be "more closely integrated to support the US military in Asia."(19) The

incumbent Democratic administration also has indicated a desire to expand security access

arrangements with Singapore and with other ASEAN states.(20) Depending on other American

regional and global policies, Beijing may well perceive such efforts as part of a US strategy of

encirclement aimed at checking the growth of Chinese power.

A Republican administration decision to abandon the objective of building a constructive strategic

partnership between the US and China that was agreed upon by Presidents Clinton and Jiang Zemin

in 1997--as suggested by some presidential candidates and their advisers--would further reduce

Beijing's confidence that a stable relationship with the United States is attainable. Even more

alarming to Chinese leaders would be a retraction of the Clinton administration's "three no's"

commitment.(21)

Deployment Decision on National Missile Defense System

In June 2000, the Clinton administration is planning to make a decision on deployment of an NMD

system to protect the continental United States. Barring technological difficulties or an economic

downturn that forces choices in resource allocation, the United States is likely to proceed with NMD

deployment. Two configurations are under consideration. The C-1 system would consist of a single

NMD site, most probably Alaska, with approximately 100 interceptors that would have the potential

to intercept China's current arsenal of about 20 ICBMs. This system could be deployed as early as

2005. The C-3 system envisions the deployment of 200 to 250 interceptors in two sites, Alaska and

North Dakota. This system could be effective against a larger number of ICBMs and could be

deployed by 2011. In either case, to preserve roughly the same nuclear balance that exists between

China and the US today, the Chinese would have to substantially increase the number of their

ICBMs by the planned deployment date.

Whichever system the Clinton administration chooses, the decision to go forward with deployment

of an NMD system will have profound implications for China's attitudes toward the United States.

Although China's strategic forces have long been vulnerable to a US first strike, Beijing now is

concerned more about the US threat than in the past and judges a Sino-American military

confrontation to be possible in the future. Any NMD system probably will feed Chinese paranoia

about US intentions and lead Beijing to conclude that the United States seeks to deprive China of a

survivable second-strike capability. Even a determination to deploy fewer than 100 interceptors in

the C-1 system will not convince the Chinese that the priority US concern is a missile attack from

North Korea or Iran because they will assume that the system would ultimately expand to greater

numbers of interceptors designed to negate their strategic deterrent. The Chinese will consider NMD

deployment as representing a dangerous shift in US defense strategy away from a doctrine based on

mutually assured destruction to one based on pursuit of US strategic superiority.

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The US decision to field a national missile defense system will coincide with ongoing Chinese plans

to modernize its strategic nuclear forces, but will no doubt affect the trajectory of those plans. China

is likely to build and deploy a mobile, solid-fueled, strategic missile force with penetration aids and

other countermeasures that is large enough to deny the United States a certain first-strike capability

against Chinese strategic forces. In sizing its new force, a debate is likely to ensue over whether to

deploy MIRVed warheads and, more fundamentally, over whether a nuclear doctrine of minimum

deterrence is still sufficient to meet China's security needs in the new security environment.

If the United States fails to reach agreement with Russia on amending the ABM Treaty to allow for

deployment of NMD systems and opts to unilaterally abrogate the treaty, Chinese concern about US

unilateralism also will increase. This condition will spur Beijing to cooperate more closely with

Moscow against American interests.

Evolving Plans on Theater Missile Defense Systems

A decision on deployment of theater missile defense systems is not expected until 2007. Once the

United States proceeds with NMD deployment, however, the Chinese will assume, probably

correctly, that deployment of upper-tier TMD systems will proceed on schedule. Over the next five

years, prior to a final determination on deployment, discussion in the United States and in the region

of the pros and cons of transferring upper-tier TMD systems to Taiwan is likely to heat up and may

significantly influence Chinese assessments of US intentions as well as American policies and

presence in the Asia-Pacific. Sales to Taiwan in this period of weapon systems that degrade the

ability of China to threaten Taiwan with ballistic missiles will no doubt elicit sharp rhetorical and

policy responses from Beijing. Chinese officials are currently warning the US against the transfer to

Taiwan of upgraded Patriot missile batteries known as PAC-3s, destroyers equipped with the Aegis

battle management system, and long-range early warning radar.

Ultimately, the impact of TMD deployment on Chinese attitudes will depend on the deployment sites

chosen and on Beijing's assessment of the strategic purpose of the TMD systems deployed. A

decision to deploy upper-tier TMD systems on Taiwan soil or on ships owned and operated by the

Taiwan military is likely to have a deep impact on Chinese assessments of US intentions on the

Taiwan issue and provoke a series of negative responses from Beijing, toward both Washington and

Taipei. Retaliatory measures by China could range from suspension of some or all Sino-US military

exchanges and a halt to cooperation in arms control and nonproliferation efforts to breaking

diplomatic relations with the United States. The likelihood of Chinese use of force against Taiwan

would be high.

A decision by Washington not to substantially upgrade Taiwan's ability to defend against Chinese

ballistic missiles, including a determination to forgo the transfer of upper-tier TMDs to Taiwan,

probably would have a favorable impact on Chinese attitudes toward the United States. Beijing is not

likely to strongly object to the deployment of upper-tier TMD systems, both land based and sea

based, that remain under US operational control as long as the defense of Taiwan is not an explicitly

enunciated goal.(22) The possibility that such systems could be used to defend Taiwan in the event of

a military confrontation with the mainland is perceived by China to be in conformity with the longstanding US policy of "strategic ambiguity." China's sole urgent concern regarding the deployment

of upper-tier TMD systems under Japanese control is the prospect that they could be used to shield

Taiwan from a missile attack. A decision by Tokyo to procure such systems will intensify Chinese

concerns about the US-Japan alliance, especially if the threat from North Korean missiles has been

effectively eliminated.

An Indian Nuclear Deterrent With Tacit US Backing

If securing Indian membership in the CTBT and NPT become US policy priorities, China will be

concerned that Washington may be willing to agree to Indian deployment of nuclear weapons in

exchange for New Delhi's signing on to those arms control treaties. Since India conducted a series of

nuclear tests in May 1998, Beijing has worried that the United States tacitly supports an Indian

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nuclear deterrent against China. Flight testing of the Agni II medium-range ballistic missile in April

1999 further heightened Chinese fears. US acquiescence to India's desire to deploy a nuclear

deterrent would inflame Chinese suspicions that the US is concerned about a future threat from

China and is pursuing a strategy of encirclement and containment.

Change on the Korean Peninsula and US Force Presence

Any analysis of changes in the Asia-Pacific security environment over the next five years must

consider the possibility of a radical change in the standoff between North and South Korea.

Scenarios of change include economic collapse or political disintegration in the North, reconciliation

between P'yongyang and Seoul, and military conflict initiated by the North out of desperation.

However change occurs, the emergence of a verifiable peace on the Korean Peninsula probably will

be a catalyst for the restructuring of US forces in the region. In the United States, a debate probably

would ensue over the threats to American interests in East Asia and the purpose of US forwarddeployed forces. The explicit question will be raised regarding whether American forces should be

forward deployed in East Asia to counter a potential threat from China. The outcome of this debate

and the resulting decisions made on the restructuring of US forces in the region will have a decisive

impact on Chinese estimates of US intentions and the prospects for achieving a stable and

cooperative relationship with the United States.

Assuming that Beijing's concerns about US strategy and intentions have not been assuaged, the

Chinese probably would respond to the new situation in Korea by pressing Seoul to insist on the

removal of American ground forces from the peninsula. If Beijing became convinced that the United

States was pursuing a strategy of military containment of China, the Chinese leadership could opt to

take an assertive stance against the presence of US military forces in Japan as well and could press

for an end to US alliances with both South Korea and Japan. Moreover, China might seize upon this

opportunity to promote a regionwide reassessment of the prevailing security architecture and its

suitability to the new strategic environment.

The stance that Beijing adopts toward American regional force deployments over the next five years

will be influenced somewhat by the views of other states in the region. If Asian states continue to

value the US presence as a regional balancer and a guarantor of open maritime lines of

communication through the South China Sea, then Beijing will be reluctant to assertively contest the

continued presence of US forces. Another factor is the attitude of regional states, including China,

toward the possible remilitarization of Japan and the US role in thwarting that outcome. If current

trends continue, concerns about a greater Japanese security role among regional states may diminish,

and support may increase for a reduction of American forces provided that Japan remains anchored

in the security alliance with the United States.

Chinese Leaders' Confidence in China's Future

Another key variable that will shape Chinese attitudes toward the United States in the coming five

years is the confidence that Chinese leaders have about China itself--the Chinese economy, political

and social stability, and China's evolving position relative to other powers. To the degree that

Chinese leaders feel secure about their continued rule, are not worried about threats from within, and

are optimistic about China's future ability to narrow the gap in comprehensive national power

between their country and the other leading powers, they will very likely be less paranoid about US

intentions toward China and the dangers of a sole superpower world.

US Economic Recession

A downturn in the US economy, especially if coincident with weakness in the Japanese and

European economies, could have a devastating impact on China's economic growth plans.

Reductions in US capital investment in China, as well as purchases from China, could slow Chinese

growth. Many economists forecast that within the next five years, there will be a major correction in

US financial markets that could reverberate globally and there could possibly be a broader US

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economic recession. The subsequent increase in unemployment rates in the United States and rising

trade deficits probably would lead to new trade tensions with China.

An economic recession in the United States could affect Chinese attitudes toward the United States

in several ways. First, Chinese leaders would be concerned primarily about the concrete negative

effects of a slowdown in US economic growth on the Chinese economy, and their worries about

potential uses of American power in ways that could be harmful to Chinese interests probably would

recede. Second, China probably would revise downward its estimates of American power and US

ability to achieve its purported global "hegemonic" ambitions. If the West European and Japanese

economies experienced a simultaneous upward turn, the Chinese would judge that the pace of

development of a multipolar world was accelerating, and their apprehension about the United States

remaining the sole superpower for many decades would further diminish.

Conclusion

Implications for Chinese Policy and US Interests

The accidental bombing of the Chinese Embassy in Belgrade and the NATO military operation in

Kosovo crystallized in the minds of Chinese leaders the potential dangers of a unipolar world in

which the United States has a commanding lead over other major states in all crucial indexes of

comprehensive national power. In the wake of the Kosovo operation, Beijing's wariness of US global

strategic aims and American intentions toward China has increased considerably. China's estimate

that the US will continue to occupy the position of sole superpower for at least the next two decades

strengthens the imperative for Beijing of maintaining normal and stable Sino-US relations. At the

same time, however, the Chinese expect that unprecedented US strength and Washington's perceived

determination to check China's emergence as a great power that could challenge America's leading

position will make achieving a steadier Sino-US relationship more difficult. In addition, the

possibility of a Sino-US military confrontation over Taiwan is looming larger in the estimation of

many Chinese institute experts and probably in the minds of Chinese leaders.

Chinese attitudes and policies toward the United States will be influenced considerably by the

variables outlined in this paper. Barring fundamental changes in American global and regional

strategy or the global balance of power, China's suspicions of the United States probably will grow,

not diminish, over the next five years. US policy toward Taiwan will be a litmus test for Beijing of

broader American intentions toward China, especially US policy responses to any steps by Taipei to

legalize the island's existence as a sovereign, independent state; US decisions regarding the transfer

to Taiwan of more capable theater missile defense systems; and the development of C3I ties between

the American and Taiwan military that would increase the likelihood of rapid American involvement

in combat across the Taiwan Strait.

Continued high levels of distrust of the United States and worries about a potentially hostile security

environment for China are certain to have significant implications for Chinese foreign policy and, in

turn, for American interests. Beijing may conclude that it is necessary to devote greater resources

toward defending Chinese security interests against newly emerging post-Cold War threats and

enhancing Chinese leverage to cope with them. Accelerated military modernization, closer alignment

with Russia against the US, active opposition to US forward-deployed forces in East Asia, renewed

proliferation activity, stepped-up obstructionism in the UN, and increased cultivation of Third World

clients are just some of the policy choices that Beijing could make.

Unless and until Chinese leaders conclude that US policy poses an urgent threat to core Chinese

national interests, however, they are unlikely to alter their policy of seeking to peacefully manage

differences between the two countries and develop a stable relationship with the United States.

Beijing will be disinclined to adopt a confrontational international posture toward the United States

over the next five years because doing so would put in jeopardy China's economic development,

political stability, and in turn, the survival of the Communist regime. We should nevertheless expect

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that China will be less accommodating than in the past to American concerns about Chinese policies

domestically as well as internationally. Moreover, Beijing is likely to be more reluctant to cooperate

with Washington on issues where Chinese vital interests are not at stake and the prospect for a

divergence of American and Chinese interests exists. For example, in areas like the Persian Gulf,

South Asia, and the Middle East, where the Chinese have worked together with the United States for

the primary purpose of promoting better Sino-American ties, Beijing may no longer be willing to

moderate its behavior to please the United States. Chinese cooperation on halting proliferation of

weapons of mass destruction probably will be slowed, and Beijing is likely to seek points of leverage

to press the United States to address its concerns about American policy toward Taiwan.

Additional tactical adjustments in Chinese foreign policy are probable and, in fact, have already

begun to be implemented. To shore up Chinese security in its own neighborhood as a hedge against

the possibility of intensified competition with the United States in the future, Beijing is seeking to

reinforce relations with states on its periphery, including Russia, India, Vietnam, North Korea, and

the bordering Central Asian nations. This policy will continue as Beijing attempts to increase its

influence in the region and position itself to defend its interests more effectively in the future.

In an effort to curb American power and promote the trend of a multipolar world, China is likely to

strengthen its relations with the other major global poles: Russia, Japan, and Western Europe. On

issues where the Chinese perceive their core national security interests to be endangered, such as the

deployment of theater and national missile defenses, Beijing is likely to cooperate more actively with

other nations than in the past to constrain the actions of the United States. China, however, is

unlikely to lead any such effort or seek to forge an anti-American alliance with other countries. In

the United Nations, we also can expect that Beijing will selectively work bilaterally and

multilaterally in response to global events with the larger goal of limiting US ability to act

unilaterally.

US-ROK Relations: Trends at

the Opening of the 21st Century

by Scott Snyder

Introduction

With the dawn of a new millennium, the burdens of history that have weighed so heavily on South

Korean aspirations during the past century have at least momentarily been set aside in favor of hope

for the future and new resolution to set aright those past difficulties that have led to failure or

disappointment. Downtown Seoul at least has been scrubbed down and stands shiny and bright with

hopeful determination. Mammoth exhortations for a new millennium in which dreams will be

fulfilled hang from corporate buildings of businesses rising from an economic crisis that only two

years ago were darkened and sobered by fear and failure. Such hope and determination to meet the

future were likewise hyperbolically expressed in the first American State of the Union address of the

millennium. The tone of heady optimism extends to the US-ROK relationship, at least if one accepts

UC-Berkeley Professor Emeritus Robert A. Scalapino's firsthand assessment over more than half a

century of observation and analysis that "the US-ROK relationship is more promising than it has

been at any time in the recent past."

Despite deserved positive reflection on the achievements of common purpose and shared interests

reflected in the current US-ROK relationship, there are also many harbingers of change that may

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either sustain or dramatically weaken the relationship at a time of uncertainty and transition in the

Northeast Asian security environment. Likewise, economic globalization poses new challenges that

will provide simultaneous opportunities for both common purpose and potential conflict in the

relationship. Perhaps most interesting and complex of all, a variety of demographic, social, and

cultural trends are influencing public attitudes and introducing new factors that will affect how South

Koreans and Americans see each other. The increasing complexity and apparent contradictions

inherent in managing such a relationship between the United States and South Korea will introduce

new, unpredictable elements into what has in the past been a relationship with a remarkably

consistent and durable foundation of shared purpose, despite occasionally dramatic episodes of

apparent disagreement and frustration. Perhaps more importantly, it remains unclear whether the

social perspectives of the younger generation will sustain a positive US-Korea relationship or

whether the final outcome of the transition-in-process to a post-Cold War structure for managing

Northeast Asian political and security relationships will challenge the relative consistency, stability,

and strength that has characterized the US-ROK relationship in past decades.

Trends in US-ROK Political and Security Relations

For five decades since the outbreak of the Korean war, the common security threat from North Korea

has remained the dominant focus of US-ROK relations. The US-ROK alliance itself came about as a

result of North Korean aggression and remains fixed on deterrence against any renewed threat. With

the end of the Cold War, South Korea's economic transformation, and North Korea's economic

decline, the balance of power internal to the Korean Peninsula clearly has shifted, and the status quo

on the Korean Peninsula is unlikely to be sustainable in the long term. One result is that unlike the

past in which a weak Korea was the object of great power rivalry and competition, South Korea has

emerged as an influential actor in regional security relations. In partial response to these

developments, the relative proportion of US and South Korean capacity and contribution to the

military relationship have gradually transformed the nature of the US-ROK security relationship

from a patron-client state relationship to one that more closely approximates partnership. Most

notably, the United States and South Korea in the early 1990s agreed that the ROK would regain

peacetime control of its ground forces, and US deployments on the Korean Peninsula were adjusted

to give the US a supporting rather than a leading role in deterrence against the North, but further

planned adjustments were suspended in 1992 with renewed concern about North Korea's nuclear

weapons development efforts.

Some South Koreans, however, view the joint command structure and South Korea's continued

military dependence on the United States in key military areas (including current restrictions on

ROK missile deployment) as institutional reflections of a dependence relationship rather than a

structure of shared responsibility for security commensurate with the perceived level of development

South Korean society has achieved as a new member of the OECD on the threshold of joining the

industrialized world. As the security situation in Northeast Asia continues to evolve, some South

Koreans desire to achieve a level of autonomy in the security arena commensurate with the rapid

progress they have made in the economic and political realm. These sentiments constitute the

primary backdrop for potentially emerging tensions in US-ROK security relations over military

issues such as South Korea's weapons procurement decisions and indigenous weapons development

programs (for instance, current negotiations over allowable missile development ranges), Status of

Forces Agreement (SOFA) issues, the ROK's political role as part of a joint strategy for dealing with

North Korea, and the emerging ROK debate over the future of relations with the PRC (including

whether South Korea should participate in development of theater missile defense--[TMD]).

US-ROK Military/Alliance Management

A number of emerging potential conflicts in the US-ROK military-to-military relationship essentially

have arisen as a result of the mismatch between ROK self-perceptions as a maturing economy with a

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more pluralistic political system and perceptions that the US-ROK security relationship remains

unequal or has lagged in its recognition of ROK social and political advances. South Korea's desire

to expand its missile development and deployment capacity beyond the 180-kilometer-limit imposed

under a 1979 US-ROK bilateral agreement to the international norm of 300 km as defined under the

Missile Technology Control Regime (MTCR) are one symptom of South Korean desires for greater

autonomy in the military sphere. Although a number of complex technical issues must be resolved in

negotiations to revise the 1979 US-ROK bilateral agreement, that agreement itself is no longer

politically viable while the United States simultaneously pursues MTCR compliance for North Korea

(a less restrictive standard than for our ROK allies!) as a minimum objective in US-DPRK missile

talks. According to one South Korean commentator, "We understand the US stance, since it pertains

to its strategic goal of containing the spread of weapons of mass destruction [WMD]. Nevertheless,

we cannot acquiesce to the US demand for 'the ROK to strip off all its clothes for the sake of

developing missiles.'"

The United States is prepared to allow South Korea to develop and deploy missiles up to the MTCRconsistent 300-km-range limit, but a request by President Kim Dae Jung to develop missiles with a

range of 500 km has held up a final resolution of this issue in bilateral US-ROK negotiations.

Another manifestation of South Korean desires for more independent scope of action in the military

sphere is an increasingly active debate in South Korea over dependency on US-originated technology

for weapons procurement (well over three-quarters of ROK foreign procurement has traditionally

been from the United States) that on the one hand is desirable to ensure interoperability but on the

other hand may become a symbol of ROK dependency on the United States in cases where USoriginated technology is less competitive on quality or price grounds.

A similar desire to rectify perceived inequities in the US-ROK security relationship underlies ROK

demands to renegotiate the Status of Forces Agreement (SOFA). In particular, South Korean analysts

have been particularly sensitive to differences in the SOFA agreements negotiated with Japan as

compared to agreements negotiated with South Korea. For instance, differences between handling of

cases involving alleged crimes by US military personnel in Japan and Korea is one issue that rankles

South Koreans. The primary South Korean concern here is that SOFA-related jurisdictional issues

are most likely to arise in South Korea in emotional cases where public opinion is more easily

inflamed and may have a broader influence on long-term South Korean public support for the

alliance relationship. This is just one example of increased South Korean sensitivity to perceived

differences in the US approach to the respective alliances with Japan and South Korea that have

come about as South Korea has moved down the road of democratization and modernization. In the

future, considering how adjustments in one alliance relationship may influence perceptions of the

other alliance partner will become increasingly necessary. This situation will be so because USJapan-ROK trilateral coordination on security issues has afforded more and more opportunities for

Japanese and South Koreans to learn more about the respective bilateral alliance relationships. Such

sharing of understanding about the intricacies and unique elements of each alliance generally is

likely to increase confidence and transparency, but comparisons also may lead to pressures to

develop a more uniform approach to the respective alliance relationships, and may serve as a limited

form of pressure to standardize and regionalize a "virtual (trilateral) alliance" presence in the region.

One evidence of this situation has been South Korean discussion about whether a post-Korean

reunification security relationship with the United States might be organized along the lines of the

current joint command structure, or whether the independent command arrangements manifested in

the US-Japan security relationship may be more a more desirable configuration. At the same time,

American security planners have doubts that the command relationships in Japan are inadequate to

permit proper coordination in time of crisis.

Policy Coordination Toward North Korea

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The development and implementation of a more effectively coordinated policy toward North Korea

is another trend that has important implications for the US-ROK relationship, although the

extraordinary difficulties that had plagued US policy coordination efforts with the Kim Young Sam

government have been considerably eased with the advent of Kim Dae Jung's Sunshine Policy.

Another essential factor has been the review of US policy toward North Korea conducted by former

Secretary of Defense William Perry. Specifically, Secretary Perry's emphasis on policy coordination

among the United States, South Korea, and Japan through the establishment of the Trilateral

Coordination and Oversight Group (TCOG) represents a concrete vehicle for launching joint policy

initiatives toward North Korea that has drawn bipartisan support from Congress. Finally, the

establishment of such a coordination process benefited critically from Kim Dae Jung's opening of

ROK-Japan reconciliation and cooperation during his state visit to Tokyo in October of 1998.

The primary result of the Perry policy review process has been the alignment of policies among the

United States, Japan, and South Korea in favor of working with the North Korean leadership to

engage in mutual threat reduction in return for the creation of a more benign international

environment to avoid a breakdown in North Korea with the attendant negative implications for

stability on the Peninsula. This policy coordination effort is itself unprecedented and has potentially

significant implications for the shape of future security relations in Northeast Asia, but it may be

unsustainable either if the urgency of the North Korean threat subsides or if North Korea were to

somehow find a way to exploit differences in priority among the United States, South Korea, and

Japan to take advantage of continued domestic political differences in each country over how to deal

with North Korea. (Given North Korea's "divide and conquer" strategy, whether or not policy

coordination proceeds effectively may indeed be at least as important as the direction of the policy

undertaken). In this respect, management of potential political power transitions resulting from

domestic elections scheduled to occur this year in all three countries will pose a special challenge for

the newly established trilateral policy coordination process.

The trilateral coordination effort has also led to the enhancement of "comprehensive deterrence"

against destabilizing North Korean behavior. US-ROK military readiness and technological depth

has been strengthened from the time of the 1994 crisis, which revealed several potential

vulnerabilities. That crisis resulted in the strengthening of US-Japan coordination in the form of the

revised US-Japan Defense Guidelines and adoption of a new Acquisition and Cross-Servicing

Agreement designed to provide Japanese logistic and equipment support to US forces in the event of

a military contingency in the region. North Korean threats have also served as a catalyst for the

development of US-Japan-ROK defense consultations from 1997 that have supported the rapid

improvement of Japan-ROK defense exchanges in the late 1990s. These quiet consultations have

proceeded informally to the point where hypothetical plans exist on paper for managing a

coordinated response to North Korean contingencies, including the emergency removal of Japanese

citizens from the Korean Peninsula in time of war and handling of North Korean incursions that

cross over from Korean to Japanese territorial waters. Despite all these developments, however,

quality and direction of performance between both US and ROK Governments in the midst of a

developing crisis remains a possible defining moment for the future of the relationship in the event it

becomes necessary to respond to sudden instability in North Korea. One South Korean scholar

recently put a fine point on the stakes involved during a casual dinner conversation, saying, "When

the balloon goes up, the United States better know how to respond."

The China Factor in US-ROK Relations

Finally, the emergence of an internal South Korean debate over how to deal with China is a trend

that may have some impact on the future of the US-ROK security relationship. Although most

Korean security analysts remain strongly supportive of maintaining a security relationship with the

United States, there is a growing minority of Korean scholars who argue that China will play the

decisive role in determining Korea's future aspirations. According to one South Korean official

involved in policymaking toward North Korea, "The premise of our diplomatic strategy toward

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China must be that China is far more important than the United States in the reunification of North

and South Korea." He expressed concern by saying, "If the DPRK's Kim Jong Il regime collapses

due to the public unrest over food shortages and China intervenes militarily, the Korean peninsula

may resemble East Timor in Indonesia, which called for the stationing of UN peacekeeping troops,

and the Korean Peninsula may end up being divided again."

Most important, South Koreans have no desire to choose between their US allies and China, which

will maintain a vital security interest in developments on the Korean Peninsula. In this respect, a

Sino-US confrontation would be seen by South Koreans as a worst case development, and

increasingly greater attention has recently been given to how developments on the Korean Peninsula

might be more effectively isolated from a potential downturn in US-China relations. South Korea's

decision not to join TMD development efforts by the United States and Japan is a reflection of South

Korean sensitivity to China's future role as an influential party to future developments on the Korean

Peninsula, as well as a recognition that TMD in and of itself does not add to South Korea's own

protection from the North Korean artillery that already represents the primary military threat to

Seoul. At the same time, the significance of South Korea's burgeoning economic and people-topeople relationships, particularly with ethnic Korean Chinese nationals, is becoming more and more

complex. On the one hand, South Korea's trade with China has grown from less than $3 billion to

more than $24 billion in less than a decade, and there is potential for continued rapid growth in many

sectors. The first exchange of top-level visits between defense ministers has just occurred within the

past few months, with limited military-to-military exchange efforts under active discussion. On the

other hand, the interests and activities of South Korean NGOs working with North Korean refugees

has become a political problem in Sino-South Korean relations, and most recently, China's decision

to hand over seven North Koreans who had been declared as refugees by a representative from the

UNHCR, has added complexity to the relationship.

Trends in the US-ROK Economic Relationship

Although relatively less important in priority than security issues, a number of economic trends also

are influencing the future of US-ROK relations in increasingly important but often contradictory

ways. Perhaps the most important issues are how South Koreans are thinking about the implications

of globalization for the South Korean economy, the extent to which South Korea has learned lessons

from its financial crisis of two years ago, and South Korea's self-perception and the likely direction

of positions on agriculture and competition issues in the context of a prospective new round of WTO

negotiations over trade liberalization.

The challenge of adjusting to globalization had received a great deal of attention in South Korea

even before the financial crisis threw into relief some of key issues and lessons for practical

consideration. In an effort to cross the threshold to industrialized country status, and in pursuit of

membership in the prestigious OECD, former President Kim Young Sam repeatedly referred to his

policy of "globalization," but that proved to be more a mantra than a substantive consideration of the

issues and challenges arising from competition in a globalized world. Prominent economist Sakong

Il has offered the perspective that for a smaller country such as Korea, which has almost no

opportunity to shape the rules of the global financial architecture, the best that can be done is to

study the new rules closely and do one's best to adapt nimbly enough to capture the benefits and

avoid the dangers of the trend itself. In other words, if globalization is a fact of life, how can one best

use the trend to one's own advantage? The Korean financial crisis served primarily to focus attention

on failures to adapt to a new global environment and the elements of reform that would be necessary

to survive and compete in a globalized world, but an underlying edge to the crisis and recovery

remains present in Korean dissatisfaction with perceived US willingness to use crude, bare-knuckles

leverage in its own economic self-interest at the expense of the economic interests of others.

The financial crisis itself has thus had a mixed effect, although only preliminary conclusions can be

drawn regarding its impact and the effectiveness of the Korean recovery at this stage. Preliminary

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reports suggest that one impact has been to increase the gap between the urban rich and the rural

poor as industrialized areas have rapidly rebounded, but the underlying fallout from the crisis

remains not fully addressed. In addition, female laborers and older white-collar middle managers in

their forties were adversely affected, particularly in the banking and financial sector, while Korea's

recovery seems to be offering more jobs in the form of startups to younger workers who are better

equipped to take advantage of new opportunities in information technology. Despite initial

questioning of the US response to the economic crisis in the days following the first IMF agreement,

blame for the crisis in Korea shifted to the many inadequacies and opaque practices that needed to be

cleaned up at home. Although the United States intervened at the critical point in December of 1998

with support for the "second line of defense" after it appeared that the IMF agreement earlier that

month was in trouble, many Koreans also perceived US private-sector "vulture capital" as attempting

to take undue advantage of the crisis as they swept in to inspect Korean assets that were potentially

available for bargain-basement prices.

In certain key sectors, Koreans appear to have embraced deregulation and reform to compete actively

in a globalized world, but in other sectors, needed reforms have run into the roadblock of vested

social and political interests. One area in which Korea appears to have moved to the leading edge of

reform has been deregulation of the telecommunications sector, which has spawned a host of

interesting developments that may catalyze additional changes across the board in key economic,

social, and political sectors. Several facts may serve to illustrate the extent to which Koreans are

embracing new technology as a result of globalization: In September of 1999, Korea became the first

country in Asia in which the number of mobile phones exceeds the number of land lines. Online day

trading has taken off in recent months, and half of all transactions in November of 1999 were

conducted online, with the possibility that Korea could soon "become the global leader in cyber

trading." Internet clubs composed of minority shareholders have exploded in recent months, bringing

new organizational capabilities to movements in favor of enhanced corporate governance and

economic reforms, including providing a base of support to NGO "blacklisting" of National

Assembly candidates as part of an effort to demand greater transparency and reform among the

political parties.

Another effect of the revolution in information technologies and their applications in Korea is to

flatten institutional structures within Korean society through ease of communication, challenging

traditional hierarchies in innovative and direct new ways. These trends will add both complexity and

internal contradiction to Korean society as new groups are able to contest for power in innovative

ways that could negatively influence certain US interests. For instance, local community groups have

been more active in monitoring and protesting potential environmental problems caused by the

presence of US military bases near their communities, and the tools for surveying and gathering

evidence regarding such problems are increasingly available to organized local groups who are

actively pressing on these issues. At the same time, differentiation and pluralization within Korean

society will make Korea more attractive as a potential economic and business partner for the United

States in certain sectors, and new technology can close the gap and create efficiencies of scale that

might enhance economic cooperation in key areas.

At the same time, globalization and its effects remain highly contested in South Korean society. The

South Korean agricultural sector is one example of a South Korean vested interest that is unlikely to

embrace reforms accompanying globalism in ways that could conflict with US interests. In fact,

South Korean efforts to defend the agricultural sector will remain a hot button issue, for instance in

the context of US attempts to liberalize global agriculture as part of the WTO. Perhaps most

interesting is that contrary to the early 1990s, when Japan and Korea pursued their objectives on

agricultural opening on rice separately as part of the final rounds of GATT negotiations, those two

countries are now cooperating in pursuit of a common strategy to protect their own interests against

US objectives. The issue of agricultural market opening in particular may have symbolic significance

in Japan and Korea as sectoral interests that symbolize the preservation of traditional culture against

international and particularly US efforts that are perceived as undermining or threatening to local

interests (that is, globalization equals Americanization); thus, it is possible that protests on such

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issues could gain public resonance following active protests among NGOs in Seattle and Davos.

Demographic and Social Factors Influencing the US-ROK

Relationship

Perhaps the most significant factors that are likely to influence the medium-to-long-term future of

US-ROK relations are social and political changes resulting from generational transitions in Korean

attitudes toward the United States. These demographic changes are also stimulating political

pluralization and social change in South Korea. It appears that the strong bonds of the US-ROK

relationship initially forged through the Korean war are gradually weakening as a younger generation

without direct experience of the war itself replaces sentimental views of the United States based on

direct knowledge of American sacrifice on behalf of South Korea during the war with a more

pragmatic view of the relationship based on a cold, hard assessment of where shared interests may lie

in the future. Although the survey information presented below is incomplete and not directly

comparable, it is sufficient to illustrate the major trends in attitudes toward US-ROK relations and to

provide a basis for projecting future challenges and problems.

According to a USIA-sponsored survey of Korean attitudes toward the United States conducted in

1994, the generational shift in attitudes toward the United States is quite striking. Although more

than 64 percent of individuals surveyed felt that US-ROK relations were either "good" or "very

good," a breakdown by age, education, and region illustrates clear changes in attitudes between the

older and younger generations. Among respondents over 40 years old, over three-quarters of

respondents had a positive view of the United States, but among 24- to 29-year-olds, the figure

dropped to less than 60 percent, and among 18- to 24-year-olds, more respondents felt that the

relationship is bad than those who felt it was good. Perhaps even more striking is the fact that there is

less support for the US-ROK relationship among college graduates and urban dwellers, while rural

dwellers and individuals with less education were more positive about the relationship. A survey by

Dr. Young Jack Lee conducted for then-opposition party leader Kim Dae Jung in the fall of 1995

demonstrates even more negative results. According to that survey, 52 percent of respondents over

40 years of age felt that US troops should stay in Korea, while 57.8 percent of students in their

twenties thought that US forces should leave, and almost 40 percent of those students considered

themselves anti-American. Another notable result of the October 1995 survey is that economic

globalization was seen as a major threat by over 20 percent of respondents.

A less scientific Internet survey of public opinion conducted shortly following the Nogunri

revelations in late October of 1999 may be interesting as a more recent point of comparison. The

timing of the survey must be taken into account as one views the responses, and this survey is also

not scientific and therefore would be considered to have a larger margin of error. That survey

revealed that over three-quarters of respondents think "there are problems with current ROK-US

relations," and once again, the breakdown shows that the higher a respondent's education level, the

more likely the respondent is to be critical of the bilateral relationship. Almost 35 percent of

respondents believed that "the ROK Government is dragged along too much by the United States,"

the number one reason given for problems in the relationship. Interestingly enough, the economic

relationship came in for a higher proportion of criticism among respondents than the security

relationship, even though the survey was taken in the aftermath of Nogunri, with over 69 percent of

respondents indicating displeasure with the economic relationship. This result underscores that

perceptions are widespread in Korea that the United States is acting in its own economic self-interest

at the expense of South Korean interests. More than 70 percent of respondents do not consider the

United States to be giving much help to North Korea, and a similar number believe that uncovering

the truth behind the Nogunri killings will be hard and the results of the Nogunri investigation will

make no difference in the ROK-US relationship.

If we consider the gradually declining levels of support in Korea for the US military presence in

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Korea (as well as the strong sense of dissatisfaction with the United States over economic affairs,

which perhaps is an effect of continuing ROK suspicions about US economic intentions in Korea

and the region), what conclusions may be drawn regarding the near-term future of the US-ROK

relationship?

One preliminary conclusion we may draw is that the US-ROK relationship may become somewhat

more difficult to manage in coming years with the end of the "three Kims era" of South Korean

politics, infighting among the next generation of political elites over who will be dominant and what

the political structure and centers of power of the new era will be, and the increasing competition to

become Kim Dae Jung's successor that will ensue in the months before December 2002. As one

looks at the current generation of likely successors to the three Kims, their primary focus is clearly

provincial and primarily oriented toward domestic political concerns, with no individual among the

likely next generation of current political leaders having international credentials for leadership

comparable to Kim Dae Jung's. One potential danger is that there may be a greater temptation than in

the past to try to use the US-ROK relationship for political purposes. More likely, however, relative

neglect and increased potential for misunderstanding may come from a lack of priority given to

adequate maintenance of the relationship or an excessive focus on internal politics at the possible

expense of stable foreign policy.

The wild card, of course, is the increasing public demand for greater transparency and

responsiveness among the political elite to popular concerns, rather than the perpetuation of "boss"

politics in which the political leader retains absolute control over the loyalties of party members. The

current NGO movement to blacklist politicians is itself yet another example of the forces in favor of

pluralization and differentiation within South Korean society, and NGOs are currently attempting to

open up the political process to improve the quality of members and their responsiveness to local

public concerns. Such a movement, if it were to succeed, also may have a mixed impact on US-ROK

relations. On the one hand, South Korean pluralization and the rise of civil society serve to

underscore the shared values that should be at the core of durable alliance cooperation; on the other

hand, civic organizations also are likely to take aim at some of the enduring and unequal historical

legacies (real or perceived) of the US security presence in Korea, demanding a more equitable

partnership and constraining USFK freedom to maneuver in ways that are likely to add strain to the

relationship in the future. The newly emerging criticisms that are resulting from greater transparency

and critical approaches within Korean society regarding the price it is now willing to pay for security

in a changed post-Cold War environment are likely to require adjustments to the US security

presence in Korea in line with evolving public sentiments and aspirations. A rigid bureaucratic US

approach that fails to take into account the accumulated pressures of gradual change in South Korea's

own domestic environment that have resulted from Korea's own economic and political evolution

may backfire. Gradual adjustments and accommodation in the context of an enduring security

partnership with South Korea (while continuing to maintain the capacity to fulfill the military

mission of deterrence against North Korea), however, may succeed in avoiding precisely the kinds of

tensions that could be most threatening to the maintenance of shared long-term interests and values

that underpin the US-ROK relationship.

Conclusion

The historical underpinnings of the US-ROK relationship, forged in a time of great challenge as an

urgent response to an external siege on shared vital national interests during the Korean war, face the

challenge of adapting to a new era--a transition that will inevitably require a reevaluation of the

extent to which interests, which have thus far sustained a close relationship, continue to be shared.

The end of the Cold War and South Korea's democratization are external and internal factors,

respectively, that multiply the range of factors to be considered as part of the challenge of nurturing

shared interests, and both factors make the management of the relationship considerably more

complex. At the same time, South Korea's democratization process, while requiring certain

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adjustments in the US-ROK relationship, also creates newly converging interests based on shared

values, a deeper basis for perpetuating a solid relationship in the future.

This paper has laid out some of the potential political, security, economic, and social and

demographic trends that will require structural adjustments in perceptions of the US-ROK

relationship and the way it is managed. South Korean desires for greater autonomy and independence

in military affairs, possible stylistic friction and differences in priorities as both parties work together

to respond to North Korea's challenge, and the long-term future role of China on the Korean

Peninsula are among the security issues that must be dealt with. Likewise, the challenge of

responding to globalization imposes mixed and often contradictory pressures on the US-ROK

relationship. Finally, a new generation of South Koreans and Americans with different experiences

and perceptions of each other may view the relationship and its benefits in very different ways from

their fathers, mothers, and grandfathers. These perceptions will also require effective communication

and adjustment as a basis for perpetuating the relationship.

The overarching challenge whether the centrifugal forces of complex social, demographic, and

economic change in Korea and the United States will overpower the centripetal forces of shared core

values that have resulted from the flowering of South Korean democracy, or whether both sides will

be sufficiently willing to look beyond their own immediate needs and short-term calculations to

cooperate and adapt to new circumstances under which shared interests and values may lead to even

stronger cooperation in the years ahead.

Southeast Asian Perspectives

by Marvin C. Ott

The Regional Context

For Southeast Asia, as for the West, the end of the Cold War was a seminal event. The region had

been a major Cold War battleground. Communism was a clear and present danger to the survival of

regimes and, in the case of Cambodia, to the very existence of a people and culture. Marxism left its

mark in the three wars and failed economies of Indochina; in the mid-1960s upheaval in Indonesia;

as a contribution to societal disruption in Burma, Malaya, and the Philippines; and even to a degree,

in the militarization of some Southeast Asian polities.

In the years immediately following the Cold War, this picture changed dramatically. The collapse of

Soviet power meant the withdrawal of the Russian Pacific Fleet back to port and the end of

subventions to the Vietnamese economy. In September 1989, the Vietnamese Army ended its

occupation of Cambodia. In the Philippines, the Communist New People's Army, which in the mid1980s posed a genuine and growing threat to the Philippine government, had begun to ebb. The

Khmer Rouge, which also posed a serious threat to take power had, by the beginning of the 1990s,

misplayed its hand and had become politically isolated and increasingly ineffective.

Thus, for the first time, the Southeast Asian countries faced no major security threats from within or

without the region. With relatively marginal exceptions, governments were secure, societies stable,

the status quo accepted, economies were growing, and external powers posed no immediate danger.

To a degree that far exceeded that anywhere else in the Afro-Asian world, the Southeast Asian states

had developed regional institutions and patterns of interaction that gave the region increasing

coherence as a single political, economic, and even security entity. The centerpiece of that

achievement was ASEAN, which subsequently spawned the ASEAN Free Trade Agreement

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(AFTA), soon to be followed by the ASEAN Regional Forum (ARF), and the Asian Pacific

Economic Cooperation (APEC) forum. Meanwhile China was preoccupied with the task of

consolidating the far-reaching domestic reforms initiated by Deng Xiaoping. By any historical

measure, this was (and is) an extraordinary moment that could prove short-lived or it could be an

opportunity to consolidate regional security for the long term. As Jusuf Wanandi of Indonesia'

Centre for Strategic and International Studies has warned, "If this opportunity is missed and these

countries go their separate ways, it would be much more difficult five or 10 year down the road to

construct a security arrangement."

The urgency Wanandi expressed reflected a pervasive uneasiness among the foreign policy elites of

the region that seemed to belie their recent record of success and a palpable growth in national and

regional self-confidence. This uneasiness derived from a number of perceived vulnerabilities, latent

threats, and related concerns. Economics did not loom large in most calculations, but it was a

crushing economic downturn that brought Southeast Asia's post-Cold War reverie to a sudden end.

As senior foreign affairs and defense officials in Southeast Asia assess the regional security

environment, the vulnerabilities they see begin but do not end with economic reconstruction.

Economic Recovery

The financial/economic crisis that began in Thailand in late summer 1997 and rolled across the

region was (and still is) deeply unsettling. It revealed that the extraordinary economic growth and

modernization of the last three decades--a phenomenon characterized by the World Bank as the

"Asian Miracle"--was not as solid as nearly everyone had believed. The image of a kind of regional

money machine gave way to a quite different picture of ineffective regulatory institutions, illusory

bank balance sheets, wildly irrational investments, excessive corruption, and conspicuous

consumption. As the value of the baht, rupiah, and ringgit collapsed, Southeast Asians were

reminded that not just living standards, but social order, political stability, and even national security

rested ultimately on economic performance. The hubris so evident in statements associated with the

"Asian values" debate of the 1980s and early 1990s gave way to a more chastened, far more worried

tone.

Political Fragility

The political dangers embedded in economic failure were graphically revealed in Indonesia. For 32

years the New Order regime of President Suharto had been a fixture of the Southeast Asian scene.

Indonesia had been politically stable (if not static), economically successful, and socially quiescent.

But under the impact of the financial crisis, the framework of the New Order cracked, triggering

mass political demonstrations, widespread street violence, and a change in regime. Next door in

Malaysia where Dr. Mahathir had been entrenched as Prime Minister for 17 years, a somewhat

analogous, but less virulent chain of events ensued. A confrontation between the Prime Minister and

his deputy over how to respond to the economic crisis took an ugly turn with the arrest of the latter

and his imprisonment on sexual misconduct and other charges. Mass demonstrations of a kind not

seen in Malaysia for 30 years shook the government to its foundations. In Thailand, the Chavalit

government, paralyzed and ineffective in the face of the economic collapse, was replaced by

parliamentary vote amid statements by senior military officers pledging there would not be a coup.

In sum, the political stability that had seemed almost as assured as continued economic growth was

now clearly a question mark.

Ethnicity. Although ethnic disputes have not proven to be as lethal in post-Cold War Southeast Asia

as in some other regions of the world, ethnic/minority issues are a significant source of domestic

tension. In Burma, a simmering civil war between the lowland Burmese and highland minorities

(Karen, Karenni, Shan, Wa, Kachin, and so forth) has continued at varying levels of violence for

nearly 50 years. A series of agreements beginning in the late 1980s between the Rangoon

government and several of the minority groups has dampened the fighting, at least for the moment.

In Malaysia, the latent tension between the Malay majority and the over one-quarter of the

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population that is Chinese, pervades national life. The spectacular economic growth of the

Federation in the years since the communal riots of 1969 has been seen by many as almost

imperative to preserve domestic stability. Recurring communal tension and occasional violence gave

way to something much more serious in Indonesia in 1997-98. Under the strain of economic

deprivation, widespread anti-Chinese violence destroyed not only property, but also the confidence

of the Chinese business community members in their future as citizens of Indonesia. Violence

against Chinese seemed to trigger a chain reaction of ethnic and religious strife involving other

communal groups that make up the complex patchwork of Indonesia. The secession of East Timor

produced the bloodiest tableau of all--this inflicted by "militias" associated with the Indonesian

Army. The potential for a still more violent confrontation looms in Aceh.

Territory and Boundaries. Although the territorial status quo is broadly accepted by the Southeast

Asian states, a number of specific disputes have been minor irritants for some time, and they could

assume more serious dimensions if the security climate in the region were to change. These include:

 Claim of the Philippines to the Malaysian State of Sabah.

 Claims to the Spratly Islands by China, Vietnam, Taiwan, Malaysia, Brunei, and the

Philippines.

 Disputed ownership by Malaysia and Singapore over Pulau Batu Puteh.

 Disputed ownership by Malaysia and Indonesia to the islands of Sipadan, Sebatik, and Ligitan.

 Clashes along the Thailand-Myanmar border.

 Dispute between Thailand and Malaysia over the land border and offshore demarcation line.

 Boundary disputes between Malaysia and Vietnam and between Indonesia and Vietnam over

their offshore demarcation lines.

 Boundary dispute between Cambodia and Vietnam.

 Dispute between Malaysia and Brunei over Limbang and offshore boundaries.

Among these issues, the South China Sea is the most serious for several reasons. It is the only

dispute to involve more than two Southeast Asian states and the only one to which outside powers

(China and Taiwan) are a party. Large, potential offshore gas (and possible oil) reserves elevate the

economic stakes to a level higher than elsewhere. Also, any conflict in these essential, heavily

traveled sea lanes would immediately jeopardize the interests of the US, Japan, and other major

powers.

External Powers

Two extra-regional powers, China and Japan, are a continuing source of uneasiness to security

planners for the medium and long term, even as they assume roles in the present that are largely

welcomed.

China is simply too large and too near not to be a major factor in the Southeast Asian equation and

not to be viewed with some trepidation. With certain isolated exceptions, China does not have a

history of seeking imperial control over Southeast Asia. And for roughly three centuries composing

the European colonial epoch, China ceased to be a serious geopolitical factor in Southeast Asia. But

this was an abnormal circumstance that has now passed into history. China's postwar support for

Communist revolutionary movements in the region marked the reappearance of Chinese power in

Southeast Asia. This, coupled with the presence of economically influential Chinese populations in

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nearly every Southeast Asian city, has bred distrust. Beijing's explicit claim that virtually the entire

South China Sea constitutes Chinese territorial waters (and its refusal to disavow the use of force to

back up those claims) has caused alarm in a number of quarters. Growing Chinese influence in

Burma and Cambodia has been a further source of concern. Finally, the burgeoning of China's

economy in the recent years has been welcomed by some (mostly ethnic Chinese) Southeast Asian

businessmen as a major new investment opportunity, while being feared by others because of the

potent competition from emergent, ultra-low-wage Chinese industries.

The prevailing uneasiness and ambivalence concerning China is evident not only in official

statements and actions but also in some suggestive public opinion data. For example, in USIA polls,

about 45 percent of respondents in Thailand and the Philippines view China as an "expansionist

power," but only a small percentage in both countries regard China as a direct security threat. In a

survey of regional executives (many of them presumably ethnic Chinese) the Far Eastern Economic

Review found hefty majorities "concerned about the security situation in the South China Sea." A

similar survey also found majorities ranging from 53 percent (Thailand) to 80 percent (Indonesia)

favoring a "greater [Chinese] leadership role in world affairs." The latter tracks with the prevailing

strategy among Southeast Asian governments to draw China into a role as a rising but status quo

power by binding China to the rest of the region with ties of mutual economic advantage.

Southeast Asia Territorial Disputes (U)

From Southeast Asia's perspective, the best China is one that is domestically preoccupied, much like

the China of the last decade. The fear is that as China gets its domestic house in order, gains

economic and military strength, and is largely freed of its historic security concerns to the west

(Russia) and the east (Japan), it will feel increasingly free to turn its energies southward.

Japan labors under the shadow of historically recent memories of its often harsh wartime rule over

the region. These memories, however, vary significantly by demography, ethnicity, and location.

Political power has passed to a postwar generation that has no direct personal recollection of the

New Asia Co-Prosperity Sphere. Also, some populations, like the overseas Chinese and the

Filipinos, experienced an often brutal occupation. But others, like the Burmese and Indonesians,

recall the Japanese invasion as the critical event that broke the hold of European colonialism in the

region and in some instances gave local nationalists their first taste of political power. Thailand

effectively acquiesced to Japanese occupation and thereby escaped its most adverse effects. Since the

war, Japan's interaction with Southeast Asia has been confined largely to economics--as trader,

investor and aid provider. In recent USIA polls, 92 percent of Indonesian respondents gave Japan an

overall "favorable" rating as compared to 77 percent for the United States. In Thailand, a plurality of

opinion regards Japan as the kingdom's "closest economic partner."

Today, Japan is valued as an economic engine that powers much of Southeast Asia's economic

growth. Japan plays no direct security role in the region, and the Southeast Asian states want to keep

it that way. As long as the US-Japan Security Treaty remains viable, the Southeast Asian

governments are confident that Japan will be content to leave to the United States the task of

protecting the vital Southeast Asian sea-lanes through which the bulk of Japan's oil supplies are

transported. The great fear is that if Japan ever feels it must use its own Navy for that purpose, it will

provoke China into military countermeasures. The last thing the Southeast Asians want is a

competition for military preeminence in the region between China and Japan.

The United States

Finally, the Southeast Asians are uneasy about the United States--about American commitments and

staying power. The reasons for doubts on this score are not hard to discern. Despite repeated

assertions by American officials to the contrary, many Southeast Asians do not regard the United

States as an inherently Asian power. In time, so the thinking goes, the United States will withdraw to

its natural geographic sphere of influence in the eastern Pacific. Perhaps ironically, such doubts were

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reinforced by America's Cold War victory. The end of that contest provided the obvious rationale, if

one was needed, for a substantial drawdown of the US security presence in Asia. Without a

worldwide adversary, there was a logic to calls on the home front for a peace dividend to be gained

in part by pulling back America's overseas military deployments. For the harshest skeptics,

America's post-Cold War record of military engagements overseas provided additional evidence.

Prime Minister Mahathir of Malaysia put the matter in characteristically blunt terms: "The presence

of a Western power will not make a difference especially after Haiti, Somalia, Bosnia, and Rwanda.

It takes only one soldier to be killed before the whole force will be withdrawn."

All Southeast Asian governments were keenly aware of the downward pressures on the US defense

budget in the immediate post-Cold War period. Most watched with dismay as the US-Philippine

negotiations to extend the American lease at Subic failed. Nor were they reassured by the defeat of

President Bush by a little-known, small state governor in a campaign that stressed US domestic

concerns to the almost total exclusion of foreign policy. Finally, the Gulf War, when US troops were

deployed through the Mediterranean rather than Southeast Asia, seemed to suggest yet one more

reason why the United States might de-emphasize its security role west of Guam. This is ironic

because the primary route for logistic supply to that battlefield (mostly by sea) was across the Pacific

and through the Indian Ocean.

Against this backdrop, the US naval deployments in response to the Taiwan crisis of 1996 and the

US-led NATO operations in Kosovo provided a welcome degree of reassurance regarding American

capacity and determination to retain its global security role. When US warplanes bombed the

Chinese Embassy in Belgrade, at least some senior military officers in Southeast Asia reacted, first,

by assuming the bombing was deliberate and, second, by welcoming it as a signal reminding China

who is boss.

At the same time, there is tangible uneasiness among policy elites concerning another implication of

Kosovo--a growing predilection on the part of the United States to engage in "humanitarian

intervention." The specter of the United States and its allies deciding what values are to be enforced

internationally evokes not-too-distant memories of Western colonialism.

Regional Response

The ASEAN response to this changing security environment has occurred along three dimensions:

unilateral, multilateral, and bilateral (with the United States).

Unilaterally, the ASEAN governments have done two things. First, they continued to act on the

central principle they have followed for nearly three decades--that the foundation of national security

is a successful and growing economy. "Resilience," a formulation connoting social stability,

economic success, and a general ruggedness was coined in Singapore and soon spread as a kind of

regional mantra. All of the successful ASEAN states have kept their focus on the priority objective--

economic growth and modernization.

At the same time, they began to invest more heavily in their respective military establishments. This

growth has been sufficiently noteworthy to lead many observers to refer to a regional arms race. In

the early 1990s Southeast Asia was the one growth area in an otherwise contracting global arms

market. Indonesia purchased much of the former East German Navy--29 ships in all. Malaysia

purchased F/A-18s and Russian MIG-29s. Singapore, Indonesia, and Thailand purchased F-16s;

Thailand purchased Chinese tanks and armored personnel carriers, German helicopters, and

American P-3s. The complete list of such acquisitions was long, but it was misleading to refer to a

regional arms race.

These actions constituted a reorientation of armed forces away from domestic counterinsurgency

missions toward external defense coupled with a modernization and upgrading of forces by countries

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that now could afford it. The growth in military spending was within planned national budgets, and it

generally tracked or only slightly exceeded aggregate economic growth. Other factors at work

included an effort to improve national capabilities to defend offshore territorial claims, particularly

in light of China's assertiveness in the South China Sea; a response to the considerable political

influence enjoyed by the armed forces in several countries; and some undeniable competition and

one-upmanship among the states of the region, notably between Singapore and Malaysia.

One of the consequences of the Asian economic crisis was a scaling back of military procurement

budgets throughout the region--most notably in Thailand's decision to rescind its purchase of FA-18s

from the United States. If a feeling emerges in the region that the economic crisis is effectively over,

military budgets can be expected to benefit accordingly.

The most interesting developments in terms of regional security have a multilateral character.

ASEAN has become the centerpiece in this process. When the association was created in 1967, its

declared purpose was to foster economic and cultural (and by implication, political) cooperation

among its members. The founders of the organization were emphatic and explicit that ASEAN was

not, nor would it become, a security organization, that is, a military alliance. In fact, ASEAN was

from the outset an organization with an overriding security purpose. Its achievements in terms of

fostering cultural contact and understanding have been constructive, but hardly earth shaking. Its

various initiatives in the direction of regional economic cooperation have come to little for the basic

reason that the economies of the member states are competitive rather than complementary.

But security is another matter. ASEAN was founded in the aftermath of Indonesian "confrontation"

against Malaysia, exacerbated by the Philippines' territorial claim to Sabah. The clear intent in

creating ASEAN was to prevent the outbreak of another conflict among the five founding members.

And this has been one of ASEAN's great successes. Patterns of consultation and collaboration have

been fostered, mutual trust has been nurtured, and political and foreign policy elites have become

closely acquainted with one another. In short, ASEAN has become a "security community" defined

as a collectivity in which military conflict among its members has become almost unthinkable. For

example, despite recurring acrimony over a number of issues, a military clash between Singapore

and Malaysia is about as unlikely as one between Spain and Great Britain over Gibraltar. Disputes

exist, but they are either resolved through negotiation or adjudication or set aside until they become

negotiable at some future time.

The second major achievement of ASEAN came in response to Vietnam's 1978-79 invasion and

occupation of Cambodia. ASEAN took the lead in coordinating a remarkably effective diplomatic

campaign that denied Cambodia's UN seat to the Vietnamese-installed government in Phnom Penh.

Three governments (Singapore, Malaysia, and Thailand) also worked with the United States (and

China) in providing covert assistance to the various Khmer guerrilla organizations conducting

military resistance against the Vietnamese. These efforts, along with the US-led economic embargo,

were instrumental in persuading Vietnam to finally withdraw from Cambodia.

Although ASEAN is not a military pact, several of its members have been engaged in bilateral

cooperation for many years on security-related issues of shared concern. Examples include Thailand

and Malaysia on their common border (long a haunt of the Malayan Communist Party and Thai

Muslim secessionists), the Philippines and Indonesia regarding smuggling, and Singapore and

Indonesia concerning piracy. Since the decision to evacuate Clark and Subic, each of the ASEAN

countries has offered to make appropriate facilities accessible to US naval and/or air forces.

Beginning in 1992, a multilateral dimension was introduced when security issues were explicitly

included on the agenda of ASEAN ministerials and uniformed officers included in meetings of

senior officials. In the same time frame, the annual meeting of the ASEAN foreign ministers with

ASEAN's "Dialogue Partners" began to encompass security issues. In 1993, this security dialogue

was expanded to include China, Russia, and India. Meanwhile, Vietnam, Laos, Burma, and

Cambodia have become full members of ASEAN. All this official dialogue has been supplemented

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by semiofficial meetings and conferences conducted by academics and policy institutes in the

ASEAN countries with invited outside experts and devoted to security issues.

Eventually, the participants will have to decide whether to extend multilateral security cooperation

beyond discussions to embrace operational activities, including possible multilateral joint exercises

and training, and coordination of some equipment purchases (for example, maritime patrol aircraft)

to allow for possible joint use and interoperability. However, there is little or no likelihood that

ASEAN will ultimately be transmuted into a full-fledged military alliance. No serious sentiment

exists within the organization for such a step. The region remains too diverse with too little

consensus regarding the identity and extent of security threats. Thailand and Vietnam, for example,

have distinctly different views of China in this regard. Even if an alliance were established, the

collective military strength of the region would be insufficient to cope with aggression or

intimidation by a large power. Finally, nonalignment still exerts a significant tug on official

sentiment within the region.

The latest development is an ASEAN decision to establish a formal arrangement to manage the

official security dialogue--the ASEAN Regional Forum (ARF). The Forum hosted its first annual

meeting in Bangkok in July 1994. Composed of 21 Pacific Rim countries, including China, Japan,

Russia, and India, as well as the United States, the ARF had the potential of becoming a significant

arena for addressing such common security concerns as piracy and such regional disputes as the

Spratlys. In reaction to the discovery of Chinese military construction on Mischief Reef in 1995, the

ARF became the vehicle for a serious initial attempt to resolve conflicting interests and claims in the

South China Sea. Yet, when additional Chinese construction was detected during the most acute

phase of the Asian economic downturn, the ASEAN countries could not muster an effective response

within the ARF. At this stage, the jury is still out as to whether the ARF will become a viable

diplomatic vehicle for addressing security issues in the region. A current test is provided by efforts

within ASEAN to use the ARF to negotiate a "code of conduct" for managing disputes in the

Spratlys.

The US Role

As a consequence--and somewhat paradoxically--the ASEAN states still look to external powers as

the ultimate guarantors of their security. The Five Power Defense Pact links the United Kingdom,

Australia, New Zealand, Singapore and Malaysia. But it is the United States that is, overwhelmingly,

the region's preferred security partner. This shows up clearly in US Information Agency polling of

regional opinion (for example, in Thailand, Indonesia, Australia, and the Philippines), in official

public statements (for example, in Singapore) and in government actions and private comments by

officials (for example, in Malaysia). Even in nominal outliers like Vietnam and Burma, some senior

military officers are quick to reveal their preference for a continued robust American defense

presence in the region.

Since the demise of SEATO, the United States has been party to only one multilateral Asian alliance,

ANZUS, comprising Australia, New Zealand, and the United States. But America does have bilateral

defense agreements with Thailand and the Philippines. More important, the US 7th Fleet,

headquartered in Hawaii and forward based in Guam and Japan, (composed of permanently assigned

units and those deployed for six-month periods from central and eastern Pacific bases) operates on a

continuing basis in the region. US air assets deploy to the region out of Japan and Alaska, and forces

from all services, including ground forces, regularly go to the region from the continental United

States for a variety of exercises. Altogether, and on a continuing basis, approximately 100,000

American military personnel are forward deployed.

At the most basic level, US objectives in Southeast Asia have remained consistent over the last five

decades: (1) prevent the emergence of a regional hegemon, (2) keep open the sea and air routes that

transit the area, and (3) maintain commercial access to the economies of the region and the peace and

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stability that commerce requires.

Pursuit of these interests has carried US security policy through four historical phases over the past

half century: the war against Japan in the 1940s; the counterinsurgency/nation building period of the

1950s and 1960s, culminating in the Vietnam War; the Nixon Doctrine; and the focus on

strengthening the 7th Fleet as a counter to the Soviet military presence based at Cam Ranh Bay in the

late 1970s, and pressure against the Vietnamese military occupation of Cambodia, culminating in the

1989 Vietnamese withdrawal and the signing of the 1991 Paris Agreements establishing a

framework for a possible political resolution of the Cambodian conflict. Coincidentally, the demise

of the Soviet Union and the end of the Cold War removed Russian military power from the region.

Since 1991 the United States has entered a fifth phase with the termination of the US military

presence in the Philippines. The loss of facilities at Clark and Subic compelled a rethinking of US

strategy that involved a dispersal of the US presence in the region through access arrangements in a

number of countries but no large US bases. Administrative offices serving the Pacific Command

have been established in Singapore. With the advent of the Clinton administration, there also was a

change of emphasis more accommodating to multilateral approaches to security. The new approach

embraced the advent of ARF and explicit intra-ASEAN discussions of security issues as fully

compatible with existing US bilateral security ties and activities in the region.

The United States now faces a substantially changed security landscape in Southeast Asia, one that

reflects the essential success of American post war policies. America currently is without challenge

as the preeminent military power in the region, and from a Southeast Asian perspective, that

presence is largely benign because it comes without territorial or overt hegemonic ambition.

Security regimes generally develop in response to or in anticipation of threats. What makes the US

security role in Southeast Asia so distinctive and challenging in intellectual and policy terms is the

absence of a clear threat. Instead, there is the regional sense of uneasiness noted earlier. The

Southeast Asians want the United States present as an insurance policy--as a benevolent cop on the

beat to protect them against potential external threats, against the unknown, and, to some extent,

against each other. As long as the US-Japan Security Treaty is operative and the US 7th Fleet patrols

the Southeast Asian sea lanes, Tokyo will not need to contemplate its own military presence in the

region. Disputes or potential disputes within the region are less likely to flare up or provoke a local

arms race if a neutral third party is by far the strongest military presence in the area. The day may

come when the combination of growing economies, militaries, and multilateral institutions and

processes will give the region sufficient strength and coherence to make a US security presence

largely superfluous--but not yet.

Other considerations that underlie Southeast Asian support for a continued US presence include the

preference among the armed forces of the region for American weapons and equipment and for the

United States as a source of common military doctrine and shared intelligence. US forces treat

Southeast Asia as a single security area, and through joint exercises, exchanges, and interactions with

local armed forces, have given the region what coherence it has in military terms. Finally, the US

military presence is valued as means of maintaining US interest in the region and encouraging an

increase in America's economic involvement. The United States remains Southeast Asia's largest

single market. Since exports and foreign investment have largely driven the economic growth of the

region, the American connection remains hugely important to the region's future. Southeast Asian

governments also want to encourage increased American investment as a counterweight to the

massive presence of Japan in that sector. Finally, if Southeast Asian industry is going to compete

successfully with lower-wage Chinese competitors, an infusion of foreign technology will be

required in many cases.

Having said all this, significant constraints exist on US influence in the region. Until recently, the

most obvious were limitations on American defense budgets. Ironically, had the Philippine Senate

approved the tentative agreement for renewal of the lease at Subic, the United States would have

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faced significant difficulties in fulfilling the financial terms of that agreement. In a new era of

Federal budget surpluses, budget limitations may not pose an insuperable hurdle to a major capitaland personnel-intensive presence in Southeast Asia like Clark and Subic. That will become clear

only if an opportunity for such a facility presents itself. Second, nationalism constrains the

willingness of Southeast Asian states to accept a close, visible tie to the United States. ASEAN has a

longstanding formal commitment to the objective of establishing a Southeast Asian Zone of Peace

Freedom and Neutrality (ZOPFAN), which would amount to the exclusion of the external great

powers from the region. ZOPFAN has taken on no reality beyond the declaratory, but it accurately

reflects a widely held determination not to be the cat's paw of others outside the area. This impulse

received a recent impetus from Indonesia's selection in 1993 to serve a five-year term as leader of the

Nonaligned Movement. One consequence of all this is a desire to minimize the size and visibility of

the American military presence in each of these countries. None of them want to have the raucous

equivalent of Angeles City or Ilongapo that serviced American airmen and sailors outside the gates

of Clark and Subic in the Philippines. Visiting Forces Agreements establishing legal jurisdiction over

US military personnel have become a lightning rod for such concerns.

Finally, several irritants recur in US relations with the region, most related to trade disputes and

human rights. Examples included a long-running and acrimonious quarrel with Thailand over

protection of intellectual property rights, a public argument between the United States (including

President Clinton) and Singapore (including former Prime Minister Lee Kwan Yew) over the proper

punishment for an American teenager found guilty of vandalism in Singapore, and the

Congressionally-mandated cancellation of some International Military Education and Training

(IMET) aid programs because of human rights related criticisms--notably Malaysia's policy toward

Vietnamese refugees and Indonesia's handling of East Timor. During the 1990s, the mood in several

of the ASEAN governments has become palpably more resentful of, and resistant to, US pressure on

behalf of a human rights/democratization agenda. Singapore and Malaysia were particularly

outspoken concerning US "arrogance" and "cultural imperialism." The Asian financial crisis has

tended to override and mute these issues while diplomatic negotiations have resolved some of them.

If Indonesia's newly empowered democracy takes hold, the political climate on these issues in the

region will presumably become more receptive to US views.

At the same time the Asian financial crisis injected a new discordant element into the picture--a

sense of acute vulnerability to the forces of the new globalized economy. Malaysia's combative

prime minister angrily blamed international currency speculators for triggering Asia's meltdown and

the IMF for running roughshod over local sovereignties in responding to the crisis. Mahathir's view

that the West (and the United States in particular) had acquired too much economic power over

Southeast Asia is widely shared by other, less outspoken leaders in the region.

In sum, US security planners face a complex environment in Southeast Asia that requires an

intelligent, sensitive (even subtle) diplomatic touch; that integrates political, economic, and military

considerations; and that looks beyond the immediate to at least the midterm future. The names of the

game are anticipation, prevention, deterrence, and reassurance.

Looking Ahead

Southeast Asian attitudes and approaches toward US policy and presence will be shaped, in the first

instance, by developments within the region. These will include performance of the major Southeast

Asian economies, the viability and unity of Indonesia, and the cohesion and effectiveness of

ASEAN. Beyond these obvious factors, there are some wild cards in the deck including a potential

political upheaval in Burma.

Economic success breeds confidence and stability--or in the parlance of the region, "resilience."

Economic growth also provides the budgetary resources to upgrade national military capabilities.

Economic growth undergirds the development and strengthening of regional institutions including

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ASEAN and its various elaborations and spinoffs. A prosperous and modernizing Southeast Asia

will deal more confidently with the major external powers--Japan, China, the United States and, in

the future, India. Such a Southeast Asia will be more inclined to draw lines in the sand (or sea)

regarding China and to insist on conditions and quid pro quos concerning the US security presence.

Conversely, a Southeast Asia unable to regain its pre-1997 economic footing will be less assertive

vis-à-vis outside players and more prone to intraregional disputes. Such a region will be more

vulnerable to growing Chinese influence and, at the same time, more inclined to look to the United

States for both markets and security support.

Indonesia is a huge X factor in this regard. If it holds together and begins to restore economic growth

under a moderate democratic government, Indonesia can regain its role as the linchpin of a

modernizing, increasingly interactive Southeast Asia. In the worst case, a disintegrating Indonesia

will fundamentally alter the balance of power in East Asia. Opportunities for Chinese ambition will

grow, and the tendency of regional states to strengthen bilateral security arrangements with the

United States probably will grow as well.

All of this is intimately connected to ASEAN. The association, as we have known it, cannot survive

a breakup of Indonesia, and it will survive only as a shell if Indonesia becomes the chronic sick man

of Southeast Asia. ASEAN is already confronting major difficulties as a result of the Asian financial

crisis and the ill-advised decision to rapidly expand its membership to include Cambodia, Laos, and

Burma. ASEAN today is a distinctly less cohesive and effective organization than it was in 1996.

The second broad set of factors that will affect US attitudes concern the policies and actions of major

powers in East Asia--notably China and the United States, itself. The foreign policies of Southeast

Asian governments are generally predicated on the hope and the expectation that China will give the

highest national priority to economic development and modernization, which will in turn require

good relations with its neighbors. A China focused on economic growth would logically desire

increased trade with and investment from Southeast Asia. And such a China would eschew

provocative, destabilizing policies in the South China Sea or elsewhere that would jeopardize such

relations. Southeast Asian policies toward China have been designed to reinforce such logic and

tendencies.

But few Southeast Asian officials are confident beyond doubt that Beijing will prove to be such a

benign presence in the region. Unlike the United States, China is geographically next door and does

have territorial ambitions. An undercurrent of apprehension is present in every Southeast Asian

government to varying degrees. The possibility that China may pursue a strategy designed to assert

its primacy in the region cannot be ruled out. Chinese statements and actions in the South China Sea

validate the danger in the minds of many regional defense and intelligence officials.

A China with hegemonic tendencies poses another danger--that Japan will react by strengthening its

military capabilities and by assuming a more "normal" security role in the region. In short, a logical

consequence of growing Chinese power could be a great power rivalry with Japan along Asia's rim.

None of this would be welcome in Southeast Asia.

The US economic presence in Southeast Asia has never been seriously controversial. Not only was it

a source of needed imports, technology, managerial expertise, and investment--it was most

importantly a natural concomitant of America's most important contribution--its market. As far as

one can see into the future, that market will remain absolutely vital to Southeast Asian economic

well-being.

The US security presence has been welcome in Southeast Asia since the early days of the Cold War

for the measure of protection it provided. In some instances that protection was direct and tangible as

with US assistance to the Philippines against the Hukbalahap insurgency. In one case--Vietnam--it

was direct, massive and unsuccessful. But generally the US presence has been valued for a general

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climate of stability and security it provided. As long as the strongest military power in the region was

an outside player without territorial ambition, Southeast Asians could be confident that nothing

really bad--a hostile hegemon or a major interregional conflict--would be allowed to happen. That

confidence was in turn key to foreign investment and other economic development initiatives that

made the Asian Miracle possible.

In sum, the regional context in which Southeast Asians view the US security role is remarkably

dynamic and indeterminate. China's strategic direction--aspiring regional hegemon or increasingly

satisfied status quo great power--remains entirely uncertain. In all probability the China of the next

10 to 15 years will emerge as a complex amalgam of the two. Just as China's strategic direction is a

question, so are its economic and political prospects. The Chinese economy of today faces huge

problems including hopelessly inefficient state enterprises, a technically insolvent banking system,

and an alarming and unsolved environmental crisis. A substantial slowing of economic momentum

has profound implications for a regime that has lost Marxism/Maoism as an effective source of

political legitimacy and relies instead on an improving economy. Future historians may see the

ongoing crackdown on Falun Gong as the first clear signal of a systemic Chinese political crisis.

Uncertainties concerning China extend to other elements in the strategic environment. As the Taiwan

dispute becomes more acute, the confident expectations of a few years ago that the situation could be

managed and contained are no longer prevalent. ASEAN is reeling under the impact of the Asian

financial crisis and suffering acute indigestion from trying to incorporate too many new members too

fast. The association's future is very much in doubt. The economic crisis has raised a number of other

uncertainties, the most basic being whether the region will make a full recovery. There are some

hopeful indicators in that regard, but whether they represent a real or false dawn is still a question.

Even larger questions surround Indonesia, including whether the archipelago will remain politically

unified.

All these uncertainties tend to impel the region, however reluctantly, toward increased reliance on

the US security presence as an anchor in stormy seas. This will be true only so long as the United

States really is seen as an anchor. Southeast Asian states will become increasingly sensitive to any

signs of declining US interest in or disengagement from the region. Assessments of US resolve will

become even more of a cottage industry for Southeast Asian governments than in the past. For this

reason the continuing (and even growing) ambiguity in US policy toward the South China Sea does

not bode well. What exactly is America prepared to defend and under what circumstances? Few in

Southeast Asia are confident of the answer. Those that are uncertain will tend to hedge that

uncertainty. The logical alternative to reliance on the US security presence will be some sort of

regional accommodation to Chinese primacy.

Convergence/Divergence in Political Interests,

Values, and Policies

by William Watts(23)

Before the "Asian flu" financial earthquake ravaged a number of East Asian economies in 1997,

many observers--and not just in Asia--argued that "Asian values" provided a new and better

underpinning for economic and political growth. As opposed to "Western values," which allegedly

placed bottom-line gain above all else, the Asian approach was to be the exemplar of a kinder, more

humane model, one which provided a surer safety net for the less fortunate, even as national strength

grew.

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The troubles that hit the region have cast doubt on that premise. But the search continues for some

middle ground, one that would achieve growth and (in some countries more than others) greater

democratization, all the while securing social equity, especially for the needy. In a recent interview

in the 2 December 1999 issue of the Far Eastern Economic Review, Japanese Prime Minister Keizo

Obuchi, advocate of a "third way," put it this way: "I do support restructuring, but not the kind of

drastic restructuring common in the United States and Europe, or so-called chopping off of people's

heads. . . . American-style layoffs, sudden cuts that create instant unemployment, just aren't

acceptable. . . . We don't want people to lose their incentive to work. We have to find a middle

ground."

While the "Asian values vs. Western values" debate has lost some of its earlier cachet, few would

argue that there are considerable differences in approach between countries across the Pacific. The

debate is complicated by the remarkable and sustained health of the US economy. This has led to a

degree of triumphalism in statements by American leaders that can grate on foreign ears.

Closely related to this discussion and argument about contrasting values is another equally sensitive

and contentious issue: nationalism vs. globalism. Malaysian Prime Minister Datuk Seri Mahathir bin

Mohamad has spoken out vociferously against forces of globalization that he sees as undermining

national sovereignty. As the International Monetary Fund (IMF) imposed certain requirements on

states wishing to participate in IMF bailout efforts, citizens of countries affected protested what they

saw as excessive demands. "I'MFired" was a popular T-shirt selling in Seoul. The blowup at the

abortive World Trade Organization (WTO) meeting in Seattle is but another example of the extent to

which these conflicting forces will command center stage in coming years.

Background: Changing US Congressional Focus

In the midst of this tidal wave of change, thoughtful observers fret about the ability of the US body

politic to meet the challenges of the new. An influential senior member of the House of

Representatives voiced his concern at a breakfast meeting in Washington some months ago. His

ruminations on the changing nature of that body are important for gaining a better understanding of

the role the House plays in the overall conduct of American foreign policy. While its role may be

secondary to that of the Senate, and certainly of the executive branch, it does control the purse

strings. As such, its influence must be taken into account.

The Congressman noted that when first elected to Congress in 1976, he and most of his colleagues

moved to Washington with their families. They bought homes. Their children went to school here.

They set down roots in the Capitol area. They socialized with one another, regularly across party

lines. They attended a wide variety of functions in the city and its environs. They had time to go to

the theater, attend lectures and concerts, and exchange ideas with residents both in and out of

government. They got to know their fellow members well. They made close links to exposed to a

wide range of thinking, and different outlooks.

No more, according to the Congressman. Today, the scene has changed dramatically. In many

(most?) cases, the spouse of the elected official stays home, the result of the growing number of twomember working families. Many (most?) members fly into Washington late Tuesday, work

Wednesday and Thursday, and go back to their homes Thursday evening or Friday morning. Time is

controlled by committee meetings, reading memos, briefings by staff, floor votes, and constituent

visits. The Congressional schedule has been cycled to meet this new pattern of life and workstyle.

The result is eminently predictable. Members of Congress have little or no time to meet people not

directly linked to their work regimen. Many share bachelor apartments with one or more colleagues.

Members must pay attention to constituent concerns. There is scant room for off-duty socializing.

For most, there is little focus on foreign policy and trade matters. The old foreign policy

"establishment" no longer commands the attention it once did.

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The impact on a less-informed Hill membership, especially on foreign policy, is exaggerated by the

inherent instability of the House as an institution. It used to be that a strong Democratic majority was

a given. That meant that the House leadership could lead. No longer. With a margin in the number of

seats held of 5-10-15, no leader has much room to maneuver. The ability to cut deals, form

coalitions, and pursue alternatives to get legislation passed is now severely restricted.

Leadership inflexibility on key issues (the case now, the speaker noted with regret) means that what

might be possible is rendered impossible. "Fast-track" legislation for passage of trade-related issues

is a shining example: he said he could draft a measure that would pass easily, but members of the

leadership will consider only their own bill, which gives no "wiggle-room" on sensitive

environmental and child labor issues. "The center of gravity in Congress for free trade is narrowing."

In closing, the Congressman noted the "anecdotal" nature of foreign policy debate. The demise of a

clear adversary--the Soviet Union--leaves no touchstone against which to measure and test foreign

policy themes. With a Congressional membership and leadership both less-well-informed and also

unfocused, coherent deliberation in international affairs becomes an oxymoron. Policy discussions

are dominated by "anecdotal" forces and pressures, and major US policy interests, such as "fast -

track" legislation, can get lost in the process.

Background: Some American Views

In trying to assess national interests on both sides of the Pacific, we may look at how Americans rate

selected countries on a spectrum ranging from "close ally" to "enemy." We have clustered "close

ally" and "friend" responses, drawing upon a recent Potomac Associates study, as well as earlier

work by Potomac and the Roper Organization.

[The Question]: "I'd like to have your impressions about the overall position that some countries

have taken toward the United States. As I read down a list of countries, do you believe that country

has acted as a close ally of the United States, has acted as a friend but not a close ally, has been

more or less neutral toward the United States, has been mainly unfriendly toward the United States

but not an enemy, or has acted as an enemy of the United States?"

Geography is, clearly, a decisive factor. With lengthy, porous borders to north and south, Americans

recognize the remarkable luxury of their relative physical security, giving their immediate neighbors

high ratings as "close ally." Mexico's problems with drug trafficking (supplying American demand)

and related crime are well documented. The bottom line, however, recognizes friendship and

security.

The standing of China, while still well down the list, has recovered much of the ground lost at the

time of the 1989 killings at Tiananmen Square. The image of a lone man standing defiantly in the

path of the tank remains indelibly imprinted in many minds. Still, Americans have moved steadily

toward a more accepting view of China. This view has been helped along by a number of factors:

reciprocal visits by Presidents Jiang Zemin and Bill Clinton, Premier Zhu Rongji's well-covered

journey last spring, and an enduring historical fascination many older Americans have with China

(buttressed over time by World War II alliance, the writings of Pearl Buck, and American missionary

activity) among others.

Table 1: "Close Ally/Friend" (listed in 1999 order)

(percent)

1987 1989 1990 1991 1994 1999

Canada 87 n/a n/a n/a 85 82

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Recent developments provide a counterweight: charges of illegal campaign contributions, the Cox

Committee report alleging Chinese theft of nuclear secrets from the Los Alamos facility, and attacks

on US diplomatic missions in China following the mistaken bombing of the Chinese Embassy in

Belgrade. On balance, the influence of these items has not halted the steady recovery of China's

image. At the same time, however, the many skeptics about China's policies and behavior certainly

will pursue their efforts to keep some distance in the Washington-Beijing relationship. Such

skepticism also is reflected in the fact that nearly three times as many of those interviewed perceive

Taiwan as a "close ally" as do those who see China that way. Taiwan's favored position in this

opinion measure assumes special meaning in light of current tensions between the two adversaries.

Japan is an interesting case. In spite of long-standing and voluminous attention given to Japan as

economic challenge--and, in the eyes of many, economic predator--it ranks near the top as "close

ally." Many surveys continue to find that the lead item of a negative nature in feelings about Japan,

aside from economic concerns, is Japan's 1941 attack on Pearl Harbor. While the "sneak attack"

syndrome persists, numbers mentioning it are declining. When comparing friends vs. foes,

Americans seem to have compartmentalized that unpleasant memory.

The standing of the Republic of Korea has advanced markedly in our new survey. Several factors are

at work. First, the growing Korean and Korean-American community in the United States,

approaching 1 million, is emerging as a significant factor in America's demographic landscape.

Korean restaurants, grocery stores, cleaning establishments, and Korean-made consumer goods have

probably softened Korea's image. Second, President Kim Dae-jung has proved to be a strong leader,

his reputation strengthened by progress in Korea's opening up of its political and social systems.

Democratization is an important part of Kim's agenda. One result has been the virtual disappearance

of stories in newspapers and on television of student protesters being clubbed and teargassed by

police. His visits here, and return trips to Korea by President Bill Clinton, received heavy and

generally positive coverage. Third, Korea's steady behavior in the face of the North Korean potential

nuclear threat, and the aberrational behavior of the regime of Kim Jong-il in P'yongyang, have

earned respect at official levels and may have reverberated as well among the public.

A special word is in order about Russia. Attitudes toward this erstwhile Cold War adversary have

undergone by far the most extensive rejuvenation of any in this series. Barely a decade and half ago,

with the nuclear rivalry still in full swing, a scant 3 percent looked upon Moscow as either "close

ally" or "friend." Now that number has risen an unprecedented fourteenfold. Slippage in recent years

probably reflects concern over chaotic and often unpredictable Russian economic, political, and

security behavior. Virtually all experts will agree that is a concern well taken.

US Policy Interests

The overarching political interests, values, and policies of the United States in East Asia can be

clustered into a number of groupings. Readers may have others to add to the following list:

Mexico 57 56 n/a n/a 66 72

Japan 66 62 52 59 59 65

Taiwan n/a n/a n/a n/a n/a 54

South Korea 39 42 n/a 41 n/a 52

USSR/Russia 4 16 36 43 48 41

China 26 16 19 17 25 32

Vietnam n/a n/a n/a n/a n/a 26

North Korea n/a n/a n/a n/a n/a 18

Iran 2 3 6 n/a 8 13

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 1. Maintenance and strengthening of regional peace and stability.

 2. Promotion of economic growth and its benefits, including a liberal trade climate, pursuit of

democratic capitalism, and productive economic engagement.

 3. Expansion of democracy and human rights. This arena ensures tension in our dealings with

authoritarian systems. The focus of US policy has been on countries where restrictions are the

most severe. In addition to pressing for enlarged political freedoms and individual liberties,

this approach can include humanitarian assistance--supporting USAID-type programs in

education, agriculture, and housing, for example.

 4. Pursuit of programs designed to protect the physical environment, including problems of air

and water pollution, destruction of rain forests, land degradation, and the like.

 5. Enhancement of bilateral and regional cooperation in dealing with a variety of new and

emerging issues, including drug trafficking, organized crime, population movements, and

piracy.

 6. Related to the above, strengthening of regional and international institutions, such as the

Association of Southeast Asian Nations (ASEAN), the Asia Pacific Economic Cooperation

forum (APEC), the World Trade Organization (WTO), the United Nations (UN), and a variety

of other bodies.

 7. Encouragement of open communications and information flow. A wide variety of exchange

programs, designed to improve mutual understanding, are already under way. These can be

continued and expanded. A dramatic new entry in this arena is freedom of access to the

emerging vehicle of choice for global information interchange--the Internet.

The first two themes are the subject of other papers for this seminar. They will be treated only briefly

here, as they relate to the overall political framework.

Regional Peace and Stability

During the five-year time frame of this exercise, the United States will wish to maintain a robust

military presence in the region. With our vast economic and political interests in the region, any

administration is unlikely, in the near term, to want to risk creating a security vacuum that would

result from any substantial US drawdown of military forces. A large amount of diplomatic energy

and capital will be devoted to working out the terms of US engagement in the region, and, in

particular, dealing with growing Chinese military capabilities, concerns, and suspicions. The general

security issue has already been addressed, with agreement on new US-Japan defense guidelines.

In that mission, any president will have considerable public backing. We found that the American

public places "trying to maintain peace and regional stability" as the first priority for the conduct of

US foreign policy in Asia: 86 percent of those we interviewed considered it to be either "very

important" (56 percent) or "somewhat important" (30 percent).

Furthermore, regional force deployment is supported by a substantial majority of Americans. Our

recent survey found that 69 percent of those interviewed favored either increasing or keeping at the

same level the number of US military personnel stationed in Japan "for defense and peacekeeping

purposes;" 66 percent were or the same view concerning forces in South Korea. Those numbers were

statistically the same as those found in a comparable 1985 testing of opinion and were higher than

1978 findings.

The same survey also registered majority support for coming to the defense of Japan if attacked by

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Russia or China, and plurality backing for defending Japan or South Korea from attack by North

Korea. In the case of Taiwan, a majority of the general public opposed its defense against attack by

China; a bare majority of a minisample of "better informed" respondents supported US defense of

Taiwan.

A continued US military presence in Asia is contingent, of course, on its being welcomed by host

nations in the region. The 1992 closure of US bases in the Philippines shows that any such welcome

has its limits. The 1995 rape of a schoolgirl on Okinawa added to pressures from some quarters in

Japan for a reduction of US military forces. Unease at the huge American presence in downtown

Seoul has long been a source of friction. Pressure for a reduction in that presence would likely

accompany any genuine movement toward South-North accord on the Korean peninsula. But in the

five-year period under review, a meaningful forward-based US military presence seems all but

inevitable.

In terms of convergence/divergence, authorities in Beijing clearly view the development of a joint

Theater Missile Defense capability by the United States and Japan, no matter how configured (i.e.,

against possible North Korean missile threat, as officially argued), to be a direct challenge to the

interests of the People's Republic. Likewise, moves to upgrade the US-Taiwan military relationship,

inherent in the Taiwan Security Enhancement Act just passed by the House, infuriates Beijing.

Ambassador Joseph Prueher was warned by Deputy Foreign Minister Yang Jiechi that US-China ties

would be "seriously damaged" if the bill becomes law.

Economic Growth and Trade Ties

Four of our largest 10 trading partners are located in Asia: Japan, China, Taiwan, and South Korea.

That should mean, by definition, that we pay in official terms a large share of high-level attention to

nurturing our ties to those countries. Critics argue that such is not the case, a theme that will be

addressed below.

Since the economic arena is also the focus of another paper, comments here will be brief. Our two

largest trade imbalances--by far--are with Japan and China. Indeed, their combined 1998 surpluses

equal those of the next 10. It should come as no surprise, then, that we found in our latest survey that

Japan and China stand essentially alone at the top of the list of those countries who are seen as

"generally unfair when it comes to trading with the United States," and whose "imports from them

pose a serious threat now to the jobs of American workers." Worth noting is that China's position on

both counts has soared steadily and dramatically in recent years, while concerns about Japan,

although still high, seem to have eased considerably. In American eyes, China has moved markedly

ahead of Japan as problem number 1:

Perhaps surprisingly, a majority of Americans in our survey took a rather self-critical view of the

current massive trade deficits the United States is now running. Given two alternatives, 60 percent of

those interviewed said that the deficits are "caused primarily by problems of our own making," while

only 27 percent attributed them "primarily to actions of other countries." Although that perception

may be reassuring, it also should be seen in the context of very good economic times. At some point,

the current American economic expansion/boom will slow down. Should the correction be sharp,

trade deficits are likely to provoke a serious political backlash. Japan and China will be the obvious

target of both Congressional and public wrath. Those deficits represent a potential time bomb

waiting to be armed and detonated.

Encouragement of Democratic Values and Human Rights

Pursuit of the human rights issues has become a central element in American foreign policy. For

some, it represents American idealism at its best: a former staff director at the US Congressional

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office for the Organization for Security and Cooperation in Europe (OSCE) told me that during

many field trips to East Europe he was constantly encouraged to keep up the pressure for improving

human rights--the annual Congressional reports on conditions around the world were "a beacon of

hope," one prominent Czech dissident told him.

American Views of China and Japan as a Trading Partner

For others, however, the US fixation on expansion of democratic and values and human rights

represents an unwarranted intrusion into the internal affairs of a sovereign state.

 China, for example, has been particularly outspoken in its disdain for what it sees as

Washington meddling. It has vigorously rejected recent US pressures, whether official or

unofficial, about its crackdown on the Falun Gong group. China has dismissed out of hand any

criticism of its actions in Tibet. Chinese authorities remain taciturn and testy about any

references to the 1989 killings at Tiananmen Square as a "massacre" and routinely turn aside

or ignore outside protests against roundups of dissidents.

 Vice President Al Gore felt the wrath of Malaysian Prime Minister Mahathir when Gore

appeared to take the side of the "reformasi" movement of ousted Deputy Prime Minister

Anwar Ibrahim during a speech in Kuala Lumpur.

 Indonesia's new Foreign Minister, Alwi Shihab, in a speech last month at the Nitze School of

International Studies, made clear his concern about possible outside intervention concerning

charges of human rights violations by its military in East Timor. Discussing meetings in New

York with UN Secretary General Kofi Annan and members of the Security Council and the

Asian caucus, he said, "My main purpose was to convey a message to the International

Commission on Human Rights. We don't know what their recommendation will be, but if it is

to establish an international tribunal we are of the opinion that the Commission should wait

until Indonesia has acted. . . . I want to convey that an international tribunal could be

counterproductive. It could trigger xenophobia or excessive nationalism, and encourage some

to 'wrap themselves in the flag.' That would be a disadvantage to all."

Whatever the pros and cons, a plurality of Americans (44 percent) believes that "human rights should

be a principal concern in our dealings with countries where they occur." Attention to human rights is

now a staple of American foreign policy.

But in looking for areas of divergence, this area surely will provoke critical response in many

quarters. It will be a particular irritant in relations with those countries where American concern is

most concentrated. Above all, pressures on democratic values and human rights will stain the official

US dialogue with China and will cloud some unofficial dialogue as well.

Support for human rights issues need not be restricted to finding fault. In a recent visit to the United

States, Indonesian Education Minister Yahya Muhaimin said he was looking for assistance in

English language training and donation of textbooks, with transportation costs funded by USAID.

The growth of English as the international language, enhanced by the explosion of the Internet, has

made such language training all the more important. In this area, US interests and those of recipient

nations clearly intersect.

Environmental Issues

Charges that environmental issues were being sacrificed in the pursuit of economic gain were some

of the key points of controversy that turned the WTO meeting in Seattle into a chaotic nonstarter.

Growing global concerns about the environment ensure that it will remain high on the international

agenda.

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Periodic global summits already have taken place, notably in Rio de Janeiro and Kyoto. More are

sure to follow. Cooperation on environmental issues was a specific item in the 1992 US-Japan

Global Partnership Plan of Action, signed by President George Bush and Prime Minister Kiichi

Miyazawa. Agreement on specifics has been difficult to obtain, with developing nations complaining

that the developed world wants to impose and enforce codes of conduct that sharply limit what those

trying to bring their economies up to the next level can do. This area has plenty of room for

convergence. Finding mutually acceptable programs and courses of action, however, will not be easy

to achieve.

What is seen by critics as indiscriminate and/or unwarranted destruction of resources will remain a

consistent bone of contention. Charges of excessive logging in Indonesia and Thailand, for example,

or development of salt manufacturing facilities that threaten gray whales in their Baja California,

breeding grounds are but two examples of the kind of commercial activity that can stir passions and

can lead to carefully targeted protest campaigns. When land clearing, as in Indonesia, results in fires

that spread choking clouds throughout the region, health concerns come into play as well. Although

US engagement in some of these issues may be marginal, its global presence dictates involvement in

relevant international forums.

Emerging Social Issues

Probably no arena in which humanitarian interests of the United States and nations of East Asia more

easily intersect than those subsumed under the broad rubric of "social issues." The list is daunting.

 Health, with a particular emphasis on the AIDS pandemic. Although signs are encouraging

that progress is being made in controlling the spread of AIDS in the United States and some

other countries, it remains an international scourge. Opportunities abound for joint research

efforts, building of new or expanding existing facilities, training of doctors and technicians,

education programs, distribution of contraceptives and training in safe-sex education, and

more.

 Drugs and narcotics. Again, bilateral and multilateral efforts, aimed at both education on the

dangers of drug use and control of drug/narcotics trafficking, are natural undertakings. Given

the enormous profits that are to be made in the drug business, control efforts are frequently

hampered by corruption at all levels. The enormous problems US efforts encounter on our own

border with Mexico give dramatic evidence of how intractable the problem is. Nonetheless, as

governments and societies become more fully aware of the destructive nature of drug addiction

to the social fabric, that awareness opens the door to expanded attempts to deal with the

problem.

 Piracy. The growth of piracy in the South China Sea. At the Manila ASEAN+3 meeting,

former Japanese Prime Minister Obuchi announced that Tokyo will convene a regional

meeting on this subject this spring. (Japanese concern has risen sharply, after seizure of the

Japanese-owned Alondra Rainbow in the Malacca Strait a few months ago.) And Indonesian

President Abdurrahman Wahid told reporters he would favor joint Indonesian-Japanese

antipiracy patrols in the region. Whether US involvement in such activities would be either

desirable (from Washington's standpoint), or welcomed in the region (given concerns about

American military reach) is open to question. This area, nonetheless, bears examination.

 Population movements. The plight of refugees, in the aftermath of the Vietnam War,

underscored the difficulties in dealing with movements and relocation of displaced persons.

Traditionally, the United States has been a haven for those fleeing both turmoil and repression.

By accepting emigres seeking political asylum, the United States can earn the opprobrium of

the country of origin. It also provides a safehaven for those exiled by their native country.

These are burdens to be borne.

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Now is the time to begin thinking about a possible new flow, this time from North Korea. Whatever

the future may hold on the Korean Peninsula, one distinct possibility at some point down the road is

a tidal wave of refugees across the border, either into South Korea or China. They are likely to be a

desperately forlorn group. Some form of US involvement will be inevitable. We will need to work

closely with South Korea and, hopefully China, Japan, and Russia in dealing with this human flood.

Smuggling of illegal immigrants has become a big business, with dramatic episodes of ships running

aground on US shores, laden with Chinese being smuggled into the country. Guam has also become

an unanticipated stopping point for Chinese "illegals," with their unintended stay keeping them in

international limbo. Interestingly, in this area (along with drug trafficking) US dialogue has yielded

constructive results with Cuba, although interchange on most other topics with Havana remains

stalled. But this example reveals this area as one where common interest and effective mutual

cooperation can coincide.

Regional/International Institutions

Strengthening of viable regional and international institutions has been a key element of policy

makers on both sides of the Pacific.

ASEAN

Almost two decades ago, Lawrence Krause (then at the Brookings Institution) described The

Association of Southeast Asian Nations (ASEAN) as ". . . . the most important political and

economic development in the world since the creation of the European Common Market." Formed in

August 1967 by Indonesia, Malaysia, Thailand, Singapore, and the Philippines, it has since grown to

include Brunei, Vietnam, Burma (Myanmar), Laos, and Cambodia. Headquartered in Jakarta,

ASEAN had as its initial mandate the promotion of economic, social, and cultural cooperation.

ASEAN has been struggling to define its roles and missions. Most recently, in the crisis in East

Timor, it found itself trumped by an outside peacekeeping force led by Australia. And ASEAN

member Indonesia was provoked, as noted above, to express concern about any possible

international inquiry into alleged human rights abuses.

ASEAN remains, however, a potent force. And it provides what may be an increasingly influential

regional forum through its expanded "ASEAN+3" format--the 10 ASEAN members plus Japan,

China, and South Korea. The November 1999 meeting in Manila gave evidence of this prospect, and

with it a stance that could be seen as seeking greater independence from US influence. Members

reportedly agreed that eventually a common market and common currency are "distinct

possibilities." Nihon Keizai cited Asian leaders as expressing "concerns about strengthened US

influence" and the dominance of "an American standard" in regional economic affairs. Nikkei quoted

South Korean President Kim Dae-jung as sharing "a common vision of Asian cooperation for Asia."

And host Philippines President Ejercito Estrada noted: "Let's face it, our future is intertwined with

that of greater East Asia."

In addition, the "plus 3" members--Japanese Prime Minister Obuchi, Chinese Prime Minister Zhu

Rongji, and Korean President Kim--agreed to form several study groups on trade and other issues.

(Kim reportedly offered ten areas, including free trade, financial markets, industrial issues, fisheries,

and environment.) In addition, Japan was asked by the ASEAN finance ministers to make permanent

the "Miyazawa fund"--an emergency pool of $30 billion created in 1998 to help Asia past the 1997-

1998 cash crunch. And Obuchi lobbied openly in Manila to have former Finance Ministry official

Eisuke Sakakibara ("Mr. Yen") made the next head of the International Monetary Fund, in place of

retiring director Michel Camdessus. According to Japanese sources, Obuchi's efforts won "strong

backing" from Zhu, Kim, and others.

These straws in the wind are important--indicators of a readiness for members of this important

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Asian regional body, expanded to bring in as participant observers other key Asian players, to move

in a direction that could give it significant additional clout in dealing with the American colossus.

Observers in Manila pointed skeptically to the absence of senior Western officials, or representatives

of major Western media sources. That oversight may prove costly for US policy interests in the

future.

APEC

Another key regional body is the Asia Pacific Economic Cooperation group (APEC),(24) formed in

1989 to further cooperation in trade and investment between members and the rest of the world. At

President Clinton's urging, the 1993 session, held on Blake Island outside Seattle, was attended by

chiefs of state or heads of government. With some stumbling along the way, it remains a significant

forum, with an economic focus that keeps it outside the purview of this paper. APEC, however, as

any of the major regional or global bodies, requires constant nurturing and high-level attention. The

huge amount of preparation that goes into the summit meetings of such groups provides unique

opportunities for focusing on specific issues, exchanging views at the mountaintop, and establishing

easy, compatible working relationships that can be drawn upon in times of trouble.

The UN

US interests will have areas of divergence with Asian counterparts in the United Nations. A singular

point of contention is the US nonpayment of its dues. Although US Ambassador Richard Holbrooke

put on a full-court press last month, inviting Senator Jesse Helms (R-NC) to attend a "love-in" in

New York, the terms of the deal that Helms and Senator Joseph Biden (D-DE) have proposed raise

difficult questions. In addition to stipulating certain UN administrative reforms, the Helms-Biden bill

would cut the percentage US contribution to the UN budget from 25 percent to 22 percent

immediately and eventually to 20 percent. That would leave the Japanese contribution of 19 percent

higher than those of four of the "Permanent Five" on the Security Council, since the United States is

not now paying.

Japan, without a permanent Security Council seat and with little chance of being granted one in the

near future, can hardly be expected to look kindly upon such a US move. Yukio Sato, Japan's

Ambassador to the UN, put it this way in a February 16 interview in The Japan Digest: "Assessed

contributions should be paid without condition. . . . [W]e can't just accept the conditions put by

Congress and say that's fine. . . . [I]ncreasing numbers of countries see the unreasonableness of our

position. Many of my colleagues at the UN agree with me when I say that Japan's contribution isn't

fully recognized, and that the most obvious symbol of the lack of recognition is its absence on the

Council."

The WTO

Events at the abortive World Trade Organization meeting in Seattle underscored difficulties

governments will face in dealing with issues of globalization. Although the issues may be primarily

economic in nature, they also reflect strong nationalist sentiments. As such, they represent a

formidable challenge to the global political fabric. The ability to restart this dialogue, and move it

forward successfully, will provide an important litmus test.

Open Communications and Information Flow

The computer, and now the Internet, have brought about, in a stunningly short period of time,

monumental change in the way we communicate, do business, and handle many aspects of

contemporary life. For most, both the extent and rapidity of change are hard to absorb. American

business sees in the Internet virtually endless possibilities for increases in efficiency and

productivity. Individuals find a new way to shop. Students have access to previously inaccessible

troves of information. Anything from travel to dining out can be redesigned.

At the same time, the Internet poses enormous threats to privacy. It raises profound questions for

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corporate security. And for governments, especially those that wish to keep a close eye on what

individual citizens are doing and thinking about, these new information tools are often seen as

downright subversive. China, for example, has advocated sharp limits on the use of the Internet, with

access monitored and restricted.

The United States has seen a veritable explosion of Internet use and development, even as "dot-com"

Internet stocks have made alot of people rich. Major corporations, led by Ford Motor Company and

quickly followed by Delta Airlines, are making home computers and the Internet available, at

virtually no cost, to their employees. That is a considerable investment in the future. Rewards, in

terms of worker productivity and loyalty, could be huge.

This information and communications revolution is bound to create interesting problems for national

policymakers. The ability of individuals to communicate with persons totally unknown to them,

across national borders, becomes simple--minimal hardware, software, and a telephone line--are all

that is needed. That communication can be harmless and transparent. It can also deal with subjects

that violate standards of good taste. It can be used to transact illegal business. And, as we have just

seen, computer "crackers" have the ability to paralyze individual systems for hours with targeted

attacks on central servers.

This new medium can also be used to think up, organize, and carry out activities that governments

find threatening to their very existence. China, for example, was unnerved by the use made of

Internet exchange during the 1989 events at Tiananmen. It has pointed to such Internet

communications as one of the subversive activities of the proscribed Falun Gong. Japanese

authorities have noted the use of the Internet by the banned Aum Shinrikyo doomsday sect. Japan

also found itself under attack last month by cyberhackers, who marched through government web

sites, adding nasty comments to home pages, wiping out census and personnel data, and generally

frightening officials over the ease with which official computer security could be broached.

Internet communications are becoming increasingly difficult to monitor and control. That is most

troubling, of course, to those who wish to limit unconventional or antigovernment thinking and

activities. This is likely to put American companies in conflict with various Asian authorities.

Internet giants such as Microsoft, America Online, Oracle, Cisco Systems, and many others will not

want to see their ability to operate in Asia restricted by bureaucratic fiat. In pursuing their objectives,

they will want to turn to the US Government to back their rights of mobility and access. They

probably will be joined by non-American companies, especially in Europe, that will be ready to join

the fray. Whether seen as political or economic, the struggle and competition over information flow

and penetration is certain to grow in scope. It is another facet of the friction inherent in the face-off

between forces of nationalism and pressures of globalization.

Specific Country Comments

Because of the special nature of US relations with, and interests in, Japan, China, and Korea,

additional commentary concerning those countries is in order.

Japan

I noted at the outset the comments by a leading member of the House of Representatives about the

changed psychology of Congress. At one point in his remarks, he lamented the sea change in the

level of attention now being paid to Japan. Formerly, when a Japan-related issue was raised, there

were immediate calls for hearings. Now, he noted, even getting a committee quorum is difficult,

never mind a plenum, to address Japan issues.

Relative lack of interest in Japan, combined with the paucity of high-level Japan expertise within the

administration's inner policy circle, are carefully noted by America-watchers in Japan. They point to

a number of specifics:

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 Shortage of top-level/inner-circle Japan expertise, just noted. (Two of our most experienced

Asia/Japan hands will shortly be moving on: Rust Deming, Principal Deputy Assistant

Secretary of State for East Asia, has been named ambassador to Tunisia, and Kurt Campbell

will reportedly leave his senior Asia slot at the Pentagon, sometime this spring, to take a

position in the private sector.)

 President Clinton's overflight of Japan (and Korea) after his 10-day China trip in 1998, which

was taken as a serious (if unintended) snub that confirmed the popular phrase of the United

States moving from "Japan-bashing" to "Japan-passing."

 Following that, what Tokyo saw as a tepid US response to North Korea's firing a Taepo Dong2 missile through Japanese airspace.

 Brusque Washington reaction to the idea of a Japan-led Asian Development Fund (now

effectively endorsed, as noted earlier, by ASEAN members asking Tokyo to perpetuate the

"Miyazawa fund" at the November ASEAN+3 meeting in Manila).

At the same time, Japan has undertaken a number of policy initiatives that suggest a readiness to

pursue a more independent policy line:

 High-level discussion of plans to cut Japanese host-nation support for US forces stationed

there. Labeled by Japan a "sympathy budget," that irritates US officials, who see the support as

Japan's proper contribution to the beneficial security arrangement it has with the United States.

 A 60-member delegation visit to Cuba last November, engaging in talks on restoring economic

ties, and possibly rescheduling 12 billion yen in public debt. Japan Air Lines will start charter

flights for Cuban tourist agency Cubanacan in August. They will fly from Osaka's Kansai

International to Havana via Vancouver.

 Endorsement of Sakakibara to replace Camdessus as director of the IMF.

 Scheduled tripartite talks with China and South Korea on a range of policy issues.

 Prime Minister Obuchi's rejection of the "American way" of economic reform, cited earlier.

 Consideration of possible free trade agreements with Singapore, South Korea, and Mexico.

Difficult issues remain on the bilateral agenda. Dealing with them will be complicated by ongoing

political instability in Japan. The feuding among various political parties has made passage of

legislation, in some areas, difficult if not impossible. Jockeying for power and the necessity of

covering one's domestic flank may impede the ability of the Japanese ruling coalition to deal

effectively with rankling trade and other problems.

Efforts to address policy issues are buttressed by a backdrop of American public opinion that is

remarkably favorable. Latest measurements on a number of baseline attitudes are at high points. At

the same time, these views are colored by holdovers of past concerns: we found a majority (58

percent) agreeing with the proposition that "Japan thinks almost entirely of its own self-interest, and

does not act as a good partner of the United States," as against a minority (30 percent) that viewed

Japan as "a valuable and reliable economic partner." Japan's former economic shadow was reflected

as well among the near majority (49 percent) who said, when asked to look at Japan's future

economic prospects, that "Japan will do what is necessary, and will soon again be a strong economic

power." Put together, those views reflect a nuanced blend of skepticism and concern.

Looking to the future, the Industrial Structure Council of Japan's Ministry of International Trade and

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Industry plans to issue a new "long-term vision" next month. It will reportedly foresee 2 percent

annual growth of the Japanese economy for the next 25 years, if Japan presses ahead in information

technology, and adds to the labor force by hiring more older people. That will help offset an average

annual shrinkage in the labor force of 0.6 percent between now and 2025.

The trade imbalance, and disagreement over discrete trade issues, have become a staple on the

bilateral agenda. Another issue of looming importance concerns US military personnel, and

particularly the Marine air wing, on Okinawa. With the G-8 summit scheduled to be held on

Okinawa in August (possibly adding China, according to reporters traveling with Obuchi in Bangkok

this past weekend), this contentious issue appears a long way from solution. As the meeting nears,

pressure for a solution will grow.

None of these items can be looked upon as suggesting any break in the close Japan-US bond. One

just as easily can argue that they are all part of the mix, with the Japanese Government for its part

pursuing responsibly its own national interest. Furthermore, popular feelings about the United States

remain positive. The latest annual survey by the Prime Minister's Office, for example, showed the

US in first place (as usual) among countries for which Japanese hold warm feelings: 76 percent were

of that view--as compared to 53 percent for the European Union, 50 percent for China, and 48

percent for South Korea. A recently released report, drawn up by an advisory panel appointed by

Prime Minister Obuchi, has called for, among other things, adopting English as a second language

(Mitsubishi Chairman Minoru Makihara had earlier decreed English as the company's official

language). Joint ventures are commonplace, underscored by a recent grand alliance of Toyota,

General Motors, and Volkswagen for certain production arrangements. And the Nihon Keizai

Shimbun recently reported that the Tokyo Stock Exchange, the New York Stock Exchange, and

Deutsche Bourse will link up with Standard & Poor's to develop a new global stock index. It will

include 100 multinationals capitalized at $5 billion or more.

In January 1992, "Global Partnership Plan of Action," noted earlier, committed both sides to a wide

range of initiatives: cooperation to promote world peace and prosperity; political and security

relations; cooperation on environment, quality of life, and science and technology; enhancement of

mutual understanding and exchanges; and a variety of efforts concerning major economic and trade

issues between the two countries. This document remains a useful blueprint for bilateral cooperation

and action. But with the bulk of official attention devoted to recurrent trade disagreements and other

economic disputes, much of the promise of that 1992 document remains unfulfilled. Passage of

revised defense guidelines could open the way to move ahead on other aspects of the plan. Much

remains to be done.

An important opportunity approaches. Eight September 2001 will mark the 50th anniversary of the

signing of the US-Japan peace treaty. Various groups in both countries are developing programs to

mark that event. It will provide a useful vehicle to reaffirm and reinvigorate a relationship that has

benefited both sides, and the world, so well. In that exercise, the warning signals noted above

deserve to be addressed and heeded.

The forthcoming arrival of this anniversary stands in sharp contrast, of course, to the continued

inability of Japan and the former Soviet Union to find a way to a peace accord. The Northern

Territories remain an intractable stumblingblock. As authorities in Moscow have made clear in their

brutal war in Chechnya, giving up territory of any sort is not high on their agenda.

Finally, throughout much of Asia, Japan's cultural image has improved considerably. Many sense

that Japanese style is a "better fit" than that of the United States or the EU. In many parts of Asia,

pirated/bootleg copies of Japanese music, movies, and merchandise are popular. Japanese language

study is on the increase, up about 30 percent over the past five years, according to one report. This

greater sense of acceptance and acceptability is important to Japan, as it suffers through a lengthy

recession and continues to confront the ghosts of its history.

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China

From talk of "strategic partnership" to the accidental bombing of the Chinese Embassy in Belgrade,

US-China relations have lurched sharply off course. The bombing aside, China remains unhappy

with what it sees as US hectoring over human rights issues. It is concerned over America's power

position vis-a-vis China and the global preeminence of US military might in a post-Gulf war, postKosovo environment. (Those two events underscored to China's leadership just how far it lags

behind in the military sphere, a realization drawn in many other capitals as well.) It is angered over

continued US arms sales to Taiwan, and the possibility of a theater missile defense system (with

Japan), which it sees as a direct challenge to its own security. It is worried about internal unrest, with

the leader of the condemned Falun Gong sect residing in the United States. It faces serious domestic

economic challenges, not the least of which is a level of corruption that has assumed daunting

proportions. (The New York Times of January 22 reported on ". . . a conspiracy that apparently

involved dozens of party, police and banking officials, the wife of Beijing's powerful Party chief,

virtually the entire customs department of a major city, and a flamboyant corporate leader who has

vanished. . . . During the 1990s, the sprawling syndicate smuggled billions of dollars' worth of cars,

oil, and industrial materials through the bustling southeastern port of Xiamen, evading huge sums in

taxes.") It fears the growth of the Internet, and the threat to its own continued hold on power this new

communications world entails. And the leadership appears divided on how to handle relations with

the United States. Fierce factional infighting was reported, for example, on how far to go in meeting

US conditions for Chinese entry into the WTO.

At the same time, US and Chinese interests coincide, or at least share some common boundaries, in

several areas:

 International comity. Both countries have an interest in seeking at least a modicum of

cooperation in the various international bodies and groupings in which both participate--the

UN, APEC, various arms control forums, and soon, hopefully, the World Trade Organization.

 Regional security. Ongoing talks with the United States, Japan, and South Korea concerning

the North Korean nuclear program are the most obvious example. Stability in Southeast Asia,

the Persian Gulf, and Central Asia can benefit both sides. Chinese interest in guaranteeing its

energy sources comes into play here and can be called upon in arms sales discussions.

 Chinese air is badly polluted. Beijing can use American investment and technology to address

this major health and environmental problem.

 Illegal emigration. Noted earlier, this mutual interest calls for cooperation.

 Coping with drug trafficking similarly calls for cooperation. As drug use in China surges,

authorities there may have an interest in cooperating with US counterparts in trying to bring

international dealing under control.

 Economic pragmatism. One-third of China's exports go to the United States, giving China a

$60 billion trade surplus. China needs our markets, providing leverage/interest in a productive

trade dialogue.

US policymakers will have to deal with a public that is skeptical about China. Our survey found that

a slight majority (51 percent) view China as "primarily a threat and challenge to US security

interests, and needs to be contained;" a minority (40 percent) sees China as "primarily an opportunity

for US business, and a potential benefit from which we should seek economic gain." Such views will

play out in Congress as the vote comes up for ending China's need to qualify for normal trade status,

a precondition for its entry into the WTO.

Korea

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As noted above, political regeneration under the presidency of Kim Dae-jung and exchanges of state

visits between him and President Clinton have added luster to the US-Korean bilateral relationship.

The absence from US evening TV news broadcasts of students being teargassed has also helped

Korea's public image in the eyes of Americans. The ratings Americans give to Korea thus have

improved across the board.

Restlessness among many Koreans at the huge American presence in their country will continue.

Periodic incidents involving US military personnel and Korean civilians add to that brew. And such

outside pressures as those from the International Monetary Fund for dealing with the Asian

economic downturn compound xenophobic sentiments. For some, "globalization" can mean

"Americanization." At the same time, the overall current mood in Korea toward the United States is

probably the best it has been since World War II. There has been a steady movement away from a

"patron-client" relationship to one of partnership.

Views of Japan among the Korean public have taken a sharp turn for the better. That improved

image has made official cooperation with Japan easier to sell--as in the Manila agreement among

Kim, Obuchi, and Zhu to set up a number of study groups.

Of overriding importance is the ongoing standoff between the two heavily armed rivals on the

Korean Peninsula, which is the focus of another paper. Suffice it to say that close coordination and

cooperation between Washington, Seoul, and Tokyo (and, where forthcoming, cooperation with

Beijing) are essential in dealing with North Korea. The policy review undertaken by former Defense

Secretary William Perry has been helpful in this regard and in reaching understanding on the need

for comprehensive deterrence. Limited recent progress in US-North Korean talks on capping

P'yongyang's nuclear program suggests that such cooperation may be achieving positive results.

America: It's Lonely at the Top

Underlying much of what governments and societies on both side of the Pacific must deal with in

coming years is a fundamental reality of the new global environment: how to deal with the

conflicting pressures of globalism vs. nationalism. They will present basic choices, for individuals

and for states. Although the two are neither mutually contradictory nor mutually exclusive, they will

result in many points of contention.

Former Assistant Secretary of Defense Joseph Nye has written of the power and appeal of American

"soft power." Whether it be films, fashion trends, music, or the Internet, there can be little dispute

about the immense projection and influence that America has on the world scene. Indeed, when

Secretary of State Madeleine Albright referred to the United States as "the indispensable nation," she

expressed a point of view that many Americans would find quite in order. With the end of the Cold

War and the collapse of the Soviet Union, for many, American supremacy has seemed unchallenged

and unchallengeable.

Historically, this position cannot be long sustained. Only a few years ago, we worried about Japan

"buying up America." Now, we push Japan to get its economy in order, reassume its role as global

economic engine and accept a larger share of the regional security burden. For many, the latest, and

now largest, challenger is China. A recent Nihon Keizai survey of 1,600 business leaders worldwide

found just over half believing that China will show the fastest growth rate for the next generation.

Just under half were of the view that by the year 2025 the world will have three superpowers--the

United States, Europe, and China. Some 54 percent of those interviewed believe the Japanese

economy will skid from second place now to third, fourth, or even fifth. As noted earlier, for

Americans, China has surged past Japan as problem number 1 in Asia. A majority now views China

as "primarily a threat and challenge to US security interests [that] needs to be contained," while a

lesser minority sees China as "primarily an opportunity for US business, and a potential benefit from

which we should seek economic gain." The rapid emergence of China as a perceived cause of

concern only underscores the necessity of keeping one's mind ready for further future shifts in

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priorities.

Much as Americans like to think of US influence as constructive, benign, and based on friendly

motives, others don't always see America that way. They often wonder about the staying power of

the United States and its perceived relative lack of interest in Asia. Given America's substantial

military prowess, economic vitality, and intellectual creativity, others are often prone to hold us to a

special--and higher-- standard.

A trenchant Asian perspective was expressed by Mohamed Jawhar bin Hassan, chairman of the

Institute of Strategic and International Studies in Kuala Lumpur at a conference held last year at the

Asia-Pacific Center for Security Studies:

"The fall and disintegration of the Soviet Union has left the United States as the lone superpower,

one without a credible rival. Many in the region would rather have the United States as the hegemon

than any other major power if a hegemonic order is unavoidable.... That sentiment... masks

considerable dissatisfaction and... hostility. More and more, the United States is seen as arrogant; as

seeking to shape the rest of the world in its own image, notwithstanding whether this self-image is

shared and desired by others; as being intrusive and prone to ever more coercive and unilateral

behavior in both the political and economic spheres; as having militarized its foreign policy; as

practicing double standards and not practicing what it preaches; and as being ignorant of, or worse,

ignoring the sensitivities and peculiarities of other countries.

"Quite obviously, much has to be done on all sides to arrest the deteriorating trend in Asian

perceptions toward the West. Asia must recognize that it needs further and more purposeful reform

in the political and economic spheres. In a rapidly globalizing world, there is no other option to

remain viable. Asia must also tend to its rifts. Suspicions, conflicts and unhealthy contests among

neighbors further undermine regional resilience and proved added opportunities for exacerbation of

relations with the West. Asia must also guard against an irrational and emotional backlash against

the West, which would be mutually disastrous.

"The onus for improving the strategic climate, however, lies more with the West, in particular the

United States. It has to do more because it is both more responsible for the present state of affairs

and is better equipped to deal with the situation. After all, it is a superpower."

Those are tough words. They mirror what a senior member of the Singapore Foreign Ministry said to

me in a conversation in his office a few years back: "Your foreign policy in this part of the world

reminds us of the workings of your volunteer fire departments. The firemen spend most of their time

doing their regular jobs. Then, when the fire alarm sounds, they jump onto the firetruck and rush in.

When the fire is out, they go back to their regular work. That seems to be the way you deal with

Asian policy--on a firealarm basis."

Whether one agrees with these assessments or not, they represent the views of friendly, seasoned,

and acute observers. They merit appropriate attention.

Economic Interests, Values, and Policies

Introduction

During the next five years, the world economy faces significant challenges in both the trade and

financial policy realms. Three main themes will emerge: disputes over substantive agendas, haggling

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over filling top leadership posts, and Asia's possible desire to go its own way and expand regional

organizations in parallel with, or in opposition to, the existing global order. These issues will develop

in the context of a probable slowing of the US economy, which could contribute to a more

conflictual environment than has existed in the recent past.

Macroeconomic Context

The United States is currently in the midst of the longest recorded economic expansion in its history.

A number of factors have undoubtedly contributed to this remarkable performance, including

improvements in economic policy making, commercialization of technological advances,

globalization, favorable demographics, and probably just plain luck. Ironically, the Asian financial

crisis probably contributed positively to economic performance in the United States by reducing

global demand for capital and facilitating maintenance of low interest rates in the United States for

the past several years.

Yet all good things must come to an end, and this 107-month expansion is surely one of them. A

number of developments over the next five years could bring this expansion to a halt. The most

obvious weakness in the US economy is its very low level of saving. This low saving rate has two

particular implications. First, the high level of household consumption in recent years has been made

possible by the rapid increase in asset prices. That is to say, a considerable amount of the recorded

increase in household wealth has taken the form of capital gains on existing holdings, rather than

incremental flow additions to existing holdings. At the same time, Standard & Poor's recently

classified the United States as one of 20 financial systems "vulnerable to a credit bust" due to

concern about the quality of bank portfolios, especially exposure to commercial real estate. A

significant downturn in asset markets, which many believe currently embody a bubble, could force a

severe retrenchment of spending by the private sector.(25) As households increase their savings rates

to rebuild their balance sheets and firms cut back on investment in response to less favorable

conditions for raising funds in response to both weakened stock prices and curtailed bank lending, a

recession could result.

Low national saving also manifests itself in the current account deficit, the difference between the

value of what a country produces and what it consumes, which reached a record $339 billion in

1999, or 3.7 percent of GDP, its highest level ever. Concerns about the level of US indebtedness

(which must be financed by foreign lending to the US) and/or recovery in the rest of the world (and

hence the growth of desirable investment opportunities elsewhere) could reduce the attractiveness of

the United States as an investment destination. To maintain the same level of capital inflow, the

United States would have to offer more attractive terms (that is, higher interest rates) or experience

downward pressure on the value of the dollar in global markets. A falling dollar would cause prices

of imports to rise. In this situation, the Federal Reserve would come under pressure to tighten interest

rates, which in turn could cause a recession. The reduction in the level of economic activity (and

hence a fall in the demand for imports and an increase output available for export) would be part of

the mechanism by which the United States would re-establish a sustainable balance-of-payments

position.

A less dramatic end to the expansion could result from a gradual rise in global commodity prices

generated by increased demand associated with recovery elsewhere in the world (including most

prominently Asia) and/or a tightening of supply conditions in the United States (especially in the

labor market) could prompt the Federal Reserve into recession-inducing increases in interest rates in

an attempt to pre-empt inflation. Furthermore, the US economy could be adversely affected by

supply shocks originating abroad, including disruptions in oil supplies originating in political

developments abroad, or financial market turmoil emanating, for example, from a meltdown in the

Tokyo stock market, or, more benignly, a shift in portfolio preferences toward the Euro in response

to European monetary integration. Policy mistakes by the incoming new administration and

Congress could subvert the economy. The point is that one can identify numerous plausible threats to

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continued US economic growth over the next five years.(26)

This possibility could have important implications for US economic relations with Asia, and could

condition how a number of issues evolve. In the recent past, surprisingly there has been relatively

little political interest in trade issues, despite the record-level trade deficits. Presumably this lack of

interest is due to the favorable macroeconomic performance exhibited by the US economy. If the US

economy were to weaken and if unemployment were to begin rising, however, trade issues could

quickly increase in political salience, with the enormous US trade deficit acting as a political

lightning rod for discontent about US economic performance. Despite the fundamental reality that

macroeconomic conditions, not trade policies, are the primary determinants of the overall US trade

balance, US politicians continually have conflate traded policies, which can strongly affect the

commodity and bilateral partner composition of trade, with the trade balance. Indeed, the single best

predictor of the amount of US Government attention given to bilateral trade issues has been the level

of the bilateral trade imbalance.(27)

This situation could have serious implications for US economic relations with Asia. Asia already

receives more scrutiny on trade issues than the magnitude of its trade with the United States would

appear to warrant.(28) Moreover, the largest bilateral trade deficits of the United State are with Japan

and China, the two largest economies in Asia. There is some evidence that the United States already

pays more attention to bilateral issues with Japan than objective indicators would predict. Of similar

concern, the US bilateral deficit with China is likely to grow as China is integrated into the World

Trade Organization (WTO), and quota restrictions on its exports of textiles and apparel to the United

States are phased out.(29)

In sum, the US economy is likely to weaken at some point in the next five years. Trade issues will

take on a greater salience. If the US political system responds as it has in the past, it is likely to

experience increased trade conflicts with Asia, in particular with Japan and China.

Trade Policy

Historically, in the absence of any effective multilateral dispute resolution mechanism, these disputes

were resolved predominantly through bilateral means. Typically, the United States used the threat of

closing its large and lucrative market to extract concessions from its trade partners. Two

developments will significantly change such dynamics in the future. First, a declining dependence on

the US market will temper foreign responsiveness to such threats. Although this process has been

interrupted by the Asian financial crisis and the need to export to the US market, the clear historical

trend is toward orientation away from the US market. This condition is simply algebra at work: if

one trade partner is growing faster than another, trade volumes quite naturally will increase more

rapidly with the faster growing partner. This trend has been particularly acute in Asia, where the

rates of national income growth across the region typically been significantly higher than that

experienced by the United States. The result, up to 1997, was a strong increase in the share of

intraregional trade and a reduced share of trade with the United States.(30) As the United States

becomes relatively less important in world trade, threats of market closure will lose their

effectiveness.

At the same time, the development of the WTO and its improved dispute settlement resolution

procedures significantly constrains the ability of the United States to pursue its old unilateral

strategies. Although under domestic law the United States retains its various trade remedy measures

(Section 301, Special 301, et al.), the unilateral use of these measures certainly will not withstand a

WTO challenge. Thus, they are reduced to the domestic legal mechanism by which WTO-authorized

retaliation can proceed (as was the case in the banana dispute with the European Union). The death

knell of unilateralism tolled in 1995, when Japan called the US bluff in the automobile dispute,

refused to acquiesce to US market-opening demands, and threatened to duke it out in the WTO. The

United States decided to settle out of court.

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The WTO

Both these developments mean that the WTO will be increasingly central to the resolution of

disputes between the United States and its trade partners, including Asia. (Indeed, the United States

has filed by far the largest number of cases of any WTO member.) The United States faces a number

of issues with regard to the future development of this organization. The most immediate questions

concern what to do in the aftermath of the debacle in Seattle, and how to integrate China into the

organization. In the longer run, issues of personnel and substantive agenda issues will reemerge.

The November 1999 attempt to launch a new round of multilateral trade negotiations in Seattle was

driven by a political compromise left over from the Uruguay Round, rather than any global ground

swell for trade liberalization.(31) To secure a conclusion to the last round of negotiations, the United

States accepted less than complete reform of agricultural trade practices on the part of the EU in

return for a commitment to revisit the issue in 1999. This deal was the origin of the so-called built-in

agenda of talks on agriculture and services motivating the new round. A certain sense of urgency was

attached to the negotiations over agriculture inasmuch as the "peace clause," which prohibits WTO

cases against certain practices (principally undertaken by the EU and United States), is due to expire

in two years.

This built-in agenda shaped participants' negotiating strategies as they headed into the Seattle

ministerial. Japan and the EU wanted to broaden the agenda to hide their inevitable concessions in

agriculture and use gains in other areas to reach an agreement emerging from the new negotiations

that would be politically palatable at home. They preferred to see a "comprehensive round" involving

not only talks on agriculture and services but also on industrial product tariff-cutting, competition

policy, investment, and reform of antidumping rules. Within agriculture, the EU jumped onto the

Japanese bandwagon, promoting the notion of "multifunctionality" in agriculture to distract attention

from its increasingly indefensible export subsidies.(32)

For its part, the United States showed little flexibility. It largely tried to limit the agenda to

agriculture and services in which the United States was not be expected to make major concessions,

while simultaneously trying to force relatively new and controversial issues such as the relationship

between trade and labor standards, human rights, and environmental concerns onto the agenda.

At Seattle, officialdom was caught offguard by a wild melange of protest groups whose motivations

and aspirations appeared at times only tenuously connected to the issue at hand. Despite police

intelligence, the authorities in Seattle appeared unwilling or unable to comprehend the violent

tendencies of some of these groups. Seattle officials were slow to react on 30 November when they

temporarily lost control of the streets. The United States was humiliated throughout the world by the

televised scenes of foreign diplomats being roughed up by the rabble. Only when the White House

demanded that authorities restore order in preparation for the President's arrival in the wee hours of 1

December were police permitted to reclaim the streets.

The behavior of the Clinton administration in Seattle was perplexing, especially in light of its interest

in promoting the social clause issues. President Clinton's statement, in which he said that he would

like to see economic sanctions used against countries not meeting labor standards, took his cabinet

members by surprise and destroyed any possibility of making progress on the issue. Indeed,

conversations with a number of developing-country negotiators indicated that the President's remark,

together with the behavior of the demonstrators, strengthened their resolve to resist US demands.

Some regarded the demonstrators as an officially sanctioned attempt to physically intimidate foreign

negotiators.

Yet, in the end, it was the traditional US-EU dispute over agriculture--the same dispute that nearly

scuttled the launch of the prior round of negotiations and nearly torpedoed those negotiations a halfdozen times--not the shenanigans of the Raging Grannies or the Ruckus Society that sank the Seattle

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negotiations. This situation, together with the emergence of the developing countries as a coherent

negotiating group, are the real lessons from Seattle.

The bottom line is that the meeting was unlikely to accomplish much. The United States was

unlikely to take major actions on trade policy given its electoral calendar, the Clinton

administration's lack of "fast-track" negotiating authority, and the change in presidential

administration in January 2001. As a consequence, the best that could have been hoped for would

have been the launch of a two-year extended negotiation over the agenda for a genuine new round of

global trade negotiations two years hence. And in the aftermath of Seattle, principally the EU and, to

a lesser extent, Japan, have moved to right the organization. They had led the resuscitation of the

built-in agenda talks and the undertaking of "confidence-building" measures.(33)

With the activities of the WTO once again fallen off the United States' political radar screen in the

aftermath of Seattle, the most immediate domestic political issue will be the Congressional vote to

extend permanent normal trade relations (PNTR) to China. For 20 years, as a result of the JacksonVanik amendment to the Trade Act of 1974, the United States has performed an annual ritual during

which it decides whether or not to extend NTR (née most-favored-nation or MFN) relations to

China. This provision, originally aimed at encouraging the Soviet Union to permit the emigration of

Soviet Jews, requires the President to certify annually that nonmarket economies allow emigration.

China first gained MFN status in the US market in 1980, and the certification was routine until the

Tiananmen Square massacre of l989. Since then, the annual renewal has been a point of contention

involving a bilateral coalition of anti-Communists, human rights proponents, and protectionists, who

have attempted to use the threat of nonrenewal as leverage to promote human rights, discourage

nuclear proliferation, and reduce the bilateral trade imbalance.(34) The President has never failed to

extend NTR to China, and the Congress has never overridden his decision. In recent years, a rough

consensus has emerged that the annual "Rite of Spring" was not producing desirable results, and the

margin of votes supporting the administration has grown.

In the current situation, the United States has reached a bilateral accord on WTO accession with

China, though the administration has not released the text of that agreement. After China reaches

similar agreements with other WTO members (the EU is the only major player with which China has

not concluded the negotiations), the WTO secretariat begins compiling the bilateral agreements. The

final outcome is that every WTO member receives the best terms agreed upon with any member,

(that is, if China agreed to reduce its tariff on watches to 10 percent with the United States, but

agreed to 5 percent with the EU, the United States would receive the better deal that the EU was able

to obtain), so that the bilateral agreement could be, at worst, the treatment that the United States will

receive when China enters the WTO.

The issue, then, is not whether China will enter the WTO--it will--but whether the United States will

live up to its WTO obligations by extending PNTR to another member state. The United States could

always refuse, but then it would be out of compliance with its own obligations under the agreement,

leaving China free to take the United States to the WTO, as it has indicated that it would. The WTO

dispute resolution panel would presumably rule in China's favor and authorize retaliation against the

United States. Hence, the vote on PNTR is not a vote on whether China joins the WTO--that train is

leaving the station as soon as the EU climbs on board--but rather a vote whether the United States is

on that train or left standing at the tracks, subject to completely legal discrimination against its

economic interests in China.

Presumably this issue will be resolved within a year or so, if not much sooner.(35) In the long run,

both personnel and substantive issues could generate conflicts between the United States and Asia.

With regard to the former, the United States actively backed New Zealand's Mike Moore over

Thailand's Supachai Panitchpakdi in a protracted dispute over who would succeed Italy's Renato

Ruggiero as the WTO director general. An eventual compromise was reached by which Moore and

Supachai would split the term. This haggling did nothing to promote the institutional development of

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the organization, and the strong support of the United States for Moore won it no friends in

Bangkok, or in Asia more generally. Another such brawl can be expected in 2005 when the MooreSupachai term ends. The search for Supachai's successor could get entangled with personnel

decisions made in other international organizations, as will be discussed further.

Beyond personnel issues, the WTO has a series of intellectually and politically challenging issues to

confront. Most immediate will be the built-in agenda of agriculture and services. As mentioned

earlier, as part of the Cairns Group, Southeast Asia is generally supportive of the US position and in

opposition to Northeast Asia. When China enters the WTO, it could be expected to side with Japan

and South Korea against agricultural trade liberalization.

On services, developed countries typically have demanded liberalization of financial and

professional services on the part of developing countries. (Developing countries have countered by

demanding increased possibility for movement of people, so that, for example, a developing country

service firm could bring its workers into a developed country on a temporary basis to work on a

project (in construction or maintenance, for example.) The natural alliance is the United States and

Japan against the rest of Asia. In reality, Japan is relatively uncompetitive in much of the service

sector, and Southeast Asia tends to be more competitive in services than countries at similar income

levels. Thus, the divisions on this issue are not so stark.

Beyond the built-in agenda, trade liberalization in industrial products is dominated by traditional

tariff cutting on the one hand and the need to better integrate antidumping and competition policy

rules on the other. With respect to the former, the main problem is the US resistance to cutting some

extremely high tariff "spikes" on some products of interest to Southeast Asia (athletic shoes, for

example). Nevertheless, because the tariff cutting exercise is a well-understood process, amenable to

traditional WTO tariff offer negotiations, it is a matter of reaching international consensus on an

acceptable formula.

Reform of antidumping rules and the creation of a more coherent international competition policy

regime present greater challenges. Asian countries, among others, want to see reform of antidumping

procedures, which they regard, with significant justification, as simply closet protectionism. Within

the United States, there is little intellectual consensus as to what the goals of a desirable international

competition policy should be, beyond prohibiting horizontal collusive practices such as cartels.

Although the topic is of relevance to a wide range of producers, the most active have been importcompeting firms, who regard competition policy as prospectively a much less protection-friendly

alternative to the existing, and WTO-consistent, antidumping (AD) laws. (There is also some

evidence that AD actions have facilitated anti competitive behavior--another reason to prefer them to

the application of competition policy.) The intellectual debate has been hijacked by lawyers arguing

that the goal of trade policy should be "market access," not "efficiency." Indeed, some commentators

go so far as to argue that these putative differences in orientation demonstrate that trade and

competition policies are fundamentally incompatible.

Within the US Government, the bureaucracy is split. The Antitrust Division of the Justice

Department fears that any multilateral accord would amount to a dumbing down of US law and a

weakening of US antitrust practices, while the United States Trade Representative (USTR), stung by

its defeat in the WTO in the Kodak-Fuji case, opposes the narrowing of antidumping laws in the

interests of its import-competing clients. The import-competing sectors and their hired guns are fully

prepared to block any weakening of the antidumping law. Unless there is a significant shift in

domestic politics, much constructive activity on this issue emanating from the United States in the

next five years is hard to envision. Perhaps the only hope for action in this area, is that US exporters,

increasingly subject to the equally irrational antidumping actions of US trade partners (including

some in Asia), will emerge as a more forceful domestic lobby for constructive change.

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button issues of the social clause. Barring a significant shift in US Government priorities, which

could occur under the next administration, the United States will continue to press its labor and

environmental agendas within the WTO. This policy thrust has found little support in Asia (Thailand

and Malaysia were among the complainants who triumphed over the United States in the infamous

sea turtle case), and will find even less support once China, which could be expected to vehemently

oppose the US labor and human rights agendas, enters the organization.

Regional Initiatives

Indeed, conflict on these issues could encourage Asia to go its own way, creating regional preference

arrangements similar to those that exist in Europe and North America. One such scheme, the

Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA), already exists, though

this arrangement has not had much impact on trade.(36) The goal is to have 80 percent of trade tarifffree by 2000 and 98 percent of tariff lines under 5 percent, with some sensitive sectors (agriculture)

given longer adjustment times. Treatment of nontariff barriers have been left vague, and the new,

poorer, socialist members, (were not members when the negotiations began), have been given more

time to implement their commitments. Although ASEAN espouses "open regionalism," AFTA may

violate nondiscrimination clauses of the WTO. Econometric evidence concerning its impact is

mixed; the intraregional bias in the trade of ASEAN members disappears when imbedded in larger

Asian groupings.(37)

The other major regional initiative, APEC, includes countries from outside East Asia, most notably

the United States, and could potentially play an important role, though it can point to few tangible

accomplishments in its decade of existence. APEC was originally an Australian initiative; the Asians

wanted United States involvement to counterbalance Japan, which had a similar proposal. After its

first meeting in Canberra in 1989, the next big step was in 1993 when, at the first APEC "leader's

meeting," the United States hosted history's first pan-Asian summit, ironically, held outside Asia.

APEC's membership accounts for more than 2 billion people (40 percent of world population) and

more than half of world output. An officially appointed Eminent Persons Group issued a report

calling for free trade and investment in the region by 2020 (2010 for rich members, 2020 for poorer

ones), a goal that the governmental leaders adopted in their Bogor Declaration of 1994.

Because of the great political-economic diversity among membership, no one anticipates "deep

integration" along the lines of the EU. Rather, much activity has been in terms of "business

facilitation" such as streamlining procedures, etc. Progress on trade and investment implementation

has been uneven; agriculture is a highly sensitive issue, and the Clinton administration lacks the

statutory authority to implement early tariff cuts.

Neither APEC nor ASEAN played an important proactive role in the financial crisis, though both

may have served to constrain backsliding. Both organizations were developed largely by their

members's foreign ministries; their finance ministries (in particular, the US Treasury in the case of

APEC) have remained unenthusiastic, and neither organization has a highly developed financial

component. (The finance ministers do have their own, separate, annual meetings, however.)

Rhetorically, at least, both groups have continued to support liberalization, however.

The growth of regionalism outside Asia and the failure of the WTO meeting in Seattle have

encouraged Asian countries to take a second look at regional economic integration schemes. The old

East Asian Economic Caucus idea has been revived recently as the East Asian Free Trade Area. In

Japan, the Ministry of International Trade and Industry is actively studying the possibility of free

trade areas involving Japan, South Korea, Singapore, and possibly even China and others. The South

Korean Government, too, has been studying the possible free trade areas bilaterally or trilaterally

with China and Japan. The problem, of course, is agriculture. Because of its inefficiency in

agriculture, Japan is constrained to look to partners who either do not have an agricultural sector

(Singapore) or have similarly inefficient agricultural sectors (South Korea). Japan's search for

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regional alternatives to the multilateral system is hamstrung by its own agricultural policy. The same

holds for South Korea.

International Financial Policy

The other important dimension of trans-Pacific economic relations is financial, and a similar set of

themes: disagreement over substantive and key leadership issues and a possible Asian desire to go its

own way reoccurs. The focal points have been Asian dissatisfaction with the performance of the US

Government and the Washington-based International Monetary Fund (IMF) during the Asian

financial crisis, subsequent debates over reform of the international financial architecture, and

proposals for regional initiatives that could run counter to policy emanating from "Washington."(38)

With regard to actions at the time of the crisis, Thailand was stunned by the initial US refusal to

come to its financial assistance and its refusal to participate in the "second line of defense"

associated with the initial IMF program.(39) This unfavorable response was compounded by what

are now widely regarded as fundamental mistakes in the fund programs which actually exacerbated

the crisis.(40) These perceptions--that the United States was an unreliable ally and that the economic

prescriptions being written by Washington were at best incompetent and at worst malevolent--were

compounded by the US and IMF opposition to Japan's proposal for an Asian Monetary Fund which

was regarded as obstructionist.(41)

The focus has since shifted to what should be done to reform the financial architecture in general,

and the IMF, in particular. The US proposal, contained in Summers (1999), makes a number of

constructive and largely unobjectionable recommendations. However, the recommendation that the

IMF phase out long-term lending and take on a more narrow crisis-prevention mission than its

current activities encompass is controversial. It calls for the Fund to play a quasi-lender of last resort

function, lending significant amounts at "prices to encourage rapid repayment" (p. 6). At the same

time, it seems to support the same kind of intrusive conditionality that proved to be so controversial

in the Asian crisis, arguing that "issues of social cohesion and inclusion. . . should be addressed as a

condition for IMF support" (Ibid.). These two thrusts appear to be logically contradictory. If the IMF

is to offer short-term financing at penalty rates, then there is a reduced need for policy conditionality,

much less the kind of deep conditionality embodied in the Asian crisis packages.(42)

The Summers proposal goes on to recommend a recalculation of member quotas (the basis for

weighted voting within the organization and in principal, determining the amount of resources that a

country can call upon in a crisis).(43) This reallocation could have important implications for Asia,

inasmuch as Asian countries appear to be greatly underweighted, while European countries are

similarly overweighted. As Bergsten (2000b) observes, Japan's economy is half as large as that of the

United States or EU, but its quota is one-third of ours and only 20 percent of Europe's. Other Asian

countries, South Korea for example, are even further underweighted, arguably constraining their

access to fund resources, and limiting their influence in the Fund's Executive Board. Nevertheless,

allocating the Japanese the second largest national quota within the fund proved politically difficult,

and further quota reallocation could be equally if not more problematic.(44) That is all to say, over

the next several years, the United States may attempt to get Asia to pony up more money for the IMF

and at the same time try to move the organization substantively in a different direction than would be

supported by much of Asia.

These issues may receive their first high-profile public airing in the dispute over who is to succeed

Michel Camdessus as managing director of the IMF. Traditionally, this job has gone to a European,

while the presidency of the World Bank has gone to an American, and a Japanese has traditionally

led the Asian Development Bank (ADB). In a break from previous practice, Japan has promoted the

candidacy of former ministry of finance official, and promoter of the Asian Monetary Fund, Eisuke

Sakakibara for the managing director's job. Some other Asian countries have been convinced to give

token public support to his candidacy. Knowing what to make of this is hard. Of the potential

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candidates to succeed Camdessus, whose names have been bandied about in the press, Sakakibara

appears to be the least temperamentally suited to run the IMF.(45) Indeed, the fact that Japan has

promoted Sakakibara could be interpreted as an indication the extent to which the Japanese pool of

potential candidates for important international positions is weak. And, if a Japanese national did get

the position, Japan would come under pressure to release its hold on the ADB presidency.(46)

In the end, appointing an Asian to the IMF managing director position is highly unlikely, and interest

in developing Asian regional financial institutions will continue. Already, there has been limited

cooperation among central banks within the region. Prior to the crisis, a number of these central

banks had established currency swap and repurchase ("repo") arrangements. These were easily

swamped by the crisis, but agreements among the members of the organization of East Asian and

Pacific Central Banks and the organization of Southeast Asian Central Banks were deepened and

expanded in January 2000. In the longer run, Japan may seek to resuscitate its proposal for an Asian

Monetary Fund. The countries of the region possess enormous foreign currency reserves (on the

order of $600 billion) and financing such an organization would not be a problem. Japan has already

committed $30 billion of regional finance through its "New Miyazawa Plan."

Yet, as in the case of trade, domestic politics and international rivalries constrain Asia's ability to

move forward on these initiatives. Japan is a major source of saving for the region, and some in

Japan would like Japan to play a greater role as an international financial intermediation center.

Despite Japan's great wealth, the government has never shown the willingness to deregulate its own

market to the extent that would be required to become a global center of financial intermediation.

Even regionally, it is unclear whether Tokyo could ever play the roles that Singapore and Hong

Kong play today and that Shanghai may play some day in the distant future. Despite the promise of

the "Big Bang," the Japanese Government remains ambivalent about financial deregulation.

Politically, it is fundamentally inwardly oriented toward its domestic parochial political interests and

financial markets and institutions, not toward global markets. As a consequence, it appears unwilling

or unable to act in ways that would reassure non-Japanese institutions that it would play a

responsible role as an efficient and unbiased regulator.

This unease is compounded by lingering distrust of Japan in region, especially in China. For its part,

Japan remains wary of China, particularly in light of its authoritarian political system. The kind of

political exigencies that fueled the rapprochement between France and Germany after the Second

World War appear to be missing from Asia and will limit Asian attempts at greater regional

cooperation, at least in the medium run.

Conclusion

Asia has been shaken by its experience during the financial crisis. Among other things, this situation

has led to a reappraisal of its relationship with the US Government and the Washington-based

multilateral economic institutions. There is a sense of disappointment in both aspects of

"Washington." US Government attempts to reshape the policies of the international financial

institutions, along with the WTO, are likely to encounter opposition in Asia. Haggling over

leadership posts could fuel further resentment of the United States and disaffection with the

international institutions.

The virulence of this conflict could intensify, if as is probable, US economic growth slows down and

trade issues rise in prominence in US domestic politics. The US political system could be strained by

the political need to "do something" about trade, and the constraints on unilateral action imposed by

the WTO. Japan and China, because of their large bilateral trade surpluses, would be the most likely

targets of US ire.

In such an environment, Asians understandably could intensify efforts at regional cooperation as an

alternative, either as a complement to, or a substitute for, multilateral cooperation. The heterogeneity

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of Asia in terms of levels of economic development, political systems, and culture and ethnicity

would appear to greatly raise the "transactions costs" of regional integration. Although Asians

exhibit a kind of grudging disappointment in the performance of the US Government and the global

multilateral institutions, this does not appear to be sufficient to propel them into significantly greater

regional cooperation in the medium run. Rather than expending efforts to construct regional bodies

from heterogeneous countries, individual Asian countries may be better off working though global

institutions or plurilateral forms of functional cooperation among like-minded countries. To the

extent that regional initiatives can be molded in ways consistent with the broader global institutions,

Asian countries can follow a two-track approach. If regional cooperation is seen as an alternative to

the global order, however, then Asian countries may face a choice. An ASEAN head of state could

face the following question: which is likely to yield more gains--AFTA or the Cairns Group within

the WTO? That it would be the former is not at all obvious. (See appendix C for references).

The Perils of Being Number 1: East Asian

Trends and US Policies to 2025

by Robert A. Manning

The cumulative impact of US global and regional policies and behavior, a broad regional trend of

emerging, multifaceted national self-assertiveness, and regional economic dynamics add up to an

East Asia in ferment that increasingly will test, if not challenge, US interests and policies in the

Asia-Pacific over the coming generation. The degree to which US interests and current policies are

likely to challenged--and the nature of the challenge--will depend in large measure on the outcome of

China's unprecedented transformation, the cosmic uncertainty casting a shadow over East Asia's

future.

For most of the past decade, East Asia has been a largely static security environment in a slowmotion evolution towards still uncertain new patterns of intra-Asian and trans-Pacific relations. As

evident in the accelerating pace of inter-Asian diplomacy (both bilateral and multilateral) and in the

political and military patterns of major East Asian actors, there has been a dynamic flow of activity

designed to cushion each actor against an uncertain future of the Asia-Pacific. Although the

economic crisis has had a sobering and humility-inducing effect, it has perhaps slowed, but not

altered, these patterns. Amidst strategic and economic uncertainty, the Asia-Pacific region has

witnessed a torrent of summitry (Sino-Russian, Sino-Japanese, Korean-Japanese, Korean-Chinese,

East Asia-Europe) and other diplomatic and territorial rumblings over the past several years. The

diplomacy highlights a fluid security environment currently defined by increasingly sophisticated

hedging strategies on the part of the major powers in the Pacific. These trends, however, could

harden into new geostrategic patterns rapidly if potential strategic shocks occur: the reunification of

Korea, a conflict over Taiwan, and possible reactions to US missile defense deployment decisions.

There is a discernible shift in the character of East Asian uncertainty about the future from that

which existed in the early 1990s. At the end of the Cold War, the largest concern was a fear that,

absent its global mission, the United States would begin to reduce its engagement and security

presence in Asia. This fear was combined with looming concern about the emergence of China. In

recent years, concern about the meaning of a successfully modernized China has grown more acute.

Indeed, there is a tendency to discount the present for the future in regard to China, with many acting

toward Beijing as though it were already a multidimensional global power. But Asian views of the

United States have become more wary and complex in new and paradoxical ways.

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 There is a broad recognition that in every measure of national power, US pre-eminence is clear

and growing--and that the US role as guardian of global and regional order has, if anything

become more central to stability.

 Discomfort with this reality is palpable and increasing, as the United States is viewed as a

somewhat capricious actor, (a rogue superpower?) frequently driven more by narrow domestic

interests and ideological imperatives than by common goals or evident strategy. The

perception is reinforced by the United States confusing power with norms of behavior and its

willingness to impose its values by force in some instances. This situation is exemplified by

US rejections of the CTBT, the Kyoto Protocol, and the International Criminal Court, while

pressing others to approve and the NATO bombing of Yugoslav, absent UN mandate).

 East Asians see a lack of sustained focus on the region and a renewed Eurocentrism

manifested in NATO expansion and long-term obligations in the Balkans, while the locus of

both economic dynamism and potential major conflicts is in Asia, most notably, the Korean

Peninsula, China-Taiwan, and India-Pakistan.

At the same time, the regional security environment has become more complex, with security

challenges and foreign policies becoming more interactive over the past several years. The accidental

bombing of the Chinese Embassy in Belgrade in March 1999 was a deliciously illustrative example

of how disparate strands in values, interests, and geography can intersect. What in the United States

was widely viewed as a humanitarian intervention against Yugoslavia over its behavior toward

Kosovo, was viewed discomfitingly as an idiosyncratic, unilateral transgression of sovereignty--

absent a UN mandate--by such US allies as Japan and Korea as well as others in East Asia.

Moreover, the alleged doctrine of humanitarian intervention was seen as particularly disconcerting

by China, raising the spectre of intervention in Taiwan, Tibet, or Xinjiang. Central Asian states

bordering Xinjiang all are members of NATO's Partnership for Peace and have been the venue of

US-Central Asian joint military exercises proximate to China's Western borders conducted without

prior notification. Another example is the unanticipated impact of North Korea's missile program,

which catalyzed a new security assertiveness in Japan, which, in turn, adds an element of tension to

Sino-Japanese relations.

The discomfort with US idiosyncratic behavior is mitigated by the widely acknowledged reality that

there is no viable alternative to the United States as a counterweight to China. It is further mitigated

by the continued importance of East Asian trade and investment with the United States, roughly

$530 billion in annual two-way trade and some $100 billion in Asian direct investment in the United

States and vice versa. The net result is a paradoxical situation with many actors in the region seeking

to cushion themselves against American unilateralism, even as they rely on the US security presence

for stability and find an unspoken sense of reassurance in the display of hi-tech US military power.

Thus, East Asia is displaying varying degrees of bandwagoning and balancing at the same time.

 China, most notably in its 1998 Defense White Paper, has articulated a competing vision of the

future in which the American role in Asia is greatly diminished. Although Beijing seeks a

dominant role in the region, at the same time it has bet its future on integration into the global

economy and has increasingly participated in global (such as WTO, NPT, CTBT) and regional

(for example, ARF, APEC) institutions. Yet even as it seeks cooperative relations with the

United States, its military modernization and planning centers on attaining capabilities to

prevail in a Taiwan conflict in which the United States intervenes.

 Japan's national desire to carve out its own identity as a major power in its own right (e.g.

Asian monetary fund initiative, increasingly independent defense capabilities, constitutional

revision debate) playing more of a leadership role in the region occurs even as it

simultaneously enhances the US-Japan security alliance;

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 South Korea's remarkable middle power diplomacy, evidenced most recently in the

unprecedented January 2000 visit of Chinese Defense Minister Chi Haotian and South Korea's

complex relationship with Beijing. This, even as Seoul deepens its political and military

relationship with Japan in unprecedented ways and remains dependent on the US for its core

security.

 North Korea has managed to be at once charity case for, continuing threat to, and new partner

of, the United States. While developing ties to the United States, it has maintained its

conventional military assets and continued to develop its WMD and delivery systems. At the

same time, the DPRK has renewed its ties to China and Russia (witness Russian FM Ivanov's

February trip to P'yongyang), while expanding ties to Italy, Australia, and the Philippines and

renewing normalization talks with Japan.

 The collective desire of smaller and middle powers, particularly ASEAN states, for East Asian

nations to be more independent actors carrying more weight in the councils of global

governance, even as they depend wholly on the US military presence and commitment to

ensure security and US markets for exports. The November 1999 ASEAN+3 meeting, replete

with fantastic visions of EU-type regional arrangements for a free trade area and monetary

union, was an expression of this hope, as was support for an Asian monetary fund.

Vic Chairman Chi Haotian and South Korean Defense Minister Defense Cho Song-tae take the stage

for talks.

Consequences of Asia's Emergence

This duality of Asian perspectives and sense, however unrealistic at present, of a tilt toward panAsian identity and interests reflects the beginnings of a qualitative shift in established patterns of

relations. The cumulative impact of a generation of dynamic economic growth, notwithstanding the

1997-98 economic crisis, are waxing nationalisms seeking validation as fledgling middle-class

societies. The Manila ASEAN+3 meeting was but one manifestation of this trend.At the same time

there was a surrealistic aspect to the Manila meeting in that regional tensions--whether SinoJapanese disputes (ostensibly over history), territorial disputes such as the Spratly islands, Taiwan's

identity politics and quest for international space, or Indonesian-Malaysian rivalry--all are

expressions of these waxing nationalisms beginning to bump up against each other.

Worth briefly summarizing are other expressions of Asia's emergence and its gravity in the world

system, a regional economy that in the space of a single generation went from 4 percent of world

GDP in 1960 to 24 percent by 1995. There is no shortage of telltale signs of the burgeoning

technological, financial, and strategic heft of modern East Asia. Beijing recently launched its first

orbiting space vehicle, prelude to a manned space program (with Russian assistance); South Korea is

building a satellite launch capability. Greater China (China, Hong Kong, Taiwan) Japan and Korea

together hold some $700 billion in foreign reserves, more than half the world's total, and are three of

the world's 10 largest economies. The recent earthquake in Taiwan threatened the world computer

industry with semiconductor shortages, as the 1995 Kobe earthquake in Japan threatened liquid

crystal computer displays. China alone is the world's second largest consumer of energy--though its

per capita energy consumption is ten times less than that of the United States!

With regard to American interests, these trends cut in different directions. On the plus side, an

important consequence of East Asia's success has been a broad trend towards democratization over

the past 15 years: the Philippines, South Korea, Taiwan, Thailand, and of late, Indonesia. We could

argue that structural economic and political change in Japan, in part generational in nature, is also

deepening its democracy, in particular, adding a new dimension of civil society and political

accountability. Although this regional trend removes a potential values conflict and is a source of

public support for US-Asia policy, it also means friends and allies whose respective political systems

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are more unwieldy to deal with. This situation is manifested in a variety of ways, such as Japan's

posture in regard to base and host-nation issues with Japan, and to a lesser extent, with Korea, where

the No Gun Ri episode and desire for more capable ballistic missiles (beyond MTCR limits) have

introduced emotional new irritants in US-Korean relations.

The trajectory of intra-Asian trade and investment patterns is another important trend that is likely to

have a crosscutting impact on US interests. Although the United States remains the first or secondlargest market for most East Asian nations, in relative terms, East Asian trade with the United States

is a diminishing portion of the region's trade. In 1990, the US market accounted for a third or more

of Korean, Japanese, Taiwan, and ASEAN exports. That has gradually diminished to the 20-25

percent range, with the exception of China, which is dependent on the US market for nearly 35

percent of its exports. At the same time, intra-Asian trade continues to grow, now to roughly 50

percent of total Asian trade.

Asia-Middle East Energy Nexus

One important economic trend with strategic implications that is woefully underconsidered is East

Asia's energy patterns, which are creating pulls that may lead to a divergence of East Asian and US

interests. Already, Asia has a substantial oil deficit. In 1998, the Asia-Pacific imported 11.5 million

barrels a day of the 19.1 million barrels it consumed daily, with imports rising to 13.5 million bbl/d

in 1999. This amounts to about 62 percent of total petroleum products consumed in the region. AsiaPacific import needs are projected to approach 17 to19 million bbl/d by 2010, and the Energy

Information Agency (EIA) forecasts those import needs to rise to 24 million bbl/d by 2020, possibly

up to 31 million bbl/d if high-end economic growth projections are realized. China's import needs

alone are projected to grow to roughly 3 million bbl/d by 2010, and as much as 5 to 6 million bbl/d

by 2020.(47) Even discounting for the region's economic crisis, by 2020, according to the Energy

Information Agency (EIA) of the US Department of Energy, Asian oil demand will still grow two to

three times faster than that of the industrialized West.(48)

The vast majority of East Asian oil imports--and much of its rapidly growing natural gas

consumption--will come from the Middle East. The workings of the highly efficient globalized oil

market tend to be based largely on transport costs. This condition has meant a bifurcated pattern of

supply, with the US obtaining most of its oil imports from the Atlantic Basin and/or the Western

Hemisphere (North Sea offshore West Africa, Mexico, Canada, Latin America. Already some twothirds of Persian Gulf crude is exported to Asia, and an oil-thirsty Asia increasingly depends on

Gulf/Middle East crude, already nearly 80 percent of its imports. A sign of the times was when

Chinese President Jiang Zemin made the first ever trip by a top Chinese leader to Saudi Arabia last

November (declaring a "strategic oil partnership"). Thus, a burgeoning Asia-Middle East energy

nexus is taking shape. This trend appears long term and a permanent feature of the oil market. Thus

far, it has not altered strategic ties beyond a thickening commercial relationship with Asians

investing in upstream Middle East, while Gulf states invest in downstream Asia, both designed to

lock in supply and customers, respectively. What the geopolitical implications are of the burgeoning

Asia-Middle East energy nexus is an open question explored further below.

Diplomatic and Strategic Trends

The diplomatic and strategic trends in the region range from efforts to attain more independent

postures within the framework of a cooperative or alliance relationship (Japan) to the prospect of a

peer competitor (China). The military capacities of key actors, particularly China and Japan, which

are undergoing qualitative improvements, both foreshadow and raise the stakes of prospective

strategic competition. The challenges to US policies and interests range from prospective strategic

rivalry to those of adjusting to a less dominant role with more equal partners, transitioning from de

facto quasi-imperial metropole to extra regional balancer without risking stability or diminishing

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American interests.

The China Factor

The most stark and consequential potential divergence of interests with the United States arises from

China's continuing military modernization, its irredentist claims and preferences for a Sino-centric

regional order. Two decades of double-digit growth have moved China's closer to its highest national

goal: economic modernization, the foundation of its 21st century version of the Meiji Restoration

slogan: Rich Country, Strong Army. Beijing's long-term objective is to lay the foundation for

becoming a multidimensional great power by attaining a new level of "comprehensive national

strength"--the sum of economic, technological, and military power that together define a country's

international standing.

Yet for China, the terrible symbolism of US bombing of the Chinese Embassy in Belgrade

underscored China's weakness. It also illuminated the degree to which China's core assumptions

about international trends (for example, a multipolar world, United States in decline, China

ascending) have been shattered since the mid-1990s. The Yugoslav war, revealing still more

improvements in US precision-guided weapons since the Gulf war, deepened China's perception of a

growing technology gap and sense of frustration and impotence. Such military prowess, combined

with the strengthening of US alliances in Europe and Asia and a penchant for values-based

intervention has left China frustrated and overwhelmed by US power. At the same time, India's

moves to become a full nuclear weapons state has still further complicated China's security calculus.

The net effect of the 'Kosovo shock" has been to accelerate the pace of military modernization,

particularly in hi-tech areas such as cruise missiles and laser weapons and China's strategic and

political cooperation with Russia.

This reality reflects China's contemporary conundrum: its highest goal of economic modernization

makes it highly dependent on the one power that can impede its aspirations to be the dominant power

in East Asia. At the same time, the United States also stands between China and its reclamation of

sovereignty disrupted by Japanese and Western imperialism during its 150 years of humiliation--

reunification with Taiwan and its historic claims in the South China Sea. Indeed, there is a lingering

fear that the United States is quietly erecting a structure of containment around China's periphery to

mitigate its modernization and limit its freedom of action.

The March 1996 Taiwan Strait crisis reinforced China's fears. The unanticipated arrival of two US

aircraft carrier battle groups off Taiwan dramatized the military-technological gap while bringing

into sharp relief the possibility of a conflict with the United States over Taiwan. The fact that one

month later, the United States and Japan announced new defense guidelines updating the US-Japan

alliance, began to deepen Beijing's concerns that not only was multipolarity not the dominant trend,

but that the US bilateral security network was reinforcing US pre-eminence. One important aspect of

the Taiwan Strait crisis worth noting is that only Japan and Australia publicly supported the US

gunboat diplomacy. This reflects the ultimate strategic nightmare for East Asia: having to choose

between the United States and China. Nonetheless, the presence of the two carrier task forces were a

sobering reminder to Beijing of the magnitude of US military power in the Pacific.

To balance its near-term economic goals and longer-term security agenda, China has evolved its own

hedging strategy, one beginning with efforts to neutralize potential threats along its enormous

borders. As the strategy has evolved, two phases are discernible: 1989 to 1996 and 1996 to present.

Since the 4 June 1989 Tiananmen tragedy and ensuing distancing from the West, China has crafted a

diplomatic strategy designed to solidify ties to its neighbors. In the early 1990s, it normalized

relations with Singapore and Indonesia. It has cultivated ties to ASEAN nations, forging particularly

close ties to Thailand, Malaysia and Burma. Beijing made progress on border talks and trade with

New Delhi and enhanced political and military/technical ties to Russia.

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In response to its predicament, China also increasingly has sought to foster its own security network

as a counter-hedging strategy. This approach has taken the form of bilateral "partnerships" and new

concepts of multilateral security structures. At a conceptual level, since 1997, Beijing has begun to

articulate what it calls a "New Security Concept," as part of an effort to discredit and attenuate US

alliances and ostensibly replace the de facto situation with a collective security framework. As

spelled out in its July 1998 Defense White Paper, the new concept incorporates Beijing's emphasis

on noninterference and respect for sovereignty embodied in its traditional five principles of peaceful

coexistence. Added to this is the notion that, "security is mutual, and security dialogues and

cooperation should be aimed at promoting trust, not creating confrontations . . . ."(49) This concept

largely has been a rhetorical and diplomatic device and has not prevented China from demonstrations

of military force in instances such as in the South China Sea. The most conspicuous manifestation of

this approach has been its "cooperative strategic partnership" with Russia. Though still largely a

military supply relationship, for both countries, it has become therapeutic and for the US, potentially

obstructionist: Sino-Russian summit communiques routinely denounce US "hegemonism" and call

for "multipolarization of the world and the establishment of a new international order."(50) But

fledgling Sino-Russian strategic cooperation is discernible and appears to have grown significantly

in response to the US/NATO Yugoslavia war: Beijing and Moscow have increasingly found

common cause in denouncing US efforts to amend or scrap the Anti-Ballistic Missile Treaty (ABM)

and build ballistic missile defenses; some 2000 Russian technicians are employed in Chinese

military research institutes; joint use of Russia's GLONASS GPS system, which would aid PRC

targeting is under negotiation. In 1997, China has signed protocols with Kazakhstan, Kyrgyzstan,

and Tajikistan governing armed forces along borders, an agreement hailed by Beijing as a "new

model for security." More recently, China has signed bilateral amity and friendship accords with

Thailand and Malaysia.(51) Together, these individual elements are aimed at stabilizing the

international environment in East Asia, advancing China's national goal of economic modernization,

bolstering China's strategic capabilities, and attenuating the US position in the region.

Beijing's assertive diplomacy has unfolded in parallel with its conventional and nuclear military

modernization program. A series of recent acquisitions and deployments have the effect of

significantly raising the cost of conflict in the one scenario where direct military confrontation is

imaginable--Taiwan--as well as reducing US freedom of action. Beijing has begun to acquire 48 Su27 fighters, along with 200 to be assembled in China under coproduction with Russia. In addition,

during his December 1996 visit to Moscow, Premier Li Peng finalized a deal to purchase two

Sovremenny-class, missile-carrying destroyers for $400 million each, (the first was delivered in

February 2000) along with Sunburn antiship missiles. These ships were developed in 1980 by the

Soviets to counter US aircraft carriers, and the PLA Navy very likely sees such hardware as

necessary if it plans to counter US aircraft carrier task forces in the future. Moreover, Beijing has

signed a $2 billion contract for some 30 to 60 150 Sukhoi Su-30MK multirole fighters and is

negotiating to buy more advanced Su-37 models. China also has deployed some 200 M-9 and M-ll

missiles in Fujian Province, across the strait, and US projections are that Beijing may deploy some

700 missiles there by 2005-6. At least another 10 to15 years will be needed before China obtains

significant air and amphibious force capability to sustain force projection beyond its borders.(52) At

the same time, China is the only nuclear weapons state quantitatively and qualitatively expanding its

arsenal, with the DF-31 mobile missile near deployment and the DF-41 likely to be deployed by

2010. These medium- and long-range missiles can carry multiple independent re-entry vehicles

(MIRVs).

For US interests, these first fruits of Chinese military modernization already complicate and raise the

cost of any US military intervention in the event of a conflict in the Taiwan strait, the most likely, if

not the only, scenario that can be envisioned pitting the United States and China in a direct military

clash. In broad terms, China's incremental development of force projection capabilities is beginning

to circumscribe US freedom of action in the Pacific. In its diplomacy, China is positioning itself to

influence the future of the Korean Peninsula and the security architecture in Northeast Asia. In

Southeast Asia, it is accentuating a geopolitical divide between continental and peninsular ASEAN

states.The challenge to both Washington and Beijing is to avoid a cycle of action-reaction that

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pushes the relationship in an adversarial direction and to maintain the ambiguity of their respective

hedging strategies until the outcome of China's transformation is evident.

Japan's New Nationalism

While China is an important factor catalyzing a remarkable evolution in Japan's strategic culture, the

quickening pace of change in Japan's national security policies is unfolding in a larger crucible of

social, economic, and political ferment. These changes come as a decade of economic stagnation has

demonstrated to most Japanese that the "development state" post-WW 2 model in Japan has been

outgrown and is being superseded gradually in a process of structural change. In broad terms, Japan's

evolving security policies reflect identity politics writ large--in redefining individual's relationship

with society and localities' relations with Tokyo, as well as Japan's regional and global role. In

tempting shorthand, Japan is becoming a more normal nation.

Chinese Su-27SK--note PLAAF markings on the tail.

In the security realm, it reflects the perception of a Northeast Asian security environment more

menacing than during the Cold War, a perception fostered by North Korean behavior during the

1990s as well as a sense of defining a Japanese international role and personality. North Korea's first

missile test, into the Sea of Japan in May 1993, hinted at Japan's vulnerability to ballistic missile

attack, and the possibility of conflict on the peninsula, potentially involving Japan, was brought into

sharp relief during the spring 1994 nuclear crisis. In terms of mass public opinion, P'yongyang's

August 1998 Taepo Dong test over Japanese territory was roughly equivalent to the psychological

impact of the Soviet Sputnik launch on the United States in 1957-58. Similarly, beginning around

1993-94, Japanese perceptions of China began to change. Prior to this time, Japan considered

economic aid, trade, and investment to assist China's economic development and to foster internal

political stability as adequate to manage China. But the cumulative effect of two decades of doubledigit economic growth--particularly set against the background of Japan's own decade-long

economic stagnation--began to raise questions about the balance in Sino-Japanese relations and the

limits of "checkbook diplomacy."

These concerns were reinforced by China's accelerating military modernization program, the 1995

controversy over nuclear testing, and by its increasingly assertive behavior on issues relating to

sovereignty: the 1995 occupation of Mischief Reef South China Sea, actions--and persisting

contention--over the disputed Senkaku/Diaoyutai islands, and most dramatically, during the 1996

Taiwan Strait crisis. At the same time, China repeatedly has warned of the destabilizing effects of

Japan's participation with the US in ballistic missile defense R&D systems The implication that

China was actively targeting Japan came as a shock to many Japanese. The palpable discord in the

October 1998 Sino-Japanese Summit, with Japan refusing to give Jiang Zemin the full and perpetual

apology demanded as the price of Sino-Japanese harmony was a reflection of Japan's new wariness

of China.

Faced with this set of challenges, Japan moved initially to strengthen its alliance with the United

States, which has been--and continues--to serve as the foundation of its diplomacy and security

policy. At the same, Tokyo has moved towards bolstering its independent military capabilities and

coterminously, sought to forge an independent diplomatic posture and solidify its economic network

in the region. Thus, we have seen the April 1996 reaffirmation and updating of the US-Japan alliance

during Clinton's visit to Tokyo, the new defense guidelines defining Japan's support role in a

regional crisis, Japan's decision to build an indigenous intelligence satellite, joint research on theater

missile defenses, and moves toward attaining air-refueling capabilities.

Japan's "rearming" as the often heard refrain goes, is not the question. Japan already has the second

or third largest defense budget in the world, $45 billion--depending on the value of the Yen. Even

without the United States, Japan possesses the most capable hi-tech air and naval forces in East Asia,

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including F-15J and F-4EJ fighter interceptors, E-2C Hawkeye early warning radars, AWACS, a

fleet of destroyers, Aegis cruisers, and 100 P3C antisubmarine patrol planes, and a C3I system

interoperable with that of the United States.(53) In addition, there is a host of areas where Tokyo is

creating an independent defense base: Japan's decision to pursue an independent satellite

reconnaissance capability; its satellite launch program, which gives it a potential ballistic missile

capability; it has four of the world's most advanced supercomputers; and its plutonium reprocessing

program, which makes it in the eyes of some, a virtual nuclear power.

But perhaps more important is the 'software' of Japan's new assertiveness. The defense guidelines

issue is part of a larger Japanese debate about the limits of Japan's willingness to engage in military

action, indeed, over the interpretation and/or revision of its constitution. This in turn, is a source of

Chinese anxiety, particularly that Japan is laying the foundation for an independent military

capability under the US security umbrella. In any case, former Prime Minister Obuchi's popularity

went up when Japanese ships fired their first shots in anger in March 1999 at intruding North Korean

spy board. In several opinion polls over the past three years, a majority favored revising the

constitution. And in terms of outward trappings, the Diet passed legislation making official the

hinomaru flag and making the Kimigayo the national anthem. Japan's drift toward a posture of

collective self-defense is reflected in the July 1999 Diet decision to establish a commission to study

revision of the constitution.

Although Japan's alliance with the US is viewed as critical leverage in any counterbalancing

strategy, the days of gaiatsu, of a top-down command US-Japan relationship are in eclipse. Japan is

aware it has no alternative to the US-Japan alliance. But it is seeking a more equal partnership, one

that is likely to have growing sets of issues on which there is disagreement (for example, Burma and

Iran). At the same time, Japan's assertive diplomacy is aimed at countering the possibility of

declining US political/military involvement in East Asia. To this end, Japan has made some headway

in repairing problems of the past. In October 1998, former Prime Minister Keizo Obuchi extended to

South Korea's visiting president, Kim Dae Jung and agreed to a "cooperative twenty-first

partnership."(54) Signs of a Japanese-Korean rapprochement are visible in economic and security

relations. A month later, Obuchi's visit to Moscow yielded the Moscow Declaration of a "creative

partnership between Japan and Russia" and a reaffirmation of commitments, made previously by

President Yeltsin and then Prime Minister Ryutaro Hashimoto, to reach agreement on a peace treaty

and on the future of the disputed Northern Territories.(55) Both Japanese efforts were designed with

China very much in mind. In the case of Korea, Tokyo has sought to influence future geopolitical

directions Korea may take; in the case of Russia, a range of cooperative endeavors, particularly

regarding oil and gas from Sakhalin and also eventually from Irkutsk, bolster Russia and offer it

alternatives to strategic cooperation with China. Japan's Russia policy is part of a larger "Eurasian

diplomacy" extended to Central Asia with oil and gas resources as much the objective as geopolitical

positioning.

In Southeast Asia, throughout the 1990s Japan has worked to strengthen ASEAN and its institutions.

Japan's recent overtures to Burma, which put it at odds with the US again appear aimed at

counterbalancing Chinese influence. Although Japan has become more realistic about the limits of

current efforts at multilateralism over the past three to four years, its support for various multilateral

ventures reflects a broader aspect of Japan's hedging strategy--the fostering of new multilateral

regional institutions to compensate for any diminished American role while seeking to showcase

Tokyo's role. Thus, Tokyo has called for a six-party forum in Northeast Asia (United States, Japan,

Russia China, and North and South Korea.) Similarly, Japan's proactive response to the Asian

financial crisis was in this vein, proposing an Asian fund in October 1997 as the Thai baht

foundered. And Japan had no qualms about actively participating in the ASEAN+3 meeting in

Manila contemplating an EU-like future for the Asia-Pacific.

In sum, Japan is no less committed to the US-Japan alliance than at any time in the past, but it is

more assertive in redefining its role within the alliance, is building an independent defense industrial

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base, and is positioning itself for potential future shocks that could render the US force presence in

Japan more problematic, if not the alliance itself. This approach does not suggest any sudden or

visible breakpoint or even a strategic distancing. Rather, in the current environment of universal

hedging and incremental change, it is largely a matter of alliance management problems and will

require more creative, flexible approaches on the part of Washington (for example, a 15-year base

agreement with a renewal clause based on the security situation or joint use of bases).

Similar types of behavior characterize South Korea and ASEAN. But for the scope of this paper, US,

Japan, and China relationships and behavior largely define the security environment. At most, Korea

is a middle power that can be a factor in shaping the strategic balance depending on which direction

it tilts, and ASEAN security is largely derivative of Northeast Asian security, that is to say USChina, US-Japan, and Sino-Japanese relationships. The exception, of course, is Southeast Asian

security challenges growing out of internal crisis (for example, Indonesia unraveling).

In any event, Asia is reaching a stage where probable events and policy choices made in pursuit of

respective national strategies may soon begin to foreclose options in regard to the future geopolitical

architecture of the region. Three probable decision points are just over the horizon, any one of which

could transform the region: decisions made in the process of Korean reunification, possible conflict

over the future of Taiwan, and in regard to the deployment of missile defense systems by the United

States and its allies. Each of these developments holds the possibility of irreversibly reshaping the

geopolitics of the Asia-Pacific. Already, all three issues--Korean reunification, Taiwan conflict,

missile defense deployments--are being factored into the security calculus of every actor. The

potentially tragic prospect is that fateful decisions may be forced prematurely, before key factors

fostering uncertainty--most importantly, the outcome of China's transformation--warrant such

choices. Thus, the necessary geopolitical ambiguity characterizing this interim period could harden

into new strategic configurations.

The Korea Factor

Most prominently, the impending reunification of Korea suggests it will play as much of a defining

role in catalyzing Asian geopolitics in the 21st century as imperial rivalries did at the end of the last

century. The resolution of the Korea question probably will force a shift from respective hedging

strategies to new diplomatic patterns and political configurations that will shape the region into the

mid-21st century.

One key variable will be the then nature of Sino-American relations and the health of the US-Japan

alliance. Under the best of circumstances, a stable, nonadversarial relationship with Washington,

Beijing will not greet with enthusiasm the prospect of a unified, democratic, free market Korea allied

with the United States with forward-deployed American forces on its border. Potentially conflicting

approaches to regional security will make Korea a seminal case in establishing the possibilities of

mutual accommodation and defining their future roles in East Asia. The point here is that the present

congruence of US and Chinese interests in Korea--a desire to avoid war, collapse, and nuclear

proliferation--is unlikely to endure after reunification, at which point they will begin to diverge.

Sino-American differences, both on the nature of forward-deployed US forces on the Peninsula and

on the future of the US-Korean relations, will be brought into sharp relief at the point of

reunification, if not before. Certainly, any postreunification US-Korean relationship in which

Washington maintains a military presence in Korea will require some clear understanding with

Beijing. In lieu of some new understandings, a polarization and ensuing tension probably will result.

China can be expected to exert tremendous, if subtle, pressure on the government of a unified Korea

to forego any continuing US military presence. This situation, in turn, would leave Japan as the only

country in Asia with forward-deployed US troops, and almost certainly at a minimum, spark a debate

there, and may attenuate the US-Japan security alliance. If Beijing is heavy-handed in its efforts

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regarding the US-Korea linkage, however, the result could be counterproductive and reinforce a

Korean desire for close security ties with the United States lest the 21st century begin to resemble the

beginning of this century.

At the same time, a newly unified Korea will watch closely the strength of US-Japan security

relations in gauging its approach to regional security. A strong US-Japan alliance, one that constrains

Japanese power projection would have a confidence-building effect on Seoul's strategic vision and

force development. Conversely, a diminished or more problematic alliance, and movements by Japan

toward autonomous capabilities, could spur strategic competition in Northeast Asia. Certainly, any

diminution of the US forward-deployed presence in Korea probably would trigger more heated

debate in Japan about the US force presence there, if not begin to reconfigure the US forwarddeployed presence. That, in turn, would force Korea to rethink its security options.

The nuclear temptation has been underappreciated by most analysts in assessing postunification

security options. But South Korean efforts to attain nuclear weapons in the 1970s, when there was a

less ambiguous US security umbrella and far less Japanese capability (for example, no potential

delivery system or source of fissile material) warrant such postunification concern. Discussions with

South Korean officials and writings of the scientific and military elite reveal a continued interest in

acquiring fuel cycle capabilities--reprocessing--with a clear intent of maintaining at least the

technical capacity.(56) The status of any US nuclear guarantee will be an important factor shaping

the attitude of an a reunified Korea towards such weapons. The experience with NATO expansion,

for example, the absence of US troops in Poland, the Czech Republic or Hungary, suggests the

possibility of maintaining such a nuclear umbrella without forward-deployed forces if a treaty

relationship continues, whether the current treaty or a successor.

Unified Korea's Security Options

Four possible alternative future scenarios for the regional security posture of a unified Korea can be

envisioned:

 Neutrality along Swiss lines.

 Strategic independence.

 Sino-Korean entente.

 Continued alliance with the United States.

Neutrality for Korea does not comport well with history. At the time of unification, a relatively weak

and vulnerable Korea probably would harbor too much distrust of its larger neighbors to place its

security on good faith alone. This vulnerability makes difficult envisioning a unified Korean

Government entrusting its security to cooperative arrangements not resting on a foundation of

military balance. Indeed, President Kim Dae Jung makes a compelling realist argument for the

continuation of a US presence after unification, namely thata small Korea exists tenuously between

powerful continental and maritime powers.(57)

Strategic independence, although more appealing than neutrality, is unlikely to be the option of

choice. Yet inevitable changes in the US-Korean security relationship following reunification could

push Seoul in such a direction. Worth noting is that a Korean posture of strategic independence holds

a realistic possibility of renewed efforts to obtain nuclear weapons capability. From a Korean

perspective, this situation is not a wholly unreasonable quest. Perpetual fears that Japan is a virtual

nuclear weapons state and the reality of being surrounded by China and Russia offer a window into

Korean logic. Moreover, Seoul probably would inherit intermediate- (and possibly long-range)

missile capabilities, chemical and biological weapons capabilities, and possibly also an opaque or

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overt nuclear capability.

Perhaps the most unstable possible outcome would be a Sino-Korean alignment. In its most extreme

form, it could define a heartland-rimland polarization either to counter or ensure against the USJapan alliance. Given China's historic relations with Korea, or even the evolution of PRC-ROK ties

since the 1995 unprecedented Jiang Zemin six-day visit to Seoul, Korean fears of a kind of

neotributary status suggest that this option would not be preferred by Seoul.(58) The rapid expansion

of Sino-Korean relations in the early 1990s, in large part related to Seoul's efforts to build leverage

against P'yongyang and Beijing's strategic decision forge ties to Seoul while maintaining ties to

P'yongyang to enhance its leverage on the peninsula. Beijing's decision to embrace Seoul initially

produced a Sino-Korean relationship that also was anti-Japanese in overtone in during Jiang's 1995

visit. Should the US-Japan alliance fray and Japan move to strengthen its independent military

posture, a Korean alignment with China cannot be ruled out.

From a US perspective, the best case that is in the realm of the possible will be some variation or

combination options two and three. US and Korean interests overlap in Seoul's desire to balance the

major powers. One can envision access, propositioned equipment, joint training, and exercising in

the context of a revised security treaty up to, and perhaps including, a small logistic unit sustained in

Korea. Moreover, recent trends have seen South Korea tilting more toward the United States and

Japan, in large measure as a consequence of the persistent North Korean threat.

A large spectrum of options exists between the current status quo and no security relationship with

Korea. Four possible models can be envisioned: an alliance absent ground troops and smaller air and

naval presence;a reconfigured alliance with emphasis on access, logistic support, propositioned

equipment, and joint training and exercising; a Singapore model, small logistical presence, joint

training and access; a Philippine model, a security treaty with no presence or regular access, but joint

training. Indeed, the future US security relationship with Korea must be viewed in the context of a

larger US strategy toward East Asia--sustaining US access to and some credible presence in the

region. The key externalindependent variable in the equation once again will be the outcome of

China's unprecedented transformation and its posture towards the region.

The Taiwan Conundrum

The Taiwan problem may be the ultimate symbol of clashing US-China interests and values. A Cold

War remnant, Taiwan captures the divergence between China's new security concept and the reality

of US dominance in the Pacific. Perhaps most starkly, the Taiwan issue illuminates a perception gap,

with the United States viewing it as a case of defending a democracy and free market partner, while

China sees only claims of national sovereignty denied by 150 years of imperialist humiliation. For

the United States, a cross-strait military conflict is almost certainly a lose-lose proposition. If the

United States did not come to Taipei's aid in the event of an invasion, profound doubts would be

raised in the minds of allies as to the credibility of the US security umbrella. Yet a US military

response would force choices polarizing East Asia, put its alliances at risk by forcing the region to

make choices, and harden an enduring enmity, and a probable new Cold War with China. This

possibility was painfully evident in the responses of East Asians to the March 1996 Taiwan crisis.

The current situation also illustrates what might be called "one country, two policies," in regard to

US policy toward the Taiwan issue. Contrast Clinton's "three no's" statement during his June 1998

China visit, with Congressional legislation, most recently the Taiwan Enhancement Act. These pull

in precisely opposite directions, with the Clinton position reinforcing the post-1971 "one china"

policy framework of the three communiques, and Congress, in its inimitable way, essentially saying

to defend Taiwan democracy. Both send the wrong signals to both sides and compromise US

strategic ambiguity that has been important to the preservation of cross-strait stability. Clinton's

position reverses the posture of wanting China to think the United States would intervene in certain

situations, while the behavior of Congress could be read in Taipei as a green light to pursue moves

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toward formal independence. This aspect is one of the post-Cold War breakdowns of the bipartisan

consensus on China policy. It also is read by some in the region as an illustration of Washington's

seeking to export its values and the United States redefining the role of sovereignty in international

relations.

Missile Defense

The Taiwan question overlaps with the third potential decision point that could create new

polarization between the United States and China, if not others in East Asia. China has made the US

provision of Aegis cruisers and PAC-3 theater missile defenses a red line in Sino-American

relations. Rhetoric about PAC-3, still under development, could have the unintended consequence of

leading China to consider military action before the balance of military forces becomes less

favorable. But in any case, virulent Chinese opposition, as is the case with the Taiwan Security

Enhancement Act, reflects a near-term political fear: obtaining TMD might lead to a US-Taiwan

quasi-alliance that could embolden Taipei to formally declare independence.

More broadly, such strategically capable systems as THAAD, and Navy Theater Wide also are

having a impact on Chinese military planners and the outcome of its nuclear modernization program.

Chinese nuclear managers are beginning to do worse case planning against the possibility that their

modest nuclear deterrent might be neutralized by US ballistic missile defenses. The risk is that this

perception may lead Beijing to pursue a more robust and MIRVed nuclear force than otherwise

might be the case. So far, the absolute numbers have not risen substantially. Whether the newly

deployed DF-31 or DF-41, when they becomes operational in the 2010 time frame, will result in only

modest additions--beyond replacement of existing forces or part of a significant nuclear buildup is

unclear. If so, the unintended consequences of looming missile defense decisions could be less

strategic stability. This situation also could foreclose possibilities for arms control between the US,

Russia, and China. Moreover, part of China's response apparently is increased cooperation with

Russia. A MIRVed China with penetration aids and countermeasures, together with regional

deployments of a US-Japanese missile defense-- depending on what architecture is chosen--could

reinforce a polarization in Northeast Asia.

Conclusion

For the near term, the trends described above will not qualitatively alter the basic structure of

relations in East Asia. Over time, however, even if precipitous events do not force change, there will

be a gradual erosion of US influence in the face of waxing nationalism and enhanced economic and

strategic capabilities. At a minimum this situation requires more coherent US policy approaches and

more "enlightened self-interest" adjustment to new realities. Apart from possible decisions on missile

defense systems over the coming year or two, the other two seminal developments may not occur for

some time, and in the case of Taiwan, the possibility of a peaceful resolution can not be ruled out.

On missile defense systems, the nature of the decisions taken and the architecture decided upon will

determine the Chinese response.

A key question is whether the US and China can sustain an ambiguous relationship where both are

hedging against uncertainty until China's transition to a post-centrally planned economy produces a

more clear economic and political outcome. A China where the iron rice bowl is broken and some

form of a constitutional rule-of-law system is established alters the possibilities for US-China

relations, and hence, the geopolitical equation. A China that is a corporatist, authoritarian system--

also a possible scenario--would have very different implications.

More broadly, the net result of the interplay of the executive branch and the Congress--that is to say,

the multitude of crosscutting single issue interests--is US policy appearing to many imperious and

confused. To argue that all this is matter little in a world of overwhelming American power and

influence is tempting. Yet, actions have consequences. The US global advantage is impermanent.

During the next quarter century, the role of other powers, Europe, China, perhaps even Russia will

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increase. The American challenge is to husband its advantage wisely. That means fostering a global

structure of relations that advances US long-term interests in which other major players feel they

have more of a stake in cooperating than in obstructing. Recent actions of US allies and others

indicated that message we seem to be sending is less one of norms and rules than of arbitrary power.

The irony is that global trends are largely beneficial to US interests and values--democratization is

spreading in Asia, deregulation and privatization continue apace.

Appendix A: Conference Schedule

9:00 - 9:05 a.m. Welcome

Robert L. Worden, Chief, Federal Research Division, Library of Congress

9:05 - 9:15 a.m. Opening Comments

Robert G. Sutter, Moderator, National Intelligence Officer for East Asia,

National Intelligence Council

9:15 - 10:45 a.m. Panel One

Japanese and South Korean Attitudes and Approaches

Susumu Awanohara--"Japanese Attitudes and Approaches Toward US

Policies and Presence in the Region" Scott Snyder--"US-ROK Relations:

Trends at the Opening of the 21st Century"

Commentators--William Heinrich, Timothy Miner, and Guy Arrigoni

11:00 a.m. - 2:30

p.m.

Panel Two

Chinese and Southeast Asian Attitudes and Approaches

Bonnie Glaser--"Trends in Chinese Assessments of the US, 2000-2005"

Marvin Ott--"Southeast Asian Perspectives"

Commentators--Greg Knight, Paula Causey, and James Ellis

2:00 - 3:30 p.m. Panel Three

Political and Economic Issues

William Watts--"East Asia and the United States--Current Status and 5-

Year Outlook: Convergence/Divergence in Political Interests, Values, and

Policies"

Marcus Noland--"Economic Interests, Values, and Policies"

Commentators--Mary Tighe, Dean Carver, and Craig Hoepfl

3:45 - 5:15 p.m. Panel Four

Security Issues and Wrap-Up

Robert Manning--"The Perils of Being No. 1: East Asian Trends and US

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Appendix B: Participants

Guy Arrigoni, Defense Intelligence Agency

Susumu Awanohara, Medley Global Advisers

Dean Carver, specialist on East Asian economic issues

Paula Causey, Department of State

James Ellis, specialist on East Asia

Bonnie Glaser, independent specialist on China

William Heinrich, Department of State

Craig Hoepfl, specialist on East Asia

Donald Kilmer, National Security Agency

Greg Knight, Department of State

Robert Manning, Council on Foreign Relations

Timothy Miner, National Security Agency

Marcus Noland, Institute for International Economics

Marvin Ott, faculty of the National War College

Scott Snyder, Asia Foundation

Robert Sutter, National Intelligence Officer for East Asia

Mary Tighe, Deputy National Intelligence Officer for East Asia

William Watts, Potomac Associates

Robert L. Worden, Chief, Federal Research Division, Library of Congress

Policies to 2025"

Commentator--Donald Kilmer

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Appexdix C: References

Bergsten, C. Fred. 2000a. "The Next Trade Policy Battle," International Economic Policy Briefs,

Number 00-01. Washington: Institute for International Economics.

Bergsten, C. Fred. 2000b. "The New Asian Challenge," Washington: Institute for International

Economics, processed.

Frankel, Jeffrey A. 1997. Regional Trading Blocs. Washington: Institute for International

Economics.

Makin, John. 2000. "How the Bubble Bursts," Washington: American Enterprise Institute. January.

Mann, Catherine L. 1999. Is The US Trade Deficit Sustainable? Washington: Institute for

International Economics.

Miller, Marcus, Paul Weller, and Lei Zhang. 1999. "Moral Hazard and the US Stock Market: Has

Mr. Greenspan Created a Bubble?" processed.

Noland, Marcus. 1995. "The Implications of Asian Growth," Working Paper Series 95-5.

Washington: Institute for International Economics.

Noland, Marcus. 1996. "Trade, Investment, and Economic Conflict Between the United States and

Asia," Journal of Asian Economics, 7:3 435-58.

Noland, Marcus. 1997. "Chasing Phantoms: The Political Economy of USTR," International

Organization, 51:3 365-88.

Noland, Marcus. 1998. "US-China Economic Relations," in Robert S. Ross editor, After the Cold

War: Domestic Factors and US-China Relations. Armonk: M.E. Sharpe.

Noland, Marcus. 1999. "Asian Perspective," Getting Ready for the Millennium Round Brief 3.

Washington: International Food Policy Research Institute.

Stiglitz, Joseph E. 1998. "More Instruments and Broader Goals: Moving Toward a Post-Washington

Consensus," WIDER Annual Lectures 2, WIDER: Helsinki.

Stiglitz, Joseph E. 1999. "The Korean Miracle: Growth, Crisis, and Recovery," paper presented to

the International Conference on Economic Crisis and Restructuring in Korea, Seoul, Korea, 3

December.

Summers, Lawrence H. 1999. "The Right Kind of IMF For a Stable Global Financial System,"

remarks to the London School of Business, London, England, 14 December.

Footnotes

(1) Wang Jisi, director of the Institute of American Studies under the Chinese Academy of Social

Sciences, asserted in an interview that, "A general estimation is that the United States' status as the

sole superpower in the world will remain unchanged until the first quarter of the next century [2000-

2025]. We do not have sufficient data to predict what the situation will be after that." Liaowang, no.

52, December 27, 1999, FBIS, January 13, 2000.

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(2) Lu Qichang and Ding Sheng, "Viewing the American Global Strategy from the Atrocity of

NATO," Contemporary International Relations, vol. 9, no. 6, June 1999.

(3) For a relatively balanced analysis of the US economy see Gu Wenyan, "US Economy: What's

Ahead?," Contemporary International Relations, vol. 9, no. 12, December 1999.

(4) Lu Zhongwei, president of the China Institute of Contemporary International Relations, wrote:

"Economic globalization benefits our country, but is logic of borderless economy will definitely

challenge our state control and sovereignty." "Global Economic Scene Vs. Economic Security at the

Turn of the Century," Contemporary International Relations, vol. 9. no. 8, August 1999.

(5) Shi Xiaohui and Xu Hongzhi, "Although Some New Characteristics Have Been Shown in

International Situation, Peace and Development Still Remain Main Themes of Our Time--Roundup

of 1999 Symposium on International Situation," Renmin Ribao, December 2, 1999, FBIS, January 1,

2000.

(6) Li Bin, "China's Security Environment in the Early 2000s," interview with Jiang Lingfei, Deputy

Director of the International Relations Department of the National Defense University, Beijing

Review (Internet version), no. 2, January 10, 2000.

(7) Bonnie Glaser and Banning Garrett, "China and the US-Japan Alliance at a Time of Strategic

Change and Shifts in the Balance of Power," published by the Asia/Pacific Research Center, Institute

for International Studies, Stanford University, September 1997.

(8) HR 1838, The Taiwan Security Enhancement Act (TSEA) passed the House of Representatives

341-70 on 1 February 2000.

(9) Lu Junyuan, "Taiwan's Geostrategic Value Makes Reunification Essential," Taiwan Yanjiu

[Taiwan Studies], no. 33, March 20, 1996, FBIS-CHI-96-171, 4 September 1996.

(10) "If the US sells advanced weapons and technology to Taiwan, then China might be forced to

reconsider its commitments to arms control agreements, such as the Missile Technology Control

Regime (MTCR)," warned a senior colonel from China's National Defense University privately in

October 1999.

(11) While it is true that cueing from US satellites would allow for earlier detection of an incoming

missile and thus increase the chances of interception, there are other early warning options that can

be implemented that do not involve surveillance from US satellites. See "Report to Congress on

Theater Missile Defense Architecture Options for the Asia-Pacific Region," at _ HYPERLINK

"http://www.defenselink.mil/pubs".

(12) During the January 24-26, 2000 Defense Consultative Talks in Washington, Deputy Chief of the

General Staff Gen. Xiong Guangkai reportedly warned that "a sale of antimissile systems to Taiwan

would, in China's view, violate the 1979 pact in which the United States agreed to recognize

Beijing's government, sever its defense pact with Taiwan, and withdraw US military forces from the

island." Steven Mufson, "Chinese Military Leader Objects to US Missile Sale to Taiwan," The

Washington Post, 27 January 2000.

(13) Dr. David M. Finkelstein and Rear Admiral (Ret.) Michael McDevitt, "Competition and

Consensus: China's 'New Concept of Security' and the United States' Security Strategy for East AsiaPacific Region," CNA Project Asia Issue Paper, December 1998, Center for Naval Analyses

Corporation, Alexandria, Virginia.

(14) Bonnie Glaser and Banning Garrett, "China's Pragmatic Posture Toward the Korean Peninsula,"

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The Korean Journal of Defense Analysis, vol. IX, no. 2, Winter 1997-98.

(15) Yearender by Xu Baokang, Renmin Ribao editor; Zhao Jiaming, Renmin Ribao reporter

stationed in DPRK; and Wang Linchang, Renmin Ribao reporter stationed in ROK: "Peace Process

in the Korean Peninsula--The Burden Is Heavy and the Road Is Long," Renmin Ribao, 22 December

1999, FBIS, December 25, 1999.

(16) The Korea Times, 10 December 1999, FBIS, 10 December 1999.

(17) For an interesting set of discussions on different scenarios of China's future, see China's Future:

Implications for US Interests, Conference Report, 24 September 1999, Library of Congress,

sponsored by the National Intelligence Council and Federal Research Division, Library of Congress,

CR 99-02, September 1999.

(18) See, for example, Condoleezza Rice, "Promoting the National Interest" and Robert B. Zoellick,

"A Republican Foreign Policy," Foreign Affairs, vol. 70, no.1, January-February 2000.

(19) Robert B. Zoellick, "A Republican Foreign Policy."

(20) "A National Security Strategy for a New Century," December 1999, The White House, released

on January 5, 2000, _ HYPERLINK "http://www.pub.whitehouse.gov" _www.pub.whitehouse.gov_.

(21) Condoleezza Rice termed China "a strategic competitor, not the 'strategic partner' the Clinton

administration once called it." She also criticized the "three no's" as a policy that tilted toward

Beijing and created uneasiness in Taiwan. Condoleezza Rice, "Promoting the National Interest."

(22) An unnamed senior PRC official in Washington was quoted as saying, "For its own defense

needs, if the United States wants to develop a [theater missile defense] system, that's its own

business. What we don't want to see is TMD covering Taiwan. That would... damage US-China . . .

relations." Steven Mufson, "Chinese Military Leader Objects to US Missile Sale to Taiwan," The

Washington Post, 27 January 2000.

(23) In the body of this paper, I will make frequent reference to a recent Potomac Associates survey

and analysis of the attitudes of Americans toward Asia and US policy/interests in the region,

Americans Look at Asia, A Potomac Associates Policy Perspective, by this writer. The study was

undertaken with a grant from the Henry Luce Foundation, with fieldwork carried out by Opinion

Dynamics Corporation, Cambridge, Mass. Copies of the full report are available upon request from

Potomac Associates.

(24) Members include Australia, Brunei, Canada, Chile, China, Indonesia, Japan, Malaysia, Mexico,

New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, South Korea, Taiwan,

Thailand, the United States, and Vietnam. It is headquartered in Singapore.

(25) For discussions of possible bubbles or bubblelike phenomena in US asset markets, see Miller,

Weller, and Zhang (1999) and Makin (2000).

(26) This is not inevitable--the US could experience a "soft landing." See Mann (1999).

(27) See Noland (1997).

(28) See Noland (1996).

(29) With regard to Japan, see Noland (1997). With regard to China, the vast majority of Chinese

exports to the US compete primarily with exports from other sources, not US domestic production

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(Noland, 1998). In particular, a removal of quota restrictions on Chinese textile and apparel trade

with the US could be expected to increase China's bilateral surplus with the US for the simple reason

that imports that are currently sourced from third countries, such as South Korea or Kenya, would in

the future come from China, reflecting a more rational locational pattern of production worldwide.

That is to say, even if the overall US trade balance remained unchanged, the pattern of bilateral

balances would change. The bilateral deficit with China would increase, and bilateral deficits

(surpluses) with other countries would decrease (increase) to offset this change.

(30) See Noland (1995) for more substantiation of this argument.

(31) Just the opposite: The developing countries believed that they had been taken to the cleaners

during the Uruguay Round, the previous round of negotiations, and were skeptical about taking on

further trade liberalization commitments. They were far better prepared to defend their interests in

these negotiations. Similarly, Asia was still recovering from its financial crisis, and policymakers

there believed they already had enough issues with which to grapple. Japan showed its lack of

interest in further trade liberalization by blocking the Early Voluntary Sectoral Liberalization effort

in the Asia Pacific Economic Cooperation forum (APEC). And in the US, President Clinton has been

unable to secure "fast-track" trade negotiating authority from the US Congress.

(32) In contrast, Thailand, the Philippines, Indonesia, and Malaysia are members of the Cairns Group

of self-identified, nonsubsidizing agricultural exporters, which generally takes positions similar to

that of the US in the agricultural trade negotiations. For a more detailed analysis of Asian countries'

positions on agricultural trade issues, see Noland (1999).

(33) These include the possible extensions of the 31 December 1999 deadline for developing

countries to implement WTO agreements on intellectual property, investment measures, and customs

valuation.

(34) See Noland (1998) and Bergsten (2000a) for more on the PNTR issue.

(35) In his January 2000 State of the Union address, President Clinton indicated that he would like to

a vote on PNTR this year, and Republican Congressional leaders voiced mild support for this

initiative. However, China has yet to reach a bilateral accession agreement with the EU. Once the

bilateral agreements are complete, observers expect the WTO secretariat to take about six months to

compile the various bilateral accords into a single accession protocol. Given the US electoral

calendar and the relatively short Congressional session, it is unlikely that the Congress could vote on

PNTR this year--if it waits for the Chinese WTO accession protocol to be completed. The Congress

could, however, vote on PNTR before the WTO process is complete, presumably on the basis on the

US-China bilateral agreement.

(36) ASEAN was founded in 1967 as a Cold War response to the war in Indochina. In 1992 it began

talks leading to the creation of AFTA. The original members were Singapore, Indonesia, Thailand,

Malaysia, and the Philippines. Brunei joined in 1984. Ironically, Vietnam joined in 1995 and was

followed by Laos (1997), Myanmar (1997), and Cambodia (1999). ASEAN initially attempted

regional industrial ventures that failed; in 1978 it put into place a preferential trade agreement (10 to

15 percent preference margin on designated items). A free-trade agreement was discussed, but

rejected, at the time. The impact of the policy was insignificant. Important items were excluded, and,

in one infamous case, Indonesia granted its partners a preference on snow removal equipment. A

decade after the deal, it covered less than 3 percent of actual trade.

(37) See Frankel (1997).

(38) Many in Asia regard the IMF as a front for the US Government, and do not distinguish between

the actions and positions of the two entities. In part this reflects ignorance, but in part it is an

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understandable response to the predominate influence the US wields in the Fund, and the fact that in

the case of South Korea, the Fund program conditionality included items of direct mercantilist

interest to the US, which were of questionable relevance to the financial crisis.

(39) The US participated in the "second line of defense" associated with the second IMF program in

Thailand. However, even this participation was purely symbolic inasmuch as the US Treasury fought

the actual use of "second line" funds and has never disbursed a dime.

(40) To cite but one example, Joseph E. Stiglitz, at the time the chief economist of the World Bank,

contemporaneously put forward serious criticisms of the IMF programs. See Stiglitz (1998, 1999).

(41) In the interest of brevity, these statements blur distinctions among Asian countries. In Indonesia,

in particular, some segments of the society actually welcomed the IMF, which was regarded as less

cozy with the Suharto regime than was the World Bank. At the other extreme, a widespread view in

South Korea is that the IMF program was a deliberate attempt to subvert the South Korean economy,

which was believed to pose a threat to the US in sectors such as automobiles.

(42) Frankly, the US position is unclear on this point. Some have interpreted this ambiguity as

reflecting a desire by the Clinton administration, in general, and the Treasury, in particular, to preempt the strongly market-oriented critique expected from the Congressionally-appointed

International Financial Institutions Advisory Commission (known colloquially as the Meltzer

Commission after its chair, Professor Allen Meltzer), while at the same time preserving support from

Congressional members concerned with labor, human rights, etc.

(43) The traditional quota constraint on borrowing was bent for Mexico in 1994 under US pressure,

and was broken dramatically during the Asian crisis, when South Korea was permitted to borrow

nearly 20 times its quota.

(44) Indeed, the problem with quota reallocation would not be giving Asia a greater share, it would

be how to reduce the European share while preserving the historical prerogatives of individual

countries. Simply treating the EU (or, alternatively, the ECB members) as a single member could

result in the European quota exceeding that of the US. This situation would not only be unacceptable

to the US on diplomatic grounds, but it would also require moving the IMF and the World Bank

headquarters to Brussels (which no one wants), since the charter states that the organizations'

headquarters must be located in the capital of the largest member.

(45) To cite a mild example, while in the midst of "campaigning" for the job, Sakakibara publicly

blasted, Masaru Hayami, Governor of the Bank of Japan, as "incompetent" and called for Hayami's

resignation. Sakakibara would presumably need the Bank of Japan's support to get the managing

director position. Some have speculated that Sakakibara's ultimate goal is Hayami's job, not

Camdessus's.

(46) The problem for Japan is that there is no other Asian country able to provide major support for a

Japanese candidacy at the IMF in exchange for Japanese support in the ADB.

(47) Author's calculations based on IEA forecast, EIA, and Fereidum Fesharaki of the East West

Center (1998).

(48) US DOE, Energy Information Agency, International Energy Outlook, 1999. p.141

(49) See "China's National Defense," Beijing: State Council of the People's Republic of China.

(50) See Sherman Garnett's study of Sino-Russian relations, "Limited Partnership," Carnegie

Endowment for International Peace, Washington, DC, 1998, for a full discussion of the bilateral

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relationship.

(51) See BBC Summary of World Broadcasts, "China and Malaysia sign Joint Statement for Future

Cooperation", June 2, 1999.

(52) See Ronald Montaperto, "Reality Check: Assessing the Chinese Military Threat," Defense

Working Group paper No. 4, PPI, April 1998, for a sober view. Also the US Deptartment of Defense

Report to Congress, "China: Future Military Capabilities and Strategy," Washington, DC 1998.

(53) See James E. Auer, "Japan's Military Capability in 2015," SAIS Policy Forum, December 1998

for a full discussion of Japan's military capacity and approach to security.

(54) See Japan-Republic of Korea Joint Declaration; Tokyo, Japanese Foreign Ministry, 8 October

1998.

(55) See Moscow Declaration, Japanese Ministry of Foreign Affairs; November 1998.

(56) See Foreign Broadcast Information Service (FBIS) Special Memorandum, "South Korea's

Emerging Nuclear Potential," 22 February 1996 for a sampling of views among the Korean

intelligentsia.

(57) Remarks to Council on Foreign Relations Task Force, Seoul, May 1998, Remarks to Council on

Foreign Relations Task Force, Seoul, May 1998.

(58) See Robert A. Manning "Will The Koreas Play the China Card?" The International Economy,

March/April 1997, for a discussion of these potential alignments.

NIC Publications

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