East Asian Multilateralism: Prospects for Regional Stability

April 22, 2008

SPEAKERS
Kent E. Calder, Edwin O. Reischauer Professor and Director of the Edwin O. Reischauer Center for East Asian Studies, Paul H. Nitze School of Advanced International Studies, Johns Hopkins University
Francis Fukuyama, Bernard L. Schwartz Professor of International Political Economy and Director of the International Development Program, Paul H. Nitze School of Advanced International Studies, Johns Hopkins University

MODERATOR
Gideon Rose, Managing Editor, Foreign Affairs

Professors Kent Calder and Francis Fukuyama of the School of Advanced International Studies at Johns Hopkins shared their ideas on the history and future of multilateralism in East Asia and discussed their book, East Asian Multilateralism: Prospects for Regional Stability, a collection of essays published this spring by Johns Hopkins University Press.

We start with institutions that are underdeveloped, "what we call the organization gap in East Asia," said Dr. Calder. With Northeast Asia accounting for over 20 percent of global GDP, the lack of cohesion in the region has profound geopolitical effects, making it easier for the U.S. to retain its global preeminence but harder for the nations of the world to coordinate on important issues of energy, the environment and perhaps most conspicuously, finance.

As is "virtually inevitable," Dr. Calder observed, geopolitical changes have altered the context of the San Francisco system, the hub and spoke system set up as individual security treaties were adopted after World War II ended: Washington with Japan, Washington with Korea, and those no longer in effect, with Taipei, with Vietnam, and with the Philippines, among others; and with East Asia moving toward alternative structures, there arise "rather subtle but tremendously dangerous potential problems in the transitions."

The inspiration for the hub and spoke system came from John Foster Dulles, U.S. senior adviser to the talks that led to the peace treaty with Japan, Dr. Calder said. "Essentially Dulles--it's remarkable how the current structure of East Asia really still bears the hand of John Foster Dulles in the San Francisco Peace Treaty of September 1951."

Dulles had been at Versailles and had seen first-hand the imposition of the harsh 1919 peace, and then the collapse of Weimar Germany, "and so in his mind as he approached San Francisco, the question is how do we bind Japan to the United States on the one hand, but also how do we assure that somehow it will be stable, that it won't be a rolling cannon in Asia and that it won't rearm and disturb the peace of the Pacific once again?"

Thus the treaty "was tremendously beneficial to Japan, so much so that it was mainly Latin American nations that ratified it," and Japan's major neighbors "either weren't present or, like the Philippines, they didn't agree to the provisions," he said. Japan was not required to pay reparations, nor was it divided into zones as Germany had been; and the security treaty gave Japan favorable access to the U.S. market for its goods.

International economic trends, including China's rise and the growth of new networks built up since the Asian financial crisis, are creating "a more coherent and informal East Asia," Dr. Calder said. Global capital markets, along with the WTO and other institutions, serve to some extent as an anchor for the region, yet with the shift "from a bilateralist hub and spoke system to a system of multilateralism patterned after the Six-Party Talks, roughly speaking," there are risks to stability and in particular to the position of Japan in the region. If a pure multilateral system is not strong enough to deter North Korea from developing nuclear weapons, for example, the concern is "that that could easily lead to accelerated rearmament in Japan, perhaps more nationalism, possibly to a nuclear Japan."

"This isn't necessarily a plea for Japan retaining the same advantages that it has had built into the system, but it is a plea for being sensitive to the transition problems that Japan will have," he said.

Historically, new structures are born out of crisis, Dr. Calder concluded--the hub and spoke system out of the Korean War, and the Chiang Mai initiative and eventually the East Asia Summit out of the Asian financial crisis of 1997. The hope is that a more coherent East Asian multilateralism can be constructed not as reaction to an emergency but with foresight and systematic planning.

"Thinking about institutional structures in Asia has actually not figured into much of American foreign policy," Dr. Fukuyama said. "Over the last seven years, I would say that the Bush administration's policy towards this region has not been bad. If they get an F for Iraq, they probably get like a B/B+ for their policy towards Asia."

"They ended up being fairly pragmatic, largely because they were so preoccupied with terrorism in the Middle East that they didn't actually have time to think about a grand strategy towards the region and then kind of stumbled into things like the Six-Party Talks framework." For the next administration, however, Asian institutional structures "will be the major choices that will be faced."

The Bush administration's East Asian policy "had all of the virtues and the defects of pure concept-less pragmatism," Dr. Fukuyama said. "On the one hand they didn't try to impose a particular ideological model on the reality of the region, and actually adjusted in a fairly realistic way to the different pressures they were feeling. But on the other hand there was really almost a decided rejection of the need to build institutions."

In 1989 when Malaysian Prime Minister Mahathir Muhammed proposed an East Asian Economic Caucus, Dr. Fukuyama was working at the State Department, "and I remember very well Jim Baker saying absolutely no way are we going to let this thing go forward, because there can't be any kind of multilateral structure in Asia that did not include the U.S. The U.S. is a Pacific power."

With the Asian financial crisis nearly a decade later there was likewise a divergence of perspectives, and "I still think people don't quite understand what happened there," he said. "If you ask American policy makers what was the cause of the Asian crisis they will say crony capitalism, bad corporate governance--all these mistakes on the part of Asian policymakers. If you ask Asians what was the cause of their crisis or what made the crisis worse, they would say basically it was the IMF and Washington trying to use our difficulties to force open local capital markets.

"And so to this day the Thais are still extremely upset that we bailed out Mexico, but we did nothing to help them after their having been a loyal ally for all of those years in Korea. This crisis is not referred to as the Asian economic crisis, it's referred to as the IMF crisis."

This gave psychological impetus to efforts on the part of Asian countries to work out structures that did not necessarily include the U.S., Dr. Fukuyama continued. "And of course that's the beginning of all the structural imbalances in the global economy, because nobody at that point wanted to rely on the IMF anymore, and so everybody started accumulating reserves of U.S. dollars so that they could weather the next currency crisis, and they started to undervalue their exchange rates and pile up dollar reserves; and now we're in the midst of the big unwinding of all of that."

The posture of the Bush administration towards Asian regionalism has been negative, as indeed was that of the Clinton administration, he said, but the Bush response has lacked clarity: The State Department, as reflected in Bob Zoellick's "stakeholder" speech, focused on drawing China into the international system, whereas the Pentagon under Rumsfeld was eager to reinvigorate the bilateral structures and indeed to create a new hub and spoke relationship between Washington and Beijing.

The Bush administration "wanted to refocus American policy on Japan rather than making China a strategic partner, and I think that was actually a very wise decision," Dr. Fukuyama commented. "But in a certain sense there was never a clear decision on how we regarded the rise of Asian institutions that did not include the U.S. and whether there was a form of that that we could live with or whether, like Baker, we wanted to scupper anything that came down the road."

In Dr. Fukuyama's view, the central question is not economic integration in Asia, but how to deal with the rise of China. Whatever the resolution, he added, it is essential that the U.S.-Japan security alliance be maintained.

Popular among U.S. neoconservatives is the idea of a NATO-type democratic alliance focused against China; this has received some enthusiastic support in Japan, but it "has no chance of flying anywhere," he said.

Another notion is to revive hub and spoke relationships where "all the points of the spokes are now countries around China that have some potential problem with China, like India, Mongolia, Singapore and so forth," he said. Japan has been "trying to join the points in the spokes to each other, so doing deals with Australia and with India and so forth," to yield "a kind of virtual multilateral construct created out of a lot of little bilateral agreements."

One problem with this is that the greatest support for a revived hub and spoke system in Japan has come from the extreme nationalist right, he pointed out; "since a lot of that right is pretty unapologetic about the Pacific War and a lot of other historical issues, if you try to build a security structure based on that you are going to drive away not just China and Korea, but virtually all of ASEAN."

Still other ideas involve building on structures such as the East Asian Summit or ASEAN Plus Three, so as to include China; here, he said, " the big question is does the U.S. have to join itself or can we trust Asia to organize itself without the U.S., and is that actually a good thing from the American perspective."

Finally, as Dr. Fukuyama wrote in a 2005 Foreign Affairs article, "not just me, but a lot of other people had this same brilliant light bulb go off, that since we've stumbled into this Six-Party Talks framework for dealing with the North Korean nuclear question," it might be possible to make this a permanent structure, something like the OSCE during the Cold War, where NATO and Warsaw Pact countries joined with the USSR "to build confidence and create certain kinds of channels." Although such an organization "could not deal with containing China if China ever became an aggressive military threat," it could handle support and reconstruction efforts in the event of a collapse in North Korea, he said.

If Japan were to embrace ASEAN Plus Three or something similar "as a means of reassuring its Asian neighbors that it actually wanted to be an Asian power," such a move could not succeed without some real confrontation within Japan of the historical issues that burden Japan's relationship with China, Dr. Fukuyama concluded. He cited the work of Kazuhiko Togo, author of one of the essays collected in the Calder-Fukuyama book.

"Togo actually has been doing some quite interesting stuff himself on the comfort women issue, and since his grandfather was one of the 14 class A war criminals, he has a very direct stake in how this issue is handled. But his feeling was that partly as a result of this 1951 agreement Japan just basically decided to stop talking about this and they said we'll accept the outcomes of the War Crimes Trials and that's it, we're not going to deal further with this set of issues. And so I think if you are really going to this kind of a Japanese integration into a larger Asian structure to work, it has to be based on the Japanese themselves somehow dealing with that issue in their internal politics."

***

Moderator Gideon Rose of Foreign Affairs began the Q&A:

In terms of the relationship among bilateral, regional and global institutions, does progress for one type come at the expense of the others?

"Broadly, it's a win-win if one has some of each," replied Dr. Calder. The presence of the WTO makes the emergence of ASEAN Plus 3 without the U.S. less dangerous, and a strong bilateral alliance between the U.S. and Japan, an alliance based on broader cultural factors as well as security, is a necessary correlate to Japan's connections within Asia.

If China's political development turns out well, does that mean everything in Asia will go well, and vice versa?

"Just being a democracy won't be enough. And China won't be a democracy soon," Dr. Fukuyama said, which "leaves us with institutions"; although one can hope that China's being part of an institution will help keep the peace, there's no certainty on this.

Do you look forward to the next five, 10, 20 years?

Dr. Calder responded, "If the U.S.-Japan alliance remains firm as a shock absorber for this transition" from hub and spoke to multilateralism, "I guess I'm optimistic." However, "if we really don't think about the problem of Japanese security and the solution of the nuclear issue, for example, then there is a good chance of moving toward a nuclear Japan, and then I'm pessimistic."

"On the question of China and its future, I'm pessimistic in the short run," Dr. Fukuyama said. "But I'm actually optimistic in the longer run."

With democratization, "what the middle class worries about, quite rightly," is whether expanding the political power of those at the bottom will mean "this big explosion of demands for redistribution" of their recent gains, he said.

"This may sound too economically deterministic, but there is a certain logic to it, that Taiwan and Korea both democratized when they were roughly at $8,000 in parity purchasing power terms," meaning largely urban and industrial with a relatively small agricultural sector. China is only about half way there, Dr. Fukuyama said.

He added, "I think China may be the first country that ever democratizes over environmental issues. They are poisoning themselves to death quite literally because they do not have a government that can protect them from developers and greedy local governments and so forth, and so they don't have these feedback mechanisms. Democracy is the only thing that's actually going to solve that particular set of problems."

The audience joined in:

Recently it's been reported that piracy in the Straits of Malacca has dropped enormously. How did that come about?

"I think it's important both to appreciate and not to over-exaggerate the nature of the issue," commented Dr. Calder. China didn't import energy at all until the mid 1990s, but now the sea lanes to the Gulf are becoming more and more important and their defense "is an important form of leverage to keep China moderate." However, the number of ships being attacked "is not necessarily so large."

Dennis Blair and Kenneth Lieberthal wrote last year in Foreign Affairs that "a lot of the discussion about that is overblown a little bit in naval budgeting requests," agreed Dr. Fukuyama.

What realistically might we expect to see in terms of the specifics on a new East Asia structure?

Dr. Calder responded, "I don't see that it's exclusive between ASEAN and narrower organizations" that are sector specific, particularly in finance, where there's the possibility of building on the swap agreement that began with Chiang Mai, and also in energy, where Japan has provided technical information on energy stockpiles.

"On the conversion of the Six-Party Talks to a permanent organization, I think that the Chinese have not been enthusiastic," Dr. Fukuyama said. "And of course the North Koreans would go crazy if this idea didn't include them, and I would go crazy if it did include them. So, you've got two major stumbling blocks there."

To the extent that we in the U.S. "take seriously the need to create some of this, we start talking about it and pushing our friends and allies in that direction, that's going to have some impact. And up till now we just haven't had a policy. We don't even know ourselves what kind of an Asia we really want," he added.

Is the need for resources, China's need and everybody else's, going to drive an increasingly protectionist and nationalistic approach, almost like a mercantilism?

"I don't see such an inflexible shortage of global resources, even though I have argued for a long time that resource issues have a geopolitical cast, which I think has been borne out in what we have seen in the last five years," Dr. Calder said. Corporations drive a lot of this, and they "think pragmatically in terms of getting the resources out, I think, rather than nationalistically."

When it comes to food prices, however, "everybody has been doing exactly the opposite of what they should be doing," commented Dr. Fukuyama. "They've all been trying to ban exports of food, and then basically the whole international trade in food seizes up and things actually get more scarce. And that is a classic case where you actually need some institutions to try to create some rules."

How does China view North Korea?

"They sometimes say that they are happy with the notion of a unified Korea. I'm a little skeptical of that still. So, some kind of a buffer against a Seoul that is becoming more dynamic, I think," responded Dr. Calder.

Dr. Fukuyama said, "I do think that there is a really unexplained part of Chinese behavior in all of this," in that private furor over the nuclear test "never leads to much serious pressure in the Six-Party Talks context."

How is the Korean problem going to end, and when?

Enclaves like the Kaesong Special Economic Zone could serve as "a halfway house" for some period, Dr. Calder said; "I guess I would say that the critical juncture really would be the passing of Kim Jong-il."

"I do have this general sense it's either going to be status quo or it's going to be a big collapse," and not a soft landing, Dr. Fukuyama responded. "I do think that the moment they relax, then--boom, it's all just going to collapse like a house of cards."

Will existing institutions be able to coordinate an appropriate response?

"Well, that's why I think it would be nice to have that organization before the collapse happens," Dr. Fukuyama said.

In a conversation in the mid 1990s, Japanese military officers pointed out to him that if North and South Korea were unified, their combined army "would be roughly 10 times the size of the Japanese Self Defense Forces," he said, and questions have been raised in Japan as to whether South Korea has been cozying up to the North in hopes of inheriting a North Korean nuclear weapon. Suspicions of this kind could be eased given an institutionalized framework where members had to lay their cards on the table, "something like what happens in NATO where all the defense chiefs have an annual meeting and everybody is forced to say under the following circumstances what is your defense budget going to look like."

Because of arms control and balanced reduction of forces issues, such a framework would have to have the U.S. behind it, Dr. Calder commented.

Do you see a role for the UN in East Asia?

Dr. Fukuyama did not, but Dr. Calder said he could see auxiliary agencies involved on soft security issues like refugees, and even on hard issues if Japan were to gain permanent Security Council membership.

At a Senate hearing a few weeks ago Admiral Keating said that a Chinese admiral proposed the idea that the U.S. control the eastern Pacific and China controlled the western Pacific, and Admiral Keating wasn't sure whether the Chinese admiral was joking or not. Could you comment?

The Chinese military "is clearly pushing the boundaries of acceptable behavior and they are feeling their oats with regard to their technological capabilities, and so I think the United States shouldn't kid itself that we're in a collaborative arrangement," Dr. Fukuyama said.

"It's both carrots and sticks, and so it's not simply offering them partnership and so forth. It's also calling them to account."

"The whole thrust I think of everything we're saying here about an interdependent Pacific and so on, weaving a net, if you will, is to reject the idea of spheres of influence... That's sort of Stalin and Roosevelt in 1945, and it wasn't appropriate then either," Dr. Calder said.

I hear nothing about India and the rise of India, which is sort of quietly perking along at 8 percent or 9 growth per year. Is it because the State Department has got South Asia over there and East Asia here?

Dr. Fukuyama said that India won't be roped into any kind of anti-China alliance, despite the Bush administration's efforts to that end, but will "be a big counterweight to China, regardless of any of these architectural schemes." And Dr. Calder observed, "We do feel that there is more integration and more cohesion within the classical East Asian nations, but there is a broader entity that is also emerging partly precisely because East Asia itself is becoming so integrated. It's more attractive as a market, it's growing and it's drawing in countries like India."

--Katherine Hyde