Thursday, November 8, 2012

Indonesia and The Big US Pivot

 Barack Obama re-elected as president of the United States of America. However, for Southeast Asia, that result is relatively unimportant.

It never would have mattered to the region who won the US election because US policy in the Asia-Pacific has already been reconfigured.

After a decade-long obsession with Iraq and Afghanistan, the United States is facing eastward. In essence, Washington has acknowledged Asia’s economic and political centrality. The move has been dubbed the “pivot” as a steady shift toward Asia (and the “containment” of China) becomes deeply-institutionalized in Beltway thinking.

Another, little-known development is accelerating this shift. America, after decades of being a net energy importer is emerging as an exporter. This trend — driven by the shale gas revolution — will reshape the way Americans view the world.

America has huge shale gas reserves (about 860 trillion cubic feet). The Economist magazine, in July, estimated that shale gas currently contributes one-third of America’s gas supply, and by 2035 this could rise to 50 percent. This could create three million jobs in the United States by 2020.

There’s also the possibility — controversial and hotly-debated — that America might start exporting its LNG surplus, generating, says the New York Times, $3 billion per year for its economy.

It’s hard to imagine how an energy-independent America will behave. An influx of US LNG imports could strengthen its influence on countries like Japan (which is trying to step away from nuclear power) and radically upend energy markets, including Southeast Asia’s.

Indonesia’s coal will be less sought after. Also, the region’s large, costly LNG facilities may experience a drop in profitability as long-term contracts lose attractiveness.

Ironically, America’s newfound energy independence is contrasted by China’s increasing energy hunger.

In July, Beijing imported 81.09 million tons of coal (up 70.6 percent year-on-year), 30.2 million tons of crude oil (up 30.2 percent) and 4.08 million tons of LNG (up 100.2 percent) in the first half of 2012 alone.

Imagine a super-power that views its energy security with mounting paranoia: watching developments in the South China Sea, the Straits of Malacca and Myanmar as a series of deliberate moves to limit its reach.

So while the US elections won’t directly impact us, Southeast Asians are going to have to get used to being an important geopolitical stage.

For starters our uneventful Asean meetings (durian-fests, golf, silk batiks and bad karaoke) will become argumentative, testing all of us.

What happened at the Asean Foreign Ministers meeting in Phnom Penh when the hosts refused to sign off on a joint communique will become a regular occurrence as a great-power rivalry courses its way through our association.

Having said this, the region was barely featured during the actual campaign. The final Obama-Romney debate on foreign policy was merely a set piece of China saber-rattling.

Still, Obama’s “pivot” toward Asia and Romney’s talk of a “Reagan Economic Zone” of “free trade” oriented nations to combat China’s influence underlines that the shift is bipartisan.

Of course, all of this comes as no surprise. We all know that economic gravity is shifting to Asia, which in turn will also boost the strategic importance of Southeast Asia.

So like it or not, Southeast Asia is going to be on America’s foreign policy radar as anywhere else.

Let’s not forget that China will also have a new leadership in place by then, fronted by that princeling extraordinaire Xi Jinping.

As I said earlier, Southeast Asia is likely to be at the front lines of the next global contest for supremacy. Let’s hope we’ll be able to cope with all of the attention.

Karim Raslan is a columnist who divides his time between Indonesia and Malaysia.

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