Tuesday, August 9, 2016

Does TPP matter? Does Singapore matter?

During his recent trip to the US, Singapore Prime Minister Lee Hsien Loong, along with US President Barack Obama, made a joint pitch for the ratification of Trans-Pacific Partnership (TPP) trade agreement. However, the hope that the TTP would form the foundation of a robust and prosperous East Asian security regime centered on economic integration and positive US engagement is fading as China has chosen to react to The Hague ruling by unilaterally redefining its role in East Asia in opposition to the security and economic regime the US is seeking to reinforce.

To paraphrase Sherlock Holmes, the most interesting question at the joint press conference conducted by Singapore Prime Minister Lee Hsien Loong and Barack Obama in Washington on August 2 was The Question That Wasn’t Asked.

The presser was noteworthy for President Obama’s full-spectrum denunciation of Donald Trump as “unfit”, and a lot of eye-glazing gabble about the TPP, which we’ll get to later.

But not a single remark from the headmen — and not a single question from the apparently obedient press corps — about the hot-button issue du jour, the UNCLOS arbitration commission’s sweeping repudiation of the PRC’s (China’s) nine-dash-line claims in the South China Sea…and the PRC’s categorical repudiation of the repudiation.

As I discussed previously, the ruling leaves no “offramps”, in other words no room for engagement with the PRC on the issues under dispute, and every indication to date is that the PRC has decided not to capitulate.  Instead, it will treat the South China Sea not just as a frozen conflict, but one that it can and must be ready to heat up and bring to a boil as necessary in order to protect and assert its regional power status.

Faced with this unpromising state of affairs, it would appear that President Obama has made the decision not to roil the remainder of his presidency — which will feature a farewell appearance at the G20 summit in September in Hangzhou hosted by the PRC — by leading a global coalition of the indignant to demand the PRC respect the ruling.

In other words, it will be up to anticipated successor Hillary Clinton to start as well as finish any high-profile ruckus over the South China Sea.

The PRC is also exploiting President Obama’s lame duck status and aversion to rocking the boat by ratcheting up the rhetoric in Asia.  As part of its “not yielding an inch” posture, it engaged in bellicose fulminations against Australia and South Korea, sent its massive fishing fleet into the South China Sea, and is going to conduct a joint Russo-Sino naval exercise down there.

One intention, I think, is to limit Hillary Clinton’s escalation options when she gets to the White House to the prospect of an imminent direct clash between the PRC and the US.

The PRC has prepped its doctrine, diplomacy, and public posture to make it clear it is ready to play chicken with the United States and is not going to back down if an actual confrontation occurs.

Since the Pentagon’s comforting assumption has always been that the PRC is a paper dragon that will reliably fold up into a worm at the first whiff of gunpowder, this might make for some interesting times in the first years of the Clinton presidency.

But more importantly, I think, is the signaling that the PRC has decided not to fear the dynamic of “security polarization” which lies at the heart of the pivot strategy, a virtuous (to the US) cycle by which the PRC response to the US containment strategy spooks the herd, causing anxious smaller nations in the region to strengthen their military ties to the United States.

PRC message: we can’t fear the pivot; we won’t be cowed by the ruling; and we can live with a heightened level of security antagonism with the United States and our neighbors.

Putting it another way, military friction is a cost of doing business and when it comes to its Asian bailiwick, the PRC is all business.

And it’s not just a question of military posturing.

The PRC’s ban on Korean K-pop bands in the wake of the THAAD decision elicited the usual Western sniggering.  But it’s a signal that the PRC is willing to bear — and inflict — the economic costs of polarization as well.

That’s an awkward issue for the United States and a major headache for Lee Hsien Loong and Singapore, one that he was loath to discuss at the press conference.

If the US imposes an expensively polarizing security/containment regime on Asia without a compensating economic strategy, the pivot is built on a foundation of sand.

A purely military containment strategy worked against the USSR since the Soviet Union and its satellites formed an inward-looking economic autarchy, and Western Europe inevitably looked to the US and its massive economy as its only option for economic integration.

Not so in Asia.  The PRC under Deng Xiaoping made the decision to eschew the autarchy model and embed China in the world and regional economy.

To bid for the loyalty of ASEAN, the United States has to come up with something that matches or approaches the PRC as an engine of economic growth.

The US can’t do it alone.  Over the next decades, its share of the world economy is expected to dwindle to about 25% from a post-World War II high of 50%.  That means somebody else has to pick up the slack.

The great US hope, of course, is Japan, and Prime Minister Abe is doing his best to roll back PRC gains in Asia and resurrect the World War II model of Japanese economic penetration in places like Taiwan, the Philippines, Vietnam, Indonesia, Thailand and Burma.

The patience that the US and the western financial world have displayed with Japanese fiscal policy, its gigantic debt mountain, and the farce of Abenomics is, I think, a sign of a desire to give Japan every conceivable chance to claim economic leadership of maritime Asia.

If the Japanese effort falls short, which is quite possible given its fiscal woes and aging population, there’s India.  And, if Singapore has its way, TPP.

Which brings us back to the Lee/Obama press conference…and TPP.

Singapore occupies a special place in the hearts of American strategists.  It’s a technocratically run state of bureaucrats, commissions, and think tanks filled with people in suits who talk the language of Beltway bafflegab.

President Obama characterized Singapore as often “the only grown-up in the room,” a statement that perhaps did not particularly enchant the putatively immature leaders of Indonesia, Malaysia, Thailand, the Philippines, the PRC et. al. but probably accurately reflected the US relief that at least somebody in Asia is ready to engage with the United States on the terms that it’s comfortable with.

Singapore relishes this role, and also its role and leverage as the perceived honest broker between the PRC and the United States.  And it also serves as the keeper of the flame of TPP, a regional trade bloc originally conceptualized by Singapore, and a symbol for Singapore and ASEAN of the importance of East Asian economic integration as the focus of US engagement with the region.

The message that Prime Minister Lee and Singapore have consistently advanced during the “pivot” years is that the pivot can’t just be military.  It has to deliver advantages that compensate for any drag on regional growth resulting from ASEAN-China estrangement.

Singapore characterizes TPP as the key signal that the “pivot” is more than a cynical ploy to find a new, ego-boosting mission for the Pentagon and a distracting overseas adversary for the US civilian leadership, fatten the bottom line of defense contractors, and burden the region with the inflated arms expenditures and corruption of domestic politics and governance that go hand in hand with front-line membership in a US military alliance.

As Lee presented it, therefore, TPP is central to the credibility of the pivot.  If the US doesn’t ratify TPP, it’s a sign it doesn’t care about Asia — or Singapore; it only cares about Lockheed and the E-Ring.

I believe Lee’s full-court press on behalf of TPP during his recent trip to Washington was an attempt to assert the shaky “centrality” of ASEAN, the importance of economic arguments, and the relevance of Singapore.

Fact is, TPP is not going to happen during Obama’s term; the expectation is that as soon as the populist follies of the US presidential election are in the rear-view mirror, President Clinton and her business allies will make sure that the TPP gets done.  Whether TPP does much more than deliver a zero-sum payday to global corporations remains to be seen.

In addition to delivering his plea to a largely indifferent lame-duck audience, Lee oversold his case somewhat by raising the dire prospect that Japan might become a declared nuclear power (thereby cratering the US security architecture in Asia) if TPP fell through (at the 48:00 mark) :

“Mr. Abe…decided to commit [to TPP]…[not ratifying TPP] hurts your relationship with Japan, your security agreement with Japan, and the Japanese living in an uncertain world under the American nuclear umbrella will have to say on trade the Americans could not follow through, if it’s life and death whom do I have to depend upon?  It is an absolutely serious calculation which will not be said openly but I have no doubt it will be thought.”

With all due respect to Prime Minister Lee, I suspect that whenever Japan decides to waive its magic wand over its plutonium, nuclear science, and rocketry assets and convert them into an announced nuclear weapons capability, any TPP-related disappointment will be a secondary factor.

Milsec considerations are becoming paramount in the calculations of the powers that matter and the economics-centric Singapore model for Asia—and Singapore’s role—is under threat.

The hope that the TTP would form the foundation of a robust and prosperous East Asian security regime centered on economic integration and positive US engagement is fading now that it’s clear that the PRC has chosen to react to The Hague ruling by unilaterally redefining its role in East Asia in opposition to the security and economic regime the US is seeking to reinforce.

Now, with hawks in the saddle, militarization galloping along, and economic retaliation in the offing, the real questions are Does TPP matter?  Does Singapore (and its self-assumed role of balancer between the US and China) matter?

When those questions get asked, Singapore might not like the answer.

Peter Lee runs the China Matters blog. He writes on the intersection of US policy with Asian and world affairs.

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