Wednesday, September 14, 2016

The real reason Brexit could influence East Asia’s ‘great game’

East Asia is an extremely diverse region, not known to easily agree on many things. But nobody thought that the consequences, in particular the economic consequences, of Brexit could be anything but bad: bad for Britain, bad for the EU as a whole, and bad for the world.

Official statements from, among others, China, Japan, the United States, Australia and India – and the last three are in a political sense East Asian countries, members of the East Asian Summit – displayed a rare unanimity in urging Britain to opt to Remain.

East Asia’s unanimity on Brexit should come as no surprise because the most salient common characteristic of East Asia has been, and remains, the region’s focus on economic development. It was inconceivable that a country should voluntarily roll the dice with such an economically advantageous arrangement at stake. But what the referendum made clear is that emotion trumps economic logic.

So where does this leave the European Union and Britain in East Asia? First of all, there has undoubtedly been reputational damage both to the EU as a whole and to Britain. It will take some time to recover from this. At present, what stands out from Brexit is the failure of political leaderships on both sides of the English Channel.

Brexit has given democracy a bad name. The events leading up to Brexit illustrate that any good idea taken to extremes – in this case, democracy as it has it has evolved in the West since the late 20th century ­– becomes self-subverting or a caricature. Europe is not unique in this respect, only an advanced case of a global disease. Much the same phenomenon has developed on the other side of the Atlantic and in East Asia.

Elected politicians were so convinced of the intrinsic correctness and grandeur of their vision of Europe, that they pursued it regardless of the wishes of substantial numbers of their electorates. If the people were too dim to grasp what was so self-evidently correct to the superior minds of their betters, more fool they; a paternalistic rather than a democratic attitude. This is an attitude that Europeans have often attributed to East Asian political systems but over which we hold no monopoly.


In so far as Brexit has added to global economic uncertainty, everyone suffers. But the immediate economic impact of Brexit on East Asia will not be overly great, particularly in trade. The EU is an important trading partner of all major East Asian economies and it will remain an important trading partner. In any case, the EU is something of an abstraction in trade terms. For Singapore, most of its trade with the EU is with only four countries – in order of magnitude: Germany, France, the Netherlands and Britain. Trade with the other members is insignificant. As a percentage of its global trade, Britain hovers at around 1.3 per cent – not to be sneezed at but not that much either.

Brexit will of course still have some immediate effect on East Asia – the intensity will vary from country to country – but we can ride it. The Asian Development Bank has assessed that Brexit will not significantly affect East Asia’s immediate growth outlook. But what the long-term economic consequences of Brexit will be, nobody can tell at present.

The immediate geopolitical impact of Brexit on East Asia will be insignificant simply because the EU plays no significant geopolitical role in East Asia. The key strategic issue in East Asia are the adjustments that are underway in US-China relations as they grope for a new modus vivendi between themselves and other countries in our region. In this new ‘great game’ the EU is irrelevant, at best a voice off-stage: not harmful, perhaps occasionally even somewhat helpful, but by no stretch of the imagination in any decisive way contributing to the action onstage. The residue of the colonial past gives Britain and France independent bit parts, but only decorative roles. This situation will not substantially change.

The pretence of a ‘Common Foreign and Security Policy’ is a further handicap to any coherent EU approach to East Asia. Who really believes in it? Very few, if any, in East Asia and few even in Europe, methinks.

But there is perhaps another long-term strategic consequence of Brexit that could indirectly and unintentionally influence the East Asian great game. It was best expressed by Gideon Rachman of the Financial Times.

“For the US,” he wrote, “the EU represents the second wing of the West and a crucial pillar of the liberal international order. If that pillar begins to wobble and crack, the West as a whole will find it harder to act cohesively. … The UK government has consistently been a voice for liberal economics within Europe; without Britain at the table, the EU is much more likely to move towards protectionism.”

The point should not be exaggerated. The liberal international order may show signs of fraying at its edges but is mainly intact. Who can challenge it? Who wants to challenge it? Russia may want to but doesn’t have the power. China has the power or will soon have the power. But China has been one of the chief beneficiaries of the liberal international order and while it may not love an order it considers, not inaccurately, as heir to that which was responsible for what every Chinese schoolchild knows as ‘a hundred years of humiliation’, Beijing has no strong incentive to kick over the table.

On a global scale, China is not a revisionist power. But there’s no doubt that China wants to reclaim something of its historical centrality in East Asia. In this region, China is revanchist, as its actions in the East and South China Seas demonstrate.

Beijing is not irrational. It does not want war with the US or any of its allies because war will place its most vital interest – Communist Party rule – in jeopardy. America will not entirely disappear from East Asia and China does not want it to disappear, only shift the US from the centre of the East Asian geopolitical equation and occupy that space. I think China understands that absent the US, the East Asian strategic situation will get more uncertain. Japan and South Korea could well go nuclear if they conclude that San Francisco will not be sacrificed to save Tokyo or Seoul. These are complications that Beijing can do without as it grapples with difficult internal issues. There is a large element of ritual in US-China competition in East Asia.

But in East Asia, trade is strategy and even small changes can have major effects. If the EU without Britain turns protectionist, this may exacerbate the mood of disillusionment with globalisation that is evident in the US, East Asia’s choices will certainly narrow, China’s economic presence will loom even larger and the ‘China Dream’ of a mainly Sinocentric East Asian order will be one step nearer to realisation. Is such an East Asia in Britain’s interest? Is it in the EU’s interest? Do those who led the Exit campaign yet fully understand what they may have started?

This is excerpted from a recent speech by Bilahari Kausikan, who is the former permanent secretary of Singapore’s Ministry of Foreign Affairs


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