By Côme Dechery of Science Po Paris, France

As the world watched President Barack Obama’s 9-day trip to Asia, it was deemed an event of high symbolic value. It marked a clear break with the somewhat tepid Bush administration policy towards Asia-Pacific nations. His trip happened to also take place during the 20th anniversary commemorations of the fall of the Berlin Wall. By missing these celebrations, the President sent a global message: the future of America does not lay anymore in Europe but in Asia. However, this long visit was certainly not solely about symbols. Since he assumed office, Mr. Obama has been faced with an increasing number of challenges in Asia. From an unbalanced economic relationship with China to the new turn in the Japanese-American alliance without forgetting the protracted nuclear negotiations with North Korea, the President has indeed been busy.

The financial effort the US had to make in order to pass a proper stimulus package for its depressed economy deepened its already huge budgetary deficits. Meanwhile, China continued to pay its debts and artificially maintained a low value for the Yuan, therefore boosting its exports into the US. Throughout the trip, Mr. Obama remained hopeful and managed to engage China in various dialogues. Cognizant of securing cooperation over a wide range of issues, the President was able to facilitate the discussions over free trade, greenhouse emissions, Sino-Taiwanese relations, and human rights. In the meantime, he must refrain from adopting an aggressive position for fear of reaching a stalemate. His speeches and comments have therefore been moderate. Instead of openly criticizing China’s human right violation or unfair trade competition, he referred to how respect of civil rights has benefited the US and strategically mentioned the necessity of cooperating in order to achieve a balanced world economy. Consequently, President Obama has been criticized, both at home and abroad, for not adopting a stance. Singapore’s patriarch, Lee Kwan Yew, publicly declared to Obama that “if you do not hold your ground in the Pacific, you cannot be a world power” before adding in private “you guys are giving China a free run in Asia”.

Meanwhile, Mr. Obama had to convince his new Japanese ally, Prime Minister Hatoyama that the Japanese-American alliance was still worth consideration. The arrival of the Liberal Democratic Party of Japan to power after 54 years of conservative rule indeed changes the way the archipelago deals with Washington. One can expect that Tokyo will not be as docile as it used to be under the conservative Liberal Democratic Party. The recent dispute by the Japanese government over the relocation of the Futenma US military base shows that the new administration views the alliance in a different manner than its predecessor.

In South Korea, the prospects for continual cooperation seem brighter. The new Korean and American administrations are a better combination for collaboration than the previous administration. Towards the end of its second term, the Bush administration rushed into an agreement with North Korea. This resulted in a lack of cooperation and consultation with Seoul. The Obama administration intends to progressively include the South Korean position into the six-party talks to denuclearize North Korea.

In addition, FTAs (Free Trade Agreements) remain a contentious issue between both nations. Blocked in Washington for fear that they will deepen the US trade deficit, the FTAs keep the two allies from fully capitalizing on their bilateral relationship. President Obama has pledged that the matter will be settled by 2010. However, he has been forced to make deals with senators opposed to FTAs to secure his health care reforms.

To help us to gain a better understanding of these complex issues, we have turned to Dr. Richard E. Feinberg (Professor of International Political Economy), Dr. Stephan Haggard (Director of the Korean-Pacific Program), Dr. Ellis Krauss (Professor of Japanese Politics at the IRPS), Dr. Barry Naughton (Chair of Chinese International Affairs at the IRPS).

PROSPECT: If China continues to pursue its Yuan devaluation policy, what consequences would it have on international economics and diplomatic relations with the US?

Naughton: First of all it would be a tremendous shock. The international community and Chinese people would be very surprised to see China make this policy change. It would potentially have a very positive impact on the diplomatic relations between China and other countries. People would very much welcome it. Unfortunately, I think it is very unlikely to happen. China is far too worried. Indeed, the economic recovery in China is still too fragile and I think that the top leadership feels it would be both politically and economically dangerous to let the Yuan appreciate too much. I hope I am wrong but I don’t see an appreciation in the near term.

Feinberg: The basic way you balance trade imbalance is currency adjustments and adjustments in relative income levels, in other words, the American income level has to contract, the dollar has to devalue and the reverse has to occur in China. They have to appreciate the Yuan, I don’t know if that’s what they will do, but that’s how you would balance the imbalance. We have to increase our savings rate in the United States. We don’t have to have a bilateral balance but we do need to shrink the US fiscal and trade imbalances, which are chronic and have been running way too long. We are paying the price, both in terms of our economic position and our global position. What do people in Asia think? We don’t know how to run an economy. When the American president goes abroad his stature, authority, and bargaining position are weakened by our current domestic imbalances.

PROSPECT: Recently Niail Ferguson, a Harvard economic historian, created the term “Chimerica” to refer to the economic entity created by China funding the American trade deficit. Obviously, both countries now find an interest in such an arrangement but do you think it is sustainable over the long run?

Naughton: I think the relationship between China and the United States is just going to continue to grow and get more complicated. There will be a lot of sides of it which will be asymmetrical but they are going to be wrapped up in a whole variety of issues that could serve to stabilize what will be a very complex relationship. Therefore, I think it is quite conceivable that the unbalanced economic relationship might only be resolved over another 5 years or so. I know some economists think these unbalances are very dangerous, that they are not good for the world economy. I am not so sure. I think we can probably accommodate these within a complex set of interests.

PROSPECT: China and the US account for 40% of the global greenhouse emissions. As the Copenhagen conference is getting closer, everyone has realized that an agreement will not be reached if these two countries do not find a common ground. Do you think it is possible?

Naughton: This is one area where so far we don’t know what happened behind the scenes. I think we can say that both China and the US have moved a great distance during the last two years on global warming. Things are much better than they were and it would be wonderful to be able to report that, as a result, we now are moving forward. But we just don’t know. We will just have to wait and see if the two countries got close enough together and they can take a series of concrete step in the next few months. Obviously Copenhagen won’t lead to an agreement but it could be the venue for a significant step forward.

PROSPECT: What are the key differences between how South Korea and the US engage North Korea?

Haggard: The big differences are between administrations. This is a greater difference between the current Ing You Bak government and its two predecessors. Similarly, the Bush administration had a different strategy compared to what the Obama administration at least said it was going to do and then to what it actually had done. Obviously South Korea is looking at a long run prospect of something resembling unification in 20 years or 30 years so its considerations of reunification as a long run objective are very different than the US.

PROSPECT: Does reunification seem like a real possibility within the next 20 years?

Haggard: Well this is a very long run proposition. I generally say to my students that I don’t expect to see Korea unified in my lifetime. I’m in my mid-50s so I hope to live for another 20 years or so. I think it’s kind of a low probability event in the medium term, but a lot of it depends on the transformation of North Korea itself. If North Korea were to start pursuing a reformist path and if its incomes could be raised adequately, you could imagine a circumstance in which more serious discussions about integration might occur. The problem right now is the gap in incomes. It’s not just ideology. It’s not just politics. The gap in incomes is so huge that I think the South has come to recognize that unification is not something that it can afford in the short to medium run.

PROSPECT: Is the income gap between those who do and those who do not have ties to the government?

Haggard: Well North Korea is certainly becoming more unequal. In addition to the socialist differences between the nomenklatura and the general public, you also have this increase in differences between people who have market-earned incomes and those who are stuck in the state sector. North Korea has become more marketized from the ground up. There are clearly people who are making a lot of money and some of those are corrupt officials or government officials who are exploiting their positions to take advantage of that marketization process. However, there is a lot of social change going on in North Korea.

PROSPECT: How do FTAs (Free Trade Agreements) affect the bilateral relationship between South Korea and the US?

Haggard: There is an economic effect and a political effect. The economic effect is to deepen and provide new opportunities for exporters in both countries to penetrate the markets of the others. Both of these countries have relatively low tariffs on trade and manufactures, they’re advanced industrial states, but FTAs currently go far beyond the trade area. They get to issues such as intellectual property rights protection, investment or the service sector. You’re looking at the opportunity to fairly substantially deepen the bilateral relationship between the two countries. That’s the economic side of it. The political side is that the alliance is a multifaceted thing and that, by signing the FTAs, I think it signals to the Korean public that the US has a strong strategic interest in seeing this relationship develop even in the face of domestic opposition. The fact that there is domestic opposition to sign an accord would make it a more telling event for the Obama administration to pull off.

PROSPECT: In 2009, Obama assumed office and in Japan, the social Liberal Democratic Party of Japan took power after 54 years of the Liberal Democratic Party’s rule. How does it affect the Japan/US bilateral relationship?

Krauss: It will affect the relationship significantly, more so than anything in the last 30 or 40 years in many ways. As you know the Liberal Democratic Party (LDP) ruled Japan for 54 years with the exception of 10 months. Their basic foreign policy was to strongly support the alliance but never try to make any major changes in it. Then, the LDP Prime Minister Koizumi came along from 2001 to 2006. He really raised the expectations in Washington because he sent self-defense forces to Iraq. For the first time since World War II, Japanese self-defense forces were operating outside Asia. He really stressed his relationship with the US and I think Washington got its expectations up very high. The Democratic Party of Japan (DPJ) shock that Washington is experiencing right now is very much because American diplomats thought what Koizumi did now made Japan into the same kind of country as Britain. Japan, as many people said in Washington under Koizumi’s rule, would be the Britain of the Pacific: a good loyal ally that could contribute to our military forces wherever we went. This was nonsense. Japan was never going to be the Britain of the Pacific. The DPJ now has come as a great shock because they are following policies that are different from the LDP and Koizumi. I therefore think there will be adjustments. However we have had alliances with Germany under Social Democratic government. We had differences with France, which withdrew from NATO at one time. These differences between allies occur. Allies are not just your junior partners that you can boss around. They have their own interests. Allies want to make sure that the bigger countries protect them but they don’t want to be entangled in ventures that are not in their own interests. I think that is the way Japan is now more and more viewing the alliance: “Let’s make sure we don’t get entangled”.

PROSPECT: Is this revision of the American-Japanese alliance part of a domestic political strategy of Prime Minister Hatoyama or is it part of a more global strategy pursued by Japan to reassert its position in global politics?

Krauss: Probably neither but more of the latter. I had not been able to understand the DPJ selection of issues whatsoever. When, over a year ago, they said that they were going to stop refilling the alliance ships operating in the Indian Ocean as the elections were coming I thought it made no sense at all. The public did not care about it. Japan was getting a good image in international circles for participating in the war against terrorism and this was Japan’s way to contribute to the international effort. Why did they pick that issue over all? Back then, I thought it was a response to intraparty diversity; a reflection of the balance of power among the leftists, centrists and conservatives of the party. I have now however been convinced by a colleague, Chris Hughes, that the DPJ may have a strategic vision. There may be more of a consensus within the party than people think, especially among the four major leaders. They may have a vision for Japan that is actually different from the one of the LDP. This is not just about domestic politics. It is true they have to show that they are different now that they are in power, but also because they truly believe in change. They think that no-war constitution must remain. They are very unhappy with Koizumi sending self-defense forces to aid the US in places like Iraq – a decision which was not at all popular with the Japanese public. Even in Afghanistan, they think their job should be nation building – a fitting way for a no-war constitution country to contribute to anti-terrorism.

PROSPECT: Can Japan play a bigger role in the six party talks to contain Korea?

Krauss: I think that there is more of a chance of that now. The prior LDP administration isolated itself by stressing the abducting issue [From 1977 to 1988, North Korea kidnapped several Japanese citizens for intelligence purposes. Only five of them were freed by 2004]. It was really crazy if you think about it. Public opinion polls in Japan showed at one point that the Japanese placed the abducting issue as more important than denuclearization of the Korean peninsula. This is absurd. We are talking about 30 people. I think it was a horrible human rights violation and I really do sympathize with the families. However, in the broader scale of things, we are talking about 30 people who are probably dead anyway. On the other hand, there are millions of lives at stake with the denuclearization. This was drummed up in many ways by the families but also by some LDP politicians for their own political purposes. I think it backed Japan into a corner. It made it domestically impossible for them not to take a strong stance against Korea. It isolated Japan and gave China, which already had the leadership role, even greater possibility for leadership. Japan could not take any initiatives because they were stalling upon the abducting issue. Furthermore, from a North Korean point of view, there was no reason to pay attention to it at this point. They were not going to get any kudos for providing more information because the information that they could have provided were not going to be trusted anyway. It was Japan who backed itself into a corner and did more harm to its foreign policy than it did to North Korea. Now, the DPJ administration has the opportunity to deemphasize this issue and actually starts to cooperate with the US to play a greater role in the six party talks.

Côme Dechery is studying abroad at UCSD through June 2010. At his home university of Science Po in Paris, France, he studies International Relations with an emphasis in Chinese politics and economics.

Photo courtesy of Ran Jiao and showbizsuperstar

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