Difficulties in leading the Asia Pacific

Simon Tay, Singapore | Wed, 11/16/2011 8:38 AM A | A | A |- Klipping the Jakarta Post

Leaders from Asia will soon be hosted by US President Barack Obama for the Asia Pacific Economic Cooperation (APEC) Summit in Hawaii. The gathering comes on the heels of the G20 Cannes meeting, preoccupied with the eurozone crisis. The East Asian Summit will soon follow, convened by ASEAN and including, for the first time, Russia and the USA.

What can this season of international summits do about the looming global downturn? Can Asia and the USA, sans Europeans, cooperate to tackle worsening economic conditions? Can Asia find ways to continue growth?

Expect no cure alls. Policy options have narrowed since the first coordinated efforts at end 2008 to pump in money and loosen credit. Those policies have run their course, with mixed results and increased political wash back.

In America, joblessness and inequalities run high and the Occupy Wall Street phenomenon shows the restive mood.

Asia suffers problems of overheating with inflation and mounting bad debts from loose credit. While relatively well, the region will be impacted by the European crisis and poor American prospects.

At the APEC Summit, a centerpiece will be the Trans-Pacific Partnership (TPP). This aims to reinvigorate trade and economic cooperation and, while only nine countries are involved, American participation has renewed energy and ambition. Japan wants to join future TPP negotiations and the TPP aims to include most other economies.

Not all about the TPP has however been positive. Some parties have resisted American initiatives to integrate more deeply and align regulations. Others outside the negotiations, especially China, have been critical of the effort.

A full agreement will not be ready. Instead, leaders are expected to sign off on a more limited declaration or framework text, with further negotiations to come.

Nevertheless, the TPP can be counted as an achievement, buttressing Obama’s promise to be a “Pacific President”.

Yet beyond Hawaii, the future focus for American leadership in Asia is uncertain. Come early 2012, President Obama faces the long and quite uncertain election trail.

Attention will necessarily shift, given erosions in his approval ratings. This APEC and the following East Asia Summit may prove something of a high point in President Obama’s efforts to engage Asia.

American domestic politics is raising issues that run counter to positive engagement. Free trade and closer ties with Asia will be an increasingly hard agenda to push with so many still jobless at home. The recent Senate bill naming China as a currency manipulator shows up this sentiment.

Although the bill is unlikely to pass, the accusations have spread to a number of presidential candidates. Leading republican contender Mitt Romney has, for instance, called for the US to clamp down on China, blaming the mainland for millions of lost jobs.

Positions on Asia and especially China are intertwining with domestic, electoral politics. Prepare for a bumpy ride. This is especially as Beijing seems unlikely to smooth things over. There is a growing confidence and assertiveness among the Chinese people and some of the political elite.

Beijing seems keen instead of finding its own place, driving the Asian economy while asserting first rights in disputes like the South China Sea.

Combined with an impending change in leadership, while moderates talk about working with the USA, few would gain from ceding ground to Washington, DC. Some might indeed gamble on sounding hawkish in the name of nationalism.

The USA can no longer lead on its own and neither can China. Yet prospects of a joint US-China leadership – once proposed as a G2 – looks like hopeless idealism. With leadership contests in both capitals, things may in fact soon get worse.

Other Asians thus face something of a tension at the coming Summits. They gravitate to China as just about the only remaining hope for continuing economic growth, while looking quite anxiously to the USA for strategic assurance.

Leaders may make grand statements but they can neither address the questions about global problems nor settle on the leadership to address such problems.

Diplomacy will dictate that the American and Chinese leaders will be photographed, smiling with their counterparts across the region, and shaking hands.

They would do well to do so while they can. Coming events will soon test their smiles and handshakes quite severely.

The writer is a chairman of the Singapore Institute of International Affairs and author of Asia Alone: The Dangerous Post Crisis Divide from America.