Although Japan’s approach to economic diplomacy under the Fukuda Doctrine initially was subject to criticism because of its stance on non-interference in domestic affairs, now some are in retrospect lauding the approach, according to Kiyoteru Tsutsui, deputy director at Shorenstein APARC and director of the Japan Program, and co-editor of the recent book The Courteous Power: Japan and Southeast Asia in the Indo-Pacific Era. This reevaluation comes after consideration of relatively unsuccessful attempts by the United States to “push” democracy onto Southeast Asian countries. 

The better approach is to focus on advancing the rule of law, which the Japanese have done by investing resources in establishing legal infrastructure in the region, Tsutsui tells Shorenstein APARC Visiting Scholar Gita Wirjawan, host of the popular Endgame video podcast. “Liberal democracy in the sense of the rule of law is a good sort of marketing ploy to sell to Southeast Asian countries because that leads to economic benefits, which is critical to making liberal democracy attractive,” he says.

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Tsutsui joined Wirjawan for an Endgame conversation about Japan’s approaches to foreign direct investment (FDI) in Southeast Asia and other topics. One issue that both scholars agreed upon is the difficulty in getting Americans to focus on Southeast Asia, which has been long recognized as a critical region by the Japanese. Part of the problem is proximity, of course, but the region also tends to be overshadowed in American eyes by East Asian countries. 

The conversation also turned to the demographic issue Japan and other Asian countries are facing as populations age and economic growth stagnates. Tsutsui pointed out that, before 1945, the Japanese Empire saw itself as multi-ethnic; it was only after WWII that the nation was perceived as homogenous, a viewpoint bolstered by Japan’s great economic success in the 1960s and 70s. Now, however, Tsutsui says there is no choice: “Japan has to become more heterogenous,” and even conservative voices acknowledge that women need a larger role in the labor force and that immigrant labor will be essential to combat the demographic crisis.

This discussion with Tsutsui is part of an "Endgame" interview series Wirjawan is recording with Stanford experts during his residency at APARC.

The Freeman Spogli Institute for International Studies (FSI) is pleased to announce that Ambassador Scot Marciel has been appointed the Oksenberg-Rohlen Fellow, working within the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC). Mr. Marciel has more than 35 years of experience in diplomacy and public policy, much of it focused on Southeast Asia. Most recently, he was a visiting scholar and practitioner fellow on Southeast Asia at APARC.

“Scot brings a deep understanding of Southeast Asian nations and unique expertise on the policy dynamics that have shaped the course of U.S.-Southeast Asia relations,” said Gi-Wook Shin, director of Shorenstein APARC. “We are fortunate to have him with us at APARC as we continue working together to bridge the worlds of scholarship and practice to foster intellectual exchange and policy dialogue on Southeast Asia and U.S. interests in the region.”

During his foreign service career, Marciel served as U.S. ambassador to Myanmar from March 2016 through May 2020, leading a mission of 500 employees during the difficult Rohingya crisis and spearheading U.S. efforts to normalize the bilateral relationship with Myanmar during its democratic transition. He also served as U.S. ambassador to Indonesia from 2010 to 2013 and the first U.S. ambassador for ASEAN affairs from 2008 to 2010. He twice served as the senior U.S. official responsible for relations with Southeast Asia in the State Department, first as deputy assistant secretary of state for East Asia and the Pacific and later as principal deputy assistant secretary of state for East Asia and the Pacific.

Early in his career, Marciel opened and led the U.S. State Department’s first post-war office in Hanoi, Vietnam, and worked in the U.S. embassies in the Philippines and Hong Kong. His other assignments included posts in Turkey, Brazil, and in the State Department’s Office of Monetary Affairs.

Marciel is the author of the forthcoming book Imperfect Partners: The United States and Southeast Asia, which will be published by Shorenstein APARC in fall 2022. Drawing on his extensive experience as a former senior U.S. diplomat and his direct involvement in some of the most pivotal turning points in America’s relationships with Southeast Asian nations, the book analyzes important domestic developments in the region, examines the interplay between them and U.S. policy toward Southeast Asia, and considers the way forward in U.S. engagement with the region.

“I'm looking forward to continuing to write and speak about critical, current policy issues in Southeast Asia, ranging from the Myanmar crisis to U.S. efforts to bolster its economic diplomacy," said Marciel.

Marciel earned a master’s degree from the Fletcher School of Law and Diplomacy and a bachelor’s degree from the University of California at Davis.

This article originally appeared in The Jerusalem Strategic Tribune.

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The numbers tell part of the story. While US merchandise trade with the Southeast Asian region grew by a respectable 62.4% from 2010 to 2019 (the last pre-pandemic year), China’s trade increased by an impressive 115% during the same period, according to the statistics of the Association of Southeast Asian Nations (ASEAN). Over a longer period, the US share of the region’s total merchandise trade fell from 16.1% in 2000 to 11.6% in 2020, while China’s share rose from 4.3% to 19.4%. Although infrastructure investment numbers are harder to come by, there is no question that China is playing a much more significant role in Southeast Asian infrastructure development than the US.

Some of the relative decline in the US economic role in the region is the inevitable result of China’s dramatic economic growth and the resulting increased trade and investment. That trend, however, only partly explains the US predicament. Over the past 10–20 years, Beijing has been much more aggressive in its economic statecraft than Washington. Beijing signed a Free Trade Agreement with ASEAN, then joined a new multilateral trade agreement—the Regional Cooperation and Economic Partnership (RCEP)—and more recently asked to join the high-standard Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade accord. On infrastructure, China established the Asian Infrastructure Investment Bank and the high-profile Belt and Road Initiative (BRI), which aims to funnel billions of dollars into infrastructure projects in Southeast Asia and elsewhere.

The BRI initiative generally has been welcomed in the region for one simple reason: Southeast Asia has huge and urgent infrastructure needs—estimated by the Asian Development Bank to be $210 billion per year through 2030—that it cannot meet by mobilizing domestic resources. Through BRI, Beijing is offering to meet a portion of those needs with greater speed and fewer conditions than other would-be partners. Southeast Asian governments have lined up for BRI projects, with outgoing Philippine President Rodrigo Duterte, Indonesian President Joko Widodo, and former Malaysian Prime Minister Najib Razaq having signed on for more than $20 billion of BRI-funded infrastructure projects in the 2015–2018 period. Although the BRI has been the subject of substantial criticism for overpromising, project delays, quality problems, employing Chinese rather than local labor, and raising the host government’s debt obligations, the initiative still dominates the discussion of infrastructure in the region.

The US, meanwhile, has underperformed in terms of its economic diplomacy. Most importantly, in 2017 it summarily withdrew from its primary economic initiative in the region, the Trans-Pacific Partnership (TPP) free trade agreement. President Trump’s decision to pull out of that accord was a severe geostrategic and economic blunder, as TPP would have bound the US into the broader region for a generation or more, as well as facilitated greater US trade with a number of fast-growing economies. With the US out of the TPP and China joining RCEP, the prospects are for a growing percentage of ASEAN trade to be with China (and other RCEP partners) and for the US and American businesses to lose further ground.

The US also has struggled to compete on infrastructure. The US is not going to match China, particularly in areas such as road, rail, and port development, but it could do more. The Trump administration launched several initiatives—including the Blue Dot Network, Clean EDGE Asia, and the establishment of the Development Finance Corporation (DFC), a larger, more ambitious version of the Overseas Private Investment Corporation (OPIC), a federal entity that helps insure US ventures abroad—all of which sought to leverage private sector funding to offer high-quality projects. The Biden administration has followed up with the Partnership for Global Infrastructure and Investment, announced in June in coordination with G-7 partners, and promised via the Quad $50 billion in infrastructure funding. To date, however, these initiatives generally have not significantly changed the overall infrastructure picture in the region.

The US failure to engage in the region’s burgeoning free trade networks—combined with the big splash that China’s BRI initiative is making and the lack of a countervailing American initiative—is fueling the perception in the region that the US is a declining economic player. In an ASEAN 2021 survey of regional opinion leaders, 76% believed China was the most influential economic partner in the region, compared to less than 10% who felt that way about the US. Even more telling, I recall asking a senior Myanmar economic minister in 2017 why he had led private-sector roadshows to China, Japan, and South Korea but not the US, and he replied: “We didn’t even think of the US.”

Thus, the US faces a problem of both reality and perception. To address this, the US does not need to match Chinese numbers. It does, however, need to find a way to re-energize its trade engagement and to become a more significant player in Southeast Asian infrastructure, and to do so in ways that change the narrative in the region.

Recognizing this reality, the Biden administration recently launched the Indo-Pacific Economic Framework (IPEF), which is expected to result in negotiations on trade, supply chains, clean energy, and decarbonization, as well as on tax and corruption issues. The administration touted this initiative as reflecting the needs and realities of the 21st-century global economy. The good news is that seven of the ten ASEAN member nations signed onto IPEF, presumably reflecting their interest in greater US economic engagement and their hope that IPEF can produce just that. Skeptics say the initiative does not offer the promise of greater access to the US market via tariff reductions, which normally would be the carrot to entice other governments into adopting the high standards Washington wants. Also, as Matthew Goodman of the Center for Strategic and International Studies has pointed out, the fact that the administration is unwilling to take any negotiated agreement to Congress for ratification is likely to raise doubts in the minds of Asian partners about the IPEF’s durability, since a future administration can easily toss it aside.

Despite or maybe because of these doubts, the US needs to do all it can to turn the IPEF into something that is economically meaningful. Can it produce a digital trade agreement, real substance on strengthening supply chains, or can it possibly even use trade facilitation tools to enhance market access as former senior US trade official Wendy Cutler has suggested in a recent podcast hosted by the Center for Strategic and International Studies? It is too early to say, but the bottom line is that many in the region—and indeed even in the US—will remain privately doubtful until and unless the IPEF shows that it can result in tangible business and economic benefits.

The White House put the IPEF forward because it believes it lacks the political support either to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or to launch another significant trade initiative. The domestic politics of trade might be tough right now, but that is not an excuse that is going to go very far in Southeast Asia. The region is not going to say “no problem, we understand.” Instead, it will go ahead without the US. If Washington wants to maintain influence, it needs to find a way to make the domestic politics on trade work. That almost certainly will entail appealing to bipartisan concern about Chinese geostrategic dominance, as trade alone probably will not sell.

On infrastructure, the various US initiatives to date have disappointed to some extent, although the Development Finance Corporation has been a step in the right direction. They do little other than offer the prospect of quality to give the US a competitive edge over Chinese-funded projects. The Chinese offer relatively speedy approval processes, low or zero conditionality deals, and complete project packages, including financing. Chinese state companies often are willing to undertake projects that do not appear to be commercially viable. Plus, Chinese political leaders weigh in personally to push the projects forward. I have seen this on the ground, in Indonesia and Myanmar, countless times. The Chinese pull out all of the stops, with intensive lobbying and full financing, and they often win.

Economic officials in the region complain that the multilateral development banks and Japan, which also offer substantial infrastructure deals, move much more slowly and laboriously than China. The design, discussion, and approval process often takes many years. With the US, it is almost always the private sector taking the lead, and private American companies have a hard time finding well-developed, “bankable” infrastructure projects in the region. Plus, US companies often come to the table without full financing or even all the pieces of the project. Government lobbying and financing usually lags, if it is there at all.

If the US is going to compete effectively for infrastructure projects in the region, it is going to have to change the way it does business. To begin with, the US will have to make it easier for Southeast Asian governments to say “yes” to deals. That means offering the full project package, including financing, and accelerating the project preparation and approval timeline to come closer to matching that of the Chinese. It also means more government funding for project development along with heavy US government lobbying, including by the president when appropriate, for major projects. The US is not going to engage in bribery or support projects that destroy communities or the environment, nor should it. But it needs to use just about all the other available tools to compete.

The US should consider establishing an overseas infrastructure czar in Washington who can lead and oversee government-business teams that identify potential projects where the US can compete, put together a full project package, including private and public financing, and then aggressively lobby the host government for approval. I often hear that the US does not work that way on overseas business. Perhaps, but if Washington wants to win some victories—and more significant projects—it needs to be willing to adopt new thinking.

Re-engaging on trade and winning more infrastructure deals are essential, but there is one more thing the US needs to do to reverse the perception that it is a declining economic player in Southeast Asia. It needs to do a much better job of telling its economic story. For example, the US remains the largest foreign investor in Southeast Asia, but I am willing to bet few people in the region know that. Similarly, America remains a huge market for Southeast Asian exports, just slightly smaller than China, but again that is not well known or much talked about in the region. The US should devote more resources and time to telling this story and to reminding the region of the incredible power of American private sector innovation and the US commitment to quality investment. Better communications alone will not solve the problem, but combined with trade and infrastructure initiatives it can help the US persuade the governments and people of Southeast Asia that it remains a major economic partner.

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Conceptualizing China as an Unconventional Great Power

Most studies on China’s presence in Southeast Asia tend to focus on China’s power dynamics and how it wields it to gain influence within the region. The emphasis is on intention and causation: how China willingly uses its power to coerce, coopt, or persuade Southeast Asian states to behave in particular ways. This characterization, Han argues, ignores the contemporary Chinese state as fragmented, decentralized, and internationalized. Han goes beyond this conventional approach to explore the variety of actors and the intended versus unintended outcomes associated with China’s presence in Southeast Asia. It is necessary to understand such nuance and complexity, he claims, if we are to make sense of China’s relations with Southeast Asian states.

China’s presence in Southeast Asia is by no means monolithic, notes Han. Rather, it takes numerous everyday forms and involves not only state actors, such as diplomatic missions and state-owned enterprises, but also non-state actors that may or may not be closely associated with the Chinese state. These include civil society organizations, private businesses, and ordinary Chinese citizens who reside in Southeast Asia for work, study, or retirement, in addition to Chinese tourists. The actions of these multiple stakeholders can have intended and unintended consequences, Han argues. In particular, the effects of non-state Chinese actors’ daily encounters with local communities in Southeast Asia deserve attention, he says.

Shadow Economy and Offshore Gambling in Eastern Myanmar

Consider, for instance, the case of the “new city” of Shwe Kokko in Myanmar’s Southeastern Kayin State (known as 'Karen State' among the ethnic-Karen population living there), on the border with Thailand. The emerging “Chinatown” project in Shwe Kokko began attracting international attention as capital investment flowed into the former farmland on the banks of the Moei River and residential complexes, hotels, shops, Chinese restaurants, and glitzy casinos sprang up. Allegations of Chinese mafia involvement have plagued the massive city project, and media outlets and Western observers attributed culpability to the Chinese government, portraying the project as part of the Belt and Road Initiative.

However, Han points out that empirical details show that the new city project was led by a company headed by a fugitive Chinese businessman fleeing the Chinese government’s crackdown on illegal offshore gambling. Therefore, Shwe Kokko is not quite a case of Chinese Belt and Road Initiative expansionism using complex networks of PRC citizens and ethnic Chinese in a neighboring country to fuel dangerous activities colluding with Chinese officials and government agencies. Instead, it demonstrates how shadow economies like the online gambling industry are responding to regulatory attempts by the Chinese state. According to Han, to make sense of the Shwe Kokko story, one must understand who the non-state actors are and how they interact with local communities in Southeast Asian borderlands.

Market Demand and Agricultural Transformation in Northern Myanmar

Now turn to Northern Myanmar, where Han conducted fieldwork in 2019. Over the past decade, he explains, Northern Myanmar has undergone accelerated deforestation due to rising agricultural production in response to increasing demand for grains such as maize and their elevated global commodity market prices. In Myanmar’s Shan State, which borders China, the expansion of maize cultivation is closely related to a surge in Chinese demand for animal feed resulting from the rising domestic consumption of meat. However, a Chinese state ban on maize import from Myanmar had created rampant smuggling coupled with irregular enforcement of border inspections and schisms between the commodity production cycle and financing for local farmers.

One may draw a correlation between the rising demand for meat consumption in China that seemingly created a ripple effect in Myanmar, leading to the expansion of maize cultivation, deforestation, and economic precarity for local farmers. But then again, is this a case of Chinese influence operations? There is no evidence pointing to such deliberate attempts by the Chinese state to influence its neighboring country, although the resulting economic and environmental consequences are related to conditions in China.

Thus, Han argues, understanding an increasingly globalized China and its variegated impacts around the world requires conceptual flexibility. In particular, when referring to China's presence and influence in Southeast Asia, one must not assume a monolith with hegemonic designs for its neighboring states but rather differentiate between multiple types of actors with long histories and multifaceted consequences, both intended and unintended.

China is ready to rock with the Treaty of Bangkok.

In a rare appearance at the special online summit for the Association of Southeast Asian Nations (ASEAN) on Nov. 22, China’s President Xi Jinping announced that China is prepared to sign the protocol of a 1995 agreement that establishes Southeast Asia as a nuclear-weapon-free zone. Under the agreement, known as the Bangkok Treaty, 10 regional states renounce the right to nuclear weapons in any form within the ASEAN zone. If it joins the treaty, China would agree not to use or threaten the use of nuclear weapons within the zone or against its members. It would make China the first nuclear-weapon state to adhere.

Read the rest at Lawfare Blog 

My summer internship experience at the Asia Society Policy Institute (ASPI) was remote due to the pandemic. It was nonetheless a memorable experience as I got to explore cybersecurity issues around Southeast Asia. ASPI is a think-tank under the umbrella of the Asia Society family, which aims to explain the diversity of Asia to the United States and the complexity of the United States to Asia. It heightens understanding between the two regions and tackles major policy challenges confronting the Asia-Pacific in security, prosperity, and sustainability by providing solution-oriented recommendations and ideas for such challenges.

At Asia Society Policy Institute (ASPI), I delved into policies and developments around the data privacy issue in Malaysia, Indonesia, Vietnam, Thailand, and Singapore. I learned how these countries bring up policies and collaborate bilaterally, regionally, and globally to tackle problems around cybersecurity. My summer internship experience also enriched my knowledge and understanding of the world.

Working at ASPI

The internship started in June 2021, around the end of the spring quarter, and continued through the end of summer. There were a total of four interns in the Washington D.C. office. I mainly worked with a small team of three - Elina, my supervisor, Chris, my co-intern, and I - which focused on cybersecurity issues.

My supervisor, Elina Noor, an inspiring expert in cyberspace, especially in the Southeast Asia region, led the team with great insights and leadership. Along with my co-intern, Chris, we spent the entire three months working on a project that studies Ethical Artificial Intelligence (AI) and Data for Inclusive Development in Southeast Asia. The project itself is expected to continue for a year, and we were in the early stages of the project. 

As a security research intern, I collected data and assisted the research. Additionally, I focused on building-up fundamental understanding of the project - determining the stages of development each country is in, how they respond to the global trend and issues, and what criteria need to be included in analyzing the different characteristics of each country, considering both the local context and the global trend. In the next nine months, the project will survey countries’ positions on these issues, assess the importance and impact of the topic, and highlight the significance of engaging in international developments. I am excited for the final product to come forth, a collaborative work of all people involved in this project.

Other responsibilities also came along the way. I had the opportunity to find the correlation between the South China Sea dispute and cyber incidents between the countries claiming sovereignty over the region. These incidents are ambiguous to identify, and the attribution is not always clear. It was also challenging to make a data set from scratch as it was a whole new experience. However, I managed to conclude that cyber incidents spiked around the time of the major disputes around the South China Sea. No secret that the Global Economy class taught by Professor Aturupane from Fall 2020-21 helped me make sense of the data set and read graphs!

The interns in the New York and Washington D.C. office took turns doing daily press scans, following up with news from the Northeast to the Middle East. It was amazing to learn how Asia, as one big continent, held such a diverse set of news and events occurring each day. I also accumulated lists of people in congress, embassies, and the government to share the op-eds from ASPI. Most of these administrative works were done as a team effort, and I met a larger ASPI family through the experience.

Ending My Internship

Working at ASPI was a rewarding way to spend my summer. I owe special thanks to Elina and Chris, who were incredibly supportive and made me feel like I was making a significant contribution to the institution. I was also rewarded with knowledge and insights into new topics in Asia and its relations with the world, mainly focusing on the U.S. It provided great insight into the developments of cybersecurity issues and data privacy around Southeast Asian countries. It was a fantastic opportunity to apply what I learned at Stanford to real-world policy problems. I thoroughly enjoyed my internship this summer and feel ready to embark on new challenges that will come forth in my career path.