Clinton’s Missed Opportunity in Asia

Secretary of State Hillary Rodham Clinton delivered a major policy speech on Asia this week. She surveyed the Obama administration’s main priorities in Asia but focused, in particular, on the subject of Asian regional organizations, or, as she put it, “Asia’s economic, political, and security architecture.”

As co-author with Bob Manning of a recent Council Special Report on this very subject, I tip my hat to the secretary for tackling this issue head-on. For more than a decade, creating multilateral forums has rivaled badminton as the leading indoor sport of Asian academics, think tanks, and governments. But the United States has mostly watched from the sidelines as proposals multiply and Asians organize themselves into an alphabet soup of new multilateral groups.

It’s easy for Americans to dismiss such ventures as irrelevant in a region populated by big powers, where bilateral alliances and ancient strategic rivalries still loom large. But that would be a mistake. Asians take architecture seriously and view multilateral institutions and agreements as essential to the development of their region.

The secretary will score some points in Asia for this very reason: she demonstrated that the United States at least takes the subject seriously.

But the speech was a disappointment, in part because it offered a very static view of a region that is changing rapidly—and in ways that the United States still does not appear to appreciate. As I wrote in the Financial Times during President Obama’s November trip to Asia, dramatic changes are taking place, as Asia becomes the center of gravity of the world economy and an engine of global growth. Linked by a growing web of economic and financial connections, a diverse Asia is searching for a common identity—and for ways to turn economic success into greater global clout. And Asians are increasingly doing this on a pan-Asian basis, without the United States.

Clinton’s speech suggests that the United States still has its head in the sand about the degree to which Asians—including even some of its closest allies—are groping for their own solutions to regional problems, and especially economic and financial challenges.

The speech was premised on the assumption that, as Clinton put it, “the future of this region depends on America,” when, in fact, much of the evidence of the last fifteen years suggests that, in some areas at least, Asians think quite the opposite is true.

It’s not that the United States doesn’t remain a crucial player in Asia. Washington continues to bring the greatest capacity to the table on the greatest number of issues vital to the future of the region. And surveys show that pluralities of strategic elites in Asia continue to view the United States as an essential strategic balancer, vital to stability.

But it is essential to adapt U.S. policy to the contours of change in Asia if the United States wishes to remain vital and relevant there. The fact is, most pan-Asian institutions will move forward regardless of American views and preferences. And even Japan has incubated a variety of Asian regional ideas and ideologies, especially with respect to Asian monetary integration. It was Japanese officials who in 1997 proposed the establishment of an Asian Monetary Fund, a proposal that helped give rise to today’s Chiang Mai Initiative of bilateral swaps among the ASEAN Plus Three countries—which doesn’t include the United States. Or take the argument by one Japan’s most distinguished diplomats, Tanaka Hitoshi, who advocates a security forum that includes the United States while arguing for an economic architecture on a pan-Asian rather than trans-Pacific basis.

There is, quite simply, no collective or cooperative security alternative to the United States and its alliance structure, anyway. But it’s the multilateral institutions that exclude the United States that have become the locus of economic and financial trends that will increasingly disadvantage U.S. firms and work against U.S. objectives.

Why do so many of these ideas come out of Japan, a U.S. ally with a strong sense of trans-Pacific identity? American policymakers need to take a hard look at that question, then deal with its implications for U.S. interests.

Put bluntly, Washington doesn’t need to be in every room and every conversation. The pan-Asian groups that merit vigilance are those that pursue functional agendas detrimental to American economic interests, such as preferential trade agreements. Clinton’s speech referred to some such Asia-only institutions as “natural,” but failed to acknowledge either their causes or consequences for the United States. What’s needed is a hardheaded assessment of what tables Washington needs to sit at and when and where it can afford to just step aside.

But instead, the speech (unrealistically) positioned the United States at the center of everything. Clinton put it this way: “We need to decide, as Asia-Pacific nations, which will be the defining regional institutions.” But the dominant trend in the region is that Asians are making pan-Asian institutions their “defining regional institutions.” And unfortunately, the speech didn’t much focus on these tensions and trends, or acknowledge that the United States needs to adjust to them.

Going forward, Clinton will need to deal with some much tougher issues:

(1) Clinton put great stock in the Asia-Pacific Economic Cooperation (APEC) forum, but Asians have turned away from APEC, and toward their own solutions, such as the ASEAN Plus Three.

(2) Washington’s past actions contributed to this very trend—for instance, Southeast Asians, in particular, came to view the United States as aloof from their problems during the 1997-98 financial crisis, not least because Washington refused to bail out Thailand in 1997 just three years after it bailed out Mexico.

(3) Pan-Asian institutions are here to stay. And

(4) The United States needs to have a serious conversation with its Asian partners about how and where trans-Pacific and pan-Asian institutions should intersect and reinforce each other.

The speech made much of political and security institutions, such as the ASEAN Regional Forum, even though it is financial, not security, institutions—including Asia-only bond funds, currency swaps, and investment pacts—that may increasingly disadvantage U.S. companies and work against U.S. objectives.

Ultimately, then, I fear the speech took the easy, default position by implying that the United States is considering joining the East Asia Summit, even though its own members have no idea as to what its purpose is.

The punchline is this: the United States doesn’t need to join every regional process. Instead, it should be working with its Asian partners to define a more purposeful and functional multilateralism that respects Asia’s trajectory while redefining how and where the United States fits into a twenty-first century Asia. Our recent CFR Special Report had a few ideas, including putting new emphasis on ad hoc multilateralism rather than the big—often vacuous—formal institutions. That was probably the high point of Clinton’s presentation: she strongly advocated “informal arrangements targeted to specific challenges, and … sub-regional institutions that advance the shared interests of groups of neighbors.”

The good news is that Clinton takes the subject of Asian architecture seriously. But she’ll need to address these tougher issues going forward. And there can be no substitute for much more vigorous trade engagement from the administration. Without moving forward on stalled free trade agreements and a Doha round that would erase intra-regional preferences, the diplomatic efforts Clinton described won’t be nearly enough to secure America’s position in a changing Asia. The United States will face a region less willing to accommodate its commercial and financial interests, in particular.