Events post Hague International Tribunal ruling on South China Sea in July of this year have been a paradox for the enigmatic ASEAN way. The Association of Southeast Asian Nations (ASEAN) as a regional body has stressed on using informality, organization minimalism, inclusiveness, and intensive consultations to generate consensus and pursuit of peaceful resolution of disputes1. With an aversion to the rigid institutionalization of a security community, ASEAN has effectively relied on US military presence in the region to shape its security framework. However, the conspicuous rise of China and growing ambiguity on US’s security assurances in Asia-Pacific has led to an environment of general uncertainty. The extant heterarchy in ASEAN frameworks along with suspicion on the intentions of a growing number of states has led to unclear incentives for a unidirectional strategic alignment.

The term heterarchy refers to the existence of multiple, ranked hierarchies based on differentiating criteria. With rising multi polarity in Asia, leadership and hegemony can be defined differently in different domains or in the context of different issues. Deference by one state to the preferences of another state need not be total but can be limited to one dimension of international affairs, such as foreign policy, weapons procurement, cultural affairs, or economic activity. Also, the growing economic linkages in ASEAN have not deterred the rising arms buildup in the region. Thus, as a way of coping with this rising uncertainty in security dynamics, ASEAN states have begun pursuing contradictory policies to mitigate the downside risks of a specific policy and project a non-sides taking stance. They have eschewed a narrow focus on military power and sought to organize security relations around a more fluid framework for the region.

Expansion of ASEAN since 1990’s

In 1994, the establishment of the ASEAN Regional Forum (ARF) gave way to more institutionalized dialogues from consultation and informal negotiations. Unlike the legalism associated with its western counterparts, ASEAN has offered anormative framework for regional security. The agenda is to encourage voluntary (as opposed to rules-based) participation by members in bilateral and multilateral cooperation. Thus, despite the absence of an enforcement mechanism, members are able to observe and understand each other’s intentions through their observance or violation of mutually set norms. The instituting of ARF paved way for greater cooperation between ASEAN and other nations. The 1997 Asian Financial Crises highlighted the need for more formal structures in dealing with regional concerns. While the Chiang Mai Initiative (erstwhile Asian Monetary Fund) proposed in 1997 took more than a decade to take off, the adoption of the ASEAN Vision 2020 same year ensured the new millennium would bring greater strides towards regional cooperation.

In 2002, a Declaration on the Code of Conduct of Parties (DOC) in the South China Sea was adopted to promote peaceful resolution of the South China Sea dispute between China and ASEAN member states. With ASEAN Concord II in 2003, the ASEAN leaders resolved that an ASEAN Community comprising of three pillars - namely the ASEAN Political-Security Community, ASEAN Economic Community and ASEAN Socio-Cultural Community - would be established in 2015. Concurrently, the economic ascendancy of East Asia in global economy hastened the need for an expansive regional grouping and led to the first East Asian Summit in 2005 comprising of the ASEAN Plus Six - ASEAN, China, Japan, South Korea, India, Australia and New Zealand. US and Russia also gained membership with the sixth East Asian Summit held in Indonesia in 2011. The ASEAN Charter adopted in 2007 provided the missing legal sanctity and institutional framework for ASEAN. It codified ASEAN norms, rules and values; sets clear targets for ASEAN; and presented accountability and compliance2. Regional cooperation under ASEAN auspices further evolved in 2006 with the ASEAN Defense Ministers Meeting (ADMM) that began coordination of defense policy through confidence-building measures, joint exercises and preventive diplomacy. The ADMM was subsequently expanded to ADMM+ comprising of ASEAN and its 8 dialogue partners and held its first meeting in 2010.

Military Expansion and Economic Cooperation

ASEAN has sought expansive military strengthening (without a defined adversary) and deeper cooperation at the same time. For a region that strives for non-military dimensions of regional security, in ASEAN there has been a net increase in defense budgets every year since 2010. In a self-perpetuating security dilemma, there has long been an unsaid competition and latent conflict between ASEAN countries. Heightened tensions with China over the South China Sea are also reflected in substantial growth in military expenditure in 2015 by Indonesia (16%), the Philippines (25%) and Vietnam (7.6%). With land-reclamation programs and fears that China might declare an air defense identification zone over South China Sea, much of the increased ASEAN defense spending has been on building air and naval capacity. Though in 2014, the average military expenditure in the ASEAN as a percentage of GDP was 2.2%, it has ranged from 0.8% (Indonesia) to 4.3% (Myanmar).Singapore accounts for the largest defense spending in ASEAN followed by Indonesia, Thailand, Malaysia and then Vietnam. Vietnam has seen the steadiest increase in military expenditure in the region. In the decade between 2005 and 2014 - its military spending increased by 314%3. Many countries in ASEAN are also seeing the push for establishment of indigenous defense industries to boost their domestic economies.

On the economic side, ratio of total trade to GDP (2015 figures) is very high in case of ASEAN countries: Singapore(227.1%), Vietnam (169.5%), Malaysia (127.7%), Cambodia (106.6%), Thailand (105.4%) and Brunei (72.8%). The lowest trade to GDP ratio is for Indonesia (34.2%) which too is significant in view of global statistics4. After intra-ASEAN trade that accounts for 23.9%, China is the largest trading country and region partner for the ASEAN as a whole. Chinese diaspora or the ‘Bamboo Network’ in ASEAN countries plays a substantial role in integrating ASEAN with China. In this scenario of high dependency on trade, China assumes pronounced significance as it accounts for 15.2% of total ASEAN trade with Hong Kong accounting for another 4%5. Further, China is also the leading importer for almost all ASEAN countries with its net balance of trade in favor of ASEAN as it accounts for 19.4% of ASEAN’s imports (exports are 11.3%)6.

China’s Economic Leverage & Cashbook Diplomacy

Timely Chinese aid and stimulus have further entrenched China’s importance for the ASEAN economy such as during the 1997 Asian Financial Crisis and later the 2008 Global Recession. With many ASEAN countries currently seeing a severe contraction in their GDPs -Brunei, Indonesia, Malaysia, Singapore, and Thailand7 - the need to open new avenues of economic activity in manufacturing and services has become all the more imperative. Hence, most ASEAN countries have a critical need to boost their infrastructure, where the importance of China in their national agenda goes further up. China’s cashbook diplomacy through ventures such as the Asian Infrastructure Investment Bank (AIIB), One Belt One Road (OBOR), Maritime Silk Road etc., grant China with tremendous economic leverage that can be used to push its interests on the region. Thus, instead of firm balancing or bandwagoning with the US or China, ASEAN has tenaciously pursued greater economic and diplomatic enmeshment with one another and a rising China, while increasing military cooperation with the United States.

ASEAN’s Challenge of Dealing with Rise of China

ASEAN’s biggest challenge has been on formulating a cohesive policy on how to deal with rise of China in the region. Inability to present a united front to China on the territorial disputes in South China Sea has been an Achilles heel for ASEAN. The ASEAN principles of non-interference and non-confrontational bargaining along with weak leadership on political and security issues has prevented an overarching ASEAN consensus on dealing with China. The 2002 DOC has been successful in only imposing moral constraints on military recourse by claimant countries. China on the other hand, has not shied away from exploiting divisions among ASEAN members, and thwart the formation of a formal and binding code of conduct (COC). From the first working group on COC in 2005, China has vociferously stated that the disputes should be resolved on a bilateral basis rather than a multilateral one and without interference from external parties. It has also reiterated that disputes over the Spratly islands are not an ASEAN–China issue and should not have any implications on China–ASEAN relations.

While Cambodia and Laos have expressed support for China’s stance and Brunei and Malaysia have preferred staying silent, Vietnam and Philippines have been quite vocal in their discontent over China’s assertiveness in South China Sea. Indonesia, not being in a fundamental conflict with China nor a formal US ally, nor having strong economic interdependencies on China, has vacillated from its desire to be an honest broker in South China Sea to maintaining its stake in Natuna Islands. During the 28th and 29th ASEAN Summits held in Laos, ASEAN faced the prospect of being unable to issue a statement after a meeting for only the second time in its 49-year history. The first time, in 2012, was also due to Cambodia's resistance to language about the South China Sea8. ASEAN’s moderated reaction and no mention of the historic verdict of Hague International Tribunal in their joint statement made global headlines and raised questions on credibility and unity of ASEAN.

Beijing’s Invites to ASEAN Heads-of-State

Coincidental or not, post-Hague ruling to just before the US presidential elections, there has been a flurry of diplomatic visits by Myanmar, Vietnam, Philippines, and Malaysia to China. Beginning with Myanmar Counselor Aung San Suu Kyi’s first visit following the inauguration of the National League for Democracy (NLD) government in March this year in August, China has been keen to reach out and upped its charm offensive on ASEAN countries. Philippines President Rodrigo Duterte’s apparent reversal of Philippines’s strategic alignment from the US to China during his October 18-21 visit was a substantial success for China from the hostility following the South China Sea Arbitration awarded to Philippines by the Hague International Tribunal Ruling. Thus, while doubts have been cast over US president-elect Donald Trump’s commitment to sustain the US pivot in Asia, China has extended invitations to ASEAN heads-of-state and sought to utilize its economic leverage in the region.

Myanmar Counselor Aung San Suu Kyi visited China from August 17-21 at the invitation of Premier Li Keqiang. Beijing recalibrated its approach towards Suu Kyi after underestimating her influence and scale of political change underway in Myanmar. By extending Suu Kyi an invite, Beijing has sought to reset China-Myanmar relations that grew frosty under the previous military-backed government in Naypyidaw. Suu Kyi, on the other hand, knows Chinese support is critical to ending 70 years of civil war with ethnic minorities that seek greater autonomy. Myanmar’s rich mineral deposits and proximity to the Indian Ocean has acquired it tremendous Chinese interest that sees it as a viable shortcut for oil and gas imports from the Middle East to reduce its ‘Malacca Dilemma’. China recently has built oil and gas pipelines from Myanmar’s coast into southern China and also won a contract to develop the Kyaukpyu port on the Bay of Bengal9. By playing a proactive role in peace talks between rival ethnic groups and the government, China also hopes to restart the $3.6 billion Myitsone Dam project, which was suspended in 2011 and is a major source of friction between the two countries.

Vietnamese Prime Minister Nguyen Xuan Phuc also visited China at the invitation of Chinese Premier Li Keqiang from September 10 to 15. Beijing’s invitation to PM Phuc assumes even more significance after Indian Prime Minister Modi visited Hanoi in early September. Modi’s visit to Vietnam was the first by an Indian PM in 15 years, and brought an announcement of a US$ 500 million line of credit from India for defense purchases10. Vietnam has developed one of the most extensive power projection capabilities in Southeast Asia, including one of the largest navies, with advanced Kilo-class submarines, and a highly sophisticated missile force in the region11. Being one of the most vocal ASEAN claimants in South China Sea, Beijing is aware that Vietnam cannot be ignored. During the visit, China and Vietnam embarked on a number of trust-building efforts and later issued a joint communiqué, and inked a number of important cooperation documents. PM Phuc also attended the 13th China-ASEAN Expo (CAEXPO) and China-ASEAN Business and Investment Summit (CABIS) in Nanjing city of Guangxi province during his visit12.

Philippines President Rodrigo Duterte visited China from October 18 to 21 at the invitation of President Xi Jingping. Despite the deteriorating China-Philippines relation due to the Hague Ruling, Beijing’s timing to issue an invite to Duterte has been impeccable. Duterte’s presidency has been marked by vehement controversy and incurred staunch US criticism on his ‘Drug War’ that has led to extrajudicial killing of more than 3,100 alleged drug users and dealers by police and vigilantes13. The US-Philippines Security Treaty and Enhanced Defense Cooperation agreements that allows US to use military bases in Philippines and engage in joint exercises, have been a vital pillar of US’s pivot to Asia. After making incendiary comments on the United States in recent months, Duterte in a speech in Beijing announced his military and economic "separation" from the United States14. Duterte’s approach has been in direct contrast to the pursuit of stronger ties with US and filling an arbitration case against China by his predecessor. As per later media reports, during his visit, Duterte signed 13 MoUs with China and secured US $24 billion of investments15. Following his visit, Beijing has also allowed Filipino fisherman to return to the contested Scarborough Shoal in the South China Sea16.

Malaysian Prime Minister Datuk Seri Najib Razak visited China at the invitation of President Xi Jingping from October 31 to November 6. Chinese trade and investment is crucial at a time when Najib needs a further boost in the Malaysian economy so as to enhance his performance legitimacy to govern the country and bolster the chances of his returning to power in 2018. This is even more important after the scandal of billions being siphoned off from state development fund 1 Malaysia Development Bhd (1 MDB) tarnished his reputation and triggered widespread calls at home and abroad for his resignation. As per later media reports, the six day visit led to US $ 34 billion of 14 MoUs between Malaysia and China. Malaysia also finalized its first significant defense deal with China of purchase of four littoral mission ships from China for just $100 million each. Along with strategic antecedents, a 13% cut to US $ 3.6 billion in Malaysia's 2017 defense budget may be responsible for the decision to purchase from China17. Further, the highly publicized high-speed rail project linking Kuala Lumpur and Singapore is also speculated to be handed to Chinese which is worth US $15 billion18.

Conclusion

Whether the recent events are a victory for China or loss for the US, they are important because they come just months after Beijing's expansion in the South China Sea was rebuked by an international court. Unlike the West, Beijing has rejected the notion of universal political ideals and values founded on human rights and democracy. Similar to the ASEAN way, it has sought non-interference and promoted political consensus centered on material gains from trade and investment19. With its recent efforts to reach out, China has been successful in reversing US military gains while expanding its own footprint in the region. However, ASEAN’s decision to pursue simultaneous and equidistant improvement in relations with the US and China is more than just a function of uncertainty about China’s rise or the staying power of the US. While Cold War era alliances have endured, ASEAN has been highly averse to building new alliances20.

Along with the upsurge in regional trade flows and diplomatic activity, ASEAN governments have had to build up higher levels of sensitivity to one another than in the past because of the growing IT inter-connectivity among its civilian populations. Further with the growing clout of other Asian giants such as India and Japan in the neighborhood, ASEAN has been able to avoid firm balancing or bandwagoning with China. India’s Act East policy and Japan’s initiatives such as Expanded Partnership for Quality Infrastructure and Free and Open Indo-Pacific Strategy have sought to allay ASEAN maritime and investment concerns over China by providing valuable partnerships and thus ensure systemic hedging as a foreign policy tool by ASEAN countries in near future too.

References

1. Amitav Acharya, Constructing a Security Community in Southeast Asia: ASEAN and the problem of regional order (London: Routledge, 2001), 63.
2. ASEAN Website: http://asean.org/asean/about-asean/overview/ .
3. Center for Strategic & International Studies, Cogitasia Blog: Zachary Abuza, Analyzing Southeast Asia’s Military Expenditures, May 7, 2015, http://cogitasia.com/analyzing-southeast-asias-military-expenditures/.
4. ASEAN statistics: http://asean.org/storage/2015/09/table2_as-of-Aug-2016-rev.pdf.
5. ASEAN statistics: http://asean.org/storage/2016/06/table24_as-of-30-Aug-2016-2.pdf.
6. ASEAN statistics: http://asean.org/storage/2016/06/table20_as-of-30-Aug-2016-2.pdf.
7. ASEAN statistics: http://asean.org/storage/2015/09/table1_as-of-Aug-2016_rev.pdf.
8. Reuters: Manuel Mogato and Michael Martina, ASEAN deadlocked on South China Sea, Cambodia blocks statement, Jul 24, 2016, http://in.reuters.com/article/southchinasea-ruling-asean-idINKCN1040HU.
9. The New York Times: Jane Perlez and Wai Moe, Visiting Beijing, Myanmar’s Aung San Suu Kyi Seeks to Mend Relations, Aug 17, 2016, http://www.nytimes.com/2016/08/18/world/asia/visiting-beijing-myanmars-a....
10. The Wall Street Journal: Vu TrongKhanh, India’s Modi Agrees to Provide Vietnam With a $500 Million Defense Loan, Sep 3, 2016, http://blogs.wsj.com/indiarealtime/2016/09/03/indias-modi-agrees-to-prov....
11. Center for Strategic & International Studies, Cogitasia Blog: Zachary Abuza, Analyzing Southeast Asia’s Military Expenditures, May 7, 2015, http://cogitasia.com/analyzing-southeast-asias-military-expenditures/.
12. China ASEAN Expo: Vietnam News Agency (VAN), Sep 11, 2016, http://eng.caexpo.org/index.php?m=content&c=index&a=show&catid=10021&id=... .
13. Reuters: Karen Lema and Manuel Mogato, Philippines' Duterte likens himself to Hitler, wants to kill millions of drug users, Oct 1, 2016, http://www.reuters.com/article/us-philippines-duterte-hitler-idUSKCN1200B9.
14. CNN: Katie Hunt, Matt Rivers and Catherine E. Shoichet, In China, Duterte announces split with US: 'America has lost', Oct 20, 2016, http://edition.cnn.com/2016/10/20/asia/china-philippines-duterte-visit/.
15. Covert Geopolitics: China & Philippines Sign $24 Billion Deals; Russia Asks For Du30 Wish List, Oct 21, 2016, https://geopolitics.co/2016/10/21/china-philippines-sign-9-billion-mous-....
16. The Washington Post, Emily Rauhala, Philippines says China has stopped chasing fishermen from contested shoal, Oct 28, 2016, https://www.washingtonpost.com/world/report-filipino-fishermen-return-to....
17. Reuters: Tom Allard and Joseph Sipalan, Malaysia to buy navy vessels from China in blow to U.S., Oct 28, 2016, http://www.reuters.com/article/us-malaysia-china-defence-idUSKCN12S0WA.
18. South China Morning Post: As Malaysia PM Najib visits, Japan to compete with China for high-speed rail project, Nov 15, 2016, http://www.scmp.com/news/asia/east-asia/article/2046139/malaysia-pm-naji... .
19. RAND: Timothy R. Heath, South China Sea Spat a Symptom of U.S.-China Jockeying for Advantage, June 27, 2016, http://www.rand.org/blog/2016/06/south-china-sea-spat-a-symptom-of-us-ch....
20. Van Jackson, Power, trust, and network complexity: three logics of hedging in Asian security,International Relations of the Asia-Pacific Volume 14 (2014) 331–356.