US foreign policy and Asia
For the United States, the visit in February of Secretary of State Hillary Clinton to East Asia, particularly to China, provided early evidence of the new Obama Administration’s recognition of the region’s significance, and the abiding strategic interest that the US (and indeed the world) now has in China’s success.
In Beijing American self-interest was displayed by the way Clinton stressed that even in these much troubled economic times, US treasury bonds and other government debt remain a good investment for China. She invited China’s cooperation in stabilising the world economy, and joint leadership in international efforts to mitigate climate change.
The visit occurred against a background in which forecasts that East Asia might escape the adverse impacts of the unfolding global economic crisis have proved mistaken. A key question now is how far will the crisis – responsibility for which is sheeted home to totally inadequate financial supervision in the US and Europe) –motivate East Asian governments to extend moves towards their deeper regional integration?
It will be recalled that in 1997, at the time of the East Asian economic crisis, the US and the International Monetary Fund (IMF) were roundly blamed inside the region for indifference. This drove the emergence of the so-called ASEAN Plus Three process (Northeast and Southeast Asia acting in concert) that widened regional habits of cooperation across a broad front, including through the establishment of a financial stabilisation mechanism.
The ASEAN Plus Three process subsequently initiated the first ever East Asian Summit (EAS), which was later extended in 2007 to include New Zealand, Australia and India. It is not clear whether ASEAN Plus Three or the EAS provide the preferred focus for Asian governments to pursue deeper regional integration.
For New Zealand, however, EAS membership plus the web of commercial, economic and political connections being fashioned through FTA arrangements, actual and prospective, with Southeast Asia, China, India and the Republic of Korea afford this country a strategically important platform at a time of profound unpredictability. [Prime Minister John Key will attend the East Asia Summit in Thailand on 11-12 April this year.]
The US economy remains a vital and indispensable force if global recovery is to be achieved. Washington is immersed in the colossal task of mobilising vast resources so that America can itself surmount the crisis, although there is no cast iron guarantee of success. But the effort will completely engross the conduct of US foreign policy which, on all present evidence, will be concentrated on the perilous insurgency in Afghanistan/Pakistan and on the intractable predicament of the Middle East.
Yet how the US responds and relates to East Asia constitutes a vital geopolitical challenge at a time when its financial and economic leadership credentials have been severely tarnished. Even as (or if) their focus shifts to the potential for greater regional integration, major Asian economies must be implicated in global efforts to create a framework that assists global recuperation.
The effectiveness of the G20 as a global crisis manager is as yet unproven, but supervision of the relevant international institutions – IMF, IBRD (the World Bank) and WTO – must now genuinely involve major Asian players. The convention inside those institutions, whereby resolute domination of process and management by Atlantic governments (undeniably the principal authors of present global misfortune) has been the norm for more than half a century, needs now to be substituted by arrangements that reflect new realities.
Terence O’Brien is a Senior Fellow at the Centre for Strategic Studies (CSS:NZ) at Victoria University of Wellington.
► On 6 April, the Wellington branch of the New Zealand Institute of International Affairs organised a lecture by Professor Ngaire Woods on governing the global financial crisis.
Professor Ngaire Woods is one of the world’s leading experts on global economic governance. A professor of international political economy at Oxford University, she is an adviser to the British Prime Minister, the International Monetary Fund and the United Nations. She is director of Oxford’s Global Economic Governance Programme.
Professor Woods spoke of the need to reform global financial institutions and improve global financial regulation. She stressed the need for governance reform at institutions like the IMF, so that major non-Western global players and large foreign reserve holders like China can become more involved in these structures and contribute to effective international financial co-operation.
