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Background Briefing: Southeast Asia: U.S. Pivot and Regional Responses Carlyle A. Thayer June 13, 2012

[client name deleted] Q1. Can you describe how countries in the region balance their ties with US and China or try to embrace the US as a security hedge, without sacrificing economic benefits of relations with China. Answer: All ten members of ASEAN are linked to China economically through the China-ASEAN Free Trade Agreement. This is the central structure of the relationship. The countries vary in their relations with China and the United States. Two mainland Southeast Asian states, Laos and Myanmar have land borders with China that facilitate commercial activities. Cambodia and Thailand are dependent on access to the Chinese market. Cambodia adopts a policy of non-offense and Thailand has been one of the most circumspect countries in trying to tone any confrontation between ASEAN and China. At the same time, Thailand is U.S. ally, Cambodia has developing defense cooperation ties with the U.S. Myanmar is quickly learning that its political reforms will lead to greater economic opportunities with the U.S. and European Union, both of which have suspended sanctions. Vietnam, which has a massive trade deficit with China, needs access to the U.S. market. It pursues a policy of cooperation and struggle. That is, Vietnam cooperates for mutual benefit and struggles where its national interests are threatened. Vietnam prefers to be the pivot between China and the U.S. This translates into a policy of drawing in each country and giving them a material interest in Vietnams stability. It raises the prospect that if either country challenges Vietnams national interests, Vietnam could shift to the other country. Indonesia adopts a more centrist position because of its size and geostrategic importance. It cooperates across the board with China while developing its economic links to the U.S. and defence ties as well. The Philippines seems to have thrown all caution to the wind and has moved to snuggle up to the U.S. as a treaty ally. Q2. Reflect ambivalence, if any, about the US policy. Answer: U.S. policy seems pretty clear with respect to its allies and strategic partners, the Philippines, Thailand and Singapore. With Thailand the U.S. is working hard to reverse the drift of recent years when Thailand was a treaty ally in name

2 only. Rather, the Thai military was close to the U.S. but the civilian politicians favoured good relations with China. The U.S. has set the objective of stepping its relations with Indonesia, Malaysia and Vietnam as potential strategic partners. The U.S. has shown some reservations about Laos, Cambodia and in some respects Vietnam due to their human rights record. I do not see ambivalence as a significant part of U.S. policy under the Obama Administration. Q3. Question the US fiscal ability to support its "pivot strategy. Answer: I do not think this is a concern for the life of the Obama Administration, even if re-elected to a second term. Irrespective of the budgetary situation, the U.S. will still give priority to the Asia-Pacific and will remain the dominant military power for several decades. The U.S. pivot strategy does not entail massive redeployment of forces to the region. Rather regional perceptions are the key. The constant expression is that relative power is changing and the U.S. is on the decline. Relative power may be changing because China is on the rise. Q4. Do you share comments that US pivot policy has emboldened Manila and Hanoi to push their claims in the South China Sea? Answer: It is the U.S. alliance with the Philippines that had driven Manila to take a stance to resist Chinese encroachments into its maritime domain. This was clear well before the pivot strategy was announced. Both Manila and Washington are now taking full advantage of the pivot strategy to challenge Chinas claims to the South China Sea. Vietnam began its own force modernisation program before the US announced its pivot strategy. Vietnam has used diplomacy to manage its relations with China and contain the South China Sea issue. The result is that it is all quiet on the East Sea front. Suggested citation: Carlyle A. Thayer, Southeast Asia: U.S. Pivot and Regional Responses, Thayer Consultancy Background Brief, June 13, 2012.