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Asia-Pacific's smaller states can be active players in great-power rivalry

US-China tensions are raising anxiety but Trump and Xi do not hold all the cards

Malaysia is lukewarm about joining military exercises yet accepts aerial surveillance drones from the U.S.   © AP

It has become commonplace for Asia-Pacific leaders to voice anxiety as the U.S. and China spiral toward open-ended economic and strategic confrontation.

Regional fears of collateral damage from great power competition may be well founded, but the publicly-expressed concerns do not fully capture a complex push-pull interplay among the U.S., China and smaller states.

To put it simply, there is opportunity as well as danger for countries caught up in the intensifying great-power regional rivalry.

Singapore's Prime Minister Lee Hsien Loong was the most recent leader to express his fears, imploring the jousting behemoths at the Shangri-La Dialogue security dialogue in Singapore in early June to coexist peacefully, without forcing exclusive choices on smaller states.

When the elephants fight, the grass gets trampled, he told the annual conference, run by the International Institute for Strategic Studies.

A few days earlier, Lee's countryman Bilahari Kausikan, an influential retired diplomat, warned in an article in Singapore's Straits Times newspaper that there is no assured "sweet spot" for Singapore, which has sought assiduously to navigate a profitable path between the U.S. and China.

Similar anxieties are voiced on an almost daily basis. Squeezed by U.S.-China rivalry, smaller countries are bemoaning their constricted room for maneuver. They worry that the open and inclusive "regional architecture" that has long prevailed is looking more like rival encampments under construction.

The angst is genuine. China's strategic revisionism and America's newfound desire to disrupt the economic status quo have punctured old certitudes. But smaller states are not as helpless or passive as first appears.

Singapore's Prime Minister Lee Hsien Loong implors the jousting behemoths to coexist peacefully.   © Reuters

As Lee noted, they "are not entirely without agency," though they lack the means to directly influence the strategic course of larger powers. Singapore would like regional states to develop more heft by aggregating their efforts into multilateral cooperation. But some may simply prefer to hawk their loyalties to the highest bidder.

The notion that states are being forced to choose is the public face of a more complex story.

Most states, from the South Pacific to Southeast Asia, including Australia, are in fact angling to maximize their gains from the intensifying competition between Washington and Beijing, for as long as this can be sustained without boiling over into armed conflict, or bifurcation into separate economic enclosures.

Many are actively petitioning both sides for economic and security benefits. Washington and Beijing must discriminate not only between the public and private views of regional states, but sift signals that are sometimes contradictory, as splintered national elites vie for varying interests and constituencies.

The dissonance between public and private messaging is particularly frustrating for the U.S., which still regards itself as the morally superior choice yet must contend with political elites that wish to draw a veil over their security cooperation with Washington, either for domestic reasons or to avoid giving offense to their main economic benefactor, Beijing.

But there should be nothing surprising about such promiscuous behavior. Just as Lee remarked that it is natural that China and the U.S. "will vie for power and influence," so it is normal for smaller states to exploit their transactional value in the marketplace of international relations. To adapt a phrase: When the elephants defecate, the grass also grows. For example, Vietnam is experiencing economic upside from the competition between Washington and Beijing, reaping a windfall as commerce seeks to circumvent U.S. tariffs targeting China.

Lee reminded his audience that Southeast Asia, a front line in the Cold War, is no stranger to the great game of nations. Some players are more subtle than others. Cambodia, directed by its authoritarian Prime Minister Hun Sen, comes closest in Southeast Asia to overt alignment with China. But how certain can Beijing be that Cambodia will be compliant after he departs the scene?

Under the rambunctious rule of President Rodrigo Duterte, the Philippines has noisily solicited China's financial favors, with limited success, while talking down Manila's alliance with the U.S. But, under the political radar, the Philippines' armed forces have maintained steady links with the U.S. military, courting assistance from Washington and its allies to try to close glaring gaps in maritime awareness in the South China Sea.

Malaysia, under Prime Minister Mahathir Mohamad, has given alternating signals to China and the U.S. Mahathir's decision to revisit his predecessor's commitments to Beijing's Belt and Road Initiative has not deterred him from doubling down on China's primacy as an investment and trading partner. Mahathir has made clear that he does not like foreign warships operating in waters close to Malaysia, yet has privately petitioned Western countries to maintain diplomatic pressure on China over the South China Sea.

Malaysia is lukewarm about joining certain types of military exercises for fear of antagonizing China, yet accepts aerial surveillance drones from the U.S., for free, to help it monitor its surrounding waters. Such a mix of warm and cold signals is not necessarily contradictory, but can easily be misread.

Understanding the great power dynamic in the region as more push-pull than great-power push is helpful for sizing up the risks. Once influence starts to be measured in zero-sum terms, the stage is set for big powers to be lured into questionable commitments of their own. For example, could the U.S.-Soviet missile crisis of 1962 have happened without the "agency" of Cuba in being willing to host the weapons?

More relevant to the Asia-Pacific region, the 1960 Laos Crisis, where communist and non-communist forces were in conflict, now all but forgotten, nearly triggered U.S. military intervention in Southeast Asia long before American combat troops were sent to South Vietnam. The contemporary U.S.-China strategic dynamic is not as febrile, but the presence of so many sovereign actors is undeniably complicating.

Lee noted that the U.S. has the most difficult adjustment to make, as the preeminent power and guardian of the status quo. Washington's credibility is more obviously on the line than Beijing's, especially in regard to its security guarantees to states in the region. But great power interests can clash in more marginal grounds where the rules of the game are murkier.

The South Pacific increasingly has the feeling of a subregion where the U.S. and its Australasian allies are rubbing up against China in unpredictable ways. Local elites are playing for a share of the spoils from great power competition, just as in Southeast Asia, but with less experience.

I do not mean to pity the U.S. and China, or criticize the smaller powers for seeking to be more than bystanders in the game of nations. Theirs is a tricky dilemma. But sometimes it is the smallest players who make the running, for better or for worse.

Euan Graham is executive director of La Trobe Asia, a unit of Melbourne's La Trobe University, and a non-resident fellow of the Lowy Institute.

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