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COVID-19 will shake ASEAN relations with China and US for years ahead

Aid to relieve mounting debt will force individual countries to make lasting choices

Representatives of ASEAN countries, pictured in Jakarta on Jan. 10: ASEAN countries incur higher risks of regime change.   © Reuters

Takashi Shiraishi served as president of Japan's National Graduate Institute for Policy Studies from 2011-2017.

Among the many questions arising from U.S. Secretary of State Mike Pompeo's recent speech declaring an end to America's "blind engagement" with China, one that has gone unanswered is what impact the intensifying U.S.-China rivalry will have on the Indo-Pacific, and in particular on the 10-member Association of Southeast Asian Nations.

With all states in the region -- including those identified as U.S. allies -- trying to balance the twin goals of national security and economic development, it would be a mistake to believe that the intensifying U.S.-China rivalry will force Indo-Pacific nations to make a choice between Washington or Beijing.

On the one hand, the U.S.-led security system underpins regional peace and stability. On the other hand, China's growing wealth offers Indo-Pacific nations economic security in the form of an expanded market and as an important source of investment funds.

Japan and Australia, the region's most prominent U.S. allies, both remain closely aligned with Washington when it comes to defense, technology, and telecommunications. South Korea, in contrast, is going its own way, shying away from even talking about a "free and open" Indo-Pacific.

More nuanced are the foreign-policy moves from individual ASEAN nations as they attempt to maintain their independence. Seizing the opportunity offered by China to gain economically, ASEAN nations are hedging their political and security risks by also trying to align themselves with the U.S.

Three factors largely inform this balancing strategy. First is ASEAN's place in the regional security system, which often hinges on whether a member country has a territorial dispute with China over the South China Sea, and whether it can take the U.S.-led security system as a given on which to build its own national security policy. Second is each country's degree of embeddedness in the regional and global economy, and how economically dependent it is on China. The third is whether there is a dynamic circulation of elites in each country.

Of the five maritime states -- Brunei, Malaysia, the Philippines, Indonesia, and Singapore -- which rely on the U.S.-led security system for protection, four are in conflict with China either over territory or access to their exclusive economic zones. All five states are also well integrated into the global economy and have a significant circulation of elites, making it difficult for China to form enduring politico-business alliances that would reshape their political economies.

Vietnam, a one-party-state that cannot rely on the U.S. for security, nevertheless has territorial conflicts with China and worries about becoming too economically dependent on Beijing. That explains Vietnam's cautious engagement with the U.S. on security issues, as well its attempts to enhance security cooperation with Russia, India, and Japan, and its participation in the Trans-Pacific Partnership Agreement.

Thailand, in contrast, is an American ally with no territorial conflicts with China. Facing a benign international environment with an economy well-embedded in global supply chains, Thailand can have its cake and eat it too. The three mainland ASEAN states -- Cambodia, Laos, and Myanmar -- have no territorial conflicts with China but are wedded to a system where the political and business elites are almost entirely dependent on Beijing.

What all ASEAN states have in common is the challenge of meeting their peoples' expectations.

On this score, major ASEAN countries did well during the 2010s, with per capita gross domestic product -- in constant prices -- expanding in Singapore by 23%, in Thailand by 29%, in Malaysia by 36%, in the Philippines by 42%, in Indonesia by 46%, and in Vietnam by 56%.

Improvements in living standards have naturally led people to expect an even better life in the coming years. Whether democratic or authoritarian, these governments have gained legitimacy through their economic performance. What the intensifying rivalry between the U.S. and China has done is to make it trickier for these ASEAN states to develop their own external policies. Now the COVID-19 crisis is changing peoples' expectations, as citizens look to their governments to not only improve their livelihood but protect their lives as well.

Free COVID-19 testing in Metro Manila, pictured on Aug. 6: the pandemic is changing peoples' expectations.   © Getty Images

While some ASEAN nations such as Vietnam, Thailand, and Malaysia have successfully managed the virus, and others such as Indonesia and the Philippines have struggled, more worrisome is the long-term economic damage. The sudden disruption of the global economy has led to plummeting demand for goods and services and set the stage for a region-wide economic downturn.

For now, ASEAN countries are focusing on keeping people healthy, minimizing economic losses, and borrowing heavily to restore growth. But looking ahead, many of these states will undoubtedly incur an even greater financial burden resulting from lower taxation revenues, higher social spending, and mounting piles of debt.

Saddled with the cost of servicing their debt, mired in long-term economic downturns, and unable to meet their people's expectations of a better life, ASEAN countries incur higher risks of regime change. Which ASEAN states turn to China or the U.S. and its allies -- or both -- for financial help will significantly shape international relations in Southeast Asia for years to come.

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