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Lack of an economic strategy is hurting US in Southeast Asia

Lloyd Austin's recent tour of region was a success, but tensions remain

| Southeast Asia
Rodrigo Duterte greets Lloyd Austin with a friendly fist bump at the Malacanang Palace on July 29: Austin's biggest achievement was convincing Duterte to fully restore the Visiting Forces Agreement.   © Malacanang Presidential Photographers Division/Reuters

Lynn Kuok is Shangri-La Dialogue Senior Fellow for Asia-Pacific Security at the International Institute for Strategic Studies.

Neglected by top U.S. officials since President Joe Biden took office in January, Defense Secretary Lloyd Austin's first official tour of Southeast Asia last week -- which included stops in Singapore, Vietnam and the Philippines -- was closely watched.

Aimed at strengthening the U.S. network of allies and partners in the region, Austin struck the right tone. His biggest achievement was convincing Philippines President Rodrigo Duterte to fully restore the Visiting Forces Agreement that underpins broad aspects of U.S.-Philippine cooperation, including military exercises and U.S. access to Philippine military facilities.

While hawks hoping for a more stridently anti-China speech would have been disappointed, Austin's address, which was hosted by the International Institute for Strategic Studies in Singapore, struck a solid and reassuring note.

Laying out Beijing's transgressions, Austin dropped the deeply ideological and divisive language employed by the Trump administration and the Biden administration in its first six months. This was the right approach for a region wary of an ideological battle that further deepens U.S.-China divisions and heightens the risk of confrontation.

Some expressed concern that Austin's speech failed to capture the urgency of the challenges posed by Beijing. But a region that lives in the dragon's shadow needs no reminding that the dragon breathes fire. Southeast Asia wanted to hear that Washington would be tough where it mattered but not be unduly destabilizing.

Austin also demonstrated sensitivity to some of the region's concerns, an important foundation for strengthening partnerships.

His focus on COVID-19 vaccines in his speech and meetings in Vietnam was welcome given the dire need in much of Southeast Asia. China has had a head-start when it comes to vaccine diplomacy, but the U.S. must not be absent.

Austin's reiteration of support for the sovereignty and sovereign rights of Southeast Asian states afforded under international law was also significant.

For several years, the U.S. and its Western allies have been more focused on "freedom of navigation" in the South China Sea. But such concerns matter less to Southeast Asian littoral states who worry about their ability to fish and explore for oil and gas in their exclusive economic zones without being harassed by Chinese vessels.

Austin's delicate handling of the Taiwan issue, where he affirmed Washington's commitment to the Taiwan Relations Act but emphasized U.S. adherence to its One China policy, was another welcome sign, as was his reference to the central role played by the Association of Southeast Asian Nations.

By highlighting the common principles holding the region together -- sovereignty, the rule of law, freedom of the seas, adherence to core international commitments and the peaceful resolution of disputes -- and not making too much of human rights and democracy, Austin avoided the kind of language that makes a region of illiberal democracies and authoritarian states uncomfortable.

Finally, Austin repeated that the U.S. is not asking the region to choose between itself and China. Still, despite the speech striking the right notes, tensions remain regarding the broader U.S. approach to the Indo-Pacific.

Yes, Austin was careful when it came to Taiwan, but reports of China seeking to take control of the island within six years stemming from outgoing U.S. Indo-Pacific Commander Philip Davidson's testimony before the Senate Armed Services Committee have caused alarm.

U.S. Navy Admiral Philip Davidson: his testimony before the Senate Armed Services Committee has caused alarm.   © AP

A Taiwan conflict involving the U.S. would be a nightmare scenario, especially for those U.S. allies and partners with facilities from which American assets may be deployed.

In his address in Singapore, Austin said the U.S. is "focusing on complementary mechanisms," including the Quadrilateral Security Dialogue, or Quad, among Australia, India, Japan and the United States. This could signal a possible shift in attention and resources away from ASEAN.

Even before the Trump administration revived the Quad, Southeast Asian diplomats complained the U.S. was neglecting ASEAN. China, in contrast, has diligently sought to engage bilaterally and multilaterally with Southeast Asia. The U.S. should not cede ASEAN to Beijing.

Geopolitical tub-thumping about the contest between authoritarian and liberal states might stir hearts in the U.S. and potentially strengthen some ties in Europe, but the framing works poorly in Southeast Asia where states reject a one-size-fits-all approach to governance and are concerned that such rhetoric might one day be directed against them.

The lack of a clear economic strategy is perhaps the weakest link in Washington's Indo-Pacific strategy, where China's pull has not been its authoritarian system but its economic potential and strength. By focusing too much on ideology, the U.S. only reveals how few arrows it has in its quiver.

Washington's ability to compete more effectively on the economic front was hurt by former President Donald Trump's withdrawal from the Trans-Pacific Partnership trade deal. And President Biden's "foreign policy for the middle class" means that the U.S. is unlikely to conclude trade deals with the region in the short term.

The U.S. insists that it is not asking Southeast Asia to choose between itself and China. But the economic and technological decoupling between the two powers might ultimately force the region's hand, irrespective of U.S. assurances.

America must now build on the momentum of the first high-level trip to Southeast Asia under the Biden administration. It is playing catch-up. But this will involve sustained attention and the resolution of the many thorny contradictions in the U.S. Indo-Pacific strategy.

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