Is ASEAN about to fracture?

By East Asia Forum Editors 
President Obama is on his final trip to Asia as president for the G20 summit in Hangzhou in China and the East Asia Summit (EAS) in Vientiane, Laos. The leaders of the Asia Pacific nations, including some of the largest and most powerful in the world — eight of them G20 members — will meet in Vientiane because Laos is the chair of ASEAN in 2016.

The 10 Southeast Asian nations making up ASEAN will also hold their summit in Vientiane, almost as a sideshow alongside the EAS. Yet, they are there because ASEAN is at the centre of Asian regionalism and regional cooperation. The ASEAN grouping celebrates its 50th anniversary next year and continues to defy the odds on falling apart. Conceived for geostrategic reasons, it has been pronounced dead or useless countless times while it still plays a key role in managing major power relationships in Asia and across the Pacific.

ASEAN is very much greater than the sum of its parts. At its best, when unified and on message, it projects the interests of 625 million people from a diverse set of countries ranging from some of the richest and most technologically advanced to some of the poorest countries in Asia and globally. Collectively it is a larger destination for US direct investment than China or Japan.
When divisions appear amongst the ASEAN 10 — as has been happening again of late — or progress on economic integration lags behind deadlines — which is the norm — ASEAN looks more like a passenger than the driver of Asian regionalism.

Because China and Japan (and South Korea) are plagued by political squabbles, the ASEAN plus three grouping including ASEAN’s three Northeast Asian neighbours has been useful for promoting broader regional economic and political cooperation. Australia, India and New Zealand, who are all in the neighbourhood and have strong interests in East Asia, build off the plus three and are part of the broader ASEAN plus six grouping. This was initiated in part by Japan’s desire to have more like-minded countries included in the East Asian arrangement. The EAS was set up to include the United States so Russia had to be brought in too. That ASEAN provides the venue for these powers to get face time is an achievement in itself, even though it could do more to set the agenda and progress Asian and trans-Pacific cooperation.

ASEAN has been successful in helping to institutionalise major power relations in Southeast Asia and in defining the role that great powers play, while giving voice to smaller states. A weakened ASEAN would put all that at risk.

Since the end of the Cold War the economic impact of ASEAN has been more important than its geopolitical impact. A necessary condition for ASEAN to thrive is for its members to deepen economic integration primarily as a base for the broader Asian supply chains that drive trade and economic growth in the regional economy.

The ASEAN Economic Community (AEC) was launched at the end of 2015. It’s an ongoing project towards a single market that has a long way to go and requires member states to commit to and deliver on difficult reforms — something not many have shown the willingness to do in recent years. Doing so collectively will help expand the benefits of regional integration but it is a slow process and the headwinds of anti-globalisation in the rest of the world are not going to make it faster. Much of the region is still very poor or at risk of becoming stuck in a middle-income trap, unable to deliver high incomes. Lifting living standards and doing so while reducing inequality, is a top priority in ASEAN economies.

The AEC sets the right agenda to achieve that — a gift for which many regions would be grateful. The rapid growth of East Asia in the second half of the 20th century was inclusive; now Asia must return to inclusive growth in order to sustain its future development.
ASEAN’s existential threats
ASEAN once again faces existential threats to its unity and centrality as Mathew Davies explains in this week’s lead essay. It faces the external pressure of ‘rival Chinese and US ambitions’, internal tensions and questions of legitimacy in the eyes of its people, according to Davies.
Davies says ‘[n]either the United States nor China seem willing to make ASEAN unity a strategic goal’. That’s because it’s easier to ‘harness ASEAN, unified or not, for their own ambitions’. It’s easier to deal with individual member nations and the result is that some align with Washington, others with Beijing and most hedge between both.

The South China Sea tensions have exposed these divisions. It does not help that Indonesia, ASEAN’s biggest member, has shown a tendency to ‘drift away from multilateralism towards a more bilateral and global heavyweight role’, as Davies explains. Indonesia dominates ASEAN in terms of size and is ASEAN’s only G20 member, but has been inclined under its current President, Joko Widodo, to pursue its own interests independently of the ASEAN group.

Former Australian Prime Minister Paul Keating last week called for Australia to join the ASEAN grouping in the context of managing its relationships between the United States and China. Keating’s call suggests that in the midst of these emerging divisions, ASEAN must be doing something right.

ASEAN’s inability to take sides between the United States and China as a group, whether on the South China Sea or other issues, may frustrate many. That same strategic incoherence, however, can be a useful buffer between the superpowers even if it does little to broker cooperation and avoid conflict between them. The risk is that ASEAN, betwixt and between, becomes divided and fractures.
China is a larger economic partner than the United States for all ASEAN members. Many but not all of the ASEAN countries rely on the United States for security from a rising China. That certainly complicates affairs but does not make them unmanageable.

Though ASEAN’s potential is huge, it’s true that it has never fulfilled the more optimistic expectations for its role in the region. It has nonetheless played a critical geopolitical and geo-economic role.
ASEAN remains a force for keeping markets open in Asia, lifting the living standards of its 625 million people, acting as a facilitator of cooperation between major powers, reducing the risk of conflict in the Asia Pacific and bringing coherence to Asian arrangements. ASEAN’s greatest proponents would be shy of owning these lofty goals. But the continued existence of ASEAN itself is still critical to achieving them.
(The East Asia Forum (EAF) Editorial Group is comprised of Peter Drysdale, Shiro Armstrong, Ben Ascione, Ryan Manuel, Amy King and Jillian Mowbray-Tsutsumi and is located in the Crawford School of Public Policy in the ANU College of Asia and the Pacific)