Chapter 10 Facing the Western Pacific

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Chapter 10 Facing the Western Pacific

Happily for the United States, the Western Pacific does not present an immediate crisis. However, given that peace in this region will not hold together indefinitely, the task for the American President over the next ten years is to prepare carefully and at leisure for the crises that are now developing just over the horizon. It should be recalled that for a good part of the last century Asia was one of the key trouble spots in the world. The past 30 years have been the exception, not the rule.

The central and longstanding balance of power in this region is between China and Japan, two nations locked in a tie for the world’s second largest economy. All other powers in the region—including South Korea, a substantial economic force in its own right—exist within the framework of the China-Japan-U.S. relationship. Some speak of an Indo-Chinese balance of power, but India and China are divided by a wall—the Himalayas—that makes sustained conflict or massive trade virtually impossible. Because of this, China and India might as well live on different planets. It is China and Japan that require careful manipulation, and it is in terms of China and Japan that the the United States will define its policy during the next decade.
It is difficult to imagine two nations more different, and economic friction has made them hostile to each other since their first modern war in 1895, when Japan destroyed China’s navy. Japan is a maritime power, utterly dependent on imports of raw materials for its survival as an industrial power. China, with its huge population and geography, is wedded to the land. From the time it first began to industrialized, Japan has needed Chinese markets, raw material and labor, and has wanted it all on the most favorable terms. The Chinese needed foreign capital and expertise, but didn’t want to fall under Japanese control. This wary interdependence of two economies led them into a brutal war in the 1930s and 1940s, during which Japan occupied much of the Chinese mainland. Neither country has fully recovered from that war, with hostility and distrust kept under control only by the dominant and intervening presence of the United States. During the Cold War, the U.S. maintained complex relations with each. It needed Japan’s industrial power as well as its geography in order to block the Soviet fleet from entering the Pacific, and Japan willingly gave both. In return, the U.S. gave the Japanese access to American markets for its industrial products, and did not require that Japan make a military commitment to American ventures around globe.
During the same era, the United States spent less than 25 years in marked hostility to Communist China, then, when the U.S. began to lose global power by losing the Vietnam war, and needed a counterweight to the Soviets, turned to China as an ally. China, afraid of the Soviet Union and seeing the U.S. as a guarantor of its own security, accepted the overture.
Neither China nor Japan was comfortable with the relationship the U.S. had with the other, but the U.S. managed the triangulation without difficulty because each country had more important issues to consider. China’s issues were geopolitical, the fear of the Soviet Union. Japan’s were economic; it’s post-war economic boom. They needed the United States for different reasons. The same has remained true since the fall of the Soviet Union. Even though China adopted Japan’s focus on economics, there was no collision between the Japan and China, and the balance came naturally, if not always with good grace.
When the Cold War ended, the nature of the balance changed. Japan’s period of rapid growth stalled out just as China entered a prolonged boom. Japan remained the larger economy, but China became the most dynamic—a situation that the United States saw as quite satisfactory. Focused primarily on economic issues, the U.S. did not look at either country from a genuinely geopolitical point of view. In general, Asia was a matter for the Treasury Department and for managers of trade relations, not something of concern to the Department of Defense.
Indeed, the Western Pacific and Southeast Asia have been remarkably stable since the 1980s—a fact all the more notable when we consider that throughout the 1960s and 70s, from Indochina to Indonesia, to China and elsewhere, Asia appeared to be one of the most unstable and unpromising regions in the world, a caldron of war, civil war, and general instability.
This is a salient fact for the President to bear in mind when dealing with the Western Pacific—it is an extraordinarily changeable place and in the next ten years we will see some things that are regarded as immutable, changed. For example China will face harsh tests while Japan will begin recovering from its failures. The consensus in 1970 was that Asia was inherently violent and unstable: the consensus in 2010 is that it is peaceable and stable. These contradictory assessments suggest the challenges in determining what Asia will look like over the next 10 years, how the Sino-Japanese dynamic will play itself out, and most important, what American policy should be toward the region.

China, Japan and the Western Pacific

When we talk about East Asia, we are really talking about a string of islands stretching from the Kuriles to Indonesia, as well as their relations with each other and with the mainland. When we talk about the mainland, more than anything else we are talking about China.
Insert Map of China

The map shows China stretching 2,500 miles inland and bordering on 14 countries. While China faces an ocean on only one side, it may be more useful to think of it as a fairly narrow island clinging to the edge of the Pacific, isolated to the north, and west, and south, by other, virtually impenetrable barriers.

Insert rain map of China

The image of an island holds up when we consider that the vast majority of China’s population lives in the eastern part of the country, within about 400 miles of the coast. The reason for this concentration is the availability of water. The line bisecting the map above marks the area within which there is more than 15 inches of rain a year, the minimum needed to maintain large numbers of people. The western part of China is too arid to maintain a large population so over a billion people are crammed into a region about the size of the United States east of the Mississippi, not including New England. This is Han China, the land of the ethnic Chinese.

Western China is a vast and quite empty near desert, surrounded by four non-Chinese buffer states—Tibet, Xinjiang, Inner Mongolia and Manchuria. These anchor China at its geographical limits: The Himalayas to the southwest, passable by small numbers, but not by armies and not by massive trade; Siberia to the north, a huge wasteland with no north-south transportation; and to the south, jungles and rugged hills stretching from Myanmar to the Pacific, isolating China from Southeast Asia.
Insert Terrain Map of China

Geographically, Japan is a much simpler place, consisting of four main islands and a series of much smaller islands to the north and south. As an archipelago, it is by necessity a maritime nation, a fact compounded by an extraordinary geological reality: Japan is almost entirely devoid of the minerals needed by industry. Industrialization has always meant importing resources, including oil, which Japan gets primarily from the Persian Gulf. This means that Japan, by definition, has global interests and vulnerabilities. Unlike China, which imports raw materials, but has sufficient supplies of its own to survive if necessary, Japan would collapse in a matter of months if its imports were disrupted.

Partly because of its isolation, and party because it industrialized rapidly in the 19th Century, Japan avoided the experience that China suffered at the hands of Europeans. The Europeans provided Japan with assistance in the form of industrial technology and military training. The British organized their Navy; the Germans their Army, and thus Japan evolved rapidly into a power that could challenge Europeans. Indeed, it defeated the Russians in 1905.
The one country alarmed by Japan’s sudden emergence was the only other industrialized power in the Pacific: the United States. Prior to World War II, the Japanese imported raw materials mostly from Southeast Asia and the East Indies. In order to secure access to these supplies, Japan needed a substantial military force, particularly a navy. The United States, which became a significant maritime power at the end of the 19th century, saw Japan’s naval build-up as something that might one day drive the U.S. out of the Pacific. Simply by becoming an industrial and naval power, then, Japan threatened the security of the United States. By expanding it naval force to defend itself against Japan, the United States threatened the security of Japan.
The result was World War II in the Pacific. The United States defeated Japan not just because of the Atom Bomb and the success of its island hopping strategy, but because its submarines cut off the supply of raw materials from the south and crippled Japan’s ability to wage war. Japan continued to resist, but its position was hopeless once the U.S. submarine campaign placed a stranglehold on their supplies.
Today, Japan is just as dependent on maritime trade for its industrial existence as it was in the 1930s and 40s. Japan still must import all of its oil, and it must do so through waters controlled by the United States Navy. That means that Japan’s industrial position depends on the willingness of the United States to guarantee the sea-lanes. It also depends on the United States not taking risks along its line of supply—particularly through the Straits of Hormuz.
Thus Japan is trapped in a subordinate relationship with the United States. It cannot afford to alienate the U.S. without first building up a military force able to secure its own supply lines, but this is an undertaking far more ambitious and expensive than Japan wants to attempt. It will be hesitant to begin this during the next decade, although Japan’s inherent insecurity due to import dependency, and American unpredictability and power will certainly cause Japan to become less dependent and exposed than it has been.
Like Japan, the Chinese can ill afford to alienate the Americans. The Chinese are dependent on the United States less for the flow of raw materials (although Chinese ships also pass through waters controlled by the United States) but as a consumer of Chinese industrial products. China, like Japan long before it, has become a massive exporter to the United States, so much so that the ability and willingness of the United States to buy is the foundation of the Chinese economy although as with Japan, China will be focused on preparing for what it will see as worse case scenarios.
Thus the regional balance desired by the U.S. will continue for a while, not so much because of Japanese-Chinese relations, but because of the relationship each of them has with the United States. As China and Japan increase their strength, they will inevitably notice the others rise and become concerned.
All other things being equal, Japan’s relationship with the United States will remain stable, but in China the story is different. Exports stabilize China’s economy and society, but it is not enough to have buyers. It is also essential that the sale of exports build Chinese prosperity. If exporting to the United States no longer serves that purpose, then Chinese interest in the relationship with the United States will shift, and China will move away from dependency. Over the next decade, China thus becomes an economic free agent, Japan would have to have the U.S. guarantee its interests against China, or shift its posture as well. Thus the balance that rests on the U.S.-China relationship actually depends on how the Chinese economy functions in the decade to come.

China and Japan

Part of the reason China was able to grow so dramatically since the 80s is that Mao restrained growth just as dramatically up until then. When Mao died and was replaced by Deng Hsiao Ping, the mere subtraction of ideology freed China for an extraordinary growth spurt based on pent up demand, combined with its native talents and capabilities.
In each decade after that initial spurt, China has continued to grow, but more slowly, and it is in this declining rate of expansion that the seeds of instability can be found.
Historically, China has cycled between isolation combined with relative poverty, and an openness to trade combined with social instability. From the 1840s when Britain forced China to open its ports, up to the Communists take-over in 1947, China was open, prosperous at least in some regions, and violently fragmented. When Mao went on the Long March and raised a peasant Army to expel the Westerners, he once again imposed relative isolation, reduced the standard of living for everyone, but created a stability and unity that China had not experienced in almost a century.
This oscillation between openness and instability, and enclosure and unity, is based in part on the nature of China’s primary economic asset—cheap labor. When outside powers are allowed to invest in China, they build the kinds of factories and businesses that take advantage of that abundant Chinese resource. And yet the purpose of these factories is not primarily to sell in China but to produce goods that can be sold in other countries. Accordingly, the primary focus of investment is around large ports, and in areas with good transportation to these harbors. Because the population is concentrated in the coastal region, there is little reason to build infrastructure deeper within the country. Indeed, the vast majority of the factories are within a few dozen miles of the coast. Even as China prospered and the factories became Chinese owned, the same pattern continued.
The accepted standard of middle class life in China is a household income equivalent to about $20,000 a year. (This estimate and the other statistics that follow come from the Bank of China.) You can argue about this number, and some say that the cost of living in China is much cheaper than in other countries, but in these coastal areas, the cost of real estate, and therefore of homes and apartments, can be staggering. Sixty million Chinese—a population equivalent to that of a large, European country—live in middle class households (those earning about $20,000 a year). But with China’s population of 1.3 billion people, 60 million middle class citizens represents less than five percent of the total population, with the overwhelming majority living on the coast or in Beijing.
By contrast, six hundred million Chinese live in households earning less than $1,000 a year—or less than $3 a day for the family. Another 440 million Chinese live in households earning between $1,000 and $2,000 a year, or $3-6 dollars a day. This means that 80 percent of China lives in conditions that compare with sub-Saharan African poverty. Even in the belt within 100 miles of the coast, where the 15 percent of Chinese who are the workers in enterprises live, China is an extraordinarily poor country in whichprosperity creates a chasm that is social as well as geographic. The coastal region around ports profits from trade and the rest of China does not. The coastal region’s interests are, in fact, much more closely aligned with those of their foreign trading partners than with the interests of the rest of the country, or even with the interests of the central government.
It is along these fault lines that China fragmented in the 19th century and will fragment in the future. Supported by foreign interests, the Chinese in the coastal area resist the central government, and with such fragmentation, the power of the central government weakens. This is what happened to the Qing Dynasty after the British incursion. Mao’s solution in the 1940s and 50s was massive repression, the expulsion of foreigners, and the expropriation and redistribution of wealth to the impoverished interior.
So how will China deal with this dilemma of regional inequality in the next ten years? During periods of relative prosperity and growth, the problem can be managed by the state. Even as inequality increases, the absolute standard of living for most Chinese rises, and that increase, however minimal, goes a long way toward keeping people passive. But what about when the economy weakens and standards of living decline overall? For the middle class and above, this is inconvenient. For the more than one billion Chinese living in poverty, even a small contraction in living standards can be catastrophic.
That is what China is heading for in the near future—a relatively small contraction, but one that will pyramid economically and socially, generating resistance to the central government.
The problem is inevitable given that China has a producer economy completely out of proportion to its consumer economy. China cannot sell the Ipods and clothing that it manufactures to its own impoverished masses. And yet China no longer has a wage advantage over other countries like Pakistan or the Philippines. With a limited pool of semi-skilled labor (as opposed to untrained peasants), the price of labor has risen. Pressed by competition, China has reduced prices, which has decreased the profitability of exports. AsIn the face of increasing competition and sluggish growth among some of its customers, China’s ability to compete will decline, making it more difficult to repay business loans, thus increasing pressure on the entire financial system.
The problem is that China simply can’t afford unemployment. Large numbers of peasants have moved to the cities to get jobs, and if they lose their jobs they either stay in the cities and cause instability, or they return to their villages and increase the level of rural poverty. China can keep its people employed by encouraging banks to lend to enterprises that should be out of business, by subsidizing exports, or by building state owned enterprises, but these efforts hollow out the economic core. Put simply, the Chinese can either pay now or pay later.
Over the next decade, China will have to increase its internal security. The People’s Liberation Army is already huge. In the end, the PLA is what will hold the country together, but this assumes that the PLA, drawn heavily from the poorest segments of society, will itself hold together and remain loyal. To quell class resentments, the Chinese will have to tax the coastal region and the sixty million well-to-do Chinese, then transfer the money to the PLA and the peasants. Those being taxed will resist and the revenues will be insufficient for those it intends to benefit, but it should be enough to retain the compliance of the army.
The long term question, which will be answered in the next decade, is whether the Chinese will attempt solve their problem as Mao did—by closing off the country and destroying the coastal businessmen and expelling foreign interests—or by following the late 19th and first half of the 20th century pattern of regionalism and instability. But for the decade ahead, the Chinese government will be absorbed with internal problems, carefully balancing competing forces, and increasingly paranoid about the intentions of the Japanese and the Americans.
In 1990, Japan went through the kind of decline that the Chinese are experiencing now. Having grown rapidly after World War II, Japan encountered a financial crisis that was inevitable because the Japanese did not have a market system for capital, any more than the Chinese did. Their economy operated through informal cooperation among the “keiretsu,” the large corporate conglomerates, and the government. This cooperation was designed so that there would be no losers, but that’s how the problems occurred. Japan has a much stronger degree of informal government control than most outsiders can see, and at the same time, a great deal of latitude for the large combines. The capital problem was exacerbated by Japan’s not having a retirement plan worth mentioning, which meant that citizens were forced to save heavily, putting their money in government Post Office banks, which paid very low interest rates. The money was then leant by the government to the large “City Banks” linked to the “keiretsu.” This system gave Japan a huge advantage in the 1970s and 1980s when U.S. interest rates were in the double digits and Japanese corporations could borrow at less than 5 percent.
But the money was not being leant to businesses that were inherently profitable. Most profit was derived from the added margin provided by cheap money. The need for the Japanese to save a huge amount in order to retire meant that they were reluctant consumers. Thus the heart of the Japanese economy, like the Chinese today, was in exports, particularly to the United States.
As competition from other Asian countries increased, the Japanese cut prices, which reduced profits. Lower profits meant that businesses had to borrow more money in order to grow, then found it increasingly difficult to pay back their loans. What followed was an economic crash that wasn’t noticed by the western media until several years after it happened.
Like the Chinese, the Japanese had to avoid unemployment, but for different reasons, primarily the Japanese tradition in which the worker committed himself to one company for life, and the company reciprocated. Lay-offs would destroy that social contract. So the Japanese dealt with the crisis by maintaining near full employment while allowing the growth rate to slip to almost nothing.
Western economists dubbed the twenty years during which the Japanese economy stagnated the “lost decades,” but this is a misunderstanding of what the Japanese were doing, or rather the imposition of a Western point of view onto it.. For the Japanese, sacrificing growth in order to maintain full employment was not a “lost decade,”but the retention of a core interest.
At the same time, however, Japan’s birthrate dropped to well below the 2.1 per woman needed to maintain population. Now, with each generation smaller than the one before, resources are inadequate to support retirees. In this way, debt and demography have created a massive crisis for Japan.
The problem over the next ten years is that the Japanese simply can no longer maintain full employment by exorbitantly increasing their debt, both public and private. Like the Chinese, the Japanese will have to shift economic models, but the Japanese have one overwhelming advantage—they do not have a billion people living in poverty. Unlike the Chinese, the Japanese can absorb austerity, should it be needed, without inviting instability.
Japan’s fundamental weakness remains its lack of natural resources for industry, from oil to rubber to iron ore. To remain an industrial power, Japan has to buy and sell globally, and if it loses access to the sea-lanes it loses everything. Should trouble arise, and lacking the option of turning inward, Japan is far more likely to once again become assertive.

The Sino-Japanese Balance of Power

For the past thirty years ago or so, relations between China and Japan have been secondary to each country’s relationship with the U.S. The United States maintained the regional balance by maintaining mutually beneficial relations with each country, but those relations are going to shift in the decade ahead. First, China’s economic problems will change its relationship to the world, while also transforming the way the country works internally. Similarly, Japan’s internal problems and the solutions it will find will change the way it operates.
Even when passive and dependent on other countries to guarantee access, Japan is always deeply embedded in the world. China is embedded as well, but not as irrevocably as Japan. The loss of imports of raw materials does not represent an existential threat to China, the way it does to Japan. Similarly, while China depends on exports, it could reconfigure itself if necessary.
China, then, has less of a temptation to become assertive; it also has less of an ability to do so. China’s main access is to the sea, but China does not have a substantial navy. Building a naval power takes several generations, not so much in terms of technology, but in terms of passing along the accumulated experience that creates good admirals. It will be a long time before China can challenge either the U.S. or Japan at sea.
Insert northeast Asia map
Japan is formally a pacifist power, barred by Article 9 of its constitution from having an offensive armed force, but this has not prevented Japan from maintaining the most capable navy in the western Pacific, nor from having a substantial Army and Air Force. It has, however, managed to avoid using those forces, relying instead on the United States to protect its international interests, particularly its access to natural resources.
Japanese submission to the United States after World War II proved beneficial because the United States needed Japan’s help in the Cold War and wanted Japan as strong as possible. Japan’s geography was crucial in blocking the Soviet fleet in Vladivostok from access to the Pacific, and in return, the United States guaranteed not only Japan’s access to the raw materials it needed, but access to the American market on favorable terms.
Things have now subtly changed. The United States still controls Japan’s sea-lanes and is still prepared to guarantee access, but the United States’ willingness to take risks with that access has put Japan in a potentially dangerous position. So far, during the U.S.-Jihadist war, the United States has been cautious in not endangering the oil route through the Straits of Hormuz that Japan depends on, but the United States could easily miscalculate. Simply put, the U.S. can endure risks that Japan can’t, so the two countries’ perspectives on the world, and their national interests, have diverged.
With less incentive for international adventure, limited means for conducting it, and with significant internal problems, China is going to be preoccupied over the next decade with managing the next phase of its economic growth. Their first option will be the reassertion of a strong central government and, to some extent, a renationalization of the Chinese economy. If this fails, China will begin to regionalize, with regional political institutions more powerful than those at the center.
The internal problem for the Japanese is that they have gone as far as they can in this economic cycle. They must either accept austerity and unemployment, or allow the economy to begin to overheat. Their great weakness remains capital markets, which still don’t operate freely, and yet the Japanese don’t have effective central planning, either. This cannot be sustained. Moving to a free market in capital might solve the Japanese problem in the long run, but only at the cost of unsustainable instability now. Because they can’t afford a true market economy, they will move toward an economy in which the state imposes greater efficiencies (never as efficient as a market, but more efficient that now) and in which the keiretsu decline in importance. This will mean that the Japanese state will concentrate more power in itself and take a greater role in managing finance.
Japan’s other great problem is demographic. It is an aging country that needs more workers but is socially unable to manage large-scale immigration, which moves counter to the cohesiveness of Japanese culture. The solution is to have workers that do not come to the factories but factories that go to the workers. Over the next ten years, Japan will be even more aggressive in exploiting labor markets outside of Japan, including those in China, depending on the evolution of events there.
Whatever the future holds, the Japanese will want to continue their core strategic relationship with the United States, including their reliance on the U.S. to secure their sea-lanes. This is both cost effective for Japan, and far less dangerous for the Japanese.

The American Strategy: Playing for Time

During the next ten years, the world will be a complex and dangerous place. The United States does not have the resources or policy bandwidth to deal with every regional balance of power at the same time. It will be preoccupied with Russia and the Middle East, which does not leave it much in the way of resources to deal with the Western Pacific. By default, then, American strategy in this region must be to delay and deflect. The U.S. cannot really control the vast processes that are under way. So the best it can hope to do is to shape them a bit. Fortunately, this is one region in which the processes at play have the countries on a relatively benign path, at least for now. Therefore U.S. policy should be to buy time, while laying the groundwork for what comes after.
The American danger does not rest in an alliance being forged between Japan and China. These two nations compete with each other in too many ways, and differ from each other too profoundly. Having reached the limits of this economic cycle, Japan will no longer be the quietly passive giant it has been for the past 20 years. China, on the other hand, will be slightly less than the explosively growing economic power that it has been. The challenge for the United States will be to manage its relationship which each player in this Western Pacific system, each in its own different phase. At the same time, the U.S. must step back from being the center and let these two Asian powers develop more direct relationships with each other, and finding their own point of balance.
Neither China nor Japan will emerge as regional hegemons in the coming decade. The Chinese economic miracle will subside as all economic miracles do, and China will focus on maintaining stability without rapid growth. Japan will restructure itself internally, while beginning to align its foreign policy with its global interests. But it will be Japan that the United States will have to watch.
As Japan increases its power, it must necessarily increase its maritime strength. It is the fundamental principle of the United States to oppose the rise of maritime powers, but obviously the United States isn’t going to go to war with Japan over this issue in the next decade. Still, it will have to develop a strategy to deal with a more assertive Japan.
The first piece of that strategy will be to make sure that China doesn’t splinter, because the weaker China becomes, the freer Japan will be to flex its muscles. To the extent possible, the United States should relieve pressure on China by facilitating its exports to the United States. There are obvious political problems in doing this, and the President will have to be very clever in justifying his generosity at a time of high U.S. unemployment. But anything that constrains Japan, even marginally, is valuable to the United States.
Only a stable China can control foreign investments into its economy, and both stability and control will be necessary to fend off Japan’s designs on Chinese factories and workers. Constraining Japanese expansion will, in turn, delay Japan’s ability to cope with its problems, and anything that slows down Japan’s economic resurgence benefits the United States, if only to the extent that it buys time.
The second piece of U.S. strategy must be to keep relations with the Japanese as cordial possible. The more confident Japan is in its access to raw materials, the less it will be motivated to build its own naval force. The Japanese, always painfully aware of the imbalance of power, have never been as comfortable as they might appear in their relationship to the United States. At the same time, they have never wanted to confront the enormous amounts of money and risk needed to create an alternative.
In the long run, a country as economically large and vulnerable as Japan will have to search for a way to secure its own interests. That doesn’t have to be in the 2020s, however, and the American strategy must be to prolong Japan’s dependency as long as possible. The longer the Japanese remain dependent on the United States, the more influence the U.S. has over Japanese policy, and the more it can shape that policy. Pushed hard enough, Japan’s new course might be a return to the destructive policies of the 1930s—a nation both economically statist and driven by an emphasis on national defense. The United States must be careful not to push them.
Two things will make this Asian strategy easier to sell to the American public. The first is that other matters will preoccupy them. The second is that American moves in the Western Pacific will be incremental and not radical. The President will have the advantage that he will not be changing policy, and his actions will not have decisive effect because the United States is important but not central to either of these Asian powers.
At the same time, the United States must be building relationships for the next phase of geopolitics in which the U.S. might wish to recruit Japan, or China, or both to cooperate against threats from Russia or other powers. Their appetite for risk is not very great, and the U.S. must realize that pressing them with inducements probably won’t work.
This is where Korea may play a critical role. It is already the bone in the throat of both sides of the Sino-Japanese balance—but particularly the Japanese. For historical reasons, Korea despises the Japanese and distrusts the Chinese. It is not particularly comfortable with the United States, for that matter, but at least geography has made it dependent on the U.S.
As Japan increases in power and China weakens, the Koreans will need the United States more than ever, and the United States will rely on Korea to increase its options for dealing with both countries. Fortunately, the U.S.-Korean relationship already exists, and for that reason extending it would not cause significant concern to either Japan or China.
Korea also has become a significant technological center. China in particular will be hungry for that technology, and having some control over the rate of transfer would increase U.S. leverage with China. For their part, the Koreans will need help in dealing with the North Korean nuisance, particularly in handling the financial aspects of reunification when it finally comes.. They would also want special trade opportunities with the United States. Even though Korea has nowhere to go but to the United States, it will be worthwhile for the American President to make such concessions because, over the next ten years, Korea may well be the most important relationship the United States has in the Western Pacific. But reunification is not the key North Korea, for all of its bluster, is a cripple, and its nuclear facilities exist only so long as others permit it. South Korea, on the other hand, remains a dynamic power on its own and will remain a dynamic power whatever happens in the North.
The second most important relationship the United States will have in the region is with Australia. One of the last landmasses taken over by the Europeans, it is certainly on the margins of the world geographically, and most of its population remains skewed into a relatively small area of Australia’s southeast.
The Land Down Under is misunderstood and misunderstands itself geopolitically. Its nearest neighbor is Indonesia, a highly fragmented and weak country, separated from Australia by hundreds of miles of water. Historically, Indonesia and its eastern neighbor, New Guinea, served an important strategic function for Australia. During World War II, the Netherlands East Indies and New Guinea soaked up the Japanese attack, leaving the Japanese too weak to think about attacking the Aussies.
Despite the appearance of standing alone and secure, Australia is actually quite dependent on international trade, particularly the sale of food products and industrial minerals like iron ore to sustain its economy. These goods are shipped by sea and Australia has no control whatever over the security of its sea-lanes. In a sense, then, Australia is like a creature whose arteries and veins are located outside of its body, unprotected and constantly at risk.
Australia’s strategy for dealing with this vulnerability has been to ally itself with the major naval power in the Western Pacific—first Britain, then the United States. All alliances bear costs, and the British and Americans wanted the same quid quo pro—Australia’s participation in their wars. Australians fought in both world wars and in Korea and Vietnam. Between 1970 and 1990 the Australians pulled back from this role as military partner, but during this period there were few wars. In 1990, in Desert Storm, the Australians returned to their strategy of assisting in military operations, and they went on to fight in both Afghanistan and Iraq.
Along with the security of sea-lanes, Australia’s well-being depends on an international trading regime that allows terms that it can manage. Australia’s strategy of being of service to Britain and the United States has bought her a seat at the table alongside the great powers. This has provided influence and security to its trade, something that Australia never could have achieved on its own.
During World War II, Australia served Britain by sending troops to North Africa and the United States by being a massive depot for building up U.S. forces for the Pacific theater. Certainly, Australian forces fought as well, but had there been no forces available, Australia’s tremendous value was in its location, behind the shield of Indonesia and New Guinea. Should any great power emerge in the Western Pacific to challenge the United States, Australia once again would be the strategic foundation for America’s Pacific strategy. The caveat is that building the infrastructure for a rear depot took several years in World War II, and n any future conflict might not allow such lead time.

Insert Map of Southeast Asia

For the United States, maintaining its relationship with Australia shouldn’t be too difficult. Australia has only two strategic options. One is to withdraw from alliance commitments and assume that its interests would be addressed in passing, or to participate in the alliance and have commitments in hand. The former is cheaper but riskier. The latter is more expensive but more reliable.
But the truth is that either path satisfies American needs. If a major threat to the sea-lanes occurs, then Australia most likely will turn to the United States. If a Western Pacific power suddenly gained control of the sea-lanes, however, there is always a chance that Australia would make a deal if it calculated that such compliance would achieve its ends with lower risk than fighting alongside the Americans.
Even if Australia ultimately has nowhere else to go, its strategic importance is such that the U.S. should be as generous and seductive as possible. Being sparing in what it asks of Australian military commitments also makes sense, because the United States may need Australia much more in the future than it needs Australian troops now.
Of similar strategic importance for the U.S. is Singapore, a major city and fortress the British created at the tip of the Malayan Peninsula as a base from which to control the Straits of Malacca. This narrow passageway is the primary route
through the Straits, particularly oil headed for China and Japan from the Persian Gulf. U.S. warships on the way to the Persian Gulf also must pass through these straits. It is, along with Gibraltar or the Suez Canal, one of the great maritime choke points. Whoever controls it can shut off trade at will or guarantee that it will flow.

Singapore is now an independent city-state, enormously prosperous because of its geographical position and because of its technology industry. Singapore needs the United States as a customer, and also to protect its sovereignty. When Malaya was given independence, the primarily Chinese Singapore split from the predominantly Muslim Malaysia. Relations have varied, and there has not been much threat of annexation, but Singapore understands two geopolitical realities: that the worst thing in the world is to be rich and weak, and that events are unpredictable. What Malaysia or, for that matter, Indonesia might want to do in a generation or two can’t be predicted.

Insert Sea Lanes map

Insert Indonesia and sea lanes between the Pacific Basin and the Indian Ocean. Vast amounts of commerce pour

The United States cannot simply control Singapore but must have cooperative relations with it. As with Korea and Australia, the President would be wise to be more generous with Singapore than he needs to be in order to assure the alliance. The price is small and the stakes are very high.
It is in this context that we must discuss India. Given its size, its growing economy and the constant discussion of India as the next China, I simply do not see India as a significant player with deep power in the coming decade. In many ways, India can be understood as a very large Australia. Both India and Australia are economically powerful, although in different ways obviously. In that sense they have to be taken quite seriously.
But both are isolated geographically, although Australia’s isolation is much more visible than India. Australia is surrounded by water. India has the Himalaya’s to the north, and hilly jungles to the east. To the south it is surrounded by the Indian Ocean. Geographically is an island, surrounded by land barriers perhaps less easily passable than oceans, and an ocean dominated by the United States navy. Subcontinent captures its inherent isolation.
Insert India Map
Its biggest problem is in the west, where there is desert and mountains, plus the nation of Pakistan that has fought multiple wars with India and where relations range from extremely cool to hostile. As we saw in my discussion of Afghanistan, the balance of power between Pakistan and India has been the major feature of the subcontinent. Maintaining this balance of power is a significant interest for the United States.
India maintains a substantial military that has three functions. First, it balances Pakistan. Second, it protects the northern frontier against a Chinese threat that is difficult to imagine because of the terrain. Most important, the Indian military, like the Chinese, guarantees the internal security of the nation. That is particularly important in a country deeply divided by very diverse regions. There is currently a significant rebellion by Maoists in the east. The Army must suppress it and prevent other divisive and secessionist movements.
It is extremely important to understand that while India has a national government, a great deal of power is held by its constituent states. This is one of the great limitations on Indian economic growth, as impressive as it has been. Different states have different regulations, some of which prevent economic development. These states jealously guard their rights and the leadership guards their prerogatives. India is called the democratic China, which to the extent this is true, exacts a toll in regional power. There are many ways that these regions are bound together, but the ultimate guarantor is the Army.
The Indians have been interested in developing a navy that could become a major player in the Indian Ocean both protecting India’s sea lanes and projecting Indian power. India has developed a significant naval force but on that is utterly outclassed by the Americans. So long as the United States has interests in the Persian Gulf—a long time—the Indian Ocean will connect the Pacific to the Persian Gulf. The United States will deploy powerful forces at sea in the region no matter how it reduces its presence on land.
The United States, therefore, has no interest in seeing India develop a powerful navy. Given that nations have interests rather than friendships, at a certain point the Indian Navy threatens fundamental American interests. To keep India below that threshold, it is in the interests of the United States to divert India’s defense rupee toward the army and tactical air force rather than to the navy. The stronger Pakistan is the more India will be forced to divert resources. Therefore, U.S. support for Pakistan is a cheap way to pre-empt a future problem.
Obviously India is interested in undermining the U.S.-Pakistani relationship or, at the very least keeping the United States in Afghanistan, destabilizing Pakistan. If the United States fails to do that it will reach out to other countries, as it did to the Soviet Union during the Cold War. Pakistan does not represent an existential threat to India. India will survive barring the unlikely use of nuclear weapons and even should there be an exchange. But Pakistan is the persistent problem for India around which its strategic policy will continue to pivot, particularly because I don’t think Pakistan will collapse.
India is behind China in its economic development, which is why it is not facing China’s difficulties. The next decade will see India surging economically. But economic power by itself does not translate into a secure nation. It does not translate into the kind of power that dominates an Indian Ocean, although it may be the necessary precondition to it. And it is not in the American interest to make India overly secure. Therefore, to the extent the United States leaves Afghanistan, U.S.-Indian relations will deteriorate. But business will still be done.

The Asian Game

While the United States is preoccupied with other issues now and in the coming decade, the two major Asian powers, China and Japan, are only minimally subject to outside influence. They will move as their internal processes dictate. Given that, the United States should not invest heavily in managing the Chinese-Japanese relationship. To the extent possible, the United States should help maintain a stable China, and the United States should work to maintain its relationship with Japan.
However, the United States must also bear in mind that the peace of the Western Pacific will not hold together indefinitely and the United States should have a policy of cementing strong relations with three key players: Korea, Australia and Singapore. The United States already has good relations with all three and, fortunately, all three need the United States.
The United States should also maintain good relations with other Asian countries to the extent possible, but the reason for good relations with the three just mentioned is deeper. These three countries are needed in the event of war with any Western Pacific country, particularly Japan, and the preparations cannot be begun too soon. Building the Korean Navy, creating facilities in Australia, modernizing Singapore’s forces constantly, will not arouse great anxiety. However, these are steps that, if taken in this decade, will create the framework for managing any conflict that might arise.

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