Did Shangri-La give birth to a new Quad?

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The recently-concluded Shangri-La Dialogue in Singapore was among the most high-stakes confabs in recent years, as multiple powers explored ways to avoid a full-blown New Cold War and armed confrontation between the US and China.

But with no sign of any immediate thaw between the two superpowers, new, inchoate security groupings are emerging on the margins.

After months of intense anticipation, defense chiefs from the US, the Philippines, Australia and Japan held their first-ever quadrilateral talks on the sidelines of the Shangri-La forum, with Beijing’s maritime assertiveness in mind.

US Secretary of Defense Lloyd Austin, Japan’s Defense Minister Yasukazu Hamada, Australian Defense Minister Richard Marles and Philippine Acting Defense Secretary Carlito Galvez held an unprecedented meeting with huge symbolic and big operational implications.

Atop their agenda was proposed quadrilateral joint patrols in the South China Sea for later this year, which if held would mark a major milestone for America’s evolving “integrated deterrence” strategy to contain China’s rise in the region.

Although playing down the idea earlier this year, Washington seems increasingly open to new quadrilateral mechanisms beyond its existing “Quad” partnership with India, Australia and Japan, which by accounts has been beset by internal divisions over confronting Russia in the wake of the Ukraine conflict.

Over the weekend, yet another incident served as a stark reminder of rising geopolitical volatility in the Indo-Pacific. Following a rare joint sail by US and Canadian naval forces through the Taiwan Straits, Beijing responded with aggressive counter-maneuvers and strident diplomatic protests.

During a “routine” transit through the area, the US Navy’s 7th Fleet said the guided-missile destroyer USS Chung-Hoon and Canada’s HMCS Montreal reportedly came close to blows with a Chinese navy ship, which cut across the bow of the American destroyer on two occasions.

Just days earlier, the Pentagon released footage that showed a Chinese fighter jet performing a similar maneuver, albeit in the skies, against an American surveillance aircraft.

The Chinese J-16 fighter cutting directly in front of the nose of the US RC-135 Rivet Joint reconnaissance aircraft on May 26, 2023. Image: CNN / Screengrab

Rising tensions in the seas and the skies were mirrored by tough diplomatic exchanges between US and Chinese defense chiefs at the Singapore forum. For his part, China’s defense chief Li Shangfu warned against a “Cold War mentality” in a not-so thinly-veiled jab at the Australia-UK-US (AUKUS) alliance and Quad.

“In essence, attempts to push for NATO-like [alliances] in the Asia-Pacific is a way of kidnapping regional countries and exaggerating conflicts and confrontations, which will only plunge the Asia-Pacific into a whirlpool of disputes and conflicts,” the Chinese official warned while reiterating an uncompromising position on Beijing’s plans to “reunify” self-ruling Taiwan.

For his part, US defense chief Austin warned against any aggressive maneuvers against Taiwan while underscoring his vocal concerns over the virtual breakdown of military-to-military communication channels with China.

“I am deeply concerned that the PRC (People’s Republic of China) has been unwilling to engage more seriously on better mechanisms for crisis management between our two militaries,” Austin said during his speech in Singapore.

“The more that we talk, the more that we can avoid the misunderstandings and miscalculations that could lead to crisis or conflict,” he added.

The deadlock in Sino-American relations has likely forced Washington to reconsider its earlier apprehensions with new Quad groupings in the region.

Earlier this year, US Assistant Secretary of State Daniel Kritenbrink, during a regional tour in Asia, played down suggestions of a new Quad grouping, including by Philippine Senator Francis Tolentino, who has pushed for “own version of Quad” to check China’s ambitions in adjacent waters.

“I guess regarding what you called, a new Quad, I would say, ‘no.’ We’re not looking to establish a new quad,” Kritenbrink said in an online press briefing during his Manila visit last month.

“We’re not looking to establish any new formal mechanisms in the Indo-Pacific at this point,” the senior US diplomat said, adding how his country is “happy to assist with the ongoing modernization of the Armed Forces of the Philippines including in the maritime domain.”

Japan Maritime Self-Defense Force at the Malabar 21 – an inter-nation exercise with the Indian Navy, US Navy and Royal Australian Navy – to improve tactical skills and further strengthen the Quad navies. Photo: AFP / EyePress News

Nevertheless, Kritenbrink left the door open for “opportunities in the future for such close allies as the United States, Philippines and Japan to look at ways that maybe we could expand our cooperation” amid growing discussions over a trilateral Japan-Philippine-US (JAPHUS) security grouping.

Following Philippine President Ferdinand Marcos Jr’s consequential visit to the White House and the Pentagon last month, which saw the two treaty allies sign new bilateral defense guidelines, moves to forge de facto alternative quadrilateral groupings are accelerating.

Historically, Manila served as a venue for the two key moments in the birth of the original Quad. The first US, Australia, India, and Japan inaugural meeting took place on the sidelines of the ASEAN Regional Forum (ARF) gathering in Manila in 2007. Exactly a decade later, the leaders of the four powers, wearing traditional Filipino barongs, held their first formal official-level discussions also in Manila.

Now, the US is overseeing the emergence of a new quadrilateral grouping, especially with the Philippines’ emergence as a new star ally in Asia under a more Western-friendly regime.

During the Shangri-La Dialogue, Philippine Defense Chief Carlito Galvez took an uncompromising position on the South China Sea disputes, signaling Manila’s hardening line against China’s assertiveness over its claimed features and islands. 

“We view the 2016 arbitration award as not only setting the reason and right in the South China Sea, but also as an inspiration for how matters should be considered by states facing similar challenging circumstances,” Galvez said before his Indo-Pacific counterparts.

“President Ferdinand Marcos Jr has strongly emphasized his directive to safeguard every square inch of our territory from any foreign power… The UNCLOS (United Nations Convention on the Law of the Sea) and the 2016 arbitration are and will continue to be the twin anchors of our policies and actions in the West Philippine Sea and the broader South China Sea,” he added while emphasizing his country’s commitment to enhance maritime security cooperation with like-minded powers.

Last week, the Philippines, Japan and US held their first-ever joint coast guard drills in Manila Bay. Later this year, the US and its regional allies including the Philippines are expected to conduct potentially unprecedented quadrilateral joint patrols in the South China Sea.

This photo taken by the Philippine Coast Guard shows Chinese vessels anchored at the Whitsun Reef 175 nautical miles west of Bataraza in Palawan in the South China Sea. Photo: AFP

Closer intelligence-sharing, expanded joint drills and arms transfers among the four allies are likely to follow, with Tokyo exploring its own visiting forces agreement with Manila, which has already hosted large-scale US and Australian military presences in the past decade.

In an official statement following the inaugural Philippine, US, Japan and Australia quadrilateral meeting in Singapore, Japan’s Ministry of Defense said that the four allies “discussed regional issues of common interest and opportunities to expand cooperation,” while vowing to double down on new and pre-existing cooperative agreements.

“It was an honor to meet with Secretary Galvez, Minister Hamada, and DPM Marles to discuss opportunities to expand cooperation across our four nations, including in the South China Sea,” Austin said in a tweet after the meeting. “We are united in our shared vision for advancing a free and open Indo-Pacific,” he added.

Follow Richard Javad Heydarian on Twitter at @Richeydarian

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BRICS currency gambit a timely warning to the buck

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On the sidelines of the recent BRICS gathering in Cape Town, South Africa, officials contemplated as rarely before the five most dangerous words in economics: things are different this time.

For years now, Brazil, Russia, India, China, South Africa and other emerging economies hoped to break the dollar hegemony that complicates geopolitical calculations. In Cape Town, BRICS foreign ministers presided over what might be remembered as the moment the anti-dollar movement grew genuine legs.

In the lead-up to the confab, BRICS members urged the bank that the grouping set up to study how a joint currency might work — logistics, market infrastructure and how sanctions against Russia play into things.

Equally important is the flurry of foreign exchange arrangements popping up that exclude the dollar: China and Brazil agreeing to settle trade in yuan and reals; France beginning to conduct some transactions in yuan; India and Malaysia increasing use of the rupee in bilateral trade; Beijing and Moscow trading in yuan and rubles.

The 10-member Association of Southeast Asian Nations (ASEAN) is joining forces to do more regional trade and investment in local currencies, not dollars. Indonesia, ASEAN’s biggest economy, is working with South Korea to ramp up transactions in rupiah and won.

Pakistan is angling to begin paying Russia for oil imports via yuan. The United Arab Emirates is talking with India about doing more non-oil trade in rupees.

Over the weekend, Argentina announced it plans to double its currency swap line with China to roughly US$10 billion. It’s partly desperation as Argentina’s foreign currency reserves evaporate amid 109% inflation that has its central bank in damage control mode.

But it’s also a sign of the rising anti-dollar movement in South America.

“Despite America’s likely opposition, de-dollarization will persist, as most of the non-Western world wants a trading system that does not make them vulnerable to dollar weaponization or hegemony,” says Frank Giustra, co-chair of the International Crisis Group. “It’s no longer a question of if, but when.”

Economist Rory Green at TS Lombard adds that “geopolitics and China’s economic heft is driving — and will continue to drive — RMB adoption for trade and reserve holdings. Greater international use of the RMB will provide channels for sanctions-busting, but the dollar is not under threat.”

A clerk counting yuan and US dollar notes at a bank. Photo: AFP

To be sure, Green adds, “China is politically unwilling and economically unable — barring significant structural reform — to run a sustained current account deficit and to provide sufficient supplies of RMB assets globally,” which complicates Beijing’s designs on competing with the dollar.

Here, BRICS members’ stepping up with a strength-in-numbers gambit could be a game-changer.

Already, they account for 23% of global gross domestic product (GDP) and more than 42% of the world’s population. At present, at least 19 other countries — including Saudi Arabia — want to join the BRICS fold, which would greatly grow its influence.

For now, the five BRICS nations are pooling $100 billion of foreign currency to act as a financial shock absorber. The funds can be tapped in emergencies, allowing members to avoid going to the International Monetary Fund. Since 2015, the BRICS bank has approved more than $30 billion of loans for infrastructure, transportation and water.

The BRICS currency issue has been gaining greater traction since mid-2022, when the 14th BRICS Summit was held in Beijing. There, Russian President Vladimir Putin said the BRICS were cooking up a “new global reserve currency” and were open to expanding its usage more widely.

In April, Brazilian President Luiz Inacio Lula da Silva threw his support behind a BRICS monetary unit.

“Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries?” he asked. “Who decided that the dollar was the trade currency after the end of gold parity?”

Lula’s return to the presidency four months earlier was a boost to the “Global South” ambitions that Chinese leader Xi Jinping has been championing. In his third term, Xi is putting greater emphasis on morphing the Global South, or developing countries in the regions from Latin America to Africa to Asia to Oceania, into a bigger economic and diplomatic force.

Brazilian Finance Minister Fernando Haddad has been highlighting the increased use of local currencies in bilateral trade instruments like credit receipts. The focus, he says, must be phasing out the use of a third currency.

“The advantage is to avoid the straitjacket imposed by necessarily having trade operations settled in the currency of a country not involved in the transaction,” he told reporters.

Lula may get his answers in August when the BRICS summit of heads of state is held in Johannesburg. The desire for a BRICS version of the euro might get a boost from countries like Egypt, Indonesia, Turkey and Saudi Arabia joining.

Visiting Brazilian President Lula da Silva and Chinese President Xi Jinping (left), at an official reception in April 2023. Photo: Wikipedia / Ricardo Stuckert

BRICS Ambassador Anil Sooklal says others keen to join include Afghanistan, Algeria, Argentina, Bahrain, Bangladesh, Belarus, Iran, Kazakhstan, Mexico, Nicaragua, Nigeria, Pakistan, Senegal, Sudan, Syria, the United Arab Emirates, Thailand, Tunisia, Uruguay, Venezuela and Zimbabwe. Sooklal hints that some European countries might sign up, too.

That, of course, also could add to the BRICS’ troubles. The more this grouping adds members with disparate economies and challenges and conflicting ambitions, the more vulnerable the enterprise becomes. Russia’s involvement alone, post-Ukraine invasion, complicates the broader legitimacy of the BRICS project.

The main problem, says Paul McNamara, investment director at GAM Investments, is that BRICS is still an acronym in search of a cohesive economic argument. It was coined in 2001 by then-Goldman Sachs economist Jim O’Neill.

More likely, McNamara says, it will be one country alone that challenges the dollar: China. After all, he reasons, without China at the core, would most current global elites care about the BRICS?

Some think it could take longer to dislodge the dollar. Though the dollar’s dominance will take time to unravel, the trajectory away from it is clear, says Vikram Rai, a senior economist at TD Bank.

“Within the next decade or two, there is great potential for regionally dominant currencies and a multipolar international regime to emerge, with the roles filled now by the dollar shared with the euro, a more open yuan, future central bank digital currencies and possibly other options we have yet to see,” Rai argues.

In a report last week, Moody’s Investors Service analysts wrote: “We expect a more multipolar currency system to emerge over the next few decades, but it will be led by the greenback because its challengers will struggle to replicate its scale, safety and convertibility in full.”

Yet a bigger US pivot to protectionism, further risks of a default and weakening institutions are threatening the dollar’s global influence, Moody’s warns.

“The greatest near-term danger to the dollar’s position stems from the risk of confidence-sapping policy mistakes by the US authorities themselves, like a US default on its debt for example,” Moody’s analysts say. “Weakening institutions and a political pivot to protectionism threaten the dollar’s global role.”

Even though US lawmakers raised the debt ceiling this time, Fitch Ratings is keeping Washington on watch for a potential downgrade. Fitch worries that the threat of default is now becoming a routine political ploy.

Fitch cautions “that repeated political standoffs around the debt-limit and last-minute suspensions before the X-date — when the Treasury’s cash position and extraordinary measures are exhausted — lowers confidence in governance on fiscal and debt matters.”

What worries Fitch analyst James McCormack is US lawmakers missing the plot of protecting America’s AAA rating. Politicians must understand that “you’re playing with live ammunition here,” McCormack told CNN. “This is an extremely dangerous situation. There is a lot at stake.”

US Speaker of the House of Representatives Kevin McCarthy pushed the US to the brink of its first ever debt default. Image: CNN Screengrab

Among the biggest risks the US is taking is losing the “exorbitant privilege” that comes with printing the international reserve currency. This phrase was coined by 1960s French Finance Minister Valéry Giscard d’Estaing, who noted the dollar’s pivotal role allowed the US to live beyond its financial means, year after year.

In April, French President Emmanuel Macron said that Europe should curb its dependence on the “extraterritoriality of the US dollar.”

That’s particularly so as Sino-US tensions intensify. If the tensions between the two superpowers heat up, Macron said, “We won’t have the time nor the resources to finance our strategic autonomy and we will become vassals.”

That same month, Tesla founder Elon Musk warned via tweet that “de-dollarization is real and is happening fast. If you weaponize currency enough times, other countries will stop using it.”

Economist Stephen Jen at Eurizon SLJ Asset Management notes that “exceptional actions” — including sanctions imposed by the US and its allies against Moscow — have made all too many nations less willing to hold dollars.

Jen is quoted saying that the dollar suffered a “stunning collapse” in its market share as a reserve currency in 2022, “presumably due to its muscular use of sanctions.”

He calculates that the dollar’s share of official global reserves fell to 47% last year, down from 55% in 2021 and a marked collapse from the 73% in 2001. Its loss of market share in 2022 alone was 10 times faster than the steady erosion over the past two decades, Jen says.

Billionaire Ray Dalio, founder of the Bridgewater Associates hedge fund, agrees that “there’s less of an eagerness to buy” US Treasury securities.

He points to Western steps to freeze about $300 billion of Russian central bank assets, punitive moves Dalio says, “increased the perceived risk that those debt assets can be frozen in the way that they’ve been frozen for Russia.”

Yet, even just based on the economics, says BRICS concept founder O’Neill, the global system seems ready for a pivot.

“The US dollar plays a far too dominant role in global finance,” O’Neill notes. “Whenever the Federal Reserve Board has embarked on periods of monetary tightening, or the opposite, loosening, the consequences on the value of the dollar and the knock-on effects have been dramatic.”

That dynamic helped pave the way for events in Cape Town over the last few days, an event that may have legs in currency circles for generations to come.

Follow William Pesek on Twitter at @WilliamPesek

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US-China closer and closer to a no-talk sea clash

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This week, the United States, Japan and the Philippines kicked off their first-ever joint coast guard drills in Manila Bay amid rising tensions in the South China Sea.

The exercises, featuring four Philippine Coast Guard (PCG) vessels along with a US Coast Guard cutter and a Japanese Coast Guard cruiser, are aimed at enhancing interoperability, search and rescue, and law enforcement capacity of the three allied nations, especially as the PCG confronts rising Chinese maritime intrusions.

The unprecedented coast drills are part of broader efforts by the US and its regional allies to check China’s rising maritime ambitions. Earlier this year, the Philippines, US, Australia and Japan conducted massive wargames in the Philippines. Following on, later this year naval forces from the Philippines, US and Australia are expected to conduct joint patrols in the contested South China Sea aimed at China.

The coast guard drills came just a day after the US Indo-Pacific command released footage that showed an “unnecessarily aggressive maneuver” by a Chinese J-16 fighter against US RC-135 Rivet Joint reconnaissance aircraft on May 26.

The Pentagon maintained that it was simply conducting “safe and routine operations” over the South China Sea but Beijing countered by accusing the US aircraft of posing a “serious danger” by “deliberately intrud[ing]” into China’s training exercises in the contested area.

Rising tensions in the maritime region have shadowed this year’s Shangri-La Dialogue in Singapore, where senior American and Chinese officials are expected to present their respective regional security architecture visions before the international community.

In a telltale sign of intensifying rivalry, Chinese Defense Minister Li Shangfu, who has been sanctioned by the US for alleged involvement in high-tech defense deals with Moscow, has reportedly turned down a proposed meeting with US Secretary of Defense Lloyd Austin on the sidelines of the high-profile defense confab.

Chinese Defense Minister Li Shengfu is under US sanctions. Image: Twitter / Screengrab

Notwithstanding China’s deployment of a new envoy to Washington, Xie Feng, there is little indication of any diplomatic breakthrough. An emerging New Cold War could quickly turn into a hot water one absent a concerted effort by both superpowers to keep their rivalry on an even keel.

Fears of actual skirmishes were brought into sharp focus following yet another close encounter between the US and Chinese armed forces in the South China Sea.

Back in 2018, a Chinese warship maneuvered as close as 45 yards from the US Navy destroyer USS Decatur, risking direct confrontation. This time, a Chinese fighter partially intercepted a US reconnaissance aircraft by cutting directly cutting in front of the latter’s nose.

The aggressive maneuver created sufficient turbulence to rock the RC-135, underscoring how close the two superpowers have again come to blows over the disputed waters.

“The United States will continue to fly, sail, and operate – safely and responsibly – wherever international law allows, and the US Indo-Pacific Joint Force will continue to fly in international airspace with due regard for the safety of all vessels and aircraft under international law,” the US Indo-Pacific Command (INDOPACOM) said in a statement, insisting on the legality of its operation in the area.

During a briefing in Beijing, Chinese Foreign Ministry spokesperson Mao Ning countered the US claims by instead accusing the Pentagon of inviting crisis through the regular deployment of spy planes into China’s claimed territories.

“The US’s provocative and dangerous moves are the root cause of maritime security issues. China urges the US to stop such dangerous provocations,” the Chinese foreign ministry spokesperson said.

The incident echoed the 2001 full collision between an American reconnaissance plane and Chinese fighter jet over the Hainan Island in the South China Sea, which led to one casualty and a full-blown diplomatic crisis.

In contrast to bilateral relations two decades earlier, when then-Chinese president Hu Jintao welcomed institutionalized bilateral dialogue with Washington, the two superpowers are currently locked in a brewing New Cold War with trade and tech war components.

A whole host of bilateral strategic dialogues were suspended following diplomatic tensions in the wake of former US House Speaker Nancy Pelosi’s trip to the self-governing island of Taiwan last August. A highly-promising summit between US President Joe Biden and Chinese paramount leader Xi Jinping last November raised hopes of a thaw between the two sides.

But the Biden administration’s decision to shoot down a Chinese spy balloon flying over sensitive facilities in mainland America deflated earlier hopes of restoring frayed communication channels.

US Air Force shoots down what is believed to be a Chinese spy balloon. Image: AP via The Conversation

This week, China reportedly rebuffed efforts to arrange a meeting between Defense Secretary Austin to meet with his Chinese counterpart Li at the Shangri-La Dialogue Security Forum in Singapore this week.

“Frankly, it’s just the latest in a litany of excuses. Since 2021, the PRC has declined or failed to respond to over a dozen requests from the Department of Defense for key leader engagements, multiple requests for standing dialogues and nearly ten working-level engagements,” a Pentagon official told the press on the condition of anonymity.

But China’s Defense Ministry has insisted that Beijing “attaches importance” to maintaining stable ties with Washington and that there had been “no interruption” in communication channels while blaming Washington for the dearth of institutionalized dialogue.

“Responsibility for the current difficulties faced by the two militaries in their exchanges lies entirely with the US side,” maintained China’s defense spokesperson Tan Kefei.

“The US claims that it wants to strengthen communication, but in reality it disregards China’s concerns and creates artificial obstacles, seriously undermining mutual trust between the two militaries,” he added, referring to a host of new US sanctions imposed on Chinese tech companies and senior officials, including defense minister Li.

Beijing has reportedly demanded the lifting of “illegal unilateral sanctions” , including on its top officials, as a precondition for the resumption of high-level dialogue. But the Biden administration has insisted on unconditional dialogue in the interest of both superpowers and international security.

The interregnum in high-level military dialogue between the world’s reigning superpowers is ringing high-pitched alarm bells, since even at the height of the Cold War the US and the Soviet Union maintained robust communication channels.

Alarmed by the rising tensions, the US Secretary of State Antony Blinken, who was on a trip to new North Atlantic Treaty Organization (NATO) member Sweden this week, warned that the latest incident in the South China Sea underscores the need for “regular, open lines of communication” especially “between our defense ministers.”

“The most dangerous thing is not to communicate and as a result, to have a misunderstanding, a miscommunication,” Blinken added.

Follow Richard Javad Heydarian on Twitter at Richeydarian

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The land is burning

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This year’s scorching heatwave across much of Southeast Asia, which saw daily temperatures soar past 40 degrees Celsius, is incendiary warning of things to come.

Average temperatures have been increasing for decades; Thailand, Myanmar, and Vietnam are among the countries most affected by climate change and global warming this century.

As temperatures rise in a region of over half a billion people reliant for the most part on locally-grown crops such as rice, food production and labor productivity will be severely affected.

The impact on human security will in turn affect socio-economic stability and upset regional relationships. Climate change is already a key driver of conflict in Africa; Southeast Asia is not that far behind.

For the time being, climate change is imposing hardships on people already suffering in conflict zones. Myanmar is considered one of the most vulnerable countries in the world to extreme weather events such as heatwaves, floods and cyclones.

In central Myanmar’s dry zone, determined resistance to military-imposed rule since February 2021 occurs in areas already ravaged by drought and rising average temperatures.

In Sagaing and Magway, increasingly parched regions heavily dependent on agriculture, farmers have been struggling for years to survive. Migration northward and eastward towards China and Thailand has been the main response. 

Now, even if people manage to migrate to cities and more developed areas of the central region of Myanmar, scarcity of fresh water and electricity makes existence hard in situations where work must be carried out at times in temperatures above 40 degrees Celsius.

Managing this slow onset of climate change impact has been thwarted by limited state resources and armed resistance to central authorities. This was evident in the wake of Cyclone Mocha, the category five super cyclone that hit Rakhine state in mid-May.

Quite apart from the difficulty of entering affected areas controlled by resistance forces, the UN cited obstacles to providing much-needed aid posed by banking restrictions and the need for Yangon’s travel authorization.

Although detailed information and data is scarce, Myanmar may be the first country in Southeast Asia to see the debilitating nexus between climate change and conflict impact human security severely. 

Cyclone Mocha left a path of death and destruction in Myanmar. Image: Twitter / Straits Times

Elsewhere in the region, this year’s excessively hot dry season brought with it economic and health problems: the combination of high temperatures and air pollution from the burning of crop stubble affected the health and residents in Northern Thailand and depressed the critical tourist industry.  

In Chiang Mai, the air quality index measuring particulate matter (PM 2.5) remained above 300 for two weeks from the end of March— 20 times above the upper limit recommended by the World Health Organization.

As a result, hotel occupancy was running below 50% in a traditionally high season for tourists and more than two million people were reportedly treated in hospitals for respiratory effects.

While the difference with Myanmar is that there is no paralyzing internal conflict, studies point to the appearance of local tensions – between urban residents affected by the pollution and provincial agrarians accused of the crop burning. 

Ahead of a general election in mid-May, the Thai government mobilized to order people in the worst affected areas to work from home and reached out to neighboring countries to see about reducing crop stubble burning.

These moves will become routine in the region as climate change impact intensifies every year. But the question is how well prepared are regional governments for more serious social and economic fallout – and what needs to be done to help the region more effectively respond?

Perhaps the tools of dialogue and mediation can be helpful. 

In conflict zones like Myanmar, as in parts of Africa, where governance is impaired by conflict, it will be important to help communities help themselves.

But even as top-down solutions are out of the question, the severe impediments imposed on local civil society and welfare organizations make it hard to extend help and advice to affected communities. 

In Myanmar, the UN notes there is “a high risk that natural disaster relief – in the case of, for instance, cyclones, flooding and drought – will be undermined or be used as an oppressive political tool, with the military preventing humanitarian organizations from helping affected populations.” 

To cope with the worsening situation, international aid agencies are urged by experts to tap into local civil society networks, especially in conflict areas. In more stable areas, where government and civil society operate unimpeded, there are still significant challenges to managing the situation.

Blame for environmental degradation is easily placed on vulnerable groups in society. Data-sharing is a major obstacle between states in a region where sovereignty is a barrier to cooperation. Deep mistrust and misalignment between state structures and civil society make for slow progress on designing effective coping strategies and policies.

Perhaps the biggest challenge of all will be managing climate change displacement. Whether voluntary, forced or planned, and although not so evident today, large-scale movement of people will soon become a feature of the region’s response to climate change.

Floods in Vietnam’s Mekong Delta in a file photo. Photo: IMF / Twitter

Natural disasters displaced almost 8 million people in Indonesia, Myanmar, Vietnam and the Philippines in 2021, according to the Internal Displacement Monitoring Centre in Geneva. The World Bank estimates that between 3.3 and 6.3 million people will be displaced by climate change in the Lower Mekong region between now and 2050.

Strong government structures in some countries will help ensure that planned re-location can be arranged. The bigger challenge will be cross-border migration that impacts labor and other human rights, for which inter-state monitoring and arrangements will be needed.

In sum, given that rising temperatures and drought, not to mention the rapid onset of extreme weather events, are already taking a toll on human security in the region, more organized and institutional anticipation and planning needs to be broached both at the national and inter-state level.

Relying on international agencies and global initiatives won’t necessarily generate responses well-tailored to the region or address the specific constraints on cooperation. Rather, a more concerted minilateral approach is urgently needed.

Michael Vatikiotis is Senior Adviser at the Centre for Humanitarian Dialogue.     

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A glacial Sino-American thaw

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US President Joseph Biden announced a thaw in China’s ties with the US. However, there is much more ice than meets the eye in this “thaw.”

When the US Secretary of Commerce Gina Raimondo returned from China last week, she declared that the US “won’t tolerate” China’s ban on Micron chips. Still, from Beijing’s perspective, why should China tolerate restrictions on tech supplies?

Then what will happen to China’s purchases of US Treasury bonds, for decades a cornerstone of bilateral ties and now extremely important because of the US budget crisis? Will they go ahead, or will China stop buying them or buy less? How will it impact the US and the global economy?

The urgency of Raimondo’s pressing to meet the Chinese side, the rush with which Secretary of State Antony Blinken and Treasury Secretary Janet Yellen moved in the following hours, told China that the US was in big trouble over the budget.

Speaking of a thaw and US government officials knocking on Beijing’s door to talk could give the impression in China that America is eager to mend fences with China because it feels weak.

Until a couple of months ago, all the messages coming from Washington were of fire and brimstone. Then, in March and April, the US budget crisis began and a problematic agreement had to be found between Democrats and Republicans to deal with it.

A not insignificant part of the budget goes into defense spending and generally to support domestic development plans aimed at national growth against Beijing.

It all looks very odd from Beijing, where people wonder: there is tension, but you want our money; what is it, a show?

Indeed, China has more than one reason to ask what’s happening and bargain with Washington. The US, keen on China’s bond purchases, has conceded something, although it is unclear how much.

In any case, China’s bond purchases have apparently muffled the recent saber-rattling. In the near future, the impression is that American allies will restrain controversial moves on Taiwan and elsewhere.

Meanwhile, Beijing will follow the problematic, divisive US election campaign with two candidates who are both weak on paper.

The Republican Donald Trump, more controversial than ever, is hounded by lawsuits and denunciations that make him a martyr to his follower base. The democratic Joseph Biden is cast by his foes as tired, fatigued and unable to handle the stress of the presidency.

Things should be under control for the next 18 months; there shouldn’t be a major bilateral crisis, Beijing seems to figure.

Central Asia’s moves

But politically, there is a lot of movement around China.

Tehran, on May 28, announced that talks have progressed between Iran and the US on releasing Tehran’s frozen assets in Iraq and South Korea, and an agreement on general terms will likely be achieved in the coming days. It could spin the political calculus of the area in a different direction.

Just two months ago, on March 10, China announced it had brokered a historic deal between Iran and Saudi Arabia. It inserted China into delicate Middle Eastern politics and seemed to sideline the US, recently battered in the region by the ruinous wars in Afghanistan and Iraq.

Still, at the beginning of April, CIA director William Burns visited Riyadh to confirm bilateral ties, as the US guarantees security to the Saudi court.

Now, the Iranian announcement could also pave the way for historic and new relations between Saudis and Israelis, which had been in the offing for years. Moreover, Iran’s new posture could turn the country to a new approach with Israel.

Wang Yi, China’s top diplomat (center), in Beijing on March 10, 2023, with counterparts Musaad bin Mohammed Al Aiban of Saudi Arabia and Ali Shamkhani of Iran. Image: China Daily

Certainly, nothing is set in stone but the US-China rivalry has extended to Central Asia and the Middle East, and it might have an overall positive spin for everybody.

China’s recent inroads in the region could have started a complex reassessment. This created a new Chinese presence and role in the area and spurred America to be more active, possibly taking Israel along.

China is not marginalized in this game, but certainly neither is the US. The two countries seem ready to play in the region according to different rules. This may change the political geography of the area, and no one is clear who will be the winner in the end.

Besides, the G7 met in Japan, inviting India, Indonesia, Vietnam, Australia and Brazil. It found unity on a platform against China. However, there is no longer talk of “decoupling” but rather “de-risking.”

Among America’s allies, there is no agreement to decouple economically from China. It may seem like a step forward from Beijing, but it may be more complex.

There is an agreement to take away the Chinese risk, which is already factored into companies’ budget plans. Those inflate all ventures dealing with China.

The new costs, sanctions and restrictions budgeted in China’s companies’ plans make all foreign enterprises in the country less convenient. In recent years, burgeoning tensions and drastic anti-Covid measures have pushed foreign investors to isolate their China operations from the rest of the world; new costs make it less convenient to operate in China altogether.

Still, if processes are still active in the country, the promising Chinese markets are no place to flee. But new operations are less attractive.

While the G7 was convened in Hiroshima, China invited the five former Soviet republics in Central Asia (the five Stans) to Xi’an, its ancient capital. The five Stans occupy a territory about half the size of China, with just over 70 million inhabitants.

The signal was against the G7 and Moscow, the former ruler of the region. With the extension of its reach into the Stans, Beijing projects to the Caspian Sea, i.e., the Caucasus, i.e., the Black Sea and to the great Mediterranean.

It claims that the G7 resolution is weak and that Russia’s eventual defeat in Ukraine does not harm Beijing. On the contrary, it allows China to extend its impact where it had never gone before, bringing closer border contact with Iran and the Saudis.

There are reasons to be not so gloomy in Beijing. The urgency of US talks on bond purchases suggests more generally that there is something very wrong with the US economic situation and model.

China may have its own internal economic difficulties: the crisis in the real estate sector, the problem in the trusts sector and the challenges of local governments. Still, without full currency convertibility, the central government can better manage its economic affairs, and thus political bargaining, than Washington. Or can it?

It is time for observation and thinking about the extensive framework that still holds bilateral ties together. Here, constraints are very tight for Beijing.

A two-way surplus

Over 30 years ago, the US and China established a framework that constrained both countries. This framework is presently under duress, but it is still there.

The US is still giving China its largest surplus. Last year, it was about $700 billion. Without the G7, China would not have a surplus; it would have a deficit. The domestic economy would not be the same.

If there were a trade deficit, China should export its currency or change its entire trade strategy. Both options, however, are problematic.

With the currency export option, there would be a foreign RMB (freely-traded abroad) and a domestic RMB (with a rate adjusted by the central bank), and their exchange rates would differ. It would lead toward the free exchange of the RMB, which the government doesn’t want.

Changing Chinese trade is not easy either, because developing countries do not have much purchasing power to acquire so many Chinese goods.

Furthermore, factories will close once China does not have today’s surplus, and workers will lose their jobs. Then, there will be a social and political crisis.

China uses part of its surplus to buy US debt. The United States needs China to buy its debt to buy Chinese goods. The whole process, though, has stopped being cost-effective for the United States.

Photo: Reuters/Jason Lee
China is a big buyer of US Treasury holdings. Image: Agencies / Facebook

The United States buys hundreds of billions worth of goods yearly, so the total deficit with China in many years is many trillion dollars. But China buys only $1 trillion in US Treasury bonds.

By some accounts, the United States has transferred trillions of dollars to China in 30 years. This calculation is simplistic and partial, but reflects something visible in the two countries: China is bridging the economic gap with the US and has grown much faster than America in the past 40 years.

America thinks China should be grateful for this. It isn’t; it’s rather unhappy with America.

China can spin a story at home about addressing the issue, but abroad there is a growing consensus that something is wrong with how China handles its trade.

Then, would China be prepared to handle a long-term trade deficit? It would have to bear its costs. China can manage a trade surplus easily; a trade deficit is far more complicated.

Managing a long-term deficit requires convincing other countries to accept your currency in exchange for real goods. Therefore, it also entails two elements:

  1. Long-term internal reliability and stability (a fairly transparent political system, a military, accepted diplomatic and cultural clout, etc)
  2. Allowing other countries to make money in China and quickly removing the hurdles. It would need an advanced stock market and the development of new technologies that can create new markets and drive global growth, which can be exported to other countries. The new markets will bring new opportunities to prosper.

The United States and its old “buddy” Britain have both elements. Others are different. Even Germany and Japan rely on exports.

If the framework is not rapidly fixed, it will fall apart after the present lull and America and its allies will have established a new framework with other countries. China certainly has plans and is preparing, but of course, it’s unclear whether they will work.

Here time is of the essence. Is time on China or America’s side?

China may think that the longer I have, the better I can prepare for the coming conflict; a bigger economy can withstand the pressure, while American divisions will rip it apart over a longer time.

America may think the longer I have, the better I can consolidate my alliances and the weaker Russia becomes, surrounding China with more problems that will come for China’s sputtering domestic economy.

But, in the meantime, the crux of the matter might be different as both sides bide their time and draw the wrong conclusions about the other side’s weakness. The thaw doesn’t seem set to last and brewing troubles will get bigger and possibly come back with a vengeance.

Moreover, is the lull real? Aside from any rational calculations, the world around China is exceptionally volatile and many things can blow up, irrespective of Beijing’s intentions.

US domestic strife can find a sudden unity for any given incident, coalescing against China, the common denominator of the nation. Then, the issue of China’s bond purchases could vanish. Chinese assets abroad would be seized or frozen, as the same would happen to Western holdings in China. It was already the case with Russia.

Meanwhile, can there be a systematic solution to avoid a war? And what will be the price for peace? At the moment, not many seem to think about that.

This essay first appeared on Settimana News and is republished with permission. The original article can be read here.

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China declines meeting with US defence chief: Pentagon

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WASHINGTON: Beijing has declined a US invitation for a meeting in Singapore between Defense Secretary Lloyd Austin and his Chinese counterpart Li Shangfu, the Pentagon said on Monday (May 29). “Overnight, the PRC informed the US that they have declined our early May invitation for Secretary Austin to meet withContinue Reading

Higher risk of haze in southern ASEAN region between June and October 2023

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SINGAPORE: Weather and climate authorities on Monday (May 29) flagged a higher risk of haze in the southern ASEAN region between June and October this year amid expectations of a more intense and prolonged dry season. 

The ASEAN Specialised Meteorological Centre (ASMC) made this announcement as it issued Alert Level 1, indicating the start of the dry season associated with the Southwest Monsoon in the southern ASEAN region.

“Persistent drier weather has been observed over most parts of Brunei, Indonesia, Malaysia, Singapore and southern Thailand in recent days, as the monsoon rain band moves north of the equator. 

“With a high likelihood of El Nino conditions developing in the coming months, the dry season is expected to be more intense and prolonged compared to recent years, and extend into October 2023,” it said.

Hotspot activities in the southern ASEAN region are presently still subdued, with 14 and 13 hotspots detected in the southern ASEAN region on May 27 and May 28 respectively, said ASMC.

A few localised smoke plumes were detected in parts of the region on some days in May, but no transboundary smoke haze occurrence has been observed so far.

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Parsing China’s ambiguous Ukraine war mediation

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After a year of diplomatic inactivity towards the war in Ukraine, the Chinese government has made demonstrable attempts to look like a peacemaker. But while these moves indicate a change in its behavior, there is little reason to anticipate that China’s efforts will end the war.

China’s 12-point “peace plan” and Chinese President Xi Jinping’s direct phone call to Ukrainian President Volodymyr Zelensky on April 26, 2023, though met with skepticism and criticism in the West, led the international community to believe that China might be able to move the needle far enough to bring the Ukraine war closer to a solution or at least some sort of peace process.

But neither Russia nor Ukraine is ready to negotiate and make concessions. While the conflict is mutually detrimental, there is no clear battlefield stalemate or strategic impasse that would necessitate immediate negotiations. Neither Ukraine nor Russia is exhausted enough to engage in negotiations, with both sides digging in for a long haul.

Beijing’s relative success in brokering a Saudi-Iran agreement should not be extrapolated to the Ukraine war. In the Saudi–Iran case, a pre-established dialogue framework helped China’s late involvement. Iraq and Oman had done much of the substantive work before Beijing stepped in. 

Most importantly, given the power vacuum in the region, both Iran and Saudi Arabia were willing to reach an agreement with each other.

This does not apply to the case of Ukraine, where the irreconcilability of Kiev’s and Moscow’s demands and the lack of a strong “give peace a chance” camp in Europe make protracted war the most likely scenario. If China’s mediation attempts are driven by the desire to boost its status, there is a risk for Beijing that a failure to achieve a successful outcome will damage its credibility.

The conflict between Moscow and Kiev has become an acute manifestation of global great power rivalry, an epicenter of the struggle for influence between Russia and the West rooted in long-term systemic trends.

The Russia–West stand-off in the post-Soviet space surfaced long before the Ukraine war. Soon after the August 2008 Russia–Georgia war, former Russian president Dmitri Medvedev stated that Moscow had demarcated a “traditional sphere of Russian interests”, to which then-US vice president Joe Biden rebutted, “we will not recognize any nation having a sphere of influence.” 

Russia and the West ruled out any possibility of a positive-sum scenario involving Ukraine. This means that China must mediate not a Russia-Ukraine territorial dispute but a full-blown zero-sum confrontation between Russia and the West — a daunting task.

China’s own precarious position in great power politics and its deteriorating relations with the United States, aggravated by Beijing’s commitment to winning back Taiwan, make Beijing an unlikely candidate to solve tensions between Russia and the West. The crux of the problem is that Russia is China’s only great power ally, and China will rely on Russia in the event of a confrontation with the United States.

Unlike the United States and its allies, China does not want Russia to suffer a devastating defeat in Ukraine. Such a scenario would mean a triumph for the United States’ international order and global influence. 

This would deal a blow not only to China’s aspirations for a new global order with “Chinese characteristics” and “dreams” but also to the Chinese Communist Party’s legitimacy, especially from the standpoint of unification with Taiwan. If Russia falls in its confrontation with the West, China will become the West’s next target.

In contrast, a protracted war or some form of Russian victory will erode the US-led international order, exposing its flaws and opening new avenues for China’s global rise. China will tread the tightrope of Ukraine geopolitics very carefully, coming up with unfulfillable “peace initiatives” that combine a Russia-friendly stance with a desire to protect its own interests.

Given these considerations and China’s overall knowledge of the conflict, China’s plans to mediate the conflict are questionable. China’s activities regarding Ukraine seem to be dictated by Beijing’s broader foreign policy goals.

By becoming involved in the global “Ukraine project”, Beijing can consolidate a coalition of like-minded developing countries with ambivalent stances on the Ukraine war, such as Brazil and South Africa.

China can not only strengthen its influence in the developing world but also circumvent the uncompromisingly binary “barbaric and authoritarian Russia versus civilized and democratic West” structural environment. 

In doing so, Beijing can expand the room for foreign policy maneuvering, simultaneously undermining the unity and global standing of the West.

Still, China’s “peace initiatives” should not be dismissed entirely despite their limited potential to end the Ukraine war. 

While they may not bring about peace talks, they can facilitate ‘talks about talks’ and talks about avoiding vertical escalation when the use of tactical nuclear weapons is no longer a distant risk but an imminent threat. Given the gravity of the situation in Ukraine, these possible outcomes make China’s recent moves a worthy endeavor.

Alexander Korolev is Senior Lecturer in Politics and International Relations at the University of New South Wales, Sydney.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Okinawa still strategically key and China knows it

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Okinawa isn’t in the news nearly as much as it was some years back when most reporting focused on noisy protest groups demanding that US military forces leave. The Japanese government sometimes even seemed to wish the Americans might go away and only return when needed. 

Times have changed. Nowadays the reporting is mostly on the China threat. And Tokyo is presumably glad the Americans are still around on Okinawa. 

It never hurts to remember why US forces are there.

Map of Okinawa, showing important cities and features including US military bases at Futenma and Henoko and the Senkaku Islands.

What is the strategic importance of Okinawa? 

In military matters, geography is supremely important. Okinawa (using the name to refer to the entire Ryukyu Island chain, and not just the main island of Okinawa, for the sake of convenience) is key strategic geography by virtue of its location.  Okinawa sits in between the southern Japan mainland, Taiwan and China. And it is also close to the Korean Peninsula.  

Whoever occupies Okinawa has an advantage. For US forces, Okinawa bases allow a “forward presence” that simplifies air, sea, and ground operations in the region. And this region is where today’s “great power rivalry” is playing out most intensely. Some argue that a fight with China is likely to break out in this neighborhood.

Okinawa bases facilitate offensive military operations, of course. But they are also useful defensively, although the difference between offensive and defensive operations is often a matter of interpretation.

The Chinese People’s Liberation Army has to tread carefully if it moves in the East China Sea. And even a Chinese assault on Taiwan would be vulnerable to US and Japanese forces operating out of Okinawa. Emplacing anti-ship missile batteries and anti-aircraft systems on Okinawa’s islands would also close off large areas of ocean to the Chinese navy and air force, and could do the same for parts of Taiwan.

Also, Okinawa is a useful platform for surveillance and intelligence collection activities that are an indispensable part of military operations.

Looking farther afield, Okinawa bases also allow the Americans to operate more easily throughout the entire Western Pacific and beyond. The US Marine-led response to the 2015 Nepal Earthquake in fact was launched from Okinawa. Also, Okinawan bases are available in the event of a contingency on the Korean Peninsula.

China National Security Strategy
China televises the firing of ballistic missiles into “training” areas around Taiwan and in Japan’s EEZ in Okinawa Prefecture. August 4, 2022. Photo: Weibo.

China knows the answer

China is well aware of the importance to Japan’s defense of Okinawa – and forward basing in particular. And it would like US (and Japanese) forces gone.

Consider how China has built artificial islands and established military bases in the South China Sea. This extends forward People’s Liberation Army operating capabilities. It allows the PLA to dominate or control sea and airspace much farther from the Chinese mainland than would be the case without the islands. Okinawa provides similar advantages to whoever holds its islands. 

And don’t forget the political significance of Japan defending its territory against Chinese aggression. China has stated its intentions to eventually “retake” Okinawa (the Ryukyus) and not just the Senkaku Islands. 

Tokyo is demonstrating political will. The joining together of the Japanese and the Americans for mutual defense of Japanese territory and to ward off Chinese expansion is a clear sign of political determination by the world’s two major democracies. 

How might US forces on Okinawa be used in the case of a conflict with China over, say Taiwan?

Potentially those islands would be used as launch points for attack by air and naval forces against Chinese forces, but the Marines and Army would use them when employing long-range precision weapons, air and missile defense systems. This would help prevent Chinese forces from operating in the area. US air and, to a lesser extent, naval forces operating from Okinawa are also part of the defensive web. 

Don’t forget that Okinawa is just as important to Japan and Japanese forces as it is to American forces. And for the same reasons. But the Americans are the ones who have the real capability to operate farther afield against the PLA.

Okinawan-based forces might also be employed to support the US presence in the Philippines, among other places in the region, as supporting elements in the event of a Taiwan fight.

US Military Drills were ongoing in 2017 at US Marine Corps Air Station Futenma on Okinawa. Photo: The Sankei Shimbun

Are the Okinawa bases losing relevance in the new age of modern warfare?

Weapons and hardware are changing, but war itself hasn’t changed all that much. Consider the Ukraine war. It looks a lot like old-fashioned war in many respects.

But aren’t the bases sitting ducks for missile attacks? 

Sort of. But sort of not. Any base anywhere is vulnerable to Chinese missile attack even Guam, Pearl Harbor, San Diego and maybe even Camp LeJeune, North Carolina. The same of course applies to Chinese military bases. 

So it’s important to harden your bases as much as possible ー both physically, say with concrete aircraft shelters, and also with proper missile defenses and other defense measures. But you also want to be able to hammer the enemy hard enough so he knows he will receive as much as or more than he delivers.

What’s the alternative? Pull back to Colorado and burrow into the Rocky Mountains?

US Marines
Japanese Self-Defense Force base under development at Yonaguni Island, Okinawa Prefecture. Photo: TheSankei Shimbun

Keep in mind as well the distinction between military operations before a war starts and military operations after the war starts. During peacetime, a military does all sorts of things to train, exercise, prepare and establish its position. And also things like humanitarian assistance/disaster relief activities.  

If you demonstrate you’re a serious military, capable of fighting ー and positioned in a number of different places ー and with a lot of “allies” or “partners,” then an enemy is less likely to try his luck with you. And he might also worry about having to take on the entire might (military, economic, political) of the USA and its friends. 

All this adds to deterrence ー which, if things go right, prevents a war from starting in the first place.

Once the shooting starts, everything is different. And that’s when you’ll know whether you did what was necessary in peacetime.

Does the US need to rethink its Pacific deployments to better contain China?

Yes, and it is doing so. Major bases of the sort that are on Okinawa are important and useful. But a military must not put all its eggs in one basket ー as the US has done. The Americans have too few major bases in Asia outside Japan.

The Americans should be operating from many different locations in Asia.

Opportunities have recently opened up in the Philippines and in a few other places such as Palau and Papua New Guinea. Also, facilities in Northern Australia are finally being used to their potential.

But the US military’s top leadership squandered 20 years. And it did not do what was necessary to establish access and position itself in as many places as possible in the region. The brass even turned down invitations by a number of countries to come and set up shop.  

To its credit, the US military now is scrambling to spread itself out. But it’s late in the day.

Grant Newsham is a retired US Marine Corps officer and a former US diplomat. He is the author of the book When China Attacks: A Warning To America. This article was first published by JAPAN Forward and is republished with permission.

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