President Obama arrives in Asia today on a ten-day trip to four Asian democracies. After touring India on his first stop, Obama continues to Indonesia, South Korea, and Japan and will attend both the G20 summit and the Asia-Pacific Economic Cooperation conference.
In a video Q&A, Douglas Paal discusses the trip and U.S. reengagement in Asia. “It’s a time when the United States is on the rebound in Asia from a period of inattention to one where Washington sees opportunities to forge a relationship with countries that can provide a kind of balance to Chinese power,” says Paal.
- What does the president hope to accomplish on his trip to Asia?
- What is the significance of starting in India?
- How important is Obama's stop in Indonesia?
- What will be on the agenda for his bilateral meeting with Chinese President Hu?
- What are the priorities for the G20 meeting in South Korea?
- How strong are U.S. relations with Asia? Does Washington have an effective strategy?
What does the president hope to accomplish on his trip to Asia?
President Obama is filling out the promise he made of getting re-engaged in the Asia-Pacific region and it’s also a year of anniversaries and activities. One of the most important things he’s taking part in is the G20 summit, which is a follow on to the meeting in Pittsburgh last year and Toronto this summer, where Obama and the others are trying to deal with the aftermath of the recession and rebalance the global economy. This is probably the most important event on his trip.
But he’ll start with four days in India. The Obama administration has tried to pick up from the strong points of the Bush administration in having a good relationship with a rising India. The idea in the minds of some is to have a kind of counterweight or balance of power for China. In the eyes of others, it’s just an opportunity for India and the United States to have good relations with each other, irrespective of what’s going on with China. I lean towards the latter camp.
There are some commercial opportunities that Obama will push for in India. He will try to get some nuclear power plants sold (this may or may not happen), try to sell some jet-fighters (this is most likely not going to happen), and try to sell some other kinds of aircraft for the Indian armed forces for long distance hauling cargo aircraft. This will be four days with lots of panoply and lots of pictures to send back to the U.S. public in the aftermath of the tough American election that preceded his travel.
Then he’ll go to Indonesia. He missed two trips to Indonesia because of the domestic agenda in the United States—first the health care bill and then the oil spill in the Gulf of Mexico. He will only spend 22 hours in Indonesia as he’s basically making up for his lost visits and he promises to go back next year. Indonesia will then be the chair of the Association of Southeast Asian Nations and will be hosting the East Asian Summit. Around Thanksgiving time next year he will go back with his children in tow so they can see where he lived as a young person. So the trip is kind of truncated, but it’s an attempt in Indonesia to press forward on the so-called partnership between the two countries. It’s not officially called a strategic partnership, but it’s still meant to be similar to the nature of a strategic partnership with counterterrorism and cooperation between our militaries.
Then he goes to South Korea and Japan. It’s the fiftieth anniversary of the U.S.-Japan Mutual Security Treaty—a very important anniversary—and it’s also where Japan will be hosting the Asia-Pacific Economic Cooperation (APEC) leaders forum in Yokohama, so Obama will be participating in that. They are trying to reenergize trade policy within the region, but we’re a long way from scoring any gains at this meeting on the subject.
What is the significance of starting in India?
India’s an area where there’s a little more boosterism and optimism about the future of U.S.-Indian relations than perhaps warranted. The United States can have a good, substantive political and economic relationship with India, but there are people who have expectations that India will do a lot to take care of China. India will take care of India, it’s not going to take care of China for the United States.
But that being the case, it’s still important to continue the diplomacy that started with President Clinton’s visit in the 1990s to India, Bush’s big visit there, and return visits by Prime Minister Singh, including last fall when his trip to Washington was a big affair. So, with the president starting off with a substantial visit in India, I imagine the journalism will be all about how the United States is putting India right up there on the front line to hold back China.
And the business community will be pushing for their opportunities in India. The country is still a very mixed market. You can make a lot of money there, but it’s not easy to get in, there’s kind of a “Raj of bureaucracy” that strangles certain kinds of industries, and there’s other industries that have been pretty well exploited, including outsourcing backroom and services industries. Obama’s visit to India reflects the significance of the economic relationship as it has grown.
How important is Obama's stop in Indonesia?
The president is going back to Indonesia as a homecoming. He spent a few years there as a kid. They hoped to take him to his old school, but it’s down a narrow alleyway and presidential motorcades don’t do well in narrow alleyways.
He will speak to students at the university in Jakarta about his experiences and the promise of the new partnership between the United States and Indonesia. I think he will also pick up on the themes of his messages to the Islamic world.
Indonesia is the world’s largest Muslim majority country, although it’s not an Islamic state. The population and authorities in Indonesia have both dealt with terrorism more effectively than any other country in the world through ordinary police and judicial processes and, at the same time, have been very tolerant of Islamic life. So it’s kind of a model, along with Turkey as it used to be, as a way for modernization accompanying Islam. I think he’ll be addressing that in his remarks as well.
Hopefully he will have more time when he goes back with his family next year to reminisce about the old days, because he’s going to easily be the most popular president to ever step foot on Indonesian soil. That’s an asset the United States should take advantage of, because Indonesia is a very important country.
Indonesia’s almost 300 million people are spread across thousands of islands. If Indonesia were physically in the heart of Europe you would never talk about Germany—Indonesia would be so much bigger. Because it’s far away, and on the south coast of Asia, it’s not so big in U.S. minds, but it should be much larger. I hope this trip and even more so the next trip will give ordinary people in America a better sense of the importance of Indonesia.
What will be on the agenda for his bilateral meeting with Chinese President Hu?
They’re setting up the meeting to be a precursor for a late January state visit by Hu Jintao to the United States. This will be more of a bells and whistles state visit than Hu’s previous visit under President Bush, where Bush wanted to play down the relationship with China.
The United States still has the same agenda with China but some things have been added to it. That agenda includes global refinancing, whether the economies are going to get started up again, and putting the United States and China trade balance into a better position. The second item on the agenda is dealing with the global climate change and there’s not much happening there right now as the climate conference in Cancun looks like it won’t be much of a meeting. The third big item on the agenda is nonproliferation—North Korea and Iran. There needs to be follow-up on what China is doing about Iran and the United States will encourage the Chinese to put more pressure on North Korea. The Chinese will want the United States to get back into the six-party talks with North Korea and both sides will dance around that subject in the course of this meeting.
And then we’ve got new issues that have emerged, including China’s pushiness and behavior in the South China Sea with the Japanese and the Senkaku islands, and outside the Korean-Chinese border areas, or maritime areas, the Yellow Sea, where the Chinese tell the United States not to operate. These are issues that the leaders need to talk about.
What are the priorities for the G20 meeting in South Korea?
The G20 needs to get down to the business of rebalancing economies. The big surplus generating economies like Japan, Germany, and China need to reduce their surpluses. And the big deficit countries like the United States, United Kingdom, and others need to reduce their spending and save or tax more. Of course, the United States doesn’t want more taxes—at least Congress so far doesn’t want to raise taxes—and Americans are still spending at record rates.
China doesn’t want to give up its exports, so it’s going to try and figure out a way to reduce the appearance of a surplus. The target that’s been set by finance ministers is 4 percent—neither deficit nor surplus countries would exceed 4 percent of their GDP. China was up to 6 percent a couple of years ago, which is an enormous amount in world trade. Germany is presently at 6 percent and shows no real desire to reduce it. So, that was supposed to be the topic.
The G20 has been sidetracked because when you’re trying to get other people to make sacrifices in their saving or their spending, you have to motivate them. And to get them motivated, the United States is using the H-bomb of international finance, which is quantitative easing. The United States is pouring dollars into the market by buying up U.S. bonds and printing cash out of the Federal Reserve.
This has put tremendous pressure on the developing world—the emerging market—and they are seeing people borrowing money cheap in the U.S. market and then moving it to the fast-growing markets and that’s driving up their currencies. And when their currencies go up, their ability to market Argentine wines or Chilean whatever all get affected by the rebalancing of the economy caused by quantitative easing. It’s America’s way of saying, “Pay attention, we want you to buy more of our stuff and we’re going to cheapen our currency to make us more competitive in the international market. And we’ll keep doing this until you (Germany, Japan, China, and other surplus countries) start buying more product and reducing your savings.” And that’s where we’re at.
It may be that they’ll come up with something at the G20 meeting that papers over the differences among the leaders. My guess is that a lot of this will be false promises. In China’s case for example, if it wants to go from a 6 percent to a 4 or 3 percent share of GDP, it can do it by buying more stuff overseas like commodities (they can buy and stockpile oil, coal, copper, and aluminum). And that goes into Chinese exports and production; it doesn’t go into the pockets of Chinese consumers, and it’ll emerge back in the international market as a bigger share of GDP. And of course, the Chinese GDP is growing so rapidly that 4 percent is still a larger and larger number every year as a trade figure, and so China can fairly comfortably make that kind of promise without the United States getting the results it wants out of China.
How strong are U.S. relations with Asia? Does Washington have an effective strategy?
America is on the rebound in Asia. The United States started to get weak in Asia in 1997 when the financial crisis occurred and a lot of the eyes of the American business community were diverted from the star attraction of the early 1990s—Southeast Asia—to the rising opportunities in China as it prepared to join the World Trade Organization in 2002. People seized on the opportunities to invest and trade in the Chinese market and to export from the Chinese industrial platform.
Then after 9/11 and the distraction of its counterterrorism effort, the Bush administration didn’t really pay a lot attention to Southeast Asia, except for the tsunami in Indonesia in 2004 and the Burmese cyclone at the end of the Bush administration. They missed a lot of meetings and seemed not to care.
At precisely the same time, China was really investing in the Southeast Asia region both in diplomacy and economic terms and so the United States under the Obama administration is trying to fill the gap. The United States would like to have stronger relations with Japan than they’ve had. The United States has had trouble because there’s a drastic change going on in Japanese domestic politics, but the Chinese pushiness in the maritime regions along its periphery have helped to solidify U.S.-Japanese and U.S.-Korean alliance relations and helped to strengthen U.S. relations with the rest of the region, notably Vietnam and the rest of Southeast Asia.
So, it’s a time when the United States is on the rebound in Asia, moving from a period of inattention to one where Washington sees opportunities to forge a relationship with countries that can provide a kind of balance to Chinese power. Sometimes the United States does this a bit clumsily (we’re not the world’s best diplomats as a people anyway), but on a whole the pattern of the administration’s strategy is pretty good.
