2010: a year of regional opportunities

2010 has the potential to be a vintage year for East Asia in terms of economic and political developments. But if the region's leaders fail to seize the opportunities, the New Year could see the beginnings of a drift toward nationalism and possible conflict eventually. That would not be simply a missed chance but a tragedy for the region. The United States, which has underwritten the security of much of East Asia in the post-war period while also providing a market that enabled the region to grow economically, is overstretched. This fact would, in itself, justify Asian leaders taking a hard look at the future of their countries in a world where the sole remaining superpower is in a somewhat defensive mood and preoccupied with domestic problems, wars on two fronts in Afghanistan and Pakistan, as well as residual hostilities in Iraq. The retreat from aggressive power projection that characterises the Obama administration has coincided with the advent of a more assertive yet flexible government in Japan, following the landslide victory there of the Democratic Party of Japan (DPJ). This shift reflects the vision of Ichiro Ozawa, architect of the political revolution in Japan. Mr Ozawa saw long ago that Asia in general, and Japan in particular, could not remain forever under the security umbrella of the US. Thus, he built a successful political movement to break the mould of Japan's US-dependent thinking and to guide the nation towards an alliance with East Asia.


Given these fundamental shifts, the stage is set for the dawn of a new era of regional cooperation in 2010. But the best of sets are of little use unless all the actors play their parts. Japanese Prime Minister and Ozawa-protege Yukio Hatoyama has made his debut with friendly overtures to Asia and now he needs support from the rest of the Asian cast. For China and South Korea, this is a golden opportunity to secure closer ties with Japan at a time when such developments are less likely to create friction with outside powers.

So, East Asia has an opportunity to institutionalise at the political level what is already a fact of life at the economic level: the high degree of interdependence that characterises regional trade and investment relations. This has been the case for a decade or more but the global recession has added major significance to regional economic interdependence. Asia's trade with the US and Europe remains far below pre-recession levels and is likely to remain so in the foreseeable future. Intra-regional trade, on the other hand, is growing by leaps and bounds. Even if this cannot compensate in absolute terms for the loss of extra-regional demand (for now at least), the signs point to East Asia surpassing the level of intra-regional trade intensity even of the European Union.

But economic integration requires institutional underpinnings, as does security cooperation. Put simply, East Asia can seize greater control of its own destiny in 2010 if only it can demonstrate the will and maturity to make the effort.

Source: Business Times, 5 Jan 2010