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Asia Pacific Security Outlook 2000

Regional Overview

As Asia Pacific enters a new millennium, the basic features of post-cold war security relations remain. No country is in open conflict with another, and positive economic and human interaction is increasing across even the most volatile of large power relationships. Of the countries most affected by the 1997-1998 Asian economic crisis, most are recovering rapidly. Cooperation among nations continues to progress. There is ample reason for optimism about the future of security relations in the region.

Nevertheless, there are signs that stability in Asia Pacific is fragile, and in many ways the outlook appears more uncertain than at any time in the past decade. These signs include the growing difficulties in large power relationships, particularly as regards China and the United States, and the acquisition of sophisticated weaponry associated with potential conflict in the Taiwan Strait and the Korean peninsula. The region remains heavily armed. (For an overview of defense spending in Asia Pacific and armed forces strength in the region, see table 1.) At the domestic level, the processes of nation building remain incomplete. This was starkly demonstrated by Indonesia, which failed in its twenty-five-year effort to integrate East Timor into the nation and which is now challenged by revitalized separatist movements and ethnic tensions. In few countries in Asia Pacific can the domestic political order be said to be firmly in place.

The combination of international and domestic stresses does not necessarily point to any immediate danger for the region. But it does suggest uncertainty and the potential for a deteriorating security environment. In particular, the 1999 crisis in East Timor illustrates that smoldering tensions, at least at the local level, can quickly ignite into flames.

Assumptions Challenged

The first post-cold war decade was met with a generally positive assessment of the international security environment. This optimism was based on a number of widely—albeit not universally—held assumptions that are increasingly coming under question today. These include:

Watch List Issues

In its initial edition in 1997, the Asia Pacific Security Outlook identified four watch list issues: the Korean peninsula, large power relations, arms acquisitions, and territorial disputes. These issues were considered manageable but of such importance that they should be carefully monitored.

Security analysts associated with the Asia Pacific Security Outlook 2000 generally see little change concerning Korea and the territorial issues, but identified worrisome signs in large power relations and weapons procurement. The situation on the Korean peninsula continues to be volatile; there were tensions in mid-1999 over North Korea's challenge to the Northern Limit Line in the West Sea (Yellow Sea) and its threat to test a second Taepodong missile. A U.S.-North Korean agreement, however, was successful in deferring the missile test, and the Perry Report, by former U .S. Defense Secretary William Perry, articulated the basis for a U.S.-Japanese-South Korean policy which sought to constrain North Korea's nuclear weapons and missile programs in return for more open economic ties. Toward the end of 1999, the hitherto frosty Japan-North Korean relationship improved, and the security situation on the Korean peninsula slipped into the twenty-first century looking more encouraging than it has for some time.

However, the progress of inter-Korean relations has been anything but linear, and the basic security dilemma for North Korea remains, and even intensifies, as its relative economic and military position continues to deteriorate. This has spurred the search for weapons of mass destruction to rectify the balance or, at least, to serve as a bargaining tool.

Similarly, there was little apparent change in the various territorial disputes in the region. Northeast Asia was quiescent in 1999. In the South China Sea, the Philippines protested activity by China and Malaysia on reefs that it regarded to be in Philippine territorial waters. But the year saw no change in the territorial status quo, no clashes, and no breakthroughs on the diplomatic front that would help to resolve disputes. Thus, territory remains an irritant in key bilateral relationships as well as an obstacle to regional security cooperation.

The worrisome trends among large power relations center on China's relations with the United States. Despite intensive economic Sino-American interaction, the political relationship has continued to be volatile. In 1997–1998, an exchange of visits by leaders placed the relationship on an upward course, and this was reflected in a more positive Asia Pacific security outlook. But in 1999, there was a sharp reversal following the NATO campaign in Kosovo in March, which China opposed, the U.S. rejection of an impressive trade offer by Premier Zhu Rongji during a Washington visit in April, and the U.S. bombing of the Chinese embassy in Belgrade, followed by Chinese demonstrations at U.S. embassy offices in China. The tone of the relationship improved in the latter part of the year after a meeting between presidents Bill Clinton and Jiang Zemin at the September leaders meeting in Auckland of the Asia-Pacific Economic Cooperation (APEC) forum. The embassy bombing was quietly put to the side, and a trade agreement was reached later in the year under which the United States would support China's entry into the World Trade Organization. Despite this recovery, however, events in the Sino-American relationship during the year reveal the deep suspicions underlying this relationship. Domestic politics increasingly complicate the management of relations in both capitals.

Two sensitive issues pose particular challenge to the United States and China: the status of Taiwan, and questions of human rights and humanitarian intervention. The Taiwan issue has grown more difficult in recent years owing to politics in both Taiwan and the mainland. Analysts associated with the Asia Pacific Security Outlook 2000 rated Taiwan leader Lee Teng-hui's statement that relations between Taiwan and China should be on a "state-to-state" basis as the single most negative security development during 1999. Analysts were also concerned about weapons deployment in the region, noting China's recent missile deployment across from Taiwan. The Chinese regard this as a response to a more provocative posturing of Taiwan, and Taiwanese weapons modernization, but this response in turn increases incentive for Taiwan to move forward in seeking a missile defense system from the United States. Thus, forces are in place for a classic arms race—a competitive weapons buildup accompanied by higher-pitched rhetoric and an increased threat to use the weapons.

The question of humanitarian intervention, given new visibility by Kosovo and East Timor in the same year, also figured large in relations between China and the United States as well as between Russia and the United States. Many governments in Asia have stressed the principles of sovereignty and noninterference in internal affairs. What was especially disturbing then was that intervention in Yugoslavia was initiated by NATO acting on its own, with concurrence by the UN Security Council. The East Timor intervention, on the other hand, coming only after agreement by Indonesia to outside forces and endorsement by the United Nations, was legitimate. Issues surrounding humanitarian intervention, which for China and Russia have special importance arising from Western cries of human rights abuses in such sensitive regions as Tibet, Xinjiang, and Chechnya, will continue to be the subject of discussion and debate among Asia Pacific nations.

Adding to these tensions is the perception of a growing military power gap between the United States and other countries due to U.S. superiority in high-technology systems, its economic strength, and the sheer magnitude of its continuing investment in the military. Some governments believe that the United States may be more willing to use its military power since its human costs in both the Persian Gulf War and the Kosovo intervention were so minimal.

The perception that the world has become more unipolar today than before is very problematic for governments such as China and Russia, which would like to see more multipolarity. Whether this perception continues, and whether it will be shared by other nations over time, will be a major factor affecting future regional and global security trends.


In Asia Pacific, the country with the most challenging, immediate security problem is Indonesia. The problem is domestic, the result of an implosion of the body politic triggered by the economic crisis rather than any foreign threat. As pointed out in the overview of Asia Pacific Security Outlook 1999, Indonesia needs "to rebuild its political system in addition to its economy." During the past year, Indonesia has made substantial progress in developing a new political order. The country carried out its first democratic election in many years without violence, and witnessed the creation of a new government under Abdurrahman Wahid that represented all major political factions.

Despite his physical disabilities and frailties, Wahid is an energetic leader. The challenges he faces, however, are daunting. One is to repair the internal and external damage done by the military's support for pro-Indonesian militia in East Timor, which nearly destroyed the country following its vote for independence. A second, not unrelated challenge for Indonesia is to develop a solid, durable framework for continued democratic and civilian-led government. Third, the country faces a serious separatist challenge in Aceh province and, to a lesser extent, elsewhere. Fourth, ethnic and communal violence in eastern Indonesia continues. Finally, President Wahid leads the one developing Asian country that shows the least signs of recovering from the region's economic crisis.

As a country of more than 200 million people, spanning the strategic links between the Indian Ocean and the South China Sea, and as the linchpin of ASEAN, Indonesia is itself important to the security of Asia Pacific. The difficulties Indonesia faces have significance in that they illustrate the continuing need in emerging Asian nations to build a strong sense of national unity and a durable, widely accepted political order.

Positive Elements: The Economic Recovery and Regional Cooperation

Aside from the improvement on the Korean peninsula at the end of 1999, two other positive elements in the security outlook are noteworthy as the region enters the twenty-first century: the recovery from economic crisis and a more realistic understanding of the promise of regional cooperation.

Economic Recovery

As Asia moves rapidly out of the crisis, there appears to be a greater understanding of the unique features of the crisis as it affected different economies. In South Korea, Malaysia, the Philippines, and Thailand, the recovery has assumed a distinct V-shaped appearance, particularly in South Korea where 10 percent economic growth was achieved in 1999. The Korean economic recovery has been buoyed by the continued strong growth in the United States and a high Japanese yen rate, enabling Korean manufacturers to compete effectively against Japanese rivals. In Thailand and Malaysia, 5 percent growth has positioned the economies in line to achieve pre-crisis output levels in the year 2000, although Thailand is lagging in restructuring bad loans.

Although dramatic, particularly in comparison with the decade-long Latin American debt crisis of the 1980s, the Asian economic recovery remains tentative in some respects. Ironically, recovery may undermine the political support for corporate and governmental reforms still needed for the longer term. Moreover, three big questions involve the future of the economies of the United States, China, and Japan. The United States continues to enjoy remarkable overall growth with strong productivity growth and relatively stable prices. In China, deflation and debt-burdened banks pose a significant problem, and the growth rate has gradually declined. Nevertheless, discussion of or concern about a Chinese yuan devaluation, regarded as a major threat to the region in 1998, has almost entirely disappeared. In Japan, despite some promising signs and considerable corporate restructuring, economic recovery remains elusive.

Even with these uncertainties and with the significant exception of the ongoing economic-cum-political crisis in Indonesia, the countries most affected by the 1997-1998 economic crisis have emerged with few domestic political or security side effects. The economic impact of the crisis was severe, especially for the poor, but the crisis may also have been a needed wake-up call. If sustained, the recovery should provide a basis for enhanced regional cooperation.

Regional Cooperation

The Asia Pacific has long been distinguished by its relative paucity of regional institutions compared to other geographical regions. This began to change in the late 1980s and 1990s with the establishment of dialogue mechanisms for both economic issues—APEC—and political security issues—the ASEAN Regional Forum (ARF). After rising expectations in the mid-nineties, disillusionment set in as APEC proved a weak vehicle for addressing issues associated with the Asian financial crisis, and as its 1998 leaders' meeting failed to agree on a package of trade liberalization measures. In 1999, however, APEC appeared to be making a modest recovery. Its Auckland ministerial and leaders' meetings took place in an atmosphere of downscaled expectations. APEC's reputation was also enhanced by the increased media attention to the value of "side meetings" that took place before the APEC leaders' meetings, such as the side meeting between presidents Jiang and Clinton and the special ministerial meeting devoted to East Timor.

The ARF process has continued to move ahead, less hindered by over expectations. There is widespread recognition that in the event of a crisis there is little ARF can do, as was the case with East Timor in 1999. ARF's efforts to move ahead into new areas of cooperation, such as conflict prevention, also remain controversial. ARF does, however, enhance contact among governmental security specialists and help build consensus, beginning with the least contentious issues. While its importance should not be overrated, it should also not be discounted.

Another positive sign in the regional picture is "minilateralism"—that is, the growing cooperation among small groups of like-minded countries. Japan, South Korea, and the United States have increased cooperation concerning North Korea. China, Japan, and South Korea have agreed to support research and analysis on economic issues in Northeast Asia. There are increased venues for Northeast Asian-Southeast Asian dialogue, deriving from the cooperation within the Asian component of the Asia-Europe Meeting (ASEM). The Auckland APEC meetings, which occurred just after the East Timor crisis came to a head, were an opportunity for foreign ministers to convene a special and effective meeting on the issue. All these are signs of a growing network of cooperation among small groups that may facilitate conflict avoidance.

Strategic Dialogue

That Asia Pacific is undergoing rapid social, economic, and political change is obvious. Some of these changes, such as the increasing economic interdependence and the decline of ideological divides, facilitate the establishment of networks across the lines and provide opportunities for dialogue. An awareness of shared interests can be thus strengthened, and misunderstandings reduced. But other changes in Asia Pacific have increased social tensions and heightened insecurity. Moreover, increasing pluralism complicates foreign policy making at the national level and thus government-to-government international relations.

These changes make critically important the development of a widely understood and accepted framework for managing regional tensions. Asia Pacific is at a crossroads where older institutions are being challenged but consensus is meager on how to strengthen, alter, or replace them. Strategic dialogue among leaders and specialists on the issues—and the principles that govern their resolution—is of central importance to the future security outlook.