Commentary / Japan

Japan's precarious Indo-Pacific balance

by Stephen R. Nagy

Earlier this month, the U.S. State Department released a report titled “Free and Open Indo-Pacific: Advancing a Shared Vision.”

It highlighted the U.S. core understandings of the Indo-Pacific, which includes: 1) respect for sovereignty and independence of all nations; 2) peaceful resolution of disputes; 3) free, fair and reciprocal trade based on open investment, transparent agreements and connectivity; and 4) adherence to international law, including freedom of navigation and overflight.

For Japan and other states in the Indo-Pacific, the document clearly articulates their ongoing concern that “authoritarian revisionist powers seek to advance their parochial interests at others’ expense.” To be clear, in the short term this means Russia and China. In the long term, as Russia’s power fades it’s clear that it is China that looms most heavily in the minds of the United States and Indo-Pacific stakeholders like Japan.

The clear articulation of the U.S. vision of its core principles of the Indo-Pacific will be welcome by proponents of the Indo-Pacific formulation. At the same time, it demonstrates the gap that exists between the U.S. Indo-Pacific strategy and those of ASEAN, Japan and others.

Japan prefers the use of “vision” instead of strategy. Japan also places a higher priority on infrastructure, connectivity, rules-based behavior in the maritime domain and inclusiveness. In short, Japan does not want its Free and Open Indo-Pacific Vision (FOIP) to be conflated with a China-containment strategy or an Indo-Pacific formulation that is security focused.

The rationale is simple: Japan’s sustained economic growth and regional stability will not be served if Japan-China relations are securitized. This is despite real concerns about China’s long-term intentions in the region and disquietude over domestic policies exemplified by the removal of presidential term limits, the incarceration of Uighurs in “re-education camps” and the unrest in Hong Kong.

Even Japan’s leadership in multilateral trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP 11), the Japan-EU Economic Partnership Agreement and the Regional Comprehensive Economic Partnership are not enough to replace the giant Chinese consumer market, which Japan depends on for economic growth, thus compelling it to remain engaged with China regardless of security concerns.

Significantly, this new report does recognize the importance of strong rules-based architecture and ASEAN’s role in realizing that objective. Interestingly, the report highlights not only the usual suspects in forging the Indo-Pacific formulation such as Japan, ASEAN and Australia but also outlines synergies that exist with South Korea’s New Southern Policy and Taiwan’s New Southbound Policy.

While tensions between Japan and South Korea linger, South Korean participation in either Japan’s FOIP vision or the U.S. Indo-Pacific strategy would bring significant resources to the Indo-Pacific bilaterally or trilaterally. Policymakers in all capitals should think about how to realize South Korea’s participation in a way that allows each player to sell it to each country’s domestic audiences.

A formula that might allow for that to happen is Japan and China’s third-country infrastructure cooperation. This formula allows for both countries to cooperate in infrastructure development while not signing on to FOIP or the Belt and Road initiative. South Korea could be included in FOIP-related activities but not place them officially under the FOIP vision rubric.

As difficult as this formula might be to realize, any cooperation that would shift the negative spiral in bilateral relations would be good for Japan and South Korea, and an important step in realizing the FOIP vision.

For Japan, South Korean participation would add significant economic power to the FIOP vision. Importantly, it would add another liberal democratic actor to the FOIP vision, offering an alternative to authoritarian models of governance.

South Korea would benefit too as it shares many of the same sea lanes of communication concerns that Japan has in the East and South China seas. Moreover, after the economic coercion experienced following the 2017 THAAD installment, it also has worries related to how an unchecked regional hegemon will behave when power asymmetries are even more pronounced and political imperatives are not aligned.

The U.S. State Department report also focuses on South Asian states such as Nepal, Sri Lanka, Bangladesh and India, demonstrating that the U.S. is not just focusing on states that have the material capacity to contribute to the Indo-Pacific formulation, but also on emerging states that should be part of building an Indo-Pacific that is inclusive, rules-based and prosperous.

This is good news for Japan as it has invested heavily in cultivating strong bilateral relations with India. India is Japan’s top Official Development Assistance recipient, and with the U.S. State Department’s acknowledgement of the U.S.-India partnership being vital to the U.S. Indo-Pacific strategy, Japan will not only be emboldened to strengthen Japan-Indian relations to realize the FOIP vision, but also to strengthen multilateral cooperation with the U.S. and other stakeholders.

Conspicuously, the report stresses the economic pillars of the U.S. engagement in the Indo-Pacific such as the Infrastructure Transaction and Assistance Network (ITAN) and the U.S. International Development Finance Corporation created by the Build Act in October 2018. This is transformative in that it demonstrates that the U.S. recognizes that the Indo-Pacific project must place development at its core.

The focus on infrastructure, connectivity and the digital economy is welcome news for emerging states in the Indo-Pacific. They seek to open up and integrate their markets into the Indo-Pacific and the global economy. They also loathe the idea of an Indo-Pacific formulation that is security focused.

ITAN will serve to inculcate private sector investment into the region. The Transaction Advisory Fund under ITAN will provide legal support to contract negotiation, sustainability analysis and proposal evaluation. The Blue Dot Network will act as a focal point for infrastructure stakeholders such as governments, businesses and civil society to ensure infrastructure and connectivity projects are transparent, financially sustainable and environmentally friendly.

This approach echoes the core principles of Japanese infrastructure and connectivity projects recently signed in the Partnership on Sustainable Connectivity and Quality Infrastructure between the European Union and Japan, which focused on “transparent procurement practices, the ensuring of debt sustainability and the high standards of economic, fiscal, financial, social and environmental sustainability.”

In the digital realm, the Digital Connectivity and Cybersecurity Partnership (digital partnership) launched at the 2018 Indo-Pacific Business Forum also has many convergences with Prime Minister Shinzo Abe’s Group of 20 Free Trade and Data Free Flow with Trust vision. Arguably much more could have been included about the U.S. vision for preventing the bifurcation of the digital economy into a closed-Chinese system and a U.S.-led open system.

There is much to like for Japan in the “Free and Open Indo-Pacific: Advancing a Shared Vision” report. It is an accounting of the shift of U.S. resources to the Indo-Pacific. This includes material, financial and diplomatic assets. This is crucial in galvanizing momentum toward institutionalizing an Indo-Pacific vision. It also is important in countering the narrative of U.S. retrenchment under U.S. President Donald Trump’s “America First” policy.

The vision also clearly articulates not only the convergences of existing Indo-Pacific formulations but also the visions of South Korea and Taiwan. This serves to carve out space for partnerships, collaboration and cooperation between states and partners that have limited capacity but unique capabilities. This suggests that the U.S. Indo-Pacific strategy is inclusive and aims to synergize the collective comparative advantages of Indo-Pacific stakeholders.

Lastly the report stresses the “strengthening and deepening partnerships with countries that share our values. Our alliances with Australia, Japan, the Republic of Korea, the Philippines and Thailand have helped sustain peace and security for generations.”

For Japan and other stakeholders in the region, statements such as this matter. Candidly speaking though, it is the meticulous detail by which this report outlines the deepening U.S. commitment to the Indo-Pacific that will reassure Indo-Pacific stakeholders Washington is committed to the region, its allies and its partners, not lofty statements.

Stephen R. Nagy (@nagystephen1) is a senior associate professor at the International Christian University and a visiting fellow with the Japan Institute for International Affairs.