The Next Decade: What the World Will Look Like - George Friedman (2011)
Chapter 10. FACING THE WESTERN PACIFIC
The Western Pacific is a region that does not present an immediate crisis for the United States, but this happy state of affairs will not go on indefinitely. Asia was one of the key trouble spots in the world for a good part of the preceding century, and the relative tranquillity of the past thirty years has been the exception, not the rule. That is why the president’s task during the next decade will be to prepare carefully and at leisure for the inevitable crises that loom just over the horizon.
There is a great deal of concern about the Indo-Chinese balance of power, but India and China are divided by a wall—the Himalayas—that makes sustained conflict and high-volume overland trade virtually impossible. Their interaction is economic and by sea. The central and long-standing opposition in this region is actually that between China and Japan, the two nations locked in a tie for the world’s second largest economy. There is substantial economic competition. Economics affect a balance of power only when geography permits other kinds of competition. All other regional powers—including South Korea, a substantial economic force in its own right—exist within the framework of the China-Japan-U.S. balance. It is in terms of maintaining and manipulating that balance that the United States will define its policy during the next decade.
It is difficult to imagine two nations more different than China and Japan, and economic friction has made them hostile to each other since their first modern war, in 1895, when Japan defeated China’s navy. Japan is a maritime industrial power, utterly dependent on imports of raw materials for its survival. China, with its huge population and geography, is wedded to the land. From the moment Japan first began to industrialize, it has needed Chinese markets, raw material, and labor and has wanted these on the most favorable terms. The Chinese have needed foreign capital and expertise but have not wanted to fall under Japanese control. This wary interdependence of two economies led them into a brutal war in the 1930s and 1940s, during which Japan occupied a good deal of the Chinese mainland. The relationship between these two countries never fully recovered from that war, and hostility and distrust have been kept under control in part by the presence of the United States.
During the Cold War, the United States maintained complex relations with each country. It needed Japan’s industrial power to support the U.S. in the Korean War and beyond, as well as its geography to block the Soviet fleet from entering the Pacific. Japan willingly gave both. In return, the United States gave the Japanese access to American markets for its industrial products and did not require Japan to make a military commitment to American ventures around globe.
During the same era, the United States spent nearly thirty years in marked hostility to Communist China. Then, when it had dissipated its global power in Vietnam and needed a counterweight to the Soviets, it turned to China. China, afraid of the Soviet Union and seeing the United States as a guarantor of its own security, accepted the overture.
Neither China nor Japan was comfortable with the U.S relationship with the other, but the United States managed the triangulation without difficulty, because each country had more important issues to consider. China’s concerns were geopolitical: largely the fear of the Soviet Union. Japan’s were economic: its postwar economic boom. Each country needed the United States for its own reasons.
When the Cold War ended, the nature of the balance changed. Japan’s period of rapid growth stalled out as China, having adopted Japan’s focus on economics, was undergoing a prolonged boom. Japan remained the larger economy, but China became the most dynamic—a situation that the United States saw as quite satisfactory. Focused primarily on economic issues, the United States did not look at either country from a genuinely geopolitical point of view. In general, Asia was a matter for the Treasury Department and for managers of trade relations, not something of concern to the Department of Defense.
The stability of the western Pacific and southeast Asia since the 1980s is all the more notable when we consider that from Indochina to Indonesia, China, and elsewhere, Asia appeared to be one of the most unstable and unpromising regions in the world, a caldron of war, civil war, and general instability throughout the 1960s and ’70s.
The president must bear in mind that Asia is an extraordinarily changeable place, and in the next ten years we will undoubtedly see some things that are now regarded as immutable being utterly transformed. For example, the Chinese economy will face harsh tests while Japan begins recovering from its failures. The consensus in 1970 was that Asia was inherently violent and unstable; the consensus today is that it is peaceable and stable. These contradictory assessments suggest the challenges in determining what Asia will look like over the next decade, how the Sino-Japanese dynamic will play itself out, and what American policy should be toward the region.
CHINA, JAPAN, AND THE WESTERN PACIFIC
When we talk about east Asia, we are really talking about a string of islands stretching from the Kuriles to Indonesia, as well as their relations with one another and with the mainland. When we talk about the mainland, more than anything else we are talking about China.
China stretches twenty-five hundred miles inland and borders on fourteen countries. While China faces an ocean on only one side, it may be useful to think of it as a fairly narrow island clinging to the edge of the Pacific, isolated to the north, west, and south by virtually impenetrable barriers.
The image of an island holds up when we consider that the vast majority of China’s population lives in the eastern part of the country, within about four hundred miles of the coast. The reason for this concentration is the availability of water. The area between the line bisecting the map (facing page) and the coast marks the area in which more than fifteen inches of rain a year falls—the minimum needed to maintain large numbers of people. Since the western part of China is too arid to maintain a large population, more than a billion people are crammed into a region about the size of the United States east of the Mississippi, not including New England. This is Han China, the land of the ethnic Chinese.
Western China is a vast and quite empty near-desert surrounded by four non-Chinese buffer states: Tibet, Xinjiang, Inner Mongolia, and Manchuria. These anchor China at its geographical limits, with the Himalayas to the southwest, minimally passable but certainly not by armies and not by trade in any volume. Siberia lies to the north, a huge wasteland with no north-south transportation. Jungles and rugged hills lie to the south, stretching from Myanmar to the Pacific, isolating China from southeast Asia.
Geographically, Japan is a much simpler place, consisting of four main islands and a series of much smaller islands to the north and south. It is being an archipelago that makes Japan by necessity a maritime nation, a fact compounded by an extraordinary geological reality: Japan is almost entirely devoid of the minerals needed by industry. Industrialization has always meant importing resources, including oil, which Japan gets primarily from the Persian Gulf. This means that Japan, by definition, has widespread global interests and vulnerabilities. Unlike China, which imports raw materials but has enough supplies of its own to survive if necessary, Japan would collapse in a matter of months if its imports were disrupted.
Chinese Rainfall and Population Density
Partly because of its isolation and partly because it industrialized rapidly in the nineteenth century, Japan avoided the experience that China suffered at the hands of Europeans. The Europeans provided Japan with assistance in the form of industrial technology and military training. The British organized the Japanese navy, the Germans the army, and thus Japan evolved rapidly into a power that could challenge Europeans. Indeed, it defeated the Russians in 1905.
The country most alarmed by Japan’s sudden emergence was the only other industrialized power in the Pacific: the United States. Prior to World War II, the Japanese imported raw materials mostly from southeast Asia and the East Indies. In order to secure access to these supplies, Japan needed a substantial military force, particularly a navy. The United States, which became a significant maritime power only at the end of the nineteenth century, saw Japan’s naval buildup as something that might one day drive the U.S. out of the Pacific. Simply by becoming an industrial and naval power, Japan appeared to threaten the security of the United States. By expanding its naval force to defend itself against Japan, the United States threatened the security of Japan.
The result of this mutual intimidation was World War II in the Pacific. The United States defeated Japan not just because of the atom bomb and the success of its island-hopping strategy, but because its submarines cut off the supply of raw materials from the south and crippled Japan’s ability to wage war. Japan continued to resist, but once the U.S. submarine campaign placed a stranglehold on its supplies, its position was hopeless.
Today Japan is just as dependent on maritime trade as it was in the 1930s and ’40s. It still must import all of its oil, and it must do so through waters controlled by the United States Navy. That means that Japan’s industrial position depends on the willingness of the United States to guarantee the sea-lanes. It also depends on the United States’ willingness not to take risks along Japan’s line of supply—particularly through the Strait of Hormuz.
Thus Japan is trapped in a subordinate relationship with the United States. It cannot afford to alienate the United States without first building up a military force able to secure its own supply lines, but this is an undertaking far more ambitious and expensive than Japan wants to attempt during the next ten years. Nonetheless, its inherent insecurity because of import dependency, along with American unpredictability, will certainly drive Japan to become less dependent and exposed than it has been.
Like Japan, the Chinese can ill afford to alienate the Americans. They depend on the United States less for the flow of raw materials (although Chinese ships also pass through waters controlled by the United States) than as a consumer of Chinese industrial products. China, like Japan before it, has become a huge exporter to the United States, so much so that the ability and willingness of the United States to buy is one of the foundations of the Chinese economy along with the European market. China must have access to both. Over the next ten years, China, like Japan, will be focused on preparing for what it sees as the worst-case scenario vis-à-vis its American trading partner, a political decision to limit Chinese access to the American market.
To the extent that the regional balance will continue, it will do so not so much because of Japanese-Chinese relations but because of the relationship each Asian nation has with the United States. As China and Japan both become stronger, each will inevitably notice the other’s rise and become concerned.
All other things being equal, Japan’s relationship with the United States will remain stable, but with China the story will be different. Exports stabilize China’s economy and society, but it is not enough to have buyers; it is also essential that the sale of exports build Chinese prosperity. If exporting to the United States no longer fits Chinese requirements, then Chinese interest in the relationship with the United States will shift and China will move away from dependency. Over the next decade, as China becomes more of an economic free agent, although not always a particularly prosperous one, Japan will have to have the United States guarantee its interests against China or shift its posture as well. Thus the balance that rests on the U.S.-Chinese relationship actually depends on how the Chinese economy functions over the next several years.
CHINA AND JAPAN
Part of the reason China was able to grow so dramatically in the 1980s is that Mao restrained growth just as dramatically up until that moment. When Mao died and was ultimately replaced by Deng Xiaoping, the mere shift of ideology freed China for an extraordinary growth spurt based on pent-up demand, combined with the native talents and capabilities of the Chinese people.
Historically, China has cycled between opposites: either isolation combined with relative poverty or an openness to trade combined with social instability. From the 1840s, when Britain forced China to open its ports, to 1947 and the Communist takeover, China was open, prosperous in at least some regions, and violently fragmented. When Mao went on the Long March and raised a peasant army to expel the Westerners, he once again imposed relative isolation and reduced the standard of living for everyone, but he created a stability and unity that China had not experienced in almost a century.
This oscillation between openness and instability and enclosure and unity is based in part on the nature of China’s primary economic asset, cheap labor. When outside powers are allowed to invest in China, they build the kinds of factories and businesses that take advantage of China’s abundant human capital. And yet the primary purpose of these factories is not to sell in China but to produce goods that can be sold in other countries. Accordingly, the primary focus of investment is near large ports and in areas with good transportation to these harbors. Because the population is concentrated in the coastal region, there is little reason to build infrastructure deeper within the country. Indeed, the vast majority of the factories are within a hundred miles of the coast. Even as China prospered and the factories became Chinese-owned, the pattern continued.
According to the People’s Bank of China sixty million Chinese—a population equivalent to that of a large European country—live in middle-class households (those earning more than $20,000 a year). But with China’s population of 1.3 billion people, 60 million middle-class citizens represent less than 5 percent of the total population, and the overwhelming majority of those live in the coastal region or in Beijing.
Six hundred million Chinese live in households earning less than $1,000 a year, or less than $3 a day for the family. Another 440 million Chinese live in households earning between $1,000 and $2,000 a year, or $3 to $6 a day. This means that 80 percent of China lives in conditions that compare with the poverty of sub-Saharan Africa. Even in the belt within one hundred miles of the coast, home to the 15 percent of Chinese who are the industrial workers, China is an extraordinarily poor country. Its narrow zone of prosperity creates a chasm that is social as well as geographic. The region around the ports profits from trade, and the rest of China does not. The coastal region’s interests are in fact much more closely aligned with those of China’s foreign trading partners than with the interests of the rest of the country, or even with the interests of the central government.
It is along these fault lines that China fragmented in the nineteenth century, and it is here that it may fragment in the future. Beijing balances between the impoverished majority and the prosperous minority. Supported by foreign interests, the well-off Chinese in the coastal areas will resist the central government. Attempts to transfer wealth either weakens the central government or forces it to become dictatorial. The Qing Dynasty weakened after the British incursion. Mao’s solution in the 1940s and ’50s was extensive repression, the expulsion of foreigners, and the expropriation and redistribution of wealth to the impoverished interior.
During periods of relative prosperity and growth, the problem can be managed by the state. Even as inequality increases, the absolute standard of living for most Chinese rises, and that increase, however minimal, goes a long way toward keeping people passive. But what happens when the economy weakens and standards of living decline overall? For those in the middle class and above, this is inconvenient. For the more than one billion Chinese living in abject poverty, even a small contraction in living standards can be catastrophic. That is where China is heading in the very near future—toward a relatively small decline of growth, but one that will pyramid economically and socially, generating resistance to the central government.
Given that China has a producer economy completely out of proportion to its consumer economy, the problem is inevitable. The iPods and clothing that China manufactures are not sold to its own impoverished masses. And yet China no longer has a wage advantage over countries like Pakistan and the Philippines. Given a limited pool of semiskilled labor (as opposed to its limitless supply of untrained peasants), the price of labor has risen. Pressed by competition, China has reduced prices, which has decreased the profitability of exports. In the face of increasing competition and of sluggish growth among some of its customers, China’s ability to compete will decline, increasing the difficulty of repaying business loans and thus increasing pressure on the entire financial system.
The stark reality is that China simply can’t afford unemployment. Large numbers of peasants have moved to the cities to get jobs, and if they lose their jobs, they either stay in the cities and cause instability or return to their villages and increase the level of rural poverty. China can keep its people employed by encouraging banks to lend to enterprises that should be out of business, by subsidizing exports, or by building state-owned enterprises, but these efforts hollow out the economic core.
Over the next decade, China will have no choice but to increase its internal security. The People’s Liberation Army is already huge. In the end, the PLA is what will hold the country together, but this assumes that this force, drawn heavily from the poorest segments of society, will itself hold together and remain loyal. To quell class resentments, China will have to tax the coastal region and the 60 million well-to-do Chinese, then transfer the money to the PLA and the peasants. Those being taxed will resist, and the revenues will be insufficient for those the government intends to benefit, but it should be enough to retain the compliance of the army.
The long-term question, which will be answered in the decade to come, is whether the Chinese will attempt to solve their problem as Mao did—by closing off the country and destroying the coastal businessmen and expelling foreign interests—or by following the pattern of regionalism and instability of the late nineteenth and first half of the twentieth centuries. The only certainties are that the Chinese government will be absorbed with internal problems, working carefully to balance competing forces and increasingly paranoid about the intentions of the Japanese and the Americans.
In 1990, Japan went through the kind of decline that the Chinese are beginning to experience now. Japan has a much stronger degree of informal social control than most outsiders can see, and at the same time the large corporate conglomerates, called keiretsu, retained a great deal of latitude. Having grown rapidly after World War II, the Japanese succumbed to a financial crisis made inevitable by their failure to develop a market system for capital. Their economy operated through informal cooperation among the keiretsu and the government. This cooperation was designed so that there would be no losers, and therein lay its fatal flaw.
The capital problem was exacerbated by Japan’s not having a retirement plan worth mentioning, which meant that citizens were forced to save heavily, putting their money in government post office banks, which paid very low interest rates. The money was then loaned by the government to the large “city banks” linked to the keiretsu. This system gave Japan a huge advantage in the 1970s and 1980s, when U.S. interest rates were in the double digits and Japanese corporations could borrow at less than 5 percent. But the money was not being loaned to businesses that were inherently profitable. Most profit was derived from the added margin provided by cheap money. And the need for the Japanese to save a huge amount in order to retire meant that they were reluctant consumers. Thus the heart of the Japanese economy, like the Chinese economy today, was in exports, particularly to the United States.
As competition from other Asian countries increased, the Japanese cut prices, which reduced profits. Lower profits meant that businesses had to borrow more money in order to grow, then found it increasingly difficult to pay back their loans. What followed was an economic crash that wasn’t noticed by the Western media until several years after it happened.
Like the Chinese, the Japanese had to avoid unemployment, but for different reasons. In Japan, the reluctance to downsize was based on the social contract whereby a worker committed himself to one company for life and the company reciprocated. The Japanese honored the tradition by maintaining near full employment while allowing the growth rate to slip to almost nothing.
Western economists dubbed the twenty years during which the Japanese economy stagnated the “lost decades,” but this is a misunderstanding of Japanese objectives, or rather the imposition of a Western point of view on Japanese values. Sacrificing growth in order to maintain full employment was for this highly cohesive society not to lose a decade but to retain a core interest.
At the same time, Japan’s birthrate dropped well below the 2.1 children per woman needed to maintain its population. Now, with each generation smaller than the one before, the economy can no longer support retirees. In this way, debt and demography have created an enormous crisis for Japan.
During the next ten years, the Japanese will no longer be able to maintain full employment by exorbitantly increasing their debt, both public and private. Like the Chinese, they will have to shift economic models. But the Japanese have one overwhelming advantage: they do not have a billion people living in poverty. Unlike the Chinese, they can absorb austerity, should it be required, without inviting instability.
Japan’s fundamental weakness remains its lack of natural resources for industry, from oil to rubber to iron ore. To remain an industrial power, Japan has to buy and sell globally, and if it loses access to the sea-lanes, it loses everything. If trouble arises and it lacks the option of turning inward, Japan is far more likely to become assertive once again.
THE SINO-JAPANESE BALANCE OF POWER
For the past thirty years or so, relations between China and Japan have been secondary to each country’s relationship with the United States. The United States maintained the regional balance by maintaining mutually beneficial relations with each country, but those relations will shift in the decade ahead. First, China’s economic problems will alter its relationship to the world while transforming the country’s internal workings. Similarly, Japan’s internal problems and the solutions it chooses will transform the way it operates.
Even when passive and dependent on other countries to guarantee access to world markets, Japan always remains deeply embedded in the world. China is embedded as well, but not as irrevocably as Japan. The loss of imported raw materials does not represent an existential threat to China the way it does to Japan. Similarly, while China depends on exports, it could reconfigure itself if necessary, albeit painfully.
China, then, has less of a temptation to become assertive; it also has less of an ability to do so. China’s main access to the world is by sea, but it does not have a substantial navy relative to geography and the United States. Building a naval power takes generations, not so much to develop the necessary technology as to pass along the accumulated experience that creates good admirals. It will be a long time before China can challenge either the United States or even Japan at sea. There has been a great deal of discussion of the development of China’s navy. Certainly, significant development is under way, but there is a huge gap between the present level of effort and what China has to do to challenge U.S. naval power even in the waters near China. The most significant developments are in land-based anti-ship missiles. But the Chinese have a very long way to go before naval vessels can hope to defeat an American fleet. And even the anti-ship missiles are highly vulnerable to U.S. air and missile strikes. China’s navy will not force the United States out of regional waters in the next decade.
Today Japan is formally a pacifist power, barred by Article 9 of its constitution from having an offensive armed force, but this has not prevented it from maintaining the most capable navy in the western Pacific, nor from having a substantial army and air force. It has, however, managed to avoid using those forces, relying instead on the United States to protect its international interests, particularly its access to natural resources.
Japanese submission to the United States after World War II proved beneficial because the United States needed Japan’s help in the Cold War and wanted Japan to be as strong as possible. Things have now subtly changed. The United States still controls Japan’s sea-lanes and is still prepared to guarantee access, but its willingness to take risks with that access has put Japan in a potentially dangerous position. So far, during the U.S.-jihadist war, the United States has been cautious in not endangering the oil route through the Strait of Hormuz that Japan depends on, but it could easily miscalculate. Simply put, the United States can endure risks that Japan can’t afford, so the two countries’ perspectives on the world and their national interests diverge.
The internal problem for the Japanese is that they have gone as far as they can in this economic cycle. They must either accept austerity and unemployment or allow the economy to begin to overheat. Their great weakness remains capital markets, which still don’t operate freely, and yet the Japanese don’t have effective central planning either. This situation cannot be sustained. Moving to a free market in capital might solve the Japanese problem in the long run, but only at the cost of instability now. Because they can’t afford a true market economy, they will move toward an economy in which the state imposes greater efficiencies (never as efficient as a market, but more efficient than what they have now) and in which the keiretsu decline in importance. This will mean that the Japanese state will concentrate more power in itself and take a greater role in managing finance.
Japan’s other great problem is demographic. It is an aging country that needs more workers but is socially unable to manage large-scale immigration, which moves counter to the cohesiveness of Japanese culture. The solution is not to have workers that come to the factories but to have factories that go to the workers. Over the next ten years, Japan will be even more aggressive in exploiting labor markets outside its own borders, including those in China, depending on the evolution of events there.
Whatever the future holds, the Japanese will want to continue their core strategic relationship with the United States, including their reliance on the U.S. to secure their sea-lanes. For Japan, this is both more cost-effective and far less dangerous than striking out on its own.
THE AMERICAN STRATEGY: PLAYING FOR TIME
The United States does not have the resources or the policy bandwidth to deal with every regional balance of power at the same time. It will be preoccupied with Russia and the Middle East, which does not leave it much in the way of resources to deal with the western Pacific. By default, then, American strategy in this region must be to delay and deflect. The United States cannot really control the vast processes that are under way, so the best it can hope to do is to shape them a bit. Fortunately, this is one region in which the processes at play have the countries on a relatively benign path toward the United States, at least for now. Therefore U.S. policy should be to stall while laying the groundwork for what comes after.
The American danger does not rest in an alliance forged between Japan and China. These two nations compete with each other in too many ways, and differ from each other too profoundly, for close cooperation. Having reached the limits of this economic cycle, Japan will no longer be the quietly passive giant it has been for the past twenty years. China, on the other hand, will be less than the economic juggernaut that it has been. The challenge for the United States will be to manage its relationship with both players in this western Pacific system, each in its own different phase. At the same time, the United States must step back from being the center and let these two Asian powers develop more direct relationships with each other, finding their own point of balance.
Neither China nor Japan will emerge as a regional hegemon in the coming decade. The Chinese economic miracle will subside, as all economic miracles do, and China will focus on maintaining stability without rapid growth. Japan will restructure itself internally while beginning to align its foreign policy with its global interests. But it will be Japan that the United States will have to watch.
As Japan increases its power, it must necessarily increase its maritime strength. It is a fundamental principle of the United States to oppose the rise of maritime powers, but obviously the United States isn’t going to go to war with Japan over this issue in 2015 or 2020 the way it did in 1941. Still, it will have to develop a strategy to deal with a more assertive Japan.
The first step in the U.S. strategy toward Japan must be to ensure that China doesn’t splinter, because the weaker China becomes, the freer Japan will be to flex its muscles. To the extent possible, the United States should relieve pressure on China by facilitating its exports to the United States. This is a reversal, of course, and there are obvious political problems in doing this. The president will have to be very clever in justifying his generosity at a time of high U.S. unemployment. But anything that constrains Japan, even marginally, is valuable to the United States.
Only a stable China can control foreign investments in its economy, and both stability and control will be necessary to fend off Japan’s designs on Chinese factories and workers. Constraining Japanese expansion will in turn delay Japan’s ability to cope with its problems, and anything that slows down Japan’s economic resurgence benefits the United States, if only to the extent that it buys time.
The second step in U.S. strategy must be to keep relations with the Japanese as cordial as possible. The more confident Japan is in its access to raw materials, the less it will be motivated to build its own naval force. The Japanese, always painfully aware of the imbalance of power, have never been as comfortable as they might appear in their deferential relationship with the United States. At the same time, they have never wanted to confront the enormous amounts of money and risk needed to create an alternative.
In the long run, a country as economically large and vulnerable as Japan will have to search for a way to secure its own interests. That doesn’t have to be in the next decade, however, and the American strategy must be to prolong Japan’s dependency as long as possible. The longer the Japanese remain dependent on the United States, the more influence the U.S. has over Japanese policy and the more it can shape that policy. Pushed hard enough, Japan might choose a new course that returns to the destructive policies of the 1930s, when it was a nation both economically statist and driven by an emphasis on national defense. The United States must be careful not to push.
Two things will make this Asian strategy easier to sell to the American public. The first is that other matters will preoccupy them. The second is that American moves in the western Pacific will be incremental rather than sudden. The president will have the advantage of not having to declare a change in policy, and his actions will not have decisive effect, because the United States is important but not central to either of these Asian powers.
At the same time, the United States must be building relationships for the next phase of history, in which it might wish to recruit Japan, China, or both to cooperate against threats from Russia or other powers. The appetite for risk within these two countries is not very great, and the United States must realize that pressing them without inducements probably won’t work.
This is where Korea may play a critical role. It is already the thorn in the side of both parts of the Sino-Japanese balance, but it is particularly irksome for the Japanese. For historical reasons, Korea despises the Japanese and distrusts the Chinese. It is not particularly comfortable with the United States, for that matter, but at least geography has made it dependent on the U.S.
As Japan increases in power and China weakens, the Koreans will need the United States more than ever, and the United States will rely on Korea to increase U.S. options for dealing with both countries. Fortunately, the U.S.-Korean relationship already exists, and for that reason extending it would not cause significant concern to either Japan or China.
Korea also has become a significant technological center. China in particular will be hungry for that technology, and having some control over the rate of transfer would increase U.S. leverage with China. For their part, the Koreans will need help in dealing with the North Korean nuisance, particularly in handling the financial aspects of reunification when it inevitably comes. A unified Korea would want special trade opportunities with the United States, and even though Korea has nowhere else to turn, the American president should make such concessions, because over the next ten years Korea may well be the most important relationship the United States has in the western Pacific. But reunification is not the core issue. North Korea, for all its bluster, is a cripple, and its nuclear facilities exist only as long as others permit it. North Korea’s nuclear program has bought it time by deflecting pressure. It cannot stabilize North Korea permanently. South Korea, in contrast, remains a dynamic power on its own and will remain a dynamic power whatever happens in the north.
The second important relationship the United States will have in the region is with Australia. One of the last landmasses to fall under European control, it is certainly on the margins of the world geographically, and most of its population remains confined to a relatively small area of the country’s southeast.
Geopolitically, Australia is misunderstood and misunderstands itself. It appears to be isolated and secure, yet its isolation is an illusion and its vulnerability real. For example, its nearest neighbor is Indonesia, a highly fragmented and weak country, separated from Australia by hundreds of miles of water. During World War II, Indonesia and its eastern neighbor, New Guinea, served an important strategic function for Australia, soaking up the Japanese attack and leaving the Japanese too weak to think about extending themselves farther south. Interestingly, World War II and Australia’s island buffers to the north have reinforced its sense of security, in spite of creating worries about boat people.
Despite the appearance of standing alone and secure, Australia is actually quite dependent on international trade, particularly the sale of food products and industrial minerals such as iron ore, to sustain its economy. These goods are shipped by sea, and Australia has no control whatever over the security of its sea-lanes. In a sense, then, Australia is like a creature whose arteries and veins are located outside its body, unprotected and constantly at risk.
Australia’s strategy for dealing with this vulnerability has been to ally itself with the dominant naval power in the western Pacific—once Britain, now the United States. All alliances bear costs, and the British and Americans wanted the same quid pro quo: Australia’s participation in their wars. Australians sacrificed heavily in the Boer War, both world wars, and in Korea and Vietnam. Between 1970 and 1990 the Australians pulled back from this role as military partner, but during this period there were few calls for their participation. In 1990, in Desert Storm, they returned to their strategy of assisting in military operations, and they then went on to fight in both Afghanistan and Iraq.
Along with the security of sea-lanes, Australia’s well-being depends on an international trading regime that allows terms it can manage. Australia’s strategy of being of service to its Anglo-American cousins has bought it a seat at the table alongside the great powers. This has provided influence and security to its trade, something that Australia never could have achieved on its own.
During World War II, Australia served Britain by sending troops to North Africa. It served the United States by acting as a depot for building up U.S. forces for the Pacific theater. Certainly Australian forces fought as well, but if no forces had been available, Australia’s tremendous value was its location, behind the geographic shield of Indonesia and New Guinea. Should any great power emerge in the western Pacific to challenge the United States, Australia will once again be the strategic foundation for America’s Pacific strategy. The caveat is that building the infrastructure for a rear depot took several years in World War II, and any future conflict might not allow that kind of lead time.
For the United States, maintaining a relationship with Australia shouldn’t be difficult. Australia has only two strategic options. One is to withdraw from alliance commitments and assume that its interests will be addressed in passing. The other is to participate in the alliance and have more formal commitments from the United States. The former is cheaper but riskier. The latter is more expensive but more reliable.
If a major threat developed, Australia would most likely return to the U.S. fold. If a western Pacific power suddenly gained control of the sea-lanes, however, there is always a chance that Australia would make a deal, if it calculated that such compliance would achieve its ends with less risk than fighting alongside the Americans. Therefore, having prior commitments from and installations in Australia serves the American interests best by limiting Australia’s options.
Even if Australia is hostage to U.S. protection, its strategic importance is such that the United States should be as generous and seductive as possible. Being sparing in what it asks of Australian military commitments also makes sense, because the United States may need Australia more—and more broadly—in the future than it needs Australian troops now.
Of similar strategic importance for the United States is the city of Singapore, created by the British at the tip of the Malay Peninsula as a base from which to control the Strait of Malacca. This narrow passageway is still the primary route between the Indian and Pacific Oceans, particularly for oil headed for China and Japan from the Persian Gulf. U.S. warships on the way to the Persian Gulf also must pass through this strait. Along with Gibraltar and the Suez Canal, it is one of the world’s great maritime choke points. Whoever controls it can shut off trade at will, or guarantee that it will flow.
Singapore is now an independent city-state, enormously prosperous because of its geographical position and because of its technology industry. It needs the United States as a customer, but also to protect its sovereignty. When Malaya was given independence, the primarily ethnic-Chinese Singapore split from the predominantly Muslim Malaysia. Relations have varied, and there has not been much threat of annexation, but Singapore understands two geopolitical realities: that the worst thing in the world is to be rich and weak, and that security is never a sure thing. What Malaysia or, for that matter, Indonesia might want to do in a generation or two can’t be predicted.
The United States cannot simply control Singapore; instead it must have cooperative relations with it. As in his dealings with Korea and Australia, the president should be more generous with Singapore than he needs to be in order to assure the alliance. The price is small and the stakes are very high.
It is in the context of the western Pacific that we should consider India. Despite its size, its growing economy, and the constant discussion of India as the next China, I simply do not see India as a significant player with deep power in the coming decade. In many ways, India can be understood as a very large Australia. Both countries are economically powerful—obviously in different ways—and in that sense they have to be taken quite seriously.
Like Australia, India is a subcontinent isolated geographically, although Australia’s isolation, based on thousands of miles of water, is much more visible. But India is in its own way an island, surrounded by land barriers perhaps less easily passable than oceans. The Himalayas block access from the north, and hilly jungles from the east. To the south, it is surrounded by the Indian Ocean, which is dominated by the United States Navy.
The biggest problem for India lies to the west, where there is desert, and Pakistan. That Islamic nation has fought multiple wars with the predominantly Hindu India, and relations range from extremely cool to hostile. As we saw in my discussion of Afghanistan, the balance of power between Pakistan and India is the major feature of the subcontinent. Maintaining this balance of power is a significant objective for the United States in the decade to come.
India is called the democratic China, which, to the extent that it is true, exacts a toll in regional power. One of the great limitations on Indian economic growth, impressive as it has been, is that while India has a national government, each of its constituent states has its own regulations, and some of these prevent economic development. These states jealously guard their rights, and the leadership guards its prerogatives. There are many ways in which these regions are bound together, but the ultimate guarantor is the army.
India maintains a substantial military that has three functions. First, it balances Pakistan. Second, it protects the northern frontier against a Chinese incursion (which the terrain makes difficult to imagine). Most important, the Indian military, like the Chinese military, guarantees the internal security of the nation—no minor consideration in a diverse country with deeply divided regions. There is currently a significant rebellion by Maoists in the east, for instance, just the sort of thing that it is the army’s job to prevent or suppress.
On the seas, the Indians have been interested in developing a navy that could become a major player in the Indian Ocean, protecting India’s sea-lanes and projecting Indian power. But the United States has no interest in seeing India proceed along these lines. The Indian Ocean is the passageway to the Pacific for Persian Gulf oil, and the United States will deploy powerful forces there no matter how it reduces its presence on land.
To keep Indian naval development below a threshold that could threaten U.S. interests, the United States will strive to divert India’s defense expenditure toward the army and the tactical air force rather than the navy. The cheapest way to accomplish this and preempt a potential long-range problem is for the United States to support a stronger Pakistan, thus keeping India’s security planners focused on the land and not the sea.
By the same token, India is interested in undermining the U.S.-Pakistani relationship or, at the very least, keeping the United States in Afghanistan in order to destabilize Pakistan. Failing that, India may reach out to other countries, as it did to the Soviet Union during the Cold War. Pakistan does not represent an existential threat to India, even in the unlikely event of a nuclear exchange. But Pakistan is not going to simply collapse, and therefore will remain the persistent problem that India’s strategic policy will continue to pivot on.
India lags behind China in its economic development, which is why it is not yet facing China’s difficulties. The next decade will see India surging ahead economically, but economic power by itself does not translate into national security. Nor does it translate into the kind of power that can dominate the Indian Ocean. American interests are not served by making India feel overly secure. Therefore, U.S.-Indian relations will deteriorate over the next ten years, even as the United States leaves Afghanistan and even as U.S.-Indian trade continues.
THE ASIAN GAME
In the decade to come, while the United States is preoccupied with other issues, the two major Asian powers, China and Japan, will be only minimally subject to outside influence. They will move as their internal processes dictate. Given that pace, the United States should not invest heavily in managing the Chinese-Japanese relationship. To the extent possible, the United States should help maintain a stable China and work to maintain its relationship with Japan.
Nonetheless, the peace of the western Pacific will not hold together indefinitely, and the United States should work to cement strong relations with three key players: Korea, Australia, and Singapore.
These three countries would prove essential allies in the event of war with any western Pacific country, particularly Japan, and preparations cannot begin too soon. Building the Korean navy, creating facilities in Australia, and modernizing Singapore’s forces will not arouse great anxiety. These are steps that, taken in this decade, will create the framework for managing any conflict that might arise.