Don’t lose the shirt off our back

23 September 2017
Originally published in The Star Online

WHILE they should not be negative about China, Asean member states should not however surrender their sovereign rights or abdicate from their commitment to greater regional integration in South-East Asia.

Alas, one or two Asean states have completely sold out. Others are measuring cost and benefit of deeper involvement with China, trying to balance and hedge. Another one or two try to show they have options without particularly wanting to antagonise the rising power.

The need to protect what is yours, usually hard-earned, is not just about abstract sovereignty or about the protection of international law, extremely important though they may be. The rule of law is without fail the most significant foundation of human society, domestic or international.

There are nonetheless real interests and rights also involved.

Next month the Institute for Southeast Asian Studies in Singapore will be holding a seminar on how over the past decade Chinese banana industry practice of “shifting plantations” has transformed and depleted Mekong borderlands, mainly in Laos.

The vast quantities of pesticides, herbicides and fungicides used to maintain monoculture production pose serious health risks to workers and the surrounding environment.

And “…. after 6 to 10 years of producing fruit on cleared farmland, the (Chinese) company usually abandons it for another plot once factors such as soil depletion and pest infestation begin to lower yields.”

Laos has since last year issued a ban on new banana plantations, but the shifting plantation practices have spread to Thailand, Myanmar and Cambodia. When will they learn their lesson?

In Malaysia there is a big debate on the East Coast Rail Line which in itself is no bad thing.

The China-funded project however has to be watched closely to ensure there is no financial stress to Malaysia’s national finances, that there is Malaysian involvement in the sub-contracts, and that what is delivered is of high quality and suitably maintained.

The RM55bil project is huge. The government of Malaysia has to be transparent on how the financing is going to be managed on its balance sheet.

An official statement said 30% of the project will be contracted out to Malaysian companies. My business friends tell me only 15%. Which is which?

Malaysian engineers say there continues to be great difficulty in getting Asean engineers admitted to practise in the country, despite the fact there is the Mutual Recognition Agreement on Qualified Asean Engineers. Engineers from China however get their work permits handed out en bloc.

This kind of favouritism – at the expense of loudly proclaimed Asean integration no less – should not be practised just because the Malaysian government may want to run up contracts with China.

On the other hand, the Prime Minister’s official visit to Washington earlier this month is a good signal that Malaysia has not just bought into China. There will be a balance to promote the national interest.

While it may appear Malaysia had given away more than it had gained from the visit, the invisible hand is protection of the trading relationship with America, much too valuable for the country to be left to the caprice of Donald Trump’s blinkered view on international trade.

This kind of balance however has to be continuously worked at. American businesses will have to up their game in countries such as Malaysia in Asean, and not ride on Trump’s attack on trade to open sales and investment opportunities. In that game, China with its financial resources, institutional arrangements and government which can deliver what it commits to without domestic complication, will win hands down otherwise.

Even in India – with which China does not have the best of relations – China is working hard to get two high speed rail (HSR) projects, from Mumbai and Chennai to Delhi respectively. This is despite the Mumbai-Ahmedabad HSR project (which cuts the 316 mile journey from eight hours to about three) going to Japan, as confirmed during the Japanese prime minister’s visit earlier this month.

Balancing act

The balancing act is not an easy one. It can come out as playing both ends against the middle if not actively and skillfully managed.

Singapore’s travails in its relations with China in the past year is a good example. The island republic took a principled stand on the efficacy of international law when the law of the sea tribunal dismissed Beijing’s South China Sea claims in July last year. China took this as an affront.

The spew of vituperation followed. Singapore was the little red dot. Its armoured personnel carriers were detained in Hong Kong on their way back from Taiwan. Prime Minister Lee Hsien Loong was not invited to the Belt and Road Forum last May.

In sum, Singapore was perceived as veering towards the US in its desire to ensure Washington’s continued commitment to the region.

Balance is not easy, especially when one pole is distracted and the other is totally focused. There was even a first time public debate in Singapore pitting former senior foreign ministry officials on two sides of the argument whether a small state should behave as a small state and not take a position on matters that do not directly involve it, such as the South China Sea territorial claims. A university professor was even expelled from the country.

Anyway, the Singapore prime minister was in China this week to mend fences. Balancing is difficult. It is a continuous effort. It takes at least three to clap and be focused. When the US is out of it, the conduct of the diplomacy becomes more tricky. It is no wonder a number of Asean states have tipped China’s way, and some others are looking like they may go that way too.

Indonesia however has shown it can stand up for its rights in relation to China and not wait on America to give it succour.

Indonesia’s renaming in July of its portion of the South China Sea as the North Natuna Sea has displeased China, but this leading Asean country has been quite cool, calm and collected in playing its hand.

It contends Indonesia has every right to rename its territorial waters, the northern reaches of its exclusive economic zone (EEZ) in the South China Sea. China has demanded that Indonesia revoke its position.

The Chinese foreign minister stated on Aug 25: “The China-Indonesia relationship is developing in a healthy and stable way, the South China Sea dispute is progressing well… Indonesia’s unilateral name changing actions are not conducive to maintaining this excellent situation… (it is) a complication and expansion of the dispute, and affects peace and stability in the region.”

Indonesia has never accepted China’s concept of its “traditional fishing grounds” and therefore of its extended rights over almost all of the South China Sea. It clearly does not accede to the fait accompli which has been the outcome of Beijing’s South China Sea strategy.

While standing by its right to rename its internationally-recognised EEZ, Indonesia stated it would adhere to International Hydrographic Organization procedures by submitting its proposal wherein all member states, including China, will be consulted.

This of course is precisely what China does not want. Its whole diplomacy on the South China Sea is premised on primacy and exclusivity – the rest of the international community out, only China and Asean and its claimant member states. The emphasis shifted from Asean as a whole to the member states separately as China’s rise picked up.

Now Indonesia has set the cat among the pigeons by proposing to take its renaming of the southern reaches of the South China Sea to a formal international audience in line with international practice.

What Indonesia has shown is that adept and subtle diplomatic initiatives can make options available to states in situations which may appear to be hopeless.

Of course it can be argued Indonesia is a middle power which is better able to stand up for its rights. But even Singapore has shown the importance of taking a stand. It may have gone through a small baptism of fire, but there is a respect in the end even if the future relationship has to be continuously worked at.

The main argument about Asean is that the whole is greater than the parts or, if it does not hang together, it will hang separately. A couple of its member states have shown even alone – and Asean states will have to act alone as well – they can make a difference.

When states start out to ingratiate, they will end up grovelling, with their nose rubbed in the sand, and their shirt taken off their back.

Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.