Shadows on the ceiling – The Edge Review


Despite U.S. President Barack Obama’s no-show in southeast Asia, America loomed large in recent summit discussions. But is China looming larger? – digital/app download available here (subscription)

U.S. Secretary of State John Kerry at the East Asia Summit in Brunei on Oct. 10 2013 (Photo: Simon Roughneen)

U.S. Secretary of State John Kerry at the East Asia Summit in Brunei on Oct. 10 2013 (Simon Roughneen)

BANDAR SERI BAGAWAN — The pre-summit chat was all about the absence of Barack Obama, but when pressed, Asian governments were quick to suggest that they had bigger concerns than the embattled American President’s no-show, with an October 17 deadline for the U.S. to raise its ‘debt ceiling’ hanging over the various summit meetings held in the Brunei capital earlier this week.

American lawmakers have yet to cut a deal to raise Washington’s mammoth $16.7 trillion borrowing limit, the ‘debt ceiling, ‘which is set to expire on October 17. The stand-off forced the closure of much of the U.S. government and prompted President Obama to cancel his planned visits to Brunei, Indonesia, Malaysia and the Philippines.

And while the government shutdown has prompted worldwide bemusement, the looming debt crisis has left Asia’s emerging economies nervous about the unheralded knock-on effects that could come about – if the U.S. ends up defaulting on its debt.

Around 60% of China’s foreign currency reserves are thought to be American assets, so Prime Minister Li Keqiang’s words to U.S. Secretary of State John Kerry – that “China is highly concerned with the United States’ debt ceiling issue,” according to a report in by the state-run China News Service – are no surprise.

Those concerns shared by other Asian countries, including American allies. Speaking to press at the sidelines of Association of Southeast Asian Nations (ASEAN) summit on Wednesday, Ramon A. Carandang, spokesman for Philippines President Benigno Aquino, said that the possible failure to raise the debt ceiling as “unchartered territory,” warning that such an eventuality “could put the debt markets in disarray.”

Similarly, Indonesia Foreign Minister Marty Natalagawa told The Edge Review that “Its always been in the background of the discussions, here [in Brunei] and earlier in the week at APEC in Bali.”

Several southeast Asian governments have said they are taking preliminary measures in advance of a possible U.S. default, but did not go into details “We are keen to maintain the resiliency of this region,” Mr Natelagawa said.

It seems that the U.S. President, by this reckoning, was right to stay at home and try to sort out the shutdown and, more importantly try head off the debt crisis.

China watcher M. Taylor Fravel, an Associate Professor of Political Science at Massachusetts Institute of Technology, told The Edge Review that “Most Asian leaders understand that he [Obama] did not cancel his trip due to a lack of interest in the region. Once the budget and debt crises are resolved, Obama will almost surely reschedule the trips that were cancelled.”

So did Obama’s absence matter? Host Brunei was disappointed, going by off the record comments made by officials, as was Singapore’s Prime Minister Lee Hsien Loong. In the meantime, Chinese media crowed over Obama’s absence as China’s Xi Jinping and Li Keqiang took centre stage.

And debt ceiling or not, there were other pressing issues discussed in Brunei. Bill Hayton, author of a forthcoming Yale University Press book on the disputed South China Sea, a central summit talking-point, told The Edge Review that Obama’s absence could send the wrong signals to allies and rivals in the region.

“If the United States’ commitment to the region is perceived as anything less than whole-hearted then all the various countries may come to the conclusion that their only option is to pursue favourable relations with Beijing, regardless of what it may cost in terms of maritime territory,” Hayton said.

Tensions between sea claimants China and Vietnam, and particularly between China and the Philippines, have been high. Last month, Manila accused China of violating a much-talked about Code of Conduct for the sea, which came up again at the Brunei summits, though this time it appears that China has agreed to go along with discussions of the code.

Philippines government spokesman Sec. Ramon A. Carandang told press in Brunei on Wednesday that “We believe that in recent months discussions on a Code of Conduct have met with some degree of progress, there is reason to be hopeful.”

China’s Li told delegates in Brunei that “We all agree that disputes in the South China Sea should be addressed through consultation and negotiation between parties directly concerned.”

But despite some smooth rhetoric from both sides, relations between China and the Philippines remain strained – as do ties between Beijing and another, bigger, U.S. ally – Japan. Tokyo has territorial and maritime disputes of its own with China and like the U.S., has been aiming for closer ties with China’s erstwhile friends in southeast Asia, such as Myanmar.

China announced ahead of the Brunei summits that Li would not meet bilaterally either Japanese Prime Minister Shinzo Abe or Philippine President Benigno Aquino.

Asked by media if there was any late change to those plans, “No” was the sole word uttered by Sec. Carandang, Aquino’s spokesman.

A short silence ensued before the subject was changed to Myanmar, which will chair ASEAN for the first time next year. That handover will be a landmark for a reforming ex=pariah, which like other nations in southeast Asia, is attempting to balance relations between the increasingly-shaky U.S. and an ascendant China.

Philippine President Benigno Aquino at the East Asia Summit (Photo: Simon Roughneen)

Philippine President Benigno Aquino makes his way into the East Asia Summit (Photo: Simon Roughneen)

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