The year 2012 has brought to the fore the difficult realities of a region adapting to a more competitive global environment. With intensifying great power rivalry in the region, continued global economic uncertainty and legitimacy challenges of Southeast Asian leaders, the strains of maintaining consensus within ASEAN, promoting shared economic opportunities and maintaining stability while meeting governance demands have become more prominent. While regional politics in the past year illustrated some of the serious obstacles the region as a whole faces in working collaboratively, developments also highlighted new initiatives that are being introduced to promote the welfare of Southeast Asians.

From a regionwide lens, the dominant story of the year was ASEAN. In this forty-fifth year of ASEAN's founding, this was perhaps one anniversary best forgotten. The failure of the organization to sign a basic communiqué in the July meeting in Phnom Penh and the limited traction on the code of conduct agreement with China over the contentious South China Sea issue at the East Asia Summit in November showcased the divisions among member states rather than a strengthening regional architecture.

After the years during which ASEAN developed stronger regional ties and excelled itself on the international stage under the chairmanships of Indonesia and Vietnam, 2012 was a wake-up call of the hurdles ahead for ASEAN under comparatively weaker chairs of the region's smaller countries. Under Cambodia's chairmanship, the dominant mode was one of limited consensus, showcasing division rather than unity.

The primary source of division reflects divergent views of the role of China in the region. From 2008, China has become more assertive in its territorial claims in the South China Sea. China's presence has extended economically as well, including stepping up efforts to control oil and gas production. Differences between the South China Sea claimant Philippines and strong China-ally and this year's ASEAN chair Cambodia in particular were quite pronounced, limiting the ability of member states to reach common ground. The year passed without the passage of a code of conduct after the ten-year period allocated to address this matter expired.

Part of this was due to developments outside of Southeast Asia. Both China and the United States consciously opted for a more competitive dynamic in their relations with the region. The United States set the course by deepening its “pivot” approach to Asia, renamed “rebalancing” at the June Shangri-La Dialogue.