On 13 December 2005, on the occasion of the series of summit meetings of the Association of Southeast Asian Nations (ASEAN) in Kuala Lumpur, President Vladimir V. Putin took part in the first-ever meeting between the leaders of ASEAN as a group and the president of the Russian Federation. The next day, the inaugural meeting of the East Asia Summit (EAS) took place. The ten member states of ASEAN, Australia, China, India, Japan, the Republic of Korea, and New Zealand participated in the first EAS — but not Russia.

Russia had agreed to go to Kuala Lumpur for the ASEAN–Russia Summit with the clear desire to take part also in the EAS, the same desire that animated Australia, India and New Zealand. However, ASEAN, which had assumed the “driver's seat” of the EAS, could not achieve consensus on Russia's participation. In Kuala Lumpur, therefore, ASEAN, particularly the Malaysian hosts, faced an awkward situation: President Putin would be attending the first ASEAN–Russia Summit but would not be a regular participant in the first East Asia Summit the next day despite his evident eagerness to take part.

In its usual creative way, ASEAN resolved its awkward dilemma by offering a compromise in which the Russian president would address the EAS as the guest of Malaysia but not take part in its deliberations. In his speech, Putin made clear that Russia was “submitting its application to take part in the organization's (the EAS') activities” and hoping that the “EAS' founding members … will also create incentives for new partners to join”. He then stressed Russia's qualifications. Russia is “an integral part of the Asia-Pacific region” on the basis of “equal partnership and mutual benefits”. It has a wide range of long-term interests in the region. Russia has been a dialogue partner of ASEAN for almost ten years and has signed the Treaty of Amity and Cooperation in Southeast Asia.

Great changes are taking place in the post-Cold War Asia where new economic giants are emerging, as well as new security configurations. So the question of what is the place of Russia in this changing region preoccupies the minds of many analysts. We believe Russia can integrate peacefully into these configurations.

Russia has certainly gone through hard times. It has not lost its significance but its role in global affairs has changed. It was a superpower and suddenly this status has gone and it received too many signs that the country is not as important in world affairs as it used to be. And Russians are very sensitive, even over-sensitive, to the idea of status.

The disintegration of the Soviet Union was not taken easily by Russians. Many took what happened as a personal tragedy and feel humiliated. Unfortunately sometimes these feelings find its outlet in inadequate statements and actions. Xenophobia is growing, racism raises its ugly head. Attacks on people of Asian origin happen in some Russian cities including Moscow. Southeast Asians sometimes become victims too. All this is very sad and certainly does not improve the image of Russia in Southeast Asia. This is deeply regrettable and it is hoped that this spell of ill-placed feelings which some people in Russia claim to be patriotic will be over and the situation will return to normal.

The changes which have taken place are irreversible. Russia is not just the former Soviet Union minus something. It is quite a new state of political democracy and market economy. It is a new entity with a different political system and political philosophy, with new aims and goals, and even new frontiers. Yet there are many people in Russia who have not realized this yet and continue to think, write, talk and act as if nothing has happened, as if Russia is a direct continuation of the former Soviet Union.

INTRODUCTION

Trade and Singapore have long been synonymous. In the nineteenth century, poised at the tip of the Malay Peninsula and strategically sited at the crossroads of the China–India spice route, Singapore was a booming port-of-call for entrepôt trade. Today, as a small and open economy dependent on external demand, Singapore has pursued a proactive trade policy in order to make it a strategic hub and key interlocutor in global trade flows.

Given its small size, expansion of its economic space is an issue that Singapore has to grapple with as it develops. This chapter examines how Singapore has done this through its bilateral trade agreements. It also examines new ways in which Singapore is forging links with its economic partners, such as through sharing of public sector expertise and private-public partnerships which manifest in Special Economic Zones (SEZs).

The cornerstone of Singapore's trade policy has always been the World Trade Organization's (WTO) multilateral, rules-based system. In addition, Singapore is active in efforts undertaken at regional for a such as Asia-Pacific Economic Cooperation (APEC), Asia-Europe Meeting (ASEM) and Association of Southeast Asian Nations (ASEAN), as well as in bilateral Free Trade Agreements (FTAs). It believes that these efforts can accelerate the momentum of trade liberalization and in the process, also strengthen the multilateral trading system. This chapter postulates how an arterial network of FTAs, if WTO-consistent and WTO-plus, can be beneficial to all levels of trade flows.

To better understand Singapore's delicate position that necessitated an active trade strategy, one must first trace the kinetics of world affairs. The turn of the century ushered in a phase of globalization. This meant an exponential increase in the inter-connectedness of global sectors and industries, and a simultaneous rise in gains made from free trade. More importantly, the past two decades have witnessed the two Asian giants — China and India. With a strong foundation of engineering capabilities built through its network of educational institutions, and honed through undertaking outsourcing contracts for multinational corporations (MNCs), India has emerge as a global IT powerhouse.

At the present stage of its development, the world economy needs energy more and more. Demand is on the rise for all kinds of fuels, especially for natural gas. In the foreseeable future competition for access to energy resources is likely to increase among the three largest gas markets: Europe, the Asia-Pacific region and North America. Emerging new economic powers in East Asia demonstrate high rates of industrial growth and a steady increase in demand for oil and gas.

The most intensive increase in the demand for oil and gas in East Asia is expected to be from China, Republic of Korea, Japan and Taiwan. These countries meet their needs partly through their own resources but increasingly through imports under long-term contracts from traditional gas and oil producing areas. Recent years have demonstrated growing instability of the global oil market and it forced consumers to search for new potential exporters of organic fuel.

The share of natural gas in the fuel basket of Asian countries is relatively small so far — around 10 per cent. However in the next fifteen years, the highest rate of growth in the global gas demand is forecasted to be in this part of the world where the projected economic growth rates in Asia would be twice as high as in Europe.

Asian countries demonstrate strong economic growth. The OECD-Asia (developed Asia-Pacific countries — Japan, South Korea, Australia and New Zealand) demonstrates an average growth at 2.4 per cent per annum while China's annual growth is above 6.9 per cent. Predictions that challenges to China's growth such as its weak banking system, regional disparities, corruption, one-party rule and growing environmental damage will constrain its economic expansion have proven to be unfounded. China has achieved strong economic growth despite these issues. A similar situation is found in Southeast and South Asia. A range of social and economic problems confronts countries across these regions but fails to fundamentally constrain their growth.

This book based on the IMEMO-ISEAS Moscow Conference of October 2006 is the second in the series. At the Moscow conference, one of the major themes discussed was the rise of China and its impact upon the Asia-Pacific economies, politics and security. The other major theme was the economic rise of Asia, as manifest in the increasing number of Free Trade Agreements, but which has not as yet involved the Russian Federation. These themes are discussed in detail in the conference papers published in this book.

Russia has steadily stabilized under the firm rule of President Putin over the past seven years. Buoyed by rising energy exports and high oil and gas prices, Russia has enjoyed steady and high economic growth for the past three years.

ASEAN on its part, has regained economic growth and stability ever since the Asian financial crisis of 1997–98. This has been due to the financial reforms put into place to prevent a recurrence of the crisis and also partly due to the economic growth and momentum of China's stellar growth, which has acted as an economic locomotive on the neighbouring economies.

With both sides of the dialogue enjoying steady growth, Russia and ASEAN are now rediscovering each other in various ways. For instance, some ASEAN countries that had postponed arms purchases from Russia were now able to place their orders once again. Visits by ASEAN leaders, like Malaysian Prime Minister A. Badawi and Singapore's Minister Mentor Lee Kuan Yew to Moscow in mid-2007 have taken place, whilst Russian ministers have also visited ASEAN countries. Indeed, there has been a noticeable increase in the number of Singaporean interactions with Russia in 2006–07, ranging from helping to set up two Special Economic Zones (SEZs) in Russia, increased investments and trade, Singapore Airlines (SIA) flights to Moscow, helping to upgrade airports, etc. Singapore has taken note of the increasing Russian prosperity, and has seized the opportunity to expand its economic space with Russia, just as it has done in the Middle East.

Early in the 1990s the then Malaysia's Prime Minister Dr Mahathir Mohamad put forward an initiative called the East Asia Economic Group (EAEG). Introduced during former Chinese Premier Li Peng's visit to Kuala Lumpur, in December 1990, the EAEG was Malaysia's response to the emergence of trade blocs in Europe and the Americas, and was an attempt to create a regional economic entity devoid of any role for Western powers, in particular the United States. Highly critical of the evolution of trade blocs in the post- Cold War era, Mahathir rationalized that in the face of this development, an Asian bloc was required to ensure “even economic development” and “fair trade” for nations of East Asia. As Dr Mahathir observed in a recent interview, “a long time ago we had the East Asian grouping, this was something to balance the grouping of Europe and that of NAFTA. I thought that we needed something to counterbalance that”.

The EAEG also represented Malaysia's reaction to the Asia Pacific Economic Cooperation forum, or APEC, which, according to Dr Mahathir, was dominated by the United States and its allies. From the beginning, Mahathir's idea was opposed by Washington as inconsistent with the development of the world economy. The United States urged Asian countries to embrace instead the APEC. Under U.S. pressure the EAEG was changed into the East Asia Economic Caucus (EAEC). Later in 1993, the ASEAN Ministerial Meeting in Singapore endorsed the EAEC as a “caucus within APEC”. Nevertheless, the United States still interpreted the conception as an attempt to create a “caucus without Caucasians”. The initiative was badly wounded but not killed.

After the Asian financial crisis, the idea of East Asian cooperation received another impulse. Summit meetings in 1997–99 between ASEAN and three Northeast Asian powers have since developed into the format of ASEAN+3 (APT), with future evolution into an ambitious regional community.

EAST ASIA'S EMERGING REGIONAL ARCHITECTURE

East Asia is currently undergoing significant transformation as a result of its economic dynamism and because of the end of the Cold War. We are witnessing growing regional cooperation among a diverse group of economies and political regimes. The region is currently involved in various multilateral initiatives such as ASEAN+3 (APT), the ASEAN Regional Forum (ARF), Asia-Pacific Economic Cooperation (APEC) and more recently, the East Asian Summit (EAS). A regional architecture is emerging although it remains unclear at the moment what the final outcome will be. Nevertheless, it is clear that collaboration among East Asian states is founded on a basis of shared interests and concern especially in the economic, political and social spheres. Not only does such behaviour indicate acknowledgement that growing inter-dependence among states require greater cooperation, it also underscores the growing willingness of governments to assume greater collective responsibility for the security and stability of the region, though it should be added that East Asian regionalism still has a long way to go.

While East Asian regionalization has been going on for several decades through Japanese foreign direct investments and the workings of Chinese business and financial networks, East Asian regionalism is relatively new. Aside from imperial Japan's Greater East Asia Co-prosperity Sphere during World War II, reference to East Asia in political lingo only emerged in the early 1990s through then Malaysian Prime Minister Mahathir Mohamad's proposed East Asian Economic Caucus (EAEC). Until then, East Asia was embedded within the concept of the Asia-Pacific. It was not until 1997 that East Asian regionalism formally took root with the establishment of the ASEAN+3 (consisting of China, Japan and South Korea) initiative in Kuala Lumpur.

The trend towards East Asian regionalism is in fact an attempt to integrate two sub-regions: Northeast Asia — which at present lacks any form of institutionalized, multilateral mechanism for conflict prevention and management and is one of the most militarized and tense areas in the world — with Southeast Asia — which boasts ASEAN, the most mature and enduring multilateral institution in Asia.

Asia began a new-era with the launch of the East Asia Summit (EAS) in December 2005 in Kuala Lumpur. Great movements often begin as a small event, which in retrospect, is understood to be a turning point in history. For instance, who would have thought the launch of ASEAN in 1967 would yield such rich dividends forty years later, with the launch of the EAS, which its members agreed would be driven by ASEAN?

Trends in the Asia-Pacific Region

There are three major regional trends which would justify some attention. Firstly, with the newly established EAS, all members, including India, now have to take in the wider Asian arena, beyond their traditional sub- regional focus. All members’ political radars will now have to scan and pay attention to such hot spots as the Korean peninsula, Taiwan-China relations, Japan-China relations. These issues are no longer far-off nor less relevant, but now deeply concern regional well-being as they determine the progress of the EAS. Many Asian policy-makers and thinkers have now to grapple with new concepts and new responsibilities such as how China, India and Japan should provide the regional public goods and how should these three powers meet the new high expectations of ODA (Official Development Assistance) and FDI (Foreign Direct Investment) from the less developed EAS members.

This focus on the Asia-Pacific region is not new, because the far- sighted then Prime Minister J. Nehru, whilst he was imprisoned in Ahmadnegar Prison during World War II, wrote:

There is obviously much to think about and much to discuss regarding the new and wider regional role and responsibilities of the three great Asian powers.

Secondly, beyond the EAS, we see rising confidence in Asia, buoyed by fast economic growth and sustained political stability. These economic and political strengths give Asia a greater sense of empowerment, in playing a more meaningful role in world affairs.

Introduction

This paper highlights major power equations that have a strong bearing on Southeast Asia's international relations. While the interactions between the major powers impact on the region it should not be assumed that the latter is a passive onlooker. Acting under a regional umbrella the Southeast Asian states have generated certain norms of inter-state behaviour which guide the exchanges between the regional and extra-regional states. Major power relations are generally explained within two dominant theoretical frameworks. One is offensive realism which argues that great power conflicts are inevitable given the zero-sum nature of their interests. The other explanatory tool is liberal institutionalism with its emphasis on complex interdependence. This paper does not explicitly make use of these frameworks to explain great power relations but it draws upon some of their assumptions.

The presence of extra-regional actors in Southeast Asia with significant tangible and intangible interests of their own has had a major impact in shaping the region's intra-regional and international relations. Regarding the role of major powers in the region the regional strategy has exhibited two tendencies simultaneously — regional peace and stability to be ensured by the regional states themselves without the deleterious influence of extra-regional actors and, at the same time, reliance on bilateral associations with outside powers to ensure their own security. The two are contradictory in some ways but that has not prevented the regional states from pursuing these strategies simultaneously. The presence of external actors in Southeast Asia has been both due to the initiatives of individual regional states and the keenness on the part of external actors to fish in the troubled waters of the region. Managing the presence of extra-regional actors without losing complete control over regional affairs has been a regional pre-occupation. Since the presence of extra-regional actors cannot be avoided the best option, from the region's point of view, is to ensure that no one single power becomes a dominant entity.

We are in a period of a historic redistribution of global power to Asia. But it will be a prolonged transition, taking up a good part of the twenty-first century. Both China and India still have a long journey ahead before achieving their full potential in terms of standards of living, quality of governance and institutions. The road ahead will not be without pitfalls and setbacks.

In this paper I examine briefly some of the political and security dynamics at work today in this changing Asia-Pacific region.

The Role of the United States

With a US$12 trillion technology-driven competitive economy, a global military reach and unique influence in the key global institutions, the United States will remain the pre-eminent power for the foreseeable future. For these reasons it will probably continue to play a key role in Asian affairs for a long time, even after China overtakes it in sheer GDP size.

The United States is in a unique position to help shape the emerging balance of power in Asia by tilting towards one party or another and by providing it economic and technological inducements. It can also influence the shape of Asian regionalism through its influence on allies like Japan and Australia.

The fundamental U.S. goal in the Asia-Pacific probably remains what it has been for the past century, that is, to prevent the domination of East Asia (now Asia) by any other power or concert of powers. In this respect Asian regionalism that excludes it poses a challenge for the United States, but as of now it seems assured by its alliances with two members of the East Asian Summit, Japan and Australia, and its developing friendship with a third, India. Further, from the American perspective, because of the conflict of interests between the major Asian players, Asian regionalism remains an uncertain venture. The present Bush Administration, when it came to power in January 2001, served notice that it was determined to maintain the pre-eminent military position of the United States in East Asia against any potential challenger, having China very much in mind.

The possibilities of India's engagement with Asia, envisaged by Prime Minister Jawaharlal Nehru, took clear shape at the inaugural East Asia Summit (EAS) in Kuala Lumpur in December 2005. In some ways, the EAS is the successor to the 1947 Asian Relations Conference held in New Delhi as well as the 1955 Bandung Conference. Both these conferences focused on themes of Asian cooperation and Asian brotherhood. Now it is up to the heirs of Prime Minister Nehru to implement his vision for Asian cooperation.

Why is the EAS so important and so different from various preceding regional fora? After all, we have witnessed the formation of ASEAN (Association of Southeast Asian Nations), SAARC (South Asian Association for Regional Cooperation, the SCO (Shanghai Cooperation Organisation), APEC (Asia-Pacific Economic Cooperation, the ARF (ASEAN Regional Forum), ASEAN Plus Three, BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), Indian Ocean Rim Cooperation, etc. The EAS is special and different because

1. • it is inter-regional, uniting the sub-regions of Northeast Asia, Southeast Asia, South Asia and Australasia;

2. • it is the first Asian grouping which includes all the great Asian powers; and

3. • it is based on open and inclusive regionalism.

India was included unequivocally since it had met the three Cebu criteria set by ASEAN, having signed the ASEAN Treaty of Amity and Cooperation without delay or reservations. As a full member of the EAS, it will play a full and equal role within the EAS.

Definition of EAS Footprint

There has been some uneasiness about the geographical definition of East Asia, and India's place, since India is part of South Asia. As far as Singapore is concerned, our Senior Minister, Mr Goh Chok Tong, a good friend of India, said at the 4th Asia Pacific Round Table, held in Singapore in February 2006, that:

Politics and security are driven by economic and social dynamics and we would do justice to politics and security by paying proper attention to the economic forces. Economic and social drivers of strategic dynamics are reflected in the rise of India and China as the major Asian players and in the establishment of the East Asian Summit with the objective of building an Asian community.

It's now an acknowledged fact that Asia is on the rise although this rise is not quite in the form of the Nehruvian vision, which we in India are very familiar with. Nehru had a vision of integrating Asia and making it a focal point of influence in world politics; shaping world politics in a manner conducive and advantageous to Asians. There were factors which fitted that vision but there were also forces which did not allow that vision to take shape at that particular point of time; although there is now a new drive to recreate that vision. Of course, in this new context it cannot be exactly what Nehru might have thought of but it certainly carries the core of Nehru's idea. In this rise of Asia, I see India and China as the core players and actors. They have shown more than eight per cent economic growth and together represent one-third of humanity.

India and China are indeed critical to the whole question of global prosperity and growth. I think their prosperity and their growth rates are generating economic surpluses which are attracting global corporate interest to Asia in a manner not seen before. This in turn is creating high expectations of the two countries, whatever may be the doubts about their ability to work together and move Asia forward.

But the rise of India and China is also raising apprehensions. I have read the reports of speeches of both President Bush and Prime Minister Blair warning their own people that if they do not work hard enough India and China would over take them.

Shifts in the regional power balance are becoming more pronounced in East Asia as a result of the ongoing changes in relations between two important players — China and Japan. What are the contributing factors to the changes? The People's Republic of China (PRC) has been rising rapidly since the 1990s, in comparison to Japan's economic stagnation during the same period. Japan is still the second largest economy in the world, but the PRC's enhanced economic relations with Asian countries, combined with its diplomacy, have been successful in eroding into the power and influence hitherto enjoyed by Japan.

Changes in Sino-Japanese relations also have a military dimension. No doubt, China's declared policy for the present, arising out of the perceived necessity to have a stable international and regional environment so that it can concentrate on its domestic development, is for pursuing a non-confrontational foreign policy course. Its central message to the outside world is that the PRC's “peaceful development” does not pose a “threat” to other countries. However, because Beijing is at the same time pursuing an active military modernization drive, East Asian nations in general and Japan in particular, are responding with some scepticism to the “peaceful development” message. Tokyo is reacting by beginning to revamp its defence, security and foreign policies, geared not only to address the issue of the rise of China, but also the threat coming from North Korea's development of nuclear weapons and ballistic missiles. The growing nationalism in Japan is facilitating such attempts to reformulate policies. As China and Japan strive for regional leadership by competing in a variety of fields like politics, military, economy and energy, their rivalry raises questions about future stability and equilibrium in East Asia.

The History Issue

A political issue which divides Japan on one side and significant parts of East Asia on the other relates to Tokyo's wartime role. China and the two Koreas in particular want Tokyo to atone for its wartime conduct and avoid policy measures which may encourage right wing and militarist elements in Japan.