Transatlantic Interests in Asia

Transcript: Q & A

Daniel R. Russel
Assistant Secretary, Bureau of East Asian and Pacific Affairs

Chair: Xenia Dormandy
Project Director, US; Acting Dean, Academy for Leadership in International Affairs, Chatham House

Catham House, London
January 13, 2014

Xenia Dormandy:
I’m going to open it up to the floor, but as you’re all thinking about what you want to ask, let me start by asking you a question about the pivot, about the rebalancing. There was an announcement just last week that more US troops were going to be stationed in South Korea. There was also an announcement in the last couple of weeks about the moving of the base from Okinawa to elsewhere in Japan. The pivot has often been characterized in the military sense, and you noted the November 2011 date of President Obama’s speech, where actually the speech also very much focused on the military. But as you say, in the last couple of years there has been a strong attention to the economic with the TPP [Trans-Pacific Partnership], there’s been a strong attention to diplomatic. Yet people keep coming back to the military side of it. The objective, as I heard a number of American military officers say, is reassurance, dissuasion and deterrence. Can you talk a little bit about the three parts – the diplomatic, the economic and the military – and how those come together in the rebalancing to actually achieve the function of deterrence, dissuasion and reassurance? Then I will open it up.

Daniel Russel:
Thanks, that’s a great question. The underpinning of the economic growth in the Asia-Pacific region over the last six-plus decades has been the security provided by the United States. Maintaining credible security but doing it not unilaterally but in partnership, in tandem with allies, has in my view been the secret of success. We are trying to expand that security cooperation beyond the traditional alliance network of the 20th century and utilize multilateral platforms, like ASEAN and the ASEAN Regional Forum (ARF), to facilitate a collaborative commitment to security that’s not the old-fashioned war-fighting kind but that focuses really on strengthening human security. That includes very much humanitarian assistance. It includes disaster relief. But it also includes deterrence and dissuasion.

So one category that fits in is in ensuring that countries in the region have the capacity to take care of themselves and their territorial waters, to know what’s going on and to be able to respond in a measured and prudent way to challenges – whether they are weather-based or other forms of challenges. What is changing gradually in terms of the character of the United States as a security partner is that we are increasingly providing training; we are providing joint exercises and joint operations. Those bases that the US maintains in the Asia-Pacific region are in many cases gradually being adjusted to reflect the political realities and to minimize the impact on the communities that host them. Increasingly our focus is on collaborative and cooperative efforts and access. We are not looking to own bases, we are looking to help partners.

Increasingly the military-to-military ties between the US and all of our Asian partners are branching out. Among them, the very important one is the US-China mil-mil [military to military] relationship. We have made considerable headway in establishing direct communications with the PLA (People’s Liberation Army) in order to ensure that the Chinese military can make its own informed judgments about who we are and what we’re up to, not on the basis of doctrine and intuition but on the practical basis of interaction.

All that said, as important as the US military presence is – and in meeting the challenge of North Korea, there is no substitute for 28,500 US troops on the peninsula. For meeting the threat of North Korea, there is no substitute for ballistic missile defence, for Aegis cruisers, for radar and high-tech aircraft and other military equipment. But as important as the military presence is, we are investing very heavily now in our people-to-people ties, in educational exchange – not only in macroeconomic, in trade and investment approaches, but in micro, through trade missions and partnerships. Not to belabour the point but there is a direct connection between the values and principles that we are advocating for in the region, such as human rights and the rule of law, and what matters most to the people of the region – and frankly any region – which is the ability to earn money, to educate their kids and to create a better life for the next generation than they themselves enjoy. One of the consistent messages that the president, the vice-president, the secretary of state and other US officials have brought each time they’ve travelled to Asia is the direct connection between freedoms – including freedom of association, freedom of speech – and the kind of innovative, open societies that promote economic growth. Getting a little far afield though.

Xenia Dormandy:
No, you cover such a broad remit, we could go on for a very long time, so it’s going to be tough. There are lots of questions.

Question 1:
Danny, welcome to London, and thanks for that very clear exposition of US policy. I’d say that in our own small way, the UK has been making a rebalance toward Asia-Pacific, building up our diplomatic personnel, our diplomatic footprint, including with embassies in all ASEAN countries now. I think that reflects the shared interests that you spoke about toward the end of your presentation. I wonder if you could elaborate a bit further on where you do see the greatest areas of opportunity for the UK and the US to work together, and indeed the European Union more generally, recognizing that we don’t have the same level of security assets and commitment in the region but that we do have significant shared economic and values and principles-based interests.

Daniel Russel:
One way to address that question is to start with a different question, which is: what is it that people in the Asia-Pacific region are looking to the US or the UK or Europe for? What do they like? What do they see when they look at us? So clearly one area is education and educational exchange. The demographics in Southeast Asia are breathtaking. They are experiencing what we sometimes jokingly call a youth-quake. I’m terrible at statistics without a computer but the numbers with regard to the median ages of the countries in Southeast Asia is pretty dramatic. It’s accompanied by dramatic statistics with regard to the emergence of a middle class. I think the experts would say that Southeast Asia is approaching a kind of historic and demographic sweet spot, where the combination of economic growth, political reforms and just the sheer volume of the youth of the population creates a unique opportunity for us to help and to exert influence. So education, including in particular English-language training as the common language of business in the region, is a huge and important area.

Another is with regard to institution-building. Practical help, practical experience in helping the countries, particularly in Southeast Asia, to talk through and think through what it means to make common cause. How to handle something as complicated, frankly, as a rotating chairmanship of a multilateral institution. How to plan and execute an agenda. These are areas where the British government and British diplomacy excel.

As you mentioned, in economic ties – again, I think we both can offer the very practical example of innovation, the close connection between the ability to challenge conventional wisdom, the importance that we place on enforceability of contracts, on rule of law – not just as an abstract principle, not as some boutique Western value, but because the right to the fruits of one’s labour is a key driver for creativity and economic growth. So those are just a few things off the top of my head.

Question 2:
You mentioned North Korea as one of the challenges, a country that’s been going from bad to worse. The policy of strategic patience hasn’t prevented that and this year there could be a fourth nuclear test, there could be an intermediate ballistic missile test. Short of waiting for the House of Kim to fall or to tear itself apart, what is to be done with this troublesome country?

Daniel Russel:
Even though the formula of strategic patience was coined by a dear friend and colleague of mine, Steve Bosworth, it’s simply not an accurate representation of how the US and how our partners have approached the challenge of North Korea. What Steve was getting at when he used that formula is really the fact that our strategy is not to succumb to impatience. Our strategy is to maintain a very solid grasp on the things that we do control and where we do have an ability both to shape North Korea’s choices but also to avoid repeating chronic mistakes that we have, frankly, made in the past. The essence of those mistakes was to put hope over evidence – the hope that this time maybe North Korea would mean it, this time the incentives that are plain for all to see would carry the North Koreans across the threshold of doubt about Western intentions and so on.

What we are doing instead is, number one, sharpening the choice that North Korea is confronted with. There is no scenario in which North Korea can create a viable economic future for itself or its people and retain a nuclear weapons programme. The pursuit of nuclear weapons by the North Korean leadership comes at the expense of North Korea’s own security. North Korea is less secure as a result of those programmes, not more, and it virtually goes without saying that its people are paying the highest price. The regime in North Korea now asserts that its policy is to have its cake and eat it too: to retain a full-fledged effort to develop a nuclear-armed missile capability that can threaten the United States and its allies, and at the same time attempt to develop its economy and become a ‘strong and prosperous nation’. It can’t. It won’t happen.

What’s really different now than five years ago when President Obama took office is that the record is clear for North Korea to see that the US is not going to bribe or attempt to bribe North Korea. The US is not going to take an unenforceable IOU in exchange for economic support. Secondly and perhaps most importantly, what has changed is both the character of the US-China relationship and the determination in both Washington and Beijing that North Korea not be allowed – and will certainly never be accepted – as a nuclear weapons-capable state. The Chinese have increasingly made it clear, both through word and through deed, that they are aligned with the United States as well as the other five members of the six-party talks in insisting that North Korea negotiate a complete end to its nuclear programme.

Now, if your definition of success is whether or not North Korea has unilaterally and comprehensively capitulated as of today – no. But the fact is that North Korea ultimately has nowhere to go except to come to the table, not to posture but to negotiate. It is so heavily dependent on China for energy, for logistics, for its economic survival. Without Chinese tolerance, North Korea cannot continue as is, and it certainly cannot continue to pursue a nuclear weapons programme.

Xenia Dormandy:
Though when you talk to the Chinese, they tend to be a lot more nervous today than they were a couple of years ago about their ability to influence North Korea.

Question 3:
Lots of people saw the pivot as one not away from Europe but away from the Middle East essentially. What seems to be an irony now is that many people in East Asia in particular seem to have taken this as a diminution of US resolve not just in the Middle East but in East Asia as well. I suppose the read-across is that if the US is no longer prepared to expend blood and treasure in the Middle East, how deep, how resolved is their commitment to our part of the world in East Asia? So you have a raft of incidents, say, between the Chinese and the Filipinos over Scarborough Shoal, and the incidents in the East China Sea with the Senkaku [islands] – there are lots of people there questioning whether when it comes to it, whether the military commitment is really there. I wonder whether you could tell us how firm the commitment – just to choose one item, on the Senkaku – is. Because I understand the US doesn’t want to encourage Japan to be reckless but on the other hand there has to be a sort of question to be aired: is the US there if there are, albeit accidental, conflicts in the East China Sea?

Daniel Russel:
You’ve got a lot packed into that one question. It was not my impression that the expenditure of American blood and treasure in the Middle East necessarily won us great accolades in East Asia, or elsewhere for that matter. What is winning us, at the risk of being self-congratulatory, a certain degree of credibility,if not accolades, is the determination and the vigour with which Secretary [John] Kerry is pursuing Middle East peace. I know particularly in many of the Muslim-majority countries, like Indonesia or Malaysia, but I think more broadly in the region that while there is and will always be a certain amount of fretting – does Secretary Kerry’s focus on the Middle East today somehow mean that there’s a hiccup in our sustained attention towards Asia? – that’s the exception, not the rule. The fact that the United States is again deeply involved, but involved in the diplomatic track, involved in the peace track not the war track, I think is frankly a matter of great reassurance to our friends and partners throughout the world, including in Asia-Pacific.

I was with Secretary Kerry and Secretary [Chuck] Hagel in Tokyo in October for what we call the 2+2, which is the defence and foreign ministers together. At that point we issued a joint statement with a vision for the alliance going forward. With respect to our security alliance, our defence alliance, with Japan, with the Republic of Korea, with Australia, I am absolutely convinced that our relations and our alliance today are stronger by far than they have ever been, and that there is full confidence not only in our allied capitals but throughout the region that America’s commitment to our defence partners and commitment to security and stability in the region is credible and sustainable.

These are perceptions that are influenced by our actions, not just by our words. Our actions are embodied in our success in moving the US-Japan alliance forward, in terms of the realignment of our bases on Okinawa. The US and Japan just reached an important milestone last month with regard to the relocation of the air base from Futenma to a less-populated part of Japan. This is a key part of updating our alliance for the 21st century. The US and the Republic of Korea just in the last week announced a breakthrough burden-sharing agreement – we call it a Special Measures Agreement (SMA) – that really brings home that the alliance is a shared equity. It’s not the US alliance based in Korea. Similarly, the US and Australia have gone from strength to strength in terms of our collaboration and cooperation.

Let me give you one very specific example. When super-typhoon Haiyan hit the Philippines, the US military in combination with the US Agency for International Development (USAID) was literally on the ground in the affected area before the typhoon had left. Within 24-48 hours, not only had the US sent large quantities of materiel and personnel and equipment that was coming out of Japan and elsewhere in the region, but also had facilitated emergency aid by Japan, by the Republic of Korea and by others. We were able to serve as a hub. These are examples of not only a credible alliance, a credible security posture, but our ability to be agile and to adjust to the needs and demands of the 21st century.

The bottom line here is that the purpose of US military presence in the region is to keep the peace and to advance our common interests. We have a good track record of that and I think we have a high degree of credibility going into 2014.

Xenia Dormandy:
We could pick apart that question a lot, but there are lots of other questions out here.

Question 4:
Pakistan has given China a base in Gwadar, in the heart of occupied Baluchistan. In Balochistan, serious human rights violations are committed by Pakistan. Gwadar port is part of a ‘string of pearls’ and there is also a democratic movement for the independence of Balochistan. Do you think there is any possibility that the US will support the democratic movement to stop the direct Chinese influence in the warm water? Thank you.

Question 5:
You mentioned, quite rightly I’m sure, the TTIP (Transatlantic Trade and Investment Partnership) running at the same time as developing the Trans-Pacific Partnership. You used the phrase ‘tying them in together’ and I wondered if you could expand or pick apart that phrase, and tell us just what you had in mind about contemporary timings or common themes or whatever you felt was necessary.

Question 6:
I noted with interest your firm denial that the pivot has anything to do with containment of China. But those who suspect otherwise frequently point to the TPP negotiations, which of course exclude China. Interestingly, about two months ago the Chinese took everyone by surprise by formally applying to join the plurilateral negotiations on trade in services in Geneva. This was welcomed almost unanimously by all the other participants in those negotiations but with the notable exception of Washington. Maybe I’ve missed something, but the US has been remarkably quiet about whether or not it would welcome China’s participation in those services negotiations. I’d be grateful if you could expand on that.

Daniel Russel:
Hopefully I can make this short, because among you you’ve touched on areas of profound ignorance on my part. I certainly would not like to be the US official who breaks silence on the sensitive issue of multilateral trade in services. But what I certainly will say with regard to TPP, and for that matter TTIP – again with a full disclaimer that it’s my colleague Mike Froman who can speak authoritatively as well as coherently – is that the point of commonality is the effort to create a set of trade relationships that are high quality: high quality in terms of genuinely opening markets, high quality in terms of creating real opportunities for the exchange of goods and services, high quality in the respect that it entails some political pain upfront in return for long-term prosperity and growth for all of us. TPP and TTIP, if we’re successful, each in their own right will constitute a huge fraction of global GDP. It is infinitely in our interest that we use these vehicles to improve access and to reduce barriers.

The approach and the view by China to the US trade initiatives has, in my observation, undergone quite a healthy evolution. I think there is more and more interest as well as genuine curiosity evinced by Chinese businesspeople and Chinese officials in TPP. In fact, I met just last week in Washington with an economic and trade group from China who wanted to know, very straightforwardly, whether China would be welcome in the TPP. That is a dramatic shift from my impression of a year or so ago, when Chinese officials, in my experience, were if anything rather dismissive of TPP and focused very heavily on alternative or even competing arrangements, such as what they call the RCEP (Regional Comprehensive Economic Partnership), in East Asia.

My answer, and I know this is the view of senior officials in Washington – including the US trade representative – is that the world would be a better place if China took the steps and met the thresholds that would allow it to join TPP. We, in fact, are taking a major step in the direction of fostering that future in our bilateral investment treaty negotiations with China. In fact, last summer the Chinese came to our annual Strategic and Economic Dialogue with a very constructive position on negotiating a bit. So I think the Chinese attitude is shifting in a positive direction.

The one connection I would make to the very first question, which I don’t have an articulate and informed answer, is to say that the extent of Chinese global trade and the heavy reliance of China explains China’s interest in ensuring that it can sustain and protect its lines of supply. It is incumbent on China, as it is on other countries, to take steps to ensure the safety of its supply lines in ways that are consistent with good international practice and that don’t create problems for China’s neighbours.

Xenia Dormandy:
Thank you. I have to apologize because there have been some hands up from the beginning that I wanted to get to, and I know you have to leave on time because you have another commitment. I’d like to thank Danny for joining us today and thank all of you for coming to hear his words.