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The annual ASEAN Ministerial Meeting (AMM) and the related ASEAN-plus meetings—a series of ASEAN-led forums involving foreign ministers from 27 nations across the Indo-Pacific—were held from August 2-8, 2017 in Manila, the capital of Philippines which holds the rotating chairmanship of the 10-member grouping. This year’s meetings marked the grouping’s 50th anniversary. They are the latest manifestation of and endorsement for the norm-based concentric multilateralism: the forums are centered on the smaller states in Southeast Asia, conducted in accord with the “ASEAN Way,” with growing participation by big powers and key players beyond the region in four evolving concentric layers since the 1990s, i.e. the ASEAN Post-Ministerial Conferences 10+1 sessions with each of the bloc’s 10 dialogue partners, the ASEAN Plus Three (10+3 Northeast Asian nations), the East Asia Summit (10+8), and the ASEAN Regional Forum (10+17). These ministerial forums, alongside those at the summit and working levels, serve as the indispensable platforms where non-coercive strategic behavior like hedging takes place, as evidenced by the meetings’ outcomes and recent developments across the region, discussed below.

This year’s ministerial meetings were dominated by discussions on the rising tensions over North Korea’s nuclear and repeated missile tests, the growing extremist threat, and not surprisingly, the South China Sea disputes. After the meetings, some observers were quick to declare China as a “clear winner,” citing Beijing’s “diplomatic coup” in avoiding criticism, weakening “regional resistance against its sweeping claims to the South China Sea,” pushing for a framework of a Code of Conduct (COC) for the disputed areas without mentioning whether the code would be legally binding, steering “the regional consensus in its own image,” and “eclipsing the United States as the leader in Asia.”¹ It is true that Beijing did succeed in mobilizing its diplomatic clout to shape the meeting outcomes, including a favorable ASEAN communiqué that eschewed criticizing China’s activities in the disputed waters, avoided raising the landmark arbitration ruling against Beijing, and used the phrase “all other states” (read: the extra-regional powers who are not claimants) in its call for “non-militarization and self-restraint” in the areas. However, it is important to put these “victorious” aspects in a wider perspective.

It is crucial not to view the outcomes in a simple win-lose manner, because any short-term “gain” by any parties might be counteracted by others’ contestations and even resistance over the longer run, and any “victory” in one realm is often attained at the expense of one’s own interest in another domain (e.g., the more assertive China behaves at sea and the more it dilutes the COC, the more suspicions and obstacles it might face in promoting external initiatives such as the “Belt and Road” connectivity cooperation). Moreover, the smaller states’ defiance may take different forms, inside or outside of diplomatic forums. Most importantly, the weaker states’ selective accommodation and non-confrontation is not the same as subservience.

In fact, hedging is still the prevalent melody of Asian international relations. In the context of Southeast Asia-China interactions, the weaker states’ pragmatic accommodation, engagement, and deference is only half the story. Another half is an insistence on strategic diversification, a tendency to show some defiance (some choose to do so more publicly than others) despite their selective deference-giving acts, and an inclination to cultivate fallback measures aimed at keeping their options open for as long as the structural conditions allow.

Structural drivers of hedging

As an instinctive human behavior under uncertainty, hedging prevails—and persists—for as long as the prospects of power relations are unpredictable, when sources of principal patrons and risks are diffuse, ambivalent, and potentially destabilizing.² Over the past year, in the face of the highly unpredictable US policies under President Donald Trump and the contradictory Chinese strategies under President Xi Jinping (marked by growing economic inducement but continuing maritime assertiveness), the systemic uncertainties and stakes are at an historic high. For smaller and weaker states in Southeast Asia—a region where big powers’ interests and actions converge—there are more reasons to hedge.

The top-down uncertainty has led to three mutually-reinforcing trends in Asia, each of which deepens smaller states’ inclination to diversify their strategic bets: the great powers’ respective hedging acts, the secondary powers’ greater strategic activism (in part driven by growing anxiety about the longer-term uncertainty in the US commitment to Asia), and the emergence of connectivity-based development as the new chessboard of Asian geopolitical competition amidst growing maritime tensions. The symptoms of these trends abound. These include: the expanding dialogue and discord between Washington and Beijing over the DPRK and other issues after the Trump-Xi summit in April 2017; the gradually widening inter-spokes cooperation among the US allies and partners; the growing minilateralism across Asia, the sprouting infrastructure-related negotiations and constructions in Southeast Asia and other regions; and the increasing hard and soft footprints of second-tier powers in Asian affairs (e.g. Japan, India, Australia, and even France, Canada, and Britain’s growing signs of activism over the South China Sea and maritime cooperation, as well as several European powers’ involvement in Asian infrastructure financing and development).

These developments increase both the structural pressures and opportunities, over which regional countries attempt to adapt and leverage for offsetting risks (e.g. the dangers of entrapment, abandonment, antagonism, dominance, and domestic resentment) while maximizing benefits (prosperity, security, autonomy) vis-à-vis the stronger powers. ASEAN-based forums are central (albeit insufficient by themselves) to these attempts. 

Roles of concentric multilateralism (and why they matter for hedgers)

Three attributes of Asian concentric multilateralism make the ASEAN-plus forums the indispensable platforms for Southeast Asian states to perform the hedging functions. They are: binding-engagement effect, norm-power synthesis, and bilateralism-multilateralism nexus. These attributes together contribute to the gradually expanding layers of ASEAN-centric institutional arrangements throughout the post-Cold War decades (e.g. the successive inceptions of ARF and APT in the 1990s, the establishment and enlargement of the EAS since the mid-2000s, as well as the creation of ADMM+8 in 2010).

First, the institutionalized nature of the forums allows Southeast Asian states to continuously engage and bind all the key players including the extra-regional powers, thereby ensuring uninterrupted multilateral interactions and keeping the channels of communication open even during politically tense periods, either between the big powers or among the regional countries. Without these regularized platforms, the inter-state cooperation and conflict management in the Indo-Pacific region would have to be conducted mostly via unilateral acts, ad hoc diplomacy, or sporadic bilateralism. The processes and outcomes are likely to be less predictable, less productive, and less sustainable, multiplying risks and making returns-maximizing endeavors more difficult.  

Second, the inherent shortcomings of ASEAN-plus institutions as weaker-states-led forums conducted along the non-binding ASEAN Way are, paradoxically, a source of institutional strength that renders a positive synthesis between norm and power within a multilateralized environment. The fact that the forums are led by weaker actors—and not “another power(s)”—makes the forums less threatening to all participating countries. This avoids the problem of leadership struggle among the big powers, mitigates power asymmetry to smaller states, and encourages the big powers to compete to woo Southeast Asian countries economically and/or strategically. In effect, these constitute non-coercive processes that ensure institutional checks and balances among the powerful actors, and enhance the weaker states’ bargaining leverage to extract benefits from different players on a positive-sum basis, thereby cultivating space for the ASEAN-centric institutions to grow continuously when conditions are ripe (e.g. the expansion of the Chiang Mai Initiative to CMIM, the negotiation and possible conclusion of RCEP, and the future enlargement of the EAS and ADMM+8 in light of the second-tier powers’ greater strategic activism in Asia). Such processes of power-contestation in a norm-based, non-coercive environment help to deny the emergence of any dominant power through institutional means (rather than mere military balance-of-power).

Third, the above-mentioned continuous binding-engagement and institutional dominance-denial combine to strengthen the multilateralism-bilateralism nexus, making it possible for weaker actors to better complement, augment, and/or offset multilateral diplomacy with bilateral maneuvers, and vice versa. Hence, policy goals that could not be attained at multilateral forums are being pursued through separate bilateral channels, the degree and form of which depend on individual countries’ own threat perceptions and benefactor ties. Accordingly, while most ASEAN states chose not to confront China at the ASEAN meetings (the recent one and those over past years), some of them—depending on the degree of their risk-perceptions and interests over the disputed waters and regional order—have opted to actively explore, cultivate, and/or step up their respective bilateral partnerships with players who share their interests and worldviews. Although most regional states did not openly contest China’s wishful thinking of treating the South China Sea disputes as an issue “between China and Southeast Asia” and not external parties, their actions outside the forums indicate that they are developing cooperative ties and strategic options with other powers.

Indeed, the weaker states’ acquiescence at the meetings does not necessarily equate to passive acceptance of Chinese dominance. Their non-confrontational actions are driven in part by a desire to avoid the risk of antagonizing the proximate giant (apart from a calculation to benefit from Beijing’s growing economic strength). However, such acts are often adopted alongside other counteracting measures aimed at quietly mitigating other forms of risks, such as premature subservience, overdependence, and other dangers of contingency associated with uncertain big power relations. The greater the perceived dangers of uncertainty, the greater the tendency on the part of regional states to hedge by further diversifying their strategic and development links as risk-contingency measures, openly or otherwise. Hedging is the prevalent melody, albeit sung in different octaves across countries (and across time).

The heavy hedgers hedge heavier, and the light hedgers lighter?

While Southeast Asian states have all opted to hedge, some have hedged heavier than the others. This can be observed from the different degrees of their defiance (as opposed to deference) behavior vis-à-vis China, as well as the extent of their risk-contingency (alongside benefit-maximizing) measures.³

Heavy hedgers are those states who perceive greater risks from the uncertain external environment, and adopt greater measures to mitigate the perceived risks.⁴ Accordingly, they are more active in obtaining external support while strengthening their own capability to manage risks. They are also more open in displaying defiance vis-à-vis the source of risks. The greater the active risk-contingency measures and the greater the open defiant behavior, the heavier the hedging behavior.

Light hedgers, by contrast, are those states who view external risks in a less alarming way, and take a more relaxed approach in managing the risks. They prioritize options that could maximize returns in economic, diplomatic, and/or political domains. Accordingly, they are more inclined to avoid open defiance, more willing to display some measure of deference vis-à-vis powerful actors, and prefer to pursue risk-contingency measures in a more low-profile manner. The greater the deference behavior and the greater the prioritization of returns-maximizing over risk-contingency measures, the lighter the hedging behavior.          

Over the past year, the two heavy hedgers—Singapore and Vietnam—have hedged even heavier, whereas light hedgers like Malaysia, Cambodia, and Laos and to some extent Thailand, have embraced more returns-maximizing transactions while downplaying risks in interacting with the proximate giant, which is intensifying its push for Xi Jinping’s Belt and Road Initiative (BRI). The Philippines under Duterte is shifting to this direction. Indonesia, interestingly, is displaying both greater defiance (openly) and greater deference (quietly) vis-à-vis China.

Singapore’s heavier hedging behavior is manifested most vividly in two aspects: 1) its position in voicing openly and repeatedly its support of the July 2016 ruling by the Permanent Court of Arbitration, at times even mobilizing international pressure on China; and 2) the republic’s deepening defense embrace of the United States. Singapore leaders’ statements concerning these issues reflect a desire to mitigate several interrelated risks: the danger of letting “the law of the jungle” prevail over international law and rule-based order in managing the territorial disputes, any developments that might affect the safety and freedom of navigation in the Asian waters, as well as the emergence of an unrestrained, dominant hegemon that might harm smaller states’ key interests.⁵ A heavy-hedging approach is deemed necessary to mitigate those risks. 

Vietnam has similarly exhibited heavy hedging behavior vis-à-vis China, particularly since the launch of the US pivot during the Obama administration. In recent months, as Singapore quietly scales down its open defiance posture in the face of Beijing’s heightened diplomatic pressure, Hanoi has re-emerged as the most vocal critic of China’s maritime assertiveness. It has publicly showed a stronger stance at sea and at the diplomatic table to defy Beijing’s will over the South China Sea, which Hanoi insists on calling the East Sea. In late June 2017, a drilling ship on contract to a subsidiary of the Spanish firm Repsol began drilling in an oil and gas block on Vanguard Bank, about 400 km off Vietnam’s southeast coast. China responded by cutting short a visit and cancelling an annual bilateral border defense friendship exchange meeting.⁶ Despite this pressure, Hanoi reaffirmed its public opposition to Beijing by renewing an Indian oil concession in the disputed waters in early July.⁷ Although Hanoi later halted the drilling in Vanguard Bank reportedly because of Beijing’s duress, it moved to defy Beijing at a diplomatic venue. At the ASEAN meetings in early August, it was Hanoi which attempted to rally fellow ASEAN members to include statements registering regional concerns over China’s island-building and militarization activities in the South China Sea in their joint communiqué (which yielded partial success, with the communiqué criticizing the activities but without naming Beijing). Hanoi also lobbied (unsuccessfully) for swift negotiation of a substantive, legally binding COC in the disputed waters. Like Singapore, Vietnam’s heavy-hedging approach involves both non-military and military statecraft. Beyond the diplomatic domain, Vietnam has further strengthened its defense ties with the United States and other strategic partners like Japan and India. Immediately after the ASEAN ministerial meetings in early August 2017, Vietnamese Defense Minister Ngo Xuan Lich visited Washington and held discussion with his US counterpart Jim Mattis. Hanoi won the promise of a visit from a US aircraft carrier in 2018, and a pledge that “a strong defense relationship was based on common interests that included freedom of navigation in the South China Sea.”⁸

Like their fellow ASEAN members, Vietnam and Singapore both want to benefit from China’s rise. However, they are more alarmed than the light-hedgers about the risks associated with the increasingly assertive China, especially at sea. They are particularly anxious about the longer-term geostrategic ramifications of China’s continuing assertiveness, seeing its approach to the COC negotiations as a sign of the giant’s delaying strategy aimed at buying time to construct new realities in the disputed areas. Their respective open defiance in recent months reflects a shared determination to keep and leverage the momentum of the 2016 arbitration ruling to restrain Beijing’s maritime actions.    

China has countered their defiance by imposing higher costs against the two heavy hedgers. Since September 2016, there have been a series of incidents seen as Beijing’s deliberate acts to pressure, if not punish, the city-state. First it was the accusation made by the Global Times that Singapore insisted on raising the arbitration at the Non-Aligned Movement. This was followed by the seizure of Singaporean armored vehicles Terrex in November 2016, the cancelation of the 2016 Joint Council for Bilateral Cooperation (JCBC, a vice-premier-level meeting held annually from 2004-2015), and the non-invitation for Prime Minister Lee Hsien Loong at the Belt and Road Forum in Beijing in May 2017. Similar pressure was exerted against Vietnam. Apart from calling off the bilateral meeting in late June 2017 noted above, China also cancelled a scheduled meeting between Foreign Minister Wang Yi and his Vietnamese counterpart Pham Binh Minh during the ASEAN-plus meetings. China’s counter-hedging measures against Singapore and Hanoi, nevertheless, did not go too far. Singapore will be the next chair of ASEAN, in 2018. Vietnam will be the chair in 2020.

The other traditional heavy hedger, Indonesia, has similarly maintained its political hedge by publicly and persistently displaying its defiance vis-à-vis China, as a posture of dominance-denial. But unlike Vietnam and Singapore, which have sought to strengthen their military indirect-balancing position chiefly by deepening their respective bilateral defense ties with powers near and far, Indonesia under the current Jokowi government has chosen to limit its military hedge primarily to self-efforts, building its defense capability and demonstrating its resolve but without relying very heavily on its defense partnerships with external powers in its security outlook. Rather, Jakarta has opted for posturing and mobilizing its military assets to show its greater strategic resolve vis-à-vis Beijing, because—and not in spite—of its lesser relative capability, and in another part, its strategic tradition and ruling elite’s domestic political considerations. When Indonesia does forge security cooperation with outside powers (e.g. its current talks with Japan on deepening maritime cooperation in some of its outermost regions), the main content of cooperation is on capacity building. 

A recent example of Indonesia’s open defiance was its move in July 2017 to rename the northern reaches of its exclusive economic zone in the South China Sea as the North Natuna Sea. This political posturing came after two rounds of military posturing. In October 2016, Indonesian Armed Forces (Tentera Nasional Indonesia, or TNI) held their largest military drill off the resource-rich Natuna Islands, whose EEZs lie within China’s ambiguous “nine-dash line” claim in the South China Sea. In May 2017, in a matter of seven months, the Indonesian military held another massive exercise near the area. Jokowi observed both exercises, dubbing the drills a show of “TNI’s preparedness” in maintaining the territorial integrity of Indonesia.⁹ However, these military endeavors are more symbolic politically than substantive militarily. They display Jakarta’s greater will—before its domestic constituency and external audience—to safeguard Indonesian sovereign and maritime interests, but not necessarily uplift the country’s strategic contingency capability. Jokowi’s South China Sea policy appears to prioritize self-stratagem over bilateral partnerships and group maneuvers.  Aaron Connelly observes that Jokowi’s approach represents a shift in the country’s policy on the South China Sea from “an active player in efforts to find a peaceful solution to the broader disputes, to one primarily focused on protecting its own interests around the Natuna Islands while not antagonizing China.”¹⁰

Indeed, under Jokowi, Jakarta’s public defiance has been accompanied by a tendency to show quiet deference to Beijing, both at sea and at diplomatic forums. Take Jokowi’s sink-the-boat policy, which aims to combat the illegal, unreported, and unregulated (IUU) fishing in Indonesian waters by seizing and blowing up illegal foreign-flagged vessels. Since its implementation in October 2014, however, Indonesia has sunk far more boats from fellow ASEAN states than Chinese vessels. In diplomatic venues, the Jokowi government has refrained from openly pressuring China after the July 2016 arbitration award, and it has shied away from supporting Hanoi’s insistence on including stronger wording against Beijing in the joint communiqué at the recent ASEAN meetings.

Instead, immediately after displaying defiance though low-hanging military and political posturing, the Jokowi government has continued its policy of developing a more comprehensive partnership with China by deepening its economic-pragmatism and binding-engagement efforts. On August 21-22, 2017, the two countries held their sixth meeting of the vice-premier level dialogue and the third meeting of the high-level economic dialogue in Beijing. This was the first time the two meetings—created successively during the Jokowi presidency—were conducted back-to-back. Indonesia is the only Southeast Asian country to develop such a high-level institutionalized annual mechanism to discuss security, political, and economic issues with China. By comparison, the Singapore-China JCBC, albeit with a longer period of existence tracing back to 2004, focuses primarily on economic and functional cooperation (chiefly the three flagship bilateral projects in Suzhou, Tianjin, and Chongqing).

Indonesia and Singapore’s pragmatism in developing high-level policy dialogue mechanisms as part of their respective efforts to strengthen ties with China—despite their public defiance towards the neighboring giant—might appear contradictory. From their ruling elites’ perspectives, however, such a contradiction is a necessity under the prevailing internal and external conditions. The seemingly contradictory acts across domains are aimed at mitigating—and offsetting—multiple risks in different realms, prudently addressing some (the politically more pressing ones, as defined by the elite of the day) but without overly reacting to any of them. The acts are motivated principally by a necessity to balance security imperative, economic rationale, and political needs, maximizing prioritized returns whenever possible but without exposing oneself unduly to undesired risks. Policy is a matter of balancing the tradeoffs.

Hence, in the case of  Indonesia, having publicly demonstrated determination of political defiance and military posturing over Natuna (to mitigate the multiple risks of becoming subservient to an external power, suffering territorial and sovereignty loss, and facing domestic nationalist backlash), and having quietly enhanced defense and enforcement capacity through either self-strengthening or limited partnerships with selected powers like Australia and Japan (to mitigate the risk of security contingency, but without provoking external suspicion and internal resentment), the ruling elites have judged that a more prudent China policy is to concentrate on exploring and tapping the more immediate economic benefits from an increasingly powerful China, leveraging Xi’s BRI and the China-centered AIIB to promote Jokowi’s own “maritime fulcrum” agenda (to help mitigate the politically crucial risks of slow economic growth or a development bottleneck), thereby enhancing the leader’s performance-based domestic authority and electoral prospects.

In the case of Singapore, its China policy is similarly driven by a desire to optimize returns while mitigating multiple risks, in ways that serve to enhance the ruling elites’ governance ability and political relevancy at home. While the island state is still concerned about the possible risks of the rise of an unrestrained hegemon in Asia that might erode the maritime-trade-dependent city-state’s long-term existential conditions, Beijing’s heightened pressure since September 2016 has made the state’s high profile defiance over the South China Sea too costly and less sustainable. Thus, Singapore’s recent adjustment in continuing to emphasize the norm-based principles but pragmatically raising its supportive tone and direct involvement in China’s BRI makes more sense geopolitically and economically under the current scenario, especially in the face of increasing unpredictability in the US long-term Asia policy.

In the case of Vietnam, despite their ideological similarity, its China policy is always constrained by security and geopolitical apprehensions but pulled by economic gravity (Vietnam-China economic ties have continued to grow remarkably over the past decade despite their bilateral problems at sea). For the ruling communist elites, in part because of the Vietnamese people’s collective memory of the thousand-year-resistance against China, the imperative of nationalist legitimation would constantly limit their policy options toward their giant neighbor to the north. Hence, although the logic of geographical proximity and performance legitimation would have induced Vietnam to embrace China’s economic promises much more than its fellow ASEAN members, the Vietnamese-Chinese relationship is still dominated more by the maritime disputes than concrete cooperation, making it the country most suspicious of Beijing’s BRI among the ASEAN states.

Vietnam’s lukewarm response to BRI and its broader heavier-hedging approach towards China is a sharp contrast to those of several other ASEAN members. For countries like Cambodia and Laos (which do not have territorial or political problems with China) and even Malaysia (with overlapping maritime claims with China, but whose governing elites are driven by domestic political reasons to prioritize concrete returns and downplay potential risks in dealing with Beijing), their light-hedging posture has become even lighter over the past year. They have continued to demonstrate more deference than defiance vis-à-vis Beijing, as evidenced in their stance over the South China Sea at ASEAN meetings. In addition, despite some domestic concerns and opposition, they have embraced China’s BRI in an increasingly receptive manner. They see Beijing’s capital and commitment to promote connectivity-based projects around the region as an opportunity to boost their own development and sustained growth, a key pathway to enhance the respective ruling elites’ authority to rule at home. Laos launched the construction of the Laos-China rail link in December 2016. Cambodia signed 13 agreements with China during the Belt and Road Forum in May 2017, covering areas from infrastructure and production capacity to finance and maritime cooperation. Malaysia over the past few years has steadily forged deeper cooperation with China in a number of infrastructure projects in different parts of Peninsular Malaysia, Sabah, and Sarawak, ranging from railroads and industrial parks to port construction and “port alliances.” Malaysia’s fast-paced and broad-scoped engagement with China in these key areas, which makes it the most enthusiastic country in the ASEAN and East Asian region in embracing BRI, is an interesting comparison to the response of another traditional light-hedger, Thailand. Thus far, the kingdom’s actual interaction with BRI is confined chiefly to the Thailand-China high-speed rail. After a protracted two-year negotiation, Thailand finally entered into two agreements (design contract and supervision contract) with China during the recent BRICS summit on September 3-5, 2017 to kick start the first phase of the high-speed rail project.

The light hedgers’ tendency to accord greater deference to Beijing and their largely cooperative interactions with China’s BRI does not mean that they are now putting all their eggs in the Chinese basket. Nor does it imply they are accepting a Sinocentric order. In fact, there are signs indicating that the smaller states still endeavor to keep their options open, largely by quietly developing strategic and development links with other players (even knowing full well that Beijing would not be happy about them). Thus, in addition to maintaining close military partnerships with the United States and FPDA (five-power defense arrangement) partners, Malaysia has recently further strengthened its security ties with Japan. It has agreed to accept coastguard vessels and patrol aircraft from Japan. The two countries are close to signing a defense MoU in the coming months.¹¹ Even Cambodia, a weaker state widely perceived as completely bandwagoning with Beijing, has taken steps to ensure diversification of its major external links. Writing before Hun Sen’s visit to Japan in early August 2017, strategist Chheang Vannarith described Japan as “one of the core strategic partners for Cambodia” as the small state “is striving to realize its strategic diversification vision and hedging strategy.”¹² As more second tier powers near and far are showing greater interest in increasing their hard and soft footprints in Asia, in part triggered by the growing concerns over the more uncertain US commitment, such a trend of strategic diversification is likely to persist.