The US profile in Asia appears to be on the rise following Secretary of State Clinton’s highly publicized presentation at the ASEAN Regional Forum (ARF) ministerial in Hanoi in July and President Obama’s New York meeting with ASEAN leaders at quarter’s end. Meanwhile Beijing’s image took a few hits as it tried to bully Japan (successfully), the US and ROK (unsuccessfully), and ASEAN (TBD) on maritime-related issues, while seemingly having nothing but kind thoughts and gestures for the DPRK, essentially serving as its defense attorney during UN Security Council deliberations regarding the attack on the Cheonan. Prospects for a resumption of Six-Party Talks remained low, despite a professed willingness by Pyongyang to return to the table (albeit as a recognized nuclear weapon state).  New faces appeared in the North’s general officer ranks but the (seemingly nonexistent) prospects for Korean Peninsula denuclearization remained unchanged.

Meanwhile, democracy marches on, one step forward in Japan and two backward in Burma/Myanmar, while Washington seeks greater economic integration in Asia, not just through traditional vehicles such as the Asia Pacific Economic Cooperation (APEC) “gathering of economies,” but through the “gold standard” Trans-Pacific Partnership (TPP). The US profile is expected to grow further next quarter with President Obama and Secretary Clinton both scheduled for high-profile visits to the region. We’ll see what Beijing does to improve its image; we expect little progress when it comes to Pyongyang.

The ruling Democratic Party of Japan (DPJ) suffered an embarrassing defeat in the July Upper House election less than a year after assuming power.  Prime Minister Kan Naoto subsequently took a beating in the polls but managed to withstand a challenge from former DPJ Secretary General Ozawa Ichiro in a party presidential election marked by heated debate over economic policy.  Political turmoil did not preclude active diplomacy on the part of Kan’s government, nor coordination between Washington and Tokyo on a range of bilateral, regional, and global issues including the relocation of Marine Corps Air Station (MCAS) Futenma on Okinawa; a collision between a Chinese fishing boat and Japanese Coast Guard vessels near the Senkaku Islands; and sanctions on Iran to condemn its nuclear activities.  The quarter came to a close with President Obama and Prime Minister Kan taking stock of a rapidly developing bilateral agenda during a brief yet productive meeting on the margins of the United Nations General Assembly (UNGA) in New York, setting the stage for the president’s trip to Japan in November.

Diplomatic confrontations over the Yellow Sea and the South China Sea were the source of new bilateral tensions this quarter.  Beijing vigorously objected to the dispatch of the aircraft carrier USS George Washington to waters near where the South Korean corvette Cheonan sunk after being attacked in March, even before Washington had made a decision to deploy it.  Worried about Chinese diplomatic posturing and destabilizing activities in the South China Sea, Secretary of State Clinton delivered a clear statement of US interests at the ASEAN Regional Forum meeting in Hanoi that irritated Beijing.  With the US mid-term elections approaching, US frustration mounted over China’s unwillingness to allow its currency to appreciate against the dollar at a faster pace. The House of Representatives passed legislation that would allow the US to impose import duties on countries that have undervalued currencies. After more than five months of delay, the Pentagon submitted to Congress its annual report assessing Chinese military capabilities.  Finally, two US presidential envoys traveled to Beijing to smooth over relations and President Obama met Premier Wen Jiabao on the margins on the UN General Assembly.

The sinking of the Cheonan remained the predominant issue in the US-ROK relationship as both countries spent the quarter coordinating and undertaking punitive measures against North Korea for its alleged attack on the ship.  The UN Security Council adopted a Presidential Statement condemning the attack but did not directly blame North Korea.  The US and the ROK held their first “Two-plus-Two” meeting in Seoul where Secretary of State Hillary Clinton and Secretary of Defense Robert Gates met Foreign Minster Yu Myung-hwan and Minister of National Defense Kim Tae-young. While countries reopened their dialogue channels in the hope of resuming the Six-Party Talks, there remain many challenges and uncertainties that make the future direction of the Talks unclear.  Several issues remain to be resolved on the KORUS FTA while negotiators are expected to hold a ministerial meeting soon to strike a deal.  The Chicago Council on Global Affairs released a report on US attitudes toward South Korea that highlighted public support for trade agreements, including the KORUS FTA, is lukewarm.  Among those who viewed fair trade as critical for US interests, support for KORUS was much stronger.

The United States significantly raised its political profile in Southeast Asia this quarter, inserting itself in South China Sea disputes, announcing its plan to join the East Asia Summit, convening the second US-ASEAN summit, and creating an ambitious agenda for participation in a variety of Southeast Asia programs.  On the South China Sea issue, Secretary of State Clinton proposed multilateral discussions under ASEAN auspices – an idea that did not appear, however, in the ASEAN-US summit communiqué in late September.  The US inaugurated naval exercises with Vietnam in early August, coinciding with the visit of the aircraft carrier USS George Washington.  Washington is considering new financial sanctions against Burma, recognizing that more engagement with the military regime has not yielded the expected results. The presence of US military trainers in the southern Philippines continues to rile leftist and nationalist legislators.  As a sign of growing warmth in US-Malaysian relations, Kuala Lumpur is sending a small contingent of medical personnel to Afghanistan.  The Indonesian-US Comprehensive Partnership was launched in Washington in September, signifying Jakarta’s special importance to the US.  Washington also restored military-to-military relations with Kopassus, the Indonesian Special Forces unit that has been accused of egregious human rights violations in Timor, Papua, and Aceh.

China was on the defensive this quarter, reacting to interventions by the US, including a notable statement by Secretary of State Hillary Clinton at the annual ASEAN Regional Forum (ARF) meeting in Hanoi regarding the South China Sea. The ARF meeting also saw a new US commitment, backed by ASEAN, to participate actively in the East Asian Summit, raising the profile of that regional body over China’s preference for Asian-only regional groups. Further complicating China’s regional calculus were prominent advances in US relations with Vietnam shown during celebrations of a US-Vietnam anniversary in August that involved exercises with a US aircraft carrier deployed near disputed regions of the South China Sea.  Chinese officials and commentary in Chinese media at first countered that the US actions were self-serving and destabilizing. Those attacks meshed with public Chinese attacks on concurrent US military exercises with South Korean forces in reaction to North Korea’s sinking of a South Korean warship. Later, some Chinese commentary dissented from the harsh public approach, and by the end of the quarter, the criticism of the US and others over the South China Sea disputes and other issues subsided. For the time being at least, it appeared that China will remain focused on publicly stressing trade and reassuring diplomacy in Southeast Asia, while defending its territorial claims and continuing to build military capabilities.

This has been a quiet but constructive quarter in cross-Strait relations.  Taipei and Beijing were focused on ratifying and beginning implementation of the Economic Cooperation Framework Agreement (ECFA). With Beijing’s agreement, Singapore and Taipei announced that they would consider negotiating a WTO-consistent economic cooperation agreement. This important flexibility by Beijing allows President Ma to show that ECFA has opened the door at least slightly to Taiwan’s involvement in regional trade liberalization.  Despite Washington’s approval of small commercial arms sales, Beijing indicated a willingness to resume military exchanges with Washington. Nevertheless, arms sales to Taiwan remain a threat to US-China relations.

The past quarter in inter-Korean relations might be called the morning after the night before. Tensions over the sunken ROK corvette Cheonan by no means disappeared; the less so since North Korea still denied responsibility, while the South smarted at its failure to convince key powers – China and Russia above all – of Pyongyang’s culpability. The Cheonan incident remains a crime and an obstacle.  Yet hopeful signs are emerging that both sides realize they will have to get past this eventually and that they might as well start now. Among various small initiatives, including flood aid, the quarter ended on a hopeful note with an agreement to hold a fresh round of reunions of separated families in late October.

China reaffirmed its traditional friendship with a revamped leadership in Pyongyang that emerged from the historic Workers’ Party of Korea (WPK) conference that re-elected Kim Jong-il as party and state leader.  Kim Jong-il visited Northeast China, holding his second summit with President Hu Jintao this year. Immediately after Pyongyang’s party conference, Secretary of the WPK Central Committee Choe Tae-bok led a senior party delegation to Beijing to brief President Hu and other officials. Meanwhile, China-ROK relations remain strained following the March 26 Cheonan incident, marking the lowest point in bilateral relations since diplomatic normalization in 1992.  The third China-ROK high-level strategic dialogue was held in Beijing. China and South Korea also held their first preliminary round of free trade agreement talks. Beijing promoted resumption of the Six-Party Talks, sending Special Representative for Korean Peninsula Affairs Wu Dawei to meet counterparts in Pyongyang and Seoul.

The quarter started well. The Kan government, emphasizing efforts to strengthen economic ties with China, appointed Niwa Uchiro, former president of the trading giant Itochu Corp., as Japan’s new ambassador to China. Talks to implement the June 2008 agreement on joint development of the East China Sea began in Tokyo in late July.  Prime Minister Kan and all Cabinet members refrained from visiting Yasukuni Shrine on Aug. 15.  In early September, Japan began the destruction of chemical weapons left behind in China by the Imperial Army at the end of the war. The quarter, however, ended in controversy.  Sparked by the Sept. 7 incident in which a Chinese fishing boat operating near the Senkaku Islands collided with two Japanese Coast Guard ships, relations quickly spiraled downward.  The Japanese Coast Guard detained the captain and crew setting off a diplomatic row that led to the Japanese ambassador being called in for a midnight demarche as well as the personal involvement of Premier Wen Jiabao before Japanese prosecutors released the ship’s captain on Sept. 24.  China’s call for compensation and an apology went unanswered as of the end of the quarter.

The two highlights in Japan-Korea relations during this quarter are Prime Minister Kan Naoto’s apology to South Korea for Japan’s colonial rule, and the appointment of Kim Jong-un, as vice chairman of the Workers’ Party Central Military Commission and military general in the Korean People’s Army. While these developments hold the promise to potentially change the security landscape of Northeast Asia, Prime Minister Kan’s first full quarter in office reveals that Japan’s North Korea policy is likely to continue along the lines of previous Japanese administrations, at least for now: an unfavorable attitude coupled with hostility and inaction. Pyongyang’s attitude toward Tokyo, too, changed little and remained more or less predictable – it denounced Prime Minister Kan for apologizing only to South Korea, criticized Japan for “shamelessly” wanting a permanent seat at the UN Security Council, and demanded compensation for all of Japan’s past wrongdoings. Japan-South Korea relations appear to be moving closer, although whether Kan’s apology will truly change anything remains to be seen.

For much of the third quarter, Russia and China were besieged by disasters of various kinds. Leaders sent each other messages to express their sympathy and support while relief materials were delivered.  Bilateral relations began to gather momentum at the end of August when Prime Minister Putin attended the opening of the Russian-Chinese oil pipeline. In September, the Shanghai Cooperation Organization kicked off its Peace Mission 2010 exercise in Kazakhstan. This was followed by President Medvedev’s state visit to China in the name of “comprehensively deepening Russian-Chinese strategic partnership relations.” All of this occurred against the backdrop of heightened tension on the Korean Peninsula after the sinking of the South Korea Navy ship in March and the rapid deterioration of China-Japan relations after Japan’s seizure of a Chinese fishing boat in early September.

In 2010, Australia saw a first-term-elected prime minister deposed by his own party and then a federal election that produced a hung Parliament. The Labor Parliamentary caucus removal of Prime Minister Kevin Rudd on June 24 ushered in Australia’s first female prime minister, Julia Gillard, who waited only three weeks after replacing Rudd before calling a national election, seeking her own mandate from the voters. Instead, the election on Aug. 21 returned the first hung Parliament since World War II. The new Labor government will live on the permanent brink of defeat – fearing an MP’s heart attack, a defection, a by-election.  Gillard has won the right to negotiate for her policy preferences, not to impose them. Running a minority government will demand an almost unremitting domestic focus from Gillard. She has promised a more consultative, inclusive style of politics. The Australian Financial Review summed up the difference between the two leaders with this quote from a senior ministerial adviser: “Kevin governed from a two-man tent. Julia will need a marquee.” Style changes between the Rudd and Gillard governments will be marked. But policy continuity will often be the norm, especially in foreign policy.

Gillard fulfilled her promise to give Rudd a senior post in her government by appointing him foreign minister. The challenge for Rudd will be whether he can put aside his deep personal hurt – and the political habits that brought him down – to serve the woman who deposed him. To put the Canberra question in a Washington frame: Can Kevin do a Hillary? Can Rudd be a loyal and effective foreign minister following the example set by Hillary Clinton as secretary of State?