Volume 6, Issue 4

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October - December 2004 · Published: Jan 2005

2004 ended on a tragic note, as the death toll from the Dec. 26 tsunami off Indonesia’s coast approached the 150,000 mark and continued to climb. The level of humanitarian assistance reached unprecedented proportion as nations put political differences aside to help the afflicted. The tsunami made many of the region’s man-made challenges fade (at least temporarily) into the background, even as some argued the relief effort provided the next Bush administration with an opportunity to improve its image in Asia after a rough first four years. In retrospect, 2004 had its ups and downs for Washington, with the derailing of Six-Party Talks and a slight cooling of Sino-U.S. relations being the biggest disappointments. On the positive side, it was a banner year for democracy in Asia; the system worked, time and time again, even if the results were not always predictable.  Multilateral cooperation was also on the rise and economic forecasts, issued before the tsunami struck, were generally positive and were not expected to be too negatively affected by the tragedy.

US - Japan

October — December 2004

Planning Ahead

The final quarter of 2004 was uneventful, at least as far as U.S.-Japan relations were concerned. I don’t dwell on this tranquility to fill space; it’s revealing of the maturity and solidity of the relationship and a welcome change from the turbulence of the 1990s. This period of calm permits the two governments to focus on future planning rather than alliance management. To their credit, they are doing just that.

Highlights of this quarter include a public discussion of the meaning of the “Far East” clause in the U.S.-Japan security treaty, a topic that fits into a broader national security debate that is taking place in Japan, Japan’s hosting of a Proliferation Security Initiative (PSI) exercise in Sagami Bay, and approval of the National Defense Program Guidelines (NDPG), which outline Japan’s future security posture. The quarter closed with the terrible earthquake in Indonesia and the tsunami it created; Prime Minister Koizumi Junichiro was quick to respond, both to deploy Japan’s formidable assets to help combat the devastation, and to demonstrate his country’s ability to play a vital regional and international role.

The quarter opened with a visit by Secretary of State Colin Powell to Beijing, as well as Seoul and Tokyo, that did little to jumpstart the stagnant Six-Party Talks or revive the dormant dialogue between Taiwan and China. Controversy erupted over statements Powell made to the media that endorsed peaceful reunification of the two sides of the Strait and declared that Taiwan does not enjoy sovereignty.  Hu Jintao and George W. Bush talked by phone in October and November, and then met on the sidelines of the 12th APEC summit in Santiago, Chile. Although cooperation predominated between Washington and Beijing, differences persisted on numerous issues, including China’s proliferation activities, U.S. refusal to return to China exonerated Uighurs held in Guantanamo Bay, the European Union arms embargo on China, Iran’s nuclear programs, China’s human rights practices, China’s currency, and the mushrooming bilateral trade deficit.

With the reelection of President George W. Bush, South Korea embarked on an unusually aggressive diplomatic campaign this quarter to prevent neo-conservative hardliners in the Bush administration from obtaining a dominant role in U.S. policymaking toward North Korea. During speeches in Los Angeles and several European capitals, President Roh Moo-hyun ruled out using military options or taking other “forceful action” against Pyongyang in resolving the nuclear issue.  Roh asserted the “leading role” of South Korea in the Six-Party Talks and rejected “regime change” as a policy approach for dealing with Pyongyang.

During talks with Roh on the sidelines of the APEC summit meeting in late November, Bush reiterated the U.S. policy of promoting a peaceful, diplomatic solution to the nuclear issue. The most notable U.S. reaction to Roh’s diplomatic initiative came from incoming National Security Adviser Stephen Hadley, who stressed the U.S. favored the “transformation” of North Korea by economic means, and not harsh measures that would bring about the collapse of the Kim Jong-il regime.

The Six-Party Talks on North Korea’s nuclear program remained in an impasse this quarter, as North Korea protested a naval exercise of the U.S.-sponsored Proliferation Security Initiative (PSI) and resisted a new negotiating round until seeing the shape of U.S. policy after the presidential election.  U.S., South Korean, and Chinese efforts to convene a six-party meeting in late December sputtered, and officials increasingly focused on the possibility of continuing the negotiations in early 2005.

After an extensive investigation, the International Atomic Energy Agency (IAEA) criticized South Korea, this quarter, for not reporting nuclear experiments in 1982 and 2000, but did not refer the matter to the United Nations Security Council.  Following the IAEA announcement, Seoul offered to explain its nuclear experiments to North Korea at the next round of Six-Party Talks. Pyongyang had previously cited the secret experiments as one reason for resisting a new round of multilateral negotiations.

The U.S. and South Korea reached agreement on a plan to delay withdrawing one-third of U.S. troops from the Korean Peninsula, as part of the global realignment of U.S. forces.  Under the agreement, the U.S. will withdraw only 5,000 troops by the end of 2005, including the 3,500 already redeployed to Iraq, and gradually pull out an additional 7,500 by 2008.

Responding to South Korea’s desire for a Free Trade Agreement (FTA) with the United States, a senior U.S. trade official expressed interest in beginning negotiations as soon as Seoul “shows it is willing to take some tough decisions to resolve outstanding trade disputes.” Among the current issues in contention between Washington and Seoul are South Korea’s “screen quota” (which limits the showing of Hollywood films), pharmaceuticals, automobiles, intellectual property rights, telecommunications, and agriculture.

In mid-December, South Korea inaugurated the opening of its Kaesong Industrial Zone, which is under construction in North Korea, 40 miles north of the demilitarized zone. Still under discussion with the United States, however, is a modification to existing U.S. export control law and policy, that would permit South Korean companies to use desk-top computers in the new industrial zone.

As autumn came many pundits began speculating about how the presidential elections would negatively influence U.S.-Russia relations.  A presidential election did indeed negatively influence U.S.-Russia relations – except that it was not the election here in the United States.  It was the election that occurred about 3,000 miles away from Washington in the Ukraine.  Many press reports in the United States and Russia billed the Ukrainian presidential election as a struggle between Moscow and Washington for the soul of that country.  Although this is far from the truth, it nevertheless put a crimp in the already strained relationship between the U.S. and Russia.

While congratulating President Bush on his reelection, Southeast Asian leaders warned that the U.S. war on terror and its Middle East policy must be altered to demonstrate that the U.S. is not attacking Islam.  Washington welcomed S.B. Yudhoyono’s election as president of Indonesia as a vibrant demonstration of democracy and applauded his cooperation in fighting terrorism.  Nonetheless, the continued U.S. arms embargo is leading Jakarta to seek military equipment from Russia, Eastern Europe, and possibly even China.  Washington has also expressed concern over southern Thai Muslim deaths at the hands of the military.  Indonesia and Malaysia are stepping up maritime security cooperation, while the United States offers technical assistance.  Meanwhile, ASEAN struggles with Burma’s abysmal human rights record and looks forward to an East Asian summit covering Northeast and Southeast Asia in 2005, a gathering that does not include the United States.

Beijing’s leaders and the supporting policy community are undoubtedly quite happy with the rhythm and trajectory of Chinese foreign policy, particularly as it relates to the nations of Southeast Asia. Indeed, from an outside perspective, it would seem that they have every reason to feel satisfied.

During the last quarter of 2004, Beijing leveraged previous gains made to use both the October Asia-Europe Meeting (ASEM) in Hanoi and the November Asia-Pacific Economic Cooperation (APEC) meeting in Santiago, Chile as platforms from which to enunciate the economic and strategic priorities now defining Chinese external policies. At these events, Beijing spoke from a global perspective.

Beijing then embedded its global stance within the context of Southeast Asian concerns at the 10th Summit Meeting of the Association of Southeast Asian Nations (ASEAN), which convened in Vientiane, Laos later in November. Also at the ASEAN meeting, Beijing held its own summit with ASEAN leaders (ASEAN Plus One) and joined Japan and the Republic of Korea in discussions with ASEAN leaders (ASEAN Plus Three). The summit provided a backdrop for the annual tripartite meetings with the leaders of Japan and the ROK.

Exhibiting what has become standard behavior, Beijing also mixed its multilateral diplomacy with bilateral efforts. These were aimed at improving and solidifying ties with Indonesia, the Philippines, Thailand, and Vietnam. With the possible exception of Vietnam, all of these activities were crowned by success.

All in all, it is arguable that, in light of the economic and political gains achieved during the quarter, China’s overall strategic position within the region has never been stronger. Increasingly, the rhythms of Southeast Asian political and economic life are being defined by Beijing as the nations of the region place a new emphasis on analyzing, assessing, and ultimately factoring potential Chinese reactions into their respective foreign policy initiatives. Although the United States and, increasingly the European Union (EU) continue to be of vital importance, the almost daily manifestations of Chinese economic power, the effort to demonstrate commitment to the “new” principle that the economic development of individual nations is inseparable from the development of the region as a whole, and the broad perception within the region that the Chinese are willing to engage actively in multilateral, cooperative policies have combined to provide Beijing with an unprecedented  measure of  influence and even clout.

China - Taiwan

October — December 2004

Campaign Fallout

During the Legislative Yuan (LY) election campaign, President Chen Shui-bian again used Taiwanese identity issues to mobilize Democratic Progressive Party (DPP) supporters and reverted to talking fervently about his mission to give his people a new constitution in his second term. Such developments only confirmed Beijing’s distrust and criticism of Chen. The Bush administration also notched up public criticism, reflecting Washington’s growing frustration with and lack of trust in Chen.  In October, Chen made some specific proposals on cross-Strait dialogue and charter flights.  Beijing dismissed Chen’s dialogue proposal as insincere because it did not directly address the “one China” issue but deferred responding on the question of charter flights. The LY election in December unexpectedly renewed the pan-blue majority in the Legislative Yuan.  Beijing and Washington breathed sighs of relief.  Nevertheless, a week after the election, Beijing announced it would proceed to adopt an “Anti-Secession Law” in the Spring. While some believe 2005 will present a window of opportunity for progress on cross-Strait relations, it remains to be seen whether Beijing and Taipei will choose to adopt flexible approaches on the “three links,” the one area were some progress may be possible.

In a cliché beloved of British soccer commentators, inter-Korean relations in 2004 were a game of two halves. Until mid-year all seemed to be going well, including unprecedented military talks to ease border tensions. On land, symbolically, propaganda loudspeakers fell silent along the Demilitarized Zone (DMZ), while at sea, substantively, direct radio contact between the KPA and ROK navies began, so as to avoid clashes. Meanwhile the usual channels of Seoul-Pyongyang dialogue at various levels met routinely, appearing to make progress on a range of substantive issues, such as cross-border road and rail links.

But July saw a U-turn. Angry on several fronts (more on motives below), North Korea pulled out of most of its hitherto regular talks with the South. By early 2005 it had not relented, and showed no sign of doing so. Of course, Seoul was not the only one to feel Pyongyang’s wrath. On a wider canvas, the North also notoriously refused to return to Six-Party Talks (both Koreas, the U.S., China, Japan, and Russia) in Beijing on its nuclear issue, so a fourth round, due by September, failed to take place. Kim Jong-il was widely assumed to be awaiting the U.S. presidential election – and praying for Kerry. Yet on this front too, as of early January Pyongyang is still stalling, saying it now wishes to see the character and policy contours of the second Bush administration. For good measure, as reported elsewhere in this issue of Comparative Connections, North Korea is also embroiled in a row with Japan – over its continued failure to come fully clean on the fate of most of the young Japanese whom it admits to kidnapping in the 1970s and 1980s.

In that sense, the current stasis in inter-Korean ties partly reflects the fact that right now North Korea is no mood to talk seriously to anyone about anything. But there are also specific aspects to this always distinctive relationship between two halves of a divided land. Rather than discuss non-events – such as rumors throughout the quarter of plans for a second inter-Korean summit – it seems more sensible this time to focus on two specific matters. One is the refugee issue: a salutary reminder that there is more to inter-Korean ties than merely what the two governments cook up between them, or fail to. The other is the one field of cooperation that Pyongyang is still keen on, doubtless because there is money in it. The first goods made by an ROK firm in the Kaesong Industrial Zone (KIZ) – saucepans, as it happens – hit the stores in Seoul just in time for Christmas, and sold out in two days. So maybe an otherwise bleak New Year is not wholly without hope after all.

China - Korea

October — December 2004

Waiting Game

The second half of the year brought no opportunity for a fourth round of Six-Party Talks.  The focal point for Chinese diplomatic efforts this quarter was the visit of North Korea’s number two, President Kim Yong-nam, who met with all of China’s senior leaders – with apparently inconclusive results.  ROK President Roh Moo-hyun also met with PRC President Hu Jintao in Santiago in November and with Premier Wen Jiabao in Ventiane in December to press the case for continued six-party diplomacy with North Korea, but to no avail in the absence of cooperation from the DPRK.

The refugee issue has taken on a higher profile as outside parties increasingly single out China for failing to recognize and provide humanitarian treatment to North Korean refugees crossing into China.  Tensions surrounding the North Korean refugee issue have escalated with the passage in the U.S. Congress of the North Korean Human Rights Act, a near doubling of refugee arrivals in South Korea to almost 2,000 in 2004, and more aggressive Chinese efforts to intimidate and deter third-party brokers who assist North Korean refugee efforts, including the embassies that have provided safe passage to North Korean refugees.  The trade relationship between China and South Korea is becoming increasingly complex, as China poses greater competition for South Korean products in third-country markets and was one of nine parties pressing to open South Korea’s rice market as required by WTO regulations.  Nonetheless, South Korean exports to China remain the primary reason the South Korean economy did not experience a recession in the second half of 2004.

The dispute over exploration of natural gas fields in the East China Sea continued to simmer.  China proposed working-level discussions and the two sides met in Beijing.  The results left Japanese officials wondering why they bothered to attend.   Shortly thereafter, Japanese patrol aircraft tracked a Chinese nuclear submarine traveling submerged through Japanese territorial waters.  Beijing’s apology paved the way for summit-level talks between Japanese Prime Minister Koizumi Junichiro and China’s President Hu Jintao and later Premier Wen Jiabao.  The talks only highlighted issues of Yasukuni Shrine and history in the bilateral relationship, underscoring national sensitivities in both countries.  In Japan, reaction centered on graduating China from Japan’s ODA program; this was not appreciated in Beijing.  In the meantime, Tokyo issued Japan’s new National Defense Program Guidelines, which highlighted China’s military modernization and increasing naval activities, concerns which Beijing found groundless.  Finally, Japan approved a visa for Taiwan’s former President Lee Teng-hui, in Beijing’s eyes a “splittist” and advocate of Taiwanese independence.

Also during the quarter, commercial and economic relations continued to expand.  The phenomenon of bifurcated political and economic relations with China is now characterized in Japan as “cold politics; hot economics.” An end of year Asahi Shimbun editorial asked: “can this be resolved?”

There have been concerns about increased friction between South Korea and Japan over history, North Korea policy, South Korea’s nuclear experiments, Japan’s attempt to secure a permanent seat on the UN Security Council, and Japan’s new defense guidelines, among other issues. Yet the Japan-South Korean relationship continues to mature, with President Roh Moo-hyun and Prime Minister Koizumi Junichiro having a seemingly better working relationship than any previous pair of leaders, and a number of the current issues are being handled as a normal aspect of a working relationship, not as special matters. On matters other than North Korea, relations between South Korea and Japan are improving across a range of political and economic issues. Improved Japan-Korea ties may ultimately be more significant in the long run than the supposedly pressing issues of the day. In the past, South Korean leaders, and to a lesser extent, Japanese leaders, have understandably focused almost exclusively on their bilateral relations with the United States. Yet, as the region becomes more integrated, and the states become more stable, how the states interact with each other will be of increasing importance.

In this context, Japan’s small steps toward a new, more muscular foreign policy were less destabilizing than they might have been a decade ago, and South Korea does not seem overly concerned, although North Korea predictably overreacted. In the past three months, Japan continued pursuit of a permanent seat on the UN, revised its defense guidelines, and began to press for more hardline actions toward North Korea. In bilateral relations, Japan and South Korea engaged in another summit, furthered economic exchanges, and saw cultural relations evolve, if not exactly improve.  South Korea and Japan also cooperated on economic issues with the rest of Asia. When it comes to North Korea, the two countries may soon be following different policies, but this has not occurred yet.

More than 300 years of territorial/border disputes between Russia and China came to an end in the fourth quarter with the signing of the Supplementary Agreement on the Eastern Section of the China-Russia Boundary Line of their 4,300-kilometer border. At year’s end, Taiwan’s Russia-born former first lady (1978-88) Faina (Epatcheva Vakhreva) Chiang died at the age of 88, ending the final Russian/Soviet touch on China’s turbulent 20th century.

Life after “history,” however, continued with both strategic cooperation and competition throughout their bilateral relationship. The quarter saw Russian President Putin’s third official visit to China, which was accompanied by record bilateral trade ($20 billion in 2004) and fresh momentum in military-military relations (a joint military exercise in 2005 and upgrading Russian military transactions to China). But what really ended on the last day of the year was Russia’s indecision regarding an oil pipeline to China. On Dec. 31, Russia’s prime minister approved a draft resolution submitted by the Russian Industry and Energy Ministry to build an oil pipeline from Taishet in East Siberia to the Perevoznaya Bay in the Pacific Primorsk region, without a word about China nor a branch to Daching.

Daily Digest

The Diplomat: How Vietnam Benefits From US Strategy in the South China Sea

While Vietnam can benefit from US freedom of navigation operations in the South China Sea, its current strategy of maintaining an independent security posture also limits bilateral military cooperation with the US.

The Diplomat: Can the New China-India Thaw Last?

An explanation of the delicate balance in the India-China relationship.

Asia Times: What sanctions on Russia and China really mean

Are US sanction regimes on Chinese and Russian companies really about trying to maintain technological advantage and an unfair trade advantage for American companies?

The Diplomat: What Concerns Japan in the Pacific?

Japan’s engagement with the Pacific Island states is being driven by shared interests in rule of law and economic connectivity.

Asia Times: Japan offers ‘quality’ alternative to China’s BRI

How Japan’s Partnership for Quality Infrastructure is providing a meaningful alternative to China’s Belt and Road Initiative in Southeast Asia.

The Christian Science Monitor: Signs mount of a fundamental shift in US-China ties

Recognizing the growing number of signs that point to a fundamental shift in the US-China relationship.

The Strategist – The US strategic shift: big news for Australia, but are we prepared?

Understanding the implications for Australia if the US continues its efforts to disentangle its economy from China’s.

The Diplomat: Indonesia-Australia Defense Ties in Focus With Ministerial Meeting

Australia and Indonesia see new opportunities for increased security cooperation.

The Diplomat: What’s in China’s Military Exercise with Malaysia and Thailand?

More signs of increased Chinese military engagement with Southeast Asian countries.

The Diplomat: What Does Mattis’ Visit Reveal About US-Vietnam Defense Ties Under Trump?

Some context for Secretary Mattis’ visit to Vietnam.