As the Year of the Horse comes galloping in, U.S.-Asia relations, when compared to the rocky start experienced in the opening months of the Bush administration, now appear to be on the upswing throughout the region. The one exception is on the Korean Peninsula, where Pyongyang’s refusal to take “yes” for an answer has resulted in a steady decline in U.S.-DPRK relations while adding some level of stress to U.S.-ROK relations as well.   Despite this post 9-11 upswing, some problems remain and may grow, especially if (as seems inevitable) Washington follows through with its Dec. announcement to formally withdraw from the Anti-Ballistic Missile (ABM) Treaty in six months.  This, plus the Bush administration’s current tendency to view all events through an anti-terrorism lens, has left many in Asia wondering about America’s overall national security strategy and President George W. Bush’s vision for Asia, even though the new U.S. president received generally good reviews for his performance at the annual APEC Leaders’ Meeting in Shanghai in October.  The White House’s effort to closely associate itself with the APEC Shanghai Accord’s blueprint for future regional economic cooperation demonstrates the Bush administration’s interest in breathing new life into this important Asia-Pacific multilateral forum.

He did it. Japanese Prime Minister Koizumi Junichiro confounded the skeptics – this writer among them – and delivered on an unprecedented package of measures to support the U.S.-led campaign against terrorism. The results are a victory for supporters of the U.S.-Japan alliance and a validation of their strategy to nudge Japan toward a greater role in regional security. And not only did the Japanese government act in a timely manner, but shrewd diplomacy by the prime minister disarmed critics within the region. This outcome is yet more remarkable given the confusion in Japan’s Ministry of Foreign Affairs, courtesy of the on-going war between Foreign Minister Tanaka Makiko and the bureaucrats under her.

If recent events are reminiscent of the halcyon days of the alliance, the memories may be more bittersweet than some prefer. As in the good old days, the strengthening of security ties poses a sharp contrast to those on the economic front. Trade frictions, in that old favorite, the steel sector, are one irritant. The real problem is the continuing deterioration of the Japanese economy. Tokyo’s failure to take forceful action in dealing with the troubled financial sector has set off alarms in Washington. Officials in both capitals recognize that any solution depends on political courage in Tokyo. Japan’s heartening response to Sept. 11 notwithstanding, few expect similar action on the economic front.

The re-ordering of U.S. security priorities in the wake of the Sept. 11 terrorist attacks provided an opportunity for Washington and Beijing to work together toward a common goal.  Cooperation against terrorism and the successful first-ever meeting of U.S. President George W. Bush and PRC President Jiang Zemin at the Asia Pacific Economic Council (APEC) Leaders’ Meeting in Shanghai contributed to an improvement in the overall atmosphere of the Sino-U.S. relationship in the final quarter of 2001.  At the same time, however, friction between the two countries persisted on issues of long-standing controversy, including human rights, nonproliferation, missile defense, and Taiwan.  After 15 years of negotiations, China finally joined the World Trade Organization (WTO), bringing a market of 1.3 billion people into the global trading system.

The war against terrorism in Afghanistan largely shaped the development of U.S.-Korean relations this quarter.  Although the actual conflict took place far away, new U.S. military and diplomatic needs, South Korea’s alliance responsibilities, Bush administration rhetoric, and North Korea’s reactions complicated and altered security relations on the Peninsula.

As was the case at the end of the preceding quarter, the global war against terrorism and the war against the Taliban government in Afghanistan continued to galvanize the U.S.-Russia relationship and to give it a newfound purpose.  The summit meetings between Presidents Bush and Putin in Shanghai in October and in the United States in November went off very well.  Differences over issues like the Anti-Ballistic Missile Treaty (ABM) and missile cuts were smoothed over as a united front in the war against terrorism was presented.

Nevertheless, the United States vowed to push forward with the development of a  missile defense (MD) system, contrary to what many assumed would be a shift in U.S. strategy after the terrorist attacks on Sept. 11.  U.S. forces were able to utilize bases and assets in two Central Asian countries with Russian approval, also contrary to what many assumed would be the case in mid-September. Within the U.S., the nation focused almost exclusively on the war in Afghanistan.

But in Russia, the war brought up a wider debate that has simmered in Russia for centuries: whether to join with the West or to define Russia’s own unique path.  President Vladimir Putin seems to prefer the former, but voices of opposition are beginning to question the wisdom of such a choice.  Can Putin continue to dominate the Russian political world or will his decision to go with the West divide the Russian leadership?  These questions are much more important to the people of Russia than the war against terrorism and the debates over arms control.  Ultimately, they are important questions for the United States, as well.

Southeast Asian states displayed a range of reactions to U.S. President George Bush’s call for international support for the war on terrorism. Enthusiastic endorsement slower and more tentative.  Both Indonesia and Malaysia, while deploring the Sept. 11 attacks on the United States, tempered their sympathy with warnings that the U.S. not target Islam generally. Most of these reactions can be explained by the characterized the Philippine response as well as more quiet backing from Singapore. Thailand’s support was domestic politics of each state and the Muslim proportions of their respective populations.

Confronted with rapid and largely uncomfortable shifts in the security environment around China’s entire perimeter – the war in Afghanistan, U.S. military forces in Central Asia, new levels of military cooperation between the United States and both Pakistan and India, Moscow’s turn toward Washington, and Japan’s removal of some restrictions on use of its military forces – Beijing must regard Southeast Asia as the one arena in which it made some gains during the quarter.

China intensified efforts to strengthen economic and political relations with all its Southeast Asian neighbors. With high-level attention, and approaches tailored to the sensitivities of individual countries, it consolidated a close relationship with Myanmar, laid the groundwork for improved cooperation with Indonesia and the Philippines, and set much of the agenda for the ASEAN Plus Three summit in Brunei in November, where it won approval in principle for an ASEAN-China free trade area (FTA).  With its customary practice of establishing principles first in bilateral relations, China signed some 23 formal agreements with Southeast Asian governments during the quarter.

Many of the goals of China’s forward-leaning regional diplomacy are not inconsistent with U.S. interests, including increased intra-regional trade and investment, stability in energy relationships, and developing industrial infrastructure. Concerns center on whether growing interdependency in such areas binds China in an open, constructive regional system – as the Southeast Asians hope – or provides increased political leverage that Beijing can use to try to dominate its neighbors and weaken the U.S. role in Asia.

Taiwan’s Dec. 1 legislative elections have brought dramatic changes in Taiwan politics, but their implications for cross-Strait relations are not yet clear.   Both China and Taiwan have said the elections do not change their basic policies, but whether a coalition will be built with Taiwan President Chen Shui-bian, who may participate in it, and Beijing’s reassessment of Chen’s longer term prospects remain uncertain. Meanwhile, despite the absence of institutional dialogue, Taipei has gradually implemented a range of measures to expand cross-Strait economic relations, and both Taipei and Beijing have been admitted to the World Trade Organization (WTO). Economic interdependence’s potential to shape cross-Strait relations is symbolized by the pending, but not yet approved, joint venture between Chinese Petroleum Corporation and China National Offshore Oil Corporation for exploratory drilling in the Taiwan Strait.

A frustrating quarter for inter-Korean relations was an apt, if sad, close to a disappointing year.  Hopes raised by the resumption of official talks in September, with Pyongyang producing a long and seemingly serious list of concrete agenda items, were dashed when the North refused to come to Seoul for future meetings – citing security concerns post Sept. 11.  The South finally accepted North Korea’s Geumgangsan resort as a venue, but talks in November broke up with no agreement: the first time this has happened in the latest era of North-South relations.  Hence there was no progress either on such specifics as trans-DMZ rail/road links, the Kaesong industrial zone, and family reunions.  There was even a brief exchange of gunfire at the DMZ, though this may have been accidental.

Still, the year ended with two glimmers of hope.  With minimal publicity, a Northern team spent a fortnight visiting Southern nuclear facilities under Korean Peninsula Energy Development Organization (KEDO) auspices, and Seoul announced the lifting of its state of alert, so removing Pyongyang’s pretext for not talking.  There is thus a fair chance that official dialogue will resume early in 2002. Whether it will get anywhere is another matter.  With ROK President Kim Dae-jung a lame duck in his final year in office, and the U.S. war on terrorism adding new issues like bioweapons to the big pile of bones that Washington may choose to pick with Pyongyang, North Korean leader Kim Jong-il has little incentive to yield much to Seoul, except perhaps to get a better deal than is likely from the next occupant of the Blue House, whoever that may be.  But as with the missile deal that it missed with former U.S. President Bill Clinton, North Korea might now have left it too late.

The fourth quarter always brings a heavy diplomatic schedule of high-level bilateral Sino-Korean exchanges in conjunction with the annual Asia Pacific Economic Cooperation (APEC) and ASEAN Plus Three meetings. These exchanges were overshadowed by an event that did not even occur in Asia: China’s official entry into the World Trade Organization (WTO) in Doha, Qatar, after 15 years of negotiations.  Widespread expectations are that China’s WTO entry will revolutionize China’s economic relations with the world and will powerfully transform Sino-Korean trade and investment relations, although not always in positive ways.

More remarkable testimony to the significance of that event for the Sino-ROK relationship, however, is that shocking consular developments between China and the ROK – including China’s execution of an ROK citizen on drug smuggling charges without adequate representation provided by the ROK government; the discovery of over 60 illegal Chinese stowaways, including 25 dead, in a failed attempt at illegal entry into South Korea via a local fishing boat; and an ROK Constitutional Court ruling overturning a Korean law that selectively provided special rights to overseas Koreans that the Chinese government views as threatening to state sovereignty – hardly made ripples given the tidal wave of expectations for Sino-ROK economic relations.  In addition, South Korean naval ships made their first port call to the Chinese mainland, and Defense Minister Kim Dong-shin met with his counterpart in Beijing during a week-long visit to expand Sino-ROK military exchanges in December.

Sino-DPRK trade volumes also grew exponentially, almost doubling during the first half of 2001, but that relationship remains insignificant in comparison with the over $31 billion Sino-ROK trade volume in 2001, which allowed China to surpass Japan as South Korea’s second largest trade partner.  China also surpassed the United States as the largest site of foreign direct investment from South Korea in 2001. The true significance of recent crises in Sino-ROK consular relations is that they were so quickly resolved, with virtually no political impact on the burgeoning Sino-South Korean economic relationship.