As the year ends, cross-Strait tensions remain remarkably low. This is so despite President Chen Shui-bian’s continuing efforts to promote his Taiwanese nationalist agenda in ways that could threaten cross-Strait stability. However, as Chen is a seriously wounded lame duck, his influence is declining and his initiatives are often just rhetorical flourishes. Despite President Chen’s restrictive approach to cross-Strait economic ties, his administration finally approved some long-pending proposals for high-tech investments in China. Beijing continues to pursue President Hu Jintao’s policy of positive outreach to Taiwan. Discreet talks between designated associations have reportedly neared agreement on arrangements for Chinese tourism to Taiwan. Progress was made toward breaking the deadlock over arms procurement, with hope that some initial appropriations may be approved by the Legislative Yuan early in the new year. If any progress is to be made on functional issues next year, it will have to occur early before the sides become engaged in preparations for the 17^th Chinese Communist Party (CCP) Congress and Taiwan’s elections.

Events on the Korean Peninsula in the latter half of 2006 exhibited, to quote the poet William Blake, a “fearful symmetry.” Just as the third quarter had been dominated by North Korea’s July 5 launch of seven missiles, including a long-range Taepodong-2, so the final three months of last year were overwhelmingly focused on the momentous and baleful test-firing by the DPRK Oct. 9 of a small nuclear device.

As with the Taepodong, so a fortiori this nuclear test sent the region, the world, and especially Pyongyang’s five interlocutors in the then-stalled Six-Party Talks – the U.S., China, South Korea, Japan, and Russia – scurrying first to condemn, unanimously, and then to try to devise appropriate countermeasures. Unanimity fast evaporated as familiar policy splits persisted. While Washington and especially a newly assertive Japan sought to punish, Seoul joined Beijing and Moscow in its reluctance to press Pyongyang too hard, for instance, in searching its vessels on the high seas.

To the surprise of some, but in fact quite typically, Kim Jong-il then deigned to return to the Six-Party Talks, which met briefly in mid-December after a hiatus of over a year. No progress was made, and at this writing no date to resume has been fixed. As a new year dawned, with Pyongyang boasting of its new nuclear status – and amid reports that it might be preparing a second nucleat test – it was hard to see a way forward on this crucial issue, despite hopes that the Six-Party Talks would reconvene ere long.

The North Korea’s Oct. 3 announcement and Oct. 9 test of a nuclear device provided the catalyst for regional diplomacy this quarter, including enhanced scrutiny and a possible reevaluation of China’s strategic relationship with North Korea. Near-term Chinese responses to North Korea’s test included public rhetorical condemnation of North Korea’s “brazen” act, a Chinese decision to back a stronger-than-expected UN Security Council resolution that imposes limited sanctions on North Korea, stepped-up speculation among Chinese and international analysts about how China might effectively utilize its economic leverage to rein in North Korea, and enhanced efforts to manage diplomatic fallout from the test by re-establishing direct dialogue with Kim Jong-il and through efforts to re-establish multilateral dialogue through Six-Party Talks.

North Korea’s nuclear test also stimulated intensive high-level Chinese meetings with South Korea (although South Korea’s diplomatic influence was further constrained by regional responses to North Korea’s test). President Roh Moo-hyun met Hu Jintao during a Beijing summit one week after North Korea’s test. Incoming UN Secretary General and former South Korean Foreign Minister Ban Ki-moon, who could not have been selected for the post without China’s support, made a special visit to Beijing in November to discuss the response to North Korea’s test prior to departing for New York to take up his new post. Despite a steady increase in Chinese-South Korean trade, investment, and tourism, the tone of China’s relations with South Korea has become more sober due to persistent sensitivities in Seoul regarding China’s Northeast Asian history project and rising anxieties about slowing growth of South Korean exports to China and rising imports of cheap Chinese industrial goods, among other issues.

The long search for a Japan-China Summit was realized Oct. 8, when Japan’s new Prime Minister Abe Shinzo arrived in Beijing and met China’s President Hu Jintao and Premier Wen Jiabao. Abe and Hu agreed to build a “strategic, reciprocal relationship” aimed at enhancing cooperation and advancing a wide range of mutual interests. Both leaders agreed to address the difficult issues of history and the East China Sea, setting up expert panels to explore ways to resolve them. On the topic of visiting Yasukuni Shrine, Abe relied on strategic ambiguity, which the Chinese leadership appeared to tolerate, if not accept, in the interest of moving relations ahead. The joint history panel met in Beijing at the end of December and the East China Sea experts meeting was scheduled for early in the new year. After several years of tough going, the road ahead appears smoother and more promising.

With Abe Shinzo becoming prime minister of Japan in late September, Japan-Korea relations entered a new period. Political relations with both North and South Korea deteriorated badly under Prime Minister Koizumi Junichiro, and both Koreas waited to see whether Abe would take a new course toward the peninsula. His initial act of visiting South Korea and China won cautious praise from the South Koreans, although the real test of his leadership and where he plans to take Japanese foreign policy remain to be revealed. With North Korea’s nuclear test, Japan became one of the most eager participants in implementing UN Security Council Resolution 1718, although this was widely expected and thus did not unduly affect relations with South Korea. North Korea’s nuclear test marks a new phase in Northeast Asian politics, and how Japan and the two Koreas manage their relations in the coming year could have a major impact on stability in the region.

By any standard, the last quarter of 2006 was extraordinary for Moscow and Beijing, the first “Russia Year” in China was winding down, trade rose nearly 20 percent to $36 billion, the Shanghai Cooperation Organization (SCO) strengthened, and their strategic interaction deepened.

The rest of the world was in a state of chaos and crisis, if not catastrophe: North Korea tested nukes; the Six-Party Talks went nowhere; the United Nations Security Council imposed sanctions on Pyongyang and Tehran; Saddam’s execution at yearend has yet to bring stability, let alone peace, to the Middle East. Meanwhile, the world’s sole superpower is seen as weakened by challenges from both outside (Iraq) and inside (midterm elections). Ironically, other major powers, including Russia and China, found themselves both unable and unwilling to manage the mess.

Two years have passed since India’s relations with East Asia have been considered in this journal (see “India-East Asia Relations 2004: A Year of Living Actively,” January 2005). In the interim, a steady if un-dramatic consolidation of ties has occurred between India and its neighbors to the east. On a parallel track, India has also gained membership or observer status in regional organizations such as the East Asia Summit (EAS) and the Shanghai Cooperation Organization (SCO). India’s immediate South Asian environment continues to demand considerable Indian attention and energies given the multiplicity of challenges there, and India’s relations with Pakistan, Bangladesh, and Nepal remain complex, but this situation has not impeded India’s relations with East Asia. India’s economic growth during the past two years has also been healthy. And though not directly related, India’s improved relations with the U.S., capped by the approval by the U.S. Congress of the U.S.-Indian nuclear cooperation agreement, also provided a positive basis to engage key Asian countries and organizations.

The last quarter ended with the international community playing “will they, or won’t they” over North Korea’s threatened missile test; they did! This quarter it’s déjà vu all over again, this time concerning a threatened nuclear weapons test. Following the UN Security Council’s surprisingly tough response to the missile tests, efforts were made to jump-start the negotiation process at this summer’s ASEAN Regional Forum (ARF) meeting. This attempt proved fruitless, however, as North Korea’s foreign minister refused to come to an “informal” six-party meeting, despite the opportunity to meet face-to-face with U.S. Secretary of State Condoleezza Rice (who, despite genuine crises in the Middle East, made the extra effort to attend this year’s ministerial meeting). Elsewhere in Asia, ASEAN foreign ministers held their 39^th annual Ministerial and numerous 10+1 post-ministerial talks (including a productive session with Secretary Rice), along with an ASEAN Plus Three meeting with their counterparts from China, Japan, and the ROK. Meanwhile, the democratic process continued to witness ups and (mostly) downs in Asia, as the military coup in Thailand reminds us of just how fragile the democratic process remains in Asia.

The key theme for the third quarter of 2006 has been the transition of power from Koizumi Junichiro to Abe Shinzo. Abe has just taken the helm, but he already had command of policy making before becoming prime minister. It was North Korea’s July test-launch of seven missiles that gave Abe a chance to display his leadership credentials, setting the stage for a continued strengthening of the U.S.-Japan alliance. Koizumi’s Aug. 15 visit to the Yasukuni Shrine raised questions and criticism in some corners in Washington about how ideological an Abe government might become, but the Koizumi visit may also have bought Abe time to decide how to handle the complex mix of history and power relations with China.

Much attention focused on economic issues this quarter with visits to China by U.S. Trade Representative Susan Schwab and U.S. Treasury Secretary Henry Paulson, which launched a new U.S.-China Strategic Economic Dialogue. Bilateral military ties also took a step forward with a visit to the U.S. by Vice Chairman of the Central Military Commission Guo Boxiong and the first ever U.S.-China joint naval exercise. Bush administration officials took China to task for continued proliferation of weapons of mass destruction (WMD) materials and technology due to lax enforcement of its export control laws.  North Korea, Iran, and Sudan dominated the security agenda.  The second round of the China-U.S. Global Issues Forum was held in Beijing.  Bilateral space cooperation was initiated with a “get acquainted” visit to China by a delegation led by NASA Administrator Michael Griffin.