Hopes of progress in Six-Party Talks negotiations evident in the closing days of the previous quarter were quickly dashed as anticipated disagreements over verification of North Korea’s nuclear declaration created a stalemate still in evidence at quarter’s end. The only movement was backward, as “action for action” was replaced by inaction and worse.  Last year, Secretary of State Condoleezza Rice made news by not showing up at the annual ASEAN Regional Forum ministerial. This year she went and hardly anyone noticed. The democratic process made for interesting watching this quarter, not only in Thailand and Malaysia, but in East Asia’s most established democracy, as Japan saw its third leader in the 24 months since Prime Minister Koizumi departed the scene. The once presumably left for dead U.S.-India nuclear deal was reincarnated by the Indian Parliament this quarter with the U.S. Congress following suit at quarter’s end and President Bush’s signature in early October.  Finally, the U.S. sneezed this quarter and the rest of the world did catch cold, even as Wall Street struggles with a serious bout of pneumonia. Economic policy also dominated the “foreign policy debate” between Senators Obama and McCain, with no questions and only sparse references to Asia throughout.

The quarter began with President Bush and Prime Minister Fukuda meeting on the sidelines of the G8 summit in Hokkaido, but their bilateral agenda and Fukuda’s own premiership were eclipsed by dramatic political and economic developments in both countries.  Fukuda resigned suddenly on Sept. 1 having failed to convince the public he could strengthen the economy and move important legislation through a divided legislature.  Aso Taro won the Liberal Democratic Party (LDP) presidential race in a landslide and began his tenure as prime minister stressing economic stimulus measures, the importance of the U.S.-Japan alliance, and Japan’s role as a global leader, but with uncertainty about whether his government would even survive to the end of the year.  Ozawa Ichiro was re-elected president of the opposition Democratic Party of Japan (DPJ) and touted a populist manifesto to woo the public in anticipation of a Lower House election this fall.  Meanwhile, the U.S. government struggled to contain a financial crisis that rattled world markets, prompting Japanese banks to take major stakes in ailing U.S. businesses.  A successful ballistic missile defense test in September augured well for sustained bilateral defense cooperation, assuming defense budgets survive the current financial turmoil.  And North Korea’s move toward reprocessing plutonium at Yongbyon threatened to erase the diplomatic progress made in the Six-Party Talks at a time when leaders in Washington and Tokyo already had plenty of diplomatic challenges and tough domestic elections to manage.

The Beijing Olympic Games were conducted without a hitch to the great relief of the Chinese leadership and the 1.3 billion Chinese people who had long anticipated the momentous event.  Abroad, the reviews were mixed.  Most agreed that the opening ceremony was spectacular and that China had successfully ensured the safety of the athletic competitions, but many argued that these goals had been achieved at a significant cost that highlighted the undemocratic nature of China’s regime. President Bush’s attendance further consolidated an already close and cooperative U.S.-Chinese relationship, even though Bush seized on several opportunities to criticize China’s human rights practices.  The U.S.-China Joint Commission on Commerce and Trade (JCCT) marked its 25^th anniversary with agreements on food security, loans for medical equipment purchase, promotion of digital TV, and cooperation in agriculture and on trade statistics.  The U.S. presidential campaign heated up, but China received little attention.

The big news in the penultimate quarter of 2008 centered on leadership ills (literally) in North Korea and Pyongyang’s rolling back of the six-party denuclearization agreement.  On the U.S.-ROK front, President George W. Bush made his last trip to Asia of his presidency, stopping for a brief visit in South Korea on his way to the Beijing Olympics.  While the free trade agreement (FTA) remains mired in U.S. domestic politics, important low-key agreements were reached to help bolster the people-to-people aspects of the alliance. As the quarter ended, the Bush administration was making preparations to make what some described as a last ditch effort to salvage the aid-for-denuclearization deal with North Korea by sending Six-Party Talks negotiator Christopher Hill to Pyongyang for a third time.

Throughout the spring and early summer it seemed that U.S.-Russia relations could sink no further.  Ill will beset the relationship.  Heated discussions were carried out almost weekly on issues such as missile defense, Iran’s nuclear program, Iraq, energy nationalism, and perhaps most significantly, NATO expansion.  At one point, Vladimir Putin compared the U.S. to a “frightening monster,” while Senator (and Republican presidential nominee) John McCain called for Russia’s eviction from the G8.  In August, the worsening situation came to a head when Russian troops invaded and occupied South Ossetia (a Georgian Province), and launched attacks on other Georgian cities.  The U.S. reaction was swift: condemnation, followed by the transport home of Georgian combat troops deployed in Iraq, the ferrying of supplies to Georgian ports by U.S. warships, the extension of $1 billion in aid, and the deployment of a small contingent of U.S. troops for “humanitarian” missions in Georgia.  But some feel the response was not enough.  The reaction did nothing to cow Moscow.  By the end of August, Russia had asserted de facto control of both South Ossetia and Abkhazia and had recognized both as independent nations.  Meanwhile the U.S. turned inward to deal with its financial crisis, leaving relations with Moscow on the backburner – at least temporarily.

The cancellation of a draft peace agreement between the Moro Islamic Liberation Front and the Philippine government triggered renewed violence in the Philippine south and allegations that U.S. forces are involved in Philippine armed forces suppression activities.  Both Manila and Washington deny the charges, though U.S. Special Operations Forces have been training the Philippine military in Mindanao since 2002.  The U.S. has added new sanctions against Burma’s junta and continues to criticize its political repression, while aid for the victims of Cyclone Nargis remains under the Burmese military’s control.  Ratification for ASEAN’s new Charter by its member states has been achieved by eight of the 10 countries.  The delays include concerns in the Indonesian and Philippine legislatures about Burma’s detention of Aung San Suu Kyi as well as the junta’s insistence that any ASEAN Human Rights Commission be toothless.  The U.S. State Department has expressed concern over the Malaysian government’s arrest of opposition leader Anwar Ibrahim on suspicious sodomy charges.  Malaysian leaders responded angrily that the U.S. complaint constitutes interference in Kuala Lumpur’s domestic politics and that Washington is not “the policeman of the world.”

Chinese relations with Southeast Asia were overshadowed for most of the quarter by Chinese leadership preoccupations with the 2008 Olympic Games and various crises involving toxic Chinese milk supplies, turmoil in U.S. and international financial markets, leadership uncertainty in North Korea, and the Russia-Georgia war. Although official Chinese media highlighted President Hu Jintao’s meetings with Southeast Asian and other world leaders at the Beijing Olympics, he and other top leaders did not travel to Southeast Asia except for the foreign minister’s attendance at the ASEAN meetings in Singapore in July. New troubles emerged with Vietnam, notably over oil exploration in the South China Sea. The recent pattern of Chinese, Japanese, and South Korean leaders meeting independent of ASEAN, despite their continued avowals of ASEAN’s “leadership” in East Asian regional matters, paused when Japanese officials announced the postponement of a planned summit among the three northeast Asian powers in September on account of the resignation of Japan’s prime minister.

Leaders in Taipei and Beijing continue to pursue improved cross-Strait relations despite political pressures and domestic criticism.   The initial agreements are being implemented and behind-the-scenes negotiations are laying the ground for a second tranche of agreements when ARATS Chairman Chen Yunlin visits Taiwan in late October or early November.  The Beijing Olympics occasioned some tensions over terminology until the leadership in Beijing stepped in to craft a satisfactory solution. Taipei’s modest proposal at the UN aimed at participation in UN specialized agencies was rejected by Beijing.  However, a debate is underway in Beijing on how to address Taipei’s demand for increased international space and the Ma administration remains hopeful that Beijing will eventually devise a more forthcoming response.  On October 3, the Bush administration notified Congress of a $6.5 billion arms package for Taiwan.

Relations between the two Koreas, having already worsened from April when North Korea took umbrage with South Korea’s new president, Lee Myung-bak, deteriorated further during the third quarter. This may have been inevitable. In a break from the “sunshine” policy pursued over the past decade by his two liberal predecessors, Kim Dae-jung (1988-2003) and Roh Moo-hyun (2003-08), Lee had signaled that henceforth expanded inter-Korean cooperation would depend on progress in denuclearization under the Six-Party Talks (6PT). Not only did this linkage displease Pyongyang in principle, but the current 6PT stalemate and North Korea’s proclaimed restoration of facilities at its Yongbyon nuclear site, have made inter-Korean progress difficult given the Lee administration’s conditionalities.

And yet, and yet. By early July, his popularity plunging barely four months into his five-year term (after the U.S. beef import protests and a series of gaffes), the president formerly known as “bulldozer” was ready to try a different tack. On July 11 he told the new National Assembly – elected in April, but only now convening due to inter-party wrangles – that “full dialogue between the two Koreas must resume.” He also renewed his offer of humanitarian aid.

The Games of the 29^th Olympiad had preoccupied Chinese leaders for almost a decade as they sought to utilize it to project to domestic and international audiences China’s accomplishments on an international stage. It has framed many issues in Sino-Korean relations, especially given the many resonances between the 1988 Olympics in Seoul and the Beijing Olympics two decades later.  But now that the Games are over, Chinese leaders may adopt a different frame for viewing the world and the Korean Peninsula, the details of which have begun to emerge in the “post-Olympics era.” President Lee Myung-bak was among the many world leaders who attended the opening ceremonies, while President Hu Jintao returned the visit to Seoul only two weeks later, less than a day after the closing ceremonies in Beijing.  In contrast, Kim Jong-il was a no-show not only for the Olympics, but also for the 60^th anniversary commemoration of the founding of the DPRK on Sept. 9.  The Olympics brought with it a surprising undercurrent of popular anti-Korean sentiment in China, most of it stimulated through internet rumors and the attempt by Korean journalists to tape and release a portion of the Olympic opening ceremonies days before the event.  This sentiment may suggest that the “Korean wave” (Chinese attraction to Korean pop culture) is receding – or at least that it is accompanied by a strong undertow of backlash among certain segments of Chinese society.  On the Korean side, Chinese product safety issues are another drag on the relationship.

The issue of contaminated frozen gyoza moved to the bilateral front burner during the quarter.  In his meeting with President Hu Jintao on the sidelines of the G8 summit at Lake Toya, Hokkaido and again during the opening ceremonies of the Beijing Olympics, Prime Minster Fukuda Yasuo emphasized the importance of making progress on the six-month old case.  Hu promised to accelerate efforts to identify the source of the problem and in mid-September, Japanese media reported that Chinese authorities had detained nine suspects at the Tianyang factory. The commemoration of the end of World War II on Aug. 15 passed quietly with only three Cabinet ministers visiting the Yasukuni Shrine.  Meanwhile, joint Japanese and Chinese public opinion polling data revealed markedly different perceptions on the state and future course of the bilateral relationship. In early September, Japan’s Ministry of Defense released its Defense White Paper 2008, which again expressed concerns about China’s military modernization and its lack of transparency.  Later in the month, the Maritime Self-Defense Force sighted what was believed to be an unidentified submarine in Japanese territorial waters.  Reacting to Japanese media speculation, China’s Foreign Ministry denied that the submarine belonged to China’s Navy.

Although there was little movement in Japan’s relations with North Korea, this quarter was dominated by the news leaking out of North Korea in early September that Kim Jong-il was potentially very sick. Questions about Kim’s health, the status of his leadership in North Korea, and the future of North Korea’s leadership quickly dominated discussion. Coupled with Japanese Prime Minister Fukuda’s surprise resignation and the quick choice of Aso Taro as prime minister, Japanese foreign policy was on a brief hiatus while the new leader set his own agenda. Known as a conservative, it is expected that Aso will take a harder line toward the North – and the region more generally – than did Fukuda. But his official appointment, coming on Sept. 24, was so recent that it is too early to see how Aso plans to proceed. Thus, there was actually little substantive change in Japan’s relations with North Korea, and the quarter ended basically where it began.

In contrast, Japan-South Korean relations plunged to new lows after a promising spring in which both Fukuda and President Lee Myung-bak had pledged to move the relationship forward. The question of who owns the Dokdo/Takeshima islets once again reared its ugly head, and both sides dug in their heels, choosing to be as provocative as possible. In what was at best a tone-deaf decision in July, Tokyo released a new set of guidelines for its middle-school teachers claiming that Takeshima was irrefutably Japanese. Seeming to contradict the spirit of the just completed and highly successful summit meeting between Japan and Korea during the spring, the decision left President Lee with little choice but to respond strongly, and relations quickly cooled between the two countries.

Although it appeared at first that there was some potential for progress on the two enduring issues on the agenda of Japan-North Korea relations – the abduction issue and Pyongyang’s nuclear development program – by the end of the quarter both issues remained essentially in the same place as they had been before. The abduction issue continued to define the tone of bilateral relations, as Japan tried to ensure that progress in the Six-Party Talks was tied to its resolution. The Tokyo-Pyongyang working-level talks in mid-August, following last quarter’s agreement that Pyongyang would reinvestigate the fate of the Japanese abductees in exchange for partial lifting of the sanctions on the North, concluded with an agreement on the terms of the investigation to be completed as swiftly as the fall of 2008. But Fukuda’s resignation as prime minister led Pyongyang to notify Japan that it would wait and see how the Aso administration approaches bilateral issues before starting the reinvestigation. Despite taking a step closer toward normalizing their diplomatic relations, there was no substantive policy change in Japan toward Pyongyang and by the end of the quarter, the new Aso administration decided to extend economic sanctions against North Korea for another six months.

The third quarter of 2008 was quite eventful for Russia and China as well as their bilateral relationship. The 29^th Summer Olympics in Beijing opened and concluded with extravaganza and a record 51 gold medals for China. Shortly before the opening ceremony on Aug. 8, Georgia’s attacks against South Ossetia – a separatist region of Georgia – led to Russia’s massive military response, a five-day war, and Russia’s recognition of their independence.  Thus, the August guns and games brought the two strategic partners back to the world stage. One consequence of the Georgian-Russian war is that China’s “neutrality” is widely seen as a crisis in China’s strategic partnership with Russia.

Beyond the Olympics, Ossetia, and chaos in world financial markets, Moscow and Beijing were able to move their relationship forward: an additional border agreement was signed to end the border disputes of the previous 400 years, bilateral energy talks at the deputy ministerial level were launched, long-stalled military sales started to show some sign of life as the two sides resumed discussions for the 38 Il-76 and Il-78 military cargo planes, the Shanghai Cooperation Organization (SCO) managed to keep a delicate balance for both internal and external politicking while elevating its observers’ status by creating so-called “Dialogue Partners,” and 1,000 Chinese children from the earthquake-devastated areas – many more than the original proposed number of 50 by Medvedev when he visited China in late May – spent several weeks in Russia’s resort areas.

With the presidential elections in the U.S. scheduled for Nov. 4, the candidates’ views of relations with Asia are of great interest to the foreign policy community in the U.S. and throughout Asia. In an effort to provide some insight into the policies of Sen. John McCain and Sen. Barack Obama, we have surveyed both campaigns’ statements to answer a series of questions regarding their Asia policy stances as the basis of this quarter’s Occasional Analysis.