Volume 8, Issue 1

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January - March 2006 · Published: Apr 2006

The 2006 National Security Strategy (NSS) was released this quarter. News coverage has focused primarily on one word: preemption. Largely overlooked has been the much greater emphasis on the promotion of freedom and democracy as the primary objective of U.S. foreign policy in the second George W. Bush administration. How far and fast a nation (like China) proceeds down the path toward democracy – or refuses to do so (North Korea and Myanmar) – will have a major bearing on its future relations with a State Department that is being reoriented toward “transformational diplomacy.” Largely overshadowed by the NSS release were two Defense Department documents: the Quadrennial Defense Review and the National Military Strategy to Combat WMD.

While Washington pushes the theory of democracy, its practice has proven difficult for both Manila and Bangkok this quarter, even as the fruits of democracy have added challenges to Washington’s relations with Taipei. Meanwhile, Pyongyang has used the “hostile attitude” reflected in the NSS as yet another excuse for not returning to the stalled Six-Party Talks. One significant gathering of democracies this quarter was the inaugural ministerial-level Australia-U.S.-Japan Trilateral Strategic Dialogue focused, in part, on supporting the emergence of new democracies. Finally, Washington took a major step forward in advancing its “strategic partnership” with the world’s largest democracy, India, during President Bush’s historic visit to New Delhi in early March.


US - Japan

January — March 2006

Unfinished Business

The U.S.-Japan alliance returned to earth this quarter. After a dizzying five-year run during which Japanese actions consistently exceeded U.S. expectations, old habits reasserted themselves in the first quarter of 2006. Unfinished business – base relocations and the reimposition of the Japanese ban on imports of U.S. beef – bedeviled both governments, while coordination on a range of other global issues proved equally frustrating. This is especially troubling as Japan becomes increasingly focused on the transition to the post-Koizumi era, which begins in September when the prime minister steps down. There is a real danger that alliance issues will fester as the Japanese gaze narrows to domestic concerns.

Economic issues garnered most of the attention this quarter with U.S. officials and members of Congress pressing China to address the trade imbalance, revalue China’s currency, and curtail Intellectual Property Rights (IPR) violations in advance of Hu Jintao’s April visit to the United States. Summit preparations were conducted in high-level visits. Deputy Secretary of State Robert Zoellick met Chinese leaders in Beijing and hugged a panda in Chengdu. Chinese Vice Foreign Minister Yang Jiechi visited Washington, D.C. and urged the Bush administration to rein in Taiwan President Chen Shui-bian. Two major U.S. government reports were issued – the National Security Strategy and the Quadrennial Defense Review – both of which provoked Chinese condemnation. Beijing convened the fourth session of the 10th National People’s Congress, which focused on domestic priorities, including rural reform, education, public health, social security, and the legal system.

In fits and starts, North Korea and the U.S. sought procedural common ground this quarter for resuming the Six-Party Talks on North Korea’s nuclear program. The deputy head of Pyongyang’s delegation, Ri Gun, traveled to New York in early March for a “working-level” meeting to discuss U.S. financial sanctions for North Korea’s alleged counterfeiting of U.S. dollars.

The substantive positions of the two sides remained the same after the meeting:  Pyongyang said it would continue to boycott the nuclear talks until Washington lifted the financial sanctions; Washington argued the sanctions were a purely “law enforcement measure” not linked to the nuclear issue.  In mid-March, however, U.S. Ambassador to South Korea Alexander Vershbow proposed that discussions on the financial issue could continue bilaterally at the Six-Party Talks. At quarter’s end, North Korea had not yet responded to this proposal.

In early February, the U.S. and South Korea announced the beginning of negotiations on a Free Trade Agreement (FTA) that U.S. Trade Representative (USTR) Rob Portman called the “most commercially significant free trade negotiations we have embarked on in 15 years.” Not to be outdone, South Korean Trade Minister Kim Hyun-Chong said the initiation of FTA negotiations “is the most important event [in U.S.-Korea relations] since the signing of the military alliance in 1953.” The first round of official talks is scheduled to begin in early June, following several procedural meetings.

The U.S. and South Korea held their first “Strategic Consultation for Allied Partnership” (SCAP) this quarter, not long after Presidents George W. Bush and Roh Moo-hyun agreed to initiate these talks at their summit meeting in November. During the consultation, the two governments reached a general agreement that the U.S. could exercise “strategic flexibility” and use its forces stationed in South Korea to meet military contingencies outside the Korean Peninsula.

Late in the quarter, the U.S. and South Korea also agreed to form a joint panel to consider the modalities of transferring wartime command of South Korean armed forces to the government of South Korea.  At present, the commander of U.S. forces in South Korea would exercise operational control over the armed forces of South Korea, through the Combined Forces Command, during wartime.

US - Russia

January — March 2006

The Lines Are Drawn

After nearly a half-decade of strategic cooperation, U.S.-Russia relations appear to have reached a turning point in the first months of 2006. The momentum behind this turn has been building for at least two years, but events of the past three months have put the future of the strategic partnership in doubt. Apart from the usual catalogue of disagreements – U.S. designs in Central Asia and the Caucasus, Russia’s stalled democratic development, and the fate of Ukraine and Belarus – there have emerged a number of other troubling issues that are potentially more damaging to the future of the U.S.-Russian partnership. These include the Iranian nuclear issue, Moscow’s rapprochement with Beijing, and a disturbing report that Russian diplomats may have shared sensitive information with the regime of Saddam Hussein about U.S. war plans in Iraq in 2003.

Determined to reverse impressions that the United States is out of sync with regional dynamics, the State Department floated the idea of a formal U.S.-ASEAN Summit and speculated publicly on a possible U.S. role in the next East Asia Summit.  Condoleezza Rice made her first visit to Jakarta as secretary of state, while U.S. Trade Representative Rob Portman launched negotiations with Malaysia on a free trade agreement in Washington. Southeast Asia’s two oldest democracies, Thailand and the Philippines, spent much of the quarter in political turmoil.  Protests in Thailand put U.S.-Thai Free Trade Agreement (FTA) talks on ice, but the Balikatan 2006 exercises went forward in the Philippines as planned, despite a declaration of national emergency.  As the U.S. and Vietnam moved closer to agreement on Hanoi’s accession to the World Trade Organization (WTO), the focus began shifting to Congress and the debate on Permanent Normal Trade Relations. In Cambodia, the return of exiled opposition leader Sam Rainsy – and hints that Rainsy could join the government coalition – led Washington to contemplate shifts in U.S. policy.

The quarter saw much less of the high-level Chinese-Southeast Asian interchange that marked past periods and was notable in the lead-up to the East Asia Summit in December 2005. The visit of Myanmar’s prime minister to China in February was the highlight in bilateral exchanges. Beijing hosted a major international donors’ conference in January to assist China, Southeast Asia, and other Asian states affected by the avian flu epidemic.

The mid-winter Lunar New Year’s or “spring festival” celebrations usually are periods of relative inactivity for Chinese leaders. Senior Chinese leaders also were preoccupied this year with issues related to the new five-year development plan and significant changes in domestic laws and regulations considered at the annual National People’s Congress session in March. Chinese leaders had little to say about policy toward Southeast Asia at the Congress, which as usual featured detailed press conferences by the Chinese premier and Chinese foreign minister discussing salient policy issues. This seemed to reflect the absence of significant controversy in Chinese-Southeast Asian relations rather than any diminution of Chinese attention to the region.

Meanwhile, political turmoil in Thailand prompted the Chinese premier to postpone a visit to Bangkok scheduled for April, according to Thai media reports. China responded to the February landslide disaster in the Philippines with a pledge of $1 million in assistance, but avoided significant comment on President Arroyo’s declaration of a state of emergency and related political difficulties.

There was little official reaction in Southeast Asia to Chinese developments with implications for Southeast Asian security. These included the disclosure at the National People’s Congress that China’s defense budget would increase over 14 percent in 2006, and a concurrent report by the Chinese-controlled media in Hong Kong of a Chinese general and deputy director of the Science and Technology Commission of the People’s Liberation Army (PLA) General Armament Department disclosing the Chinese military’s determination to build an aircraft carrier fleet. China welcomed Southeast Asian statements criticizing the Taiwan president over his controversial decision in February to end the island’s National Unification Council and Guidelines for political unification with China.

China - Taiwan

January — March 2006

Missed Opportunities

The agreement to conduct an expanded round of direct cross-Strait charter flights during the 2006 Lunar New Year could have marked the resumption of progress on practical cross-Strait ties. However, reacting to his party’s defeat in the recent county elections, President Chen announced Jan. 1 his intention to more “actively manage” – meaning to tighten restrictions on – cross-Strait economic ties.  Nevertheless, President Hu Jintao and other Chinese officials continued to signal their interest in expanding cross-Strait transportation, economic, tourism, and cultural ties. In late January, President Chen announced his intention to abolish the National Unification Council (NUC). His motives were primarily domestic, but the implications of this proposal sparked a sharp response from Washington and Beijing. In the end, Chen stopped short of abolishing the Council.  Cross-Strait rhetoric has been heated, but tensions have not escalated. In late March, Chen began announcing steps to implement further restrictions on investment in China.  The most serious result of these developments has been that opportunities for expanding mutually beneficial economic ties and for making progress on practical cross-Strait issues have once again fallen victim to President Chen’s domestic political maneuvering.

The first quarter of 2006 saw inter-Korean relations brisk, in more senses than one. As the chronology illustrates, both the variety and density of interactions testify to ever-growing ties between North and South across a range of activities and on many levels: political and security, economic and business, social and cultural, and more. Rightly or wrongly, no one in Seoul (or at least in the ROK government) appears inclined to let the continuing impasse over the six-party nuclear talks – which have not met since November and show no sign of doing so any time soon – derail or even decelerate burgeoning North-South links.

However, it is not all plain sailing. From the Southern viewpoint, the North is not only reluctant to make concessions, but continues to stall on implementing matters to which it had agreed in outline. There are also quarrels: the past quarter saw several tiffs, and one major row that could have easily proved damaging. In the past any of these might have escalated out of hand, putting all ties on ice for months. That this did not happen is mainly due to the South’s vast reserves of patience, which to critics risks shading into appeasement.

Yet defenders of the Sunshine Policy can point to subtle changes in North Korea’s stance, too. Pyongyang’s noisily extreme rhetoric continues unabated, but its deeds talk louder. At least twice in the past quarter the North showed its displeasure with the South by actions which, if regrettable and uncalled for, were noticeably less extreme than in the past. This more careful calibration suggests a deepening commitment to the relationship as such. A more cynical view is that Kim Jong-il knows not to push the goose too far lest it stop laying golden eggs, in what remains financially and otherwise a very one-sided process.


With prospects for renewed Six-Party Talks diminishing, Kim Jong-il’s unannounced visit to China in January appears to have been a turning point for the Korean Peninsula and the North Korean nuclear issue. The rumors began as soon as Kim’s special train was sighted crossing the border into China Jan. 10, sparking a week of “Where’s Waldo” speculation and media sightings of Kim in various parts of China. Despite the rumors, Chinese officials followed precedent and kept mum until Kim’s departure on Jan. 18. The fact that Kim’s route overlapped with that of Deng Xiaoping’s famous 1992 southern tour stimulated further speculation about North Korean efforts at economic reform. Chairman Kim got the red carpet treatment: he was accompanied throughout his visit by all nine members of the Central Committee of China’s Politburo, and capped the trip with a meeting with President Hu Jintao in Beijing. But unlike Korea’s tributary relationship with the Middle Kingdom in dynastic times, Chairman Kim seemed to come with empty suitcases, prepared more to pack and take home China’s reward for good behavior than to offer gifts of his own.

China’s embrace of Kim has produced considerable angst in South Korea, which fears that North Korea will become “China’s fourth northeastern province,” and thwart South Korean hopes for enhanced influence and eventual unification with North Korea. South Korea’s “China threat” usually refers to China’s rapid erosion of critical Korean technological advantages even as China’s overall growth remains a boon to South Korean producers in many sectors. South Korean businesses face the dilemma of figuring out how to benefit from China’s rise, while fending off its effects on Korea’s competitiveness.

The quarter ended as it began – with Prime Minister Koizumi Junichiro expressing his inability to understand why China and the Republic of Korea refused to hold summit meetings just because of differences over Yasukuni Shrine. He also could not understand why he should not pay homage at the shrine simply because China and South Korea said he should not do so. Meanwhile, China’s leadership made clear that it was writing off the next six months and looking to a post-Koizumi future. During the quarter, Beijing hosted a number of high-level political delegations and courted potential Koizumi successors. Reflecting the political stalemate, diplomatic efforts to resolve issues related to the exploration and development of natural gas fields in the East China Sea failed to make progress.  China rejected Japan’s proposal for joint development, and when Chinese diplomats presented their ideas, Japanese diplomats found little they could agree to beyond agreeing to take them back to Tokyo, where the political reception proved decidedly frosty.

Despite the government adopting the position that China was not a threat to Japan, the political debate continued. The opposition Democratic Party of Japan adopted a party platform that China represented an “actual threat” to Japan. At the end of March, the Foreign Ministry released the 2006 Diplomatic Blue Book, which called attention to the lack of transparency in China’s military budget and in the modernization of the People’s Liberation Army. In the face of “cold politics,” economic relations continued “hot.” For the seventh consecutive year, Japan’s trade with China hit a record high in 2005, reaching $189.3 billion.

The first quarter of 2006 produced no real movement in Japan-South Korea relations, nor Japan-North Korea relations. Politics remained chilly while economic and cultural relations were somewhat warmer. Japan-North Korea relations remained stalled over the abductee issue, and Japan-South Korea political relations remain stalled over Yasukuni Shrine. The Japanese and South Korean economies continue to integrate and interact, and cultural relations experienced no real controversies. The next quarter looks to be a continuation of this one. Japan and North Korea have not scheduled another round of bilateral talks, and Roh Moo-hyun and Koizumi Junichiro show no signs of extending the olive branch that will allow them to resume summit meetings. South Korea and Japan will continue discussions about a free-trade area, although such negotiations are likely to make little progress.

By any standard, China’s “Year of Russia” is unprecedented. The year-long celebration was officially inaugurated with President Putin’s fourth visit to China in March, with more than 200 cultural, business, science, and political activities unfolding throughout China. Both sides hailed the relationship as being at the “highest level” and as the “strongest ever,” which are both probably true.

Beyond the extravaganza, which will be followed by Russia’s “Year of China” in 2007, Russia’s energy politik continued. Political elites in Beijing and Moscow were faced with the challenging task of bridging misperceptions and dislike between ordinary Chinese and Russians that persist despite a decade of strategic partnership. This is particularly needed when the world, according to Moscow and Beijing, is overshadowed by the gathering “nuclear storm” of Iran and North Korea. Both have friendly relations with Russia and China while continuing to be at odds with the U.S., which is getting increasingly impatient with the nuclear potential, peaceful or not, of the two “rogue” states.

Daily Digest

Associated Press – Taiwan is selling more to the US than China in major shift away from Beijing

Whether it’s tapioca balls or computer chips, Taiwan is stretching toward the United States and away from China — the world’s No. 2 economy that threatens to take the democratically ruled island by force if necessary.

Associated Press – Kim’s sister denies North Korea has supplied weapons to Russia

The influential sister of North Korean leader Kim Jong Un again denied Friday that her country has exported any weapons to Russia, as she labeled outside speculation on North Korea-Russian arms dealings as “the most absurd paradox.”

Associated Press – China and Cambodia begin 15-day military exercises as questions grow about Beijing’s influence

Cambodia and China began 15-day military exercises on Thursday as questions grow about Beijing’s increasing influence in the Southeast Asian nation.

Associated Press – North Korea test-fires suspected missiles a day after US and South Korea conduct a fighter jet drill

North Korea fired suspected short-range ballistic missiles off its east coast on Friday, South Korea’s military said, a day after South Korea and the U.S. flew powerful fighter jets in a joint drill that the North views as a major security threat.

Reuters – South Korea urges better cooperation on supply chain with China

South Korea’s finance minister on Thursday said Seoul and Beijing should seek better economic cooperation on the supply chain for raw materials.

Reuters – Putin and Xi deepen partnership and scold the United States

Russian President Vladimir Putin and Chinese President Xi Jinping agreed on Thursday to deepen their “strategic partnership” while scolding the United States for a series of moves that they said threatened their countries.