Volume 8, Issue 3

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July - September 2006 · Published: Oct 2006

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 39th 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.

US - Japan

July — September 2006

Enter Abe Stage Right

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.

North Korea elevated the 11-month impasse in the Six-Party Talks to a diplomatic crisis in early October by conducting a test of a small nuclear device. The U.S. responded by calling for the United Nations Security Council (UNSC) to impose harsh sanctions on North Korea “unlike anything that they have faced before.” President George W. Bush explicitly drew a diplomatic red-line that the United States would regard Pyongyang’s “transfer of nuclear weapons or material” to other states or terrorist groups as a “grave threat” that would impliedly bring a U.S. military response.

North Korea’s nuclear test Oct. 9 followed a unanimous statement of the UNSC on Oct. 6 that a nuclear test would “jeopardize peace, stability, and security in the region and beyond.”

In an earlier unanimous resolution, the Security Council condemned North Korea in mid-July for test launching seven missiles and imposed a set of missile-related sanctions on Pyongyang.  Instead of vetoing this measure, as Pyongyang undoubtedly expected, China delivered a major diplomatic shock to North Korea by voting to approve the resolution, which called on UN member countries to prevent transfers of missile technologies and “financial resources” to Pyongyang. For the moment, Washington, Seoul, and Beijing seemed to be speaking with one voice.

At the mid-September summit meeting of President Bush and ROK President Roh Moo-hyun, the two presidents indicated they would follow a “common and broad approach” to the North Korean nuclear issue. President Bush gave his blessing to President Roh’s request for returning operational command of South Korea’s forces during wartime to Seoul. Bush defused opposition to this proposal from South Korean conservatives by promising that U.S. forces would come to South Korea’s aid in an emergency and continue to play an important military support role on the Korean Peninsula.

In two rounds of negotiations this quarter on a U.S.-Korea Free Trade Agreement, U.S. and South Korean trade negotiators put on the table a number of critical issues in manufacturing, services, and agriculture but were only able to reach an apparent agreement on pharmaceuticals. In South Korea, the government is under popular pressure from farmers, labor unions, and business organizations to resist any excessive U.S. demands for opening the Korean market.

US - Russia

July — September 2006

Energy and Strategy

Casual observers of U.S.-Russia relations over the past three years understand that the two nations have navigated rocky paths in their search for common understanding and shared strategic goals. This quarter started off well enough for the two nations as Presidents George W. Bush and Vladimir Putin met amiably at the G-8 Summit, for which Russia was the host this year. But as the quarter wound down, familiar themes of distrust and misunderstanding pervaded the relationship once again. It is not that Moscow and Washington have strategic interests that are directly opposed to one another. In fact, leaders in both capitals see eye-to-eye on the pressing issues of nuclear proliferation and terrorism, and on more long-term goals, such as managing a peaceful rise of China. The problems seem to lie more in the tactics of achieving these strategic aims. Russian leaders have a hard time conceding global leadership to Washington; likewise many in the United States still harbor ingrained prejudices against the longtime adversary in Moscow.

Additionally, energy issues have become more and more the cause for disagreement between Russia and its neighbors and partners. The Russian government does seem determined – for right or for wrong – to control the access to and management of the resources lying beneath its soil and waters. This has become an acute problem in the Russian Far East for Washington and its two closest allies, Britain and Japan.  Meanwhile, elsewhere in the Asia-Pacific region, relations between Japan and Russia have become downright contentious, due to a series of events, including the untimely death of a Japan national at the hands of Russian border authorities.

Indonesia and Malaysia chastised the United States for backing Israel in the July-August Hezbollah Lebanon war, though both Jakarta and Kuala Lumpur subsequently offered peacekeeping forces to monitor the ceasefire. Washington signed a trade and investment framework agreement with ASEAN at July ministerial meetings and is considering appointment of an ambassador to ASEAN as well as creating a new Southeast Asian financial post in the Treasury Department. On the military dimension, the U.S. is delivering spare parts for the Indonesian air force and has initialed a new defense arrangement – the Security Engagement Board – with the Philippines that will focus on humanitarian aid, civic engagement, and counterterrorism training in insurgent-ridden Mindanao. Washington has also placed Burma’s human rights violations on the UN Security Council agenda and enhanced economic and military relations with Vietnam. In response to the Sept. 19 Thai coup, the U.S. expressed disappointment in the setback to democracy by an important regional ally but did not insist that deposed Prime Minister Thaksin be restored to power.

Chinese diplomacy this quarter focused on the ASEAN Regional Forum (ARF) meeting in July in which China played an important role regarding North Korea, Myanmar, and Japan. Chinese officials remain optimistic about Chinese-ASEAN relations as they celebrate the 15th anniversary of the China-ASEAN dialogue partnership. They reacted moderately to the military coup in Thailand, though they voiced strong objections to a successful U.S.-supported vote by the UN Security Council in September to have the Council examine the situation in Myanmar. There was little evidence of any change in China’s policy toward the region as a result of a work conference on Chinese foreign policy in Beijing during three days in August that featured remarks by top Chinese leaders Hu Jintao and Wen Jiabao. Official Chinese reports on the conference appeared to support existing Chinese foreign policy priorities. U.S. and regional commentators continued to emphasize American anxiety over a perceived U.S. decline relative to China’s rise in regional affairs, although in-depth analysis by some specialists underscored significant Chinese limitations and continued U.S. strengths.

China - Taiwan

July — September 2006

More Small Steps

Corruption scandals and street protests calling for President Chen’s resignation have largely paralyzed policy making in Taipei. Beijing is concerned over President Chen’s playing the constitutional reform card to counter the campaign for his removal.  Nevertheless, Taipei and Beijing undertook more small steps to ease restrictions on cross-Strait contacts. Beijing also continued active exchanges with the Kuomintang (KMT) opposition. Significant changes in Taiwan Affairs Office (TAO) personnel were announced, and the changes were viewed positively in Taipei. The PRC continued to outmaneuver Taiwan in the international arena, but at home Chen pushed his campaign for a stronger Taiwanese identity. The visit to Taipei of a Japanese vice minister of agriculture symbolized the increased contacts that have been taking place between Tokyo and Taipei. With the Democratic Progressive Party (DPP) set to release its proposals on constitutional reform, that issue is likely to reemerge as a source of cross-Strait tension.

Prosecutorial investigations of President Chen Shui-bian’s family and aides continued to provide fodder for a media frenzy in Taipei. Allegations about the president’s possible role in the mishandling of the Presidential Office Allowance for State Affairs for the first time directly touched the president. In August, former DPP activist Shih Ming-teh launched a “depose Chen” campaign to force Chen from office.  This led to repeated demonstrations and counter demonstrations, and these events largely paralyzed policy-making in Taipei and raised concerns in Beijing.

In mid-September, Chen Yunlin, minister in Beijing’s TAO, made an unpublicized trip to Washington. Reportedly, he expressed concerns to U.S. officials that Chen might seek to rescue himself by provoking some incident in cross-Strait relations or by reneging on his promises concerning the constitutional reform issue to regain support from the DPP’s political base.   The constitutional concerns were prompted by DPP plans to make public its proposals concerning a new constitution for Taiwan by the end of September.   DPP Chairman Yu Shyi-kun was in Washington at the same time on a mission to reassure the U.S. that Taipei politics would remain stable and that the DPP’s constitutional proposals would not touch on sovereignty issues.

While release of the DPP constitutional draft(s) has been delayed, President Chen told a DPP seminar on constitutional reform in late September that he believed the time had come to reconsider the definition of the country’s territory in the constitution.  Chen’s purpose was clearly to deflect attention from the scandals by making a controversial proposal that would appeal to his core DPP supporters.   While there is no chance that any amendment concerning territory could actually be passed, this proposal was a clear deviation from Chen’s assurances to the U.S. on constitutional reform and an example of what Beijing fears. Politburo Standing Committee Member Jia Qinglin reacted promptly, warning of the dangers Chen is creating by promoting independence under the guise of constitutional reform.  In Washington, the State Department said that adherence to President Chen’s commitments that constitutional reform would not touch on sovereignty issues, including the territorial definition, was very important to peace and “would be a test of the President’s leadership, dependability and statesmanship.” If information that has leaked out about the content of constitutional drafts under consideration by the DPP is accurate, the constitutional reform issue will soon re-emerge as a serious source of tension in cross-Strait and U.S.-Taiwan relations.

Rarely has the arbitrary time unit of a quarter so neatly framed real events as on the Korean Peninsula these past three months. For South Korea, like all of Pyongyang’s other interlocutors, the third quarter of 2006 was topped and tailed by two ominous bookends. It began with, and was dominated by, the seven missiles (including a long-range Taepodong-2) which North Korea test-fired on the Fourth of July, U.S. time (locally, early July 5). Inevitably this rude gesture of defiance cast a large shadow, at least partially and temporarily, on the “Sunshine” policy of engagement and outreach that Seoul has pursued for the past nine years. At that stage it was too early to tell whether this was just a temporary hiccup, or marked a lasting sea-change in the balance and thrust of the ROK’s Nordpolitik.

For reasons hard to fathom, Kim Jong-il chose to settle that question in the negative by ending the quarter with a far graver threat. After weeks of rumors of preparations spotted by spy satellites, on Oct. 3 North Korea for the first time gave notice of its intention to conduct a nuclear test. Still, some analysts hoped that this might be just a sharp negotiating ploy, as arguably the missile tests were: intended to break almost a year’s stalemate in the suspended Six-Party Talks and jolt the U.S. and others into concessions on financial sanctions. Less than a week later, such hopes were dashed Oct. 9, when Pyongyang announced, with typical pride, that it had carried out its first nuclear test. Outside opinion seems to agree, though at this writing it is unclear whether it was completely successful. The implications of this are considered at the end of this article.

July’s missile launch had put most of the now quite dense network of regular official inter-Korean contacts on ice for late summer and early fall. Seoul struggled to strike a balance between showing its disapproval – and keeping the semblance of a common front with Washington – while seeking to ensure that the overall framework and achievements of Sunshine were not jeopardized. Walking such a tightrope was no easy task, and – as often with the Roh Moo-hyun administration, which now has little more than a year left to run before his successor is elected in December 2007 – some of the specific policy decisions and judgments made thus far appeared questionable.

China - Korea

July — September 2006

Unrestrained Defiance

North Korea’s July 5 missile tests set the stage for a quarter of active diplomacy designed to prevent Pyongyang from taking additional escalatory actions and to further isolate and punish Pyongyang. To the surprise of many, China signed on to the strongly worded UN Security Council (UNSC) Resolution 1695 that condemned the North Korean missile tests.  This followed the failure of last-ditch diplomatic efforts to convince North Korea to exercise restraint and return to the negotiating table.

Diplomatic activity this quarter focused almost exclusively on how China could re-establish high-level communications with North Korea while seeking to revive an effective multilateral channel for addressing North Korea’s nuclear challenge. PRC Foreign Minister Li Zhaoxing met with his counterpart Ban Ki-moon several times during the quarter to discuss North Korea, and Roh Moo-hyun placed a rare phone call in late July to Hu Jintao, who counseled patience and restraint on the part of all parties in responding to the situation. Rumors of North Korean plans for a nuclear test gained momentum throughout the quarter and were given official credence by the North Koreans in an official statement Oct. 3. Union leaders from ailing Ssangyong Motors took a page from North Korea’s book with a general strike against Chinese management at Shanghai Automotive Corporation, while China’s attempts to restrain its booming economy reverberated in the form of slower growth of Korean exports to China.

Japan - China

July — September 2006

Searching for a Summit

Prime Minister Koizumi Junichiro visited Yasukuni on Aug. 15, honoring a long-standing campaign pledge. China protested the visit and moved on, focusing its attention on Chief Cabinet Secretary Abe Shinzo, odds-on favorite to succeed Koizumi as Liberal Democratic Party president and Japan’s prime minister. Abe took the reins of the LDP Sept. 20 and control of the government Sept. 26. China welcomed Abe with the same words it welcomed Taiwan’s President Chen Shui-bian: it would listen to what he says and watch what he does.

Meanwhile in Japan, the late Showa Emperor and the LDP’s intra-party search for a successor brought the subject of Japan’s relations with its neighbors and the nature of Yasukuni Shrine to center stage. In August, Abe acknowledged an April visit to the shrine but, contrary to his custom of visiting the shrine on Aug. 15, did not do so this year. Even before taking office, Abe made clear his interest in finding a path to a summit meeting with China. As the fourth quarter begins, Japanese and Chinese diplomats are engaged in exploring various paths to a summit.


As a tumultuous summer drew to a close, North Korea’s missile launches in July and the election of Abe Shinzo as prime minister of Japan in September may have marked the beginning of a new chapter in Northeast Asian regional relations. Although neither by itself has clearly redefined Japan-Korea relations, both events are widely seen to presage a new series of options and possibilities in the region. The missile launches in early July marked the escalation of the North Korean issue to new heights, prompting a stern response even from countries such as China and South Korea, the end result being a UN resolution that could open the door to economic sanctions against the North.

As for Abe’s election, former Prime Minister Koizumi was widely considered to have been a revolutionary Japanese politician, and whether Abe will continue along the same path as Koizumi remains to be seen. Certainly Abe, as both the youngest prime minister in the postwar era and the first one born after World War II, appears to have the potential to continue Koizumi’s reformist path. How Japan under Abe might deal with both North and South Korea has been the source of tremendous speculation, and while there are a number of predictions, it remains to be seen how and in what manner Abe’s foreign policy will develop. Some speculate that Abe will be even more assertive toward the Koreas than was Koizumi. Others wonder whether Koizumi might have been the exception, and whether Abe will revert to the norm of previous prime ministers remarkable mainly for their blandness and conventionality.

The third quarter was both routine and hectic for Russia and China. While top leaders socialized at summits (G-8 in mid-July and the Shanghai Cooperation Organization prime ministerial meeting in mid-September), Russian and Chinese diplomats were in overdrive to deal with North Korea’s excessiveness (missile tests) and Iran’s sluggishness in responding to outside “offers.” In both cases, the middling position of Beijing and Moscow was eroded because of the stalemate in the two nuclear talks. For Russia and China, it seems that working with friends is as difficult as confronting foes.

Daily Digest

Reuters – US, Japan, Korea finance leaders agree to consult on foreign exchange, market developments

U.S., Japanese and South Korean finance leaders agreed to consult closely on foreign exchange and market developments in a trilateral meeting on Wednesday, they said in a joint statement issued by the U.S. Treasury Department.

Reuters – China sends fighter jets to shadow US Navy plane over Taiwan Strait

China’s military said on Wednesday it sent fighter jets to monitor and warn a U.S. Navy patrol aircraft that flew over the sensitive Taiwan Strait, a mission that took place just hours after a call between the Chinese and U.S. defence chiefs.

Associated Press – US navy flies aircraft through the Taiwan Strait a day after US-China defense chiefs hold rare talks

The U.S. 7th Fleet said a Navy P-8A Poseidon flew through the Taiwan Strait on Wednesday, a day after U.S. and Chinese defense chiefs held their first talks since November 2022 in an effort to reduce regional tensions.

The Diplomat – What the Revamp of the Japan-US Alliance Structure Means for South Korea

Not many realize that the United States had a Far East Command (FECOM) in the 1950s due to the Korean War and its ramifications.

The Diplomat – Beyond Tariffs: Overcapacity Ignites Fresh Tensions in China-US Trade Relations

Overcapacity, particularly prevalent in technologically advanced sectors such as electric vehicles (EVs), now occupies a central place in the economic discourse between the United States and China.

South China Morning Post – China’s top diplomat Wang Yi to push belt and road during visits to Indonesia, Cambodia and Papua New Guinea

China’s top diplomat Wang Yi will visit Indonesia, Cambodia and Papua New Guinea from Thursday, the Chinese foreign ministry announced on Tuesday.