2018 Geopolitical Forecast: Asia Pacific
NORTH KOREA
The continued evolution of several varied and intermittent security dilemmas along the Korean Peninsula suggest the crisis point will remain a primary international concern in 2018.
At the UN, a key discussion will revolve around revelations of some 49 nations violating the terms of sanctions against North Korea. Expect a spotlight on international export and nuclear proliferation financing controls, and accusations of corruption between UN member states.
Such reports support US claims that existing programs are ineffective in securing North Korean cooperation for denuclearisation. This will likely prompt calls to introduce additional measures such as the right to interdict goods being transported to and from North Korea. Although China’s leadership is deeply frustrated by North Korea’s nuclear posturing, Beijing would likely block any such UN Security Council resolution in the interest of regional stability.
There is also the possibility that South Korea would oppose such measures, an outcome that would create a more difficult climate for multilateral action. Of note, one of South Korea’s ruling party lawmakers has said that Xi and Moon “share an understanding” that a freeze of US-South Korea military exercises in exchange for a freeze on North Korea’s nuclear program is “perhaps the most realistic way” to diffuse tensions.
Given the present malaise of international efforts toward denuclearisation, mutual disengagement and enhanced maritime security represent the most viable courses of action and will be debated heavily.
A third option – talks – are unlikely to occur soon. There are few signs the Kim regime is ready to come to the table. The frequency of its missile tests only increased in 2017 while September saw the regime conduct its largest nuclear test to date. Similarly, the Trump administration has indicated it will not agree to talks unless North Korea dials back its belligerence. However, in that event, the US is likely to flirt with engaging in negotiations, particularly if South Korea, China and Russia continue to push this option.
US forces are poised to eliminate the Kim regime should a real nuclear attack unfold, acting as a deterrent to any escalation from North Korea. As such, do not expect Pyongyang to undertake any further missile or nuclear tests much beyond the scope of its previous record.
US-CHINA RELATIONS ON A DOWNWARD TRAJECTORY
Tensions over trade and Northeast Asian security dominated relations between the US and China in 2017. These points of friction will continue into the new year and will exacerbate the uncertainty and distrust inherent in the relationship in 2018.
The Kim regime’s efforts to develop a reliable nuclear deterrent in 2017 have had significant repercussions for its relationship with China. In response to the North’s ballistic missile and nuclear tests, Beijing implemented restrictions on imports of coal and steel from North Korea, and banned investments by North Koreans in China. Yet these measures have been carefully calibrated so as to not present an existential challenge to the Kim regime. China remains heavily invested in maintaining stability on the Korean peninsula and will continue to resist US pressure to implement more severe sanctions.
The South China Sea has been another sore point in US-China relations. After a slow start, the Trump administration demonstrated US commitment to the preservation of freedom of navigation in the South China Sea, authorising an unprecedented four freedom of navigation operations (FONOPs) in five months. US policy for the South China Sea in 2018 will remain agnostic regarding sovereignty claims and will focus exclusively on freedom of navigation, overflight, and the preservation of open sea lanes in the region. However, there will remain ample opportunity for Washington and Beijing to butt heads as China continues to militarise the waters through island building activities. With US FONOPs expected to remain frequent, there is the possibility of miscalculation and subsequent military confrontation between US and Chinese assets in the region.
Finally, 2018 will see a more contentious trade relationship between the world’s two largest economies. The Trump administration will likely embark on a series of unilateral trade actions against China to pressure Beijing to change the way it manages access to its markets. In this way, the US aims to secure greater Chinese market access for US companies. Washington’s suspension of the Comprehensive Trade Dialogue with China in late November and the recently initiated US investigations into Chinese trade practices will also generate further tension in this relationship, particularly as the conclusions of the US investigations are announced and punitive trade measures considered.
NO END IN SIGHT FOR THE ROHINGYA CRISIS
The Rohingya refugee crisis will continue to be a major issue in 2018, with Myanmar showing few signs of curbing the violence in Rakhine state.
Tensions will likely persist but ease between Myanmar and Bangladesh as Rohingya continue to flow over Bangladeshi borders, albeit it at a much slower pace. Myanmar and Bangladesh have signed the first bilateral agreement on the crisis to return hundreds of thousands of Rohingya, but the Rohingya would be at the mercy of Myanmar’s military, the Tatmadaw. The mass return of hundreds of thousands of refugees into mass internment camps would be a humanitarian and environmental nightmare; aid resources in the region are already stretched and in many cases aid workers are unable to access crisis points due to restriction from the Myanmar government.
There is also considerable concern that discrimination against the Rohingya may cause radicalisation and turn them towards extremist groups such as Al Qaeda and ISIS offshoots in Bangladesh. For now, the extremist groups do not appear to enjoy the same prestige with Rohingya as they do with other Muslim populations in the region. Nonetheless, Myanmar seems set to continue its systemic discrimination against the Rohingya in Rakhine state, and the civilian leadership shows little signs of restraining the Tatmadaw’s violent operations.
The international community remains the most effective way to deal with the crisis. 2018 will see sustained growth in condemnation of Myanmar’s actions. In the latter half of 2017, the UN became increasingly concerned with what it termed ‘elements of genocide’ and it has already dispatched resources to deal with massive numbers of refugees in Bangladesh.
However, China remains a key ally for Myanmar, and Beijing’s growing defence of the Tatmadaw has put it at odds with other Western and Islamic nations — it has voted against several UN resolutions condemning the Tatmadaw’s actions. Other regional powers like India are also broadening their ties with Myanmar. This, as well as the relatively weak US response, suggest that the Tatmadaw will continue its actions unabated into the new year, regardless of the increasing pressure on de facto leader Aung San Suu Kyi and her government.
EXTREMISM IN SOUTHEAST ASIA A GROWING CONCERN
Extremism will be an ongoing challenge faced by governments in Southeast Asia in 2018. The Islamic State’s rise to prominence in the region in 2017 was marked by the siege in Marawi. The battle lasted several months, and led to the deaths of over 900 Islamist combatants and more than 100 members of the Philippines Armed Forces. Thousands of civilians were displaced by the fighting. The Marawi siege pushed regional actors more prone to radical Islamic terrorism — Indonesia, the Philippines, and Malaysia — to increase sub-regional cooperation initiatives aimed at combating terrorism. However, there are few signs that the threat from the alphabet soup of Southeast Asian terrorist organisations will subside in 2018.
In Indonesia, the new year will likely see a further splintering of a country increasingly divided along religious lines. Hard-line conservative Islamic groups were front and center in the ousting of Jakarta Governor Ahok in April. They will again seek to mobilise Islamists and other conservatives ahead of the local elections in June 2018 to bring attention to their political goals of further incorporating Islam into mainstream Indonesian politics. The June polls will also present a target for extremist groups including ISIS affiliates and a resurgent Jemaah Islamiyah. Large scale terror attacks in Indonesia have the potential to pave the way for former General Prabowo Subianto to campaign on a security-based platform ahead of the Presidential elections in early 2019.
Additionally, the Philippines faces continuing fallout following the Marawi siege. While pro-ISIS groups have been ousted from the city, Mindanao remains one of the poorest regions in the country and the slow-paced reconstruction of Marawi will favor active and well-resourced ISIS recruiters. The passage of the Bangsamoro Basic Law — needed to enact the Comprehensive Agreement for Bangsamoro that settled conflict with the Moro Islamic Liberation Front (MILF) — could either help or hinder the fight against extremism. While the bill will likely pass congress in 2018, many critics see it as unconstitutional. A supreme court challenge is possible and this will further delay the long-stalled law, pushing MILF fighters to more radical alternatives.
CHINA LEADING THE WAY ON REGIONAL TRADE
With global economic power continuing to shift to the Asia-Pacific, US economic leadership in the region will be challenged by an increasingly confident China in 2018. The Trump administration’s abandonment of the Trans-Pacific Partnership (TPP) early in 2017 marked the first major breakthrough for China in seeking a larger bloc of states in the Asia-Pacific to join its preferred regional trade deal, the Regional Comprehensive Economic Partnership (RCEP). In the absence of US regional economic leadership, the outlook for trade in the Asia-Pacific in 2018 will be centred around the remaining benefits that the Western-led TPP can offer without the US. Intense economic competition is likely as China aggressively promotes RCEP.
The TPP, now dubbed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), will continue on without the US, but it will lack the influence and force that having the US as a party would have carried. Many Pacific rim states will make attempts at being party to both the CPTPP and Chinese-led regional trade initiatives. The China-led Asian Infrastructure Investment Bank is also likely to ramp up its influence activities in the region as another eight regional and fourteen non-regional states set to become full members.
The increasing dynamism of the Chinese economy, and its nascent reforms in monetary and financial market liberalisation means that regional states could potentially gain greater access to the Chinese market compared to any accord that would have involved the US. Despite China’s aggressive territorial claims in the South China Sea, many Southeast Asian states will forge closer economic ties with China as the US distances itself from the ‘pivot’ to Asia strategy that the Obama administration initiated in its first term.
As a result of these geopolitical shifts, expect a sustained challenge to US and Japanese economic influence in the region, particularly as China seeks to integrate RCEP into its wider ‘One Belt, One Road’ trade and economic initiatives. While the trade outlook is less uncertain than in the period before President Trump took office, expect major changes in 2018.
SIMMERING SINO-INDIA TENSIONS SET TO CONTINUE
2018 will see the rivalry between China and India become more pronounced as the two agree, by way of conduct, upon the tone of their relationship going forward.
Neither of Asia’s giants is currently in a position to forcefully assert their agenda upon the other; India is significantly constrained by issues of domestic poverty, unemployment, and development while Beijing would almost certainly become overextended in the event of prolonged confrontation with New Delhi. But 2018 will see an ongoing struggle for dominance between the two as China seeks to claim the status of regional hegemon, a position quietly contested by India.
So far this contest has played out in territorial disputes, as at the Doklam tri-junction, and within multilateral forums, such as the Shanghai Cooperation Organisation. Diplomatic means including the BRICS conference have previously been used to quell tensions. However, this method has been based mostly on a symbolic gestures towards cooperation, a principle that could easily be derailed in the event of extended tension.
To that end, all indications are that China is aiming to hedge its bets while India appears to have lost the initiative. At a recent meeting, India’s External Affairs Minister Sushma Swaraj and China’s Foreign Minister Wang Yi addressed issues in a ‘frank’ and ‘forward-looking’ manner that provided a spark of optimism for cooperation. However, roughly 1800 Chinese soldiers are reported to have established a permanent presence at the Doklam tri-junction, constructing two helipads, upgraded roads, prefabricated huts, shelters and stores for the winter months and beyond.
Activities such as these will continue into the new year so long as they remain uncontested by New Delhi. India may seek support from ASEAN or its members, but it will have limited success. A more promising avenue for security lies in the ‘concert of democracies’ of the Quadrilateral Security Dialogue with the US, Japan and Australia. With the likelihood that ‘India’s diplomatic prowess, India’s etiquette, India’s restraint and India’s patience’ will become less effective in mitigating the threat from China, the coming months will see this course become much more attractive.
DEVELOPMENTS TO WATCH
AFGHANISTAN
The security situation in Afghanistan is steadily deteriorating. Taliban forces control 13% of the country’s 407 districts and are contesting many more. ISIS have also gained ground since it established a presence in the southeast in 2015. Conflict between the two extremist groups may provide the government with limited relief, while a modest US troop increase announced by President Trump will likely not be enough to prevent the deteriorating security situation from derailing the long-delayed parliamentary and district council elections currently set for July 2018.
PAKISTAN
Nawaz Sharif must overcome significant hurdles next year in order to complete his political comeback. In October, the former prime minister was re-elected as leader of the PML-N after the party successfully drove a bill through parliament that allows parties to be led by politicians previously disqualified from holding public office — Sharif was disqualified by the Supreme Court in July on charges of corruption. Yet his position hangs in the balance as the Pakistan Awami Tehreek party is challenging the new law in the Lahore High Court, and other parties have announced their intent to challenge the law in the Supreme Court. Continued opposition from the military, which backed Sharif’s ousting, will mean that he is unlikely to return to contest the general election as Prime Minister in 2018.
MALAYSIA
Malaysia’s Prime Minister Najib Razak will again present his party – the United Malays National Organisation (UMNO) – as the voice of the country’s Malay ethnic majority ahead of the general election, set to be held before August 24 next year. Persistent economic and social inequalities between the majority Malay population and the smaller Chinese and Indian communities coupled with Malaysia’s slide toward a more conservative Islam has seen the rise of an increasingly fractious and racially divisive political scene. An improving economy, a fragmented opposition as well as intelligent political manoeuvring from Razak in the aftermath of the 1MDB corruption scandal, which surrounds his association with a state investment firm, has left UMNO and its coalition partners well-positioned to win the election. While Razak will likely back-track on conservative Malay issues, such as the empowerment of sharia courts, after the election, for the meantime the Prime Minister will remain silent on issues that could endanger his popularity with conservative Islamic voters. Social unrest and racial divisions will likely worsen in the interim.
THAILAND
In November 2018, Thailand is set to hold its first general election since the military assumed power in the 2014 coup. The election, first promised for late 2015, has been delayed twice, first in 2016 and then in 2017. The military’s ‘roadmap to democracy’ was supposed to be part of a 20-month process where the government would have six months to draft a new constitution, four months to hold a referendum on it, six months to draft laws to support the constitution, and four months to campaign for the election. But the death of King Bhumibol Adulyadej and the resulting one-year mourning period has further drawn out this process. But even after the election, Thailand will at best be a guided democracy. The new constitution established a new electoral system that favours smaller parties at the expense of larger ones, meaning that after the election, the country will likely not see the country’s dominant political party, the Thaksin Shinawatra-linked Pheu Thai party, returned to majority power. Instead, the country will likely be governed by coalitions through which the military will more easily exercise influence.
CAMBODIA
Cambodia’s general election will be held in July 2018. With the dissolution of Cambodia’s main opposition party in November, the Cambodia National Rescue Party in November, incumbent Prime Minister Hun Sen will further extend his 33-year grip on power. It remains to be seen whether a viable alternative to the CNRP is allowed to emerge come July. What is clear, is that any new political parties will only be permitted to contest the election in an effort to stave off perceptions of outright dictatorship and will have little chance of wresting control of the government from Hun Sen’s ruling party.