Eurasia’s transformation and the American response

KENT E. CALDER

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IN 1900, as the era of American global diplomacy was dawning in the wake of the Spanish American War, U.S. Secretary of State John Hay predicted that: ‘The Mediterranean is the ocean of the past, the Atlantic is the ocean of the present and the Pacific is the ocean of the future.’1 At the time Hay’s observation seemed fanciful. Yet, before the century was out, it appeared to be eerily prescient. And now the broader prospect of an Indo-Pacific ocean era, in possible competition with a new Eurasian continentalism, is steadily emerging.

This paper will consider first, the domestic and regional political-economic changes that have transformed Hay’s futuristic projections into reality. Then it looks at how the United States has across the years responded to Asia’s rise, culminating in the ‘rebalancing’ strategy of the Obama Administration as articulated since 2011. Finally it will consider the prospective future role of American policy, particularly in cooperation with India and Japan, in coping with the geo-economic transformations now in progress across the Indo-Pacific region.

Japan, it must be noted, played a central role across the 20th century in triggering the political-economic changes that made Hay’s foresighted prediction about the Pacific an ultimate reality in three respects. First, it provided a developmental model of state-led growth and related private sector dynamism that both produced the first non-western economic modernization drive, and inspired others to emulate it.2 Second, it disrupted western colonial arrangements, particularly in Southeast Asia, and created a political-economic fluidity that gave Asian nations more diplomatic and economic space to emerge as autonomous actors. Finally, in the late 1950s and beyond, Japan became the major source of development assistance for Asia, thus accelerating the region’s economic growth.

From the mid-1960s on, South Korea and Taiwan provided a second engine for Asian economic development. And in the late 1970s, a powerful additional engine was added in the form of China’s four modernizations. Deng Xiaoping’s economic reforms began to unleash the economic potential of the world’s most populous nation, leading to over three decades of sustained, close to double-digit, growth that has continued to the present.

 

It is important to recognize the central role of the United States in Asia’s early economic modernization. American pressure opened Japan and Korea to the modern world, and American missionaries were at the heart of educational institutions there, as well as in China and to a lesser extent in Southeast Asia. Following World War II, the US provided a crucial alternative market to revolutionary China, cut-off by turbulence and embargo from the rest of Eurasia until the 1980s.

As it became linked to the broader world economy, Asia’s manufacturing base, fuelled by heavy foreign investment and by growing global market opportunities, expanded sharply. In 1950 Asia generated only around 19% of global GDP. That share has since grown by nearly 500%,3 with Asian nations now constituting fully a quarter of the G-20 membership.4 

In general, American consciousness of Asia’s importance in world affairs has been intermittent over the past century and a half of interaction, and concrete US understanding of how Asian developments might affect America itself has been remarkably limited. Attention to Asia was relatively more pronounced during the first decade of the 20th century, fuelled by the personal interest and experience of two successive Presidents, Theodore Roosevelt and William Howard Taft.5 Beginning with Woodrow Wilson, however, the focus of high-level US interest in international affairs shifted to Europe and Latin America before being abruptly pulled back to the Pacific by the Pearl Harbor attack of 1941.

It was the rude political-military shocks, beginning with Pearl Harbor, that pulled US strategic interest back to the Pacific over the long years of Eurocentrism, isolationism, and the Cold War between World War II and the very recent past. These shocks included Pearl Harbor, the advent of the Korean War, and the bitter Vietnam conflict. From the foundation of Israel in 1948, the Middle East was also a concern, one intensified by the Iranian revolution and hostage crisis of 1979, the Gulf War of 1990-1991, the Iraq War of 2003-2011, the 9/11 attack, and the Afghan War, from which the US disengaged its combat troops at the end of 2014.

 

As it withdrew from Iraq (2012) and ended its combat presence in Afghanistan (2014), the United States declared that it would ‘rebalance’ from the Middle East to Asia. Secretary of State Hillary Clinton was the first to comprehensively articulate the new doctrine,6 followed by President Barack Obama;7 Secretary of Defense Leon Panetta;8 Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell;9 and the Clinton-Panetta team’s successors.10 The heart of the rebalancing, as the Obama Administration articulated it, included the following general elements: (i) augmentation of US naval forces in the Pacific to 60% of overall capacity by 2020, including six carrier battle groups; together with a majority of cruisers, destroyers, littoral combat ships, and submarines; (ii) the strengthening of strategic hubs at Guam in the Pacific and Diego Garcia in the Indian Ocean, with pre-positioned equipment and munitions, as well as additional personnel and weaponry; (iii) the redeployment of Marines out of Afghanistan and Okinawa to Darwin, Australia, beginning in April 2012, to reach a total of 2500 by 2016; and (iv) the future deployment of additional high performance vessels and aircraft to the Pacific, including Joint High-Speed Vessels (2015), four combat littoral ships (2017), new Zumwalt-class destroyers (2018), and Hawkeye unmanned reconnaissance.

 

Apart from the general reinforcement of region-wide capabilities, the rebalancing also involves a variety of country-specific deployments and diplomatic initiatives, including the following:

1. Japan: Deployment of high performance American aircraft, such as the F-22 Raptor to Japan; procurement of the F-35 Joint Strike Fighter by Japan; expansion of missile defence capabilities, including X-band radar; a draw down of 5000 Marines from Japan, together with a redeployment of 3000 additional Marines from Okinawa to Iwakuni; enhanced US-Japan defence guidelines, and two plus two high-level bilateral security consultations in Japan itself.

2. South Korea: Deployment of the F-35 Joint Strike Fighter, and deployment of the Global Hawk to Korea.

3. Philippines: Bilateral Enhanced Defence Cooperation Agreement (EDCA) concluded in 2014, to augment rotational US force presence, and two plus two bilateral security consultations.

4. Vietnam/Malaysia: ‘Comprehensive partnerships’, signed by President Barack Obama personally, plus a possible end to the Vietnam arms supply ban.

5. India: US-India Defence Trade and Technology Initiative (2014), and appearance of President Barack Obama as chief guest at Republic Day celebrations.

 

The emergence of the Pacific as a central concern of American foreign policy took three quarters of a century – from the tenure of John Hay in 1900 until the Nixon shocks of 1971. And even then Cold War and Middle Eastern concerns continued to intrude. The broadening of American strategic concerns in the Pacific, and their merging with traditional Middle Eastern considerations, however, was much quicker. It began to emerge with the Gulf War of 1991, and was completed with the World Trade Centre and Pentagon attacks of 9/11/2001, and the ensuing Afghan conflict.

One important institutional precondition for an Indo-Pacific approach to American foreign policy had already been laid years before, in the geographic configuration of the US regional military commands. The Pacific Command (PACOM), head-quartered in Pearl Harbor, Hawaii, extends westward from the Pacific coast of the continental United States to the east coast of Africa. Fortuitously, PACOM’s operational area includes the powerful American strong point of Diego Garcia, which is 2500 miles southeast of the Persian Gulf. It is Diego that is the primary air, naval, and logistical support facility for operations in the Gulf and areas to the East, thus including both Iraq and Afghanistan, which are geographically in the US Central Command (CENTCOM) operational area.

 

Thus, the US regional military command structure naturally merges the Indian Ocean, Pacific, and even Persian Gulf operations, making the Indo-Pacific concept operationally if not strategically comprehensible in the Pentagon fifteen years before the Gulf War, since PACOM’s geographical contours as presently configured were determined in 1976.

If it was conflicts in the Persian Gulf, related operationally to PACOM-based facilities in the Indian Ocean, that began to make the Indo-Pacific concept operationally plausible in the Pentagon, it was the deepening political-economic interdependence of Northeast Asia and the Middle East, followed by the rise of China and India, that made the Indo-Pacific concept important for the United States in strategic and diplomatic terms. Those changes started to occur in the early 1990s, close to a decade before the Afghan and Iraq conflicts began, and have been the central geopolitical hallmark of the post-Cold War world.

The fateful geopolitical transformation of Eurasia over the past two decades has had two important aspects – the maritime and the continental dimensions. On the sea, it has been driven primarily by the deepening reliance of the rapidly growing East Asian economies and energy imports on the Persian Gulf, and the Gulf’s corresponding dependence on Asia. This maritime interdependence began during the Korean War, when US forces were supplied for the first time with aviation fuel from outside the continental United States,11 and deepened rapidly as Japan and then Korea grew across the 1960s and 1970s. It was carried to a new level as China became an oil importer in the third quarter of 1993, and has deepened in scale and significance ever since.12 In 2013 China imported well over five million barrels of oil daily, over 52% from the Persian Gulf, and more than 23% from Africa. India, Korea, and Japan were even more dependent on supplies flowing across the Arabian Sea and the Indian Ocean – more than 62, 87, and 83% respectively on the Gulf alone.

 

In total, more than 17 million barrels of oil now flow out of the Strait of Hormuz daily, more than two-thirds flowing east to Asia. Fuelled by Asia’s rapid growth, that share is expected to grow to almost 90% of the Persian Gulf’s exports by 2035,13 and is complemented by expanding liquefied natural gas (LNG) exports. Even as the United States grows ever more energy independent, due to the shale gas revolution, the International Energy Agency forecasts that Asia, particularly China, will grow more dependent on imports for its energy supply. And the pre-eminent source of energy supply, for China as well as India, Korea, and Japan, will be maritime imports from the Gulf and Africa, across the Indian Ocean.

 

As rapidly growing Asia imports more and more energy from the Gulf, it is exporting more and more manufactures westward to pay for those energy flows. As a consequence, the Middle East is growing increasingly dependent on Asian manufactured imports, as indicated in Figure I. This increased manufactured trade is also flowing increasingly across the Indian Ocean.

FIGURE I

Middle East Imports from Asia, the United States, and the European Union as a Percentage of Total Middle East Imports

* This figure is taken from in Kent E. Calder, The New Continentalism: Energy and Twenty-First-Century Eurasian Geopolitics. Yale University Press, New Haven, 2012, p. 8.

Source: International Monctary Fund, Direction of Trade Statistics, annual.

Apart from the rising importance of the sea lanes, there is a second important trans-regional geo-economic development that is giving a deeper reality to the Indo-Pacific concept: the rise of a ‘new continentalism’.14 Driven by China’s four modernizations (1978); the Iranian Revolution (1979); India’s economic reforms (from 1991); and the collapse of the Soviet Union (1992), a rapidly growing, deeply interactive and increasingly interdependent Eurasian continent is arising in which China is geographically central within the land mass. Two-thirds of the distance from Beijing to the Strait of Hormuz is within China’s borders, with China’s western development policies and rising energy demand deepening its westward orientation. An overland, ‘New Silk Road’ political-economic route from Northeast Asia to the Gulf, for both energy and broader commerce, is thus emerging in which China’s position is central.

 

The rapid economic ascent of China and India in recent years is well known. China’s GDP has increased by 17 times in the past two decades, as has India’s by more than six times.15 China now has the largest population and the second largest economy in the world, with foreign exchange reserves of over $3 trillion, and is continuing to grow at 7% annually. Both nations have large, expanding, and increasingly sophisticated military capabilities, including nuclear weapons and strategic power-projection arsenals. For the United States and Japan, India is an intrinsically important counter-force to a rising China, whose importance is magnified by its centrality on both the energy sea lanes and the Eurasian continent as continental integration deepens on both land and sea.

Japanese Prime Minister Abe Shinzo perceptively noted the deepening geopolitical and geo-economic integration of the Pacific and Indian Oceans in his 2007 address to the Indian Parliament. The growing importance of the Indo-Pacific concept has also been increasingly appreciated at the elite policy and political levels in the United States in recent years.16 Yet, some continue to wonder if the United States will be financially able or willing to sustain a dominant political-military presence in the Indian Ocean energy sea lanes – half way around the world from Washington – given rising social-security requirements at home, Congressional disillusionment with years of protracted conflict abroad, and America’s own rising energy self-sufficiency.

 

It is important to note in this regard that the costs of retaining America’s commanding presence in the blue-water Indo-Pacific sea lanes will, for at least the coming one to two decades, be far more manageable than generally perceived. The capital costs of construction, deployment and pre-positioning at the crucial US strong points of Diego Garcia and Guam – particularly the former – have already been incurred, and so midterm future costs will be relatively limited. The United States also has eleven relatively new carrier battle groups in operation – more than any other nation on earth – so the incremental capital costs of sustaining a blue-water navy capable of dominating the Indo-Pacific sea lanes will also be minimal.

To conclude, the Pacific became the dynamic ocean of the 20th century that John Hay predicted due to the catalytic effect of East Asian growth, led originally by Japan, and continued by Korea and most recently by Deng Xiaoping and his successors. The United States has responded imperfectly, and often only reactively, but has begun to rebalance explicitly in the wake of the Iraq and Afghan Wars. By 2020, 60% of American naval assets worldwide will be deployed in the Pacific; while strategic American bases at Guam and Diego Garcia are being systematically strengthened.

The rebalancing now underway must respond to a deepening integration of the Indo-Pacific region that has fateful, rising significance for American allies such as Japan and Korea, even as the United States becomes increasingly self-sufficient in energy, due to the shale-gas revolution. This integration has two aspects – the rising economic and strategic importance of the energy sea lanes traversing the Indian Ocean from the Persian Gulf to Northeast Asia, and the emergence of a ‘new continentalism’ across the Eurasian continent, within which China is geopolitically central. These parallel developments on the sea and the land, coupled with the steady rise of India and China in the post-Cold War world, are making an increasingly integrated Indo-Pacific region an area of utmost global significance, in which sustained cooperation with India and Japan will be crucial to American interests in future.

 

* The author expresses special thanks to K.V. Kesavan for comments, to the Observer Research Foundation for conference support, and to Nanum Jeon for her research assistance.

Footnotes:

1. See John Hay’s quote in the US Department of Defense website, at http://www. defense.gov/Speeches/Speech.aspx? SpeechID=680.

2. See Chalmers Johnson, MITI and the Japanese Miracle, Stanford University Press, Stanford, 1982 and Kent E. Calder, Strategic Capitalism, Princeton University Press, Princeton, 1993 on the Japanese model of political-economic development.

3. See Angus Maddison, Contours of the World Economy 1-2030 AD: Essays in Macro-Economic History. Oxford University Press, New York, 2007, p. 340.

4. China, Japan, India, South Korea, and Indonesia are all now members of the G-20 group of nations.

5. Theodore Roosevelt was deeply interested in Japan, and received the Nobel Peace Prize for his brokerage of the Russo-Japanese peace agreement in 1905; William Howard Taft had been Governor of the Philippines, and as Roosevelt’s Secretary of War headed high-level delegations to East Asia.

6. For details, see Hillary Rodham Clinton, ‘America’s Pacific Century’, Foreign Policy, 11 October 2011, http://www. foreignpolicy. com/articles/2011/10/11/americas_pacific_ century.

7. See Barack Obama, Remarks by President Obama to the Australian Parliament, 17 November 2011, http://www.whitehouse. gov/the-press-office/2011/11/17/remarks-president-obama-australian-parliament.

8. See Leon E. Panetta, ‘Shangri-La Security Dialogue’, Secretary of Defense Speech, 2 June 2012, http://www.defense.gov/speeches/speech.aspx?speechid=1681.

9. See Kurt Campbell, Interview with Assistant Secretary Campbell on the Obama Administration’s Pivot to Asia in a Foreign Policy Initiative Forum, 13 December 2011, http://www.foreignpolicyi.org/files/uploads/images/Asia%20Pivot.pdf.

10. These included Secretary of State John Kerry, Secretary of Defense Chuck Hagel, and Assistant Secretary of State for EAP Affairs Danny Russel during 2013-2014.

11. M.A. Palmer, Guardians of the Gulf: A History of America’s Expanding Role in the Persian Gulf, 1883-1992. Free Press, New York, 1992.

12. See Kent E. Calder, Pacific Defense, William Morrow, New York, 1996, for one of the early analyses of the deepening importance of the energy sea lanes between Northeast Asia and the Persian Gulf.

13. International Energy Agency data (https://www.iea.org/newsroomandevents/speeches/APR4OilSummitEDslidepresentation.pdf)

14. On this concept, and the geo-economic developments that are giving it deepening global significance, see Kent E. Calder, The New Continentalism. Yale University Press, New Haven, 2012.

15. See World Databank, at: http://databank. worldbank.org/data/views/reports/tableview. aspx#

16. India’s perceived importance to American diplomacy has taken a quantum leap since 2001, due to the onset of an expanded ‘war on terrorism’, coupled with the rising political influence of Indian Americans in US domestic politics. For details, see Kent E. Calder, Asia in Washington: Exploring the Penumbra of Transnational Power. The Brookings Institution, Washington, D.C., 2014, especially pp. 208-210.

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