Small States and Hegemonic Competition in

Southeast Asia

In the last few decades, Southeast Asia has become generally more peaceful
and more prosperous, with progress in economic development, regional
cooperation and integration. The Association of Southeast Asian Nations
(ASEAN), in particular, plays a leading role within and beyond the region
in promoting multilateral cooperation in both security and economic
matters. All these developments progress amid increasing hegemonic
competition between the US and China for regional dominance in the Asia-
Pacific region. According to the realist viewpoint of international politics,
Southeast Asian states can do nothing but choose sides at the expense of
international political autonomy in order to maintain their national interests.
However, in this book Chih-Mao Tang argues that in fact there exists an
opportunity for Southeast Asian states to simultaneously reinforce their
military security, economic development and international political
autonomy in face of the US–China hegemonic competition.
Drawing on the ideas of power transition theory and recent works of
capitalist peace, Tang argues that small states can exploit the competition
between great powers to make economic gains and ensure security while
maintaining their autonomy. He outlines the necessity of cooperation
among these small states and of economic liberalization for the
effectiveness of these reinforcing dynamics, applying policy and
econometric analyses to a wide range of qualitative and quantitative data.

Chih-Mao Tang is Assistant Professor and Director of the Center for

Globalization and Peace Research in the Department of Political Science,
Soochow University, Taiwan.

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Small States and Hegemonic
Competition in Southeast Asia
Pursuing Autonomy, Security and Development amid
Great Power Politics

Chih-Mao Tang
First published 2018
by Routledge
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and by Routledge

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© 2018 Chih-Mao Tang

The right of Chih-Mao Tang to be identified as author of this work has been asserted by him in
accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by
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British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Names: Tang, Chih-Mao, author.
Title: Small states and hegemonic competition in Southeast Asia : pursuing autonomy, security and
development amid great power politics / Chih-Mao Tang.
Description: New York : Routledge, 2018. | Series: Routledge advances in international relations and
global politics ; 136 | Includes bibliographical references and index.
Identifiers: LCCN 2017054719| ISBN 9781138672321 (hardback) | ISBN 9781315562599 (e-book)
Subjects: LCSH: Security, International–Southeast Asia. | Southeast Asia–
Politics and government–21st century. | Southeast Asia–Foreign relations–
21st century. | Southeast Asia–Economic policy–21st century. | Great powers. | States, Small.
Classification: LCC JZ6009.S644 T364 2018 | DDC 327.1/120959–dc23
LC record available at https://lccn.loc.gov/2017054719

ISBN: 978-1-138-67232-1 (hbk)

ISBN: 978-1-315-56259-9 (ebk)

Typeset in Galliard
by Wearset Ltd, Boldon, Tyne and Wear

For my parents:
Tang Ching-Fu and Tang Wei Chin-Chih
Contents

Acknowledgments
List of abbreviations

1 Introduction
Small states’ pursuit of autonomy, security, and development in the
Asia-Pacific region
Theoretical argument
A brief note on research design
Book outline

2 Small states’ autonomy, security, and development: a reinforcing

logic
Introduction
The asymmetric relationship between the small state and great power
Small states’ opportunity to change asymmetric relation: great power
competition in the power transition system
How can a small state reinforce its autonomy, security, and
development?
Conclusion

3 Southeast Asian states’ cooperation in the context of US–China

competition
Introduction
The US–China competition in Southeast Asia after the end of the Cold
War
Implications of the US–China competition on regional cooperation in
Southeast Asia
Empirical analysis
Conclusion
4 Pursuit of economic development and Southeast Asian peace
Introduction
Why has Southeast Asia enjoyed relative peace?
Empirical analysis
Conclusion

5 US–China competition and Southeast Asian states’ international

political and strategic autonomy
Introduction
Small states’ international autonomy in world politics
Research design
The promotion of the international political and strategic autonomy of
Southeast Asian states
Conclusion

6 Conclusion

Index
Acknowledgments

I owe a debt of gratitude to many individuals and institutions, including the

Department of Government at the University of Essex, the Center for Asia-
Pacific Area Studies at the Academia Sinica, the Department of Political
Science at the Soochow University, Taiwan, and my publishers at
Routledge. I also thank the Ministry of Science and Technology, Taiwan,
for its generous support to this book project with a two-year research grant
(MOST 103–2410-H-031–069-MY2). Among individuals, I particularly
thank Kristian Gleditsch for his excellent and supportive supervision to my
doctoral study and continuous advice afterward, Xun Cao, Han Dorussen,
and Hugh Ward for their helpful advice on my doctoral study, and Cheng-yi
Lin and Yu-shan Wu for their generous mentoring and encouragement in
pursuit of my academic career. I also feel grateful to my colleagues,
particularly Shiow-Duan Hawang and Bih-Rong Liu, and the administrative
staff in the Department of Political Science, Soochow University. Finally, I
thank my parents and dedicate this book to them.
Abbreviations

AC ASEAN Community
ACFTA ASEAN–China Free Trade Area
AEC ASEAN Economic Community
AFTA ASEAN Free Trade Area
AIIB Asian Infrastructure Investment Bank
AMM ASEAN Ministers’ Meeting
APEC Asia-Pacific Economic Cooperation
ASEAN The Association of Southeast Asian Nations
ASEAN- ASEAN Post-Ministerial conference
PMC
ARF ASEAN Regional Forum
BTA Bilateral Trade Agreement
CINC composite index of national capability
COC Code of Conduct of Parties in the South China Sea
COW Correlates of War
CPV Communist Party of Vietnam
DOC Declaration on the Conduct of Parties in the South China
Sea
DOTS Direction of Trade Statistics
EAI Enterprise for ASEAN Initiative
EAS East Asia Summit
EDCA Enhanced Defense Cooperation Agreement
EFW Economic Freedom of the World
FDI foreign direct investment
FTA free trade agreement
HPA Hanoi Plan of Action
IMET International Military Education Training program
LMC Lancang–Mekong Cooperation
LMI Lower Mekong Initiatives
MID Militarized Interstate Dispute
NSS National Security Strategy
OBOR One Belt One Road
RCEP Regional Comprehensive Economic Partnership
TAC Treaty of Amity and Cooperation in Southeast Asia
TIFA Trade and Investment Framework Agreement
TPP Trans-Pacific Partnership

UNCLOS United Nations Convention on the Law of the Sea

UNCTAD United Nations Conference on Trade and Development
VAP Vientiane Action Programme
VFA Visiting Force Agreement
WTO World Trade Organization
ZOPFAN Zone of Peace, Freedom, and Neutrality Declaration
1 Introduction

Small states’ pursuit of autonomy,

security, and development in the Asia-Pacific region

The leading role that the Association of Southeast Asian Nations (ASEAN)
has played in architecting and advancing regional security multilateralism
and economic cooperation for regional peace and prosperity has been one of
the remarkable developments in the Asia-Pacific region in the post-Cold
War era.1 ASEAN states, a group of small states in terms of economic and
military capabilities,2 have significantly advanced the regional economic
and security cooperation of Southeast Asia and placed their economic
development on an ascending trajectory. They have also extended
cooperation and integration beyond Southeast Asia by including the key
Asia-Pacific countries, such as Australia, China, Japan, and the United
States, under the ASEAN-led multilateralism, which heightens

their regional autonomy to some extent in the process. Over the past two
and a half decades, Southeast Asia has witnessed a gradual advance in
regional cooperation and integration, including the ASEAN Free Trade
Area (AFTA) agreement, initiated in 1992 and implemented in 2010,
ASEAN enlargement, which includes Cambodia, Laos, Myanmar, and
Vietnam during the second half of the 1990s, and the ASEAN Economic
Community (AEC), effective as of 2015.

ASEAN states also initiated a series of ASEAN-centered multilateral

security and economic cooperative

partnerships and dialogue mechanisms, such as the ASEAN Regional

Forum (ARF), the ASEAN + 1 (with China, Japan, South Korea, Australia
and New Zealand, and India), the ASEAN + 3 (China, Japan, and South
Korea), the Regional Comprehensive Economic Partnership (RCEP)3, and
the East Asia

Summit (EAS). Southeast Asian states have also become less willing to use
violent military measures to settle

their interstate disputes. Creating a stable and peaceful environment for

economic development and promoting

their role in the Asia-Pacific regional order have been the primary motives
prompting Southeast Asian states to act collectively through ASEAN-led
multilateral mechanisms. The ASEAN states succeeded in placing
themselves at the center of regional development to foster a regional
development trajectory that favors their international security, economic
development, and international political status. If we look at it through the
lens of conventional realist international theory that emphasizes the
competence of great powers and assumes that small states can do nothing
more than choose sides between great powers in world

politics, what ASEAN states have achieved is intriguing, especially when

faced with rising competition between the US and China over regional
dominance in the Asia-Pacific region that could overshadow and undermine
what

ASEAN states have been striving to accomplish. The objective of this study
is to explain and theorize about how this development was propelled in
Southeast Asia.

In the wake of the collapse of the Soviet Union, the US became the most
powerful state in the world. However, in the Asia-Pacific region, US
supremacy, bolstered by its mighty military force and strong alliances and
economic ties, soon faced a growing challenge from China, whose rapid
economic and military growth triggered a shift in the regional distribution
of power and changes in the regional order. China’s high rate of economic
growth has been critical in Beijing’s pursuit to become a great power in the
post-Cold War period. Consequently, the basic tenant of China’s foreign
policy during the 1990s and through the 2000s was to maintain a stable and
peaceful

external environment conducive to the pursuit of economic development.

Based on this policy rationale, China has striven to develop and improve
bilateral ties with Southeast Asian states with the adroit use of its
tremendous economic resources. Examples include opening up its domestic
market, increasing regional investment, and

providing economic aid. Beijing’s approach, known as the Charm

Offensive, has, on the one hand, helped mitigate China’s image as a threat
to peace and eased tensions with Southeast Asia caused by China’s
economic and military development, while, on the other, helping facilitate
economic exchanges between China and Southeast Asia and

providing access to Southeast Asia’s resources, which has benefited

China’s own economic development. Regarding ASEAN-led
multilateralism, Beijing was wary of it in the early 1990s because it could
potentially serve to stem China’s resurgence and erode its sovereignty.
Nonetheless, a few years later, China changed its stance and even played an
active role in developing regional economic and security cooperative
institutions centered on ASEAN, because the low-level binding character of
these multilateral institutions has served to alleviate China’s

concerns and allowed it to channel its economic and political resources

and influence through the multilateral networks, in addition to the bilateral
links it already enjoyed, to achieve the changes that it desired. In other
words, while China is aware of potential restrictions that could be imposed
on it by multilateral mechanisms, it also regards multilateralism as a useful
platform to improve its international image and status.

The hidden rationale here is that China wants to gradually change its role
from participant to conductor as it increases its involvement in the
development of regional multilateralism. Great national capability has
moved

China to the front line of world affairs and piqued its desire to seek
corresponding power and influence by
 establishing its own alliance network in order to shape regional order in
favor of its national interests in the Asia-Pacific region. Over the past two
and a half decades, China’s relations

with Southeast Asia have advanced substantially. For instance, China is

now an active participant in the ARF and establishes the ASEAN–China
Free Trade Area (ACFTA) and is fostering RCEP with ASEAN. China’s
official foreign policy tone since 2013 under Xi Jinping was recently
changed to the pursuit of the Chinese Dream, a more

proactive and assertive policy, from the Peaceful Rising under Hu Jintao
from 2002–2012.4 This change is evidenced in China’s attitudes and actions
in dealing with maritime disputes in the South China Sea, such as the
militarization of its claimed islands and reefs, and its Silk Road Fund and
the Asian Infrastructure Investment Bank (AIIB), which is created to
support its far-reaching economic project, One Belt (the Silk Road
Economic Belt) and One Road (the 21st Century Maritime Silk Road),

together known as the OBOR.5 The Maritime Silk Road goes through
Southeast Asia. Although China’s regional policy is gradually becoming
assertive, the charm offensive policy

remains at the core of China’s regional engagement.

With respect to US engagement in Southeast Asia, although Washington

was aware of the potential impact of China’s rise on the US hegemonic
system in the Asia-Pacific region, it initially neglected the geopolitical
importance of Southeast Asia in future competition with China until
China’s quiet and almost imperceptible encroachment on US

hegemony became increasingly obvious in the 2000s. In the early 1990s,

the US turned a blind eye and passively responded to China’s engagement
in Southeast Asia. Beijing is almost always one step ahead of Washington
in terms of participating in the ARF and other ASEAN-led multilateral
institutions. However, faced with China’s deepening and widening
engagement and increasingly assertive behavior in Southeast Asia, the
George W. Bush Administration (2001–2009) took more proactive action to
maintain economic and security ties in Southeast Asia, which was
 incorporated with its global anti-terrorism policy after the 9/11 attacks of
2001. Under the Bush Administration, the US tightened relations with
Southeast Asia, for example by signing a series of Trade and Investment
Framework Agreements (TIFA) with Southeast Asian states to foster
economic cooperation, by participating in Trans-Pacific Partnership (TPP)
negotiations,6 and by elevating alliance status with Thailand and the
Philippines and defense and security relations with Singapore, as well as
increasing

military exchanges with non-traditional allies, such as Indonesia and

Vietnam, via the International Military

Education Training program (IMET). Changes in US policy attitude

toward Southeast Asia were carried out under the “Rebalancing to Asia”
policy initiated by the Obama Administration (2009–2016). US economic,
diplomatic, and

military cooperation and engagement in Southeast Asia were

comprehensively accelerated and expanded on this

strategic foundation. For instance, the US signed the Treaty of Amity

and Cooperation in Southeast Asia

(TAC)7 in 2009, regularly attended the ARF and the EAS, held

US–ASEAN leader summits, actively led the TPP negotiations,

upgraded relations with Vietnam, and reconnected with Myanmar, all of
which underscored the fact that the US was determined to not withdraw its
presence from the

region. In short, the US has been attempting to maintain its hegemonic

system by spreading liberal values, such as democracy and human rights,
and planting capitalist market economic systems, activities which are
buttressed by strong military deployment and cooperation. On the other
hand, China has been seeking to build a sphere of influence in Southeast
Asia to ensure that the region will not turn against it at some future date and
so that the region can continue to be a stable provider of resources and be a
market for
 Chinese exports and services. While economic engagement is currently
China’s key approach to establishing its own hegemonic system, military
measures are always made available alongside economic engagement to
reinforce and

consolidate its influence. Beijing is, in fact, taking a two-pronged

approach. This shows that Southeast Asia is now gaining geopolitical
weight as it faces and becomes increasingly intertwined in the growing
competition

between the US and China in the Asia-Pacific region.

US–China competition over influence has given rise to opportunities as

well as risks for Southeast Asian states.

This encouraged Southeast Asian states to foster closer cooperation and

integration with each other to manage and capitalize on the positive effects
of the competition between these two great powers, while mitigating the

negative ones. Promoting economic development is the most important

national policy of Southeast Asian states. In the course of pursuing
economic development, especially adopting export-led economic policy,
investment and

markets are essentials. As the factory to the world, China has been an
overwhelming competitor of Southeast Asian states for world markets and
investment. Nonetheless, since China has been attempting to reduce the
perception that it poses an economic threat and has wanted to foster positive
reciprocal economic relationships with

Southeast Asia, it has increased trade and investment in and opened up

its domestic market to regional states.

This has allowed Southeast Asian states to acquire needed capital and
markets from China or through China from the world. Furthermore, US
economic engagement has also helped channel foreign investment into the
region. That is to say, the competition between the US and China helps
generate trade and investment for Southeast Asia. The risk-averse and
profit-seeking nature of foreign investors has served to encourage the
facilitation of regional cooperation and integration among ASEAN states to
manage regional security as well as make the region

economically profitable for existing and prospective investors. For

example, one of their current major security issues is that China’s assertive
military expansion in the South China Sea could jeopardize the stability of

regional security. But the risk is partly mitigated by the US’s explicit
counterbalance to China’s expansionist military actions and China’s own
economic interests in the region, and partly by the collective effort on the

part of ASEAN states to bring the issue to the table of cooperative

security management that involves China and the US, for example, via the
ARF. AFTA and the AEC are also representative cooperative efforts of
ASEAN states to improve regional investment and business environment to
attract foreign investors.

In addition, from a strategic viewpoint, since the US and China are

attempting to include ASEAN states into their own alliance systems, or at
least to prevent target states from leaning toward the opposing side in the
competition over hegemony, they are more inclined to employ
accommodation than coercion in dealing with relations with ASEAN states.
This has given rise to conditions conducive to the pursuit of

changes that ASEAN states want to make, consequently encouraging

them into closer cooperation. Faced with

circumstances that are strategically beneficial, ASEAN states enjoy a

pivotal position that increases their

bargaining power in negotiations with the US and China over regional

security, economic, and political interests, which has been evidenced in
recent years by the increased hedging behavior of Southeast Asian states
toward the US and China. Willingness to accommodate on the part of the
US and China has also given ASEAN states more
 political room for agenda setting in regional security and economic
affairs, allowing them to set regional

development in their preferred trajectory. In other words, ASEAN states

are given higher strategic and political autonomy in conducting regional
development, mitigating the risk that their regional autonomy could be
eroded as the US and China increase regional involvement. However, this
strategic advantage could be less sustainable or could be easily diluted at
the bilateral level of interaction because weak national power makes it
difficult for individual ASEAN states to withstand pressure from the US or
China. In this regard, cooperative action via

multilateral mechanisms may help diversify and alleviate pressure

resulting from the US and China’s regional

involvement and also amplify this strategic advantage to reap more

economic and security benefits from the

US–China competition, evidenced by the development of the ARF where

the US and China accommodate the ASEAN

states’ agenda setting of regional development and ASEAN states

actively hedge against the US and China. Hence, the US–China competition
serves as an important catalyst to regional cooperation and integration in
Southeast

Asia and also enlarges the strategic autonomy and international political
autonomy of Southeast Asian states in regional affairs.

On the other hand, Southeast Asian states today are either currently
adopting or gradually moving toward a liberal capitalist route of economic
development. Employing this approach to development, they will be driven
to improve their domestic environments to facilitate investment and trade
and create open and safe investment

environments for risk-averse investors. Therefore, they are becoming

more sensitive to and are striving to
 prevent violent international conflicts that could jeopardize economic
activity. ASEAN states have experienced long interstate peace since 1979,
seeing a relative lack of violent interstate conflict and an exceptionally low
level of battle deaths (e.g., Kivimäki 2016; Tønnesson 2017). As will be
shown in Chapter 4, the pursuit of economic development through liberal
capitalist economic policies by Southeast Asian states has produced a
positive security externality to help create regional peace. This mitigates the
pressure and burden to maintain regional military security, alleviating the
need for external security

assistance, which accordingly weakens the condition that compels

Southeast Asian states to concede regional

autonomy for the provision of security from the US or China. In other

words, they can maintain their regional

autonomy. As noted, hegemonic competition also makes the US and

China more

willing to accommodate the needs of regional states and less willing to

use coercive means in dealing with

relations in Southeast Asia. This puts Southeast Asian states in a position

that allows them to acquire needed security commitment and assistance
with less concession of autonomy than before. The pursuit of liberal

capitalist economic development and the US–China competition together

create a virtuous circle that helps

reinforce Southeast Asian security and autonomy.

In Southeast Asia, competition between the US and China lends itself to

a beneficial strategic environment for regional states to promote economic
development as well as international political autonomy, which encourages

them to advance regional cooperation in order to effectively make use of

those positive strategic advantages to sustain promotion of development and
autonomy. On the other hand, liberal capitalist economic development
 contributes to regional peace and helps maintain the autonomy of
regional states in managing regional security with great powers. The
promotion of international political autonomy in turn gives regional states
more power in setting the course of regional development in ways more
favorable to their economic development, security

management, and international autonomy. In other words, the US–China

competition and the pursuit of liberal

capitalist economic development help reinforce the economic

development, military security, and international

political autonomy of Southeast Asian states.

Theoretical argument

As noted, what has happened in Southeast Asia makes for an intriguing case
in our understanding of international interactions. In conventional power-
oriented realist thought, great powers are central actors in steering and

shaping the international system, while small states are passive actors that
conform to the agendas and

operations of great powers in the international system. Small states have

little or no power or room to develop an operational order in favor of their
own security and autonomy in world politics. The inability to effectively
protect themselves motivates small states to ally with great powers to
survive in an anarchical world where

material power dominates. They will either ally with one great power
against another threatening great power

(“balancing”) or directly ally with the threatening great power itself

(“bandwagoning”) (Walt 1985; Waltz 1979).
However, for the small state, employing a balancing or bandwagoning
strategy to acquire and maintain security is not without cost. Morrow
(1991) points out that security is not the only consideration motivating
states to form alliances. In addition to security, a state, and a great power in
particular, might also wish to acquire more

autonomy in an alliance so that it will be more able to drive the

development trajectory of the international

system along agendas that help reinforce its international status and power.
Hence, when in alliance activities a state is willing to exchange its
autonomy for security and another is willing to exchange its security for

autonomy, it results in an autonomy–security tradeoff alliance or

asymmetric alliance.8 Asymmetric alliance relationships of this sort are
commonly found between small states and great powers. Because of its
inability to maintain a

satisfactory level of security in the international system, a small state gives

up some autonomy in exchange for increased security. As a result, a small
state usually becomes subservient to a great power.

Although small states might seem fated to accept this type of asymmetric
relationship, it is not necessarily inevitable. The autonomy–security trade-
off between small states and great powers may hinge on the anticipated
trajectory of economic development of small states and hegemonic
competition between great powers. Small states can acquire security
without conceding autonomy—and can even bolster their autonomy—in
their relationships with great powers when they pursue liberal capitalist
economic development and cooperation and when great powers

compete with each other in the power transition system. Economic

performance is an important aspect in

determining the legitimacy of the government or leader of a state.

Pursuing economic development through liberal capitalist policy,
particularly for developing states, requires foreign investment and free and
efficient markets to succeed. Foreign investors are sensitive to the stability
and security of the places they invest in. States on this development track
will make efforts to prevent and peacefully resolve interstate disputes,
because violent interstate conflict can disrupt economic exchange and
production, put off existing investment, and discourage

prospective investment, which can adversely affect economic

development and undermine the legitimacy of the

leader in office. Liberal capitalist economic development also

encourages states to facilitate economic

cooperation with open, free, and efficient institutions. In other words, the
pursuit of liberal capitalist

economic development generates a positive security externality for states

adopting this approach to development.

On the other hand, hegemonic competition between great powers in the

power transition system gives rise to a strategic environment that also helps
to reinforce the security and autonomy of small states and encourages their
cooperation. Growing national capability encourages a rising power to seek
corresponding international power and influence in order to underpin and
continue its growth and ultimately obtain the status it seeks in the

international system. This triggers a power transition process and

prompts the dominant power’s defense of its dominance, initiating
hegemonic competition. In the competition, alliance networks through
which power resources are piped are a vital battlefield. However, the rising
power and the dominant power are less likely to employ

coercive measures, such as military invasion or economic sanctions, to

extend and maintain alliance networks as this can incline states that are
already in or targeted to be included in their own alliance networks to move
to the opposing side. For the rising power, making friends by providing
economic benefits is a plausible way to

cultivate an alliance network, particularly when it can leverage its

rapidly growing economic capabilities. It also helps avoid the image of
being a security threat. Faced with the rising power’s increasing ability to
adopt an expansionist policy, the dominant power will be determined to
consolidate its alliance network. But instead of taking a coercive approach
to consolidate its alliance network, the dominant

power is more compelled to increase its economic resources and security

commitments to satisfy existing allies in order to prevent them from being
incorporated into the rising power’s alliance network, because coercive
measures leave more room for the rising power to establish closer relations
with the allies of the dominant power and then disaggregate the dominant
power’s alliance network, especially when the dominant power’s allies find
that the

cost of leaving the status quo can be compensated by the benefit gained
from joining the new status quo that is being established by the rising
power. The dominant power will also offer security and economic benefits
in an attempt to incorporate the rising power’s allies, or at least distance
them from the rising power. In other

words, both the dominant power and the rising power will hesitate at the
idea of using aggression in their

competition over their alliance networks. Accommodating and inducing

becomes the preferred means for keeping

existing allies and making new allies. This creates political and strategic
space for small states to set a

development agenda in favor of their own interests. That is to say, small

states faced with this type of

circumstance, as existing or prospective allies of either the dominant

power or the rising power, are given an international status allowing them to
obtain greater strategic and political power, allowing them to renegotiate
their autonomy and security in relations with both great powers. Also, they
receive increased economic and
 security benefits or, at a minimum, they are at a lower risk of having
benefits withdrawn by the rising or

dominant power.

Increasing economic and security benefits derived from the competing

great powers add impetus to small states’

pursuit of economic development and subsequently encourage their

cooperation and peaceful interstate interaction, making them more able to
maintain their security. In other words, small states can correspondingly
reduce their security reliance on the rising power or the dominant power
because of their own increased security capabilities, meaning that small
states can decrease their need to trade autonomy for security provision from
the great power.

The promotion of strategic and political status, on the other hand, gives
small states leverage when bargaining with great powers for more security,
economic benefits, and autonomy, as well as for cultivating a setting for
political and security development that can help consolidate and reinforce
this promotion of favorable

international status. This creates an incentive for small states to advance

their political and strategic

cooperation so that they can have greater bargaining power to sustain the
promotion of their international

status, which in turn can help them gain better terms for economic and
security interests from great powers.

Thus, although an autonomy–security tradeoff is frequently witnessed in

small states’ alliance relations with great powers, it is not necessarily
inevitable. Hegemonic competition between great powers in the power

transition system and the pursuit by small states of liberal capitalist

economic development give rise to an
 international environment in which small states can make changes to and
promote their autonomy, security, and

development in a positive, reinforcing way in a world politics dominated

by great powers.

brief note on research design

This study tests the proposed theoretical argument against ten Southeast
Asian states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand, and Vietnam. East Timor, which only

recently became independent, is not included in this book due to the lack of
data and information required for empirical analysis. Both quantitative and
qualitative research methods were used to examine the relationships of the
variables of theoretical interest. Regression analysis, the quantitative
method employed here, allows the

effects of various independent variables on the dependent variables to be

systematically compared. The

qualitative research method, process tracing, is used to examine the changes

in foreign policy behaviors of the investigated countries, based on public
statements of officials, official documents of governments and

organizations, the observations and judgments of country and regional

experts, and newspaper articles. By

providing in-depth information of investigated observations, qualitative

analysis can add inferential leverage that is often lacking in quantitative
analysis. The empirical investigations of Chapters 3 and 4 rely primarily on
regression analysis but are complemented with qualitative investigation that
helps sketch historical pictures of the
foreign-policy-making of the investigated cases. The key explanatory
variable of Chapter 3 is the US–China competition over alliance networks
in Southeast Asia and the dependent variable is Southeast Asian
cooperation. For Chapter 4, the dependent variable is interstate conflict and
the independent variable is the liberal capitalist economic

policies of Southeast Asian states. All these variables of interest are

quantified in either the continuous form or the dichotomous form. Chapter 5
shares the same explanatory

variable with Chapter 3 and its dependent variable is international political

and strategic autonomy. The complex content of international political
autonomy and strategic autonomy makes quantification of the dependent
variable of Chapter 5 hardly plausible; therefore, Chapter 5 relies on a
qualitative research method, using process tracing with crucial case
research design (Eckstein 1975). In other words, this study uses a research
approach composed of various methods to test theoretical hypotheses
proposed in the following

chapters.9
Book outline
This book consists primarily of one theoretical chapter and three empirical
chapters. Chapter 2 begins by discussing the formation of asymmetric
relations between small states and great powers. Then it develops a
reinforcing logic of economic development, military security, and
international political autonomy for small states in the international system,
taking into account the effects of the great power competition in the power
transition scenario and the liberal capitalist economic development of small
states. Chapters 3, 4, and 5 provide empirical investigations to test the
reinforcing logic by analyzing the evolution of international interactions
between Southeast Asian states, China, and the US in terms of foreign
policies, economic exchanges, security relations, and diplomatic
interactions. Chapter 3 analyzes the evolution of policies of the US and
China toward Southeast Asia and offers explanation of the effect of US–
China competition on regional cooperation of Southeast Asia, which is then
followed by a quantitative empirical analysis. Chapter 4 appraises the
implications of competing variables, namely democracy, economic
interdependence, and the ASEAN security management, on Southeast
Asian peace, and then it discusses the pacifying effect of Southeast Asian
states’ pursuit of liberal capitalist economic development on regional
interstate conflict. Then, a quantitative empirical analysis is employed to
compare and assess the proposed argument with the competing theories.
Chapter 5 discusses the autonomy of small states and explains how and why
small states can promote their autonomy when faced with great powers in
the international system. Based on the designed operationalization of a
state’s international political and strategic autonomy, it examines the effect
of US–China competition on the promotion of international political
autonomy and strategic autonomy of Southeast Asian states through the
lens of the case of the ARF and individual country cases, including the
Philippines and Vietnam, during the post-Cold War period. It concludes by
reviewing key findings and draws out some broader implications of this
study for scholarship of international security and cooperation as well as
international relations of the Asia-Pacific region.

Notes
1 Unless otherwise noted, the term “ASEAN states” refers to Southeast Asian states that were the
member states of ASEAN at the time. For instance, prior to 1995 the term “ASEAN states”
refers to Indonesia, Malaysia, Singapore, the Philippines, Thailand, and Brunei, but after 1999 it
includes Vietnam, Laos, Myanmar, and Cambodia.
2 Throughout this book, the term “small states” refers to countries with relatively small or weak
economic and military capabilities and a lower degree of international autonomy than that of
great powers. Further discussion on the definition of a small state is given in Chapter 2.
3 RCEP was initiated with the ASEAN Framework for Regional Comprehensive Economic
Partnership, passed in the 19th ASEAN leaders’ meeting in 2011, formally set off in 2012, and
began the first round of negotiation in 2013. It was built on the existing ASEAN + 1 Free Trade
Agreements (FTA).
4 To avoid controversy, the Chinese government soon exchanged the word “rise” for
“development” in its official propaganda, because the word “rise” can be interpreted as
suggesting expansion and threat.
5 When Xi Jinping visited four Central Asian countries (Turkmenistan, Kazakhstan, Uzbekistan,
and Kyrgyzstan) in September 2013, he proposed in a speech in Kazakhstan that China would
cooperate with Central Asian countries in the construction and development of the “Silk Road
Economic Belt” (also called the “New Silk Road”). When he visited Indonesia that same year,
he indicated that China would create the “21st Century Maritime Silk Road” (also called the
“New Maritime Silk Road”) to strengthen maritime cooperation with ASEAN countries. After
that, the OBOR initiative was formally incorporated into future key tasks of the Chinese
government during the Third Plenary Session of the 18th Central Committee of the Chinese
Communist Party and the Central Economic Work Conference held in 2013.
6 The TPP, a regional trade agreement connecting Asia, the Pacific, and Latin America, grew out
of the Trans-Pacific Strategic Economic Partnership Agreement between New Zealand,
Singapore, Chile, and Brunei in 2005. It is a “high-quality” FTA which involves a wide range of
trading issues, requires the complete opening up of domestic markets, and integrates regional
supply chains. However, the Trump Administration has withdrew the US from the TPP in 2017,
which has not only caused interruption to the establishment of the TPP but also undermined the
confidence of the US’s regional allies about Washington’s commitment to the region. But since
it is still not clear about the Trump Administration’s alternative to dealing with the US economic
relations in the Asia-Pacific region, it might be too arbitrary and early to conclude that US is
retreating from the region. It is also too early to predict the death of the TPP, because Japan now
has taken the leadership from the US in facilitating its establishment.
7 The TAC comprises of the following principles which constitute “the ASEAN Way”: (i) mutual
respect for the independence, sovereignty, and territorial integrity of all nations; (ii) the right of
every state to lead its national existence free from external interference, subversion, and
coercion; (iii) noninterference in the internal affairs of other states; (iv) settlement of differences
and disputes by peaceful means; and (v) renunciation of the use of force (ASEAN 1976).
8 The terms “autonomy” and “security,” as used in Morrow’s article, are abstract concepts. For
explanations of the two concepts and their application to this study, see further discussion in
Chapter 2 and Chapter 5.
9 Since the empirical chapters employ different methods using different types of data for different
variables, for the convenience of reading and understanding, individual research design is given
for each chapter, instead of providing an independent methodological chapter.

References
ASEAN, 1976. The Treaty of Amity and Cooperation in Southeast Asia. Bali, Indonesia. Available
from: http://asean.org/treaty-amity-cooperation-southeast-asia-indonesia-24-february-1976/
[accessed 2 June 2016].
Eckstein, H., 1975. Case Studies and Theory in Political Science. In: F. Greenstein and N. Polsby,
eds. Handbook of Political Science, Vol. 7. Reading, MA: Addison-Wesley, 79–138.
Kivimäki, T., 2016. The Long Peace of East Asia. New York: Routledge.
Morrow, J. D., 1991. Alliances and asymmetry: an alternative to the capability aggregation model of
alliances. American Journal of Political Science, 35(4), 904–933.
Tønnesson, S., 2017. Explaining the East Asian Peace: A Research Story: Copenhagen: NIAS Press.
Walt, S. M., 1985. Alliance formation and the balance of world power. International Security, 9(4),
3–43.
Waltz, K. N., 1979. Theory of International Politics. Reading, MA: Addison-Wesley.
2 Small states’ autonomy, security, and
development
A reinforcing logic

Introduction

Material power is generally regarded as a key aspect defining a state’s

status and role in the international system. As such, great powers are
assumed to be primary actors formulating and driving the international
system, while a small state’s task is to passively conform to the
international agenda of great powers. In other words, because of its lack of
material power, the small state hardly pursues a preferred trajectory of
development of the international system to enhance its own international
security, international political autonomy, and economic development. For
the small state, the lack of material power tends to be relatively evident in
the area of security. In conflicts with or when threatened by a great power,
the small state is rarely able to protect itself alone and is compelled to ally
itself with another great power against the menacing one or ally itself with
the threatening one. However, the small state that employs either strategy to
maintain security loses some or all of its international autonomy as a result.
The small state that elects to bandwagon is forced to relinquish its
international autonomy to the threatening power. On the other hand,
although the main purpose of the balancing strategy is aggregating
capabilities through an alliance to deter a common threat, the small state’s
ally could also want to acquire more international autonomy in the alliance,
constituting an autonomy–security tradeoff alliance commonly found
between small states and great powers (Morrow 1991).1 The small state
can, therefore, obtain the level of security it desires, but at the cost of its
autonomy in the international system. As a result, the small state is less able
to develop its own international agenda. That is to say, it is difficult for the
small state to simultaneously enjoy both autonomy and security in the
international system at the same level as great powers.
However, although the autonomy–security trade-off seems to be the fate
for small states faced with great power, the situation is not irreversible. The
autonomy–security trade-off could hinge on the small state’s anticipated
development trajectory and the competition among great powers. On the
one hand, competition for influence and dominance in the power transition
system makes competing great powers less likely to use aggressive and
coercive policies toward the small states they want to include in their own
network of allies, which not only encourages wooed small states to
cooperate with each other but also creates greater strategic space for the
small state to bargain for greater international autonomy that it can enjoy
without risking the withdrawal of security benefits promised by great
powers. On the other hand, pursuing economic development through
economic liberalization encourages small states to cooperate with each
other and endeavor to resolve disputes peacefully, which can improve their
external security environment. Thus, the small state’s reliance on great
power for security could decrease. When the two developments come
together, the small state gains an opportunity to reinforce its security,
autonomy, and development at the same time.
This chapter will first discuss the formation of asymmetric relations
between the small state and great power. Then it will discuss how
competition between great powers for alliance networks for power and
influence in the power transition context gives rise to favorable
opportunities for the small state to adjust the autonomy–security trade-off in
relations with the great power. Third, it will provide a theoretical
framework for how the small state can reinforce its economic development,
military security, and international political autonomy when the small state
pursues liberal capitalist economic development in the context that great
powers compete with each other in the power transition system. A
conclusion ends the chapter.

The asymmetric relationship between the small state and great power

Anarchy and hierarchy coexist in the international system (Lake 1996). In

the anarchic world, no central authority exists to regulate interaction among
sovereign states that are formally given equal international standing in
world politics. That is, each sovereign state possesses not only exclusive
domestic sovereignty but also the same level of international autonomy. In
reality, states differ from one to the other in terms of international power
and status, defined by their national capabilities in achieving what they
want to change and secure in world politics, making a hierarchical
relationship among states. Material capacity constitutes the vital part of a
state’s composite capability and plays a critical role in defining a state’s
international status as a great power or a small state and its foreign behavior
(Rothstein 1968; Vital 1967). In other words, the distribution of material
power in the international system virtually affects and sets interaction and
relationships among states. An abundance of material and human resources,
such as land, natural resources, and population, contribute to bigger
production capacity and market, generating greater ability to assess and
accumulate capital to enhance innovation and technology, allowing a state
to sustain better economic development and bear more of the costs required
for military security. This suggests that a great power can adopt foreign
policies that are more independent and proactive, enabling it to react to
external changes and determine the dynamics of the international system to
protect and enhance its interests and achieve its desired goals, while a small
state, deficient in material capacity, is less able to sustain economic
development and maintain military security on its own, making it more
vulnerable to changes in the external environment (Commonwealth
Secretariat 1997). Rather than adopting proactive policies, the small state is
often compelled to either adapt to the results of external changes or to seek
external assistance to deal with the results, so it can ensure its national
interests. In other words, the small state has a narrower range of actions and
strategies available to maintain or pursue its desired interests and to tackle
threats and uncertainties in world politics.
In this regard, in terms of international security, the small state is
unlikely to independently prevail in conflicts with great power. To prevent
national security conditions from deteriorating in conflicts with the
threatening power, the small state can adopt either a balancing strategy (i.e.,
allying with one or more great powers and other states sharing common
security interests to counter threatening great power) or bandwagoning
strategy (i.e., allying with or subordinating to a threatening great power to
avoid undesirable danger in unwinnable conflicts or to secure revisionist
benefits) (Schweller 1994; Walt 1985; Waltz 1979). In the scenario of
balance-of-power, states form alliances to aggregate capabilities to counter
a common security threat and restore the balance-of-power in the
international system (Waltz 1979). However, capability aggregation is not
necessarily the only goal of forming alliances. Morrow (1991) argues that
an alliance can be formed through exchanging autonomy and security
between two parties.2 As has been mentioned, states formally hold the same
level of autonomy, but they in fact have different levels of security
capabilities as a result of different national capability. This state of affairs
can lead to different motives and needs between states to form an alliance.
In an alliance between a great power and a small state, the great power with
a strong security capacity could want to use the alliance to enhance its
autonomy, such as agenda setting and policy conduct, rather than security,
to pursue favorable changes to further its interests in world politics. In
contrast, weak security capabilities could make the small state prefer to
augment protection from external security threats, making it willing to ally
with great power at the expense of autonomy in order to gain security
assistance from the great power, such as military aid or arms sales.
Therefore, the small state and the great power forge an “autonomy–security
trade-off” alliance or an “asymmetric” alliance, different from the
commonly seen “capability aggregation” or “symmetric” model of alliance.
For example, during the Cold War, Finland yielded its international
autonomy when it bandwagoned with the Soviet Union. In fact, a tight
security alignment, such as balancing or bandwagoning, usually entails a
high level of security and political cooperation under formal defense treaty
agreements involving military basing, operations, and bureaucratic
collaboration (Ciorciari 2010). The small state commonly is the side that
provides land for military bases and coordinates its foreign and domestic
policies with the great power, resulting in a loss of international and even
domestic policy flexibility. In other words, the small state usually pursues
international security at the expense of its international autonomy. However,
although such autonomy–security trade-off relationships are prevalent
between small states and great powers, this is not always the destiny of a
small state. There exists an opportunity for the small state to reverse this
asymmetric relationship if the dominant power is in competition with a
rising power which could potentially assume international supremacy in the
power transition system.
Small states’ opportunity to change asymmetric relation: great power
competition in the power transition system3

According to the power transition (the PT) theory (Kugler and Lemke 1996,
2000; Lemke 2002; Organski 1958; Tammen et al. 2000), the world is
hierarchical in the form of a pyramid, consisting of a few strong states and
many weak states in terms of composite capabilities. The strongest state is
the dominant power that develops, conducts, and manages the hierarchical
ordered patterns, i.e., the status quo, in which economic, diplomatic, and
military relations between most states in the world are embedded. In other
words, the status quo is a global cooperation network or an alliance network
managed by the dominant power to reinforce its power in the international
system. The status quo of the international system is also an international
projection of the domestic arrangements of political and economic
resources of the dominant power. Superior capabilities enable the dominant
power to shore up the status quo that can reinforce its internal development
and subsequently its international dominance. In addition to superior
national capabilities, the stability of the status quo also hinges on the
support of subordinate states which is determined by their satisfaction with
or evaluation of the status quo. The PT theory argues that subordinate states
are willing to stay being led by the dominant power because they are
satisfied with benefits obtained from the status quo and share common
interests and compatible preferences with the dominant power. In other
words, if the status quo cannot continually generate sufficient benefits to
satisfy subordinate states, they could contemplate deviating from the status
quo, possibly weakening and deconstructing the status quo. Hence, to keep
the status quo stable, the dominant power will undertake whatever tasks and
efforts are necessary to ensure that the status quo continues to satisfy
subordinate states. It is unlikely, however, that the dominant power’s values
and interests will be unanimously accepted by all states in the international
system or that the operation of the status quo will satisfy all subordinate
states all the time. There are always dissatisfied states that either want to
modify the operational patterns of the status quo or seek to construct an
alternative one in order to have their preferences, interests, and values
realized.
According to the PT theory, the change in power distribution between
the dominant power and the rising power will prompt the latter’s quest to
change the status quo, in effect challenging the former, especially when the
rising power is not satisfied with the status quo. This shift of power is
caused by the rising power’s rapid economic growth that is driven by its
internal development of industrialization. Growing economic development
helps the rising power foster economic and military competence in world
politics. In addition to the promotion of internal power, establishing an
alliance network externally is another primary foundation for recasting the
existing power distribution (Kim 1991). Those who join the newly
developing status quo being formed by the rising power will add impetus to
accelerate the formation of a new power-reinforcing pattern for the rising
power. In other words, internal and external means are two sides of the
same coin for the rising power in the course of achieving power parity with
the dominant power and then taking over the dominant position in the
international system.4 Faced with a rising power enjoying rapid internal
development that is helping it to expand its alliance network, the dominant
power will find it difficult to preserve its predominance in the existing
status quo. Being in a different phase of economic development compared
to the rising power, it would be difficult for the dominant power, whose
mature economy is growing at a lower rate, to maintain economic growth
comparable to that of the rising power, let alone outpace it. Therefore,
consolidating and expanding a military and economic alliance network
becomes a viable option because the subordinate states play a key role by
providing and chaining up external power resources to reinforce the
operation of the status quo, so that the dominant power’s supreme status can
be maintained and the existing status quo kept alive. The alliance network,
therefore, becomes a turf where the dominant power and the rising power
compete: the former wishes to sustain the status quo and the latter wants to
enhance its international power and status.5
Against this background, states subordinated to or dissatisfied with the
status quo become targets for the two competing powers which would like
to include them in their own alliance network, giving the small state a
strategic opportunity to bargain for more military assistance and economic
benefits from the two competing powers to benefit their own security and
development, while promoting their international autonomy. This
opportunity emerges because the dominant and rising powers will more
likely be accommodating than aggressive or threatening when expanding
their alliance networks, so as not to risk pushing the target state to the
opponent’s side. Walt (1985: 14) argues that “restraint and benevolent
foreign policies are best because strong states may be valued as allies not
only by how much they offer their partners but also the level of
threatening.” For the rising power, benign foreign policies, such as offering
economic benefits, security assistance, and respecting foreign or domestic
policy autonomy, clearly will be more effective to furthering its pursuit of
alliance network enlargement, especially when its national capabilities can
afford the cost of the policies. Faced with the rising power’s benevolent
approach to pursuing the subordinate states in the status quo, it would be
unwise and counterproductive for the dominant power to use suppressive
measures, such as economic sanctions and political or military interference,
to maintain ties with the subordinate states as it might simply irritate the
subordinate states and provoke resistance to the dominant power. Moreover,
increasingly greater benefits generated by the rising power’s developing
status quo could increase dissatisfaction among subordinate states with the
weakening benefit output of the status quo caused by the dominant power’s
economic slowdown. As a consequence, the subordinate states could
gradually shift toward the rising power, causing the status quo to fall apart.
The dominant power’s suppressive policies toward the members of the
status quo could also dissuade potential allies from joining the status quo,
hindering the expansion of the alliance network. When approaching
dissatisfied states, the dominant power’s aggressive foreign policies could
result in resistance and hostility, encouraging them to coordinate with the
rising power. In contrast, improvements in the dominant power’s relations
with dissatisfied states could increase the cost of expanding an alliance
network for the rising power, disrupting the rising power’s expansionist
policy. Therefore, the rising power’s charm offensive strategy will serve to
pressure the dominant power into adopting a relatively softer and more
accommodating approach to consolidate the status quo and establish
positive relationships with the potential allies. As a result, the competition
for power between the dominant power and the rising power over the
alliance network could bring about a range of benefits for subordinate and
dissatisfied states.
In this context, the small state, whether subordinate or dissatisfied, can
obtain greater leverage with the dominant power and the rising power when
bargaining over issues of concern, as the two great powers prefer to use
benign and accommodating foreign policies. Hence the targeted small state
will be in a pivotal position that can help them leverage the security
dilemma faced with the rising power and the dominant power on
competition over alliance networks, so that they could acquire more
concessions or offers on issues of interest in negotiations. In other words,
the small state might be able to maintain its autonomy at less cost to its
security in its allying relations with the two competing powers. For
example, the small state could obtain more in such areas as investment,
trade, markets, and security assistance from the two competing powers
while conceding little or none of its international autonomy to shaping the
preferred agenda of regional development and order. Or it could increase its
international political autonomy without any reduction in its economic or
security benefits. Its strategic pivotal position would also allow the small
state to adopt an alternative approach, such as hedging, which is more
flexible than balancing or bandwagoning, to deal with relations with and
increase advantages from the competing great powers.6 In sum, great power
competition in the power transition context makes it possible for the small
state to move away from strong balancing or bandwagoning, meaning that it
could relatively adjust the autonomy–security trade-off relations with great
powers in world politics.

How can a small state reinforce its autonomy, security, and

development?
Economic wealth is the primary foundation upon which a state’s national
security capabilities rests. Without money, there is no protection.
Continuous economic development enables a state to accumulate financial
and human resources to develop its national defense. As mentioned
previously, weaker economic capacity makes it difficult for the small state
to afford the desired level of national defense to tackle external threats or
uncertainties, compelling the small state to seek external security assistance,
particularly from a powerful nation, at the cost of international autonomy.
On the other hand, the small state mostly relies on external capital and
markets, provided mainly by a powerful nation, to advance its economic
development in the world economy. Uneven economic dependence between
a powerful nation and the small state allows the former to enhance the
latter’s security reliance. For example, a small state that is advancing
economic development may make military procurements from the latter’s
defense industries or allow military bases to remain on the small state’s soil,
a move which would reinforce the small state’s security dependence, as a
return for making an economic agreement with or acquiring foreign
investment from a powerful nation. The small state would be locked into
security- and economic-dependent relations with the powerful nation,
costing it its international autonomy. However, the small state on its own
could improve its unfavorable situation by enhancing national economic
development using the liberal capitalist approach.
Pursuit of liberal capitalist economic development, on the one hand,
could help accumulate national wealth which underpins national defense
expenditure; on the other hand, it helps produce international peace. The
effect of economic development on a state’s propensity for international
conflict has been a long-standing theme in international studies. One
classical stand argues that economic development generates lateral pressure
which leads a state to adopt expansionist foreign policies to acquire natural
resources overseas to satisfy increasing domestic capacity of production and
consumption (Choucri and North 1975). However, Rosecrance (1986)
argues that economic development driven by improvement of industry and
technology can help diminish the incentive to use military measures to
accumulate wealth, because war preparations become increasingly costly,
trade more cost-effective, and capital and intellectual resources more crucial
then natural resources in growth. Recently, Boehmer and Sobek (2005)
argued that a state’s opportunity and willingness to use military force for
economic growth could be contingent on the level of the state’s economic
development. Both developed states and less-developed states are less
likely to use force to further development because the former is more reliant
on service sectors to increase national wealth and the latter does not have
the military capabilities needed to adopt an expansionist policy, whereas
developing states who have built up military capabilities, but that have not
yet transited to an industrial and service economy, are more likely to try to
acquire natural resources for development through forceful territorial
acquisition. Similarly, Gartzke (2007) also finds that development leads to
more peaceful relations between contiguous states than between non-
contiguous states. On the other hand, increasing economic interdependence
through trade also makes violent international interaction prohibitively
expensive due to the high economic and political costs of the interruption of
trade links that communicate a range of matters beyond commercial
exchanges (Hegre et al. 2010; Oneal and Russett 1997, 1999a, 1999b;
Polachek et al. 1999; Russett and Oneal 2001).7 Also, economic
interdependence through trade and capital that serve as mutually valuable
linkages provides a mechanism for states to communicate credibly in the
bargaining process of a crisis as damaging those valuable economic
connections signals resolve, so that it reduces the use of violent measures to
settle a crisis (Gartzke et al. 2001; Morrow 1999). In other words,
developing states become less conflicting on the way to higher economic
development and greater economic interdependence. These analyses mainly
stress the resulting constraining effect of economic development and
consequential economic interdependence on a state’s choice of foreign
policies, based on the lateral pressure of economic development, a deterrent
effect by opportunity cost, the effectiveness of trade for economic
development, or credible signaling. Nonetheless, the choice of certain
economic policies to pursue development could also produce a distinct
effect on a state’s foreign behavior.
In democratic or authoritarian regimes, to remain in office leaders have
to provide advantages to politically relevant domestic supporters in order to
maintain a winning coalition consisting of voters or private economic and
political clients (Bueno de Mesquita et al. 1999, 2003). A lack of or poor
economic development deprives a leader of her or his capacity to produce
enough advantages to satisfy supporters who expect greater economic gains
and are averse to losing their hold on prior economic gains. This, in turn,
endangers a leader’s ruling legitimacy and stability. Therefore, making
economic policies that keep the economy thriving, so as to provide more
economic benefits to satisfy the winning coalition, is a leader’s dominant
undertaking to secure ruling power; otherwise, sooner or later, the leader
will be sacked, either by election or coup. Although economic policy
certainly includes a leader’s personal calculations and interests, it also
reflects the aggregate political and economic interests and preferences
(philosophy and prospects) of groups of officials and individuals within
society concerned with how to achieve national prosperity and growth. That
is to say, the ruling party and its social coalitions act in concert to preserve
and enhance their shared political and economic interests by establishing
certain beneficial economic institutions. In this regard, a domestic ruling
coalition that prefers a liberal capitalist approach to economic development,
i.e., free-market reforms, export-oriented economic policies, and free trade
and financial policies, is more likely to advance regional cooperation and
promote peaceful international relations to maintain stable and free markets
for exports and to secure a continuous inflow of capital, investment, and
technology, whereas a domestic protectionist ruling coalition consisting of
statist, nationalist, and import-substituting economic interests and
preferences is less likely to prevent international conflicts and endorse
international cooperation (McDonald 2004; Solingen 1997).8 Interstate
conflict might not only disrupt existing foreign economic exchanges as a
result of war-related activities, blockades, and the closing down of
important infrastructure, such as harbors and airports, as well as reduced
domestic production and consumption due to the destruction of property
and infrastructure and loss of human resources, but it might also discourage
potential inflow of foreign capital and investment that tend to avoid the
high risk of loss and the low prospect of returns (Li and Sacko 2002; Long
2008; Pollins 1989a, 1989b). Immediate and potential costs resulting from
violent interstate conflicts, therefore, deter liberal capitalist economies from
breaking peaceful and cooperative relations with one another.
On the other hand, a liberal capitalist economy necessitates removal of
protectionist economic institutions privileging inward-looking politicians
and other protected individuals, changing wealth and power distribution in a
society in which the liberal capitalist coalition’s domestic supports and
influences are extended and the protectionist coalition’s domestic power is
relatively reduced, enhancing the prospect for peaceful foreign behavior of
a state (McDonald 2004). Multilateral cooperation with foreign liberal
political and commercial parties can also help reinforce the political and
economic capacities of a domestic liberal capitalist coalition to further
disadvantage the protectionist coalition in economic policy making,
ensuring the advancement and consolidation of economic liberalization
(Solingen 1997). Furthermore, expanding privatization in the course of
liberal capitalist development mitigates a state’s propensity for conflict,
because privatization as a key feature of liberal capitalist economy
decreases a government’s hold on public assets, thereby undermining its
fiscal autonomy and political power to arbitrarily pursue belligerent foreign
policies on behalf of the interests of the ruling class (McDonald 2007,
2009). In short, when the rulers of a pair or a group of states, particularly
less-developed and developing ones, tend to promote liberal capitalist
economic development, they are not only sending costly signals (Fearon
1994) that mitigate the outbreak of conflict, they are also fostering a
consensus of mutually beneficial and cooperative foreign policies for
economic development, decreasing the prospect of violent interaction
between the states.
Based on this rationale, if the small states in a region collectively pursue
liberal capitalist economic development, they can expect to see greater
regional economic cooperation and integration and an environment
characterized by better peaceful regional security. As such, their security
capabilities will increase relatively because, on the one hand, economic
growth helps enhance the internal capabilities needed to maintain a
preferred degree of national defense, while, on the other hand, peaceful
regional interaction in pursuit of liberal capitalist economic development
can alleviate external military security threats and uncertainties, and
mitigate the likelihood of intervention by a powerful nation. Changes in the
security situation allows the small state to reduce to some degree its
reliance on external security assistance from a powerful nation. In other
words, the need to concede international political autonomy to a great
power for security assistance in an alliance can be decreased. Hence, for its
part, the small state will become able to adjust its asymmetric relations with
a great power. This development can also be further reinforced when great
powers compete with each other for alliance networks during their power
transition process. As mentioned earlier, the dominant and rising powers
prefer to satisfy the requests of targeted small states, allowing the latter to
enjoy an advantageous pivotal position to hedge against the two competing
powers for greater economic resources—such as export markets, foreign
investment, and security assistance—and commitments, with the least loss
in terms of international autonomy. The economic and security benefits
derived from the competition between the two great powers can further
contribute to the formation of a favorable security and economic
environment for the small state, allowing it to pursue liberal capitalist
economic development and national security to a greater degree. This, in
turn, helps strengthen the small state’s bargaining power with the great
power as it pursues greater international autonomy. Promotion of
international autonomy can motivate small states to change the existing
regional order to preserve and reinforce their economic and security gains.
This motivation encourages small states led by liberal capitalist ruling
coalitions to cooperate with one another and use the promoted international
autonomy to effectively reshape as well as reorient the status quo to achieve
this goal. Consequently, the small state’s autonomy, security, and
development are put on a reinforcing trajectory. In short, if a small state
employs liberal capitalist means to pursue economic development and is
then simultaneously pursued by competing great powers to join their
alliance network, it can comparatively reinforce its economic development,
military security, and international autonomy.
Figure 2.1 shows the possible outcomes of the autonomy–security mix in
different types of alliances to the small state. The black dot on the
indifference curve is the original position of the autonomy–security mix
without an alliance. According to Morrow (1991: 913–914), only an
alliance with a great power can move a small state’s autonomy–security mix
over the indifference curve, that is, the black dot A. The black dot B is the
outcome of an alliance with a non-great power which increases security
with a small cost of autonomy but moves the original autonomy–security
mix below the indifference curve. The black dot C shows the outcome of an
autonomy-enhanced alliance with a large cost of security, which moves the
original autonomy–security mix below the indifference curve, similar to the
black dot B. The autonomy–security trade-off model of alliance postulates
that low security capacity makes the small state willing to concede its
autonomy for a moderate degree of autonomy–security mix in alliance with
a great power. However, the reinforcing logic proposed above suggests that
there exists a possibility, the black squared dot D, that the small state could
hold a higher level of the autonomy–security mix in an alliance with a great
power when it is the target ally which great powers compete to include in
their alliance networks and small states themselves pursue liberal capitalist
economic development.
Figure 2.1 The autonomy–security outcomes of alliances for small states.
Note
This figure is adopted and revised from Morrow (1991). The solid
preference curve is the indifference curve.

Based on the reinforcing logic, I posit three general hypotheses for the
empirical analyses of the following chapters based on the context of
Southeast Asia:9

• Hypothesis 1: If the great powers compete with each other to include

targeted small states in their own alliance networks in the power
transition context, then those targeted small states will increase their
cooperation.
• Hypothesis 2: If small states pursue liberal capitalist economic
development, then the likelihood of interstate conflict between them
will decrease.
• Hypothesis 3: If the great powers compete with each other to include
targeted small states in their own alliance networks in the power
 transition context, then the targeted small state can acquire more
international political and strategic autonomy.

Conclusion
In contrast to conventional thinking, this book presents a reinforcing logic
for small states’ autonomy, security, and development in the international
system, suggesting that the small state can enhance these three
competencies in the face of a great power on the condition that it pursues
liberal capitalist economic development and that great powers are
competing with each other for power and influence during power transition.
Obviously, lack of material capabilities serve as a disadvantage to the small
state in international political, economic, and military affairs. As a result, it
is commonly observed that the small state will ally itself with a great power
to enhance its ability to protect what it wants to protect, rather than strive to
achieve it alone. It also commonly noted, however, that the small state pays
for its alliance with a great power through loss in its own autonomy.
Competition for alliance networks between great powers gives the small
state leverage to negotiate how much autonomy to concede and the security
benefits to gain when it allies, because during a power transition the
competing great powers are more willing than usual to increase the
economic, security, or political advantages they offer to maintain and
expand their own sphere of power and influence. In addition, liberal
capitalist economic development not only increases the small state’s
security capabilities, it also pacifies the small state’s external security
environment. When the two conditions come together, the small state can
trigger the reinforcing dynamics to promote autonomy, security, and
development in a world dominated by great powers. Given this opportunity,
the small states in a region can collectively drive the reinforcing dynamics
by reforming the status quo in a way that they can retain the fruits resulting
from this development. In short, the small state might be weak overall but
that does not mean it necessarily has to always have the weaker hand when
faced with great powers. The following chapters will empirically examine
this theoretical statement, using the case of the US, China, and Southeast
Asian states.

Notes
1 Regarding the application of the concepts “autonomy” and “security” to such areas as the
military, economics, and politics, a further discussion is provided in Chapter 5.
2 Morrow (1991: 908) defines a state’s autonomy as “the degree to which it pursues desired
changes in the status quo” and a state’s security as “the ability to maintain the current resolution
of the issues that it wishes to preserve.”
3 One could ask why power competition exists between great powers in the “power transition
system.” Is it necessary to compete? It might be worthwhile to provide in this footnote some
reasons to justify the use of the power transition perspective for the development of the
theoretical argumentation in this book. First, from a theoretical viewpoint, the PT theory
provides a dynamic understanding of the source of power competition between great powers,
i.e., changes in relative power resulting from changes in national capabilities and its impact on
the strategic calculations and actions of a great power, especially toward non-major powers, in
the course of pursuing power and dominance in the international system. Compared with the
balance-of-power perspective, the power transition perspective has an advantage because the
discussion of power competition in the balance-of-power scenario focuses on the function of
alliance in strategic interactions for acquiring power and it does not explain further how changes
in national capabilities can influence the selection of approach or strategy to forge alliance with
other states. Second, the development of the theory offered in this book rests on observation of
the changing dynamics of interaction between China, the US, and Southeast Asian states over
the past decades, a period marked by a rapid growth of China’s national capabilities. The
development of the case here fits well into the PT theory. Therefore, the power transition theory
is a suitable basis for developing the theory presented in this book.
4 The internal and external approaches to establishing a new status quo are similar to what realists
call “internal balance” and “external balance” (Paul et al. 2004).
5 This argument is based on the scenario that a rising power will want to acquire power and
influence corresponding to its increasing national capabilities. A rising power’s pursuit of power
in the international system may prompt it to change the status quo initiated by the dominant
power. Nonetheless, it is possible that the dominant power and the rising power share similar
preferences for the status quo. In this alternative scenario, the status quo could remain the same
or undergo limited modifications. This could result in a declining dominant power deciding not
to challenge the upcoming dominant power because it can still benefit from the new but similar
status quo (Lemke 2004). Accordingly, the current cooperation network (the status quo) may
remain, and thus the wide-ranging competition expected among the allies may not occur.
However, it will be difficult for the dominant power to renounce its dominance as it is a power-
maximizing actor. The competition will still exist but it may be relatively benign and
insignificant. Regardless of whether or not it is satisfied with or attempts to restructure the status
quo, the rising power will seek to build international status and influence corresponding to its
growing national capabilities, driven by rapid development built through industrialization and
modernization.
6 The definition of hedging will be elaborated on in detail in Chapter 5.
7 However, some scholars used alternative measurements of economic interdependence to test the
liberal peace argument in the empirical analysis, and argued that the pacifying effect of trade is
not unconditional and that trade is positively correlated with interstate conflicts. For a succinct
comparison of different views about trade–conflict, see Barbieri and Schneider (1999); for a
comprehensive discussion, see Schneider, Barbieri, and Gleditsch (2003).
8 For an explanation of how economic liberalization policies can encourage economic
regionalism, see Schiff and Winters (2003).
9 In the empirical chapters that follow, these general hypotheses will be rewritten with the context
of Southeast Asia.
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3 Southeast Asian states’ cooperation in the
context of US–China competition

Introduction

At the end of 2015, Southeast Asia witnessed another significant advance in

regional cooperation as ASEAN formally announced the establishment of
the ASEAN Community (AC) pillared by the political-security, economic,
and socio-cultural communities. Of the three communities, the AEC enjoys a
relatively advanced position over the other two. ASEAN was established in
1967 and it took about five decades for it to reach this milestone. In fact, as a
regional intergovernmental organization designed to promote regional
cooperation and integration, ASEAN progressed little in its first two
decades, because different domestic and international concerns among
ASEAN’s founding members that were in the process of state-building
hindered a regional convergence of interests in the context of Cold War. The
end of the Cold War allowed ASEAN to regain momentum in its pursuit of
regional integration as the different political ideologies that tore the region
into communist and non-communist camps now play a less prominent role
among regional states than the pursuit of economic development. Against
this background, for example, ASEAN launched the process to establish
AFTA in 1992, initiated the ARF in 1994, and extended membership during
the second half of the 1990s to Cambodia, Laos, Myanmar, and Vietnam, the
states previously in enmity with the founding ASEAN states. All of this
shows the collective desire of Southeast Asian states to create an economic
and security environment favorable to national development. The
establishment of the now reflects the positive effects of those early efforts.
However, ASEAN’s remarkable development is not merely the outcome of
the collective action of ASEAN members. The competition between the US
and China caused by power shifting in the post-Cold War period has also
exerted profound influence on ASEAN regional cooperation and heightened
the importance of the role played by ASEAN in the development of regional
order in the Asia-Pacific region.
 During the Cold War, US–China competition revolved around ideological
antagonism at a level beneath the grand confrontation between US and the
Soviet Union. Their ideological competition gradually transitioned into
competition over power after China instigated economic reforms for
promoting national development in 1978. Competitive interaction between
China and the US for regional power and influence evidently increased when
the power transition between the two powers accelerated, and this has
become the underlying force driving and orienting the dynamics of
international relations in the Asia-Pacific region. Pursuing a greater role in
deciding a trajectory beneficial to it in regional development, Beijing has
cautiously avoided generating a threatening image and actively takes
advantage of its growing economic capabilities to employ its “charm
offensive” to improve relations with neighboring states. Examples of the
charm offensive include offering generous economic aid, opening domestic
markets, and supporting regional multilateralism. For example, China
participates in the ARF, carries out the ACFTA), and initiates the RCEP with
ASEAN states. Although its economic charm offensive remains the core
tenant of regional policy, it in recent years has become incrementally
assertive. The US, responding to China’s growing assertiveness in the area
of security (such as constructing military facilities and building up forces in
the South China Sea and the East China Sea) and its continued use of the
charm offensive in the area of economics (such as initiating the AIIB and the
OBOR), is accelerating its return to Asia and strengthening its rebalancing
policy by increasing regional military and economic ties with regional states
in order to defend arrangements that buttress its regional predominance, such
as democratic governance and liberal market economies. In Southeast Asia,
the US has used various economic and military initiatives to reenergize
bilateral ties with traditional allies like Thailand, the Philippines, and
Singapore. It has also been seeking to advance relations with Indonesia and
Malaysia and to improve relations with Vietnam, Cambodia, Laos, and
Myanmar, countries that were previously antagonistic to the US. In addition
to bilateral engagements, the US also takes part in the ASEAN-led
multilateral institutions, such as the ARF and the EAS, and headed the TPP
negotiations. Deepening regional involvement by Washington and Beijing
have been accompanied by more positive benefits than negative coercions.
This has cleared the way for an international environment favorable to
ASEAN states’ pursuit of economic development, regional cooperation and
integration in Southeast Asia.
This chapter is structured as follows. It first reviews the evolution of US–
China competition in Southeast Asia after the end of the Second World War.
Then it shows the implications of US–China competition on the
development of regional cooperation in Southeast Asia. Third, it adopts
statistical methods for empirical examination of the relationship between the
US–China competition and Southeast Asian regional cooperation. It ends
with concluding remarks.

The US–China competition in Southeast Asia after the end of the Cold
War

During the Cold War

The end of the Second World War was followed by a divided world, with the
communist camp on the one side and the anti-communist camp on the other.
This post-war world structure defined the US–China relations at the time,
centering mainly on their ideological and geopolitical competition. This
great power confrontation on the eastern side of the Asia-Pacific region led
to several international conflicts, such as the Korean War, the Taiwan Straits
crises in the 1950s, and the Vietnam War in the 1960s, generating long-
lasting impacts on regional stability and order. Against this backdrop, the
goal of China’s foreign policy toward Southeast Asia was to provide support
for local revolutionaries to help establish local communist regimes so as to
push the US out of the region and prevent the Soviet Union’s hegemony in
the region. As a result, China was generally hostile to the governments of its
Southeast Asian neighbors, particularly those that lined up with the US (Bert
2003: 109–110; Muni 2002: 5–7; Percival 2007: 5–6). That is to say,
Southeast Asia was an important front for the US’s containment policy,
which was underpinned by the hub-and-spoke alliance system that included
Thailand and the Philippines to counter the expansionist policies of the
Soviet Union and China. However, increased friction between China and the
Soviet Union on the division of regional power and the US’s weakening
capacity caused by the Vietnam War during the 1970s motivated the US and
China to strategically realign with each other in order to counterbalance the
Soviet Union. Significant reduction of rivalry between the US and China
under rapprochement in the early 1970s produced an important impact on
the development of their relations with Southeast Asian states afterwards
(Bert 2003: 110–111; Percival 2007: 6–7).
The end of the Vietnam War was the critical watershed for the US and
China’s foreign policymaking toward Southeast Asia. The rise of a
noncompliant Vietnam backed by the Soviet Union compelled China to
disconnect from local revolutionary movements and improve relations with
ASEAN states, including establishing diplomatic relations with Malaysia,
Thailand, and the Philippines, in order to mitigate the negative impact of
growing cooperation between the Soviet Union and Vietnam (Hinton 1993:
395–397; Muni 2002: 8–9). Domestic reforms, also known as the “Four
Modernizations” (of agriculture, industry, national defense, and science and
technology), which was the thrust of national policy under Deng Xiaoping,
also played a significant role in reformulating Beijing’s policies from enmity
to cooperation toward non-communist states in Southeast Asia (Hinton
1993: 385–386; Muni 2002: 9–11; Pollack 1993: 360–364). Since then,
China’s foreign policy has been designed to create a stable external
environment and facilitate economic exchanges with regional states, so as to
reinforce domestic economic modernization. The Open Door Policy,
designed to increase interdependence with the world during the 1980s,
clearly reflected this paradigm shift in China’s foreign policy. In addition,
the US withdrawal from Vietnam precipitated the US disengagement from
Southeast Asia during the Carter (1977–1981) and Reagan Administrations
(1981–1989), both of which more focused on dealing with great powers,
particularly the Soviet Union, on global affairs (Mauzy and Job 2007: 623–
624). As a result of these regional processes, Southeast Asia became less of
a priority in Washington’s foreign policy. In short, security competition
between the US and China was relatively modest in Southeast Asia from the
mid-1970s through to the 1980s, because the US neglected the region and
China focused on domestic reform.

After the Cold War

The dramatic collapse of the Soviet Union brought the Cold War to an end
and precipitated a sea of change to international relations in the Asia-Pacific
region in which the US became the unrivaled supreme power. Washington’s
key regional interests are to protect freedom of navigation through regional
sea lanes to ensure safe passage for energy resources and international trade;
to promote economic liberalization, democracy, and human rights; and to
prevent the rise of any hostile power to strategic prominence in the region
(Bert 2003: 25–27; Percival 2007: 128–129; Sokolsky et al. 2000: 5–13).
However, Southeast Asia had been neglected (Mauzy and Job 2007). During
the first half of 1990s, the US’s attentions revolved around the Kuwait War
in the Middle East, the Bosnian War in Eastern Europe, and the Somali Civil
War in Africa. As a result, after Vietnam pulled out of Cambodia in 1989,
Washington did not focus its attentions as much on the relatively peaceful
region of Southeast Asia. The withdrawal of US military forces from the
Clark Air Base and the Subic Bay Naval Base, as a result of opposition by
domestic nationalists in the Philippines and the US’s inability to financially
support its military forces abroad, gave rise to concerns on the part of
traditional Southeast Asian allies of the US about the US’s security
commitments in the region. The George H. W. Bush Administration was also
cautious about the potential undermining effect of multilateralism on the
autonomy of its regional policies, which are underpinned by its hub–spoke
alliance system, making it reluctant to support the ARF that was designed to
manage regional security in which ASEAN states would play a central role
and other great powers are also involved, including China.
Nonetheless, while bilateralism remained a central feature of the US’s
Asia-Pacific policy, the Clinton Administration, that emphasized
engagement and enlargement, began considering multilateralism a
complementary means which could not only help improve coordination
among the US’s regional allies but also could draw and engage other
regional states or potential rivals into Asia-Pacific regional cooperative
processes, facilitating the development of democracy, human rights, and a
Washington consensus that calls for deregulation, privatization and free
markets in the Asia-Pacific region (Department of Defense of the US 1995;
White House of the US 1995). In this regard, in addition to promoting Asia-
Pacific Economic Cooperation (APEC), the US participated in the ARF and
emphasized the forum as a key venue where, together with ASEAN states,
the US can explore the implications of cooperative security in the Asia-
Pacific region, despite the continuing concern about potential erosion on
policy autonomy. On bilateral relations, major breakthroughs in US
diplomacy in Southeast Asia came when it normalized relations with
Vietnam through the lifting of the trade embargo in 1994 and then again
when it established formal diplomatic relations with Vietnam in 1995.
Another step forward was the restoration of military ties with the
Philippines, marked by the signing the Visiting Force Agreement (VFA) in
1999. Although Washington’s regional engagements saw some good starts
and took some steps forward, its advocacy of liberal political and economic
values engendered tensions in relations with Southeast Asian governments.
For instance, in terms of human rights concerns, the US and ASEAN
experienced friction after the latter decided in 1997 to grant full membership
to Myanmar which, at the time, was being sanctioned by the US for its long
record of domestic suppression. In addition, US support of the 1998 protest
movement Reformasi in Malaysia caused antagonism with the Mahathir
government that long criticized US hegemony and promoted Asian values
over Western liberalism (Capie and Acharya 2002: 3). Washington also
suspended the IMET program and imposed an arms embargo on Indonesia in
1999, because Indonesia’s armed forces supported East Timor’s militias’
terror campaign in the wake of East Timor’s independence referendum
(Murphy 2010: 368). Furthermore, human rights continued to be the key
theme in the US Congress as it scrutinized Washington’s restoration of
economic connections with Vietnam. Additionally, stringent responses to
pleas for economic assistance from ASEAN states suffering from the
financial crisis in 1997 further distanced Washington from the region.
Washington’s fluctuating engagements during the 1990s gradually led to its
loss of standing in Southeast Asia, thereby paving the way for Beijing to
cultivate closer relations with states in the region and giving rise to a less
US-centric regional pattern of development.
Faced with the emerging US-led unipolar system in the Asia-Pacific
region, China, which was recovering from the Tiananmen incident of 1989
and accelerating its economic growth, moved to enhance engagement in
Southeast Asia on both a bilateral and multilateral basis. China did this in
order to maintain a stable peripheral environment to continue its fast-paced
economic development and thereby ensure the survival of the Chinese
Communist Party as China’s ruling regime, to build a multipolar regional
order to counter US hegemonic power, to hinder efforts to contain China,
and to mitigate the impact of the regional involvement of other great powers
on geopolitical and security issues in the region. These goals were all
pursued under Beijing’s implementation of the Policy of Good
Neighborliness and its adoption of the New Security Concept in the 1990s
(Haacke 2005; Muni 2002; Percival 2007; Shambaugh 2005).1 At the outset
of the 1990s, China established diplomatic relations with Singapore (1990)
and Brunei (1991), resumed diplomatic relations with Indonesia (1991), and
normalized relations with Vietnam and Cambodia (1991). Noninterference in
domestic politics has been Beijing’s principle of action when engaging with
its Southeast Asian neighbors, which are diverse in terms of political
regimes and economic status. In this regard, China prefers to develop
relations with Southeast Asian governments by supporting their current
political systems. Economic exchanges between China and Southeast Asian
states have been even more impressive. China’s trade with each Southeast
Asian state grew explosively during the 1990s. For instance, according to
Direction of Trade Statistics (DOTS) from the International Monetary Fund
(IMF), China’s trade with Vietnam increased from US$2.54 million in 1990
to an incredible US$2,466.39 million in 2000, about 1,000-fold.
In addition to bilateral relations, China set to engage with ASEAN for the
first time with then-Chinese Foreign Minister Qian Qichen attending the
24th ASEAN Foreign Minister Conference in 1991. Those contacts in the
early 1990s were nothing more than probing as Beijing initially viewed the
development of regional multilateralism as a potential means to contain
China. Nonetheless, Beijing joined the ARF as a founding member in 1994
and later attained full dialogue partner status with ASEAN in 1996 as its
perception of multilateralism changed from suspicion and hesitation to
support and activeness following a few years of observation of the content
and development of the ASEAN-led multilateralism. Beijing recognized that
multilateralism could complement bilateralism, which dominates its foreign
policy making, as it architected its preferred regional order, and it discovered
that the cooperative security approach adopted by the ARF is compatible
with its New Security Concept first proposed in the ARF in 1996. More
importantly, the ASEAN Way, which underscores a nonbinding and
consensus approach to decision making, assuaged China’s fear of being
entrapped in multilateralism. Since then, ASEAN-led regional
multilateralism has seen increasing involvement by China. When the Asian
Financial Crisis hit the region in 1997, the first ASEAN–China summit was
held in Kuala Lumpur. The two sides established a partnership of good
neighborliness and mutual trust for future relations. This was upgraded to a
strategic partnership in 2003. In contrast to the harsh posture taken by the
International Monetary Fund in response to the financial crisis, China
maintained its currency value to help stem the crisis and offered aid
packages and low-interest loans to suffering Southeast Asian states. At the
time, this kind, immediate assistance served largely to disprove China’s
threatening image and to build its image as a responsible great power.
Building on the positive foundation laid in the 1990s, China has extended
engagement in Southeast Asia in the 21st century a great deal. The
engagements have been seen in a wide range of activities, such as the
numerous high-level visits of national leaders and representatives, as well as
mid-level official contacts and Track II (unofficial) meetings, and the
signing of joint declarations and cooperation mechanisms in the areas of
politics, security, and economics. For example, 46 important high-level visits
between China and ASEAN took place from 2002 to April 2006 (Glosny
2007: 163). In the 2002 China–ASEAN summit, Beijing signed two
landmark agreements with ASEAN: the Declaration on the Conduct of
Parties in the South China Sea (DOC), which represents a major step in
addressing conflicts over maritime interests (ASEAN and China 2002a), and
the Framework Agreement on Comprehensive Economic Cooperation,
which provided a legal basis for both sides to negotiate further agreements to
realize the ACFTA by 2010 (ASEAN and China 2002b). At the same
summit, China also announced the implementation of the Asia Debt
Reduction Plan to reduce or write off the debts of Vietnam, Laos, Cambodia,
and Myanmar, and launched full cooperation with ASEAN to develop the
Greater Mekong Subregion (Ministry of Foreign Affairs of China 2002).2
These salient advances were followed by China becoming the first great
power to accede to the TAC (ASEAN 1976b; China and ASEAN 2003) and
the establishment of the Strategic Partnership for Peace and Prosperity with
ASEAN (ASEAN and China 2003), which now has moved into its third
five-year term (2016–2020) (ASEAN and China 2015). Among others, the
promotion of economic interdependence and integration with ASEAN states
continues to be at the core of China’s regional policy. It not only can provide
markets for China’s exports and access to natural resources for Chinese
manufacturers for short-term economic benefits, but it also helps to enlarge
China’s commercial influence and alleviates the anxiety of Southeast Asian
states concerning the security and economic impact of China’s rise on long-
term diplomatic benefits.
In addition to the ACFTA, which went into full effect in 2010, China also
actively supports the ASEAN-centered RCEP about which official
negotiations to push forward regional economic integration based on the
existing five ASEAN + 1 FTAs have been going on since 2013. From the
viewpoint of ASEAN, the RCEP will reinvigorate ASEAN-centric economic
regionalization—which consists of the ASEAN + 1 FTAs, the ASEAN + 3
and the ASEAN + 6, none of which effectively complement each other in
facilitating liberalization processes—so that ASEAN can avoid losing its
position in the driver’s seat in regional integration as it is faced with the rise
of the TPP and the China–Japan–South Korea Free Trade Agreement.
However, China is not only supporting the RCEP for economic purposes; it
is also doing so to counterbalance the US-led TPP. Later, at the 2014 APEC
conference, China proposed the “Beijing roadmap” to demonstrate its intent
to lead the realization of the Free Trade Area of the Asia-Pacific (FTAAP)
(APEC 2014) advanced by Washington in 2006. In addition to trade, China
also increasingly used aid and investments in the form of concessional or
low-interest loans and government-funded or subsidized investments
through joint ventures and cooperation to strengthen economic and
diplomatic relations with Southeast Asian states. Most of those aid and
investments go to finance natural resource and energy projects and related
infrastructure (such as railroads, roads, and warehousing) and social
infrastructure (schools, office buildings, housing, and stadiums), and some
goes to medical and technical assistance as well as training and humanitarian
aid (Copper 2016; Lum et al. 2009).3 For instance, in 2005, China provided
US$5 billion in preferential loans to support projects in which Chinese
companies had invested in ASEAN states and about US$3 billion in
concessional loans and preferential export buyer’s credit, after nearly US$3
billion in economic assistance and concessional credit had already been
provided to ASEAN states over the previous five years (ASEAN 2005).
Recently, at the First Lancang–Mekong Cooperation (LMC) Leaders’
Meeting in 2016, Beijing offered a RMB10 billion concessional loan and
US$10 billion credit line to support infrastructure and production capacity
cooperation in the development of the Lower Mekong River Basin.4
Furthermore, China initiated several grand development funds to intensify
economic diplomacy in Southeast Asia. As a part of the China–ASEAN
Investment Agreement signed in 2009, the China–ASEAN Investment
Cooperation Fund, a private equity fund led by the Export–Import Bank of
China under the conduct of the Chinese government, went into effect in
2010. China later launched the OBOR and the AIIB in 2013, both of which
will function in a way similar to the US-led Marshall Plan in Europe after
the Second World War, serving to continue China’s growth through boosting
foreign markets for Chinese exports.5 Southeast Asia is the frontier area of
the Maritime Silk Road and the AIIB now includes all ASEAN states,
showing that China’s economic engagement in Southeast Asia is progressing
into a greater and more comprehensive scope.
Undoubtedly, the 9/11 terrorist attacks in 2001 were the decisive factor
heightening the policy weight of Southeast Asia in Washington. However,
China’s rapidly growing power in the Asia-Pacific region drove it home in
Washington that the US-centric regional order was being challenged. During
a confirmation hearing in January 2001, then-US Secretary of State Colin
Powell publicly stated that China is “a competitor, a potential regional rival”
and that the US would work with its Asian allies and friends in responding to
China.6 The George W. Bush Administration implicitly reiterated the policy
tone in its 2001 Quadrennial Defense Review by stating that “the possibility
exists that a military competitor with a formidable resource base will emerge
in the region.” It implicitly included Southeast Asia in the “East Asian
Littoral,” the area regarded as facing the challenge from this potential power
challenger (Department of Defense of the US 2001). In order words, the
importance of Southeast Asia was not completely neglected at the outset of
the Bush Administration. In the War on Terror, the Bush Administration’s
policy toward Southeast Asia, the “second front” for combating terrorism,
was primarily military-oriented and operated bilaterally, even unilaterally, in
the mindset of deterrence, different from the engagement of the Clinton
Administration. Washington’s efforts to strengthen security ties with the
region were evident in many bilateral engagements. For example, the US
elevated Thailand and the Philippines to major non-NATO ally status, and
upgraded its defense and security relations with Singapore to strategic
partnership status with the signing of the Strategic Framework Agreement in
2005. Even though the US Congress continued to have serious concerns
about the human rights violations of the Indonesian military in East Timor
and Indonesian Muslims resented the US’s unfair treatment of Muslims in a
series of counter-terrorism measures, Washington resumed the IMET with
Indonesia in 2005. The US also expedited military contacts and cooperation
with Vietnam, evidenced by, for instance, the visit of the USS Vandegrift to
Vietnam in 2003, the first US Navy vessel to visit the country since 1975, as
well as the signing of the IMET agreement with Vietnam in 2005. The US
further cultivated strategic ties with Southeast Asian partners by intensifying
military exercises with Southeast Asian states, such as Balikatan with the
Philippines and Cobra Gold, a region-wide multinational exercise which
gradually expanded from being a bilateral exercise between Thailand and the
US to one which now includes almost all Southeast Asian states, except
Brunei and the Philippines, as participants or observers. These efforts, taken
by Washington to reinforce military relationships in the region, are not
merely for the purpose of counter-terrorism. They are also a means for
preparing to meet China’s challenge in the future (Percival 2007).
Although the Bush Administration’s attention to Southeast Asia was seen
as episodic and selective in the crisis-driven nature of military affairs (Ba
2009b; Limaye 2007; Mauzy and Job 2007), the importance of US–
Southeast Asia economic and diplomatic relations was not overlooked by the
administration in the US’s strategic arrangements in Asia. Although
operations to counter terrorism took precedence, the Bush Administration
further moved to foster a network of FTAs with ASEAN states through the
Enterprise for ASEAN Initiative (EAI) announced in 2002, following TIFA
previously signed with the Philippines (1989) and Indonesia (1996). Based
on the EAI, the Bush Administration concluded bilateral TIFAs with
Thailand and Brunei (2002), Malaysia (2004), Cambodia (2006), and
Vietnam (2007), a FTA with Singapore (2004), and a Bilateral Trade
Agreement (BTA) with Laos (2005),7 and TIFA with ASEAN in 2006. It
took these actions not only to secure access for US exports to growing
Southeast Asian markets, but also as a response to the ACFTA which was
being negotiated at the time. Furthermore, after failing to advance the
FTAAP at APEC, Washington participated in the TPP negotiations from
2008 onwards as an alternative plan to maintaining its leading role in the
process of economic liberalization of the Asia-Pacific region. Although the
Bush Administration’s Southeast Asian policy was bilateralism-centric, the
value of regional multilateralism as a complement to bilateralism was not
entirely dismissed.
The US’s 2002 National Security Strategy (NSS) noted that ASEAN,
along with APEC, served as a foundation for regional stability on which the
US could develop mixed regional and bilateral strategies to manage the
dynamics of the Asia-Pacific region (White House of the US 2002). In this
regard, the US initiated in 2002 the ASEAN Cooperation Plan, a bundling of
projects to foster ASEAN economic integration and development, to
enhance the resources and capacity of ASEAN’s Secretariat, and to build
regional cooperation on transnational issues such as HIV/AIDS, maritime
security, and human trafficking. Additionally, faced with China establishing
a strategic partnership with ASEAN, the US responded in 2005 by
announcing the US–ASEAN Enhanced Partnership that consisted of
comprehensive cooperation, including acknowledging the importance of
TAC as a code of conduct in Southeast Asia, supporting the ARF with
ASEAN as a driving force, and facilitating the process of a region-wide
TIFA with ASEAN (ASEAN and US 2005), showing that Washington had
begun to compete with China for diplomatic networks (Percival 2007: 137).
It was followed by the US’s NSS of 2006 which stated that “the United
States is a Pacific nation, with extensive interests throughout East and
Southeast Asia” and recognized the ARF as a vital regional institution for
security management in the Asia-Pacific region (White House of the US
2006). However, preoccupation with Iraq War and the Middle East distracted
the US and prevented resources from being allocated to engagements in
Southeast Asia throughout years of the Bush Administration. For instance,
then-US Secretary of State Condoleezza Rice cancelled her trips to the ARF
conferences in 2005 and 2007 and President Bush cancelled the 2007
ASEAN–US Summit, stirring up criticism from ASEAN members over
Washington’s inattentiveness. Nonetheless, Southeast Asia increased in
importance on Washington’s policy radar during the Bush Administration,
particularly in its second four years.
During the Obama Administration starting in 2009, the US accelerated
the shift of its strategic emphasis to Asia from the Middle East with its new
Asian policy doctrine called “Pivot” or “Rebalancing” to Asia. It served to
basically deepen and expand the Bush Administration’s Asian policy
(Daggett et al. 2012) to maintain US leadership and interests in the region.8
At this turning point in global strategy, the US placed considerable strategic
emphasis on Southeast Asia, where China had gained substantial ground in
terms of diplomatic and economic influence and had been assertively
expanding its military presence, particularly in the South China Sea. In fact,
in a bid to bolster its regional standing and counter China’s growing
influence, the Obama Administration gave a high policy priority to
Southeast Asia and regional multilateral institutions from the outset. This
was evidenced by the fact that US Secretary of State Hillary Clinton’s first
overseas trip, taken just one month after taking office in January 2009,
included Indonesia after Japan, signaling the US’s return to the region.
During her trip to Indonesia, Secretary Clinton visited the ASEAN
Secretariat where both sides made preparations for the signing of the TAC
with ASEAN in Thailand in July of the same year. Since then, Washington
has significantly intensified bilateral and multilateral diplomatic and
economic engagements with Southeast Asian states and stressed its security
concerns and commitments in the region. For example, President Obama and
Secretary Clinton visited Southeast Asia far more frequently for bilateral
official meetings and to attend regional multilateral institutions, such as the
ASEAN–US summit, the ARF, the EAS, and APEC. President Obama paid
13 visits to nine Southeast Asia states from 2009 to 2016 and Secretary
Clinton made 21 visits to all ten Southeast Asian states from 2009 to 2012.9
Among other regional issues, maritime security in the South China Sea is
a core US interest because it is profoundly vital for increasing the volume of
US exports and imports flowing into and out of the Asia-Pacific region. At
the 2010 ARF in Hanoi, Hillary Clinton stated that the US has “a national
interest in freedom of navigation, open access to Asia’s maritime commons,
and respect for international law in the South China Sea.”10 In dealing with
the South China Sea issue, while the Obama Administration offered no
explicit stance for any claimant’s maritime territorial claims, it cooperated
strategically with Southeast Asian claimants to internationalize and
multilateralize the South China Sea issue and encouraged regional states to
reach an agreement on the Code of Conduct of Parties in the South China
Sea (COC), for example, as seen in US support in the South China Sea
arbitration case that refutes China’s claim to the Nine-Dash Line. The US
also heightened its military presence with regular maritime and aerial
surveillance of the South China Sea, collaborating with Japan, the
Philippines, Australia, and Vietnam. The US has also expanded its defense
cooperation with Southeast Asian states, such as Cambodia, Indonesia,
Malaysia, Myanmar, the Philippines, and Vietnam, by initiating multilevel
military dialogue and consultation as well as providing assistance in military
training and defense institution reforming, helping these regional states build
an effective and self-sufficient capacity so they can independently handle
domestic and cross-border security threats, both traditional and non-
traditional, and to balance China’s increased influence (Chalk 2013).
In terms of economics, given the bilateral FTAs, the US–ASEAN TIFA,
and the other economic initiatives mentioned earlier, the TPP, which is
primarily modeled on the format of the US’s past FTAs but with higher
regulation standards, was the centerpiece of the Obama Administration’s
economic rebalancing toward the Asia-Pacific region. US interest in
negotiating an expanded TPP resulted from the concern that the US could be
left out of the world’s fastest-growing integrated regional economy after it
failed to put forward the FTAAP via APEC in 2006. This could cause it to
lose its role as the dominant player in regional economic and geopolitical
dynamics and adversely impact its future prosperity and security interests.
After eight years of negotiation, the TPP participants signed an agreement in
February 2016. The US could utilize the TPP to increase access to the
growing regional markets, stimulate growth in exports, generate exports-
related jobs, enhance the protection of US intellectual property rights, and
ensure a fairer regional market for US companies. Furthermore, participation
in the TPP would demonstrate Washington’s commitment and engagement
in the region and help promote deeper interdependence with other member
states. Although only four ASEAN member states (Brunei, Malaysia,
Singapore, and Vietnam) have joined in this high-standard trade agreement
so far, the potential effects and benefits of the TPP have interested Indonesia,
the Philippines, and Thailand, countries that were not in first-round
negotiations. That is to say, the TPP has been exerting influence on regional
integration in Southeast Asia.
Parallel with the TPP, the Obama Administration also launched several
initiatives furthering economic engagement in Southeast Asia, such as the
US–ASEAN Expended Economic Engagement (White House of the US
2012), the ASEAN Connectivity for Trade and Investment (USAID 2014),
and the US-initiated US–ASEAN Connect (White House of the US 2016).
Each of these works on similar economic facilitations, ranging from business
and energy to innovation and policy, that technically and financially support
ASEAN states to create a favorable infrastructure and policy environment
conducive to sustainable growth and deeper integration in Southeast Asia,
and great interdependence between the US and the ASEAN in the higher
standard framework of the TPP. Alongside these region-wide facilitations,
the US also became involved in sub-regional development in the Mekong
River Basin with the Lower Mekong Initiatives (LMI) launched in 2009, a
platform for collaborating with Cambodia, Laos, Myanmar, Thailand, and
Vietnam to enhance cooperation in the areas of the environment, health,
education, and infrastructure development. The LMI can be seen as an
initiative used by the US to respond to China’s increasing economic links
and political leverage in the Mekong region as a dialogue partner in the
Mekong River Commission, and now compete with the LMC mechanism
driven by China in the heartland of Southeast Asia. For the US, trade and
economics are both causes and instruments of the rebalancing policy. Not
only could economic engagements in Southeast Asia provide markets and
resources for the US economic resurgence after the 2008 financial crisis, it
also could enhance the US security connectivity in the region because both
sides would share a greater common interest in maintaining a reliable and
safe environment for economic development.
Figure 3.1 illustrates the US’s and China’s trade with Southeast Asia from
1990 to 2016, using DOTS from the IMF. It shows that total US trade with
the region grew steadily at an average annual rate of 6.7 percent, from
US$47.572 billion in 1990 to US$233.346 billion in 2016. China’s total
trade with the region grew at an average annual rate of 21.4 percent, about
triple that of the US, from US$7.283 billion in 1990 to US$568.254 billion
in 2016.11 A similar trend is seen in imports, which can be regarded as an
indicator of the opening of domestic markets. China’s imports grew at an
average annual rate of 22.8 percent, from US$3.133 billion in 1990 to
US$269.828 billion in 2016. The US’s stood at 7.2 percent and increased
from US$28.600 billion in 1990 to US$158.423 billion in 2016. China’s
trade with the region has been rapidly increasing since 2000, exceeding that
of the US in 2007. After 2007, growth of China’s total trade with the region
greatly outpaced that of the US. China’s imports from Southeast Asia
exceeded that of the US in 2008. However, China’s import growth has been
slower than that of the US since 2012.
Figure 3.1 The US and China’s trade with Southeast Asia (1990–2016).

Figure 3.2 indicates US and Chinese total foreign direct investment (FDI)
in the ASEAN area from 2001 to 2012, using Bilateral FDI Statistics
compiled by the United Nations Conference on Trade and Development
(UNCTAD).12 It shows that FDI outflows and outstocks of the US and China
to the region were in general upward trajectories during the same period,
reflecting their increasing economic engagement in the region. Yearly FDI
outward of the US to the region grew at an average annual rate of 107
percent, from US$8.835 billion in 2001 to US$21.429 billion in 2012, while
China’s FDI outflow grew at an average annual rate of 67.8 percent, from
US$119 million in 2003 to US$6.100 billion in 2012. Yearly FDI outstocks
of the US in the region grew at an average annual rate of 10 percent, from
US$70.532 billion in 2001 to US$189.802 billion in 2012, while China’s
FDI outstocks grew at an average annual rate of 55.7 percent, from US$587
million in 2003 to US$28.245 billion in 2012. As of 2012, US regional FDI
stocks stood at 6.7 times that of China, underscoring the deep roots of US
economic connections in the region. However, China’s regional FDI stocks
grew about six times faster than that of the US. In terms of trade and FDI,
the region saw increasing economic engagement on the part of the US and
China in Southeast Asia, reflecting their increasing competition in the
region.
Figure 3.2 The US and China’s foreign direct investment in Southeast
Asia (2001–2012).

In short, general inattentiveness on the part of the US during the 1990s

and the first decade of 2000 allowed China to increase its influence in
Southeast Asia. China’s consistent and considerable effort in multi-faceted
and multilevel engagements eroded the predominance of the US in the
region. To counter China’s growing power, the Obama Administration
proactively set out a catch-up play under the Rebalancing policy to
reconsolidate the US regional standings and maintain its regional interests.
Consequently, Southeast Asia is witnessing an intensifying and upward trend
in competition between the US and China after the Cold War.

Implications of US–China competition on regional cooperation in

Southeast Asia
At the end of 2015, the AEC was formally established, forming a huge
market with a US$2.6 trillion GDP and over 622 million people. It took
ASEAN about half of a century to reach this major milestone. Although
ASEAN’s founding states claimed at the beginning to promote regional
security and economic cooperation, the first decade of the organization saw
no substantial achievements in general, due to a lack of political will among
the leadership and a weak, loose, unbinding institutional design which was
devised around consultations (musyawarah) and consensus (mufakat) to
protect the fragile political cohesion, meaning that they would move at the
pace of the slowest member (Weatherbee 2015: 99). At the time, their focus
revolved around politico-security issues, particularly containing the spread
of communism and tackling domestic communist insurgencies supported by
the Soviet Union and China (Narine 2008: 414), but economic grouping
progressed little thanks to differences in domestic economic conditions,
development strategies, and nation-building priorities (Acharya 2009: 97–
98; Ba 2009a: 87–89; Narine 2002: 24–31). Nonetheless, the retreat of US
military presence and the rise of communist Vietnam supported by the
Soviet Union after the Vietnam War led to ASEAN states’ pursuit of
regional resilience to deal with the changed regional security climate
(Akrasaneeb 2001: 36–37; Narine 2008: 415). Against this backdrop,
ASEAN states at the 1976 Bali Summit decided to revitalize the impetus of
cooperation by singing the Declaration of ASEAN Concord (Bali Concord I)
(ASEAN 1976a) and TAC, and endorsing the 1971 Zone of Peace, Freedom,
and Neutrality Declaration (ZOPFAN) (ASEAN 1971). Also, in 1977,
ASEAN states embarked on facilitating Preferential Trading Agreements
(PTA) to liberalize and expand intra-ASEAN trade in search of internal
economic strength (ASEAN 1977). China also began to improve its relations
with ASEAN states and the US in order to counter the Soviet Union’s
expanding influence through Vietnam in Southeast Asia, and to forge a
favorable external security environment for its incipient domestic reforms.
This diminished the hostile characteristics of US–China competition in
Southeast Asia and created a relatively stable politico-security environment
for ASEAN to pursue regional resilience in the post-Vietnam War era. At the
time, despite concerns about China’s rising capabilities, ASEAN states
viewed China as a stabilizing force in the region during the 1980s (Narine
2002: 76–77).
The end of the Cold War paved the way for further regional cooperation
in Southeast Asia. Although the diversity of domestic political, economic,
and social conditions continued to cause cooperation among ASEAN states
to fluctuate, the states shared common goals in the face of an uncertain
regional security order and emerging regionalism in East Asia at the dawn of
the post-Cold War period. These included preventing regional dominance by
any great power, obtaining bigger political and economic leverage against
external powers, and the pursuit of economic growth (Acharya 2003: 206;
Severino 2009: 2–3). All of these together propelled ASEAN states into
greater and deeper regional cooperation and integration. The decline in
ideological confrontations that divided Southeast Asia and bogged down its
development for decades during the Cold War cleared the way for ASEAN
states to promote economic development. During the 1992 ASEAN Summit
in Singapore, ASEAN states took a significant step forward to establish
AFTA to create a single market, integrate intra-ASEAN industrial resources
into a single production base, attract FDI, and expand intra-ASEAN trade
and investment. On the one hand, AFTA was created to respond to the
emergence of regional groupings, such as the North American Free Trade
Area National Security Strategy and the expansion of the European Union
(EU), and to compete with rising economies, such as China’s and India’s,
around the world during the wave of global trade liberalization that
culminated with the creation of World Trade Organization (WTO) in 1995.
On the other hand, it also expected to help ASEAN states to acquire
bargaining power against great powers in dealing with regional economic
and security affairs (Severino 2006). In addition to economic cooperation,
ASEAN states also created the ARF in 1994, an inclusive security dialogue
platform, to manage multilevel traditional and non-traditional security issues
among themselves and with extra-regional countries, through which they
expected to cultivate and bolster their stands and avoid undesirable
situations, such as the dominance of any single great power, in the
developing regional security environment (Severino 2009: 6).
The 1997 Asian financial crisis caused political turmoil in the affected
ASEAN states and ASEAN’s poor response to the resulting economic
shockwaves revealed the weak collaboration among the member states.
Consequently, ASEAN states created ASEAN Vision 2020 which envisaged
ASEAN as “a Concert of Southeast Asian Nations” aspiring to closer
economic and social integration and peaceful interaction (ASEAN 1997).
Later, the 1998 Hanoi Plan of Action (HPA) (1999–2004) was adopted as the
first in a series of action plans or programs designed to realize the goals of
Vision 2020 (ASEAN 1998). Vision 2020, in fact, kicked off the building of
the AC. Meanwhile, ASEAN continued to enlarge. The desire for economic
development and the conclusion of the Paris Agreements on Cambodia in
1991 transformed the regional climate and made rapprochement between
ASEAN and Vietnam possible, prompting expansion of ASEAN to include
Vietnam in 1995, Cambodia and Laos in 1997, and Myanmar in 1999
(collectively also known as the “CLMV countries”). ASEAN membership,
including accession to TAC, ZOPFAN, AFTA, and the ARF, would give the
CLMV countries wider access to markets and, against a background of
economic globalization and regionalization, increase their acceptability to
investors inside and outside of ASEAN, as well as greater leverage in their
political, security, and economic relations with China and the US (Binh and
Duong 2001; Hourn 2002; Muni 2002: 18–19, 127–128; Thayer 2006: 35–
38). For older members, although accepting old foes into the organization
might complicate ASEAN’s economic and security cooperation because of
their different political systems, economic conditions, and foreign policies, it
underscored ASEAN’s relevance and gave it added weight in its relations
with the great powers. The expansion of ASEAN by the year 2000 marked a
new phase in Southeast Asian cooperation and integration. This was driven
by a belief among ASEAN states that economic integration in the long-term
would “elevate ASEAN’s attractiveness as a global production base” and
“contribute to regional cohesion … [and] strengthen ASEAN’s bargaining
power and geopolitical influence” (Soesastro 2005: 22).
As aforementioned, over the course of the 1990s and into the 2000s, the
US–China competition incrementally escalated in Southeast Asia. Despite
Southeast Asia gaining little emphasis in the US policy making regarding
Asia in the first decade of post-Cold War period, the US security presence, in
contrast to other extra-regional actors, remained strongest and its economic
ties continued to expend and deepen in the region. It virtually served as a
central force shoring up regional stability and development, even though US
dominance continually faced domestic resistance by anti-US hegemony
politicians and groups in some regional states. China increasingly expanded
its economic and diplomatic engagements and somewhat restrained its
foreign behavior to mitigate an image of threat and maintain a stable
neighborhood for its pursuit of economic development, giving rise to an
impulsion for ASEAN-driven regionalism. For China, Southeast Asian
integration is vital to ensuring the consolidation of a vibrant market for its
exports as well as a safe destination for its investment funds, which is
imperative to its future economic growth as it would bolster the expansion
and stabilization of its sphere of influence. In this regard, coercive foreign
policies that could destabilize the region and estrange regional states from
China were carefully avoided. China noticed that taking advantage of its
rapidly growing economic strength was more effective when dealing with its
relations with Southeast Asian neighbors and enhancing its regional
influence, i.e., focusing more on economic and diplomatic carrots than
military sticks. The expansion of China’s influence stirred the US to catch up
and stem the erosion of its dominance, giving rise to competition between
the US and China in Southeast Asia. For Southeast Asian states, the US–
China competition in terms of economic engagement in the areas of trade,
investment, and other economic assistance would provide additional
momentum to their economic regionalization. On the other hand, the US
security presence, regarded as a countering force to China’s growing military
power, and China’s self-restrained behavior constituted a relatively stable
external environment for the process of regional integration in Southeast
Asia. Furthermore, from a strategic standpoint, the great power competition
would give rise to greater leverage for Southeast Asian states in negotiations
with the US and China over security concerns and economic interests,
yielding incentives to advance regional cooperation under the auspices of
ASEAN in order to effectively hold, augment, and manipulate the strategic
leverage and construct ASEAN centrality in the development of Asia-Pacific
regional integration. In other words, the US–China competition would foster
an environment for ASEAN that was favorable to expansion and cooperation
in and beyond Southeast Asia.
Against this backdrop, a series of collective efforts were added to
advancing ASEAN integration in the first decade of the 2000s. At the 2003
Bali Summit, following Vision 2020, ASEAN adopted the ASEAN Concord
II (Bali Concord II) that declared it would create the AC comprising three
pillars (the ASEAN Political-Security Community, the ASEAN Economic
Community, and the ASEAN Socio-Cultural Community) by 2020 (ASEAN
2003), which was later brought forward to 2015, signifying a shift toward a
deepening integration within ASEAN. The Vientiane Action Programme
(VAP) (2004–2010) (ASEAN 2004), which is based the guidelines of the
new Concord and was adopted to replace the HPA, underscores goals and
strategies for realizing the three pillar communities. It was recognized that
successfully building the AC would require not only support from national
political wills, but also the institutional effectiveness and efficiency of
ASEAN. One of the goals of the VAP was, therefore, to develop an ASEAN
Charter to transform ASEAN into a more formal, structured, and treaty-
based organization with international legal characteristics, so as to
reinvigorate its credibility and relevance. The Charter became effective in
2008. Paralleling the setup of a new organizational structure, the Roadmap
for an ASEAN Community (2009–2015) (ASEAN 2009) was proposed as a
substitute to the VAP to drive ASEAN integration to the next level. Built on
existing integration programs, such as AFTA, the AEC, which formally
came into existence on 31 December 2015, was the first pillar community to
be realized, marking a milestone of ASEAN economic integration and also
demonstrating that ASEAN had continued to improve its competitiveness
against China and India in attracting FDI on the international market.
Additionally, ASEAN, as a group, actively extended its external relations to
promote its centrality in the Asia-Pacific region, using a number of dialogue
partnership agreements with extra-regional countries, including China,
Japan, and Russia in 2003, South Korea and India in 2004, the US in 2005,
Australia and the European Union in 2007, and Canada and New Zealand in
2010.13 Intertwined with these partnership agreements, the ASEAN-centered
RCEP was put forward to restructure existing ASEAN + 1 FTAs. This also
served to accelerate ASEAN integration. In addition to economic ties, the
ARF has become a central platform for diplomatic communication on
regional security issues, both traditional and non-traditional, through which
ASEAN states and extra-regional participants attempt to exercise confidence
building, foster preventive diplomacy, and utilize peaceful approaches to
conflict resolution. For instance, the ARF is now the key venue for
addressing South China Sea territorial issues and promoting the COC. These
developments imply a growing will and consensus among Southeast Asian
states to cooperate with each other in order to strengthen collective leverage
and autonomy in regional affairs.
Figure 3.3 shows Southeast Asian intra-regional trade trends from 1990
to 2016, using the IMF DOTS. It reveals that intra-regional trade in
Southeast Asia increased from US$52.210 billion in 1990 to US$513.328
billion in 2016, representing an average annual growth of 10.2 percent.
Trade share, the percentage of intra-regional trade to total trade of the
region, was on an upward track from 16.9 percent in 1990 (total trade:
US$307.650 billion) to 22.9 percent in 2016 (total trade: US$2,250.822
billion). These figures indicate that Southeast Asian cooperation and
integration was increasing steadily. Contrasting Figure 3.3 to Figures 3.1 and
3.2, we find that Southeast Asian cooperation was evolving positively with
the patterns of trade and FDI of the US and China with the region,
suggesting positive implications of the US–China competition on Southeast
Asian regional cooperation.
In short, although the US–China competition exposed Southeast Asia to
the pressure of choosing sides and, therefore, the risk of being torn apart, it
has also encouraged regional states to cooperate to mitigate this undesirable
risk and make the best use of benefits derived from the competition between
these great powers, particularly as China restrains itself from using coercive
measures to heighten its strategic weight and influence in the region. Hence,
with the investigation in mind, I postulate the following hypothesis:
increased competition between the US and China over Southeast Asian
states leads to more cooperation between Southeast Asian states.

Figure 3.3 Southeast Asian intra-trade (1990–2016).

Empirical analysis

Research design
The evolution of the US’s and China’s policies toward Southeast Asia and
Southeast Asian states’ responses to the competitive engagement by the two
great powers suggest that the US–China competition generates relatively
favorable economic, security, and strategic conditions that serve to not
merely promote economic development among ASEAN states, but also to
sustain the leverage created to advance ASEAN cooperation and integration.
The trade and investment patterns shown previously in this chapter also
imply this correlation, giving support to the theoretical argument provided in
Chapter 2 that competition between the dominant power striving to maintain
the status quo and the rising power pursuing the dominant role in the power
transition system will benefit and motivate cooperation among small states
that are pursued by the two competing powers. Based on the findings of
analysis of foreign policy and related descriptive statistics, statistical
modeling is employed to systematically compare the concerned factor with
other competing factors in order to provide a more robust empirical
examination and support the argument.
Because interstate cooperation is cooperative interaction between two
states, the undirected dyad is adopted as the unit of analysis.14 As mentioned
previously, although the competition between the US and China can be
traced back to the end of the Second World War, China only became a
compelling challenger to US dominance in Southeast Asia after the Cold
War. This suggests that the post-Cold War period represents a more
meaningful time for empirical analysis. Hence, this analysis is focused on
the period between 1991 and 2010.15 Therefore, in terms of the unit and
timespan of analysis, it creates a time-series cross-sectional dataset,
comprised of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand, and Vietnam.
The dependent variable, cooperation between Southeast Asian states, is
measured by trade. Trade, as a primary economic activity in the
contemporary international system, is not merely commercial exchange, but
also entails a range of international political, social, and security-related
communication (Russett and Oneal, 2001).16 Closer trade relations usually
represent the existence of good political and security relations. When trade
relations between two states are seen to improve, for example, bilateral trade
flows between them increase; this could be a result of them mutually
lowering or removing tariffs and non-tariff barriers, implying a will for
economic integration and preparing to advance cooperation and integration
in other areas. This is what we have seen in Europe. Therefore, it is
reasonable to use trade to gauge interstate cooperation. However, trade
between two states can rise and fall as a result of the growth and decline of
economies. In other words, market size affects trade flow. This means that
the absolute volume of trade may not be an adequate indicator for measuring
changes in cooperative relations between two countries. In this regard, the
ratio of bilateral trade between two countries to their total trade is used to
construct the dependent variable to gauge cooperation between the two
countries. When this trade ratio increases, it captures natural market
dynamics and also conveys information that the bilateral relations of the two
countries are being intentionally promoted with certain policies. Hence, the
dependent variable, Cooperation, is taken as the ratio of bilateral trade to the
sum of the total trade of the two countries, (trade ijt / (total trade it + total
trade jt)), where country A is denoted by i, country B by j, and year by t.
Higher Cooperation indicates higher interstate integration and cooperation.
Trade data is retrieved from the Correlates of War (COW) Trade Data
(version 4.0) (Barbieri and Keshk 2016), which is based on the IMF DOTS.
The core independent variable is US–China competition. As shown
already in this chapter, US–China competition has been witnessed in various
areas in Southeast Asia. While security or military contests between the two
great powers in the region have escalated recently, particularly on the issue
of the South China Sea, the contest has been exercised in an intentionally
restrained manner so as to avoid violent conflict. This has constituted the
dynamics of balance-of-power in the region. Nevertheless, economic
engagement has remained the US’s and China’s primary and continued
policy in developing and consolidating their own relations and interests with
existing and potential Southeast Asian allies, who welcome the economic
benefits as they are helpful for their own domestic as well as region-wide
economic development. Trade is an effective means for realizing economic
growth in the contemporary liberal economic system (Edwards 1993;
Krueger 1997). For Southeast Asian states employing an export-led
approach to economic development, access to US and Chinese markets, now
respectively the largest and second largest in the world, would be a
tremendous plus to their exports and, of course, their economic growth. In
other words, trade is a useful policy tool which China and the US can use in
developing their regional ties and interests in Southeast Asia. Opening
domestic markets is not only a critical step for facilitating a country’s
economic relations with another country, it also represents improvement in
political relations between them and even signifies an attempt to improve
security relations in the future. That is, patterns in trade relations are a
convincing indicator of not only economic relations, but also present and
future dynamics in political and security relations. Based on this rationale,
improvements in the US’s and China’s trade relations with Southeast Asian
states imply the bolstering of regional engagements, namely their regional
competition. In this regard, the influence of US–China competition over a
specific Southeast Asian state is measured by the ratio of trade imports to the
US and China from the Southeast Asian state in a given year, placing the
smaller value in the numerator position and the lager value in the
denominator position, e.g., China’s imports (small)/US imports (large). The
ratio will be between zero and 1. The maximum score of US–China
competition is given as 1, while the minimum one is given as zero. Because
this is a dyadic analysis, it generates two ratio values. The two ratio values
are summed up to construct the main independent variable, Competition,
with a single ratio value representing the overall intensity of the influence of
US–China competition on a specific dyad of Southeast Asian states. A
higher Competition value reflects higher US–China competition on the
Southeast Asian dyad.
In addition to the main independent variable, the model also includes
several control variables that might promote or interrupt trade that is used to
measure Cooperation. It has been argued that interstate conflict disrupts
existing trade and discourages prospective trade in that the damage to
property and infrastructure and loss of human resources caused by
militarized conflict can decrease the ability of consumers to demand imports
and firms to supply exports (e.g., Keshk et al. 2004, 2010; Li and Sacko
2002; Long 2008; Pollins 1989a, 1989b). In this regard, the Conflict variable
is constructed, using the COW Militarized Interstate Dispute (MID) data
(version 4.0) (Palmer et al., 2015). It defines MID as:
united historical cases of conflict in which the threat, display or use of
military force short of war by one member state is explicitly directed
towards the government, official representatives, official forces, property, or
territory of another state … composed of incidents that range in intensity
from threats to use force to actual combat short of war.
(Jones et al. 1996: 163)
Conflict is a dichotomous variable that is coded as 1 when a dyad
experiences an MID of any type, including initiation and ongoing, in a year;
otherwise it is recorded as zero.
Alliances and preferential trading agreements play a positive role in
promoting trade between members (Gowa 1994; Gowa and Mansfield 1993;
Mansfield and Bronson 1997). As mentioned already, after 1976 ASEAN
member states set about to devote themselves to economic cooperation
through PTAs and later the Common Effective Preferential Tariff Scheme for
AFTA. According to the COW Formal Alliance data (version 4.1) (Gibler
2009), no formal military alliance existed among Southeast Asian states
from 1991 to 2010. However, ASEAN itself can be seen as a “quasi-
alliance” because it was initiated to stabilize political and security relations
between members and intended to promote the influence of ASEAN
members in regional security development. Therefore, joint membership in
ASEAN serves as a suitable proxy to capture the effects of alliance and
PTAs. JntASEAN is coded as 1 when both Southeast Asia states were
ASEAN members in a given dyad year; otherwise zero.
The third control variable is democracy. Studies on political determinants
of international trade point out that the trade policies of democratic states
tend to be more open, so that a pair of democracies are more likely to agree
on lower trade barriers than a pair of states in which one is a democracy and
the other an autocracy (e.g., Bliss and Russett 1998; Mansfield et al. 2000;
Milner and Kubota 2005; Morrow et al. 1998). That is to say, more trade
would be expected between democratic states, suggesting a positive spiral
that encourages them to put forward economic cooperation that could
augment the welfare of their peoples, thereby furthering regional integration.
JntDem is generated to measure the level of joint democracy in a dyad, using
Polity IV data (Marshall et al. 2015).17 Following Oneal and Russett’s
operationalization (1999), JntDem is calculated by (the polity score of
country A + 10) × (the polity score of country B + 10).
In short, the statistical model used for making estimations is: Cooperation
= α + β (Competition, JntASEAN, Conflict, JntDem) + ε
The model is estimated using the fixed effects ordinary least squares
(OLS) estimator, employing robust standard errors clustered by country-
pairs to correct serial correlation. The fixed effects model accounts for the
effects of unobserved time invariant country-pair (dyadic) specific influence,
such as cultural factors, which can help mitigate estimation bias produced by
omitted variables. I also include a set of year-specific fixed effects to control
for factors such as US dollar value, global business cycles, globalization, and
economic shock, which could affect economic exchanges between countries
(Rose 2004: 100). In order to mitigate problems of reverse causality, the
independent variables are lagged by one year (t − 1) in modeling. As a
robustness check, I re-specify the proposed model in the form of the
standard gravity model of bilateral trade (cf. Anderson and Wincoop 2003;
Frankel 1997: chapter 4; Rose 2004) by adding three variables: gross
domestic production (GDP) of country A, GDP of country B, and distance
between capital cities of the two countries. GDP data is retrieved from the
updated GDP Data Version 6.0 by Gleditsch (2002) in constant US dollar
values (2005 prices) and capital-to-capital distance from Gleditsch and
Ward’s Minimum-Distance Dataset (Gleditsch and Ward, 2001). Since the
gravity model is multiplicative, all continuous independent variables are
transformed in natural logarithm form, but dichotomous independent
variables are kept as is (1 and 0).18 The gravity model is estimated using the
fixed effects panel Poisson maximum likelihood estimator (Silva and
Tenreyro 2006; Westerlund and Wilhelmsson 2011).19 Also, the gravity
model is estimated employing robust standard errors clustered by country-
pairs.
Table 3.1 provides the descriptive statistics of the variables.

Table 3.1 Descriptive statistics of variables (1950–2010)

Statistical results and robustness checks

Table 3.2 presents the statistical results of the OLS model and the gravity
model with the fixed effects of dyad and year. Model 1 and Model 4 show
that Competition is a significant positive encouragement to Southeast Asian
cooperation for the period 1991–2010, supporting the theoretical argument
proposed here. But the other three control variables do not produce
significant positive or negative effects on regional cooperation. The negative
sign but statistical insignificance of JntASEAN implies that ASEAN as a
venue of collective economic and political actions is not an effective force
for bringing about regional cooperation. The insignificant JntDem accurately
reflects a regional reality of highly diverse regimes, the existence of which
weakens the expected effect of democracy on regional economic exchange
in terms of trade. Conflict is positive but not significant. This result might be
explained by the fact that the MIDs of the period examined were low-level
conflicts in terms of scale and duration that did not substantially interrupt
trade relations.
But one may argue that modeling only the post-Cold War period could
give rise to a risk of missing the information of the variables in the model for
the Cold War period, for instance, the potential effect of China’s
rapprochement with ASEAN states on ASEAN cooperation after the
Vietnam War. China’s reconciliation with ASEAN states, as a result of
strategic needs for creating a stable neighborhood for its economic reforms
which started in 1978 and checking the rise of a united Vietnam in the region
in the post-Vietnam War era, might add new dynamics to Southeast Asia,
especially when ASEAN states at the time also attempted to pursue internal
resilience through cooperation to cope with the new development of regional
security. Although it is proper to have separate estimations for different time
periods in order to avoid the issue of heterogeneity in statistical analysis as
different dynamics exist in the data before or after a specific time point, I re-
estimated the models using extended time periods, 1978–2010 and 1950–
2010, to serve as a robustness check. As shown, Competition is insignificant
in Model 2, Model 3, and Model 5, but significant in Model 6, revealing that
US–China competition as a significant positive encouragement for Southeast
Asian cooperation may be the post-Cold War phenomenon. This conforms to
the reality that China’s engagement and influence in Southeast Asia notably
increases only after the mid of 1990s, as shown in Figure 3.1 and Figure 3.2.
Furthermore, low-level disputes, such as the seizure of fishing boats
violating a country’s territorial waters, while coercive actions, may not affect
trade relations (Keshk et al. 2010). So, I re-estimated all the models in Table
3.1 with fatal MIDs involving at least one battle death. As shown in Table
3.3, the statistical results are generally not different from those of models
using all types of MIDs in Table 3.2, except Competition becomes
insignificant in Model 12.
In sum, the present results of empirical analysis in the context of
Southeast Asia during 1991–2010 support the theoretical argument that great
power competition in the power transition system can motivate small states
to cooperate with each other more closely.
Table 3.2 US–China competition and Southeast Asian cooperation

Notes Robust standard errors (clustering by dyad) in parentheses.

**
***
2
* Significance tests are two-tailed: p < 0.01; p < 0.05; p < 0.1.
3 Coefficients of country effects and year effects are dropped for saving space.
4 Continuous independent variables of the Gravity models (M4, M5, and M6) are transformed in
natural logarithm form.
Table 3.3 US–China competition and Southeast Asian cooperation: fatal
MID

Notes Robust standard errors (clustering by dyad) in parentheses.

**
***
2
* Significance tests are two-tailed: p < 0.01; p < 0.05; p < 0.1.
3 Coefficients of country effects and year effects are dropped for saving space.
4 Continuous independent variables of the Gravity models (M10, M11, and M12) are transformed
in natural logarithm form.

Conclusion
Through the lens of foreign policy, we found that as China’s engagement in
Southeast Asia profoundly accelerated, paralleling its rapid increase in
national capability, US regional policy also changed from inattention to
proactive involvement as a response to China’s rise in an attempt to maintain
regional dominance, evidencing that the US and China were in an
increasingly intense competition to extend their own power and influence in
Southeast Asia in the post-Cold War era. Competing moves on the part of
the two great powers in the form of economic, political, and security
engagements generated a relatively beneficial climate in which Southeast
Asian states could obtain economic and security benefits for their ongoing
regional cooperation and integration. Therefore, they were strategically
motivated to further their cooperation under ASEAN to maximize the
benefits of the favorable international environment. The findings of the
foreign policy inquiry gained empirical support from the statistical analysis
which systematically compared the effect of US–China competition with
those of other variables, including joint ASEAN membership, joint degree of
democracy, and interstate conflict. The results of the statistical analysis
suggest that US–China competition played a significant role in stimulating
regional cooperation in Southeast Asia, particularly since the end of Cold
War. However, neither ASEAN, democracy nor conflict produced a relevant
effect. Not merely does this result support the theoretical argument proposed
in Chapter 2, that is that the competition between the great powers in the
power transition system can motivate small states targeted to be included in
a great power’s sphere of influence to further their cooperation, it also
refutes constructivists’ frequent emphasis that ASEAN facilitates regional
cooperation and realists’ standing argument that great power rivalry will tear
apart the region, just as it did in the Cold War.

Notes
1 The Policy of Good Neighborliness was adopted to forward political, economic, security, and
cultural engagement with neighboring states. The New Security Concept emphasizes multilateral
dialogues, consultations, and negotiations to establish mutual trust, benefit, equality, and
cooperation.
2 Yoshimatsu (2015) provided a concise review of the development of US and Chinese
involvement in the form of aid in the Mekong Region and also explained the challenges to the
US’s current policies to the region when China is implementing its OBOR.
3 Copper (2016) provides great chronicled information on China’s foreign aid and investments to
individual Southeast Asia states.
4 The meeting is based on the LMC mechanism initiated at the 2014 China–ASEAN summit by the
Mekong River Commission members (Laos, Thailand, Cambodia, and Vietnam) and its dialogue
partners (China and Myanmar). For China’s expectations and support of the LMC, see Ministry
of Foreign Affairs of China (2016).
5 For detailed information about the formation background and the policy goals of the OBOR and
the AIIB, please see the official websites of the Belt and Road Initiative
 (http://english.gov.cn/beltAndRoad/) and the Asian Infrastructure and Investment Bank
(www.aiib.org/).
6 Confirmation hearing by Secretary-Designate Colin L. Powell, https://2001–
2009.state.gov/secretary/former/powell/remarks/2001/443.htm, accessed 23 July 2016.
7 The Obama Administration had also concluded TIFAs with Burma in 2013 and Laos in 2016.
The information on the agreements were retrieved from the Office of the United States Trade
Representative.
8 The Pivot to Asia-Pacific was first seen in Hillary Clinton’s article, “America’s Pacific Century,”
carried in Foreign Policy on 11 October 2011. Later, the Obama Administration used
“Rebalance” to replace “Pivot” to describe its Asian policy, as seen in Sustaining US Global
Leadership: Priorities for 21st Century Defense, published by the US Department of Defense in
January 2012.
9 The statistics of official visits by President Obama and Secretary Clinton were collected from
traveling schedules publicly released by White House and the US Department of State: Cambodia
two times, Burma two times, Thailand two times, Singapore three times, Brunei one time,
Indonesia four times, Laos one time, Vietnam three times, Philippines two times, and Malaysia
one time.
10 Remark by Secretary Clinton at the Press on 23 July 2010,
www.state.gov/secretary/20092013clinton/rm/2010/07/145095.htm, accessed 14 February 2015.
11 Trade figures from Hong Kong have been included since 1997 and from Macau since 1999.
12 Here, FDI outflows and outstocks are used to indicate the investment activities of US and
Chinese enterprises in Southeast Asia. FDI outflows are the capital from foreign direct investors
to enterprises in other countries during a given period in time, usually a year. FDI outstock is the
total value of direct investment by resident investors in foreign economies during a given period
in time, reflecting overall investment activities of transnational corporations outside their home
countries (UNCTAD, 1995).
13 For the details of these partnership agreements, please refer to the section about External
Relations on the ASEAN official website, (http://asean.org/asean/external-relations/).
14 The dyadic data for each observation consists of a given state matched with a given partner.
There are two types of dyadic data: directed and undirected. For the directed dyadic data, each
pair of states, A and B, generates two rows of observations in a given year. For instance, in terms
of trade, one row is for the trade flow (exports and imports) from state A to state B in that year
and the other is for the trade flow from state B to state A in that year, namely A → B and B → A.
For the undirected dyadic data, each pair of states generates a single row of observations only,
with the trade flow from A to B and the trade flow from B to A, namely A–B. The undirected
dyadic data format is here adopted because the outcome of cooperation between two states, rather
than which side initiates cooperation with the other, is our only concern.
15 Although trade data which is used to construct the dependent variable here are available up to the
year 2016, the reason of that 2010 is taking as the final year of the period is simply an issue of
data availability for other variables, such as conflict.
16 FDI is also a key economic activity to gauge interstate cooperation. However, FDI data for
Southeast Asia is far less available than trade data.
17 The Polity dataset creates an 11-point index of each state’s democratic characteristics (democ)
and an 11-point index of its autocratic characteristics (autoc). The difference between these
indices, democ–autoc, yields a summary measure of regime type that takes on values ranging
from −10 for a highly autocratic state to 10 for a highly democratic one. This measure captures
variations both within democracies and among autocracies.
18 I transformed zero values to [1/e21] to avoid missing values in continuous variables. See Gartzke
and Li (2003: 563) and Kim and Rousseau (2005: 530). I used the original coding for
dichotomous variables since this is consistent with the logarithmic form of the equation. It is
 equivalent to replacing the original zeros with a one while replacing the original values of the one
with the value [1/e21] and then taking natural logarithms of the whole series. The gravity model is
specified as follows: Cooperation = α + β (ln(Competition), JntASEAN, Conflict, ln(JntDem),
ln(GDP of county A), ln(GDP of country B), ln(Capital distance between Country A and country
B)) + ε
19 For further discussion on the application of the Poisson maximum likelihood (ML) model to
gravity model of trade, refer to Prehn (2016) and Martínez-Zarzoso (2013).

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4 Pursuit of economic development and
Southeast Asian peace1

Introduction

Previous scholarship has argued that Southeast Asia has experienced

relatively peaceful international relations, in terms of the frequency of
interstate conflicts and the level of battle deaths, in the decades since the
Sino-Vietnam War ended in 1979 (e.g., Goldsmith 2014; Kivimäki 2011,
2016; Tønnesson 2009, 2017). The constructivist perspective and the liberal
peace perspective come to the fore to explain the formation of Southeast
Asian peace. The constructivist theory of peace emphasizes the security
management of ASEAN, providing a process of social construction for
consensus among common interests, values, and norms that promote
regional peace (e.g., Acharya 1998, 2014; Ba, 2009; Kivimäki 2001, 2011,
2016). The liberal peace perspective underlines the pacifying effects of
democracy and economic interdependence in the modern international
system (e.g., Russett and Oneal 2001; Russett 1998). Of these two
perspectives, ASEAN security management seems a more plausible
explanation for the formation of Southeast Asian peace, because non-
democratic regimes and low economic interdependence are hallmarks in
Southeast Asia. However, considering the empirical evidence that ASEAN
states have continued to experience MIDs among themselves since 1967, the
assumed pacifying effect of ASEAN security management could be
exaggerated.
The intent of leaders in Southeast Asia to promote economic development
for the purpose of state-building is notable. This is, for example, evidenced
in the establishment of ASEAN and related multilateral institutions for the
purposes of maintaining regional security and advocating regional economic
integration. Although the intent of pursuing economic development is often
mentioned, it is usually assumed to be represented by outcome, such as
ASEAN, economic development, and economic interdependence, rather than
being singled out as an independent factor, in empirical investigation. This
practice might not be suitable when investigating the cause of Southeast
Asian peace, because this intent on its own might exert more influence on
foreign policy-making processes.
For the leaders in Southeast Asia, as well as their domestic coalitions,
failing to promote national economic development would undermine the
political and economic foundations of their ruling. When a domestic ruling
coalition prefers the liberal capitalist approach to economic development,
either as the most effective way for national development in the modern
economic system or as the most effective way to realize the private interests
of coalition members, it will work to achieve peaceful and cooperative
international relations, because the success of the liberal capitalist approach
to development hinges on a stable, open, and adaptive economic
environment and markets. Thus, it can be expected that states adopting
economic liberalization policies will be less likely to act belligerently in
their foreign policies, reducing the likelihood of MID among them. In other
words, a state’s approach to pursuing economic development can affect its
foreign behavior and its adoption of the liberal capitalist approach can
generate peaceable foreign behavior. Applying this argument to Southeast
Asia, the pursuit of liberal capitalist economic development would help
foster regional peace. As shown over the following pages, a series of
statistical analyses, focusing on the likelihood of MID between Southeast
Asian states, supports the idea that the pursuit of liberal capitalist economic
development, among other factors, produces a positive effect on Southeast
Asian peace.
This chapter is arranged as follows. It first appraises the implications of
democracy, economic interdependence, and ASEAN security management
on Southeast Asian peace with several comparisons of descriptive statistics,
followed by the argumentation of capitalist peace and its implications in
Southeast Asia with a brief sketch of the development of regional states
pursing economic development. Next, a series of statistical analyses are
employed to test the proposed hypothesis and compare it with competing
arguments. Finally, the chapter closes with a summary.

Why has Southeast Asia enjoyed relative peace?

Democracy, economic interdependence, or ASEAN security management

Previous literature, especially constructivist literature, commonly points to
and compares democracy, economic interdependence, and ASEAN security
management as factors in the formation of Southeast Asian peace (e.g.,
Acharya 1998, 2014; Haacke 2005; Kivimäki 2001, 2011). Previous liberal
peace research (e.g., Gartzke et al. 2001; Hegre et al. 2010; Maoz and
Russett 1993; Oneal and Russett 1997, 1999b; Quackenbush and Rudy 2009;
Russett and Oneal 2001) shows democracy and economic interdependence
as notable pacifying factors in international relations at the global level.
These studies argue that democratic cultures advocate peaceful approaches
to conflict resolution. Democratic political institutions and the costs of war
could deter a government from entering a militarized conflict and enable a
government to send a credible signal of resolve in a diplomatic crisis.
However, the ability of these two pacifying factors to explain peace in
Southeast Asia is less clear, given that the region experienced a relatively
peaceful history prior to the arrival of salient democracies and economic
interdependence. Russett (1998), a key advocate of the liberal peace theory,
admits that the pacifying effects of democracy and economic
interdependence may vary in time and space (case). Figure 4.1 shows the
dyad-level frequency of political regime combinations and MID onsets from
1950 to 2010, using Polity IV data (Marshall et al. 2015)2 and COW MID
data (Palmer et al. 2015). The frequency of democratic dyads in the region in
the period between 1950 and 2010 represents only about 2.5 percent of total
observed dyads, whereas non-democratic dyads (i.e., autocracy–anocracy
and autocracy–autocracy) constitute 71.2 percent of the total number of
dyads, indicating that democracy has not been a common feature in
Southeast Asia. In addition, there have been three onsets of MID in 50
democratic dyads (6 percent), representing a likelihood as high as that of
democracy–autocracy dyads (6.3 percent) and anocracy–autocracy dyads (6
percent). These results raise suspicions about the role that democracy has
played in bringing peace to Southeast Asia.
Figure 4.2 shows that the level of economic dependence between
Southeast Asian dyads, measured as the ratio of State A’s total imports and
exports with State B over State A’s GDP in a given year, using COW Trade
data (Barbieri and Keshk 2016) and the updated GDP dataset (Gleditsch
2002) in current US dollar value.3 The figure shows that Southeast Asian
economic interdependence was generally low in the period 1950–2010, with
a mean (median) ratio of 0.0099 (0.0007). Approximately 82 percent of total
dyads fall below the ratio of 0.01 and 16 percent are at zero value, indicating
that the mode ratio is zero. But the economic dependence of regional dyads
has increased slowly and incrementally in the post-Cold War period.
Examples include Cambodia on Vietnam, Singapore, and Thailand; Vietnam
on Thailand, Malaysia, and Singapore; Laos on Vietnam and Thailand;
Malaysia on Indonesia and Thailand; the Philippines on Singapore and
Thailand; as well as Singapore on Indonesia, the Philippines, and Thailand.
Of these dyads, Singapore and Malaysia have had an exceptionally high
economic interdependence. The highest ratio of the region is observed in
Singapore’s economic dependence on Malaysia (0.414) in 1995. However,
there were two MID onsets between Singapore and Malaysia, as shown in
Table 4.1 later.

Figure 4.1 Political regime combinations and MID onsets in Southeast

Asia (1950–2010).
Figure 4.2 Economic interdependence in Southeast Asia (1950–2010).

Low levels of democracy and economic interdependence cast a shadow

over the implications of liberal peace in the formation of Southeast Asian
peace. This gives way to the popular constructivist contention that ASEAN
security management is a more crucial factor in pacifying relations between
non-liberal, non-democratic ASEAN states. That is to say, the ASEAN Way,
stressing a preference for informality that reflects the historical and cultural
milieu of the actors, minimal institutionalization of cooperation, consensus
building on the basis of equality, and tolerance with mutual consultation, has
helped construct particular diplomatic and security cultures that have
pacified the region. Constructivists could be correct in their contention about
the pacifying effect of ASEAN security management, noting that Indonesia,
Malaysia, Singapore, Thailand, and the Philippines have not waged war
against each other since establishing ASEAN in 1967 (Acharya 2014: 5), or
arguing that no armed conflicts have occurred between ASEAN states by
using the UCDP/PRIO Armed Conflict dataset (Harbom and Wallensteen
2009) with all levels of armed conflicts (e.g., Kivimäki 2008, 2011).4
However, based on COW MID data, which includes threats and displays of
force as well as the actual use of military force causing no battle deaths or
more than one battle death in its definition of the state of interstate conflict,
it reveals that MIDs did occur between ASEAN states within the sample
period.
Figure 4.3 discloses that most MID onsets in Southeast Asia since 1967
occurred between ASEAN states and non-ASEAN states, and only six MID
onsets were between non-ASEAN states. However, it also reveals the
striking fact that 27 MIDs were initiated between ASEAN states.
Furthermore, if we look into ASEAN’s founding members (Indonesia,
Malaysia, the Philippines, Singapore, and Thailand), they became more
likely to experience militarized disputes after ASEAN was established than
before. The average number of MID onsets (frequency/year) for 1950–1966
was 0.176 and 0.318 for 1967–2010, or about two times more. Regarding
MIDs between ASEAN states, most occurred during the post-Cold War
period. Thailand has been the member state involved in the most militarized
disputes (15 MID onsets) as shown in Table 4.1. As to fatality levels of
MIDs between ASEAN states, Table 4.1 also shows that six MIDs caused at
least one battle death and 20 caused no deaths, implying that ASEAN states
could fight each other violently. The most violent military incident took
place on the border between Myanmar and Thailand in 2001 as the Myanmar
army intruded into Thailand in a series of skirmishes with Karen ethnic
rebels. MIDs between Malaysia and the Philippines during the Cold War
period were territorial disputes over North Borneo (Sabah) and the Spratly
Islands, albeit those disputes resulted in no fatalities. The above descriptive
statistics run counter to constructivist arguments concerning the effects of
ASEAN security management.
Figure 4.3 MID onsets and the ASEAN membership (1950–2010).

Table 4.1 Fatality level of MID onsets between the ASEAN states
(1967–2010)

Battle deaths Frequency Dyad (year)

No 20 Cambodia–Thailand (2005)
Malaysia–Thailand (2004, 2005, 2006)
Indonesia–Thailand (2004)
Indonesia–Malaysia (2005, 2008)
Indonesia–Philippines (2003)
Myanmar–Thailand (2002, 2004, 2006, 2009)
Vietnam–Philippines (1998 and 1999)
Malaysia–Philippines (1979, 1980, 1985, 1988)
Malaysia–Singapore (1992, 2003)
1–25 5 Cambodia–Thailand (2008)
Myanmar–Thailand (1999, 2003, 2007)
Vietnam–Thailand (1995)
26–100 1 Myanmar–Thailand (2001)
Missing data 1 Malaysia–Philippines (1968)

In light of the discussion above, democracy, economic interdependence,

and the ASEAN way of security management do not seem to be persuasive
factors explaining Southeast Asian peace. Rather, the desire to promote
economic development to facilitate state-building in a peaceful environment
as a distinct factor for explaining Southeast Asian peace, while often
mentioned, has not received much empirical assessment. Following
decolonization, the newly independent Southeast Asian states shifted their
national policy focuses from pursuing self-determination, autonomy, and
anti-colonialism/anti-imperialism to advancing state-building and national
prosperity. In this shift, Southeast Asian leaders became aware of the
adverse effects of regional instability on the pursuit of economic
development and, consequently, on the foundation of their ruling. For
instance, regional instability and stunted national growth caused by
Indonesia’s Konfrontasi (“Confrontation”) policy against Malaysia and
Singapore in the early 1960s was a costly lesson (Narine 2004, 2008; Stubbs
2001). The establishment of ASEAN, therefore, evidenced this realization
and signaled the resolve to promote regional stability to attract badly needed
FDI to stimulate economic development (Haftel, 2010). The member states
use ASEAN as a diplomatic venue to communicate and consult with each
other on international and regional issues, manage regional security, and
advocate regional cooperation for the purpose of promoting national social
and economic development. However, the first decade of ASEAN did not
stimulate substantial economic cooperation and it focused on regional
security affairs (Narine 2008). Although ASEAN began to shift more
attention to economic cooperation and development after the Vietnam War,
to promote national resilience, its achievements were limited because
developing ASEAN states at that time preferred liberalizing their own
national trade and investment links with extra-regional partners rather than
promoting regional economic integration to enhance economic
interdependence among themselves (Acharya 2014; Kivimäki 2008;
Ravenhill 1995, 2008). But this shows that the pursuit of economic
development has been the primary motivation behind the establishment and
enlargement of ASEAN. Until the end of the Cold War, ASEAN was not
effective in promoting regional economic development and cooperation. Its
economic functions gradually came to the fore only in the post-Cold War
period, but its weak institutionalization as well as imprecise obligations and
lack of binding and substantial commitments continued to overshadow the
prospect of ASEAN’s effectiveness on regional economic integration.
Hence, ASEAN’s designated functions were not evenly fulfilled, even
though it was born to facilitate all aspects of regional development.
Therefore, it would be better to regard ASEAN as an institution providing
the political and security prerequisites for economic development, such as
defusing or settling political disputes and military conflicts. The intent of
pursuing economic development would be better recognized as a distinct
factor.

Pursuit of economic development as a pacifying factor

The relationship between economic development and interstate conflict has
been a major theme of debate in international studies. A classical line in the
literature contends that the level of economic development is positively
associated with interstate conflict, because rapid growth of economic
development in the processes of nation-making will bring about expansionist
foreign policies that are predicated on the necessity to acquire additional
natural resources to satisfy the increasing capacity of production and
consumption (Choucri and North 1975; Tilly, 1985), or in some cases
because economic growth leads to power transitions and consequently war
(Lemke 2002; Organski and Kugler 1980). In contrast, other literature argues
that economic development in the modern economic system reinforces the
use of international trade for future economic development, heightening the
importance of capital and intellectual resources and increasing the cost of
war preparations; consequently, it diminishes the incentive to use costly
military measures to accumulate wealth (Rosecrance 1986). Also, increasing
economic interdependence through trade makes violent international
interaction prohibitively expensive due to the high cost of the interruption of
trade links (Hegre 2000; Polachek and Xiang 2010; Polachek 1980;
Polachek et al. 1999; Russett and Oneal 2001). In addition, drawing on the
bargaining model of war (Fearon 1995), economic interdependence as
mutually valuable linkages provides a mechanism that substitutes for violent
contests, allowing states in a crisis to communicate credibly in signaling
resolve by damaging valuable economic connections so that the use of
violent methods decreases in bargaining (Gartzke et al. 2001). Recent studies
argue that the relationship between economic development and international
conflict is curvilinear; that is, mid-developed states are more prone to engage
in belligerent foreign policies than either poor states or highly developed
states (Boehmer and Sobek 2005), developed contiguous dyads are more
peaceful than either developing or non-contiguous dyads, and states are
more likely to become involved in conflicts far from home (Gartzke 2007).
These analyses mainly stress the resulting effect of economic development
and consequential economic interdependence on a state’s choice of
belligerent or peaceful foreign policies, because of the lateral pressure for
prospective growth of economic development, the deterrent effect by
opportunity cost, the effectiveness of trade for economic development, or
credible signaling. However, this does not adequately take into account that
a state’s choice of certain policies for economic development could also
generate a distinct effect on a state’s making of foreign policies and
behaviors.
Leaders of both democratic and authoritarian regimes must provide
benefits/welfare to their politically relevant domestic supporters in order to
retain a winning coalition and thereby remain in office (Bueno de Mesquita
et al. 1999, 2003). Lack of or poor economic development deprives a leader
of his or her capacity to produce enough benefits to satisfy supporters who
are expecting economic gains and dislike losing existent economic gains.
Failure to produce economic development can, consequently, endanger a
leader’s legitimacy and stability of ruling. Hence, formulating productive
economic policies that can satisfy the interests of a winning coalition in the
modern economy has become a dominant mission of leaders. A national
economic policy is not merely a projection of a leader’s personal political
calculations and interests, it is also a combination of political/economic
interests and preferences (philosophy and prospects) about how to achieve
national prosperity and growth shared by the leader, political officials, and a
group of individuals within society. The shared interests and preferences
lead the ruling group and its fellows within society to act in concert to
advance beneficial economic regulations to attain and preserve their
political/economic interests. Some prior studies have pointed out that a
domestic ruling coalition that consists of politicians and social parties who
prefer the liberal capitalist approach to economic development (i.e., free-
market reform, export-oriented economic policies, and free trade and
financial policies) are more likely to advance regional cooperation and
promote peaceful international relations, whereas domestic protectionist
coalitions occupied by statist, nationalist, and import-substituting economic
interests and preferences are less likely to prevent international conflicts and
more likely to dismiss international cooperation (McDonald 2004; Solingen
1997). The liberal capitalist route to economic development needs stable and
free markets for exports as well as plentiful and constant inputs of capital,
investment, and technology. International conflicts can disrupt existing
economic exchanges and discourage prospective economic activities by
closing off channels of exchange and by damaging domestic capacities of
production and consumption. In addition, conflicts can discourage planned
or potential inputs of overseas capital and investment, because of the high
risk of losses and the low prospect for return in an unstable environment in
the future (Li and Sacko 2002; Long 2008; Morrow 1999; Pollins 1989a,
1989b). In other words, violent interstate conflicts are obstacles to economic
growth and negatively affect a state’s pursuit of liberal capitalist economic
development. The prospective costs of engaging in violent interstate
conflicts, therefore, motivate states that have adopted liberal capitalist
economic policies to create a peaceful and cooperative economic
environment to extend markets and economic exchanges and acquire capitals
and investments.
In addition, liberal capitalist economics necessitate the removal of
protectionist economic institutions that privilege inward-looking politicians
and other protected individuals. This results in changes in the distribution of
wealth and political power in society. The liberal capitalist coalition’s social
supports and domestic influences are extended and protectionists’
economic/political powers are shrunk, enhancing the prospect for peace
between states (McDonald 2004). Growing cooperation with regional
foreign liberal political/commercial parties, driven by liberal capitalist
economic development, may also reinforce the domestic liberal capitalist
coalition’s capacity to further disadvantage the domestic political and
economic status of the protectionist coalition so that the former can
accelerate and consolidate free economic reforms, thereby decreasing the
likelihood of engaging in costly conflicts (Solingen 1997). Furthermore,
when a state pursues liberal capitalist development, the proportion of public
and private properties in the society will change; that is, public holding of
property will decrease and private holding will increase. Accordingly, the
likelihood of a government to pursue a more aggressive foreign policy will
diminish because its fiscal autonomy and its hold on the domestic reign of
power will decrease (McDonald 2007, 2010). Also, as liberal capitalist
development evolves, it cultivates an economic norm based on trust and
mutual respect for contractual obligations within society, helping to resolve
disputes through negotiation and compromise (Mousseau 2000, 2009, 2010,
2013).
 Put simply, common liberal capitalist economic interests and preferences
drive politicians and socially engaged individuals, as a domestic coalition, to
employ cooperation, which mitigates the conflict-inducing effect of lateral
pressures, as a means to collectively enhance free economic reforms and
extend capitalist roots. Adopting liberal capitalist economic policies also
sends a message of cooperation to states moving in a similar direction of
economic development. Mutually benign and cooperative signaling helps
reduce natural enmity and imbue confidence, helping to foster a consensus
for making mutually beneficial and benevolent foreign policies. The pursuit
of liberal capitalist economic development will also reduce a government’s
capacity to wage war autonomously and help its society evolve into the one
preferring to settle international disputes peacefully. In short, based on this
rationale, jointly moving to adopt liberal capitalist economic policies helps
cultivate a starting milieu that can reduce the prospects of violent interaction
between states. Thus, it is necessary and helpful to single out the effects of
economic policies when discussing the making of Southeast Asian peace
when comparing it with the effects of economic factors, such as economic
development and economic interdependence.
In Southeast Asia, several states have somewhat lengthy histories of
implementing economic liberalization policies for economic development.
Beginning in the 1970s, some Southeast Asian economies started replacing
the import-substituting development model with the export-oriented
development model which is typically employed alongside economic
liberalization policies, necessitating a more open economic environment for
trade and investment (Felker 2004; Rodan et al. 2006). Solingen (2008)
suggested that Singapore was a pioneer in adopting an export-oriented
strategy in 1965, followed by Malaysia and Thailand in the 1970s, the
Philippines and Indonesia in the 1980s, and Vietnam in the 1990s. Through
the lens of trade policy (Wacziarg and Horn Welch 2008),5 Thailand (since
1950), Singapore (since 1965), Malaysia (since 1963), Indonesia (since
1971), and the Philippines (since 1989) are in the category of “open trade
regime,” meaning that they are pursuing liberal capitalist economic
development. Since 1976, ASEAN states have taken efforts to work together
to enhance their economic development and trade by initiating a series of
economic cooperation schemes and proposals, including such agreements as
PTAs (1977), ASEAN Industrial Projects (1980), the ASEAN Industrial
Complementation Scheme (1981), ASEAN Industrial Joint Ventures (1982),
the AFTA (1992), the ASEAN Framework Agreement on Services (1995),
and the Framework Agreement on the ASEAN Investment Area (1998).
After the 1997 Asian financial crisis, ASEAN states actively advanced
financial cooperation by implementing expanded currency swap
arrangements (i.e., the Chiang Mai Initiative), monitoring for exchange rates
and macroeconomic and social policies (i.e., the ASEAN Surveillance
Process), and liberalizing financial services (i.e., the ASEAN Finance Work
Program). Most notably, the ASEAN Concord II in 2003 brought a new
long-term ambition to an ASEAN-wide economic, security, and socio-
cultural community. The Declaration on the ASEAN Economic Community
Blueprint was signed by all ten ASEAN states in 2007 (Severino 2006: 213–
255; Weatherbee et al. 2005: 187–202). All of these developments showed
that Southeast Asian economies were shifting from protectionist toward
liberal economic institutions and highlighted their efforts to advance liberal
capitalist economic reforms. By matching Wacziarg and Horn’s trade regime
data with COW MID data in dyadic terms, it reports only one non-fatal MID
(Singapore–Malaysia 1992) between Southeast Asian states jointly adopting
economic liberalization policies in the period 1950–1999, much less frequent
than that of joint ASEAN membership as shown above. This suggests that
the pursuit of liberal capitalist economic development is an indispensable
factor in generating Southeast Asian peace.
To examine whether the adoption of liberal capitalist economic policies
can contribute to Southeast Asian peace, I propose a hypothesis for the
following empirical analysis: If two Southeast Asian states commonly pursue
liberal capitalist economic development, then they will be less likely to
experience interstate conflict.

Empirical analysis

Research design
This section sets out to test the above hypothesis in the context of Southeast
Asia. The dependent variable is the onset of interstate conflict, using the
MID dataset (Palmer et al. 2015) as mentioned previously. This is a
dichotomous variable, coded as 1 for the first year of a new MID in a given
Southeast Asian dyad and zero otherwise. In other words, the subsequent
years of the same MID are dropped from the analysis. In addition, using only
a new MID onset (i.e., dropping all the ongoing records of the same MID)
also addresses the problem of the dependence of the subsequent dispute
years in the statistical analysis because statistical models assume cases are
independent (Boehmer et al. 2004; Gartzke and Li 2003).
Pursuit of liberal capitalist economic development is the independent
variable of primary interest here. Economic liberalization, often measured by
a state’s trade policies, is a common proxy for identifying whether a state has
a propensity for free-market export-oriented economic development. Several
indicators have been used to discern a state’s trade policies, such as average
statutory tariff rate, the ratio of tariff revenues to imports, and the ratio of
total trade to GDP (cf. McDonald 2004; Milner and Kubota 2005).6
However, the lack of data on tariffs and customs revenues as a percentage of
imports of Southeast Asian states for the period 1950–2000 makes it difficult
to obtain meaningful results. In addition, tariffs cannot capture the extent to
which a state uses non-tariff barriers to protect non-competitive domestic
sectors, and customs revenues cannot reflect prohibitive tariffs (McDonald
2004: 557–558). Also, the ratio of total trade to GDP is a relatively poor
indicator for capturing changes of political propensity in certain economic
policies because the value of this outcome indicator may be highly sensitive
to other factor endowments, such as resource supplies, international prices,
natural barriers to trade, technology, and tastes (Leamer 1988). In this
regard, I follow Milner and Kubota (2005) in using the trade regime
indicator developed by Sachs and Warner (1995) and recently updated by
Wacziarg and Horn Welch (2008) to identify a state’s economic development
policies. This indicator is coded as a closed trade regime if any one of the
following criteria is true: non-tariff barriers cover 40 percent or more of
trade; average tariff rates are 40 percent or more; black-market exchange
rates depreciated by 20 percent or more relative to the official exchange rate
during the 1970s or 1980s; a socialist economy is in place; or a state
monopoly on exports exists. This indicator is useful and fitting here because
it provides more comprehensive information as it considers various aspects
of protectionism over time (1950–1999) and across space. Thus, JntELP is a
dichotomous variable coded as 1 when both states in a dyad year t are jointly
open trade regimes and zero otherwise. However, data are not available for
Brunei, Cambodia, Laos, and Vietnam in Sachs and Warner’s original data
set. So as not to lack information on the four states in the analysis, I assess
the status of their trade regimes using Fukase and Martin’s (2001) report.
Although the four states started at different levels of trade liberalization in
the 1980s, they qualify as closed trade regimes over time using Sachs and
Warner’s criteria. Thus, I code JntELP as zero for these states in any given
dyad year, rather than treating them as missing data.
As mentioned previously, democracy, economic interdependence, and
joint ASEAN membership are regarded as competing variables to JntELP.
The Polity IV dataset (Marshall et al. 2015) is used to measure political
regimes of Southeast Asian states, scaled from −10 (most autocratic) to 10
(most democratic). Following the “weak link” logic (Dixon 1994; Oneal and
Russett 1997), the variable Democracy(L) reports lower democratic values in
a given dyad year. The variable Interdependence(L)—the lower ratio of the
sum of State A’s imports from and exports to State B over State A’s GDP in
current US dollar value—is employed to capture the degree of economic
interdependence between regional states, using Gleditsch’s (2002) Expanded
Trade and GDP dataset. JntASEAN is a dichotomous variable for joint
ASEAN membership, capturing the effect of the ASEAN style of conflict
management on the foreign policy behavior of ASEAN member states. It is
coded as 1 when both states in a dyad year t are the jointly ASEAN members
and zero otherwise.
Several control variables are also included in the model.
Intergovernmental organization is commonly regarded as a positive factor
promoting international peace. They not only facilitate a member’s self-
interests across a variety of issues but also reduce the possibility of conflict
between members by mediating conflicting parties, reducing uncertainty as
information is conveyed, socializing member identities, and shaping
common norms (e.g., Keohane and Nye 1989; Russett and Oneal 2001;
Young 1986). To gauge the potential mediating effect of intergovernmental
organizations, I use the variable IGOs, which is defined as the natural
logarithm of total shared memberships of intergovernmental organizations
summed for each dyad year, using the International Governmental
Organization dataset (V2.3) (Pevehouse et al. 2004). Because the data
contains only observations at five-year intervals before 1965, values are
filled in until 1965 by projecting the summed memberships forward four
years, i.e., values for each dyad’s shared IGO memberships in 1950 are also
used for the years 1951–1954 and so on. I replace zero with [1/e21] to avoid
missing values before natural logarithm transformation.7
 Furthermore, similar foreign policy alignments among states may
coincide with better diplomatic relations and indicate a future with less
hostility between those states, thus producing a positive effect on bilateral
trade (Dixon and Moon 1993; Gowa 1994; Gowa and Mansfield 1993;
Mansfield and Bronson 1997; Morrow et al. 1998). In other words, besides
producing a direct pacifying effect, similar portfolios of foreign policy can
indirectly affect the likelihood of MID onset through JntELP, which is
enhanced by increasing bilateral trade. An indirect effect of similarity like
these, therefore, should be controlled to obtain an accurate net effect of
JntELP on MID onsets. The variable Similarity is the weighted S-score
measuring the level of similarity of alliance portfolios for the dyad
(Signorino and Ritter 1999).8 Furthermore, Similarity can also account for
the concern that the open trade policies of a Southeast Asian state may be
closely related to its alliance with the United States (i.e., US–Thailand
alliance 1954–1977; US–Philippines alliance 1951–2000).
Since the outcome of economic development may affect the likelihood of
interstate conflict, as previously mentioned, the variable GDP / pc(L), the
natural logarithm of the lower GDP per capita of a dyad in a given year in
current US dollar value, is created to control this effect, using Gleditsch’s
GDP dataset. Geographical proximity is associated with the likelihood of
interstate conflict (Bremer 1992; Diehl 1991). The variable Contiguity,
which is predicted to increase the likelihood of interstate conflict, is a
dichotomous variable that is coded 1 if states share a land border or are
separated by up to 150 miles of water, and zero otherwise. The variable
Distance is measured in the natural logarithm of the great circle distance
between two national capitals, predicted to be negatively associated with the
likelihood of interstate conflict. The interaction variable, Contiguity × GDP
/ pc(L), is also included as it is argued that economic development decreases
incentives for territorial expansion (Gartzke 2007).
National material capability is always a primary concern of the realist in
studies of war and peace. Power transition theory contends that states which
are vastly different in national power will be much less likely to fight each
other; that is, preponderance brings peace (Kugler and Lemke 1996; Lemke
2002; Organski 1958). However, the balance-of-power tradition argues that
power parity brings peace (Waltz 1979). To account for the effect of power, I
construct the variable Power Parity using the composite index of national
capability (CINC) score provided in the National Material Capability dataset
(v5.0) in the COW project (Singer et al. 1972). Power Parity is represented
by the quotient of the smaller composite indicator of national capability
score over the larger composite indicator of the national capability score.
Thus, a dyad with perfect power parity will score 1 and a dyad with
complete asymmetry in power will score zero.
The Cold War was a prominent contributor to tense rivalry between
communist states and non-communist states in Southeast Asia during much
of the examined period. Therefore, I control for this structural effect by
adding the variable CW Dummy, a dichotomous variable that is coded as 1
when a dyad is between 1950 and 1989 and zero otherwise. This variable is
not included in the models for the subsamples 1950–1975 and 1976–2000
because the separation of time periods already controls for the Cold War
effect.
The statistical model to be estimated is specified as: MID Onset = α + β
(JntELP, JntASEAN, Democracy(L), Interdependence(L), IGOs, Similarity,
GDP / pc(L), Contiguity, Contiguity × GDP / pc(L), Distance, Power Parity,
CW Dummy, Peace Year) + e The timespan analyzed is 1950–2000 because
the data to construct JntELP is available for the period 1950–1999. The
dataset is pooled time-series cross-sectional, consisting of Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,
Thailand, the Democratic Republic of Vietnam (1954–present), and the
Republic of Vietnam (1954–1975). The unit of analysis is the undirected
dyad year. In addition, the literature commonly characterized tensions as
high in Asia during the Cold War, culminating in the Vietnam War and
gradually lessening afterward. The end of the Vietnam War in 1975, the
emergence of a regional communist bloc (Vietnam, Cambodia, and Laos),
and uncertainties about US commitments in the region together worked to
motivate the heads of ASEAN states to meet in Bali in 1976 to discuss this
new phase in international relations in the region (Alagappa 2003; Narine,
2008). If different dynamics in international relations in the region exist in
specific periods, it is suggested that those dynamics be examined separately
to avoid heterogeneity in modeling (cf. Goldsmith 2007). In this regard, I
also divide the entire sample period 1950–2000 into two separate periods:
1950–1975 and 1976–2000. I estimate coefficients using logistic regression
with Huber/White robust standard error and adjust for clustering in dyads. I
adopt Beck et al.’s (1998) method of temporal spline variables to control for
temporal dependence of observations in the analysis of cross-sectional time-
series with a binary dependent variable to produce accurate standard errors
and consistent coefficients.9 All independent variables are lagged by one
year in order to mitigate problems of reverse causality.
Table 4.2 provides the descriptive statistics of the variables.

Statistical results and robustness checks

Basic analysis
Table 4.3 shows the empirical results for the three periods (1950–2000,
1950–1975, and 1976–2000). In Models 1 and 3, JntELP shows the
statistically significant and negative effect on MID onset. It is dropped due
to the perfect prediction in Model 2, indicating that no new MID occurred
between the Southeast Asian dyads sharing common economic liberalization
policies in the period 1950–1975. These results confirm the proposed
argument that common economic liberalization policies might mitigate
conflicting behaviors between pairs of states. Regarding the two classical
liberal peace variables, Democracy(L) is negatively but insignificantly
associated with MID onset, but Interdependence(L) significantly increases
the likelihood of MID onset in Models 1 and 3. The statistical outcomes of
Interdependence(L) thus support the argument that increasing frequency of
contact can increase the likelihood of conflict (Waltz 1979). The outcomes
of the two variables affirm weak implication of classical liberal peace in
Southeast Asia. In addition, JntASEAN demonstrates no significant pacifying
effect in Models 1 and 2, but that significant pacifying effect exists in Model
3. This suggests that the constructivist’s claim about the effect of ASEAN
security management might be correct only for the post-Vietnam War period,
but it should not be exaggerated when taking into account the entire Cold
War period.10
Table 4.2 Descriptive statistics of variables (1950–2000)

Note
Except for MID onset, all variables are lagged by one year.

As for the control variables, in Model 1 IGOs does not produce a

significant pacifying effect. In other words, Kantian peace (Russett and
Oneal 2001) does not exist in Southeast Asia. The geographical variables,
Distance and Contiguity, generate the expected effects; that is, the further
two Southeast Asian states are geographically separated from each other, the
less likely they are to experience an onset of MID. GDP / pc(L) is positive
and statistically significant, supporting the idea that an increase in the level
of economic development could heighten the risk of a non-contiguous
Southeast Asian state becoming involved in a militarized dispute. On the
other hand, significant positive Contiguity × GDP / pc(L) shows that
contiguous Southeast Asian states will be less likely to have a MID when
they are focused on economic development. Also, as predicted, Similarity is
negative and significant, affirming that states sharing similar foreign policy
perspectives will be less likely to fight each other.11 Power Parity is positive
but not significant, contradicting the expectation, but it becomes positive and
significant in Model 3. However, the international structure of the Cold War
period, in comparison with the above variables, did not notably prompt
conflict in Southeast Asia.
Table 4.3 Models of the MID onset in Southeast Asia (1950–2000)

(M1) (M2) (M3)

1950–2000 1950–1975 1976–2000

JntELP −7.997*** (omitted) −7.249***
(1.819) — (1.509)
JntASEAN 0.060 −0.348 −0.979**
(0.534) (1.523) (0.468)
Democracy(L) −0.055 −0.126 −0.001
(0.039) (0.109) (0.049)
Interdependence(L) 40.503*** −0.369 45.230***
(12.147) (66.385) (8.728)
IGOs −0.019 −0.033 1.063
(0.027) (0.034) (0.740)
GDP/pc(L) 1.378** 1.559*** 0.592
(0.562) (0.540) (0.724)
Similarity −2.454* −3.361* −4.052***
(1.447) (1.723) (1.348)
Contiguity 7.579** 12.662*** 8.163
(3.510) (4.587) (5.719)
Contiguity*GDP/pc(L) −0.908* −1.831** −0.865
(0.503) (0.850) (0.813)
Distance −1.323*** −1.323** −0.627
(0.398) (0.600) (0.449)
Power Parity 1.369 −1.558* 2.833***
(0.875) (0.930) (1.029)
CW Dummy 0.626 — —
(0.422) — —
Peace Years −0.129 −0.085 0.129
(0.126) (0.175) (0.153)
_spline1 0.002 0.003 0.012*
(0.005) (0.007) (0.006)
_spline2 −0.004 −0.014 −0.010*
(0.003) (0.012) (0.005)
_spline3 0.002* 0.016 0.005**
(0.001) (0.013) (0.002)
Constant −5.195 −5.444 −8.016
(4.152) (5.378) (6.635)
N 1,640 768 828
Pseudo R2 0.348 0.373 0.419
χ2 775.9 162.6 1,497

Notes Robust standard errors (clustering by dyad) in parentheses.

**
***
2
* Significance tests are two-tailed: p < 0.01; p < 0.05; p < 0.1.

Substantive effect
Although statistical significance is important in quantitative research, it does
not necessarily make a finding statistically meaningful when a large number
of observations are taken in analysis. If a sample size is very large, small p-
values can occur even though the difference between the true value of the
parameter and the null hypothesis value is small (cf. Gujarati 2003). Given
this concern, the empirical analysis further compares the substantive effects
of JntELP, Democracy(L), Interdependence(L) and JntASEAN. Table 4.4
reports the difference value (maximum minus minimum) of the predicted
probability of a new MID onset for the four variables in Model 1.12
JntELP’s predicted probability of a new MID onset declines by about
0.26 percentage points when its value changes from minimum to maximum;
Democracy(L) decreases predicted probability by about 0.19 percentage
points; Interdependence(L) increases predicted probability by about 25.59
percentage points; and JntASEAN increases predicted probability by about
0.11 percentage points. But the substantive effects of Democracy(L) and
JntASEAN have to be interpreted cautiously because of their statistical
insignificance. This result suggests that commonly adopting economic
liberalization policies plays a more important role in reducing the likelihood
of MID onsets in Southeast Asia.

Robustness tests
One concern to the above empirical result is collinearity which can result in
imprecise outcomes. As Table 4.5 shows, JntELP and JntASEAN are highly
correlated (the correlation coefficient is 0.6920). This is because most
Southeast Asian states that have adopted economic liberalization policies
were also ASEAN member states for most of the sample period. However,
rule of thumb suggests a potential problem of collinearity at the stage of
estimation. In addition, although the correlation between JntELP and
Interdependence(L) (0.4477) is not so high that it raises serious collinearity
concerns, the two variables theoretically, to some extent, could share the
same information, because increasing economic interdependence can also
reinforce the adoption of economic liberalization policies. Therefore, to
address this issue of collinearity, I make a check based on a reduced form of
Model 1 in Table 4.3 in which JntASEAN or Interdependence(L) is dropped
from the original empirical equation, thereby estimating the independent
effect of JntELP. For brevity, Table 4.6 only reports the results of the
variables of interest here, which confirm that JntELP is statistically
meaningful in terms of a conflict-reducing effect. Also, the inclusion of
interaction variable Contiguity × GDP / pc(L) could result in a less efficient
estimation (i.e., greater uncertainty) for the effect of JntELP. Therefore, I re-
estimate Model 1 without Contiguity × GDP / pc(L) and find that JntELP
still holds statistical significance with a slightly bigger coefficient (−8.3738).

Table 4.4 Predicted probability of MID onset (1950–2000)

Min. value → max. value 95% confidence interval

JntELP −0.0026 −0.0163 ~ −0.0000
JntASEAN 0.0011 −0.0017 ~ 0.0105
Democracy(L) −0.0019 −0.0127 ~ 0.0002
Interdependence(L) 0.2559 0.023 ~ 0.9124

Table 4.5 Pairwise Pearson’s correlations

Note
All variables are lagged by one year. All values are significant below 1%.
 The second concern comes from the operationalization of economic
liberalization policies. Recoding Brunei, Cambodia, Laos, and Vietnam,
which were originally missing observations, could affect the evaluation of
JntELP’s statistical significance. I, therefore, re-estimate Model 1 with the
data for the four states as missing. JntELP still holds negative and
significant. In addition, as previously mentioned, previous literature
proposes different indicators to discern a state’s economic policies in terms
of trade. Although Sachs and Warner’s (1995) trade regime indicator
provides temporal and economics information on the trade policies of
Southeast Asian states that is more complete, I employ McDonald’s (2004)
use of the ratio of customs revenues to imports (import duties) in their higher
values to re-estimate Model 1, expecting a positive sign of outcome from
this alternative variable.13 But the import duty variable was insignificantly
negative, counter to the expectation. A similar statistical result applies to the
use of Hiscox and Kastner’s (2008) measurement of a state’s trade
openness.14 The inconsistent outcomes shown here could imply that these
alternative indicators might capture different parts of trade policies,
suggesting a need for a more comprehensive trade policy indicator. None of
these findings, however, provides strong evidence to refute the current
empirical findings using Sachs and Warner’s indicator.

Table 4.6 Reduced forms of Model 1 (1950–2000)

JntELP −3.774*** −3.842*** −8.006***
(0.795) (0.944) (1.885)
Democracy(L) −0.053 −0.052 −0.055
(0.037) (0.039) (0.038)
Interdependence(L) — — 40.881***
— — (13.951)
JntASEAN — 0.091 —
— (0.547) —
N 1,640 1,640 1,640
χ2 358.1 371.0 770.3
Pseudo R2 0.345 0.345 0.347

Notes Robust standard errors (clustering by dyad) in parentheses.

**
***
2
* Significance tests are two-tailed: p < 0.01; p < 0.05; p < 0.1.
 The third concern is data coverage. Data availability, in terms of time and
space, is always a top concern as well as an Achilles’ heel for researchers
applying quantitative research methods. Lack of data in terms of time or
cases for the dependent variable obviously limits the generality of analysis.
Even though the dependent variable data is up to date, unavailability of
independent variable or control variable data could cause the same results.
Furthermore, unavailability of data for the independent or control variables
could also change the specification of the original model. This, in turn, could
reduce comparability between the previous analysis and the current analysis.
Sachs and Warner’s indicator obviously imposes a constraint on the analysis
here as its data only goes to 1999, preventing examination of the time period
after 1999 which could contain important information supporting or
disproving the present statistical outcomes. In other words, the possibility
exists that the present statistical outcomes could change if information from
more recent years is included. To deal with this issue, I re-estimate Model 1
by replacing JntELP with the composite indicator of “Freedom to Trade
Internationally” which is provided in the dataset of Economic Freedom of
the World (EFW) (Gwartney et al. 2016) and constructed on a series of
criteria similar to that of Sachs and Warner’s indicator but updated to
2016.15 The higher the value of Freedom to Trade Internationally a state has,
the more open the state’s trade policies are. Based on the weak link logic, the
variable FTI(L) is created with the lower value of Freedom to Trade
Internationally in a given dyad year. Because the data of Freedom to Trade
Internationally contains only observations at five-year intervals before 2000,
I filled the values in until 2000 by projecting FTI(L) forward four years; for
example, values for each dyad’s FTI(L) in 1970 are also used for the years
1971–1974 and so on. This increases the number of observations for
modeling. The re-estimation for Model 1 will also be executed with this
modification as another test.16
Several points have to be noted here for this re-modeling. First, its time
period is 1970–2010 because the COW MID dataset is only updated to 2010
and the EFW data is provided for 1970–2016, meaning that the re-modeling
lacks data for the periods 1950–1969 and 2011–2016. However, the
inclusion of IGOs further shortens the time period to 1970–2005 because the
IGO data ends in 2005. Therefore, I will execute re-estimation with
inclusion as well as exclusion of IGOs. Third, as the ideal point is suggested
as a better estimate of a state’s foreign policy preference (Bailey et al. 2015),
I here generate Similarity (ideal point), the absolute distance score of ideal
points of a dyad, to capture the foreign policy of the dyad, using Voeten’s
(2013) United Nations General Assembly Voting dataset (Voeten, 2013).
Fourth, Contiguity, GDP / pc(L), and Contiguity × GDP / pc(L) are excluded
when re-modeling with the original FTI(L) data as shown in Model 4 in
Table 4.7, because inclusion of the three variables disrupts producing
standard error in the re-estimation processes.17 Therefore, Models 4 and 5
are the reduced form of Model 1. But since the modified FTI(L) data allows
the inclusion of Contiguity, GDP / pc(L), and Contiguity × GDP / pc(L),
Model 6 is specified the same as Model 1. Model 7 excludes IGOs. As
shown in Table 4.7, FTI(L) in Model 4 is negative and significant but it
becomes insignificant in Model 5.18 CW Dummy has been dropped due to
the perfect prediction. Nonetheless, the modified FTI(L) are negative and
significant in Model 6 and Model 7, from which Contiguity and Contiguity ×
GDP / pc(L) are dropped due to Contiguity’s perfect prediction and
Contiguity × GDP / pc(L)’s collinearity. However, the deletion of
observations of Contiguity and Contiguity × GDP / pc(L), due to perfect
prediction failure and collinearity, greatly limits the number of observations
that can be used in Models 6 and 7, compared with those used in Models 4
and 5 and those used in the models shown in Table 4.3.19 In other words, this
causes to lose some information of the effect of FTI(L) on MID onset.
Therefore, I reran Models 6 and 7 dropping Contiguity and Contiguity ×
GDP / pc(L), which increased the number of observations to include in
estimation to 308 for Model 6 and 352 for Model 7. The results of the
modified FTI(L) remained negative and significant.
In short, the above robustness checks increase confidence in the idea that
adopting liberal capitalist economic policies is a key factor in generating
peace in Southeast Asia.

Conclusion
Previous literature on the formation of Southeast Asian peace revolves
primarily around the pacifying effects of democracy, economic
interdependence, and ASEAN security management. But statistical analysis
shows that democracy and economic interdependence, contrary to the
predictions of the liberal peace theory, have not operated favorably to bring
about peaceful coexistence between Southeast Asian states in recent
decades. This is not a surprising outcome because the two variables have
improved at a rather slow pace in the region. In addition, although ASEAN
states experienced no wars—defined as conflicts causing more than 1,000
battle deaths—among themselves since 1967, there were still militarized
disputes, showing that ASEAN security management did not effectively
prevent ASEAN states from using force in interstate disputes. This is in line
with the usual criticism that ASEAN could have been no more than a
“talking shop” in recent decades due to its low institutionalization and weak
coercive power. Thus, the popular constructivist contention about the
effectiveness of the ASEAN security management may need a reappraisal.
However, in comparison with the above three variables, a state’s intent of
pursuing liberal capitalist economic development, as a separate factor, is a
compelling force encouraging Southeast Asians to live with each other
peacefully and cooperatively. In other words, common liberal capitalist
preferences and interests in national economic development exert a
significant influence on Southeast Asian states’ decision making in regards
to foreign policy toward each other in the past decades. Therefore, Southeast
Asia has enjoyed a long period of capitalist peace.
Table 4.7 Models of MID onset in Southeast Asia (1970–2010)
Notes Robust standard errors (clustering by dyad) in parentheses.
***
**
2
* Significance tests are two-tailed: p < 0.01; p < 0.05; p < 0.1.
3 IGOs is included in Models 4, 6, and 8, but it is excluded in Models 5, 7, and 9.

Notes
1 This chapter is revised from the author’s article (Tang, 2012) previously published in
International Relations of the Asia-Pacific by Oxford University Press.
2 I use the variable ‘polity2’ from the dataset to construct Figure 4.1. It is also used in the empirical
analysis that follows. The threshold for recognizing a democracy is diverse in the democratic
peace literature (for a nice review, see Moon, 2009: 123). Here, I adopt the recent Polity
codebook’s recommendation to use a Polity score of +6 or more as the criterion for recognizing a
democracy. As I focus on traditional Southeast Asian states throughout the book, East Timor is
excluded in the figure. In the Polity dataset, Brunei is not taken into coding for whole period,
since it became an independent state in 1984, Cambodia is coded as missing values from 1979 to
1987, and Vietnam is split into the Republic of Vietnam (South) and the Democratic Republic of
Vietnam (North) from 1955 to 1975 and then merged into one from 1976.
3 In order to extend the timespan in Figure 4.2, I use here the COW Trade dataset which goes to the
year 2014, instead of Gleditsch’s (2002) Expended Trade dataset which only goes up to 2000.
But, Gleditsch’s data is used for the following statistical analysis because it reduces the amount
of missing data by using various data sources and imputations. For the debate over the treatment
of missing trade data, please refer to the comments of Barbieri et al. (2009) and the reply of
Gleditsch (2010) to the former’s comments. Abbreviations of country names in Figure 4.2 are as
follows: Brunei: BRU; Cambodia: CAM; Democratic Republic of Vietnam: DRV; Indonesia:
INS; Laos: LAO; Malaysia: MAL; Myanmar: MYA; the Philippines: PHI; Republic of Vietnam:
RVN; Singapore: SIN; and Thailand: THI.
4 The UCDP/PRIO Armed Conflict dataset sets the conflict threshold at 25 casualties, which is
different from that of the MID dataset. In addition, it may be controversial to use all levels of
armed conflicts, including extra-systematic, interstate, intra-state, and internationalized, to assess
ASEAN peace, because ASEAN is basically designed to deal with interstate relations and the
various levels of armed conflict differ in definition. Kivimäki also used onsets as well as ongoing
conflicts together when determining the number of armed conflicts, which needs justification.
5 Wacziarg and Horn Welch updated the dataset by Sachs and Warner (1995). See the section on
research design in this chapter for a detailed discussion.
6 Reviews offered by McDonald (2004) and Hiscox and Kastner (2008) are helpful to
understanding the debate on measurements of trade protection and openness.
7 Recent empirical analyses on the pacifying effect of IGOs is mixed (see review by Dorussen and
Ward 2008) and some scholars have warned that the aggregate count variable of IGOs may
mislead our understanding of the role of IGOs in promoting international peace (Boehmer et al.
2004). The exclusion of this variable in the modeling, however, does not change the significant
effect of JntELP.
 Recently, Bailey et al. (2015) adopted an ideal point model to dynamically estimate a state’s
8 foreign policy preference, based on votes in the United Nations General Assembly. They
suggested that this estimate is better than S-score for capturing dyadic similarity of foreign
policy. Therefore, as a robustness check, I replace S-score with the absolute distance score of
ideal points of two countries in dyad (ideal point of state A − ideal point of state B), using the
United Nations General Assembly Voting dataset (Voeten 2013). As a result, JntELP still has a
significant pacifying effect.
9 I also re-estimate the models by replacing Beck et al.’s method with Carter and Signorino’s
(2010) method (peace years, peace years squared, peace years cubed) as well as generalized
estimation equations (GEEs) (Liang and Zeger 1986) with the first order autoregressive process
(cf. Boehmer and Sobek 2005; Gartzke 2007; Oneal and Russett 1999a, 1999b) to control for
temporal dependence. After these alternative treatments, the pacifying effect of JntELP still
holds. However, it is noteworthy here that the GEE model with first order autoregressive process
for control temporal dependence is called into question (Beck 2003).
10 Recently, Hsueh (2016) found that the pacifying effect of the ASEAN security management is
conditioned on an ASEAN member state’s economic performance (growth), thereby refuting
Tang’s (2012) claim of the existence of capitalist peace in Southeast Asia and that ASEAN
security management was not effective for the period 1950–2000. However, Hsueh’s contention
in essence is not far from what Tang has argued. This is because Hsueh’s emphasis on pursuing
state-building by promoting economic development as a condition for the effectiveness of
ASEAN security management already implies the ineffectiveness of ASEAN security
management on its own and the positive implication of pursuing economic development on
Southeast Asian peace. This is basically identical to Tang’s argument. Also, what makes Tang’s
analysis different from that of Hsueh is that the former focuses on a government’s or a leader’s
policy intent to pursue capitalist liberal economic development and the latter on the outcome of
economic policy (GDP growth rate). While many factors can cause growth in the modern
economic system, liberal capitalist economic policy is obviously one of them. Economic growth
is a result of a state’s shifting of economic policy toward a liberal capitalist one; that is, better
economic performance itself implies a pursuit of liberal capital economic policy (JntELP).
Therefore, we can say that Hsueh’s empirical findings support Tang’s argument. In fact, Hsueh’s
(2016: 53) robustness check does not reject the importance of JntELP for Southeast Asian peace,
which is emphasized by Tang (2012) and in this book.
11 However, when Similarity is replaced with the new measuring method by Bailey et al. (2015),
foreign policy similarity becomes positive and insignificant.
12 Predicted probabilities are calculated by simulation of the Clarify program (King et al. 2003)
while holding all other continuous variables at their means and dummy variables at their median.
13 Import duty data is replicated from McDonald’s (2004) data, which is based on the World Bank
Development Indicator.
14 The statistical outcome of Hiscox and Kastner’s measurement is based on the 2002 version of
their dataset which is replicated from McDonald (2004). It has to be noted that the dataset only
includes Indonesia, Malaysia, the Philippines, and Thailand for the period 1960–1992. Although
Hiscox and Kastner (2008) updated the data to 2000, it only provides for Thailand, the
Philippines, and Indonesia, constituting 123 dyad-year observations. When using the 2008
version of the data, the logit modeling cannot be executed data because no MID occurred in those
123 observations. I therefore report here the outcome of their 2002 dataset which gives more
country cases but shorter timespans, which could leave out a great deal of information on trade
policy.
15 The construction criteria of Freedom to Trade Internationally includes tariffs, regulatory trade
barriers, black-market exchange rates, and controls of the movement of capital and people
 (Gwartney et al. 2016: 278–280). Using Freedom to Trade Internationally helps maintain as much
measurement consistence with JntELP as possible.
16 FTI(L) has 282 observations and the modified FTI(L) has 858 observations for 1970–2010.
17 One possible reason for this situation could be the high collinearity between GDP/pc(L) and
JntASEAN (0.7657) and between GDP/pc(L) and FTI(L) (0.6809). Pearson’s correlation
coefficients are estimated on a pairwise base for the period 1970–2010.
18 The insignificant outcome of FTI(L) in Model 5 could be a result of the difference between Sachs
and Warner’s indicator and the EFW indicator for “Freedom to Trade Internationally” in terms of
measurement criteria, even though the two indicators are similar.
19 Ideally, all original FTI(L) (282 observations) and the modified FTI(L) (858 observations) would
be used in modeling. However, data unavailability and the situations like perfect prediction
failure and collinearity could reduce observations of certain independent or control variables,
which in turn could affect the final number of observations to be used in modeling. In the cases
here, CW Dummy’s perfect prediction failure resulted in 60 observations not being used in
Models 4 and 5, meaning that at least 60 observations will be left out of the estimations for
Model 4 and Model 5. Contiguity’s perfect prediction failure caused 198 observations to be
dropped from the estimation for Model 6 and Model 7.

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5 US–China competition and Southeast Asian
states’ international political and strategic
autonomy

Introduction

The distribution of power in the Asia-Pacific region is clearly undergoing a

tremendous change and the architecture of regional order is being
reformulated as a result. One could hardly refute that the underlying force
of this regional transformation is China’s comprehensive rise since the end
of the Cold War. This has recently been evidenced in China’s increasingly
assertive attitude in maritime disputes in both the East China Sea and the
South China Sea and in its ambitious foreign economic policy entitled “One
Belt One Road.” Faced with China’s growing influence, the US, under the
“Rebalancing to Asia” policy, is accelerating the pace to reinstall its
economic and military power in the region in order to consolidate its
regional predominance. Southeast Asia is geopolitically an important region
in which the US is explicitly seeking to counterbalance China’s economic
and military expansion. For Washington and Beijing alike, the effective
maintenance and expansion of alliance networks is critical in the
geopolitical competition for regional dominance, which tends to cause both
great powers to adopt more accommodating (adjustment and adaptation)
policies toward the region. As a result, a greater strategic space for
bargaining has been created for Southeast Asian states to deal with relations
with the US and China, which in turn gives rise to opportunities for
Southeast Asian states to bolster their international political and strategic
autonomy.
After the Cold War, Southeast Asian states collectively established a
number of regional multilateral institutions surrounding ASEAN, including
the ARF, ASEAN + 1, ASEAN + 3, ASEAN + 6, and the EAS, to manage
regional development in their preferred trajectory. These ASEAN-centered
multilateral institutions have also been endorsed by great powers. China
was once cautious of regional multilateralism, but now is an active
participant. This has caused the US to reconsider multilateralism as a
complement to its bilateralism-centered regional policy. These two
competing powers eventually became enmeshed in ASEAN-led regional
multilateral mechanisms. The success in advancing ASEAN-led
multilateralism that enmeshes regional and extra-regional great powers
represents the promotion of ASEAN states’ international political autonomy
as they employ a favorable approach to construct the Asia-Pacific regional
order. On the other hand, hedging is now a risk-aversion strategy commonly
used by ASEAN states to manage their relations with the US and China to
mitigate uncertainty and maximize economic benefit and national security
amid the increasing competition between the two great powers. Not only
has hedging been adopted by individual ASEAN states, it is also employed
in a collective form through multilateral institutions, such as the ARF in the
security field. This means that Southeast Asian states are acquiring a wider
range of strategic approaches that they can adopt as they are faced with
China and the US. In other words, Southeast Asian states need not choose
sides by adopting a balancing or bandwagoning strategy, which would
curtail their international autonomy, in order to reduce any negative impact
from US–China competition, but rather they can opt to promote
international political autonomy as well as strategic autonomy in regional
affairs.
This chapter first discusses the definition and content of autonomy in
international politics, particularly from the perspective of the small state,
and subsequently offers theoretical discussion pertaining to circumstances
in which the small state can promote its autonomy against great powers in
the international system. Second, it presents a rationale for empirically
measuring a small state’s international political autonomy and strategic
autonomy in interaction with a great power. Then, drawn on the given
operationalization of autonomy, it provides empirical analyses that illustrate
how the US and China are enmeshed in the development of ASEAN-
centered multilateralism, in the case of ARF, and also shows the hedging
behavior with individual country cases, including the Philippines and
Vietnam, during the post-Cold War period. A concluding remark ends the
chapter.

Small states’ international autonomy in world politics

What autonomy to gain?
According to the Oxford Dictionary, autonomy is defined as freedom from
external control or influence. In other words, the level of autonomy a
person or a state has over a certain issue or object differs with the actions of
others on said issue or object. In line with this literal explanation, scholars
of international relations have tried to provide a general term to use when
observing variations in a state’s international autonomy in the international
system. Some scholars have offered general theoretical definitions of a
state’s autonomy in the international system. For instance, Altfeld (1984:
524) argued that “autonomy is related to the government’s capability to
adopt whatever positions it wishes to with regards to international issues
salient to it and to change those positions as well.” Morrow (1987, 1991)
offered a similar idea: a state’s autonomy consists of it being able to
determine its own policies and to have external self-assertion. Employing
more abstract terms, Morrow (1991: 909) argued that a state’s autonomy
can be assessed by “the degree to which it pursues desired changes in the
status quo;” namely, it can be judged by “the difference between its ideal
point and its position over the issues in the status quo that it would like to
change,” and “[i]f a state adopts its ideal point as its position, it has made
no compromises in its attempt to achieve desired changes [but that if] the
difference between the two grows, its autonomy decreases.” In other words,
a state’s international autonomy can be observed and measured in terms of
whether and to what extent it can modify the status quo of an international
issue to a preferred orientation and condition whenever it wants to do so.
The bigger the change a state can make to the international status quo, the
greater its international autonomy is.
In the contemporary international system, interstate activities are highly
diverse but can be categorized into four major types: economic, military,
political, and strategic. Based on this categorization, a state’s international
autonomy can also correspondingly be characterized into the four forms:
economic autonomy, military autonomy, political autonomy, and strategic
autonomy. Drawing on the theoretical definition of autonomy given above,
a state’s international economic autonomy can be determined by the extent
to which that state can sustainably promote its economic development and
national wealth in its own desired way in the international economy, and its
military autonomy from the degree to which it is able to employ preferred
military measures, either aggressive or defensive, to maintain its
international security. From a political perspective, a state has international
political autonomy when it is able to set up a favorable agenda and
institutions to improve its international political status and power to the
desired level in relationships with other states in world affairs. In addition, a
state’s international strategic autonomy is reflected in the degree of
flexibility it has to switch and adopt its allying policy when dealing with
relations with other states.
Practically speaking, however, it is hard to deny that material capabilities
play a significant role in determining the degree of overall international
autonomy of a state, even though all states are primordially in equal status
in the anarchic international system. Material and human resources in
essence constitute and underpin a state’s economic development and
military capabilities. The more a state is able to provide, control, and
mobilize human, natural, and capital resources, the less it will rely on
external economic supplies and, therefore, the greater flexibility it will have
to carry out favorable economic foreign policies. Similarly, better national
economic competence can enable a state to afford higher expenditure on
military requisitions and modernization and, in turn, opt for favorable
defensive or aggressive military policies. Furthermore, economic and
military capabilities are the bedrock of a state’s international political will
and potency and a source of bargaining power when handling and
negotiating world affairs to maximize national interests. In other words,
greater economic and military capabilities are critical for attaining greater
international political and strategic autonomy.
Nevertheless, as we further distinguish the four forms of international
autonomy, economic autonomy and military autonomy appear more
material-based, and political autonomy and strategic autonomy are more
relation- or interaction-based. A state can gain international political power
and strategic advantage over a counterpart when its political and strategic
positions change relative to the counterpart, regardless of whether relative
material power changes correspondingly. This positional change can occur
when a third party becomes involved in their relations, especially if the
third party wants to establish closer ties with one of them. A third party’s
move toward a state can give the state political and strategic weight in its
relations with its counterpart, if the counterpart is concerned with the
outcome of the state inclining toward the third party. In this regard, a state’s
international political and strategic autonomy can be advanced by
maneuvering the dynamics of interaction with the counterpart and the third
party without considering hard power.
According to the material-based argument, therefore, a small state will
find it difficult to develop international economic and military autonomy to
the degree that a great power can obtain, and its international political and
strategic autonomy will be correspondingly less in practice. Nevertheless,
although a small state’s overall autonomy will be less significant when
compared to that of a great power, it can bolster its relational autonomy
when external political and strategic dynamics change.

When and how to promote international autonomy?

While lack of natural materials predisposes a small state to weaker
international autonomy, it does not mean that the small state cannot reverse
its unfavorable status in the hierarchical international system.
Enhancements in a small state’s international autonomy can take place with
changes in the characteristics of its relationships with other states, rather
than in the possession of any objective measures of power (Papadakis and
Starr 1987: 430). In other words, a small state can realize greater relation-
based political and strategic autonomy when its interactions with great
powers change.
To alter the tone of relations with a great power, a small state can either
improve its own national capabilities or make use of a third party in a
triangle relationship. Change in relative power can give a small state a
better position and stake to negotiate greater international autonomy against
a great power. However, this scenario will not come true unless the great
power’s material capabilities drop to a level that it cannot recover from in a
short time, while the small state is able to effectively increase and maintain
its material capabilities. Notwithstanding this possibility, a lack of material
capabilities does significantly hinder a small state from unilaterally making
effective changes to the status quo of relative power, while superior
capabilities usually enable a great power to quickly reobtain its
advantageous position. Therefore, it is not easy for a small state to pursue
greater international status in relation to a great power by changing material
power.
 Instead, involving a third party, specifically another great power, in the
relations with a great power is a more promising approach for improving
the small state’s international autonomy. Whether or not a small state,
however, can make use of a third party to make adjustments in its relations
with a great power is conditioned on the status of relations between the
great power and the third party. If a third party enjoys a friendly/cooperative
relationship with the great power, little can be won for the small state in
bargaining over autonomy with the great power by manipulating relations
between the great power and a third party. In contrast, if the third party and
the great power are in a power contest, the utility of the third party to
advance the international autonomy of the small state will increase, because
the small state will be in pivotal position in the contest between the great
power and the third party. As a result, both contesters will attempt to bring
the small state to its side to increase its chances of winning the contest. In
this situation, the small state could acquire a certain degree of greater
strategic autonomy and bargaining power. The increased bargaining power
then enables the small state to reset the rules of the game in its relations
with the great power, boosting its international political autonomy. In
addition, to mitigate the negative effect of the third party’s involvement, the
great power will be more willing to accommodate the small state’s quest for
change than to use force to maintain the status quo. Thus, a small state’s
relation-based autonomy could relatively increase, and it can even further
use the promoted relation-based autonomy to raise its international
economic and military autonomy in world affairs.
As mentioned in Chapter 2, great power competition in the power
transition system gives rise to a favorable opportunity for small states to
enhance their international political and strategic autonomy. During
competition over dominance between the dominant power and the rising
power, small states are targeted to be included in their own alliance
networks. Since aggressive or threatening measures will less likely be taken
by the two great powers to achieve extension of alliance networks, because
that could risk pushing a target state toward the opponent who has instead
taken a more benign approach with the target state, a greater freedom of
strategic action is given to small states in the triangle interactions with the
two competing powers. The competing powers also will be more likely
inclined to accommodate the requests of small states. The targeted small
states, therefore, become a pivotal player who can opt to take strategic
action that retains more autonomy than balancing or bandwagoning. Taking
advantage of the greater strategic leverage and the relatively benign
behaviors of the competing great powers, small states are more able to
negotiate and realize desired changes in the agenda and institutions in the
world affairs, so that they can reinforce and bolster their international
autonomy. On the other hand, they can cooperate with each other to
accelerate and consolidate the newly developing rules of the game in
international affairs so as to build for themselves a strategic and political
advantage and augment their collective voice and bargaining power with the
competing powers over issues of interest.
In the light of the above discussion, I put forward a hypothesis for
empirical examination in the context of Southeast Asia: If the US and China
compete with each other to include targeted Southeast Asian states into
their own alliance network in the power transition context, then the targeted
Southeast Asian state can acquire more international political and strategic
autonomy.

Research design

Measuring a small state’s international political autonomy

According to the aforementioned definition and classification, a state’s
international political autonomy is defined by how much it can implement
favorable agenda and institution to alter its current international political
status to a desired level in international affairs. When the difference
between the current status and the desired position decreases, a state’s
international political autonomy increases. Due to the relational attribute of
international political autonomy, the dynamics of a state’s relation with a
counterpart can affect changes in its own autonomy. A change in a
counterpart’s behavior toward a state indicates a change in the distribution
of political autonomy between the two.
Although the international system is usually regarded as an anarchical
system, international interaction is not unregulated. In world politics, states
establish institutions to conduct and stabilize interaction so as to offset the
impact of discrepancy in natural material power and to secure or acquire
desired national interests in a predictable way. Keohane (1989: 3) defines
international institution as “persistent and contested sets of rules (formal
and informal) that prescribe behavioral roles, constrain activity, and shape
expectation,” and Mearsheimer (1994: 8) as “sets of rules that stipulate the
ways in which states should cooperate and compete with each other.” In
other words, not only is the international institution comprised of rules and
decision-making procedures designed to shape competition and cooperation
between states and the world order, the international institution itself is also
an important object about which states contest with each other because of
its profound regulatory effect on a state’s international status which, in turn,
can decide the state’s political potency in world affairs. In this regard, the
greater institutional power a state could hold to rule over the operation of
international organization, the higher autonomy it could obtain in
formulating its relations with other member states via setting up role,
agenda, procedure, and expectation, and then the greater possibility for it to
shape world or regional order in favor of its interests.
From the realist’s viewpoint, however, great powers are major players
that define the structure of international politics and small states are passive
impotent players that have little or nothing to do with the development and
real operations of international institutions which great powers use to shape
the world order (e.g., Mearsheimer 1994; Waltz 1979). Indeed, as
mentioned previously, material power determines a state’s political potency.
A number of international institutions, either global or regional, e.g., the
United Nations and its sub-organs, are mainly funded and directed by great
powers. Without sufficient political as well as financial support, an
international organization will find it difficult to realize goals set for it by
its members. In other words, whether or not the participation or
endorsement of great powers, with their abundant financial resource and
political influence, is present significantly determines the fate of an
international organization. In contrast, boycotts by them can produce a
negative impact on the conduct and achievements of an international
institution expected by member states. In this sense, it is difficult for small
states to establish and run an international institution to influence the world
order with the preferred approaches, meaning that a small state finds itself
in a critical predicament when it tries to advance its international political
autonomy without a great power’s benign agreement.
As mentioned previously, in a scenario of a small state vis-à-vis a great
power, the great power’s responses to the small state’s activities exert
significant influence on the ups and downs of the small state’s autonomy.
Through the lens of the international institution, if a great power is willing
to endorse the leading role of a small state (or a group of small states) in the
formation of an international institution and accommodate its proposed
rules, principles, agendas, and norms upon which the originally imbalanced
distribution of political power can be rearranged in the development of
global or regional affairs, then that small state can enjoy a relative boost in
its international political autonomy. Realists may interpret the
accommodating behavior by great powers toward the international
institution led by small states as being the result of a rational calculation to
extending their influence by means of first acceding to, then involving
themselves in and reforming the institution for the sake of their own
interests in global or regional affairs. Nonetheless, the move by a great
power to accept the rules and norms set by small states, rather than devising
its own, has exposed itself to be transformed and regulated by new rules
and norms, suggesting that the small states, to some degree, have succeeded
in advancing their international political autonomy through the building of a
favorable international institution.
With regard to measuring a small state’s international political autonomy,
the development of international institutions initiated by small states turns
out to be a suitable empirical field in which to observe both the evolution of
what a small state can do to change world politics and a great power’s
attitudes and responses to the institutions which could be a disadvantage to
their status in dealing with international affairs of interest.

Measuring small state’s international strategic autonomy

As discussed earlier from the realist’s perspective, a small state’s relatively
limited capabilities compel it to maintain its security by adopting a
balancing or bandwagoning strategy with a dominant power or an incipient
threatening power. Adopting either hard alignment strategy, however,
assumes a contraction of the small state’s strategic autonomy because the
close political and military relations with its powerful counterpart will
require trading its autonomy for security or other advantages. In this regard,
if a small state can depart from an autonomy-reduction alignment policy, by
hard balancing or hard bandwagoning, then one can say the small state’s
strategic autonomy against a great power increases.
 Scholars have forwarded several alternative types of alignments in
addition to the ideal forms of balancing and bandwagoning to better explain
the dynamics of alignment activities in the international system. These
include engagement, soft balancing, binding, buck-passing, hedging, and
limited alignment (e.g., Christensen and Snyder 1990; Ciorciari 2010;
Johnston and Ross 1999; Pape 2005; Paul 2005; Schweller 1999; Weitsman
2004). With regard to policy strength and measures applied, these
alternative types of alignments are distributed at different positions between
the two ends of the pure-balancing and pure-bandwagoning spectrum. Of
the various alignments, hedging boasts greater strategic flexibility. Among
scholars, hedging is given various definitional facets. Weitsman (2004: 20–
21) defined hedging as a strategy that “entails a low commitment move
toward a state that represents neither entirely friend nor foe” and “a tactic
designed to reduce some of the risk inherent in a more full-fledged alliance”
to leave more flexibility and keep options open against the counterparty in
the interaction. Goh (2005: 2) described hedging as a set of actions “to
ensure against undesirable outcomes, usually by betting on multiple
alternative positions” and to avoid “a situation in which states cannot decide
upon more straightforward alternatives such as balancing, bandwagoning,
or neutrality” in order to prevent “having to choose one side at the obvious
expense of another;” and later Goh (2007: 121) added that hedging is a
“multidirectional omni-enmeshment” policy wherein hedging states
endeavor “neither to pick sides nor to exclude certain powers, but rather to
try to include all the various major powers in the region’s strategic affairs.”
Roy (2005) distinguished hedging from balancing and bandwagoning in
terms of whether or not a certain and compelling threat exists, and regarded
it as a policy to keep open more than one strategic option to manage
uncertain future security threats. Ciorciari (2010) referred to hedging as a
middle-path policy which could be included in his proposed limited-
alignment policy wherein developing countries tilt for protection or gain.
Kuik (2008, 2016a) described hedging on the power rejection/acceptance
spectrum as a policy behavior that insists on not choosing sides among
competing great powers and incorporates multi-manners which are
mutually opposite and counteracting, including indirect balancing,
dominance denial, economic pragmatism, binding engagement, and limited
bandwagoning, to mitigate undesired dangers, maximize returns, and
cultivate a fallback position amid uncertainty. Lim and Cooper (2015: 703,
709), with an emphasis on the security aspect, asserted that hedging
theoretically is “a class of behaviors which signal ambiguity regarding great
power alignment, therefore requiring the state to make a trade-off between
the fundamental (but conflicting) interests of autonomy and alignment,” and
that in the context of East Asia

secondary states hedge by sending signals which generate ambiguity

over the extent of their shared security interests with great powers, in
effect, eschewing clear-cut alignment with any great power, and, in
turn, creating greater uncertainty regarding which side the secondary
state would take in the event of a great power conflict.

In short, hedging is an ambiguous strategic policy which combines multiple

approaches to interaction to hold leverage against and keep vying with a
powerful counterpart to avoid or reduce negative effects, e.g., autonomy
reduction in subordination to a great power and the costs of being entrapped
or abandoned in conflict caused by great power rivalry (Snyder 1984), and
increase positive gains, e.g., military security commitments and economic
benefits, incurred in an uncertain international environment. In other words,
application of hedging itself represents the improvement of a state’s policy
flexibility in respect to the number of policy options available to elect to
handle uncertainty. Having hedging as an option also demonstrates that a
state possesses a better strategic environment that gives it more freedom to
maneuver relations with competing great powers than one associated with
hard balancing or hard bandwagoning. Thus, hedging can be a suitable
indicator to identify whether or not a state’s strategic autonomy has
increased in the international system.
Although a consensus exists among scholars that hedging is emerging as
a prevailing policy in Southeast Asia, or broadly in the Asia-Pacific region,
to deal with relations with China and the US (e.g., Chung 2004; Ciorciari
2010; Goh 2005, 2007, 2009; Hiep 2013; Kuik 2008, 2016a, 2016b;
McDougall 2012; Matsuda 2012; Medeiros 2005; Roy 2005; Storey 1999a,
2007; Tan 2012; Tow 2004; Vuving 2006; Wu 2016; Zhao and Qi 2016),
they are still searching for and debating on a suitable measure for hedging
in terms of composition and degree (e.g., Kuik, 2008, 2016a; Lim and
Cooper, 2015). For example, Lim and Cooper (2015: 700) argue, drawing
on Liff’s (2016) reappraisal of balancing behavior in the Asia-Pacific
region, that hedging assessment should focus on the security dimension as
the nature of its risk management resembles that of traditional balancing
behavior which emphasizes military security, while Kuik (2008, 2016a)
takes into account multiple aspects of hedging because hedging is to
mitigate diverse risks, from political and economic to diplomatic and
security, which are often simultaneously intertwined with external
uncertainties. Although it is true that traditional security issues are still of
great importance to government policymakers, it is also true that non-
security activities, such as economic exchanges, norm preservation and
transformation, and institution building, are not inconsequential, and
increasingly combine with and exert influence on traditional security issues
in our highly interdependent world (Acharya 2004). Political alignment and
diplomatic exchange are an indispensable part of risk management in that
both also involve transmitting information and signaling willingness and
resolve, which can help prevent risk escalation. Economic cooperation can
be a stake when negotiations over military security relations are pushed or
impeded. Moreover, Southeast Asian states are hedging for both security
and economic advantages, employing various types of interaction with the
US and China. Considering the multiple facets of practical operation,
therefore, I have adopted Kuik’s approach to measuring hedging.

Method, case, and time

To test the hypothesis posited above, I have adopted a case study research
approach that utilizes process tracing or “causal process observation”
(Brady and Collier 2004: 12). The major reason for applying qualitative
investigation for hypothesis testing, instead of statistical ones, is that
changes in international political and strategic autonomy (the dependent
variable here) come about in the complex and subtle foreign policy
interactions between states. In the case here, given the definition above,
international political autonomy does not appear to be feasibly quantifiable
using a clear-cut numbered indicator, because variations in a great power’s
accommodation to a small state’s political agenda can occur subtly and
gradually. Similarly, hedging as an indicator to changes in international
strategic autonomy has the same quantification issue, because quantitative
operationalization can risk conflating conflicting effects resulted from
hedging in the non-variation condition that can foil meaningful statistical
appraisal. Process tracing, like “detective work,” is an analytical approach
using deductive inference to rebuild causality that occurred in a case of
interest in the past by employing multiple types (quantitative/qualitative
form) of noncomparable evidence (Gerring 2007: 172–173, 179).
Employing this method of inquiry, a variety of contextual resources, such as
records of historical events, official documents, and statements, are adopted
to delineate policy behaviors of interest.
Regarding the proposed indicators for international political and strategic
autonomy, the empirical investigation in the context of Southeast Asia will
be applied to transformation in the foreign policies of the US and China
toward ASEAN-centered multilateral institutions and the hedging behavior
of Southeast Asian state against the US and China. ASEAN has clearly
developed into one of the most important regional multilateral institutions
in the Asia-Pacific region during the post-Cold War period. Through
ASEAN, all member states collectively not only strive to promote regional
development and integration in Southeast Asia, but also seek to be the key
driver of overall development in the Asia-Pacific region. Amid great
powers’ competition over a dominant position in the regional order,
particularly by the US and China, ASEAN as a group has taken the leading
role in transforming and constructing regional development by enmeshing
and socializing the competing great powers in ASEAN-led regional
interdependence and institutional settings which are designed to constrain
and deal with moves by great powers for regional dominance through the
use of force (Acharya 2004, 2014: chapter 6). Involvement of the US and
China in ASEAN-centered multilevel institutions indicates that the two
great powers accommodate to the regional agenda of ASEAN as well as
acknowledge ASEAN’s driving role, which to some extent implies
concession of policy autonomy. In this regard, ASEAN-led multilateral
institutions are a sound empirical field for examining political and strategic
autonomy of ASEAN states against great powers.
Of ASEAN-centered multilateral institutions, the ARF, created from the
ASEAN Post-Ministerial conference (ASEAN-PMC), is the primary
multilateral arena developed by ASEAN to deal with security relations with
external powers.1 More importantly, the ARF is operationalized on the basis
of the ASEAN Way which is characterized as an informal, consultative,
consensus led, and incremental approach to fostering dialogue and
consultation on political and security issues of common interest and
concern, and contributes to efforts toward cooperative security consisting of
confidence building, preventive diplomacy, and conflict resolution in the
Asia-Pacific region (ARF 1994, 1995).2 In other words, the development
and operation of the ARF represents the development of the regional
political and security agenda of Southeast Asian states. However, the
intended function of the ARF is seen differently by various scholars. Some
have argued that the process of regional balance-of-power is comprised and
intended in the ARF (e.g., Emmers 2003: 110–127; Leifer 1996: 19; Narine
2002: 102), while others have asserted that the primary purpose of the ARF
is building a cooperative security norm in the Asia-Pacific region to create a
platform that allows Southeast Asian states to determine which security
issues are to be addressed and how (e.g., Johnston 2003; Katsumata 2010).
The different theoretical lenses have led to different evaluations of the ARF.
The pessimistic view in line of power politics contends that the ARF is no
more than a talking shop as a result of weak institutionalization under the
ASEAN way (Leifer 1996; Narine 2002) and has failed to progress from its
current phase of confidence building to the next stage of preventive
diplomacy to effectively regulate participant behavior and resolve disputes,
let alone develop into the final goal of becoming a conflict-resolution
mechanism (Jones and Smith 2007). In contrast, those who emphasize the
pursuit of normative appropriateness have praised the ARF for successfully
articulating the regional cooperative security norm in which forum
participants are socialized and their security behavior is being transformed,
deepening engagement with China, heightening ASEAN’s autonomy
against the US, and enhancing ASEAN’s centrality in Asia-Pacific
regionalism in security (Johnston 2003; Katsumata 2010: 16–34). In light of
practice, it has been seen that the ARF is gradually, though slowly, moving
from dialogue-based confidence building into the preliminary stage of
prevent diplomacy involving non-traditional security collaboration and
coordination in which defense officials have joined in areas such as
maritime security, terrorism, piracy and disaster relief (Emmers and Tan
2011; Haacke 2009; Tan 2013). In addition, mixed and intertwined channels
of diplomatic operations enable ASEAN states as a united group, as well as
individual actors, to take advantage of their pivotal position between and
mitigate potential setbacks resulting from bilateral as well as multilateral
bargaining with external participants, great powers in particular. That is, for
ASEAN states the ARF serves as a venue for normative bargaining to let
their voices be heard on regional security issues (Goh 2011: 383–386). The
ARF, therefore, is suitable for investigating the evolution of political and
strategic autonomy of ASEAN states in regional affairs.
In addition to the collective level of inquiry, a country-level investigation
on the change of regional states’ strategic autonomy is also carried out to
provide more robust empirical evidence. As mentioned previously, hedging
has become a prominent policy among Southeast Asian states in coping
with relations with China and the US, while the content of hedging can vary
from one state to another in time and space. Nonetheless, since the object
here is to evince the emerging behavior of hedging among Southeast Asian
states in the context of US–China competition, rather than get further
involved in the debate over the attributes of regional hedging policy
behaviors, a crucial case study with the least-likely design will be sufficient.
The crucial case, as defined by Eckstein (1975: 118), is the one that “must
closely fit a theory if one is to have confidence in the theory’s validity, or,
conversely, must not fit equally well any rule contrary to that proposed.” In
other words, it is a case that offers particularly convincing evidence for or
against a theoretical proposition. The inferential logic of least-likely case
design is that if a least-likely case that is very unlikely to confirm the
prediction of a hypothesis is found to be valid, it can be regarded as strong
confirmatory evidence (Gerring 2007: 115–119, 139–142). This is what
Levy (2002: 442) called “Sinatra inference” (if I can make it there, I can
make it anywhere). This type of case study design tries to identify cases in
which just one independent (causal) variable as well as the dependent
variable (outcome) co-vary and all other plausible independent variables
have different values. Therefore, the Philippines and Vietnam are chosen as
the crucial cases because these two countries are key regional targets to
influence and ally with in US–China competition (the independent variable
of interest here) as well as the players in the hedging game (the outcome)
but different in various aspects (the other plausible independent variables)
which could have effects on hedging policy, e.g., relationship with the US
and China, regime type, geographical position, economic and social
compositions, and military power. Of those differences, their previous
security relations with the two competing powers are a particular distinction
which singles them out as valuable cases. Regarding security cooperation
after the Vietnam War, of all Southeast Asian states, the Philippines is the
US’s strongest ally against China, whereas Vietnam is the strongest
adversary of the US and a geopolitical competitor. It was also an ideological
ally of China from 1975–1991 but turned to non-alignment to both great
powers after the Cold War (Ciorciari 2010: 56–130). The historical security
relations of these two crucial states with China and the US, respectively,
can be viewed as a huge concrete hindrance to them to align to the other
great power against which it used to fight, because scaling back from the
original position to the middle one in terms of policy behavior could
disadvantage their national security. That is to say, a historical security
relationship can be an appropriate feature to identify a least-likely case to
indicate the trend of hedging in the context of Southeast Asia.3
Concerning the time span of the empirical analysis, the post-Cold War
period is adopted for two reasons. First, although competition between the
US and China began at the birth of the People’s Republic of China, China
has only developed sufficiently to pose substantive economic and military
challenges to US predominance in Southeast Asia since the end of the Cold
War. The effect of US–China competition on the foreign behavior of
Southeast Asian states will be more obvious to capture in this period, which
serves as more robust evidence. Second, the end of Cold War dissolved
stringent ideological antagonism, which pushed Southeast Asia into a
dichotomous strategic environment of communism vs. anti-communism.
The post-Cold War period allows the executing of empirical examination
more precisely on the effects of US–China competition by removing the
intervening effects of ideology.

The promotion of the international political and strategic autonomy of

Southeast Asian states

Collective arena: the ARF

Since the end of the Cold War, the rise of China has generated an
abundance of economic opportunities but it also poses a potential security
threat to Southeast Asia, which places Southeast Asian states at the
crossroads in terms of responding China. The US’s uncertain security
commitments around the region at the dawn of the post-Cold War period
aggravated Southeast Asian states, causing them to worry about a void in
the regional order which China has been filling with its power almost
imperceptibly. Against this backdrop, different views have been given to
describe and predict how Southeast Asian states have been reacting to
China’s tremendous rise, including, for example, balancing (Friedberg
1993), bandwagoning (Kang 2003), binding (Acharya 2004), soft balancing
(Khong 2004), and engagement (Johnston and Ross 1999). However, as
mentioned earlier, a growing body of literature on Asian security asserts
that Southeast Asian states are neither balancing nor bandwagoning; rather,
they are hedging against China and the US. The goal of hedging by
Southeast Asian states, on the one hand, is to prevent Chinese domination
in the region, US withdrawal from the region, and an unstable regional
order (Goh 2005). On the other hand, hedging is being used to reduce
vulnerability and enhance strategic maneuverability, so that Southeast Asian
states can reap political, economic, and military rewards from both great
powers in bilateral and multilateral fora (Roy 2005; Tang and Wu 2016;
Tow 2004).
Regional multilateralism centered upon ASEAN is the primary arena
wherein Southeast Asian states engage in hedging and make claims and
requests (Ba 2009; Goh 2011; Rüland 2011). ASEAN states utilize
inclusive but minimalist multilateralism to encompass and entangle all great
powers, so that they can alleviate the pressure of choosing sides between
great powers and manipulate multilayered bargaining processes to garner
more time and space to achieve desired political, economic, and security
interests. Faced with the US and China, they attempt to enmesh China into a
regional society by developing closer political and economic ties with
China within multilayered regional institutions to maximize economic
benefits, while minimizing security risks from China. Being cautious of
China’s growing military power and increasingly assertive foreign policy,
they also continue to modernize their military equipment and, more
importantly, ensure that the US continues its military presence in the region
as insurance for regional security, a stabilizing element for economic
development, and a counterweight to China’s potential aggression that
could disrupt the status quo (Chung 2004; Johnston and Evans 1999; Khong
2004; Storey 2007). The ARF was established for this purpose.

China and the ARF

In the early 1990s, the good neighbor policy [mulin zhengce], based on
bilateralism and the concept of balance-of-power, was the main tune of
China’s foreign policy toward the Asia-Pacific region. Multilateralism was
given a minor role among Chinese officials and experts in terms of coping
with the development of regional security (Garrett and Glaser 1994: 18–22),
which was vividly reflected in China’s attitude to the development of
ASEAN-led security multilateralism, including the ARF. The initial
hesitation of Beijing to endorse the ARF arose from its caution that the
ARF could serve as a form of entrapment to check China’s power and
restrict its strategic choices in regional affairs (Deng 1998). For China, the
ARF could be dominated and used by the US to interfere in its regional
interests, and sensitive issues, like territorial disputes in the South China
Sea and the Taiwan issue, could be internationalized in the agenda of the
forum. It was also concerned about military transparency (Garrett and
Glaser 1994: 27–31; Kuik 2005: 106; Shirk 1994: 11–13; Wu 2009: 56).
Nonetheless, given Beijing’s continued stress on bilateral diplomacy in
Southeast Asia, multilateralism was not completely dismissed and instead it
incrementally gained prominence in the Chinese government.
In fact, China has taken part in Track II exchanges on the future
development of regional security architecture in the 1980s, for example, the
Asia-Pacific Roundtable conference organized by ASEAN (Katsumata
2010: 56–58). Immediately after the Cold War, Chinese leaders and high-
level officials prudently began to show support for a multilateral regional
security mechanism (Shirk 1994: 7–8). In 1991, then-Chinese Foreign
Minister Qian Qichen was invited to observe the 24th ASEAN Ministers’
Meeting (AMM) in Kuala Lumpur, Malaysia, marking the first attempt to
establish a dialogue mechanism with ASEAN. While in attendance at the
26th AMM in Singapore in July 1993, in which the agreement to create the
ARF was reached, Qian Qichen as Chinese Vice Premier and Foreign
Minister signaled China’s willingness to explore security cooperation in the
ARF by saying: “As for security cooperation, in our view, we may start off
with bilateral and regional security dialogues of various forms at different
levels and through various channels in response to the diversity of the
region.”4 In 1994, China became a founding participant of the ARF, even
though bilateralism was still a dominant policy in China’s regional
diplomacy. But the potential for the ARF being developed into a highly
institutionalized security mechanism, including preventive diplomacy and
conflict resolution, like the Conference on Security and Co-operation
Europe, which could erode sovereignty and constrain policy autonomy, led
to China’s reluctant early participation (Kuik 2005: 107). The
transformation of China’s regional policy toward regional security
multilateralism in the first half of the 1990s was impelled by several factors,
including disproving the image of the “China Threat,” strengthening the
multi-polarity regional system through the ARF to counter US
unilateralism, and improving overall relations with ASEAN to prevent
containment resulting from the formation of an anti-China alliance
(Emmers 2003: 124–125; Haacke 2005: 116–117; Shirk 1994; Wu 2009:
57–59). Also, the lack of willingness to tackle disputes in South China Sea
by Southeast Asian states using a bilateral approach played a role in
pushing China to take part in the ARF (Katsumata 2010: 105).
After a few years of wait-and-see, however, Beijing changed its reluctant
attitude and gradually raised its commitment to the ARF in the second half
of 1990s, partly because the unbinding and consensus decision-making
feature of the ARF could allow China to promote its own agenda and
maintain its national interests in a comfortable way without stringent
diplomatic operations to gain support of the majority and partly because
ASEAN’s driving role in the forum assuages China’s worry about an anti-
China alliance developing with other great powers’ involvement (Foot
1998: 428; Goh 2011: 378–380; Kuik 2005: 107–108). Under these
conditions, China could take advantage of ASEAN’s institutional network
to cultivate “a structural basis for regional order that might prepare the
ground for an alternative to the US alliance system” (Odgaard 2006: 208).
Since then, China has turned to actively participate in the ARF, indicating
that multilateralism has gradually become a supplement to China’s
bilateralism-oriented foreign policy (Katsumata 2010: 104–110; Kuik 2005:
107–109). Against a backdrop in which the Philippines disputed with China
over the latter’s placing of an installation on the Spratly Island, which is
only 100 miles away from the former’s Palawan Island, and it later garnered
support from ASEAN to prohibit further action by China, at the July 1995
ASEAN-PMC in Brunei, China agreed for the first time to carry out
discussions multilaterally with regional states over the South China Sea
disputes on the basis of recognized principles of international laws,
including the 1982 United Nations Convention on the Law of the Sea
(UNCLOS). This can be seen as a concession by China in the multilateral
arena. In 1996, as a full dialogue partner of ASEAN, China made its first
initiative at the ARF meeting, offering to co-chair with Manila the ARF
Inter-sessional Support Group meeting on Confidence Building Measures,
in addition to participation in the first meeting of defense college chiefs, in
the 1997 ARF meeting. Also, amid the outbreak of the Asian financial crisis
in 1997, Chinese President Jiang Zemin and ASEAN leaders held their first
informal summit in December 1997. Both sides agreed to establish a
partnership of good neighborliness and mutual trust.
In the 2000s, China–ASEAN relations gained further momentum as
China proactively utilized multilateralism as a complementary policy tool in
engaging with ASEAN (Kuik 2005). After years of confrontation and
negotiation over the South China Sea issue, China in November 2002
signed the DOC, an nonbinding political statement, regarded as a
reaffirmation of its commitment to resolve South China Sea disputes with
the ASEAN counterparts under the UNCLOS (ASEAN and China 2002).
The DOC is the first major step toward the COC, a formal conflict
management mechanism with coercive power to regulate activities in the
South China Sea. The COC is a major security agenda by ASEAN in the
region. Although the claimants’ strong incentive to protecting sovereignty
weakened efforts of the ASEAN–China Joint Working Group on the
Implementation of the DOC to construct confidence-building measures, so
as to realize the COC, neither side stopped its moves and they progressed to
the Guideline to Implement the DOC in 2011 (ASEAN and China 2011). In
2003, China became the first non-ASEAN member state acceded to the
TAC (China and ASEAN 2003), endorsed by the ARF as a code of conduct
governing relations between participants (ARF 1994). It established the first
strategic partnership with ASEAN by signing the Joint Declaration on
Strategic Partnership for Peace and Prosperity (ASEAN and China, 2003).
The accession to the TAC gave China a ticket to participate in the first EAS
in 2005.5 More recently, the ASEAN–China strategic partnership began its
third five-year term (2016–2020) in 2015 (ASEAN and China 2015).
China’s efforts to improve relations with ASEAN over the last two decades
have not merely been part of China’s “charm offensive;” they have also
shown China’s self-restraint in accomplishing its autonomy in regional
affairs.

US and the ARF

Like China, the US initially discouraged the development of a multilateral
security mechanism in the Asia-Pacific region after the Cold War, because
regional security multilateralism might erode the exceptional autonomy and
influence of the US in the region, which is underpinned by the bilateral
alliance system, and also could foster an exclusionary regional bloc that
could turn against the US (Calder 2004; Cossa 2009: 35; Glossman 2010:
36–37; Ikenberry 2002). Washington’s caution at that time was evidenced
by the fact that several proposals to build a regional security dialogue
platform were dismissed by US officials in the early period of the George
H. W. Bush Administration (e.g., the proposals for a Conference on
Security and Cooperation in Asia initiated by Australia and supported by
Canada, and for a security forum proposed by Japan) (Goh 2004: 51;
Katsumata 2010: 123). While aware of China’s incremental involvement in
the development of regional multilateralism, Washington also began to
reconsider the utility of multilateralism in maintaining its dominant role in
the region. A multilateral security mechanism for the US is an instrumental
complement to the existing bilateral alliance system in the Asia-Pacific
region, not only assuring its continued commitment to friends and allies in
the region but also for engaging and harnessing the rising China (Emmers
2003: 123; Glossman 2010: 45–49; Goh 2004).
In fact, although bilateralism overwhelmed Washington’s Asia-Pacific
policies, reassessment of the policy function of multilateralism has taken
place during the Bush Administration in late 1991. While reaffirming the
centrality of bilateral alliances, then-US Secretary of State James Baker
acknowledged the importance of multilateral actions for supplementing
existing bilateral ties by stating that “we should be attentive to the
possibilities for such multilateral action without locking ourselves into an
overly structural approach” (Baker 1991: 5–6). Nonetheless, the first clear
signal of the US attending regional multilateralism came in 1993 when
enhancing multilateral security dialogue and deepening ties with ASEAN
was listed as one of the Clinton Administration’s ten priority policy goals
for Asia.6 The inaugural ARF meeting in Bangkok in July 1994 later
confirmed the US’s embrace of multilateral security. In 1995, the US
Department of Defense issued a report entitled Security Strategy for the
East Asia-Pacific Region (also known as the Nye report) emphasizing that
the regional multilateral institution is an important supplement for
enhancing transparency and confidence building in East Asia, and that the
ARF, which serves to realize cooperative security, can be a very useful
multilateral arena for managing regional security (Department of Defense
of the US, 1995). Since then, the ARF as a hub of developing security
multilateralism in the Asia-Pacific region has incrementally gained
importance in US regional policy. For example, each issue of the NSS
report issued by the Clinton Administration emphasized the important role
played by the ARF in regional security (White House of the US 1995, 1996,
1997, 1998, 1999, 2000). The George W. Bush Administration stated that
the US will “build on the stability provided by … institutions such as
ASEAN … to develop a mix of regional and bilateral strategies to manage
change in this dynamic region (Asia)” (White House of the US 2002: 26)
and that the ARF can play a vital role in regional security and prosperity
(White House of the US 2006: 40). In the Obama Administration,
Washington was devoted to investing and strengthening the role of ASEAN
in regional security and development (White House of the US 2010, 2015a).
These reports also sent an important signal that the US wanted to use
multilateral engagement to transform China into a responsible great power.
Based on this conduct of policy, US secretaries of state almost always
attended the ARF regular meeting since 1994, so that Washington could
tackle bilateral and regional issues with Southeast Asian states and also
address strained relationships and facilitate cooperation between great
powers.7 At the 2005 APEC Leaders’ Meeting, Washington held the first-
ever US–ASEAN Summit which became a regular event between the US
and all ASEAN states during the Bush Administration and the Obama
Administration. It was followed by the US appointing the first-ever ASEAN
Ambassador in 2007, demonstrating the US’s increasing recognition of the
importance of ASEAN. This tendency became even more evident with the
Obama Administration launching its “Rebalancing to Asia” policy to
counter an increasingly assertive China in the region. In 2009, the Obama
Administration signed the TAC and joined the EAS in 2010. Washington
now used the ARF to enhance collective action with ASEAN states to
counter China’s assertiveness in the South China Sea. In 2015, the US
leveled up dialogue relations with ASEAN with the Enhanced Partnership
to the Strategic Partnership (2016–2020) (ASEAN and US 2015).
For Washington and Beijing, participating in the ARF has been a rational
calculation, because being members of the ARF legitimizes their roles in
regional security affairs and the nonbinding, minimalist design of the ARF
allows them to retain policy autonomy comfortably, limiting to some extent
the brokerage of ASEAN states. China, for example, is more able to stall
and forestall the development of intrusive or constraining institutions
pursued by ASEAN states and the US (Goh 2011). While it is true that US
and Chinese policies toward the ARF, which have evolved from cautious to
active participation in and utilization of the ARF as an arena to protect their
own regional interests, reflect not only increasing competition between the
US and China in the development of regional multilateralism, they also
demonstrate that both great powers have been gradually accommodating
and socialized with regional political and security norms advanced by
ASEAN. In addition, institutional characteristics of the ARF provide
ASEAN states with a buffer to prevent direct confrontations as they manage
relations with Washington and Beijing. In the case of the South China Sea,
a long-standing theme in the ARF meetings, ASEAN states have made
collective efforts with Washington’s support to manage China’s expanding
maritime activities. Although it was not easy, ASEAN and China have
reached the DOC and, later, the Guideline to Implement the DOC. Despite
this, ASEAN states did not issue a joint communique during the 2012
AMM chaired by Cambodia, the first time they failed to do so since 1967,
because of China’s interference (Bower 2012), ASEAN states together, with
the help of Indonesia’s proactive diplomacy, eventually issued the ASEAN
Statement on the Six-Point Principles on the South China Sea (Thayer
2013), which was reiterated in the ARF Chairman’s Statement that same
year (ARF 2012). This failure raised questions about the unity of ASEAN
when faced with the troubled water stirred up by US and Chinese
involvement. However, the following AMM and ARF meetings did not stop
advocating the COC and continued to internationalize maritime disputes in
the South China Sea by emphasizing that UNSLOC is a foundation for
resolution (AMM 2013, 2014, 2015), a viewpoint echoed by the US. In fact,
US has continued to cooperate with Cambodia in the area of defense since
2006 (Lum 2013). For instance, the US and Cambodian naval forces
participated in Cooperation Afloat Readiness and Training in October 2012
for the third year in a row, focusing on maritime security. US Secretary of
Defense Leon E. Panetta reaffirmed US military ties with Cambodia in
November 2012.8 This was followed in March 2013 by the third annual
Angkor Sentinel in Cambodia, a bilateral peacekeeping exercise between
Cambodia and the US, suggesting that Cambodia would continue to engage
with the US while receiving substantial economic aid from China. Under
pressure from China, in the 2015 AMM joint communique, ASEAN states
collectively noted “the serious concerns expressed by some ministers on the
land reclamations in the South China Sea, which have eroded trust and
confidence, increased tensions and may undermine peace, security and
stability in the South China Sea,” but they also agreed to Indonesia’s
proposal to establish a hotline for communications at the highest levels of
government of ASEAN states and China to address emergency situations
and reduce tensions. The 2015 AMM joint communique again sent a signal
to China that ASEAN states would respond to aggressive actions with
measures they deemed necessary. During the 2015 ARF meeting,
Washington proposed “three halts (halting further land reclamation and
construction of new facilities on or the militarization of disputed features)”
to urge China to address the South China Sea issues peacefully on the basis
of international law, reiterating that the freedom of navigation is
“essential.”9 This recent regional interaction over security issues illustrates
that, while attempts are being made to utilize bilateral tracks to deal with
South China Sea issues, China can no longer unilaterally stay away from
ASEAN’s multilateral mechanisms such as the ARF. ASEAN states are also
using US support to restrain China.
According to the discussion above, one might say that ASEAN states
have well employed hedging in the ARF as they have seen their
international political autonomy increase incrementally over the last two
decades as the US and China have been gradually enmeshed the regional
multilateral settings.

Crucial case: the Philippines and Vietnam

The Philippines
In the first decade after the Cold War, uncertainty about the US’s East Asian
policy disrupted the traditional alliance relationship between the Philippines
and the US, while the economic rise of China inclined the Philippines to
emphasize its relationship with China. China’s rising assertiveness in the
disputed South China Sea, however, contaminated improving Philippines–
China relations and led to the US’s return to the region, impelling Manila to
hedge against China to secure economic benefits and deter security threats
from China.
 The Philippines has been an ally in the US hub-and-spoke alliance
structure in the Asia-Pacific region since the 1951 Mutual Defense Treaty
was signed. The close security relations lost forward momentum from
1992–1999 after US forces were withdrawn from military bases in the
Philippines in 1992, including the Subic Bay Naval Base and the Clark Air
Base, the US’s largest bases in Asia that projected US power throughout
Southeast Asia. Stagnation in their security relations was a result of
unsatisfactory financial compensation to lease the military bases in the
Philippines by the US, which was experiencing economic difficulties at the
time, and domestic nationalist opposition in the Philippines which led to the
failed ratification for a new basing package in the Philippines Senate in
1991 (Park 2011: 273–274, 279). However, a turning point was reached in
their suspended alliance with China’s occupation and fortification of
Mischief Reef in 1995, a move which challenged Philippine maritime
territorial sovereignty and struck a blow to Manila’s economic and political
engagement policy with China. Consequently, Manila attempted to renew
military ties with the US. Washington also raised concerns about the impact
of China’s assertive territorial claims in the South China Sea on its regional
maritime and strategic interests, even though Washington tried to steer clear
of the troubled waters. During negotiations with China for a peaceful
resolution over the disputed islands, it was reported that the Ramos
Administration intended to use Mischief Reef to stir up domestic support
for bringing US troops back (Storey 1999b: 111, 118). Because regional
security had taken an undesired trajectory, Manila and Washington reached
the VFA, providing legitimacy for US military personnel to once again
participate in defense-related activities covered by the 1951 Mutual Defense
Treaty (De Castro 2009: 404–405).
Already warming up, bilateral security relations were further
reinvigorated by the US’s anti-terrorism policy following the 9/11 attacks in
2001. The Philippines’ Arroyo Administration viewed the US’s worldwide
anti-terrorism policy as an opportunity to bring back US assistance to
bolster national military capabilities to tackle internal insurgency issues and
terrorism. From the vantage point of the US under the Bush Administration,
deepening security relations with Manila—by helping with reforms, shoring
up the Philippines’ military capabilities, and developing interoperability for
mutual military mobilization through regular military exchanges via new
collaboration mechanisms and the Balikatan Exercise—would not only be
good for countering global terrorism, it would also serve a broader purpose:
it would function as a hedge against the challenge to the US’s regional
hegemonic position posed by China’s comprehensive emergence and
growing assertiveness in the Asia-Pacific region (De Castro 2009; Park
2011: 274). Amid intensifying maritime territorial disputes in the South
China Sea, Washington and Manila signed the Manila Declaration in 2011
against the background of the Obama Administration’s rebalancing to Asia,
reaffirming the bilateral security relationship and calling for multilateral
talks to resolve maritime disputes in the region. Since then, the US has
provided increased amounts of security assistance to the Philippines and
strengthened military cooperation between the two states via the Enhanced
Defense Cooperation Agreement (EDCA), reached in April 2014 to allow
for a greater presence of US military forces, ships, aircraft, and equipment
in the Philippines on a nonpermanent basis, and greater access for US
forces to Philippine military bases (Lum and Dolven 2014: 15–16). Due to
the increased military cooperation, US President Barack Obama publicly
visited the Philippine Navy’s flagship vessel, the BRP Gregorio del Pilar (a
former US Coast Guard cutter given to the Philippines by the US in 2011)
on a trip to the APEC Summit in Manila in 2015 to underscore US maritime
security assistance to the Philippines and commitment to regional security.
In 2016, the growing security relationship was further boosted by the
EDCA, which was reaffirmed by the Philippine Supreme Court amid
protests by left-wing domestic political groups (De Castro 2016). US
assistance to the Philippines to improve government services, facilitate
business activities, strengthen the rule of law, expand healthcare coverage,
and bolster military capabilities increased steadily from US$131.7 million
in 2008 to US$203.5 million (requested) in 2015 (Lum and Dolven, 2014:
9). In addition, Washington helped Manila, which has shown interest in the
TPP, to prepare to join TPP.
While continuing to seek and receive US military and economic aid,
both of which are vital to the national development of the Philippines and
the relations between the Philippines and China were tense because of
maritime disputes, Manila did not dismiss the importance of engagement
with China and even used China as a leverage to obtain US assistance (De
Castro 2009: 411–412). Based on the official reports of the number of trips
to foreign countries (Republic of the Philippines 2016), the US remained
the top foreign destination for Philippine Presidents, but each President of
the Philippines from Corazon Aquino, Fidel V. Ramos, Joseph Estrada, and
Gloria Macapagal Arroyo to Benigno S. Aquino III, paid at least one state
visit to China. President Arroyo, in particular, visited China ten times
between 2001 and 2010, including four state visits, far more than any of her
predecessors. Besides increasing maritime disputes, economic benefits are
at the core of Philippine engagement with China. Against the background of
frequent high-level visits between Manila and Beijing by the Arroyo
Administration, Manila explicitly reached out to China for security and
economic cooperation. In return, Beijing signed an agreement with Manila
for Joint Marine Seismic Undertaking in the disputed waters of the South
China Sea and provided economic benefits in the form of trade concessions,
investments, and large-scale Official Development Assistance projects for
such areas as agriculture, mining, dam construction, North Luzon railway
upgrades, and the establishing of a national broadband network by China’s
ZET Corporation (De Castro 2009: 409–411). According to the IMF DOTS,
although the US remains an important economic and political partner, as of
2007 it is no longer the Philippines’ largest trading partner. The Philippines’
combined trade with China and Hong Kong represented 16.8 percent of
total trade in 2007 compared with only 15.5 percent for trade with the US.
Trade with China and Hong Kong continued to grow by 7 percent between
2007 and 2015.
Nonetheless, while enjoying economic benefits from China, the
Philippines has not been deterred from proactively protecting its security
interests with a two-pronged strategy in the face of China’s expansive
claims and aggressive actions in the disputed South China Sea. Manila, on
the one hand, has continued bilateral negotiations with China, while on the
other it has been working toward multilateralizing the maritime disputes
within ASEAN processes and beyond. The most striking action taken by the
Philippines to internationalize the maritime disputes was its application for
arbitration with the Hague-based Permanent Court of Arbitration in 2013.
In the end, this provided it with strong international legitimacy to rebuke
China after the final results for the South China Sea Arbitration were
handed down on 12 July 2016 (Permanent Court of Arbitration, 2016).
Developments before and after the award of the South China Sea
Arbitration bared to light Manila’s two-pronged approach for dealing with
Beijing. On 14 June 2016, China was attempting to mitigate potential
negative impacts stemming from the results of the arbitration by hosting a
special meeting with all ASEAN states in Kunming, China, but it was
reported that during the meeting, diplomatic struggles occurred over
whether the final joint statement that had been agreed by ASEAN states,
with strong wording referring to recent developments in the South China
Sea, should be read out loud on Chinese soil. Faced with pressure from and
maneuvering by China, the statement was withdrawn within a few hours of
its release on Chinese soil; the statement, explicitly iterating strong
concerns about the impact of China’s actions in the South China Sea on
relations, was instead released by individual states after the meeting
(Thayer 2016). The Philippines is the one of the countries that publicly
issued the statement through its Department of Foreign Affairs (Department
of Foreign Affairs of the Philippines 2016a). While the arbitration ruled in
overwhelming favor of the Philippines, Manila opted to respond in an
affirmative but restrained manner (Department of Foreign Affairs of the
Philippines, 2016b) and in turn signaled its willingness to continue bilateral
talks with China over the South China Sea issue.10 Manila also attempted to
have the ruling of the arbitration included in the joint statement of the 49th
ASEAN Foreign Minister’s Meeting held in Laos in 2016, demonstrating its
firm support for the arbitration result. Therefore, as shown previously, it can
be seen that Manila continued to hedge as it continued with its political and
economic engagements with Beijing while reinforcing security ties with
Washington. It has become increasing emboldened in regard to its hedging
as the US has become comprehensively re-involved in the region.

Vietnam
Vietnam has undoubtedly been one of East Asian countries most sensitive
to the rise of China. Given its geographic position and historical experience,
Vietnam formulated a mixed post-Cold War China policy consisting of a
number of features, including balance, deference, solidarity, and
enmeshment, each of which waxed and waned along with changes in
Vietnamese leadership composition that can be divided into anti-
imperialists and integrationists (Vuving 2006). Vuving argues that anti-
imperialists make protecting socialist ideology and countering Western
influence the top priority of their foreign policy and emphasize deference
and solidarity in maintaining conflict-averse and close relations with China,
while integrationists give “diversification and multi-directionalization”
linchpin status in their foreign policy to promote national security and
socioeconomic development and regard balancing and enmeshment as
better approaches to dealing with China. Despite differences in terminology,
Vuving’s typology of Vietnam’s foreign policy toward China is similar to
Hiep’s (2013) description of Vietnam’s hedging strategy with China, which
is comprised of hard balancing, direct engagement (deference and
solidarity), soft balancing (enmeshment and solidarity), and economic
pragmatism (enmeshment). Since a strategy of “cooperating while
struggling (vua hop tac vua dua tranh)” was introduced in the third plenum
of the Communist Party of Vietnam’s (CPV) Central Committee in 1992
and was officially adopted by the CPV Politburo in 1994 to improve foreign
relations by utilizing common interests and minimizing discrepancies
between Vietnam and other countries in the region and the world, Vietnam
has, in essence, been moving incrementally toward a hedging strategy. This
foreign policy guideline was further elaborated on and supplemented by
CPV Central Committee in 2003 with the two concepts doi tac (“objects of
cooperation”) and doi tuong (“objects of struggle”), showing that Vietnam
views its relations with other countries, including the US and China, as
being comprised of cooperation and struggle as it pursues national interests
(Hiep 2013: 343; Thayer 2011: 351–352). Against this backdrop of policy
conduct, Vietnam has, on the one hand, been accelerating its military
modernization to upgrade its military capabilities, steadily increasing its
defense budget in the process, to deter China’s assertiveness, especially in
the disputed South China Sea, while on the other hand, because Chinese
trade and investment contributes to Vietnam’s economic growth and that, in
turn, has been critical to regime stability, it continued to deepen economic
relations with China and deal with cooperation and disputes between Hanoi
and Beijing through frequent high-level political exchanges and multilateral
institutions like ASEAN (Hiep 2013). According to the IMF DOTS, China
is Vietnam’s biggest trading partner and importer of Vietnamese goods,
representing 29 percent of Vietnam’s total trade in 2015.
In the course of dealing with relations with China, the US is clearly the
most crucial third party of which Vietnam can take advantage to utilize
hedging against China to maximize national interests. Given ideological
differences and the experience of a bitter war, one would have never
guessed that Vietnam–US relations would progress so quickly over the last
two decades. Most recently, a historic move in Vietnam–US relations was
made during US President Obama’s first visit to Vietnam, when an
announcement was made on 23 May 2016 that the US would completely lift
the embargo on sales of lethal military equipment that had been in place
since 1984. This meant that security relations of the two countries would
take another significant step forward after sales of non-lethal defense items
were allowed in 2007. This move explicitly indicates that Vietnam is taking
advantage of strengthened security relations with the US to balance China’s
expanding assertiveness in the South China Sea. It took more than four
decades after the end of Vietnam War, however, to reach this high point in
the bilateral relations. Vietnam’s diplomatic and economic relations with
the US were essentially nonexistent after the US lost the Vietnam War
against communist North Vietnam in 1975. Even though overtures were
made to resume bilateral relations during the Carter Administration, the
US’s approach did not receive a positive response and Vietnam’s later
invasion of Cambodia in 1978 undid all US efforts at the time. The frozen
relations continued for more than another decade until 1990 when the
George H. W. Bush Administration decided to help with a peace agreement
in Cambodia after Vietnam withdrew its forces from Cambodia in 1989 and
agreed to launch a compromise peace settlement. Following the contact
made during the settlement process on Cambodia, the US laid out a
roadmap for normalizing relations with Vietnam in 1991. In return, that
same year, Vietnam allowed the US to open an office in Hanoi to handle
affairs related to US prisoners of war/missing in action.
Relations made a major advance when the Clinton Administration lifted
the trade embargo on Vietnam in 1994 and re-established formal diplomatic
relations in 1995, when Vietnamese integrationists, who underscored
balancing and enmeshment, were in charge of foreign policy (Vuving 2006:
814). Bilateral economic relations improved incrementally and were
highlighted by the US–Vietnam BTA signed in 2000 and implemented in
2001. Since 2002, the US has become Vietnam’s biggest export destination.
However, the BTA was ratified during domestic political struggles between
the integrationist camp and the anti-imperialist camp (Vuving 2006: 816).
With Vietnam’s agreement to extend domestic market liberalization, the
2001 BTA, which was granted conditional status with annual reviews,
became permanent one month after US President Bush visited Vietnam in
November 2006. The rapid progress in Vietnam–US economic relations
was driven by Vietnam’s eagerness to promote economic development
under Doi Moi that took place in 1986, as well as a bid for WTO
membership in 2007 to facilitate integration into global and regional
economic system. Soon after joining WTO, Vietnam started TPP
negotiations led by the US in late 2008. In the last two decades, Vietnam’s
trade with the US skyrocketed by an average annual rate of 130 percent
from US$139 million in 1994 to US$42,318 million in 2015.
In addition to economic relations, political engagement was intensely
undergone at the same time. During a visit by Vietnamese President Truong
Tan Sang to Washington in July 2013, one month after he paid a state visit
to China, Vietnam–US relations were upgraded to a comprehensive
partnership in which maritime capacity building, economic engagement,
climate change and environmental issues, educational cooperation, and
human rights issues were underscored (White House of the US 2013). CPV
General Secretary Nguyen Phu Trong visited the US in July 2015, the
highest-ranking official to do so since the end of the Vietnam War. During
his visit, the two sides agreed to boost economic and defense ties, including
easing US restrictions on arms sales (White House of the US 2015b),
demonstrating that the two countries had entered a new phase in bilateral
relations. In return, President Obama made a state visit in May 2016 to
Vietnam during which Washington lifted the ban on arms sales, mentioned
earlier. In fact, General Secretary Nguyen’s visit to China in April 2015,
taken before his first trip to the US, can be regarded as a move to raise the
stakes in Hanoi’s subsequent negotiations with the US in July. General
Secretary Nguyen’s visit to the US was immediately followed in September
2015 by President Truong’s visit to China during which the two sides
agreed to handle South China Sea disputes through dialogue (Xinhua 2015).
However, in a press interview later in September, President Truong publicly
expressed his concerns about China’s assertiveness and stated that China’s
island building in the disputed South China Sea violated international law
and threatened maritime security. He also urged the US to lift the ban on
lethal weapons sales to Vietnam (Daniszewski and Pennington 2015). Two
months later, Hanoi and Beijing reached several cooperation agreements
during Chinese President Xi Jinping’s visit to Vietnam in November 2015,
including a loan of US$200 million from the Chinese Development Bank to
Vietnam, to mend bilateral relations strained over disputes over the South
China Sea (Associated Press 2015). Like the Philippines, Vietnam publicly
released a joint statement through its national news agency after the special
China–ASEAN meeting in Kunming (Vietnam News Agency 2016) and
Vietnam officially voiced support for the arbitration result (Ministry of
Foreign Affairs of Vietnam 2016).
In light of the recent developments in Vietnam–US relations and
Vietnam–China relations, it is clear that, on the one hand, Vietnam has
gradually been taking advantage of the US’s comprehensive return to Asia
to deal with its disputes with China, while, on the other hand, it has been
attempting to acquire economic and/or security benefits from both great
powers. Vietnam has also been utilizing ASEAN as a platform to reinforce
its capacity in dealing with relations with China and the US. In other words,
Vietnam is hedging, both bilaterally as well as multilaterally, for better
economic and security benefits and a less negative impact amid the grand
competition between the US and China.

Conclusion
To cultivate close ties with regional states and maintain a stable external
environment, China has moved to embrace ASEAN-centered
multilateralism since the mid of 1990s. As its national capabilities have
increased rapidly, Beijing has gradually become confident of being
involved in the development of regional multilateral institutions and, in
turn, has used multilateral engagements to bolster its regional influence.
The growth of China’s influence in regional security and economic affairs
has prompted Washington to reconsider the utilities of multilateralism in its
bilateralism-centered regional policy and turn to participate in ASEAN-led
multilateralism. As a result, ASEAN-led multilateral mechanisms have
become important arenas for both Washington and Beijing to negotiate
regional affairs with each other, with Southeast Asian states, and with
others. For the US and China, taking part in the ARF is a rational choice.
However, their moves toward ASEAN-led multilateralism at the outset
necessitated accommodations to the ASEAN norm and its agenda of
regional security, namely they have had to concede to some extent their
own political power of agenda setting. This implies that Southeast Asian
states have acquired more political autonomy to formulate a preferred
blueprint of regional development. The competition over regional alliance
networks has placed Beijing and Washington in a security dilemma, giving
ASEAN states a relatively flexible strategic environment. ASEAN states,
therefore, have been able to hedge against the two great powers to mitigate
uncertainty and, in turn, enhance their international political autonomy. The
case studies of the ARF, the Philippines, and Vietnam demonstrated above
show this tendency in Southeast Asia. This empirically supports the
theoretical argument that small states can obtain greater international
political and strategic autonomy amid great power competition in the power
transition context.

Notes
1 The ASEAN-PMC is an annual meeting that takes place in two phases. ASEAN member states
meet annually with their external dialogue partners (as of 2015 it consisted of Australia, Canada,
China, the European Union, India, Japan, New Zealand, the Republic of Korea, Russia, and the
United States). The first phase is a closed meeting in which ASEAN foreign ministers discuss
with dialogue counterparts as a group (ASEAN + 10) a wide range of international economic,
political, and security issues. The second phase is a separate session of a meeting between
ASEAN and each dialogue partner (ASEAN + 1) to examine their bilateral relationships.
However, the PMC ASEAN + 10 has been terminated and to some extent folded into the ARF
with regards to security issues (Weatherbee 2015: 109–111).
2 The ARF consists of two processes: the official one (Track I) and the unofficial one (Track II).
The core of Track I is the annual ministerial meetings held in the summer. They are supported
by the ARF Senior Officials’ Meeting that is designed to prepare agendas to be explored at the
ministerial meetings. In addition, meetings of Inter-sessional Support Group on Confidence
Building Measures and Preventive Diplomacy and inter-sessional meetings on Counter-
terrorism and Transnational Crime, Disaster Relief, Marine Security, and Non-proliferation and
Disarmament also operate as channels of communication. Track II activities include researchers
of strategic studies institutions linked to the Council for Security Cooperation in the Asia Pacific
and government officials in private capacities (Weatherbee 2015: 134–135). Diplomacy in the
ARF, at both the official level and the unofficial level, in effect is not solely constrained to
multilateral exchanges, as sideline bilateral communications and negotiations also take place
simultaneously. As of 2015, the ARF consisted of 27 intra-regional as well as extra-regional
participants, including Australia, Brunei, Canada, China, the European Union, Indonesia, Japan,
Lao PDR, Malaysia, New Zealand, Papua New Guinea, the Philippines, the Republic of Korea,
Russia, Singapore, Thailand, the United States, and Vietnam (1994), Cambodia (1995), India
and Myanmar (1996), Mongolia (1999), the Democratic People’s Republic of Korea/North
Korea (2000), Pakistan (2004), Timor-Leste (2005), Bangladesh (2006), and Sri Lanka (2007).
3 In this regard, Thailand is the typical case with a long record of security aligning with both the
US and China at the same time since the Vietnam War (Ciorciari 2010: 56–91).
4 China ready to take part in Asian security dialogues, excerpts from speech by Qian Qichen,
Chinese Vice Premier and Foreign Minister at Foreign Correspondents’ Association, Singapore,
24 July 1993. Beijing Review, 9–15 August 1993.
5 As of 2015, the EAS consisted of all the ASEAN states plus Australia, China, India, Japan, New
Zealand, the Republic of Korea, Russia, and the United States.
6 Winston Lord in his confirmation hearing on 31 March 1993 for Assistant Secretary of State for
East Asian and Pacific Affairs identified ten priority policy goals. See http://1997-
2001.state.gov/www/regions/eap/930331.html [accessed 11 August 2015].
7 Warren Christopher, Madeleine Albright, Colin Powell (attended four times in a row),
Condoleezza Rice (attended three times, but missed the one in 2005—she did, however, send a
 positive signal of US commitment to the ARF by attending the 2006 meeting in Malaysia
despite the various crises occurring in the Middle East), Hillary Clinton (attended four times in a
row), John Kerry (attended four times in a row).
8 Remarks by Secretary Panetta at ASEAN Meeting, Siem Reap, Cambodia.
http://archive.defense.gov/Transcripts/Transcript.aspx?TranscriptID=5152 [accessed 10 August
2015].
9 Press availability in Kuala Lumpur, Malaysia.
www.state.gov/secretary/remarks/2015/08/245768.htm [accessed 10 August 2015].
10 Manila sent former President Fidel Ramos as a special envoy to hold talks with his Chinese
counterpart in Hong Kong (Manila Times, 2016).

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6 Conclusion

As many scholars and practitioners of international politics would argue,

autonomy, security, and development are the prominent concerns and
interests of each sovereign state in the international system. Yet, although
all sovereign states are formally assumed to be equal, in reality they do not
enjoy these interests equally. From the viewpoint of conventional realism,
the distribution of autonomy, development, and security among states is
contingent to a great degree on the distribution of power in the international
system. That is to say, national capability defines a state’s ability to pursue
and maintain the three interests in the international system. Some states
equipped with preponderant capability become great powers and those with
lower or little national

capability become middle or small states. A great power is more able than a
small state to realize what it desires to acquire, protect what it wants to
secure, and promote what it wishes to develop. Consequently, the difference
in material power defines relationships between great powers and small
states. Less capability impels a small state to seek external resources and
assistance to help it retain its desired level of economic

development and national security. Small states, therefore, often acquire

security assistance and economic resources from great powers, but at a cost
to their international political autonomy. As a reward for providing
assistance and resources, great powers gain greater international autonomy
to decide agendas and shape the trajectory of world or regional
development, which are crucial for them in maintaining their preponderant
power and influence. This autonomy–security trading is commonly seen
between small states and great powers in alliance activities. As a result,
small states rely on and subordinate to great powers.

However, the autonomy–security trade-off relationship is not immutable

for small states. Inspired by theories of power transition and capitalist
peace, this book proposes a theoretical argument that competition between a
dominant power and a rising power in the power transition system and the
pursuit by small states of liberal capitalist economic development gives
small states reinforcing dynamics of international political autonomy,
military security, and economic development. On the one hand, great
powers competing for alliance networks in the context of power transition
are inclined to adopt non-aggressive, benevolent behavior in their relations
with small states, giving rise to an economic, security, and strategic
environment that can stimulate cooperation among small states that benefits
their pursuit of economic development and allows them to put political
weight into defining their own agendas of development. Given the
advantageous outcome of competition between great powers, small states
become more able to promote economic development and manage their
international security in their own way. On the other hand, pursuit of liberal
capitalist economic development not only facilitates cooperation among
small states but also produces a pacifying effect on interstate

interaction among them, which helps increase self-reliance in security

matters. As a result, they can reduce their reliance on security assistance
from great powers, thereby reducing the need to concede autonomy to great
powers in exchange for security. In other words, small states become more
able to pursue the changes they want.

Since small states can continue to receive economic benefit and security
assistance from great powers at

relatively low or no cost to their autonomy, and since they are more able
to determine their economic and

security matters and manage their relations with great powers in ways
that they prefer, small states can

reinforce their international political autonomy, military security, and

economic development.

This theoretical scenario is empirically supported by the qualitative

inquiry of foreign policy behavior and quantitative investigation of
longitudinal empirical data in the case of Southeast Asia and the US and
China laid forth in the preceding chapters. First, it finds that competition
between the US as the dominant power and China as the rising power had
been intensifying in terms of their economic and security engagements in
Southeast Asia in the post-Cold War era. On the one hand, a rising China
brought immense economic benefits and opportunities as well as
increasingly becoming a security threat to Southeast Asia. On the other
hand, the US enhanced its

economic interconnections with Southeast Asia and presented a

balancing force to counter China’s security threat.

Engagements by both the US and China have created a fertile

environment for economic development and regional cooperation in
Southeast Asia. Second, the empirical findings have revealed that the
pursuit of liberal

capitalist economic development produces a positive security externality

that has helped construct a peaceful Southeast Asia. This makes regional
states better able to bear the burden of regional security by themselves.

Third, the birth of ASEAN centrality in the ARF evidenced the

stimulating effect of the growing US–China

competition on the international political and strategic autonomy of

Southeast Asian states and on their

cooperation in shaping regional development at the multilateral level.

Case studies on the Philippines and Vietnam also bear witness to similar
outcomes at the bilateral level.

Not only do the empirical findings confirm that small states themselves
can play an important role in defining and creating routes of international
development more to their liking, a fact which contradicts the conventional
realist thought that only great powers can play non-trivial roles in the
operations of the international system, they also present some findings that
differ from mainstream explanations concerning interstate interactions in
general and regional development of Southeast Asia in particular. One of
the different outcomes is that ASEAN’s performance in facilitating regional
integration and managing regional

security is not as outstanding as proponents of ASEAN have indicated

when it is compared with another factor: the competition between the great
powers described here. One possible answer for this result is that ASEAN’s

underperformance could be borne out of its low institutionalization, a

common criticism. Although ASEAN is not at this point an efficient force
for advancing regional cooperation and integration, this does not
necessarily mean that ASEAN is trivial as a venue of fostering identity and
collectiveness in Southeast Asia, as well as for constructing cooperative
regional security and dealing with and shaping extra-regional relations.
However, this suggests that ASEAN still needs time to effectively carry out
its designated functions. Another different outcome is that the pacifying
effects of democratic regimes and economic interdependence are not found
in Southeast Asia.

Given the highly diverse political regimes and various levels of national
economic development that characterize Southeast Asian states, this finding
is not a surprise. Nonetheless, whether liberal peace is applicable to
Southeast Asia hinges on future political and economic development in the
region. But it is obvious that the pursuit of economic development,
currently a central concern of regional governments, outperforms traditional
liberal peace variables in generating interstate peace in the region.

In addition to the preceding insights, this study also offers some practical
implications. Southeast Asian states and small states in East Asia alike need
to seize and take cooperative advantage of the geopolitical opportunity that
stems from US–China competition in the power transition context. They
need to keep hedging against but not choose sides between the US and
China, at either the bilateral or multilateral level. In this regard, Southeast
Asian states in particular have to continue to collectively advance the
institutionalization process of ASEAN and establish robust regional unity in
order to maintain their pivotal role in the region. They also have to keep
unity in ASEAN-led regional multilateral institutions, such as the ARF, the
EAS, ASEAN + 3, and other
 Asia-Pacific-wide multilateral institutions where they are hedging
against the US and China. Second, they have to continue to facilitate intra-
regional and inter-regional cooperation to broaden and deepen liberal
capitalist economic development, as this can help effectively enhance
national capability and reduce security burdens.

Supported by these policy efforts, Southeast Asian states will be able to

gain and uphold a level of autonomy, security, and development that they
want.

While this book has disclosed the conditions in which small states can
reinforce their autonomy, security, and development, it also brings forward
several interesting issues which deserve further research in the future.

First, empirical investigation here was focused on Southeast Asia, which

limits the general implication of the reinforcing logic. To shed more light on
the generality of the reinforcing logic, empirical inquiry has to be extended
to other regions, for example, Africa and Latin America where the US–
China competition is being observed and regional states are eager to
promote economic development. Second, this book has uncovered the
potential effects of domestic politics on reinforcing dynamics but it has not
been

explained in enough detail. For instance, the intensity of a state’s

hedging policy could be contingent on the form and degree of domestic
partisan competition caused by such factors as ideological differences and
the distribution of interests generated as a result of great power
competitions. Put differently, the convergence or divergence of domestic
political interests on the policy of hedging can, in part, affect the processes
of small states pursuing international political and strategic autonomy and,
subsequently, the reinforcing dynamics.

Third, the ARF is just one of many venues where ASEAN states execute
hedging, even though it is the most

important one. But other issue-specific or area-specific multilateral

institutions and activities in Southeast Asia or the Asia-Pacific region that
involve geopolitical competition between the US and China, such as the
LMC, the LMI, APEC, and the RCEP, are also worthy of further studies,
because they can help provide additional

observation of the hedging behavior of small states as well as useful

insights for the reinforcing logic. Fourth, developing a quantitative measure
for international political and strategic autonomy is desired, even though it
is a hard task, so that it can compare systematically the effects of concerned
variables on changes in autonomy or the effects of changes autonomy on
variables of interest here, allowing for a more robust empirical outcome.

Fifth, this book does not consider in which circumstances such

reinforcing dynamics would cease or be reversed.

This issue is not only critical for the development of reinforcing logic in
the academic sense, but also

important for policymakers in practice. Disappearance of the proposed

conditions propelling the reinforcing dynamics is obviously the handy
answer here. But this answer begs another question: When and how will the

conditions end? As for the condition of great power competition, what is

the tipping point that makes a dominant power or a rising power retreat
from escalating competition? It might be that the rising power significantly
outweighs the dominant power in terms of national capability or that a new
status quo has been established.

Neither answer is sufficient, however. This is because, even though the

great power competition has ended or is ending as the new status quo
emerges, small states also have grown stronger in terms of power and
influence, and have become more able to set up and consolidate institutions
helpful for preserving the power and influence they obtained in the
formation process of the new status quo. Therefore, small states would not
necessarily return to where they were previously, implying that the new
status quo would be a setting which allows small states to enhance their
status in the face of the new dominant power. In other words, the
reinforcing dynamics could possibly last longer, even after the shift to the
new status quo. As for economic development, this could be crucial to help
small states maintain the reinforcing dynamics, particularly after the power
transition is completed. Economic development is a generator of self-
reliance security capability. Without continuous economic growth, small
states would likely return what they gained back to the great powers in
order to obtain what they wanted, in which case the reinforcing dynamics
could be reversed. But more observation is needed to determine whether
stalled economic development is the vital cause of this outcome. Thus,
identifying the potential tipping point for reversion requires comparison of
past histories of interactions between small states and great powers in
different regions. Furthermore, additional studies aimed at investigating
whether small states can achieve the reinforcing dynamics without the
conditions proposed here would be helpful to further check the robustness
of the reinforcing logic.

It is true that the world is comprised of a few great powers and many
small states, yet the world is dominated by the few, not the many. This
asymmetric reality is not the whole story, however. Amid the competition
between great powers lies room for small states to reinforce their autonomy,
security, and development for now and for the future, fueled by their pursuit
of liberal capitalist economic development. Hence, small states can adjust
their asymmetric relations with great powers and be the masters of their
fate. Admittedly, such reinforcing dynamics are not easy to propel and
maintain, but neither are they entirely impossible when small states are
collectively committed to them.
Index

Page numbers in bold denote figures, those in italics denote tables.

9/11 attacks 3, 34; US’s anti-terrorism policy following 110

alliance network 15; benefits for subordinate and dissatisfied states 17; competition over 17; military
and economic 16; rising power pursuit of 16
Angkor Sentinel 108
anti-China alliance, formation of 105
anti-terrorism policy 3; following the 9/11 attacks 110
APEC Leaders’ Meeting 107
arms embargo: imposition of 31; by US on Vietnam 113, 115
ASEAN + 1 1, 91; free trade agreement 10n3, 11n6, 43
ASEAN + 3 1, 33, 91, 126
ASEAN + 6 91
ASEAN Community 27; ASEAN Economic Community 27, 40, 43; ASEAN Political-Security
Community 43; ASEAN Socio-Cultural Community 43; establishment of 27; Roadmap for 43;
three pillars of 43
ASEAN Concord II see Bali Concord II
ASEAN Connectivity for Trade and Investment 38
ASEAN Cooperation Plan 35
ASEAN Economic Community 1, 27, 40, 43, 70
ASEAN Finance Work Program 70
ASEAN Foreign Minister Conference 32, 112
ASEAN Framework Agreement on Services 70
ASEAN Free Trade Area 1, 4, 27, 41, 42, 43, 47, 70; Common Effective Preferential Tariff 47
ASEAN Industrial Complementation Scheme 70
ASEAN Industrial Joint Ventures 70
ASEAN Industrial Projects 70
ASEAN Ministers’ Meeting 104, 108, 109
ASEAN Post-Ministerial conference 100, 105, 116n1
ASEAN Regional Forum 1, 3, 5, 27, 28, 30, 42, 91, 101, 125–126; China and 104–106; on Code of
Conduct for the South China Sea 44; code of conduct governing relations 106; collective arena of
103–104; Confidence Building Measures 105; cooperative security approach 32; Inter-sessional
Support Group 105, 116n2; Senior Officials’ Meeting 116n2; on South China Sea territorial
issues 44; Track I and Track II activities 116n2; United States and 106–109
ASEAN Surveillance Process 70
ASEAN Vision 2020 41, 43
ASEAN Way 11n7, 32, 65, 101
ASEAN–China Free Trade Area 3, 28, 33, 35
ASEAN–China relations: ASEAN–China Free Trade Area 3, 28, 33, 35; ASEAN–China summit see
ASEAN–China Summit; on Asia Debt Reduction Plan 33; China–ASEAN Investment
Agreement 34; on confidence-building measures 106; Declaration on the Conduct of Parties in
the South China Sea 33, 105; economic and trade relations 32, 38, 39; on formation of Greater
Mekong Subregion 33; Joint Working Group on the Implementation of the DOC 106, 108; on
South China Sea issue 105; Strategic Partnership for Peace and Prosperity with ASEAN 33;
Treaty of Amity and Cooperation 33
ASEAN–China Summit 32; Asia Debt Reduction Plan 33; Declaration on the Conduct of Parties in
the South China Sea 33, 105; Framework Agreement on Comprehensive Economic Cooperation
33; landmark agreements 33; Track II meetings 32
ASEAN–US relations: Angkor Sentinel 108; ASEAN–US Summit 37; on bilateral peacekeeping
exercise 108; on case of Philippines 109–112; Cooperation Afloat Readiness and Training 108;
on defense cooperation 37; Enhanced Partnership to the Strategic Partnership 108; Lower
Mekong Initiative 38, 127; on maritime security 108; on South China Sea dispute 37; Treaty of
Amity and Cooperation 36; Trade and Investment Framework Agreement 3, 35, 37; trade
relations 38; US–ASEAN Connect 38
ASEAN–US Summit 36
Asia Debt Reduction Plan 33
Asian Financial Crisis 11n6, 31, 32, 41, 70, 105
Asian Infrastructure Investment Bank 3, 28, 34
Asia-Pacific Economic Cooperation 31, 33, 35, 36, 37, 110, 127
Asia-Pacific regional integration 43
Association of Southeast Asian Nations 1, 3–5; agenda of regional development 5; attractiveness as a
global production base 42; bargaining power and geopolitical influence 42; centrality in Asia-
Pacific regionalism 101; Charter of 43; defense cooperation with US 37; economic and security
cooperation 42; economic development of 27; economic integration and development 35;
effectiveness on regional economic integration 67; establishment of 27, 60, 67; expansion of 42,
67; fatality level of MID onsets 66; foreign direct investment 39, 41, 43, 53n12, 67; founding
states of 40; as hedge against US and China 5; impact of competition between the US and China
on 27; institutionalization of 126; Joint Declaration on Strategic Partnership for Peace and
Prosperity 106; liberal peace perspective of 60; membership countries 27, 42; performance in
facilitating regional integration 126; political ideologies of 27; process of state-building 27, 60;
process to establish AFTA 27; pursuit of regional resilience 40; quasi-alliance 47; rapprochement
with Vietnam 42; regional multilateralism 32; on regional security development 47; Roadmap for
43; Secretariat 36; security management of 60, 61–67, 83; Statement on the Six-Point Principles
on the South China Sea 108; trade with China 32
asymmetric alliance 6; between small states and great powers 7, 14; small states’ opportunity to
change 15–17; “symmetric” model of 14
autocracy–anocracy dyads 62
autonomy of small states 7, 92; advantages of 97–99; approach to reinforce 17–22; causal process
observation 100; characteristics of 94; defined 92; friendly/cooperative relationship 95; against
great power 97; measurement of 96–97; method, case, and time for measurement of 100–103;
objectives of 92–94; promotion of 94–95; relation-based 95; research design for measurement of
96–97; in world politics 92–95
autonomy–security mix 21–22
autonomy–security outcomes, of alliances for small states 21
autonomy–security tradeoff alliance 6–8, 12, 124; motives and needs between states to form 14–15;
between small state and great power 14, 17; “symmetric” model of 14
Baker, James 107
balance-of-power 14, 23n3, 46, 73, 101, 104
balancing strategy, of small states 6, 12, 14, 17, 92, 99
Bali Concord I 40
Bali Concord II 43, 70
Bali Summit: in 1976 40; in 2003 43
bandwagoning strategy, of small states 6, 12, 14, 17, 91
bargaining model of war 68
bargaining power 8, 93, 95; of ASEAN states 5, 42; of small state with great power 21, 41
bilateral trade agreement: between US and Laos 35; between US and Vietnam 114
Bosnian War 30
Brunei 9, 35, 45, 53n9, 72, 74, 83n2; ASEAN membership 10n1, 37; economic liberalization policies
78; relation with China 32, 105; Trans-Pacific Partnership 11n6
Bush, George H.W. 30, 106, 113
Bush, George W. 3, 34, 107; Southeast Asian policy 35

Cambodia 9, 27, 32, 33, 35, 45, 72; ASEAN membership 1, 42; ASEAN Ministers’ Meeting 108;
defense cooperation with US 37, 108; economic dependence 62; Lower Mekong Initiative 38;
Paris Agreements 41; relation with US 28; Vietnam pulled out of 30, 113; Vietnam’s invasion of
113
capability aggregation 14
capitalist economy see liberal capitalist economic development
capitalist peace, theory of 124
Carter, Jimmy 30
charm offensive strategy 2, 17, 28
Chiang Mai Initiative 70
China: and ASEAN Regional Forum 104–106; ASEAN–China Free Trade Area 3; Asia Debt
Reduction Plan 33; charm offensive strategy 2, 17, 28, 106; diplomatic relations with ASEAN
states 29, 32; domestic reforms in 29; economic and military development of 2; economic and
military expansion 91; economic links and political leverage in Mekong region 38; efforts to
improve relations with ASEAN 106; foreign direct investment in Southeast Asia 39; foreign
policy toward Southeast Asia 2–3, 29, 104; Four Modernizations 29; friction with Soviet Union
29; insurgencies supported by 40; Joint Marine Seismic Undertaking 111; Mischief Reef,
occupation of 109–110; New Security Concept 31, 52n1; Open Door policy 29–30; Policy of
Good Neighborliness 31, 52n1, 104; reconciliation with ASEAN states 49; relations with
Southeast Asia 3; rivalry with US see US–China competition; security and economic impact of
rise of 33; Sino-Vietnam War 60; South China Sea dispute see South China Sea dispute;
Tiananmen incident 31; trade with ASEAN states 32, 38–39
China–ASEAN Investment Agreement 34
China–ASEAN Investment Cooperation Fund 34
China–Japan–South Korea Free Trade Agreement 33
Chinese Communist Party 10n5, 31
Clark Air Base, Philippines 30, 109
Clinton, Hillary 36–37
CLMV countries 42
Code of Conduct of Parties in the South China Sea 37, 44, 106, 108
Cold War 14, 27, 52, 73, 91, 102, 104, 106; collapse of Soviet Union 30; end of 41; militarized
interstate disputes during 66; US–China competition after 30–40; US–China competition during
 28, 29–30
Common Effective Preferential Tariff Scheme 47
common security threat 14
composite index of national capability 73
Concert of Southeast Asian Nations 41
Conference on Security and Co-operation Europe 104
Conference on Security and Cooperation in Asia 106
Confidence Building Measures 106, 116
conflict resolution: mechanism of 101; peaceful approaches to 61
Cooperation Afloat Readiness and Training 108
cooperative security in Asia-Pacific region, implications of 31
Correlates of War: Formal Alliance data 47; Militarized Interstate Dispute data 47, 65, 70, 71, 79;
Trade Data 46
Council for Security Cooperation in the Asia Pacific 116n2
currency swap agreements 70

Declaration of ASEAN Concord see Bali Concord I

Declaration on the ASEAN Economic Community Blueprint 70
Declaration on the Conduct of Parties in the South China Sea 33, 105–106; ASEAN–China Joint
Working Group on implementation of 106; guideline to implement 106, 108
democracy in Southeast Asia, implications of 61–67
democracy–autocracy dyads 62
democratic governance 28
Deng, Xiaoping 29
diplomatic crisis, resolution of 61
Direction of Trade Statistics 32, 38, 44, 46, 111, 113
distribution of power, in international system 124
domestic protectionist coalitions 69
dominant power: economic resources and security commitments 8; economic sanctions imposed by
16; economic slowdown of 17; foreign policies of 17; political or military interference by 16;
relations with dissatisfied states 17; rivalry with rising power 7–8, 17; suppressive policies
toward members of the status quo 17; ties with subordinate states 16

East Asia Summit 1, 3, 28, 36, 91, 106, 107, 116n5, 126
East Asian Littoral 34
East China Sea dispute 28, 91
East Timor: human rights violations 35; independence referendum 31; militias’ terror campaign 31
economic alliance network 16
economic development: of ASEAN countries 27; and bargaining model of war 68; cooperative
foreign policies for 20; driven by improvement of industry and technology 18; economic
liberalization policies for 70; effect on state’s propensity for international conflict 18, 20;
effectiveness of trade for 68; empirical analysis of 71–80; export-oriented development model 70;
financial and human resources for 17–18; import-substituting development model 70; liberal
capitalist 7, 18, 68–69; national 18; non-tariff barriers 71–72; in processes of nation-making 67;
pursuit of, as a pacifying factor 67–71; relation with interstate conflict 67; research design to
study impact of 71–74; of rising power 16; of small states 7, 13; through forceful territorial
acquisition 18
Economic Freedom of the World 79
economic globalization 42
economic growth 42, 69, 127; of ASEAN states 41; of China 2, 31; in liberal economic system 46;
and national defense 20; power transitions 67; of rising power 15, 16; use of military force for 18;
of Vietnam 113
economic interdependence: among Southeast Asian countries 62, 63–64; implications of 61–67; in
post-Cold War period 62; of regional dyads 62; through trade 18–19, 68
economic liberalization, policy of 30, 61, 71; for economic development 70; operationalization of 78;
of Southeast Asian states 71
economic policy making 20
economic sanctions 7, 16
economic slowdown, of dominant power 17
economic wealth 17
Enhanced Defense Cooperation Agreement 110
Enterprise for ASEAN Initiative 35
European Union 41, 43
Export–Import Bank of China 34
export-oriented economic policies 19, 71
external balance, to establish status quo 23n4

foreign direct investment 39, 41, 43, 53n12, 67

Framework Agreement on the ASEAN Investment Area 70
Free Trade Agreement: ASEAN + 1, 43; China–Japan–South Korea 33; US–Singapore 35
free trade and financial policies 19, 68
Free Trade Area of the Asia-Pacific 33, 35, 37
freedom of navigation 30, 37, 109
Freedom to Trade Internationally 79, 85n15
free-market reforms 19, 68

global cooperation network 15

global trade liberalization 41
great powers 12; asymmetric relationship between small state and 13–15; autonomy–security mix in
alliance with 22; balancing strategy 6; bandwagoning strategy 6; competition in power transition
system 13, 15–17, 125, 127; confrontation between 29; hegemonic competition between 7;
responses to the small state’s activities 97; small states alliance with 6–8, 13; small state’s
bargaining power with 21; see also dominant power; rising power

Hanoi Plan of Action 41, 43

hegemonic competition, between great powers 7–8; in power transition system 13, 15–17
HIV/AIDS 36
Hu, Jintao 3
hub-and-spoke alliance system 29–30, 109
human rights abuses 30, 31, 35, 114
human trafficking 36

Indonesia 9, 36–37, 45, 53n9, 74, 84n14; arms embargo on 31; ASEAN membership 10n1, 66; on
ASEAN security management 65; East Timor’s militias’ terror campaign 31; economic
dependence of regional dyads 62; human rights violations, issue of 35; International Military
Education Training program 31, 35; Konfrontasi policy 67; relation with China 32; relation with
 US 3, 28; on South China Sea dispute 108–109; Statement on the Six-Point Principles on the
South China Sea 108; Trade and Investment Framework Agreement 35; Trans-Pacific Partnership
3, 37
innovation and technology 13
internal balance, to establish status quo 23n4
international autonomy 16; and bandwagoning strategy 14, 92; bargain for greater 13; cost of 18; of
great powers 124; promotion of 6, 21, 94–95; for regional development 17; and security
management 12, 21; in world politics 92–95
international conflicts: effect of economic development on state’s propensity for 18; impact on
economic exchanges 69
International Governmental Organization dataset 72
International Military Education Training program 3, 31, 35
International Monetary Fund 32, 38, 44, 46, 111, 113
international security 1, 10, 12, 14, 93, 125; role of small states in 14
international status, of small states 6, 8, 13, 93, 94, 96
interruption of trade links, economic and political costs of 18, 68
Inter-sessional Support Group 105, 116n2
interstate conflicts 19, 47; economic development and 67; see also militarized interstate dispute

Jiang, Zemin 105

JntASEAN 47–49, 72, 74–75, 77–78
JntDem 48
JntELP 72–74, 77–78

Kantian peace 75
Karen ethnic rebels 66
Korean War 29
Kuwait War 30

Lancang–Mekong Cooperation 34, 52n4, 127

Laos 9, 28, 42, 45, 62, 72, 74, 78, 83n3; ASEAN Foreign Minister’s Meeting 112; ASEAN Free
Trade Area 1, 27; ASEAN membership 10n1; bilateral trade agreement 35; Chinese Asia Debt
Reduction Plan and 33; Lower Mekong Initiatives 38
liberal capitalist coalition 20, 69
liberal capitalist economic development 7, 18, 20, 21, 68–69, 80, 124; contribution to Southeast
Asian peace 71; empirical analysis of 71–80; open trade regime 70; privatization in 20;
promotion of 20
liberal market economies 28
liberal peace theory 62, 80; implications in formation of Southeast Asian peace 65
Lower Mekong Initiatives 38, 127
Lower Mekong River Basin 34, 38

Malaysia 9, 28–29, 45, 62, 74; ASEAN membership 10n1, 66; ASEAN Ministers’ Meeting 104;
conflict with Philippines 66; defense cooperation with US 37; economic interdependence 65;
export-oriented strategy 70; Indonesia’s Konfrontasi policy against 67; Reformasi protest
movement (1998) 31
maritime security 36–37, 101, 108, 115
Maritime Silk Road 3, 10n5, 34
Marshall Plan 34
material capacity, of small states 13–14
Mekong River Commission 38, 52n4
militarized interstate dispute 60–62, 65, 70, 71; and ASEAN membership 65; during Cold War period
66; fatality level among ASEAN states 66, 66; predicted probability of 77
military alliance network 16
military measures: to accumulate wealth 18; for economic growth 18
Mischief Reef dispute 109–110
Morrow, J.D. 6, 11n8, 14, 21, 23n2, 92
multilateral cooperation 20
multinational exercise: between Thailand and US 35
Mutual Defense Treaty 109–110
Myanmar 1, 3, 9, 27–28, 45, 74; ASEAN membership 31, 42; conflict with Thailand 66; defense
cooperation with US 37; Lancang–Mekong Cooperation 52n4; Lower Mekong Initiatives 38

national defense expenditure 18

national economic development 18, 27, 60, 83, 126
National Material Capability dataset 73
National Security Strategy 35, 36, 107
national wealth 18, 93
Nguyen, Phu Trong 114
Nine-Dash Line 37
non-tariff barriers 45, 71–72
North American Free Trade Area 41
Nye report 107

Obama, Barack 3, 36, 113, 114; Asian policy doctrine 36; economic rebalancing toward Asia-Pacific
region 37; “Rebalancing to Asia” policy 107; visit to Philippine Navy’s flagship vessel 110; visits
to Southeast Asia states 36
One Belt One Road 3, 28, 34, 52n2, 91
Open Door policy 29–30
open trade regime 70, 72

Paris Agreements on Cambodia 41

peacekeeping exercise, bilateral 108
Permanent Court of Arbitration, Hague 111
Philippines 9, 10, 45, 62, 92, 102; as ally in US hub-and-spoke alliance structure 109; arbitration on
South China Sea dispute 111; ASEAN membership 66; Balikatan Exercise 110; bilateral security
relations 110; Clark Air Base 30, 109; economic and political engagement policy with China 109;
Enhanced Defense Cooperation Agreement 110; export-oriented strategy 70; Joint Marine
Seismic Undertaking 111; Manila Declaration 110; maritime territorial sovereignty 109; military
capabilities 110; military ties with the US 110; Mischief Reef dispute 109–110; Mutual Defense
Treaty 109–110; non-NATO ally status 34; relationship with China 109; South China Sea dispute
37, 109, 111; Subic Bay Naval Base 30, 109; Trade and Investment Framework Agreement 35;
Trans-Pacific Partnership 37, 111; US’s policy on 3, 28–29, 35, 73, 109–112; view on US’s anti-
terrorism policy 110; Visiting Force Agreement 31, 110; withdrawal of US forces from military
bases in 109
“Pivot” to Asia-Pacific 36, 53n8
Policy of Good Neighborliness 31, 52n1, 104
political autonomy, international 9, 17, 20, 93, 95–97, 100, 109, 115, 124–125; in conducting
regional development 5; defined 96; distribution of 96; and liberal capitalist economic
development 13; promotion of 6, 92; for small states 9, 92, 96–97; strategic autonomy and 5
Powell, Colin 34
power distribution 15–16, 20
power transition system 13, 15–17, 23n3, 73, 124
Preferential Trading Agreements 40, 47, 70
protectionist coalition 20, 69

Qian, Qichen 32, 104, 116n4

Quadrennial Defense Review, US 34

Reagan, Ronald 30
“Rebalancing to Asia” policy 3, 36, 40, 91, 107, 110
Reformasi protest movement, Malaysia 31
Regional Comprehensive Economic Partnership 1, 3, 28, 33, 43, 127
regional development, agenda of 17; approach by small state to reinforce 17–22
regional distribution of power 2
regional economic cooperation 20
regional multilateralism: ASEAN-led 32; development of 2
Rice, Condoleezza 36, 116n7
rising power: alliance network 8; charm offensive strategy 17; coercive measures against dominant
power 7–8; cost of expanding an alliance network for 17; economic development 16;
expansionist policy of 7, 17; foreign policies of 16; power transition process 7; power-reinforcing
pattern 16; pursuit of alliance network 16; relation with subordinate states 16–17

Second Declaration of the ASEAN Concord see Bali Concord II

security of small states 7; approach to reinforce 17–22
“Security Strategy for the East Asia-Pacific Region” report see Nye report
Silk Road Economic Belt 3, 10n5
Silk Road Fund 3
Sinatra inference 102
Singapore 9, 45, 62, 66, 104; ASEAN membership 10n1; ASEAN Summit 41; defense and security
relations with US 3, 28; diplomatic relations with China 31; economic dependence on Malaysia
65; economic liberalization policies 71; export-oriented strategy 70; free trade agreement 35;
Indonesia’s Konfrontasi (Confrontation) policy against 67; Strategic Framework Agreement 35;
Trans-Pacific Partnership 37
Sino-Vietnam War 60
small states: alliance relations with great powers 8, 13; asymmetric relationship with great power 13–
15; autonomy of see autonomy of small states; autonomy–security mix 21–22; bargaining power
with the great power 21; competition over alliance networks 17; international autonomy in world
politics 92–95; military security relations 99; “multidirectional omni-enmeshment” policy 98;
opportunity to change asymmetric relation 15–17; political alignment and diplomatic exchange
99
socialist economy 72
Somali Civil War 30
South China Sea dispute 3–4, 28, 36–37, 91, 105; ASEAN Regional Forum on 44; ASEAN
Statement on the Six-Point Principles on the South China Sea 108; ASEAN–China relations on
105; Code of Conduct of Parties in 37, 44, 106; Declaration on the Conduct of Parties in the
South China Sea 33, 105–106; due to China’s assertive territorial claims 110; internationalization
of 37, 108; on land reclamations 108; maritime territorial claims 37; multilateralization of 37;
Nine-Dash Line 37; Permanent Court of Arbitration verdict on 111; and United Nations
Convention on the Law of the Sea 105–106; US military presence in 37; US “three halts”
proposal for resolution of 109; US–Chinese competition on 46; Vietnam position on 113
Southeast Asia: economic interdependence in 62, 63–64; economic liberalization policies 71;
international political and strategic autonomy of 103–115; intra-trade scenario in 44; models of
the MID onset in 76, 81–82; political regime combinations and MID onsets in 62; relations with
China 3
Southeast Asian peace, formation of 60, 61, 66; implications of liberal peace in 65; liberal capitalist
economic policies for 71
Soviet Union 29; collapse of 2, 30; confrontation with United States 28; friction with China 29;
influence through Vietnam in Southeast Asia 40; insurgencies supported by 40
state monopoly, on exports 72
state-building, process of 27, 60
Strategic Framework Agreement 35
Subic Bay Naval Base, Philippines 30, 109
“symmetric” model of alliance 14

Taiwan Straits crises 29

tariffs and non-tariff barriers 45
territorial acquisition, economic development through 18
Thailand 3, 9, 28–29, 36–38, 45, 65; alliance with US 73; ASEAN membership 10n1, 66; bilateral
exercise with US 35; conflict with Myanmar 66; export-oriented strategy 70; militarized disputes
66; non-NATO ally status 34; Trade and Investment Framework Agreement 35
Tiananmen incident 31
Trade and Investment Framework Agreement 3, 35; between US and ASEAN 37
trade embargo 31, 114
Trans-Pacific Partnership 3, 11n6, 28, 33, 37–38, 111, 114
Trans-Pacific Strategic Economic Partnership Agreement 11n6
Treaty of Amity and Cooperation 3, 11n7, 33, 40, 42, 106, 107; code of conduct 36
Truong, Tan Sang 114

UCDP/PRIO Armed Conflict dataset 65, 83n4

United Nations Conference on Trade and Development 39
United Nations Convention on the Law of the Sea 105–106
United States: anti-terrorism policy following the 9/11 attacks 110; and ASEAN Regional Forum
106–109; Asia-Pacific policy 30, 106; attitude toward Southeast Asia 3; confrontation with
Soviet Union 28; containment policy 29; defense cooperation with Southeast Asian states 37;
Department of Defense 107; economic resurgence after 2008 financial crisis 38; Enterprise for
ASEAN Initiative 35; establishment of diplomatic relations with Vietnam 31; foreign direct
investment in Southeast Asia 39; foreign policy toward Southeast Asia 29–30, 34; International
Military Education Training program 3, 35; Marshall Plan 34; military ties with the Philippines
31; National Security Strategy 35; Quadrennial Defense Review 34; “Rebalancing to Asia” policy
3, 36, 40, 91, 107; rivalry with China see US–China competition; “second front” for combating
terrorism 34; Security Strategy for the East Asia-Pacific Region (Nye report) 107; “three halts”
 proposal for resolution of South China Sea dispute 109; trade with Southeast Asia 38; unfair
treatment of Muslims 35
US–ASEAN Connect 38
US–ASEAN Enhanced Partnership 36
US–ASEAN Expended Economic Engagement 38
US–ASEAN leader summits 3
US–China competition 3–4; after Cold War 30–40; characteristics of 40; during Cold War 28, 29–30;
on distribution of power in Asia-Pacific region 91; effect on foreign behavior of Southeast Asian
states 102; implications of 40–44, 52; influence on ASEAN regional cooperation 27; on issue of
South China Sea 46; negative impact of 92; in power transition 126; for regional power and
influence 28; research design for study of 45–49; role in stimulating regional cooperation 52; in
Southeast Asia 42–43, 47, 50, 51, 125; statistical results and robustness checks of 49; in terms of
economic engagement 42; on trade relations with Southeast Asian states 46
USS Vandegrift 35
US–Southeast Asia economic and diplomatic relations 35

Vientiane Action Programme 43

Vietnam 112–115; arms embargo by US on 113, 115; bilateral trade agreementwith US 114;
Communist Party of Vietnam 113–114; Doi Moi 114; domestic market liberalization 114; foreign
policy toward China 112; Hanoi Plan of Action 41, 43; hedging strategy with China 112; human
rights issues 114; invasion of Cambodia 113; non-alignment, policy of 102; post-Cold War China
policy 112; rapprochement with ASEAN 42; relation with US 113–114; on rise of China 112;
Sino-Vietnam War 60; socialist ideology of 112; on South China Sea dispute 113; Trans-Pacific
Partnership negotiations 114; US withdrawal from 30; Vietnam War 29, 67, 74, 113, 114
Visiting Force Agreement 31, 110

War on Terror 34
Washington consensus 30
Western liberalism, values of 31
World Trade Organization 41, 114
World War II 28–29, 34, 45

Xi, Jinping 3, 10n5, 115

ZET Corporation (China) 111

Zone of Peace, Freedom, and Neutrality Declaration 40, 42