Q&A at "Looking East - Trend Lines in the Asia Pacific"

Daniel R. Russel
Assistant Secretary, Bureau of East Asian and Pacific Affairs
Hertie School of Governance
Berlin, Germany
March 22, 2016

Moderator: I think that all of us must say it was a very, very exciting analysis and outlook. And I think both of us, we’re looking forward to your questions. So we’re waiting for the first question.

Audience: Thank you very much for your very insightful lecture. I have one question that relates to the last point that you were making about the rules-based system in East Asia.

How would you see the argument that is being raised of, especially in the case of China, that this rules-based system is to a certain degree not applying or cohering with their cultural experiences? That in fact, like, derive from Confucianism. A rules-based system with codified rules that apply equally to all are just not natural in that sense. And how much mutual understanding do you see from, like, the U.S. perspective and also from the Chinese perspective there? Thanks.

A/S Russel: None of us can accept the premise that there is a cultural carve-out that exempts us, individuals or societies, from universal rules, from international law. That’s not an option.

What motivates me to make the distinction and to keep qualifying my reference to values and rights by describing them as universal is precisely to push back on this canard that well, they’re Western values but they’re not applicable in the Asian environment. They don’t fit with Asian culture.

I’ve worked most of my career in Asia. I think I’ve heard every argument that can be made along those lines. And now it’s rare to find a serious Asian thinker who holds to that premise because people are people and people want the same thing. They want opportunity, they want fairness, they want justice, they want safety, and that is what makes these values universal.

We have developed, whether it is - and applied, in Muslim countries, in Christian countries, in Asia, in Africa, principles of strong institutions, principles of equity, and principles that reflect democratic values that are in fact universal. They do not impinge in any way on Confucianism.

Ask the people in Taiwan. They don’t infringe in any way on Asian DNA. Ask the people of Japan, ask the people of Korea who fought hard for a democratic system. Ask the people of Myanmar who waged a multi-decade struggle and were successful in finding a peaceful path in a tense and multi-ethnic country whereby the voice of the voters could clearly be heard.

We simply can’t accept a bankrupt notion of a cultural exemption from the rights that are intrinsic to all human beings.

Audience: Thank you very much for your lecture as well. [Inaudible], Hertie student and currently and professionally in the Foreign Ministry for Economic Affairs and Energy, East Asia Department.

A/S Russel: No fair.

Audience: So the TPP is actually what I’m interested about because I hear friends saying that Congress is increasingly not so happy about TPP. This election race has been about trade, lost jobs to China especially, and to other places in the region because of trade deals. And you said you’re going to push for the completion of it. How realistic is it to see a ratification of TPP before the end of the Obama administration?

And one thing, how does the U.S. administration feel about the UK and Germany as well joining the AIIB?

A/S Russel: Thank you. Two different questions.

I am optimistic. I am confident that the TPP will be ratified I expect by the end of the Obama administration because it is, number one, so directly in the best interests of the U.S.

Number two, because after a long period where the details of the trade agreement itself weren’t widely known, in part because it was still under negotiation, now the full text is available. It has been analyzed by every think tank around the region and in the United States. It’s been analyzed by the Chamber of Commerce of the United States, by a variety of business groups.

And they’ve all come to the same conclusion, that this agreement, number one, will benefit the U.S. economy; number two, that it will significantly enhance the standards whereby member countries and frankly neighboring countries conduct trade. Number three, that it has unprecedented provisions for protecting the environment, for protecting labor rights and workers, for protecting Internet freedoms and open digital economies and more.

Businesses in the U.S. with very small exceptions believe that TPP will be good for them. And ultimately Congress is responsive to what constituents and business interests feel is best for them and best for the country. And on that basis I think the agreement will prevail.

There’s also a powerful strategic argument, namely that the U.S. has invested a lot of credibility into the TPP. There has never been a case in history where the Congress has failed ultimately to ratify an agreement that has been negotiated by the executive branch.

The Congress passed the Trade Promotion Authority, fast track authority, in full knowledge that the administration was using it to close TPP. And although there’s a certain amount of hype about it, I think it’s well understood that we would be creating a real vacuum in East Asia and damaging our credibility if we failed to follow through on that.

With respect to the AIIB, I would say that ultimately the AIIB is a good news story made up of a lot of bad news, and the bad news was the initial conception of the bank which looked a lot as if it were designed to be a tool for handling excess Chinese manufacturing capacity and arguably a tool for Chinese foreign policy interests.

But due to a concerted effort by a number of countries that either joined or declined to join, the Chinese leadership recognized that in fact for AIIB to succeed, it needed to come into compliance with the basic terms and standards of international development banks.

The AIIB that is soon to come on line, now it hasn’t had any projects yet and the proof is in the pudding. But the AIIB that one could reasonably expect to see over the next two years, say, bears very little resemblance to the original rough conception of AIIB as envisaged initially in Beijing.

So while it was not a good news story either in terms of what the Chinese initially set out to do or in the narrative that the United States and Japan were just so dead set against it, we tried to block, we tried to stop other countries from joining, I defy any one of you to find one statement on the record by a U.S. official opposing AIIB or opposing other countries joining.

That is not what President Obama said. It’s not what Secretary of the Treasury Jack Lew said. It’s not what Secretary of State John Kerry said. This is a story line that we were not successful in repudiating at the time. All that is the bad news.

The good news is that the AIIB is rapidly evolving in the direction of a normal international development bank.

Audience: My name is Tom O’Donnell. I work on energy and international affairs, and I also teach now here at Freie University.

I appreciated your going through everything the occupation of these islands is not. I mean we know there’s a standard explanation of trying to control the near abroad, acting as a, wanting to as a great power, as sort of the first step, and sea lanes. I don’t believe it’s got very much to do with energy in that way.

But I was going to ask you, it’s sort of like the counterfactual. Why that, I mean once you see it and you hear that explanation it makes sense, but on the other hand if somebody was gone for 20 years and came back, they shouldn’t be surprised to see China has been growing, has great economic influence, has even a lot of Chinese nationals traditionally in all these countries. And you come back and you see that it’s very deeply involved and they decided to work together to push out the traditional American naval hegemony jointly.

So why not, something must have happened because when this happens, it really turns a number of countries and other possibilities, turns them around for China. So what would it be that would make them go this direction and not that direction?

A/S Russel: Well, I do a lot of things in my job, but speaking on behalf of China isn’t one of them. [Laughter].

Look, it is not a good thing from the U.S. perspective for there to be this level of alienation and hostility between China and the vast majority of its neighbors.

We’re not recruiting Asian partners. They are being driven into our arms. They’re worried. They’re afraid. We understand that.

That said, each one of us wants to have, and Germany is in this boat as much as anyone, each one of us wants to have good relations with China. That’s important. And we are each working at it in our own way.

Countries that are very close to China geographically and that have little leverage with China have a harder go of it. That’s one of the motivators I think behind the unity of ASEAN. It is certainly one of the motivators behind the strong push by a number of coastal countries to expand their security relationship and cooperation with the United States.

But it’s not the configuration of the region that we would like to see. It’s not what we consider to be optimal. And we continue to work hard with China to try to push for a better model, a better formula.

Look, the Chinese are fond of saying that the Pacific is big enough for both of us. What that does not mean is that they can draw a line in the center of the Pacific and say you stay on the east and we’ll have control over everything west of the Nine-Dash Line. That’s unacceptable.

The organizing principle, as I said, has to be international law and global norms. There is no right that the United States exercises in Asia or in the South China Sea that we do not also accord to China. That’s what rules mean. They apply equally to everyone.

Yes, there are naval ships, U.S. naval ships transiting the South China Sea. But there are Chinese naval ships also and that’s fine. That’s the way it should be.

The fact that the South China Sea is closer to China than it is to the United States isn’t really the issue. All the islands in the Spratlys are a lot closer to the Philippines and Malaysia than they are to China.

And when a Chinese group of war ships transited the Aleutian Islands and the Bering Strait and entered U.S. territorial water within 12 nautical miles of Alaska at a time when our President was visiting Anchorage, just saying, the U.S. Navy issued a statement saying we respect the right of China, the Chinese Navy to exercise the lawful transit of innocent passage through U.S. territory.

I’ve never heard that same statement coming out of the Chinese PLA [People’s Liberation Army] or Foreign Ministry.

But I don’t mean to be flip and I’m not in the business of vilifying the Chinese. I’m in the business of working with the Chinese. And what we are seeking is cooperation and finding a way forward that’s consistent both with the interests of the claimants, the interests of the coastal states, but also consistent with international law and I think that should be doable.

Audience: I have a question regarding the New Silk Road. What is your view on that? And do you think it’s possible for China to invest so much money and still follow its policy of non-interference? Thank you.

A/S Russel: The Chinese have been willing to make an occasional exception to the policy of non-interference in internal affairs of other countries from time to time, but they’re not alone in that.

The New Silk Road or the New Maritime Silk Road or more recently and more conventionally, “One Belt, One Road,” is an attempt to name a very poorly defined or an undefined set of policies and programs. And in all honesty, I’ve found that my Chinese counterparts themselves have difficulty explaining exactly what One Belt, One Road is and isn’t.

Certainly one piece of this Chinese initiative or set of initiatives and programs is to deal with the structural problem of over-capacity. And there is a limit to how many white elephant projects the Chinese government can build at home, particularly when this is funded by local and provincial debt. But they have a tremendous over-capacity in steel, in concrete, in labor, in other materials. And they also have a great deal of accumulated foreign currency reserves so they’re looking to channel that in a way that makes economic sense. Fine.

Moreover, China has, as a rapidly growing industrial power, a huge hunger for raw materials, a huge hunger for energy. And like you or me, if we were in charge of our own countries, a huge and a legitimate security concern that those lines of supply not be interfered with, not be cut off.

So thinking of it in that way, it makes good strategic sense for China to do what it can to ensure that the pathways for oil, for raw materials, from say the Middle East or elsewhere into China be as well-developed and well-protected as possible.

Conversely as a major manufacturing power, China needs to get its products to market and wants to do so in a way that’s cheaper and faster than any competitor.

The Chinese society is aging very, very rapidly. The statistics about what China will look like by 2049, its centennial goal year, are pretty daunting. You’ll have something on the order of 2.5 working people looking after every retired elderly Chinese person, maybe 60 percent of the population elderly by that point.

They’ve got to make their money now. And they have to look at emerging rivals like India, rivals like certainly Thailand and Vietnam who have lower wages and are very attractive to investors.

They have to look at the uncanny ability of the United States and Japan to spawn innovative, new technologies and entire businesses that never existed before. Many of the biggest companies on planet Earth didn’t exist 10 years ago or 15 years ago, and many of them don’t manufacture anything. Can the Chinese compete with that?

So trying to establish the outbound lanes for bringing their goods to market here in Europe, that also makes a certain amount of sense.

When it starts bleeding over into a grand strategy of hubs and spokes emanating from Beijing, criss-crossing East Asia, South Asia, Central Asia, someone like me starts to wonder, “How realistic is that, how practical is that?”

And when you see a record of multi-billion dollar deals that never go anywhere or that get abandoned halfway through, or that leave behind a really frightening legacy of environmental damage or of absolutely crushing debt for the recipient country, you also have to wonder how sustainable that model will be.

Audience: [Inaudible] from the [inaudible] for China Studies.

How come that you didn’t talk about cooperation with China when it comes to anti-terrorism? Because it was only last week that in Indonesia two Uighurs have been killed, two terrorists have been killed and China has a major problem when it comes to Islamic terrorism. So why don’t you admit that China has this problem, and why don’t you try to cooperate with China on it? Thank you.

A/S Russel: We fully recognize that China has a huge problem with its oppressed Muslim minority population in Xinjiang. We fully recognize that there is a growing number of Uighurs who are fighting in Syria, although the absolute number is still quite small. And we do seriously try to talk to and cooperate with China on countering terrorism, not only on a local basis but on a regional and a global basis.

This is an area where Chinese domestic politics and doctrine have made it extremely difficult for them to hear us and to learn from the experience of the United States, of Europe, of Southeast Asia, and of the countries in the Maghreb and elsewhere, because the tendency that I’ve experienced tends to be for the Chinese to look at this through the prism of their national strategy vis-à-vis the Muslim minority in Xinjiang.

But the Director of the FBI has just visited China. Our Secretary of Homeland Security has visited. Our counterterrorism officials visit. We’ve hosted not long ago a visit by Meng Jianzhu, the security czar of China. There is a very serious effort underway to make real cooperation with China in combating global terrorism, when possible, both as a matter of law enforcement, and as a matter of practical cooperation in Syria and Iraq.

I’ll tell you honestly that it’s not easy. It has not been easy. But there’s no lack of trying on the part of the United States.

Audience: Thank you very much. I’m a master’s student here at Hertie.

You mentioned two or three times the Myanmar case. I’ve been living there so I want to go a bit farther on that because I agree with that. I think that it has been a huge U.S. foreign policy success, the political transition from now. But I’m interested on which are going to be the next priorities for the U.S. department in Myanmar, because I don’t think it’s going to be as easy anymore. I mean we have, you mentioned the new first civilian president in Myanmar, but if something happens to him the first vice president is a military member which is actually sanctioned by the U.S. in the SDN list.

So which are going to be the priorities and the red lines in the human rights, Rohingya issue, for example, or the reformance of the constitution? So where are you going to? Thanks.

A/S Russel: Thank you.

The way that I think about it is this: That after 50-plus years of military dictatorship, Myanmar has held a bonafide election and a civilian government has been put in power.

Now, it’s not an unfettered civilian government. The military retains 25 percent of the seats in the parliament. They retain a number of key positions and ministries including the Ministry of Interior, Ministry of Defense. And there’s a long process of ginger negotiations and cohabitation ahead.

But the person who has masterminded the transformation from a military dictatorship to democracy, Aung San Suu Kyi, has proven herself to be immensely capable and extraordinarily agile and adaptable in meeting a new series of challenges. She’s gone from being a political prisoner, to a democracy icon, to a candidate for Parliament, to the leader of a party, to the coordinator of a massive electoral campaign, to the successful leader of a nation, of a government.

Now she’s not technically the president, but nobody who knows Myanmar and knows her is under any illusions that the people voted for her. She knows that, the military knows that, and she has demonstrated already that she has the requisite skills to find ways forward in the Burmese context with the military and with other stakeholders.

So our priority is helping to ensure that the significant progress made is protected and that the reforms and the progress along several tracks: democratization, the peace negotiations with the ethnics, the reduction of violence against the Rohingya in Rakhine State, and the integration of the communities, the opportunities extended to both Arakan, the Rakhine people and the Rohingya there, efforts to deal with the irregular migration problem, the economy, agriculture, water security, the problems of narcotics, of the criminal exploitation of natural resources, jewels and gems and lumber, that these problems along with the more basic effort to build up derelict institutions -- the courts, the government, the universities.

The United States and the rest of the international community provide the support that the democratically elected government of Myanmar now needs.

These solutions aren’t going to come overnight. We have to be temperate in our demands and our expectations. Aung San Suu Kyi and the NLD are under no illusions about how important we and the world think it is to address the situation in Rakhine state and the plight of the Rohingyas.

But this is not a short-term enterprise, and she and the new leaders of Myanmar are going to have to figure out ways to tackle this daunting array of challenges. Our responsibility and our intent is to help them absolutely across the board.

Audience: Good evening, Mr. Secretary. A short question.

How do you see the Chinese role regarding North Korea? A they partner or obstacle?

A/S Russel: Yes. [Laughter]. Short answer.

The U.S. and China have very, very significant common interests with respect to North Korea. First and foremost a determination that North Korea should not be allowed to possess and develop nuclear weapons or ballistic missiles.

We also are both utterly convinced that the only peaceful way to achieve that objective is for the North Koreans to enter into a credible negotiating process built around the nuclear problem.

We’re both confronted with the dilemma of a categorical stubborn insistence by the North Koreans that they will never denuclearize, that the world has to accept them as a legitimate nuclear power, and while they might be willing to talk about global disarmament some day in the context of America withdrawing troops from South Korea, they will never, never, never, never, never denuclearize. That is completely unacceptable.

Where our interests start to diverge is on the tactical questions of how much risk and how much pressure is acceptable. The Chinese, not surprisingly, as next-door neighbors have a morbid fear of things going haywire.

Collapsing North Korea is not our strategy. If it were, our actions would look a lot different than what they are today.

But the prospect of a peacefully unified Korean Peninsula that looks a lot like South Korea is pretty appealing to us and I think that in their heart of hearts, certainly judging by the good relations between China and South Korea, most Chinese would probably agree even though they wouldn’t say so out loud.

The obstacle is not China. The obstacle is North Korea. So ultimately the continued cooperation of the entire international community and particularly of China, given that 80 percent of North Korea’s economic activity is with China; North Korea is almost entirely dependent on China for food, fuel, and access to the international banking system and transportation, means that China has what we in the West call leverage.

If it will find ways to use that leverage to change Kim

Jong-un’s mind and convince him that he has no viable alternative but to actually negotiate a halt and a roll back and eventually elimination of his nuclear program, then there can be a peaceful outcome on the Korean Peninsula.

Audience: My question was the same.

Audience: Christopher. I’m also a master’s student here.

I want to go back to the South China Sea and because we see there is a real need for de-escalation there. I’ve heard it said by a German expert at a talk that I attended where the world can be lucky that there are not that many drunk sailors today. But I wondered, you said with the approaching verdict on the case by the Philippines, there might be a possibility for more constructive engagement.

How specifically do you see this going about? Because if we look at the situation on the ground, one indicator, for example, is that China is now going through a period of transition with its economy, it could use a little bit of nationalism. So for China, this whole idea is very much about identity. And you can’t divide identity. So how do you see ways forward to bridging that gap of like arriving at a modus operandi that will lead to incremental steps to diffuse the situation?

A/S Russel: Thanks.

Let me preface my remarks by saying that there is no alcohol aboard any U.S. Navy ship anywhere in the world.

The enemy of peaceful diplomatic resolution is ambiguity, and the Chinese strategy to date has been deliberate ambiguity about what the character and nature of their claims are. That’s why they have consistently refused to clarify questions like what is the Nine-Dash Line? What does that signify?

To take the line that one’s claims are indisputable, which doesn’t really open any doors for compromise or negotiation, and then to decline to define what those claims are, leaves no room for de-escalation or for diplomacy, especially when it’s accompanied by behavior that is alienating not only other claimants but now, if you read the paper, you’ll see Indonesia and others as well.

We think that there is a way forward, and I’ll, it’s not because China is a Leninist system where the party controls the media and can instruct the censors, the propaganda ministry, and the people what to think. That’s not the basis of my argument.

Because nothing in the tribunal decision is going to prejudice China’s ability to make a legal argument, an argument consistent with international law claiming sovereignty over the land features in the Spratlys or the Paracels, doesn’t mean they’re right, it doesn’t mean anybody else agrees, but they can certainly make those claims and their claims presumably are as good as anybody else’s.

Because they have the space to create those claims, it is not an unacceptably humiliating climb-down for the Chinese to go from saying we have sovereignty over the South China Sea to saying we claim sovereignty over all of the islands in the South China Sea. And the waters they’re entitled to. There’s nothing wrong with the Chinese saying that.

So I think, using that as a starting point, there are cases galore in modern Chinese history where they have set aside intractable problems. I mean, they were at the Japanese’ throat three years ago over the Senkakus, the East China, the Diaoyu Islands, and have calmed that down to a low simmer not by accident.

They’re capable of doing the same in the South China Sea if they choose to and I think that you’re onto an important point in terms of the domestic dynamics and nationalism. Others write about and speculate the interplay between the party and the PLA. There could be a million factors involved, but what we’re interested in doing is finding a way forward that is reasonably face-saving -- nobody’s looking to embarrass or humiliate China -- that will concentrate on the kind of collaborative steps that they have flirted within the past.

I mean there’s been this ten-year dance of the seven veils over a Code of Conduct with the ASEANs. There’s a lot that can be agreed to if they concentrate on the areas, the disputed maritime space. The waters that everybody agrees are the subject of multiple claims.

If all the claimants can agree, then there’s a lot that can be done and the United States has made clear, not only to the other claimants but to China, that we’re willing to use our good offices to try to foster that and try to facilitate that.

We’ve made equally clear that the U.S. military will sail and fly and operate anywhere and everywhere that is permitted under international law and that we will not brook the creation of an illegal exclusionary zone. We won’t allow any country, not just China, to wall off part of international space arbitrarily and say hey, this is closed, this is ours. Particularly when their neighbors vehemently disagree with that.

We operate globally to challenge illegal claims and we will continue to do so. And there’s - it’s not a matter of sobriety. It’s much more basic than that. China has no interest in a conflict with the United States. The United States has no interest in conflict with China. It’s entirely avoidable and I’m convinced that it’s not even likely.

What is harder is to get all the parties firmly onto a peaceful, diplomatic track but that’s where we’re focused, and that’s what diplomats do for a living.

Moderator: I propose that now we have our last question, although I must confess I could listen to you much more, but I feel you won’t be content with me. So who has the last question?

Audience: My name is Laura /Moen/, and I’m from Embassy of Thailand. And thank you so much for your comprehensive lecture on Asia and also on ASEAN.

As you may well aware, we expect to have an election next year and my question is, during the past two years as this government took over the control of the administration, they have done a lot of reforms. And have you, I mean from your point of view, if you’ve seen any positive signs or any positive things coming from these reforms that the government has been implemented, including the tackling of corruption.

And second is that after this election in 2017, as Thailand is one of the longest friends of the U.S. in Asia, what are your priorities in our relationship? Thank you.

A/S Russel: Well, as you said, Thailand is one of America’s oldest friends. We’re allies. We’re partners. And it’s painful to us and to other friends of Thailand to see your government and your political institutions faced with so many challenges.

What we care the most about is keeping faith with the people and the nation of Thailand and we hope that the democratic institutions can be strengthened and that the people themselves have an opportunity to choose their own leaders through a credible democratic process. There’s no sell-by date, there’s no magic time line, but as you pointed out, it’s been two years and there’s really nothing to show yet in terms of movement towards a civilian-led government.

I’m not one who says the problem is that it’s taking too long, though. What worries me the most is that the country is not being unified, that there are remaining divisions and polarization within Thailand that raise the question of whether in the future, even after democracy is restored, the country can be fully united behind a single government, single leader, or whether it will be even more divided, whether it’s red and yellow or north and south.

What we want is a Thailand that’s whole, that’s prospering, that’s happy and that’s democratic.

So, in the meantime, we work with Thailand as a partner and deal with Thailand as a friend. Notwithstanding our unhappiness and abhorrence of military coups, notwithstanding our grave reservations about the practice of using military courts to try civilians or utilizing the lèse majesté laws in a way that is unprecedented, notwithstanding other problems, we value the ability to talk to Thailand’s leaders. I’ve met with Prime Minister Prayut when I was in Bangkok a few months ago. I saw him again when he came to see President Obama long with the other leaders at the Sunnylands summit.

We cooperate with Thailand and with the government on a wide range of issues. You mentioned one, but we work together on health, on law enforcement, on combating trafficking in persons, on pushing back and dealing with illegal and unregulated fishing, with the irregular migration problem, with climate change, with counter-narcotics. It’s a very very long list.

But at the end of the day, unless there is a process, it doesn’t matter what we think. What matters is what the people of Thailand think.

So unless and until there is a process that has credibility with Thailand’s own citizens and that enfranchises, not alienates or vilifies, big segments of the population, we’re going to keep worrying that the stability and the well-being of the nation is being put at risk.

Moderator: Thank you so much.

Well, even all good things must come to an end, and that’s why I must thank you once again for your talk and also for the many answers you gave. But also thank you quite a lot for the audience. You have many questions. We didn’t have enough time to get them all answered, but we can continue some discussions outside at the reception.

But as for you, I must say I do understand and I learned very much and enjoyed it, that you really are a top, top expert in all those Asia-Pacific affairs. Thank you so much for being here.