This article first appeared in Forum, The Edge Malaysia Weekly on June 13, 2022 - June 19, 2022

French writer Jean-Baptiste Alphonse Karr said, “The more things change, the more they stay the same”. Such is the case when it comes to the realities and calculus of the global strategic-security architectures.

While a lot has changed in the 2½ years of Covid-19, the underlying factors that fuel an increasingly zero-sum strategic competition remain the same. Before the pandemic, the multi-spectrum competition between the US and China drove the global strategic environment, diminishing inclusive multilateral mechanisms.

Instead of setting aside differences to deal with a pandemic, the major powers continued their rivalry. The pandemic didn’t change a thing, it was merely subsumed into existing dynamics. Aid and loans to alleviate the health, social and economic effects of the crisis were used to leverage influence, while access to vaccines, either through donations or purchase, became a yardstick to see which “side” a country leaned towards.

For a case study on how things can go from bad to worse should rivalry go unchecked, look no further than Europe. Once again, suspicion, hostility and disregard for the long-standing principles of international law and territorial sovereignty erupted into open warfare when Russia invaded Ukraine.

Many countries now must deal with the ripple effects of the conflict on global commodity and food prices. After a disastrous opening to its campaign, Russia is throwing men and machines into its push to annex most of eastern Ukraine. Ukraine, meanwhile, continues to receive support, including heavy weapons, from its allies. Policymakers across the globe are preparing for long-term disruption caused by a grinding and bloody campaign.

We in Southeast Asia and Asia-Pacific should not make the mistake of thinking we are immune to the ebbs and flows of strategic competition. The impact is obvious on existing multilateral frameworks and mechanisms. Much of the peace and trade dividend that the Asia-Pacific has enjoyed since the end of the Cold War has been due to the strong presence and buy in of multilateral forums and approaches to shared challenges.

But the emergence of mini-lateral mechanisms, led by major powers and designed to exclude “rivals” or “competitors”, raises questions about their impact on existing forums. The “culprits” here are the Quadrilateral Security Dialogue (Quad) and Aukus trilateral defence pact. Both are groupings designed to counterbalance Chinese influence in the region.

More recently, the US-led Indo-Pacific Economic Framework (IPEF) generated headlines and swift criticism from China as yet another initiative designed to split the region. Just like the enlarged focus of the Quad, IPEF looks beyond strategic security, making cooperation with third parties more palatable. Its enlarged focus now includes climate action, sustainable infrastructure projects, healthcare and emerging technologies.

But there is concern that revisions to China’s Belt and Road Initiative could take on a more exclusionary approach. Narratives from recent discussions at the Chongyang Institute for Financial Studies on Sino-US trajectories point to the growing view that China should more selectively shape its multilateral initiatives for like-minded partners, excluding “rivals”.

Southeast Asia and Asean should worry about such trends. Most of the existing and consequential multilateral mechanisms are centred around the regional organisation and its member states as key players. These include the Asean Regional Forum, East Asia Summit, Asean Defence Ministers’ Meeting Plus and Asia-Pacific Economic Cooperation (Apec). Their success is the result of the culmination of the effort put in by Asean to create inclusive venues where policymakers and thought leaders of the Asia-Pacific — be they from major, middle and small powers — meet as equals.

But if Asean is perceived to be increasingly disunited and its centrality undermined by the influence of major powers, then it is hardly a surprise that new mechanisms are emerging.

The regional organisation is increasingly unable to present a united front on a range of issues, leading to growing disquiet about its centrality. The long-term impact on the reputation that Asean has so painstakingly built and the security and prosperity of Southeast Asia should not be underestimated.

Policymakers and stakeholders must confront these realities and negotiate the difficult and competing priorities. Asean, after all, is not just an association but is taking steps to grow as a community. The decisions or indecisions of one affect all.

The biggest mistake is to assume that this competition and its effects are limited to the strategic-security and diplomatic spheres. It has and will spill over into the business and supply chains.

The US-China trade war didn’t end with a new president. The Biden administration is only now considering dropping some of the tariffs that its predecessor imposed and that too because of skyrocketing domestic inflation. That trade war has expanded into competition for leadership in core technologies like 5G, artificial intelligence and microchips. This has only enhanced the bifurcation of trade and supply chains between the two major powers. It is also happening at an alarming speed, across multiple spectrums.

The Americans are now pursuing bilateral and multilateral engagements focused on secure strategic supply chains, especially for semiconductors and other high-tech components. Much of these components are owned or produced by the US or its allies and they are now keeping a closer eye on the entire supply chain process. This has not gone unnoticed in Beijing. A recent government circular instructed its agencies and state-owned and state-backed firms to stop using foreign-branded computers and software within two years and replace them with local alternatives.

There are long-term ramifications. For those in the strategic-security sphere, it could lower the costs of a hypothetical conflict, as both powers now might feel there is less to lose if push comes to shove.

As a key cog in the global trade and supply chains, especially those connected to the US, China and Taiwan, Malaysia won’t be immune to these challenges. While opportunities are present — especially as companies seek to both bypass existing tariffs and diversify their supply chains — the balance is a delicate one.

Last year, almost 37% of Malaysia’s total exports were related to the electrical and electronics industry with trade directly related to both the US and China making up a significant portion. Malaysia is also a significant player in the semiconductor industry with up to 13% of its global trade and test market share passing through the country.

We are the focus, albeit quietly, of US engagement in Southeast Asia. It is also no surprise that China is keeping a keen eye on developments, including memorandums of understanding between the US and Malaysia on supply chains and our participation in IPEF. Participation in these initiatives is not a bad thing. It provides Malaysia with options and leverage as it continues to hedge between the major powers and gives us the first-mover advantage.

Maritime-related trade also accounts for 98% of Malaysia’s overall trade. This means that any disruption to maritime routes, especially in the South China Sea and East China Sea, and across the Taiwan Strait, will impact us directly. These maritime regions have ongoing disputes that involve both China and the US in some capacity.

This region is smack bang in the midst of strategic and major power competition. There is an edge to bilateral and multilateral issues now, which could lead to a fracturing of the ties that sustained us through the last two years of global disruption. It is, therefore, imperative that governments and stakeholders continue to cooperate to mitigate its more damaging aspects.

Thomas Daniel is a senior fellow with the Institute of Strategic and International Studies (ISIS) Malaysia. ISIS Malaysia’s signature regional conference, the Asia-Pacific Roundtable, will take place from July 5 to 7, 2022. More details, including free registration, are available at: https://www.isis.org.my/apr35/

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