Powder Keg in the Pacific

China is rising -- fast and furious. So why can't the rest of Asia get its act together?

Over the past decade, East Asian countries have surprised observers with their eagerness to work together. After all, this is a region where ancient (and not-so-ancient) hatreds run deep. But observers shouldn't get their hopes up: Modern rivalries and historical baggage still stand in the way of transforming these arrangements into genuine regional cooperation.

On paper, progress appears to be occurring rapidly. In 2010, China, Australia, and New Zealand implemented free trade arrangements with the Association of South East Asian Nations (ASEAN), providing preferential access to each others' markets. China, Japan and South Korea are negotiating a free trade agreement. Even erstwhile enemies China and Taiwan entered into an economic agreement that reduces trade barriers such as tariffs and quotas on both sides: trade between Taiwan and China reached $128 billion in 2011, a 13 percent increase from the previous year, when the agreement went into effect.

But East Asia's patchwork of economic alliances is weighed down by history and hobbled by ineffective security arrangements. The region's three biggest flashpoints stretch back decades, if not centuries, and are like volcanoes -- mostly dormant but occasionally deadly. Besides the French, U.S., and Chinese wars with Vietnam, the last full-on slugfest was the Korean War, which ended almost six decades ago. But its repercussions linger until the present day: North Korea and the United States never signed a peace treaty and technically remain at war. Similarly, Imperial Japan's invasion of China, Korea, Taiwan, and practically all of Southeast Asia was the greatest cause of upheaval in 20th century Asia. World War II also remains far more politically explosive in Asia than it does in the United States -- as the July torpedoing of a South Korean-Japan military pact because of lingering anti-Japanese sentiment shows.

If Japan is weighed down by its historical baggage, so is China. After Chinese guerrillas kicked out the Japanese in 1945, Mao Zedong and his Communists drove Chiang Kai-shek and the Nationalists to Taiwan in 1949, an island China still claims (and at which it still points an estimated 1,000 missiles). In July, China celebrated the creation of Sansha City, a flyspeck of 3,500 people that China claims administers about 770,000 square miles of the South China Sea. That claim grates on the five other countries (plus Taiwan) that consider parts of the sea as their territory. Philippines President Benigno Aquino seemingly spoke for everyone in the region when he said in July, "If someone enters your yard and told you he owns it, will you allow that?"

China, Japan, and Taiwan also bitterly contest the uninhabited islands known as Diaouyu in China and Taiwan, and Senkaku in Japan, which lie near Taiwan, China, and the Japanese island of Okinawa. The issue strikes a nationalist chord among the rival nations: Tokyo's governor Shintaro Ishihara mischievously suggested in June that a panda cub due to be born in Tokyo zoo should be named Sen-Sen or Kaku-Kaku.

You might think that East Asian countries, which are increasingly wealthy and stable, would seek regional allies to help protect their own interests and defend their sovereignty. But this is a region of shifting diplomatic sands, and mistrust continues to stymie apparently rational arrangements. Incredibly, there is only one regional alliance that requires a military response to an attack -- it's between China and North Korea, an agreement "sealed in blood," as China's Defense Minister Liang Guanglie described it in 2009.

Of course, the United States has similar commitments to a number of countries in the region. It has formal defense arrangements with Japan, South Korea, the Philippines, Thailand, and Australia, and close security partnerships (a step down from alliances) with Taiwan, Singapore, and Indonesia. But these agreements have not been tested since the Korean War, when U.S. soldiers and marines fought back a fierce assault by Chinese troops across the Yalu River; the risk of going to war with China might make the United States think twice about honoring its security arrangements.

The only other applicable military treaty in the region is the Five-Power Defense Arrangement, a pact between Australia, Britain, New Zealand, Malaysia, and Singapore signed in 1971. The five states agreed to consult each other in the event of external aggression against peninsular Malaysia, now a mere historical footnote. That's not to say Asian countries aren't focusing on defense: Military budgets are growing rapidly. China's defense budget will nearly double in 3 years, Southeast Asian countries increased defense spending by an average of 13.5 percent in 2011, and Asia's overall military spending will likely outstrip Europe's for the first time this year. It's just that Asian countries aren't growing closer together.

Consider ASEAN, East Asia's premier regional political organization, now strained by China's rise. Established in 1967 to provide solidarity in the face of what seemed to be an inexorable communist tide, it was not explicitly a defense pact: Its members agreed only not to fight each other (they nevertheless break that promise, most recently between 2008 and 2011, when Cambodian and Thai troops skirmished over the ownership of a temple on their borders). ASEAN now embraces Vietnam and Laos, two formally communist states. During its last annual meeting in July, ASEAN for the first time in its history failed to release a basic diplomatic communiqué, likely because of China's meddling and its desire to protect its claims in the South China Sea.

China's new centrality as the biggest trading partner of most countries in the region means that while its neighbors are nervous about its growing military muscle and nationalist rhetoric, they are reluctant to place their economies at risk by confronting it directly. But China also feels vulnerable. Zhu Feng, deputy director of the Center for International and Strategic Studies at Beijing University, described China to me in 2009 as "a lonely rising power" -- an apt description for a country whose only alliance among its 14 neighbors is with North Korea, from which it appears increasingly estranged.

That doesn't mean there aren't bright spots. Indonesia, the big new democracy on the block, has been steadily shedding its antipathy to China -- for decades until 2000 it had even banned the importation of publications written in Chinese characters. Burma is liberalizing. Despite China's continuing claims on Taiwan, the two have improved relations since President Ma Ying-jeou was elected in 2008. But the lack of trust means that a regional skirmish could wipe the economic gains away.



Kim Jong Un Is No Reformer

North Korea's new leader studied in Switzerland and has a young, attractive wife. That doesn't mean he's into the whole hope and change thing.

For those searching for signs of reform in North Korea, Kim Jong Un has been a godsend. Women on North Korean state TV wore high heels and miniskirts while he sat in the audience. Disney characters, the cultural export of a country North Korea has long demonized, danced onstage. The not-yet-30-year-old Kim, since taking over from father in December 2011, frolicked with school children and was photographed on a rollercoaster with a British diplomat, signaling a level of international openness never seen under the stern Kim Jong Il. He found a pretty wife, Ri Sol Ju, whom the New York Times equated with Britain's Kate Middleton. In a sign of changing times, the new first lady has even been photographed with her husband -- significant because Kim Jong Il was never seen with his spouse -- sporting a Christian Dior purse worth more than the annual wage of a North Korean worker.

Such inane details, combined with the young Kim's years of Swiss schooling where he wolfed down pizza and idolized NBA stars, have caused optimists to declare once again that North Korea is ready to open up to the outside world. This spring, I participated in unofficial meetings in New York where North Korean officials met with executives from Coca-Cola and Kentucky Fried Chicken to discuss opening branches in North Korea.

Rumors of a new economic policy being hatched in Pyongyang only fuel speculation that junior Kim is serious about change. Similar predictions were made in 1994 when Kim Jong Il, then a sprightly 52, took over after his 82-year-old father Kim Il Sung died. Needless to say, the reforms never happened. But apparently, believers in the irresistibility of Disney, Dior, and Coke have short memories and tall hopes of a China-type economic modernization coming to North Korea.

Let me be blunt: The North Korean regime will not change because Little Kim studied in Switzerland, likes Mickey Mouse, and has a hot wife. If anything, another crisis could be looming: The death of Kim Jong Il and the politics of an unstable leadership transition, a new "get-tough" attitude in Seoul, and U.S. and South Korean electoral cycles constitute a unique confluence of escalation that has not been seen on the peninsula since the 1990s. This could spell another nuclear crisis with North Korea, or even worse, military hostilities that could threaten the peace and prosperity of the region.

The Obama administration stopped trying to engage Pyongyang after its April 2012 missile launch, which North Korea announced just 16 days after a food-for-nuclear-and-missile-freeze deal with the United States. Stung by the launch, the Obama administration immediately called off the deal and gave up on its last chance to get IAEA inspectors into North Korea's nuclear facilities at Yongbyon. The launch, which North Korea claimed was for a weather satellite but tested ballistic missile technology banned by the U.N. Security Council, exploded an embarrassing 81 seconds after liftoff.

The spectacular failure of Kim's first major public act almost ensures that another provocation is in the offing. He lacks the revolutionary credentials his grandfather earned as a guerrilla fighter against the Japanese. Unlike his father, he does not have a decade of training and preparation for the job. Without serving a day of military service, in September 2010 the junior Kim was made a four-star general and foisted to the top of the power structure at the age of 26 or 27. Even for North Koreans, who expect their leaders to start young so that they can rule for decades, this is a stretch. So Kim must prove himself -- be it through another missile launch, a nuclear test, or a military provocation against Seoul.

But South Koreans are fed up. Since North Korea torpedoed a South Korean navy ship in March 2010 and shelled an island a few months later in attacks that killed sailors and civilians, the government and public no longer preach patience and stability so as not to rattle the South Korean stock market. South Korean military leaders have re-written their military rules of engagement. They are now prepared to retaliate for the next military act, possibly even going after command structures in North Korea, which could ignite a full-scale war on the peninsula.

The South Korean conservative political contender for the presidential election in December, moreover, is in no mood to look weak on North Korea.  Even if the long-shot liberal candidates who preach engagement with the North were to win, Pyongyang has a history of provoking a newly elected leader in the South to show who is the alpha dog on the peninsula, in which case, public pressure for a strong response would be difficult to ignore.

Based on my research of U.S.-North Korea negotiations since 1984, within an average of five months after a provocation Washington is usually back at the bargaining table, often because it wants to de-escalate a crisis. The Obama administration, facing a tough election, is not interested in offering exit ramps to North Korea, for fearing of being denounced as weak by Republicans.

Optimists often cite China as the answer to avoiding another crisis.  The mid-August meetings between the Chinese and Kim's uncle, Jang Song-taek, may be a prelude to more economic deals and even a visit by the new leader to Beijing. But China cannot restrain Pyongyang from belligerence; and it cannot reform North Korea's family-run regime, no matter how many bureaucrats it offers to train. It can only bribe them to return temporarily to a negotiating table that is now empty of other willing partners.

The only thing missing right now is a spark. Perhaps North Korea's new leader is busy amusing himself with Disney and his new lovely wife instead of dealing with problems like the flooding that has ravaged the countryside. NGOs report that the food shortage situation is worsening. And the rogue nuclear and missile programs continue to expand. Infighting within the regime is likely intensifying, manifested in the surprise sacking in July of the country's top military general, Ri Yong-ho. Some interpret Ri's departure as evidence of the young reform-minded Kim trying to usurp power from the hard-line military.

It appears, however, that Kim might be trying to redirect the money the military earns through lucrative business activities toward his own patronage networks. This means there are some very unhappy generals in North Korea today. This could be a gutsy move by Kim; it could also be a stupid one if it prompts challenges from the military.

Even if Kim successfully consolidates power, he needs a new ideology in order to demand the blind obedience that characterized his father and grandfather's rule. He appears to be downgrading, not celebrating the military, so he cannot copy his father's "military-first" ideology. (It probably doesn't help that his father's ideology bankrupted the country in every respect except for making nuclear weapons.)

Kim appears to be associating himself with a hard-core version of his grandfather's juche or "self-reliance" ideology, honed in the 1950s and 1960s, an era of relative North Korean development and affluence. The young leader has made himself the physical reincarnation of his grandfather -- down to the Mao suit, protruding stomach, high-cropped hairdo, and hearty laugh. But this was also a time of deep ideological indoctrination, mass mobilization, and rejection of foreign contaminating influences.

It's hard to square Kim's great leap backwards with a society that is slowly and fitfully opening up. Since 1994, when his father came to power, thousands of North Koreans have embraced once-heretical capitalist concepts. Official and unofficial markets grew out of terrible food shortages of the 1990s, as people traded to survive. For a regime like North Korea's that tries to tightly control everything, that is incredibly dangerous. A study published in 2011 by Marcus Noland of the Peterson Institute for International Economics found that 60 percent of recent North Korean defectors admitted to getting their food outside of the government's ration system.

Other elements of modernity are starting to seep in. There are now more than a million cell-phone subscribers in North Korea, and thousands surf the web, though the content remains highly circumscribed. Markets, cell phones, and the Internet are a slippery slope. Once they enter a society, they become impossible to uproot.

North Korea is at a dead end. New leadership exercising a more rigid ideology seeks greater control over an increasingly independently-minded society and disgruntled elements of the military. This is not sustainable. With true reform, North Korea would open itself up to foreign influences and create an immediate spiral of expectations in its society that it could not control. Which is exactly why, with apologies to Mickey Mouse and Christian Dior, it's just not going to happen.