Between two stools: balance of forces in Southeast Asia

Involuntary partnership

The importance of the region and the United States' concern for its security can be seen in former U.S. President Barack Obama's “Pivot to Asia” policy. In the early 2010s, Washington set out to refocus attention and resources on the Asia-Pacific region, a key region for the global economy in the 21st century. The strategy included increased investment, stronger trade ties and a stronger military presence in partner countries. By 2020, the US planned to concentrate 60% of its naval forces in the region through presence in strategically important countries - Japan, South Korea and Guam. Joint exercises with key allies, including the Philippines, were actively pursued. In addition, the U.S. strengthened cooperation with new partners - Vietnam, India and Indonesia - including supplies of modern military equipment, exchange of experience and joint training.

In 2012, speaking at the APEC summit, former U.S. Secretary of State Hillary Clinton declared the 21st century the Asian century. Washington has increasingly and rapidly militarized the region. QUAD - a quadrilateral security dialogue initiated by Shinzo Abe between Australia, India, the United States and Japan - spent $979.3 billion on defense in 2022 alone. The main portion went to the United States, which allocated $851.6 billion, followed by India with $80.9 billion. These figures underscore the alliance's growing investments and reflect U.S. ambitions in the region. Also in February 2023, the Pentagon's plans to “accelerate full implementation” of the Enhanced Defense Cooperation Agreement (EDCA) with the Philippines became known. The document was signed in 2014 and allowed Washington to rotate troops to the Philippines for extended stays, as well as build and operate facilities at Philippine bases. During Defense Secretary Lloyd Austin's visit in 2023, the U.S. gained access to four more new bases in the country. Together, the partners have deployed operations against Abu Sayyaf terrorist groups operating in the South Pacific archipelago.

In February 2024, the U.S. signed an agreement aimed at deepening military-strategic cooperation with Thailand. Under the partnership, the U.S. will provide Thailand with access to advanced military technology and equipment, including air defense systems, maritime patrol ships and cyber security solutions. A key element of the agreement is the expanded use of Utapao Base, which will be utilized for logistics operations and mission support in the South China Sea.

Thailand is a key player in the Association of Southeast Asian Nations, one of the region's largest economies and an important trading partner for the rest of the alliance. Therefore, the U.S. is actively participating in the regional forum to strengthen dialog with Southeast Asian countries. In addition to economic integration and social stability, much attention is paid to localized conflicts, such as in the South China Sea. In Beijing's perception, the tensions here are linked precisely to US activism in the region. China, Taiwan, Vietnam, the Philippines, Malaysia, Brunei, and Indonesia dispute over the ownership of the Paracel Islands, the Spratly archipelago, and Scarborough Reef. China seeks to prevent U.S. intervention and the consolidation and regionalization of the dispute, in which all 10 ASEAN members will be Beijing's adversaries. Individually, each of these countries is too weak and has to balance the heavyweights with a strategy of engagement and containment. All major powers are invited to cooperate, but are bound by certain norms of behavior enshrined in the Treaty of Friendship and Cooperation. The main objective is to preserve autonomy and prevent one country, especially from outside, from dominating the region. Therefore, India, South Korea and Japan are actively involved in political games in the region.

South Korea is engaging technologically in the regional agenda. Its exports are based on electronics, automobiles, as well as chemicals and steel. Active interaction is being built with Vietnam, Singapore, Malaysia and Indonesia. Giant companies such as Samsung, LG, Hyundai and Kia are investing heavily in the development of the region's production facilities. For example, Samsung has built several large factories in Vietnam, turning this country into an important center of global electronics production. Japan, whose giants - Toyota, Honda and Mitsubishi - have significant production facilities in ASEAN countries, is also engaged in economic expansion.

The asian route

In June 2024, Russian President Vladimir Putin arrived on an official visit to the DPRK. Among other things, the parties signed the Comprehensive Strategic Partnership Treaty, which entered into force on December 4 of the same year. In case of an immediate threat of aggression against one of the parties, the signatories will immediately begin consultations to coordinate actions and take measures to eliminate the threat. In case of an armed attack, the partners will immediately provide the necessary assistance in accordance with the UN Charter. In addition, the countries commit themselves not to conclude agreements with third states that threaten the sovereignty, security and territorial integrity of both.

This document returned Russia to its status as a key security player in Northeast Asia, commemorating the role played in the region by the Soviet Union. The security treaty concluded between the USSR and North Korea in 1961 provided for a commitment to joint defense and included a clause prohibiting the parties from entering into any alliances or engaging in actions against the other side. After the collapse of the Soviet Union, the document was replaced by another one, the 2000 Treaty of Friendship, Good-Neighborliness and Cooperation, which contained no provisions and no mutual military support. With the signing of the new treaty, Russia regains the competencies once held by the Soviet Union, but creates some difficulties for China without changing the regional balance itself. China continues to maintain its unique security agreement with North Korea, a relationship based on a deep historical bond that President Xi Jinping has characterized as “ bound by blood.” Beijing perceives the possible unification of Korea, especially with the involvement of the US and Japan, as a threat to its security, so the preservation of the North Korean regime remains of utmost importance to it. In addition, a joint statement by Vladimir Putin and Xi Jinping in May 2024 emphasized that the two sides will strengthen coordination and cooperation in response to the so-called “dual containment” policy of the United States, whose claims are unconstructive and hostile to China and Russia.

On the one hand, the agreement signed by Putin and Kim Jong-un sent a signal to South Korea and Japan regarding their military-technical cooperation with Ukraine. On the other hand, it unleashed a symmetrical response: President Putin said that Russia reserves the right to supply weapons to other regions, including the DPRK. This is a rhetorical device that challenges, among other things, Washington's transfer of medium- and short-range missiles to the Asia-Pacific region under the pretext of joint exercises. New closed military-political alliances like NATO, which the United States is working hard on, are harmful and counterproductive, Moscow believes. Therefore, a trilateral alliance of Russia, China and the DPRK is a heavy weight on the geopolitical scales.  

In parallel, China is strengthening its position in the southeastern direction, breaking free from Washington's influence. This strategy is based on the “One Belt, One Road” initiative, which focuses on integrating land and sea transportation routes for fast and economical transportation of goods between Southeast Asian countries, as well as their delivery to Africa, the Middle East and Europe.

The railroad to Laos is a unique project that connected China's domestic railway network with a foreign country for the first time. Construction was completed in 2021, and according to statistics from China Railway Kunming Bureau Group Co., Ltd. last year, 144,900 tons of goods were transported by direct rail, up 71.7% from a year earlier. The construction of the road cost $6 billion, accounting for a third of Laos' entire economy. Due to the inability to finance such a huge project on its own, about $3.5 billion had to be borrowed from the Export-Import Bank of China.

As The Diplomat noted last July, the built railway is now being used to unite the armies of Laos and China. From July 6 to July 9, 2024, the countries held a military exercise called “Friendship Shield,” involving about 900 Lao and 300 Chinese troops. The country occupies a strategic position along the Mekong River, the most important trade route between Southeast Asia and China, so Beijing is not being petty in its methods, building, among other things, so-called “debt diplomacy.” For example, in 2020 Laos was forced to transfer a controlling stake in its power grid to a Chinese company. China Southern Power Grid Company Limited received 80% of the national grid of Laos Electricity Generation Corporation (EGL). Thus, Laos was able to avoid default due to the inability to service the Chinese loans received earlier, but lost its energy independence.

However, Thailand avoids Chinese lending at all costs and finances sections of the road within its territory from its own resources. As of 2023, borrowing from the Export-Import Bank of China at 3% was unprofitable, while borrowing from domestic sources offered a lower rate of 2%. Thailand is at the heart of mainland Southeast Asia, which is crucial for China not only in terms of logistics but also in terms of technological leadership. The construction of the railroad tracks exclusively uses technologies from China, including the 1435 mm gauge, which is standard for the country but rarely found in the rest of Indochina. The promotion of Chinese technical standards in turn increases the scope and scale of China's regional industrial cooperation with Southeast Asian countries. The spread of the Chinese model will pay significant dividends in the long run if plans to extend the highway through Thailand and Malaysia to Singapore are realized.

The Royal Thai Government, realizing the benefits to China, took advantage of its strategic location and used it successfully in negotiations with Beijing, securing the transfer of key Chinese technology. For example, China has created modular structures for railroad stations and other infrastructure elements that can be easily assembled on site. It has also developed innovative track materials that can reduce future maintenance costs, including extra-strong steel and concrete sleepers. This approach makes Thailand much different from Laos or Indonesia: the country is trying to balance Washington and Beijing while pursuing its own interests. Thus, on February 10, 2025, Finance Minister Pichai Chunhawajira said that Bangkok would consider increasing imports from the United States and discuss tariff risks with enterprises. This year, Thailand intends to increase imports of U.S. ethane by at least 1 million tons, at the same time it is expected to increase the supply of agricultural products from the United States.

China, in turn, is not deploying a debt trap, but using soft power: panda diplomacy and good neighborship. Beijing will send a pair of pandas to Bangkok for the 50th anniversary of the establishment of diplomatic relations and as a sign of strengthening friendship. In addition, China expresses its willingness to work with Thailand to strengthen the China-Thailand community of shared destiny and actively support humanitarian exchanges. This strategy is partly related to overcoming the Malacca Dilemma articulated by former Chinese President Hu Jintao in 2003. Thailand and Malaysia are U.S. allies, and the Strait of Malacca is a key sea route linking the Indian and Pacific Oceans and providing a link between populous India, Indonesia and China. Nearly 80 percent of energy imports - 16 million barrels daily - pass through it. Surrounded by adversaries, oil imports from East Asia and the Middle East could be cut off. China is seeking to secure its military and economic trade and is building alternative trade routes, including numerous seaports.

The port of Kyaukpyu plays an important role in the regional logistics and energy supply chain. The project was proposed back in 2007 by the Chinese state-owned CITIC Group. The main objective was to transport cargo from China to the Indian Ocean, bypassing the Strait of Malacca. In 2009, the Myanmar government signed an agreement with the company to build a port, oil and gas pipelines, railroads and an industrial zone. Between 2011 and 2013, deep-water terminals were built, and after that, the second phase began with the expansion of port facilities, including the construction of additional terminals. Investments are estimated at $1.3 billion.

India sees the port as a threat to its interests in the Indian Ocean and is stepping up cooperation with Myanmar because of concerns that the port could become a base for Chinese warships. The situation is particularly complicated by the fact that Beijing already has access to other important ports in the region - Gwadar in Pakistan and Hambantota in Sri Lanka. In fact, China is surrounding India with a “string of pearls” - a strategic project to expand its presence in the Indo-Pacific. In addition to the ports described, the project also includes a naval base in Djibouti, Chittagong port in Bangladesh, Dar es Salaam in Tanzania.

Step left, step right

The expected massive changes in U.S. foreign trade policy in the region due to Obama's pivot to Asia did not happen. A breakthrough could have been the entry into force of the Trans-Pacific Partnership (TPP) agreement, but President Donald Trump withdrew the United States from the treaty during his first term. His administration's policies, culminating in a trade war with China, have on the one hand encouraged greater U.S. engagement with ASEAN countries, but on the other hand have challenged Southeast Asian economies to more explicitly demonstrate their loyalty to either America or China. After the 2024 elections, the first on the list of international meetings and phone calls for U.S. Secretary of State Marco Rubio were India, Australia, Japan, and the Philippines - the closest allies. Indonesia and South Korea were relegated to the 10th place, not to mention China and Vietnam, with whom the dialog was planned in the last place.

If Donald Trump's threats of new tariffs against China and other trading partners become a reality, it could lead to fragmentation of global supply chains. As a result, economic efficiency would decline and costs for consumers and producers would rise, slowing growth. In the event of a full-scale trade war, the consequences would be catastrophic for global trade, with positive short-term prospects for the region undermined, according to experts at the ISEAS-Yusof Ishak Institute. In turn, the militarization of aid would again lead to a cycle of dependency and instability.

ASEAN countries need a coordinated policy strategy to protect free and open trade. They need to prepare for possible punitive U.S. tariffs because of the region's persistent trade surplus. It is enough for the Trump administration to conclude that the significant growth in Southeast Asian exports to the U.S. is due to Chinese companies using the region to circumvent the anti-China tariff wall. According to a report by the World Economic Forum, South Korea is the most at risk of U.S. restrictive trade measures, followed by China, Japan and India.

Against this background, Moscow and Beijing are perceived as an increasingly strong “dual deterrence” of the United States. The military partnership with the DPRK in this unspoken alliance is a deterrence factor for South Korea and, as a consequence, Washington. Talks that the influence of the China-Russia-North Korea-Iran “axis” is exaggerated due to the lack of personal interests apart from US resistance can be questioned. Countries are increasingly involved in helping each other and these ties could be strengthened if Trump increases hostility on all fronts.

Southeast Asian countries themselves are closely watching the U.S. transition process and the resolution of long-standing regional conflicts in Europe and the Middle East. Today, the U.S. exhibits protectionist and self-centered tendencies, preferring to work in tight groups with allies who share its views on China. This forces countries like Indonesia to choose between the two superpowers, even though they would prefer to avoid it. Vietnam hopes that the United States will pursue a coherent regional strategy that supports ASEAN's central role in the regional architecture. Among Vietnam's top priorities are partnerships in digitalization, semiconductors, and emerging areas such as artificial intelligence, renewable energy, critical infrastructure, and minerals. These industries are the foundation of the future regional and global economy, and Vietnam hopes that the new US administration will not lose sight of Vietnam's growing importance in these areas.

Malaysia, as an important external partner, hopes for a more constructive approach to the Asia-Pacific region and greater market access for Malaysian goods and services. However, given U.S. domestic politics and the trade deficit, these expectations may go unrealized. The Trump team may pressure Malaysia to reduce its trade balance surplus. Given the negative perception of the US among the local electorate, Malaysian leaders have to be cautious about relations with Washington.

Thai-U.S. relations have been sidelined for the past decade by the military junta that ruled the country until 2023. During that time, China has increased its presence in Thailand, complicating a potential parting of the ways between Thailand and China. It is one of the last frontiers on Beijing's path to dominance in mainland Southeast Asia. The United States cannot allow Thailand to squeeze further into China's sphere of influence like Cambodia, Laos and, to some extent, Myanmar. Thailand will carefully weigh the costs of any new trade policy that might affect its commitment to security cooperation with the United States.

As U.S. policy toward the region is dualistic and has changed repeatedly over the past 15 years, from Obama to Trump's second term, ASEAN countries have to adjust to these changes, which does not bring stability. Against this backdrop, a monumental China, committed to strategies of one path and one destiny, is driving its partners into unsustainable debts, which robs them of their independence. For this reason, Southeast Asian countries will have to continue to choose between two evils, each of which does not guarantee their sovereignty.