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Regional Overview:………………………………………………………………………………1 US Profile Rises, China Image Falls, North Korea Changes? by Ralph A. Cossa and Brad Glosserman, Pacific Forum CSIS The US profile in Asia appears to be on the rise following Secretary of State Clinton‟s highly publicized presentation at the ASEAN Regional Forum (ARF) ministerial in July and President Obama‟s meeting with ASEAN leaders at quarter‟s end. Meanwhile Beijing‟s image took a few hits as it tried to bully Japan (successfully), the US and ROK (unsuccessfully), and ASEAN (TBD) on maritime-related issues, while essentially serving as North Korea‟s defense attorney during UN Security Council deliberations on the Cheonan attack. Prospects for a resumption of Six-Party Talks remained low. New faces appeared in the North‟s general officer ranks but prospects for Korean Peninsula denuclearization remained unchanged. Meanwhile, democracy marches on, one step forward in Japan and two backward in Burma/Myanmar, while Washington seeks greater economic integration in Asia. The US profile is expected to grow further next quarter with Obama and Clinton both scheduled for high-profile visits to the region. We‟ll see what Beijing does to improve its image; we expect little progress when it comes to Pyongyang. US-Japan Relations:…..………………………………………………………………………..15 Hitting the Reset Button by Michael J. Green, CSIS/Georgetown University, and Nicholas Szechenyi, CSIS The ruling Democratic Party of Japan (DPJ) suffered an embarrassing defeat in the July Upper House election less than a year after assuming power. Prime Minister Kan Naoto subsequently took a beating in the polls but managed to withstand a challenge from former DPJ Secretary General Ozawa Ichiro in a party presidential election marked by heated debate over economic policy. Political turmoil did not preclude active diplomacy on the part of Kan‟s government, nor coordination between Washington and Tokyo on a range of bilateral, regional, and global issues including the relocation of Marine Corps Air Station (MCAS) Futenma on Okinawa; a collision between a Chinese fishing boat and Japanese Coast Guard vessels near the Senkaku Islands; and sanctions on Iran to condemn its nuclear activities. The quarter came to a close with President Obama and Prime Minister Kan taking stock of a rapidly developing bilateral agenda during a brief yet productive meeting on the margins of the United Nations General Assembly (UNGA) in New York, setting the stage for the president‟s trip to Japan in November. iv US-China Relations:……..……………………………………………………………………..25 Tensions Rise and Fall, Once Again by Bonnie Glaser, CSIS/Pacific Forum and Brittany Billingsley, CSIS Diplomatic confrontations over the Yellow Sea and the South China Sea were the source of new bilateral tensions this quarter. Beijing vigorously objected to the dispatch of the aircraft carrier USS George Washington to waters near where the South Korean corvette Cheonan sunk after being attacked in March, even before Washington had made a decision to deploy it. Worried about Chinese diplomatic posturing and destabilizing activities in the South China Sea, Secretary of State Clinton delivered a clear statement of US interests at the ASEAN Regional Forum meeting in Hanoi that irritated Beijing. With the US mid-term elections approaching, US frustration mounted over China‟s unwillingness to allow its currency to appreciate against the dollar at a faster pace. The House of Representatives passed legislation that would allow the US to impose import duties on countries that have undervalued currencies. After more than five months of delay, the Pentagon submitted to Congress its annual report assessing Chinese military capabilities. Finally, two US presidential envoys traveled to Beijing to smooth over relations and President Obama met Premier Wen Jiabao on the margins on the UN General Assembly. US-Korea Relations:...………………………………………………………………………….41 Smooth Sailing in the Wake of Cheonan by Victor Cha, CSIS/Georgetown University and Ellen Kim, CSIS The sinking of the Cheonan remained the predominant issue in the US-ROK relationship as both countries spent the quarter coordinating and undertaking punitive measures against North Korea for its alleged attack on the ship. The UN Security Council adopted a Presidential Statement condemning the attack but did not directly blame North Korea. The US and the ROK held their first “Two-plus-Two” meeting in Seoul. While countries reopened their dialogue channels in the hope of resuming the Six-Party Talks, there remain many challenges and uncertainties that make the future direction of the Talks unclear. Several issues remain to be resolved on the KORUS FTA as negotiators are expected to hold a ministerial meeting soon to strike a deal. The Chicago Council on Global Affairs released a report on US attitudes toward South Korea that highlighted public support for trade agreements, including the KORUS FTA, is lukewarm. Among those who viewed fair trade as critical for US interests, support for KORUS was much stronger. US-Southeast Asia Relations:…..……………………………………………………...............49 Growing Enmeshment in Regional Affairs by Sheldon Simon, Arizona State University The US significantly raised its profile in Southeast Asia this quarter, inserting itself in South China Sea disputes, announcing its plan to join the East Asia Summit, convening the second US-ASEAN summit, and creating an ambitious agenda for a variety of initiatives. Secretary of State Clinton proposed multilateral discussions under ASEAN auspices on the South China Sea issue. The US inaugurated naval exercises with Vietnam in early August. Washington is considering new financial sanctions against Burma, recognizing that more engagement with the military regime has not yielded the expected results. The presence of US military trainers in the southern Philippines continues to rile leftist and nationalist legislators. As a sign of growing warmth in US-Malaysian relations, Kuala Lumpur is sending a small contingent of medical personnel to Afghanistan. The Indonesian-US Comprehensive Partnership was launched in v September and Washington restored military-to-military relations with Kopassus, the Indonesian Special Forces. China-Southeast Asia Relations:………………………………………………………………63 US Interventions Complicate China‟s Advances by Robert Sutter, School of Foreign Service, Georgetown University, and Chin-hao Huang, University of Southern California China was on the defensive this quarter, reacting to interventions by the US, including a notable statement by Secretary of State Clinton, at the annual ASEAN Regional Forum (ARF) meeting regarding the South China Sea. The ARF meeting also saw a new US commitment, backed by ASEAN, to participate actively in the East Asian Summit, raising the profile of that regional body over China‟s preference for Asian-only regional groups. Further complicating China‟s regional calculus were prominent advances in US relations with Vietnam shown during celebrations of a US-Vietnam anniversary in August. Chinese at first countered that the US actions were self-serving and destabilizing, which meshed with public Chinese attacks on US military exercises with South Korean forces. Later, some Chinese commentary dissented from the harsh public approach, and by the end of the quarter, the criticism subsided. For the time being at least, it appeared that China will remain focused on publicly stressing trade and reassuring diplomacy in Southeast Asia, while defending its territorial claims and continuing to build military capabilities. China-Taiwan Relations:………………………………………………………………………71 Slow, Steady Improvements by David G. Brown, The Johns Hopkins School of Advanced International Studies This has been a quiet but constructive quarter in cross-Strait relations. Taipei and Beijing were focused on ratifying and beginning implementation of the Economic Cooperation Framework agreement (ECFA). With Beijing‟s agreement, Singapore and Taipei announced that they would consider negotiating a WTO-consistent economic cooperation agreement. This important flexibility by Beijing allows President Ma to show that ECFA has opened the door at least slightly to Taiwan‟s involvement in regional trade liberalization. Despite Washington‟s approval of small commercial arms sales, Beijing indicated a willingness to resume military exchanges with Washington. Nevertheless, arms sales to Taiwan remain a threat to US-China relations. North Korea-South Korea Relations: ………………………………………………...............79 Picking up the Pieces by Aidan Foster-Carter, Leeds University, UK The past quarter in inter-Korean relations might be called the morning after the night before. Tensions over the sunken ROK corvette Cheonan by no means disappeared; the less so since North Korea still denied responsibility, while the South smarted at its failure to convince key powers – China and Russia above all – of Pyongyang‟s culpability. The Cheonan incident remains a crime and an obstacle. Yet hopeful signs are emerging that both sides realize they will have to get past this eventually and that they might as well start now. Among various small initiatives, including flood aid, the quarter ended on a hopeful note with an agreement to hold a fresh round of reunions of separated families in late October. vi China-Korea Relations:………………………………………………………………………...91 Consolidating Ties with New DPRK Leadership by Scott Snyder, Asia Foundation/Pacific Forum, and See-won Byun, Asia Foundation China reaffirmed its traditional friendship with a revamped leadership in Pyongyang that emerged from the historic Workers‟ Party of Korea (WPK) conference that re-elected Kim Jong-il as party and state leader. Kim Jong-il visited Northeast China, holding his second summit with President Hu Jintao this year. Immediately after Pyongyang‟s party conference, Secretary of the WPK Central Committee Choe Tae-bok led a senior party delegation to Beijing to brief President Hu and other officials. Meanwhile, China-ROK relations remain strained following the March 26 Cheonan incident, marking the lowest point in bilateral relations since diplomatic normalization in 1992. Nevertheless, there was some progress as the third China-ROK high-level strategic dialogue and the first preliminary round of free trade agreement talks were held. Beijing promoted resumption of the Six-Party Talks, sending Special Representative for Korean Peninsula Affairs Wu Dawei to meet counterparts in Pyongyang and Seoul. Japan-China Relations:……………………………………………………………................101 Troubled Waters by James J. Przystup, Institute for National Strategic Studies, NDU The quarter started well. The Kan government, emphasizing efforts to strengthen economic ties with China, appointed Niwa Uchiro as Japan‟s new ambassador to China. Talks to implement the June 2008 agreement on joint development of the East China Sea began and Prime Minister Kan and all Cabinet members refrained from visiting Yasukuni Shrine on Aug. 15. In early September, Japan began the destruction of chemical weapons left behind in China by the Imperial Army at the end of the war. The quarter, however, ended in controversy. Sparked by the Sept. 7 incident in which a Chinese fishing boat operating near the Senkaku Islands collided with two Japanese Coast Guard ships, relations quickly spiraled downward. The Japanese Coast Guard detained the captain and crew setting off a diplomatic row that led to the Japanese ambassador being called in for a midnight demarche as well as the personal involvement of Premier Wen Jiabao before Japanese prosecutors released the ship‟s captain on Sept. 24. China‟s call for compensation and an apology went unanswered as of the end of the quarter. Japan-Korea Relations:……………………………………………………………………….115 Same Dance, Different Floor by David Kang, University of Southern California, and Ji-Young Lee, Oberlin College The two highlights in Japan-Korea relations during this quarter are Prime Minister Kan Naoto‟s apology to South Korea for Japan‟s colonial rule, and the appointment of Kim Jong-un, as vice chairman of the Workers‟ Party Central Military Commission and military general in the Korean People‟s Army. While these developments hold the potential to change the security landscape of Northeast Asia, Kan‟s first full quarter in office reveals that Japan‟s North Korea policy is likely to continue along the lines of previous Japanese administrations, at least for now: an unfavorable attitude coupled with hostility and inaction. Pyongyang‟s attitude toward Tokyo, too, changed little and was rather predictable – it denounced Kan for apologizing only to South Korea, criticized Japan for “shamelessly” wanting a permanent seat at the UN Security Council, and demanded compensation for all of Japan‟s past wrongdoings. Japan-South Korea relations appear to be moving closer, although whether Kan‟s apology will change things remains to be seen. vii China-Russia Relations:………………………………………………………………………123 Peace Mission 2010 and Medvedev‟s China Visit by Yu Bin, Wittenberg University For much of the third quarter, Russia and China were besieged by disasters of various kinds. Leaders sent each other messages to express their sympathy and support while relief materials were delivered. Bilateral relations began to gather momentum at the end of August when Prime Minister Putin attended the opening of the Russian-Chinese oil pipeline. In September, the Shanghai Cooperation Organization kicked off its Peace Mission 2010 exercise in Kazakhstan. This was followed by President Medvedev‟s state visit to China in the name of “comprehensively deepening Russian-Chinese strategic partnership relations.” All of this occurred against the backdrop of heightened tension on the Korean Peninsula after the sinking of the South Korea Navy ship in March and the rapid deterioration of China-Japan relations after Japan‟s seizure of a Chinese fishing boat in early September. Australia-East Asia/US Relations…………………………………………………………….133 Australia Deposes a Leader and Hangs Parliament By Graeme Dobelle, Lowy Institute for International Policy In 2010, Australia saw a first-term-elected prime minister deposed by his own party and then a federal election that produced a hung Parliament. The Labor Parliamentary caucus removal of Prime Minister Kevin Rudd on June 24 ushered in Australia‟s first female prime minister, Julia Gillard, who waited only three weeks after replacing Rudd before calling a national election, seeking her own mandate from the voters. Instead, the election on Aug. 21 returned the first hung Parliament since World War II. Style changes between the Rudd and Gillard governments will be marked. But policy continuity will often be the norm, especially in foreign policy. Gillard assured that the US would remain the “bedrock” of Australia‟s defense security. As foreign minister, Rudd will remain involved in shaping multilateral interaction in Asia even though his proposed Asia-Pacific Community has been dismissed. Gillard fulfilled her promise to give Rudd a senior post in her government by appointing him foreign minister. The challenge for Rudd will be whether he can put aside his deep personal hurt – and the political habits that brought him down – to serve the woman who deposed him. About the Contributors……………………………………………………………………….151