Newsweek 3rd coverNewsweek Japan asked me to write an introductory essay for a special issue on tension in Northeast Asia. Basically I plea not to throw out all the remarkable growth of the last 35 years in an orgy of nationalism. It’s almost certain that the post-79 Asian peace was a necessary condition for simultaneous economic growth. So fighting over some empty rocks (Liancourt Rocks, Pinnacle Islands) is a terrible idea. And for IR, I think the current Sino-Japanese tension is a good test of the old liberal hypothesis that economic interdependence encourages peace. It’s fascinating to watch China especially try to figure out just how much economic gain to forego to push Japan over the Pinnacle Islands. Here we go:


This was intended for their print edition, so there are no hyperlinks included in the text. If you know the IR literature on Asia – Friedberg, Shambaugh, Johnston, Kang, etc. – there won’t be too much new here.

“1979 was an important year in modern East Asia. It captures two of the region’s most important trends. It was the year of both the last serious military conflict between two East Asian countries – a Sino-Vietnamese border war – and the start of China’s capitalist modernization under Deng Xiaoping. These moments usefully frame the following thirty-four years: much of Asia has gotten substantially wealthier, and no major conflicts have broken out to upset that upward economic swing. This magnificent regional achievement has catapulted Asia, particularly East Asia, into the center of world politics.

China alone has pulled two-thirds of its population out of absolute poverty – defined by the World Bank as living on less than $1.25 per day. In absolute terms, this is close to one billion people – a staggering achievement in human betterment and the fastest, widest modernization in world history. China now has the world’s second largest gross domestic product (GDP), an aggregate figure used by economists to tabulate all the good and services produced in a country. And China should overtake the United States as the world’s largest economy within a decade. Japan has the world’s third highest GDP, and South Korea is ranked number thirteen despite its small size. So dramatic has East Asia’s economic rise been that the analyst Thomas Barnett calls the region the ‘new core’ of the world economy. (The old core is the West.)

Investment by Japanese and western firms has helped fire this rapid growth. But such gigantic financial commitments do not occur in regions racked by inter-state or civil conflict. Areas like Africa or the Middle East often lose foreign direct investment because of their instability. This means that the post-1979 ‘Asian peace’ is a central, if underappreciated, part of the Asian economic miracle. Were China still a belligerent Maoist state exporting communist revolution, foreign investors would certainly not have brought their money. Were Japan and Korea fighting to control the Liancourt Rocks and the Sea of Japan, their respective GDPs would be substantially lower. In short, Asian wealth is inextricable from its geopolitical calm, a point Asia’s many nationalist elites would do well to remember.

Today, that post-1979 Asian peace is being stressed as never before. China has become increasingly belligerent in the past few years. The conflict over the Pinnacle Islands (Senkaku/Diaoyou) is worsening rapidly. Japan and South Korea, two liberal democracies, still cannot fix their differences, which flare up with disappointing regularity. North Korea is now a confirmed nuclear power, and it seems hell-bent on developing intercontinental ballistic missiles no matter how much alarm this creates in the region.

All these tensions are made more dangerous by Asia’s new wealth. China, South Korea, and Japan are all wealthy enough today to spend far more on defense than they do. Even crushingly poor North Korea seems to find the resources to field a massive army and develop weapons of mass destruction and missiles. Were this the 1970s, when all four players were substantially poorer, that weakness would have made the situation less dangerous. But today all four have substantial capacity to project power against each other. New wealth means a vastly more expensive and dangerous arms race would be affordable.

A useful analogy here, with some relevant geopolitical parallels, is Europe before World War I. Late nineteenth-century Europe, like Northeast Asia today, was a crowded neighborhood growing rapidly. In the space of a few decades, modernization and industrialization had created vastly larger and more effective militaries backed up by large economies that could afford arms build-ups as never before. Like Asia today as well, nationalist grievances were common. They were frequently stoked by nationalist education systems that taught dubious race and eugenics theories (also a problem in Asia). While such social Darwinism turned out to be poor science, it helped harden European populations’ attitudes toward each other. National communities were glorified, and triumphalist historiography made empathy between countries harder. Minor conflicts – frequently in the colonial peripheries of Africa or Asia – became tests of national honor where compromise would be an impermissible loss of face. Long before 1914 and the ten million dead of the ‘Great War,’ European diplomacy experienced crisis after crisis, with elites increasingly unable to control their nationalistic populations and militaries. Finally, like Northeast Asia, territorial disputes enraged public opinion and aided the rise of hawkish, nationalist elites. Germany and France disputed their border zone, Alsace-Lorraine, for nearly a century. This helped plunge them into three wars in just seventy years (1870, 1914, 1940).

If this sounds similar to Asia today, it should. Many analysts have sketched these parallels in the last two decades. The title of one famous academic article on this is, ‘Will Europe’s Past be Asia’s Future?’ European states and their populations had to fight two disastrous ‘civil wars’ within European civilization (i.e., WWI and WWII) before they could learn to live with another in peace. It would be a shame if Asian states had to go through a similar catastrophe in order to learn to step back from the nationalism that threatens the Asian peace today.

But there is another model, also derived from the European experience of war and conflict. From the ashes of the wars of first half of the twentieth century, the Europeans slowly built the European Union in the second half. Today the EU is struggling of course. The euro crisis is genuinely severe, but an unraveling of the larger European project is unlikely. Nor is the EU’s demonstration value for Asia tied to the common currency’s fate. Instead, Asian policymakers might learn how the EU bound its members together tightly enough to make war on the continent unthinkable.

Specifically, the EU sought to use economics to overcome deep political divisions. The earliest version of the EU, the European Community, encouraged economic interdependence. The idea was that the creation of a continent wide-economy would make it hard for countries to ‘de-link’ from each other. Discrete national economies, with few connections to neighbors, could be mobilized more easily against those neighbors for war. (This, not coincidentally, is the intent behind North Korea’s juche ideology of economic self-reliance.) But economies that had grown together – where goods and services flowed easily across borders, where foreign customers and producers were critical for GDP, where tariffs and protectionism were minimal – would be less able to de-link for national war-making. Populations would also be less willing to de-link and forego the benefits that came from trade.

All this would also improve the EU member-states’ national security. Participation in a liberal security community, where no one was arms racing against anyone else, meant that threats were low. States did not need to field massive militaries. Helpfully, small, weak militaries are also very inexpensive, allowing for other, more socially valuable spending.

Germany’s history is particularly instructive here, especially for strategists in Beijing considering a tougher line on Japan and in the South China Sea. In 1914 and 1939, Germany sought security through expansion, seeking to subject Europe to its hegemony. Despite some successes – Germany defeated Russia in 1917 and France in 1940 – these bids for continental dominance lead to German encirclement and crushing defeat. So toxic was Germany by 1945, that early postwar thinking considered permanently de-industrializing it, throwing it back into the Middle Ages, to prevent it from ever threatening European security again. (This idea was derailed by the need for Germany to help contain the Soviet Union in the Cold War.)

By contrast, Germany’s integration into the European security community of the EU has brought it far greater security, and wealth, than its previous war-making. Today, Germany is the dominant state of Europe and the anchor of the euro, even though it spends only 1.2% of GDP on defense. That is a remarkable achievement, and one that Japan and China especially might think about.

Viewed this way, the rapid economic growth of China, and Asia generally, is a gamble. The upside hope is that economic growth, from regional integration and peace, would dull nationalist paranoias. Asians would slowly cease arguing about history and a few small rocks in the sea somewhere, in order to capture the benefits of integration and cooperation. As the new Asian middle class came to appreciate their HDTVs, cars, and tourist opportunities, the ideological satisfactions of nationalism would decline – as in the EU.

The downside of this gamble is that existing Asian disputes could be so much worse if all players grew wealthier but did not moderate. If GDP growth did not smooth away the grievances of history and territory, then new wealth could be spent on militaries to pursue those grievances even more vigorously. This would be the worst of both worlds – anger, plus wealth, leading to arms racing and threats of war.

Today, East Asia stands at a juncture of these two paths, a test of hypothesis that economic integration can restrain and soften political competition. Can thirty-plus years of economic integration make conflict in Asia so costly that nationalists will step back from the brink? The world is watching as China and Japan decide just how much wealth and economic benefit to forego over their Pinnacle Islands’ dispute.

Hopefully, various Japanese proposals about an ‘East Asian Community’ might be a way out. Post-1979 Japan spread out production and aid in East Asia. This tightened economic interdependence and laid the groundwork for a nascent community. The basic deal was that Korea and China would get richer and less upset with Japan because of its good neighborliness, while Japan would get regional acceptance and less hostility. To smooth it over, everyone would get wealthier from trade. This basic arrangement is still a pretty good one for Asian prosperity and peace. Let’s hope it weathers the rising nationalist storm.”

Cross-posted at Asian Security Blog.