Asia, China, Foreign Policy

Islands of Conflict: Where Trade and Security Collide

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On Tuesday, July 23rd, a combined Sino-Russian air operation nearly sparked a four-way air battle over the Sea of Japan by coming provocatively close to the disputed Dokdo/Takeshima islands. Sometime in the middle of the day, the Republic of Korea scrambled fighters to intercept a large flight of Russian and Chinese bombers plus fighter escorts and a control aircraft that approached the sensitive airspace. The Korean jets fired warning shots, causing the intruders to change course. A few minutes later however, the package returned and was again intercepted by the Koreans. This time, Japanese fighters also responded, leading to a very dangerous situation and a formal protest from Tokyo. 

Though the scramble of fighters is not uncommon in these waters — Japan did so 390 times in 2017 — the discharge of weapons is a very serious incident, especially over disputed airspace. What remains uncertain however is whether the intrusion was an accident or a deliberate act intended to cause discord between two US allies. Russia initially denied culpability, accusing the Koreans of “hooliganism in the air” and questioning the legitimacy of the Korean air defense identification zone (ADIZ). Later that day however, Moscow blamed it on a technical glitch and promised to launch an investigation. Statements from the Chinese defense ministry on the other hand, contradicted the Russian stance; claiming the flight was executed as planned and insisting their aircraft did not violate Korean air space. Deliberate or not, the incident exposed widening cracks in US-led security arrangements in Northeast Asia and exacerbated a growing trade dispute between Japan and the Republic of Korea.

The Dokdo/Takeshima Islands

The tiny islands called Dokdo by the Republic of Korea and Takeshima by Japan have been an irritant in Japanese-Korean relations since the Second World War. Occupied by Korea but claimed by Japan, the rising economic and military power of Korea in the past 20 years increased the islands’ importance as a symbol of national sovereignty and pride. As a result, the frequency and intensity of squabbles over them also increased. Depending which source one consults, the islands were officially recognized as Korean in the 17th century but annexed by Japan during their colonization of the Korean kingdom beginning in 1905. Though not specifically mentioned in the San Francisco Treaty that ended American occupation of Japan, the islands were mostly forgotten until Korean forces occupied them in 1952 where they remain to this day. Despite recognizing the islands as Japanese, the US-led occupation government (still operating at that time) in Tokyo muted Japanese protests in order to maintain a unified front in Northeast Asia against the rise of Communism there. 

The islands became important again in 1994 when the UN convention on the law of the sea (UNCLOS) came into force. UNCLOS drastically increased the economic importance of even the smallest of maritime terrain features as states all over the globe used them to delimit the boundaries of their exclusive economic zones (EEZ). Since then, Dokdo/Takeshima has become more than just a point of pride, it is the key to some of the world’s best fishing grounds and any other economic riches that may lie within the 200 nautical mile EEZ surrounding it.

The Sino-Russian air operation on Tuesday also touched on how Beijing and Moscow believe boundaries should be drawn and security administered in Northeast Asia. The Korean ADIZ, for example, is not completely recognized by China or Russia, though they have different reasons to dispute the boundaries of that airspace management tool. For its part, China also has territorial disputes with both Japan and Korea in the East China Sea. By ensuring their air patrol also came close to the Socotra Rocks in the East China Sea (disputed with Korea), China and Russia managed to irritate the allies on a number of touch points simultaneously.

Routes followed by Chinese and Russian aircraft on 23 July
The Japanese Ministry of Defense released this map depicting the routes flown by Russian and Chinese aircraft on 23 July. Note their proximity to disputed islands.

Connections

The incident over Dokdo/Takeshima took place at a time when Japan and Korea are involved in an escalating trade dispute. Faced with an upper house election last week and falling tech exports due to the ongoing US-China trade war, Japan tightened its approval process on tech-related chemicals critical to Korean manufacture of memory chips. The Koreans, whose semiconductor industry makes 2/3 of the world’s memory chips for smart phones, accused the Japanese of retaliating for a Korean court decision demanding compensation to victims of forced labor during the Second World War. Japan rejected this claim but took steps to prevent World Trade Organization (WTO) sanctions by invoking national security, citing cases of inappropriate export of the chemicals in question to North Korea. Tokyo then doubled-down on their position by threatening to remove South Korea from a “white list” of countries with whom Japanese companies can trade with minimal oversight. Korea argues, with some justification, such a move would have devastating impact on the global supply chain that supports smart phone manufacture.

All these complex escalations took place in the two weeks leading up to the incident at Dokdo/Takeshima. Whether or not Japanese trade sanctions and the Korean responses to them are actually connected to ongoing disputes over wartime labor or a tiny set of islands, the dangerous incident in the skies over the Sea of Japan puts the convergence of all this disruptive maneuvering into a very disturbing context. If nothing else, it highlights the connections between politics, trade, and security in Northeast Asia. To the extent this was the intent of Russia and China, it will be interesting to see whether the United States plays a constructive role in cooling the temperature amid its own contentious trade disputes in the region. 

Lino Miani, CEO Navisio Global LLC

Lino Miani is a retired US Army Special Forces officer, author of The Sulu Arms Market, and CEO of Navisio Global LLC. 

Asia, Foreign Policy

The Contradictory Nature of U.S.-Japan Relations

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This article has been republished with permission from our partner, Stratfor. The original version was first published in Stratfor’s WORLDVIEW and can be found here.

U.S. President Donald Trump’s Memorial Day weekend visit to Japan serves as a reminder of the complex relationship between the United States and Japan. In addition to ceremonial events, meeting the new emperor and visiting U.S. military personnel, President Trump held discussions with Prime Minister Shinzo Abe about trade frictions (driven by the United States’ nearly $68 billion trade deficit with Japan) and regional security concerns ranging from North Korea to China to Iran. This contrast between bilateral trade competition and mutual security cooperation in many ways exemplifies the modern U.S.-Japan relationship.

Mutual and Conflicting Interests

U.S.-Japanese security and economic interests have been intertwined and often at odds with one another. This has played out through recent history, from the time Commodore Matthew Perry’s “Black Ships” sailed into Edo Bay in 1853, through the post-World War I distribution of territories and the 1922 Washington Naval Treaty, to U.S. restrictions on Japanese access to key industrial resources in the late 1930s and beyond. This duality was further ensconced after World War II and has defined modern U.S.-Japanese relations. In what later became known as the Yoshida Doctrine, for then-Prime Minister Shigeru Yoshida, Japan largely relegated its national security and defense to the United States and instead focused its resources and efforts on reconstruction and building a modern economy.

Japan’s strategic location in the Pacific gave Tokyo quite a bit of leeway in its relationship with the United States. The outbreak of the Korean War in June 1950 solidified Japan as a key component of the U.S. defense architecture to contain the spread of communism in Asia, with Japan serving as an off-shore support base for U.S. operations in Korea and later in Indochina. The 1951 Security Treaty between the two, which would undergo several evolutions, provided basing rights for the United States and strengthened the importance of Japan in U.S. defense planning and posture. Japan’s location also served U.S. efforts to bottle up the Soviet Pacific Fleet during the Cold War.

Though Washington convinced Japan to stand up its Self-Defense Forces, Tokyo often held firmly to the Yoshida Doctrine, limiting its own indigenous military capacity while building up its economic might. Japan provided financial support for U.S. basing (effectively outsourcing its own national defense) and moved rapidly from an import substitution economy to that of an industrial powerhouse. The phrase “Made in Japan” underwent a radical transformation, from being a sign of cheap goods to an indicator of leading high-end technology and quality manufacturing. Initially, Japan’s economic focus over security responsibilities drew quiet criticism from the U.S. over Tokyo not pulling its weight in the alliance, but until the early 1990s, this was mostly rhetoric rather than any serious bone of contention.

Rising Trade Discord

The first major crisis in trade between the United States and Japan began in 1973 with the Arab oil embargo, triggered by the Yom Kippur War. The resulting oil shock opened the way for a brief but significant surge in Japanese auto sales in the United States. Japanese car sales picked up again in the late 1970s, at a time when U.S. automakers were facing rising economic problems of their own, and the competition led to outbreaks of rhetorical (and at times literal) “Japan bashing,” leading Tokyo to apply voluntary export restrictions by 1981 to try and ease trade tensions. The automotive industry was an early focus of competition, but throughout the 1980s it was the emerging high technology arena that became a key focal point. The rising trade dispute was further heightened by expanding Japanese investments in the United States, raising cries of America being sold to Japan.

By the late 1980s, U.S. and Japanese trade frictions had come to a head. Inside Japan, a nascent sense of nationalism had emerged during the previous decade, and in 1989 then-Minister of Transport (and later Tokyo Governor) Shintaro Ishihara penned a book with Sony Chairman Akio Morita titled “The Japan That Can Say No.” The book echoed the sentiment that Japan had left its national interests in U.S. hands for too long, and it was time for the country to stand up, assert its own position and say “no” to U.S. demands. Amid the small but significant camp calling for a stronger and more independent Japan, and given rising anti-Japanese sentiment in the United States, Washington used a combination of unilateral and multilateral dialogues and diplomatic tools to chip away at what it portrayed as Japan’s unfair trade practices.

The mismatch between U.S. security and economic interests that was obvious during Trump’s visit to Japan is not an anomaly but a baseline element of the relationship between the two Pacific partners.

The result was the floating of the Japanese yen, changes in investment and industrial policies, and as a secondary consequence the decline of Japan from a rapidly growing economic power to a country that slipped into 25 years of relative economic malaise. Significantly, Washington targeted the Japanese economy even in the midst of the Cold War, at a time when the United States was deeply at odds with the Soviet Union, and thus where the Japanese alliance was a critical security component. The apparent mismatch between U.S. security and economic interests that was obvious during Trump’s recent visit to Japan, then, is not an anomaly but is rather a baseline element of the relationship between the two Pacific partners.

Continuing a Pattern of Past Relations

In this context, what appears on the surface to be counterintuitive — engaging in strategic competition with China while simultaneously attacking trade relations with key ally Japan — matches a pattern of past relations. The structure of the U.S. government and society frequently leads to seemingly contradictory policies on economic and national security interests, in contrast to countries like China or even Japan in the 1960s through the 1980s. For Tokyo, this is not a new situation, nor is it one that the Japanese perceive as fundamentally straining their security relationship with the United States. In many ways, that aspect of the alliance is growing even more significant as Japan moves further away from its strict interpretation of both the Yoshida Doctrine and the war-renouncing Article 9 of the Japanese Constitution. Tokyo no longer sees its national security as something to leave in U.S. hands, but neither does it see an advantage in breaking from the U.S. security orbit.

Over the past several decades, Japan has slowly but steadily moved its defense capabilities from being a supplement to U.S. forces to be a complement to them. And, in some ways, it has even begun to take on some regional security responsibilities itself. This was driven by a combination of factors: The evolving North Korean security situation beginning in the late 1990s; the rise of China, particularly over the past decade; and by the more recent encouragement of the United States for its regional allies to take on more local responsibility. Washington wants to reframe burden sharing from primarily financial and basing support to concrete action, encouraging its allies and partners in the Indo-Pacific to take on more responsibility. And Japan is now ready to reemerge from its quarter-century malaise.

Japan’s strategic location, advanced technological know-how, and parallel interest in countering a rapidly rising China reinforce its ongoing and expanding security cooperation with the United States. At the same time, Tokyo’s advanced economy and primary position as a maritime trading nation continue to stir competition in its relations with the United States. It is this duality that defines U.S.-Japan relations, and it is something that is unlikely to fade away any time soon.

Rodger-Baker (1)Rodger Baker is the Senior VP of Strategic Analysis at Stratfor. He leads Stratfor’s strategic thinking on global issues and future trends.

Latin America, Politics

El Salvador’s Combative New President Faces A Perilous Balancing Act

This article has been republished with permission from our partner, Stratfor. The original version was first published in Stratfor’s WORLDVIEW and can be found here.

With a style and pedigree different from that of his modern predecessors, El Salvador’s new president came out swinging against the status quo almost as soon as his inauguration ended on June 1. Nayib Bukele’s supporters see his willingness to break with politics as usual as a sign that El Salvador may finally shake off the lingering vestiges of its 1980-1992 civil war. Until now, every Salvadoran president has been associated with one of the main protagonists in that brutal conflict, the leftist Farabundo Marti National Liberation Front (FMLN) or the conservative Nationalist Republican Alliance (ARENA). Part of Bukele’s appeal is that he represents a break with the past, but change will come at a price in one of the world’s most violent countries. Unbalancing power dynamics too quickly in El Salvador could provoke a violent and destabilizing response.

A Hard Place

El Salvador is a tough place to govern. It is one of the most densely populated countries in the world, and most of its people are poor. The country’s gross domestic product per capita is a paltry $3,900, and fully 29 percent of Salvadorans survive on half that amount. The economy is rooted in resource extraction, which is vulnerable to climate change and environmental degradation. It is also heavily dependent on remittances from overseas, which account for 21.3 percent of GDP. Years of expensive infrastructure development and high levels of corruption have left El Salvador with a debt-to-GDP ratio that averages around $2,550 per person — a high number that will have serious consequences if it remains unchecked.

Though the economics of governance in El Salvador seem daunting, violence is perhaps a more urgent problem. El Salvador has one of the highest murder rates in the world: 50.3 homicides per 100,000 residents in 2018. The country is home to some of the world’s most notorious gangs. When organizations like Mara Salvatrucha (MS-13) and Barrio 18 fight over territory, the resultant violence interrupts development and corrupts politics at every level. Inadequate funding and limited resources hamper the ability of El Salvador’s National Civil Police (PNC) to respond effectively to the threat. Though the PNC has respectable investigating arms, it lacks the confidence of the population. The justice system is in even worse shape. Judges and prosecutors who manage to avoid corruption are often intimidated. The prison system is underfunded and overcrowded, with some facilities operating at 320 percent capacity. Inmates in overcrowded prisons eventually establish their own order, turning what is meant to be a physical manifestation of state power into a secure communications and operations base for the gangs.

Breaking Rocks

Bukele will find it difficult to achieve prosperity for El Salvador while breaking with political tradition. Though he won the presidency with a resounding majority, FMLN and ARENA still dominate the Legislative Assembly, holding a combined 60 of the 84 seats. Bukele will need to act in a cooperative manner, yet so far he shows little inclination to do so. Little more than a week into his presidency, he accused the FMLN of funding gangs to destabilize his government. He followed that explosive statement with another, threatening to “attack the criminality” of the FMLN’s senior officials. Though observers of Salvadoran politics say this is not a new phenomenon, acknowledging it in such a public way is not something a Salvadoran president has done before.

The Legislative Assembly is not the only institution uncomfortable with Bukele’s new approach. Leading families and their associates, so accustomed to wielding influence in El Salvador, have found themselves on the receiving end of termination notices delivered via Twitter. The social media-savvy Bukele used Twitter to announce the firing of 30 relatives and associates of former President Salvador Sanchez Ceren of the FMLN. They are already pushing back, calling the firings an abuse of power and preparing lawsuits that could cause leadership crises in the agencies involved.

More dramatically perhaps, Bukele’s first order of business as president was to order the army — again via Twitter — to remove the name of Col. Domingo Monterrosa from its 3rd Infantry Brigade barracks in San Miguel. Monterrosa was the commander of the forces responsible for the infamous El Mozote massacre during El Salvador’s civil war. That incident claimed the lives of nearly 1,000 villagers accused by the army of sympathizing with FMLN guerillas. The massacre played a central role in the negotiations that ended El Salvador’s civil war because the army insisted on amnesty as a condition for peace. Since then, the army has honored Monterrosa as a hero. Though the army acquiesced to Bukele’s demand, it is unclear what the president’s relationship with the military will be going forward.

Striking the Balance

Without a legislative majority or support from the oligarchy or the army, Bukele will need all the friends he can get if he is to maintain stability in El Salvador. His critics in ARENA and particularly in the FMLN, a party he once belonged to, know how to attack him. They’ve highlighted some of his expensive failures as mayor of San Salvador and pointed out that despite his attacks on cronyism and corruption, Bukele appointed dozens of relatives and associates to take the place of those he’s fired. Though he commands the support of a growing majority of Salvadoran voters, he could quickly lose their adoration if FMLN pays the gangs to destabilize the country as he claims.

Bukele will need all the friends he can get if he is to maintain stability in El Salvador.

Bukele’s combative approach to entrenched interests in El Salvador may win him the support of the voters but it leaves him with few allies in his quest to change his country’s reputation for violence and backwardness. Though he’s burning bridges at home, the right foreign backers may allow him to attract enough investment and maintain enough security to address his serious fiscal and political concerns, but this is far from assured. Recognizing this, he is rearranging some of El Salvador’s traditional alignments in ways that will appeal to U.S. President Donald Trump and his administration. For example, Bukele declined to invite the leaders of Nicaragua, Cuba, Honduras and Venezuela to his inauguration, telling President Nicolas Maduro to “say goodbye” to Venezuela’s alliance with El Salvador. Nevertheless, the Trump administration’s focus on Central American migrants makes the United States a challenging partner.

However, the United States is not the only superpower with interests in the region. China also wields significant economic influence over El Salvador’s foreign policy. After some early suggestions he may reestablish relations with Taiwan, Bukele reaffirmed his country’s “complete” and “established” relations with China on June 27 and said his government would look “wherever we have to look” to develop El Salvador. While it is unclear what caused him to seemingly change his stance, the best Bukele can hope for in these circumstances is to provoke a developmental bidding war between China and the United States — a balance few leaders have been able to manage.

Ultimately, Bukele has a choice to make. The climate in San Salvador is not conducive to establishing populist dominance over his rivals and unless he finds a way to cooperate with his country’s other power brokers, El Salvador is on course for gridlock and pain. If Bukele fails, he may find it difficult to contain a violent reaction against him and his supporters, a consequence that could cause a deterioration in security in the wider region. The extent to which he can manage the balancing act between the will of the people, the vested interests of his still powerful rivals and the desires of global stakeholders to move El Salvador forward may ultimately be the central feature of his presidency.

Lino Miani is a retired US Army Special Forces officer, author of The Sulu Arms Market, and CEO of Navisio Global LLC. He is a regular contributor to Stratfor’s Worldview.

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