The perils of Asia’s nationalist power game; Modi completes a quartet of combative leaders in the most powerful nations of the region

May 22, 2014 7:12 pm

The perils of Asia’s nationalist power game

By Philip Stephens

Modi completes a quartet of combative leaders in the most powerful nations of the region

India has a new prime minister; and each of Asia’s four most powerful nations is now led by a combative nationalist. The multilateralist assumptions of the postwar order are giving way to a return to great power competition. Nationalism is on the march, and nowhere more so than in the rising east.

On the face of it, Narendra Modi’s victory in India’s election had little connection with geopolitics. Mr Modi’s pitch was to a nation tired of the incompetence and corruption of the Congress party. His promise was faster economic growth and rising living standards. His ambitions, though, reach beyond the domestic: India should be China’s match on the global stage.

Mr Modi’s Hindu nationalism fits the temper of the region. China’s President Xi Jinping wants to restore the Middle Kingdom to past pre-eminence. Deng Xiaoping’s caution has been replaced by demands for due deference to Chinese power.

In Toyko, Prime Minister Shinzo Abe’s economic programme is driven by a resolve to rebuild Japan’s capacity to stand up to Beijing. Vladimir Putin, the fourth of Asia’s nationalist horsemen, has shown with his military intervention in Ukraine Russia’s contempt for a co-operative international order.

Mr Abe hopes Tokyo will be the first port of call when Mr Modi steps out overseas. The Indian prime minister-elect, officials say, shares Mr Abe’s temperament and goals. The talk is of a grand strategic bargain. Japan has the technology and investment to speed India’s economic development. Delhi would be a powerful ally in containing China. Each has territorial quarrels with Beijing – Japan in the East China Sea and India on its northern border. Both worry about Chinese naval power in the Indian Ocean.

The Sino-Japanese relationship could hardly get worse. Beijing is pressing its claims to the disputed Senkaku (in Chinese, Diaoyu) islands in the East China Sea. Mr Abe has struck a revisionist pose by visiting Tokyo’s Yasukuni shrine, where class-A war criminals are honoured alongside fallen soldiers. Barack Obama’s US administration, bound to Japan in the region’s pivotal security alliance, finds itself trying to deter Beijing while restraining Tokyo.

After confronting the west, Mr Putin is turning east. He was in Beijing this week to clinch a big gas supply deal. The contract is intended as a signal to western critics that the Kremlin has alternative markets for its hydrocarbons and a powerful friend in the rising world.

For the moment the arrangement suits Mr Xi. China needs the gas, and Russia can be a convenient ally at the UN. Beijing, like Moscow, sees the present international system as skewed in favour of the west. The partnership, though, is unequal. China is scornful of Russia’s failing economy and of the social and demographic trends dragging the country into decline. Mr Putin’s role, then, is that of the useful idiot.

Mr Abe thinks the Kremlin can be tempted to hedge its bets. Russia is nervous of China’s growing presence in a fast-depopulating Siberia. Over time, Chinese citizens may become the dominant ethnic group in the Russian far east. How long before Beijing applies to Chinese citizens on Russian soil the doctrine of extraterritoriality Mr Putin has deployed in Ukraine? Mr Abe, who has been sotto voce in his criticism of Russian annexation of Crimea, calculates it is time to “normalise” Russo-Japanese relations.

This turning kaleidoscope of rivalries and realignments is further complicated by a swirl of collisions involving smaller players. China is in angry dispute with Vietnam and the Philippines over competing claims in the South China Sea. South Korea should be a natural ally of Japan, but Mr Abe’s reluctance to acknowledge the sins of Japan’s imperial past nudges Seoul towards accommodation with Beijing. China accuses Washington of turning neighbours against it. More likely, China’s heavy-handedness is driving them into America’s arms.

One consequence of this is a rapid build-up of military forces across the region. China and Russia have set double-digit increases in their defence budgets. The Indian military has secured a similar rise, and intends to lay first claim on the fruits of Mr Modi’s promised economic revival.

For his part, Mr Abe wants to reinterpret Japan’s postwar constitution to ease the constraints on its capacity to deploy force. At a glance, his proposed changes seem modest enough but, set in the context of the times, they speak to a strategy of building a network of security alliances against China.

Stir in the toxic legacy of disputed history and the absence of international mechanisms to settle the border spats, and the region looks ever more combustible. For now, the US holds the ring. American power may be waning, but it still outguns everyone else. The question uppermost in the minds of every Asian leader is for how long?

Watching Washington’s retreat from the Middle East, many of its allies have doubts about the longevity of the US security guarantee. Japanese and South Korean officials say they need the US in the short to medium term, but must make their own plans for the long term. China’s strategy looks pretty clear – to push the US out of the western Pacific and claim tribute from its neighbours. It will push and prod to test Washington’s resolve.

What’s wrong with nationalism, a friend in Tokyo asked me the other day? Well, there is much to be said for patriotism. As for nationalism, the answer is found in the bloodied pages of European history. I doubt, though, that Asia’s four horsemen have taken the time to read them.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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