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Background Briefing: ASEANs 22nd Summit and Bruneis Role as Chair Carlyle A. Thayer May 20, 2013

[client name deleted] As you know, China has played a large role in influencing ASEAN's decision-making this year by playing its economic hand in Cambodia. Although Brunei is not as economically dependent on China for financial aid and loans, nor is it particularly close politically to China, it's pretty clear to see that China will attempt to employ some sort of leverage over Brunei in 2013. We request your assessment of China's what China's strategy might be on Brunei as ASEAN Chairman in order to gain some sort of footing in its meetings, particularly as the South China Ses will be a topic for discussion at upcoming meetings? The only strategy that we can think of would be that China increases its trade with Brunei in the next year. We think that its only card would be to increase investments and business opportunities in Brunei, which could translate into short-to-medium term growth. Brunei, as you know, is looking to diversify its economic dependencies from the oil sector, and we suppose they would welcome it. Perhaps this could gain some leverage for China. Do you think this is a logical assessment? If not, do you think there are other ways that China would go around this? ANSWER: Southeast officials that I spoke to were complimentary that Brunei held the ASEAN Ministerial Meeting (AMM) several days before the Summit. This meant that any contentious issue(s) could be dealt with in the intervening period without impacting immediately on the Summit leaders. It seems clear that the 19th ASEAN-China Senior Officials' Consultations witnessed a more cooperative attitude by China. But there seems to have been some momentary confusion after Marty Natalegawa announced that ASEAN and China would hold a meeting on the Code of Conduct in the South China Sea (COC). Marty then made some critical remarks about China. As you know, the ASEAN-China Working Group to Implement the DOC Guidelines will meet in August/September at director general level and the COC will be discussed at this venue. This is not a meeting solely devoted to the COC. That may open the door for China to link progress on the DOC to discussions on the COC. After China's Foreign Minister Wang Li visited Southeast Asia, Marty gave his verbal backing to China's proposal for an Eminent Persons Group (EPG). Last April (2012) China proposed that the EPG comprise ten Chinese

2 and one representative each from the ASEAN states. The EPG should be viewed with a degree of caution. It could slow down discussions on the COC. From all outward appearances Brunei appears to be carrying out its role as ASEAN Chair exceptionally well. Brunei has announced it will give priority to kick start talks on the COC. The Sultan met with President Xi Jinping on the sidelines of the Boao Forum and the media noted that the South China Sea had been mentioned. There is some regional concern about China-Brunei economic relations, Chinese investment, and joint oil exploration arrangements. The Vietnamese fear that China will exert undue influence just as it did over Cambodia. As you will have noted from my Background Briefs I hold a contrary view. Also, between 1999-2000 China signed long-term cooperative framework agreements with all ASEAN members. It is a fact of life that bilateral engagement with China is the "name of the game." And the ChinaASEAN Free Trade Agreement links China's economy to the region. Prior to the Summit Southeast Asian officials said that the action by the Philippines in lodging a claim to be heard by the UNCLOS Arbitral Tribunal had "breathed all life out of the COC." This now appears a premature judgment. The Singaporeans have been quite critical of the Philippines for not undertaking prior consultations with ASEAN on a matter affecting regional security (eg its claim for an Arbitral Tribunal). Indonesia's zero draft COC has become available to a few academics (notably Mark Valencia who has written about it). It is obvious that much work remains before it emerges as a polished draft to discuss with China. Cambodia appears to have gone quiet on the South China Sea. Thailand's role as country co-ordinator for China appears designed to accomplish two objectives at the same time: (1) to use this position to strengthen Thailand's already good relations with China and (2) advance discussions on the South China Sea. When Cambodia was chair they insisted that Thai activities be informal. It is not known how closely Thailand consults with Brunei. In the past, particularly at the 2nd ASEAN-US Leaders Meeting, Thailand successfully pressed for the deletion of all references to China and the South China Sea. This was widely viewed as an act of deference to Beijing. Finally, the Chairman's Statement of the 22nd ASEAN Summit carried a very succinct and positive summary of discussions and reiteration of ASEAN's position. All in all it is my assessment that China is reacting to ASEAN's leadership (Brunei and Indonesia) and is using the goodwill generated by the appointment of "old Southeast Asia hand" Wang Li as foreign minister. It remains to be seen how much clout the foreign ministry will have in positively advancing discussions on the COC. China's actions against the Philippines are worrying. Suggested citation: Carlyle A. Thayer, ASEANs 22nd Summit and Bruneis Role as Chair, Thayer Consultancy Background Brief, May 20, 2013. All background briefs are posted on Scribd.com (search for Thayer). Thayer Consultancy provides political analysis of current regional security issues to selected clients. It was officially registered as a small business in Australia in 2002.