Critical Questions for 2013: Regional Issues

In Critical Questions 2013 CSIS's world class experts give their take on what they see as the most pressing challenges facing the world in 2013. Transitions in U.S. defense policy, regional flashpoints, and global-scale issues are likely to dominate what will be another year of international transformation. Read below to find the answers to next year's most critical questions on Regional Issues or follow the links to find additional answers.

Defense and Security

A Defense Strategy We Can Afford
Maren Leed, senior adviser, Harold Brown Chair in Defense Policy Studies and Ground Forces Dialogue

Living within Our Means: Redefining Defense Priorities for an Era of Limited Resources
Clark Murdock, senior adviser and director, Project on Nuclear Issues
Kelley Sayler, research associate, Defense and National Security Group

Maritime Security 2013
Carl Baker, director of programs, Pacific Forum CSIS

Meeting The True Fiscal, Social and Political Challenges to U.S. National Security
Anthony H. Cordesman, Arleigh A. Burke Chair in Strategy

Sustaining an Effective and Affordable Nuclear Deterrent in 2013
Clark Murdock, senior adviser and director, Project on Nuclear Issues
Stephanie Spies, research assistant and program coordinator, Project on Nuclear Issues

Global Challenges

Democratic Governance and Budgets in 2013
Gerald Hyman, senior adviser and president of Hills Program on Governance

The Demographic Picture in 2013
Richard Jackson, director and senior fellow, Global Aging Initiative

Economics in 2013
Matthew P. Goodman, William E. Simon Chair in Political Economy

Energy and the National Interest
Sarah O. Ladislaw, codirector and senior fellow, Energy and National Security Program

How Does America Avoid Becoming Japan or Europe?
James Andrew Lewis, director and senior fellow, Technology and Public Policy Program

Instability and Crisis in 2013
Robert D. Lamb, director and senior fellow, Program on Crisis, Conflict, and Cooperation (C3)

The Prospects for Nonproliferation in 2013
Sharon Squassoni, director and senior fellow, Proliferation Prevention Program

Rewriting the U.S. Narrative
Brad Glosserman, executive director, Pacific Forum CSIS

Support the Doing Business “Revolution” through U.S. Leadership
Daniel Runde, William A. Schreyer Chair and director, Project on Prosperity and Development

Transatlantic Security in 2013
Stephen J. Flanagan, Henry A. Kissinger Chair in Diplomacy and National Security

U.S. Trade Policy and Economic Growth
Scott Miller, senior adviser and Scholl Chair in International Business

What’s Next in Cybersecurity?
James Andrew Lewis, director and senior fellow, Technology and Public Policy Program

Regional Issues

The Arctic in 2013
Heather A. Conley, Senior Fellow and Director, Europe Program

Asia in 2013: Whither the Pivot in 2013?
Michael J. Green, Senior Vice President for Asia and Japan Chair

China in 2013
Christopher K. Johnson, Senior Adviser and Freeman Chair in China Studies
Bonnie S. Glaser, Senior Adviser For Asia, Freeman Chair in China Studies

Europe in 2013
Heather A. Conley, Senior Fellow and Director, Europe Program

India in 2013—and Beyond
Karl F. Inderfurth, Wadhwani Chair in U.S.-India Policy Studies

The Challenge of China and North Korea for Madame Park Geun-hye
Victor Cha, Senior Adviser and Korea Chair

Russia in 2013
Andrew C. Kuchins, Senior Fellow and Director, Russia and Eurasia Program

Southeast Asia in 2013
Ernest Z. Bower, Senior Adviser and Sumitro Chair for Southeast Asian Studies

Western Hemisphere 2013
Stephen Johnson, Senior Fellow and Director, Americas Program

The Arctic in 2013

Heather A. Conley, Senior Fellow and Director, Europe Program

If 2012 was any indication, the Arctic will continue to dominate headlines in 2013. New oil and gas discoveries…Arctic Sea ice at the lowest level since data was recorded…a Chinese icebreaker traveled through the Northern Sea Route: these were a few of last year’s headlines. For many, the Arctic, as a region and an issue, is very remote. Both statements are untrue. As we ring in 2013 with news reports of a grounded oil platform in the Alaskan Arctic, we are reminded that growing Arctic economic interests and new shipping routes, coupled with rapidly changing climatic conditions, are not distant issues; they are happening now.

In May of this year, the foreign ministers of the eight members of the Arctic Council, an international forum that brings together the Arctic coastal states—Canada, Denmark (via Greenland), Norway, Russia, and the United States—plus Iceland, Sweden, and Finland, as well as representatives of the indigenous peoples of the Arctic (permanent participants), will meet in Sweden. First on the agenda will be approval of an oil spill response and prevention agreement that will encourage Arctic states to work together in case of an oil spill incident. This legally binding agreement comes on the heels of an international search and rescue agreement that was signed in 2011 by Arctic Council members. These agreements, along with the establishment of a Permanent Secretariat for the Arctic Council, are important steps that solidify international cooperation in the Arctic.

One issue that may or may not be resolved, however, is whether to accept new permanent observers to the Arctic Council. China, Japan, South Korea, Singapore, Italy, India, and the European Union have applied to become permanent observers. While the criteria to become a permanent observer have been previously approved, it will be a political decision by the Arctic Council as to whether these countries are approved. This seemingly technical issue is symbolic of larger geopolitical trends. Is the Arctic an issue just for the countries of the region, or is it a global issue? Until now, it has been largely a topic of discussion for regional actors. Because of the Arctic’s potentially vast natural and mineral resources, shipping routes, and global climatic impact, many more countries now wish to be engaged.

Following the Arctic Council Ministerial, Canada will assume the chairmanship of the Arctic Council with a greater focus on economic development than has been the case with previous chairmanships. The Arctic has greater domestic political significance in Canada than it does in the United States (with the exception of Alaska), and the Canadian government will frequently refer to sovereignty and regional rights over the concerns of non-Arctic states. This may be a cause of concern for Arctic states as well.

The United States has been an engaged but muted actor in Arctic issues thus far. The Obama administration has yet to update the 2009 U.S. Arctic strategy and has been unable to attain Senate ratification of the UN Convention on the Law of the Sea Treaty (UNCLOS), the international legal regime for the Arctic. The United States is the only non-signatory member in the Arctic Council. If there is to be any hope of achieving ratification in Obama’s second term, the White House will need to send a strong signal early in 2013 that UNCLOS ratification is one of its top treaty priorities.

An updated strategy and UNCLOS ratification are necessary steps as the United States assumes the chairmanship of the Arctic Council in 2015. During the U.S. chairmanship, the Arctic Council will celebrate its 20th anniversary. Much has changed in the Arctic during these 20 years, and active U.S. leadership will be vital to ensure that the international community is adequately prepared for the next 20 years.

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Asia in 2013: Whither the Pivot in 2013?

Michael J. Green, Senior Vice President for Asia and Japan Chair

As security experts in the Asia-Pacific region forecast 2013, the variable they are often most interested in is whether the Obama administration’s vaunted “Pivot” or “rebalancing” to Asia will continue. The fiscal cliff, uncertain defense budgets, near silence on trade policy, and the departure of the officials most associated with the Pivot—particularly Secretary of State Hillary Clinton and Assistant Secretary Kurt Campbell—have all raised questions about whether the administration’s active engagement of the region will continue.

Before assessing the future of the Pivot, however, it is probably necessary to define what it actually is. Theoretically, any new conception of grand strategy should marry the ends, or national interests at stake, the means for achieving those interests, and the ways those means will be employed to deal with new challenges to the nation’s interests. The Pivot emerged from no such careful policy planning process or central strategic document. Instead, it was the result of a confluence of planning and narratives related to domestic political messaging, military strategy, and unexpected developments in Asia. The five elements were:

1. The broad sense that Asia is more important to U.S. national interests. This recognition is reflected in numerous public and elite opinion polls over the past few years. As the Scottish economic historian Angus Maddison demonstrates, Asia is returning to the center of international economic output after a hiatus of 200 years that started with the industrial revolution and the demise of the Qing Empire in China. The American people know this intuitively, which is why in recent Chicago Council on Foreign Relations polls they began identifying Asia as the most important region in the world to the United States. Raised in Hawaii and Indonesia, President Obama also understood this. However, recognizing that a region is more important to U.S. interests does not in itself represent a grand strategy. It begins to identify the ends, but not the ways and means.
2. Political messaging. As Bob Woodward describes in Obama’s Wars, senior White House officials around the president were looking for arguments to accelerate the withdrawal of U.S. military forces from Afghanistan—the conflict that candidate Obama had identified as the “good war” to brandish his national security credentials as he critiqued the surge in Iraq. The Pentagon’s January 2012 Strategic Guidance punctuated the theme that U.S. military forces had to focus more on East Asia after a decade of intense combat in Southwest Asia. This was a proper prioritization of future missions, but also good political cover for much deeper defense cuts than outgoing Secretary of Defense Robert Gates had recommended as prudent. However, there was very little strategic planning on Asia that went into the “rebalancing.” As The New York Times reported, the military services were tasked by the White House to describe what might go into the rebalance only after it was announced. In that sense, the Pivot is still a work in progress in terms of the means for executing the strategy.
3. A reaction to Chinese assertiveness. Broadly speaking, U.S. strategy toward Asia and the Pacific has combined the engagement of China, continued by every president since Richard Nixon went to Beijing in 1972, with the balance-of-power strategy, continued by every president since Bill Clinton revitalized the U.S.-Japan alliance in 1996. The senior strategists in the Obama administration knew this and made a point of inviting Prime Minister Taro Aso of Japan as the first foreign head of state to visit the White House. On the engagement side, the administration then tried to add more “strategic reassurance” and institutional superstructure to the relationship with China. This included a joint statement on the occasion of President Obama’s November 2009 visit to Beijing in which he and President Hu Jintao each agreed to respect the other nation’s “core interests,” which included Taiwan, Tibet, and Xinjiang for China and the U.S. role as a Pacific Power. That was not a good trade for the U.S. side, particularly when it was paid for with gestures meant to signal a new tone with Beijing, such as delaying the traditional visit of the Dalai Lama to the White House. Though the administration clearly did not intend to do so, it gave the impression of accommodation to a rising China.

The next year Beijing clashed at sea with Japan, Vietnam, and the Philippines over maritime territorial claims and refused to pressure Pyongyang after deadly North Korean attacks on South Korea. It was evident that Beijing was either unwilling or unable to deliver on its side of the strategic reassurance effort. With a clamor from regional allies and partners for a more active U.S. stance, the administration increased the emphasis on balance of power in its approach to the region. In January 2011, when Hu Jintao visited the United States, the joint statement he issued with the president did not include any reference to “core interests,” a deliberate omission insisted upon by the State Department and White House negotiators. Secretary of State Hillary Clinton then put the word “pivot” into circulation when she used it in her article on Asia in Foreign Policy magazine in November 2011. Military dimensions of the Pivot—or “rebalance” as it was being called in the White House—also began to surface. The January 2012 Defense Department Strategic Guidance noted threats posed by the People’s Liberation Army (PLA) and included assessments of PLA anti-access capabilities in the same sentence with Iran. That April, the United States and Japan agreed on the mechanism for dispersing U.S. Marine Corps units from Okinawa to Guam and Northern Australia. Both the Strategic Guidance and the deployment to Darwin were announced by the president, giving these military elements of the Pivot particular prominence. This aspect of the Pivot, while sound military strategy overall, has raised questions in the region about whether the purpose of U.S. engagement is actually to contain China.

1. Realignment of U.S. forward posture. In fact, the realignment of U.S. forward posture in the Pacific began over a decade ago, driven by the need to reduce pressure from U.S. bases on Okinawa and to deal with growing low-intensity challenges in Southeast Asia and growing A2AD (anti-access area denial) challenges in Northeast Asia. In that sense, the realignment is not old, but it has become increasingly urgent and—for better or worse—identified with the Pivot to the region. And precisely because the larger strategic context of the Pivot has not been articulated sufficiently, the specific force posture spending proposals have been blocked by the U.S. Congress. It was in this context that CSIS was tasked to complete an independent assessment of U.S. force posture strategy in the Asia-Pacific region in 2012. Our report found that the overall administration strategy for the region was sound, but it urged the administration to find venues to explain the larger strategic context for the Pivot more consistently for congressional and foreign audiences.
2. Greater engagement of Southeast Asia. From the beginning of the administration, Secretary of State Clinton has been an active and enthusiastic participant in the sometimes dreary multilateral diplomacy of the Association of Southeast Asia Nations (ASEAN), with unprecedented perfect attendance at the ASEAN Regional Forum (ARF). Previous deputy secretaries have shown similar enthusiasm about Southeast Asia, in particular Robert Zoellick, but Clinton is the first secretary of state to sustain attention to the region. How much of that will dissipate with her successor is not clear, though the intense diplomatic confrontations with China behind the scenes in recent years could make the ARF too important to skip. Meanwhile, President Obama has fully embraced the regional institutional architecture centered on ASEAN. There are multiple dimensions to Asian multilateralism, ranging from the transpacific Asia-Pacific Economic Cooperation (APEC) forum, to the smaller trilateral the United States does with Japan and Australia. ASEAN members have been pushing for “ASEAN centrality” in this process, and President Obama has obliged by joining and then attending two years in a row the new East Asia Summit (EAS). The move raised concerns among those hoping that APEC would maintain a strong transpacific anchor in regional architecture, but the president’s commitment to the EAS may be the most lasting dimension of the Pivot. It means that in future U.S. presidents will likely take two annual trips to the region (one for APEC when it is not in the Western hemisphere and one for EAS). Some critics say that all the administration has done is pivot from North to Southeast Asia, but in fact the enhanced engagement of Southeast Asia represents a filling-out of overall U.S. strategy given the growing importance of ASEAN, both as a major trading partner in its own right and as an objective of U.S. and Chinese strategic influence.

So will the Pivot continue in 2013? Certainly the American people will continue to see Asia as the most important region to their interests, but polls also indicate that Americans identify the Middle East as the most dangerous region to their interests. Given that 2013 could be the year of reckoning on Iran’s nuclear program, not to mention the likely denouement for Syria, John Kerry will require real strategic discipline to keep a focus on Asia. The administration has also had some difficulty managing the inherent tension between engaging China and maintaining a favorable balance of power in the region. Allies such as Japan and the Philippines worry that in the second term the administration may tilt back toward an emphasis on reassuring, rather than dissuading, Beijing. That would be unfortunate, since lack of consistency on that front hurt the administration in the first term with both the allies and Beijing.

Engagement of ASEAN is a noted success for this administration, but the terrain could become tougher in the years ahead, given renewed ethnic conflict in Burma, leadership transitions in Indonesia, and domestic political problems in Vietnam, Malaysia, and elsewhere. A strong U.S. trade representative empowered to move forward on the Trans-Pacific Partnership would certainly help the sustainability of the Pivot, particularly with ASEAN.

Finally, all eyes will be on the defense budget. A carefully managed cut to defense spending that allows reprogramming for naval and air force capabilities in the Pacific is necessary. Sequestration that throws the defense establishment into chaos would damage the region’s image of U.S. strategic competence.

If the president sticks to his commitment to attend summits in the region twice a year, however, the impact of these decisions on trade and defense will come home to him and his team with a regularity that should help keep the Pivot alive.

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China in 2013

Christopher K. Johnson, Senior Adviser and Freeman Chair in China Studies
Bonnie S. Glaser, Senior Advisor For Asia, Freeman Chair in China Studies

Maritime disputes on China’s periphery, already a source of tensions between Beijing and its neighbors, may become further aggravated in 2013. In the East China Sea, Chinese marine and fishery surveillance vessels and aircraft are challenging Japan’s administrative control over disputed islets (called Senkaku by Japan and Diaoyu by China) and their adjacent waters, increasing the potential for a clash that could escalate and, in some scenarios, draw in the United States. Friction over territorial disputes in the South China Sea may also intensify, especially if Beijing seeks to interfere with oil and gas exploration and development activities conducted by rival claimants Vietnam and the Philippines. For example, in the summer Philex Petroleum plans to begin drilling “appraisal wells” at Reed Bank, which Manila claims was the site of Chinese harassment of Philippines exploration vessels in 2011. Several members of ASEAN, along with the United States, continue to push for a Code of Conduct for the South China Sea that holds promise for reducing the risk of conflict, but Beijing is resisting, preferring instead to manage the disputes bilaterally. In addition to maritime disputes, North Korean provocations, such as a third nuclear test or an attack on South Korea, could test Chinese foreign policy under its new leadership in the coming year. A major challenge for the United States in 2013 is how to respond to China’s increasing predilection to bully its neighbors, through the use of white-hulled maritime vessels rather than People’s Liberation Army (PLA) warships or via the employment of crafty economic coercion tactics. The United States’ continuing pivot to Asia, which China fears is a veil for a new U.S.-led coalition of nations to contain Chinese influence, will undoubtedly remain an irritant complicating U.S.-China ties.

Internally, newly installed Chinese Communist Party general secretary Xi Jinping captured the mood perfectly by repeatedly referring to “crossing the river by feeling the stones” in remarks delivered on the margins of a Politburo “study session” held on New Year’s Eve to discuss deepening China’s reforms in the year ahead. Xi and his new Politburo Standing Committee colleagues have set the right tone early in their tenure by casting themselves as servants of the people who oppose “formalism” and “empty talk” and are focused on delivering “real” economic growth. But relying on catch phrases and style points alone will not solve the many challenges the new team faces, and they appear to know it. Despite some initial pushback, for example, Xi has signaled unambiguously that a corruption crackdown launched in the wake of the 18th Party Congress will continue.

Still, it remains ambiguous whether such moves are designed to buy the leadership time to think through a plan for rolling out a more substantial reform program, as the optimists hope, or instead are simply a distraction from more of the same, as the pessimists preach. This underscores the reality that, in many ways, the leadership itself is not entirely sure where it is going. The reforms needed to unlock another massive wave of Chinese economic expansion are complex and difficult. It will require “great wisdom and courage,” as Xi told his Politburo colleagues at the study session. Presumed government restructuring plans to be unveiled at the first session of the new National People’s Congress in March will offer an initial glimpse of the leadership’s appetite for bold action and for taking on the regime’s vested interests. A key Central Committee plenum in the fall also will test whether Xi’s carefully choreographed campaign to style himself as a reformer in the tradition of deceased paramount leader Deng Xiaoping is genuine or mere theatrics.

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Europe in 2013

Heather A. Conley, Senior Fellow and Director, Europe Program

2013 will be a determinant year that will shape the contours of the transatlantic relationship for the next decade. As emerging economies challenge and test the 70-year-old international rules established by the post-1945 victorious powers, what will the transatlantic response be? Use the current international system to restrain emerging powers? Open the international system to allow the emerging powers greater voice even if it contradicts Western values? Or, attempt to revitalize and redefine the Western value-based operating system at a time when the system itself is undergoing a fundamental challenge? Unfortunately, neither Europe nor the United States view this pivotal year with any sense of urgency or innovation toward renewing today’s post-1945 architecture for a highly interconnected, globalized setting.

If the moment could be seized in 2013, the transatlantic relationship would see dramatic renewal in the form of a transatlantic free trade agreement. Although both sides of the Atlantic eagerly seek growth to improve their respective sluggish economies, GDP growth would be a beneficial by-product of what a free trade agreement would really do: set the international trade and investment standards for the world economy for decades. The same could be said about a cyber-security regime, which is also under serious challenge.

Reading the current transatlantic political and economic tea leaves, however, look for 2013 to be a continuation of the past four years where both sides remain stuck in a political and economic “muddling through” of their own making with lasting consequences for the Western model. Chancellor Angela Merkel of Germany, for example, has perfected the tactical art of muddling. To her credit, the euro zone has remained intact, and she is Europe’s most popular politician. But unfortunately for the European integration project, there is no strategic path forward beyond the next European summit and certainly no compelling message about Europe’s future role and influence in the world.

Interestingly, for the first time in several years, Europe’s political muddling through will overshadow its economic muddling. There will be great media attention surrounding the upcoming February Italian general election and September German national election, although both will likely be status quo events with very little change to policy course. Similarly, U.S. elections in 2012 produced a status quo result as American politics will also muddle through on austerity measures, tax increases, and debt ceiling debates. Tragically, this is the prism by which the international community views Europe and the United States today.

The three most important political muddling events to watch for in Europe in 2013 will be how British politics will evolve (or devolve) as the United Kingdom seeks a diminished relationship with the European Union as a nationalistic reaction to its own struggling economy; how Scotland and Spain’s autonomous Catalonia region prepare for independence referenda respectively in 2014; and, how French politics will or won’t respond to a deteriorating domestic economic situation.

Although the health and well-being of the world’s largest trading block and the vitality of liberal democracy is at stake in 2013, transatlantic leaders seem unwilling or unable to take notice. As muddle is perceived as Western decline or isolationism, emerging powers will surely take advantage and press forward with their own global rules of engagement—to the detriment of the international liberal-based order.

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India in 2013—and Beyond

Karl F. Inderfurth, Wadhwani Chair in U.S.-India Policy Studies

To paraphrase an expression often used by President Ronald Reagan, “there they go again.” But in this case, it’s not the political opposition being referred to; it’s the National Intelligence Council (NIC) in its latest global predictions report.

In 2004, the NIC released “Mapping the Global Future,” forecasting what the world order would look like by 2020. In one of its boldest, and historically most audacious, assertions, it stated: “The likely emergence of China and India as new major global players—similar to the rise of Germany in the 19th century and the United States in the early 20th century—will transform the geopolitical landscape” of the 21st century.

Last month the NIC came out with its latest long-range global forecast, “Global Trends 2030: Alternative Worlds.” Perhaps to modest India’s discomfort, the NIC again raised the bar for what can be expected from the soon-to-be world’s most populous nation: “In 2030 India could be the rising economic powerhouse that China is seen to be today.”

In support of this bullish prediction, the NIC called attention to the World Bank’s assessment that India will join China as an “emerging economy growth pole” by 2025 and that India’s contribution to global growth in coming years will surpass that of any individual advanced economy except the United States.

Talk about Dickens’s Great Expectations. Now we know what Secretary of State Hillary Clinton has been drawing on when she says it is in America’s national interest to make a “strategic bet” on India’s rise as a global power and to pursue our bilateral relations accordingly.

But for India today and its more immediate future, a reference to the opening line in another Dickens’s novel—A Tale of Two Cities—is a cautionary tale: “It was the best of times, it was the worst of times.” As the NIC report and other publications (including by CSIS) point out, for India to maximize its advantages (including demographic with a youthful population) it will need “to boost its educational system; make substantial governance improvements, particularly in countering corruption; and undertake large-scale infrastructure programs to keep pace with rapid urbanization.”

How India addresses these three major challenges in 2013—education, corruption and infrastructure—will say a lot about whether India will be able to achieve the “Great Expectations” many have for it in this century or find itself facing the title of yet another book by the great English novelist, Hard Times.

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Japan in 2013

Nicholas Szechenyi, deputy director and senior fellow, Office of the Japan Chair

Q1: Is political stability on the horizon?

A1: Japan recently produced its seventh leader in six years and a fundamental question is whether the resurgence of the Liberal Democratic Party (LDP) and Prime Minister Shinzo Abe, who previously served from 2006-2007, improves the prospects for political stability. The LDP won the December 2012 Lower House election in a landslide but exit polls showed that the election was largely a referendum on the relatively inexperienced Democratic Party of Japan (DPJ), which assumed power for the first time in 2009 but over three years failed to articulate a cohesive policy agenda. Abe must sustain enough momentum to secure an LDP majority in an Upper House election scheduled for July, after which a period of relative stability could follow. Voters soured on the LDP three years ago for its failure to revive the economy and Abe’s economic agenda is therefore a subject of great scrutiny. 

Q2: What’s in store for the economy?

A2: Abe’s strategy emphasizes fiscal stimulus in the form of increased public works spending and monetary easing to combat deflation. The new government can also be expected to devise an energy strategy that gradually reduces reliance on nuclear power but stops short of entirely eliminating it from the energy mix absent sufficient supply from alternative sources. Less clear is the degree to which the LDP might be willing to tackle questions of reform including deregulation, immigration, and trade liberalization that could help chart a path to sustainable growth. The recent cycle of political instability in Japan has placed a premium on short term tactics but the public is starving for leadership and this year could feature a more substantive debate on economic policy.

Q3: How about regional diplomacy?

A3: Japan’s relations with China and the Republic of Korea will prominently figure amid tension over contested territories. Abe has made statements in the past on sensitive historical issues that have also garnered attention and the question is whether he chooses to pivot to the center over the course of this year as he did during his last term as prime minister when he oversaw significant improvements in Japan’s relations with Seoul and Beijing. Abe has expressed interest in strengthening partnerships with Australia and India and has already begun outreach in Southeast Asia to further Japan’s diplomatic profile in the region. 

Q4: And security policy?

A4: Abe has pledged to reinterpret Japan’s constitution to exercise the right of collective self-defense and thereby facilitate coordination and interoperability with the U.S. military and potentially other partners in the region. The Abe government is also expected to increase defense spending and initiate a review of defense policy this year to further define Japan’s leadership role in regional and global security. A key variable in this context is whether the resulting strategy, unlike previous efforts, will be sufficiently resourced in the face of sluggish economic growth.

Q5: Bottom line?

A5: The Abe government in Japan will offer new policy prescriptions to confront economic stagnation and a rapidly changing security environment, possibly as a prelude to another extended period of LDP rule. The potential for renewed leadership on economic and security issues is encouraging and bodes well for U.S.-Japanese cooperation as the Obama administration pursues a strategic rebalancing toward the Asia-Pacific region that rests fundamentally on the strength of its alliances. An end to political paralysis would undoubtedly create space for a strategic vision to emerge that projects confidence and optimism about Japan’s future.

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The Challenge of China and North Korea for Madame Park Geun-hye

Victor Cha, Senior Adviser and Korea Chair

On February 20, 2012, South Korea had a historic election with Park Geun-hye of the Saenuri Party being elected as the first female president in the country’s (and indeed East Asia’s) history. This was the first time for a South Korean presidential candidate to win the election with a majority of votes since democratization in 1987. President-elect Park Geun-hye received 51.6 percent of the vote against Moon Jae-in of the opposition Democratic United Party, a former chief of staff to late President Roh Moo-hyun.

Multiple challenges loom on the horizon. Much domestic attention will focus on how she will fulfill her campaign pledges to spur economic growth, reduce unemployment, strengthen economic regulation, and improve social welfare. Her foreign policy challenges are no less daunting, the most interesting of which will be her approaches to North Korea and China.

Q1: Do we anticipate major changes in the new South Korean government’s foreign policy?

A1: “Major” would be too strong a word. “Adjustments” might be more appropriate. Park Guen-hye’s national security team will likely be stocked with mainstream, traditional foreign policy internationalists who value the U.S.-ROK alliance as a center of gravity, but who also seek to expand relations with neighbors, including China and North Korea.

Q2: How will policy shift on North Korea?

A2: Park Guen-hye is the first South Korean president to have visited North Korea and met with the late leader, Kim Jong-il, before she entered the Blue House. She is therefore less afflicted by the obsession with crossing the demilitarized zone (DMZ) than past presidents. Having said this, Park has also made clear her desire to take a different path with the North that “builds trust.” What exactly this means is unclear, but the first operational step is likely to be a delinking of humanitarian assistance from politics. This might mean unconditional offers of food and fertilizer that were absent under the previous government. In the larger scheme of things, however, it is unlikely that the Park government will move beyond this level of assistance without reciprocity from Pyongyang on inter-Korean issues (family reunions, provocations, denuclearization, West Sea).

Q3: How will relations with China change under Madame Park?

A3: This is another foreign policy priority for the incoming Park government. During the campaign, Park talked about reaching out to Beijing and improving the state of relations left by the previous government. Park is the only ROK president in recent history who speaks Chinese; indeed, when Lee Myung-bak became president in February 2008, he sent Madame Park as his special envoy to China. As president-elect, her decision to send her first diplomatic envoy, Kim Moo-sung, from January 22–24, 2013, to China is a reflection of her perceived desire to improve relations with Beijing.

But here again, it is unlikely that she will replicate the “balancer” mantra of the last progressive government in Korea (i.e., that Korea would act as a “strategic balancer” between the United States and China). She hosted a meeting in Seoul with a visiting delegation of U.S. government point people on Asia on January 16, 2013, led by Assistant Secretary of State Kurt Campbell, which signals her clear interest in the strong alliance.

One area of increasing priority will be to align Seoul and Beijing’s expectations on the future direction of the peninsula. China’s record of increasing economic penetration into North Korea since 2008 (as documented in a recent Senate Foreign Relations Committee report will be something the incoming government will need to address in some fashion. Simply upping South Korean economic assistance to the North is unlikely to solve the problem. Such assistance would not likely supplant China’s economic stake in the North, but merely complement it.

Q4: Can we expect any “wild cards” in the first half of 2013?

A4: One can never rule out the possibility of another North Korean provocation proximate to Park’s inauguration next month. Our research at CSIS has found that Pyongyang has a history, dating back to 1992, of welcoming in new ROK presidents with some sort of military action. In this regard, one can never rule out a nuclear test.

There are two additional wild cards, however. Despite President Park’s previous trip to North Korea, one can never discount too heavily the attraction in South Korean circles of a surprise summit. Second, an area of potential escalation is the West Sea. This could go poorly in the sense that we will see altercations and escalation; or it could go well in the sense that the two countries might start inter-Korea dialogue on tension reduction. The latter would be a welcome development.

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Russia in 2013

Andrew C. Kuchins, Senior Fellow and Director, Russia and Eurasia Program

Q1: What is the future of the “Reset” with Russia for Obama’s next term?

A1: Zero. Nothing. The “Reset” is dead as a doornail. In retrospect I would date its demise to September 24, 2011, when at the United Russia Party Congress it was revealed that Vladimir Putin and Dmitry Medvedev, the so-called tandem, would switch places with Putin again becoming president of Russia. It was precisely at this time that U.S.-Russia relations took a decided turn for the worse with the first of Russia’s double vetoes (with China) on UN sanctions on Syria in early October. Kremlin criticism of the United States multiplied and became much sharper as the fall progressed on issues including Syria, missile defense, Iran, and others.

Note that, as far as I am aware, Putin never used the term “Reset” (perezagruska), neither when he was prime minister nor when he again became president in May. For him this term applies to the Obama/Medvedev years. It is not that he did not support agreements and cooperation that emerged in 2009–2011, but I suspect he always believed that the Obama administration’s strategy with the Reset in part was to try to strengthen Medvedev’s domestic political standing at home through foreign policy achievements with the United States. And while we do not know the decisionmaking progress during the tandem years, I think that Putin and Medvedev genuinely disagreed over Libya and the eventual Russian decision to abstain from the UN Security Council resolution that allowed NATO intervention in the spring of 2011. Many observers tossed that off as a good cop/bad cop routine, but I believe it reflected real differences on a pivotal issue given what happened in Libya, as virtually all of the Russian ruling elite now views the abstention as a serious blunder (as do the Chinese) that would not be repeated in Syria.

The year 2012 was rather brutal for U.S.-Russia relations. It began with the unprecedented harassment of our newly appointed ambassador to Russia, Michael McFaul, who has often been referred to as the architect of the Reset. This was part and parcel of the presidential campaign of Putin, which featured blatant and virulent anti-Americanism as a central plank. Putin then stiffed President Obama in refusing to come to Washington in the spring for the G-8 and gave the totally uncredible excuse that he was too busy to travel because of political demands at home in his cabinet formation. Then in the fall, the Russians expelled the U.S. Agency for International Development and discontinued the Cooperative Threat Reduction Program (Nunn-Lugar), which that had probably been the most successful U.S. collaborative assistance effort since the Marshall Plan. The year ended on a total downer with the Russian Duma’s bizarre response to the U.S. Congress’s passing of the Magnitsky Act (which accompanied Russia being granted permanent normal trade relations status)—the Dima Yakovlev Act (which prohibited as of January 1 Americans from adopting Russian orphans). The Russian government promised an asymmetric response to the Magnitsky Act, but they really outdid themselves by passing legislation whose primary effect is to punish especially older and disabled Russian orphans that Russians themselves are not inclined to adopt. Any happiness in Moscow and Washington about finally getting rid of the dreadfully anachronistic Jackson-Vanik amendment was overwhelmed with the tit-for-tat Magnitsky and Dima Yakovlev legislation.

Q2: Okay, so if the Reset is over, how would you characterize the challenges and opportunities for the Obama administration in the year ahead with Russia?

A2: The only good news is that the relationship is not as bad as it was in January 2009 when Obama first came to power. The bad news is that is still a very low bar, and there are not any near-term prospects or major incentives to improve relations as there were four years ago. In 2009, the Obama team believed they needed to work with the Russians first to address the Iran nuclear threat, second to support a greater military footprint in Afghanistan, and third to advance the newly elected president’s new vision for nuclear security. Iran is much closer to gaining a nuclear capability, but however the issue is resolved, there is not as much need to engage Russia as four years ago. Afghanistan is now a “sell” rather than a “buy” issue for the administration, and while we need Russian support for our withdrawal and efforts to stabilize the region, this is not as high of a priority for the Obama team today. Obama has not given up on his “global zero” nuclear agenda, but its prominence has faded, and the prospects of another bilateral round of deep cuts in offensive nuclear forces with Russia will be impossible without reaching some kind of agreement on missile defense, which would require compromises from Washington and Moscow that appear at least for now to be unworkable.

Obama expended considerable time and political capitol in working with Dmitry Medvedev in the first years of his term, and he was rewarded with important agreements and cooperation on Iran, nuclear cuts, Afghanistan, and other issues. There is nothing, however, that Vladimir Putin has said or done in the past year or so to give the U.S. president any confidence that investing his precious time and capital would bring anything close to the returns he got in the heyday of the “Reset.” Obama is a pragmatic guy, and I cannot imagine he has any serious enthusiasm in taking up Putin on his invitation to come to Moscow later this spring. For what? What prospect is there of any “deliverables” that are worth the effort? I would love to be wrong, but I do not see them in the offing.

This may be a better time for officials and thought leaders to take a step back and make the effort to envision how each country can be important in the longer term in achieving economic and national security goals. Where should Russia fit in U.S. global strategy in the years ahead? There is a lot of dynamic change now in international relations including obvious developments like the rise of China, the growing impact of climate change, and the shale gas revolution. It does not take a genius to envision how Russia could play a constructive role from the standpoint of Washington and vice versa of the United States for Moscow on East Asian security, the development of the Arctic, global energy security, the growing role of political Islam, and a host of other major challenges. There also is significant untapped potential in bilateral commercial relations stemming in part from Russia’s membership in the World Trade Organization but more broadly as it continues to integrate into the global economy and finally unshackle itself from the tremendous burden of the Soviet economic legacy.

Q3: Is Putin really going to rule Russia for two more six-year terms—until 2024?

A3: I doubt it, but he certainly is in no imminent political danger, at least as long as the oil price does not fall much below $80/barrel. However, the challenges he faces in guiding Russia to its next stage of development are considerable. He is popular, maybe not so much as a few years ago, because he has presided over an unprecedented and remarkable period of economic growth and increased prosperity in Russia. But with that growing prosperity has emerged a genuine middle class with greater demands for pluralism, good governance, and a voice in how public affairs are managed.

If Putin and his team are not able to deliver more sustained dynamic economic growth, his ratings and political popularity will continue to fall. But the key drivers of economic growth for much of his tenure—dramatically rising oil prices, increased oil production, and easy monetary conditions—will hardly coalesce to the degree they did from 1999 to 2008, fueling a very much unexpected Russian boom. In 2006, I wrote an article entitled “Vladimir the Lucky” arguing that Putin was leader of Russia during a remarkable period of fortuitous, mainly external circumstances over which he had no control. But now it appears that his luck is running out as, for example, the shale gas revolution has decidedly had and will likely to continue to have a negative impact on one of Russia’s main sources of export revenue, natural gas. It would appear that Putin’s only real option is to return to a reform agenda that will bring greater efficiencies to the Russian economy. This calls for better governance and transparency to combat endemic corruption. The risk, however, is that making these efforts will attack the foundation of his system, the “vertical of power” as the Russians call it. One has to think long and hard of another historical leader who led his polity building one system for more than a decade and then pivoted to destroy that edifice in a second decade. So the task is not impossible, but probably not a good wager.

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Southeast Asia in 2013

Ernest Z. Bower, Senior Adviser and Sumitro Chair for Southeast Asian Studies

The United States has a time-limited opportunity to consolidate and secure the strong relationships it has developed in Southeast Asia and the Pacific over the last three years. China, for a number of reasons, has forfeited the momentum it built in the region during its charm offensive that began during the Asian financial crisis in 1999 and ended a decade later in 2009 with its declaration of the nine-dashed line around the South China Sea. India remains relatively aloof as it focuses on domestic politics and economic issues. Japan still has not regained its confidence, and while it is well-intentioned, it is no longer viewed as a partner with ballast or heft. And South Korea has not yet aspired to a regional leadership role.

Both Southeast Asia and the Pacific continue to welcome the United States to develop its role, as long as it does so based on the principles of mutual benefit and respect. Southeast Asia needs the United States to balance its effective security “pivot” with economic diplomacy, specifically a trade policy that is viable in Asia, while promoting U.S. interests. Specifically, this means completing the Trans-Pacific Partnership (TPP) agreement in 2013, while simultaneously working with key partners and regional organizations such as ASEAN to build capacity so that all member countries understand they have alignment and a clear on-ramp to increase trade and investment with the United States.

The greatest challenges for the United States in Southeast Asia in 2013 will be sustaining the high-level engagement and vital messaging of “being present.” Secretary of State Hillary Clinton and Secretaries of Defense Robert Gates and Leon Panetta have all understood the importance of this effort and committed themselves and their senior officials to it because strengthening ASEAN is a vital part of a long-term strategy to welcome a rising China to a responsible leadership role regionally and globally.

Will John Kerry and Chuck Hagel follow through on this commitment, and will the White House support the effort? Based on their records and their understanding of Asia generally and Southeast Asia specifically, there are good reasons for optimism in this area.

Over the long term, the White House needs to work with the new cabinet and willing members of the House and Senate, as well as with governors with foresight and global perspective, to make the case to Americans that engagement in Asia is important for our economic future and national security. Talking about Asia to the American public in a sustained way has never been supported by political advisers in the White House. That needs to change if the United States wants to be strong and safe in 2013 and beyond.

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Western Hemisphere 2013

Stephen Johnson, Senior Fellow and Director, Americas Program

Two opportunities and two challenges jump out as the United States and its hemispheric neighbors roll into 2013. On the plus side, Mexico is trying to change its narrative from a country battling narco-violence to one that’s prosperous and safe. The July 2012 presidential election brought in a reform-minded government, even if it returned the old, suspect Institutional Revolutionary Party to power. This September, Mexico’s outgoing president worked with lawmakers to pass an overhaul to its labor law that was the equivalent of the groundbreaking U.S. Taft-Hartley Act. Inaugurated in December, President Enrique Peña Nieto is preparing to do the same in education and energy—two sectors that badly need help. As Mexico’s economy grows, Mexican labor will need to be better trained to tackle high-tech jobs, which is why education reform is crucial. Mexico’s ailing state oil company, Pemex, still funds a third of the federal government’s budget to the detriment of reinvestment in exploration and maintenance. Unless Pemex regains its health, there won’t be any money for better schools. Thankfully, the Peña Nieto administration is working on this.

Another positive development is what could be called the Pacific bloc of free-trading nations—termed by one foreign diplomat as the hemisphere’s “constructive majority.” Of all the American states that have a Pacific coastline, only Ecuador maintains an interventionist economic policy and favors protectionism. Meanwhile, Chile, Mexico, and Peru have become leaders in free trade groups such as the Partners of the Pacific and the Trans-Pacific Partnership now under negotiation with Asia-Pacific nations, the United States, and Canada. These four are connected by commerce to the United States and Canada, as are Colombia, all the Central American countries, and the Dominican Republic. Plus, all are part of various production chains that are helping to boost economies and lower poverty rates at home.

At the other end of the spectrum are Venezuela and Cuba. In 2000, Venezuela’s populist president Hugo Chávez came to Cuba’s rescue, a decade after the Soviet collapse and subsequent withdrawal of billions of dollars of aid. Trading oil for Cuban doctors, sports trainers, and intelligence specialists, he gave the four-decades-old Castro regime a new lease on life. Now Chávez is battling cancer in a Havana hospital. Soon his loyalists at home could face off in a succession struggle, as the country heads for South America’s version of a fiscal cliff—inflation, debts, and a debilitated productive sector. Watching close by, Cuba’s octogenarian president Raúl Castro probably sees Venezuelan oil supports vanishing sooner than expected. He is gambling that he can stave off change through economic reforms without easing restrictions on civil liberties or political rights. Unrest is a possibility in Venezuela and could ignite in Cuba if Castro’s measures prove too little too late.

On one hand, the United States is witnessing the fruition of decades of pushing democratic reforms and free markets throughout the hemisphere. At first blush, the result seems a bit unsettling. Many of our American neighbors are becoming like us and no longer need our lectures. After all, Brazil, Chile, and Colombia now have their own foreign assistance agencies. Washington’s goal toward such countries should be to collaborate and welcome their leadership. On the other hand, Venezuela and Cuba don’t want anyone’s advice on democracy and markets. So until they seem receptive, it still makes sense to condition any openings, aid, or cooperation on substantive reform. Perhaps there will be instability. But now there are other countries with whom to share the burden.