Myanmar has become a new frontier for cooperation among Japan, the United States, and Europe under President Thein Sein’s initiative for democratization and market reform. Senior Fellow Tsuneo Watanabe notes that Myanmar’s trajectory will have an impact on the future regional order , test ing whether Chinese aspirations for national rejuvenation can coexist with the interests of neighboring countries and the larger international community . The Japanese government has demonstrated new thinking , recently collaborating with a domestic NGO to facilitate the process of ethnic reconciliation in the country .

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The global policy community sees East Asia as a prosperous and stable region, an engine of economic growth, and the locus of business opportunities. The region’s development began with Japan’s “economic miracle” of the 1960s and 1970s, which was followed by rapid growth in South Korea, Taiwan, Hong Kong, and Singapore in the 1980s, China in the 1990s, and India in the 2000s. Members of the Association of Southeast Asian Nations (ASEAN), such as Indonesia, Malaysia, and the Philippines, have also recently been growing steadily. The latest business “frontier” in Southeast Asia—for developed economies like Japan, the United States, and the European Union—is Myanmar under President Thein Sein’s initiative for democratization and market reform.

An interesting aspect of the current Myanmar boom among businesses in developed economies is Myanmar’s own decision to wean itself from an exclusive diplomatic and economic relationship with China. The closed, military government is now taking steps toward becoming a more open and democratic society and economy. Analysts view these moves as part of President Thein Sein’s strategic calculation to maintain an appropriate distance with China, which had virtually monopolized economic relations with Myanmar over the past 20 years.

Naturally, the Myanmar case has attracted the interest of Western observers because it offers hints regarding the shape of the future liberal international order in the light of the structural power shift in Southeast Asia, prompted by China’s rise. The Obama administration’s initiatives to engage positively with Myanmar are part of its “rebalancing” policy toward the Asia-Pacific, which emphasizes its relations with Southeast Asia, as a region where US administrations had not spent much political capital following the retreat from the Vietnam War.

In the face of the Asian financial crisis of 1997, which dealt a body blow to most Southeast Asian economies, Washington’s commitment was regarded as minimal, while Japan’s New Miyazawa Initiative provided huge financial support. This was a case in which Japan-US coordination broke down. The US commitment to addressing disputes in the South China Sea was also minimal in 1995, when China built structures on Mischief Reef, over which the Philippines also claims sovereignty. The United States now appears ready to seriously address issues pertaining to the future governance and order of Southeast Asia, where participants are worried about the consequences of China’s rising economic and political influence. Myanmar is definitely a case offering a glimpse of the future shape of the regional order, where the forces of China’s rise and US rebalancing interact.

Dreams and Anxieties

New Chinese President Xi Jinping has vowed to achieve the “Chinese Dream” of great rejuvenation of the Chinese nation. This is a vague slogan with many connotations, and has invited myriad interpretations. Xi himself ascribes four meanings to the slogan: a strong China, a civilized China, a harmonious China, and a beautiful China. He has also vowed to achieve the “two 100s”: a moderately well-off society by 2020—the 100th anniversary of the Chinese Communist Party—and a fully developed nation by 2049—the 100th anniversary of the People’s Republic. Although the slogan does not contain any aggressive elements, countries embroiled in territorial disputes with China in the South China Sea are worried that they may be trampled upon as China forges ahead toward its dream.

For example, Vietnamese scholar Nguyen Hung Son points out that China’s neighbors are wondering whether Xi’s “Chinese Dream” can really coexist with their own. [1] China has grown very assertive in territorial disputes with its neighbors in the South China Sea. In addition, China does not respect many international rules, such as the United Nations Convention on the Law of the Sea (UNCLOS) and the Declaration of Conduct (DOC) over the South China Sea, although China is formally committed to them. Nguyen states that China pursued a moderate and cooperative approach to these issues in the past, but that its attitude has changed as a result, he believes, of the relative decline of US strength and Japanese economic power.

Japan, too, shares such worries, owing to tensions over the Senkaku/Diaoyu Islands in the East China Sea, as does the United States and the European Union. Chinese assertiveness is a concern not just for the regional order but for international rule- making in the East Asian region, where the West has extensive business and economic interests.

In this context, the Obama administration’s rebalance toward Asia is resisted by China and warmly welcomed by its worried neighbors. At the same time, Japan and other US allies and friends are aware of the United States’ limited financial resources and political capital, and they grew concerned when Washington began seriously contemplating intervening militarily in Syria to oppose the Bashar al-Assad regime’s use of chemical weapons. However, it would not be constructive for East Asian nations to restlessly fret over the fluctuating balance of power between the United States and China. It is not the US goal to antagonize China through containment or encirclement, nor would that be in the interest of Japan or the EU. On the other hand, US power is still regarded as an effective tool in inducing China to be a more cooperative player in regional rule-making and in hedging against China’s arbitrary exercise of power against asymmetrically smaller neighbors.

It is the imperative of the international community—particularly the EU and Japan—to work with the United States to create a stable Southeast Asian environment where all actors, from small to large, respect common rules and enjoy the fruits of peace and prosperity. The EU has an advantage in dealing with China since it does not have a territorial dispute or direct conflict with China while being an influential economic and trading partner. By working with countries sharing vital interests, Japan, too, needs to proactively support the shaping of the regional order.

Japan’s New Approach to Assistance for ASEAN

For Japan, stability in the South China Sea and the ASEAN region is critically important for its own security and prosperity. Japan is still heavily dependent on the sea lane from the Gulf region through the Strait of Malacca and the South China Sea to the East China Sea for imports of energy resources critical to its economic survival.

In the past, Japan’s vital interests were protected by the US military presence. Although this fact has not changed, Japan has gradually begun to cooperate more fully with US and regional efforts to stabilize the Southeast Asian region, which can be a choke point in the energy flow to Japan and where countries share Japan’s interests in tempering China’s territorial aggressiveness.

Japan plans to provide capacity building to Southeast Asian countries suffering from a wide maritime capability gap with China, which has rapidly increased the number of patrol ships, surveillance vessels and aircraft, submarines, and fifth generation jet fighters. Japan has been providing official development assistance to ASEAN countries throughout the post–World War II period. This was regarded as a form of war reparations for Japan’s military aggression in the 1930s and 1940s.

Recently, Japan has found a new rationale for its assistance to ASEAN nations: to help them reduce the economic and military gap with China—a country to which Japan has also provided substantial economic assistance in the past.

During the Japan-ASEAN Summit Meeting in November 2011, then Prime Minister Yoshihiko Noda pledged $25 billion to promote projects for enhancing ASEAN connectivity. In the Japan- Mekong Summit in April 2012, Japan offered $7.4 billion over three years to help five Mekong states build up their infrastructure.

The Japan Self-Defense Forces (SDF) have actively participated in joint military exercises for humanitarian assistance and disaster relief in Southeast Asia, including the US-Thai Cobra Gold joint/combined exercises since 2005. In July 2011, Japan joined, for the first time, the joint maritime military exercise with US and Australian forces in the South China Sea off the coast of Brunei. And in spring 2012, the SDF joined the US-Philippine joint military exercises called Balikatan.

In addition, Japan is helping to directly strengthen regional maritime security capabilities by providing patrol vessels to Southeast Asian countries. In December 2011, the Noda administration eased Japan’s self-imposed restrictions on weapons exports. Japan is still committed to not exporting weapons to other countries, although exceptions have been made in the past for Japan’s alliance partner, the United States. Now, exceptions are being made in cases that contribute to peace and advance international cooperation.

Japan is planning to provide the Philippines with patrol vessels for its coast guard and maritime communication systems using its official development assistance (ODA) budget in the coming years. Contributing to ASEAN’s capacity building in such a manner is a new approach for Japan.

Japan’s mainstream assistance to ASEAN has traditionally been for economic development, and this is a policy that has the support of all political parties. However, assistance for capacity building in the security arena was quite controversial among liberal opposition parties. Now aware of the tough reality faced by Southeast Asian nations in dealing with an assertive military giant, public opinion has gradually changed. Many scholars have begun to address this new frontier, calling on Japan to offer direct assistance to enhance developing countries’ security capacity, although Japan still avoids transferring combat weapons.

Importantly, Japan’s new approach is coordinated with US policy in Asia. At the two-plus-two meeting in April 2012, Japanese and US foreign and defense ministers agreed on joint cooperation to assist other Asian countries’ security efforts. The agreement is as follows:

The Ministries confirmed the great importance of working together to promote peace, stability, and prosperity in the Asia-Pacific region, and enhancing effective, efficient, and creative cooperation. In this context, the US government plans to continue to help allies and partners in the region to build their capacity with training and exercises. The government of Japan, for its part, plans to take various measures to promote safety in the region, including strategic use of official development assistance, for example through providing coastal states with patrol boats. [2]

Although China may be irritated by such cooperation, it is an important step toward creating a stable regional balance by enhancing the security capacity of the region’s states. The EU has a part to play in such efforts as well, as many EU countries are experienced in providing capacity building assistance to Middle Eastern and African nations.

The Challenge of Myanmar

The situation in Myanmar is an omen of developments that could influence regional rule making over the long term. Its political and economic structures are far from stable, however, and there is no guarantee that the process of democratization advanced by President Thein Sein will not be reversed.

The initial challenge will be whether Myanmar can amend its constitution, under which the military is granted 25 percent of all parliamentary seats and three important ministers—the internal minister, border management minister, and defense minister—are appointed by the supreme commander of the national military. Since a constitutional amendment requires the approval of a 75 percent-plus-one-seat majority in both houses of parliament, it remains a high hurdle. Opposition leader Aung San Suu Kyi is now cooperating with the Thein Sein government in seeking an amendment. One litmus test will be how steadily democratization proceeds in the next election, scheduled for late 2015. A critical task for the international community regarding Myanmar will be to share its notions about and technical knowledge of establishing a healthy civilian-military relationship through the process of democratization and economic development.

The second challenge will be to address the ethnic conflict from which Myanmar is still suffering, even after 25 ethnic groups signed a ceasefire agreement with the military government in 2007. The Karen and Shan (Myanmar National Democratic Alliance Army) continue to fight the central government in the east of the country. Small, armed ethnic Rohingya groups are active in the west. Ethnic conflicts are a grave matter that could derail Myanmar’s economic and democratic development. Economic assistance, combined with reconciliation support, from the international community will be a critical facilitator.

In this area, Japan has demonstrated new thinking. To facilitate the reconciliation process, the government is collaborating with an NGO that has been assisting ethnic minorities in Myanmar for decades. The Nippon Foundation—one of the largest nonprofit, philanthropic organizations in Japan (which also helped establish the Tokyo Foundation)—has been providing food and medical assistance to ethnic minorities since 1976. In February 2013, the Japanese government appointed Nippon Foundation Chairman Yohei Sasakawa as special representative to help achieve ethnic reconciliation in Myanmar. Sasakawa was the sole observer at the first official peace talks between the Myanmar government and the United Nationalities Federal Council—an alliance of 11 ethnic militias—held in Thailand in February 2013. That the chairman of a Japanese NGO would be granted government status to facilitate such a reconciliation process is a new development. This shows that collaboration between the Japanese government and NGOs in the international arena has been growing in areas such as in advancing disarmament, demobilization, and reintegration (DDR) activities in Afghanistan and Africa, and Japan’s civil society can henceforth be expected to make further contributions to expanding the role of civil society throughout East Asia.

Myanmar faces enormous challenges, however, and addressing them is beyond the task of any one NGO or foreign government. Sasakawa has stressed the critical importance of the international community’s continued economic support for Myanmar’s ethnic minorities, many of whom are suffering from extreme poverty. This can play a key role in the domestic reconciliation process and abet the country’s democratic development. [3] Such a role may be identified as a common mission for the civil societies of Japan, the United States, and Europe.

Japan-US-EU Trilateral Cooperation

The international community’s role in helping Myanmar meet the challenges of reconciliation, democratization, and economic development must be considered wisely. One dilemma would be an excessive emphasis on business development in urban areas, as this could widen the gap between the rich, urban majority and the poor, rural minority. In this context, the international community’s continued assistance to rural, minority areas is of critical importance. Formulating a common strategy and enhancing coordination among Japan, the United States, and the EU in their assistance would be a symbolic model case in supporting the steady economic and peaceful development of Myanmar and other ASEAN countries. Such trilateral cooperation, moreover, would not conflict with China’s rise in the region, as long as all actors share the common goal of a stable and prosperous East Asian region. The process itself may contribute to creating a rule- based and liberal international order throughout East Asia.

Reprinted from “ Unlocking the Potential of the US-Japan-Europe Relationship ,” a collection of papers written for Trilateral Forum Tokyo 2013, co-organized by the Tokyo Foundation and the German Marshall Fund of the United States .

[1] Nguyen Hung Son, “Can the Chinese Dream Coexist with Other Dreams?: Views from Vietnam” (in Japanese), in Gaiko (Diplomacy) published by the Ministry of Foreign Affairs of Japan, July 2013, pp.36–37.

[2] Secretary of State Hillary Clinton, Secretary of Defense Leon Panetta, Minister for Foreign Affairs Koichiro Gemba, and Minister of Defense Naoki Tanaka, Joint Statement of the Security Consultative Committee, April 27, 2012.

[3] Interview with Yohei Sasakawa, “Toward Reconciliation with Minorities and Ending Poverty: Issues in the Current Democratization Process in Myanmar” (in Japanese), Gaiko (Diplomacy), published by the Ministry of Foreign Affairs of Japan, July 2013, pp. 51–56.