Is the US Ready to Expand Its Strategic Economic Footprint in Southeast Asia? – The Diplomat

Pacific Cash | Financial system | Southeast Asia

U.S. Vice President Kamala Harris landed in Manila final week, a go to which was meant to ship a sign to the Philippines that they will depend on the USA for financial and protection help. Together with reaffirming protection ties, Harris introduced a raft of financial agreements masking vitality, telecommunications, and nickel mining. Amid rising geopolitical tensions with China, the go to additionally despatched a bigger message that the USA could also be getting extra severe about increasing its strategic footprint in Southeast Asia by interesting to the financial pursuits of key regional allies.

November was a whirlwind month of summits for Southeast Asia, with the area internet hosting dignitaries and heavy hitters from across the globe on the G-20 in Bali, the ASEAN annual gathering in Phnom Penh and the APEC summit in Bangkok. One of many overriding messages emanating from the area, bolstered many times on the summits, was that nations in Southeast Asia need to focus not on geopolitical tensions between nice powers, however on their very own financial agendas and growth targets. Because the financial profile of the area grows, the query is much less about selecting a aspect, and extra about ASEAN nations asking dueling international rivals like China and the U.S.: what are you able to provide us?

For the final a number of years, a powerful case could possibly be made that China has been faster on the draw with a solution. Via the Belt and Street Initiative, in addition to through different channels, China has elevated its direct financial engagement with Southeast Asia at a quicker clip than the USA, notably in strategic sectors like telecommunications and transportation. Just a few examples of such engagement embrace the Jakarta-Bandung high-speed rail line nearing completion in Indonesia; a first-of-its-kind metro line not too long ago opened in Hanoi; and Chinese language funding exercise within the Philippine and Indonesian telecom sectors.

The initiatives unveiled by Vice President Harris in Manila could possibly be interpreted as a U.S. response to this Chinese language exercise, as they cowl most of the similar sectors, particularly vitality and telecom. As reported by Rappler, Harris indicated the U.S. was “eyeing a partnership with NOW Telecom for the deployment of 5G applied sciences within the Philippines” and that the U.S. Division of Vitality would associate with the Philippines to develop new types of vitality manufacturing, together with renewable vitality. There was even point out of civil nuclear cooperation.

However maybe essentially the most attention-grabbing growth from Harris’ journey was the announcement that the U.S. can be investing within the Philippines’ downstream nickel and cobalt processing business. Nickel is an important enter within the manufacture of lithium-ion batteries and is anticipated to be in excessive demand as international clear vitality transitions collect steam in coming years.

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Indonesia, which has the world’s largest uncooked nickel ore deposits, has been utilizing export bans on unprocessed ore to extend funding in its downstream industries. This has, by and huge, labored and resulted in vital funding (notably from China) in industrial parks in Sulawesi, that are more likely to be crucial hyperlinks within the subsequent technology of fresh vitality provide chains.

The nation with the world’s second-largest provide of nickel ore? That may be the Philippines. American plans to spend money on the Philippines’ downstream nickel business would recommend they’ve caught on to the significance of nickel in clear vitality provide chains, and the strategic necessity of guaranteeing American corporations have entry to it.

At this level, the initiatives Harris introduced final week are simply laying the groundwork; they ship a sign to the Philippines concerning the readiness of the USA to step up financial engagement in strategic sectors like vitality, telecom, and nickel, sectors the place China has to date been extra lively regionally. We should wait and see the extent to which these initiatives are literally translated into actuality. Additionally it is unclear whether or not this strategy is more likely to be prolonged past the Philippines, which already has a uniquely deep relationship with the USA.

However merely sending the message is essential, as a result of it says that the USA might now not be content material to take a seat again and count on a rules-based international system of free commerce and the normative attraction of American values to do the heavy lifting within the area. As a substitute, the administration is actively concentrating on strategic sectors, and coming to the desk with concrete plans about what it might probably provide potential companions and allies.