SE Asia in the front line

Obama or Romney? Republican or Democrat? Who cares? American policy in the Asia-Pacific has already been reconfigured. The die has been cast.

After a decade-long obsession with Iraq and Afghanistan, the US has finally switched its focus further east. Washington has acknowledged Asia’s centrality both economically and now, politically. The move has been dubbed the “pivot” as a steady shift towards Asia (and especially the “containment” of China) becomes more deeply-institutionalised in Beltway thinking.

Another less well-known development is accelerating this shift. Basically, the US, after decades of being a net importer of energy, is emerging as a new exporter. This trend – driven by the shale gas revolution (powered by the “fracking” technique by which gas is extracted from rock) – will reshape the way Americans view the world. Petro-powers such as Saudi Arabia and the UAE will see their influence dipping in Washington.

According to the US Energy Information Administration, the world’s second-largest energy consumer after China has huge shale gas reserves (some 860 trillion cubic feet). The Economist in July estimated that shale gas currently contributes one third of America’s gas supplies and by 2035 could rise to 50 per cent. Moreover, these new developments could create 3 million jobs in the US by 2020.

There’s also the possibility – controversial and hotly-debated– that America might start exporting its LNG surplus, generating, according to Michael A Levi of the Council on Foreign Relations in an August New York Times article, an additional US$3 billion per year for the American economy.

It’s hard to imagine how an energy-independent America will behave. There’s no doubt that the Middle East will no longer be so central to US foreign policy. Instead, a resurgent America may well have greater wherewithal to check China in their common Asia-Pacific backyard. Moreover, an influx of American LNG imports could strengthen its influence on countries like Japan (which is seeking to step away from nuclear power) and radically upend Asian energy markets, including in Southeast Asia. For starters, Indonesia’s coal will be less sought after. At the same time, the region’s large and costly LNG facilities may well end up experiencing a drop in profitability as long-term contracts lose their attractiveness.

Ironically, America’s newfound energy independence is contrasted by China’s increasing energy import-dependence. In July, Beijing’s National Energy Administration reported imports of 81.09 million tonnes of coal (up 70.6 per cent year-on-year), 30.2 million tonnes of crude oil (up 30.2 per cent) and 4.08 million tonnes of LNG (up 100.2 ) in the first half of 2012 alone.

China’s demand for energy is vast. Imagine then a superpower that views its energy security with mounting unease, if not “paranoia”: watching developments in the South China Sea, the Strait of Malacca and Myanmar as a series of deliberate moves to limit its reach.

So, while the US presidential election won’t have any direct bearing on our lives, Southeast Asians will have to get used to being an important geopolitical stage as the two great superpowers jockey for pre-eminence.

For starters, our uneventful Asean meetings (durian fests, golf, silk batiks and bad karaoke) will become argumentative. What happened recently at the Asean Foreign Ministers meeting in Phnom Penh, when the hosts refused to sign off on a joint communique, will become a regular occurrence as Great Power rivalry courses its way through our association.

Having said this, the region barely featured during the actual campaign. The third and final Obama-Romney debate on foreign policy was a set-piece of China sabre-rattling.

Still, Obama’s “pivot” and Romney’s talk of a “Reagan Economic Zone” of “free trade”-oriented nations to combat China’s influence underlines the shift.

Of course, all of this is not surprising. We all know that economic gravity is shifting to Asia, which in turn will boost the strategic importance of Southeast Asia. So, like it or not, the next US president’s main foreign policy challenges are likely to come from Southeast Asia as anywhere else.

Let’s not forget that China will also have a new leadership in place by then as well, fronted by that princeling extraordinaire Xi Jinping.

Southeast Asia is likely to be at the frontlines of the next global contest for supremacy. Let’s hope we’ll be able to cope with all the attention.