The pacific basin

The western shore of the Pacific has been the fastest- growing region inthe world for the past half century. It contains two of the world’s largesteconomies, those of Japan and China. Along with other East Asian economies,they are heavily dependent on maritime trade, shipping goods to the United States and Europe and importing raw material from the Persian Gulf and the rest of the Pacific Basin. Any interruption in the flow of commodities would be damaging. An extended interruption would be catastrophic. Let’s consider Japan, the world’s second- largest economy and the only major industrial power to possess no major natural resources of any sort. Japan must import all of its major minerals, from oil to aluminum. Without those imports—particularly oil—Japan stops being an industrial power in a matter of months. To gauge the importance of this flow, bear in mind that Japan attacked Pearl Harbor in 1941 because the United States had inter- fered with its access to raw materials. China has also emerged as a major industrial power in the last genera- tion, with growth surpassing that of any other major economy in the world, although its economy is still far smaller than that of Japan or the United States. Nevertheless, China is now a key player in the Pacific Basin. Previ- ously, it was much more self- sufficient than Japan in terms of primary com- modities. But as China has grown, it has outstripped its own resources and become a net importer of raw materials. the new fault lines67 AYMALAYSIA HILIPPINES PJAPAN NDONESIA IMEXICO PANAMA n ustrial I dExports Hawaii, U.S. Raw Materials Strait of Malacca Pacific Ocean AUSTRALIA UNITED STATES CANADA MALAYSIA CHINARUSSIA Pacific Trade Routes 68 t h e n e x t 1 0 0 yea r s

The Pacific now has two major Asian powers that are heavily dependent on imports to fuel their economy and on exports to grow their economy. Japan and China, along with South Korea and Taiwan, all depend on access to the Pacific in order to transport their goods and commodities. Since the

U.S. Navy controls the Pacific Ocean, they rely on the United States for their economic well- being. That is a huge bet for any nation to make on another.

There is another side to this. The United States consumes massive amounts of Asia’s industrial products, which benefits the United States as a whole by providing consumers with cheap goods. At the same time, this trade pattern devastates certain American economic sectors and regions by undermining domestic industry. What benefits consumers can simultaneously increase unemployment and decrease wages, creating complex political crosscurrents within the United States. One of the characteristics of the United States is that it tends to be oversensitive to domestic political concerns because it has a great deal of room to maneuver in foreign policy. Therefore, regardless of the overall benefits of trade with Asia, the United States could wind up in a situation where domestic political considerations force it to change its policy toward Asian imports. That possibility, however remote, represents a serious threat to the interests of East Asia.

China sends almost one- quarter of all its exports to the United States. If the United States barred Chinese products, or imposed tariffs that made Chinese goods uncompetitive, China would face a massive economic crisis. The same would be true for Japan and other Asian countries. Countries facing economic disaster become unpredictable. They can become aggressive in trying to open up other markets, sometimes through political or military pressure.

Militarily, however, the United States could shut down access to the Pacific Ocean whenever it wished. Economically, the United States is dependent on trade with Asia, but not nearly as dependent as Asia is on trade with the United States. The United States is also susceptible to internal political pressures from those groups disproportionately affected by cheaper Asian imports. It is possible that the United States, responding to domestic pressures, might try to reshape economic relations in the Pacific Basin. One of the tools it can use is protectionist legislation, backed up by its military 69 the n ew f au lt l i n e s

strength. So East Asia has no real effective counter to an American military or economic move.

Subjectively, the last thing any nation in the region wants is conflict. Objectively, however, there is a massive imbalance of power. Any shift in America’s policies could wreak havoc on East Asia, and a shift in American policy is far from unimaginable. The threat of American sanctions on China, for example, through which the United States might seek to limit Chinese importation of oil, strikes at the very heart of the Chinese national interest. Therefore, the Chinese must use their growing economic strength to develop military options against the United States. They will simply be acting in accordance with the fundamental principle of strategic planning: hope for the best, plan for the worst.

Over the course of the last fifty years, the western Pacific has dramatically increased its economic power, but not its military power—and that imbalance has left East Asia vulnerable. China and Japan will therefore have no choice but to try to increase their military power in the coming century, which the United States will see as a potential threat to U.S. control of the western Pacific. It will interpret a defensive move as aggressive, which objectively it is, whatever their subjective intent. Add to this the ever- evolving nations of South Korea and Taiwan, and the region is certain to be a powder keg during the twenty- first century.

What’s more, any Asian country that believes that huge mega- surges in the price of oil are a realistic possibility cannot discount the threat of an American energy grab. In the near term, the next twenty to fifty years, this is actually a very real scenario. Any rational Asian power must plan for this. The only two that have the resources to challenge the United States at sea are China and Japan, each antagonistic to the other yet sharing a common fear of American behavior during an energy price spike.

Control of the Pacific intersects with a more specific issue—control of the sea lanes used for energy transportation. The higher the price of oil, and the longer non- hydrocarbon energy sources are from being a reality, the greater the likelihood of a confrontation over sea lanes. The imbalance of power in this region is severe. That, coupled with the issues of energy transport and access to the American markets, gives the Pacific Basin its massive geopolitical fault line. 70 t h e n e x t 1 0 0 yea r s