WEEK IN BRIEF: March 29
Why Europe wants to go it alone on arms productions; what about Vietnam's human rights record; how to respond as Thailand legalizes same-sex marriage; plus can Europe help defend the Philippines?
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Good morning! Welcome to the latest “Week In Brief” edition of Watching Europe In Southeast Asia, written by journalist and columnist David Hutt.
As well as weekly news briefs about Europe-Southeast Asia engagement, this newsletter also brings you exclusive analysis and in-depth Q&As with leading diplomats and businesspeople from both regions.
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— THE LOWY INSTITUTE HAS PUBLISHED A RATHER INTERESTING REPORT ON INFRASTRUCTURE FINANCING IN SOUTHEAST ASIA. The key takeaway was that there is “an enormous gap between what Beijing promises and what it has delivered, amounting to more than $50 billion in unfulfilled project financing with more than half of this reflecting projects that have either been cancelled, downsized, or otherwise seem unlikely to proceed.” That said, around half of the promised financing from the Asian Development Bank hasn’t been realised, it seems. But this is useful information for European politicians when they’re trying to convince Southeast Asian leaders to trust European investment schemes, like the Global Gateway (more on that in a Q&A tomorrow). And take note of the stated sixth and seventh infrastructure investors in the region: Germany and France. According to the report, Germany pledged $2.9bn for infrastructure development projects between 2015 and 2021, of which $1.6bn has actually been spent. France was much better, it seems, at putting the money where its mouth is. It signed deals worth $1.8bn and spent $1.7bn.
— CONTROVERSY AROUND THE EU’S EUROPEAN DEFORESTATION REGULATION JUST WON’T FADE. In fact, we’ve likely seen nothing yet. The law will come into effect for larger businesses that export into EU markets on December 30 this year. Smaller firms have until mid-2025. So far the backlash has been about what could happen. The furore when the rules start biting will be immense. In essence, to sell certain agricultural products in Europe, companies will have to provide evidence showing the goods come from land where forests haven’t been cut since 2020. Naturally, this is a bureaucratic minefield for smaller producers in Southeast Asia. Indonesia and Malaysia have already taken the EU to the WTO over this to protect their palm oil industries. A ruling (in Malaysia’s case) was announced in early March, which technically went in the EU’s favour but with quite a few caveats, including the WTO panel finding fault in the way the EU’s measures were prepared, published and administered. Attention has also turned to how the EU’s deforestation code will impact other Southeast Asian exports. Rubber from Thailand and Cambodia was one of those. Now it’s coffee. Fortune reported on how Vietnamese coffee producers will be affected, but also how they are adapting. It noted: “Vietnam can’t afford to lose — Europe is the largest market for its coffee, comprising 40% of its coffee exports. Six weeks after the EUDR was approved, Vietnam’s agriculture ministry started working to prepare coffee growing provinces for the shift. It has since rolled out a national plan that includes a database of where crops are grown and mechanisms to make this information traceable.”
— EU FOREIGN POLICY CHIEF JOSEP BORRELL PUBLISHED A LENGTHY DIATRIBE ON WHY BRUSSELS NEEDS TO PUT DEFENCE AT THE CENTRE OF ITS POLICIES. This came after a recent European Council meeting that was dominated by security discussion. Naturally, most of his blog post was about Ukraine, as well as about the Western Balkans and Middle East. Not that much was said about Southeast Asia or the Indo-Pacific. But of interest for Southeast Asian governments is European thinking on defence. As Borrell noted, “EU Member States are already spending significantly more on defence with a 40% increase of defence budget over the last ten years and a €50 billion jump between 2022 and 2023. However, the €290 billion EU defence budget in 2023 only represents 1.7% of our GDP under the 2% NATO benchmark. And in the current geopolitical context, this could be seen as a minimum requirement.” The desire now is for a more combined and united EU security policy, eserpcially on production and procurement. “To use our defence expenses efficiently, we have also to take care of filling gaps and avoiding duplications,” Borrell wrote. With that in mind, the EU presented the first-ever European Defence Industrial Strategy (EDIS) in early March. A factsheet is here. Around 78% of European defence acquisitions currently come from outside the EU. The Industrial Strategy wants member states (it’s nonbinding) to procure at least 40% of defence equipment collaboratively and 50% from within the EU by 2030 and 60% by 2035. The European Council On Foreign Relations has this snapshot of the policy. The Center for Strategic and International Studies has noted that the strategy has many, many pitfalls and problems, but “If implemented and funded, the strategy would result in U.S. defense companies losing some of their market share in Europe”. It also pointed out that if successful, it could “pave the way for the European Union itself to potentially become an arms exporter and would entail the European Union, with its member states, creating its own arms export policy.” Of course, the industrial policy is far from certain to work out as its architects imagine (and most analysts are sceptical), but it could be a boon for the Southeast Asian states that are increasingly eager to purchase Europeans arms and defence systems. Moreover, p.30 of the EDIS notes that “Strengthening mutually beneficial partnerships with strategic partners, international organisations, and like-minded third countries, including through security and defence dialogues, can amplify the Union’s efforts towards defence industrial readiness. This cooperation will be flexible.” And a more militarily well-stocked and confident EU would be able to act as more of a security guarantor than European states can today. (See the Q&A at the end of this newsletter for more on that.) Conversely, it could also spell danger for Southeast Asian imports of European arms, especially if the desire to keep arms within the EU is stronger than actual output. At present, the report notes, Europe’s defence sector can “focus on exports to ensure its viability, resulting in a risk of excessive reliance on third countries’ orders, with the consequence that responding to Member States’ orders may be less a priority than honouring third country contracts in case of crises and related shortages.” Yet it does stress that “the competitiveness of the [European defence technological and industrial base] and its ability to export must be preserved.” In other words, we’re really only at the beginning of this process and who knows how it will end up. If all goes well, Europe will keep on turning out arms exports at the same time as their militaries become better equipped. Interestingly enough, there are now also calls for Southeast Asia to do something similar (and to take the EU as an example) and create a “pan-ASEAN defense industry”.
— THE VIETNAMESE COMMUNIST PARTY CHIEF INVITED VLADIMIR PUTIN FOR A STATE VISIT “IN THE NEAR FUTURE”. And Putin has reportedly accepted. My editor at the Diplomat, Sebastian Strangio, had a nice take on this. And Ian Storey, a senior fellow at ISEAS–Yusof Ishak Institute, published a really interesting piece on why Hanoi fears that “Beijing may use its leverage with Moscow to undermine Vietnam’s interests in the South China Sea.” I haven’t seen any European politicians reacting to the news of the invite, but they’re likely to be peeved. Then again, Thai Prime Minister Srettha Thavisin last October invited Putin for a visit and that had no impact on European engagement with Bangkok. Vietnam’s foreign policy is one thing. But Hanoi’s invitation to a war criminal should give one a reason to think about who they’re engaging with. On March 26, Nguyen Van Lam, a Facebook blogger, was sentenced to eight years in prison for managing a Facebook page that shared news and content that authorities said was against the state. Human Rights Watch recently warned about a “new wave” of repression. European officials would be read to inspect Dien Luong’s opinion piece in Nikkei Asia last week, “As West draws closer to Vietnam, Hanoi gets more like Beijing”. As he put it, “In an era in which ideals increasingly clash with realpolitik, how should democracies balance strategic priorities with the imperative of promoting civil liberties?” It comes as the EU pushes through the Corporate Sustainability Due Diligence Directive, under which, from 2029 onwards, “companies in Europe will have to prove they are taking action to protect the environment and human rights throughout their supply chain.” And, indeed, amid much introspection about the EU’s actual stance on human rights in light of the Gaza conflict. Vietnam’s repression of activists and ordinary people with opinions continues to worsen, and has, in fact, worsened considerably since the EU ratified its free trade agreement (the EVFTA) with Vietnam. And, to put it impolitely, the EU has been duped by Hanoi over the issue of trade unions. Allowing independent trade unions was a condition of the EVFTA—and Brussels paraded Hanoi’s acceptance of this as a human-rights victory, as an indication of Wandel durch Handel. When you get into the fine detail, however, Hanoi has instead said it will allow independent “workers’ organisations”, which aren’t quite the same as trade unions (they’re much weaker and constrained), and a recent leak of government documents (Directive 24) shows the Communist Party is committed to crushing these groups as well as foreign investors who might "hide in the shadows" while seeking to undermine Vietnam's politics.
— THAI LAWMAKERS APPROVED A BILL TO LEGALIZE SAME-SEX MARRIAGE ON MARCH 27. This will make it the first Southeast Asian state to do so, and at a time when the region is hit-and-miss on LGBT rights. In 2022, Singapore's parliament removed penalties for homosexual activity, yet simultaneously modified the constitution to prevent legal disputes regarding marriage definitions, effectively prohibiting same-sex marriage. Conversely, Indonesia de-facto criminalized homosexuality by prohibiting sexual relations outside of marriage last year; given that same-sex marriage is banned, sexual relations between same-sex couples are also forbidden. LGBT rights are very much part of the European agenda in the region. The French Ambassador for LGBTQ+ rights, Jean-Marc Berthon, was in Cambodia last week to meet with civil society organizations and community members. And, naturally, European officials and ambassadors have reacted with much praise for Bangkok for this decision, and some have insinuated that same-sex marriage reform should be taken up across the region. As it should. However, there’s also a risk that European praise enflames the reactionaries. I recently argued in my Diplomat column that same-sex marriage and LGBT rights aren’t unpopular among the Southeast Asian public, as some polls show, but many of the region’s authoritarian or religious-minded governments see them as political threats. Partly, that’s because much of the narrative from LGBT rights comes from the proposition that it is a “dispossessed” or “oppressed” community, which is quite obviously the case. But, I noted, “authoritarian governments are naturally wary of any group being labelled ‘dispossessed’ or ‘oppressed’ since that implies the government is the oppressor – or, indeed, that the national community is oppressive.” Even more worrying, some Southeast Asian politicians see rights or same-sex marriage debates as a Western imposition or, worse, as a conspiracy by the West to culturally colonise Asia. To mention a few: former Indonesian Defence Minister Ryamizard Ryacudu, Aung San Suu Kyi’s former aide and (of course!) Mahathir Mohamad have all claimed that LGBT rights are ‘another’ Western ideology colonizing Asia. That puts Europeans in a tricky spot. Of course they should celebrate Thailand’s reforms, which are long overdue, but celebrate too loudly and there’s a risk that whatever progress on this front is happening elsewhere in Southeast Asia gives ammunition to the region’s cultural reactionaries.
— ARE THERE TENSIONS BETWEEN INDONESIA’S OUTGOING AND INCOMING PRESIDENTS? Local Indonesian media seems to think so, as did this Straits Times analysis. The EU and European governments are naturally keen on a stable transfer of power, which will almost certainly happen, and to be on the good side of Prabowo Subianto, the incoming president. His victory was confirmed on March 21, to which the European Commission sent a congratulatory note. In the run-up to and after Indonesia’s election in February, there was little mention from the Europeans about Prabowo’s war-crime past (he was accused of mass human rights violations when part of the special forces during Indonesia’s colonization of Timor-Leste between 1975 and 1999) and of his role in human rights crimes when the regime of Suharto, his former father-in-law, came crashing down in the late 1990s. Nor was there much European handwringing about the general decline of democratic standards in Indonesia. Perhaps European capitals are content that Prabowo claimed to be the status-quo candidate; last week, he said there’s ‘no shame’ in continuing his predecessor’s policies. After all, talks on the EU-Indonesia trade deal are advanced; Brussels and Jakarta had said they wanted it wrapped up by the middle of this year. Europeans are desperate for a foothold in Indonesia’s vast raw materials sector and see it as having a real future in EV battery manufacturing, so there’s a trade necessity to get on well with Prabowo. Last week also saw a number of commentary pieces about what to expect from Prabowo’s presidency. Joshua Kurlantzick, of the Council On Foreign Relations, listed five things to watch out for, while Sarang Shidore looked at likely US-Indonesia relations under Prabowo (with similar implications also for Europe). One takeaway from that piece: “unless Washington makes a big deal of past human rights issues (unlikely), there are opportunities for incremental strengthening of ties,” a message that also applies to Europe.
— “THE EUROPEAN UNION’S ECONOMY HAS GROWN BY ONLY 4% THIS DECADE, compared with 8% in America; since the end of 2022, neither it nor Britain has grown at all,” pointed out this superb leader article from the Economist (“The triple shock facing Europe’s economy”). Europe has several paths it could follow in the coming years, with varying dangers, especially if Donald Trump wins November’s presidential election (and steers the US more protectionist and isolationist) and if Beijing also goes that way as its economy stagnates. “The path ahead is littered with traps…[one] would be to copy America’s and China’s protectionism by unleashing vast subsidies on favoured industries. Subsidy wars are zero-sum and squander scarce resources—within Europe, countries have already started an intra-continental race to the bottom.” But perhaps most sonorous to Southeast Asian ears are the Economist’s recommendations, including this one: “European diplomats should sign trade deals wherever they are still on offer”. In Southeast Asia, this is already policy. But time could be running out, especially if the EU does tack hard to protectionism. Time, indeed, could be running out for those who still reckon an EU-ASEAN free trade agreement is the way to go.
IN BRIEF
“Nine out of 10 European ships end their lives on Southeast Asian beaches recycled into scrap metals,” reported Staffan Dahllöf for the EUObserver.
The EU-ASEAN Business Council established the ASEAN Circularity Coalition to drive the agenda on the important topic of circularity within the region.
The work plan of the Enhanced Regional EU-ASEAN Dialogue Instrument (E-READI) until the end of 2025 was approved by ASEAN Member States and the EU in the 7th E-READI Project Steering Committee.
Experts from the European Commission, representatives from EU Member States and the private sector will hold a seminar on EU sanctions in Singapore on April 10.
More musical soft power. In partnership with the Embassy of Belgium, the EU Delegation to Singapore supported a European music concert in Singapore.
The Germany Trade & Invest (GTAI), Germany’s international economic promotion agency, opened a new hub in Singapore that will be a “gateway for SG businesses to explore opportunities in Germany, and vice versa.”
Registration is open for the annual European-Philippine Business Dialogue, hosted by the European Chamber of Commerce of the Philippines and the EU-ASEAN Business Council, which will be held on May 8.
As Philippine-China tensions ramp up, the French ambassador to the Philippines, Marie Fontanel, met with the Philippine Coast Guard Commandant, Admiral Ronnie Gil Gavan, and inspected the BRP Gabriela Silang, an offshore patrol vessel.
A FEW WORDS FROM
Every month tensions seem to escalate between China and the Philippines. The latest skirmish came on March 23 after a water cannon attack by the Chinese coast guard injured Philippine navy crew members and damaged their boat in the disputed South China Seam which sparked angry words from Manila and Beijing as well as much public support for the Philippines from the Europeans. This comes as the Philippines is keen on new security partners. Although that’s chiefly the United States, Japan and Australia, Manila’s more than happy to accept improved defence ties with Europe. For this week’s Q&A, I spoke to Alexander Vuving, a professor at the Daniel K. Inouye Asia-Pacific Center for Security Studies in Honolulu, Hawaii, about the situation in the Philippines and what deterrence to China could the Europeans provide.
Amid escalating tensions between China and the Philippines, the European Union and several European states have been vehemently supportive of Manila. This comes as the Europeans are looking to be ever more involved in the South China Sea dispute. What do you make of European engagement in these disputes?
I think the key motive behind the involvement of several European states in the South China Sea dispute is their growing concern for international law in this important water highway. In the current confrontation between China and the Philippines, Manila is defending its rights under international law, especially the UN Convention on the Law of the Sea and the 2016 rulings of the Permanent Court of Arbitration, while Beijing is pursuing its “nine-dash line” claims, which were invalidated by the 2016 court rulings. Second Thomas Shoal is a reef submerged at high tide. It is located within the exclusive economic zone (EEZ) of the Philippines. According to international law, China cannot make any territorial claim over Second Thomas Shoal and cannot deny anyone access to it. Neither can China object to Manila’s building of a permanent structure on the shoal because it’s an exclusive right of the Philippines per international law. China’s blatant dismissal of international law in the South China Sea is all the more alarming for European states as they are faced with similar behaviour by Russia in Europe. Russia’s war in Ukraine and China’s “grey zone” conflict in the South China Sea are breaking a “rules-based international order” that European states believe is fundamental to security and prosperity in the international arena.
How much influence can the EU actually have, more than 10,000 km away, over these disputes, especially if they were to result in conflict?
For defenders of international law, some of the imperatives are, first, to keep up international law; second, to hold the line; and third, to shed maximum light on the facts. Although geographically remote, European countries can help the Philippines enhance its capabilities. Individual countries can send their vessels to help the Philippines hold the line. They can also help by raising awareness of the issue, including the fact that no country can make a territorial claim over Second Thomas Shoal, and only the Philippines has exclusive economic rights over the reef. This struggle is playing out not only in the physical domain but also in the cognitive domain. China is pursuing not just a “people’s war at sea” but also “three warfares”, which include psychological warfare, public opinion warfare, and lawfare. While geography disadvantages the European countries regarding China’s “people’s war at sea”, European countries actually have a large capacity to fight China’s “three warfares”. The current confrontation is unlikely to result in a military conflict. It's a violent confrontation, but both sides are trying to keep it under the threshold of a military conflict. For example, China is blasting water cannons but not shooting bullets against the Philippines. By installing a floating barrier near Second Thomas Shoal, China is conducting a blockade with non-military means. Under international law, a blockade is an act of war, but its non-military means create some deniability, thus keeping the conflict within a grey zone. China would not risk escalating it into a war because such a war may destroy China's artificial islands in the Spratlys and would be more costly than beneficial to China.
What about Europe’s protection of the international order?
It’s true that the solidarity between several European countries and some Southeast Asian claimants against China in the South China Sea stems from their shared commitment to upholding a “rules-based international order”. However, two main caveats need to be clarified. First, the term “rules-based international order” is a misnomer because every order has rules and every order is based on rules. What makes a difference here is the nature of the rules. In a “rules-based order”, the rules are more or less neutral with regard to the size and power of countries. For example, under UNCLOS, a tiny country like Kiribati can have a larger EEZ than a big country like Germany, and the convention treats all countries equally regardless of their power. In the hierarchical order that China’s “nine-dash line” claims exemplify, smaller countries should pay deference to the big country. This vision of a hierarchical order was proclaimed by then-Chinese Foreign Minister Yang Jiechi at an ASEAN Regional Forum meeting in 2010: “China is a big country and other countries are small countries and that’s just a fact”. The rules of a hierarchical order reflect, reinforce, and ritualize the asymmetry of power between the big and the small. If you think the term “rules-based” is too misleading, I would offer the term “lateral international order” as opposed to “hierarchical international order”. Second, the current international order embodied by the United Nations system is not fully “rules-based” (i.e., lateral) but a mixture of laterality and hierarchy. The UN General Assembly is lateral, but the UN Security Council is hierarchical. With this background discussion, the big picture of the current conflict between China and the Philippines in the South China Sea can best be described as a struggle between two kinds of international order in which China is pursuing a hierarchical order and the Philippines is defending a more lateral one.