The guided-missile cruiser USS Chancellorsville transits the Philippine Sea. AP Photo
The guided-missile cruiser USS Chancellorsville transits the Philippine Sea. AP Photo
The guided-missile cruiser USS Chancellorsville transits the Philippine Sea. AP Photo
The guided-missile cruiser USS Chancellorsville transits the Philippine Sea. AP Photo


In 2022, Asia's middle powers ensured all was quiet in the Indo-Pacific


  • English
  • Arabic

December 23, 2022

The best way to describe Asian geopolitics in the past year is encapsulated by the term "strategic maturity", namely the ability of nations to see the bigger picture beyond the fog of short-term tensions and uncertainty. What began as a tumultuous year, which took an even more troubling turn over the coming months, ended on a relatively more encouraging geopolitical note, largely thanks to the proactive role of "middle powers" in encouraging the better angels of superpowers’ nature.

Already divided by the war in Ukraine, and locked into a disruptive trade and technological warfare, the US and China almost sleepwalked towards direct confrontation following a controversial visit to Taiwan by Nancy Pelosi, the departing Speaker of the US House of Representatives, in August.

In particular, South-East Asian nations such Indonesia – this year’s G20 president, and the incoming chairman of Association of South-East Asian Nations – was instrumental to brokering a desperately needed detente between the two superpowers. The upshot is a more manageable competition rather than a mutually destructive conflict.

Sino-American ties constitute the most consequential bilateral relationship in the world. But the past year also demonstrated the growing significance of middle powers in shaping the 21st-century global order – in ways that preserve the interests of smaller nations and ensure maximum possible stability and prosperity for all. Thus, both the reigning superpowers as well as key regional players such as Indonesia have demonstrated commendable degree of strategic maturity, which bodes well for the future of the Indo-Pacific.

Lest we forget, 2022 began with a shocking geopolitical development. Just days after the Munich Security Conference in Germany, where Russia’s threat of military action against Ukraine dominated the proceedings, Europe witnessed the first major conventional war of the 21st century.

I vividly recall late-night conversations with European counterparts on the sidelines of the conference. Few believed that a major armed conflict was truly on the short-term horizon. Having spent years in conflict-ridden regions of the world, especially the Middle East, I remained deeply sceptical of the strategic complacency pervading the European strategic community.

Closely following analyses by a few perspicacious Russian experts, I publicly argued that an actual war was more probable than not. I also maintained that Asia could not insulate itself from a potential war in Europe, especially given the centrality of both Russia and Ukraine to global commodity markets. Just weeks after the actual war broke out, a number of Asian nations grappled with a huge energy and food crisis.

US President Joe Biden, right, and Chinese President Xi Jinping shake hands at the G20 summit in November. AP Photo
US President Joe Biden, right, and Chinese President Xi Jinping shake hands at the G20 summit in November. AP Photo
Smaller nations don’t want to be at the mercy of the whims of superpowers

The war in Europe, meanwhile, only accentuated Sino-American rivalry. While the US mobilised its European and Asian allies against Russia, the Chinese leadership blamed the West for provoking the conflict. Aside from laying blame on Nato expansion into post-Soviet space, Beijing also stepped up its energy imports from Russia in a bid to shield its Eurasian ally from western sanctions.

By and large, Chinese President Xi Jinping and Russian President Vladimir Putin projected a united front, pledging to jointly pursue a "new world order" beyond the West’s dictates. In response, the Pentagon spoke of the need to confront a Sino-Russian alliance in a new era of "great power competition".

Accordingly, the Biden administration moved on three fronts. To begin with, it released two major policy documents in quick succession, namely the National Security Strategy document and the National Defence Strategy to signal its commitment to confront its superpower rivals with gusto.

In particular, the NDS described the Asian powerhouse as the “most consequential strategic competitor for the coming decades", while the NSS openly accused Beijing of harbouring the “intent to reshape the international order [with] … increasingly, the economic, diplomatic, military, and technological power to do it".

Second, the Biden administration mobilised a new set of sanctions to weaken the foundations of its rivals' economies. While Russia was met with comprehensive financial and energy sanctions, China confronted unprecedented sanctions targeting its cutting-edge industries. In particular, Washington threatened to punish any western or multinational companies providing semiconductor technology to China.

While tightening the noose around China’s economy, the Biden administration proposed an Indo-Pacific Economic Framework, which aims to deepen strategic economic co-operation among a dozen US allies and partners, particularly in the realm of cutting-edge industries, public infrastructure development, and green technology.

Finally, the Biden administration also stepped up its military footprint on both ends of the Eurasian landmass. While mobilising European military allies against Russia, Washington forged ahead with solidifying a new alliance of “maritime democracies” in the Indo-Pacific.

In a surprising move, the Biden administration signed a nuclear submarine deal under the Aukus alliance, with the clear objective of countering China’s growing maritime capabilities in the Western Pacific. This went hand-in-hand with expanded naval patrols across China’s immediate neighbourhood.

Crucially, the US also began negotiating new basing access across vital locations in the Philippines in order to expand its forward-deployment presence in East Asia. The ultimate aim is to build an integrated network of allies and partners to keep China’s ambitions in check.

Against the backdrop of rising tensions across a whole range of issues, Ms Pelosi’s visit to Taiwan, which Beijing considers as a "renegade province", almost provoked a full-scale conflict between the two superpowers.

Singapore's Prime Minister Lee Hsien Loong and Indonesian President Joko Widodo meet in Riau, Indonesia, in January. Reuters
Singapore's Prime Minister Lee Hsien Loong and Indonesian President Joko Widodo meet in Riau, Indonesia, in January. Reuters

Perturbed by the perilous direction of Sino-American relations, South-East Asian leaders openly warned that the two superpowers could end up "sleepwalking" into conflict. It was precisely at this point that regional states, namely Indonesia and Singapore, stepped up their efforts to mediate between the rival powers.

Neither Asean member state has the same economic and military resources as the reigning superpowers. But what they bring to the table as "middle powers" include credibility as responsible regional powers, and a proven capacity to foster co-operative relations and corral geopolitical coalitions. They are also capable of exercising a significant degree of strategic autonomy and, accordingly, projecting power beyond their immediate borders.

While Singaporean leaders publicly warned of the disruptive impact of Sino-American relations, Indonesia mediated among them. Crucially, both countries were backed by other "middle powers" such as Japan, India, South Korea and Australia, which had also fretted over this concern.

Following a historic trip to Europe to mediate the Russia-Ukraine conflict, Indonesian President Joko Widodo convinced his Chinese and American counterparts to find a common ground on the sidelines of the G20 summit in Bali before the end of the year.

As non-aligned nations with robust ties with all major powers, and key leaders within Asean, Indonesia and Singapore were also in a unique position to nudge the US and China towards a new modus vivendi. The upshot was the "Bali detente", which saw both Mr Biden and Mr Xi hold a cordial meeting and recognising their shared interests in creating a broadly stable and prosperous order in the Indo-Pacific.

The highly encouraging episode not only underscored the strategic maturity of the two global statesmen, but also the proactive contribution of middle powers such as Indonesia and Singapore. The past year showed that smaller nations don’t want to be at the mercy of superpowers and, accordingly, are willing and capable of becoming captains of their own strategic destiny.

The biog

Job: Fitness entrepreneur, body-builder and trainer

Favourite superhero: Batman

Favourite quote: We must become the change we want to see, by Mahatma Gandhi.

Favourite car: Lamborghini

The stats

Ship name: MSC Bellissima

Ship class: Meraviglia Class

Delivery date: February 27, 2019

Gross tonnage: 171,598 GT

Passenger capacity: 5,686

Crew members: 1,536

Number of cabins: 2,217

Length: 315.3 metres

Maximum speed: 22.7 knots (42kph)

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

RESULTS

1.30pm Handicap (PA) Dh 50,000 (Dirt) 1,400m

Winner AF Almomayaz, Hugo Lebouc (jockey), Ali Rashid Al Raihe (trainer)

2pm Handicap (TB) Dh 84,000 (D) 1,400m

Winner Karaginsky, Tadhg O’Shea, Satish Seemar.

2.30pm Maiden (TB) Dh 60,000 (D) 1,200m

Winner Sadeedd, Ryan Curatolo, Nicholas Bachalard.

3pm Conditions (TB) Dh 100,000 (D) 1,950m

Winner Blue Sovereign, Clement Lecoeuvre, Erwan Charpy.

3.30pm Handicap (TB) Dh 76,000 (D) 1,800m

Winner Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.

4pm Maiden (TB) Dh 60,000 (D) 1,600m

Winner Bladesmith, Tadhg O’Shea, Satish Seemar.

4.30pm Handicap (TB) Dh 68,000 (D) 1,000m

Winner Shanaghai City, Fabrice Veron, Rashed Bouresly.

Results:

5pm: Baynunah Conditions (UAE bred) Dh80,000 1,400m.

Winner: Al Tiryaq, Dane O’Neill (jockey), Abdullah Al Hammadi (trainer).

5.30pm: Al Zahra Handicap (rated 0-45) Dh 80,000 1,400m:

Winner: Fahadd, Richard Mullen, Ahmed Al Mehairbi.

6pm: Al Ras Al Akhdar Maiden Dh80,000 1,600m.

Winner: Jaahiz, Jesus Rosales, Eric Lemartinel.

6.30pm: Al Reem Island Handicap Dh90,000 1,600m.

Winner: AF Al Jahed, Antonio Fresu, Ernst Oertel.

7pm: Al Khubairah Handicap (TB) 100,000 2,200m.

Winner: Empoli, Pat Dobbs, Doug Watson.

7.30pm: Wathba Stallions Cup Handicap Dh80,000 2,200m.

Winner: Shivan OA, Patrick Cosgrave, Helal Al Alawi.

The specs

Engine: 5.0-litre supercharged V8

Transmission: Eight-speed auto

Power: 575bhp

Torque: 700Nm

Price: Dh554,000

On sale: now

The specs

Engine: Two permanent-magnet synchronous AC motors

Transmission: two-speed

Power: 671hp

Torque: 849Nm

Range: 456km

Price: from Dh437,900 

On sale: now

Traits of Chinese zodiac animals

Tiger:independent, successful, volatile
Rat:witty, creative, charming
Ox:diligent, perseverent, conservative
Rabbit:gracious, considerate, sensitive
Dragon:prosperous, brave, rash
Snake:calm, thoughtful, stubborn
Horse:faithful, energetic, carefree
Sheep:easy-going, peacemaker, curious
Monkey:family-orientated, clever, playful
Rooster:honest, confident, pompous
Dog:loyal, kind, perfectionist
Boar:loving, tolerant, indulgent   

Updated: December 27, 2022, 9:33 AM