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Asia's Challenge in 2013 is Nationalism

January 6th 2013

The East is Red

The West's attention may be focused on the American "fiscal cliff" and possible breakup of the euro zone, but Asia, especially the northeast, offers its own challenges in 2013 that could affect global stability. Given regional rivalries and lack of trust, there is little reason to believe that Asia's problems will be solved in the coming 12 months. Instead, they may only fester, leading to greater complications down the road.

As odd as it may seem, Kim Jong Eun is now the senior leader in northeast Asia. The last two months of 2012 saw the elevation of Xi Jinping to head of the Chinese Communist Party, Shinzo Abe returning to power in Japan after five years, and Park Geun-hye elected as South Korea's first female president. This quartet of leaders will have to learn to live together.

For now, each will be focused on his or her domestic economy. Kim continues to flirt with ideas of reform, though to what extent remains murky—and unreliable. Mr. Xi must deal with a worrying slowdown in China that raises questions about social stability and the Communist Party's legitimacy.

Japan's voters kicked out the Democratic Party of Japan after only three years, due to a controversial sales tax increase, along with the broader failure to move the country out of deflation, tame public debt, and effectively respond to the 2011 earthquake. As for Ms. Park, she inherits a country that has seen public confidence in elected officials drop amid corruption scandals.

Given the scale of the problems, these leaders' economic initiatives so far aren't encouraging. Kim's purge of army officers last year has been merely followed by speeches urging greater loyalty to the party. Neither Mr. Xi nor Mr. Abe has proposed significant economic reforms, and in fact the latter could hurt Japan and spark a currency war by pushing for easier money.

From the economic perspective then, there is little reason to be optimistic about 2013, but the geopolitics evokes downright pessimism. This week, an unexpected New Year's televised address from Kim calling for an end to confrontation with the South will undoubtedly raise hopes for a breakthrough in Pyongyang-Seoul relations. Experience should temper expectations though. There are credible reports that a third nuclear test by the North, following last month's successful rocket launch, may be just weeks away.

Such a test is sure to raise fears that Pyongyang is getting closer to manufacturing nuclear warheads to fit onto its rockets, which will permanently change Asia's security dynamic. This would greatly pressure the U.S. to prove the credibility of its nuclear umbrella over Japan and South Korea. It would also increase tensions between China and its neighbors, given the belief that Beijing tacitly supports the Kim regime.

Then there are the region's island disputes, which a growing number of analysts believe will lead to actual conflict. Japan recently announced a special naval force to deal specifically with incursions into disputed waters surrounding what it calls the Senkaku Islands, and Tokyo believes China's dispatch of air force planes to the skies over the islands ratchets up the crisis. It doesn't help that Mr. Abe raised hackles by campaigning as a staunch nationalist.

Mr. Xi, too, is speaking of China's nationalistic "revival" these days. Even if we're to disregard his rhetoric, Beijing insists that Tokyo's nationalization of the islands upset the decades-old status quo, and is unwilling to talk about ways to reduce tensions until Japan backs off. A miscalculation or accident in the waters around the Senkakus could indeed lead to conflict, though full war is unlikely. China-Japan tensions, though, have already damaged trade ties and could cause further economic disruptions in one of the most integrated regions in the world.

Disputes over the Spratly and Paracel Islands in the South China Sea also continue, with China having recently announced new maritime navigation "rules" that many feared gave it the right to stop innocent shipping. Beijing has since restricted the scope of this policy, but other problems fester. The month-long face-off between Manila and Beijing last summer over the Scarborough Shoal remains a sore spot, while Hanoi has claimed recent Chinese interference with its oil exploration vessels.

Beijing has so far been successful in preventing the Association of Southeast Asian Nations from formally adopting a multilateral approach to deal with the maritime disputes. If Beijing now tries to pick off the smaller nations one by one, tensions will worsen. China's Southeast Asian neighbors will also be watching the expansion of a military garrison in the Spratlys announced last year.

All this sounds worrying, but perhaps the most disturbing trend in East Asia is the complete lack of progress on solving any of these problems. No diplomatic initiatives have been proposed, nor have nations sought bilateral solutions that could form the basis for wider agreement. Instead, politicians keep stoking more nationalism, as their positions harden.

The United States could have been the one arbiter of the regional order, but it refuses to help resolve Asian issues. Despite the Obama administration's rhetorical shift to Asia, it has made known its intention to steer clear of these territorial disputes. It doesn't even have any response to North Korea's missile and nuclear tests.

It seems that Asia is on its own in solving its problems. The fact that it shows little interest in doing so should raise alarms in world capitals. After all, a century ago, Europe showed itself unable to resolve a variety of disputes, despite deep economic integration. The centenary of 1914 is just a year away, but its lessons already may have been forgotten.

Mr. Auslin is a scholar at the American Enterprise Institute in Washington and a columnist for wsj.com.

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