PM's Japan visit heralds 'hedging' strategy

PM's Japan visit heralds 'hedging' strategy

Prime Minister Prayut Chan-o-cha welcomed Chinese Premier Li Keqiang at Government House late last year. (Photo by Chanat Katanyu)
Prime Minister Prayut Chan-o-cha welcomed Chinese Premier Li Keqiang at Government House late last year. (Photo by Chanat Katanyu)

News that Thailand is becoming a Chinese client state is greatly exaggerated. True, Bangkok has moved ever closer to Beijing following the military coup in May 2014. But recent foreign policy manoeuvres suggest even Thailand's military rulers know when they are getting a raw deal.

What Thailand needs going forward is the realisation that foreign relations are a business of national interest and diplomatic nuances, and that the China-Japan relationship is the most consequential for East Asia's future, especially in mainland Southeast Asia.

It is common knowledge since the coup that Thailand's military rulers, led by Prime Minister Gen Prayut Chan-o-cha, have sought diplomatic support and development alternatives from China. As Bangkok became increasingly isolated in the face of an ongoing rebuff of the coup by developed democracies in the West and Japan, Beijing's warm embrace has stood out. Mutual visits between senior officials of both countries were trumpeted as Thailand's way forward, away from Western influences. The more Thailand took an authoritarian turn, the starker this contrast between Western and Chinese responses towards the Thai coup became.

Japan has been the odd player in this mix. It is Asian and irreversibly democratic, with the largest stock of direct investment in Thailand and Southeast Asia — more than any other major power over the past three decades. Like the Western democracies, Tokyo initially responded to the Thai coup by calling for the restoration of fundamental freedoms and the return of democratic rule. But as Thailand's military regime fell head over heels for China's coup approval, Japan took a pause and became decidedly reticent.

The Japanese were naturally afraid of losing Thailand to China. It has happened nearby before. In the mid-1990s, when Burma (now called Myanmar) was ostracised by the international community for years of military repression and human rights violations, the Chinese moved in and thrived to become the biggest investor in the then-pariah country. Indeed, China's domination became a major catalyst for Myanmar's reforms and diversification since 2011, and Beijing's stranglehold on Yangon has been diluted as a result.

Yet Thailand has been a conundrum for Japan. While its business ties and economic interests in Thailand as the hub of mainland Southeast Asia are immense, Tokyo can hardly condone a military coup. Its business lobby has weighed in heavily, and the official Japanese position towards the Thai coup softened after the initial call for democracy and human rights.

But Japan deftly found the right mix of business and politics in its recent reception of Prime Minister Prayut's on an official visit. The government of Prime Minister Shinzo Abe fortified the deep and dense Japan-Thailand relationship and signed a clutch of memoranda of understanding for Japan's investment in east-west rail projects across Thailand, while successfully calling for the return of a civilian-led government and enticing Prime Minister Prayut to reassure the international community that Thailand remains on course back to electoral democracy, with poll prospects in late 2015 or early 2016.

Getting both the business and politics right during Gen Prayuth's visit was Japan's own mini-coup. It preserved Japan's democratic values and maintained its economic interests.

The geo-political and geo-economic backdrop of Gen Prayut's visit to Japan and his government's recent kowtowing and pursuit of Chinese approval and infrastructure investment is really what recent Thai foreign policy dealings have been about.

While the Chinese leadership appears forthcoming and reassuring, it has become clear that China remains a transactional superpower. It does not give without taking up front and sometimes in advance. Although there are no freebies in geopolitics, China has exacted a heavier cost for its goodwill compared to Japan. For example, the two major north-south rail projects inked between China and Thailand involved conditions and attached strings that may be seen as a grand rip-off.

The interest rate for China's multibillion-dollar government-to-government loans is pegged at 2%, with a relatively short grace and repayment periods of four and 20 years, respectively. In goodwill G-to-G development-based and project-financed loans, interest rates are typically under 1.5%, with at least a 10-year, and closer to 30-year, grace and repayment terms. In addition, China has insisted on using its own engineering, technological, management, logistical resources and land-development perks.

These conditions are rudely unfamiliar to Thai development planners who are used to receiving more favourable and friendly terms from the likes of the Japan International Cooperation Agency or Japan Bank for International Cooperation. The latter, for example, was instrumental in the final phase of Suvarnabhumi airport's construction on low-cost conditions a decade ago.

To be sure, coup or no coup, across governments before Gen Prayut's and after, China's gravitational pull will grow. Beijing is the resident superpower and mainland Southeast Asia is its backyard. But in the longer run beyond military coup and military rule, Thailand's position will likely become more hedged and nuanced again, as it has always been, with world-renowned success and effectiveness.

Certainly, the United States provides a strategic and substantial counterbalance to China in maritime Southeast Asia, particularly for the Philippines. But in mainland Southeast Asia, Thailand's balancing act must rely more on Japan.

Gen Prayut's interim government found this out the hard way by isolating itself from global democratic voices only to give greater leverage to China to milk benefits out of Thailand's coup interregnum.

His trip to Japan is a timely reminder of this sobering geopolitical reality and hard business calculations and an opportunity to rebalance Thailand's foreign policy posture.

There is no avoiding the Chinese where Thailand is located. But when young Thais close their eyes and imagine their dream destination in China, they will probably think only of Hong Kong, whose culture, identity and place are open and liberal with latent Western democratic touches. Beijing and Shanghai are most likely not the first choices that come to young minds around here for a dream visit.

On the other hand, if given a free range of Asian destination choices, many Thais are likely to opt for Tokyo, Hokkaido and an assortment of places up and down the Japanese isles. Such is the fundamental difference between China and Japan in the popular Thai (and the broader Asian) imagination.

In policy terms, a more sophisticated hedging strategy between China and Japan is Thailand's imperative.

Yet it should not go so far as to promote tension and conflict between these two East Asian giants. The policy ideal would be some tension and discord between Beijing and Tokyo to the benefit of hedging countries such as Thailand and its neighbours in Southeast Asia, but at the same time enough cooperation and concert between China and Japan to act as a pillar around which East Asia's future peace and prosperity can be organised.

Thitinan Pongsudhirak is associate professor and director of the Institute of Security and International Studies, Faculty of Political Science, Chulalongkorn University.

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