The Strategic Outlook


South East Asia will face a number of challenges to its security in the 2010s, largely in the form of Islamist militancy, piracy, weak borders and rising competition between China and the US for influence in the region. One of the biggest individual unknowns in the region is the future of Myanmar. If the regime there were to collapse suddenly, regional insecurity would be greatly increased.

South East Asia In A Global Context

South East Asia will remain one of the world's most important regions for the following reasons:

Population Size: It is one of the most heavily populated parts of the world, with an estimated 597mn people in 2010, according to the UN. The population is still rising rapidly, with the UN forecasting an 11.5% increase to 666mn in 2020, and to 723mn in 2030.

Rapidly Expanding Economies: South East Asia's economies are generally expanding rapidly and the region is a key destination for foreign investment, business and tourism. It is also rich in commodities and natural resources.

Islamist Militancy: Islamist militants have been active in South East Asia for some time. The region has 258mn Muslims (16% of the global total), according to a January 2011 report by the Pew Forum, providing a significant pool of potential recruits.

International Piracy: The Malacca Strait and waters around Indonesia are major zones of pirate activity. The Strait is one of the world's main maritime 'chokepoints', and there are fears that terrorists could block the channel.

Sino-US Competition For Influence: The US dominated South East Asia during the Cold War but in recent years Chinese influence (especially commercial) has been increasing. This raises the likelihood of a concerted struggle for influence between Beijing and Washington.

Challenges And Threats To Stability And Security

South East Asia faces multiple challenges to its security over the coming decade and beyond. These include:

Poor Governance And Political Instability

Most South East Asian states are vulnerable to political instability and suffer from relatively poor governance. Thailand has been wracked by multiple periods of mass protests since 2005. This instability reflects a deep-rooted power struggle between traditional Bangkok-based royalist elites represented by the Democrat Party, and new elites and the predominantly agricultural north eastern provinces, represented by exiled former premier Thaksin Shinawatra and his younger sister, Yingluck, who was elected prime minister in July 2011.

The Philippines has also been prone to political instability, with two 'People Power' popular uprisings against corrupt presidents (in 1986 and 2001), and several repeated attempts during the 2000s. During the past decade the Philippines has occasionally been hit by rumours of an imminent military coup, although most of these were speculative and actual mutinies were foiled or failed to attract the support of the top brass. Given deep inequalities in the Philippines, and high levels of political corruption, we cannot preclude renewed instability in the years ahead.

Indonesia has achieved a high degree of stability under President Susilo Bambang Yudhoyono (2004-) following the chaos that accompanied the fall of long-time ruler Suharto in 1998. That period resulted in three changes of president in six years (1998-2004) and the near disintegration of the state, as separatist movements took advantage of central government weakness to break free. It remains to be seen whether the stability achieved under Yudhoyono represents a maturing of Indonesia's political culture or is an aberration that will end once he steps down, as mandated, in 2014.

Cambodia, Laos and Vietnam are all de jure or de facto one-party states experiencing rapid economic growth and social change. We do not preclude rising public unrest, especially if governments fail to translate rapid economic growth into higher living standards. Indeed, the popular uprisings which shook the Middle East and North Africa in 2011 show the speed at which pent-up public dissatisfaction with authoritarian regimes can reach boiling point. Cambodia saw mass anti-government protests in 2013.

Rapid Population Growth And Urbanisation

Although birth rates have declined, populations are increasing fairly rapidly in most South East Asian countries, with total fertility rates (TFR, the average number of children a woman is expected to have in her lifetime) above the population replacement level of 2.1. The Philippines is forecast by the UN to have the highest TFR in the region (3.1) in 2010-2015, while Thailand will have the lowest TFR of 1.5, which is already below replacement level, having fallen from 3.9 in 1980.

High birth rates mean governments and private sectors must create sufficient jobs to absorb the expanding labour force. However, in many cases, job creation is proving difficult, and this is leaving a vast segment of unemployed or underemployed young people who have only limited prospects for social and economic advancement. In the Philippines an estimated 10% of its workforce has moved abroad in search of work.

Several South East Asian states are also expected to experience substantial urbanisation over coming decades. Cambodia, Laos, Myanmar, Thailand and Vietnam are still predominantly rural, with only one-third of their populations living in cities. As more people migrate to the cities, this will place ever greater strains on urban infrastructure and social services. This could increase scope for political instability or force rural migrants to work in the underground economy. These conditions in turn provide opportunities for organised crime to flourish.

Organised Crime

Organised crime is common in many parts of South East Asia (although hardly uniquely so), owing to weak institutions, high levels of poverty and corruption and a degree of lawlessness in some countries. In addition, increasing globalisation has allowed criminal groups hitherto mainly restricted to one country to develop operations overseas. As with many underdeveloped regions of the world, organised criminal groups trade in drugs, people (prostitutes, but also children and illegal migrants), weapons and counterfeit goods.

Nonetheless, most foreign visitors to South East Asia are unlikely to be physically targeted by criminal gangs, although they are at risk of petty crime and trickery. Most criminal syndicates are arguably more likely to pose a threat to domestic rather than foreign businesses.

Islamist Militancy

South East Asia's Muslim populations have long practiced a moderate form of Islam, and the vast majority still does. However, since the 1990s the region has come under greater scrutiny for its ties with radical Islam. For example, in 1995, al-Qaeda operatives used South East Asia as a staging ground for a failed plot (Operation Bojinka) to destroy a dozen transpacific airliners flying towards the US, a scheme that was later carried out on a smaller scale on September 11 2001. The '9/11' terror attacks prompted national and global intelligence agencies to intensify their efforts to crack down on South East Asian terror cells.

There are several reasons why the region, and Indonesia in particular, will remain vulnerable to terrorism or a source of terrorism in the near future:

•There is the region's sheer geographical size and population. Indonesia and the Philippines are large archipelagos with thousands of small and sparsely populated islands where the government's presence may be limited. This provides terrorists with places where they can hide and train.

•Despite fairly robust economic growth, tens of millions of people in Indonesia and the southern Philippines remain in deep poverty. Their lack of opportunities for social advancement could make them vulnerable to recruitment by radical groups.

•There are powerful religious organisations in Indonesia, which although not terrorist in nature, espouse 'radical' messages to their supporters. The Indonesian authorities have at various times been reluctant to crack down on these groups for fear of creating a backlash.

•There is a significant foreign presence in South East Asia that provides potential targets for terrorists. These include foreign businesses, tourists and travellers, aid workers and Christian missionaries. Singapore, too, could potentially be targeted, because it is the region's leading financial centre and a pro-Western state.

Main Islamist Militant Groups In South East Asia

Jemaah Islamiyah

Jemaah Islamiyah (JI) is one of the most prominent Islamist militant groups in South East Asia, having received notoriety in the international media for orchestrating the October 2002 Bali bombing. This was the worst single act of terrorism on Indonesian soil, killing 202 people, including 152 foreign citizens (88 were Australian). JI was founded in the early 1990s with the aim of forming an Islamist superstate consisting of Indonesia, Malaysia, the southern Philippines, Singapore and Brunei. Of these countries, it has been most active in Indonesia, carrying out bomb attacks on the Marriott Hotel in Jakarta in 2003, the Australian embassy in 2004, Bali (albeit on a much smaller scale) in 2005, and on the Marriott and Ritz-Carlton hotels in Jakarta in 2009.

By the start of the 2010s most of JI's top operatives had been killed or captured, with Noordin Mohammad Top, the Malaysian-born mastermind of the 2009 Jakarta attacks, dying in a gun battle with Indonesia's anti-terror police in Central Java in September that year. Nonetheless, the Islamist terror threat persists. In May 2010 the Indonesian police announced that they had foiled a plot by Aceh-based militants to carry out a Mumbai-style hotel siege and attack President Susilo Bambang Yudhoyono, government officials, and foreign guests at Indonesia's national day ceremonies on August 17. The militants were also reportedly planning to target the US president, Barack Obama, who eventually visited the country in November 2010.

In August 2010 the Indonesian authorities detained the radical cleric Abu Bakar Bashir, whom they consider to be the driving force behind JI. Indonesia's Detachment 88 linked Bashir to a militant training camp in the westernmost province of Aceh, the only region of Indonesia to incorporate shari'a law. In February 2011 Bashir went on trial charged with plotting acts of terror and in mid-June he was sentenced to 15 years in prison. This was reduced to nine years in October 2011. In July Indonesia's national counter-terrorism chief stated that Islamist militants were now using parcel bombs and targeting minority groups to push their radical agenda.

In March 2012, Indonesian police shot dead five suspected Islamist militants in a raid in Bali. The men were believed to be plotting new attacks, including one against a beachfront bar popular with tourists. This demonstrated the persistency of the terror threat, and security officials believe that militants are keen to raise their profile with new attacks. In October 2012, the authorities foiled another plot aimed at attacking the US and Australian embassies in Jakarta, the American consulate in Surabaya, and the offices of mining company Freeport-McMoRan. The plotters were believed to represent a new group, the Sunni Movement for Indonesian Society ('Hasmi').

In January 2013, police carried out further raids on Islamist militants in Poso, Central Sulawesi, which has reportedly emerged as a new front in the fight against terror groups, and the island of Sumbawa. The militants were apparently planning to attack tourist spots in these areas. In February 2013, Indonesian lawmakers passed legislation enabling the government to cut off terrorist financing by freezing bank accounts and seizing assets of accused terrorists. Overall, Indonesian security forces are increasingly concerned about the proliferation of very small militant groups or terror cells, which are harder to detect than larger, established groups such as JI.

Also noteworthy is that in early 2013, Indonesian police foiled a plot to bomb the Myanmar embassy in Jakarta. The militants were apparently motivated by their desire to avenge the plight of Rohingya Muslims in Myanmar, who are regarded as being violently persecuted by the Myanmarese government and society. Going forward, there are concerns that the Rohingyas could become a rallying cause for South East Asian Islamist militants. By the start of 2014, concerns had also arisen that more Indonesians were joining the Islamist rebels in Syria's civil war, and that their experiences there would allow them to learn new terrorist skills that could be used in Indonesia on their return.

Abu Sayyaf

Abu Sayyaf is a small but deadly Islamist group in the Philippines that was formed in the 1990s by Abdurajak Abubakar Janjalani after he returned from the Middle East and Afghanistan. After Janjalani's death in 1998, his brother Khadaffy led the group until his own death in 2007. Khadaffy's successor, Albader Parad, was killed in February 2010. All three died in battles with Philippine government forces. Abu Sayyaf has been fighting for an independent Islamist state and has attacked or kidnapped foreign tourists, aid workers and Christian missionaries, as well as conducted bomb attacks. Its main strongholds have been the islands of Jolo and Basilan.

In 2004 Abu Sayyaf bombed a ferry in Manila Bay, resulting in 116 deaths, making it the Philippines' worst terror attack. The group developed close ties with al-Qaeda thanks to the support of Mohammed Khalifa, a brother-in-law of Osama bin Laden, and Jemaah Islamiyah (see above). Abu Sayyaf's links with al-Qaeda prompted the US to deploy several hundred troops to the southern Philippines in 2002 in support of Philippine military operations against the group.

While the Philippine government has scored successes in its campaign against Abu Sayyaf, reducing the number of militants to around 350 from a peak of 5,000 in early 2000, the authorities see the group as very dangerous, and fear that it is rebuilding its ties with militant groups in the Middle East. As of 2014, the militants were holding several foreign nationals as hostages, all of whom were captured in the south of the Philippines.

Moro Islamic Liberation Front

The Moro Islamic Liberation Front (MILF) broke off from the Moro National Liberation Front (MNLF) in 1981 to wage an intensified war for an independent Moro (Muslim) state in the southern Philippine island of Mindanao. The MNLF had been fighting for a Moro state since the 1960s, but gradually adopted a moderate path, which prompted its hardliners to form MILF. In 1989 the Philippine government created the Autonomous Region in Muslim Mindanao (ARMM), consisting of several Muslim provinces, in a bid to placate local Muslim populations. However, MILF considered the move insufficient and continued its armed struggle. Nonetheless, from 1997 MILF conducted on-and-off negotiations with the Philippine government to end the conflict, which has killed more than 120,000 people.

On December 10, 2013, the Philippine government signed a power-sharing agreement with MILF that paves the way for the establishment of a new autonomous Muslim territory, to be called Bangsamoro, which is expected to replace the ARMM before President Benigno Aquino III's term ends in mid-2016. Bangsamoro is intended to have greater political power than the ARMM and more control over the resources located within it. (Under a deal signed in July 2013, MILF will receive 75% of gold, copper, and other resource wealth mined from the territory.) Bangsamoro's government will have more power over taxes, spending, and internal security, but foreign, defence, and monetary policy will remain in the hands of Manila.

However, the struggle in the Philippine south is not necessarily over. Early 2011 saw the emergence of a MILF splinter group known as the Bangsamoro Islamic Freedom Fighters (BIFF), with around 100 members. The group was led by Ustadz Ameril Umbra Kato, a hardline commander who was behind an outbreak of violence in August 2008. MILF formally expelled Kato in March 2011, prohibiting him from using the group's name in any communications. Shortly after the announcement of the initial October 2012 peace breakthrough, a BIFF spokesman rejected the deal. Going forward, BIFF may stage new attacks, which could complicate the peace process. The group was implicated in a plot to bomb the Shariff Aguak town hall in Mindanao in January 2013. Also potentially problematic is the existence of private armies controlled by powerful clans in the region who could see their influence eroded under a peace deal.

Meanwhile, on September 9, 2013, as many as 500 insurgents from a rogue faction of the MNLF occupied parts of Zamboanga City in Mindanao, taking hundreds of people hostage. The rebels then declared the independence of Muslim Mindanao. Government forces subsequently stormed the city, and ended the siege after 20 days. The crisis served as stark reminder of the lingering security threats in the region. We caution that the MNLF rebels' act of aggression could undermine the peace process between the government and MILF, given the former group's loose linkages with the latter.

Insurgents In Thailand's South

Since January 2004 Thailand's three predominantly Muslim southernmost provinces, Pattani, Yala and Narathiwat, have been wracked by an insurgency that is estimated to have resulted in 5,926 deaths and 10,593 injuries, mostly civilians, by December 31, 2013. Of these, 3,461 were Muslims, and 2,431 were Buddhists, with the remainder coming from other groups. The local Muslim population has long bemoaned its marginal economic and social status in predominantly Buddhist Thailand, and believes it has more in common with its Malaysian neighbours. The current insurgency has consisted of small-scale attacks on military and police facilities, and occasional bombings, but successive Thai governments have all failed to bring the conflict to heel, despite a variety of economic incentives and military measures, and negotiations. Despite the durability of the insurgency, the militants have generally shown little sign of wanting to expand it to key tourist areas or the capital, Bangkok. Although there have been concerns that the militants could attract the operational involvement of radical groups such as al-Qaeda or Jemaah Islamiyah, this has not happened. Nonetheless, we believe Thailand remains an attractive target to South East Asian Islamist militant groups, because of the large presence of Westerners in the country.

Meanwhile, fears of a possible terrorist attack against American or Israeli interests increased in January 2012 after Thai police arrested a Lebanese man with a Swedish passport for possession of large quantities of chemicals, which could be used to make explosives. The man was allegedly linked to Iran-backed Shi'ite Islamist group Hizbullah, prompting speculation that Tehran was preparing to strike American and Israeli interests beyond the Middle East in the event of a US-Israeli attack on Iranian nuclear facilities.

Piracy In The Malacca Strait

Piracy has been a long-standing risk in the Malacca Strait and the waters around Indonesia, and there have long been concerns that terrorists could bomb a tanker in the Strait, blocking it to international trade. Around 40% of world trade passes through the Malacca Strait. Malacca is the main channel between East and South Asia, the Middle East, Europe and Africa. It is especially important for China and Japan, since 80% of Chinese oil imports and 90% of Japanese inbound crude shipments pass through it. Defence planners in Beijing and Tokyo have long feared that terror attacks, piracy, or interdiction by hostile navies could choke off their trade and oil supplies. Singapore is the world's top container shipping port and refuelling hub, and any temporary shutdown of the port would be a tremendous economic blow to the city-state.

Militant groups have a proven capability to attack large ships. In 2000 Islamist militants used a small boat to carry out a suicide bombing against the USS Cole in the port of Aden, Yemen, and in 2002 they attacked the French oil tanker Limburg in the Gulf of Aden. More recently Somali pirates have shown an ability to seize large vessels, including an oil supertanker in 2008. While joint maritime patrols by Indonesia, Malaysia and Singapore have helped curb piracy, the overall threat to shipping in the Malacca Strait is real.

Fortunately, there are alternative routes to Malacca should it become blocked. The first is the Sunda Strait, which separates Indonesia's largest islands of Sumatra and Java. However, this route is considered difficult to navigate (especially for large vessels), because of shallow patches, strong tides, oil platforms and tiny uninhabited islands. There is also the route through the Lombok and Makassar Straits, which is wider, deeper, and less congested. However, this route is 1,600 nautical miles longer, requiring a further three-and-a-half days' travelling time, which adds to shipping costs.

Overall, the rising volume of Asian trade, especially with emerging markets in the Middle East and Africa, means the Malacca Strait is likely to become more important and more congested, increasing the risk of a terror attack or piracy. China is building pipelines across Myanmar to bypass the Strait, and Malaysia is planning a trans-peninsular pipeline, but these schemes will not compensate for any disruption in Malacca.

The South China Sea/Spratly Islands

The South China Sea is a potential flashpoint in South East Asia. Most notably, ownership of the Spratly and Paracel Islands, which consist of thousands of small islands in the sea, is disputed between Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam. Not all of these countries claim all the islands; rather, they each claim part of the archipelago, and have deployed small numbers of military forces there. The islands are believed to contain oil and gas deposits and vast fish stocks, which increase their perceived value to the claimant country.

For many years the countries with claims to the Spratly and Paracel Islands have been concerned about China's increasing assertiveness in the South China Sea. China is progressing with long-term plans to develop a blue-water (ocean-going) navy and has already developed a large new underground naval base in Hainan Island, in the southernmost part of the People's Republic, which can be used to project power in the South China Sea. Given that virtually all maritime trade between East Asia and Europe/the Middle East must pass through the South China Sea, there are concerns among some defence planners in Japan, Taiwan, and Vietnam that the Chinese People's Liberation Army Navy (PLAN) could interdict their vessels in the area in the event of a geopolitical crisis. We believe such action is highly unlikely, given that this could be construed as an act of war and could prompt US intervention.

Other Regional Threats

Thai-Cambodian Border Dispute

The Thai-Cambodian border has been a potential flashpoint owing to the presence of the disputed Preah Vihear temple. In 1962 an international court ruling awarded the temple to Cambodia, but many in Thailand did not accept this status. Recent years have seen both countries use the dispute to stoke nationalist fervour and both have deployed troops to the region, resulting in small but deadly skirmishes. The latest of these took place in late April/early May 2011, resulting in at least 18 deaths. Despite these occasional hostilities, neither side wishes to see full-scale armed confrontation. On November 11, 2013, the ICJ ruled that Cambodia had sovereignty over an area immediately surrounding the temple, but not over a nearby hill. Both claimants appeared to accept the verdict.

New People's Army

Besides Islamist militants, the Philippine government has fought a Maoist insurgency led by the Communist Party of the Philippines and its armed wing, the New People's Army (NPA), for more than 40 years. The NPA has been a threat to government forces, as well as civilian communities in various parts of the country. Both the US and the EU designate the militant group a terrorist organisation. Despite the offer in 2007 of an amnesty by then-president Gloria Macapagal Arroyo that promised to forgive certain crimes committed 'in pursuit of political beliefs', the NPA has continued to wage hostilities against the central government. However, the NPA's strength has been weakened substantially, with Philippine military officials estimating that the group may only have 4,000 fighters, compared with 26,000 at the peak of its power in the 1980s. In early June 2010 guerrilla leaders stated that they were ready to resume talks with the Philippine government under the new president, Benigno Aquino III. Formal talks, hosted by Norway, resumed in mid-February 2011 after a six-year hiatus. One of the key sticking points was the demand by rebels that more of their comrades be released from detention. Meanwhile, the rebels continued to attack foreign and domestic mines in the southern Philippines in 2011, citing their pollution and the displacement of indigenous people. The government countered that the guerrillas use these social concerns as an excuse to extort money from mine operators. In April 2013, peace talks collapsed, raising doubts about Aquino's goal of reaching a final settlement by 2016.

The Future Of Myanmar

The future of Myanmar remains a major risk factor for South East Asian security. Myanmar is important for the following reasons:

•It lies at the intersection of China and India, and has been the subject of competition for influence between Beijing and New Delhi, with the former generally holding the upper hand.

•China sees Myanmar as a crucial transport corridor connecting its landlocked inner western provinces to the Indian Ocean, and thus world markets. China is building new pipelines from Myanmar's gas fields and ports to its industrial centres, so that less oil to China needs to be shipped via the Malacca Strait.

•Chinese access to Myanmar's ports could eventually allow the Chinese navy to increase its ability to project power in the Indian Ocean, which is shaping up to be a major arena of 'Great Power' competition.

•A Myanmar closely allied to the US would allow Washington to increase its influence in South East Asia. Like India, the US worries about rising Chinese influence. Indian dominance over Myanmar could counteract some of China's geopolitical clout in the region.

•Myanmar is vulnerable to separatist pressures and any full-scale collapse of the country could lead to massive refugee flows into China, India, Thailand and Bangladesh, none of which are necessarily well placed to cope with them.

•Myanmar is a major centre of illegal trafficking of gems, timber, drugs, and labour (including prostitutes).

•The country emerged as a potential ally of North Korea in the late 2000s and there were reports that Pyongyang was assisting Naypyidaw in developing a nuclear programme.

Following the first elections in more than 20 years in November 2010, Myanmar remains dominated by the military, albeit in the civilian guise of the Union Solidarity and Development Party. However, new President Thein Sein reached out to the US and other Western countries in 2011, eventually resulting in President Barack Obama making a landmark visit to Myanmar in November 2012. The EU and US meanwhile moved to ease long-standing sanctions, with the former lifting all sanctions in April 2013. Against this backdrop, hopes are high that Myanmar can be reintegrated into the global economy. Yet despite these positive initiatives, BMI sees a risk of political instability and even chaos if the regime eventually collapses or is replaced by a weaker and untested government. Already, 2012 and 2013 have seen considerable violence between Buddhists and the Muslim Rohingya minority, resulting in more than 100,000 Rohingyas being displaced. The Rohingya cause has the potential to galvanise Islamist militancy, according to some security experts. Myanmar is a highly diverse country, and the experiences of Indonesia and Yugoslavia in the 1990s showed that when a long period of authoritarian rule collapsed, ethnic separatism and civil war (or quasi-civil war in Indonesia's case) followed, leading to atrocities, refugee flows and the spread of organised crime, all of which proved detrimental to economic development.

Myanmar's vast armed forces keep separatist regions in check, but if the military fractured, these regions might be expected to take advantage of the power vacuum and go their own ways. The putative new central government would thus face a dilemma over whether to allow breakaway states to become independent, or fight to prevent their secession. Meanwhile, there would be the possibility of behind-the-scenes intervention or even major troop deployments by China, India, Thailand and potentially even the US.

Sino-US Rivalry In South East Asia

Sino-US competition in South East Asia is likely to feature more prominently over coming years. Traditionally, the US has been the preeminent 'Great Power' in the region. During the Cold War, Washington developed close relationships (especially in the military sphere) with Thailand, the Philippines and Indonesia, as a means of containing Chinese- and Soviet-backed communism in the region. However, in the post-Cold War era South East Asia's geopolitical importance waned, and the US military withdrew its substantial presence in the Philippines in 1992.

For much of the 1990s and the 2000s the US was too concerned about events in Iraq, Bosnia, Kosovo, North Korea and Afghanistan to give much attention to South East Asia. Nonetheless, the 9/11 terror attacks forced the US to turn its full attention to militant Islam, and while the prime foci of Washington's 'war on terror' have been Afghanistan and Iraq, the White House feared that al-Qaeda and its offshoots could find save havens in the southern Philippines and parts of Indonesia. In 2003 the Bush administration named Thailand and the Philippines as US Major Non-NATO Allies (MNNA), a status that brings close defence cooperation with Washington. The US also became more involved in assisting the Philippines in its war against Abu Sayyaf militants. Even so, there has been a perception that the US' ongoing commitments in Afghanistan and previous deployment in Iraq have resulted in Washington neglecting South East Asia at a time when China has quietly been gaining influence through increased trade, investment, tourism and other cultural exchanges.

Consequently, the US has been seeking to revive its influence in the Asia-Pacific region, and in late 2011 announced that it would deploy more military resources there. To Washington's advantage, it is unlikely that South East Asian states would willingly acquiesce to Chinese hegemony. Beijing's attempts to assert its sovereignty in the South China Sea since 2010 have led to a regional backlash. Most notably, Vietnam has a long history of strained relations with China. Vietnam was the last sovereign state that China attacked (in 1979) and Hanoi remains wary of Beijing's rise, despite the fact that they are both one-party Communist states pursuing similar economic reforms. The US is cognisant of Vietnam's apprehension and has been working since the late 1990s to boost bilateral relations, apparently with the unstated intention of developing Hanoi as a potential counterweight to Beijing. Although the US fought a bitter war with Vietnam in the 1960s and 1970s, around half of all Vietnamese were born after the US defeat in 1975 and thus do not have direct experience of the conflict. Vietnam therefore does not suffer from high degrees of anti-Americanism that would preclude an alliance with the US. That said, there is reluctance by Hanoi to become too dependent on Washington for security. In the early 2000s there was speculation that the US would seek to establish a military presence at Cam Ranh Bay in southern Vietnam, following the withdrawal of the Russian navy in 2002 after a 23-year stay, but this did not happen. Vietnam appears to be sticking with its 'three nos' policy of no foreign bases, no formal military alliances, and no use of its territory to attack another country. Meanwhile, the US's outreach to Myanmar, discussed in the previous section, is part of its broader strategy to regain influence in South East Asia.

Sino-Japanese Rivalry In South East Asia

As China's influence in South East Asia has risen, Japan has started trying to reassert its own clout in the region, with Tokyo seeking to counterbalance Beijing in the Asia-Pacific realm. Japan is still a major foreign investor in South East Asia and a key trade partner of most countries in the region. Japan is thus seeking to position itself as an alternative economic anchor to China - although its ability to do so is constrained by its long-term economic weakness. Following the return to power of Japan's conservative Liberal Democratic Party (LDP) in the December 2012 election, Tokyo is moving rapidly to shore up its relations with South East Asian states. Japan's prime minister, Shinzo Abe, visited the region in January 2013, and his commitment to boosting Japan's military profile could position Tokyo into closer defence cooperation with regional states. Significantly, the Philippines in December 2012 backed Japan's plan to become a fully fledged military power. Nonetheless, Japan's severe budget deficit and colossal debt burden could limit is ability to become a powerful counterweight to China.