Mon, Oct 22, 2012 - Page 8 News List

Risks of economic interdependence

By Eric Chiou 邱奕宏

Fifty years ago, on Oct. 16, 1962, the 13-day Cuban missile crisis started, which may well be the closest the world has ever come to the outbreak of nuclear war.

During the Cold War, the political leaders of the US and the Soviet Union sought a predominance of nuclear capability by seeking to outnumber their opponent’s nuclear weapon stocks, in order to pose a credible deterrent capability. Since there was no significant bilateral economic ties between the US and the Soviet Union at that time, any direct military confrontation between the two superpowers was very likely to escalate into total war.

Despite there being no intention to start a war on either side, misperception and miscalculation of the enemy’s objectives and moves could have led to overreaction and undesirable consequences. However, thanks to then-US president John F. Kennedy’s prudence and deliberation, the Cuban missile crisis was peacefully defused and did not result in catastrophy.

Fifty years later, the tension between China and Japan caused by a territorial dispute over the Diaoyutai Islands (釣魚台列嶼) — known as the Senkaku Islands in Japan — has rapidly increased. Although the dispute is not equivalent to the Cuban missile crisis in terms of its political significance and scale, the unwillingness of political leaders to wage war is comparable in both cases.

However, instead of the fear of triggering a nuclear war seen in the Cuban missile crisis, what deters China from resorting to military means is the possible involvement of the US, due to its military alliance with Japan.

The last thing China wants is direct confrontation with US forces at this critical juncture of its leadership transition. On the other hand, the US-Japan alliance implicitly constrains Japanese forces from taking any action that may provoke China. As a result, the dominating presence of US troops in East Asia is the key to regional stability and what restrains nations from using force to solve disagreements.

Given that initiating military conflict is too costly and the outcome uncertain, both China and Japan have tended to adopt low-level conflict strategies, such as conducting maneuvers and dispatching surveillance vessels and warships to the disputed waters, in order to show off their respective military muscle.

Accordingly, in the past week the Japanese navy have staged a large-scale military parade and, subsequently, seven Chinese military vessels sailed toward the Diaoyutais on Tuesday. Both sides tried to send similar warnings to the other to not underestimate its strength or resolve.

In spite of rising military tension, the odds of this dispute turning into a real military clash are rather remote, owing to various geopolitical constraints and domestic factors.

Most importantly, leaders on both sides have no intention of risking starting a war.

Since military force cannot be utilized, China must resort to oher means to pressure Japan, and its economic ties with Japan have turned out to be an important asset it can exploit. Despite Sino-Japanese trade has tripling over the past decade and reaching US$340 billion last year, the structure of economic interdependence between the two is asymmetrical in many respects.

This asymmetrical economic interdependence creates room for the less dependent nation in this relationship to take advantage of the other. In Robert Keohane and Joseph Nye’s classic book, Power and Interdependence, they point out: “asymmetrical interdependence can be a source of power, we are thinking of power as control over resources, or the potential to affect outcomes.”

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