Southeast Asia in the G20: a missed opportunity to push a difficult agenda?

Overshadowed by the complicated run-up and tumultuous course of the summit, its actual outcomes took a back seat in media coverage. While Federal Minister for Economic Affairs Brigitte Zypries was content to “establish the status quo,” Foreign Minister Sigmar Gabriel (in a somewhat awkward move partly motivated by the upcoming federal elections) even called the summit a “total failure” with regard to “the big questions of humanity” such as war, civil war, hunger, and poverty. All the more surprising is the expert assessment that the Hamburg summit was indeed a summit of “significant success” and produced by far the most commitments of all G20 summits (Kirton 2017).

Against the background of a lack of US leadership, interest convergence with the host country Germany, and diverging opinions regarding the success of the summit, the following sections discuss the Southeast Asian countries’ interests, diplomatic approach, and commitments in the key fields of terrorism, trade, and climate protection.

From financial stability and monetary governance towards inclusive and sustainable development

Over the last years, the G20 steadily broadened its agenda from a forum narrowly focussed on financial stability and monetary governance – priorities that were partly inherited from the G7/8, partly imposed by the global financial crisis – towards sustainable development more generally. The G20’s fight against terrorism, on the agenda since 2001, has evolved into more comprehensive security governance, especially under the Chinese presidency last year.

This broader approach is most tellingly reflected in the leaders’ commitment to “achieve sustainable and inclusive supply chains,” “foster the implementation of labour, social and environmental standards and human rights,” and “stand united and firm in the fight against terrorism and its financing.” In many ways, the Hamburg summit followed up on issues that were brought to the forefront at last year’s summit in Hangzhou, China.

Combating terrorism: a consensus topic

Regarding the fight against terrorism, the G20 has two main priorities: drying out sources of terrorist funding and preventing the establishment of new strongholds of the so-called Islamic State (ISIS) as its bases in Iraq and Syria are eroding. The latter is closely related to the issue of foreign terrorist fighters and a particular concern of the states of Southeast Asia who have well-founded fears to become the next global hotspot of terrorist activity.

After several lone wolf attacks in Indonesia, Thailand, and Malaysia, the Philippines are currently struggling to fight the Maute Group in Marawi. The terrorist group linked to ISIS and supported by foreign fighters occupies pockets of the city in the Southern region of Mindanao, known for its decade long fight for independence from the Filipino state. By now the vast majority of the Marawi’s residents have fled city.

Only in mid-June Presidential Spokesperson Ernesto Abella called on the international community. “The fight against terrorism .. is not only the concern of the Philippines or the United States but it is a concern of many nations around the world. The Philippines is open to assistance from other countries if they offer it," he said. With that in mind, Mr Duterte’s indifference towards the cancellation of his invitation appears somewhat less credible.

Effectively, Indonesia took on the role of representing ASEAN on matters of terrorism at the G20 summit."The President will touch on the situation in Marawi and how to strengthen cooperation within the context of the G20," Foreign Minister Retno LP Marsudi said on the eve of the event (Deutsche Welle 2017).

Similar to Chinese President Xi in his opening address to the B20, the business layer of the G20, last year, President Joko “Jokowi” Widodo closely linked economic and security concerns at the Hamburg summit. Mr Jokowi reminded the G20 countries during the leaders’ retreat that economic inequality and injustices are root causes of terrorism and advocated for improved intelligence exchanges, cutting terrorist of funding sources, and soft power measures to strengthen moderate societal forces and developing counter-narratives.

Already in mid-June, Indonesia, Malaysia, and the Philippines agreed on mutual naval patrols at the Shangri-La Dialogue in Singapore, the annual meeting of ASEAN defence ministers. The measure originally intended as an anti-piracy measure now shifts its focus on monitoring and preventing the movement of foreign fighters. US Defence Minister James Mattis also attended the meeting and shortly thereafter dispatched special forces and equipment to support the Filipino military in Marawi. Eager to improve relations with China, Mr Dutere only grudgingly accepted the US offer as the situation continued to deteriorate (Heydarian 2017).

Holding a more neutral stance towards the two major powers in the region, China and the US, Mr Jokowi was in a much better diplomatic position to welcome US support in the conflict. In a bilateral meeting with Mr Trump on the sidelines of the G20 summit, he commended the US for standing by Muslim countries in their fight against terrorism and extended an invitation to the US President to visit Indonesia. Mr Jokowi explicitly left out some of the most contentious issues that plague US-Indonesia relations such as the conflict over mining licences for the US company Freeport.

Hoping that an issue of consensus could break the negative dynamics of the the summit’s lead-up, host Merkel followed a similar strategy when she made terrorism a top priority of the initial leaders retreat where the heads of state and government had the chance to exchange views in an intimate atmosphere. 

The strategy was rewarded with success, at least in the field of terrorism (Emorine and Rudich 2017). The G20 was able to agree on the implementation of commitments made under various resolutions of the United Nations Security Council. It committed to improved data exchanges with several international organisations, INTERPOL in particular. It strengthened the role of the Financial Action Task Force (FATF) in order “to make the international financial system entirely hostile to terrorist financing." Finally, the G20 also acknowledged the the role of socio-economic root causes and pledged to promote “political and religious tolerance, economic development and social cohesion and inclusiveness, to resolve armed conflicts, and to facilitate reintegration."

The link between economic inequalities and the combat of terrorism may have in fact provided the Indonesian government with an overarching theme for its negotiating strategy as it potentially reveals inconsistencies in the Western countries’ policies. While willing to assist the countries of Southeast Asia in the fight against terror, the EU and the US both recently enacted protectionist trade measures against Indonesia.

A difficult environment for free trade

Multilateral trade diplomacy is traditionally an arduous task, even more so since the new US administration took office. Although the Trump presidency has softened its tone compared to the campaign, Trump just recently blocked a joint commitment for free trade at the last G7 summit in Taormina, Italy. Accordingly, expectations that the G20 summit could produce any meaningful progress on international trade could have hardly been any lower.

Many therefore see the compromise that was forged in complicated negotiations as the best possible outcome. In the leaders’ statement the usual commitment to free trade was complemented by the ambiguous pledge to “continue to fight protectionism including all unfair trade practices and recognize the role of legitimate trade defence instruments in this regard.”

For the Southeast Asian countries the compromise brings little certainty. They share a mutual concern that their trade surpluses with the US could be increasingly subject to protectionist measures. Both Indonesia and Vietnam are on the hit list of surplus countries that will see a review of trade relations with the US.

In its role as current APEC chair, Vietnam used the G20 meeting to advocate for the Free Trade Area of the Asia-Pacific (FTAAP). At the upcoming APEC meeting in Ho Chi Minh City from 18-30 August, Vietnam is hoping to achieve substantial progress on the FTAAP. The trade agreement has moved up on Vietnam’s domestic agenda after the US pulled out of the Trans-Pacific Partnership (TPP) late last year. TPP negotiations will also continue on the sidelines of the APEC summit, most likely without the US however.

For Vietnam, the country considered to profit most from the TPP, trade issues for the first time in years topped strategic concerns at a first bilateral meeting with the new US administration on 31 May. At the meeting that closely followed the APEC trade minister meeting on 21 May, Vietnamese Prime Minister Phúc was eager to dispel US concerns about the sustained trade deficits with the US and closed significant deals for high-tech purchases worth over $8 billion (Clark 2017). The country’s trade surplus has been viewed with suspicion for a while but came into the spotlight again after Vietnam became a gateway for Chinese steal exports which suffered anti-dumping sanctions from the US.

Indonesia followed a mostly domestic agenda on trade. Consequently, it primarily engaged in bilateral side talks to forward its interests at the G20 summit. In bilateral talks with Dutch Prime Minister Rutte, Spanish Prime Minister Rajoy, and Mr Trump, Mr Jowoki intensively lobbied to lift sanctions against palm oil imports from the country (GRES News 2017). With a share of more than 50% of global production, the commodity is Indonesia’s prime export good.

While Mr Trump pledged to find a “good solution” concerning the active ban on Indonesian biodiesel exports, negotiations with the EU will be more complicated. As Emmanuel Desplechin, Secretary General of ePURE, the European renewable ethanol association, points out, EU trade policy on the one hand and EU environmental and energy policy on the other suffer a deep disconnect (Michalopoulos 2017).

While the European Commission seems keen to progress with talks regarding the EU-Indonesia Free Trade Agreement, the European Parliament recently issued a non-binding resolution to ban palm oil imports from Indonesia on the grounds of environmental concerns.  At the G20 meeting, Mr Jokowi reportedly asked the Mr Rutte and Mr Rajoy to instead apply the sustainability standards contained in the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan (Sundaryani 2017).

A difficult trade-off for the environment

As the G20, minus the US, reinforced their commitment to the Paris Climate Agreement, the issue is likely to stall trade talks with the EU for the foreseeable future. The EU countries sees palm oil production as a major source of deforestation with irreversible damage to biodiversity and the climate. In their efforts to implement climate commitments, restrictions on the use of palm oil for biodiesel appear high on the list. France, for example, already declared to end the use of palm oil in producing biofuels.

Indonesia indeed faces various dilemmas on its way to comply with the Paris Agreement and the UN 2030 Sustainable Development Goals (Hornung 2017). One aspect is the country’s reliance on palm oil exports. Not only are exports an important source of foreign exchange, necessary to realise technological upgrades to the country’s ailing (energy) infrastructure. Shortly before signing the Paris Agreement Indonesia declared that it could only achieve a 29% instead of a 41% reduction in greenhouse gas emissions as it had a funding gap of $6 billion.

At the same time, palm oil production is responsible for the drying out of peatlands and subsequent wildfires. The 2015 wildfires alone caused carbon dioxide emissions comparable to those of Japan during that whole year. Although Mrs Retno explicitly referred to the extension of the moratorium on land clearing as well as the establishment of a restoration agency for 2 million hectares of peatlands and areas depleted by forest fires, concerns remain. The previous government moratorium was largely considered toothless by civil society and environmental groups (Indradi 2016).

Even more problematic, neither Indonesia nor Vietnam made any mentioning of plans to scale back their investment in coal-fired energy plans at the G20 summit. A coal phase-out is widely considered a necessary condition to comply with the goals set in the Paris Agreement. Indonesia still aims to almost double, Vietnam even triple, its coal power capacities which locates them in the top 5 coal energy investors worldwide, only behind China, India, and Turkey (Shearer et al. 2017).

Not quite a success

In sum, the G20 summit in Hamburg was probably not quite the success the Southeast Asian participants were hoping for. This is especially true for the Philippines whose President effectively denied the country a bigger international role with his outrageous comments. Whether Vietnam was more successful, remains to be seen at the upcoming APEC meeting. Chances however are slim that it accomplished mission impossible to encourage the US administration to a sudden embrace of multilateral free trade.

Similarly, much remains to be seen regarding the Indonesian agenda. For Mr Jokowi, the Filipino faux pas certainly improved the outset by making him Southeast Asia’s prime representative in the fight against terrorism. On issues of trade and climate protection, however, it seems virtually impossible that Indonesia achieved to square the circle. Too many opposing structural concerns impede a consistent bargaining position that allows for necessary trade-offs in climate protection and free trade.

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