My Joint ‘Newsweek Korea/Japan’ Story: Do US Alliances Create Moral Hazard in Asian Conflicts?

I am pleased to say that the following essay was printed simultaneously in this week’s Korean and Japanese editions of Newsweek. It think it is critical for both sides to think about the issues I present, and it is pitched to both communities as American allies, no matter how sharp their disagreements.

In brief, I argue that – contrary to the conventional wisdom that US alliances in Asia tamp down conflict by re-assuring everyone that they need not arms-race against each other – US alliances may in fact be freezing those conflicts in place by reducing the incentives of all parties to solve them. The US reassures Asian states not just against each other, but also against their own reckless nationalist rhetoric and racially toxic historiographies. I think the Liancourt Rocks fight is a particularly good example of this ‘moral hazard’ mechanic, as is the recent comment by no less than the South Korean foreign minister (!) that Abenomics’ threat to Korean export competitiveness is a greater danger to SK than North Korea’s nuclear program. That kind of preposterous, reckless myopia can only be explained by taking the US security umbrella for granted. (Or how about SK officers’ golfing during last month’s nuclear crisis?)

I realize the argument will be somewhat controversial, even to Americans given that we are ‘pivoting’ to Asia, but I think it needs to be said and genuinely researched. As with my other Newsweek pieces, there are no hyperlinks because this was intended for print:

“Asia is one of the world’s most combustible regions. It is brimming with nationalism, territorial disputes, ideological divisions, and historical revisionism – all substantially aggravated by the region’s new found wealth. A war in Asia a generation ago would have been disastrous, but regional; a war today would involve the world’s largest economies. To soothe these tensions, the United States has begun to ‘pivot’ to Asia. By 2020, the US is scheduled to have the bulk of its navy deployed in the Pacific. Conversely, the US is seeking to wind down its Middle East conflicts. As a ‘new core’ of the world economy, Asia is more important to the US than ever before, and the pivot is to reflect that.

The pivot rests on the local embrace of the US as a powerful outsider, more trusted by each Asian player than they trust each other. The US is not really neutral, of course; it has its own interests in Asia too. But those interests mostly run toward trading issues, such as intellectual property rights or currency regimes. The US is not caught up in the sovereignty and national identity disputes that so divide Asia; the US has no territorial claims, for example. Hence the US enjoys greater strategic trust. The US can stand above the Asian fray and deploy its considerable power to balance threats – most obviously, North Korea, but also, possibly, China – and maintain local equilibrium.

But there is a danger lurking here for the US as well – that it will be instrumentalized by local parties for their own goals. Specifically, US policymakers worry that Japan may use the US as a bulwark to pursue a tough line against China in the East China Sea. For its part, China very obviously uses the US presence in South Korea and Japan as cause to continue propping up North Korea. And Japan and Korea both exploit the reassurance offered by the US to push maximalist nationalist agendas against the other over history and territory. Ironically, US reassurance serves to freeze, if not worsen, the very conflicts it is meant to soothe.

It is hard to imagine, for example, that the Dokdo/Takeshima dispute would still be active after so many years, were it not for US reassurance to nationalists and die-hards on both sides that they would not suffer the consequences of their rhetoric. A war between Japan and Korea in the Sea of Japan/East Sea would be a disaster for both and a geopolitical gift to China and North Korea. Yet so long as the US is allied to both South Korea and Japan, neither side has any incentive to back-down, to compromise on the many issues that divide them.

The flip-side of the usual argument that the US reassures Asian states against hostile moves by others, is that the US presence also locks Asian conflicts in place. The US may indeed prevent Asian conflicts from spiraling toward war, but that very presence also reduces the incentives for all parties to compromise and solve those conflicts. Indeed, these tensions often serve a useful domestic purpose for unpopular national elites with no genuine interest in resolving issues. Whenever Asian governments need to whip up popular feeling, they can always wave the flag over nationalist disputes and distract voters at home from the more substantive issues that plague Asia like corruption, poor demographics, corporate interference in politics, and so on. It is far easier for the Chinese Communist Party, for example, to pick fights with Vietnam or Japan over maritime borders than to actually pursue desperately needed reforms at home. And in South Korea, it was widely understood last year that President Lee visited Dokdo primarily because his poll numbers were poor; mercifully, Korean voters did not fall for that cheap gimmick.

Economics has a term for this problem – ‘moral hazard.’ When a person is insured against the consequences of his actions, he is, ironically, more likely to engage in that action, because insurance makes the risks of the action less than they would otherwise be. The classic example of this phenomenon is a teenager with a driver’s license. Because the teen is likely driving her parents’ car, not her own, and because the car is insured, the teen drives more recklessly than otherwise. Once the teen matures and pays for her own car and insurance, she drives more responsibly. Insurance companies have wrestled for decades with both providing insurance while still incentivizing good behavior. There is no obvious answer.

This model can easily be applied to the relationship of Japan and Korea. Both are insured by the US, explicitly by the presence of US soldiers on their territory. As such, both are somewhat guaranteed against the consequences of their actions. Both can therefore indulge the luxury of conflict with the other. Because the US is handling the larger geopolitical picture – North Korea, China’s rise, the national defense of Korea and Japan – the strategic discussion in both countries can focus inordinately on the comparatively minor issues between them. Dokdo may indeed seem to Koreans like an issue worth going to war over, but in the context of Chinese strength and North Korean nuclear weapons, it is not. Such talk occurs only because Seoul and Tokyo have ‘buck-passed’ the momentous issues to the Americans.

This is both an extravagance and a mistake, despite what nationalist, vote-hungry politicians may say. It consciously avoids the larger issues, abuses the US position here, and misses the reality that the US will not in fact defend Japan and Korea unless they defend themselves first. Without the US in Asia, Japan and Korea would be immediately compelled to work together to deal with issues vastly greater than Dokdo/Takeshima and a war 70 years ago. For all the criticisms hurled back and forth, South Korea and Japan are far more politically similar to each other than to other states in the region. This is woefully under-admitted:

China is a nationalist, aggrieved, one-party dictatorship increasingly bent on regional primacy, and a permanent well of support for North Korea. Russia is an erratic, badly-governed, semi-autocracy happy to see North Korea stymie democracy and liberalism in Asia. North Korea is arguably the world’s most dangerous country with a human rights record ranked lower than the Taliban. By contrast, South Korea and Japan are both liberal, capitalist, human rights-respecting democracies. They should in fact be allies – and would be if the US were not in Asia.

Far-seeing elites in both countries know this fact. As an academic in this area, I frequently attend conferences on this topic, where I hear many cosmopolitan South Korean and Japanese statesmen and intellectuals make similar arguments. And US officials have clearly been hoping for decades that Japan and Korea would put aside their comparatively minor differences to focus on the much larger issues. But elites on both sides are trapped by their countries’ rhetoric in the media and education. Asian media are relentlessly nationalistic: Japan’s disturbing fetishization of Yasukuni alienates everyone in Asia, while a Korean newspaper once seriously suggested that Japanese samurai were going to invade Dokdo. And education systems that teach racial notions of national identity dramatically worsen the problem. If the Han race (China), the Yamato wajin (Japan), and the minjeok (Korea) go back millennia and are rooted in blood, then compromise becomes ‘race betrayal.’ This is extremely unhealthy and precisely the kind of ideological extremism that helped tip Europe into World War I and II.

Further, the US is unlikely to referee or mediate these disputes, especially among allies. To date, the US has tried to bolster the ASEAN states in their negotiations with China. And the US has argued broadly for liberal ‘rules of the road’ in the region – free trade, open seas, floating currencies, open economies instead of mercantilism, and so on. The US wants peaceful dispute resolution; contrary to Chinese paranoia, the pivot is not intended to contain China – although it will become that if China becomes very belligerent. The US is broadly comfortable with Asian regional organizations like the ASEAN Regional Forum. The ARF provides a venue for Asian states, including even North Korea, to debate security issues. The US has also supported trade pacts like the Trans-Pacific Partnership that would open Asian economies more to one another, hopefully increasing interaction and interdependence.

However, the US will not become a referee for an Asia insistent on militant nationalism, brinksmanship, and conflict, especially among allies who really should know better. South Korea and Japan’s pursuit of their disputes weakens the combined position of democracy in Asia. China and North Korea are cheered to see Japan and South Korea clash incessantly. If South Korea and Japan were to fight, the US would not take sides. Indeed, the US would almost certainly exit the region.

Similarly, the US will not arbitrate or get involved in the details of disputes here. As an American academic in Asia, I am solicited relentlessly on these issues. I am regularly asked what I think of Dokdo, the Pacific War, China’s claims in the South China Sea, and so on. And to my interlocutors’ great frustration, I refuse to answer what inevitably become ideologically-loaded questions. This is the US government’s own policy as well. America has regularly said these conflicts need to be worked out among the parties involved on their own terms. An American solution or adjudication would be politicized by the losing party anyway and rejected as an illegitimate outside intrusion.

Koreans particularly make tremendous efforts to recruit westerners to take up the Dokdo claim. But they should not, as this frequently amounts to manipulating impressionable young foreigners or English teachers in country. These young people have little knowledge of the relevant history but are desperate for cultural acceptance in Korea. They have little sense of what they are arguing for. And in fact, the US government is rather studious in its avoidance of this topic. US diplomats are told not to pronounce on the ownership of the islet.

So what should be done? US retrenchment would indeed force Japan and South Korea to come to terms, and quickly. But China is so vast, and NK so dangerous, this would be a mistake. With those autocracies, there is little to do but confront them when necessary and talk with them as much as possible. North Korea particularly seems hell-bent on making trouble permanently. There is little to be done except stare it down and wait for its collapse. The pivot should continue.

But between Korea and Japan, the US should make it very clear that there are limits to its patience. US weapons sales to each should be conditioned on their non-use against the other. A clear US statement that the US will withdraw from Japan and Korea should hostilities break-out between them would also help. At home, Korea and Japan should reform their education systems to encourage far less nationalistic history instruction. A fair amount of this is mythic anyway; Korea and Japan’s histories are both far more diverse politically than the Hegelian, ‘march toward the modern state’ that is taught today. Finally, some manner of negotiation on Dokdo/Takeshima should commence. Without some joint resolution of this issue, the Japanese-South Korean relationship will never heal.

Asia is a dynamic, critical area that merits the US pivot. But the US commitment is not a blank check, and Asian states – especially America’s allies – need to realize this. The United States will make a reasonable effort to restrain conflict and maintain equilibrium. But it will not umpire an Asia unwilling to bend and compromise. Post-Iraq War especially, America will not become embroiled in a local war over a few islands here or there with little or no demographic and economic interest. Asia has come a long way in the last four decades. Unprecedented growth has alleviated poverty, raised education, and opened Asia to the world. Asia is the emerging ‘cockpit of world politics.’ It would be a shame if Asians were to throw that all away under the spell of nationalism and racism, as Europeans did last century. And if Asians cannot mature enough to work-out their differences, the US is neither capable nor willing to do it for them. America cannot derail an Asia intent on conflict and tension; the sooner that fantasy is dispelled and Asians take greater ownership of their own security, the better for all.”