ASEAN; Brick in the BRICS

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Dr M Ali Hamza

Two of Southeast Asia’s key economies have announced plans to join the BRICS network. If you’re not yet convinced that the BRICS alliance is rapidly transforming the geopolitical landscape, consider the words of Malaysian Prime Minister Anwar Ibrahim: “We can no longer accept the scenario where the West wants to control the discourse because the fact is they are not colonial powers anymore and independent countries should be free to express themselves.” Each week, we see more stories of the developing world striving to break free from US dominance, seeking a more balanced and fair world.

Malaysia, the sixth largest economy in Southeast Asia, announced its decision to join BRICS just one week after Thailand, the region’s second largest economy after Indonesia, revealed plans to pursue BRICS membership later this year.

Together, the economies of Thailand and Malaysia represent over $1 trillion in GDP, which will be a significant addition to the BRICS alliance. However, the more crucial aspect is the larger geopolitical shift occurring behind the scenes that could reshape Asia’s future. The biggest beneficiary of this new development will be China, due to the strategic importance of the Strait of Malacca.

The Strait of Malacca, arguably the most crucial body of water globally, stretches over 800 KM and narrows to just 2.8 KM at its tightest point, making it one of the world’s most congested shipping choke points. Annually, more than 94,000 vessels navigate these waters, with an astounding 25% of global trade passing through this strait. No country relies more on the Strait of Malacca than China, with over 80% of its oil imports traveling directly through these waters.

Imagine a scenario where the US and China are drawn into a larger conflict. The US military wouldn’t need to confront China’s military directly; they could simply blockade Chinese shipping containers in the Strait of Malacca by securing cooperation with Malaysia. The real-world implications of such a blockade can be gleaned from the current Suez Canal crisis. In January, Iran-backed Houthi rebels seized control of the Suez Canal, causing chaos in the shipping world in response to Israel’s war in Gaza. This conflict resulted in a 50% drop in Suez Canal trade in the first two months of 2024, demonstrating the devastating impact a naval war in a strategic region can have. The disruption has forced shipping companies to revert to thousand-year-old trade routes, rerouting vessels around the Cape of Good Hope due to the heightened risk in the Suez Canal, where multiple ships have been sunk by the rebels. China is undoubtedly observing this situation closely and has been developing contingency plans in case of a conflict in the Strait of Malacca.

In 2015, China launched the flagship project of the Belt and Road Initiative (BRI), the China-Pakistan Economic Corridor (CPEC). This project aims to build a network of roads and railways from China’s western Xinjiang province all the way to the Arabian Sea. With a budget of nearly $50 billion, CPEC would ensure China’s access to Middle Eastern oil if the Strait of Malacca were ever blocked. However, given Pakistan’s ongoing political, economic, and security concerns, the Chinese government recognizes the need for a backup plan and cannot rely solely on this option.

China, the most dominant country in Asia, is determined to maintain its regional supremacy. Malaysia joining BRICS is just one aspect of China’s broader strategy. For many years, China has been cultivating its reputation and strengthening relationships with ASEAN, the political and economic union of 10 Southeast Asian countries. Remarkably, China’s trade with the ASEAN alliance surged from $252 billion to $523 billion—a 106% increase—since 2017. This growth has made ASEAN China’s most important trading partner, with over 80% of these imports consisting of electronics, machinery, chemicals, plastics, aluminium, and other industrial goods.

Despite all these developments, BRICS has yet to convince the largest economy in Southeast Asia, Indonesia, to join. However, Indonesia remains a key target for all five BRICS member governments. The potential value of Indonesia to BRICS is clear: it has the world’s fourth largest population, a rapidly growing economy with the potential to become one of the top five economies by 2045, and is located in a strategically important region where the United States and China compete for influence.

Officially, President Jokowi Widodo’s government states that it needs more time to evaluate the benefits and drawbacks of BRICS membership, particularly in the economic realm, and wishes to consult with its ASEAN partners. However, it’s important to recognize that Indonesia’s foreign policy has a long-standing tradition of non-alignment, keeping its options open. Joining BRICS would be interpreted by the West as a shift towards the Chinese camp, marking a significant change in Indonesia’s hedging and issue-balancing policy, where Jakarta leans towards the United States on security matters and towards China on economic issues. This move would undermine the credibility of Indonesia’s longstanding doctrine of “free and active”. Additionally, given Indonesia’s neutral stance on the Russia-Ukraine war, joining BRICS would likely exacerbate Western concerns.

Indonesia cherishes its goal of being a “good global citizen.” It expresses demands for reform in a conciliatory and accommodating manner, which allows it to maintain open dialogue with the Global North while advocating for the interests of the Global South. This moderation has led to invitations for Indonesia to speak as a guest at both the Western G7 and BRICS.

In the fifteen years since its inception, BRICS has achieved notable milestones such as establishing the New Development Bank, a multilateral institution with $50 billion (€45.6 billion) in subscribed capital to finance infrastructure and climate projects in developing countries, and spearheading institutional reforms within the International Monetary Fund. Additionally, BRICS has effectively provided short-term liquidity through currency swaps and similar mechanisms. However, it still needs to assert itself as a prominent player on the global diplomatic and economic stage. While its summits have been frequent, they have not consistently yielded significant concrete outcomes. BRICS must enhance its appeal to attract countries like Indonesia to consider joining its ranks.