Days after announcing a $113 million infrastructure fund for Asia-Pacific economies as part of the White House’s Indo-Pacific blueprint, Secretary of State Mike Pompeo is expected to flesh out details of that policy during a five-day visit to Malaysia, Singapore, and Indonesia that began this Wednesday.
The trip comes at a time of deep skepticism in the region toward U.S policies, particularly President Trumps trade issues with China. U.S. engagement with Southeast Asia under President Trump is typically framed as a counter to Chinese dominance in the region. While the issue of Beijing’s influence will likely come up during Pompeo’s tour of the area this week, it most likely will not dominate his talks with policymakers.
Analysts say the $113 million of technology, energy and infrastructure initiatives trumpeted by Pompeo early this week may be hard to sell to countries that form an integral part of Chinese exporters’ supply chains. Southeast Asia’s response could be to urge the U.S. to stop threatening a trade war with China that will cause the area to loose billions of dollars.
“The Southeast Asian capitals are more worried about any blowback effects for them of U.S.-China trade tension than they are about how much they can benefit from this $113 million initiative, said Malcolm Cook, senior fellow at the Institute of Southeast Asian Studies in Singapore. “Pompeo has a hard selling job. There is still no real positive trade story for Asia coming out of the United States,” Cook said.
After a brief meeting with new Malaysian Prime Minister Mahathir Mohamad in Kuala Lumpur, Pompeo will fly to Singapore, which is a global trading hub that could be one of the hardest-hit in the region by a trade war. Today in Singapore, Pompeo will meet with the 10-member Association of Southeast Nations (ASEAN).
“We are acutely aware of the storm clouds of trade war,” Singapore’s Foreign Minister Vivian Balakrishnan said at the opening of the an ASEAN foreign ministers meeting on Thursday that precedes meetings with the United States and other nations. In addition, Singapore Prime Minister Lee Hsien Loong has repeatedly warned about the dangers of Asian nations being forced to pick between the United States and China.
Singapore’s biggest bank, DBS, estimates a full-scale trade war, defined as 15-25 percent tariffs on all products traded between the U.S. and China, could more than halve Singapore’s growth rate next year from a forecast 2.7 percent to 1.2 percent. Malaysia’s growth rate in 2019 could fall from an estimated 5 percent to 3.7 percent.
As well as trade, today’s meeting will also cover security issues such as South China Sea disputes and North Korea’s nuclear disarmament. The United States will press Southeast Asian leaders to maintain sanctions on Pyongyang following reports of renewed activity at the North Korea factory that produced the country’s first intercontinental ballistic missiles capable of reaching the United States.
