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Scot Marciel
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This essay originally appeared in The Diplomat.


With major crises in Gaza and Ukraine, the Biden administration might be tempted to overlook the importance of Indonesian President Joko “Jokowi” Widodo’s mid-November visit to Washington. That would be a mistake. Indonesia is an important country that is heading into crucial presidential elections in early 2024, and the results of Jokowi’s visit could go a long way to shaping the next Indonesian government’s attitudes toward its relations with the United States.

Although U.S.-Indonesian security cooperation is good and trade has grown, by all accounts Jokowi and his team are heading to Washington feeling less than satisfied on several fronts. First, Indonesians remain upset by President Joe Biden’s decision to skip the recent Indonesia-hosted East Asia Summit, which they took as a serious snub. Biden invited Jokowi in part to make up for that absence, but the White House might have underestimated the extent to which Indonesians remain upset over the initial affront. The protocol-conscious government no doubt will also contrast their modest White House schedule with the lavish welcome recently received by Australian Prime Minster Anthony Albanese.

Indonesian authorities also remain unhappy with what they see as Washington’s failure to deliver on the high-profile Just Energy Transition Partnership (JETP), under which the U.S. committed to lead G-7-plus efforts to mobilize $20 billion to support Indonesia’s accelerated transition from coal to cleaner energy. Indonesian officials have complained publicly for months that the U.S. has pressed them to take difficult steps while offering little in the way of concessional financing to pay for it. The reality is more complicated, but the perception in Jakarta that Washington “sold them a bill of goods” is real. Some Indonesian officials have contrasted that with substantial Chinese funding on priority infrastructure initiatives, highlighting the regional perception of U.S. weakness vis-à-vis China as a reliable economic partner. (The Indonesians have largely ignored the fact that the U.S. is their second-largest export market and has risen rapidly to be their fourth-largest source of foreign direct investment.)

Jokowi also is looking for Biden to move forward on a proposed limited free trade agreement under which Indonesian critical minerals (namely nickel and processed nickel) would meet the criteria for inclusion in the electric vehicle tax credits provided for in the Inflation Reduction Act. The Biden administration reportedly is interested in such a deal, which by promoting diversification of both suppliers for the U.S. and markets for Indonesia would be in the U.S. national interest. It has, however, hesitated to proceed due to concerns about the congressional reaction, environmental and labor issues, and heavy Chinese investment in Indonesian nickel mining.

 

Indonesia, home to the world’s largest Muslim population, has long supported the Palestinian cause and has vigorously pursued diplomatic efforts to achieve an immediate ceasefire… Indonesian public opinion has put the two governments at odds over the crisis.
Scot Marciel

Finally, one has to assume that the Gaza crisis will be at the top of Jokowi’s agenda (if not Biden’s) when the two presidents meet. Indonesia, home to the world’s largest Muslim population, has long supported the Palestinian cause and has vigorously pursued diplomatic efforts to achieve an immediate ceasefire. While working hard to keep the issue from blowing up domestically, there is no question but that Indonesian public opinion (and genuinely held beliefs among top officials) has put the two governments at odds over the crisis.

At this late date, there is little prospect of major initiatives coming out of the Biden-Jokowi meeting that would ease Indonesian concerns or generate significant positive momentum. There is, however, still time to make some small investments that could result in Jokowi and his team leaving Washington feeling more positive about the relationship.

First, on Gaza, the meeting will not resolve the two countries’ differences, but it is important that Biden listen to and engage with Jokowi seriously on the issue and that he highlights his efforts to encourage Israel to show restraint and to promote a humanitarian pause. Jokowi’s post-meeting public comments about this discussion likely will have a significant influence on the Indonesian public and media perceptions of the U.S. role, so it is critical that Biden do all he can to ensure those comments are positive.

Second, it is important that Biden understand that Jokowi and many Indonesians are still upset over the president’s decision to skip the recent Jakarta summit. Biden cannot undo that, but he can and should acknowledge it in his discussion with Jokowi and emphasize that he appreciates how important Indonesia is.

Even such moves will only go so far without some movement on JETP and the critical minerals trade question. On the former, there isn’t time to achieve major progress before the meeting, but President Biden should instruct his team to redouble their efforts to mobilize funding and get the initiative moving. This goes beyond Indonesian concerns and gets to the heart of regional wariness about Washington being able to put meat on the bones of its various economic initiatives.

On critical minerals, Biden should agree to send trade officials to Jakarta to discuss the outlines of a possible agreement, though he will have to be careful not to overcommit absent confidence he will be able to deliver. Indonesia, for its part, needs to stop rotating ambassadors through Washington so quickly and install an envoy who can effectively make the case for a limited trade deal to Congress and others.

Some serious, last-minute work needs to be done to ensure that next week’s meeting between the leaders of the world’s second and third-largest democracies does more than highlight the differences and problems in the relationship.

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Indonesian naval plane
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Flanked by Sultan of Brunei Haji Hassanal Bolkiah (L) and President of Indonesia Joko Widodo (R), U.S. President Joe Biden points towards the camera.
Flanked by Sultan of Brunei Haji Hassanal Bolkiah (L) and President of Indonesia Joko Widodo (R), U.S. President Joe Biden reacts to a reporters questions during a family photo for the U.S.-ASEAN Special Summit on the South Lawn of the White House on May 12, 2022 in Washington, DC. | Drew Angerer/ Getty Images
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President Joko Widodo and his team arrive in Washington at an uncertain time in U.S.-Indonesia relations.

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George Krompacky
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Today’s geopolitical climate has created new and dangerous challenges for America’s defense and the support of democracy and freedom worldwide. These challenges demand a reexamination of the U.S. defense budget to ensure that America’s forces retain the capabilities to defend the nation and deter aggression abroad. The expert authors of the new volume Defense Budgeting for a Safer World (Hoover Institution Press) review the significant areas of debate in the U.S. defense budget and provide recommendations for aligning it with new global realities. Chief among these new realities are China’s modernized military and the nation’s objectives in the South China Sea and for reunification with Taiwan, testing U.S. dominance in the world order and raising questions about allies’ security and the U.S. ability to counter threats from the People’s Liberation Army.

In her contribution to the new volume, in a chapter titled “The Military Challenge of the People’s Republic of China,” Center Fellow Oriana Skylar Mastro reviews the last quarter-century of developments in China’s strategy for reunification with Taiwan. Mastro explains that the original shape of that strategy, strengthening ties with Taiwan to persuade the population, “has failed” and now takes the form of belligerent air and sea incursions, increasingly sophisticated military exercises, and official Chinese rhetoric about the inevitability of reunification and the impossibility of Taiwan’s independence has intensified.

China’s military modernization has focused on the ability to prevent a decisive U.S. response, referred to as its anti-access/area denial (A2/AD) strategy.
Oriana Skylar Mastro
Center Fellow

Mastro notes that “China’s military modernization has focused on the ability to prevent a decisive U.S. response, referred to as its anti-access/area denial (A2/AD) strategy." The United States, as a non-resident power in the Asia-Pacific, depends on its aircraft carriers to project power in the South China Sea, but these carriers are vulnerable to Chinese ballistic systems. Because it will likely have to operate outside the first island chain — that is, the “barrier” extending from Japan, past Taiwan and the Philippines, to maritime and peninsular Southeast Asia — the U.S. military depends on “enablers” to accomplish its missions, like aerial refueling and satellites for cyber capabilities. These assets are likewise vulnerable to Chinese disruption/attack, as are U.S. forward bases in Asia, such as Okinawa.

Mastro’s recommendations to mitigate current U.S. weaknesses to a Chinese invasion of Taiwan include "more access, basing, and overflight," "more mass on targets," and "leveraging partners." While Chinese military power has not surpassed that of the United States, Mastro warns that if U.S. deterrence is not maintained and improved, Chinese leadership may become confident enough to move against Taiwan, resulting in a war with the United States. On the other hand, she assesses that the needed deterrence is possible if the proper steps are taken now.

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U.S. Seaman Xi Chan stands lookout on the flight deck as the Arleigh Burke-class guided-missile destroyer USS Barry (DDG 52) transits the Taiwan Strait during routine underway operations.
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The ultimate choice that must be made.
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Michael McFaul, Oriana Skylar Mastro, Ken Jimbo, Kiyoteru Tsutsui, Larry Diamond, and Francis Fukuyama speaking at the Yomiuri Conference, Tokyo.
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Stanford Experts Explore the Roles of Taiwan and Ukraine in Countering Autocratic Challenges to Democracy

At the Yomiuri International Conference, Freeman Spogli Institute scholars Larry Diamond, Francis Fukuyama, Oriana Skylar Mastro, Michael McFaul, and Kiyoteru Tsutsui examined lessons from the war in Ukraine, the risks of a crisis over Taiwan, and the impacts of both geopolitical flashpoints for defending democracy and for a coordinated approach to deterrence in the Indo-Pacific.
Stanford Experts Explore the Roles of Taiwan and Ukraine in Countering Autocratic Challenges to Democracy
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An F/A-18E Super Hornet assigned to the “Golden Dragons” of Strike Fighter Squadron (VFA) 192 launches off the flight deck of the Nimitz-class aircraft carrier USS Carl Vinson (CVN 70), Jan. 23, 2022.
U.S. Navy photo by Mass Communication Specialist 3rd Class Megan Alexander
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With contributions from military, government, and academic experts, a new volume explores what changes will be necessary in the U.S. military budget to keep the nation secure in a new geopolitical environment. A chapter by Center Fellow Oriana Skylar Mastro focuses on how to update military spending to enhance U.S. capability to deter Chinese ambitions in Taiwan and beyond.

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Cover of the book "Defense Budgeting for a Safer World," showing a helicopter highlighted against the setting sun.

The authors of Defense Budgeting for a Safer World review the significant areas of debate in the U.S. defense budget and provide their expert suggestions for aligning it with new global realities.

One of those new realities is a modernized Chinese military with dramatically increased funding. It raises questions with U.S. allies about their own security and the U.S. ability to counter threats from the People’s Liberation Army, including the possibility of forced reunification with Taiwan.

In chapter 2 of the book, “The Military Challenge of the People’s Republic of China,” Oriana Skylar Mastro focuses on this threat. She first reviews the last quarter-century of developments in China’s strategy for reunification with Taiwan. This plan has evolved from strengthening ties to belligerent air and sea incursions and increasingly sophisticated military exercises. At the same time, Xi Jinping has stepped up rhetoric about the inevitability of reunification and the unacceptability of an independent Taiwan.  

The United States has significant weaknesses in the face of a Chinese anti-access/area denial strategy, primarily due to the United States not being a resident power in the Asia-Pacific but also the vulnerability of U.S. aircraft carriers to Chinese ballistic systems. Because it will likely have to operate outside the first island chain, the U.S. military depends on “enablers” to accomplish its missions, like aerial refueling and satellites for cyber capabilities. These assets are vulnerable to Chinese disruption/attack.

Mastro’s recommendations to mitigate current U.S. weaknesses to a Chinese invasion of Taiwan include expanding the number of agreements to base in countries around the Asia-Pacific, increasing stockpiles of munitions effective against naval vessels, and strengthening partnerships and allies in the region.

While Chinese military power has not surpassed that of the United States, Mastro warns that if U.S. deterrence is not maintained and improved, Chinese leadership may become confident enough to move against Taiwan, resulting in a war with the United States.

 

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A chapter in Defense Budgeting for a Safer World: The Experts Speak, edited by Michael J. Boskin, John Rader, and Kiran Sridhar.

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Oriana Skylar Mastro
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Hoover Institution Press
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Shorenstein APARC's annual report for the academic year 2022-23 is now available.

Learn about the research, publications, and events produced by the Center and its programs over the last academic year. Read the feature sections, which look at Shorenstein APARC's 40th-anniversary celebration and its conference series examining the shape of Asia in 2030; learn about the research our postdoctoral fellows engaged in; and catch up on the Center's policy work, education initiatives, publications, and policy outreach. Download your copy or read below:

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Oriana Skylar Mastro
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This commentary originally appeared in The New York Times.


For a half-century, America has avoided war with China over Taiwan largely through a delicate balance of deterrence and reassurance.

That equilibrium has been upset. China is building up and flexing its military power; hostile rhetoric emanates from both Beijing and Washington. War seems likelier each day.

It’s not too late to restore the kind of balance that helped to keep the peace for decades, but it will require taking steps to ease China’s concerns. This will be difficult because of Chinese intransigence and the overheated atmosphere prevailing in Washington. But it is worth the political risk if it prevents war.

Deterrence came in the form of the implied use of U.S. military force to thwart a Chinese attack on Taiwan. Reassurance was provided by the understanding that the United States would not intrude on decisions regarding Taiwan’s eventual political status.

The United States and its regional allies must continue to create a robust military deterrence. But U.S. leaders and politicians also need to keep in mind the power of reassurance, try to understand China’s deep sensitivities about Taiwan and should recommit — clearly and unequivocally — to the idea that only China and Taiwan can work out their political differences, a stance that remains official U.S. policy.

During the Cold War, Beijing and Washington signed a series of communiqués related to Taiwan. One of them said the United States “reaffirms its interest in a peaceful settlement of the Taiwan question by the Chinese themselves.” This and other wording was deliberately ambiguous, but it was accepted by all sides as a commitment to avoid rocking the boat. China still views this arrangement as binding.

To be clear, it was China that began rocking the boat first.

Since 2016, when Tsai Ing-wen of the independence-leaning Democratic Progressive Party was elected president of Taiwan (succeeding a more China-friendly administration), Xi Jinping has repeatedly brandished China’s military power with large-scale military exercises and other pressure tactics apparently meant to discourage independence sentiment on Taiwan.

U.S. political figures have rightly responded with rhetorical support for democratic Taiwan, by supplying it with weapons and by strengthening the U.S. military presence in the region. But the American reaction is also pouring fuel on the fire.

Beijing is far less concerned with U.S. efforts to enhance its military posture in the region — the deterrence side of the equation — than with the political rhetoric, which is seen in China as proof that the United States is moving away from past ambiguity
Oriana Skylar Mastro
Center Fellow

I have worked on U.S. defense strategy in various military roles for more than a decade. I recently traveled to Beijing, where I met with Chinese government and military officials, leading academics and experts from Communist Party-affiliated think tanks. During these talks it was clear that Beijing is far less concerned with U.S. efforts to enhance its military posture in the region — the deterrence side of the equation — than with the political rhetoric, which is seen in China as proof that the United States is moving away from past ambiguity and toward supporting Taiwan’s de facto independence.

They have plenty of evidence to point to.

In December 2016, Donald Trump became the first U.S. president or president-elect since the normalization of China-U.S. relations in 1979 to speak directly with a Taiwanese leader, when Ms. Tsai called to congratulate him on his election victory. President Biden has, on four occasions, contradicted the U.S. policy of ambiguity by saying we would support Taiwan militarily if China attacked. The number of U.S. Congress members visiting Taiwan — which China views as overt support for the island’s independence — reached a decade high last year, including an August 2022 trip by Nancy Pelosi, the speaker of the House at the time and the highest-ranking U.S. official travel to Taiwan since the 1990s. That has continued this year: In June a nine-member congressional delegation, the largest in years, arrived in Taipei.

Provocative legislation has not helped. Last year the Taiwan Policy Act, which articulated support for Taiwan’s role in international organizations, was introduced in the Senate, and in July of this year the House passed a similar act. House Republicans introduced a motion in January to recognize Taiwan as an independent country.

For now, lingering doubts over Chinese military capabilities and the specter of U.S. and allied retaliation are enough to restrain Mr. Xi
Oriana Skylar Mastro
Center Fellow

Actions like these put great pressure on Mr. Xi, who won’t tolerate going down in history as the Chinese leader to have lost Taiwan. That would be seen in Beijing as an existential threat, potentially fueling separatist sentiment in restive regions like Tibet and Xinjiang.

For now, lingering doubts over Chinese military capabilities and the specter of U.S. and allied retaliation are enough to restrain Mr. Xi. But if he concludes that the United States has broken, once and for all, from its previous position on Taiwan and is bent on thwarting unification, he may feel that he must act militarily. The United States might be able to build the necessary military power in the region to deter a Chinese war of choice. But the level of dominance needed to stop Mr. Xi from launching a war he sees as necessary might be impossible to achieve.

Reassuring China would require Mr. Biden to reiterate that the United States does not support Taiwanese independence or oppose the island’s peaceful unification with China and that, ultimately, Taiwan’s fate is up to Taipei and Beijing. It would mean moving away from attempts to create international space for Taiwan and chastising Beijing when it pulls away Taipei’s diplomatic partners. The White House would also need to use what leverage it has to discourage members of Congress from visiting Taiwan and threaten to veto provocative legislation.

There would doubtless be blowback in Washington and Taipei, and Mr. Xi may already have made up his mind to seize Taiwan, regardless of the U.S. stance. But a politically neutral position on Taiwan is what the United States has followed for decades. Presidents Bill Clinton, Barack Obama and George H.W. and George W. Bush advocated peaceful dialogue between Taipei and Beijing to resolve their differences.

There also are longer-term repercussions to consider: If the combination of deterrence and reassurance fails and China attacks Taiwan, it will set a precedent in which Chinese leaders kill and destroy to achieve their goals. But if a pathway remains for China to eventually convince Taiwan’s people — through inducements or pressure — that it is in their interest to peacefully unify, then that may be a China that we can live with.

In the best-case scenario, the United States and China would reach a high-level agreement, a new communiqué, in which Washington reiterates its longstanding political neutrality and China commits to dialing back its military threats. This would avert war while giving China political space to work toward peaceful unification. That might mean using its clout to isolate Taiwan and eventually convince the island’s people that it should strike a deal with Beijing. But it isn’t Washington’s place to prevent the unification of the two sides — only to ensure that doesn’t happen through military force or coercion.

A war between the United States and China over Taiwan could be the most brutal since World War II. As politically difficult as it may be, U.S. leaders have a duty to try to prevent conflict, and that means speaking more softly but carrying a big stick.

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Military vehicles carrying DF-26 ballistic missiles drive through Tiananmen Square during a military parade in Beijing.
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What Chinese Nuclear Modernization Means for U.S. Deterrence Strategy

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7th fleet cruisers transit Taiwan strait
Commentary

Can the U.S. Deter China? Lessons from Putin’s Invasion of Ukraine

In the wake of Putin’s invasion of Ukraine, how are Chinese strategists and scholars assessing U.S. deterrence strategy? What are the implications for Taiwan? Leading foreign affairs expert Oriana Skylar Mastro analyzes a newly translated article by a senior Chinese scholar which concludes that while the United States failed to deter Putin’s aggression, its actions in Ukraine are nonetheless impacting Beijing’s foreign policy calculations.
Can the U.S. Deter China? Lessons from Putin’s Invasion of Ukraine
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U.S. Seaman Xi Chan stands lookout on the flight deck as the Arleigh Burke-class guided-missile destroyer USS Barry (DDG 52) transits the Taiwan Strait during routine underway operations.
Seaman Xi Chan stands lookout on the flight deck as the Arleigh Burke-class guided-missile destroyer USS Barry (DDG 52) transits the Taiwan Strait during routine underway operations. | U.S. Navy
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For a half-century, America has avoided war with China over Taiwan largely through a delicate balance of deterrence and reassurance.

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George Krompacky
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Amidst evolving geopolitical shifts, the foundation of U.S. nuclear deterrence, forged in the crucible of the Cold War, faces a new set of challenges. The principle of mutually assured destruction (MAD), once the bedrock of deterrence, is now being tested by Russia's aggressive posturing and China's strategic advancements. In the wake of Russia's invasion of Ukraine and signals of a willingness to employ tactical nuclear weapons, questions arise about the efficacy of traditional deterrence strategies. Concurrently, China's expanding nuclear arsenal adds complexity to the equation. Do these developments mean America needs to rethink its deterrence strategy? 

In a new paper, “China’s Nuclear Enterprise: Trends, Developments, and Implications for the United States and Its Allies,” FSI Center Fellow Oriana Skylar Mastro focuses on the Chinese perspective of the equation and examines recent trends in Chinese military doctrine and their implications for U.S. deterrence strategy. Mastro’s contribution is part of a new report, Project Atom 2023: A Competitive Strategies Approach for U.S. Nuclear Posture through 2035, produced by the CSIS Project on Nuclear Issues.

A fundamental premise underlying Mastro’s analysis is that China merits distinct scrutiny differently from Russia, and that the two countries should not be considered  “nuclear peers.” Although China is indeed engaging in nuclear force modernization, Mastro contends that the nation is still adhering to its fundamental nuclear policy: minimal retaliation capability and a no-use-first pledge.

While some have been troubled by China’s turn to regional nuclear options like the DF-26, an intermediate-range ballistic missile capable of carrying both conventional and nuclear warheads, Mastro asserts that this is because “they are regional weapons lower on the escalation ladder.” Rather than trying to achieve parity with the United States, she contends that Beijing’s objective is to preserve a credible second-strike capability, which is essential to the concept of deterrence.

Instead of prescribing specific alterations to U.S. force posture or nuclear modernization, Mastro suggests that any changes in U.S. defense strategies carefully consider the impact on Chinese nuclear strategy. The key is to preserve China’s minimal retaliation capability and its pledge to refrain from initiating nuclear warfare: “the most important goal for U.S. deterrence policy should be to ensure it does not encourage a change in China’s nuclear policy and in posture.”

Other steps the United States should take, according to Castro, include preventing the “co-mingling” of nuclear and conventional weapons on vessels apart from ballistic missile submarines. This precaution aims to eliminate ambiguity and mitigate the risk of possible conflict escalation. She also believes that there may be “more costs than benefits” in the proliferation of nuclear weapons among Asian allies — South Korea, Japan, and Australia. These threaten the non-proliferation regime and increase the possibility of accidents. The answer, Mastro holds, is not deployment of U.S. nuclear weapons on foreign soil, but rather increased consultations and joint planning with allies. Such collaborative efforts could reassure allies and partners of U.S. intentions even as they have minimal impact on Chinese contingency planning. 
 

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South Korean soldiers participate in a river crossing exercise with U.S. soldiers.
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Striking the Right Balance: What South Korea Can Do to Enhance Deterrence in the Taiwan Strait

Despite obstacles and risks, there are good reasons why South Korea should want to increase deterrence against China. In a new article, Center Fellow Oriana Skylar Mastro and co-author Sungmin Cho chart an optimal strategy for Seoul to navigate the U.S.-China rivalry and support efforts to defend Taiwan.
Striking the Right Balance: What South Korea Can Do to Enhance Deterrence in the Taiwan Strait
7th fleet cruisers transit Taiwan strait
Commentary

Can the U.S. Deter China? Lessons from Putin’s Invasion of Ukraine

In the wake of Putin’s invasion of Ukraine, how are Chinese strategists and scholars assessing U.S. deterrence strategy? What are the implications for Taiwan? Leading foreign affairs expert Oriana Skylar Mastro analyzes a newly translated article by a senior Chinese scholar which concludes that while the United States failed to deter Putin’s aggression, its actions in Ukraine are nonetheless impacting Beijing’s foreign policy calculations.
Can the U.S. Deter China? Lessons from Putin’s Invasion of Ukraine
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Military vehicles carrying DF-26 ballistic missiles drive through Tiananmen Square during a military parade in Beijing.
Military vehicles carrying DF-26 ballistic missiles drive through Tiananmen Square during a military parade in Beijing. | Getty Images
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Despite changes in China’s forces and the illegal invasion of Ukraine, the United States does not need to increase the numbers of its nuclear arsenal, argues Oriana Skylar Mastro in a new report.

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This essay is part of the report "Project Atom 2023: A Competitive Strategies Approach for U.S. Nuclear Posture through 2035," published by the Project on Nuclear Issues at the Center for Strategic and International Studies (CSIS). The volume addresses the question of how the United States should respond to deterring two peer competitors: Russia and China. 


Cover of the report "Project Atoms 2023"

This paper’s main contention is that the nature of U.S.-China military competition from 2035 to 2050 will exhibit some unique characteristics compared to the U.S.-Russian nuclear relationship that require new thinking on these topics. As such, this paper differs from others in this volume by focusing on what changes in Chinese military posture, doctrine, and modernization mean for U.S. nuclear deterrence strategy, modernization, reassurance of allies, and arms control efforts. The reason for focusing on China is to challenge the premise that the United States should treat Russia and China as similar peers, and because assumptions among nuclear experts about what modernization efforts in China mean for Chinese nuclear policy are limiting thinking on ideal policy responses. The details of force modernization are consistent with the idea that China is maintaining the same nuclear policy it has had since 1964. This is advantageous for the United States, and thus most of this paper’s recommendations revolve around discouraging deviations. Admittedly, this piece raises more questions than it answers, but understanding which components of U.S. thinking will also serve the United States well in the future, and which require additional consideration, is the first step to devising any useful responses. Each section lays out relevant Chinese approaches, U.S. assumptions, and key issues that color best responses. While this paper focuses on Chinese nuclear modernization, what it means for U.S. strategy, and how the United States should respond, it should not be interpreted as dismissing the challenges of responding to Russian nuclear aggression and expansion. Rather, it focuses on challenging the premise that the United States needs to make significant changes in posture or policy to deter China.

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Trends, Developments, and Implications for the United States and Its Allies

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Oriana Skylar Mastro
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Banner image for October 12, 2023 APARC event Political Economy of the Financial Crisis in Japan and the U.S. featuring headshot of speaker Hirofumi Takinami

 

This spring, we saw the collapses of Silicon Valley Bank, Credit Suisse, etc., and now we are observing collapses of Chinese real estate giants: Evergrande, and Country Garden. Would be there another financial crisis? 
Now, it is highly worthy to review the ‘lessons' of historically recent financial crises with significant seriousness, which happened in the two largest economies, the United States and Japan.

During the 1990s-2000s, Japan and the United States each experienced the same type of financial crisis, notably triggered by the collapse of major financial institutions, stemming from the real estate bubble burst. Namely, the Heisei Financial Crisis and the Lehman Brothers Collapse.

Both were under the political-economic conditions of one of the largest economies in the world, as well as of an advanced democracy. Enormous shock happened politically, economically, and historically, due to these two financial crises.

Then, as the research question, what were the ‘lessons’ of the United States and Japan's financial crises, concerning crisis response through public money injection, from the viewpoint of political economy? Where is the ‘learning’ between Japan and the United States?
Also, as the related research ‘puzzle’, why the difference in speed between these countries to respond and recover?

Based on his Ph.D. thesis, Senator Takinami, an alumnus of Stanford APARC, will elaborate on these issues by covering up and amending Hoshi & Kashyap(2010), thus establishing ‘7 lessons’ throughout the Japan and the United States financial crises on government bailout from the political economy viewpoint.

 

Speaker

Square photo portrait of Hirofumi Takinami

Hirofumi Takinami (Ph.D.) is an Upper House Member of the Japanese Parliament, corresponding to a Senator in the U.S. He is a former Vice-Minister of Economy, Trade, and Industry, and also a former Vising Scholar, APARC, Stanford University. 

Dr. Takinami covers a wide range of policies, including not only energy, environment, and finance, but also innovation, infrastructure, welfare for the disabled, etc. He has been the Director of the Fisheries Division of LDP (Liberal Democratic Party) from last year.

Before starting his political career 10 years ago, he was a Director of the Ministry of Finance. During his about 20 years of service as a Japanese government official, he held management positions including Public Relations Director, and Deputy Budget Examiner at the Ministry of Finance. He also worked internationally, in charge of the Asia-Pacific Economic Cooperation (APEC) and the Asia Europe Meeting (ASEM) etc. 

He graduated from the University of Tokyo in 1994, earning a Bachelor of Law. He received a Master of Public Policy (MPP) from the University of Chicago in 1998. While in office as an upper house member, he obtained a Ph.D. in 2021 from Waseda University for the study on financial crises, which he started when he held research positions at Stanford University as a Visiting Fellow in 2009-2011 and as a Visiting Scholar in 2016. 

Hirofumi Takinami Upper House Member of Japanese Parliament, Ph.D. , Former Vising Scholar, APARC, Stanford University Upper House Member of Japanese Parliament
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This September, President Biden welcomed Prime Minister Fumio Kishida of Japan and President Yoon Suk Yeol of South Korea for a weekend summit at Camp David. Against the backdrop of the war in Ukraine and tensions between the U.S. and China over trade, militarization, and Taiwan, the meeting was a notable step in ongoing efforts by the U.S. to increase trilateral cooperation amongst its allies in East Asia.

To contextualize the summit and its implications for the U.S.-South Korea-Japan relationship, Gi-Wook ShinDaniel SneiderThomas Fingar, and Oriana Skylar Mastro — scholars at the Freeman Spogli Institute for International Studies (FSI) and Walter H. Shorenstein Asia-Pacific Research Center (APARC) — explain the evolution of the relationship and how the summit may impact the dynamic moving forward.



A Complicated History


While South Korea and Japan are both long standing partners and allies with the United States, their bilateral relationship with each other has historically been strained.

In an interview with Asia Experts ForumGi-Wook Shin, the director of the Walter H. Shorenstein Asia-Pacific Research Center (APARC) explained:

“Japanese colonialism was instrumental to the formation of Korean national identity. The Korean peninsula is surrounded by big powers such as China, Japan, and Russia. Even today, these influences are still very strong. A sense of threat is still there.”

In particular, issues stemming from the Japanese occupation of the Korean peninsula between 1910 and 1945 remain a political third rail in both countries. The use of Korean nationals as forced laborers and soldiers in Japanese industry and the Japanese military remains an unresolved legacy, as do demands for the recognition of and restitution for Korean women who were taken into sexual slavery by the Imperial Japanese Army in the 1930s and 40s.

The withdrawal of Japanese troops from Korea, 1945.
The withdrawal of Japanese troops from Korea, 1945. | Mainichi Newspapers Company via Wikimedia Commons

In 2018, the South Korean Supreme Court passed a series of rulings requiring Mitsubishi Heavy Industries and Nippon Steel of Japan to compensate 14 Korean citizens for their unpaid labor. As of yet, neither company has agreed to comply with the ruling. The South Korean government has since announced plans to compensate survivors who were forced to work in Japanese mines and factories during the wartime period, but this remains a unilateral decision on the part of the Yoon administration, not a bilateral position between South Korea and Japan.

These tensions have ripple effects far outside of East Asia. Writing for Toyo KeizaiDaniel Sneider, an FSI Lecturer in International Policy with a focus on Asia, explains the broader geopolitical implications of these issues:

“The Americans have been urging the two countries to settle these problems in order to ease the way to the kind of security cooperation that has become visible in recent months. Joint military exercises for missile defense and other small steps to intensify trilateral coordination are taking place and a resolution of the history of problems may be key to moving ahead.”


Steps Forward


The last year has seen increased efforts to restore more functionality to the South Korea-Japan relationship. President Yoon and Prime Minister Kishida met briefly on the sidelines of the September 2022 UN General Assembly meeting in New York, which was followed by respective visits of Yoon to Tokyo in March 2023 and Kishida to Seoul two months later in May, the first such visits in over 11 years.

The Camp David summit, which brought the U.S., South Korea, and Japan together as strategic partners, is the latest step on the hoped-for road to institutionalized security cooperation between the three nations.

Speaking to NBC, Shorenstein Fellow Thomas Fingar explained the significance of the weekend.

“The importance of this [summit] is that it was a genuine trilateral meeting, which means the Japanese and the Koreans are talking to one another as opposed to the U.S. dealing separately with each of them.”

In contrast to the idyllic Camp David setting, the three leaders are faced with a weighty set of issues, noted Sneider, including the crisis triggered by the Ukraine war, North Korea’s aggressive posture, as well as growing concerns about China.

The war in Ukraine has done a lot to open leaders' eyes to the dangers of having neighbors with territorial hopes and claims that also have strong militaries. It's pushed these two countries to rethink their own strategies for security.
Oriana Skylar Mastro
FSI Center Fellow

Oriana Skylar Mastro, an FSI Center Fellow and an expert on security, conflict resolution, and the Chinese military elaborated further on the mutual pressures South Korea, Japan, and the United States face:

“Since President Biden came into office, he’s really stressed strengthening alliances and partnerships as a way of protecting U.S. interests abroad. I'm sure there has been much work behind the scenes to try to get these two countries to come together. In terms of the timing [of this summit], it's of course partially because of the accumulation of these concerns over China. I think also the war in Ukraine has done a lot to really open up leaders' eyes to the dangers of having neighbors with territorial hopes and claims that also have strong militaries that could potentially be undeterred from using force. I think it's fair to say that this has also pushed these two countries to rethink their own strategies for security.”


An Uncertain Future


The official summit documents outline both a vision of partnership and offer a variety of practical agreements on everything from annual leadership summits to meetings on economic and cyber security, and a proposal for how to move forward with joint military exercises. Notably, the two-paragraph ‘commitment to consult’ on responses to ‘regional challenges, provocations, and threats affecting our collective interests and security’ — while not a fully embodied collective security agreement — is nonetheless a “stunning achievement,” says Daniel Sneider.

Despite agreeing on a hefty laundry list of shared concerns and security goals, the way forward for additional trilateralization between the United States, Japan, and South Korea is not necessarily clear. Oriana Mastro explained: 

“Even though they might have shared threat perceptions, there is still a lot of trust that has to happen between nations for them to take coordinated military approaches. If two countries, for example, exercise together — and that's one of the things that the Biden administration is hoping to get out of this summit: more routine trilateral exercises — you get to learn a lot about another country's military, and that only really happens between friends. That’s also true of intel sharing. When you share intelligence, you’re not only sharing information, you're sharing how you get intelligence, which can also be sensitive. So while they've shared these threats for a while, it hasn't really gotten to the level in which they were willing to take risks in terms of the relationship between South Korea and Japan to become closer in the security space in a way that would help them combat these issues together.”

South Korean President Yoon Suk Yeol, U.S. President Joe Biden and Japanese Prime Minister Kishida Fumio arrive for a joint news conference following three-way talks at Camp David.
South Korean President Yoon Suk Yeol, U.S. President Joe Biden and Japanese Prime Minister Kishida Fumio arrive for a news conference following three-way talks at Camp David. | Getty

Besides the challenges of international diplomacy, Yoon, Kishida, and Biden also face domestic hurdles that could hinder further cooperation.

In a comment to the Wall Street Journal, Gi-Wook Shin noted that, “Yoon only entered politics a few years ago. If his party loses the election, I don’t know who will stay with him.” Improving South Korea-Japan relations was a major platform of the Yoon campaign, and backlash against his administration could yield disinterest or even renewed hostility toward continuing his efforts. 

Daniel Sneider sees similar challenges for Biden and Kishida. Writing in East Asia Forum, he cautioned:

“President Joe Biden is already embroiled in an election campaign that threatens to bring Donald Trump and his isolationist views back to power. The Camp David summit was barely noticed amid the constant flow of domestic political news, though it mostly received welcome praise in the media. . . Imprisoned by domestic politics, the White House will likely be unable to give substance to this emergent partnership.”

In the case of Kishida, the decision to release wastewater from the Fukushima nuclear site, which came just days after the conclusion of the summit, has been particularly counterproductive. Sneider continued:

“Prime Minister Fumio Kishida has been waiting for a bump from the Camp David summit. But he is experiencing a deepening slide in opinion polls. The Fukushima release faces opposition within Japan, including from fishermen and others worried about boycotts of Japanese products in China and South Korea. Talk of an early parliamentary election in Japan, intended to consolidate Kishida’s claim to long-term leadership, is now on hold.”

Where is the trilateral U.S.-Japan-South Korea relationship headed next? Follow FSI scholars to stay informed about the latest developments. Register to receive alerts to your inbox either weekly or monthly.   

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The trilateral summit between the United States, South Korea, and Japan was an important marker in deepening coordination among the allies, but work still remains to create a solid security partnership.

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