Economic Statecraft – 2025
ASEAN’s Slow Diplomacy

The ASEAN 2025 Summit in Kuala Lumpur has already been dubbed a “historic turning point” by some observers. While this may be an exaggeration, the event was indeed a testament to the vitality of ASEAN, which had been going through difficult times in recent years, write Georgy Toloraya and Elena Pyltsina.

In its Indo-Pacific policy, the US has begun to counteract the “centrality of ASEAN” with its own geopolitical groupings (QUAD, AUKUS, JAKUS), grounded in an anti-Chinese agenda. However, with the arrival of Trump in the White House, the latter appears somewhat disillusioned with the effectiveness of these efforts, and the pressure on ASEAN appears to have eased. It seems that ASEAN, despite its usual sluggishness, has seized the moment, proving that its ideology of gradualism and compromise is more relevant than “frontal attacks” in these turbulent, confrontational times. 2025 could mark a bifurcation point, when ASEAN finally manages to transform its chronic “sluggishness” into strategic resilience, deftly balancing between giants.

The current summit has been marked by a series of breakthrough agreements and geopolitical signals that will likely have a significant impact on the development trajectory of Southeast Asia over the next decade.

Kuala Lumpur became a gathering place for world leaders, clearly demonstrating ASEAN’s unique unifying power – the leaders of China, India, Brazil, and the new prime minister of Japan all gathered there. But, of course, the show was stolen by none other than Donald Trump. He became the third sitting US president to visit Malaysia. His predecessors were Barack Obama in 2015 and Lyndon Johnson in the 1960s. Given that Trump ignored ASEAN during his first term and Joe Biden skipped several summits, this visit was seen as a clear signal of the US desire to reassert its influence in Southeast Asia amid China's growing involvement. His visit catalysed processes that demonstrate both new opportunities and old, deep-rooted risks for the region.

A visible and symbolically rich outcome of the summit was the signing of a peace agreement between Thailand and Cambodia on their protracted border conflict. The ceremony, at which the prime ministers of the two warring countries stood side by side with Donald Trump and Malaysian Prime Minister Anwar Ibrahim, was carefully orchestrated to showcase the triumph of diplomacy. Trump can boast of plenty of quick media wins and applause, but he has no "magic wand" to resolve deep-seated problems rooted in the colonial past and exacerbated by surges in nationalism. His presence acted as a powerful catalyst, exerting unprecedented pressure on both sides – Bangkok and Phnom Penh were forced to sit down at the negotiating table, fearing they would find themselves at the centre of an unpredictable storm of Washington's discontent. However, the signed document is not a comprehensive peace agreement, but rather a preliminary agreement, almost a “declaration of intent.” Its essence boils down to a cessation of hostilities and the return of some hostages. Thousands of people remain in camps, while fundamental questions about border demarcation, disputed territories, and the business interests behind the conflict (including the infamous scam centres) remain unresolved. And here, the discreet, background, yet critically important work of ASEAN comes to the fore. While Trump, having highlighted the event with a flash of his charisma, departs for other global affairs, the hard, day-to-day work of maintaining the fragile peace will fall on the shoulders of regional actors. The ASEAN Group, in this case represented by the Malaysian Presidency and Anwar Ibrahim, has acted as the glue holding the parties together; meanwhile, the mechanism ensuring continuity of dialogue when the global agenda shifts elsewhere. The danger of regression and a new round of violence along the thousands of kilometres of the Thai-Cambodian border remains extremely high, and the question "Who should I complain to?" will be addressed precisely to ASEAN. Thus, the Thai-Cambodian agreement is a textbook example of a new model of hybrid diplomacy: impetus and pressure from an outside great power, compounded by the institutional resilience and mediation capital of a regional group.

A historic milestone for the Association has been the formal admission of Timor-Leste as its 11th full member, marking the bloc's first expansion since 1999. The signing ceremony was accompanied by the symbolic placing of the new country's flag alongside those of other ASEAN members. Timor-Leste Prime Minister Xanana Gusmão, shedding tears of joy, called the moment a “dream come true” and a “powerful affirmation of the journey” of his people. Malaysian Prime Minister Anwar Ibrahim declared that this addition “completes the ASEAN family”, reaffirming a shared destiny and a deep sense of regional kinship. This membership, which brings both enormous opportunities and new challenges to consensus and economic integration within the bloc, marks the logical conclusion of the young nation's long journey and a new milestone in the evolution of the Association itself.

Naturally, the success in the Thai-Cambodian conflict raised the question: can this model be applied to other, even more complex regional crises, such as Myanmar and the South China Sea? The answer, unfortunately, is not so optimistic. In Myanmar's case, the internal contradictions are so deep-seated and protracted that simple external pressure is unlikely to make a difference. True peace requires a willingness on the part of all internal parties to compromise, and until that happens, any external attempts to force a settlement are doomed to failure. Moreover, with Trump preoccupied with the Middle East, Europe, and trade wars, Myanmar may simply not be a priority. Here, ASEAN's role as a “patient” force comes into play again. The association has a keen understanding of local specifics, methodically and persistently seeking to find some avenues for action in a deadlocked situation. The “Five Point Consensus” policy, despite the lack of prospects for quick solutions, remains the only legitimate regional framework, and ASEAN will continue its struggle, recognizing that there are no easy solutions.

As for the South China Sea, the situation is even more complex. Years of attempts to develop a Code of Conduct (COC) with China were once again sidelined at this summit, clearly illustrating the fundamental difficulties. The confusion stems from a misunderstanding of the code's purpose: it is not intended to resolve territorial claims, but merely to establish rules of conduct to prevent the escalation of incidents. China is not interested in a COC precisely because it could limit its freedom of action, while its opponents, the ASEAN countries (Vietnam, the Philippines, Malaysia, and Brunei), fear that any document would merely legitimise Beijing's growing power. The Trump factor, paradoxically, could play a positive, albeit indirect, role here. His presence at the summit sends a signal to China: if ASEAN fails to agree on a peace-supporting process, America may try to impose its own order, which risks direct confrontation. However, Washington is likely to exercise increased caution in matters related to the South China Sea compared to the situation on the Thai-Cambodian border, as there is a direct clash of interests between the two superpowers. Thus, the effectiveness of external pressure combined with intraregional efforts is significantly limited in the context of the SCS, where the global nature of the rivalry between the US and China creates a fundamentally different environment for seeking resolution.

This Sino-American standoff became another dominant theme of the summit. In parallel with its peace initiatives, the US, even before the summit, was engaged in a series of intensive trade negotiations with China, and here ASEAN's position, voiced by Malaysian Prime Minister Anwar, was crystal clear: the region does not want to choose sides. It wants to do business with both America and China. This strategic ambivalence is the cornerstone of ASEAN's foreign policy.

The key to long-term peace and stability in Southeast Asia lies not in which side ASEAN will side with, but in whether the two "poles" themselves can find a way to coexist. Trump’s entire Asian tour was supposed to culminate in a meeting with Xi Jinping in Busan, South Korea, but the expected progress on the “grand bargain” failed to materialize. Trump, preparing the ground for negotiations with Xi, concluded a series of bilateral rare earth metal deals with Malaysia and other countries in advance, a tactical move to create alternative supply chains in the event that negotiations with China collapse. This means new economic opportunities for these countries, while simultaneously strengthening their role as pawns in the grand game. For the countries of Southeast Asia, the optimal scenario would be managed competition between the two centres of power, since the region's constant fear is of being crushed in a full-scale trade war between the two economic titans.

In this context, the issue of intraregional integration is particularly pressing. Concerns over Trump's protectionist policies have once again forced ASEAN to consider the need to strengthen its own economic resilience. Promoting intra-ASEAN trade has become a key agenda item. This isn't about America or China, but rather about problems within the bloc itself. Trade with the US is important, but it accounts for only 11% of total trade and isn't the backbone of the region's economies. To increase the share of mutual trade, ASEAN needs to do its homework. The main obstacles are non-tariff measures. Some are motivated by safety, health, or environmental concerns, but often they are simply veiled protectionism: bureaucratic barriers and artificial standards designed to stifle competition.

Removing these barriers is routine, unglamorous work; it may not make headlines, but it is critical for the future of the region. The 2025 summit is likely to give new impetus to the implementation of the Regional Comprehensive Economic Partnership (RCEP). The agreement establishing it entered into force in 2022. It is the world's largest free trade area, comprising China, Japan, the Republic of Korea, all ASEAN countries, Australia, and New Zealand. RCEP creates the very multilateral network of economic ties that allows ASEAN to diversify risks and avoid becoming completely dependent on the whims of Washington or Beijing. Russia and the EAEU should be more proactive in establishing ties and interaction with this organisation through unhurried but forward-looking work in the spirit of the Greater Eurasian Partnership. Such routine work is clearly more effective in this region than public spectacles and theatrical effects.

 

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.