Managing geopolitical tension key to Asia-Pacific success — ADB

YOKOHAMA – The Asia-Pacific region has prospered in the past half-century in an environment of relative peace and stability, and ongoing geopolitical tensions must be managed carefully to sustain the region’s success, according to the head of the Asian Development Bank.

ADB president Takehiko Nakao told a press conference here yesterday that Asia-Pacific leaders must exert more effort to manage the tensions or the region could lose its growth momentum.

“We cannot totally remove tensions,” Nakao said yesterday. “How to manage these things is very important, how to maintain stability... that’s the lesson we learned since World War II.”

The ADB opened its annual Board of Governors meeting in this port city yesterday, celebrating 50 years of financing projects in a region that has achieved remarkable growth since the end of the last world war.

“Geopolitical tensions are of course a source of concern,” Nakao said in response to a question. “The reason Asia has been successful in 50 years is because ... Asia has gained stability.”

He avoided mentioning specific countries involved in ongoing disputes, but the South China Sea has been tagged as a potential flash point due to conflicting maritime claims and the construction of artificial islands by Beijing to reinforce its nine-dash-line claim over nearly the entire area. China is also locked in a maritime dispute with Japan.

Beijing has ignored a ruling last year of the United Nations-backed Permanent Court of Arbitration (PCA) in The Hague, which granted the Philippines a sweeping victory in the dispute. The PCA not only specified the Philippines’ maritime entitlements, awarding the country “sovereign rights” over key areas including Panganiban or Mischief Reef in the Spratlys, but also invalidated China’s entire nine-dash-line claim.

President Duterte has refused to demand Chinese compliance with the PCA as he continues his friendly overtures toward Beijing. But he has vowed to raise the issue with Beijing in future talks, promising that he is not junking the Philippines’ victory in The Hague.

The United States on its own and the Group of 7 industrialized nations have called for the full implementation of the PCA ruling, which is based on the UN Convention on the Law of the Sea (UNCLOS). Both the Philippines and China have ratified UNCLOS.

Nakao noted that the region has increasingly become more stable in the past decades, with the end of wars for independence in the 1950s, the Vietnam War that raged in the 1960s, conflict in Cambodia in the 1970s, confrontation between “some countries” in the 1980s, conflict in Sri Lanka and Myanmar’s isolation until it began opening up in 2013.

“I’d say we now enjoy a much better place,” Nakao said.

He also cited the importance of open and free trade in Asia’s growth amid concerns about rising protectionism worldwide. But he said it was still “too early” to say if the protectionist trend would be harmful to Asia.

“At this moment I don’t think protectionism is affecting our growth projections (for the region),” he said in answer to a question.

The region is still waiting for US President Donald Trump to issue specific orders implementing his campaign promise to “buy American, hire American.” The impact of Britain’s exit from the European Union is also causing uncertainty.

Even multilateral lenders are feeling financial constraints, but Nakao said that “for some time in the coming years... we’re OK.”

The ADB, with $31 billion available for financial support including co-financing, is ramping up its lending by 50 percent up to 2020.