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What to Watch in 2018

The coming year is shaping up to be highly consequential for the Asia-Pacific. The distribution of the region’s economic, political, and military power is evolving rapidly, which will have profound implications for regional stability and for American interests. To inaugurate the Wilson Center Asia Program’s new blog Dispatches, the program’s staff has compiled brief analyses of what we believe to be some of the most critical issues to watch in 2018.

A Potential Second Korean War

Asia's Trade Roadmap Without the United States

Another Year in America's Longest War

India's Time in the Sun

Eyes on Rising Tensions in the Taiwan Straits

A Potential Second Korean War

The United States and North Korea are on a collision course. North Korea’s accelerating nuclear and missile programs, and the Trump administration’s stated unwillingness to accept such a capability, raise the potential for a major confrontation on the Korean peninsula that could threaten the lives of millions, undermine the global economy, and jeopardize stability across the Asia-Pacific.

In 2017, North Korea made unprecedented progress in its nuclear and missile programs. In September, North Korea claimed to have tested a miniaturized nuclear device that yielded over 100 kilotons of explosive power –several times larger than the bomb that destroyed Hiroshima. Additional, as the capstone to multiple ballistic missile tests, North Korea tested an intercontinental ballistic missile (ICBM) that analysts believe would be able to strike the entire continental United States. While North Korea still has not demonstrated an ability to field a vehicle that would survive reentry into the Earth’s atmosphere, it is entirely possible that North Korea would complete the development of a credible nuclear capability sometime in 2018.

This will put Pyongyang directly in opposition with the Trump administration, which has stated categorically that it would not tolerate a North Korean capability to strike the United States with nuclear weapons. National Security Advisor H.R. McMaster has stated that the potential for war grows every day. At some point, probably sometime in 2018, the Trump administration may be forced to choose between two very unpalatable options: a devastating war that would threaten the lives of millions, or learning to live with a North Korean nuclear weapon.

A war with North Korea would potentially be worse than anything the United States has experienced since World War II. Recently declassified U.S. government documents from 1994 included Pentagon estimates that a war on the Korean peninsula would kill or injure 52,000 American service people and over 490,000 South Korean troops in just three months of fighting. It is likely that these numbers have gotten worse since the mid-1990s.

Yet living with a nuclear North Korea also presents incredible challenges. While a stable deterrence dynamic with Pyongyang may be possible, it is also possible that North Korea may be emboldened by its nuclear capabilities and seek to use them to assert its other interests. It is possible that Pyongyang will use nuclear blackmail and smaller-scale conventional and asymmetric attacks in order to terrorize the region and extract significant geopolitical concessions, including long-term goals such as the end of the U.S.-ROK Alliance and the reunification of Korean peninsula under Pyongyang’s control.

There are no good opportunities here–that is why specialists often describe North Korea as the “land of lousy options.” There remains a possibility of a diplomatic breakthrough that ends the crisis and makes space to strike a deal. However, thus far, neither Pyongyang nor Washington has evinced much of an inclination for backing down. This crisis is the most likely driver of instability in the region for the near future.

Asia’s Trade Roadmap Without the United States

After the initial shock of the U.S. decision to withdrawal from the Trans-Pacific Partnership (TPP), the future of Asia’s economic architecture has been deeply uncertain. While the resilience of the TPP since then even without Washington has been a pleasant surprise for proponents of multilateral trade deals, Chinese ambitions to offer an alternative vision for the region’s economic future has emerged as a key indicator of broader geopolitical dynamics across the Asia-Pacific.

While TPP11–now officially known as CPTPP (shorthand for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership)–is hardly a done deal, the fact that there is clearly a desire to conclude the world’s most ambitious trade deal has spoken volumes about the economic and political value of enhanced multilateral trade relations seen across the region. For Japan, that appetite for multilateral deals has strengthened its position as a champion not only for free trade, but also for ensuring that the rule of law prevails. The White House has not objected to TPP moving forward without the United States, as President Trump remains resolute that his decision to withdraw from the deal was a good one. Yet the American absence from TPP speaks volumes, and Japan has sought to fill the leadership vacuum by continuing to advocate for a liberal, rules-based multilateral trade architecture in Asia. Japanese Prime Minister Shinzo Abe is clearly eager to take on that mantle as a champion of regional economic integration, while also pushing President Trump as well as other Asian nations to remain committed to free trade and the rule of law.

Japan’s vision, in essence, would be to have TPP11 be part of a broader Indo-Pacific strategy encompassing Southeast Asia and India, as well as Australia and New Zealand to counterbalance the threat from China. While specifics for the Indo-Pacific strategy are still lacking, it can certainly be seen as the beginning of an alternative vision for Asia outside of the grand strategy outlined by China’s ambitious Belt and Road Initiative. The conclusion and ratification of TPP11 would ensure that free and transparent trade rules remain viable for much of Asia, and would also help recalibrate the balance of power in Asia in which China is now clearly in ascendency.

For its part. Beijing had been vigorously opposed to the TPP from the onset, arguing that it was a tool to contain and isolate China from international markets. That perspective changed by the time TPP was concluded, and interest within China for the country to join the agreement had gradually mounted. Now, though, with Japan as the leading force behind keeping the TPP alive, Chinese apprehension towards the deal is stronger than before.

President Xi Jinping has made clear China’s appetite not only to be acknowledged as an economic and military power, but also as a champion of international trade and globalization amid regional perceptions of a U.S. retreat from Asia. New institutions like the AIIB and alternative architectures like the Belt and Road Initiative all promote regional economic integration, while also placing China at the center of the region’s economic destiny.

Rival economic architectures have become indicators of broader geopolitical competition between China and Japan. This fact alone may only increase tensions between Beijing and Tokyo, as China looks to consolidate its position as Asia’s hegemon, while Japan seeks to challenge China in closer partnership with other like-minded nations while keeping the U.S. engaged.

Another Year in America’s Longest War

Two thousand eighteen is a pivotal year for the war in Afghanistan—the longest foreign conflict in U.S. history, and a conflict that’s worsening by the day.

Consider that the Taliban now controls or contests somewhere between 40 to 50 percent of Afghanistan’s 407 districts—the largest amount of territory since U.S. troops entered the country in 2001. The fatality rates of beleaguered Afghan security forces have soared. Afghan civilian deaths from the conflict have never been higher. The Taliban—buoyed by record opium harvests (drugs are a major source of profits for the insurgency), bolstered by a troubled Afghan government that can’t convince a critical mass of Afghans that it’s a better alternative to the Taliban, and buttressed by the sanctuary it enjoys next door in Pakistan—is on a roll.

In 2018, the Trump administration Afghanistan strategy will likely focus on reversing the Taliban’s momentum. Unfortunately, this strategy is predicated on a questionable assumption: that deploying more U.S. troops to Afghanistan and empowering them to fight the Taliban more aggressively will weaken the insurgents militarily and compel them to leave the battlefield and launch peace talks with the Afghan government.

Here’s the problem: America already tried this strategy, and it didn’t work. Even worse, it attempted this strategy with more than 100,000 troops during the height of the surge in 2010 and 2011. If it didn’t work then, with vastly greater resources, it’s hard to imagine it working now, with fewer than 15,000 American soldiers on the ground.

Washington’s argument is that circumstances have changed since the surge. Afghan security forces, U.S. officials will argue, are stronger now than they were seven years ago. The combination of more capable Afghan troops, an enhanced U.S. training mission that will make them even more capable, and stepped-up American counterinsurgency operations can turn the tide.

It’s a fair argument. However, it overstates the capacities of the Afghan forces, which continue to struggle with basic battlefield functions such as providing air cover and gathering intelligence. It also understates the ferocity of the Taliban insurgency. Indeed, despite getting hit hard for years by the world’s most powerful military and suffering multiple leadership decapitations, the Taliban has arguably never been stronger.

Another risk is that even if the Taliban does find itself under pressure on the battlefield, this could merely deepen its determination to continue to fight. After all, the Taliban insists that the withdrawal of foreign forces is a precondition for any peace talks. Unless the Taliban is confident that it would receive irresistible concessions in a negotiation process, it may have little incentive to lay down its weapons.

Ultimately, there is tremendous uncertainty surrounding the Trump administration’s strategy for Afghanistan. This ambiguity is rooted in great part in a lack of precedents. The Taliban has never stepped off the battlefield—and it’s never participated in a formal peace negotiation. No one know what, if anything, will convince them to finally come to the table for credible negotiations.

In all likelihood, 2018 will provide some clarity on these matters. But if history is any guide, we shouldn’t hold our breath that the year will bring better news about this (hereto) unending and worsening conflict.

India’s Time in the Sun

While all eyes have been monitoring the remarkable rise of China, India has also quietly burnished its own credentials as a rising power—and could add to them in 2018. Yet the course and sustainability of India’s rise is uncertain, and will depend on several economic, diplomatic, and military factors.

Despite recent stumbles, India’s economy remains poised for growth. In the coming year, India is expected to vault past the UK and France to become the world’s fifth largest economy in dollar terms. India’s economic trajectory this year will be shaped to a considerable degree by a signature government initiative, Make in India, which seeks to attract major international firms to India to partner with local companies in an effort to strengthen India’s mammoth yet sluggish manufacturing sector.

Meanwhile, extensive diplomacy has enabled India to deepen its global footprint. In 2017, it joined a key Asian regional organization, the Shanghai Cooperation Organization, and a prestigious global nonproliferation club called the Wassenaar Arrangement. How much India bolsters its global presence will depend in part on its ability to take advantage of new institutional opportunities—such as the two-year-old Asian Infrastructure Investment Bank, to which India is the number-two shareholder. Another factor is China, which has so far stymied New Delhi’s efforts to get a foothold in prestigious global forums, such as the Nuclear Suppliers Group and the UN Security Council, where Beijing wields strong influence—and veto power.

Finally, India has long played second fiddle to China when it comes to military power, though the Indian military is no slouch. Multiple rankings, including a list in 2017, designate it as one of the top five most well-equipped and trained security forces in the world. How much the Indian military continues to strengthen in 2018 will depend in part on the success of the Make in India initiative, which aims to strengthen the country’s domestic defense manufacturing capacities—long an Achilles’ heel—as well as its defense partnerships with key external suppliers. While India’s growing defense relationship with the United States gets ample attention in Washington, Russia, France, and Israel are also top arms suppliers to India. More deals with these nations could deliver a short-term shot in the arm, particularly if the benefits of Make in India are slow to materialize.

One major question for Washington in 2018 is India’s willingness to enhance its power projection capacities in Asia, in order to provide a balance to China’s regional influence. New Delhi has long resisted U.S. pitches for operational military cooperation—including joint naval patrols—in the region. However, the U.S.-India defense partnership continues to deepen, Trump administration officials are explicitly proposing that this cooperation play out in the Indo-Pacific region, and India-China relations are poised for another difficult year. Consequently, in 2018, New Delhi may choose to supplement its growing diplomatic and economic engagement in the Indo-Pacific by ramping up regional security cooperation with Washington, most likely through enhanced joint training exercises.

Eyes on Rising Tensions in the Taiwan Straits

When President-elect Trump took a congratulatory phone call from Taiwanese President Tsai Ing-wen in December 2016, he became the first incumbent or incoming U.S. president to have direct contact with the leader of Taiwan since 1979. But rather than enhancing ties between Washington and Taipei, the call quickly came to be seen as a pitfall in disturbing the delicate balance in cross-Strait relations. Other suggestions from President Trump that the U.S. may be willing to strike a deal with Beijing on its position regarding Taiwan depending on whether U.S. trade and other interests could be accommodated by China further inflamed concerns in Taipei, but have since abated as the Trump administration’s policy toward Taiwan has followed a more traditional course.

For Beijing, making progress toward President Xi Jinping’s goal of “national rejuvenation” is likely to keep officials focused on ensuring that the international community, including Washington, abides by its “One China Principle.” Additionally, in response to Taiwan’s election of Tsai Ing-wen as President, the mainland has put in place significant economic, diplomatic, and military pressure on Taipei. Two of Taiwan’s “diplomatic allies” switched recognition to Beijing in 2017, cross-Strait tourism remained down, and Chinese warplanes have flown near Taiwan's military defense zone roughly 10 times in the past two years.

This pressure is likely to continue into 2018. Given that the 20 countries that continue to recognize Taiwan are increasingly dependent on capital from Beijing, there is a very real concern in Taiwan that the list of nations that it has official ties with will continue to dwindle. Worries about being marginalized from major international trade agreements also looms large for export-focused Taiwan. U.S. withdrawal from the TPP has undoubtedly been a big blow for Taipei, as it had hedged on becoming accession-ready to the multilateral trade deal. As Beijing asserts greater influence in establishing new rules of trade and economic architecture in Asia and beyond, Taiwan’s challenge in the year ahead will be not only to ensure strong relations with Washington, but also to build relations with other countries, most notably Japan.

Further reading:

What to Watch in South Asia in 2018

Two thousand eighteen will be a significant year for domestic politics and regional security in South Asia. Three issues are worth highlighting in particular: Elections, India-China rivalry, and conflict risks.

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Risks Challenging Northeast Asian Growth in 2018

For all the political upheaval and security risks worldwide over the past year, 2017 has been a good year for much of the global financial markets, and Asia has been no exception. The spillover effect of the robust economic performance by the United States in particular has been felt strongly in Tokyo, Seoul, and Taipei, in spite of ever-growing worries about North Korea’s nuclear ambitions and the possibility of an outright military conflict breaking out in the region. There are, of course, other concerns that loom large over the horizon, not least an uncertain outlook for the U.S. economy in the year ahead and high debt levels, as well as the still-real threat of war in the region. At the same time, there are three potential political risks weighing down continued growth in Northeast Asia, namely a rise in economic nationalism; frictions over new trade deals; and dealing with seismic demographic shifts.  

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A New Era of Intensified U.S.-China Competition

China’s explosive economic growth has been the single most profound and significant geopolitical event of the last four decades. Once a financial and technological backwater, China today is a leading driver of economic growth in East Asia and increasingly of technological innovation around the world. As a result, the United States and the rest of the Asia-Pacific have developed robust economic relationships with mainland China. As a result, the entire world is increasingly invested in China’s success.

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The views expressed are the author's alone, and do not represent the views of the U.S. Government or the Wilson Center.  Copyright 2018, Asia Program.  All rights reserved.

Asia Program

The Asia Program promotes policy debate and intellectual discussions on U.S. interests in the Asia-Pacific as well as political, economic, security, and social issues relating to the world’s most populous and economically dynamic region.   Read more