The Asia-Europe Meeting is a high-level political dialogue held every two years to improve relations between participating states. This year’s conference, hosted in Brussels on October 18-19, marks the twelfth gathering of what is now a 53-member group, including geopolitical heavyweights like China, France, Germany, India, and Russia. Collectively, ASEM partners represent 55 percent of global trade, 60 percent of the world population, and 65 percent of global GDP.
In this Q&A, Carnegie experts explain the issues at the top of the ASEM agenda.
Source: “Asia-Europe Meeting (ASEM), 18-19/10/2018,” European Council
What’s the context around this year’s ASEM Summit?
Lizza Bomassi: The 2018 ASEM conference offers a chance to make headway on some big-ticket items on the Europe-Asia agenda. In theory, the high-level meeting is set to cover a lot of ground on several pressing global issues—everything from trade and investment to climate to security—at a time when the United States’ interest in multilateralism is on the wane. The question is whether ASEM partners will take advantage of this opportunity.
Europe’s attention risks being distracted by domestic gerrymandering and a litany of internal challenges—including Brexit, Italy’s perceived insubordination, rising East-West tensions, and a difficult relationship with Turkey, to name a few. Meanwhile, the Asian states will be driven by their own, individual priorities: Japan on finalizing its trade pact with the EU; South Korea on dealing with its belligerent neighbor to the north; India on its upcoming elections; not to mention China’s preoccupation with the escalating global trade war.
The areas where common ground could lie may prove too thorny to reach solid consensus, at least in this format. It’s likely that countries will show some unity on Iran and North Korea, if only to demonstrate that good old-fashioned diplomacy still works. The connectivity debate that Erik Brattberg discusses below will be the most difficult because there’s little opportunity for advancement on some of the key sticking points, especially between Europe and China.
Ironically enough, the one place where Europe and Asia could be on the same page is on saving the WTO. Despite growing views to the contrary, the WTO is still the only viable institution that provides a rules-based mechanism for dealing with global trade disputes.
—Lizza Bomassi is the deputy director of Carnegie Europe
What does the EU hope to achieve from these high-level talks?
Erik Brattberg: A top priority for the EU at the summit is connectivity, which has to do with promoting more physical and digital infrastructure links between the two continents. The European Commission just released its new strategy for connecting Europe and Asia, laying out a framework for how the EU can promote regional connectivity projects with countries in Asia in sectors ranging from transport and energy to the digital economy. Though EU officials may deny it, the strategy should be seen as a response to China’s massive Belt and Road initiative (BRI)—which many European officials are increasingly wary of. The EU has voiced concerns about BRI projects on issues such as lack of respect for labor, environment, and human rights standards; insufficient transparency and open procurement; and debt sustainability.
The EU’s vision for connectivity is not designed against China but is rather an effort to codify the EU’s position in a way that carefully preserves engagement with China while clarifying Europe’s own priorities and red lines. In contrast to BRI, the initiative put forward by the EU seeks to establish a normative framework and rulebook for connectivity projects in a way that would addresses transparency and sustainability issues. Whether the EU can successfully convince Asian countries that it is serious about presenting an alternative vision to Beijing’s BRI initiative and put enough resources toward such efforts will be a tall order.
—Erik Brattberg is the director of the Europe Program and a fellow at the Carnegie Endowment for International Peace in Washington
There is growing concern about China’s investments and influence across Europe. How much of that is valid?
Judy Dempsey: Concern about Chinese influence in Europe is valid for several reasons. First, the investments targeted by China involve strategic sectors, such as energy and telecoms, ports, and the high-tech industry. These sectors are crucial for any EU member state. They are the backbone of an economy’s infrastructure. They are essential for resilience in the case of a natural catastrophe or terrorism.
Yet Cyprus, Greece, Malta, Italy, and other member states have welcomed such foreign investments, even though they undermine the EU’s attempts to build resilience and promote a common policy about how to protect strategic sectors without hindering competition.
Second, Chinese companies have bought into the Mittelstand—Germany’s highly successful small and medium-sized companies—many of which are world market leaders in sophisticated industrial products. Buying into them allows China to transfer such technologies back home as part of its “Made in China 2025” strategy. This is about intellectual property rights. Chancellor Angela Merkel herself has repeatedly criticized China’s disregard for such rights, a deficit many European companies operating in China complain about. It is also about the level of investments and acquisitions that China has been making in Germany and Europe over the last few years. The German government is now curbing such acquisitions for strategic reasons.
Third, through its 16+1 forum, China’s role in Central and Eastern Europe and the Balkans allows Beijing to invest lavishly, with these countries often flouting transparent procurement procedures. This is where China’s influence comes in. Such investments mean that several EU countries are loath to criticize Beijing’s dismal human right records, its surveillance of its citizens, and its cyberattacks on the West.
—Judy Dempsey is a nonresident senior fellow at Carnegie Europe and editor in chief of Carnegie’s Strategic Europe blog
How is the ASEM Summit of value to China and Russia?
Alexander Gabuev: For China and Russia, the ASEM summit has both symbolic and pragmatic value. Beijing and Moscow will use it to promote narratives on the future geoeconomic landscape in Eurasia. For China, it’s all about the mammoth Belt and Road Initiative (BRI), a signature project of Xi Jinping. Moscow has its own concept, the Eurasian Economic Partnership (EEP), centered on free trade agreements and business deals that involve Russia. Both initiatives are intentionally vague so that Beijing and Moscow can claim progress every time they sign a random agreement with a third party. Understandably, the BRI attracts a lot of attention because it is promoted by rich and powerful China, while the Russian EEP initiative is much lesser known due to the unattractiveness of an oil-dependent economy under sanctions.
On the pragmatic side, China and Russia will use the ASEM summit to pursue bilateral negotiations with EU leaders on pressing issues. Prime Minister Li Keqiang will try to dissuade EU countries from joining hands with the United States on trade issues against China and will try—yet again—to sell the narrative of ongoing reforms in China to help further open its market to European companies. Topping Dmitry Medvedev’s tactical agenda will be the EU’s participation in deepening U.S. sanctions against Russia, the future of Nord Stream 2, and the possibility of joint Russia-EU efforts to maintain commercial ties to Iran, despite Trump’s withdrawal from JCPOA.
—Alexander Gabuev is a senior fellow and chair of the Russia in the Asia-Pacific Program at the Carnegie Moscow Center
What are the main priorities for India?
Milan Vaishnav: As the ASEM meeting approaches, Europe is likely to witness an India that is primarily preoccupied with domestic concerns. Parliamentary elections are likely to be held in April-May 2019, with several critical state polls taking place at the end of this year. Prime Minister Narendra Modi’s ruling Bharatiya Janata Party (BJP) is already in election mode as mixed economic numbers, anti-incumbency sentiment, and coalition politics have complicated its path to an easy reelection. The major short-term focus of the government is the economy, which faces the twin headwinds of higher oil prices and an uncertain global trading atmosphere.
To that end, expect the Indian side to focus its attention on two issues in Brussels. The first is Iranian oil. India is under severe U.S. pressure to cut its reliance on Iranian energy imports or risk falling afoul of secondary sanctions. India will want to probe the possibility of joining hands with the EU in setting up a special-purpose vehicle that would allow it to continue importing oil from Iran without doing great harm to its economy. The second priority is investment. Thanks to rising oil prices, India’s current account deficit is expected to rise as high as $80 billion (or 3 percent of GDP) next year. To finance this gap, the government is stepping up its investor outreach in hopes that it can bring in fresh foreign institutional and foreign direct investment flows.
—Milan Vaishnav is the director and a senior fellow in the South Asia Program at the Carnegie Endowment for International Peace
What about the growing trade war between the United States and China—can Europe mediate?
Yukon Huang: America’s launching of another $250 billion of tariffs on China means that a trade war is now a reality. When two seemingly purposeful and equally endowed antagonists confront each other in this way, both sides are worse off. Europe can play a key mediating role, but its leadership may be too distracted to do so.
U.S.-China economic links are extensive, but Europe-China links are even deeper. Over the past decade, Europe’s foreign investments going to and from China have been about twice that of the United States’. This comes from the EU’s greater prominence in exporting machinery and high-end consumer goods and using China as an export production base for the rest of the world.
China has approached Europe on using the WTO as the alternative to America’s reliance on tariffs to address trade concerns. Europeans, however, also harbor many of the same negative feelings about China’s alleged unfair trade and investment practices. The EU now finds itself in the awkward position of trying to negotiate a trade agreement with the United States while simultaneously championing efforts to strengthen the WTO—which the Trump administration has targeted for extinction.
While Europe is not as concerned as the United States is about great power rivalries, European are wary about China’s strategic intentions embodied in its Belt and Road Initiative. The question now is whether Europe, with many of its leaders facing internal political pressures, is capable of acting strategically—with the energy and pragmatism needed to work with China on reforming the global trading system—without jeopardizing its much deeper U.S. relationship.
—Yukon Huang is a senior fellow in the Asia Program at the Carnegie Endowment for International Peace
How prominently will the Iran nuclear deal, trump-style diplomacy, and the mutilateral order feature in the discussions?
Pierre Vimont: The U.S. withdrawal from the Iranian nuclear deal will not feature very high on the ASEM agenda itself—the Asian side has too many reasons not to risk upsetting the ebullient American president. From the ASEM viewpoint, there are more crucial challenges that need to be discussed in the India-Pacific region, including the ongoing talks around a possible deal with North Korea, the current military tension in the South China Sea, the prospect of a nonproliferation policy in the overall area, and negotiations over future regional trade relations. A bland reaffirmation of the need to respect international agreements and a call for downgrading the tension in the Gulf region are therefore preferable to running directly against the U.S. confrontation with Tehran.
Out of this summit—and looming larger than the exclusive focus on Iran—may stem an increasingly cautious attitude of America’s partners towards Trump’s destabilizing diplomacy. Europeans, at least some of them, are certainly prepared for a more sanguine reaction on Iran. It could be that by the end of this summit the EU will have caught from its Asian counterparts—on Iran as well as on other matters—a message of realism over the importance of giving more time for reflection over U.S. President Trump’s diplomacy. If so, the ASEM could represent a first step on the way for less indignation directed at Washington and more in-depth mobilization between the two sides to actively defend the multilateral order.
—Pierre Vimont is a senior fellow at Carnegie Europe
How will North Korea feature in the agenda?
Chung Min Lee: Global security today is not defined by borders but by pervasive cyber warfare, rapid AI advancements, terrorism, and other non-traditional threats. Threats to stability and security at one end of the Eurasian landmass reverberate at the other. What transpires at NATO has ramifications for South Korea, for example, especially given Seoul’s critical alliance with Washington. Likewise, an unstable Indo-Pacific has wider repercussions for Europe given the EU’s growing economic and political ties with the region.
The search for more permanent peace on the Korean peninsula will therefore be high on the agenda. Political and diplomatic support from the EU will be essential to reaching any lasting peace between North and South Korea. The EU can help in two critical ways: providing multilateral diplomatic support throughout the long and arduous peace process; and providing capacity-building networks and resources to augment institutionalized reforms in North Korea.
Fostering greater cooperation between Asian and European democracies will also be a priority at this year’s ASEM summit, to remind the world of the importance of universal norms and strong democratic institutions. There are many reasons why democracies do not fight wars with each other, but some of the most important are robust checks and balances, a free press, a vibrant civil society, and respect for international law.
—Chung Min Lee is a senior fellow in Carnegie’s Asia Program
