According to an IHS Jane’s study, defense spending in the Asia-Pacific will overtake North American defense budgets by 2021. What are the strategic implications of this expenditure rise? What is the US role to be in this militarizing region? On August 22, 2013, the Atlantic Council’s Brent Scowcroft Center on International Security held a panel discussion as part of its Cross-Straits Series on the trend of the increasing defense budgets in the Asia-Pacific region; what it means for the US strategy; and its impact on regional security.

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To discuss these developments, the Atlantic Council invited three prominent experts to the discussion: Dr. Ely Ratner, deputy director of the Asia-Pacific Security Program at the Center for a New American Security; Mr. Randall Schriver, president and chief executive officer of the Project 2049 Institute; and Mr. Kurt Amend, the director of international business development for Raytheon International Inc. The event was moderated by Mr. Barry Pavel, a vice president of the Atlantic Council and the director of the Brent Scowcroft Center on International Security.

Dr. Ratner began the discussion by pointing out three macro trends of the Asia-Pacific security environment. First, Asian countries increasingly networked amongst themselves, not relying solely on the United States’ system of allies, but reinforcing more connectivity with one another. This trend has the potential to lead to greater security competition and alliances, and, in turn,increase the possibilities of incidents. At the same time, there will be more opportunities for the United States to build stronger security ties and cooperation with countries in the region, generating stronger deterrence against China’s growing military capacities, and reducing the intensity of the US-China competition. It also helps build more effective defense capacities in Asian countries, and develop more coherent region-wide security cooperation. Instead of destabilizing the region, growing military capabilities can actually foster better cooperation and stability in the region.

Second, diplomatic and political context matters along with behaviors and the perception of intentions. Dr. Ratner mentioned that many Asian countries have expressed more interest in contributing to regional stability and creating a more positive diplomatic environment. Therefore, it generates the need for a multilateral cooperation and comprehensive engagement strategy that includes both security initiatives and other components, such as economics and environmental issues.

Finally, there are different levels of security competition caused by the imbalance of power between key countries. These include high-end arms races, competitions from asymmetric threats, and natural buildup due to technological developments. All that said, increasing Asian defense budgets creates the need for greater cooperation or greater competition among Asian countries, and there is a need for new strategy to prepare for those contingencies.

Mr. Schriver emphasized the impact of Chinese military modernization on the cross-straits environment, and discussed the key drivers as well as the military objectives of both China and Taiwan. To reason the rising defense capabilities of China, the important role of Taiwan cannot be omitted, according to Schriver, as Taiwan used to be the main driver of robust Chinese military spending from 1995 to 1996. For the past fifteen years, Taiwan played the single focal role in PLA’s defense strategy, which allowed the PLA to focus their skills and technology quickly despite the underestimation of the success of PLA’s arms modernization from the US government.

While Taiwanese the defense budget decreased over time, the PLA has done nothing to reduce its military buildup. One of the reasons for this mismatch in perceptions between China and Taiwan, according to Mr. Schriver, is because Taiwanese civilian leaders do not want to challenge the PLA in terms of defense budget growth. Second, the PLA is not very confident about the trajectory of the Taiwan mission. The previous Chinese leader, Hu Jintao, did not have strong enough ties with the military to carry on a single Taiwan mission. In addition, Schriver also pointed out that the US arms sale to Taiwan has made a positive impact on the cross-straits environment and helps develop the relationships between the United States and the region.

Next, Mr. Kurt Amend discussed three issues from the US defense industry perspective, specifically about what it means to the US defense industry and the nature of defense spending (on procurement or personnel). The main implication of the growing defense budget of Asian countries is the range of opportunities for the American defense industry, as well as increasing stress on the US military. The increasing US arms exports to Asia was raised as a threat for the US defense strategy. Meanwhile, technology can help fill the gaps in the US posture in Asia through defense sales. On the other hand, important challenges remain in order to develop an efficient system designed for export capabilties and make them affordable for Asian countries. Finally, Asian countries, especially China, are trying to get ahead of the United States in terms of technological capabilities, but the United States still has upper hand in this realm.

To further the discussion, Barry Pavel asked what the United States could do avoid the most disastrous outcomes of an arms race in Asia. The speakers called for a greater commitment of the US “rebalance” to Asia, as well as a necessary preparation for all contingencies. According to Dr. Ratner, developing the ASEAN-China code of conduct as an official rules-based system to communicate and negotiate through diplomatic means is the priority to avoid military stand-offs in the region, but this process has been slow. It is also time to prepare a strategic solution independent from this process to avoid the worst-case scenario. Mr. Schriver added that there is not enough commitment and effort from the United States on Asia security issues. He also called for more US involvement in other aspects of Asia, especially Trans-Pacific Partnership (TPP) to rebalance the pivot toward the Asia-Pacific region.

Questions raised by the audience touched upon the future relationships among Asian countries, especially considering the rising military power of China. One question in particular asked if a NATO-like alliance could form in Asia; both Dr. Ratner and Mr. Schriver said that this is unlikely since states fear angering China and due to their economic interdependence. Instead, the region should reinforce bilateral or trilateral relationships for better cooperation and foster negotiation through diplomatic means instead of military deployment. If a multilateral relationship should be established, it should include both ASEAN states and outside countries to participate in the discussion, instead of creating an alliance against China.

With a question about the US role in the China-Japan dispute over Senkaku Island, the guest speakers emphasized that instead of being biased toward Japan due to its ally commitment, the United States holds a neutral position, and tries to engage both sides. They also point out that the more countries develop their military capacities to balance against China, the more stable the region will become. Concerning Filipino-US military cooperation, Ratner and Schriver both agree that the Philippines’ level of military buildup is not adequate enough to foster a partnership with the United States. Instead, it is rudimentary for the United States to establish a maritime presence, which will benefit both countries, and become the foundation for their cooperation.