Understanding Modi, Abe, and Jokowi

CFR Senior Fellows Alyssa Ayres and Sheila A. Smith, and the Lowy Institute's Aaron Connelly, join Michael Fullilove, executive director of the Lowy Institute, to discuss the leadership priorities and styles of Indian Prime Minister Narendra Modi, Indonesian President Joko "Jokowi" Widodo, and Japanese Prime Minister Shinzo Abe. The panelists, each focusing on one of the aforementioned leaders, outline Asia's shifting political landscape.

This meeting is part of the U.S. Rebalance to Asia Symposium, presented by the Council on Foreign Relations and the Lowy Institute for International Policy.

This event was made possible by the generous support of longtime CFR Member Rita E. Hauser and the Hauser Foundation.

FULLILOVE: Well good morning. Good morning, ladies and gentlemen. Good morning, ladies and gentlemen, and welcome to the second session of this Council on Foreign Relations, Lowy Institute Symposium on the U.S. Rebalance to Asia. I'm Michael Fullilove, executive director of the Lowy Institute and I see some familiar faces from the panel yesterday on which I spoke.

Let me say again that my colleagues and I are really delighted to be in this wonderful American institution in this magnificent city of New York, and we're grateful, again, to Rita and Gus Hauser for supporting this symposium.

This session is on Asia's new leaders, and there's a generation of new leaders in Asia. In Indonesia, Joko Widodo has been president for six months. In—in India, Prime Minister Narendra Modi has been in office for almost a year. I believe we're going to have—reading the press overnight, that we're going to have a new South Korean prime minister, and Shinzo Abe—although, I guess he's not—he's not—he's the oldest of these new leaders. He—he, himself, was reelected late last year, having served in office since 2012.

In my country, Tony Abbott, having been—has been prime minister for 18 months and, who knows? He may even last until the next election.

(LAUGHTER)

FULLILOVE: So there's this phenomenon of new leaders and they're all very interesting and they're interesting similarities and differences between them that we might tease out.

We have three formidable experts, Alyssa Ayres, Aaron Connelly and Sheila Smith. I won't go through their lengthy biographies, partly because their mums aren't here so they don't—they don't need to hear it, but also because you have their biographies in—in your packs. But they are all very insightful people.

Let me—because not everybody here is going to be a—a Modi obsessive or—not everybody here probably follows Jokowi's tweets, I might start by inviting each of the panelists to address the leader in the country that they focus, and tell us—just tell us for a minute or two about their leader, as it were, the leader that they're focusing on. A little bit about their personal stories, and also about how they're going in the first flush of their leadership.

And, I'll start with you, Alyssa.

AYRES: OK. The first thing that I think is—is interesting and unique about Prime Minister Narendra Modi is that he—as people probably do know or are aware, he is now heading the first non-congress majority government in India, and the first majority government elected in some 30 years. So India's been in a phase of coalition government, and it's important just to recognize that his party, the Bharatiya Janata Party, campaigned so successfully that they were able to form this government on their own. So that, in and of itself, is—is, you know, a once-in-a-generation shift in terms of Indian politics.

And, on a personal level, there's something that gets very interesting about Mr. Modi. We were just talking about this as we were preparing to come out here. And that is the fact that he has a background of—of no privilege at all. In fact, he grew up quite poor. He father was a tea seller, he was a tea seller. He comes from a subordinate caste background and he spent a lifetime of service in one of Indian's nationalist organizations, the RSS, the Rashtriya Swayamsevak Sangh.

Through his service in this organization, he actually demonstrated that you can come from a humble background and rise to the top. You could make it to the top in Indian politics without coming from a dynasty, or without having a kind of deep family background to support you. And I think that resonates with a lot of people in Indian because it is quite different.

The third thing I'd just like to say—I don't want to go on for too long, but this is—is actually really important. Indian has—had a more statist-focused economy, as many know, a socialist republic. India's been in a gradual process of reforming, going more towards a—a liberal market economy. There's still reforms needed. But Mr. Modi was the first person that I can recollect who actually staked an entire campaign focusing on economic growth and good governance. Good governance, obviously, resonates with a lot of people, but the economic growth piece was clearly not going for a welfare-oriented message but rather saying this is what we need for our future in order to deliver jobs for our citizens, for our population, and that's what I'm going to deliver. And—and that's how people voted.

FULLILOVE: I'll come back to this question of how Mr. Modi's personal background is playing into his—into his time in office, but how would you give—what sort of—what grade would you give him so far in terms of that reform agenda? Because expectations are of course (ph) extremely high, precisely because he had so much popular support and he had so much support in the legislature. So how is he doing? Is he meeting those expectations or not?

AYRES: So I think it's become clear that—that he is not meeting all the expectations that people have had for him. This is not entirely his fault or his government's fault. It shows, I think, the complexity of India's democratic setup. He has a majority in the lower house of parliament but not in the upper house. And, to pass legislation, you need to have both houses.

He's faced a seat challenge in the upper house, a lot of parliamentary disruptions in the previous session, not so much now in the current session, which has just resumed. But I think that is showing how, even as a strong man and even with a kind of strong mandate in the lower house of parliament, it's not enough to kind of push your agenda through quickly. And that's where I think Modi and the BJP are now starting to—to recognize that they do have to do a lot of outreach to other state-level leaders.

It's the state that then elect the representatives to the upper house. Over time, to try to build that political support more broadly in areas where they and their party may have a clear view on what they'd like to achieve, but others may disagree. And India's got a very rambunctious democracy and so there's always a lot of disagreement built in.

FULLILOVE: Another country with a rambunctious democracy these days is Indonesia, and Aaron and I were in Jakarta a couple of months ago meeting with—with the people at the presidential palace and elsewhere.

Aaron, tell—tell the members a little bit about President Jokowi and his background and how he's doing.

CONNELLY: Well, there's a point of commonality between Prime Minister Modi and President Jokowi because Jokowi grew up on the banks of the river in Solo. He came from a very humble background. He's a bit of a self-made man. He went to college in forestry and then became a furniture exporter. And (inaudible) is primarily a small businessman.

And he's a very disruptive figure within Indonesian politics because he does not come from within the Jakarta elite. He didn't come up through the military, as his predecessor SBY did. He didn't come up through the political party structure; although he did—was sort of inserted at the top of that structure at the very end. And he didn't come up through the—the Jakarta business community. He was a small businessman in Solo.

And this is very threatening to many people in the Jakarta elite. There are a number of liberal reformers; I should set those aside. But a number of people see this as a threat because he wasn't the sort of the—the consensus choice of that elite. So he's a disruptive figure in that sense but he's also a very energetic economic reformer. He wants to see a lot done in terms of infrastructure development. There is now some question over whether or not he'll actually be able to push the anti-corruption drive that he promised during his campaign. But he is an energetic reformer also in—in the mode of—of Prime Minister Modi and Prime Minister Abe.

FULLILOVE: And what grade would you give him so far, Aaron, and what (inaudible) the big he—he's hit a few road blocks, hasn't he?

CONNELLY: And this is another point of difference, unlike Modi or Abe, President Jokowi has very weak support within the parliament, within the legislature in Indonesia. And he has very weak support within his own party and then again with—within that broader Jakarta elite. And so there's a lot of jockeying among different factions within his own coalition and, in fact, within his own party for influence and patronage. And he's not handled that particularly well. And he's in a very weak position; he doesn't have a very hand to play. But, given that he's in that weak position, he hasn't been able to do very much with it.

One sort of minor success that Jokowi has had is he was able to get through a revised state budget, having reduced fuel subsidies which were literally burning 13 percent of the Indonesian budget every year by subsiding petrol. He's reduced those almost to zero. And then he's put that money back into infrastructure spending. He's done this through spreading largesse to the legislature, and it's not clear that that can continue.

I grew up in Florida and we had a saying that, you know, if you fed the alligators because it was kind of a novelty when they came up behind your back yard, eventually the alligators would come back because they expected more food. And I think Jokowi has to deal with the same phenomena with the legislature.

(LAUGHTER)

FULLILOVE: We have crocodiles in Australia, not alligators, but...

(LAUGHTER)

FULLILOVE: ... the principle probably applies.

Sheila, the—Mr. Modi and—and Mr. Jokowi have sort of Obama-esque stories in a way, all rising from these humble roots, whereas Mr. Abe's roots are—are somewhat more dynastic like some other candidates for president next year.

(LAUGHTER)

FULLILOVE: How—tell—tell us a little bit about Mr. Abe's background and—and his time as prime minister.

SMITH: Thank you, Michael. He's—I feel a little awkward trying to explain Mr. Abe to this group because, of course, we are—our newspapers in the United States are full of stories about Mr. Abe.

But this is his second time as prime minister. He was prime minister for the first time in 2006, 2007. And he lasted about a year and then, for health reasons, had to abruptly resign. So this is his second time back as Japan's prime minister and he was reelected in December of 2012.

He comes from perhaps the most famous line of political leaders in the post-war period in Japan. His father—his maternal grandfather, Kishi Nobusuke, was the man who was prime minister at the end of the 1950s. He was the man who advocated and successfully renegotiated the U.S.-Japan Security Treaty, and created the document that we rely upon today as the bilateral security treaty.

He was a strong advocate of Japanese sovereignty and his ambition at that time was to remove the—what he saw as basically a basing (ph) agreement and to make the—the bilateral security treaty with the United States more reciprocal. He also wanted a stronger Japanese voice over the movements of U.S. forces in Japan. So Kishi Nobusuke has a very central role, not only at home in Japan but—and this was Mr. Abe's grandfather. Very important for Japanese foreign policy.

But Mr. Abe's father, too, was no small man in his politics. His—his father was foreign minister; he was secretary general of the liberal democratic party, the conservative party that ruled Japan. Mr. Abe may have spent a lot of time at the knee of his grandfather, which is the mythology, but he also was the political secretary of his father.

So he is a politician through and through, not only was blood—in terms of bloodlines but in terms of his conservative political experience.

FULLILOVE: And we've heard a lot about the three arrows of Mr. Abe. How—how are the arrows flying through the air at the moment?

SMITH: Many, many arrows. Every time I go to Tokyo and I—I—I go there, obviously, quite often, there's a speech about how many more arrows Mr. Abe needs in his quiver.

(LAUGHTER)

SMITH: He a man of many arrows. But I think he's challenged in some very fundamental ways. You know, the Japanese economy is challenged in—in some ways, the same way we're looking at our advanced industrial economies here and in Europe. This is not an economy that is going to change gear very quickly. There's a lot of structural changes that have to happen in Japan and, of course, the Japanese demographic picture in the future is not terribly bright.

I—I saw an opinion poll three weeks ago that began to indicate that the Japanese public now is beginning to think that immigration may be the answer. This very, very conservative Japanese public is beginning to seriously understand that the future of their economy is going to rest on some pretty significant changes.

His reform agenda has been moving forward. I think it's not as transparent on the outside but agricultural reform—he's taken on some of the older institutional basis of liberal democratic party politics, agricultural sector being one of them. He has embarked on this program of womenomics in an effort to bring more women into the Japanese economy. So he's trying to push up against some of the social barriers to change in Japanese. But there's a long way to go, frankly.

FULLILOVE: Just a quick one. How seriously do you take the idea that—that immigration may come into the mainstream of Japanese policy?

SMITH: I—I think it's going to have to happen, honestly. I—I think womenomics is one piece of the puzzle; 50 percent of the Japanese population is highly educated, highly dynamic and fully able to contribute to the workforce. And that you have to change the corporate mindset. You have to change the institutional culture in Japan.

Immigration will be a little harder. But already you can see the focal point is on healthcare worker, on very specific, task-oriented discussions about where to bring in talent from abroad. And the—the word is global talent. So you have a—a vigorous conversation emerging in Japan about how to educate Japanese to be more globally-oriented, but also to understand that there is talent outside of Japan that Japan can bring into their economy.

Again, don't—don't—don't wait for this to happen next week but it's going to have to happen given the demographics and given the—the scope of change that really needs to—to come if you're going to see a dynamic Japanese economy.

FULLILOVE: There's an interesting sort of bromance (ph) that's going on between Mr. Abe and Mr. Modi and, in fact, there's a—there's a third member of the bromance (ph) and that's Mr. Abbott. They're all conservative new leaders.

How—Alyssa, how's that playing out? That—that sort of personal relationship between the Indian and Japanese leaders, in particular?

AYRES: Well, Mr. Modi's first major foreign visit outside of South Asia was to Japan and the photographs of that visit are, you know, sort of—if you follow the Indian press, lots of bear hugs. I think he visited—was it Osaka first and then—it was Kyoto and then to Tokyo, and they went together, and Mr. Modi, I don't know, played drums at this temple. And, who knew that he all these musical talents.

FULLILOVE: And so much rhythm.

AYRES: Lots of rhythm. But it's true. I mean, they spent a lot of time together and it was clear from the way that visit unfolded that they enjoyed each other's company and sort of spent a lot of time developing that personal relationship.

But the relationship between Japan and India has been one of long standing. It was actually, I believe under Mr. Abe when he was in power, in the mid-2000s that India and Japan forged what was called a strategic and global partnership, as distinct from the strategic partnership that India has with the United States and a number of other countries. So this strategic and global partnership piece between India and Japan is two great, market democracies of Asia, something that they—they see as quite important to each other.

Japan also has a long history of investment in India. This particular visit, Mr. Modi walked away with I think $35 billion in promises of infrastructure aid and support over, I think, a five-year period. So it was a very substantially positive visit from the Indian perspective.

FULLILOVE: Aaron, can I ask you about the U.S.-Indonesia relationship? There was—I mean, it was quite a—it was quite an intriguing element of Mr. Obama when he emerged as a presidential candidate that he had—had spent a number of years growing up in Indonesia and still spoke Bahasa and had favorite Indonesian dishes and—and so on.

How—to what extent has—has that—the Indonesian antecedents of Mr. Obama made a difference? To what extent has it thickened the relationship between the United States and Indonesia? And how has Mr. Jokowi's election shifted the relationship, if at all?

CONNELLY: I think—and I think Ambassador Cameron Hume is still in the audience form—from earlier and it was a remarkable moment. The week after President Obama was elected, President SBY came to the United States and, based on the suggestion from some American officials and I believe Ambassador Hume was key in this, suggested that there should be a comprehensive partnership between the United States and Indonesia, and used this moment of having an American president who once spoke Bahasa Indonesia and who had lived in Jakarta, to try and build closer ties.

There had been a difficult period after the Iraq war where America was very unpopular in Indonesia, but then after the tsunami in 2005, when American military assistance was really key in helping—or I should say that the aid, rescue efforts in Aceh, there was a much better attitude towards America, a much friendlier attitude towards America. And the comprehensive partnership took advantage of that.

And, also, the opportunity to build that cooperation among a really wide range of issues. Indonesians felt that America was very focused on terrorism and global pandemics, and never really asked what Indonesia wanted. So they were very flattered that America was finally asking what does Indonesia want? How can we help you? How can we make this good for both of us?

That said, I think we have to say that the compressive partnership has underperformed. It's very good on a wide range of functional issues, but the political connection that we had hoped would exist between President Obama and Indonesian leaders doesn't exist. And there's a couple reasons for that. I think President Obama, he sees himself as coming from the Indonesia of 1966 to 1971. He doesn't necessarily see himself as coming—or having lived in the Indonesia of today, and I think has a limited understanding of it. So they were never really able to build upon that understanding.

SBY was also very formal. President Obama, of course, is not terribly formal. There was never really a very close interpersonal connection. I think there's a change to build that connection between President Jokowi and President Obama, and President Jokowi will, of course, come to Washington later this year, so there's an opportunity to begin to build that.

The challenge is SBY really saw himself as a global statesman, and wanted a relationship with the U.S. president, almost as a—a quiver in his cap. Jokowi really does not care about foreign policy. It's one of the last things on his agenda except insofar as it will help his domestic reform agenda, particularly investment in infrastructure. So it's not entirely clear that Jokowi wants this relationship in the same way that President SBY did.

FULLILOVE: I know that you wrote a paper for the institute before Jokowi's inauguration where you said that he was the least internationally-minded of any of Indonesia's presidents. To what extent has that—has that proved to be correct? Are you seeing, at all, the signs that, as with most heads of—heads of government, as they settle into the seat, they start to find that international affairs are more interesting and congenial than perhaps they thought? Are we seeing that at all with Jokowi or is he still focused exclusively on the domestic situation?

CONNELLY: I think one—of the most important things to understand about Jokowi's political views is he sees himself as a reaction to the SBY presidency. Indonesians felt that SBY spent far too much time on foreign affairs; that he was obsessed with summitry and he was always sort of flying around the world in the plane that he bought from Boeing to—to have a sort of Air Force One for Indonesia. And Jokowi said enough of that; this hasn't delivered for the Indonesian people and so I'm not going to focus on this except insofar as it meets the goals of the Indonesian people. So he's focused a lot on the conditions of Indonesian migrant workers overseas, particularly those who are on death row in Malaysian and the gulf states. And he said, "I'm going to reject the politics of image," which is what SBY's foreign policy became known as in the United States. And that we're still very much in that phase.

It's possible that Jokowi, especially as he runs into domestic difficulties, will turn to foreign policy and say what's this all about, is there something more meaningful here that I can be engaged in. But I haven't seen that begin to happen yet.

In that sense, I would just add, very different from Abe and Modi who, in addition to being energetic, domestic reformers, also have a view of their country's place in the world. Jokowi really does not have that view and it's the advisors around him who are competing for an influence and for the primacy of their views about Indonesia's place in the world. And because Jokowi has such a weak position, that court politics is very intense right now and it could change in a—in a few months, depending on domestic politics in Indonesia.

FULLILOVE: Let me ask you, Sheila, one more question and then I might open it up to members. So, please, have a think about some tough questions for the panel.

Sheila, this is—this year is the 70th anniversary of the end of the second World War. We know that there are two teachable moments, perhaps coming up for Mr. Abe, his speech to the Congress and then the—the Abe statement later in the year.

What should Prime Minister Abe say in those statements? What expressions of remorse should he make? What will he say? And, thirdly, is there anything that he could say to satisfy some of the critics of Japan in the region?

SMITH: So let's start with the 70th anniversary. When I—when I tell my American friends that this is a huge year in Asia, it's a huge year for Japan, in particular, they say what's so special about 70? Fiftieth-year anniversaries, 100 year anniversaries, they make more sense to us than 70,  but this is important for two reasons. One is in the region, there will be a lot of commemorations of the end of World War II. So, in May, Mr. Putin is going to host one in Moscow, which will talk about Europe as well as about the end of the war in Asia. Xi Jinping will be at that meeting. There's some speculation about whether the leader of North Korea's going, right?

June is the—not only the anniversary of the end of World War II but it is also the 50th anniversary of the peace treaty between Japan and South Korea whose diplomacy at the moment is struggling somewhat, to be frank.

Mr. Abe will make his Abe statement on August 15, which is the day the Japanese commemorate the end of the war and then Xi Jinping will host his own commemoration on September 2, accompanied by a military parade and there's lots of preparations here for that commemoration for the Chinese.

So it's not just in Japan, it's not just Mr. Abe's statement; it's across the region. But this will be the first time, next week, when he comes to the United States. It'll be the first time for a Japanese prime minister to speak to a joint session of the U.S. Congress. Mr. Ikeda in the early '60s spoke to one House, but no Japanese prime minister has ever been invited to speak to a joint session.

So in the U.S.-Japan relationship, this is a pretty important moment. And for the Japanese, it is an—a terribly important moment for the relationship. So there's a lot of anticipation about what should Mr. Abe say. The questions you posed to me, what should he say, how will he say it, and he will begin this regional tit-for-tat maybe—or regional—or iterate of conversation on—on the role of World War II.

I expect that he will start talking about the war in terms of U.S.-Japan experience. I expect that he will talk about the underpinnings of our relationship today is the reconciliation of two adversaries, intense adversaries, right? And that cross-generational accomplishment of the U.S.-Japan relationship.

But he will also acknowledge—he will be standing at the podium and for many Americans, this has symbolic significance. He's—he will be standing where President Roosevelt stood to talk about the Day of Infamy, right? And the beginning of the war against the Japanese in the Pacific.

So, like his speech in the Australian parliament, which I'd like to hear your thoughts on, I suspect he will go back there and say, "We are today different than we were then, and we have worked hard at building this new relationship and partnership." But everybody, as you know, will be listening. South Koreans will be listening, Chinese will be listening, I think across the globe, people will be listening to hear is Mr. Abe going to apologize? Is Mr.—how is Mr. Abe going to talk about Japan's own role in the 1930s and '40s.

So it's going to be some tricky territory for his speechwriters. I suspect he will tread gently. I suspect most of the speech will be about the contemporary agenda between the United States and Japan, our defense cooperation guidelines, TPP, but there will be an—at the—at the beginning, I think he will enter that conversation by noting the accomplishments of reconciliation between the United States and Japan.

FULLILOVE: And what about that final question I put to you? Is there anything he could say that would satisfy Japan's critics?

SMITH: Well, I think, you know, when people ask me and many people have been Washington, journalists and government officials, what should he say? My response is speak first and foremost to the American people. It is the United States Congress you're addressing; that is the United States public that will be listening.

But there will be global audience and so how you address your regional relationships will also be of great interest, and you saw in the Washington Post David Ignatius had an interview with Mr. Abe a couple weeks back. And for the first time, Mr. Abe used the term human trafficking to talk about the delicate issue between Japan and South Korea that is—is still being discussed between Seoul and Tokyo. I suspect he will continue to—the introduction of that language will probably carryover to the speech if he makes a comment about it. But I think he's already understanding that he's coming to an audience that wants to hear about the past in 21st century language and with the values of today's Japan.

FULLILOVE: All right. Let me open the—for up to members. Who would like to ask a question of one of these panelists?

QUESTION: This is a leftover question from the last panel, but I think it has high relevance for the Asia region as well.

Last night, Danny Russell talked about—he basically cautioned against the politics of talking about China for the upcoming presidential election. We are electing new leadership here, vis-a-vis, new leadership that you've been working with. How would you—how would you advise U.S. presidential candidates to talk about Asia? Should they talk about it?

Hank Paulson has also made a similar plea about limiting that discussion about China. Michael Folly (ph)(inaudible) seems to disagree yesterday and in highlighting that TPP should be talked about. What other issues should be—should be spotlighted?

FULLILOVE: Who would like to have a go at that? Actually, the presidential candidates spoke about Asia and maybe in China and, essentially, your countries as well?

Sheila?

SMITH: I—I can start quickly while there is a gathering (inaudible). I—I don't see how you talk about the future of Asia or our policy in Asia and not talk about China. It's kind of—it would be odd not to have a conversation about what we want from our relationship with China, and what we want for the Asia-Pacific and what that means in terms of how we work with others in the region to build the enormous (ph) institutions and practices that will make the Asia-Pacific secure and prosperous.

So I think you imbed it in a broader context of American strategy or thinking about our values and our priorities in the Asia-Pacific, but by no means do we ignore the topic, because we have a very complex task of navigating this geo-strategic moment. And China is in the middle of that conversation.

FULLILOVE: Anyone else? Yes, Alyssa.

AYRES: I agree with what Sheila just said, and I also think that talking about Asia is not narrowly just talking about China and I think sometimes, in broader conversations, those two tend to be conflated into one. But there's a lot to say about the United States and India or our interests throughout the broader Southeast Asia region.

We've got a—a momentarily stalled but a troop drawdown going on in Afghanistan of critical importance for what happens in South Asia more broadly. All the countries in the region close by—Central Asia, India, Pakistan, China—care about that a lot. So, of course, can (ph)—should be talking about South Asia and what will be happening there and what their policies would be. Absolutely.

I think—I am definitely on the side of thinking that U.S. long-term and medium-term and near-term interests are with stronger relationships across the board in Asia, and having a platform and an ability to talk about that with—with some very clear prescriptions, I think would be first and foremost in—in the presidential campaign.

CONNELLY: I would just say that I think it's all very well and good for think tanks and, you know, folks like us to—to have conversation about Asia but that conversation needs to be broader within the Washington policy community. I'm currently undertaking some research on how Congress views the Asia-Pacific and whether or not there is a strategic view of what America's goals should be in the region any more. And, as far as I can tell, there's—there's very little. It's very driven by adamous (ph) interest in, you know, for instance, having a lot of Korean and American constituents in your district causes you to push women (ph) issue in Congress.

So I think there needs to be a broader conversation within the Washington policy community. I'm not so sure it's helpful to have Republic primary candidates for president talking about Asia, and I'm concerned that there will be a competition, sort of a race to the bottom in terms of who can be toughest on China. And I would just caution as a Southeast Asia specialist, that will land with an enormous thud in all but two countries in Southeast Asia. And there is real concern that the American consensus on China is beginning to fracture and that America will have an explicit containment strategy toward China because there will be competition to be tougher on China in the next election. And that's a concern in Jakarta, Singapore, most Southeast Asian countries.

FULLILOVE: I might just take the presider's initiative and—and add one—one thought here, seeing as a question I mentioned my panel yesterday.

I totally take the point that—that Aaron made, that you don't want a competition about who can be tougher on China. You don't want an ill-informed debate, you know, highly partisan contest about Asia. But to go back to the discussion last night about the rebalance, I do think it's weird to be saying America is supposedly rebalancing it's policy towards Asia and one—one way we should do that it by not talking about Asia.

(LAUGHTER)

FULLILOVE: I—I just don't think that's viable. If—if the United States is really rebalancing towards Asia, then, of course, the country has to talk about it. The Congress has to talk about it, the media has to talk about it, the President needs to talk about it. The President needs to—to take the lead and he needs to bring the country with him (ph) and—and other elements of the country need to talk about it.

So we need to be careful, of course, that we don't kick—that—that you don't have a destructive conversation but you can't be scared of it because if you—if you, as a country, really believe that many of your challenges and opportunities lie in Asia, then you need to address that and you need to talk about it amongst yourselves, is my own humble contribution.

QUESTION: My question for each of you, to localize the discussion, each of you is concentrating on a country. What do the leaders who you're talking about—what—how do they see China and what relation are—what relationship is each of them trying to develop with Xi Jinping with what goal in mind? I mean, it's a narrow—I'm not talking about the whole universe just sort of when they talk about China, Xi Jinping, what do I need to—what's my relation with him? What do I need to get from him? What does each of them think about that?

FULLILOVE: Great question. What—what does the China relation with each of your three countries and are there any bromances (ph) happening with—with Xi Jinping?

(LAUGHTER)

SMITH: Do you want to go first, Alyssa? There is definitely not a bromance (ph) between Mr. Abe and Xi Jinping, so I can very quickly get rid of that idea. There is a bromance (ph) with Mr. Abe and Mr. Modi, potentially. (inaudible)  

Here's the challenge. Mr. Abe doesn't get to meet Mr. Xi very often. In fact, the first time the two leaders met was last November at APEC. That doesn't mean Mr. Abe doesn't think about him a lot. I suspect Mr. Abe thinks about him every day. Or at least how to manage this very challenging relationship with China.

I just finished writing a book, in fact. It's really about—not just Mr. Abe but about Japan's adjustment to this very complex phenomenon we're calling a rising China. So, no, there are very few Japanese politicians and leaders who don't think about their—their country's relationship.

I suspect that you could see the photo. Many of you probably saw the photo of the Abe-Xi meeting where Mr. Xi was going like this.

(LAUGHER)

SMITH: And he almost held his nose. It was that conspicuously uncomfortable for him. Mr. Abe was smiling and leaning forward. So Mr. Abe wants a different relationship with China. How he will get there from here is not very clear to me. I—I think the two countries now are very cautious and skeptical about each other. I think from the extent I understand some of the Chinese thinking about the Japan piece of their foreign policy; I think they understand they may have allowed it to go too far, that there may be some need to understand what one Chinese scholar called the Japan factor. Also, in our—their relationship with us.

So they're—I think they're understanding that some adjustment is needed. But I suspect we have a structural competition between these two powers that will not just affect their bilateral relationship and our relationship with both of them, but will also affect the broader Asia-Pacific.

FULLILOVE: Aaron?

CONNELLY: I would just say, you know, from the Indonesian perspective, Indonesia's the largest country within Azian and Azian runs a lot of diplomacy—the regional diplomacy; it's the center of—of a lot of that diplomacy. And so I think the Chinese view a new Indonesian president as an opportunity to sort of get in on the ground floor, and President Xi and President Jokowi had a very good meeting in Beijing on the sidelines of APEC. And it—probably one of the best meetings that Jokowi had at APEC was said to be with President Xi. They got along very warmly; they're both sort of very disciplined economic reformers. And so you can see where they might have—have gotten off on—on the right track.

But there's a lot of concern about Chinese power in Indonesia, and this goes back to 1965 when China was sponsoring uprisings in—communist uprising in Indonesia or trying to. And that suspicion was very slow to dissipate to the point that Indonesia and China did not have diplomatic relations until 1991, and there's still a lot of concern.

So President Jokowi, because he has this domestic reform mission that requires so much infrastructure investment, wants a lot of that to come from China but there's a lot of suspicion within Indonesia with regards to how good Chinese investment is and—and Chinese expertise when Chinese companies are involved in that investment. And then, also, whether or not they could take in too much Chinese investment and that that would lead to disproportionate political influence.

So Indonesian officials have said we want a bebas (ph) active. We want a free and active attitude toward foreign policy—this has always been the—the doctrine, you know, the paradigm of foreign Indonesian policy who are now saying we also want a bebas (ph) active—a free and active—attitude toward foreign investment. We don't want too much from any one source.

So you've also seen President Jokowi go to Japan and he'll be in the United States later this year to make the same—the same pitch.

FULLILOVE: Alyssa?

AYRES: So India has a really complicated relationship with China. They fought a border war in 1962. That border has still not been fully demarcated and resolved. There continue to be problems with troop incursions across that border in—in two different segments of it.

Let me fast forward to Mr. Modi's election. Shortly after his election, it was on speculation that he would concentrate on developing a strong relationship with China. He made several visits to China during his time as chief minister of India's state of (ph) Gujarat. And was well known for having admired the type of economic growth and infrastructure development that China has done and which, you know, frankly, India could benefit from, sort of getting on track.

When Xi visited India, there were a lot of expectations that this would be a visit that would rival the Modi visit to Japan where Modi had come back with this pledge of $35 billion in investment over a five-year period. In fact, the Chinese counsel general based in Mumbai spoke to the press in advance of the Xi visit to India and said, you know, we're going to outdo that. There will be a pledge of $100 billion of assistance.

This visit took place. Xi Jinping came to India; Mr. Modi welcomed him in his state of Gujarat, there was a lot of fanfare, you know, having a—a—a picnic, taking a—a stroll along the river, talking about infrastructure development. As this day was unfolding, then there were reports of PLA incursions across one of these undemarcated borders between India and China. This is an...

FULLILOVE: That's awkward.

AYRES: ... astonishing thing to have happen, right?

FULLILOVE: Awkward, yes.

AYRES: Absolutely.

(LAUGHTER)

AYRES: So kind of summed up right there the—this situation of wanting to have a really strong relationship with an economic power that can be beneficial to India's own economic development while facing this, again, still decades-long, unresolved security challenge.

Mr. Modi is a very frank politician and didn't simply keep this problem behind the scenes during that visit. He actually spoke publicly about the troop incursion and—and needing to resolve this problem. They have a—a joint border consultation of—the national security advisor is in charge of that in India.

But, again, that's going to take a long time to resolve. The—the joint border consultations have been going on for decades. It doesn't appear to be that much closer to resolution and—and continues, then, to be a real challenge. But, you know, India needs to have a strong relationship with China.

I think in 2006 or 2007, China overtook the United States as India's largest trading partner in goods. We are still the largest partner for India in both goods and services combined, but China's the kind of an economic power that India can't afford to focus on solely through the prism of security challenges and enmity, so I think they see the positive economic relationship as a way to try to offset some of these security problems which, indeed, are—are still very difficult to resolve.

FULLILOVE: Thank you.

QUESTION: I want to ask you a particular—you said that changes are coming to Japan. One of the great issues, of course, is the use of their security forces and whether they can be used abroad. I was much involved a decade or more ago in changing of the constitution to allow them to have peacekeeping operations strictly for humanitarian purposes and, over the decade, it's been very modest. I mean, at best, they give a lot of money but not a lot of men and not a lot of support. Abe hints broadly that he would like to amend the constitution all together and allow them to have a normal military.

When do you see it happening, and, two, what would be the reaction throughout Asia?

SMITH: Thank you. That's a great question, and it—it—there's two pieces of the—of the puzzle here, and you talked about the PKO (ph) in 1990, '91, hat debate in the midst of—of the first Gulf War. So Japan has passed laws that allows itself what they call the self-defense forces; they don't call them the national military, to participate in U.N.-sanctioned PKO activities. Japan has been on almost—Japan's military has been on almost 30 PKO missions. They have a lot of experience now in the—Haiti and across the world, right?

So the Japanese military today is much more cosmopolitan than it was in the 1990s, right? They now have a maritime mission in the Gulf of Aden, the anti-piracy mission, they contribute—they work alongside the Chinese, right? They work with the Indians, right? They've got maritime dialogue in strategic conversations across the region, from India to Indonesia to Thailand, et cetera.

So this is a military—it's very different now in terms of the way they think about their role in the globe and the way they think about their role regionally. The Japanese constitution—Article 9 of the Japanese constitution very literally says that Japan will not use military force to settle international disputes. So there's a paragraph, however, after that that says—they interpret to allow for the self defense—so for Japan's own defenses, right? Own interest.

Mr. Abe wants to move that conversation forward a little bit. He already has. His cabinet last summer reinterpreted Article 9 to allow for what the Japanese call the right of collective self defense. In other words, to allow their military to fight alongside other national militaries, first and foremost ours, right, their allied partner—to defend Japan on issues or missions necessary for the defense of Japan.

What those missions will end up being is now the subject of the—the (inaudible) discussion. But your bigger picture about constitutional revision itself is the political challenge for us outside Japan to try to wrap our minds around. It's not just about the Japanese military. It's really, I think, a larger debate about a Japanese origin document—Japanese written document about what they think is the appropriate relationship between their state and their society.

So I suspect within the next several years—next year there's an election that we should pay attention to in the upper house—that could bring it a little bit—quite—more quickly to the forefront. But I suspect you'll have a debate over amending the constitution. The revision word has been dropped of late. So now there's an amendment to the constitution.

I suspect you'll see environmental issues, private—personal privacy issues come to the fore (ph) first, not—not—not Article 9. Not the military. But you'll—you'll break the taboo on changing the post-war constitution. And Mr. Abe, in parliament, about a month-and-a-half or so ago, said, and I quote, something paraphrasing along these lines, "Our constitution was written in a week by amateurs."

(LAUGHTER)

SMITH: And he's right, right? Those amateurs worked for General Douglas MacArthur in 1947 and they were new dealers for the most part, fascinating story. There's lot of interesting stories about that period in time. But the larger point is it was not written by us.

And there's a fairly strong current coming up in the next generation of Japanese politicians, particularly on the conservative side of the political spectrum, that they want their own constitution. They want a Japanese say in the way their government, society relationship works. But I don't think it'll be about Article 9 soon, frankly. I think a lot of the accommodations of Japan's security concerns can be met under the relaxation of the reinterpretation of collective self defense.

FULLILOVE: Sheila, let me ask you a quick follow up on the question of military exports and there's an Australian angle here because not all of you may know that—that Australia is looking to purchase a new fleet of submarines, and one of the strong possibilities—in fact, Mr. Abbott's preferred possibility, I think, are the Japanese boats. And that has enormous strategic implications for Australia, but it also is a—I—I understand would be a huge deal for Japan.

So how enthusiastic are the different elements of the Japanese military establishment about—about doing that deal if—if Australia decides to purchase those subs from Japan. What—what would be—what are the broader implications for Japan's role in the world when it's start—when it's starting to take on contract of that size?

SMITH: So I think more than the constitutional debate, this is the big (ph) piece of the puzzle to watch in terms of Japan's strategic shift. So there's two ambitions here. One is to move away from what use to be the policy which was the three principles of non-export of defense-related goods and that often meant civilian technologies as—that had defense applications, right?

So they've moved away from that three-no's policy into this new defense technology transfer policy. They don't yet have the regulatory framework of how they're going to work through all of the complexities of exporting defense technologies that Australia knows about, we know about. So there's work to be done yet.

But the fact that they're having one of their very first conversations about submarines to Australia, I think is a pretty strong indication that Japan is moving in a very different direction with partners that it wants to move forward with in terms of developing economies of scale, in terms of reassuring domestic industry that there is a reason to continue to invest in defense technology industry in Japan, right?

So this is also a hedge for Japan's own industrial capacity, and we see these hedges being made across the region. We could ask Scott (ph) later on about the Korean discussion about air defense systems, for example. But I think this is a fairly significant shift for the Japanese.

How quickly we'll get to implementation, I don't know. But the conversation with Australia and the conversation with India about seaplanes and coastal planes and some ships, I think, those—those are the conversations I expect to go forward first.

FULLILOVE: Thank you.

QUESTION: There's a 250-pound gorilla in the room that hasn't been mentioned and that's Korea, which has new leadership, which needs to be graded, and may have new leadership, again, very soon. Has anyone been following this?

SMITH: The (inaudible) following it is...

(CROSSTALK)

(LAUGHTER)

SMITH: Yes, come on, Scott (ph).

CONNELLY: OK. Well, just very briefly. Yes, Park Geun-hye is the president of South Korea and she has been dogged by various scandals related to political corruption. The scandal that Michael referred to is really related to a specific corruption challenge that has—appears to have reached its way into the prime minister's office. But it does raise questions about whether this administration, now in its third year, is going to be able to sustain and make any sort of impact in this very complicated regional context. And, of course, one of the key elements of that is the Korea-Japan relationship. I think we'll probably be talking about that a little bit more in the next panel.

FULLILOVE: That's just a little taster of Scott's (inaudible).

(LAUGHTER)

FULLILOVE: And you can come back in Session 3 and you'll hear from him. I'm going to take these two questions; they may well be our last two questions. I'm going to take them together and see if we can meld them together into an amalgam. 

QUESTION: Assuming that Congress gives the administration negotiating authority, and I realize that's a big assumption, how close are the negotiators to reaching a deal on TPP?

FULLILOVE: Thank you.

QUESTION: My question is related to China, India and Pakistan. China is ostensibly forming a—a string of pearls around India. How—how would you assess that?

FULLILOVE: OK. Well, we probably can't combine them; we'll take the—we'll take them...

(LAUGHTER)

FULLILOVE: We'll take them in order.

SMITH: GO ahead, Michael. Meld those together for me.

(LAUGHTER)

FULLILOVE: I'm trying to wrap the string of pearls around...

(CROSSTALK)

FULLILOVE: I don't think I will.

SMITH: A quick TPP?

FULLILOVE: I don't think I will. Sheila, on TPP, Alyssa on...

SMITH: Since you were looking at me on TPP.

FULLILOVE: Yes.

SMITH: Thank you, Michael. I—I, you know, Ambassador Froman is in Tokyo as we speak. The Japanese—there's a lot of hype about the distance between Japan and the United States on—on TPP itself, market access, in particular. There's no difference between Japanese and American positions on norms or standards of the broader framework for the 12-member TPP initiative, market access.

It comes down to ag and it comes down to auto and auto parts, and the tariffs on trucks, in particular for the Japanese. I suspect—I may be speaking slightly out of turn and they'll be people turning over in their graves in Tokyo, but I suspect there's a certain amount of wanting to make sure that Japan gets treated as equitably in this conversation on autos that the Koreans did in (inaudible). So there's a little of looking to the side.

But at the end of the day, I'm not worried about the United States and Japan on market access.

Already on the agricultural side of things, despite our domestic politics here, the Japanese have moved the goalposts on ag reform so fundamentally forward on, you know, removing price subsidies of rice, of doing all kinds of things that will shift their own domestic interest groups that they're really quite ready. The question is timing and sequencing, how fast to zero, how fully to zero.

So I'm not worried, actually, on the United States and Japan piece of the puzzle. I'm more worried on our congressional conversation and the instrumentalities that we need to be effective, not just in partnering with Japan, but in leading the larger conversation which in every—I'm sure Michael can tell us more about this, but in every capitol we'll have the same kinds of politics. I'm not worried so much about Tokyo's domestic politics on this. They are committed, if we can see it through.

FULLILOVE: Alyssa?

AYRES: China, India and Pakistan. So this is a very difficult triangle, obviously. Xi Jinping's visit to Pakistan underway, being heralded as a visit that will bring pledges of $46 billion in infrastructure development and the turnover of the Gwadar Port to Chinese control. This is a big visit.

It's also the case that India has watched China's relationships with the South Asian countries grow and develop over the course of the last decade and India now is stepping up its engagement throughout the South Asia region. You saw this happening under the previous Indian government, but I would argue that Mr. Modi has sort of doubled down on that. He's made outreach to the South Asian countries among the top of his foreign policy priorities, both symbolically as well as in the nitty gritty of diplomatic relations.

So for his inauguration, he invited all the heads of government from the SAARC countries to attend; this had never been done before. He had looked to—to—to reach out very substantially. His first visit abroad was to Bhutan. He visited Nepal twice in his first year in office, once, of course, on a bilateral visit but once because that's where the—the South Asian Area of Regional Cooperation—the SAARC summit—was being held last year.

He has focused on reestablishing ties with Sri Lanka. That process has been helped in great part because of the election of a new leader in Sri Lanka. The previous Sri Lankan president, Mr. Rajapaksa had very, very strong links with China. Mr. Rajapaksa is now being investigated. A new probe has opened up in Sri Lanka on a graft case for what actually happened during some of these big infrastructure projects. So we'll probably be hearing more about that from Colombo.

So this very, very challenging triangle, you do see China establishing strong ties in the region. Their relationship with Pakistan is special and unique and is of long standing. So I would say that the $46 billion visit is not new but sort of an intensification of a relationship that is important to both China and to Pakistan.

But India is definitely stepping up and does not want to be left out in the cold or does not want to be overshadowed in terms of influence in its own region.

FULLILOVE: I'm going to ask the last question of each of the panelists.

When in—when in five years' time, reder and gaspar (ph) bring the Lowy Institute back to New York to—to think again about the U.S. and Asia, do—do each of you—can you each comment, just in a sentence or two, make a prediction on where the—we're going to conclude that the leader you've been speaking about today was a success or not.

Do you think in five years' time, will we look back on Modi as a success, do you think, Alyssa?

AYRES: I think that's going to depend on whether he can get—whether his country's economic growth rates continues to rebound and—and grow. He has staked his government on that. The growth rates are ticking back up. They've also revised the way they count how the economy is growing which makes it a little bit complicated. But if he can deliver 8 percent, 9 percent growth, I think he stands a good chance of being reelected because that's what the citizens of India seem to want.

If he cannot do that, and that will become clearer, it's not quite a full year yet on a five year cycle—if he cannot do that, I think that the reelection process becomes much more challenging for him.

FULLILOVE: Aaron, what about Jokowi?

CONNELLY: I think it fundamentally depends upon whether or not Jokowi from his very weak position within Indonesian politics can manage to continue to sort of play one faction off from the other and get things like a revised state budget that he got done in February through the legislature. That's going to be a very tall order, but if Jokowi can get that done, then he would have to be considered one of the most successful Indonesian leaders since independence.

FULLILOVE: Sheila?

SMITH: Hard to—it's hard to tell. Let me—my thought processes are this. Mr. Abe just had a snap (ph) election last December. He now has more time. He could potentially be Japan's prime minister until 2018. It is, like Australia, a parliamentary system, though. We don't know the crystal ball can always get a little blurry in parliamentary systems if something happens. But he has also situated himself quite nicely in the LDP. He has no opposition. In fact, I would suggest in September there is no competition for the head of the LDP; he will be resoundingly reelected as the head of his party.

So, politically, I don't see trouble ahead for Mr. Abe, but I think it comes like India, perhaps, perhaps like Indonesia, comes down to the economic performance of the Japanese economy. And, there, to be honest, the Japanese are scratching their heads and they're worried because there isn't—especially in this first quarter of 2015—there isn't the kind of consumption that you'd want to see. There isn't the economic engine, even a little tiny engine that the—the people were looking for.

So consumption has been very, very, very weak, both on the corporate side and the household side. So there is a challenge here for Mr. Abe because it really does come to the economy for most Japanese. If they're going to be confident about their country's future, it's not about the FDF (ph) or the constitution; it's really about their ability to compete economically.

FULLILOVE: Ladies and gentlemen, I think you'll agree it's been an entertaining and informative panel. So please join me in thanking...

(APPLAUSE)

FULLILOVE: ... everybody. You've got 15 minutes as a break, and please come back for the next discussion which is on the alliance system in Asia. Thank you. Great.