Hagel Set for Vietnam Embrace as Wary Asia Eyes Rising China

Photographer: Andrew Harrer/Bloomberg

Chuck Hagel, nominee for U.S. secretary of defense, said he would discuss in Singapore the need for better cyber-security measures, and plans to meet informally with lower-level Chinese officials. Close

Chuck Hagel, nominee for U.S. secretary of defense, said he would discuss in Singapore... Read More

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Photographer: Andrew Harrer/Bloomberg

Chuck Hagel, nominee for U.S. secretary of defense, said he would discuss in Singapore the need for better cyber-security measures, and plans to meet informally with lower-level Chinese officials.

When Defense Secretary Chuck Hagel served in Southeast Asia as a U.S. Army sergeant, Nguyen Tan Dung fought to expel him and other American troops from Vietnam.

More than four decades later, Dung, 63, is Vietnam’s prime minister. He will be among the Asian leaders seeking Hagel’s reassurance that the U.S. will maintain a strong regional presence to counter a more assertive China.

As top defense officials gather in Singapore, Hagel must balance concerns among U.S. allies about China’s territorial ambitions against a need to cooperate with President Xi Jinping’s government in halting North Korea’s nuclear weapons program. Disputes over fish, oil and gas in waters off China’s coasts risk disrupting trade among emerging Asian powers that are driving global economic growth.

China and the U.S. have the “biggest responsibilities” to take practical steps for regional peace, Dung said in a speech tonight in Singapore. “We attach special importance to the roles played by a vigorously rising China and by the United States, a Pacific power.”

The U.S. is “on track” with its plans to boost security ties with Asia, Hagel, 66, told reporters en route to Singapore. “We have been undertaking more new bilateral initiatives with partners than we ever have.”

President Barack Obama, who will meet Xi in California on June 7, last month said U.S. budget cuts wouldn’t affect the administration’s bid to focus on Asia while winding down its presence in Iraq and Afghanistan. That includes money for weapons systems in Japan and South Korea, a rotational deployment of marines in Australia and enhancing Philippine maritime capabilities.

‘Main Doubt’

“The main doubt among countries in this region is whether the U.S. can sustain its rebalancing” to Asia, said Termsak Chalermpalanupap, a visiting research fellow at the Institute of Southeast Asian Studies in Singapore. “As long as the U.S. helps maintain the rule of law” its greater focus will be welcome, he said.

The White House has also underscored moves to cooperate with China despite disagreements over how strongly to respond to North Korea’s nuclear and missile tests, Iran’s weapons program and Syria’s civil war. The administration has repeatedly accused China of a massive cyber-espionage campaign aimed at stealing U.S. military and commercial technology.

Obama “is firmly committed to building a relationship defined by higher levels of practical cooperation and greater levels of trust, while managing whatever differences and disagreements that may arise between us,” U.S. National Security Adviser Tom Donilon told Xi in Beijing on May 27.

‘Pretty Hard’

Hagel said he would discuss in Singapore the need for better cyber-security measures, and plans to meet informally with lower-level Chinese officials. He didn’t directly address allegation of China’s involvement in cyber attacks, saying “it’s pretty hard to prove that they are directed by any specific entity, but we can tell where they come from.”

Chinese Foreign Ministry spokesman Hong Lei said today his country wants to exchange views with the U.S. on the sidelines of the meeting.

“We believe that both sides should sit down and carry out an even-tempered discussion on cybersecurity,” Hong said at a daily briefing in Beijing. The U.S. and China should “make joint efforts to maintain a secure, open, transparent cyberspace.”

Hagel said he has invited his Chinese counterpart to come to Washington for a visit in August.

Qi Jianguo, deputy chief of General Staff of the People’s Liberation Army, will lead China’s delegation to the Shangri-La Dialogue, hosted by the International Institute for Strategic Studies.

‘Not Reasonable’

China’s neighbors are making claims in the South China Sea that are “not reasonable” because they want access to oil resources, according to Ni Lexiong, professor of international military affairs and diplomacy at the Shanghai University of Political Science and Law.

“If China doesn’t take back its territory, domestic public pressure will be very strong,” Ni said by phone.

Miscalculations over territorial disputes may disrupt trade flows in the waters, Dung said in his speech. He cited projections that two thirds of global trade will move across the South China Sea, which Vietnam refers to as the East Sea.

“A single irresponsible action or instigation of conflict could well lead to the interruption of such huge trade flow, thus causing unforeseeable consequences not only to regional economies, but also to the entire world,” he said.

Pentagon Cuts

At the conference, Hagel wants to show the Pentagon’s pivot toward Asia -- announced in October 2011 by then-Secretary of State Hillary Clinton -- will be maintained, said a defense official who briefed reporters this week on condition of anonymity. The rebalancing will mean that 60 percent of the Navy’s fleet will be based in the Pacific by 2020, from about 50 percent today.

The Pentagon is slicing about $37 billion off its budget this year and bracing for as much as $500 billion in cuts over the next nine years -- the result of a deficit-reduction deal requiring automatic, across-the-board spending cuts.

Next month the U.S. Pacific Command will hold a joint exercise with Indonesia for the first time, Army Colonel James Barker, the command’s director of training and exercises, said in an interview. The U.S. will also grant permanent funding for exercises with Malaysia.

While military exercises with allies are expanding they “may just not be as robust,” Barker said. “In some cases we’ve had to scale back the number of troops participating in exercises.”

Hagel’s ties to Asia run deep. His father served in the Pacific in World War II. The first former enlisted man to head the Pentagon, Hagel won two Purple Hearts during his time serving with the infantry in Vietnam in the late 1960s and came back a skeptic of military power.

“The only thing we can predict is that wars are unpredictable, and they remain a fundamentally human endeavor,” he said in a May 25 commencement address at the U.S. Military Academy at West Point, New York.

Resource Conflicts

Hagel’s three years of experience on Chevron Corp. (CVX)’s board prior to joining the Pentagon may prove useful in managing disputes in the South China Sea. Besides fishermen, oil and gas companies have been at the forefront of conflicts in the waters.

Since 2010, when then-Defense Secretary Robert Gates warned against intimidating companies in the waters, China has cut the cables of survey ships working for Vietnam, chased away an exploration vessel near the Philippines and sent its first deep-water drilling rig to the region. Last year, China National Offshore Oil Corp. invited bids for exploration blocks Vietnam had awarded to companies including Exxon Mobil Corp. (XOM) and OAO Gazprom.

Chinese Navy ships in March visited James Shoal off Malaysia, an area near where Royal Dutch Shell Plc (RDSA) and Petroliam Nasional Bhd. have oil and gas operations. Last month, China moved to allow tourists to visit the Paracel Islands, which it took by force from Vietnam in 1974.

‘Clear Message’

The Philippines last week protested after a Chinese naval ship escorted a fishing vessel at a shoal it occupies, after losing effective control of the Scarborough Shoal to China a year ago. President Benigno Aquino last week pledged more funds to modernize the military and said a second refurbished U.S. Coast Guard ship would arrive in August.

“Our message to the world is clear: What is ours is ours and we can fight back and defend ourselves from threats,” Aquino said in a speech to the Philippine Navy in Cavite City.

Vietnam’s Dung has also sought to strengthen his country’s defenses. On a visit to Russia this month he met with crew members training to operate a Kilo-class submarine, one of six Vietnam plans to buy.

Hagel’s planned meeting with Dung in Singapore could send a positive message to the region, said Richard Bush, director of the Center for Northeast Asian Policy Studies at the Brookings Institution in Washington.

“He can’t go wrong by playing up the ability and willingness of former enemies finding a path to reconciliation,” Bush said, referring to Hagel. “There are other former adversaries in Asia that could learn from that.”

To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; David Lerman in Washington at dlerman1@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net; John Walcott at jwalcott9@bloomberg.net

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