The Razor’s Edge: Managing Geopolitics and Sustainable Development in Asia

Sustainability as an umbrella term has become an essential pillar of policymaking in most governments. Yet it does not exist in a vacuum, divorced from financing or politics. In its outlook on sustainability for 2023, the asset management company Schroders lists five trends for investors as the world attempts to move past Covid-19: climate change and political will, natural capital, cost of living and other social stresses, active ownership and impact, and regulation. There is a growing appreciation for the holistic approach, which has become more urgent in the face of lack of progress on climate change. The Schroders report accurately notes that “structural and growing tensions between escalating demand from a larger, wealthier and hungrier global population and the world’s finite resources to support that population” mean not only that climate threats are growing more serious, but that national governments will feel even more tempted to adopt a figurative “every-person-for-themselves” route, which has always stymied global cooperation on climate crisis mitigation.  

Furthermore, sustainability goals must also take into account the prioritization of post-Covid economic recovery and geopolitical tensions between the United States and China, especially the US’s attempts to decouple from and economically isolate the Chinese. Asia has never encountered this historical context before – that is, one in which the US and China are locked in an open and fierce contest for dominance, short of a war, across a wide swathe of fields. 

This does not bode well for the interconnected way Asian countries have traditionally approached diplomacy and development. For example, the Asia-Pacific Economic Cooperation (APEC) forum leaders at their summit in Bangkok from November 18-19, 2022, envisioned sustainability not as a “separate” goal but one that would be integrated with a network of objectives including what strategist Andrew Hammond, a former UK government adviser and now an associate at LSE IDEAS (the Centre for International Affairs, Policy and Strategy at the London School of Economics and Political Science), called “deeper economic cooperation, an improved environment for trade and investment, and the adoption and sharing of innovation.” 

In 2023, Schroders foresees a stronger focus on human capital management, human rights, and diversity and inclusion. Shoring up these aspects of development could be a unique opportunity for the sustainability industry, but it could also be exploited as a geopolitical wedge, as has been a common theme in the past few years.

Summits and meetings as barometers of problems and progress

Two events at the end of 2022 gave us a taste of the trajectory on which we are heading: the United Nations Climate Change Conference, known as COP27, from 6 November to 20 November in Sharm El Sheikh, Egypt, and the meeting between Saudi Arabian Crown Prince Mohammed bin Salman (MBS) and Chinese leader Xi Jinping in Riyadh on December 8. The former has traditionally aimed to unite the world in the common goal of mitigating humanity’s greatest threat. By contrast, the latter could not have been clearer in its geopolitical priorities, with the world’s second-biggest oil producer (after the US) trumpeting its upgraded ties with its largest market, the world’s second-biggest economy. 

Geopolitical tensions and maneuvering – countries and blocs locked in fierce competition for influence and power – essentially render the idea of a “global community” as promoted by the UN somewhat quaint and outdated, even as it is widely accepted that the world can only solve its long-term sustainability crises by banding together. As the tools and mechanisms of globalization continue to lose favor in the corridors of power in Beijing and Washington, “geopolitical angst” will define conferences and summits across Asia, with less and less space for the consensus-driven approaches valued by countries in the region.

But the creation of a loss and damage fund at COP27 was an acknowledgement that there needs to be a “stop gap” or bridge between the move away from fossil fuels (which is not happening anytime soon in either the Global South or the Global North) and the long-awaited transition to green energy, as well as the necessity for financing to cover the damage that developing nations inevitably incur to fulfill their net-zero commitments, especially now that they are burdened by the challenge of post-Covid recovery. Funding eases the hardship of trying to meet the goals set out in the 2015 Paris Agreement. More important, it will generate goodwill in the Global South, presenting the Global North as an active partner rather than as a group of enriched privileged nations haranguing developing counterparts (many of them former colonies) to get off the sustainability sidelines. The restoration of some hope in a “global community” to combat the climate crisis and the putting aside differences for the “global good” are absolutely critical for the future. 

Sadly, the global community does not really exist as it once did even just a decade ago. This is largely due to how the democratic world (especially the US) perceives China’s rise in recent years and the bifurcation, spurred on by both American and Chinese actions, of the world into “China-friendly” and “American-led” blocs. While trends can always be overstated, the growing Sino-Saudi friendship highlights the difficulty of uniting a world to face existential challenges of sustainability and climate when ideology and perceived national interests, which themselves are divisive, are pursued as action (US decoupling) and reaction (closer Saudi-China relations). 

It was perhaps inevitable that the China-US-Saudi triangle would become part of a “great game”. Whether the current situation was a self-fulfilling prophecy is a question for historians. What is certain is that the new Great Game has been fueled by sharpening ideologies and nationalism in Washington and Beijing. The Biden administration has characterized the world as a Manichean divide between democracies and autocracies, notably led by China, which the US fundamentally sees as an enemy to manage and “keep down” – even possibly engage with in a war. 

The relatively muted reaction of the administration of US President Joe Biden to MBS’s meeting with Xi, however, suggests that the US cannot count on persuading or even castigating resource-rich middle powers into containing, or even abandoning, China. There may be a dawning realization in Washington that countries in the Middle East or “West Asia” and the Asia-Pacific do not have much patience for what leaders such as MBS perceive as the West’s self-righteousness and presumptive demands for loyalty. Pressuring even partners of longstanding to remain in your camp regardless of what is in their best interests will not generate global camaraderie even in the pursuit of a noble goal such as taming climate change. 

For its part, Saudi Arabia dealt the US two major blows – first, by refusing to help lower oil prices, the rise of which had been fueling inflation around the world, and second, by remaining neutral in the Ukraine war, effectively giving support to what the West sees as Russia’s illegitimate invasion. The Biden administration did not wish to pick another fight with MBS especially given the US president’s backtracking on his election campaign promise to treat Saudi Arabia as a pariah because of the murder of Saudi journalist Jamal Khashoggi. The crown prince was resolutely dismissive.   

The fact that COP23 will be held in the United Arab Emirates (UAE) in 2023 hints at not just the growing importance of the Middle East or “West Asia” in the growing ambitions to decarbonize but also the fact that the West can neither ignore nor bypass the collection of oil-producing, non-democratic countries that are increasingly cast by the US as in the camp of autocracies, which the Biden administration reflexively views with suspicion due to their closer ideological alignment with China. 

World leaders negotiating a climate deal in Copenhagen, December 18, 2009: Restoring some hope in a “global community” to combat the climate crisis and putting aside differences for the “global good” are critical (Credit: Pete Souza/The White House)

As demonstrated by the US’s reaction to the ruling by World Trade Organization (WTO) dispute-settlement arbitrators that the US was “out of line” in requiring that products from Hong Kong be labelled as “Made in China”, the world’s lone superpower struggles to square a circle: It claims to protect a global order based on free trade and liberalism while simultaneously imposing unilateral actions that advance its “national security” and ignoring global bodies that rebuke it for doing so. American leaders might argue that this has been China’s way for decades, and that the US has failed to coax China to become a “responsible stakeholder” in the international system or “to become more like us” (the liberal like-minded West). Therefore, Washington argues, it must respond accordingly.

China, for its part, has not staked a claim to global leadership. This is the traditional preserve of the US, which chooses to preside over entire blocs and regions that are not always so cohesive due to the inevitable strains of conflicting or competing geopolitical interests. When historians look back on this period, the Trump-Biden administrations will shoulder some of the blame for being “seduced” into equating what they believed to be US national interests with those of the entire world. Even during the triumphalist years of the “neo-cons” and the New American Century envisioned by George W Bush and the arch-conservative Dick Cheney, and even through the disastrous years of the Iraq War, there was some notion that the US would need to make generous gestures and even sacrifices to maintain its might and clout as a world leader. That era is gone. The “cost-benefit”-focused Trump-Biden era has abandoned even the performative pretense of engaging in give-and-take or good-faith negotiation, which in hindsight might well have been an “illusion” critical to maintaining the beautiful lie of a global community. 

Business presses ahead despite the geopolitical noise

Underneath all the geopolitical rumble, business interests are pressing ahead with getting things done. Companies from Denmark to Japan are building green hydrogen bases across the Asia Pacific, with Europe in the lead but Asia beginning to move toward production. Green hydrogen is a resource that does not emit carbon dioxide and could be a next-generation power-generating fuel. As Schroders noted, “political momentum clearly slowed in 2022, but importantly the private sector continues to push ahead.” 

This means that businesses, from start-ups experimenting with groundbreaking green tech to energy companies looking to decarbonize, will help to close the gap between corporate readiness and political commitments. Over the long term, private and public sectors need to unite to drive national plans to produce hydrogen at a low cost, similar to the German model that has worked well for its green hydrogen expansion. 

This probably means that Asian governments will have to sharpen their messaging – pointing out that the US, in its heavy-handed insistence on alignment with democratic values and human rights commitments, risks turning the Asia-Pacific region into a self-fulfilling prophecy, a bifurcated tug-of-war that the great powers claim they to want to avoid. ASEAN diplomats, deft at balancing China’s expansion and the historical American presence in the Pacific, are familiar with this challenge. Singapore, Malaysia, Vietnam, the Philippines (as demonstrated by its new president Ferdinand Marcos, Jr, on his recent state visit to China)  and other nations in the region, while maintaining vastly differing perspectives and interests, do not wish to lose the protective security guarantee of the US but are not at all willing to commit economic self-harm by spurning China, a key driver of regional and global growth. 

As Australia under Prime Minister Anthony Albanese, who took office in May 2022, is learning, it is possible to be aligned with one side, while also dealing with the other in a mature and sensitive manner that allows for dialogue. The contrast between the high-level contact that Australia (which remains strongly aligned with the US) now enjoys with China is striking, compared to Canada’s (specifically Prime Minister Justin Trudeau’s) disastrous handling of Ottawa’s relationship with Beijing. Consider the dressing down that Xi gave Trudeau on the sidelines of the G20 summit in Bali, video of which became a much-debated geopolitical moment.

The EU, as a US ally, once seemed like a model for balancing and checking amid the tensions of Sino-American competition, but in 2023 looks increasingly divided, lethargic and sluggish, especially when compared to Australia, Southeast Asia or the Middle Eastern nations. At best, the EU looks rather helpless as companies suffer (potentially at the expense of American corporations) while their national governments comply with American rulings. At worst, the EU must radically reinvent its approach to both the US and China if it is not to be seen as altogether outdated in its statecraft. 

The adage “walk and chew gum at the same time” has probably never been more applicable to sustainability goals than now. The world is exiting what might be called the “epistemic certainty” of globalization and must contend with nations, from rivals to allies, making the case for robust national self-interest. The pandemic, no doubt, enhanced this survival instinct. But just as the public and private sectors must inevitably unite to drive forward sustainability goals, there must be at least some level of globalized shared interest if we are to have any hope of reconciling the political with the economic, the Global North with the Global South. 

Can it be done? As with all things, it depends on whether there is enough will – and money.