Island disputes between Japan, China, and South Korea are threatening financial stability in East Asia, and with it, the global economy. The next US administration should push publicly and persistently for a solution.
What are the biggest short-term threats to the global economy? The two most obvious answers are the ongoing European debt crisis and the looming austerity of the “fiscal cliff” in the United States. But what if I told you that in the running for honorable mention is the sticky situation in East Asia surrounding territorial disputes over several small islands?
At the heart of these disputes lie the region’s “big three” economies: China, Japan, and South Korea. Beijing and Tokyo are at odds over who has rights to the Senkaku Islands (or in China, the Diaoyu) and, more important, the potential oil deposits in the surrounding waters. Meanwhile, Japan has a similar dispute with South Korea over the Takeshima Islands (or in South Korea, the Dokdo), also with energy deposits.
While these territories have been disputed for decades, tensions have recently heightened in the region as all sides intensify ownership claims and leaders use the disputes for leverage in domestic politics. This raises concerns about strategic – and economic – stability in the region going forward.
Fears about instability in East Asia are not new. In the early 1990s, as the cold war entered the history books, some international relations experts feared that East Asia was poised to become like Europe of the early 20th century – a multipolar region with a threatening rising power (in this case China, rather than Germany) and weak regional institutions.