 Hello and welcome to this special long-distance Lowy Institute launch of the 2021 Asia Power Index. I'm Sam Rogovine, Director of the International Security Programme here at the Lowy Institute. I'd like to begin as always by acknowledging the traditional owners of the country where I am today, the Gadigal of the Orinatian, as well as the traditional owners of country throughout Australia and pay my respects to elders past and present. In just four years since its launch, the Asia Power Index has become a flagship product for the Lowy Institute. It's now a widely quoted source, the most credible resource available for this region on national power in all its dimensions. In fact, it's fair to say that there's nothing like the Asia Power Index anywhere in the world. The Asia Power Index meets an important need in our present moment. Perhaps as little as a decade ago, the idea of measuring power might have seemed anachronistic, a vestige of an age of military and political competition which we left behind when the Berlin Wall fell. But if Asia ever had a post-Cold War holiday from history, it is now surely over. Nuclear weapons have proliferated throughout Asia. Explosive economic growth in the region has upended our mental models of an Atlantic-centered world order. China has far surpassed the Soviet Union as an economic power and as a challenger to U.S. hegemony. And Korea remains divided and tense. It's more important than ever for us to grasp the essentials and the intricacies of power in Asia. The Asia Power Index ranks 26 countries and territories in terms of what they have and what they do with what they have, reaching as far west as Pakistan, as far north as Russia, and as far into the Pacific as Australia, New Zealand and the United States. The 2021 edition, which covers four years of data, is the most comprehensive assessment of the changing distribution of power in Asia so far. With me today to discuss the 2021 edition of the Asia Power Index are Hervé Lemayou, Director of Research at the Lowy Institute, Director of the Power and Diplomacy Program, and the founding researcher behind the Asia Power Index. Alissa Leng is a research fellow and economist at the Lowy Institute. Alissa produces data-driven projects and analyses, principally the Asia Power Index, but also the COVID Performance Index, and we'll be talking about COVID over the coming hour. And lastly, Roland Rajar, Lead Economist and Director of the International Economics Program at the Lowy Institute. Roland was previously an economist with the Asian Development Bank, and earlier he was based in Indonesia with the Australian Department of Foreign Affairs and Trade. Welcome to all three of you. The format today is very simple. I'll be asking my three guests some questions. We'll occasionally throw up a few charts on the screen for you to look at from the API itself, and we'll also be taking some questions from you, the audience. But to begin Hervé Lemayou, let me start with you. Can you take us through some of the major findings of the 2021 Asia Power Index? Thanks, Sam, and it's a huge relief to get this one over the line. My fourth edition of the Asia Power Index, and my last one as well, because I'm transitioning full-time into the Director of Research role from January. But essentially, just to remind the audience, the index measures the ability of states to shape and respond to the external environment. In other words, we define power very broadly as the capacity of a state to direct or influence other state actors, non-state actors, and the course of international events. So that's what we're after. That's what we seek to measure, and that can be done in two ways. What countries have in terms of the resource-based determinants of power, whether that's their military strength or the size of their economies, and what countries do with what they have in terms of the influence-based determinants of power, and that's where the index gets its geographical relevance because we look at influence flows in our region. So it is influenced specific to Asia. There's a lot to unpack in 2021, and I thought I'd just begin by mentioning the pandemic. It's obviously been the story of this year and last, and it has continued to negatively impact the resources and influence of a majority of states in the region in 2021. So far from this being erased at the top, it's perhaps more accurate to describe it as erased at the bottom, whereby countries are out competing each other by degrees of underperformance, largely as a result of the pandemic, both the primary economic effects and the secondary effects in terms of interrupted exchanges, diplomatic and cultural influence being somewhat undermined and compromised by border closures. The big story continues to be the uneven economic impact and recovery of the pandemic, which has already altered the balance of power in our region and will continue to do so well into this decade. So at the moment, it looks as if only the United States, Taiwan and Singapore are set to have larger economies in 2030. Then we had forecast prior to the pandemic. Everyone else will be, by degrees, smaller than we had forecast prior to the pandemic and developing economies. India being perhaps the largest one seemed to be hardest hit relative to their pre-COVID growth path. So that's a fundamental story, which we're continuing to track, which we saw unfold last year and continue to do so this year. The biggest surprise is probably the fact that the United States has managed to beat this regional downward trend and, in fact, registered its first upswing, its first growth in its power in four editions of the Asia Power Index. It reminds us that there is nothing inevitable about the U.S.'s decline or inexorable about China's rise. It is really the function of both how countries respond to their circumstances, political as well as structural trends in the region. The U.S. now tops six out of eight measures of power. So it overtook China and two critical rankings in terms of its diplomatic influence and our assessment of its future resources. So that points to both a political and a structural turnaround in the United States, nowhere near enough to claw back. I should add the losses that the U.S. sustained last year, but sufficient to make us think that there are signs of a resurgent United States in the Indo-Pacific. And it is also a sign of both the Biden and what you might call the Biden effects on a U.S. diplomatic standing globally, the fact that Biden has put a concerted effort on trying to put the United States in the middle of answering transnational challenges, whether that's climate change, the pandemic or development finance in ways that the Trump administration never really sought to do, but it is also structural. It is to do with a faster than expected U.S. economic recovery and improved prospects through the decade to 2030 at least. So that is a big, a big story in itself. But within that, I would say modest upswing in U.S. power this year. There's a lot of volatility. We're seeing the fact that U.S. gains in some areas, such as in diplomatic influence, have almost completely been counterbalanced by a loss of relevance in the U.S.'s the U.S.'s loss of relevance to the political economy of Asia. And that is a key continuity between Trump and Biden. So it's not all been changed. Some some real continuity and an alarming rate of decline, I would say, in terms of the U.S.'s economic influence, its clout, its relationships in the region. So domestic renewal and coalition building point to a more competitive United States, but just how influential in Asia will really depend on whether on the quality of U.S. economic engagement with the region, which also in turn depends on the administration's ability to overcome the anti-trade tilt in U.S. politics. So the sources of U.S.'s revival are domestic, but the sources of the U.S.'s weaknesses continue to be domestic as well. China is also incredibly interesting this year in the sense that it lost ground in overall power, as well as in half of the index measures in 2021. Everything from diplomatic to cultural influence to its assessment of our assessment of its future resources. That contrasts with the year before when Beijing was essentially holding ground despite emerging diplomatically diminished from the pandemic and to 2019 when it netted the highest gains in the region. So this too is an interesting change in direction. What we don't know yet or what we can't predict is how durable that decline will be. But it certainly suggests that there are inherent limitations in the ascendancy of China, that its power is rooted in narrow but deep foundations of economic capability and economic relationships in the region with sort of very varied results in other measures of the index. Beijing is, for example, now the primary investor in as many countries in the Pacific as Japan and the U.S. combined. And we still think the Chinese economy will overtake the United States at some point towards the end of this decade at market exchange rates. But it appears less likely that China will ever be as dominant as the United States once was. So a bipolar future beckons. And depending on how the U.S. plays its cards, it may well remain the top superpower, but we'll have to see how that plays out. There are inherent limitations on the speed at which China can continue to grow beyond 2030. And I'd be happy to go into that later on in our discussion there to do with the contraction and its workforce that to do with diminishing returns over time in China's investment heavy approach to driving economic growth. But here's the hitch. China is down relative to the United States fractionally, but its lead over the rest of the region has not been substantially undermined. In fact, there is a growing power differential between the two superpowers, the U.S. and China on one hand, and nearly every other emerging power in the region. Asia has become more bipolar, less multipolar in 2021. And you see that first and foremost in terms of how Japan and India are performing relative to China. Both of these major powers have lost more ground in 2021 than did China. In fact, neither are really, really qualified major powers anymore, simply high performing middle powers. They don't really meet the 40 point threshold. And again, we can go into the details as to why that is, but suffice to say Japan remains a smart power. It uses limited resources to very great effect in terms of wielding significant economic clouds, cultural influence, but its margins of influence are steadily eroding, whereas India remains an underachiever relative to both its resources and potential. And it has been hard hit by the COVID pandemic, as I've already mentioned. So what does greater bipolarity mean? It means that U.S. allies and balancing powers, such as India, have never been more dependent, essentially, on U.S. capacity and willingness to sustain a military balance against China's rise. China's defense spending is now 50 percent larger than the combined outlays of India, Japan, Taiwan and all 10 ASEAN countries. So that's quite a staggering figure. And it's China has also used its growing military strength to good effect, I should add, certainly viewed from Beijing's national interests, pressing its sovereignty claims in the East and South China Sea, jostling with with India on the Himalayan border, intimidating Taiwan. These are all signs of a very confident military power. Australia is ranked sixth and it has not changed. In fact, it's whether the pandemic better than most middle powers over the past two years. You may remember it was up last year. It's this year, it's down. And the net effect of that is that we're basically exactly where we were prior to the pandemic. We haven't lost ground. Neither have we particularly gained ground. On one end of the spectrum, we've seen improvements in our resilience, despite sustained Chinese sanctions. And on the other, we're down an economic influence due in part to investment trends. We've lost our status as the primary foreign investor in Papua New Guinea to China in 2021. So paradoxically, Australia has also lost a few points in military capability and in our measure of defense networks. The latter, though, remains its highest ranking overall and hasn't changed. But the fact that it is trending down is curious, given the major diplomatic achievements this year, AUKUS being the primary case in point. But what it suggests is that AUKUS is still more of a political rather than a physical reality. It has not yet registered in our data. It also marks a deepening rather than a widening of Australia's defense diplomacy. So greater reliance on the United States and a greater investment towards integrated deterrence with the United States will take several decades for that to come to fruition, not in a way that we can capture at this point yet. Last but not least, in terms of how the countries have done, Indonesia makes it into the top 10 in 2021. It's it's curious that it hasn't been in the top 10 prior to that, but it does reflect the problem that a lot of developing countries have, which is that they face constraints in their ability to project power and leadership abroad. They tend to be more inward looking, more focused on domestic development agendas. That's certainly been the case with President Jacoé's priorities to date. But the fact is that Indonesia has now gained in its diplomatic standing. It has become the most diplomatically influential player over succeeding Singapore in that regard. And it does suggest that Indonesia's overall importance within the ASEAN grouping will grow and is growing. But the overall story for Southeast Asia is rather grim. So in the graph that you'll probably see in front of you, you will see how Southeast Asian countries in particular have been hardest hit in terms of their economic prospects. In fact, if you look at Myanmar, Myanmar will be 40 percent smaller in 2013 than we had anticipated a couple of years ago. That's a combination not only of the pandemic, but of political instability and highlights the fact that for a lot of emerging countries, the problems still emanate from the unresolved nation building agendas. The fact is, militaries are much more geared towards addressing internal threats than they are towards addressing external threats. So a combination of internal weakness within the ASEAN grouping and power politics outside of it has really started to undermine the collective diplomatic clout, the ability of ASEAN to hold the region together, to have the superpowers at the same table through its network of multilateralism. What we've seen is instead this year is a real rise in mini-lateral coalitions, again, that mirrors the bipolar reality that we are starting to experience. And I should also say for all the talk of war and potential conflict, the biggest threat to the region remains a non-traditional one. It remains the threat of a pandemic disease, and therefore vaccine diplomacy has emerged as a key conduit of foreign policy. And my colleague, Elisa, has done quite extensive research on that so she can talk to that as well. Hurley, thank you. And that gives me the perfect segue to ask you, Elisa, about vaccine diplomacy, which has become, well, vaccines have become a new currency in effect in Asian diplomacy and geopolitics. Can you tell us about the findings of the the power index in regard to vaccine diplomacy? Sure. Thanks, Sam. And thanks, Herve, for that overview as well. So as both both have mentioned, vaccine diplomacy has become this major channel for countries to exert geopolitical influence over the course of this year. To reflect this, we added two indicators to the index to reflect this new development. The first is total donations that have been delivered to the region, as well as donations made on a capita basis. So on the chart, you'll see in front of you now, you'll see that of the actors that are from the region, so IE excluding Europe, etc., we find that the US is the largest donor of vaccines and has exerted the most influence through this channel to date. This reflects data coming up to October this year. So we can see that it has delivered about 90 million doses to Asia so far, and this is one of the key planks that has supported the rise of its diplomatic influence in Asia, as well as the Biden effect, as noted by Herve before. You can see as well that countries like China, Japan and India have also given large amounts of donations, while smaller countries like Australia and New Zealand have also been relatively generous once you account for differences in size. Really, what you can see now here as well is that it's this kind of per capita generosity that has really been recognized across the regions. So as we capture in one of our COVID-19 related surveys in the index, we see that larger per capita donations from countries like the US, New Zealand and Japan, generated a lot of good will. We saw that these countries were rated quite highly on their contributions towards global efforts in ending the pandemic. Interestingly, though, despite, as I mentioned before, China and India making significant, fairly significant donations on this front, their contributions, while still considered to be broadly constructive, were not really rated as highly by the policymakers and analysts that we talked to in the region. So there are a couple of possible reasons for this. The first is that while they have been generous in aggregate, they have been less so once adjusted to size. And the second sort of underlying factor here as well is that China and India have done a lot of commercial vaccine supply deals across the year. In fact, this is probably outstripped their donations by quite a large margin. So it's quite interesting because this result suggests that donations are better received than commercial supply deals, which makes sense, particularly as it took time for all those commercially supplied doses to actually get down to the region. Whereas in this respect, we're talking about donations that have already have already gotten onto the ground. So what does this mean more broadly outside of the index world? I would say the first key implication is that there are real rewards here for being generous, real geopolitical rewards, and therefore, you know, putting aside the economics, the health and the other moral reasons to give doses, this extra incentive also exists to exert geopolitical influence through this channel, and that giving quickly matters. And I'd say the second implication of this vaccine diplomacy for the broader balance of power in the region is that we know that in general, it is richer countries that have higher rates of vaccination than poorer ones. And in this case, China falls into that higher vaccination rate category. But as we've just as we were talking about before, India and Indonesia are both big emerging powers that are relatively poor still compared to countries like the US and other more developed middle powers like Japan, Korea and Australia. So while this means it's somewhat unsurprising that they're behind in relative terms in vaccinating their populations with India at about 50% fully vaccinated and Indonesia at about a third, it does and bearing in mind as well that economic recovery and control of future outbreaks in the years to come will be heavily dependent on vaccination. This put together with broader concerns around India and Indonesia's economic rise in the coming years just raises extra question marks. And if we combine this with the narrative that Hervé was talking about before that gap between China and the US and everyone else in the region really beginning to widen, this does not help in that front either. And we could very well end up with a more stratified region in which it's really the poorest countries that miss out. So let me turn now to Roland Raja and Roland. I know you and Alyssa have written together about vaccine diplomacy in Asia. So I would just invite you broadly to fill in any gaps that Alyssa might have left, but also specifically Alyssa said that going going quickly matters in terms of vaccine diplomacy. So I want to ask you for Australia. Is it already too late? Have we left our run too late and have we missed an opportunity to not only do good in the region, but to increase our influence? Thank you, Sam. And let me just at the outset congratulate Hervé and Alyssa on a really another really great launch of the API. I think the narrative that the two of you are explaining really captures what's going on in the world right now in a really excellent way, but backed up with data. So that's certainly a real achievement. And I think just going to your question, Sam, on Australia, is it too late? No, I don't think it is too late. I mean, we've seen with say Omicron that new variants are going to keep arising and they can potentially be more dangerous and that will have ramifications for the rest of the world, but also for ourselves. So it's not too late to be doing something constructive about that. You know, Australia has made some fairly generous pledges on a per capita basis. According to the calculations, Alyssa and I have been doing second most generous on a per capita basis amongst global donors in terms of giving vaccines overseas. We have been slow to get those vaccines overseas, but that's changing very rapidly now that Australia is basically given up on rolling out the AstraZeneca vaccine domestically. And so that means the AstraZeneca vaccine supplies that we do have, which are being produced domestically, they're able to be shipped overseas much more rapidly. So we're catching up in terms of our delivery on those pledges. But the reality is that no country is doing enough. So as Alyssa said, some countries are more generous and generosity is being rewarded in the diplomatic stakes, so to speak, but no country is doing enough from the moral and self-interest perspective when it comes to trying to achieve the quickest, most efficient end to the global pandemic and bringing it under control for Australia and more broadly than Australia as well. The big gap for the world is in Africa. That's where the vaccine, not only the rollout, but just the pure supplies. I mean, they haven't even secured enough supplies at any point in the future to cover their population. So it's not just about how many vaccines they're getting now. And I mean, that does matter and versus how much, how quickly they're able to roll that out at the same time, which does face constraints. It's also simply a matter that they don't have, even over the coming years, according to the WHO, that vaccine supply isn't even there. So something has to be done about that. Otherwise, we're going to be stuck in the situation for a lot longer. And that's not good from anybody's perspective. But to bring it back to the sort of Indo-Pacific and the power stakes that Herve and Alissa are talking about, I think the argument that Alissa just mentioned and that she's written up on the interpreter as well on our website. I mean, I think this is an absolutely crucial one. It's that it's not just about making friends and improving, getting some diplomatic wins out of providing vaccines overseas. It's not just about stopping the pandemic. It's also about helping countries countries like Australia see as key partners in terms of the balance of power within the region, in terms of countries like India, Indonesia, Philippines and most of the countries in the region are developing countries at their heart. What we've seen with the pandemic is that reality has been deeply exposed. China has proven itself much more resilient in many ways than countries like India and Indonesia have in the end. And so there's a weakness there and there's a need for responding to the needs of countries like that within the regional order that is currently being being reshaped. I think what we've seen with COVID-19 is that really there's been a vacuum. There's a vacuum that where the West and the United States weren't providing what was needed. But I think very shocking thing that's come through the last two years is that this was a great opportunity for China to provide a lot of those things and China also failed. And here we're not talking about just about vaccines. That's very important, but we're also talking about things like emergency credit lines. Last year we saw capital being sucked out of emerging economies, including this part of the world. And that was a very destabilizing effect. The US didn't really step up. China had been talking a big game for a long time about being useful in those sort of situations. Also didn't step up. Look at debt relief. China has not been particularly forthcoming in terms of the provision of debt relief either. And then if we look in terms of the recovery, not just on vaccines where China has given a lot of vaccines commercially, not so much on the donations front. But also we talk about things like infrastructure and development finance. On the one hand, the West is trying to talk a bigger game in terms of Biden's Build Back Better World initiative. It's not clear whether or not there's going to be actually any new money or ideas put forward on that front, although Europe is now looking like they might be stepping up. But on the other hand, China had been again talking a big game about the Belt and Road initiative and how it was going to be the big new provider of this kind of economic development assistance. But we haven't seen anything again in the aftermath of COVID. And in fact, we've seen a retrenchment of Belt and Road as well. So there is a vacuum there and it is affecting the regional order. And I think, you know, it is incumbent on all the players in the region to think about how the regional order, regional architecture and actions that we can take, you know, can generate a more favorable, more favorable outlook. Roland, thanks. Having zoomed in there on COVID, I just wanted to zoom out again on the index as a whole. And I'll stick with you for a moment, Roland, and just ask you of the results that you saw in the 2021 Asia Power Index. What surprised you the most? I think, you know, I think the surprising thing for me of role was how well it captured what's going on in the world right now. I mean, the key storyline there that, you know, the United States and the Biden administration, by getting things right at home, they've done the biggest favor they can for themselves in the immediate term for boosting their global standing. You know, they got the vaccine out reasonably and they've been pouring a ton of fiscal and monetary stimulus in that so much so that the concern now is about the overheating of the US economy and overheated recovery. And, you know, that's a much better position the United States to be in than anything else, frankly. So, you know, there's that story, but there's also the story about China and the question marks of the index is pointing to in terms of the assumptions about China's rise in both in the short term and in the long term. And I think, you know, it's tempting to blame that on certain short term issues in terms of COVID-19, certainly in China's zero COVID policy and the energy crunch that they're currently going through. But I think the deeper issue is that, you know, the cracks and weaknesses in China's growth model are starting to become a little bit more obvious, partly due to COVID, but it's really just the passage of time. And a lot of the time, I think, you know, people are willing to give China the benefit of the doubt in thinking that, you know, they've got this track record of policy success. And so the new wave of reform is somehow around the corner and that. And so they can keep kicking the can down the road in terms of deep adjustments they need to make, because at some point these reforms will deliver the productivity growth that they need. And we just haven't seen that occur, basically. And reform progress is mixed at best, possibly going backwards. And so now we're seeing the cracks and problems start to emerge. And we're seeing that in the housing market in particular, you know, this is a cyclical downturn in the Chinese housing market. You know, it's the start of structural decline. And, you know, housing has been so important to the Chinese economy that that's going to have only posed big financial risks, but have big ramifications for China's longer term China's longer term outlook. The key question, though, which again, the API raises again, is that what matters is less the race between the US and China and the fact that maybe China is slowing down in America maybe is speeding up. But also the other emerging Asian players, India and Indonesia, I'm not sure how well that's necessarily can be captured in the data just yet. But my sense is that not only these countries struggled through this crisis, but their medium and longer term prospects are becoming much more uncertain than I think we typically take for granted. Alyssa Lange. Roland says the cracks are becoming more obvious in China's economic model. So I wanted to ask you about China's economic prospects going forward. Are you more pessimistic and perhaps a bit less trusting about the China growth story now than you were before you finished the 2021 power index? Yeah, I think what's interesting here is putting China in context of the US. As you know, Roland and her they've alluded to earlier, we've seen that, you know, change can occur. We've seen that the US its efforts at home have sped it up not just today, but that has implications going up further into the decade. And I would say that the long term picture on China looks not grim, but increasingly there are there are more and more question marks. Of course, it's well known that its demographic outlook is not great. The population is aging at a much earlier point in its development trajectory than other East Asian miracle economies saw that happen. And there are few policy levers around how it can turn that around. We're also seeing that returns will diminish to its investment heavy approach. Roland talked about the housing market, but the same applies also for public investment. So I think that it's difficult to to reconcile that with the general consensus that China's rise is inevitable. And I think there's a bit of tension there and it's more worth examining more. What actually are the basis of those kinds of assumptions? So Hervé Lemme, I wanted to ask you about the about the United States and in regard to China as well. So you you talked about the fact that China's strengths are deep but narrow. If I've understood the results of the 2021 Asia Power Index correctly, could we say the same about the United States and that the United States is the only major power to have made gains in this index in this years index. And yet those gains have been purely almost solely on the military side, right? Not on the economic side. I would say the US's weaknesses are narrow, but deep. So it is a more well rounded superpower in the sense that it's if you look at it on top of China's results, it's when there's a graph that we can point to, it's still clearly demonstrate it's a better all rounder in terms of the eight measures of power as a whole. It does it does have one significant Achilles heel. And that is the quality in depth of its economic relationships in Asia. And that just happens to be one of the key metrics of the changing distribution of power and influence in the region. So what we're saying is essentially if the United States plays its cards right, it can remain a very competitive and perhaps even marginally the more competitive of the two superpowers within what looks said to be a bipolar region. However, that will really depend on the quality of the US's economic engagement with the region. And if you think about it in two ways, if you think about it in terms of you have just as US military is eroding its primacy is eroding slowly but incrementally in the region to China. But the US is offsetting that through reliance, greater reliance and investment in its defense networks. And something similar could be done in terms of economic influence for the United States, which is to say it will be very difficult for the United States to match the market pool or the geographic proximity of China's economy that it is increasingly difficult to compete with that. Nevertheless, the types of economic engagement we're referring to are the kind of multinational trade agreements which in this region acquire more that it's more than just about trade. This is institution building. This is regional order building. And it really goes to the heart of what the region will become and how it will be structured and who will dominate or influence. And at the moment, what you have is a CPTPP the what's left of the Trans-Pacific Partnership deal minus the United States. They are a sort of shallow sort of very deep but narrow grouping minus the United States. And it's not clear that given that the US is no longer there to really anchor that agreement that they can really sustain their lofty goals of setting the rules base, the rules of the road for the for the trading environment in the region. And then you've got the much wider 15 countries, the largest multinational trade agreements ever reached other than the WTO itself which will come online in January, which is an ASEAN-led initiative the regional comprehensive economic partnership. Now, that is an initiative that springs from the region, springs from Southeast Asian countries and still speaks to a degree of their sort of importance in clout and ASEAN centrality is important here. But what it will do is, you know, very few commitments on labor, the environment, intellectual property, state-owned enterprises, but it will succeed in deepening the trade, investment and supply chain integration between 15 countries with China first among them. So there are competing visions and of how trade integration is working in our region. But neither the TPP nor RCEP involves the United States. In fact, the United States is becoming increasingly irrelevant when it comes to these discussions. And it's unclear whether this so-called or nascent Indo-Pacific strategy for an economic strategy, US economic strategy for the Indo-Pacific, which has been sort of vaguely alluded to so far by the Biden administration. It promises to put down some details in the new year, unclear whether that will be able to surmount both the US anti-trade tilt in domestic politics in the United States, as well as convince the region that it's offering anything of real substance. So that I think is the real Achilles' heel, the key continuity with the Trump administration and the one reason why the US gains this years are not more pronounced. So I began in my question by talking about American military power and that that had been a significant factor in the overall rise of its status in the power index this year. In terms of Australian defense policy and foreign policy, actually, there's been no bigger story this year than AUKUS. So tell us, how does something like that show up in the Asia power index? What effect does it have, actually, on the standing of the United States and Australia as what is a major initiative, but effectively at the moment is little more than a piece of paper? Yes, which makes it very difficult for something like the index, which is data driven to capture that. So it remains to be seen. And I think, you know, once you do have, if it does results and we expected to in a deepening of cooperation on multiple levels between the United States and Australia, as well as the UK, but obviously the UK is not captured within the index countries that that should result in in sort of arms transfers going up in the number of dialogues at a senior ministerial level going up the range of sort of metrics by which we by which we judge the depth of a partnership. But the fact is the US and Australia already probably the two closest partners in the region. And that is already a key strength of Australia. So what it is is it's doubling down on a on a comparative advantage for Australia. But at the same time, AUKUS promises results. But but at an uncertain point in the future, perhaps as far as two decades away when it comes to the nuclear powered boats and without the French deal, we are left with an aging fleet of conventional submarines. And our platforms are not keeping pace with the military modernization efforts in the rest of the region, which is why we're incrementally down on military capability. So there is a sort of medium term problem here, which is what we do in the next 20 years. And I realize that AUKUS is more than just the nuclear submarines. And there's been, you know, there have been multiple promises that it will encompass many other areas, including AI and cyber and and and other areas of naval power projection. So that may well start to change the reality in terms of Australia's military capability. It's just we haven't seen it yet. So it does remind us this is a political vision, more than the physical reality, not to undermine the political vision. It may well result in great gains. But at the same time, I think Australia shouldn't lose sight of the fact that the region is more than the United States or more than its alliance. And the pandemic and border closures in Australia has disrupted the normal pace of our defense diplomacy in the region. So if you look at, if you compare Australia to Japan, for example, Japan has established itself in 2021 as the lead defense dialogue partner for more countries in the region than any other. And that goes from Mongolia to Vietnam. And perhaps we could be doing a bit more of that because ultimately the US Alliance is probably our biggest failsafe. But there are big question marks around both AUKUS as well as the political trajectory in the US in decades to come. Sam, I might just jump in briefly on that point as well. And I think it's really important as well on AUKUS to think about the cost benefit in terms of the year as well as the future. So what I mean by that is that, of course, we talk about these positive long-term effects on defense capabilities and on engagement more broadly in the defense sphere. We've also got to stack that up and see how much that's offset by the current implications of AUKUS that we've seen in the region's reactions. So we've seen several countries in the Southeast Asian region in particular, not very happy about this development. We've seen Indonesia and Malaysia in particulars that are be quite vocal on this front. So I think it's important to remember that we will have long-term benefits possibly, but the diplomatic ramifications of really locking into the Anglosphere, I think those can't be ignored and the index might be able to measure how Australia's perceptions change in the coming years as a result of this. But I think it's important to think about those two differing time periods as well. A very good point. And actually just to add one more point on top of that because Alyssa and I have a way of sort of thinking along the same wavelength, but it also highlights another interesting indirect finding of the index, which is that as Indonesia rises, and we've seen it now for the first time emerge in the top 10, there is a lot of hope on the part of the United States and its partners that it will contribute to an overall sort of Indo-Pacific bounce of power, assimilate anxieties about China, and join essentially what is a US, maybe not US-led, but US-centered coalition in the region. And I think what Orcus has highlighted is that there is very little prospect of that happening either now and actually little prospect of that happening ever. Southeast Asian countries will continue to hedge as a way of managing their, competing influences by the United States and China. They are neither inclined strategically nor really suited in terms of the military capability to contribute to a collective military deterrence. I mean, even a country the size of Indonesia wouldn't be able to match China's military outside of Indonesia's jurisdiction, and often even within Indonesia's EEZ and jurisdiction. So no Southeast Asian power is equipped for this sort of concertive power approach. And I think we have to understand that they see the world very differently. That's not to say that they're necessarily succeeding and carving a path which is essentially non-aligned. I mean, they're facing more challenges in trying to carve out a space between US and China. But I think fundamentally, neither their power nor their inclination suggests that that will be the case. I'm so pleased you mentioned Indonesia because I did want to talk about it. And Roland, as Herve mentioned for the first time in the history of the index, Indonesia has entered the top 10. There are observers in Australia. I'm among them who are fond of talking about Indonesia as a nascent great power. So it's tempting to read this as a kind of harbinger of the future. But is it or is this just an anomaly? Is Indonesia gonna drop out again or will it inexorably rise in status in the Asia power index? Yeah, and I don't think if the 2021 index reminds us of one thing, it's just that nothing is inevitable. And even long-term projections that seem to be based on sound assumptions can be challenged by the reality of events such as a pandemic. But I think what Indonesia, I mean, certainly in terms of our assessment of its future resources, it ranks fifth just behind Japan. And it's one of the few countries really with the capacity or the potential to one day become a major power in our region in the way that we conceive of India and Japan. When that happens, if it happens, difficult to predict. But what we can say is it has the potential capacity, whether it actualizes that capacity is another question. Let me jump in for Roland there and get his perspective on that one. Thanks, Sam. I think, you know, Hervé hits on a lot of interesting points there. I mean, it is interesting what you said beginning Hervé about that it's surprising that Indonesia wasn't in the top 10 previously. And one of the things I note is that in the APIs scores, the reason Indonesia has gone up is one because it's been more active diplomatically and two, its resilience score has also improved. And that second one, the resilience thing I think is very interesting because Indonesia is historically seen as a very fragile country. Everyone's always worried that, you know, the next crisis is just around the corner and that the place could collapse or disintegrate. And I think what we've seen through COVID in particular is Indonesia has really come a long way. You know, I think, you know, if you look at how they manage the crisis on the economic front, you know, we go back a year ago they had, you know, about $10 billion a month flowing out of their economy. So huge capital outflows at the same time just like everyone else around the world they needed to fund a massive fiscal stimulus and really just financial relief to the economy to keep the economy and people's livelihoods afloat. They needed money. Typically they relied on financing their debt, their budget from overseas that wasn't available. And what they ended up doing in the end was just printing the money themselves by the central bank. And the interesting thing here in the broader context is that if you'd even just gone just before this crisis just a few months before this crisis or even a week before this crisis and said that's what Indonesia was going to do a lot of people would have said that they couldn't do it and that they were probably going to invite a deeper crisis as a result of that as markets panicked their currency collapsed and who knows what else would happen. In the end, they were able to do that they were able to get through it and they've managed it actually quite well so far on the economic front. So the resilience story in Indonesia which is coming through on the index I think is very true. We saw it also in the global financial crisis so over a decade ago, but even more so I think this time with COVID-19 in terms of how the government is able to manage it on the economic front and then, you know, on the health front I mean, they haven't done so well. And this is something that Ben Bland our resident Indonesia expert and I debate over which is in my view, the fact that Indonesia hasn't done so well is unfortunately that's about half of the course for what you would have expected before the crisis. So they haven't necessarily underperformed against my own expectations unfortunately on that front where they have overperformed though is on the economic front at least so far. And that's I think where the key question marks start to emerge. I mean, we'll see what happens. Everything is always virus dependent in the current, in our current times Indonesia's not rolling out its vaccines that fast but they're, you know, they're getting there. It depends what happens in terms of new variants and these sorts of things. I think the deeper concern is two front. One is that, you know, all countries in order to make the recoveries the economic recoveries happen which as we can see through the index is key to what kind of role these countries are gonna play both here and now and in the future. That depends on being able to continue to provide a fair amount of fiscal support to the economy. What we see in a country like Indonesia but also a lot of other emerging economies including India is that fiscal retrenchment is just around the corner. And that's born of two big factors. One, you know, global interest rates are set to rise and that's got to do with what's going on in the United States in terms of the strength of their recovery and concerns about inflation. And that's a problem for emerging economies but also there's a happy degree of fiscal conservatism also which has been abandoned in the advanced Western economies but still heavily subscribed to in countries where recent crises like in Indonesia are still front and center of mind. That's really gonna hamper, I think their short to medium term recoveries. And then if we look longer term certainly a country like Indonesia has got a lot of promise as Herbe has mentioned whether they're gonna capture that. I think, you know, as time goes on it becomes increasingly questionable. You know, in the past year or so we've seen Jacoey and the Indonesian government pass what they've called the omnibus law which was supposed to be a big set of economic reforms. In reality, it's probably not as big a deal as they've made out, but at the same time they had to ram that through parliament and politically there were protests and now it's just been deemed potentially unconstitutional by the constitutional court. And so may not be completely unwound but its implementation is now completely uncertain. And, you know, that was the biggest, one of the biggest reforms Indonesia has been able to deliver in a really long time they had to ram it through and now it's already uncertain. But those are the kinds of things that are necessary for it to fulfill the kind of potential that outsiders looking at Indonesia and of course indeed Indonesians themselves want to see happen. So I think that, you know, there are a lot of concerns here in the short term, Indonesia's getting the recognition deserves for how far it's come since, you know, 20 years ago with the Asian financial crisis it's really come a long way. On the other hand, you know, probably the outlook again is getting much, much more difficult. We've got time just for a few audience questions and Alyssa Lange, I'm gonna throw this first one at you it's from Liam and it's kind of a methodological question about how you built the Asia power index. He asks, is the US considered to be in Asia? If so, what proportion of its national power is implicated? And I guess we could broaden that question to ask about how you account for the fact that nations that are the 26 countries and territories in the Asia power index are not purely Asian countries they all have global interest to some extent. So how do we account for that in the Asia power index? Who can we? Sure, Sam. Geographically, as you mentioned in the intro we do include countries as far into the Pacific as the US, Australia, New Zealand and Papua New Guinea. So in that sense, in our conception of the region it's definitely there. And it's obvious through the influence it's had not just through the vaccine donations but all costs and all these other measures that it is playing a very active role in the region deserves to be measured as a result of that. And as Herve alluded to in the beginning that involvement is very heavily weighted towards the military and the defense partnership side of things. And so we do see that the US is weighted towards that rather than the economic side. Yeah. Herve, go ahead. Yeah, I mean, this is actually, I mean, difficult and a perennial question. In a sense, I think or we think that power is often best understood in regional context. Power is often situational. US's global standing in sub-Saharan Africa is not the same as what it would be in Europe is not the same as what it would be in Southeast Asia. And therefore geography matters in our index and that's why we've also limited our index to what you might call either the Asia plus or the broader in the Pacific region going as far west as Pakistan, as far north as Russia and as far east as the United States. But the fact is that all of our influence measures are about how those countries perform in relation to counterparts in the region. So this is US influence and standing in Asia or in the Indo-Pacific rather than a reflection of US influence and standing in sub-Saharan Africa. That's why when we look at vaccine diplomacy that 90 million figure for the number of donations and deliveries that US has committed in the course of this year that is limited to the countries of our index. And you'd have to do another index to figure out where and how US is performing in say Latin America. So yes, I think certainly when it comes to measurements of influence, geography matters and that's where the geographical definition of our index really comes to bear. There is another question related to that which is what portion of the US's military power, for example, applies to Asia? And there are two ways of answering that. I mean, you could look at just the Indo-Pacific assets, the bases and fleets that the US has at its disposal in our region or you could look at US global military power and assume that theoretically, if there were a major war that were to break out between the US and China, there would be at Washington's disposal, its global military posture. I mean, and so you can't, I think sort of assume that that doesn't exist. I think it would exist. It would become relevant. Of course, there'd be difficulties in terms of placing those assets in the region, in a fast enough manner to respond effectively to China. We also alluded to the fact that China has a home ground advantage in terms of its focusing its assets on its near abroad in the way that the US simply can't do with its global security commitments. But I think it would be naive of us to sort of discredit the global assets that the US brings to bear and could theoretically mobilize within the Indo-Pacific were to need to, you know, given the situation. And Hurley, I just wanna stick with you very quickly for one final audience question. Just a very quick response from Ramana. This question comes, what would Japan and India need to do to turn around their falling power scores? Yeah, that's a very good and challenging question. I think for India, it's quite clear it is an underachiever relative to its current resources, not just its future potential. So it could be doing a lot more with its current resources, where India lags notably in terms of its economic diplomacy, it's improved in terms of its defense diplomacy. And you might remember India was sort of proudly non-lined if anything closer to Russia than it was to the United States. But now I think we have seen a significant shift in the form of the Quad, but these things are not enough. These things will not guarantee India an equilibrium unless it gets involved in economic diplomacy. And that's where we've seen shortcomings partly by design, not by, I think in the sense that India is still a more closed off economy than many other economies in East Asia, for example. And self-sufficiency has acquired greater meaning and importance as a result of geopolitical competition, but self-sufficiency is a two-edged sword. Self-sufficiency means that you're actually investing and trading less with the region, and therefore your economic influence is diminishing, not just in terms of India's unwillingness to participate in the major trade institution building ventures of our region, whether that's RCEP or the TPP, but also in terms of it's near abroad. I mean, we're seeing in Nepal and Bangladesh and Sri Lanka and elsewhere a diminishing of India's economic diplomacy. When it comes to Japan, far harder to beat the trend. And in fact, it's very good at beating the trend of its long-term decline. So I'm not sure what more it could be doing because it is such an effective and quintessential smart power to begin with. However, where we have seen Japan take a slight step back is it hasn't really recovered or Tokyo hasn't really recovered its diplomatic standing on the regional stage since the departure of Shinzo Abe. So perhaps a sort of, again, a more durable, longer-lived prime ministership in Japan would inject more continuity in its foreign policy and perhaps stand that way is one way that Japan could notch up its points somewhat, but otherwise very difficult to see how Japan could turn around. The facts as they are, which is that it is in long-term decline and as an economy, it's as a share of the global economy and the regional economy, it's also declining. Thank you, Herbert. Just a quick final question for all three of you. I'd ask you to just confine your answers to 20 or 30 seconds. The headline result this year is that the United States is the only major power to increase its status in the Asia Power Index. China went down slightly. When we come back here in a year's time and the four of us are discussing the 2022 Power Index, do you expect to see that's the same result or something different? Roland, let me start with you. The risk of being somewhat boring, I think I expected to be sustained at least for another year or so. I think China is still working through a lot of difficult economic issues for themselves. I think the United States is still got some way to run in terms of the stimulus that is flowing through their economy and they'll be managing that. So a year from now, the US should be doing still pretty well economically. China might still be having some troubles. Unfortunately, I think also, a lot of the other emerging Asian economies also will be struggling. So perhaps more of the same next year. Alyssa, how about you? I have to agree with Roland on that one. I'd echo his points and also add that the Biden administration will be even more settled into the reins there and there might be more scope for them to continue the traction that they've had on their efforts in the region. So I'd echo the same points as Roland. Hervé is the mastermind behind the Asia Power Index. How did you get the final word? Yeah, well, I can't fix the results for next year, unfortunately. Now, it will be, I think largely again, an index driven by the US and China in ways, you know, in the sense that it has reinforced that bipolarity. I expect that to continue. But I do think that the big bump for the US this year was in terms of that shift in administration, a turnaround in its economy. And I'm not sure that there will be as big a net effect next year, given that we've already registered that dividends this year. So the key challenge for the US is not to sustain its ground and to prove that this modest upswing in its power is not simply a short-term reprieve on a longer term trend of relative decline, but more an emerging situation of strength for the United States. And again, that really determines, that will really be determined by the quality of its economic engagement with the region. Thank you, Herve. Thank you, Alyssa. Thank you, Rowland. And thank you, the viewers, to all of you for joining us. This is the Lowy Institute's final event for 2021. So on behalf of everyone here at the Lowy Institute, I wish you a happy Christmas season. And we look forward to welcoming you again in the new year. Bye for now.