Explaining Hedging: The Case of Malaysian Equidistance.

• Date: 01 April 2024
• Author: Cheng-Chwee, Kuik

Malaysia is one of the few Southeast Asian countries that has moved from an alliance-based strategy to one of non-alignment, neutrality and "equidistance". During the first 14 years following its independence in August 1957, Malaysia (or "Malaya" before 1963) anchored its foreign policy on the Anglo-Malayan Defence Agreement (AMDA), an alliance established with its former colonial ruler, the United Kingdom. (1) This coalition, which also involved Australia and New Zealand, protected the small state from internal and external communist threats during the height of the Cold War. (2) It also protected Malaysia during Konfrontasi, a low-intensity conflict launched by Indonesia in 1963 in opposition to the formation of the Federation of Malaysia. (3) When threats were direct and allied support was certain, an alliance was a rational and practical policy choice.

However, a rational policy is not necessarily a sustainable solution. Indeed, the sustainability and feasibility of an alliance or partnership are often beyond the desirability of the weaker partners. Even when threats remain, the patrons in an alliance might reduce or retract their commitments, leaving the smaller partners to face dangers and challenges on their own. Britain's decision in 1968 to retreat "east of Suez" led to the replacement of the AMDA by the Five Power Defence Arrangements (FPDA) in 1971. The FPDA, which also includes Australia, New Zealand and Singapore, was a consultative mechanism rather than an alliance, as there was no mutual defence commitment among its members. (4) This coincided with the Nixon Doctrine in 1969, which led to the withdrawal of US troops from mainland Asia. These developments signalled a reduced Western commitment in Southeast Asia and exposed Malaysia and other Western-allied states in the region to the risk of being abandoned. Thus, the late 1960s was a watershed moment for Malaysian defence planning. Malaysian leaders began to realize that while a clear-cut policy of full alignment with one side against another provides significant returns, it also presents profound risks. And while big powers might come and go, the long shadow of uncertainty remains for smaller states. (5)

For the next half-century, Malaysia persistently adopted a neutral, no-alliance policy. In addition to joining the Non-Aligned Movement (NAM) in 1970, Malaysia began using the Association of Southeast Asian Nations (ASEAN) as the cornerstone of its foreign policy. However, a regionalist policy and a non-aligned posture did not preclude Malaysia from developing and maintaining pragmatic defence partnerships with countries far from its territory--primarily the United States and other Western powers--and, more recently, also those closer to home--China and other Asian nations. Although Malaysia's defence and security cooperation arrangements with China pale in comparison with those with the United States, its choice to maintain concurrent security ties with both powers, while embracing other partnerships, demonstrates Malaysia's neutral and "equidistant" position. But being equidistant does not mean being equally distant or equally proximate to competing powers. Instead, it means maintaining an impartial, not-taking-sides position at the macro level while simultaneously seeking inclusive but selective partnerships with all powers across all micro-level domains, with an eye on mitigating risks, maximizing benefits and keeping options open under conditions of uncertainties.

Malaysian equidistance entails three puzzling contradictions. First, despite its proclaimed non-alignment position since the early 1970s, Malaysia, in practice, has actively maintained increasingly robust military partnerships with several Western powers, meaning de facto "alignments" without alliances. (6) Second, despite increasing concerns about China's intentions in the South China Sea, as China grows more assertive near Malaysian waters, Malaysia has gradually developed closer defence and security cooperation with China since the 2010s. (7) Third, despite Malaysia's openly expressed concerns about AUKUS, a pact formed by the United States, the United Kingdom and Australia in 2021, it has continued to enhance bilateral military ties with each of these three states while also maintaining the FPDA and widening its engagements with more partners, including China, Japan, South Korea and Europe across defence, diplomatic and development domains. (8) In short, Malaysia has pursued non-alignment via multi-alignments. (9) Hence, Malaysia's equidistance is not passive neutrality but an active, inclusive and seemingly contradictory form of impartiality. (10)

What explains this paradoxical policy? Why has Malaysia persistently avoided alliances and insisted on a neutral, equidistant policy for the past half-century, even amid growing security concerns because of tensions in the South China Sea? Why has Malaysia adopted these puzzlingly contradictory approaches rather than a clear-cut policy vis-a-vis the competing powers? Why has Malaysia pledged a non-aligned position at the macro level but pursued multilayered alignments and partnerships in practice across micro-level domains?

This article offers a two-level explanation. Describing Malaysia's paradoxical policy as quintessential "hedging" behaviour, it argues that the smaller state's macro neutrality is rooted in structural conditions, while its micro multi-alignments are driven and limited primarily by domestic-level determinants. Specifically, while Malaysia's insistence on not taking sides is attributable to structural imperatives, the manner and extent to which it pursues inclusive but prudently selective multi-alignments across domains have been profoundly shaped by its elites' desire to optimize different pathways of domestic legitimation. This legitimation process intersects with the pluralistic socio-political contestations, thereby pushing the elites to pursue paradoxical approaches to balance multiple policy trade-offs, such as economic benefits versus security considerations, internal autonomy versus external concerns and immediate interests versus longer-term identities.

The article proceeds in four sections. The first presents a two-level framework to theorize hedging as a small-state alignment choice under uncertainties. The second traces the changing structural factors driving Malaysia's shifting alignment position from non-hedging to hedging before analysing Malaysia's enduring macro neutrality vis-avis the United States and China since the 1970s. The third unpacks the domestic determinants of Malaysia's micro-level, multilayered alignments and partnerships with the major and second-tier powers across domains. The concluding section summarizes the key findings and suggests directions for future research.

A Two-Level Framework: Explaining "Hedging" in International Relations

Hedging is defined as an insurance-seeking behaviour under high-stakes and high-uncertainty conditions, which aims at mitigating and offsetting risks while maximizing returns via three approaches: active neutrality, inclusive diversification and prudent fallback cultivation. (11) Accordingly, hedging is conceived of not only as a "middle" position--between the competing powers--but also as an "opposite" position, where two or more mutually counteractive measures are pursued to offset risks of uncertainties and cultivate fallback options. (12)

Conceptually, hedging is distinguishable from "balancing" and "bandwagoning", the two more clear-cut, straightforward alignment behaviours, which have dominated International Relations (IR) literature for decades. Balancing means a security-seeking act of pursuing alliance (external balancing) and armament (internal balancing) to counter the strongest power or the most threatening power. (13) Bandwagoning refers to a utility-seeking act of accepting a subordinate role to a rising or dominant power in exchange for profit or security. (14) The distinctions are illustrated by four key aspects (see Table 1).

Theoretically, a two-level model posits that hedging originates at the structural and domestic levels. While structural conditions explain when states hedge, domestic reasons explain why a state hedges in the ways and extent it does. That is, states choose to hedge, rather than to balance or bandwagon, when two structural conditions prevail: when threats are neither immediate nor straightforward; and when states are uncertain of credible, sustainable allied support. However, the manner and degree to which a state opts to hedge are necessarily the result of domestic factors: optimizing pathways of legitimation necessitates ruling elites to hedge in ways that balance key trade-offs in foreign policy choices. These two-level explanations are elaborated as follows.

When Do States Start (and Stop) Hedging? Structural Sources of Alignment

Structural factors matter. Alignment choices are primarily a function of the relative certainty about two systemic-level conditions. First, high or low certainty about the presence of a principal threat--an immediate, predominant danger in all key domains. Second, high or low certainty about the presence of a principal patron--highly reliable, sustainable and long-term allied support. This article has developed a 2x2 matrix (see Figure 1) to explain when states opt for hedging, balancing, security-driven bandwagoning or profit-driven bandwagoning. Balancing and bandwagoning are likely when one of three clear-cut circumstances prevail: when a state is highly certain of both an imminent threat and reliable allied support (Quadrant 1), balancing will prevail; when a state is highly certain about the existence of an immediate threat, but uncertain about the availability of a credible ally as a countervailing force (Quadrant 2), security-driven bandwagoning will prevail; and when a state is highly certain about the availability of an indispensable multi-domain patron and the absence of...