KBA13 Insight Regional Update: Southeast Asia Under Pressure (Hormuz Shock, ASEAN Crisis, Myanmar, Indonesia, and the South China Sea in 2026)

EXECUTIVE SUMMARY

Southeast Asia enters the week of May 20, 2026, under the simultaneous weight of an external energy shock, a deepening governance crisis, and an accelerating great-power competition that is narrowing the region’s diplomatic room at precisely the moment when that room is most needed. No single crisis dominates the picture. What distinguishes this week from earlier moments of regional stress is that the pressures are not sequential but concurrent—each feeding into the others and collectively testing an institutional architecture designed for a more stable world.

The energy emergency is the dominant immediate driver. The Strait of Hormuz has been effectively closed for eleven weeks following the United States–Israeli military operation against Iran launched on February 28. Southeast Asia, which requires approximately 5 million barrels of oil per day and produces only around 2 million domestically, was structurally exposed from the moment the closure began. The Philippines declared a national energy emergency in March. Indonesia, Thailand, Vietnam, and Myanmar introduced fuel rationing. Brent crude surged past US$115 per barrel by late March — a 59 percent rise in a single month, steeper than the 1990 Gulf War shock. The IMF now projects regional economic growth to fall from 5.5 percent in 2025 to 4.9 percent in 2026, with energy price inflation feeding directly into food costs, which account for 25 to 35 percent of ASEAN consumer price index baskets.

The 48th ASEAN Summit in Cebu — held May 6–8 under Philippine chairmanship — reflected the crisis rather than transcended it. President Marcos pre-announced a “bare-bones” summit, and the gathering delivered precisely that: energy security dominated the agenda, the Myanmar crisis received frustrated acknowledgment without consequence, and the South China Sea Code of Conduct remained unfinished after more than two decades of negotiation. The summit did produce two meaningful institutional outputs — the ASEAN Leaders’ Declaration on Maritime Cooperation and the endorsement of a Philippine-based ASEAN Maritime Center — but the architecture of the meeting was reactive. ASEAN’s long-running credibility deficit is now more visible than at any point since the COVID-19 pandemic, and the Cebu summit did not close that gap.

The most consequential domestic political development in the region this week is the opening of Sara Duterte’s Senate impeachment trial in Manila. On May 11, the House voted 257 to 25 to impeach her for the second time — the first Philippine official in history to be impeached twice. The trial opened May 18 before a Senate whose leadership had just been reorganized by pro-Duterte forces, raising immediate questions about institutional integrity. If convicted by two-thirds of the Senate, she is barred from politics for life, eliminating her 2028 presidential candidacy. Her father, former President Rodrigo Duterte, sits in The Hague awaiting confirmation of crimes-against-humanity charges at the International Criminal Court. The Marcos–Duterte conflict is not a personal quarrel but a structural realignment of Philippine political power, and its resolution—or escalation—will shape the country’s foreign policy posture in the South China Sea for years.

Myanmar’s civil war entered a new phase of institutionalized impunity. On April 10, coup architect Min Aung Hlaing was sworn in as president under a constitutional order his military designed. Air and drone strikes have risen to over 3,300 incidents in 2025–2026 alone—Myanmar now ranks third globally in drone operations, behind only Ukraine and Russia. Civilian deaths from airstrikes exceed 3,800. ASEAN’s Five-Point Consensus, adopted in April 2021, has produced no measurable outcome in five years. The most legally novel development is a genocide and crimes-against-humanity complaint against Min Aung Hlaing accepted in Indonesia under universal jurisdiction provisions—the first such case in Southeast Asian legal history. Whether Jakarta pursues the case or quietly stalls it will be a defining signal of how seriously ASEAN’s leading member takes its accountability commitments.

Indonesia’s foreign policy under President Prabowo Subianto is the region’s most consequential ongoing strategic experiment. In eighteen months, Prabowo has signed a reciprocal trade agreement with the United States, joined BRICS, visited Putin in Moscow, struck a new security pact with Australia; and offered 8,000 peacekeepers for Gaza — all while managing a joint maritime statement with China that critics argue implicitly validates Beijing’s South China Sea claims. The US–Indonesia Reciprocal Trade Agreement, signed in February, contains a clause requiring Jakarta to consult Washington before entering digital trade agreements with third parties — a provision the East Asia Forum reads as compromising Indonesia’s non-aligned foreign policy. The philosophical shift from non-alignment to multi-alignment, which Prabowo has made explicit, is ambitious in vision and untested in practice. Its durability under simultaneous great-power pressure remains the region’s most important open strategic question.

The South China Sea remains a managed confrontation. The ASEAN Maritime Center, once operationalized, will be the first dedicated regional maritime security institution in Southeast Asia. The Code of Conduct is closer to the political agenda than it has been in years, partly because the Hormuz crisis has driven Manila to explore a relationship reset with Beijing — Manila imports 98 percent of its oil from the Middle East and needs alternative suppliers. But China has given no credible signal of willingness to accept a legally binding enforcement instrument, and its grey-zone operations at Scarborough Shoal and in the Spratlys have not diminished. The most important South China Sea variable this week is not what ASEAN declared in Cebu but what the United States does if China uses force against Philippine vessels in the coming weeks.

Mainland Southeast Asia is navigating the energy crisis through a combination of fiscal measures, supply diversification, and accelerated renewable transitions. Thailand’s new Bhumjaithai–Pheu Thai coalition government has imposed diesel price caps while managing renewed border tensions with Cambodia. Vietnam, under General Secretary To Lam’s consolidated authority, holds 30 to 45 days of fuel reserves and has canceled dozens of domestic flights due to jet fuel shortages. Indonesia, Malaysia, and Vietnam are all negotiating long-term crude supply arrangements with Russia — a development that EU foreign policy chief Kaja Kallas has openly criticized at ASEAN forums, framing it as indirect support for Moscow’s operations in Ukraine. The Mekong subregion’s transnational scam-compound crisis, disrupted but not dismantled by 2025 crackdowns, continues to generate diplomatic friction and reputational damage to governance for affected states.

The strategic signals to watch this week center on five variables. First, the conduct of the Philippine Senate impeachment trial—whether it proceeds on legal merit or is procedurally distorted by Duterte allies—will signal the health of Philippine democratic institutions under unprecedented political pressure. Second, any development in the Philippines–China bilateral engagement on the South China Sea Code of Conduct, including at the foreign minister level, will indicate whether the energy-driven relationship reset is substantive or merely rhetorical. Third, any announcement of a formal long-term Russian crude supply contract by a major ASEAN economy will mark a durable geopolitical shift that extends well beyond the current energy emergency. Fourth, the progress of Indonesia’s universal jurisdiction case against Min Aung Hlaing through its domestic courts will test Prabowo’s willingness to act on accountability commitments in practice. Fifth, and most broadly, the question of whether the cumulative pressures of 2026 are pushing ASEAN toward deeper functional cooperation or accelerating its fragmentation will become clearer as the second half of the year approaches.

The structural lesson of this week is not pessimistic but precise. Southeast Asia is not in crisis because its institutions failed. It is in crisis because multiple external and internal shocks have arrived simultaneously at a moment when the regional architecture was already under strain from great-power competition. The Hormuz closure will eventually ease. The Myanmar war will eventually reach a political settlement, however distant. The Philippines will eventually resolve its dynasty conflict, however bruising the process may be. Indonesia will eventually find a coherent strategic direction, however difficult the navigation. What matters now is whether the region’s leaders use this period of compounding pressure to build the institutional resilience—in energy reserves, maritime governance, digital frameworks, and accountability mechanisms — that would reduce their vulnerability the next time the world delivers concurrent shocks.

INTRODUCTION

The week of May 20, 2026, finds Southeast Asia under simultaneous pressure from an external energy shock, an internal governance crisis, and accelerating great-power competition that is narrowing the region’s diplomatic room for maneuver. The Strait of Hormuz has now been effectively closed for eleven weeks following the United States–Israeli military operation against Iran launched on February 28, and Southeast Asia is bearing disproportionate consequences: the Philippines declared a national energy emergency in March; Indonesia, Thailand, Vietnam, and Myanmar have introduced fuel rationing and demand-suppression measures; and the Economist Intelligence Unit now projects regional economic growth falling from 5.5 percent in 2025 to 4.9 percent in 2026. The immediate pressure of the energy crisis dominated the 48th ASEAN Summit held in Cebu, Philippines, on May 6–8, reducing what Philippine President Ferdinand Marcos Jr. himself described as a “bare-bones” summit to a crisis-management session rather than a strategic-planning forum.

Against this backdrop, the ASEAN bloc’s structural tensions are more exposed than at any point since the COVID-19 pandemic. The Philippines, chairing ASEAN in 2026, entered the chairmanship with an ambitious mandate: to finalize the long-stalled South China Sea Code of Conduct. That ambition has been partially stifled by the energy emergency, yet paradoxically, the same crisis has created an opening. Marcos stated publicly that he is exploring a “reset” in Philippines–China relations, partly because Manila imports 98 percent of its oil from the Middle East and needs alternative suppliers quickly. China has leverage; Manila has urgency. Whether that equation yields genuine diplomatic progress or merely transient opportunism will be a defining question of the second half of 2026.

Myanmar deepens the ASEAN credibility deficit in ways that are now structurally intractable. On April 10, coup architect Min Aung Hlaing was sworn in as president under the junta’s choreographed constitutional order, completing a “managed transition” that does nothing to end the civil war now in its fifth year. Data from the International Institute for Strategic Studies show air and drone strikes rising to over 3,300 incidents in 2025–2026 alone, with civilian deaths from airstrikes now exceeding 3,800. ASEAN’s Five-Point Consensus, adopted in April 2021, has produced no measurable outcome. In Cebu, Marcos acknowledged that ASEAN members had “aired their frustration” at the lack of progress, while stopping short of naming consequences.

The Philippines is simultaneously managing the most consequential domestic political crisis in its post-Marcos generation. On May 11, the House of Representatives voted 257 to 25 to impeach Vice President Sara Duterte for the second time in fourteen months—making her the first Philippine official in history to be impeached twice. The Senate opened her trial on May 18 in a chamber already riven by conflict: the pro-Duterte bloc had just ousted Senate President Vicente Sotto III and replaced him with Alan Peter Cayetano, a Duterte loyalist, in what critics described as a procedural coup aimed at shielding the vice president. The trial now runs in parallel with the imprisonment of her father, former President Rodrigo Duterte, in The Hague, awaiting confirmation of crimes-against-humanity charges by the International Criminal Court.

Indonesia, Southeast Asia’s largest economy, continues to test the limits of “multi-alignment” under President Prabowo Subianto. In the twelve months since his October 2024 inauguration, Prabowo has signed a reciprocal trade agreement with the United States, joined BRICS, visited Putin in Moscow, struck a new security pact with Australia, and offered 8,000 peacekeepers for Gaza — all while managing a controversial joint maritime statement with China that critics argue implicitly validates Beijing’s South China Sea claims. The US–Indonesia Reciprocal Trade Agreement, signed in February, contains provisions requiring Jakarta to consult Washington before entering digital trade agreements with third parties, a clause the East Asia Forum describes as effectively compromising Indonesia’s non-aligned foreign policy. How Prabowo navigates this tightening geometry will have consequences not just for Jakarta but for ASEAN’s collective posture.

The South China Sea remains a managed confrontation rather than a resolved dispute. The ASEAN Leaders’ Declaration on Maritime Cooperation, adopted at the 48th Summit, represents incremental institutional progress: it establishes a Philippine-based ASEAN Maritime Center to coordinate monitoring, navigation safety, and anti-trafficking operations. Yet the Code of Conduct itself remains unfinished after more than two decades of negotiation, with its geographic scope, legal status, and enforcement mechanisms still unresolved. China has given no signal of willingness to accept a legally binding instrument. Ray Powell of Stanford University’s SeaLight maritime transparency project argues that the core problem is not the absence of written rules but “a lack of any authority China is willing to accept above its own political will.”

The Hormuz crisis has altered the strategic calculus across Southeast Asia in ways that extend well beyond energy supply. Malaysia and Indonesia have both begun negotiating long-term oil supply deals with Russia, a development that EU foreign policy chief Kaja Kallas criticized at an ASEAN foreign ministers’ meeting in Brunei, urging the bloc to see the “big picture”: purchases from Russia enable Putin to continue the war in Ukraine. Regional governments are simultaneously accelerating renewable energy programs — Indonesia is considering raising the palm oil biodiesel blend to 50 percent, while Vietnam has advanced its E10 biofuel rollout — and the structural pressure of the crisis is now the most powerful forcing function for energy transition the region has ever experienced. Whether this pressure produces durable reform or merely temporary adaptation is the central economic question of 2026.

Mainland Southeast Asia presents a more fragmented picture. Following its February 2026 general election, Thailand is now governed by a Bhumjaithai–Pheu Thai coalition under Prime Minister Anutin Charnvirakul. The new government has imposed a temporary diesel price cap while navigating ongoing border tensions with Cambodia that have both domestic political and external geopolitical dimensions. Vietnam’s Communist Party completed its second plenum of the 14th Central Committee in March, consolidating the authority of General Secretary and President To Lam while signaling continuity in a foreign policy that is increasingly explicit about hedging between Washington and Beijing. The Mekong subregion as a whole faces compounding stresses: energy shortages, Chinese dam operations altering downstream water flows, and the transnational scam-and-compound crisis that 2025 crackdowns disrupted but did not eliminate.

The digital and information domain across Southeast Asia is growing in strategic significance. The ASEAN Digital Economy Framework Agreement, expected to be signed in 2026, would reduce friction for cross-border digital trade and move the bloc toward a more interoperable digital market — but its implementation faces the familiar ASEAN problem of consensus without enforcement. Separately, Southeast Asian governments are intensifying digital governance regulation, with several countries enforcing stricter rules on harmful online content. The region’s transnational cybercrime networks, including scam compounds that shifted operations after 2025 crackdowns, continue to generate diplomatic friction with South Korea and the United States, raising reputational stakes for host governments in the Mekong subregion.

ASEAN ARCHITECTURE AND REGIONAL GOVERNANCE

The 48th ASEAN Summit, held in Cebu, Philippines, on May 6–8, 2026, was the most constrained gathering of Southeast Asian leaders in years. Philippine President Ferdinand Marcos Jr., as ASEAN chair for 2026, had already announced in advance that the summit would be a “bare-bones” affair — a signal that normal agenda priorities were being subordinated to the immediate emergency of regional energy security. The preparatory meetings were scaled back and moved online due to the fuel crisis, reducing the usual bandwidth for deliberation on structural issues, including Myanmar, the South China Sea, and digital governance. That compression did not prevent outcomes, but it ensured they were reactive rather than proactive.

The summit’s three stated priorities precisely reflected the crisis context. Marcos identified energy security and resilience, food security stabilization, and the safety of ASEAN nationals in the conflict zone as the headline agenda. Under the first priority, ASEAN leaders agreed in principle on two significant institutional proposals: a regional fuel reserve system and a Philippines-based ASEAN Maritime Center. The fuel reserve concept represents a meaningful departure from the bloc’s historical reluctance to pool strategic resources, though as Marcos himself acknowledged, the operational details “have yet to be threshed out.” The Maritime Center, which will coordinate maritime monitoring, navigation safety, anti-smuggling, and anti-trafficking operations, was unanimously backed — a relatively rare show of consensus on a tangible institutional innovation.

The ASEAN Leaders’ Declaration on Maritime Cooperation, adopted at the summit, represents the most substantive formal output directly related to the South China Sea. The declaration does not resolve the Code of Conduct negotiations, but it commits members to the concept of shared maritime governance and gives the Philippines an institutional anchor — the Maritime Center — through which to advance its chairmanship priorities beyond the summit itself. Analysts at Chatham House have argued that the Hormuz crisis may paradoxically create a window for South China Sea diplomacy, because Manila’s need for alternative energy sources gives China leverage, and China’s desire for regional stability gives Manila something to negotiate with. This dynamic is still embryonic, but it constitutes a genuine shift in the bilateral geometry.

On Myanmar, the summit produced frustration more than resolution. Marcos told reporters that ASEAN members “aired their frustration about the lack of progress in the process of normalizing the situation in Myanmar” — phrasing that, for ASEAN, constitutes a relatively direct acknowledgment of institutional failure. The Five-Point Consensus, which the bloc adopted in April 2021, called for an immediate cessation of violence, dialogue among all parties, mediation by a special envoy, humanitarian assistance, and the envoy’s access to Myanmar. Not one of these five points has been fully implemented in five years. The junta has ignored the envoy mechanism, conducted aerial campaigns against civilians, held choreographed elections, and installed Min Aung Hlaing as president — without triggering any formal ASEAN response beyond statements of concern.

ASEAN’s structural constraints on Myanmar are well-documented but worth restating, as they are relevant to understanding the bloc’s limitations on every contested issue. The non-interference principle enshrined in the ASEAN Charter makes it nearly impossible to take coercive action against a member state regardless of what that state does internally. The consensus-based decision-making structure means that any single member can block collective action. Thailand and Cambodia have historically maintained relatively accommodating positions toward the junta, limiting Malaysia’s and Indonesia’s ability — which have pushed for a firmer stance — to move the bloc. And Myanmar’s exclusion from ASEAN summits, while symbolically significant, has not translated into material pressure on the military government.

The ASEAN Power Grid proposal gained new momentum at the summit as leaders pushed for its “operationalization” and explicitly linked it to the energy security emergency. The long-standing goal of interconnecting electricity networks across the region to enable cross-border power sharing and renewable energy integration has been discussed for decades, but the Hormuz crisis has given it a political urgency it previously lacked. The ASEAN Centre for Energy’s APAEC 2026–2030 policy cycle is now expected to prioritize actual implementation steps, building on the LTMS-PIP initiative — the Lao PDR–Thailand–Malaysia–Singapore Power Integration Project — as a proof of concept. If the grid advances meaningfully, it would constitute a rare example of a crisis accelerating ASEAN institutional integration rather than simply exposing its limits.

The ASEAN Digital Economy Framework Agreement occupies a different kind of strategic space. Expected to be signed in 2026, DEFA is designed to reduce friction for cross-border digital trade and move the bloc toward a more interoperable digital market. Its successful conclusion would represent a significant integration milestone, potentially increasing the comparative advantage of ASEAN’s 700-million-person market for global technology investors. However, the agreement’s value depends entirely on implementation, and ASEAN’s record on translating signed frameworks into operational reality is mixed. The political context of 2026 — with member states under fiscal pressure from the energy crisis and preoccupied with national-level stabilization measures — is not ideal for the sustained political attention DEFA’s implementation would require.

The ASEAN Studies Centre’s State of Southeast Asia 2026 Survey, released in April and drawing on responses from 2,008 regional opinion-makers across all ten member states, provides a snapshot of elite sentiment that is striking in its clarity. The survey found that Southeast Asia is caught between a “highly distrusted China” and an “unpredictable United States” under Trump, and that the dominant regional response is defensive consolidation rather than alignment with either. The ISEAS analysis notes three systemic risks: the fragility of the rules-based order on which ASEAN’s diplomatic model depends; a lopsided leadership burden resting on Singapore, Indonesia, and Malaysia; and a potential talent drain as the region’s most educated citizens gravitate toward partners whose normative and institutional environments they find more credible. None of these risks are new, but the 2026 survey captures them at a moment of heightened salience.

The question of ASEAN chairmanship succession is relevant in the medium term. The Philippines holds the chair for all of 2026, and the second ASEAN Summit of the year is scheduled for later in the year. The institutional weight of the chairmanship gives Marcos a second opportunity to advance his priorities — particularly the Code of Conduct — before handing the chair to the next country in rotation. Whether the second summit can be more substantive than the first will depend on whether the energy crisis eases, whether the Philippines–China maritime reset gains traction, and whether the political crisis at home — centered on the Sara Duterte impeachment trial — consumes enough executive bandwidth to reduce the president’s foreign policy ambition. All three variables are in motion simultaneously.

The credibility of ASEAN as an institution is not simply a function of what it achieves at summits. It is a function of whether it retains the trust of its member states as the primary forum for managing regional relations. The 2026 survey data suggest that trust is conditional rather than structural: ASEAN’s strongest champions point to economic cooperation and convening power, while its critics point to the gap between rules and behavior at sea, the inability to manage the Myanmar catastrophe, and the bloc’s structural inability to present a collective posture to great powers who prefer bilateral engagement. The Philippines’ chairmanship is not the moment when this credibility question will be resolved, but it is a moment when the gap between ASEAN’s stated purpose and its demonstrated capacity will be especially visible to a watching world.

THE HORMUZ SHOCK: ENERGY CRISIS AND ECONOMIC FALLOUT

The closure of the Strait of Hormuz, which followed the United States–Israeli military operation against Iran on February 28, 2026, represents the most severe energy supply disruption in Southeast Asia since the 1970s oil crisis. According to data from the US Energy Information Administration, 84 percent of crude oil and 83 percent of liquefied natural gas transiting the strait in 2024 were bound for Asian markets. The disruption was immediate: by March 4, maritime traffic had fallen to less than 10 percent of pre-war levels, and global Brent crude prices experienced a 59 percent surge within a single month, climbing past US$115 per barrel by late March—a rise steeper than the shock following Iraq’s invasion of Kuwait in 1990. Southeast Asia, which requires approximately 5 million barrels of oil per day and produces only around 2 million domestically, was uniquely exposed.

The Philippines was among the hardest-hit economies by any metric. Manila imports between 95 and 98 percent of its oil from the Persian Gulf. On March 24, President Marcos declared a national energy emergency — the first in the country’s history for an externally induced fuel crisis — stating that “nothing is off the table.” Retail diesel and gasoline prices more than doubled within a month of the closure. The government implemented a four-day workweek for government employees, provided targeted subsidies worth 5,000 pesos to motorcycle taxi and public transport drivers, and began procuring 2 million barrels of oil to serve as a state-owned buffer. Singapore-based analysts at the Economic Research Institute for ASEAN and East Asia ranked the Philippines among the four most exposed ASEAN economies alongside Thailand, Malaysia, and Brunei.

Indonesia’s position is structurally more resilient but far from immune. As Southeast Asia’s largest economy with a GDP of approximately US$1.5 trillion — roughly 38 percent of regional GDP — Indonesia’s energy trajectory has outsized effects on the broader regional outlook. Although the country produces around 840,000 barrels of oil per day and maintains a fuel reserve of approximately 22 days, it still imports about a third of its crude oil. The government allocated 381 trillion rupiah (approximately US$22.4 billion) for fuel-related subsidies in its 2026 budget, a figure calculated based on US$70 per barrel — a price the market left behind in early March. Indonesia has begun negotiating long-term crude supply deals with Russia, whose oil became more accessible after the US lifted certain sanctions as part of broader Ukraine-related diplomacy.

Vietnam’s exposure is severe and structural. The country imports over 80 percent of its crude oil, with Kuwait as the primary source, and holds only 30 to 45 days of fuel reserves. The government abolished certain fuel levies until mid-June, advanced the national E10 biofuel rollout from June to April, and drew extensively on the Fuel Price Stabilization Fund. Despite these measures, the jet fuel shortage was acute enough that Vietnam Airlines canceled dozens of domestic flights beginning in April. The Institute for Energy Economics and Financial Analysis assessed Vietnam as being at “high risk of fuel shortages without more crude inflows” even as of late March. Vietnam’s tourism sector, a major contributor to GDP, is also absorbing indirect damage as long-haul flights avoiding the Middle East become more expensive and less frequent.

Thailand’s response reflects both its deeper reserve cushion — approximately 61 days, compared to the regional norm of 20 to 45 — and its significant indirect exposure. Prime Minister Anutin Charnvirakul’s new coalition government imposed a temporary diesel price cap funded by the Oil Fuel Fund, increased spot market LNG purchases for power generation, and restricted finished petroleum exports to preserve domestic supply. However, roughly half of Thailand’s fishing fleet has been confined to port due to diesel price spikes, directly affecting food supply and rural incomes. The Rayong Olefins chemical plant, a unit of Siam Cement Group, suspended operations after it could not obtain naphtha and propane — illustrating how the shock propagates beyond transport and into industrial production and petrochemical supply chains.

The macro-economic consequences are accumulating in ways that individual country stabilization measures cannot fully offset. JP Morgan analysts noted that ASEAN economies are among the most exposed in the world given their heavy reliance on Middle Eastern energy imports. The IMF’s Chief Economist Pierre-Olivier Gourinchas, warned that sustained escalation could produce “an energy crisis on an unprecedented scale,” and the IMF now projects regional economic growth falling to 4.9 percent in 2026 and 4.8 percent in 2027. Energy price inflation is feeding directly into food inflation — accounting for 25 to 35 percent of ASEAN consumer price index baskets — compressing household purchasing power. INSEAD professor Pushan Dutt has flagged the risk of currency weakness across Thailand, Vietnam, and the Philippines if the disruption persists at current severity.

The crisis is simultaneously exposing and accelerating Southeast Asia’s renewable energy transition in ways that no policy framework alone had previously achieved. Indonesia is evaluating a biodiesel blend of up to 50 percent palm oil (B50), up from the current B40. Thailand has mandated B20 biodiesel. Vietnam has brought forward its E10 rollout. The IEEFA has published analysis arguing that the crisis has renewed the urgency of fossil fuel subsidy reform — in 2024, explicit fuel subsidies across Indonesia, Malaysia, Thailand, Vietnam, and the Philippines reached US$54.2 billion, straining public finances in ways that are now acute. However, analysts at the New Security Beat caution that the crisis also reveals a structural paradox: the Philippines is the world’s second-largest nickel reserve holder and a key player in green technology supply chains, yet continues to export raw ore and import refined fuel — a developmental trap that the short-term crisis measures do nothing to resolve.

The Russia energy pivot deserves close analytical attention. Vietnam, Indonesia, and Malaysia are all negotiating or exploring Russian crude imports facilitated by the partial lifting of US sanctions on Russian energy. While ASEAN governments frame these as pragmatic moves toward supply diversification, they carry strategic implications that extend beyond energy policy. EU foreign policy chief Kaja Kallas explicitly raised the concern at the ASEAN foreign ministers’ meeting in Brunei, warning that purchases of Russian oil effectively underwrite Putin’s military operations in Ukraine. For ASEAN governments, this is a classic sovereignty-versus-values trade-off — and the current emergency tilts the balance heavily toward sovereignty. Whether these arrangements prove durable after the immediate crisis passes will depend on pricing, infrastructure, and political will to maintain diversification even when Middle Eastern supply resumes.

The fertilizer dimension of the Hormuz crisis is systematically underreported but strategically significant for a region where food security is a core political concern. Over 30 percent of global urea, widely used in agricultural production and manufactured from natural gas, is exported from Gulf countries through the strait. For large agricultural economies like Indonesia, Thailand, Vietnam, and the Philippines, rising fertilizer costs directly affect crop yields and food prices. Indonesia, Malaysia, and Brunei have begun coordinating joint fertilizer production to reduce dependence on Gulf imports. Thailand, facing a near-shutdown of its fishing fleet, is also looking to Russia for fertilizer supply. These arrangements, taken together, represent a significant reorientation of agricultural supply chains that will persist beyond the immediate energy crisis.

The structural lesson that Southeast Asia’s crisis managers are being forced to absorb is one that energy security analysts have long argued: the region’s fossil fuel dependency, combined with thin strategic reserves, makes it structurally vulnerable to any disruption of the Strait of Hormuz. Singapore, with over 200 days of strategic oil reserves maintained in underground caverns on Jurong Island, is the outlier — a deliberate investment in resilience that most of its neighbors have not replicated. ASEAN’s oil and gas bill amounts to approximately 4 percent of regional GDP — nearly double Europe’s share — and that structural exposure will not be resolved by this year’s emergency measures alone. The IEA’s Fatih Birol has labeled the current conflict “the greatest global energy security challenge in history.” For Southeast Asia, the relevant lesson is not simply to respond to this crisis but to redesign the very architecture that made it so damaging.

MYANMAR: IMPUNITY INSTITUTIONALIZED

On April 10, 2026, Myanmar’s coup architect Min Aung Hlaing was sworn in as president of Myanmar under the constitutional order his military crafted following the February 2021 coup. The swearing-in was the culmination of a three-phase “election” held between December 28, 2025, and January 25, 2026 — a process that the Union Solidarity and Development Party, the junta’s political vehicle, won by the kind of margin that happens only in elections designed not to be lost. International observers, diplomatic missions, and human rights organizations uniformly condemned the process as a sham. Myanmar state media reported the outcome as an overwhelming victory. Min Aung Hlaing, who has been the most consequential single driver of Myanmar’s trajectory since before the coup, now holds the state’s highest constitutional office. The man who engineered the Rohingya “clearance operations” of 2017 — operations the UN Fact-Finding Mission described as genocidal — is now formally Myanmar’s head of state.

The military’s political consolidation is proceeding alongside a civil war that shows no sign of resolution and significant evidence of trajectory toward protracted conflict. Data from the International Institute for Strategic Studies’ Myanmar Conflict Map show air and drone strikes rising from 134 incidents in the first year after the coup to more than 3,300 in 2025–2026 alone, with nearly 9,400 incidents recorded in total since 2021. Civilian deaths from airstrikes now exceed 3,800. Myanmar ranks third in the world for drone operations after Ukraine and Russia, according to the Armed Conflict Location & Event Data Project. The military has increasingly relied on conscription to fill depleted ranks — its forces have fallen from approximately 300,000 soldiers in 2021 to an estimated 130,000 — with economic hardship and political polarization, paradoxically, making the draft more effective than anticipated. Recruits are reportedly serving as snipers and drone operators, partly because they bring technical literacy that older cohorts lack.

The Arakan Army’s territorial consolidation in Rakhine State is among the most significant developments in the conflict theater. Having completed its takeover of Maungdaw in December 2024, the group is now pushing beyond Rakhine’s borders and overrunning military bases in adjacent areas. The military’s defense industries face a direct threat. In northern Kachin State, the battle for Bhamo — a gateway city to the north — has entered its second year. In northern Shan State, the Myanmar National Democratic Alliance Army continues to hold Lashio, including the Northeastern Regional Military Command headquarters it seized in August 2024. The pattern across all theaters is consistent: the military retains technological superiority and firepower but is losing the ability to hold territory and administer populations in the conflict zones.

The economic dimension of the civil war is catastrophic and functions as a force multiplier for all other forms of instability. Myanmar’s banking system has largely ceased to function normally. The kyat shed 40 percent of its value against the US dollar on parallel markets in the first eight months of 2024, and the trend has continued. The junta’s price caps on essential commodities — rice, cooking oil, petroleum products — have exacerbated shortages rather than stabilizing them. Public debt now stands at approximately 64 percent of GDP, with approximately 70 percent of external debt held by bilateral creditors, primarily China. The healthcare and education systems have been decimated by the combination of conflict and the civil disobedience movement, in which large numbers of professionals refused to work under military authority. Nearly five years on, there is no credible pathway to economic recovery without political resolution, and no political resolution is in prospect.

Human rights accountability has entered new terrain with a case that deserves close regional attention. A genocide and crimes against humanity complaint against Min Aung Hlaing was recently accepted in Indonesia under the universal jurisdiction provisions of Indonesia’s new penal code — the first such case of its kind in Southeast Asia. The significance of this development extends beyond Myanmar. It represents the first time an ASEAN member state’s domestic legal system has been invoked to pursue accountability for atrocities committed by another member state’s government. If the case proceeds, it will test both Indonesia’s legal institutions and its diplomatic relationships simultaneously. The Prabowo government, which has generally adopted a cautious posture toward Myanmar, will face growing pressure to explain how Indonesia can assert jurisdiction over Myanmar’s crimes while simultaneously operating within ASEAN’s non-interference framework.

ASEAN’s practical leverage over Myanmar has been minimal for years. The bloc cannot compel the junta to comply with the Five-Point Consensus, cannot enforce the exclusion of junta representatives from its meetings in ways that create material costs, and cannot address the root causes of the conflict without directly engaging the National Unity Government, which most ASEAN members are reluctant to do, for fear of setting a precedent that external actors can legitimize internal opposition movements. The NUG operates largely from border areas and in exile, has collected revenues through parallel taxation, and coordinated military operations through the People’s Defense Forces. A 2024 survey found that around 93 percent of respondents within Myanmar hold a favorable view of the NUG. That political legitimacy does not translate into external recognition, but it does mean that any eventual settlement will require NUG participation.

China’s role in Myanmar is decisive, layered, and often misread. Beijing has provided arms, military equipment, and political support to the junta while simultaneously brokering temporary ceasefires between the junta and specific ethnic armed organizations, particularly in Shan State. China’s primary interest is not the junta’s survival per se but stability along the Myanmar–China border, the security of Chinese infrastructure investments, including oil and gas pipelines and the Mandalay–Kunming rail corridor, and the prevention of any outcome — whether NUG victory or prolonged state collapse — that creates ungoverned space adjacent to Yunnan. Chinese-linked operators have established over 300 mining sites for heavy rare earth metals in Kachin and Shan States without environmental or labor standards, according to Human Rights Watch, generating substantial revenues while producing documented downstream contamination in Thailand and the Mekong River basin.

The regional spillover from Myanmar’s conflict is a structural challenge for Thailand, Bangladesh, and India in different but compounding ways. Thailand hosts a significant proportion of the border-area fighting in its immediate proximity and has managed a delicate position—closer to the junta than Malaysia or Indonesia, but facing domestic political pressure as refugee flows and border incidents continue. The Andaman Sea and the Myanmar–Thai maritime border zone have become sites of irregular trade, resource extraction, and small-scale population movement that formal governance frameworks are not designed to manage. Bangladesh, which hosts approximately 900,000 Rohingya refugees in Cox’s Bazar, faces the twin challenges of continued pressure from new displacement and the political impossibility of returning refugees to a Myanmar that has not recognized their citizenship or safety.

The international media attention to Myanmar’s crisis has not translated into accountability or policy change. The Diplomat observed in April 2026 that Myanmar’s civil war “keeps sliding down the list of global priorities” in a world crowded with crises that more directly threaten stock markets, alliances, and great-power interests. Min Aung Hlaing’s new cabinet is, by all accounts, a continuation of the administration—the same generals and close associates who have administered the coup and the war. A new genocide complaint in Indonesia and sustained monitoring by Human Rights Watch and the UN do not, in themselves, change his strategic calculus. His historical track record suggests that he is largely insensitive to reputational pressure when it is not backed by tangible consequences: enforced sanctions, restricted access to arms, or meaningful political isolation. None of these consequences is currently in prospect at the scale required to alter behavior.

Myanmar’s status within ASEAN will be a slow-motion legitimacy crisis for the bloc. Myanmar is simultaneously a member state, a civil war theater, a site of mass atrocity, and now governed by a man whom Indonesia has opened a genocide case against in its domestic courts. That configuration has no precedent in ASEAN’s history and cannot be managed indefinitely through the existing institutional framework. The two most likely trajectories over the next 12 to 18 months are continued de facto exclusion of Myanmar from ASEAN’s political processes while the bloc avoids formally addressing the junta’s illegitimacy, or a more assertive posture led by Malaysia and Indonesia, using the Indonesian universal jurisdiction case as leverage. The second trajectory would require political will that has not yet been demonstrated, but the Cebu summit’s acknowledged frustration suggests that the appetite for continued institutional patience with Myanmar is declining.

 THE PHILIPPINES: IMPEACHMENT, THE ICC, AND THE BATTLE FOR 2028

On May 11, 2026, the Philippine House of Representatives voted 257-25 to impeach Vice President Sara Duterte, with 9 abstentions. The vote made her the first Philippine official in history to be impeached twice. The 257 votes exceeded the 215 who had approved her first impeachment in February 2025, a margin that reflects the sustained and organized nature of the Marcos administration’s political campaign against its former coalition partner. The articles of impeachment, consolidated from four separate complaints, cited misuse of confidential funds, unexplained wealth, abuse of power, bribery, and threats against President Marcos, First Lady Liza Araneta Marcos, and former House Speaker Martin Romualdez. The Senate received the articles and opened the trial on May 18, with Senate President Alan Peter Cayetano — a Duterte loyalist installed in a vote simultaneously with the House impeachment — presiding.

The trial’s opening took place amid political turbulence that had already eroded a significant portion of the Senate’s institutional credibility. The week before the trial began, Senator Ronald “Bato” dela Rosa—a close Duterte ally, former Philippine National Police chief during the drug war, and a subject of an International Criminal Court arrest warrant — emerged from hiding to attend the Senate session that would oust Marcos ally Vicente Sotto III and install Cayetano as Senate president. The maneuver succeeded, installing Duterte loyalists in control of the chamber that will judge her. A shootout near the Senate building was reported amid the political drama. Sotto, who had led the Senate through years of legislative activity, was removed in what observers described as a structural attempt to turn the Senate’s impeachment court function into a political defense mechanism rather than an accountability proceeding.

Sara Duterte’s political position is existential in the most literal sense. If successfully convicted — a process requiring a two-thirds vote of the Senate — she would be removed from office and constitutionally barred from holding public office for life, thereby eliminating her 2028 presidential candidacy. In February 2026, she formally announced her candidacy. With the Senate now under the leadership of a political ally, she needs just over one-third of senators to vote for acquittal to survive. Her defense team has stated it is “fully prepared” for the trial. Beyond the legal arguments, the political dynamics turn on whether the Duterte family’s base — which remains substantial, particularly in Mindanao and among lower-income Filipinos who remember the drug war’s early popularity — can sustain enough Senate support to prevent conviction.

The Marcos–Duterte conflict is one of the most consequential political ruptures in post-Marcos Philippine history, and its stakes have been consistently underestimated by observers who treat it as a personal quarrel rather than a structural realignment. The two families ran together in 2022 to decisive effect, combining the Marcos political machine in the north with the Duterte political base in Mindanao and among populist working-class voters. Their subsequent fallout — rooted in disputes over political loyalty, congressional investigations, and ultimately the ICC case against Rodrigo Duterte — has fractured that coalition and produced a period of intense legislative and judicial warfare. The outcome will determine not just Sara Duterte’s fate but the composition of the political coalition that governs the Philippines through 2028 and shapes its 2028 presidential election.

Rodrigo Duterte himself remains detained in The Hague awaiting confirmation of charges by the International Criminal Court. The charges include crimes against humanity related to his administration’s “war on drugs” — a campaign that, according to Philippine human rights groups, resulted in the extrajudicial killing of between 12,000 and 30,000 people between 2016 and 2022. His transfer to the ICC followed a decision by the Marcos administration to honor the ICC’s arrest warrant — itself a major break from the position of successive Philippine governments, including Duterte’s own, which had formally withdrawn the Philippines from the Rome Statute. The ICC case is now proceeding on its own timeline, but its political resonance within the Philippines is enormous, framing the entire Marcos–Duterte conflict in terms of accountability versus loyalty rather than simply power versus power.

The Marcos administration has been deliberately ambiguous about the degree to which it is driving the impeachment process. President Marcos has stated publicly that it is a “legislative matter” and sought to distance himself from the proceedings. This framing is widely disbelieved by political analysts: the administration controls roughly two-thirds of the House, the consolidated articles of impeachment were advanced through a Marcos-aligned committee, and the voting margin — 257 to 25 — leaves no doubt about where legislative loyalty lies. The ambiguity serves Marcos by allowing him to claim institutional neutrality while delivering political outcomes that serve his interests. Whether it survives the Senate phase, where the dynamics are more competitive, is the central question.

The Philippines’ ASEAN chairmanship adds a foreign policy dimension to the domestic political crisis that is rarely integrated in analysis. Marcos is simultaneously managing the Sara Duterte impeachment trial, the ICC proceedings against Rodrigo Duterte, a national energy emergency, and a bid to reset Philippines–China relations — all while chairing ASEAN and hosting the second summit of the year. Executive bandwidth is not infinite, and the domestic political crisis has already absorbed significant presidential attention. The risk, as analysts at CSIS have noted, is that ASEAN’s most ambitious Philippine chairmanship agenda in years — the South China Sea Code of Conduct, the Maritime Center, energy security coordination — is managed by a political team whose primary focus is domestic survival. Whether Marcos can sustain the foreign policy ambition alongside the political warfare is a genuine open question.

The South China Sea dimension of Philippine politics is entangled with the Marcos–Duterte split in ways that matter strategically. Rodrigo Duterte’s presidency was characterized by deliberate accommodation of China in the South China Sea — setting aside the 2016 arbitral tribunal ruling and pursuing bilateral engagement over multilateral pressure. Marcos has moved in a different direction, asserting Philippine maritime rights more explicitly, pursuing expanded defense relationships with the United States and Japan, and using ASEAN chairmanship to promote the Code of Conduct. The Duterte political base, however, has historically been associated with the accommodationist position on China. If Sara Duterte survives the impeachment and rebuilds political momentum toward 2028, the Philippines’ strategic positioning in the South China Sea could shift again. That possibility is not hypothetical — it is a live variable in the strategic calculus of every actor engaged with Manila.

Social media has played an unusually significant role in the political dynamics of the Duterte impeachment. Sara Duterte has an active social media presence — her Facebook page has tens of millions of followers — and she has used it consistently to frame the proceedings as politically motivated, to rally supporters, and to maintain visibility during the formal proceedings in which her public appearances are constrained. The Marcos administration has countered with its own information campaign, but the dynamics of Philippine social media, which has historically been more favorable to populist messaging, make this a contested terrain rather than a one-sided one. International social media publications tracking the trial—including coverage from Rappler, Inquirer, and ABS-CBN—are serving as primary sources of information for millions of Filipinos, whose views on the outcome will ultimately determine the political consequences.

The trial outcome will not be the end of the political conflict regardless of which direction it goes. If Sara Duterte is convicted and removed, the Duterte political family will likely channel its energy into ensuring that no ally of the Marcos administration wins the 2028 presidential race, potentially further fragmenting the political landscape. If she is acquitted, she becomes the frontrunner for 2028 with a narrative of survival against a politically motivated prosecution. In either scenario, the structural question of how the Philippines manages the intersection of dynastic politics, populist mobilization, international criminal accountability, and democratic institutions remains unresolved. As one analyst put it: “Whatever the trial’s outcome, the political war between Duterte and Marcos is unlikely to come to a conclusive end.”

 INDONESIA’S MULTI-ALIGNMENT GAMBLE

Eighteen months into Prabowo Subianto’s presidency, Indonesia’s foreign policy has produced a record of diplomatic hyperactivity that is impressive in scope, contested in substance, and uncertain in strategic direction. Since taking office in October 2024, Prabowo has executed a first state visit to Beijing, signed a reciprocal trade agreement with the United States, joined BRICS, visited Vladimir Putin in Moscow, struck a new security pact with Australia, offered 8,000 peacekeepers for Gaza through Trump’s Board of Peace initiative, and delivered a UN General Assembly address that included a historically unprecedented Indonesian reference to Israel’s security. The sheer volume of high-profile diplomatic engagements has positioned Indonesia as a more visible global player than at any point in its recent history. It has also created a growing body of domestic criticism about the coherence, accountability, and consequences of the approach.

The US–Indonesia Reciprocal Trade Agreement, signed in Washington on February 19, 2026, is the most consequential single transaction of the Prabowo foreign policy in material terms. Under the agreement, US tariffs on Indonesian goods fall from 32 percent to 19 percent — a meaningful reduction for an export-oriented manufacturing economy. But the terms extracted by Washington in return have generated sustained critical analysis. Article 3.3 on digital trade requires Indonesia to consult the United States before entering any new digital trade agreement with another country that could jeopardize essential US interests. The East Asia Forum described this clause as potentially compromising Indonesia’s “free and active” foreign policy principle and effectively making Indonesia a de facto US ally on digital governance. Other provisions require Indonesia to adopt measures equivalent to any US restrictions on third-country trade and economic security — a sweeping clause that has been read as constraining Indonesia’s ability to deepen economic engagement with China.

The controversy over the joint maritime statement issued following Prabowo’s November 2024 state visit to Beijing deserves sustained attention because it illuminates a pattern that recurs throughout his foreign policy. The statement included the phrase “joint development in areas of overlapping claims” — language that critics argued tacitly acknowledged Beijing’s expansive South China Sea maritime claims, including areas adjacent to Indonesia’s Natuna Exclusive Economic Zone. Indonesia has historically maintained that it has no overlapping claims with China because it does not recognize the Nine-Dash Line as a legitimate legal instrument. The language of the joint statement appeared to partially contradict that position. Government clarifications followed public scrutiny, but the sequence — announcement, controversy, clarification — has become characteristic of how Prabowo’s major foreign policy decisions are handled, raising questions about the quality of internal deliberation prior to commitment.

The Lowy Institute analysis, published in February 2026, provides the most rigorous available framework for evaluating Prabowo’s strategic logic. His philosophy, articulated explicitly in public speeches, is that Indonesia must abandon non-alignment in favor of multi-alignment — befriending multiple great powers simultaneously because “the strong will rule and the weak will suffer.” The practical implementation of this philosophy involves building personal relationships with Trump, Xi, and Putin simultaneously while maintaining ASEAN solidarity and deepening ties with Australia, India, and Japan. The Lowy authors argue that multi-alignment differs from non-alignment in a critical way: it requires Indonesia to manage the expectations and demands of multiple competing powers simultaneously, rather than declining to align with any of them. The risk is that this approach does not bring the benefits of active alignment with any partner while creating the liabilities of perceived entanglement with all.

Indonesia’s suspension of its participation in Trump’s Board of Peace for Gaza, announced in the wake of domestic criticism following the US–Iran war, illustrates the domestic political constraints on Prabowo’s foreign policy choices. The Board of Peace was established at the Davos World Economic Forum in January 2026 and included several countries that committed to overseeing a ceasefire and reconstruction in Gaza. Indonesia’s accession was presented as consistent with its tradition of contributing to international peace and its Islamic solidarity with Palestinians. The Iranian attack on Israel and the subsequent US–Israeli military operation against Iran — which Indonesia described as “deeply regretted” rather than directly condemned — created a domestic political environment in which continued participation in a Trump-initiated initiative was untenable. Prabowo offered to mediate the Iran dispute, but, as Indonesian officials acknowledged, none of the warring parties took the offer seriously.

The Australia–Indonesia Treaty on Common Security, signed in February 2026, represents the most institutionally significant defense development for Indonesia in a generation. The treaty establishes a formal security relationship with Australia — historically a complicated bilateral relationship due to geographic proximity, differing political cultures, and episodes including the East Timor crisis of 1999. The treaty’s provisions on military access and overflight rights have attracted scrutiny, with critics arguing that they compromise Indonesia’s strategic autonomy. Proponents argue that in an era of accelerating great-power competition, a formal security relationship with a capable democratic middle power is a rational hedge against strategic isolation. The RSIS analysis notes that while Prabowo’s agreements with Russia, China, and the United States appear diverse, they risk threatening Indonesia’s ability to maintain a genuinely neutral, non-aligned foreign policy precisely because of their accumulation.

The Jakarta stock market’s performance in 2026 serves as a useful proxy for investor confidence in Indonesia’s economic management amid the dual pressures of the energy crisis and geopolitical realignment. The Jakarta Composite Index experienced a 4 percent drop, bringing it under close scrutiny from MSCI — the global index provider whose decisions on whether to include or exclude securities in benchmark indices can trigger substantial capital flows. Indonesia’s status as a market under MSCI scrutiny signals that foreign institutional investors are watching the macro environment with concern. The combination of energy subsidies straining public finances, the US trade deal’s still-uncertain implementation, and the geopolitical complexity of Prabowo’s foreign policy creates a governance risk premium that will persist as long as these variables remain unresolved.

Eastern Indonesia’s clean energy potential is emerging as a distinct strategic narrative within the Prabowo administration’s economic program. A Lowy Institute analysis published in May 2026 notes that China is now positioned to provide clean energy investment to eastern Indonesia—a development that cuts across the grain of the US reciprocal trade agreement’s implicit effort to limit Chinese economic penetration. The archipelago’s eastern regions contain substantial solar, wind, and geothermal potential, as well as critical mineral reserves. The structural question — whether Indonesia can capture more value from those reserves through domestic processing rather than exporting raw ore — connects the energy crisis narrative to the longer-term developmental ambition of becoming the world’s fifth-largest economy by 2045. The Prabowo administration has not yet articulated a coherent answer to this question that satisfies both domestic and international audiences.

Indonesia’s foreign policy consultation deficit, identified by East Asia Forum analysts, is not merely a procedural concern — it has direct strategic implications. When major commitments are announced before key domestic stakeholders are briefed, the government is forced into a reactive posture: explaining and justifying decisions rather than building consensus around them. This pattern reduces the durability of foreign policy commitments, because decisions made without broad domestic buy-in are more vulnerable to reversal under political pressure. The Board of Peace suspension is the clearest example, but the pattern extends to the China maritime statement, the US defense arrangement, and the Australia security treaty. For a country positioning itself as a major voice in global affairs, the gap between Prabowo’s diplomatic ambition and the quality of his government’s domestic consultation process is a structural vulnerability.

Indonesia’s position in ASEAN is simultaneously its greatest strategic asset and its most significant constraint. As the bloc’s largest economy and a demographic giant, Indonesia carries weight in regional deliberations that no other member can match. But ASEAN leadership requires building consensus, managing smaller members’ concerns, and maintaining the bloc’s credibility as a forum that protects the sovereignty of all its members — including smaller ones that feel pressure from both Beijing and Washington. If Indonesia’s foreign policy becomes too visibly entangled with great-power competition, its ability to lead ASEAN credibly as a non-aligned broker diminishes. The tension between Prabowo’s ambition for Indonesia to be a “rising power” that matters to the great powers and its traditional role as ASEAN’s anchor is not irreconcilable, but managing it requires more strategic coherence than Indonesia’s foreign policy currently displays.

SOUTH CHINA SEA: BETWEEN RULES AND REALITIES

The South China Sea in the week of May 20, 2026, is both more institutionally active and more operationally contested than at any point in recent memory. The 48th ASEAN Summit adopted the ASEAN Leaders’ Declaration on Maritime Cooperation and endorsed the creation of a Philippines-based ASEAN Maritime Center — measurable institutional outputs from the Philippines’ chairmanship. The Code of Conduct negotiations, while not concluded, have been given renewed political attention, partly because the Philippines–China relationship is undergoing a reset driven by the energy emergency. Yet grey-zone operations in the waters around the Spratly Islands and Scarborough Shoal have not diminished. China’s assertion that it has “sensed” US acknowledgment of its position on Taiwan at the Trump–Xi summit carries implications that reverberate into the South China Sea, where ASEAN states are watching to see whether Washington’s regional commitments retain their credibility.

The ASEAN Maritime Center, once operational, will be the first dedicated regional institution with a mandate focused on maritime security coordination in Southeast Asia. Its functions as described at the summit — coordinating maritime monitoring, navigation safety, anti-smuggling efforts, anti-trafficking operations, and maritime policy cooperation — are broad enough to encompass both the South China Sea territorial disputes and the non-traditional security challenges (illegal fishing, trafficking, maritime crime) that affect all member states. The center’s establishment in the Philippines is symbolically appropriate given Manila’s position as the most assertive claimant state, but it also reflects the practical reality that the Philippines has the strongest motivation to invest in the institution’s effectiveness. The center will not, by itself, alter Chinese behavior in disputed waters — but it creates a platform through which ASEAN can more systematically document and respond to incidents.

President Marcos’s stated intention to pursue a “reset” in Philippines–China relations deserves careful analytical framing. It is driven primarily by the energy emergency: Manila’s need for alternative oil suppliers and China’s positioning as a potential source of both supply and financing create material incentives for accommodation. Marcos has been explicit that the reset does not imply abandonment of the Philippines’ legal rights — he has continued to reference UNCLOS and the 2016 arbitral ruling in public statements. The Chatham House analysis argues that the Hormuz crisis may have created a genuine opening for progress on the Code of Conduct, because the economic stakes of continued confrontation in the South China Sea are now elevated for both sides. Whether Beijing will offer enough in negotiations to justify the political cost of accommodation with Marcos’s domestic audience — which includes the still-active maritime and defense community that has been the primary driver of transparency operations — is the central question.

Ray Powell of Stanford University’s SeaLight project has provided the sharpest available assessment of the COC’s structural limitations. His core argument is that “the problem is not the absence of written rules but a lack of any authority China is willing to accept above its own political will.” The 2002 Declaration on the Conduct of Parties, which committed all signatories to self-restraint and peaceful dispute resolution, has not prevented more than two decades of Chinese militarization, island-building, and grey-zone pressure. The COC, if concluded, would face the same enforcement problem: there is no mechanism that any of the ASEAN claimants — the Philippines, Vietnam, Malaysia, and Brunei — can invoke to compel Chinese compliance, and China has made clear that it will not accept any enforcement instrument that assigns authority above its own political judgment. What the COC can do, as S. Rajaratnam School analyst Joseph Kristanto notes, is reduce misunderstandings in daily interactions — a meaningful but partial goal.

Vietnam’s posture in the South China Sea is structurally different from the Philippines’ in ways that rarely receive sufficient analytical attention. Vietnam is also a claimant state, also regularly subject to Chinese grey-zone pressure, but operates within a fundamentally different political framework: a one-party communist state that maintains a careful strategic balance between its historical relationship with China and its growing defense partnerships with the United States and Japan. Vietnam does not benefit from the same bilateral US defense treaty relationship as the Philippines. It manages its South China Sea disputes with less international visibility — partly by design — and relies more heavily on diplomatic engagement with China, including through the Communist Party channel that has no equivalent in Manila. The To Lam leadership’s consolidation of authority, following the second plenum of the 14th Central Committee in March, signals policy continuity rather than strategic innovation.

China’s maritime claim architecture in the South China Sea has not changed substantively, but its operational posture has continued to evolve. The declaration of a nature reserve at Scarborough Shoal — which Beijing controls but the Philippines claims — represents a new form of administrative entrenchment: by declaring environmental management authority over disputed features, China creates a bureaucratic overlay that complicates any future legal challenge. The deployment of buoys, the continued use of water cannons against Philippine vessels, and the ramming of fishing boats in waters that the 2016 arbitral tribunal ruled fall within the Philippines’ Exclusive Economic Zone are consistent with a strategy of incremental assertion rather than dramatic provocation. The Chinese approach is designed to accumulate facts on the water without triggering the kind of incident that would force a formal US military response.

Malaysia’s approach to the South China Sea is the quietest among the claimant states and arguably the most pragmatic. Malaysia has overlapping claims with both China and Vietnam in the Spratly Islands but maintains low-profile energy operations in contested areas while avoiding the confrontational transparency strategy adopted by the Philippines. Under the 2025 ASEAN chairmanship and continuing into 2026, Malaysia’s Anwar Ibrahim has consistently framed the South China Sea dispute as something that should be resolved within ASEAN, warning against the involvement of “outside forces.” This position serves Malaysia’s interest in avoiding escalation while preserving its energy assets, but it creates friction with Manila, which sees outside partnerships — particularly with the United States and Japan — as essential to maintaining deterrence against Chinese pressure.

The “minilateral” defense architecture that the Philippines has been building since 2023 continues to expand and now serves as the operational hedge against ASEAN’s structural inability to generate collective deterrence. The US–Philippines Enhanced Defense Cooperation Agreement provides American access to multiple military installations in the Philippines, several of which are operationally relevant in a Taiwan contingency and in South China Sea incidents. Japan has expanded its defense relationship with Manila under its Official Security Assistance framework. Australia is a growing security partner. This network of bilateral and trilateral arrangements cannot be described as a formal alliance system, but it functions as a deterrence overlay that supplements the inadequate ASEAN consensus mechanism. China’s characterization of this network as “outside force” interference is consistent with its preference for bilateral engagement, in which its structural power advantage is greater.

ASEAN’s South China Sea credibility problem has a temporal dimension that is often understated. The Code of Conduct negotiations have been ongoing for more than two decades. Every ASEAN chair since Malaysia’s 2015 chairmanship has identified the COC as a priority. Every year in which the COC is not concluded represents another year in which China’s physical facts on the water accumulate without a governing legal framework. The political cost of failure is borne most heavily by those ASEAN members — the Philippines, Vietnam — who face the most direct Chinese pressure, and least by those — Cambodia, Laos — who maintain accommodationist positions toward Beijing. This uneven distribution of costs and benefits within ASEAN’s consensus structure is one of the structural reasons why progress is so difficult: the members most motivated to conclude the COC are outnumbered by those with weaker incentives.

The intersection of the South China Sea with the Trump–Xi summit dynamics of mid-May 2026 is a variable that ASEAN states are watching with anxiety. China’s Foreign Minister Wang Yi declared after the Beijing summit that Beijing “sensed” US understanding of China’s position on Taiwan. If that sentiment extends to the South China Sea — if Beijing interprets the summit as a signal that Washington will not actively support ASEAN claimants against Chinese pressure — then the deterrence calculation changes for every maritime actor in the region. The Philippines, Vietnam, and Malaysia have direct stakes in the answer. The ASEAN Leaders’ Declaration on Maritime Cooperation is a useful outcome, but the diplomatic signal that will most durably shape behavior in the South China Sea is not what ASEAN says in a declaration, but what the United States does when the next significant incident occurs at Scarborough Shoal or Second Thomas Shoal.

 MAINLAND SOUTHEAST ASIA: THAILAND, VIETNAM, AND MEKONG DYNAMICS

Thailand’s February 8, 2026 general election produced a coalition government that reflects the country’s persistent political fragmentation rather than any decisive mandate. Bhumjaithai Party leader Anutin Charnvirakul became prime minister after his party formed a coalition with the once-dominant Pheu Thai Party — a combination that is pragmatic in its arithmetic but structurally unstable given the two parties’ different political bases and constituencies. The new government immediately faced a governing environment defined by the energy crisis, ongoing border tensions with Cambodia, and the broader regional economic pressures. Anutin’s immediate economic response — a temporary diesel price cap funded through the state Oil Fuel Fund — has been judged adequate in the short term but fiscally unsustainable if the Hormuz disruption persists beyond mid-2026.

The Thailand–Cambodia border conflict is a slow-burning crisis that has repeatedly proven resistant to technical solutions and diplomatic management. Tensions that intensified in 2025 have continued into 2026, with both governments facing domestic political incentives that make de-escalation politically costly. Economic measures and national political narratives have become deeply entangled with security dynamics, and external actors — including China, which maintains close ties with Cambodia’s ruling family — have begun to be drawn in, adding complexity to an already volatile bilateral relationship. The new Thai coalition government, which includes nationalist elements from multiple parties, does not enter this conflict with a strong mandate for accommodation. The Thailand–Cambodia border issue has a long historical dimension rooted in disputed temple territories and overlapping claims that have generated military incidents as recently as 2011.

Vietnam’s political environment in 2026 is defined by the consolidation of General Secretary and President To Lam’s authority following the second plenum of the 14th Central Committee of the Communist Party of Vietnam in March. Key appointments, policy targets, and organizational priorities have been confirmed, and the initial uncertainty that accompanied the party leadership transition from Nguyen Phu Trong’s era has been substantially resolved. Vietnam’s foreign policy under To Lam is characterized by explicit multi-vector hedging: expanding defense and economic ties with the United States, Japan, South Korea, and Australia, while maintaining the complex relationship with China that is historically, ideologically, and economically central to Vietnam’s strategic position. The energy crisis has accelerated Vietnam’s engagement with non-traditional suppliers and its domestic biofuel transition, adding an energy-security layer to an already complex foreign-policy calculus.

The Mekong River Basin remains one of Southeast Asia’s most consequential environmental and political arenas, with implications for food security, water governance, and great-power competition that are all systematically underweighted in mainstream analysis. Chinese dam operations upstream continue to have downstream effects on water flows in Thailand, Cambodia, Laos, and Vietnam. The transboundary contamination from Chinese-linked rare earth mining operations in Myanmar’s Kachin and Shan States — documented by Human Rights Watch as involving arsenic and other toxic metals reaching rivers and flowing into Thailand — is an additional and underreported environmental stressor. The Mekong River Commission, which includes China as a “dialogue partner” but not a full member, lacks the authority to compel upstream behavior changes, and China has historically been reluctant to accept binding constraints on its dam management practices.

Laos presents a distinctive economic and political situation that deserves more analytical attention than it typically receives. The country is navigating its own domestic political transition in 2026, with national and provincial representative elections taking place within a single-party system that offers limited public visibility into policy deliberations. Economically, Laos faces a debt sustainability crisis driven by infrastructure financing — primarily the Laos–China Railway, whose construction debt has placed significant pressure on public finances. The railway itself is operational and generating transit revenues, but the structural asymmetry of the arrangement — whereby Chinese state entities hold most of the debt and Chinese companies manage the most profitable segments of the rail corridor — has reinforced concerns about economic sovereignty. The Hormuz crisis has affected Laos primarily through its landlocked position: it relies on Thailand and Vietnam for fuel supply chains that are themselves under stress.

Cambodia under Prime Minister Hun Manet, who succeeded his father, Hun Sen, in 2023, continues to navigate the tension between its close alignment with China and its desire to diversify its economic relationships. Local elections are set for 2027 and national elections for 2028, and Cambodia’s pattern — identified by analysts at ASEAN Wonk — of tilting more visibly toward Beijing as elections approach has begun to influence its posture in 2026. US defense exercises with Cambodia, resumed in recent years as a signal of diplomatic reengagement, help Phnom Penh maintain a narrative of diversified partnerships, but the structural weight of Chinese economic involvement — in infrastructure, tourism, and special economic zones — gives Beijing leverage that no other actor can currently match. The Ream Naval Base expansion, which has generated sustained US concern about potential Chinese military access, remains a source of bilateral tension.

The transnational scam compound crisis is the Mekong subregion’s most significant new security challenge, and the 2025 crackdowns did not resolve it. Operations in Myanmar, Cambodia, and Laos — running industrial-scale online fraud targeting victims primarily in China, Taiwan, South Korea, and beyond — shifted geographically and operationally following enforcement actions, but the underlying business model and the corrupt local protection networks that enable it have not been dismantled. The issue has become diplomatically sensitive as South Korea and the United States have intensified law-enforcement cooperation, financial disruption measures, and travel advisories, raising reputational and governance stakes for the affected governments. The ASEAN Public Policy Institute assessed in its 2026 outlook that the scam compound crisis “accelerated adaptation and relocation” rather than elimination, and that the issue’s diplomatic sensitivity would continue to grow.

Singapore, which stands apart from the energy vulnerability experienced by its ASEAN neighbors due to its unique strategic oil reserve of over 200 days, has maintained its position as the region’s most stable financial and logistics hub during the Hormuz crisis — but not without costs. Singapore’s position as a major oil refining and trading hub is directly affected by supply disruptions, and its status as a transshipment center for goods moving between the Middle East and East Asia places it at the intersection of the trade disruption. The Singapore government has managed the energy price pass-through with its characteristic competence, but the broader regional economic slowdown reduces demand for Singapore’s financial and service exports. Singapore’s strategic value to ASEAN and the great powers as a neutral, credible, and institutionally robust actor has increased in the current environment of heightened uncertainty.

Brunei’s energy security posture deserves brief mention as a contrast to the region’s energy-importing economies. As a hydrocarbon producer and exporter, Brunei does not face the supply disruption problem that has dominated regional analysis. Its primary concern is price: the global oil price rise directly benefits its government revenues. However, Brunei’s long-term economic sustainability question — how to manage the transition away from hydrocarbon dependence given its small population and limited industrial base — is not helped by a high-price environment that reduces the urgency of diversification. Rethinking Brunei’s air defense priorities, as analyzed in the Lowy Interpreter in May 2026, reflects a broader regional defense-investment recalibration underway as great-power competition intensifies.

The Mekong subregion’s ASEAN Power Grid ambitions received explicit endorsement at the Cebu summit, with the LTMS-PIP initiative cited as a proof of concept for multi-country electricity trade. The APAEC 2026–2030 cycle prioritizes practical cross-border power connectivity, and the energy crisis has given the political will for implementation a boost that years of technical discussion had not produced. If realized, the grid would constitute the most significant regional infrastructure integration in Southeast Asia since the ASEAN Free Trade Agreement transformed trade flows in the 1990s. The political challenge — managing sovereignty concerns, investment financing, and the varying regulatory environments of eleven different national electricity markets — remains formidable. But the crisis has, for the first time, created a strategic urgency that matches the technical aspiration.

STRATEGIC OUTLOOK: SIGNALS TO WATCH

The dominant structural reality shaping Southeast Asia in the second quarter of 2026 is not any single crisis but the compounding of multiple simultaneous pressures on a regional architecture — ASEAN — that was designed for a more stable order. The Hormuz energy shock, the Myanmar governance catastrophe, the Philippines’ domestic political crisis, Indonesia’s multi-alignment tensions, and the South China Sea’s managed confrontation are not independent events but interacting dynamics that collectively test the region’s resilience, institutional creativity, and diplomatic bandwidth in ways that have no recent precedent. The most important analytical question is not which of these pressures will resolve first, but whether they collectively produce a deepening of regional institutional capacity or an acceleration of its fragmentation.

The energy crisis will remain the dominant immediate driver through at least the first half of 2026. The critical variable is not the price of oil, which will fluctuate in response to military and diplomatic developments in the Middle East, but the duration of Hormuz disruption. Analysts at Fortune and JP Morgan have estimated that oil prices could reach US$150 per barrel if the strait remains effectively closed through June. A ceasefire or sustained reopening of shipping lanes would provide significant relief to all Southeast Asian economies, particularly the Philippines, Vietnam, and Thailand. A prolonged disruption — beyond the third quarter of 2026 — would begin to produce the recessionary dynamics that multiple analysts have flagged as a tail risk for frontier markets in the region.

The Philippines Senate impeachment trial of Sara Duterte is the most immediately consequential domestic political process in Southeast Asia this week. The trial opened May 18 and will proceed over weeks to months. The key signal to watch is whether Alan Peter Cayetano’s leadership of the Senate, as a declared Duterte ally, allows procedural maneuvering that effectively blocks a fair presentation of the prosecution’s case — or whether the trial proceeds on its legal merits. International observers, including the ICC monitoring the proceedings against Rodrigo Duterte in The Hague, will be watching the Philippine Senate’s conduct as a proxy for the country’s democratic institutions. The outcome will materially affect ASEAN’s chairmanship dynamics: if Marcos is consumed by political crisis, the second 2026 ASEAN Summit and the Code of Conduct negotiations lose their primary champion.

The Indonesia–China maritime relationship requires close monitoring in the context of Prabowo’s stated commitment to multi-alignment. The joint maritime development statement of November 2024 has not been formally retracted, and China has every incentive to push for operationalization of “joint development” arrangements in areas near Natuna, which it claims are within its historical fishing rights under the Nine-Dash Line. Indonesia has consistently denied that such a claim is legally valid. If China uses the energy crisis — offering preferential crude supply terms — as leverage to advance the “joint development” concept in the Natunas, it would constitute a significant test of Prabowo’s willingness to defend Indonesian sovereignty against transactional pressure he has partly created through his own diplomatic framing. Watch for any announcement of bilateral energy or maritime cooperation agreements between Jakarta and Beijing in the coming weeks.

The South China Sea Code of Conduct negotiations will advance or stall depending on signals from the Philippines–China bilateral channel, which are currently difficult to read. Marcos has indicated interest in a reset; Beijing has not publicly indicated what it would offer in return. The second ASEAN Summit of 2026, which the Philippines will host later in the year, is the remaining formal deadline for the chairmanship’s COC ambition. Watch for any Philippines–China bilateral meetings involving Foreign Secretary Enrique Manalo and his Chinese counterpart Wang Yi, which would signal whether the reset is substantive or merely rhetorical. Watch also for any incident at Scarborough Shoal or Second Thomas Shoal: any Chinese use of force against Philippine vessels in the weeks following the Cebu summit declarations would immediately deflate the reset narrative.

Myanmar’s civil war will continue to generate regional consequences through refugee flows, cross-border resource extraction, and transnational crime networks, even if it receives less international attention than it deserves. The Indonesian universal jurisdiction case against Min Aung Hlaing is the most legally novel development in the accountability architecture, and its progress through Indonesian courts will be a signal worth watching. If Indonesia proceeds with the case despite ASEAN’s non-interference norm, it will represent a significant precedent. If Indonesia quietly stalls the proceedings, it will signal that Prabowo’s multi-alignment priorities take precedence over accountability commitments. The distinction matters for how the international community assesses ASEAN’s credibility as an institution capable of enforcing any norms at all.

Vietnam’s energy situation requires monitoring through June. With 30 to 45 days of fuel reserves as of late March and a daily crude requirement that cannot be met from domestic production, the pace at which Vietnam is successfully diversifying supply — from Russia, from non-Middle Eastern sources, through its E10 rollout — will determine whether the country moves toward genuine fuel shortages in the second quarter. Vietnam Airlines’ flight cancellations are the most visible indicator of stress in the aviation sector; watch for announcements from Petrovietnam on new supply contracts or from the Ministry of Industry and Trade on additional rationing measures as indicators of the reserve position.

ASEAN’s Digital Economy Framework Agreement is a slower-moving but strategically significant signal to watch. If DEFA is signed in 2026 as planned, it will constitute a concrete deliverable from ASEAN’s integration agenda at a time when the bloc’s credibility on its more political agenda items is under strain. More importantly, DEFA’s provisions on data flows, digital trade, and e-commerce regulation will shape the competitive environment for technology platforms operating across the region for years to come. Watch for any indication that the Indonesia–US reciprocal trade agreement’s digital trade provisions are creating friction with the DEFA negotiations — a potential area of conflict between the two frameworks, particularly around data localization and third-country platform access.

The Russia energy pivot across Indonesia, Malaysia, and Vietnam bears watching as a long-term structural signal rather than a short-term emergency response. If these arrangements produce durable, long-term supply contracts — as opposed to spot-market purchases — they will represent a sustained deepening of Russia’s economic penetration of Southeast Asia that China, India, and Russia will all find strategically useful. The EU and the United States will be watching closely. Any formal long-term crude supply agreement between a major ASEAN economy and Russian state energy companies would face diplomatic pressure from Washington and Brussels, testing the resilience of ASEAN’s multi-alignment claims in a domain with direct geopolitical implications.

The broader strategic signal that analysts should monitor is whether the cumulative pressures of 2026 are pushing ASEAN toward deeper functional cooperation — on energy reserves, power grids, maritime coordination, and digital governance — or whether each crisis is producing national solutions that further fragment the regional architecture. The evidence from the 48th Summit is mixed: the regional fuel reserve concept, the ASEAN Maritime Center, and the power grid acceleration all suggest at least rhetorical commitment to deeper integration. But the simultaneous unilateral energy supply deals, national rationing measures, and bilateral security arrangements pursued outside ASEAN’s formal framework suggest that member states’ primary instinct remains national rather than collective. The tension between those two impulses — integration under pressure versus self-help under pressure — is the most important structural dynamic in Southeast Asian governance for the remainder of 2026.

KBA13 Insight Update: Southeast Asia is published every Wednesday by the KBA13 Insight editorial team. All data, facts, events, and figures are validated against primary sources. For subscriptions and archives, visit www.kba13.com.

© 2026 KBA13 Insight. All rights reserved.

About The Author

Kamaruzzaman Bustamam Ahmad

Prof. Kamaruzzaman Bustamam Ahmad (KBA) has followed his curiosity throughout life, which has carried him into the fields of Sociology of Anthropology of Religion in Southeast Asia, Islamic Studies, Sufism, Cosmology, and Security, Geostrategy, Terrorism, and Geopolitics. Prof. KBA is the author of over 30 books and 50 academic and professional journal articles and book chapters. His academic training is in social anthropology at La Trobe University, Islamic Political Science at the University of Malaya, and Islamic Legal Studies at UIN Sunan Kalijaga Yogyakarta. He received many fellowships: Asian Public Intellectual (The Nippon Foundation), IVLP (American Government), Young Muslim Intellectual (Japan Foundation), and Islamic Studies from Within (Rockefeller Foundation).

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