The Senkaku Islands dispute is the first Japan-China security crisis in seven decades of peace. This puzzling contretemps between Asia’s two giants unnerves the region, whose waters host half of global trade, and President Barack Obama faces a test. American power anchors the China-Japan balance in a tripod that is the unsung secret of East Asia’s peace and progress.

Prime Minister Shinzo Abe is worried. “As a result of the trust and confidence between Japan and the United States having gone through a pretty rocky period,” he told the Washington Post on February 16, “Japan’s foreign policy clout has been declining. And the stability in Japan’s adjacent waters and in the Asia-Pacific region is being affected, with acts of provocation seen against Japan’s territory and territorial waters.” Obama did not mention the Senkakus (Diaoyu in Chinese) in public during the prime minister’s visit, as Abe did at length, and much depends on the president’s acting upon his one strong sentence: “The U.S.-Japan alliance is the central foundation for our regional security.” Only if he goes beyond “leading from behind” will peace hold in the East China Sea and Beijing receive an overdue message.

“Japan is back, keep counting on my country,” Abe said in Washington, but he will also need luck with his economic policy and agreement to join Trans-Pacific Partnership talks, to regain Japan’s clout as a top power and perhaps stir Obama from insouciance.

War or peace between China and Japan, and America’s coping with the consequences, has been a drama in East Asia for a century. In 1895 the weakening Qing Dynasty fought upstart Japan and was crushed; Beijing lost Taiwan, and soon Japan colonized Korea. Washington backed the loser. Repeatedly from then on, the United States failed to achieve good relations with China and Japan simultaneously.

As China recovered from the collapse of its 2,000-year-old Confucian monarchy in 1911, Japan pushed again with its infamous “21 Demands” for Chinese territory in 1915. When Japan invaded Manchuria, China’s northeastern provinces, in 1931 and launched full-scale war in 1937, the United States and United Kingdom wrung their hands and did nothing. The famous Kellogg-Briand love fest of 1928 “outlawing war as an instrument of national policy,” signed by 62 nations (including Japan!), turned out to be toothless.

Pearl Harbor ended the dithering, and the United States led the Allies in a deadly war with Japan. Chiang Kai-shek’s flawed China was the West’s ally from his wartime capital, Chongqing. This time the United States backed the winner, Japan lost, and Hiroshima and Nagasaki paid the price.

But Washington’s closeness with China ended when Mao Zedong defeated Chiang in 1949, and Stalin and Mao soon gave North Korea a green light to attack South Korea. For a quarter-century the United States was in a dangerous standoff with China, firming up security treaties with Japan, Australia, South Korea, and others.

The breakthrough to China by President Nixon in 1971-72 began an economic transformation that replaced repeated fighting in East Asia (Japan-China, Korea, Vietnam, close shaves in the Taiwan Strait). This prosperity occurs under the umbrella of a U.S.-China-Japan entente. The potentially fraught relationship between Japan and China is finessed by superior U.S. power.

Not only have Japan and China been at peace, but they have become vital economic partners. And the United States for the first time in close to a century has achieved good relations with Beijing and Tokyo simultaneously. Smaller powers breathe easier after years of feeling pressured between a Communist bloc and an American bloc. Amusingly, the Australian academic Hugh White in a new book, The China Choice: Why America Should Share Power, delighting U.S. declinists, urges an end to U.S. primacy so that Asia can enjoy “peace, stability, and opportunities to grow.” That’s exactly what U.S. primacy, keeping China and Japan steady, has afforded Asia for 40 years.

But this China-Japan-U.S. tacit entente is under threat amidst the rocky barrenness of the Senkakus. Like two champion footballers arguing over a pair of boots, Japan and China snarl and escalate. Japan points out the United States included the islands in the Okinawa Reversion of 1971. China says the islands have been Chinese since the Ming Dynasty (1368-1644).

True, this is Japan’s dispute, not the United States’, but the two countries together face a broad challenge from China. Ronald Reagan at first felt neutral about the Falkland Islands dispute between Britain and Argentina in 1982, irritating Margaret Thatcher, but in the end he backed Britain for the sake of the alliance.

The real problem in the East China Sea is Japan’s apprehension about China’s growing muscle-power, and China’s maritime push to match economic success with military dominance in its “historical backyard.” An eye on resources, yes, but President Hu Jintao’s remark on the 60th birthday of the People’s Republic of China is seminal: “Today a socialist China is standing toweringly in the Eastern world.”

This “towering” China and a Japan with backbone under Abe make the flare-up serious. The four-term governor of Tokyo, Shintaro Ishihara, cried, “I don’t want Japan to end up as a second Tibet.” Last week Abe became the first major world leader to say Chinese nationalism is being dragged to the rescue of a government no longer gaining legitimacy from socialism.

“As a country that is under the one-party rule of the Communist party,” he told the Washington Post, “formally what they should be seeking is equality. .  .  . And I believe it is fair to say that is probably what constitutes the legitimacy of one-party rule by the Communist party. But as a result of introducing the market economy, China has dropped one of its pillars of legitimacy, which was equal results for all. This has led them to require some different pillars—one of which is high economic growth, and another of which is patriotism [italics added].”

Yet Obama just asks everyone to be careful with their guns. His national security aide Daniel Russel briefed the press: “Sino-Japan relations have a significant impact on all of us, and on all the countries in the region, so it’s something we pay close attention to.” But U.S.-Japan relations should also have an impact around the world. Why be passive about the alliance? Why not secure Beijing’s “close attention” too? Must others always lead? It did not help that Hu got a state dinner from Obama whereas Abe got lunch and that Abe’s wife did not make the U.S. trip because Michelle Obama was “too busy” to host her.

It’s true, as Obama aides say, that Japan has catching up to do after three years of drift under a Democratic Party of Japan government. Abe acknowledged that it’s “high time, in this age of Asian resurgence,” for Japan to bear more responsibility to promote “our shared rules and values, preserve the commons, and grow side by side with all the high achievers in the region.” He refreshingly aligned Japan under his Liberal Democratic party with “the United States, Korea, Australia, and other like-minded democracies throughout the region.”

At one level Obama’s caution is understandable, as the rocky isles are worth little. Alexander Downer, longtime Australian foreign minister under John Howard (1996-2007), told me the day Abe visited Washington: “There’s nothing to fight for in those islands. The two won’t go to war.” Abe himself declared, “I have absolutely no intention to climb up the escalation ladder.” But the danger lies in any perception that Tokyo and Washington acquiesce in Beijing’s maritime push. The dragon would open his mouth for more. Should Abe acknowledge China’s equal claim to the islands, Beijing would nibble further at Vietnam and the Philippines in the South China Sea. On we would go, and no new Kellogg-Briand pact would “outlaw” combat.

“Since we have decided that the United States is bluffing in the East China Sea,” wrote a Chinese air force colonel in Bejing’s Global Times in August, “we should take this opportunity to respond to these empty provocations [by Japan] with something real. This includes Vietnam, the Philippines, and Japan, .  .  . the three running dogs of the United States in Asia. .  .  . We only need to kill one, and it will immediately bring the others to heel.” That is why Abe trumpeted the U.S. alliance last week and why Obama should have pulled out the stops to do the same.

Japan wants steady U.S.-China relations, not a love affair and not hostility. It is often overlooked that China also faces limits. Plummeting relations with Japan would surely bring China major problems with the United States; even Obama’s whispered backing of Abe has given Beijing pause. Continuance of Japanese-American closeness is arguably in China’s interests, because an unleashed Japan with nuclear weapons would be worse for China and North Korea than Japan as junior partner to the United States.

China’s rise is fine, but the tacit China-Japan-U.S. entente is essential. It would be a disaster for Asia if Japan’s record-breaking performance as a major power that for 68 years has not killed or lost a soldier in war came to an end.

China understands U.S. power but wonders, as many around the world do in hope or fear, about Obama’s will. France and the United Kingdom cannot push Obama to take a stance in the East China Sea, as they did in Libya. His own resolve is the key, and the Senkakus are unlikely to calm down unless Obama supports Japan with believable conviction. Secretary of State Kellogg in 1929 won the Nobel Peace Prize for wishful thinking on disarmament. Obama won it in 2009 for antiwar pledges. In the East China Sea, wishful thinking will not suffice to steady the U.S.-China-Japan entente.

Obama came to office vowing “fresh thinking and a change from the U.S. policy approach of the past eight years.” During 2009 he sought close rapport with Beijing, but he failed and sobered up. What Obama should emulate is the Reagan-Shultz architecture for Asia policy. In the 1970s President Nixon felt in urgent need of China’s support to cope with the Soviet Union. President Reagan saw less need. He and George Shultz believed that in China, as in the Soviet Union, communism was ultimately a passing phase. Shultz wanted an Asia policy, not just a China policy. He spoke of China’s important “regional role” (even more important today) but reserved the term “strategic” for Washington’s relationship with Japan. In fact, this policy brought the Reagan administration superior relations with the People’s Republic of China as well as with Taiwan and Japan. James Lilley, later ambassador in Beijing, called the period from 1983 to 1988 “the Golden Years in terms of China policy.”

Many here in Australia hope Obama’s “pivot” might mean an Asia-wide policy bringing Japan, India, and Australia heavily into the picture, with China important but not the alpha and omega. They may be disappointed. Obama’s diffidence toward Abe seems a missed opportunity. Abe favors cooperation with China but wariness of China’s nationalism. Obama should draw the same distinction for the United States.

Obama wants Beijing’s “help” with North Korea and other matters, but the Chinese don’t think that way. The Chinese naturally only want to help themselves. But they understand strength, and if we grasp both points, we’ll secure equilibrium in East Asia. Beijing’s attitude is close to the one Lord Palmerston expressed in 1848: “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

Ross Terrill of Harvard’s Center for Chinese Studies is visiting international senior fellow at the Australian Strategic Policy Institute in Canberra. He is the author of The New Chinese Empire, Mao, and The Australians.

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