Southeast Asia's external security environment has remained relatively benign. This can be expected to continue into 2004–05. U.S.–China relations will remain mostly steady and peaceful because it is in the interest of both powers at this point of history to strengthen co-operation and manage issues that can cause bilateral tensions and conflict. The most important of these issues, Taiwan, still retains an element of unpredictability, especially in view of the Presidential election in Taiwan in 2004. However, even if the Democratic Progressive Party's candidate wins the election, the United States can be expected to restrain Taiwan from any subsequent act that could precipitate a crisis with China. Another subject that is likely to feature more prominently between the United States and China in 2004, an American election year, is the trade and currency issue, but it is unlikely to cause any significant damage to the relationship. The apparently growing U.S.– China co-operation will continue to be accompanied by competition for influence in the region, especially in Southeast Asia.

China–Japan relations will still be marked by underlying distrust but economic and other forces, like the ASEAN Plus Three — China, Japan and South Korea — regional framework will also be pulling them towards co-operation.

The situation on the Korean peninsula remains unstable but the common interest of the major powers to prevent conflict and to keep the peninsula nuclear free augurs well for the future. Particularly encouraging is the co-operation between the United States and China to resolve the nuclear crisis. Yet, the possibility of adverse outcomes to the crisis on the peninsula, including possible proliferation of weapons of mass destruction to terrorist groups, cannot be entirely ruled out, which means a degree of uncertainty and anxiety will remain pending the resolution of the crisis one way or another. Needless to say, the nature of the outcome in Korea could also have implications for Japan's security policies and for the American security posture in the Western Pacific, subjects of much interest to Southeast Asia.