Managed Confrontation: The Indo-Pacific After Shangri-La 2026

The 23rd Shangri-La Dialogue (SLD), held in Singapore from May 29 to 31, 2026, lacked major surprises. There were no breakaway statements, no announcements of new pacts, and no moments of public confrontation between great powers. However, it presented an image of a security order that has crossed the threshold of confrontation: not armed, but managed.

Managed confrontation refers to a condition in which great powers actively compete for strategic position (accelerating military capabilities, securitizing supply chains, and disputing zones of influence) while avoiding direct armed conflict, managing rivalry within escalation thresholds that neither party wishes to cross.

The SLD is the most important defense and security forum in the Indo-Pacific. Organized annually by the International Institute for Strategic Studies (IISS) and held in Singapore since 2002, it brings together defense ministers, military chiefs, senior officials, and specialized academics from over forty countries. This edition included 44 states, with 54 ministerial-level delegates and more than 42 defense chiefs, as well as representatives from the private sector and the defense industry. As such, this forum is the space where Indo-Pacific actors gauge the real temperature of competition between great powers and calibrate their position in response.

The forum placed less emphasis on abstract statements about the desired regional order and more attention on concrete capabilities, such as defense spending, munitions, underwater drones, critical infrastructure, intelligence, air defense, advanced presence, and logistical resilience. This shift in focus (from principle to capability) is the balance of the meeting.

The central question of the Indo-Pacific is no longer what architecture is desired to sustain peace, but what real capabilities exist to uphold it. This shift implies three things: that the structural competition between great powers is considered consolidated; that deterrence has ceased to be declarative and has become operational; and that regional actors (from the United States to Vietnam, including Australia and ASEAN) are adjusting to a scenario where open war is sought to be avoided, but material preparation is accelerating.

This report organizes the most relevant topics of the forum into three argumentative axes. Each articulates the observed evidence with a strategic reading of its significance. The Latin American and Chilean perspectives are then examined, and the conclusion integrates the findings into a prospective balance.

The three axes in summary

1. The Reordering of Confrontation Between Great Powers

The first axis analyzes how the United States and China relate at this moment in the strategic cycle. Four elements define the relationship: a more transactional U.S. logic, a deliberate Chinese absence in high-level political and military spheres, a rhetorical moderation that does not alter the background, and a Taiwan issue that continues to create tension.

1.1.   The Indo-Pacific as a Center of Gravity, Under a New Logic

The forum confirmed that the Indo-Pacific remains the decisive space of rivalry between great powers. The novelty of 2026 was not this acknowledgment, but the change in the form of U.S. presence. Washington reaffirmed its regional commitment, but under an openly transactional logic. It ensures greater presence, but in exchange for allies taking on greater financial and military burdens. Secretary of Defense Pete Hegseth explicitly called on Asian partners to increase defense spending (setting 3.5% of GDP as a new contribution standard) and to strengthen their own capabilities in the face of the rapid increase in Chinese military power.

Figure 1: First Island Chain in the Indo-Pacific (reference map)

Source: AthenaLab’s own elaboration.

The most relevant element of his intervention was the definition of U.S. strategy, characterized by a geographical focus. This is, the withdrawal from a global presence to a regional one, concentrating efforts in the Indo-Pacific, specifically on the first island chain (image 1). For Washington, controlling that strip is key to what Hegseth called a “favorable balance of power” in the region, capable of raising the cost-benefit calculation of any major confrontation and, thereby, deterring it. The urgency to close other fronts (the Middle East, Ukraine) responds to the same logic: freeing up resources to concentrate on the priority theater. In Hegseth’s own words, one can have all the rules one desires, but if they are not backed by military power, they are worth little more than the paper they are written on.

In the room, the call translated into levels of commitment proportional to the perception of threat. Japan, the Philippines, and South Korea emerged as the most willing partners to increase capabilities and forge new alliances. Of particular interest was the approach of certain NATO members to the Asia-Pacific through the IP4 group (Australia, South Korea, Japan, and New Zealand), without constituting formal mutual defense agreements. The difference from previous years is not one of position but of model. The United States is not abandoning Asia but redefining the terms of its commitment toward a more distributed deterrence less dependent on the strategic subsidy it maintained for decades. Those who invest in their own capabilities will remain relevant partners; those who do not will see their position eroded. This is the realistic stance of the current Trump administration.

1.2.  The Chinese Absence and the Problem of Asymmetric Dialogue

The most relevant political signal from the forum was an absence. For the second consecutive year, Chinese Defense Minister Dong Jun did not attend. China sent a lower-ranking delegation, led by Major General Meng Xiangqing from the National Defense Institute of the People’s Liberation Army, which several delegates interpreted as a deliberate downgrade of its participation. The absence spared Beijing from direct confrontation over Taiwan and the South China Sea.

In the room and in the hallways, this absence of high-ranking figures was read as a message of “passive diplomatic confrontation,” directed more at the current U.S. administration than at internal factors. The Singaporean hosts, for their part, managed their dual role as a commercial partner of China and a strategic ally of the United States with notable balance.

The absence has structural consequences. With this decision, Beijing prioritizes message control over exposure in scenarios where it may face public pressure. Thus, the forum ceases to operate as a space for multilateral dialogue between Washington and Beijing and becomes a setting where the United States and its allies coordinate positions in front of a China that listens without exposing itself. The asymmetry is not neutral, as it reduces the utility of the Dialogue as a mechanism for interaction between the two powers.

1.3.  Rhetorical Moderation, Structural Confrontation Intact

The U.S. discourse was less confrontational than in previous years, partly due to the recent rapprochement between Donald Trump and Xi Jinping and the planned visit of Xi to the United States in September 2026. But the substance did not change: the United States maintained its goal of preventing any Chinese regional hegemony, preserving the balance of power, and reinforcing its alliances with Japan, South Korea, Australia, the Philippines, Singapore, and India.

The distinction matters because it defines the nature of the moment. This is not a real détente, but risk management in a diplomatically sensitive juncture. The search for stability with China occurs within managed confrontation, not as a substitute for it. Confusing tone with substance would lead to an optimistic reading that the content of the forum does not support in fact.

 

1.4. Taiwan: Present in the Background, Absent from the Podium

Although the U.S. discourse avoided overstating the issue (Hegseth, in fact, did not mention Taiwan in his intervention), tensions surrounding the strait remained as a backdrop to the entire meeting. Regional concerns focused on maritime coercion, military maneuvers, gray areas of regulation, and the risk of miscalculation.

Taiwan remains the main point of potential high-intensity friction in East Asia, but actors tacitly agreed not to make it the explicit axis of the forum. The careful treatment from the podium does not reflect a reduction in structural risk, but a deliberate management of the public narrative. Neither party wants to precipitate a discursive escalation that would close the diplomatic space recently opened by the Trump–Xi summit in May 2026.

The underlying factor is the tension between what numerous actors consider international waters and what China understands as its maritime and aerial sovereignty. This dispute will continue to strain the immediate future, not only among regional actors but also with extra-regional powers that assert their right of passage.

2. Where Security and Trade Converge: The Material Environment

The second axis shifts the focus of great powers to the field where confrontation materializes. Three parallel processes define it: the expansion of maritime security into the underwater domain, the consolidation of a functional alliance architecture without total alignment, and the shift from declarative deterrence to operational deterrence.

2.1. From Surface Sea to Undersea

One of the most important conceptual novelties of the forum was the centrality of underwater security. Fiber optic cables, underwater energy infrastructure, anti-submarine warfare, underwater drones, and shadow fleets emerged as structural, not marginal, themes. The event organizer (IISS) dedicated a specific session to the maritime security disorder in Asia, emphasizing that underwater threats, transnational crime, territorial disputes, and the increase in capabilities exacerbate the regional environment.

The most concrete outcome of the forum in this domain was the launch of the GUIDE framework (Guiding Principles for Underwater Infrastructure Defence Exchanges), an initiative from Singapore with co-signatory countries from multiple regions and the first interregional instrument dedicated specifically to the protection of critical underwater infrastructure.

Australia highlighted the increase in incidents against cables and critical infrastructure (referring to the cuts recorded between Germany and Finland, and between Sweden and Lithuania, in 2024 and 2025), linking them to strategic vulnerabilities both in the Indo-Pacific and in the Baltic. This interregional connection is significant, as the underwater domain is becoming a competitive area with its own logic, where actions in one region generate learnings and vulnerabilities that transfer to others.

Maritime competition is no longer limited to surface fleets or control of routes. It shifts to the underwater domain, data, sensors, and critical infrastructures, demanding new capabilities (technical, regulatory, and operational) that most regional actors still do not possess. In other words, the traditional dimensions of conflict (land, maritime, aerial, cyber, and space) are expanding to increasingly integrate the underwater realm. This includes fiber optics, data, artificial intelligence, and supply chains operating there.

 

2.2. Allies with Increasing Autonomy, Without Break

Australia, Japan, South Korea, the Philippines, and Singapore are strengthening their own defensive capabilities without breaking from the U.S.-led architecture. Hegseth praised those who have increased spending and operational cooperation, in explicit contrast to partners who have not followed that path.

The U.S. pattern is consistent. More self-investment, more operational cooperation, and more participation in emerging technological domains, but within the framework of existing alliances. The region is moving toward a network of functional minilateralism, such as AUKUS, U.S.-Japan-South Korea cooperation, U.S.-Philippines, Australia-India, and strengthened ties with Singapore (see image 3). It is not an Asian NATO, but a flexible deterrence architecture, without the rigidity of a collective treaty.

Image 3: Flexible Framework of Minilateralism in the Indo-Pacific

Source: AthenaLab’s own elaboration.

This flexibility is both a strength and a limitation. It allows adaptation to the capabilities of each actor, avoids the logic of blocs, and preserves spaces for diplomacy with China. However, lacking formal mechanisms for collective defense, its deterrent power depends on repeated signals of capability and commitment. Meanwhile, ASEAN retains a high-value role by preserving a space for dialogue and fostering communication that contains risks and fragmentation.

2.3. From Declarative Deterrence to Operational Deterrence

The forum showed less emphasis on abstract statements and more attention to concrete capabilities. Defense spending, munitions, underwater drones, critical infrastructure, air defense, and logistical resilience dominated substantive discussions. The U.S. demand for greater allied spending and Australia’s attention to underwater cables are expressions of the same phenomenon: a shift toward the material preparation of confrontation.

This is likely the most significant change from the forum in the long term. The debate over principles (rules-based order, international law, multilateralism) remains present as a normative framework, but ceases to be the space where the real fate of the regional order is decided. The question is no longer just what order is desired, but what capabilities exist to sustain it. It is a question of a different nature, showing the weakening of traditional multilateralism instruments and placing the analytical center of gravity in the material domain.

3. The Responses of Middle Actors to Polarization

The third axis addresses how actors that are neither the United States nor China navigate this order. Three elements structure it: Vietnam as a strategic hinge, the contamination of the Asian agenda by the conflict in the Middle East, and ASEAN’s search to avoid binary logic.

3.1. Vietnam and the Doctrine of the Hinge Actor

The inaugural speech by Vietnamese President Tô Lâm was significant. He raised three simultaneous crises converging in the Indo-Pacific, such as the erosion of international law, a development crisis, and a crisis of trust among states. His emphasis was on preserving the rules-based order, avoiding coercion, and reinforcing dialogue and transparency, with special attention to the protection of cyberspace.

Vietnam projects itself as a hinge actor, advocating for a regional order that limits the coercion of great powers, especially in the maritime domain. This position is relevant for two reasons: it offers an alternative to total alignment and is credible due to the issuer. Vietnam maintains simultaneous credibility with the United States, China, Russia, and Southeast Asia, a rare regional weight. In the room, it was perceived that its stance responds to a realism aligned with its sensitive geographical position, where prioritizing an open environment that reduces polarization is the best way to protect its sovereignty and strategic autonomy.

3.2. The Middle East as a Reminder of Global Interdependence

The war between the United States, Israel, and Iran and the situation in the Strait of Hormuz appeared as external factors with a direct effect on Asia, through three channels: energy, maritime trade, and the availability of U.S. military capabilities. The Indo-Pacific cannot be analyzed in isolation, considering that energy and military interdependence connects Taiwan, Hormuz, Ukraine, and the South China Sea into a single matrix of global risk.

For middle actors, recognizing this reality is uncomfortable. Their security partly depends on events over which they have no influence and on the United States’ ability to manage simultaneously distant but connected theaters. Hence the U.S. interest in quickly closing the Middle Eastern front, precisely to free up resources and concentrate on the Pacific. The autonomy that middle actors claim is paradoxically exercised in a system where interdependence limits the real margin of any actor.

A consensus ran through the room during the days of the forum. This was that, in the current scenario, no crisis in a strategic chokepoint fails to have immediate global effects. The countries most exposed due to their dependence on imported energy (Japan, South Korea, India, and Singapore) are also the most motivated to reinforce their logistical and energy resilience. 3.3. ASEAN Between Declared Autonomy and Structural Pressure Southeast Asian states seek to maintain maneuvering room. They do not desire automatic subordination to either Washington or Beijing. Their emphasis on international law, inclusive development, connectivity, trust, and multilateral mechanisms reflects a clear preference for avoiding total polarization. This preference is genuine, and the forum allowed it to be articulated clearly.

However, there is a growing tension between declared autonomy and the conditions that make it possible. The space for not choosing narrows when decisions are imposed in fact. This pressure may arise from supply chain dependencies, access to controlled technologies, exposure to financing systems, or pressure from specific defense investments. The risk is not that middle countries formally choose sides, but that de facto dependence advances without any political declaration recognizing it. This gap between the rhetoric of autonomy and the reality of accumulated pressures is structural and will likely deepen.

4. The Latin American and Chilean Perspective

The three axes do not exhaust themselves in Asia. The reconfiguration of competition between great powers, the transformation of the material security environment, and the pressure on middle actors also shape the space in which Chile trades, connects, and projects its interests. The first thing a Chilean observer must note, however, is that the country barely registered the forum where these dynamics were discussed.

4.1. Absence as a Complete Phenomenon

Latin American presence was marginal, despite repeated statements from several states in the region about the value of the Indo-Pacific for their national interest. Only official presence from Peru and Brazil was noted. From the American Pacific, the only significant actors were the United States and Canada.

Unlike in 2025, Chile did not have official presence. The absence was not exclusively state-based, as the national private sector was also not present. It is fair to recognize that the Chilean business community accurately reads the Asian opportunity. Recently, SOFOFA reactivated its network of binational business councils focused on India, Asia, and Latin America, including a Chile-India table within the framework of negotiations for a CEPA, interpreting the commercial fragmentation and the dispute between the United States and China as an occasion for diversification.

Although this reading is valuable, it is partial because it addresses the Indo-Pacific as a market and not as a strategic space. The market does not float in a vacuum. It is political and security decisions (where a red line is drawn, which underwater infrastructure is protected, which supply chain is securitized) that determine the conditions under which that trade is possible. Guilds, banks, and economic think tanks would do well to complement their commercial perspective with a strategic reading of these spaces.

In this context, it is significant that the only national presence came from specialized civil society. AthenaLab’s participation allowed for firsthand observation of the space where decisions are currently made that determine Chile’s security and business environment in the Pacific.

4.2. Material Exposure: Underwater Infrastructure

The convergence between security and economy that ran through the forum has a physical and concrete expression in Chile: the Humboldt Cable, the first direct submarine fiber optic connection between South America and the Asia-Pacific, linking Valparaíso with Australia and New Zealand, with operations expected by 2027. Chile is building precisely the type of critical underwater infrastructure that the forum identified as a new domain of competition.

Image 4:

Chile and Flows in the Indo-Pacific (reference image)

A second cable project, this time from China, recently generated controversy, being suspended after a U.S. security alert. Therefore, the rivalry between the two powers is not a distant phenomenon for Chile in the Indo-Pacific, but already defines what infrastructure it can build and with whom. This is a fixed vulnerability (a localized asset, exposed to sabotage at a point) whose response requires physical protection and a legal regime that international law has yet to consolidate, as evidenced by the session on maritime disorder and the launch of the GUIDE framework. 4.3. The Exposure of Flows: Trade Routes

Fixed infrastructure is not the only Chilean exposure in the maritime domain. Its other face is the flows of trade, and here the dependence is structural. China has been Chile’s main trading partner since 2010. In 2025, it accounted for 32.7% of total trade and nearly 35% of exports, a share that rose from 14% to almost 40% of shipments in less than two decades (SUBREI 2026). Adding other Asian destinations (Japan, South Korea, and an India growing at rates exceeding 40% annually), the Pacific confirms itself as the decisive commercial theater for national income.

The copper, cathodes, cherries, lithium, salmonids, and cellulose that sustain this income cross the Pacific to the same Asian ports whose approach security was debated in Singapore. A disruption in the Taiwan Strait, the South China Sea, or in the approach chokepoints is not an abstract geopolitical risk for Chile. Rather, it is the direct interruption of the route on which a third of its foreign trade depends. Unlike the cable, this is a flow vulnerability (its critical point is not on Chilean territory, but thousands of kilometers away) and its response is not physical protection, but diplomatic and logistical and energy resilience.

Both planes (the cable that transmits data and the route that transports cargo) belong to the same domain that the forum placed at the center of strategic competition. And in both, Chile is an exposed actor. Consequently, for our country, the analysis of the Indo-Pacific must adopt a comprehensive approach, incorporating foreign policy and economic policy into its strategic planning.

5. Three Projections for 2028 Based on what was observed and discussed at the forum (on the podium and in the hallways), three plausible trajectories for the period 2026-2028 in the Indo-Pacific are projected. 6. Balance: Managed Confrontation as the New Normal

The three axes converge on the same diagnosis. The Indo-Pacific is entering a phase of managed confrontation. Actors seek to avoid open war but accelerate military, technological, and logistical preparation for crisis scenarios. The Chinese absence reduces the space for direct dialogue between the two powers, although it preserves the multilateralism of the countries in the region.

The United States reaffirms its commitment but demands greater material co-responsibility; regional states insist on international law, strategic autonomy, and maritime stability, without reversing the underlying logic. Theoretically, the forum reflects the transition from a relatively institutionalized liberal-regional order to a competitive power balance where confrontation is managed.

The conclusion is neither alarmist nor complacent. The region is not on the brink of war, but it is also not building the institutions that would make it unlikely in the long term. Instead, it establishes a condition of permanent and materially dense competition, where stability depends less on shared agreements and more on each actor’s ability to deter, resist, or impose.

This is the new normal of the Indo-Pacific, and the Shangri-La Dialogue 2026 will be remembered as the forum where it became visible.

7. Implications for Latin America and Chile

For the region, the challenge posed by the conclusions of this forum is to group countries with common interests and elevate their collective influence in a scenario where international law will increasingly be subjected to expressions of power over traditional legal foundations. Coordination among Latin American countries for the collective promotion of interests is, therefore, an urgent challenge.

For Chile, the main lesson from this forum is the need to integrate and consolidate a process of strategic reflection on the Indo-Pacific that, based on national interest, identifies risks, threats, and opportunities. The commercial dimension is not enough and must be complemented with the strategic perspective of security and defense. Avoiding this approach increases vulnerability levels, as the country remains exposed to dynamics over which it will have limited margin to influence or protect its own interests.

These forums are not just declarative scenarios. They are barometers of the strategic climate that allow measuring the temperature of competition, anticipating trends, and reading signals that do not come through formal channels. In 2026, Chile’s presence at Shangri-La came solely from specialized civil society, and that firsthand observation feeds our analysis and advice for the decision-making process on matters of national interest.

Sustaining and expanding that presence is an investment in strategic anticipation. Being present allows for anticipating what is already underway. AthenaLab will continue to cover these spaces and aspires to do so in conjunction with the sectoral representation of the State and the private sector, because national interest is increasingly played out in these scenarios.

Annex: Technical Sheet of the Event

🇬🇧 ENGLISH VERSION.