Why are Southeast Asian member-states spending billions of dollars to upgrade their military capabilities at a time when many are still struggling with the effects of a global economic downturn? The answer lies both within the region, where competing claims to offshore oil and gas reserves are increasing tensions, and beyond, with growing concerns that a rising China is seeking to expand its influence in its backyard.At least four members of the Association of Southeast Asian Nations (ASEAN) have made substantial additions to their armed forces in recent months. Burma is buying Russian fighter planes, while Malaysia, Vietnam and Thailand have either bought or plan to buy submarines.

Malaysia is spending more than US $990 million on two high-quality diesel-powered submarines, while Vietnam – which still cannot supply electricity to all its citizens – is committing more than $2 billion on Russian-made fighter planes and six submarines. Meanwhile, according to Russian media reports, impoverished Burma has spent $600 million on 20 Russian MiG-29 fighter planes.

Thailand is so strapped for cash that it aims to buy a cheap secondhand submarine first so that it can join the new submariners club, but ultimately Bangkok also plans to spend hundreds of millions of dollars on several subsea vessels.

Ironically, this scramble to acquire more weapons comes as ASEAN moves towards European Union-style economic and social unity with zero-tariff trading. But with rapidly rising demand for energy fuelling offshore exploration for oil and gas in disputed territory – particularly in the South China Sea, where four ASEAN members and China have staked conflicting territorial claims – national interests appear to trump regional fraternity.

Political tension among ASEAN members over other issues is also complicating efforts to resolve competing claims amicably. Thailand recently cancelled an agreement with Cambodia to talk about a decade-old dispute over territorial claims in the Gulf of Thailand because of its neighbour’s relations with fugitive former Thai Prime Minister Thaksin Shinawatra. Large, untapped reserves of oil and gas are thought to exist in the disputed waters.

Elsewhere in the region, Burma is in dispute with neighbouring Bangladesh over maritime boundaries in the Bay of Bengal, where both countries want to explore for gas. Their small navies have already confronted one another over an exploratory drilling rig authorized by the Burmese junta in waters claimed by the Bangladeshis.

The costly arms buildup – in countries where millions still live on less than one dollar a day – is also fuelled by rivalry between the armaments industries of China and Russia, although European countries are also suppliers. Singapore, for instance, buys German arms, and Malaysia is buying French-Spanish submarines.

Malaysia’s expensive submarines purchase comes as the country’s biggest income source, the state-owned oil and gas producer Petronas, announced a fall of more than 15 per cent in its contribution to government coffers for 2009-10 – amounting to hundreds of millions of dollars.

Other countries are even more hard-pressed to meet the cost of this recent round of military expansion, but this hasn’t prevented them from trying to keep up with others in the region.

Submarines in particular are a “necessity” to strengthen Thailand’s economy, insists Thai navy chief Adm Kamthorn Pumhirun. They will protect natural resources, fisheries and oil exploration, he said in a statement on Jan. 1 that outlined navy policy in the coming decade. As part of its long-term plans for boosting its naval capabilities, Thailand may buy a second-hand, Chinese-made submarine to train crews before investing in a small fleet.

Meanwhile, ongoing conflicts within national borders are also contributing to the rush to acquire new weapons, sometimes from illegal sources.

Some military experts believe that a cargo plane full of weapons seized in Bangkok in December was destined for Burma and not Iran or Sri Lanka as speculated. The plane was carrying anti-insurgency arms – rocket-propelled grenades, small missiles and small arms ammunition – from North Korea, which has a history of clandestine dealing with the Burmese junta.

Since last year, Naypyidaw has intensified its drive to eliminate active resistance by groups such as the Karen National Union, which has waged an ethnic-based insurgency for more than six decades. The regime has also been preparing for a showdown with cease-fire groups that have so far refused to accede to demands to form themselves into border guard forces under Burmese military command.

While it remains unclear if the weapons seized in Bangkok were intended to be used as part of the Burmese junta’s arsenal against its ethnic enemies, questions have also been raised about the regime’s purchase of MiG-29 fighter jets. The decision to buy planes from Russia rather than China has baffled some observers, who point out that Beijing is not only the junta’s closest diplomatic ally and biggest investor – especially in the oil and gas sector – but traditionally its major arms supplier as well.

The Burmese regime, however, had bought 12 MiGs from Russia in 2001 following a border clash with Thailand, and announced its plan to purchase a new fleet of MiG-29s only a few weeks after a trip to Burma by Chinese Vice President Xi Jinping, whose public comments about strengthening economic ties probably masked the real reason for his visit: to persuade the junta to buy Chinese planes instead of the Russian MiGs.

Some have seen the move as part of an effort to reduce the regime’s reliance on Chinese support, particularly in the wake of last year’s attack on the Chinese-speaking Kokang ethnic minority, which sent some 37,000 refugees into China and earned the Burmese junta a rare rebuke from Beijing.

But other observers see the decision in economic rather than political terms.

“It looks like the Burmese did their homework. They might be closer to Beijing than to Moscow, but they still want value for their money,” said a military analyst at a Western embassy in Bangkok, noting that the flying life of a Chinese plane is less than half that of a MiG.

For the time being, China also appears content to prioritize economic considerations over other issues in its relations with Southeast Asia. But even as Beijing dramatically increases its trade with ASEAN through recently secured free trade agreements, it has also sought to assert military dominance of the South China Sea, which is bordered by ASEAN members Vietnam, the Philippines, Indonesia and Malaysia.

Vietnam’s big Russian weapons deal comes after China attempted to warn Vietnam and the Philippines off claims to the Spratly and Paracel islands, both linked to oil and gas prospecting hopes.

Malaysia is also clearly focused on strengthening its position in this region. The base for its submarines is in Sabah, on northern Borneo – firmly in the South China Sea.

In a December assessment, the Washington-based think tank, the Jamestown Foundation, said that Beijing’s actions are “intensifying the regional arms race.”

But as Burma’s decision to buy Russian jets instead of Chinese attests, China’s growing weapons industry is not likely to profit much from Beijing’s recent assertiveness in the region. Although China can offer its weapons technology – most of it copied from Russian systems – at cheaper prices, many countries in Southeast Asia seem prepared to pay a premium for weapons that are not supplied by a neighbour that is increasingly seen as a potential threat to regional stability.