05/09/2018
AUSTRALIA’S MOMENT: OUR OPPORTUNITY AND RESPONSIBILITY IN THE ASIA-PACIFIC REGION TO ENSURE SECURITY, STABILITY AND PROSPERITY
AUSTRALIAN INSTITUTE OF INTERNATIONAL AFFAIRS
MELBOURNE
WEDNESDAY, 5 SEPTEMBER 2018
I would like to acknowledge the Wiradjuri people who are the traditional custodians of this land. I would also like to pay respect to the elders past and present of the Wiradjuri nation and extend that respect to other Aboriginal people present.
I’d also like to acknowledge Mr John Richardson – former Australian Ambassador to Brazil (and just retired from DFAT)
Mr Hien Tran – representative of DFAT (who give us great cooperation)
Mr Patrick Moore – President AIIA Victoria
Setting the scene: the new epicentre of global power
Tonight, I want to share my thoughts on the crucial role middle powers must play in this fluid geopolitical landscape and the pressing need for Australia to invest in a genuinely independent foreign policy.
The world has we know it has changed.
The Trump Administration has radically shifted the US towards, what I would term, a nativist and transactional foreign policy.
Trade wars have been waged against allies, while the diplomatic door, the red carpet has been opened to old foes, without much result it should be noted.
Across the Pacific, China’s economic and military power continues to rise.
China’s territory expands through the construction of artificial islands in the South China Sea.
Chinese influence expands with the expansion of $350b development assistance program across more than 100 countries.
Today, the world, our world, not only pivots around the Pacific. It centres in the Asia-Pacific or as it is now known, the Indo-Pacific.
In this century, our region, this Indo-Pacific, will become home to most of the world’s middle class.
It will be the world’s largest producer of goods and services and the largest consumer of them.
Whatever we call it, we have well and truly entered the Asian century. The economic and strategic heart of the international community has shifted.
Australia need no longer lament what had been our geographical constraint with respect to our international affairs and our place in the world that dreaded tyranny of distance is no more.
Our famous and visionary PM Keating more colourfully referred to Australia as ‘being the arse end of the world.’
This seismic shift, the realignment of the geostrategic tectonic plates, presents both enormous challenges and opportunities for Australia.
Australia needs a vision and a clear plan to seize the opportunities that come from these changes and to meet the strategic challenges that arise from them.
We cannot afford to be passive. We need to have a vision of and invest in an independent and proactive foreign policy.
Today, we must by necessity, by the very realities we face in this fluid geostrategic landscape build our middle power strengths and independence in order to pursue our national interest.
China the US and the rapidly changing geopolitical landscape
A great deal of debate has focused on Australia’s need to navigate this shifting period while balancing two critical relationships: China as our dominant trading partner, and the US as our dominant security partner.
I have always argued against what I consider the simplistic view that we need to choose between the US and China.
We can walk and chew gum at the same time.
However, not enough consideration or political action at least until very recently has been given to the need for Australia to strengthen its relationship with other middle powers in our region such as Japan, South Korea, Indonesia and Vietnam and beyond, such as Canada and France.
But in the age of Trump and Xi, when these two powers are active agents of change to the world order we have known, we are compelled to do so.
Australia has welcomed China’s economic growth and seen the benefits flow. In 2009, trade and investment with China was estimated to create benefit close to $4000 per Australian household; in 2011, this was estimated to have increased to A$10,500 per household per year.
China has contributed to over a quarter of a century of economic growth in Australia.
We must do all we can in our own interests to keep China inside the tent on a rules based trade order.
As Shadow Foreign Minister Penny Wong wisely puts it, we should “approach China with respect not fear”.
China’s growing assertiveness in the region rises is in parallel with a re-embracing of a harder edged autocracy that adds layers of difficulty to an already complex relationship.
China has stepped up its military presence and constructed artificial land features in the South China Sea.
In 2016, in a case brought by the Philippines, the Permanent Court of Arbitration in the Hague ruled that China’s claims to 85 percent of the South China Sea had no legal basis.
China dismissed the ruling, challenging the international rules based order in our region.
The nations of the Indo-Pacific have relied on the United States for security in our region since the Second World War. As the US under Trump moves towards a nativist foreign policy, or at least his Tweets, we risk facing a power vacuum in our region if the tweets jump the aether and become an implemented reality.
When the US President declares that the post-war international order is not “working at all”, we know the game has changed and is being changed by a US President that seemingly has scant regard for the rules based order which the US had been a central power in founding and protecting for decades.
Before our eyes, the Trump Administration is unravelling the international trade system.
While some have celebrated Australia’s exemption to US steel tariffs, we might as well be celebrating a seat at the back of a sinking boat.
According to modelling from KPMG, a full blown trade war could cut Australian household income by $474bn over 10 years, costing 60,000 jobs. A continuation of the current scenario, will see Australian GDP cut by 0.3pc over four years with losses adding up to around $36 billion over the decade.
The US will remain a crucial ally but we must recognise the changing nature of our relationship.
Allies are rightly shaken by President Trump’s attacks on NATO, the EU, G7 and focus on America first. Just last week President Macron told France’s overseas ambassadors that Europe can “no longer rely” upon the US for its security.
There is a tiny ray of sunlight peeping out of the clouds though.
While Trump can use executive orders to unwind the trade system, it’s much harder to do this with the security, intelligence and the military.
This is an important point. In our region we are unlikely to see the US security alliance networks and structures disengage, they are too deeply rooted, too intertwined in our region to simply be dismantled by a tweet!
But nonetheless we must be prepared to do more to maintain our own security.
Regional stability is inextricably link to our national stability.
By way of example; 91 percent of our crude and refined oil travels through the South China Sea and Malaaca Strait.
The NRMA has said that Australia only retains enough fuel in stockholdings to continue delivery of chilled and frozen goods for seven days, dry goods for nine days, hospital pharmacy supplies for three days, retail pharmacy for seven days and petrol stations for three days.
Barriers to oils imports would grind our economy to a halt. Any disruption would be felt across society and in every sector.
Australia receives 47% of our jet fuel from South Korea. Our commercial airline industry and military aircraft has only 14 days of reserve.
It doesn’t matter if Australia is directly involved in a conflict or not, because in the event of a major standoff, involved countries are unlikely to send their fuel products offshore to countries like Australia for trade.
They are more likely to hold onto fuel stocks for the sake of their own national security.
Independent foreign policy: The need for active and collaborative middle powers
As PM Gillard noted in the foreword to the Asian Century White Paper: “As a nation, we face a choice: to drift into our future or to actively shape it”
I have said tonight we need a proactive and ambitious vision of Australia’s role in our region.
It is core to Australia’s national interest that we build stability and cooperation in our region.
The geo-strategic outlook for Australia in our region is uncertain and unpredictable.
Navigating this terrain will require an independent foreign policy.
What do I mean by this? To start a deeper collaboration with other regional partners.
Debate for and against an independent foreign policy and even its definition isn’t new to forums like this, but now is the time to debate not whether it is needed, but what it should look like.
If we want to maintain the international rules based order, if we want to maintain a system that is fair we must step up and provide leadership in our region.
Because an international rules based order is under threat, put simply, on trade by Trump and on security by Xi.
That means we must work more closely and deeply with our friends across the region, like Japan, South Korea, Indonesia and Vietnam to strengthen and protect the international system, of international norms.
My view of an independent foreign policy is that it must focus on building a fulcrum of middle powers, these middle powers must be bound tightly in a ball of networks built on the multiple layers of engagement on trade, security, intelligence sharing, cultural exchange, military cooperation and so on.
The aim would be to ensure that the major powers – China and the US – play by the rules and the middle power fulcrum is large enough, strong enough and resilient enough that if they choose not to, the price to pay would be too high even for them.
Historically our independence has come from our relationship US who have acted as a security guarantor.
This relationship has enabled us to reduce our defence spending and take a leadership role in our region.
Some would argue the price was too high, particularly under Howard, when we offered military support for the US in the Middle East, particularly the Iraq war.
These can be historical debates.
Today as the US, under Trump, drifts away from international rules based order, particularly on trade, and China ignores international norms, like those around freedom of navigation, there is an urgent necessity, for an independent foreign policy drawn from a reshaped and bolstered middle power architecture.
The current international rules based system has served us well for 60 years but it is straining under the pressure of the US and China, challenging existing norms.
As middle powers we have the economic strength and global influence to work together to protect our mutual interests in security and prosperity.
We have to work together, that’s the key.
There has been a lot of failure on this front, I’ll give you one example: the relationship with India. Which, in some ways is more than a middle power, it is a potentially a regional power or super-power in itself depending on how it travels over the next 10 years.
But the bilateral relationship that we have had with India has been one of benign neglect. I am so sick and tired of hearing of the three C’s: cricket, curry and the Commonwealth – and I think Indians are as well. The relationship must go on beyond the simplistic nature of the three C’s. there is so much more potential to that relationship and yet we haven’t stepped up on that.
There have been efforts made, to give credit to both sides of politics, Gillard did visit India and there were efforts made in the previous Turnbull Government but there is so much more that could have been done.
We must look to build this fulcrum of middle powers – a centre point for regional power. A fulcrum is a thing that plays a central or essential role in an activity, event, or situation, coming from the Latin, a word that originated in the 17th century originally meaning ‘a prop or support, but in Latin literally meaning ‘post of a couch’, from fulcire which means ‘to prop up’.
We can do this by strengthening, propping up our already rich network of bilateral relationships, multilateral fora, and deepening our areas of partnership and cooperation.
We need to do much more than co-exist we must make it our shared responsibility to ensure the stability of the region.
Only together, as middle powers can we take an equal seat at the table with China and the US.
Let’s be clear, the two major powers China and the US should not be entirely outside of fulcrum.
Rather we should look for opportunities to bring or rather keep them in, to engage them.
We want to make it difficult for US to extract themselves.
Australia wants a region with an agreed and observed set of operating rules and so we must ensure those rules are protected and followed.
I believe in the current strategic environment , we can only do this alongside and in concert with other middle powers.
You may be asking why make the case for an international rules based order? Because it suits our national interests as a trading nation.
I do not want to live in a world where might is right.
We have come too far in that long arc of human history, so much pain and loss of human life to a point that even the small gains of international law and international norms are worth protecting and building upon.
We have to understand what is in our national interest and why is it so. This is always open to analysis and debate. Our Shadow Minister for Foreign Affairs, Penny Wong has articulated our position:
- • The security of the nation and its people
- • The economic prosperity of the nation and its people
- • A stable, cooperative strategic system in our region anchored in the rule of law
- • Constructive internationalism
- • And our values – compassion, equity, inclusion, mutual respect – find expression in the ‘rule of law’ that is the basis of our democratic practice, the contract between the government and the people.
Australia has an impressive record as an influential middle power.
We played a critical role in the architecture of international bodies like the International Criminal Court and international forums including the G20. And Doc Evatt was instrumental in establishing the United Nations.
In this time of uncertainty, Australia’s presence in the region presents a responsibility to maintain and protect the international rules based order.
Working in concert with other middle powers we can deal with change and instability in our region.
Working more closely with countries like Indonesia, Vietnam, Japan, and South Korea we not only secure amiable partnerships with middle power countries in the region we change the way other countries approach Australia diplomatically.
Investing in the tools of statecraft – diplomacy, development and defence
So how could we get there? How do we create this middle power world order?
Much like we need to invest in our telecommunications and transport infrastructure, we need to invest in this independent foreign policy though the tools of statecraft at our disposal– The three Ds – diplomacy, development and defence.
Only by using each of these tools in concert and most critically in collaboration with other middle powers will we be able to secure stability, security and prosperity in our region in this Asian century
An independent foreign policy will require Australia to invest more in the three core tools of statecraft: diplomacy, development and defence.
A comprehensive approach using each of these tools will be critical to building stability and cooperation in our region, it is not enough to pursue one or two alone.
Diplomacy:
We have a long history of strong relationships in our region, indeed, a more substantive engagement with Asia has been a major policy goal of Labor governments since the end of World War II, but we must do more.
First, we need to double down on our bilateral relationships including strengthening our diplomatic presence in the region. Since 2009, the Lowy Institute has argued that Australia’s Department of Foreign Affairs and Trade (DFAT) has been under-resourced for several decades.
As a result, its overseas network has thinned out significantly.
In the 2016 Lowy Institute Global Diplomacy Index, the average number of posts for OECD nations was 132.
Among G20 nations, the average number of posts was 190. Today, Australia sits below each of these metrics with only 114 posts
Our bilateral relationships will also be advanced by strengthening our trade relationships.
Significant work has been done in the last decade to conclude bilateral trade agreements with a number of our key partners in the region including: Malaysia, Korea, Japan and China
I congratulate our DFAT officials for this progress, these agreements take time, skill and investment.
Second, we need to expand our multilateral engagement through quadrilateral and trilateral cooperation. Our regional neighbours understand the need for enhanced cooperation, indeed it is not new.
10 years ago there were talks for quadrilateral relationships with the US, Japan, India and Australia but they were placed on hold for fear that it looked like an attempt to contain China. I can tell you it had more to do with VP Cheney.
Part of it was really domestic, I was working as Foreign policy adviser to Rudd at the time. VP Cheney, if you remember, was not a very popular person in Australia and he was pushing, even more so than President Bush and others within the administration for this quadrilateral relationship to go ahead. It was something that couldn’t be stomached in a domestic sense that we would adopt a policy that was being pushed by Cheney.
There were other reasons, of course, for not going ahead with it but now I think is the time to renew some of these ideas – trilateral, quadrilateral – and not specifically with the US.
I’m talking about engaging with the middle powers in various forms or layers of trilateral engagement. We can do something with Malaysia, Vietnam and Indonesia. We can mix and match these in so many different ways based on the shared interests that we might have and the areas where we might work together.
But expanding those areas is really critical. We can do it in areas like tackling extremism, cyber security, epidemics and narcotics
Third, we ought to double down on our cooperation in, and support for, multilateral fora. As a region we have a rich multilateral framework: ASEAN, APEC, Pacific Islands Forum, and the East Asia Summit.
Strong and cohesive multilateral forums have fostered cooperation and encouraged norms of behaviour that have laid the foundation for peace and prosperity in the region.
They will be integral to maintaining peace and prosperity.
Australia became the first of ASEAN’s ten dialogue partners in 1974. At the 40th Anniversary Commemorative Summit in Myanmar in November 2014, Australia and ASEAN entered into a Strategic Partnership, in recognition of the depth and breadth of Australia-ASEAN cooperation over many years and acknowledging the potential for still greater mutual engagement.
Fourth, people to people diplomacy.
The power of “people-to-people diplomacy,” is often underestimated but can play an important and complimentary role to traditional and formal diplomacy. They can also enhance bilateral relationships by driving public support.
The Rudd Opposition had a policy to withdraw our troops from Iraq, which I drafted after having been there, and replace them with humanitarian and political support. But there was a great worry, during the 2007 election, that the withdrawal from Iraq would affect the US alliance.
I called up some contacts of mine that worked within the Whitehouse who I’d worked with in Iraq. One of them happened to be the deputy national security adviser in the Whitehouse, and I said, “Look, we’re probably going to win this election. I’ve worked with you for a year when I was in Iraq. You know that we have a commitment to helping Iraq get out of this mess.
I don’t believe that more Western troops is the answer. You know that as well.
Please tell Vice President Cheney when he comes to visit (He was due to visit in March in 2007) not to fall into the trap of mimicking some of the lines that might be put out there by the Howard government that Rudd might be a problem for the US alliance.”
She said, “Alright, I’ll have a chat to him.”
So we had the meeting with Vice President Cheney, it was a good meeting. I was sitting there with Rudd but then everyone left the room except for myself and Cheney, we standing on our own, maybe the security guys were in the back.
I looked at him and said, “Mr Vice President, did Megan speak to you about the withdrawal?”
He looked at me and said, “Yes she did Peter,” and then walked off.
I wasn’t sure what that meant.
He was off to do the press conference with Prime minister Howard and sure enough someone from the Australian asked the question, “is Rudd’s policy of a withdrawal from Iraq going to affect the US alliance?”
To Cheney’s credit, he ran the lines that I had spoken to Megan about which is that, “regardless of whether we’re Liberal or Labor, Republican or Democrat we don’t interfere with domestic affairs. And I’m sure we’ll be able to work with whichever Government of Australia at the time.”
That’s a good story about Cheney.
Not quite on the scale of the stories of “Ping-Pong diplomacy” in 1971 helping to pave the way for President Richard Nixon’s historic visit to China the following year or Gough’s audacious visit to China and the decades of advantage in the relationship thaty floured from it.
But those people-to-people links actually make a difference when you can pick up a phone and call someone high up enough inside the Whitehouse or in London or in France or in capitals in Asia – whether it’s in Malaysia or Vietnam – wherever it might be make all the difference because relationships do matter.
The foundational and enduring roles in people to people diplomacy are played by academia, business and diaspora communities.
One and a half track dialogues like the Australian American Leadership Dialogue.
These type of exchanges have helped review and refine the parameters of the Australian-American bilateral relationship and strengthen our relationship.
Across our region, people-to-people ties are robust, through education links, two-way tourist traffic and migration with countries.
Department of Education figures show that in February, Australian universities, private colleges, English language courses, and schools registered more than half a million international student enrolments.
Overwhelmingly, these students come from our region. Students from China make up the largest proportion at 31 percent, followed by India, Nepal, Malaysia and Vietnam.
Relationships matter, they work in foreign policy more than people realise.
We can and should do more to strengthen these ties.
As a one of the most multicultural nations in the world we have an untapped resource in our community and the potential to deepen our people to people ties.
I spoke to Peter Varghese about this when he was Secretary of the Department of Foreign Affairs. But all this needs resources to DFAT, not cuts.
Development:
That is a good segue to what is a
relatively low-cost alternative to force projection, foreign aid and development which can help achieve our national interests of regional stability.
Development is the first D of the three D’s.
It is critical that we rebuild our aid program, slashed by the Coalition.
To those that question our foreign aid commitments, this is about more than doing the right thing.
It is squarely in our national interest. Development is not only a tool for poverty alleviation, it is also about fighting radicalisation and enhancing stability, security,self-sufficency and good governance so that we can have good relationships with those people who are benefiting from that development.
This Coalition Government has overseen a dramatic decline in our development assistance budget. They have turned their back on our region, diminishing our influence and leaving critical tools of statecraft unused and idle.
Coalition cuts now exceed more than $11 billion.
It is little wonder, that former Danish Prime Minister Helle Thorning-Schmidt last year said that,
“… When your development budget is at an all-time low, which it is right now, it feels like Australia is not taking its place in the world… We miss Australia. Australia should be big influential, taking your space, helping with humanitarian [disasters.]”
I met Helle last year. She misses Australia, we miss her too.
It does not have to be this way.
The great disappointment on foreign aid, is that during the 2010 Federal Election, both major parties committed to the goal of 0.5 percent of GNI spending on foreign aid by 2015/16.
In 2016 Australia ranked 17th among OECD countries in terms of aid generosity. Australia’s 0.27 percent of ODA/GNI was below the OECD average of 0.32 percent and well below the bipartisan commitment at the 2010 Federal Election.
What explains these cuts?
Either the Coalition Government fundamentally misunderstands or is wilfully blind to the fact that our aid and development assistance is critical to our national interest, wilfully blind to the fact that it lifts millions out of poverty and works to create stability and security in our region and across the globe.
Labor will rebuild Australia’s aid program under a Shorten Labor Government.
Rebuilding our aid program will require more than increased funding. We need to rebuild our experience.
The integration of AusAID into DFAT has led to a limited number of specialists working on our aid program and an increase in outsourcing to contractors.
This approach exposes DFAT to risks related to development effectiveness, programme efficiency and reputation.
You can’t pull the thread until and unless we rebuild the capability within DFAT.
I concede that balancing humanitarian and moral objectives with our more pragmatic political objectives, which are often tied to the national interest, is difficult.
There is a need to get the balance right and the philosophical underpinnings behind this, but I know we can.
Penny has been fantastic on this, establishing the working group of consultation with MPs and NGOs and the aid sector, so we can hit the ground running if we were to win Government.
In the past, governments have shaped the quantum and focus of aid and development – there has been largely non-interference and non-politicisation.
Non-politicisation would be great, bipartisanship would be even better.
I’m afraid we are not there.
Bipartisanship is crucial because defence, diplomacy and development contribute to stability, security and prosperity in mutually reinforcing ways.
Aid is an easy target for populist and nativist politics.
Bipartisan agreement particularly around core aspects of our aid program, such as magnitude of funding, is critical.
Another challenge, and this is pronounced in the Pacific, is that emerging powers, China and India, are also emerging donors.
China and India have increased aid spending primarily to enhance their geo-political influence across the globe, especially in the Pacific. Save the Children analysis reveals that Chinese foreign aid expenditure has an annual growth rate of around 15 percent.
Recent news of China’s interest in a military base in Vanuatu is just the latest in a pattern of emerging powers using Aid in the Pacific to assert their geopolitical influence.
How many of you here are fans of Prince Charles? Put your hands up. What about Tim Cahill? Put your hands up.
In response to the Vanuatu story Julie Bishop – then Foreign Minister – took Prince Charles to Vanuatu. They might not know who he is or they may know who he is. But why don’t we use our own superstars like Tim Cahill who is of Pacific Islander background and he is beloved in the Pacific Islands. Use him for our public relations diplomacy.
Just a thought. I think we have to be a bit more creative on our foreign policy and our engagement.
Aid policy speaks to our notions of social justice and our desire to act in a humanitarian way; it has flow on economic benefits and; it helps ground Australia’s international reputation.
Defence
General Mattis, President Trump’s Secretary of Defence, has said in a summary of his views on statecraft and diplomacy in 2013, “If you don’t fund the State Department fully, then I need to buy more ammunition ultimately.”
There is an elemental truth to this, if you don’t fund diplomacy and, by extension, development and if you don’t utilise those tools of statecraft effectively you spend more on defence.
The military is, and should always be, the last resort. But you increase the chances of reaching for the defence tool if we don’t adequately use the other tools at our disposal.
If we are to have an independent foreign policy centred around a new and emerging and strengthened middle power architecture we must spend more on defence not only to utilise if we miss the work on diplomacy and development but also as an active part of the first 2 Ds (humanitarian assistance, disaster relief etc).
The ADF has done very good work on humanitarian relief, disaster relief, humanitarian assistance, building bridges and roads and helping people in our region.
Australia should maintain our commitment to defence spending.
This spending should be used to not only procure defence materials but also to build our sovereign capability and human capital.
As Shadow Defence Minister Richard Marles has noted “At its best, Australian industry is as capable as any in the world.”
The ability to sustain and maintain the equipment the ADF uses is fundamental to our national security and it is essential that we always retain the industrial capability to meet this objective.
Similarly, we must ensure our regional partners have these skills and work together to train our defence forces.
As we strengthen our defence export industry and upgrade our defence materials we should look to support partners in the region to do the same.
The Australian Defence Force do great work in partnership with allies in our region.
We should build on this and expand our defence cooperation across the region including increasing training programs and capacity building.
As a middle power, Australia finds itself well positioned to make effective use of soft power mechanisms, diplomacy and development, in pursuit of our national interests.
These must be pursued alongside our defence efforts.
Conclusion
As the world changes, governments must choose how they engage.
Governments can choose to shape the world or be shaped by the changes.
Foreign policy requires a clear vision and agenda.
Under Prime Minister Gillard (2012) the ALP government committed to ensuring Australia “seize the opportunities of the Asian century”
In the years since, new risks have arisen in our region, risks that I believe a future Shorten Labor government will ensure we overcome.
A commitment to and investment in an independent foreign policy will require a reshaping of our regional architecture into a middle power architecture.
It is time for a new middle power world order. One led and defended by the middle powers of the earth.
A fulcrum of middle powers that would seek to keeps the major powers invested and engaged in the international rules based system.
ENDS