Australian Foreign Policy and the Asia Pacific Century

Speech to the Brookings Institution, Washington DC

Speech. Check against delivery, E&OE

3 May 2011

It's an honour be back in Washington as the Foreign Minister of Australia.

And it's great to be in Washington in a week when America walks tall.

You have reminded us again this week of America's reach and capability.

But equally we are reminded this week of the time when this city came under terrorist attack nearly a decade ago.

It reminds us of the pain that has been suffered by the families of those who have been the victims of terrorist attack — for whom we hope that the events of the last 36 hours might bring some closure.

The events of this week also remind us of our common resolve as democracies, to deploy the formidable resources we have between us against those who seek to destroy our freedoms.

Our watchword must always be eternal vigilance.

This week — any week — it's great to be back at Brookings.

I spoke here last, just three years ago.

If a week is a long time in politics, three years is an eternity.

The three intervening years have been something of a rollercoaster ride:

  • for the world economy;
  • for global politics;
  • and, for some of us personally

All of which, as they say in the classics, has been character building.

In the global economy, we have travelled the road from boom, to bust, to uncertain recovery.

Over these three years, we have worked intimately with the United States through the councils of the G20, to prevent a global recession catapulting us into full scale global depression.

Together we are now working, within the framework of the French Presidency of the G20 to deal with the macro-economic challenges of the global fiscal imbalance on the one hand and currency valuations on the other.

Through the Financial Stability Board, under the policy direction of the G20, we are also systematically working our way through global financial regulatory reform to prevent a repeat of the global financial crisis which brought us to our collective economic knees only a year or two ago.

At the same time, in global politics, we are witnessing the tectonic shifts occurring across the Middle East.

Much of the Arab world is being convulsed by a series of political, economic and social shocks. The trajectory of events remains uncertain.

The strategic and economic impacts arising from these developments are profound: the future of the democratic project in the Arab world; the influence of Iran; the peace process between the Israelis and the Palestinians and the wider Arab world; the outflow of peoples from the Middle East to safe-havens elsewhere in the world; the risk of rising extremism and terrorism, not to mention, the price of oil.

In responding to these challenges, Australia is deeply engaged with the United States and with our friends and partners in Europe and the Middle East — because we see our interests and our values deeply at stake in these developments.

In the Asia Pacific we have been confronted by a series of natural disasters which have brought us face to face with the inadequacy of our regional counter-disaster management capabilities; as well as a critical debate on the future of the safety of civil nuclear facilities across the world.

Developments of the political, economic and strategic level in our region may have thankfully been less dramatic than in other regions in the world, but they are just as significant.

The rise and rise of China continues to preoccupy the region.

As does, increasingly, the rise of India.

The irresponsible, retrograde and reckless behaviour of the North Koreans continues to represent a strategic tinder box for us all. Tensions over the East China Sea and the South China Sea have risen.

Russia has reasserted its territorial claim over Japan's Northern Territories.

The Taiwan Straits remain mercifully stable, although that stability remains hostage to Taiwanese domestic electoral processes in the year ahead.

And in the wider region, there is the hardy perennial of India, Pakistan and Kashmir.

For those of us, therefore, engaged in the craft of foreign policy, security policy and global economic policy, we are in fact living out the oft-quoted Chinese curse — for indeed we are living in interesting times.

Australian Interests

Australia views all of this from the perspective of a middle power with both global and regional interests.

We are the 13th largest economy in the world.

We are the fourth largest economy in Asia after China, Japan and India.

We are also one of the world's most significant suppliers of energy and raw materials that power the global economy. Australia is the world's largest exporter of coal, the world's largest exporter of iron ore, and the world's fourth-largest exporter of liquefied natural gas, an industry undergoing rapid expansion in Australia.

In terms of defence expenditure, we are currently the 14th largest in the world.

The 5th largest in Asia.

If we were a European state, we would come in at number five in military power after France, the UK, Germany and Italy — our defence outlays are currently at about half that of the entire German Bundeswehr.

We have doubled our development budget over the last five years and our plan is to double it again by 2015.

We have a sophisticated higher education sector with many of our universities ranking in the world's top 100.

We also have one of the most multicultural and cohesive societies in the world — a strength which has enabled us to engage comfortably across most of the regions around the globe.

Together with your nation, we are one of the oldest continuing democracies in the world.

And we are deeply committed to the extension of democratic values across the world.

Global and regional engagement

The cornerstone of Australia's global and regional engagement is our alliance with the United States.

Originating in the darkest days of the second world war and cemented with the signing in 1951 of the Australia New Zealand United States (ANZUS) treaty, our formal alliance has endured for 60 years — across twelve US presidents, Republican and Democrat; 12 Australian prime ministers, conservative and Labor.

It is therefore one of America's oldest alliances.

And for Australia it remains the bedrock of our national security.

Australia is also a founding member of the United Nations and we are today engaged in the full range of UN and Bretton Woods institutions.

On nuclear non-proliferation and disarmament, we have been among the world's most active drivers in the conclusion of the Comprehensive Nuclear Test Ban Treaty and the Chemical Weapons' Convention.

Worth noting here is that I have come to Washington from Berlin where I participated in a meeting of the NPDI (non-proliferation and disarmament initiative) established by Japan and Australia. An initiative which brings together 10 significant countries from around the world with diverse affiliations and with the single objective of advancing the implementation of the NPT Review Conference recommendations concluded last year.

Right now we are engaged as part of the combined NATO/ISAF operation in Afghanistan and we are among the top ten military contributors and the largest non-NATO contributor.

While not militarily engaged in Libya, Australia is the third largest contributor of humanitarian assistance to that country after the US and the EU. And later this week Australia will attend, together with Secretary of State Clinton and others, the next meeting of the international Contact Group on Libya.

And Australia remains deeply engaged in the Middle East Peace Process as a long standing friend of Israel since 1948, and with good relations now with the Palestinian Authority.

In the Asia Pacific region, the region that is central to our interests, Australia is profoundly engaged both bilaterally and multilaterally. Australia is a founding member of APEC, the ASEAN Regional Forum, the ADMM+ and the East Asia Summit — and we are now members of the ASEM.

Australia and New Zealand have now concluded a free trade agreement with ASEAN creating a combined free trade area of 623 million people with a combined economy of $3.5 trillion.

At a political security level, Australia is working towards establishing regular 2+2 meetings (that is of Foreign and Defence Ministers) with Japan and Indonesia.

We have also elevated our foreign and security policy dialogue with India within the framework within the framework of the Australia –India Strategic Partnership agreed with New Delhi in 2009.

We have also expanded our defence and security policy and military to military engagement with China.

In the South Pacific, where Australia has particular responsibilities, we currently deliver half of all global ODA to the 14 Pacific island countries. This amounts to around $1.1 billion in 2010/11, and represents 25 per cent of Australia's total ODA.

Australia has also begun a new policy of engagement with Africa where our companies now have more than $25 billion of FDI (actual and proposed) in more than 600 mining projects spread across 43 African states.

We now have new memoranda of understanding with the AU and the Arab League.

We are also increasingly engaged with the dynamic economies of Latin America where our corporate engagement is increasing.

Ours, therefore, is an activist foreign policy — reflective of our values and our interests, and expressed both globally and regionally.

As a nation whose origins lie in large part in the West, but whose geopolitical and geoeconomic circumstances are shaped in large part by our location in the east, there is no alternative other than to be activists both globally and regionally.

This is the inescapable expression of the Australian condition.

The Asia Pacific region

The 21st century will be the first in several hundred years where the trans-Atlantic axis will not be the most crucial. That will shift to the trans-Pacific, as the geostrategic, geopolitical and geoeconomic centre of gravity migrates from Europe to Asia, from the Atlantic to the Pacific.

Ted Roosevelt said back in 1903 that “the Atlantic era is....now at the height of its development and must soon exhaust the resources in its command. The Pacific era, destined to be the greatest of all, is just at its dawn.” Roosevelt may not have known how right he was.

Asia is now home to 3.8 billion people — over half the world's population. By 2030, wider East Asia may account for 40% of global GDP — compared with only 22% in 1990. Of course the dominant chapter in this unfolding narrative is the People's Republic of China. According to the IMF, the Chinese economy will have grown 25 fold over the 25 years to 2015.

To put this into context, Australia and China had economies of comparable size back in 1990.

By 2016, China's economy is likely to be seven times the size of Australia's.

The IMF predicts that in purchasing power parity (PPP) terms, China's economy will surpass that of the United States by 2016.

And in current price terms, China may become the world's largest economy by 2030.

These trends are reflected in the respective rates of economic growth. In the five years from 2005-2010:

  • the US economy grew an accumulated 5%;
  • the eurozone by 4%;
  • the Japanese economy by 2%;
  • India by 47%; and
  • China by a staggering 69%.

These economic trends are also reflected in regional military expenditure. Over the last 20 years, East Asian military expenditure grew by nearly 150% to nearly $215 billion.

During the same period of time, US military expenditure grew by 36% to $US 687 billion.

By contrast, Chinese military expenditure grew by nearly 600% over nearly the same period.

East Asia, therefore, is rapidly becoming a global arms bazaar — with China a dominant driver within it.

And all this on top of the long list of unresolved territorial disputes and associated political frictions that I referred to before.

The core geostrategic and geoeconomic point is this: continued regional and global economic growth will depend on maintaining for the next 40 years the strategic stability in East that we have seen over the last 40.

This in turn gives rise to the core question of the future directions of Chinese strategic, economic and foreign policies and how the region, the US and its allies and the world at large respond.

From the perspective of Beijing the rise of China looks different to the way it looks from the rest of the world.

From Beijing's perspective, China is at last resuming its proper place in the global community of nations denied it for the last 150 years. Anyone who ignores the importance of Chinese national historiography in shaping current Chinese policy debates is missing a large part of the picture.

These are the factors, for example which also shape the absolute imperative of maintaining Chinese national unity and the priority of defeating any separatist movements — Xinjiang, Tibet and Taiwan.

Beyond this, from China's perspective, their principal challenges are domestic and economic: sustaining sufficiently high levels of economic growth to continue to lift its people out of poverty and to develop its vastly underdeveloped and impoverished interior.

Maintaining strong employment growth for the country's still bourgeoning population is therefore fundamental.

Feeding this economic growth given China's deficiency in domestically sourced energy and resources is therefore a core driver of Chinese international policy.

China is now increasingly seized of the imperatives of environmental pollution in general and climate change in particular for its own future economic and social stability — leaving aside any sense China may have of its global responsibilities.

China also attaches a fundamental priority to maintaining domestic political stability within its restrictive framework of a one-party state. Tiananmen in 1989 has left a searing impression on the current generation of Chinese leaders. Hence their reaction to any migration of the sentiments associated with the current Arab spring.

China also sees itself as strategically “hemmed in” with longstanding historical disputes with many of its neighbours combined with the forward deployment of US forces in the western Pacific.

The beginning of wisdom, including foreign policy wisdom, lies in understanding something of how the other party views reality.

Needless to say, the region and the world at large are concerned that China is a non-status quo power.

Many sense an increasing Chinese foreign and security policy assertiveness both within the region and beyond.

Many of China's neighbours are functioning democracies of one form or another, whereas China is not, and states that it has no intention of becoming one.

Despite improvements in human rights over the last 30 years, instances of repression continue to occur and are characterised by a number of celebrated individual cases.

While Chinese economic growth is welcomed across the world — particularly in current global economic circumstances — concerns continue to be expressed about Chinese practices in restricting market access, in not respecting copyright and patent, and about the enforceability and impartiality of Chinese commercial law.

In Africa, concerns are mounting in relation to China's energy and resource diplomacy and a predisposition to use Chinese rather than local labour in major resource projects.

There is also a wide debate concerning allegations of Chinese mercantilism — particularly in relation to the valuation of its currency.

And finally, there are anxieties across many countries about the rapid rise of Chinese military outlays in the absence of what Wang Jisi described in the most recent edition of Foreign Affairs as a declared “grand strategy” for China, which would be capable of providing for the region and the world a framework for understanding the purposes for which China is accumulating such formidable military assets.

As I said before, the world is viewed quite differently from Beijing — and from beyond Beijing.

The reality undoubtedly lies somewhere in between these worlds of differing perceptions.

The key question is how this can be best managed for the long term future without undermining strategic stability and the economic prosperity that has been built on it.

Bilateral and regional engagement with China

Three years ago, I delivered a speech at Peking University which outlined, for Australia at least, the beginnings of a conceptual framework for engaging China.

I explained our desire to form a particular type of friendship with China known by the Chinese word “zhengyou” — the type of candid relationship you have in a true friendship — a friendship that allows the acknowledgment of where disagreements and differences may lie.

I also set out my understanding that the Australia-China relationship was a case of the glass being considerably more than half full, rather than one that was half empty.

12 months ago I delivered another address — the Morrison Lecture at the Australian National University in Canberra.

In that address, I sought to take the concept of “zhengyou” once step further by calling on the world to free itself of Cold War paradigms in engaging the China of the 21st century.

Both in China and many parts of the West, I argued that the arid dichotomy between being characterised as either pro-Chinese or anti-Chinese has to be consigned to history.

Instead I argued for a new third way of engagement which emphasised, both bilaterally and multilaterally, what we had in common with China — committing ourselves to further developing these areas of common agreement while not resiling from real differences where they exist.

I also argued that these concepts of “zhengyou” and a “third way” in dealing with the China of the future could also be accommodated and articulated through China's own philosophical traditions.

For example, when China's leadership talks about a “harmonious society” at home and a “harmonious world” abroad, these concepts lend themselves readily to Bob Zoellick's framework of China as a responsible global stakeholder.

That is a China which helps construct a harmonious global order by both contributing to and abiding by the rules of that order — rules that not only enhance China's own interests but contribute to global public goods as well.

This conceptual framework, in large part drawn from China's own tradition, represents a useful framework for collectively engaging the China of the future — always recognising the positive while refusing to ignore the negatives when they arise.

The East Asia Summit

As our European friends have learnt from their bitter experience across the centuries, we need to develop the mechanisms and habits of cooperation to preserve our collective security in East Asia.

The truth is that our wider region has no such institution at present.

But in Southeast Asia, ASEAN has led us some of the way. In the 1970s this region of 10 countries was riven by strife.

35 years later, ASEAN has brought a degree of regional trust, peace and development that was unimaginable back then.

It has achieved a genuine common understanding of security across what remain ten vastly different political entities.

What we now need is to expand that sense of common security understanding across the broader region.

The Hanoi Summit made us focus on our region's architecture, and the need to expand the East Asia Summit to include the United States and also Russia:

  • so that we have an institution comprising all the key players of our region — especially the United States, China, Japan and India — but also the ROK, Australia, Indonesia and the other countries of ASEAN;
  • so that we have an institution with a mandate to cooperate on the full range of political, security and economic challenges confronting the region;
  • and so that we have an institution meeting at summit level that is capable of making strategic decisions for our region's future.

This indeed was Australia's core objective in proposing the concept of an Asia-Pacific community.

At last the broader region now has a forum with the right membership, and the right mandate.

Now we need to work on strengthening this institution's agenda.

The EAS's future security agenda could include:

  • a more substantive leaders' dialogue on security issues;
  • consideration, at leaders' level, of the security policy deliberations of institutions such as the ASEAN Regional Forum and the ADMM+;
  • deliberations on appropriate confidence and security building measures for the region, including for example, enhanced counter disaster management involving the armed forces and emergency services of participating states;
  • appropriate consideration of some of the more contentious security issues within our region;
  • as well as over time providing the region with the necessary institutional ballast to deal with real tensions when they arise.

The EAS is not the answer to every problem of course. There will be other more discrete mechanisms needed and some have developed already.

Nevertheless, especially in the security sphere, the EAS will be a critical institution. And President Obama's first participation in it is hugely significant for its future success.

Australia believes that by enhancing dialogue regionally through the emerging institution of the EAS, we can obtain greater predictability, transparency and stability on security issues than ever before.

Conclusion

Australian foreign policy has as one of its core objectives the strengthening of the regional and global rules based order.

The reason is not to be found purely in our national interest.

It's because we believe that the maintenance of a rules based order is important for all states, large and small.

Be it in security policy, economic policy, or climate change.

Therefore the multilateralisation of security policy norms in the Asia Pacific region is important for the security needs of all regional states for the future — helping to evolve over time a wider sense of common security across the region at large.

Globally, it's analogous to the work that we seek to do through the G20 in enhancing the norms of global economic governance following the global financial crisis.

Such multilateralisation causes us to be mutually accountable under the norms we collectively determine. If we do this well then we have it within our grasp to shape a genuinely pacific and prosperous Asia Pacific century.

ENDS

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