I am pleased to be back at the Centre for Strategic and International Studies here in Washington.

This is my ninth visit to the United States since becoming Foreign Minister just over two years ago, and on each occasion I am enthused and energised by the power of the United States and the dynamism of our bilateral relationship.

Over the past two years I’ve been fortunate to meet with some of the brightest minds in the United States.

On this visit, I’ve spoken with the foreign policy and international relations experts at the Rand Corporation, The Asia Foundation, Stanford University and Harvard University – and together with my colleague Defence Minister Marise Payne –with Secretary of State, John Kerry and Secretary of Defence Ash Carter at AUSMIN in Boston yesterday – which was a very successful ministerial dialogue.

I have met with some of the leading innovators – Twitter and HP (Hewlet Packard), Microsoft, Palantir and some up-and-comers like Planet Labs, and those with a distinctly Australian flavour – Cloudpeeps, Nitro, Kaggle and others in Silicon Valley and the Bay Area.

Today, I will bring two themes together – foreign policy and innovation – and talk about what the future holds for the global order, and what this means for Australia and the United States.

In coming to office last month, Prime Minister Malcolm Turnbull set a vision for Australia’s future. He said;

“The Australia of the future has to be a nation that is agile, that is innovative, that is creative. We cannot be defensive, we cannot future-proof ourselves. We have to recognize that the disruption that we see driven by the technology, the volatility and change, is our friend if we are agile and smart enough to take advantage of it. There has never been a more exciting time to be alive than today, and there has never been a more exciting time to be an Australian.”

These are optimistic, uplifting words. I believe that to more efficiently embrace the future, we need to anticipate coming events, although predicting the future is a brave endeavour.

As the late dearly beloved Yogi Berra said so well “It's tough to make predictions, especially about the future.”

Nevertheless, in 2015, we can discern some of the trends that are likely to shape the world in years to come.

Esteemed organisations like the National Intelligence Council make significant contributions in this regard.

To take a long term approach, let us look ahead as –  we head towards mid-century – where current projections reveal the world will be populated by almost 10 billion people, two-thirds of whom – that is, somewhere near our current global population – will live in cities.

Increased migration will see more people living outside their country of birth, in more multicultural societies.

A greater portion of the world’s population – an extra three billion people, most of them in Asia – will be middle-class thanks to economic growth and development, improved education, healthcare and greater gender equality.

It will be a wealthier world – the global economy will have nearly tripled in size, countries will be even more economically interdependent than they are now, while engaging in greater strategic competition.

Looming resource scarcity and our contemporary understanding of the fragility of the environment will drive fundamental changes in production, making manufacturing processes and consumer goods more energy and water efficient.

We can assume that disruptive technologies will continue to change our lives and our work. I have my hopes pinned on teleportation.

Governments will continue to come and go, yet I believe the nation-state will endure.

Global governance is likely to continue to evolve.

That will apply domestically and internationally.

This raises the question of how countries like Australia and the United States will seize the opportunities and meet the challenges of the future.

It is self-evident that the answer will depend in large part on the choices we make today and in coming years.

These choices are now more vital than in times past, for I believe we are living through the critical inflection point in history.

Since the end of the Second World War, international politics has played out within a global order unlike any that preceded it.

By ‘global order’, I mean both the unwritten understanding and the written rules between states about how the international system functions and how the nation states relate to one another within that system.

For seventy years, the most powerful nation on Earth has carried the unique distinction, for a superpower, of seeing its own national interest as lying in the promotion of public goods and the development of a peaceful, rules-based global order, where states voluntarily limit the exercise of their power for the common good.

The last time the global order faced an inflection point was at the end of the Cold War.

The academic literature of the late 1980s and early 1990s, examining what that signified, had two stand-out thinkers, well known to any Washington audience: Francis Fukuyama and Samuel Huntington.

In 1989, Fukuyama declared in his famous essay, The End of History, that we had reached “the end point of mankind’s ideological evolution and the universalisation of Western liberal democracy as the final form of human government”.

Fukuyama claimed that the idea of liberal democracy had triumphed – all that remained was the passage of time as nations adopted the triumphant ideology.

A few years later, Huntington wrote his seminal essay on what was to come in the post-Cold War period, The Clash of Civilisations.

While both are outstanding works, it was not possible for either to establish a framework for analysing the dynamics and developments of the international system that followed.

Unfortunately, we aren’t seeing a widespread move towards liberal democracy across the globe.

Freedom House has found that “acceptance of democracy as the world’s dominant form of government – and of an international system built on democratic ideals – is under greater threat than at any other point in the last 25 years”.

For example, China has continued to follow its own path of a regulated market economy under a one party system, while non-democratic nationalist and religious ideologies elsewhere in the world have proved more durable than desirable.

Fukuyama’s argument that there is no alternative ideology to liberal democracy that supports individual liberty holds true – but some of its old competitors have proved resilient.

Huntington placed strong emphasis on cultural and historical factors, downplaying the complexity of identity.

Conflict over the past few years has had many cultural and historical elements, but cannot be explained by these factors alone.

Some commentators point to the rise of anti-Western Islamic terrorism as proof of Huntington’s thesis.

However, the conflict in Syria and Iraq today cannot be characterised as between the Islamic world and the West.

While the conflict began as a civil war in Syria, it has evolved and can now be described as an extreme minority group of one Islamic sect waging war against the rest of Islam and the rest of the world at large.

There is a coalition of states from many regions and cultures united in wanting to stop the bloodshed and defeat the terrorists.

In the end, notwithstanding the contributions made by Fukuyama and Huntington, the inflection point of the late 1980s and early 1990s represented a period of consolidation of our global order, not its transformation.

When we look back at this current inflection point, will we be able to say the same?

For we are living through a period of fundamental challenge to the global order.

We applauded the use of social media to mobilise against repressive regimes in the ‘Arab Spring’, and technology will continue to play an important role through disruption. Today terror networks are also using technology but to recruit and radicalise across the globe.

Fundamental shifts in power are underway and I point to the two trends identified by Professor Joseph Nye: first the shift of power within the global order – that is, the transition of the power balances among states – and second, the shift of power away from the nation-state – that is, the diffusion of power to non-state actors and individuals. 

I was fortunate to have dinner with Joe Nye last night so I could test his theories! His new work Is the American Century Over? makes for compelling reading –  and the answer by the way, no it’s not.

In terms of the first trend, it is clear that power is moving east, to the Indo-Pacific.

The economic rise of Asia is being followed by its increasing strategic importance, military might and, to varying degrees, soft power.

By mid-century, China, India and Indonesia – and hopefully also a unified Korea – will join Japan as established global powers.

At the same time, relative power elsewhere is declining.

To be clear, I am not referring to the United States.

This country will still be a global leader in the foreseeable future – and I agree with Professor Nye’s assessment that the United States is still likely to be in the lead until at least the 2040s and beyond.

It will remain the most significant economy – purchasing power parity is not the equivalent measure of per capita GDP.

However, some powers are in decline – and not withstanding President Putin’s more recent assertive displays – I would put Russia in this category.

It is certainly a lesser player than was the Soviet Union – considering that Russia’s share of the global economy today is 1.6 per cent making it the 15th largest economy compared to the USSR, which accounted for 7.7 per cent in 1980, the 4th largest economy.

What this transition of power to a more multipolar world means, depends to a large degree, on the behaviour of states as they compete for relative power.

Russia’s annexation of territory, military incursions and support for separatist movements has flouted the principle of state sovereignty.

China’s behaviour has been more nuanced.

It has sought to make a space for itself in the international system that is commensurate with its economic and strategic weight.

China is seeking a greater role in many existing forums and, where it finds them unaccommodating, it now has the influence and economic heft to create new arrangements.

On one hand, China’s reclamations in the South China Sea has ignored sensitivities in the neighbourhood and escalated regional tensions.

On the other hand, China has established new institutions like the Asia Infrastructure Investment Bank, the AIIB, to fill the gap in development finance, and has begun playing a bigger role in global peacekeeping.

At UNGA Leaders’ Week this year China announced a 10 year US$1 billion China-UN peace and development fund, that it will join the Capability Readiness System and that it is setting up a permanent peacekeeping police squad and building a peacekeeping standby force of 8,000 troops. Both are potentially valuable contributions to peace and prosperity that should strengthen the global order.

The second shift in power is its diffusion away from nation-states.

Terrorism is one of the forces that sap power from states – the most overt threat is currently Da’esh.

It completely rejects the current global order and all of its tenets – even the nation-state itself – having effectively erased the border between Syria and Iraq – in favour of its proclaimed Caliphate that respects no boundaries, no sovereignty.

More broadly, power and influence is also increasingly vested in the hands of individuals and other parts of civil society, with technology the most important enabler.

By the middle of this century this will have brought about fundamental changes in the relationship between the state and its citizens.

The individual attachment to the state will have eroded, to some degree, as individuals define their identities less in reference to their nationality, and alternative centres of influence and authority emerge.

This trend isn’t necessarily negative – modern empowerment has been transformational for many lives.

Looking ahead, the globalised nature of the world will have further reduced the ability of states to quarantine issues, trends and threats.

Events overseas will increasingly influence developments at home.

In many ways, national borders will no longer be physical.

A larger share of the transmission of ideas, trade and financial flows will take place outside state control.

Perhaps even more so than today, wealthy individuals, NGOs and multinational corporations will control budgets larger than many states.

It will be a world where nation-states remain the locus of power, but will have less capacity to advance their national interests, even as they face increasing demands.

These trends don’t spell the end of the current global order, but they will change it, potentially quite radically.

How it will survive but that will depend on whether it can adapt – on how effective states are in actively defending the useful and good parts of the global order, while moulding the parts that need to change.

The health of the global order is crucial for all of us, including countries like Australia and the United States – because it underpins our efforts to create a future framework that is supportive of our values and where we can promote our national interests.

For decades we have enjoyed relative stability, underwritten by United States military dominance that has deterred other states from destabilising behaviour, and by international rules that afford a degree of certainty.

We have enjoyed greater prosperity as the global order has facilitated a more open, free and secure trading system.

We have benefited from cooperation on trans-national issues – multilateral negotiations and projects that promote development and help manage threats like climate change, transnational crime, terrorism and pandemics.

Crucially for states like Australia, the current global order has provided us with avenues of influence.

Its structure and norms have enabled us to:

  • drive international law, like the Arms Trade Treaty;
  • pursue initiatives, such as Australia’s lead on the UN Security Council’s response to the downing of Malaysian Airlines MH17; and
  • form coalitions that amplify our influence, as we have in working with the MIKTA group– Mexico, Indonesia, Korea, Turkey and Australia – on the Sustainable Development Goals.

That is why I have announced our candidacy for the Human Rights Council in 2017 and the UNSC in 2029 – if we want to ensure that existing structures work as intended, we need to participate and support them.

It is not a perfect global order – often, it is unequal, slow and inflexible – but it has, on the whole, served the world well.

I should stress it is not an arrangement that Australia has taken for granted as being the responsibility of others. Nor have we passively watched it evolve from afar.

We have made commitments that anticipate burden sharing as an ally; to active participation in the global debates structuring international organisations; to outcomes which we have judged as advancing successfully for all and the democratic principles that underpin our society.

Our task now is to guide the changes that are coming.

I believe we can make this inflection point one of simultaneous transformation and consolidation.

The global order is, after all, a construct, a device created by states that can be maintained and refashioned by states.

It has to be updated to take into account the realities of the 21st century, to accommodate the legitimate interests of emerging powers and a global citizenry that increasingly defines itself outside of states’ borders, while retaining the features of the global order that derive legitimacy from universal appeal.

This is no mean feat.

We need to be agile to respond to change, flexible to accommodate it, and also resilient in protecting and promoting our values and interests in the face of change.

When states like Russia violate principles of sovereignty or international law, the international community has to respond in defence of those principles, as we have done with the current suite of sanctions.

We have to be clever about the rise of China.

We have to accept it will not be a power in our own image, and focus on cooperation where we do see convergence – like market liberalism and regional stability, through forums such as APEC and the East Asia Summit – so the global order can accommodate China’s weight.

Little noticed, but of enormous significance, was the undertaking, given by the Chinese to the Americans during President Xi’s visit, to incorporate the sorts of governance principles which have emerged through years of work – trial and error – in institutions like the Asian Development Bank and The World Bank.

As Australia approached membership of the AIIB we worked very hard to see this trend emerge in Chinese policy. We were delighted to see there just may have been some impact.

It is important for our institutions to adapt to multiple, sometimes competing centres of power – otherwise, they will become obsolete as emerging powers look for alternatives – and in the meantime, we should leverage more nimble forums, like the G20.

We have to be determined in our fight against violent extremism and terrorism, and maintain international resolve to defend the weak, preserving the global order’s ability to respond to threats through collective action.

States need to adapt to citizens’ new aspirations and identities – this makes the democratic project more important than ever and this makes our shared values and our shared principles more important than ever.

While we cannot expect the global order will perpetuate our values, we should be confident in them and continue to pursue a foreign policy that is underpinned by them.

Finally, we have to expect the unexpected.

It’s the events we haven’t factored into our predictions that can do the most damage to the global order – a nuclear war, accelerated impacts of climate change or a global depression would derail the vision of the future I outlined at the outset.

We aim for peace and prosperity, stability and security.

Australia will work with a diverse range of partners to this end – including our closest ally the United States, using forums like AUSMIN to discuss issues and propose pragmatic and achievable steps towards our goals.

As the adage goes, the only certainty in life is change.

We know the future will not look like today. 

If our foreign policy doesn’t acknowledge this – if it aligns to the status quo, stands in the way of evolution of the international system, fears technological innovation – change will happen in spite of us.

Once we accept the future will be different, then we have to act to bring about the kind of change we want.

The current global order has intrinsic value that we should actively seek to preserve and promote as beneficial to the international community.

However for it to endure, to continue to be effective, and to continue to serve our interests, the global order also has to adapt. It must abandon structures and norms that no longer have contemporary relevance, to allow for new ideas and institutions to develop in response to contemporary challenges, and to reflect the reality of the contemporary spread of power.

Agility is not a weakness.

We approach issues from a well-founded national character of commitment to friends, allies and a decent global order.

We know from time to time a physical price has to be paid, and a political and economic price always.

Change must be identified as a challenge not a threat. I am confident our two nations have the capacity to adapt.

We also know that holding true to our core values – the values of a liberal democracy and egalitarianism – is a non-negotiable tenet of adoption and innovation. 

I look forward to working with my counterparts in the United States Government to seek that better future for both our nations.

Standing together, that future is assured.

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