Foreign Policy in an Uncertain World

Thank you Zara. Good morning, welcome to Canberra.

Distinguished guests, diplomats, the Hon Kim Beazley and Senator Penny Wong who will be here shortly.

Ladies and gentlemen, it is an absolute delight to be here on this bright Canberra morning to address the Australian Institute of International Affairs – this National Conference theme of Foreign Policy in an Uncertain World.

It is true that every era confronts uncertainty, however uncertainties at this time are arguably more profound than for several decades.

A number of factors have converged:

• the rise of non-state actors challenging the foundations of the international rules-based order by attempting to occupy sovereign territory to establish caliphates, while also directly attacking civilian communities;
• states seeking to subvert, avoid or ignore the rules-based order - most egregious example currently is North Korea with its flagrant defiance of the UN Security Council with its illegal nuclear weapons and ballistic programs threatening regional and global security;
• the ongoing consequences of the 2008 Global Financial Crisis weighing on global growth;
• significant shifts in the relative power balance of larger nations, especially in our region;
• then the election of President Trump and the new Administration in the United States;
• Brexit and a re-ordering of affairs in Europe.

The international rules-based order, the web of treaties and alliances and institutions that has been built up since World War II is under strain, even fraying, as some nations seek to bend or break rules in pursuit of short-term gain.

It is partly in response to these and other challenges that the Turnbull Government will be releasing its Foreign Policy White Paper later this year – the first since 2003.

The White Paper will chart a course for our engagement with the world over the next decade including how to best deploy our resources in pursuing our interests and promoting our values – even though it is impossible to predict how the world will change over this time.

The White Paper will also reflect on the underlying and ongoing conditions for continued peace, stability and prosperity in the region and across the globe – and how best to position Australia in this fluid environment.

Arguably, the most rapid and dramatic changes occurring are in our region.

There will be more large and significant strategic actors in Asia than before – some of them already or else likely to be great regional or even global powers.

The majority of nations in Asia with large populations have risen in strength and influence, and will continue to rise rapidly over the next decade.

This will have significant strategic consequences, depending on how those nations exercise their power and influence, and whether they act to strengthen the international order or weaken it.

Australia will retain its status as one of the few fully industrialised economies in the region with a powerful and advanced military, while other countries in the region will become wealthier with growing power.

We are currently the 13th largest economy in the world in nominal terms.

We've broken a world record this year – as we enter our 27th consecutive year of uninterrupted economic growth. No other economy has ever achieved this.

Yet, in a decade's time, we may well sit outside the Group of Twenty largest economies in the world, the G20, should current growth trajectories in our region be sustained.

To take a PwC study as one guide, by 2030, Indonesia, Pakistan and Thailand will all have larger economies than Australia.

Vietnam, Bangladesh, Malaysia and the Philippines will be approaching parity with Australia in absolute economic size.

Rising economic power leads invariably to greater investment in militaries.

This is a reality we must confront.

The shift of relative power to our region is likely to continue.

Within the time period covered by our upcoming White Paper, the combined military budgets of Asian countries are likely to match United States military spending for the first time in at least one hundred years.

This means the Indo-Pacific will become an increasingly congested space for great powers and their formidable military capabilities.

The United States will likely remain the world's only superpower although we have never seen or been in an era where there has been a powerful China, Japan and India at the same time.

Russia will remain a significant strategic player in the Indo-Pacific.

South Korea, Indonesia and Vietnam will grow in relative influence.

Additionally, the strategic composition of nations will be qualitatively different from the past, as the majority of the emerging great and regional powers in the region are not allies or long-standing security partners of the United States.

This is vastly different to the second half of the previous century when rapidly growing economies such as Japan, South Korea, Thailand, the Philippines, Singapore and Malaysia all enjoyed strong security relationships with the United States.

Raising the stakes is the fact that many of the current disagreements over territory involve Asia's great powers.

If they are not managed peacefully, the consequences for Australia and the region will be destabilising with potentially greater implications for our collective security.

For example, China has maritime disputes with five Southeast Asian countries, including the rising powers of Philippines, Indonesia and Vietnam.

There are also disagreements between Southeast Asian states in the South China Sea.

Beijing also claims the Diaoyu Islands in the East China Sea, which are held and administered by Japan, which calls them the Senkaku Islands.

China has several border disputes with India, the most significant being over Arunachal Pradesh which is an important geo-strategic area roughly the size of Switzerland.

The Taiwan question remains unresolved.

Tensions are growing on the Korean Peninsula, due to North Korea's weapons testing, continued provocative threats and illegal missile and nuclear programs.

This directly involves the United States, China, Japan, Russia and South Korea. Australia is part of the collective strategy to impose diplomatic and economic pressure on North Korea to compel it to change course.

These and other challenges give rise to much discussion with respect to the future direction of Australia foreign policy.

We need to be clear-eyed about the current state of the region and the world, and to proactively seek ways to shape events to our best advantage.

Importantly, Australia needs to maximise its influence in the world.

Hope is not a strategy.

We have an independent foreign policy and we do not outsource our decisions to other countries.

That does not mean we do not value the views of others or acknowledge the great benefit that comes from our long-standing and strong alliance with the United States – quite the contrary.

As the only global superpower into the foreseeable future, the United States is able to project power in any part of Asia, throughout the Indo-Pacific, and around the world.

More importantly, security and stability in Asia continues to depend on a United States-centric system of bilateral alliances and security relationships in the absence of any collective security arrangement, along the lines of NATO, the North Atlantic Treaty Organisation.

In my meetings with the vast majority of regional leaders, they want more US leadership in our region and do not want to see any lessening of that.

There are good reason why this is so.

The United States receives explicit and ongoing acquiescence from many countries to host its troops and military assets because it is in their interest to do so.

A number of other countries offer logistical and other facilities to support the military presence of the United States, such as visits by the US Navy.

The United States is also the only great power in the region that does not have direct territorial disputes with other nations in Asia, thus putting it in a principled position of not having to pursue self-interest at the expense of regional security.

Criticism of American administrations emanating from the region is generally loudest when Washington is perceived to be stepping back from the region but rarely when it seeks to engage more deeply.

As an ally of the United States and close security partner of several more countries in our region, we are playing an increasingly important role.

Allow me again to take the Korean Peninsula as an example.

It is directly in our national interest that tensions are resolved peacefully, with three of our four largest trading partners in North Asia – China, Japan and South Korea.

The countries most directly involved in finding a solution to North Korea's nuclear proliferation are those members of the suspended Six-Party talks: the United States, South Korea, China, Japan, Russia and North Korea.

Outside this group, the weight of Australia's voice and advocacy on this issue is at least the equal of any other in the world.

That comes from our sensible, insightful and constructive input with respect to the challenge of North Korea's illegal weapons programs.

Australia has been an active contributor to the international debate about North Korea, and much has been undertaken in bilateral discussions with counterparts.

One interesting piece of advice that I was given early in my time as Foreign Minister is that Australians are too modest, and that we tend to underestimate the value of our input.

As I travel throughout the region, it is clear to me that Australia's stance is respected and nations are interested in our perspectives as we are seen an influential and independent voice of reason.

As Australians, we famously speak our minds, and so we tend to be frank and upfront about our opinions and judgments.

That is not lost on other nations and we are often viewed as an honest broker when engaging with others on matters that are often highly sensitive.

The Coalition Government's record of deepening our alliances and advancing Australia's interests and values throughout the region is compelling – our relationships with most ASEAN nations have never been stronger or deeper.

We have delivered tangible outcomes and I can point to numerous specific achievements that will position us well into the next decade and beyond.

The Coalition Government concluded free trade agreements with South Korea in 2014 and with China and Japan in 2015.

This means that in addition to the free trade agreement with the United States agreed in 2004 by the Howard Government, Coalition governments have concluded free trade agreements with four of Australia's largest trading partners in recent years.

The free trade agreements with China and Japan are the two most comprehensive economic agreements those two major economies have ever signed.

In 2016, we concluded a Comprehensive Strategic Partnership with Singapore following a review of the Singapore-Australia FTA signed in 2003 under the Howard Government.

We are currently in the process of advancing comprehensive economic agreements with countries such as Indonesia and India.

We have invested in what is recognised as an enormous boost to our long term and enduring engagement with our region.

Our New Colombo Plan is a visionary model for developing people-to-people links between the next generation of Australian leaders and the region which will serve our nation well for at least a generation, or more.

Our New Colombo Plan began in 2014 as a pilot program supporting a number of Australian undergraduate students to live and study in Japan, Singapore, Indonesia, or Hong Kong, and undertake work experience with a business or entity within the host country.

By the end of 2018, almost 30,000 Australian undergraduates will have spent time studying, undertaking practicums and working in around 40 countries throughout the Indo-Pacific.

I want to give a shout out to the New Colombo Plan alumni – please stand – these brilliant young students have lived, studied and worked in one of 40 countries in our region, and I ask you to take the time to talk to them today about their experience and I'm sure you will agree with me that this is one of the wisest investments the Government could make in foreign policy terms.

I am delighted that every foreign minister or head-of-government from ASEAN countries, as well as China, Japan, South Korea and India have publicly commended the New Colombo Plan as one of the most outstanding initiatives by any Australian government in building meaningful links and networks within the region.

The experiences and friendships of the thousands of talented young Australians will shape their careers and perspectives.

Their connections with their chosen country will last a lifetime, and our Global Alumni Engagement Strategy leverages the benefits of such networks.

This is building our Asia-capacity and literacy in a genuine and meaningful way – with a strategy backed by investment.

I have also overseen the largest expansion of our overseas diplomatic presence in more than 40 years with 12 new posts, mostly in Asia, as we advance and promote our interests in the region – two additional posts in Indonesia, an additional post in PNG, in China, in Mongolia, in Thailand for example.

Importantly, Australia remains strongly committed to the international rules-based order and we have demonstrated our willingness to submit ourselves to independent scrutiny, as an example for others.

Our recent successful conclusion of maritime boundary negotiations with Timor Leste was under the auspices of an international panel of arbitration.

Australia was also supportive when the Tribunal of the Permanent Court of Arbitration released its decision on the South China Sea in July 2016.

Australia's position is that China and the Philippines should treat the Award as final and binding.

We do not take sides in the territorial dispute in the South China Sea, however we support the Tribunal's decision as an authoritative articulation of international law and the application of UNCLOS.

Our Government will continue to promote the development of Australian foreign policy by maximising our capacity to pursue our interests and values in an increasingly contested region and world.

We cannot predict how events will unfold.

However when it comes to our interests and values, we can determine our anchor points and reinforce those when engaging with the region and world.

We adapt to developments as they occur and adjust - to advance our interests and values rather than at the expense of them.

We are seen as an open, liberal democracy, committed to freedoms, the rule of law and democratic institutions.

We are an open, export-oriented market economy, selling our goods and services around the world.

Our Foreign Policy White Paper will articulate our priorities, interests and values for the next decade and beyond so that we can navigate with more clarity and assuredness the uncertain seas ahead.

I wish you the best for your conference today.

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