Address to the Brisbane Institute


Future Stability and Security in the Asia Pacific Region

Speech, check against delivery, EO&E

8 December 2010

Unprecedented growth in Asia, sustained over several decades, is changing the world in which we live.

The global centre of geo-strategic and geo-economic gravity is shifting to our region.

Let's just contemplate the following figures for the moment.

In the 25 years from 1990 to 2015, the IMF predicts that the contribution that India and the countries of East Asia make to global output will rise from 20.8 per cent in 1990 to 29.2 per cent in 2015.

China will contribute half that growth, expanding its economy 25-fold, from 1.8 per cent of global output to 12.2 per cent.

Over the same 25-year period the United States economy will have grown three-fold, but despite that growth its share of global output will fall from 26 to 22 per cent.

By 2015, the United States will still be by far the world's largest economy, and will remain so until the 2030s.

But, in aggregate, the economic weight of Asia has already overtaken that of the United States and will move further ahead.

These metrics begin to underpin what we see in terms of military expenditure trends within wider Asia as well, where a new trajectory is also emerging.

The United States is still the unchallenged leader and will be for many decades to come.

Its military expenditure according to SIPRI in 2009 was some US$663 billion, an increase of 25 per cent over its 1989 base level expenditure.

When we turn to India plus East Asia, the 2009 military spend was $245 billion, representing a 125 per cent increase on 1989.

US military expenditure in 1989 was nearly five times as much as that of East Asia plus India, now it is less than three times as much.

China's military expenditure alone grew by 600 per cent to $99 billion over the 20 year period.

Why do I go through these figures? To underline just how dynamic a factor Asia has become in relative economic and security terms.

The great wealth and power of the United States is not waning but Asia is catching up.

In many ways this new strategic complexity is a product of the success of our near region: China's rapid economic development has already helped lift around 500 million people out of poverty; India is on a similar trajectory.

This is an unambiguously good thing.

And Australia has benefited, as have Asia's trading partners right around the globe.

The robust growth in India and China and the other countries of East Asia has provided strong support to Australia's economy.

This matters to Queensland.

Your goods exports have increased fourfold in the last 20 years to $43 billion, at the same time as Australia's exports overall have also increased fourfold to $201 billion.

73% of Australia's goods exports are to Asia.

Three quarters of Queensland's goods exports are to South and East Asia. A significant proportion of Australia's and Queensland's foreign direct investment flows are from Asia.

My point is that Australia's economic prosperity is closely tied in with Asia's stability and growth; Queensland's even more so.

And that means Australian and Queensland jobs.

One in seven Australian jobs depends on exports, one in five on trade.

That means nearly 2.3 million Australian jobs and 460 000 Queensland jobs, most of them dependent on Asia.

Our regional security underpins our economy which in turn underpins jobs.

The equation is as simple and as profound as that.

In an ever increasing globalised age, every Australian household has a direct economic interest in our region's future political and strategic stability.

And yet our region remains one which is potentially one of the most unstable in the world, one in which deep strategic uncertainties, historical enmities and unresolved territorial disputes are longstanding.

We have a surprisingly large number of outstanding territorial disputes: in the Sea of Japan, the East China Sea, the South China Sea, the islands to Japan's north.

Moreover, across the region as a whole we see evidence of an arms race unmatched in any other region in the world.

That is why foreign policy matters.

That is why diplomacy matters.

That is why the role we seek to play in the region and the world matters.

Nothing abstract.

Nothing esoteric.

But instead, intensely in our national interest.

We still have tensions over the Taiwan Strait.

And we still have a nervous truce on the Korean Peninsula holding the huge military forces confronting each other on either side of the 38th Parallel: 1.1 million on the North Korean side and nearly 700 000 on the South Korean side.

North Korea's erratic behaviour is threatening stability in North Asia and more widely across the region.

Lasting security on the Peninsula will only be realised through open communication and peaceful cooperation, not through isolation and provocation.

Across the many disputes across our wider region Australia has a profound interest in such differences being handled peacefully, in accordance with international law.

And in a way that does not allow nationalist sentiments to exacerbate tensions in our region.

The area to Australia's north is also home to some of the world's most important sea lines of communication: 40 per cent of world trade passes through the Strait of Malacca.

Much of Australia's own trade with our northern neighbours passes through the Indonesian archipelago.

We share an interest with all countries in the region in keeping open and secure the sea lines of communication on which our trade depends.

We have an interest in peace and stability, freedom of navigation, respect for international law, unimpeded lawful commerce and application of the provisions of the UN Convention on the Law of the Sea.

There is a clear need for this to be the basis for a peaceful resolution of regional maritime territorial disputes in the South China Sea, as well as the East China Sea.

In this context, Australia would also support negotiation of a more formal, binding Code of Conduct for the South China Sea.

In addition to these old traditional or so-called ‘hard' security challenges, our region will also increasingly face a range of newer non-traditional security threats, including –

  • Cyber security – both for governments, for corporations and individuals;
  • climate change – which threatens our small island nations, the predictability of our food production, our resilience to natural disasters; and
  • other transnational security like people-smuggling, pandemics, organized crime and piracy.

So when you look broadly at East Asia, we have the dynamic of an early twenty first century shift of geo-economic and geo-strategic gravity to East Asia and the Pacific.

But at the same time we have a fragile, brittle and uncertain security environment more reminiscent of the early twentieth century.

We have left unresolved many difficult security questions from history.

At the same time, new security questions for the region are emerging.

We need the security and stability that has underpinned the economic growth and rising living standards of the last 40 years to be sustained for the next 40 also.

So how can we safeguard this?

I have just come back from Kazakhstan where I attended the summit of the Organisation for Security and Cooperation in Europe.

Australia became an Asian Partner of the OSCE in December 2009.

The OSCE has been with us for 35 years.

It has seen both successes and failures.

Both are worthy of reflection.

The OSCE dates from when the Cold War was the dominant paradigm.

In this environment, the Helsinki Final Act was revolutionary.

It committed countries from both sides of the Iron Curtain to work together on security, to cooperate rather than compete.

What were the principles it set out?

Firstly it's about security among states.

Secondly it's about human security within states.

And thirdly it's about creating habits of cooperation and peaceful dispute resolution rather than resorting to violence.

These are good traditions.

They need to be entrenched.

They need to be reinforced.

How have they worked in practice?

The OSCE is not an alliance.

Nor is it a cosy club of like-minded countries.

And it came into being at a time when East and West faced each other with daggers which were literally drawn.

It's an organisation today where states with conflicting territorial interests sit under the same roof and, where possible, seek to resolve their conflicting interests peacefully and diplomatically, sometimes making progress.

The OSCE was unable to prevent the destructive conflict that occurred during the break-up of the former Yugoslavia.

But today, you have sitting around the same table Serbia and Croatia, Georgia and Russia, Armenia and Azerbaijan. Notwithstanding the tensions of the past, their respective positions on South Ossetia and Nagorno-Karabakh.

Today the OSCE has also helped create institutions that enable Kosovo to function as a democratic society.

The OSCE also champions Human Rights within states.

The 1990 Copenhagen Document commits OSCE member states to democratic values and human rights.

Leveraging off these commitments, the OSCE deploys election observers in its member states.

The views of OSCE election observers carry weight.

It has a sound record of providing impartial pronouncements on whether elections were free and fair.

Australia is working with the OSCE to promote effective human rights education in Central Asia.

One way we plan to do this is by encouraging the participating states of that region to adopt an OSCE Human Rights Education Compendium of Best Practice.

Australia is also supporting an OSCE program against human trafficking in Eastern Europe.

With the OSCE, we will be supporting Ukrainian authorities and civil society to combat people trafficking and provide victims mechanisms so they can access help.

And we are supporting other OSCE states in related areas.

All consistent with one of Australia's core foreign policy interests – good international citizenship is building a robust, international rules-based order.

Security is not just about managing conflict.

It's also about preventing conflict.

One way of building habits of cooperation and a culture of negotiation among member states is by working together on security and confidence-building measures.

The OSCE Summit of 1999 produced the Vienna Document, which aims to do just that.

To build mutual trust among participating states by exchanging and verifying information on armed forces, defence policies and military activities.

The OSCE also provides a framework to manage protracted disputes.

The OSCE sponsors the Minsk Process which brings together two of its member states, Armenia and Azerbaijan, as well as France, Russia and the United States to pursue a peaceful solution to the Nagorno-Karabakh conflict.

In October this year, the Presidents of Armenia and Azerbaijan agreed to exchange prisoners.

These may seem to be small steps.

But in the absence of any agreed institutional processes to be drawn upon to manage disputes once they have arisen, there is nowhere else to turn other than escalation.

The Australian Government acknowledges that many conflicts leave deep wounds that are not easily healed.

The many such conflicts in Europe include the events at the end of the Ottoman Empire.

These events continue to resonate around the world, including in Australia.

The Australian Government's position on this has been consistent and has not changed.

The Australian Government acknowledges the effect these terrible events have had on subsequent generations, their identity, heritage and culture.

And the deeply-held feelings in various Australian communities in relation to this period of history.

While the Government respects these feelings, it strongly believes that dialogue between the governments and communities of the countries concerned is the best way to address such issues, and does not intervene in this historical dispute.

Although various groups at state and local level in Australia might express different views, these do not reflect Australian Government policy.

The habits of conciliation and cooperation are important for the future dealings of all states.

I raise the OSCE in my remarks today not to say that we should transplant any particular institution from Europe.

On the contrary, we need in our own region to develop our own home-grown institutions.

But I raise it to show that Europe is on the same search as are we in the Asia Pacific to find means of fostering cooperative regional security.

A concept of common regional security.

A culture of non-confrontational security policy engagement.

And, in time, the institutions which give these concepts, these cultures, practical effect.

It's part of what I called the other day “punting for peace”.

And that means working for peace.

One of the core challenges of the 21st century is for this region to frame a common sense of rules-based security cooperation.

A number of elements will help us do this.

The first will be the continued stabilising role of strong US strategic engagement in the region.

This engagement for close on seven decades has laid the foundation of peace and stability in the region, a foundation that has made possible the phenomenal economic growth and prosperity that we have all built together.

The success of this security enterprise has been reflected in the results.

No major wars in over 30 years.

In part because of the fact that across East Asia and the West Pacific, the security presence of the United States, while always clear, has been rarely been intrusive.

It has been the quiet, solid foundation stone on which so much of our regional prosperity has been built.

It is a presence that has also sublimated many of the tensions between states that would otherwise have resulted in conflict.

And this has enabled the governments of the region to get on with the business of developing their economies.

We should watch our region with concern as any of these ancient tensions in the midst of changing macro strategic circumstances begin to rise once again to the surface.

Recently Stephen Smith and I held the AUSMIN talks with our US counterparts Defense Secretary Robert Gates and Secretary of State Hillary Clinton.

Those talks marked the 25th anniversary of AUSMIN and the 70th anniversary of the establishment of diplomatic relations between our nations.

Next year we mark the 60th anniversary of the signing of the ANZUS treaty, the underpinning of the US-Australia Alliance.

AUSMIN reminded us of our continuing and common values and the ability of the Alliance to deal with global and regional challenges and emerging 21st century threats and opportunities.

Australia believes that the future strategic stability of the region will in large part rely on the continuing strong presence and engagement of the United States, which the Obama Administration has made a high priority.

A second important element will be for Japan to play a regional and global role commensurate with its economic strength, capability, and interests.

Japan is and will remain a global power.

It has vast technological and economic capacity.

It has a strong commitment to regional and global peace and stability.

It aspires to a permanent seat on the United Nations Security Council, an aspiration Australia fully supports, as we do for India.

Australia would support, and seeks to encourage Japan to play, an even greater role in regional and global strategic affairs.

Important as the role of the Unites States and Japan is, the challenges of the 21st century will demand more.

Australia, Japan, the United States and other partners in the region, including China, will need to work closely together to frame a common sense of rules-based security cooperation in our region.

One of the things that will develop this sense of a common or collective regional security is a stronger regional architecture that affords the right opportunities for dialogue among regional states.

And one that fosters the culture and habits of regional cooperation necessary to bring about the reality of collective security in our region.

ASEAN has led the way here.

In 35 years it has achieved a remarkable transformation, from a group of states among whom lay many enmities, to an environment now where there is 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.

Our broader regional architecture is now in better shape than it was just a year ago to meet contemporary challenges.

We needed to expand the East Asia Summit to include the United States and Russia so that:

  • We have an institution comprising all the key players of our region including the United States, Japan, China, the ROK, Russia, India, the ASEAN states, Australia and New Zealand.
  • We have an institution with a mandate to cooperate on the full range of political, security and economic challenges confronting the region.
  • And an institution meeting at summit level that is capable of making strategic decisions for our region's future.

This was our core objective in proposing the concept of an Asia-Pacific community – as I said in a speech on the Asia Pacific community to regional representatives in December last year – a regional institution with sufficient membership and mandate, and meeting at summit level, to begin to carve out a regional rules -based order for the future.

In October, with the EAS' expansion, we achieved the core of that objective.

The challenge now is to the build this emerging institution's agenda.

Within this architecture, what can we be doing to enhance security cooperation and to enhance confidence in our mutual security?

I believe we should be using the dialogue opportunities we now have through the expanded East Asia Summit productively to focus on areas of common concern and agreement where cooperation on regional security-related projects can build confidence for the future.

This may include areas such as greater regional cooperation between our defence and police forces, in dealing with disaster relief, people-smuggling, piracy, and terrorism.

Australia and Indonesia for example have worked closely to build counter-terrorism capability throughout Southeast Asia.

The Jakarta Centre for Law Enforcement Cooperation, a joint Indonesian and Australian project, has provided training to over 7000 Indonesian and regional law enforcement personnel.

Our law enforcement cooperation with Indonesia, but also with Thailand, the Philippines, Malaysia, and others, and the determination of our partners, has positioned the region as a leader in the struggle against transnational terrorism.

As we build confidence and security building measures region-wide, there is great scope for expanding region-wide counter terrorism cooperation across all regional states.

Similarly with counter-piracy, counter-people-smuggling and counter disaster planning, joint exercise and operations.

As we build confidence with one another in these fields, we could then move on to other more contentious areas of security engagement including the negotiation of formal Codes of Conduct for the South China Sea and other disputed maritime areas of the wider region.

Following on from such measures, progress could also be made through the East Asia Summit over time on other more intractable security tensions in the region including the building of institutional norms that increase military transparency - of budgets, of exercises and of doctrine.

As confidence is built over time, regional states might also increasingly turn to our regional institutions to deal with long-standing disputes over conflicting territorial claims.

There is therefore, a graduating spectrum of confidence and security building measures that our regional institutions (and the various participating states, including the US and China) could shape together.

In this way, we could strengthen the confidence and security building role of the East Asia Summit – and its linkages with other existing regional forums – so that it becomes, over time, the key regional political and security body in East Asia.

The alternative is to rely upon the sharp, brittle and often inflexible arrangements that currently pertain – arrangements which provide inadequate buffer or ballast, or common understandings, to deal with future misunderstandings or crises as they arise.

For some, all this may belong to the esoteric realm of foreign policy with little domestic relevance.

This view is wrong.

As recent reverberations across the region from the Korean Peninsula have reminded us afresh.

Again, the core principle is this: national prosperity rests on international stability.

We only tend to become aware of the importance of this principle once stability is undermined, threatened or tested.

The presence of stability is barely noticed.

It is only the absence of stability which confronts our political consciousness – and the practical consequences that flow from a lack of stability.

If there is no stability, and instead there is the risk or reality of conflict, consumer and business confidence falls.

Exports collapse.

Investment dries up.

International tourism falls.

Parents become reluctant to send their students abroad to study.

And all this hits jobs in a big way.

That is why the improvement, maintenance and entrenchment of regional and international stability means everything to the Australian economy, living standards and jobs.

It is only when security and stability deteriorate that we are reminded afresh that strategic stability is not necessarily a pre-determined, natural condition.

History teaches us otherwise.

And contrary to Fukuyama, we are far from the end of history.

Strategic stability is something that must be built over time.

Strategic stability is built on many foundations.

It is built on predictable behaviour.

It is built on mutual trust.

It is built on a commonly agreed set of rules of the road.

And it is also built on adhering to those rules once set.

That is why the work of building a rules-based order for the Asia of the 21st century is important to the future of all Australians.

And why the entry of the United States and Russia into the East Asia Summit is such a significant development for the future of our region.

And it is why this Australian Government is determined to exert every effort - in partnership with our friends and neighbours – to help lay the lasting foundation of long-term peace, stability and prosperity for all the member states of the Asia Pacific region.


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