ASPI Unisys Lunch, the Boat House, Canberra — E&OE
In my address today I want to outline the changing face of Australia's international engagement and outline some of the big challenges we might face over the next 20-30 years.
In doing so, I do not intend to cover the waterfront but am happy to take questions on what will be some obvious gaps.
Australia is well placed in a changing world. We have quality human capital and natural resources. With our LNG, coal and uranium we are already a significant energy exporter. We are also a significant exporter of agricultural produce. So we have a lot of what the world will want in the 21st Century.
Our trade and investment patterns are diversified globally. China, Japan and Korea take just over 50 per cent of Australia's merchandise exports. We have completed a remarkable agreement for trade liberalisation and closer economic integration with the ten ASEAN economies. Our inward and outward investment and financial flows are becoming more diversified but remain dominated by the United States and member countries of the EU. And we have expanding economic interests in the Middle East, Africa and Latin America.
All up, Australia is not as small as we like to think of ourselves. Compared to the United States and China, yes; relative to others, no. Our challenge is not to punch above our weight, but to punch up to our weight.
Of the 193 countries that make up the UN, we are the 6th largest in land area, the 13th or 14th largest economy and about the 50th most populous – in other words, of the 193 countries in the UN, about 140 have a smaller population than Australia. We have the 13th or 14th largest defence budget in the world, and within four years we will become one of the 7 or 8 largest aid donors in the world.
What we also have is a proud record of international engagement, both globally and in our own region; from the establishment of the UN in 1945 to the Cairns Group, to the prevention of mining in Antarctica, to APEC to the G20; from the support for Indonesia's independence in the 1940s, to the Colombo Plan, to ASEAN's first Dialogue Partner to Cambodia to East Timor.
What we don't have is a natural, weighty grouping such as the EU or ASEAN. Our history has consistently been to be put in what can only be described as 'the Others', as in the 'Western European and Others' (WEOG) in the UN. Hence, our bilateral, regional and global diplomacy does need to be active and creative, as it has generally been over the decades.
When I joined the then Department of External Affairs in 1969 the only summit in which Australia was regularly engaged at Leaders level was the Commonwealth – CHOGM. The Pacific Islands Forum started around the time I joined the Department.
The APEC Leaders Meeting commenced in 1993. The East Asia Summit commenced in 2005. The first G20 Leaders Meeting took place in 2008. The Australian Prime Minister attended the bi-annual Asia Europe Summit for the first time in 2010.
The point of all this is that Australian leaders are now involved in a round of annual meetings which are changing the face of Australian diplomacy and the pace and shape of our international engagement.
For the first time, we now talk of a 'summit season' for the Australian Prime Minister.
Look at the Prime Minister's program between 23 October and 20 November: CHOGM in Perth, the G20 in Cannes, APEC in Honolulu, the EAS in Bali and, of course, we have President Obama's visit between APEC and the EAS.
These forums not only engage us in important global and regional matters but, for the first time, put us around the table regularly with a number of countries with which we have not historically had deep and broad-based relations, but which are becoming increasingly important on the global stage.
Nowhere is this more evident than in the G20, with Brazil, Mexico, Turkey and, of course, India and South Africa.
Take for instance Brazil. Destined to be one of the world's biggest economies within a decade or so, and a major player in international forums, we have no historical or other natural starting point for our relationship. Until recently, it is a relationship which has largely stagnated. And even today, our diplomatic presence there reflects the world of 40 years ago, not the present, let alone the future. To varying degrees, the same could be said of Turkey, Mexico and South Africa.
But Australia's involvement in regional and global summits is also intensifying the nature and pace of our interaction with countries with which we already have very strong and well-established relationships. Take for instance China, Japan, Korea and Indonesia. By virtue of the G20, APEC, the EAS and the Asia Europe Summit, the Australian Prime Minister can now expect to meet the leaders of these countries a minimum of 7 times every 2 years over and above any dedicated bilateral visits.
Likewise, the Australian Prime Minister now meets with the US President a minimum of 3 times a year, and the Prime Minister of India a minimum of twice a year.
These meetings, while geared around regional and global issues, also enable the Prime Minister to engage bilaterally.
And we're utilising the pattern of meetings to pursue worthwhile initiatives – not the clichéd 'announcables' but matters of real substance:
- at CHOGM, the International Mining for Development Centre, and the initiative for the eradication of polio – while announced at CHOGM both initiatives have a relevancy beyond CHOGM
- at the G20, the initiative to strike a new direction in the DOHA Round and the initiative to put more into the IMF
- at APEC, continued behind the border reforms to facilitate the flow of trade, and the Trans-Pacific Partnership
- at the EAS, the initiative to enhance regional co-ordination and responses to natural disasters.
Prediction is always difficult, but the following are some of the big challenges with which I believe Australia will be confronted over the next 20-30 years.
The inter-relationship between the United States, China, Japan and India will provide the backdrop and centre point to much of what unfolds in East Asia and beyond – just as the Cold War provided the backdrop and centre point to the second half of the 20th Century.
As a middle power we have a national interest in the embedding of regional architecture, such as the East Asia Summit, which provides a forum for the open discussion of all issues and which continues to embed the habits of consultation – something which ASEAN has been so successful in fostering.
Making the existing architecture work effectively is fundamental to peace and prosperity in the wider region.
With a few exceptions, our East Asian and South East Asian neighbourhood will probably become increasingly wealthier and more confident. For the first time we will have a neighbour – Indonesia – which will have a bigger economy than our own. This will require a psychological adjustment by Australia, as will an Indonesia which continues to embed democratic norms. We will need to rethink engagement strategies and expectations.
The changes in East Asia challenge our capacity to become genuinely Asian literate. Not just to talk about it, but to do it. It ought to be a cause for concern that our education system has become less, not more, able to support that necessity. In DFAT we see it every year in our recruitment drives. But others have spoken about that, and here, I can add little to the critique.
The bureaucracy also needs to relearn the fact that knowledge of another country is highly relevant to advice and decision-making which materially affects another country's interests. And DFAT needs to be more robust in its advocacy.
The changes in East Asia, both economic and strategic, will see a real growth in regional defence expenditure. This will not be directed against us, but it will mean that the capability gap we have traditionally enjoyed in the wider region will significantly diminish and, in some instances, probably disappear. This in turn will raise questions – not now but well down the track – whether we will be able to continue to meet our defence needs with just under 2 per cent of GDP.
EU countries and Canada are in different strategic circumstances, so we should not look there for comparisons.
None of this should be seen in dramatic terms, or in terms of growing threats. Rather, it is a natural consequence of countries getting richer and modernising their defence capabilities in the process. We will not be able to ignore that reality.
But the growing wealth of East Asia will not be shared across much of the other part of our neighbourhood – the South Pacific. Here, climate change and other constraints may present us with opposite challenges to wealth and confidence. Over time, that could lead to serious questions of labour mobility if some of the smaller South Pacific Island countries are to develop sustainable economic growth.
Beyond the immediate neighbourhood, we have yet to develop a genuine strategic partnership with India, and our trading relationship remains far too narrowly based. So the potential for growth is great.
It is important that we see our recently commenced economic partnership discussions with India, and with Indonesia for that matter, as having implications and returns beyond trade. That may not sit well with economic purists, but it is our challenge in today's world.
The most volatile area of the world stretches from the India-Pakistan border through Afghanistan, the Middle East to the Horn of Africa. Within that arc, intractable conflicts, nuclear armed states, endemic poverty, major power competition and Islamist terrorism all come together.
It has long been relevant to Australia. Since 1948 there has been no year in which Australian military forces haven't been serving in some capacity in the Middle East, and look also at our commitment in Afghanistan.
The region will continue to be a major source of demands on and hazards for Australia, ranging probably from requests for involvement in conventional war, peace keeping and humanitarian assistance missions, to irregular immigration.
For Australia, both the subject matter of global politics, and the players in it, range beyond individual countries. Pressures for cooperation and competition are increasing across the range of what is sometimes called the global commons – the high seas, outer space, the climate system and the connective tissues of cyberspace.
The 'headline' transnational challenges – terrorism, cyber, organised crime, people movement, and climate change – will persist and change shape rather than diminish or disappear.
And more actors are now involved. New technologies have empowered groups and individuals ranging from pirates to fraudsters, from people smugglers to computer hackers, who can now have a real impact on state power.
At its simplest, as an open economy and middle sized power, Australia has an interest in a rules based international order broadly supportive of the free flow of ideas, goods and services.
It is in our national interest that the UN functions more effectively and that, over time, it is reformed.
As the body which provides the basis for our presence in East Timor and in Afghanistan, and as the body which provides the basis for our sanctions against Iran and the DPRK because of their nuclear programs, it is only reasonable that, from time to time, Australia seeks a temporary seat on the UN Security Council.
If we take its resolutions seriously, we should take its membership seriously. And if we take its membership seriously we should be prepared to play our part from time to time.
My final observation concerns prediction and global and regional changes over the coming decades. Whatever our views and certainties now, the totally unexpected – the Black Swan – is the one certainty in an uncertain future. We do not know what or when but we do know it will be something which none of us can see today.
That may be obvious. But it is only by being conscious of the certainty of the totally unexpected that we can keep an open mind. And only with an open mind can you retain the flexibility to respond sensibly to the big surprise, to the big shift which changes the fundamentals.
That, ultimately, is the true test of foreign policy professionalism in a changing world.