Predictability In Australia’s Foreign Policy

The Hon Julie Bishop was a minister in the Howard Government and held the portfolios of Ageing and Education, Science and Training and was the Minister Assisting the Prime Minister for Women’s Issues. Following the defeat of the Howard Government in 2007, Julie Bishop was elected Deputy Leader of the Liberal Party in November 2007. In February 2009, Julie Bishop became shadow minister for foreign affairs. On Tuesday, 5 June 2012, Julie Bishop addressed The Sydney Institute to discuss directions in Australian foreign policy.

PREDICTABILITY IN AUSTRALIA’S FOREIGN POLICY

JULIE BISHOP

In 2002, I bought and read The Paradox of American Power by the influential international relations scholar Joseph Nye, who was then Dean of the Kennedy School of Government at Harvard and a former US Assistant Secretary of Defense.

This book was a timely critique, published as it was in 2002, of US foreign policy in the wake of September 11.

Dr Nye’s thesis was that while the United States had assumed an unrivalled position in global affairs through supreme military, economic and cultural power, the global challenges of the twenty-first century, including terrorism and nuclear proliferation, meant that the United States should rely less on traditional methods of power and more on the power that comes from the appeal of its values, its culture and its institutions.

Nye of course is widely credited with laying the foundations of several fundamental concepts in foreign policy including “soft power” as a contrast or adjunct to “hard power” which when combined makes for “smart power”.

What made for fascinating reading though was his assessment of which countries might challenge the primacy of the United States and what alliances might be formed that would overtake it in terms of economic and military strength.

Remember this is just ten years ago.

Nye noted that China lagged far behind the US in economic development and even if the two economies were eventually equal in size, they would not be equal in composition. Dr Nye likewise argued against Russia, Japan or India assuming pre-eminence over the United States, although he mused over the impact of unlikely but powerful alliances – a Sino-Japanese alliance or even a Sino-Russian-Indian alliance.

But Nye found that the closest thing to an equal facing the United States at the beginning of the twenty-first century was the European Union. He compared the European Union’s combined economy, population, military strength, trade and exports and cultural influence to that of the United States.

At the time there were commentators predicting that the European Union and the United States were on the road to political conflict and the European Union would emerge as a political bloc that would present a challenge to the United States.

Ultimately, however, Nye concluded that at the deepest level neither the United States nor Europe threatened the vital interests of the other, therefore the United States was well placed to remain the leading power in world politics well into the 21st century or beyond. Pax Americana was likely to last.

While some of his forecasts were logical, in a highly volatile, highly connected world, events can confound even the most reasonable predictions. Few if any could have foreseen how Afghanistan and Iraq would impact on global affairs, the financial crisis of 2008, China’s continued economic growth or the advent of the Arab Spring, let alone the impact on the global economy of the European sovereign debt crisis and the threat to stability of the European Union.

Successful nations must be ever alert to changing global circumstances, strategic trends, emerging threats or opportunities, including being aware of the fluid alliances and allegiances and dynamic regional networks that have emerged and could challenge the established world order. Strategies and priorities in foreign policy must be kept under constant review to ensure the national interest is being served and protected.

Tonight I will talk about the need for Australia to have a clear and predictable foreign policy – focussed and effective, practical and principled.

Our foreign policy must advance our security and prosperity and be underpinned by strong bilateral and multilateral relationships that will benefit the lives of Australians. It must extend our reach and influence in the Indian Ocean Asia Pacific region while recognising that our interests are global.

Economic diplomacy is also a vital part of foreign policy and while it does not rest on trade alone – for our nation’s interests are wider than that – it is our success as a trading nation, with an open, export-oriented economy that has made us the country we are today.

As a long standing democratic country we need a foreign policy with a conscience that is based on our values of democratic freedom, rule of law and universal human rights. We must promote human rights consistently and vigorously while recognising that other countries will and do develop differently.

Successful democracies with strong institutions are built over time and we know that just holding an election, for example, does not guarantee freedom and democracy. Our ability to promote our values, to advance greater political and economic freedom and to assist in poverty reduction and economic self reliance in developing countries, is essential to our long term survival and our security and out prosperity.

This ultimately rests on our economic strength. That is why the Coalition is so determined to get our national finances back into shape and focus on growing our economy for tomorrow, not just redistributing what we already have today.

It is fundamentally important that our foreign policy be clear and predictable, well understood by the Australian public and accountable to them. Under this government, Australia’s foreign policy has lost direction.

While there are an increasing number of international sections in various government departments, there does not appear to be any coordinated effort to promote clear national objectives across the government.

It is not apparent that there is any effective overarching or strategic framework within the government that brings together the elements of defence and security, development assistance, trade and investment and overall diplomacy. The government doesn’t seem to recognise that it can exercise influence over regional indeed global affairs by being relevant and useful to our allies and partners.

Our standing in the world is at its highest when our influence in our region is at its strongest. Using Dr Nye’s terminology, there does not appear to be an appreciation of the need for our hard power assets to work in conjunction with our soft power capabilities in order to leverage our potential smart power.

To be fair, the government has remained committed to our unshakeable alliance with the United States, our most important relationship and the bedrock of our security. But we must foster new friendships and new allies in foreign policy while maintaining close ties with our traditional and more established partners and allies.

The government has either allowed long standing relationships to stagnate or undermined more sensitive relationships, including with Papua New Guinea and Indonesia, or has missed opportunities to forge new connections. The government’s greatest failure is that it has not been predictable.

In the largely bi-partisan world of foreign policy and trade, the Coalition has often been surprised indeed dismayed on occasions, by the decisions, actions and inaction of the current government.

The lesson I took from Joseph Nye’s predictions is that no one has a crystal ball when it comes to world affairs. But what you can do is put in place a policy that has a strong framework with coherent processes. You don’t have to be able to predict the future, but you should be ready to cope with any eventuality.

Australia’s foreign policy should flow through the veins of the entire federal government so that we promote our interests and values in a systematic and predictable way over the long term.

Take the government’s focus on Asia and reliance on China’s economic growth in particular. It is true that Australia is ideally placed to take advantage of the so-called Asia Century, with booming economies and large populations to our north generating an insatiable demand for gas, coal, iron ore and other resources. The truth is that the Asia Century has been under way for decades and has already played a major role in Australia’s economic development.

The economic miracle of Japan in the years after World War II underpinned the first wave of development in Western Australia’s Pilbara region. Japan was our largest trading partner for many years. The “Japan model” inspired other nations in the region to also adopt similar development paths, with South Korea, Taiwan, Singapore and Hong Kong among the regional leaders.

China is now Australia’s largest export market valued at nearly $72 billion in 2011, with two-way trade valued at nearly $114 billion. A staggering $44 billion of iron ore was exported to China last year alone. Other nations in the region have also embarked on the path to economic development, with Malaysia, Indonesia, Thailand and others following the model pioneered by Japan. Vietnam has more closely followed China’s model, where the Communist Party has retained a central role in economic and investment decisions.

While other nations are on a development pathway, China is forecast to remain the economic powerhouse of the region, if it continues to grow even moderately. However, there are some doubts about the longer-term promise of the Asia Century and whether high rates of growth are sustainable. A short-term slow down in China is not unexpected, given that the two biggest export markets upon which China has relied are the European Union and the United States.

These factors are of concern in the short to medium term, but there are other important long-term factors that hold serious consequences for China, and Japan in particular.  The United Nations Population Fund has reported that China’s one child policy, introduced in 1980, has brought serious distortions into the distribution of people across the age spectrum. Changes in China’s average life expectancy and rates of fertility have compressed the challenge for the nation in coming decades.

The UN notes that population ageing trends driven by these two factors took 150 years to occur in countries currently regarded as developed, more than 50 years in most developing countries, but only 10 to 20 years in China.

It forecasts that the challenges of dealing with this problem will start building from as early as 2015, by which time the number of people reaching retirement age in China will greatly outnumber those reaching the age of 15 years. By 2050, the United Nations estimates that more than 30 per cent of China’s population, more than 430 million people, will be aged over 60 years. The UN Population Fund report analysed the forecast economic growth per capita and concluded that, “If the projections are correct, China will become old before it gets rich.”

Japan also faces challenges from population ageing, with the median age increasing from 22 years of age in 1950 to more than 50 years by 2030. It is forecast that by 2050, 36 per cent of Japanese people will be aged over 65. This has led to some pretty dire forecasts of economic decline due to a lessening of national savings, declining workplace productivity and falling domestic demand for consumer goods.

There is of course no guarantee that the impact of population ageing will be as severe as forecasts indicate but it is safe to assume there will be huge challenges.

India’s demographic destiny is less of a problem. The National Commission on Population has forecast that from 2001 to 2026 the proportion of those under 15 will decrease from 35.4 per cent to 23.4 per cent of the total population, while those of working age of 15-59 will increase from 57.7 per cent to 64.3 per cent. The percentage of people over 60 will increase from just 6.9 per cent to just 12.4 per cent of the total population, which represents a large number of Indian people but is a significantly smaller challenge than that confronting China and Japan.

A research paper from the US-based Population Reference Bureau describes the so-called “demographic dividend” of young and growing populations. It points to the young populations in Asia during the 1950s through to the 1970s as making a significant contribution to rapid economic development during those and subsequent decades.

If this analysis is correct, the Bureau predicts that developing countries in central and southern Africa are set to reap the dividend of relatively young populations over the next few decades, before population ageing catches up with them.

It is a fact that most African nations will have more people of working age in 2030 than today. Sceptics may point to instability, corruption and conflict in parts of Africa as impediments to economic growth; however the same challenges plagued many parts of Asia in the years after World War II.

Military occupation of Japan and major wars in Vietnam and Korea, a long-running guerrilla war in Malaysia, combined with hostility between the West and China, were hardly fertile grounds for economic growth. Yet growth did occur, very strongly, and similar growth potential exists in Africa. And a “demographic dividend” exists in the Middle East and North Africa.

A major factor in the uprisings against authoritarian rule during the Arab Spring was the preponderance of young people. The largest age bracket in Middle Eastern and North African countries is people under the age of 30 years. Many are well educated but currently unemployed.

It has been reported that in the 10 years to 2006, this young work force grew at three times the rate as other developing countries combined. A recent conference on the Middle East and North Africa estimated that more than 100 million jobs will need to be available in the region to take advantage of this large and growing workforce.

The images of conflict in Egypt, Yemen and Syria and the spectre of social and political unrest would appear to work against economic development, and that is likely to be the case in some countries. However, in other parts of the Middle East there is enormous investment and development under way.

This morning I spoke at a Forum and Expo hosted by the Australia-Arab Chamber of Commerce and Industry, attended by delegates from 10 countries in the Arab region. There is huge potential for growth in our trade and investment relationship with the countries of the Middle East.

I contend that while China, Japan, South Korea, Indonesia, India and other nations in our Indian Ocean Asia Pacific region will be primary drivers of economic activity for many years to come, there are forces at work that mean we should not focus too narrowly on the potential of the Asia Century.

In particular, we must guard against complacency or worse – arrogance – in assuming that markets close to our north will automatically underpin our national prosperity, regardless of any policy decisions taken in Australia.

We need to be outward looking and seek opportunities wherever they exist. And I fear that our current economic or trade diplomacy is also floundering. Now is absolutely the time to pursue trade agreements in our region and beyond and secure trade and market access in emerging economies to enlarge free trade and combat protectionism.

In fact, we should see the whole world as our market place and then take a far more targeted and strategic approach to identifying commercial opportunities wherever they exist to promote growth and Australian jobs.

I have been critical of the lack of commitment from the government in pursuit of trade alliances and particularly bilateral Free Trade Agreements. In Opposition, Labor was a trenchant critic of bilateral Free Trade Agreements, particularly the agreement we negotiated with the United States. That cudgel was taken up with relish by the current Trade Minister Craig Emerson, who has been a vocal critic of bilateral Free Trade Agreements.

The current government has finalised Free Trade Agreements with Chile, ASEAN and Malaysia, but there has been no discernible progress on outstanding negotiations they inherited with China, India, Japan, South Korea, Indonesia, the Gulf Cooperation Council and there is also the PACER Plus agreement with the Pacific.

Minister Emerson is reported to have dismissed concerns over the slow progress on the negotiations for the China Free Trade Agreement, which began over seven years ago, saying it is “overrated”.

While government Ministers have been engaged in a go-slow on establishing bilateral trading relationships, our competitors have not been idle. There are new alliances and networks emerging around the globe. One of the best known of the new alliances is the BRIC grouping of Brazil, Russia, India and China. More recently, South Africa has been added to form the BRICS. A Goldman Sachs economist is credited with coining the acronym in 2001, and the reaction at the time from others in the investment community was that BRIC actually stood for “Bloody Ridiculous Investment Concept”. Yet another misguided prediction. The BRICS are likely to represent 40 per cent of the world’s gross domestic product by 2050, with four of the grouping among the five largest economies in the world.

With 40 per cent of global population within their borders, there is growing trade between BRICS members on a scale that could fundamentally reshape the existing global trading order, forecast to exceed $500 billion by 2015.

Other parts of the world are also building new alliances. The Gulf Co-operation Council, which includes Qatar, Oman, Kuwait, Bahrain, Saudi Arabia and the United Arab Emirates, has been very active in building relationships around the world. A Free Trade Agreement between the Gulf nations and the countries of the European Free Trade Association, Norway and Switzerland and Iceland and Liechtenstein was concluded in 2008.

In recent years, the Gulf has signed Free Trade Agreements with Singapore and New Zealand, and is actively seeking agreements with Japan, China, India, Korea and, as I mentioned, Australia. The European Union, which has been the subject of criticism over many years because of its perceived protectionist tendencies, has also been engaged in a flurry of Free Trade Agreement negotiations. The EU has free trade agreements in operation with Mexico, South Africa, Chile and South Korea. Negotiations are under way with ASEAN, Canada, India, Singapore, the Gulf, Malaysia and Ukraine. It is Coalition policy to pursue such an agreement with the EU.

These examples are but a small snapshot of the trade activity under way around the world. Australia needs to be aware that these developments have the potential to fundamentally redraw the international order that we have largely known since World War II.

It is vital that the Australian government, and in particular its Ministers for Foreign Affairs and Trade and their Departments, are working to protect our national interest by also building new linkages and relationships with the fastest growing economies of the world.

We should be in the business of opening new diplomatic posts staffed by skilled diplomats with a level of access, understanding and presence that can help our companies do business overseas and attract new business to Australia. At the same time the government announced dramatic budget cuts to the Department of Foreign Affairs and Trade, its disinclination to boost our international presence is being noticed.

Recently I attended the Boao Forum hosted annually by China as its premier economic forum designed to build closer economic relationships throughout the region. For the first time in many years there was no representative from the Australian government. I was in fact the only serving Australian parliamentarian to attend.

This is a worrying trend as it reflects a lack of focus on Australia’s national interest and this and other examples reveal a lack of respect and common courtesy for our international relations which must always be built on mutual respect.

Should there be a change of government and I am privileged to be Australia’s Foreign Minister, there will be a renewed commitment to rebuilding our framework of international relationships. For example, in addition to the potential trade agreements I referred to above, I note that since China signed the Economic Cooperation Framework Agreement with Taiwan, Singapore is now negotiating a Free Trade Agreement with Taiwan – and New Zealand, India and Indonesia are expressing serious interest.

Australia should be actively involved in pursuing a similar agreement. Likewise an agreement with Hong Kong must be considered to build greater links to a city that is in many ways the window in and the window out of mainland China.

As well as our defence and economic capability, our standing in our region and the world also relies on the appeal of our open society, our freedoms and our culture – the soft power which is our ability to achieve our objectives by attraction and persuasion rather than by coercion, sanctions or payment.

While the Coalition has announced, and is preparing, a number of initiatives to increase our soft power diplomacy, including a commitment to our students learning a second language and a dedicated sports diplomacy initiative, it is in the field of educational exchange that I believe we can best leverage our soft power. Whenever I travel in our region I am impressed by the number of political leaders and government officials who have studied in Australia and count one of our tertiary institutions as their alma mater, or who have sent their children to Australia to be educated.

As at March this year over 350,000 international students were enrolled in Australian universities, vocational training institutions and schools. Students from our region first came to Australia in large numbers under the original Colombo Plan initiated by the Menzies government. Combined with the vast number of overseas students in more recent decades, there are literally thousands and thousands of potential alumni that could be embraced as ambassadors of Australia.

Shared educational experiences create bonds for life with a greater understanding of the society and country in which students have lived and studied. I regret that I have not been able to locate a database within Australia of our overseas student alumni, and that relatively few networks have been established to remain in contact with them after they return to their homes.

There is an urgent need to establish much more formal networks to ensure we do not lose the goodwill, and that we remain in contact with students who have studied in Australia. If given the opportunity to serve as Australia’s Foreign Minister, I would seek to establish a two-way student exchange program in the spirit of the Colombo Plan so that the best and brightest of our students could also undertake part of their education living and studying overseas. Having so many students from other countries studying in our schools and universities is a great asset to our nation, contributing to our economy, our reputation and our cultural influence.

Likewise to have a body of young people amongst our citizenry who have a deeper understanding of other countries, their language, their culture, would be a powerful diplomatic tool to use in advancing our national interest.

The fragmentation of Australia’s foreign policy effort must be redressed and placed on a sound framework underpinned by our values and interests with a reinvigorated diplomacy in the pursuit of our prosperity and security.