Priorities in Australias
Australian Institute of
Thursday 7 November 2002
by Des Moore
Director, Institute for Private Enterprise
and Councillor, Australian Strategic Policy Institute*
*The views expressed herein are the personal views of the author
I am not a specialist in foreign policy. My perspectives on priorities come mainly from my Treasury experience in handling external economic relations and from an on-going interest in strategic issues, reinforced by my appointment last year to the Council of the Australian Strategic Policy Institute. I propose to offer a broad perspective and then to touch on a few specific issues that are matters of controversy.
When I told a friend I was going to discuss foreign policy priorities, he suggested, slightly facetiously, that the answer is easy - that just as the Welsh office is for the Welsh and the Scotch office is for the Scots, so the role of Foreign offices is to look after foreigners. That rather acidic comment recalled my running battles with many in (what is now) DFAT to try to stop them agreeing to various proposals by other foreign representatives.
Our foreign affairs colleagues were wont to accommodate economic proposals by developing countries. They perceived that Australias geographical position and the low incomes in those countries warranted support for developing countries "reforms" that would supposedly help improve their economic positions. Those countries proposal to establish through the United Nations a supposed new international economic order or a NIEO was presented not simply as helping improve their living standards but as something colonial powers "owed" for their alleged past exploitation.
This was subjected by Treasury to comprehensive public criticism in 1979 and that analysis has become a more accepted part of foreign policy priorities in particular, that we should not accept policies judged contrary to Australian interests or succumb to proposals by other countries simply because rejection might upset supposed "friends". Treasury argued that the major departures proposed from the relatively liberal international trading and capital arrangements were contrary to Australias interests. But that argument was not simply based on a selfish pursuit of those interests: it also encompassed a view that the NIEO proposals would be contrary to developing countries interests as well.
Is it arrogant to tell others what is not good for them, even if not to label them intransigent? A major change in the economic system contrary to developing countries interests would soon lead to a worsening in relations with developed countries. Accordingly, while it is appropriate to seek good relations with overseas countries, that objective should not oblige accession to flawed proposals.
Equally, foreign policy should make our national interest its central priority and, in particular, our interest in protecting the values we regard as of fundamental importance. Indeed, our foreign policy should promote such values, not by trying to force them down the throats of others but by continually suggesting there would be advantages in following them. We should, in particular, support and promote democracy, the rule of law, freedom of choice, and property rights. We should do this in the interests of self - but of others too - because the world will thereby become a more stable, freer, and more prosperous place.
The precise interpretation of how such values should be applied in practice will, as in all human relations, inevitably involve differences of opinion and judgments about how strongly to espouse ones policies at any particular time. The underlying priority, though, should remain the achievement of policies consistent with our values.
Others Values and Immigration
But how much account, then, should be taken of other societies values? Officially Australia has a multi-cultural policy, but in reality our values, our political system, our law, and our institutions make us Western in civilization. We should continue to relate primarily to policies and institutions of Western countries and our foreign policy (interpreted in the broadest sense) should include the determination of source and type of immigrants.
Those suggesting Australia has an unnecessarily restrictive and selective immigration policy overlook that one in four Australians were born overseas, one in two and half Australians were either born overseas or have at least one parent born overseas, and that in recent years people from around 185 different countries have come to call Australia home. More than half of our immigrants in recent years have come from Asia. When recently I addressed a London audience, questioners expressed surprise when told that about half our annual increase in population comes from migration.
Australians are right to be selective. Most want an immigration program that gives priority to sourcing migrants from outside Asia, Africa and the Middle East. This predominant support for immigrants from cultural backgrounds with most respect for freedom and tolerance doubtless reflects, in part, the British or Irish ancestry of 70 per cent of Australians. That is also undoubtedly a factor behind the strong backing of the Governments measures to stop illegal immigrants - and of the priority rightly accorded to the (12,000 pa) officially recognized refugees.
Australians selective attitude to immigration is not basically racist or anti-immigrant but a rational fear that a much larger, more culturally mixed immigration program would weaken our culture and risk the greater social and political divisiveness seen in many other countries with major mixes. Of course, Australians have recognized the benefits from the widening understanding of different cultures flowing from the more mixed immigration program of recent years, just as immigrants themselves have seen the benefits to themselves from contact with our Western culture. That is why many have come here and, over time, have adapted to much of that culture. But the deeper understanding of people of different cultural backgrounds should not mean any substantive modification of our values or any turning of our foreign policy into a moral equivalence approach.
Our Policy Should Not Have A Special Regional Focus
If it be accepted that our foreign policies should be fundamentally concerned with protecting our national interest and hence our basic values, that suggests an important conclusion that being in the Asian region does not itself constitute a basis for giving Australian foreign policies an "Asian" priority - that is, even assuming one could discover amongst the diverse group of countries and cultures in Asia what commonalities might be available to constitute an Asian policy. Advocates of emphasizing the "Asian " approach sometimes appear psyched into believing that, because Asian countries seem "nearby" and therefore more likely to pose a threat, we should pay them greater regard in framing our policies and in cultivating friends. This is reflected, inter alia, in the absurd media comparisons of how many times our various Prime Ministers visit Asian countries.
What happens on the other side of the world from Australia can be -- has been -- of far greater moment for Australia's security than what happens right next door. Germany (twice) and the USSR in one century are evidence enough of that. Moreover, although Asia is closer than most of our "traditional" partners, the distance factor is probably more of a protective asset than a worry for Australia, particularly compared with many other countries.
It certainly facilitates border control but it also places us sufficiently far from our neighbours that any serious military attack would be a major undertaking requiring considerable defence capacity. Some forget that Jakarta -our nearest Asian capital is about as far way from Canberra as the fear-inspiring (sic) Kabul is from London, while Peking the Asian capital most distant from us is actually further from Canberra than it is from Dublin.
More generally, apart from the now serious terrorist problem, substantive threats to Australian security appear limited if judged by the intent of neighbouring countries, most of which have to handle their own quite serious internal problems. It is particularly important not to exaggerate the potential for Indonesia to become a threat to Australian security let alone to our external economic situation (less that 3 percent of exports go to that country). The possibility of any conventional Indonesian military threat developing is slight and, although terrorist groups are trying to disrupt the Indonesian government and society generally, they form part of the terrorist threat already facing Australian intelligence and security from various sources.
It would naturally be of concern if the Indonesian government proved unable to deal effectively with the serious terrorist threat it faces. That would have adverse economic and social effects for both the Indonesian people and Australian interests in that country. But it needs to be recognized that this is a matter primarily for the Indonesian government itself and, in practice, Australia has very limited scope to assist Indonesia with its internal problems.
None of this is to say that we should neglect our relationships with Asian countries or that our policies should proceed on the basis that there are no potential regional threats. Asia is important to us - and there is potential for serious problems to come to the surface in changed conditions: but that does not justify even "the Asia-first" (rather than the "Asia-only") approach suggested by Minister Downer, let alone the recent statement by Australias leading Sinophile - Gough Whitlam that the "China-Australia relationship will dominate our world-stance for the next half century".
Of course, as Noel Coward once pointed out it, China is "very big", with (at 12 per cent) the second biggest world economy (not counting the European Unions), a greatly expanded export sector and considerable foreign investment. But size alone is not an adequate basis for giving a country top ranking in foreign policy, let alone giving credibility to some supposed nearness criterion, under which our Irish and some other distant friends would also qualify. It was particularly surprising to hear our current ALP leader, Simon Crean, echo Labors icon in foreshadowing in his first major foreign policy statement that a Labor Government would give a major emphasis to relations with China and move to negotiate "an Australia/China treaty similar to the agreement on friendship and cooperation that we signed with Japan in 1976". Yet that Nara Treaty with Japan appeared do little more than enunciate broad generalities and is rarely quoted even by foreign policy aficionados as a contributor to improved relations with Japan and has made no practical difference to these relations.
Importantly, the doubling in recent years in the proportion of Australian exports taken by China and the quadrupling in the proportion of our imports coming from that country was not due to any bilateral agreement but predominantly to changes in China itself. That China still only takes a slightly larger proportion of our exports than Taiwan, and significantly less than Korea, largely reflects its late movement towards a more market-oriented economy.
In reality, the pursuit by Australia of a policy of encouraging stability and trade in the Asian region will continue to depend much less on pursuing or maintaining friendly regional relations (or even concluding agreements) than on the continued retention by the US of its very strong military presence in the western Pacific, the further development of liberal international and domestic economic arrangements and decisions by individual Asian countries to expose themselves to freer trade. Fortunately, the USs continued strategic engagement in the region it is sometimes overlooked that the US is part of the Asia-Pacific region - is virtually assured by its substantial and growing regional economic interests (including 50 per cent greater trade across the Pacific than across the Atlantic); and Chinas forthcoming admission to the World Trade Organisation is an encouraging acknowledgement that it is giving increasing recognition to the potential mutual advantages from a more liberal economic system.
There has been criticism that Australian Governments should have been doing more to develop closer trading and investment relations with regional Asian partners. But Australia has in fact taken various initiatives, and is continuing to pursue them, with ASEAN, Singapore, Thailand, Japan, China and Korea. That no substantive agreements have been concluded appears due mostly to the general hesitancy of the ASEAN countries (in particular) to liberalise. Even with their ten year old preferential trade agreement, the ASEAN countries have made only limited progress in reducing restrictions between themselves and talk of a Free Trade Agreement with China will require a major change of ASEAN attitudes if it is to come to anything.
Whatever may be claimed about the lack of specific agreements with Asian countries, Australia has not been prevented from achieving a strong growth in trade in recent years both overall and to the Asian region. Between 1988-89 and 2000-01 total exports increased as a percentage of GDP from 12.5 to 17.8 percent and total imports from 13.3 to 17.6 per cent, while for the principal Asian countries other than Japan their share of our exports rose from 3.1 to 6.2 percent and in our imports from 2.3 to 4.1 percent.
Although Asian countries are also of growing importance as both a source of inward and outward capital flows, given their stage of development, more restrictive attitude to inward foreign investment and less developed capital markets they are unlikely in the foreseeable future to replace US and UK investors as the main source of our foreign capital, or even to become the main investment outlet for Australian investors. Again, this is attributable more to the situations and policies of Asian countries than to either investment or foreign policies of Australia.
The Importance of the United States
If we were to give priority in foreign policy on the basis of size alone, the USA would naturally win hands down. It has the largest share of the world economy (21.4 percent of GDP, the largest share of world exports (13.6 per cent) and its GDP per head (on a purchasing power parity basis) is about 32 percent higher than the average for European Union countries and 26 per cent higher than for Australia.
Moreover, even though the US is now allocating a much smaller proportion of GDP to defence (about 3 per cent) than during the Cold War, that still gives it a defence force with a high capability. The Congressional Budget Office rightly describes the capabilities of the US military as "far surpass(ing) those of other nations if factors such as training, readiness for combat, sophistication of weapons, and availability of linked communications and intelligence networks are taken into account (and it points out that) the makeup of todays combat forces is driven by a goal of being ready to fight two regional wars occurring at about the same time".
But, while this suggests that the US is a good team to be in, the importance of the US relationship to Australia derives much more from its support for similar cultures and values to those we espouse. The existence and maintenance of such support is behind the much-quoted ANZUS Alliance under which each of the parties commits to act to "meet the common danger" in the event of an armed attack on any of them. As pointed out by DFAT Secretary Calvert, the obligations under ANZUS are basically similar to those under the North Atlantic Treaty and the treaty is "the formal expression of a strong working alliance based on shared values, a close congruence of strategic interests and a proud history of defence cooperation".
There are some critics of the US and our relationship who perceive that country as an aggressive and expansionary state out only to pursue its own interests almost regardless - and a danger at that. In my view, this is a fundamental misinterpretation that derives from the establishment by the US of a strong economic and military power position and an associated fear complex. That economic strength does not derive from exploitation: it is largely the product of adopting domestic policies and institutions conducive to growth, with international trade playing a relatively small role but, agriculture aside, with domestic trade and capital markets open to outside access.
Politically and militarily, the USs adoption of a leadership position has provided vital support for democracy and national sovereignty, not to mention individual freedom. With East Timor, for example, the US provided communications and intelligence assets, helicopter mobility, and strategic lift for many of our fellow participants. They were of high military value in themselves and the accompanying US servicemen were an important display of US interest in the success of the operation. With the knowledge of further, over-the-horizon, support if required, this greatly reduced the risks of interference from the 35,000 Indonesian soldiers in East Timor when Australian troops first arrived. But the US also provided crucial political help, notably through Defense Secretary Cohens special visit to Jakarta and US assistance in persuading Indonesia to accept an international force. It also encouraged others to participate in the force and helped obtain solid Security Council authority for it.
The USs occasional support for undemocratic regimes needs to be viewed in this broader context - and as a choice between the lesser of two evils. Importantly, the US cannot be regarded as imperialist either territorially or economically, which means it should not be feared as a potential world hegemon as it will never be Eurasias greatest land power.
None of this is to suggest that the US has not made mistakes or that Australia should go "all the way with LBJ". But the US should be regarded as the major actual and potential contributor not only to Asia-Pacific region but world-wide stability. In terms of foreign policy priorities, therefore, Australia should normally be prepared to provide both military and moral support to US policies and activities.
For example, should the one party Chinese government adopt a policy of more actively pursuing its territorial claims and/or territorial grievances against others, it would be appropriate for Australia to support US opposition to such expansionism. In the unlikely event that Taiwan (on which China has many missiles trained) became the subject of unprovoked attack, it would not be in Australias national interest to see China win and the US lose the engagement that, given the stated US position on Taiwan, would ensue. While any possible Australian military contribution to such an engagement would be small, our foreign policy should be to indicate support for the US in such circumstances.
Australia should also strongly support the US in responding to the new terrorism that has the evident intention of undermining, if not destroying, Western civilization and that constitutes a major threat to our security and our values more generally. Arguably, this new terrorism has fundamentally changed international relationships in that a state that refuses to act to eliminate major terrorist groups with such objectives should now become subject to encroachments of its sovereignty by others. Additionally, in circumstances where weapons of mass destruction are becoming more powerful and more readily available, states with access to such weapons and that are pursuing expansionist policies (and possibly using terrorism as an instrument of state policy), should also become subject to such encroachments. Currently, that should obviously be the case with Iraq.
The Defence Component
Any discussion of foreign policy cannot omit defence policy, whose primary function should be to provide protection of our territorial integrity from invasion or major assault in the conventional sense rather than verbal protection of our interests. As Defence Minister Hill observed recently "No country has the capacity or intention to make any such attack ..(and) the prospect of having to use the ADF to counter conventional military attack remains very low".
In fact, experience suggests our defence forces will predominantly be involved in overseas activity. Australia and the US are the only two countries in the world to have sent combat forces to each of the five major wars of the 20th century. And Australia is the only country to have done so from the very beginning of each war - and without waiting first to be attacked. Within the past dozen years, Australian forces have had substantive overseas deployments in the Gulf War, Afghanistan and East Timor (all of which are continuing), as well as peacekeeping type operations in Somalia, Cambodia, Rwanda, Bougainville and the Solomons.
Australias substantive military operations overseas indicate that, in practice, successive Australian governments have recognized that the defence of our territorial integrity often needs to start offshore and outside our immediate region. This is not a matter of fighting other peoples wars, as some would have it: we fought because if the other side had won, our own political independence, and perhaps territorial integrity, would have been impaired.
It is surprising in these circumstances that so much credibility was given to the concentric circles theory of international relations that became current in the 1980s. That theory expounded the doctrine that ones strategic interests diminish with distance, which in turn led to the idea that Australias forces should mainly be sized and equipped and deployed for the narrow defence of Australia itself and its maritime approaches.
The 2000 Defence White Paper did offer a different perspective when it emphasized the need for Australia to be able to "deploy forces overseas to support our regional and global interests" and it appears that the present Government will maintain that emphasis in the forthcoming White Paper. However, there remain many "experts" in Canberra who argue that we should continue to focus on the region in framing our defence structure and defence policy. These experts seemingly overlook that it is very much in our interests that the United States continue to attempt to maintain global stability and that, as a supporter of Western culture, we should normally be prepared to offer the US assistance in its efforts. Moreover, the "new terrorism" has created a new form of instability that adds to the need for Australia upgrade its defence structure and its preparedness to make a contribution to improving stability in areas on the other side of the world in which we appear have only a relatively small interest.
The theory that we should focus on the immediate region, which probably derived from the view that there should be "no more Vietnams", was wrong then and is surely now completely dated. Within the limits of our capacity, Australias foreign and defence saddle - bags should include in their combined weight the equipment needed both to justify and to undertake overseas deployments when our interests and values are under serious threat. We should recognize in this context that deployments may be needed in advance of any direct or immediate threat to Australian territorial integrity, not only to help protect our interests but also to lessen the risk that it could effectively become too late even to protect territorial integrity.
In that regard, my view is that the correct judgment on protection of values was made in the case of Vietnam and again in Afghanistan. Indeed, the recent emergence of a terrorist group or groups not simply pursuing nationalist or local objectives makes it even more necessary that our defence forces should be structured and deployed on the basis of Australias global interests. The emergence of this new international terrorism in a world where weapons of mass destruction are becoming more widely available has also probably increased the likelihood that Australian forces will become engaged in overseas deployments. In this context I include as part of defence forces our intelligence and security services, which now need to play a greater role.
Of course, given our relatively small forces, any decision that we should undertake large (by our standards) overseas deployments would almost certainly require that we do so in conjunction with another like-minded nation or nations. In practice, that is likely to mean the United States, which provided important indirect assistance in East Timor and which Minister Hill has rightly described as "the main force for global stability". The Minister has also rightly indicated that this means "maintaining interoperability with the United States will be critical". In short, our defence forces should be structured on the basis that Australia has global interests and that an important part of their operations will be in conjunction with overseas, usually US, forces.
Regrettably, the overall capacity of our defence forces has been falling and, notwithstanding our SAS skills, our capacity to undertake difficult military operations overseas appears very limited. Our governments have allowed defence expenditure to fall from 2.6 percent of GDP in 1986-87 to the current level of 1.9 per cent of GDP while increasing social security expenditure by around 2.5 per cent of GDP over the same period despite sharply rising living standards. And the current stated policy of increasing defence expenditure by 3 per cent pa in real terms implies the allocation of a steadily falling proportion of GDP to around 1.7 percent of GDP in 2005-06.
Since the mid 1980s regulars in the defence forces have declined from around 70,000 to 50,000 and there has been no increase in defence equipment - except in terms of age! While some are skeptical about the capacity of the defence "machine" to spend money efficiently, it is difficult not to conclude that overall spending is too low and that we need to lift our capacity to contribute to overseas activity. Top priority should be given to increasing the size and firepower of the army, which has suffered from the perception that our involvement in Vietnam was mistake that should not be repeated, resulting in the army numbers being allowed to fall by over 20,000 (to 42,000) since the early 1980s.
1. The central priority of our foreign policy should be our national interest and, in particular, the values we regard as of fundamental importance to that interest, such as democracy, the rule of law, freedom of choice, and property rights. Policies that are not in our national interest should not be accepted simply because their rejection would upset supposed friends.
2. There is no case for giving Australian foreign policies an "Asian" priority. Australian exports to and imports from Asian countries have been growing strongly and have not suffered from not having closer relations with Asian countries. Asian nations are also a growing source of and outlet for investment, but their stage of development and relatively restrictive attitude to foreign investment mean they are unlikely in the foreseeable future to replace US and UK investors as the main source of our foreign capital, or even to become the main investment outlet for Australian investors. This is attributable more to the situations and policies of Asian countries than to either investment or foreign policies of Australia.
3. The US is the major actual and potential contributor not only to stability in the Asia-Pacific region but world-wide. It is also a leading exponent of the values that are in our national interest. In these circumstances, Australia should normally be prepared to provide both military and moral support to US policies and activities.
4. Our policies should proceed on the basis that the new international terrorism has fundamentally changed international relationships and that states harbouring major terrorist groups with destructive international objectives should be subject to encroachments of sovereignty unless effective counter action is taken by them. States with access to weapons of mass destruction and that are pursuing expansionist policies should be similarly subject to such encroachments. Currently, that should obviously be the case with Iraq.
5. As the defence of our territorial integrity may need to start offshore and outside our immediate region, our defence forces should be structured on the basis that they are most likely to have overseas deployments and that such deployments are most likely to be in conjunction with US forces.
6. Overall, defence spending is too low and there is a need to lift our capacities to contribute to military and intelligence activities.
 The NIEO proposals continue to reverberate today in assertions by environmentalist groups that globalisation is economically and environmentally damaging, in misguided proposals suggesting that debt relief will solve some developing countries economic problems, and in the equally misguided opposition to military action against increased terrorism by those who perceive poverty as its cause.
 See Treasury Economic Paper Number 6, NIEO An assessment of the proposals for a new international economic order, AGPS, Canberra 1979, as submitted to the Inquiry of the Senate Standing Committee on Foreign Affairs and Defence into "The Implications for Australias Foreign Policy and National Security of Proposals for a New International Economic Order."
 In 1997 the first white paper on Australias foreign and trade policy was entitled "In the National Interest".
 Websters New World Dictionary defines values as: The social principles, goals, or standards held by an individual, class, society etc. That which is desirable or worthy of esteem for its own sake;thing or quality having intrinsic worth.
 While some support a larger immigration program on the ground that it would improve our economic performance, there appears to be no connection between population size and levels of GDP per head.
Recently, European countries have started to realize the cultural implications from the "liberal" immigration policies they adopted in the post World War 11 period.
 Downer, Alexander, Advancing the National Interest: Australias Foreign Policy Challenge, Speech at the National Press Club, 7 May 2002. Ministers web site.
 Australian Institute of International Affairs, Whats New, www.aiia.asn, 9 August 2002. The Whitlam statement was timed to coincide with the 30th "anniversary" of the establishment of diplomatic relations with the Peoples Republic.
 Chinas trade to GDP ratio quadrupled to 36 per cent between 1978 and 1999.
 Crean, Simon, Australia and Asia: New Partnerships, New Directions, 22 April 2002, ALP web site. It should be noted that, prior to April, officials had been discussing for some time a trade and economic agreement with China and it was agreed during Mr Howards visit to China in May that a framework agreement would be developed.
 The following were the shares of Australian exports and imports, respectively in 2000-01: ASEAN 13.3% and 14.8% (Indonesia 2.6% and 2.8%); China 5.7% and 8.4%; European Union (incl UK) 11.7% and 21.6%; Hong Kong 3.3% and 1.2%; Japan 19.7% and 13.0%; New Zealand 5.8% and 3.9%; Korea 7.7% and 4.0%; Taiwan 4.9% and 2.8%; USA 9.7% and 18.9%.
 More than a quarter of the total stock of foreign direct investment in East Asia is American.
 For example, the recommendation by an ASEAN/Australia/New Zealand task force that a free trade area be established between ASEAN and the two other countries was blocked by Malaysia in October 2000.
 Brunei Darussalam, Burma, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
 Between 1988-89 and 2000-01 the share of exports going to Japan fell from 27.2% to 19.7%, due largely to the relatively depressed state of the Japanese economy. The share of our imports coming from Japan fell from 20.7% to 13.0%.
 OECD, National Accounts of OECD countries, Main Aggregates, Volume 1, Updated February 2002.
 Congressional Budget Office, Budget Options, February 2001, p94-95 US Government Printing Office. It notes, at the same time, that Russian and Chinese forces may be numerically superior and some Russian and Chinese conventional weapons may be equal in number.
 Calvert, Ashton, The United States Alliance and Australian Foreign Policy Past, Present and Future, University of Sydney Conference, 29 June 2001. www.dfat.gov.au. In each case the trigger is an armed attack on any party and the obligation is to act to "meet the common danger" (ANZUS) or "restore and maintain security" (NAT).
 Militarily, it would probably confined to our conventional submarines that would have operational advantages in the relatively shallow waters of the Taiwan straits.
 While some have suggested that the Al Quaeda attack may be only an isolated incident that will not recur, until that is established definitively we must continue to work on the basis that Al Quaeda is a destructive international terrorist group.
 Hill, Senator Robert, "S11 Its Implications for Australia and the Defence White Paper", Defender Winter 2002, p 11.
 Large wars involving the combat forces of at least three continents include World Wars 1 &11, and the Vietnam, Korean and Gulf Wars.
 The Labor Government that brought in the new doctrine did explicitly acknowledge that elements of our forces could in limited circumstances be used further afield and for wider purposes.
 Our decision to deploy forces to Vietnam was consistent with the defence of our interests primarily because the Russians were attempting to spread communism more widely in South-East Asia through their extensive support of the Viet-Cong. Even though the deployment was militarily unsuccessful in Vietnam itself, it contributed to stopping that wider spread. Had that succeeded it would have had serious potential adverse implications for Australian security.
 op cit, p 9.