Allan Gyngell

Address to National Conference, Australian Institute of International Affairs

15 October 2018

Bipolar Disorder: Australia, the United States and China

It is a great privilege to be able to follow two such important presentations from the Foreign Minister and the shadow Foreign Minister.

Next year will mark one hundred years since some of the participants in the Paris Peace Conference at the end of the First World War concluded that if the world was to have any hope of avoiding the disasters that led to war, it was essential to engage the public in the great issues of statecraft and foreign policy. Three Australian delegates in Paris were part of those conversations. Two of them – J.G. Latham and Robert Garran – are commemorated in the names of suburbs in this city.

Their discussions led to the creation of the US Council on Foreign Relations and the Royal Institute of International Affairs, and were part of the background to the formation of the AIIA, which has made a long and important contribution to thinking about Australia’s engagement with the world.

Tragically, of course, the hopes of the Paris peacemakers were dashed and an even more destructive conflict followed. The United States pulled back from international engagement, the provisions of the peace treaty punished Germany and drove its continued resentment, social revolutions weakened Europe and the international economy collapsed under the weight of protectionism.

But the experiences of the 1920s and ‘30s reinforced rather than refuted the insight that successful foreign policy requires the understanding and involvement of an informed public.  In this era of Brexit and global populism it is more important than ever.

What sets this Institute apart from the universities and think tanks we work with is the strong community base on which we rest – the participation of members from all areas of life, from old to young, and from right across the country, who want to understand more about the world and the way it affects Australia.

Tomorrow our National Executive will be discussing how we can continue to strengthen those connections.  I just want to say here that we are always very interested in the views of our members and supporters on how we can best do that. So if you have ideas or suggestions, Melissa, Zara and I, as well as the other National Executive members, are around all day and very happy to hear from you either directly or later by email.

For many years now, I’ve pointed out in speeches to students and young public servants that every Australian government since 1945 has at one time or another declared that the international situation Australia faces has never been more fluid and uncertain. You can trace it through our foreign policy history.

So you can understand how cautious I have been in coming to the conclusion that, this time, the claim in the Government’s 2017 Foreign Policy White Paper that our region is changing ‘in ways without precedent in Australia’s modern history’ is right, and that we have to deal with a future more uncertain than any we have known since the Second World War.

These changes are the result of the shifting balance of global economic and military power. Their consequences are all around us: in new tensions between great powers and within old alliance systems; in the crumbling capacity of international organisations to make and enforce rules and norms.

But from Australia’s perspective, their sharpest manifestation lies in the changed approaches of the two countries of most importance to our future – our principal ally and old friend, the United States, and our major trading partner, China.

The United States and China have both been status quo powers. Neither of them now is.

As President Trump has reminded us, American voters are no longer willing to bear the costs of supporting the international order that the United States itself established at the end of the Second World War. That order was constructed around multilateral institutions like the United Nations, the IMF and the World Bank. It was driven by the liberal social and economic goals set out in documents like the Preamble to the United Nations Charter and the Universal Declaration of Human Rights and in the principles of a free and open trading system.  It was backed by the power of the United States and its network of alliances.

The current US Administration considers that the benefits it receives from providing such global public goods are diminishing. A number of elements in the international status quo such as the WTO and some of its own alliance relationships are no longer seen as delivering an adequate return on its investment.

‘The United States is the world’s largest giver… by far, of foreign aid. But few give anything to us’, President Trump complained in his speech to the UN General Assembly last month.  Washington wants something different.

That’s not surprising.  At the end of the Second World War, the United States accounted for about half of all global GDP. Now it is just under a quarter. It is still the world’s largest economy but much more focussed on its internal challenges.  Future US governments will no doubt use different language from Donald Trump’s, but they will be similarly keen to emphasise America First.

The Chinese government, for its part, adhered to and benefitted from, the international status quo during its forty-year period of economic reform. But a new Communist Party leader, Xi Jinping, has moved decisively away from Deng Xiaoping’s advice that China should hide its capabilities and bide its time.

Again this was inevitable. China is looking for a role in the world to match its economic weight and its increasingly global interests. It’s hard to hide when you are the largest economy in the world by purchasing power parity and likely to be the largest by any measure, according to the Australian Treasury, by the end of the next decade.

The United States-China economic relationship was underpinned for years by a basic complementarity between cheap, efficient Chinese labour and American technology, design and markets. But that is eroding. Costs in China are rising.  And like the American government, the US business community is taking an increasingly sceptical approach towards China, partly driven by concerns about Chinese behaviour in areas such as cyber and intellectual property protection.

If it is to meet Xi Jinping’s ‘China Dream’  of becoming a ‘moderately prosperous society’ by the centenary of the Communist Party’s formation in 2021 and a fully developed country by mid-century, China will need to break its way free of the so-called middle-income trap and move up the economic value chain. The China 2025 high-tech industrial policy is part of that aim. The Party’s continuing legitimacy depends upon its success.

The broader geo-strategic complementarity that led President Nixon to strike a deal with the repressive Mao Zedong in order to address the challenge of the Soviet Union, and later encouraged the idea of China as a responsible stakeholder in the post-Cold War order, is over. The US has begun to take notice of the emergence of a potential peer competitor, and a country whose interests are increasingly global in their reach.

Expectations from some in the West that as it grew China would become more like us, have been disappointed.  Under Xi Jinping, ideology and the role of the Communist Party in economic and social life have made a strong return.

China’s own sense of its historical centrality is as important a component of its cultural mindset as the idea of America as an exceptional nation is to the US worldview.

The American and Chinese rejection of the status quo matters to Australia because if there was one country that did well out of the post-war order, it was us.  The dangers of the Cold War were mostly far away and the costs borne by others. In the Asia-Pacific, US defence relationships, especially with Japan and South Korea, and open trading arrangements, provided the stability within which the Asian economic miracle could occur and Australia could prosper.

That’s why successive Australian governments have been so determined to argue that we don’t have to choose – between our history and geography, our main ally and principal trading partner, our security and prosperity.

But the demand that we make such choices is getting louder.

With unexpected speed, as we saw in the National Security Strategy and most recently in Vice-President Pence’s speech on 4 October, the United States Administration has begun to frame China not as a partner whose behaviour in some areas needs to be moderated but as a competitor in a long-term global struggle for political and economic advantage.

A new bipolar divide is beginning to entrench itself around the Asia-Pacific. Established lines of connection in areas ranging from trade and technology to student and research exchanges are being tested.

We know from neuroscientists and evolutionary biologists the split-second speed with which the human brain differentiates between ‘us’ and ‘them’, and the evolutionary advantages the quick identification of the ‘other’ may have provided individuals. In the context of contemporary societies, however, ‘othering’ is a powerful and dangerous social tool.  Bosnian Moslems, Tutsis and Rohingyas are only the most recent of the groups to have felt its impact.

But a more sophisticated form of othering is also taking place at the refined levels of international relations scholarship, based not on the cruder foundation of race or religion but on differences in values.

The argument is coming from liberal internationalists as well as populist nationalists.

For example, writing in the journal Foreign Affairs[i], the American scholars Jeff Colgan and Robert Keohane noted the ‘crucial importance of “othering” in identity formation, for individuals and nations alike’.  The best way of addressing the growing populist revolt in the United States and rallying Americans to the cause of the liberal world order, they suggested, was to help ‘clarify the American national identity and build solidarity’ by ‘othering authoritarian and illiberal countries’ like China.

I’m doubtful such advice has much use in the United States context. I’m certain it has none for Australia.

Values matter in foreign policy, of course. They inform our way of looking at the world and the way we act in it. In the words of the 2017 Foreign Policy White Paper, they are ‘a critical component of the foundation upon which we build our international engagement’.

But values, like interests, are messy and complex. They are shaped by philosophy, religion, history and biology. And they change over time.

‘Racial and gender equality’ were among the Australian values listed in the Foreign Policy White Paper and few Australians would argue. But during my own lifetime those values sat uncomfortably with the positions of earlier Australian governments as they fought to maintain the White Australia Policy.

It will, of course, always be easier for us to work with countries which share more of our values or our institutional history, but we are dealing with a spectrum not a binary divide. And for Australia, located at the civilizational cross-roads of the Indo-Pacific, that spectrum is wide.

Among the countries of the region, only Australia and New Zealand measure up to the standard of full democracies, according to the Economist Intelligence Unit’s 2017 Democracy Index.  All the others range between ‘flawed democracies’, a category that includes the United States, Japan and India; ‘hybrid regimes’ like Singapore, Fiji and Thailand; and authoritarian states like China, Vietnam and Myanmar.

Other, more tangible, interests come into play for Australia as well.  If America’s economic complementarity with China has changed, Australia’s has not.  Notwithstanding sensible efforts to diversify our trade and economic relations, China will be an important partner for Australia in any plausible economic future.

No other country – not the US, not India, not ASEAN, not global Britain – will be capable of replacing Chinese energy, resources, agriculture and services markets in the medium term.

And in geopolitical terms, our closest partners in the region, and China’s nearest neighbours, like Japan, the ROK, the ASEAN countries and India understand that they need to sustain policies over a long period that will enable them both to engage with China as well as to shape its behaviour and manage the consequences.

The emerging international order isn’t going to look like the 20^th century world, with its hub-and-spokes alliance systems and broad multilateral institutions with universal membership.

No single power will be able to generate the energy needed to shape and sustain the new order alone. China can’t do so, nor can the United States. Energy will have to come not from a single power source but from a networked grid.

A diverse and fluid network of relationships, groups and coalitions will be required to address the economic, security, environmental and social uncertainties ahead.

Sometimes these arrangements will be designed to cooperate, sometimes to compete. Sometimes China will be central to the institutions, sometimes it will not be involved. Sometimes the institutional bonds will be economic, sometimes normative, sometimes geographic.

So what does Australia need to do to navigate our way through the dangerous terrain ahead?

The answer certainly does not lie in ‘othering’ the second-largest economy in the world.  It doesn’t lie in wishful assumptions that we can transform China.  (You might have thought that a decade’s experience in the Middle East had taught us that lesson.) It does not lie in spurious historical metaphors, whether the Thucydides trap, or appeasement at Munich, or Churchill’s Iron Curtain.

I spent ten years of my professional life working on the Cold War. This is not the Cold War.

Whatever disagreements we may have with China about its claims in the South China Sea or its use of cyber or possible debt pressures on developing states, these are far removed in scale and danger from the permanent stand-off between the nuclear forces of the Warsaw Pact and NATO across the central German plains, or from the violent proxy wars fought by the two sides through Asia, Africa and Central America.

No Australian interests or values will be served by a re-bipolarisation of the  international environment. We should work as hard as we can to avoid it.

This is instead a time for Australia to be focusing on the slow, patient work of foreign policy, that neglected part of statecraft whose very purpose is to find ways of managing differences in a complex world.

It does this by seeking to understand the motivations and processes of the other actors in the international system, then, by drawing on long traditions of reciprocity and deal-making,  crafting the rules and norms necessary to build the international order.

With its compromises and trade-offs and grinding backroom negotiations, foreign policy has nothing like the romantic allure of Grand Strategy.

But the outcome it seeks – a fair and peaceful world in which our security is protected, our prosperity expanded and our citizens able to live full and meaningful lives – could not be more heroic.

[i]Jeff D. Colgan and Robert O. Keohane, The Liberal Order is Rigged, Foreign Affairs May/June 2017