Australia's Regional Interests

CHAPTER TWO

THE Heritage Foundation has established an enviable reputation, both for intellectual rigour and for the breadth of its research.  It has achieved what many similar institution can only ever aspire to, and that is, both quality and influence.  It has stood for a clear set of principles:  for intellectual honesty, often against the tide of prevailing opinion.  But it has always done so with an admirable fearlessness and on the basis of careful argument rather than blind emotion.  It looks beyond the short term:  to the forces of change that will affect Australia's international interests over the next decade, and beyond.

History shows that Australian foreign policy has not been characterised by a clear concept of national interest, nor by any consistent pursuit of this interest.  Too often our foreign policy has been reactive rather than forward-looking.  Too often it has been held back by ambiguity, by insularity, by grandstanding or simply by the hope that the interests of other nations will turn out to be identical to our own interests.

The strategic purpose of all policy-making has been to make Australia a major economic and political player in the Asia-Pacific region by the year 2000.  We have set ourselves that clear policy objective not because we are regional isolationists, but because the Asia-Pacific region is central to the pursuit of Australia's national economic and security interests.

Except for times of war, there has never been -- in my view -- a period when the purposes of Australian foreign and domestic policy have been more interdependent than they are today.  Indeed, Australia can only achieve its objectives in the Asia-Pacific region if we correctly anticipate the nature and pace of regional change, and if we act decisively to achieve reforms within Australia:  particularly basic structural economic reforms.

Essentially, I believe that there are six major forces of change which will shape "Tomorrow's Pacific."

THE WIDER INTERNATIONAL ORDER

First, and perhaps most obviously, the Asia-Pacific region will be affected by the character of the wider international order of which it is a part.  Debates will continue to rage over the type of post-Cold War international order which is emerging, but certainly not over the fact that it has fundamentally changed.  The sources of international power are more diversified;  structures are more complex;  and the limits of State sovereignty are more apparent.  In short, the international order of the 1990s does not lend itself to description under the neat labels of a less complicated past.  Traditional notions, such as "the balance of power," simply no longer suffice.  What is emerging is an international order in which no single hierarchy of power dominates.

In terms of military power, of course, the United States is clearly superior to any other country, and will remain so into the foreseeable future.  In terms of economic power, the balance is tripolar (based on the United States, Europe and Japan), as indeed it has been since the 1970s.  Complementing these realities of global economic and military power is, of course, the influence of what is so often quite awkwardly described as "transitional interdependence" -- namely, the impact of global markets for trade, capital and information;  the spread of technology;  and the international consequences of environmental problems (such as global warming) and health issues (such as AIDS and drugs).

The countries of the Asia-Pacific region are no less influenced by these characteristics of the emerging international order than the nations of Europe, the Americas and elsewhere.  But it is economics which is driving the foreign policy of nations in a powerful and dominant way.  As one writer recently put it:  "The rules of the game have changed;  indeed the game itself has changed."  At the heart of the recent changes in the international system lies the great transformation of economic power and leadership in the Asia-Pacific region.

It is the market economies of Asia that are setting the pace.  With Japan at the forefront, they lead the world in terms of economic growth and dynamism.  They also provide a model to which the developing world can aspire.  And in the new era of "geo-economics," that pattern of economic dynamism and pace-setting in the Asia-Pacific region certainly looks set to continue.

Second, the Asia-Pacific will be influenced increasingly by pressures towards greater regionalism and sub-regionalism.  The impact of transnational economic influences has long been apparent, as have the advantages of genuinely global markets.  But these realities co-exist with regionalist pressures.

At an economic level, the momentum continues to build in favour of increased regional co-operation.  The Asia-Pacific Economic Co-operation forum (APEC) is perhaps one example.  Proposals for an ASEAN free-trade zone are another.  This trend is partly a recognition by the Asia-Pacific states of the need to expand intra-regional trade and to liberalise trade in a GATT-consistent way.  But it is also partly a response to the fear of a breakdown in the open international trade system, and to recent developments affecting trade arrangements within Europe and in the Americas.  With its variety of motives, the trend towards greater economic regionalism in the Asia-Pacific region is set to continue.

It is far from inevitable, however -- and certainly not intended at this stage -- that such regionalist influences will lead to a world of competing trade blocs.  Such a development would certainly run counter to the global trading interests of the major states.  It would handicap smaller countries, which would be dominated by the leaders of each bloc.  And it would be inconsistent with the security concerns of many Asia-Pacific states, which want to see a continuation of the American defence presence in their region.

Yet GATT-consistent regionalism will continue as a powerful force for change, in Asia and in the Pacific.  It is also apparent that economic sub-regionalism is set to grow, under the impact of local trade and financial flows.

Throughout Asia, there are many examples of Natural Economic Territories (NETS) being formed.  Hong Kong, Taiwan and the Guangdong province of southern China constitute one such NET.  Another is developing between China's Shantung province and South Korea.  An NET is also taking shape around the littoral states of the Sea of Japan.  There have been discussions between Singapore, Johore (in Malaysia) and Batam Island (in Indonesia) about establishing a NET.  And there are many similar examples of this trend towards economic sub-regionalism.

NATIONALISM COMPETING WITH INTERNATIONALISM

A third force of change in "Tomorrow's Pacific" will be the competing interaction between nationalism and internationalism.  In the context of the emerging international order, all states and regions will be subject to these competing pressures.  But in Asia and the Pacific, there will be particular strains.

At one level, those strains are reflected in the re-emergence of ethnic tensions, religious rivalries and nationalist aspirations, particularly in relation to territorial and political disputes.  At another level, they are apparent in the growing awareness and self-confidence among regional states about Asia's own identity.  This process has been labelled "the Asianisation of Asia."  It highlights a growing awareness of a basic (although, perhaps, an exaggerated) common heritage of race, geography, culture and history.  Whatever the merits of the label, there can be no denying the significance of the growing network of economic, political, cultural and other ties within the Asia-Pacific region, and the fact that its influence is set to expand further.

Fourth, there are significant forces of change affecting the regional security outlook.  They lie not so much in the potential regional flashpoints that exist, such as on the Korean peninsula, in Cambodia, in Burma, in China and Hong Kong, as in disputed territories (such as the Northern Territories and the Spratly and Paracel Islands).  Resolutions or neutralisation of these regional security trouble-spots is an important priority.  But the longer-term extent of regional security lies in the changing attitudes of regional states to managing security issues.

With the end of the Cold War, traditional alliance relationships are having to react to new realities and priorities.  There is, of course, a tendency to exaggerate this trend.  It is fundamentally mistaken, for example, to believe that somehow everything has changed to a point where the established alliance structures and security arrangements are now little more than "transitional arrangements" on the road to a brave new world of regional security.  Nor is there any obvious need for immediate and major changes to be made in institutional arrangements to facilitate dialogue on security issues in the Asia-Pacific region.  At the same time, however, significant changes in regional security structures are occurring:  partly of their own accord and partly in response to shifts in American strategic priorities after the end of the Cold War.

In the Asia-Pacific region, what appears to be developing is the type of "pluralistic security communities" that analysts such as Karl Deutsch foreshadowed many years ago -- that is, states and groups of states among which there have been relatively long periods of peace and between which there is no expectation that disputes will be resolved by resort to force.  It is not a question of new alliances between such regional states, or new formal institutional arrangements on defence co-operation.  Too often proposals for such arrangements are, as Dick Solomon once said, "solutions in search of problems."  But we may well be seeing the evolution of a greater sense of strategic community.

New possibilities are also opening up in terms of confidence-building and dispute-settling mechanisms.  They relate not so much to grand designs for imposing a European mould on Asia-Pacific security issues.  Rather, they are focused on special-purpose sub-regional security structures -- what Professor Robert Scalapino has called "concentric arcs" -- designed to promote maximum flexibility and communication among those in dispute.  They may or may not become established over time.  But it is important to recognise that the old structures, within which regional security issues have long been addressed, are changing significantly.  And they are likely to continue to change over the rest of the decade more quickly than they have at any time since 1945.

THE US-JAPAN ALLIANCE

A fifth force of change at work is the nature of the US-Japan alliance relationship.  This relationship is the key to every other issue of stability in the Asia-Pacific region.

Genuine questions are being asked (in both Japan and the United States) about whether fundamental social, cultural and business differences at a bilateral level are greater than shared economic and security objectives.  Will the Cold War in fact accentuate those bilateral differences and, over time, fatally poison the relationship?  Will a new strategic era be the catalyst for a new kind of US-Japan partnership?

Putting the most pessimistic scenarios to one side, it is quite possible that the interests of Japan and the United States may diverge more in the years ahead than they have in the past.  With the rise of "techno-nationalism" in both countries, and given Japan's growing leadership role in Asia, the partnership may become one of more open rivalry.

Some, of course, go further and argue that such a trend is a slippery slope which could lead to a deterioration in US-Japan relations over the medium to long term, thereby harming both countries and the region as a whole.  But a major rupture in these relations remains highly improbable, and certainly highly undesirable.  The two nations' shared agenda -- of economic growth, new trade and investment opportunities, secure and diversified sources of energy and raw materials, and a rising living standard in both countries -- is one that is likely to overcome other competing priorities.  Furthermore, the American and Japanese economies are already highly integrated, and that process is set to continue.  The Japanese stake in the health of the US economy is growing, not diminishing.

Similarly, at an international level, Japan's focus is on its leading role in East Asia's economic dynamism, it has neither the need nor the desire to become an independent military power, and most regional countries would be particularly disturbed at any such prospect.  In addition, like most other Asian nations, Japan sees a continued US military role in the region as essential to its own national interests, and to the interests of the region generally.

Despite all this common ground, there is no escaping the fact that the partnership between the United States and Japan is currently facing a critical test.  The goal of preserving a close, effective US-Japan political relationship requires a delicate balance.  On the one hand, there is the need to maintain justified pressure against Japan on some of its particular trade and fiscal practices.  On the other hand, there is the need for the United States to face issues of its own domestic economic management which have contributed to the two countries' current trade and economic tensions.

Finally, the Asia-Pacific region will be vitally affected over the coming years by the outcome of the continuing debate between those who advocate the primacy of spreading democracy and those who share the same long-term goal but give short-term priority to economic development.  Assisting the expansion of democracy is currently a powerful motive in American foreign policy.  The influential American commentator, Charles Krauthammer, reflects that view when he writes that the end of the Cold War creates a "unipolar moment" for America in which it can, and should, assert America's democratic interests and values.

This view runs counter to the dominant view in most Asia-Pacific countries which maintains that the transition to democracy is only effective if it is preceded by a period of economic development, underpinned by a strong and firm government committed to consistent market-based economic policies.

There is a growing awareness in Asia that an open economy and a closed political system cannot long co-exist.  As the search for capital, technology and markets becomes more intense, and as political power is assumed by a better-educated and more widely travelled younger generation, the old political order in many countries will change accordingly.

But, over the short term, there is a real potential for difficulty.  The different priority given by Western countries and most Asia-Pacific states to the expansion of democracy and the need for economic development will be one of the vitally important determinants in how the Asia-Pacific states interact with the wider international community.

IMPLICATIONS FOR AUSTRALIAN POLICY

These six factors are what I see as the major forces of change that will shape the Asia-Pacific region over the next decade and beyond.  Let me now turn to make some brief remarks about their implications for Australian policy.

First, in terms of the general challenge for public policy-making in Australia, the changes in the Asia-Pacific region demand a careful re-thinking of the legacies of our history and of our geography.  Too often, we have drawn the wrong lessons from our history and taken false encouragement from our geography in relation to the Asia-Pacific region.  For too much of our history, we drew back from committing ourselves to a new kind of dynamic interaction with regional countries because we did not see it to be either necessary or desirable.  Then, more recently, we were mugged by reality, and we too easily deluded ourselves that our geographic proximity guaranteed us both economic access and diplomatic influence in the Asia-Pacific region.

The fact of life for Australia, however, is that "being there" just isn't enough.  For too long, Australia's leaders have built our geographic proximity to Asia into some kind of cargo-cult mentality.  There has been a mistaken optimism that, somehow, by just being where we are, we can overcome all the consequences of our domestic economic mismanagement by tapping into the dynamic economies of our neighbours.  Yet the truth is that a more productive and a broader-based relationship with Asia and the Pacific will not just "happen" because of geography.  It will only happen if a concerted program of major economic reform and public awareness in Australia makes it happen.  Our history won't save us from our geography.  But our geography alone won't guarantee us anything.

The choice, therefore, is not an exclusive one between our history and our geography.  It is about drawing on the best of both -- learning the right lessons from our history, understanding the real forces of change at work in our region, and pursuing deliberate policies of structural economic reform to maximise the potential of our geographic position.

Second, Australia needs to recognise the likely consequences in our own region of any final collapse of the Uruguay Round of multilateral trade negotiations.  Such a collapse would gravely damage the economic interests of all trading nations, but particularly those of Asia-Pacific countries including Australia.  It could lead to unforeseen social and political problems in particular countries.  Furthermore, a break-up of the world into competing trade blocs would be likely to lead to a serious challenge to existing security arrangements in the Asia-Pacific region and, in particular, to the continuation in its present form of the American strategic role in the region.  The end of the GATT system of international trade would also be likely to lead to increased environmental damage.  Some developing countries, in response to what they would interpret as developed states "tearing up the rules" of international trade, would be likely to respond by maximising the use of their own natural resources without existing environmental safeguards.

These are just some of the likely consequences in the Asia-Pacific region of a collapse of the GATT negotiations.  They confirm the view that the success of the Uruguay Round is still the most important item on the international economic and political agenda.  And that is why any Australian government must do whatever it can to promote a successful outcome.

Third, Australia needs to respond creatively to the trend in favour of co-operative economic regionalism and sub-regionalism.  We can do this by making APEC more than a debating society, by giving it some specific targets and deadlines, by involving the private sector more explicitly, and by encouraging APEC's development as a GATT-consistent free trade area.  In addition, the trend towards Natural Economic Territories holds out particular opportunities for areas in northern Australia in terms of developing their economic interaction with neighbouring countries.

Australia also needs to monitor closely the developments towards an ASEAN free-trade area.  The decision in January 1992 by ASEAN member countries to establish such an area within the next 15 years should be welcomed.  Such an initiative is seen as complementary to the APEC process, and we believe that it can play an important role in promoting the trend to trade liberalisation in the Asia-Pacific region as a whole.  We also need to assess objectively the prospects for Australia negotiating GATT-consistent free trade agreements in good and services with particular regional countries or groups of countries.  To the extent that they would advance Australia's national interests in the wider region, such agreements should be pursued actively.

Australia must continue to work for a successful outcome of the Uruguay Round.  But we must not settle for a trade policy which amounts to little more than the hope that the open international trade system will survive.  Australia's national interests are at stake and we must act accordingly to cover all contingencies.  Australia has been too willing to rationalise inactivity and find excuses for failure and delay in international trade negotiations.  Australia should act decisively -- at bilateral, regional and multilateral levels -- to ensure that our national economic interests are protected.

Fourth, Australia needs to respond to the changing contours of regional security.  Our alliance relationship with the United States continues to be to the advantage of both countries.  For Australia, there are clear operational, strategic, intelligence and economic benefits.  And Australia should certainly be strongly committed to developing and strengthening defence co-operation under the alliance.  Australia should do all it can to support the American alliance, and also make it unmistakably clear that we expect reciprocity in this approach.  We want to give the alliance new relevance in the 1990s and beyond.  This applies as much to security as to trade and economic issues.  Without such relevance, the danger is that the alliance will wither.  That is not in the interest of either country, and Australia should do all it can to ensure that it does not occur.

I believe that a significant and continued American strategic presence in the Asia-Pacific region is a fundamentally important stabilising influence.  I also recognise, however, the winds of change blowing through the United States in terms of its international involvements and responsibilities.  I know that the 1969 Guam Declaration will have more relevance than ever before in the 1990s.  I acknowledge the changing attitudes to regional security issues which post-Cold War realities are encouraging within the Asia-Pacific countries themselves.

Australia should adopt a positive, forward-looking policy to develop interaction and build confidence between regional Defence communities.  Our purpose in doing so will be to encourage a framework of co-operative deterrence in our immediate region.  I believe there are particular initiatives that can be taken to upgrade co-operation with regional countries in every area including maritime security measures, information exchange, training, personnel exchanges, industry joint ventures and equipment procurement.

Fifth, Australian policy must clearly recognise that our economic and security interests in the Asia-Pacific region coincide in the US-Japan relationship.  We have, in fact, an interdependent "triangle of interests."  One leg of the triangle is our economic relationship with Japan.  Another is our economic and security relationship with the United States.  The third is the US-Japan relationship itself.  The future course of relations between those two countries will depend critically on a common perception of threats to international security, on the success of the Uruguay Round, on non-discrimination by the North American Free Trade Area, and on a genuine commitment to extend and strengthen shared goals and values.  Australian policy has a very limited role to play in that process.  But we should be very clear as to our national interests that are directly involved, and should do all we can to protect them.

Sixth, and finally, Australian policy must strike the right balance between advancing its interests in the Asia-Pacific region and staying true to its values in support of international recognised standards of human rights.  Australia takes the view, shared by all Western aid donors, that human rights are valid considerations in the provision of foreign aid.  I do not believe it is appropriate to apply hard and fast rules of linkage between the two.  But I do see a relevance between them.

Governments, in Asia or elsewhere, are entitled to pursue their own policies in their own way.  But if their actions openly and grossly violate internationally accepted standards of human rights, then other countries, including Australia, have a right -- and a responsibility -- to respond appropriately, including in the area of foreign aid.

Any such response, however, needs to have a broad focus that addresses not only the extent of civil and political rights but other dimensions such as the alleviation of endemic poverty, improvements in education, and the development of social infrastructure.  I remember the striking title of an article that was written in the late 1970s when the human-rights policies of President Carter were running into enormous difficulties.  The article was entitled "The Hell of Good Intentions."

GOOD INTENTIONS NOT ENOUGH

I believe that the pursuit of good intentions in foreign policy does not necessarily create a "hell" for policy-makers.  Good intentions in the area of human rights, however, will create difficulties if they are pursued in a narrow legalistic way, or as an end in themselves, or divorced from any wider concept of national interests.  And they will also cause difficulties if they are pursued for the purpose of giving governments and interest groups a warm inner glow rather than for the purpose of achieving practical, if limited, outcomes.

Support for internationally recognised standards of human rights is a responsibility that has a legitimate place in a foreign policy of "enlightened self-interest."  Australia should promote such rights in a constructive way and with a clear emphasis on regional implications.  We should do so in a principled and a consistent manner that respects legitimate differences of views.

Owen Harries wrote recently about the end of the Cold War, and concluded:

"... conservatives won the Cold War by virtue of character rather than intellect;  won it despite having a flawed understanding of the enemy and of the strength of their own side;  won it while having little confidence in the outcome until the very end;  won it, one might say, by displaying the old-fashioned phlegmatic qualities of a peasant army -- stubbornness, perseverance, endurance, and a simple uncomplicated sense of right and wrong."

I believe Owen Harries' assessment is fundamentally correct.  Success in the post-Cold War era will require many of the same qualities -- but, of course, many others as well.

It will require a clear recognition of the growing interdependence between foreign and domestic policies.  It will require a capacity to match best international practice in areas of comparative economic advantage.  It will require a capacity to reinvigorate old alliance structures and to adapt them to changing regional security priorities.  (In the case of the US-Australia alliance, it will require that we add value and we consciously set out to make it work.  We can't just take it for granted and expect that it will work.)  It will require a recognition of the fact that what the world has witnessed over recent years is not the "end of history", but one of the great turning-points of history, creating opportunities and challenges for every country.