Embassy of Australia
United States of America
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ADDRESS BY DENNIS RICHARDSON

AUSTRALIAN AMBASSADOR TO THE UNITED STATES

TO THE NIXON CENTER

WASHINGTON DC

9 JUNE 2006



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AUSTRALIA AND RISING ASIA

Thank you to Director Geoffrey Kemp and President Dmitri Simes of the Nixon Center for inviting me to speak today.

The Nixon Center’s mission makes much sense to Australia: it promotes “the enlightened pursuit of national interest”, mixing “hard-headed pragmatism with fundamental American values”. It seeks to combine realism and values

- this parallels Australia’s approach to foreign policy, which combines pragmatism and principle.

Australia and the World

I was asked to talk today about “Australia and Rising Asia”.

Asia is central to Australia. It is also important to note at the start that Asia alone does not define our policy

- our geography, history and national interests dictate that, while our immediate responsibilities are regional, our interests are fundamentally global in nature.

Australians have always been outward-looking. We never sought to opt out of world politics; on the contrary we have feared isolation and have consistently sought to avoid it.

- that’s no surprise when you think of who we are: a quarter of Australians were born outside Australia (double the share of Americans born overseas)

- 20 million Australians have 12 million passports; 300 million Americans have 50 million passports

Australia’s economic interests are global. If taken as a single entity, the European Union is our largest trading partner; our largest investment partner is the United States; and our largest and fastest-growing export markets are in East Asia.

We have reformed our economy to meet global challenges. Australia is now in the 15th successive year of economic expansion. Unlike in previous periods of growth, however, our current success is taking place against the background of nearly zero tariff protection, a flexible exchange rate and recent labour market reform.

We are the world’s 13th largest economy, bigger than that of Russia or Brazil. And we rank fourth in the world in terms of competitiveness.

Australia’s current military deployments also tell you much about the varied nature of our interests.

- Afghanistan, East Timor, and the Solomon Islands.

But, East Asia has been and remains a primary focus of Australia’s foreign and security policy. That is an enduring aspect of our post-war international outlook:

- we actively supported Indonesia’s independence in the 1940s, despite US and UK opposition; and we were central to the Columbo Plan – a sort of mini-Marshall Plan focused on Asia – in the 1950s

- we instigated and saw through to completion the Cambodian peace process in the 1980s; and we were prime movers in the creation of APEC in the 1990s

- and we responded quickly and generously to regional crises: eg the financial crisis of 1997; trouble in East Timor in 1999 and again this year; the 2004 tsunami.

Change in East Asia

East Asia is undergoing remarkable change – has been for many years.

In the past fifteen years East Asia’s growth has averaged 7 per cent a year. In 1960 East Asia made up around 11 per cent of global GDP; today it is around 21 per cent.

East Asia’s economies have become more open and mature. Average tariffs in the APEC region have fallen by somewhere between a quarter and a third in the last ten years; the most dramatic falls in protection in that time have been in Asia.

Politically, too, East Asia has changed decisively. Today, dictatorships are the exception, not the rule, in Asia. Taiwan and the ROK are often cited, but just as important in the longer-term is Indonesia’s transition to democracy.

Equally significant, but often overlooked, is the social transformation in East Asia. Prime Minister Howard recently said we are witnessing for the first time in history the emergence of a truly global middle class – one that is not limited to the industrialized West, but which will include Asia.

India and China alone could produce middle classes of 400 to 800 million people over the next twenty years. As their incomes grow, they will want greater political participation, better health care and retirement benefits, and a cleaner environment. We don’t yet know where this will lead. For instance, how will China reconcile this social transformation with its political system?

Add to that the ageing of much of East Asia’s population – especially in China, whose population is expected to peak around 2050 even as that of the United States is expected to continue growing.

In terms of the challenges posed by nation states and their interactions, America’s strategic fortunes in coming decades will be shaped more by developments in Asia than elsewhere.

China

China’s rise looms large in everyone’s thinking. In Australia, the public debate about China has a different tone to some aspects of the debate here in the United States. I suspect that one reason for this is that China’s rise has been factored in at a national psychological level in Australia for some time.

- and, though we in Australia have bilateral trade problems with China too, our trade with China is widely seen as a good news story in Australia; whereas in the United States views are often more mixed.

Australia has a pragmatic, clear-headed approach to China. We welcome its growth as natural and as benefiting others. We welcome that fact that it is engaging other countries – something we had long urged it to do. We welcome its efforts in the war on terror, on the North Korean nuclear issue, though on the latter we would like it to do more.

We see China’s leaders as essentially pragmatic, less ideological over time, and clearly pre-occupied with the serious internal governance challenges facing them.

We are under no illusions, however, that China’s values match our own, or that our ties with China are on a par with our ties with the United States or Japan. They are very different kinds of relationships. We are friends with both China and the United States; but we are an ally of only one.

We follow closely aspects of China’s military build-up. As the Australian Government noted in its recently released National Security Update, “the pace and scale of China’s defence modernization may create the potential for misunderstandings, particularly with the development of new military capabilities that extend the strike capability and sustainability of its forces. It is important that the development of China’s military capability is transparent and that its capability decisions remain consistent with its legitimate security needs”.

But it is not inevitable – indeed, I would argue it is far from inevitable – that this will lead to conflict in Asia. The question, rather, is to what extent China’s rise will change the system in which it rises. Can it play by the rules or will it change the rules? We in Australia want China to play by the rules. After all, in the long term, this is very much in China’s own interest.

Some degree of hedging against possible futures must inform US policy – that is only natural and sensible. But hedging is not enough; we must actively seek the kind of China and the kind of region that we want to come about.

To achieve that we need to have frank discussions with China about where we differ, but not to lose sight of the fact that those differences sit alongside other areas where we have tremendous common interests. And I think the United States has the balance right, as evidence in the policy framework articulated by Deputy Secretary Zoellick in September last year.

India

India’s rise is also significant. Its reemergence had long been predicted, and there had been many false starts in the last twenty years.

We in Australia welcome the prospect of a democratic, English-speaking, cricket-loving nation such as India assuming a major place in international affairs.

As a major energy consumer and producer, we need India’s help to find an equitable and sustainable solution to climate change. That’s why we welcomed it as a founding member of the Asia-Pacific Partnership on Climate and Development. India is also an indispensable partner in the war on terrorism.

The reality has been implicitly recognized by the United States in its efforts to build a substantial strategic relationship with India in its own right. That is a welcome and natural development from Australia’s point of view.

Japan

China and India are rising powers; Japan is no less important. Japan has been Australia’s largest export market for forty years and is our closest friend in Asia.

It is easy to take Japan, and the US-Japan alliance, for granted. But they are in fact of fundamental significance. Were the US-Japan alliance to falter – of which we see no sign – it would affect the entire system of regional security. We should not want Japan to feel isolated or vulnerable.

Japan’s relatively poor economic performance for much of the 1990s led many to say it was a nation in decline. But we in Australia never believed that to be the full story. And its micro-economic reform is beginning to pay dividends.

Prime Minister Koizumi’s leadership has been very important in forcing through much needed political and economic reform and in lifting Japan out of a sense of relative decline. He has also taken Japan further than any other post-war leader towards assuming a fuller role in international security.

Australia has actively encouraged Japan to play a greater security role regionally and globally. We have done so on the basis that Japan’s post-war outlook has been unambiguously peaceful and democratic, safely anchored in the US Alliance and a commitment to global multilateral institutions.

We have welcomed and encouraged Japan’s important out-of-area security responsibilities in recent years, including in East Timor, Afghanistan and Iraq. It is a welcome sign of a more relaxed Japan assuming a bigger role. As it increasingly does so it will inevitably rub against others that harbour resentment towards it. Japan needs to be astute and generous in handling those issues and relationships.

The Trilateral Strategic Dialogue between Japan, Australia and the United States adds a new dimension to its regional role.

Indonesia

No sensible discussion about East Asia can or should exclude Indonesia. Think of its significance: the world’s fourth most populous country, the world’s third largest democracy, and the world’s largest Muslim nation. Indonesia is not a great power. But by any measure, it is pivotal.

That is even more so in the context of the global dimensions of terrorism and democracy, and the challenges terrorism poses not only to our own societies, but to those in countries such as Indonesia. For Australia, for the region, and I would argue, for America, Indonesia is critical.

We welcome Indonesia’s direction in recent years, especially under President Yudhoyono. We also welcome the significantly increased US engagement with Indonesia over the past twelve months. We believe, for instance, it was a proper recognition of real change when the United States recently restored military-to-military ties with Indonesia. (Secretary Rumsfeld recently visited Jakarta; this followed visits by Secretary Rice and Attorney-General Gonzales.)

It is important in engaging Indonesia to sustain the effort. We know through our own experience that there will be times when task becomes difficult. But we must not falter in the effort.

America and Rising Asia

It is easy to marvel at the vast scale of East Asia’s economic and social transformation. It is quite another thing to put it into context and understand what it means for us today. To get the full picture you can’t look at Asia in isolation.

One common trap is to assume that because East Asia is growing so quickly, the rest of us – including the United States – are somehow failing, or risk being left behind

- this ignores the reality that East Asia’s growth cannot be separated from the role of America and others

: indeed, East Asia’s growth would not have occurred without America’s stabilising alliances, its openness to trade and visitors from Asia, and the innovative efforts of US businesses in Asia.

Whether in strategic or economic terms, it is best to think of the Asia-Pacific region as one single system. In this I would include North Asia, South East Asia, and the United States.

The flip-side is the notion or fear that we in the West are threatened by the growth of East Asia – in particular that of China – and that we must guard against it by limiting investment from those countries

- again, this ignores the reality that our own economies benefit enormously from that prosperity, not least from the deflationary effect of China’s growing capacity to make low cost, high quality, goods.

- Australia for one would be greatly disturbed if voices calling for greater protectionism and limitations on foreign investment were to become more influential and powerful in the United States.

Another manifestation of this thinking is an exaggerated sense of concern among some commentators that the United States is being excluded from regional institutions and somehow sidelined in Asia. The United States should not agonize over its place on the region as a result.

- East Asia is not Europe. Regional institutions in Asia need to be seen against the historical background that, unlike in Europe, institutions took a very long time to develop there. Regional architecture in Asia is messy, is still developing, and does not sit easily with those who aspire to neatness and order. The pace of change in regional architecture cannot be forced, nor can models be readily copied from other regions or settings.

Responding to the challenge and opportunity inherent in Asia’s rise requires us neither to fear its rise nor to fawn over it. America should think carefully (as it is doing) about how it relates to East Asia; but it need not agonize over it.

The United States and its strategic and economic engagement in East Asia are inextricably linked with East Asia’s success.

As Prime Minister Howard said during his recent visit, and again in Canada, people who lament the strength of US influence in the world and who seek a reduced US global role should be careful what they wish for.

- that is especially true in Asia. Indeed, it is perhaps no surprise that those who call most loudly for a reduced US global role tend to live not in Asia but in parts of the world where the peace has been won – eg Europe.

Unlike Europe, East Asia is still subject to profound great power competition. Without the United States’ strategic involvement in East Asia, issues involving China and Japan could take on a very different dimension.

As I’ve said before, the United States deserves more credit for its diplomacy in Asia than it is often given credit for. It has gotten the big issues right. For example, it has:

- expanded its alliances with Japan and Australia;

- developed a nuanced and sophisticated China policy;

- successfully managed tensions in the Taiwan Strait;

- brought North Korea into a multilateral process on denuclearization, and avoided isolation in that process;

- simultaneously improved ties with India and Pakistan;

- reopened military ties with Indonesia; and

- built a US-ASEAN partnership with annual leaders talks.

Overall, America’s position in Asia is strong and respected.

That it remains so is of great importance to us. Our alliance is not just a bilateral asset but a foundation of regional stability. It empowers each of us in our dealings in the region. Other countries in the region welcome it and respect it. It is a reminder of our shared interests – which mutually reinforce those of regional countries – and of our shared values.

Ends

 

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