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Paul Keating’s speech on Australia’s China policy – full text | Paul Keating | Australia news

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Taking some longer view of the strategic scenery, I have come to some key beliefs about the changes that are taking place globally.

The international system is fundamentally anarchic in structure. Two world wars in a century and Vietnam, Iraq, Syria gives the evidence of that. We should not confuse the relative peace of the last 30 years with the anarchy which lies latent.

Pax Americana is not the natural order of things and at some point an American president was going to construe the national interest in much narrower terms. President Trump may have no academic or rationalist framework for his actions – but his intuitive stance will take America where the next president or the one after that would take it anyway.

The direction started with President Obama. His policy of “restraint”, the red lines and his impotence in the South China Sea – pointed the direction for Trump.

As someone said, President Trump is restoring America as a selfish state among selfish states. Never since the Roman Empire had power been so concentrated in one state and imperial decay invariably comes from the misuse of power – which follows from its concentration. Both the opportunist extension of Nato to the very borders of Russia, and the unprovoked attack on Iraq, come to mind as examples.

Then from the mists of imperial grandeur – China popped up. President Trump’s great fear is that China will overtake the US, both economically and technologically. Economically, it’s bound to, simply by population – technologically is another matter.

The US president is endeavouring to engineer a technological divorce from China – in the mistaken belief that China’s technological achievements depend almost entirely on theft from the west – some of which has certainly happened – but China’s contemporary progress is broadly homegrown.

I think the president fails to understand that the industrial revolution broke the nexus between population and GDP and that globalisation – with the transfer of capital and technology – has restored that nexus. Population is now again the principal driver of GDP.

The fact that the Chinese population is four times that of the US is the key metric.

I think it is true to say the US remains the most ideological major society on earth. It believes, as a nation and as a system, it has the democratic formula and the universal values – which values it is committed to propagate.

On the other hand, China’s historical view is not rooted in ideological aspiration, universal or otherwise. It sees its legitimacy arising from its ethnic one-ness and bulk, and its geopolitical pre-eminence on the Asian mainland.

Trump Xi



‘The United States has to decide where its vital interests lie in its relations with China and China’s role in the world.’ Photograph: Kevin Lamarque/Reuters

The US will have to adjust to the reality of China, deciding which characteristics of China are inimical to US interests and pose a threat, and which are simply a product of China’s scale and economic rise, and which can be accommodated, however glumly.

In other words, the United States has to decide where its vital interests lie in its relations with China and China’s role in the world, and which interests are otherwise tradable.

After United States wars in Korea, Vietnam, Iraq and Afghanistan, it has to accept that war on the Asian mainland is unwinnable and that the shape of Asia cannot be cast by a non-Asian power – including by the application of US military force.

The promotion of economic and strategic cooperation between Asian powers is the key to Asian stability – not resorting to strategic blocks or military arrangements.

The key question is about the United States itself: Is the United States capable of fundamental renewal? Can it overcome its debilitating political gridlock; can it regain its sense of magnanimity and mission; can it rebuild its productive base and more equitably divide its wealth? Can it renew the enthusiasm of its middle and working classes for the national story, and can it redress the growth in its budget imbalance and national debt?

For if it fails on these fronts, it will compromise and perhaps forfeit its global pre-eminence and regard, as it will its ability to fund its military outreach.

These are all live issues for Australia.

It is in all of Asia’s interests, including Australia’s, that the United States remains engaged with its traditional partners and allies – Japan, South Korea and the Philippines.

It is desirable that the US improves relations with India and Indonesia but not cajole them into an alliance structure with military undertones.

The same can be said for Singapore, Malaysia and Vietnam.

Closer US political and commercial links with the countries of the region should help establish a web of self-reinforcing, cooperative ties which, over time, should assuage Chinese concerns that a structure is being built with the express purpose of Chinese strategic containment.

Indeed, such a cooperative structure should encourage China to participate in the region rather than seek to dominate it.

We want a region which gives China the space to participate but not dominate.

Australia, for its part, should be actively involved in the development of such structures, while being wary of being caught up in a policy by the US, should the United States come to the conclusion, that the rise of China is broadly incompatible with its strategic interests.

When strategic blocs become bipolar – once they become rigid, even small events magnify risk.

The management of violence during the cold war has made many sanguine, that the great and developing forces within the post-cold war world can be similarly managed.

We should recognise that the cold war structure was quite stable but very brittle, whereas this new system is much less stable but more flexible. This is because a much greater range of interests cross the strategic divide – more players and a variety of interests.

Flexibility is the requirement when the structure is under pressure, and in this emerging structure there should, at least, be scope for some hope.

But back to the immediate. President Trump’s instincts are to avoid military confrontations, what he calls permanent wars, but the confrontation – the military one – he most seeks to avoid is with China.

From the Australian national interest we should applaud the president for that. But more than that, keep on applauding.

For President Trump alone is deciding US foreign policy and the news in that for Australia is he has no appetite for a military skirmish with China – which parts of the US east coast foreign policy and defence establishment would countenance. And not just part of the establishment in the US, in parts of the same establishment in Australia too.

So, while the president’s instincts in these respects are good – and they are particularly good – he is nonetheless not personally able to divine a new international agenda. He will not be constructing a new world model.

At the moment the current model is in serious decline. Global institutions are crumbling. Look at the WTO. The global system is under stress.

And regional institutions are being marginalised into the bargain. For instance, the president did not attend the recent East Asia Summit. He did not even direct his secretary of state to attend. The only US cabinet representation was his commerce secretary, Wilbur Ross.

When, in the context of the East Asia Summit, the United States invited the 10 Asean heads of government to meet the US commerce secretary, in the absence of the president – seven of the 10 invited to attend declined.

East Asia



‘Whether the United States can assume it retains strategic guarantor status in East Asia is open to debate.’ Photograph: Manan Vatsyayana/AFP via Getty Images

Apec, which has met consistently for 26 years, is this year off. To have been held in Chile, it is cancelled – nominally due to riots – but it lacked any real encouragement from the US for it to go ahead.

More broadly, the so-called “quadrilateral” is not taking off. India remains ambivalent about the US agenda on China and will hedge in any activism against China.

A rapprochement between Japan and China is also in evidence, with the Chinese planning a summit for December after concluding a successful meeting ahead of the G20 – so Japan is not signing up to any program of containment of China.

On the broader point, whether the United States can assume it retains strategic guarantor status in East Asia is open to debate.

What is not debatable is that we need the US as the balancing and conciliating power in the region.

But it is hard to be effective in that role if you don’t turn up. If you are not integral to and part of the strategic discussion.

As I said at a conference of this kind a year or so ago, “if you pawn the crown it is incapable of being redeemed at the same value”.

In fact, given recent US conduct, the larger question is: is the US likely to return to the pawn shop to recover it?

In the event President Trump were to win a second term, the answer to that question is likely to be in the negative.

Indeed, I think it is fair to say that following this presidency, the United States will not return to being the state it was, regardless of whether a Republican or a Democrat occupies the White House. But not only is the United States withdrawing from Asian arrangements – it is doing the same in Europe as well.

The French president is calling the effectiveness of Nato into question – admittedly with criticism from the Germans – but he visits China comporting himself as the representative of Europe. More than that, he feels he has to go there.

Given the rise of China and the power of population – four times that of the US – and the inevitability of China being as large an economy as the US, or in time much larger, the US, in strategic terms, had open to it the option of “consolidating the Atlantic”.

GDP between the US and Europe is worth some $40tn (Europe $18tn and US $19tn) – with China at $12tn, a third of the combined GDP of the Atlantic community. The combined population of the Atlantic is 850 million people.

The only real challenge to such a consolidation was finding a place or a point of accommodation for Russia in the European construct.

But the US is turning its back on that, that balancing construct, that Atlantic opportunity, returning to a “US first” posture – dividing Europe while leaving the bigger game open to Xi Jinping and China.

So where does all this leave Australia?

The answer: in the deep blue sea between two great powers – the US and China.

Despite all the talk about the Indo-Pacific, India and Indian GDP will not rival that of China over the next 30 years.

So Australia will be dealing, or obliged to deal, with but two great powers – the US and China – over the next 30 years.

Currently, India’s GDP sits at $2.1tn. China’s GDP is $12tn – six times that of India.

And, in the next 20 to 30 years, India is not going to catch up.

The related matter is China’s residual growth potential.

In terms of urbanisation, the advanced countries are in the 80% to 90% range. The United States is 82%, Germany 77%, France 80%, Britain 83%, Canada 81% and Australia 90%.

Currently China is at 60% urbanisation. China has at least 15% of its population yet to be accommodated in cities – leading to at least the basis of another 10 to 15 years of solid growth ahead of it.

And as China is the world champion at infrastructure and city-building, no other state will catch them.

Certainly not India.

So in Australia we will be left to deal with the two most muscular economic powers in the world. The United States and China. Just the two of them.

But unfortunately, the debate in Australia has markedly degenerated in respect of the preponderant Asian economic power – China.

Two underlying propositions go to this degeneration.

The unstated one: that somehow the rise of China is illegitimate. That a state dragging 20% of humanity from poverty has ulterior motives and has to be strategically monitored. With no premium being placed on the human condition – 700 million people lifted from abject poverty. An event without precedent in world history.

The second proposition, debated more openly, is that China is not a democracy. Well, God help us if we are limited or slated to deal only with democracies.

That policy would, without doubt, have lost us the second world war – for Europe had no chance of being liberated singularly from the west.

Twenty six million Russians died defeating nazism in the brutal battles across the northern European plain.

I don’t think we cared at the time whether the poor devils in those battles had particular regard to Jeffersonian democratic principles. Survival and a bigger overarching strategy took precedence. It was policy realism and, remarkably, it succeeded.

And let’s not get too starry-eyed about so-called democracies.

Germany was a constitutional democracy coming up to 1914 – those instincts didn’t save the rest of us from the nationalist instincts of the Prussian Junkers. But let me read what one of the coldest of the cold war warriors, Zbigniew Brzezinski, had to say on this topic – with particular reference to China. He said:

“America should tacitly accept the reality of China’s geopolitical pre-eminence on the mainland of Asia, as well as China’s ongoing emergence as the predominant Asian economic power.

“America’s Pacific strategy should not try to contain China but to engage it in a larger hub of cooperative relationships – that by themselves also help shape the US-China relationship.”

And beyond Brzezinski, Henry Kissinger’s remark on the same subject:

“China’s political culture has deep roots and is suffused with its own distinctive philosophical concepts of life, of hierarchy and of authority – a Confucian China with modern characteristics.”

The idea that upon growth and wealth, China would, ipso facto, adopt a multi-party, western-style democratic structure was the idea of people ignorant of China’s long history or the recent history of the Communist party.

When Deng Xiaoping went with the traditionalists following Hu Yaobang’s death and the Tiananmen demonstrations which followed, he abandoned any within-party multi-group or multi-party objectives which his former party secretary and Premier Zhao Ziyang were considering.

The party was returned to its central position in the Chinese command system and hierarchy. China will be – is – the predominant economic power in Asia, as Brzezinski asserted.

That position will not be usurped by a non-Asian power, either economic or military.

How does Australia respond to this?

Is it to help divine and construct a set of arrangements which engages China but which also prevents China from dominating the region?

Or do we seek to insulate or remove ourselves from this enormous shift in world economic power, by allowing our singular focus on the United States and our alliance with it to mark out our international personality?

My concern is what passes for the foreign policy of Australia lacks any sense of strategic realism – and that the whispered word “communism” of old, is now being replaced with the word “China”.

The reason we have ministries and cabinets is that a greater and collective wisdom can be brought to bear on complex topics – and particularly on movements of tectonic importance.

This process is not working in Australia.

The subtleties of foreign policy and the elasticity of diplomacy are being supplanted by the phobias of a group of national security agencies, which are now effectively running the foreign policy of the country.

And the media has been up to its ears in it.

The Sydney Morning Herald has two anti-China stories in today’s paper. It’s the usual “shock and awe” indignation. All fundamentally fired by alarm at the scale and speed of China’s rise.

A few months ago, the Herald and the Age led with a “China Threat” headline. The “threat” turned out to be a beat-up about China supposedly building a full naval base on Vanuatu.

Drops to journalists by the above-mentioned agencies about another “seditious” publication in a particular university or the hijinks of another Chinese entrepreneur is passed off as the evil bearing of the Chinese state.

The Australian media has been recreant in its duty to the public in failing to present a balanced picture of the rise, legitimacy and importance of China, preferring instead to traffic in side plays dressed up with cosmetics of sedition and risk.

Frankly, how the prime minister and the government can permit this state of affairs to obtain is beyond me.

Let me conclude on these points.

Great powers do things to advance their cause and use their strength.

Two years after I was elected to the House of Representatives, the US state department arranged a six-week visit for me to the United States. Meeting political organisations, staying in the homes of American families, meeting academics and key members of Congress and being inculcated with views by the state department, the Pentagon and specialist institutions.

No trifling things like Chinese language publications or pamphlets in Australian universities on that occasion – which the press here perpetually complain of. No, for the Americans, it was straight through the door to get a grip on you. And I was a member of the House of Representatives – a parliamentarian, not a random university student.

But this is the kind of thing muscular states do.

And in the case of the US at the time, it was just disengaging from Vietnam. Twenty years earlier, it had succeeded in removing the elected prime minister of Iran, Mohammad Mosaddegh, to install the Shah, and at the time of my visit was manoeuvring with the CIA to bring on a military coup in Chile to remove its president, Salvador Allende.

Big states are rude and nasty – but that does not mean we can afford not to deal with them – whether it be the United States or China.

It is the national interest and its long run trajectory which should guide our hand and not the nominally pious belchings of “do-gooder” journalists who themselves live on leaks of agencies unfit to divine a national pathway – organisations which lack comprehension as to magnitude or moment or the subtleties and demands of a dynamic international landscape.

Australia still has choices, but it cannot ignore or go on downplaying the importance and import of the largest economic shift in world history – with all its attendant strategic implications.

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