23.09.2019 Author: James ONeill

A Changed Economic World for Australia, But No Change in Policies

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For most of its history, trade and foreign policy did not create dilemmas for the Australian ruling classes. Until the Japanese invasion of Singapore in 1941 Australia regarded its trade and foreign policy interests with the United Kingdom to be synonymous. The rapid collapse of the British Army in Asia shattered that pipe dream. Thereafter, Australia looked almost exclusively to the United States as its guarantor of security.

This was formalized in the Australia, New Zealand, and United States (ANZUS) Treaty signed in 1951. It has remained the linchpin of Australia’s defence posture ever since. That the treaty is actually no more then a promise to “consult” in the event of an attack upon one of the parties did not prevent it from becoming the cornerstone of Australia’s defence policy for the whole of the post World War II period from the date of its signature up to the present.

New Zealand remains nominally a member of that alliance, although the relationship effectively ended when the incoming Labour government in 1984 refused to allow United States warships to visit its ports if they contained nuclear weapons. The Americans refused to admit or deny whether their ships actually carried nuclear weapons (which they almost invariably did) and the military relationship was effectively terminated.

New Zealand remains on good terms with the Americans, but whether the loss of the nominal protection of the United States alliance actually had an effect on New Zealand is a moot point. Since that 1984 decision, New Zealand has strengthened its ties with China, and was the first non-Asian country to join the critically important Chinese initiated Belt and Road Initiative (BRI) in 2017, when it signed a memorandum of understanding during Chinese premier Li Keqiang’s visit to New Zealand in May of that year.

There are now 152 countries and international organisations that have joined the Belt and Road Initiative. Notable absentees include the United States and Australia. Media coverage of the BRI in Australia is notable both for its paucity, and its consistent misrepresentation as some sort of Chinese plot to dominate the world. If that were even remotely correct, it would represent a degree of dominance by one country unparalleled in human history. It is of course nonsense.

One can understand the reluctance of the Americans. The deep-seated belief in the superiority of all things American would make membership of an organisation in which they totally lacked military or political dominance a difficult situation for them.

Even though the United States has long since lost whatever military and political pre-eminence it once enjoyed, as Andrei Martyanov has pointed out in devastating detail (Losing Military Superiority 2018; and The Real Revolution in Military Affairs (2019), that reality is yet to be reflected in modified United States hegemonic behaviour around the world.

More importantly from Australia’s perspective, its whole military strategy is built upon a presumed everlasting and undefeatable alliance with the Americans. Public debate as to a contrary reality is simply non-existent. Alternative analysis, such as that by the insightful and vastly experienced Tony Kevin,(Return to Moscow, 2017) a former Australian diplomat, is simply excluded from the public discourse.

How utterly obsolete and inappropriate Australia’s foreign policy posture is may be seen in a quick glance at the foreign trade figures and related activities.

Forty years ago the United Kingdom was Australia’s biggest trading partner by a significant margin, taking about one quarter of all of Australia’s exports. The latest figures show that the United Kingdom accounted for 1.4%, less than half of Australia’s trade that with New Zealand, which has less than 7% of the United Kingdom’s population.

The United States is Australia’s 5thlargest trading partner,but having only about a one third greater share of Australia’s trade than New Zealand, with 40 times the population. All of the other top 15 trading nations (excluding the Netherlands in 15th place) are from Asia.

A similar dominance of the role of China in Australia’s economy is seen from other significant data: the largest source of foreign students (a hugely important factor in the Australian economy), the largest source of foreign tourists (ditto),  and the third largest source of foreign investment.  When one looks at these basic economic realities, Australia’s foreign policy stance becomes increasingly inexplicable.

The dilemma has become increasingly acute. Australia is the United States’ closest military and political ally, certainly in the Asia-Pacific region, yet it is pursuing policies with China that are the antithesis of Australia’s vital interests. Whether this is from ignorance or from a naïve belief that one can pursue anti-Chinese policies and expect to escape unscathed is uncertain.

One clue as to a possible Chinese reaction to Australia’s inexplicable foreign policy antics can be seen in China’s recent, and by their customary standards, remarkably blunt warnings issued earlier in September when a British warship sailed near the Paracel Islands in the politically and militarily sensitive South China Sea. A Chinese foreign ministry spokeswoman bluntly criticized the British action as “wrong” and more significantly linked China’s displeasure over the British actions with Britain’s hopes for bigger and better trade links with China following its potential exit from the European Union.

It is a lesson that should not be ignored by Australia that regularly takes part in so-called ‘freedom of navigation’ exercises with United States warships in China’s nautical backyard.

That neither the United States nor Australia can point to a single incidence of China impeding the peaceful movement of international shipping in the South China Sea is simply ignored by the Australians and the Americans.

Given the huge importance to China of the South China Sea and its trade links with the rest of the world, China has every interest in ensuring the safe and unimpeded movement of civilian shipping through these waters. Given Australia’s reliance on the Chinese market (as noted above three times as important as the next largest country, Japan,) one might have thought that economic self interest would also be influential in Australian decision-making.

Instead, Australia’s actions, and in particular its adherence to the increasingly unwelcome American military presence in the Asian region, is arguably the antithesis of enlightened self-interest.

The last two decades have you seen enormous changes in the world geopolitical situation. Russian, and to a lesser extent, Chinese military superiority over the west is beyond question. The delusional thinking represented by a top Australian civil servant telling the then chief of US military forces in the Asian region that one of Australia’s “advantages” was that it was “out of the range of Chinese missiles” personified the extent and the degree to which Australian strategic thinking is locked in a world that has long since ceased to exist.

The Chinese spokeswoman’s explicit warning to the United Kingdom quoted earlier over the latter’s inappropriate military behaviour in the South China Sea could have been directed with equal validity to Australia.

There is a long overdue need for Australia to adjust its strategic thinking to reflect the realities of this part of the 21st century. A failure to do so could easily see the Chinese government preferring one of its multiple BRI partners, not to mention other regional initiatives of which Australians seem blissfully unaware, as to the preferred source of the imports. There is ample precedent as China’s recent freezing of agricultural imports from key US States demonstrated.

The central question will be whether Australia recognises that the world has long since ceased to be the world of the 20th century. Such recognition necessitates policy changes that on present indications are notably lacking from Australian perception, let alone their policies.

Given Australia’s huge reliance on the Chinese market, one might have thought that its economic self-interest would be influential in Australian decision-making. Instead, its actions, and in particular its adherence to the unwelcome US military presence in the Asian region, is the antithesis of self-interest.

The last two decades have seen enormous changes in the world geopolitical situation. Russian, and to a lesser extent, Chinese military superiority is beyond question. The delusional thinking represented by a top Australian civil servant telling the then chief of US forces in the Asian region that one of Australia’s “advantages” was that it was “out of the range of Chinese missiles” personifies the degree to which Australian strategic thinking is locked in a world that has long since ceased to exist.

The Chinese spokeswoman’s explicit warning to the United Kingdom over the latter’s inappropriate military behaviour in the South China Sea could have been stated with equal validity to Australia.

There is a long overdue need for Australia to adjust its strategic thinking to reflect the realities of this part of the 21st century. A failure to do so could easily see the Chinese government preferring one of its multiple BRI partners, not to mention other regional initiatives such as the recent huge contracts signed with Iran by Russia and China. Of all of these geopolitically significant developments, Australians seem blissfully unaware, or if it is aware is choosing to ignore their importance and the implications for Australia.

Australians seem similarly unaware of the geopolitical significance of China’s recent freezing of agricultural imports from key US states. The panic with which that was greeted in the affected States is small in comparison with what would happen were a similar ban to be placed on Australian exports to China.

The central question will be whether Australia recognises that the world has long since ceased to be the world of the 20th century. Such a recognition would necessitate policy changes that on present indications are notably lacking from Australian perception, let alone the implications of failing to adjust to the realities of the 21st century.

James O’Neill, an Australian-based Barrister at Law and geopolitical analyst, exclusively for the online magazine “New Eastern Outlook”.


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