Lowy Institute

Diplomacy is a French-German film set in 1944 about Hitler's order that Paris be destroyed before it can be retaken by the Allies. It centres on the intense discussions between the German general who has to give the order and a Swedish diplomat trying to dissuade him.

The New Yorker's David Denby writes:

...the movie presents an argument between civilization and barbarism, between the pleasure principle and the death instinct. But the filmmakers mostly avoid high-flown rhetoric in favor of the intensely practical give-and-take of negotiation. (Director Volker) Schlöndorff, dedicating the movie to the late Richard Holbrooke, makes a case that diplomacy can solve the most intricately knotted problems. As Hemingway wrote, in a slightly different context, it would be pretty to think so.


In this debate, both Thomas Mahnken and Elbridge Colby argue that a secure sea-based second-strike capability might embolden China to pursue a more aggressive foreign policy.

Their arguments are based on an article by Thomas Christensen, which drew the conclusion that China's nuclear strategy is based on a textbook of the PLA's Second Artillery Corps, Science of Second Artillery Campaigns, which calls for blurring the line between conventional and nuclear war.

Christensen's conclusion is problematic for several reasons.

First, the Second Artillery is responsible for implementing China's nuclear strategy, not making it. This is the responsibility of China's top political leadership.

Second, Christensen mistranslates a critical term and misunderstands the cultural context in which the textbook was written. Christensen interprets the terms of 'conventional war under nuclear deterrence', 'double deterrence' and 'nuclear forces as a shield for conventional forces' as if China would combine nuclear and conventional coercive means to achieve its diplomatic objectives. But the original meaning in Chinese is that if an adversary were to use nuclear forces as coercion against China in a conventional conflict, China would need its own nuclear capabilities to deter this potential coercion.

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Rather than emboldening China to pursue a more aggressive foreign policy, a secure nuclear retaliatory capability will give China an equal footing in which to fight a conventional war with the US, where neither side could coerce the other with nuclear weapons. Recall that the direct driving factor of China's nuclear weapons program was the nuclear threats from America during the Korean War and Taiwan Crisis. China has already achieved mutual deterrence with America, and current China-US strategic relations are stable. However, US homeland missile defence has the potential to neutralise China's nuclear deterrent, and China may be forced to build up its nuclear arsenal in order to restore strategic stability.

Thomas Mahnken also mentioned the 'consequential' fact that China apparently, to some extent, co-mingles the deployment and command and control of its nuclear and conventional forces. While sharing his concern on possible escalation, two points have to be made.

First, China does operate both conventional and nuclear ballistic missiles, but China does not deliberately co-locate its conventional and nuclear missiles to confuse its adversary. Conventional and nuclear missiles require different operating sites, so technically it is not easy to co-locate them. Besides, co-locating different missiles to confuse the adversary would undermine the survivability of China's nuclear forces, which is not in China's interest.

Second, every country to some extent, including America, co-mingles the deployment and command and control of its nuclear and conventional forces. For example, America co-mingles the deployment of its SSNs and SSBNs, and US strategic bombers could be used for both conventional and nuclear purposes.

Potential China-US conflict escalation is a focus of current international relations scholarship. China is developing asymmetric means (in American terms, anti-access/area denial capabilities) to counter superior US military forces, and accordingly America is developing the Air-Sea Battle concept to address that. We should make it very clear that it is the interaction between these strategies that would cause escalation, rather than the strategies themselves. In order to understand the mechanism and try to reduce the escalatory risk, we need to analyze both sides' strategies and their interaction.

Simply blaming one side is not constructive and will not help.

Photo courtesy of Flickr user Chuck Hagel.


Gough Whitlam with the author in Manila, 1973.

Gough Whitlam had political courage and a vision for Australia. A forward-looking, pragmatic realist, he sought to reshape Australia's approach to the countries of North and Southeast Asia, the region in which we are forever situated.

It was stimulating to be a senior official in the then Department of Foreign Affairs when Gough became prime minister on 2 December 1972 and the winds of change swept so forcefully through this country. Three days after his election, Whitlam said:

...the change of Government provides a new opportunity for us to reassess a wide range of Australian foreign policies and attitudes...the general direction of my thinking is towards a more independent Australian stance in international affairs, an Australia which will be less militarily orientated and not open to suggestions of racism; an Australia which will enjoy a growing standing as a distinctive, tolerant, co-operative and well regarded nation not only in the Asia Pacific region but in the world at large.

Whitlam certainly did 'reassess a wide range of Australian foreign policies and attitudes'. It was Whitlam who pushed through Australia's transfer of recognition from Taiwan to China and the need to substantially develop relations with Indonesia, our large and growing neighbour of increasing importance.

Whitlam redirected Australian foreign policy away from its established World War II roots based largely on the 'anglosphere'. He also acknowledged that the US and its allies, including Australia, had virtually lost the war against North Vietnam. He completed the withdrawal of Australian forces from the Vietnam War and abolished conscription, which was feeding young Australian troops into a losing conflict.

On East Timor, Whitlam's critics maintain he gave 'the green light' to Suharto for the Indonesian invasion in December 1975. Between 1973 and 1975 I was present at all Whitlam's meetings with Suharto (in Jakarta, Wonosobo, the Dieng Plateau, and in Townsville and Magnetic Island in Queensland). Gough told Suharto he believed the best outcome of the decolonisation of this neglected Portuguese colony would be for it to become part of Indonesia. But he maintained this would need an educational process of some years in East Timor, Portugal and Indonesia, followed by an act of self-determination.

Indonesia knew at the highest levels that Australia would not condone the use of force. Indonesia invaded East Timor on 7 December, almost a month after Gough had ceased to be the prime minister.

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Gough's active and productive involvement in foreign affairs was not without error. I think it was a mistake to confirm that Australia recognised Latvia, Lithuania and Estonia as part of the Soviet Union. And while Gough made some good diplomatic appointments — for example Stephen Fitzgerald to Beijing and Mick Shann to Tokyo — he also made the bad political appointment of Senator Vince Gair to Ireland.

Gough has been criticised for damaging relations with the US. I accompanied Gough on his visit to Washington in 1973. President Nixon and Dr Kissinger were annoyed by the Australian Government's changing attitude to Vietnam and Cambodia. In my view, their criticism was fed largely by highly critical remarks made by other ministers such as Jim Cairns, Clive Cameron and Tom Uren.

Gough was determined to pursue an independent Australian foreign policy within the framework of the alliance with the US. He believed the alliance did not equate to compliance, and that understanding China's policies and role in the region did not equate to supporting it where we had disagreements.

Gough was attuned to the end of Western colonialism and wanted to avoid Australia being seen as the last European colonial power in the region. It was for this reason that he wanted to hasten the movement of Papua New Guinea towards independence, which he did in close co-operation with then Chief Minister Michael Somare. 

His strong support of an Australian republic was reinforced naturally by his dismissal by the Governor General. But he also saw the need for an Australian republic in the wider context of Australia's identity in the world. He saw the final public abandonment of the White Australia policy, which he acknowledged was started by Prime Minister Harold Holt in the late '60s, in the same light.

I had many conversations with Gough Whitlam over a period of 45 years. I recall clearly that he said to me in 1973, 'I have always had a long-standing and deep belief that we must have good relationships with China, Indonesia and Japan as well as with the United States and Great Britain.'

It was a pleasure to travel with him. While he expected well informed, culturally sensitive and carefully evaluated advice from officials, he was receptive to other views. I observed during these trips that many leaders were impressed by Gough's knowledge of their countries, histories and cultures, which he was often able to relate to Australia. This was particularly evident in his eight hours of discussion with Chinese Premier Zhou Enlai. In Manila the head of the Catholic church, Cardinal Sin, was surprised when Gough detected a mistake in a Latin inscription in the Manila Cathedral. After checking, the Cardinal had it changed.

Gough had an excellent and at times self deprecating sense of humour. There are many stories I could quote, but two will have to suffice.

On an official visit to Papua New Guinea we attended a colourful Sing-Sing in Goroka. A local who was very short in stature and wearing little more than bird of paradise feathers on his head and red and white football socks on his feet was standing beside me looking at Gough and me. I realised he wanted some explanation. I had acquired some very rusty Pidgin, and when he next pointed at Gough, I said to the Papua New Guinean, 'Him long fella number one belong Australia.'

An Australian official turned to me. 'Do you realise you have just referred to the Prime Minister as the biggest prick in the country?'

Overhearing this, Gough said to me, 'Thank you comrade. Not all my attributes are known to public servants.'

Another story I recall was when I was travelling with Gough on a somewhat criticised visit he made to 15 countries in four weeks. In The Netherlands, as we waited in an outer office to call on the prime minister, Gough browsed through the London Times. He looked up and said, 'Have you seen this comrade? Guinea-Bissau, Bangladesh and Grenada have just been admitted to the United Nations. They are creating these countries more quickly than I can visit them.'

Gough was a towering figure in the pantheon of regional leaders. I am proud to have served him as a foreign policy adviser and from March 1975 as ambassador to Indonesia.


Forecasts of China's growth always attract interest, even when they are a year old. Larry Summers and Lant Prichett are getting another good run with the paper they published last year (see my earlier post), which analyses emerging-economy growth in general, but of China and India in particular.

There is sophisticated econometrics here, but the key argument is a simple but powerful rule-of-thumb: 'reversion to the mean'. One of the great insights (not just in economics) is that natural phenomena vary around a mean, and when there is an observation well away from it, chances are the following observation will be closer to the average. You might flip a coin and get three 'heads' in a row, but the best forecast for the next toss is still 50:50. Applying this rule-of-thumb to China tells Summers and Pritchett that it's growth rate during the three decades before 2008 is an outlier in the history of global economic growth, and so in the future there is likely to be a lot less, and somewhere around the mean.

Economics has other rules-of-thumb which would support the idea that China's growth will slow. Herb Stein's famous 'law' is that 'unsustainable events don't go on forever'. And of course 'trees don't grow to the sky'.

But a powerful case can be made that reversion to the mean of global economic growth is not the most likely outcome for China, at least any time soon.

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Even the most powerful rules-of-thumb must be used in the right context. Let's start with another one, the rule of convergence. In the right circumstances, poor countries will converge towards the levels of per capita GDP achieved by the mature economies, because the technology to do so already exists. Accumulating the necessary capital and technology has been done before by quite a few countries. If they can do it, why not China and India? In this context, the more relevant mean is the average per capita GDP in mature economies. China and India have a long path of potential convergence –adding capital and technology – before they will run into the technological frontier where the mature economies currently are.

What about another favourite rule-of-thumb: the story of the statistician who drowned while crossing a river with an average depth of only a metre? The moral here is that there is a range of experiences – often widely different – hidden within the average. True, Brazil had more than two decades with no growth at all in per capita income. On the other hand Taiwan, Singapore, South Korea and Hong Kong (and earlier, Japan) had quite long periods of fairly sustained economic growth which have taken them to high levels of per-capital income. What relevance does Brazil's failed growth experience have for China? It's a warning that you can mess things up for a sustained period, but China already knows this from its own experience.

Where does this leave us? It's stale news to say that China can't sustain the double-digit economic growth that occurred in the three decades before 2008. Since then, China's underlying growth has been 7-8%, with an exceptional year in 2010 when there was a gigantic temporary policy stimulus. Proper analysis shouldn't rely too much on the average experience of all emerging economies (many of them clearly quite different from China), but look at the variety of experience in the convergence process, and ask if China's actual circumstances will allow it to mimic the success stories rather than the failures. 

The serious debate is whether China can sustain an underlying rate of economic growth around the current pace or whether there are specific factors, such as financial problems, environment, demographics and rebalancing difficulties, which could take this down to 3%, as Michael Pettis argues. The history of emerging economies tells us that it's easy to mess up and fall off the convergence path. But China has done pretty well for the past three decades, and that experience is relevant to the forecast.

To look at these specifics is more useful than thinking in terms of 'reversion to the global mean'. If China achieves even 5% growth until 2050, it will reach OECD average per capita GDP. That's amazing, but not unrealistic.

Photo courtesy of Flickr user Richard Atkinson.


As commentators rightly eulogise Gough Whitlam's foreign policy achievements, most of the attention has focused on his grand outreach to communist China and the independence of Papua New Guinea. These two acts were conspicuous hallmarks of Whitlam's game-changing diplomatic moments.

A 1979 Peter Nicholson cartoon from The Australian on then Foreign Minister Andrew Peacock's attitude to Indonesia's treatment of East Timor.

However, in terms of hard-nosed negotiating and high stakes versus high ideals, China and PNG were relatively easy accomplishments. Whitlam was pushing on an open door in both China and PNG, both of whom stood to gain from his gestures. Measured by degree of difficulty and complexity of task, Whitlam's engagement with Suharto's Indonesia is an even greater testament to a visionary statesman who put Australia's national interests above all else, including domestic politics.

The reason Australian governments today instinctively comprehend Indonesia's overriding importance to our national interests can be sheeted home mainly to Gough Whitlam.

But Whitlam was seized by the importance of Asia to Australia even before he entered politics, witnessing the decline of colonial power and influence in our region through the eyes of a World War II airman. Although Whitlam's handling of relations with Indonesia has been criticised by some, mainly over the issue of Portuguese Timor's independence, this stems from writing history retrospectively. The actions of leaders and decision-makers cannot be evaluated through a contemporary lens. Whitlam's dealings with Suharto and his involvement in the events which led to the Indonesian invasion of East Timor may only be fairly assessed in context.

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A typical 30-something Australian in 1975 had grown up against a backdrop of World War II, the Korean War, the Malayan Emergency, an undeclared conflict in Borneo, and the Vietnam War. In 1975, the Cold War was raging, with both Saigon and Phnom Penh falling to communist forces in April of that year. Almost all of Whitlam's senior cabinet ministers had direct personal experience of world war.

War was a clear and present reality of the international system, while the culture of violence was far more acceptable than it is today. To some extent this explains how a 1965 pogrom, where between 500,000 and one million Indonesians were killed, could pass largely unremarked by the outside world.

By contrast, a 30-something Australian in 2014 has never witnessed open warfare in our region. Despite territorial disputes in North Asia and contested waters in Southeast Asia, it is almost unthinkable that miscalculation might convert these flashpoints into armed conflict. We are products of our Weltanschauung ('worldview'). So was our 21st prime minister. Any criticism of his handling of East Timor's self-determination needs to take this into account.

While Indonesian President Suharto had met Prime Minister William McMahon in 1972, relations between Australia and Indonesia had laboured under the shadow of Konfrontasi until Whitlam's visit to Jakarta in 1973. 

Suharto dealt with nine Australian prime ministers throughout his 32-year presidency. Notwithstanding the warmth of his relationship with Paul Keating, Suharto first showed genuine respect and admiration for an Australian prime minister in 1974. In one of the more bizarre vignettes of Australian diplomacy, Suharto took Whitlam to a secret cave in the Dieng Plateau, near his Yogyakarta home. A syncretic Muslim, Suharto often retreated there, alone or with spiritual advisers, to receive the mystic wisdom that helped him guide the Indonesian ship of state. Whitlam, and by extension Australia, had been drawn closer inside Suharto's confidences. 

It was also during this visit that Whitlam expressed to Suharto his preference that Portuguese Timor become integrated into or associated with Indonesia, though in a way that would be acceptable to the Australian people. There is no doubt that Whitlam's clear preference was for the peaceful political integration of East Timor into Indonesia after it was decolonised. There is equally little doubt that Whitlam viewed Australia's paramount interest as maintaining good relations with Indonesia – he said so twice during a meeting with Suharto in Townsville in 1975. Given the unlikelihood that there would ever be the 'measured and deliberate process of decolonisation in Portuguese Timor' described in Australian official policy, Australia's national interests would always trump the aspirations of some East Timorese.

Armchair strategists have accused Whitlam of giving Suharto a sly wink during their meetings, virtually assuring him of Australia's acquiescence in the event of East Timor's annexation by force. The written record does not support this. But if it did, there were understandable contemporary factors at play.

Early indications were that Fretilin would kill more East Timorese than Indonesia ever might. The millions who died during Angola's civil war, which also followed Portugal's precipitous withdrawal, are a salutary reminder of this very real possibility (not to mention the violent seizure of power by Frelimo in Mozambique). There is no doubt that the violent aspects of Fretilin were whitewashed by the mainstream Australian press after 1975. Some theories attribute this overly sympathetic treatment of Fretilin to squaring up the ledger with Indonesia for the Balibo Five killings. 

In addition to the threat of chaos under Fretilin, the active support of communist regimes around Asia was an article of Chinese Communist Party policy in 1975. At the height of the Cold War, communist rule in Dili was as inimical to Australia's interests as it was intolerable to Jakarta.  

If Whitlam, knowingly or unknowingly, reassured Suharto over the invasion of East Timor, he was hardly alone among world leaders. Gerald Ford and Henry Kissinger had met with Suharto in Jakarta literally hours before Operation Seroja (the occupation of Dili by force) was launched. It is easy to imagine Suharto receiving two nods and two winks from the US President and his Secretary of State. It is hard to imagine the Americans did not inform Australian diplomats of what had transpired.

Neither Whitlam nor Ford, perhaps not even Suharto, had any way of predicting how stubborn Falantil's resistance would be, or how brutally oppressive Indonesia would become as a colonising power.

Whitlam, for one, had other preoccupations from Remembrance Day 1975 until Indonesia's invasion of East Timor on 7 December. A caretaker government was holding the reins in Canberra. The nation's constitutional crisis and an acrimonious election campaign eclipsed concerns over the Indonesian military operation unfolding one hour's flying time from Darwin.

For all the hurly burly of domestic politics in early December 1975, caretaker Prime Minister Malcolm Fraser had a message passed to Suharto through Australia's Ambassador in Indonesia Richard Woolcott, assuring Suharto that, should Fraser become prime minister, he hoped for the same kind of personal relationship Whitlam enjoyed with the Indonesian President. De jure recognition of Indonesian dominion over East Timor was given by the Fraser Government several years after the 1975 invasion (see Nicholson cartoon above from 1979).

Whitlam had set the bar for Australia-Indonesia relations. Fraser and all subsequent Australian leaders have understood the national self-interest inherent in the current Government's 'Jakarta not Geneva' maxim.

In his time, Suharto remained the most reliable friend Australia had in the region, despite the best efforts of some to derail the relationship. For his part, Whitlam always remained tight-lipped on any mystic wisdom he may have imparted to Suharto in a Javanese cave in 1974. 

Image courtesy of nicholsoncartoons.com.au

  • China's top diplomat, Yang Jiechi, visited Vietnam in yet another sign of improving ties. Carl Thayer looked at the establishment of the  China-Vietnam defence hotline and asked what's next.
  • The Institute for Security and Development Policy looked at Slavery and Human Trafficking in the Greater Mekong.
  • Meanwhile, there are fears of an emerging Cambodia-Thai organ trafficking ring in kidneys.
  • Burmese cats are returning from the brink of extinction in Myanmar through a dedicated repatriation program.
  • Almost two months after al Qaeda announced its intent to carry out operations in Myanmar,  Naypyidaw unveiled a new CT unit.
  • Malaysia joined 20 nations (including Singapore, Thailand and the Philippines) to set up the China-led Asia Infrastructure Investment Bank. An Interpreter post recently argued why Australia should join.
  • In what is often a forgotten point of view, an International Crisis Group report on the situation in Rakhine state in Myanmar noted that:
    Rakhine Buddhists have tended to be cast as violent extremists, which ignores the diversity of opinions that exists and the fact that they themselves are a long-oppressed minority. They are concerned that their culture is under threat and that they could soon become a minority in their state. These fears, whether well-founded or not, need to be acknowledged if solutions are to be developed.
  • Over at the Institute of Security and International Studies in Bangkok, a look at why reconciliation should spearhead reform in post-coup Thailand.
  • And finally, Vietnamese are the most optimistic country when it comes to views of their children's future financial well-being, according to this Pew Research:


This VICE News video of the 2014 RIMPAC exercise (the largest international maritime exercise in the world), held in June this year, is worth 14 minutes of your time.

It includes (from 8:24) a tour of the Chinese hospital ship Peace Ark, but focuses mainly on the US Marine Corps' attempt to return to amphibious warfare after more than a decade in Iraq and Afghanistan. On this site we regularly debate the status of the pivot/rebalance. Maybe it has lost momentum at the political level, but it clearly figures prominently in US Marine Corps talking points.


Turkey appeared to take a step closer toward membership in the coalition against the Islamic State on 20 October. It agreed to allow Iraqi Kurdish peshmerga fighters and heavy weapons to transit through its territory to defend the Syrian Kurdish city of Kobane, located less than a mile from the Turkish border. Up to 200 peshmerga will arrive in the area over the next week, with some reports suggesting they will only provide heavy artillery support from outside the city.

US Secretary of State Kerry with Turkish Foreign Minister Cavusoglu, September 2014. 

The US has been under pressure to take action on Kobane because the city's border location has enabled the international media to cover the fighting there relatively closely, and because the local population is firmly against ISIS and has been putting up valiant resistance. While some military analysts have noted that Kobane isn't as great a strategic prize as Iraqi locations like Mosul, failure in Kobane would deal a heavy blow to both the tactical assumptions of the air campaign and to the Coalition's global public credibility.

Over the last week the US initiated a substantial air campaign followed by weapons and ammunition drops into the city. This Coalition military effort has made solid progress in driving ISIS fighters back to a small section of the city. ISIS rallied somewhat over the weekend but was unsuccessful in its efforts to cut Kobane off from the border crossing.

So, Coalition credibility restored? Somewhat.

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The military action comes after weeks of speculation that Kobane might be left to its fate. As Foreign Policy's Kate Brannen notes, the delay, coupled with the fact that the US has potentially expended a lot of its leverage with Turkey over this issue, means the US is making a huge bet on Kobane. Time will tell if it pays off. 

On the surface it seems as if Turkey has acceded to US requests, but Turkey remains an ambivalent partner in the fight against ISIS. It sent a lower-level official than the other Coalition members to a meeting at Andrews Air Force Base last week. It allows the US to conduct air surveillance operations out of its Turkish bases, but full combat missions are still ruled out. In an article in The Guardian, Turkish Foreign Minister Mevlüt Çavuşoğlu expressed dissatisfaction with the Coalition's 'Iraq first' strategy and its lack of clarity on the endgame in Syria. President Erdogan has been critical of the fact that at least one US arms drop has fallen into the hands of ISIS militants, claiming that he personally warned Obama about this possibility.

The Kobane issue and the delayed Coalition action there reflect Turkey's sensitivities about the status of the Kurds in light of its 30-year struggle with its own sizeable Kurdish minority. Although Ankara has been engaged in a peace process with the leaders of the Kurdish PKK, it still designates the group as a terrorist organisation, as does the US, NATO and the EU. The EU's designation has been challenged by a number of its own member states, however, and a range of other important players like Russia have refused to brand the PKK terrorists. 

Ankara therefore has a significant stake in shaping how the Kurds in Syria and Turkey are perceived globally. Whereas Turkey has (perhaps surprisingly) had fairly good relations with Iraqi Kurdistan, the semi-autonomous region from which the peshmerga hail, it has been vexed by the growing autonomy of Syria's Kurds amid that country's descent into chaos. Stronger links between Syria's Kurds and the PKK would potentially place Turkey's internal security in jeopardy, as would the possibility of further Coalition moves to strengthen Syria's Kurds militarily or politically. 

We can only speculate as to the reasons for Turkey's concessions on Kobane. Some commentators have cited Turkey's increasing isolation and US pressure as key factors. Perhaps a more specific quid pro quo (either with the US or the main Syrian Kurdish Party, the PYD) has been hammered out. Perhaps Turkey has calculated that it cannot afford to sit this one out and risk further Kurdish unrest inside Turkey, a further influx of refugees and international opprobrium. Perhaps Turkey regards strengthening the peshmerga and the Iraqi Kurds as one move in a long game to strengthen the (Iraqi) form of Kurdish nationalism it prefers.

By staying engaged with the Coalition (but only just), shrouding its true motives and continuing to elicit US attention to its concerns, Turkey is for the time being maximising its influence and room for maneuver. 

Photo courtesy of Flickr user U.S. Department of State.

  • Civil society groups walked out of the World Bank's official safeguards consultation over concern about a proposed reduction in the Bank's social and environmental standards.
  • Oxfam has called for the Australian Government to enact the Extractive Industries Transparency Initiative.
  • 24 October was World Polio Day. Check out this interactive map to see global hot spots.
  • Related, this story from Pakistan, where terrorist forces aim to stop polio vaccinations. Pakistan is one of only three countries, along with Afghanistan and Nigeria, where polio is still endemic.
  • 24 October was also  UN Day. Read this research paper from UN watcher and New York University academic Richard Gowan: Peacekeeping at the precipice: Is everything going wrong for the UN?
  • China's use of coal falls for the first time this century; but will this  change its negotiating position at UN climate talks later this year? 
  • Lastly, a podcast from Freakonomics Radio called Fixing the world: Bang for buck edition. Economists and intellectuals decide how to spend the world's combined aid budget.

I was in Fiji last week to get an update on Chinese assistance to the country, as part of a larger project I'm doing mapping Chinese aid activities in the Pacific islands, to be launched in early 2015.

Navua Hospital, built with Chinese aid assistance, Fiji. (Author photo)

Fiji is becoming popular again in the post-election environment.

Chinese President Xi Jinping is scheduled to visit Fiji after his trip to Australia for the G20 next month (we should expect some announcements, as is common in Chinese high-level visits, though apparently nothing too big in terms of aid is on the cards). Australian Foreign Minister Julie Bishop is dropping by this week, and the Asian Development Bank, World Bank and Japanese are all developing new programs (with new loan financing) for Fiji. Prime Minister Bainimarama will attend the Seventh Pacific Islands Leaders Meeting in Japan next year,  his first time in eight years.

With all that international attention, suddenly Chinese assistance might not look so appealing. My trip revealed two main insights about the challenges confronting Chinese aid in Fiji.

1. Chinese aid is not as quick or efficient as assumed

It is frequently said that developing-country leaders like Chinese aid because it is quick and efficient. I've said this myself too. While this is sometimes the case, it is actually far from a universal truth.

I was surprised to see a number of projects that had been agreed to when I was last in Fiji, five years ago, still underway or only recently completed.

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Two low-cost housing projects in Suva are funded through China Eximbank loans that were signed in 2010. But these loans came from the regional concessional loan package announced back in April 2006 at the 1st China-Pacific Island Countries Economic Development and Cooperation Forum in Nadi. Construction started in early 2011 and the projects have only just been completed. In fact the project was halted due to a dispute over building standards and subsequent cost blowout. It took a plea by Prime Minister Bainimarama during a visit to Beijing, and the Chinese Embassy stepping in with some grant funding, to resolve the dispute and get the project completed.

Similarly, the Somosomo mini-hydro project on the island of Taveuni was originally discussed with China in 2005. A Chinese team did a survey in 2010. The Chinese contractor, Hunan Engineering Construction Group, signed the contract in September 2013 and started work in July this year. The grant-funded dam is scheduled for completion in September 2015. This is some ten years after the project was first proposed and five years after the first Chinese site survey.

The efficiency of Chinese assistance is usually used as an explanatory factor by developing countries as to why they sometimes take on Chinese aid over 'traditional donor' support, which can be encumbered with complicated processes. But clearly it isn't just a matter of China pledging a loan and a project being built a couple of years later.

2. It all comes down to design

We've heard numerous stories of inappropriate or unsustainable Chinese aid projects. Time and again it seems problems stem from issues around design. A Chinese company will implement a project according to a design usually done by a separate Chinese company. As the Chinese aid system currently stands, it is difficult to negotiate changes to the design down the track.

The new Navua hospital (pictured above) is a case in point. According to the Chinese, the design for the hospital was approved by the Fijian Government. Chinese aid is managed through the Prime Minister's Office (PMO) in Fiji and it appears the Ministry of Health had no involvement at the design stage.

As a result, when the hospital was handed over to Fiji in July, health officials discovered a number of design features that weren't ideal. Toilets are too small and frequently get blocked, tiles on the kitchen floor are too slippery, basins are too shallow to clean medical instruments, and telephone connections are in strange places. The ramps connecting the two wards are steeper than the usual standard. This has led to the hospital manager instructing staff not to transfer patients on trolleys. Instead they must use an ambulance to move people between wards less than 20m apart.

The Health Ministry is happy with the workmanship and professionalism of the Chinese contractor, Yanjian Group. But it will now have to resolve some of these design issues at its own cost. This might have been avoided had the PMO involved them.

It can be a challenge working within the Chinese aid system. As I've outlined previously, much depends on strong government processes around project negotiation and implementation. In Fiji's case, it seems there could be better involvement of line ministries, particularly at the design stage.

But it is important to note that despite these challenges, Chinese assistance in Fiji is supporting some priority areas such as health care, rural infrastructure and housing. And I drove along some very smooth Chinese-built roads. Going forward, the Chinese embassy is keen to use its grant aid to support projects that have a positive impact on the people of Fiji, including in climate change and renewable energy. 

The Fiji Government hasn't yet put in its wish list for projects to be funded through the new US$1 billion regional concessional loan facility announced at last year's 2nd China-Pacific Island Countries Economic Development and Cooperation Forum in Guangzhou. It is smartly waiting to see what's on offer from the other agencies that are now re-engaging. The Asian Development Bank and World Bank loans have lower interest rates than China, and allow for local contractors and consultants.

The PMO needs to be more proactive with project design, insist documents are provided in English and consult with its own experts before signing contracts. This will help ensure projects built with Chinese aid are appropriate and therefore well received. It is a good sign that the Chinese embassy has recognised the problems with its project design processes.

Given some of the challenges with Chinese projects and the very tied nature of its aid program, coupled with the fact that more options are now available, we may see the newly-elected Fijian Government prioritise loan assistance from other partners ahead of China in the next year.


President Jokowi announced his first Cabinet on Sunday evening on the grounds of the State Palace, six days after his inauguration and four days after he scrubbed carefully orchestrated plans to unveil his selection of ministers at Jakarta's port. The initial announcement was delayed after Jokowi took the unusual step of submitting the names of his ministerial selections to Indonesia's Corruption Eradication Commission (KPK) and anti-money laundering agency for vetting. The agencies reported that eight candidates were suspected of involvement in criminal cases, forcing Jokowi to replace them and reconfigure his selections.

President Joko Widodo introduces newly appointed State Secretary Pratikno.

The delay was also extended by intense negotiations over posts between Jokowi and opposition parties, and between Jokowi and factions within his own party. The final list does not include any opposition figures, indicating that the standoff in the Indonesian legislature between Jokowi's minority Great Indonesia Coalition and the opposition Red-and-White Coalition is likely to continue. The lineup does, however, include a number of senior figures from Jokowi's Indonesian Democratic Party of Struggle, an indication that the influence of party chair and former president Megawati Sukarnoputri remains particularly strong, even now that Jokowi has taken office.

Beyond that, I would suggest four questions to better understand the implications of the announcement.

First, who has Jokowi chosen to shepherd his signature policy initiatives, like maritime connectivity, expanded healthcare, and increased spending on infrastructure? For these posts, Jokowi has chosen little-known technocrats for ministries including maritime affairs, health, and transport. These businessmen and bureaucrats are said to have been personally chosen by Jokowi for their managerial abilities, to further those policies he cares the most about. 

Second, who is filling 'wet' positions (those known to be a source of political patronage) like energy, state-owned enterprises, and agriculture, and how does that square with Jokowi's campaign for cleaner government?

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Jokowi is spreading the patronage around among his coalition, giving the Ministry of State-Owned Enterprises to former trade and industry minister Rini Soemarno, a Megawati confidante; the Ministry of Agriculture went to a young businessman and acolyte of Vice President Jusuf Kalla. On the other hand, the Ministry of Energy and Natural Resources, the wettest of them all, went to a former state oil company official who was reportedly forced out in retaliation for his efforts to clean it up.  There are signs both of principle and compromise.

Third, who has taken the key economic portfolios? Here, Jokowi has continued the practice of appointing a trusted technocrat to the key finance portfolio while offering political supporters microeconomic portfolios like trade and industry. It is a dichotomy that soothes markets watching macroeconomic indicators for signs of weakness, but frustrates foreign investors who are made to navigate a complex maze of protectionist legislation and regulation.

Finally, who is filling positions where Jokowi is likely to take less of an interest, like foreign affairs and defence? These ministers are likely to have outsized influence, as Jokowi delegates to them in areas where he's shown less interest and feels less comfortable.

Retno Marsudi will become Indonesia's first female foreign minister, but is otherwise a fairly orthodox selection. Like former foreign minister Marty Natalegawa before her, she is a  graduate of the twelfth class of Indonesia's foreign ministry, a group of diplomats in their early 50s who were mentored by Hassan Wirajuda, Indonesia's foreign minister from 2001 to 2009. As a career diplomat, Retno is likely continue to pursue a foreign policy that emphasises non-aligned rhetoric while skewing slightly toward the West, managing the tension inherent in Indonesia's 'independent and active' foreign policy as most of her predecessors have.

Ryamizard Ryacudu, Jokowi's new defence minister, is more problematic. As Army chief of staff, he took a hardline stance on separatist movements, which made it more difficult to achieve the negotiated solution that ultimately ended the insurgency in Aceh. Human rights activists have noted that he defended Army human rights abuses during this time. He has strained relations with neighbouring countries like Australia and Singapore, and with  the US. Ryamizard is a Megawati loyalist whom she chose in the last weeks of her presidential term to become head of the Indonesian Armed Forces. The appointment was quashed by Megawati's successor, Susilo Bambang Yudhoyono, who had quarrelled with Ryamizard over policy towards Aceh.

Notably absent from the roster is Luhut Panjaitan, a retired general and minister who remains the closest advisor to Jokowi with a military background. During the transition, Luhut seemed likely to become coordinating minister for politics, law, and security, a key position in liaising with foreign militaries and security services. Instead, a retired Navy chief of staff, Tedjo Edhy Purdijatno, will fill the role. Naming an admiral to the role is likely a nod in the direction of Jokowi's maritime emphasis, but is not unprecedented; under SBY the position was held by an admiral for five years.

Foreign Minister Retno is said to have less experience and clout with the military than colleagues in the diplomatic corps such as outgoing deputy foreign minister Dino Patti Djalal. Her appointment thus raises questions as to whether the foreign ministry can prevail when disagreements emerge between it and the military, as exists on the question of territorial disputes in the South China Sea. In these situations, the military's voice might could become louder, leading to less clarity about specific Indonesian policies, as I have argued in a Lowy Institute analysis released earlier this month.

Photo courtesy of Reuters/Darren Whiteside.


Bringing together the best longer Interpreter articles you were too busy to read this week.

Former Prime Minister of Australia Gough Whitlam passed away this week at the age of 98. Sam Roggeveen interviewed Nonresident Fellow Murry McLean on the legacy of Whitlam's foreign policy for Australia: 

I talked with Murray McLean this morning, and as you will hear, he argues that Whitlam established the basis for a fully independent Australian foreign policy, setting relations with Asia on a truly equal basis while also tenaciously defending the ANZUS alliance. McLean provides some wonderful historical detail from the early 1970s, when not only Australia but the US, Canada and others were re-thinking their relations with China. When we chatted after the interview, he recommended this 2012 essay by Stephen FitzGerald, Australia's first ambassador to Beijing, on Whitlam's historic 1971 visit.

Historian James Curran wrote on the tumultuous relationship between Whitlam and Nixon and its effect on the Australia-US alliance: 

But it was the speed and direction of the Australian moves which put Whitlam on a collision course with the Nixon Administration. At a time when Washington was trying to rebalance its regional policy following the subordination of other concerns to the fighting in Vietnam, Labor's policy prescription in Asia was bound to throw relations into a tailspin. Against Whitlam's impatience for Australia to be accepted in Asia in a new way and his eagerness to embrace a world less constrained by rigid bipolarity, American officials maintained the need for incremental change, with one eye on the fragility of détente and the other on the persistence of great-power politics.

The new Indonesian President, Joko Widodo, was inaugurated in Jakarta this week. Lowy Institute Research Fellow and Indonesia specialist Aaron Connelly had this to say on Jokowi's attendance at the G20 Summit: 

It would be a mistake for Jokowi to skip the G20.

It is an important opportunity for the new president to engage in debates in Brisbane over proposed measures to boost global economic growth and fund infrastructure projects. Given the the importance of commodity exports to the Indonesian economy and the dire need for improved infrastructure throughout the archipelago, the outcome of those debates could be key to Jokowi's ability to deliver growth and prosperity at home, despite significant macroeconomic and political headwinds.

Rory Medcalf reflected on Jokowi's inaugural address:

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The inauguration speech of Indonesia's 7th President, Joko 'Jokowi' Widodo, was powerful despite its brevity, or perhaps because of it. It contained a striking blend of personal humility, national pride and an ethos of unremitting work. But as an analyst of Asian geopolitics, I was most struck by its message about Indonesia's rightful aspirations as a seagoing Indo-Pacific power; an archipelagic country connecting two oceans.

And Catriona Croft-Cusworth attended Jokowi's inaugural parade in Jakarta:

The peaceful celebrations are a sign of acceptance by supporters of losing presidential candidate Prabowo Subianto, and, hopefully, a sign of a peaceful and constructive term ahead for Jokowi as president. However, with only a minority in the House of Representatives against Prabowo's bulky coalition, Jokowi will have to do more than win the hearts of the people to succeed in making significant changes as president

In a detailed and important post, Senator John Faulkner wrote on the need for a wide-ranging review of Australian intelligence:

Enhanced power requires enhanced accountability. The greater the potential for that power to infringe on individual liberties, the greater the need for accountability in the exercise of that power. This is not to suggest that our security and intelligence agencies are acting perniciously or misusing their powers. But in the relatively recent past those powers were used inappropriately, with a consequent erosion of public trust. We must be conscious that enhancements we agree to now may lend themselves to future misuse in the absence of appropriate and effective accountability mechanisms.

Julian Snelder on the contradictions in Hong Kong's future with China:

Francis Fukuyama addresses this paradox in his latest book, Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy. He says that a well-functioning society needs three building blocks: a strong state, rule of law and public accountability, delivered in that sequence. Hong Kong's protesters are demanding the third element, while China itself works on the second, so perhaps the tension between them is understandable. China's state media has praised Fukuyama's book as a vindication of its cautious, paternalistic approach. Fukuyama himself has wondered where China is heading. He argues that China, which built a modern state two millenia before Europe, still lacks an impersonal, impartial legal system.

The Lowy Institute's East Asia Program Director Merriden Varrall took a look at the Chinese Communist Party's Fourth Plenum:

When thinking about China, even when the language may sound familiar (and in the case of 'rule of law', reassuring), the underlying concepts are often completely different. The ultimate implications are not going to be what we expect if we take the terminology at face value. While there will very likely be some important and positive developments at this Fourth Plenum, we should not expect to see Chinese judges' decision-making suddenly de-linked from Party considerations. 'Comprehensively advancing the rule of law' does not equate to a separation of powers and a rollback of the Party-state's role in legal affairs. Rather, it should be understood as a sophisticated development in how the Party manages governance and control.

Mike Callaghan argued that the World Trade Organisation is in trouble

The WTO needs a major shake-up. But this will only come if the crisis confronting the global trading system is acknowledged. On reflection, it is probably unfortunate that the Bali deal was reached. The WTO trade ministers meeting last December was widely seen as make-or-break for the WTO. If there had been no agreement, there would have been a crisis, and the need for changes to the way the WTO operates would probably have been confronted. Now the WTO is in a crisis, but this is not getting sufficient recognition.

In a new Lowy Analysis, Dirk van der Kley takes a detailed look at China's foreign policy in Afghanistan:

Beijing has also vastly increased its regional diplomatic footprint. China hopes to achieve a consensus on the Afghan issue among surrounding countries because they are at the front line of containing any new Afghan instability. What this consensus may look like is vague, but could include increasing regional cooperation on issues such as anti-narcotics and counter-terrorism, with practical measures such as intelligence sharing, joint military exercises and judicial or law-enforcement training (some of these already happen bilaterally or through the Shanghai Cooperation Organization).

The battle for the Syrian city of Kobane is quickly becoming symbolic, said Rodger Shanahan:

Kobane's value though, lies in what it represents more than what it is. One of the principles of war that applies to insurgent groups as much as it does to conventional armies is the maintenance of momentum. If you have momentum, then you force your opposition to make reactive decisions under pressure that often turn out to be sub-optimal. You can also create fear and panic in the opposition, as ISIS showed in its attack on Mosul and subsequent drive south which resulted in the collapse of several Iraqi army divisions. ISIS has also relied on battlefield victories to replenish its ammunition stocks and gain military equipment and recruits.

Photo courtesy of Flickr user Jack Amick.


'The umbrella revolution won't give Hong Kong democracy, protesters should stop calling for it' says Eric X Li, a vocal advocate of the CCP's authoritarian model. 'This is about inequality, not politics, so democracy can't fix the problem.'

Actually, if Hong Kong did have universal suffrage, it is quite conceivable its citizens would elect a populist leader running on redistributive policies. 'Tyranny of the majority' is precisely what Hong Kong's elites fear. Chief Executive CY Leung crassly told foreign reporters this week that allowing public nominations for his post 'would give too much power to poor and working-class residents.' Inequality is a major source of unhappiness and property is the root cause of Hong Kong's inequality. A progressive populist could raise Hong Kong's tax rate and flood the real estate market with land and free housing.

Li is wrong that universal suffrage couldn't bring that about.

But what about his broader arguments? Eric Li praises China's government as responsive, meritocratic and efficient, especially in delivering economic development. He further argues that it is representative because it is politically, and not just economically, legitimate and practices a consultative, 'consensual' style of executive deliberation. China has the system that's right for its present needs, Li argues, and surveys of citizen satisfaction would concur. By contrast, Li can fluently cite a dismal litany of failed electoral democracies.

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Francis Fukuyama addresses this paradox in his latest book, Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy. He says that a well-functioning society needs three building blocks: a strong state, rule of law and public accountability, delivered in that sequence. Hong Kong's protesters are demanding the third element, while China itself works on the second, so perhaps the tension between them is understandable. China's state media has praised Fukuyama's book as a vindication of its cautious, paternalistic approach. Fukuyama himself has wondered where China is heading. He argues that China, which built a modern state two millenia before Europe, still lacks an impersonal, impartial legal system.

The Communist Party's Fourth Plenum this week focused on 'governance according to law.' The Plenum may disappoint foreign observers, but Xi Jinping rightly wants 'power confined within a cage' of regulation, meaning a continued draconian campaign on corruption, less local interference in courts, and hopefully a lower caseload for judges and improved transparency in sentencing. Xi Jinping's political actions have been strongly centralising, and it is clear Communist Party rule will be strengthened. Officials offer a circular justification: the Party wrote the law, so there is no conflict between its authority and the proper application of justice. 

Hu Shuli writes this week that China's original 1979 'rule of law' was a traumatised reaction to the Cultural Revolution's 'rule of the people.' Today the Party's power over society is immensely greater. She courageously opines that now 'the rule of law is fundamentally incompatible with an authoritarian system.' But a true 'separation of powers' is not going to happen; in fact the term is an official taboo. Even 'constitutionalism' is seen as a seditious attack on 'the people's democratic dictatorship'.

The country has no shortage of laws; it's the selective prosecution of them that's the problem. Foreign legal scholars like Jerome Cohen and Carl Minzner have expertly documented an arbitrary 'rule by law' culture that has undermined societal trust by created an overweening, unanswerable bureaucracy.

Which brings us back to the problem of Hong Kong, the well-functioning civil society without a vote. The students on the street are fighting for freedoms they already possess, as much as the right to new ones. They mistrust the Party's monopoly over all forms of power, including the judiciary and the media, and there is fear of a regression of public accountability.

It is worth considering that we are already almost 20 years into the 50-year 'One Country Two Systems' framework. We cannot imagine how China will look in 2047; yet on current trends its legal system will still be vastly different than Hong Kong's. Probably in another decade, the reality of that impending collision will start to sink in. History may record Occupy Central as the first tremor of concern.

Photo courtesy of Flickr user Pasu Au Yeung.


China has just launched another spacecraft to the moon. The flight will carry a small capsule around the far side of the moon before returning to earth. If all goes well, the capsule will parachute to a soft landing on the flat steppes of Inner Mongolia, where China usually lands its space capsules.

Officially, this flight is a test of a capsule system to be used in a future robot sample-return mission, which should launch in a few years. Unofficially, the mission serves as another reminder of China's long-term goals of sending astronauts to the moon. The capsule is a scale replica of the crew descent module used on China's Shenzhou astronaut-carrying spacecraft. (Some analysts still refuse to believe China wants to place footprints on the moon. It's another delicious example of politics trumping reason.)

Publicity for this mission has been unusually tight, even by the typically guarded standards of the Chinese space program. This seems to be a trend, judging by recent missions. Perhaps China wants to advance further without tipping off America to its growing achievements. 

Photo by Flickr user Jose Maria Cuellar.