Lowy Institute

John Garnaut, writing for Fairfax yesterday, says I'm wrong to argue that Prime Minister Abbott and Foreign Minister Bishop do not understand the nature of China's challenge to the Asian regional order. He says Bishop's remarks, in the fine interview John did with her last week*, show that she understands perfectly well that China is a threat to the status quo.

But that is not my point. I agree that Bishop (and Abbott) can see that China is posing a challenge. What they do not understand, I think, is how determined China is to pursue that challenge in the face of opposition. If they did understand that, they would realise that simply pushing back, as Abe wants us to do, will not persuade China to back off.

Instead it simply leads China to push back again even harder, which escalates strategic rivalry and increases the risk of war. I do not believe Abbott and Bishop want that, so I infer that they do not see that this is the where their policy leads, because they do not understand how determined China really is.

Of course this is not good news. Like almost everyone else, I would be much happier if China was willing to live with the old order which has served us all so well. But that is not the world we live in, because China is now too ambitious to accept the status quo, and too strong to ignore. We do not have to give it everything it wants, but we do need to try to do some kind of deal if we possibly can. We should all be exploring how such a deal could work.

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Instead we are worrying about what the Global Times says. I don't think that this matters much. It would be quite wrong to say that Bishop's remarks were unwise just because they were criticised in Beijing, and it would equally be wrong to judge they were sensible and helpful just because Beijing doesn't like them.

In fact the tone of Australia's bilateral relations with any of the great powers of Northeast Asia is not really the key issue here. What matters most to us is the quality of their relationships with one another. If America, China and Japan can all get on well, then we in Australia can easily manage our relations with all of them. If they get on badly, then we are in deep trouble.

That means the key test of Australian policy is not whether they like it in Washington, Tokyo or Beijing. It is whether we contribute to stoking animosity between them, or help to damp it down.

That's why last week's diplomacy with Japan was bad policy. Not because it irritated Beijing, but because it helped escalate strategic rivalry between China and Japan, and pushed Asia closer to a Cold-War style division into hostile blocs. Abbott and Bishop should understand that, but I do not think they do.

* China's Foreign Ministry now claims this interview never happened. In response, Fairfax has posted a recording and transcript.

Photo by Flickr user Steve Webel.

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Sam Roggeveen says that Mr Abe's visit last week, and Julie Bishop's interview with John Garnaut, show that the Abbott Government now accepts there is a serious strategic competition underway in Asia as China challenges US primacy.

If so, I think this would be an important shift. The simplest explanation for the Abbott Government's approach to strategic issues in Northeast Asia so far is that they simply do not understand how serious the strategic rivalry there is. As recently as last month in Washington, Tony Abbott was still talking down the challenge that China poses to the status quo in Asia – or at least that's how I interpreted his Chamber of Commerce speech.

Sam disagrees with that interpretation, but he suggests that the question is now moot. Whatever Abbott meant last month in Washington, Sam says, he and Bishop last week made it clear that they now see the situation more clearly, and that they have adopted Mr Abe's view that China is a major threat to the regional status quo.

But I'm still not sure they yet really understand the seriousness of China's challenge. To see why, look at how they intend to respond to it. Last week they signed up to Abe's plan to build a regional coalition of like-minded countries steadfastly to oppose China's ambitions for a larger leadership role in Asia. Abe sees Japan itself playing a major leadership role in this effort. That's why he was here in Canberra last week.

Whether Abe's plan is sensible depends on how China responds to it.

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Abe hopes and expects that if China meets determined resistance it will abandon its challenge and accept the regional status quo. If so, his plan will have worked and all will be well. Sam thinks this is what Abbott expects too: he says that Abbott wants to damp down strategic rivalry in Northeast Asia by deterring China from upsetting the status quo.

But that only works if China reacts the way Abe and Abbott expect, by backing off. They assume that China's challenge isn't really very serious, because they think China is not determined enough about changing the regional order to risk confrontation with Abe's Japanese-led coalition or the US or both. And they assume China believes that our side is, on the contrary, determined enough to risk confrontation with China.

How valid are these assumptions? We do not have to guess about this. 'Our side' has already tried to deter China from challenging by showing our resolve to defend the status quo. It was called the Pivot. The whole idea of the Pivot was that when Obama declared he was determined to preserve the status quo, China was supposed to back off graciously. But it didn't work. Instead Beijing pushed back harder, by escalating its maritime disputes with US friends and allies, especially Japan.

So now our side is pushing back harder again – this time led, tellingly, by Japan. That's what was happening last week. Abe's muscular new strategic policy, which we have signed up to join, is his response to China's response to Obama's Pivot. And how will China respond this time? By far the most likely Chinese response to Abe's move will be to push back harder again in turn, because the evidence strongly suggests that China is determined to change the order in Asia, is willing to confront the rest of us to do so, and believes that we will eventually back down. So Abbott's decision to support Abe just helps to escalate the strategic rivalry another notch.

If Abbott really understands what's happening in Asia, he would understand how serious China's challenge is, and he would recognise that Abe's policy will only lead to further escalating rivalry and an increased risk of war. Which is why even after last week I still think that Abbott either doesn't understand what is happening in Asia or he does understand and he thinks that escalating rivalry is a good idea.

I prefer to think he still does not understand. Once he does understand he will, one hopes, have enough imagination to see that there are more than two ways to respond to China's ambitions. We do not have to choose supine surrender or inflexible resistance.

Photo courtesy of @TonyAbbottMHR.

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Clearly Japanese Prime Minister Shinzo Abe has deep personal and political motives for wanting to change Japan's strategic posture, 'escape from the postwar regime' and make Japan a normal country. But he has only been able to push this week's changes through because many Japanese who reject Abe's revisionist nationalism have lost faith in the post-war strategic posture. They can see that relying on the US has worked well for decades, but is failing now as strategic circumstances change.

The question is whether collective self-defence will work any better to keep Japan secure in these new circumstances? I don't think it will.

Japan's old posture isn't working anymore because of the shift in relative power between America and China. The stronger China becomes, the more Japan fears that China will use its strength to subordinate Japan, and the less confident the Japanese can be that America will always help them resist Chinese pressure. As the economic and military costs and risks to America of conflict with China go up, US willingness to support Japan's interests goes down, and it becomes less clear that Japan's and America's interests will always coincide. Japan therefore loses confidence in a strategic posture based on dependence on the US. We can see all this playing out in the Senkaku/Daioyu dispute, making it Japan's most acute strategic challenge since the Second World War.

Will collective self-defence fix this problem? The argument that it will is simple enough: Japan will strengthen both America's willingness and its capacity to support Japan against China if it does more to support the US against China. This is the classic burden-sharing idea that has been central to the way alliances around the world have been seen to work for the last century or so. It has certainly been central to the way Australia has approached alliance management with both Britain and the US. Indeed Japan's alliance has been unique in not imposing this kind of burden-sharing, so Abe's move simply brings Japan into line with other US allies. 

But collective self-defence will only reinforce US strategic guarantees to Japan and restore Japan's confidence in the alliance if it deals directly with the factors that have been eroding them.

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On the military side, Japan's armed forces will make little difference to America's ability to win a war against China in the western Pacific. Very simply, even with Japanese support America could not achieve sea control against China's formidable sea denial forces, and even without Japan's support it can easily achieve sea denial against China's feeble sea control forces. So Japan's help would do nothing to break what is essentially a US-China maritime stalemate in which both sides can deny the waters around China to the other. And Japan can do nothing to help America control the very real risks of escalation which that stalemate produces. So Japan's commitment to collective self-defence will not reduce the costs and risks to America of confronting China.

Nor will Japanese burden-sharing make much difference to America's willingness to bear those costs and risks on Japan's behalf. America already has strong reasons to support Japan and preserve the alliance; it is after all the essential foundation of US primacy in Asia. The present crisis of confidence in the alliance arises precisely because the costs and risks of confronting China are now so great that they threaten to outweigh even this alliance in US strategic calculations.

And it is not clear that anything Japan could or will do under collective self-defence will tip the scales back the other way. Australians are familiar with the argument that big allies are more likely to come to a junior partner's aid if the junior partner has paid collective self-defence 'dues'. But this kind of moral entrapment seldom works. Tokyo would be unwise to assume that America will be so grateful for Japanese military support that they would feel obliged to come to fight China on Japan's behalf when America's own interests did not require them to do so. 

This suggests that collective self-defence as the junior partner in a US-Japan alliance will not solve Japan's strategic problems. Of course there may be a different model of collective self-defence in mind. Perhaps Tokyo intends that collective self-defence will allow it to join, and perhaps even to lead, a wider regional coalition or alliance to resist China's growing power. But that would not do much to make Japan more secure either.

In the end, Japan's best prospect for security in the Asian century is to build the forces it needs to defend itself without relying on others, and without threatening others. This is perfectly possible for Japan economically and militarily, but it would be a big step politically, and would require much better diplomacy than we have seen from Mr Abe so far. 

Photo by Flickr user JBLM PAO.

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Many people, like my old friend Brad Glosserman, find it hard to understand why China is acting the way it is in the East and South China Seas. What does Beijing hope to achieve by alienating its neighbours and undermining regional stability?

Let me suggest an answer: China is trying to build what President Xi Jinping calls 'a new model of great power relations'. To understand how this might be the aim of Beijing's actions, we have to recognise that under his 'new model', Xi wants China to wield much more power and influence in Asia than it has for the past few centuries. These things are inherently zero-sum, so for China to have more power and influence, America must have less. This is what Xi and his colleagues are trying to achieve.

Their reasoning is simple enough. They know that America's position in Asia is built on its network of alliances and partnerships with many of China's neighbours. They believe that weakening these relationships is the easiest way to weaken US regional power. And they know that, beneath the flowery diplomatic phrases, the bedrock of these alliances and partnerships is the confidence America's Asian friends have that America is able and willing to protect them from China's power.

So the easiest way for Beijing to weaken Washington's power in Asia is to undermine this confidence. And the easiest way to do that is for Beijing to press those friends and allies hard on issues in which America's own interests are not immediately engaged – like a string of maritime disputes in which the US has no direct stake.

By using direct armed pressure in these disputes, China makes its neighbours more eager for US military support, and at the same time makes America less willing to give it, because of the clear risk of a direct US-China clash. In other words, by confronting America's friends with force, China confronts America with the choice between deserting its friends and fighting China. Beijing is betting that, faced with this choice, America will back off and leave its allies and friends unsupported. This will weaken America's alliances and partnerships, undermine US power in Asia, and enhance China's power.

This view of China's motives explains its recent conduct.

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Ever since President Obama announced the 'pivot', China has tested US willingness to support its allies over the Scarborough Shoals and Senkaku/Daioyu disputes. Until his Asian trip last month, Obama seemed inclined to step back from America's commitments, but his bold words in Tokyo and Manila suggest he has recovered his resolve to stand firm.

Now we can expect China to test this newly-recovered resolve by applying more pressure in the same places or elsewhere. And that is what Beijing is doing today in the waters off Vietnam. It is calling Obama's bluff. Expect more pressure against Manila and Tokyo soon.

Of course this carries risks for China. It does not want to fight America, so it must be confident in the judgement that America will back down and desert its friends rather than engage in conflict with China, even if backing down badly weakens the US position in Asia. This confidence reflects two key judgments by China's leaders.

First, they believe that China's new anti-access/area denial capabilities can deny America a quick and easy victory in an maritime clash in the East Asian littoral waters. They have been reassured by America's own Air-Sea Battle doctrine that the US knows it cannot prevail in these waters without launching a major campaign of strikes against Chinese territory. Such strikes would obviously risk a major escalation which might not stop below the nuclear threshold. So China's leaders think their US counterparts understand that a war with China today is one that America could not be confident of either winning or limiting.

Second, Beijing believes the balance of resolve is on China's side. Washington clearly wants to preserve its role in Asia, but Beijing is even more determined to win power at US expense. China's conduct suggests that the leadership in Beijing believes Washington understands this imbalance of resolve. That makes the Chinese confident that US leaders will not assume that China would back down first in a crisis.

The idea that China might believe these things comes as a surprise to many outside China, including, one suspects, many in Washington. US policy towards China, including the pivot itself, is based on contrary assumptions. The consensus is that Beijing is not really serious about challenging US leadership in Asia because it is simply not willing to risk a confrontation with America which Beijing's leaders must know they would lose, and they do not care enough about expanding China's role in Asia to take that risk.

If that's true, then as Brad Glosserman says, China's conduct is clearly foolish. But before assuming that the Chinese leaders are fools, we would be wise to wonder whether they really do believe what Washington assumes they believe. I'm pretty sure they do not.

Asia today therefore carries the seeds of a truly catastrophic episode of mutual misperception. Both Washington and China are steadily upping the stakes in their rivalry as China's provocations of US friends and allies become more flagrant and America's commitments to support them become more categorical. Both believe they can do this with impunity because both believe the other will back down to avoid a clash. There is a disconcertingly high chance that they are both wrong. Someone needs to change the nature of the game to avert the risk of disaster.

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Commenting on Paul Keating’s speech about China’s strategic responsibilities in Asia, Michael Green asks how, under my model of an Asian concert of powers, America should respond to China’s Air Defence Identification Zone (ADIZ). It is a good question.

China’s move is a clear attempt use the threat of force to push Japan towards concessions over the Senkaku/Daioyu Islands. In Chapter 8 of The China Choice I argue that a concert requires agreement between the great powers on basic norms of conduct, including especially a prohibition on the use or threat of force to settle disputes.

I also explained that a concert could only last as long as the parties were clearly willing and able to uphold those norms against any of their number who tried to violate them, with force if necessary. So if there was a Concert of Asia today, the appropriate US response to China’s ADIZ would be full military support for Japan in resisting Beijing’s implied threat.

Moreover, I think this should be America’s response to China’s ADIZ now, when no concert yet exists, because China’s action would otherwise set a very risky precedent. So there is probably less difference between our views on the current situation than Mike might think.

But we probably differ about where we should go from here. Like most of the US policy community, Mike seems to believe that China is not really serious about challenging US primacy. Faced with firm US responses to provocative acts like the ADIZ, China will back off and accept the status quo. There is thus no need for America to consider changing its basic posture in Asia to avoid escalating strategic rivalry with China.

I think this is mistaken. Beijing seems committed to fundamental change in the Asian order. And it probably believes that America will back off once it understands China’s resolve; it would be foolish to declare the ADIZ otherwise.

This means both sides underestimate the other’s resolve, and hence also the need to compromise in order to avoid a collision. This makes the risk of war much higher that many people realise.

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To lower that risk, both America and China must compromise. China must accept the kind of restraints Paul Keating spelt out in his speech. America must accept that it cannot play a sustainable role in a stable Asia without relinquishing primacy and building a new and more equal relationship with China. So unlike Mike, I think America should do more than just stand up for Japan. To get the process rolling America should also start talking to China about a new basis for their relationship.

Michael might respond that America could never negotiate with a country that behaves as China is doing. But our Chinese colleagues might say that America would never negotiate with a China that didn’t behave this way, and they are probably right. US attitudes suggest that China has to threaten the current order in this way to get America to take its demands to change the order seriously. That does not excuse the Chinese action, but it does help to explain it.

Michael might ask whether China can be trusted to behave better once such a deal is done. I think there is a chance it will, if the deal gives it enough and the high costs of pushing for more are made unmistakably plain. And if not, then the Concert would collapse and we would just be back where we are now, but with the benefit of knowing that a deal was not possible.

My argument is not that I’m sure it will work, but that it is worth a try. That’s because the alternative is not the perpetuation of the peaceful status quo, but escalating strategic rivalry and growing risk of war.

Which brings us back to Michael’s response to Keating. He says he cannot understand why prominent Australians like Keating urge Americans to step back from primacy in the face of China’s challenge. Let me suggest three reasons. First, they take China’s challenge to the regional order seriously. Second, they don’t assume that primacy is the only possible basis for a strong US role in a stable Asia. Third, they clearly understand that the alternative of escalating rivalry between the US and China would be a disaster for everyone.

Lastly, I think Michael is wrong to say that only Australians think like this. We Australians speak more bluntly, but if Michael listens carefully he will find that many others in Asia say the same thing.

Photo courtesy of Sinodefence.

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James Goldrick has raised two very important issues in his latest contribution to our conversation about maritime strategy for Australia*. The first concerns the circumstances under which serious threats to Australia’s trade routes might occur. I had earlier argued that serious powers were most unlikely to attack one another’s seaborne trade except in a major war, because they all depend on one another’s economies, and on their own seaborne trade which is highly vulnerable to retaliatory attack. In short, they are deterred.

James worries that I am here making the same mistake as Norman Angell a century ago, who argued that economic interdependence made major war more or less impossible. I’ve spent quite a lot of the last few years arguing against the widely held modern version of Angell’s view that economic interdependence between the US and China makes strategic rivalry and conflict between them highly improbable (my reasons are set out in The China Choice, pp.53-56), which is why I’m gloomier than most about Asia’s, and Australia’s, strategic future.

So I’m not arguing that major wars won’t happen. I’m suggesting that serious attacks on trade won’t happen except during major wars. And I think that hypothesis is borne out by the historical record since 1800, though I’d be very interested in whether James, who knows vastly more naval history than I do, can think of some contrary instances.

Why does this matter? Two points. Firstly, it suggests that what ultimately keeps our trade safe outside major wars is not our capacity to defend our ships, but our capacity to attack others’, which is what provides the deterrent. Hence my view that forces optimised for sea denial are a better investment than those optimised for sea control.

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Secondly, it suggests that during major wars, when seaborne trade and supply would be massively disrupted anyway, the deterrent provided by sea denial capability would lapse. The task of defending shipping would then become very hard, because it would require the establishment of sea control. And as I argued earlier in this exchange, deep-seated technological and operational asymmetries make sea control against capable maritime forces dauntingly difficult.

This brings us to the second of the two issues James raised. I absolutely agree with him that keeping Australia, especially its armed forces, supplied in a major war is a cardinal question. But I do not share his confidence that the Navy we are building, or any navy we could build, can solve this question, given the daunting difficulty of sea control. Nor do I share his confidence that our allies’ navies can solve it for us, even if we are talking only about convoying small shipments of especially vital materials.

This is a critical point. To justify investing in forces for sea control, we need to establish not just that sea control is desirable, but that the forces we plan to build will deliver it where and when we need it. If the Navy can make a compelling argument that the kind of fleet it has in mind would achieve the sea control required to keep Australia supplied in a major war, I would very strongly support building it. I’ve never seen that argument made, or even attempted.

And what if we cannot keep ourselves supplied in war? This raises a very deep question indeed: is our island continent defendable if our great and powerful friends no longer rule the waves? This question has haunted Australian strategic thinking ever since Pax Britannica started to fray in the 1880s, but arguably it confronts us more starkly than ever in the Asian Century, when the economic sources of maritime power are so much more evenly distributed than they have been throughout our history.

I think perhaps Australia might still be defendable, even in a major conflict, but only if we address a whole range of issues that we have hitherto been happy to ignore, including the issue of wartime supply. But I don’t think spending billions on ships that can’t do the job counts as addressing this issue successfully.

This is not because I have a prejudice against big ships. I work hard to avoid prejudices for or against particular kind of capability. The only good reason to invest in any element of armed force is that it contributes to achieving the operational outcomes which most cost-effectively support Australia’s strategic objectives. This exchange with James has been all about whether the bigger ships now being built and planned for the RAN satisfy this criterion. I don’t believe they do.

Photo by Flickr user Andrew Scott.

* Ed. note: The exchange began on the Fairfax opinion pages with an op-ed by Hugh White, a response from James Goldrick, and a reply from Hugh White, before moving to The Interpreter with James Goldrick's piece.

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2 of 12 This post is part of a debate on Australia's consular conundrum

Alex Oliver's new Policy Brief on the Consular Conundrum tells some great stories to highlight a key problem, and comes up with some very good ideas about how to fix it (I wish I'd come up with the idea of a consular levy on passports or air fares when I looked at this issue a few years ago).

But Alex also wisely places the consular issue in the broader context of DFAT's workload and the question of the priority that ministers, and ultimately voters, place on the different functions we expect our diplomats to perform. If we assume that they are rational actors, the fact that ministers and voters have been willing to see resources swing so sharply from what one might call 'real' foreign policy to consular work shows that they value the later more than the former. 

If we in the foreign policy community think this is wrong (and I certainly do), then it is incumbent on us to explain why it is wrong. Part of that is to look at it from the consular side, as Alex does. But it is perhaps equally important to come at it from the foreign policy side, and explain why exactly we need to put more resources back into traditional diplomatic tasks.

This is something we don't do very well. Arguments for increased funding for diplomacy (including Lowy's excellent Blue Ribbon panel of a few years ago) tend to assume that diplomacy has an intrinsic value: diplomacy is good and more diplomacy is better.

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I'm familiar with this style of argument from long decades in and around defence policy, where arguments for bigger defence budgets typically take the same form. But such arguments seldom work, and nor should they. Ministers should only agree to spend more on diplomacy, whether by shifting money back from consular work or by increasing the DFAT budget, if they can be persuaded that there are high-priority policy objectives that could be achieved with the extra money, and which would justify the cost.

Those of us who think DFAT needs more money therefore need to explain as precisely as we can what we think needs to be done that is not being done now, why it matters to Australians that it should be done, and how spending more on diplomacy would do it. Above all, that is what DFAT itself needs to do, and has not done (so far as I can see) for a very long time.  

This is in fact what a real Foreign Policy White Paper would be all about. It would be interesting to try and draft one.

Photo by Flickr user ~David.

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Sam is quite right to hear echoes of Hedley Bull in Peter Varghese's point about the role of rules and institutions in managing strategic relations. This does indeed make Varghese much more than a crude realist. But that does not mean Varghese is putting as much faith as Sam perhaps suggests in the existing flora of regional institutions like APEC, the EAS of the ASEAN to manage the big strategic issues which his speech describes.

Elsewhere in the speech was this passage: 

The primary burden of managing strategic stability in Asia will fall on bilateral relationships and smaller networks of relationships among the major powers of the region. And of foremost importance among these relationships will be the US-China relationship.

This is spot on, and also very reminiscent of Bull.  Rules and institutions are not necessarily multilateral, or broadly inclusive. The biggest issues tend to be managed by the smallest groupings. Certainly, stable strategic relations between the US and China will need to be based on some new rules and understandings, but the understandings will be negotiated among the region's most powerful states, not in anything that looks like the EAS.

I do not presume to claim Varghese as a convert to my idea of a Concert of Asia, but this is the core idea behind my argument that a concert-like set of understandings among Asia's major powers is the best hope for stable region. The highly inclusive model of Asian regionalism that as evolved over the past few decades won't do the job, for reasons I explore briefly here.

Photo by Flickr user bingpoint-uk.

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Peter Layton's response to my post on Kevin Rudd's Pax Pacifica ends our blogging year on an appropriate note, reminding us of how momentous the issues are that we face in Asia's strategic future. Two quick points in response.

First, I don't think the evidence justifies Peter's hope that Rudd is any less 'realist' than I am. Rudd has often described himself as a realist, and even as a 'brutal realist' in his famous wikileaked comment to Hillary Clinton.

Both Rudd and I argue that Asia needs to build a new order to accommodate China's power and manage the rivalry that occurs when power shifts between states. It is true that Rudd says we should build that order through region-wide multilateral forums, while I put more faith in smaller groupings of great powers. But that is a difference of process, not outcome.

Which brings us to the second point. Whatever Rudd's views may be, Peter raises a serious question about the kind of outcome we should be after in Asia. Should we aim for Peter's more optimistic outcome, which is a regional order that does not have conflict in its DNA? Or should we content ourselves with the less ambitious goal of managing the reality of rivalry and the risks of conflict as best we can?

Well, these are not mutually exclusive alternatives. One might say that the first step towards eliminating strategic rivalry, as they have done in Western Europe, is to manage it effectively. My realist order might be the best, or only, way to reach Peter's post-strategic nirvana. And meanwhile, the Senkakus shows how serious and urgent are the issues to we need to manage. In this situation, as Voltaire said, the perfect can be the enemy of the good.

Photo by Flickr user theogeo.

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One less noted development in Australian foreign policy this year has been the evolution of Kevin Rudd's ideas on the future of the Asian order and the US-China relationship. Since an address to the Asia Society in New York in January, Rudd has delivered a series of speeches around the world in which he has set out a pretty robust and clear model for the future Asian order, which is very far indeed from the flaccid evasions of the Gillard Government.

The latest and in some ways most interesting of these was given at the Brookings in Washington, DC this week. There is lots of interesting stuff here, but the most important is his core message about the future of the US-China relationship and what to do about it. He sounds clear warnings about the trajectory of that relationship, and argues that fixing this requires the negotiation of a new order in Asia: 'a new Pax Pacifica which is neither a new Pax Americana by another name, nor a Pax Sinica.'

What is most significant about this is Rudd's clear acknowledgment that the status quo of US primacy is not sustainable, and that there is a third alternative between the US primacy and Chinese primacy which both powers need to strive to foster if escalating strategic rivalry is to be avoided. Moreover he says that America should take the initiative in trying to reach this accommodation with China.

Some may detect an element of partiality in my analysis. Indeed there is: the view Rudd is putting forward here seems to me very close in its essentials to the argument about the future US-China relationship that I have developed over the last few years. That means it is very far indeed from the Government's declared policy of determined optimism. Rudd deserves credit for this. He would deserve more credit if he contributed these views more robustly to the debate here in Australia.

Photo by Flickr user CeBIT Australia.

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As usual, most commentary on North Korea's rocket launch last week focuses on the politics and diplomacy of Pyongyang's delinquency. But it is worth exploring the strategic implications more specifically. These are significant, but not straightforward.

The apparently successful launch of a three-stage rocket makes it rather clearer than before that North Korea has both the capacity and the intention to build an intercontinental-range ballistic missile (ICBM). It is now prudent to expect that in perhaps as little as a decade, if North Korea survives in its present form, it may well have an operational ICBM capability. This would give Pyongyang the capacity to deliver a small number of probably relatively low-yield nuclear warheads onto American cities. 

The key question, therefore, is what this would mean for strategic affairs in Northeast Asia over coming decades.

The first thing to say is what it doesn't mean. It does not mean North Korea has any rational options to initiate an unprovoked nuclear attack on the US, because that would certainly produce a totally devastating US response. Nor does it make much if any difference to Pyongyang's capacity to deter a nuclear, or regime-threatening conventional, attack on North Korea. Its existing medium-range nuclear delivery options bring plenty of high-value targets within range of its nuclear forces today, so Pyongyang already has the capacity to deter military action which potential attackers would fear might cross Pyongyang's red lines.

But an ICBM capability would undermine the deterrent umbrella extended by the US to its Asian allies.

Extended deterrence depends on the credibility (to both the adversary and the ally) of US threats to respond to any nuclear attack on the ally with a US nuclear attack on the adversary. Such credibility depends a great deal on whether the adversary has the capacity to hit back at the US. As long as North Korea has no credible capacity to target America itself, a US retaliatory strike on the North carries relatively low risks for the US itself. 

But if the North can hit back, the costs for the US go up dramatically, and the credibility of the US threat goes down. In a crisis, everyone will be asking whether stopping North Korea doing whatever it wants to do is important enough to America to risk a nuclear attack on Honolulu or LA.

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Of course, America can fix this if it can destroy North Korea's ICBMs early in the crisis. This would be easy as long as the missiles are as exposed and vulnerable, but of course if Pyongyang is serious about an ICBM force it will do whatever it can to make them more survivable, and would probably succeed to some extent at least. Moreover, conventional strikes against North's ICBMs would not be risk-free for the US even if they were likely to succeed, because Pyongyang could credibly threaten nuclear retaliation with its medium-range forces. So we should not assume that the North's ICBMs can be simply blown away. 

How serious is this? That depends on how seriously we see the risk of North Korea adopting an aggressive rather than defensive strategic posture over the next few decades. The more likely it is that Pyongyang might try to invade the South or attack Japan, the more worrying it is that US extended deterrence might be weakened by North Korean ICBMs. And if the argument presented here is correct, then ICBMs only make sense for the North if it does harbour aggressive intentions, because they do not substantially increase the North's capacity to deter on attack on itself. 

On the other hand, North Korea is a weak state surrounded by strong neighbours. Unlike Iran, for example, it has no serious chance of being able to extend its territory or political clout at its neighbours' expense – with or without ICBMs. This makes the ICBM program look like a bad investment for Pyongyang.

And what of North Korea's neighbours? Clearly, weakened US extended deterrence means higher incentives for Japan and South Korea to build nuclear forces of their own. But I doubt Pyongyang's moves add much to the already growing incentives for Japan at least to build a deterrent capability of its own. It worries about China, and China already has ICBMs, so US extended deterrence against China is already weaker than most people assume.

Photo by Flickr user oracle monkey.

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3 of 7 This post is part of a debate on What's the purpose of Australian foreign aid?

Jeni Whalan's post on the issues that should get more attention in Australia's aid debate is full of good ideas. But can I suggest we add another issue to her list of things that need to be debated: what is Australian aid trying to achieve?

The need for us to think about this question more deeply is clear enough from this passage in Jeni's post. She says participants in the aid debate need to...

...establish a few initial parameters. For starters, aid is not benevolent charity, but neither is it an extravagance that Australia can't afford. More aid does not necessarily produce better development, but aid is neither dead (the case from the political right) nor a neo-colonial instrument of oppression (the case from the left).

So, this tells us what aid is not. But what is it, then? What are the objectives of the aid program? In particular, if it is not charity, not something we altruistically do for others, then presumably we do it for ourselves. So we need to know as clearly as possible what it is supposed to be doing for us before we can begin any useful debate about whether it is working.

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Now Jeni would probably file me away in the category of what she calls 'aid sceptics (who usually have little other engagement with development policy)'. I plead guilty to the second charge, but I'm not so sure about the first. I don't see myself as an aid sceptic. I can easily be persuaded that aid is good policy and worth spending money on. But first we have to know what it is for.

I am sceptical that we can rigorously debate how to spend the aid budget until we are clear about what aid is trying to achieve. And I am sceptical that we can rigorously debate the size of the aid budget against other government spending priorities until we can compare the cost-effectiveness of aid against other forms of spending in achieving overarching national objectives. Which of course means we need to know what the overarching objectives are that aid is supposed to support. Can I suggest that this question needs to go at the top of the list of issues to be debated?

Photo by Flickr user Bethan.

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John Blaxland and Albert Palazzo are quite right: there was a clear risk in 1999 that escalation in East Timor could have led to serious combat. I'd disagree that this was something understood only by those in the field, and not by those of us in Canberra. On the contrary, some of us in Canberra were deeply, and I believe correctly, concerned about the risk of escalation, which was a central issue for us throughout the crisis

But more to the point, I do not think the risk of escalation quite addresses my doubts about the argument that East Timor was a near-run thing because of post-Vietnam cuts to the ADF's capabilities. So let me clarify.

The 'near run thing' claim can be interpreted in two ways. One is that the ADF's capabilities were nearly inadequate for the operation as it actually unfolded. That seems to me clearly wrong. That is not to say that the forces deployed did not do a good job. I think they did, but the job they actually did was well within their capabilities. As it should have been, considering there was no fighting.

Here I think the analogy that Bob Breen draws in the passage quoted by Peter Dean, between East Timor on the one hand and Long Tan and Kokoda on the other, is hard to sustain. Those who served in those earlier campaigns – or indeed in Afghanistan – might use stronger words. It is important to keep the operation in East Timor in perspective.

There is a separate argument that the operation revealed deficiencies in logistics and equipment. Of course it did, just as every military operation does.

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As always, these deficiencies tested the ingenuity and adaptability of the ADF. But they did not threaten the success of the mission. And they cannot simply be blamed on budget cuts, because of course they also reflect choices about how the remaining funds were spent over the years before the operation. And we could have a long debate about that, of course.

The second interpretation of the 'near run thing' claim is the counterfactual argument that, had the operation met serious resistance from the militias or from TNI (and had there been no coalition partners), then the capabilities of the ADF would have been inadequate to achieve the mission. But that had nothing to do with the post-Vietnam cuts to Army. Even with the Army at its Vietnam-era peak, Australia could not have defeated TNI or a determined militia in East Timor. So the lessons of East Timor have little to teach us about the wisdom or folly of those cuts.

Which brings us back to the bigger issue. As I said last week, I agree that today's defence budget cuts carry real strategic risks. But I do not think that the best way to caution against the cuts is to argue, as those citing the 'near run thing' in East Timor do, that defence cuts in the past had bad consequences, therefore we shouldn't cut Defence today.

No one believes more strongly than I do in the value of history in informing strategic policy, but even good history will only get us so far in deciding our future defence needs. The only effective way to argue for future levels of defence spending is to analyse and describe as clearly as possible the strategic risks we face in future, the military options we would need to meet those risks, and the forces those military options would require. Australia's defence community, both inside and outside Government, has not yet seriously tried to do this.

Photo courtesy of the Defence Department.

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Bob Carr must be pleased, but also a little embarrassed. Bob Zoellick, Republican foreign-policy heavyweight, has used a line from Carr as the peg for a substantial essay in the latest issue of Foreign Policy about the future of American power. Unfortunately, the line was one that Romney used briefly in the presidential campaign to attack Barack Obama, so perhaps he would prefer to see it forgotten now that Obama is safely back in power. I wonder if Hillary and Leon teased him about it at AUSMIN?

But there is another, more substantial reason Carr should wish that the line would be forgotten. What he said is so obviously wrong. Here is the line as Zoellick quotes it:'The United States is one budget deal away from restoring its global pre-eminence.' Carr is saying that the challenge to US global primacy comes from its fiscal problems, and if only the federal budget could be fixed, American leadership would be secure indefinitely.

I think this is clearly wrong. What challenges US primacy is not a fiscal issue but an economic one.

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Of course the federal deficit is a major problem for the US, but the challenge, especially in Asia from China, is being driven by a shift in strategic weight, which in turn is driven by a shift in the relative size of the two economies. Compared to this really fundamental change in the distribution of power, America's fiscal problems are relatively insignificant. America would still face a fundamental challenge even if its budget was in healthy surplus.        

No budget deal in Washington can turn around the trends driving the rise of China, because in the end it's not about America. It's about China. Carr's mistake matters because it encourages Americans to think the opposite, which in turn reassures them that they do not have to adjust to the power shift by rethinking their role on the world, and especially their relations with China.

The really worrying thing is that he seems to have convinced Zoellick, for one, that what he said is true. This is what Zoellick’s whole essay is about, and he is among the brightest and most influential of Americans. Of course it helps that Carr's message is something Americans very much want to believe. Which is no doubt why Carr said it.

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I share Jeffrey Grey's and Albert Palazzo’s concern that the trajectory of the defence budget carries strategic risks which are perhaps not properly understood by those making the decisions. But I'm not sure that their use the 1999 East Timor crisis to support their case is historically accurate. 

Both Jeffrey and Albert suggest that East Timor was a near-run thing because of the cuts to capability in the decades before it. If what they mean is that the military operation that we undertook in East Timor nearly failed to achieve its objectives because the combat capability of the ADF had been eroded since Vietnam, then I disagree.

East Timor did not test the combat capability of the ADF in East Timor at all because there was no combat. This was no accident. The ADF only went to East Timor because the Habibie Government, and TNI, allowed it in. Without Indonesia's agreement there would have been no UN resolution and no international coalition, and without all three of these things we had no military options in East Timor and wouldn't have been there.

Of course I can't be sure that the Howard Government might not have sent our forces in anyway. But I am sure it would have done so against the advice of its military and civilian advisers, and I am sure it would have failed. 

Moreover, I think this had nothing to do with the post-Vietnam cuts to the ADF. Even at its Vietnam-era peak, the ADF alone would never have been able to win a campaign in East Timor against TNI, or even against TNI-backed militia. If I recall the numbers correctly, there were 30,000 TNI troops on Timor alone at the time. Not since 1945 has Australia had an Army that could have taken them on.

So while I agree that Australia's defence policy is in very bad shape, I don't think East Timor is the best place to look for solutions.

Photo by Flickr user fmgbain.

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