Lowy Institute

Deterrence is a beguiling concept. It offers the hope that we can prevail over our opponents without actually fighting them because our mere possession of military power will be sufficient to compel them to our will.

This seductive idea seems to be the basis of Michael Cole's view that deterrence will allow America and its allies to defend Taiwan from China with incurring the costs and risks of conflict, and that they should therefore commit themselves to doing so. This view is set out in Michael's most recent contribution to an exchange between us about this issue, and I'd like to thank him for his thoughtful part in our exchange on this sensitive topic.

Alas, I think this view of deterrence is mistaken. Deterrence can work, of course, but only where the deterred power believes that the deterring power is willing to incur the costs and risks of conflict. So Washington can only deter Beijing from using force against Taiwan if Beijing is reasonably sure that Washington is willing to actually fight to do so.

Moreover, because the stakes are so high and the nuclear threshold is so unclear, Washington must convince Beijing that it is willing to fight a nuclear war over Taiwan if it is to deter China from starting a conventional one. Simply possessing armed forces, including nuclear forces, is not enough to do this. You also have to convince the other side that you are willing to use them, and are willing to incur the costs and risks of the resulting conflict.

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There is, as Michael acknowledges, a parallel here with the Ukraine. Many in the West believed Russia could be deterred from any military intervention in the Ukraine. But deterrence did not work because Moscow did not believe that Washington cared enough about Ukraine to accept the costs and risks of a military conflict with Russia.

Some might hope that China can be convinced that the US is willing to fight, even if it isn't. This is called bluffing, and it's a dangerous and unreliable tactic. And this is precisely why America cannot reliably deter China from attacking Taiwan. As Michael himself acknowledges, there are real doubts that America would be willing to go to war with China. It seems likely that those doubts are shared in Beijing, and they cannot be dispelled simply by rhetorical reaffirmations of the Taiwan Relations Act, because they arise from a quite reasonable assessment of the balance between costs to America of reunification on the one hand, and the costs of war with China on the other.

This assessment does not minimise the costs of unification, both to America and to the Taiwanese themselves. It simply sets them realistically against the costs and risks of war with China, which Michael seems to agree are exceptionally grave. And if Americans are not convinced of US resolve, why should we expect China's leaders to be? And if they are not reasonably sure that the US would be willing to actually commit its formidable forces to fight for Taiwan, how can they deter China from attacking it?

The conclusion seems clear: America cannot defend Taiwan unless it is really willing to fight China to do so, and unless it is plainly willing to do that, Washington should not mislead the Taiwanese into thinking that they can rely on American support if the worst happens.

Photo by Flickr user See-ming Lee.

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After a decade of relative harmony, tensions between Beijing and Taipei are rising again. As Taiwan's leaders and voters face big choices about their future relations with China, America must think carefully about its commitments to Taiwan.

Would America be willing go to war with China to prevent Taiwan being forcibly united with the mainland? J Michael Cole, responding in The National Interest to a recent op-ed of mine in Singapore's Straits Times, expresses a widely held assumption that it would, and should.

To many people it seems self-evident that America would honour the commitments enshrined in the Taiwan Relations Act. But the TRA was passed in 1979, when China's GDP was 1/20th the size of America's, its place in the global economy was miniscule, its navy and air force were negligible, and its prospects for progress depended completely on America's goodwill.

So back then a US-China conflict carried much bigger economic and military risks for China than for America. That made the TRA's commitments both highly credible and very unlikely to be tested. Washington could safely assume that Beijing would back off to avoid a conflict in which China had so much more to lose than America.

Things are different today.

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China's economy is now so big and so central to global trade and capital flows that the consequences of any disruption would be just as serious for America as for China. Militarily, America can no longer expect a swift and certain victory in a war over Taiwan. China's anti-access/area-denial capabilities would preclude direct US intervention unless those capabilities had first been degraded by a sustained and wide-ranging strike campaign against Chinese bases and forces.

China would very likely respond to such a campaign with attacks on US and allied bases throughout Asia. The US has no evident means to cap the resulting escalation spiral, and no one could be sure it would stop below the nuclear threshold. The possibility of nuclear attacks on US cities would have to be considered.

These new realities of power mean that today a US-China conflict would impose equal risks and costs on both sides. And where costs and risks are equal, the advantage lies with those who have more at stake, and hence greater resolve. China's leaders today seem to think they hold this advantage, and they are probably right. It is therefore a big mistake to keep assuming, as many people seem to do, that China would be sure to back off before a crisis over Taiwan became a conflict.

US leaders must therefore ask what happens if Beijing does not back down as a crisis escalates. At what point would they back down instead? What would be the damage to US global leadership if Washington brought on a confrontation with China and then blinked first? What could happen if Washington didn't blink first? Is Taiwan's status quo worth a global economic collapse? It is worth a real risk of nuclear war with China?

These are the questions America's leaders would have to confront in considering military action to defend Taiwan, and their answer would very likely be that the status of Taiwan is not worth risking nuclear war or economic collapse over. And that means American leaders and policy analysts must confront these questions now, as they decide whether to maintain the old commitments to defend Taiwan. The promises that America was willing and able to keep in 1979 might not be ones it is willing or able to keep now.

What about America's allies and friends in Asia? Wouldn't they help America defend Taiwan, if only because they are so worried themselves about China? Many Americans seem to assume they would. But even Australia, America's most reliable ally in Asia, is uncertain about this. And if Australia is uncertain, it is pure wishful thinking to expect the likes of India, Singapore, Vietnam or even the Philippines to offer anything more than mild diplomatic support to America over Taiwan.

The exception is Japan, which under Shinzo Abe might be expected to join the fight, especially after last week's visit to Washington. But does Mr Abe really speak for Japan? Will future Japanese leaders take the same view? And even if they did, how exactly would that help America? How would Japan's support change the answers to the hard questions posed above, and increase the chances that America would indeed come to Taiwan's aid?

So no one should lightly assert that America or its allies would help defend Taiwan from China. But should they? This is a big subject. Suffice to say here that the question is not answered simply by using the word 'appeasement' to invoke the memory of Munich.

There are hard questions to be answered about how far we should be willing to go to accommodate (or, if you prefer, to appease) China's ambitions for a bigger regional leadership role as its power grows. Any substantial accommodation would mean a shift away from the US-led order of recent decades, which would be risky and unsettling. It seems much easier to evade these questions by refusing to contemplate any accommodation at all. But that would carry high costs.

Those who assume that those costs must be worth paying might not have thought carefully enough about just how high the price could go. And those who assume that it will be impossible to accommodate China because it proved impossible to appease Hitler perhaps assume that there are no material differences between the situations in Europe in 1938 and in Asia now, or between Nazi Germany and today's China. They perhaps also assume that there are no alternatives to the old US-led order in Asia except Chinese hegemony. The magnitude of the issues at stake – including for the people of Taiwan – suggest that these assumptions need more careful scrutiny.

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For a long time American (and Australian) thinking about China has been dominated by a broad consensus that, despite many signs of growing assertiveness, Beijing does not pose a fundamental challenge to US leadership in Asia. The argument goes that, whatever they might say, China's leaders know that its economic future is too uncertain, its political system too fragile, its military too weak and its friends too few to allow it to contest American primacy. They also know that China's own stability and prosperity depend on the regional order that only America can uphold.

Therefore, the consensus has concluded, America doesn't have to do much in response except remind everyone that it intends to stick around. Hence the 'pivot', which has emphasised declaratory statements rather than substantive actions.

But that consensus may be unravelling, at least in America. Washington's AIIB debacle seems to have sounded a wake-up call and now, in just the past week, two major reports from the heart of the US foreign policy establishment have chimed in too. Both reports argue that China's challenge to US primacy in Asia is for real, and that America's policy in Asia needs to shift radically to respond.

At first glance they offer diametrically opposed views of what that response should be, in ways that might appear to frame the debate Washington is now having about how to respond to Beijing's challenge.

In fact, as we shall see, they share a reluctance to address the real issue, and to acknowledge the real risks.

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One of these reports is by our own Kevin Rudd (US-China 21: The Future of US-China Relations Under Xi Jinping). It is the product of his stint at Harvard's Belfer Centre, and is now being showcased by his new home at the Asia Society. The other, from the Council on Foreign Relations, is by two well-known policy heavyweights, Robert Blackwill and Ashley Tellis (Revising US Grand Strategy Toward China).

Both reports argue that China's economic rise marks a fundamental shift in the distribution of power in Asia, and that China's leaders, especially under Xi Jinping, are determined to use their newfound strength to transform the Asian order in their favour. Rudd's argument on this is particularly strong, in part because he draws on a deeper understanding of China. It reminds us that, at his best, Rudd can be a very good analyst indeed.

So what should America do? Rudd says America and China can resolve the tensions caused by China's ambitions through diplomacy. The two powers can and should negotiate in a spirit of 'constructive realism', deepening cooperation where their interests coincide while quarantining and managing the issues on which they disagree.

It's a nice idea, but Rudd's account of it evades the hard question: is America willing to deal with China in the way he proposes? His model implies a complete transformation in the nature of US-China relations so that they become true partners in regional leadership. But his prescription will only work if America is willing to deal with China as an equal, which is of course incompatible with the old model of US regional leadership in Asia.

Yet Rudd does not acknowledge this in his report. No doubt he understands that it is something his American audience will not want to hear, but until this issue is squarely addressed, America's debate about China will keep on missing the mark.

Blackwill and Tellis do not make this mistake. They say upfront that perpetuating US primacy is America's primary strategic objective, and they urge America to build up its economic, military and diplomatic position in Asia to preserve it from China's challenge. This is, in effect, a policy of containment.  Any accommodation of China's ambitions is ruled out.

They are rather glibly optimistic about what this policy would require. They call for the strengthening of America's economy, military power and diplomacy to counter China's rise, and a 'geo-economic' counter-offensive against China's growing economic sphere of influence, without saying how all this might be done. This suggests they do not really understand how radically China's rise has shifted the distribution of power.

But more importantly, Blackwill and Tellis are optimistic about how China would respond. They say America could continue cooperating with China where that suits US interests, while relentlessly resisting China's ambitions to build a new regional order. Their policy prescription assumes that China will be happy to continue working with the US on these terms. In other words, their prescriptions assume what their analysis disproves: that China is not really serious about challenging US primacy after all. If that was true, America could follow Blackwill and Tellis' prescription to resist China's challenge and preserve its primacy without running the risk of disrupting its relationship with China, which is what Americans want to hear.

This brings us to point where Blackwill and Tellis converge with Rudd. Both reports evade the fact that strategic rivalry between America and China is ultimately caused by their fundamentally incompatible aims in Asia. America's primary aim is to retain leadership in Asia, and China's is to displace it.

Rudd assumes America will abandon its aim, while Blackwill and Tellis assume it will be China that steps back. Rudd at least assumes that China will also be willing to compromise, whereas Blackwill and Tellis seem to think that America need make no substantial concessions to enjoy a peaceful relationship with China.

The big risk, of course, is that neither side will be willing to make concessions, because each expects the other to blink first. That leads straight to escalating rivalry and an ever-higher risk of war. Both these reports downplay that risk, because they seem to assume China does not want to change the regional order enough to risk a military confrontation with the US.

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

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Jim Molan is dismayed by my suggestion that strategic-level policy is not the ADF's strong suit. The offending line — in an article by Sophie Morris in last week's Saturday Paper — accurately reflects my remarks to her. Jim's robust response peppers a rather larger target, however.

Among other things, he attributes to me the view that Defence civilians are much better at strategy than their uniformed colleagues. So to be clear, I do not believe that civilians are any better at providing strategic policy advice than military officers. On the contrary, had I been asked, I would have said that the depth and breadth of strategic policy expertise among civilians in the Defence Department is just as inadequate as it is among their military colleagues. This is a major problem for our defence policy which, to be fair, I believe the senior leadership of the organisation understands.

My primary point to Sophie was simply that serving in the ADF, perhaps at quite a junior level, does not in itself guarantee that a parliamentarian will have special expertise in the defence and strategic policy decisions discussed and made at the political level.

But the broader point remains true too: the ADF as an institution does not generally (with some notable exceptions) excel at the strategic-level tasks of advising governments about when and how they should use force to achieve policy objectives, and about what capabilities Australia needs.

I would offer as evidence the flawed advice that led to Australia's costly strategic failure in Afghanistan (and yes, I have no doubt that it was a failure), and the advice to acquire the amphibious assault ships (pictured), which I believe are now becoming widely recognised as the white elephants they are. I think the ADF's strategic-level advisers, along with their civilian counterparts, must take some share of the responsibility for these decisions, if indeed they spoke in favour of them or failed to speak to robustly against them.

Photo by Flickr user Crouchy69.

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Alan Dupont concludes his thoughtful response to my comments on his Lowy Analysis paper, Full-Spectrum Defence: Re-thinking the Fundamentals of Australian Defence Strategy, by posing some good questions.

First, he asks, should we see irregular warfare as the dominant form of future conflict, both between and within states? The answer depends on what we mean by 'dominant'. Do we mean 'most common' or 'most serious'? Irregular warfare is likely to be the most common form of conflict in future, as it always has been in the past. What I suppose we must call 'regular warfare' – large-scale conflict between the armed forces of states – has always been much rarer, and I expect this will remain true too.

But regular warfare is more serious than irregular warfare, at least for a country like Australia. If we were Yemen or the Congo or (for much of its history) Indonesia, then irregular warfare would pose a more serious threat than regular warfare, and it would make perfect sense to design our armed forces primarily for that kind of conflict.

But we face no credible or even conceivable risk of internal insurrection, and no risk of insurrections spilling onto our territory from elsewhere on anything but the smallest scale, a scale for which police are more relevant than armed forces. And the risk of state-sponsored irregular warfare against Australia by a neighbouring state was tested at length by the 'low-level contingency' concept which was so central to our defence policy in the 1980s. I think Alan would agree with me that the closer one looked at that concept, the more improbable it seemed.

Of course the risk of Australia being involved in a regular conflict is pretty low too. But I would argue that changes in the regional strategic order mean it is not as low over coming decades as it has been since the early 1970s, and that this risk is much more serious for Australia than risks of irregular warfare. And that is why I think it should predominate in our force planning.

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Second, Alan asks whether the 'force structure determinants' used in previous White Papers 'have any redeeming value'. By 'force structure determinants' Alan means the core strategic objectives which the Government decides the ADF should be built to achieve, and which therefore determine what kinds of forces we need and how much money we should spend.

I think setting these strategic objectives for the ADF does have value. Indeed I think deciding what we want our armed forces to be able to do is absolutely essential to making sensible decisions about what capabilities we need. In his paper, Alan says they are no use because governments sometimes ignore them in choosing capabilities, and often use the ADF for tasks different from the ones they identify as force structure determinants.

He is quite right about both of these, but that does not mean the idea of setting core objectives has no value. Governments do sometimes violate their own policy principles (the Howard Government did when it ordered the C-17s that Alan mentions), but the fault here might lie with government decisions rather than the principles they sometimes ignore.

More importantly, the fact that governments use the ADF for purposes other than that for which it was designed does not mean it has been designed for the wrong purposes. It often makes sense to use something for a purpose for which one would not buy it.

There is a separate question, of course, about whether the strategic objectives that have been laid down as force structure determinants in recent white papers are the right ones for Australia over coming decades. I do not think they are, because they assume that Australia's strategic risks will remain much the same in the next few decades as they have been in the last few. What objectives we should adopt instead is a question for another time.

Third, Alan asks whether I still think we should have a primarily maritime military strategy, and if so how space and cyber fit into it? The short answer to the first part is 'yes'. Most of the core strategic objectives I would set for the ADF can be achieved most cost-effectively by maritime operations, and I would focus most of our capability there.

What about cyber and space? Let's clear up a muddle here: when we talk about cyber and space as new domains of warfare, are we talking about the impact of cyber- and space-based actions on the systems that support and enable the conduct of conventional military operations in the other three domains, or are we talking about the impact of such operations on society more broadly, to achieve a direct strategic effect?

If it is the former, then clearly we need to develop our maritime forces to operate in a contested cyber and space environment, based on a sober assessment of the risks involved. This might be hard technically, but it poses no conceptual challenges to policy.

If it is the latter, the issue is much less clear. Cyber attack on national information systems is a serious potential threat, but armed force is little or no use in responding to it, so it need not shape our defence planning. Space-based attack directly on civilian populations or systems? Unless we mean such familiar problems as ballistic missiles, I'm not sure what we are talking about here. Denial of satellite services, perhaps? Whatever it is, I doubt that armed forces are going to be the answer.

Photo by Flickr user DVIDSHUB.

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The first thing to say about Alan Dupont's recent paper is that he is absolutely correct about the dire condition of Australian strategic policy.

As he suggests, we lack a coherent answer to the most basic question of all: 'What do we want our armed forces to be able to do?' Until that question is answered, there is no way we can make sensible choices about the kinds of armed forces we need, nor about how much we should spend on them.

Moreover, Alan is right about many of the reasons why our strategic policy is so bad. However, I'm not completely sold on all of his suggestions about how to do things better. Here are a few points that I think deserve fuller debate.

What is armed force good for?

Clearly we cannot decide what we want our armed forces to be able to do until we have decided what kinds of things armed forces can usefully do. Alan casts the net pretty wide. He identifies a broad range of security threats which he thinks our forces should be designed to deal with, and criticises the idea that we should focus narrowly on building them to respond to threats from other countries' armed forces.

I'm not so sure.

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For example, Alan clearly believes that stabilisation operations in the Middle East are an important role for our forces and should influence our force development decisions. This presupposes that not just our interests in the Middle East are important enough to us to warrant giving them such a central place in our national security policy, but that military operations are a cost-effective way of promoting those interests. The experience of the past decade does not support that view.

To take the most obvious case, it seems likely that a serious analysis of our experience in Afghanistan would conclude that sustained military operations there failed to achieve our strategic objectives, not because of any faults in the conduct of the operation itself, but because the aims we set ourselves could not be achieved with military means. Those are lessons we need to learn.

What kinds of threats will we face in the future?

Alan's ideas about the kind of threats that Australia's forces should be designed to address, reflect a judgement that our future threat environment will look much like the one we see have seen in recent decades. That means he emphasises lower-level contingencies and coalition operations over higher-level conventional conflicts and independent operations.

But the future does not always resemble the past, so it is important to test this judgement.

Alan rightly observes that the strategic order in Asia is changing as power shifts to China, and that America's role in Asia will change too, and he criticises our defence policymakers for not thinking carefully enough about what this will mean. But he himself, perhaps, underestimates just how big the implications of these changes might be – especially if we look out a few decades.

Alan deprecates any attempt to think this far ahead, but one wonders how decisions about capabilities that will not even enter service for 20 years can be made without doing so. This is not the place to explore what kinds of risks we might face in the very different Asia of the Asian Century: suffice to say here that it would be unwise to base our strategic policy on the assumption that they will look much like those of the past 30 years.

That is the context in which issues like the geographic focus on our defence posture and the place of maritime operations in our defence planning come into focus. The more the future resembles the recent past, the more sense there is in Alan's arguments for a wider geographic and operational focus. The more we contemplate our security needs in a very different and more contested Asia, the more questionable Alan's arguments become.

How much to spend?

Alan's paper doesn't focus much on money. That is a pity, because money is of course central to any serious discussion about strategic policy. One gets the impression that Alan thinks we should be spending a good deal more on defence than we are, but even with a much bigger budget there would be hard choices to be made between competing priorities.

Alan mentions lots of things he thinks the ADF should be able to do, but doesn't give any basis for setting priorities between them. That leaves the hard work of building a coherent strategic policy still to be done.

Photo courtesy of Australian Defence Image Library.

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In his latest contribution to our debate, Shashank Joshi raised some excellent points against my sceptical view of the emerging India-US strategic partnership. But I'm still unpersuaded.

To explain why, it helps to step back and clarify the question we are debating here. It is not whether strategic relations between Delhi and Washington have grown closer in recent years, because clearly they have. It is what these closer relations mean for the geo-political contest between America and China.

India's position is clearly important to this contest. Many Americans, and many of America's friends in Asia, have long believed that India's growing wealth and power will be vital in helping America counterbalance China's growing strategic weight, and resist China's challenge to US regional leadership.

Indeed, the belief many people have that India will play this role is central to their confidence that America can and will preserve the status quo against China's challenge. It is therefore important to decide whether the progress we have seen in US-India relations justifies that confidence.

I have argued that in a geopolitical contest of the kind we see unfolding between America and China today, India's relations with America will only make a difference to the extent that India is seen to be willing to support America in a US-China conflict.

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That is because who wins the contest between the American and Chinese visions of Asia's future order ultimately depends on which is seen to be more willing to fight for their vision. Each power wants the other to believe that it will go to war to impose its vision, and hopes that, if all else fails, this will persuade the other to back off.

This way of describing what is happening will surprise those who think that this kind of old-fashioned power politics disappeared after 1989, but it seems to me the only way to understand events in Asia today. In fact power politics never went away; people simply started to think that America was the only power that was indulging in it. It has been taken for granted that America will fight to support its vision of regional order, but that no one would be willing to oppose them. Now China is proving that false. We can no longer assume that China is any more determined to change the current order than America is to preserve it. 

That is why India's role in this contest depends on how far it appears willing and able to materially support the US in a conflict with China. In a game played for these stakes, nothing less counts for much. 

As I read him, Shashank makes two key points about this question.

One is that, while India might not be willing to send combat forces to fight alongside America's in a coalition against China, it would provide other, non-combat support such as basing and refuelling facilities. That sounds like what the diplomats call 'all support short of actual help'. It would do very little either practically or symbolically to bolster America's position against China, and certainly much less than American boosters of the relationship expect. 

His second key point is that perhaps India would be willing to provide America with more substantial support if it saw really fundamental issues of regional order at stake in a US-China conflict. He cites the example of the wide support given to America in opposing Iraq's invasion of Kuwait in 1990 by countries who saw basic questions of international order being tested there.

I agree with Shashank that very important issues for India would be at stake in a US-China clash. But deciding to support America against China would be much harder than joining the coalition against Iraq. In every way China is both a much more valuable partner and a much more dangerous adversary. The key question for India, and for America's other friends in Asia, is what would have to be at stake for them to make that decision? 

So it boils down to this: would India go to war with China to help America preserve the current order based on US primacy? If the answer is no, then I don't think the new warmth between America and India matters much to the future of Asia, and America's position in Asia is rather weaker than most people assume.

Photo courtesy of White House/Lawrence Jackson.

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Shashank Joshi makes a good case for the importance of Obama's visit to India last month, and against my view that there is much less to the US-India alignment than meets the eye.

My argument is that their underlying strategic objectives remain too different for real strategic alignment. Shashank says that sets the bar too high. Without fully sharing America's aim of preserving its primacy in Asia, he says, India 'can take a range of other steps, from aligning itself to US allies to strengthening a diplomatic consensus against China, that together contribute to (US) primacy in a more diffuse, politically acceptable manner.'

It's a reasonable point, but I don't buy it.

We differ on this because we seem to see what is happening in Asia today differently. I think Asia's international order faces a fundamental challenge, whereas Shashank's argument suggests that he believes it remains essentially intact.

If Shashank is right, we can safely expect that issues in dispute between the region's major powers will be resolved by diplomacy operating within the status quo; business as usual, in other words. If so, the kind of low-stakes diplomatic alignment that Shashank describes might indeed make a real difference. The kind of low key, low cost diplomatic support India might offer the US will be enough to help the US preserve primacy, because its primacy would not face any serious challenge.

But what is happening in Asia today is not business as usual.

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The regional order based on US primacy is under direct and fundamental challenge from China. It wants to change the framework of norms and expectations within which regional diplomacy takes place. That is why we cannot assume that the issues raised by China's challenge will be resolved by routine diplomacy. China is aiming to change the way diplomacy in Asia works by changing the regional order.

That has big implications. The prevailing order in any international system is defined ultimately by what the major powers in the system are prepared to go to war with one another over. As that changes, the order changes. Rising countries challenge a prevailing order by showing they are willing to go to war over issues that they previously would not have. 

In 1972 China transformed the Asian order when it decided that it was not willing to risk war with America over anything except Taiwan. Now China is showing that it wants to change the order again. By undermining the credibility of Washington's alliances, Beijing shows its willingness to risk war to degrade America's position in Asia.

India's new alignment with the US will only make a real difference if it is credibly willing to support America militarily against China if and when US primacy is at stake. Diffuse and politically acceptable diplomatic support won't cut it at a time like this. So the test of the US-India alignment is simple: does anyone think India would send forces to help America defend Japan's claim to the Senkakus, or the Philippines' claims in the South China Sea, or Taiwan? If not, how does India's support help America deter China from challenging US primacy in these flashpoints? And if it doesn't do that, what use is it to Obama?  

That's why Obama's bid for India's support shows the weakness in America's position, without doing anything to strengthen it. The deeper problem is that lining up countries like India against China, even if it worked, would not help America find a stable, sustainable relationship with the country which is both its most important partner and its most serious rival. The only way to do that is to start talking to China in a new way.

Photo courtesy of the White House/Pete Souza

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One of the many ways in which Malcolm Turnbull is not your average Australian politician is that he has thought quite deeply about foreign policy and strategic issues. Among aspirants to the Lodge in recent years, only Kevin Rudd has comparably developed views about Australia's place in the world. But of course that was Rudd's day job for much of his career. For Turnbull it has been, one suspects, more a sign of his wide-ranging natural curiosity, and perhaps also prudent preparation for the post which seems now for the first time to be within his reach.

He has set out his views in a series of speeches and essays over the past few years. This post draws on just three of those, including the one he gave in the US late last month as the Liberal Party's leadership crisis flared. They present a consistent and coherent set of ideas which suggest that, if he becomes prime minister, he would pursue a rather different policy from his predecessors, including and perhaps especially from Tony Abbott, on the central question of positioning Australia between America and China.

Turnbull's starting point is the magnitude of the shift in the distribution of wealth and power occurring with the rise of Asia, led by China, which he sees as 'the great geopolitical transformation of our time'. He believes this will inevitably drive major changes in the way the world works. Last month he posed the question: 'How ready are Western nations and Western-dominated multilateral institutions to adapt to a very different distribution of global power than that which they've been used to?' So unlike Tony Abbott, he does not believe that, thanks to the Anglosphere, the world will continue to be run in English.

Second, Turnbull does not assume that America has necessarily worked out how best to respond to this challenge. Though he has praised the Pivot as 'a vitally important stabilising reassuring factor in the peaceful development of our region', Turnbull has at times observed that the US is struggling to find an effective response to China's rise. Back in 2011 he said they seemed 'utterly flummoxed'.

On the other hand, he has also criticised Beijing's approach, saying in 2011 that 'China needs to be more transparent about its goals in the region', and more recently that 'there seems little doubt that the tough line taken (by China) on the disputed islands and reefs has been quite counter-productive'.

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Third, Turnbull thinks that responding to China's rise and its implications for our place in Asia requires rather more sophisticated diplomacy from Australia than we have seen so far. A few days after Obama's big Pivot speech to the Australian parliament in 2011, he delivered this thinly veiled rebuke to Julia Gillard's gushing response:

An Australian Government needs to be careful not to allow a doe-eyed fascination with the leader of the free world to distract from the reality that our national interest requires us to truly (and not just rhetorically) to maintain both an ally in Washington and a good friend in Beijing.

He suggested that this requires a careful balance in our positioning with both powers, warning against 'extravagant professions of loyalty and devotion to the United States' and also against 'equally extravagant compliments paid to Beijing.' 

And he certainly doesn't buy Kevin Rudd's idea of muscling up to China militarily:

I disagree with the underlying premise of the 2009 Australian White Paper that we should base our defence planning and procurement on the contingency of a naval war with China in the South China Sea.

Above all, Turnbull has warned about complacently, assuming that:

...the strategic and diplomatic posture that served us in the past can and will serve us unchanged in the future: or that it doesn't matter if our strategic and economic messages to our region are somewhat contradictory.

Of course it is anyone's guess how these ideas would translate into policy if Turnbull should become prime minster. We can assume he would tread carefully and pay due respect to the patterns and precedents of Australian diplomacy, at least up to a point. But it is worth reflecting that Turnbull, if he wins the Lodge, might have more scope to really explore Australia's place in the world of the Asian Century than any of his predecessors, or any of the current alternatives.

Politically he has less to fear from an open discussion of the future role of America in Asia than anyone on the Labor side of politics, because he will not suffer from Labor's deeply ingrained terror of being attacked by the Liberals as disloyal and irresponsible.

And intellectually he has more to offer than anyone on his own side of politics, simply because he has thought about it more, and more openly than his colleagues. One reason for that is his obviously deep curiosity about China, especially, simply because he seems to see it as the most interesting, as well as perhaps the most important, place in the world today. That's not a bad starting point for Australian foreign policy.

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Ian Hall is right to doubt that President Obama's recent trip to India did much to build a really substantial US-India strategic partnership. But there is bit to learn from it anyway about how Obama and Prime Minister Modi are approaching the big strategic questions in Asia today – and that makes the visit worth a second look.

The first thing to see is Modi's attempt to revive a proposal for strategic consultations between America, India, Japan and Australia. This 'Quad' idea first emerged almost decade ago from the trilateral US-Japan-Australia strategic consultations but it was scuppered by Kevin Rudd soon after he won office. He worried that it would look like the beginnings of a coalition to contain China, which of course it was.

One would expect Mr Abbott to be much more enthusiastic about it. The Quad seems to fit perfectly his ideas for Australia to build closer strategic links with each of the other parties to defend the existing regional order against China's challenge. Indeed it is noteworthy that Canberra has not yet (as far as I have seen) come out with a statement welcoming Mr Modi's proposal. Perhaps following President Xi's visit last November, Mr Abbott is starting to think more carefully about whether this kind of coalition-building is the best way respond to China's growing power and ambition. Or perhaps he just has other things on his mind.

Second, Mr Modi's willingness to refloat the Quad idea reinforces a lot of other evidence that he is keenly looking for partners to help balance China's rise. He is keen for closer links with Japan (he's even considering buying Japanese submarines), and seems willing to take the strategic relationship with America into new territory. The joint statement issued with Obama during last week's visit was low on specifics, but it did explicitly align US and Indian strategic aims in the Western Pacific, which is an important symbol of India's willingness to identify itself with US efforts to counter China's rise. That was certainly how it was read, and welcomed, in both the US and Indian press.

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However, it is probably a bit soon to declare that Mr Modi is now a fully committed supporter of America's efforts to resist China's challenge in Asia. Like Abbott, Modi tends to send mixed messages. Just this week, as Brendan Thomas-Noone has mentioned, India's foreign minister joined his Chinese and Russian counterparts in what seemed a very pally meeting in which they declared their shared commitment on a new international order based on multipolarity. Not quite what Washington has in mind.

Like other new and relatively inexperienced leaders, Mr Modi might think that walking both sides of the street with America and China is smart diplomacy. Alas, it is not that easy. India has wide range of interests at stake in its relationship with China, and India cannot afford to subordinate those interests to the concerns of America or Japan, or Australia.

Third, and perhaps most interestingly, Mr Obama's visit to India tells us something about the evolution of his policies towards Asia. Whether or not he gets India's unflinching support against China, this is clearly what he wanted, and what the visit was designed to deliver. The scale of the visit itself shows how serious he is about this.

It was planned as a visit to India alone, not just a stop on a regional tour. The program – including long hours watching India's Republic Day parade – sent strong messages about Obama's commitment to building a substantive strategic relationship with India, directed against China. The US press was clearly briefed to read the whole visit this way, as they did.

We can draw three conclusions from this. The first is that, despite dramas in the Middle East and Europe, Obama still sees China as America's major strategic challenge, and he sees that challenge growing sharply. This reinforces the message on China in his Brisbane speech last November, which received much less attention than it deserved. He described the dangers posed by China, and the choices faced by Asia in response to it, in far starker terms than he had ever done before.

The second is that he has understood that his response to it so far — the pivot/rebalance – has not worked. His trip to India was his big effort to re-boot the pivot and re-energise America's efforts to resist China's assault on US primacy in Asia.

Third, despite the hugs, it didn't work, because India is not willing to make the preservation of US primacy its principal strategic aim in Asia.

Photo courtesy of White House.

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Malcolm Cook and I have been debating why China has been willing to bless Tony Abbott with an FTA when Mr Abbott has so strongly opposed Beijing's political and strategic interests and aspirations in Asia.

Why has President Xi met Mr Abbott's stick with such a juicy carrot, especially when Beijing has been so quick to use the stick itself on other neighbours? (Sam raised the related and important question of why China uses the stick at all when it has so many carrots to offer, to which I have offered an answer separately.)

Malcolm's explanation is that the economic benefits to China of the FTA simply outweigh the costs to China of Australia's position on strategic questions. He does not dispute that those strategic costs are significant, because he concedes both that China is serious about creating a new order in Asia, and that Australia's attitude to this is important to Beijing. He just thinks the economic advantages to China of a FTA with Australia are big enough to counterbalance them.

I'm not so sure. I think it is more likely that Xi and his colleagues believe that wider economic opportunities and kind words will seduce Australia away from its alignment with China's strategic rivals, and encourage us to be more willing to accommodate China's ambitions for regional leadership.

Of course it may be that we are both right to some degree. But it remains important to judge the relative weight of each factor in China's approach to Australia, because the implications for our position in Asia and our future policy depend a lot on which of them predominates.

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Malcolm's argument that economic factors predominate in Beijing's decision rests on judgments about the scale of the perceived economic benefits of the new FTA to China. That is hard to judge at this stage, of course, but we need to be careful not to take last week's euphoria at face value.

The evidence suggests that FTAs actually make very little difference to trade flows or GDP growth. Our Government's only word on this is a 2005 DFAT-sponsored study, which was the source of the much-cited figure of US$18 billion boost to Australia's GDP from an FTA with China. Here is what that study said about the impact, had there been an FTA between Australia and China over the past decade:  

In terms of average annual growth rates between 2005 and 2015, the FTA is estimated to increase Australia's real-GDP growth by 0.039 percentage points; and increase China's real-GDP growth by 0.042 percentage points.

Yes, that's right – four hundredths of a percentage point. In other words, the impact on GDP for China, as for Australia, was estimated to be utterly negligible, and there is no reason to believe that the deal that has now been done will have a significantly greater effect. Indeed the Productivity Commission's 2010 report on FTAs strongly suggests that it won't. It concludes that FTAs in general do nothing at all to boost trade or growth.  

But are there other economic benefits? One view is that China values an FTA with Australia to drive reform within China, which might indirectly boost growth. One cannot dismiss this out of hand, but it does seem on the face of it very improbable. The CCP seems to have no trouble driving reform on its own, and if it needs help from outside, why Australia? China has already signed FTAs with many advanced and prosperous countries which pose it no strategic problems. How does adding Australia to the list help?

So from the available evidence there doesn't seem much reason to think that economic motives have been uppermost in Beijing's decision to cuddle up to Tony Abbott. The fact is that this FTA, like others, is much more about politics than economics, in Beijing as well as in Canberra.

And one cannot help but notice that Beijing seems to have secured precisely the political outcome I think they were aiming at. Tony Abbott did, at least while Xi was here, show himself much more open to China's vision of Asia's future than he has ever been before, and he did so in direct defiance of Barack Obama's very plain and stern warnings just two days before Xi spoke in Canberra.

Time will tell whether this proves to be anything more than a passing blip. Tony Abbott may well revert to his previous strategic alignment against China at the next opportunity. If so, it will be instructive to see how China responds. That would perhaps tell us more about its motives and purposes.

In the meantime, it is easy to understand the attractions of Malcolm's interpretation of events. It would be nice to think that Australia's economic weight and sophistication is such an irresistible magnet for China that we can dictate the terms of the relationship and compel it to accept without demur whatever strategic positions we choose to adopt.

Be we would be unwise to assume that this is what is happening. It is at least as likely that the boot is on the other foot, and that China's economy is so important to Australia's future that Beijing can set the terms of the relationship — either by carrot or stick or both — and persuade us to look more kindly on China's aspirations for regional leadership.

Photo courtesy of the Department of Foreign Affairs and Trade.

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Sam Roggeveen raises an important question when, apropos my debate with Malcolm Cook about China's use of diplomatic carrots and sticks towards Australia, he asks why China bothers to use sticks at all when it has so many carrots. Like many others, Sam thinks China is making a mistake by acting so threateningly to so many of its nearer neighbours when it could so easily seduce them with economic opportunities.

We explored some aspects of this issue on The Interpreter back in May, specifically in relation to China's conduct in its maritime disputes with Japan and its Southeast Asian neighbours. I argued then that China uses these disputes specifically to weaken US regional leadership and strengthen its own by showing that America cannot or will not any longer support its friends and allies in Asia militarily as it used to do.

Sam's post however raises the deeper question of why China should think that this will help build its new model of great power relations in Asia. One simple answer is that everyone else does it. Most models of leadership at all levels of human interaction – even America's — involve a mix of both carrot and stick, and there is no reason to expect China's be to any different.

But I think there may be a more specific answer: the main target of China's sticks in the East and South China Seas is not its neighbours themselves, but Washington. It wants to convince America to step back from leadership in Asia by convincing Washington that it will have to confront China militarily to preserve its regional primacy, and that the costs and risk of doing so would be immense. It is trying to intimidate America, in other words. There is a good chance that it is working.

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Most people are surprised that China would think in these terms. It does not fit our model of how the world works these days. But my whole point is that the world is working differently now from what we have known, because for the first time in decades we are seeing real strategic rivalry between great powers. China is deadly serious about its 'new model', and will run real, if carefully calculated, risks to create it.

Moreover, viewed from Beijing, such measures might seem justified, and indeed required, by America's stubborn refusal so far even to contemplate any accommodation of China's aspirations. That refusal was restated more bluntly than ever by President Obama in Brisbane just last Saturday week. For Beijing, if carrots won't work on America, sticks must be applied, even if indirectly.

Photo courtesy of the White House.

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As Malcolm Cook says, this week's events show that Tony Abbott's strategic policies in Asia have not got in the way of his economic agenda. Mr Abbott has won his free trade agreement with China despite his enthusiastic alignment with Japan and America to resist China's regional ambitions.

So those, like me, who thought it might be otherwise have been proven wrong. When that happens it is a good idea to ask oneself why. Why has President Xi been so warm and generous to Mr Abbott when Mr Abbott has so deliberately opposed himself to China's interests and ambitions? There seem to be three possible explanations:

  1. Beijing doesn't really care much about these strategic/political issues, and their importance is outweighed by the economic value to China of the FTA and the diplomatic value of a warmer relationship with Australia.
  2. Beijing does care deeply about the strategic/political questions, but doesn't think Australia's views matter, so it is willing to ignore what Mr Abbott says on these subjects.
  3. Beijing does care deeply about these issues and does think Australia's views matter, but it decided carrots will work better than sticks. China's leaders may have calculated that the best way to change Mr Abbott's mind and bring Australia closer to China's views would be to offer soothing words and lavish gifts.

Which of these best explains what has happened this week? The Government probably believes it is option 1, and many others will agree. The consensus in Canberra remains that China is not really serious about challenging the US-led order in Asia, because for Beijing the economy always comes first. Hence Xi has been willing to overlook Abbott's strategic policies in pursuit of an economic win for China.

The problem with this explanation is that everything China has said and done in recent years shows that it is very serious about building a new strategic order in Asia. China's ambitions were absolutely clear from Xi's speech to parliament on Monday. It was equally clear from President Obama's speech in Brisbane that he takes China's challenge to the regional order very seriously indeed. That is exactly what his speech aimed to warn us about, in unusually stark terms.

Others too think the same. Mr Cameron's speech to parliament last week, and Mr Modi's yesterday, made plain their concerns about the strength of China's ambitions, and so did Mr Abe's address back in May. Only in Canberra does a consensus still prevail that China is not strongly committed to driving major change to the Asian order. The weight of evidence is strongly the other way, and that makes option 1 look implausible, especially as the economic benefits to China of the FTA are hardly transformational.

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What about option 2? For all the recent boasting about Australia coming out as a big regional player, it is possible that some people, even in the Government, still half-believe that what we say on these big issues doesn't really matter to the main players. A reflection perhaps of the 'adolescence' in our approach to foreign policy that Peter Hartcher has recently described.

But on this issue, at least, we should be in no doubt: Australia seems to have acquired quite a prominent place in regional power politics, as shown by the way Obama, Xi, Modi and Abe have all come here to deliver big geopolitical speeches. It would be unwise to believe that the Chinese do not care about Australia's position on Asia's great strategic questions.

That leaves option 3 as the most credible explanation for what has happened. If that is right, Mr Xi and his colleagues are very serious about their strategic ambitions, and do care what Australia thinks. But they concluded that it would be easy to bring us around to their point of view by offering an FTA and some reassuring words.

If that is what they thought then they seem to have been proved right – at least for now. To judge from what Mr Abbott said this week, and from the response of many of our leading commentators, Australia has taken a long step away from the policies he and they have articulated until now, and towards accepting and endorsing Mr Xi's vision of Asia's future under Chinese leadership. This is just what Mr Obama seems to have feared would happen.

But do the Chinese imagine that Mr Abbott's new-found enthusiasm for their vision of Asia will last for long? If so, they will be disappointed. He already took a step away from it in his exchanges with Mr Modi yesterday. What will he say next time he goes to Washington or Tokyo?

So where do we go from here? On the basis of this week's performance, Malcolm and others seem to think Mr Abbott has created a clear and sustainable basis for Australia's relations with China and our position in the power politics of Asia. I'm not so sure.

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Yesterday in Brisbane US President Barack Obama reaffirmed the Asian Pivot/Rebalance (transcript) which he presented in Canberra three years ago. But in doing so he presented a view of Asia's future, and especially of US-China relations, which was starker and darker than he gave in 2011. This makes the speech rather important. When future historians study the two speeches – and if they also look back to Obama's first big speech in Asia, in Tokyo in November 2009 — they will see clear evidence of how far America's sense of rivalry with China has intensified over the past five years, and especially over the past three years. They will see much less evidence of clear ideas about what America should do about it.

The significance of the President's words about Asia and China were somewhat overshadowed by the remarkable passage in his speech about climate change. I'll leave it to others to say what it might mean for climate policy, but it is worth noting what it means for relations between Canberra and Washington.

It is a very long time since any US president has publicly expressed his policy and political differences with his Australian counterpart as directly and even brusquely as Obama did yesterday, and to do so on that issue, at that time and place, was, well, very pointed. It is hard not to read it as a sign of how the Obama Administration sees Tony Abbott.

However, that matters much less than how the Administration sees Asia and China. Obama spoke more positively than he has done before about China's economic achievement and its significance for the welfare of the people of China, and of course he referred to the deal with Beijing on carbon emission targets. But he more than matched that with a distinctly adversarial tone in describing America's differences with China. These seem to me to be the key points:

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  • He spoke of 'genuine dangers' in Asia that can undermine progress, including 'Disputes over territory, remote islands and rocky shoals that threaten to spiral into confrontation'.
  • He spoke of the need to choose between two visions of Asia's future: 'Do we move towards further integration, more justice, more peace? Or do we move towards disorder and conflict? Those are our choices — conflict or cooperation? Oppression or liberty?'
  • He described America's vision of the regional order this way: 'We believe that nations and peoples have the right to live in security and peace; that an effective security order for Asia must be based — not on spheres of influence, or coercion, or intimidation where big nations bully the small — but on alliances of mutual security, international law and international norms that are upheld, and the peaceful resolution of disputes.'
  • And he left us in no doubt as to whose was the alternative vision. Back in 2011 Obama devoted only one paragraphs of his speech directly to China. Yesterday he devoted four paragraphs to China, in which he indirectly but quite unambiguously implied that China at present is not a responsible international actor and is not good for the region. He said America would cooperate with China where interests overlap, but not where they differ. And he explicitly warned against making too many compromises with China to accommodate its interests and values where they might differ from America's.

All of these points are much starker than any language he has used about China before. Obama's stress on choices seems especially pointed, in view of successive Australian Government's instance that 'we don't have to choose' between America and China.

And just to reinforce the point, a couple of days before Australia's FTA with China is due to be finalised, Obama made two not-so-subtle digs at our economic relationship with China. At one point he spoke disparagingly of trade whose purpose is 'simply to extract resources from the ground', and at another he spoke of building a new economic structure in Asia under the US-led Trans Pacific Partnership in which countries are no longer 'dependent on a single market'.

Finally, although Obama repeated the assurances he has made before about his resolve to use 'all the elements of America's power' to impose America's vision of Asia's future on a reluctant China, he did not explain what more America would or could do, beyond what it has been doing for the last three years, to resist China's challenge to US leadership.

Obama therefore gave us no reason to believe he has an answer to what he himself clearly sees as China's increasingly powerful bid to create a 'new model of great power relations' in Asia.

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As power shifts in Asia, Australia faces big new foreign policy challenges. Getting them right is vital to Australia's future security and prosperity. But the way we do foreign policy in Australia these days is not up to the task. We have to do foreign policy better.

This is the central argument of Peter Hartcher's new book, The Adolescent Country, which gives a fresh and well-framed take on the way Australia tries to position itself in the world. Peter is an indefatigable reporter, and he has garnered many interesting and important views from many interesting and important people. He is also an accomplished author who assembles his material into a fluent and accessible story.

It is also, at heart, a distinctly optimistic book, for two reasons.

Australian Foreign Minister Julie Bishop. (Flickr/CSIS.)

First, although Peter finds much that is wrong with the way Australia approaches foreign policy, he tends not to blame governments for that. Mostly – there are a few exceptions – he argues that successive governments in recent years have got things right and that it is the media, successive oppositions and the wider public who fail to understand how important their work is, and sometimes get in the way. The key message seems to be that all would be well if the media and the public would only take what their governments are doing more seriously.

Second, Peter seems broadly confident that good solutions to Australia's foreign-policy challenges are going to be relatively easy to find. His shares Julie Bishop's conviction that Australia is and will remain a 'top 20' power, and that as such we will be able to shape the international system to preserve our prosperity and security without having to make too many uncomfortable choices.

Alas, I'm not sure it's that easy.

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First, how should we score recent governments' foreign policies? Peter gives high marks for Rudd's G20 initiative and UN Security Council bid, for Gillard's support for Obama's Pivot, and for the Abbott Government's responses to MH17, ISIS and Abe's changes to Japan's defence posture. This is not the place to argue the toss about all these policies, but there are solid arguments that each of them was either largely irrelevant or actually damaging to Australia's core interests. The more of those arguments one accepts, the weaker our governments' recent performances look.

These examples also cast some doubt on Peter's diagnosis of the problem with our foreign policy. The media warmly applauded each of these policies, and those in opposition only overtly criticised one of them. A more critical observer might therefore argue that our media and opposition are too lenient on governments rather that too tough on them. More stringent scrutiny might produce better outcomes.

Second, I think we have to be a little more cautious about the seriousness of the problems we face and the choices they will impose on us. Peter's book discusses the strategic shifts in Asia and the need to respond to them, quoting with approval Michael Thawley's view that Australia has to 'take the lead in creating an agenda'. But he does not discuss in any systematic way what our response should actually be.

In fact Peter seems to accept the widely shared assumption that these responses need not involve any very hard choices for Australia, because US leadership will continue to provide the foundation of regional order. But that is not something we can simply assume, and one might argue that the real weakness in Australian foreign policy is that so few in government, the opposition or the media and commentariat are willing seriously to debate it.

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