Lowy Institute

I'm a sucker for these video tutorials which explain economic concepts. This one has an Australian angle:

(H/t MR.)


With Indonesia's presidential election to be held next Wednesday (9 July), we thought we'd depart from our normal weekend catch-up to highlight some of the first rate Indonesia election coverage we've featured on The Interpreter.

Back in September 2013 Stephen Grenville commented on the possibility of Joko Widodo running for president:

You can't read a paper or watch TV in Indonesia without coming to the conclusion that Joko Widodo ('Jokowi'), the mayor of Jakarta, is a shoe-in for the 2014 Indonesian presidential election.

Not only is he the front runner in most polls, he is ubiquitous, getting footpaths fixed, sorting out street vendor logistics, shoring up Jakarta's flood defences and restarting construction of the city's monorail.

How does someone who a year ago was just a small-town mayor become the likely leader of Southeast Asia's largest country? The US experience provides a clue. Presidential systems can elevate a peanut farmer to the POTUS role. And the other current candidates seem fatally flawed for one reason or another.

In January Catriona Croft-Cusworth joined The Interpreter as a regular contributor from Jakarta. Since then she has contributed an enormous amount of excellent material. A few of her best posts below.

On why Islamic parties generally don't do well in Indonesian elections:

Lost claims to moral superiority and a lack of ideological difference to secular parties has made it difficult for Islam-oriented parties to compete in Indonesian politics. Another lost selling point has come with the improved provision of social welfare by secular parties, undercutting the services provided in health and education by NU and Muhammadiyah. Though still far from perfect, government welfare services are improving and in some cases now cater better to poorer voters than those provided by the two big Muslim organisations.

With all three factors thrown into question, Islam-based parties have lost their major platforms for public support. Meanwhile, secular parties are free to court all religious groups and make promises on social welfare from a non-Islamic, but still religious, ideological background.

And why Islamic parties did a little better than expected in the 2014 parliamentary election:

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Islamic parties actually saw a rise in support compared to previous legislative elections, taking a collective 32% of the vote compared to 29% in 2009. All Islamic parties took a bigger share of the vote than in the previous election, with the exception of the scandal-ridden Prosperous Justice Party (PKS), which was punished with only a 1% decline in voter support.

Rumours are now flying about plans for the Islamic parties to form a coalition and put forward a presidential candidate, though commentators have dismissed this as unlikely, if not impossible.

Journalists and analysts in Jakarta have been scratching their heads over the result, which put the Islamic National Awakening Party (PKB) in the top five, just below President Susilo Bambang Yudhoyono's Democratic Party. Some have pointed to corruption among secular nationalist parties as a reason voters looked to Islamic parties, deemed to be more morally sound. But this does not explain why parties such as the PKS were not punished more harshly.

 Following legislative elections in April, Catriona reported on the first chinks appearing in Jokowi's armour:

Then came the legislative elections last month and the poorer than expected result for Jokowi's party, the Indonesian Democratic Party of Struggle (PDI-P). By quick-count results (official results are due to be announced in the coming days), the PDI-P secured about 19% of the vote, less than the 25% needed to independently nominate Jokowi for president. Suddenly, doubts began to arise about whether Jokowi could simply sail into the presidency, as many had come to believe.

In a thorough rundown of events on Inside Indonesia this week, Mietzner defends PDI-P's legislative result, arguing that it only looks disappointing because of unrealistic expectations raised by experimental* polls and local media. However, he concludes by saying that 'losing is no longer an impossibility' for Jokowi in the presidential race.

Lots of people talk about Indonesia's  obsession with social media, and as Catriona wrote, it naturally permeates the election campaign:

 On social media, campaigning is in full swing. This means YouTube clips, Facebook pages, Twitter hashtags and a whole lot of election-related apps.

Jokowi is a newcomer to national politics but no stranger to social media campaigning, which he used to great effect in his campaign for Jakarta governor. There are plenty of apps available under his name, most of which appear to be made on a budget by his supporters. One is called 'Flap Jokowi Man' — presumably a mash-up of 'Flappy Bird', Jokowi and Superman — by Shayort Games, which has the presidential frontrunner dressed in a green and purple superhero outfit. As in 'Flappy Bird', the aim of the game is to keep the character flying through a series of obstacles at the top and bottom of the screen, which in Jokowi Man's case come in the form of fistfuls of cash. And as in 'Flappy Bird', it's really difficult to avoid falling flat.

 And here's Catriona's take on what the two presidential candidates might mean for relations with Australia:

On Sunday night, Indonesia's rival presidential candidates, Prabowo Subianto and Joko 'Jokowi' Widodo, held their third televised debate ahead of the 9 July election, this time with the theme 'International Politics and National Defence'. In a wide-ranging discussion of regional concerns and Indonesia's national interests, Australia received special mention.

Jokowi, a small-town politician who has only recently risen to national-level politics, gave a surprisingly confident performance against the former military commander Prabowo, who was expected to dominate the international-themed debate. During a question and answer session, Jokowi asked his opponent for his opinion on why Australia-Indonesia relations had tended to run hot and cold.

Prabowo's response gave the Australian media its sound bite for the evening: 'Honestly, I think that the problem is not in Indonesia. Perhaps Australia holds some kind of suspicion towards Indonesia. A kind of phobia,' Prabowo said.

Jokowi had his own comments prepared for the topic. He didn't go so far as to suggest that Australians had an irrational fear of Indonesia, but did identify the two main issues that he believed were affecting relations between the two countries: distrust and a lack of respect for Indonesia's integrity. 'There is a problem of trust, which is what led to the spying problem,' he said. 'We are regarded as a weak nation. It's a matter of national respect, a matter of integrity,' he added.

Back in February we featured an insightful four-part series on Indonesia's growing middle class. Authored by Joanne Sharpe, part 3 looked at voting habits of the the 'noisy' middle class:

Jakarta Govenor Joko Widodo (Jokowi) has risen to such prominence that it's hard to remember a time when he was the underdog for the 2012 gubernatorial race. A charismatic small town mayor with a track-record of reform, he and running mate Basuku Tjahaja Purnama (known as Ahok) were behind in the polls two months before the first of two electoral rounds.

As political consultant Yunarto Wijaya explains, 'all the surveys predicted that (the incumbent) Fauzi Bowo would be the next Governor. In my survey, two months before the election, I only had about 23% voting for Jokowi/Ahok'. Some polls predicted that the incumbent could win the first of two electoral rounds by as much as 49%.

But, Yunarto says, much of the middle class remained undecided. A survey by respected pollster Indonesia Survey Institute (LSI) confirmed that an unusually high 30% of respondents made their decision within the last week of the first round election. And on the day, says Yunarto, it was the middle class that turned out in force for Jokowi. Jokowi/Ahok won the first round with 43% of the vote to the incumbent's 34%. They went on to win decisively in the run-off.

LSI called the first round election result a 'middle class protest'. Does the growth of the middle class herald a sea change in Indonesian politics?

 In March, Wawan Mas'udi from Gadjah Mada University in Yogyakarta looked at some of the reasons behind Jokow's popularity:

The second factor is Jokowi's commitment to participatory governance. In particular, he gained widespread acclaim both in Solo and more broadly for his consultative approach to relocating street vendors away from a park in central Solo, where they had built up a dirty semi-permanent squatter marketplace and were causing traffic chaos. Attempts to move street vendors in Indonesia often turn violent, as police and public-order personnel clash with traders determined to stay put. Jokowi avoided this by holding as many as 56 informal meetings with street vendors, often over lunch or dinner, to find a mutually acceptable solution. In the end, to convince the traders to move, he offered them a permanent marketplace in the southeast of the city, provided financial incentives including a six-month tax holiday and free of charge relocation, as well as establishing public transport links from the city centre to their new location.

Jokowi also made a habit of making local visits to talk to residents (a practice called 'mider projo'), as well as encouraging community participation in the city's planning process. This approach resonated with a local cultural idiom of 'nguwongke uwong' (treating a person as a person) and helped Jokowi cement the 'man of the people' image that has been one of his great electoral assets. 

 Turning to the economic ramifications of Indonesia's election, Stephen Grenville examined the economic policies of the two front runners:

Will Jokowi, if elected, turn the clock back and reinstate the failed policies of the 1950s? He comes from a practical business background and has shown himself to be an adept administrator. His vice presidential running mate, Jusuf Kalla, is deeply experienced in both business and politics. The bureaucracy, too, will exert some inertia to prevent policy slipping the wrong way too quickly. 

In the meantime, Jokowi may learn a key lesson of politics: good economics sometimes requires pre-election promises to be broken or at least re-interpreted. Perhaps Australia should offer some bipartisan technical assistance on how it's done.

Finally, last week the Lowy Institute's Aaron Connelly broke the news that, despite all the hype over the last 10 or 11 months, Jokowi may not actually be the favourite in the upcoming presidential contest:

If the race is as close as it appears, that would favour Prabowo. Local party officials who have kept a foot in both camps as the race tightened are now likely to board the Prabowo bandwagon as it picks up momentum. Moreover, businessmen are now likely to place new bets on Prabowo's already well funded campaign. As The Economist notedlast week, those close to the Jokowi campaign say that a sense of panic has set in among his campaign staff.

Prabowo Subianto must now be considered the favourite to win the 9 July presidential election, a result that was unthinkable just a month ago.

Image courtesy of REUTERS/Beawiharta.


A short and powerful piece, this, from Nir Eiskovits. Two highlights:

At this point we should introduce an uncomfortable but crucial distinction: terrorism, like guerilla fighting more broadly, is a way of behaving rather than a group designation. Scholars such as Stephen Nathanson have pointed out that it is more coherent to talk about terrorist methods than about “The Terrorists”. These methods are used, disproportionately, by non-state actors like the Taliban, Hamas and (recently) ISIS. But not exclusively. If terrorism consists in the intentional targeting of civilians, then blowing up buses is terrorism, shooting rockets into civilian neighborhoods is terrorism, retaliating in kind is terrorism, and the devastation of German cities at the end of World War II counts as well.

And this:

Refusing to “negotiate with terrorists” is the same as telling our soldiers that we will never talk to their enemies, which amounts to telling them that they have nothing to hope for if they are caught, which is the same as telling them that we don’t “have their back”. That is wrong (for obvious reasons), bad for morale, and catastrophic for our ability to recruit fighters. If any of our asymmetrical wars are worth fighting (a different question altogether), we need to face up to the moral and practical realities involved. We must, in other words, confront the enemy we find, not the one we would have fashioned for ourselves. 


Peter Jennings says 'pretending that America can sit out (the Iraq) fight is just not realistic'. That's exactly what many pundits were saying a year ago about air strikes against Syria.

But to his everlasting credit, President Obama reconsidered, and where are we now? Syria remains a tragedy that could not have been fixed by US air power anyway. But Israel remains secure, oil is still flowing from the Persian Gulf, and there is now one less WMD-armed regime in the world. True, the terrorist threat is surely more acute, given the potential for Iraq and Syria to act as incubators for the next generation of violent fanatics. But after the experience of Iraq and Afghanistan, the bar for demonstrating that US military intervention can reduce the terrorist threat is high. As I said in my debate with Anthony Bubalo, we have a pretty good idea in this part of the world about the most effective mix of policies for combating terrorism, and military action is rarely part of that mix.

Peter says 'The opportunity for early American air strikes against ISIS has been lost', but that Obama has only delayed the inevitable because 'America's interests in the Middle East balance of power are so substantial that not even Barack Obama can ignore them forever'. I'd like to hear more about exactly what those interests are, but even assuming they are vital, it's still not clear that military action is the best way of protecting them. In fact, it will probably just damage them. America is less secure and prosperous today because of the wars in Iraq and Afghanistan (and Libya), and it is less respected in the Middle East. That's a dreadful legacy, and ought to be a caution for those demanding still more intervention.

I must correct Peter on one final point: I'm not at all motivated in this debate by a 'distaste of George W Bush'. It's more like self-loathing for my eagerness to buy the disastrous policy Bush, Cheney and Powell were selling at the time. But as President Bush himself once almost said, fool me once, shame on you. Fool me twice, shame on me.


As Julian Snelder wrote yesterday, World War I analogies are all the rage among Asian security scholars this year (we posted a two-part examination of the similarities and differences by Robert Kelly in March). Now Australian Foreign Minister Julie Bishop has joined the fray, with what Fairfax's David Wroe described fairly as a dark speech to the Crawford Australian Leadership Forum yesterday (transcript here):

Every nation in the global supply chains has much more to lose from conflict than they could ever hope to gain. And yet, there is increasing instability and conflict in our time. We cannot take for granted that globalisation is, of itself, a bulwark against aggression and conflict.

This is not a new concept. British author, parliamentarian and 1933 Nobel Laureate, Sir Norman Angell observed just over 100 years ago, that economic interdependency at that time had become so significant, that war had become economically pointless. He argued that rational self-interest would triumph in the considerations of national leaders. Tragically history proved that global trade did not prevent irrational or mad decisions, and did not stop war.  We must learn from that lesson.

Today we are witnessing the re-emergence of Asia as an economic power. China has been the largest economy in 18 of the last 20 centuries and is set to be again in the 21st Century.  This has brought with it renewed, and increasingly significant border tensions as China asserts what it sees as its role as a global power – as we have witnessed recently between China and Japan, with Vietnam, the Philippines and other countries in the East and South China Seas.

Australia takes no position on the merits of the competing claims, but we do have a vested interest, a deep vested interest, in the maintenance of peace and stability in the seas and oceans to our north and west. That is why we urge all nations to refrain from unilateral or coercive behaviour and for all disputes to be settled peacefully through negotiation and according to international law. 

And it is in this context that perhaps the most critical lesson from WWI is relevant – that isolated, single, random events can unleash forces that quickly spiral out of control. That is why we urge all nations involved in territorial disputes to show restraint, to avoid miscalculation or misjudgement that could trigger another round of escalating tensions.

One other notable thing about this speech: Bishop confines the recent Arab uprisings to history by noting pointedly that these were 'formerly known as the Arab Spring'.


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

This week the Lowy Institute revived its Lowy Institute Papers series, now to be published in cooperation with Penguin Australia. The first paper in the series (Beyond the Boom by John Edwards) looked at Australia's mining boom, asking whether the boom is really over and questioning how much it contributed to Australia's prosperity. We've kicked off a debate on these questions and John summarised his arguments for Interpreter readers:

The investment phase is certainly beginning to wind down but the mining boom is not over – and in some important respects it has barely begun. Anyway, the mining boom does not explain Australia's long run of economic success. Australia's economy grew faster in the ten years before the boom began than it did in the ten years after, and incomes rose more rapidly. Exports increased much more in the ten years before the boom began than the ten years since. Over its first decade the mining boom saw an expansion of the resources sector by something like 3% of GDP and an addition to Australian income of something like 3% of GDP – both useful contributions, but much less than the imagined gain.

The first response to John's paper came from Alex Tabbarok, a professor in economics at George Mason University:

Edwards focuses on the past. I will say more about the future. First, a simple point about China. China does not have the institutions — rule of law, honest government, sound property rights and so forth — to push beyond middle-income status. China's growth rate, therefore, while it has been astonishing, will decline. The Chinese economy will get bigger, just at a slower rate. Thus, the demand for Australian exports will remain high even as prices moderate and, with its recent investments in infrastructure, Australia is well placed to deliver exports profitably even at lower prices. Second, mining is not just about getting stuff out of the ground. Mining is about transportation, automation, and logistics. Rio Tinto's driverless train system, for example, is the most advanced in the world. Exporting logistic services is another boom field for Australia.

As Jon Stewart memorably illustrated, every US president since Nixon has called for freeing the US from 'dependence on foreign oil' (within ten years!). Every president has failed. Fracking, however, has delivered the goods. Fracking has reduced the price of energy while generating millions of jobs and reducing net emissions of greenhouse gases. The fracking revolution has only just begun in Australia. Australia has abundant supplies of natural gas and if it creates a national market and avoids parochial calls for price controls and environmental NIMBYism it will certainly become the world's largest exporter. While profiting from natural gas production and infrastructure investment, Australia will also help the world to move closer to greenhouse gas targets.

The Interpreter had a scoop this week (welcome to all our new readers), with Indonesia Fellow Aaron Connelly suggesting that Prabowo Subianto might now be the favourite in Indonesia's presidential election, which is less than a fortnight away:

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New polling data on Indonesia's presidential election — and the lack of it from certain critical quarters — suggests that Jakarta Governor Joko Widodo's 38-point lead of three months ago has evaporated. He and his opponent, former military commander Prabowo Subianto, may be locked in a dead heat. 

If the race is as close as it appears, that would favour Prabowo. Local party officials who have kept a foot in both camps as the race tightened are now likely to board the Prabowo bandwagon as it picks up momentum. Moreover, businessmen are now likely to place new bets on Prabowo's already well funded campaign. As The Economist noted last week, those close to the Jokowi campaign say that a sense of panic has set in among his campaign staff.

Prabowo Subianto must now be considered the favourite to win the 9 July presidential election, a result that was unthinkable just a month ago.

Still on Indonesia, Catriona Croft-Cusworth reported on the foreign and defence policy debate between the two presidential contenders:

It's not surprising to hear nationalist rhetoric in the lead-up to a presidential election. Jokowi's prepared comments on Indonesia's 'integrity' were likely drafted to dispel the public perception that Prabowo would be a more firm and decisive leader than Jokowi, who tends to solve problems via consultation and consensus. Prabowo's comments about military and economic might are surely also playing to this perception.

However, Australia should take note that its relationship with Indonesia was considered important enough to be raised during Sunday night's debate. Regardless of who emerges as Indonesia's new leader in the coming months, the Lowy poll and the televised debate suggest that Australian attitudes towards Indonesia play a crucial role in the relationship.

Kadira Pethiyagoda wrote on the the importance of cultural identity and values in the formulation of Indian foreign policy:

Despite the BJP's reputation, a focus on cultural identity won't necessarily convert to hyper-nationalism; it can also be part of India's enormous potential in the field of 'soft power'. For instance, Modi justified the maintenance of India's 'no first use' (NFU) nuclear policy by calling it a reflection of the country's cultural heritage. Granted, India's nuclear competitors don't trust the NFU pledge, but it is likely that Modi's statement is more than just spin.

Modi is likely to follow the tradition of the last BJP government (1998-2004), which did not seriously consider nuclear weapons as useable war-fighting instruments. 

In the View from Rangoon, Elliot Brennan discussed the recent political maneuvering of Aung San Suu Kyi (and constitutional reform in Myanmar more broadly):

In organising these mass rallies and upping the rhetoric around the discussion of constitutional amendments, Aung San Suu Kyi has challenged the military establishment to change its role in the country. It's a challenge that has come too soon for some. The powerful figurehead and Commander-in-Chief of the Armed Forces, General Min Aung Hlaing, is unmoved. He argued in an Armed Forces Day speech in March that the Tatmadaw (the armed forces) was 'mainly responsible for safeguarding the constitution'.

Concern over sovereignty is the chosen argument of the naysayers to the amendments. This is sensitive issue, with bubbling ethnic tensions and a violent and highly volatile situation in Rakhine state with ongoing persecution of the Rohingya, locally known as Bengalis. Any change to the constitution would likely open a Pandora's Box, opening calls for a complete rewrite. Many would want a debate on a new Panglong agreement, a federal system, which has long been popular among ethnic groups.

Switching to economics, here's Stephen Grenville on the legal complications of sovereign debt restructuring:

Just as individuals default, countries also reach a stage where they can't repay their debts in full. Simply insisting on the 'sanctity of contract' doesn't get us far in resolving the issues. The debt problem is usually as much the fault of the creditor as the debtor — remember all those Euro-periphery bonds that were bought at yields almost the same as Germany's? Sitting down to reach a practicable resolution makes sense. When the clear majority of the creditors have done exactly that, those who come along afterwards to buy the 'hold-out' debt at a heavily-discounted price and then act as if they should be paid in full shouldn't be surprised if they earn the title of 'vultures'.

The damage is now done. Sovereign debt resolution can't be left in this unsatisfactory state. Europe provides many examples (Greece being the most prominent) of where the outstanding debt is clearly unsustainable and more restructuring is needed.

And Julian Snelder on China's banking sector:

Risk of loss is the root problem. Both Chinese industry and banks lack real equity. The economy is highly credit intensive, yet banks must continue underwriting loans to keep it running. But investors have lost confidence in the true state of the banks, which are in turn forced to issue junk capital. Investors are unwilling to buy it except at a high price, perhaps 7-8%pa for the best banks, which means 10%pa or more for the weaker ones. No investor really expects a state-owned bank to go bust (if they did they'd demand a lot more than 7%) but they are nonetheless scared of corporate losses piling up at the banks.

Under China's bold new economic reforms, it still isn't clear whether and how major financial losses will be permitted. Beijing needs somehow to untangle this knot and begin the recapitalisation of the banks and the entire economy: more equity, less debt.

 The sentencing of journalist Peter Greste in Egypt this week understandably caused much outrage in Australia. Anthony Bubalo reminded us not to forget the broader political situation in Egypt:

It is these arrests that make a mockery of the regime's claim that it is only fighting terrorists. Indeed, even if every charge the regime has made against the Muslim Brotherhood is true (and some of them are), this still does not explain or excuse the wider crackdown.

Journalists like Greste are being arrested or intimated precisely because, to use the words of the Prime Minister, they 'report the Brotherhood', or anything else the regime does not like. What the Greste case demonstrates is that both as a matter of principle, and on very practical grounds, the international community cannot turn a blind eye to the wider assault on Egyptian citizens while expecting special protections for its own.

Still on the Middle East, Thomas Lonergan looked at an innovative solution to the potential problem of extremists returning to Australia after fighting in Syria and Iraq:

Government should consider establishing a Joint Inter-Agency Task Force (JIATF) to address the urgent Australian jihadist threat. The JIATF's mission would be to gather and analyse intelligence, liaise with allied and other foreign partners and take law enforcement action against Australian jihadists (it should also ensure that things like this don't happen again). At home, increased messaging to deter and prevent travel, and an invigorated effort to counter violent extremism, would be essential. 

To work, the JIATF must have a binding command and management mechanism. The JIATF's senior leaders must be given the legislative authority to give direction and make decisions for all the participating agencies. Furthermore, operational funding should be provided directly to the JIATF and not be 'filtered' by parent agencies.

Finally, here's an interesting piece by Robert Kelly on the 'dangerous indulgence' that is the debate on history between South Korea and Japan:

The Korea-Japan dispute over history is back yet again, with the Japanese Government this week releasing a 'review' of the drafting of the 'Kono Statement.'

That statement is the 1993 Japanese admission, by Chief Cabinet Secretary Yohei Kono, that the Imperial military during the Pacific War organised military brothels in which Korean women were often forced to serve. The Japanese euphemisms for this is 'comfort women' and 'comfort stations'; in reality, this was enforced prostitution that inevitably included beatings and other abuse. As the Japanese empire expanded, the practice spread across Asia, including women in Japan's Southeast Asian holdings.

Much of this is well known and widely accepted outside of Japan. There is a fairly substantial literature on it, especially in Korea where the practice was widespread (this is a good place to start). Even within Japan, it is really only the hard right which disputes this history, insisting that all these women were voluntary prostitutes (for a colourful example of the sort of hate mail I get on this, try here). Kono himself says there is nothing to add to the previous statement, and even the US has urged Japan to leave it alone.

Photo by Flickr user Ed Yourdon.


Billed as a French version of the British political parody The Thick of It, The French Minister (titled Quai d'Orsay in France) is the story of a young speechwriter working for the French foreign minister. According to Wikipedia, the character of the foreign minister is based on Dominique de Villepin, who was President Chirac's chief diplomat from 2002 to 2004.

The film is screening in Melbourne from 17 July.


ASPI's Peter Jennings yesterday drew parallels between President Obama's recent West Point speech and a 1950 speech by then US Secretary of State Dean Acheson which set geographic boundaries to US interests in Asia. South Korea was placed outside those boundaries, and the speech is widely thought to have encouraged Pyongyang and Moscow to believe that they could invade South Korea without US retaliation.

According to Jennings, Obama's speech, in which the President said the US would only use force to protect 'core interests', has sent the same message to America's contemporary adversaries:

Around the world, America’s frenemies now know that they have a free hand to push the limits of their own aggressive intensions against neighbours. All they have to do is avoid harming American ‘core interests’, itself a flexible concept. Obama’s West Point speech repeats in all fundamental respects the same disastrous errors of Dean Acheson’s 1950 oration. Emphasising what America will not do in international affairs only emboldens the world’s zealots, nationalists and chauvinists to fill the vacuum created by absent US power.

Peter might have drawn on other examples to illustrate what America will not do in international affairs. For instance, the US opposed the Soviet incorporation of the Baltic republics in 1944, but took no military action to stop it. Nor did it send tanks into Hungary in 1956 to resist the Soviet invasion, or into Prague in 1968. Then there was China's war against Vietnam in 1979, various wars and skirmishes between India and Pakistan since partition, and countless civil and international conflicts in Africa and South America.

You get the point: American foreign policy is, like that of every country, defined by limits, of both resources and interests.

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In fact, that sentiment is so obvious it borders on trite. So why should Obama not articulate it? What is controversial about a US president saying that there are a whole bunch of conflicts the US will not get involved in? Surely it would be much more extraordinary if a US president were to declare that his country's foreign policy had no limits? But of course, we've been there:

So it is the policy of the United States to seek and support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world.

That's from George W Bush's second inaugural, delivered in January 2005, though even that sweeping statement was immediately followed by the caveat that 'This is not primarily the task of arms'. Unfortunately, Bush was about two years late to this realisation. A more sober assessment of the limits of American power in early 2003 might have  saved Bush from making the greatest strategic blunder of any president since the Vietnam War.

Peter Jennings thinks that, in articulating the limits of American power, Obama has emboldened groups such as ISIS in their take-over of Iraq. He says 'Small crises...have a way of growing into bigger ones, and sooner or later those will infringe core interests. The message for Barack Obama should be if you aren’t prepared to fight small fires, you’d better get ready to fight bigger ones.' That sounds like a call for the US to be permanently prepared to pre-emptively intervene in essentially any local conflict anywhere, a sentiment more at home in the heady early months of the Afghanistan invasion or Operation Iraqi Freedom. Our experience since then should have taught us that even 'small fires' are often beyond the ability of the US to put out. In fact, trying to put them out is what got Iraq into this mess in the first place.

It's not the articulation of limits that has weakened America over the last decade or more, but the refusal to accept any limits. Obama's speech was a necessary correction to that over-reach.


The Interpreter has been flooded with traffic since we published Aaron Connelly's analysis of the Indonesian presidential race on Tuesday afternoon.

Aaron said Prabowo Subianto was now favourite to win the Indonesian presidential election, an unthinkable prospect just a month ago in the race against former Jakarta governor Joko 'Jokowi' Widodo. Aaron also said that some Jokowi-aligned institutions are holding back their opinion polling because they fear that Prabowo's strong showing in those polls will, if published, further weaken their preferred candidate. Fairfax Indonesia correspondent Michael Bachelard has now backed up this analysis via his own sources.

As you will hear in Aaron Connelly's Quick Comment below (the interviewer is Lowy Institute intern Steven Hong), some Prabowo supporters in Indonesia have used Aaron's analysis to claim that their candidate is in front. There's no direct evidence for that claim yet, though as Aaron wrote, it is looking more likely. Listen also for Aaron's thoughts (4.20)  on what a Prabowo presidency might mean.


A few items that have crossed my desk today:

  1. The Canberra Times reports today on the massive increase in the number of Australian bureaucrats with security clearances, including plumbers working for the Industry Department and field workers for the Plague Locust Commission. It's all because so much more of the information these public servants need for their jobs is classified when it probably shouldn't be.
  2. Spiegel has published in PDF form a new tranche of Snowden documents relating to the NSA's activities in Germany.
  3. The New York Review of Books has a review of three new books about Snowden and a documentary by the American public broadcaster, PBS. Parts 1 and 2 of the doco embedded below.
  4. The same review mentions a piece by prominent American political commentator Michael Kinsley, in which he states that 'the private companies that own newspapers, and their employees, should not have the final say over the release of government secrets, and a free pass to make them public with no legal consequences'. For reasons outlined here, I don't think that's a persuasive argument, but I do think governments do themselves no favours by classifying so much material (see point 1). They could help themselves by setting up systems that allow for the controlled release of classified information, as a kind of safety valve against uncontrolled leaks. It's an argument I make at greater length in this WSJ op-ed.


Strong stuff from Gideon Rachman:

Will David Cameron go down as the prime minister who turned Great Britain into Little England? If things go wrong for him, he could end up presiding over the departure of Scotland from the UK – swiftly followed by Britain’s own departure from the EU.

Many foreign observers are bemused. The Obama administration has made it clear that it would be appalled if Britain left the EU. The US also worries that Britain’s ability to play a global role is dwindling, as military capacity shrinks. A senior German politician sniffs that Mr Cameron has a knack of “organising his own defeats”. The Japanese, key investors in Britain, are alarmed at the prospect of UK withdrawal from the EU. And a Chinese official warns that the UK is becoming the “third power” in Europe.

He concludes on an upbeat note:

Syria, Scotland and the EU, taken together, suggest that the UK may be quietly abandoning its remaining pretensions to be a great power. But it would be a mistake to conclude, therefore, that Britain is becoming an inward-looking country. Its entrenched internationalism is rooted in economic, cultural and social forces that are ultimately more powerful than the political questions thrown up in Brussels, Edinburgh or the Middle East. Whatever happens politically, the UK will remain an outward-looking, trading nation and a magnet for immigrants the world over. London’s position as one of the few truly global cities is also unlikely to change.


Vox has some remarkable — and depressing — charts on why the world is failing on climate change, all derived from BP's latest Statistical Review of World Energy. Half of the world's greenhouse gas emissions now come from Asia, with China alone consuming half of the world's coal. This is the flipside of all those graphs you see charting the meteoric rise of Asian GDP:


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

Iraq continues to dominate headlines, and we've had plenty of coverage on The Interpreter this week, including a debate between Anthony Bubalo and myself. Here's Anthony on why the US and Australia should 'go back' to Iraq:

The US has to go back to Iraq, not with boots on the ground but with a more focused and sustained engagement using all the wit and clout it can still muster. It needs to set aside pivots and rebalances and deal with the serious threats to its interests in Iraq and elsewhere in the Middle East. Obama may have felt that America is done with the Middle East; the problem is that the Middle East is not done with America.

There is a lesson here too for Australian strategic planners. What is really interesting is that despite all the talk of how Australia is intently focused on the looming strategic challenges in Asia (and how this will be reflected in the forthcoming Defence White Paper), the Australian Prime Minister's instinctive reaction was to not rule out any Australian involvement in Iraq in support of the US.

This is not say Abbott was wrong to imply we might go back to Iraq. His cagey response might even be considered prudent and unsurprising, given the US probably has not yet even asked him for assistance. It is also noteworthy that since the Prime Minister's comments last week, Foreign Minister Bishop seems to have ruled out any participation by Australian ground troops.

In fact, if the immediate US response is airstrikes, there is little Australia could provide in support. More interesting, however, is what Australia could and in my view should provide to support the building of a more effective and professional Iraqi army (something we have done in the past). The fact that Indonesian jihadists are already traveling to the region for training underlines that we still have significant interests at play.

 And here's my counter-argument:

Re-entering Iraq and training local security forces is not necessarily the best way to address that problem. Surely the biggest lesson from Iraq and Afghanistan is that the broad-canvas approach to counter-terrorism (rebuild the security forces and even the entire political system in places where terrorism incubates) is much too ambitious.

As for the terrorist threat to Australia, we know what works: intelligence and policing cooperation with our friends in the region, which has brought impressive gains against al Qaeda affiliates such as Jemaah Islamiya. The outstanding success story of Southeast Asia's fight against terrorism has been Australia's cooperation with Indonesia, an effort that 'has yielded results that have exceeded all expectations', according to Greg Barton, a researcher at Monash University's Global Terrorism Research Centre.

Rodger Shanahan on the use of social and digital media by the Islamic State of Iraq and Syria:

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Al Qaeda and other Islamist terrorist and insurgent groups have cultivated an advanced social media presence. It serves a much more important purpose than do traditional information operations campaigns that Western militaries have been developing for the last few decades. For Islamist groups, their social media platforms are part recruiting tool, part fundraising tool and part branding tool. Video of victorious Islamic warriors parading captured Western equipment and hundreds of kaffir prisoners does wonders for the the Islamic State of Iraq and Syria (ISIS) brand, which in turn attracts volunteers to its ranks and money into its coffers.

Rodger again on potential odd-couple cooperation between the US and Iran in Iraq:

One of the more unusual byproducts of the advance of ISIS has been the realisation that Iran and the US share an interest in blocking ISIS advances and re-asserting government control over areas seized by the group. It is a classic Middle Eastern 'enemy of my enemy' scenario, which makes for strange bedfellows.

Publicly, President Rouhani seemed to open the door to cooperating with the US in Iraq, but this appeared to be shut again by the Iranian Foreign Ministry's spokesman.

While Tehran and Washington's security interests may converge on this issue, we should not fall into the trap of thinking that this may presage any broader degree of cooperation. The differences between the two countries on Syria and on Iran's broader regional aspirations, as well as the nuclear issue, remain significant.

Of course, there was plenty happening in our own region, and Jenny Hayward-Jones gave us the lowdown on the complex political developments in PNG:

A remarkable 72 hours in Port Moresby has seen an arrest warrant issued for Prime Minister Peter O'Neill, the Attorney-General and Deputy Police Commissioner sacked, and PNG's anti-corruption agency, Taskforce Sweep, disbanded. Respect for the rule of law and good governance from the highest political office in the land appears to be in meltdown.

The arrest warrant was issued based on information collected by Taskforce Sweep and PNG police and relates to the long-running scandal over fraudulent payments from the PNG Finance Department to Paraka Lawyers. New evidence suggests O'Neill, as finance minister, personally signed off on many of these payments. O'Neill sought a court injunction against the arrest warrant and announced he would establish a separate Commission of Inquiry into the corruption allegations. The court has not yet granted a stay of the warrant and after two sittings has now adjourned further consideration until 25 June.

On Wednesday the Australian Government unveiled what it called a a 'new aid paradigm.' Annmaree O'Keefe was at the launch:

But while the pivotal event had been created, a clear policy framework guiding this new integrated program was missing. Until yesterday, the unveiling of the new aid policy had been piecemeal and was largely in the form of speeches by Foreign Minister Bishop.

And so what did yesterday's launch reveal? When the fog cleared outside, Canberra had not changed. Similarly, inside the Press Club, nothing much new was revealed. Instead, yesterday's event simply puts into one place everything the Foreign Minister has been saying since the government came into power. Economic development and the role of the private sector remain this government's catch cry.

Mike Callaghan, director of the Lowy Institute's G20 Studies Centre, wrote on whether the IMF should apologise when it makes significant forecast errors:

The IMF should acknowledge when it makes mistakes, but the most important thing is to assess and analyse why it was wrong. The IMF is meant to include in its annual country assessments a section on how authorities have responded to previous Fund advice. It wold be an improvement if there was also a section where the IMF reviewed the accuracy of its assessment of the outlook for each country and the appropriateness of its previous advice. If the IMF was wrong, the report should say why.

Such an approach would remove the need for knee-jerk apologies, and rather than undermining the credibility of the IMF, everyone might learn something.

On climate and energy policy, Paul Bourke argued this week that policies in Europe, China and the US are continuing to 'merge', leaving Australia far behind:

The British and Chinese have a vision concerning how their energy sectors will need to work beyond 2020. The UK's is not a perfect vision and there is intense competition between nuclear power, offshore wind and gas as to which energy mix will deliver the most affordable decarbonisation of power generation. The essential point is that no-one in Europe or China denies the need to undertake major changes in energy production and consumption.

Australia has no coherent energy policy beyond preserving the market power of dirty, inefficient black and brown coal-fired power plants for as long as possible. In comparison with the UK, China and the US, increasingly it looks like we have few ideas and little progress on energy to offer, right at the time when energy policy across the globe is starting to join up.

Still on climate change, Khalid Koser looked at the results of the 2014 Lowy Institute poll and what it means for the Australian Government:

But neither should the 63% of those polled who feel that the Australian Government should take a leadership role on global warming and reducing emissions be holding their breath. Prime Minister Tony Abbott has a track record of scepticism on climate change, as do Dick Warburton, his recent pick to review Australia's renewable energy target, and Maurice Newman, his top business adviser. And so far the Prime Minister has resisted growing pressure from the US and EU to elevate climate change on the agenda for the G20 meeting he will chair in Brisbane later this year, even though international forums like G20 provide a more realistic venue than UNFCCC for concrete achievements. Brisbane is the Prime Minister's chance to direct international progress on climate change in Australia's national interests.

The result of the 2014 Lowy Poll accentuates the choice confronting Mr Abbott. Climate change is happening and its effects in Australia are accelerating. Almost two-thirds of Australians polled want the Government to respond even if the costs are significant. Fellow G20 members are primed.

We had a number of first-rate pieces on Indonesia this week. Aaron Connelly looked at differing perceptions of Indonesian President Susilo Bambang Yudhoyono in Canberra and Washington:

American disappointment reflects Indonesian disappointment. SBY's popularity among Indonesians has steadily declined, dipping into the 30s late last year. Indeed, one of the biggest surprises in the Lowy Institute poll last week was the relatively high number of Australians – 38% – who said they admire SBY, almost certainly a higher number than he would get in Indonesia (precise numbers are hard to come by – pollsters have mostly stopped asking as they turn their attention to the men looking to succeed him – but this poll provides some indication as to his popularity). Australian journalists and academics, too, can hardly be included among SBY's champions; Marcus Mietzner for one slams SBY for the 'gradual calcification that befell Indonesian democracy' under his leadership.

Official Australian and American views of SBY diverge because we seek different things from Indonesian presidents. Australian interests regarding Indonesia, due to geography, are deeper and more immediate than American concerns. Perhaps for that reason, Australians look first for an Indonesian president who does no harm. Americans, on the other hand, have the luxury of aspiring to a role for Indonesia on the world stage commensurate with all the familiar statistics on its size and its status as a democracy – even if that is a role the Indonesian foreign policy elite do not aspire to, as Dave McRae argued in his Lowy Institute Analysis earlier this year.

SBY's management of foreign relations has been competent but unexciting. That has pleased Canberra, and disappointed Washington.

And here's Catriona Croft-Cusworth with a youth take on the second debate in Indonesia's presidential election:

With most mainstream media outlets having already picked sides in the race — Prabowo with two television stations behind him and Jokowi ruling TV news and newspapers — it's no wonder Jakarta's youth are hungry for independent and firsthand comment. Even foreign news outlets and observers are considered biased in their reporting and analysis. By sounding their views online, young Indonesians are asking for the chance to make up their own minds.

Finally, former Fairfax China correspondent John Garnaut wrote about the arrest of Chinese lawyer Pu Zhiqiang, and why it matters for all of us:

China's 'rights protection' lawyers have long been the best barometers for measuring China's progress. What the best of them are saying and doing, and how they are being treated, is the most reliable measure of progress I know of. And there are none more important than the charismatic Hebei lawyer, Pu Zhiqiang, whose clients include the artist Ai Weiwei.

I once asked Pu why he persisted in holding the system accountable to its own laws, given the enormous personal costs.

He told me many things, all eloquent and powerful, but the one I've thought about most often is this: he acted as he did so that he could hold his head up high up in front of his son. Pu's formal arrest on Friday – for doing his job — has implications not only for dissidents and NGOs but for everyone who deals with China at home and abroad.

 Photo by Flickr user askpang.


John Fitzgerald's article on Chinese and Australian values is fascinating throughout, but I wanted to highlight a few passages. This I didn't know:

Beijing has gained overwhelming dominance of Chinese language media in Australia, New Zealand, and the Pacific Islands following a concerted effort at content placement and media industry networking by China’s embassies and consulates in the region. This effort is part of a larger proactive strategy of “group management, extra-territorial influence, counter-infiltration, and counter subversion” targeting Overseas Chinese communities generally—particularly Chinese students abroad—to ensure their loyalty to Beijing wherever they happen to be domiciled.

Beijing’s investments in Australia’s Chinese language media have had negligible impact on the broader Australian public, but they are earning high dividends among the Chinese-Australian communities targeted through an active public-diplomacy program that is highly strategic, clearly focused, and generously supported. Through China International Radio, the World Chinese Media Forum, and other arms of the party-government, the Central Propaganda Bureau outlaws the slightest criticism of the CCP or PRC government on its Australian radio and press networks. It pre-packages its own content for placement in local media, including layout, editing, and typesetting, and has largely banished alternative news sources from co-placement on Australian networks.

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What is the effect of control from Beijing? Leninist propaganda systems are less notable for what they say, which can be taken with a grain of salt, than for what they prevent others from saying. In 2013, central Party officials added seven subjects to the list of topics never to be mentioned in colleges, the media, or the Internet. The seven taboo issues include “freedom of speech,” “judicial independence,” “civil society,” “civic rights,” and “universal values” in addition to criticism of the CCP and allusions to its privileged and wealthy leadership. Even mentioning to foreigners the existence of the document that lists these banned subjects is considered a betrayal of state secrets in China—an indiscretion that appears to have landed veteran Chinese journalist Gao Yu in detention in China in April 2014.

Chinese-language media conglomerates in Australia, which depend on Beijing funding for their programming, do not report the existence of the mystery document nor do they provide open and critical coverage of the banned topics.

There's also a section on Beijing's management of local diasporas:

In Australia, the party ranks control and management of the Chinese diaspora community well above damage to that community’s reputation. Beijing considers the 2008 counter-demonstrations orchestrated along the route of the Olympic Torch relay in Australia not as a disgraceful display of extra-territorial hubris but as a successful endorsement of its strategy harnessing Chinese residents of other countries to its national objectives.

Fitzgerald's bracing conclusion:

It was all very well to respect the value differences that separate Australia from China while each country went about its business. This may have been the case in Prime Minister Howard’s day, but it is certainly not the case today. China is determined to change the status quo in the region, to project its values through public diplomacy, and increasingly to link trade and investment with political trade-offs. In Australia, the CCP is mobilizing and policing its diaspora to flaunt its distaste for liberal-democratic values. Howard used to say that Australia faces a phony choice between its economic interests and its basic values in balancing relations with China and the United States. The problem for Prime Minister Abbott is that it may no longer be Australia’s choice whether or not to exercise even a phony choice. In arriving at this point, Australians have handicapped themselves by ceding too much to China on national values and reflecting too lightly on the universal character of their own.


Anthony Bubalo's Why the US (and Australia) Should Go Back to Iraq deserves your attention. In the most direct sense, it is a call for renewed diplomatic and political engagement in Iraq. But in arguing that the Middle East continues to demand American (and Australian) attention, it also questions the Obama Administration's Asia pivot and the Asian focus of this and the previous Australian government. It might even be read as a critique of Australia's foreign policy establishment, which on the whole has enthusiastically embraced an Asia-first vision (though they disagree about its implementation).

I am one of those Asia-first enthusiasts. I am also a reformed Iraq war supporter who came to realise the profound strategic and moral folly of the enterprise. It should never have happened and I'm ashamed of the fact that I did not see that at the time. From a personal perspective, that just makes it all the more urgent to see that the same mistakes are not made again, even on a smaller scale.

And to be clear, Anthony Bubalo's proposal is a modest one. He endorses Obama's pledge not to re-introduce ground forces, but he wants sustained US political re-engagement, and he wants Australia 'to support the building of a more effective and professional Iraqi army'. 

Yet even on a small scale, such a policy would represent a victory for hope over experience. After all, the US and its allies have been trying to rebuild Iraq's security forces for over ten years now, at vast expense. I suppose it could be argued that the Iraqi army's failures against ISIS demonstrate that even more effort is required, but equally, it could be evidence that something else entirely is amiss, something more fundamental which can't be fixed by training the army (eg. Kenneth Pollack argues that the army has in recent years become a tool in Iraq's political and sectarian conflicts).

Anthony is rightly worried that an ISIS-controlled region straddling Iraq and Syria will become an incubator for Islamist terrorism that reaches our region.

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But re-entering Iraq and training local security forces is not necessarily the best way to address that problem. Surely the biggest lesson from Iraq and Afghanistan is that the broad-canvas approach to counter-terrorism (rebuild the security forces and even the entire political system in places where terrorism incubates) is much too ambitious.

As for the terrorist threat to Australia, we know what works: intelligence and policing cooperation with our friends in the region, which has brought impressive gains against al Qaeda affiliates such as Jemaah Islamiya. The outstanding success story of Southeast Asia's fight against terrorism has been Australia's cooperation with Indonesia, an effort that 'has yielded results that have exceeded all expectations', according to Greg Barton, a researcher at Monash University's Global Terrorism Research Centre.

Anthony also wants the Obama Administration to 'set aside' the pivot and refocus on the Middle East. He argues that the crisis in Iraq is a warning that governments 'need to avoid being captured by abstract strategies and doctrine'. 

But whatever the merits of America's pivot to Asia, it is surely a response to evidence, not a denial of it. It's not 'abstract' to craft a national strategy in reaction to a once-in-a-century economic shift like the one we are witnessing in Asia. In fact, it would be rather obtuse for the world's leading superpower to simply carry on with its Middle East policy as if nothing is happening in Asia. It's clear that the Iraq problem is urgent, but Anthony has not made the case that it is more important than the strategic and economic shift we are seeing in our region.

Which brings us back to the problem that has plagued Western strategic policy since 9/11: threat perception. The terrorist groups which target Western countries have never come close to posing an existential threat, yet resources have been thrown at the problem as if our very survival depended on it. In fact, the West's response to the terrorist threat has been far more costly in lives and treasure than the terrorists themselves. We're beginning to overcome this problem, but a re-commitment to Iraq would reverse this progress and lead to a further misallocation of resources.

The single exception to the judgment about the terrorist threat would be if terrorist groups acquired nuclear weapons. Then they really could destroy nations. For that reason, Obama's Middle East policy has wisely focused on counter-proliferation. He has made almost entirely unacknowledged progress in Iran, and as a bonus, he has convinced Syria to give up its chemical arsenal. Not too shabby, and a good reason to reinforce the counter-terrorist policies that work (policing, intelligence, diplomacy and occasional surgical strikes), and to leave behind the mistakes of the past.

Photo by Flickr user US Army.