Lowy Institute

Last week, in an op-ed for Nikkei Asia Review, I made the argument that the US and China ought to settle for a military balance in the Asia Pacific. Such a balance will be difficult to manage and will probably not satisfy the ambitions of either country, but would be less dangerous than the alternative, in which both strive for superiority over the other.

Now I see that Michael Swaine has made a similar argument for Foreign Affairs, though with far greater sophistication (h/t Sinocism). The premise of Swaine's argument is that in the face of China's rise, America cannot take the risk of trying to maintain its regional military primacy: 

It is inconceivable that Beijing will accept U.S. predominance in perpetuity and that it will grant the United States complete freedom of action in the Pacific and recognize its ability to prevail militarily in a potential conflict. Trying to sustain such predominance, therefore, is actually the quickest route to instability, practically guaranteeing an arms race, increased regional polarization, and reduced cooperation between Washington and Beijing on common global challenges. And even if some Chinese leaders were tempted to accept continued U.S. predominance, they would almost certainly end up meeting fierce and sustained domestic criticism for doing so as China’s power grows and would likely end 
up reversing course to ensure their political survival.

So what should be the ultimate aim?

...the primary future strategic challenge is finding a way to develop a mutually beneficial means of transitioning from U.S. predominance toward a stable, more equitable balance of power in the western Pacific—one in which neither nation has the clear capacity to prevail in an armed conflict, but in which both countries believe that their vital interests can nonetheless remain secure.

Read on for Swaine's specific proposals about what a negotiated military balance would look like in the South China Sea, Taiwan and the Korean peninsula.

Photo courtesy of Wikimedia Commons.


With Japan now inching closer to agreement on the US-led Trans-Pacific Partnership, some strong stuff from Timothy Lee in Vox:

Trade deals like the TPP have grown so complex because the global trade community has figured out how to solve a problem that has bedeviled philosophers and political leaders for centuries: how to craft international agreements with teeth. The WTO's dispute-settlement process, which serves as a model for the TPP, puts pressure on countries to actually keep the promises they make in trade deals. That's why everyone with an agenda — wealthy investors, drug companies, labor unions, environmental groups, and so on — is scrambling to get on the bandwagon.

But the complex, secretive, and anti-democratic way the TPP is being crafted rubs a lot of people the wrong way. The agreement will have profound and long-lasting effects on countries that sign on, yet voters in those countries won't even be allowed to see the text until negotiations are over and it's too late to make changes.

 From the conclusion:

We expect the laws that govern our economic lives will be made in a transparent, representative, and accountable fashion. The TPP negotiation process is none of these — it's secretive, it's dominated by powerful insiders, and it provides little opportunity for public input.


Yesterday the Council on Foreign Relations in New York hosted a panel session on the US rebalance with Lowy Institute Executive Director Michael Fullilove and US Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel. Here's video of the event:

It was the opening session of a symposium on the US rebalance that will cover a lot of ground. Some of the sessions are being live-streamed on YouTube; you can follow the session on the future of Asian regionalism, and there's another on the future of the US alliance system.


The timing is just right for Foreign Minister Julie Bishop's first-ever visit to Iran, given Australia's recently boosted troop deployment to Iraq,and the newly announced framework agreement on Iran's nuclear program.

Not that the latter will be top of Bishop's agenda for this visit. As Lowy Institute Middle East expert Rodger Shanahan says in the interview below, there is now enough depth in the West's relations with Iran that third-party envoys are no longer needed to carry messages to Tehran. Rodger also talks about the delicate subject of Iran's role in the Iraq conflict, and the economic opportunities that might arise for Australia in Iran from a cut in the sanctions regime:


Kevin Andrews was appointed Defence Minister with question marks over whether he was even interested in the portfolio. So as I watched his interview on the ABC's 7:30 program last night on the deployment of additional Australian troops to Iraq, I was impressed by how well he seemed to be across his brief. He spoke with authority on the sectarian make-up of various provinces, and on the role of Australia's forces. If anything, he seemed a little too eager to display his command of the topic. And then this happened:

It didn't take the Fairfax websites long to make this 'gaffe' their top story. It is still reverberating around the media today. And it has gone global.

It was a dreadful moment for Andrews which I'm sure he wishes he had handled better. It may well haunt him, because once a media narrative is established about a minister, it is hard to shake.

But let's be clear: it says nothing about Andrews' competence as a minister. He may very well have known the name of Abu Bakr al-Baghdadi and just forgotten in the moment. Or he may not have known at all. Either way, what of it? Andrews probably doesn't know what LHD stands for, either, or what an MH-60R is, yet his Government is spending hundreds of millions of dollars on these two weapons platforms. Andrews is paid to get the big decisions right, not to memorise details.

As David Wroe commented, we've just had a defence minister who loved nothing better than to toss off military acronyms and weapons-systems designations. But was it important for David Johnston to know that stuff? Did he need to know what an MH-60R was in order to actually do his job, or did he need to know it so that he could appear to be in command of his job? 

Read More

The two things are not unrelated, of course. It's a minister's job to convincingly advocate for the Government's policies in public, so I suppose Andrews failed in that regard. But it's unfair of Wroe to draw broader conclusions, particularly after he admits that it could just have been a mental blank, and 'we've all been there'.

Or maybe it wasn't a gaffe at all. Maybe the fact that Andrews could not recall al-Baghdadi's name indicates that Andrews has his priorities straight. Andrews is paid to make the truly big decisions about the nation's defence, and having the name of the ISIS leader at the forefront of your mind just doesn't serve an obvious purpose in that regard. For someone like Andrews, it is completely rational, reasonable and efficient to offload that bit of data to an adviser or to a briefing note, rather than memorise it. The only context in which it would be useful for him to have that information at immediate command is in a media interview; in every other part of Andrews' job, it makes no sense for him to know it off the top of his head.

We should think about where this insistence on the instant command of detail takes us. Which other names and details should Kevin Andrews commit to memory? Would that be the best use of his time? And how many of Andrews' ministerial colleagues wasted hours this morning memorising trivia about their portfolios rather than actually doing their job?


The trailer looks dreadfully overwrought, and when the film was first shown on the BBC last month it got such a chilly reaction from UK critics that it prompted this response from one of the film-makers.

The BBC, which co-produced this film, describes it as a 'documentary by Italian director Annalisa Piras and former editor of The Economist Bill Emmott, which explores the crisis facing Europe', but it 'includes fictional scenes, set in a post-EU future' (hence the question mark in the headline). The film aired on the BBC on 1 March and will be shown on German and French TV later this month, but you can pay to watch it on demand.

(H/t The Browser.)


With Hillary Clinton now having officially announced that she is running for president, let's take a stroll through the Interpreter archives to get a sense of her foreign policy views, particularly as they relate to Asia.

As US Secretary of State (2009-13), Clinton developed a reputation for championing the US re-balance or pivot to Asia, most prominently through a 2011 essay in Foreign Policy. As Lowy Institute Executive Director Michael Fullilove put it in an interview, 'the rebalance is Clinton’s signal foreign policy achievement as Secretary of State, she’s invested in it.'

Rory Medcalf noted that Clinton's embrace of the pivot included an endorsement of the 'Indo-Pacific' concept:

...the term has also entered US Secretary of State Hillary Clinton's lexicon, especially in describing the scope of the US-Australia alliance: 'We are also expanding our alliance with Australia from a Pacific partnership to an Indo-Pacific one'.

In 2012, Hugh White covered a speech by Clinton in which he detected a movement away from the Obama Administration's 'pivot' rhetoric:

[The speech] gently but unmistakably steps away from Obama's insistence on the preservation of US primacy in Asia and his rejection of any negotiation with China on their respective roles. So it might reflect the beginnings of a serious debate in America about the wisdom of trying to contain China rather than accommodate it...she several times said that Asia will need a new order which will be very different from the status quo, plainly implying that America's role will therefore be different too. She also clearly suggested that this new order will have to be negotiated between China and America, and admitted that this will be unprecedented for America, and very hard to do.

In 2014, Clinton's tone on China was less accommodating, when she said that Australia's economic dependence on China could 'undermine your freedom of movement and your sovereignty — economic and political'. Darren Lim disagreed. Clinton has had concerns about China's financial heft since at least 2009 when, as leaked US embassy cables revealed, she pointedly asked Kevin Rudd 'How do you deal toughly with your banker?' Graeme Dobell looked at the subtext of that remark.

Read More

Clinton's term as Secretary of State was marked by the opening up of US relations with Burma, with her 2011 visit marking what Burma expert Andrew Selth called  'a turning point in [Burma's] relations with the US':

However, even experienced Burma-watchers were unable to agree on what actually prompted the visit. It was variously described as a calculated move to leave behind the failed policies of the Bush era, an effort to encourage Thein Sein's reform process, an attempt by the Obama Administration to re-engage with the Asia Pacific, and a ploy by the US to score points in its strategic competition with China.

To a greater or lesser extent, all these factors probably contributed to the decision to make the visit, the first by a US Secretary of State to Burma for over 50 years.

Clinton also made the Pacific islands region a more prominent part of her work as Secretary of State. Here's Jenny Hayward-Jones in 2010:

US Secretary of State Hillary Clinton will be visiting Papua New Guinea tomorrow, as part of her seven country tour of the Asia-Pacific. Her visit is timely. It comes soon after Assistant Secretary for East Asian and Pacific Affairs Kurt Campbell's testimony before the House Foreign Affairs Subcommittee on Asia, the Pacific, and the Global Environment signaled an enhanced US interest in the Pacific Islands region, and will send a clear message that the US is serious about the region.

Hillary Clinton officially launched her campaign via social media, and her facility with new technology was a big element of her work as Secretary of State, as Danielle Cave wrote in 2010:

Monitoring Secretary of State Hillary Clinton’s current Asia Pacific trip online has led me to a surprising and refreshing discovery — Hillary is the ultimate online diplomat.Hillary and the State Department proactively engage the international community in ways the Australian Government could only dream of. I realised seconds into a Google search that in fact I won't need to chase down Hillary Clinton; it’s almost as if Hillary is chasing me.

Last year James Bowen asked whether Hillary really is a foreign policy hawk

In a much-publicised interview with The Atlantic, Clinton called out Obama's failure to offer support to rebels fighting Bashar Al-Assad's regime in Syria as being culpable in the rise of the Islamic State, an organisation most recently in the news for the horrific beheading of US journalist James Foley.

'The failure to help build up a credible fighting force of the people who were the originators of the protests against Assad — there were Islamists, there were secularists, there was everything in the middle — the failure to do that left a big vacuum, which the jihadists have now filled,' she said, adding that great nations needed better organising principles than Obama's favoured 'don't do stupid stuff.'

So far, so hawkish.


Regular readers may have noticed that I oscillate between optimism and pessimism when it comes to climate change and energy. So let's call this a glass-half-full day, in which I highlight two related pieces from the FT's energy writer, Nick Butler, who writes that 'Almost all the major oil and gas companies I know are undertaking substantial reviews of their policies on climate change.' He lists several reasons why (including 'because the industry takes climate change seriously'), but I found this one particularly noteworthy:

...reputation does matter, not least for morale within the company. Without a clear forward strategy on climate change, companies start to feel defensive. As one rising executive in one of the companies said to me last week – “I don’t want to work for the tobacco industry”.

 Then there's Butler's earlier piece on the rise of solar energy:

...there is growing evidence that some fundamental changes are coming that will over time put a question mark over investments in the old energy systems.

Wood Mackenzie, a consulting firm with an impressive track record, recently published a report that said that within 5 years solar would be fully competitive with traditional sources of energy in 19 states in the US. Within a decade the number of states will double. “Fully competitive” means without subsidies. The detail matters – the US is a low cost energy market compared with most of the rest of the world. To be competitive there against coal and gas – without subsidies and without any carbon price – is quite something.

Of course, as with every column on this topic, this one comes with a caveat about the problem of storing solar-generated energy. But entrepreneur Elon Musk is set to make a major announcement on that issue at the end of the month. Through his electric car company Tesla, Musk is building the world's biggest battery factory, and it looks like he is preparing to branch out from car batteries to home batteries. If it's affordable (this article suggests it will be), it will allow homeowners and communities to go 'off grid'. If such technology becomes widespread, it could transform (sorry) the power industry in advanced economies.

Photo by Flickr user US Army Environmental.


It's very much worth listening to the podcast (below) of yesterday's Lowy Institute panel session on the Iran nuclear deal, not least because at around 21:00, The Australian's foreign editor Greg Sheridan links the Iran negotiations with North Korea, pointing out that the US has numerous times hailed diplomatic breakthroughs with Pyongyang, only to see North Korea develop nuclear weapons anyway.

 The reason I raise this specific point is that this week's news on the Iran story has crowded out a fairly dramatic nuclear development in North Korea, with a senior US military commander stating publicly that Pyongyang has an operational nuclear-armed inter-continental ballistic missile (ICBM). Here's the video of the press conference by Admiral Bill Gortney, the head of Northern Command (which is tasked with protecting the continental US from long-range missile strikes): 

Note that the US has been warning about the KN-08 missile for some time, but this appears to be the first public statement that Pyongyang has mated the missile with a minituarised warhead and made the system operational. Experts in this field are divided on Gortney's assessment, with some (including the South Korean defence ministry) pointing out that the KN-08 missile has not been flight tested. Others counter that North Korea has previously fielded weapons that were not fully tested, and anyway even if the missile is not reliable, it still has deterrent value. Here's a backgrounder with quotes from expert Jeffrey Lewis on how the US intelligence community might have reached its judgment.

So why is this an important development? Back in 2012 Hugh White wrote a piece for The Interpreter which explains:

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

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


Here's entrepreneur and thinker Peter Thiel in conversation with economist Tyler Cowen:

I would bet on globalization slowly being in abeyance. I think with the benefit of hindsight, we will realize that 2007 was not just the peak year of the finance boom, but also the peak year of globalization, like maybe 1913. Happily, it hasn’t resulted in a world war, at least not yet, but I think we are in this period where globalization is steadily pulling back.

On China:

China is hard to evaluate on this globalization metric, because on some level, the growth story is linked to exports and globalization. Then at the same time, it has these capital controls and all of these ways that it’s somewhat separate. I find it always very hard to evaluate. I do think it’s interesting that the questions about China are being asked less often in the US today than they were a decade ago.

In 2005, it was a very widespread question, in what year will China overtake the US? A decade later, it’s reasonable to think that it’s a decade closer to when this will happen. It’s a much less commonly asked question. At the end of the day I suspect we are underestimating China, but it may be very hard to invest.

I’ve always thought that you could only participate in the Chinese boom if you are a well-connected, card-carrying member of the Chinese Communist Party. I’m not, and so it’s not been a place that I’ve really focused that much.

The whole interview is worth watching (above) or reading.

I would bet on globalization slowly being in abeyance. I think with the benefit of hindsight, we will realize that 2007 was not just the peak year of the finance boom, but also the peak year of globalization, like maybe 1913. Happily, it hasn’t resulted in a world war, at least not yet, but I think we are in this period where globalization is steadily pulling back. - See more at: http://marginalrevolution.com/#sthash.9kqxpWGz.dpuf
I would bet on globalization slowly being in abeyance. I think with the benefit of hindsight, we will realize that 2007 was not just the peak year of the finance boom, but also the peak year of globalization, like maybe 1913. Happily, it hasn’t resulted in a world war, at least not yet, but I think we are in this period where globalization is steadily pulling back. - See more at: http://marginalrevolution.com/#sthash.9kqxpWGz.dpuf
I would bet on globalization slowly being in abeyance. I think with the benefit of hindsight, we will realize that 2007 was not just the peak year of the finance boom, but also the peak year of globalization, like maybe 1913. Happily, it hasn’t resulted in a world war, at least not yet, but I think we are in this period where globalization is steadily pulling back. - See more at: http://marginalrevolution.com/#sthash.9kqxpWGz.dpuf

My Tuesday piece criticising US Defense Secretary Ashton Carter's speech on the US rebalance caught the attention of CSIS's Bonnie Glaser and Ely Ratner from CNAS:

I can see Ely's point. Trade liberalisation is a notoriously hard sell in the US Congress, so the Obama Administration has to pitch the TPP to a domestic audience as a win for American standards and interests, which is what Carter did in his speech. And the stakes could not be higher for the Administration; as the FT's Tom Mitchell put it, 'Should TPP fail, then the economic component of the US president’s “pivot” towards Asia will — to Beijing’s surprise and delight — have completely unravelled.'

But although Google tells me that Phoenix (where Carter delivered his speech) and Sydney are 12,540km apart, that didn't stop me from pontificating about the speech from my perch at 31 Bligh St. So as Bonnie Glaser says, these speeches have a global audience. The open question for me is whether Carter overlooked this fact when presenting his clumsy remarks about the TPP and the rebalance, or whether he was aware of it and went ahead anyway. Neither conclusion is particularly comforting.


New US Defense Secretary Ashton Carter is embarking on a week-long visit to Japan, Korea and Hawaii, a visit which he previewed with a speech in Arizona. It's worth extracting some remarks, starting with this, on the US-backed regional trade initiative, the Trans Pacific Partnership (TPP):

TPP would provide...a more level playing field and more opportunities to succeed.  It would do so by requiring these other countries to adopt the standards that we hold ourselves to here in the United States, such as: government transparency, intellectual property laws, a free and open internet, environmental protections, and workers’ rights.  TPP would also lower barriers to American goods and services in the Asia-Pacific’s fastest growing markets.

But TPP also makes strong strategic sense, and it is probably one of the most important parts of the rebalance, and that’s why it has won such bipartisan support.  In fact, you may not expect to hear this from a Secretary of Defense, but in terms of our rebalance in the broadest sense, passing TPP is as important to me as another aircraft carrier.  It would deepen our alliances and partnerships abroad and underscore our lasting commitment to the Asia-Pacific.  And it would help us promote a global order that reflects both our interests and our values.

Note the terms on which TPP is pitched here: the agreement levels the playing field not because it requires all countries to agree on the highest standards, but because it requires foreign countries to abide by US standards. It's not an argument likely to sway opinion in the region. Nor is the explicit link Carter makes between the TPP and America's military capability, courtesy of the reference to aircraft carriers and alliances, likely to go down well. In fact, it's a sound-bite tailor made for those Beijing sceptics who see the TPP as a device which deliberately excludes them, and which functions as the economic component of a US-led China containment strategy.

Speaking of China, here's Carter on Beijing's place in Obama's 'rebalance' strategy:

Some people would have you believe that China will displace America in the Asia-Pacific or that its economic growth will somehow squeeze out opportunities for young people like you.  But I reject the zero-sum thinking that China’s gain is our loss because there is another scenario in which everyone wins…and it is a continuation of the decades of peace and stability anchored by a strong American role, in which all Asia-Pacific countries continue to rise and prosper, including China.  This is the scenario we seek in the ongoing rebalance.

So the scenario in which 'everyone wins' is one in which the status quo of US regional leadership continues indefinitely. I'm certain Australia and others friends and allies of Washington would agree because all of us have prospered under that arrangement. But unfortunately, there's an excellent chance that this is not what China wants. Carter says earlier in the speech that 'as countries across the Asia-Pacific grow more powerful...we expect to see changes in how countries define and pursue their interests and ambitions. In other words, the regional status quo will change.' But the rest of the speech indicates that the US will resist that change, which does set the scene for a tense relationship. Read More

Finally, Carter dropped some interesting details on US military capabilities in the Asia Pacific:

...we will continue to invest in future capabilities that will be especially relevant to the Asia-Pacific’s complex and dynamic security environment.  These include high-end capabilities, such as a new, long-range stealth bomber and a new, long-range anti-ship cruise missile – just to name two…and areas like rapid runway repair, which may seem mundane, but will help ensure that U.S. forces can survive in a crisis.  We’re also working on new weapons like a railgun, which uses electromagnetic forces rather than high explosives to fire rounds at much higher speeds, lower cost, and with greater effectiveness.  And we’re developing new space, electronic warfare, and other advanced capabilities, including some surprising ones.

Two things of note: first, what could 'some surprising ones' refer to? Is Carter hinting at some undisclosed 'black' weapons program?

Second, note the reference to runway repair. As Carter says, it's a mundane topic, but it indicates that the Pentagon is taking seriously the threat of Chinese ballistic missile strikes on US air bases in the region. There has long been a lively debate among strategists about the possibility that a regional skirmish — say over the South China Sea or Taiwan — could escalate quickly if China were to attack US bases in the region. It's a scenario that raises some scary questions: how could the US tell whether incoming missiles had conventional or nuclear warheads? Would Washington respond by attacking bases on the Chinese mainland? Would Beijing in turn take this as a provocation that would justify counter-strikes on the continental US? In the event of heightened regional tension, would the US be better off pre-emptively hitting Chinese missile sites in order to protect its bases?

Carter's reference to runway repair suggests a few things. First, it could be an indicator that the US accepts it will be too difficult to protect its air bases from missile strikes with missile-defence systems alone. The numbers just don't stack up, so America needs to supplement its 'active' defences (missiles to take out incoming missiles) with 'passive' measures such as rapid runway repair.

Second, it might indicate that the US wants the flexibility to not respond to Chinese strikes on its bases with counter-strikes on Chinese territory. If the US can instead blunt such strikes by rapidly returning its facilities to working order, it can avoid taking action that might escalate a regional skirmish to a world war.

These seem like lurid military fantasies, and it's true that the chances of US-China relations deteriorating to this point are remote. But it is fair to say that they are less remote than they were a decade ago. Moreover, if China's aim is to erode America's military preeminence in the region, and if America's aim is  to resist that erosion, then the two countries have incompatible goals. Carter says he rejects 'zero-sum thinking that China’s gain is our loss', but in this case, zero-sum thinking seems hard to avoid.


Along with most of Australia, we're taking a break over the Easter period, so posting will be light tomorrow and Monday, and will return to normal next Tuesday. Best wishes for the season.

Photo by Flickr user Jan Herbert.


A couple of weeks ago, after a visit to India, I wrote an op-ed for the Indian weekly Open with my impressions of the Indian strategic debate. The biggest take-away was how openly suspicious the Indians are about China and its intentions in the Indian Ocean.

That suspicion got another boost yesterday, with Islamabad announcing that it has approved, in principle, the purchase of eight Chinese submarines for the Pakistani navy.

This is big news for a number of reasons. First, it's a large order for a navy that currently only operates five submarines. Second, it will be the first time China has exported its submarines, which says something about the improvements in its military technology (granted, Pakistan is probably buying on price as well as capability, but this is a navy that has previously bought advanced European submarines, so its not an undiscerning customer).

And third, it represents a fairly blunt Chinese statement about its willingness to cooperate with Pakistan to challenge Indian maritime power. Of course China has sold arms to Pakistan before, and in fact it helped Pakistan develop its nuclear and ballistic missile programs. China has also sold surface ships to the Pakistan Navy in the past. But in the maritime domain, it is fair to say that this is a step-change in China's involvement with the Pakistan military.

Things are likely to get even more discomfiting for India soon, with Xi Jinping set to visit Pakistan from 10 April, where he will address parliament. The Newspaper Dawn writes:

Sources say that during the visit, over two dozen memoranda of understanding (MOUs) regarding nuclear power, the Gwadar Port, the Pak-China Economic Corridor (PCEC), energy, trade and investment will be signed by Pakistan and China.

It will be interesting to hear what is announced on the Chinese-developed Gwadar Port, which has been cited in India as an example of Beijing's attempt to encircle India with naval bases, and also as a way for China to avoid maritime choke points in the Indian and Pacific oceans by moving Persian Gulf oil and gas over land from Gwadar to China. This theory has been debunked in the past, partly on the grounds that the port is not supported by sufficient road and rail infrastructure, but this might be set to change.

Photo by Flickr user Richard Munden.


Here is part 1 and part 2 in this series.

My thanks to Stephen Fallon for alerting me to the documentary series now getting a run on the ABC, How We Got to Now, which addresses the link between air conditioning and development:

Marginal Revolution has more links on this topic too.