Lowy Institute

On the 30th of November, the IMF announced its decision to include the Chinese yuan in the Special Drawing Rights (SDR) basket.

Terrific, I hear you say, yet another TLA to understand (Three Letter Acronym). Bear with me. I could go through the technical details of how it all works, but I suspect my readership would plummet so here's the quick version. SDRs are not a currency; rather, they are used as a book-keeping entry. When a country borrows from or through the IMF, that loan is recorded as a loan of SDRs, though what the country actually receives is a hard currency. Other international organisations use SDRs in this way too. SDRs also function as an asset at the IMF (Wait, they are a book-keeping entry and an asset? Yep, just like the dollar). Countries have a certain amount of SDRs allocated to them by the IMF. Countries can exchange these for currencies with other IMF members. For more details check out the IMF worksheet. If you want a gold star and to see how SDRs are used in the plumbing of IMF lending, then the FT has the page for you.

Right, hopefully that’s all clear. So what is the significance of the yuan inclusion? In and of itself, not much. Inclusion is not going to lead directly to more trading or use of the yuan, apart from perhaps at the IMF itself. The FT also has a nice piece deflating some of the hype surrounding SDR inclusion

Inclusion can, however, also be viewed as the IMF’s tick of approval.

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In August, the IMF released a report that examined, in detail, the case for the inclusion of the yuan. A sticking point was whether the currency was 'freely usable', a somewhat rubbery concept that is one of the IMF's criteria.

Since that report was published, the Chinese have made some changes, perhaps with the aim of addressing this issue. For example, they have taken steps to allow the market more influence on the value of the exchange rate, and they have allowed official institutions to have direct access to bond and foreign exchange markets. That seemed to be enough for the IMF. And perhaps, economically speaking, these reforms by the Chinese are the bigger story here.

But not everyone is happy. Ted Truman, long-time Federal Reserve employee and also former assistant secretary of the US Treasury, has criticised the decision making process. In particular, he is worried the decision was politicised:

Christine Lagarde appears to have decided to give the Chinese authorities the political trophy of inclusion of their currency in the SDR basket and to take personal credit for this action. She has announced her position on the SDR basket two weeks in advance of its review by the executive board. Thereby, she has exerted pressure on the members of the executive board and on officials in the capitals of the countries they represent to agree with her.

Given the problems other IMF reforms are facing — in particular the reforms that would increase the voting share of China, which are held up in the US Congress — some may be tempted to give the Chinese some leeway. However, unequal treatment is a dangerous game to play, and I hope those in charge have not succumbed to the temptation.


With global attention on Paris this week for the Global Climate Change Conference of Parties (COP), France has hosted another event on the eve of that meeting which has regional signfiicance.  Convening the France-Oceanic Summit with Pacific Island leaders, French President Francois Hollande identified France as 'fully a country of the Pacific' through its territories there, and linked assistance with a call for full membership for its territories in the Pacific Island Forum.


After a hiatus of six years, the Hollande government re-convened the France-Oceanic Summit in Paris on 26 November.  Initiated in 2003 by Chirac, the Summits were meant to take place alternately in Paris and the region, every three years.  They were part of a number of initiatives by France to secure a regional role and acceptance in the wake of the controversies over nuclear testing and decolonisation issues of the 1980s and 90s.  Momentum stalled in 2009, when Sarkozy did not attend the meeting in Noumea.  Although Hollande met some Pacific leaders when he hosted a Climate Change meeting in Noumea in 2014, the 2015 meeting is the first France-Oceanic Summit since 2009. 

The focus of the France-Oceanic Summits has been cooperation for sustainable development.   So reconvening the Summit on the eve of the COP was logical, and in his opening speech, President Hollande emphasised the unique importance of climate change and biodiversity for the South Pacific region.  The Summit issued a Declaration calling for urgent action to address cliimate change issues at the COP.

But Hollande’s speech is important for another reason. Read More


It is a rare occasion when a French president has articulated for regional leaders in clear and unambiguous terms, that 'France is fully a country of the Pacific.  Thanks to New Caledonia, French Polynesia and Wallis and Futuna, we share the life and future of the big Pacific family'.

After rehearsing a number of regional economic and environment challenges, Hollande said that France would play a role in addressing them, through the three French territories who would be France’s 'representatives’, engaged by the responsibilities France has delegated to them for certain aspects of foreign relations. He then put in a pitch for full membership of the Pacific Island Forum (PIF) for New Caledonia and French Polynesia, and for associate status for Wallis and Futuna, promising renewed engagement by France through its Pacific Fund, which has been sorely depleted in recent years.

New Caledonia and French Polynesia are currently 'associate' PIF members, a status especially created for them by Pacific Island leaders in 2006, when both territories, then 'observers', began seeking full membership, supported by France.  Wallis and Futuna is currently still an 'observer'.   The 'observer' category for its territories has always sat oddly with France as it was designed for territories 'on a clear path to self-government or independence' (Palau 1999 PIF Communiqué).  But whatever the nomenclature, Forum island leaders (as opposed to Australia, who supports full membership for the French territories) have to date been cautious in welcoming the French territories as full members until residual decolonisation questions have been resolved, wary of having three voices of France in their number.  

In New Caledonia's case, under the 1988 and 1998 Matignon and Noumea Accords, a long-delayed independence referendum process must take place before 2018.  French Polynesia has only recently, in 2013, been re-inscribed as a non-self governing territory with the UN Decolonisation Committee, at the behest of its independence leaders, a move proposed by three small island states, and accepted by consensus in the UN, but opposed by France.

By proclaiming itself as fully a country 'of the Pacific' rather than just 'in' it, through its territories, France is acknowledging that its own regional presence rests on its continued sovereign status in its territories.  But this status is as yet to be fully resolved, in New Caledonia and French Polynesia.  Whether Island leaders will change their position on PIF membership for the French territories in the light of France's promised assistance, remains to be seen.

Map Getty Images


The long awaited findings of a US military investigation into the bombing of a Médecins Sans Frontières (MSF) hospital in the northern Afghan city of Kunduz on 3 October have been announced. The findings should sit rather uncomfortably with those who advocate for stepping up the aerial campaign in Syria against ISIS.

A month ago, MSF documented that the aggressive Russian bombing raids over northern and central Syria 'have hit at least 12 hospitals in recent weeks, killing at least 35 patients and medical staff and wounding more than 70 others.' With France having joined the war against ISIS after the recent terror attacks in Paris, it might be time to pause and take stock of the consequences such aerial campaigns bring, aside from more civilian deaths and refugees. After all, what happened in Kunduz is unlikely to be a one-off incident.

The 3000 page report from the US military has not been publicly released, but the announced findings could almost be a comedy if the circumstances weren't so tragic, coming from one of the world's most efficient military organisations with access to the latest technical gizmos.

The story however, shows more than just human error, and the problem is unlikely to go away if the blame shifts solely to individual soldiers without addressing the underlying question of how the West fights wars. Kunduz, after all, is not the first and won't be the last such 'tragic mistake' by the US military. Perhaps it is time for a system overhaul, or possibly an urgent effort to address what I feel has been a slow erosion of human rights within military circles due to the frustratingly long wars in Iraq, Afghanistan, Iraq and now Syria against non-state adversaries not bound by the Geneva Convention and which care little about international humanitarian law.

But let's return to Kunduz and that fatal night.

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It started with a C-130 gunship crew taking off and forgetting the list of non-strike targets. Then the key electronics on board the aircraft failed and with it the ability to communicate in real time. The crew could then not find their initial target, and when their targeting system became misaligned they still decided to go ahead with their mission, aiming for visual identification instead. Let's remember, it was night. When they found a target that looked right and was approximately in the right location (500m looks like nothing from the air), they radioed in their new target to US personnel who had the no-strike list but did not bother to double-check. After all, it was 2am and 'the Special Forces members in Kunduz had been fighting continuously for days and were fatigued.'

Rightfully, MSF Director Stokes is outraged by the fact 'that 30 people were killed and hundreds of thousands of people are denied lifesaving care in Kunduz simply because the MSF hospital was the closest large building to an open field and "roughly matched" a description of an intended target.' That is what the military considers a sad combination of human error, technical and procedural failures.

The US military needs to learn from its mistakes and look deeper at why these human errors continue to happen and how they can be prevented. Perhaps it takes such high-profile events to shake the US military into action, as clearly previous bombings that led to civilian casualties (Afghan, Iraqi, Syrian) have not necessarily changed how things are done and how these kind of wars are fought. As already noted, this is particularly important as more countries join the Syrian civil war.

Perhaps the US military's rules and regulations regarding bombings, especially in populated and dense urban areas, need better checks and balances to correct mistakes by tired humans who might simply want to 'get a job done'. Perhaps it takes a renewed training effort that reminds military personnel about the importance of international humanitarian law, how it came about and why it matters.

And perhaps the US military and those of its allies simply need to ensure they approach the problem in a Malcolm Turnbull-like fashion: measured, proportionate and reasonable. Kunduz is a stark reminder that it never pays to rush into any kind of aggressive act, nor does it pay to allow an erosion of international humanitarian law, regardless of who the West is fighting. Foresight is called for, not hindsight.


Now that the terms of the Trans-Pacific Partnership (TPP) have been agreed, the participant countries have to decide whether to ratify the deal. In assessing the benefits, where might we turn for guidance on the economics?

First thoughts might go to David Ricardo, father of one of the few ideas that economists largely agree on: comparative advantage. Countries should produce the things they do best, and trade these for things they do less well. The key insight is that countries should trade internationally, even if they are better at doing everything (they have 'absolute advantage') than their trading partners. 

The policy message is that countries should abandon tariffs and quotas and open up their markets for international trade.

This is, more or less, what Australia has done. Over 90% of Australia's imports have tariffs of 5% or less. We've done this largely unilaterally, believing it to be in our own self-interest. Can't we now just rest on our laurels, while urging other countries to follow our virtuous lead?

Economists might believe this, but they have never persuaded either the public or the politicians. The WTO has struggled in vain for the past decade to make progress at the multilateral level.

So-called Free-Trade Agreements (FTAs) such as the TPP have been the response to this failure. These are preferential agreements, so Ricardo's simple free-trade dictum doesn't apply. There is trade diversion (imports may not come from the cheapest source). Nevertheless the TPP will push some of our partners, over time, towards some reduction in quota restrictions on our agricultural exports. And having 12 TPP members (accounting for one third of world trade) reduces the trade diversion, compared with bilateral FTAs.

Thus, viewed from Ricardo's vantage point, the TPP is not ideal, but it might be the best that can be done in an imperfect world.

The main issues are however, elsewhere, in the high-level 'platinum standard' rules that the TPP imposes on participants. Most of these rules are not closely related to international trade.

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We can't object to the idea of rules, per se. Ricardo's free trade took place in a fantasy world, where cloth merchants met wine traders and agreed on price, quality, payment terms, delivery date and then everyone kept their side of the bargain. Transaction costs were ignored. In the real world, enforceable rules are needed to ensure markets work well. If there are not enough rules, uncertainty and asymmetric information raise transaction costs. If there are too many rules (or the wrong ones), there is a dead-weight cost to transactions; too much 'red tape'.

Thus we need more than Ricardo's 'free market'. But what rules are needed, who makes them, and in whose interests? 

For academic guidance on this, we might draw on the work of economic historian Douglass North (who died last week, aged 95). One of his best-known studies examined the self-imposed rules that developed between long-distance merchants during the revival of trade in the late middle ages.

North's interest was in generalising from this experience, analysing the evolution of rules of conduct. He called these 'institutions' — 'the humanly devised constraints that shape human interaction' — and likened them to the rules of sporting games.

For North, the rules evolved out of social interaction (often by the participants) rather than being imposed by governments, and in response to perceived needs. Whether a particular set of rules persisted or evolved over time depended on whether they served the objectives of the participants. 

So where does the TPP fit into North's view-of-the world? If Australia had been writing the rules from scratch to foster our international economic interaction, does the TPP represent the set we would have devised?

We're an intellectual property net importer, so have little national interest in strengthening the current IP rules, perpetuating the misconception that innovation is best fostered by awarding monopoly rights to the innovator. The same goes for foreign investment dispute resolution. As a major capital importer, we are entitled to think our own domestic laws should be enough to protect foreign investors. Labour laws, environmental issues, corruption, the role of state-owned enterprises and free capital flows are all issues we might best handle with our domestic laws and practices, which might or might not coincide with TPP requirements. In short, while acknowledging the desirability of rules-based international order, these are not the rules we would have prioritised.

Just as in football, we now have the opportunity to sign up for this TPP code which is a less-than-perfect fit with the way we would like to play. One strong incentive to sign is that this is the 'only game in town', at least at the moment. If we don't join, the TPP partners will be off playing with their own set of rules, including some which divert trade away from us. On top of this, economics isn't the only consideration: the TPP is part of our overall relationship with America.

So we will sign up. This should not, however, be the end of the story. Douglass North's narrative analyses why some 'institutions' are persistent (unchanging) while others evolve. Two paths of evolution are open. 

The first is to expand TPP membership, starting with China and Korea, but going on to include Southeast Asia and India. The biggest advantages come from enlarging the number of participants playing by the same rules.

The second is to align the rules more directly with the practical needs of international trade. The TPP rules are unlikely to evolve much, but there are opportunities outside the TPP for rule-making (and rule simplification). In the longer term, the more operational focus of the ASEAN-based Regional Comprehensive Economic Partnership (RCEP) might offer us more advantages, more analogous to Douglass North's trade-facilitating rules. It is moving slowly but is more focused on our region, where our greatest trade potential lies. 

The ultimate advance would entail moving away from competing codes, towards a 'world game' where everyone plays with the same rules. International trade would benefit from both the TPP's high-level behind-the-border rules and the detailed operational facilitation that is at the heart of the RCEP.


The Paris Climate Conference is underway. This is the 21st Conference of the Parties (COP21) to the 1992 UN Framework Convention on Climate Change (UNFCCC) to which 195 states are signatories and, like previous COPs, it has been hailed as the most important climate conference in history. This is because previous climate summits have so far failed to confront a challenge that is now getting out of hand.

Atmospheric concentrations of carbon dioxide have risen past 400 parts per million, the highest for many millions of years. Global average temperatures have surged by 1°C since the industrial revolution, and if emissions continue unabated, we are on track for up to 5°C. Unfortunately we are still rapidly burning our 'carbon budget', the amount of carbon dioxide that can be emitted to maintain a safe climate. This could be spent in as little as 25 years, after which at least 2°C warming becomes inevitable, and many changes become irreversible (including the melting of the Greenland ice sheet).

So the seriousness of the challenge and the urgency of a response could not be clearer. 

The hope is that COP21 in Paris will finally come to grips with the issue. There have been significant COPs since the first in Berlin in 1995, including COP3 in Kyoto, where the Kyoto Protocol was agreed, and COP13 in Bali, when Australia finally ratified the Kyoto Protocol. But in addition to 'good' COPs there have been 'bad' COPs, with COP15 in Copenhagen in 2009 considered to have been not so wonderful.

The Copenhagen COP attracted criticism for many reasons, among which was the fact the resulting agreement, the Copenhagen Accord, was not legally binding. However it was significant because it included a definition of dangerous climate change (+2°C) and it set in motion a process for states to pledge emissions cuts. So far 183 nations have submitted pledges, and, if fully implemented, they could hold global warming to 2.7°C. This is not remotely 'safe' but is a world of difference away from the 5°C or more that we currently are on track to experience. Australia’s post 2020 target is widely judged to be inadequate in meeting the 2°C commitment, and Australia does not currently have effective policies in place to reduce emissions at the scale and pace required.

There has been extensive speculation as to what obligations the Paris Agreement might contain. Understandably, this has mostly focused on what the agreement will do substantively to address climate change. But just as interesting as the substance, indeed perhaps more so to international lawyers, is what form or style the agreement will take. Will it be a fully-fledged, legally binding treaty? Or will it be similar to the non-binding Copenhagen Accord? Or could it comprise something in-between?

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We should not assume an agreement that is legally binding is necessarily good and one that is not is necessarily bad. The Kyoto Protocol is legally binding but delivered minimal global emissions reductions. And there are non-binding, or hybrid options that combine binding and non-binding efforts that could be more effective at delivering emission reductions.

At COP17 in Durban, the UNFCCC parties agreed that in Paris they would settle 'a protocol, another legal instrument or an agreed outcome with legal force under the UNFCCC applicable to all parties'. This goal has been interpreted in different ways by different states. US Secretary of State John Kerry, for instance, has said the Paris Agreement will not be a treaty. But what Kerry meant is that the US would like a text that meets the description of an 'executive agreement' under US constitutional law, allowing the President to sign it without going to the Senate, a step that would be required if it were a treaty. Nonetheless for the purposes of the 1969 Vienna Convention on the Law of Treaties, such an agreement could still be a binding treaty satisfying other parties, including the EU.

As Australia's Ambassador for the Environment, Peter Woolcott has explained, the old Kyoto approach of top down targets in a binding treaty is no longer fit for purpose, and the only way forward is to have a process which 'allows us to build action over time to keep within the 2 degree guard rail through a regular periodic process that prompts States to revisit and update their national mitigation efforts through five-year cycles'.

Beyond these issues as to formal status, there are fascinating questions as to what mix of obligations the Paris Agreement may contain.

The draft text reveals a spectrum of views on how stringent those obligations should be, and the mix between pledging, reporting and monitoring obligations, and obligations to cut emissions.

This text recognises the urgent threat of climate change, and includes a commitment to keep temperature rises below 2°C or 1.5°C (the latter would be safer, but we no longer have a hope of meeting it). There is a provision (containing lots of bracketed text) setting out the overall objective to reduce emissions; one of the options is to achieve carbon neutrality, a goal which both the Australian Government and Opposition support, although they disagree on the timing for achieving it.

The draft also obliges all parties to have targets and to implement them. To meet US constitutional requirements, it seems likely states will agree that the targets themselves are not obligatory, but there would be a legally binding obligation to pledge them and to have plans to implement them. The draft also includes a provision requiring targets to be set for five year periods, with each target to be stronger than the last, and justified in terms of being a fair contribution to the 2°C objective. There is to be a regular stocktake of individual and collective action, and a system of transparency to ensure that states do not make empty promises.

If you want to see what rising temperatures means for Australia, the CSIRO has developed a handy tool showing where climate change is effectively moving your home (if you live in Melbourne you are on the move to Dubbo; if in Sydney, then Brisbane; if in Darwin you are heading to a climate currently found nowhere on earth). Unmitigated climate is likely to cause unmanageable levels of economic disruption to most states and cause cascading national security threats. And carbon dioxide is not only warming the planet, it is also driving ocean acidification as the seas draw down carbon (if left uncontained, heat and acidification will cause the ocean food chain to collapse).

The Paris Agreement will not itself fix the climate crisis. Indeed it will studiously avoid confronting the central question; how to set and divvy up the global carbon budget. But it is hoped that Paris will mark a break from the past and finally set in motion a collective process that is up to the task of meeting this unprecedented global challenge.

Photo by Mustafa Yalcin/Anadolu Agency


The Lowy Institute, with the support of GE and the DFAT-sponsored Australia-PNG Network, is hosting the Australia-Papua New Guinea Emerging Leaders Dialogue this week. The Dialogue, which seeks to develop deeper, people-to-people relations between Australia and its nearest neighbour, takes place at the end of a year in which the official relationship has taken a few hits.

A shared history: PNG and Australian fire fighters after a training session (Photo courtesy Flickr user DFAT)

The most recent came when an AFP officer alleged in the media last week that Australian police serving as advisers in Papua New Guinea were constrained because of the Manus processing centre. I won’t deal here with the other allegations the officer made, which have been refuted by the AFP, Papua New Guinea’s police commissioner and DFAT, and which changed in later interviews with the officer in question.

But the reference to Manus bears further analysis. A number of prominent commentators on Papua New Guinea have publicly and privately regretted the impact of the political imperative to maintain the Manus island refugee processing centre as a deterrent to future asylum seekers. The ANU’s Stephen Howes and I are on the public record saying that this imperative dissuades the Australian government from tackling tough issues in Papua New Guinea and constrains Australian policy options. Anti-corruption campaigner and head of the now de-funded Taskforce Sweep in Papua New Guinea, Sam Koim, has also cautioned about ignoring corruption at the highest levels in Papua New Guinea in order to preserve the O’Neill government’s cooperation with refugee resettlement processing and resettlement.

Are we right? Is Australian policy in Papua New Guinea beholden to its immigration policy?

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If the processing centre in Manus were to be closed, would Australia be freer to publicly criticise the government of Papua New Guinea about the rule of law and the behaviour of its police force?

Australia has many reasons to maintain a friendly bilateral relationship with Papua New Guinea, including:

  1. Papua New Guinea is Australia’s nearest neighbour. Its security is inextricably tied to Australia’s security. The 2013 Defence White Paper identified the security of Australia’s immediate neighbourhood (including Papua New Guinea) as the second of four key strategic interests.
  2. Bilateral trade is worth $5.9 billion. Papua New Guinea is Australia’s 17th largest trading partner. Australia takes 36% of PNG’s exports and Australian goods account for 34% of PNG’s imports, making Australia by far Papua New Guinea’s leading trading partner. The stock of Australian investment in Papua New Guinea totals $18.9 billion.
  3. Papua New Guinea is the largest bilateral recipient of Australian aid, with $554.6 million due to be disbursed this financial year. According to DFAT, Australian aid accounts for 68 per cent of total official development assistance received by Papua New Guinea and makes up 14 per cent of Australia’s total aid program. 
  4. According to DFAT, approximately 10,000 Australians live in Papua New Guinea. The latest Australian census shows about 15,000 Papua New Guineans living in Australia.
  5. Australia’s colonial relationship with Papua New Guinea gives Australia special responsibilities. The 2015 Lowy Poll found 82% of Australians agree that ‘stability in Papua New Guinea is important to our national interest’ and 77% say ‘Australia has a moral obligation to help Papua New Guinea.’

Separately and together, these are good reasons not to risk damaging the bilateral relationship, regardless of whether Australia maintains the costly processing centre in Manus.

The Australian government is constrained from speaking out about the rule of law, corruption and human right abuses because it wants to avoid the risk the PNG government would renege on its agreement to process and resettle refugees. However, by far the most most important reason for Australia’s reticence is that the nature of the bilateral relationship has changed.

After the tense times of the Howard-Somare era, Australian leaders and foreign ministers have sought to put the relationship on a friendly and more equal footing. Prime Minister Kevin Rudd set the wheels of change in motion, showing overt respect to his elder counterpart Sir Michael Somare and agreeing to Somare’s request to focus more on the bilateral economic relationship and reform the aid relationship. When Peter O’Neill replaced Somare as Prime Minister, he quickly developed a friendly relationship Julia Gillard as prime minister and Rudd as foreign minister. O’Neill understood Australian politicians well. He convinced them he was the leader Papua New Guinea needed and that he could provide the regional leadership Australia needed, presenting a viable alternative to the then undemocratic Fiji.

Through these years, PNG’s economy strengthened, benefiting from the impact of ExxonMobil’s landmark LNG investment and high commodity prices, and it developed more substantial trade relationships with Asian countries. Foreign Minister Julie Bishop has worked harder than any of her predecessors to improve the relationship in an era when Papua New Guinea is no longer dependent on Australia. Peter O’Neill’s government has a relationship of trust with Canberra because of efforts on both sides. The Manus deal helped Prime Minister O’Neill gain some leverage over Canberra but the fundamentals of the bilateral relationship had changed before that deal was struck.

The relationship could certainly be better but at this particular juncture is hard to see how an Australian foreign minister could tackle the most difficult issues in a public way without risking another hit to the official relationship. In these challenging times, strong people-to-people and business-to-business relationships are more important than ever.


The delegates have arrived and the behind the scenes discussions in Paris are well underway. Negotiators are meeting to discuss strategy and informally coordinate positions. The aim is to  ensure formal negotiations proceed smoothly after the fanfare of the leaders' statements tomorrow.

Canada and Japan's multi-billion dollar commitments to support the world's poorest nations participation in climate change solutions are a welcome boost heading into the week. See below for the chronology of climate finance commitments:

From an Australian perceptive, we head into the Paris meeting with an unprecedented commitment from both major political parties that we must achieve net zero emissions. On Friday, as I was getting on the plane to Paris. Opposition Leader Bill Shorten, outlined the ALP's commitment to Australia achieving net zero emissions by 2050 at the Lowy Institute (more on this below). From the Commonwealth Heads of Government Meeting in Malta the Prime Minister stated, 'It [Paris] is a step along the way to achieving a net zero emission world'.

Long-term emission goals such as this will be on the agenda in Paris. But, more importantly, these statements offer a rare opportunity to reset some of the hyperbole in recent domestic policy discussions. How a party plans to achieve net zero emissions over coming decades is now a key test of its policy to clean up and modernise our economy.

However, the unusual convergence on what our ultimate objective is has been marred by some of the domestic debate around the ALP's emissions goals. Businesses have largely been constructive in their responses and focused on the need, regardless of the targets set, to have scalable, durable and domestic climate policy they can invest in(see, for example, media statements from the Business Council of Australia and AiGroup). However, a number of Government statements in response to the ALP's commitment require scrutiny:

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ALP target would be a massive hit on the economy

This is not supported by evidence. All independent economic modelling in Australia has shown that cleaning up our economy would see economic growth continue strongly. Putting aside the fact this modelling explicitly ignores the economic impacts of climate change itself, any cost to businesses and the economy is largely determined by the policy to achieve the target, not that target itself. For example, the modelling commissioned by the Government shows that the overall economic cost of achieving a 45% reduction in emissions by 2030 through domestic and international action is the same as achieving a 26% reduction through domestic action alone.

The ALP's target is stronger than other countries

This is incorrect. The average emission reduction target of other developed countries, on 2005 levels, is around -35% by 2030. This is less than the ALP's target but more than the Government's. However, a number of countries including Germany (-45%), Norway (-44%), Switzerland (-51%) and the UK (-49%) have comparable or stronger targets than the ALP's proposal.

A straight comparison against a 2005 base year also misses a critical point.

Over the last two decades Australia has done much less than many other nations to limit emissions. As a result we still have the highest emissions per person and the most pollution intensive economy of any developed nation. By not bringing per person emissions and emissions intensity down to levels comparable to others, we are asking other nations to continue subsidising our lack of action.

  • The Commonwealth has announced its first female secretary-general, Baroness Patricia Scotland. The Baroness’ first task should be to beef up the effectiveness of their aid work as The Commonwealth has routinely ranked as one of the worst performing multilateral donors.
  • In the first of a two part series that I have co-authored over at Devpolicy we look at trends in Australian development NGO spending since 2000, and in particular how fundraising costs have changed over time (hint: they’ve gone up).
  • Terence Wood continues his analysis of new Australian polling data on foreign aid, this time looking at who specifically opposed Australia’s aid cuts. 
  • Census’ and household surveys in developing countries are rare, unreliable and notoriously expensive. New research shows how many aspects may be recreated at a fraction of the cost by using mobile phone metadata.
  • Michael Clemens debunks some of the biggest fears about refugees and their supposed links to violence, terrorism and costing the economy. 
  • There’s only two weeks left to apply for the 2016 ODI Fellowship Scheme, perhaps the best entry pathway for young economists to work in developing countries.
  • In a new podcast Adam Davidson takes a look at all things concrete, with particular reference to the industries overwhelming influence in developing countries and how shoddy concrete is to blame for many deaths when disaster strikes.

  • Finally, as we enter the festive season, Tiny Spark has launched a three part ‘guide to good [charitable] giving’ podcast series.



The Paris climate change talks will dominate the political debate over the coming week. The focus will be on whether the Australian prime minister joins over 140 other leaders to shepherd in a deal to cut greenhouse gasses and tackle climate change. There are expectations Prime Minister Turnbull may rise to the occasion, and 'stand-up for climate change', as The Sydney Morning Herald reports.

On the domestic front, tax reform continues to be the major issue, and the Turnbull government has emphasised that all options are on the table. As the government's tax reform discussion paper states, the objective is to create a tax system that will support a 'modern economy that will support our way of life'. Dealing with climate change has to be part of a modern economy.

Climate change and tax reform are inextricably linked through imposing a price on carbon; a carbon tax.

If the world is serious about doing something meaningful about reducing greenhouse gas emissions in the most efficient way possible, it will have to put a price on carbon. This was highlighted in a paper prepared by the IMF in advance of the Paris meeting.

As the IMF pointed out, carbon pricing is preferred to regulatory approaches to curbing emissions because it:

  • Promotes the full range of mitigation opportunities across all sectors;
  • Aligns the private cost of emissions with their social cost;
  • Can raise significant revenue which, if used productively, minimises overall burdens on the economy, and
  • Is simpler, administratively, than multiple regulatory programs targeting different behaviour in different sectors.

As the IMF stated:

Carbon pricing can...play a critical role in meeting in the most efficient and effective way the[ climate change] commitments that countries are now entering into; it can also raise substantial revenues that can be used to reduce other, more distorting taxes.

In short, carbon pricing can address some of the major challenges that Australia faces.

And yet, in one of the most regrettable recent developments in Australian public policy, imposing a price on carbon — through either a carbon tax or an emissions trading scheme — has become a no-go area.

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Notwithstanding the overwhelming benefits of such a move, as highlighted by the IMF, both the government and the opposition continue to say they will not introduce a carbon tax. As one headline states 'Labor denies carbon tax is coming back', and another 'Australia has no plans to plans to reintroduce the carbon tax —Josh Frydenberg'.

Carbon pricing is 'on the nose' in Australia because of politics and scare mongering; not as a result of a considered assessment of the merits of pricing carbon.

If the world is serious about reducing greenhouse gas emissions in the most efficient way possible, putting a price on carbon is a must. Currently about 40 countries are implementing some form of carbon pricing at the national level and over 20 sub-national governments have carbon pricing schemes. China is introducing an emissions trading system. But not Australia, which has the unenviable distinction of being the only country to abolish a carbon tax.

If Australia is serious about reducing emissions in the most efficient way possible, it should put pricing carbon on the tax reform table for, as the Prime Minister has said, nothing is off the table when considering tax reform options. It is time for Australia to move on from the simplistic claim that a price on carbon is nothing more than a 'great big new tax'.

The case against a carbon tax is it would raise the cost of living for Australians, mainly through higher gas and electricity prices. But so would an increase in the GST. In both cases, low income households could be compensated; as indeed they were when the carbon tax was introduced in 2011.

The focus of the tax reform is to find an equitable way to raise revenue. The opposition to raising the GST is that it is a regressive tax. However, not pricing carbon also raises equity issues. Omitting the price of emissions generated in energy use holds energy prices down. As the IMF points out, this is a highly inefficient way to assist low income households, because most of the benefits go to higher income groups.

And, as the IMF also notes, the revenue stream from introducing a price on carbon could be substantial, and this would present an opportunity to reduce other, more distorting taxes. In the first two years of the Australian carbon tax, it raised $15.4 billion. This is serious money when it comes to tax reform.

If Australia wants to make a mark in Paris in demonstrating its commitment to efficiently reducing carbon emissions, it should put a carbon tax on the tax reform table.

Image courtesy of Flickr user Giorgio Raffaelli


With PM Turnbull jetting out last week to take part in yet more summiteering in Paris for the COP21 climate talks (via Malta for that most baroque of institutions, CHOGM), he and his team must feel like multilateral veterans barely months into the job. They might also be feeling a tad jaundiced about these efforts, and not only from the jetlag. Asia's summit season this year delivered a particularly anemic harvest.

Every year in November, APEC, ASEAN with its various add-ons, and the East Asia Summit are held in close proximity. This year the biannual ADMM+ was also held several weeks prior to the others. This gives regional players plenty of opportunity to get to know one another, improve communication, foster goodwill and possibly even cooperate on economic and security policy. The meetings also provide a good barometer of the region's broader international environment and of course a chance to see how well the bodies are actually functioning as compared with the platitudes spoken about them by their many supporters.

This year's summit season reminded us that Asia now has abundance of multilateral structures. It was not that long ago that the region was bereft of opportunities for states to gather on a regular basis to improve their relations and coordinate policy. Yet, beyond the annual photo-op of leaders decked out in cliché ridden national costume, broader engagement with these mechanisms is poor.

for one thing, Asian multilateralism is largely an elite affair. This is understandable to a point, but the various forums lack connections to Asia's people. More significantly, this year's meetings displayed three big problems with Asia's multilateral groupings.

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Although Asia now has plenty of multilateral bodies, they remain both individually and collectively insubstantial. At the most obvious level, the meetings showed that they lack the ability to drive meaningful policy coordination. Perhaps most famously, APEC has become known as a platform for discussion of non-APEC related trade negotiations. This time around the biggest talking point was the recently struck TPP deal and its fit with the the ASEAN-centric RCEP. But perhaps more importantly, the various bodies show little ability to shape state behaviour nor indeed have they demonstrated that they can build the trust that is so palpably in demand.

Supporters of multilateral institutions have long argued that their most basic contribution is that elites can get to know one another at a personal level, and that these links can be a platform for a more cooperative way of doing things. The EAS is ten years old this year, APEC is twenty-six while some of ASEAN's various add-ons date back nearly twenty years. Yet there was not much trust or common cause on display over the past few weeks beyond perhaps that old stalwart of 'ASEAN solidarity'. Indeed in the case of the EAS, ostensibly Australia's preferred institution, it is not at all clear just what it does that the others don't do.

One of the central problems of institutions lacking heft (existential or functional) is that they can easily be buffeted by external forces. Of course no multilateral grouping, no matter how effective or long lived, would be unaffected by the traumatic events in Paris or the turbulent forces in international affairs such as the long-running conflict in Syria or the tensions in the region itself. Yet the ability of ADMM+, EAS and indeed APEC to be not only overshadowed but blown entirely off course by such events is remarkable.

The EAS is a case in point. Held once again in Kuala Lumpur, ten years on from the first meeting, the EAS was poised to make a decisive move. The Summit was about to adopt an unambiguous purpose as the region's leading body for strategic dialogue, to establish bureaucratic support within the ASEAN secretariat and to adopt a number of clear issues as its core business. Considerable work behind the scenes had gone into this, and in the weeks leading up to the meeting, diplomats were uncharacteristically confident that the opportunity to allow the body realise its potential would be grasped. The winds of terrorism and territorial contest blew this off the agenda. Instead, EAS remains a two-hour photo op which issues motherhood statements about counter-terrorism, connectivity and blandishments about areas of cooperation.

Finally, and perhaps most depressingly, the summit season has shown that forums intended to corral the major powers are proving instead to be forums in which they compete. One of the great claims that institutional supporters make, and ASEAN boosters especially so, is that multilateral mechanisms can bind the hands of great powers and, by setting rules and norms, limit their competitive tendencies. Sadly, as China and the US squared off, primarily about the South China Sea but also about trade and economic matters, Asia's summit season reminded us that the institutions in the region have a long way to go before they can be said to hold the attention of the major powers, let alone shape their interests and constrain their behaviour.

But even though this year's meetings showed much of what is wrong with the region's mechanisms, one should not underestimate their basic importance. That they exist at all in a region beset with historical animosity, rising mistrust and a slew of territorial disputes is an achievement. These entities have real potential not only to build personal connections among elites and to manage crises, but also to establish the foundations of a more stable platform for Asia's future. The recent summit season shows us how much work we have to do before this can occur. It is a significant challenge but one from which Mr Turnbull's self-styled 'grown up government' must not shirk.

Photo: Gregorio B. Dantes Jr./Pacific Press/LightRocket via Getty Images


The shooting down of the Russian aircraft by the Turks and the subsequent death of two Russian servicemen briefly got the tabloids talking about World War III but in reality this was never going to blow up into a direct military confrontation between Moscow and Ankara. What it did demonstrate, once again, is how focused on the short-term Turkey President Recep Tayyip Erdogan has been in his Syria policy.

No one will know who gave the order to shoot down the Russian aircraft, but it nearly certainly wasn't the Turkish pilot. Russia has been provocative with its airspace violations, but there is always a graduated response to these types of incidents; from verbal warnings, to visual warnings, to escorts out of the area, to shooting down. Ankara appears to have jumped from the least aggressive to the most aggressive option at lightning speed.

And now Turkey is paying for it. When taking on an adversary there are two golden rules: first, make sure you can hurt them more than they can hurt you; and second, make sure you have friends who have got your back. On the second of these points, to describe Erdogan's relationship with his NATO allies as 'good' would be overstating the case. Of course after the plane went down NATO constituted its crisis mechanisms and issued a statement publicly supportive of Turkey. But when NATO condemned airspace violations by Russia a month earlier, it noted Turkish aircraft had 'in accordance with NATO practice…closing to identify the intruder, after which the Russian planes departed Turkish airspace.' The apparent failure to follow these procedures in the latest incident is likely to be exercising the minds of some of Ankara's NATO allies.

There's not much more that NATO can do to help Turkey, or that it would really want to do. There is a widely held belief that Erdogan was complicit by commission or omission in the rise of ISIS and other violent jihadi groups by allowing the free flow of fighters and weapons across Turkey's borders in the belief that Assad could be defeated militarily and Turkey could control the rise of any Islamist groups. Turkey was also quite restrictive in how it allowed the US to use its Incirlik airbase to launch attacks against ISIS in Syria; hardly the actions of a committed NATO ally.

Russia has already demonstrated its intent to retaliate against Turkey and Turkish interests. Moscow appears to have shifted some of the weight of its air campaign to attack towns and border crossings abutting the Turkish border, as well as Turkish-backed rebel groups in Syria, a group that had already come under Russian attack prior to the shooting down. Moscow has also adopted a raft of economic sanctions against Turkey and, given Russia is Turkey's second-largest trading partner, there is plenty of scope for additional pain to be inflicted.

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Erdogan has tried to contact Putin personally but has been rebuffed to date, while Russia has demanded an apology from Turkey, which is unlikely to eventuate. Erdogan has gone so far as to say he was 'saddened' by the loss of the aircraft, but that is likely to be as far as he will go. The return of the deceased pilot's body could provide a circuit breaker, and there is little doubt back door discussions are underway to achieve this

Erdogan has proven himself to be an adept domestic politician, but on the international stage his Islamo-nationalist outlook and short-termism has resulted in Ankara becoming increasingly isolated from states that had been its close partners. The West believes it to be duplicitous when it comes to Syrian Islamists, the Arab regimes (with the exception of Qatar) believe it to be in bed with their natural enemy, the Muslim Brotherhood, and it has now picked a fight with its second-largest trading partner in Russia. None of this augurs well for the future.

Photo: Mehmet Ali Ozcan/Anadolu Agency/Getty Images


Earlier this week, a Turkish F-16 shot down a Russian Su-24 which Ankara said had violated its airspace near the Syrian border. A public relations and media struggle ensued, with both countries releasing their own versions of the Russian plane's flight path. Turkey released audio recordings of its warnings to the fighter to turn away, and both countries engaged in economic and military posturing

Sarah Lain wrote on Turkey's 'overreaction' to the airspace transgression, but also pointed out that this show of strength may force Russia to focus it's behaviour: 

Another challenge for Turkey is that if it had indeed escorted the Russian plane out of its airspace instead of shooting it down, the airspace violations would continue. By meeting Russian actions with an overly-forceful response, Turkey has potentially genuinely deterred Russia from doing something it feels violates its sovereignty. This is not a policy Western European nations should necessarily endorse, but it does reflect the use of 'strength' often called for over Russia’s behaviour. Syria is not Ukraine, and Russia needs to adapt its way of thinking given the number of complex players, and the wider variety of rules of engagement that they are playing by.

Former Australian Chief of Air Force Geoff Brown reviewed Russia's air campaign in Syria overall, and compared it to the West's operations there:

In contrast to coalition air forces, Russia has been unconstrained by the legacy of 10 years of counter-insurgency operations in Afghanistan. The tactical micromanagement of each strike sortie, and a total lack of freedom of action given to coalition aircrew, have made it impossible for coalition air planners to put together a coherent air campaign to defeat ISIS.

The coalition's formidable capability is being significantly underused because of self-imposed constraints. Contrast this to the Russian experience; in less than seven days, the Russians were flying more than 60 sorties per day, a very high rate given the modest force Russia deployed. And in the execution of its air campaign in northern Syria against militant groups opposed to the Assad regime, the Russians have used air power decisively in a way the US-led coalition has not.

Turning to the politics of terrorism in Australia, Sam Roggeveen on how Turnbull can outflank the Right on the issue:

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More to the point, though, this line of argument actually plays right into Turnbull's key message since becoming PM: one of optimism and confidence, a sense that right now is a great time to be alive and be an Australian. Where the hard-right sees only threat and fragility, Turnbull sees a strong country with a hopeful future. Turnbull can play this card against his ideological opponents. Why are they so pessimistic about Western civilisation at a historical moment when it has never been so dominant? Why, when faced only by a small army of poorly equipped extremists, do they have such little faith in a system which has seen off Nazism and communism, and which is a magnet for every persecuted minority in the world, including Muslims?

Sidney Jones, writing from Jakarta, wrote on ISIS's efforts in Indonesia:

The Paris attacks drew praise from Indonesians with ISIS in Syria, among them Bahrun Naim, an ex-prisoner and jihadi intellectual who was involved in trying to organise an attack in Central Java from Syria last August. In a blog posting entitled 'Lessons from the Paris Attacks' (Pelajaran dari Serangan Paris), he urged his Indonesian audience to study the planning, targeting, timing, coordination, security and courage of the Paris teams. His readers aren’t fellow fighters in Syria, they’re too busy. He's writing for the terrorist wannabes on Java.

One of the saving graces for Indonesia over the last five years is that local terrorists have thought small. Bahrun Naim and some of his friends think bigger.

Former intelligence specialist David Wells examined the advantages Australia has in preventing a 'Paris style' attack here:

This control means that while Australia has contributed a significant number of foreign fighters relative to population size, numbers have remained relatively stable over the past 12 months. Unfortunately, this means that the number of radicalised individuals unable to leave Australia and turning their thoughts to domestic attacks has got larger.

If we’re still uncertain how the Paris attack network slipped under the radar, the emerging picture is not a positive one for European authorities. A key issue appears to be a lack of coordination between authorities internally in France and across Europe, alongside a growing list of radicalised individuals.

Continuing our excellent debate on the future of drone warfare, ethicist Matthew Beard wrote on moral frameworks and the idea of the 'warrior':

Without a coherent moral framework for justifying their killing, drone operation is morally fraught. It is unsurprising then that, despite undertaking no risk, drone pilots report the same rates of PTSD as pilots of manned aircraft. This is even less surprising when one considers the growing literature on moral injury:  which is trauma that emerges as a product of transgressing against deeply held moral beliefs. 

Drone pilots not only kill their targets, but they observe them for weeks beforehand, coming to know their habits, families and communities. That is, they are able to see their targets as persons. As Coeckelbergh notes, 'pilots may recall images of the people they killed... of the person who first played with his children and was then killed'.

In another installment of Emma Connors' ongoing series on US presidential election politics, this week Republican presidential hopefuls sought to imitate Da Vinci:

The seven presidential hopefuls were placed at a table designed to evoke Thanskgiving. Which it would have done, except all seated were looking out, creating a tableau with a discomforting resemblance to Leonardo Da Vinci's Last Supper, albeit down a few disciples. Donald Trump and Jed Bush skipped the event. Both pleaded prior engagements but as NPR's Sarah McCammon noted, 'the format for the dinner — a soul searching discussion with a heavy focus on faith — isn't Trump's strong suit'.

Leon Berkelmans on the downsides of free-trade agreements:

The only reason to have intellectual property protection is to encourage innovation. If it reduces innovation, then we should run from agreements that increase our obligations. Why? Well, innovation is the most important source of sustained growth in the economy. If increased intellectual protection reduces innovation and growth, it will likely overwhelm the one-shot bumps to GDP that the aforementioned modelling suggests is the upside.

Euan Graham gave a rundown of the Australia-Japan 2 + 2 meeting, held last weekend and involving defence and foreign ministers:

On submarines, my takeaway from yesterday's press conference was that the post-Abbott penny has well and truly dropped in Japan; they know now they are in a commercial dogfight with the more export-savvy German and French bidders. Hence Nakatani's visit to Sydney was preceded by a trip to Adelaide (and that of a Japanese industry delegation several weeks ago). In the press conference he played the two trump cards in Japan's hand: unrivalled experience in the design and construction of long-range conventionally powered submarines and a strategic relationship that is not only bilateral, but trilateral, when the US-made combat system for the Collins' replacement is taken into account.

What should Australia's involvement be in the G20 now that it's off the troika? Hannah Wurf:

The best thing for the Australian G20 legacy would be if China revives a narrative on growth and runs a tight ship. Although Australia has departed the governing G20 troika, we should not go quietly back to the sidelines. We have a responsibility to encourage China to strengthen the forum and deliver real outcomes.

And Morris Jones wrote an excellent short post on the growing private sector competition in the space sector:

The successful landing of the Blue Origin rocket after an actual space mission sparked an angry 'tweet war' with Elon Musk, the South African-born entrepreneur behind Tesla electric cars and SpaceX, a US company that also makes rockets and space capsules. Musk has been trying to get one of his Falcon 9 rockets home safely for years, but has never staged a safe landing. Rivalries for this first landing shadow greater contests in the cutthroat business of commercial spaceflight, which struggles to attract clients to offset its huge operational costs.

In the second part of a two-part series on the future of coal, Fergus Green and Richard Denniss write about the upsides of a potential moratorium on the commodity: 

This might, superficially, seem crazy — and, viewed collectively, it is. But at an individual level, it is entirely rational for the owners of coal to sell coal cheaply, flooding the world market, in anticipation of future carbon prices or regulations. Such behaviour is consistent with what economists call the 'green paradox'.

Luckily, an economically rational and politically expedient solution presents itself: in addition to regulating demand for fossil fuels (through carbon prices for example) we must also regulate the supply of coal.

Stephen Grenville on Chinese and other foreign investment in Australia:

This ambiguity isn’t surprising; politics represents community values, which are ambivalent, even inconsistent. Governments have to dissemble, ducking and weaving to maintain sensible balanced policies, and in this case that means considering current account funding and providing a global element to investment.

It is, however, important for Australia, as a substantial capital importer, to either articulate a clear policy on foreign investment or learn to live with a smaller external deficit. It is also possible to squeeze more benefit out of the foreign investment that is coming in.

ASS/Barcroft Media via Getty Images


Earlier today at the Lowy Institute, Opposition Leader Bill Shorten announced an emissions reduction target of 45% by 2030 on 2005 levels (in comparison, the Coalition's target is a 26-28% reduction by 2030). 

After Shorten's address, I spoke with John Connor, CEO of The Climate Institute, about the impact of that target on Australia's economy, how it ranks us internationally, and whether climate change will be a major issue at the next Australian election.


As the NLD celebrated its election victory, the US Treasury announced it had added four North Korean individuals and one company to its targeted sanctions list due to links with the Korean Mining Development Trading Corporation (KOMID), a sanctioned North Korean entity involved in arms trading.

NLD supports cheer as the vote-count appears on screen at Party HQ on election night. (Sebastian Strangio.)

While sanctioning such entities is nothing new, what makes this case interesting is that two of the individuals named are based in Myanmar. One was the North Korean Ambassador to Myanmar Kim Sok Chol, who is accused of working with KOMID to facilitate arms trades. The other is allegedly an employee of KOMID's Myanmar office.

These aren't the first US actions targeting Myanmar entities with links to North Korea. In 2013, three Myanmar companies with alleged links to North Korean arms trading were added to the US sanctions list. In 2014, the late U Aung Thaung was also added. The reason given was that he was 'undermining' Myanmar's reforms. However, US Embassy cables had previously identified his sons as facilitators of transactions with North Korean entities, which raises the question of whether suspected continued involvement was the underlying reason for the sanctions.

Little is known about the Myanmar-North Korea relationship, who is involved and what role the military (Tatmadaw) or president's office may play. But collectively, these actions suggest this relationship may not have ended, as some have hoped or claimed. After all, why would the US keep applying sanctions if it didn't have evidence of continued engagement?

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Arguably even more concerning is the implication that outgoing Myanmar President Thein Sein was either unable to curtail the Tatmadaw's relationship with North Korea, or simply didn't care and paid lip service to international calls for it to end.

However, the NLD's recent election win and the upcoming transition of power provides an opportunity for the US to further align itself with the NLD and use what leverage it has to break these connections. The timing of the US announcement — soon after the elections, but just long enough to know the result — was likely a way to signal Washington's expectation that the incoming government will address the issue.

But will an NLD government be more successful than its predecessor? Even when the NLD takes over next year, it will not control the Tatmadaw, which, constitutionally speaking, has control over its own affairs. And if Thein Sein was unable to rein in the relationship, what chance does Aung San Suu Kyi or the NLD have?

Yet failure to address the North Korea issue carries risk for the NLD.

Whether Western governments like to admit it or not, Aung San Suu Kyi has long influenced (and perhaps dictated) their policy towards Myanmar, including on sanctions. She could ask for these to be lifted and it would likely happen. In some jurisdictions, this isn't as easy as it sounds, but with her support it would most likely be a rubber-stamp decision.

Removing economic sanctions would help the NLD implement significant economic reforms. But any lingering concerns about the Myanmar-North Korea relationship, or evidence that it is continuing, could hamper the lifting of sanctions. After all, the Myanmar-North Korea relationship is one of the stated reasons for continued US sanctions.

Would the US be willing to appease Aung San Suu Kyi by lifting sanctions at the expense of trying to end the Myanmar-North Korea relationship?

The US has some options. Washington could lift economic and trade sanctions but leave arms embargoes or military restrictions in place. If Congress is happy to lift sanctions but the White House wants to continue applying pressure, the Administration could increase its targeted sanctions on senior Tatmadaw officials. But any move that leaves the Tatmadaw out of the game is high risk. Aung San Suu Kyi needs the Tatmadaw onside, as it controls the three ministries (Home Affairs, Border Affairs and Defence) that are key to ensuring the rule of law. If it was thought she had negotiated or supported a deal for economic reform at the expense the Tatmadaw, she would be unlikely to get the cooperation she needs.

Alternatively, lifting these sanctions and embargoes could give the Tatmadaw the international military engagement it has sought for so long. Such a move might remove its dependence on countries like North Korea and open other avenues to legitimately procure defence materiel, especially from Western countries keen to provide such goods. On the other hand, lifting these restrictions could merely make it easier for the Tatmadaw to conceal its transactions with North Korea. Moreover, for many governments, giving up the stick in favour of the carrot is politically risky.

The NLD has a lot of work to do over the next few months, and turning its manifesto into actual policy is likely to be the main priority. But considering the US Government's continued interest, the NLD will need a strategy to address the North Korean issue.


It's been disappointing, and a little depressing, to see how parochial and partisan the issue of climate change has become in recent years in Australia, to the detriment of good policy and intelligent national debate.

There is far too much name-calling by opposing advocacy groups locked into entrenched ideological positions, and too little analysis or understanding of the science. But the greatest failing has been the inability of both Labor and Coalition governments to frame the issue in a way that makes sense to Australians and provides context for the technical discussions about emission reductions, economic costs and burden sharing that are likely to dominate the Paris climate summit.

At its heart, climate change is a national security issue. Without strong action to cap and then reverse still climbing greenhouse gas emissions, a rapidly warming planet will have adverse implications for all of us (including on the stability of states) requiring judgements about strategic risk as well as economic costs.

Graeme Pearman and I spelt out these risks in a major paper for the Lowy Institute a decade ago (Heating up the planet: Climate Change and Security). The bad news is that a review of the latest science suggests that, if anything, these risks have become both more probable and consequential because the current rapid rate of warming is now 'unequivocal'. Furthermore, the cause of this warming is 'extremely likely' (at least 95% probable) to be mainly the result of human activities, not natural climate variability.

This, by the way, is not just my opinion but the considered view of all 193 members of the UN and, increasingly, their hard headed military and national security establishments.

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As examples, the US National Intelligence Committee stated in 2008 that 'global climate change will have wide ranging implications for U.S. national security interests over the next 20 years.' And the 2015 US National Security Strategy argues that climate change is 'an urgent and growing threat to our national security, contributing to increased natural disasters, refugee flows, and conflicts over basic resources.'

Unfortunately, these realities have been distorted and masked in Australia by the polemical nature of the debate and by a failure of not only governments, but also scientists and policy makers, to effectively communicate the science and broaden the climate change narrative to include its all-important security dimension. The result? Public confusion about the causes and consequences of climate change, and a decline in those who believe that recent climate change is mainly caused by humans, not natural variability.

As a proven communicator and supporter of the scientific consensus, the Paris summit gives Prime Minister Malcolm Turnbull the opportunity to initiate a more constructive and informed public debate, and to develop a new political consensus in Australia on climate change policy.

How can he do this? By framing climate change as a risk management issue. In doing so he should draw on the national security approach to risk which typically evaluates and prioritises security challenges by weighing the likelihood of a threat against its impact. Climate change would rate highly on both measures and even higher if emissions are not brought down quickly.

The questions Turnbull should pose to contrarians and sceptics are these: are you prepared to bet against the consensus of the world's most knowledgeable climate scientists that you are right and they are wrong? And, if so, are you also prepared to bet that future climate change impacts will be benign or that the risk can be managed solely by adaptation?

If not, then the Paris summit will figure much more prominently in your thinking, because whatever we do to reduce greenhouse gas emissions lowers the risk of dangerous climate change outcomes. The higher the emissions, the higher the prospect of widespread species loss, water and food insecurity, energy disruptions, increased refugee flows, infrastructure failure and more conflicts.

Over to you Malcolm.

Photo courtesy of Getty/Sean Gallup.