Lowy Institute

Mohammed — not his real name — is a Syrian opposed to Syrian President Bashar Assad. In 2013, he fled to Turkey with his young family. A little over a week ago, he among the first out in Istanbul streets, waving the Turkish flag in support of President Recep Erdogan in the wake of the failed  coup.

Mohammed sent me a video of his young son, draped in the red crescent of the Turkish flag, among the tens of thousands who responded to Erdogan's call for mass mobilisation by his supporters against the short-lived coup.

Since then, Erdogan’s efforts to cleanse the country of what he has described as 'cancerous institutions' of the conspirators, including mass arrests of up to 50,000, have made the West nervous.

Do we look the other way as Erdogan talks about re-introducing the death penalty, as thousands of military men disappear, only to be seen half-naked and cuffed in state released photographs in a basketball court? As upwards of 1600 educators are sacked, academics are banned from leaving the country, and journalists are rounded up?

Fears of the President’s increasingly autocratic and dictatorial ways, his persecution of journalists, and reported mass human rights violations against the Kurds are uncomfortable truths about a NATO ally. Turkey is, after all, home to the largest air base from which the US is launching its air offensive against ISIS in the north of Iraq and Syria. It is also critical to Europe’s response to the refugee crisis; a recently agreed deal with Europe to try to stem the flow of Syrian refugees to Europe by offering incentives for them to stay in Turkey has been credited with lowering the migrant death toll on the Aegean sea. 

Erdogan would also appear to be an unlikely hero for the largely Sunni Syrian opponents to Assad, who only five years ago rallied against the same kind of undemocratic leadership.

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When I suggest this to Mohammed, his answer is straightforward and persuasive.

'We are scared. That’s all there is to it'.

The truth is, for all its problems, Turkey has been a safe haven for Syrians. Of the six million Syrian refugees now outside their country, some 2.7 million have made Turkey home. Turkey has given them limited work visas, opened Arabic schools, and recently raised the possibility of  citizenship.

If the coup had succeeded, Syrians fear they would have become the chief target of military secularists, and once again, they would have found themselves unwelcome. These are not idle fears; when Erdogan floated the idea of Syrian citizenship, 'I don’t want Syrians in my country', trended on Twitter. The Istanbul airport attack last month was largely seen as a result of Turkey’s position on Syria. Many even believe his pro-Islamic position and Anti-Assad stance were what spurred the putschists in the first place.

'We all remember Egypt', said another Syrian, Tarek, who lives in Istanbul, referring to the 2013 military counter-revolution which spurred a massive backlash against Syrians who had taken refuge in that country.

'If there was a secular coup here — where would we go?'

But another Syrian I spoke to was concerned the West’s response to Erdogan’s crackdown could also spell trouble.  Should the EU decide to discipline Erdogan by taking the EU visa deal off the table, Turkey may be inclined to send more Syrians their way.

'I worry we are going to see a lot of Syrians take the boats again and the deaths will start again', this refugee told me.

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Are the Blue Dog Democrats to blame for US inaction on the Trans-Pacific Partnership trade agreement?

Well, at least partially. 

With the World Trade Organization stalling, regional agreements like the TPP are the next best option for making international trade easier and cheaper. And with trade growth slowing they are more important than ever. When the negotiations were launched in Melbourne six years ago it seemed reasonable that a handful of moderate Congressional Democrats would eventually join a Republican majority to pass the TPP, as they’d done with other US trade deals. 

But the one thing Democrats and Republicans currently seem to be able to agree on is their mutual distaste for the TPP, which means getting the deal through Congress will be tough. That has the rest of the TPP countries in limbo because negotiators from the 12 countries had effectively agreed that the agreement could not come into force without US participation. 

How did it come to this?

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Democratic political opposition to trade deals isn’t new, particularly during presidential elections. Democrats have traditionally courted the support of labour unions like the AFL-CIO and have long argued that free trade hurts the American working class by sending jobs overseas.

But the White House and Congressional Republicans have always been able to count on a small but important minority of Congressional Democrats to help free trade agreements (FTAs) across the line. This Democratic contingent was led by the Blue Dogs (moderate Democrats who supported federal fiscal restraint and were hawkish on national security). They also supported free trade as a tool to spur on US economic growth and private sector growth job creation. In 1993 when Bill Clinton was trying to secure Congressional ratification of the North American Free Trade Agreement (NAFTA), the Blue Dogs helped to lead the charge. A whopping 40% of House Democrats ultimately supported NAFTA. 

But election losses and retirements have diminished the Blue Dogs — there are now only 14 members of the coalition left — weakening Democratic backing for trade agreements. Indeed, compared to NAFTA, only 15% of House Democrats voted for Trade Promotion Authority last year, the legislation which simplifies the US process for agreeing to trade deals. 

Meanwhile, the changed American political landscape which has put the Blue Dogs under pressure has also thrown into doubt the GOP’s status as the undeniable party of free trade. Some Republican senators have come out against the TPP because they worry it doesn’t go far enough to help big American business. Others agree with the sentiment that trade deals hurt American jobs. These are the same Republicans who now see the working-class white men who soured on free trade after the Global Financial Crisis as their key constituency. 

The result is a gloomy outlook for the TPP getting through Congress. But there’s at least a glimmer of hope.

Like China bashing, anti-trade rhetoric is typical during US presidential campaigns. During his 2008 presidential campaign, Barack Obama criticised NAFTA and US free trade agreements with South Korea, Colombia, and Central America, only to champion them once in office. 

If the TPP isn’t passed under Obama, it’s possible the next president could execute a similar pivot. That’s because while US anti-trade groups have been organised and vocal, polling by the Pew Research Centre last year showed that 68% of Americans agreed that boosting trade and business ties between the US and other countries is a good thing for their country.

What’s more, Pew polling of registered American voters in March of this year shows that Democratic voters are now actually far more supportive of free trade agreements than Republicans (56% to 38%), breaking the previous Democrat anti-trade mould. And Clinton supporters have the most positive view of FTAs, giving her the easier path to push the TPP through, despite her endorsement by major US trade unions: 58% of her supporters say FTAs have been a good thing for the US, compared to only 27% of Donald Trump supporters. 

But voters have mixed views on the impact of FTAs on their personal lives. Fewer than one in five Americans think that free trade agreements create jobs and higher wages, and 36% say that FTAs have hurt their financial situation. Key to US ratification of the TPP will be addressing head-on the sense that trade has been good for business, but that the benefits have not been felt by all.

Without the Blue Dogs around to help, this will be a tough (but not impossible) task. 

Photo: Flickr/US Capitol Building

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Money stolen from the troubled Malaysian state fund 1MDB was laundered in jaw-dropping ways: multi-million dollar real estate in Manhattan, Beverly Hills and London; art worth US$130 million; and funding for Hollywood movie The Wolf of Wall Street, among others

The US Department of Justice (DOJ) is trying to seize US$1 billion in assets traced to 1MDB, its largest ever such endeavour.

Malaysia’s Prime Minister Najib Razak is the chief of 1MDB’s advisory board as well as the country’s finance minister, and the scandal surrounding the fund hangs heavily upon him.

As the allegations pile up, Najib has defied gravity, even strengthening his position domestically by removing opponents at key state institutions like the Attorney General’s Office and the Central Bank, and clamping down on critics in the media.

Najib has persistently denied any wrongdoing, stating he did not take any money for personal gain. He has refused to resign, claiming the allegations are a political plot by adversaries.

Many are now wondering: will the unfolding US investigation bring him down?

It is a natural enough question, given how the 1MDB scandal is impacting on Southeast Asia’s third-biggest economy. Any political instability could also stymie joint efforts by the Muslim country and US and Australia to fight terrorism, which analysts fear will be reinvigorated in the region by returning extremists from ISIS-controlled territory.

But those hoping for a swift end to Najib’s rule are likely to be disappointed for three main reasons: the PM's substantial political support; a lack of united opposition; and, finally, some powerful foreign allies.

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1. Political support at home

Firstly, Najib commands solid support from his political party, United Malays National Organisation (UMNO), and has flushed out all dissenters.

UMNO’s Supreme Council, the most important party organ, threw its support behind the party leader soon after the DOJ announcement, warning others 'not (to) make any conclusion because no one can be said to be guilty until proven in the court'.

Last month it sacked prominent party members critical of Najib, including former deputy Prime Minister Muhyiddin Yassin and MP Mukhriz Mahathir, eldest son of Malaysia’s longest serving prime minister Mahathir Mohamad

'This move (by the DOJ) will not dent his position because he is strong domestically and his party members fall in line. They are beholden to him,' said one source in the government’s inner circle who declined to be named.

2. No united opposition

Najib's political foes are weakened and the opposition parties fragmented.

An early supporter of Mr Najib, Dr Mahathir now leads the charge to bring him down. But the 91-year-old, who once wielded considerable political leverage as Malaysia’s longest serving prime minister, now sees his influence waning. The latest indication of this came in May, when Dr Mahathir called for voters in elections in east Malaysia to punish Najib. Instead, the ruling coalition won a bigger-than-expected margin. 

'It also reflects the reality that many rural voters — who make up the majority of the population in some states — do not relate to 1MDB; they have no idea what it is and why it matters because all they see is that the ruling coalition has provided them with the basics,' said a Kuala Lumpur management consultant, also speaking on condition of anonymity.

Meanwhile, the opposition coalition is in disarray after leader Anwar Ibrahim was jailed last February for the second time in his career on a sodomy charge many believe was politically motivated. His once-powerful opposition alliance fell apart after rejecting the plans of the conservative Pan-Malaysian Islamic Party to enforce Islamic law in the state it rules.

Another alliance member, Democratic Action Party, is in full damage-control mode after the arrest of its secretary-general Lim Guan Eng on allegations of corruption. 

3. Foreign friends

Finally, Najib still has the support of foreign allies, like Saudi Arabia.

The Malaysian attorney-general claimed that funds deposited into the PM’s bank accounts were a 'personal donation' from the Saudi royal family. 

US-Malaysia relations initially blossomed under Najib as he forged a closer friendship with his American counterpart, President Barack Obama, who became his golf buddy. The US needs regional support to combat extremism and mitigate the rise of an ever more aggressive China. It sees Malaysia as a crucial partner on both fronts and Mr Najib’s ouster could undermine what has been a constructive and important relationship.

Malaysia is trying to play the US off against China, which has become an important friend to Najib since this scandal broke. China provided a lifeline to 1MDB when China's state-owned energy company invested in 1MDB’s energy assets worth US$2.3 billion soon after the Chinese Premier promised to help Malaysia overcome its economic woes. 

So, even as his image takes a further hit, Mr Najib’s position looks solid for now.

The 63-year-old son of Malaysia’s second prime minister is renowned for this survival skills.

He pulled through a scandal as defence minister, when two former members of his security detail were jailed for killing a Mongolian model in 2006 and blowing up her body, all amid allegations of dark dealings.

Now his resilience is on display once again. So far Najib has outmanouvered his domestic foes. If the US DOJ were to charge him with a criminal offence, it may finally be enough to bring him down.

But, with much to lose and few credible challengers at home, Najib seems set to hold on.

Photo by Mohd Samsul Mohd Said/Getty Images

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As an analyst of regional security, I spend much time absorbed with the usual suspects; nuclear proliferation, arms modernisation, territorial tensions, plus a panoply of non-state challenges from terrorism, cyber and other domains. While the divisions between state and non-state security concerns are more blurred than they used to be, our assumptions about great-power flashpoints are more or less constant. North Korea, Taiwan, the South and East China Seas exercise a steady hold on our attention. Are there potential triggers to regional conflict entirely out of this analytical comfort zone?

At last week's public event to celebrate the 50th anniversary of the ANU's Strategic and Defence Studies Centre (SDSC), the audience was asked to suggest 'black swan' events with the potential to tip the balance between peace and war in Asia in 2020.

Here's my black swan for what it's worth:

In 2019, a Southeast Asian country (I'm not being deliberately coy, there is more than one candidate) experiences a sharp economic and political crisis, following a deterioration in global conditions. The country has a sizeable, long-established ethnic Chinese minority. From 2017, it received a new wave of skilled permanent residents as managers and entrepreneurs from the People's Republic of China (PRC). This was part of a wider relocation of labour-intensive production out of China, attracted by tax-breaks and other inducements offered by a number of Southeast Asian countries competing for Chinese investment and one-belt one-road initiatives.

Many of the new arrivals are wealthy, conspicuous consumers making them easy targets for resentment in a downturn — just as Japanese citizens were across Southeast Asia in the mid-1970s. The difference in 2019 is that opportunist politicians openly play the race card in ways that had been taboo previously.

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Violent attacks on ethnic Chinese communities spread to PRC expatriate communities, clustered around export processing centres along the coast. Chinese-Singaporean and Taiwanese nationals are also attacked. As police and military units are deployed disproportionately to the capital, law and order quickly breaks down in a number of regional cities.

Commercial flights out of the country are snapped up, and as violence escalates, it becomes clear that an organised evacuation of PRC nationals is necessary. Western embassies are preoccupied evacuating their citizens.

Saturation media coverage in China, reporting lurid details of racial attacks on PRC citizens, feeds a social media clamour for China's authorities to intervene and ensure their citizens' safety. Widespread calls are made to extend China's protection to ethnic Chinese 'compatriots'.

After intense diplomatic pressure, the Southeast Asian country accedes to China's request to facilitate a non-combatant evacuation operation (NEO). In addition to chartered flights from the capital to China, the order is given to dispatch a PLA Navy amphibious group from the South Sea Fleet to carry out an evacuation by sea. The PLA has conducted NEOs in the past, in the Middle East. But never on this scale. A battalion-sized force protection element consisting of Chinese marines and special forces is embarked. Military transport and refueling aircraft are sent ahead to China's installations in the Spratly islands, where PLA combat aircraft already seasonally deploy.

On arrival, Chinese military personnel, with uneasy assistance from local security personnel, establish a defensive perimeter around the port to facilitate the evacuation of Chinese expatriate workers and their families. However, as law and order degenerates elsewhere, local forces are withdrawn, leaving the Chinese contingent to handle security largely unaided. Groups of local ethnic Chinese begin arriving, appealing for protection. As the perimeter is extended, Chinese forces are involved in small-scale clashes to restore law and order. The local mood sours further. Although many evacuees are quickly taken to the main naval force offshore, the distinction between PRC citizens, their dependents and non-Chinese citizens quickly becomes blurred.

As the PLA commander in charge of the operation appeals for reinforcements in order to hold his perimeter against an increasingly hostile population, the Southeast Asian government accuses China of violating its sovereignty, issuing a 48-hour ultimatum to complete its evacuation, return non-PRC citizens and withdraw its forces. Mass demonstrations flood the capital protesting against China's 'invasion'. Nationwide violence intensifies. China's government issues a corresponding warning, demanding that Chinese people's safety be guaranteed and their property respected. Internet outages are reported at key government installations. Chinese combat aircraft begin flying sorties offshore, as a wider mobilisation of forces is detected.

This stab at a black swan is not a prediction of the future. Clearly such a turn of events would not occur within an international vacuum. But nor is it unthinkable. Unlike conventional state-on-state flashpoint scenarios, there would be no 'playbook', or mechanisms to prevent crisis escalation. Moreover, emotions on both sides would be heavily engaged. A non-combat, humanitarian intervention in such circumstances could quickly become charged with strategic overtones.

Fortunately, there has been no major outbreak of violence against any of Southeast Asia's ethnic Chinese populations since the late 1990s. Some have been effectively assimilated. Yet if tensions over the South China Sea continue, the geopolitical risks overhanging the Chinese diaspora are likely to intensify, especially if Beijing pursues a destabilising 'co-ethnic' foreign policy based on appeals to culture and kinship. Equally, Southeast Asian elites must be increasingly alert to the strategic implications of populist politicians resorting to the race card.

Photo by the author

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Papua New Guinea’s Peter O’Neill survived last Friday’s vote of no confidence, the first since his turbulent term as prime minister began in 2011. With Parliament to now adjourn until August, O’Neill looks set to remain prime minister until next year’s June election. This would make him only the second prime minister in PNG’s history to serve a full term in office.

A casual observer of Papua New Guinea will note that with 85 members of Parliament voting in support of O’Neill, more than three quarters of the total, he holds a majority that would be the envy of most modern democracies. However, the numbers hide the much more fractured reality of PNG politics. High profile defections, including three former prime ministers, combined with bloody student boycotts and ongoing worker strikes, show the gloss has clearly come off the PM, once heralded as the voice of an emerging generation.

How did it come to this? How did a man who controversially wrested power from founding father Michael Somare in 2011 and then went on to win the largest majority in PNG’s history, marginalising the opposition to only four seats (less than 4% of parliament), find himself in the fight of his political life just three years later?

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For me, it all boils down to two interconnected issues: economic management and corruption.

The state of the economy

When O’Neill came to power, PNG was entering the construction phase of its largest ever natural resource project, a US$19 billion LNG project that was expected to transform the nation's economy. Anticipating a dramatic surge in government revenues once the project came on line, the government made bold expenditure commitments including free education, free healthcare, a massive decentralisation program, and commitments to hosting major events including APEC 2018 in Port Moresby. The promises of PNG’s newfound wealth from the project also emboldened the prime minister to make a dubious deal to acquire a stake in PNG’s largest company. O'Neill thought he could have it all, and had commodity prices remained at historic highs he may well have been proved right. But that’s not the story of PNG’s fourth resource boom.

In previous posts on the Interpreter I have detailed what happened next but, in short, the dramatic fall in commodity prices combined with record deficit spending left the government in an untenable fiscal situation with an overvalued exchange rate putting the private sector under significant strain. Revenue collapsed by 10% in 2015, instead of increasing by 10% as expected, leaving the government scrambling to slash the budget while protecting major expenditure items, resulting in a major shift in expenditure allocations that slashed the budget for essential services.

It is easy to see how all of this could have broken better for the O’Neill government, and the PNG economy was certainly hit by the global downturn at the worst possible time. But the government has not done itself many favours in the way it has responded to its sudden and dramatic reversal of fortune. This has not gone unnoticed.

Corruption

Corruption is often synonymous with development, particularly in natural resource dependent countries like Papua New Guinea that have a strongly entrenched system of cultural patronage. In this context it should not be surprising that corruption is rife in PNG; the nation currently ranks 139th in a list of 163 in the Corruption Perceptions Index. Corruption predated O’Neill’s tenure in PNG and he made bold claims about how his government would stamp it out by establishing and empowering an independent corruption taskforce. The ABC’s recent account of the tragic shooting by police of students boycotting classes recounts how far O’Neill’s stance on corruption has changed as the spotlight was directed towards him.

It’s impossible to say whether corruption has become worse under O’Neill’s leadership, but his active role in the subversion of the independent and police corruption task forces and abuse of the court system has created a perception of impunity in the country’s highest office. Corruption has become the rallying call for broader dissatisfaction at the state of PNG, which goes far beyond the actions of the prime minister.

We’ll never know how different the state of PNG would have been under a Somare (or any other) government emboldened by the natural resource boom. Changing the country’s leader now will also not change the country’s fortunes or necessarily improve adherence to the rule of law. As Bal Kama concluded last week, the important question is not who will be prime minister, but rather who is fit for the office.

Would all of this have been different if services were still flowing and the economy was the darling of Asia, it was expected to be? That is one of the greatest ‘what ifs’ of O’Neill’s first elected term in power.

Where to from here

There is clearly a deep dissatisfaction with how Prime Minister O’Neill has responded to the allegations against him to date, and the energy with which he has disputed these claims has no doubt distracted him from the task of managing PNG’s weakened economic position. But who could have done better? Even after this vote the opposition is still a marginal force in parliament, and no alternative leader has emerged with a platform for change.

Legislation prohibits no confidence votes in the 12 months leading up to an election, so the people and the opposition will no doubt be turning their attention to voting in change at next year’s election. A dissatisfied civil society and disenfranchised student body will help embolden the opposition and perhaps see some new voices emerge in the campaigning to come. But sitting MPs have substantial financial advantages to remaining in power. Money politics will certainly be put to the test, and it will make for an interesting election campaign. Unfortunately, it will also no doubt distract from governing the country. June 2017 looks very far away.

Photo: Mark Schiefelbein / Pool / Getty Images

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This week the Lowy Institute (in conjunction with the United States Studies Centre) hosted an address from Joe Biden, US Vice President. Biden spoke on US-Australia ties, and on US engagement with the Asia Pacific more generally (for video of the event, click here; for audio, click here).

The address did not introduce new policy or even new rhetoric, but that Biden felt the need to repeat a message of reassurance was in and of itself meaningful, wrote Sam Roggeveen:

It was a tone of reassurance and comfort which matched the rest of the speech. But to bring comfort is also an acknowledgment that comfort is required. Evidently the Vice President and his advisers judged that allies and friends in the region needed to be reminded that America's economic and military strength is enduring, and need to be assured that, in its presidential politics, the US is not lurching towards demagoguery. That in itself is a worrying sign.

Biden’s address, argued Richard Woolcott, lacked an understanding of how the Asia Pacific had so radically changed, and how the US-Australia relationship may need to change as a result:

Our relations with the US are of great importance, but we should tell our larger ally when we consider that a conflict is not in our interests, as Prime Minister Whitlam did in 1973 in respect to the Vietnam conflict.

Last Friday segments of the Turkish army attempted a coup against President Erdogan, which ultimately failed. Erdogan’s response was swift, wrote Rodger Shanahan

To many leaders, an attempted coup would give one pause for thought as to the direction they had taken a society. But Erdogan cares little for introspection and is driven to a large extent by ideology. He has made his way in the hard scrabble of Turkish politics with a firm belief in using power to shape society, and the fewer constraints on that power the better.

The coup attempt has likely brought an end to Kemalist Turkey, according to Wayne McLean:

Erdogan’s triumph will likely bring a natural end to Kemalist project, given its decreasing usefulness in managing Turkey’s exceptional geopolitical and ideational position in the current international environment. What replaces it is critical, because it's not only likely to shape Turkey’s future, but the wider region's political future as well.

The ramifications of the UN Permanent Court of Arbitration decision on the South China Sea continued this week. Bonnie Glaser argued that the US should make signing the UN Convention on the Law of the Sea a priority:

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Centering US policy toward the South China Sea on a rules-based order has proved correct. The contradiction, if not hypocrisy, of the US insistence that China abide by the Convention while the US refuses to accede to it is evident, and undermines US moral authority.

Crispin Rovere recommended that the US build its own islands in the South China Sea:

This has multiple advantages over alternative courses of action, and is the only option likely to be effective long-term. Indeed, it is probably the only response that China will understand.

In the wake of the PCA ruling, now is the perfect time. Washington should undertake land reclamation on behalf of the Philippines, and do so under the auspices that the matter has been settled under international law.

Michael Leach noted the Court’s decision in the context of the Australia-East Timor maritime border:

Timor-Leste has been quick to note that Foreign Minister Julie Bishop’s call for China to respect an international rules-based order is at odds with Australia’s persistent refusal to negotiate maritime boundaries with Timor-Leste. This refusal was made more complete by Australia's withdrawal from the UNCLOS dispute mechanisms shortly before the restoration of Timor-Leste's independence in 2002. This move was clearly an effort to avoid the increasingly strong presumption of a median line boundary in international law.

Allaster Cox from the Department of Foreign Affairs and Trade responded to Leach’s article:

Where a country takes Australia to an international court or tribunal, Australia engages in that process. In fact, we are participating in two arbitrations initiated by Timor-Leste and we will abide by the decisions of the arbitrators. We have called on the parties to the South China Sea arbitration to do the same.

We are also participating in a separate conciliation process initiated by Timor-Leste. The conciliation will be heard by a five-member commission appointed by Australia and Timor-Leste. Although a conciliation is not a legally binding process, Australia is engaging in the process in good faith, in accordance with our international legal obligations.

In Indonesia, Sidney Jones wrote on the implications of the death of the nation’s most-wanted terrorist, Santoso:

He was found and shot on 18 July by the elite army unit Kostrad; not by the police who had been searching for him for the last five years. His death has implications for the risk of violence, military-police relations, and the draft anti-terrorism law now being revised in parliament.

British journalist Simon Heffer wrote on the appointment of Boris Johnson as foreign secretary:

Boris Johnson is hugely popular with the Conservative party rank and file. Those who work with him (which at the moment include his fellow parliamentarians) tend to have less regard for his abilities. He is seen as unreliable, dishonest, lazy and with a capacity for saying things without weighing up the consequences … Clausewitz he isn't.

While China continues to build huge numbers of coal-fired power stations, coal consumption is on the decline. Fergus Green:

Coal consumption is falling, and that’s good news from a climate-change perspective. But, for a country that aspires to a greener, more services-oriented and people-centred economy, the fact that the country is on track to spend US$160 billion on redundant coal-fired power stations purely to boost short-term GDP growth highlights some deeper problems in the Chinese political economy.

Finally, I wrote on why ease of media access to Nauru is a concern the Australian government should address:

While it’s undeniably true that the Nauruan government decides who comes into their country and the circumstances in which they come, the Australian government also decides whether or not the conditions on Nauru (including media access) are acceptable enough to run a detention centre there, and if not, whether diplomatic resources should be invested in attempting to adjust those conditions.

Photo: Sydney Heads/Peter Morris

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Vice President Biden's speech at the Paddington Town Hall on 20 July was very assertive and, in my view, it lacked appreciation for the way the world has changed in the last two decades. Biden said America had 'an unmatched ability to project our power to any corner of the world'. He gave an emphatic description of US power which reflected feelings of exceptionalism.

Biden spoke of maintaining open sea lanes. But while the US itself announced in 1986 that it would not defer to International Court of Justice decisions that were contrary to its interests, and while it has not signed the International Law of the Sea Convention, this has not prevented Washington from suggesting that China should do so. China has in fact signed the International Law of the Sea convention and argues that for more than 100 years many thousands of ships carrying trade have gone through the South China Sea without any interruption.

There was no acceptance in Biden's speech of the way new powers, especially China, India, Brazil, Indonesia, South Korea and Vietnam, are continuing to rise. He said that the US economic and military supremacy would continue indefinitely. He added that the US would maintain a 'rules based international order'. He overlooked the fact that what American and some Australian political leaders refer to as 'a rules based international order' was in fact established by the US and Britain after World War II. Countries which have risen in influence since then naturally want to participate in framing an order more relevant to the first half of this century.

Biden also said that the US presence was 'essential to maintaining peace and stability' regionally and globally. America is the 'lynchpin'. He said he had told the Premier of China, Xi Jinping, that the US intended to play a leading role in shaping the future of the dynamic Asian region.

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Biden praised Australia for joining the US in every conflict since World War II. In so doing he overlooked any judgement as to whether these conflicts — in particular Vietnam, the invasion of Iraq, and Afghanistan — have been in Australia's interests, or predominantly in the interests of the US.

Also, no reference was made to the fact that on the only occasion we sought US support under the ANZUS treaty, when our armed forces were in Sabah and Sarawak in conflict in 1964 with Sukarno's Indonesian forces, opposing the establishment of Malaysia, the Kennedy Administration declined.

Historically, Australian governments seem to have gone readily to war. They do so with a curious lack of feeling for the humanitarian need to do so. For example, Australia lost 600 men in the Boer War between 1899 and 1902, a three-year conflict in Africa which really had nothing to do with Australia. Australia also sent forces to New Zealand to join in the suppression of Maori uprisings. Maybe, like the US, we feel the need of a threat to rally the Australian public to support a conflict.

I am certainly not a pacifist but I do believe Australia should only go to war when it is under attack, as it was by Japan in World War II, or under actual, not imagined, threats. Our relations with the US are of great importance, but we should tell our larger ally when we consider that a conflict is not in our interests, as Prime Minister Whitlam did in 1973 in respect to the Vietnam conflict.

In the world of 2016 and beyond, our foreign, security and trade policies should have a more appropriate balance, especially in respect of the US and China. 

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China surprised many observers when its coal consumption (which had grown at more than 8% per year on average since the turn of the century) stopped growing in 2014 and declined in 2015. Some thought this was a temporary blip that would be reversed. With the release of China’s 13th Five Year Plan in March this year, and six months of 2016 economic data to analyse, it's clear that the direction of both government policy and actual coal consumption in China continues to be toward further cuts in coal. 

In a chapter contribution to the 2016 China Economic Update volume, launched yesterday at the Australian National University, Professor Nicholas Stern and I explain the energy demand and energy supply factors that have driven this historic turnaround in coal consumption (references below to Figures are to the figures in the chapter).

On the demand side, changes in China’s wider economy have caused a dramatic slowdown in energy demand growth. First, China’s economic growth rate has slowed, for structural reasons, from the double-digit average of the first decade of this century to less than 7% over the last 18 months (Fig. 18.1). 

The slowdown in energy demand growth has been even more pronounced due to shifts in the composition of economic activity away from energy-intensive industries. The higher GDP growth rates of the first decade or so were fuelled by extremely high growth in investment and production in construction, infrastructure and highly energy-intensive basic materials such as steel, cement and aluminium. In China’s old economic growth model, GDP growth went hand in hand with energy-intensity. 

But much of the capital investment in recent years, induced by monetary and fiscal stimulus in response to the global financial crisis, went into unnecessary capacity expansions that have led to large excesses in buildings and industrial capacity, low prices for basic materials, and debt-related financial challenges in these industries. As a result, production in sectors like steel and cement slowed in 2014 and contracted in 2015. Meanwhile, high-tech manufacturing and services sectors (which use much less energy) have grown. In the transition toward China’s new economic growth model, GDP growth is going hand in hand with accelerated reductions in energy intensity (Fig. 18.2).

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The result of these changes in the rate and composition of China’s economic activity, along with steady improvements in energy efficiency within industries, have resulted in a dramatic slowdown in energy demand growth from an average of over 8% per year between 2000 to 2013 to around 1% in 2015 (Fig. 18.3).

The slowdown in energy demand growth occurred at the same time as a longer-running trend, the decarbonisation of China’s energy supply mix, accelerated. Chinese government policy has strongly supported the expansion of non-fossil energy: hydroelectricity, solar, wind and nuclear (Fig. 18.4). More recently, policy has directly restricted coal consumption and production in various ways. These policies have been motivated by a mix of concerns about energy security, local air pollution and climate change, and an industrial strategy that aims to capture global market opportunities in innovative clean-technology industries such as solar photovoltaics and wind power. Figure 18.4 shows how the expansions in non-coal energy sources, amid much slower growth in energy consumption overall, contributed to the absolute decline in coal consumption in 2015.

Because the above factors driving the coal turnaround are predominantly structural, we argue that they are likely to continue in broadly the same direction in the coming years. As a result, coal will likely continue to decline gradually. Recent Chinese economic data and policy announcements lend further support to that prediction.

In the first half of 2016, preliminary Chinese data show a continued decline in thermal power generation (which is predominantly coal-based) and a large reduction in coal production. Thermal power generation declined 3.1% year-on-year over this period and, since gas-fired power generation would have increased, we can infer that coal-fired power generation fell even further (Chinese statistics do not disaggregate the ‘thermal generation’ category). 

Moreover, crude steel production (which drives both coking coal and electricity demand) also continued to fall, by 1.1% year-on-year. A combination of lower demand and government policy to close down coal mines (to reduce the excess capacity that is playing havoc in the Chinese coal industry) caused coal production to plummet nearly 10% during this period. 

In 2014–15, China’s coal imports fell dramatically (around 11% in 2014 and 30% in 2015). This decline was reversed in the first half of 2016, with imports rising 8.2% year-on-year, as large domestic production cuts meant more imported coal was needed. But imports make up a relatively small proportion (around 5%) of Chinese coal supply. In absolute terms, therefore, the increase in imports was dwarfed by the decline in domestic coal production. 

A more concerning trend is the recent expansion in the construction of coal-fired power plants and high-voltage transmission infrastructure intended to carry coal-fired electricity from western provinces to eastern demand centres. Outside observers might be tempted to conclude from this expansion, along with the upswing in coal imports mentioned above, that China is headed for a new surge in coal consumption. But this would be incorrect. 

While coal-fired power stations are still being built at a rapid rate and many more are being planned, they are simply not being used; as generation capacity expands while coal-fired power generation continues to fall, the utilisation rate of China’s coal fleet plummeted to less than 45% by the end of May 2016. China’s already over-capacity coal-fired generation sector is experiencing a bubble in redundant capacity, implying a waste of capital on a large scale. The best explanation for it is that local authorities have been encouraging power station construction to stimulate short-term growth in their regions, with little concern for the weak long-term economic justification for such new plants. 

The central government is aware of this problem and has indicated its plans for a nationwide moratorium on new coal-fired power stations for three years (which may well become permanent). Together with its policies to close inefficient coal mines and redeploy coal workers, its regional restrictions on coal and coal-fired power production to mitigate air pollution, and the strong ‘green’ focus of the 13th Five Year Plan, it’s clear that the direction of government policy is to reduce coal consumption overall.

Nonetheless, the failure to rein in coal-fired power infrastructure is indicative of an inability to redirect investment away from the heavy industries of China’s old economy and into the new sources of Chinese economic growth

Coal consumption is falling, and that’s good news from a climate-change perspective. But, for a country that aspires to a greener, more services-oriented and people-centred economy, the fact that the country is on track to spend US$160 billion on redundant coal-fired power stations purely to boost short-term GDP growth highlights some deeper problems in the Chinese political economy.

Photo: Getty Images/Kevin Frayer

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In 1966, Britain's Labour prime minister, Harold Wilson, appointed George Brown as foreign secretary. Brown was a problem for Wilson; he was a senior figure in the party and popular with its rank and file, but he was also inept as a minister – he was sent to the Foreign Office to stop him damaging the economy as secretary of state for economic affairs. He was also a serious drunk, which was to prove his undoing.

Theresa May, the new British prime minister, had a Wilsonian difficulty when forming her administration. Boris Johnson is hugely popular with the Conservative party rank and file. Those who work with him (which at the moment include his fellow parliamentarians) tend to have less regard for his abilities. He is seen as unreliable, dishonest, lazy and with a capacity for saying things without weighing up the consequences.

This problem is exacerbated by the fact he has for years moonlighted in his original trade as a newspaper columnist, a calling in which punches are not pulled. Thus, he has described Hillary Clinton (who from next January he may be meeting regularly at international summits if she succeeds in becoming the head of state of Britain's chief ally) as resembling 'a sadistic nurse in a mental hospital', and has written a limerick in which he describes the president of Turkey having carnal knowledge of a goat, and in which 'Ankara' rhymes with 'wankerer'. Clausewitz he isn't.

It is widely assumed among Britain's political class, and the journalists who follow it, that May has executed a stroke of genius by putting Johnson in the Foreign Office. First, not even his most slavish supporter could claim that by giving him so great an office of state has she failed to reward adequately a man with such a huge political following. Second, by doing so she has shown solidarity with scores of MPs who felt Johnson was betrayed by his former lieutenant Michael Gove, who spectacularly withdrew support for Johnson during the recent leadership campaign and decided to stand himself (to be fair to Gove, he realised a few days into the campaign that his own credibility would be wrecked if he backed Johnson, given what he saw at close hand of Johnson's lack of capacity for organisation and reliability). Third, the Foreign Office is used to having products of Eton and Oxford at its helm (think Anthony Eden, Harold Macmillan and Lord Curzon), so Johnson was hardly a shot in the dark in that respect.

But, above all, Johnson has been given enough rope with which to hang himself.

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Most of the important functions of the Foreign Office have been devolved elsewhere. Following Britain's decision to leave the EU, matters concerning that very delicate negotiation have been separated and apportioned to a new Department for Exiting the European Union, or Ministry of Brexit as it is more popularly known. A separate secretary of state, David Davis, is in charge of it, and answers to May, not Johnson. Sorting out the new trading relations that Britain must have with the rest of the world has been made the work of a new Department of International Trade, so that will be nothing to do with Johnson either. And, as has been the case since the Blair years, all the other most significant foreign relationships (with the US, Germany and China) and the management of tense policies (such as those concerning an aggressive, wayward Russia and the conflagration in the Middle East) will be run straight from 10 Downing Street.

'Boris's job,' another minister told me shortly after his appointment was announced, 'will be to fly round the world in a hot air balloon with a vast Union Jack painted on it waving a flag'. In other words, he will be a little like the celebrities sent to great shopping centres during November to turn on the Christmas lights; he is designed to cheer people up on behalf of the country, but not actually to engage in any serious act of foreign policy.

Despite his vast legacy of pronouncements recorded in his newspaper columns, we do not get what might be called a 'world view' from Johnson. The main purpose of foreigners was to provide him with copy, and with jokes such as the ones recorded above. Although he has a long record of being rude about the EU (and has that in common with many other UK columnists), nobody quite knew on which side of the argument he was going to come down in the recent referendum. When he announced himself as a Brexiteer, it was greeted with great cynicism, and with the assumption that he was on that side not out of principle but because on that particular day he thought Brexit was going to prevail.

When it did, he seemed shocked, realising that this might force him to run for the leadership of his party (which, briefly, he did) and then that he might end up in a serious job running a department of state. He had been mayor of London from 2008 until last May, but was legendary there for having had seven or eight deputy mayors to do the work for him.

He is broadly pro-American (he was born there and had an American passport until recently, when he surrendered it largely to avoid being taxed there) but, as we have seen, that does not prevent him being offensive about its possible next president. The problem with Johnson is that he has for years been an act, a species of light entertainment, whose womanising has become a national joke in the way that George Brown's drinking did half a century ago. Many in Britain will continue struggling to take him seriously. So, we must fear, will the rest of the world.

Photo: Flickr/Department of State

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US presidential race 2016

There's a good reason that potential US first lady Melania Trump's plagiarism scandal became one of the defining moments of the Republic National Convention now concluding in Cleveland: original thought of any nature has been in critically short supply throughout the four-day event.

Were it not for Ted Cruz's party-crashing turn to exhort Republicans to 'vote your conscience' in November — thus recognising an attribute in others that many accuse him of lacking — Melania's Michelle Obama-cribbing sentiments might have left the only lasting impression from the entire RNC.

Of course, the Republican presidential candidate himself has the chance to change all that when he appears on stage to accept the party's nomination today, in what many members of the GOP establishment might be hoping is a complete departure from rhetoric-heavy but details-light performances to date.

It's far too late in the game to expect Donald Trump to abandon his nativist and Republican sacred cow-slaughtering platform, but it also far beyond time that he started injecting some more policy into his politics to try to convince the doubters that his platform might actually be workable.

Questions such as how exactly Trump intends to  wind back the forces of globalisation at the same time as many American jobs are starting to be lost to technological change sorely need to be answered if he is to have any chance of defeating Hillary Clinton later this year. Despite polls showing relatively equal support for the two candidates, the New York Times this week put Clinton's actual chances of winning the White House — taking into account state voting histories and the vagaries of the electoral college system — at 76%.

Despite those odds and the party divisions wrought by Trump, deepened by Cruz, the RNC has not descended into the chaos predicted by many commentators ahead of the event. There has indeed been a surprising spirit of unity and optimism among many previously opposed to Trump. This was best displayed by Speaker of the House Paul Ryan, whose impressively enthusiastic presentation called for unity and heralded the power of the Republicans' 'ideas'.

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Yet Ryan was still typical of most speakers at the RNC in failing to properly articulate and promote these ideas. Instead he attacked Barack Obama and Clinton. Indeed, Trump's Democratic opponent has often appeared to be the true centre of attention in Cleveland, whether as the target of speakers such as New Jersey Governor Chris Christie (widely believed to be making a case for Attorney-General in a Trump administration), or the subject of 'Hillary for prison' chanting among wide sections of the audience. Then there's the overtly misogynistic merchandise being sported everywhere, and a lengthy segment of the convention program being turned over to the long-exhausted Benghazi controversy.

Aside from Clinton, much of the focus has also been on other supposed enemies of the real America, such as the Black Lives Matter movement, which attracted most attention from former New York mayor Rudy Giuliani and seems to have, at least momentarily, seen African Americans regain their role from Mexicans of favoured bogeyman of the largely white US conservative population.

While ad hominem and 'us vs them' politics have long been par for the course in America and beyond, the negative tone in Cleveland feels more compensatory than it does calculated. It appears a direct result of the schism between Trump and the mainstream Republicans, as well as the distinct lack of aptitude for, and interest in, traditional campaigning and political leadership from the nominee.

Trump has proven himself a highly effective enemy of the GOP establishment, so much so that most of its members have been chastened into falling in behind him. But it is not for the likes of Ryan to unite the party behind ideas, because he represents a line of thinking that has been firmly rejected by the majority of GOP voters.

Regardless of what he says on the Quicken Loans Arena stage today or in the weeks and months ahead, Trump surely has a lock on the white working class Republic voting bloc, while much of the doctrinaire free market, small government crowd seems to have reluctantly signed on out of a sense of loyalty or merely a greater dislike of his opponent. Yet, alongside Cruz are some major holdouts that may significantly affect the enthusiasm of conservatives to turn out for him — multibillionaire financers and major architects of the contemporary GOP Charles and David Koch are notable among them.

This is to say nothing of independents or even Democrats for whom the promise of jobs returning to depressed areas of the country might matter more than any larger ideological or moral concerns. Trump may have previously claimed to have 'the best words', but without any connection to reality, or a still significant segment of his party, they may only carry him so far.

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  • Pakistan's Interior Minister is concerned Indian intelligence may be using social media to spread rumours that could bring down the morale of Pakistani forces.
  • Five experts review and respond to Naked Diplomacy: Power and Statecraft in the Digital Age, a new book by former British Ambassador Tom Fletcher.
  • There's a new tool to take down terrorism images posted online. Is it a game changer?
  • Israeli diplomat @EladRatson on how Israel became a digital diplomacy powerhouse and (allegedly) the first country to use algorithms and code to revolutionise public diplomacy.
  • The US State Department has changed its approach to countering ISIS messaging abroad.
  • Power has been drastically realigned and this academic argues Canada needs a whole-of-government digital strategy in order to engage with the emerging global digital system.
  • Emoji gender equality is finally here and emoji users now have more diverse female options than salsa dancer, princess and bride. 
  • An Al Jazeera debate on whether the UN's #NextSG process is transparent enough.
  • Turkey's President turned to social media to help foil last weekend's coup; it's not the only way cyberpower shaped Turkey's future this week.
  • As China considers its options on how to manage new forms of media, a boutique agency run by Egyptian Sameh El-Shahat is behind a series of online videos promoting China's global ties. 
  • Bougainville (approx. population: 300,000) must have one of the world's smallest communications budgets, which is why this video is so impressive.
  • NZ's Ministry of Foreign Affairs chief executive on how his diplomats are easing into the world of social media.
  • New app game PokemonGO may be the digital phenomenon of the decade and it's no surprise to see governments (including UK, Canada and Italy) jumping in on the action given the enormous potential:  

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In less than 24 hours, Papua New Guineans will know the fate of  Prime Minister Peter O’Neill when the national parliament sits for a vote of no-confidence. There are three possible scenarios: O'Neill may survive the vote; he may opt to relinquish the nation’s highest office to a colleague; or, worse, he will be deposed unexpectedly in the manner of some of his predecessors. It is difficult to predict what outcome will prevail in a country known fittingly as the ‘the land of the unexpected'. 

PNG Prime Minister Peter O'Neill with Australia's Foreign Minister Julie Bishop last year (Photo: DFAT)

Should O’Neill survive the vote, he will declare his uttermost respect for the constitutional processes. He will claim to have duly followed a court order, to have respected the people’s wish by subjecting himself to the vote, and to have survived with the confidence of MPs who have the best interests of the nation at heart. His victory speech will be aimed at discrediting his critics. He will use the victory as important ammunition to change the narrative against him. A victory for O’Neill may dishearten those who perceive the vote of no-confidence to be the ‘last straw.’

In the second scenario, O’Neill will step aside and allow the government caucus to nominate a new prime minister within the coalition. Writing from Alotau where government MPs are meeting, one of O’Neill’s staunch supporters and leader of Social Democratic Party, Powes Parkop revealed that 'we (MPs) are …putting pressure on him (O’Neill) and trying to advise him to face the allegations and step aside'.

If this is true, one of the MPs closest to O’Neill may be nominated. Opposition Leader Don Polye also hinted that the underlying priority is to replace Peter O’Neill, not the government. A replacement PM from within government ranks is more likely given these sentiments, and the fact that government MPs outnumber the opposition's two to one.

Should O’Neill insist on staying in power he risks an unexpected desertion by his colleagues. This would bring a humiliating end to his controversial reign.

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O’Neill may insist on staying because leaving the prime ministerial position would reduce his grip on the police force and make him more vulnerable to mounting corruption allegations. However, the bloody protests, ongoing workers’ strikes, and worsening economic conditions might prompt MPs to consider that O’Neill’s insistence on staying would be primarily in his own interests, and not for the stability and welfare of the nation.

The defection of Petroleum Minister Ben Micah to the opposition exemplified this possibility. Micah argued that 'as a responsible person who has concerns, I cannot sit in a government that is slowly allowing the country to (fall) into hell'. Many Papua New Guineans would expect the same from their MPs tomorrow — to 'be conscious of the issues out there', and not within.

If tomorrow’s no-confidence vote succeeds, it will be the fourth such vote to unseat a prime minister since PNG gained its Independence in 1975. The merits of the scheme have been debated at length. Former Prime Minister Sir Julius Chan once confessed that the fear of it often meant a prime minister has to spend ‘quite disproportionate amount of his time and energy keeping individual politicians “happy"'.

But the PNG Supreme Court has held that ‘a vote of no confidence is an integral part and a legitimate process of a democratic Parliament’ that ‘should never be curtailed or suppressed.’ The Court rightly ordered a recall of the PNG Parliament after it was abruptly adjourned to diffuse a potential vote of no-confidence on the back of shooting at an unarmed student protest in June. 

For many, the question now is who will be the next prime minister, if not Peter O’Neill? But that misses the point. The most critical issue for the country at this juncture is who is 'fit' to be PM.

Any party leader within the government and the opposition would happily claim the office, but would he or she be a ‘fit and proper’ person? After this relentless and bloody pursuit to remove O’Neill, Papua New Guineans should not be content with achieving a new national leader tomorrow. Rather, they should demand their future prime ministers adhere to a higher moral and ethical standard. 

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12 of 12 This post is part of a debate on South China Sea ruling

Dr Michael Leach makes a number of inaccurate claims in his Interpreter post: 'The PCA ruling, Australia and Timor-Leste'.

Dr Leach asserts Australia is engaged in a ‘two-step’ in its approach to international law with China and Timor-Leste. He also appears to accept a premise of Australia’s ‘persistent refusal to negotiate maritime boundaries with Timor-Leste’. The facts, however, are quite different.

Australia takes a consistent approach, whether in relation to the Timor Sea or the South China Sea. We believe parties to disputes should resolve them peacefully, in accordance with international law. This is the approach Australia and Timor-Leste have taken in the Timor Sea. 

In previous negotiations, Australia and Timor-Leste were unable to reach agreement on permanent boundaries. As an alternative, both countries agreed to put in place arrangements to enable joint development of the resources. The UN Convention on the Law of the Sea actively encourages countries this type of approach. It’s a practical way of working together to overcome disputes. The arrangements between Timor-Leste and Australia have been cited as best practice.

Far from a ‘refusal to negotiate’, Australia in fact has made significant concessions. Under our joint arrangements, Timor-Leste receives the vast bulk of revenues (90% of the Joint Petroleum Development Area). This has allowed it to develop a US$16 billion petroleum fund.

Australia takes its treaty obligations seriously and believes in sticking to the agreements we have made. This is an expression of our respect for international law.

Dr Leach claims that CMATS is ‘inoperative’ but this is not the case.

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CMATS provides for a 50/50 revenue split between Australia and Timor-Leste, despite 80% of Greater Sunrise lying in an area of exclusive Australian seabed jurisdiction. Greater Sunrise will be developed when the Greater Sunrise Joint Venture and both governments agree on a development plan.

Australia’s long-standing preference is to resolve maritime boundary issues through negotiation. This is common practice and international law specifically allows this. Around 30 countries including Canada, Thailand, the Republic of Korea, Mexico and France, take the same approach.

Importantly, where a country takes Australia to an international court or tribunal, Australia engages in that process. In fact, we are participating in two arbitrations initiated by Timor-Leste and we will abide by the decisions of the arbitrators. We have called on the parties to the South China Sea arbitration to do the same.

We are also participating in a separate conciliation process initiated by Timor-Leste. The conciliation will be heard by a five-member commission appointed by Australia and Timor-Leste. Although a conciliation is not a legally binding process, Australia is engaging in the process in good faith, in accordance with our international legal obligations. 

Despite our differences, Australia is, and will remain, committed to our relationship with Timor-Leste. Timor-Leste’s stability and prosperity are important to Australia and a key focus of our bilateral engagement, including through our $93.7 million aid program.

Photo courtesy of Flickr user yeowatzup

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'May you live in interesting times' is a modern western saying that is often wrongly described as an ancient Chinese curse. But you get the feeling that those working on the Chinese G20 Presidency would be justified in feeling burdened with the curse of an interesting 2016.

G20 finance ministers and central bank governors are preparing to meet in Chengdu, in the Sichuan Province of southwest China, on Friday and Saturday. It will be their third gathering under the Chinese G20 presidency, and their final opportunity before Leaders gather in Hangzhou in early September.

Once again, near term economic challenges seem likely to dominate discussions. The IMF has downgraded its growth forecasts from what it expected three months ago by 0.1%, to 3.1% in 2016 and 3.4% in 2017. The Fund also warned of significant economic, political and institutional uncertainty, which could lead to future downgrades.

Events in recent months have certainly been as surprising as they are significant. Since the last time finance ministers met, voters in the UK have elected to leave the EU; a decision with enormous economic and geostrategic implications for both the UK and EU in coming decades, and broad implications for the way advanced economies are managing the flows of globalisation. IMF chief economist Maurice Obstfeld has said that Brexit threw a 'spanner in the works' of their world economic forecasts. It is sure to be a prominent topic of discussion over the weekend.

And something that has not even been included in the IMF's analysis is the recent activity in Turkey, a member of the G20’s three-member governing troika (involving each of the past, present and future hosts), which is managing the fallout of an attempted coup. This event will likely have profound ongoing political ramifications in an already uncertain part of the world.

These add to a long list of prominent challenges facing those around the G20 table. To name just a few, there are the risks associated with China's ongoing economic transition, the spillover effects of potential changes in monetary policy settings, elections in the US, an upcoming constitutional referendum in Italy, and the ongoing refugee crisis in Europe.

And while policymakers continually state their willingness to use all tools at their disposal (monetary, fiscal and structural), doubts remain over how constrained these tools are in a world of disaffected voters, heightened sovereign debt levels and already-accommodative monetary policy settings.

Against this backdrop, the IMF is urging a familiar prescription: political leadership from finance ministers and central bank governors.  We were in a similar situation earlier this year, and the significant global financial market volatility at the start of 2016 and the panama papers scandal in April were not enough to jolt the G20 from its malaise. There are reasons to be cautious about seeing the necessary political leadership this weekend.

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In classic style, China, as G20 host, is likely to push a technical, bureaucratic, long-term agenda. China’s presidency has long promised a vast array of blueprints, action plans, guiding principles, indices, strategies and cooperation initiatives. Such action has been a hallmark of recent agreements by Energy Ministers and Trade Ministers.

As I pointed out in the latest G20 Monitor, the two most recent meetings of finance ministers and central bank governors have shown encouraging signs of incremental progress in areas as broad as financial safety nets, climate finance, international tax, tax transparency, and financial regulation and investment. This meeting will need to be seen as deliver on the platform established at these meetings, and contribute to the ten major results that Chinese Foreign Minister Wang Yi foreshadowed would be delivered to leaders in Hangzhou.

The contributions are undoubtedly positive. However, a technical agenda of positive incremental change is not enough to convince commentators like former UK Prime Minister Gordon Brown of the G20's relevance. As Mohamed El-Erian noted, strange things happen when advanced economies persist in low, non-inclusive growth. And 2016 is just over half way through; there is plenty of time for it to get more interesting.

So we can only hope that 'this meeting is different' and ministers and governors heed the calls to demonstrate political leadership. There needs to be a much clearer sense on how the G20 is managing risks and getting out of the low, non-inclusive growth path. Martin Wolf has suggested several areas of action, which includes reforming capitalism, greater demand support, prosecuting an enhanced tax agenda, and fighting the quacks. These are all sensible areas for the G20 to be involved in.

On a more basic level, if the finance ministers and central bank governors of the economies with the most stake in the current liberal economic order won’t make the political case for preserving it, then who will?

Photo: Getty Images/VCG

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11 of 12 This post is part of a debate on South China Sea ruling

The Permanent Court of Arbitration's decision places more pressure on the US than China, as Washington must now act to support this emphatic judgement. Failure to do so will further weaken America's credibility, and undermine the rules-based order it seeks to preserve.

In order to determine how the US may effectively respond, China's strategy must be understood.

In recent years a number of high profile strategists have described China's South China Sea (SCS) encroachment as 'salami tactics'. Here on The Interpreter, Derek Lundy eloquently explained what is meant by this (though none will eclipse this gem from Yes Prime Minister). Indeed, the depiction of China's approach in the SCS as 'salami tactics' is now a widely accepted norm.

Nevertheless, this is contestable. In my view China is not employing salami tactics at all, but rather a wholly different strategy. This challenges a consensus, and requires a substantive explanation.

To my mind, there are three pre-conditions that need be met for a salami strategy to be employed: 

  • a strategic interest must be contested by two or more opposing actors
  • the aggressor must deliberately calibrate provocations below the thresholds of opposing actors
  • and effective military options without serious escalation are clearly limited.

On all three counts the SCS fails.

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First, while the SCS is claimed by China as sovereign territory, it is not by the US. In the case of the latter, the concerns are expressed in terms of freedom of navigation and the rule of law. There isn't any slicing – China claims the whole of the SCS and is taking strategic steps to enforce that claim.

Contrast this with say, the Berlin blockade, where the Soviet Union was overtly attempting to 'slice' a piece of influence, and it's immediately apparent the SCS is quite different. A modern comparator is the Senkaku islands. The US has explicitly included these islands in its alliance commitment to Japan, therefore the Senkaku/Diaoyu island dispute would meet this first criterion. 

With regard to the second requirement, there is remarkably little evidence that China is carefully calibrating. Its island reclamation activities have total disregard for how the US might respond, with Beijing taking as given that Washington will cede the strategic space. This is not salami slicing but expressly challenging; the only constraint is American power, not American wrath.

Again, there are plenty of alternative examples for comparison. North Korea's provocations are innumerate, but they are carefully measured. The regime makes sure that while these actions are sufficient in scope to get the world's attention, they are not severe enough to incur a decisive response.

Finally, unlike many flashpoints, America's military options in the SCS are not especially limited. If, for some reason, America perceived China's reclamation as a direct and immediate threat, the US could render those islands inoperable without difficulty. Moreover, the initial objectives would be achieved without a wider conflict, even though escalation may be China's response.

Contrast this with Ukraine, the best example of salami tactics today. Any attempt by NATO to expel Russia from Ukraine militarily would require a massive escalation of an ongoing conflict, carrying immense risk and with great uncertainty over whether the core objective would be achieved.

These distinctions are important, as framing China's actions in the SCS as 'salami tactics' will lead to ineffective policy responses. Accordingly, our apprehension of China's strategy in Asia needs rethinking.

At risk of oversimplification, the respective grand strategies of the major powers may be summed up as follows: The United States plays poker, the Russians chess, and the Chinese — Go.

Poker is based on ambiguity and incomplete information. To that end the nuclear age was made for the Americans. In Europe, the US convinced the Soviets they held pocket aces and would go all-in to defend Europe. This seemed credible. After all, the loss of Western Europe would pose such an existential threat to America that a nuclear war could be initiated to prevent it. To sell the message, the US barrelled the pot with forward deployed bombers and artillery units. The bet was never called, and the Russians ultimately folded.

But this doesn't work in the Asia Pacific. It's hard to sell the idea that China's expansion in the South China Sea poses an existential threat to the US, and distant offshore deterrents don't look like aces. In other words, if the Americans go all-in against China, they're going to be called.

Meanwhile, chess is for the Russians – and salami tactics is for chess players. That is, to play a closed game, gain space through positional play, and gradually improve your freedom of action at the expense of your opponent.

But the Chinese are not playing chess, they're playing Go. The vast majority of China's land borders have been settled, while Beijing rapidly lays stones in the SCS. Given the asymmetric objectives between China (gaining territory) and the US (preserving the existing order), 'flexible response' approaches will not be effective.

So how should the US respond to China's advances in the South China Sea, preferably without hegemonic war?

The US must adjust its strategy and build its own islands in the South China Sea. This has multiple advantages over alternative courses of action, and is the only option likely to be effective long-term. Indeed, it is probably the only response that China will understand.

In the wake of the PCA ruling, now is the perfect time. Washington should undertake land reclamation on behalf of the Philippines, and do so under the auspices that the matter has been settled under international law.

No doubt many will advocate other approaches being exhausted first but, just as with Go, by the time the danger becomes obvious it may well be too late. At which time, America will be praying that its weak 7♠ , 2♥ holding somehow manages to win.

Photo courtesy of Flickr user John Goode

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