Lowy Institute

The signing last month of a civil nuclear cooperation agreement between Australia and India has been greeted as an important step towards closer relations between the two countries, as well as bringing India into the global nuclear energy mainstream. These are worthy objectives, but not at any cost. 

Now that the text of the agreement has been quietly made public, some substantial departures from Australia's current safeguards conditions are evident. These suggest, disturbingly, that Australia may be unable to keep track of what happens to uranium supplied to India.

In this post I will explain what is wrong with the Australia-India nuclear cooperation agreement and why it appears that the Abbott Government may be abandoning Australia's longstanding safeguards requirements for India. In a subsequent post I will explain what can and should be done about it.

Negotiations for the agreement began under the Gillard Government in 2012, after Labor came around to an in-principle acceptance of uranium exports to India provided they were properly safeguarded. This was always going to be contentious, primarily because of Australia's longstanding policy against supplying uranium to countries outside the Nuclear Non-Proliferation Treaty (NPT).

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It is short-sighted and self-defeating to make the agreement even more contentious by compromising Australia's safeguards standards. This will jeopardise bipartisan support for the agreement, raising the prospect of future governments suspending exports under it. It will also expose the agreement to potential legal challenge under the 1987 Safeguards Act, and it risks re-opening the wider uranium debate in Australia. None of this is in the interests of the Australian or Indian governments or of the nuclear industry in either country.

Two documents are critically important here. First, let's look more closely at the agreement itself. It departs in the following ways from Australia's standard requirements on countries receiving our uranium:

Consent to reprocessing – reprocessing, involving separation of plutonium from spent fuel, is the most sensitive stage of the nuclear fuel cycle. To date Australia's consent to reprocessing has been limited to the EU and Japan, and has been given on what is called a programmatic basis, i.e. Australia has approved the specific 'downstream' facilities using separated plutonium and the purposes involved. In this agreement, however, Australia has effectively given consent in advance for India to reprocess in accordance with an 'arrangements and procedures' document India concluded with the US in 2010. This covers safeguards at two reprocessing plants which India plans to build, but includes only a vague reference to management of plutonium, and nothing corresponding to programmatic consent;

Right of return – Australia's standard conditions include a right for Australia to require the return of material and items if there is a breach of an agreement. This agreement contains no such provision;

Fallback safeguards – Australia's standard condition is that, if for any reason IAEA (International Atomic Energy Agency) safeguards cease to apply, the parties are to establish safeguards arrangements that conform with IAEA safeguards principles and procedures and provide equivalent assurance. This agreement requires only that the parties consult and agree on 'appropriate verification measures', a vague term readily open to differing interpretations;

Settlement of disputes – Australia's standard requirement is for negotiation, backed by an arbitration process. This agreement refers only to negotiation, with no mechanism for resolving deadlock.

Even more consequential than the agreement itself may be a second, follow-on text that the public may never get to see, a so-called 'administrative arrangement' which sets out the working procedures for the agreement. Officials are presumably working on this at present. The key question here is, will this administrative arrangement enable Australia to track and account for the nuclear material that is subject to the agreement with India?

The administrative arrangement should set out detailed procedures for identifying and accounting for the specific nuclear material to which the agreement applies. This includes not only the initially-supplied Australian uranium, but all subsequent generations of material derived from it, especially plutonium. If it is not possible to apply the agreement's provisions to specific material, the agreement will be meaningless. 

To be effective, these procedures need to include a requirement for regular reports to Australia showing the flow of material under the agreement through the nuclear fuel cycle in India. Australia needs to be able to track and account for this 'Australian-obligated nuclear material'. This is both a proper public expectation and a legal requirement under section 51 of the Safeguards Act.

Bipartisan support for, and public acceptance of, uranium exports is based on the assurance that Australia is able to track our material and determine that our conditions are being met. Australia's safeguards requirements were developed by the Fraser Government, are in line with international standards, and have been applied under all our safeguards agreements ever since – today we have 22 agreements covering 40 countries. 

Disturbingly, it is reported that Indian officials will not provide Australia with reports accounting for material under the agreement, and that the Abbott Government seems prepared to waive this requirement for India. The same issue has arisen under India's arrangements with the US and Canada. In response, Washington has held firm: the US-India administrative arrangement has been outstanding for several years; reportedly the US is insisting on receiving tracking information and India is refusing.

In the case of Canada, the Harper Government gave in to India, an outcome described as the 'meltdown of Canadian non-proliferation policy'. The Canadian Government refuses to reveal the details of its arrangement. If Australia follows Canada down this path, it will put the wrong kind of pressure on the US, the EU and Japan in their own dealings with India.

Apparently India considers that its acceptance of IAEA safeguards should be good enough. But India's refusal to provide reports on Australian supplied material calls into question whether India will in fact identify and account for this material, as required by the agreement. If India will account for this material, the additional effort in providing reports to Australia should cause India no problem. However if it will not account for the material, India will be in breach of the agreement.

Why is India being so difficult on this issue? India has an expanding nuclear weapon program. It has not fully separated its military and civilian nuclear programs and some facilities are still dual-purpose. India's safeguards agreement with the IAEA does not impose the same restrictions as bilateral agreements in areas such as reprocessing, higher enrichment, retransfers to third countries, research and development or the production of tritium (which has uses in nuclear weapons). 

If India succeeds in delinking foreign-obligated nuclear material from individual bilateral agreements, making it impossible to identify which batch of material is covered by which agreement, then India could work a 'pea and thimble' trick in which no supplier could tell whether their material was being used contrary to bilateral conditions. The mere possibility of this is sufficient to call into question India's commitment to observing bilateral agreements. 

Without proper reporting, Australia has no way of knowing whether India is in reality meeting its obligations to identify and account for all the material that is subject to the agreement, and to apply Australia's safeguards conditions to this material. It is not good enough to simply say that we trust India because it has an 'impeccable' non-proliferation record (and India's record in any case is not 'impeccable').The reporting procedures are not optional; they are fundamental to Australia's ability to confirm that our safeguards conditions are being met. They have long applied to close and trusted partners such as the US, the EU, Japan and South Korea. There is absolutely no case to waive them for India.

John Carlson AM is a Nonresident Fellow at the Lowy Institute. He was Director General of the Australian Safeguards and Non-Proliferation Office and its predecessor the Australian Safeguards Office from 1989 to 2010.

Photo courtesy of REUTERS/Adnan Abidi.

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In these times of budget austerity, imagine if someone came up with a proposal that could potentially save the Defence budget tens if not hundreds of millions of dollars from its bottom line without impacting on overall capability. Indeed, a plan that could actually enhance performance while significantly reducing expenditure.

Far from being a pipedream, this kind of potential exists within the Australian Army Reserve, just waiting to be unlocked by the right combination of reforming zeal and political will.

As Australian Army Major Mark Smith has argued, the Reserve is disproportionately expensive for the capability it provides and the impact it has on advancing Australia's national security interests.

This is not a criticism of the men and women of the Army Reserve, 'chocos' as they are affectionately known, who have proven themselves over many years of continuous deployment both at home and abroad in scenarios as diverse as domestic disaster relief to counter-insurgency operations in Afghanistan. Rather, it reflects the fact that the Reserve is operating in basically the same way that it has done since the Vietnam War.

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Sure, the powers that be can point to Plan Beersheba, the Strategic Reform Program, and other measures as evidence of recent attempts to modernise the part-time force. However, these initiatives dance around the edges of the problem and do nothing to address the structural inadequacies of the current system.

With the Army Reserve no longer deployed in the Solomon Islands or East Timor, now is the time to review our approach to part-time military service with a view to enhancing efficiency and reducing costs.

The core problem is the Army Reserve force structure, which is based on conventional principles of military organisation whereby soldiers are organised into battalions and regiments, which are then grouped into brigades and subsequently divisions. While this structure has worked well for the Reserve and its equivalents around the globe, it is patently unsuitable for a part-time force where units which should consist of 500+ personnel often attract less than a hundred to training. Additionally, individual readiness requirements are met by barely 50% of Army Reserve members.

The end result is an unwieldy system where there are too many officers and not enough soldiers. It is further exacerbated by the fact that the Reserve has to comply with essentially the same corporate governance regime as its full-time counterpart. This means that time and resources that could be spent on training are instead diverted to activities such as assessment reports for soldiers who may have performed as little as 20 days of duty over the course of a year. 

Ask reservists themselves, and most readily accept that the system is in need of an overhaul. Many would even forego the current lucrative (but administratively intensive) retention bonuses if these were replaced by reforms that more clearly defined the role of the Army Reserve and the expectations placed on its members.

So what should a reformed Army Reserve look like?

One option, advocated by Mark Smith, is to consolidate the existing force structure into fully-manned units that incorporate a broader range of capabilities (such as infantry, artillery, signals) but under a single administrative regime.  

This model represents a radical departure from the status quo yet there is sufficient precedent to suggest that the upheaval would be justified. Indeed, modern armies are increasingly organised into multi-faceted 'battlegroups' in which troops with differing specialities (and originating from separate units) are brought together under a unified command based on the specific operational requirements at hand. While such arrangements are almost always temporary, with the detachments returning to their parent unit once a task is complete, it provides a potential basis for the reorganisation of the Army Reserve. 

Permanently maintaining the 'battlegroup' structure for the Reserve would have several advantages, not least of which would be a significant cost reduction associated with administering the many disparate, under-manned units that currently constitute the Army Reserve. Additional benefits would include the pooling of equipment, the rationalisation of scarce resources and enhanced interoperability between the sub-units.   

There is no doubt that the above proposal is a controversial one insofar as it would involve disbanding units that trace their history back as far as World War One and the Boer War. Indeed, a battalion such as 4/3 Royal New South Wales Rifles can trace its lineage to both world wars.

The key point is that the Army Reserve is badly in need of reform and that this proposal has the added attraction of potentially saving the Government significant funds at a time when it is looking for savings across the range of Commonwealth responsibilities.

Photo courtesy of Australian Department of Defence.

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An LA Review of Books essay on Dan Washburn's The Forbidden Game: Golf and the Chinese Dream:

...although construction of new golf courses has been banned in China since at least 2004, more than 400 were built between 2005 and 2010, making China the only place in the world experiencing a golf boom. Government officials who enjoy hitting the links register at golf courses under false names, afraid of leaving a paper trail connecting them to a game most often associated with capitalism and corruption. And while massive golf course complexes lined with luxury villas populate large tracts of land outside Chinese cities, their owners attempt to hide the courses in plain sight, giving them convoluted names like the “Anji China Ecotourism and Fitness Center.” Like so much else in contemporary China, golf occupies a gray zone: officially forbidden, yet tolerated — even encouraged — behind the scenes, as local government officials and land developers reap massive profits from the construction of new courses.

Photo by Flickr user g33kgrrl.

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Photo: @Charles_Lister

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In a new Lowy Institute Analysis launched today, Nicholas Humphries, the Australian Customs and Border Protection Service Fellow at the Lowy Institute, examines how Customs can increase Australia's trade competitiveness at a time when goods and services are increasingly produced across borders in so-called 'global value chains'. 

The Analysis argues that to harness the opportunities of a changing global trading environment, Customs must develop an Authorised Economic Operator (AEO) program. AEO programs are currently being established around the world as a means of rewarding low-risk traders with secure supply chains. Humphries argues that an AEO program will enable Customs to help Australian industry exploit new global trading opportunities, while still providing the Australian community with border protection services. 

'Without an AEO program, Australia is at a severe competitive disadvantage', argues report author Nicholas Humphries.

The Analysis can be downloaded from the Lowy Institute website. It was written as a part of the Australian Customs and Border Protection Service Fellowship at the Lowy Institute.

Image courtesy of the Australian Customs and Border Protection Service.

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Many of us are holding our breath wondering what is going to happen next in Hong Kong. There are concerns that what is happening now might come to the same tragic end as what happened in Tiananmen Square in Beijing in 1989. 

Universal suffrage is the ultimate aim in Hong Kong, according to Article 45 of its Basic Law. People are protesting because although China agreed to the universal suffrage clause during handover negotiations with the UK in the 1980s, on 31 August the National People's Congress Standing Committee announced that candidates not approved by Beijing would be screened out of the running.

Many – although not all – in Hong Kong are angry that promises for full suffrage in 2017, while not broken as such, have been cleverly reshaped so that while everyone would be able to vote, they would only be able to vote for Beijing-approved candidates.

While the Hong Kong authorities are already using harsh violence, at this point it has not gone past tear gas and threats of rubber bullets. I think that escalation to another Tiananmen is unlikely, for a number of reasons. One particularly important reason is that individuals count when it comes to decision-making, and Xi Jinping is not Deng Xiaoping.

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As events unfold in Hong Kong, decisions about how the leadership should best react are being made from scratch; the direction and result is not preordained. China now is not where it was in 1989 economically, politically, or socially. Under Deng in the reform era, ideological struggle was being subjugated to economic development, and a new social contract that still holds today was being forged. With this new social contract, the people would not oppose or compete with the Party for political power as long as the Party served their economic needs and improved standards of living.

China's role in the world was also fundamentally different. At that time China was becoming increasingly engaged with the rest of the world, so China's pariah status as a result of Tiananmen, at least in the West, had real and tangible domestic implications. This loss of (much) international legitimacy had profound implications for Deng's domestic project, creating an urgent need for the leadership to shore up its side of the domestic social contract, particularly given that social dissatisfaction of various sorts was what had led to the Tiananmen demonstrations in the first place.

Xi Jinping and the current Chinese leadership will be all too aware of the damage Tiananmen caused to China's international status, and, more importantly, the implications for China's domestic development. Given the current circumstances of the Chinese economy, and China's growing role in international affairs, I believe that the Communist Party is very unlikely to choose to use more violence on these protesters in Hong Kong to the extent of that used in Tiananmen. 

Xi Jinping is presiding over an era where maintaining the breakneck economic growth required to maintain the social contract forged in Deng's reform period is neither really desirable nor possible. The Party is already in a very difficult bind as to how to demonstrate its legitimacy and mandate domestically. Messaging around events in Hong Kong is carefully controlled, key search terms such as 'Occupy Central' and even 'Hong Kong' do not come up with anything related to the protests. Reportage of how events are being covered in the mainland can be found here. What coverage does exist describes the protesters as instruments of anti-Chinese forces in the UK and US, "whose hearts belong to colonial rule and who are besotted with 'Western democracy'." 

As such, domestic political and social uprisings on the mainland in response to a more severe crackdown in Hong Kong would not necessarily be the primary deterrent of intensified violence. However, the economic impact of the global loss of legitimacy that would follow another crackdown like Tiananmen would be too high a cost in the current economic climate. 

We should also not underestimate the skill and experience the Chinese Communist Party has when it comes to managing dissent. It has a range of well-honed options at its disposal, which it deploys regularly in protests and demonstrations across the mainland, that we never really see reported in Western media. 

What is happening in Hong Kong now is undeniably a very real challenge to the Chinese authorities, but precisely because of the risks associated with getting it wrong, it will be handled carefully, skilfully, and without recourse to violence anywhere near the level of what was seen in Tiananmen in 1989.

Photo courtesy of Flickr user Pasu Au Yeung.

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Most discussions about the security of Asia in the 21st century beg the comparison with the East-West confrontation of the 20th. In the nuclear realm, as in other domains, the question 'Is Asia different?' is central. Judgments on the stabilising or destabilising nature of Asian nuclear weapons at sea depend on a few key parameters, on which there does not seem to be major disagreement among contributors to the debate launched in this series:

  • It is generally agreed that secure second-strike capabilities at sea were a stabilising factor in the strategic relationship between great powers during the Cold war; there is no a priori reason why things would be radically different for Asia tomorrow.
  • Asian nuclear powers already have a modicum of secure second-strike capabilities. Through protection, mobility, concealment and deception, at least some of their land-based missiles are de facto immune to an adversary’s first strike. Or, to put it differently: no Asian nuclear-armed country could reasonably consider that it has a disarming first strike option on another.
  • Submarines armed with strategic (ballistic but perhaps also cruise) missiles would thus probably increase strategic stability in the region without necessarily being a complete game-changer.
  • However, for that increase in stability to happen, two conditions would have to be met:
    • All three major Asian nuclear powers would need to have them; in the meantime, access to strategic submarines by one or two (but not three) could be more destabilising than stabilising.
    • Maritime nuclear forces would need to be protected from attack either through continuous at sea deterrence (CASD) or through heavy natural protection (such as the Hainan island base); otherwise, they could become tempting targets, with the risk of adding more instability than stability. This also implies an investment in nuclear force protection (anti-submarine warfare frigates, maritime patrol aircraft etc) to ensure that a ship leaving for patrol does not become an easy target; any investment in a sea-based nuclear capability implies an additional investment in non-nuclear forces.
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  • These two conditions are unlikely to be fulfilled anytime soon, and the peculiarities of the Asian maritime theatre (access to oceans, nature of the waters) will make them harder to achieve than in the East-West context. This is another reason why, for operational patrols, 'bastion' practices will be more tempting than 'dilution' ones.
  • Because of command and control challenges, countries which combine assertive nuclear control cultures and de-mating practices (China and India) will not naturally be inclined to allow for operational patrols of submarines. In other words, CASD will not come easily to Asia.
  • That said, access to modern submarine-based secure second-strike capabilities might be faster, relatively speaking, than it was in the East-West context, due to technological developments that will make some key capabilities (accoustic discretion, secure communications, etc) easier to achieve than was the case in the 20st century.
  • It is hard to argue that theatre nuclear weapons at sea (for use against other maritime forces) would increase strategic stability in the region. They may lower the nuclear threshold in a conflict.
  • Finally, an inescapable feature of the Asian nuclear landscape is its multilateral nature (four nuclear countries in the region plus Russia and the US). Three independent Asian nuclear actors plan to put part of their nuclear weapons at sea, and since the beginning of this discussion, it has been learned that the fourth (North Korea) may also have plans in this regard. This 'built-in complexity' of the Asian nuclear scene may be more important, at the end of the day, than the structure of the respective arsenals of the countries concerned. 
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In Cambodia, a country of remarkable ethnic unity (close to 95% of the population is ethnically Khmer) and with the religion of Buddhism dominant, religious extremism has been absent. What is new and notable is the emergence of political activism among some Buddhist monks. 

Over the past year there have been frequent reports of Cambodian Buddhist monks taking part in anti-government demonstrations.

Some of these demonstrations are linked directly to protests mounted by supporters of the Cambodian National Rescue Party headed by Sam Rainsy, and others to such issues as garment workers' wages and calls for the protection of environmentally threatened forests. Very recently, Buddhist monks have been among those protesting against the agreement reached between Australia and Cambodia for the transfer of asylum seekers to Cambodia.

By comparison with the role of monks in Sihanouk's Cambodia during the 1950s and 1960s, when the Buddhist sangha was largely passive, or to a limited extent supportive of the ruling regime, such contemporary political activism offers a marked contrast with the past.

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Some qualification is nevertheless required. During the worst years of Vietnamese control of Cambodia in the early decades of the 19th century it is clear that Buddhist monks played an important part in sustaining a shared sense of Cambodian identity. And in the period of French colonialism the sangha was involved in resisting, if only passively, efforts by the French to interfere in what it saw as fundamental elements of the country's culture, for instance, the French attempt to introduce a romanticised written form of the Cambodia language. Moreover, Buddhist monks were at the forefront of the one major protest against French rule during the Second World War, the so-called 'Revolt of the Parasols' in 1942, which took its name from the fact that monks were carrying their saffron-coloured umbrellas as they protested. All this noted, it is correct to say that before the victory of the Khmer Rouge in 1975 Cambodian Buddhism at no stage played the overt political role seen elsewhere in Southeast Asia, as in Burma both before and after independence or, in very different circumstances, in South Vietnam in the 1960s.

Under the Khmer Rouge Buddhist observance was abolished and all monks forced to defrock, though as the most authoritative Western observer of Cambodian Buddhism, Ian Harris, has noted in his important book, Buddhism Under Pol Pot, there have been two instances of monks continuing to live out their role despite general regime opposition. The Vietnamese invasion and the overthrow of the Khmer Rouge regime at the beginning of 1979 saw the slow re-emergence of Buddhist practices and a sangha closely linked to and controlled by the People's Republic of Kampuchea (PRK) government. While the degree of government control has now been loosened since the early 1990s, there is good reason to endorse Ian Harris' view expressed in his book published that the 'problems affecting the sangha remain deep and seemingly intractable.' Noting the presence of 'corruption and stagnation', Harris aptly observes that the 'Buddhist order is, in fact, the mirror of a wider society'. In this regard, the Supreme Buddhist Patriarch, Tep Vong, is widely recognised as having been, and still remaining, a firm supporter of Hun Sen's Cambodian People's Party.

It is against this background that some Buddhist monks have become more active in playing overtly political roles, taking advantage of the right they now have to vote and increasingly turning to the use of social media. It is difficult to provide a precise figure for those who are involved in this activism. The Independent Monk's Network for Social Justice (IMNSJ) established in 2013 claims a membership of 5000. This figure needs to be placed against a total membership of the sangha between 5-7000. It appears that political activism is mostly found among monks based in Phnom Penh.

It is unlikely that there will ever be a return to the pattern of the past in which Buddhist monks played little active part in the political life of Cambodia. At the same time, and just as Ian Harris has reflected on the sangha mirroring society at large, the evidence of the past two years suggests that a sea change has occurred in Cambodian politics. This change is a reflection of a sharp demographic shift so that over 50% of the population are now under 30 and the staggeringly rapid rise of new social media. Human rights groups are now more active and outspoken, so that it should not be a surprise that change has also taken place among the Buddhist clergy.

Photo courtesy of Flickr user Luc Forsyth.

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Anxious friends called me last night in Wanchai, at the edges of the Occupy Central protest. The police had baton-charged at the crowd and fired tear gas, and people were streaming away from the event, crying and wailing. Yes, tear gas really works. No, Hong Kong is not afire, and life goes on this morning in the downtown business district (the stock market is down 1.7%).

Other large cities experience violence and civil disobedience, and continue to thrive. We have not reached the apocalypse yet.

Still, as I've said before, street protests are bad news for Hong Kong and it's hard to discern any winners from this event.

The Wall Street Journal and the Financial Times Asian edition front pages both headlined last night's confrontation as a 'harsh crackdown.' The police will be criticized for their heavy-handed tactics, even though the boys in blue are just doing their job. The Hong Kong Government will be mocked as feckless lackeys and puppets, acting only for the interests of tycoons and on Beijing's commands. There was a telling scene a week ago when Xi Jinping summoned these businessmen, the emperor and his vassals.

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Beijing itself is rebuked for dissembling on its Basic Law commitments and thereby provoking this civic response. The Occupy Central organizers who claim to lead a campaign for 'love and peace' have already lost control of affairs. The students (some as young as 13) tear-gassed last night will be described as naïve, led astray by troublemakers. The silent majority who just want to carry on with business will be condemned for being craven and apolitical.

How did we get here? To recap, Beijing has offered a restricted form of universal suffrage in which a 1200 person nomination committee (mainly loyal to mainland interests) must pre-approve candidates. Hong Kong's legislature can now choose either to accept or veto this arrangement. Actually, these choices are pretty good. If Hong Kong declines Beijing's formula, on the principled basis that it is a 'fake democracy' like Iran's, we will revert to the old-style (2002) system where voters get only a limited say in Hong Kong's governance, which is still more inclusive than the rule of British colonial administration.

If Hong Kong abides by Beijing's recommendation, the territory must elect candidates acceptable to China, hardly unreasonable, many may think. Although domestically Beijing insists that loving the country equates to loving the Communist Party, it has clarified rather awkwardly that its definition of Hong Kong patriotism merely requires not to oppose China's one-party rule. Besides, the democrats utterly lack an electable candidate in any case. So for all the much-ridiculed crocodile tears about the loss of freedom, one must question what better governance alternatives exist.

How bad could it get? Very bad. Twenty five years ago, we saw what happened when a threatened Beijing is backed into an existential confrontation. Today, China is a country with a triumphal sense of infallibility. It is so resolute and confident of its sovereign power that it can deliberately taunt large neighbors like Vietnam and India as a matter of routine. Hong Kong is a mere flyspeck by comparison, and a domestic concern at that. Of course, this is not June 1989, and Hong Kong is not the capital. But the protesters need to realize what they're dealing with here: a state that will use lethal force if it deems it necessary. Then there'll be real tears.

Photo courtesy of REUTERS/Tyrone Siu.

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With other international institutions reiterating their forecasts of declining growth in the emerging economies, the latest Asian Development Bank Outlook Update has a more positive view, at least those in our region. Not only are they sustaining a 6%-plus growth rate, but trade integration continues apace.

Australia has not found much of a role for itself in this supply-chain revolution so far, but our strong services sector gives us potential opportunities.

Among the many reasons for Asia's superior economic performance has been the success of supply-chains (what the ADB calls global value chains), which divide the production process so that each stage is carried out in a country which has comparative advantage in that particular process. From 1995 to 2008, the share of Asia's value-chain trade in worldwide manufacturing exports almost doubled from 8.6% to 16.2%. The message from the IMF on emerging economies has been gloomy for the past few years, but those in Asia have sailed ahead at a pace around three times that of the advanced economies, and the ADB sees this continuing. 

What made this possible was close integration and freedom of regional trade.

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Following the implementation of the ASEAN Free Trade Area, over 70% of intra-ASEAN trade incurs no tariff, and less than 5% of that trade is subject to tariffs above 10%. Non-tariff trade facilitation – making it easier to ship things across borders – is the objective of the Asian Economic Community and the Regional Comprehensive Economic Partnership initiatives. The national single window (a one-stop shop to speed customs clearance within ASEAN) has gone live in Indonesia, Malaysia, the Philippines, Singapore, and Thailand, with full roll-out planned for all significant ports and airports by 2015.

Where does Australia fit into all this? Have we been left behind with these fast-expanding opportunities, just at the time when we need to find a substitute for commodities to drive our growth? What have we got to offer?

Japan played a key role in promoting supply-chains when it shifted its manufacturing to lower-income countries. Taiwan provided managerial support for the initial stage of China's manufacturing growth, with Foxconn as the prime example. South Korea's sophisticated electronics industry provided inputs for other countries' manufacturers. All of these countries had inherent advantages in finding a role in the supply-chains. Australia, as a net capital importer and commodity exporter with modest manufacturing capacity and few global manufacturing brands, has found it hard to find a role in the manufacturing boom in Asia.

Many of our best opportunities will be found in services. Our engineers are seen all over Asia, in mining and infrastructure. Australian accountants, lawyers and financiers are there too. But the supply-chains should provide new opportunities, especially as Asian manufacturing goes up-market and needs sophisticated design and better distribution know-how to gain greater access to Western markets. 

Photo courtesy of Asian Development Outlook 2014 Update

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  • Need an overview of what happened at the UN Climate Summit? Good reporting and pictures from IISD, as well as six takeaways from the other high level meetings that also took place in NYC last week.
  • There were a string of new announcements from NYC , including:
  • Australia announced its support for a US$200 million Global Innovation Fund, which will distribute money through grants, loans and equity investments.
  • During the annual Clinton Global Initiative, Hillary Clinton announced a US$600 million global female education plan, which aims to improve quality, safety and security at schools around the world. (Interested in what the Clinton Global Initiative has achieved in the past 10 years? Watch this video).
  • There was good news at the UN last week, as the World Bank launched a major fund to advance the health of women and children.
  • With the UN discussion on the post-2015 development agenda heating up , John McArthur has some good news about child mortality in his Brookings report: seven million lives saved. But he pertinently reminds us that 'progress towards the [Millennium Development] Goals is not the same as progress because of the Goals'.
  • Chinese editorial rebuts the claim that China isn't shouldering enough global responsibility in humanitarian assistance.
  • Why 'disability is not our priority area' shouldn't be an excuse.
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The Wilson Center's Peter Gumbel looks at the social media reaction to Germany's 7-1 World Cup defeat of Brazil and concludes that, when it comes to Germany, 'the usual rules of political correctness don’t apply':

For example, Binyamin Applebaum, a Washington correspondent for The New York Times, tweeted, “The Germans have stormed into a foreign country and taken charge. How unexpected.” Joshua Benton, director of the Nieman Journalism Lab at Harvard University, tweeted “Flush with Confidence, Germany Launches Land War in Asia,” while New Yorker music critic Sasha Frere-Jones tweeted “The Germans will just deny the match ever happened.” On Facebook, a post by British comedian Ricky Gervais—“This won’t be the first time thousands of Germans will have to lie low in Brazil for a while for their own safety”—drew more than 100,000 likes.

Europe's leaders keep this picture of Germany alive too:

...the key rationale for the creation of what is now the EU was that there should never again be a European conflagration. For young generations today, the idea of a war between France and Germany seems preposterous, but that doesn’t stop the mantra being repeated endlessly by European leaders in an effort to promote pro-European sentiment. It doesn’t work: the record of recent European elections is that the younger the voter, the less likely they are to vote. At the very least, that suggests a more updated and relevant rationale for the EU needs to be developed.

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As several participants in our debate have argued, nuclear ballistic missile submarines (SSBN) can have a positive effect on strategic stability in Asia and globally. But they do not exist in a vacuum. New military capabilities, and strategies that take advantage of them, are being developed and deployed in the Indo-Pacific that make the gradual proliferation of sea-based nuclear weapons dangerous rather than stabilising. 

These novel weapons, such as cyber and electronic warfare, anti-satellite missiles and hypersonic technology, add new dimensions to both conventional warfare and nuclear deterrence. Their development, along with their roles in comprehensive strategies, such as the US’s Air-Sea Battle concept, requires us to ask whether the introduction of Chinese and Indian sea-launched nuclear weapons will only create instability and the risk of escalation in conflict. 

The role of SSBNs is to provide an assured second-strike capability to a nation's nuclear deterrence. Essentially, a second strike capability acts as a kind of fail-safe by ensuring that any aggressor takes on the risk of being attacked by nuclear weapons in-kind. Thus, theoretically, SSBNs and assured second strike should lead to a more stable strategic system in the Indo-Pacific by deterring any potential disabling first strike.

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As Rod Lyon has argued, the SSBN can make an aggressor think twice, as long as the threat of the platform is credible. It is mobile, quiet and difficult to track. Once professional crews, reliable communication technology and effective command and control are established, the SSBN can act as a credible deterrent. But if the SSBN is to play a positive role in strategic stability, communication with state leadership must be guaranteed. 

Communications with submerged submarines, both conventional and nuclear, are established through very low frequency and extremely low frequency programs. These involve large antenna installations that are part of a state's military communications network. Thus for example India, conducting sea-trials of its first SSBN, has started construction of its own very low frequency station

But what happens to deterrence and stability if such communications come under attack?

In the Cold War, the main way to neutralize an adversary's submarine-launched nuclear weapons was through anti-submarine warfare; detecting and tracking enemy SSBNs and, in the event of war, destroying them before they launched. 

There was, of course, the risk that during a conflict anti-submarine warfare could induce 'use it or lose it' decisions on a state's leadership. That destabilising factor is now amplified by another possibility raised by new technologies: the prospect that a state's communications with its nuclear deterrent force could be cut in times of crisis.

What would happen in a future conflict in which the opening attack involved the use of cyber and other capabilities to disrupt or destroy military communication systems? How could we be certain that SSBN commanders, cut off from political authority, would not launch their weapons? 

This goes to wider questions about vulnerability of communications, including satellites, in conflict. The head of US Air Force Space Command recently said that if one of the Advanced Extremely High Frequency satellites, a backbone of US military communication, was taken out 'we could potentially have a situation where the president can't communicate with forces in that part of the world.'

There is no guarantee that striking another power blind or dumb in the midst of crisis would add to stability. Thus the US Air-Sea Battle concept has an uneasy relationship with nuclear deterrence. Designed to counter Chinese anti-access and area-denial capabilities, Air-Sea Battle requires the integration of all 'interdependent warfighting domains (air, maritime, land, space and cyberspace)' in order to 'disrupt, destroy and defeat' enemy forces. The strategy calls for the disruption of enemy 'command, control, communication, computers, intelligence, surveillance and reconnaissance' systems before attacking their weapon systems and capabilities.

Many of these communication systems, like the low frequency installation India is building, are dual-use in the sense that they could network with conventional and nuclear forces. Thus it is possible to foresee a situation where a 'blinding' campaign like that envisioned in Air-Sea Battle could involve attacks on an installation that also communicates with SSBNs, radically disrupting a state's control over its sea-based nuclear arsenal. Presumably, India would face a similar problem if Pakistan or China ever planned to target its communications at the outset of a conflict.

These are some of the complexities and scenarios that will need to be thought through if the introduction of Chinese and Indian nuclear-armed submarines is to reduce risks of conflict rather than heighten them.

Photo courtesy of Flickr user U.S. Navy Official Page

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

Lawyer and former journalist Cynthia Banham cites Northern Ireland as a cautionary tale for Australia's legislative response to terrorism:

Northern Ireland is the paradigm case for how executive overreach in counter-terrorism laws and policy can go wrong. Hundreds of Catholic nationalists, many of them innocent, were interned under the Civil Authorities (Special Powers) Act (Northern Ireland) 1922, which permitted detention without charge or trial. They were subject to a range of mistreatment, including what today would be regarded as torture. The internment policies were widely viewed in hindsight as a failure, having led to the alienation of the Catholic population and the escalation of violence.

Julian Snelder on economist Justin Yifu Lin and China's economic growth:

If Justin Lin is right, China will 'rule the world' economically, if not by 2030 then certainly before mid-century. Its domestic economy will far surpass anything on the planet, its companies will tower above all, it will be the prime money-mover globally, it must lead technologically and the West's middle and working classes will be industrially and financially sidelined. If he is wrong, but China's leaders insist on his growth imperative anyway, then China will become highly indebted, parched, polluted and frustrated. That is why I am listening closely to Justin Lin.

Turkey is widely seen as a critical partner in stemming the flow of resources to ISIS. Sarah Graham wrote on why it has been reluctant to date:

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But let's recall that Turkey was unwilling to be part of the coalition during the Iraq War in 2003. It probably has the same concerns now that it had then: too little clarity on the post-war political solution. Turkey has long been critical of the West's handling of Syria's Bashar al-Assad, wanting tougher action against the dictator. Turkey may fear that action against ISIS will strengthen Assad, particularly given that US plans for the endgame in Syria aren't clear. To top it off, the US Senate has only just approved the appointment of a new ambassador to Ankara, John Bass, who will have to manage a delicate and extremely high-stakes negotiation process as he settles in. The Obama Administration will need to appreciate that Turkey is status conscious, focused on what the ultimate political order in its region will look like, and doesn't take a simplistic view about the sources of Islamist radicalism. 

The crisis in West Africa, should not be forgotten, says Tim Mayfield: 

Indeed, the less emotive nature of the Ebola outbreak as compared with ISIS's hardcore ideology and homicidal tactics seems to be a significant factor in the Australian Government's response thus far. Even when taking into account the latest announcement of A$7 million in support of the international response to the Ebola outbreak, this brings Australia's total contribution at this point to just A$8 million. That looks downright miserly when compared with the A$500 million per year that Australia's military mission in Iraq is forecast to cost.

A Chinese submarine visited Colombo earlier this month. James Brown took a look at what it means for the future of the PLA Navy and international submarine rescue cooperation: 

There may still be opportunities for international engagement as China weighs how to provide submarine rescue capabilities further afield. In a 2010 address to the Royal United Services Institute, the PLA-N's then Northern Fleet Commander Vice Admiral Tian Zhong concluded that 'international coordination for submarine rescue may be the best way of saving the submarine and avoiding nuclear leakage', and signaled that China was 'looking forward to more extensive cooperation' in the submarine rescue field. Subsequently, Chinese naval observers attended ISMERLO, NATO, and US submarine rescue exercises. But to date China has neither fully participated in any combined submarine rescue exercises nor concluded any international agreements that establish logistics channels necessary for fly-in submarine rescue.

Nonresident Fellow Stephen Grenville argued that Indonesia's new president should focus on structural reforms of the economy, because: 

If the going does get tougher, Indonesia is poorly placed to handle a more serious crisis, either at the global level or domestically. As a still heartfelt legacy of the 1997-8 crisis, Indonesian policy-makers would be reluctant to seek help from the IMF. The operational effectiveness of the Chiang Mai Multilateral Initiative is extremely doubtful. Domestically, the Financial Sector Safety Net bill was rejected by parliament in 2008 and has little prospect of early revival, leaving policy-makers with few options in the event of financial-sector problems. 

Philippa Brant presented a strong case for Australia to get involved with the new Asian Infrastructure Investment Bank: 

Australia could be cautious and wait to see how the AIIB develops. But as we know from the history of the Bretton Woods institutions, it is easier to shape these institutions by getting involved early. They prove challenging to change down the track. It is natural for the country committing the most dollars to want to have the most influence. China's desire in this regard shouldn't be seen as inherently problematic. But by signing up to the AIIB now, Australia has greater opportunity to influence its governance and operation. Those countries that sign the MoU at APEC will get to be part of the governing structure, and thus have voting rights.

I wrote on Obama's speech at the UN Climate summit this week

The other lesson to draw from Obama's prioritisation of global challenges is not to confuse media attention with policy focus.

Yes, military action against ISIS is getting a lot of attention, and in my view, the US-led response to the ISIS threat is an over-reaction. But it's not as if Obama is betting the farm on this mission; he's restricting his commitment mostly to air power. So even if America is making a strategic mistake, it is not a big one. And if it relieves pressure on the Kurds and other minorities being persecuted by ISIS, it will even have some humanitarian upside. It also fulfills US (and Australian) moral obligations to a struggling Iraq. We broke the joint, so we ought to play a part in holding it together.

If we're looking for long-term policy impact, it might be worth turning to where Obama says his priority lies: climate change.

The Lowy Institute's East Asia Program Director Merriden Varrall argued that there are complex implications to China's crackdown on corruption

The crackdown on corruption in China does respond to a genuine misuse of power by some government officials. But to understand how far the campaign will go, and what its purpose is, corruption in China also needs to be seen in the context of a long tradition of social relations that are very different from those we are used to in Australia. Seen in this broader context, it would seem that however vigorous the anti-corruption campaign is, it can never truly go all the way; it must necessarily be selective and limited.

Following the elections last week, Alex Stewart warns that the overwhelming personal victory for Frank Bainimarama could lead to a shaky start for democracy in Fiji: 

This means there are unlikely to be many changes in the development of Fiji government policy going forward. And as Jenny Hayward-Jones has pointed out, there are significant issues facing Fijian democracy and civil liberties. Addressing these issues is likely to become much harder now that Bainimarama can draw on a strong mandate from the polls, a mandate that he has already interpreted as popular support for his 'vision'.

While there is certainly going to be parliamentary debate, it may be too much to expect it to alter key issues, especially since one of those issues is media freedoms. The restrictions on the press imposed by the Media Industry Development Agency and the media decrees have served Bainimarama well, and he is not going to change them readily.

And Catriona Croft-Cusworth says West Papua was watching the Scottish referendum: 

In a time when Indonesia is still consolidating its democracy, backtracking on decentralisation reforms would be an unwise move. As the case of Scotland shows, sticking together involves a negotiation of identity, dialogue and power. Despite its flaws, the mechanism of direct regional elections in Indonesia is a platform for that negotiation. With strong institutions, it can also become a self-correcting process, supporting democratic reform from the centre to the regions.

Lastly, Saleem Ali argued that the UN Climate summit held in New York this week was an opportunity for Foreign Minister Julie Bishop to conduct 'environmental diplomacy': 

There are opportunities to link Australia's relations with major powers through our environmental technology sector just as much as through our mining industry.

For instance, Australia has excellent technological capabilities in renewable energy research and infrastructure development. The world's largest solar research facility is currently under construction in south-eastern Queensland and there are numerous Australian companies such as Barefoot Power that offer innovative solutions to meeting rural electricity challenges. Then there is the nuclear fuel issue, which has already been a major point of Australia-India diplomacy, and which will have direct carbon reduction implications if properly managed.

Photo courtesy of Flickr user Sander Spolspoel.

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