Lowy Institute

This morning it was announced that the nuclear negotiations between Iran and the P5+1 have been extended for another seven months; or to be specific, another four months to reach a political agreement and another three months beyond that to finalise technical details.

That the talks did not end simply in a comprehensive failure was no great surprise. The stakes are too high. As I explained last week, for the Rouhani Government and the Obama Administration, a nuclear deal holds the key to critical broader objectives: for Rouhani, it can end Iran's political and economic isolation; for Obama, it can recalibrate America's posture and policy in the Middle East.

Moreover, comprehensive failure would have led to an escalatory spiral of increased sanctions and an acceleration of Iran's nuclear program. We could have seen increased tension between the US and Iran in Iraq, undermining the military campaign against Islamic State. The risk of military confrontation in the Middle East would have risen as well.

Within Iran, the Rouhani Government would have paid a steep political price. Having raised and modestly delivered on popular expectation of an improvement in Iran's economy, a comprehensive failure would have fractured economic confidence and undermined political support for Rouhani. Rouhani's hardline internal adversaries would have used the opportunity to step up their attacks on him and his Government.

Of course, all of this may still happen. The critical deadline here is not in seven months' time, it is in four months. As Secretary of State Kerry made clear in his press conference this morning, 'At the end of four months...if we have not agreed on the major elements by that point in time and there is no clear path, we can revisit how we then want to choose to proceed'.

So what should we take away from this non-failure/non-success?

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First, the failure to outline in any detailed way what progress has been made would suggest that what we have here is a 'negative non-failure'. There had been expectations that the two sides might announce a framework agreement and say that more time was required to work out the details. This would have constituted a positive non-success.

While it is possible that the current situation reflects the old negotiating maxim of 'nothing is agreed until everything is agreed', it has to be worrying that the two sides still need another four months to even reach a framework deal. This would suggest that either both, or one, of the sides feel that what is currently on the table won't wash with those who will sit in judgement on the deal.

On the Iranian side, Rouhani has to convince a sceptical Supreme Leader who must ultimately sign off on an agreement. Obama meanwhile has to win at least grudging acquiescence from Congress and allies in the Middle East. 

Kerry made a point of saying how tough the talks are and how the US doesn't 'want just any agreement. We want the right agreement.' At the very least, extending the talks has the virtue of underlining to critics on both sides that neither the Rouhani Government nor the Obama Administration are going to sell themselves cheaply for the sake of a deal. And by not giving the impression that an agreement is close – which may in fact be true – it could help to stave off any efforts to torpedo a prospective agreement over coming months.

Of course, those efforts to derail the deal may come anyway, as patience wears thin among hardliners in Iran and a more hostile Congress takes office next year. It is going to be a fraught four months.

Photo courtesy of Flickr user U.S. Department of State.



Sam Roggeveen raises an important question when, apropos my debate with Malcolm Cook about China's use of diplomatic carrots and sticks towards Australia, he asks why China bothers to use sticks at all when it has so many carrots. Like many others, Sam thinks China is making a mistake by acting so threateningly to so many of its nearer neighbours when it could so easily seduce them with economic opportunities.

We explored some aspects of this issue on The Interpreter back in May, specifically in relation to China's conduct in its maritime disputes with Japan and its Southeast Asian neighbours. I argued then that China uses these disputes specifically to weaken US regional leadership and strengthen its own by showing that America cannot or will not any longer support its friends and allies in Asia militarily as it used to do.

Sam's post however raises the deeper question of why China should think that this will help build its new model of great power relations in Asia. One simple answer is that everyone else does it. Most models of leadership at all levels of human interaction – even America's — involve a mix of both carrot and stick, and there is no reason to expect China's be to any different.

But I think there may be a more specific answer: the main target of China's sticks in the East and South China Seas is not its neighbours themselves, but Washington. It wants to convince America to step back from leadership in Asia by convincing Washington that it will have to confront China militarily to preserve its regional primacy, and that the costs and risk of doing so would be immense. It is trying to intimidate America, in other words. There is a good chance that it is working.

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Most people are surprised that China would think in these terms. It does not fit our model of how the world works these days. But my whole point is that the world is working differently now from what we have known, because for the first time in decades we are seeing real strategic rivalry between great powers. China is deadly serious about its 'new model', and will run real, if carefully calculated, risks to create it.

Moreover, viewed from Beijing, such measures might seem justified, and indeed required, by America's stubborn refusal so far even to contemplate any accommodation of China's aspirations. That refusal was restated more bluntly than ever by President Obama in Brisbane just last Saturday week. For Beijing, if carrots won't work on America, sticks must be applied, even if indirectly.

Photo courtesy of the White House.


The $254 million in cuts to the ABC budget, outlined today by ABC Chief Executive Mark Scott after Malcolm Turnbull's statement on Wednesday, have been coming for a long time – at least since the Lewis review which proposed efficiencies to reduce the ABC's annual budget requirement.

Since then, there have been numerous rumours of the steps the ABC will take to implement the cuts, including axing or trimming Stateline and Lateline, and closing its international bureaux in New Delhi and Tokyo (with the result that no Australian media outlet would have a correspondent in Tokyo).

The Minister's statements last week yet again emphasised his view that the cuts would not require programming changes, and could be implemented by driving back room and administrative efficiencies. Mark Scott's announcement today to the ABC staff is in stark conflict with the Minister's view. As rumoured, Stateline is gone, Lateline moves to ABC24, and several regional bureaux are cut.

As for the international bureaux, they will undergo a euphemistic 'shape readjustment'. The Auckland bureau will be entirely closed and others thinned down, with 'multi-platform hubs' installed in their place. London, Washington, Beijing and Jakarta reportedly remain, with no mention yet of the fate of the Tokyo bureau. 

This is 'highly contentious', as Crikey points out today, 'as some believe it exposes journalists to greater risks in hostile environments, but is increasingly becoming the global standard as media companies cut costs'.

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According to some in the ABC, budget surgery on the scale required by the Government could not possibly have been achieved only in administrative efficiencies, so programming changes were inevitable. While the Lewis review set out five broad areas in which, in its view, those administrative efficiencies could be achieved, it did not quantify or itemise those efficiencies. Given the heavy blows inflicted on the broadcaster today by its management and board, it's hard to believe that the cuts could have been made solely by reference to the Lewis recommendations.

One available conclusion, then, is that the Minister has relied on something of a fiction to lay the responsibility and the blame squarely on the shoulders of ABC management, rather than accepting some responsibility on behalf of the Government which is mandating the cuts.

Regardless of where responsibility lies though, the reality of $50 million plus cuts per annum for the ABC — coming on top of the axing of the Australia Network and the massive restructuring of ABC International which resulted in swingeing cuts to Radio Australia and a decimation of its programming to the region – is a severe curtailing of the ABC's ability to cover international news. 

Thinner representation of journalists across international bureaux, with leaner resources, will mean more sparse news coverage, more perfunctory reporting and less analysis. This is to Australia's detriment in a century where everything is global, and where we need to be vigilant that our geographic remoteness doesn't render us geopolitically isolated.

Photo courtesy of Flickr user Sarah_Ackerman.


Jenny Hayward-Jones is Director of the Lowy Institute's Melanesia Program and Philippa Brant is a Research Associate at the Lowy Institute.

Pacific Island leaders have had the rare opportunity to meet the international leader of the moment, Narendra Modi, and the president of the world's economic powerhouse, Xi Jinping, within the same week.

Both leaders had sufficient star power for many Pacific Island leaders to make a special trip to Fiji to meet the visiting leaders.

That Fiji was able to convene meetings for two such important leaders in one week is a diplomatic coup for the newly elected Government, which is seeking to recreate its image on the international stage. Fiji's media is naturally playing up the significance of the leaders of China and India visiting Fiji before the leaders of Australia and New Zealand have. Other international media outlets have played into this by emphasising the strategic calculations behind the two visits.

But to keep things in perspective, both Prime Minister Modi and President Xi Jinping (and for that matter French President Francois Hollande, who dropped into New Caledonia last week), were in the region because of the G20 meeting that Australia hosted. It is unlikely either would have made a special trip to Fiji were it not for the location of the G20 this year. The fact that President Xi had very little new to announce to island leaders suggested it was more a visit of convenience than of strategic significance.

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The 'strategic partnership' (featuring mutual respect and common development) that Xi announced with the countries of the region consisted mostly of initiatives already underway. Announcements of 2000 scholarships, zero tariffs for 97% of imports from the least developed countries in the region, and promises of more Chinese tourism and cooperation in areas like trade, agriculture, fisheries and infrastructure construction were all announced by Chinese Vice-Premier Wang Yang in Guangzhou last year.

Although not new, these initiatives are potentially valuable. Scholarships abroad are highly sought after by Pacific Island students. Pacific Island countries, particularly Fiji, will benefit from Chinese initiatives to increase the number of Chinese tourists traveling to the region and from encouragement of Chinese investment in tourism. Fiji appeared to be the main beneficiary of new announcements from Beijing. A US$11 million grant to Fiji was announced and is expected to be linked to infrastructure development. New visa exemptions for Fiji citizens will be valuable in increasing people-to-people links.

In his keynote speech to Pacific Island leaders, Xi Jinping said China stands ready to enhance communication with the island countries on 'global governance, poverty elimination, disaster reduction, food security, energy security, humanitarian aid and climate change to safeguard the common interests of all developing countries.' While China does not like to be perceived as a 'donor' in the traditional Western sense, Xi Jinping has clearly adopted the language of the international development community and knows how to appeal to his audience. His reference to climate change both in the speech and in bilateral meetings with island leaders will be well received at a time when the commitment of the region's major development partner, Australia, to tackling climate change is in doubt.

Indian Prime Minister Modi's visit to Fiji earlier in the week arguably made a bigger public splash, largely because of his international rockstar reputation and his ability to connect with diaspora communities. Fiji-Indians make up approximately 37% of the Fijian population. 

Unlike Xi, Modi was welcomed by large crowds of enthusiastic supporters in Suva. In remarks to a meeting of Pacific Island leaders, Prime Minister Modi announced a number of new policies for the region, including a US$1 million special climate change adaptation fund, a pan-Pacific Islands project for tele-medicine and tele-health, visas on arrival for all 14 Pacific Island countries, an increase in bilateral aid from US$125,000 to US$200,000 per annum, some trade promotion assistance, training for diplomats and a new regular Forum for India-Pacific Islands cooperation. While these initiatives are potentially constructive and play to some of India's strengths, they are relatively minor contributions to development compared to those made by the region's major donors.

As with the announcements made by Xi, Fiji was the main beneficiary of new Indian largesse. After talks with Fiji's Prime Minister Frank Bainimarama, Modi announced India would provide a US$70 million line of credit to build a co-generation power plant at a sugar mill, a parliamentary library, and US$5 million to strengthen and modernise small and medium size businesses. Modi's speeches and remarks in Fiji suggest India's relationship with the Pacific Islands region will remain largely focused on Fiji, either as the target of India's attentions or as a 'hub' through which India engages with other Pacific Island countries. 

Even if Xi and Modi's visits were more about style than strategic substance, Fiji's government has had a big win in the last week. Fiji has reasserted its claims for regional leadership, potentially at the expense of Papua New Guinea, which has been seeking a similar role for itself in recent years. In acting as the host for two meetings of Pacific Island leaders, the Fiji Government portrayed Fiji as the natural hub for the region. It also benefited more than any other country from the few new aid announcements that were a necessary feature of the visits of both leaders, propelling it into the international spotlight for a few days.

Photo courtesy of Facebook user Fiji Ministry of Information.


Hugh White's willingness to admit his mistakes and revisit his assumptions is admirable. His error in predicting that China would punish Australia by withholding final agreement on the FTA out of displeasure with the Abbott Government's pro-US and pro-Japan tilt is understandable. After all, Beijing has been in a combative mood lately, threatening and coercing its neighbours in a bid to broaden its sphere of influence. In this case, though, as Hugh said, it seems Xi Jinping has sought to charm Canberra out of Washington's orbit rather than bully it out.

But to me, the mystery is not why Beijing opted for carrots in this case rather than sticks. As Malcolm Cook explained, withholding the FTA would have damaged the domestic economic reform agenda which is at the centre of Beijing’s concerns. Rather, the mystery is why Beijing has used sticks against other regional powers lately, and indeed why it bothers with the stick at all.

Let's assume that Hugh's overall assumption about China's ambition — that it seeks to reorder the region with itself in a lead position and the US no longer the strategically dominant force — is correct. It is not clear why China has decided that coercion and punishment are the most expeditious means to that objective.

Take Taiwan, for instance. The trajectory of the Chinese economy has led to a substantial growth in economic ties with Taipei. It has also led to growth in Chinese military capabilities which has seen the cross-Strait balance shift dramatically in Beijing's favour. In turn, this has led to a decline in the credibility of America's security assurances to Taipei – it is getting harder and harder to believe that the US would intervene on Taipei's side in a conflict between China and Taiwan, because the costs would likely be so high for Washington.

From a Chinese perspective, that's a major advance for its Taiwan policy. Yet it is hard to argue that it came about because China either threatened Taiwan or offered it carrots. The economic forces that Beijing unleashed through its reforms have taken care of most of it.

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So when the long-term economic trends are so favourable to China, why does it bother to impose itself in the region? In the case of the Australia FTA, why would it feel the need to cajole Canberra away from Washington? If it waits, and grows, time will surely whittle away at the problem, forcing Canberra to equivocate here and there, slowly loosening Washington's grip. More broadly, if China can maintain its political unity and a decent rate of economic growth, then surely much of the work towards achieving its desired stature in the region will have been done.

I don't mean to suggest that China could feasibly return to its Deng-era 'hiding and biding' strategy. It is asking too much of Beijing to consciously choose to remain a second-rate strategic power as it rises to economic pre-eminence (in any case, as a major actor on the world stage, China has more responsibilities now). So China could continue to increase its military capabilities commensurate with its growing GDP, and it could lay out a strategic and foreign policy vision consistent with its size. But it could do these things without consciously frightening the region's horses. Given the scale of China's economic rise, even such modest steps alone would be earth-shaking enough.

So why does Beijing have to go beyond that? Why press territorial claims in the East and South China Seas? Why unilaterally declare an air defence identification zone and move oil rigs into waters claimed by a neighbour? Why consistently increase defence spending over and above GDP growth?

Perhaps such a policy will get China to the position of regional pre-eminence it seeks a few years earlier, but at what risk?

Photo by Flickr user nist6dh.

  • A proposal to end the exaggeration of what counts as foreign aid.
  • How do countries and other donors compare in their Ebola assistance? The Ebola Response Tracker by ONE is a great interactive.
  • With the Lima Climate COP just around the corner,  how ambitious are China's climate targets? Good fact sheet from The Climate Institute.
  • In Berlin last week countries pledged US$9.3 billion for Green Climate Fund for developing countries to deal with climate change.
  • News that China will build a US$12 billion railway in Nigeria, connecting Lagos to Calabar.
  • 'The less the government controls, the more authoritarian it becomes.' The future looks dismal in war-torn South Sudan.
  • The Djioubti Minister for Foreign Affairs urges a reconfiguration  on the debate  African nations face in forging 'eastern' or 'western' partnerships.
  • Last week marked the 25th anniversary of the adoption of the Convention of the Rights of the Child, the world's most widely ratified human rights treaty. See UNICEF's anniversary interactive.

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

This week the Lowy Institute hosted both the Prime Minister of Italy, Matteo Renzi, and the Chancellor of Germany, Angela Merkel. Both these visits followed the conclusion of the G20 Brisbane Summit and major speeches in Australia by President Barack Obama, President Xi Jinping and Prime Minister Narendra Modi, among others. It has been busy. Here Lowy Institute Fellow Sam Roggeveen reflected on the 2014 Lowy Lecture by Chancellor Merkel:

I think that what we tend to look for in political leaders is not so much intelligence but wisdom, and Merkel's was on display in the Q&A, where she cautioned patience on Europe's response to the crisis in Ukraine. As someone who saw Germans give up hope of their country ever being reunified, she said we ought not to be too pessimistic about future change in Russia's attitude. But it might take some time for Europe's most powerful tool, its economic might, to take effect. The only danger for Europe is that it becomes divided in the meantime.

Sam also pointed to the global goodwill that Merkel has personally developed, and what this could mean for Germany:

It seems to me that, were Merkel to embrace this opportunity, it could raise her country's standing in world affairs to something unprecedented in the post-war era. For instance, is it really so far-fetched to imagine Merkel taking the leading role in international climate-change negotiations? Her country has diplomatic heft and green-energy credentials. And, if I'm right, Merkel herself has the personal profile to give such an initiative real stature.

Chinese President Xi Jinping's speech before the Australian parliament on Monday, along with the announcement of the China-Australia Free Trade Agreement, has provoked considerable debate. Kerry Brown provided a first take on Xi's speech:

But Xi has made it clear that there needs to  be more diversification, and one of the routes to diversification is finance and services. Xi's recognition of Australia as a place where this sort of business can be done for Chinese today is a big deal. Now it is up to us to re-imagine our relationship with China along lines that are broader than just exporting resources and foodstuffs. If we go this way, we are pushing on an open door.

Lowy Institute Nonresident Fellow Malcolm Cook talked about how the FTA busted several myths about Australia-China relations:

The second strategic myth is that closer relations with the US, to which the Liberals are seen as being more prone than Labor, are detrimental to Australia's key relationships in Asia. Australia's Asian engagement policy would benefit from a more 'autonomous' and 'independent' relationship with the US and its ally Japan, it is argued.

The most sustained and inaccurate criticism of the Abbott Government's foreign policy is that closer relations with Japan and the US will undercut relations with China, with Beijing likely to impose costs on the bilateral economicrelationship. The exact opposite now seems to have occurred, with the signing of the historic Japan-Australia FTA earlier this year clearly an important late-term stimulus to the decade-long China-Australia trade talks.

Hugh White responded:

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As Malcolm Cook says, this week's events show that Tony Abbott's strategic policies in Asia have not got in the way of his economic agenda. Mr Abbott has won his free trade agreement with China despite his enthusiastic alignment with Japan and America to resist China's regional ambitions. So those, like me, who thought it might be otherwise have been proven wrong.

Hugh White layed out three possible explanations for why President Xi Jinping has 'been so warm and generous' to Prime Minister Abbott, when 'Mr Abbott has so deliberately opposed himself to China's interests and ambitions'.  Malcolm Cook provided a fourth option

Rather I think Option 4 — China's primary motivation for signing the trade deal with Australia is its global (not regional) trade diplomacy strategy aimed at domestic structural reform – is the most compelling. In this case, China is telling the truth when it says its foreign policy is primarily driven by the domestic concerns of a developing, previously centrally planned, economy in rapid transition.

Newly appointed Director of the International Economy Program at the Lowy Institute, Leon Berkelmans, made a compelling argument for treating the new FTA with some scepticism(part 2 of his post is here):

In any case, suppose we take the report at face value. The modelling suggests the agreement will boost GDP growth by 0.04% per year for 10 years. Trend GDP growth is around 3% per year, so 0.04% really does not look like much. In fact, at trend growth, that is how much the economy grows in 5 days. Let me emphasise this point: it is not that the FTA is worth 5 days' worth of output. It is worth the difference between GDP today and GDP in 5 days' time. We should all just calm down a little bit.

President Obama's speech at the University of Queensland on Saturday covered a wide range of topics, including climate change, human rights, the Asia Pacific rebalance and China's economic development. Rory Medcalf with a first impression on the strategic aspects of the speech:

Which brings us to China. Sensibly, Obama's speech today did not directly challenge the legitimacy of the Chinese political system, in the way that his strong words in Canberra did just three years ago ('prosperity without freedom is just another kind of poverty'). 

Still, he did not resile from upholding values of democracy, freedom and human rights – linking them with themes of opportunity, innovation and youth - and pointedly included a reference to Hong Kong alongside Asia's democracies.

In these times when a rules-based liberal global order is under challenge from forces variously of destabilization, disorder, authoritarianism and sheer barbarism, Obama's Brisbane speech may not prove historic, but it has at least held the line. With clarity and conviction about the staying power of democracies, British Prime Minister David Cameron did at least as much in addressing the Australian Parliament yesterday.

Hugh White argued that the speech was tough on China:

However, that matters much less than how the Administration sees Asia and China. Obama spoke more positively than he has done before about China's economic achievement and its significance for the welfare of the people of China, and of course he referred to the deal with Beijing on carbon emission targets. But he more than matched that with a distinctly adversarial tone in describing America's differences with China.

Obama's remarks on climate change have provoked a rare rebuke from Foreign Minister Julie Bishop. Historian James Curran wrote an interesting piece on past breakdowns in the alliance:

The last occasion when there was a serious public rupture in the alliance came with Bill Clinton's refusal to provide American ground troops in East Timor in 1999. Notwithstanding the fact that US logistical, intelligence and diplomatic muscle were crucial ingredients in the success of that mission, both John Howard and Alexander Downer made the point to American leaders at the time that, given Australia's support for the US in various wars over the previous half-century, Canberra could have reasonably expected the participation of a few Marines. Downer's remarks at the time on CNN invited a personal phone call of complaint from then Secretary of State Madeleine Albright.

Mike Callaghan has given his 'tick of approval' to the Brisbane G20 Summit, saying that it produced outcomes that were necessary for the event to be called a success. There was just one hiccup:

If Australia had adopted a more positive approach well in advance of the summit, rather than conveying an impression that it was doing everything possible to avoid the mention of climate change in Brisbane, it could have latched onto the US-China deal on emissions and presented the Brisbane G20 Summit as an important step in building momentum for next year's UNFCC negotiations.

So for all the good work Australia did as G20 chair in 2014 and the substantial outcomes from the Summit, it missed an opportunity for Brisbane to be presented as a major success across all fronts, rather than being overshadowed by the US-China agreement.

It's a pity, because in every other way Australia had a successful G20 year.

In a personal reflection on the feeling in Brisbane during the G20, Hugh Jorgensen provided some colour:

Otherwise, the only really noticeable human activity going on within the vicinity of the Summit site are 6000 sweaty police, a handful of Falun Gong protesters, and a lone monk bearing a placard asking G20 leaders to give peace a chance. I have heard there are a few hundred protesters across the river near City Hall, but as today's mercury moves up to a sweltering 35 degrees, I sympathise with anyone who can think of somewhere better to be that is not in Brisbane's willpower-draining sun.

Danielle Rajendram wrote on Prime Minister Modi's important visit to Australia:

Closer relations with Australia also tie into Modi's broader vision for India's role in East and Southeast Asia. The Modi Government has devoted considerable effort to deepening its partnerships in the region as part of its recently enhanced 'Act East Policy'. Focusing on key partners such as ASEAN, Japan, Vietnam and Australia, the Modi Government has signalled its intention to play a greater role in the region, potentially acting as a counterweight to Chinese influence in the Indo-Pacific. If it is able to carefully manage Chinese sensitivities (no mean feat), cautious Indian engagement has the potential to act as a stabilising force in the region.

Vanessa Newby recalls her friendship with Peter Kassig, the humanitarian worker held hostage and recently beheaded on camera by ISIS:

Peter was never idle. Usually when I saw him he was on the run from A to B delivering medical supplies to whoever needed them. He never had any money of his own; he spent all his resources assisting others. On the odd evening when he did take a break he was to be found in deep conversation with someone about his work or an issue he felt strongly about. He lived out his beliefs with an authenticity that is unusual. Peter was charming, eloquent, intelligent and highly passionate. It was the last trait that got him into trouble.

Finally, Anthony Bubalo wrote a two-part post on the Iranian nuclear negotiation, which is set to reach its deadline on 24 November (part 2 here):

But the thing that clouds judgments about what constitutes a good or a bad deal, the thing that makes this complex technical negotiation even more complicated and makes the atmosphere around the negotiation highly charged, is that for each of the protagonists — the Rouhani Government, its domestic opponents, the Obama Administration and key regional players such as Israel and Saudi Arabia — the talks are a proxy for their broader objectives.


Part 1 of this two-part series here.

I would argue that, for the Obama Administration, a nuclear deal with Iran is central to its recalibration of America's policy and posture in the Middle East. Of course it is not explicitly articulated that way, and for obvious reasons cannot be, but it's not difficult to make the case.

Iranian President Hassan Rouhani, World Economic Forum, 23 January 2014.

Obama's approach to the Middle East can be crudely summed up as 'get out of the wars America is fighting in the region and don't get into any new ones'. By withdrawing American forces from Iraq and Afghanistan, Obama has fulfilled the first part of this policy. The second is evident in the way his Administration has either been extremely limited or exceedingly reluctant in its use of military force in Libya, Syria and now Iraq (although in many ways the rise of Islamic State in Iraq is the most serious challenge to his policy).

This second aspect of the policy has also been articulated quite explicitly by Obama, most notably in his West Point speech, where he set out the kinds of things that the US will do in the Middle East, but also the things it won't.

I think Obama also understands that if the US is going to stop fighting wars in the Middle East, it has to come to terms diplomatically with its most difficult adversary, Iran, on the most challenging issue, the nuclear question. There are two key dimensions to this.

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First, a nuclear deal is the key to ending 35 years of enmity between Iran and the US that has on many occasions flared into serious clashes and military conflict. Of course, a deal won't on its own end that enmity or resolve all the difficulties in the relationship. But in the same way as the Rouhani Government wants to remove the nuclear issue as an obstacle to ending Iran's political and economic isolation (see part 1 of my series), I think Obama wants to remove the nuclear issue as an obstacle to gradually normalising relations with Iran.

But there is another dimension. Both enhanced sanctions, and now the nuclear negotiations, are not just designed to stop Iran from getting the bomb, they are also designed to stop some of America's allies in the region taking unilateral military action against Iran. In particular, what I think Obama fears is that any military strike by Israel will risk drawing America into any subsequent conflict between the two. To a lesser degree, by diminishing the nuclear threat, Obama also reduces the reliance of regional Gulf allies, in particular Saudi Arabia, on US security guarantees. This again helps him recalibrate American policy and posture in the region.

The problem, however, is that a comprehensive nuclear deal (even one that places very strong limits on Iran's ability to build a nuclear weapon) will leave Iran a stronger regional player. Ending Iran's political and economic isolation will allow it to better pursue its regional ambitions and to realise its economic potential. As I said in Part I, this is what the Rouhani Government hopes for. 

But this is precisely what regional adversaries such as Israel and Saudi Arabia (as well as their supporters in the US Congress) fear. This is not to say that they do not fear a nuclear-armed Iran. They do, but they also recognise that the utility of nuclear weapons is limited and that a nuclear-armed Iran would be isolated and sanctioned, and would bring even stronger regional security guarantees from the US. 

The Israeli and Saudi preference, therefore, is to see Iran sanctioned and contained. As I argued in part 1, even if a nuclear deal leaves Iran less isolated and more influential in the region and internationally, I think over time, the end of its economic isolation will pose a more direct threat to the regime and to the interests of hardliners than the current sanctions regime. But for those regional countries like Israel and Saudi Arabia with justified fears about what a more powerful Iran means for their interests and the security of their citizens, this is unlikely to prove reassuring.

What this means is that if we do get a nuclear deal next Monday, or more likely, an extension of the current negotiations, there is going to need to be an effort to address these broader concerns as well. The Rouhani Government and the Obama Administration are right that the nuclear issue needs to be addressed first. But it should only be seen as a first step in building a more stable and less conflict-prone region.

Photo courtesy of Flickr user World Economic Forum.


Thanks to Hugh White for responding to my post on the China-Australia free trade agreement (FTA). Hugh lays out three options for interpreting China's decision to go ahead with the FTA despite the Abbott Government's pro-Japan and pro-US stances. I am not an Option 1 believer ('Beijing doesn't really care much about these strategic/political issues, and their importance is outweighed by the economic value to China of the FTA and the diplomatic value of a warmer relationship with Australia'), as Hugh suggests.

Rather I think Option 4 — China's primary motivation for signing the trade deal with Australia is its global (not regional) trade diplomacy strategy aimed at domestic structural reform – is the most compelling. In this case, China is telling the truth when it says its foreign policy is primarily driven by the domestic concerns of a developing, previously centrally planned, economy in rapid transition.

Australia is the fourth developed economy to sign a preferential trade deal with China in 2014, following after Iceland, Switzerland and South Korea. More are on the way. These four were preceded by deals with Singapore, New Zealand, Hong Kong and Taiwan. Not only is China under Xi Jinping increasing the number of trade deals with advanced economies, the scope of these deals, as we can see with the Australian and Korean FTAs, is increasing.

For me, the China-Australia deal is motivated more by China's global trade diplomacy aimed at domestic economic goals than it is by the regional strategic order in East Asia and Australia's perceived position in this order in relation to China and the US. I imagine the same is true for Australia as well.

If Option 4 is the best explanation, this is a good sign for the regional security order and a strong caution against over-interpreting the scope and effect of regional strategic competition. If the Abbott Government is an Option 4 follower, then the China-Australia trade deal is even more of a coup than advertised, and is the sign of a mature, not adolescent, Australia in Asia.

Photo by Flickr user gp1974.


Why would a prime minister with a two-thirds majority in the lower house of parliament go to the polls two years early? While Abe's Liberal Democratic Party (LDP) is experiencing a slump in the polls at present, it is two years away from having to front the electorate if the normal electoral cycle is followed. If we scratch the surface it is not difficult to find reasons why Abe has taken this extraordinary step. But what really needs explaining is why Abe is risking so much in the process.

Abe's justification for the snap election is to seek a mandate to delay a planned increase in the consumption tax from 8% to 10%, originally scheduled for October 2015. This is a flimsy excuse indeed, given the LDP's overwhelming majority in both houses of parliament. The Government can revisit the consumption tax legislation and get it through whenever it pleases.

The real incentive for Abe here is to placate the party's rank and file, for whom the April 2015 round of local elections across the country loom large. Japan has just officially gone into recession, voters in the regions have not seen the benefits of the quantitative-easing aspect of Abenomics, and their wages are not keeping pace with inflation. When asked if they want to delay the planned tax increase, most voters will yelp 'YES' in response.

There is self-interest at play also. Abe is scheduled to face his own party in September 2015 in the election for the presidency of the ruling LDP. With an electoral slump in April, Abe could easily be blamed for diminishing the LDP's fortunes through the failure of Abenomics, the policy that bears his name. Abe could be tossed out as prime minister if he is not returned to the presidency of the party.

From this perspective then, the December election starts to look like a self-serving attempt to provide a democratic sheen to what is essentially a spot of internal party trouble.

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We can also see that, by interrupting the electoral cycle, the LDP will avoid confronting a hostile electorate in both houses of parliament in the same year (2016), thus limiting the fallout should the economy remain flat.

Cynics will point to the fact that the LDP under Abe is clever to time this election for December, because it is difficult to recall a time when the opposition parties have been in greater disarray than they are at present. But this where the spectre of political risk enters the picture.

With several small opposition parties locked in self-defeating hostilities against each other, the LDP is literally the only political force capable of winning power in its own right. But there is another political entity that needs to be taken into account – the non-aligned voter. The LDP is sitting on only 41% approval ratings; 38% of the country supports no party.

So the real contest in December is not between the LDP and the rest but between the LDP and no-one. Voters can express their democratic dismay at the lack of a viable choice by simply staying away from the polling booth. If less than 50% of the electorate turns out to vote, Abe's resort to the fig leaf of democracy will be exposed.

Moreover, he may lose his precious two-thirds majority in the lower house, now that the electorate is really able to react to the policy agenda that has only been revealed after the last poll in 2012. The post-electoral moves by the Abe cabinet to reinterpret the pacifist clause of the constitution to allow for collective self-defence, and his determination to re-start Japan's nuclear power generators, will now receive the electoral scrutiny they deserve.

Abe wants to claim a mandate for Abenomics before economic policy failures become too entrenched by asking voters to answer an easy question: do you want to delay a tax increase? But voters may flex their democratic muscles in quite another way, slicing the LDP's majority and undermining the very notion of a mandate, by staying at home on election day. This is the political risk Abe has chosen to face off against in December. And it is a huge risk, given that this is an election Japan simply did not have to have.


Next Monday, 24 November, we will know whether months of talks over Iran's nuclear program will end in a comprehensive deal, a comprehensive failure or an agreement to keep negotiating. 

Iranian Foreign Minister Zarif Stand. Baroness Catherine Ashton and US Secretary of State John Kerry, 20 November 2014.

The talks have generated great heat in Iran, in the Middle East and in key international capitals, mainly because Tehran and Washington have never been closer to an agreement (strictly speaking it's a negotiation between Iran and the five permanent members of the Security Council plus Germany, but who are we kidding?). 

If there is one thing that both proponents and opponents of a deal would agree upon privately, it is that the negotiation is not really about Iran's ability to produce nuclear weapons.

Don't get me wrong. At the core of the talks is a highly technical negotiation designed to do three things: (1) prevent Iran from using its nuclear knowledge and technology to build a weapon, primarily by placing limits on its ability to produce fissile material; (2) put in place an intrusive inspection regime to ensure that if Iran does try to make a bomb, the international community would quickly know about it; and (3) establish a sanctions mechanism that both rewards compliance but also has the capacity to quickly punish Iran if it is found to be cheating.

But the thing that clouds judgments about what constitutes a good or a bad deal, the thing that makes this complex technical negotiation even more complicated and makes the atmosphere around the negotiation highly charged, is that for each of the protagonists — the Rouhani Government, its domestic opponents, the Obama Administration and key regional players such as Israel and Saudi Arabia — the talks are a proxy for their broader objectives.

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It is these broader objectives that make the protagonists variously more or less willing to compromise on the nuclear issue. And it is these broader objectives that lead opponents of a deal to charge that the proponents are willing to trade anything to get an agreement, and in turn for proponents to argue that there is no deal that would satisfy opponents.

So what are these broader objectives? Let's start with the Rouhani Government and its opposition within Iran. Rouhani is neither a moderate nor a reformist. His goal is not to change the Iranian regime but to strengthen it. What distinguishes him from his internal opponents is his belief that the best way to do that is by striking a nuclear deal. 

I was in Tehran a few weeks ago attending a workshop organised by the European Council on Foreign Relations and the Institute for Political and International Studies (the think tank of the Iranian Foreign Ministry). The workshop included a long session with the Iranian Foreign Minister, Mohammed Javad Zarif. Two things were evident.

On the one hand, Iran is confident about its position in the region. In particular, it feels that has the upper hand in their long running power struggle with Saudi Arabia. The Saudis have failed in their efforts to dislodge Tehran's key ally Bashar al-Assad in Syria. Meanwhile in Saudi Arabia's backyard, Yemen, Houthi rebels, seen by many as aligned with Iran, have seized the capital. Even the rise of Islamic State in Iraq, while presenting some immediate challenges for Tehran, has played into Iranian hands. Suddenly the international focus is less on the brutality of the Syrian regime and more on Islamic State. Meanwhile, Iran can portray itself as a bulwark against jihadist extremism in Iraq.

On the other hand, there was a strong sense of frustration that despite its strategic ascendancy, Iran remained politically isolated and economically vulnerable. At the workshop it was noted with strong disdain the way that Iran had been left out of the Geneva talks on Syria last year and the Paris talks on the rise of Islamic State in Iraq this year. This is not just a practical matter for Iranians, it is also a question of pride – a sense that Iran is not being accorded its due deference in the region. 

Likewise, Iran's strategic ascendancy obscures a great economic vulnerability. The limited sanctions relief that has already occurred as a part of the interim agreement, combined with better economic management by the Rouhani Government, has improved the economic situation in Iran, particularly with respect to inflation. But this improvement, and the renewed economic confidence that has come with it, is fragile and susceptible to a breakdown in the nuclear negotiation. You sense that for the Rouhani Government, the nuclear talks are not just about staving off future socioeconomic causes of unrest, it's about realising Iran's full potential – something that won't happen while Iran remains economically isolated.

I have no doubt that the Rouhani Government is bargaining very hard to protect Iran's nuclear program. But it also sees the nuclear issue as a stick that has been used to beat Iran down and keep it isolated. In its view, taking that stick out of the hands of its adversaries is key to both Iran's future and the regime's longevity.

I think for this reason Rouhani has been able to convince Supreme Leader Khamenei to give him the leeway to negotiate. Convincing him to sign off on a deal will be more difficult, however, given that the Leader is more naturally predisposed to the views of those opposing an agreement.

The Iranian domestic opponents of a deal do not form a coherent group, nor do they have a single motive. I am sure there are some within the regime who want to preserve and even enhance Iran's ability to produce a nuclear weapon should the regime take the decision to do so (and most analysts assume it has not, so far).

But there are two other groups, sometimes overlapping, that are also opposed to a deal for different reasons. First, there are those within the regime who are ideologically opposed to a deal. They tap into a deep vein of distrust of the outside world in Iran (and not just in the regime) that is sceptical of any promise to deliver real sanctions relief in return for deep Iranian concessions on its nuclear program. There are also those who believe that the regime cannot ultimately survive without preserving its ideological enmity to the US in particular, and the West in general. In this view, ending that enmity would remove a key reason for the regime's unity and existence.

In recent years this ideological enmity has, however, overlapped with a more practical opposition to any deal with the US. Parts of the regime have made enormous amounts of money as a result of sanctions. They have done this by either running sanctions-busting schemes or by filling the economic vacuum left by international companies unable to do business in Iran. The expanded role of Revolutionary Guard commercial entities in the economy is one example.

So for ideological and economic opponents, a nuclear deal represents a threat to the regime and in some cases to their personal economic interest. As a matter of fact I think the hardliners are right. In an isolated Iran, the regime and regime hardliners hold all the security cards and increasingly the economic ones as well. A less isolated Iran will empower new economic interest and actors outside the regime. 

In Part II of this post I will look at the broader factors driving external proponents and opponents of a deal.

Photo courtesy of Flickr user U.S. Department of State.


It's been a long time since an Australian foreign minister publicly pushed back against a US president. Julie Bishop did just that in her interview from New York last night on the ABC.

The last occasion when there was a serious public rupture in the alliance came with Bill Clinton's refusal to provide American ground troops in East Timor in 1999. Notwithstanding the fact that US logistical, intelligence and diplomatic muscle were crucial ingredients in the success of that mission, both John Howard and Alexander Downer made the point to American leaders at the time that, given Australia's support for the US in various wars over the previous half-century, Canberra could have reasonably expected the participation of a few Marines. Downer's remarks at the time on CNN invited a personal phone call of complaint from then Secretary of State Madeleine Albright.

But Bishop's language on ABC 7:30 was careful, moderate, and symptomatic of the approach the Abbott Government is taking in reaction to the President's speech in Brisbane. There's been no public retort from the Prime Minister. No fire-breathing fulmination from government ministers, though Joe Hockey and Jamie Briggs certainly let off some steam earlier in the week. And Bishop was quick to repudiate any link between the President's speech and the Government's decision not to increase its contribution in the Middle East. The optics of this were potentially awkward.

Bishop's cautious reminder of what state and federal governments have been doing to protect and preserve the Barrier Reef is probably as much as we will hear from the Government on how it really feels about Obama's remarks on climate change in Brisbane. The rest will no doubt be made clear behind closed doors.

For over a century, Australian governments of both political persuasions have mostly chosen not to air in public the dirty laundry of their differences with the great powers.

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Nothing is to be gained from an open slanging match. Billy McMahon tried that in 1971 after President Nixon failed to consult him about his dramatic change on China policy. McMahon, enraged at being ignored by Washington and hopelessly flatfooted on account of Whitlam's successful visit to Beijing as opposition leader, resorted to ridiculing Nixon in a speech to an American-Australian Association Dinner in July that year. So shocking were the PM's public words about the President on that occasion that many in the audience thought McMahon was drunk.

Obama's words in Brisbane were certainly provocative. It is doubtful that either the State Department or the US Embassy in Canberra would have cleared them. This was a White House effort. It showed dramatically the difference between the US and Australian positions on climate change.

There are of course potential flaws in the US-China climate deal. A badly weakened president at home, Obama will struggle to gain congressional approval for his Green Climate Fund. And there is certainly no guarantee that next year's summit in Paris – the city of light, no less! – will produce a global deal that is either binding or enforceable. It is entirely conceivable that the Chinese will scupper that deal as they did Copenhagen. And in Australia, the domestic politics of climate change remain treacherous terrain for Labor. It would be utter folly for Opposition Leader Bill Shorten to think that momentum is now swinging back Labor's way on this issue.

It is difficult, however, to think of a precedent where an American president has intervened in Australian domestic politics quite like this.

LBJ certainly made life uncomfortable for Labor Opposition leader Arthur Calwell during his visit here in October 1966, but Calwell had publicly provoked Johnson at the parliamentary welcome by reminding the President of those Democrats back in Washington – Morse, Mansfield and Bobby Kennedy – who opposed the Vietnam war. It didn't matter that Calwell finished his speech by reciting verbatim the Gettysburg address. Johnson duly poured a bucket of rhetorical grief all over Calwell. Recall too that George W Bush publicly referred to the 'disaster' of a possible Latham victory at the 2004 election, and that Howard believed Obama's win in 2008 would be a victory for the terrorists.

Imagine if Ronald Reagan had visited Australia in the mid 1980s and given a major speech on why US allies should support his SDI (or 'Star Wars') missile defence program, or indeed the testing of the MX Missile. On both issues the Hawke Government ultimately decided not to lend its support to Washington – though in the case of the MX Missile a rancorous Labor Left forced Hawke into backing down on his previous commitment to allow the use of Australian airfields by US aircraft to monitor the weapon's splashdown. But if Reagan had visited Australia and given such a speech, Hawke would have been justifiably furious, especially given that his political opponents, Andrew Peacock and John Howard, were strongly backing the US over its MX testing.

In private, however, American rebukes to Australia have been much sharper – and a good deal more significant – than Obama's comments last weekend.

The remarks in Brisbane were certainly not as embarrassing for Australia as when President Eisenhower took a different stance to Australia over the Suez crisis in 1956. Nor as ruthless as those by John F Kennedy to the Australian foreign minister in October 1963, when Kennedy told Garfield Barwick that the American people had 'forgotten ANZUS' and that US support for any Australian military action against the Indonesians in Borneo would be negligible.

Nor were they as infuriating to Australia as Nixon's decisions not to warn the governments of John Gorton and Billy McMahon about troop withdrawals from Vietnam and the enunciation of the Nixon doctrine in 1969. Or as stinging as Nixon and Kissinger's telephone conversation in late December 1972, when they dismissed Whitlam as a 'peacenik'.

But Obama's speech reminds us that, in an unprecedented era of bipartisan consensus on the alliance, the two countries cannot expect to see eye to eye on all issues. That is unrealistic. And, clearly, Australia's loyalty as an ally does not mean it will necessarily receive special treatment. That, perhaps, is the more salient lesson from this week. The President's speech in Brisbane shows that the alliance, strong as it is, will from time to time inevitably face the dilemmas of divergence. The test is how each side responds in these moments. The history shows that both countries have been able to manage those differences within the alliance.

Photo courtesy of Flickr user G20 Australia 2014.

  • The big news this week was Modi's visit to Australia, the first of any Indian prime minister in 28 years. The Age has an editorial on the new maturity in Australia-India ties, Pradeep Taneja looks at what the visit means for the broader bilateral relationship and P Vaidyanathan Iyer argues that the Australia-India Security Framework reveals a lot about Canberra's strategic choices in the face of a rising China.
  • How Modi's trip to Myanmar for the India-ASEAN and East Asia summits presented an opportunity to rebuild historic connections.
  • Why is India doing better than most emerging markets?
  • The 2014 Global Slavery Index was released this week, revealing India has the highest number of slaves in the world, though it ranks fifth in terms of a percentage per capita.
  • Rajiv Kumar looks at what Modi must do at home to meet the global expectations for his Government.
  • What happened when Jokowi and Modi met in Myanmar?
  • Abhijit Singh looks at the emerging Australia-India maritime relationship.
  • On the 86th anniversary of Mickey and Minnie Mouse's TV debut, Disney has sent Mickey on an auto-rickshaw journey across India:


Last week's summitry in Myanmar was full of media soundbites and photo ops but the policy scorecard was won by Beijing.

During a period of US weakness (with Obama suffering at the midterms and many in the region doubting his Administration's ability to fulfill the great Asia Pivot promise), China asserted itself in Myanmar. 

Beijing came offering some $20 billion in development loans for Southeast Asian states. It also proposed a friendship treaty with ASEAN as well as continuing its favoured bilateral approach in signing $7.8 billion in deals with Myanmar and, in the days leading to the summit, between $500-700 million annually in development loans to Cambodia

As China doled out the cash, Obama was left wanting. It seemed to fall to his personal charisma and popularity in the region to carry America's load. 'I have a very close association with Indonesia having spent a good deal of my childhood there', he reminded his counterparts during a meeting with Joko Widodo. His mantle as America's most Asia-focused president is often recalled in the region. But harder policy (a US-ASEAN Summit Fact Sheet is here) on this trip went missing. Read More

Obama wooed an admiring audience of young Southeast Asian leaders in a town hall meeting in Myanmar. After strong support of her struggle for the presidency, Obama shared an affectionate if awkward hug with Aung San Suu Kyi during their press conference. In that conference, she noted that the country's reform process is going through a 'bumpy patch' but that it could be overcome. Post summit, that 'bump' came for her with the speaker of the lower house this week categorically stating that there would be no changes to the constitution, thus barring Aung San Suu Kyi from contesting the presidency. The US may be caught backing a scratched horse in next year's election and souring other relationships.

On the economic front, while China's Asia Infrastructure Investment Bank and other development loans have made headlines, few others have made progress.

As RSIS's Yang Razali Kassim wrote last week, China has recently out-manoeuvered the US for the mantle of Asia Pacific economic leadership. The APEC Summit showed as much, as did Southeast Asian support for the AIIB. Obama left the long week of summitry in the region (including the G20 and APEC) without the desired progress on the TPP. Only a handful of ASEAN states are involved in TPP negotiations due largely to the high threshold of trade liberalisation required.

Despite some trademark Obama charm diplomacy in Myanmar, the fact remains that his promises have been long in materialising. While his ambitions of an Asian-focused presidency are still well received, they lack the bite they once had. And for Southeast Asian states, relations with the US are easier to mend than with China. After all, Obama is an outgoing president with a couple of years left; Xi's tenure will hold long into next decade.

The rounds of summitry in Myanmar seemed to reflect this reality. Indeed, as Thein Sein noted in his Chairman's statement, Southeast Asia is undergoing a period of 'rapidly changing regional and international dynamics'. Last week signaled that China is steering this change.

Photo by REUTERS/Soe Zayan Tun.