Australia in the "Asian Century" or is it Lost in Asia?

China and the US - The Australian dilemma

The Australian Prime Minister Julia Gillard released a long awaited white paper Australia in the Asian Century yesterday, which has been "wowed" by the Australian media. The white paper basically affirms that Australia's future lies with Asia and consequently immense economic opportunities exist for Australia to grab.

The paper hinges the nation's strategy of becoming a competitive force within the region through skills development, innovation, infrastructure, the tax system, regulatory reform, and environmental sustainability. However before a nation can become a competitive force, it must have an accepted place in the region.

On this key strategy the White paper does little more than make a "rally call" to Australians to come out and make it happen. The paper also reeks of Austro-centrism where most of the points made in the document are written with the expectation that Australia will win out of closer ties with Asia without necessarily giving much back in exchange - such as Australia having closer ties with Asian universities in order to attract students and skilled workers. Rather one-way to say the least.

In fact the report has probably missed the growing strategic importance of aid in the region as an instrument of gaining influence and trade. China is aggressively using this lever as a source of influence where for example, it is financing the Thai Government's purchase of tablets for all school students.

The Australian China US relationships

Not surprisingly, the document still goes out to reaffirm Australia's loyalty to the United States. This could be seen as Premier Julia Gillard's metaphoric statement of "all the way with LBJ".

Historically the US is seen as a savior from invasion by the Japanese during WWII and consequently there has been a total commitment from successive Australian governments through the cold war until the present time for US foreign policy. The ANZUS Treaty that embodied these commitments has brought many foreign policy mistakes to Australia and probably cost Australia in South-East Asia its own persona of identity.

In addition, although Australia could be considered a rich multicultural society today, some people in Asia still have a negative impression because of the old white Australia policy, treatment of indigenous people, Pauline Hansen, and the latest policies on boat arrivals of asylum seekers.

In contrast, China is now so important to Australian trade, investment, and tourism, yet Australia is unconsciously niggling China with its staunch loyalty to the US. China saved Australia from a deep recession with demand for minerals whereas the US brought the Australian Government anguish over the involvement in Iraq and Afghanistan. In addition, it appears the US had a different rule to Australia than other allies. The Australian Government has been expected to follow US foreign policy in an unquestionable manner. Each Australian Prime Minister since Curtin has kowtowed to the US, seeking a close presidential relationship in the belief that this was in the best domestic and foreign interests. Certainly a close personal relationship with the incumbent US president has been seen as something of importance. Conversely, Kevin Rudd's prowess at speaking Chinese was not good enough to develop the relationship with China, as the relationship is much more complex than mere small talk.

China would prefer to deal with an Australia with a mature and independent foreign policy rather than an enthusiastic supporter of US foreign policy. Precedent shows that China does not necessarily expect blind allegiance but would like to see Australian decisions more in line with its own realities rather than someone else's.  However looking today at both major parties in Australian politics this is highly unlikely. In addition the punishment dished out by the US Government to the David Lange Government in New Zealand in the mid 1980s is a deep lesson about what happens to those disobedient to the US.

From the US perspective, Australia is a nice ally to have, one it can rely upon on the international stage, which will be important as Australia takes up a temporary security council seat at the UN. With the Obama visit to Canberra and Darwin last year and the stationing of troops in Australia, the country has some importance to the US until it can establish much more substantial bases closer to China.

China as an ally presents less of a dilemma than the US, as China has historically always allowed some deviation from the official Chinese foreign policy. For example China does allow Australia and other nations to have a separate relationship with Taiwan, and different approaches to regional issues without making these differences major issues. Maybe Australia can learn from the Indonesian approach of dynamic equilibrium, a doctrine where Washington and Beijing would agree to co-exist rather than compete for supremacy in the region.

Australia is also finding it difficult to accept that there are other views in the world other than the occidental position on detente and human rights that it expects within the region. For example, many Australians cannot understand why so many Chinese people so strongly support the position of the Chinese Government on many issues like Tibet, and how people can accept a communist system.

Australia's relationship with the Asian Region

After decades of successive government foreign and trade policy, Australia still does not have any embedded position within the Asian region. In fact Australia has been historically viewed as occasionally condescending and arrogant towards the region with attitudes towards human rights, where Australia's own practices in matters like the detention of boat people are seen by some as hypocritical.

The influence of Australian business and financial institutions in the region is minor, nowhere near the critical mass needed to become a competitive force in the region. Australia at this time has only a very low profile in the Asian banking and finance sector with no brands out there. The only exception is in the mining sector, which to all intents and purposes has made the Australian economy very dependent upon demand in Asia, particularly China.

Back in the 1990s the then Prime Minister Paul Keating stated that Australia is part of Asia and together with the then foreign minister Gareth Evans made a concerted effort to embed Australia within the region. This had some positive effect with Indonesia, Cambodia, Laos, and East Timor with Australian policy working towards enhancing peace and prosperity within the region. But they had their setbacks over the recalcitrant remarks about Malaysia's former Premier Mahathir Mohamed which soured relations with that country for a number of years. However perceptively, all these gains were lost when John Howard came to power in 1996 reaffirming the Canberra-Washington link, earning the label for Australia as the US's deputy sheriff in the Asia.

The Australian relationship with the region is one where Australia needs the region more than the region needs Australia.  The Australian market is small compared to other markets and of little interest to regional exporters who prefer to put their efforts into the larger markets of China, Japan, EU, and the US. Other hubs in the region are more conducive to becoming corporate HQ hubs than Sydney or Melbourne. The only real interest Australia has for Asian investors been in rent seeking activities like real estate. Australia is the gateway to nowhere, so cannot play the role as a hub like Singapore and Hong Kong have successfully done. However the concept of Darwin as a gateway to Asia has been formally recognized but it remains to be seen what will actually be done about it.

With the rapidly changing nature of the region and the shifting balance between the US and China within Asia, the Austro-centric view of the region needs urgent revamping. The Australian economy in the short and medium term is dependent upon China, and Australia perceives itself rightly or wrongly to be dependent upon the US for security.  Australia's acceptance of  the wide array of Asian views within the region that Australia can one day become an equal partner in the region.

Though Australia has some deeply historical links with many parts of the region due to some heroic actions of troops during the Second World War and the Malayan Emergency after that, tragically these opportunities to further develop relationships were not capitalized upon, due to Australian mesmerization with Washington. White papers aside, it will be action and not words that are important and China and the region will be surprised to see any real change, although the intention and realization of the need is present within the foreign policy Australian agenda. However with Australia, old habits die hard. And just as Julia Gillard had an unfortunate fall the other week in India in front of the media, Australia also has a track record of falling over itself in Asia.

It will take much more than a massive investment in skills and education to be able to engage the Asian region, let alone be "competitive". One of the paramount barriers Australia has to overcome is the deep set belief that its own cultural values are not necessarily universally accepted across the region. It's not about learning Asian languages but about understanding different points of view, approaches, and 'mindsets'. Austro-centrism must take a back seat in relationships around the region for Australia to be seriously considered a member of the region. Currently it's not.

The white paper is still haunted by Australia's past. Maybe it's time for Australia to release the US security blanket a little and become a mature and independent nation within the Asian region. However one fears with the promise of a rise in real incomes from the "Asian Century" initiative, that the whole thing is just a pander to the domestic electorate. As the report itself aspires, Asia is seen only as a means for Australian incomes to become one of the top 10 per-capita ones in the world.

Rather, Ken Henry the principal author of the white paper appears to have placated the Australian Government's wishful thinking for a positivist instrument that can be sold to the electorate, which he may have done well. The White paper has turned it into a promissory note for a better future within Australia based upon the misconception that internal capacity building will make Australia more competitive in Asia, being too "fuzzy" about developing a real strategy to engage the region. Building up capacities are only building capabilities. They are not strategies within themselves.

One worries about the quality of actual analysis undertaken about the region when the paper has not even mentioned the emerging Muslim/Halal market opportunities. This developing market is worth USD 400 Billion per annum and growing exponentially. Malaysia and Thailand are spending massive amounts of money on developing supply chains to the world market. There are more than 400 million Muslims in the Asian region, and the report has not identified this potential.

On initial reading of the 312 page report there appears to be little new in it, and one could argue that existing ALP policy was used as a template. If this is correct then it will be difficult for this white paper to garner bipartisan support, and maybe fated to become another relic of a former government tossed out of office.

Presence and accommodation of Asia to what Australia really has to offer is the vital key. This implies showing the region that an independent Australia is truly willing to put its lot in with Asia and not with the US.

Asian suspicion may arise to the issue Ms Gillard herself talked about Australia being a winner in Asia, and this implies there must be losers.

Its highly doubtful if anybody in the region is looking at Australia with any more interest today.

Published in the Jakarta Post 30th October 2012

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