The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Thursday, August 23, 2012

Washington statement gels with my analysis of US intent in Asia

Earlier in the week I published the following arguments in the AFR and on the Lowy Interpreter:

A third insight is that I think some of the experts and politicians with whom I have spoken, and the public more widely, get the rise of China, the US reaction function, and our economic and strategic relations with each, wrong.

I hear many people offer China strategic deference for lifting hundreds of millions out of financial (if not political) poverty. Coupled with Australia's economic integration with China, much like UK and German integration prior to 1914, this infuses an alleged tension into our strategic decision-making process. One gets this sense reading David Uren's latest book.

Should we contemplate distancing ourselves from a heavy-handed US hell-bent on clinging to its historical primacy, which is capable of destabilising the region as much as China? Should we consider Swiss or Swedish-style neutrality? Could we imagine aligning ourselves with the Middle Kingdom?

At this juncture, I don't think these are legitimate options. I argue that China's progress over the last sixty years is as much attributable to US hegemony and the post-Bretton Woods economic stability established and enshrined by US-led Western states as any actions on the part of Chinese leaders.

China's prosperity has been built on subsidised exports to North American and European markets. These subsidies, which have been reluctantly tolerated by the West, include currency manipulation, undervalued labour, and intellectual property theft. China has also stealthily resisted reciprocating free trade by making it difficult for foreign companies to compete in its domestic markets.

I argue that these misunderstandings lead us to misconstrue US intent, and the policy of containment. I believe that US policymakers recognise, as much as Australians do, that the epicentre of global growth in the next 50 years will be found in Asia. Their financial future, as much as ours, will be fueled by exports to Indo-Pacific nations, and demand generated by billions of new middle-income consumers.

I think US policymakers have resolved that in order to protect their own economic and political interests, and ensure that the region is not mortally disrupted by non-democratic actors, they have an obligation to both developed democratic nations, and to their own taxpayers, to maintain their Indo-Pacific leadership. This is the US policy of least regret.

And it is clearly exemplified in Hillary Clinton's recent essay for Foreign Policy, which I think has been to some extent neglected in the domestic debate. She does not conceive of this as an 'Asian Century' but rather as 'America’s Pacific Century'. Now that is fascinating.

And then today the US State Department calls a sudden media conference with Australian journalists to correct misunderstandings about the US approach to the region, and to reject Hugh White's China Choice:

The US has told Australia that it is "foolhardy" to think it needs to make a choice between America and China.

Kurt Campbell, the top Asia policy official in the US State Department, said America wanted to correct "false assessments" in the emerging debate about strategy in Australia.

Mr Campbell said he realised some debate in Australia posed it as a choice for Australia between its strong alliance with the US and stronger ties with a rising China. But "such a choice would be foolhardy", as well as unnecessary, he said. Mr Campbell said the idea that the US was trying to exclude a rising China from sharing power in the Asia-Pacific region was "patently false".

Former Australian prime minister Paul Keating argued earlier this month that the US needed to do more to accommodate Chinese power.

He cited what he called the Keating mantra, "that great states need strategic space and that if they are not provided some, they will take it''.

But Mr Campbell said of Mr Keating's remark: "If he's referring to some 19th century kind of colonial division, then I would reject that."

He said that "no country has taken more trouble to engage with China" than the US. If anything, the US had been giving China more responsibility in global affairs than it was comfortable with.

"Look at the role they play in international relations in the global economy, look at the role they play across the spectrum," he said, citing Iran, Syria, North Korea and issues of nuclear non-proliferation. "You name it, there are ample opportunities for China to play a larger role in politics."