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New Zealand

International

eviewRSeptember/October 2013 Vol 38, No 5

PACIFIC GEO-POLITICS Chinese aid Australian defence

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New Zealand International Review1

New Zealand

International

ReviewSeptember/October 2013 Vol 38, No 5

Managing Editor: IAN McGIBBONCorresponding Editors: STEPHEN CHAN (United Kingdom), STEPHEN HOADLEY (Auckland)Book Review Editor: ANTHONY SMITHEditorial Committee: ANDREW WEIRZBICKI (Chair), ROB AYSON, BROOK BARRINGTON, PAUL BELLAMY, BOB BUNCH, GERALD McGHIE, MALCOLM McKINNON, JOSH MITCHELL, ROB RABEL, SHILINKA SMITH, JOHN SUBRITZKY, ANN TROTTERPublisher: NEW ZEALAND INSTITUTE OF INTERNATIONAL AFFAIRSTypesetting/Layout: LOVETT GRAPHICSPrinting: THAMES PUBLICATIONS LTD

New Zealand International Review is the bi-monthly publication of the New Zealand Institute of Affairs. (ISBN0110-0262)Address: Room 507, Railway West Wing, Pipitea Campus, Bunny Street, Wellington 6011Postal: New Zealand Institute of International Affairs, C/- Victoria University of Wellington, PO Box 600, Wellington 6140Telephone: (04) 463 5356Website: www.vuw.ad.nz/nziia. E-mail: [email protected]: New Zealand $50.00 (incl GST/postage). Overseas $85.00 (Cheques or money orders to be made payable to the New Zealand Institute of International Affairs)

Michael Powles asks whether we need to choose between security, trade and our neighbours.

Jenny Hayward-Jones discusses China’s presence in the South Pacific and argues that long- established aid powers should co-operate with it.

Andrew Davies discusses the future of the Australian Defence Force.

Dimitry Shlapentokh discusses the implications of a weakening in American backing of the Jewish state.

Terence O’Brien reviews aspects of New Zealand’s approach to international affairs.

24 CONFERENCE REPORT

Peter Kennedy reports on discussion about the Syrian crisis at the recent Asia Pacific Model UN Conference.

Gerald McGhie comments on a book that posits 1979 as a key year in shaping our modern world.

28 BOOKS Harshan Kumarasingham: A Political Legacy of the British Empire: Power and the Parliamentary System in Post-Colonial India and Sri Lanka (Malcolm McKinnon). Ashley Ekins (ed): Gallipoli, A Ridge Too Far (Ian McGibbon). Peter Burness: The Nek, A Gallipoli Tragedy (Ian McGibbon).

30

Winston Peters launches a book by the late Michael Green, the former high commissioner in Suva.

The views expressed in New Zealand International Reviewwhich is a non-partisan body concerned only to increase understanding and informal discussion of international affairs, and especially New Zealand’s involvement in them. By permission of the authors the copyright of all articles appearing in New Zealand International Review is held by the New Zealand Institute of International Affairs


In the new Pacific geo-politics my argument when confronted with the question of whether we need to choose among security, trade and our neighbours is that we must avoid having to choose between them. Our security, our trade and our neighbours are all crucial to us and will remain so through the 21st century, and of course beyond. But it is also a theme of this article that in the new Pacific geo-politics of the 21st century, continuing to give priority to all three will be increasingly demanding, requiring significant resources and skill on New Zealand’s part.

Some of the challenges which will preoccupy the region in the 21st century are certainly new, like the emergence, or more accu-rately re-emergence, of China as a great power. Many challenges seem to be longstanding, like achievement of the Millennium De-velopment Goals and the whole question of development itself as well as the on-going search for improved trading arrangements in the wider Asia–Pacific region, but they are no less crucial for that. And others could appropriately be labelled ‘unfinished business’, a category that could include decolonisation in the region.

Geo-politics involves practical diplomacy. Indeed, elements of practical diplomacy can have as large an influence internationally as learned theories of international relations. Ninety per cent of diplomacy involves muddling along somewhere between war and peace or between success and failure. Dr Gerard Finn of Hawai’i made this point more eloquently when he quoted from the late Sir Paul Reeves: ‘We edge our way to a better situation’, which amounts to a kind of moral pragmatism.

Unique challengesBut today some of the challenges that face us are indeed unique. For our whole history New Zealand has relied for both its security and its prosperity on our relations with Western powers. That has been the centre-point of our place in the world. Today, however, while our principal security partners continue to be Western, Chi-na has become our biggest trading partner.

Having a security foot in one camp and an economic foot in another has the potential to be both difficult and painful. Aus-

Michael Powles asks whether we need to choose between security, trade and our neighbours.

Michael Powles is a senior fellow of the Centre for Strategic Studies, Victoria

Foundation. This article is the edited text of an address he gave to the Otago Foreign Policy School in June 2013.

tralia’s position is similar, of course, but we would be foolish to think that our situation is really comparable to that of a major middle power with enormous resources that are in high demand. Rivalry between China and the United States has shown signs of intensifying in recent years, and this situation is complicated by America’s alliance relationship with Japan, particularly, with which China’s relations are becoming increasingly tense.

It is not my purpose to try to predict how the situation in East Asia is likely to develop in the years ahead. But I do want to emphasise its complexity to indicate how preoccupying and demanding it will be for a country like New Zealand. I am very conscious of the comment by Foreign Minister Murray McCully that there was no doomsday scenario to be feared and he was not being kept awake at night by talk of potential conflict between the great powers.

But I suggest we would be foolish not to keep in mind that Japan’s former prime minister Taro Aso has said, ‘Japan and China have hated each other for a thousand years, what should be differ-ent now?’ Commenting on this, Richard Rosecrance of Harvard University has said: The main problem with Asia is not its population or its eco-

nomic importance — which was initially great 200 years ago and is growing now. It is its manifest and lasting divisions. Like 19th century Europe whose Britain, France, Germany and Russia grew rapidly but eventually exploded in war, con-temporary Asia is a region without unity. Europe eventually outgrew its divisions, but only after two world wars.1

New Zealand will have new challenges in the decades ahead because of its unique situation: some security dependence still on the old great power and increasing economic dependence on the new great power. Rivalry between China and the United States is increasing. Moreover, Sino-Japa-

honouring longstanding obligations in our own neighbourhood, including greater recognition of -


China’s riseOne of Australia’s leading strate-gic thinkers, Hugh White of the Australian National University and a frequent visitor to New Zealand, argues that China’s power is already such that any at-tempt by either Beijing or Wash-ington to dominate will lead to sustained and bitter strategic ri-valry, imposing huge economic costs and a real risk of catastroph-ic war.2

White goes on to argue in his recent book The China Choice: Why America Should Share Power

The pivot is a very stupid choice. The United States has achieved nothing and only annoyed China. China can’t be contained.4

Chinese perceptionChina believes that the West, the United States in particular, is trying to contain China, to inhibit its re-emergence as a great power. This strong Chinese perception of Western and Japanese antagonism towards China dates back to what it calls its ‘century of national humiliation’ that began with the first Opium War in the mid-19th century and lasted through the end of the Sino-Jap-anese War in 1945. A Chinese professor teaching in the United States says: ‘China’s memory of this period as a time when it was attacked, bullied, and torn asunder by imperialists serves as the foundation for its modern identity and purpose.’5

It is hardly surprising, then, that many influential Chinese see the American pivot or rebalancing as aimed directly at China. And this suspicion of the West goes beyond obviously strategic matters. In this situation, there could be a crucial role for medium and small powers, like New Zealand, in ‘speaking truth to power’, telling both the United States and China plainly and bluntly that the world has no stomach for another Cold War. This would be no more popular with other Western powers than our anti-nucle-ar stance was in the 1980s, but I suggest this should not deter us.

Would such an effort have any influence? I believe it could, if a sufficient number of medium and small powers were brave enough to be involved.

Meanwhile, the United States is currently pushing hard for the adoption of a Trans-Pacific Partnership. The suggestion is that it should include all major Asia–Pacific countries — Japan has just joined the negotiations — but not China. There is specula-tion as to whether this is also aimed at reinforcing relations among American allies and friends — at the expense, of course, of China. But at least New Zealand, through Trade Minister Tim Groser, has emphasised that New Zealand would not have anything to do with a TPP that excluded China. (Of course, it may never come into being, given the controversy on sovereignty issues that it has caused so far.)

Leaders and their advisers in New Zealand, and indeed in numbers of other countries, are going to have their hands — and brains certainly — full in this century, wrestling with the diffi-culty of helping maintain a peaceful Asia–Pacific environment. Murray McCully may not be kept awake at night but I would bet many others will be.

Good effortSo far New Zealand has done pretty well for itself. As we are fre-quently reminded, and enjoy reminding others, we were the first developed country to conclude a comprehensive free trade agree-ment with China, the result of decades of energetic diplomacy — and some luck. At the same time we have developed as good a relationship with the United States as we have had since the nuclear row of the 1980s. And more recently, we have signalled that we welcome China’s increased involvement in the Pacific by co-operating with China on a development project in the Cook Islands — another historic first. Sensibly, our government prefers the possibility of influencing China in the Pacific through co-op-eration rather than through the blandishments of a bystander.

But today there is some recognition that protecting and pro-moting New Zealand interests as tensions continue in North

New Zealand seafood on show at the China Fisheries and Seafood Expo in Dalian, Asia’s largest seafood event, in November 2012

that as neither China nor America can hope to win a competition for primacy outright, both would be best served by sharing pri-macy. He believes that East Asian countries are seeking a pathway that avoids taking sides — he quotes leaders in Indonesia and Sin-gapore to this effect — and that the best approach for the United States is a strategy that helps them achieve that goal.

Hugh White is regarded as something of a pessimist because of his doubt that the United States will in fact be prepared to ‘share power’ with China. But he does believe that Australia’s ap-proach has become more sophisticated recently and quotes the new head of the Australian Department of Foreign Affairs and Trade, Peter Varghese: Australia does not want to be put in the position where we

have to choose between the US and China… . China has every right to seek greater strategic influence to match its economic weight. The extent to which this can be peacefully accommodated will turn ultimately on both the pattern of China’s international behaviour and the extent to which the existing international order intelligently finds more space for China.3

And fortunately, there is some recognition in Washington that the pivot, or rebalance to Asia, is seen in Beijing as potentially hostile to China and, therefore, in the long run also potentially harmful to long-term American interests. The highly respected Harvard professor Joseph Nye has reported that on a recent visit to China he was told by a prominent Chinese academic:

Hugh White


Asia and rivalry between China and the United States intensifies will be increasingly demanding for us. There is a risk that these geo-political preoccupations will suck oxygen away from on-go-ing priorities that relate to our neighbours in the region and to our position in our own neighbourhood. We must not allow that to happen.

Not all will agree with this. There is indeed a genuine problem of what might be called finite diplomatic resources, which I will touch on again below. But for a start we need to get our perspec-tives right. Over the years, I have heard friendly foreigners, usually Americans or Australians, speak in terms of New Zealand ‘playing its part’ or ‘doing its job’ or simply ‘looking after’ the South Pacif-ic. In addition to their patronising implications, these comments denigrate New Zealand’s role in our immediate neighbourhood. In truth our home neighbourhood is far too important to New Zealand for us to be acting in it for or on behalf of other countries.

For sure, our immediate neighbourhood is important to us for geo-political reasons, as is any country’s neighbourhood, but prac-tically that neighbourhood is far more important to us for other reasons — the family links, the large number of Pasifika people in New Zealand, the obligations on New Zealand which flow from our having chosen to be a colonial power in the Pacific, even the simple straightforward obligations of one neighbour to another.

I suggest we must not be so dazzled by the exciting new geo-political challenges that we forget our on-going neighbour-hood responsibilities. Without apology, therefore, I shall list just some of them.

More than half a century since winds of change, arising in part in New Zealand itself, began to give Pacific peoples the right to self-determination, we still need to remind ourselves of the par-amount importance of paying attention to Pacific Islands wishes and concerns. Gone are the days when New Zealand or for that matter Australian views as to what is best for the Pacific should, or indeed could, dominate.

other options. If so, fine, but it is surprising that we have not more unequivocally offered New Zealand as a refuge of last resort for displaced fellow Pacific Islanders.

Any list of current and on-going challenges in the Pacific today invariably includes the need for governance improvements. Pa-cific leaders have often spoken on the subject and development co-operation programmes commit significant resources to im-proving governance standards. Often this involves attempts to impose Western standards and traditions in the Pacific. Perhaps not surprisingly, progress has been slow and troubled. Meanwhile, some Pacific academics and others are questioning whether in fact appropriate values and standards are being propagated in the Pa-cific. Elsie Huffer and Ropate Qalo argue that in this field Pacific custom and values should be accorded much more importance: Using concepts understood by people at all levels of society

will help make leaders more accountable. While terms such as good governance, the rule of law, democracy, human rights, development and so on are largely seen as impositions from outside and are seldom understood, long-standing local con-cepts embody ideals of social justice… and other values in ways that make sense to and empower local people.

And they make the further observation: Where good development and governance are occurring, it is

usually through the direct initiative of local communities us-ing their knowledge base. These indigenous knowledge bases must be better understood and made nationally accessible so that more can benefit. To achieve this requires a great deal more theoretical and action research into Pacific values and worldviews. Ultimately it means listening to the communities around us and giving them a chance to express their under-standings of the world.6

The case is strong for promoting significant further research into the relevance to governance practices of custom and traditional values; and equally strong for providing resources to help govern-ments and institutions in the region promote relevant customs and traditional values.

There is another aspect of governance in the Pacific that brings to mind the exhortation used in medical ethics: ‘Above all, do no harm’. Many outside powers have failed to observe this and, in some instances have caused governance harm and even worse, in fragile political systems.

For example, we could usefully remember that current ortho-doxies or accepted practices in our own country are not necessar-ily desirable or welcome with our neighbours. In the 1980s and

Terence Wesley-Smith of the University of Hawai’i made a powerful argument at the 2004 Otago Foreign Policy School on ‘Redefining the Pa-cific’. He argued that if there was any redefining to be done it should be done by Pacific Islanders, not by outsiders. I suggest we still need to re-member that today, as there are quite a few areas in which we have been slow to acknowl-

edge and support Pacific countries’ own wishes and priorities. One example is the development of sub-regionalism, where

we in New Zealand may have been rather slow in under-standing the strength of some Pacific leaders’ wishes to as-sociate more closely with their own sub-regions, their own immediate neighbours.

And there are also issues regarding the plight of Pacific Is-landers likely to lose their home islands to rising oceans. New Zealand leaders have indicated that affected people from say Tuvalu and Kiribati might be accommodated in New Zea-land if necessary. Of course, affected people could well prefer

Terence Wesley-Smith


1990s, when neo-liberal economics was all the fashion in New Zealand, we persuaded one or two of our Pacific Islands neigh-bours to implement neo-liberal policies that many felt were clear-ly inappropriate. Much later, Australia has used Pacific Islands countries Papua New Guinea and Nauru to help with a curious solution to its aversion to receiving refugees from Asia in Australia itself. Probably greater harm was done by the chequebook diplo-macy — a euphemism for the bribery of politicians — of Taiwan and China when they were at the height of their competition for diplomatic supporters. Fortunately, a truce in that competition between Beijing and Taipei brought that to an end, helped per-haps by strong criticism from Canberra and Wellington.

Depopulation challengeAnother issue in our neighbourhood, one which New Zealand played a part in causing, is the depopulation challenge faced by Pacific peoples living in some of the smaller island countries and territories, mostly in the former and present New Zealand and American territories of the Cook Islands, Niue and Tokelau and the Federated States of Micronesia, Palau, the Marshall Islands and American Samoa. Few of these countries or territories can

you go around in the villages in all the states of FSM, some of the villages are like ghost villages. Very few people re-main. The number of people staying in the FSM is decreas-ing… I think right now we seem to be falling into a space where we don’t expect any-thing to be done any more… . The most popular thing now is to go to the United States…But I can always go fishing.8

I suggest it is not our role now to

maintain their population levels because their peoples have access to their former administering powers.

Former leaders of Niue and of the Federated States of Microne-sia have recently expressed bitter disappointment at their countries’ plight in remarkably similar terms. Niue’s former Premier Young Viv-ian said: Our big problem is we don’t

have the people to increase productivity… . Most of our

highly trained people are not in Niue, they are in New Zea-land… . People are leaving our little country… . You cannot have a nation with very few people and we are not able to keep our people in our little country. We are trying to keep alive our language and traditions — but what for?7

And a former president of the Federated States of Micronesia, John Haglelgam, said: Our problem seems to be similar to the problem in Niue and

the Cook Islands. We’re heading in the same direction. When

Young Vivian

the problem in the South-east Pacific. Did we realise how a right of access to New Zealand would destroy societies on the islands concerned — just as the right of access to the United States is de-stroying life in parts of the former US Territories? Of course, this is what the islands leaders of the day wanted. Today some of them regret that they gave in to their own people on the point. Former Niue Premier Young Vivian told Ian Johnstone: At first, I thought we should sacrifice our right to live and

work in New Zealand and become completely independent, but the people in the villages didn’t like that. They were ap-prehensive about decolonisation and they wanted to secure the relationship with New Zealnd. So I had to modify my view and work to achieve the sort of self-government my peo-ple wanted.9

Today we should at least be encouraging and facilitating debate by those affected on ways of mitigating the problem; and be ready to support ways forward when they have been agreed.

Largest challengeTurning now from the region’s smallest countries and their par-ticular challenges to the region’s largest, Papua New Guinea, the challenge here is for New Zealand and other countries in the re-gion and it is posed by Papua New Guinea’s obvious climb to regional leadership. This is backed by its enormous wealth and resources. Perhaps the best indicator of this is that the first phase of the Exxon Mobil LNG project, Exxon Mobil’s biggest develop-ment project anywhere in the world at the time it was started, is moving towards completion, on schedule and only slightly above budget.

Papua New Guinea’s pursuit of leadership ambitions and its commitment of significant resources to that end also present sig-nificant opportunities to regional partners. Fifty million kina has been promised for Fiji’s election, and funds and scholarships are being given to Solomon Islands. Regionally, Papua New Guinea is starting to drive trade agendas in the Pacific. It is taking a leading role in the US tuna treaty negotiations and also with the Europe-an Union on an economic partnership agreement.

Papua New Guinea’s private sector is also increasing its re-gional involvement. PNG investment across the Pacific is grow-ing rapidly. Fifty-one PNG companies have registered to invest in Solomon Islands (although to date only 23 have actually taken up the registration). An investment promotion and protection agreement is being negotiated. Papua New Guinea is also invest-ing in hotels across the Pacific, including in Fiji and in Samoa. A return trade and investment mission to Fiji is planned, following on from a large group that went to Papua New Guinea recently with Bainimarama.

But it is probably fair to say that in our south-eastern end of the Pacific, we have been fixated on Fiji and its problems, and slow to recognise the massive changes taking place in the west. In many ways, the biggest questions in the region today are when Papua New Guinea will be fully recognised as the Pacific’s leader and the extent to which its leadership will reduce the roles of New Zealand and even Australia.

Painful historyWest of Papua New Guinea, of course, are East Timor and Indo-nesia. East Timor has a good deal in common with Pacific Islands countries, despite its much more painful history. New Zealand played a role in East Timor’s fraught move into independence.

John Haglelgam

come up with suggestions as to how the depopulation challenge might be met. But New Zealand is at least partly responsible for


That involvement is no longer necessary, but we need to remem-ber it and continue to take a supportive interest in the country’s development.

Beyond East Timor is the colossal archipelago of Indonesia. We are accustomed to putting Indonesia in the Asian pigeon-hole and, except where there are political issues in which Pacific Island-ers take an interest — such as the status of West Papua and the treatment of its people — we seldom mention Indonesia in a Pa-cific context. Yet the natural boundaries between the Pacific and Asia bear little relation to today’s political boundaries. The Wallace Line showing the southern boundary of Asian fauna goes through Indonesia, of course. And any traveller in the south-eastern prov-inces of Indonesia, or among the Batak people of North Sumatra, quickly becomes conscious of affinities between the population and Pacific Islanders who today live thousands of miles to the east.

But quite apart from that consideration, Indonesia’s proxim-ity, its enormous population, its growing wealth and its increas-ingly democratic stability will almost certainly make the country a massive influence in our Pacific Islands region in the future. Moreover, the opportunities for the Pacific will be immense, both economically and initially culturally, where there is so much in common. (I was in Indonesia at the time of the country’s first foreign ministerial visit to the Pacific Islands in 1983. On his re-turn to Jakarta, the minister told me that what struck him most was how much there was in common between the Indonesian archipelago and the Pacific Islands region: ‘They are like us but just a little smaller.’ Incidentally, I would not have predicted in 1983 that Indonesia would move ahead of some Pacific Islands countries in developing democratic institutions and practices.)

Looking some distance into the 21st century, two of the most dramatic changes that will impact on the Pacific Islands region are likely to be Papua New Guinea’s burgeoning influence from inside the region and Indonesia’s burgeoning influence from out-side, but only just outside, the region. Are we doing enough to prepare for these changes?

Decolonisation issueA longstanding issue in the region, on which New Zealand has tak-en a leading role in the past, is decolonisation in the Pacific. Rep-resenting New Zealand at the United Nations in the late 1990s, I was berated by the then US ambassador to the United Nations. She complained about the trouble New Zealand had always caused major Western powers like the United States, Britain and France through our support of decolonisation. Her particular gripe was that New Zealand, alone of all former or present colonial powers, had consistently co-operated with and supported the UN Decolo-nisation Committee, the C24, as it is called. The C24 causes par-ticular angst to continuing colonial or administering powers.

New Zealand’s support for the committee and co-operation with it had its genesis in Peter Fraser’s strong views on self-deter-mination and his involvement in the drafting of the Trusteeship chapter of the UN Charter. That flowed through to Samoa being the first Pacific Islands country to achieve independence, in 1962. And, of course, our co-operation with the C24 leads to much more relaxed discussions than we might otherwise have on devel-opments in our own remaining territory, Tokelau.

In the past New Zealand has been a strong supporter of self-determination in the Pacific. We would have agreed emphat-ically with Sir Peter Kenilorea, who led the Solomon Islands to independence, when he told Ian Johnstone in an interview:

There were comments and songs about ‘We’re not ready’ and ‘We don’t have enough money’. But I felt then that independence is not about money, but deciding about being yourself — which is your right… . every human being is born free and to be shackled by a system which is outside of yourself is not hu-man, in my view.10

Colonial holdoversBut today there is still a significant number of colonial territories in the Pacific, mostly French and American. I hope that support for self-determination has not slipped from our list of Pacific pri-orities — overshadowed perhaps by a focus on bilateral relations with the United States and France. In the past we have managed to balance relationships with these important powers with our support for self-determination. I would hope we will continue to do so.

In fact the issue of self-determination for French Polynesia seems set to become controversial again. In May this year the is-sue of French Polynesia was re-inscribed on the list of territories considered by the Special Committee on Decolonisation. France reportedly reacted to the decision with anger and will clearly con-

Sir Peter Kenilorea

Richard Marles

from France on decolonisation issues in the Pacific would be a most remarkable policy U-turn. Hopefully such a proposition might at least be debated before it becomes policy.

People’s mobility Another region-wide topic which is likely to become increasingly important in the near future is the subject of people’s mobility. This is often called labour mobility or ‘work schemes’ because so far that is largely what it has involved. But I prefer ‘people’s mobil-ity’ because in time, and very gradually, one could see possibilities beyond the mobility only of workers. It is only a short time since trial schemes were begun by New Zealand and then also Australia. Many critics were initially doubtful that they would be successful. Today there is talk in the Pacific of schemes by which workers might move and work among and within Pacific Islands countries, as well as New Zealand and Australia.

As vulnerable Pacific Islands countries face new challeng-es from climate change and the rise of ocean levels, and others

tinue to contest a role for the De-colonisation Committee.

Interestingly, in 2012 Austral-ia’s then parliamentary secretary for Pacific Island affairs, Rich-ard Marles, is reported to have described France as a long-term stable democratic partner in the Pacific and to have said that, on inscription on the C24 list, ‘We absolutely take our lead from France on this.’11

I have not seen any public statement of the New Zealand position. For us to take our lead


wrestle with the despair of depopulation, it is not impossible that increased mobility of people within all Pacific Forum member countries could be part of trial solutions. We should never forget the region’s pre-colonial history famously described in the stirring words of the late Epeli Hau’ofa: Nineteenth century imperialism erected boundaries that led

to the contraction of Oceania, transforming a once bound-less world into the Pacific islands states and territories that

Neil Walter

day in the Pacific region we have a higher proportion of political appointees — and obviously a lower proportion of career foreign service diplomats — heading our embassies and high commis-sions.

Vital needAnother former diplomat, Terence O’Brien, now a regular con-tributor on foreign relations issues, recently wrote a column whose headline neatly summarised his point: ‘More than ever, NZ needs a strong, professional diplomatic corps: Outsiders in charge of skeletal embassies may not be very fruitful’. O’Brien describes what has been an effective and well-regarded foreign ser-vice and points to the increasing challenges facing New Zealand in the years ahead.15

The resource and capacity issue affects our diplomacy global-ly, including other priority areas besides the Pacific. As successful New Zealand businessman in China David Mahon pointed out in The Listener in June, in the past few years costs have been cut in the ministries of foreign affairs and primary industries, leaving them under-resourced for China.16

It seems New Zealand’s overall international capacity will be affected, at least in the short term. But I am optimistic that it will not be long before the facts of international life convince us of the need to re-create a professional foreign service. Similarly, I am optimistic that our Pasifika community, not least their voting power, will help ensure we give priority to our Pacific neighbours and our Pacific neighbourhood.

NOTES1. Richard Rosecrance, The Interpreter, Lowy Institute weblog,

14 May 2013.2. Hugh White, ‘China: Our Failure of Imagination’, ibid., 3 Jul

2012.3. Hugh White, ‘America wants to know whose side Australia is

on: Could the US and China share equal billing in Asia?’, The Age, 5 Mar 2013.

4. Joseph S. Nye Jt, ‘Work with China, Don’t Contain It’, New York Times, 25 Jan 2013.

5. Zheng Wang, ‘Not Rising, But Rejuvenatiing: the “Chinese Dream”’, The Diplomat, 5 Feb 2013.

6. Elise Huffer and Ropate Qalo, ‘Have We Been Thinking Upside-Down? The Contemporary Emergence of Pacific Theoretical Thought’, The Contemporary Pacific, vol 16, no 1 (2004), pp.87–116.

7. Ian Johnstone and Michael Powles (eds), New Flags Flying: Pacific Leadership (Wellington, 2012), pp.116–17.

8. Ibid., pp.226–9.9. Ibid., p.113.10. Ibid., p.155.11. Nic Maclellan, ‘Self-determination on Pacific Agenda’, The

Interpreter, 4 Jun 2013.12. Epeli Hau’ ofa, ‘Our Sea of Islands’, in A New Oceania: Redis-

covering our Sea of Islands (Suva, 1993).13. The Interpreter, Lowy Institute, 23 May 2013.14. Neil Walter at book launch for New Flags Flying: Pacific Lead-

ership, Wellington, 27 Nov 2012.15. Terence O’Brien, ‘More than ever, NZ needs a strong profes-

sional diplomatic corps’, Dominion Post, 13 Apr 2013.16. David Mahon, ‘The China Challenge’, The Listener, 29 Jun

2013.

we know today. People were confined to their tiny spaces, isolated from each other. No longer could they travel freely to do what they had done for centuries.

…the ocean is theirs because it has always been their home. Social scien-tists may write of Oceania as a Spanish Lake, a Brit- Epeli Hau’ofa

ish Lake, an American Lake, and even a Japanese Lake. But we all know that only those who make the ocean their home and love it, can really claim it theirs.12

Meeting challengesThis article has focused on the need for policy solutions to new and emerging challenges in and affecting our region. I shall con-clude with some comment on New Zealand’s capacity to pursue effective diplomacy in the Pacific region. In a recent column head-ed ‘NZ Diplomacy: The budget buzz cut’, Alex Oliver reported on budget cuts to the New Zealand foreign service, the cutting of 140–150 jobs (10 per cent of staff) and the scrapping of the rotational employment system that is used by all foreign services to maintain diplomatic professionalism.13

At the launch of a Pacific-related book in Wellington late last year, Neil Walter, a former head of New Zealand’s foreign service and the last one to have had significant Pacific experience, dis-cussed the many issues in the Pacific region and the challenges facing New Zealand. He said the book also reminds us that New Zealand has special responsibilities to

the countries of the Pacific. Some of these responsibilities are based on constitutional links; some reflect a shared history; and some are simply the inescapable obligations that come with geographical proximity and the desire to be a good neighbour.

On the role of the Ministry of Foreign Affairs and Trade, Wal-ter comments that the ministry’s move away from a professional career service — ‘with the conse-quential loss of so many experienced staff, is making it increasingly diffi-cult to bring to bear the expertise, continuity and understanding that our interests in the Pacific require’. He continued: ‘Whereas in my last year in the Ministry five out of six of our senior management team had postings in the Pacific, I understand that the comparable ratio now is just two out of thirteen.’14

Walter could have added that to-


China’s profile in the Pacific Islands region has grown significantly over the last decade, spurring a resurgence of American interest in the region, and inspiring speculation about whether a new great power competition is playing out in the Pacific Islands. This anal-ysis argues that viewing China’s growing role in the Pacific Islands from the perspective of geo-strategic competition is not only in-appropriate but also counter-productive. An evidence-based evaluation of China’s trade and investment, aid, and diplomatic and military ties with the region reveals, at best, a weak case for the argument that China has some grand geo-strategic design. With little strong evidence that China is doing much more than supporting its commercial interests and pursuing South–South co-operation in the region, placing China’s activities into a geo-strategic paradigm risks obscuring the bigger and potentially more transformative impacts — both positive and negative — of its commercial and aid activities in the region. The region’s estab-lished powers need to pursue a more sophisticated understanding of the real drivers of China’s recent activism in the Pacific Islands in order to avoid counter-productive policy and assist Pacific Is-lands countries in maximising the potential economic and devel-opment gains to be had from China’s interest.

China’s growing trade and investment profile in the Pacific Islands is routinely held up as evidence of its geo-strategic ambitions in the region. But in the last ten years, China’s trade with the Pacif-ic Islands only increased sevenfold, to US$2.1 billion in 2011. While impressive, this increase was much smaller than growth in China’s trade with other parts of the world over the same period. China’s trade with Africa, for instance, increased by a factor of fifteen over that decade, to US$160 billion in 2011.1

By 2011 China had become the Pacific Islands’ second largest bilateral two-way trading partner, but its trade with the region remained dwarfed by Australia’s. With exports to and imports from the region totalling US$897 million and US$1.17 billion respectively in 2011, China’s trade with the Pacific Islands was only roughly a third of Australia’s exports to and imports from the

checkJenny Hayward-Jones discusses China’s pres-

it.

A Chinese warship visits Tonga

Pacific in that year, which totalled US$2.6 billion and US$4.14 billion respectively.2

Growing Chinese investment in the Pacific is equally often seen as evidence of rising geo-strategic influence, but this line of argument is weaker when viewed in the context of the activities of other foreign investors. While it is difficult to collect reliable data on foreign direct investment in the Pacific Islands (in part due to weaknesses in Pacific Islands government collecting agencies and a lack of transparency from some investors), it is clear that there is growing diversity in an investment scene once dominated by Australia and New Zealand.

There are a number of new external players in the resource, aviation and communication fields. The Irish telecommunica-tions company, Digicel, has invested in the mobile phone markets of most Pacific Islands countries and has driven a revolution in


Tonga as well as Papua New Guinea. The participation of Chinese businesses in this competitive economic environment is not evi-dence of a threat to the established geo-strategic order.

The rise of China’s investment in the region has been most visible in Papua New Guinea, where it has been driven in large part by a desire to secure access to that country’s vast natural resources. Chinese companies and investors in Pacific Islands, mostly from provincial centres in China, have expanded beyond their traditional small retail business focus to the domain of public infrastructure and mining. Chinese construction compa-nies are growing in number and influence in the region, with aparticularly strong presence in Papua New Guinea and also Fiji. Contrary to common perception, these companies of-ten work in co-operation with other foreign investors and multinational partners to complete projects in the Pacific Is-lands.4 They also compete for and win World Bank and Asian Development Bank tenders in the Pacific Islands, which de-mand levels of transparency not commonly associated with Chinese activities in the region. This aspect of Chinese com-mercial activities complicates the perception that Chinese ac-tors in the region are inherently different from Western actors.

Aid spendingChina’s aid spending in the Pacific Islands tends to be highly visible, given its concentration in public works projects, an area that traditional donors have shifted focus away from over the last decade. Analysts and Pacific Islands politicians and officials thus frequently invoke China’s aid as evidence that China has strate-gic ambitions to replace the West by filling a gap left by the es-tablished donors. This interpretation would, however, appear to over-estimate the actual quantum and intent of China’s develop-ment assistance spending in the region.

According to published and forthcoming research conducted by the Lowy Institute’s Philippa Brant, China disbursed approxi-mately US$850 million in bilateral aid to the eight Pacific Islands countries that recognise the People’s Republic of China between 2006 and 2011.5 Brant’s research was based on a comprehensive, detailed survey of Pacific Islands budgets and government reports, information from China’s Ministry of Commerce, and interviews with Pacific Islands and Chinese government officials. She argues that the complex and various methods of disbursement of China’s

Chinese Premier Wen Jiabao (right) shakes hands with Dr Fred Sevele, prime minister of Tonga, at the opening of the the First Ministerial Conference of the

Nadi, Fiji, on 5 April 2006

(US$millions)

Source: OECD DAC Creditor Reporting System, Dr Philippa Brant

communications in the region.3 Energy companies from France have investments in Fiji and Papua New Guinea as well as the French Pacific. In Papua New Guinea, the United States oil and gas giant Exxon Mobil has a $19 billion investment in an integrat-ed liquefied natural gas development in the Southern Highlands and Western Provinces that dwarfs any other private sector invest-ment in the region.

Competitive environmentPapua New Guinea hosts a range of non-Chinese Asian invest-ments, including a South Korean cassava ethanol project and a Japanese cement company. Malaysian companies dominate the logging sector in Papua New Guinea, and also have substantial interests in the palm oil industry, property, retail and media. The tuna processing industry has attracted investment from companies in the Philippines, South Korea, Malaysia, Thailand and China. Japanese company Yazaki is the largest private sector employer in Samoa. The Malaysian company MBf Holdings has investments across a range of industries in Fiji, Solomon Islands, Vanuatu and


aid in the Pacific Islands make it difficult to extract accurate an-nual expenditure figures per country and that a five-year regional total is more likely to be an accurate representation of Chinese expenditure on aid.

Using a five-year total to compare donors shows that even with its impressive rise in profile as an aid giver in the region, Chi-na is very far from challenging Australia’s overwhelmingly dom-inant position. As reflected in Graph 3, Australia is far and away the lead donor in the region, disbursing US$4.8 billion over five years, approximately four times that of the second largest donor, the United States.6

In fact nothing illustrates Australian predominance in the Pacific Islands better than its aid commitment to the region. In the 2012–13 financial year Australia committed A$1.19 billion to the Pacific Islands.7 In 2011, the last year for which compara-ble statistics for other OECD donors are available, Australia’s net disbursements totalled US$1.21 billion, which constituted 62 per cent of the bilateral aid received by the region.8 There is no other region in the world where a single donor dominates to the extent that Australia does in the Pacific.

Collaboration frameworkIt is often argued that OECD and Chinese aid are not compara-ble, given the Chinese government’s characterisation of its inter-national spending on development as ‘South–South co-operation’ rather than traditional official development assistance. ‘South–South co-operation’ is a framework for collaboration among de-veloping countries in various fields, and is meant to take the form of a partnership where knowledge and skills are shared to promote development. Such altruistic explanations should not always be accepted at face value. China’s aid often ends up supporting Chi-na’s own economic development through investment in projects that deliver contracts to Chinese companies and employment to Chinese nationals. Pacific Islanders, who tend to be excluded from opportunities to work on infrastructure projects funded by Chi-nese grant aid, may not see these projects as partnerships. More-over, as is the case for many other donors in the Pacific, Chinese aid is sometimes delivered with an expectation that the recipient country will be grateful enough to support a Chinese candidature in international organisations or the Chinese position on a vote in the United Nations.

Dr Graeme Smith makes a compelling argument that it is ‘Chinese infrastructure companies in the Pacific Islands, not aid agencies in Beijing’ that are responsible for driving aid.9 There is in fact very limited knowledge in the central government agen-cies of Beijing of the Pacific Islands region, and there is no single

centralised aid agency in Beijing co-ordinating China’s develop-ment assistance. Instead, commercial interests of the companies that deliver development assistance shape Chinese involvement in this field. Forty per cent of China’s global foreign aid expenditure is for construction projects in which China provides some or all of the financing, services, materials and labour.10 China’s aid in the Pacific Islands is, therefore, unsurprisingly and increasingly focused on Papua New Guinea, where the greatest number of op-portunities for Chinese construction, manufacturing and mining companies reside. It is these commercially-driven, albeit mostly state-owned, entities that are advocating for the attention of the Chinese Ministry of Commerce and the China Exim Bank in the Pacific Islands to ensure that they have the financial support to compete for tenders and expand their market share. Such drivers of aid are clearly commercial and bottom-up, contradicting the thesis that China’s development assistance is underpinned by a centrally co-ordinated geo-strategic design.

Diplomatic/military tiesChina maintains diplomatic missions in most of the countries that recognise it in the region. Chinese diplomats, like diplomats from many nations, leverage Chinese development assistance to shore up Pacific support for China’s positions on international matters. But in the competitive vote-buying environment that exists in the Pacific Islands, there is no evidence yet to suggest that Pacific Is-lands governments are being particularly swayed by China.

China has not yet sought to project hard power into the region. Two Chinese naval vessels visited some Pacific Islands countries in 2010, en route to Australia and New Zealand, which may signal longer-term military interests in the region. However, previous rumours about China setting up military bases in islands states have not come to fruition. Senior Chinese military officers have paid visits to regional counterparts, provided military uniforms, vehicles and other non-lethal equipment and refurbished barracks in Fiji, Papua New Guinea and Tonga. While China has been criticised for supporting the military-led regime in Fiji, the nature of the military support it has made available to Fiji has been no different from that offered to Papua New Guinea and Tonga.

Instead, once again, China’s diplomatic and military ties in the region lag well behind those of the existing powers. Australia re-mains the key security partner for many countries in the region and bears much of the security responsibility for the South Pacific, which it identifies as a key strategic interest. Australia’s influence is supported by co-operative working relationships with powers such as the United States, France and New Zealand, which all have ter-ritorial interests, defence responsibilities and military forces in the region.

The stance of Pacific Islands states in relation to these estab-lished powers often reflects the somewhat fractious attitudes that result from close and longstanding familiarity. Nevertheless, most of the islands states in the region (with the possible exception of Fiji) are not seeking to change the existing order, even if they could. However, they will continue to seek additional econom-ic growth opportunities from engagement with the rising Asian economies that neighbour the region.

Problematic paradigmIt could be argued that while viewing China’s growing presence in the Pacific Islands through a paradigm of geo-strategic com-petition may not be entirely accurate, it is prudent given the un-

A roadside sign in Tonga


certainty surrounding China’s future trajectory. But the problem with relying on a geo-strategic paradigm is that it obscures a better understanding of both the benefits and drawbacks of China’s cur-rent economic and commercially-led aid activities in the region, and perhaps even obstructs engagement with China on those ac-tivities. In that regard, in analysing the changing dynamics of the Pacific Islands region, it is important to be clear about the differ-ence between normal economic competition and competition for strategic influence derived from diplomatic, defence and aid links.

The real competition in the Pacific Islands region is economic, even if China, with its ‘South–South co-operation’ approach to development assistance and with the influence of Chinese com-mercial interests on its decisions about aid expenditure, often blurs the distinction between economic and development activi-ties. The last five to ten years have seen an increase in international interest in the resources of the Pacific Islands to meet global de-mand. Private sector competition for those resources has inten-sified. Papua New Guinea hosts a range of investment partners, who compete for the country’s abundant and valuable resources. Competition over Pacific Islands fisheries is fierce. There are also prospects, as yet unrealised, for deep-sea mining across the region, which is likely to provoke further competition.

The proximity of the Pacific Islands to resource-hungry East Asia will be very advantageous for the region over the long term. Already, rising demand for the resources of Melanesia has seen the region’s annual GDP growth rates surpass the global averages of the last decade. China’s own experience in lifting millions of people out of poverty inspires Pacific Islands countries in ways that the region’s established powers cannot. But it would be a mistake to think, as some Pacific Islands governments have done, that any and all for-eign interest should be welcomed simply because it contributes to the public purse.

Debt burdensChina’s loans to various Pacific Islands countries have created debt burdens. For example, according to IMF assessments Tonga is at high risk of debt distress due to loans from China’s EXIM Bank.11 Elsewhere, the commercial interests of foreign logging and min-ing companies have in some cases imposed lasting damage on the environments and, therefore, the livelihoods of communities in Melanesia. Moves by foreign firms, including Chinese-owned en-tities, into rural business sectors have caused some consternation in the islands. Vanuatu’s government has discussed imposing re-

strictions on foreign investment to stop Chinese businesses dom-inating its retail sector.12

Large and small companies from China or other nations that favour employment of their nationals over locals are failing to meet local communities’ expectations of investment. Resentment against Chinese-owned businesses was a factor behind riots in Nuku’alofa in Tonga and Honiara in Solomon Islands in 2006 and in Papua New Guinea in 2009. Resentment fuelled by frus-trations about exclusion from job opportunities could resurface and be expressed in violent outbursts in almost any of the Pacific Islands.

Co-operative futureAustralia, New Zealand and the United States should be seeking to engage and co-operate with China on its commercial and de-velopment activities. The region faces massive development chal-lenges, and with its sizeable resources and experience in lifting millions of people out of poverty, China can a make a significant contribution to addressing them. But as a relatively recent and still inexperienced donor and investor in the region, China would benefit from the experience of countries like Australia and New Zealand. The challenge, therefore, will be to build the appropriate framework through which this can occur.

This is easier said than done. China has been reluctant to co-operate with other donors in the past, and has repeatedly de-murred from joining the Cairns Compact on Strengthening De-velopment Co-operation, which was established in 2009 to facil-itate co-ordination and promote transparency among aid donors in the Pacific Islands. China may not have wanted its records on aid to the Pacific subjected to the rigours of transparency required by the compact. Nor did it necessarily want to abide by rules it had no hand in negotiating. It may have also believed that its mechanisms of delivering aid were simply too different to fit into a framework set up to suit the region’s established donors.

China does need to be more transparent about its aid activities in the Pacific. But ultimately it is in the interest of established do-nors to bring China into regional arrangements such as the Cairns Compact and this probably means showing more flexibility and understanding of China’s position as a relatively new aid giver. Otherwise, it will be difficult to move beyond the somewhat cir-cular discussion about the true intention of Chinese aid. This dis-cussion, often played out in the public arena, only fuels mistrust between China and other donors and prevents co-operation on aid projects that may actually help to break down suspicion. It is in this context in particular that viewing Chinese activities in the Pacific Islands from a starting point of geo-strategic competition is counter-productive.

Fruitful partnershipThe private sector has demonstrated in the Pacific Islands that co-operation between organisations with different nationalities, philosophies and modus operandi can work in partnership to achieve common objectives. Chinese companies already work in partnership with Australian, French and local companies to deliv-er projects in the Pacific.

The Cook Islands and New Zealand have proved that donor co-operation with China is also possible. In a world first, the Cook Islands instigated trilateral co-operation on a NZ$60 million pro-ject in 2012 to improve water quality in Rarotonga. Of course, this initiative came about for a number of reasons that are not

China


easily replicated by others. China had offered the Cook Islands a NZ$32 million concessional loan for the project years earlier. The Cook Islands proposed to involve New Zealand, with which it has a special relationship, as a means of improving project ef-fectiveness. New Zealand, which also has a very positive relation-ship with China (it is the first developed country to have signed a free trade agreement with China), contributed NZ$15 million towards the cost of the project and the Cook Islands government also contributed.13 Secretary of State Hillary Clinton praised the initiative as a model the United States could follow.14

The Australian government has made some positive strides in broadening and deepening its relationship with China. In April 2013, it agreed a Strategic Partnership with China that comprises an annual foreign and strategic dialogue and an annual strategic economic dialogue. Australia and China could use this dialogue to share views on development priorities in the Pacific Islands. Substantive discussions about the Pacific that focus on tackling se-rious development challenges in the region in collaboration with Pacific Islands states, rather than on persuading China to join existing Australian-led initiatives such as the Cairns Compact, would probably be more constructive for the islands countries. It should serve to build trust and could help to assuage any Chinese suspicions of containment.

New initiativeThe new Australia–China Development Cooperation Memoran-dum of Understanding, also signed in April 2013, is meant to en-able the two countries to co-operate on aid initiatives, including regional health issues and water resource management.15 Co-op-eration with China in the aid sector is difficult and this memoran-dum represents a very valuable start to building a new relationship in the region, based on a higher degree of trust between Australia and China.

Encouraging wider co-operation on disaster response pre-paredness exercises would be a constructive and non-politicised means of breaking down barriers between Pacific Islands coun-tries and their established and newer partners, and help Pacific Islanders to become more resilient. Natural disasters are crises that befall almost all Pacific Islands countries on a regular basis, so there are many opportunities to put co-ordinated planning into practice. These exercises can be organised bilaterally and regional-ly, and if initiated by Pacific Islands countries or regional bodies, China is more likely to be attracted to participating.

Useful mechanism Australia, New Zealand and France already have in FRANZ a useful mechanism that assists Pacific Islands countries in dis-aster response, but there is scope for more partners to assist. China has offered cash grants and in-kind donations to Pacific Islands governments following past natural disasters. As there are now a large number of Chinese engineering firms based in the Pacific, China’s role in disaster response could involve in-kind assistance provided by these firms to repair infrastructure. Building effective models of co-operation in this field would help all partners act as responsible stakeholders that are respon-sive to the priorities of Pacific Islands countries. They would also lessen the chances of misinterpreting the motivations of external actors in the region.

China is a very long way from approaching Australia’s domi-nance of the aid, trade and strategic domains in the Pacific Islands

region, or displacing the longstanding relationships between Pa-cific Islands states and the region’s established powers. If China’s aims in the region are to be described in terms of geo-strategic competition, then on the available evidence China is not a par-ticularly committed competitor. Australia, New Zealand and the United States should co-operate with China in areas that support Pacific Islands economic and development priorities rather than building any new security or diplomatic infrastructure designed to compete with China. This will help to maximise the benefits of China’s new role in the region, while helping to minimise the neg-ative consequences that do flow from some of China’s commercial and development activities in the Pacific Islands.

NOTES 1. David Smith, ‘China’a booming trade with Africa helps tone

its diplomatic muscle’, The Guardian, 22 Mar 2012.2. Paul Gruenwald and Daniel Wilson, ‘Pacific trade — who

should be targeted in Emerging Asia?’ ANZ research article, 16 Aug 2012.

3. Danielle Cave, ‘How the Pacific’s ICT revolution is trans-forming the region’, Lowt Institute Analysis, Nov 2012.

4. Losirene Chand, ‘China Railway, TOTAL partners’, Fiji Sun, 27 Feb 2013.

5. Philippa Brant, ‘No strings attached? Chinese foreign aid and its implications for the international aid regime’ (PhD the-sis, University of Melbourne, 2012); interviews with Philippa Brant conducted in April 2013. The figure of $US850 million does not include scholarships ot technical assistance which are delivered by separate line government agencies in China.

6. OECD.StatExtracts, Creditor Reporting System 2013 (stats.oecd.org/Index.aspx?datasetcode=CRS1).

7. Department of Foreign Affairs and Trade, Portfolio Addition-al Estimates Statements 2012–2013: Foreign Affairs and Trade Portfolio (Canberra, 2013).

8. OECD Development Assistance Committee, ‘Development aid at a glance: statistics by region — Oceania. 2013’ (www.oecd.org/dac/stats/regioncharts.htm).

9. Graeme Smith, ‘Are Chinese soft loans always a bad thing?’ in The Interpreter, 29 Mar 2012 (www.lowtinterpreter.org/post/2012/03/29/Are-Chinese-soft-loans-always-a-bad-thing.aspx).

10. China’s Information Office of the State Council, China’s foreign aid 2011 (english.gov.cn/official/2011-04/21/con-tent_1849913.htm).

11. International Monetary Fund, Tonga: Staff Report for the 2012 Article IV Consultation — Debt Sustainability Analysis, 1 May 2012.

12. ‘Vanuatu to restrict foreign owners in the business sector’, Ra-dio New Zealand, 16 Apr 2013 (www.rnzi.com/pages/news.php?op=read/id=75342).

13. New Zealand Aid Programme, ‘New Zealand and China collaborate on world first in development,’ Sep 2012 (www.aid.govt.nz/media-and-publications/development-stories/sep-tember-2012/new-zealand-and-china-collaborate-world-fi).

14. Kate Chapman, ‘US to follow NZ lead in China aid’, 1 Sep 2012 (www.stuff.co.nz/national/politics/7593279/US-to-fol-low-NZ-lead-in-China-aid).

15. Australian Minister for Foreign Affairs, ‘Australia and China enter new development cooperation partnership’, Canberra 10 Apr 2013.


Retired Australian Army Major General Jim Molan wrote recent-ly that the Australian Defence Force is ‘being pushed into a state where its capabilities are at, or will soon be at, a state from which they will not be able to be revived in any reasonable period of time — a situation of terminal decline’. That might be a little over-stated, but it is true that there are some force elements currently under-performing, and any credible estimate of the cost of future force structure plans is greater than the projected funding. For the amount the government spends, I do not think we get much of a return in terms of military options available.

It is not too hard to find examples that support Molan’s con-tention. The Royal Australian Navy has managed to keep a frigate on station in the Gulf for over a decade, but has conspicuously failed to maintain an acceptable level of capability in its amphib-ious and submarine fleets. The Army and Royal Australian Air Force have both managed to do the jobs they have been called upon to do, although the former has had to dip deeply into its Re-serves for specialised personnel like engineers and medical. Look-ing forward, recapitalisation of the air combat fleet (A$15 billion) and protected mobility for land forces (over A$10 billion) at the same time as a new submarine fleet (potentially A$30–40 billion) and replacement frigates (over A$10 billion) is going to be a very big ask in the fiscal environment we are likely to see.

It is not too hard to see how we got to this point. Defence spending has rarely increased at a rate that will allow the quantity and quality of capability to be maintained. As my colleague Mark Thomson’s budget analysis has shown, maintaining military ca-pabilities requires annual funding increases of about 2.5 per cent above inflation. The 2009 Defence white paper promised to do that (for a while) but never delivered on it.

Inevitable declineA decline in capability, capacity, or both is inevitable if the fund-ing is not there. And the rising unit cost of military platforms does not help. It has meant that the numbers able to be fielded have steadily fallen over the years. For example, the Army had 143 Centurion tanks, which were replaced by 103 Leopards, which in turn gave way to 59 Abrams. The RAAF and RAN operated over 400 combat aircraft between them in 1960. Today the RAN’s fast jets are a distant memory and the RAAF is down to 71 ‘classic’

Issues in Australian defenceAndrew Davies discusses the future of the Australian Defence Force.

Andrew Davies is program director at the Australian Strategic Policy Institute in Canberra. This article is an amalgam of a series of blog posts published on the ASPI Strategist (www.aspistrategist.org.au).

After a decade of continuous operations, Australia’s armed forces are fraying around the edges. A major recapitalisation began after the 1999 East Timor operation, but is only partly complete. There is a real risk that the mismatch between aspiration and resources that became obvious after the 2009 Defence white paper funding model collapsed just two weeks after its release will come home to roost in the next few years. The ADF is now looking at a situation a bit like the NZDF has faced before them — more top-end capabilities to support than money to do it with.

Hornets and 24 Super Hornets.The overarching challenge in defence planning is always to

align strategy and resources and shape the force structure accord-ingly. One possible policy prescription is to maintain Australia’s stated military strategy options of long-range high-end platforms and increase spending to first arrest the decline and then expand the forces. (Molan suggests around 2 per cent of GDP would do the job — a long way from where we are today.) That is certainly a workable solution — if the government and its successors in perpetuity are willing to provide the required funds. But it is not the only way, which is just as well, as neither side of Australian politics is showing much inclination to shovel more money to-wards defence.

History and the current fiscal situation suggest strongly that pursuing that top-down strategy is unlikely to be an appealing option for future Australian governments, especially if it comes with a big price tag. So we need to find a different approach, by accepting the resource constraints as more or less fixed (in the absence of an external shock that changes the calculus) and de-veloping a strategy that suits the force structure that the funding envelope can afford.

Unappealing approachThat approach is not likely to appeal to the Department of De-fence or to those of us who make a living pontificating on stra-tegic matters because it is somehow less intellectually ‘pure’. But I believe we need to deal with the world we have rather than the world we would like to have. If Molan is right that the ADF is in terminal decline, then drastic treatment might be called for.

We have a very good example available to us of setting strat-egy to deal with a resource-limited environment. We need only to look across the Tasman. Our New Zealand neighbours have


taken a deep breath, weighed up their resources and strategic cir-cumstances and have taken some tough decisions, at the expense of some military sacred cows. The most visible such decision was deciding that it could do without fast jets. Imagine that — armed forces with no ‘top guns’.

Instead, New Zealand has decided that it will keep the ability to police its maritime jurisdiction (with only limited warfighting capabilities at sea), do long range airlift, participate in peacekeep-ing and stabilisation operations in the South Pacific (and lead small ones), make small contributions to US-led and UN-man-dated operations further afield — and not much else. The result is a force structure that is modest but well-suited to the equally modest strategy it supports.

One objection to this argument as a role model is that New Zealand can always rely on Australia for its defence. My response to that is twofold. First, why should not they plan on that basis? It has the merit of being true because of geography and the realities of the scale of resources the two counties can bring to bear. And, second, we have a similar luxury of a bigger friend with more capability in the form of the United States. We might not like to look so obviously calculating, but the New Zealanders have mostly learned to live with it.

White paperThe Defence white paper released at the start of May 2013 did not help. It maintains the fiction that all of the ‘core capabilities’ can be retained with a funding boost that is modest in the next few years and some ‘smoke and mirrors’ shifting around of mon-ey. The 2009 white paper had a more generous funding envelope and started at a higher baseline.

Australia has done the experiment of trying to maintain top shelf capabilities on modest budgets before. The 1990s were tough times for the ADF. Funding was constrained as successive governments worked their way back from the ‘recession we had to have’, causing the ADF’s readiness and capability levels to fall away. Submarine capabilities declined alarmingly and the Anzac frigates were ‘fitted for but not with’ the systems needed to make them combat ready. Australia’s air combat platforms were not able to participate in even moderately challenging environments due to inadequate electronic warfare fits and long-delayed weapons upgrades. At the same time, the Army spent a demoralising dec-ade preparing to hunt for small groups of insurgents who had de-cided — for reasons nobody could ever adequately explain — to penetrate the vast expanse of Australia’s north to do who knows what.

Yet — and this is very important for what follows — the ADF still managed to pull off the INTERFET operation in late 1999. It is conventional wisdom to say that this was a ‘by the skin of our teeth’ success, which is usually followed up by an argument for boosting defence funding so that it will not happen again. I would argue that there is actually another lesson that can be drawn from that episode: the decline in front-line combat capability across the ADF did not preclude success in that sort of operation.

Foreseeable contingenciesIt is true that the ADF would have been in trouble if had it faced an adversary with high-level capabilities around that time, and things could have gotten difficult if the Indonesian forces had not co-operated in East Timor (that is why Indonesian agreement was an effective precondition for the deployment). But the rel-

atively benign stabilisation operations that did arise in East Ti-mor, Bougainville and Solomon Islands were far and away the most likely sorts of contingencies foreseeable at the time. In short, the armed services and those who see a strong military as a vital arm of national power lamented the decline in ADF capabilities in the 1990s, but it did not endanger Australia’s security in any meaningful way. In fact, the embarrassing failure to provide am-phibious vessels during the Queensland floods in 2011 showed that our preoccupation with platforms suitable for high-intensity operations can lead to capability downfalls in those areas that are more likely to be required.

That observation brings me to what I think is the crux of the defence decision-making process -— the level of risk we are willing to live with and how we assess it. Assuming that we are at least passably smart in the way we spend the defence budget, more funding buys more capability, which in turn retires more risk. That is why we tend to ramp spending up in times of height-ened risk perception, as the Menzies government did during the time of insurgencies in Vietnam, Malaysia and Indonesia, and as the Howard government did after 9/11. But it is also possible to over-estimate risk and spend more than is prudent to retire the risk of events that are either unlikely to the point of irrelevance or which would have consequences that do not outweigh the cost of hedging. The convulsive decade-long reaction to 9/11 is arguably a case in point.

As mentioned above, New Zealand is a good example of a country taking a hard look at its strategic situation and realising that it had capabilities on the books that were never likely to be used in anything but a war of choice, which would take place far from its sovereign territory (and in which New Zealand’s contri-bution would be far less then decisive). Arguably, New Zealand is less well defended today than it was in the past, but it is defended well enough against anything that is actually likely to happen.

Looking at Australia’s strategic circumstances, we are less well served by geography than our mates across the Tasman, so our risk assessment is different — but perhaps not as different as might be supposed. Power projection across oceans remains a formida-bly difficult task, and the list of countries that could bring much combat power to bear against Australia’s territories is (provided we exclude the United States) vanishingly small.

The futureA predictable rejoinder to that analysis is ‘but we can’t predict the future’, so we have to hedge against things we cannot foresee. To a point that is true, but any planning process has to have a stab at prediction within a reasonable set of parameters, and defence planning is no exception. So I will provide my short list of what I think are reasonable planning assumptions for the next twenty years. I do not think any of them are particularly contentious:

even with only modest investment, the ADF will continue to overmatch the power projection capability of those countries within range of Australian territoriesthe United States will remain the primary military power in all parts of the Asia–Pacific region from which a conventional threat to Australian territories could be launched

Australia’s budget situation will not return to as favourable a state as was the case in the period 2000–08.

Let us start with the third of those. Post-global financial crisis, Australian government revenues have fallen sharply and serious economists inside and outside government are talking about a


structural deficit that will take ‘a substantial level of financial dis-cipline’ on the behalf of future governments to deal with. So, in the absence of a substantial external shock, Defence should not hold its breath waiting for more money. Like it or not, we need to find ways to provide defence capability and capacity with spend-ing levels not too different from today’s. I think that is doable, but acknowledge in advance that the levels of risk we will have to accept will rise — the good news being that they are currently very low and are not likely to increase to an uncomfortable level.

My prescription for the ADF force structure is based on the following objectives:

having the ability to lead or contribute substantial military ca-pability to regional stabilisation, peacekeeping and non-com-batant evacuation operationshaving adequate surveillance and constabulary capabilities to protect our maritime interestshaving the capability to defeat the force projection capabilities of countries in our immediate regionhaving the capability to provide high value contributions to US-led operations in the wider Asia–Pacific theatre and be-yondmaintaining a critical mass of core warfighting capabilities which will allow for expansion in the future should the stra-tegic situation deteriorate significantly.

Core interestsThe first three points are options that support Australia’s core interests. First, we have a greater stake in regional stability than powers further afield do. That is why we have found ourselves as leaders of operations in Bougainville, East Timor (twice) and the Solomon Islands. That is not going to change, and we will have to be ready to do it again when circumstances demand. We will be able to handle similar operations with the land forces and airlift capability we have today plus the two large amphibious ships that will arrive in a few years. (Until then we might want to cross our fingers and hope our trans-Tasman mates can provide sealift if we need it.)

Second, while we actually do a pretty good job of policing our maritime interests, in part by making good use of intelligence sharing arrangements, the politics of border security will proba-bly cause Australian governments to try to do more. Throwing extra money at top-end platforms like the naval version of Global Hawk or the P-8 maritime patrol aircraft is likely to be at the top of Defence’s wish list. But there are almost certainly more cost-ef-fective ways to improve performance.

Third, while there is no indication that any country has de-signs on Australia’s territory (and there is no credible reason for it to do so), maintaining capabilities that overmatch nearby militar-ies is prudent because intentions can change relatively quickly. We can put a large tick in that box with the forces we already have. Indonesia has neither the intent nor ability to seriously threaten Australia’s current air or maritime forces and has little prospect of doing so in the next couple of decades. In fact, given the large size of Indonesia’s army (and thus the unappealing idea of a land conflict there for Australia’s small army), there is a natural détente between the countries even if there were to be a massive falling out. No other small to medium power has the ability to first de-feat Indonesia then use their territory to stage against Australia.

That leaves us with hostile major powers — and brings us to the fourth objective. There are not any of those at the moment.

But, again, intentions can change, and an insurance policy is worthwhile. That is where getting smart in our alliance contribu-tions makes good sense. Providing similar capabilities to the Unit-ed States but on a much smaller scale will not make any difference in the outcome of a major power conflict, but if we are clever and turn up with niche contributions of often over-subscribed force elements, we could — and I hesitate to say it — punch above our weight. High value assets we could bring to the fight include air-to-air refuellers (almost always over-subscribed in intense air operations), electronic warfare aircraft (ditto), special forces and (perhaps) conventional submarines — although we need to have a frank discussion with the US Navy about the concept of oper-ations for those.

Expansion capacityFinally, it makes sense to keep up the levels of expertise and a baseline level of sophisticated hardware to allow us to expand our defence forces if we need to. But we do not need gold-plated tech-nology to do that.

The force structure decisions that follow from this line of rea-soning include:

There is no need to develop substantial elements of the Army as a ‘Marine’ force, with the exception of a vanguard force to seize and hold points of entry for larger forces — but only against light opposition. The Army does not need weapon systems designed for high intensity warfare. In fact, it is head-ed this way, with only 2 Battalion Royal Australian Regiment being trained as an amphibious specialist battalion.There is no need for the F-35 Joint Strike Fighter any time this decade — consolidate on the Super Hornet (especially the Growler electronic attack variant) and have another look some time after 2020. This is almost happening with the 2013 white paper announcement of twelve more Super Hor-nets and the JSF to reach initial operational capability around 2020.The future frigate need not be a large, top-end warfighting vessel. A larger number of less capable vessels would provide better value.Maritime surveillance and response needs a cost-effective force mix of manned and unmanned and military and civil-ian platforms.Twelve future submarines might not be necessary, depending on what we (and the US Navy) want them to do.

There are some sacred cows in this list, and the defence estab-lishment will not like it one bit. Nor will either side of politics be prepared to say publicly that they will settle for less capability than is in the increasingly fanciful Defence Capability Plan. But the alternative is to cut elsewhere in government spending to put more into defence. Do not hold your breath.

A US Navy battle group


During the Cold War US attachment to Israel, people in Wash-ington asserted, stemmed from ideological reasons: Israel was praised as the only democratic state in the Middle East. At the same time Americans could not forget Jewish suffering during the Second World War. Nonetheless, the major reason for US support of Israel was pragmatic geo-politics; in the process of Cold War geo-political realignment, the Soviet Union ultimately chose the Arab regimes in Egypt and Syria as its allies/proxies after the 1956 Suez War. Consequently, the United States, following the simple logic that the enemy of my enemy is my friend, embraced Israel, providing it with generous economic and military help. Wash-ington also helped to open doors for Russian Jews who started to emigrate to Israel in droves.

Following the end of the Cold War, the situation changed. There was no Soviet Union. Apart from Iran there was no hostile power present in the Middle East, at least of those that could be compared in strength with the Soviet Union. In these new cir-cumstances, Washington hastily reconsidered its vision of Israel. Israel’s conflict with the Arab world helped foster anti-American feelings in the region. It also created instability, encouraging the spread of Islamic terrorism and regimes that could well endanger general stability in the Middle East, which remains one of the major sources of American oil.

More importantly, the conflict in the Middle East, or even potential big power conflict in the area, has created or could cre-ate an unbearable strain on the US economy even without much rise in oil prices. Indeed, the US economy has been in the process of decline for a few generations now. This can easily be seen if one looks beyond the ‘service’ bubble to actual goods production, such as steel and cars. In this latter category US decline in the last few generations has been not just relative to overall global production but also in absolute terms. The lack of efficiency and the mercantile nature of the military machine creates additional problems.

At present, the US military is not the holy shrine of patriot-ism despite assertions of the Pentagon/White House propaganda machines to the contrary. It is, however, a ‘cash cow’ and/or the last option for employment. Consequently, despite the huge US

Israel and the United States: a new trendDmity Shlapentokh discusses the implications of a weakening in American backing of the Jewish state.

Dr Dmitry V. Shlapentokh is an associate professor of history at Indiana University, South Bend, Indiana. E-mail: [email protected]

During the Cold War, Israel was the staunchest ally of the United States in the Middle East. It goes without saying that the US relationship with Israel continues to be strong. Still, new reali-ties clearly affect this relationship. In comparison to the Cold War era, Israel has become much less important for the United States and, in some cases, it has actually become a liability. Israel’s support in the United States, including among the Jewish community, has dwindled at least in comparison to the early years of Israel history. Jerusalem has recognised the new mood in Wash-ington and the emerging complicated relationship between Middle Eastern countries and great powers, especially the United States.

military budget, the actual translation of dollars into military as-sets has become increasingly modest. In this regard, the cost of one soldier in Afghanistan/Iraq for just one year is illustrative: it is one million dollars. This is not because soldiers are extremely well paid and treated — the state has, in fact, done its best to minimise payment for their medical bills, education and other benefits — but because the delivery and upkeep of each soldier is in the hands of numerous middlemen/contractors, who try to milk Uncle Sam as much as

new zealandinternational review - nziia · 2020. 1. 16. · new zealand international review 1...

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