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Australian appeasement: the slow boat to China

Slow boat to China? Foreign Minister Bob Carr encountered pressure over Australia’s relationship with the US on his recent trip to Beijing. - Yu Chuzhong.

Australian foreign minister Bob Carr was interrogated about Australia’s alliance with the US in three separate meetings with Beijing’s leaders last week.

“Make no mistake, the re-emergence of China, and the rise of India and others is desirable,” Carr said.

But what caught the media’s attention was a statement by Song Xiaojun, a former People’s Liberation Army senior officer.

“Australia has to find a godfather sooner or later,” Mr Song was quoted in an interview with the Sydney Morning Herald. “Australia always has to depend on somebody else, whether it is to be the "son” of the US or ‘son’ of China.“

True, Song is merely an analyst always willing to provide the media with a controversial quotation. He has no power or influence within the Chinese Community Party leadership. Nevertheless, his statements raise important issues for Australia’s future relationships with both the US and China.

More than a decade ago, at a round table discussion with some Department of Foreign Affairs and Trade (DFAT) officials, I argued that Australia would eventually need to make some hard choices about its relations with Washington and Beijing. Canberra, I posited, could not continue to maintain a close defence alliance with Washington, while continuing to enjoy the enormous economic benefits that flowed from the Sino-Australian economic partnership. Sooner or later, hot economics would spill over into cold politics. Beijing would start pressing Canberra to choose sides.

The DFAT officials were horrified by the suggestion. The US was our friend and ally. China was our economic partner. There was no inherent contradiction in this position.

But in the second decade of the 21st century, we have an emergent, more confident and more demanding Beijing leadership. For now, Australia counts Washington, Tokyo and Seoul as its most important regional allies. But China’s rise means Australia’s policy elites are beginning to view the strategic landscape differently. The emerging ‘Beijing consensus’ – comprising soft power diplomacy and market power, combined with the concept of China’s "peaceful rise” – has influenced Australia’s political and business decision makers that a ‘tilt’ towards Beijing is in the national interest.

But this not the first time that Canberra’s policy elites misjudged Australia’s national interests so badly.

Appeasement: Phase One (1967–1999?)

In the 1990s, Professor Allan Patience of Victoria University mounted a persuasive thesis: that for 30 years, Australian governments, from Harold Holt to Paul Keating, had devoted a considerable proportion of their foreign policy resources to appeasing Suharto’s Indonesia.

Appeasing Indonesia was the dual product of the US-Australian ANZUS alliance, and the escalating presence of US and Australian forces in Vietnam. Suharto’s New Order regime was viewed in both Washington and Canberra as a critical bulwark against the tide of communism that the domino theory predicted would sweep through Southeast Asia.

Deakin University’s Scott Burchill has written extensively on the Jakarta lobby from the perpective of a former insider. As Burchill has long held, in exchange for Suharto’s support, successive Australian governments delivered significant economic aid, light arms and military training, which lasted far beyond the Cold War requisites of the Vietnam war.

For his part, Suharto returned Australian largesse by maintaining a repressive regime in Irian Jaya (West Papua), invading East Timor in 1975 – infamously killing five Australian journalists at Balibo in the process – and employing heavy-handed suppression of the independence movement in Aceh.

Canberra’s unrestricted support for Suharto led to the development of an insidious coterie of unlikely collaborationists: Foreign Affairs and Defence officials; self-interested Asian studies academics; and sympathetic journalists, known unofficially as the ‘Jakata lobby’.

Even former foreign minister Gareth Evans, himself an unwilling hostage to the Jakarta lobby, was to express his dissatisfaction publicly on more than one occasion with an Australian foreign policy that left Suharto with a free hand to engage in systematic repression, while Canberra merely looked askance and handed him everything he wanted.

The East Timor massacre: the bloody outcome of decades of appeasement.

The well-meaning – but naive – Paul Keating even brokered the Australian-Indonesian Security Agreement in 1995. It was torn up contemptuously by Suharto’s successor, Habibe, following Australia’s intervention in East TImor as the leader of the UN security force in 1999.

For the historical record, make no mistake: neither John Howard nor Alexander Downer had any intention of disrupting the now-institutionalised status quo of appeasement towards Indonesia when they came to office in 1996. More accurately, as the US and the UN backed East Timor’s independence ballot, Howard and Downer lobbied furiously against the ballot. Precisely what you might expect of the Jakarta lobby.

Moreover, it was only in the context of an economically-ruined, IMF-controlled and dramatically-weakened Indonesia in the wake of the 1997 Asian Financial Crisis that Howard and Downer made their reluctant turn towards support for East Timorese autonomy and, ultimately, independence.

Even so, the Howard government had so calamitously run down the Australian Defence Force (ADF), via a combination of budget cuts and accrual cost accounting, that the ADF found that resources to run even the small East Timorese operation stretched the Australian military to its limits, requiring logistics support from New Zealand.

So hastily did Howard and Downer perform their volte-face, that the ADF could not have prevented the Indonesian military from re-occupying East Timor without US assistance, as some ADF officers later revealed publicly.

The road to Beijing

At present, China is clearly Australia’s most important trading partner. Almost 25% of Australia’s exports go to the PRC, with two-way trade totalling over $AUD120 billion in 2011 alone.

Australia is also the largest destination for Chinese investment, with over $AUD38 billion in inward foreign direct investment (FDI) over the last six years. The PRC’s net stock of FDI in Australia is, of course, lower than that of the US, EU and Japan, but the relative share of Australian FDI by Chinese enterprises has grown rapidly and will rival or eclipse other investors over the next two decades.

No one disputes China’s contribution to Australia’s fiscal stability, economic dynamism, and financial prosperity. Equally, Australian outward FDI and portfolio investment in the PRC is also expected to increase significantly as China gradually opens its state-owned enterprises to further foreign participation.

Peace in our time?

In 2010, defence analyst Hugh White published a provocative article as both a Quarterly Essay and in the Australian Journal of International Affairs.

White argued that ‘A Concert of Asia could be built between Asia’s great powers – America, China, Japan and India.’

Australia: torn between two lovers?

If it sounds like White is endorsing some form of appeasement – well, he admits it himself:

“Many people will still see this as conceding too much to China. It will seem like appeasement…Perhaps Chamberlain’s mistake was not to accommodate Hitler over Czechoslovakia, but failing to make it absolutely clear that there would be no accommodation over Poland.”

Thus, for White, letting Czechoslovakia get wiped off the map and absorbed into the Third Reich was not a crime; the mistake was to let Hitler think he could annex Poland and get away with it.

(It might be worth footnoting here that the Czech armoured divisions were so competent that they made up 25% of the German Panzer divisions that defeated Poland and France so decisively in 1939–40. But that would be pedantic).

For White, “the best outcome for Australia would be a Concert of Asia,” as it would maintain Sino-US peace and preserve the US-Australia alliance.

In a public riposte, Michael Danby, Carl Ungerer and Peter Khalil excoriated White for his “Canberra Munich moment”. The three analysts note, correctly, that the contemporary PRC, although all-too-frequently brutally oppressive, is not directly comparable wih the regimes of terror operated by Hitler and Stalin.

Rather than caving in to Beijing, Danby, Ungerer and Khalil argue forcefully that Australia’s security cannot be guaranteed by a concert of powers where a fundamentally anti-democratic Chinese state is accepted as an equal partner in the governance of Asia-Pacific security.

Let’s be frank here: China is a state that drastically understates its defence spending; it has frequently resorted to violence to crush dissent in Tibet and in Xinjiang province to quash the Uigars.

In the South China Sea, which China claims in its entirety as its ‘historic waters’, Beijing killed Vietnamese fishermen in January 2005 in the Gulf of Tonkin. China refuses to allow the International Tribunal on the Law of the Sea (ITLOS) to arbitrate rival claims between Southeast Asian states and the PRC.

This is the China that White and the ‘Beijing Lobby’ want to appease. Whereas Jakarta was the target of appeasers until the 1990s, Beijing is now the centripetal force that drives elites to placate China at every turn.

Follow the money

Few groups are left untainted by Beijing’s influence. Australia’s universities are increasingly addicted to the cashflows generated by Chinese students, a situation that will culminate in dependency. Overseas students heavily subsidise domestic students’ places to the tune of $1,200 per place.

Australia’s political and business elites are also heavily dependent upon the continued flow of Chinese capital to Australia’s resources, food, tourism and real estate sectors. Even a momentary pause in China’s growth plunged the Commonwealth budget into crisis, evidenced by the deep fiscal deficits that emerged from 2009.

On a clear day, you can almost see Alexander Downer.

Even John Howard and Alexander Downer were flummoxed by the question of who to support in the event of conflict between China and the US over Taiwan. But the question neatly illustrated the strategic quandary Canberra found itself in with its dual loyalties to the US alliance and Chinese commerce.

The view from the Ivory Tower

In the wide-ranging 2008 TRIP survey, which asks International Relations (IR) scholars in 10 countries for their views on a range of issues, 121 IR Australian academics [are there really that many?] responded (yours truly included). Asked the question, “Which entity would you like to see surpass the United States?”, 11 Australians responded “China.” 71 responded “The European Union.” And fans of Vladimir Putin will be pleased to note that he has at least 8 admirers in the Antipodes, as these 8 replied “Russia.”

Granted, only 11 wrote “China”, but more than 50% of Australian IR academics want to see a country other than the US become the most powerful country in the world (Question 79, page 86).

Perhaps we shouldn’t read too much into this survey. But anti-US sentiment, particularly as Bush was president and US forces were still in Baghdad, was clearly on display in Australia’s IR ‘academy’ in 2008 (the 2012 edition is on its way).

The cultural revolution

The emergence of a ‘Beijing lobby’ is a not a ‘reds-under-the-beds’ conspiracy. It is a quiet, cultural revolution that will infiltrate policy communities throughout Australia. But slowly, surely, they will determine whether Australia makes a strategic decision to pivot towards Beijing and, by logical extension, how far and how fast Canberra may loosen its ties with Washington.

It’s already too late to stop the Beijing lobby; Appeasement Phase II has already commenced.

Remy Davison writes the Polynomix column for The Conversation.

EDITORS NOTE: We have been contacted by some readers concerned their comments do not appear on this story. This story is another version of Remy’s column, Polynomix, created to overcome a technical publishing issue. No comments on either story have been deleted. - Helen Westerman, Business editor, The Conversation.

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