The New Pacific Triangle

By Geoffrey Garrett

After being invisible during the election campaign, the prospect of a Rudd-Gillard rematch has put Australian foreign policy back in the news.

All the more so because the new Prime Minister's principal initiative thus far has been the domestically driven small target of an East Timor solution to asylum-seekers, a policy Rudd warned against on the eve of his ouster by his new boss.

There may or may not be a personalities crisis brewing over Australian diplomacy. After all, Barack Obama and Hillary Clinton have been an effective foreign policy team in the US even though they were bitter and sometimes nasty rivals on the presidential campaign trail.

But according to Hugh White, Australian foreign policy itself is in crisis. In his recent Quarterly Essay, White says that after 60 years of nailing itself firmly to the American mast, "[Australia] should try to persuade America that it would be in everyone's best interests for it to relinquish primacy in Asia" to accommodate China's rise, and then to agree to a 19th-century Concert of Europe-style sharing of power with China.

The Australian's Greg Sheridan has called White's essay "the single stupidest strategic document ever prepared in Australian history". Michael Danby, Carl Ungerer and Peter Khalil have labelled White a Munich-style appeaser in these pages.

Instead of giving up on the alliance in the name of accommodating China, Sheridan says Australia should double down on the alliance by offering Darwin for the US's largest military base in Asia.

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Danby, Ungerer and Khalil propose that Australia commits to a campaign to transform China from a country that "summarily jails Catholic bishops and HIV activists" into a liberal democracy.

All this comes on top of last year's defence policy white paper arguing for a large-scale Australian military build-up over the next 20 years. The glib but not unfair rendering of the underlying reasoning is Australia can no longer rely on the US for its security and it cannot trust China to remain peaceful, so the time for more self defence is now.

These analyses of the US and China and what they mean for Australia cover the waterfront of policy options: side even more with the US, sidle up to China, or go it more alone.

However, they share one key assumption, namely that Australia's greatest international achievement of the past several decades -- getting closer to both China and the US at the same time -- is no longer possible.

The world is no doubt changing. But the sky is not falling.

Australia does not have to and should not want to choose between its alliance with the US and its economic ties with China. The most important foreign policy move the government can make is to ensure that it stays that way.

To paraphrase Mark Twain, news of America's demise is exaggerated. The resilience and innovation of the American economy should never be underestimated. The markets certainly don't underestimate it, if the willingness of foreigners to lend the US as much money as it wants at low interest rates is any indication.

The US economy has taken a series of body blows in the past decade. But it isn't on the precipice of a Greece-style economic tragedy. Outside Australia, it isn't obvious that any big Western economy is better placed to get through today's prolonged downturn than is the US.

Nonetheless, unless something goes horribly wrong with China's three decades and counting economic miracle, the irresistible twin forces of demography and development will result in China passing the US as the world's biggest economy in the mid-2020s.

But if and when that happens, China will still be a poor country with domestic challenges. The US's military, political and cultural power will still dwarf it.

Almost 15 years ago, former US secretary of state Madeleine Albright's description of the US as the "indispensable nation" was spot on. There is little reason to think it will be less accurate 15 years from now.

There is no denying that the US and China have real disagreements over principles and policies. But it is equally clear that they are committed to managing them down in the name of the greater good, which is increasingly closer economic ties between two countries that are already joined at the economic hip.

It is better to think of the tensions that will continue to flare up between the countries over issues as diverse as trade and Taiwan more as useful pressure-release valves than as brushfires that threaten to burn out of control.

Australia re-enters the picture because of the fundamental similarities between the US's approach to China and its own, not to mention those of Japan and South Korea, America's other leading Asian allies and Australia's closest friends in the region.

At its core, America seeks to maximise the economic benefits of China's rise and minimise the chances that it will have malign geopolitical consequences. This approach is surely at least as true for Australia.

Obama may in general be the anti-George W. Bush. But like Bush, Obama has been steadfast in resisting powerful domestic pressures to bash China, while devoting considerable resources to high-level, behind-closed-doors diplomacy with Beijing.

Indeed, economic engagement has been the core of Washington's China policy for at least two decades. US presidents of both parties have pushed economic engagement not only because of the cheap goods and big new market China provides for consumers and producers. They have also long believed economic engagement reduces the risk of military conflict and increases the prospects for political change in China.

At the same time, the US knows it must insure against the chance that China's rise is not benign, even as it works hard to minimise the probability of this dire outcome. This is less about overt military build-up and power balancing than it is about building ever stronger and more integrated relationships with the leading pro-market democracies in Asia and encouraging China to join the group. Bush emphasised the US's alliances with Australia and Japan and forged a new strategic partnership with India. Obama wants to bring South Korea back into the alliance and to develop a new strategic partnership with Indonesia.

Obama wants to be much more active in regionalism than Bush was. Rather than being a late joiner in existing Asia-only institutions developed in the US's absence over the past decade, Obama wants to be a prime mover in new arrangements connecting both sides of the Pacific.

The US's agenda for the Asia-Pacific century seeks to engage and socialise China rather than isolate and chastise it. This creates considerable opportunities for Australia and the region's other market democracies to work with the US on an agenda that is of common interest.

Pushing the Asia-Pacific community further and faster than the US and Australia's Asian friends want would be unwise for Australia. Moving the Asia-Pacific Economic Co-operation forum beyond a talking shop seems unlikely.

But helping Obama and the US become more involved in the East Asia Summit, and making it a less ASEAN-centred and, indeed, Asian-centred grouping in the process, seems an obvious first step for Canberra. Helping the US transform its hub-and-spokes alliances with Australia, Japan and South Korea into a more integrated system is also important.

Active Australian participation in negotiating the Trans Pacific Partnership, the proposed new Asia-Pacific free trading group in which Australia is the US's main partner, should also be high on the new government's priority list.

The US's aim is to build a high-quality regional free trade group that South Korea, Japan and ultimately China might join. The fact that Australia is in on the ground floor is an advantage to be exploited.

The bottom line seems clear. Australia doesn't need to choose between China and the US because Washington doesn't view its relations with Beijing as a zero sum game. Rather than a fundamental foreign policy rethink, the new Australian government should roll up its sleeves to work with the US on a shared strategy for making the most of the Asia-Pacific century.

Geoffrey Garrett is chief executive of the U.S. Studies Centre at the University of Sydney.

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