President Trump’s ‘America First’ policies are shaking established structures. Regardless of Trump’s future they are unlikely to be reversed anytime soon. His split with China opens unprecedented opportunities for Australia. Indeed a brave new world, if we have the intelligence and the skills to navigate the transition along with our regional partners.
If by ‘America First’ US President Trump means that the world should divide into two mutually exclusive economic and technology spheres, then Australia may have little choice over time but to accommodate itself to the Chinese sphere as best we can. Our security dependence on the US may become untenable if the imperatives of our economic links prevail and the US has down-sized from the region relatively. Realising the trend we should be preparing ourselves to make the transition as smooth as possible. This should be seen as much as an opportunity as a challenge.
The most visible aspect of this phenomenon is the trade war with China instigated by President Trump who claims that China has conducted its trading activities dishonestly and unfairly contrary to established WTO trade rules. In particular by building up huge trade imbalances and, as a separate matter, stealing advanced US technologies in the areas of artificial intelligence, computer software, and intellectual property generally – pursuant to its policy of achieving Chinese supremacy under the ‘Made in China’ banner in the year 2025. In anticipation also of outright global supremacy by the centenary of the PRC in 2049. President Xi Jingping has changed the parameters. His course is set. Question: will he be able to keep his population onside over the duration and contain governance issues within the communist party?
Severing supply chains and financial structures
Severing the US and Chinese economies, with the attendant disruption of supply chains and financial structures, would seem to make little sense given their deep inter-dependence (or co-dependency) over past decades. It would seem to make more sense that the two should grow together and assimilate their respective interests. Not so, as each has different perceptions of how the dynamics of world power are shifting. The US sees its post-WW2 dominance in the Pacific area, let alone the world, being challenged existentially by a rising, more disciplined military power; and has decided to resist and push back, initially by breaking the Chinese economic mould, whatever it takes. In trade terms the ‘punitive’ (if illegal) tariffs being imposed by the US on Chinese exports are damaging significant areas of manufacturing in the US, and those imposed by China in retaliation are hurting US farmers many of which live in Trump’s political base. These measures have tertiary effects for third countries by disrupting their patterns of trade and internal cost structures.
US and Chinese co-dependency?
An issue with co-dependency, it is said, is that as the relativities between the ‘partner’s change, including their rules of engagement, there is a reaction to its continuance, leading to dysfunctionality in the relationship. Changes in China’s economy and its trading practices have been more profound than the US and the pushback by the US commensurately stronger. This explains too why the US under Trump is taking the WTO to task even though a weakening of that organisation undermines an essential institutional trade structure for the rest of the world.
The US view is that China has exploited the GATT/WTO system to the US’s disadvantage; and as the US is disposed to making unilateral responses when not getting its way, multilateral systems are seen as a hindrance. These institutions, also suffering other fissiparous pressures, are unlikely to recover or be transformed constructively over the next several decades.
This accounts too for the US becoming self-centred and off-handed with its military and political allies, both in the region and further afield (NATO). Many observers believe that this trend is unlikely to be reversed and that ‘allies’ should reset their strategic relationships.
The trade war in perspective
The trade and tech war is already well underway. As the authoritative newspaper The Economist (May 18) pointed out recently these developments are not a repeat of the US/Soviet Cold War. It noted that they involve a contest for economic and technological dominance, not ideological influence. The trade stakes with Russia were then minimal: the combined trade was just $2bn a year, whereas trade between America and China is now $2bn a day.
The ban on Huawei, and the current abuse of legal process against its personnel, is just the beginning. As this continues global supply lines and affinities will be changing, with substantial and costly dislocation and disruption all round. The practical consequences for this region, including Australia, are that it will be drawn further into the Chinese sphere as the political and economic viability of the region is re-centred regardless of the US.
For Australia the question is how the current trade war and the broader tendencies generally will affect our trade. Given our own co-dependency with China in the economic sphere, and given also that the US has adopted the position that those not supporting its policies are deemed to be against them, and must therefore comply with any trade sanctions and embargoes the US places on third countries, are we comfortable with this in what has been an open globalised world? Is this state of affairs irreversible, reflecting seismic changes in the American polity?
Is it not counter-productive to continue depicting China as an enemy, presently and potentially, given that they see us as ‘joined at the hip’ with the US? Examples: Pine Gap and its implications; Australian military personnel regularly embedded in US naval patrols in the Pacific; the US base with 2,500 troops in Darwin, and other military installations existing or planned – notwithstanding that a Chinese company has been granted a 100 year lease of the Port of Darwin! Time to recast and broaden the background scenario to refocus misperceptions.
How might we and the region be shaped by ‘America First’ policies?, How might the region respond? Should we feel isolated? Should we try and dissuade the US diplomatically from that course because of its negative consequences?
For Australia and Japan the alliance dilemma is uppermost.
Apart from ourselves Japan is the most torn among US allies. Perhaps with Australia, Japan will try and make the modified Trans-Pacific Partnership work to broader advantage but the US, having rejected it, will be tending to its own exclusive sphere demanding a ban on all things Chinese. In that circumstance Japan may well opt to identify with its natural region which is Asia. Despite the reassurances given to Japan on Trump’s trip to Tokyo in May, the US seems unprepared to compensate it for the constraints imposed as a consequence of its mercantilist policies. Japan is in the gun with America over its too favourable terms of trade, a matter not easily adjusted given domestic factors. The absence of a strong cultural affinity would be another factor.
Elsewhere in south east and east Asia trade is essentially transactional and entrepreneurial, as with Singapore and Malaysia. To cite The Economist again (May 25), Asian countries with favourable relations with the US are host factories that supply China’s tech-manufacturing hubs and are home to companies that also operate in China. This is particularly the case with Taiwan and South Korea. The region will not be compliant. Institutions like ASEAN and APAC could be moderating influences on the more extreme aspects of US policies, but that remains to be seen.
Australia, being regionally unique, thanks to far-sighted immigration policies, particularly following the Second World War, does have trading options with countries not cowered by the United States, including the European Union and the UK, and could sustain a stance in world affairs not unlike the Scandinavian countries during the Soviet ascendency. On the other hand with regard to China itself, the advantageous and complementary trading opportunities that have been a constant since the emergence of the PRC should continue for Australia on the basis of mutual respect. Recall that at the height of US/Chinese tensions at the time of President Mao Tse-tung Australia was happily despatching shiploads of wheat to China to alleviate starvation. There are bound to be trade-offs for Australia from trade diversion, an example being rare earth supplies from the mines in W.A. – notwithstanding some environmental issues with its processing in Malaysia.
In the South Pacific, about which an active Chinese interest has been perceived recently, Australia and New Zealand should strengthen their influence and support of the islands. The long period of neglect is over but we would do well to engage cooperatively with China in this area.
China’s widening relationships
China is widening and deepening its relations with a range of countries not only in the region but across Asia all the way to Europe (the Belt and Road Initiative). This need not of itself threaten Australia’s interests. The B&I is an initiative in which Australia would do well to invest. China’s relations with the participating countries as with ourselves must, to succeed, be governed by the basic norms of international law evolved over centuries and refined in more recent times with China’s own consent and participation. China respects the nation state system, within its sphere of influence and externally, and should not be presumed to engage in aggressive and arbitrary military conflict beyond its region. As for a nuclear threat or nuclear blackmail, what conceivable advantage would there be for China to resort to this unless provoked by a comparable power threatening its supremacy in its own region?
What grounds would there be for believing that our security is imperilled by China’s rise, leaving us exposed without a US nuclear umbrella – or the ‘extended nuclear deterrence’ it is said to provide?
Defence implications and the Alliance
The defence implications for Australia need go no further than the protection of our borders, our sea lanes, and surrounding margins. Those margins consist of some 26.000 kms of coastline and outer islands, impossible to defend against a major offensive. Threats are more likely to originate from cyberspace. In time technology will prove more potent than battleships, especially as the latter or its equivalents are more expensive and take decades to deliver. For an alternative defence policy and force structure consistent with this assessment, see my item: An alternative perspective for a realistic defence policy for Australia (Pearls & Irritations, 12 December 12, 2017).
Perspectives in this regard should be informed further by the fact that by 2030 China will have a GDP 25 times greater than ours. Its current military expenditure is already 25 times greater than ours. There is much that we can do by way of acquiring a credible self-defence posture, exploiting asymmetrical elements and tactics.
Hasn’t Australia had enough of war and talk of war and armed conflict which has been a constant since Korea, with what gain and at what cost? Drawn into these military conflicts by zealous defence/intelligence/security operatives, their funded think tanks, and susceptible politicians, we have in effect been in the continuous service of the US and its military campaigns on and off for decades. Without exception these wars and interventions have essentially involved national self-determination struggles resulting from past colonial legacies – which we have opposed. Our involvement and support has cost lives and incurred much expense which in retrospect has achieved very little in the national interest. Afghanistan is a prize example – with areas gained and lost to no recognisable advantage over a period of some 17 years? In the Middle East we have involved ourselves in conflicts that are essentially religious or involve national transitions within areas artificially created as states by colonial powers going back to and before the First World War. The US’s antagonism towards Iran over the nuclear agreement negotiated with the UN Security Council, Germany and the EU (JCPOA), which has been strictly adhered to by Iran but now rejected by the US, is a masquerade intended to provoke conflict there in concert with Saudi Arabia, Israel and some UAE states. If we were to follow the US in this, as we have done in the past, these out of area states would be our allies. Would that be acceptable to the Australian public? Is that what ANZUS is about?
Avoiding irrelevant conflicts
Indeed, recent conflicts in the Middle East are not ones that have fundamentally engaged Australia’s national interests. They do not warrant our continued presence because they make no strategic contribution of relevance; nor are they payments on account for our future security.
As the 21st century unfolds Australia needs to distinguish between those factors which it had been conditioned to think of as being integral to our security and prosperity and those that are no longer. The US alliance has caused us to link and identify with American interests wherever, without distinguishing from our perspective where those interests start and end. Bear in mind that the US heartland is isolationist and could not be relied on by Australia unless key American interests were at the same time being or likely to be threatened. Recall that after the 1942-45 Pacific War when he was thanked for saving Australia, General Douglas McArthur remarked that he hadn’t come over here to save Australia. He had come to save America.
Does this sense of insecurity explain why we have so readily joined with the US in military engagements in the Middle East, the politics of which were successively dictated over time by Britain and later the US? In the days of Empire the Middle East was at the fulcrum of power politics. But that is long past. Yet the US has a military presence in every state in the Middle East bar Iran, at the centre of which is Saudi Arabia and its need of protection. If states there can be debased by corruption their source can be found in combination with Saudi Arabia.
America is no longer dependent on Middle East oil though the quasi-colonial structures there, and integral financial operations, would collapse if America were to let go. Saudi machinations lead to places like Yemen and 70,000 military kills in addition to large scale sickness, starvation and abject misery of every kind resulting from the massive arms supplies to that region on the part of the US and Britain. While Middle East oil is critical to south and east Asian countries, including China, they do not need to extract it with military force. It can be bought as now through normal trading – but spare a thought for China if the Saudis were obliged by the US to embargo sales to China pursuant to its ‘America First’ policies. It would certainly not be in Australia’s interests, nor Asia’s, to have any part in such disruptive actions (like with Iraq in 2003). An unnecessary war with Iran may serve some US (and Israeli) interests; it would not serve ours. It would have no bearing on ANZUS either. The intelligence community might be reminded that the Middle East is not in or near the Pacific Ocean which circumscribes the geographical reach of the treaty.
It has been suggested that another reason why we have been so keen to engage in these conflicts is the military’s interest in staying close to US operational methods and tactics, as well as keeping the troops practiced and battle ready when needed closer to home. This can have a diplomatic downside for our regional relations, and that enemies created abroad can have threat consequences later at home.
President Trump’s expanding powers
President Trump has by irregular means been able to up-the-ante and expand his military options; to abuse international legal process, and impose illegal sanctions on third countries by way of unsubstantiated ‘national security’ and ‘national emergency’ declarations. These have been used to over-ride the GATT/WTO rules-based trade system, to engage in or threaten aggressive action (e.g. Iran), and to provide military support without Congressional authorisation to dictators in oppressive countries (e.g. the Philippines). While Trump’s policies may have partisan support domestically they are inflicting irreparable damage to long-standing international trade and security institutions, possibly beyond restoration. These actions seriously risk war by mis-calculation. They do not enhance Australia’s security. Indeed to the contrary. In any event, when the question arises as to whether Australia should join in these extended, out of area, wars and conflicts it is a question for the Australian Parliament as a whole to decide, not the Executive arm of government acting alone.
Conclusion and implications
We may feel a deep disappointment that the orderly, rules based system resulting from hard diplomatic work and persistence since 1945 is being seriously compromised by the US in its lone quest for supremacy. But these current geopolitical and geostrategic changes are facts that we need to acknowledge and adjust to. This is not the end of all things, just of some things we had become overly used to and taken for granted. History is replete with such situations and changes of circumstances. What matters is how we adjust to them – as with China – for mutual advantage and security. Governments and public will come to terms with needed policy changes only when it has become obvious that long held beliefs and postures have become untenable.
We should recognise threats where they are real and relatable. We should not gear up for speculative or extrapolated conflicts as in the past. We should be measured in our approach and respond proportionately to realistic risks that threaten the national interest, not to imagined or fabricated risks as peddled by vested interests within our defence/intelligence communities and their associates. The need is for fresh strategic thinking that breaks encrusted paradigms in order to avoid the political errors and misjudgements on war as experienced in the past.
Andrew Farran is a former diplomat, law academic and trade policy adviser