“In many ways (Australians) were ahead of the curve in understanding influence operations and interference in domestic systems,” one senior US official told me. “They were pioneers and we have to give a lot of credit to Australia.” The official singled out former Australian senior intelligence advisor John Garnaut for praise…’
Legion of Merit to the wrong PM
Something strange happened this week. The ABC was the first to get hold of a highly sensitive American defence paper, titled US Strategic Framework for the Indo-Pacific, that had been mystifyingly declassified by the Trump administration two weeks ahead of the handover to Joe Biden, despite having been stamped “secret” and “not for release to foreign nationals” since it was written only in 2018.
Instead of the likes of Shari Markson and other security hawks with News Corp, it fell to the 7.30 Report’s Laura Tingle to convey its message to the world.
In a note on its publication to all this Wednesday, the US National Security Advisor Robert O’Brien said the release was “to communicate to the American people and to our allies and partners America’s enduring commitment to this vital region”.
Conjecture about deeper motives included that the US defence and intelligence community wanted to show they had actually been doing some structured thinking behind Trump’s erratic leadership, and wanted it out there for Biden to pursue.
The 10-page paper seems to firm up elements of US strategy that had been deliberately left hazy or ambiguous up to now, notably the marking out of the first island chain as the limit of Chinese power projection, making its enclosed seas contested, and effectively guaranteeing the defence of Taiwan. As well as this defence posture, the paper also calls for closer cooperation with allies in countering Chinese interference and espionage, and tightening the US-Japan-Australia-India “quad”.
Citing Australia’s participation in nearly all US wars since 1916, the Melbourne Herald-Sun’s Sarah McPhee commented: “In other words, if America was to take on China in defence of Taiwan, it’s assumed that Australia would jump to our ally’s aid – despite our increasing reliance on China as a crucial trading partner over the years.”
None of this is likely to delight Beijing, and guess who gets a lot of the credit for stiffening the US approach? “Australia’s experience with China strongly influenced the drafting of the 2018 Indo-Pacific strategy,” two researchers at the Aspen Institute wrote in the US political website Axios.
They quoted a “senior US official” as saying: “In many ways they were ahead of the curve in understanding influence operations and interference in domestic systems,” one senior US official told me. “They were pioneers and we have to give a lot of credit to Australia.” The official singled out former Australian senior intelligence advisor John Garnaut for praise, and said a 2017 report on Chinese influence operations by New Zealand-based scholar Anne-Marie Brady had also influenced the US strategy.
So Trump gave the Legion of Merit to the wrong man, it seems. Malcolm Turnbull, who employed Garnaut, should have been up there in the Pantheon of Indo-Pacific warriors, alongside Shinzo Abe and Narendra Modi, not Morrison.
But anyway, Canberra security figures were absolutely delighted. “This confirms that US strategic policy in the Indo-Pacific was in substantial part informed and driven by allies and partners, especially Japan, Australia and India,” ANU National Security College head Rory Medcalf wrote for the Australian Strategic Policy Institute.
Another brick in the wall against China
New foreign investment rules came into force on January 1, requiring all proposals to be vetted for potential dangers to national security.
The regime kicks off as the Australian Financial Review’s John Kehoe broke the news that treasurer Josh Frydenberg had vetoed two more Chinese investments recently, apparently on these grounds – a $300 million takeover of builder Probuild by state-owned China State Construction Engineering, and a $300 million investment by a Chinese state power firm in a new gas-fired power station that Energy Australia plans for near Wollongong.
The objection to the Probuild buyout from its listed South African owner was apparently that it had recently built the new headquarters for Victoria’s police and was building a Melbourne office tower to house vaccine maker CSL. Getting hold of the blueprints for these buildings would apparently allow Chinese intelligence to do bad things. The other refusal suggests any infrastructure is sensitive.
Following refusals in agriculture and food processing, not much is left. “Most of the economy is now not available to the Chinese,” Kehoe quoted one unnamed investment banker as saying.
Lawyers and bankers believed the Foreign Investment Review Board, which advises the treasurer, had become a proxy security regulator, not just an economic body to facilitate foreign investment. “The FIRB is chaired by Australia’s former top intelligence chief and former ambassador to China, David Irvine,” Kehoe said. “The new head of Treasury’s foreign investment division, Tom Hamilton, has a defence background. Treasury officials work for the FIRB.”
The FIRB’s published guidance includes national security risks from the construction sector, including construction firms holding contracts with government agencies and critical infrastructure service providers, access to sensitive information such as building blueprints and supply chains.
“Such information may be of value to foreign intelligence services,” FIRB’s website says. “Foreign intelligence services may also pre-position for future intelligence activities such as by building surveillance equipment into the premises during construction, in order to gather information on intended sensitive tenants.”
Canberra officials were well aware of that long ago. In the 1990s our security agencies tried to do exactly that with the new Chinese embassy premises.
This week’s payback from China came with the news that shipments of Australian cherries had tailed off. while the Chinese steel mills and other buyers of Australian coal sitting in ships off Australian ports have been told to find other markets for it.
The Chinese punishment is hitting hard in regional Australia already. In The Australian on January 6, Stephen Lunn and Angelica Snowden reported unease in Portland, where the struggling Alcoa aluminium refinery has an uncertain future, despite a $77 million lifeline from the federal government last month. Two other big employers, timber and crayfish, had been brought to a halt by Chinese halts to imports. The lesson is being driven home to new trade minister Dan Tehan, as Portland sits in his electorate.
But if Portland readers had turned to the newspaper’s opinion pages the same day, they would have felt exhorted to stand firm. China was out to bring Australia to heel, warned academic turned spy-catcher Clive Hamilton. “…some of the leaders of the industries being squeezed by China’s trade bans have become, in effect, mouthpieces for Beijing, calling on the government to “fix the relationship”, as if it’s all our fault. This is exactly what Beijing planned.”
A shocking thought
Now it can be told, as Trump crony Arthur Culverhouse packs up in Canberra and the US embassy awaits a Biden appointee as ambassador. The Sydney Morning Herald’s Anthony Galloway informed readers on January 7 that disinformation can come from American and Australian sources.
He instanced the notorious Sydney Daily Telegraph front-page story about a 15-page “dossier” on Covid-19 that laid “the foundation for the case of negligence being mounted against China”. The dossier was in fact an openly sourced “non-paper” authored by the US State Department, which contained no classified information from intelligence agencies.
Galloway said there were “widespread suspicions within senior ranks of the Australian government and the intelligence community that the document was leaked to the Daily Telegraph by a staff member in the US Embassy in Canberra.”
“The Trump administration’s promotion of the Wuhan lab theory did immeasurable harm to Australia’s efforts to push for an independent inquiry into the origins of the virus” Galloway said. “It allowed Beijing to claim the inquiry was part of a US propaganda bid to discredit China, leading to relations between Canberra and Beijing to deteriorate to their worst levels in decades.”
He concluded: “While you should always watch out for your adversaries, sometimes you need to keep a close eye on your friends.”
Xi Jinping’s sledgehammers
Australia’s part in the new US strategy and the foreign investment decisions undoubtedly mean more punishment is being considered in Beijing, and any hopes of invoking the free trade agreement or WTO appeals are not going to cut it. Under Xi Jinping, no agreements or rules get in the way of putting down challenges and opposition.
This was amply demonstrated at dawn on January 6, when some 1200 police fanned out across Hong Kong and arrested some 53 prominent politicians, activists and others for suspected offences against the territory’s new national security law imposed by Beijing. Most spent a night in police cells before being bailed the next day.
The offence as outlined by Hong Kong security secretary John Lee was organising an unofficial “primary” vote ahead of elections that were due last September for the elected seats in the Legislative Council, postponed ostensibly because of the Covid-19 epidemic.
This was a prelude to an effort by pro-democracy elements to win enough Legco seats to block government budgets and thereby force the resignation of the unpopular Hong Kong chief executive, Carrie Lam, whose position is filled by vote of a Beijing-vetted panel. Lee said the activists were planning on “mutual destruction” and plunging the city into an “abyss.”
That all the activities he cited were normal, open political campaigning for elections permitted under Hong Kong’s autonomy system is unlikely to deter prosecutions. The territory’s politics were evolving the wrong way, and had to be smashed.
As well as passports, about 200 mobile phones and computers were confiscated from the arrestees and family members, and were sent off to the mainland where authorities have sophisticated data-extraction technology, the Washington Post reported. The Ministry of State Security will then confect sedition charges potentially bringing lengthy jail terms.
It was also noticed this month that nobody has seen the Chinese e-commerce tycoon Jack Ma in public since he was hauled in for questioning after criticising Chinese state banks for a “pawn shop mentality” at a Shanghai conference attended by Xi Jinping’s consiglieri, Vice-President Wang Qishan, and central bank governor Yi Gang, on October 24.
Chinese authorities promptly halted the planned US$37 billion public share offering by Ma’s e-payments enterprise Ant, which would have been the world’s biggest float. As the AFR’s Karen Maley wrote on January 8, Ant (previously known as Alipay) had expanded from online payments into a virtual online bank where customers could park money in accounts known as Yu-ebao that earned higher interest than paid by the state banks.
“To the banks’ chagrin, Yu’ebao proved massively popular, becoming one of the country’s largest money market funds,” Maley reported. “Chinese banks also watched helplessly as Alipay, which was spun out as Ant in 2014, developed the largest payments business in the world, with some 730 million monthly users. But in addition to being a payment tool, Ant’s Alipay has become a major portal for personal credit, loans, investment and insurance.”
“By pulling the pin on the Ant IPO, Beijing made it clear that it would not tolerate such open defiance of its authority. Private companies, no matter how successful, still had to play by the political rules of the game, which include showing due deference for the state’s authority. What’s more, Beijing now appears to be gearing up for a more fundamental attack on Ant’s entire business model, no doubt with the blessing of the country’s massive state-owned commercial banks.”
Too much of a challenge to the system, even though Ma is a Communist Party member and his Alibaba enterprise is surely the kind of service sector thing you’d think Xi’s “dual circulation” economic strategy would welcome. Whether Ma has been purged, and will eventually appear in court accused of financial crimes remains to be seen. Possibly he has been told to lie low.
Meanwhile, Maley noted: “It’s likely that Canberra will be watching the punishment that Beijing has meted out to Chinese tech billionaire Jack Ma with huge interest and not a little anxiety.” No-one is too big to pull down. She asks: Are Australia’s education and tourism sectors next in line for punishment?