JACK WATERFORD. Chinese checkers in the great game

Active spying need not mean an invasion, or war, is imminent

Australians should probably be chuffed by the claims that China is doing an awful lot of spying and intelligence operations in Australia. Imagine the national sense of humiliation  were it to become known that it had given us a look over and decided we were not worth the effort.

No doubt blame would quickly descend on soolers such as Andrew Hastie. The brigade of Australian Chicken Littles, forecasting Australia’s movement into bondage may be leading Chinese intelligence analysts to conclude that there was no particular need to spy on Australia, when listening to the words of American defence hawks might give a more authentic feel for the thinking of their enemies.

It’s not actually news that the Chinese government takes a close interest in the defence and foreign policy of Australia, that they try to influence both, and that they closely watch economic, political and social developments in Australia. It wants to confirm that Australia, and Australians, are doing what they are saying they are doing.

It analyses events closely, looking for investment and trade opportunities to the advantage of favoured Chinese businesses.  It tries to know and understand the levers of Australian decision-making, in national, state and local government, as well as in particular economic sectors, such as agriculture, mining and computers. It also studies politicians, bureaucrats, leading people in business, and opinion formers, whether for clues about how their predilections or personalities might influence events, and for weaknesses which might be exploited. The weaknesses need not be character defects, such as susceptibility to bribery and corruption or blackmail, a tendency for garrulousness or big-noting, or temporary financial embarrassment. It might equally be for weaknesses of business or political judgment, capture by ideology or obsession, or lack of imagination – just the same thing that any Australia chief executive might shrewdly assess and act upon when in competition with another business here.

A good deal of what the Chinese do is out in the open. Likewise a good deal of what they find out is just the sort of thing a new manager at a company, or envoy to Canberra, would be trying to discover. Most political and economic intelligence is publicly available in a free and open nation such as Australia, but material that has some “insider” or “intelligence” label is often given extra weight, often wrongly. Much of this “research” can, of course, be done on the internet, in China and elsewhere, including by analysts very familiar with Australia, its law and politics and its economy, in part because they studied here.

We can also be sure that there are also clandestine attempts to gather additional information in ways that are illegal. This can involve hacking into computer systems, suborning or compromising people with access to secret or confidential information, and active bugging and surveillance.  What happens in relation to secret military, diplomatic and political intelligence is replicated on the commercial and business front, because the principals of many Chinese businesses (which may or may not be secretly controlled by the Chinese state) are constantly seeking an edge in negotiations with Australian suppliers, middlemen or buyers.

We know all that because Australia, and Australian businessmen, do exactly the same thing against the Chinese state and Chinese businesses. Indeed, we have been doing it longer (if not necessarily more effectively) than the Chinese have been doing it to us. For a long time the White Australia Policy, and the fact that China was largely closed to the world limited its capacity for foreign intelligence gathering.  Australia had access to Five Eyes intelligence electronic and satellite, as well as its window into China from Hong Kong and refugees coming out of China. Chinese access to us is not a problem now.

Nor have our intelligence agencies confined themselves to military and national intelligence and eschewed spying on Chinese businesses. Sometimes Australian agents or businessmen have suborned Chinese negotiators, as when a Rio Tinto negotiator bribed managers of Chinese steel mills to disclose their negotiating positions.

Sometimes our overseas spy service, ASIS, and our electronic spies at the Australian Signals Directorate will be deployed to bug, spy on and, if needs be, compromise the other side, or rivals for a contract. This is the spying of the type used in East Timor, when ASIS bugged the East Timor Cabinet rooms during border negotiations – the primary beneficiary being Woodside Petroleum, regarded as an Australian company. This service is not, of course, available to all Australian companies. One must have a certain amount of insiderness, as well as the ability to argue that the size of the transaction in question has the capacity to be measured in the national accounts. Then, apparently, it can be in the national interest, even if it is illegal in the host country, and distasteful to most Australians.

It has sometimes been suggested that ASIS has not always done a fabulously good job in this regard. The consequence, it has been said, is that Australian intelligence-gathering capacity has been hijacked by our British and American friends to advantage “their” companies operating in competition with Australian ones. These days, luckily for the intelligence industry, it would be a breach of any number of secrecy provisions in national security legislation to disclose examples. Anyone who did so, or who received such information could be tried and sentenced to jail, probably in a compliant ACT Supreme Court, in a secret hearing no one knew about.

About half or more of the spying by authoritarian regimes is usually directed at what the KGB used to call “émigré work” – in its case surveillance of its own citizens abroad. It was for this that Vladimir Petrov was sent to Australia in 1952. Before he came, he received no briefing  on general Russian spying operations against Australia, and he came to take charge of KGB (if not GRU) general spying operations without any subsequent briefing after the real station chief was summoned home and was purged. Petrov found a few documents in the safe – provenance mostly unknown to him, except by inference – and some mostly cranky correspondence from Moscow Centre complaining of the inactivity of the office, or its tendency to send as secret intelligence material gathered from the social pages of The Canberra Times.

Petrov’s emigres were mostly refugees, or people who had been displaced during the war and been sent here. By the 1960s, however, some countries, especially Malaysia and other Colombo Plan ones, began taking a very intense interest in the activities of their students in Australia, having both embassy staff supervising the surveillance, as well as a network of informers among students. The fear of government retaliation, whether personally or against families, was very strong. The security services took little notice, perhaps reasoning that the coercion was not focused on getting them to spy on us. A dangerous assumption, I should think.

There are about 1.2 million people of Chinese ancestry in Australia. Many are citizens, some of long standing. Others are students. Many of these are under surveillance and pressure – again sometimes by embassy staff and sometimes by very patriotic fellow students. Pressure is also exerted on students after visits by police and security people to parents in China. With residents, efforts are made to cajole a sense of patriotism and pride in China’s formidable achievements over at least the past 40 years, and the joining of any number of front organisations, many pretty openly under the control of Chinese Communist Party functionaries in China.  A few may be approached to provide information or cover. Many more will be made to think that they should show loyalty to China  – whether from duty (a feeling many do not have) or so as to be one  with fellow members of the great diaspora, rather than individualists.

The mere fact that there is a lot more talk about the Threat from China, or its intelligence activity does not mean that there is any sort of upsurge in China’s hostility to Australia. We are a favoured tourist destination, and place for real estate purchases. The talk owes more to the trade war between the US and China, and the tendency of many Australian opinion formers will always echo its anti-Chinese rhetoric. It is, in part, because we have a weak Foreign Minister, and, apparently, a weak DFAT, so that much defence, foreign affairs and national security policy is being made in defence. Or by folk, such as  in the department of home affairs, ever given to seeing the nation under deep threat – today from terrorists, tomorrow paedophiles, the next day malingering refugees, then Chinese and soon after Little Green men.

“Proofs” of escalating aggression – such as the interpretation of China’s efforts to keep open the South China Sea as an effort to “dominate” it – are mostly ambiguous. The Chinese government’s unconscionable brutality against its own population is, alas, what one gets, almost anytime, from a ruthless dictatorship no longer much concerned with international opinion. But that, or what is happening in Hong Kong does not prove that militant China is on the march, let alone to Australia.  There are louder and more frequent signs of Chinese exasperation at the way Australians live in a comfy economic relationship with China, while hugging up to the US and shouting abuse. That may be because they want or expect war. Economically or militarily, that wouldn’t be pretty for us. Appeasing and pre-emptive kowtowing are not the answers. But there is a difference between firmness and standing on our national interest, and offensive sabre rattling.

The CCP has more than 90 million members. Membership may be vital to business success and access to power and privileges. But  mere membership does not prove that a person is a functionary of the party or the state, or a conscious agent of it, any more than membership of the old Australian communist party necessarily proved one to be an agent of Moscow. T

here is little doubt about the ultimate power of the Chinese government to control almost any business engaged in trading with foreigners, and many businesses are in fact owned by state corporations, including the army.  But that does not necessarily mean that every Chinese billionaire in Australia making a “donation” to a politician is acting in his government’s interest when he is looking for Australian power and influence, or to get his way in a business transaction. Or when he is trying to establish networks of business and political relationships to influence the environment in which he must work. In China, as increasingly in Australia, one often does not get favours by due process, but by politics, through “friends” and by presents, bribes and corruption. Chinese businessmen are doing here what they know from home, and, apparently, it is very successful.

For all of the talk of requiring Australians to register if they lobby for foreign interests, and the banning of foreign donations, the two major Australian political parties have done very little practical or effective to reform themselves to prevent corruption by foreign interests. I doubt the party structures really want to. It’s the Australian way that party organisations, on both sides, plot to flout donation rules. with political donations.

The Chinese have been giving money to both sides, and have clearly compromised Australians and our party system. It is, of course, not only a problem with foreigners, or the Chinese. Over the past decade, major Australian bank donations have bought undue power and influence over politicians, more successfully and at, apparently lower cost, than Chinese businessmen. So has money from gambling and liquor interests, at equal damage to the national interest.

Attempts to buy influence are  why there is a Labor corruption scandal before NSW ICAC, and continuing questions about Liberal donations in Victoria. It looks as if it is an example of why the Federal Government wants only a toothless, powerless, and unaccountable Integrity Commission, operating and reporting in secret.

An effective commission is not merely a protection against the corruption of public officials by intelligence agents, Chinese or otherwise.

In his recent Quarterly Essay, “Red Flag”, the Sydney Morning Herald’s international editor, Peter Hartcher , has talked of our “hollowed-out” institutions. Their weakness is no accident – indeed much of it can be tracked back to the regulation-busting blather of the incoming Abbott government, and its then pet wanna-be, Josh Frydenberg.

“Australia has many fine laws that are being flouted through a lack of political will,” Hartcher says.  “As we have learned in the past few years, major businesses and famous chefs have been systematically underpaying their workers and getting away with it because the Fair Work Commission wasn’t enforcing the law. Misconduct by the major banks was rampant because federal agencies lack the staff and the will to investigate. Newly built apartment blocks are uninhabitable because state [and territory] governments have failed to enforce their building codes.

“Governments, state and federal, are failing as functional entities. They have allowed vital laws to lapse through inexcusable neglect. They snap into action only when the media exposure a vacuum where there is supposed to be an operational core.

“The  state, as an entity charged with conducting the rule of law, has been hollowed out. The people live under the assumption that their taxes, their elected representatives and their public servants are protecting them as the law guarantees. But in industry after industry, this has been exposed as a hoax”.

No wonder smart Chinese businessmen and the Chinese state, or communist party,  are trying to take advantage. Action to prevent them doing so might more effectively come from reforming our institutions to make it more resistant to corruption than giving more unaccountable money for security and more unaccountable powers to home affairs.

Last week I wrote about the risks of mere tightening of money laundering laws, particularly if the only effect was to make the sending of overseas remittances slower and more expensive. By coincidence, the American Congressional Research Service said the same thing in a paper issued on Monday. Recent American reforms, under the Dodd-Frank laws,  which are supposed to make the payment of remittances – say by Mexican workers in the US to family in Mexico – cheaper and with more protections will probably actually increase costs of formal transactions. The not-so-perverse consequence, as I remarked, will be more money transfers outside the system – and thus open to money laundering, terrorist purposes and even – horrors – the enabling of child sex exploitation.

Jack Waterford is a former Editor of The Canberra Times

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