Australia in the Asian Century: Foreign Policy Challenges

2012 International Affairs Oration by Professor the Hon Gareth Evans AO QC, Chancellor of Australian National University, Professorial Fellow at University of Melbourne, and former Foreign Minister, International House, Melbourne, 10 May 2012

Thank you for inviting me to give this prestigious annual lecture at this great Melbourne institution, International House, which – for nearly as long as I have been alive – has been bringing Australian and overseas students together for a wonderfully satisfying learning and living experience, and I am sure will be doing so for the whole of this Asian century and beyond.

The Asian Century. As Paul Keating might have put it – and how we miss that marvellous turn of phrase of his – every galah in every pet-shop is now talking about the Asian century. And so they might.  A gigantic shift in global power and prosperity to  Asia  – or more accurately, back to Asia after an aberrant few centuries – has been happening before our eyes, with every prospect of continuing, as will International House, throughout the lifetime and beyond of all of us here. The implications for Australia and Australians are profound, and will impact upon almost every area of both domestic and external policy.

It’s always dangerous to extrapolate from current trends. But relative economic growth rates, trade and investment patterns, population futures, defence capabilities, and influence in global decision-making forums are all pointing in one direction.

The economic numbers, as spelled out by Prime Minister Julia Gillard last September when announcing the commissioning of a White Paper on Australia in the Asian Century, are simply breathtaking. All the previous advances by Japan, then the ‘Asian Tigers’ (South Korea, Singapore, Hong Kong and Taiwan), and more recently by Malaysia, Thailand, Indonesia and Vietnam, have been put in the shade by the dramatic performance of China and India. In twenty years, these two giants – already containing nearly 40 per cent of the world’s population – have increased their absolute economic size nine-fold, with at current rates China doubling the size of its economy every eight years, and India every eleven.

They have together grown in just two decades from less than a tenth of the global economy to almost a fifth, and over the next two decades are projected to grow from a fifth to a third. Already the world’s second largest economy, China is on track to become the largest within twenty years – maybe much earlier if The Economist is to be believed - and India is set to surpass the U.S. economy for size by mid-century in purchasing power terms. All this is tempered, of course, by the reality that neither China nor India will be rich in per capita terms for a very long time yet, with all the internal distributional problems and tensions that involves – but it doesn’t alter the basic reality of a huge wealth shift.
Economic growth has been accompanied by significant increases in military expenditure by both China and India with, on the latest 2010 figures, China ranking second in the world after the U.S. and India ninth – after the UK, France, Russia, Japan, Germany and Saudi Arabia. Here, however, relative standings are rather overwhelmed by the absolute numbers, with the U.S. spending $698bn (43 per cent of the world total) as compared with China’s estimated $119bn (7.3 per cent) and India $41bn (2.5 per cent). But in the contemporary age, when war between the world’s major powers has become almost unthinkable, power is about perceptions, and political influence, as much or more than it is about raw military capability, and in this context it is clear that China, and increasingly India, are punching well above their absolute military weight.

Further signs of the times are the emergence of the G20 as a significant global policymaking forum, gradually superseding the G8 (with the G20 having five Asian members – China, Japan, India, ROK and Indonesia, as well as Australia, as compared with the G8’s one, Japan); the emergence of the BRICS group (Brazil, Russia, India, China and South Africa) as a significant force in UN and other multilateral decision-making, in contexts ranging from climate change negotiations to Middle East peace and security; and the emergence of the East Asian Summit as a new institutional focus for both economic and security dialogue demanding the attention and engagement at presidential level of the United States.

Of course the United States is not going to fade from the equation any time soon – it will remain the world’s dominant military power for the indefinitely foreseeable future and continue to be an economic superpower even when overtaken, as it will be soon enough, in total GDP terms. But with Europe’s paralysed institutional response to the ongoing Euro financial crisis dramatically eroding its economic credibility, and its relative military capability a very pale shadow of the past; and with Russia’s capability, its nuclear arsenal apart, lagging way behind Vladimir Putin’s aspirations for imperial revival – the Euro-Atlantic is simply no longer the centre of the action. That mantle already belongs to the Asia Pacific, broadly defined so as to embrace the Indian sub-continent as well as East Asia – or what we should probably now be calling the ‘Indo Pacific’.

I won’t try to anticipate, in anything I say tonight, the White Paper which Ken Henry and his team will be producing in the next few months.  There will no doubt be some overlap in our approaches, not least in the area of dramatically improving what he and the Prime Minister have been describing as ‘Asia relevant capabilities’ when it comes in particular to Asian language study  and cultural awareness. But it appears clear that the White Paper will concentrate overwhelmingly on how we should gear domestic policy settings to take maximum advantage of the huge opportunities, and especially economic opportunities, that will be created for us in this new environment – policy settings on everything from macro-economic management, to trade, industry and innovation, education and training, business regulation, infrastructure, immigration, environment and the arts.  By contrast, what I will focus on tonight are the main challenges for Australian foreign policy that are inherent in the new regional and global environment I have described.

Foreign Policy Challenges – and Capabilities.  The main such challenges posed for Australia by the Asian century, as I see them, are first, to avoid having to make a zero-sum game choice in our relations with China and the US; second, to get right and keep right our relationship with India; third, to get right and keep right our relationship with Indonesia; and fourth, to contribute to the establishment of regional economic and security cooperation mechanisms in which we are seen as a relevant and effective player.

In understanding not only the nature and extent of those foreign policy challenges, but our capacity to do something about them, it may be useful to say something at the outset in more general terms about the nature of Australia’s national interests and the strengths and weaknesses we bring to protecting and advancing them.

For us, as with every other country, the primary role of foreign policy is to protect and advance national interests, and the starting point in defining them will always be the familiar duo of security interests on the one hand, and economic and trade interests on the one other: what’s necessary or desirable to protect the country from threat or attack, and to increase the income and quality of life of its people. But the starting point should not be the finishing point.  I have long argued that every country has what it should recognise as a third national interest, that in being, and being seen to be, a good international citizen, both regionally and globally.

This concept is based on the reality that many problems in the contemporary world require not just unilateral or bilateral but cooperative multilateral action to solve. Ranging from climate change to piracy, terrorism, weapons of mass destruction proliferation and mass atrocity crimes, from health pandemics to unregulated population flows, they are  what  Kofi Annan has called ‘problems without passports’, and others ‘transnational problems’ or ‘global public goods problems’.  Each is manifestly beyond the capacity of any one state, however big and powerful, to fix on its own. The difficulty (as economists will recognise is the case with any public goods) is that costs and benefits, issue by issue and country by country, are not precisely aligned:  the perceived importance of each issue, in traditional security and economic interest terms, will vary dramatically from country to country.

In this context, being, and being seen to be, a good international citizen is not some kind of foreign policy equivalent of boy-scout good deeds. The argument is that, by being seriously committed to cooperative international problem solving, national interest is advanced two ways. First, through simple reciprocity: my help for you today in solving your drugs and terrorism problem might reasonably lead you to be willing to help solve my environmental problem tomorrow. And secondly, through reputational benefit: the perception of being a country willing to take principled stands for other than immediately self-interested reasons does no harm at all to one’s own commercial and wider political agendas.

Any country’s capacity to effectively pursue its national interests, in all three of the dimensions I have mentioned, is a function of its strengths discounted by its weaknesses. The limits of Australia’s strength are self-evident: we are not, and never will be, either a superpower or major power. We are at best a middle power, never likely to have enough political, military or economic clout to force our will or preferences on others, and reliant ultimately on our capacity to persuade. But we are certainly able to have some influence if we employ creatively the characteristic methods of middle power diplomacy, viz. coalition building around particular issues with “like-minded” countries, and “niche diplomacy”, which means simply concentrating resources in specific areas best able to generate returns worth having rather than trying to cover the field.

And we do bring considerable strengths to that role: Australia is, after all, the twelfth  largest economy in the world, the sixth largest by landmass and with the third largest maritime zone; we are one of the most multicultural countries in the world; we bring to the table a unique perspective bridging our European history and our Asia-Pacific geography; Australian peacekeepers and individuals working in international organisations, both official and non-governmental, overwhelmingly have outstanding reputations; and, while we have a close security alliance with the United States, we have also had a strong and long-standing commitment to a rule-based global and regional order in which no one has a monopoly on global decision-making.

So now, against this background, to the specific challenges I have identified.

One: Avoiding a Zero-Sum Game Developing in our Relations with China and the US.  The bilateral relationship between the US and China is in reasonable shape at the moment, surviving some sharp exchanges in 2010 on a number of  provocative actions by China on territorial waters issues in the South China Sea, and the recent tension over US support for the blind dissident Chen Guangchen. But there still remains the huge underlying issue of how the US will respond over time to the dramatic acceleration in China’s economic growth, and all the stretching of wings, not least in rapidly increasing military capability, that is going with that.

Certainly a number of China’s neighbours – all with historical issues of one kind or another with Beijing – are nervous about that wing-stretching, and are quite likely to get more rather than less nervous as time goes on. China’s relationships with Japan, ROK, Taiwan and with its disputed-sea-boundary neighbours in the South China Sea are all reasonably quiet right now, but the capacity for blow-up is never very far away, and every commentator has a favourite ‘flashpoint’.  Notwithstanding the overwhelming top-level preoccupation with maintaining internal stability as the top policy priority, and the absence of any rational basis for picking unnecessary foreign policy fights in its neighbourhood or anywhere else, there is a periodic risk in the current environment of adventurism and overreach, as we have seen with some of the posturing in the East, and especially South, China Seas in recent times – apparently driven (as an excellent recent report by the International Crisis Group makes clear)  by military and economic interests much more than  the traditional foreign policy establishment, but no less troubling for that.

On the most potentially dangerous military issue of all in the region, the potential misuse of nuclear weapons, Washington remains less than fully persuaded that Beijing is doing as much as it could to constrain North Korea from its own brand of adventurism, and is concerned about the apparent slow but steady build-up of China’s nuclear arsenal to redress what Beijing perceives to be an imbalance of capability, given the US’s overwhelming conventional and missile arsenal, and growing missile defence capability.

As China’s strength grows, the central dilemma for Washington remains that which I heard Bill Clinton pose at a private gathering nearly a decade ago:

America has two choices. We can use our great and unprecedented military and economic power to try to stay top dog on the global block in perpetuity. Or we can seek to use that power to create a world in which we are comfortable living when we are no longer top dog on the global block.

My own sense is that the US will be sensible enough to make the second choice, and that that is certainly the direction in which President Obama wants to go. But if there is a shift back toward an uncompromising insistence on maintaining absolute dominance in the region, as well as globally, then there is every chance things will end in tears. And those tears are going to very much affect us.

In his highly publicized article ‘Power Shift’ in Quarterly Essay in 2010, ANU Professor Hugh White has opened up an uncomfortable debate – but one we need to have – about whether it is reasonable to assume that Australia can go on enjoying indefinitely a hugely prosperous economic relationship with China, and a hugely reassuring security relationship with the US, in an environment where the tectonic plates really are shifting and it cannot be assumed that China will continue to recognize – as it becomes over time economically dominant – the primacy of US power.

Though one can certainly challenge  (as I have) some of his detailed argument, White argues with some persuasiveness that the US has three basic choices in responding to China’s inevitable further rise: withdraw from Asia (which it is extremely unlikely to do, and not many Australians would want it to do); compete with it for primacy (which runs a very serious risk of ultimately generating conflict); or – as he prefers, as would Bill Clinton on the evidence I have quoted – share power with China, recognising it as a genuine equal (which it has so far been reluctant to do).

Working all that through in practice, and its implications for how we should handle our defence posture and expenditure in the future – in a way that gives us some affordable independent protection against various ugly contingencies without either spending ourselves into penury or making potential regional tensions worse – is going to keep us preoccupied for a long time to come.

Australia is no keener than any other of China’s major trade and investment partners to see its relationship with Beijing end in tears, and we have constantly said that we have no interest in applying to China anything resembling a Cold War containment strategy. But Australia has also, I think rightly, not been reluctant to join with the U.S. and its South East Asian neighbours in some appropriate push-back after China overreached itself on a number of occasions asserting its territorial interests in the South China Sea.

Moreover, the government, while rightly making no judgement at all about any kind of hostile intent on the part of China, has also being developing, I think justifiably, a hedging strategy based on its assessments of present and future capability of China and other major players in the region. This is articulated to some extent in the much discussed Australian Defence White Paper of 2009, and has become a little more obvious since the Gillard government’s enthusiastic recent embrace of a training base in northern Australia for 2,500 U.S. Marines, a not-insignificant new capability (certainly not insignificant symbolically) within easy reach of both South East Asia and the Indian Ocean.

China is hard-headedly realistic about our alliance relationship with the US –  in no doubt at all on which side we would be on if the nightmare scenario of a military confrontation were to arise, but not inclined to let that inhibit the other dimensions of its relationship with us. But it’s important to show some reciprocal understanding and constraint of our own, not push things too far, and do our best to persuade the US and our other friends in the region likewise. As Australia gears up now for another Defence White Paper next year, to follow the Henry White Paper, it’s crucial that we work hard at every possible level to build an effective working relationship with China – economically, politically and on global public goods issues – to counter any perception that we are edging back into the containment business. It’s fine to build basic hedging capability against possible future risks, but we should avoid overtly getting into the face of those against whom we are hedging, not only by not using the ‘C’ word (containment), but the ‘D’ word as well (maintaining the dominance of the U.S. and its allies in the region). At most what is involved, and likely to be able in practice to be delivered, and what I think Bill Clinton was talking about, is the ‘B’ word: balance. In diplomacy words have always been bullets and it’s important not to fire them prematurely or unnecessarily.

Two: Get Right and Keep Right our Relationship with India.  The rise of India is becoming as visibly important a phenomenon as that of China, but this has still been insufficiently noticed by global policymakers, and is only slowly dawning on our own still very East coast-oriented commentariat. Trade volumes between East Asia and South and West Asia actually now far outweigh those across the Pacific, and are growing dramatically. A lot of that, true, is Gulf oil fuelling China’s growth, but a lot of it is also burgeoning bilateral trade between the two giants, and the overall trend is unmistakeable. And there is an unmistakeable military build-up occurring by both major powers, reflecting the growing extent of their maritime interests in particular.

There is nothing much for Australia to be alarmed by, and quite a lot for us to be excited by, in this development.  Just as South East Asia becomes more important as the geographic hub for most physical communication between the North East and South West, Australia also becomes significantly closer to the action.  Australian businesses are certainly starting to recognise that the economic potential in India is of the same order of magnitude as that with China, but it has taken a long time for policymakers and publics generally to get their heads past the stereotypical three C’s: cricket, curry and the Commonwealth.

There are plenty of foundations on which to build. For a start, we do now have a quite strong, albeit one-sided, economic relationship. Since its historic decision in the early 1990s to open its economy, India has become a very large market for Australian natural resources (coal, gold and copper in particular) and educational services: overall this is our fourth largest export destination for goods and services (after China, Japan and Korea), and very much has the potential to become the second.

In diplomatic terms, our relations from the beginning have been cordial – albeit limited during the Cold War years because of different strategic alignments, some formidable personality differences between Prime Ministers Nehru and Menzies, and fallout from India’s nuclear tests in 1974 and 1998 – and we have worked together well on particular issues over the decades, most notably, in my personal experience, in the endgame struggle against apartheid we waged in the late 1980s and early 1990s.

We have had the beginnings of security cooperation with the conclusion of a “strategic partnership” joint declaration in 2009 which both continued and foreshadowed a significant program of pol-mil talks at ministerial and official levels, and service visits and exchanges: this has not yet borne much fruit in terms of joint military exercises or other substantial defence cooperation, but the foundations have been laid.

And we have had a long tradition of people to people contact, not only on the sporting field, but with generations of young Australians – including me in my long-ago youth – spending months of their lives travelling in India, getting to know and love the country. In recent years around 100,000 young Indians have been enrolling annually in Australian higher education and vocational training institutions, and (notwithstanding the unhappily overblown press reports of a couple of years ago) manifestly enjoying themselves. In a 2010 Survey of International Students, in which 85 per cent expressed themselves satisfied with their living and learning experience in Australia, Indian students were the most satisfied of any nationality group.

But all that said, the India-Australia relationship simply hasn’t had the weight and priority that it could – and I, for one, believe should – have had. It is one that has not been terribly good at taking small bumps in its stride, as a genuinely mature relationship does. There has been periodic irritation on the Indian side with Australia’s recurring interest– including certainly from me when I was Foreign Minister – in initiating more substantial cooperation arrangements in the wider Indian Ocean region, which India has regarded as very much its own domain; in any show of interest by Australia – at least since Sir Owen Dixon’s time as a mediator – in any international route to resolution of the long running Kashmir issue, which has been at the heart of so much of the ongoing tension in South Asia; with – at least until recently – our perceived closeness with the U.S.; and with some of our other international activism. Most recently, and obviously, there was intense irritation over the issue of uranium sales.

The way forward – and the environment for this has been created with the removal  late last year of the uranium ban (which I accept there was no point in us maintaining once the wider international community had sold the pass on it)  – is for both India and Australia to focus on their respective national interests, rethink what these mean in the new economic and geopolitical environment of the Asian Century, and recognize that they can be very usefully enhanced by consciously trying to develop some new and enhanced dimensions to our relationship.

The economic relationship is the most obvious place to start, because it has so much inherent momentum already. If our bilateral trade and investment relationship is to reach anything like its full potential, there needs to be closer economic integration through a comprehensive and liberalizing trade agreement of the kind that Australia is negotiating with our three largest partners – China, Japan and Korea – and  launched last year with India.

The defence and security relationship between our two countries has the most intriguing potential of any area, with the capacity to significantly enhance both Indian and Australian geopolitical, strategic and security interests. The most obvious way forward, is to make some really serious efforts at maritime security cooperation, to strengthen the level of naval engagement both in the Indian Ocean region and in our South East Asian neighbourhood, aimed at addressing transnational seaborne challenges like piracy and people-smuggling, and developing further disaster management capability of the kind that was used to such good effect when India and Australia, along with the U.S. and Japan, led the response to the December 2004 Indian Ocean tsunami.

We could perhaps also seek to work with India in building a rule-based maritime order in the Indian Ocean, and supporting one in the South China Sea, although India, while certainly having a number of concerns of its own about China’s long term intentions in the region – and a history of its own of tensions with China –  has been traditionally very resistant to entering into any kind of defence alliance, and will be very wary about having anything to with anything that could be so characterized. As Australian High Commissioner to India Peter Varghese has described it, while happy enough to pocket a strategic dividend from those who have a balancing-China agenda, India will not play the part of an anti-China chess piece on anyone’s chess board.

The remaining area where it might be possible, and would certainly be desirable, to introduce a new level of maturity into India-Australia relations, is in relation to our respective national interests in what I have described as being and being seen to be good international citizens. Maritime cooperation of the kind I have been discussing is one such area, but there are two others worth considering.

The first is the global response to internal mass atrocity crimes of the kind which the international community has been lamentably failing to prevent for centuries, but spectacularly so in the Rwanda and Balkans catastrophes of the 1990s, and which led to the unanimous embrace by the UN General Assembly, at the 2005 World Summit, of the concept of “the responsibility to protect”. But following something of a backlash against the military use of this doctrine in Libya last year, there is a real question now as to how strong that support, from India in particular, will be in the future.  The suggestion I have put to New Delhi is that, rather than turning back the clock on a principle that most have seen as a huge advance in the recognition and protection of our common humanity, it should respond by supporting the adoption of clear guidelines as to when coercive military force might be legitimately authorized and implemented. Such guidelines, which were widely debated in the run up to the 2005 adoption of the responsibility to protect, but not then approved, would contain explicit requirements that, among other things, the military response be proportional to the harm feared, a line that many would argue was crossed in Libya. This seems to me to be exactly the kind of improving-global-public goods campaign on which India and Australia could cooperatively work.

The other such area I can’t forbear from mentioning is nuclear non-proliferation and disarmament, where India and Australia have long been prominent and articulate supporters of both, but where differences of view about basic strategy – particularly since India itself acquired the bomb in 1998 – have made it difficult to find constructive common ground. With the uranium issue now behind us, it may be possible for us to work together to fundamentally advance the agenda, to which I believe we are both committed, of a nuclear weapons free world, exploring again in that context some of the areas in which India might play a leadership role, starting with ratification, without waiting for the US or China, of the Comprehensive Test Ban Treaty. India has always been – so far at least as third countries are concerned – a responsible non-proliferator, and Australia could help kick-start a working relationship here by supporting its immediate membership of the Nuclear Suppliers Group, Australia Group, and other major non-proliferation export control groupings.

With the relationship between India and Pakistan continuing to be as volatile as it is, the potential for a catastrophic nuclear exchange between these two countries is in my view significantly higher than anything likely in North East Asia, and we cannot start soon enough in trying to introduce some layers of sanity into what is an essentially totally insane situation.

Three: Get Right, and Keep Right, our Relationship with Indonesia.  One of the many enduring mysteries of Australian public policy is why Indonesia simply hasn’t (with only a few honourable exceptions) attracted the same level of attention, understanding, and sustained high level commitment from our political leaders that other Asian countries have received, and which it so manifestly deserves. Most people seem to constantly forget that Indonesia is both the fourth largest country, and largest Islamic country, in the world, and is by far the biggest and most potentially influential player in ASEAN, although for most of its history has punched below its weight.  There is a now widely shared and totally justified degree of confidence that Indonesia is not only consolidating its democracy and rapidly growing its economy, but also playing an ever more  thoughtful and constructive role in both regional and global affairs.

But we all know how political, press and public preoccupation in Australia has been almost wholly dominated over the years by irritants and negatives like East Timor, Bali bombers, drug smugglers, and boat people. As Bruce Grant and I wrote back in 1995 in our book on Australia’s Foreign Relations, ‘The relations that we went out of our way to cultivate in Asia always seemed to be with other countries’,and it would be hard to say anything very different now. Elements that would add real ballast to our relationship are either deteriorating – like Indonesian language teaching and learning ­– or just not getting any better. Just a week ago we had the alarming revelation that there were fewer year 12 students studying Indonesian in 2009 than there were forty years ago.  And so far as attracting Indonesian students here, again the last year for which I have seen figures, 2009, saw Indonesian student commencements at just 2.5 per cent of the national total, ranking not only after China and India, but Korea, Thailand, Vietnam, Nepal, Malaysia – and Brazil as well!

I suspect that a big part of the reason why a multi-dimensional relationship hasn’t really taken off, at least on the Australian side, is that old stereotypical habits of thinking about Indonesia haven’t really changed very much – and that it still thought of as military-dominated, authoritarian, undemocratic, hostage to Islamic terrorist fortune, and with an exotic institutional-governance culture about as unfamiliar and unrecognisable in an Australia context as a Balinese funeral. The short point to make is that stereotype is completely outdated: there has occurred a fundamental democratic transformation, which is in the process of fundamentally changing the old governance culture, and which it is critical now that we and the rest of the world recognise, applaud, and do our best to help consolidate.

We  need to work hard and fast to now consolidate that relationship by building on the layers of economic connection that do now exist, especially in the services and financial sector; by continuing to develop close bilateral cooperation on areas of established strength, like counter-terrorist operations; by putting more resources (and this is possible with an aid budget that is still growing, despite the slowdown in its increase announced in this week’s budget) into hugely successful aid programs like the school-building program (which at one stage was going to be cut by the Opposition, but I think they have now understood how comprehensively mindless this would have been in terms of our national interests); by engaging in many more ministerial and high-level visits than is presently the case; and by  handling more sensitively than we have been accustomed to difficult issues like live-animal exports and, above all, the passage of asylum seekers. It would be difficult to imagine a more counterproductive visit than the one Mr Abbott has said he would make to Jakarta in his first week as Prime Minister, not to get to know our most important neighbour but to tell them to stop the boats.

As Foreign Minster I had an enormously productive personal and professional relationship with my counterpart Ali Alatas which was not only extremely helpful in addressing bilateral issues, but led to an extraordinarily productive cooperative relationship in a number of multilateral forums, not least during the Cambodia peace process. We have now in the present Foreign Minister, Marty Natelagawa, someone who spent his most formative years throwing The Age over Canberra front fences to help support himself as a student at ANU, and we ought to be leveraging that personal connection into a much more comprehensive effort to develop with Indonesia like-minded middle-power  niche diplomacy initiatives across a range of global public goods issues, All the building blocks have been laid for that kind of cooperation, including as fellow members of the G20 and as groups like ‘Friends of the Responsibility to Protect’ in New York : it just takes the will and persistence to see things through.

Four: Establish Effective Regional Economic and Security Cooperation Mechanisms.  The environment I have been describing, and the issues that are emerging over the years ahead, make it imperative that we work as hard as we can to put in place regional policy-making architecture – regional economic and security cooperation mechanisms – that actually work.  There were until very recently three obvious basic gaps in the structural architecture for Asia Pacific, or Indo Pacific, dialogue and cooperation: there was no security forum bringing all key players together at leaders level (the ASEAN Regional Forum is ministerial); the key economic forum – APEC, which remains an important engine for trade facilitation, even if it has not lived up to the hopes of its founders (including me) by delivering rapid trade liberalisation – did not include India; and the only forum with potential for broad-ranging dialogue on all major policy issues, security, economic, and broader socio-political – the East Asia Summit – did not include all the relevant players, namely the US and Russia.

These are the perceptions which lay behind the proposal announced by Australian Prime Minister Kevin Rudd in mid-2008 to create an ‘Asia Pacific community’, which set a major debate running over the next two years. The Australian proposal generated quite a lot of controversy, and looking back, some of criticisms that were directed at the Rudd proposal – at least as to the way it was originally formulated, and some advocacy events were conducted – were not entirely unreasonable. Certainly we could and should have been more receptive to the sensitivities of our ASEAN friends, who have seen themselves as both a model for effective sub-regional cooperation, and have made most of the running in developing the dialogue forums that already existed.

But the story has ended well. Very much as a result of Australia’s lobbying persistence, which resulted ultimately in some strong buy-in from the Obama Administration, the East Asian Summit now  includes both the US and Russia.  This means an annual meeting of leaders from all the key broader Asia-Pacific region countries – ASEAN, China-Japan-ROK, India,  Australia-New Zealand, and the US and Russia – which is able to debate in free-ranging way all the key economic, security and  strategic political issues (including the environment) that will be crucial to our common future.  This is exactly what Australia had in mind from the outset as the core unmet regional institutional need

Of course what we need with this new architecture, if it is really going to enhance stability, prosperity, state security and human security, is real dialogue and policy cooperation. We should not expect too much too soon in the way of hard decision-making from these mechanisms: there is much to be said for our South East Asian colleagues’ view that the great value of multilateral engagement is as a process through which trust and confidence are built over time. But what we do not need is just another expensive series of photo-opportunities with set-piece speeches endorsing pre-cooked lowest-common denominator communiqués. Optimists of the world, unite!

Let me conclude by saying that I am indeed optimistic that we can meet the major foreign policy challenges of the Asian century that I have been describing, and others as well. But we will have to be quick on our feet, because stuff happens: accidents occur, behaviour is misconstrued, misjudgements are made, minor incidents escalate out of control, peace can turn into war almost overnight, and economic tsunamis can arrive unheralded. It has happened in the past, and could again.

To deal with everything from the known knowns to the unknown unknowns, we are going to have to be better informed about our region than we have ever been.

To deal with all the sensitivities that we are constantly going to rub up against as all the new regional dynamics work themselves out, we are going to have to be much more culturally aware than we have ever been before.

To deal with the range and scale of issues that we will have to confront as the century unfolds we will have to have many more people across the country with the necessary skills and awareness than we even begin to have now.

And to deliver the kinds of policies, both domestic and foreign, that are going to be necessary to support all these objectives we are going to have a quality of leadership that we have, unhappily, all too rarely seen in this country.

But with the debate that has now begun around the Henry White Paper, and most of the issues that I have raised this evening, we are at least off to a flying start. And for even the most unreconstructed optimists among us, that’s probably, for the moment, as good as it’s going to get.