Frydenberg is wrong to support Ivanka and Donald Trump on the World Bank. It’d be better to let it die


Mark Crosby, Monash University

Treasurer Josh Frydenberg has offered support to Donald Trump’s pick for the World Bank Presidency.

David Malpass is currently Under Secretary of the United States Treasury with responsibility for International Affairs, and his previous experience includes being chief economist at Bear Stearns prior to their collapse.

Our Treasurers support is wrong headed.

No matter what the strengths of David Malpass, the next World Bank President should not be American.

After World War Two the victors designed many of our global institutions, including the World Bank, and the International Monetary Fund. Major global institutions were headquartered in Europe or the United States, and there was an agreement that the World Bank President would be a US citizen, while the IMF would be headed by a European.

This cosy arrangement was fine for most of the 20th century, but is at odds with our 21st century world.

Trump’s unspoken ultimatum

It has been suggested that Trump would follow his usual negotiating tactics and withdraw support from the World Bank if the next chief is not American, which is presumably why some countries including Australia are likely to support Malpass.

The search for the US nomination was headed by Steven Mnuchin and Ivanka Trump, with Invanka Trump herself mentioned as a possible nomination.

Malpass may be a better candidate than the President’s daughter, but I doubt it.

Malpass has been a critic of World Bank lending to China and at Bear Stearns he ignored warning signs of crisis in 2007.

But it’s not so much Malpass’ dubious credibility that is the problem, but the idea that the President should always be American.

The American might not be the best candidate

Important global institutions should be led by the best candidate. The views and expertise of emerging market candidates, particularly from larger economies such as China, India, Brazil, Nigeria and Indonesia should be taken more seriously.

In recent years the IMF would have been much better led by a non-European. The decision to bail out French and German banks at the expense of the Greek economy in 2012 was a poor decision made by the French head of the IMF.

The IMF rightly supported restructuring of banks and financial markets after the Asian Financial Crisis in 1997, but did not push for the same for European or US banks after 2008.

So what if Australia and other middle powers did not support Malpass’ nomination?

Better off withoug the World Bank?

A US withdrawal from the World Bank would probably see its demise. But so what?

The World Bank has become relatively toothless.

Last year China lent more money to emerging market economies than the World Bank.

And this is the point. China needs to be brought into the World Bank and other institutions more fully, not sidelined.




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Problems with governance and other issues with China’s Belt and Road initiative would be much better handled by a multilateral agency, whether that is a properly renewed World Bank or a new institution.The Conversation

Mark Crosby, Professor, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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The collapse of the US-Russia INF Treaty makes arms control a global priority


Ramesh Thakur, Australian National University

On October 20 2018, US President Donald Trump announced he intends to withdraw from the Intermediate-Range Nuclear Forces Treaty (INF) – an arms control treaty with Russia that contributed to the end of the Cold War.

Secretary of State Mike Pompeo confirmed this decision last week, while Trump reiterated his commitment to withdrawing from the treaty in his State of the Union address yesterday.

Russia followed suit and reports say it is aiming to create new land-based missiles within the next two years. Reports also say the US is allocating funds for the research and development of such missiles.

So, what is the INF Treaty? And will its collapse lead to an increase of global nuclear tensions that marked the Cold War?

What is the INF?

The INF Treaty took seven years to negotiate, contributed to the end of the Cold War and ushered in three decades of strategic stability.

US President Ronald Reagan and Soviet General Secretary Mikhail Gorbachev signed the treaty on December 8 1987 to give effect to their declaration that “a nuclear war cannot be won and must never be fought”.

The treaty prohibited the development, testing and possession of ground-launched cruise and ballistic missiles with a range of 500km to 5,500km, whether armed with nuclear or conventional warheads.

A joint statement from Reagan and Gorbachev noted:

This treaty is historic both for its objective – the complete elimination of an entire class of US and Soviet nuclear arms – and for the innovative character and scope of its verification provisions.

It entered into force on June 1 1988. By its implementation deadline of June 1 1991, 859 US and 1,752 Soviet missiles had been destroyed.

Reflecting the dominant Cold War architecture of nuclear arms control, the INF Treaty was bilateral. US National Security Adviser John Bolton, writing in 2011 as a private citizen, conceded the treaty had successfully “addressed a significant threat to US interests”. The threat was a surprise Soviet/Russian nuclear attack in Europe using missiles in the 500-5,500km range.

But the arms control architecture began fraying when US President George W. Bush pulled out of the Anti-Ballistic Missile (ABM) Treaty in 2001. Signed in 1972, the ABM controlled systems designed to counter “strategic” ballistic missiles, such as intercontinental ballistic missiles (ICBMs).

With the INF Treaty now dead and another arms control treaty, New Start, set to expire in 2021, the world will be left without any limits on the two major nuclear arsenals for the first time since 1972.

What now, for Europe?

Since 2014, under the Obama administration, Washington has accused Russia of deploying nuclear-capable ground-launched missiles with a 2,000km range (the SSC-8) in Europe that are non-compliant with INF Treaty obligations.




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The US decision to pull out of the treaty will deepen the strains in the North Atlantic Treaty Organisation (NATO). Baltic countries insist Russia’s violations of the INF Treaty demand robust diplomatic and military counter-measures. The UK has lined up firmly behind Washington, blaming Russia for the breakdown.

But Germany’s foreign minister, Heiko Maas, urged Washington to consider the consequences of withdrawal for Europe and for the future of nuclear disarmament. And the EU foreign policy chief, Federica Mogherini, said:

The INF contributed to the end of the Cold War and constitutes a pillar of European security architecture.

NATO stands to lose more from the INF Treaty collapse than Russia. Russia will be able to move ahead rapidly with the development and deployment of short and medium-range ground-launched nuclear-capable missiles. But, unlike in the 1980s, the US would face difficulty in finding allies in Europe prepared to station such missiles on their territory.

Also, would the host countries have a voice or veto on launching them and in choosing targets?

What about the Asia-Pacific?

In addition to alleged Russian violations, the US exit is motivated by China’s growing challenge to US dominance in the Pacific. China and North Korea have been developing missile-delivery capabilities.




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“To reduce the threat from INF-range missiles,” Bolton concluded back in 2011, “we must either expand the INF Treaty’s membership or abrogate it entirely so that we can rebuild our own deterrent capabilities.” Trump has done the latter.

As a non-signatory, China is unconstrained by INF Treaty limits. About 95% of its missiles are in the prohibited range. This enables it to target US ships and bases from the mainland by relatively inexpensive conventional means.

Without INF restrictions, the US could develop and station ground-launched intermediate-range cruise missiles across the Asia–Pacific, which would force Beijing to divert significant military resources to defend its homeland.

China’s nuclear stockpile has remained relatively stable over many years despite the fluctuations in the Russian and US numbers. It is below 300, compared to nearly 7,000 and 6,500 Russian and US warheads, respectively.

This signifies a policy of deliberate restraint in China despite substantial growth in economic and technological capability since its first nuclear test 55 years ago.

The collapse of the INF Treaty and deployment of China-specific US missiles could compel China to institute counter-measures – such as rapidly expanding its warhead numbers and missile-delivery systems – to protect vital security interests, including nuclear assets deep in its interior.

China’s response in turn may trigger re-adjustments to India’s doctrine of credible minimum deterrence and could produce matching re-adjustments by Pakistan. The nuclear arsenals of both these countries is presently limited to under 150 each.

In a worst-case scenario, China, India and Pakistan could engage in a sprint to parity with the US with a rapid expansion of warhead numbers and missile-delivery capabilities, and perhaps even move to keeping a stock of nuclear weapons on high alert just like Russia and the US.

However, economic and technological limitations will constrain India and Pakistan’s ability to engage in an open-ended nuclear arms race.

Expanding arms control

The sensible alternative would be to begin urgently multilateralising the Cold War bilateral structure of nuclear arms control regimes. This means involving more countries than just Russia and the US in arms control treaties, and in particular involving China. Chinese nuclear expert Tong Zhao’s conclusion holds for the whole world, not just China:

… the era of relying on the US-Russia bilateral arms control structure is at its end.

Multilateralising the arms control negotiating process and resulting structure will avoid a free-for-all nuclear arms race and instead anchor strategic stability in arms control agreements.

Meanwhile, thanks to Donald Trump and John Bolton, we shall continue to live in interesting times.The Conversation

Ramesh Thakur, Professor of International Relations, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

A Trump-aligned World Bank may be bad for climate action and trade, but good for Chinese ambitions


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A World Bank in sync with Donald Trump’s views about climate change and multilateralism would probably help to increase Chin’s role in international development and finance.
Shutterstock

Usman W. Chohan, UNSW

The seat of World Bank president is becoming vacant. Its president, Jim Yong Kim, will step down on January 31, three years earlier than his term formally ends.

His move – described as “sudden” and a “shock,” particularly since the World Bank has been going through significant internal restructuring – gives US president Donald Trump the chance to appoint a replacement more aligned with his outlook.




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This is because, since the World Bank’s establishment in 1945, the United States has had outsized influence as its largest shareholder. Its president has always been an American citizen nominated by the US government. Kim was chosen by the Obama administration in 2012.

Rumours circulated early on that Trump was considering his daughter Ivanka for the job. Even though that has since been denied, it’s likely he will choose a candidate sympathetic to his worldview.

This may mean a substantial change in the World Bank’s priorities. In particular, in two areas the bank has played an important and positive role: funding sustainable projects to deal with climate change (“climate resilience”); and encouraging robust international connectivity through trade.

Focus on climate resilience

The World Bank has put substantial emphasis on funding projects in developing countries that address climate change. Last financial year 32% of its financing – a total of US$20.5 billion – was climate-related.

Recently approved World Bank projects included climate resilient transport in the Oceania region (such as in Tonga and Samoa), and solar projects across Sub-Saharan Africa. This is all part of a detailed five-year Climate Change Action Plan underway since 2016.

This concern about the consequences of climate change stands in marked contrast to the Trump administration’s record.

Trump’s disregard of climate science is reflected in the defunding or reorganisation of climate-related research projects and institutions. His appointee to head the US Environmental Protection Agency, Scott Pruitt, played a key role in the US withdrawing from the Paris Climate Agreement and energetically worked to gut pollution protection regulations.

So there’s good reason to believe the Trump administration’s pick for the World Bank will reflect its hostility to climate security, and that the bank’s priority towards funding climate resilience will change as a result.

Antipathy towards multilateralism

The Trump administration has already sought to curb salary growth among World Bank staff. More severely, Trump’s National Security advisor, John Bolton, has argued the World Bank should be privatised or simply shut down.

This is part of a wider “antipathy towards multilateralism” that includes institutions such as the United Nations and the World Trade Organisation.




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Trump’s belief that free trade has hurt the US is at odds with the World Bank’s long history of facilitating reforms designed to promote international trade.

Part of the original logic for the World Bank was that trade was seen as a means to create interdependence, and thus reduce economic conflict that might lead to war.

The Trump administration has shown it is more than willing to revert to an old-fashioned trade war.

Its tariff contest with China (which joined the WTO in 2001 with the World Bank’s help) is already hurting global manufacturing, with the International Monetary Fund downgrading its global economic growth forecasts as a result.

Though a Trump appointee might not upend the World Bank’s commitment to free trade in principle, the result might be an organisation less active in promoting multilateralism in practice.

Playing to China’s strengths

Ironically a Trump-compliant World Bank might result in promoting its sidelining to the advantage of China.

In its first six decades of existence the World Bank was an immensely powerful international institution. But its relevance to international development and finance is now being overshadowed by alternative funding mechanisms such as private-sector lending and particularly institutions related to Chinese international development initiatives.

China is planning through its Belt and Road Initiative to spend US$1 trillion on international infrastructure projects over the coming decade. Much of these are focused on Eurasian and African regions where the World Bank has struggled most to promote sustainable prosperity.

China has also has built a rival to the World Bank in the form of the Asian Investment Infrastructure Bank (AIIB), which has a sizeable balance sheet and a proactive approach to funding projects, including those in sustainable development.




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But in climate resilience and global economic integration, the World Bank still retains the mantle of global leader. Thus far it has welcomed cooperation with the AIIB, signing a memorandum of understanding in 2017.

Blunt its work in these two areas and the World Bank becomes more irrelevant. Combined with the organisation’s serious governance problems, which are most unlikely to be addressed by a Trump appointee, the future for the World Bank is not bright.The Conversation

Usman W. Chohan, Economist, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

G20 summit bring a truce in US-China trade relations – but it’s likely to be temporary


Tony Walker, La Trobe University

The United States and China have arrived at a temporary truce in a trade conflict that was threatening to further destabilise world equity markets, entrench a global slowdown and cause more damage to a rules-based international order.

Agreement by US President Donald Trump and his Chinese counterpart, Xi Jinping, to allow further negotiations before threatened tariff increases on Chinese imports come into effect is a welcome development.

However, this is a temporary respite, a short-term fix, not a long-term solution to myriad trade and other tensions that have put the US and China at odds with each other.

For their own purposes and in their own interests, Trump and Xi have come away from the Argentine capital with a deal that papers over differences that extend from China’s activities in the South China Sea to its mercantilist trade policies.




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As far as we know, China’s ruthless assertion of its sovereignty over disputed waters in the South China Sea was not a material subject for discussion in Buenos Aires except, possibly, in passing.

China’s rise and America’s relative decline ensure these global economic superpowers will continue to bump up against each other.

So, what was achieved and what are the prospects for an accord reached on the sidelines of the G20?

In their efforts to lower trade tensions and prevent a further erosion of global confidence, Trump and Xi agreed to a 90-day extension on the imposition of additional US tariffs on some US$200 billion of Chinese imports.

Trump had threatened to increase tariffs from 10% to 25% on an initial batch of Chinese imports from January 1. He had also flagged his intention to impose levies on another US$267 billion worth of imports if progress was not made in resolving broad-based trade differences.

A joint statement laid out a timeline for continuing negotiations. It reads:

Both parties agree that they will endeavour to have this transaction completed within the next 90 days. If, at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent.

In return for these temporary concessions, China agreed to:

… purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between the two countries. China has agreed to start purchasing agricultural product immediately.

China also agreed to crack down on sales of Fentanyl by making it a controlled substance. The US is battling an opioid crisis in which Fentanyl is a lethal component.

In retaliation for US trade actions, China had imposed duties on US$110 billion of imports. A principal component of this is soybeans, effectively killing one of America’s more lucrative export markets.

Trump has been under huge pressure from his Mid-Western rural heartland over a collapse in the Chinese market for American agricultural products.

The two sides also agreed to address structural problems in the trading relationship. These extend to five areas – forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft.

These are highly complex issues and unlikely to be resolved in the short term, if at all.

In the wash-up of the Xi-Trump discussions it appears China has got more out of the deal than the US – at least for now. It has secured a stay of execution for the implementation of tariff increases and forestalled, for the time being, tariffs on an additional bloc of Chinese exports.

In return, it has agreed to buy unspecified quantities of US products and to talk about differences.

Trump’s willingness to compromise after months of bombast reflects pressures from a shellshocked grain-producing constituency and alarm on Wall Street at prospects of a full-blown trade war.

From Beijing’s perspective, China has demonstrated that its growing economic heft has enabled it to avoid the appearance of yielding to US pressure.

If not a “win-win” for China – as Chinese officials are fond of saying – it is certainly not a “lose-lose”.

In a statement at odds with months of fire-breathing rhetoric over China’s allegedly perfidious trade practices, Trump hailed his understanding with Xi. He said:

This was an amazing and productive meeting with unlimited possibilities for both the US and China.

For their part, Chinese officials were more circumspect.

Foreign Minister Wang Yi said the talks were conducted in a “friendly and candid atmosphere”. The presidents:

agreed that the two sides can and must get bilateral relations right… China is willing to increase imports in accordance with the needs of its domestic market and the people’s needs.

Impetus for a face-saving deal in Buenos Aires has been prompted by growing concerns about the global economy. The signs of a slowdown are clear. Trade volumes had begun to moderate in the third quarter, heightening worries of a global retrenchment.

International Monetary Fund managing director Christine Lagarde at the G20 summit.
AAP/EPA/G20 handout

On the sidelines of the G20, the International Monetary Fund’s managing director, Christine Lagarde, noted:

Pressures on emerging markets have been rising and trade tensions have begun to have a negative impact, increasing downside risks.

In its October Outlook statement, the IMF warned about threats to global growth due to trade disturbances.

In their final communique, G20 leaders danced around contentious issues on trade to accommodate American objections to having the word “protectionism” inserted in the document.

In the end, participants settled on the need for reform of the World Trade Organisation to describe a world trading system that is falling short of its objectives. Washington has been agitating for a review of the WTO to strengthen its dispute resolution and appeal procedures.

The US has also objected to a continuing description of China as a developing country, with concessions that enable it to take advantage of less developed country status in its access to global markets.




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On climate change, Washington separated itself from the other G20 members. All, except the US, reaffirmed their commitment to the Paris Agreement. The US announced in 2017 it was pulling out of Paris.

Foreign policy specialists will be sceptical about a de-escalation of trade hostilities given the range of issues bedevilling the US-China relationship.

Reflecting a hardening of US attitudes towards China, and in contrast to the optimism that had prevailed for much of the past two decades, Ely Ratner in Foreign Affairs notes:

Even if tariffs are put on hold, the United States will continue to restructure the US-China economic relationship through investment restrictions, export controls, and sustained law enforcement actions against Chinese industrial and cyber-espionage.

At the same time, there are no serious prospects for Washington and Beijing to resolve other important areas of dispute, including the South China Sea, human rights and the larger contest over the norms, rules and institutions that govern relations in Asia.

A stiffening view in the US towards China is shared more or less across the board. In those circumstances, a temporary ceasefire in Buenos Aires is unlikely to be sustained.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

In the post-APEC scramble to lavish funds on PNG, here’s what the country really needs



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A student does his homework near a solar power kit in remote PNG – apparently charging his phone or looking up something on the internet.
Geoff Miller/University of Queensland

Mark Moran, The University of Queensland

If you set out by dinghy from the northern-most inhabited part of Australia you will make landfall in Papua New Guinea (PNG) fairly soon.

Boigu Island, part of Queensland, is the most northerly island in the Torres Strait. With its own Australia Post outlet, it is less than ten kilometres from the PNG coast, an area known as South Fly District, part of Western Province. (Fly refers to Fly River, a major feature of the area.)

PNG, a country often overlooked by the Australian public, is enjoying the fierce competition among foreign powers for influence in the country after APEC ended in stalemate and heightened US-China tensions. APEC was held in Port Moresby, PNG’s capital, earlier this week.




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For PNG, the attention may well translate to development funds. Already, the US has pledged to work with Australia to upgrade Lombrum naval base on Manus Island, in what is widely seen as a counter to rising influence from Beijing in the region.

Fishermen at Daru, the capital of PNG’s Western Province, pictured in 2006 as local police cracked down on illegal fishing.
Royal PNG Constabulary

But if foreign powers really want to make a difference to PNG, one of the poorest in the region, then funding equipment like telecommunications gear and solar power kits would be widely welcomed. One key benefit would be using mobile phones to transfer money – instead of traipsing long distances to a bank in town.

No fewer than 85% of PNG citizens live in rural and remote areas, it is estimated – so items like these are capable of making an enormous difference in their lives.

Much talk of infrastructure of late has involved the heavy duty type – ports, rail, military bases and the like. But as we all know, the biggest revolution around the globe is internet access.




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Stepping into remote villages in the South Fly, one is viscerally confronted with the lack of national expenditure or international finances of any kind.

Life in rural PNG has been described in terms of its “subsistence affluence.” The people are friendly and the land is fertile, with reliable rainfall.

But the lack of roads or public transport, and access to cash, means that opportunities for enterprise and employment remain extremely low. Everyone is searching for markets for their produce and crafts, so they can get cash to buy consumables and health services, and pay school fees.

One option for transferring money in these remote areas is via mobile phones.




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Recent research by Tim Grice found that people living in urban centres and rural towns in PNG are already using mobile money to send money to one another.

It is yet to take off in the South Fly but it could do soon, as people are already exchanging mobile phone credits used to top-up their phones.

Across the South Fly, villagers receive money from relatives living in urban centres like Port Moresby – or from Australian relatives in the Torres Strait – through the mail service Post PNG or the “bricks and mortar” Bank South Pacific (BSP) branch in Daru.

Households affected by the nearby Ok Tedi mine receive compensation payments into their bank accounts. The payments relate to extensive environmental damage to the area, especially the Fly River, when BHP Billiton operated the mine. But this could be done via phone payments too.

And then there are public servants or retired public servants, who burn up much of their government pay or pensions just to get to the bank and back. Mobile phone payments would improve life here too.

Paying government salaries and pensions by phone would be far easier

In the South Fly, officials get payments from the PNG government for community work projects. These officials keep careful records of the hours each villager works, but sometimes spend months in Daru, repeatedly asking the district administrator to release the funds. When the funds finally arrive, the elected official journeys home, surrounded by relatives as bodyguards, and hand delivers payments to each worker.

Much of the money goes on transport and accommodation in Daru. Again, this money could be sent via mobile phones.

PNG’s new Ireland province tested the idea of social payments for aged and disability pensions – with great success. The World Bank assessed the idea and said an electronic payment system was needed across the country.

In many South Fly villages, the shared mobile phone is found dangling from a tree or a window, in the one place where reception appears intermittently.

A lack of infrastructure maintenance and coastal corrosion have seen mobile phone coverage in the South Fly deteriorate. Work is underway to replace failing towers, ahead of moves to bring in 3G internet coverage.

A young girl in traditional dress uses a mobile phone as she waits for then Prime Minister Tony Abbott in Port Moresby in March 2014.
Alan Porritt/AAP

Maintaining mobile phone towers is cheaper than building roads

The cost of installing and maintaining mobile phone infrastructure is lower than building roads across river deltas and flood-prone savannah. And the higher the demand for transferring money via mobile phones, the more viable an upgrade to mobile coverage becomes.

International donors like China are increasingly funding infrastructure projects in PNG, though often with strings attached. Australian Prime Minister Scott Morrison just announced an infrastructure financing facility.

Two major mobile network operators, Digicel and B-Mobile, already provide mobile money services in partnership with BSP, Westpac, and ANZ.

Foreign aid could be sent via mobile phones, cutting out the middlemen

Foreign aid could be distributed this way, to a community-based organisation, for example. And cash flowing in means better-off citizens and more economic activity.

Another big potential benefit to all this could be tackling absenteeism among teachers and medical workers. They are often off work travelling long distances to towns to get their pay and do grocery shopping.

But there are risks. Giving the cash directly to people and organisations – where previously it was funnelled through the central government – will fundamentally shift the politics between citizens, leaders, bureaucrats, and international actors, and not necessarily for the better. Some people who may be benefiting from current arrangements may oppose change to protect the privileges they enjoy.

PNG is a place of great complexity, with a development landscape littered with failed efforts. If such changes are made, there will be winners and losers – but surely it’s worth considering new approaches, given how little money is getting to these villages now.The Conversation

Mark Moran, Chair of Development Effectiveness, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

As tensions ratchet up between China and the US, Australia risks being caught in the crossfire


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The APEC forum in Port Moresby may come to be seen as a pivotal moment when the US reasserted itself in the Pacific region.
AAP/EPA/Mast Irham

Tony Walker, La Trobe University

Port Moresby may not be Yalta, nor, it might be said, is it Potsdam. But for a moment at the weekend the steamy out-of-the-way Papua New Guinea capital found itself at the intersection of great power combustibility.

When this latest chapter in America’s relationship with China is written, the Asia-Pacific Economic Cooperation (APEC) forum in Port Moresby in November 2018 may well come to be regarded as a moment when Washington exposed its determination to reassert itself in the region.

The failure of APEC leaders for the first time in the organisation’s history since 1993 to agree on a final communique, due to a standoff on trade between the United States and China, points to more trouble ahead.




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Unless frictions on trade and other issues are eased over the coming months, Washington and Beijing will have embarked on a course that threatens to destabilise the whole region.

These are significant moments in the evolution of a fractious relationship between an established and a rising power.

The US has long wrestled with a workable approach to an ascendant China. It has oscillated between a hedging strategy, elements of containment, and a process of engagement.

None of these approaches has gelled.

Now, it appears to be moving towards a policy of strategic competition and economic confrontation. This is a combustible formula.

Competing worldviews were on show in Port Moresby as leaders of the two countries put aside diplomatic niceties.

US Vice President Mike Pence’s declaration that the US would not “change course” in its trade dispute with China until that country “changes its ways” could hardly have been more provocative.

China’s leader, Xi Jinping, took a swipe at the US when he said countries that embraced protectionism were “doomed to failure”.

Failure to secure American and Chinese signatures to a leaders’ communique arose from differences over the need to reform the World Trade Organisation.

China dug its heels in on language that might have posed challenges to the role of state-owned enterprises, and also on the question of differential treatment of developed and developing countries.

China has long benefited under WTO rules from being regarded as a developing country.

Both Pence and Australian Prime Minister Scott Morrison warned loans to Pacific countries were being used as a “debt trap” to assert Chinese influence. Xi strongly rejected these assertions.

Whatever the upshot of these skirmishes, America’s posture in the Asia-Pacific has shifted to one in which it seems to be spoiling for a fight. Canberra should be wary.

The Barack Obama pivot to the Asia-Pacific ended up lacking substance and has been superseded by a combative Trump administration. Its approach has less to do with engagement than with confronting China’s regional ambitions.

The pressure point for regional competition lies in the South China Sea, where China is developing base facilities on disputed features. That strategic competition now extends to the southwest Pacific.

Pence’s announcement that the US would partner Australia and Papua New Guinea in the development of a naval base on Manus Island overlooking the Bismarck Sea is, arguably, the most significant American security initiative in the Asia-Pacific since the end of the Vietnam War. Pence said:

We will work with these nations to protect sovereignty and maritime rights of the Pacific Islands as well.

Thus, Beijing was put on notice that America would adopt a more forward-leaning posture in the Asia-Pacific. Where this leads is hard to predict, but what is certain is that trade and other tensions will have a security overlay.

American bases on the Korean Peninsula and in the Japanese archipelago will now stretch into the southwest Pacific. The Manus base will overlook maritime routes on Australia’s northern approaches.

From an Australian strategic perspective, this is a hugely significant development, and one that will test Canberra’s ability to balance its security relationship with the US and its commercial partnership with China.

Beijing will correctly view the Manus facility as a joint endeavour to neutralise China’s thrust into the southwest Pacific, where it has been cultivating micro-states as part of attempts to spread its power and influence across the region.

Belatedly, Canberra is responding to this Chinese assertiveness in its backyard by ramping up its diplomatic engagement, expanding its aid programs, and now partnering Papua New Guinea and the US in the development of a joint naval facility.

In the period ahead, Australian diplomacy towards China will need to be more nimble and subtle than it has been in the recent past.

Beijing will be watching.

Morrison was not understating the case when he said US involvement in the Lombrun base on Manus would elevate Australia’s relations with its ANZUS alliance partnership to a “new level”.

How this “new level” plays out will depend on careful management of relations with China by whatever government is in power.

A joint naval facility will inevitably make it more difficult to avoid being caught in an American slipstream in any confrontation with China.

Finally, in the lead-up to what is shaping as one of more important encounters between world leaders in years – the meeting between Xi Jinping and Donald Trump at the G20 in Buenos Aires this month – Australian policymakers would be advised to read Pence’s October 4 address to the Hudson Institute in Washington.




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Assuming Pence’s speech represents an administration view, this should be regarded as a deeply antagonistic statement verging on a declaration of hostilities.

Pence accused China of: seeking to influence America’s mid-term congressional elections; engaging in cyber attacks against American institutions; stealing American property rights; and adopting ruinous trade practices:

When it comes to Beijing’s malign influence and interference in American politics and policy, we will continue to expose it, no matter the form it takes.

We will work with leaders at every level of society to defend our national interest and most cherished goals.

Some viewed the Pence speech as the forerunner of a new cold war. That probably overstates the case, but it is also true that relations between Washington and Beijing have taken a turn for the worse.

Watch this space.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

With China-US tensions on the rise, does Australia need a new defence strategy?



File 20181120 161621 1g1rmsp.jpg?ixlib=rb 1.1
China’s rising influence in the region has alarmed many defence experts. But the question remains: would Australia ever need to fight China on its own?
Joel Carrett/AAP

Greg Raymond, Australian National University

There is no evidence that China has ever contemplated using its nuclear weapons to coerce another state. Instead, China has maintained a “no first use policy” on nuclear weapons. Surprising as it may sound to many, China wants to build an image of itself as a responsible power.

But the fact remains that China could threaten to use those weapons to force the Australian government into, say, ceasing its patrols of the South China Sea, regardless of the much-debated US “nuclear umbrella” in East Asia.

This is the reality that Australian defence planners have lived with for some 50 years. Australian defence force planning has long accepted the premise that our self-reliance needs to be viewed within an alliance context. As recently as 2009, the government plainly conceded that the Australian Defence Force was not expected to deal with a situation:

…where we were under threat from a major power whose military capabilities were simply beyond our capacity to resist.

In such a situation, we don’t expect to be alone.

This point is important to bear in mind when we consider recent discussions of a “Plan B” to strengthen Australia’s defence posture.




Read more:
Australia and China push the ‘reset’ button on an important relationship


Commentators have suggested recently that Australia’s strategic risk is increasing and the A$195 billion defence spending plan announced in the 2016 Defence White Paper is now insufficient.

Australian taxpayers would certainly be interested to know why a plan that doubles our submarine fleet, significantly expands our navy and adds 100 of the most advanced and expensive combat aircraft ever invented would now be seen as insufficient.

The answer lies in the shifting strategic landscape in the Asia-Pacific region, which has led to greater concerns about China’s long-term intentions and rising tensions between China and the US. So what exactly has changed?

China’s recent activities in the region

Since the last Defence White Paper in 2016, Australian defence observers have been alarmed by four things:

  • China’s rejection of the Permanent Court of Arbitration’s ruling that deemed its nine-dash line claim in the South China Sea illegal

  • China’s conversion of its South China Sea artificial islands into military bases, which was largely complete by the end of 2016, despite a pledge President Xi Jinping gave then-President Barack Obama that China had “no intention to militarise” the islands

  • reports in April of this year that China was establishing partnerships with Pacific nations like Vanuatu for potential future military bases and other arrangements

  • the election of Donald Trump as US president and the uncertainty this has brought to the region due to his disparaging of traditional alliances and disdain for multilateral institutions

These events have occurred against a backdrop of China’s rapidly expanding global footprint. This includes the establishment of its first overseas military base in Djibouti on the Horn of Africa, and its growing access to regional ports such as the controversial Hambantota port in Sri Lanka, which the Sri Lankan government ceded to Beijing on a 99-year lease.

President Xi Jinping has rapidly expanded China’s presence in the Pacific region in recent years.
Mick Tsikas/AAP

These regional shifts have also come amid growing illiberalism in China, evidence of increasing Chinese intelligence and influence operations in Australia (especially the Dastyari affair) and bullying behaviour from Chinese officials in their meetings with Australian politicians.

In addition, Trump appears to mark a significant break with the strategic priorities of previous US administrations. He’s threatened to walk away from America’s support for the traditional allies and global trade institutions that have characterised US foreign policy since the Second World War. This has put unprecedented distance between the United States and Australia, which as a middle power needs healthy global institutions.




Read more:
Australia’s naval upgrade may not be enough to keep pace in a fast-changing region


But on China, it’s different. The Trump administration and importantly, the US security apparatus, share Australia’s darkening view of China to the point we may now be seeing a new Cold War developing in the region.

Case in point: the recent announcement of US participation in the development of a joint naval base with Australia on Papua New Guinea’s Manus Island. This is clear evidence of the US’s new willingness to compete with China and a signal the US wants to dispel the uncertainty left in the region in the wake of Obama’s problematic “pivot” to Asia.

Assessing the risks for Australia

In assessing whether Australia needs a steep increase in its defence spending, there are two questions we must ask: Firstly, what regional developments could the 2016 Defence White Paper not have anticipated? And of these, which equate to risks that increased defence spending can obviate?

Our defence planners have been well aware since at least 2009 of China’s gradually modernising defence forces and steadily growing navy. China’s moves toward a blue-water fleet, including new carriers and cruisers, were also well understood in 2016.

While the artificial islands in the South China Sea were still being built, their eventual militarisation was also anticipated by Australian defence leaders, despite China’s protestations to the contrary.

But even knowing all of this, Australia’s defence planners essentially decided in the 2016 White Paper to continue with the “Force 2030” force structure they envisaged in 2009. There have been some additions like shore-based anti-ship missiles, but our plan has largely been focused on enablers – that is, the capability to make the force operate with greater certainty, precision and coordination. Importantly, this White Paper did not envisage Australia fighting China on its own.




Read more:
The risks of a new Cold War between the US and China are real: here’s why


Of the strategic developments involving China since 2016 – from the revelations of its influence operations to its new-found interest in the Pacific – the question defence planners should now be asking is whether any undermine the fundamental judgements of the 2016 White Paper. Do they point to a need to radically change Australia’s defence posture?

Combating China’s illicit influence in Australia is being dealt with through our stronger foreign influence laws. Offsetting China’s influence in the Pacific will be best undertaken through Australia’s aid and diplomatic programs.

This leaves the big question of the role of the US in the Asia-Pacific region – the most critical of defence planning factors. Will Australia be left on its own in the foreseeable future?

And here we must observe that despite Trump’s anti-alliance rhetoric, the American force posture in the Western Pacific actually remains unchanged. There have been no base closures and no force draw-downs as of yet from the bases encircling China in Guam, Japan and South Korea, though Trump has threatened this.

Mike Pence signaled a harder US stance towards China in a speech last month, saying: ‘We will not stand down.’
Fazry Ismail/EPA

Moreover, the hardening US view against China means a likely strengthening of its Asia-Pacific posture under the new National Security Statement, the cardinal US security policy document.

In fact, the US is now expanding its presence in the region with the announcement of the new joint naval base on Manus Island. The US also recently put its nuclear deterrence guarantee to Australia in writing for the first time in history. And the American Marine build-up in Darwin continues.

Although China’s military advances are making the task of possibly defeating its navy more challenging, the fact remains that it will be a long time before it’s able to start a war with the US confident of victory. The US also seems unwilling to leave China to dominate Asia.

In these circumstances, would China use its forces against other countries in the region, like Australia, without the US getting involved? In my view it could not.

Therefore, while every responsible government should continue to assess defence planning and ensure appropriate levels of readiness, the case for a sharply increased defence spending plan is not at this point compelling.The Conversation

Greg Raymond, Research fellow, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.