As Scott Morrison heads to Washington, the US-Australia alliance is unlikely to change



Wes Mountain/The Conversation, CC BY-ND

David Smith, University of Sydney

Prime Minister Scott Morrison’s official visit to Washington this week carries some prestige. It is just the second “official visit” (including a state dinner) by a foreign leader during the Trump presidency, and the first by an Australian since John Howard in 2006. Despite a rocky start, relations between Australia and the US have been uniquely smooth in the Trump era.

Many traditional allies have learned to endure constant insults from the president. Trump complains bitterly about allies taking advantage of the United States in trade deals and defence alliances. France, Germany, South Korea, Japan, Denmark, Canada, Mexico and the whole of NATO have all been on the receiving end of Trump’s scorn.

In contrast, the leaders of a select group of Middle Eastern allies – Saudi Arabia, Israel, the UAE, and Egypt – have enjoyed extravagant backing from Trump, born of a mutual hostility to Iran and Barack Obama.

Australia seems to be in its own category as a long-standing ally that rarely attracts the attention of the president. In the absence of either tantrums or patronage, business as usual has quietly continued.

Australia’s unique position may be largely because we have a trade deficit with the United States, rather than the other way around. This is an issue of core importance to Trump, and the US gets its fifth-largest trade surplus from Australia at US$7.8 billion.

Australia’s outgoing ambassador, Joe Hockey, has cultivated a genuinely warm personal relationship with Trump that lubricates various bargains. It’s impossible to imagine him suffering the same fate as the UK’s Kim Darroch.

Morrison also understands the usefulness of a close personal relationship with the president and has steadily worked on this. It helps that Trump believes he has some political affinity with him.

But the relationship between the Australian and American governments is much broader than the one between president and prime minister. It is conducted behind the scenes every day by public servants on both sides and reflects decades of cooperation. Earlier this year, pro-Australian forces in the US government successfully defused Trump’s irritation at the volume of Australian aluminium exports to the US. Australia remains the only country with a complete exemption from American steel and aluminium tariffs.

This very stability may limit the scope of what Trump and Morrison can talk about. Most issues are relatively settled. However, the US-China trade war, and Australia’s role in it, will almost certainly be a topic of conversation.

Given the risks to Australia from a trade war, some had hoped Morrison could influence Trump to de-escalate tensions. In June, Morrison warned against the development of a “zero-sum mindset” on trade. He told a London audience that the World Trade Organisation, then under attack from the US, needed support as the US-China trade conflict put prosperity and living standards at risk.




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Back then, there was still hope of an agreement, which now seems more remote than ever. Morrison seems resigned to an enduring conflict between two of our largest trading partners. He has said the world will have to get used to it and that the conflict is all about the need to enforce the rules of global trade on China.

Australia has long shared American concerns that China flouts the rules to the extent that it undermines the whole system. Indeed, Australians have sometimes worried that Trump’s obsession with trade deficits is actually a distraction from this deeper issue.

In February, Hockey warned Trump against making a deal with China that would reduce the deficit while leaving structural issues unaddressed. But none of this means Morrison would accept an invitation from Trump to join the US in the trade war.

Morrison has already committed Australian support to the US effort to guard oil shipments from Iranian seizures in the Strait of Hormuz. This is the kind of invitation Australia rarely refuses. A frigate, surveillance and patrol aircraft and some personnel will go to the Persian Gulf, though it is unclear when.




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Infographic: what is the conflict between the US and Iran about and how is Australia now involved?


Other US allies, some of whom are signatories to the Iran nuclear deal, have declined to make even modest contributions such as these. They see the current crisis, correctly, as Trump’s fault and they fear provoking further conflict with Iran.

Even after Trump unilaterally withdrew the US from the Iran nuclear deal, reimposing sanctions that led to increased hostilities, the Morrison government opted to continue support for the deal, subject to Iranian compliance (which is now evaporating).

Both major parties are framing Australia’s support for the US in terms of our commitment to freedom of navigation and a rules-based international order.

Morrison is likely to reaffirm this commitment in Washington, without getting into discussions about why Trump withdrew from an agreement that his own intelligence agencies said was working. The recent demise of John Bolton as national security adviser will hopefully make it less likely that Australia faces any questions about deeper military involvement in the Gulf.

Morrison is keen to secure Trump’s first visit to Australia, for the President’s Cup golf tournament in December. While he lauds Trump as “a good president for Australia”, Australians are sceptical. A US Studies Centre poll in July found only 19% of Australians want to see Trump re-elected (that includes just 29% of Coalition voters).

In fairness to Trump, polls conducted in 2008 and 2012 found even smaller numbers of Australians wanted John McCain (16%) or Mitt Romney (5%) to win those presidential elections. The Republican Party this century has been well to the right of nearly every other mainstream conservative party in the world, including the Liberal Party.

Trump isn’t the first deeply unpopular president Australia has seen and he won’t be the last. In the 2019 Lowy Institute Poll, 64% of respondents say Australia “should remain close to the United States under President Donald Trump”.

There is no danger of that changing under Morrison.The Conversation

David Smith, Senior Lecturer in American Politics and Foreign Policy, Academic Director of the US Studies Centre, University of Sydney

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

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Nuclear power should be allowed in Australia – but only with a carbon price



The Opal nuclear research reactor at Lucas Heights in Sydney. It does not produce nuclear energy but is used to produce medical radioisotopes and for other purposes.
Tracey Nearmy/AAP

John Quiggin, The University of Queensland

Looking at the state of policy on energy and climate change in Australia, it’s tempting to give in to despair. At the national level, following the abandonment of the National Energy Guarantee last year, we have no coherent energy policy and no serious policy to address climate change.

In this context, the announcement of two separate inquiries into the feasibility of nuclear power (by the New South Wales and federal parliaments) could reasonably give rise to cynicism. The only possible case for considering nuclear power, in my view, is that it might provide a way to decarbonise our electricity supply industry.

Yet many of the keenest boosters of nuclear power have consistently opposed any serious measure to address climate change, and quite a few have rejected mainstream science altogether.

Activists dressed as nuclear waste barrels protesting at the Lucas Heights nuclear reactor in 2001. Nuclear technology in Australia has long raised concern among environmentalists.
Laura Frriezer/AAP



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Yet in a situation which all responsible people view as a climate emergency, we can’t afford the luxury of despair. For this reason, rather than dismissing these inquiries as political stunts, I made a submission to the federal inquiry setting out the conditions required to allow for any possibility of nuclear power in Australia.

The submission was picked up by the national media, which largely focused on my proposal to lift the state ban on nuclear power and implement a carbon price.

The reception from commentators on the right, who want the ban lifted, and from renewables advocates, who want a price on carbon, suggests a middle ground on nuclear power may be achievable.

The three big problems with nuclear power

Three fundamental problems arise immediately when considering the prospect of nuclear power in Australia. First, the technology is expensive: more expensive than new fossil-fuelled power stations, and far too expensive to compete with existing fossil fuel generators under current market conditions.

Second, given the time lags involved, any substantial contribution from nuclear power in Australia won’t be available until well beyond 2030.

Third, given the strong public opposition to nuclear power, particularly from the environmental movement, any attempt to promote nuclear power at the expense of renewables would never get broad support. In these circumstances, any investor in nuclear power would face the prospect of losing their money the moment the balance of political power shifted.

A technician uses a hot cell which shields radioactive material at the Opal nuclear research reactor at Lucas Heights in Sydney.
Tracey Nearmy/AAP

On the first point, we have some evidence from the contract agreed by the UK government in for the construction of the Hinkley C nuclear power plant. This was the first new nuclear construction project to be approved in an OECD country for a number of years.

The agreement to construct Hinkley was based on a guaranteed “strike price” of £92.50/ megawatt hours (MWh), in 2012 prices, to be adjusted in line with the consumer price index during the construction period and over the subsequent 35-year tariff period. At current exchange rates, this price corresponds to approximately A$165.




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Prices in Australia’s National Electricity Market have generally averaged around A$90/MWh. This implies that, if new nuclear power is to compete with existing fossil fuel generators, a carbon price must impose a cost of A$75/MWh on fossil fuel generation.

Assuming emission rates of 1.3 tonnes/MWh for brown coal, 1 tonne/MWh for black and 0.5 tonnes for gas, the implied carbon price ranges from A$50/tonne (to displace brown coal) to $150/tonne (to displace gas). On the basis that nuclear power is most plausible as a competitor for baseload generation from brown coal, I considered a price of A$50/tonne.

A blueprint for reform

The central recommendations of my submission were as follows:

Nuclear power, while costly, could dramatically reduce Australia’s electricity sector emissions.
AAP

Recommendation 1: A carbon price of A$25/tonne should be introduced immediately, and increased at a real rate of 5% a year, reaching A$50/tonne by 2035.

Recommendation 2: The government should immediately adopt the recommendations of its own Climate Change Authority for a 40% to 60% reduction in emissions by 2030, relative to 2000 levels, and match other leading OECD countries in committing to complete decarbonisation of the economy by 2050.

Recommendation 3: The parliament should pass a motion:

  • affirming its confidence in mainstream climate science and its acceptance of the key conclusions of the United Nations’ Intergovernmental Panel on Climate Change;
  • legislating a commitment to emissions reductions;
  • removing the existing ban on nuclear power.

Let’s all meet in the middle

Rather to my surprise, this proposal received a favourable reception from a number of centre-right commentators.

Reaction from renewables proponents, on social media at least, was cautious. But it did not indicate the reflexive hostility that might be expected, given the polarised nature of the debate.

There are immediate political implications of my proposal at both the state and federal level. It will be more difficult for the Coalition-dominated committees running the two inquiries to bring down a report favourable to nuclear power without addressing the necessary conditions – including a carbon price. If the government’s hostility to carbon pricing is such that a serious proposal for nuclear power cannot be considered, it will at least be clear that this option can be abandoned for good.

Former Nationals leader and now backbencher Barnaby Joyce is a strong advocate for nuclear power.
Lukas Coch/AAP

In the admittedly unlikely event that the Coalition government shows itself open to new thinking, the focus turns to Labor and the Greens.

Given the urgency of addressing climate change – a task that is best addressed through a carbon price – it makes no sense to reject action now on the basis that it opens up the possibility of nuclear power sometime in the 2030s. And, if renewables and storage perform as well as most environmentalists expect, nuclear power will be unable to compete even then.

Political hardheads will doubtless say that this is all impossible, and they may be right. But in a world where Donald Trump can win a US presidential election, and major investment banks support UK Labour leader Jeremy Corbyn over Prime Minister Boris Johnson, “impossible” is a big claim

In the absence of any prospect of progress on either energy or climate, the grand bargain I’ve proposed is at least worth a try.The Conversation

John Quiggin, Professor, School of Economics, The University of Queensland

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

Why Chinese and Hong Kong students clash in Australia: the patriotic v the protest movement


Christine Cunningham, Edith Cowan University; Clive Barstow, Edith Cowan University, and Wei Zhang, Edith Cowan University

The protests in Hong Kong have led to some open clashes here in Australia between students from mainland China and others from Hong Kong.

There were angry scenes between pro-China and pro-Hong Kong groups in Sydney and Melbourne, as well as at universities in Brisbane and Adelaide.

These clashes are troubling for the Australian university sector, which enrols 182,555 mainland Chinese and 11,822 Hong Kongers as international students at various education institutions.




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Our current research suggests differences in the curriculum studied by mainland Chinese and Hong Kong students may help to explain the beliefs underpinning the protest movements.

Our research involved in-depth interviews of a random sample of more than a dozen international postgraduate students from mainland China who are studying, or very recently have been, at Western Australian universities.

The interviews took place in late 2018 – before the recent Hong Kong protests. We asked the participants about their experiences studying in Chinese schools where Moral Education is a compulsory subject.

Lessons in China

The Moral Education curriculum teaches Chinese children to be politically proud of the Chinese Communist Party (CCP) and loyal to the ideals of a One-China worldview.

Moral Education is a stand-alone subject and also embedded within other subjects, such as history and Chinese literacy studies. Moral Education starts being taught in the early years of schooling and continues throughout high school and during undergraduate university studies.

In primary school, all Chinese children are supposed to join the Young Pioneers, a 130 million-strong youth organisation controlled by the CCP.

In high school, teachers invites students who achieve highly academically and morally to join the Communist Youth League. In university, excellent students are invited to join the Communist Party.

In contrast, Hong Kong students do not study Moral Education and cannot join the Young Pioneers, Youth League or the Communist Party.

When East meets West

Preliminary indications from our interviews suggest that when mainland Chinese students arrive in Western countries for postgraduate studies they carry with them a moral duty to uphold their national identity. This identity is arguably constructed through the Moral Education lessons.

The following are translated Mandarin quotes from participants in our study. Each quote comes from a different student, but we have de-identified them to protect their identity. They are talking about their experiences of studying Moral Education in their primary and high school years:

I was taught to love our motherland and love our country. It’s the right thing to do.

We were taught many slogans that were inspirational, positive and patriotic. It taught us to love our country, our family and our society.

In secondary school Moral Education made us all feel we are part of one China and what the government is doing is to give us a better life.

We are also learning from our interviews that even after mainland Chinese students study in Western universities for several years, they are unlikely to change their previously learnt ideological positions.

I think although the Communist Party is a one-party dictatorship, because in a big country like China it is very difficult to apply democracy and maintain the sustainability otherwise it will be too chaotic.

When I was standing under the party flag and sworn in to join our Communist Party it was so exciting. After so many years of ideological and political education, I believe that the Communist Party is the most advanced organisation of our society.

Now, especially when we are living overseas, if you hear the Chinese national anthem it brings me to tears of pride, belonging and identity.

Sympathy for the Communist Party

Another phenomenon our interviews revealed is that many of our participants expressed strong sympathy towards the CCP government.

That holds even after they learn about facts and events that have been censored in China, including the 1989 Tiananmen Square massacre.

I will most likely participate (in) rallies like welcoming President Xi’s visit to Australia because I am […] Chinese and I have a sense of belonging and responsibility attached to this Chinese identity. I also will be vocal about protecting China’s sovereignty.

China is a big country with a large population and there are still many people who are not well educated, therefore they are easy to be incited by others. Although the one party is never 100% perfect, it at least proved itself that most people in China have a good life under its leadership.

Isolated in Australia

Over the course of three interviews with each participant in our study, we discovered many Chinese international students feel isolated from Australian friendship circles.

They expressed concern at the lack of opportunities to truly engage with Australian students during their time living here. Many worry that local Australian students just aren’t interested in them.

Actually I have little knowledge about how Australian society works – aside from the common social norms. I don’t know where I can access such knowledge. Some locals take it for granted that we should have known this, but we really don’t as we grew up in a totally different place.

For me I tend to have the impression that the local students believe we Chinese students are not interested in talking to them, so they would not take the initiative and talk to us either. I suggest that our university can do more about it like organising activities so we could access local friendships.




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International education should be a two-way transaction, deep in its engagement and fluid in its ability to change as we change.

But what these interviews show is the strong feelings many students from mainland China have about their country and government, which perhaps explains why they feel anger towards those who protest against that way of life.

The growing trend of these Chinese graduates returning to their homeland for work opportunities also has a bearing on their continuing patriotism and sense of national identity.The Conversation

Christine Cunningham, Senior Lecturer in Educational Leadership, Edith Cowan University; Clive Barstow, Professor of Creative Arts / Executive Dean Arts & Humanities, Edith Cowan University, and Wei Zhang, PhD candidate, Edith Cowan University

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

After a border dispute and spying scandal, can Australia and Timor-Leste be good neighbours?



Protesters outside the Australian embassy in Dili, Timor-Leste, in 2016, demanding a settlement of the border dispute between the nations.
Antonio Dasiparu/EPA

Michael Leach, Swinburne University of Technology

On August 30, Timor-Leste will celebrate the referendum that gave it independence from Indonesia. For the people of this small island, it has been a long battle – and one that continues today. You can read our companion story on the island nation’s struggle for independence here.


This Friday marks the 20-year anniversary of the day the East Timorese people voted overwhelmingly for independence from Indonesia after a 24-year occupation.

Another significant anniversary comes next month, on September 20. That was the day of the arrival of the INTERFET mission, the Australian-led multinational force that brought an end to the violence that wracked Timor-Leste after the independence vote.

In the intervening three weeks, 1,500 Timorese were killed in the violence, which had been orchestrated by the Indonesian military and its proxy militias. Over 250,000 were forcibly displaced to West Timor and some 80% of the infrastructure was destroyed.

Many Australians are rightly proud of their contribution to Timor-Leste’s independence, which served as a historical corrective to Australia’s longstanding support for Indonesian’s invasion and forced integration of East Timor in 1975-76. The more than 5,000 Australian soldiers in the INTERFET mission marked the nation’s largest military deployment since the Vietnam War.

Yet despite the goodwill the mission engendered in Timor-Leste for the Australian people, relations between the two nations have repeatedly been undermined by contentious negotiations over control of the lucrative oil and gas fields in the Timor Sea.




Read more:
Australia and Timor Leste settle maritime boundary after 45 years of bickering


A treaty signed last March created a maritime boundary between the states for the first time. The border is expected to come into force this week following its ratification by both parliaments – another momentous milestone in Timor-Leste’s history.

But other thorny issues remain. When Prime Minister Scott Morrison arrives in Dili for the anniversary on Friday, he will likely face calls for Australia to drop its prosecution of a whistleblower who revealed an Australian spying operation against Timor-Leste.

As former Timor-Leste leader Jose Ramos Horta said,

If Australia doesn’t show political leadership, moral leadership on this issue, every time we talk to Australian leaders I will wonder if they have a tape recorder in their pocket [or] if my office has been bugged.

Australian soldiers conducting an operation to flush out militia fighters in Timor-Leste in September, 1999.
Jon Hargest/AAP

Conflict over oil and gas

Since its independence, Timor-Leste’s relations with Australia have been overshadowed by one major factor: the oil and gas fields on its contested maritime border.

Relations hit rocky waters in 2012 when Timor-Leste challenged the Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS), which had been signed by the two countries in 2006. This treaty had established a 50-year moratorium on maritime boundary negotiations, or five years after exploitation of the Greater Sunrise gas field ended, whichever occurred first.

Allegations then emerged in 2013 from a former ASIS agent (now known as Witness K) that Australia had spied on Timorese officials during the negotiations over the CMATS treaty. This led Timor-Leste to launch a case in The Hague challenging the treaty for want of good faith.

Australia was embarrassed by the exposure, but determined to maintain the countries’ ongoing treaty arrangements and focus instead on revenue-sharing agreements. However, Timor-Leste argued that the bulk of the oil and gas fields in the Timor Sea would lie on their side of a median line and pushed for a permanent boundary to be drawn between the countries.




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Australia and Timor Leste reach a deal on the Timor Sea – but much remains unknown


As relations deteriorated, ministerial visits ceased for almost five years.

Because Australia had abandoned the international courts as a means of resolving the maritime boundary in 2002, Timor-Leste had only one option left. In 2016, it pioneered the use of the UN Convention on the Law of the Sea (UNCLOS) compulsory conciliation process: a non-binding but mandatory mediation between nations on maritime disputes.

The conciliation panel of five judges found the CMATS treaty’s moratorium on defining a maritime boundary was invalid. This dealt a fatal blow to decades of Australian foreign policy focused on maintaining its continental shelf claim in the Timor Gap in line with the 1972 Australia-Indonesia border treaty.

Australia could have attempted to tough it out since the tribunal’s finding was non-binding. But by this point, the Labor opposition was arguing the maritime boundary with Timor-Leste should be renegotiated in line with international law, putting additional pressure on the government to resolve the dispute.

A separate dispute over China’s claims in the South China Sea, also settled in 2016, made Australia’s position increasingly untenable, as well. The world was urging China to respect an international tribunal’s maritime ruling, so it would be difficult for Australia not to do the same.

A new boundary finally set in the sea

Once the UNCLOS opening decision came down, the two sides began negotiating a border in good faith. Timor-Leste dropped its espionage case against Australia in the Permanent Court of Arbitration in The Hague, and later terminated the CMATS treaty, without Australian objection.

Announcement of the new maritime border treaty followed in March 2018. It was a major diplomatic breakthrough and soon led to the resumption of ministerial visits.

The new maritime boundary between Australia and Timor-Leste.
Department of Foreign Affairs and Trade

The treaty created a median-line boundary in the former Timor Gap, placing the wells in the former Joint Petroleum Development Area (JPDA) in Timor-Leste’s sovereign waters.

The Timorese believe there is another A$1.5 billion of oil reserves in this area, but as these fields near the end of their life, the greater game lies in the as-yet-untapped Greater Sunrise field. This field straddles the eastern side of the new boundary and is believed to be worth in excess of US$40 billion.

Timor-Leste also achieved a major increase in royalties from the future development of this field, up from 50% under the CMATS treaty to 70-80%, depending on whether the pipeline eventually goes to Timor or Darwin.




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For Timor-Leste, another election and hopes for an end to crippling deadlock


China’s potential role in development

Since then, Timor-Leste’s focus has shifted to negotiations with its commercial partners over its ambitious plans for the Tasi Mane oil and gas megaproject on its southern coast.

This project could bring additional challenges for the relationship with Australia. The East Timorese government estimates that external financing will provide some 80% of the estimated US$10.5-12 billion funding for the project. And Timor-Leste’s ambassador to Australia has already stated that if funding partners cannot be found among Timor-Leste’s friends in Australia, the United States, Japan or South Korea, then Chinese capital would be a clear alternative.

Timor-Leste has rejected reports that China’s Exim bank offered a A$16 billion loan to finance the megaproject, though it acknowledges both countries have expressed willingness to cooperate over the separate development of Timor-Leste’s petrochemical industry.

It is also notable that China this month donated some US$3-5 million in defence materiel requested by the Timorese government.

Even though China might be seen as a logical partner for developing Timor-Leste’s oil and gas processing capabilities, Beijing’s involvement would certainly complicate relations with Australia.

Timor-Leste has generally sought to balance its relationships with key regional powers, in part to prevent the dominant influence of any single nation. The country’s foreign minister recently emphasised that discussions on the Tasi Mane project are ongoing with potential partners in Australia, the US, Europe and Asia.

Foreign Minister Julie Bishop meets with her Timor-Leste counterpart, Dionisio Soares, in Dili in 2018. She was the first Australian government minister to visit Timor-Leste in five years.
Greg Roberts/AAP

Remaining obstacles to closer ties

Despite the major improvement in bilateral ties between the two countries, there are some remaining points of contention.

The prosecutions of Witness K and his lawyer Bernard Collaery in the espionage whistleblower case have been criticised by Horta and another former Timor-Leste leader, Xanana Gusmão. This week, Gusmão indicated he would appear as a witness to give evidence on behalf of the two, raising the potential for further embarrassment for Australia.

Some political activists in both Australia and Timor-Leste have also called for Canberra to pay back oil and gas revenues it has received from the JPDA since the border treaty was signed in 2018, and accused Australia of delays in ratification.

While these accusations have made headlines, Timor-Leste’s parliament had not ratified the treaty either until last month. In any case, Timorese NGOs point to the far larger question of up to US$5 billion in revenues that Australia has received dating back to 2002, when revenue-sharing agreements began.

But it appears there is no appetite in either country to consider repayment of historical royalties.

As Australia and Timor-Leste prepare to celebrate the anniversary of the independence referendum – as well as the recent restoration of good bilateral relations – it’s worth keeping in mind that new hurdles potentially lie ahead, with implications for the wider region.The Conversation

Michael Leach, Professor, Politics & International Relations, Swinburne University of Technology

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

India has it right: nations either aim for the Moon or get left behind in the space economy



India’s Chandrayaan-2 Moon mission blasts off from Satish Dhawan Space Centre in Sriharikota, India, on 22 July 2019.
Indian Space Research Organisation/EPA

Nicholas Borroz, University of Auckland

India’s Chandrayaan-2 spacecraft has settled into lunar orbit, ahead of its scheduled Moon landing on September 7. If it succeeds India will join a very select club, now comprising the former Soviet Union, the United States and China.

As with all previous Moon missions, national prestige is a big part of India’s Moon shot. But there are some colder calculations behind it as well. Space is poised to become a much bigger business, and both companies and countries are investing in the technological capability to ensure they reap the earthly rewards.

Last year private investment in space-related technology skyrocketed to US$3.25 billion, according to the London-based Seraphim Capital – a 29% increase on the previous year.

The list of interested governments is also growing. Along with China and India joining the lunar A-list, in the past decade eight countries have founded space agencies – Australia, Mexico, New Zealand, Poland, Portugal, South Africa, Turkey and the United Arab Emirates.

China’s Chang’e 4 spacecraft landed on the far side of the Moon on 11 January 2019. This image taken with the lander’s camera shows the mission’s lunar rover Yutu-2, or Jade Rabbit 2.
China National Space Administration/EPA

Of prime interest is carving out a piece of the market for making and launching commercial payloads. As much as we already depend on satellites now, this dependence will only grow.

In 2018 382 objects were launched into space. By 2040 it might easily be double that, with companies like Amazon planning “constellations”, composed of thousands of satellites, to provide telecommunication services.

The satellite business is just a start. The next big prize will be technology for “in-situ resource utilisation” – using materials from space for space operations. One example is extracting water from the Moon (which could also be split to provide oxygen and hydrogen-based rocket fuel). NASA’s administrator, Jim Bridenstine, has suggested Australian agencies and companies could play a key role in this.




Read more:
Australia: well placed to join the Moon mining race … or is it?


All up, the potential gains from a slice of the space economy are huge. It is estimated the space economy could grow from about US$350 billion now to more than US$1 trillion (and as possibly as much US$2,700 billion) in 2040.

Launch affordability

At the height of its Apollo program to land on the Moon, NASA got more than 4% of the US federal budget. As NASA gears up to return to the Moon and then go to Mars, its budget share is about 0.5%.

In space money has most definitely become an object. But it’s a constraint that’s spurring innovation and opening up economic opportunities.

NASA pulled the pin on its space shuttle program in 2011 when the expected efficiencies of a resusable launch vehicle failed to pan out. Since then it has bought seats on Russian Soyuz rockets to get its astronauts into space. It is now paying SpaceX, the company founded by electric car king Elon Musk, to deliver space cargo.

SpaceX’s Crew Dragon spacecraft just moments after undocking from the International Space Station on 8 March 2019.
NASA/EPA

SpaceX’s stellar trajectory, having entered the business a little more than a decade ago, demonstrates the possibilities for new players.

To get something into orbit using the space shuttle cost about US$54,500 a kilogram. SpaceX says the cost of its Falcon 9 rocket and reuseable Dragon spacecraft is about US$2,700 a kilogram. With costs falling, the space economy is poised to boom.




Read more:
How SpaceX lowered costs and reduced barriers to space


Choosing a niche

As the space economy grows, it’s likely different countries will come to occupy different niches. Specialisation will be the key to success, as happens for all industries.

In the hydrocarbon industry, for instance, some countries extract while others process. In the computer industry, some countries design while others manufacture.
There will be similar niches in space. Governments’ policies will play a big part in determining which nation fills which niche.

There are three ways to think about niches.

First, function. A country could focus on space mining, for instance, or space observation. It could act as a space communication hub, or specialise in developing space-based weapons.

Luxembourg is an example of functional specialisation. Despite its small size, it punches above its weight in the satellite industry. Another example is Russia, which for now has the monopoly on transporting astronauts to the International Space Station.

Russian cosmonaut Alexey Ovchinin flanked by NASA astronauts Christina Koch and Nick Hague at the Gagarin Cosmonaut Training Center in Star City, Russia, as they prepare for their launch aboard the Soyuz MS-12 in March 2019.
Sergei Ilnitsky/EPA

Second, value-adding. A national economy can focus on lower or higher value-add processes. In telecommunications, for example, much of the design work is done in the United States, while much of the manufacturing happens in China. Both roles have benefits and drawbacks.

Third, blocs. Global production networks sometimes fragment. One can already see the potential for this happening between the United States and China. If it occurs, other countries must either align with one bloc or remain neutral.

Aligning with a large power ensures patronage, but also dependence. Being between blocs has its risks, but also provides opportunities to gain from each bloc and act as an intermediary.




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The first space race, between the Soviet Union and the United States, was singularly driven by political will and government policy. The new space race is more complex, with private players taking the lead in many ways, but government priorities and policy are still crucial. They will determine which countries reach the heights, and which get left behind.The Conversation

Nicholas Borroz, PhD candidate in international business and comparative political economy, University of Auckland

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

Australia’s energy woes will not be solved by reinforcing a monopoly



Australia’s energy market has a logjam,
Sean Davis/Flickr, CC BY-NC-SA

Bruce Mountain, Victoria University

The possibility of blackouts affecting half of Victoria has attracted plenty of attention to a document once read only by industry insiders and policy wonks: the Electricity Statement of Opportunities.

The Statement, updated every year by the Australian Energy Market Operator (AEMO), forecasts 10-year supply and demand in the main grids that serve the Australia’s south and eastern states.

But the chance of huge blackouts is just part of the Statement – and in fact it reveals a growing tension between the market operator and the bodies that oversee electricity regulations.




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Explainer: power station ‘trips’ are normal, but blackouts are not


Blackouts unlikely

So, what does the latest Statement say? The good news is AEMO calculates the expected level of “unserved energy” – that is, demand that cannot be met by supply – is likely to be fairly low, which makes blackouts unlikely.

The bad news is AEMO thinks a standard based on “expected unserved energy” is a poor way to forecast keeping the lights on.

Instead, AEMO points to the unlikely events that nonetheless could have a significant impact on consumers and says we should frame reliability obligations around those.




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In its analysis of these, AEMO finds it is possible (albeit unlikely) about half of Victoria’s households could lose supply in a single event in the coming year.

So, on the one hand AEMO expects the system will basically meet the current obligations for unserved energy, but it also says there is nonetheless the possibility half of Victoria’s homes could suffer outages because of shortfalls on the main power system.

Importantly, as AEMO’s obligation is to hit the expected unserved energy standard, not beat it, it is not authorised to take actions to mitigate these outside possibilities.

Market vs regulators

To really understand the issues here, we need to look back to last year. In 2018, AEMO sought to change Australia’s energy regulations so AEMO could buy as much reserve capacity as it decided was needed to reliably manage unlikely but possible severe failures.

It also asked for the authority to buy reserves for longer periods so that it could source reserves more cheaply.

The Australian Energy Market Commission (AEMC) that sets the rules rejected this application on the basis that the standards were already high enough – maybe even too high – and AEMO was unduly risk-averse (the political risk associated with power failures made it so). By implication, left to its own devices AEMO would look after itself, at customers’ expense.

Whatever the stated rationale, underlying AEMC’s rejection of AEMO’s application is the philosophy of the sanctity of the market: wherever possible, the market is to be protected from intervention.

From the regulator’s perspective, were it to have acceded to AEMO’s request to expand the volume of reserves AEMO bought outside the market, it would be buying reserves it did not need and allowing the price signals in the market to be further undermined.

But I would argue the regulator’s decision is better characterised as protecting the National Electricity Market’s monopoly for the exchange of wholesale electricity.

It may be acceptable to force transactions through a market if there is confidence in that market. But the evidence of market failure is abundant: wholesale prices in Victoria at record highs, rampant exercise of market power, reliability concerns that often make the front page, and in certain cases shortfalls in dispatchable capacity, storage and price-responsive demand.




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New demand-response energy rules sound good, but the devil is in the (hugely complicated) details


In its Statement, AEMO signalled it will work with Victoria’s state government to explore ways they can work together to meet Victoria’s reliability needs, in spite of the AEMC’s decision.

This is a very significant development and I envisage it will presage similar bilateral arrangements between AEMO and other states.




Read more:
35 degree days make blackouts more likely, but new power stations won’t help


Should we be worried about this? Not in the least. Electricity markets do not spontaneously arise; they are administrative constructions. For too long the National Electricity Market has had a monopoly on the exchange of wholesale electricity and the AEMC has had a monopoly on its oversight. Monopolies and markets ossify when they get stuck in their originating orthodoxy and ideology.

AEMO is beginning to clear a log jam. There is a spirit of innovation and discovery in the air. This is something to welcome and it is not a moment too soon.The Conversation

Bruce Mountain, Director, Victoria Energy Policy Centre, Victoria University

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

Vital Signs: economically, Australia is at risk of becoming Germany, and not in a good way



Once, emulating Germany would be something to be proud of. Not at the moment.
Shutterstock

Richard Holden, UNSW

It’s four years since then Prime Minister Tony Abbott warned Australia had been heading to “a Greek-style economic future”.

He was referring to what he said had been happening under the previous Labor government.

When Labor left office in 2013 the federal government’s budget deficit had been 3% of gross domestic product. The Greek government’s had been 7%.

The Australian government’s debt to GDP ratio was 20%. The Greek government’s was 177%.

Australia was never on the path to becoming an economic basket case like Greece, but right now we are on the road to becoming like another European nation.

It also starts with “G”.

Becoming economically like Germany isn’t as scary. But it is genuinely troubling nevertheless.

Germany is not in good shape

Germany’s GDP growth in the June quarter was minus 0.1%. That means economic activity shrank.

Its central bank, the Bundesbank, doesn’t see things getting better any time soon, saying growth “is probably set to remain lacklustre in the third quarter of 2019”.

Interest rates have fallen so low that investors are now paying the German government to take their money. The nominal interest rate on 2-year German government debt is -0.90%, and on extremely long-term 30-year bonds is -0.15%.




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The ‘yield curve’ is one of the most accurate predictors of a future recession – and it’s flashing warning signs


That’s right: even for 30 years into the future, investors think its safer to lose money by parking funds with the German government than to try to make money by using them in other investments.

Put another way, markets think the German economy will be in trouble for decades, meaning short-term German interest rates will have to remain ultra-low for decades.

The German penchant for balanced budgets became (there’s really no other way to put it) fanatical in the wake on the financial crisis of 2008.

Like centre-right governments around the world – Britain was a leading example – a dark fiscal austerity took hold, at precisely the wrong time.




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What is an inverted yield curve? Why is it panicking markets, and why is there talk of recession?


2009 was a time of chronically weak private demand that required both lower interest rates and, as monetary policy was running out of steam, continuing budget deficits.

Instead Germany cut government spending, pushing the budget back into surplus
from 2014.

It didn’t get everything wrong.

As I wrote at the time, Germany was largely right to insist that Greece get its out-of-control spending and government debt under control.

But Germany’s approach to its own economy hurt it and other European economies such as Italy and Spain.

We’re turning German…

With apologies to British 1980s band The Vapors, we’re at risk of “Turning Germanese”.

Like Germany, our interest rates are getting close to zero. OK, Germany has negative nominal 30-year interest rates, but we’ve got negative real 10-year bond interest rates, and zero 30-year bond rates.

Both of our major political parties are gripped by balanced-budget fetishism, appearing to want to balance the budget regardless of the economic context.




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Mine are bigger than yours. Labor’s surpluses are the Coalition’s worst nightmare


Again, here we are not quite as fanatical as Germany, but Labor seems determined to “out-surplus” the Coalition to prove its economic management credentials. And the government has made delivering a surplus the centrepiece of its economic agenda.

And, like in Germany, our economic growth is slowing. We don’t yet have negative GDP growth like in Germany, but we do have negative per capita GDP growth.

…but there’s time to pull back

RBA Governor Philip Lowe in a staged photo op with Treasurer Josh Frydenberg, July 11, 2019.
David Geraghty/AAP

Poor old Reserve Bank governor Philip Lowe has been pleading over and again for more aggressive government spending, particularly on infrastructure, to help complement what he is doing on interest rates.

A couple of cheesy photo ops with Treasurer Josh Frydenberg aside, there’s no evidence of him gaining any traction in Canberra.

Structurally balanced budgets are important, and thinking government debt doesn’t matter is deeply misguided.

But this is the situation we face:

  • private demand is chronically weak

  • our physical infrastructure has not kept pace with population growth and modern needs

  • our social infrastructure (including all levels of education) is not up to standard

  • interest rate cuts are running out of puff

  • the government can borrow in its own currency, long-term, for close to nothing

Any government that won’t borrow and spend up big and smart in these circumstances is making a huge mistake – one for which we and our children will pay dearly.

If we’re not careful the old Abbott narrative of “we’re about to become Greece” will become true, except about another country whose shoes we would rather not be in.




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Vital Signs: Amid talk of recessions, our progress on wages and unemployment is almost non-existent


The Conversation


Richard Holden, Professor of Economics, UNSW

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

The Strait of Hormuz is the most important oil choke point in the world. Use our interactive map to explore it



Wes Mountain/The Conversation, CC BY-ND

Wes Mountain, The Conversation

After months of increasing tension between Iran and the US, on Tuesday the Morrison government committed a warship, surveillance aircraft and about 200 troops to a US-led convoy to protect ships passing through the Strait of Hormuz.

But why is this small passage – just 39km across at its narrowest point – so important to the international oil trade and why has it become the stage for the growing conflict between the two powers?

And, more to the point, where is it?

Click through our interactive below to get everything you need to know about the Strait and the events that led to Australia’s involvement.


The Conversation


Wes Mountain, Multimedia Editor, The Conversation

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

Australia’s latest military commitment should spark assessment of how well we use our defence forces


John Blaxland, Australian National University

Just when we thought Australia was getting serious about shifting priorities away from the Middle East to its own neighbourhood, the prime minister has announced another Middle East step up. Australia has committed a warship, surveillance aircraft and defence personnel to help keep the Strait of Hormuz open for shipping.




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Infographic: what is the conflict between the US and Iran about and how is Australia now involved?


So what is going on?

As it happens, the commitment to the Middle East is essentially a rebadging of a routine commitment of Australian Defence Force (ADF) assets. Australia has about 2,250 military personnel deployed on operations. These include:

  • Operations Accordion and Manitou in the Middle East (740 people)
  • Operation Aslan in support of UN peacekeeping in Sudan (25)
  • Operation Mazurka established in Egypt after the signing of the Egypt-Israel peace accord (27)
  • Operation Okra in support of counter-ISIL operations in and around Iraq (450)
  • Operation Paladin, with small contingents on rotation for over 70 years with the UN Truce Supervision Organisation in Israel/Lebanon (12)
  • Operation Augury, providing training and related support for the armed forces in the Philippines after the siege of Marawi in Mindanao (100)
  • Operation Resolute, involving border protection-related tasks (600).

Australia has a defence force of about 60,000 full-time uniformed personnel and 25,000 in the reserves. So this commitment of about 2,250 personnel is sustainable, for now, as long as security challenges closer to home don’t rapidly escalate.

This also means the operational tempo of border protection or any of the other ongoing operations is not expected to decrease as a result of this commitment. Some of these elements, notably Operation Manitou, will perform more than one role.

Operation Manitou is the Royal Australian Navy commitment of one warship to the Combined Maritime Forces (with 32 participant nations) that operate in and around the Persian Gulf. Australian warships have been doing this on rotation for the best part of 30 years.

Similarly, the Royal Australian Air Force P8 Poseidon surveillance aircraft have been operating intermittently out of the Persian Gulf for years. The extra defence planning personnel announced likely will be drawn from a pool already assigned to support Australian operations, notably attached to US military headquarters semi-permanently based in and around the Gulf.

So why make all the fuss with the announcement?

It appears pressure from the United States as well as Britain has convinced the government of the importance of making a contribution.

To be fair, it is not a token contribution. The warship and P8 are capable platforms that have made a tangible difference in the past in countering piracy, smuggling and related security concerns in the Persian Gulf. And, as the prime minister reminded us, the Gulf is the source of much of Australia’s oil.

So, while not a token contribution in one sense, it is not a significantly onerous addition to what Australia has been contributing there for a long time.

However, in international diplomacy, words matter, and small contributions can have significant effects. No doubt, Australian policymakers were mindful of making a contribution that would satisfy the US after declining Secretary of State Mike Pompeo’s suggestion to base intermediate-range and potentially nuclear-armed ballistic missiles in Australia.

While Australia can sustain this new commitment without a significant surge, there is growing recognition that committing forces to operations in the Middle East detracts from the ability of the ADF to focus on high-priority areas closer to home.

The 2016 Defence White Paper referred to three strategic defence interests. These are: a secure and resilient Australia; a secure nearer region (including the Pacific and Southeast Asia) and a stable Indo-Pacific region; and a rules-based global order.

But China’s increasing illiberalism and regional assertiveness across Southeast Asia and into the South Pacific have generated considerable unease over spreading ourselves too thinly.




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As Australia’s soft power in the Pacific fades, China’s voice gets louder


Consequently, a consensus is growing among security and defence experts that we need to double down on our investment in defence and security capabilities.

Reports along similar lines have been published recently by the United States Studies Centre and my own Strategic and Defence Studies Centre, among others.

My colleague Brendan Taylor warns of the volatility of the four flashpoints in Asia: the Korean Peninsula, the East China Sea, Taiwan and the South China Sea. That was before the Hong Kong protests and the news of militarised ports in Cambodia.

Another colleague, Hugh White, has called for spending up to 3.5% of GDP on defence to boost the air and naval forces.

Senator Jim Molan has argued for a fresh national security strategy.

My own geostrategic SWOT analysis for Australia points to the need for a more holistic consideration of issues related to looming environmental catastrophe (affecting biodiversity and societal sustainability), a spectrum of governance challenges (such as cyberterrorism and organised crime) and great power contestation.

That paper calls for, among other things, a national institute for net assessment to weigh up how best to respond.

In essence, the prime minister has deftly handled the call for a commitment in solidarity with the United States. But the Strait of Hormuz issue is only one of many looming security challenges. Its emergence at the top of the news pile points to the need for a significant and far-reaching re-examination of our defence and security posture and priorities.The Conversation

John Blaxland, Professor, Strategic and Defence Studies Centre, Australian National University

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

Tim Fischer – a man of courage and loyalty – dies from cancer



Tim Fischer aboard a one-off passenger train last month to raise money for the Albury Wodonga Cancer Centre trust fund.
Sally Evans/ Albury Wodonga Regional Cancer Centre Trust Fund

Michelle Grattan, University of Canberra

Former deputy prime minister Tim Fischer, who has died aged 73 of cancer, leaves a political and personal legacy as a man of courage, conviction and congeniality.

The support that Fischer as National Party leader gave was crucial in John Howard’s success in achieving his ground-breaking gun control measure after the 1996 Port Arthur massacre.

While the issue tested Howard, for Fischer it was extraordinarily tough. Howard recalls: “He never tried to talk me out of it but he made it plain how difficult it was going to be in certain parts of the bush”.

Fischer remained resolute despite the fury of many among his party’s base, where hostility lingered for years.

When Fischer became leader in 1990, with the Coalition in opposition, quite a few observers doubted the party’s choice. (They included this writer; Fischer delighted in recalling that misjudgement.)

He defied the sceptics, managing his party and the Coalition relationship to the benefit of each, despite the challenges, which included not just gun control but the Wik issue, constant sniping from the Queensland part of the party, leadership rumblings, and the electoral threat posed by One Nation.

“The boy from Boree Creek” was born in the Riverina, and educated at Boree Creek Public School and then at Xavier College in Melbourne. He was conscripted in 1966 – subsequently saying his birthday being selected in the ballot proved a “great door opener” – and he served in Vietnam.

His long parliamentary career spanned state and federal politics. In 1971 he entered the NSW parliament; in 1984 he won the federal seat of Farrer.

Grahame Morris (who became Howard’s chief of staff) remembers as a young country reporter covering Fischer’s appearance at a hall in the town of Grong Grong, in his first state campaign. The speech seemed to take forever, because Fischer had a dreadful stutter – which in later years he managed to control, although it left him with an unusual speech pattern.

“That a fellow [who started] with a pronounced stutter became deputy prime minister and an effective communicator is remarkable,” says Morris, a friend of Fischer over decades.

Cabinet colleague Peter Reith said once, “You don’t so much listen to what Tim has to say as imbibe it”.

In the Howard government Fischer was trade minister, a powerful economic bastion for the National party in those days. But his time in office was limited. He stepped down from his party’s leadership (and the ministry) in 1999, largely driven by family factors – Harrison, one of his two young sons, had autism.

When he went to tell Howard of his decision, the PM tried to talk him out of it. Fischer, feeling he was losing the argument, played his winning card – revealing he had already told a journalist on a VIP flight from New Zealand earlier in the day. He left parliament in 2001.

The citation when Charles Sturt University awarded him an honorary doctorate in 2001 captured much about his personality: “Tim’s life has been about dogged adherence to goals. It has also been about risk-taking, grabbing opportunities and perseverance.”

The highlight of a busy post-politics career was serving as Australia’s first resident ambassador to the Holy See, a post to which he was appointed by Labor prime minister Kevin Rudd.

Among a myriad of interests and activities, including writing several books, Fischer’s special passion was trains, which saw him leading tours at home and abroad and, while at the Vatican, organising the Caritas Express, a steam train trip from the Pope’s platform to Orvieto in Umbria .

Last month Fischer was among those aboard a one-off passenger train, raising money for the Albury Wodonga Cancer Centre trust fund, that travelled to tiny Boree Creek, where a park was named for him. “It’s nice to be going home, on a special train,” he said.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

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