General

Business or plunder: international corruption robbing Africa’s poor

21 May 2013
Posted in: General By

Mapping Africa's mineral wealth

Africa is a resource-rich continent, but most of its people live in extreme poverty. Amid the world’s resources boom and high global demand, Africa’s vast oil, gas and mineral resources have the potential to drastically improve and transform the lives of African populations.

So why do some of the world’s poorest people live in one of the world’s most resource-abundant regions? And, as Australian business, investment and trade with African countries increase, how can this economic injustice simply be ignored?

Global momentum to address the current dismal state of affairs is mounting, and Australia needs to take an active part in efforts to ensure greater transparency and accountability in Africa’s resources sector and international transactions.

The Africa Progress Report is produced by the African Progress Panel and published in May each year. The panel’s composed of influential business and political figures and is chaired by former UN Secretary-General Kofi Annan. Its mandate is to ‘advocate at the highest levels for equitable and sustainable development in Africa’.

This year’s Africa Progress Report—released at the World Economic Forum meeting in Cape Town—focuses on the extractive industries of oil, gas and mining. The report’s findings made headlines around the world, highlighting exactly why African populations aren’t yet fully benefiting from the continent’s resource wealth. It details the horrifying extent of the corrupt practices that plague Africa’s resource sectors and gives details of secret mining deals, the undervaluation of state assets, tax evasion and transfer pricing (moving profits to jurisdictions with lower tax). It’s estimated that transfer pricing is costing Africa $34 billon each year.

The report uses the mining sector in the Democratic Republic of the Congo (DRC) as a key example. It explains that the DRC ‘incurred losses of $1.36 billion between 2010 and 2012 as a result of the alleged undervaluation of state assets in five mining deals’. It states that ‘with some of the world’s richest mineral resources the DRC appears to be losing out because state companies are systematically undervaluing assets. Concessions have been made on terms that appear to generate large profits for foreign investors.’ And this while the Congolese are one of the world’s poorest populations.

Kofi Annan has said that ‘We [Africa] are not getting the revenues we deserve, often because of either corrupt practices, transfer pricing, tax evasion and all sorts of activities that deprive us of our due.’ Annan explained that Africa can’t remedy this loss of revenue alone: ‘the tax evasion, avoidance, secret bank accounts are problems for the world … so we all need to work together, particularly the G8, as they meet next month, to work to ensure we have a multilateral solution to this crisis.’ Annan described the current situation as akin to ‘taking food off the table of the poor’.

The key to battling corrupt practices that rob African populations of their resource wealth is improvements in the level of transparency and accountability in the resources sector and in the operation of international companies. For example, in Liberia and Guinea, mining contracts can now be scrutinised online by the public, in a bid to curb corruption in the sector.

Annan says he’s encouraged by the international multilateral response to the challenge, including legislation in the US (the Dodd–Frank Act) and Europe requiring extractive companies ‘to meet higher levels of disclosure’. He’s also buoyed by the fact that the British have put international cooperation on taxation on the agenda for the G8 summit meeting to be held next month.

A more prosperous Africa for all is a real possibility, and the international community has the most important role in making it a reality. As a responsible global player and with expertise in the extractive industries, Australia can make a valuable contribution to making sure that those who rob from the poor have nowhere to hide.

In Africa, the mining, oil and gas industries produce seven times the amount that the continent receives in donor aid. There’s a real possibility that sovereign wealth funds could be created to meet the needs and aspirations of future generations, using the huge revenues flowing in from resources sales. Perhaps they could take a form similar to the Norwegian sovereign wealth fund (the Government Pension Fund—Global) or be variations on Australia’s Future Fund. Capturing today’s wealth to help meet tomorrow’s national needs in Africa is an opportunity that shouldn’t be missed.

In conclusion, a final quote from the Africa Progress Panel:

Imagine an African continent where leaders use mineral wealth wisely to fund better health, education, energy, and infrastructure. Africa has oil, gas, platinum, diamonds, cobalt, copper, and more. If we use these resources wisely, they will improve the lives of millions of Africans.

Sabrina Joy Smith is a PhD candidate with the Centre for the Study of the Great Lakes region of Africa at the Institute for Development Studies and Management, Belgium. She is currently based in New South Wales. Infographic courtesy of Africa Progress Report 2013.

Marine protected areas across the Southern Ocean?

21 May 2013
Posted in: General By

Guest editor Anthony Bergin

East Antarctic map for MPAAt their annual Meeting in 2012, the 25 members of the Convention for the Conservation of Antarctic Marine Living Resources (CCAMLR) failed to come to agreement on the declaration of any specific Marine Protected Areas (MPAs). This was despite several years of discussions and clear commitments to the establishment of a representative system of MPAs within the Convention Area by 2012, the adoption of a small MPA providing protection to the South Orkney Islands southern shelf in 2009, and an agreement in 2011 of Conservation Measure 91-04 providing a general framework for the establishment of CCAMLR MPAs. States are happy to commit to protecting the continent (and reap the benefits of looking proactive) but seem to lack the willpower to follow through.

CCAMLR considered three proposals for MPAs at this meeting: the Ross Sea region MPA proposed jointly by NZ and USA; the East Antarctic Representative System of MPAs proposed jointly by Australia, France and the EU; and the Antarctic Peninsula Ice Shelves (put forward by the EU).

And while all members had participated in the preceding discussions and the associated consensus decisions leading to the presentation of the specific MPAs, when push came to shove, a number of members couldn’t support any of the proposals on the table. The Ice Shelves proposal was withdrawn following strong opposition from some.

Both of the remaining proposals have been through multiple rounds of scientific analysis and provide significant dispensation to existing and future fishing activities, and the EA proposal encourages multiple use for activities consistent with the protection of the values for which the MPAs are being designated. Yet, Russia felt their scientific contribution was not fully reflected in the proposals; China was unsure if there was sufficient science to support the proposals. In addition, there’s a strong push for any MPA to have clear designated expiry date, to ensure that future fishing interests are not constrained.

Article II of CCAMLR establishes conservation and the precautionary and ecosystem approach at the core of CCAMLR’s decisions. This means that conservation objectives can’t be limited by the state of scientific knowledge and that management decisions must take account of uncertainty associated with imperfect knowledge and should be ‘precautionary’ (ie conservative) in the absence of complete knowledge. But increasingly members are choosing to ignore these convention fundamentals and prefer to view CCAMLR as a fisheries management regime.

CCAMLR members did agree to come together for a special session this year in Bremerhaven, Germany prior to their annual meeting in October to attempt to find agreement on the designation of the two MPA proposals before them.

All CCAMLR member governments have an opportunity at a meeting this June to reaffirm their commitment and belief in the basic tenets of the Convention they have signed and to the commitments they’ve made by consensus over the last years to the establishment of a representative system of MPAs.

They’ve shown they’re willing to talk the big talk – now they need to show they can take action – and designate large scale marine reserves and other marine protected areas covering substantial areas in the Convention Area.

As one of the last great wildernesses, the Southern Ocean is an exceptional place and deserves special recognition, not to mention respect and commitment from those governments who have chosen to manage it.

Lyn Goldsworthy is a senior advisor to the Antarctic and Southern Ocean Coalition.

What’s an Australian defence industry for? Part I

20 May 2013
Posted in: General By

Oberon class HMAS Oxley sits in Fitzroy Dock at Cockatoo Island dockyard, in an Intermediate docking, 1970.The Queensland government has recently appointed a defence envoy to bolster defence industries in the state. In this it joins other states and the federal government in actively adopting defence industry sector strategies. But for strategies to be effective, they must be built on a clear understanding of the objectives sought. There are several different objectives that a defence industry strategy could be potentially optimised for. At the fundamental level this raises the question of what an Australian defence industry is for.

Where you stand on this issue may depend greatly on where you sit. In this post we’ll look at the federal level, leaving the state and company levels for later. The federal level comprises both the government as a political entity and below this the departmental levels, particularly Defence, Finance and Treasury.

At the political level there’s currently a focus on defence industry providing jobs—but not just any jobs, or indeed simply more jobs. Instead, the focus is on creating meaningful, well-skilled jobs in the manufacturing industry, as the current interest in naval shipbuilding attests to. This is by no means an unworthy objective; philosophically, contemporary liberal thinking stresses improving the life of individuals—what else does a society exist for? Read more

There are alternatives. Mercantilists would argue rather than helping individuals, the aim should be building national ‘hard’ power. The national defence industry should primarily seek to create national wealth, as money is fungible and can be used to increase national power in the most efficacious manner. A defence industry strategy would then be focussed on import substitution to the extent that it’s efficient, while exporting as much as possible.

In a different approach, some countries might consider the number of jobs—not their type or value—to be the most important criteria. Having more people gainfully employed can be important for political stability and can help lower income disparities.

Taking a less insular view, countries can use their defence industries as diplomatic tools to build stronger links with other countries. In joining with others there are secondary benefits of economies of scale and sharing R&D costs, but the primary aim which informs the requisite compromises and tradeoffs is to build interdependencies and entrench good relationships. ASEAN member states are tentatively (PDF) going down this path.

Of the departments of state, Treasury is charged to take a whole-of-economy view. An obvious market-centric strategy is to eschew interventionist industry strategies altogether, although current global troubles may commend a risk management alternative. With the global economy inherently prone to financial instability, having a balanced economy can provide greater resilience during the inevitable periodic economic crises. As one sector strikes trouble, another might improve, compensating for any downturn. Australia has strong primary and service industries and strengthening our relatively weak manufacturing sector, of which the defence industry is a significant part (PDF, pages 26-28), might be advantageous in the next economic crisis.

Such a re-balancing logic underpins the UK government’s ‘Plan for Growth‘ to return the country to economic health. In developing manufacturing in today’s globalised world, being part of global supply chains is seen as essential. For several years, Australian defence industry has been able to access Government support for joining such supply chains. This program has been relatively successful in terms of developing Australian manufacturing although it’s of marginal value to Defence. Building F-18 rudder pedals for example is undoubtedly good business, but of little importance for ADF operations.

The Defence Department has the luxury of being able to take a much more focussed approach in considering possible objectives for a defence industry strategy. Defence could potentially adopt an industry development strategy that sought to give ADF warfighters some unique capabilities that provide a distinct combat edge. US ‘black’ programs try to do this for American warfighters and, while some of these are very expensive, other niche areas like electronic or cyber warfare might be affordable. Such a defence industrial strategy almost by definition calls for supporting smart thinking rather than having deep pockets.

Defence has instead embraced strategies aimed at developing industry to maintain and sustain equipment purchased off-shore. There are two broad variations in this: build a national capability to be able to modify equipment on-shore to meet changing operational demands or, more simply, to just replace and sometimes fix broken equipment. The former was in vogue from the 1970s (PDF, para 270–272) until about the first decade of the 21st century (PDF, pages 5–6) when the capability development focus switched to new acquisitions and away from mid-life upgrades.

Over this time the argument has developed that the objective of an Australian defence industry strategy should be maximising ADF combat power and acquisition efficiency—getting the most bang for the defence buck. This idea was neatly encapsulated in the title of Andrew Davies recent blog post ‘Four ships for the price of six?’ which examined the difference between buying from the most efficient overseas source versus building warships on-shore.

There’s a range of objectives that governmental defence industry strategies could be based on and choices have to be made between them. All objectives aren’t equal, and any strategy seeking to embrace several would most likely be incoherent, ineffective and inefficient. At the state and company levels though the objectives are subtly different again, as we’ll discuss next time.

Peter Layton is undertaking a research PhD in grand strategy at UNSW, and has been an associate professor of national security strategy at the US National Defense UniversityImage courtesy of Flickr user Kookaburra2011.

ASPI suggests

20 May 2013
Posted in: General By

The Japan Maritime Self-Defense Force (JMSDF) helicopter destroyer JS Kurama (DDH 144) performs maneuvers during training as part of the integrated maritime exercise Koa Kai, November 2011.Michael O’Hanlon from Brookings has some ideas on how the US might spend its defence dollars given current fiscal constraints in his book Healing the Wounded Giant, including cutting ground forces, buying half of the planned 2,500 F-35s, and suggesting the Navy can get by with as low as 260 ships, rather than the planned 286. O’Hanlon and David Petraeus have an op-ed along the same lines as well.

On a related topic, here is an article on how to keep the US–China relationship from running off the rails.

In Japan, Prime Minister Abe is having some success the second time around:

Mr Abe’s dramatic rata-tat-tat of policy shifts has excited and enthused [the Japanese people]. His approval ratings, like the stockmarket, are booming.

His plans also appear to involve the first ever amendments to the 1947 constitution, including acknowledging Japan’s right to standing army, navy, and air force.

On the other side of the Indo-Pacific, the Lowy Institute has released its 2013 India poll. It tells us, among other things, that apparently 83% of Indians consider China a threat, and we in Australia are India’s fourth favourite country, behind the US, Singapore, and Japan.

And earlier this month the International Crisis Group has released a report on stability in Timor-Leste:

Timor-Leste deserves praise for the success with which it has implemented pragmatic policies designed to bring rapid stability following the 2006 crisis. Promoting confidence at home and abroad is important for transforming any post-conflict economy. But it likely has a very limited window of opportunity during which to make investments – both political and financial – that might mitigate the still real risks of an eventual return to conflict.

We have also had a couple of short responses from our readers:

Neil James notes in response to this piece on basing at the Cocos (Keeling) Islands, that as well as there being limited space, limitations in the supply of fresh water and the lack of a deep-water harbour to accommodate larger ships will also preclude the establishment of large or permanent bases.

And in response to Peter Jennings thoughts on pay parking for the ADF (and others in the Parliamentary Triangle), a bemused member of the ADF notes that: we should “Spare a thought for some in JOC that drive 140km round trips to Bungendore each day… Did you know DFAT are offering a fuel allowance to their people to actually get someone to volunteer to work out there?”

And last but not least, we also suggest you check out our jobs page. There are three positions going at the moment; a cyber security analyst, events and publications assistant, and an administration officer.

Image courtesy of Flickr user U.S. Pacific Fleet.

The order of Fiji’s New Order

20 May 2013
Posted in: General By

Soldiers from Fiji serve as the guard unit of the United Nations Assistance Mission in Iraq (UNAMI). 6/Feb/2009.The political settlement that Fiji’s New Order regime is preparing to impose on its subdued society and decimated polity is a lousy outcome after 13 years of struggle and schism. Yet Australia, New Zealand and the rest of the South Pacific have little option but to persist in engaging with the regime as it bolts in place the narrow terms for next year’s election. The decision to engage is why Canberra is prepared to put up with the current bout of silliness from Suva over issuing a visa for the new Australian High Commissioner.

A flawed and limited election in 2014 will be better than no election at all. Granted, it’s clear that the election will seek to enshrine the people and the interests of Fiji’s New Order. That outcome, however, was always in view. For Australia and the region, seeking accommodation with the regime is a sad acknowledgement that Fiji has been unable to save itself. In the contest between power and principle, power has triumphed.

The relatively tough line Canberra has taken towards the Supremo and his regime since Bainimarama’s second successful coup in 2006 was based on two ideas. One was that with a bit of bashing and barracking, the military would go back to barracks. The other thought – both lofty and practical – was the commitment to a set of democratic understandings that have wide support and proven utility in the South Pacific. Read more

The back-to-barracks hope drew strength from the experience of previous coups in 1987 and 2000, when the military had acted reasonably quickly to hand control back to civilians. The second idea was that Australia and the region had to do everything possible to help any resistance to the coup culture that could be mounted from within Fiji by its people and institutions. The aim was to give as much outside assistance as possible to Fiji’s political parties, the courts, the churches, the chiefs, the media and the various elements of civil society. If Fiji could mount some resistance to the descent into coup-coup land, then the region had to do everything possible to help (hence the steady increase in Australian aid).

Both those ideas have failed. The military and its cronies have entrenched themselves, and the regime has been extraordinarily successful in cowing and controlling other significant elements of Fiji’s society. The Supremo and his useful idiots have got a lot more mileage than they deserved from the old junta jingle that the soldiers had to kill democracy to save democracy; the Fiji version is that the military is slaying the old politics in order to deliver a new, multi-racial democracy. A clearer view of what has befallen Fiji is that one institution of the state has triumphed over all others. And, inevitably, that has allowed the colonels, the cronies and the carpetbaggers to cash in.

To summarise a complex conundrum, here’s a brief description of Fiji’s New Order regime, with links to previous articles that lay out these arguments in more detail. The first concept (or conceit) is to see Bainimarama’s government as having similar elements to the New Order constructed by Suharto in Indonesia. As with Indonesia, Fiji’s New Order is built by a military that proclaims its dual function: to both guard and guide the nation.

Secondly, Bainimarama has been constructing his New Order for 13 years, since his first successful coup in 2000—the George Speight coup attempt was foiled by Bainimarama’s more powerful coup. The construction effort has been shambolic and ad hoc (reflecting the Supremo’s intellect as much as anything) but the cumulative effect is in view. Bainimarama’s one clear achievement over these 13 years has been to place the military at the centre of Fiji’s society, administration and politics. The Supremo’s goal is to entrench himself and the absolute rights and special prerogatives of Fiji’s military.

Thirdly, Fiji’s New Order is to make the logical step of expressing itself as a political as well as a military force. The military is about to show its dominance through the creation of a political party that will see Bainimarama ‘elected’ as Prime Minister. If quote marks can ever have ironic effect, then put them around ‘elected’ in this context. Next year’s election will give the New Order a useful political carapace. With Fiji’s old political parties barred, the military will be able to offer its own version of Suharto’s Golkar Party.

Suharto created Golkar as the regime’s parliamentary vehicle (Golkar from golongan karya, or ‘functional groups’) drawing together hundreds of groups in society: rural workers, labour unions and businesses. Golkar enabled the army to create a party while claiming it was a new form of movement, not tainted by old party politics. The Suva Supremo will have no trouble denouncing the taint of old party politics while introducing his gleaming replacement version.

The Supremo’s sense of entitlement mirrors that of the military he leads. The former Fiji colonel, Jone Baledrokadroka, has written of the ‘inflated corporate self image’ of the military, built especially on its constant deployment on peacekeeping operations for the UN.

One of the unintended consequences of the military’s international experience as a mediator of political tensions was the growing belief that it should perform the same role at home. The demands of peacekeeping inflated the size of the military just as it inflated its view of itself, making the military what Baledrokadroka calls ‘a state within a state.’ Under the Supremo, the boys in uniform have done away with the parallel bit and simply taken over the state.

Baledrokadroka has been keeping count of the number of officers being shifted across to do top government jobs, from heading departments to running state bodies. The recent total he gave me was that 66 military officers are now doing senior civilian jobs across the Fiji Government.

Bainimarama will merely follow the trend he’s imposed when he shifts from being Supremo to become the ‘elected’ Prime Minister. The big questions awaiting Fiji are about the size of the victory delivered to Bainimarama’s version of Golkar and whether the vote will have any impact on the habits and hopes of the New Order. Certainly, the colonels, cronies and carpetbaggers are set to dig in deeper, with their interests legitimised by a ‘popular’ and ‘democratic’ process. The rest of the world will have to take the election at face value, however unlovely the face.

Graeme Dobell is the ASPI journalism fellow. Image courtesy of Flickr user United Nations Photo.

Decoding China’s rising influence in the South Pacific

17 May 2013
Posted in: General By

What’s China up to in our near neighbourhood? That’s an important question at a time when Australia has just declared that we’ll structure the ADF around just two of our Principal Tasks (PDF), the second of which is to promote stability and security in the South Pacific and Timor-Leste.

In this context, Jenny-Hayward Jones’ new Lowy paper, Big Enough for All of Us: Geo-Strategic Competition in the Pacific Islands, provides some welcome nuance on what China’s growing presence and economic clout may mean (and not mean) for regional countries’ interests and ours.

Although analysts have questioned the strength of the ‘causal link between the strategic theology of the initial chapters of the White Paper and the wish list of equipment projects further in’, Australia’s renewed security focus on the near neighbourhood is real. While the South Pacific contains less than 10 million of ‘the half billion souls that live between us and China’, the real estate and inhabitants of the region are important for reasons I’ve explained elsewhere. Read more

As Ross Terrill noted in yesterday’s Strategist, ‘abstraction is a perilous approach to the reality of China’. One of the many things to like about Jenny’s study, then, is its lack of American ‘eagles’, Chinese ‘pandas’ or other creatures signifying such abstraction and the use of countries as symbols.

Jenny argues—pretty convincingly I think, and as others have suggested—that there’s little to no evidence of China currently actively seeking to project hard power into the region. As a case in point, PLA-N vessels periodically hosting cocktail parties in South Pacific harbours are generally en route to port visits, or even naval passage exercises, they’ve been invited to in Australian or NZ waters.

And as she’s pointed out elsewhere, China’s aid activities in the region are managed by the Ministry of Commerce more than the Ministry of Foreign Affairs, and much of its investment is driven by individual provinces or state owned companies, intended first and foremost to make profits and deliver jobs for Chinese workers rather than systematically advance China’s strategic interests. In that sense, Beijing doesn’t appear determined or fully able to coordinate multifaceted and diffuse Chinese political, business, investment, immigration and military engagement in the South Pacific. Its overall approach appears more haphazard than monolithic or a product of a grand design. Jenny also reminds us that ‘traditional’ powers, including the US and France as well as Australia and NZ, have a large, scalable, regional military presence and reach. And even Exim Bank concessional loans might be aimed at identifying potentially profitable areas to invest trade surpluses, diversify sources of raw materials, and promote engineering businesses, as much as foster influence and prestige.

But while that may provide a useful corrective and reassurance to anyone who thinks the sky is falling, it’ll probably temper more than eliminate the anxieties of professionally pessimistic Strategist readers. The Lowy paper is pretty persuasive that Beijing’s ‘a very long way from approaching Australia’s dominance of the aid, trade and strategic domains in the Pacific Islands region or displacing the US as the dominant military power from the north’. However, those who view China’s rise chiefly through a geo-strategic lens might feel that the fact it poses little challenge to Western primacy or our leadership in the region is a bit beside the point. Put simply, China doesn’t need to try (or even want) to supersede us for its growing local presence, weight and clout to greatly complicate our interests.

Complications in the military arena have been manageable to date. For example, China’s support for Frank Bainimarama doesn’t affect our Fiji options, which are constrained for their own reasons. But in a broader strategic sense, it isn’t so much we need to worry that ‘the Chinese are coming’; they’re already here. For instance, although the scale of Tongan indebtedness to Beijing might not buy the sort of influence fretted over this week, it probably does have potential to spark a more serious re-run of the kind of violence that required a brief stabilisation mission in 2006. And, as Jenny notes, future strategic circumstances could change. Although Chinese-Taiwanese rivalry has been much reduced since the diplomatic truce of 2008, intense political competition could return in a new guise over different issues.

To return to former Secretary Clinton’s comment “the Pacific’s big enough for all of us”, at 85 million square km (nearly a quarter of the world’s ocean) the South Pacific certainly ain’t small. Earlier this week I was more offhand than the idea warranted about suggestions that regional aid projects and military exercises offer a relatively low risk opportunity to encourage cooperation with China. Jenny also notes that the South Pacific Defence Ministers envisage inviting ‘new partners’ to observe regional military exercises in innocuous areas of ‘common interest’. But I think she’s closer to the mark in recommending that future collaboration with China occur ‘in areas that support Pacific Island economic development priorities’ and avoid focusing too much on security cooperation themes and mechanisms. (Notwithstanding our evolving strategic partnership with China, chapter six of the Defence White Paper treats engagement activities in our near neighbourhood pretty gingerly too.)

We can’t, and shouldn’t try to, prevent China assuming growing regional roles. But encouraging a PLA that doesn’t seem to be busting to get comfortable operating in our immediate approaches to do so would be something else altogether. As with Fiji, our guiding principle should be ‘first do no harm’.

Karl Claxton is an analyst at ASPI. Image courtesy of Flickr user roberthuffstutter.

Reader response: Defence White Paper—between the lines

17 May 2013
Posted in: General By

Mark Thompson writes:

Imagine how the White Paper would have read if it had begun with the recognition—brutal yet surely accurate—that our security ultimately depends on the geopolitical balance in our part of the world rather than on our ability to defend the continent against attack.

Unfortunately, that “brutal” recognition is more of a theoretical assumption derived from the attitudes of large states rather than a universal reality for all states. Australia’s security is not ‘ultimately’ dependent upon the geopolitical balance of Asia. Just as the evolving changes during the Cold War between the US and USSR had no substantial impact on Australia’s day to day environment, neither will a (much more geographically restricted) balancing act in northeast Asia affect us. Certainly the balancers may get it wrong with occasional clashes but, save a WW3 type scenario, Australia’s security does not “ultimately depend” upon the degree or even existence of ‘balance’ 10’000km to our north. Read more

As Stephen Walt noticed in the 1980s, regional powers don’t decide their alliances based upon the global balance of power but on regional conditions. So either most countries have been getting their security policies wrong, or the balancing theory, designed to explain the behaviour of great power countries, is simply not that relevant for smaller powers. And that’s exactly what we’re seeing in Asia.

Despite expectations, the evidence for balancing/bandwagoning behaviour in our part of the world is underwhelming. Hence the proliferation of terms such as hedging, soft balancing, underbalancing, omni-enmeshment, strategic hedging etc as scholars seek to explain away the divergence between theory and reality. As we all too often forget, great powers and smaller powers worry about very different things. If Australia was a great power country, then Mark would be right and the geopolitical balance would be the essence of our security (though we’d then also have a viable ability to defend our continent). But mid and small sized countries care far more about their immediate region. Thus we’re seeing only moderate re-balancing in Northeast Asia and little more than modernisation in Southeast Asia. Even if the pessimists are right and an Arms Race emerges in Asia, that would simply re-emphasise the primacy smaller states place on reacting to their neighbours rather than using the geopolitical balance to organise their defence choices. No wonder Australia, a country located even farther south and further removed from any potential conflict or coercion is not acting concerned.

Australia has historically been an unusual country: a mid-sized power that has appeared to act based on the global balance of power. But we haven’t done so because of strategic necessity but because of a political (if not emotional) choice, driven by our Empire-inherited worldview and our familial relationship with the largest powers. We may decide to keep acting in this manner, but we shouldn’t confuse the necessary behaviour of great powers with the voluntary behaviour of a regional power. Australia has the luxury of choosing how much the geopolitical balance affects our military spending. This is an important choice, but our ultimate security, just like most regional powers, is based upon issues and circumstances much closer to home.

Andrew Carr is an associate lecturer at the Strategic and Defence Studies Centre at the Australian National University.

Four principles of Australian defence policy

LCPL Dustin Hoppe from Melbourne’s 4th/19th Prince of Wales Light Horse Regiment stands at Rest on Arms as a member of the Catafalque Party during the Dawn Service in Honiara, Solomon Islands.I’m an old Defence-of-Australia hand, so I’ll offer a perspective which looks at the 2013 Defence White Paper through that prism, and then draw some conclusions.

There are four overall principles that have characterised Defence of Australia policies. The first is the self-reliant Defence of Australia. The new White Paper leaves no equivocation on this point.  Paragraph 3.35 says ‘The highest priority ADF task is to deter or defeat armed attacks on Australia without having to rely on the combat or combat support forces of another country’. The next paragraph elaborates:  ‘Australia’s defence policy is founded on the principle of self-reliance in deterring or defeating armed attack on Australia, within the context of our Alliance with the United States and our cooperation with regional partners’. What’s new here is the reference to the region in the final phrase.

The second policy principle is that there are limits to Australia’s military resources and influence. There are few direct references to this (perhaps it’s taken as self-evident) but there’s little doubt that it’s a central factor.  Paragraph 3.2 reads to the effect that the Government’s responses to security threats and opportunities will have to acknowledge ‘the limits of our capability and reach’. The next sentence is in some ways more telling:  ‘Choices must therefore be made to guide the allocation of finite resources to deal with challenges that are most likely or most dangerous, and where our response can be most effective’. This theme of choice, and by implication difficult choice, recurs throughout the document:  see for example paragraph 7.9. Read more

A related theme is that Australia’s strategic edge is likely to diminish. For example, paragraph 2.51 says ‘Over the next three decades, Australia’s relative strategic weight will be challenged as the major Asian states continue to grow their economies and modernise their military forces’. This thought too recurs in the White Paper.

The third principle is the strong preference for operations closer to home over more-distant operations. Paragraphs 3.30 to 3.34 spell this out most clearly, with Task 1 (deter and defeat armed attacks on Australia) and Task 2 (contribute to stability and security in the South Pacific and Timor-Leste) being the determinants of the force structure, and with the resultant defence force being deemed sufficient to meet the needs of Tasks 3 and 4 (contribute to military contingencies elsewhere, with priority given to Southeast Asia). This is classic Defence of Australia stuff, although other parts of the text seem to allow for a greater influence of operations in the nearer reaches of the Indo-Pacific (a new term introduced in this white paper) than previously.

The fourth principle brings together the issues of levels of contingency (and discretion), warning time, and force expansion. Recall the Defence of Australia approach: minor contingencies were credible in the shorter term, but major contingencies would be credible only after an extended period of warning, during which Defence would expand.

With respect to major contingencies, not a lot has changed. Paragraph 5.13 talks of the need to balance resources between current and short-term requirements while retaining a baseline as the foundation for force expansion should strategic circumstances deteriorate. Paragraphs 3.39 and 3.40 elaborate on this, including the need for strong defence intelligence. Paragraph 3.46 reassures us that, in spite of military modernisation in our region, we would still expect substantial warning of a major power attack, although, perversely, paragraph 7.12 cautions that strategic circumstances can change with little warning.

In any event, there’s little force expansion on offer, implying that we’re not in a period of strategic warning. Nevertheless, the commitment to get twelve electronic warfare Growler Super Hornets is important, as is the enhancement of cyber security. Overall, more needs to be done on the analysis behind warning and expansion, as the issue is critical.

The White Paper is less clear on contingencies to which Australia might want to respond in the shorter term. But preparedness is a recurring theme:  paragraph 5.1 recognises it as a ‘key strategic management tool’, and paragraph 5.17 mentions some welcome recent enhancements to Defence’s preparedness management system. Paragraph 5.3 is a cautionary straw in the wind:  ‘Adjustments to preparedness levels … can take effect relatively quickly compared to longer-term basing and force structure decisions’. The discussion of the Reserves (paragraphs 4.32 and 5.18 for example) and how quickly they can be readied for either longer-term or shorter-term contingencies seems incomplete. Overall, the issue of what Defence needs to be prepared for, why, and with what warning, is shaping up to be a battle in itself, and, again, more thought is needed.

To paraphrase Thucydides, White Papers are an armistice in the never-ending war for funding:  they set the rules of engagement for the next few rounds of combat between spending departments and the gatekeepers:  they don’t set out the answers, but they do tell you how to ask consistent questions, and in a way agreed by the other players in national security.  They help progress the inevitable unfinished business.

The White Paper contains a lot of the latter. Further examples include the evolution of the ‘Indo-Pacific Strategic Arc’, Defence diplomacy in the region, and Defence policy for industry and innovation. In the immediate term, however, there’s a pressing need to choose the balance of investment between the current force, its preparedness, and modernisation. For choose read adjust and rebalance. It seems unlikely that Defence can afford to modernise what it has already got, so something has to give. Even if the Government continues to maintain the permanent ADF at about 59,000, there’s still the issue of the size of the post-Afghanistan Army and the allocation of the 59,000 between the three Services. Hard decisions usually don’t make themselves:  let’s hope that Defence has the mechanisms in place to identify what needs to be done and then to get on with it.

Richard Brabin-Smith is a visiting fellow at the Strategic and Defence Studies Centre at the Australian National University. Image courtesy of Defence.

Collins IP: Australia and Sweden bury the hatchet

16 May 2013
Posted in: General By

Swedish and Australian flagsThe Australian and Swedish Defence Ministers produced a joint communique today on the subject of intellectual property rights for submarine design and technology. That mightn’t sound like a ‘tear down the front page’ story, but it’s actually very significant—the management of Swedish firm Kockum’s IP has been a vexed issue in the past, and at one stage represented a rather large spanner in the remediation works on the Collins class submarines.

In fact, things got very untidy indeed between the Commonwealth and Kockums, ending up in the Federal Court over a number of issues in the early 2000s. In 1998–99 cracking problems were discovered in the Collins’ propellers, and the Commonwealth shipped two to the United States for analysis and advice. Propeller configuration is one of the ‘crown jewels’ of submarine design, and Kockums took court action in 2001 when another was to be shipped, resulting in the unedifying spectacle of the ship carrying the propeller being held off the US coast while the court action was resolved.

The Court found in favour of the Commonwealth, but a substantial ground for the decision was that the harm to Kockum’s position had already been done by the earlier shipments—hardly the basis for a trust-based relationship between the parties involved. (The story is told in Chapter 26 of ‘Steel, Spies and Spin‘.) Read more

When Defence announced the Commonwealth’s court win in April 2001, it made a couple of observations which must be in the running for a ‘most understated comment in a press release’ award:

Notwithstanding the decision of the Court, Kockums, as the designer of the Collins Class, has a very important role to play in the future support of the submarines.

And:

Although we have been successful in this instance, we sincerely hope that we can move forward and quickly restore the prior mutual respect and strong working relationship that existed between Kockums and the Submarine Project Office.

In fact, court action between the parties dragged on for another three years, finally being settled in June 2004 with payments being made in both directions, in the process greatly complicating Commonwealth plans to sell ASC.

Any evolution of the Collins class, which now has a combination of design and hardware elements originating from Sweden, France, the United States, Australia and other sources, will require a solid basis for handling the complex web of IP rights involved. Without an agreement of the type reached today, that would be a fraught process indeed.

A working relationship needs to be far more than a formal agreement, and time will tell whether the high degree of cooperation required can be maintained. But the parties involved in today’s announcement today should be congratulated for giving us a good chance to avoid a repetition of past problems in what’s bound to be a complex and challenging project.

Andrew Davies is a senior analyst for defence capability at ASPI and executive editor of The Strategist. Image courtesy of Flickr user mikecogh.

Why does China spook the world?

16 May 2013
Posted in: General By

Prime Minister E. G. Whitlam and Mrs Whitlam in front of the Temple of Heaven, Beijing, during Whitlam's visit to China in 1973.Former foreign minister Hayden said, “As Labor came to office in 1972 ‘China’ had become a symbol of a broad judgment of the need for change in many areas”. Stephen FitzGerald recalled of the atmosphere when Whitlam chose him as the first ambassador for Beijing: “I felt part of a movement for social change”. China is often erected as a symbol of a progressive golden age. And occasionally, by Americans, also as a symbol of adverse forces. Such abstraction is a perilous approach to the reality of China.

Japan helped pioneer China as a symbol in the 18th century, portraying it as giving non-Western meaning to Japan’s own existence. Russian thinkers in the same century took China as a symbol of virtue on the grounds that the Western Enlightenment esteemed Confucian China and therefore Russian intellectuals should too.

Throughout the 1960s and 1970s and even today, the left in the west has erected China as a symbol for western guilt over imperialism (a stance useful to Beijing). In Japan, the left’s massive (unsuccessful) struggle against the US alliance in 1960 elevated China as the ‘anti-US’, and thus as brother to a Japan smothered by the American embrace. Today, China is popular among American intellectuals as a symbol of the west’s decline. Such declinists embrace the absurd Martin Jacques’ notion (in ‘When China rules the world’) that ‘China’s past is a symbol of the world’s future’. Read more

Today some Australians erect China as a symbol of a dawning Asian Century. I was asked in a radio interview this morning if China is the key to the Asian Century envisaged by PM Gillard. Such a question overlooks the challenges Beijing faces with many tensions, territorial disputes and contradictions with other countries in Asia (more than it has with Europe or the US). Beijing would have a tough time presiding over Asia and its history in Asia should give pause to folk who welcome China as replacement for the US in the Asia–Pacific. China was intermittently an imperial power in East Asia, not least in the climactic Qing Dynasty.

During the Marshall Mission to China in the 1940s which sought to reconcile Mao Zedong and Chiang Kai-shek, General Marshall’s chief aide wrote home to his wife from Nanjing: “It seems that for time beyond man’s recollection, China has been the desire and design of people outside China. What that has to do with China, as China is today, is another question, but the fact remains that many nations have their eye on this place out here”. In truth, China isn’t a symbol of anything; it’s just multifaceted China. It’s hazardous to essentialise China into a symbol of guilt, hope or fear.

If we’re to choose a context for China’s rise, the best might be ‘modernising China is a major ingredient in globalisation’. The coincidence of enlightened post-Mao Chinese development policies and growing international economic interdependence is of great historical importance to the Asia Pacific. This actual China is distant from the ‘China’s past’ that Jacques calls the world’s future. Refreshingly, China’s current renaissance draws on ideas and resources from around the globe and across the political spectrum. China’s new civilisation will be one ingredient in globalised evolution, but not its heart. China‘s urban youth by no means focus on China’s past; why should Australian youth do so? The 21st century will not be China’s; it will not be any one country’s. That is, unless globalisation stalls, technology goes to sleep, and young people cease to trend cosmopolitan.

This post is excerpted from the author’s ASPI Strategy report ‘Facing the Dragon: China policy in a new era‘.

Ross Terrill of Harvard’s Centre for Chinese Studies is a visiting international senior fellow at ASPI. Image courtesy of DFAT.

The growing Timor Gap

14 May 2013
Posted in: General By

On 23 April, Timor-Leste notified Australia that it had initiated arbitration under the 2002 Timor Sea Treaty of a dispute related to the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS). I’ve written a short piece on this elsewhere, but here I provide more context about this development.

The arbitration relates to the validity of the CMATS treaty. Timor-Leste argues that CMATS is invalid because it alleges that Australia didn’t conduct the treaty negotiations in 2004 in good faith by engaging in espionage.

The Timor Sea Treaty concluded between Australia and East Timor in 2002 (Annex B) provides for a three-person arbitral tribunal to settle disputes. A tribunal would consider whether it has jurisdiction to resolve this dispute. Assuming it did, then the tribunal would then judge the merits of Timor-Leste’s claim. Read more

Treaties can be rendered invalid for a variety of reasons (PDF, Articles 46–53), such as restrictions on authority to express the consent of a state, error, fraud, corruption of a state, or coercion.

Alfredo Pires, Timor-Leste’s Natural Resources Minister has said that ‘during the process of negotiations, there were some exercises of covert operations’  which ‘assisted the inquisition itself during the process of negotiations’.

Australian Foreign Minister Carr and Attorney-General Dreyfus have stated that:

These allegations are not new and it has been the position of successive Australian Governments not to confirm or deny such allegations. However, Australia has always conducted itself in a professional manner in diplomatic negotiations and conducted the CMATS treaty negotiations in good faith. …the Australian Government is considering its response to Timor-Leste’s arbitration notification.

There was considerable speculation earlier this year that Timor–Leste would walk away from the treaty. CMATS entered into force in 2007 to cover the 80% of the Greater Sunrise field in the Timor Sea. (20% of the Greater Sunrise Unit area is in the Joint Petroleum Development Area.)

Joint Petroleum Development AreaCMATS is an interim agreement; it doesn’t finalise maritime boundaries. It’s an example of the sort of provisional arrangements of a practical nature which the UN Convention on the Law of the Sea provides for.

CMATS states that neither Australia nor Timor-Leste will assert claims to sovereign rights and jurisdiction and maritime boundaries for the period of the treaty (fifty years). The Treaty divides the revenue derived from resource extraction in the Greater Sunrise oil and gas field equally between Timor-Leste and Australia.

CMATS provides that if no development plan is agreed to within six years from when the treaty entered into force (23 Feb, 2007), then either country can give notice to terminate the treaty. This would take effect three months from when notice is given. The relevant date where there was an option of termination was 23 February this year.

So, given there isn’t an agreed development plan for Sunrise, termination is now a live option, where either side could give three months notice. But neither party has exercised that option. The treaty continues, even after Timor-Leste’s initiation of arbitration last month.

There’s a strong view in Timor-Leste that the processing plant for the Greater Sunrise field should be located on Timorese soil to spur its economy, rather than constructed as a floating plant. Onshore processing is part of Timor-Leste’s national strategic development plan. It’s also a political issue in the country, and featured in last year’s election campaign.

But a pipeline across the Timor Trench to an onshore LNG processing facility in Timor-Leste is both technically difficult and much more costly than a floating platform. Australia’s view (PDF, pages 512-513) is that it simply favours developing Sunrise to the best commercial advantage, including elements that would contribute to Timor-Leste’s development.

Under CMATS, a Maritime Commission is supposed to meet once a year and consult on maritime security generally. But it has never met, despite our common maritime interest in areas such as customs and unregulated fishing (chapter 5). And the first meeting isn’t not going to happen any time soon given Timor-Leste’s decision to pursue arbitration.

Timor-Leste has still got the option of cancelling the treaty, but feels that course might be legally messy: it might risk other joint development arrangements in the Timor Sea and wouldn’t provide certainty to business. Dili feels it’s better to secure a decision that the treaty in effect never really existed. If that was the result, it’d create the possibility of Timor-Leste opening negotiations on permanent maritime boundaries.

The arbitral tribunal would establish its own procedures. But proving espionage will be a difficult evidentiary requirement. Australia could decide not to participate. But a tribunal could still be formed by Timor-Leste asking the President of the International Court of Justice to appoint an adjudicator. The tribunal could make a ruling (Annex B (c)) even if Australia defaults. It also wouldn’t exactly be a great public relations success for Australia if we decided not to participate.

The arbitration initiative is a very high risk play for Timor-Leste. The trend of offshore technology is away from Timor-Leste’s objective of a pipeline to its country. Gas prices have come down in recent years, and shale gas is creating interest worldwide. Invalidating the treaty won’t provide an incentive to develop the Sunrise area. It’s more likely to result in the development languishing in the ‘too hard’ basket.

Anthony Bergin is deputy director of ASPI. Map courtesy of Australian Government Department of Resources, Energy and Tourism.

Antarctic logistics—in for the long haul?

14 May 2013
Posted in: General By

Guest editor Anthony BerginResearchers studying penguins while voyaging aboard the icebreaker Aurora Australis.Australia made its last significant new investment in Antarctic logistic capability during the Howard government years, when we funded an intercontinental air capability in the form of a commercial Airbus A319 flying from Hobart to an ice runway in Antarctica.

This was the first time a commercial wheeled jet aircraft had been licensed to fly to and land in Antarctica. The construction of Australia’s research and resupply icebreaker Aurora Australis in Newcastle (Australia) and a station rebuilding program in the 1980s were the previous major investments in Antarctic logistics. Read more

Almost a decade after funding the Antarctic airlink, two fundamental budget issues are combining to potentially cripple Australia’s Antarctic efforts. The first is that Aurora Australis is reaching the end of its life. It will need to be replaced within a few years. And a replacement vessel(s) for Aurora Australis won’t be cheap.

The second budget issue is the steady erosion of base funding through the imposition of efficiency dividends and other budget savings. When the budget is tight, keeping the people safe and the stations resupplied and operating will always trump a marine research project or a deep-field ice core drilling program, no matter how important they might be. This year, for example, the internationally significant sea-ice research expedition to Antarctica, SIPEX 2, was only able to proceed with additional funds from the Antarctic Climate and Ecosystems Cooperative Research Centre.

The relentless erosion of core capacity, in the absence of a fundamental rebasing, runs the risk of re-creating a ‘Sir Humphrey Appleby’s hospital‘ in Antarctica: three research stations and a marine science capability, but no means to fund and support real or relevant scientific activity in the Australian Antarctic Territory.

But Australia’s Antarctic efforts should be supported to a level that matches Australia’s interest as a claimant of 42% of the continent, and as a leading nation in Antarctic and southern ocean science.

So what should Australia’s Antarctic logistic capabilities look like in the years to come?

  • A replacement for Aurora Australis needs to be commissioned in the next few years—keeping Aurora on the water beyond its design life will be both expensive and inefficient. A new ship (or ships) must be capable of breaking ice for both resupply and science and have fit-for-purpose cargo capacity and science capability. Australia shouldn’t be tardy in making this decision, or it runs the risk of losing its own essential ice-breaking capability like the US did a decade ago, and become hostage to an unpredictable and expensive supply chain.
  • Continued intercontinental air transport capability: While the use of the A319 has demonstrated the importance of intercontinental air transport to a modern Antarctic program, the reliance on a single ice runway near Casey station has proven limitations. It’s time to seriously explore options for additional capabilities. These could include the use of long range ski-equipped aircraft, if they were available, landing at each of the Australia’s research stations, or the construction of another ice runway inland from Davis station. These or similar options would provide a kind of logistic hub and spoke operating from Hobart.
  • Deep field logistic capabilities: For Australia to play a leading role in significant research efforts such as the drilling of a million year old ice core in Antarctica (a real game-changer in understanding past climate), it will need to be able to operate far from its coastal stations. To do this efficiently Australia needs the logistic capability to conduct overland traverses, and access to the deep field with ski equipped aircraft.

International cooperation is key to future logistics and science in the Antarctic. The bottom line is that Antarctic logistics are both necessary and expensive. Collaborating with other nations in the movement of personnel, supplies and science will be necessary in a fiscally constrained global economy. Being able to provide leadership and build collaborative logistics should be an underpinning ambition of Australia’s Antarctic efforts.

It’s also time to think hard about the role of Australia’s military capabilities in the logistics arena. Antarctica is demilitarised by virtue of the Antarctic Treaty, but that doesn’t constrain the use of military logistics to support science in the Antarctic—many nations do this. However, the use of military logistics might be an inhibiter for other nations to join with us in Antarctic science. The alternative would be to develope a greater role for private commercial support for our Antarctic logistic requirements. These options should be investigated in developing our logistic options.

In developing Australia’s future logistic capabilities in Antarctica, it’s imperative that we have a clearly articulated view of Australia’s strategic interests in the region. If Australia wants to maintain a leading role in the critical science that’s being conducted in the Antarctic, it needs to have the capacity to do it: deep in the field, in the sea-ice zone and in the southern ocean. Our scientific capability needs the funding and the flexibility to not be bound to our coastal stations. And it needs the vision and the capacity to be involved in and lead large international efforts in Antarctic science and logistic support.

An Australian Antarctic program which struggles to make ends meet will have little to contribute to expanding international research efforts in Antarctica; we’ll become inward looking and increasingly irrelevant in our own backyard, the Australian Antarctic Territory.

Anthony Press is the CEO, Antarctic Climate and Ecosystems Cooperative Research Centre. Image courtesy of Wikimedia Commons.