Australia’s Creative Diplomacy and the Evolving Global Order
Tsinghua University
17 September 2015
It’s a pleasure to be here today to speak to you.
The topic I would like to speak on is the evolving global order, and the particular role Australia, and other states like it, can play in this process, including by working with states like China.
We are at an interesting moment in history, a time of great change.
Domestic economic reforms based on market principles and an opening of economies to the outside world has, and is continuing to, unleash the huge potential of many states, including emerging major powers like China and India.
This is a process that Australia underwent itself, starting in the 1980s. We floated our dollar – in 1983, removed foreign exchange controls, and opened many domestic sectors, including the banking sector, to increased foreign competition.
At the same time, we undertook a process of unilateral reform to reduce most import tariffs to low levels and remove many non-tariff barriers to trade.
Those reforms were difficult. They exposed our domestic industries to unprecedented pressure and competition, but also made them stronger and more efficient.
The prosperity that Australia enjoys today, resulting from 24 years of uninterrupted economic growth, is in no small part due to the success of those early reforms.
‘Opening up and reform’ has also, of course, been a major part of the China story over the past 30 years and is still ongoing.
You will know the statistics well:
• Over 500 million people have been lifted out of poverty since 1980, according to the World Bank.
• Per capita GDP has grown from USD155 in 1978 to USD6800 in 2013.
• China is now the world’s second largest economy, with a GDP of 9.47 trillion US dollars (2013 figure) - the largest if PPP figures are used.
The power of China’s market, and increasingly also China’s overseas investments, is now felt globally, from Africa to Latin America – around 120 countries now say that China is their largest trading partner, including Australia, I am pleased to say.
But this is not just an economic story. With growing economic weight naturally comes greater political and strategic influence.
Again China is the standout example.
We see this in the constant stream of foreign leaders coming to Beijing, and the regular visits by Chinese leaders abroad . A strong and constructive bilateral relationship with China is a top foreign policy objective for many countries today.
We see this in the important role China plays in diverse international forums, from the United Nations, to the World Trade Organization, to the G20, which China will host next year.
And we see this in the increasing tendency for China not just to be a participant in regional and international architecture, but also one of the creators and shapers of that architecture; including through initiatives like New Development Bank (the ‘BRICS Bank’) and the Asia Infrastructure Investment Bank (AIIB).
Australia welcomes China playing a greater, constructive role in our shared region.
Australia is a founding member of the AIIB, which has the potential to make a valuable contribution to closing the significant infrastructure investment gap in this region.
We are also looking to work with China on its ‘One Belt, One Road’ initiative.
The maritime leg of this initiative covers many countries in the region where Australia has a long history of engagement.
China also sees Australia as a potential ‘One Belt, One Road’ partner and there is scope for synergies with the Australian Government’s plan to increase investment and development in the northern parts of our country.
The momentous changes that are taking place in our region and in the global order more broadly are clearly bringing great benefits: economic development and unprecedented prosperity; more opportunities for a broader array of states to contribute to global and regional governance; and even, at a people-to-people level, greater opportunities for exchanges of culture, ideas and friendship.
But these changes are also inevitably bringing some significant challenges.
History has taught us that times of great change in the international system can also be accompanied by contest and instability. Security scholars are fond of talking of the ‘Thucydides Trap’ – the idea that tensions between rising powers and dominant powers are likely to lead to conflict, and perhaps even war.
Of course, states have different interests, different values, and sometimes different visions of the way the international system should be structured and the rules by which it should operate. This is natural.
The difficult task we face is how to take advantage of the benefits these changes in the global order offer, while navigating our way through the challenges, and ensuring that differences are resolved peacefully.
When thinking about these issues, often our focus is on major powers, like China, the United States, the European Union and Russia.
This makes sense. Ultimately, the stability and prosperity of our region will be determined by the character and quality of the relationships and interactions between major powers.
But we should not overlook the importance of other types of states, including those we sometimes term ‘middle’ powers.
Today I want to talk about this particular category of states which, because of their characteristics and capacities, have a unique and important role to play in shaping the evolving global order.
It will not surprise you to learn that I am going to use Australia as an example.
But others, like Canada, the ROK, Mexico, and Turkey – for example - could also be considered to fall into this category.
We are not major powers, but neither are we small states.
There have been lots of different names used to describe us: middle powers, pivotal powers, constructive powers. Australia’s Foreign Minister, Julie Bishop, likes to refer to Australia as a “Top 20 nation”.
Australia is part of an informal grouping called ‘MIKTA’ that includes many of these states. That’s ‘Mexico, Indonesia, Korea, Turkey and Australia’.
In many ways we are diverse.
We do not share a common language, religion or culture. We are not geographically proximate. We have taken very different historical and development paths.
But we share some important characteristics that make us distinctive – when compared to other states.
In particular, we share a certain level of capacity, a set of very similar interests and, I would argue, a distinct way, or method, of conducting ourselves internationally.
I will explain what I mean by this.
First, our capacity.
While we could not be classified as major powers, we are all nonetheless states with significant economic, political and strategic heft.
Australia, for example, is the 12th largest economy in the world, and the 4th largest in Asia.
We have the 5th highest GDP per capita.
Our currency is the 5th most traded in the world.
We are sometimes referred to as a ‘resources and agricultural superpower’.
We are the number one global exporter of coal, iron ore, aluminium ores and zinc and the 3rd largest exporter of LNG.
We are also the largest exporter of beef and the 4th largest exporter of sugar.
We could also be called an ‘education major power’.
Per head of population, we educate more international students than any other country in the world – 450,000 in 2014, including 120,000 from China.
This reflects the strength of our education sector, with 8 of our universities in the world’s top 100 last year, and more than half of our universities in the top 500.
We also have a strong record of producing world-class innovations, with 15 Australian Nobel Laureates since 1915, the highest number per head of population of any country in the world.
We have a world-class defence force.
Our defence expenditure is the 14th largest in the world, and the 5th largest in Asia. Our naval forces in particular are recognised for their professionalism and technological sophistication. We are also an active contributor to UN peacekeeping missions and have provided more than 65,000 troops to over 50 UN mandated operations since 1947.
We are one of the most world’s most generous aid donors with an aid budget of over $4 billion a year, primarily focused in the Indo-Pacific region.
And we have a strong voice in many of the world’s leading forums.
We are, like China, a G20 member and hosted the G20 Summit last year.
We recently completed a term as an elected (‘non-permanent’) member of the UN Security Council.
Regionally, we are active participants in the East Asia Summit, APEC, and the ASEAN Regional Forum.
Yet, while our economic, strategic and political weight gives us significant capacity to pursue and protect our interests internationally, states like Australia generally lack the ability to shape the international environment on our own.
Instead we must work with other states and institutions to achieve our goals.
This leads to what I think is the second characteristic that defines so-called middle powers – a strong shared interest in building a global and regional rules-based order that serves the interests of all states, both great and small.
Going back to Thucydides again – his famous dictum was ‘the strong do as they can, and the weak suffer what they must’. But a well-designed and fair system of global and regional rules and norms allows us to overcome this brutal, zero-sum dynamic of ‘might is right’.
Promoting a rules-based global and regional order, and the mechanisms that underpin it, is a core objective of Australian foreign policy.
This is why we are such strong supporter of the UN system.
Australia is an active contributor across the full range of UN organs and agencies.
We were a founding member of the UN and held the first presidency of the Security Council in 1946. Of the UN’s 192 Member States, we are the 12th largest contributor to the UN’s regular budget and to its peace-keeping budget. As I mentioned earlier, we have recently completed a term as an elected member of the UNSC.
Our strong interest in a rules-based regional order is also why we are active participants in regional norm-creating groupings like the East Asia Summit, APEC, and the ASEAN Regional Forum.
These organisations are vital forums for great and small states to come together and cooperatively solve the problems the region faces.
Our interest in a fair, rules-based order is also why Australia is a champion of the application of international law and cooperative mechanisms to resolve disputes between states.
Including, for example, the territorial disputes in the South China Sea.
We are not a claimant state of course, and do not take a position on the various claims, but we do have a strong interest in seeing this dispute resolved peaceably and in accordance with international law, including the United Nations Convention on the Law of the Sea (UNCLOS).
We strongly oppose the use of intimidation, aggression or coercion to advance any country’s claims, or unilaterally alter the status quo.
It is this combination of significant capacity and shared interests that sets states like Australia apart from others.
Small states usually have a similar interest to us in a rules-based international order and strong institutions to underpin it.
But they often lack the ability to effectively pursue these interests, because they are not members of key decision-making bodies or lack diplomatic resources, including a broad network of diplomatic posts. Or they may simply have overwhelming domestic concerns, like stability, development and poverty alleviation.
Major powers generally have ample capacity to pursue their interests.
But they might not always have the same motivation, arguably, to seek multilateral solutions to problems.
They may sometimes see it in their interests to seek bilateral solutions to problems, where they can draw on their innate advantages of size and superior resources.
But there is also a third characteristic that I believe makes middle powers distinctive – a common ‘method’ or way of conducting themselves internationally.
Particularly the employment of what in Australia we like to call ‘creative diplomacy’.
For middle powers, the use of creative diplomacy is a key asset and an important way in which they can influence and shape the international environment.
There are two main aspects to creative diplomacy.
First, creative diplomacy requires policy activism. It means having the ability to identify what problems are arising, or what deficits exist in the way the international system operates, and the capacity to craft practical and innovative solutions to resolve them.
Australia has a long history of this sort of policy activism.
In the late 1980s, Australia, working with others, proposed the establishment of a regional economic cooperation institution that became the Asia-Pacific Economic Cooperation Forum, or ‘APEC’.
The inaugural APEC meeting, held in Canberra in November 1989, brought foreign and trade ministers from across the region together for the first time to cooperate on boosting economic growth and prosperity.
Today, APEC’s 21 member economies account for over half of global GDP and are home to more than 2.7 billion people. APEC consists of plethora of forums, from leader’s level summits, to officials’ level sectoral meetings.
APEC succeeded as an idea because it was innovative – no other equivalent forum existed in the region – and practical – it met a clear need for greater consultation and coordination among the region’s economies that were becoming ever more integrated.
The G20 is another example of where Australia has exercised policy activism.
Australia played an important role in the formation of the G20 initially as a finance minister’s process in 1999 in the aftermath of the Asian Financial Crisis.
Australia was also central to efforts to elevate the G20 to leaders’ level in 2008 to respond to the Global Financial Crisis.
The other main aspect of creative diplomacy is consensus-building.
Successful policy-making in the international sphere means not only being able to come up with creative ideas, but also being able to build ‘coalitions of the policy-willing’ to support those ideas.
States like Australia are uniquely placed to play this kind of role.
We have extensive networks in our regions and in both the developed and developing world that we can draw on.
We have the diplomatic resources, reach and experience to be able to make the case for new policy initiatives to a broad range of states.
And, most importantly, we have excellent international reputations as ‘honest brokers’. This means other states, in both the developed and developing world, trust us to deal fairly with issues on the basis of their merits.
There are many examples of when Australia has played this type of role.
In late 1980s, Australia played a key role in building regional and international support behind United Nations involvement in ending civil conflict in Cambodia.
Our diplomats travelled the region, speaking to all stakeholders, large and small, to gauge views on the idea of UN involvement and to refine and develop a plan that became known as the Australian Peace Proposal.
This led eventually to the Agreements on a Comprehensive Political Settlement of the Cambodian Conflict that was signed in 1991 by all four Cambodian parties, and a permanent ceasefire, under the supervision of the United Nations Transitional Authority in Cambodia (UNTAC).
More recently, Australia has been heavily involved in the development of the Arms Trade Treaty (ATT).
The ATT has, for the first time, established internationally agreed common standards for the national regulation of the conventional arms trade. It is designed to reduce the flow of unregulated arms, which are responsible for the deaths of around half a million people every year.
Australia joined six states in sponsoring the first UN General Assembly resolution on the ATT in 2006, and has worked closely with these states, other countries across all regions of the world, and civil society, to build support for the treaty internationally.
The ATT entered into force in December last year.
As I hope these examples show, the interest, capacities, and creative diplomacy of states like Australia mean we can play an important role in finding solutions to the problems our region and the world faces and in developing the rules and institutions that will shape the evolving global order.
For Australia, our goal is to work constructively with other states to ensure that fair and commonly accepted rules, underpinned by international law and strong and effective institutions, continue to be the foundation on which the regional and global order rests.
We believe this is in the long term interests of all countries.
We already enjoy some good cooperation with China on this task.
I mentioned before our support for Chinese initiatives like the AIIB.
But we also work closely together in forums like the G20, which we hosted last year, and APEC, which, as you know, China hosted last year.
In particular, we both share a strong interest in utilizing these groupings to support and promote liberalised trade, which continues to underpin both Australia and China’s prosperity, and will be a driver of prosperity for our regional and more broadly into the future.
In addition to the ‘open regionalism’ of APEC, Australia is also working with China and others towards conclusion of negotiations on the Regional Comprehensive Economic Partnership Agreement, or ‘RCEP’, to lower trade and investment barriers in our region.
We are also strong supporters of efforts to upgrade global financial governance, including at the IMF, to reflect modern realities and the increased role of economies like China in the global financial system.
This is an issue we worked closely with China on during our G20 presidency, and one we will continue to promote.
The story of the evolving global order is one in which China is intimately involved.
The shape that order takes, and way in which it evolves – peacefully, or otherwise – will depend to a large degree on the actions and interactions between major powers, including China.
But middle powers like Australia have a valuable contribute to make to a lasting prosperity that rests on the strong foundation of shared international rules.
I’m confident we will have many more opportunities to work with China on this task into the future.
I look forward to hearing your views.
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