Speech at the 4th Plenary of the Manama Dialogue

Bahrain

Asia, Australia and the Gulf Region - Security

Speech, check against delivery, EO&E

4 December 2010

Let me say a few things about why we’re gathered here at this very, very good dialogue. I think in foreign policy three things are important. The first is ideas. And the second is perspectives, that is how different countries and different regions can view differently a common reality. And then thirdly what is important is diplomacy, how do you translate ideas into solutions – real solutions that count, bearing in mind the challenge of different perspectives.

And the good thing about the IISS is that I’ve seen them at work in this space now in the Asia-Pacific region through Shangri-La now over the last decade, and they’ve done it well. It’s spawned lots of interesting, not second track initiatives, but first track initiatives. And I think the Institute should be congratulated for that.

I see very much the same animating principle alive here in Bahrain in this dialogue. And I therefore would congratulate John and the team for what they are doing. Bringing together ideas; I believe ideas are fundamental in foreign policy. Bringing together the diplomatists, and there are a large number of them here in this room, both from foreign ministries, and also from defence ministries and defence forces. But also uniquely sitting in this audience as I have listened to many and different perspectives on common realities. And I think here with a culture of mutual respect. So thank you for the work the Institute does.

I’ll make three sets of remarks today. One is about why we in Australia are engaged in this particular region, and where it fits within our own wider interests. The second is about what is happening in the Asia-Pacific region, and how that is impacting on global security, including the security of this wider region, the Middle East, as well as what happens in the Gulf. And thirdly some specific remarks about some of the current challenges here in this specific region.

First a few short remarks about Australia itself. We see ourselves as a middle power with global interests, and have long seen ourselves as such. We’re members of the G20. We are the fourth largest economy in Asia after China, India and Japan. We are active allies of the United States, and have been so for the last 60 or 70 years. And we’re active in most of the councils of the world.

We are particularly active in Asia and the Pacific, where we’ve been founding members of the region’s principle institutions; APEC; the East Asia Summit; the ASEAN Regional Forum, and others. We have very strong and deep diplomatic engagements and economic engagements with China; with Japan; with Korea; with South East Asia, in particular our friends in Indonesia and in Singapore, but elsewhere as well; and in India. And for the Chinese themselves we occupy a particular place in the galaxy, and that is we’re their largest supplier of iron ore, and Australia is the largest single destination of Chinese foreign investment to the rest of the world. In this region therefore we are particularly active.

But Australia is not just a Pacific nation, we are an Indian Ocean nation. We are deeply engaged with our friends in Africa; we have six or seven hundred Australian mining companies currently active across most of the continent; here in the wider region, in South Asia, longstanding relationship with India, a new strategic partnership with India; with our friends in Pakistan, we are friends of democratic Pakistan but also on top of that we are deeply engaged with assisting our friends in Islamabad with the training of their military officers abroad. After the United States we are, I think, the second largest trainers of Pakistani military officers in the world. And beyond that again, we are active in many other countries of South Asia.

Here in the Gulf, our engagements diplomatically with the Gulf States goes back to the very beginning. Our trade currently ranges at about $10 billion per annum, or a little less than that. We have tens of thousands of students from the Gulf studying in various Australian universities. All welcome, invariably well behaved compared with their Australian counterparts – and that’s not difficult. And I believe deepening the people-to-people links, which already exist between the countries of the region and Australia. We’re also engaged in the nascent, emergent and somewhat fragile institutions of the Indian Ocean at large – the Indian Ocean Regional Council and other such bodies. Enough of where we fit in terms of our own interests, and where therefore the Middle East and the Gulf fits within our spectrum of interests.

Let me now make a few sets of remarks about what is happening more broadly in the Asia-Pacific. And I think it’s important to emphasise the significance of some of these numbers, in terms of where the global centre of geo-strategic and geo-economic gravity is moving. And that is to Asia, at least as we move to the first half of this century.

A few figures, which I think are worth just contemplating for the moment.

Over the period from 1990 to 2015, the IMF predicts that the United States economy will have grown three-fold to $18 trillion, with its share of global output falling from 26 to 22 per cent.

In the same 25 year period, the IMF predicts that China would have grown its economy 25-fold, to just under a US$10 trillion economy, rising from 1.8 per cent of global output to 12.2 per cent of global output. That is a significant shift.

The proportion and contribution to global output of East Asia – the countries of North Asia plus ASEAN – is predicted to rise from 19 per cent of global output in 1990 to 27 per cent of global output by 2015.

So by 2015, the United States will still be by far the world's largest economy, and will remain so until the 2030s.

But, in aggregate, the economic weight of East Asia, by early this decade, would be greater than that of the United States. And certainly we’re looking at figures that would suggest that by that stage, Asia would represent some 40 per cent of global trade.

These therefore are significant metrics for us all to bear in mind. These then begin to underpin what we see in terms of military expenditure trends within wider Asia as well.

The relativities in this field are shifting greatly as well, and a new trajectory is emerging.

The United States is still the unchallenged leader and will be for many decades to come.

Its military expenditure according to SIPRI in 2009 was some US$663 billion, an increase of 25 per cent over its 1989 base level expenditure.

When we turn to East Asia, the 2009 military spend was $208 billion, representing a 122 per cent increase on 1989.

US military expenditure in 1989 was six times that of East Asia, now it is three times that of East Asia.

China's military expenditure grew by 600 per cent to $99 billion over the 20 year period, compared with a 122 per cent increase for the region as a whole.

Why do I go through these figures? Asia and the Pacific represent a dynamic factor in global economic and security affairs as the centre of gravity moves increasingly to that part of the world.

How therefore Asia resolves its security future is not just intrinsically significant to the countries of that region itself, it is now fundamentally significant for the world at large. Critical because when we look at what could happen if trends turn down, the economic contagion of either China or India going south on the economy would frankly be profound for us all, as other speakers have indicated today.

When you look more broadly at East Asia, we have this dynamic of a twenty first century shift in the centre of geo-economic and geo-strategic gravity to East Asia and the Pacific, but very much an almost nineteenth century set of security arrangements; a fragile, brittle security environment with many unresolved territorial disputes. Which is why in wider East Asia and the Pacific, the absolute importance of building institutions within the region capable of dealing with underlying confidence and security-building measures, or the lack thereof; and providing a multilateral capacity to deal with unresolved territorial disputes; is important. That therefore, is critical for our future.

In terms of this enormous concentration of economic- and security-related activity across wider East Asia, how is it therefore affecting the wider Middle East and the Gulf? I think if we pursue that analogy of the centre of geo-strategic activity, economic and strategic, moving to Asia in the first half of this century, it is therefore acting as a magnet, not just on this region, but a magnet on the rest of the world.

You begin to see therefore the consequences which flow from that in basic export terms and therefore in consequential security terms. Energy exports in particular from this part of the world into the energy hungry economies of North East Asia is profound. The physical manifestation in shipping across the Indian Ocean is profound. You’re acutely conscious of all the metrics on that. But where the rubber hits the road for all of us is what that means for the security interests of a range of nation-states in maintaining the security of sea lines of communication, coastal lines of communication, as well as the openness of key Straits such as those of Singapore and Malacca for the period ahead. Therefore, it’s important that in our wider Indian Ocean region we afresh begin to contemplate the need for wider, ocean-wide, confidence and security-building measures, and implicit security arrangements to underpin the openness of the arteries of trade and of commerce. Of course we are in part doing this already with combined naval operations dealing with counter-terrorism; combined naval operations dealing with counter-piracy; these need to be built on for the future.

My third set of remarks goes to some of the intrinsic challenges within the region itself, and of course within the Gulf itself. I listened with careful attention this morning to King Abdullah as I’m sure many people did here today, and his profound observations about what is happening in relation to Israel and Palestine. His core remark seemed to be that the prospect of a two-state solution for an independent Israel and an independent Palestine – a two-state solution – does not have a permanent timeline attached to it; that the door at some stage would begin to close. This is a profound observation.

Therefore, it is incumbent upon all of us, including those of us who are friends of Israel, to work with our friends there to ensure that this key fact is realised. Of course, dealing with the Israel government is important; dealing also with Israeli public opinion is equally important for those of us who are realists in understanding what shapes politics in Israel at times like this.

It is important, again reflecting on what King Abdullah had to say, to reflect increasingly publicly on what the alternatives to a two-state solution would look like from the perspective of the domestic Israel body politic.

Casting a clear picture around that alternative reality is, I believe, important in shaping Israel’s response to the current debate. Again paraphrasing King Abdullah this morning, he said, quite correctly, that this is not the time for politics as usual. Time is now pressing. Time is urgent. And again our colleague from Turkey, Foreign Minister Davutoglu, his key remark that he was no longer interested in the roadmap but rather the actual arrival at the end of the road. These in different ways point to the same objective, which is that time is not our ally in dealing with this profound and continuing challenge.

Secondly on the question of Iran, I have listened carefully to the contributions which have been made on Iran today. There is often the observation, in fact reflected by the Iranian Foreign Minister today and others from Iran concerning the nuclear weapons status of Israel. Australia’s position is very clear on this, which is that all states should adhere to the Non-Proliferation Treaty and abide by its provisions. And that includes the State of Israel as well.

Secondly the problem for Iran is that as members of the NPT they are clearly in violation of various of its undertakings relevant to the NPT, as demonstrated by the IAEA. And that is why that needs to change.

Thirdly our position is clear. At the recent NPT review conference, we, together with the rest of the world, support and embrace a conference within the next couple of years to examine the proposal for a nuclear weapons free zone across the Middle East.

Therefore, I would ask our Iranian friends to just contemplate one reflection. It is as follows: when the NPT came into being back in the 1960s, many of us as nation-states faced the possibility of becoming nuclear weapons states ourselves. The debate was active in Australia at the time. It was active in Indonesia at the time. It was active in many states around that time. And we in Australia certainly did not lack in terms of the technical capability to achieve that status, had we chosen to go in that direction.

But the leaders of that time around the world took instead an alternative path. And that was to choose a non-nuclear weapons future. Had they chosen not to, and had the NPT not come into being, let us just for a moment including our friends in Tehran, reflect on what the world would look like today had 20 or 30 of us done that back in the 1960s. We would be confronted with a radically different security environment worldwide. Therefore, I would strongly encourage our friends in Iran to reflect carefully on what I saw to be the outstretched hand last night of Secretary of State Clinton in seeking a response from our friends in Iran at the time when the P5+1 soon meet.

Of course we will be looking particularly at the application of the new Chipman banking model when it comes to an international fuel bank, and whether it is to be a direct deposit or a much more regulated banking system. We will see what happens when the P5+1 meet.

Can I also reflect briefly on the comments made by some, including King Abdullah, on our good friends in Yemen, and the particular challenges which they face. It was my privilege yesterday to spend lunchtime with the Foreign Minister of Yemen on his particular challenges.

But again, if we are looking across the horizon, and again reflecting on where we will be in two, three and five years time unless as a region and a wider region we choose to act, we need to be actively in support of our friends in Sana’a, and therefore actively in support of the work which is currently being done by others, including the group of the friends of Yemen as well. I believe that is important work for us all.

Sheikh Khalid spoke again of the connectedness between what has happened in our region, particularly in the Association of South East Asian Nations, and what might yet happen here in the Gulf. I listened carefully to what he had to say. He talked about ASEAN’s doctrine of connectivity or interconnectedness. He sought to reflect on that in terms of what could happen here in the Gulf, and his notion of networking across the Gulf. This I believe is something worth further consideration and genuine embrace. If we are to unfold a genuine sense of wider community in the Gulf I believe there are indeed some subtle lessons to learn from our friends in ASEAN.

ASEAN, with no assistance from Australia whatsoever, has achieved something remarkable in the last 35 years, as Defence Minister Teo reflected earlier this afternoon. If you looked back to see where the South East Asian’s lay, together with Indo-China, in 1975 and where they’ve come to by 2010, this is a remarkably successful example of institution-building. Now there is a genuine commonsense of wider regional, common security across the 10 vastly different political entities that make up the Association of South East Asian Nations. There is something to learn there.

And my final remark about the challenges of our region is that again – given the impact of the magnet effect of the energy demands of North East Asia and the wider impact which the economic growth of that region will have here in the Gulf, the wider Middle East and elsewhere, including South Asia – we need to turn our mind afresh to the need for new and effective confidence and security-building measures in the Indian Ocean region itself.

The Indian Ocean region at large is not institution-rich. It is an area where we need to build and being to think how we build on the existing institutional structures in order to maintain security in the future.

To conclude, again I would commend the soft security role played by the IISS in convening gatherings of this nature. And also, if I could add a remark, about comments made earlier today about the role, again in a soft security space, on the whole question of inter-civilisational, inter-cultural, inter-religious and inter-faith dialogue. This is much talked about, but it is absolutely important work to do.

In our own region we do a lot of this with our good friends in Indonesia, the largest Muslim country in the world, our neighbour. This is good work in our own region. Let us all commit afresh to it across the world. For Australia our lesson in that respect, is that as a country - small in population terms, a Western country in wider East Asia which is home to six of the world’s great religions and a multiplicity of cultural and civilisational traditions - interfaith dialogue and inter-religious conversation is fundamentally important. And let us have that as part of our common deliberations for the future as well.

I wish this dialogue well. I believe it has been successful in articulating many views on how we can take the region forward.

My simple message to you all is that Australia will be actively engaged in this process.

I thank you.

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