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Perspectives on AustralianForeign Policy 1998Gary SmithPublished online: 09 Jun 2010.

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Australian Journal of International Affairs, Vol. 53, No. 2, 1999

Perspectives on Australian Foreign Policy 1998

GARY SMITH

(International Relations, Deakin University)

1998 saw the most dramatic changes in Australia’ s external environment since the end of theCold War a decade earlier. Several Asian crises intersected: the East Asian monetary crisisof the second half of 1997 was followed by dramatic reductions in growth or, worse,economic recession, in Japan and in many of the East Asian `tigers’ that had boomed in theprevious decades. In Indonesia this economic crisis further transformed into a deep politicalcrisis which ended President Suharto’ s 32-year reign in May, and interim President Habibiescheduled mid-1999 elections for Parliament and selection of a new President. In Malaysia,Prime Minister Mahathir Mohamed put his ambitious deputy Anwar Ibrahim on trial on arange of sex and corruption charges, generating a series of street clashes and challenging theMalaysian judicial system to produce a just outcome independent of the Prime Minister’ spressure. The nature of the charges echoed a year of disclosures about US President Clinton’ ssexual behaviour, matters that arguably distracted the leadership of the world’ s superpowerfor much of the year and led ® nally to an impeachment trial for perjury and obstruction ofjustice.

Economic and political crises led to speculation about security crises: ASEAN displayedsome more noticeable divisions, particularly over the issue of the proposed membership ofCambodia; the future status of East Timor returned decisively to the international agenda; andintercommunal and military violence in Indonesia threatened to escalate. The most signi® canterosion of regional security came in South Asia as India and then Pakistan, refusing tosupport the Comprehensive Test Ban Treaty, tested nuclear weapons. In the Middle East, theissue of Iraq’ s failure to comply with a UN disarmament commission (UNSCOM) becamethe trigger for war. The year began with the US mobilisation of an international force toattack Iraq. Intervention by the UN Secretary General, Ko® Annan, averted war, but in theend only postponed it, and a four-day US±British bombing campaign in took place in lateDecember.

This year of crisis and challenge demanded complex responses from Australia and, as itwas also a year of a federal election, some contested foreign policy issues might have beenanticipated. In the event, it was a year when there was very little foreign policy debatebetween the major political parties, suggesting an extensive bipartisanship and a perceptionthat there were not signi® cant domestic constituencies for areas of policy difference. Theelection, held on 3 October, was fought, won and lost on domestic tax issues. The domesticcampaign focus was enhanced by Australia’ s surprising immunity to the Asian ® nancial andeconomic ¯ u, culminating in high consumption expenditure in the last quarter. At the year’ send, the re-elected Howard government was itself pleasantly surprised by the strength ofeconomic growth and with the continuing decline in levels of unemployment that hadtranspired.

It was minor parties who injected, wittingly or otherwise, an element of divergence onforeign policy issues, and who may have offered a portent of problems to come for the majorparties. Both One Nation and the Democrats/Greens frame many of their policy positions

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within a critique of the effects of globalisation, from the right and the left, respectively. ForOne Nation, the antipathy to foreign investment echoes attitudes once dominant in the LabourParty (many decades ago), and its rightwing character comes not from its economicsentiments, but from its attacks on Aborigines, immigrants and anything Asian, that is, fromits incitement of racism and an underlying fear of diversity. Formed as a party in 1997, OneNation surged in the poll in Queensland in mid-1998, securing 11 seats, only to be blockedat the federal election in October, where one Senator was elected but no House ofRepresentatives candidates. One Nation’ s main foreign policy effect was the potentialdamage to perceptions of Australia to a large number of Asian countries. To the extent thatits constituency is driven partly by unemployment and poverty, it may be seen as a warningto the government about complacency with inequities which accompany an increasinglyglobalised economy.

For the Democrats and Greens, there was often a more thoughtful response to dilemmasof globalisation, arguing for the reassertion of sovereignty against international markets onissues such as uranium mining at Jabiluka or the draft Multilateral Agreement on Investment(MAI), and yet also for international collaboration of social movements and non-governmentorganisations to change policies at a global level. These parties had an impact on thegovernment on these two issues, strengthened by the role of similar political forces incoalition governments in Europe. In the `safe’ seat of the Minister for Foreign Affairs,Alexander Downer, a Democrat election candidate emerged as Downer’ s main opponent andsecured suf® cient ® rst preference votes to force a protracted preference count. Downersurvived, with his reappointment as Minister for Foreign Affairs and Trade creating anelement of consistency in Australia’ s foreign policy.

Australia and the East Asian economic crisis

Foreign Minister Downer’ s mid-1997 White Paper `In the National Interest’ stated:

The Government ’ s judgement is that economic growth in industrialising East Asia will continue at

relatively high levels over the next ® fteen years. This means that the countries of East Asia will become

even more important to Australia as trade and investment partners, and in security terms.1

Issued immediately before the onset of the East Asian economic crisis, the growth assump-tion could be seen as a ® nal expression of what was subsequently described as the`unbounded optimism’ 2 of the decade. During the course of 1998 the Minister set out themore sombre reality that faced Australian economic relations with the region:3

The impact on real economies throughout the region of this turmoil is now becoming clear, with forecast

growth rates falling and unemploymen t rising. Many of the countries in our region will see their economies

shrink this yearÐ at the lower end, Malaysia, with a decline of perhaps 3%, up to Indonesia , which may

see a fall of 15%.

1 Alexander Downer, 1997, `Australia’ s Foreign and Trade Policy: In the National Interest’ , White Paper,August, http://www.dfat.gov.au/ini/wp.html

2 Alexander Downer, 1998, `Australian ExportersÐ Top Performers in Tough Times’ , Speech to the `TopExporters’ Dinner, Melbourne, 15 July, http://www.dfat.gov.au/pmb/speeches/fa_sp/980715_top_exporters.html

3 Alexander Downer, 1998, `Australia and AsiaÐ After the Crisis’ , Occasional Lecture to theBusiness/Academic Meeting of the Asia Research Centre and the WA State Of® ce of the Departmentof Foreign Affairs and Trade, Perth, 6 August, http://www.dfat.gov.au/pmb/speeches/fa_sp/980806-asia-crisis.html

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One of the consistent Australian responses during the year was an emphasis by thegovernment on its good neighbourliness, on `regional mateship’ ,4 on the notion that Australiawas not just a `fair-weather friend’ , but an `all-weather friend’ .5 The Minister could point toa list of actions that demonstrated this `practical commitment to the region’ . Australia wasthe only country besides Japan to contribute to all three IMF ® nancial rescue packagesÐ forThailand, South Korea and Indonesia. Aid, partly as training in ® nancial management andcorporate governance, was increased, and extensive trade insurance cover provided. TheYouth Ambassadors for Development program was launched aiming to send a 500-strong`Peace Corps’ to the region. Moreover, as the crisis in Indonesia worsened, Australia lobbiedthe US for softer IMF packages for Indonesia, as `being seen through the IMF to bully andcajole Indonesia into a particular political paradigm will ¼ invite a negative and lastingbacklash from Indonesians ¼ ’ 6

With these practical commitments under his belt, Alexander Downer was ready toexorcise the spell of Labour’ s claim during its 1996 election campaign, and after in defeat,that the Coalition were so disinterested in the region that regional relationships were injeopardy under a Howard-led government. In a broadside at the ghosts of former ForeignMinister Gareth Evans and Prime Minister Paul Keating, and their claims to have negotiatedAustralia’ s regional destiny, Downer claimed the high ground for the Coalition:

¼ I believe that future historians will view this periodÐ the years 1996 through `98Ð as a historic turning

point in Australia’ s engagemen t with the Asia Paci® c. They will see these years as the time when Australia

ceased being the region’ s `demandeur ’ , badgering its neighbours for attention and recognition, and became

a genuinely close partner and regional friend, in good times and in bad.7

Attitudinal surveys suggest that the notion of `turning point’ may have some long-termempirical validity as `some of the most pronounced anti-Asian sentiments ¼ are concentratedin older generations’ ,8 and so in historical decline. Yet it would also seem that the strongestnegative sentiments were concentrated in certain parts of rural and regional Australia. Thepolitical rise of One Nation gave national and international publicity to a set of isolationistviews that not only rejected regional engagement, but which also, because of the racistrhetoric, generated extensive and adverse publicity in the region.

This new political force created a pressure on the government to discard any residualregional ambivalence. `Small-l’ liberals may, with Downer, wish to `encourage the full¯ ourishing of ideas and a fearless tolerance of diversity with its potential for both genius anduncertainty’ ,9 but they are still faced with the quandary of how far to tolerate the intolerant.Publicity given to One Nation intolerance encouraged the Australian government tocompensate with more de® nitive af® rmations of regional `mateship’ , and a fair proportion of

4 Alexander Downer, 1998, `Australia’ s Future in the Asia Paci® c: Cooperation, Economic Reform andLiberalisation’ , Speech to the Melbourne Institute ConferenceÐ The Asian CrisisÐ Economic Analysisand Market Intelligence, University of Melbourne, 8 May, http://www.dfat.gov.au/pmb/speeches/fa_sp/melb8may98.html

5 The term used in numerous speeches and media releases in 1998, e.g. Alexander Downer, `Australiaand AsiaÐ After the Crisis’ , op. cit.

6 Alexander Downer, 1998, `AustraliaÐ Stability in the Asia Paci® c’ , Address to Australian±AmericanAssociation at Harvard Club, New York, 8 June, http://www.dfat.gov.au/pmb/speeches/fa_sp/stability-asia_jun98.html

7 Alexander Downer `Australia’ s Future in the Asia Paci® c: Cooperation, Economic Reform andLiberalisation’ , op. cit.

8 Ian McAllister and John Ravenhill, 1998, `Australian Attitudes towards Closer Engagement with Asia’ ,Paci® c Review 11, 1:119±41.

9 Alexander Downer, 1998, `Reshaping Australia’ s Institutions of Diplomacy’ , Occasional Lecture,Canberra, 18 February, http://www.dfat.gov.au/pmb/speeches/fa_sp/anu18feb98.html

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the Foreign Minister’ s time was spent on damage limitation in the region. He performed thistask with a natural ease, especially when contrasted with the Prime Minister’ s protractedreluctance to tackle One Nation head-on at home, until after its surge in the Queenslandelection.

The Foreign Minister and the Prime Minister appeared to represent the polar positions onAustralia’ s ambiguous regional location, or `liminality’ ,10 where Australia is simultaneouslydrawn `forward’ by notions of constructing a new regional identity, and `back’ by old culturaland strategic ties outside the region. The ambivalence, `to run or walk’ towards Asia11 wasillustrated in a variety of ways. Australia’ s practical commitment to the region was based, itwas observed by the government itself, on the fact that Australia had been much less affectedby economic adversity, being `in such excellent economic shape that we have been able tocome to the aid of our regional neighbours in their time of need’ .12 The corollary of thisperspective was that Australia’ s `all-weather’ friendship required fair-weather at home, and,indeed, when the ® nancial storm blew across Australia mid-year and speculative pressuremounted against the Australian dollar, Treasurer Peter Costello declared that Australia wasnot really part of the region, and ® nancial players should treat it differently.13 The Economistnewspaper commenced a June article on Australia with the ¯ ourish `The lucky country maybe running out of luck’ , captioned a table showing Australia’ s comparatively high share ofexports to Asia `UNLUCKY’ , and observed that the troubles in the region were `drivingAustralia’ s currency literally down under’ .14

Surprisingly, to the government and most economic pundits, the storm receded. The`Aussie dollar’ ended the year where it had begun at the start, about 63 US cents. Even`maverick’ economist Paul Krugman was at a loss later in the year to explain why theshort-selling hedge funds had backed away from driving the `Aussie’ down when the ReserveBank had refused to raise interest rates to protect it.15 For the rest of the year, Australia de® edregional economic gravity; the currency traded in a narrow range and GDP growth remainedhigh. Growth was a product of continuing strong domestic demand, and the expansion inexport volumes and value to Europe and America to partly compensate for loss of East Asianmarkets (with this expansion boosted by the 1997 depreciation of the dollar16). The growingtrade de® cit and foreign debt was softened by falling interest rates, and thus became nextyear’ s problem.

Disappointment at APEC

As the APEC Heads of Government meeting in Kuala Lumpur in November drew closer,Australian economic self-con® dence increased and the government set out an ambitiousagenda for the regional economic summit. Before his departure, the Prime Minister observedthat it was `a source of great strength to me to be able to go to the APEC meeting and speakas the leader of a successful economy’ .17 Australia’ s agenda was based on continuingmarket-oriented economic reforms and further trade liberalisation, on the assumption that

10 Richard A. Higgott and Kim Richard Nossal, 1997, `The International Politics of Liminality: RelocatingAustralia in the Asia Paci® c’ , Australian Journal of Political Science 32, 2:169±85.

11 Rawdon Dalrymple, 1997, `Perspectives on Australian Foreign Policy 1996’ , Australian Journal ofInternational Affairs 51, 2:243±53.

12 Alexander Downer, `AustraliaÐ Stability in the Asia Paci® c’ , op. cit.13 Sydney Morning Herald, 30 July 1998; 28 November 1998.14 The Economist, 13 June 1998.15 Australian, 14±15 November 1998.16 Alexander Downer, `Australia and AsiaÐ After the Crisis’ , op. cit.17 Australian, 16 November 1998.

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Australia, with its successful economy, would `push above its diplomatic weight’ and havea leading in¯ uence over the direction of the proceedings.18

This was not to be. The agenda item of principal concern to Australia was the adoptionof Early Voluntary Sectoral Liberalisation (EVSL) measures in nine areas, includingchemicals, energy, gems and jewellery, toys, medical equipment, ® sh and forest products,environmental goods and services and telecommunications. The EVSL measures wouldreduce trade barriers and open markets to greater external competition in these sectors. Underpressure from Japan, concerned with ® sheries and forestry, and with the acquiescence of theUnited States, the matter was almost immediately referred to a different forum, the WorldTrade Organisation, and removed from APEC consideration. The Trade Minister, TimFischer, declared his disappointment and stated he remained `underwhelmed at the Japanesefailure’ .19 He then described it more diplomatically as `ª second bestº way forward’ and thechosen metaphor for APEC was of a car in `lower gear’ than Australia sought.20

How is the gap between Australian expectations of taking the APEC down the liberalisingfast lane, and the realities of the APEC Forum, to be explained? A part of the answer maybe that Australia’ s exceptional economic performance led it to a restatement of the orthodoxliberal economic recipe of freer trade, on the assumption that there was a substantial regionalconsensus on this priority, or that Australia could lead this consensus. However, manygovernments in the region were searching for ways of more rapidly ameliorating their plightthrough direct support from industrialised countries, and held signi® cant distrust of theunregulated global ® nancial system. They were looking for new approaches to a newsituation, less inclined to focus the trade liberalisation agendas of previous APEC meetings,and shared Japan’ s sensitivity to further liberalisation. Australia, out of overcon® dence,seemed to have misread the regional mood.21

Within Australia, two issues illustrated the political reactions that may develop inresponse to the imposition of others’ liberal economic agendas. The proposed MAI, aninternational treaty on foreign investment originating in the Organisation for EconomicCooperation and Development, generated considerable concern amongst minor parties andsections of the major parties, as it seemed to be an orchestrated exercise to wind backdemocratic state power in favour of corporate freedom. In June 1998, the Joint StandingCommittee on Treaties tabled its interim report, which recommended that Australia shouldnot sign the text of the Agreement unless and until a decision was made that it was inAustralia’ s interest to do so, and sought further hearings, criticising the `¯ imsy’ submissionit received from Treasury.22 The government seemed relieved when the Treaty negotiationsstalled in Europe in October after France withdrew.23 A second illustration came when theHigh Court ruled in April in favour of the New Zealand TV and ® lm production interestsagainst the Australian Broadcasting Authority. The Court determined that under the CloserEconomic Relations agreement between Australia and New Zealand, New Zealand content

18 Australian, 11 November 1998.19 Australian, 16 November 1998.20 Tim Fischer, 1998, Statement at APEC meeting, Media Release, 15 November, http://www.dfat.gov.au/

media/releases/® scher/981115_1.htm l21 Australian, 17 November 1998; for a challenging background argument see James George and Rood

McGibbon, `Dangerous Liaisons: Neoliberal Foreign Policy and Australia’ s Regional Engagement’ ,Australian Journal of Political Science 33, 3:399±420.

22 Joint Standing Committee on Treaties, Public Hearings on the Draft Multilateral Agreement onInvestment and other Treaties, http://www.aph.gov.au/house/committe/jsct/181298.htm

23 Mark Vallianatos, Update on MAI Negotiations, 27 October, http://www.islandnet.com/ , ncfs/maisite/mai-up3.htm

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was Australian content for purposes of quotas. The Australian television production industryreacted sharply. They argued that substantial loss of jobs would follow.24

Relations with Indonesia and Malaysia

The turbulent political situations of these two Australian neighbours, Indonesia and Malaysia,at the time of the APEC summit in November illustrated the problems facing Australia’ sbilateral relations through a tumultuous year. Australian headlines were focused on riots inJakarta, protests in other parts of Indonesia, and on political unrest in Malaysia. All theAPEC leaders were aware of the situation in Kuala Lumpur outside their hotel rooms,although President Habibie ¯ ew back to Indonesia each night to an even more fragilesituation.

The longstanding framework of Australia’ s relations with Indonesia, based aroundsupport for the Suharto regime as anchor of Southeast Asian stability, had collapsed, andfuture relations would depend on how Indonesia managed its political transition in a contextof severe economic dif® culties. The optimism expressed early in the year that `out of thiseconomic crisis should emerge a new Asia which will be more con® dent, more mature, andliberal and democratic’ ,25 was faced with its strongest test in Indonesia. To assist in politicaltransformation, Australia offered to support the 1999 election process through the expertiseof the Australian Electoral Commission, in addition to various forms of economic andtechnical assistance.

During the year the question of violent excesses by sections of the Indonesian militarybecame a key issue in many of the student protests and in areas of ethnonationalist tension.Student groups were calling for the end of the `dual function’ of the military, in internalsocial and political life, as well as external security. The surge of criticism of the military inIndonesia raised the question of the appropriateness of one of Australia’ s principal tools ofdiplomatic relations, the cultivation of military-to-military cooperation arrangements.Australia’ s military ties in Indonesia had expanded in the 1990s, partly in the gap createdwhen the US Congress blocked military cooperation after the Dili massacre in East Timor.The relationship now came under increased criticism. Ties were suspended at the time of theMay killings, but resumed shortly after and were defended by the government. In Decemberthe new Defence Minister, John Moore, and the Chief of Defence Force Staff visitedIndonesia, with a reported aim to help ABRI (The Indonesian Armed Forces) make thetransition from the centre of political life.26

For Australia, the spotlight began to turn more harshly again on the of® cial position onEast TimorÐ support for Indonesian sovereigntyÐ a policy which had been sustained for overtwo decades on the assumption that it was the key to the development of sound bilateralrelations with a Suharto-led Indonesia. The fall of Suharto raised new hope for those pursuingthe cause of an independent East Timor, and a range of pressures for policy change were feltwith greater force by the interim Habibie administration: the cost of military control,continuing reports of atrocities, a wider loss of respect for the military in Indonesian society,the freer media in Indonesia, and the support for the East Timorese cause amongst major aiddonors. The shadow foreign minister, Laurie Brereton, signalled at the start of 1998 his desire

24 Australian Broadcasting Authority, 1998, `High Court Decision Threatens Australian Content on TV’ ,News Release, 28 April, http://www.aba.gov.au/navigation/newsrel/1998/41nr98.htm

25 Alexander Downer, 1998, `East Asian Transformations, Challenges for Australia’ , Speech to theAustralian Institute of Export’ s International Exporters’ Summer School, Parliament House, Canberra,23 February, http://www.dfat.gov.au/pmb/speeches/fa_sp/canb23feb98.html

26 Australian, 10 December 1998.

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to break ranks with the bipartisan policy of recognition of Indonesian sovereignty. He soughtto reopen the issue of Australia’ s position on East Timor’ s status and the conferencesupported an `act of self-determination’ for the East Timorese.27 The Indonesian foreignminister, Ali Alatas, remonstrated with Brereton, but by the end of the year the politicalground on the East Timor question was altering quickly within the Habibie administrationand in the thinking of some key political ® gures who were positioning themselves for the1999 elections. As Australia’ s position on East Timor came undone, so questions aboutAustralia’ s actions in the lead-up to the Indonesian invasion in 1975, its knowledge of theBalibo killings of Australian journalists, and of the 1991 Dili massacre, became matters ofincreasing political contention.28

Malaysia’ s political turmoil did not spring from the same depths of economic collapse orregime stagnation as in Indonesia, and was substantially self-imposed by the actions of PrimeMinister Mahathir in pursuing his deputy and leadership rival, Anwar Ibrahim. Australiaexpressed its strong displeasure at the arrest and maltreatment of Anwar, but also dissociateditself from the US announcement that, as a protest, it would not meet with Dr Mahathir atthe APEC. The Australian Prime Minister told his Malaysian counterpart that the mattercould do irreparable harm to Malaysia’ s international reputation; Downer met secretly withAnwar’ s wife, Azizah Ismail, to hear of her concerns (as had the US Secretary of State).29

Australia’ s dissociation from the US deepened when Vice President Gore made outspokencomments in support of Anwar’ s reformasi movement while at the APEC meeting inMalaysia. The Australian newspaper also observed that the Vice President’ s commentsimplied a poor knowledge of the East Asian region, as he described the Vietnamesegovernment’ s mid-1980s initiative of doi moi as a movement of political/democratic changewhen it was a communist government’ s partial opening to market forces, without politicalliberalisation.30 The comments were also arguably counterproductive in Malaysia becausethey were ostensibly aimed at supporting. Australia’ s distancing itself from US criticism ofauthoritarian governments in the region continued a practice developed under Labourgovernments, in the interest of good state-to-state relations. But in Australia’ s relations withMalaysia, Downer’ s 1996 hope for a deeper bilateral relationship, one not marred by theKeating/Mahathir `recalcitrance’ issue, was yet to be realised. Beyond the possibly transientpolitical crisis, fundamental differences on preferred regional trade arrangements persisted.

China and Japan

There were some notable contrasts in the way Australia’ s relations with China and Japandeveloped over the year, re¯ ecting in large part the realities that China remained a signi® canteconomic stabilising force (or potentially a very destabilising force) in East Asia, while Japanstruggled to ® nd the political will to rebuild its banking system and re¯ ate its economy.Australia’ s relations with China in 1998 continued the `successful year of diplomacy’ of1997,31 while relations with Japan seemed fraught with matters of con¯ ict.

The Australian government praised China, often, for `remaining strongly committed toensuring that the Yuan is not devalued’ in response to the ® nance market driven devaluationsin the rest of East Asia.32 The praise was offered without a hint of the ironies of an Australian

27 ALP Platform 1998, http://www.alp.org.au/platform/platform.htm28 Sydney Morning Herald, 28 August 1998, 18 November 1998.29 Age, 16 November 1998.30 Australian, 18 November 1998.31 Russell Trood, 1998, `Perspectives on Australian Foreign PolicyÐ 1997’ , Australian Journal of

International Affairs 52, 2:185±98.32 Alexander Downer, `AustraliaÐ Stability in the Asia Paci® c’ , op. cit.

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government which espoused and practised free market philosophies, including a ¯ oatingexchange rate, asking a Communist state to stay out of the global ® nancial system and ® xits exchange rate in order to prop up that very system and stabilise global trade.

Australia convened the second meeting of the bilateral human rights dialogue with Chinaestablished the previous year, which aimed to `make a real difference to human rights ¼focusing on measures that strengthen human rights institutions’ .33 The meeting produced aseries of unproblematic commitments to of® cial and scholarly exchanges. China signed theInternational Covenant on Civil and Political Rights in October. But the limitations of sucharrangements in relation to China became all too evident by the end of the year when, inDecember, the authorities detained a number of pro-democracy advocates, followingincreasingly hardline statements by leaders such as Li Peng. NGOs, such as Human RightsWatch, urged government `dialogue partners’ to `end their self-imposed silence’ .34

There was less self-imposed silence towards fellow liberal democracy Japan. Criticism ofJapan focused on its need to reform its banking system and stimulate its economy so that itcould play a signi® cant role in ending the East Asian economic crisis. On these themesAustralia was echoing US sentiment. Japan was seen by many observers as in political shockas it struggled to grasp the magnitude of the economic crisis, and ® nd a way of responding.Australia’ s sharp comments on Japan at the APEC meeting in November stood in starkcontrast to the years of collaborative effort in building up APEC.

Australia also became engaged in a serious bilateral dispute with Japan over ® shingquotas for Southern Blue® n Tuna, echoing earlier disputes over whaling. In January, Japanfailed to secure an increased quota through the regulating body, the Commission for theConservation of Southern Blue® n Tuna, and declared it would increase its catch through `anexperimental ® shing program’ . In response, Australia banned Japanese vessels fromAustralia’ s Exclusive Economic Zone, threatened impoundment by the Navy and refused torenew the Australia±Japan ® shing agreement.35 As the year progressed Australia initiatedformal dispute resolution procedures with Japan, and was accused by environmental groupssuch as Greenpeace of softening its stand to avoid a breakdown of the Commission.36

Regional security uncertainties

President Clinton’ s mid-year visit to China led to speculation that the US may becommencing a process of `choosing’ China over Japan as its main strategic partner in Asia.37

Though this prospect may seem far-fetched, given the United States’ extensive allianceconnections with Japan, the existence of such speculation underscored the key problem whichAustralian foreign and defence policymakers faced in delivering an assessment of Australia’ sregional security outlook: the new uncertainties and complexities which confronted the task.Australia’ s regional security outlook had been premised on economic growth throughout theregion, on the steady development of regional institutions of cooperation, the ASEAN

33 Alexander Downer, Media Release, 11 August 1998, http://www.dfat.gov.au/pmb/releases/fa/fa108_98.html

34 Human Rights Watch, Press Release, December 1998, Chinese government must free pro-democracyadvocates, http://www.hrw.org/frw/press98/dec/china1202/htm; Australian, 26±27 December 1998.

35 See the daily newspapers in the period 22±24 January 1998.36 Greenpeace Australia, `Government Ducks for Cover over Japan Tuna Issue’ , Press Release, 1

September, http://www.greenpeace.org.au/Releases/sbtgov.htm37 G. John Ikenberry, 1998, `Choosing Partners in Asia’ , Australian Journal of International Affairs 52,

3:229±32.

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Regional Forum and the Five Power Defence Arrangements, on bilateral treaties and`dialogues’ , and on an expanded conception of the role of the Australian Defence Force.

There was a sense in which the East Asian economic crisis could be said to have had asecurity `upside’ . When perpetual economic growth in East Asia was still the of® cialassumption, the 1997 White Paper hinted at Australia’ s relative decline, observing thatgrowth has `implications for Australia’ s relative standing in the region, and signi® cantconsequences for the broader relativities of power and in¯ uence in the Asia Paci® c andbeyond’ .38 The Defence Minister’ s strategic review, Australia’ s Strategic Policy, launched atthe end of 1997, referred to Australia’ s declining `strategic weight’ , as modernisingeconomies modernised their military organisations.39 The converse was that the economiccrisis in East Asia, by slowing the rate of military modernisation, would increase Australia’ sstrategic weight, a point partly acknowledged by the foreign minister, who stated:

¼ many countries in the region have slashed their defence spending and have deferred purchases of

military hardware. While we were not concerned by the process of modernisation of military forces that

was occurring in the region prior to the ® nancial crisis, it is probably no bad thing that defence planners

now are forced to think very carefully about what capital equipment they really need.40

What to do with this `weight’ to enhance the regional security environment was anotherquestion. Australia’ s Strategic Policy identi® ed three basic tasks that the Australian DefenceForce could be required to perform:

· defeating attacks on Australia;· defending our regional interests; and· supporting a global security environment which discourages interstate aggression.

The second of these, defending our regional interests, represented a reaf® rmation of theexpansion of the task of the Australian Defence Force from the more narrowly constructedDefence of Australia approach to a wider but unspeci® ed regional role.41

We can no longer assume that forces able to meet low-level contingencies in the defence of Australia will

be suf® cient to handle con¯ ict beyond our territory. We must make sure that the forces we develop for our

own defence do indeed give options for handling crises in which vital interests may be threatened.

But what were the crises that would legitimately take Australian military forces into theregion? While this may be the stuff of classi® ed `scenarios’ , there was little attention givento the ethical and legal differences between using military force for territorial defence, andusing the military to defend an `interest’ in the region. Yet at the same time the governmentwas committed to the establishment of an International Criminal Court which assumed adetailed commitment to setting limits on the use of military force, and de® ning `war crimes’ .

Australia’ s Strategic Policy identi® ed Australia’ s key strategic interests as including theavoidance of destabilising competition between the region’ s major powers, and keepingSoutheast Asia free from destabilising disputes. This may be read as an unexceptionalstatement about interests. It may also be read as re¯ ecting Australia’ s `strategic culture’ andits preoccupation with the idea of stability as security and instability as threat.42 In 1998, thetoppling of Suharto in Indonesia and the continued self-determination struggle in East Timor

38 Alexander Downer, `Australia’ s Foreign and Trade Policy: In the National Interest’ , op. cit.39 Department of Defence, 1997, Australia’ s Strategic Policy, December, p. 5, http://www.dod.gov.au/

minister/sr97/welcome.html40 Alexander Downer, `Australia and AsiaÐ After the Crisis’ , op. cit.41 Ian McLachlan, Minister for Defence, House of Representatives, 2 December 1997, http://

www.dod.gov.au/minister/sr97/s971202.html42 A revealing historical insight into `strategic culture’ is Alan Renouf, 1979, The Frightened Country

(Melbourne: Macmillan).

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both involved new elements of instability, but such instabilities may also be necessary stagesin the evolution of more democratic political arrangements.

Despite anxiety over possible deterioration in the regional security environment, theforeign minister could ® nd some positive signs. Downer observed that the `architecture’ ofregional institutions remained intact, in particular the ASEAN Regional Forum,43 which metin Manila in July, although preoccupied with Indian and Pakistani nuclear tests. Divisionsbetween ASEAN members were sharper than at any time in its 30-year history, re¯ ecting theprocesses of change affecting all its members, and the willingness by some, such as Thailandand the Philippines, to comment on the `internal affairs’ of other member states. The mainissue was the expansion of membership to include Cambodia, a move that had been blockedat the 1997 ASEAN meeting because of internal instability in Cambodia (although the samemeeting had agreed to the membership of Burma). But by the end of the year a Cambodiain which internal political forces were partly reconciled was admitted, and ASEAN thenincluded all ten states of Southeast Asia. At the end of the year, Australia faced an ASEANwhich was larger, somewhat less united, but waiting on the future political character of itslargest member, Indonesia.

Australia had built its multilateral regional security strategy through its contributions toa range of institutions: ASEAN Regional Forum, the Five Power Defence Arrangements, andthe Council for Security Cooperation in the Asia Paci® c. Yet the kind of challenges thataffected the region in 1998 were increasingly issues of ethnonationalism, repressive regimeactivities and inter-ethnic clashes. The states with which Australia was developing dialoguewere usually unwilling to have these issues on the agenda, and so the regional securityorganisations seemed largely irrelevant to unfolding security issues, around ethnic andcultural diversity, within and beyond states.44

The 1998 `success story’ in the regional security environment was the continued peaceprocess on Bougainville, and Australian±PNG cooperation in supporting that process, instriking contrast to the Sandline mercenary crisis of the preceding year. A cease® re agreedto in New Zealand in January 1998 (the Lincoln Agreement) came into permanent effect inApril as planned. Australia took up the leading role on the ground, being invited to commandthe Peace Monitoring Group, and providing up to 250 of the 300 personnel involved.45 InAugust the PNG government formally ended its military operations, and helped address theapparent crisis at the end of the year when its parliament failed to pass legislation for theBougainville Regional Government before a six-month adjournment.46

For Australia, the other signi® cant element of the `architecture’ was the continuedinvolvement of the United States in security relations in the region, and the high levelAUSMIN talks in July reaf® rmed this continued interest without breaking any new ground.The enthusiasm with which the incoming Howard government in 1996 publicly embraced theUS connection had paralleled that of Bob Hawke in 1984 in the early part of Labour years.In 1998 there was less hype, possibly in¯ uenced by Rupert Murdoch’ s outburst earlier in themonth that Australia needed to be more assertive in its relationship with the United States.47

The joint communique referred to a determination to `continue to make interoperability a

43 Alexander Downer `Australia’ s Future in the Asia Paci® c: Cooperation, Economic Reform andLiberalisation’ , op. cit.

44 Terry Narramore, 1998, `Coming to Termswith Asia inDiscourses of Asia±Paci® c Security’ ,AustralianJournal of Political Science 33, 2:235±66.

45 Alexander Downer and Ian McLachlan, 1998, `Australia to Command Peace Monitoring Group onBougainville’ , Joint Media Release, 30 April, http://www.dfat.gov.au/pmb/releases/fa/fa053_98.html

46 Australian, 4 December 1998.47 Sydney Morning Herald, 2 July 1998.

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primary goal, particularly in view of the challenges posed by rapid technological change,especially in the information area’ , raising the familiar dilemma of the extent to which suchmilitary interoperability comes at a cost to Australia’ s self-reliant capabilities.48

Responding to global security problems

Iraq, UNSCOM and Mr Butler

Issues related to the development of weapons of mass destruction impinged dramatically onAustralian foreign policy at the start of the year when the Australian government made its® rst commitment of ground troops to war since Vietnam. In February, Cabinet approved theimmediate deployment of 190 personnel, including 110 members of the elite Special AirService Regiment, to operate under the command of the US Marine Expeditionary Unit ina planned military strike against Iraq. The strike was planned in response to Iraqi PresidentSaddam Hussein’ s obstruction of the inspection efforts of the United Nations SpecialCommission (UNSCOM), which had already unearthed extensive information on the extentof Iraq’ s chemical and biological weapons, which it was expected to locate and remove.Opposition leader Beazley gave unequivocal support. The party leaders solemnly joinedtogether in competitive bipartisanship to express support for the departing troops withthoughts and prayers in face of the dangers ahead, in a war which was to be fought in thejust cause of disarmament.49

UN Secretary General Ko® Annan’ s last minute intervention defused the crisis and troopsbegan to return home in May. UNSCOM returned to Iraq, but the problem of access to siteswas replayed in the second half of 1998. After receiving a report from UNSCOM’ s ChiefWeapons Inspector, Richard Butler, about Iraq’ s continued obstruction, the US and Britainlaunched a four-day missile and bombing blitz on Iraq in December, without requesting thereturn of Australian forces. Some issues for Australia in the second half of the year arosefrom the central role of an Australian citizen and former Ambassador as UNSCOM’ s ChiefInspector.

UNSCOM, under Butler’ s leadership, found extensive evidence of Iraqi weapons of massdestruction and many untrue statements by Iraqi of® cials. But Butler, in presenting these factsand making a public case, did not win the battle of perceptions. Iraq was able to mobilisesigni® cant support in the Middle East and well beyond for the idea that Butler was simplyan agent of US imperialism, rather than an independent international disarmament inspector.A problem this posed for Australia’ s foreign relations in the Arab and wider Muslim worlds,wrote Professor Vincent in the Australian,50 was the perception that Australia’ s of® cialapproach to the Arab world was much less even-handed than we might wish it to be. Herecommended a series of goodwill initiatives to remedy the situation. Vincent’ s argument didnot involve taking a judgement on Butler’ s performance, only on the consequences ofperceptions of that performance.

Butler’ s `blunt language’ made him popular in the United States, which did not needconvincing of Iraqi government duplicity, but there seems to be a case to answer that his stylewas counterproductive in the task of convincing the many sceptics outside the US of the truthof his claims and the weight of his evidence. Butler was under considerable pressure asthe Iraqis were determined to paint him as a `Mad Dog’ , persecuting the weak in Iraq.

48 Joint Communique of 1998 Australia±US Ministerial Talks, http://arc.org.tw/USIA/www.usia.gov/re-gional/ea/easec/ausmincm

49 Australian, 18 February 1998.50 Australian, 14 November 1998.

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But in becoming visibly emotional and introducing a personal dimension in his counterattackon the Iraqi foreign minister, Butler appears to have lost credibility in arenas where, withdiplomatic restraint, he may have retained it. For example, in a report in the Australian,Butler states: `I wrote to him (Aziz) today saying ª start again, give us a whole new answeron biology [ie on biological weapons]; break the habit of a lifetime and tell the truthº ’ .51 Thisstyle arguably allowed Tariq Aziz to pose as the injured man of honour . To the extent thatButler’ s style becomes associated with Australian disarmament diplomacy, Australia may® nd the onerous task of building multilateral coalitions more dif® cult.

Multilateral disarmament

Foreign Minister Downer presented an agenda for multilateral disarmament negotiations atthe start of the year based on:

· working towards a ® ssile `cut-off’ treaty to stop the production of weapons-grade material;· extending the landmines prohibitions to cover trade in landmines; and· strengthening the Biological Weapons Convention.

In pressing for a `cut-off’ treaty, the foreign minister located himself within theintellectual legacy of the Canberra Commission on the Elimination of Nuclear Weapons, aninternational expert group whose report on achieving nuclear disarmament was commis-sioned by former Prime Minister Keating. It was presented after Keating had lost of® ce, andlargely ignored by the new Prime Minister, although Downer was `pleased to have receivedthe report’ and it was taken on to the UN Conference on Disarmament.52 The United NationsConference on Disarmament agreed in August 1998 to launch negotiations on such a treaty.53

But the government did not present the idea of nuclear disarmament to Australians as anachievable objective, in strong contrast to the landmines issue.

The idea of the elimination of landmines was pursued most vigorously in the domesticas well as the international arena, re¯ ecting the rapid and unexpected delegitimation of theseweapons due to campaigns associated with the late Diana, Princess of Wales. Australia hadsigned the `Ottawa Treaty’ in late 1997 as soon as it was opened, and proceeded to introducelegislation to allow rati® cation before the treaty entered into force on 1 March 1999.Australia established a special representative on demining, and introduced a `Destroy aMine® eld’ program. This used the Princess Diana Trust Fund to `enable individuals, schools,community groups, businesses and associations to participate directly in solving the land-mines problem by ª adoptingº active mine® elds selected by the United Nations as having ahigh priority for clearance’ .54

The Verifying Biological Weapons ban was less of a domestic priority, although itreceived a boost from the Prime Minister in the Parliament in March, in the context of thecommitment of troops to war against Iraq. The Foreign Minister subsequently convened aninformal ministerial meeting in New York in September, only to be unable to attend due tothe election.

Until May 1998 the Minister’ s perspective on the possibilities of progress on multilateral

51 Australian, 20 November 1998.52 Canberra Commission Home Page, http://www.dfat.gov.au/cc/cchome.html53 Alexander Downer, 1998, `Negotiations on Cut-Off Treaty on Fissile Material Launched In Conference

on Disarmament’ , Media Release, 12 August, http://www.dfat.gov.au/pmb/releases/fa/fa109_98.html54 Alexander Downer, 1998, `Princess Diana Trust Funds for ª Destroy a Mine® eldº Initiative’ , Media

Release, 12 October, http://www.dfat.gov.au/pmb/releases/fa/fa129_98.html; Alexander Downer andTim Fischer, 1998, `1998±99 Budget’ , Joint Media Release, 11 May, http://www.dfat.gov.au/pmb/re-leases/fa/fa057_98.html

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arms control and disarmament was optimistic. In April, France and Britain rati® ed theComprehensive Test Ban Treaty (CTBT), putting the ® nal seal on an issue which hadtroubled French±Australian relations for decades. Australia looked forward to other nuclearpowers following with their rati® cation. In the Budget, $1.6 million was allocated to the newComprehensive Test Ban Treaty Organisation. The Budget Papers extract stated:

The CTBT will ® rst and foremost serve Australia’ s security interests: it is a solid barrier to the

proliferation of nuclear weapons, and brings the nuclear arms race to a de® nitive end. (emphasis added)55

Not a bad outcome for $1.6 million. Unfortunately, events in South Asia brought a newcomplication to the picture.

Indian and Pakistani nuclear tests

The testing of nuclear weapons by India in mid-May and then by Pakistan two weeks laterpresented a profound challenge to the government’ s assumptions about the direction of itspolicies for enhancing global security.

Australia had proceeded, under Labour and Liberal governments since the 1970s, with anagenda that focused on developing a test ban treaty, to reinforce the commitment to theNuclear Non-Proliferation Treaty that the nuclear powers had made. In the 1970s and 1980s,Australia’ s opposition to nuclear tests put it at odds with all the nuclear powers, includingits principal ally the United States, but the main political target was France which continuedto test in the Paci® c. With the end of the Cold War, support for a CTBT wideneddramatically as the nuclear powers were no longer driven by intense rivalry and did not needto test weapons that clearly `worked’ . Australia, with good historical credentials on the issue,rode with the new tide of support for a CTBT and played a leading role in the diplomaticgambit of taking the matter directly to the General Assembly in 1996 to overcome delays inUN processes. It was with considerable ¯ ourish that Australia had presented the Treatybefore the General Assembly for adoption.

It was assumed that the few outliers to the process, the states which had not rati® ed theNon-Proliferation Treaty and resisted the Comprehensive Test Ban Treaty, would be drawnalong by the new global consensus. The outliers included India and Pakistan. India hadargued, consistently and persistently, that the commitment of the nuclear powers to disarma-ment was not incorporated into a timetable, and so the whole NPT/CTBT structure wasdiscriminatory. India also had historical security concerns with China, which had made nocommitments to reduce its nuclear armaments.

In reaction to the tests, Australia announced it had suspended of® cial visits and bilateraldefence links, and had cancelled non-humanitarian aid. The United States imposed moresubstantial sanctions on behaviour that the nuclear powers had treated as a simple sovereignright for decades when exercised by them. India and Pakistan responded to internationalcriticism with the promise of future participation in the CTBT, but with no action to backit up. Australia’ s relations with India, which had been steadily nurtured against a trend ofconsiderable mutual indifference, were an immediate casualty.

Environmental diplomacy

At the start of the year, Australia received an ecological `dividend’ from a past exercise inenvironmental diplomacy. In January, the Protocol on Antarctica Environmental Protection

55 Alexander Downer and Tim Fischer, 1998, `1998±99 Budget’ , Joint Media Release, 11 May,http://www.dfat.gov.au/pmb/releases/fa/fa057_98.html

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(the Madrid Protocol) came into force after all the 26 nations who signed in 1991 had ® nallyrati® ed, commencing the 50-year ban on mining and controls on travel, entry and wastedisposal. So taken for granted in Australia was the rati® cation of a treaty that was supportedin 1991 by both political parties that there was very little press coverage or comment.56

The Australian Environment Ambassador’ s job description to `promote national interestsand policies on global environment issues overseas and in Australia’ summarised thegovernment’ s perspective on environmental issues in 1998.57 Interests were often de® ned ineconomic terms. This seemed particularly evident in Australia’ s role in the internationalnegotiations over climate change, where Australia mounted a sustained campaign at theKyoto meeting in late 1997 to change the carbon emission rules applying to Australia to takeinto account the role of energy intensive industries in the economy. The outcome was, fromthe government’ s (and these industries’ ) view successful, but it saw Australia in 1998 playinga largely negative role in the grander strategy for reducing Greenhouse emissions, except inthe context of some initiatives with South Paci® c Forum states.

The government faced a more public battle over its approval of the third JabilukaUranium mine on the edge of Kakadu National Park, which became the site of direct protestby environmental activists for much of the year. In particular, the government was stungwhen the environmental movement secured the support in November of the prestigiousUNESCO World Heritage Bureau in calling for a six-month delay while heritage values wereassessed, and with a cessation of mining sought in the interim. The Australian stated this wasthe ® rst time a world heritage site had been placed on the danger list against the wishes ofa responsible government and its new report recounted the connections between Australianactivists and Greens who were part of coalition governments in Germany, France and Italy.58

Environment Minister Senator David Hill sought to denigrate the Bureau and its ® ndings,which provided a strong psychological boost to the anti-mining campaign.

A middle power with regional in¯ uence?

Despite an aversion to the term `middle power’ , associated by the Coalition government withthe perceived over-activism of former foreign minister Evans, Australia nevertheless contin-ued in 1998 to participate in the kinds of multilateral diplomatic activities that are a hallmarkof middle power status. Moreover, Australia self-consciously sought a leadership role in keymultilateral settings, including APEC and arms control/disarmament forums. It may be thatin times of rapid international change, Australia is driven to this kind of role in order toaspire to some in¯ uence over the shape of the external environment.59 The Canadiancomparison, often used in academic middle power analyses of Australia, emphasisesmultilateralism as a choice or option for states with certain levels of diplomatic capability.60

But the Canadian example is misleading as it under-emphasises the essential difference ofgeopolitical location. Put simply, Canada has no external military security problem due to itsextensive US border, and `middle power’ behaviour can be a matter of personality and party,in and out of fashion, with limited consequences as Canadian security can `free-ride’ on the

56 But see, for example, Age, 15 January 1998.57 Alexander Downer, 1998, `Diplomatic Appointment: Ambassador for the Environment’ , Media

Release, 18 November, http://www.dfat.gov.au/media/releases/downer/fa143_98.html58 Australian, 7 December 1998.59 See Dave Cox, 1996, `Australia as a Middle Power’ , in Gary Smith et al., Australia in the World: An

Introduction to Australia’ s Foreign Relations (Melbourne: Oxford University Press).60 Especially, Andrew F. Cooper, Richard A. Higgott and Kim Richard Nossal, 1993, Relocating Middle

Powers: Australia and Canada in a Changing World (Vancouver: University of British ColumbiaPress).

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United States (for better or for worse). Australia, in contrast, seeks continued US involve-ment in East Asia and cultivates a bilateral alliance `insurance policy’ , but the inherentlyuncertain nature of future US commitments means that Australia has, at the same time, tonegotiate a place in the region which can survive a contraction of US interest, or a failureto deliver its support. That is, it is principally out of `realism’ and `national interest’ thatAustralia is pressed to multilateralism, with a regional focus.61

In 1998, Australia’ s leadership efforts were, however, largely unsuccessful. In theregional economic arena, APEC did not take up the trade liberalisation agenda that Australiawas pursuing. In the security area, India and Pakistan demonstrated that they had not beenconstrained by the CTBT regime and the new global `consensus’ on proliferation thatAustralia had helped to construct. Furthermore, Australia’ s longstanding recognition ofIndonesian sovereignty over East Timor, which Australia had hoped would lead to a moregeneral acceptance of Indonesia’ s claim, seemed increasingly isolated and at odds with thecourse of events. Australia abandoned its leadership efforts in global warming and concen-trated on reducing the requirements expected from Australia.

The overall impression may be of a year of gradual loss of in¯ uence in the world;alternatively, the outcomes may suggest that the leadership tasks Australia set itself were tooambitious, or misconceived. Does loss of in¯ uence matter? No military threats transpired, thedomestic economy grew, the One Nation political challenge was contained at home and inits effects in the region, a Bougainville settlement endured and some modest neighbourlygestures were made. Australia ended the year `relaxed and comfortable’ Ð in a turbulent sea.

61 For a keen analysis of the Australian±Canadian comparison, see John Ravenhill, 1998, `Cycles ofMiddle Power Activism; Constraint and Choice in Australian and Canadian Foreign Policies’ ,Australian Journal of International Affairs 52, 3:309±27.

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