Australia: balancing the long with the short

Authors

Geoffrey Barker

In Brief

The Australian Labor government’s first full year in office became a momentous political and economic challenge as it moved to deal with the impact of the deepening global financial crisis while seeking to advance national foreign policy and security interests. By year’s end it seemed inevitable that Kevin Rudd’s government would be judged primarily by its economic management over 2009-10.

But Rudd remained committed to expanding Australia’s role as an activist, if largely conformist, middle-power. Despite changes of emphasis, and new multilateralist initiatives, he left little doubt that there would be more continuity than change in Australian foreign and defence policies while the government’s economic management would be cautious, orthodox but consistent with giving a nudge to global big spending stimulatory economic policies.

A clear mark of Rudd’s caution was the minimal greenhouse gas reduction targets announced towards the end of the year. The decision pleased Australian business, but it seemed at odds with the fanfare and the bloated rhetoric that surrounded Rudd’s early prime ministerial decision to sign the Kyoto accord.

In broad strategic terms Rudd Labor in 2008 was trying to balance and to respond to the short-term and long-term challenges facing Australia. The major short-term challenges were economic: the financial crisis, falling employment, and concerns within Australia’s ageing population over superannuation and savings losses. The long-term challenges were geo-political: historic demographic and economic shifts that could diminish Australia’s regional and global relevance, the rise of China and India as major regional powers, and the global impact of climate change.

These short-term and long-term challenges were connected. The geo-political implications of the financial crisis were coming into focus by the end of the year, although questions were clearer than answers. What would be the security consequences of a major collapse of Chinese economic growth? Would the world economy be able to avoid devastating protectionism? Would Australia face more markedly authoritarian, ambitious and expansionary regional states and leaders if the world economy did not recover reasonably quickly? And how would climate change impact on global security and security relationships.

The Rudd government’s response to the economic crisis, like that of most countries, was to introduce stimulatory economic packages to encourage spending. At the end of the year the packages totalled some A$22 billion with promises of more to come if necessary. At the same time interest rates tumbled as the Reserve bank moved to ease the economic pain of home-buyers with mortgages. The government claimed Australia could still avoid recession and a deficit budget, but it was going to be a close-run thing if it did.

Rudd proved an inveterate traveller in the pursuit of Australian diplomatic and security interests. His efforts were perhaps most dramatically focused when he attended the G20 meeting on the economic crisis in Washington in November, but his travels took him to the US, Britain, China, Japan, Malaysia, South Korea, Singapore, Indonesia, New Zealand, Romania, Belgium, Peru, and Afghanistan.

In multilateral mode Rudd proposed, with little promise of immediate success, the establishment of an Asia-Pacific security community; he established a commission under former Labor foreign affairs minister Gareth Evans to pursue the eventual elimination of nuclear weapons; he launched a new bid for an Australian seat on the United Nations security council.

In bilateral mode he stressed the importance of Australia’s relationship with the US and was delighted by Barak Obama’s election. He also sought to use his knowledge of China and its language to advance Australian interests in the middle kingdom. Rudd responded quickly to criticism that he had ignored the importance of Japan, and made a hastily organised visit to Tokyo.

Rudd made it clear that he would not modify the massive rearmament program put in place by the former government –although it remains to be seen how the demands of the financial crisis will affect Australian plans to spend tens of billions of dollars on new fighter aircraft, surface ships and submarines. Canberra defence orthodoxy maintains that Australia has to maintain a technological edge over regional powers because the country has a relatively small population from which to draw its military forces. How successfully it can continue to do is still unclear.

A national security policy statement released late in the year was received with faint and generally damning praise and a definitive statement of long-term national security policy is expected in a new defence white paper due around March 2009. A major issue for Rudd will be how to respond to expected US pressure to commit more troops to Afghanistan.

The future of the Rudd Labor government already looks like being determined by how successfully it can balance the inter-connected demands of economic crisis management with the demands of defence and security management in a dynamic and uncertain regional security environment. This will not be an easy job.

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Geoffrey Barker was formerly senior security and defence columnist with the Australian Financial Review.

This is part of the special feature: Reflections on developments in Asia in 2008 and the year ahead