University of Tasmania, Australia

Delivered by the Hon Kevin Rudd MP, 13 July 2011 - 'Taking Centre Stage: The rise of Asia and its implications for the global order'

I am honoured to deliver this annual lecture dedicated to the memory of the great Sir James Plimsoll.

Sir James was one of the finest diplomats this country has produced.

And later he became a fine Governor of the great state of Tasmania.

In Ambassadorial roles, he served in Seoul during the Korean War, at the United Nations in New York, in Washington, Moscow, London, Brussels, New Delhi and Tokyo.

He was Secretary of the Department of External Affairs from 1965 to 1970, where his legacy also continues.

For those of you familiar with our Department in the audience, he had a close hand in selecting the much revered class of 1969 graduates, personally interviewing each candidate – including the present Secretary, Dennis Richardson.

Although how Jim could have allowed a future Board Member of the Canberra Raiders to be admitted to the Department in the first place reflects at least a minor lapse in judgement.

Jim also addressed the diplomatic training course which I attended in the early 1980s.

It was a privilege to hear from a man of such great knowledge, experience and international stature.

And the legacy from his time here in Tasmania also continues.

He took on a young Ray Griggs as his aide-de-camp who went on to have a great career in the Royal Australian Navy, culminating in his appointment last month as Chief of Navy.

Jim Plim, as he was often called, also offered a standing invitation to all members of the Diplomatic Corps in Canberra to come visit Tasmania.

He was so keen that those who took up the invitation had a good time that he would accommodate them at Government House, personally organise their programs – all to ensure that they took back home and then to the world the best possible impression of Tasmania.

Jim Plimsoll was an extraordinary ambassador for Tasmania, and an extraordinary ambassador for the nation.

In this lecture, I want to address a foreign policy challenge that matters deeply to Australia.

And a challenge whose importance Sir James anticipated nearly half a century ago.

And that’s the importance of Asia’s re-emergence as the centre of the global economy after an interruption over the last 200 years.

An Asia whose remarkable growth is rapidly shifting the centre of gravity in the world economy (and, prospectively, politics) from the Atlantic to the Pacific.

An Asia that is growing increasingly confident in how it wields its economic influence across the world, and its growing political influence as well.

An Asia that is nonetheless vulnerable to a host of strategic uncertainties arising from a combination of old hostilities and new changes in power relativities.

An Asia whose future economic, political and strategic course now has the capacity to influence the world beyond Asia as well.

In other words, in the second half-century of the post-colonial history of Asia, we see Asia emerging now as a dominant global actor in the affairs of the world – no longer the object of foreign policy interests of greater powers from the West, but now itself the “subject,” with a capacity now (for good or for ill) to shape the future of the West itself.

Because of proximity, we in Australia begin to understand this implicitly.

In America, it is partly understood.

In Europe, I fear, it is understood very little, where Asia realities are still often seen (and therefore obscured) through a post-colonial lens of Asia as it was – not Asia as it is becoming.

These observations are not born of some romantic view of some future Asian arcadia.

No, it’s simply the product of a cold, hard analysis of geo-economic and geostrategic facts that now confront soft-minded policy-makers across the world.

Will Asia equip itself to handle the new challenges and responsibilities that arise as Asia moves to global centre stage in the first half of the 21st century?

Or will Asia instead fail to deal with its internal strategic challenges to the detriment not only of our region, but the world beyond Asia as well?

The truth is we have it within our collective group to do either.

This is the broad challenge which I wish to address in this lecture.

As the oft-quoted Chinese curse reminds us – indeed we live in interesting times.

Not just interesting, but challenging and, at times, exciting.

We are living through tectonic shifts we have not seen in two thirds of a century.

The scale and pace of economic change in Asia is breathtaking.

According to Asian Development Bank forecasts, Asia will nearly double its share of global GDP.

In other words, Asia’s share in world GDP will jump from 27 per cent in 2010 to accounting for 51 per cent by mid-century.

This will lead to three billion more people in Asia being lifted out of poverty in the next forty years.

China, of course, is the main driver of this ascendancy.

The IMF predicts that, in purchasing power parity terms, China’s economy will surpass that of the United States by 2016 – only five years from now.

In nominal terms, China is likely to become the world’s largest economy in the decade to 2030.

If China succeeds in fostering wage growth that equals GDP growth, its middle class could swell to 50 per cent of its population in just 12 years.

The other powerhouse of the region is India, which could grow even more rapidly, given prevailing distribution of income.

India is predicted to become among the three largest economies in the world well before the middle of this century.

According to IMF data, in the five years from 2005 to 2010, in purchasing power parity terms:

• the Eurozone grew by an accumulated 15 per cent;

• the US economy by 16 per cent.

• India by 67 per cent;

• and China by 88 per cent.

Japan will remain one of the world’s biggest economies.

South Korea, already a major economy, will continue to record strong growth.

And they will be joined later this century by other South-East Asian economies, including Indonesia, Vietnam, Thailand and possibly the Philippines – at the head of the next tier of emerging economies most likely to deliver sustained long-term growth.

Indonesia, Malaysia, Thailand, Vietnam and even Cambodia could become predominantly middle class within 15 years.

Within the decade ahead, Indonesia alone will be home to a 50-million-strong middle class more than twice Australia’s population.

The scale of infrastructure projects in the new, emerging Asia matches the overall growth trajectory.

A few weeks ago, the Prime Minister of Kazakhstan described to me that the West China-Western European highway project should be finished by the end of next year.

That’s 3,000 kilometres of highway that will link the Kazakh-Chinese border to European Russia, forming a high-speed land bridge from Kashgar to St Petersburg.

This reality compels us to consider another, perhaps less well-appreciated truth.

No country in the world, big or small, can now afford not to be part of this shift in the centre of gravity in the global economy.

All countries now have a direct and abiding interest in the future of Asia.

Continued Asian strategic stability and economic growth are good for the rest of the world.

By corollary, any deterioration in Asia’s stability or economic performance will also now be disastrous for the rest of the world – not just Asia itself.

Nonetheless, Asia’s impressive economic development belies the chronically under-developed security arrangements in the region.

And here lies the core strategic point: how we in Asia craft our region’s security and stability for the half century ahead is now a challenge of truly global significance, not just regional significance.

And the world, of necessity, is now watching how we rise to that challenge – and whether we succeed or fail.

Security in the Asia-Pacific region is not underwritten by the strong institutional mechanisms that we take for granted in the West.

Since 1949, NATO has served as an important guarantor of peace in the Euro-Atlantic space, including through the darkest years of the Cold War.

The most patent measure of its success is that former Warsaw Pact countries – NATO’s erstwhile adversaries – now comprise a third of its current membership and are thriving democracies.

Even during the Cold War, the Helsinki Accords, the CSCE process and then the OSCE sought to construct confidence and security, devising measures between the two military blocs – by building some degree of transparency and even trust – in an effort to prevent conflict.

Of course, there have been appalling internecine conflicts in both the Balkans and the Caucasus, but, while violent, they have not been on a continental scale.

By contrast, Asia’s security evolution since World War Two has been considerably less even.

Sixty years ago, a bitter war was being fought across the Korean peninsula.

Then followed Vietnam.

Then China’s border wars with India, the Soviet Union and Vietnam, as well as frequent conflict between India and Pakistan.

The Cambodian genocide and the three-way dispute between Vietnam, Cambodia and China.

Then, of course, there are the maritime disputes between China and its neighbours in archipelagic Asia, which, in various forms, have continued to this day.

This multitude of conflicts and disputes, now spread over many decades since 1944, has engendered varying levels of mistrust across many parts of the region.

So, despite the great advances in economic integration and mutual economic development in Asia in recent decades, the underlying regional security reality remains brittle, and the regional architecture for dealing with these security tensions remains thin.

Encouragingly, ASEAN has been the harbinger of better strategic cooperation and political stability in South East Asia.

In the 1970s this region of ten countries was riven by strife. 35 years later, ASEAN has brought a degree of regional trust, peace and development that was unimaginable back then.

It has achieved a common understanding of sub-regional security across what remain ten vastly different political entities.

Similarly, America’s bilateral security arrangements with Japan, Korea, Australia and the Philippines have also contributed to strategic stability, continuity and predictability across the wider region.

As have the Five Power Defence Arrangements between the United Kingdom, Australia, New Zealand, Malaysia and Singapore.

But the truth is that after two thirds of a century following the end of the Second World War, Asia still lacks any pan-regional institution capable of dealing effectively with the multitude of security challenges that permeate the wider region.

This presents an even greater problem for a region where five states – the United States, China, Russia, India and Pakistan – are all in possession of nuclear weapons capabilities.

Moreover, we live in a region which is strategically dynamic, not static.

There are changing power relativities and therefore relationships in the economic, foreign policy and security policy domains.

Changes in power dynamics at other points in history have often, although not always, been destabilising as countries adjust to the reality of a new order.

In Asia, changing power dynamics also have the potential to exacerbate old strategic uncertainties, historical enmities and longstanding unresolved territorial disputes.

For example, 60 years after the ceasefire, we have a nervous truce on the Korean Peninsula, where 1.1 million soldiers on the North Korean side of the 38th parallel face off with nearly 700,000 on the South Korean side, turbocharged by a series of unpredictable and lethal provocations from the North.

Strategic tensions, although thankfully recently reduced, also remain a concern in the Taiwan Straits.

As they do between India and Pakistan.

We still have ongoing territorial disputes in the region, involving China, Japan, the Republic of Korea, Russia, India and a number of the countries of ASEAN.

There are also many other security challenges in Asia – including maritime security, cyber security, counter-terrorism, counter-proliferation and other transnational crime – that also need to be dealt with.

Take, for example, the South China Sea.

The South China Sea sees the transit of 50 per cent of global merchant traffic passing through its waters.

A number of states in the region have competing territorial claims, energy interests and wider strategic interests in these waters.

Australia has never taken a position on any individual country’s claims.

But we do have an interest in such differences being resolved peacefully, fairly and in accordance with international law.

The modern economies of East Asia are acutely aware of their dependence on imported fuels and raw materials.

According to the OECD in 2008:

• 84 per cent of South Korea’s energy requirements are imported;

• 83 per cent of Japan’s;

• 11 per cent of China’s;

• And 30 per cent of India’s.

But these figures do not paint the full picture.

For crude oil, China is 90 per cent dependent on imports.

And India imports more than 65 per cent of its crude oil.

Then there is Europe’s trade with these major economies of North East Asia – $842 billion in total for last year, much of which transits the South China Sea.

So too for Australia.

Around 60 per cent of ships engaged in trade between Australia and North and South East Asia transit through the South China Sea.

Therefore, all countries, not just immediate littoral states, have an interest in the peaceful resolution of outstanding disputes over the South China Sea and freedom of navigation is maintained into the future.

My point is this: economic integration alone in Asia will not of itself resolve underlying political and security tensions.

Anyone familiar with the high degree of economic integration between the major powers of Europe prior to 1914 will attest to this fact.

So what then is to be done?

Australia argues that the security dynamics of East Asia can better be managed if we develop a greater sense of common security across the wider Asia Pacific region.

An acceptance of a concept of common security also helps develop the culture, habits and practices of consultation, cooperation and dialogue on common security challenges – and, in time, collaborative mechanisms for dealing with security challenges as they arise, if they threaten to disrupt the wider stability of the region.

Furthermore, this can be enhanced over time by developing dedicated regional institutions with a mandate to encourage and develop multilateral rules and arrangements that enhance the transparency, predictability and stability of security policy behaviour across the wider region in the future.

In short, we begin to need to multilateralise the consultative arrangements around regional security policy challenges for the future.

This is not an easy road to travel down.

Nor will it present any immediate solutions to longstanding problems.

But the time has well and truly come not to simply adopt a passive posture, waiting for the next crisis to arise, and hoping that existing bilateral mechanisms will manage any future crisis effectively.

This is basing foreign policy on hope rather than reality.

Rather, the time has come to start building the strategies for a pan-regional institution, with a mandate to help take off some of the sharper edges of bilateral security tensions as they arise in future – reminding all regional states that we have a wider set of regional and indeed global interests at stake.

There are two possible paths as we approach the great challenges that lie ahead of us as we collectively seek to shape Asia’s future.

The first is to regard economic integration and security policy behaviour as entirely separate domains.

This posits that economic interdependency is one thing.

But national sovereignty is another – and that the best means of advancing the latter is primarily through national military and diplomatic means.

The second path is one that instead seeks to capitalise on economic interdependency to increase security policy transparency, with a view to working more cooperatively as a region.

The global economic crisis has forced us to think in terms of our interdependency, rather than in terms of the zero-sum game of classical balance of power dynamics.

In the end, as we consider these two paths for the future, it is a debate between nationalists and internationalists.

Between nationalists and globalists which seek to build a global rules-based order.

Between nationalists and those who want to build a regional rules-based order.

In the economic domain, it’s a debate between mercantile interests and free traders.

We cannot, of course, be naive about tightening the nexus between prosperity and security.

And unlike the EU, Asia faces considerable hurdles, in addition to the security challenges I alluded to – most notably, its political, developmental and cultural heterogeneity.

But Asia nonetheless now has an emerging mechanism at its disposal that could help us achieve both a more secure and a more prosperous Asia.

And here I refer to the East Asia Summit – a nascent institution with a combined political, security and economic mandate, and one that for the first time this year will meet at summit level, with all the major players at the table, including the United States.

Australia has worked hard with others in our region to develop the right architecture for a rules-based system.

What we needed was a regional forum meeting at leader level, with the membership and the mandate to discuss the full range of challenges facing our region.

This indeed was Australia's core objective for the concept of an Asia-Pacific community, which I first advanced in 2008.

With agreement in 2010 to expand the East Asia Summit to include both the United States and Russia, we now have this.

When it meets later this year, the EAS will include Australia, the United States, China, Japan, South Korea, India and Russia, New Zealand as well as Indonesia and the other ASEANs who are central to this institution’s success.

Now we need to work on strengthening this institution's security agenda, which could, over time include.

• a more substantive leaders' dialogue on political and security challenges;

• consideration, at leaders' level, of the security policy deliberations of institutions such as the ASEAN Regional Forum and the ASEAN Defence Ministers Meetings;

• deliberations on appropriate confidence and security building measures, including enhanced disaster management involving armed forces and emergency services of participating states;

• appropriate consideration, over time, of some of the more contentious security challenges within our region;

• as well as, over the longer term, providing the region with the necessary institutional ballast to deal with real tensions when they arise.

The EAS is not the answer to every problem of course. There will be other more discrete mechanisms needed, and some have developed already.

Nevertheless, especially in the political and security sphere, the EAS will be a critical institution.

And President Obama's first participation in it is hugely significant for its future success.

Australia believes that by enhancing dialogue regionally through the emerging institution of the EAS, we can obtain greater predictability, transparency and stability on security challenges than ever before.

Australia has a vital stake in this Asian 21st century.

We are part of Asia.

This is our region.

And this region’s future is also our future.

As the fourth-largest economy in Asia, we are active in the diplomacy of the region.

Also, as a member of the G20 and as a middle power that straddles Asia and the West, we bring a different and, I hope, constructive perspective to bear on both.

We are committed to the principles of creative middle power diplomacy.

We seek to look beyond the horizon.

We seek to anticipate the challenges ahead.

Not simply to respond to them once they hit.

And, consistent with our values and our interests, which we articulate through the agency of what we call good international citizenship, we are also in the business of making a measureable difference wherever we can.

And we will be doing so again when the foreign ministers of Asia meet in Indonesia next week to begin preparing for the first expanded East Asia Summit later this year.

When we look back in the decades ahead, I believe we will see ourselves as a region as writing the middle chapters of the rise of modern Asia.

The post-colonial period is now consigned to a distant past.

The economic rise of Asia has been upon us now for thirty years or more.

And now we see the rise of Asia as a global economic – and prospectively political – power.

How Asia manages that power – and the responsibility that flows from it – is the chapter we are currently writing.

Will we craft a truly prosperous and truly pacific Asia-Pacific century?

Or will we repeat the mistakes of Europe’s pre-1945 past – and the blood-soaked centuries that accompanied Europe’s economic and political rise?

Do we learn from the history of others?

Or do we repeat it?

And that is the challenge focusing this generation of Asian leaders.

I’m an optimist about Asia’s future.

I’m optimistic we can draw on the great wisdoms alive in the great civilisations of this continent.

And I’m determined our country will also play a part to help shape our region’s future.

END