Saturday 21 Sep 2019 | 13:35 | SYDNEY
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Pacific island links: Fiji special

I spent some of this week in Fiji so it is the focus of this week's links:

  • Australia will co-lead a 14-country international observer mission to Fiji for the elections on 17 September. The Australian delegation will be led by Peter Reith.
  • Grant Bayldon of Amnesty International (NZ) looks at what is needed to support true democracy over and above holding elections in September.
  • The Fiji First party has been campaigning in New Zealand where they have had a mixed reception. When asked for assurance that there would be no more coups, Bainimarama's laughing response was 'You vote me into Parliament and there will be no coup'.
  • The interim prime minister will also visit Australia, where approximately 4000 Fijians have registered to vote in next month's elections. His visit is expected to prompt protests.
  • Current polling shows that Bainimarama enjoys 60% support as preferred prime minister but this is a 6% drop since May.
  • Away from politics, Fiji is preparing to welcome home a favoured son, golfer Vijay Singh, along with other big names who will take part in the first international tour event to be held in the country.
  • This coming weekend will see the celebration of the Hibiscus festival. More than just a beauty pageant, this year's theme is the impact of climate change: 

China: Economic war and the humbling of multinationals

'I really worry about China. I am not sure that in the end they want any of us to win', confided GE boss Jeff Immelt to a group of fellow multinational business-people dining in Shanghai in 2010.

So far, GE has mostly stayed out of trouble in China. But many other Fortune 500 companies have been whacked by the Chinese authorities: for corruption (GSK), food safety problems (KFC and MacDonalds), security concerns (Cisco, IBM and others), quality problems (Samsung), forced upgrades (Microsoft), monopolistic behaviour (Qualcomm), and 'unparalleled arrogance' (Apple).

Offshore deals have been postponed or even forbidden by Beijing. And recently, foreign carmakers have been hit for excessive pricing on the mainland (more on this later), an accusation which has also been directed at Starbucks, milk suppliers, luxury goods companies and drugs firms. The list is practically endless.

Beijing uses three agencies to prosecute foreign firms, depending on their sin: the National Development and Reform Commission (NDRC) reviews pricing, the Commerce Ministry approves mergers and acquisitions, and the State Administration for Industry and Commerce (SAIC) probes anti-trust matters. It is a formidable trio, and the Chinese state rarely loses cases on its home turf. Multinationals can also find themselves simultaneously brutalised in the Chinese press; almost all succumb meekly to the charges, correct their mistakes and apologise for hurting the feelings of the people.

To be fair, the Chinese authorities usually do have good grounds for complaint. Foreign companies often behave badly in China. But it seems that successful foreign companies are targeted, as if Beijing deliberately wants them humbled. Immelt appears surprised by this possibility. He shouldn't be.

China is, first and foremost, a state capitalist. Like all nations, it covets the mercantilist objective of commercial success. Countries don't fight economic war like they fight militarily, but sometimes it feels that way. The AFR's Angus Grigg, in an intriguing short piece on the deteriorating business climate for multinationals earlier this week, reported a Chinese official acknowledging this point forthrightly: 'It's an economic war'.

Twenty years ago, John Fialka's superb War by Other Means described in scary detail how nations conduct underground conflict in the commercial realm; Japan then was America's most feared rival, although China was charging up the list. The Japanese, led by the masterly bureaucrats at the Ministry of International Trade and Industry, had achieved global success based on a level of chauvinism in their home market that China has never approached. The Japanese were much too polite to say what the Shanghai official told Grigg, but no doubt embraced 'economic war.'

Unfortunately, this term literally applies to the worsening situation with Russia, which faces sanctions and other forms of 'lawfare'. Both China and Russia are perceived to be at the vanguard of growing anti-Western statism, but China is a more formidable and subtle player than the Soviet Union ever was. 'The Chinese were never as stupid as the Russians, who came to us and said repeatedly "we will bury you"', as Zbigniew Brzezinski splendidly put it last week.

Indeed, China's strategy in the state capitalism game seems beyond such easy explanation. Back to the car market. Chinese consumers have long complained about paying 2-3 times what Americans pay for luxury cars. Most of this gap is explained by formal levies, such as import duties and sales taxes. But not all. The authorities worked backwards through the pricing layers and found three anomalies. First, carmakers have been stiffing local dealers. Second, carmakers overcharge for spare parts. Third and most damning, Beijing has found that premium cars rolling out of German factories are marked up outrageously when heading for China, which may account for one-third of German carmaker profits. Chinese consumers are being gouged and Beijing is angered by this unfairness. Beijing probably also resents the fact that the brands are 'skimming' this money back home rather than sharing the profits with their China joint ventures.

Yet forcing foreigners' prices lower is the very opposite of what other mercantilists do. Japan and Korea are delighted to see foreign cars at huge premiums compared to indigenous alternatives; all the better to encourage buy-local preferences. Nations criticise each other at the WTO for 'dumping' — exporting below cost or home-market prices — yet China's objection is the reverse. Forcing foreign carmakers to lower their prices doesn't help China's national champions either; it hurts them by lowering prices relative to domestic brands. Are Beijing's actions about consumer advocacy, or does it simply want to take away the super-profits of foreign companies who might otherwise further dominate China's booming car market?

The claim of 'monopolistic' behaviour is iffy. Competition in cars is fierce and consumers can choose between many brands. Chinese car buyers act more affluently than Western ones, so it is hard to argue for greater affordability. Western companies in China are doing what all businesses do: charging whatever price the market bears. If Beijing is so concerned about monopolies, it could do much more by investigating its own state-owned enterprises. And perhaps Beijing should consider why domestic agricultural prices are soaring above international levels, a direct result of subsidising farmers at the expense of urban households. In other words, there are plenty of domestic pricing anomalies to investigate.

International business people are often told here that 'they are not invited to China to profiteer; they are invited to make the Chinese better'. The guests are held to higher standards than locals, and they should be. Chinese officialdom is making a mighty effort to build future Chinese global champions like Immelt's GE. Knocking foreigners is part of their strategy, forcing them to be more responsive and competitive. Multinational companies are 'making China better', but China is making them better too.

Photo by Flickr user dcmaster.

What next for multilateral trade negotiations?

The Director-General of the World Trade Organization is sounding despondent after the latest setback to the December 2013 Bali Agreement. Meanwhile, a survey of exporters has given some endorsement for the alternative path of free trade agreements (FTAs). Is there any hope for furthering the multilateral trade agenda?

Mike Callaghan described the Bali Agreement signed last December as a small win for the WTO — the first multilateral trade agreement since the WTO replaced the GATT as the multilateral trade forum in 1995. The main components of the Bali Agreement were trade facilitation (aimed at cutting red tape and corruption in ports, thus encouraging international trade), an agriculture package that allowed governments to run food security programs without breaching WTO commitments, and a reaffirmation of market access for less-developed countries.

While the agreement reached in Bali required subsequent endorsement, this was seen as a mere formality, as the text was signed by all trade ministers and had been painstakingly tailored to India's special sensitivities on food security. Yet India late last month blocked the deal.

The time limit for final endorsement expired at the end of July, with India insisting on re-opening the agricultural issues. The WTO Director-General, reporting to the WTO ambassadors in Geneva on 31 July, had a tone of desperation. This is not 'just another delay which can simply be ignored or accommodated into a new timetable'. Here is the wider context:

I want to stress the importance of each of the three pillars of the WTO: disputes, monitoring and negotiations — not to mention our work on technical assistance and aid-for-trade. We saw the importance of our work during the financial crisis when, unlike with previous crises, there was no surge in protectionism. Having the rules in place and adherence closely monitored — with the dispute settlement mechanism there to back them up — helped to keep protectionism in check during a dangerous period for the global economy. The value of those pillars was plain to see — and they performed very well. But, when I took office last September, I was clear that I had real concerns for the future of the negotiating pillar. Bali was a very important moment in reviving and revitalising the negotiating function. But, just seven months later, once again I am very, very concerned.

The central component of the Bali Agreement (making ports more efficient) is hardly controversial. But why is food security policy such a sticking point? In an imperfect-market world, surely India should be able to offer some subsidies to its own farmers? When, however, the farm price-support programs result in what are effectively export subsidies, it becomes a multilateral concern

The WTO Director-General expressed some hope that the European summer holiday period might deliver a breakthrough when the ambassadors next meet in September. But if not, the consequences do indeed seem dire for the future of multilateral trade agreements. When a hard-fought negotiation, finally brought to fruition, can be torpedoed in this way, who will bother to try again?

Meanwhile, the rival model for international trade negotiation, FTAs, received some endorsement from a survey by The Economist Intelligence Unit. Senior executives from 800 exporters in Australia, China, Hong Kong, India, Indonesia, Malaysia, Singapore and Vietnam were quizzed on their experience.  All these countries have extensive FTA coverage. The survey finds that each FTA signed in Asia is used, on average, by only one in four exporters. But where they are used, the result is positive: more than 85% of respondents report that their exports to the markets concerned have increased either significantly or moderately as a result of FTAs. According to the EIU report:

Critics of FTAs have long warned this would happen. FTAs, they say, replace the relative simplicity of multilateral WTO agreements with a "noodle bowl" of overlapping preferences and rules and regulations that, in practice, often prove more trouble than they are worth for companies to use. But the result is nonetheless surprising, given the benefits in terms of increased exports reported by companies that do use the FTAs.

Of course exporters (the survey respondents) are not in a position to judge the overall national or multilateral benefit of FTAs. The central criticism of FTAs (which should properly be called 'discriminatory preferential trade arrangements') is that they divert a country from buying its imports from the cheapest foreign supplier. FTAs are unambiguously second-best, compared with multilateral agreements. But the current multilateral model seems in need of drastic modification.

Photo by Flickr user Betsy Dorset.

China links: PLA compounds, shale gas, PR blunders, anti-monopoly and more

 Mr. Xi and his close supporters, who were born into the Communist aristocracy as children of former leaders, have won the first round in their battle to save the revolution that their parents fought for. But there is a long journey ahead not least because, like their forebears, they have invested far more effort defining enemies than objectives.

  • Also on the topic of corruption, China University of Petroleum not-so-subtly tries to cover the signature of disgraced politician Zhou Yongkang, with a model rocket:

G20 must save the WTO, among other things...

As John Lennon wrote, 'life is what happens when you are busy making other plans.' How true for Australia's plans for the G20. Life is not being kind in the lead-up to the Brisbane G20 Summit.

The head winds for the summit so far include:

  • International organisations (the IMF and World Bank) lowering their forecasts for global growth.
  • Equity markets being hit with concerns of rising geopolitical tensions ( Ukraine, Gaza, Syria, Iraq).
  • Economic sanctions being imposed by some G20 members (US, EU, Australia, Canada) on another G20 member (Russia) and that member imposing trade sanctions on other G20 members.
  • A G20 member (Argentina) defaulting on its external debts.
  • Another G20 member (the US) continuing to block agreed governance reforms of the IMF. 
  • One G20 member (India) vetoing an agreed WTO trade deal, a move which has brought into question the future of the WTO and the multilateral trading system.

To add to the depressing developments, Indian Central Bank Governor Raghuram Rajan (who is famous for forecasting the 2008 financial meltdown) has warned that the world economy is on the brink of another market crash. To top things off, the World Health Organisation has called the Ebola outbreak an international health emergency.

How should the G20 react to these developments? It must confront them; it must deal with reality. If it did not, any collective commitment coming from a G20 meeting to strengthen global growth or do anything else would be hollow.

The G20 — not only at the summit in November but also when G20 finance ministers meet in Cairns in September — must discuss the impact of rising geopolitical tensions on the global economy. It would be surreal if, in the face of the developments listed above, a meeting of world leaders or finance ministers limited their discussions to technical economic and financial issues. As Michael Spence has noted, rising geo-political tensions are a major threat to global co-operation and economic prospects. If the G20 truly is a global economic steering committee, it must adapt to developments and respond to all the challenges and threats to the global economy.

One of the threats to global economic cooperation that the G20 must confront is the impact of India's veto of the Bali WTO trade deal.

The G20 must respond and restore confidence in the multilateral trading system and the WTO. Tom Miles sums up much of the reaction to India's decision when he says that 'India has dealt a potentially fatal blow to the World Trade Organization's hopes of modernising rules of global commerce and remaining the central forum of multilateral trade deals'. Simon Evenett from the Swiss Institute for International Economics said that 'without a serious shake-up, the WTO's future looks like that of the League of Nations.'

The world economy has prospered with a rules-based global trading system administered by the WTO. However, trade liberalisation through the WTO's Doha round has dragged on for over 13 years and in response, countries have sought progress through bilateral or regional trade deals. While this may benefit the countries involved, it has not been a positive for the global trading system and the countries excluded. There is a 'noodle bowl' of trade arrangements, often mutually incompatible, which discriminate against non-members, mainly developing countries. This trend has undermined the WTO, including its vital dispute resolution mechanism.

In the absence of the WTO's mediation of trade disputes and its capacity to deliver binding rulings, the world economy would likely be engulfed in retaliatory trade wars. For example, China recently lost an appeal at the WTO in a case brought by the US, EU and Japan to challenge China's restrictions on exports of rare earths. In the absence of the WTO's dispute resolution mechanism, the US and the other countries would probably have retaliated with their own restrictive measures.

For the sake of the global economy, the G20 must act decisively to restore faith in the global trading system and the future of the WTO.

How? At the Brisbane Summit, G20 members should commit to rolling back protectionist measures introduced since the global financial crisis, including non-tariff measures. The G20 should ask the WTO to monitor, report and make public progress with the rollback. The G20 chair should seek individual commitments from members for the early implementation of the Bali trade facilitation agreement. G20 members should not wait for the formal ratification of the agreement but include in their individual growth strategies the steps they are taking to facilitate trade. If one member does not make such a commitment, it should not stop action by others.

At the Brisbane Summit, G20 leaders should call on WTO trade ministers to conclude the Doha round and leaders should set the strategic direction for the WTO in a post-Doha world. This should be one that does not repeat the ambitious and wide-ranging Doha program with its 'nothing is agreed until everything is agreed' agenda. In future, negotiations should target specific areas and allow for plurilateral agreements, where WTO members may opt in. The discussions over the future of the WTO should be anchored around the governance and implications of global value chains.

As chair of the G20 in 2014, Australia has to ensure that the G20 is nimble, does not become preoccupied with a set agenda, and responds to challenges and risks that arise. One of those challenges is to save the WTO.

Image courtesy of the G20 Australia website.

At AUSMIN 2014, let's talk about naval force posture

Secretary of Defense Chuck Hagel arrives in Sydney, 11 August 2014. (Department of Defence.)

US Secretary of Defense Chuck Hagel touched down in Sydney today for the annual AUSMIN meetings between Australian and US foreign policy and defence leaders, which start tomorrow. There will be no shortage of crises for the leaders to discuss, from coup rumours in Baghdad to the ongoing conflicts in Gaza and Ukraine. Leaders will also sign off on existing force posture agreements that permit the rotational presence of US Marines and the US Air Force in northern Australia.

But the long term issue of most importance to the alliance which needs to be discussed this year is the future force posture of the US Navy in Australia.

At the 2012 AUSMIN in Perth, then Australian Defence Minister Stephen Smith said that the growing strategic importance of the Indian Ocean was leading the US Navy to shift its attention to the waters off Australia's northwest coast. That AUSMIN meeting committed a joint working group of Australian and US officials to investigate options for the additional presence of US Navy vessels on Australia's west coast. A formal study didn't begin until December 2013, and the group will report its finding to the leaders over the next few days with a view to forging a way forward to new naval force posture arrangements.

In a sense, the presence of the US Navy in Western Australia is nothing new. US Navy Expeditionary Strike and Carrier Groups have been visiting the port at HMAS Stirling for decades. But the shift in economic power within Asia, the modernisation of the Chinese and Indian militaries, and the growing importance of energy transit routes through the Malacca Straits is leading US strategic planners to think more about the potential for crisis in Southeast Asia.

Two recent studies from the Center for Strategic and International Studies and RAND Corporation, both supporting the ongoing US global force posture review, concern themselves with the need to move large numbers of US Marine Corps troops into Southeast Asia. Both endorse the expansion of the Marine Rotational Force-Darwin into a full-size Marine Air/Ground Task Force and then consider further naval and maritime intelligence, surveillance, and reconnaissance initiatives which might be appropriate. The CSIS report considers the presence of a US Carrier Group in Western Australia, but dismisses it as too expensive, given the near US$6 billion cost of facilities upgrades. 

Both reports mention the possibility of home-porting a US nuclear submarine at HMAS Stirling. This option is attractive, given HMAS Stirling hosts one of the few Mark 48 Torpedo Maintenance Facilities in the southern hemisphere and so can recondition and resupply submarine munitions. The Royal Australian Navy also has readily accessible underwater exercise areas and submarine rescue training facilities at HMAS Stirling.

However, the most likely force posture option under discussion is for the future rotational presence of a US Amphibious Ready Group (ARG) at HMAS Stirling. The Marines based in Darwin will need some kind of sea-lift if they are to operate in Southeast Asia, and it makes more sense to base this in Western Australia than in other nearby locations. The US Chief of Naval Operations last year flagged his intent to raise another ARG in the lower Pacific region. Local political considerations in both the US and Australia would make home-porting the ARG in Perth difficult, but a rotational presence would make sense.

This would require some additional berthing infrastructure at HMAS Stirling, as well as the possible construction of additional ramp space at nearby airfields, but it is far less costly than other options. For the US, this would preposition assets closer to potential trouble spots, diversify basing (particularly outside of the range of potential adversary missile systems), and allow an enhanced and more regular Indian Ocean and Southeast Asian presence, using fewer vessels than if a forward presence wasn't available.

Australian leaders will need to make more of a case for why this option needs to be explored and how the alliance is evolving. Currently, questions regarding force posture are met with relatively simple endorsements of the strength and shared vision of the US alliance. That cedes much of the ground in the discussion to strident critics such as former Prime Minister Malcolm Fraser, who argues that Australia should withdraw from the alliance entirely. At this AUSMIN, it is not only important to work through the options privately, but to discuss how to make a detailed public case for why such steps are beneficial to both countries.

Iraq: ISIS's error, Maliki's mismanagement, Obama's opportunity

As events unfold in Baghdad, President Obama's decision to unilaterally withdraw US troops from Iraq in the absence of a Status of Forces Agreement appears vindicated. Prime Minister Maliki has exacerbated the sectarian nature of Iraq's politics, bringing the current crisis to a head. The White House must be thanking its lucky stars that it doesn't have troops working for a prime minister who is refusing all entreaties to leave.

Some commentators have opined that ISIS would not have had its successes in Iraq had there been a residual US troop presence. The reality is that ISIS has assiduously courted the Sunni tribes disenfranchised by Maliki's government, and the Iraqi military has become hollow and corrupt. A small residual US force would have been at best spectators to, and at worst complicit in, Maliki's mismanagement of the situation. Greg Sheridan's view in The Australian that 'a residual (US) force would have helped stabilise Iraqi politics and bolster the Iraqi military' is typical of the 'if only' brigade – it ignores the complex reality of Iraq's secular, religious and tribal dynamics.

That is why in some ways ISIS's decision to launch attacks against religious minorities and the Kurdish region has presented President Obama with a strategic gift which he has been quick to act upon. Iraq clearly needed military assistance but the US needed to offer it in such a way that it wouldn't be seen to profit Maliki politically. What better way to introduce US firepower than in support of a humanitarian cause and in defence of Kurdish-controlled areas? It came with the imprimatur of the Iraqi Government but is not directly in support of it. It is a difficult act to juggle but it gives the US some leverage: if Maliki tries to cling to power, expect a narrow range of US military support. If he leaves and is replaced by a more inclusive government, then air support could be more widely employed.

For its part, ISIS is beginning to learn the difficulty of trying to fight a conventional military campaign using captured equipment when your enemy has air supremacy. As far as we know, US airstrikes have only destroyed an artillery piece, a mortar baseplate, some armoured vehicles and a vehicle convoy, but even the rabid ideologues of ISIS will start to sense that trying to manoeuvre in the open plains of northern Iraq is fraught with danger when US strike aircraft lurk overhead. Nor will the demonstration effect of a few 500lb bombs and Hellfire missiles have been lost on the other protagonists. Iraqi and Kurdish forces are likely to fight more vigorously if they know air support is at hand. Moreover, should US air support be broadened in support of a more inclusive Iraqi government, Iraqi tribes now aligned with ISIS may decide that their interests are better served by opting out of the Islamist coalition.

These are all big ifs, and the situation in Baghdad is unfolding hour by hour. But it may well be that ISIS's decision to press ahead with attacks against minorities and the Kurds is a strategic, rather than just tactical, error.

Photo from Flickr user United States Forces Iraq.

The dangers of SSBN proliferation in Indo-Pacific Asia

 

It has become commonplace to lament the arms races underway in Indo-Pacific Asia.

China's military modernisation over the last two decades has helped provoke heightened political tensions and growing concern in capitals from Tokyo to New Delhi to Washington and Moscow. North Korea's continued pursuit of nuclear weapons and missile delivery systems keeps tensions in Northeast Asia high. The Indian subcontinent is home to two nuclear powers that have fought four wars over the last 65 years. Many countries in the Asian littoral have undertaken serious rearmament programs, and across the region strategists see a proliferation of missiles of all types — anti-access systems, aerospace capabilities and naval platforms, among others. 

Regional nuclear modernisation programs, especially the development of submarines (nuclear powered or conventional) armed with nuclear weapons, are of special concern.

China and India are committed to producing more nuclear-capable delivery systems and weapons with greater range, accuracy and features that make them more lethal and thus more threatening to potential adversaries. Meanwhile Pakistan is pursuing its own program to acquire more capable submarines from China. While no one is arguing, as yet, that Pakistan intends to acquire ballistic missile submarines, some analysts hint that nuclear-tipped cruise missiles are a real possibility. Given Pakistan's record on nuclear proliferation over the past decades, such fears appear real. 

With the possible exception of America, powers external to the Indo-Pacific (Russia, for example) are also pursuing strategic modernisation. Russia, lest anyone forget, is an Indo-Pacific nuclear power by virtue of its Pacific Fleet, complete with its latest model SSBNs (in the American lexicon: Ship, Submersible, Ballistic, Nuclear), the Borei class, armed with Bulava missiles. Even the US is investing in the research and development preliminary to building a replacement for the Ohio-class submarines that currently constitute the sea-based leg of the American nuclear triad. American strategic modernisation is not a driver in the region's strategic dynamics, but insofar as the US is executing an Asian 'pivot', American military capabilities, nuclear and conventional, remain important. 

The emergence of strategic submarines in the Indo-Pacific is summarised in the following table.

This short post will not attempt a net assessment of regional or bilateral rivalries. A full analysis would need to look more closely at all dimensions of military power as well as the impact of American forces in the region. But a simple scan of the table above allows one small observation for a region that may soon be in the grips of a full-blown nuclear arms race. The prospects for stable, long-term peace (meaning greater strategic stability, the reduction of crisis instability, and fewer opportunities for accidents, chance and misperception to lead to conflict) depend, in part, on taking steps sooner rather than later to rein in potentially destabilising developments. At present, regional SSBN programs are not so advanced, and the numbers of platforms and weapons are not so large, that steps cannot avert a widening arms race. 

Growing numbers of submarines with nuclear-armed ballistic missiles may preserve second-strike capabilities for their possessors (and thus, debatably, contribute to strategic stability). But in the increasingly crowded seas of  Indo-Pacific Asia, greater numbers also lead to more opportunities for accidents, chance and misperception.

Submarine accidents are not unknown: the national tragedy of a lost boat and its crew might quickly become a regional or even global crisis if reactors or nuclear weapons have problems. Submarine operations in cramped seas also raise the possibility that one side or another will encounter the other in a crisis, with unpredictable results. Slowly maturing command and control (C2 ) and intelligence, surveillance, and reconnaissance (ISR) technologies still have a ways to go (look how long it took in US and the Soviet Union to develop their systems).

Furthermore, few speak of the challenge of ensuring the political and professional reliability of crews (while the mature nuclear powers rarely focus today on crew reliability, such concerns were quite real in the not-so-distant past). Nor are SSBNs and ballistic missiles in the Indo-Pacific the only aspect of undersea warfare and nuclear weapons that should trouble us: surface fleets, mine warfare, anti-submarine warfare and so forth increase the danger of incidents at sea, and they could raise the potential for a nuclear crisis. Knowledgeable analysts are concerned that the next stage of the Indo-Pacific naval arms race will involve still more submarines with nuclear sea-launched cruise missiles. 

Three 'nots'

If regional actors (not just the states currently pursuing SSBNs but other concerned parties) are to act to avert further arms racing and stabilise the emerging undersea deterrent, they must recognise the situation for what it is. A nuclear arms race at sea is:

  • Not simply a local or regional issue.
  • Not simply a military issue.
  • And not simply a navy or maritime issue.

A nuclear arms race at sea is a global problem with far-reaching implications for proliferation, conventional arms modernisation, and the possibility of arms control. The mere existence of such systems makes it more likely that the so-called nuclear taboo might finally be broken. An undersea nuclear race is deeply political because it affects the geopolitical rivalry among great and regional powers, not to mention alliance structures and patterns of regional governance.

For all regional military forces, such a nuclear arms race at sea is not simply the business of navies: SSBNs affect joint and combined operations in ways big and small, and blur important distinctions between conventional and nuclear systems. It is worrisome that despite some recent developments there has been, in general, asymmetric progress in developing weapons systems versus the C2, ISR, training/readiness, and nuclear doctrine necessary to deploy sea-based deterrent systems safely and reliably. 

Although prudence on the part of India, China and other regional powers may alleviate these concerns, it may not be sufficient for those interested in regional stability. In the end, although it is not fashionable to advocate for arms control much less naval arms control, strategists and policy makers should remember the words of Schelling and Halperin: 'the essential feature of arms control is the recognition of the common interest, of the possibility of reciprocation and cooperation even between potential enemies with respect to their militaries.' And, in the words of Robert Jervis, which seem especially prescient with regard to naval nuclear arms racing in the Indo-Pacific, 'because the security dilemma and crisis instability can exacerbate if not create conflicts, potential enemies will have an interest in developing arms control arrangements.'

The Lowy Institute gratefully acknowledges support from the John D and Catherine T MacArthur Foundation for this Interpreter debate, which is part of a broader research, dialogue and outreach project on strategic stability in Indo-Pacific Asia.

Image from Wikipedia.

Obama's intervention: Iraq is not Syria

The limited use of military force announced by President Obama earlier today was likely prompted by concern at the success of ISIS's latest offensives across Syria and Iraq. The jihadist group has recently redoubled its efforts in Raqqa, Syria, in an effort to take the remaining pockets of Syrian Government-held territory in the province. At the same time, ISIS's performance against Kurdish forces would have raised concern in Washington and Baghdad, and led to a re-assessment of  some overly optimistic judgments about Kurdish capabilities.

The situation facing the Yazidis and the Christians is of grave humanitarian concern. The fact that the refugees are geographically concentrated would have made air support an attractive option for the president. Add to this the fact that the sovereign Iraqi Government invited the intervention, and the stage was set for a dual humanitarian/limited direct military intervention operation to which Obama could agree.

There will of course be accusations that Obama is a hypocrite for intervening in Iraq but not Syria. That argument is simplistic and wrong. If the US is obliged to intervene militarily everywhere there is a humanitarian need, it would never stop intervening. Obama said as much in his speech. He is one of the few US leaders to understand the limits of American power. 

Moreover, the situation in Syria is far more complex. To have assisted one side would have meant breaching a nation's sovereignty (no big deal) and potentially assisting the very Islamist forces that pose a security threat to the region and the West (a very big deal). The intervention in Iraq requires Obama to do neither of those things, so the calculus is completely different.

In his speech, Obama was careful to emphasise the need for an Iraqi political solution to the crisis engulfing the country. As long as Maliki remains prime minister, there will be little appetite for substantive US air support. The intriguing question is whether a more politically inclusive Iraqi prime minister might prompt a more robust US response in terms of air support and stand-off weapons.

Photo by Flickr user Marines.

New Lowy Institute paper urges Indo-Pacific middle powers to band together

In a new Lowy Institute Analysis launched today, International Security Program Director Rory Medcalf and Nonresident Fellow C Raja Mohan argue that Indo-Pacific middle powers should look to build security coalitions in response to changing power balances in Asia.

China's increasing assertiveness and doubts about America's role in the Indo-Pacific have resulted in enhanced security cooperation between middle powers in the region. 'With Tony Abbott and Narendra Modi due to meet in the coming months, India and Australia are well placed to form the core of middle power coalition building', says C Raja Mohan in the new paper.

 The Analysis argues that cooperation between Indo-Pacific middle power coalitions would help them deal with the uncertainties surrounding the future of US-China relations while helping to build a more multipolar Indo-Pacific order. 'The next logical step should be the creation of "middle power coalitions". These informal arrangements will allow regional players to cooperate on strategic issues in groups that do not include China or the US', says Rory Medcalf in the paper.

Key findings:

  • China's assertiveness and uncertainties about America's response are causing middle powers in Indo-Pacific Asia to looking beyond traditional approaches to security.
  • Cooperation between Indo-Pacific middle power coalitions would build regional resilience against the vagaries of US-China relations.
  • India and Australia are well placed to form the core of middle-power coalition building.

The Analysis is free to download from the Lowy Institute website.

Image courtesy of Royal Australian Navy.

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