Octavian Report: What do you think is the real story behind the events we’ve seen in China recently? Are they really peacefully rising, or do they have more aggressive ambitions in the region?
Alexander Downer: They don’t have any obvious motive for alienating themselves from the rest of the region, and so if you think it through logically, then peaceful rising is the appropriate strategy for China. There’s no other strategy that makes any sense for them — though it depends a bit what you mean by rising. They definitely see — as their economy has now become the second-biggest in the world and is a very important economy in lots of different ways to many other countries — that they have more status than they’ve had for a very, very long time, and they want that greater status to be appropriately acknowledged.
They are rising in the sense that they want to play a bigger part, and they, as they rise, will have more extensive interests as well. Their interests aren’t just in Asia, but as their economy becomes bigger and more diverse, as they expand their investments and trading profile around the world, as well as rather specifically across Asia, then naturally enough their interests expand with it. They want to be able to protect their interests, particularly diplomatically. But to some extent, they want to protect their interests militarily as well.
That’s a very different thing from saying that they want to provoke Asia, or to provoke the wider world. We’re certainly not the wider world. They are just becoming more self-confident and more determined to maintain historic claims that they have, for example, in the South China Sea. In a sense, that’s pretty understandable, as long as they don’t do anything which transgresses the rules-based international system — and so far there’s no sign of that.
OR: Are displays such as the huge military parades we saw this summer more for internal consumption, then?
Downer: Oh, absolutely. They’re not naïve and they’re not silly.
OR: Do you think that there’s a chance that tensions between Japan and China explode?
Downer: There are what we might in diplomacy call risks of miscalculation with Japan. There are competing claims for the Diaoyu or Senkaku islands, and they’re not going to be resolved any time soon; the Chinese aren’t going to concede the point, even if the world would want them to. That doesn’t mean that anything much is going to come of it. These are uninhabited islands. It does mean that there is some risk of miscalculation. It’s a low risk, and it’s a low risk even if there was a miscalculation and some rather ugly incident that it would expand much beyond that. Probably it wouldn’t. It’s just worth flagging the fact that there are risks, but perhaps nothing more than that. There is historical antipathy and historical rivalry between China and Japan, and you have to acknowledge and accept that. It’s not just the governments that feel that, it’s felt quite strongly through the national communities — a function of their shared history. Nothing’s going to change that any time soon.
OR: Do you think Obama’s Asia pivot is an effective or well-executed strategy?
Downer: From Australia’s point of view, the important thing is that the U.S. maintains its place as the key player in terms of security architecture in the Asia-Pacific region. That’s our ambition, and we’re glad that this administration has been focusing on relations in that part of the world and its responsibilities in that part of the world.
By the way, I think it’s important to be fair here. Both the Clinton and Bush administrations placed considerable emphasis on the Asia-Pacific region, and those two presidents frequently visited the region and participated in its affairs, as did their secretaries of state and secretaries of defense and their national security advisors. There is nothing new about an American administration recognizing the responsibilities that it has to the security architecture in particular of the Asia Pacific region, and from Australia’s point of view, any statements that are made reaffirming that are always welcome.
OR: Do you think the China-Australia Free Trade Agreement is going to happen?
Downer: It’s definitely happening. It has to get approval of the Australian parliament. That’s a matter for the politicians. Just assuming that there’s no major problem in that respect, we would absolutely expect it to go ahead. We have mutual economic interests. China has a continuing need for raw materials, natural resources, and energy. We have a capacity to help supply them with those things. On the other hand, for us, China is obviously a very important market, particularly for energy and resources. It’s Australia’s largest market by a very long way, but it’s also an increasingly important source of foreign investment in Australia, and frankly we want to maintain that investment. A free-trade agreement, which will also give us better access to a whole series of Chinese markets for our agricultural production and in other sectors, makes perfect sense to both of us. It’s in our mutual interest. I started off the process, I and a then-trade minister, on the negotiation of a free-trade agreement with China in 2006 and 2007. It’s taken a long time for it to come to fruition for all sorts of reasons. But it has now, and I think it’s very welcome.
OR: Australia has, via its export relationships, a clear idea of what’s going on in China economically. Do you think this is going to be a sustained slowdown?
Downer: I wouldn’t put it that way. Our exports to China are continuing to grow, and China’s economy is continuing to grow, so if China’s economy continues to grow at the current rate, our exports are going to continue to grow. There has, remember, in terms of commodity prices, been a very big increase in supply. A lot of the increase in supply, in terms of iron ore in particular, has come out of Australia. The increase in supply may reduce prices. The Chinese economy has come off the pace a bit, but it hasn’t fallen into recession, and I wouldn’t overstate its problems.
They do have important challenges ahead of them — chiefly continuing the process of modernizing and restructuring their economy. There’s absolutely no doubt about that. That is not just economically difficult for them to do, but it will be politically difficult as well, in that the likely reforms are likely to meet with some community resistance. Of course, they don’t need to worry about losing the next election, but nevertheless, they need to keep the country stable. I think they’re not doing as well as they were and there has been a significant stock market decline. Still, their position is pretty strong compared to what it was three or four years ago. And this is despite the fact that there’s been a huge decline in commodity and energy prices, including in the case of the Chinese market. We’ve seen a depreciation of the Australian dollar which has been quite substantial actually. In that kind of an environment, it’s had an effect on the Australian economy, but the Australian economy’s still continuing to grow at around 2.5 percent a year. That’s a bit below our average, which is around three percent, but nevertheless, I wouldn’t overstate the problems in China and I wouldn’t overstate the impact of them on Australia.
OR: What is your view on the U.S. in terms of its global leadership? Will an America under a new administration be able to regain credibility? Is it facing long-term damage?
Downer: We look to the U.S. to maintain international activism and leadership. It’s tough to ask the Americans to do this because it involves a lot of sacrifice. Deploying forces internationally involves the sacrifice of the troops themselves, which can be life-threatening, and it also involves huge financial costs. We do say to the Americans that we don’t want America to retreat from its leadership role in the world because if it does, it creates a vacuum. That vacuum will be filled and it will be filled in unpredictable and often quite dangerous ways.
You have tensions right across the Middle East from Yemen to Syria to Iraq. You have the Iran issue. You have tensions in Eastern Europe, in particular in Ukraine, you have issues in relation to the behavior of the Russians. We’ve spoken already about the South China Sea and the potential for miscalculation in Asia. We have to take all those things into account. In that sort of environment, what we don’t want to see is an America in any way retreating from its global role. It’s easy of course for us to say that, and therefore we say it with this additional comment: we don’t think America should attempt to do these things alone.
We think it should be able to call upon its allies to help it. For our part, as an ally of the U.S., we’re always willing to do that. We have people in Afghanistan, we have aircraft flying over Iraq and soon over Syria, bombing ISIS targets. We are prepared to share the burden with the Americans and we want the American administration to know that there are countries like us, like the U.K., often the French, the Canadians, and others that are prepared to share the burden with them.
As you start to enter the election period and as you’re particularly now beginning to get into a faster pace through the primary process, we look for candidates who will maintain that role for America, should they be successful and become the next president. That’s the best way I can answer your question, rather than getting into giving the Obama administration points out of ten. I think as an ambassador, I might just bypass that one.
OR: What do you think of the Iran deal?
Downer: No agreement can ever be completely watertight, but given the alternative, which is no agreement at all, we think the agreement is a positive development. The thing of course about Iran is that it’s a key player throughout the Middle East. Where sometimes we, Australia, would find ourselves at odds with the Iranians, particularly in relation to the Middle East peace process (so-called), on other occasions, as is the case in Iraq and the war against ISIS, we obviously have to some extent make common cause with the Iranians. We need the Iranians, however, who exert a great deal of influence in Baghdad, to understand the importance of having an inclusive government in Iraq, not a Shia-dominated government, which disregards the interests of the very large Sunni element of the population.
We want there to be as well a constructive relationship between Iran and the Gulf States and we don’t want Iran to overreach in terms of any ambitions it may have in that part of the world. Whether you agree with the Iranians or whether you don’t, it’s without any doubt an important country in the neighborhood. It would obviously be a regional, if not a global catastrophe if Iran moved towards building nuclear weapons. It would be a huge and very retrograde step in the security environment of the Middle East. We’re hopeful that this agreement will ensure that doesn’t happen. That’s the intention of the agreement, and if it should start to fall apart, then the great powers, the permanent members of the U.N. Security Council in particular, will have to think again about what they can do in that environment. That’s a hypothetical question, so we don’t need to exercise our minds about that. The present agreement is going ahead, so let’s just hope that it works out for the best.
OR: Do you think the release of frozen assets will embolden Iran, especially insofar as it supports certain terrorist activities?
Downer: There is an argument, of course, that because they will receive their frozen assets and be able to trade more openly and there will be more investment going into Iran, that they will have more resources to put into organizations like Hamas and Hezbollah, or to continue to strengthen their military.
I think the great challenge here is to engage Iran and work on trying to persuade Iran that there is a better path towards regional peace — a path that would, of course, also underwrite Iran’s own security. Let’s not underestimate the role that Iran can play in the Middle East. Iran can be very useful in the fight against ISIS. Iran could be useful if it played a constructive role in helping to search for a political solution to the catastrophic civil war in Syria. Yes, there are questions about Iran’s role in Yemen. But the point I’m making by going through all of those things is that we have an opportunity now to work towards more constructive outcomes in the relationship with Iran and to find ways of working with Iran to try to solve some of these debilitating and catastrophic regional crises.
Remember: Iran isn’t a country which has just one point of view. There are hardliners, there are more liberal people, there are people who want to engage with the West, and there are people who don’t. There are people who are hardline theocrats, there are people who aren’t.
OR: Australia as a country, and you personally, have been good friends of Israel. How do you think Israel’s international position stands now? What can it do to combat the BDS movement?
Downer: As I speak to you, Israeli Prime Minister Benjamin Netanyahu is in London. The British government has a particular focus at the moment on Israel. So what can I say about all of this? Australia remains a stalwart supporter of Israel. We don’t want to see Israel isolated and on many issues, we do our best to make sure Israel isn’t isolated. That’s been our position for quite some years now. That’s not going to change.
We accept that Israel doesn’t like — at all — the Iran nuclear deal. We’ve heard their arguments and we understand their arguments. The deal is going ahead, so we hope it works. Secondly, they can rest assured that we will maintain a strong diplomatic relationship with them and we will work to ensure that Israel doesn’t become isolated as a country, diplomatically speaking. It is isolated geographically, in a sense, but diplomatically, we don’t want to see Israel become isolated.
OR: Do you see extremism continuing to rise in Europe? Do you think the U.K. will stay within the E.U.?
Downer: I think extremism, rise or fall, is a hard prediction to make. Impossible, really, excepting to say it is a real problem in Europe. We’ve seen plenty of incidents that have demonstrated that. What you don’t hear about is the very successful work in Europe, including in the U.K., of the intelligence services and police in terms of intercepting threats. They get no credit for that because you don’t put out a press release every time you intercept a plot. The British government, you might note, very recently used a drone in Syria to kill two British citizens whom they saw as a direct threat to their national security. These are big issues. We might be talking about a small percentage of Muslims in France, in Britain, in Belgium and so on. It might be a small percentage, but it’s quite a dangerous percentage and it is threatening the security of countries in Europe, which have to be prepared to invest a lot of resources in dealing with that problem. I can speak much better for Britain than I can any of the other European countries, but they are working hard on it.
I think as far as Britain and the E.U. is concerned, there are difficult issues for them here. They need a negotiation to be completed with the E.U. to improve, as they see it, the operation of the E.U., to make the E.U. more efficient, more effective, and more, if you like, community-friendly than they see that it is at the moment. That’s going to be quite an important challenge for them.
If they can negotiate a successful agreement with the E.U., then there’s every chance they’ll remain but it remains to be seen whether they can. There are other issues, with this issue of the immigrants coming into Europe from across the Mediterranean and through the Turkish border being one of the biggest. This is a difficult issue for Europe, but it is an issue they’re going to have to address and that will have an impact on European public opinion over time.
As regards public opinion, I suspect what will happen in Europe is what has happened on this issue in Australia. The public in the end don’t have a problem with immigration as long as they believe that immigration is being properly managed, but the public will become very resistant to random immigration where people are able to get into Europe just by virtue of paying money to people smugglers.
I suspect this issue is going to become more difficult before it becomes easier. I think it’ll become increasingly contentious within public opinion throughout Europe, not just in the U.K. In fact, it won’t have such substantial political consequences in the U.K. because they had an election in May. In other parts of Europe, it could have a very significant effect on elections, including the next French presidential election, so this immigration issue is one the governments really need to get under control. As far as the British are concerned, it will have an impact on how the British public addresses this referendum on whether they should remain in the E.U. It’s not a foregone conclusion Britain will remain in the E.U.. It’s going to be dependent on how some of the difficult issues that Europe has to handle are resolved.
Another very important issue impinging on the U.K.’s status in the E.U. is the stability of the euro and the euro zone. Although Britain isn’t in the euro zone, the euro zone is at the heart of the E.U. If it looks unstable, that will affect public opinion in Britain as well as the issues outlined above. But if the Europeans get this immigration issue under some sort of control and get the E.U. itself into better shape, then I think there’s a good chance that the public in Britain will vote for Britain to stay. But I’m qualifying that quite heavily.
OR: You served as the special advisor to the U.N. Secretary General on Cyprus. Do you think there’s any hope in the foreseeable future of a resolution on the Cyprus issue? Do you think that Turkey’s trajectory is going to change with some of the recent developments there or that we’ll continue to see them move away from the West?
Downer: It’s a complicated story, the story about Turkey allowing the United States and other countries, including Australia, to use a Turkish airbase to launch strikes against ISIS. There are other issues there, I know, but I think that’s a sign that there is still a constructive relationship between Turkey and Western countries. Turkey is a hugely important member of NATO, as that particular incident illustrates.
As far as Cyprus is concerned, all the signs I’ve seen have been that the Turkish government is very committed to there being an agreement to resolve the Cyprus problem. There are still some very sticky, complex, detailed issues which have huge political implications in Cyprus which will be hard to solve and have proved to be intractable over many, many years.
I have no doubt that Turkey is committed to a solution and I don’t see Turkey as becoming increasingly anti-Western. There have been tensions between Turkey and the E.U. and there have been tensions between Turkey and the U. S., but I think the recent decision in relation to the use of a Turkish airbase shows that the relationship still has plenty of strength in it.
OR: Do you think that the situation in the Middle East is going to improve or worsen in the medium term?
Downer: I don’t think anything’s going to happen vis-à-vis the Israeli-Palestinian peace process anytime soon, so let’s just set that one aside. I don’t want to be too pessimistic about it, but I don’t have any immediate reason for great optimism.
So let’s look at other specific issues. Is it going to be possible to find a political solution to the Syrian civil war? That’s going to be very hard, and to do that will involve a lot of goodwill and effort on the part not just of the U.S. and the Europeans, but importantly, Russia and Iran, who are the key sponsors of Assad and his administration and without whom he can’t survive. A political solution is also dependent on whether President Assad insists on staying in power or whether he would be prepared to entertain a transitional arrangement and a formula for replacement. It’s hard to predict. That’s not happening at the moment, and as long as it doesn’t happen, the civil war will go on. More and more lives will be lost, more people will flee Syria, and the chaos will continue.
With Iraq, again, you have to depend on acts of goodwill here — and perhaps a bit of determination. Consider the war against ISIS in Iraq. To what extent are the Iraqi security forces going to stand up effectively? To what extent is the coalition’s training of the Iraqi security forces (or any other support the coalition might provide) going to help them win back those parts of Iraq that have been stolen by ISIS? We’ll have to wait and see — and we need to be prepared to wait for quite some time. There is also the question of the extent to which the Abadi administration becomes increasingly inclusive of all Iraqis and is not seen — particularly by Sunni Iraqis — as being a Shia administration in the thrall of Iran.
To some extent, the local population will have to work through the solutions themselves, not just depend on intervention from outside forces — in particular the Western coalition. Arab countries generally, the Gulf States and others, have to be prepared to carry a huge share of the burden in addressing these issues. They have their own domestic issues to deal with, of course. One can sympathize with that.
I think we’re going through a very tragic era in the Middle East and it’s going to take years to work through all of these issues. There are the Houthis in Yemen as well and the pretty violent fighting that’s taking place there now, too. There’s that little problem to solve as well.
It’s a tough environment. You’ve got traditional rivalries, you’ve got tribal rivalries, you’ve got national rivalries, overlaid with an increasing sectarian tension between Sunni and Shia Arabs, and in the case of Syria Alawites who are aligned with the Shia. The sectarian issue has gotten substantially worse in recent years.
OR: How in your opinion has Indonesia’s Widodo administration justified the hype that accompanied its entrance onto the scene? What do you think its reentry into OPEC means in terms of the bigger economic and political picture?
Downer: Indonesia is a huge country, stretching from West Papua to the north of Sumatra to Aceh and containing more than 17,500 islands of which about 6,000 are inhabited. Its 255 million people display great ethnic diversity. A very, very difficult country — by any stretch of the imagination — to govern.
One so easily overlooks success and thinks only of difficulties and problems, which is human nature, but it’s important to remember this is a country which has only in the last 15 or so years embraced democracy. And it’s remarkable how well Indonesia has taken to democracy. I don’t mean only the electoral process, I also mean the structure of its civil society. You have a free press, people go out there and attack the president and criticize the president and ridicule the president, there are debates about policy issues in the media, in think tanks and universities — this is a very open and a free country. Really, you only have to go back to 1998 and it was a country that had been run for a little over 30 years by President Suharto with scant attention paid to democratic norms.
Widodo is elected in this environment. He’s been a mayor and a successful mayor, and quite a successful businessman as well, before that, and he is finding his way through the presidency. Obviously, in his early days as the president, he’s been on a steep learning curve. He hasn’t had control of the parliament, either, so that hasn’t made it any easier for him.
We’ll have to wait and see. What we want from Indonesia is for it to be open to international trade and — importantly from Indonesia’s point of view — international investment. We don’t want the Indonesians to think that there’s some fast track to great prosperity through import substitution and protectionism and limiting foreign investment in the country. The reverse is what’s going to give Indonesia the great economic boost that a huge number of its people need.
This is a work in progress. Obviously, they have been hit by the decline in commodity and energy prices: Indonesia is a big commodity and energy exporter. That’s not come at a great time for Widodo. He comes into power and down goes the price of oil and other commodities, so that’s a problem for him about which we can do absolutely nothing. OPEC isn’t going to solve that problem.
In any case, the important thing about oil prices to understand is that the Saudis are not going to take drastic action this time around to cut back production, and in doing so to lose market share. They learned that lesson once and they’re not going to repeat the mistake, so don’t expect anything miraculous to happen through OPEC or through, for that matter, unilateral action by Saudi Arabia.
OR: Fantastic. Thank you.