AUSTRALIA PLAYS THE ASIAN CARD

With its major trading partners in Asia wary about the new man in the White House, Canberra sees an opportunity, reports Chris Pritchard .

Australia’s close links with Asia are broadly accepted by the Australian public. When there is so much trade with Asian nations, it makes sense to stay friends.So, since a wary Asia saw Donald Trump become US president,Australia’s government has redoubled its efforts to build relations, in the belief it may fill a gap in the region.

It didn’t take long for the new US leader to make waves Down Under. In a tetchy telephone conversation with Australia’s Prime Minister, Malcolm Turnbull, Trump denounced a deal,made with the Obama administration, for the US to take 1,250 of Australia’s illegal asylum seekers, mostly from Iran and Afghanistan. It’s still not known whether any refugees will be shipped from Australia to the US.

Trump reportedly told Turnbull that their conversation (scheduled to last an hour, but terminated by Trump after 25 minutes) was ‘the worst’ of five he had with foreign leaders. To avoid exacerbating damage to Australia-US relations, the PM did his best to play down any difference of opinion,denying claims that the President had hung up on him and insisting that the entire call was courteous.

Was this any way to treat a country that considers itself an essential US ally, one memorably described by the conservative thinker John Howard, a former prime minister, as America’s ‘deputy sheriff’ in the Asia-Pacific region? The phone callgave ammunition to those who allege that despite lip service,Australia cannot rely on US treaty commitments to come to its aid if required. At the least, it encouraged Australians to examine their relations with other powerful neighbours.

Canberra has been careful to remain aloof from two simmering disputes involving China, its number-one trading partner. The first concerns eight tiny islands in the East China Sea, claimed by bothChina, which calls themthe Diaoyu Islands, and Japan, Australia’s second-largesttwo-way trading partner, which names them the Senkaku Islands. Though uninhabited, the isles are a rich fishing ground, and are thought to have oil reserves below the seabed. Chinese patrol boats and fishing vessels and Japanese patrol boats menace each other regularly.

Canberra has been careful to remain aloof from two simmering disputes involving China

Australia alsotreads carefullyin another dispute: control of the South China Sea’s Spratly Islands – about 100 minute specks of land, some no more than reefs, parts of which are claimed by several Asian nations. China claims all of them, backed up with military installations, runways and buildings, a number on man-made islets. Turnbull’s centre-right government has questioned China’s intentions,though politely, and Australia’s Foreign Minister, Julie Bishop, hascalled for one of the world’s busiest sea lanes, which passes close to theSpratlys, to remain free of disruption.

The strongest card Canberra can play, however, is its support of free trade at a time when the Trump administration faces Asian perceptions that it is isolationist and protectionist. The importance of free trade was emphasised when Japan’s Prime Minister, Shinzo Abe, recently visited Canberra. But Australian efforts to capitalise on Trump-related jitters in Asia have not always gone smoothly.

Parts of the Spratly Islands are claimed by several Asian nations
Parts of the Spratly Islands are claimed by several Asian nations

One of the new president’s first acts was to tear up the Trans-Pacific Partnership (TPP) free trade agreement. Turnbull suggested the treaty could continue ‘even without the United States’– presumably with an enhanced Australian role – but Abe quickly slapped this down, calling the TPP ‘dead’. And when Turnbull later floated the possibility of China entering a restructured TPP, Beijing was unresponsive.

China and Australia are outwardly very friendly, but Beijing also wants to maintain its relations with Washington. The Chinese Foreign Minister, Wang Yi, recently said Australia did not need to choose between China and the US, its third-largest trading partner. ‘Any sober-minded politician,’ said Wang, ‘clearly recognises that there cannot be conflict between China and the United States because both will lose – and neither can afford that.’

Australia’s relationship with Asia was initially built on primary exports. In the decade to 2012 there was a boom in mineral shipments, spearheaded by iron ore and coal, with gold and diamonds playing secondary, but important, roles. Though a strengthened Australian dollar hurt agricultural exports, major supplies of iron ore, coal, and liquefied natural gas still go to China, with South Korea also an important destination for gas and coal.

But in China’s case the nature of trade is changing. Fee-paying Chineseare pouring into Australian universities, colleges and schools, and tourism is surging.These service industries have overtaken minerals and food exports in value, and are being further boosted by the rapid expansion of ties with India.Two-way trade is increasing,and India has leapfrogged many other Australian trading partners.

The importance of free trade was emphasised when Japan’s Prime Minister, Shinzo Abe, recently visited Canberra

There is also Indian participation in what some believe could be another mining boom, with coal and gold prices rising andwidely expected to climb further. India’s Adani Groupis developing Australia’s biggest coal-mining project in inland Queensland state, with its own rail link to the coast. As for gold, West Bengal-born Sandeep Biswas, managing director of Newcrest Mining, Australia’s largest gold miner, is upbeat about the outlook, arguing that in uncertain times such as these,‘gold has proved itself to be a store of value’.

But Australian relations with two Asian nations have recently been rocky, though both appear close to amicable resolution. Asia’s newest and poorest country, East Timor, previously ruled by Indonesia, accused Canberra of spying and bullying in a disagreement over positioning of the maritime border between the two, meaning East Timor got lower royalties than it considered fair for offshore hydrocarbons. Australia has since agreed to redrawthe border.

Indonesia, meanwhile, cancelled defence co-operation with Australia after visiting military personnel found literature satirising Pancasila, Indonesia’s national philosophy, at their accommodation. But Australia apologised quickly and fully, and military co-operation is likely to resume between neighbours who also happen to be important trading partners.

Despite the economic weight of Asian markets, however, the US alliance remains of great significance. In an analysis fora leading Australian think-tank, theLowy Institute for International Policy, Robert Garran, former head of North Asia assessments for Australia’s Defence Intelligence Organisation and an authority on Australian-Asian relations, writes: ‘Trump’s approach to Asia will be the biggest test for Australia of whether his influence on our security will be benign. It should be the main factor shaping Australia’s approach… if the US maintains its historical role of benign hegemon in this region, that would be a significant plus for Australia.’

Against a backdrop of frostiness toward the US, Garran continues that unfettered commerce must remain a priority and ‘that means maintaining a liberal internationalist order, of which free trade is a key component’. Australia, he urges, should engage comprehensively with ‘all the countries in the region. On both the economic and the security front, we need to maintain constructive relations with China.’

As Australian politicians and pundits keep reminding their countrymen, they are part of the Asian family – and though disagreements in families are commonplace, they rarely result in prolonged estrangement.


Chris Pritchard, based in Sydney, is a former BBC and Wall Street Journal correspondent who travels widely in Asia.

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