In a telling lecture at the Lowy Institute for International Policy this month, Peter Varghese, Secretary of Australia’s Department of Foreign Affairs and Trade, spoke about his country’s place in Asia. Successive governments have tried to define how Canberra should engage with the changing region. All have fallen short. Last week, Varghese cut through the politician-speak that clouds too much of Australian foreign policy and set out Canberra’s strategic view.
Australia, he noted, has traditionally existed in the “slipstream” of power (think relations with the U.K. and the U.S.), both when operating in the region and internationally. In recent years, new power relations in the Indo-Pacific are forcing a period of adjustment. As Varghese noted, any “grand bargain” between the two great powers in the region is unlikely. Instead, Varghese noted that the process of adjusting to shifting power balances in a multi-polar Asia will be “incremental and organic.”
Reaching consensus in regional and international frameworks is increasingly difficult due to the diverging interests of actors. As Varghese notes we need to break the idea that we can’t agree until we agree on everything. Explaining further that we need to “break through this idea that one or two or three countries are able to effectively veto the adoption of an international instrument.”
On China’s rise he urged greater nuance in debating great power rivalry in the region. “The extent to which this [China’s rise] can be peacefully accommodated will turn ultimately on both the pattern of China’s international behaviour and the extent to which the existing international and regional order intelligently finds more space for China.”
China, he says, has been too much of a beneficiary of the current system to be a “classic revisionist power” that seeks to entirely overturn the current order. Beijing will instead find its own “strategic settling point.”
This strategic settling point will no doubt rely heavily on the success of the transition of China’s economic model (recently seen under significant stress). Varghese referred to China’s transition as a “high-wire act” that seeks to both preserve the monopoly of the power of the Chinese Communist Party and secure market-based and consumption driven growth. “There is no certainty about how this (China’s transition) will end” but “no one gains if China fails.”
Australia’s increasingly complex patchwork of partners across the region combined with deepening economic ties is forcing Canberra out of the “slipstream” of power and into a role where it must become a master negotiator in its own right. Meeting these needs is what Varghese terms the “meta challenge“ of Australian foreign policy. As Australia aims to be a more independent and muscular middle power, Canberra must invariably help to stabilize the environment it operates in. “Australian interests” Varghese said, “are best served by a stable strategic system in Asia, which favours open societies, encourages economic integration, is inclusive in membership, and looks outward.”
As I have argued here before, Australia’s key interest going forward is to uphold the rules-based system in the Indo-Pacific. Ultimately, with such rules also come the mechanisms for dispute settlement and conflict resolution.
Varghese spoke to these concerns directly, in what seemed a subtle questioning of Beijing: “Will strategic behaviour flow from what you can get away with or will it reflect core principles about respect for international law?”
Recent actions suggest that the region is increasingly shaped by ‘what-you-can-get-away-with’ rather than traditional rule-based norms.
Varghese’s comments offer a fascinating and important insight into Australia’s worldview, minus the political spin which so often disfigures the message itself. His view is a measured and largely accommodating one that calmly recognizes a shifting balance of power in the region under the current rules-based system.