Foreign Donations, Local Politics: China’s Australia Influence

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Foreign Donations, Local Politics: China’s Australia Influence

Australia’s foreign donation scandal exposes long-term strategic challenges.

Foreign Donations, Local Politics: China’s Australia Influence

Staff members chat as they prepare a seminar of Australia China bilateral cooperation in resources and infrastructure in West Australia, in Beijing (July 23, 2009).

Credit: REUTERS/Jason Lee

Of all the regions in the world where the recent global trend to isolationism is counterproductive, the Asia-Pacific is foremost. A region experiencing rapid economic growth, it also holds some of the world’s greatest geopolitical challenges. Oftentimes, this is most visible in the “tinderbox” of the South China Sea, in Sino-Japanese tensions, and of course with Pyongyang’s arms proliferation. Yet more subtle shifts can have the greatest impact in the long term. The past month in Australian politics illustrated this.

Concerns over undue influence by the People’s Republic of China in foreign politics is not new.
In recent years, as Beijing has pursued a more muscular foreign policy in tandem with its pronounced economic growth in the post-financial crisis global economy, these concerns have grown.

Recent years have seen murmurs of concern in Australia, but the past month brought it to boil, with a PRC foreign-donations scandal that rocked Canberra’s political class at its core. Australia is not unique in the Asia-Pacific in having concerns over domestic interference by the Chinese government.

Interference in another nation’s domestic politics is also not unique to Beijing, as accusations of Russia’s role in the 2016 U.S. presidential election has shown. It’s also plain that Beijing has growing tensions in its own domestic politics, which may increasingly see its focus drawn inward. Still, June 2017 shall long be remembered in Australian political history for the month concerns over Beijing’s influence on Australia’s politics were fully exposed.

Scale of Foreign Donations Unveiled

News broke in early June that Australia’s three major political parties — the Labor Party, Liberal Party, and the Nationals — had been warned in years prior by the Australian Security Intelligence Organization (ASIO) of concerns over foreign influence in Australia, and specifically from individuals with close links to the Communist Party of China. The revelations, as first discovered in a joint investigation by the Australian Broadcasting Corporation and Fairfax Media Limited, illustrated that the issue of foreign donations in Australia was now entrenched, rather than incidental.

Previously, murmurs suggesting links between foreign donations and undue influence in Australia’s political class had been reported, but largely sailed over the national conversation. September 2016 proved to be the final salvo before the story broke wide open, as Labor Party Senator Sam Dastyari resigned following revelations a Chinese billionaire had paid his legal bills. It was subsequently alleged in the joint ABC-Fairfax report last month that Dastyari sought to personally intercede on a citizenship application for the Chinese national.

Dastyari defended his conduct as in line with his constituent duties as an Australian senator, but the revelations further diminished the prospects of his return to senior leadership anytime soon. Having previously won renown for his high-profile critique of high bank profits, it was a sharp fall from grace for the onetime rising star.

Across the political aisle, former Liberal Party minister Andrew Robb was also subject to critique. It was revealed that the veteran Liberal, former federal director of the Party,  and minister for trade from 2013-2016 took up an advisory role to Ye Cheng, a Chinese billionaire with prominent links to party leadership in Beijing. While the move was not ultimately found to be in breach of the Ministerial Code of Conduct, which former ministers are bound by, it proved a bad look, and affirmed concerns over Beijing’s influence in Australian politics was not confined to one major party, or any particular politician.

Australia and the World

Australia has long been the recipient of sizable foreign investment and capital injection. The past 40 years have seen Australia substantially liberalize its economy, with reduction of tariffs, the floating of the dollar, and a number of free trade deals with the world’s biggest economies. Australia’s economy is geared to face the world, and a close association between Australian politicians and influential figures in business from across the nation and beyond is a vital component of that. The chief issue is where a shift occurs from an association to undue political influence.

Countries have always faced influence from foreigners and external groups in domestic politics. At times this is overt; other times more opaque. This is not confined to Australia, nor the Asia-Pacific as a whole. The common link throughout is the concern when such influence becomes pervasive, and goes beyond invitations to party fundraisers and galas.

The realities of democratic politics often mean the line between these two distinctions is very thin. But when a clear trade has occurred, the problem becomes immense. This was the concern ASIO identified, fearing the impact undue foreign influence could have on domestic politics now and into the future.

It is not news this has been a noted problem with Beijing’s leadership under Xi Jinping, as a more muscular foreign policy has been pursued alongside a strong push in the soft power field. Often this soft power push has been philosophical, but it has also been practical. The establishment of the Australia-China Relations Institute at the University of Technology Sydney has been regarded as an example of an “pro-Beijing” think tank established under the auspices of academic research and inquiry. The Institute has been the subject of substantial critique since its foundation.

The Fallout and the Future

Three core takeaways have emerged since this scandal broke. First, in tandem with the warnings issued to Australian political parties surrounding the potential for corrupting influence via Beijing-backed political donations, it’s now known ASIO also conducted a raid on a prominent Australian-Chinese power couple. The intelligence agencies’ work in this sphere is more advanced that the Australian public may have otherwise imagined.

Second, though Australia has previously been one of the few nations to not have a ban on political donations from abroad, this scandal has given renewed momentum to negotiations begun earlier in the year to pass such a law. Similar to the ban the New South Wales state government implemented on donations from property developers, it remains to be seen how effective such a law would be when state-level bans haven’t improved transparency, but its progress has been hastened.

Third, the call by minor parties for a royal commission into the foreign donations issue may indeed have currency, but is also undoubtedly good politics — especially at a time when up to one-third of Australians have indicated their intention to vote for a party other than Labor or the Liberal-National Coalition in the next election. Mirroring the experience of the United States and Japan in the Asia-Pacific, at a time when Australia’s geopolitical challenges grow more immense, any shift away from the stability of the two party system could be particularly enduring in the long term.

One crucial question remains unanswered: what will China do about this? Will Beijing withdraw for a time before returning once more? Will they retreat altogether and seek to exert influence in other ways? Or shall they continue on with business as usual? The last is the most likely, as China under Xi has long shown its tendency toward a more robust approach to foreign policy. In an period where Beijing is increasingly comfortable in asserting its claims on the world stage, it is unlikely to see a change in behavior in this sphere. Thus, it is likely the greatest change in the existing dynamic will come from Australia.

The Australian Response

While this scandal is the most recent, it is certainly not the first time Canberra has been caught in a drama over political donations. It is also an issue that draws the ire of Australians, not only when it comes to foreign donations, but also regarding enduring problems with donations from domestic sources.

Nonetheless, the perceived risk to national security ensures donations with close links to foreign governments will be held as the most urgent issue. The issue is substantial for two reasons. Foreign donations have the potential to give rise to allegations of corruption, with the fear of “cash for comment” on major issues (of foreign policy especially). Second, there is concern about the overall corrosive influence foreign donations could have on Australia’s democratic process.

Australia has not only failed to rise in Transparency International’s index of democratic nations in the years prior, but even dropped in the rankings. Nonetheless, while Australia’s system is imperfect, it is also one that has functioned reasonably well for over a century since Federation in 1901.

Reports of a convergence between ASIO, the Australian Federal Police, and Australia’s Border Force under a new Cabinet department illustrate how diverse Australia’s challenges are at the moment. Canberra’s efforts to combat terrorism and maintain border security are sure to outrank a “donations drama” in Australia’s strategic outlook.

Australia’s national conversation regarding Beijing has long been caught between an ambition to grow economic ties with China and the need to maintain close defense ties with the United States. The challenge is visible in the diplomatic banquets of Canberra’s social set, all the way up to Australia’s participation in freedom of navigation exercises in the South China Sea.

Australian National University professor Hugh White notably declared in 2013 it was time for Australia to make a China Choice and seek to resolve this divide once and for all. Failing to do so soon, White argued, would leave Australia at a disadvantage in the long term. Yet at present, there appears to be little appetite among the Australian population for such a decisive shift in the foreign policy realm. A continuation of “business as usual” is the order of the day.

Nonetheless, as recent elections in the Philippines, the United States, and Japan have shown, the Asia-Pacific is an era of immense uncertainty about the old ways of doing politics. Australian politics is yet to suffer a seismic shock like those seen in other democracies around the world, but past performance is never a guarantee of future behavior. Should the minor parties find a political winner on this issue, or a trend emerge in Australia’s broader reputation, this scandal may be looked back again in history as the first page of a new chapter in Canberra’s foreign policy.

Ed Kennedy is a journalist based in Australia. Follow him on Twitter: @Edkennedy01