2 posts tagged “foreign policy”
Went to see Kim Beazley at the Lowy Institute last night. His speech was on Australia's foreign policy. Some notes on what he said and what I thought:
(BK) Australia is now involved in a civil war in Iraq which is basically clan against clan.
(JT) Seems to me that it's more complex than that. Iraq has become a testing ground in which nation states like Iran and the US are superimposing their struggle for pre-eminence in the region. Also seems like it's in BK's interest to characterise the war as a mess with no broader strategic importance because it's Howard's war.
(BK) Later said that Iran had very successfully done nothing while the US handed them dominance by taking out Iraq then getting stuck there.
(BK) Iraq is different from Afghanistan. In Afghanistan, America had been attacked and thus Australia was obligated to engage under the ANZUS treaty. Also there was an unprecedented global coalition. It was in our interest to be there.
(JT) Not sure the ANZUS treaty applies because Afghanistan did not attack the US (Kate's point). But the conflict can still be characterised as different from Iraq in terms of its international support. The question then becomes on what terms do we engage globally?
(BK) We should be the ally America needs not the ally this current administration wants. "Mates talk straight."
(JT) Vomit inducing quote aside, actually a good point here about how we are their only friend in an important region. Our long term value to them is in things like Pine Gap and our regional capabilities. While it may be politically advantageous in the short term to go crusading with the US, we should instead make ourselves into a really useful regional force.
(BK) Need to focus on our region in both alliances and spending. Buying 2 large amphibious vessels, and investing heavily in the JSF without a stop gap measure gives Australia small amounts of global capability with large risks of overstretching and of losing air dominance in the region. Instead we should be spending more on smaller amphibious vessels for regional incursions, like the ones hired at great expense for operations in East Timor recently. We should also utilise our great local industry in fast catamarans which the US have purchased for their SEAsian forces.
(JT) However also said that regional vs global engagement was a "false choice". I don't understand this. If you have $X and you can either buy aircraft carriers to take tanks to Africa or smaller ships to send troops to the Solomans, it seems to me like there is a choice to be made. More on this below.
(Q) There was a question on whether region matters in our more global age. You've talked about the importance of the Afghan conflict. Is Afghanistan part of our region?
(JT) I thought this was a good question because it showed up the inherent difficulty of criticising procurement of global platforms and emphasising regional engagement while also supporting Australia's role in some global conflicts but not others. Maybe the "false choice" idea was B's way of saying that there can be no hard and fast rule about where and when Australia should engage, only different emphasis and different capabilities.
(BK) However B didn't say that. He said "Of course your region matters, it's where you live."
(JT) Penetrating insight of the quote aside, I tend to think that region does matter. Movement of people is still heavily restricted by both physical limitations (as we have not yet got jetpacks or teleporters) and national barriers. So the people closer to us can still hurt us more easily. I'm not sure if this means that our foreign policy should be defined more by regional than by global interests but I think region still matters.
(BK) We need a Department of Homeland Security in Australia.
(JT) Does another department bring the desired coordination among different services such as intelligence and boarder security? Not sure the experience in the US has been entirely positive.
Two articles about Iran:
- From the Economist.
- From the Lowy Institute.
Indicators from inside Iran:
- Ayatollah Ali Khamenei likes remind the US that should they make a “mistake” with regard to Iran, “energy flow through this region will be seriously in danger.”
- President Mahmoud Ahmedinejad has become a rockstar in the Muslim world by standing up to the US and has somewhat isolated the pragmatists and Bazaaris in the Iranian regime.
- The Iranian military have conducted exercises in the Strait of Hormuz which is the passage through which most oil is transported from the region.
It’s a crazy world we’re livin’ in:
- International Atomic Energy Agency demands that Iran suspend its uranium enrichment activities.
- Chapter VII resolutions are being debated in the Security Council.
- Russia and China are resisting the invocation of Chapter VII.
- The EU is continuing to provide incentives for compliance.
- The US will probably push for sanctions.
- Should sanctions fail, air strikes and military options are more likely.
What would the effect be?
- Iran is the 4th largest producer of oil in the world (3% of the world’s oil).
- About ¼ of the world’s oil flows through the region.
- Other oil producing areas are not poised to pick up the slack – only Saudi Arabia has significant reserves and most of them are in heavy sour crude while global demand is mostly for sweet light crude.
- A World Bank simulation estimated that a sustained loss of 2million bpd would see a 1.5% decrease in global GDP.
Demand and Supply
- We’ve already had a prolonged oil ‘shock’ – it was $10/barrel in 99 and is now over $70/barrel and we’re still seeing global growth – so what’s the problem?
- The increase in price has primarily been driven by increased demand from growing economies like China and India.
- According to the Lowy Institute article, supply shortage is a different and much more damaging story.
- While this is not very well explained in the article, I imagine that it is because increases in price due to demand came bundled with increased demand for products and services from the US and around the world (eg steel from Australia).
- Increases in price due to supply shortages won't have any of these ancillary benefits.
Would Iran do it?
- There is evidence that Iran is conflicted about using oil as a tool for foreign policy.
- Lobbing in the occasional rhetorical grenade helps keep the price of oil high.
- Oil earnings account for 80% of Iran’s total exports and 40% of the government budget.
- Iran has an ‘Oil Stabilisation Fund’ that has been built up to 20billion.
- However disrupting the oil flow would be a last resort as it would weaken the grip of the regime over the populace.
