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Wednesday 20 Sep 2017 | 01:02 | SYDNEY
Wednesday 20 Sep 2017 | 01:02 | SYDNEY

Can economic and security analysts find a lingua franca?

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This post is part of the Australia’s Foreign Policy White Paper 2017 debate thread. To read other posts in this debate, click here.

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16 March 2017 12:10


This post is part of the Australia’s Foreign Policy White Paper 2017 debate thread. To read other posts in this debate, click here.

This post is part of a debate on Australia’s foreign policy White paper 2017. Click here for other debate posts.

When Foreign Minister Julie Bishop put economic diplomacy at the centre of Australian international relations in 2014, I suggested this might just be a canny way for a globe-trotting but ambitious Foreign Minister to keep a grip on the core government economic debates from abroad.

This wasn't meant to be a criticism, as there was much to welcome about the push to better align traditional diplomacy objectives with broader economic imperatives in a trade- and investment-exposed country.

But I was reminded of the more sceptical view recently when I asked both a German diplomatic commentator and a Japanese economic official what was going on with economic diplomacy back in their hometowns.

'I only hear about that when I visit the [Australian] embassy in Berlin,' the German replied cheekily. And my Japanese friend gave me a quick refresher course in the separation of powers between the Ministry of Foreign Affairs and the Ministry of Economy, Trade and Industry, not to mention the guiding role trading companies have long played in Japanese diplomacy.

Economic diplomacy seems to have recently faded somewhat from ministerial rhetoric, as trade policy has been dealt a body blow by Donald Trump to become all about jobs, jobs and jobs. The unglamorous work of actually integrating diplomacy and the former AusAID development agency has also had to proceed.

But the formulation of a new Foreign Policy White Paper raises the question of where now for this one-time priority that promised to bring some pro-business practicality to diplomacy and provide a framework for doing away with (and saving money from) a specialist development agency.

Economic diplomacy and commercial diplomacy scored no references in the last two foreign policy white papers. More surprisingly, that was only marginally less attention than then better established alternative foreign policy concepts such as soft power and public diplomacy. Business, on the other hand scored 40-50 references; on average, a bit more attention than trade policy.

In contrast, the Australia in the Asian Century White Paper embraced public diplomacy, but ignored economic diplomacy and took a distinctly economically determinist outlook on the region.

So will economic diplomacy be supplanted in the newest white paper by the newest alternative lever of international relations, digital diplomacy? Or is it even more relevant to providing a practical, self-interested gloss to expanding the diplomatic post network, funding the development budget and providing a new defence of trade liberalisation when the anti-aid and trade political forces are drawing inspiration from Trump?

The clear political threats to aid and the confusion about the best trade deal strategy that are now afoot seem to make a strong case for providing a persuasive narrative about how diplomatic infrastructure (from cocktail parties to annual meetings of ambassadors) does play a role in facilitating inward and outward trade and investment.    

The links between selling education to foreign students and the alumni networks this can create for Australian businesses struggling to establish a foothold in difficult foreign markets needs to be explained as the stuff of the new economic diplomats.

The work done by banks on financial literacy in the Pacific with some development aid alignment is in the interests of their shareholders who are nervous about Asian risky exposures. But it is also in the national interest of slowly reducing dependence on foreign aid in poor neighbourhood communities.

The case studies being mooted as part of the White Paper education process can play a crucial role in explaining these diplomatic complexities to make the document and (more importantly) diplomatic infrastructure in general more palatable to a sceptical electorate.

However, maintaining an economic diplomacy focus in the White Paper will also require addressing two other interrelated challenges to government policymaking in this area.

First, if economic diplomacy is to be retained as a serious arm of policy, the White Paper will need to address the way economic and security analysts often talk past each other in the Australian policymaking space, with their different language and philosophies. This happens in many countries, especially at the academic level, but is arguably a more pressing issue to address in a country such as Australia, which faces obvious tensions between its longstanding main security partner in the US and its rising, likely most important economic partner in China.

This week's Perth USAsia Centre paper identifying how sales by Australian owned businesses in the US are now quadruple Australian exports to the US shows how economic and security connections will be more difficult to disentangle in the modern world. But so too does the growing reality that our international education and tourist sectors are heavily dependent on Chinese clients. This has both positive and negative implications for a holistic approach to economic diplomacy.

Second, a serious approach to economic diplomacy will involve the acceptance by traditional foreign policymakers that many more arms of government policy need to be brought into the international policymaking process to achieve the 2014 stated aims of liberalising trade, boosting economic growth, encouraging investment and helping business.

So economic diplomacy requires greater liaison at least, and probably involves some ceding of decision-making to agencies ranging from the Reserve Bank of Australia to the Foreign Investment Review Board. Tristram Sainsbury outlines the case for more hard economics in this still-evolving new approach to foreign policy in the Australian Journal of International Affairs here (pay-walled).

This won't be easy, even in the fairly integrated bureaucratic process like present in Australia, as was demonstrated by the impasse between competition theory-focussed econocrats and deal-focussed trade negotiators over intellectual property in the Trans-Pacific Partnership.

The controversies over the lease of the Port of Darwin and partial sale of Ausgrid last year underline the need for a better integration of security and investment thinking. And the development of a critical infrastructure list in response illustrates the need for multi-agency cooperation to manage the foreign relations challenge of rising Chinese investment.

So the White Paper will need to address just how much of a shift in Australia's foreign policy approach really occurred when Bishop and then-Trade Minister Andrew Robb seized the economic tiller back in 2014, just as the government's top economic ministers were stranded by a mishandled national budget.

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