Published daily by the Lowy Institute

Julie Bishop: The WA connection

Julie Bishop: The WA connection
Published 21 Aug 2013 

Andrew Pickford is a Perth-based security and energy analyst. Here's part 1 of his Julie Bishop profile.

Western Australia's economic boom, arising from the sudden and massive expansion of China's economy and the export of iron-ore and natural gas to the Middle Kingdom, has seen WA adopt a different attitude to Chinese investment and presence when compared to eastern Australia. The 'China choice' is not an abstract question in Perth.

There is significant experience with Chinese investors and firms, alongside substantial long-term US investments and a military presence that's now primarily exercised through naval visits and crew changes. This is a state which is home to the massive Chevron Gorgon project as well as numerous Chinese resource-oriented investments.

With this economically-focused approach to US-China-Australia interactions, the foreign policy outlook from Perth is different. The 2013 Lowy Institute Poll noted that nationally, 41% of Australians consider it likely that China will become a military threat to Australia in the next 20 years. But 'Western Australians, whose state has close economic ties with China, are far less wary of China's military intentions. Twenty-six per cent of Western Australians think it likely that China will become a military threat in the next 20 years.'

Alongside this different perception of China lies Shadow Foreign Minister Julie Bishop's political and personal network, which is very much at ease in dealing with China and has business interests that favour good relations. [fold]

Perhaps not well understood outside Perth is how Bishop has aligned herself with the powerful Court dynasty, founded by the late Sir Charles Court. There was an aborted effort in 2001 to install her as the leader of the State Liberal party, with an expectation she would follow the Sir Charles and Richard Court legacy. Nowadays, Perth billionaire entrepreneur Kerry Stokes counts former Western Australian Premier Richard Court as a senior member of his business inner circle and as a key advisor on East Asian issues.

Bishop also has close ties to former Howard Government Foreign Minister Alexander Downer, now on the local board of the Chinese global telecommunications giant, Huawei. A number of commentators have criticised Bishop for receiving airfares, accommodation and hospitality paid for by Huawei.

Since China-Australia relations are generally seen more through a business lens in Perth, Bishop's familiarity with boards, investment decisions and the complex nature of attracting foreign capital are likely to play an important if little noticed role. Western Australia has not always been a magnet for investment and this experience may see Bishop compartmentalise aspects of the China relationship, de-linking security-related debates. Some hawks may view this as compromise, but it reflects the outlook and experience of someone working in Perth.

The elevation of the Indian Ocean and Indo-Pacific regions by security analysts and foreign affairs commentators is another trend which will play into foreign policy considerations. Labor's one-time foreign minister and now minister for defence Stephen Smith has helped accelerate this strategic shift, which dates back to the largely forgotten 1987 Defence White Paper. The rise of Bishop as foreign minister alongside WA Senator David Johnston as defence minister is likely to reinforce this trend. It is likely that 'Our Western Front', as ASPI's Anthony Bergin calls it, will factor more in decision making.

One scenario that will test Bishop as foreign minister is if a Chinese state-owned firm sought to acquire a major holding in an Australian energy assets like Woodside. A similar event occurred in Canada when CNOOC completed a takeover of Canadian oil and gas company Nexen in February 2012.

This triggered a debate in Canada over the national interest and the role of Chinese state-owned firms in so-called strategic sectors of the economy. Some regulatory conditions were consequently imposed on this takeover, the largest in Canadian history. Interestingly, the Canadian Government let it be known that the CNOOC-Nexen was the last deal of this kind that it would approve.

In Australia, as the mining boom slows and the industry consolidates (and resource companies get much cheaper to acquire), there may be potential for acquisitions by Chinese state-owned enterprises. There have already been moves by China to enter into the agricultural sector in Western Australia's south-west. In a slowing economy, Bishop's roles as a Western Australian MHR and foreign minister are likely to encounter some interesting buffeting, especially in light of the state government's views on Chinese investment.

Africa is another area where foreign policy shifts may occur due to Western Australia's resource oriented economy. During the later stages of the mining boom, when costs were rising rapidly and the proposed Resources Super Profits Tax sparked concerns over sovereign risk in this industry, a large number of junior and medium-sized mining companies boosted their involvement in Africa, especially West Africa. This pattern of investment failed to match Australia's diplomatic footprint on the African continent, which has most recently been influenced by Canberra's bid for the UN Security Council. Under Bishop, there may be a rebalancing in Africa to support Australia's investment patterns.

Another emerging issue will be pending discussions over deepening the links between the US Navy and the HMAS Stirling base just south of Fremantle. US diplomatic efforts in Western Australia have been elevated, with numerous Perth visits by US Ambassador Jeffrey Bleich and a succession of talented and senior US Consul Generals. The increased diplomatic attention has been partly been due to major US investments like the Chevron Gorgon offshore project, but it also has a strategic component.

Bishop as foreign minister is unlikely to pursue radical shifts in policy. And she's unlikely to be as passionate and interested in the portfolio as, say, Gareth Evans. Instead, expect to see an administrator with greater appreciation of commercial nuances (especially with respect to China), alongside a keen understanding of US linkages and an ability to help deepen the relationship. Those expecting 'China Choice' flashpoints will be disappointed.

In the early period of an Abbott Government, there is likely to be a focus on border protection and on Indonesian and Melanesian diplomacy. However, in Western Australia, East Asian and US relations are the main game. Once urgent political matters relating to asylum seekers have been addressed, expect these areas to increasingly draw Bishop's attention.

Photo courtesy of Wikimedia Commons.

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