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Weekend catch-up: The South China Sea, RAMSI, Hong Kong and more

John Edwards making headlines on interest rate rises, Hugh White and Ely Ratner in discussion on the US approach to the South China Sea, and more.

The USS Coronado the South China Sea, May 2017 (Photo: Flickr/US Pacific Fleet)
The USS Coronado the South China Sea, May 2017 (Photo: Flickr/US Pacific Fleet)
Published 1 Jul 2017 

By John Gooding, Digital Editor at the Lowy Institute and Associate Editor at The Interpreter.

This week The Interpreter featured a discussion between Hugh White and Ely Ratner over the latter's most recent contribution to Foreign Affairs, 'Course Correction: How to Stop China's Maritime Advance'. First, White's initial post:

[Ratner's] approach has two major advantages over what’s been tried so far. First, it recognises that America must show quite plainly that is willing to go to war with China in the South China Sea, if Washington is to resist the salami-slicing tactics that China is using so effectively there to undermine US leadership in Asia.

Second, it puts China’s neighbours in the front line, where they belong. It makes little sense for the US to be more committed to containing China’s challenge to regional order than China’s neighbours are, which is how things have looked so far.

But would it work? Does it offer both a high chance of compelling China to back off, and a low risk of starting a war? Alas there are three reasons to think that it won’t.

And Ratner's reply:

I agree with core elements of Hugh's perspective. He's right that the United States has yet to take seriously the severity of the China challenge, that there has been inadequate debate among America's leaders and its public about the very real stakes, and that current trends, including deficient US policy, portend a China-dominated region.

But Hugh and I diverge significantly on the question of whether the United States can and should do anything to arrest the slide toward a Chinese sphere of influence in Asia. He offers three reasons why my recommendations for a more robust US policy in the South China Sea would pose little chance for success, while likely risking war.

The Lowy Institute's 2017 Distinguished International Fellow Jake Sullivan weighed in on a related topic – how to best argue the case for US global leadership:

I spent the last two years on the campaign trail serving as Hillary Clinton’s senior policy advisor. At first, I brushed off Trump’s attacks on American leadership. Running down NATO? He can’t get away with that, I thought. Suggesting that other countries should fight a nuclear war while we stand by and watch? Disqualifying, I thought. And America First? That was the slogan of Nazi sympathizers who wanted to keep us out of the Second World War, and it would never fly. Or so I thought.

As I talked to people around the country, however, I came to understand why Trump’s arguments for a reduced American role appealed to people. I couldn’t say the same for our arguments. To push back on Trump’s worldview, we need to figure out how to convince people that principled nationalism and internationalism are not incompatible.

Closer to home, John Fitzgerald made the case for concerted and explicit Australian media scrutiny of China's influence over Australia's institutional infrastructure:

Australians need to ask what it is they value most, what their basic principles are, where their core interests lie, and what they would be prepared to surrender short of surrendering their own self-worth. Would they be content for their political parties and universities, for example, to remain quiet on matters of fundamental principle in order to win favour with China?

This question is implicit in the recent media coverage on institutional responses to Chinese efforts to influence national policy and compromise Australian institutions. China is not going to change to accommodate Australia. And Beijing is unlikely to change any time soon on its own account. But Australia could well change in fundamental ways if it moved to accommodate China’s growing power without regard to questions of value, integrity and public trust.

Brendan Thomas-Noone argued that in defending the liberal international order, Australia should take a leaf out of Canada's playbook:

It’s an interesting diagnosis for other middle powers such as Australia. How confident are we that our ability to shape the nature of our society, politics and sovereignty would survive in a world dominated by great powers, closed borders and no shared standards, whether political or economic?

Canada’s answer to this question is three-fold.

As Indian Prime Minister Narendra Modi visited the White House this week, Shashank Joshi wrote that the visit cemented a strong start to the relationship, free of gaffes or clashes:

With Modi in a commanding political position at home and bipartisan support for India in the United States, this may point to a higher degree of continued convergence than many expected or feared.

John Edwards' Interpreter piece on the Reserve Bank made more than a few headlines this week (see here, here, here and here) – read his original argument:

If inflation does indeed return to 2.5%, as the Bank now expects, if growth does indeed return to 3% ‘within a few years’, as the minutes of the June board meeting predict, if the world economy is indeed picking up, then a policy rate of 1.5% is too low.

Let’s say for argument the RBA wants to start next year and get to 3.5% in two years, which is surely within the range of outcomes it would think about. If each increase is 25 basis points, it needs to make eight of them, or say four a year. This implies that within three years Australia’s economic world has returned to more-or-less normal, with wages growth of 3.5%, inflation of 2.5%, and output growth of 3%. But this is, after all, exactly the forecast that both the Bank and the Australian Treasury publicly offer.

Tomorrow will mark the 20th anniversary of the Asian Financial Crisis – what lessons did it teach the world, asked Stephen Grenville:

The difference in response between 1997 and 2007 was in part because crises, like Tolstoy’s unhappy families, are all dissimilar. The common lesson, apparent in 1997 but not learned until 2007, is that financial sectors are not self-disciplining; fickle changes in confidence can cause dramatic runs on financial institutions; borrowers and lenders make lemming-like responses to correlated mistakes, especially about risk; and markets can fail dismally in their basic task of price discovery.

These lessons are, however, ephemeral unless they are incorporated into changed institutional frameworks. As memories fade, the vulnerabilities of financial sectors, capital flows and exchange rates are forgotten. At least until the next crisis.

As RAMSI departs, its legacy will be measured not by what has been achieved, but by what happens to Solomon Islands in the future, argued Greg Colson:

The departure of RAMSI has led to some to question whether Solomon Islands is ready to strike out alone. There have been some reports in the media that locals remain sceptical of the capability of local police. The outgoing Special Coordinator, Quinton Devlin, has emphasised that advisors will remain in country and Solomon Islands will continue to receive assistance in the form of aid. So, what warning signs should those advisors look out for?

The wider South Pacific region is facing an increasingly dire food security scenario, wrote Paula Hanasz:

Australia has been a regional leader in enhancing Pacific Ocean governance, including in the regulation, surveillance and enforcement activities in fishing industries. Similarly, we support Pacific Island states in achieving food security through enhanced agricultural research. But science and technology alone cannot bring about food security. While new varieties of crops, better production techniques and dissemination of best practice all have the potential to increase food security, these developments must be planned and coordinated between different arms of government, and implemented in the context of Pacific Islander cultural and institutional constraints.

Twenty years after the handover, how has Hong Kong fared? Kerry Brown:

With 2047 starting to appear on the horizon, when the Basic Law and all the current agreements in theory can be scrapped, the young in the city contemplate that, just as their parents dealt with all the uncertainties arising from the events of 1997, they too will, in middle age, have to work out an even greater uncertainty – what a city under `one country, one system’ might look like.

Vanessa Newby on Lebanon's 2018 elections:

Lebanon's last election was held in 2009 for what is supposed to be by law a four-year term. The delays were caused by a presidential vacuum that lasted two years. The parliament twice voted to extend its term in 2013 and 2014, citing concerns about maintaining national stability in the absence of a president. Under the constitution, the parliament can postpone elections, but only in exceptional circumstances.

The role of Saudi Arabia's dislike for Al Jazeera in the Gulf's Qater embargo, from Anneliese Mcauliffe:

While the Saudi alliance accuses Qatar of using its powerful media empire to incite extremism, back Islamist groups and interfere in affairs of regional countries, Qatar is framing the Saudi demand as an attack on press freedom and an attempt to rein in voices of dissent.

The truth probably lies somewhere in the middle.

Finally, Robert Kelly on the tragic death of Otto Warmbier following his return from North Korea:

Warmbier’s killing illustrates once again that North Korea routinely operates outside most rules, formal or otherwise, in the modern international system. Warmbier’s case, while tragic, is not that unique in the history of North Korea simply doing whatever it wants, consequences and expectations be damned. 

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