ADDRESS

AUSTRALIAN AMERICAN LEADERSHIP DIALOGUE FORUM

GALA DINNER

ART GALLERY OF NEW SOUTH WALES

THE DOMAIN, SYDNEY

SATURDAY, 20 AUGUST 2005

Last Monday, 15^th August 2005, was the 60^th Anniversary

of Victory in the Pacific (VP Day).

Of course the Second World War did not start on the same day for our two countries

– Australia and the United States of America. For Australia it started

on 3^rd September 1939 when Germany ignored an ultimatum over Poland,

and Great Britain and its Dominions declared war. For the United States it began

on 7^th December 1941 with the infamous attack on Pearl Harbour. But

the war finished for each of us on the same day some 60 years ago.

Australia and the United States went into World War II separately but came

out of it together:- as allies; and as friends.

Just as the United States was caught off guard by the Japanese attack in 1941,

Australia was caught unprepared for the rapid Japanese advance in South East

Asia and the Pacific. By February 1942 the continental mainland of Australia

was under direct air attack. Australia faced its gravest security threat. But

beginning with naval battles in the Coral Sea, with the Australian land defence

of Port Moresby, and the island campaign under Douglas MacArthur, the war began

to turn. It ended in circumstances that are well known.

Anyone who lived through that period knows that in Australia’s greatest

hour of need it was the forces of the United States that stood with us in the

defence of Australia and ultimately secured victory in the Pacific. This is

the World War II generation – a generation sometimes described as the

‘greatest generation’.

My generation is the sons and daughters of that generation. We know the story

of the defence of Australia from our parents – their stories, their medals,

their battalion reunions have been part of our history from birth. But as that

generation fades, so too does the knowledge of how our countries came to be

military allies and what that meant in the dark years early in the 1940s. We

should not assume that these events loom large in the minds of the next generation.

It is common in this country, like so many others, to come across anti-American

sentiment. It is always there but it rises at times of Australia’s military

engagement in coalition with the United States. Most recently Australia’s

engagement in Iraq has raised these sentiments. Critics commonly allege that

Australia is only engaged in these theatres at the urging of, or in some supine

gesture towards the United States. “After all”, one senior school

student aggressively asked me at a local school: ‘What have the Americans

ever done for us?’ What indeed? I began my answer with the events of 1941.

There was no flicker of recognition. It was clear to me that whatever the educational

achievements of this school, the teaching of history was not among them.

This is not to say that every person that opposed Australia’s engagement

in Iraq is anti-American, plainly not. Some have legitimate disagreements over

aims or strategy. Some dispute the legality of the engagement. Not every person

opposed to Australia’s engagement in Iraq is anti-American. But let me

turn it around the other way. Every anti-American would have opposed Australia’s

engagement in Iraq.

I think it was a fair element motivating Labor’s Leader of last year.

When he opposed Australia’s engagement in Iraq, he didn’t confine

himself to aims or strategy but included gratuitous insults to President Bush.

Warming to his theme he told Parliament that:

“Mr Howard and his Government are just yes-men to the United States.

There they are, a conga line of suckholes…”

Other statements by him on the subject cannot be reported here for reasons

of decency. They reveal a lot of venom directed towards America.

Anti-Americanism is not unique to Australia. It is prevalent in much greater

degrees in other places around the world. For example, in Europe, particularly

France, it is widespread. Jean-Francois Revel writing on “Europe’s

Anti-American Obsession” in December 2003 observed that:-

‘Many Europeans sneer that America, a society still in a primitive

state, ruled by violence and criminality, couldn’t possibly have a

mature culture’.

Part of the feeling against America in Europe stems from the fact that although

America is a much younger country it has managed to take the leadership role

in world affairs that Europeans believe rightly should belong to them. In the

minds of many in Europe, America is an immature upstart. Of course one of the

reasons this upstart became a global leader is that it proved quite successful

and valuable to France in 1944!

Anti-Americanism is virulent in the Arab world. I will not give examples. They

are regularly published in newspapers and on websites. Some of them can be extremely

offensive. They mostly revolve around perceived injustices to Islam, the Palestinians,

or the so-called influence of the Jews.

But a sense of denied global leadership or a perceived injustice to the Arab

world is not likely to be the source of anti-Americanism in Australia. So where

does it come from?

In April this year, the Lowy Institute published a survey of Australian attitudes

to other countries. It asked this question: “When you think about the

following countries do you have positive or negative feelings about them?”

Amongst Australians positive feelings for New Zealand topped the list with a

net positive of 90%, the UK was second with a net positive of 75%, Japan was

at 70%. Then it fell away. The United States had a net positive rating of 19%

half that of China and slightly ahead of Indonesia. It received a much larger

negative response than China.

What are the sources of anti-American feeling in Australia?

There has always been hostility from some on the left of politics towards America.

These are people who believe capitalism is evil and that the United States is

the home of capitalism. In their eyes the United States is the place where the

evil of capitalism and exploitation is most at home, and not only at home, but

at home base from which it is exported around the world. During the Cold War,

Marxists and socialists of various types were ideologically or emotionally drawn

to the communist side. Their side lost. This gave them even stronger reason

to dislike America.

Fortunately communism has now been consigned to the dustbin of history. Except

for a few strongholds in University Faculties it would be rare to meet a real

socialist today, or to hear a Marxist critique of capitalism. But the sentiment

hasn’t entirely disappeared – the Left in Australian politics is

still there but has morphed itself into other names. One of the names you will

find it takes today is “anti-globalisation”.

Anti-globalisation rallies really got a big start after the World Trade Organisation

meeting in Seattle in November 1999. They are frequently directed at International

Monetary Fund meetings. It is quite common to see an effigy of Uncle Sam at

these rallies. After all if the world is being subjected to exploitative economic

forces where do you think those forces would be based and who do you think would

be directing them? You guessed it – the home of evil. Opponents of globalisation

locate evil in the same place that their ideological soulmates from the days

of the Cold War did. Left wing politics and its more recent variant – anti-globalisation

– operates in a fever of anti-Americanism.

Outside of left-wing circles, there might be another reason for resentment

towards the United States. This is a resentment about the level of US power.

This might not be a particular objection to the economic or political system

but resentment that its economy is so strong and its military reach so wide.

In global terms the power of the United States is unrivalled. People are naturally

suspicious of power. A lot of our literature tells stories about the little

guy who takes on and overcomes the big guy:- David vs. Goliath. We are supposed

to identify with the little guy. There is something in human nature that resents

another’s power.

Of course people get suspicious about power because they fear that at the end

of the day it might be used against them, or their interests, or the interests

of those they care for. The history of the world is replete with powerful states

and empires – Rome, the Ottomans, Great Britain. These were powers that

ruled large areas of the globe, generally by force. There always has been and,

in likelihood, always will be great powers – even hegemons. But if the

world is to have a hegemon the modern United States is the kind of hegemon we

would like to have – democratic, respectful of human rights, with strong

and genuine belief in individual liberty.

A stable international order which recognises these values is far preferable

to one where great powers seek to extinguish these values, or to an unstable

international order where these values cannot be guaranteed or enjoyed.

A stable free democratic condition is not the natural condition of the human

race. In the sweep of world history this is the exception not the rule. Democracy

is something that has to be worked at. Most societies that have been able to

practice it successfully have come to it after a very long process.

Great powers determined to rub out democracy are dangerous. Great powers that

want to respect and protect this process are not at all threatening.

Australia does not seek to rival the United States for global leadership. We

have no reason to resent its great power. That power is more likely to be used

in defence of values we hold dear – the rule of law, parliamentary democracy,

property rights, freedom of movement, freedom of conscience, freedom of speech

– than in threatening them.

There is another level of values, a less important level, where Australians

might worry about the United States influence. American mass culture is very

strong. It is exported around the world principally through media. A fair bit

of it is distasteful – particularly views on violence and sex portrayed

on television or movies coming out of Hollywood. If you watched too much of

this rubbish you could begin to think that this behaviour is normal or glamorous.

Some people might try to imitate it.

Before we get too self-righteous about this we should acknowledge that there

is an element of Australian popular culture that is equally distasteful. We

have our own media propagating distasteful images and values. We could certainly

give the Americans a run for their money in a race to the bottom.

Unfortunately America has found it much easier to spread its mass culture,

than to spread its high principles. Perhaps we have too. So what should we conclude?

That there is something wrong with the international order? Of course not. We

should conclude that human nature is frail. There is always going to be a large

market for this kind of stuff. A large proportion of America is concerned about

Hollywood as well. Short of media control there is little, however, that can

be done about it.

So some people blame America for “evil capitalism”. Some resent

its power. Some dislike aspects of its mass culture. None of these things threaten

Australia, its vital interests or its core values. In fact American power is

supportive of our core values. Our country has no solid reason for anti-Americanism.

The US Administration has recognised that anti-Americanism is an issue, and

I think the appointment of Karen Hughes as Under Secretary of State for Public

Diplomacy has been a positive move to help address this issue. Henry Kissinger

in his most recent book concluded with an injunction for the US to strive for

co-operation.

He cites the Australian scholar Coral Bell who he says brilliantly describes

America’s challenge thus:

“to recognise its own pre-eminence but to conduct it’s own policy

as if it were still living in a world of many centres of power.”

Australia and the United States will see many issues in the same way – because

we have similar values – but we will see some issues quite differently because

we have dissimilarities:-

1. The United States is a global power that sees its role and interests in

global terms. Australia does not purport to be a global power.

2. We are located in different regions. Australia’s neighbourhood is

in East Asia and the United States’ neighbourhood is the Americas.

3. The United States believes that it can be a self-contained economy. Australia

knows it can’t and relies on international trade for its standard of

living.

4. The United States believes it has a “manifest destiny” to

take its view of human rights to the world. Australia has a common law tradition

where civil and political rights emerge from democratic experience sometimes

in different forms.

These different perspectives give rise to some differences on policy. I will

illustrate a couple from my own experience.

Disagreements over IMF Support for Indonesia

In late 1997 and early 1998, the Asian economic crisis that had started in

Thailand spread to Korea and Indonesia. The Indonesian currency was in free

fall (falling from 2450 to the USD in June 1997 to 10375 in January 1998), foreign

banks had cut their credit lines, inflation had surged and trade was disrupted.

Indonesia’s economic stability and future was at stake.

The IMF and Indonesia agreed on an IMF program in November 1997. It made little

difference, conditions in Indonesia continued to deteriorate. A revised programme

in January 1998 contained a long list of demands that I would support –

fiscal conditions, structural reform – for long term economic reform but

which were hopelessly misdirected for a country with collapsing living standards

that required immediate stablisation and liquidity support. For example, the

IMF demanded the abolition of Bulog, the state-owned monopoly food supplier;

the elimination of the Clove Marketing Board; cement cartels to be dissolved;

barriers to foreign investment in palm oil to be lifted; petrol prices to be

increased. Australia made strong objections about the appropriateness of these

conditions. The United States strongly defended them. Eventually the IMF reconsidered

them.

Australia’s approach to Indonesia during the crisis reflected our assessment

of Indonesia’s strategic importance – our view that the stability

and prosperity of Indonesia and its 200 million people were the first and foremost

issue not only for the Indonesians themselves but for Australia and the wider

region.

The United States believed that breaking up monopolies would break up corruption

and improve human rights. It wanted the international community to get tough

with Indonesia – much tougher than it demanded when crises later occurred

and programmes were offered to Argentina and Turkey, where US strategic interests

were seen more clearly at risk. Washington viewed Indonesia principally through

the lens of human rights. Australia viewed it through the lens of economic stability

in East Asia.

China’s Exchange Rate Regime

Over recent decades, China’s remarkable growth has lifted millions of

its citizens out of poverty, transformed its economy and society, re-shaped

the East Asian economic landscape and shifted global markets for commodities,

manufactured goods and capital.

Australia and the US have welcomed – and benefited from – China’s

economic emergence and increasing integration into the global economy. We have

encouraged the Chinese authorities to maintain the pace of economic reform and

liberalisation.

It is widely believed that because China has pegged its currency to the US

dollar the RMB is undervalued. If so, this means its exports are more competitive

against US domestic manufacturers. Many in the United States see this as unfair

competition and a source of the large United States current account deficit.

This was a major issue at the 2003 APEC Finance Ministers’ meeting in

Phuket, Thailand.

At the end of the 2003 APEC Finance Ministers’ Meeting in Phuket, Thailand,

US Treasury Secretary Snow issued a press release affirming his: –

“long-held view that market-determined floating currencies, with

interventions kept to a minimum, are essential to a well-functioning international

financial system.”

He went on to point out that:-

“[o]nly freely floating currencies bring the accuracy and efficiency

necessary for proper pricing, account settlement and capital flows among

our economies.”

Australia agrees. We also acknowledge that for emerging economies with fragile

financial systems, the pacing and sequencing of reform designed to bring about

this outcome is critical.

Here’s what I said at the end of the meeting:-

“…countries that are emerging markets like China have to develop

strong financial systems to come fully into the international financial

system and as we learnt in 1997 and 1998, the floating of an exchange rate

is something that tends to come at the end of that process rather than the

beginning of that process. And there’s a lot of work to be done of

course in strengthening the Chinese financial system.”

Australia, like the US, welcomed China’s 21 July announcement that it

was adopting a more flexible approach to its currency, we believe that Beijing

must adopt a carefully paced approach to further liberalisation. Australia views

this issue through the lens of regional economic stability. The United States

views it in the context of bilateral trade.

Different Perspectives, Shared Values

These examples are not major strategic disagreements. They do illustrate different

perspectives. We are nations of different sizes. Australia is conscious that

it is one of many middle sized powers in the world. It is conscious that it

must work with those powers.

We are not a self-contained economy. We are an open trading economy. We want

to work within the World Trade Organisation to open trade for the benefit of

all countries. If the world resorts to a shoot-out on subsidies, the United

States might think it can win. We know we would lose. Overall global prosperity

would turn down.

Australia has done a lot of hard reform in opening its economy to international

trade. It has paid results. But it would pay higher results if other countries

were able to achieve similar results. We really need co-operation in the forthcoming

Hong Kong Ministerial by countries that are able to take decisions in the long-term

interest even where it conflicts with short-term political pressures .

Australia is conscious that its near neighbours in East Asia are important

to it economically and strategically. It wants to see continuing stability and

growing prosperity. And it wants to see the United States closely engaged with

the region.

On matters of global significance, such as the fight against terrorism, we

look at things in very much the same way. This is because we look through a

prism of shared values and shared interests. It is shared values and shared

interests that form the foundation of our alliance. An alliance could not have

a firmer foundation.