China divides Labor across its generations

THIS week Paul Keating launched an assault on the Rudd-Gillard East Asian strategy of militarily hugging close to the US against a rising China, provoking a counter-attack from Defence Minister Stephen Smith, an architect of the deeper US alliance.

Australia is now plunging into an intense intellectual dispute, guaranteed to spill into Labor and Coalition politics, about how to manage its greatest external policy challenge for half a century -- the rising competition between China and the US.

There is now a sharp generational fracture on display. It is the Whitlam-Hawke-Keating generations against the governing Labor generation represented by Julia Gillard, Kevin Rudd, Smith and their advisers. This was highlighted during the week when Keating launched Hugh White's book, The China Choice, carrying a front-cover endorsement by Bob Hawke, and used the occasion to assail Labor's policy.

Speaking at the Lowy Institute, Keating said: "The debate around China has carried with it the assumption that Australia has no choice but to support American primacy in Asia against the threat of Chinese hegemony. This assumption, Hugh White says, now needs to be challenged. And I agree with him; it does."

In office, White was a pivotal adviser to both Kim Beazley as defence minister and Hawke as prime minister before becoming deputy secretary at the Defence Department. His thesis is that Australia is now making the wrong choice. Warning that China will reclaim its place as an Asian leader even at the cost of war, White argues the US must radically switch course, admit it cannot retain regional primacy, concede China strategic space and treat it as a power-sharing equal.

Keating agrees, saying that great states, such as China, "need strategic space and that if they are not provided some, they will take it". He warned that, contrary to repeated government statements, Asia's stability cannot be underwritten by a non-Asian power, notably the US. For Keating and for White, stability comes only via the choice of a strategic deal by both nations.

Keating says Australia has been too compliant with US policy for too long -- from its management of Indonesia during the Asian financial crisis to the 2003 Iraq war. Australia must now encourage the US to face "its changed economic and strategic circumstances" and abandon a disguised containment policy on China.

White is a trenchant critic of President Barack Obama's speech to the Australian parliament last November that sealed the closer US-Australia military ties. "This is a declaration that America has made its choice about China," White said. "And the choice is for rivalry."

Keating makes the startling remark that if he had been PM last year he would have refused to allow Obama to make such a speech to the Australian parliament. He felt its prediction that China's political model was doomed to fall was too great an insult to our major economic partner. At the time Keating said the US Marine deployment through the Northern Territory looked like Australia had been "verballed" into "the stringing out of a (US) containment policy."

This week Australia's recently retired ambassador to China, Geoff Raby, a firm optimist on US-China ties, disagreed fundamentally with White's thesis yet aligned himself with the Keating-White critique on closer US military ties.

In an address at Monash University, Raby criticised the Prime Minister and Obama, suggesting the US President was "overstepping the boundaries of normal diplomatic behaviour" by making a speech to Australia's parliament that admonished the major economic partner of his host government.

Raby bemoaned Gillard's "gushing enthusiasm" standing next to Obama for the announcement of the 2500 US force rotation through Darwin which, Raby said, reminded him of Harold Holt's infamous "all the way with LBJ".

Raby said that from China's perspective Obama's visit and the military decisions "signals clearly a shift in the balance of our position further towards the US and against China" yet the Australian government had offered China no public explanation or reason. Beijing remained unconvinced.

While Hawke has been circumspect, he has praised White's book. Hawke, long an optimist on US-China ties, told the author last year he did not believe China posed a threat to Australia. He felt the Rudd government's defence white paper tilting at China was an "absurdity" and that the vast economic opportunity between Australia and China meant that Australia would not succumb to an "act of masochism" by teaming up with the US against China.

The White thesis, if not all its details, has attracted broad support from a range of luminaries such as former foreign minister Gareth Evans, the Whitlam-appointed inaugural ambassador to China, Stephen Fitzgerald, and former DFAT chief Dick Woolcott.

This week Raby recalled Alexander Downer's contentious remarks in office when, at the St Regis Hotel in Beijing, he said the ANZUS treaty would not necessarily involve Australia in any US-China conflict over Taiwan. It would, he said, depend upon the circumstances.

Raby said: "Downer was not only setting out the reality from Australia's point of view but was being a very good friend to the US by telling them that when it comes to China don't assume we'll always be on your side."

Tony Abbott, by contrast, lines up with the Gillard-Rudd-Smith position. Indeed, the Opposition Leader, who called the US "family" during his recent visit, has signalled his preference for even more intense US military ties than embraced by Labor.

Interviewed by Inquirer, however, Downer makes clear his real position -- he backs closer ties with China but dismisses the White thesis.

"I don't think our upgraded military ties with the US are a problem," Downer says. "But Labor needs to explain clearly to the Chinese what it stands for and this is the problem. Our alliance with the US goes back to the First World War and is a permanent arrangement.

At the same time we are strident opponents of containment of China and believe in engagement with China.

"Frankly, the Chinese are comfortable with this. The idea that 2500 marines might change the balance of power in Asia is nonsense. But Labor has sent mixed and muddled messages over the past five years on dealings with China. The reason is because they keep playing domestic politics. For instance, Kevin Rudd presented himself to the Chinese as their friend and then went to China and launched an attack on them."

Raby's nuanced speech challenged some of White's core propositions. Raby argued the realignment White wanted was now "well under way". The US and China were learning to manage their differences. The prospect of tensions over Taiwan had "diminished substantially".

He said for China, the strategic priorities were: internal territorial issues such as Tibet and Taiwan, managing land borders with 14 nations, the Korean peninsula, the Japan relationship and the South China Sea. Raby argued China was now "utterly dependent" on foreign markets and foreign nations and was, in reality, "a highly constrained power".

Raby's two most important insights were that America had started "to open up strategic space for China", a direct contradiction of White, and the widespread under-estimation of the sheer depth of the US-China dialogue.

"Neither side wishes to admit it, but this is effectively a G2," Raby said. "The world is already being led by the US and China. No other country has anything like this level and intimacy of engagement with China, as does the US."

Raby said the intensity of this dialogue "makes me confident that we (Australia) will not have to make Hobbesian choices" between economic and strategic imperatives.

In his Lowy Institute speech Defence Minister Smith offered a powerful case for Labor's policy and repudiated any zero-sum game in Australia's ties with the US and China. The current Labor generation has more confidence the US will "get it right" in Asia. It rejects the chronic suspicion of the older generation that America is running a containment line, a posture the Obama administration rejects in public and in private.

Dismissing containment as "not viable" Smith said nobody could define with precision what the evolving regional order will look like. This defies the Keating-White argument that such long-range prescripitive decisions must be embarked upon now.

Smith sketched Labor's core ideas. It wants closer relations with China such that political and strategic ties match economic ties. It sees a "continued, indeed enhanced" US regional presence as "essential" to underwrite stability -- an unmistakable rejection of the Keating-White line.

Labor, aware of strong regional sentiment for a US presence, backs initiatives that integrate operations involving the US, Australia and regional players. And Smith, critically, wants closer US-China military-to-military ties to get the required G2 collaboration.

He dismissed any notion of Australia as a bridge between the US and China. And he saw India as a core player in the new regional power balance. To an extent the optimism of the current Labor generation is interpreted by the older generation as strategic irresponsibility.

Not that Keating is a pessimist. He says Asia will be "safer and better" with an ongoing US engagement. Yet the test he imposes is stark: the US must accept China's legitimacy as a great power and the legitimacy of its government.

Reflecting upon his Beijing posting, Raby says: "I can assure you that no one this evening in Beijing is lying awake in their beds trying to work out how to peel Australia off from the US." Yes, it might be their dream. But China knows "our alliance with the US serves our interests".

How should Australia explain the regional re-balancing now under way? Raby embraces Malcolm Turnbull's speech in October 2011 when he rejected containment but endorsed the notion of "hedging" against adverse contingencies.

For Raby, hedging is "insurance against an uncertain future". It is a prudent course for Australia and other Asian nations given China's rise. It includes alliance building and backing a US regional presence. China, Raby says, "understands that we and others would want to hedge". It might not like this. Yet the Chinese, as realists, know they would do the same.