The stakes are greater than we realise

THE meeting of 21 world leaders in Sydney next week does not happen by accident: it happens by design, and that design is a prize example of Australian independence and creativity.

The Asia-Pacific Economic Co-operation forum is an Australian creation. The reason Paul Keating is popping up on the media these days is because the APEC leaders meeting was his idea and achievement.

When John Howard occupies the host's chair, it will be the first time that an Australian prime minister has presided at APEC. He will be surrounded by leaders who represent half of global gross domestic product, 70per cent of Australia's trade and 60per cent of world energy demand.

APEC was designed in 1989 as a vision of Australia's future. Its profile was transformed when Keating grafted the leaders summit on to the APEC structure. Its purpose was to foster the idea of an Asia-Pacific community that would also maximise Australia's influence and leverage over the politics, economics and security of the region.

This is the reason for the profound angst that surrounds APEC's fortunes. Its fate is tied to Australia's national judgments. It cannot be divorced from the navigational skills that constitute Australia's abiding effort to succeed in the region likely to dominate this century.

That angst has been on display this week. Howard the host, Keating the originator and Kevin Rudd, the alternative act, have all offered a political homily on APEC, its meaning and next week's Sydney forum.

For Howard, this is a high tide of his prime ministership. He hosts the biggest such gathering of leaders held in this country. Howard wants a successful meeting, an affirmation of APEC's value and a declaration on climate change that can assist his election campaign.

For Rudd, the APEC meeting has a dual purpose: as a reminder of Labor's regional profile and its aspiration to invest APEC with more purpose.

For Australia, however, the stakes are greater than many realise. Two years ago, Keating's former adviser Allan Gyngell, now executive director of the Lowy Institute, warned that APEC was "teetering on the brink of terminal irrelevance". Gyngell said what others were thinking.

Although APEC will not make or break Australian policy, it represents a significant Australian investment over the past 20 years and a strategic effort to bind the US into East Asia. Despite its limitations, APEC has improved the political chemistry of the region and its leaders meeting has become a pivotal opportunity for exchanges among heads of government.

Australia has a deep interest in ensuring that APEC endures and stays healthy and relevant.

And this is a challenging project. The dual problem with APEC is its faulty design and lack of imaginative pull. Consider these problems: it is formally a meeting of economies, as this was the only means of including China and Taiwan; its membership, instead of being limited to East Asia and North America, has extended to Latin America and Russia, at the cost of focus; its identity is stranded between being an Asia-Pacific body and a Pacific Rim body; it is restricted in dealing with security issues but it knows they must be addressed; although Bill Clinton hosted the first leaders meeting, the US has rarely "got" APEC, because it lacks a regional consciousness; and China, unsurprisingly, gives priority to the ASEAN Plus Three as a regional grouping.

Keating said of the original 1993 summit in Seattle that "the meeting was the message". He was right. The creation was an astonishing event but APEC must continue to astonish. The risk is that it is too big to harness regional will yet too small to encompass global action.

The APEC concept envisages "a community of Asia-Pacific economies". Its mission has been to promote trade, investment and economic and technical co-operation, address human security challenges such as pandemic disease, reduce transaction costs for business, promote structural reforms and build mutual confidences where interdependence is growing daily.

When you see the almost inevitable violent demonstrations in Sydney against APEC and its heads of government, these purposes should not be forgotten. Its goals are political stability and higher living standards for people in the region. Its existence as a body testifies to Australia's independent and constructive world view, a reality that many in the street deny or refuse to comprehend.

The problem with APEC is the gap between expectation and reality. Witness Howard and Rudd.

In midyear Howard said he wanted APEC to be "one of the most important international gatherings of leaders to discuss climate change since the 1992 Rio conference". He is likely to be disappointed.

Yet Rudd said this week that APEC must deliver on "concrete targets for global greenhouse gas emission reductions to be achieved through the UN negotiating process".

This is an untenable expectation, as APEC leaders are not ready for such binding targets.

It highlights the limits of APEC. As Howard said in his Lowy Institute speech on Monday, APEC operates on a voluntary basis; it has no legal constructs; it is not a negotiating forum. Its founding spirit is to address "all the big global challenges of the day". Howard nominates three goals for Sydney: to encourage completion of the Doha world trade round; to promote security in relation to terrorism, pandemics and natural disasters; and, on the priority issue, to give political direction to the post-Kyoto global climate change framework.

He wants APEC leaders to agree "for the first time" that the new global compact include an "aspirational goal" for reducing greenhouse gas emissions. This is the limit of achievability. Howard will stress APEC's role in bringing together the developed and developing giants, the US and China. Although he is bound to present this agreement as evidence of APEC's global leadership, Howard knows and concedes that any advance will be incremental.

Rudd's speech on APEC, the same day as Howard's, sent a different message. Reading between the lines, it appears Rudd thinks APEC is nearing the death zone and that Australia is failing to realise its obligation as diplomatic creator.

Rudd believes APEC doesn't function unless one nation takes the lead and the responsibility, and Australia is that nation. His pledge is that Labor will restore APEC as the centre of regional architecture. Indeed, if Rudd wins the election his foreign policy departure will involve more investment in multilateralism and regionalism in the causes of freer trade, arms control and climate change.

Given the hopes of Howard and Rudd for APEC, a deeper question looms: Is Australia's public culture behind them or is it reverting to aggrieved introspection?