Regional Cooperation: Harder but no less vital
It has been seven years now since I left government service so my comments today will be personal observations, drawing on my time in government and also informed by my current positions as chair of the Asialink Advisory Council and as Chancellor of The University of Queensland, one of Australia’s leading universities, ranked in the top fifty globally and with strong connections to our region.
These are challenging times for regional cooperation. In many ways we are at a turning point driven by deep geopolitical currents and also some fundamental shifts in what we once thought about as the inevitable path to a more globalised economy.
The region which we previously described as the Asia Pacific and now think about as the Indo Pacific has a long history of regional cooperation. It began as an economic impulse largely driven by the private sector, grew into a high level of regional economic integration and then into the creation of regional institutions which had both an economic and geopolitical purpose. Along the way we saw Pacific Basin Economic Cooperation, the closer integration of South East Asia through ASEAN, the creation of APEC, the ASEAN Regional Forum, the East Asia Summit and the ASEAN Dialogue partnerships, with Australia the first dialogue partner.
The foundational ideas behind this evolution were a sense that we shared a common destiny even if our national systems and histories were very different. Among its core precepts were the shared benefits of opening economies, the creation of wealth through trade and investment, the assumption that economic growth was not a zero sum between nations and an acceptance that differences in our political systems were not an insurmountable barrier to closer regional cooperation.
For the most part, these foundational ideas have been very effective in fuelling the broader East Asian economic growth story over the past five decades.
However, today those trends are under challenge and strain.
We are moving towards a more bifurcated region geopolitically and the combination of geopolitical competition, the global financial crisis of 2007/8, and the impact of covid has led to a slowing of globalisation.
And in some quarters, these recent historical events have even caused people to question the very concept of open economies and the merits of global supply chains.
These trends have significant consequences for regional cooperation and that is what I would like to focus on today. Are we now at risk of throwing out the baby with the bathwater?
My short answer is yes, but all is not lost. There is still time to prevent that from happening.
The geopolitics of the Indo Pacific region is being reshaped by two trends: first, the competition for strategic primacy between the US and China. And second, the quest for multipolarity by the other big powers in the region supported by a number of middle and smaller powers.
At one level these are contradictory trends, but the reality is that they are both occurring simultaneously and resolving the tension between the two will be among the large strategic challenges the region faces.
US-China competition over primacy is becoming baked into the dynamics of the region. The US is deeply attached to its primacy. It has been the organising principle of its strategic policy at least since the end of the second world war.
China now believes its time has come or, if not come, then certainly around the corner. It believes that it no longer needs to hide its ambitions, nor bide its time. It is convinced the correlation of forces is in its favour.
The US wants to preserve the existing order, largely shaped by US power and anchored in the principles of what we used to call the liberal international order. That order has worked well for the US and indeed for many countries in the region. It has brought a measure of strategic stability to the region, without which its economic growth would not have been possible.
It was also a product of a unique moment in history when, after the second world war, the US came to believe that its own interests were best served by a system of rules and norms which encouraged open economies, created international institutions which made and, up to a point, enforced rules and which promoted ideas such as human rights and democracy, while also enshrining the principles of sovereignty and non-interference.
It is, of course, true that the US did not itself always live up to such ideals, but it is also fair to say that the order that it shaped was, on the whole, a successful model, certainly from an Australian perspective.
That model is today under challenge. China, and indeed much of what we now call the Global South, is less willing to accept an order that they had only a marginal role in creating.
China has been a beneficiary of the US led order in that its spectacular economic success was facilitated by the institutions and markets of a US led global system. But China now wants an order more reflective of its own interests. It is no longer content to be a price taker in the international system.
China has both a strong sense of itself as a civilizational power and a long sense of history. It is in many ways looking to recreate the Middle Kingdom in the Indo Pacific. This was an era where hierarchy was harmony, China was at the top of the hierarchy and it expected other states to accept the primacy of China’s interests and certainly to refrain from acting in ways which China considered to be contrary to its core interests. Vietnam, of course, has had long experience of this period of history.
So today we find ourselves in a geopolitical standoff. China is seeking regional predominance and the US is determined not to cede primacy to China and to maintain US authority and influence in the region.
There will be no quick or easy solution to this standoff. Most likely what we will see is the gradual crafting of a new strategic equilibrium in the region, which will both overlay and moderate this contest for primacy.
That equilibrium is likely to have an uneven, multipolar character. Uneven because China does not seek formal allies and has limited strategic partners, while the American side of the balance is likely to include a number of significant powers. The Quad, comprising the US, Japan, India and Australia, is an incipient example of what such a balance may look like, but it is far too early to say what exactly the settling point of this new strategic equilibrium will be.
I raise these issues to underline how much more difficult the task of regional cooperation has become. Bipolarity, strategic equilibriums, multipolar balancing all play to the fault lines in our region. These fault lines cannot be simply wished away, and neither can the reality that our region faces common challenges that must be addressed through regional cooperation.
Climate change is one obvious example. It needs collective action on decarbonisation. It needs a collective agreement on the nature of the challenge and how best to deal with it.
Nuclear non-proliferation is another. It requires both a global and regional consensus. North Korea’s acquisition of nuclear weapons has made that much harder. The risk of nuclear proliferation in Asia is now higher than at any time since the end of the Cold War.
Pandemic management is another challenge without national borders. Covid laid bare just how weak our collective response was. Regional organisations were largely missing in action. Global cooperation was constrained by geopolitics. The instinct to look after your own is understandable but it is not particularly helpful when you are dealing with a global pandemic which requires an effective global response.
Perhaps the most immediate issue on which we need more regional cooperation is economic growth. If there is one region which should understand the value of economic cooperation it is ours because the sustained economic growth of our region has been built on a recognition of the benefits of trade liberalisation, an openness to foreign investment, access to regional markets and economic policies which put a premium on well-regulated markets to ensure the most efficient allocation of resources.
Yet all of these hard learnt lessons are in danger of being forgotten as we turn inwards in the post-Covid era and convince ourselves that self-reliance is the path to success. Today, there is an increased risk that the nations of the Indo-Pacific region will erect new barriers to trade and investment in the mistaken view that those barriers are necessary to protect sovereignty and self-reliance.
Contrast this with the earlier trade and investment liberalisation agenda of APEC, the emphasis on economic integration by ASEAN, and the efforts until recently of the East Asia Summit to forge a sense of shared interests, if not shared destiny.
We cannot of course just turn back the clock or pick up where we left off in terms of the regional cooperation agenda. But we can and must recognise that regional cooperation has a value notwithstanding the new geopolitics and geoeconomics of today. And unless we are prepared to understand and explain that value, we will indeed throw the baby out with the bathwater.
Certainly, it is harder today to make the case for open economies. The vocabulary of the past simply does not have the traction it once had. But the answer is not to abandon open economies. Instead, we have to learn how to re-prosecute the case for open economies; to find a new vocabulary which will resonate in these different times.
One way to do this is to focus less on the grand journey of regional cooperation and more on the practical value of cooperation in particular areas. If geopolitics and the new hesitations about economic integration have dented the regional cooperation agenda, perhaps it is time to approach that agenda from a different perspective. Let us acknowledge that at least in the short and medium terms we will struggle to find enough common ground to imagine a region of common security and deep economic integration.
Instead, let us set our sights on a more practical approach. One that avoids the vaulting rhetoric of one region but does not turn its back on the benefits of regional cooperation in a range of sectors. Education provides a good example.
I am fortunate to have a front-row perspective on how the bilateral cooperation between Australia and Vietnam in the education sector produces benefits that flow in both directions between our two nations.
As Chancellor of The University of Queensland, I have seen this partnership broaden and deepen over recent years, despite the challenges to cross-border collaboration that we’ve all been grappling with through the Covid period.
In the past five years alone, for instance, more than 500 Vietnamese students have enrolled to study with us at UQ.
Upon graduating, some of those students have chosen to stay in Australia – but the vast majority have returned home, or will return, to join the growing cohort of almost 1,500 UQ alumni who now live and work, right here, in Vietnam.
Many of these students come to UQ to study in areas such as business, economics, law, medicine, engineering, and IT. So, they are returning with the knowledge and skills to make a meaningful contribution to Vietnam’s future prosperity, as well as the nation’s economic and social development.
Moreover, their formative experiences of studying in Australia will undoubtedly deepen the people-to-people to links between our two nations – and create fertile ground for the further development of future economic, cultural and trade exchanges.
So, it is a very clear example of the kind of practical approach to regional cooperation that we must continue to nurture, because we know that it can have a profoundly positive impact – for individuals, for communities, and for nations.
As Chancellor, I also have the privilege of seeing the deepening research partnerships that the University has with a number of Vietnamese institutions.
These collaborative research projects are focused on sharing knowledge across a range of important areas – from adopting more sustainable approaches to mining … to improving the capacity of the health system … or cultivating the local innovation ecosystem. Another good example is the project that UQ is leading with an international research team that’s focused on improving the economic, social, and environmental outcomes of smallholder rice farmers in the Mekong Delta.
That project is solely focused on connecting the smallholder rice growing communities in that region to global markets, thereby giving those farmers the incentives to grow higher-value rice in a more sustainable way.
Once again, that’s a project that exemplifies what I mean by taking a practical approach to regional cooperation across a range of industry sectors.
Conclusion
Let me conclude with these observations.
It is most likely the case that the salad days of regional cooperation are now behind us. These were the days of creating new and inclusive regional institutions, of a shared and broad acceptance of the value of regional cooperation, of convincing ourselves that differences in our systems and values were not an insurmountable barrier to doing more things together.
The challenge here is not to abandon the idea of regional cooperation but re-imagine it.
Yes, we are now living in a more contested environment. An environment in which striking a regional consensus is much more difficult, where zero sum calculations seem more prevalent, and where our differences, at times, look impossible to bridge.
But we do not have to look very far to find examples of how countries with different approaches, different histories, and different political systems can still collaborate to achieve mutual advantage.
Australia and Vietnam is one such example. Over the last fifty years we have travelled a long way. We were on different sides in a tragic war. Our political systems remain different as does our economic position. Our world views have been shaped by very different forces and traditions.
And yet we have forged a genuine strategic partnership. We have expanded our economic ties. We have deepened our people-to-people links. We have found common ground on many regional issues and we share an abiding conviction that our futures can indeed be even better.
The history of our bilateral relationship demonstrates that things can, and do, change. It shows that what may seem impossible at one point of time does not have to remain impossible forever.
Of course, we must be realistic about the limitations of the present and the seriousness of the fault lines that currently run through our region.
But it would be a mistake to see current challenges as incapable of being addressed, or to assume that the worst is inevitable. We all have agency. We can with sufficient collective political will shift the direction of geopolitical and economic currents.
Neither the logic nor the benefits of regional cooperation have vanished. The pathway may be more complicated, the boundaries perhaps narrower but none of that should deter us from recognising the importance of applying every effort to make it work.
Speech by Mr Peter Varghese AO, Chancellor of The University of Queensland to Hanoi University, Hanoi, 2 June 2023.