Explaining the Japan–Australia security relationship: it’s complicated…

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International Affairs Blog, with Tomohiko Satake, 13 July, 2018

During the Cold War, Japan defined its security policy by the Yoshida Doctrine — maintaining a low profile security posture while relying on the United States for protection based on the US–Japan Security Treaty. There was little appetite within Japan’s government or military for military-to-military relationships with other regional states. Yet the past three decades have seen a steady diversification of Japanese security partnerships, including with South Korea, Australia and India as well as with some ASEAN and European countries. Notably, these relationships were not meant to replace the still-dominant security reliance on the US–Japan alliance, but instead were part of a strategy — carried out in tandem with the US — which saw the two states moving away from its strict bilateralism to what Michael J. Green calls ‘federated capabilities’.

The case of Japan and Australia — a ‘quasi-alliance’?

In our recent article for International Affairs, we looked specifically at this rapid diversification of Japanese security partnerships from the perspective of Japan–Australia security cooperation in both the bilateral and multilateral contexts, including the US and China. First of all, it was apparent that while some referred to Japan–Australia relations as ‘quasi-alliances’, they were not, in fact, alliances at all, but merely examples of what Thomas Wilkins called‘alignment’. While these groupings have systematically set about developing ‘alliance-like’ characteristics — such as military interoperability, strategic consultations and institutionalized intelligence-sharing — they have carefully avoided the primary ingredient of alliances: defence guarantees.

We asked why political leaders in Tokyo and Canberra went to the trouble of developing such complex security relationships — one need only look at the general security of information agreement (GSOMIA) and the acquisition and cross-servicing agreement (ACSA), for example — while simultaneously avoiding the primary benefit of a formal alliance commitment to each other? Neo-realist theory would have us believe that as authoritarian China rose in the region and expanded its military hard power capabilities across the maritime space and trade routes of both states, Australia and Japan would either balance Beijing’s ambitions or bandwagon behind them. However, the actual record is more complex and sees political leaders adopting elements of both strategies. At times, Australia and Japan developed very close ties and seemed on the verge of committing to the relationship — as when Prime Minister John Howard offered Prime Minister Shinzo Abe a security treaty in 2007 or when, in 2015, both Prime Minister Tony Abbott and Prime Minister Abe began promoting a submarine deal in strategic terms, labelling theirs a ‘special relationship’. Subsequently, however, caution seemed to reassert itself in both cases and domestic factors inside both countries halted further progress.

Drawing from Tomohiko Satake’s 2011 article on the origins of the trilateral relationship between the US, Japan and Australia and from John Hemmings’ doctoral research, we developed a model for explaining this apparent discrepancy. Faced, for example, with a triple security dilemma, that pits them between (1) a security dilemma with China, (2) an abandonment/entrapment dilemma with each other and (3) a quite separate abandonment/entrapment dilemma with their mutual ally, the United States, Japanese and Australian foreign policy elites simply cannot tell what the optimum policy choice is. What we found, through interviews and by analysing government policy documents, was how bureaucratic coalitions within Canberra or Tokyo would push for given policies, prioritizing one or another of these three drivers. This meant that in some cases the two would align more closely — such as when a pro-alliance group prioritizing the danger of abandonment was in control of the tools of foreign policy — only to pull back after new bureaucratic coalitions, which promoted policies that engage with China and emphasized the dangers of entrapment, took power. This was apparent, for example, after the 2008 election in Australia which saw Kevin Rudd replace John Howard as prime minister, as Australia unilaterally withdrew from the US–India–Japan–Australia Quadrilateral (QUAD) and warned against closer defence engagement with Japan.

What does this mean for the future?

This model explains both the specific pattern of Japan–Australia security ties as well as the historically atypical alignment policies that are rising across the region, in which states begin implementing multipronged strategies to pair balancing with engagement. We see these states building evermore institutionalized security relations, while continuing to closely monitor their relations with Beijing. In academia, this dual-approach has become known as ‘hedging’. As we look to the future, instability and threats to the rules-based order are discussed not only in terms of Chinese assertive behaviour, but also in terms of the Trump administration’s challenge to the liberal international order. Given these circumstances, we must also ask whether our model will see even more non-committal alignments — particularly between medium-sized regional states — or whether China will be able to successfully restrain states from forming balancing alliances. Examples of these alignment patterns are to be found in the Trilateral Strategic Dialogue, created in 2002; in the creation of an Australia–India–Japan trilateral in 2015; and in the revival of the QUAD in 2017.

One interesting implication of our research is that, while abandonment concerns regarding the US engagement in Asia significantly encouraged Tokyo to seek closer ties with India, India itself has been less motivated by abandonment issues. Instead, internal debates in Delhi are more concerned with the risk of becoming entrapped between the United States and a rising China. This, combined with a fear of provoking a security dilemma and India’s longstanding ‘non-alignment’ foreign policy approach, has compelled some factions inside the Indian Ministry of External Affairs to eschew strong commitment to the QUAD. As we can see, this ‘commitment dilemma’ explains why all of these groupings see an ebb and flow of defence institutionalization, despite the fact that all share concerns about China’s intentions and growing military capabilities.

Should the US–China rivalry intensify, we might expect to see bureaucratic coalitions inside all four countries debate the prioritization of alliance commitments versus the prioritization of their relationship with China. Much of this has a mercurial dynamic, meaning that if any player decreases its security commitment to the QUAD, one will see a reaction from the others. If the Trump administration cannot sustain strong and consistent commitment to regional security, one might see a worrying shift in balancing behaviours by other QUAD members, with some reaching out to Beijing. The future of the QUAD therefore not only depends on Chinese assertiveness, but also on the appearance of US resolve to the defence of its smaller allies and partners. No doubt, this debate is occurring now at the domestic level.

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Europe can still salvage this Nato summit – here’s how

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The Telegraph, 11 July, 2018

The first day of the Nato summit has confirmed the worst fears of Nato’s alliance managers. Despite a seemingly promising Summit Declaration confirming defence for Ukraine and adherence to the Wales 2014 commitments, many problems remain unresolved.

Nato’s latest gathering risks turning into a sham, but Europe can still turn it around

In a similar vein to the letters sent to specific Nato member states thought to be shirking their contributions, President Trump launched into a surprising attack on Germany, asserting that they are “controlled by Russia”. The remark – and the large helping of irony that came with it – provoked German leader Angela Merkel to respond in kind, stating that Germany did quite enough for the alliance, contributing the second largest number of troops to the alliance.

While most Nato leaders will most likely be lining up behind her in this unstatesmanlike confrontation, the fact is – as I have written before – Trump is completely correct: Germany is not doing enough. Given its size and leadership role in Europe, its buck-passing cannot continue indefinitely without pulling the alliance into disarray and eventually decline.

At a recent closed door round table hosted by the Henry Jackson Society in cooperation with Nato in Westminster, Sophia Besche, a research fellow from the Centre for European Reform, admitted as much, citing a recent report on Germany’s military. The report, issued by the German Parliament’s Armed Forces Commissioner, Hans-Peter Bartels in February this year found that overall

  • the Bundeswehr lacks basic equipment (like winter clothing and tents) for Nato missions
  • Germany has a shortage of operational tanks and helicopters and does not have enough parts to maintain those it does have at full readiness (it went from 5,000 tanks in 1990 to 236 in 2017, with many of these being non-operational)
  • Germany lacks enough ships to take part in Nato, EU, and UN missions

​However, rather than chiding the Germans endlessly about not meeting the two per cent, what is necessary is a bold start by all sides in order to rescue the situation in short order. We are speaking about the future of the Western alliance, one of the largest and most advanced military alliances in the modern world. And it’s democratic and filled with overarching liberal ethos. We simply cannot let it walk itself into oblivion. What is required on all sides is some steps toward each other’s position.

We are speaking about the future of the Western alliance, one of the largest and most advanced military alliances in the modern world

First of all, get rid of the two per cent benchmark. Despite the ease of this benchmark, it has become so politically toxic as to be useless. It seems only to get backs up and there are lots of good reasons on why it is not useful.

Second, replace the two per cent benchmark with a capabilities agreement, where member states agree to not only implement the four 30s plan (30 battalions, 30 fighter squadrons, and 30 naval vessels to be read in 30 days), but also to have a baseline of capability, based on meaningful force plans.

Third, create a mechanism by which a new mechanism within Nato the organisation monitors the capability commitments of states to Nato own’s force structure, including whether all states are meeting or failing to meet their targets. This agency should be compelled to make an annual public report.

Fourth, stop grandstanding about the US President. Despite Merkel’s lofty rhetoric about Germany defending the liberal order, German spending has barely grown while Trump has doubled US spending for the European Defense Initiative from $3.4bn in 2017 to $6.5bn.

Fifth, stop pointing to development aid as a contributor to security. The fact is that when all states do this, Germany still does not rank particularly high in this regard. Attempting to use aid to sideline one’s commitments to one’s allies is bad alliance politics. Aid won’t stop Putin’s aggressive foreign policy.

Sixth, be willing to engage on the importance Nato with national publics. One gets the sense from German policy analysts and commentators that those who argue for increased military spending are considered to be “far right” or extreme. The only thing extreme in this scenario is Germany’s complete detachment from the concerns of its Eastern neighbours. Germany’s political leadership has completely failed to make these arguments in a meaningful way to their own people.

Attempting to use aid to sideline one’s commitments to one’s allies is bad alliance politics

As one report by CSIS – a Washington think tank reveals – when one looks at the actual force numbers, it is clear that there is a serious problem in Europe. Even when one considers the shrunken Russian military, it is frightening that in 2014, Putin was able to throw a “snap exercise” with 150,000 men right on Europe’s doorstep. Mustering everything they had and planning for nearly a year, Nato threw its own large exercise – with just under 40,000 men.

As one of Europe’s primary defence providers and one of Nato’s founding nations, Britain must act as a bridge between a hardening US position and Germany’s entrenched stubbornness. Pulled between the both, the alliance could fragment, losing any serious capability to provide security for the continent. This would be a disaster for the UK and a windfall for Moscow and Beijing. Despite our own domestic travails – does any good news come from the Continent? – London must continue to help keep Nato together.


Lessons from the America-Japan Trade War of the 1980s

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The National Interest, with James Amedeo, 2 July, 2018

The current wisdom is that there are no winners in trade wars. This message is inherent in nearly all coverage on the United States President Trump administration’s tariffs campaign on China, the European Union, and Japan. However, is this really true? History tells us that sometimes, there are winners in trade wars—all it takes is for one side to blink first.

In the 1980s and 1990s, the White House was faced with a powerful Asian economic power that manipulated its currency, subsidised its companies, and erected stiff non-tariff barriers to imports. Washington’s response was to put 100% tariffs on electronics, force voluntary restrictions on the aggressor’s auto, steel, and machine industries, and adopt laws that restricted the country’s steel, lumber, and sugar industries. But this wasn’t a nascent People’s Republic of China (PRC), it was the U.S. treaty-ally, Japan.

For approximately a decade, Japan and the United States engaged in a small-scale trade war. The United States achieved a tactical victory in the war with the 1985 Plaza Accord when the U.S. argued that it and Japan should abandon the fixed exchange rates that had prevailed after the Second World War. The result was that U.S. imports dropped in price as the dollar fell and Japan entered the bubble economy, which was ultimately to lead to the Lost Decade.

While there are many differences between the PRC now and Japan in the 1980s—the PRC is an authoritarian power and a peer competitor, rather than a U.S. ally—there does seem to be similar structural features in how the two approached trade, and how they approached access to their home market.

Thus far, the PRC’s strategy has been to respond to U.S. measures in kind. This reciprocity is somewhat ironic, given widespread complaints about Beijing’s lack of market access reciprocity. President Xi’s economic adviser, Liu He, has been the central player behind this approach. Shortly after Trump gave the green light on tariffs worth $50 billion of Chinese products Beijing retaliated with tariffs of their own that totalled up to $34 billion. Liu He even went so far as to pick the same date to enact their tariffs, July 6.

The difference between the two sets of tariffs lies in the contents. The Trump tariffs focus on parts and components used in high-technology manufacturing, machinery, automobiles, and transportation, while Xi’s tariffs focus mainly on agriculture exports like soybeans. This latter strategy seems odd until one realizes the Chinese dependency on U.S. high-tech. These items are unlikely to be targeted by Lieu He as long as Made in China: 2025 is a crucial part of Xi’s platform. Under that plan, China aims to improve its domestic production of high-end technology.

The Trump team has, of course, realized this, and therefore focused primarily on this area, both to stop the loss of valuable American intellectual property and to put pressure on the PRC through the threat of urban job losses. The example of the Chinese company ZTE is telling. With 74,000 workers jobs risked by its expulsion from the U.S. economy, Beijing focused the entirety of its next move on attempting to remedy this. While the PRC’s attack on farmers—who are a part of Trump’s voter base—threatens success in the Midterms, the White House’s attack on ZTE was much quicker, and some would say, more effective at moving Beijing.

There is a lot of noise around Trump’s tactics, saying that he represents chaos or anarchy. However, if one looks at the U.S.-China relationship since he came into office, one can discern a pattern.

First, communicate with the other side that you are unhappy and want to negotiate. One could argue that this occurred during the Presidential campaign when Trump consistently repeated the trope that China was “killing the American economy.” Second, develop a personal relationship with your opponent and give him time to make an offer. This occurred when President Xi was invited to the President’s estate at Mar-a-Lago. Filled with personal bonhomie, the president also joked during the Press Conference that Xi had not given him anything yet.

Second, if you are ignored, give the other guy something to think about. Cause him pain. This is not meant to be punitive, but to prod the opponent into really engaging with you. Famously, Beijing has promised structural reforms to previous U.S. administrations, only to renege. The first round of steel tariffs was a sign that Trump’s patience had finally run out. Perhaps symbolically, the replacement of Gary Cohn by Peter Navarro at that time as Trump’s key economic advisor was a message the U.S. would now be taking a more hard-handed approach.

Whatever the drivers are for the tariffs the end goal should remain the same for the Trump administration—Washington needs to focus on structural reform in China rather than on the reduction of the trade deficit. The trade deficit of $375.57 billion has become a useful political tool in Washington and, while it may be powerful, it is also dangerous. This is because it focuses on the symptoms, rather than the cause. In the words of former U.S Under Secretary of Commerce Frank Lavin, “If they give you a check, watch out. They’re sort of buying you off and getting you just to go away for that money.”

Trump could ‘win’ this trade war by getting Beijing to blink by seriously addressing the structural and intellectual property concerns raised in the March U.S. Trade Representative report. Whether Xi can make these changes and continue his China Dream, on the other hand, is debatable.


Vice News, David Gilbert, July 2, 2018

“The recent allegations that the North Korea regime has increased its production of enriched uranium and the subsequent interview with the President by Fox show just how precarious the notion of a second Summit with Kim Jong Un is,” John Hemmings, Asia Director at the Henry Jackson Society, a British foreign policy think tank, told VICE News.

“The relationship dances on the tip of a needle, balancing the entirety of the relationship over a lack of trust,” Hemmings said. “It’s not clear to me how two countries can negotiate something without trust.”


Sydney Morning Herald, Latika Bourke, 30 June, 2018

“I think the British government has now woken up to the fact that the Chinese are not on our side on a number of issues,” [Lord] Howarth says.

John Hemmings, a close observer of China at the Westminster think tank the Henry Jackson Society, agrees.

“Despite Brexit, some aspects of UK government have quietly begun to shift into the new paradigm vis a vis a rising geopolitically ambitious China,” he says. “On the home front, they have begun to follow the lead of countries like the US, Germany and Australia in screening Chinese state-led investing into sensitive sectors of the economy.”

 


Ambiguity the only certainty as the dust settles on the Singapore summit

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East Asia Forum, with James Amedeo, 17 June, 2018

Since the founding of the Democratic People’s Republic of Korea (DPRK) in 1948, no acting US president had met with a North Korean leader. Early on the morning of 12 June 2018 in Singapore, all that changed. In the historic meeting, US President Donald Trump and North Korean leader Kim Jong-un agreed to ‘establish new US–DPRK relations in accordance with the desire of the peoples of the two countries for peace and prosperity’.

This line from the joint statement Trump and Kim released after the Singapore summit is a small example of the document’s larger theme: ambiguity. The only substantial part of the joint statement is the two leaders’ agreement that dialogue between the United States and the DPRK will continue into the future.

If we compare the Singapore summit joint statement to previous US–DPRK agreements, it is closer in nature to the 2000 Joint Communique than to the 1994 Agreed Framework. The Agreed Framework involved concrete steps to denuclearise the Korean Peninsula. It stated that North Korea would switch from using graphite-moderated reactors (which use unenriched uranium as fuel) to using light-water reactors (which use water as fuel).

The Joint Communique and the Singapore summit document, on the other hand, use highly diplomatic language that avoids stipulating concrete steps to denuclearisation. The only specific policy outcomes of the 2000 Communique and the Singapore joint statement are about the recovery and return of US soldiers’ remains from the Korean War. This endeavour requires little effort from the North Koreans while providing a small political victory for the United States.

The main push of the Singapore agreement is North Korea’s continued commitment to complete nuclear disarmament of the Peninsula as agreed in the 2018 Panmunjom Declaration. That’s a win, particularly for South Korean President Moon Jae-in who promised this to South Koreans.

But there is little else to commend the document. There is no mention of North Korea’s human rights transgressions, which could become a major stumbling block to passing future DPRK-related policies in the US Congress. There is a hint at establishing diplomatic relations, but it’s not clear whether this is merely a commitment to better relations or a commitment to formal diplomatic relations. Will a peace treaty be on the table? Again, it is not clear.

Even though the joint statement itself is ambiguous, there may be more going on behind the ink. Trump announced after the summit that he will suspend US military exercises with South Korea. He also mentioned that he expects Kim to dismantle his nuclear arsenal ‘very quickly’.

But spoken agreements tend to carry little weight in comparison with written ones. Trump could take back his decision to suspend military exercises at a moment’s notice just as Kim could decide to restart his nuclear program. The important mission in the future is to secure a more conclusive written deal instead of these loose spoken commitments.

The joint statement allocates the responsibility for ‘follow-on negotiations’ to US Secretary of State Mike Pompeo and ‘a relevant high-level DPRK official’ — a rather oblique reference to North Korea’s diplomatic team.

The main question going forward is: how can Pompeo secure a deal of substance without the North Koreans walking away? In 1994 US diplomat Robert Gallucci, the head of the US delegation that was sent to negotiate the Agreed Framework, faced the same question. His answer was to find out what the Kim Jong-il regime wanted.

Kim Jong-il’s desires and his son’s desires are the same. In his 2018 New Year’s speech, Kim Jong-un acknowledged that the successful development of North Korea’s nuclear weapon program is complete and that it is time to shift to focussing on economic development. Pompeo should use this information to achieve a deal with North Korea. Lifting economic sanctions, providing aid or including North Korea in China’s Belt and Road Initiative are concessions that could fulfil Kim’s economic development desires.

In return, the United States must request the closing of nuclear reactors like the one in Yongbyon. Evidence suggests that the Yongbyon site was operational and producing plutonium for North Korea’s nuclear weapon program as recently as April 2018. The closing of this plant along with others like it will be key to entering a ‘nuclear freeze’, which may be a compromise on denuclearisation that Trump is willing to agree to.

Had somebody said in 2017 that Kim and Trump would someday shake hands they most likely would have been laughed out of the room. US–DPRK relations have come a long way from the use of inflammatory language like ‘dotards’, ‘red buttons’ and ‘rocket men’ — but that does not mean that the hard work is over. There are still major question marks going forward, particularly around the area of North Korea’s human rights record.

While the US–DPRK joint statement from the Singapore meet has little substance, it is significant that Trump and Kim agreed to continue negotiations. Going forward Pompeo’s goal will be to turn this ambiguity into concrete guidelines that can be monitored and followed.


It’s not just Rolls-Royce: China is stealing every technology that isn’t nailed down

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The Telegraph, 16 June, 2018

The arrest two days ago of a Rolls Royce engineer for allegedly spying on his employers on behalf of China did not shock many in aerospace. It’s no secret that China is attempting to develop an indigenous aerospace industry and will do everything it can to get its hand on modern Western-designed jet engines. Such is the complexity of these engines that they are virtually impossible to reverse-engineer.

But this story has become a bit of a motif of late. Nearly every week, we hear of another story of alleged hacking of corporate secrets by some Chinese entity – or, worse, resorting to outright robbery, as might have happened to Pelamis Wave Power, a Scottish alternative energy company that saw a Chinese start-up appear only months after its offices were burgled.

So what’s behind it all? What is driving these stories? Well, to some extent, China is a driver of its own success and a driver of its own reputation. Over the past two decades, China has been implementing policies that some say unfairly help its firms to acquire foreign technology, either at home in the Chinese market, or abroad, when they invest in overseas markets, including the British one.

Rather than developing indigenous technologies, they prefer to steal, beg or borrow those of others, leapfrogging up the technology ladder. And they don’t mind stooping to different means: China’s current domination of solar energy technologies is alleged to have come after Chinese hackers stole files on panel technology from Solar World America. The subsequent government support for Chinese firms to build solar panels at much cheaper prices than US and European firms put many Western solar power companies out of business.

Are these policies illegal according to the World Trade Organisation? Indeed, they are, but getting them to that stage takes political support from their own governments.

The Chinese government policy most associated with this issue is Made in China: 2025, which has been widely criticised by the US government, the German government, among many others. According to James Lewis, a technology expert at the Washington-based Center for Strategic and International Studies (CSIC), the policy seems to have three stages.

The first is to require foreign firms attempting to enter China’s market to hand over their intellectual property in critical sectors such as robotics, alternative energies, quantum, and new energy vehicles. The second is to provide government subsidies to Chinese firms to go out into the international market and sell these newly-acquired products for cheaper prices. The third is to dominate these sectors by driving out foreign competitors.

According to Peter Navarro, an economic advisor to Donald Trump, these sectors have a strategic implication for the future of Western security, as national governments look more and more to the high-tech sector for the next generation of military technologies.

The news this week that the European Council and European Parliament have passed investment screening mechanisms shows that Western governments are seeking to maintain a level playing field for their own firms and stopping buy-outs that either seem driven purely by the desire of China to gain intellectual property with military connotations. Germany passed legislation last year screening investment and the US has also tightened up its own Committee for Foreign Investment in the United States (CFIUS), making sure that Chinese firms cannot simply swoop in and buy high-tech firms and give their IP to Chinese competitors.

The May government is current considering a White Paper on investment-screening, having already tightened up the current Enterprise Act (2002) and broadened the remit of the Competition and Market Authority (CMA). Given China’s voracious appetite for British high-tech and the impact its theft has on British companies, this is a welcome and appropriate response. Britain is open for business, but in a fair way that gives all sides a level playing field.

Jeremy S. Maxie

Energy & Political Risk Consultant

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