Monday 26 Sep 2022 | 03:34 | SYDNEY
Monday 26 Sep 2022 | 03:34 | SYDNEY

Q. How do you negotiate with your banker? A. Carefully.


Graeme Dobell

8 December 2010 13:47

Credit Hillary Clinton with a wonderful quote which is, indeed, a great question: 'How do you deal toughly with your banker''

Rework the question from the Canberra end: 'How do you deal toughly with the country that is driving both Australia's and Asia’s economic future' How do you deal toughly with the country that is driving Asia's strategic future'' To use Kevin Rudd's self description, being a 'brutal realist' doesn't provide much of an answer to either question. Tough love never seems to cut it with bank managers or number one customers. 

The China dynamic in both questions points to the reality that is causing so many in Asia to try to ponder new thoughts. The various questions are so big because the old, single-country answer is no longer enough. The old answer was the US. The new answer is going to have to be the US, plus the rest of Asia, plus the new great power which is also America's banker and the world's factory.

The ironic thing about Rudd's 'go to war' comment in that meeting in March last year was that he wasn't advocating a new US policy. Australia's then Prime Minister was merely reflecting back to the US Secretary of State the essentials of the hedging strategy that evolved under the two Bush presidencies and the Clinton presidency and inherited by the Obama Administration: seek to integrate China into the international community, ask China to demonstrate greater responsibility, while also preparing to deploy force if everything goes wrong.

The problem is that the existing hedge mechanisms no longer seem adequate for the task.

China is now of such import that it is one half of the G2, and as Hillary Clinton noted, China is the banker to the system. Hedging looks like last decade's policy. For Asia, hedging has gone into overdrive: there's engagement at every conceivable level and every increasing intensity; there's no arms race yet, but the arms stroll is speeding up to become a brisk build-up of military capabilities. And hedging doesn't really describe the desperate efforts to create an Asian concert to go with the G2.

For Australia, this means the fullest and frankest conversations possible with the US. Yet that does not mean always lining up directly behind the US. Even John Howard sought his own space in dealing with China, and explicitly noted the differences between US and Australian approaches to Beijing.

Much of Australia's future Asian diplomacy will be about that calibration between the China and US positions and the other big and medium powers in an ever more complex Asian dance. It will not always be in Australia's interest – nor, even, in the US interest – for Australia to align too exactly with Washington. In a multi-player game, lots of different moves are needed.

The nuance question is showing up in many conversations within the Australian polity. Here are two examples pulled from last Friday's Financial Review from two parts of the business-politics spectrum: the former Liberal Party leader, John Hewson, and the former China President for BHP Billiton (and now Lowy visiting fellow) Clinton Dines.

Hewson laments that 2010 has been a policy-free zone in Australian politics. Among the series of problems Hewson nominated was this take on Australia's international settings:

Foreign policy seems excessively subservient to the US, rather than driven by a realistic assessment of our national interest and regional responsibilities. Defence remains essentially non-transparent and unaccountable, largely free to run its own race – and hang the expense.

The issues of choice and nuance were even more explicit in Dines' comments about the different interests Australia and the US have when looking at China. He divides the Western conversation about China into two big camps: those who worry about China ruling the world and those who focus on the coming collapse of China. The US concern is about China as world ruler, he says, while Australia's anxiety should be about China's collapse:

That's a very important discussion for Australia to have – because our reflexes, our civilisational sympathies, tend to go with the way the US talks about China and the way the Europeans talk about China, not necessarily recognising that our situation is different. We need to be a little braver as a nation recognising that just converging with the developed world narrative with respect to China is not actually recognising our particular stature. What you have now is that your geopolitical interests and your civilisational sympathies are separate from your economic interests. They have been bifurcated. I don't think we get that yet.

When the geopolitical game changer is also your banker and number one customer, the nuances stray beyond complex towards incredibly intricate.

Photo by Flickr user @mjb.