Australia, India and the Indo-Pacific: The need for strategic imagination

Thank you, Minister, for your generous introduction.

Let me begin by acknowledging the traditional custodians of the land on which the Lowy Institute stands, the Gadigal of the Eora Nation, and pay my respects to their Elders, past and present.  

Let me also take this opportunity to express my sadness on the tragic death earlier this month of the Chief of Defence Staff General Bipin Rawat, his wife and his colleagues from the Indian Armed Forces.

I was grateful to receive the invitation to give this lecture from India’s External Affairs Minister. I have known Dr Jaishankar for a long time. I called on him when he was posted in Beijing and Washington and kept in touch with him during his periods as Foreign Secretary and Minister. I have long admired his intellect and sagacity.

And I am honoured to give a lecture named after a statesman of the quality of Prime Minister Atal Bihari Vajpayee.

We often bemoan today’s two-dimensional politicians. But Prime Minister Vajpayee was a poet as well as a politician. He was a leader with a hinterland.

Both as external affairs minister and prime minister, his statecraft was creative and imaginative. In his overtures to competitors and adversaries, his belief in the relationship between India and the United States, and his determination to ‘Look East’, Prime Minister Vajpayee showed a willingness to shrug off the habits of the past and seek new friends and new ways of doing things.

I would like to take this concept of strategic imagination as my theme for this lecture.

Like many Commonwealth politicians, Prime Minister Vajpayee had a close association with cricket. And by the way, how many Australian PMs would like to have a 50,000-seat cricket stadium named after them?

Cricket is on my mind today, because the Third Test in this year’s Ashes series starts on Boxing Day at the Melbourne Cricket Ground.

I have attended many diplomatic receptions, but few can rival the State Dinner for Prime Minister Modi, held in 2014 at the MCG, in the presence of Sunil Gavaskar, Kapil Dev and many others. It was a stroke of genius to hold such an important diplomatic occasion at a temple to cricket like the MCG.

The game of cricket is, in many ways, similar to the great game of relations between states – and it contains important lessons for the foreign policies of both India and Australia as we navigate the evolving strategic circumstances of the Indo-Pacific.

Like foreign policy, cricket is a long game. A Test match can take up to five days (although not when Australia plays England at the Gabba!). Things are opaque in cricket, as in diplomacy: sometimes a draw can be a win.

Cricket and foreign policy require many of the same qualities: intelligence, skill, patience, discipline, toughness – and imagination.

The most successful cricket captains are creative – they set imaginative fields, surprise their opponents with unexpected bowling changes, and lead from the front with the bat. Imagination is key.

The weather conditions and the state of the pitch are also critical. In foreign policy, too, the decision-making environment is fast and fluid. That is certainly the case today.

In 1991, the United States’ only rival for global leadership, the Soviet Union, conceded defeat, and the world switched from a bipolar system to a unipolar one. The hegemony over the West that was achieved by the United States during the Cold War became the new world order.

The only option available to Russia and China was to become stakeholders in this enterprise – if they promised to be responsible stakeholders. A liberal international order settled over the world. Or so we thought.

Now, three decades on, the scales have fallen from our eyes. The contests between nation-states and between ideologies have resumed. Cooperation between great powers is declining, not increasing. Unipolarity has given way to multipolarity. Geopolitics has returned. Every day, the liberal international order becomes less liberal, less international and less orderly.

The other big global change is that wealth and power are shifting eastwards, towards India and Australia. Impressive Asian economic growth in recent decades has transformed the region and lifted more than a billion people out of poverty.

Emerging Asia is the most dynamic part of the world, accounting for more than half of global growth despite representing only a third of the global economy.[1]

China’s economic rise has been phenomenal. Decades of rapid economic growth have pulled nearly 700 million Chinese people above the poverty line. China is the world’s second largest economy and it is likely to be the largest by the end of the decade. It is already the world’s largest trading nation and the largest trading partner of most Asian countries, including Australia.

Of course, India’s economic rise is also an important part of this Asian success story. Thirty years ago, before India set out on the path of liberalisation and reform, its economy formed just a tiny fraction of the global economy. Today, India has the world’s seventh largest economy. The average Indian citizen today is more than three times richer than she was in 1990.[2]

For a country such as Australia, with an economy that is so interconnected with Asia’s economies, the changes in China and India, as well as in Southeast Asia, create tremendous opportunities.

But if the economic outlook in Asia is positive, the security outlook is not. We are heading towards a prolonged period of bipolar competition in the Indo-Pacific.

Both the United States and China have exhibited troubling behaviour over the past decade.

This year marks the 70th anniversary of Australia’s alliance with the United States.

Our interests are served when the United States is well governed, cohesive, attractive to the world, and strong enough to deter bad behaviour by adversaries. Under Donald Trump’s presidency, the United States was, in my opinion, poorly governed, divided, unappealing to the world, and weak – which left all of us vulnerable to malign actors.

On foreign policy, Mr Trump’s actions ran counter to Australians’ instincts. Australians are alliance believers; Mr Trump thought allies were scroungers. Australians are inclined towards internationalism; Mr Trump was sympathetic to isolationism. Australia is a trading nation; Mr Trump withdrew from the Trans-Pacific Partnership and attacked the World Trade Organization.

Joe Biden is not a perfect president. But today we can say that the president of the United States is a decent person. That was not the case for four years. The Biden administration has got off to a good start, marked by more effective governance at home and more adroit alliance management abroad. America, in other words, is back.

If Washington’s international stance over the past decade has been changeable, Beijing’s has been consistent – and increasingly concerning.

Since the accession of President Xi Jinping in 2012, China has become much more aggressive in the waters to its east and west, and in its relations with other states. Australia is an extreme case.

Seven years ago, Xi Jinping addressed our Parliament to loud bipartisan applause. Now the two countries are at daggers drawn.

Analysts differ as to whose fault this is. In my view, the main reason why our relationship with China has changed is that China has changed. Its foreign policies have hardened; the constraints on people within China have tightened; its willingness to accept criticism has disappeared.

Australia has taken steps to protect its sovereignty, including banning Huawei and other high-risk vendors from participating in our 5G rollout, and introducing new foreign interference laws.

For the Chinese, Australia’s call last year for an international inquiry into the origins of the coronavirus pandemic was just the latest provocation. Seen from our perspective, all our actions were just reactions to Chinese moves.

China has had Australia in the diplomatic deep freeze for some time. It has imposed sanctions on many of our exports, including barley, wine, seafood, cotton, timber, beef and coal.

Of course, Indians have also become increasingly familiar with China’s newfound assertiveness, for which Indian soldiers have paid with their lives.

Australian public opinion towards China has hardened in tandem with Chinese behaviour. The 2021 Lowy Institute Poll found that, for the first time, more Australians see China as a security threat than an economic partner. Trust in China has fallen precipitously, with only 16 per cent of Australians saying they trust China ‘a great deal’ or ‘somewhat’ to act responsibly in the world, down from 52 per cent three years ago.[3]

I agree with the broad thrust of Australia’s approach to China. That doesn’t mean that I am uncritical. Diplomacy requires guile as well as steadfastness. In my view, we have not always been as artful as we might have been. Sometimes Australian ministers and parliamentarians have strayed beyond protecting our sovereignty and our core interests, and allowed indiscipline to creep into their public comments. But the chief responsibility for the current state of affairs lies with the men in Zhongnanhai.

The fluctuations in US policy, and the severity of Chinese behaviour, is prompting three important developments in Indo-Pacific security.

First, a number of regional powers are adopting a larger view of their own potential and seeking to increase their freedom of movement. After all, no one wants to live in another country’s shadow.

I have been very impressed by the steps taken by the Indian government to protect its sovereignty and adopt a flexible foreign policy suited to the times, including an upgraded relationship with the United States and membership of important new institutional arrangements such as the Quad.

In Australia’s case, we have bolstered our internal resilience, increased our defence spending and, most recently, entered into a new defence pact with the United States and the United Kingdom, AUKUS, which promises closer military and scientific ties between the three countries and the development of a nuclear-powered Australian submarine fleet.

After the fall of Kabul in August, many observers of US foreign policy concluded that America had lost interest in its allies, and that its allies had lost faith in America. The announcement of AUKUS in September served as a powerful rebuttal of both arguments.

With AUKUS, Australia is doubling down on its alliance with the United States while also drawing the United Kingdom more deeply into the Indo-Pacific. This is an ambitious step for Australia, a signal that the country intends to shape its external environment and contribute to the regional balance of power. Nuclear-powered submarines provide immense capability in terms of lethality, speed, range and stealth. Presuming these boats are eventually built, they will give Australia significant deterrent power.

AUKUS is not just about submarines, however. It is also about technology sharing, cyber capabilities and artificial intelligence. It reminds me of something that Prime Minister Winston Churchill said in 1940, when the United States provided Britain with destroyers in exchange for access to naval bases. Churchill said that the two countries “will have to be somewhat mixed-up together in some of their affairs for mutual and general advantage.”[4]

I suspect that in the face of new challenges, we will once again see like-minded countries getting more “mixed-up together”.

Second, there have been important institutional developments in the Indo-Pacific, foremost among them President Biden’s elevation of the Quad to the leaders’ level.

In his 2021 Lowy Lecture, US National Security Adviser Jake Sullivan described the Quad as an example of the new “latticework” of institutional arrangements. Whereas Dean Acheson’s generation of policymakers built the Parthenon, with its columns of the UN, NATO, the IMF and the World Bank, Jake argued that today’s arrangements are “more flexible, ad hoc, more political than legal, sometimes more temporary than permanent.”

In this sense, Jake told me, the architecture of international cooperation is acquiring “more of a Frank Gehry character than the formal Greek architecture of the post-war era.”[5]

And indeed, the first in-person Quad leaders’ meeting, held in the East Room of the White House in September, was every bit as eye-catching as Gehry’s Guggenheim Museum in Bilbao.

It was a tremendous thing to see the leaders of four highly capable Indo-Pacific democracies come together to progress a positive agenda of cooperation.

Let me take this opportunity to compliment India for its remarkable work as the manufacturing hub of the Quad Vaccine Partnership.

The Quad is a reminder for Australians that we must increase our investment in diplomacy as well as defence – and in new relationships as well as old ones.

For Australia, the Anglosphere is necessary, but certainly not sufficient. As a matter of urgency, we need to thicken our links with other Indo-Pacific powers, including Japan, South Korea, Indonesia – and India.

The strengthening of bilateral relationships between like-minded countries is the third major Indo-Pacific development I want to mention today.

The relationship between New Delhi and Canberra has the character of a long innings at the crease. We started off slowly, but now that we have settled in, we’re taking our shots and the runs are flowing.

One year ago, when I interviewed Dr Jaishankar for a Lowy Institute event, he told me: “If there is one relationship I take great satisfaction in, it is the India–Australia relationship.”

Today, our Comprehensive Strategic Partnership encompasses regular meetings of prime ministers, foreign ministers and defence ministers, as well as military exercises and military-to-military contacts.[6]

I was pleased to see Prime Minister Scott Morrison announce last month the establishment of a new Australian Consulate-General in Bengaluru, as well as a centre of excellence to deepen our collaboration on science and technology.

I would like us to be even more ambitious. The latest edition of the Lowy Institute’s Asia Power Index – a data-driven annual assessment that measures national resources and international influence to rank the relative power of Indo-Pacific states – indicates that neither the United States nor China will be able to exert undisputed primacy in our region. A bipolar future beckons.

In this future, the decisions made by other Indo-Pacific powers, including India and Australia, will be highly consequential. Our actions may well constitute the marginal difference. Countries such as ours have the means to influence the regional balance of power – and a clear interest in doing so. But we will need to step up.[7]

My challenge to the decision-makers on Raisina Hill in New Delhi and Capital Hill in Canberra, therefore, is to look for practical and imaginative new ways that India and Australia can strengthen our bilateral relationship and together contribute to stability and prosperity in the Indo-Pacific.

Let me make some suggestions. I believe we should:

• Establish a high-level Strategic Economic Dialogue between Australia and India;
• Improve the interoperability between the Australian Defence Force and the Indian Armed Forces, especially in the area of maritime domain awareness;
• Increase the level of consultation and information-sharing between our diplomats and our intelligence services;
• Cooperate on infrastructure financing in Southeast Asia, the Pacific and the Indian Ocean region; and
• Reinvigorate our trilateral partnerships with Indonesia and Japan.

Of course, international relations are driven by economics. And the run rate in the economic relationship between India and Australia is much slower than it should be.

People-to-people links are very strong. Today, more Australians were born in India than in any other foreign country save for England.[8] Yet despite India’s immense market size, only about three per cent of Australia’s goods exports go to India, and this is almost entirely made up of coal. And India does not make the ‘top 20’ countries as either a source or a recipient of foreign investment.[9]

As Australia’s former High Commissioner to India and Secretary of the Department of Foreign Affairs and Trade, Peter Varghese, said in his India Economic Strategy report: “Australian business has long put India in the ‘too hard’ basket.”[10] This needs to change.

The dismantling of the misconceived ‘Fortress Australia’ approach to Covid-19, and the recent reopening of Australia’s borders to international students and skilled migrants, will re-energise our ties.

I also welcome the news that our two governments have re-launched negotiations for a Comprehensive Economic Cooperation Agreement, with talk of an initial agreement before the end of the year.

Australian governments and businesses must lift their game, therefore, but so must Indian governments and businesses. Australian firms still find India a difficult place to do business. Further reforms are desirable in areas such as labour markets, the financial sector and the legal system. And I would like to see the Indian government take a more positive and ambitious approach to trade liberalisation.

Countries such as India and Australia have the wherewithal to help shape Asia’s future. But we need to believe in ourselves – and in each other.

The good news is that our publics already do. The 2021 Lowy Institute Poll revealed that six out of ten Australians trust India either ‘a great deal’ or ‘somewhat’, which represents a remarkable increase of 16 points in a single year. This puts India on par with Australians’ level of trust in our principal ally, the United States.

In the 2021 Observer Research Foundation Foreign Policy Survey, two-thirds of young Indians said they trust Australia either ‘completely’ or ‘somewhat’, second only to their trust in the United States. And six in ten respondents said that Australia will be one of India’s leading partners in the next ten years, again second only to the United States.[11]

These are strikingly complementary results – and all the more welcome for that fact.

Now it is for policymakers to match the foresight of their peoples.

Ladies and gentlemen: We live in a time of great strategic flux. I’m confident that Australia and India can help determine the complexion of the game – if we have the strategic imagination to do so. We should be unafraid to seek to shape our environment, trusting in our own abilities and in each other, and knowing that providence favours those who help themselves.

I hope that, like Atal Bihari Vajpayee, India and Australia decide to think big.

Thank you.