Thank you for the opportunity to address the Association this afternoon. It is a very great pleasure to be here and to be able to share some ideas with you.

As we approach the end of the first decade of the 21st century, international politics is once again going through a period of profound change. This address aims to outline the nature and extent of this change and to suggest some of the implications for Australian foreign policy. The broad argument is that the impact of change is likely to be so extensive that the foundations of the existing international order are already beginning to shift. At the very least, change will transform what a former distinguished academic colleague of mine called the “context for living globally” well before the middle of the century. This will have significant implications for international community and for Australia more specifically.

My remarks today are drawn from a paper published last Monday by the Lowy Institute for International Policy entitled The Emerging Global Order Australian Foreign Policy in the 21st Century.

Moving on from the Cold War
The natural starting point for this discussion is with the contrast between the Cold War era and the present. During the Cold War the confrontation between East and West was the great fault line of post World War II international relations. No part of the international system was untouched by the power of the Cold War to shape events. Foreign policies were polarised by its competing ideologies, international organisations shaped by its diplomatic prescriptions and global and regional problems resolved (or unresolved) according to its strategic imperatives.

Nearly two decades after it ended with the triumph of the west, the comparatively simple, if often dangerous verities of the Cold War no longer define the global predicament. International relations is now characterised by multiple fault lines.

As in the past these reflect clashes of powerful interests in international affairs. They are places where ideas contend and controversies are played out. And they are reshaping the geopolitical order, transforming international institutions and giving rise to some new and deeply troubling international problems.

The Changing International Order
Against this background, a powerful set of trends is now shaping the global strategic environment and are likely to continue to do so for the foreseeable future.

First, globalisation remains the most powerful transformative force of modern international relations. It is largely an economic phenomenon, but its wider social and political impacts are changing the way we live work and play in a 24/7 world across the globe.

Economically, globalisation will continue to serve as an engine of economic growth. Providing we leave aside the current, and I think short term international crisis (which is of course a contemporary indicator of the power of globalisation) it is generating prosperity and economic opportunity. Vietnam is a good example. And notably, it is creating new hubs of economic and geo‐strategic power especially in Asia.

However, the benefits of growth and prosperity continue to be spread unevenly throughout the international community. For those marginalised by globalisation – largely in Africa, it is a source of chronic insecurity. It is also increasing the gap between rich and poor both between countries and within countries. Even in developing countries the downside effects are visible in the hollowing out of economies through off‐shoring in manufacturing and outsourcing of services.

A wider critique of globalisation argues among other things that it hands power to an unelected international elite, is an instrument of American imperialism and an assault on global cultural diversity. I am however, unpersuaded by these suggestions.

As a consequence of its perceived costs, and not just in the developing world, the gains of globalisation are now at serious risk. Many in the international community now no longer see a need to maintain the policies that have long underpinned globalisation’s promise.

It seems clear that the expanded flows of information, ideas, technology, capital, services, goods and people that are the hallmark of globalisation will continue to grow. But there is now an urgent need to arrest the threat to its sustainability by addressing the issues that place it most at risk: growing economic protectionism; weak and failing international economic institutions; the fragile economies globalisation leaves behind; the insecurities it generates, and globalisation’s costs to the environment.

Many of globalisation’s frictions do not admit of simple solutions, but the international community, Australia included, has a strong interest in seeing them confronted. I trust this is one of the things that Mr Rudd is arguing for on his 17 day international odyssey which began yesterday.

The second significant trend relates to American primacy. For the foreseeable future, the United States will remain the worldʹs only superpower. Some doubt this, apparently believing America’s time has come and is now rapidly going. I think these critics of the US are mistaken. America possesses a resilience and capacity for renewal that will continue to sustain its pre‐eminence well into the century.

But while US primacy is not currently under serious challenge, a deep seeded anti Americanism acts as a serious constraint on its foreign policy. Events in recent years have undermined its international credibility and weakening its capacity for international leadership. This is not only an American problem it is something that should trouble all of its friends and allies, and certainly Australia.

The US faces a complex array of strategic challenges. If they are to be confronted successfully it will demand a change of policy direction by the new administration arriving in Washington in 2009. This will certainly demand a greater degree of skilled statecraft, including a return to international organisations, as much as it may require periodic applications of military power.

Longer term, globalisation is facilitating the rise of challengers to US primacy. This is a process that well before the middle of the century will have changed the foundations of the global geo‐strategic order. China is rising as a rival to America’s strategic power in the Asia Pacific and perhaps more widely. Confrontation is possible but certainly not inevitable and on balance I think it unlikely. Other countries such as India, Russia and Brazil, together with the European Union and eventually perhaps a large Islamic country are increasing their relative power.

The inherent danger is that this will shift the foundations of the existing Western oriented international order, affecting long established rules, norms and institutions. The international community as a whole has an abiding interest in ensuring that this does not happen.

The third key trend is that we appear to be living in an era where extremism, fanaticism and fundamentalisms of all kinds are flourishing. In recent years, Rwanda, Bosnia, Afghanistan, the Sudan and perhaps now even Kenya, all offer examples. This fanaticism is dividing states internally and is a major source of international tension.

Certainly ideology is back on the international agenda with the most severe threat from Islamic fundamentalism. The terrorism is has spawned continues to confront the international community with an enormous and complex challenge. It should not be underestimated, it will not soon be defeated and we need to develop far more effective ways to address it.

We should be very wary, however, of casting this danger as a confrontation between the West and Islam. There is little doubt that since 9/11 the West’s relations with Islam have been plunged into a new, profound and largely unexpected crisis. Six and a half years on it is evident the ideological fault line over Islam is not so much a single geo‐strategic fissure in the global body politic, but a series of rather messy political and religious cleavages which extend across continents dividing countries and communities.

In the West we tend to be preoccupied with the character of our relations with Islam. This is undoubtedly important, but it is certainly no less important that we take serious notice of the intense debates taking place among Muslims themselves. These relate to economic modernisation, the impact of globalisation, nationalism within the context of pan Islam, the foundations of engagement with the West and the prospects for democratic secularism within a theocratic Islamic state.

Let me emphasise that these debates are as important to Islam’s future relations with the West as they are to Islam itself. This being the case governments and communities on all sides need to build bridges with one another, much as Australia is seeking to do with Indonesia. As the West and other countries seek to defend themselves against Islamic fanaticism they also need to develop better strategies for engagement with the wider Muslim world. And Islam, of course, will need to respond.

The fourth trend focuses on the accumulating evidence that the way human beings live work and play is placing growing environmental stress to the planet’s resources and ecological habitats.

Much of the environmental attention is focused on climate change. Thus is important but it is also too narrow a perspective. As the Secretary General’s advisory commission on the UN Millennium Project, the Task Force on Environmental Sustainability noted that “(o)ur lives on this planet depend on nature’s provision of stability and resources. Current rates of human engendered environmental destruction threaten those resources and leave death and misery in their wake.”

The challenges are comprehensive, starting with population growth and demography, running through the protection of marine and water resources, the alarming progress of deforestation, the loss of biodiversity and ecological habitats, global warming and its consequences and a great deal more.

Many of these challenges raise security issues at one of two levels. First, in the sense that environmental degradation is the ultimate security threat because it strikes at the foundations of the earth’s life support systems. Second, in the sense that environmental problems, such as a struggle to gain access to fish stocks or water resources, may lead to tension and conflict or perhaps exacerbate already tense relations between communities.

As the century unfolds, the complex interdependencies between the environment, politics and security are set to deepen, making it almost certain that sustaining environmental health will be an increasingly important issue on foreign policy agendas. We are going to have to work out new ways to respond.

These are the really big trends, but let me mention several others more briefly.

First, states will continue to acquire and use military force, but while incidence of interstate violence may decline, conventional arms acquisition will continue and intrastate conflict seems set to rise.

Second, many of the most serious challenges to states’ national interests will come not in the form of direct threats of violence from other members of the international community, but from the vulnerabilities created by the new security agenda ‐ vulnerabilities created by more amorphous dangers such as transnational crime, nuclear proliferation, terrorism, resource insecurity, climate change, the instability of global financial markets and possibly a new pandemic.

And finally, existing structures and institutions of global (and regional) governance are facing and will continue to be under stress. The sovereignty of nation states is under treat from globalisation, international institutions are suffering a troubling deficit of legitimacy and international law is experiencing one of its periodic crises of self confidence.

These are all worry developments. Trends are not always accurate predictors of events, but if these expectations are any guide, there is every prospect that over the coming decades we will see greater instability in world affairs. Messy disputes leading to increasing tension and conflict are likely over any number of issues. It is entirely possible that in many parts of the world people, states and communities will experience higher levels of political, social, economic and environmental insecurity.

In short, the early decades of the new century will confront all members of the international community, with a more demanding and challenging international environment.

Implications for Australia
Let me now turn to the implications for Australia. In an increasingly interconnected 24/7 world, no country, including Australia, can escape the impact of widespread change. International events have always shaped Australia’s destiny and in a globalised world this is more so than ever.

Today we have a great stake in the preservation of the existing international order and this makes foreign policy an especially important arena of public policy. We not only live in a period of transformational global change, Australia itself faces significant challenges abroad.

For the moment, Iraq, Afghanistan, international terrorism, climate change and instability in the South Pacific claim much of the foreign policy spotlight. But a potentially profound shift in the global strategic balance of power is ahead and it will be played out in Asia as the US, China, Japan and India all seek to adjust to the new economic and strategic realities of the region. This will pose challenges for Australia and will have to be managed alongside the need for effective responses to the threats and vulnerabilities created by issues such as weapons proliferation, global financial instability, energy insecurity, trade protectionism, population movements and the growth of regionalism in the Asia Pacific.

Reviewing Liberal Policy
The Liberal Party must use its time in opposition to think clearly on these challenges and their implications for Australia’s foreign policy. It can do so with some pride in the former government’s many achievements in office. In an increasingly difficult, even hostile strategic environment, the Howard Government pursued an energetic foreign policy. It blended the use of military force with a constant tempo of diplomatic activity, both in the Asia Pacific region and more widely and can count numerous policy successes. Its policy accomplishments were extensive and there were significant innovations in policy planning.

Overall, the Howard government’s foreign policy record is an impressive one, but my party must be frank in acknowledging its weaknesses. Its response to climate change, for example, was to say the least uneven, the Pacific solution overshadowed the considerable strengths of a well conceived and responsible immigration policy, And as I have said on the public record on other occasions, Iraq was an illconceived enterprise from the very beginning. The former government was right to remain committed given our initial role in the invasion, but after March 2003, the failures of policy there were a constant burden on the government and a factor in our declining public support.

It is now time, however to look ahead and for the Coalition to undertake a comprehensive reassessment of its foreign policy. In a world of profound change and enormous challenges, we should be mindful of, but cannot be hostage to the Howard governmentʹs foreign policy legacy. My party needs fresh ideas and new policy options. These should be judged against Liberal values and for their capacity to provide practical solutions to the challenges we face.

Australia’s Response: selective global activism
How should Australia respond? Australia has the national capabilities to meet the challenges of the new era confidently and effectively. We do not possess the structural strength of a great power, nor are we in an especially advantageous geographic position to shape events to our advantage. But we now live in world where structural power is not the only measure or determinate of foreign policy success (witness the United States in Iraq) and as has always been the case in world politics, the successful application of power is relative and contextual, making its successful exercise almost invariably a moveable feast.

Viewed from this perspective, and here rather surprisingly, I find myself in some accord with Mr Rudd recent remarks, Australia is a not insignificant country. It possesses an impressive array of strengths and capabilities to advance and protect its interests. Among other things:

• Australia has the world’s 12th largest economy (9th in GDP per capita) sustaining high levels of growth over a long period of time and increasingly well integrated into the global economy;
• a strong resource and energy base;
• a well educated population, with a high standard of living, securely integrated into a generally harmonious multicultural society
• a strong tradition of innovation in the sciences and technology and of creativity in the arts;
• a small, but outstandingly competent, well equipped and well trained defence force;
• a highly professional foreign service with an extensive network of posts and missions around the world;
• a global network of well developed international alliances and diplomatic partnerships,
• and a stable liberal democratic political system with strong institutions of governance.

Sustained over time, these strengths serve as a firm foundation for the conduct of Australian foreign policy. Australia has many policy options, but I would argue that selective global activism will best serve our interests.

Selective Global Activism
To sustain this strategy over time, we will need to pay conscientious attention to each of its key elements.

First, Australia will have to sustain the attributes of its hard and soft power that are the source of its credibility and legitimacy in the international arena. Many of these rest on maintaining a strong resilient and internationally competitive economy.

Second, it will need to develop a clear understanding of its national interests and the way they can be pursued effectively in a complex world of rapid and dynamic change. This will require a close alignment between the purpose of policy and the means to carry it out. It points to the long overdue need for the development a whole of government statement of national security policy.

Third, Australia will have to be willing to undertake and sustain a role of global and regional activism, but critically, one that is selective in the tasks it undertakes. The Asia Pacific however, is an arena of strategic priority for Australia.

Fourth, while maintaining a credible military capability, Australia will need to be conscious of its limitations as an instrument of policy. These limitations are inherent in the nature of military force itself, are a function of Australia’s particular ability to wield it and a reflection of the changing nature of contemporary international affairs.

Fifth, Australia will need to maintain the integrity of its alliances and strategic relationships, most especially that with the United States and Japan. It will also need to develop opportunities for fresh partnerships as the occasions arise – especially India.

Sixth, Australia will need to work creatively to enhance its ability to develop, sustain and use a wider range of foreign policy capabilities, ones well adapted to the unique and growing challenges of contemporary international affairs. This will require a sustained effort to expand Australia’s diplomatic capabilities through improved funding the Department of Foreign Affairs and Trade and the creation of a new independent National Security Office. It will also mean that rediscover our talent for multilateralism.

Finally, as with all sound and effective foreign policy, Australia will have to ensure the policies it pursues internationally rest securely on the values and beliefs of the Australian community and command the support of the Australian people.

If we take these steps Australia will be well placed to meet the challenges that are likely to come our way as the new century unfolds.

Conclusion
The global order is already changing and events are already recasting the “context of living globally.” A new order poses immense challenges for Australia but also presents opportunities. While selective global activism offers a foundation for both prosperity and security in the challenging international environment of the 21st century, it is difficult to avoid the conclusion that Australia will only achieve these objectives if it plays an increasingly smart national game, one that is more strategic in the conception and design of its foreign policy, and more tactically astute in the ways it seeks to advance it.