 My name is Michael Wesley, I'd like to welcome you all to the second Australia 360 event. Before I start I'd like to pay our respects to the traditional owners of the land on which we meet the Ngunnawal people and pay our respects to their elders past and present. Thank you so much all for being here today. Can I issue a particular thank you to our partners Westpac Bicentennial Foundation and issue a special welcome to all of the Westpac scholars who join us today. You are very welcome. This is the Bell School's chance to look at the world that Australia finds itself in and to ask the question, how is Australia travelling in today's world? But just how do you assess a country's international position? Should it be by weight of activity? Is a hyperactive foreign policy with one initiative after another evidence of a favourable international position? Or is it the opposite, where a record of masterly inactivity can be taken as evidence that the country has its international affairs under control? Or should one look for a country's memberships? Is a country in a better position when it has memberships of any or all organisations that will accept it? Or more trade agreements and defence packs with other countries? Or are the countries with fewer of these commitments more in control of their own international destiny? How about centrality? The number of developments, crises or initiatives that a country is central to? Or is being able to avoid crises and controversies a better gauge of success? Or should one look at what a country is able to extract from the international arena? Wealth security, concessions or a stable legal predictability? Or should it be not about what a country can extract but what it can contribute to global public goods? Beyond the question of how do you measure success or failure is the question of over what period you should try and assess a country's international position. One common way is to think in terms of eras, world wars, cold wars, unipolar moments. Another is by government administrations, assessing the stewardship of national affairs by one country or another in government. The third periodisation tends to be generational. As we get older, we often look back on past golden ages and judge the present harshly according to these memories. Australia 360 chooses to assess Australia's international position on a year-on-year basis. This is a much shorter timeframe than eras, administrations or generations. Some might say that given the frequency with which we've been changing governments for the last decade or so, these days a year seems like an era or a generation. But more seriously, awaiting the passing of eras, administrations or generations to judge our international policy seems to me to be letting our foreign policy makers off the hook. Compared with other areas of Australia's public policy which are assessed rigorously and constantly, our foreign policy makers are subjected to very light scrutiny. Australia 360 is intended as an annual audit of this country's international position. What's worked and what hasn't over the past year and what challenges and opportunities lie ahead for us. As we look back and cast forward in this way, it also gives us grist for thinking about what criteria we should be using to assess the health of Australia's international position. If we cast our minds back to the middle of 2015, the weight of Australia's attention was focused on two ongoing challenges. The first was the war against ISIS in Iraq and Syria and the attendant terrorist attacks in Europe, North America and the Middle East. Australia has been involved in attacking ISIS positions using air power since October 2014. However, since that initial commitment, the war has become much more complicated. Russia and Turkey have become involved in the war and despite claiming to be committed to defeating ISIS have very different end games in mind for Syria and are therefore bolstering different allies from each other and from Western interests. Russia and Iran have found common cause in backing the regime forces of Bashar al-Assad against anti-regime rebels backed by Turkey, the West and the Sunni regimes of the Gulf. In this highly complex situation, Australian policy has evolved in a highly pragmatic direction while staying strongly committed to the fight. On the one hand, Foreign Minister Julie Bishop has spearheaded a warming of Australian-Iranian relations, facilitating a swap of foreign ministers visits. Australia is a strong advocate of the Iran nuclear deal acting quickly to take advantage of the commercial opportunities presented by the loosening of economic sanctions on Iran. But Bishop has been very clear that she intends the Australian-Iran relationship to be also about the war against ISIS, as well as stemming the flow of asylum seekers from Iran. Australia, perhaps more quickly than any other US ally, has realised that Iran is a central player in the future stability of Iraq and Syria and in the region's resilience to ISIS and its fellow travellers. This in turn reflects what appears to be a crystal clear set of priorities and judgements by the Australian government on the conflict in Iraq and Syria. First, that the key objective is to defeat ISIS. Second, that the other internecine conflicts in Iraq and Syria are impeding the war against ISIS. And third, finding a pragmatic compromise between all other parties internal and external to the conflicts can agree is essential for the comprehensive defeat of the main enemy. This is a clarity of vision that has eluded most other parties to this war. It has led Bishop to publicly disagree with her American counterpart, John Kerry, who continues to believe that allied strategies are going to battle ISIS and Assad. The challenge for the Australian government is to convince its allies of the wisdom of its own position in the year ahead. Because the best hope ISIS has at this stage of perpetuating its caliphate is that all of the forces arrayed against it are more focused on fighting each other. The second ongoing challenge confronting Australia's international interests in mid-2015 was the territorial standoffs in the east and south China seas. These confrontations are about much more than territoriality or resources. Were they simply about such divisible commodities, they would have been amenable to division and compromise. Central to both standoffs is China's sense of maritime vulnerability, particularly to the ability of the United States and its allies to navigate through its coastal waters, which wash onto China's most populous and productive provinces. Key to addressing this vulnerability is contesting the possession of what Chinese strategists call the first island chain, stretching from Japan in the north down through the Ryukus, Taiwan and the Philippines, all held by U.S. allies. China seeks sea control within this narrow strip of ocean, meaning the ability to determine who sails these waters and under what conditions. And Beijing seeks the deference of other states interested in these waters to China's wishes. At the heart of the confrontation in both the east China sea and the south China sea is concerned about why China wants to assert sea control and how China is asserting sea control. Australia finds itself somewhat conflicted over these confrontations. On the ostensible territorial disputes, Australia is a non-claimant and primly takes no position, although the Permanent Court of Arbitration decision in June now has Canberra backing the ruling that China's claims lack any basis in international law. But Australia does have issues with the prospect of sea control and the way in which it is being asserted. The frequency with which the phrase the rules-based global order occurs in this year's defence white paper speaks of a growing concern among our policymakers that the heat of Sino-American rivalry is tipping us from a benign era of uncontested American naval supremacy and freedom of navigation into a future in which Asia's vital sea lanes will be controlled by a succession of rival powers. It is in moving from worrying to acting that Australia has been less than decisive. On the one hand, Australia has been one of the most outspoken regional countries voicing concern about China's actions. On the other hand, while the government has repeatedly asserted its freedom of navigation and overflight rights in the South China Sea, it has so far demurred from conducting freedom of navigation exercises close to the artificial structures China has constructed, either alone or alongside the United States. This may reflect Canberra's sense of heightened risk, of conflict in doing so, or perhaps its sense of the ultimate futility of these actions. Because while temporarily asserting a principle, they have no material effect on China's possessions or claims. In the meantime, I believe Australia has wedged itself in a position where it can't play a more creative role in finding a solution. In loudly asserting the principle of freedom of navigation and for US exercises, Canberra has become pigeon-holed in China's perception of opponents to its claims. Meanwhile, Australia's reluctance to match its rhetoric with freedom of navigation exercises has probably convinced Beijing that we are also like many of the countries of Southeast Asia, opposed to China's actions but unwilling to put our interests on the line to make a clear point. If we are truly concerned about the prospects for the rules-based order in our region, then we have dealt ourselves into a position where we can't do much about the slow-motion Greek tragedy we're all watching with mounting concern. To my mind, a much more creative Australian position would be to be a more active player in trying to find a solution to the standoffs. China has been allowed to settle on a position in which it believes the current freedom of navigation order is incompatible with its own national interests. From this position, Beijing believes that the only way it can pursue its interests is to overturn the existing order. The more the United States, Japan, Australia and some Southeast Asian countries have a non-negotiability of the current order, the more Beijing feels it must assert its interests more forcefully. In this array of interests, there is no country that is in a position to challenge this impasse of confrontation. This should be a role that Australia considers playing. We know that China is a country that has been prepared to change its mind on international initiatives. If it has been convinced that there is a better way to achieve its ultimate interests. We saw this with the Asian Infrastructure Investment Bank. Here was an initiative that was designed as an alternative to the World Bank and the Asian Development Bank that initially Beijing wanted to run China's way. But the protracted process of setting up the AIIB, Chinese officials were convinced by officials in countries such as Australia that the new bank would be more effective and less politicised if they adopted some of the World Bank and ADB governance principles. I believe Australia could play a much more significant role in relation to the territorial disputes in our region by seeking to convince China that it is not in its interests to bring about a future in which Asia's vital sea lanes are ruled by a succession of naval powers. In the meantime, Australia could also work with the United States and other regional countries towards a regime in which freedom of navigation did not seem so threatening to China's core interests. Asia's freedom of navigation regime, for example, could be much more restrictive on the practice of what is euphemistically called naval picture building or collecting intelligence on rivals from the safety of international sea lanes. In short, I hope we do see a more creative recalibration of Australia's position on the territorial disputes in its own region. Or we are likely to be rendering a no-progress judgment on this issue come next year's Australia 360. There's been progress on other fronts over the past year. In mid-2015, our relationship with Indonesia was stuck in one of its periodic ruts. Revelations of Australian spying on the Indonesian president, his wife, and close advisers had tipped the bilateral relationship into a state of icy distance. The execution of two Australian drug smugglers led to further estrangement. In this environment, Australia's change of prime ministers had a positive effect. In a bilateral visit to Jakarta, and during the summit season, Malcolm Turnbull showed an ability to connect with President Joko Wododo that had eluded his predecessor's best efforts. Thereafter, there was a chain of bilateral agreements between Indonesia and Australia on counter-terrorism, on terrorist financing, and on cyber security. This brings to the fore the question of whether the government has an agenda for the Australia-Indonesia relationship. The relationship works best when both sides lift their gaze from bedeviling bilateral gripes to larger strategic issues. It was Australia and Indonesia together that worked towards a leader's summit for APEC and for Bali processes on people smuggling and counter-terrorist financing. I would suggest that Australia and Indonesia should use the convergence in their interests around the changing regional order to work together on finding creative solutions to regional order challenges. Another bilateral relationship that could do with greater clarity of vision is Australia's relationship with Japan. Australian and Japan have drawn closer together over the past decade as a consequence of the erosion of American strategic primacy in Asia. Canberra and Tokyo have converged on the view that China's regional order challenge mandates a more conventional Japanese security posture than that which has been heavily constrained by a conservative interpretation of the Japanese Constitution. Along with other supportive regional countries, Australia provides Japan with diplomatic cover for loosening its Article 9 restrictions, a coalition of trusted order builders comfortable with Japanese security normalisation against fears of a resurgent Japanese militarism. The problems occur when we contemplate moving beyond this. Prime Minister Tony Abbott decided Australia should enhance Japan's normalisation by drawing it much into a much deeper security partnership. The purchase of Japanese submarines was to have been a significant move in this direction, and that was certainly how it was interpreted in Tokyo. The problem was that no one had articulated on either side what the end game of this process was. Exactly what would a closer security partnership between Australia and Japan entail? Precisely what role would each country be comfortable with the other playing in its defence posture? My interpretation is that our bilateral difficulty in enunciating the end game of our closer security partnership is because there is an asymmetry in what each side wants. Tokyo, it seems to me, would like a much more robust security partnership with clear imperatives all along the western Pacific coastline. Canberra is much more cautious. The last thing Australia wants is to be drawn into a conflict in North Asia as Sino-Japanese rivalry deepens. Indeed, our ministers have raised doubts as to whether our ANZS Security Treaty obligations would bind us in such an eventuality. So we have a dilemma in our relationship with Japan that goes well beyond soothing ruffled feathers over our decision to buy French and not Japanese submarines. We want a more active Japanese security role in the Pacific but seem unwilling to go much beyond supporting Tokyo and defraying its risks in a non-committal diplomatic sense. We're yet to have a robust discussion about what sort of relationship we want with Japan, what obligations we're willing to incur in exchange for what sort of undertakings from Tokyo and how this sits with our other security relationships. And while we're at it, we should talk more robustly about our slowly developing relationship with India. With the conclusion of an agreement to supply uranium to India last November, the last major stumbling block to a closer Indo-Australian partnership has been removed. In many ways, we want similar things from India as we want from Japan, a willingness to play a more robust strategic role in the Indo-Pacific. Indeed, we have found that a trilateral dialogue with India and Japan is a good way of progressing discussions on our common perceptions of what's happening in the region. But beyond this, we're quite vague about what sort of security partnership we want to aspire to with India. My guess is that the answer will not be found in considering these issues in a bilateral sense. Rather, we need a different sort of discussion about how best to shape the regional security order that considers and includes roles for all of the significant actors. Looking ahead to the challenges of the coming year, there are some pretty clear outlines. A US presidential election will deliver one of two very weak presidential candidates to the White House. A President Trump will somehow have won, despite widespread rejection of what he stands for by the American electorate, including from within his own party. On the other hand, a Clinton victory will deliver a president with ongoing investigations hanging over her head, a shocked but galvanized Republican party and a real prospect of impeachment proceedings. Maintaining a US commitment to Asia in the face of mounting trade deficits is increasingly a feat of presidential resolve, and that's probably beyond the capacities of either presidential candidate. I think we need to prepare ourselves for a replay of the Nixon shock of the early 1970s, in which in America at war with itself enabled a lower level of commitment to Asia's security. The difference then was that this lower American commitment was accompanied by an understanding between the US and China on a pragmatic coexistence. Today we have a deepening Sino-American rivalry along with a state of dysfunction in regional institutions that we've rarely seen before. Brexit will play a major role in sowing uncertainty into the global system as Britain and Europe edge their way towards trying to find the best terms of divorce. London's challenge is to try to give the Brexiteers what they voted for while minimizing the negative impact of the divorce. Brussels' challenge is to make the terms of the divorce harsh enough to discourage others from finding a similar deal while shifting the terms of membership in the EU in ways that allay real resentments among their members. The French and German elections both next year will be significant bellwethers of how Europe is handling Brexit. Closer to home, Papua New Guinea's election next year will need to be watched with great care. The volatility of PNG politics seems to be reaching avenue heights and Port Moresby's growing standoff with Bogenville doesn't portend well for the plebiscite and its aftermath. By mid next year, our 14-year-old commitment to the Ramsey intervention in Solomon Islands will be winding down. There are real challenges in this. Ramsey's success in stabilizing Solomon Islands creates real dangers of instability after it departs, especially as many of the political, social and ethnic issues that led to the intervention remain unresolved. And then, of course, there are events that no one can foresee but which suddenly consume huge amounts of our international resources and attention. These are 9-11 type events that can divert the course of history, posing impossible questions of our readiness and imagination. I believe such events make hard thinking about the conceptual frameworks of our foreign policy incredibly important. If properly designed, such conceptual frameworks don't reduce our flexibility in response as some of our governments seem to think. Rather, they give a clear sense of our interests and enduring values, particularly when dealing with the unexpected and disorienting. That's why it's so pleasing that the government has made a commitment to developing Australia's first foreign trade and development white paper since 2003. I look forward to seeing what they come up with and I urge the opposition to begin a similar process. For our discussion today, ladies and gentlemen, it seems to me that it's much harder to judge how Australia is positioned in today's world without such orienting frameworks. We are incredibly lucky in the Bell School of Asia-Pacific Affairs to be able to call on the breadth and depth of expertise to discuss the broad array of Australia's international policy domains and interests. This is a capacity that no other school of international affairs in the country is able to do. I look forward to hearing from my colleagues and to hearing from you as we discuss how Australia is travelling in today's world. Thank you very much.