Rough Road Ahead

7 Jan 2014

A couple of months after a strong victory against a bruised and battered Labor is too early to declare that the wheels have fallen off the Liberal ascendancy in Canberra. But the signs are already emerging of the rough road that lies ahead. Of course some of the potholes are completely self-inflicted, such as the Coalition’s attitude towards climate change, which is almost universally regarded as childish. The Liberal version of Direct Action predictably will become an unmanageable burden in government over time. But other problems are more complex and give us insight into the state of the world today, a state that would confront and challenge any incumbent political party. Tony Abbott and Joe Hockey in opposition could only see the world in terms of Liberal versus Labor, but increasingly they will find an unravelling world order, as did Labor before the election. Neither party has a perspective, let alone realistic policy, to respond to these developments.

The crisis of diplomatic relations between Australia and Indonesia is one example. Contrary to first impressions, the fall-out arises from developments far larger than relations between two states: it illustrates a general deterioration in world affairs. Most commentators emphasise the obvious: that intelligence is conducted by all states against each other and that intelligence efforts disclosed by Edward Snowden merely made public an assumed reality. However, this ignores developments in technology as well as basic changes in society and how these have played out since September 11.

Richard Tanter in an extended article in Arena Journal no. 40 made clear the profound transformation of intelligence-gathering given technology change, partly expressed in satellite communication over the last twenty years, as well as the central role played by Australia in this global security effort (see also Richard’s piece in this issue). This is a highly significant development that locks Australia into the strategy of the United States and the West more generally vis-à-vis the rest of the world. When combined with the strategies pursued in the aftermath of September 11, where extra-legal torture, assassination and outright warfare were adopted time and again as acceptable expressions of the war on terror, long-standing patterns of relations between the West and other nations and cultures have been radically re-asserted and further elaborated.

Belief in cultural superiority has been the working assumption of the West since the Enlightenment, based in cultural developments that supported the ‘exceptionalist’ idea. Centuries of colonial dominance followed. This sense of superiority has never gone away and one of the ways it is expressed is through heightened intelligence possibilities. Digitalisation of life-ways in general is arguably a fateful cultural development, but whatever is said about that, it introduces a further expression of asymmetry in relations between cultures. If all cultures can embrace mobile phones, only some have high-tech means of intelligence, the highly complex infrastructure needed to engage in global surveillance of the phones.

There should be little surprise that this is resented if not feared by those outside of Western networks of power. Forced to accept onslaughts from the West, where sovereign legal systems have been brushed aside and sometimes whole cultures have been ravished and humiliated, a significant reservoir of resentment has built upon historical colonial experience. Sometimes this resentment is direct or close to the surface, as with states like China. Other times it is relatively buried or suppressed and combined with naive expectations of an easily achieved, simple equality between states, as with the present Yudhoyono government in Indonesia and also East Timor. But the resentment is there and will not readily go away.

If such frustrations can be seen to lie behind tensions in relations between states, their effects gain a new level of complexity when brought into relation with the rise of non-Western economies within the global economy and a new realisation that the West has entered a phase of significant decline.

We do not know the details of the discussions Joe Hockey had when he recently visited the United States and circulated in various Congressional and related networks—including the International Monetary Fund. But we do know that he came back to Australia shocked at the dim prospect of the renewal of sustained economic growth—what he, and many others, regard as normality. In addition, Hockey witnessed the humiliation of the US government by Congress over the extension of the US debt ceiling, a conflict that is about to re-appear, and also the political passions that allowed no room for cooperation within Congress. He returned to Australia convinced that our debt ceiling had to be radically increased, a complete reversal of the triumphant pronouncements about the management of debt and budget deficits when in opposition.

While Hockey’s focus on the debt ceiling in Australia is a little bizarre when compared with the outright warfare that has broken out in Congress, he nevertheless has become more realistic. It may be true that there is an element of party politics in his attitude, but those who simply see it this way ignore the broader reality that now faces our government and governments wherever we look.

The dilemma that faces the West is well brought out in recent reports by the US Congressional Budget Office. In 2012 the Office analysed the US debt situation and considered it to be manageable. It assumed a quick return to sustained economic growth by the US economy. In 2013 it abandoned this assumption because growth was not materialising and then the situation turned pear-shaped. The United States was fast heading for a debt crisis not unlike Japan’s, where state debt is over 200 per cent of GDP.

There is good reason to believe the 2013 expectation of a debt crisis is well-based. It is certainly an empirical fact that none of the large Western economies have been able to return to sustained growth. Some of the European nations have entered into situations similar to that of the Great Depression; the others struggle along close enough to zero. There is good reason for this. They have experienced a profound crisis of their financial system and a collapse of credit circulation. They have entered a process of deflation similar to that of Japan in the 1990s, not to mention that of the Great Depression, one that constantly undermines the prospect of growth. The present situation of most Western societies is not only financially unsustainable, it is unravelling. This is especially evident in the resort to printing money by their Central Banks. This is a process very difficult to stop. While it helps money circulation on the stock exchange, it does little in the real economy. And any prospect of slowing or halting the printing presses immediately produces an outcry and the prospect of its own crisis.

These crises of economy in the United States and the West more generally will have profound effects over time. Australia has embraced the US pivot to Asia, supporting it by committing to bases in northern Australia. It is not only regarded with suspicion by Asian nations (thus intersecting with the intelligence crisis) but it is also unconvincing.

The West still maintains its belief in its cultural superiority but increasingly its economic and military resources lack credibility. Unable to have its way in Iraq and Afghanistan, and credited with cultural destruction in both those theatres, security arrangements in Asia come under pressure and are challenged. They are already being tested.

These developments are the context of Japanese adventurism in north and east Asia. Prime Minister Abe’s determination to break out of the iron cage of twenty years of deflation has two elements: attempting to establish a level of inflation in the economy and devaluing the Yen to kick-start its export industries. Both these strategies are being pursued through printing money. It is a wild and predictably unstable gambit. If successful, Japan will have to face rising interest rates to cover inflation. But because of its levels of indebtedness, payment of interest would quickly empty its whole budget. Abe’s whole strategy in this regard endangers any prospect
of security in the long term.

The other element of Abe’s strategy is to challenge China and to seek US support in this challenge. The rights and wrongs of the dispute over the Senkaku/Diaoyu islands depend to a significant degree on an evaluation of colonial history, but the dangers of the assertion of a zone over the islands by the Chinese are obvious to most. That Abe in his assertive strategy is demanding that the United States fly civilian aircraft over the zone gives an idea of the foolish grandstanding involved. And all this is happening in a context of growing Chinese power and declining Japanese and US power. While raw power should not be the rule in relations between nations, to ignore the history of China’s humiliation by the West and unambiguously take the side of an unbalanced and radically unstable Japanese government, as has Australia, is foolish to say the least. And what does Australia make of Abe’s intention to re-arm Japan?

There is a larger framework to all this that no state has yet faced. It is one thing to note that the West is in a phase where it is unable to sustain economic growth, and how this is leading to the unravelling of relations globally. But the truth is that the whole era of growth economies must come to an end if it is going to be possible to develop a sustainable relation with the natural world. This is a core matter that Indonesia, China, Japan and the West must face over the coming period if present and future tensions are not going to turn into outright conflicts.

This is an appropriate moment to recognise the enormous contribution to world affairs made by Nelson Mandela. His ability to fight for his people who suffered a cruel regime and to do so without malice, to pursue equality without fear or favour, was an inspiration to vast numbers of citizens around the world.

Nevertheless, the great victory that was Mandela’s achievement was of a different order to what confronts us today. It is extremely difficult for people to come to terms with the kind of changes that are needed. As J. M. Coetzee noted in The Age on 7 December, Mandela, ‘like the rest of the leadership of the ANC … was blindsided by the collapse of socialism world-wide; the party had no philosophical resistance to put up against a new, predatory economic rationalism’. The spirit of Mandela requires that we go beyond his inspirational project if we are cope with the world as it has become.

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