Australia, America and Southeast Asia

The following is based on a presentation by Australian Foreign Minister Alexander Downer at the Georgetown Southeast Asia Forum, Washington D.C., on June 16, 1999. This is the first of two articles.

WASHINGTON: The Australia-United States alliance has a unique depth, quality and value which should never be taken for granted. Our two countries enjoy a genuinely dynamic partnership, one that is capable of delivering practical strategies and solutions to regional and global problems.

In fact, those joint solutions are important because they are more widely acceptable and successful than those that could be achieved by either of us acting alone. This fact was brought home to me very acutely in the way Australia and the United States have acted together since the onset of the Asian economic crisis. With this in mind the Howard government has, since its election in 1996, worked for a thorough revitalization of our alliance with the United States, and I rate the successful attainment of that goal as one of our major foreign policy achievements.

We have already heard from other speakers of the historic and far-reaching changes that are sweeping across Southeast Asia -- and none more so, as Ambassador Kuntjoro-Jakti has described, than in Indonesia. Now, I believe that the key lesson to draw from these events is simple and unmistakable. It is that flexible and open societies -- with robust, transparent and effective economic and political institutions -- are far better equipped to manage these powerful changes than closed, inflexible and inward- looking societies.

Only open and mature societies can truly harness globalization's extraordinary power to deliver practical benefits for ordinary citizens. Those that seek to cut themselves off from the world, to build illusory buffers against change, will simply doom themselves to the backwaters of history.

The Australian government has always recognized that Australia's future is tied up with Asia. We made that point unequivocally in the government's 1997 White Paper on Foreign and Trade Policy, which committed Australia to a long-term, mutually beneficial relationship with the region.

Although the past two years have seen some very heavy setbacks for Asia, and have also been a testing time for Australia, we never lost our optimism about the region's future, and appreciation of the region's fundamental economic strengths. Many East Asian economies have taken a battering, and the wider social and political effects of the economic crisis are continuing to unfold. But, thankfully, the economic outlook for the region is beginning to look a little brighter.

We've recently seen a significant improvement in Asian market sentiment, evidenced by the rise in stock markets since the beginning of 1999. Such a return of confidence to the region, which will be important for sustained recovery, is very welcome. It will probably still be quite some time before we see such a recovery in the region as a whole, but some economies are already heading in the right direction. Since March, we've seen the resumption of economic growth in Korea, Malaysia and Singapore, and stabilization in Thailand and the Philippines. It is very encouraging that growth forecasts for most of the economies of Southeast Asia continue to be revised upwards.

So the indications are that the worst of the crisis (at least terms of economic contraction) may be behind us. But one should never underestimate the challenges that still face governments in the region. Southeast Asian nations must push ahead with reforms to the financial sector, including the disposal of non-performing loans, recapitalization and an easing of the credit crunch. And the corporate sector must take reducing debt, improving profitability and eliminating excess capacity seriously.

For Australia, one of the outcomes of the region's "trial by ordeal" has been the definition of a new paradigm for our relations with Asia.

We have been able to help our regional neighbors when they needed it most. Australia was one of only two countries to participate in the International Monetary Fund (IMF) second tier support arrangements for Indonesia, Thailand and Korea, and we have provided other well-targeted and practical programs to help affected countries meet the many challenges thrown up by the crisis.

Just as importantly, we have by our own national example been able to show our neighbors the many benefits of open societies and free market democracy. While Asia has suffered its worst economic crisis for half a century, Australia has emerged as the shining regional economy, with the potential to be a vibrant regional financial hub. Our economy is among the fastest-growing in the world, we have a national budget in very healthy surplus, and we have interest, unemployment and industrial dispute rates at their lowest level for years -- in some cases, decades. And we've achieved that through the pursuit of a thorough program of economic reform and strong adherence to free trade principles.

Our wider regional diplomacy is also gathering pace and showing some practical results. For example, we continue to "stay the course" on trade liberalization in regional and global trade forum, recognizing liberalization to be the essential basis for long term economic recovery in the region, and beyond.

We've made a significant contribution to institution-building and good governance in the region through the establishment at the Australian National University of the Center for Democratic Institutions, which has already commenced an ambitious program of events involving many regional countries. And Australia is also an enthusiastic advocate of more effective regional security links, which we have sought to implement by developing a large network of bilateral security meetings, and through the fostering of a more effective ASEAN Regional Forum.

I don't have to underline the special importance of Indonesia to Southeast Asian and wider regional stability -- and, of course, to Australia's security. That is why Australia has been at the forefront of international efforts to assist Indonesia overcome the effects of the economic crisis, and why we were so concerned to persuade the IMF to amend the conditions of its rescue package for Indonesia to more accurately address the real needs of that country.

It's also why Australia made a significant effort to assist Indonesia in holding its national elections early this month, including through technical assistance on the ballot from the Australian Electoral Commission and the provision of a team of election observers. I have made the point many times that the significance of those elections -- the first completely open elections in almost five decades -- cannot be overstated. There have been problems, but the conclusion of all outside observers has been the same: that we have seen a basically free and fair election, that has produced a legitimate outcome. With that result, Indonesia has become the third largest democracy in the world, a good reason for optimism by any standards.

And in discussing Indonesia, I must also mention East Timor, which has long been a key foreign policy challenge for Australia and its wider international community. Australia has been very active over the past months in encouraging the development of the Tripartite Agreement that will guide the territory's decision on its future status.

Indeed, Prime Minister Howard's pivotal role in encouraging Indonesia to review its position on East Timor has been acknowledged both by President Habibie and Xanana Gusmao.