Australia, America and Southeast Asia

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.