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Why Australia should maintain focus on Southeast Asia

Josephine Warnant | Australian Foreign Policy Fellow

The Morrison government recently cut foreign aid to Southeast Asian countries by 42 per cent to make way for its Pacific Step-Up program. The decision reflects the Australian Government’s strong pivot towards the Pacific, with the aim to shape a strategically and economically secure region.

Australia resides in a unique position whereby it has close relationships with the Pacific “inner ring” but must also ensure positive relations in the Southeast Asian “outer ring”, where Australia acts as a middle power and facilitates alliances.

Southeast Asia provides significant opportunities for Australia. Its burgeoning cities are accelerating economic growth and the region is undergoing significant development. Collectively Southeast Asia makes up the world’s sixth largest economy and is projected to be the fourth largest by 2030. Australia has a unique opportunity to engage with these nations and play a role in shaping the region’s development.

The Department of Foreign Affairs and Trade (DFAT) emphasised the importance of engaging with ASEAN, a regional organisation representing countries in the region, in the 2017 Foreign Policy White Paper. The document established that “Australia places high priority on our bilateral relationships in Southeast Asia and on our support for ASEAN”. This was further expressed in 2018 when Australia hosted an historic ASEAN - Australia Special Summit.

In his recent speech to the Australian Parliament, Indonesian President Joko Widodo also underlined a need for “strategic trust” between Indonesia and Australia.

Despite the significant opportunities evident for collaboration with our Southeast Asian partners, the Australian Government seems to have shifted focus away from these countries in favour of the Pacific.

The Pacific Step-Up has seen Australia commit $1.4 billion in development assistance to the Pacific in 2019-20, as well as a significant increase in the number of diplomatic visits in the Pacific. In 2019, Prime Minister Scott Morrison visited Fiji, Vanuatu and Tuvalu and leaders from five Pacific nations visited Australia. This marks a significant uptake in diplomatic visits, with Australia previously averaging two ministerial visits to the Pacific between December 2017 and June 2019.

The Australian Government also cut aid to key partners such as Indonesia by as much as 50 per cent, while the Pacific is the only region to have received increased support over the last five years (17 per cent). As Minister for Foreign Affairs, Marise Payne, said at a DFAT Innovation Exchange: “we can and should all do more together to rise to the challenge and opportunities of our new Blue Pacific Continent".

The Pacific Step-Up is fuelled by a desire to engage in relationship building with Australia’s Pacific neighbours, as well as the need to prevent China from asserting its dominance in these nations through its Belt and Road Initiative (BRI).

Whilst these strategic goals are imperative, it’s also important that Australia continue to strengthen vital relationships in Southeast Asia. Southeast Asian nations have also been focal points for China’s BRI, with China being the largest foreign investor in Cambodia, Laos, Malaysia and Myanmar and, the second largest in Singapore and Vietnam.

China’s investment in Southeast Asia demonstrates its attempt to strengthen relationships as a way of increasing its influence. One example is the Lancang-Mekong Cooperation (LMC) which has seen an estimated US$260 billion invested in the Mekong sub-region. Southeast Asian countries may welcome China’s finance but are also facing over-dependence and a loss of autonomy. ASEAN has been criticised for failing to address regional security matters involving China and many see its influence waning in the shadow of China’s power. This means the Pacific is not the only area facing increasing investment and influence from China. This warrants a strategic response from Australia.

Australia possesses key strategic interests in Southeast Asia, meaning a reduced focus on this area may prove costly. Australia’s current military engagements with Southeast Asia include the Five Power Defence Arrangements as well as military training in the Philippines as part of “Operation Augury”. These links demonstrate a need to continue forging a strong position in the region, rather than taking a step down in favour of the Pacific.

This was echoed in recent comments made by US Ambassador Arthur Culvahouse, who said that the US will "be pushing Australia to expand its step-up from the Pacific Islands region to South-East Asia".

Focusing energy in Southeast Asia is not only important because this area sits at the centre of the Indo-Pacific region, but because the area offers significant economic potential. In 2016, Australia’s trade with ASEAN countries was greater than with our second-largest bilateral trading partner, the US. This region is also of particular appeal as ASEAN has traditionally sought to balance power between China and the US rather than take sides. As the geopolitical relationships in the Indo-Pacific shift, the US’ relative power in the region could decline. This means Australia may need to do more heavy lifting to maintain regional norms, making strong, politically neutral partners a significant asset.

The Pacific Step-Up is an important way to ensure Australian influence does not decrease at the expense of China's rising influence. But the Australian Government must ensure its focus on the Pacific does not lead to the neglect of Southeast Asian partnerships.

Josephine Warnant is the Australian Foreign Policy Fellow for Young Australians in International Affairs

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