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Hazards of Oz
By Chan Akya
Instead of the kangaroo, Australia's national animal emblem should be the platypus, an odd duck-billed, water-dwelling, fur-wearing, egg-laying mammal. In much the same way, Australia represents European values, or at least tries to, in a region suffused with either Confucian ethics, Islamic mores or spiritual transcendentalism, depending on which Asian country you choose for comparison. As US influence in Asia ebbs away, does Australia gain an opportunity to be the standard-bearer for theWest in Asia, or does it face being consigned to the peripheries of Asian strategic considerations?
From a purely economic perspective, Australia's strategic position couldn't be any worse. Half of its exports are primary products, and roughly two-thirds of imports are manufactured goods. This mix puts Australia in the same bucket as other Asia-Pacific natural-resource exporters, rather than in the value-added spectrum of countries such as Japan and South Korea. Australia also exports more than two-thirds of its total to East and South Asia, with few products making it to Europe or the Americas. This dependence on Asian countries firmly puts the country in the local rather than global sphere of influence.
The strategic rationale for any meaningful Australian role in Asia is compromised by its meager population, which at 20 million is equivalent to a year's growth in the population of China or India. Additionally, Australian participation in the Iraq conflict has roused the ire of Muslims across Asia, which precipitated the deadly Bali bombings in 2005, while cultural conflicts in the environment post-September 11, 2001, pushed the earlier Bali bombings in 2002. Call me a skeptic, but somehow the strategic equation of 20 million people facing off against 200 million angry neighbors fails to add up. In essence, Australia has to choose a new role for itself in the next few years, with a likely acceleration in the time scale should the US strategic withdrawal gather pace under Democratic leadership. 
'Two Wongs don't make a white'
As if the strategic position explained above were not challenging enough, Australians have worked assiduously to cultivate an image of being the region's bully. Their behavior toward various neighbors is poor even by the low standards observable across Asia, while the country's politicians have managed to put many a nose out of joint across the region. Famously, Malaysia's Mahathir Mohamad pooh-poohed Australia's role in the late 1990s, in essence dismissing the country as a listening post of the United States.
The reasons for countries such as Indonesia and Malaysia to exercise hostility against Australians are of course related to Australia's long-standing animosity toward Muslim immigrants. Racial riots in Sydney aimed at Australians of "Middle Eastern appearance" as recently as 2005 were but a culmination of years of hostility shown by the country's politicians to immigrants from Muslim countries, including the infamous case of the boat people from Afghanistan beginning in 2001.
Going further back in history, Australians adopted greater animosity toward Chinese peoples in the 1960s and '70s, which was exemplified by the wide use of 1940s immigration minister Arthur Calwell's quote "Two Wongs do not make a white"  in both the media and political circles. Even in the late '90s, Australian politicians such as Pauline Hanson made substantial headway by espousing racist politics. Interestingly, Hanson went on to blame Prime Minister John Howard for her subsequent election losses, claiming that he had hijacked her own policies - indicating that mainstream politicians had embraced the alienation of Asians as a core value.
The ugly Australian
More recently, Australia's cricketers kicked up a big hoo-hah in India  after insulting the president of the cricket board at an award ceremony. Gesturing with his index finger (mercifully, not the middle one), Australian captain Ricky Ponting motioned Sharad Pawar, president of the Board of Control for Cricket in India (BCCI), to hand over the team's trophy, and subsequently other Australian cricketers were seen pushing the elderly Pawar offstage.
Indian media reactions to the incident were predictably mixed. While many commentators took umbrage at the staggering lack of culture on display, others went on to use the incident to attack the role of Pawar himself, who as a politician had reportedly played some shrewd tactics to usurp the lucrative role of BCCI president from more qualified candidates. It is often a feature of Indian media that someone comes up with an "on the bright side" for disaster stories.  On the Internet, Indian bloggers have too often degenerated to referencing the "poor bloodlines" of Australians, castigating them as descendants of penal colonists, in essence adopting the same racist attitudes as their intended targets.
Whether or not the cricket incident was a minor one that doesn't merit longer introspection is moot to examining what all this negative goodwill does for Australia in the next few years, when I expect the country to face an existential crisis.
Death of a thousand cuts
Looking through the next few years, a few scenarios will likely push Australia over the edge.
Locally, the country's hyperactive housing market has already shown signs of cooling off, because of the leveling off in interest from foreign investors and more aggressive interest-rate hikes than originally expected. Second, the decline in commodity prices over the past few weeks adds more pressure to Australia, by trimming its export and profits, in turn depressing stock-market valuations.
Third, the yawning gap in trade will likely cause the country's currency to collapse in coming months, particularly if the US dollar declines against Asian currencies as well. This adjustment is sorely needed to improve Australia's competitive position, although as I note above, the lack of value-added exports makes the impact less meaningful. The combined impact of the decline in house, stock and currency values could put the country into a recession.
Any downturn will reveal Australia's fault lines clearly. Both sides of the country's economy, namely services and primary, are vulnerable. While advantages such as an educated workforce and the rule of law are positive for Australian service companies, competitors include Asia's city-states  as well as emerging service giants such as India. In primary businesses, such as mining and agriculture, the country's cost ratios are too high to sustain profits if commodity prices drop further, thanks mainly to labor - which has of course benefited from the absence of imports of unskilled workers.
Confronted with an economic crisis, Australian policymakers need to adjust their priorities. As I expect the environment will also include a gradual withdrawal of US presence across the Asia-Pacific region, Canberra hardly has any legs to stand on.  To recover, Australia will need to enhance the value of its service exports, where it faces tough competition from India, or its manufacturing exports, where it faces even tougher competition from China.
Immigration has been used as an effective tool by many Asian countries, including Singapore, to boost their economic fortunes. Given the volatile political history described above, and the poor image that Australians have across Asia, the country will have to double its efforts if it intends to attract any useful talent from the rest of the region. Even if this change in policies does prove successful, Australia will have bought some time, but I very much doubt that a meaningful longer-term solution can be worked out in the current demographic/economic framework.
Basically, the best solution for Australians is to sell their land to Asians and move back to Europe.
[ Last edited by northwest at 2006-11-24 02:54 PM ]