Travels in Australia – The Complacency of a Regional Titan

Greetings from the land down under. As I come to the end of my visit to Australia, I thought I would take a moment to put down some thoughts for my blog readers.

It has been a very interesting week here, both for the perceptive and talented people I have had the opportunity to meet, as well as the important developments currently unfolding in Australian-Russian relations. As the APEC Summit in Sydney approaches, political tensions are high. Perhaps more than any other time over the past year, the world’s attention is focused on Australia and its regional leadership role as both President George Bush and President Vladimir Putin both make state visits. Amid this atmosphere of heightened interest, the highlight of my visit was the Sydney Summit on Russia held on Tuesday, where I gave the keynote address along with my colleague Grigory Pasko. Among the talented academics I was able to speak with were Professor Graeme Gill of the University of Sydney, the author Stephen Fortescue (whose excellent book is a must read for Russia observers), the analyst Dr. Alexey D. Muraviev, and many others. I had the opportunity to present a short new paper entitled “The Foreign Policy of the Siloviki,” which generated some interesting discussions and vigorous debate – though most of the proceedings were overshadowed by questions about Australia’s upcoming deal to send uranium to Russia. As many of you have already gathered from the media coverage of the event, both Pasko and I took the logical but surprisingly “controversial” position that the extraordinary lack of rule of law in today’s Russia poses significant risks to global security, as whatever safeguards over the uranium trade offered by Kremlin cannot be taken at face value. Personally I was very surprised by the strong reaction from some sectors – illustrating a growing gap between public opinion and political support for the deal. Almost immediately following our comments, a rebuttal came from Foreign Minister Alexander Downer, later followed by the same sentiment expressed by U.S. Secretary of State Condoleezza Rice. Finally the embattled Prime Minister John Howard chimed in to state his trust and confidence in the Putin government. So why, if a clear majority of Australian voters oppose selling uranium to Russia, would the Howard government back the deal? The answer is no doubt complicated, but it is in part due to the enormous business opportunities Howard’s supporters are envisioning – even at the cost to Australian sovereignty. While Russian investment in Australia is only about $6 billion and growing, exports from Australia to Russia more than doubled over the past year and a half – and the Kremlin is practically begging for more investment. What some fail to understand is that the uranium deal is part and parcel of a much larger investment agreement: Sergei Novikov, a spokesman for the Russian Atomic Energy Agency, said that the agreement is “a political document … It just opens the possibilities for our companies to buy and to sell products and services, to exchange technologies, to work in the science sphere together.” But For Russia, the uranium deal is key; a core component of their strategy to further project their power and influence globally through energy relations – the goal is the generation of energy dependence leading back to an ever-shrinking group of decision makers not accountable to a voting public. Russia is currently in discussions to build and run nuclear power plants in China, India, Egypt, Morocco, Namibia, and Vietnam – not to mention their ongoing work at the Bushehr plant in Iran. Combined with gas and oil exports snaking through their pipelines to Europe, and soon to come LNG tankers supplying global markets, the extension of a nuclear power system across various nations will provide Russia with even further clout.

A Russian technician works inside the nuclear power plant in Bushehr, south of Tehran, April 3, 2007. (Photo: Reuters)

In order to meet its stated goals on nuclear energy both at home and abroad, Russia badly needs help from Australia. In determining the Kremlin’s intentions, it is illustrative to examine the strategies used by Gazprom in Europe to co-opt at the source. Just as Gazprom wasn’t content to just sell gas, but rather own midstream and downstream distribution assets, the Russians are looking to vigorously invest at all levels of minerals, mining, and processing, and eventually buy Australia out (just look at Victor Raznikov actions with FMG, or the takeover of LionOre Mining International Ltd by Norilsk Nickel – and of course don’t forget about Rusal, who is also getting in on the action down under). Yet despite this geopolitical encroachment on Australia, and the rapid rise of Russia’s militarization of the region – most recently capped off by the $1 billion arms giveaway from the Kremlin to Indonesia (which must have made Downer a little embarrassed to have been defending Russia’s peaceful motives only 24 hours earlier), the “regional titan” is looking quite complacent and hesitant to act. One news story even carried the headline “The Russians are coming, but Australia isn’t worried.” There’s a huge new game in Asia, and it is very fluid. With 60% of the world’s economy meeting in Sydney and a clear demonstration that Russia is intent on building its presence, this is not the time for Australia to miscalculate who their friends are. I do believe that the government understands that in the end, Russia is becoming a major competitor, a country that wants to take on the role as the price setter for the minerals and energy trade. But is the Howard strategy of engagement the right one? Is realism in this case politically possible? I can’t purport to know all the answers, but as an outside observer, I think it says a lot when a president, who should be coasting on very high approval ratings following a successful APEC Summit, is instead losing points to an opposition that is mired in a humiliating strip-club fiasco. Now that says a lot about what Australian voters want.