Jersey Lee
Welcome to this episode of Pacific Polarity. Today, we're speaking with Ambassador Andrew Goledzinowski. Ambassador Goledzinowski had served as Australia's ambassador to Vietnam, high commissioner to Malaysia, ambassador for people smuggling and human trafficking issues, various postings in Australia's mission to the UN, etc. He had also served as chair of the International Coordination Council at the Coalition Provisional Authority in Iraq, senior advisor to two Australian foreign ministers and various other diplomatic postings. Ambassador Goledzinowski, great to have you on.
Andrew Goledzinowski
Thank you, Jersey. You make me sound very old.
Jersey Lee
Let's start with the latest news out of Washington. According to Politico's reporting a few days ago, a draft of the Pentagon's newest National Defense Strategy proposes that the department prioritise protecting the U.S. homeland and the Western Hemisphere, which is a striking reversal from the military's years-long mandate to focus on the threat from China. If this comes to be, it would obviously impact Asia-Pacific the most. However, it feels like something that not a lot of people here are talking about at the moment, despite its potentially immense ramifications. What are your thoughts on that?
Andrew Goledzinowski
I think it's too soon to panic. This is an administration where we see a lot of ideas being floated, and a lot of new language emerging sometimes, but we have to wait and see what the US actually does. I think as with trade policy and in so many other spheres, we've seen changes happen where the administration has either announced a policy direction or has speculated about a possible future direction, and then it's changed. So I think we can afford to sit back and monitor this situation.
The US is a global power and has been for a century and has global interests. I think it unwise for the US to behave like a small country and focus just on its defence of its borders. That's not how the US will protect its national interests going forward. And I think that the US is sufficiently wise and experienced enough to understand that. So I personally don't think that that will be the direction of future US security policy.
From our point of view, from Australia's point of view, we have to play the long game. Various administrations come up with different policies. Sometimes we agree, sometimes we don't agree. But our relationship with the US is also a century old and it will continue. And I believe that for us, strategic patience is a good policy to adopt and to not to react hastily with every twist and turn that comes out of Washington.
Jersey Lee
Obviously, the U.S. has had a history of producing many wise statesmen, but I think a good case could be made that it's not so much reflected in a lot of the decisions made by the current administration. So we do have to plan for—a good planner would always plan for a worst-case scenario; given that this is being reported, it is very much within the realm of possibility. So what's your thoughts on that?
Andrew Goledzinowski
Well, you're right. It's always good to have a plan B and a plan C. But in strategic policy, it's not that easy. There isn't another US that we can link up with as a major security partner. So there isn't an easy sort of alternative route to take.
The other thing is resources are limited when it comes to security. So if you choose to go with one strategy, such as AUKUS, it's not easy to hedge by having a second one up your sleeve because the costs are—you know, it's a zero-sum game when it comes to these huge outlays.
And the third problem is timeframes. Creating a strategic environment, a direction takes years. It's not possible to adjust direction on a regular, on a short-term basis because of an announcement that's just emerged or because of a story written in one magazine about a possible paper that may have been written by one part of the Pentagon. That would be a crazy policy for Australia to adopt. You know, it takes many years to adjust to strategic direction, to acquire military and security capacities. So we would be better served, I think, to wait and see what develops.
If indeed this does become a new trend in U.S. security policy—and as I say, I don't think that's the case, I think that's it's not impossible, but I think it's less likely—but if it does happen, there will be plenty of time for us to adjust. I don't think we need to do anything right now.
Jersey Lee
It's obviously not just Australia that may be paying attention to what happens next, it's also Southeast Asia. And for Australia, it would also mean that the reaction—if this were to come to pass—it would not just be a reaction to what the US does, but also what regional countries, particularly in Southeast Asia, how they respond to this. There's a lot of discussions about even before this strategy came out, that Southeast Asia might be starting to think about what happens if the U.S. is not such a counterweight to China. And you do see some countries already starting to bandwagon to a potential Chinese sphere of influence, like Laos, like Cambodia, and even Vietnam to some extent has really ramped up their cooperation with China, with the approval this year of a high-speed rail line extending to Haiphong and first joint army drills between China and Vietnam this year as well. Obviously, Australia in this scenario wouldn't have the capability to replace America's role in counterbalancing Chinese dominance. So how would you see this developing? Just the last week, we did see a number of Southeast Asian heads of state in China, when their predecessors weren't there for similar commemorations a decade ago.
Andrew Goledzinowski
You're right. If the US were to withdraw from its role as a counterbalance and as a superpower, it would have implications for all countries. And those implications would, of course, have ramifications for each other as well.
But in terms of your specific points, Vietnam is a very different case from Laos or Cambodia. Laos and Cambodia are very much countries that are small countries that are very much within China's sphere of influence. And that is a reality which won't change in the foreseeable future. Vietnam, on the other hand, has a thousand years of history of resisting Chinese dominance. It is deeply ingrained within Vietnam's identity and national DNA. I don't think that's changing. Vietnam has always tried to maintain a constructive relationship with its big neighbour, particularly in the economic sphere. China is Vietnam's biggest source of imports. It's its second biggest destination for exports. So of course, Vietnam will always want to maintain good relations with China. So that's not really a major change in recent years.
In terms of the US position, it's important for us as countries in the region, that is, the ASEAN countries in Australia, as well as Japan and Korea, to not overreact. I've always said that for me, the main reason why AUKUS is a good idea for Australia is not because it gives us the capacity to engage in a war with another country. It's not even mainly a deterrence. I think the main function and value of AUKUS is it locks the US into the region.
Because imagine a situation where Australia says to the US, we want you to remain engaged, we want you to counterbalance China with all the attendant risks and costs of doing that, but we're not going to help, we're going to stay neutral while you do the hard work. Imagine if Japan said the same thing or if ASEAN said the same thing. That would increase the likelihood that the US, either this administration or a future administration, would say, well, why should we do that? If you're not interested in balancing China in the region, why should we do that? Because we're safe, we can withdraw to Hawaii and the West Coast, and nobody will attack us, so we don't have to do the hard work. For me, that's why it's important that we don't overreact, because an overreaction that has us withdrawing from the U.S., as it were, could actually bring about the outcome that we want to avoid.
That would be a disaster; if the U.S. were to withdraw from the region, geostrategically speaking, what would Japan do? How would Japan then feel about its nuclear umbrella and its security guarantees? Arguably, Japan would feel it needs to create an independent capacity for self-defence. How would South Korea feel about its position vis-a-vis North Korea? Would it continue to trust a US which had obviously vacated the field? And then what would that mean for Australia? Who would we turn to for our security? It would be very impactful and consequential. But the most important thing is that we don't increase the likelihood of that outcome by precipitately withdrawing our friendship of the US.
That would be an entirely wrong decision to take for us.
Jersey Lee
To what extent do you think that AUKUS is helping to tie down the U.S. in the region? You know, some people argue to a large extent, some people argue to only a minor extent. And obviously, there's the AUKUS review that's also going on, which presumably might interplay with this draft Pentagon report as well.
Andrew Goledzinowski
Well, again, people are speculating that Elbridge Colby is anti-AUKUS and his recommendations will be negative. But the US is a big system, a big machine, and no one report or no one individual is going to be able to change the direction of a century of US policy very easily. We will have to wait and see.
In the meantime, I think, our best strategy is to continue engaging with the US. I wouldn't use the words that it ties them down into the region. Obviously, Australia can't tie the US into the region, but the counterfactual is possible. If we say to the US, we will do nothing to support you in this work, then that increases the likelihood that the US will reconsider its options, either this administration or a future one. So by doing AUKUS, we don't guarantee the US's presence, but we increase the likelihood.
Jersey Lee
For Southeast Asia, there's a debate over how they are and might respond going forward to Trump 2.0. On the one hand, it has often been said that diplomacy with Southeast Asia requires respect, so Trump's brash approach with tariffs and the broader uncertainty and some of the rhetoric could weaken America's position. But on the other hand, Southeast Asian countries are generally quite pragmatic; they see where their interests lie, and their interests would most likely align with having the U.S. continue to be engaged in the region as a counterbalance to China. So others expect them to ignore the noise, focus on the fundamentals, and work with Australia to, as you say, doing whatever we can to keep America engaged in the region, having America feel like it has more interest at stake and more interest to help defending the region and having a strong presence in the region; so that would push them to make concessions to Washington as necessary, beyond just the tariff issues. This gets at another dilemma for Southeast Asia: While they say they don't like the US-China competition, it has also benefited them in a number of ways, such as attracting “China+1” investment. So what are your thoughts around that?
Andrew Goledzinowski
Well, I agree with you 100%. I remember in Malaysia, I would attend a lot of conferences where all the Malaysian academics would say, our big problem is this great power competition. We don't like it. It's bad for us. And I would then, when my turn came to speak, I would say, well, I have a solution for that; if you've identified the problem as the competition, we should just ask the U.S. to leave. When the U.S. leaves, there'll be no competition, solves the problem. And of course, then they would have to sort of recant, because that isn't the problem. Competition, I then would go on to say, competition actually is the answer. Balance is the answer. A lack of competition would be a disaster.
Yes, sometimes the rhetoric talks about competition being bad, but I agree with you, it's not bad. It's actually—healthy competition and balance is deterrence. And that is actually the best situation that we can have in the current circumstances.
Southeast Asians are smart enough to know that. And you're right, too, to say that they're very pragmatic. Not many countries, I think, have really appreciated the style of the current US administration or the language, but they have been prepared to work with it because they know that that's the best way forward for them. Vietnam, for example, is disappointed in some of the things that have been said and done vis-a-vis the US trading relationship with Vietnam. Vietnam's biggest export market is the US. Vietnam also has learned over a long time not to expect too much from other countries. It's learned to be disappointed and to manage that disappointment and to do the best it can, notwithstanding the circumstances.
Again, it's unfortunate. I don't think anyone thinks that this is good for the US in the long term. The US is doing damage to itself in terms of its relationships, in terms of its soft power, in terms of how it's perceived as a trustworthy partner and ally. All of that is true. I agree with all of that. But I also think that the region and the world more broadly will continue to manage the current situation as best it can with a view to, in the longer term, restoring the sort of balance that we think should be in place.
Jersey Lee
So in terms of the damage you say that the U.S. is doing to itself, its soft power, its image, et cetera. What would you expect to be the practical ways it would play out, beyond just like, unfriendly press statements or whatever?
Andrew Goledzinowski
It's hard to say. You know, foreign policy and international relations are so complex. It's such a complex web of actions and interactions and unintended consequences. It's like the old analogy about the butterfly flapping its wing in the Amazon and it causing a typhoon in North Asia, it's a bit like that. It's chaos theory. So it's impossible to predict what the consequences will be, and we'll never know.
But obviously, a US which is seen as less reliable and less friendly is not good for the US or the broader interests of democracies around the world. So we can never predict what the outcomes will be of these sorts of shifts in policy, but we do know what trends we would like to amplify, what trends we'd like to avoid. And I think the current trend where the US is seen as being belligerent and selfish, I think that's not positive. And I'm looking forward to when we can move to a better dynamic.
Jersey Lee
I guess I'm thinking about this in terms of how the Trump administration or perhaps its defenders might approach it. They're like, okay, see, with this approach, we're getting tariff money, revenue, we're also getting various other concessions; and in terms of the cost, our opponents cannot clearly articulate what are the costs, it's all this wishy-washy stuff about our soft power, our image. We don't care about that, we get the money, we get the real stuff, you can't say how it really harms us, so we don't care. They might make this case and it might be persuasive to some people.
Andrew Goledzinowski
I agree, and it would be short sighted. The U.S. is inextricably linked to the world. It always has been. And the U.S. has to care what direction the world goes in. So if it's a Russian domination of Europe or whether it's a Chinese domination of Asia or whether it's a situation where democracy fails in the world or where trade dries up or where there's some unpredictable technological developments which adversely affect US interests, the US has to continue living in the world. And history has shown that the world is better when the US is engaged than when the US is disengaged. And I think there are enough smart people in the US who understand that that will continue to be the case.
Jersey Lee
While Southeast Asian countries could look past a lot, I imagine Trump's proposed ambassador to Malaysia, self-proclaimed “alpha male” Nick Adams, who is actually an Australian, incidentally, would be a bridge too far. So I certainly have a lot of sympathy for the Malaysian government and Australia's current High Commissioner to Malaysia as they try to work with and around such an individual, as well as a government that is prepared to send someone with no diplomatic credentials to such a posting.
Andrew Goledzinowski
The US has a great tradition of sending ambassadors with no diplomatic credentials. It's common for presidents to reward donors and others with ambassadorial positions. And the US system has somehow managed to cope with that. Usually the DCM, the deputy chief of mission, is a very highly experienced person who can make up for some of the lack of experience of the ambassador. So, I hope and trust that'll be the case also in Malaysia.
I don't want to comment about the individual because I don't know him personally, but we are used to this administration appointing colourful individuals to various important positions, both domestically and internationally. And we just have to—it's their sovereign right and we have to deal with that as best we can, I guess.
Jersey Lee
As Australia's former ambassador to Vietnam, during your ambassadorship, you led the establishment of a comprehensive strategic partnership between the two countries. In the past, this kind of classification of diplomatic relations used to be something that we might be more used to seeing coming out of China and its relations. And back then, it had been criticized as largely symbolic In Australia's case as well, in fact, having a comprehensive strategic partnership with China did not prevent the relationship from entering into a deep freeze. So what does this comprehensive strategic partnership mean and how significant is it in practice?
Andrew Goledzinowski
It means two things. First of all, it's a public recognition by Vietnam that Australia is an important partner. When I became ambassador in Vietnam, Vietnam only had three relationships at that level, and those were China, Russia, and India. And then, I think as a consequence of Vietnam's recognition of its role as a middle power, it started creating more of these relationships. Australia was one of the first ones in that next tranche of comprehensive strategic partnerships. So, first of all, it is symbolic. It's a signal and a symbol. And that's important because it's a signal to the broader Vietnamese government system that, yes, Australia is a favoured nation. It's OK to work with the Australians.
The second thing is it's very practical. Because after we negotiated the CSP, we then negotiated an implementation arrangement. The CSP is a public document; the plan of action is not a public document. And it goes into a lot more detail about how we will actually deliver on the different parts of the six parts of the CSP arrangement, so it really is something which is implementable. As a practical measure, I can tell you that there's a whole bunch of activities that we've undertaken with Vietnam as a consequence of the CSP that we wouldn't have done otherwise, or would have taken longer, or wouldn't have been as deep. So it's both symbolic and symbolism is important and it's practical. It's a win-win for both countries. It's an important indication of where Vietnam sees itself headed as a foreign policy player in the region.
Jersey Lee
To the extent that you could share, how is this document developed? What kind of inputs and what kind of processes go into it?
Andrew Goledzinowski
The head document is the CSP, and that's jointly developed by the foreign ministries on both sides. The way we did it was, we sat down and we talked about what the main elements should be, and then we discussed how those elements should look. Then one side or the other does a zero draft and shares it. That then bounces backwards and forwards a number of times. Things get added, things get subtracted. The precise wordings are very important sometimes, because Vietnam's not just thinking about its relationship with Australia, it's thinking about its other relationships as well, and same for Australia. And then the thing is signed, and it's done at a very high level, prime minister to prime minister.
And then we go back to work, the two foreign ministries again work on the plan of action, where we specify in a much more granular way what it is we'll be doing under each of these headings. And then it becomes the roadmap for our bilateral relationship.
In Australia's case, we can back it up. In Vietnam, the biggest embassies are the US and the Chinese. But then the third biggest is either Australia or Japan; it varies from year to year, and depends how you calculate it. So we bring a lot of weight to the relationship. We have a bilateral aid program—well, a total aid program, including bilateral and regional money, of nearly 100 million Australian dollars every year with Vietnam, which funds a lot of activities. It funds a review that's happening now of Vietnam's mining law. It funds exchange of knowledge around renewable energy and carbon trading mechanisms. It funds research into saline resistant crops for the Mekong region, which is subject to climate change. So there's a lot of things that happen underneath this document that wouldn't happen if A, we didn't have the document and B, we didn't have the money and the resources to invest.
Jersey Lee
One point of issue is that, despite strong diplomatic ties, as well as significant people-to-people ties by various diaspora communities in Australia, Australia's economic ties with Southeast Asia, not just Vietnam, but broadly, leaves much to be desired. You've argued that part of the reason for this state of affairs is that many Australian firms remain too risk averse to make big investments in that region. First of all, do you see this change anytime soon? What can be done on a more systemic level, beyond just lobbying or encouraging individual firms directly, perhaps systemic incentives or inducements? And why has this been less of an issue with the Americans and even various European countries, who have zoomed past Australia in terms of their economic engagement, and what could be learned from them, and could their presence help Australia re-engage?
Andrew Goledzinowski
That's a really good question, and we struggle with this. We puzzle over it. There's two reasons why Australia is underdone in Southeast Asia in terms of investment. Trade is fine. We sell a lot of stuff and we buy a lot of stuff and that seems to work very well. But investment is underdone.
Two reasons. First of all, Southeast Asia has very much based its economy on large scale manufacturing. They were taking advantage of abundant labour, cheap land, cheap energy, and they were able to take advantage of the rapid growth in large-scale simple manufacturing. Vietnam is a classic case. Australia, we're not a big manufacturing nation, so we didn't really have a lot to invest in that area.
The second reason, as you correctly say, is our avoidance of risk. The big investors for Australia in Southeast Asia, you would think, would be the pension funds, the big publicly listed ASX companies. But they have very strict rules on how they invest. And they're not chasing high level returns, they're chasing benchmark returns. For a proposal to go to even the investment committee of a big corporation, it has to tick like 14 boxes, right? You can never tick 14 boxes if you want to invest in Vietnam, for example. You have to tick the first four boxes and then you have to actually take the first step. That's how the Koreans did it. The Koreans tick the first four boxes. They say, yes, Vietnam is an attractive destination, potentially, and they open an office and they begin the process of gradually getting to know the environment, dealing with regulatory hurdles, establishing relationships and scaling up their investment. We don't do that. We want all of the risks managed. We want all of the questions answered before we set foot in the country.
When I talk to Australian business people, I sometimes use this analogy. I say that investing in Southeast Asia, particularly countries like Vietnam, is like crossing the road in Hanoi. You cannot plan it from the curb. You have to step out into the traffic immediately. and begin the process and you will you will get to the other side but if you're waiting to sort of figure it out from the footpath you will never you'll never make the first step.
Jersey Lee
That sounds like it's something that's really difficult for Australia to change or improve, because it's the structure of the economy. Number one, the reality is that there's not much of a manufacturing sector in Australia, and it doesn't look like there's going to be much of one in the near future for those kinds of investments; I suppose maybe if Southeast Asia's economic structure changes, then that provides an opportunity. But short of that—basically, we are going to have to hope that Southeast Asia's economy changes. And number two, in terms of the super funds, they are obviously going to be risk averse because of all the policy and incentive. And they do need to tick a lot of boxes, because they need to be accountable to the Australian people in this manner.
Andrew Goledzinowski
Yeah, you're right. But I'm more optimistic than that. Where Southeast Asia has grown fast has been in large-scale, low-cost manufacturing, assembling flat screen TVs, making shoes, things like that. And we couldn't participate very much in that sector. But what's happening in Southeast Asia is it is changing. It's going up the value curve. They are moving gradually away from large-scale, low-cost manufacturing to more high-tech manufacturing. And that's where Australia can begin to play a role. So, again, Vietnam is the country where I've served most recently. They are interested in the mining and processing of critical minerals. That's something we know a lot about. They're interested in a green energy transition, and we know a lot about that as well. We know a lot about agri-tech. Our financial sector is incredibly big and sophisticated. Sorry, that's fintech, but agri-tech as well. We are amongst the most efficient high-tech farmers in the world, and Vietnam is wanting to learn more about that.
So there's so many sectors where we will be able to participate. Services is not a big area of Vietnam's economy yet, but they will need to develop insurance products. They will need to upscale their education systems. These are all areas where Australia actually has a lot to offer. So I personally think, as Vietnam and other Southeast Asian countries go up the value curve, that's where Australia is, and that's where we will start to play a bigger role.
The second bit of it is, how do we change our corporate culture to be less risk averse? That is a tough one. And the government, to its credit, has adopted the Moore report, which aims to try and encourage and incentivise Australian businesses to do more in Southeast Asia. And interestingly, I think it's SME, small and medium-sized enterprises, that will lead the way, rather than the big ones who, as you point out, are more accountable and have more—they're big bureaucracies, basically, they're hard to shift. But the smaller ones and the medium-sized ones are beginning to see the opportunities. And so I think the Moore report and the work the government is doing to try and encourage that is absolutely valuable.
Capital is always an issue; the Moore report recommended, and the government adopted, a new investment fund worth two billion dollars, which is there to incentivize and facilitate Australian investment in Southeast Asia and that's happening I know for a fact that there's things happening in the background. There's a bit of a slow burn, all of this is only not even two years old yet. So it's too soon to judge the results of that work. But I think we're going to start to see some new investments in the region, which probably wouldn't have happened absent the government's active engagement.
Jersey Lee
You mentioned critical minerals as an area of engagement; you are currently senior advisor at EQ Resources, which is involved in tungsten extraction from Australia and processing in Vietnam, and being the only Western producer at scale for that. Another Australian company, Lynas, recently became the first company outside of China to commercially process heavy rare earths with its Malaysian facility. It seems like an emerging critical mineral supply chain is developing with mining in Australia and processing in Southeast Asia. As Australia's ambassador to the US, Kevin Rudd, pointed out recently, a key priority at the moment is to set a price floor in the West, to compete with cheap Chinese processing capability. Without the price floor, it's probably very difficult to directly compete with China. What else needs to happen to make this work? How will this interplay with some of the other ideas out there, such as a proposed Australian critical mineral strategic reserve and perhaps using it to help Australia-US relations? And is there a risk for Australia if it's just focused on the mining itself and not to try to onshore the processing?
Andrew Goledzinowski
You've said a lot and it's all correct. It's true Australia has some fantastic companies. EQ Resources and Lynas are both world class, in fact, world leading companies in their particular segments. And the fact that they are actively looking to, are engaging with Southeast Asian countries, and looking to deepen their engagement, it gives the lie to what I said earlier. Some companies are doing it and we need to recognise them as national champions. The important strategy, I think, for Australia is to ensure that these companies that are national champions are able to succeed, and therefore providing them with the relevant and necessary assistance to do so is a good investment. So what we need to really protect is the supply chain and the supply chain elements, which are the companies which are doing the work. I think That's the direction we're going.
Now, critical minerals stockpiles and reserves, that's another strategy. That's been a bit controversial. Not everyone thinks that stockpiling is actually the best way to go forward. It can distort the market a little bit. But the US is doing it and Australia is doing it. So we'll see how that plays out.
Setting a price, that is a good idea, that's what the US has done in terms of the deal between the Defence Department and Mountain Pass in the US, and that's in fact had a positive impact on Australian rare earths companies, although they're not directly benefiting from that, there is a sort of a market signal which is benefiting their share price as well.
I think there's a balance to be struck here. Partly it's about onshoring the processing and partly it's about ensuring that our supply chain connections into Southeast Asia continues to strengthen. We can do both. And in fact, we have to do both. So in the case of Lynas, their first processing facility was in Kuantan, Malaysia. The second one they built was in Kalgoorlie, Australia. And that's where these rare earths have been produced. And now they're building another one in Texas. EQ Resources, it's a similar story where they are looking to strengthen the supply chain, but also to do work in Australia. It's not one or the other. The answer in each case is, what will strengthen the company to allow them to continue to compete and grow? And whatever the answer to that question is, that's what we should be doing.
Jersey Lee
Could you, if you could, elaborate a bit more on what you mean by protecting the supply chain specifically?
Andrew Goledzinowski
These companies are working within a competitive landscape. But the competition is not always fair, as you know. In other countries, there's often incentives and subsidies and assistance that's given to companies to succeed globally. We in Australia have not been very good at that. But increasingly, Australia, the US and the Europeans are providing incentives to their national champions, either price laws or co-investments or various other grants which enable them to build their capacity and compete internationally. That's what we need to become good at. It's something that the Asians are very good at, not just China, but Korea and Japan. We've had this funny situation, and I remember when I was a young diplomat, I was told that we don't pick winners, the Australian government doesn't pick winners, we simply open the door by negotiating an FTA, and then we let the invisible hand of the market determine who wins. Well, that is a lousy strategy. And that's not what the Koreans do. It's not what the Japanese do. It's not what the Chinese do. And increasingly, it's not what the Americans or the Europeans do. We are one of the few countries that still believed in the magic hand of the market. Well, increasingly, we started to realize the government has to play a more strategic role. And I think we're starting to do that cleverly. And I think we're starting to see the results.
Jersey Lee
Back to the point about businesses and investing in Southeast Asia. Part of the argument that businesses make for why they avoid investing in Southeast Asia is that there are so many different countries with different regulatory framework that it is just easier to set up shop in China and be done with it, given that it’s got 1.4 billion people, a big enough market and a big enough network of supply chains, et cetera. Do you see this as the real reason for the lack of investment, which lots of businesses make the case that it is, or partly an excuse for their inaction? Given also the common criticism of ASEAN as “big on words, but small on action”, do you see any prospect for ASEAN to really come through and become more integrated? Because actually the most significant recent pushes for integrating Southeast Asian economies have come from the outside, such as the frameworks like RCEP, which was strongly pushed forward by China. So what role can Australia or other parties play in maybe pushing Southeast Asia to become more economically integrated?
Andrew Goledzinowski
There's a few questions there. First of all, on China, I think people have been using China as a factory to manufacture. Not many Western companies have actually made money in China. If you look at it closely, it's a market of 1.4 billion people that very few Western countries have actually managed to penetrate. That's not how the Chinese operate. A lot of companies have gone there hoping to make a fortune, and they haven't. But it is still a good place to manufacture things and then re-export. But increasingly, Southeast Asia is going to be taking that role as well, because China is becoming less price competitive, whereas other countries are going to be able to take over some of that role. Also, “China+1” is driven by strategic risk. With the US-China dynamic, it is increasingly dangerous, if you are like Apple and 90% of your iPhones are made in China, that is a huge risk exposure. So I think there'll be some hedging that goes on there.
In terms of Southeast Asia becoming a more unified market, you're talking about microeconomic reform, where regulations are brought into alignment with each other. That is very difficult. That's something not even Australia and New Zealand has managed to really perfect; we've done pretty well, but not perfectly. It's much more complex in Southeast Asia. ASEAN is the most diverse regional grouping that there is anywhere in the world. It's a diversity of languages, cultures, religions, political systems, very hard for them to coalesce around common policies. They have managed to open up trade amongst themselves by reducing obvious barriers like tariffs, and that's been good. But I think companies or countries like Australia will have to continue to deal with each ASEAN country as a separate economy. They are diverse, they're different, they each have different dynamics, and we have to get used to that, because to try and expect them to become a single partner entity from the point of view of regulation, it's not going to happen. And that's okay. We can manage still to work with particularly the big ASEAN economies. And we're getting better at that slowly.
Jersey Lee
I suppose that makes building a supply chain across Southeast Asia a bit more complicated, would you say so, and how to mitigate the difficulty that that might bring?
Andrew Goledzinowski
No, I don't think so. See the example of Lynas. Lynas is working with Malaysia. It does some refining in Vietnam, but it's not working with the other Southeast Asian countries. It doesn't need to. EQ Resources is working with Vietnam, but it's not working with Malaysia or Philippines. It doesn't need to. So I think individual Australian companies don't need to work with all 10—soon to be 11—ASEAN countries in order to make money. They can choose the country which is best suited for their particular corporate needs. IT is another good example. We are very much working with India to outsource a lot of our IT requirements. But increasingly, Philippines is becoming more important. And the one that's coming up the fastest is Vietnam. Vietnam has a growing and very efficient IT sector, which is about 40% cheaper than India's IT sector and extremely effective, very productive. So increasingly, we're going to see IT collaborations with Vietnam.
And if I as an Australian company want to work with Vietnam for IT, like with CMC Global—it's another company that I'm working with at the moment—it doesn't mean I also need to work with the Philippines and Thailand and Cambodia. I can create that relationship with Vietnam and benefit from that. So the fact that there's a diversity of countries there and a diversity of systems, we should see that as a buffet. We don't need to eat the whole buffet. We can choose the dishes that suit us at a particular time.
Jersey Lee
This is perhaps a more difficult question to ask. To what extent do you feel Australia is seen in Southeast Asia as a “vestige of European colonialism” and as a cultural “other”? And to what extent might it either hinder Australia's diplomatic efforts or help our adversaries make their case? And what can be done to mitigate any such impressions?
Andrew Goledzinowski
I've spent a lot of time in Southeast Asia. That's not something that people raise with me. I don't sense that that's a problem. People in Southeast Asia know Australia quite well; so many have studied in Australia, so many have visited, they know who we are. When they arrive in Sydney or Melbourne, they walk down the street and they see that half the faces look Asian anyway. We are a very complex multicultural country. They know that we're not of Europe. They know we're not of America. We're Australia. So this kind of debate that happened between Paul Keating and Dr. Mahathir back in the 1980s, I don't hear echoes of that anymore. So I don't think we carry a lot of cultural or political baggage in Southeast Asia; people know who we are, they know what we're good at, and they're happy to take us on our merits and work with us
Jersey Lee
As part of your earlier work as Ambassador for people smuggling and human trafficking issues, you had negotiated an agreement with the Obama administration to resettle the refugees in America, who had turned up around Australia's shores and were held in Nauru and Manus Island; this was the subject of the infamous phone call between Malcolm Turnbull and Trump. Immigration is in the news again around the world and in Australia, where Nauru's name is also coming up again, in the context of a proposed deal where Australia can send a few hundred criminals subject to deportation and pay Nauru 408 million upfront and around 70 million a year thereafter for them to take these people. Some of the political Left have criticized this, which is being pushed forward by the current Labor government, saying this is the kind of agreement that previous Labor oppositions would have opposed. From a purely political and financial standpoint, does this look like a good deal? And what if we bring in the diplomatic, ethical and other point of views?
Andrew Goledzinowski
Here's the thing. This is my personal view. Immigration now has become a hot-button issue around the world. For Australia, our immigration system over the last 100 years has been incredibly successful. It has made Australia the country it is today. As you know, a third of all Australians were born somewhere else. And if you include the people whose parents were born overseas, then that's nearly two thirds of Australians. And it's incredibly enriched us as a country. I'm an example. You're an example. We celebrate that.
But one reason why it's worked so well, is that the Australian population has always supported immigration as being a net positive, because they felt that it's been in Australia's interests. They've always felt that it's been well managed and well run and they've always felt that it's been—they've lent their confidence to the government to do it properly. Fast forward to today, there are risks. Should there be uncontrolled immigration, which there isn't, should immigration start to be seen by the population as being too fast or not sufficiently well managed, then that creates political risks for the government of the day. And we've seen in other parts of the world where the result of that is that very extremist governments sometimes can be elected, as a sort of extreme solution to the perceived problem. We want to avoid that. We want in Australia to maintain that middle of the road. And both major parties have basically coalesced around that sort of strategy.
The particular example that you give now is a conundrum, because for governments of both parties, you have individuals who are not Australian citizens, who have committed, in some cases, terrible crimes and normally would be deported. That's the normal thing that would happen. And it's what the Australian public would expect. But in the case of a relatively small number of individuals, they can't be deported because they qualify as refugees under the Convention. And Australia has always been extremely careful to comply with our international legal obligations. They can't be sent home because they would be at risk if they were sent home. So what do we do with these people? Do we release them onto the streets? That could create that lack of confidence that I was talking about, which in turn has implications for governance and politics and in the longer term, broader implications for our immigration policy. The worst thing would be in Australia for me, from my point of view, is if people felt that they no longer trusted that immigration is good for Australia and they stopped immigration, they elect a government that would deport people or put a halt to our immigration policy. That would be, I think, a very bad result for Australia. So if the price of maintaining people's confidence is moving these people offshore through an agreement with another country that is happy to cooperate with us on this, then I think it's probably a good idea. Let's see if it works. I'm hoping it does.
Jersey Lee
When you were serving as High Commissioner in Malaysia, you observed the first democratic transfer of power there. Back then you compared it to the fall of the Berlin Wall, the democratic transition in neighbouring Indonesia, and the end of apartheid, the latter of which you had observed on the ground. However, with rising populism in Germany, where the former East is being particularly drawn to the far-right AfD, Indonesia being rocked by the recent riots, and South Africa continuing to be mired in various socio-economic challenges, it really doesn't feel like such a hopeful comparison reading it today. Syaza Shukri remarked on this podcast two weeks ago that even in Malaysia, there's a significant undercurrent of racialised and very divisive rhetoric in Malaysia. And even in Australia, we saw the recent anti-“mass immigration” rallies and the ongoing associated political debates, as you alluded to. So with the earlier model of globalisation facing possibly chronic challenges, perhaps exemplified/amplified by the current US administration, rising inequalities, declining social cohesion and institutional trust, and the corrosive effect of social media, where do you see democracy going in the region?
Andrew Goledzinowski
Well, that's a big question. Malaysia is a special case. Malaysia has, as you know, a very complex national identity, and I think it has some unresolved issues that will need to be worked through if Malaysia is to continue to be a national success story.
South Africa, Russia, US, Germany… Yeah, the world is becoming a complex and unpredictable place. The trends are not positive, I have to say. I'm not personally very optimistic. I think the world is going to get more challenging before it resolves itself. And unfortunately, the nature of the resolution is also problematic because sometimes these trends continue until there's a crisis, and the crisis can be a depression, a world war, a revolution before there's a political reset. I'm hoping that that isn't the case in this era. But we will have no choice but to live through it and to see where we're taken by the tides of history. Definitely, democracy is not having a very good time at the moment.
But I think there's something fundamental about democracy, about listening to the voice of the people, about allowing people to express their views and allowing them to determine the nature of their government that will always be appealing. So, you know, at this stage, we can't see the graph. We can't see if we're on a small downward curve that will then rise again, or whether it's a long secular decline before we start to go up the other side. I'm hoping it's a blip, but I'm a bit fearful that it may not be.
Jersey Lee
Finally, and this might bring us to where we started: As Australia's most senior official in the Coalition Provisional Authority in Iraq, a bit over 20 years ago now, what was the experience like? Why did state-building, democracy-building in Iraq fail to achieve some of the expectations from 2003? And as we see America withdrawing from its global empire—either to some extent, or to a significant extent if Politico’s reporting is to be believed—in no small part a consequence of the Iraq misadventure, what do you think are the right lessons we should take from that time, and what are perhaps the wrong lessons to take?
Andrew Goledzinowski
Well, I can tell you the lesson that I personally took, is that we are just not smart enough to be able to predict the consequences of international action. It is such a complex machine. It's like the human body. And we are like 18th century doctors who are applying leeches and very primitive remedies to problems that we can see, but we can't really solve.
So Iraq, I agree it was a misadventure. The US administration of the day thought they were doing a good thing by displacing a dictator like Saddam Hussein. But the unintended consequences of tinkering with that mechanism, that original network of powers was on balance negative. That's my assessment today. And not many people, I think, would disagree. So the lesson is, you know, doctors have the Hippocratic Oath, which is a pretty good guide; and the first lesson, the first rule in the Hippocratic Oath is do no harm. And that's not a bad guide, I think. It doesn't mean step back and do nothing. It doesn't mean withdraw entirely from the challenges of the world. That would be a mistake. But it does mean that we should proceed with humility because our interventions in the past have not always been successful. What that means in any individual case, well, we seem to not always be good at applying the lessons of the past for the future. We have to keep trying.
Jersey Lee
Good words to end on. Thank you for your wisdom, Ambassador Goledzinowski.
Andrew Goledzinowski
Jersey, thank you for the opportunity. This has been an interesting conversation. I find that when I speak to smart people about these complex issues, it helps me to refine my own thinking. So good luck to you. I hope you do more of this because the role that you play in helping us as a community to think about these issues, it's very important.
