Economic Opportunities and Strategic Threats

Peter Varghese AO on the grand challenges in the Indo-Pacific

Peter Varghese AO, Secretary of the Department of Foreign Affairs and Trade. Image courtesy of the Hindu Times

Peter Varghese AO, Australia's top diplomat, in his second address to Asia Society Australia members since taking up the position of Secretary of the Department of Foreign Affairs and Trade in 2013, gave a characteristically succinct and comprehensive summary of the economic, political and security challenges facing Australia in the Indo-Pacific region.

Growing economic interdependence and strategic competition in the region means that the strength of Australia's diplomacy and economic dynamism will be increasingly vital for our prosperity and security. Australia's ultimate goal is to maximise economic opportunities while minimizing strategic threats emering with the rise of Asia.

China’s vision for the world and regional order and its actions to shape that order will be critical, but the U.S. will remain the strongest geopolitical power in the foreseeable future. It means that the U.S.-China relations will be the single most important factor in international politics and economy, and particularly to the countries of Asia, such as Australia.

India will be increasingly important to Australia, but the questions of economic growth and its capacity to replicate China’s success remain to be seen. If India can, it will be felt by Australia and will change the economic and strategic fabric of our region.

Japan’s ability to restart and grow its economy and reposition itself strategically in the region will have a profound impact on the balance of power and interrelations in Asia. Korea, especially if unified, has the potential to become a much more influential player, both strategically and commercially.

Russia will be increasingly active in the region, but its capacity to influence the agenda is limited (while its capacity to block the agenda is apparent). Russia-China relations should not be overstated, but the convergence of immediate interests can be a powerful factor in empowering and shaping the trajectory of this relationship.

Australia may not be capable to bridge major powers, but it can (as it has done in the past) encourage and help build the institutions and structures in the Indo-Pacific which will ensure that the region will come out of the current transition more or less secure and stable.

Australia should continue to pursue its open, active trade agenda through bilateral and multilateral mechanisms and diversify its trade with the region and beyond to ensure that the dependencies and risks are spread.

This special event was sponsored and hosted by Herbert Smith Freehills - a long-standing partner of Asia Society Australia. The event is a part of our Leaders Program which presents high-profile events with visiting heads of state, ministers, senior officials, dignitaries and leading thinkers from the Indo-Pacific region and Australia who interpret and shape the present and future of our region.