Rupert Murdoch, AC
Chairman and Chief Executive
The News Corporation Limited

Asia Society AustralAsia Centre
8 November 1999

Chairman Hugh Morgan, Founding Director Dick Woolcott, Executive Director Prue Holstein, ladies and gentlemen.

It is always a great pleasure to be back in Sydney, soon to be host to the Olympic Games and now the headquarters of Fox Studios and News Limited.

It is an even greater pleasure for me to have the opportunity of sharing with you some thoughts about the role of Australia in Asia, and, indeed, in the world as we approach the new century, and this country engages in what some have called the most significant change in Australian foreign policy since the end of World War II.

A few years ago my son, Lachlan, addressed a meeting in Melbourne of the Australian-American Association. I am pleased that he described our family so accurately. Lachlan said that ``An Australian influence nourishes the family, even in the United States...I have got to say that I love both countries deeply, and they are both an essential part of my identity.'' I share my son's sentiment, especially in the context of what I want to discuss tonight.

We all have to be concerned that the current reappraisals of Australian foreign policy - - driven by recent events in East Timor - - come out right -

• Right for Australia;
• Right for our allies;
• And right for the peoples of the region with which Australia is inextricably tied.

Let me start by saying that I have observed with some concern the spread of the notion that a nation's foreign policy can be driven purely by humanitarian or moralistic concerns, divorced from attention to national interest. In Britain, Kim Beazley's old friend, Tony Blair, has found that pursuit of a moral imperative in foreign policy can often conflict embarrassingly with his country's interests. And when it does, self-interest will prevail, even if that means leaving Foreign Minister Robin Cook with orders to sell a load of weapons.

So, too, with America. Presidents Bush and Clinton found that when a moral imperative to assist famine and gangster-ridden Somalia resulted in American casualties, voters' interest in doing good evaporated overnight.
And President Clinton is now discovering that the humanitarian instincts that led him to commit forces in Kosovo - if a strategy that aims at zero casualties can accurately be called ``a commitment'' - are not applicable in Chechnya. Why? Because Russia has nuclear weapons and Serbia does not.

Now Australia must decide whether to base its foreign policy on some notion of a moral imperative or on a clear eyed understanding of the national interest. In making that choice it must keep three things in mind: one, that what is often dressed up as morality is really emotionalism; two, the fact that American attitudes towards Europe do not extend to this region of the world; and three, the fact that pursuit of a foreign policy based purely on moralism can lead to a massive loss of sovereignty.

Let me address each of those issues in turn.

First, a moral foreign policy is often in reality a policy based on emotionalism. It is a variety of religious enthusiasm. But such enthusiasms are fickle and frequently short-term. They often fail to take realistic, hard-headed account of the consequences of intervention. They generally involve unrealistic assumptions about the staying power of domestic opinion and the likely reactions of international actors. A morality which doesn't take account of all of the consequences of its actions is an emotional self indulgence and a false morality. A democratic nation acting in the lawful, reasonable pursuit of its national interest is much less likely to miscalculate on a grand scale, to everyone's cost, than is a nation bent on a moral crusade.

Second, American attitudes. America has told us in no uncertain terms that any moral imperative it feels about events in Europe does not extend to this part of the world. Whatever led America to extend help to beleaguered Kosovo, did not apply to East Timor. Australia was doomed to disappointment when it attempted to convert its historic loyalty to America into reciprocal behaviour by the Americans. When East Timor blew up, and the human tragedy there unfolded, Australians assumed - yes assumed - that Americans would help it to pacify East Timor. No such luck.

President Clinton dithered. His national security adviser said that we in this part of the world shouldn't look to America for help in solving our problems. Finally, America decided to contribute a derisory 200 troops, but only for logistical support and to be kept out of harm's way.

Let me turn to the question of sovereignty and its relation to a morality-based foreign policy. Any nation seeking to do good in the world by intervening in the affairs of other nations must face the fact that the dominant view is that going-it-alone just isn't on.

For Australia, the limitation of our resources makes this an unrealistic option anyway.

Some international organisation, generally the United Nations, insists on being a player whenever an international peace-keeping or similar operation is involved. In East Timor, Australia found that it needed the blessing of other nations and, now, is seeking to pass some of its burdens over to the UN. Needless to say, my friend Kofi Annan is more than willing to assume the role as intervenor-in-chief - the person whose blessing is required before a sovereign nation can intervene in the affairs of another. But who will set the rules governing that intervention?

And if Australia seeks to assert a moral basis for intervening in this region, it will find that its problems will be exacerbated by the fact that it will be a predominantly white nation intervening in the affairs of non-white countries. This is a real problem for Australia as it reinforces an image, a stereotype, which Australia has sensibly and strenuously been trying to move away from for 30 years.

In short, if Australia chooses to pursue a moralistic foreign policy, it had better realise it runs the risk of doing more harm than good.

It is one thing to put young Australians at risk under Australian commanders and pursuant to Australian rules of engagement. It is quite another to place them in harm's way under rules set by someone not democratically elected and responsible to their parents and loved ones for their safety.

None of this means that Australia should adopt a coldly amoral foreign policy. Rather, we must always remember our values, but at the same time we must take a hard-headed view of where our interests lie. The East Timor effort now seems likely to cost substantially more than A$1 billion a year for several years.

Australia must ask itself whether it is prepared to spend its treasure and, inevitably, the blood of some of its young men and women, in pursuit of a purely humanitarian, or moralistic, foreign policy. The answer may be ``yes''. But it should be a considered answer, arrived at after a full and open debate.

In the course of that debate we must give careful thought to our relationship both with America and with the countries of East Asia. We cannot allow our disappointment with America's failure to provide speedy and meaningful support for Australia's policy in East Timor to obscure the fact that America still has a key part to play in what is in effect a triangular Australian-Asian-American relationship.

America's policy towards its trading partners in East Asia generally affects the economic health of those countries which are also Australia's trading partners. And that is why we have a vital interest in the position America takes in this month's World Trade Organisation ministerial meeting in Seattle.

The intertwining of American and Australian interests is nothing new. World War II made cooperation between Australia and America a necessity for both. Victory was followed by the Cold War and America needed Australia as a strategic asset in implementing its policy of containing Communist power and expansion.

We needed each other and our cooperation stood both countries in good stead during the crises that have wracked the world. Indeed, Australia and America are the only two countries to have sent combat forces to fight side-by-side in each of the five major wars of this century (World Wars I and II, Korea, Vietnam and the Gulf War).

I mention this history because I do not want our recent disappointment with America to prompt us to forget what the Prime Minister recently pointed out: that ``continued American involvement in the region is vital to our security''. Or to obscure the fact that America and Australia share not only interests but important, fundamental values.

Nonetheless, Australia must pursue an independent foreign policy within the framework of its American alliance, and in the framework of its other alliances.

The economic relationship between Australia, Japan and the United States is a good example of this triangulation. Despite Japan's recent economic problems, it remains by far Australia's largest export market. Australia naturally wants its Japanese market to grow. And for that to happen Japan will have to cure its current economic problems and continue to open its markets to imports. America can be a powerful ally in both connections, so long as its policy is consistent and sensitively handled.

Japan needs American markets for its manufacturers if it is to resume its economic growth. That puts America in a good position to urge upon Japan the fundamental reforms that are required if its economic system is to be converted from a government-directed one, to one that allows capital to flow to its highest and best uses. And it puts America in a powerful position to press for Japan to open its markets to imported goods - not only from America but from all of Japan's trading partners, including Australia.

So, too, with China. That great country is edging its way into the world economy.

It is no small undertaking to modernise a country the size of China, and to replace the industries of yesterday with those of the next century, while at the same time minimising the social impact on a large and diverse work force. Indeed, it is far the greatest economic challenge anywhere in the world today. Australia is doing its bit to help by supporting China's application for membership in the World Trade Organisation. The goals are clear:

• to open potentially massive Chinese markets;
• to help its leaders in their modernisation program;
• and to contribute to the stability of the region by helping to resolve the disputes and tensions that periodically arise.

Here, again, Australia must move down two paths. It must first strive to make its own voice heard in China, where it can support the Chinese Government's efforts at economic reform. And it can use its influence in Washington on the side of those who would engage rather than isolate China. Equally important, it can provide a calming influence in Washington, where the heat generated by foreign policy debates often exceeds the light those debates throw on the issues.

For America tends towards bellicosity and an urge for quick fixes in trade matters and in foreign affairs, whereas we natives of Australia are known for our soft-spoken subtlety.

Seriously, because we can have some small influence on the American foreign policy establishment, and because American policy makers know that our interests in this region are broadly consistent with their own, we are in a position to act as a moderating influence on America as it gropes for a coherent policy towards China, India, and indeed, Indonesia.

So, too, with Japan. We are closer to the Japanese geographically and have widespread people to people links with Japan, as well as a big trade relationship and a long standing and intimate political partnership. We therefore can help make the message of economic reform more acceptable in Japan. After all,

• Australia regularly welcomes a large number of Japanese tourists to its shores;
• More and more Australians are studying Japanese;
• Since 1997 Australia and Japan have agreed to annual Prime Ministerial summits.

So Australia can contribute its increasing understanding of Japan - that country's problems and prospects - to the debate over trade policy, both as that debate takes shape between Australia and Japan, and as it will be played out between America and Japan. It is no small thing to be expert in the laws and mores of two of the world's largest economies. And Australia has that advantage.

So Australia can play a role in shaping American attitudes towards Japan, China, Indonesia and the entire region - if its diplomats prove to be as skilled at whispering in the right ears in Washington as their British colleagues have been for many years!

I do not mean to concentrate solely on relations with Japan and China. Australia now sells more of its merchandise to each of China, Hong Kong, Japan, Korea, New Zealand, Singapore and Taiwan than it sells to Great Britain. In short, Australia is thoroughly integrated into the economies of this region.

But this does not mean Australia's future lies exclusively with its regional neighbours. It lies as well with the United States. Australia needs an America that remains constructively engaged - economically, politically and in a security sense - in the Asia-Pacific region. Such an engagement is essential to the prosperity and security of the region.

Similarly, Australia faces no contradiction between its American and Asian commitments. In fact they can reinforce each other. The more Australia conceives of itself as a nation of the New World, open to new ideas and new people, the more it will engage ever more deeply with Asia.

Fortunately, it is also in America's interest for it to remain engaged in the region. The recent financial difficulties of several of the area's economies could not be ignored by an America eager to keep its own economy growing.
So its Federal Reserve Board cut interest rates three times - not because the American economy required those reductions, but because Asia's economies needed a stimulus. The difficulties in this region dictated American interest rate policy. And now, when the Fed felt that it must raise interest rates to cool the economy a bit, it was in a position to do so only because economic recovery is taking hold in Korea, Japan, and elsewhere in Asia.

So, engaged in the region America must remain - in its own interests. This means not only helping Japan and other countries to develop solutions to their economic problems, but continuing cooperation with Australia in fields such as intelligence, logistics and technology.

America, of course, is not alone in wondering whether the end of the Cold War calls for a loosening of Australian-American ties. Australia, too, is in the process of a re-think.

Many Australians have long resented their dependence on America, which some see as more than a bit arrogant. They see the end of the Cold War as creating options, expanding the scope for independent action.

And they are right. Australians should not become mired in a debate over whether we are part of Asia or part of the Western world. We are Australians.

We have origins in Britain and Europe.

But we are increasingly a multicultural society, eager to welcome people of all origins who want to come to Australia to work and to prosper. There has been a reconceptualisation of the Australian national identity. Today nearly one in four of Australia's 19 million people was born overseas. Of these, about half have come from the UK, Ireland and Europe, and half from Asia, Oceania, the Middle East and North Africa. It is a pity to see immigrant numbers declining. Australia needs to recommit itself to the challenge and opportunity of large scale immigration. We should think of ourselves as a brilliant basketball team, eager to choose the first draft of human talent - intellectual and entrepreneurial talent, and what might be termed the talent of animal spirits - from anywhere in the world. Living next to Asia gives us an obvious source of highly talented immigrants.

We have so much to offer, including a distinct set of values that encompasses a heavy emphasis on individual freedom, individual responsibility, and generosity towards those beset by temporary tragedy or by forces beyond their own control. Capitalism with a human face.

In my view our greatest contribution to the region can be made by doing two things: Australia should set an example; and we must become a centre of educational excellence, increasing this nation's human capital as well as that of its neighbors. Let me touch briefly on each of those points.

Australia must set an example. It should show that a nation that embraces its values can be successful. Nations in this part of the world have before them two economic models. There is the Asian model, in which

• government plays a large role in directing the flow of capital;
• cronyism sometimes overwhelms market forces; and
• governments commonly shore up failed enterprises.

Recent history suggests that this model cannot survive in a globalised economy - one in which capital can be withdrawn from a country at the touch of a computer button. An increasingly open world economy favors nations which embrace open competition and open information flows.

The American economic model is far from perfect but is demonstrably capable of producing long term economic growth and sharing the benefits of that growth widely. It is this model - modified around the edges and changed a bit here and there to accommodate local needs - that Australia should take as its own.

Australia has already moved a long way in that direction. It has deregulated large segments of its non-information industries, and privatised utilities. It has curbed the power of its trade unions. It is about to lower income taxes.

But there is more to do. For we live in a world in which all resources are highly mobile, and in which the ability of governments to control events is limited. I am told by many young entrepreneurs that they prefer to seek the capital needed and the atmosphere so essential to success in America, rather than cope with the welter of regulations and the abnormally high marginal income taxes that still prevail in Australia.

This naturally stifles entrepreneurship, which is a pity, because a wonderful country such as this should be the natural home of young, thrusting entrepreneurs. And Australia's participation in the economies of the region should be a magnet for new high-tech firms seeking to sell goods and services to the millions of potential customers in the region.

Indeed it is a pity twice over - because we are coming close to the day when technology will mitigate the effects of Australia's geographic isolation. A day when technology will trump distance.

A leading historian has written of how "the tyranny of distance" has shaped Australian history. In the 1850s it took a letter 90 days to get from London to Australia. This was cut to 45 days in the late 1870s and reduced further when telegraphy was introduced.

Today companies such as mine make world news available to Australia in print almost as it occurs, and instantly on websites available on the Internet. As a result, Australia's geographic isolation is now less relevant than it has ever been - the tyranny of distance has been overthrown by technology.

I see no reason beyond government policy why Sydney cannot compete with mighty America and tiny Israel as a world-class high-tech centre, and with Singapore, Shanghai and Hong Kong to become an important capital market.

But first it has to become a world class, open market for all forms of communications and ideas - something that seems far past the imagination of our present rulers.

Nonetheless I am, I admit, very optimistic about our chances of emulating America's recent successes.

• Like America, this country was carved out of the wilderness by people who had no choice but to struggle or perish.
• Like America, that original migrant stock has been enriched by later migrants who have come here in search of opportunity - hands with which to work, minds with which to create.
• Like America, Australia is rich in natural resources.
• So, like America, Australia stands on the threshhold of long-term, solid economic growth.

But to emulate America's success, and to achieve sustainable economic growth, Australia must become the centre of great academic excellence. To say that the wealth of nations in the future will consist of intellectual capital is to repeat what is by now a truism. Only 2% of the value of a computer chip comes from the raw materials it uses. The balance represents the intellectual capital imbedded within the chip.

Look at Silicon Valley in California, where more wealth has been created in the last ten years than anywhere in history. And why is it there. Not the climate. Not natural resources. No, it is practically an extension of that great educational establishment, Stanford University - not ten miles away!

There is no reason why Australia cannot build a university system in the next century comparable to that of America. We provide an attractive place for academics to live. We have the space on which to erect great campuses. We have a start with the many fine educational institutions that already exist here.

John Howard recently said we must be a "can do" country - a country that can convert its luck and its cleverness to its long-term national advantage. In that same speech, he also said we must reform those institutions which in the past have contributed to our uncompetitiveness.

A superior higher educational system - on a par with the best of the U.S. and England - is crucial in securing our long-term national advantage and the single most important component toward ensuring our international competitiveness.

Tonight we should challenge the Prime Minister to back up his words by putting education at the forefront of his national agenda and to commit the resources necessary to building a university system capable of attracting and training the next generation of both Australian and Asian leaders.

So let me sum up this way.

All good foreign policy has two core aims - to protect the security of the people, and to extend their prosperity.

Australians should not worry whether they are European or Asian. We are Australians - and that is more than good enough, wherever we may be situated.

We can make our greatest contribution to the region by strengthening our regional engagement, and by showing our values and our economic system provide an example worth following, and by establishing our country as one of the world's great educational centres.

As I said, I am an optimist. I can see a day where, with the help of organisations such as this, Australia

• will resolve its foreign policy dilemmas;
• where it will understand that it must have mutually beneficial relations with the countries of the East Asian region and with the United States;
• where it will develop its intellectual capital and embrace the emerging telecommunications technologies to conquer the disadvantage of distance;
• where it will prove that its social and economic model is worthy of emulation; and
• where it will become a magnet for potentially great scholars, wealth creators and leaders.

These goals are obtainable. And with your help, and that of forward-looking leadership they can be achieved.

Thank you.