In many ways, the uncertainty and confusion that has characterised the international environment since the end of the Cold War continued into 1993-94. There were, however, some major accomplishments, notably the conclusion of the Uruguay Round of multilateral trade negotiations. The Asia-Pacific region continued to exhibit both strong economic performance and a marked determination to develop more effective regional processes and mechanisms to promote security and economic co-operation.
The successful conclusion in December 1993 of the Uruguay Round of multilateral trade negotiations was a signal accomplishment for the international community as a whole, and one from which Australia could derive particular satisfaction. The Cairns Group of major agricultural exporters, chaired by Australia, developed into a significant player in these complex and protracted negotiations and helped to ensure a final outcome that delivered Australia’s key objectives. When the commitments agreed to in the Uruguay Round are fully implemented they will provide a significant and sustained stimulus to world economic growth. After more than seven years and several missed deadlines, the negotiations had become a disturbing source of general tension in a number of key relationships, notably between the United States and both Japan and the European Union. The successful conclusion of the negotiations was therefore additionally welcome as it provided an opportunity to put these relationships back onto a more constructive footing.
The meeting of leaders of the Asia Pacific Economic Cooperation (APEC) grouping, convened in November 1993 at the invitation of President Clinton, confirmed the relevance and importance of the Australian initiative to the continued prosperity of this extended region.
The emerging sense of community in the Asia-Pacific (both reflected in and nurtured by APEC) was also evidenced in the agreement in July 1993 to establish the ASEAN Regional Forum (ARF). The ARF, which met for the first time in July 1994, breaks new ground as the first body to include all major regional states and to be concerned specifically with security issues.
The outbreak in the central African state of Rwanda in April 1994 of ethnic conflict on a horrific scale and continued ethnic rivalry in Bosnia and elsewhere underlined the urgency of clear thinking and agreement on what the United Nations should do to deal with and, ideally, prevent such conflicts.
The main global trends in the year under review included:
a much higher priority attached by governments to trade and international economic issues;
the consolidation and further development of regional cooperation in the Asia-Pacific, particularly in the economic field but also in the area of security;
the European Union remained on course in terms of expanding its membership but divided on the philosophy that should guide the deepening of political and economic integration;
an intensifying pre-occupation in industrialised countries with seeking economic growth more specifically directed to the reduction of unemployment;
the security environment in the Asia-Pacific remained generally positive, notwithstanding the escalating dispute with North Korea over its nuclear program and some deterioration in Cambodia’s internal security;
the number of regional and civil conflicts continued to far exceed the international community’s peacemaking capabilities, a condition underlined by the outbreak in April 1994 of an extraordinarily savage tribal conflict in Rwanda.
The major powers
In the United States, President Clinton remained principally preoccupied with domestic and regional issues, above all health care and the North American Free Trade Agreement, but also threw his weight decisively behind APEC by proposing and hosting the inaugural meeting of leaders in Seattle. Other indications that the United States would not resile from its international leadership responsibilities included intensified involvement in the effort to resolve the conflict in Bosnia, inspiring NATO’s Partnership for Peace program directed at the countries of the former Warsaw Pact and the former Soviet Union, pushing along the Middle East peace process, taking the lead in encouraging North Korea to comply fully with its obligations under the non-proliferation treaty, and positioning itself for intervention, with UN endorsement, in Haiti.
In Japan, the Liberal Democratic Party that had ruled without interruption for over four decades, was finally overwhelmed by the pressure of continued political corruption and impatience with its reluctance to implement political reform. Much of the period under review was characterised by the resulting political instability-epitomised by a succession of Prime Ministers-although, encouragingly, continuity was maintained in key economic, foreign and trade policies.
China’s high growth levels continued, albeit somewhat abated after the authorities, concerned by signs of overheating in the economy, applied a series of contractionary measures in early 1994. The Chinese Government nevertheless continued steps to internationalise its economy, seeking membership of the GATT and the World Trade Organisation (WTO). China’s growing economic and military standing was emphasised by new studies suggesting that the Chinese economy is substantially larger than previously estimated. Friction continued between China and Britain over the future political structures of Hong Kong. Although the first US-China summit meeting since 1989 took place during the APEC Leaders’ Meeting in Seattle and the Clinton Administration again renewed China’s most-favoured nation trading status, relations between the US and China remained strained.
Europe remained characterised by slow economic growth and, in the wake of controversies surrounding the Maastricht Treaty, uncertainty over the nature and extent of the integration process. Doubts about the future were exacerbated by political uncertainty in several key countries, most significantly Italy, where the traditional ruling parties suffered a severe setback in elections following a series of corruption scandals. The continuing conflict in Bosnia also highlighted tensions between the major EU partners. The EU nevertheless completed negotiations for the accession of Finland, Austria, Norway and Sweden in 1995, subject to popular approval in these countries. It also pursued closer integration with the countries of Eastern Europe and the CIS, signing partnership and cooperation agreements with Russia and Ukraine.
Security cooperation between NATO and the countries of Eastern Europe was confirmed through the Partnership for Peace agreements. The return to power through election of former communists in several Eastern and Central European countries, including Poland and Hungary, highlighted widespread disillusionment in these countries with the effects of economic reform. This phenomenon was repeated in eastern Germany, where the former communist party enjoyed a resurgence in popularity in response to the stresses of unification.
The shape of Russia’s political and economic future remained uncertain. Although the introduction of a new constitution after President Yeltsin’s defeat of a parliamentary insurrection strengthened presidential powers, the return of large numbers of anti-reform candidates in fresh parliamentary elections indicated that the struggle between conservatives and reformers has not been finally resolved. Growing participation in the private sector has made retreat from economic reform increasingly unlikely, but the transition to a market economy remained slow, painful and uneven.
Asia and the Pacific
APEC’s first leaders’ meeting, held in Seattle in November 1993, marked another important stage in the development of APEC as a major regional institution. The hallmark of the meeting, the culmination of a 1992 initiative by the Prime Minister, Mr Keating, to strengthen the organisation’s political impetus, was a determination on the part of APEC members to pursue closer cooperation on economic and trade issues, including the proposal to hold a second leaders’ meeting in November 1994 in Bogor, Indonesia. The Fifth APEC Ministerial Meeting, which preceded the leaders’ meeting, agreed on a work program covering trade and investment measures including on investment, standards, customs and non-tariff barriers as well as a post-Uruguay Round review. The ministerial meeting also agreed to immediate admission of two new members, Mexico and Papua New Guinea, and the admission of a third, Chile, in 1994. A moratorium was placed on further expansion, however, to concentrate on deepening the links between APEC members.
Cooperation on regional security issues between countries of the Asia-Pacific also developed as regional governments began to prepare for the first ASEAN Regional Forum (ARF). Although sponsored by ASEAN and timed to coincide with the ASEAN PMC in July 1994, the ARF was designed as an inclusive region wide meeting to debate security issues.
Of the security issues confronting the Asia-Pacific region, the most pressing remained the international community’s concerns about the DPRK’s nuclear program and its nuclear weapons potential. Throughout the year the international community made repeated attempts to persuade the DPRK to return to the NPT and to comply with its safeguard and inspection obligations to the IAEA. The IAEA finally completed an inspection of DPRK nuclear facilities in May 1994, but in June reported to the Security Council that it could not guarantee that the DPRK had not, in the past, diverted spent fuel. Following this report, the US, Japan and the ROK agreed to press for the imposition of UN sanctions if the DPRK did not cooperate with the IAEA. China, however, argued that the issue should be resolved by negotiations rather than sanctions. At this point former US President Jimmy Carter offered to discuss the issue with DPRK President Kim Il Sung. As a result of these talks, the DPRK agreed to freeze its nuclear activities and allow IAEA inspectors to continue their monitoring activities in return for further talks with the US and suspension of the sanctions moves.
In Indonesia, President Soeharto’s government remained focused on the country’s markedly successful and outward looking economic development. During the year the Government announced a series of measures designed to deregulate key industries and liberalise investment rules, as well as dealing with pressures for increased democracy in public life.
Prime Minister Bolger’s National Party government in New Zealand had a narrow victory in the November 1993 general election, winning 50 seats of a possible 99. At the same time, New Zealanders approved the introduction of a new electoral system-a mixed member proportional system, known in New Zealand as the MMP. This will see the number of constituency seats reduced to 65, and the balance of a parliament expanded to 120 members elected from party lists. The politics of MMP are likely to result in the formation of coalition governments, the stability of which could impact on policy settings and business and investment decisions.
In Papua New Guinea, Prime Minister Wingti managed his resignation and immediate re-election by Parliament in September 1993 in an effort to gain a further 18 months in office free of the threat of no- confidence motions. Although apparently successful, the manoeuvre was the subject of a court challenge. The country benefited from rising international timber and minerals prices, but there were nevertheless growing concerns about the government’s fiscal situation and tensions over foreign mining investments. The PNG Government’s position slowly improved on the island of Bougainville and, in June 1994, it opened a dialogue in Honiara with rebel groups.
The position of Fiji’s Prime Minister, Sitiveni Rabuka, was strengthened by his decisive victory in early elections, held in February 1994. Mr Rabuka gave an undertaking to resume Fiji’s constitutional review process begun the previous year, but the Indo-Fijian opposition remained sceptical about his commitment.
Five months after UN supervised elections, Cambodian political parties agreed on the formation of a new coalition government. Despite the success of the elections process held in early 1993, however, it became clear that the Khmer Rouge retained a capacity to mount low level operations aimed at destabilising the central government. These operations undermined attempts to rebuild the economic and social infrastructure of Cambodia.
Despite ongoing separatist campaigns in Kashmir and several other regions, India’s Prime Minister Rao gradually consolidated his position during the year. The parliamentary opposition was unable to convert its identification with Hindu nationalism into electoral success and a merger with a smaller party gave the governing Congress Party a narrow majority in Parliament for the first time since the 1991 elections. The government maintained its economic reform program, and the reforms, designed to open the economy after decades of state regulation, are now regarded as irreversible.
The international economic environment
As noted in the July 1994 issue of the Department’s Economic and Trade Review, economic activity in the OECD area as a whole is now accelerating after three years of weak growth. Real GDP growth for 1994 is projected at 2.6% for the OECD area, rising to 2.9% in 1995. Faster than expected growth in the US underpins the projections, although growth in Europe is also projected to be considerably stronger. The European OECD economies are now projected to grow by almost 2% in 1994 and almost 3% in 1995.In Germany, where the recession has been particularly severe, GDP is expected to grow at close to the European average. Projections for Japan have also been raised, but by less than the average for other OECD countries.
The economies of East Asia continued to grow strongly in the latter half of 1993, average growth almost reaching double-digit levels. Most regional economies grew at between 5 and 8% in 1993; China recorded the highest single growth rate, 13.4%, but this slowed marginally in 1994. Inflation fell in most East Asian economies, although remaining above the OECD average except in Japan, Singapore and Taiwan. In China, however, inflation reached double digit figures in 1993-94.
In line with patterns throughout the early 1990s, investment flows remained subdued in the second half of 1993. Major investor countries such as Japan and Germany pursued internal economic adjustments, but investment flows into some newly industrialised and industrialising countries remained strong, reflecting their favourable growth prospects. It is expected that, with increased economic growth in the US, overall investment flows will accelerate during 1994 and that the newly industrialised and industrialising economies will continue to absorb increasing shares of that investment. Some uncertainties, however, have been introduced by rising US interest rates.
The Final Act of the GATT Uruguay Round negotiations was signed in Marrakesh in April 1994, marking the end of the most extensive multilateral trade negotiations ever undertaken. Included in the final act were agreements on the full extension of GATT rules to trade in agricultural commodities, the reduction of tariffs on industrial products by up to one third, the extension of GATT-type rules on trade in services and improved protection of intellectual property. The final act also provided for the establishment of a World Trade Organisation (WTO) to institutionally strengthen the GATT. The OECD has estimated that the final outcomes on agricultural and industrial products will provide a boost to the global economy of up to $418 billion by 2002.
Trends towards regionalism in international trade continued with the formal commencement of the North American Free Trade Area, approved by the US Congress in November 1993, and the ASEAN Free Trade Area (AFTA) on 1 January 1994. The congressional vote on NAFTA was an important indication that the US had rejected isolationist and protectionist trade policies. NAFTA was one of a number of steps taken by Mexico to integrate itself into the North American market and to become a first world economy. It also joined APEC in November 1993 and the OECD in early 1994. Following a Thai suggestion, the ASEAN countries, Australia and New Zealand also began to explore the scope to link AFTA to Australia and New Zealand’s Closer Economic Relations (CER) arrangements.
Global cooperation
The debate over the development of more effective international security mechanisms and strengthening the UN’s capacity for peacekeeping and preventive diplomacy continued during the year with widespread criticism of the UN’s response to the ongoing conflicts in the former Yugoslavia and Somalia. The deaths of UN peacekeepers, and many Somalis, in a conflict with supporters of the Somali warlord, General Aidid, in 1993 intensified the debate about the organisation’s function in the post-Cold War world and about the use of its peace enforcement powers.
Since Somalia, most countries appear to have adopted an increasingly cautious, results-driven approach to UN peacekeeping operations. In May 1994 President Clinton issued a directive stating that US participation in future peacekeeping operations would be decided on a case by case basis. These views appear to have conditioned the international response to the outbreak of large scale tribal killings in Rwanda. The UN Assistance Mission in Rwanda (UNAMIR), operating at the time of the killings, was restricted by its mandate from direct intervention and most potential contributors were reluctant to provide troops to its successor, UNAMIR II, until its objectives had been clearly defined. The UN’s response to the crisis in Rwanda, following its problems in Somalia and Bosnia, also highlighted the organisation’s inadequate resources and capacities to assemble, equip and control its peacekeeping missions.
The Minister for Foreign Affairs, Senator Evans, addressed these questions in his book, Cooperating for Peace, launched in September 1993. Senator Evans’s study sought to clarify the concepts involved in the security debate and to suggest specific criteria that might be applied by decision-makers in developing appropriate responses to new security problems. Senator Evans also argued strongly for the necessity of further reform of the UN system, including reform of the UN Secretariat, funding mechanisms and the machinery of preventive diplomacy.
The vigour of the debate over the UN’s security role has been, in many ways, a reflection of an international commitment to multilateralism in the post-Cold War era and a questioning of the boundaries of national sovereignty. This commitment was demonstrated in a number of other areas, including the follow-up to the 1992 UN Conference on Environment and Development (UNCED). Since its signing at UNCED the Convention on Biological Diversity has been ratified by more than 40 countries and came into force in December 1993. The convention encourages the sustainable use of biological resources to meet the food, health and other needs of the world’s population. Another important product of UNCED, the Climate Change Convention, came into force in March 1994 after it had been ratified by more than 50 countries. One of the primary aims of the Climate Change Convention is to limit global greenhouse gas emissions. Negotiations also continued on the text of a desertification convention.
The US, Russia and Ukraine signed an agreement in January 1994 requiring the transfer of all former Soviet weapons in Ukraine to Russia for dismantling. Ukraine will be compensated by up to an estimated US$1 billion for the fissile material in the warheads transferred to Russia. The agreement also addressed Ukrainian security concerns about attack by nuclear armed countries. Kazakhstan acceded to the Nuclear Non-Proliferation Treaty (NPT) in February 1994, in return for a package of increased economic assistance from the US and funds for the dismantling of the former Soviet republics’ nuclear weapons. Of the former Soviet states, only Ukraine, Kyrgyz-stan, Tajikistan and Turkmenistan have not yet acceded to the NPT.
On other disarmament matters, good progress was made on the preparations for the NPT Review and Extension Conference, scheduled for April-May 1995. In July 1993 President Clinton announced that the US would extend its moratorium on nuclear testing at least until September 1994, provided that no other nation tested before that time. Except for China, other nuclear powers have also implemented a moratorium. Following a Chinese test in October 1993, the US commenced preparations for a possible resumption of testing in late 1994. No decision was made to resume testing. Despite these developments, encouraging progress was made in negotiations on a Comprehensive Test Ban Treaty.
At the annual summit of the world’s major industrial countries in the G7 in July 1993, further steps were taken to involve Russia more centrally in its deliberations.
Regional conflicts
Despite concerted efforts by the international community, conflict continued in former Yugoslavia. For much of the period, however, fighting was less intense than in the previous year. The cease-fires in the Croatian UN protected areas have largely held and while the situation in Bosnia has been far less stable, there have been periods of comparative respite. Following the formation of an uneasy alliance between the largely Muslim Bosnian Government and the Bosnian Croats in a federation, an international contact group has been working to broker a settlement based on a roughly equal division of territory in Bosnia between the federation and the Bosnian Serbs.
A fragile cease-fire between government and rebel forces in Rwanda broke down with tragic consequences following the death of the country’s president in an unexplained plane crash in April 1994. The Rwandan Government, dominated by the majority Hutu tribe, exploited traditional inter-tribal animosities to organise a wave of massacres directed against its perceived opponents, particularly members of the minority Tutsi tribe, who were identified with the rebel Rwandan Patriotic Front (RPF). At least half a million people are believed to have been killed over the next few weeks. In response, the RPF resumed the civil war and quickly overran much of the country. Fearing reprisals, hundreds of thousands of Hutus had fled to neighbouring countries to escape the RPF advance by the end of June 1994, causing a major refugee crisis.
After the relative success in the first half of 1993 of the US-led Unified Task Force (UNITAF) in ending the famine in Somalia, the security situation again began to deteriorate in the latter part of the year. UNITAF’s successor, the second UN Operation in Somalia (UNOSOM II), became involved in a conflict with a key Somali warlord, General Aidid, and international and US public support for intervention began to decline. Following the deaths of 18 of its servicemen in an ambush in October 1993, the US decided to terminate its commitment in Somalia by March 1994. Negotiations between the competing Somali factions in early 1994 failed to produce a government or a peace agreement, and inter-clan fighting and attacks on remaining UNOSOM troops escalated.
The apartheid system in South Africa finally ended with the holding of non-racial elections in April 1994 and the inauguration of Nelson Mandela as the country’s first democratically elected president the following month. The elections followed more than a year of negotiations over the transition to democratic government, including the terms of a new constitution. Although preceded by widespread political violence, the elections were largely peaceful and marked by strong voter turnout. The elections resulted in a clear victory for the ANC, which became the largest partner in a five-year Government of National Unity (GNU). The former ruling National Party was also guaranteed positions in the GNU.
Elsewhere in Africa, conflicts continued in Angola, southern Sudan and Liberia. The promised transition from military to civilian rule in Nigeria was thwarted by a disputed election result and the reimposition of military rule in September 1993. After decades of internal conflict, elections were held in Ethiopia in June 1994 for an assembly to draw up a new constitution.
A major breakthrough occurred in the Middle East peace process in September 1993 when Israel and the Palestine Liberation Organisation (PLO) formally recognised each other through an exchange of letters and signed a joint declaration of principles on Palestinian interim self-government. Although the negotiations were interrupted by the massacre of Muslim worshippers at Hebron in February 1994, the two parties finalised the terms of Palestinian self-rule in the Cairo Agreement, signed in May 1994. An interim Palestinian Authority was established to run the civil administration of the Gaza Strip and Jericho, Israeli military forces were re-deployed from these areas and a Palestinian police force established. Provision was also made for economic cooperation between Israel and the interim Palestinian Authority and for the phased transfer of power to Palestinians in the rest of the West Bank, leading to Palestinian elections. The agreements between Israel and the PLO gave impetus to some of the other bilateral talks, particularly those involving Jordan.
Many of the conflicts following from the collapse of the Soviet Union continued, osc-illating between open warfare and peace negotiations. Separatist rebels in Georgia overran the region of Abkhazia in September 1993, but later agreed to a Russian-brokered ceasefire involving the deployment of peacekeepers from the Commonwealth of Independent States (CIS). CIS troops, mostly Russian, also continued to act as peacekeepers in the central Asian republic of Tajikistan, where they have been deployed since 1992.
Civil wars continued in Afghanistan and Sri Lanka, while separatists maintained their campaign for an independent state in Kashmir. Burma’s military government continued to resist demands for a more participative and genuinely representative system of government in Myanmar.