Mr Michael L'Estrange Mr Michael L'Estrange, Secretary

Address to the National Press Club, Canberra, 27 September 2006

Responding to Twenty-First Century Challenges: DFAT in a Changing World

• Australian foreign and trade policy reflects Australia's interests and values as well as our history and our geography

• Today, I would like to focus on how these influences relate to the current priorities of Australian foreign and trade policy

• And I would also like to address some remarks to the modern capabilities in the Department of Foreign Affairs and Trade which help to advance the interests and aspirations that underpin Australian foreign and trade policy

– those interests and aspirations are defined by the government of the day

– they give the Department of Foreign Affairs and Trade, or DFAT to give it is everyday title, its points of reference and its benchmarks for effectiveness; their development and implementation are the focus of our policy advice; and their purposes are a key determinant in the allocation of our resources.

A Modern Organisation To Meet Modern Challenges

• Earlier this year, on 2 February to be precise as I signed and dated my first papers for the day, I suddenly realised I was older than I felt

– that was because it dawned on me that it was 25 years to the day since I joined the Australian Public Service, as a graduate recruit in the International Division of the Department of the Prime Minister and Cabinet

• The Australian Public Service I joined at that time was very different to the one that exists today

– and the Department of Foreign Affairs and Trade is a very different organisation as well

• Today, whole-of-government realities and modernised management practices have fundamentally changed the way that the Australian Public Service operates

– and DFAT has been at the cutting edge of these changes

– that is because DFAT is so intricately involved in the wide-ranging policy implications of increasing globalisation and because across so many areas of national policy - from security issues to national economic competitiveness to many others - the interaction between domestic and international considerations is more active and porous than ever before.

• In response to these new realities, DFAT has adapted and modernised its structures, its work practices and its resource allocation in ways which, I believe, make it extremely well equipped to meet its responsibilities.

• DFAT today is a flexible organisation operating in a complex international environment

– our Australia-based staff number just over 2000 officers of whom around a quarter are posted overseas at any one time

– those postings include 87 Embassies, High Commissions, Consulates and Multilateral Missions in 74 States

– the Department now operates in 61 different currencies

– and on an annual basis around 11% of our Australia-based officers are rotated to overseas assignments.

• In all the areas of their responsibilities, whether it be diplomatic and security issues, or the welfare of Australians overseas, or opportunities for Australian exports and investment, or international policy benchmarking generally, DFAT officers in Australia and overseas require a more diverse set of skills than ever before

– so, in our recruitment and training strategies, our purpose - and I believe our achievement - is to develop DFAT officers with modern diplomatic skills, not of an effete or arcane kind but of a practical, hard-nosed and outcomes-oriented kind focused on policy issues of highest relevance to Australia and with particular skills in areas such as international security, regional relationships, international law, trade and economics, financial administration, client services and project management

: this means having DFAT officers with informed good judgement, policy and analytical depth, carefully focused activism and high quality advocacy skills

: and it means having officers with personal qualities to support Australians in times of emergency or grief and to cope themselves with the pressures that they and their families are under on a regular basis in many parts of the world.

• I believe that DFAT as an organisation and DFAT's officers themselves are meeting these many challenges with appropriately high standards of skill, professionalism and commitment

• The modern capabilities of DFAT need to take account of the fact that the demands that our portfolio generates are often unpredictable and call for immediate response

– for example, in the year that ended in June this year, DFAT activated crisis contingency plans following the London bombings in July 2005, the Bali bombings in October 2005, and the civil unrest in the Solomon Islands and East Timor in April/May this year

: and we sent specialist consular teams twelve times to assist with consular crises overseas.

• The recent Lebanon crisis highlighted the modern need for flexibility within DFAT as an organisation

– DFAT led a multi-agency operation which included Defence, DIMA, Centrelink and others

– that operation oversaw the evacuation of around 5,200 Australians and 1,200 other foreign nationals from a war zone located 15,000 kilometres from Australia

: it was an operation that also successfully brought over 4,600 Australians home by air immediately after their evacuation from Lebanon

– in managing the DFAT resources to support this consular emergency, flexibility was the key in relation to both our Australia-based and overseas-based staff

: we deployed 92 additional officers to support the work of our missions in Beirut, Nicosia, Ankara, Amman and Tel Aviv

: while 357 Canberra-based DFAT staff drawn from many areas of the Department worked on crisis management during the Lebanon emergency through the 24-hour crisis centre, the logistics co-ordination centre and the consular operations centre.

Advancing Policy Priorities

• The capabilities within DFAT to which I have referred are directed to meeting the policy challenges we face in a modern, dynamic and effective way.

• At the core of that policy challenge lies the diversity of Australia's international engagements, with clear priorities in the Asia-Pacific region and with broader interests that are global

• Australia is pursuing both its regional engagements and its wider global interests in the context of an international environment that has fundamentally changed

• Overlaying some of the familiar historical patterns of strategic competition between states that remain clearly apparent around the world there are two new realities that have transformed the international environment and the pursuit of Australian interests in it.

• The first is the reality of global terrorism

– a reality highlighted in the terrorist attacks in the United States on 11 September 2001 and in other attacks that have followed in Indonesia, Turkey, Spain, Britain, Egypt, Jordan and elsewhere

– the reality of modern terrorism poses a qualitatively new challenge to international security and constitutes a new kind of extremist threat

: one that is global in its reach, utterly ruthless in its intent, indiscriminate in its targeting, rigidly ideological in its perversion of religion and its rejection of pluralism, democracy and tolerance, committed to inflicting as much loss of life and dislocation as possible, and constrained only by its access to weapons with maximum destructive effect.

• The second transforming influence on the international environment is the reality of economic globalisation, that process of market-driven interaction and integration between economies which is being driven by the unprecedented movement of goods, services, capital and people across borders and by the ongoing revolution in innovation and commercialisation.

• There is, in my view, no alternative framework of ideas or action which provides any comparable record of practical gains to that of globalisation in generating higher levels of economic growth and in alleviating global poverty

– more countries are participating in the global economy than ever before and hundreds of millions of people in developed and developing economies alike have benefited as a result

– all of the world's great and emerging powers, including India and China, are committed to the market-led dynamic underpinning modern economic globalisation.  They are beneficiaries of globalisation as well as important drivers of it.

• The forces accelerating globalisation bring with them challenges as well as benefits

– challenges such as the illegal movement of people, finance, weapons and drugs

– challenges such as the grievances of states which have not, for various reasons, had access to the full benefits of globalisation; and

– challenges such as the accentuated threats posed by pandemics and environmental issues.

• These are substantive challenges that demand practical and sustained responses

– they demand effective international co-operation to stem illegal movements across borders

: they require dismantling the international trade barriers that prevent developing countries making progress down the path of export-led growth

: and they require effective, targeted development assistance programs which promote economic growth, improve governance and address the real needs of people.

• One of the great challenges currently facing the international community is the erosion of capacity among particular states which creates weakness and vulnerability, and potentially makes such states failing or failed ones.

• There are those who argue that this erosion of state capacity to deliver security or economic opportunity is somehow a direct consequence of globalisation, and in particular of some states being unable to access its full benefits.

• This proposition is, in my view, fundamentally flawed

– failed and rogue states are not the inevitable consequence of globalisation

– they are a consequence of ineffective and often corrupt governance, or a self-defeating economic introversion, or a dependency culture, or perceived grievances against modernity, or extremist ideologies, or some combination of these influences.

Complementarity between Australia's Global and Regional Interests

• The transforming impact of global terrorism and economic globalisation on the international system has had the effect of significantly increasing the complementarity between Australia's global interests and our regional ones

– just as there are interlocking regional and global networks of economic interaction, so too there are interlocking regional and global networks of terrorism, weapons proliferation and extremist ideologies.

• Australian foreign policy has always engaged elements of both regional and global interests

– but the interaction between them is now closer than it has ever been

– and that reality is clearly reflected in DFAT's pursuit of the priorities of Australian foreign and trade policy.

• One such priority is focused on counter-terrorism - and in this context the work of DFAT is directed at developing capabilities within and between governments as well as communities to deter terrorist attacks and to strengthen the mainstream consensus in order to further erode, and eventually eliminate, the appeal of violent extremism

• Terrorism clearly has both global connections and regional manifestations

– and Australia's counter-terrorist strategies address both these realities

: globally, Australia is doing so through on-the-ground commitments to countering terrorist challenges in places such as Iraq and Afghanistan as well as through activist Australian involvement in multilateral diplomacy to address terrorist threats and their bases of support

: and regionally, Australian counter-terrorism priorities are focused very effectively on co-operation with countries from India across South-East Asia to Fiji on issues such as border management, transport security, transnational crime, people smuggling, money laundering and promoting interfaith dialogue, pluralism and tolerance.

• Another key priority for the Department relates to countering the proliferation of weapons which undermines both global and regional security.

• Australia's counter-proliferation strategies again address both these dimensions

– globally, we do so working with others in the international community to meet the challenge posed by the nuclear brinkmanship of Iran and North Korea and through promoting arms limitation agreements and effective export controls

– and regionally, Australian counter-proliferation policy enhances co-operative arrangements to inhibit international trafficking in illegal weapon technologies and to limit the proliferation of small weapons in particular.

• DFAT is also intently focused on Australia's developing relationships with the great and emerging powers of the Asia-Pacific region, and in particular with the United States, Japan, China and India

– these relationships clearly embrace global as well as regional dimensions.

• We have important but different relationships with each of these countries

– we have a strong, close and expanding alliance relationship of critical significance with the United States:   an alliance, as the Prime Minister said yesterday, of interests as well as values

– we have a broadening scope of very significant security and economic cooperation with Japan reflecting Japan's own changing view of its role in the world

– we have an important and fast-developing relationship with China which we are keen to advance in an ambitious and clear-eyed way

: ambitious in terms of the important and expanding interests which Australia and China share in areas such as bilateral trade and investment, regional security dialogue and regional institutions,

: and clear-eyed in terms of the different priorities we have on particular issues as a result of different histories, different processes and different values

– and we also have significant new and expanding associations of common interest with India across a range of important bilateral, regional and global economic and security issues.

• Australia's interests in these key relationships with the United States, China, Japan and India are importantly affected by the changing character of the relationships between each of them - and particularly between the United States and China, Japan and China and the United States and India.

• But Australia's relationships with these major powers of the Asia-Pacific region are not the product of zero sum considerations

– in fact, the opposite is the case

– for example, over recent years, in a period when Australia's alliance relationship with the United States has never been closer or stronger, our engagement with the countries of the Asia-Pacific region and with the region's institutions has never been more intensive or productive.

• Another priority issue for DFAT which again engages both regional and global dimensions relates to the pursuit of Australian trade policy interests in the liberalisation of trade and investment flows

– globally we pursue this liberalisation objective through the processes of the World Trade Organisation and, in particular, the negotiations in the Doha Round

– regionally we pursue it through trade facilitation and through addressing structural 'behind the borders' impediments to freer trade and investment flows, and

– bilaterally we work to advance Australian interests through particular liberalising initiatives such as free trade agreements and other facilitating arrangements.

• As a Department, we are also clearly focused on a range of other vitally important international issues where Australian interests engage both global and regional dimensions.  Those issues include:

– the alleviation of global poverty and the role of aid, debt relief and liberalised trade access in delivering the most effective outcomes

– the challenges posed to the international community by weak, vulnerable, failing and failed states

– responses to climate change, and

– contingency planning in relation to avian flu and the spread of HIV/AIDS.

• The Australian Government's responsibilities in relation to the safety and welfare of Australians overseas constitute another priority for DFAT which directly engages global and regional dimensions

– these consular responsibilities are not defined by geography

– they are as relevant in our region as they are beyond it

– our support services to Australians overseas continue to increase

: with DFAT in the year to June this year providing assistance in just under 16,000 substantial consular cases involving Australians overseas and responding to many minor ones as well

: with our regularly updated travel advisories now covering 152 destinations

: and with the Department issuing over 1.2 million passports to eligible Australians in 2005-06.

Regional Engagement

• The interaction between global and regional issues in Australian foreign and trade policy is more intense than ever before but it is not symmetrical

– Australia pursues a wide range of important bilateral and institutional interests in the Asia-Pacific region not because they are reflections of broader global trends but because of their significance in their own right.

• Australia's bilateral relationships throughout South-East Asia are more diverse, realistic and productive than they have ever been

– this is reflected across the board

– it is reflected in trade and investment

– it is reflected in the important free trade agreements which Australia has negotiated with the United States, Singapore and Thailand, the further FTAs we are negotiating with China, Malaysia and ASEAN, and in the negotiations on an FTA that we hope can commence with Japan in the near future

– it is reflected in the extensive bilateral and regional cooperation on counter-terrorism, on counter-proliferation and on issues such as maritime security

– it is reflected in the clear focus of Australia's development assistance programs on the Asia-Pacific region

– and it is also reflected in people-to-people contact where Australian linkages in South-East Asia are more extensive and expansive than ever as a result of tourism, employment, education and the diverse connections established between national and community organisations.

• These dimensions of Australia's engagement in South-East Asia are clearly highlighted in Australia's relationship with Indonesia, the world's largest Muslim majority country and the world's third largest democracy.

– commercial links have been further strengthened by the agreement in 2005 between both governments to establish a Trade and Investment Framework agreement

– our shared security interests are the focus of the ongoing negotiations on a framework agreement for security co-operation

– the extensive and highly effective bilateral co-operation on counter-terrorism, is reflected at various levels of agency interaction as well as in the Bali Process on People Smuggling and the Regional Interfaith Dialogue

– the Australia Indonesia Partnership for Reconstruction and Development that was established after the 2004 tsunami has contributed significantly to helping re-build communities, promote economic growth and develop new ties of association and friendship between the people of both countries

– and there is a highly productive co-operation between Australia and Indonesia in regional institutions such as APEC, the East Asia Summit and the ASEAN Regional Forum.

• Our shared interests with Indonesia are, therefore, strong and growing

• Clearly there are some issues on which Australian and Indonesian perspectives differ

– that reality reflects the fact that each country has its own traditions, its own values, its own priorities and its own challenges

– our differences need to be recognised but managed in the context of the broad and expanding common ground we share

– they also need to be managed in the context of a modern bilateral relationship in which the capacity to achieve good outcomes to the mutual benefit of both countries has never been greater.

• The Pacific region presents a range of different but also critically important challenges for Australian policy

– the key challenge is to work in co-operation with Pacific Island governments and with the institutions of the region to enhance good governance, sustainable development and economic growth

– this entails a focus on law and order, humanitarian assistance and effective governance mechanisms

– it also entails addressing the challenges of structural development, the impact of transnational crime and the enhancement of strong, accountable national institutions.

• In the pursuit of these priorities, development assistance in its broad dimension is a necessary but, in its own right, not a sufficient condition for good governance, sustainable development and economic growth

– an indispensable additional element is that regional states need to assume responsibility themselves for addressing the root causes of the challenges they face

– Australia's development assistance programs and the work of Australian officials on the ground in the Pacific - including our police, our defence force personnel, our diplomats, our aid workers and our other officials working in line positions - are clearly directed to this objective

– this is especially the case in those countries, such as the Solomon Islands, East Timor and Papua New Guinea where Australian development assistance and other resources are allocated in a particularly intensive way to advance mutually agreed objectives.

• In addition to our bilateral relationships, another critical dimension of Australia's regional engagement concerns our involvement in regional institutions

– from Australia's perspective, the pre-eminent regional institution, by virtue of its membership and mandate, is APEC

: Australia hosts APEC next year with the Leaders meeting in Sydney in September and a series of Ministerial meetings around Australia leading up to it

: this will be a vitally important process for APEC's future following on this year's meeting in November in Vietnam

: and its scope will include important dimensions of APEC's future work program including trade facilitation, structural reforms, human security issues, regional contingency planning and other priorities.

• While APEC constitutes a pre-eminent focus for Australia's regional institutional engagement, there are other established and emerging forums to enhance regional co-operation

– these include the East Asia Summit processes and the ASEAN Regional Forum, in both of which Australia is an active participant

– there is also the ASEAN Plus Three process (including China, Japan and South Korea)

– in the Pacific, there is the Pacific Islands Forum

– and a range of other formal and informal associations of interest throughout the Asia-Pacific region.

• The challenge of this diversifying structure of regional institutional architecture is to encourage the minimisation of unnecessary duplication and the development of constructive and complementary dimensions of regional responses to regional challenges.

Conclusion

• The final point I wish to make today relates to values and foreign policy.

• In the context of modern global terrorism and the accelerating globalisation to which I have referred today, I believe that the values which underpin Australian foreign and trade policy are particularly well suited to the challenges of the times

– in promoting priorities such as good governance, transparency, accountability, democratic freedoms, the rule of law, economic openness, market competitiveness and practical support to enhance the capacity of states to benefit from economic globalisation, Australia is not only being true to the values it believes in itself and we are not only effectively pursuing our own prospects in an increasingly competitive international environment

: we are doing more than that

: by encouraging and actively helping other states to do the same, we are also advancing our wider interests and responsibilities in promoting stability, in supporting economic development and in countering extremism in our own region and in the wider world as well.