Australia

Important: The views expressed on this blog are my own. The Council on Foreign Relations takes no positions on matters of policy or politics.  Is Australian Prime Minister Tony Abbott the most incompetent leader of any industrialized democracy? Of course, a leader’s popularity, to some, depends on that leader’s political orientation. Many conservative Republicans think Barack Obama is one of the worst presidents in modern history, while many liberal Spaniards think conservative Prime Minister Mariano Rajoy is one of the worst leaders in Spain’s modern history. But competence and popularity are not necessarily the same things. Even conservative Republicans would admit that Obama has achieved major accomplishments in office – they just do not like those accomplishments at all. And Obama, Rajoy, and other rich world leaders, whatever their problems, usually seem to be making their policy decisions based on advice from a retinue of advisors and after careful consideration of policy options. Even leaders criticized for acting too slowly, and offering uninspired policy ideas, like French President Francois Hollande, appear to be capable of running their countries’ day-to-day policymaking. There are world leaders who appear dangerously unhinged, making policy based on whims, advice from a tiny handful of advisers, or some other highly unscientific formula. Argentina’s president, Christina Fernandez de Kirchner, comes to mind, as does Ecuador President Rafael Correa, North Korea’s Kim Jong-un, or Russia’s Vladimir Putin. But none of these leaders run a rich and powerful democracy. Tony Abbott, however, is in charge of a regional power, a country that is the twelfth largest economy in the world and the only rich world nation to have survived the 2008-9 financial crisis unscathed. Yet in less than two years as prime minister, Abbott has proven shockingly incompetent, which is why other leaders within his ruling coalition, following a set of defeats in state elections, may now scheme to unseat him. They should: Abbott has proven so incapable of clear policy thinking, so unwilling to consult with even his own ministers and advisers, and so poor at communicating that he has to go. Abbott’s policies have been all over the map, and the lack of coherence has often made the prime minister seem ill-informed and incapable of understanding complex policy issues. In press conferences, Abbott has offered mixed public messages about some of the health care reforms that were at the center of his agenda, and sometimes has seemed unsure himself of what health legislation has actually been passed on his watch. He also has seemed unsure of what he promised in the past regarding Australia’s major public broadcaster – he promised not to touch it – before he went ahead and made cuts to it. He also looked completely baffled on climate change issues at the G20 summit in Australia last year. Abbott also does not seem to think it necessary to even discuss policy proposals with his top ministers and other leading members of his conservative coalition. His lack of consultation has made it harder for him to pass some critical legislation. In addition, he appears to have one of the worst senses of public relations of any prime minister in recent Australian history. At major economic summits, he has embarrassed Australia with his coarse rhetoric. He recently decided to give an Australian knighthood to Prince Philip, husband of British Queen Elizabeth II, even though nearly half of Australians would prefer the country to be a republic, and even those who support the monarchy disdain actions that look like Canberra sucking up to the British royals. Australia had not given out its own knighthoods for nearly decades, and even to many monarchists the very idea of Australian knighthoods seemed archaic. And if Abbott was going to give out archaic knighthoods, Prince Philip was a bizarre choice. Even among the conservative supporters of Abbot’s coalition, giving a knighthood to the notoriously gaffe-prone and fusty Prince Philip went down badly. Abbott did not appear to have consulted with most of his top ministers before deciding to give Prince Philip the accolade. I take no position on whether a left or right coalition can govern Australia better – whether Australia needs a revolt from within the ruling coalition or a national election victory by the left. But a country that for decades has punched above its weight on nearly every international issue surely can do much better for a prime minister than Tony Abbott.

Ashlyn Anderson, Lauren Dickey, Darcie Draudt, Andrew Hill, Will Piekos, and Sharone Tobias look at the top stories in Asia today. 1. Japan slips into recession, dissolves lower house. New economic data released Monday morning showed that Japan had lapsed into recession, striking yet another serious blow to Prime Minister Shinzo Abe’s vaunted economic recovery policy and leading some to ask if this is the end of Abenomics. In a bid to win popular mandate for his economic policies, Abe announced he would delay a planned increase to the national sales tax and dissolve the lower house of Japan’s parliament. On Friday afternoon, lawmakers in the house of representatives chanted “Banzai!” as they disbanded. Snap elections are expected to take place in mid-December, and while Abe’s ruling Liberal Democratic Party may lose a number of seats, they are overwhelmingly expected to maintain their majority and could potentially increase their power. 2.  In Hong Kong, confrontations lead to questions over the future of protests. Dozens of demonstrators, apparently frustrated with the nonviolent strategy that has guided the Hong Kong pro-democracy protests, used metal barricades to smash doors and windows of Hong Kong’s legislature in an attempt to break in. The police arrested six people for assault of police officers and criminal damage to property, and the leaders of pro-democracy and student groups joined the government in criticizing the violent demonstrators. The incident came hours after the city of Hong Kong cleared out a smaller protest camp with no resistance; thirty court bailiffs enforced an injunction against street barricades at the request of the landlords of neighboring buildings in the area called Admiralty, and a similar injunction was issued for the protest site in Mong Kok. 3. Economic growth and climate change top the agenda at G20 summit.  The 2014 Group of Twenty (G20) summit, the ninth such meeting for the G20 heads of government, was held in Brisbane last weekend. The world leaders laid out a plan comprised a plan of more than 800 measures to boost the global economy by more than $2 trillion. Climate change was also discussed at the meeting, despite Australian Prime Minister Tony Abbott’s resistance to its inclusion in the G20 summit agenda. Also of note, the heads of several member states, including the United States and Canada, threatened further sanctions against Russia if Moscow does not withdraw its troops from Ukraine. 4. Peace process in Myanmar complicated by deadly attack. A critical component of President Thein Sein’s vision of reform, the peace talks between minority groups in Myanmar and the government, have been burdened by the Myanmar army’s shelling of a rebel group’s training facilities in Kachin state near the Chinese border. At least twenty-three rebels from the Kachin Independence Army (KIA) were killed in the incident, casting doubt on the Myanmar military’s resolve for peace talks. The incident marks the deadliest attack since a ceasefire agreement broke down in 2011. The Myanmar army has claimed that the strike was only meant as a warning, but KIA has denied this assertion. 5. Xi Jinping makes official state visit to Australia and New Zealand. In the wake of Asia-Pacific Economic Cooperation (APEC) forum and G20 meetings, Chinese President Xi Jinping visited Canberra, signing a trade agreement with Australian Prime Minister Tony Abbott on Monday. The agreement gives Australia more access to Chinese capital markets, opens Chinese markets to Australian farm and service-sector exports, and eases limits on Chinese investment in resource-rich Australia. While the two sides cemented opportunities for bilateral economic cooperation, Australia failed to get a reduction in tariffs on key commodities—rice, wheat, cotton, sugar—and China was similarly unsuccessful in getting Australia to change its practice on investigating inbound foreign investment. President Xi then flew to Auckland to begin a series of official engagements showcasing the bilateral trade, economic, and cultural links between China and New Zealand. BONUS: The Hunger Games proves too threatening in China and Thailand. The release of the third installment of the franchise, “The Hunger Games: Mockingjay Part 1,” in China was postponed until January, reportedly to balance the 2014 foreign and domestic box office receipt totals. Some commentators have suggested that the move is more political, as the film depicts a dystopian world in which a revolutionary movement attempts to overthrow an authoritarian government. In Thailand, the connection between the film and revolution is much more overt—several student protesters have been detained for using a three-finger salute, a symbol of resistance in the movie. The students, in Thailand’s northeast, were protesting the May 22 military coup that removed the populist Prime Minister Thaksin Shinawatra from power.

I don’t often write about Australia, partly because Australian politics are so stable and the country such a solid partner for the United States, but also because Australia has for twenty years basically avoided the ups and downs of the world economy. Alone among rich nations, Australia was basically unaffected by the global economic and financial crises of 2008-9 and the country also has not faced the kind of long-term economic slowdown challenges that confront Europe, the United States, and Japan. Unemployment today in Australia is around 6 percent, and earlier this year it was under 6 percent. Most forecasters project that Australia will grow by at least 3 percent in 2014, which is well above projections for most other developed economies. The prolonged boom in Australia has led many Australians, including not a few Australian leaders, to think that the prosperity can go on forever, that Australia has found a way to defy some of the challenges that have slowed other rich economies. Any visitor to Melbourne or Sydney or even Darwin, in northern Australia, can see for themselves the enormous boom in residential and commercial construction, and the skyrocketing prices for even the simplest apartments and houses. When I was in Darwin, a city of about 130,000 people, homes and apartments were going up everywhere; Darwin is the closest city to a group of large liquid natural gas processing plants piping in offshore gas. Twenty years ago, when I visited Darwin, it looked like a tiny, run-down Midwestern American suburb, with the only excitement coming from the markets on the edge of town where immigrants from Papua New Guinea and other Pacific islands sold their wares. But a series of recent commentaries and new books reminded me of what that visit to Darwin sparked in my mind – the idea that Australia’s growth, though impressive, seems a little too close to the frothy, wild, speculative growth that happened in Thailand in the 1990s and the United States in the mid-2000s. A new book by consultant and macroeconomist Lindsay David, Australia: Boom to Bust, argues that Australia’s housing market is wildly overpriced and is going to crash, and that overall Australia’s economic base is too narrow–housing, exports of natural resources to China, and (to some extent) financial services. Bloomberg View columnist William Pesek recently wrote an excellent commentary on the book.  Pesek too notes that Australia is the most dependent of any major economy on China’s growth, which is headed down as China’s economy cools and its own housing market cools. Pesek concurs that, beyond simply being too dependent on China, the Australian economy also has become far too dependent on exporting natural resources and on housing sales. He doesn’t mention another point: Natural resources are not renewable, and dependency on natural resources does little to foster innovation and entrepreneurial activity. Pesek does note that the average price of housing in Sydney as a multiple of average income–a standard metric used to see whether housing is overpriced–now stands at nine. By comparison, the price of housing in Tokyo, hardly a cheap city, as a multiple of income stands at 4.4. Meanwhile, in the past four weeks a series of major Australian companies and financial institutions also have sounded warnings about the Australian economy. Earlier this week, BHP Billiton Mitsubishi Alliance, Australia’s giant coal mining company, cut 7 percent of its work force because of declining demand for coal from China, which takes in over half of all natural resources exports from Australia. (Two decades ago, China took in only about 10 percent of Australian natural resources.) In addition, earlier this week the treasurer of Western Australia, the Australian state producing the majority of the country’s iron and coal and other resources, expressed significant worry at the declining world prices of these commodities, a decline that stems from oversupply and declining demand in China. In addition to that warning, Australia’s own central bank recently warned that the Australian economy was becoming subject to increasing speculation over housing, speculation that could overheat the economy and cause serious imbalances. These forecasts should be a warning to Australian policy-makers as well–and to Australian home buyers, builders, and the Australian population as a whole. But as Pesek notes in his commentary, when he faced down Australian federal treasurer Joe Hockey in an interview, and asked him about whether Australia faced a property bubble, he got little response. The minister dismissed concerns about the Australian economy and projected continued robust growth for the “lucky country.” “It is just an easy mantra for international commentators and for analysts based overseas to say, ‘Well, there’s a bit of a housing bubble emerging in Australia,’” Hockey told Pesek. “That is a rather lazy analysis because fundamentally we don’t have enough supply to meet demand.” Indeed, the entire government of Prime Minister Tony Abbott seems in denial about Australia’s vulnerability to any downturn in Chinese growth, and the country’s overdependence on exporting natural resources to China and overpriced housing sales for its decades-long growth. But at some point, probably quite soon, the lucky country’s luck is going to run out, and Abbott’s government will need a real response.

Ashlyn Anderson, Lauren Dickey, Darcie Draudt, Andrew Hill, Will Piekos, and Sharone Tobias look at the top stories in Asia today. 1. Japan reshuffles Cabinet. Japanese prime minister Shinzo Abe reshuffled his inner circle on Wednesday, the first such move since he returned to office nearly two years ago. While key members of the previous cabinet, including Chief Cabinet Secretary Yoshihide Suga, retained their posts, notable new appointments include a new minister of defense and a newly created post of security legislation minister, as well as five new female ministers. Overall, the move seems to have some popularity with voters, who gave the new cabinet 54.9 percent and 64 percent approval ratings in polls conducted by Kyodo News and the Yomiuri Shimbun, respectively. The reshuffle seems especially favorable to female voters, with 63 percent of female respondents in the Yomiuri’s poll having a positive view of the new cabinet, representing an impressive 18 percent jump over the previous incarnation. 2. Beijing reasserts its grip on Hong Kong elections. The Standing Committee of China’s National People’s Congress issued restrictive guidelines this week for the election of Hong Kong’s next chief executive in 2017. While selection of the chief executive will shift from a 1,200-member election committee to popular vote, all presumptive nominees must first be unanimously endorsed by the committee and approved by the Chinese government, ensuring Hong Kong’s leader will meet Beijing’s approval. Critics have called Beijing’s new regulations a “fake democracy” that only gives residents an illusion of choice. Others, including the British government, “welcome” the proposal. 3. Al-Qaeda establishes fifth official branch in India. In a video released this week, al-Qaeda leader Ayman al-Zawahri announced the beginning of a new branch of the terrorist group on the Indian subcontinent. The establishment of the branch, Qaedat al-Jihad, represents al-Qaeda’s efforts to increase support among India’s 170 million Muslims, as well as Muslims in Myanmar and Bangladesh. In the video, Zawahri calls for Muslims to rally for the formation of a caliphate, asserting that the subcontinent was previously Muslim territory before the “infidel army” occupied it. Al-Qaeda is also facing intense competition for support with the Islamic State of Iraq and Syria (ISIS), which has already succeeded in recruiting a number of Indian Muslims to its cause. 4. Australia and India agree to uranium export deal. During a state visit to New Delhi, Australian prime minister Tony Abbott signed an agreement with his Indian counterpart, Narendra Modi, to allow for the export of Australian uranium to India for power generation. The deal is an appropriate marriage of interests: Australia holds over a third of uranium reserves, while India faces chronic power shortages and depends on fossil fuels for 65 percent of its power. However, some critics of the deal are concerned that the uranium could end up in nuclear weapons, as India is not a signatory of the Nuclear Non-proliferation Treaty; Abbott countered that, “India has an absolutely impeccable non-proliferation record… and India has been a model international citizen.” 5. South Korea and United States announce plans to organize combined wartime division. The division would activate during wartime and provide services such as civilian affairs operations in North Korea and seeking and removing nuclear weapons materials. During peacetime, the troops from each country will train together but live at separate bases. It will first be located in Uijeongbu, north of Seoul, until U.S Forces Korea headquarters move to Pyeongtaek in 2016, part of a long-planned relocation of U.S. forces to locations south of the Han River. The commander of the U.S. Second Infantry Division will lead the new combined division, with a South Korean brigadier general serving as deputy. Bonus: Malaysia Airlines scraps unfortunate “bucket list” ad campaign. Malaysia Airlines launched a promotion asking travelers which places were on their “bucket list”—apparently not realizing that the phrase implies making a list of things to do before you die. Malaysia Airlines is still suffering from negative perceptions after the disappearance of flight MH370 from Kuala Lumpur to Beijing in March and a missile brought down flight MH17 while flying over Ukraine in July. The contest was renamed “Win an iPad or Malaysia Airlines flight to Malaysia.”

Sharone Tobias and Will Piekos look at the top five stories in Asia this week. 1. Thailand delays debate on amnesty bill that has sparked mass protests. The Thai senate on Friday delayed debate on a bill that would grant amnesty to almost anyone facing charges arising from Thailand’s political turmoil that took place from 2004 to 2010. Opponents of the bill claim that it is an attempt to bring back former premier Thaksin Shinawatra from self-exile without serving jail time. (His sister, Yingluck Sinawatra, is currently serving as prime minister.) Thousands have taken to the streets in protest of the bill, some wearing yellow shirts to signify their opposition to the former premier, and others wearing red shirts as a call for justice for their comrades who were killed in a crackdown of 2010 political protests. 2. Blasts in Taiyuan, China, kill one and injure eight. Several home-made bombs went off near government buildings in the northern city of Taiyuan early Wednesday morning. According to the Global Times, police detained a 41-year-old ex-convict who wanted to “take revenge on society” and confessed to the details of the crime. The incident comes a week after a car crash and explosion killed five and injured forty in Tiananmen Square. At the same time, the Chinese government condemned an opinion piece in the Wall Street Journal entitled “China’s Desperate ‘Terrorists’,” because it insinuated that human rights abuses in Xinjiang province caused the recent violence. 3. Typhoon Haiyan batters the Philippines. Typhoon Haiyan, one of the strongest typhoons ever recorded, hit the central Philippines on Friday and is expected to hit Vietnam over the weekend. The Philippines News Agency cited unconfirmed reports that roughly twenty people drowned after the storm surge, and close to 720,000 were evacuated from the typhoon’s path. Thanks to evacuations and preparations that included emergency housing for those displaced, as well as less violent winds than previously forecast, the impact of the typhoon was not as severe as expected. 4. China’s Third Plenum starts on Saturday to much fanfare. The third plenary session of the Eighteenth Party Congress begins tomorrow, November 9, and will last until November 12; the meeting will lay out President Xi Jinping’s economic plan for the next decade. Anticipation over the meeting and its outcome has reached a fever pitch, with analysts predicting a wide range of reforms to be announced. As important as they are, though, CFR’s Elizabeth Economy argues that China needs to foster the appropriate policy environment for these reforms to flourish; it will be a few years, not a few days, before we know the real impact of this weekend’s meetings. 5. Indonesia will not take in rescued asylum seekers. Indonesian coordinating minister for security and political affairs, Djoko Suyanto, said that his government will not accept Australia’s call to take in a boat with over fifty asylum seekers. The two countries have engaged in what some have called a "mid-ocean standoff" since the boat made a distress call on Thursday. Some Australians have complained that their government has not released enough information about the event and left citizens in the dark as to what was taking place. Bonus: Jimmy Kimmel’s China "joke" reaches the White House. A petition condemning a tasteless segment by Jimmy Kimmel—host of ABC’s “Jimmy Kimmel Live!”—has reached the White House and will require a response after it received 100,000 signatures within a thirty-day period. On October 16, in response to a question about how to resolve the United States’ trade imbalance with China, a child concluded his answer “Kill everyone in China”; Kimmel proceeds to let the kids debate the merits of doing so. Kimmel has been compared to Hitler for airing the segment, and protesters have picketed outside ABC’s studios.