Wikileaks in our trousers

The extraordinary material on display in the Fairfax papers today from Wikileaks rips a hole in the seam of what this blogger has consistently described as the "Great Straddle": The national interest divergence that Australian leaders have allowed to develop between our strategic imperatives with the United States and our economic imperatives with China.

This blogger largely agrees with John Garnaut's assessment that:

Rudd's unsolicited enthusiasm "to deploy force if everything goes wrong" and his willingness to posit Australia directly against China's growing military capability seems unnecessary, given the vast and growing gap between Australian and Chinese capabilities.

It also seems short-sighted, given how tightly our economies, people and political and physical environments are intertwined. Australia should not be signalling to Washington, let alone Beijing, that it ranks China closer to an enemy than friend, given what's at stake if that favour is repaid.

There is absolutely no reason to encourage Washington to believe we'll be ready with bayonets in the event of a China conflict. For two reasons. First, that to do so risks just this outcome and encourages Washington to be hawkish. Second, why give it up now when you can extract something later?

And that brings us to the nub of the issue. The Howard government undoubtedly handled the straddle better. The Age reports that in 2006 the then opposition leader Kim Beazley remarked to US Ambassador Robert McCallum that:

''In the event of a war between the United States and China, Australia would have absolutely no alternative but to line up militarily beside the US. Otherwise the alliance would be effectively dead and buried, something that Australia could never afford to see happen.'' ... Mr Beazley was commenting on 2004 remarks by the then Howard government foreign affairs minister, Alexander Downer, that a conflict between America and China over Taiwan would not necessarily trigger Australia's obligations under the ANZUS treaty with the US. The ANZUS treaty, which came into force in 1952, commits Australia and the US to respond if the armed forces of the other party in the Pacific come under attack ... The then prime minister John Howard refused to comment publicly on what Australia would do if hostility broke out between the US and China, saying it was a hypothetical situation.

McCullam was newly appointed in 2006 and Beazley was no doubt doing some repair work following the Latham debacles of earlier years. Nonetheless, these are strong terms and greater hedging would have been appropriate, much like the Howard/Downer approach.

But let's not get dewy eyed. Howard may have understood more clearly the usefulness of the gap between declaratory foreign policy and actual foreign policy, as described here, but there is little doubt that had push come to shove in a North Asian conflict, his loyalty to ANZUS would have directed his government too deploy in favour of the United States. Probably a token force.

Moreover, the Howard government presided over the creation of the Great Straddle. As Paul Kelly put it some years ago at a Lowy Institute function, Howard's approach when confronted with this fork in the road was to "take it".

Howard might have addressed the divergence between our strategic and economic imperatives by encouraging much greater saving. He could have established a sovereign wealth fund to retain a large slice of the commodities boom. He could have leaned against the housing bubble and consumption boom and its associated dependence on foreign capital. That, in turn, would have decreased what is now an absolute dependence upon exports to China to sustain our credit ratings, which support the borrowings.

Leaders on both sides have failed to address the Great Straddle. It is better that that failure catches up with us now rather than later in a trade war, or worse.