Australia: balancing international relations skilfully

Multi-facet and Skilfully-balanced International Relations

With that definite advantage of location, Australia is able to establish bold relations with major players of the world and avoid being hurt by feud, conflicts, and rivalries common in other continents of old civilisations. The country has been under strong influence of the UK, Western Europe, the US, and, more recently, East Asia. It must be a beneficial package of heritage containing Commonwealth, American, and Asian links while being neutral to all these stakeholders. It is thus imperative that Australia fully utilise these existing links and necessary detachments to advance its cause of progress.

A near total reliance on Britain collapsed when Britain sought an entry into the EEC and from then on spared fairly little thought of the Commonwealth, including Australia, aside from playing designated ceremonial roles. The colonial links offered soft cushions and therefore presented intangible barriers to the thinking in Australia of their realistic position in the world. When that shackles were broken by the British’s own initiative, Australia was left with a chance to examine the world again and seek new solutions. Australia became genuinely internationalised to exploit fuller benefits from its extensive links to other major players of the world. Sentiments and nostalgia of England stay well alive and are openly displayed in numerous occasions, but strategic thinking has forwarded to be sufficiently mature and pragmatic. It would simply be foolish and unfortunate if Australia failed to seek more trade, business and growth beyond the familiar British sectors and industries.

If Australia was far from previous centres of activities in Europe and the US and got its fair share of neglect, its location guarantees bumper opportunities to get right into the centre of matters in recent decades, East Asia. There is now no excuse to shirk from close connection and dealings with those Asian neighbours and new economic powerhouses. Priority has been shifted since the late 1980s, and Australia did benefit immeasurably from trade and interactions with the fastest growing economies of the world in this region.

The most profound challenge for Australia is the re-emergence of China, which entirely changes power balances and relations patterns in the region where Australia has vital interests in. Australia feels cosily comfortable with British and American presences and primacy, and it counts trade with Japanese clients from the later half of the last century very satisfying. China is something dissimilar to previous key power brokers. It is none of Anglo-Saxon, Caucasian, and Western democratic; it is not a former colony of fragmentation either. Certain ideological and cultural barriers persistently stand between the two countries, such as divergences in human rights and media freedom in which Australia has forever followed conventional ideas in the West to make patronising judgement on China affairs. Apart from the Tiananmen tragedy in 1989, which reduced former Australian Prime Minister Bob Hawke to tears in public, a few incidents in bilateral relations or in China’s behaviours also caused concerns among Australians. Notable examples include treatments of Tibetans, Fa Lun Gong followers, and one child policy. The relentless press never misses reporting on these irregularities and making a point of their moral high standards in reflection. In addition, the aggregate strength of a continent-sized China sheds a shadow in the mind of Australians in a sparsely populated country. Due to these deep concerns over security and alien norms, Australia could easily have sought help from old allies and declined close contacts with Chinese interests.

Australia did not follow that assuring and comfortable logic for good reasons. It is vital for an export nation to keep the number of major customers increase and tie up with them for stable demand. There is no obvious problem in doing normal business and trade with China; the question is rather how far Australia would go before it is steered by ideological concerns in relation to this rising power. Being neutral is extremely beneficial to Australia in doing business all rounds. In this regard, Australia has been widely regarded in China as a good friend and a reliable partner. It has made some surprise moves in recent decades, utilising its well placed position and steadily setting itself into extensive working relations in trade and business with China.

Trade between Australia and China was less than 100 million USD in 1972 when the formal relations were established. It turned around to reach 24.6 billion USD in 2005. China is the second largest export market of Australia and the biggest export market for Australia’s iron ore. Trade surplus for Australia reached over 5 billion USD in 2005, while wool export to China takes over 60% of the total export of this raw material. The Howard government signed a 25 year contract in 2002 on LNG export to China, a secured billion dollar business order. On the sideline of government-sponsored bonding, a number of large Chinese steelmakers signed a contract with BHP Billiton in 2004 to buy 12 million tons of iron ore every year for 25 years, worth 7 billion USD. As of 2005, well over 3,000 Australian companies exported to China.

For these increasingly closer links in trade and business, Australia from the 1980s has adjusted its position regarding China and made it a priority in equal importance with other major international partners. This is not done out of appeasement, as some American and Australian ideologues passionately objected to, but of fair spirit and positive attitude towards a rising Asian power while not hurting core values and interests of Australia. All those well organised protests or outbursts of concerned groups on China related issues could not shake or hijack the central foreign policies off the course, which highlight the evident mutual benefits generated from a smooth relationship with China, backed by comprehensive understanding and acceptance of reality.

With these vital interests identified and clarified, Australia has shown a hesitation in tuning strategic thinking into the US led effort to isolate or contain China. In the Pacific, the US guards jealously its sphere of influence with both air craft carriers and economic incentives. It is inevitable that Australia, New Zealand as well, comes into the crossfire of a clash between the world superpower and a large regional power. This is particularly true during the long Cold War when the Australian Navy did the dirty work for the US of submarine spying missions on China and got caught. A heightened hostility on the basis of military confrontation has, however, dissipated in the last decade, thanks to mutual good intentions in multiple fronts. The Australian position to accommodate a resurgent China as a strategic partner is hard to be swallowed by the US, which tolerates no challenge to its supremacy and is often distracted by pacifying even the slightest offence in this regard. Subtle differences often surface to the open between the official lines of the two countries. A newspaper commentary by former Prime Minister Malcolm Fraser in 1996 says it quite plainly: the US must give room to China’s rise and accept China as a great power despite overwhelming US influence around the world. From Australia’s point of view, China’s aspirations to a more assured destiny deserve some sympathies and understanding, given the country’s past historical glories and current growing weight in the world economy. This kind of rhetoric from a neutral and accommodating Australia has only been acknowledged grudgingly in the US in this new century, after no significant outcomes forthcoming from persistently coercing China into submission and hands being tied in a global “war on terror”. This lagging in understanding derives from an aggressive American world outlook of the ultra conservatives in the early post Cold War era. The more moderate Australian view of a rising China has eventually proved plausible and on the right track.

It has been chided that generations of Australian leaders and scholars looked to China with “affectionate and misty eyes”. This is not overly unlike the twists and turns in Americans’ attitudes toward China, as summarised by Paul Cohen. The Australian approach is only a more softly, softly touch, since it represents none of a condescending, commanding culture of a lone world super power. This approach is more restrained and non-confrontational, sensing that there is no cause for alarm or direct conflict, and that Australia’s hard line over proportionate reaction to events in China would achieve little, even with American consent. This pragmatic approach to focus on gains rather than forbidding dogmas and fierce denunciation towards a none-Western developing country undoubtedly draws loathing from right-wing commentators, both domestic and overseas, those taking moral high ground and spitting despise of cultures not conformed to their own.

This rationale of acceptance is taken up even by the Howard government, the staunchest supporter of the Bush administration. The stand was confirmed in government speeches, including Howard’s own, as his administration and ruling Coalition benefit most from a continuing prosperity based on surging demands from China. The recognition of China’s position in the Asia Pacific is the logical next step. Australia refused to join a secret forum in 2003 organised by the US on its closest allies’ collective responses to the rise of China. In Howard’s talks with Bush in 2005, differences caught people’s attention, in that Australia tended to emphasise mutual understanding and considered the rise of China “good for Down Under and rest of the world”, while the US focused more on crucial and strategic differences with China. Australia sees the alliance with the US as not there for a common ground in schemes against China. This caused some stirs in American strategic study institutions, as that would hint Australia being drawn further into China’s economic orbit and inclining to take a non-involvement option when the US does engage itself in a military confrontation with China, most likely over Taiwan. Since Australia’s one China policy covers Taiwan, Australian troops would have plenty of reasons not to go to battles there when the Pentagon moved fleets in first, at least not to involve themselves in combat missions. Even if Australian troops play routine symbolic and auxiliary roles, the presence of akubra hats along side GI full battle gears signals a hearty legitimising of coalition missions when American unilateralism makes international cooperation and crisis management seriously lacking. Australia would only take that path of hostility to China when strategic interests and gains are evidently at risk in a show down. That seems a predictably unlikely scenario.

Clashes of interest do exist in bilateral business and trade. Not small numbers of Australian businesspeople complained bitterly about difficulties in their investment projects in the China market, and some sold their ventures to exit due to losses. Prominent among them, giant beer makers Foster’s and Lion Nathan each claimed to have lost hundreds of millions of dollars in their “great escapes” from the competitive China market, which disappointed them immensely. The relationship between the importer and exporter of minerals is stable but not always smooth. Large buying orders create risks in demand and price setting. Australian mining giants have made fantastic deals with their Chinese customers, with fabulous earnings, especially in the most recent commodity booms. Subsequent requests on raising prices of iron ore exported to China present a particularly knotty problem. The price jumped by a whooping 71.5% in 2005, after previous significant rises of 18.6% in 2004 and 9% in 2003. These mining giants then demanded a further 20% price hike for 2006, on the ground of a near total world monopoly of iron ore supply between them and a Brazilian company. This urge for price rises also derives from a hidden fear of oversupply and dropping prices shortly after the boom. It is quite natural for a seller to grab a last chance of bargaining. Those raised prices brought extra export revenues of billions of dollars back to happy miners in Australia, approximate 1.5 billion AUD in profit between BHP Billiton and Rio Tinto from the 20% price increase alone. They pay scant attention to deep anger of Chinese steelmakers, are simply clouded by an immediate kill, and ignore the basic rule in doing steady business, mutual benefits. Well, you gain some, you loose some. Even if China in June, 2006 officially accepted this round of price rises BHP demanded, that sense of unhappiness will linger and lead to search for new sources of supply, equity control over new mines and driving price down through other means, let alone a more critical and less favourable view of existing Australian business partners. In the long run, driving a hard bargain and rash price hikes serve no purpose of sustained benefits and invariably destroy customers’ trust.

Export opportunities are not exclusive to mining sectors, but in numerous lines of production. A common phrase now is to “ride the dragon”, sustaining growth on the back of an increasingly hungry importer. The state of Victoria exports hundreds of millions of dollars of farm and dairy products to China. Short on mineral reserves, this small state has to rely on primary products and services to lure overseas customers, and China is fast becoming the largest goods export market of the state. A classmate of my son’s has his family in rural Victoria, Horsham in the west, whose property covers 5,000 acres of prime farm land, and export of grain there to China takes a large part in the total of their business. Booming tourism and export of Australian education haul back additional billions of dollars from China to Australia. Australian universities have grown a deadly habit of depending on tuition fees from foreign students to pay for upgrading and stay in operation. Although this is partially a policy issue of insufficient federal government funding, money from overseas students, Chinese in particular, make irresistible offers to those financially tight higher education institutions. Considering the size of China’s population, these inflows of bountiful revenues are to grow unabated. Australians have a particular strength in the field of professional services and enjoy trade surplus with China at well over 2 billion AUD in 2004.

It is crucial to handle the problems cautiously in bilateral relations and keep the momentum going. It is clear now that Australia can ride the tide of China growth for the near future, chiefly in receiving export earnings. This is in addition to security and regional issues, of which China plays a key role among leading countries.

The US remains Australia’s first priority in foreign policy and strategic planning, so much so that John Howard made it known that the country is willing to be the US’s deputy sheriff in the Asia branch. That slip of tongue accurately reflects the official lines and goals, though raising some eyebrows in the region. Bound by heritage, beliefs, and security concerns, Australia needs the US as a key ally as it used to pay unreserved homage to Britain. This tendency has come from a long line of interactions, starting from WWII and Japanese aggressions. It is not exactly the truth that American GIs saved Australia from Japanese occupation. Japanese attacks were half-hearted at best, and they were troubled by the tyranny of distance and extreme difficulties in coastal landing by foot soldiers, leading to the alternatives of occasional bombing and very rare midget submarine assaults. No Japanese plans came forth for an invasion, when they realised the limited capacity in their hold for ambitious and overstretched offensives in the entire Asia-Pacific. The Japanese felt desperately squeezed by large scale military campaigns elsewhere, land battles in mainland China and Indochina, and sea battles with the US in the Pacific. Invading Australia was an unlikely venture similar to Japanese attacks on the US mainland, at least in terms of distance beyond reach. Even if they took a foothold in the extreme north of Australia, they would not have succeeded in gaining any meaningful victories, as their columns would be far from any populated places of Australia and would be drastically weakened by the harsh nature. That possibility of landing campaigns was extremely remote and soon evaporated. On the other hand, the US used Australia as a support and transit base for ground and sea battles in Southeast Asia and strikes north to Japan, as well as being a refuge for General MacArthur on the run after being spirited out of the Philippines. Up to one million American GIs at one time or another stationed in Australia. This safe and massive base proved invaluable for Allies’ war efforts in the Asia Pacific.

Under a global divide of the Cold War and unchallenged US military supremacy, Australia sought American alliance as a matter of fact and considered itself lucky to be in the bind of the ANZUS Treaty. The security responsibility shifted from Britain to the US, causing minimum disturbance. Although Australia is not a NATO member, for various reasons including distance, the alliance with the Americans made it up for the absence of a membership of the European bloc. Australia thus placed itself in a favourable position, having security provided by a military agreement but evading strict rules and command problems of a gigantic military organisation. The unified command under NATO does not apply to this corner of the earth, while the US takes on increasingly global obligations and pacifies challenges elsewhere. Australia enjoys the shield of an American protection and contributes to certain overseas missions of American directing, but its positioning provides it with flexibility in seeking its own interests and developing strategies of its own, not being overly hampered by declared commitments to a military alliance. This treaty of half a century faces growing uncertainty over its extended application into Asia at the behest of the US, and over missions which involved territories far away from Australia and go beyond original intentions in the treaty.

This flexibility does not indicate that Australia is leaving the US camp; on the contrary, Australia shows publicly its enthusiasms and conviction to US led missions, especially under a conservative administration. I was told by some Melbourne Aussie friends that their close relatives served in the Special Forces and went into covert missions in Afghanistan and Iraq along with the Americans. Bilateral relations are particularly cosy and camaraderie. Australia is one of the few countries which agree to be partners in the US missile defense systems, which places the country in potential dangers of being the first targets of future military conflicts. The Bush administration created special visa categories for Australians entering the US, giving them rights to roam across, work and live unrestricted in that traumatised country post September 11. Considering ultra sensitive issues of screening foreigners and homeland defense, Australians received extra care and special treatment as a reward for their long standing closeness to the psyche and doctrines of the US. In the face of authoritarian or “failed” states, the two countries share common views and issue similarly worded statements. Even in private conversations, Australians often passionately echo their American cousins on serious international issues, such as Islam.

There are equally quarrels of diverse natures between the two countries, on issues such as trade, international cooperation, climate change, nuclear disarmament, and, more recently, on dealing with Asia’s rising giants. American companies are in general welcome to invest in Australia, as the country needs foreign investment as the US does. This, however, often causes serious concerns and uproar about American invasion and domination in business, takeovers of local market shares by American corporations, and in the culture sphere almost everything American. Major companies have key American investors, and many Australian brands people have known when they were little are in fact from production lines controlled and managed by American multinationals. A tricky issue is American subsidies to agricultural exports. A few farming families I came to know complained openly about impossible competition with their American counterparts due to heavy government subsidies in the US, while they enjoy none of similar benefits from the Australian government.

Despite these rumbling quarrels, Australia remains a loyal ally of the US in so many fields. As countries like Libya buckles under American isolation strategy and many small European countries compete for American aids at all costs, the alliance Australia has with the US is in little danger of breaking. No one, politician or ordinary Joe, is foolish enough to throw away such a cherished, solid relationship with the sole superpower in the world. That would be suicidal and against basic instincts of human nature. The question is to what extent this country seeks to play the role of a deputy sheriff and does not shirk from that risky duty. Divergences from American agendas bound to occur.

Asia has become a place vital to Australia’s future. A trident policy stand is established, after much agonising, in which Australia moved from one leg support of Britain to two leg support of the US and the UK (Europe), and then to the current triple support. It was frankly hard for Australia to regard its closest neighbours in equal terms, either from the fact of poorer conditions there or from a deep fear of this small European settlement being swamped by inflows of Asians. Giving Asia a serious thought was impossible when those countries struggled with their abject poverty and were merely colonies of Western powers. Only with demonstrable sustained economic growth in East Asia, in emerging dragons and tigers, that Australia tempted to break away from an absolute and exclusive Western focus.

Sensibly, Australia turned to deal with them on more equal terms and has eventually developed its policy into taking Asia as the place to belong to. This is the location that binds. The continent of Australia is not going to drift to the Atlantic, and long distance flights are not to diminish the significance neighbouring lands pose. Isolation could instill a spirit of barricading against poorer, underdeveloped Asian economies, as the “white Australia” policy indeed intended to do, but a flourishing region nearby offers new and abundant business opportunities not to be lightly ignored and dismissed. Fast narrowing gaps in economic strength and living standards between Australia and East and Southeast Asia eventually convinced the country of their geographical advantages in a new era. Even the key issue of security can now be seen from a totally different angle, as stable and mutually beneficial bilateral relations with Asian countries prove rather enhancing Australia’s security and reducing tensions and hostility deriving from contempt and misunderstanding.

Labour governments began to incorporate Australia more with the region closest to this country, and the shift of policy focus led to the forming of a new perception, for Australia to be recognised an Asian country, in order to be legitimately “living in the fastest growing part of the world”. That might sound rather radical to some, dragging Australians to have a leap of faith. From Australia’s deep cultural heritage and mindset, it is a bit awkward to accept this extraordinary drift from the comfortable hug of Anglo-Saxon traditions. In terms of strategic positioning, this is not a surprise or a rushed move, but a reality to be admitted long time ago. In two decades, Australia fostered admirable stable relations with major Asian economies and made clear of its intention to stay in the right place. Even Australian Socceroos entered the Asian Football Confederation to compete with teams of more numerous Asian countries for a place, rather than with neighbouring Pacific island countries. Major targets of foreign policy in this region include India and China, but also old connections of Japan and Indonesia. Australia has ventured to get close to the ASEAN, a regional bloc related to Australia’s core concerns, especially trade and security. It has obtained a status of dialogue partner, similar to Russia, China and the US, being relevant major powers but not Southeast Asian member countries. Australia even sponsored the idea to form the APEC, the regular forum of Asia Pacific leaders. With persistent efforts, Australia has established frequent security, business, economic, and political contacts with those Asian countries key to its future development.

This shift is reflected in an acute sense of learning things Asian. Australia can rightfully benefit from its internal multiculturalism and external neutral approach to Asia, as it is much less perceived in that region as an intimidating and patronising partner as the US is. Open dialogue and constant interactions with Asia provide Australia with a unique capability to blend in. The learning of Asian ways and cultures for doing fair business is most impressive in the recent two decades. In one instance, Mr. Kevin Rudd, the Labour shadow minister on foreign affairs, had a lengthy interview in 2006 with a Hong Kong TV host on WTO and trade issues. The interview was conducted in Putonghua throughout, during which Mr. Rudd displayed his perfect Chinese expressions and was fluent on choices of word regarding specific and complex trade issues, so much so that his Chinese host lost points with his own heavy southern accent and frequent confusing phrases. Mr. Rudd’s outstanding performance on this occasion of course derives from his previous work experience in China and close contact with Chinese counterparts. If Labour were in office, Australia would have had a foreign minister talking straight like a native Chinese. This to a certain extent illustrates the depth of learning in recent times, for Australia to shift some of its attention and energy to East Asia, the place needing greater effort on cooperation and holding the key to identify Australia’s destiny, in particular for being recognised a regional power, despite its small population.

It is not easy to convince Asians of this country being one of them. Besides vigorous regional rivalries among existing powerful players, Australia’s connections with European and American powers warrant certain suspicions from neighbouring Asian countries. Is this country a Trojan horse or vanguard force of powers of other oceans? How deep Australia is allowed to get involved in regional affairs? Will it become a dominant force in handling relations and start to give directions? The military of Australia certainly got involved in numerous missions in the region, from the Korean War on. On the other hand, the good deeds of Australia are aplenty, in peace keeping, relief and aid. On balance, Australia is a harmless regional power, benign and voluntary. Unlike the rise of certain big powers, such as Germany, the US, or China in future, Australia, with its medium size and stable democracy, causes no stirs and attracts little attention of “coming threats”. Those big powers came to the world stage with a big bang and would inevitably cause a rebalancing to the existing orders. Repercussions warrant concerns as each move made means a counter response to be rendered, in order to minimise losses or secure shares. When things come to a head, force has to be employed to solve conflicts and quarrels in a straightforward way. That is why big guys tend to reflex their muscles in political, economic or military forms and tend not to mediate or negotiate. Unilateralist tendency and interventionism are in the blood of big powers, especially in the veins of the super power.

At the other side, small and medium sized countries tend to rely on international bodies to operate, one of them being the UN. These platforms are the best for initiating solutions to conflicts, and small participants can at least have some say and a role to play here. They make contributions to negotiations to reach desired outcomes, rather than through bilateral bargaining or horse trading deals those big powers prefer to undertake outside international bodies. Australia is in this camp of middle powers favouring robust multilateral systems and coalitions for solutions and settlements, despite its shared historical experiences with and heavy reliance on Anglo-Saxon powers. The country has been an excellent contributor to these international organisations and is active in the UN on numerous issues. Its commitment, neutral stance, and eager participation have earned it much respect, trust and admiration. Unlike the UK, or to a lesser degree Canada, Australia can make its points known without being seen as merely a mouthpiece or agent of the US. Even with John Howard in office, the most fervent US ally by far, equivalent of Sir Menzies to Britain, so to speak, Australians regularly show their differences from the Americans at the UN. This is a happy legacy of the British rule, since Australia under Britain initially kept distance from the emerging power of the US, and when the US became the super power Australians remain inclining to the British traditions in the face of overwhelming American culture invasion. Fortunately, Australia has no global ambitions, rather than its unending effort to exert and radiate good will. Those ambitions related to the region and nearby countries are chiefly for stability and economic advancement which set safe barriers for Australia. A clear and unchallenged Australian dominance in the region is either unintended or unrealistic. Even its deputy sheriff position is not agreed upon domestically, and it is quite clear to all that Australia prefers endorsements and resolutions of international bodies. This standing will minimise suspicion or hostility of certain Asian countries toward Australia.

Some indications of Australia’s limited world ambitions are that their leaders lack world standing and politicians are obscure. This is basically a reflection of national characteristics, being modest, less sophisticated, and fiercely straightforward. The downside is that average Australian political leaders run state affairs and primarily focus on local and national matters. Within a rare breed of egalitarian society, this is what they are required to do, and ventures across the world and global diplomacy are certainly not their cup of tea. Leaders and top civil servants are perhaps not with best qualities, being exceptionally intelligent or super bright in international dealings. An overly ambitious Paul Keating once lamented this paucity of world class leaders and desired to lift his world standing, but was roundly accused of losing touch with his own people. However, the plus factor of this apparent mediocrity is that they make fewer gigantic mistakes. In contrast, the US has so-called best of the best in their political and economic circles, and they are never shy of boasting this pool of superior genes. Talents match world ambitions of a super power, and those lucky selected found a centre stage for executing their master plans. In the end, these incredibly intelligent people made a lot of messes in the past and dragged others down along the way. The best of the brightest the US had, the blue blood elites starting with Robert McNamara and his “Whiz Kids”, conceived and conducted the Vietnam War and lost to guerrilla wars and crudely equipped Vietnamese army. The best brains of the country got their wishes of high flying and crashed spectacularly during the tech bubble burst and corporate scandals. The cream of the nation’s elite was there to wage wars on false information and defend their innocence against charges with more pretences and brilliant spins.

Along with blending in, power shift and deputy sheriff duty, the military of Australia plays a vital role in keeping a visible presence in the region and getting recognised. This recognition depends heavily on the real military strength of Australia in the south Pacific. In hardware, Australia has demonstrated its might with awesome air and sea capabilities. A ready air projecting power is to display a much needed military deterrent to other countries in the region. Several squadrons of F/A-18 Hornet jet fighters and F-111 fighter bombers are constantly deployed. To offset upgrading effort in other Asian countries, mainly in purchases of Russian Sukhoi jet fighters, the air force sought to get the delivery of more advanced American next generation F-35 joint strike fighters, costing tens of billions of US dollars. This ambitious grand plan was temporarily thwarted in 2006 due to multiple technical problems associated with the selected fighter model produced by Lockheed Martin. The hotly promoted model is claimed by some as too expensive to maintain and even becoming obsolete quickly, and the issue of obtaining next generation jet fighters remains on table. The air force could turn to American F-22 Raptor, already in service in the US, as an option. To keep aerial surveillance over vast land and sea territories of Australia, the air force deploys early warning recon planes purchased from Boeing. Also crucial are a number of long range air refueling planes in service. These recon, strike, intercept and refueling planes are the most advanced in the region where Australia has large stakes and leave neighbouring Asian military forces well behind. This strike force thus constitutes a firm guarantee of national security and air defense. The priority is on quality, not quantity, since the defense policy may project that once a large scale air invasion is on with hundreds of enemy aircraft, that will be the time to call an all out war and invoke mutual defense agreements with the US. Short of that disastrous scenario, advanced jet fighters, though only at a number of 100, will be sufficient to deter potential intruders and accomplish designated missions. A related issue of concern is that all these hardware and upgrading come from the US, paid by Australia’s military budgets. Lacking manufacturing capabilities, Australia provides research and maintenance technology and products by defense institutes and corporations. This would mean budget restraints on making more expensive future purchases and a shortage of local supplies.

The navy is the central part of Australian defense force since early times. As a land surrounded by water and a British tradition of overseas expedition, Australia has maintained its admirable maritime capabilities and owned fleets of significance. The navy had in early years cruisers and destroyers for undertaking tasks given by the British Empire and for protection of ports and shipping lines. The navy even had a few light aircraft carriers, prominent among them “Melbourne” after the Pacific wars. Their air strike capacity was not comparable to formidable carrier fleets of the Imperial Japan, but seriously intimidating to then inadequate Asian naval forces. With the carrier “Melbourne”, the Australian navy enjoyed numerous advantages in high seas of the region. Curiously, that only operational Australian aircraft carrier was bought, after being decommissioned, by a Chinese company and moored at a Dalian port for some time. It was speculated that this purchase perhaps facilitated a learning platform for future locally made Chinese carriers. The navy today is filled with frigates, guided missile frigates, and submarines, replacing previous heavy cruisers and destroyers. The size has shrunk but capabilities enhanced. As it is not war time and there is a genuine lack of world ambition of the US calibre, the Australian navy has commissioned no aircraft carrier after “Melbourne” was discharged. Instead, frigates hold helicopters, rather than jet fighters, to carry out tasks of recon, attack, and rescue. The shipyard in Williamstown, Melbourne, continues to churn out guided missile frigates and other ships with advanced equipments, for the navy and for export. One issue of concern is that the navy, as well as the air force, relies overwhelmingly on advanced technologies shared with the US under bilateral agreements, and there is every possibility that the latter would wield the carrot of this sharing to urge Australia into future missions it feels reluctant but unable to decline, such as naval maneuverings against China or India.

With self-production capacity of major modern warships and close relations with American and British fleets, the Australian navy has maintained its capability of defending national waters and shouldering international obligations, including troop delivery in East Timor and blockade in Iraq. The key issue of security in the Asian region is calmly and confidently dealt with, on the basis of an effective long range strike force. If Australia is small in population, the military forces have displayed an image larger than the country’s, through past successful military missions, advanced hardware and combat systems, and sheer martial professionalism.

Australia has turned its location from an initially remote, insignificant continent away from world centres of activities in modern times into a place full of advantages and potential in the 21^st century. This location, once despised and cursed, still binds, bringing unforeseen benefits to this essentially bountiful country. Fundamental shifts in external circumstances are economic rising of East Asia and prosperity of one generation, roughly the time span of economic reforms and opening in China after the tragic 1989. Intelligent foreign policy making by consecutive Australian governments grasped opportunities arising from this momentum trend of shift, wisely realigning relations with three key stakeholders, the UK (EU), the US and Asia. Standing firmly on its unique location of this vast continent and handling relations with required understanding, Australia has markedly enhanced its chance as a favourite long term winner.

Strategic positioning: the location that binds

Australia a quiet all-round achiever

The advantages Australia has in sitting at a unique place of the world are apparent. The former Prime Minister Paul Keating has described this location of Australia as such: “What nation has been given an inheritance like we have? Eighteen million of us (now twenty), a continent of our own, a border with no one, and the chance to actually live in a beautiful country, rather than one simply spoiled by the careless commitment of industrial resources, … and on top of that, living in the fastest growing part of the world”.

This sums up primary reasons for feeling exceptionally good and a strong sense of luckiness from being in the right place. The continent sized land mass is big enough to have inland space and depth, leaving huge potential for endless further exploration in all directions. The combination instantly eliminates drawbacks some countries have in small territory and narrow width, such as Chile. A widely varied diversity in landscape and climate tempts people to search for the mode of life they prefer, sub-tropical, British or European countryside, Miami coastal, metropolitan, or outback. It is a factor of available choices that makes it convenient for people to pick up a property and settle down in a particular area. For years, Australians have migrated from Victoria in the south to sunshine coasts of Queensland, and when swooping up beach front properties in Melbourne spread frantically like prairie fires, some turned the other direction towards inland country and found tranquility there of equal measure. It is assuring and comforting to have these wide varieties and choices within the borders of a single nation.

Australia keeps a far distance from others, separate by seas and oceans, and more importantly from hostile countries; close by neighbours are either extremely friendly or insignificant, dependent. This factor is terribly crucial, since land routes crossing borders destroyed major powerful regimes in past histories, such as what Mongols from steppes impacted on agrarian societies and empires. A 20^th century example is Britain’s survival in facing Nazi Germany: it would have all lost the fight miserably against German panzer divisions save for the Channel of Britain. Even with systematic military upgrades, Australia could not effectively defend itself from falling if the continent were connected to other lands. Furthermore, successful amphibious landing campaigns for taking on this vast country are incredibly hard to organise and execute. Traditional maritime powers have been benign to Australia, as most of them are west European or cousins of Australia. The only exception, the Imperial Japan, ran out of steam before it could reach the shores of Australian coastal belt. Potential maritime powers, Russia, China, or India, have so far minded their own strategic or development business and have not had a firm hand on genuine blue ocean battle fleets. Distance and waters kill ambitions.

Australia benefits immensely from its small population, a population dwarfed by many medium sized Chinese provinces, in two fronts: generous and secured sharing of resources for future generations and moderate scales of pollution. The first lies in simple math division, making higher average figures of usable resources available for a smaller population. This guarantees future consumption at acceptable levels for all citizens. The second front of pollution is a tricky one. The economy of Australia relies on consumption, and inconsiderate consumerism does cause unnecessary waste and pollution to the environment of Australia, commonly seen as a fragile one. However, slow expansion of this small population poses an overall minor threat to the environment and gives the land time to recover and re-generate at its own pace. As the majority of population concentrate in major urban centres along the coastal belt, damages can be managed, and minimised, in a controlled spread to spare large chunks of land man-made disturbances. This leave-it-lone approach seems timid, unassertive, and contrary to growth priority of many countries, but will prove invaluable in preserving space for future development.

With a smaller burden to shoulder, the economy can maintain higher inputs in public education and welfare. One argument against this tininess is that the domestic market is always small for consumption, as well as the size of talent pool. Since many developed and wealthy countries are both small and creative, this argument on economics and business grounds appears not quite strong. For one thing, talents can also come from higher standards of living and education.

With these evident advantages in the location and size of this country, a cursory comparison with other countries in similar conditions still makes sense in identifying the real benefits underneath. The island country of New Zealand is also a cousin of Anglo-Saxon powers and surrounded by oceans. New Zealand is nearly identically well managed, green and pleasant, with fertile land, hidden natural reserves, and high living standards, a minor Australia in a sense. It is not a viable choice simply because it is even so much smaller than Australia, two islands rather than a continent. The country is short on mining potential and political clout in the world. Clearly that economy has a dependence on other major markets, including Australia’s. New Zealanders routinely seek job opportunities in the larger market of Australia, reducing unemployment rates back home at low times. A recent tourist boom arises as a result of utilising its unique landscape as perfect settings for Hollywood mystical legend movies. The country’s tiny population and limited island space make it impossible to sustain attacks from outside, and a close alliance with Australia proves imperative, from the very early time of contemplating joining Australia as one offshore state similar to Tasmania.

Japan is another country totally surrounded by seas and gives intruders no land routes for easy advances. This country, however, locates in a precarious corner of the Pacific facing formidable competitors and adversaries. That sense of low security is almost entirely its own making. The hermit country received nothing but benefits and loots from being close to the Eurasian mainland from China, Korea to Russia. Its obsession with survival and uncontrollable urge for external expansion ruined its chance to keep good terms with neighbours even when it did show certain pacifist tendencies after the American occupation forced upon it nominal forms of demilitarisation. With its world leading economic strength and undying military, political ambitions, Japan could head towards triggering a major military confrontation in a feud with close neighbours, mobilising its impressive so-called Self Defence Forces. Although there are no land routes connecting the mainland to Japan for armoured divisions to drive all the way to Tokyo, considerable long-range firepower from those three countries (two Koreas counted as one) could easily strike the Japan proper and cause havocs. Deeply entangled in this love-hate web, historic and contemporary, Japan has enjoyed only limited security on a water-isolated territory. Its vulnerability also shows in narrow, stretched territory and a desperate shortage of homeland resources reserves, minimising potential for sustained defence and counter attacks. Even its frantic strategic effort on stockpiling key materials on its home islands may prove futile. Australia, in contrast, keeps far distance away from boiling regional feuding and rivalries. Water forms a natural defence line and deters attempts of aggression.

Canada is often viewed as a more promising country relative to Australia. It is a Commonwealth country of British legacy of parliamentary democracy, but also a G-8 country, which projects a higher international standing. The country has its hands on huge land mass and waterways, with a population not overly larger than Australia’s. The size of the country ranks the second largest in the world, in the safe hug of two oceans. Only the land of the extreme south near the US is relative temperate and inhabitable, under 60-degree latitude. Most big cities of Canada line up along the border. This has impeded heightened economic activity in other parts of the country away from the line. Australia, of course, has similar empty space of desert and wasteland, hostile to human settlements, but those are probably places of precious resources reserves exceptionally valuable in future. Canada takes a similar position, living off rich natural resources from that land mass, including mining and forestry. There is no question that Canada can count on its yet explored natural resources for sustaining remarkable social welfare and future prosperity.

One of the major problems of Canada is its close proximity to the US, in fact too close for comfort. Trade with the US undoubtedly benefits Canada immensely, with a 500 billion USD annual trade value and bulk export of crude oil and natural gas to the US. Canadian talents find easy excess to the much bigger market of the southern neighbour, among them entertainers and sports stars like Michael J. Fox, Peter Jennings and Steve Nash. For this short distance apart, however, Canada has constantly endured penetrating influence and mounting pressure from the US, in every conceivable way, and ended up making regular commitments to US led overseas expeditions and agendas. Clash and conflict often erupt from this requesting and conceding relations pattern between the two neighbouring Western countries. The world power of the US also imposes its will and styles over the whole of North America, making the independence of Canada a doubtful statement from time to time. Cultural invasion and temptation create for Canadians a lot of stress, as their European traditions and liberal characteristics have undergone steady erosion. It is easy for people of Asian backgrounds to take a Canadian person as an American in first meetings, either in English accent or behaviour details.

Some commentators list relationships between the two countries as admirably exemplar of an ideal non-aggression type, asserting it a perfect model of peaceful coexistence among democracies, in that the US acts honourably and gentlemanlike for not grabbing Canadian territories with its overwhelming military supremacy. In fact, the US does not need to demonstrate aggression to this cooperative northern neighbour; Canada has been doing the US’s bidding as always, disagreeing at times, but not disobeying. Canada is a faithful participant of NATO and has joined the US in numerous military campaigns around the world. The decision not to send troops to Iraq in 2003 is a most recent divergence, since that move echoes domestic public dissent to blatant American unilateralism and was made under a government of centre left Liberal Party. If there were the Conservative Party in office, like the situation in Australia, Canadian troops would have been dispatched to Iraq at the behest of the US. With such a mostly adherent country next door, the US feels no urge to annex it and on the contrary understands the vital significance of leading a larger number of allies in front of world media, and of possibly listing Canada in some “coalition of the willing”.

The other major issue of concern to Canada is the separatist tendency of Québec region in this Commonwealth country. French influence remains, even after the narrowly defeated independence referendum in 1995. The country adopts both English and French as official languages, prompting the need for a policy of bilingualism to service coexistence and reconciliation. People benefit from mastering an additional language tongue, but there remains a sense of two identities in the country, and clashes are not to be ruled out permanently. With hope, longer time span of multiculturalism and sustained bilingual practice probably could mend the divide in a way of setting up a melting pot.

Australia gains some points in these areas, as its geological location keeps certain distance to the all-powerful US and attached influences. This “forgotten land” in the eyes of Americans could handle cultural interactions more objectively and maintain its ways of life persistently. Americanism has not been overly in fashion; on the contrary it is often disputed publicly. This appears not annoying or displeasing the US due to the factor of distance. Australia acts more like a Commonwealth country than Canada does, because the latter in public perception forms part of the US sphere of influence in North America. The issue of Aborigines poses as a thorn in the country’s conscience and policy, but that non-lethal issue can be handled intelligently and sensibly by the community, and it is far from as destabilising as separatist sentiments within Canada.

South Africa is another regional power with sizable territory and abundant resources reserves, in some mining categories even more promising and productive than Australia. It is however not a separate state from the bulk of the African continent, linked by land with other African countries and facing disruptions from the north. Its white rule was unstable at a glance, a few million of whites among several dozen of million of blacks and so-called coloured locals. After the historical turn of an official abandonment of apartheid, the black majority rules the day and government, making some whites feel unease. It has long been a common scene in Australia that Caucasian South Africans moved to this country and settled down when potential or reality of a black rule back home unnerved them. One of the most prominent tycoon families in Australia, Homes a Court, has a South African origin long way back. Australia shares vital interest with South Africa in mining industries, leading to the formation of the number one mining corporation of the world, BHP Billiton, in 2001. Overall, this African country longs for the kind of security and stability Australia has, due to its location and social composition, and has to work hard to fix the specific problem of substantial poverty among the black population.

Brazil of South America is a leading developing country and a regional power to reckon with. Its potential in future is particularly promising and stirring, as being placed into the coined term “BRIC” by business analysts (Brazil, Russia, India and China). The country is well endowed with vast territory, large population of nearly 200 million handy for providing ample labour force, abundant natural resources, and outstanding economic and industrial strength in relation to other Latin American countries. It in fact projects an image of a mini US in this continent, except for the latter’s world class supremacy. It is also officially a parliamentary democracy, gradually shrugging off domestic threats from the military and vested interest blocs and thus shielding the country from intentional hostility and potential aggressions coming out of ideology-driven US administrations.

Risks hide deep and hamper prospects of development. The entire Latin America is regarded as the backyard of the US, and Brazil is not immune to this overbearing American influence. Financial controls in forms of foreign investment and lending allow the US to play a key part in local economic affairs. Although Brazil shares no land border with the US as Canada does, it feels tremendous pressure and sharp pinch from the north when the economy is facing problems and thus has to heed American demands and concerns. The American will to mould Brazilian economy, including a forceful implementation of the “Washington Consensus”, has clashed with the country’s desire to find its own way and options. In the shadow of an overwhelming American influence and habit of interference in Latin America, Brazil finds it hard to be genuinely leading, despite its considerable size and progress.

Another factor is that diversified approaches taken up in the region forces Brazil to court waves of disputes over its regional leadership. Other countries tend to follow their own instinct and sense, especially on issues concerning American neo-liberalism and intervention. The left-wing Brazilian government is seen less determined to face up the US challenge. That task has fallen on to other smaller and economically less viable, but more resolute, left-wing countries. Venezuela creates an aggressive leader of Hugo Chavez, setting an example of anti-American stance and once foiling an American plan of a continental free trade pact. This stance has gained some currency in the region, where chronic issues of poverty, foreign control and unrealised development potential remain unsolved, even with selective American aids, and people grew impatient. Brazil in this light sits in an ambiguous position whether as a fine example of independence and success or merely another generously aided entity under US guiding. Taking the second position would certainly lose respect and following in other Latin American countries. If Brazil gets bogged down in regional rivalries and contenders of leadership, it is doubly hard for the country to fully explore its potential and play a significant role in the world. On this point, Australia has no regional contenders and has managed to keep a safe distance from troubled relations offshore.

For equally extraordinary social democratic traditions and practice, Sweden and Norway are in the same league as Australia is. On top of egalitarianism and provision of extensive social welfare, they manage to maintain high productivity levels and have their own multinational businesses competing successfully worldwide. Sweden ranks high in competitiveness studies and fares well even in the so-called new economy, leading Internet and telecommunications world trends while maintaining a solid foundation in manufacturing. Swedish built machinery, cars and trucks hold unique reputation of quality and reliability. Norway keeps an equally remarkable record, being selected as the most liveable place of the world on a row and has successfully explored North Sea oil and export to sustain economic growth and social welfare of the country. These two countries are very small in population relative to their territories, so that they can expect continued resources exploration for their future development.

With these outstanding performances, they in effect are more successful in leading the way of social democratic movement and especially in dealing with constant contradictions between productivity and fairness and between GDP growth and welfare. Economic issues trouble many voters in Western European countries who feel uncertain of uncurbed welfare largess and erosion of competitiveness by those centre-left parties in office. These two countries adequately demonstrate to the public their capability of handling the economy and make their model of dealing with contradictions work. So far they have not adhered to the extreme economic rationalism or neo liberalism. The trials there are inspiring and offer an alternative to the overwhelming US doctrines of economic management and blind worshiping of free market. Their mixed economies are even branded “Scandinomics”, an independently developed approach in comparison with mainstream ones.

The problems with these Nordic countries, albeit their splendid track records, are that they are within the European domain, in between traditional rivalries and conflicts, such as that between Russia and Eastern and Western Europe, between Britain and continental countries, or between France and Germany. Sweden joined the EU, while Norway opted out. There are questions of benefits from such an entry and how they avoid being dragged into endless quarrels, assistance to poorer Eastern members, and the ultimate requirement to follow EU rules and politics, leaving them with less chances for self chosen options and alternatives. They inevitably will come under influence from other models in the EU, such as the UK and Eastern European countries which have displayed decidedly willing support for US policies and approaches, and will have to make compromises in the process of coordination. Centralisation of authority in the EU may also prove negative to creativity and flexibility in these two countries of inexhaustible imagination.

A bigger question concerns the EU, a once promising bloc to grow into an equal to the US in many fields. The EU is now a union built on fragments. Troubles come from the fast pace of expansion this union has eagerly undertaken. The union admitted some eastern and Balkan countries to fulfill its ambitions, which are not quite qualified and not at the comparable levels with the core, founding members. In terms of coherence and development levels, the 15 member bloc before rushed expansion was an ideal size, rather than the current 25 member cluster. This super union breeds bureaucracy and inconsistency, making it doubly difficult to coordinate, especially in times of reaching consensus. A larger group tends to create bad group dynamics and make less sensible decisions under group pressure and conflict. Taking on new members enlarges the total size and strength, but the larger the Union grows, the less likely consensus is to be reached and the more limited influence traditional European powers such as France or Germany, two economic powerhouses of Western Europe, have on decision making of the Union. A larger grouping also typically incurs heavier burdens of allocating funds or subsidies for those new and poorer members.

Conflicts already emerged, with divisions at the behest of the US, relentlessly shoring up the so-called new Europe against the old. A line could be drawn to split this cluster of countries roughly into two sub-clubs, separated by economic strength and political power. Both new and old members are not content. They began to argue in the union and make requests for their rights to be presented and agendas implemented. It is getting evidently harder to accommodate and reconcile, and there are more occasions of bureaucratic wrangling on benefit redistribution among members. On top of that, the US as an external stakeholder will fully capitalise on these frictions to encourage certain members in the EU to adopt American lines and act as some kind of Trojan horses. Indications of this intrusion are permissions given to secret prisons on behalf of the US and introduction of missile defence facilities in some eastern European countries. Visible divisions within this colossal union are not likely to be smoothed out any time soon, considering complex histories of Europe and deep-rooted military and ideological feuds in modern times. As Europe gets more fragmented, with new, smaller countries gaining independence status, the divide could drag the EU along, exhausting it with tension and attrition, instead of raising its status in the world as a credible counterpart to the US. Unlike the EU, Australia faces little prospect of disintegration or threats of deep internal disagreements of many kinds.

After this brief, wide-scoped comparison, it is conceivable that the advantages Australia holds are comprehensive and not one dimensional. It is undeniable that numerous countries have specific advantages, at equivalent levels to Australia’s, and are able to achieve remarkable progress and demonstrate leading qualities. However, in combination they do have noticeable shortcomings and troubles. In view of future development, only countries with large territory and abundant resources can survive and become leading powers, Australia among them. This eliminates many candidates and narrows it down to sizable countries, some of them understandably bearing serious, unsolved problems, despite their size advantage. Australia stands high in an overall estimate, benefiting most from its location and size, but also from many identifiable favourable characteristics. This right combination compensates what it seems lacking, such as military might or extremely high levels of productivity or creativity.

Greed is good as there is no tomorrow

After this wave of spectacular turbulence and corporate collapses, typified by Bond and Skase, there was a quieter phase, with recessions hitting the majority of businesses and tycoons consolidating. In the US, good times continued with abundant foreign capitals flowing in from all over the world. Businesses got a fright from the 1987 stock market crash, which formed the background of the American movie “Wall Street” of the ugly side of the “greed is good” mentality. That scene was soon forgotten and nicely ignored during a decade long growth and boom. Australian businesses seemed to have suffered from over-reactions to previous excess and corporate scandals and thus failed in a comparison with the American successes. It is until the time of bubble burst and Enron-style scandals that the worthiness of Australian practice of prudence and caution, hard lessons learned from the previous chapter of business history, are proved.

Amidst this relative calm, the demise of HIH stood out as a timely shock to investors and the community as a whole, for the scales of its impact and financial losses. HIH Insurance Limited, as the second largest general insurer in Australia, went into liquidation in 2001 under the weight of 5.3 billion AUD debt and dragged thousands of policyholders and shareholders down with it. Due to the nature of insurance companies, this collapse incurred financial troubles to businesses of a much wider range, since they all need proper insurance policies as work covers. My next door neighbours in Hawthorn were affected by this collapse as well, because their renovating company was insured with HIH. If the company did not get another insurer while losing the policy from HIH, they would carry the risk of paying full penalties and compensation if any accident happened during the renovation.

The HIH is described as the largest corporate failure in Australia, in monetary terms. Even the daring Bond and Skase could not match the scale of losses, and there has been no bigger failure after this incident. Its record severity forced the federal government to step in, responding to the crisis by setting up a Royal Commission to investigate and providing various rescue schemes to those affected. The impact went beyond a single company close-down.

A more significant aspect is the exposure of routine malpractices by business corporations and a lack of proper regulatory mechanisms. The likelihood of a market failure is shown clearly in this case after years of deregulation, refuting the proposition from those who only envisioned government failures and hindrance in the economy. The founder of HIH received court sentences of four and half years of jail term, for falsified company accounts and blatant mismanagement. These are perhaps the right penalties imposed on the company executives concerned; for the demise of a multi-billion dollar company, these are small prices to pay. The issue of wide implications is corporate governance under market conditions. One major cause to troubles is the decisions made by top executives to over-extend, to make unrealistically ambitious deals on acquisitions, and to spend on excesses. These conducts usually break no clear legal restraints, but would lead to unforeseen consequences as executives lose their head and attempt to realise fantasies. The route to failure and self-destruction is more or less the same, in Australia or in the US, in this sensational HIH incident and in the horrendous corporate scandals of Enron and others in the early 21^st century. These finally succeeded in drawing people’s attention to root problems in corporate governance in a free wheeling market economy.

In a post-Enron era, when people have deeper suspicion of business strategies and governance, Macquarie Bank of Australia poses a challenge to this wariness. This is an odd phenomenon in the Australian business world, in a sector away from the traditional resources, manufacturing, or retail giants and even from big banks of Australia. The bank is now the largest investment bank in Australia, and its ambitious desire is clearly to become the Morgan Stanley of Australia. It seems that someone in that circle are determined to play the same games those international heavyweights, mostly Americans, have been playing. Macquarie’s pace of international acquisitions is stunningly quick, and money figures involved in takeover bids are jaw-dropping. The bank even lodged a bid for the London Stock Exchange and got rejected for undervaluing. The question is how this company of super bidding, floating and financial leverage can be sufficiently and securely supported by those pedestrian infrastructure holdings under its arms, such as toll roads and energies. That is a risky game of high margins and high returns, absorbing more assets and pushing for faster cash circulation, in order to generate revenues. At this stage, the bank remains positive and confident in all expansion and acquisition plans, and has regularly reported profits and dividends to happy investors. By market capitalisation, the bank is ranked among the top 25 of Australian companies, close to what Enron once obtained, at the seventh in the US. A minor unfavaroable fact relating to this bank in its Hong Kong branch is that the short name of the bank in Chinese sounds very close to "prostitution", and it is on daily in newspapers' finance sections.

The Australian corporate world has retained its distinctive trait of integrity in business doing and treaded the path carefully in a traditional, prudent fashion. Economic failures in this market setting of Australia are not new, though not on a scale equivalent to the spectacular ones in the US. Before the shocking American and European scandals and collapses, Australians viewed their own failings and frauds as extremely unbearable, embarrassed of a betrayal of their treasured practices by those fallen tycoons and incompetent bureaucrats. Those occurrences seemed to be unusual in the developed world. They felt some great relief when scandals involving giant overseas corporations such as Enron surfaced, which give them needed confidence on their own records much better now than previously thought.

It is interesting to note that Enron Australia, set up by the US parent but managed by local Australian personnel, in fact worked. This branch operated differently from its US headquarters, established a different corporate culture, and made deals in a different fashion. The branch actually earned money, returning 17 cents a dollar to investors. It had to close down after the Enron collapse, but liquidators found money on accounts of Enron Australia and a well run company.

Australians are slow followers of American business and management practices, but many have recently caught up with the trends in international markets. This proves a double-edged sword for the learner. Efficiency and productivity level were raised, with new technology and enterprise management, and Australian businesses found ways to venture out. In an economy of easy money and reduced regulatory pressures, frauds and scandals emerged more widely, producing examples of aggressive business chiefs and spectacular collapses with massive losses. Learning the practice also creates potential bubbles in the economy, in inflated figures and an urgency to satisfy investors. With or without dreaded lessons of Enron and others, these fallacies indicate an inherent vulnerability in corporate governance and a powerful tendency towards taking risky approaches in the market. Scandals and collapses of the past serve to remind Australian businesses, even those well run businesses, of their extensive exposure to unpredictable market forces and to temptation of expanding.

The corporate world of Australia and mini Enrons

The corporate world of Australia from the late 20^th century has plenty to do with economic rationalism and deregulation. Business opportunities emerge when sectors of the economy and industries opened up, making it possible for shrewd businesspeople to have those opportunities drop on their laps. Deregulation brought a visibly more undisciplined phase of activities in industries and emboldened the daring and scheming to embark on ventures previously unthinkable. These exuberance and excesses were gradually corrected and smoothed out after shocking corporate scandals and failures were exposed in Australia and overseas.

Australians are proud of their reputation of trading fairly and making deals honestly, with almost absolute integrity and rare tricky bargaining. What you see is what you get. People doing business have a sure sense of security and accountability, and services and goods are delivered with guarantee and follow ups. Hard bargaining down to half of the offered prices is commonly seen as an insult, indicating that previous offers from an Aussie were not genuine and falsely inflated. This tactics is not tolerable and smacks a kind of untrustworthiness. In business and in the market, there are in general few, very few, cases of full blown frauds and scandals by ego-centric business crooks, in a comparison with sensational and colossal business scandals in the US.

Business doing in any economy is filled with plentiful stories of rising stars and downfalls. Talks about the “tall poppy” syndrome are common in Australia, as an excuse for not having been able to produce legendary leaders or tycoons in this medium sized country. This habit in fact illustrates an underlying tendency towards equity and a wariness of unscrupulous practices which may enhance the status of the few successful. Outstanding performance, extravagance, or extraordinary claims attract suspicion and even condemnation in cases of disclosed malpractice. The downfall of such a “hero” is met with glee, satisfaction and relief.

This has been harshly categorised as a sign of mediocrity in this society and perhaps a cause to pedestrian pace of growth and creativity in recent times, in an urgent comparison with tiger economies or even with other developed economies. This notion has been turned around by ambitious entrepreneurs for a lack of understanding of and support for their marvelous feats. They could blame this syndrome for the difficulties they encountered in business expansion or failures in efficiently utilising resources. This tall poppy syndrome seems an obstacle to their impressive fame and status to be recognised fully in this mediocre country, unlike those accorded to American super tycoons or management gurus. It also seems to have undermined many successful ventures and destroyed reputations of some celebrities.

There are indeed some prominent cases of fascinating rocket rises and collapses in the business world of Australia, which simply cannot drag that syndrome in to blame. The 1980s was an innocent age of early deregulation, without the idea and experience of sufficient supervision, and financial sectors found it unforgivable not to make large investments of some kind. In public sectors, Tricontinental investment bank managed to accumulate bad loans and loaded up intolerable burdens on its parent, the State Bank of Victoria. The subsidiary had to be closed down, and the state bank went to seek rescue from the Commonwealth Bank. This was cited as a shinning example of bad management by the state Labour government at the time and gave ample ammunition to the opposition Liberal Party under Kennett. There was also this Pyramid collapse in 1990, once the largest building society in the state of Victoria. I had only faint ideas at that time of the complicated liquidation and real impact; even with massive government bailout, depositors were said to have retrieved their assets at a ratio of a few cents of a dollar. Large numbers of people were affected and billions of dollars evaporated; worse still, confidence on the financial system was shaken during these financial disasters. A few banks collapsed, often taking the form of rescue/mergers by a larger bank, disappearing quietly in contrast to their splashing launch.

There was a more colourful display in private business sectors of Australia. The one person who is qualified to claim the detriments of the “tall poppy” syndrome is Alan Bond. The winner of the American Cup, the Australian of the Year, owner of top Aussie beer brewers and founder of the first private university in Australia has rightful pride in looking back at these achievements and making loud criticisms of others savagely undermining him and subduing his valiant ventures.

There are no secrets of how these feats were made. The fortunes of Bond Corporation were built on large and continuing financial backing of banks in years of early deregulation and easy credit. In common business practice, banks look for credible borrowers at their discretion. While they tend to hesitate on lending to small size businesses or ventures and exercise the strictest assessment criteria before issuing a loan, they find it hard not to chase those large corporations deemed credible and offer them generous loans. It may turn out that some corporations are suspiciously more sizeable than they ought to be, but a lending bank is very likely to be hooked on to a certain business which just dangles potential in front of the bank in question and spit out some money as interest payments for ever larger borrowing. Banks under these circumstances have little to resist: they either keep the business running so that they one day could receive the full payment, or pursue the matter to the end and break the business so that they receive little in return. A hooked bank usually avoids taking the second option and is keen to leave the business operational, even if that means pouring in more money for the purpose of liquidity and cash flow.

It must be said that in the business world of Australia a deliberate action to trap and hook a bank is not common, and borrowers are expected to put up their best behaviours to keep making loan payments. This does not exclude the possibility of some extremely creative use of bank loans. Bond mastered certain tactics. He worked hard to building up the image of a reliable business conglomerate, with his appetite of acquiring numerous businesses in varied sectors, and with his purchase of an English castle complete with servants and villagers. His unusual ways of spending money on splendours drew praises and certainly attention from banks, presenting to them with an inflated corporate image. Money matters are then easier to deal with on the basis of business reputation and celebrity status of the borrower.

A popular theme in the US in the 1980s was spending “other people’s money” for the building of your own business empire. Bond had exploited this means to his advantage, drawing money from banks and depositors for his disparate and widely dispersed business expansion, while handing certain money back as interest payments. It was reported that he daringly threw a bundle of office keys to hapless bankers and demanded them to sort out the financial mess of his making in various companies and subsidiaries. Facing a termination of Bond’s businesses, which means they could only get a fraction of their total lending back, the bankers and creditors balked at this grim scenario and humbly returned the keys to Bond, with promises of even more funding in future. Put simply, Bond gambled correctly on financial institutions' addiction to providing much of the funds for his ambitious undertakings.

Among Bond’s crumpling business empire, Bond University remains his legacy, in an oddly positive way. I wrote to the then vice chancellor regarding the university’s awkward situation that it was still curiously associated with a bankrupt and tarnished corporation’s name. The vice chancellor readily admitted that there was nothing he could do, and the board tended not to make a dramatic and conspicuous move when the university was doing good business financially, with considerable numbers of enrolments of overseas students. This vice chancellor appeared having other important matters on his mind, for he soon after returned to the US to answer a call from President Clinton, to serve as one of his advisors.

Bond left untold fortunes to his children to be among the richest people of Australia. He himself has no remorse or regret to the lost money and people involved in bankrupt businesses. His recent writing after serving jail sentence has glossy accounts of his achievements and complaints of being wronged. It is touching somewhat to watch him walking wobbly to the court in as many days just to save some money for his children to “survive”. In 1994, on one regular walk to court, when Bond recognised the guy asking him questions was none other than Paul Barry, a journalist from ABC and the author a relentless Bond book, he threw Barry’s name card on the ground and spit on it in front of cameras. This shows how deeply he hated those who ruined his golden life of an Australian hero and billionaire. There must be this full blown disgust at the back of his mind of the tall poppy syndrome.

Another notorious Australian fraud involves Christopher Skase, a golden boy in the media business, who was even deeply surprised by his own sudden fame and fortunes. He owned Seven networks and made numerous bids to get more media businesses under his arms. That over-stretched the finances of his company Qintex, and the pleasing appearances could hardly hide the truth of a vulnerable business on credit. His failure to produce a small amount of money guarantee for a 1.5 billion AUD international deal broke the bubble image. For this relatively young Australian entrepreneur, the cash flow soon halted, bank credits ceased to come, and receivers came to chase after his assets. In panic, Skase fled to Majorca, Spain and never stepped on Australia soil again, dodging extradition requests from Australia and meeting his fate of death there in August 2001. A former Australian media tycoon degenerated into a regular at Spanish court, attached to a breathing machine to fight off arrest warrant and extradition. He was once cornered by an Australian journalist on the street of Majorca, when he was riding a bike effortlessly and apparently enjoying it. He screamed at the journalist and darted away. All these were on camera.

Skase got a big cut in the development of Gold Coast and Port Douglas. Over-leveraged finances were commonplace those days, in that development projects are supported by bank credits, and as long as property sales are made, developers with a small fortune at the start could make it big in the end. The moment of truth comes when developers over-spend money on huge projects and see slow sales. Development in Port Douglas by Skase was not dissimilar to what Donald Trump did in New York. The difference is that Trump, when in difficulties, negotiated debts restructuring and received additional financial backing from various sources, including Asian and Hong Kong, to survive a collapse. Skase was not that lucky when his bankers rushed in to get back certain assets as they smelt a rat. To a certain extent, this applies to Bond as well.

Bond and Skase bore the immense brunt of public disgust of the rich and extravagant. For high achievers such as Bond, the combination of careless buying sprees, little tax payments, and hiding fortunes for family members eventually put people off. Even during the high tide of deregulation and economic rationalism, there remained little desire for worshipping the super rich and those influential industrial leaders. To Bond, this Australian trait is perhaps the most annoying and evident of a tall poppy syndrome, because, until the corporate scandals surfaced in the early 21^st century, worshipping of money and the rich in the US was undisguised, and the media and publications showered those celebrity tycoons and corporate leaders with loads of praises, those people who were just Alan Bond and Christopher Skase of the US. Penalties there on corporate frauds and scandals came much later than in Australia.

Exceptions to this super rich group members being dragged down are Rupert Murdock and Kerry Packer. The former has since left Australia to pursue wider market shares of all kinds of media and entertainment businesses, so the convenience from holding an American citizenship was sought. The latter remained in Australia and retained the riches in several lines of industries on the solid foundation of family business. From the time receiving one billion dollar from a careless and reckless Alan Bond for his Nine networks, a price inflated beyond any estimates, Packer passed the point of no return in his pursuit of mega billions. Many people with average business sense can make it to the top with one billion dollars at hand; with some more genius and originality, they can build a business empire. The fact that Packer went from strength to strength proves that it takes the downfall of a hotheaded entrepreneur to make another a success.

Where is that said “tall poppy” syndrome now? Murdock commands immense admiration, even after he officially became an American citizen and ran true colour tabloid newspapers in the UK. His business empire unavoidably met financial crises, chased by creditors in a similar fashion to that for Bond and Skase, but Murdoch convinced them with his ambitious expansion plans and workable profit-generating schemes. Packer had been solidly protected from being bothered by the press and the public. During one of his heart attacks in the early 1990s, it was shown on live TV that his crew blocked any photo-taking as his ambulance sped away. For a man of money, though a billionaire, Packer received a state funeral in Sydney, granted by the state government, an indication of media power and new political correctness which rates financial achievements highly. One crucial factor is that these two shrewd businessmen control media corporations and are able to minimise the occurrences of negative reporting. In addition, people may come to admire their incredible deeds in Australian style that they not only succeeded in carrying on their family businesses, but in exceeding the best expectations of their parents. Being the richest men in Australia, they obviously knew what not to do: throwing family fortunes away and being uselessly spoiled.

These and other true stories enhance people’s suspicion of some unexpected fortunes made by celebrity businessmen. There is no genuine confidence on the ability of someone to shoot to the top circles fair and square, and there is even less intended respect accorded to high flyers in this essentially egalitarian society. Public anger and denouncement toward big businesses and their leaders with wrongdoing are often unreserved, rather than sympathy and pity. A lack of proper supervision and regulating of financial markets made matters worse, conducive to the crowded course of rise and downfall of certain “greats”. This is understandable, since regulating was directly against the torrents of deregulation in the same period of time. The Australian Securities Commission took on the role of corporate regulator only in 1991.