A return to “our foreign policy is trade”?

datePosted on 23:57, May 1st, 2009 by Lew

Murray McCully hasn’t so much taken the razor to NZAid as taken the axe to its foundations, in one of the clearest indications so far of the new government’s ideological intentions:

Following a review process, the government has decided to change the mandate of NZAID, the government’s aid agency, to focus on sustainable economic growth.

Notice how he leaves out what the mandate was changed from. Good press release-writing. National Radio is more explicit, however:

The semi-autonomous body NZ Aid will be brought back under the control of the Foreign Affairs and Trade Ministry and its focus will change from poverty elimination to sustainable economic growth.

Now we see the dichotomy I theorised a while ago made plain: from from least harm to greatest good.

Now, in the context of foreign policy I don’t have a categorical problem with this approach, because foreign policy is different to domestic policy where the government bears a direct and explicit responsibility for the wellbeing of the worst-off of its citizens. NZ doesn’t necessarily have that responsibility to the worst-off citizens of its donee nations. While it serves NZ to look after them, fundamentally all foreign policy actions are taken with the home nation’s interests at the fore, not with the foreign nation’s interests. So I’m not going to argue against this change of mandate on the basis that it’s cruel or unjust or unfair on the poor of the Pacific, plenty of people are doing that. I’m going to argue against it on the basis that it’s short-sighted and bad for NZ in the context of our relationships with our Pacific neighbours.

The problem, paradoxically, is that the realignment of NZAid with the trade agenda prioritises immediate NZ commercial interests to the exclusion of other, more strategic goals. Like democracy, sustainable economic development isn’t something you can create by throwing money about. NZ’s aid agenda to provide an economic floor in (parts of) the Pacific has generally had three broad purposes: 1. maintain peace and order; 2. deter the advances of more predatory regional powers*; 3. enable people to develop economic structures on their own terms. Largely the first two have succeeded; the third remains a work in progress. The three points are in ascending strategic order; that is, the longest-term goal is to enable the people of the Pacific to develop their own economies and their own market structures, structures which serve them, rather then serving the interests of foreign entrepreneurs first. The changed NZAid mandate, which to my mind roughly reverses the order of the three priorities on the reasoning that if people have the third then the first and second will follow, seems unwise because I don’t think they will follow. Markets which exploit people’s vulnerability, or which concentrate wealth and power among the usual sorts of tin-pot third-world elites will not result in stability, and will render the disgruntled Pacific vulnerable to the aforementioned depredations. This policy realignment (by McCully’s own admission) will divert aid money from those at the subsistence line into private enterprise, most of which is owned outside the Pacific. It will result in a subclass of client entrepreneurs both here and in the Pacific, those with the connections to sign on early and sew up a section of the nascent market for themselves, with full government favour. The Pacific needs trade strategies for mutual benefit, driven by Pacific people to meet their own needs, not created artificially from outside with a territorial gold rush in mind. If we profit to the detriment of our neighbours, our trade might be healthy, but the wider Pacific situation will not, and we will suffer in other ways.

In this situation, trade wins and everything else loses. This is what I mean by the title: McCully has tacitly declared that nothing other than trade really matters, a return to Muldoon’s famous position on the matter. Although the aid agenda is more closely targeted to the Pacific, the focus on trade signals the beginning of a more arm’s length relationship based on cash rather than regional allegiance. This in tandem with a more realist positioning from the defence review, in which the “benign strategic environment” doctrine of Clark’s government has been discarded with, I think, little evidence. Those changes will result in less development and support work and a more hard-power focused defence strategy, with its eye on a phantom threat, and a consequent cooling of the excellent operational relationship the NZDF has with the Pacific. Of course, such a realignment will be necessary if the aid=trade agenda results in the sort of destabilisation I’ve talked about.

L

* Clearly, in this context I’m talking about China. I don’t typically ascribe to the Sinophobia so rampant in the West, but in the Pacific case I think it’s justified.

10 Responses to “A return to “our foreign policy is trade”?”

  1. SPC on May 2nd, 2009 at 01:22

    If only they had a sustainable economic development programme for New Zealand and thus increased both the wages of New Zealanders and our capability to deliver .7%GDP in foreign aid – and through independent and focused aid delivery at that.

    A focus on the South Pcific would make us somewhat unique amongst the OECD in having such a limited regional range. It also implies an overly defensive and almost territoral approach to being the ones who provide aid on our patch. It also borders on the sort of desperate jealous possessiveness which some resort to when their lesser one has become aware of more appealing options.

    Of course to then deliver the aid in relationship to trade, diminishes connections to both government and people in the Pacific to focus on doing good by doing mutually advantageous business with private sector partners.

    The worst of all worlds would be to seen as attempting to exploit aid to the region to service NZ Incorporated. Or is that a political party in New Zealand attempting to turn the aid budget into a vehicle for private sector profit for business partners. No wonder connection to charity groups had to be cut so starkly. It’s as if this is vengeance for the government being blocked from privatising within New Zealand.

  2. reid on May 2nd, 2009 at 02:54

    Markets which exploit people’s vulnerability, or which concentrate wealth and power among the usual sorts of tin-pot third-world elites will not result in stability, and will render the disgruntled Pacific vulnerable…. This policy realignment (by McCully’s own admission) will divert aid money from those at the subsistence line into private enterprise, most of which is owned outside the Pacific. It will result in a subclass of client entrepreneurs both here and in the Pacific, those with the connections to sign on early and sew up a section of the nascent market for themselves, with full government favour. The Pacific needs trade strategies for mutual benefit, driven by Pacific people to meet their own needs, not created artificially from outside with a territorial gold rush in mind. If we profit to the detriment of our neighbours, our trade might be healthy, but the wider Pacific situation will not, and we will suffer in other ways.

    I quite agree this is a risk Lew. Presumably however since we can work it out those who do this for a living also have (in far more detail) and have advised accordingly.

    It’s possible this is designed to weaken long-term, the Chinese-Fiji connection which is becoming a small but increasingly virulent abscess in the region. I don’t think this will work, but it’s a plausible strategy.

    There are many other possibilities.

    In this situation, trade wins and everything else loses.

    Lew do you see this as an inevitable across-the-board win-lose? I don’t quite see how, if so.

  3. jcuknz on May 2nd, 2009 at 09:14

    stop burbling on about the Pacific .. the story I heard suggested it would be South America and South Africa which MIGHT loose some aid … look after one’s own back yard I say. Though if they further the sanctions with aid cuts to Fuji I’d be unhappy.

  4. Lew on May 2nd, 2009 at 11:03

    SPC,

    The worst of all worlds would be to seen as attempting to exploit aid to the region to service NZ Incorporated.

    Indeed. The trouble is that there will be a great temptation from within Labour to employ this sort of rhetoric in attacking National, which will cause problems with certainty and continuity. One of the defining features of our foreign policy in the last two decades has been its remarkable bipartisan continuity; that’s been valuable, but it seems to no longer be a priority.

    It’s as if this is vengeance for the government being blocked from privatising within New Zealand.

    That’s a bit too black helicopter for me, but I wonder if a goal is to fly a few privatisation kites, establishing models for how things might work in NZ?

    reid,

    I quite agree this is a risk Lew. Presumably however since we can work it out those who do this for a living also have (in far more detail) and have advised accordingly.

    This is a question of whether you reflexively trust the government (in its current form) or not. I trust their abilities; I just don’t trust their ideological premises. This means I think they’re potentially more dangerous than if they were incompetent, since I think they’ll do a good job of implementing a bad strategy, whereas incompetents would do a bad job of implementing an indifferent strategy.

    It’s possible this is designed to weaken long-term, the Chinese-Fiji connection which is becoming a small but increasingly virulent abscess in the region. I don’t think this will work, but it’s a plausible strategy.

    It’s a very roundabout way of approaching Fiji, if that’s the case.

    Lew do you see this as an inevitable across-the-board win-lose? I don’t quite see how, if so.

    I hate making predictions, especially about the future :) No, of course, nothing is certain or inevitable – this is a judgement call based on the balance of probabilities as I see them. There are other possibilities, and it might work – McCully talked about the need for `discipline’ when it came to aid funds being used to support private enterprise and reducing the amount of governmental ticket-clipping associated with direct aid delivery. Presumably this means limiting potential for crony capitalism and associated corrupt and pseudo-corrupt practices and enforcing free and transparent trade systems as a condition of support. Again – it comes down to a matter of whether you believe them or not, or whether you think it’s even possible. I don’t really, on either count.

    jcuknz,

    stop burbling on about the Pacific ..

    Come again? The Pacific is what the new aid/trade strategy is all about.

    the story I heard suggested it would be South America and South Africa which MIGHT loose some aid … look after one’s own back yard I say.

    Perhaps you’d consider reading the linked press releases rather than listening to a `story’. There’s no `might’ about it.

    Though if they further the sanctions with aid cuts to Fuji I’d be unhappy.

    Assuming you mean Fiji, not a mountain in Japan, then prepare to be disappointed. The programme intends that aid be replaced by trade, and the state of diplomatic relations between NZ and Fiji doesn’t lend itself to the establishment of new and effective trade structures or relationships.

    L

  5. Tom Semmens on May 2nd, 2009 at 11:45

    I wonder if Jane Clifton will write anything about this.

  6. Pablo on May 2nd, 2009 at 13:11

    The subordination of foreign policy to trade is a bad move on several levels, and should be resisted by the professional diplomatic corps. If it is true that NZ Post CEO John Allen is to become the new Secretary of MFAT without any diplomatic credentials whatsoever, then the dye will clearly have been cast in that direction. The trouble is that this is an ideologically-driven project that does not take into account the fact that trade policy is embedded in a complex web of foreign relations and needs to be seen as such rather than as the end-all, be-all. For example, trade openings are used by other countries as part of a wider strategy of influence expansion. The PRC uses its trade networks as cover for intelligence-gathering in areas of strategic interest such as the South Pacific. It uses soft power (development aid) to buy influence in smaller nations of strategic interest such as Fiji and Tonga. Hence, subordinating broader strategic concerns to a trade-based NZ aid policy that “promotes growth” through private enterprise detracts from other areas such as the non-proliferation regime where NZ’s historical record has given in leverage in the diplomatic community, and in which it has used aid policy as a means of securing cooperation on disarmament and NPT issues (in other words, growth is not the issue). Hence to adopt a one-eyed approach to diplomatic endeavour rooted in an abject belief in the benefits of trade and privatized channels of soft power projection is not only ideologically rigid and naive. It is, at a minimum, potentially dangerous to NZ’s long-term security.

    The good news is that the professional diplomatic corps knows this, and can stymie the intrusions of ideologues like McCully should they choose to. The bad news is that continued public disinterest in foreign affairs allows the ideologues more room for maneuver than should rightfully be the case in a liberal democracy.

  7. SPC on May 2nd, 2009 at 18:55

    That’s a bit too black helicopter for me, but I wonder if a goal is to fly a few privatisation kites, establishing models for how things might work in NZ?

    Perhaps not in “vengeance”, its probably just the political ideologues looking for areas where they are not blocked by public resistance in New Zealand (and here can deliver proft making opportunities to their friends and sponsors). All while they are developing the way towards privatisation here as best they can meantime.

    On the foreign policy side of it, China’s approach has been to secure resource supply to its economy. The Pacific is not of much importance in this except for Australia and to a lesser extent New Zealand. One could take the view that their goal has so far been twofold – nuetralise Taiwan (which has some ties to Pacific colonisation) and otherwise not upset us or the Australians. If their relations with Taiwan improve, as they could well do so, our approach should be to welcome their economic development aid (which we cannot match) as neighbourliness from a fellow member of APEC and merely seek to be consulted about it.

  8. Lew on May 2nd, 2009 at 20:12

    SPC,

    I generally agree with what you’re saying here. I have one objection, though it’s tangential to the case in point:

    If their relations with Taiwan improve, as they could well do so

    At best, China’s relationship with Taiwan can hold steady, while the US remains a credible military force allied with Taiwanese independence (for its own strategic reasons). It’s a nasty situation. Alastair Iain Johnston has a neat argument (from a realist pragmatic position) for why all three parties to the Taiwanese situation engage in behaviour likely to result in eventual war although they would prefer to avoid war at all costs (hence the uneasy truce at present, founded on the fiction of `Chinese Taipei’). He argues that this fiction can be formalised, negating the likelihood of war – and while I don’t quite buy it, it goes some way to showing how complicated and convoluted things like this can get – and why saying `trade will make everything ok’ isn’t really an answer.

    L

  9. SPC on May 2nd, 2009 at 20:48

    It all depends on whether Taiwan adopts a bi-partisan position on their relationship with China. If the “mainland exile” party and the “local” nationalists can agree (as the competitors for local representative government) to enjoy continued autonomy without stressing any policy of independence.

    China appears to be be adopting a carrot and stick approach to move them to that position of co-existence with China. China’s goal appears to be to have them operate as if they will one day be an autonomous region within China (as per Hong Kong) – and provided Taiwan accepts this their reward is the suggestion that their existing autonomy is not at risk.

    The concern for Taiwan will be over whether China will continue with this benevolence should the power balance continue to move in their direction – or whether Taiwan will have to start operating as if they already an autonomous region within China to maintain good relations (though one suspects China will reward such behaviour and this process would occur without too much trauma).

    I think the nationalists in Taiwan will choose to settle for a gradual process of increasing co-operation while retaining some of their historic autonomy – to the extent that later this century we will regard Hong Kong and Taiwan as both similarly part of and yet apart from the rest of China.

    I think it will occur quite smoothly. If so, it will nuetralise the more militant of the Chinese leadership and be better for all of us.

  10. [...] One the one hand National has embraced the idea of shifting its trade focus–which as Lew mentioned in an earlier post has once again become the basis for all foreign policy–towards Asia (and [...]

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