The Hon Kevin Rudd MP
Australian Minister for Foreign Affairs
Fault lines in the 21st century global order:
Speech to the Royal Institute of International Affairs,
Speeches, E&OE, proof only
The title of my address today is designed to be provocative. Not with a view to being discourteous. But definitely with a view to provoking fresh debate, fresh ideas and perhaps even fresh approaches to the future of a global order that has governed us now for two thirds of a century.
Major changes are now underway that are challenging many long-standing
assumptions about the current order. Humans, being creatures of habit, often need shorthand ways of understanding the world in which we live, providing comfortable, and sometimes even comforting, assumptions about the way the world really is.
We become so accustomed to the current international order that we often assume it is permanent. History, of course, teaches us otherwise. The disturbing thing about deep changes in the global order is they are almost imperceptible at first, then gather pace,
then change itself can take place quite suddenly.
The cracks, when they first appear, often seem part of the original design, or at least part of a natural weathering process of an otherwise sound structure, rather than threatening the structure itself.
But then the cracks widen, just as the broad outline of an alternative design begins to emerge. Then, suddenly, having reached a tipping point, a new structure begins to become apparent, whether the political community or public opinion are ready for it or not.
What began as mere straws in the wind, becoming, over time, an irresistible force. Take for example the
Take also the unravelling of the
Change therefore, may be inevitable, and in many ways we shouldn't fear it – as long
as we are fully mindful of it, shape it, adapt to it, and leave the failed experiments of
Effective foreign policy should therefore be mindful of history, not imprisoned by it,
even less captured by some sort of determinism, or disempowered by a notion that we
are helpless to change what is happening around us.
We should be mindful of history, but equally creative, optimistic and, above all,
resolute about the future. Mindsets, left unexamined, can become self-fulfilling. None
of us are passive agents in all of this, unless we choose to be. No, we are active agents,
if we choose to be. It is the decisions of men and women that craft the future.
These I believe are the intellectual, analytical and policy disciplines we need to bring
to bear today, given the seismic shifts that are now unfolding before us – for
A decade ago, we could see
crisis, then the global recession of 2008/09, what seemed a distant prospect became a
more immediate reality.
struggles to comprehend the dimensions of the numbers themselves which describe the
formidable power of the modern Chinese economy.
have concluded that
current European financial and economic crisis as evidence that the European project
itself is now unsustainable, and, as a result, the idea of an emerging, active,
international political personality for
To add further to the picture, the fatalists then claim that the
fundamentally weakened -through the last decade of declining economic performance;
irresolvable political gridlock between the legislative and the executive branches; and,
as a result, a weakened Presidency – that the American Century is coming to a sad and
And finally, and on a broader historical scale the civilisational historians themselves
then point to the inevitable decline and fall of the 'idea' of 'the West' itself, although to
be replaced by what, the same civilisational historians are, unhappily, unable to guide
Today, I want to challenge each of these propositions, in a way that I hope might open
up new possibilities and new approaches to the real challenges that lie before us.
At the beginning of the 21st century, it is intellectually fashionable to be pessimistic,
almost fatalistic, about where the future is taking us.
As a middle power with global and regional interests, and a middle power animated by
values that we unapologetically embrace from the tradition we call "the West",
Australians refuse to accept this premise.
This is not because an Australian summer simply turns us into sunny optimists midst
the gloom of a European winter.
It's because we see another possible path for the future order, a middle path, which
yields to neither appeasement and capitulation at one extreme, or an apocalyptic clash
of civilisations at the other.
So, what should we make of the rise of
fundamental within it?
I recently addressed these themes in speeches to the Asia Society in
North Atlantic Council in
power relativities between
Let me restate the broad arguments for our purposes here today in
US has held that position for more than a century – 130 years. On current projections,
that long-lived structural reality of the current international system will cease to be the
case within this decade.
Earlier this month, The Economist, almost matter-of-factly, reported that
have a larger economy than
years. And measured by market exchange rates, the relativities between the
The economic pre-eminence of the
been a settled feature of the global landscape for generations. To give a sense of the
historical proportion of this change, let's put it in Chinese terms. The
biggest economy in the world since well before the collapse of
Or in European terms, the
landscape since just after the Franco-Prussian War.
century. In most cases, a decisive factor. History teaches us that all power is ultimately
grounded in economic power.
The expectation that Chinese
definition an historic event. But the rising power of
changes in relative
foreign assets of $2 trillion today versus US net foreign debt of $2.5 trillion);
.. Chinese exports surpassed the
.. Chinese fixed capital investment took the lead in 2009;
.. Manufacturing output in 2010;
.. Energy consumption also in 2010;
Looking forward, it is projected that other key markers will soon be passed:
.. The total value of Chinese imports will be greater than the
.. Chinese retail sales will outpace the
.. Chinese firms in the Global Fortune 500, now half those of the
.. And Chinese stock market capitalisation will be greater than
2020, leaving Wall Street in its wake.
If all this data were not sufficiently compelling, The Economist also projects – perhaps
controversially – that Chinese defence expenditure will surpass that of the United
States in absolute terms by 2025.
Just to put that in context, Chinese defence spending is currently about a fifth that of
We are truly therefore living through a watershed in global history.
It's fashionable, of course, at present, to talk of
other as a result of some sort of inevitable axiom. Certainly,
challenges at present. But a clear-eyed analysis of
a proper treatment of this continent's underlying strengths.
Consider the following:
.. The European Union remains the world's largest economy. Its
purchasing power parity terms, was estimated at US$14.8 trillion in 2010,
.. Of the world's top 15 nations for offshore investment, seven are European.
In 2009, the FDI outflows of
than the FDI outflows of the
.. The Euro area produced and shipped 26.1% of the world's exports in 2010,
and was the world's biggest exporter of goods and services in 2009;
.. With that,
goods and services, and is itself the biggest export market for more than
one hundred countries;
.. More than one-third of the world's largest corporations are headquartered in
.. More than one-third of the companies in Interbrand Top 100 Global Brand
Index are European (half are from the
.. In 2009, the EU produced 33.4% of the world's total scientific publications,
making it the largest scientific centre in the world;
.. One half of all Nobel Laureates have been European;
.. In 2008,
10 biggest spenders on R&D on the planet.
.. 30 of the world's top 100 universities are European;
.. In 2009, the EU and EU Member States (through their bilateral programs)
provided more than 56 per cent of total world development assistance (€49
.. Finally, although military expenditure in
the previous year, while rising elsewhere in the world,
comprises 43% of total non-US military expenditure globally.
Therefore, before anyone reaches too many dramatic conclusions about the
'inevitability' of the decline and fall of
statistical realities as well.
These achievements also rest on the shoulders of robust democracies that have again
weathered decades and sometimes centuries of political change – providing, in the
main, political and social resilience to respond to change without fundamentally
undermining stability. This is a critical advantage over non-democracies. They reflect
the cumulative investment in knowledge, innovation and, critically, institutions over
decades and in many cases centuries.
It is within the framework of these robust fundamentals that
itself into an early economic grave. I do not in any way underestimate the dimensions
of the current financial and economic challenges facing
unaddressed, the'll impact not only on
stability as well.
The challenges in various EU member states are now familiar.
Even threats to social stability, fuelled by ever-widening inequity.
National parliaments, and the taxpayers who vote for them, are restive across the
A more fundamental difficulty is that the apparent solution to financial crisis creates
problems of its own in the real economy, growth and employment.
Governments must tackle debt by pursuing fiscal austerity, and they must increase
competitiveness through structural reform of labour markets, education and training,
business regulation and tax.
Meanwhile, banks cut back lending to repair their balance sheets, driven also by new
capital adequacy requirements, with the resulting danger of a credit crisis for firms,
both their cash flow and then investment capital.
In other words, the impact of these various measures to deal with the financial crisis
can put at risk the economic growth these countries also need, if they are to succeed in
reducing deficits, reducing unemployment and reforming their economies.
Some have described this as a perfect storm of pro-cyclical policies which may
achieve neither the financial nor economic ends that policy makers seek. And on top of
all of this, there are some who now question the medium to long term viability of the
European project itself – including the future of European unity.
This is placed into sharp relief through ongoing negotiations in
of the Greek bailout facility and the consequences that may flow from it.
Once again, however, while recognising the dimensions of the challenge, it is crucial
not to be sucked into a self-fulfilling vortex of despair and an irrational mindset setting
in that there's no way through the current crisis.
The truth is there is, if the right options are taken. Because the equal truth is
now grappling with the full dimensions of the crisis they face, including the future of
From my own discussions with leaders in
the challenges that lie before it. I'm also convinced that there is a way through this
Through what often appears to outsiders as the torturous political processes of
the truth is that the contours of a comprehensive European policy response are
.. A liquidity facility offered by the ECB for European banks (which has already
been drawn on by nearly 500 banks, totalling nearly half a trillion Euro to help
keep credit available);
.. A European "firewall" for the ultimate defence of European sovereigns,
through the EFSF, the ESM and perhaps ultimately (depending on other policy
conditions being met) the ECB itself;
.. An enhanced capacity for the IMF to provide a further backstop to the
.. A legally binding European fiscal compact to bring budgets back to structural
.. A program of competition policy reforms and pension reforms, the first wave
of which have already been announced in
The one missing element so far in the emerging policy response is a parallel strategy
for growth, given that for
But the debate is on in earnest about the prospect for: greater consumption and external
investment by surplus economies; productivity-driven growth through labour market
reform; as well as the easiest but hardest of all, real trade policy reform by concluding
My overall point is this: given
the emerging policy response to the immediate crisis, there is a rational basis for
and social costs will be high.
is equally a question of political economy as much as economic policy alone, then
So too with the United States where policy reform and the formidable American
capacity for economic re-invention and renewal should never be underestimated.
But a central point I wish to make today is that both these renewal projects, drawing on
the deep, fundamental strengths of both continents, are also crucial to a broader project
important to us all – and that is the future of the idea of 'the West' itself.
It's easy today to think that we're witnessing the inexorable decline and fall of what we
call 'the West' as
therefore strategic power.
Of course, such thinking intensifies as the 'the West' begins to lose confidence in itself
and the future of its own project that has evolved over many centuries.
'The West' is a phrase often understood to represent a particular geographic construct –
a collection of countries, centred somewhere on one side of the
By contrast, I would argue that the concept of 'the West' in the 21st Century represents
a powerful idea rather than a particular piece of real estate. Put simply, the idea of 'the
West' is one of freedom: open societies, open economies, open politics, the freedom of
academic inquiry, the compatibility of faith and reason, the secular pluralist state.
Furthermore, for 'the West' these freedoms are held to be universal, rather than
particular to any individual culture, or people or period of economic development.
These values are reflected in parliamentary democracies: in a deep belief in codified
human rights for all, empowering all individuals to make decisions about their own
lives; tempered also by parallel traditions of fairness, equality and justice; and all
protected by a legal system independent of party politics.
These values are also reflected in the economy – in the free flow of ideas, of capital, of
commerce, in open markets, both at home and abroad.
This idea of 'the West' evolved over several hundred years, first in
afresh in the various societies of the so-called '
political cultures across much of the entire world.
They are the product of centuries of evolution growing from the Christian tradition, the
reformation, the enlightenment, the scientific and industrial revolution, and political
emancipation. They are freedoms that have been hard-fought over many centuries.
They are freedoms of which we should be collectively proud, because it is a tradition
that has humanity at its centre, rather than the state. They reflect therefore an idea that
should never be surrendered.
In many respects, these ideas are 'the West's' patrimony to the rest of the world. British
parliaments, French ideals of liberty and equality, Australian ideas on universal male
and female suffrage before others believed these to be politically or socially
These are common values to which all peoples, from all around the world, from all
cultures, can relate and, indeed, aspire. In truth, these ideas are no longer the specific
inheritance of a particular group of countries, or a particular tradition or any particular
civilisation. They have now become universal ideas and ideals that belong to our
common humanity and are reflected now in various international covenants.
They've been applied in countries around the world, countries at different stages of
development, countries from vastly different cultural, religious and even philosophical
systems – although the ideas themselves may not be formally ascribed to 'the West',
and may in fact be called by different names.
In fact, these ideas have been found to be adaptable to all cultures, incorporating local
differences into fundamental freedoms that are on offer to all cultural traditions.
The attraction of the idea of 'the West' did not lie in military might, or raw political
power, but in the freedom it offered, in the promise that it held that poverty could be
rolled back through economic growth, through open markets at home and abroad, and
that these economic projects could be achieved without compromise to personal and
And the challenge which now confronts us all is to remain confident in these values
when different, economically successful development models are now on offer around
In particular, when non-democratic development models produce the largest
economies in the world, that may openly challenge the values and assumptions that
have long underpinned the post-war global order.
So what is the way forward?
First, and most fundamentally, we must be confident in the values for which we stand.
not talk itself into an early grave politically, economically, strategically or in terms of
the core values for which this continent has stood for generations.
Third, nor should the
Fourth, it is equally critical that
embrace far-reaching financial and economic reform to provide the platform for
renewed growth, rather than economic decline.
Fifth, we should engage
emerging framework of the global and regional rules based order, so that future
Chinese leaders embrace the need for such an order to continue, although with political
and economic power appropriately shared within it.
In other words, the sharing of power in the emerging order should sit alongside Bob
Zoellick's doctrine of emerging powers as responsible global stakeholders.
And finally, we should take all of this forward with a clear intention to maintain, and
certainly not cede, the core values that have animated 'the West'.
.. Minister's office: (02) 6277 7500
.. DFAT Media Liaison: (02) 6261 1555
[Source: Royal Institute of International Affairs,